Another nine months of limbo for the federal Export-Import Bank spells big trouble for Washington exporters, large and small. A decision by Republican House leaders last week not to debate the bank’s reauthorization and kick the matter down the road is every bit as much a failure as the squabbling last year that shut down the federal government. Alas, an argument that doesn’t happen never gets as much attention as an argument that does. So Washington state needs to be attentive and place the blame where it is due, for missed business opportunities, sales that go to companies in other countries, and the first step toward a unilateral disarmament that will wreak havoc on Washington’s largest business, Boeing. House GOP leaders last week decided not to permit a vote on bills that would have extended the nation’s export-credit agency for a longish term of five or seven years. Instead they slipped a more modest proviso into the usual “continuing resolution” that allows the federal government to continue functioning, keeping the bank alive until next June 30. Certainly it was better than allowing the 80-year-old institution to expire on Sept. 30, which is what would have happened otherwise. But it is an unwarranted genulflection by Republican leaders toward a faction within the party’s ranks that sees the bank as an affront to free-market principles. Free markets are good things, of course, but in a battle between ideology and reality, the latter should always count for more. The Times has pointed out in numerous editorials that if the U.S. can’t put up a fight, other countries will eat its lunch. Nearly 60 other countries have export credit agencies just like the Export-Import Bank, offering credit-services-of-last-resort to foreign purchasers of their country’s products – loans, loan guarantees and credit insurance. If the U.S. can’t offer those services, the business will go elsewhere. Boeing hasn’t said much during this summer’s wrangling – the bank’s critics have singled it out as a primary target because Boeing’s customers are the biggest recipients of Ex-Im services. The public battle instead has been waged by businesss associations across the country and by smaller manufacturers that have used Ex-Im’s services to sell overseas. Speaking with the Times last week, Boeing spokesman Tim Neale laid out a compelling argument for the bank – and for a quick decision, without delay. Some four-fifths of Boeing’s international aircraft sales are made to airlines in countries where commercial financing is available. But in the remaining sales, mostly to developing countries where commercial lenders shy away, Ex-Im loan guarantees are an essential sales tool. Last year the bank backed about $7.9 billion in financing for Boeing customers. The delay poses an enormous problem for Boeing, because from the time an order is placed for an airliner to the time of delivery, four or five years may elapse. The financing generally is set up late in the process, perhaps eight months before delivery. But how can a purchaser feel confident enough to place an order without knowing financing will be available? “Believe me, we know this is a problem,” Neale says. “A lot of our customers are telling us they are very concerned Ex-Im will not be reauthorized.” An airline that doesn’t buy from Boeing has other options – namely Airbus, the European consortium that competes with Boeing head-to-head. Purchasers can tap similar institutions run by the governments of Germany, France and Britain. “If the U.S. Export-Import Bank isn’t there and they need a loan guarantee, they are going to buy from Airbus,” Neale says. Even if Congress ultimately approves a long-term reauthorization next year, Ex-Im officials warn American manufacturers will lose business merely because of the uncertainty. In Congress, a little over 240 Democrats and Republicans have signaled their support for the bank – more than enough to pass any bill that comes to the floor. That fact leads to an unsettling conclusion. To avoid a debate that might have offered a few hours of unpleasantness in the House, GOP leaders were willing to jeopardize the competitiveness of American businesses worldwide. They should reverse that decision quickly.
September 22, 2014 at 6:08 AM