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Legislation to Re-authorise U.S. Ex-Im Bank Introduced in Senate

A bi-partisan Senate proposal to re-authorise the U.S. Export-Import Bank prior to the expiry of its authorisation on 30 September was introduced on 25 July by Banking Committee members Kevin Cramer (Republican-North Dakota) and Krysten Sinema (Democrat-Arizona). The bill, which has five additional co-sponsors from members in both parties, keeps many provisions of a prior House of Representatives bill while omitting some of its more controversial provisions.

On 21 June, Chairman Maxine Waters (Democrat-California) and Ranking Member Patrick McHenry (Republican-North Carolina) of the House’s Financial Services Committee jointly introduced the United States Export Finance Agency Act of 2019. That bill would rename the Ex-Im Bank as the United States Export Finance Agency and extend its authorisation for seven years, through 30 September 2026. It would increase the Bank’s exposure cap to US$175 billion from the current US$135 billion over those seven years. More creatively, it proposes an alternative to the current board quorum requirements that prevented the Bank from making loans over US$10 million from mid-2015 until May 2019. A lack of a quorum for 90 consecutive days could be remedied by the establishment of a temporary board of directors composed of the U.S. Trade Representative, the Treasury Secretary, the Commerce Secretary and the remaining members of the Ex-Im board of directors. Representatives of those three trade agencies sit on other boards, such as the Millennium Challenge Corporation. This temporary board would be authorised to issue loans of up to US$25 million.

The House bill has numerous other provisions to increase outreach to small and minority businesses as well as firms in U.S. territories, along with certain reporting, transparency and diversity provisions. The legislation expresses an explicit goal of competing with financing offered by mainland China’s finance agencies and, most controversially, it has a section specifically banning financing for sales to mainland Chinese government-owned enterprises. At a House Financial Services Committee hearing on 4 June, Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers, objected to such prohibitions by arguing that they are nowhere to be found in other countries’ export promotion programmes. If adopted, she said, such a restriction would handicap U.S. exporters’ sales to their third largest market. However, Ranking Member McHenry argued that “the American taxpayer and an instrument of the U.S. federal government should not be subsidizing a Chinese state-owned enterprise.” While the Ex-Im Bank is an instrument of the U.S. federal government, its financing is self-sufficient from user fees and its budget does not draw on U.S. tax payments.

The Senate’s Export-Import Bank Reauthorization Act of 2019 would not change the name of the agency, nor would it restrict Ex-Im Bank financing for purchases by SOEs. Like the House bill, it would increase the Bank’s lending cap from US$135 million to US$175 million over seven years even as it re-authorises the Bank for ten years. It would also allow the establishment of a temporary board if a quorum does not exist for 90 days; this board could authorise transactions of US$100 million. It does not include the other diversity and reporting provisions of the House version, however.   

The chairman of the Senate Banking Committee, Republican Mike Crapo of Idaho, said in late June that he hoped to finalise a bill before the August recess but he has not co-sponsored the new bill. The House, for its part, has already left for its August recess. Ex-Im re-authorisation is most likely to pass if a compromise version can be attached to higher priority “must-pass” legislation, which may be tricky to achieve before the end of September.

Content provided by Picture: HKTDC Research
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