June 9 - The ongoing drama surrounding the future of the US Export-Import (Ex-Im) Bank - the government's official export credit agency (ECA) - has taken several dramatic twists recently. While its future has been secured, the bank remains hamstrung by a

Reporting by Doug Webster and published in the May/June 2017 edition of HLPFI. To receive your copy, subscribe today. 

President Donald Trump's political shift to support the bank appears to be positive for the organisation, US trade, and the project cargo and heavy lift community. However, several critical details await attention. They will determine how quickly the bank can return to full operations and whether some pending projects will fall by the wayside or shift production planning to countries offering.

Founded in 1934, Ex-Im provides loans and loan guarantees to stimulate exports of US goods and services. Depending on how they are defined, over 60 countries have their own ECAs to stimulate their exports worldwide.

In June 2015, Congressional reauthorisation for Ex-Im was blocked by a small group of critics who argued that ECAs cost the government billions and were a form of corporate welfare. As a result, the bank could no longer engage in new business. Supporters countered that the bank's programmes actually generate profits for the government.

They also pointed to the vast network of small to medium-sized US companies who supply those corporations with goods and services and rely on exports to help support hundreds of thousands of jobs.

Despite the critics, Congressional support for Ex-Im was strong. Manufacturers, large and small, and members of the transport community, educated representatives on the bank's positive impact on exports and job creation, winning the bank's reauthorisation until 2019.

Critics, however, used a provision in the Ex-Im Bank Charter to again undercut its operations. The charter requires a majority vote of the Ex-Im Bank's board to authorise projects valued at over USD10 million. Existing board vacancies meant it lacked the necessary quorum of three members to convene board meetings. With most bank project values exceeding USD10 million, a backlog of proposals needing approval began to accumulate which today, backers say, exceeds USD30 billion.

As the Trump administration took office, prospects did not look good. Trump had opposed the bank during his campaign and opposition remained strong among hardline Republican Party conservatives. But, as in the past, intense efforts from Ex-Im supporters appear to have turned the tide.

William Schubert, president of International Trade & Transportation, a Houston- based transportation and logistics consultant and an expert in Ex-Im financing, noted: "When the President announced he now supports the bank, he cited its ability to generate funds for the Treasury and its role as a jobs booster. It was clear he got our message."

However, Senate action is still needed to fill board vacancies and break the logjam. On April 14, 2017, Trump announced plans to nominate former New Jersey congressman Scott Garrett as chair, and former Alabama Republican congressman Spencer Bachus III as a director.

The Garrett choice has raised both eyebrows and questions. He was among the most conservative members of the House and a strong opponent of the bank - voting against reauthorisation in 2015. Just what role he will play in the future shape and functioning of the bank under Trump remains to be seen.


Bank supporters are anxiously waiting to see how long it will take to fill those critical vacancies. Marco Poisler, executive vice president for UTC Overseas, a specialist in global project cargo logistics, says his firm has a growing backlog of service work for clients awaiting Ex-Im approvals.

"The cumulative value of these projects is in the billions, much of it energy sector work in the Middle East and Africa. Some have been awaiting Ex-Im approval for well over two years and are literally hanging on. Without US ECA support they may be forced to shift component sourcing to other countries willing and eager to win their business and jobs with generous EC terms."

Steve Wilburn, chief executive of Firm Green, based in Newport Beach, California, underscores Poisler's concerns. His company designs and constructs complex green energy systems and has relied on Ex-Im for financing guarantees to sell its projects to customers worldwide. "A system we built for a South American customer now extracts methane from a decommissioned landfill site to fuel a nearby industrial facility. That project alone involved five different US manufacturers and hundreds of jobs, but we would not have made the sale without Ex-Im support.

"Today, we are literally within days of having to make a tough decision regarding three utility-scale solar power projects we have designed for the Philippines. We have held off on seeking Ex-Im credits for these projects because of the bottleneck, although we could have done so as far back as early 2016. Unless things change, we will have to decide whether to seek ECs from the Chinese Export Bank. That will mean the manufacturing and the jobs will be sourced to China. We can only hope that the vacancies on the Ex-Im board will be filled in a timely fashion so we can still seek US backing."

Schubert said China is an aggressive global competitor. "They are offering very favourable interest rates, concessionary repayment terms and periods of forgiveness - especially in support of large infrastructure projects in Asia, Africa and Latin America."

Trump must forward the Garrett/Bachus nominations to the Senate for confirmation, and also needs to nominate a vice chair. Democrats must submit names to fill the other two slots. At the time of writing, the office of Senate minority leader Charles Schumer, who would submit those names, had not yet responded to questions on when that will happen.

Recently Ex-Im supporters were blocked when they attempted to add language to the stopgap federal budget bill allowing a smaller number of board members to constitute a quorum. With Congress snarled in major negotiations over a budget, taxes and healthcare, just how soon they will take up the future of the bank remains uncertain.