Arkansas has gone global. Last year, companies here sold over $3 billion in goods abroad.
This local exporting renaissance, though, may be short-lived. Authorization of a vital federal agency, the Export-Import Bank, is set to expire in a matter of weeks.
Congress must act fast and approve legislation to reauthorize this bank. Otherwise, Arkansas exports could collapse.
Established in 1934 by President Franklin Roosevelt, the Ex-Im Bank facilitates the purchase of American products abroad. It has four basic functions: providing pre-export financing to private banks that provide loans to U.S. exporters; issuing credit insurance to U.S. exporters offering loans to foreign buyers; guaranteeing loans to foreign buyers; and directly loaning to foreign buyers of U.S. products.
Over the past eight decades, the Ex-Im Bank has helped American companies greatly increase foreign sales, supporting exports valued at more than $567 billion.
The bank has also been a major job creator. In the last six years alone, it has supported 1.3 million jobs across the country. And about 90 percent of the bank's transactions, representing $10.7 billion worth of U.S. exports, involve small businesses.
In rural states like Arkansas, where access to credit and foreign markets may be limited, the bank's services are critical.
Over the past several years, the bank has provided $713 million in financing to 44 different local companies, supporting 4,500 jobs. Each of Arkansas' four congressional districts has received support from the bank. In the second district alone, between 2007 and 2014, the bank supported more than $3.2 million in exports, benefiting eight companies and creating nearly two dozen jobs.
But the bank's future is now uncertain. In anticipation of its impending reauthorization, its critics have trotted out the old canard that it is inefficient and wasteful.
Nothing could be further from the truth.
Despite its outsized economic benefits, the bank employs just 400 people. Its total loans at any one time represent only a tiny fraction of the government's $3.5 trillion federal budget. Last year, they totaled $112 billion. And it benefits from an exceptionally low default rate of less than one-fifth of one percent.
Critics also fail to recognize that about 90 percent of world commerce relies on the kind of financing the Ex-Im Bank provides. Many governments in Asia and Europe provide far-higher levels of public financing for national exporters. In fact, according to the Congressional Research Service, nearly 60 countries have an export credit agency of their own.
In such a world, the Ex-Im Bank is essential to maintaining U.S. competitiveness.
By supporting small- and medium-sized businesses, the Export-Import Bank has helped increase the competitiveness of local companies, supported job creation, and strengthened Arkansas' economy. Our state can't afford for it to shut down.
Here's hoping that congressional leaders that remain undecided on the issue--like Arkansas' French Hill--will be swayed by hard facts and sound reasoning, and will quickly vote to reauthorize it.
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Daniel L. Curtis is the director of Arkansas Manufacturing Solutions and serves as vice president of industry at the Arkansas Science and Technology Authority.
Editorial on 05/30/2015