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4/29/15

Ex-Im’s fight against foreign competition is as fake as pro wrestling

It was an awkward moment at Omni Shoreham hotel ballroom in Cleveland Park. U.S. Export-Import Bank President Fred Hochberg flashed up on the screen the logos and names of dozens of his foreign counterparts — the export credit agencies of countries such as Germany, France and Japan.

“More and more, U.S. companies aren’t just competing against their counterparts in China, Japan and elsewhere,” Hochberg said. “Our foreign competitors, particularly those in Asia, are zealous advocates for their national champions — they are forceful and unrelenting in the global marketplace.”

“I was a bit surprised to see Mr. Hochberg say that,” said Katsuyoshi Goto, a representative of NEXI, one of Japan’s export-subsidy agencies. “NEXI is more a collaborator with U.S. Ex-Im rather than competitor… The U.S. Ex-Im is more the partner of NEXI.”

Plenty of other foreign collaborators from Africa, Asia, Europe, and the Americas were in the ballroom for Hochberg’s talk, kicking off the Export-Import Bank annual conference — as they were last year, when Hochberg flashed a slide depicting a sailboat race, with national flags as sails. This us-vs-them, America Inc., talk is typical of the Obama administration, and absolutely central to the defense of Ex-Im.

“Where we used to have an arms race,” Sen. Heidi Heitkamp, D-N.D., said at the Ex-Im conference, “we now we have an export race.”

But this fight is as fake as a professional wrestling match. Goto, from Japan’s counterpart to Ex-Im, sat down with me for a cup of coffee after the conference. His job is to boost Japanese exports. According to Hochberg’s tale, he should hate U.S. Ex-Im. So I asked him if he wanted Ex-Im to go away. “No,” Goto said, shaking his head.

“You could say we compete with each other,” Jongsoo Han of Korea EximBank said to me Monday afternoon, “but also we are in cooperation with each other.”

Roberts Orya, CEO of Nigeria’s Ex-Im, likewise wrote an op-ed last year calling on the U.S. Congress to reauthorize and strengthen Ex-Im. He described Ex-Im not as a competitor, but an inspiration. “The institution has inspired establishment of similar export credit agencies around the world.”

Consider that for a moment: While Hochberg and the bank’s Republican defenders say we need it because other countries have their own Ex-Ims, those countries’ Ex-Ims say they exist because the U.S. Ex-Im exists.

China is the bogeyman trotted out most often by Ex-Im defenders. But Ex-Im has a weird idea of how to treat its mortal rivals. Last April, a couple of weeks before Hochberg portrayed U.S. Ex-Im and China Ex-Im as regatta competitors, Hochberg’s agency approved an $18.4 billion U.S.-taxpayer-backed loan guarantee to the Export-Import Bank of China.

This is a pattern. In 2013, the U.S. Ex-Im gave China’s Ex-Im two loan guarantees, worth a combined $55.6 million. Looks like the U.S. taxpayer is the wind in China Ex-Im’s sails.

France’s export credit agency is called Coface. Coface’s American arm is not backed by France’s government, but it is subsidized by the U.S. government. “Ex-Im Bank Will Reinsure Coface North America’s Issue of Export-Credit Insurance,” an Ex-Im headline declared in 2012. U.S. Ex-Im extends subsidies to other foreign export credit agencies, including the African Export-Import Bank.

The foreign companies at the Ex-Im conference must also find the jingoistic talk a bit awkward. For instance, Ex-Im named as its “Deal of the Year” a direct loan to a Spanish company building in Peru using turbines made by a German company, Siemens, in the United States. Only a few minutes after Hochberg’s jingoistic opening remarks, Joe Kaeser, CEO of Siemens, in his German accent, exclaimed that it was insane for Congress to consider scrapping Ex-Im.

U.S. Ex-Im subsidizes the largest foreign companies in the world in one way or another. Sinopec, a Chinese state-owned oil company, is the largest company, measured by revenue, outside the U.S., and U.S. taxpayers subsidize it through Ex-Im. Sinopec was the subsidized exporter in a 2002 deal, exporting project management, engineering and construction services to China National Offshore Oil Corporation (CNOOC), another Chinese state-owned oil company. Ex-Im provided a $200 million guarantee to the Chinese bank financing the deal.

So the Chinese government was selling services to the Chinese government, and U.S. taxpayers were backing the Chinese loan financing it all. CNOOC’s partner in this project was Royal Dutch Shell, the largest European company, as measured by revenue.

In 2012, Ex-Im’s second-largest deal of all time subsidized a facility in Australia being built to supply Sinopec with natural gas.

In order to garner some patriotic support, Ex-Im supporters will keep pretending they do battle with foreign companies and foreign governments. In truth, they’re all on the same page in supporting U.S. Ex-Im and opposing the free-market voices in Washington that call for its abolition. “These Tea Party Republicans,” Goto, the Japanese export-subsidy official said as we enjoyed coffee at the Omni Shoreham last week, “they go too far.”



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