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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Exports Must Be Our Stock In Trade

Martin A. Kamarck Journal Of Commerce

When the Commerce Department announced in March that the American work force had grown by 700,000 in February, it brought to 8.4 million the number of jobs created in the past three years - surpassing President Clinton’s 1992 campaign pledge of creating 8 million jobs in his first term.

We cannot attribute February’s unexpected surge in employment - the largest one-month gain since 1983 - to any particular industry sector.

But we do know that exports play a significant role in creating and sustaining job growth; there are 7 million American men and women directly employed in making products or producing services for export to our allies and trading partners around the world. Millions more U.S. jobs are indirectly related to export trade through the supplier chain linking larger companies with smaller manufacturing firms.

Yet we trade on a highly sophisticated and complex global playing field, and there are many ways for those who do not care to play the rules of the game to gain advantages that shut U.S. exporters out of potential sales. For example, Japan’s export credit agency finances more than 35 percent of the country’s total exports, and France’s rate of government support is more than 17 percent, while the U.S. registers next to last among seven major industrial nations - less than 4 percent.

The European and Japanese governments place a high premium on capturing export markets, and here’s the reason why.

Growth in the big emerging nations of Asia, Central Europe and Latin America is double that of growth in the industrialized world, a trend that is likely to continue. Over the next 20 years, fully three-fourths of the increase in the world’s output is likely to come from today’s emerging markets, home to nearly half the world’s population. These markets will account for more than 40 percent of global import growth in the next two decades.

U.S. national interest must be central to the public policy debate under way over government’s role in helping our exporting business, because our success in competing for market share in these big emerging economies could well determine our continued status as an economic superpower in the 21st century.

The debate includes calls to shut down or severely cut back on funding for the Export-Import Bank of the United States, the U.S. government agency charged with financing exports in new markets where private financing is generally not available.

My entire career was spent in the private sector until joining government two years ago, and I would be the first to call for shutting down the Ex-Im Bank if we lived in a perfect market-driven world. Unfortunately, we do not.

In their zeal to reduce the federal deficit, the bank’s critics have tagged Ex-Im Bank programs as “corporate welfare,” alleging that the bank finances transactions for large corporations, which could otherwise find the money in their own coffers.

But Ex-Im Bank does not pick “winners” and “losers.” It does not target deals to benefit specific companies or sectors. The bank responds to requests as they are presented by exporters. It is deal-driven. As smaller businesses have gotten more involved in the export market, Ex-Im Bank was there also; small businesses accounted for more than 18 percent of the bank’s total dollar volume last year (more than $2 billion in exports financed), up from 17 percent the previous year (and $1.7 billion in exports financed). Last year, almost 80 percent of the bank’s authorized transactions were for small businesses.

Ex-Im Bank leverages its $786 million budget with the taxpayer directly in mind; in 1994, the bank generated $15 billion in U.S. exports resulting in 270,000 jobs. Every dollar of its budget expended in 1995 resulted in $17 of U.S. export sales.

The Paiton power project on the northeastern tip of Java is a prime example of Ex-Im Bank’s worth. Paiton, the first private-sector power project in Indonesia, will mean $540 million in sales of U.S. equipment and services and the creation of more than 7,000 American jobs.

As mandated by Congress, the Ex-Im Bank has moved to meet foreign competition head-on by financing U.S. exports into high-risk emerging markets. Under this mandate, the bank has moved aggressively to counteract other governments’ “subsidies” of their companies with below-market financing. In doing so, it has demonstrated to American workers and business that they have a stable and reliable partner in their efforts to successfully compete in the global marketplace.

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