Export-Import Bank: New Domestic Financing Initiative

Export-Import Bank: New Domestic Financing Initiative

INSIGHTi

Export-Import Bank: New Domestic Financing
Initiative
May 31, 2022
The Export-Import Bank of the United States (Ex-Im Bank or the Bank) has launched a Make More in
America Initiative to support “export-oriented domestic manufacturing projects.” The initiative extends
some of the Bank’s existing demand-driven, export-contingent financing programs to a more domestic
focus (see Table 1). The Biden Administration states that the initiative will help in “revitalizing American
manufacturing, improving the resiliency of our supply chains, and leveling the playing field for American
companies competing in overseas markets.” The initiative raises issues for Congress regarding the Bank’s
authorities, operations, and effectiveness.
Background
The Make More in America Initiative is part of the Administration’s efforts to strengthen U.S. supply
chains. In a June 2021 report per Executive Order 14017, the White House recommended that Ex-Im
Bank develop a proposal to use existing authorities to further support domestic manufacturing.
In December 2021, the Bank issued a Federal Register notice soliciting comments on the
recommendation (with hypothetical parameters). In comments received, supporters included companies
both large (e.g., renewable energy and engineering) and small; industry associations representing
manufacturers generally and specific industries (e.g., aerospace, nuclear energy, and ports); and financial
institutions. They welcomed the move to bolster U.S. supply chains and exports. In contrast, a think tank
and civil society group raised concerns that Bank financing under the initiative would displace private-
sector financing and increase fossil fuels support, respectively.
On April 14, 2022, Ex-Im Bank’s Board of Directors approved the initiative in a unanimous vote. To date,
the Bank has not approved transactions under it.
Table 1. Export-Import Bank’s Make More in America Initiative: Select Features
Product Makes available the Bank’s existing medium- and long-term loans and loan guarantees for export-
oriented domestic manufacturing projects.
Statutory May fall under the Bank’s existing authority to “aid in financing and to facilitate exports of goods and
Authority services. . to contribute to” U.S. jobs.
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International May fall outside of the scope of the Organization for Economic Cooperation and Development
Rules (OECD) Arrangement on Officially Supported Exported Credits (by which the Bank generally abides).
Priority Transactions that are environmentally beneficial, by small businesses, and/or “transformational” (e.g.,
Sectors semiconductors, biotech and biomedical products, renewable energy, and energy storage)—these are
ongoing statutory export focuses.
Core Project  “Export nexus” (percentage of production or shipment tied to exports) of 15% for transactions by
Criteria
small businesses, in transformational sectors, or climate-related; and 25% for transactions in other
sectors. Firms that supply domestic exporters also may be eligible if they meet the nexus.
 Financing scaled based on the number of U.S. jobs supported during construction and the financing’
lifetime. (The Bank historically has considered “U.S. content” a proxy for U.S. jobs supported.)
 “Contractual recourse measures should projects fail to meet” these criteria.
Other Key Ex-Im Bank’s due diligence and “additionality” policies, and U.S. flag shipping requirement for related Bank-
Requirements supported imports.
Pricing According to Ex-Im Bank’s Federal Register notice on potential parameters when the initiative was
under consideration, pricing could be through a “direct market proxy” or an “implicit market benchmark”
using commercial pricing (based on Ex-Im Bank’s “self-sustaining” budgetary requirement and
“market” pricing requirement under international trade rules on subsidies).
Support Limited to 80% of a project’s financing (lower than 85% under OECD rules).
Limitation
Approval Projects subject to Board approval.
Congressional Required for transactions above $50 mil ion (lower than the Bank’s statutory requirement to notify
Notification “traditional” transactions above $100 mil ion).
Reporting Planned annual reporting on aggregate export and jobs performance.
Source: CRS, based on Ex-Im Bank website, including its Make More in America Initiative webpage, and Federal Register
notice (December 23, 2021).
Questions Facing Congress
Members may continue to oversee the initiative and pursue potential legislation, e.g., regarding
codification, modifications to parameters, reporting, resources for it, or prohibitions against it. Questions
include:
Is the initiative within Ex-Im Bank’s authority?
Ongoing “Indirect” Support
The Bank contends that its charter allows it to go
The Bank holds that U.S. small businesses “benefit indirectly
beyond financing U.S. exports directly, by also
from sales made in the supply chains of larger companies
empowering it “to facilitate” them (see text box).
that directly used financing products to support their
The Senate Banking Committee Chair welcomed
exports.” The Bank’s existing working capital loan guarantee
and supply chain finance guarantee programs provide
the initiative, asserting that it is consistent with the
support for supplier companies that do not directly export.
agency’s 2019 reauthorization (P.L. 116-94, Div. I,
Title IV) to help U.S. exporters compete with
China and other countries. Meanwhile, the Ranking Member argued that the initiative “subverts
Congressional intent and strains [Ex-Im Bank’s] statutory mandate to such an extent to make it
meaningless.” He also argued that the Bank should have published “a comprehensive framework” for the
proposal and subjected it “to a robust public notice-and-comment rulemaking process” before the Board
vote.
Relatedly, policymakers may examine whether the Bank can adequately adapt its existing policies to the
initiative or requires new parameters, and whether the initiative may affect Ex-Im Bank’s portfolio risk
and default rate.

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Is the initiative effective? As the initiative ramps up, Members may examine whether it is structured to
help expand private capital support for U.S. manufacturing and infrastructure in critical sectors, and
whether it supports or competes with the Bank’s historical export focus. They may consider metrics to
gauge its effectiveness. It can be difficult, however, to assess the impact of government intervention on
overall U.S. exports and jobs, as other economic factors can hold more influence.
Members also may examine how the initiative relates to existing federally supported economic
development programs, and whether enhanced coordination is needed.
What are international considerations? One issue may be how the initiative factors into Ex-Im Bank’s
international competitiveness relative to foreign export credit agencies (ECAs). Another issue may be
how the initiative affects the United States’ position or influence in efforts to strengthen the OECD
Arrangement or any efforts to develop potential new ECA disciplines to cover major ECA providers, such
as China, which are not OECD members.

Author Information

Shayerah I. Akhtar

Specialist in International Trade and Finance

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