VIP Shipper Club story – Time of the Essence

ISSUE 2 / 2018

THE PUBLICATION FOR THE INDUSTRIAL PROJECT SUPPLY CHAIN INDUSTRY

ISSUE 2 / 2018

TIME OF THE ESSENCE

US Exporters Push for New Ex-Im Board

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TRADE NOTES

Time of the Essence US Exporters Push for New Ex-Im Board

T

he National Association of Manufacturers, or NAM, and exporters across the country want the U.S. Senate to move quickly to get the Export-Import Bank of the United States, or Ex-Im, back up to full speed. But to achieve that will take a senate vote and a bank board quorum.

Time, exporters say, is of the essence.

Without a quorum, the bank can’t make deals above US$10 million. Ex-Im last had a quorum in 2015, and it has been unable to operate at full capacity since, frustrating U.S. businesses competing for global projects, and ultimately send50 BREAKBULK MAGAZINE www.breakbulk.com

BY LORI MUSSER

ing U.S. jobs to other countries with better access to financing.

More than US$30 billion in U.S. export contracts are stuck in bank limbo, according to then acting chairman of the Ex-Im Bank, Charles J. Hall, during an interview last fall. He retired from his position in December 2017. The lack of national-level export credit agency financing has essentially forced U.S.-based multinationals to use expatriate supply chains for big export deals, including the global projects that comprise the heavy-lift, breakbulk and project cargo industries.

NAM URGES MOVEMENT

The U.S. manufacturing population represented by NAM are fighting hard to reinstall an Ex-Im Bank board. In a letter dated Jan. 9, 2018 to the senate majority leader and senate whip, NAM pressed for the speedy approval of the current board nominees.

NAM CEO Jay Timmons wrote: “I urge you to act expeditiously to process these four nominees on the floor and ensure a fully functioning Ex-Im Bank before month’s end.” The letter maintained that doing so would benefit “manufacturers of all sizes and types ISSUE 2 / 2018

that rely on the tools that the Ex-Im Bank provides and will advance U.S. competitiveness in the global economy at a critical moment when overseas opportunities are increasing at a renewed pace.”

In December 2017, the Senate Banking Committee approved four nominees to the Ex-Im board: Spencer Bachus, Judith Pryor, Kimberly Reed and Claudia Slacik. These nominations, though not confirmed before the end of the first session of the 115th Congress, received unanimous consent to remain in the Senate for consideration during the second session, which began in early January.

The nomination for a fifth and highly controversial candidate, former New Jersey Republican lawmaker Scott Garrett, was sent back to the White House. While serving in Congress, Garrett opposed the Ex-Im Bank, branding it as a form of “crony capitalism.” The administration would have to re-nominate Garrett for him to go through to the confirmation process. It has not done so.

NAM is urging the administration to find a different Jay Timmons nominee.

The assoNAM ciation contends that a fully functioning Ex-Im Bank supports tens of billions of dollars in exports and millions of U.S. jobs by enabling businesses throughout America to compete more successfully in the global economy. This includes larger manufacturers that will lose projects to foreign competitors, and also the smaller companies that comprise project supply chains. A level playing field helps U.S. businesses secure new customers, “particularly in emerging markets, through a transparent and open process through which all exporters that meet the eligibility requirements can seek Ex-Im Bank services,” said the NAM letter.

Ex-Im board nominee Kimberly Reed testifying during a Senate Banking, Housing and Urban Affairs Committee hearing last November.

CREDIT: TOM WILLIAMS/ CQ ROLL CALL/NEWSCOM

“While the United States sits on the sidelines, China has provided more trade-related investment support than the rest of the world combined. Together, the BRICS countries (Brazil, Russia, India, China and South Africa) provided a combined total of more than US$51 billion in medium- and long-term export credit in 2016 – nearly half of the total official export credit provided worldwide,” Timmons said.

NUMBERS ON TABLE

The US Exporter’s Competitive Maritime Counsel, or ECMC, has also voiced its concerns.

In a letter dated Jan. 10, 2018, to the U.S. Department of Commerce Office of Supply Chain, ECMC President Jake Swanson, said: “The urgency of achieving a fully functioning Ex-Im Bank, with pro-export leadership, has never been greater. The U.S. exporters would like to see an Ex-Im Bank that is strong, competitive and working on behalf of all U.S. exporters, regardless of size.”

The ECMC’s position was backed by powerful numbers. Its members represent US$100 billion annually in project cargo value. The letter said information from a recent survey of five engineering, procurement and

construction, or EPC, contractors indicated that they lost the opportunity to include US$67.6 billion in U.S. goods and services in their competitive bid tenders in the past 12 months.

It said: “The bids covered a wide range of capital projects including refineries, petrochemical facilities, transportation projects, oil and gas, and renewable projects. Further, as a condition precedent to submitting a valid bid proposal, the project sponsors required the EPC bidders to include a total of US$51,694,015,450 of supply chain goods and services that met export credit agency (ECA) eligibility.

Since U.S. Ex-Im Bank was not a viable ECA during the past 12 months, no U.S. companies were included in the bids, and the supply chain was moved outside the U.S. to countries with active ECAs.” The same supply chain companies will also likely lose out on decades of follow-up operations and maintenance activities. Permanent inroads are being made by other economies’ supply chains while the U.S. supply chain twiddles its thumbs awaiting an Ex-Im Bank quorum. BB Based in the U.S., Lori Musser is a veteran shipping industry writer.

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