Bipartisan issues seem scarce in our current political climate, so when I attended Sen. Kevin Cramer’s town hall about the Export-Import (EXIM) Bank of the United States, I expected a conservative, partisan discussion.
I was pleasantly surprised. It turns out the U.S. EXIM bank has bipartisan support (and opposition) and has helped North Dakota businesses looking to increase sales through exporting. Attending this event helped me understand why.
First, the EXIM bank provides and facilitates banking services related to international trade. This usually means backing services provided by private banks and insurance brokers, including export credit insurance, because, as panelist and North Dakota Business owner Tom Shorma said, “the only thing worse than not making a sale, is making a sale and then not receiving payment.” Hence, the services provided by the EXIM bank give North Dakota’s small businesses the confidence to expand to international markets without losing money.
Second, when the EXIM bank was reauthorized just over a year ago, supporters hoped it would help the U.S. compete with China. China’s medium and long-term export credit activity rivaled that of all G7 nations combined from 2015 to 2019, and the country’s Belt and Road initiative has expanded China’s global influence in recent years. The EXIM bank hopes to challenge China by offering services (loans, insurance, etc.) that are competitive with China’s.
By now, the Republican opposition to the EXIM bank is probably obvious. The bank is an example of big government interfering in the market and hurting competition. This sentiment among Republicans caused the EXIM Bank to shut down when Congress failed to reauthorize it in 2015.
However, Senator Cramer (R-ND) led the movement to successfully reauthorize the bank at the end of 2019. He argued that the EXIM bank is necessary for U.S. businesses to successfully compete in global markets. In 2019, there were 115 known official export credit providers (like our EXIM bank) worldwide, and this does not include additional assistance some countries, like China, provide their businesses. The EXIM bank may not be ideal from a free-market perspective, but it helps our small businesses compete in a heavily subsidized global market.
Bank Chairman Kimberly Reed was also quick to point out that the bank’s purpose is not to replace private lenders or take their business, but to work with them to expand their services and confidence.
Republicans and some Democrats also argue that the EXIM bank is an example of crony capitalism; success in exporting is dependent on a good relationship with the government which can benefit large businesses and create barriers to entry. Therefore, Chairman Reed often hears about the benefits to Boeing and GE when opponents argue against the bank.
However, even if you don’t accept Cramer and Reed’s argument that small businesses have more to gain by using the EXIM bank and more to lose without it, the fact that Boing and GE benefit from the bank doesn’t just impact the large companies; it benefits the small businesses that make up their supply chain (including Kildeer Mountain Manufacturing in North Dakota). When a large company faces financial hardship, the supply chain can be seriously impacted; the security offered by the EXIM bank’s services benefits jobs at many small manufacturers across the country, not just at Boeing.
The Export-Import Bank may seem like an odd source of bipartisanship at first, but with results like increased trade and support for small businesses, it’s easy to see why.
Meet the Author
Kate Best is a Mancur Olson Research Fellow at the NDSU Center for the Study of Public Choice and Private Enterprise and an export assistant with the U.S. Department of Commerce. She is an undergraduate studying economics, mathematics and statistics at North Dakota State University.