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EXPORT-IMPORT BANK in the NEW GLOBAL ENVIRONMENT

• Although Ex-Im Bank is a small agency, it is a key player on the Bush Administration's trade policy, foreign policy, and economic stimulus policy teams. 
   
• Ex-Im Bank has been in the business of supporting U.S. jobs by backing U.S. exports to challenging markets since the 1930s. 
   
• But the world of 2002 is a very different world from the one confronted in the 1930s. The biggest change is this: Trade and cross-border investment flows have grown so rapidly in the last few decades that there is hardly a business, much less a country or even a community that is not touched by globalization. 
   
• One hallmark of globalization is a heightened degree of economic interconnectedness. A financial crisis in an emerging market could just as surely affect the United States as a slowdown in the U.S. will impact growth prospects in Latin America, Asia, or other regions of the world.
   
• Today, Ex-Im Bank stands at the confluence of powerful forces that are changing the business environment throughout the world. Not only has global commerce been rapidly growing in recent years, but American exporters face increased competition for overseas markets. At the same time, emerging markets, where Ex-Im Bank primarily finances transactions, appear to be riskier. 
   
• From the onset of the currency devaluations in Thailand to the crises in Russia in 1997 and 1998 and most recently Argentina, emerging markets have been battered by swiftly moving capital flows. Today, most private-sector lenders are reluctant to provide long-term financing to emerging markets, and most investment flows are seeking short-term gains. At the same time, private-sector lenders are frequently reluctant to support small business exports. In fiscal year 2001, 90 percent of Ex-Im Bank's transactions were in direct support of small business.
    
• Many investors and businesses are likely to continue to shy away from emerging markets because of the perceived risks. But, where others may see danger and insurmountable risks, Ex-Im Bank sees opportunity. Emerging markets are home to nearly 90 percent of the world's people, and are where much of the economic growth in the coming years is likely to be.
   
• Ex-Im Bank's charter directs that they provide financing to support U.S. exports in those markets where the private sector is unwilling or unable to go. Ex-Im Bank offers loans and loan guarantees to foreign buyers and export credit insurance and working capital loans for U.S. exporters. They do not compete with private lenders. They find opportunities, take risks and try to draw the private sector in, although our mandate also specifies that they must have a reasonable assurance of repayment. They also step up in times of crisis -- as they did during the 1997-98 global financial crisis, and as they did this past fall in supporting the airline industry in the wake of the September 11 attacks. In so doing, they not only foster stability but economic growth in emerging markets as well as in the United States.
   
• Export credit agencies (ECAs) such as Ex-Im Bank play a critical role in filling the financing gaps to emerging markets. ECAs provided approximately one-fifth of the total long-term credits -- of more than one year -- that went to emerging markets in 2000, with most of the funds going to the private sector. In 2000, the ECAs of OECD member nations provided a total of $58 billion in long-term export credits.
   
• Reducing the likelihood of crises brought on by sharp declines in investment flows and keeping trade flowing and growing are central to Ex-Im Bank's mission. They are also key components of the Bush Administration's efforts to re-ignite global economic growth. As the President said last year: "Our goal is to ignite a new era of global economic growth through a world trading system that is dramatically more open and more free."
   
• Last year, Ex-Im Bank authorized $9.2 billion in loans, guarantees, and export credit insurance, supporting $12.5 billion of U.S. exports. They are pleased that the President's budget will allow us to support up to 10 percent more in exports next year. 
   
• In today's global business environment, the smart business and the successful business is one that can successfully tap into markets foreign and domestic. The world is not going to become any less interconnected, so it pays to understand these connections and profit from them. At Ex-Im Bank, they understand that, and they are here to help American businesses reap the benefits of globalization and to support the jobs that depend on exports to different markets around the world. 
   

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