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Wednesday, February 16, 2011

Export-Import Bank: Background and Legislative Issues

Shayerah Ilias
Analyst in International Trade and Finance

The Export-Import Bank of the United States (Ex-Im Bank), an independent federal government agency, is the official export credit agency (ECA) of the United States. It helps finance American exports of manufactured goods and services, with the objective of contributing to the employment of U.S. workers, primarily in circumstances when alternative financing is not available. Ex-Im Bank also may assist U.S. exporters to meet foreign, officially sponsored, export credit competition. Ex-Im Bank’s main programs are direct loans, loan guarantees, working capital guarantees, and export credit insurance. Ex-Im Bank transactions are backed by the full faith and credit of the U.S. government. The Bank operates under a renewable charter, the Export-Import Bank Act of 1945, as amended, and has been reauthorized through September 30, 2011 (P.L. 109- 438). The Charter requires that all of the Bank’s financing have a reasonable assurance of repayment and directs the Bank to supplement, and to not compete with, private capital.

The 112
th Congress may introduce legislation to renew Ex-Im Bank’s authority. In considering such legislation, Members of Congress may examine issues related to Ex-Im Bank that center on the economic rationale for the Bank; the impact of the Bank on the federal budget and U.S. taxpayers; the Bank’s support for specific types of business or industries; the current balance between the Bank’s advancement of U.S. commercial interests and other U.S. policy goals; the competitive position of Bank compared to foreign ECAs; and the Bank’s role in federal export promotion efforts.

Ex-Im Bank finances less than 5% of U.S. exports a year. In light of the international financial crisis, demand for Ex-Im Bank services has grown in recent years. In FY2010, the Bank approved more than 3,500 transactions of credit and insurance support, totaling about $24 billion—the highest level of authorizations in the history of the Bank.

Ex-Im Bank has been “self-sustaining” for appropriations purposes since FY2008. It uses offsetting collections to cover its operations. Congress sets an upper limit on the level of the Bank's financial activities as part of the annual appropriations process. For FY2010, the Consolidated Appropriations Act of 2010 (P.L. 111-17) authorized a limit of $58 million on the total amount that Ex-Im Bank can spend on its credit and insurance programs and a limit of $83.88 million for the Bank’s administrative expenses. For FY2011, the President requested a limit of $92.7 million on the total amount the Bank can spend on its credit and insurance programs and a limit of $105.6 million for the Bank’s administrative expenses. Congress has not enacted appropriations for FY2011 government funding measures, but passed a series of continuing resolutions to fund most government programs, including Ex-Im Bank, at the FY2010- enacted level. P.L. 111-322 extends funding at this level to March 4, 2011.

Ex-Im Bank is one of approximately 20 federal government agencies involved in promoting U.S. exports and is a participant in President Obama’s National Export Initiative (NEI), a plan to double exports by 2015 to support two million U.S. jobs.

The Organization for Economic Cooperation and Development (OECD) “Arrangement on Export Credits” sets forth export credit terms and conditions, including restrictions on tied aid, for the activities of Ex-Im Bank and the ECAs of foreign countries that are OECD members. Other OECD agreements set forth sector-specific rules, guidelines on environmental procedures, and other terms and conditions.

Date of Report: February 9, 2011
Number of Pages: 22
Order Number: 98-568
Price: $29.95

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