EX-Im Bank in the 21st Century: A New Approach?by Gary Clyde Hufbauer
President Franklin Roosevelt created the Export-Import Bank of the United States (Ex-Im Bank) in 1934 to promote US trade in the midst of the Great Depression. At the outset, the Ex-Im Bank was instructed to supplement, not compete with, private sources of export finance. Historically, the Ex-Im Bank filled gaps when the private sector was reluctant to finance exports to politically uncertain areas such as Latin America in the 1940s, Europe in the 1950s, and emerging markets more recently. Critics now ask whether in the current era of vast private capital markets significant financing gaps still exist that require government action. Put bluntly, should the Ex-Im Bank still be playing a role in financing US exports to emerging markets?
Since the 1970s, the Ex-Im Bank has faced a new challenge: helping US exporters meet the financial competition from foreign export credit agencies (ECAs) such as COFACE in France and the Export-Import Bank of Japan. The Ex-Im Bank has tried to cope with foreign ECAs in two different ways. One way is to negotiate common rules for export financing, under OECD auspices. The other is to match credit terms offered by foreign ECAs. A central question for the Ex-Im Bank in the 21st century is whether this dual strategy still provides a viable answer to an array of new forms of competition spawned by foreign ECAs.
The Institute for International Economics sponsored a conference in May 2000, both to honor the Bank's 65th anniversary and to look ahead at challenges facing the Ex-Im Bank. This volumeedited by former director of the Bank, Rita Rodriguez, and Institute Senior Fellow Gary Clyde Hufbauerpresents the papers from the conference. The papers both describe the Bank's current environment and identify new problems and opportunities in a global economy characterized by highly sophisticated private finance and intense competition for export markets. This volume provides an analytical basis for evaluating the Ex-Im Bank's future and suggests options that should be considered President George W. Bush and Congress.
About the Editors: Gary Clyde Hufbauer, Reginald Jones Senior Fellow, was formerly a Marcus Wallenberg Professor of International Finance Diplomacy at Georgetown University (1985-92); deputy director of the International Law Institute at Georgetown University (1979-81); deputy assistant secretary for international trade and investment policy of the US Treasury (1977-79); and director of the International Tax Staff at the Treasury (1974-76). He has written extensively on international trade, investment, and tax issues. He is coauthor of NAFTA and the Environment: Seven Years Later (2000), Unfinished Business: Telecommunications after the Uruguay Round (1997), Fundamental Tax Reform and Border Tax Adjustments (1996), Western Hemisphere Economic Integration (1994), Measuring the Costs of Protection in the United States (1994), NAFTA: An Assessment (rev. 1993), US Taxation of International Income (1992), North American Free Trade (1992), Economic Sanctions Reconsidered (2nd edition 1990).
Rita M. Rodriguez is former director of the Ex-Im Bank (1982-99) and sat on its board of directors from 1982-99. She was professor of finance at the University of Illinois at Chicago from 1978 to 1982. From 1969 to 1978 she was assistant and associate professor of business administration at Harvard Business School. In addition to her academic career, Rodriguez also served as a consultant in international finance to US multinational companies and to US and foreign government agencies. Rodriguez is the author and coauthor of several books and articles on international finance. She also edited an economic analysis of the Ex-Im Bank that was published at the Bank’s 50th anniversary.
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