Georgia-born EXIM Chairman: US Returns to Export Credit Game in New Era of Global Competition

That US is back in the game when it comes to financing the sale of American products around the world Georgia-born Chair of Export-Import Bank of the United States said Monday in Atlanta.

EXIM Bank, as it is colloquially known, was sanctioned again by Congress in 2019 after being paralyzed by debates over the nature and scope of its work for the past few years.

Despite the fact that 90 percent of its deals were with small companies, around 2014 lawmakers pounced on the bank’s unilateral support for the planemaker Boeing as “corporate welfare” and refused to ratify new appointments to the EXIM board after 2015. Without a quorum, the agency could only approve deals of $10 million or less.

Supporters of the bank, including many Georgia Companies that have used products like export credit insurance and working capital loan guarantees say it underpins US jobs by helping businesses of all sizes reduce the risk of selling to the 95 percent of consumers worldwide who live outside the US living limits.

With annual capacity of $135 billion and a mandate that lasts at least until 2026, EXIM now envisions American companies recovering from the pandemic — and a world that is putting new competitive pressures on U.S. companies, he said Reta Jo Lewiswhich was tapped by the President Joe Biden to lead the 88-year-old organization. Ms. Lewis, a trained attorney who grew up as the daughter of small business owners, was confirmed by the Senate in February as the first black woman to head the finance agency.

As supply chains shift by the day, the Statesboro native and Emory Law Graduate said the US hasn’t just ceded ground to potential adversaries like that Chinabut also to friendly countries that maintained healthy export credit agencies during EXIM’s self-imposed hiatus.

“America must emerge. We were absent and we can no longer be absent if we are to survive in this global competition,” she said, alluding to the title of her talk at an Atlanta Council on International Relations Lunch: “Keeping America Competitive in an Intense Global Environment.”

“It’s very intense. It’s also exceptionally competitive. And I’m not just talking about those with whom we compete. I am also speaking of those with whom we are indeed allies and friends,” Ms. Lewis said.

Nonetheless, she positioned the bank to redefine its partnership approach as a core element of its new face in the world.

In one example, EXIM is renewing co-financing arrangements with ECAs of friendly nations to pool risks for mutually beneficial projects and bringing in a new buyer sensitivity Africa, Latin America, Southeast Asia and beyond.

While EXIM always focuses first on its congressional mandate to create American jobs, recent trips have been to launch a $500 million memorandum of understanding Ivory Coast and sign letters supporting a $3 billion nuclear power plant in Romania Ms. Lewis showed the importance of communicating that “we will not be a loner nation”.

“I say to all leaders — it doesn’t matter what country I’m speaking to — this isn’t just about jobs in the United States. It’s also about jobs in their country,” she said. “Nobody wants you to come and talk about ‘Our way or the highway.’ That day is dead. Everyone wants it to be a chance together. It’s about mutual respect. It’s about the values ​​we share, but we want them to be partners and work together.”

New flexibility: balance China and strengthen export-oriented manufacturing

A key priority for the bank is counterbalancing China, a thought built into EXIM’s reauthorization in 2019, even before COVID-19 sparked a scramble to reassess strategic sourcing priorities around the world.

China is the export credit juggernaut and eclipses all others when it comes to supporting its companies in global markets. In 2020, the cumulative amount supported by China’s three export credit agencies fell from US$33 billion to US$18 billion, the total was still 50 percent higher than the next largest competitor (France at $12 billion) and 10 times that of EXIM in the US ($1.8 billion).

Couple this with the fact that China can offer more lax conditions than the (mostly western) countries inside Organization for Economic Cooperation and Developmentand what is emerging is a recipe for losing business in places where heady ideals like transparency in governance are eclipsed by cheaper financing.

But EXIM has gained new flexibility in its latest iteration, Ms Lewis said, codifying that 20 percent of its capacity should go to the China and Transformational Exports Program, or CTEP, which specifically targets projects that can “neutralize” unfair Chinese subsidies.

Under CTEP, American companies in 10 strategic sectors can apply for special project-based funding to fend off Chinese-backed challengers. That program includes semiconductors, biotechnology, artificial intelligence, quantum computing, renewable energy and other sectors that have attracted particular attention Washington came to the uncomfortable consensus that the US is over-reliant on one of its main competitors.

EXIM is now also breaking new ground by supporting domestic institutions through the Do more in America Initiative. While EXIM traditionally finances overseas purchases of US products, in this case its direct loans, warranties and insurance products go directly to US manufacturers who are expanding to meet export demand.

This does not suggest a relaxation of EXIM’s strict insurance standards, which require due diligence to achieve a “reasonable payback guarantee” and assurances on environmental and labor practices, Ms Lewis said.

“America has some of the best standards in the world and that’s how we want to be judged. We don’t lower our standards for anyone. It’s just not going to happen.”

Focus on Africa and small businesses

In countries like Africa, however, some have complained that EXIM’s zeal to protect American taxpayer dollars has dulled risk-taking, hurting its transaction flow. (EXIM must maintain a default rate of less than 2 percent, a constraint many agencies don’t face.)

“This is the time when EXIM needs to be the bank for everyone.”

In EXIM’s absence, Chinese agencies in particular have chimed in with low-priced products and resource-backed loans, which US lawmakers have dubbed “debt-trap diplomacy,” though studies of Chinese involvement in Africa suggest the picture is a bit more nuanced than many might be admit .

In any case, Ms. Lewis said her conversations as she travels around the world reveal the remorse of more and more borrowers in partner countries.

“Many of these countries, not just in Africa, are moving away from those who they believe didn’t make deals the way they should have or the way America would have done,” she said, referring to China . “A lot of the products? It does not work. parts? Not there. jobs? Absolutely not. I mean I can always go on. rule of law? Not transparent. We are all of the above in the United States.”

Ms. Lewis spoke at length about the opportunities in Africa, with a rich resource base and a billion (mostly young) buyers in a vast continent where most of the 54 countries have rapidly growing populations coupled with urgent infrastructure needs.

“We all know Africa is the final frontier – that’s where the critical minerals are, that’s where the consumer market is, and if we don’t play we’re just going to be shut out,” the chairman said.

Strengthened by the inclusion of the continent in the re-approval, EXIM now has a team of 11 focused on Africa within the bank and Ms Lewis followed her journey to the recent COP27 conference in Egypt with meetings across the continent with finance and infrastructure ministers and elected officials.

EXIM has supported $176 million for environmental projects this fiscal year, up from just $11 million in 2020, and its charter now calls for 5 percent of the volume to go to clean energy, storage, or battery projects.

EXIM’s plans to return to full strength are being carried out with grassroots support from businesses and economic development agencies in places such as B. be dependent Georgiawhich she cited as exemplary for growing world trade.

“We cannot be the EXIM of yore; We need to be the EXIM of the new, and being the EXIM of the new means more partnerships, more collaboration,” she said, adding that 30 percent of EXIM capacity should now be dedicated to small businesses.

“This is the era where EXIM needs to be the bank for everyone,” Ms. Lewis said in a post-event interview on Global Atlanta, spelling out the bank’s actions as part of Biden’s effort to enact “a foreign policy for the middle class.” .

EXIM’s partnership approach leads to deeper connections with sister agencies in Washington and embassies abroad, as well as further discussions with city, county and state governments, said Ms. Lewis, who led an intergovernmental initiative at the Ministry of Foreign Affairs under the Obama Administration before joining the United States German Marshall Fund, where she served as Director of Congressional Affairs immediately prior to joining the Bank.

EXIM is also reaching out to its larger customers to find bankable small businesses upstream in their supply chains. Only by tapping into more small businesses among the estimated 300,000 exporters across the country can EXIM achieve the “diversification” its new mandate calls for, Ms Lewis said.

war ravaged Ukraineshe added, will be a key target for projects that help rebuild using American products and know-how, building on an EXIM legacy that includes post-WWII reconstruction Europe.

“It will be specific, project by project. They have some urgent needs and the team is taking care internally to coordinate closely with the administration to try to help Ukrainian citizens in any way they can.”