Remarks by Acting President and Chairman of Export Import Bank of the United States Bank Jeffrey D. Gerrish at the Indo-Pacific Business Forum
Acting President and Chairman of Export Import Bank of the United States Bank Jeffrey D. Gerrish
Jul 30, 2018 – U.S. Chamber of Commerce Washington, DC
AMBASSADOR GERRISH: Thank you, John, for the gracious introduction and for the Chamber’s support of the Export Import Bank of the United States. And, thank you to Secretary Pompeo and Tom Donohue for the invitation and warm welcome. It is a great pleasure to be here with them, Secretaries Ross and Perry, OPIC President Ray Washburne, Members of Congress, friends from the Diplomatic and business community, and others to talk about the Export-Import Bank and the Indo-Pacific region.
As Secretary Pompeo noted in his remarks, a free and open Indo-Pacific region is vital for our economic growth and national security. As an Indo-Pacific nation, the United States has long worked to advance freedom and prosperity across the region. For nearly a century, the EXIM Bank has demonstrated a proud and distinguished history of supporting American companies – large and small – in their efforts to do business in the Indo-Pacific.
EXIM Bank approved its first transaction in the region more than 80 years ago. Later, in 1935, EXIM provided financing for the export of U.S. steel products and machinery to India. Fast-forward to the conclusion of World War II, when the Bank set up a revolving fund to help restore trade in cotton to the region. Our work with several countries in the region extends back more than half of a century. The EXIM Bank’s first transaction with Vietnam was in 1956. Our first with Korea was in 1959.
The EXIM Bank’s work with American companies in the Indo-Pacific region has remained strong in good times and bad. During the Asian financial crisis of the 1990s, the EXIM Bank reaffirmed its commitment to the region by collaborating with other export credit agencies to help Indo-Pacific countries stay open for business by providing the financing the region needed. And in the decade following the 2008 global financial crisis, EXIM has provided about $40 billion in support of American business in the Indo-Pacific region, including liquefied natural gas projects in Australia and Papua New Guinea.
All of this has been accomplished by complementing private financing and providing support where the financial market doesn’t. The United States is home to the world’s most robust and innovative private financial sector, and we at EXIM understand that our role is to complement, not compete with, private sector banks. EXIM fills gaps in the market that private banks can’t or won’t fill in order to level the playing field for American businesses overseas. Many large international projects require the involvement of export credit agencies like EXIM. If EXIM is not there for American businesses, exporters will have to make the difficult decision of whether to take production offshore, get financing from another country’s export credit agency, or lose the sale. None of these options benefit the U.S. economy.
Small and medium-sized American businesses rely on EXIM to expand their sales into overseas markets too. Ninety percent of the Bank’s transactions help small businesses. In 2016 and 2017, nearly 5,000 of EXIM’s authorizations went directly to these smaller American companies. And it’s important to keep in mind that these numbers don’t even begin to measure the thousands of small and medium-sized businesses that make up the supply chains for larger American exporters who use EXIM when no private bank can help.
Today, EXIM has more than $10 billion dollars in transactions sitting in our pipeline for the Indo-Pacific region in sectors that include power, mining, transportation, and advanced information technology – deals that would support thousands of American jobs here at home.
The Bank looks forward to continuing to do work on behalf of the American people to move these transactions through the pipeline and get our businesses the support they need to win these opportunities. At a time when global economic competition has never been more intense, American businesses and American workers need EXIM fighting in their corner.
The rest of the world continues to ramp up its use of export credit financing aggressively, using their export credit agencies as “weapons” of national economic policy.
China, in particular, has led the way in converting export credit activity from a gap-filling instrument to a potent arm of national policy.
Over the last three years, the two Chinese export credit agencies provided about $250 billion dollars in official medium- and long-term financing as part of their “Belt and Road” and “Made in China 2025” initiatives. The amount of money they are deploying is staggering. In fact, China has provided more export financing support in the last two years than EXIM has in its entire 84 year existence.
A fully functioning EXIM can help to counter China’s influence around the world while promoting mutually beneficial and sustainable economic engagement and contributing to greater safety and security. EXIM can play a strong role in promoting national security objectives for the United States and our partners in the Indo-Pacific region. As the President said in the National Security strategy, “economic security is national security.”
In particular, EXIM’s support of the American commercial space industry has reaped both economic and security benefits for the United States and our partners in the Indo-Pacific. In 2012, EXIM underwrote two transactions totaling $461 million in support of America-made satellites to ABS, formerly Asia Broadcast Satellite, a private company based in Hong Kong. ABS deployed the two satellites in 2015 to upgrade and expand its fleet, which today offers coverage to 80 percent of the world's population and targets emerging markets around the world, including India and Southeast Asia. At the time, the ABS-2 built by Space Systems/Loral was one of the largest satellites ever to be launched over Asia. Space Systems/Loral is a provider of satellites and space systems based in Palo Alto, California that has manufactured more than 250 satellites since 1960. The ABS mission was launched on a Falcon 9 vehicle, which also marked EXIM’s first launch deal with SpaceX. As you may know, SpaceX also is based in California, and it made history as the first private company in the world to build, launch, and dock a spacecraft at the International Space Station.
Not only did this EXIM-financed satellite mission support approximately 3,700 high-tech jobs in the United States, but it also promoted a private sector-led growth of the information and communication technology industry and the development of increased connectivity in the Indo-Pacific region.
The Administration is seeking to strengthen and improve our trading relationships and to increase exports to markets around the world. Nowhere is this more true than in the Indo-Pacific region, a region with growing markets that want American exports. President Trump has been very clear about how growing the economy, creating jobs here at home, and winning on trade are among the top agenda items for the Administration.
EXIM’s mission fits squarely within that agenda.
EXIM can facilitate the entry into new markets for American companies and serve as a partner to help continue to showcase to the world our American standards of high-quality craftsmanship, innovation, and fair play. There are too many examples of EXIM’s work helping to expand the exports of American companies to discuss in the limited time we have here today, but I wanted to highlight one to give you a sense of what EXIM can do. Earlier this year, EXIM named Classic American Hardwoods to be its 2018 Exporter of the Year. Classic American Hardwoods is a small business based in Memphis, Tennessee. With the support of EXIM’s export credit insurance, Classic American Hardwoods was able to rehire 60 employees after the company had to lay them off due to the collapse of the U.S. housing market and the financial crisis that occurred in 2007 and 2008. Despite the devastating effect this crisis had on the domestic lumber industry, the company was able to use EXIM insurance to rebound by breaking into new markets in Asia, including Vietnam, Thailand, Malaysia, and China.
Like most small businesses, Classic American Hardwoods maintains cash flow through asset-based lending, which consists of a revolving line of credit secured against a borrower’s inventory and assets. Its lender, however, would only agree to make the company’s foreign receivables eligible as security if they were insured.
Initially, the company was able to access private export credit insurance, and its exports boomed. Then the financial crisis hit hard, and the company’s insurer canceled its policy at a time when exports made up 60 percent of its total sales. Enter EXIM. Classic American Hardwoods purchased EXIM’s insurance and was able to secure its foreign receivables, which enabled the company to regain access to financing. As a result, the company rehired 60 employees that had been laid off and subsequently added another 15 jobs. Ten years later, Classic American Hardwoods exports to customers in 27 countries all around the world and has increased revenue by 67 percent, with all of this increase resulting from export sales. Over the same period, the company topped $150 million dollars in sales insured by EXIM without a single dollar of credit loss. With access to export credit, and with access to markets in the growing Indo-Pacific region, this small business in Tennessee was able to overcome an economic crisis, find new markets abroad, and create jobs in America. EXIM is proud to have played a role in supporting this great American success story.
The Administration is working with Congress to return EXIM to full functionality so it can continue to help American businesses compete for and win overseas opportunities, including in the Indo-Pacific.
The talented men and women at EXIM are excited to do their part to help realize the President’s agenda.
It has been an honor to speak with you this morning. On behalf of everyone at EXIM, I look forward to working with you to advance our shared goals of expanded economic engagement and sustainable growth in the Indo-Pacific region.