Forget Ex-Im: As U.S. Takes on EU, End Corporate Welfare at Home
Arlington, VA – Amid the latest standoff with the European Union (EU) over aircraft subsidies, the Trump administration is preparing new harmful tariffs and some are pushing to bring back the Export-Import Bank. Americans for Prosperity (AFP) and Freedom Partners Chamber of Commerce remind policymakers to end one major source of taxpayer-supported corporate welfare in the United States: The Export-Import Bank.
AFP Chief Government Affairs Officer Brent Gardner and Freedom Partners Executive Vice President Nathan Nascimento issued the following joint statement:
“The Export-Import Bank is on a countdown to expiration and Washington should make sure it gets there. Ex-Im tilts the scales in favor of the well-connected at the expense of American companies and taxpayers. Rather than obligating taxpayers to support welfare for politically influential foreign and domestic corporations, companies should compete on their own merits. Industries have moved on to other financing, and the U.S. economy is doing fine without Ex-Im. As the administration criticizes EU subsidies, instead of imposing new counterproductive tariffs, they should end domestic subsidies like the Export-Import Bank.”
RECENT ADMINISTRATION CALLS TO END MASSIVE STATE-SPONSORED CORPORATE WELFARE SHOUD REMIND CONGRESS NOT TO REVIVE EXPORT-IMPORT BANK
Administration Proposes New Tariffs On Goods From EU In Response To WTO Rulings
On April 8, The Trump Administration Said It Would Move Forward With Imposing Potential Tariffs On $11 Billion In Imports From The EU In Response To Subsidies For Aircraft Manufacturer Airbus. “The Trump administration moved Monday toward imposing tariffs on about $11 billion in imports from the European Union, saying the move was justified by the bloc’s subsidies for European aircraft manufacturer Airbus.” (Joshua Zumbrum, “U.S. Moves To Impose Tariffs On $11 Billion Of EU Goods,” The Wall Street Journal, 4/9/19)
- The Tariffs Follow An On-Going Trade Battle At The World Trade Organization (WTO) Since 2004. “The U.S. has been in litigation at the World Trade Organization over Airbus subsidies since 2004, and said it was releasing a list of items proposed for tariffs in anticipation of a ruling soon from the WTO. ‘This case has been in litigation for 14 years, and the time has come for action,’ said U.S. Trade Representative Robert Lighthizer. ‘Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.’” (Joshua Zumbrum, “U.S. Moves To Impose Tariffs On $11 Billion Of EU Goods,” The Wall Street Journal, 4/9/19)
The U.S. Administration Used The WTO Findings To Call Out Unfair Trade Practices That Support “Exceptionally Large And Harmful” State-Sponsored Subsidies That Create An Uneven Playing Field…
Trump On Twitter After The 2019 EU Tariff Announcement: “The World Trade Organization Finds That The European Union Subsidies To Airbus Has Adversely Impacted The United States, Which Will Now Put Tariffs On $11 Billion Of EU Products!” (Harvey Morris, “Trump’s Dispute With Europe Takes Pressure Off Tensions With China,” China Daily, 4/16/19)
Lighthizer After The April 2019 Announcement Of Potential EU Tariffs: “Our Ultimate Goal Is To Reach An Agreement With The EU To End All WTO-Inconsistent Subsidies To Large Civil Aircraft. When The EU Ends These Harmful Subsidies, The Additional U.S. Duties Imposed In Response Can Be Lifted.” (Press Release, “USTR Proposes Products For Tariff Countermeasures In Response To Harm Caused By EU Aircraft Subsidies,”United States Trade Representative, 4/8/19)
While Simultaneously Resurfacing Calls To Revive The Export-Import Bank, The U.S.’s Own Private Export Financing Agency.
In 2019, Director Of The Office Of Trade And Manufacturing Peter Navarro Called For Not Only The Reinstatement Of The Export-Import Bank Quorum, But “Longer-Term Assurance That EXIM Will Be Fully Functional And Properly Funded.” “Dr. Peter Navarro, director of the Office of Trade and Manufacturing Policy, noted the losses of contracts and jobs that the United States has experienced during the period in which EXIM has been without a quorum on the bank’s board of directors and consequently has been unable to approve larger transactions… Navarro also called for Congress to reauthorize EXIM before the bank’s current authorization expires at the end of September. ‘We don’t just need a quorum at EXIM. We also need longer-term assurance that EXIM will be fully functional and properly funded to strongly support U.S. businesses and keep our exporters competitive.’” (Press Release, “Administration Officials, Congressional And Business Leaders Call For EXIM Board Quorum And Reauthorization,” Export-Import Bank Of The United States, 3/28/19)
Washington Examiner; 2019: Lighthizer Said That The Lack Of A Functioning Export-Import Bank Is A Serious Blow To The Economy. “U.S. Trade Representative Robert Lighthizer said Wednesday that the lack of a functioning Export-Import Bank was a serious blow to the U.S. economy. ‘The answer is, yes, it is having an impact and it is way beyond China and it is costing us jobs and there is no excuse for it in my opinion.’ Lighthizer said in response to a question from Rep. Gwen Moore, D-Wis., during an appearance before the House Ways and Means Committee.” (Sean Higgins, ‘No Excuse For Loss Of Export-Import Bank, Lighthizer Says,” Washington Examiner, 2/27/19)
However, The Ex-Im Bank Is A Form Of Corporate Welfare That Subsidizes Large Corporations At The Expense Of Many.
The Export-Import Bank’s Website Reads: “EXIM Bank Is More Critical Than Ever To Small Businesses.”(“The Facts About EXIM Bank,” Export-Import Bank Of The United States, Accessed 4/17/19)
- Congress Mandated In 2002 That At Least 20 Percent Of The Export-Import Bank’s Budget Go Toward Small Businesses. “In 2002, Congress established several new requirements for Ex-Im relating to small business, including increasing from 10 to 20 percent the proportion of Ex-Im’s aggregate loan, guarantee, and insurance authority that must be made available for the direct benefit of small businesses. Although Ex-Im consistently reported providing more than 10 percent of the value of its authorized transactions to small business through 2002, it has not reported providing 20 percent in any year since then.” (Loren Yager, “Export-Import Bank: Changes Would Improve The Reliability Of Reporting On Small Business Financing,” Government Accountability Office, 03/03/06)
- In 2014, Reuters Reported That The Ex-Im Bank Mischaracterized Potentially Hundreds Of Large Companies And Multinational Conglomerates, Including Those Owned By Billionaires Like Warren Buffett And Carlos Slim, As Small Businesses. “The U.S. Export-Import Bank has mischaracterized potentially hundreds of large companies and units of multinational conglomerates as small businesses, a flaw in its record keeping that could undermine the export lender’s survival strategy. A Reuters analysis showed companies owned by billionaires like Warren Buffett and Mexico’s Carlos Slim, as well by Japanese and European conglomerates, were listed as small businesses and Ex-Im acknowledged errors in its data in response to those findings.” (Howard Schneider & Krista Hughes, “US Ex-Im Acknowledges Errors In Politically Sensitive Small Biz Data,” Reuters, 11/14/14)
During Fiscal Year 2013, $17.4 Billion, Or 64 Percent Of The Total Ex-Im Financial Assistance Went To Only 10 Large Corporations. (Veronique De Rugy, “Public Data Suggest Ex-Im Bank Is Not for Everyone,” Mercatus Center, 9/30/14)
- Topping The List Was Boeing ($8.3 Billion, 30.3 Percent), General Electric ($2.6 Billion, 9.5 Percent), Betchel Power Corporation ($1.8 Billion, 6.6 Percent), Applied Materials Inc. ($1.5 Billion, 5.5 Percent), And Caterpillar Inc. ($1.3 Billion, 4.9 Percent). (Veronique De Rugy, “Public Data Suggest Ex-Im Bank Is Not for Everyone,” Mercatus Center, 9/30/14)
- Five Corporations Received More Than 93 Percent Of The Export-Import Bank’s Loan Guarantees In Fiscal Year 2013—Even Though These Large Firms Could Easily Arrange Their Own Financing. “These charts suggest that while not all US exporters benefit from Export-Import Bank assistance, the ones that do often benefit handsomely. Boeing, Caterpillar, General Electric, and the rest have a large incentive to keep the Export-Import Bank running, despite the fact that the Bank’s own leader, Fred Hochberg, has publicly admitted that these firms can ‘arrange their own financing’ without the Bank’s help.” (Veronique De Rugy, “The Biggest Beneficiaries Of The Ex-Im Bank,” Mercatus Center, 4/29/14)
From 2009-2014, The Bank Backed Less Than Two Percent Of Total U.S. Exports. (Veronique De Rugy, “Jobs And Export Value In Perspective: Ex-Im-Backed Projects Constitute Tiny Portion Of Total US Exports,”Mercatus Center, 6/23/14)
- During 2013, Less Than One-Third Of The Ex-Im Bank’s Funds Went Toward Countering Subsidized Foreign Competition, Which Means That Only One-Half Of A Percent Of U.S. Exports Were Protected From Foreign Competition. (Press Release, “10 Facts About The Export-Import Bank,” Freedom Partners, 4/13/15)
From 2012-2014, The Export-Import Bank Gave Unstable Countries And Foreign Corporations Billions Of Dollars In Subsidies Including Nearly $4 Billion To Chinese Companies, A Nearly $5 Billion Direct Loan To Fund A Corporation Owned By The Saudi Arabian Government, As Well As An $18 Million Loan Guarantee To A Russian Financial Company That Was Under U.S. Sanctions. “The Export-Import Bank sends billions of dollars each year to unstable countries and foreign corporations, including ones owned by foreign governments. The bank provided Chinese companies with $1.8 billion, $636 million, and $1.18 billion in subsidies in 2014, 2013, and 2012, respectively. The Export-Import Bank gave a $4.975 billion direct loan to fund a project being developed by a corporation owned by the Saudi Arabian government and also provided an $18 million loan guarantee to a Russian financial institution now under U.S. sanctions.” (Press Release, “10 Facts About The Export-Import Bank,” Freedom Partners, 4/13/15)
Four Officials At The Bank Were Suspended Or Removed During 2014 Due To Investigations Into Illegal Activity, Such As Steering Government Contracts To Favored Companies In Exchange For Kickbacks And Other Bribes. “The U.S. Export-Import Bank has suspended or removed four officials in recent months amid investigations into allegations of gifts and kickbacks, as well as attempts to steer federal contracts to favored companies, several people familiar with the matter said. One employee, Johnny Gutierrez, an official in the short-term trade finance division, allegedly accepted cash payments in exchange for trying to help a Florida company obtain U.S. government financing to export construction equipment to Latin America, according to a person familiar with the inquiry. Mr. Gutierrez was escorted from the Ex-Im Bank building in April, said two people familiar with the matter.” (Damian Paletta, “Officials At Ex-Im Bank Face Investigations,” The Wall Street Journal, 6/23/14)
- The Department Of Justice Later Announced Gutierrez Plead Guilty To Accepting Bribes Totaling More $78,000 Between June 2006 And December 2013. “Gutierrez admitted that on 19 separate occasions between June 2006 and December 2013, he accepted bribes totaling more than $78,000 in return for recommending the approval of unqualified loan applications and improperly expediting other applications.” (“Former Loan Officer At Export-Import Bank Pleads Guilty To Accepting Over $78,000 In Bribes,” Department of Justice, 04/22/15)
POLITICO: During March 2015, A Miami-Based Financial Services Company Agreed To A $3.8 Million Settlement After A Former Employee Allegedly Pocketed Loans From The Export-Import Bank That Were Never Connected To Real Transactions. “The Miami-based financial services company whose former employee allegedly pocketed loans from the Export-Import Bank that were never connected with real transactions has agreed to a $3.8 million settlement, the Justice Department announced Thursday.” (Adam Behsudi, “Morning Trade,” Politico, 03/13/15)
- POLITICO: Hencorp Becstone Capital Had Been Charged With Violating The False Claims Act After The Justice Department Alleged One Of Its Agents Was “Creating False Documentation” To Get Bank Guarantees, Which He Diverted To Himself, Friends And Business Associates. “Hencorp Becstone Capital, which provides financing to Latin American businesses, had been charged with violating the False Claims Act based on testimony from two whistleblowers connected with the company. The Justice Department recounts, in its statement, how Ricardo Maza, a former Hencorp business agent based in Peru, was accused of creating false documentation to get Ex-Im guarantees ‘on which no products were sold or exported.’ Maza allegedly diverted the loans to himself, his friends and his business associates in Peru. ‘[T]he transactions resulted in losses to the Ex-Im Bank when the loans were not repaid,’ the department said.” (Adam Behsudi, “Morning Trade,” Politico, 03/13/15)
Between 2009 & 2014, The Heritage Foundation Found There Were At Least 74 Cases In Which Bank Officials Were Forced To Open “Integrity” Investigations With The Office Of The Inspector General. “Based on a review of government documents, The Heritage Foundation has determined that there have been at least 74 cases since April 2009 in which bank officials were forced to act on the basis of ‘integrity’ investigations by the Office of Inspector General. Dozens of other fraud cases involving Ex-Im beneficiaries have been referred to the Department of Justice for prosecution.” (Diane Katz, Op-Ed, “Careless Lending At Ex-Im Bank Invites Fraud,” The Daily Signal, 06/24/14)
Boeing, Once One Of Export-Import Bank’s Largest Beneficiaries, Also Celebrated The Administration’s Calls To “Level The Playing Field.”
In Response To The Administration’s Release Of Proposed Tariffs On $11 Billion Worth Of EU Goods, Boeing Congratulated The United States Trade Representative (USTR) For “Ongoing Efforts To Level The Playing Field In The Global Aircraft Marketplace.” “The Trump administration moved Monday toward imposing tariffs on about $11 billion in imports from the European Union, saying the move was justified by the bloc’s subsidies for European aircraft manufacturer Airbus… ‘Boeing supports the U.S. Trade Representative and his team in their ongoing efforts to level the playing field in the global aircraft marketplace,’ the company said Monday. ‘Hopefully, the draft tariff list will compel the EU to comply with past WTO rulings against it.’” (Joshua Zumbrum, “U.S. Moves To Impose Tariffs On $11 Billion Of EU Goods,” The Wall Street Journal, 4/9/19)
After The WTO Ruled In Favor Of The U.S. During May 2018, Boeing Executive Dennis Muilenburg Said, “The Commercial Success Of Products And Services Should Be Driven By Merits And Not By Market-Distorting Actions.” “Today’s final ruling sends a clear message: disregard for the rules and illegal subsidies is not tolerated. The commercial success of products and services should be driven by their merits and not by market-distorting actions… Now that the WTO has issued its final ruling, it is incumbent upon all parties to fully comply as such actions will ultimately produce the best outcomes for our customers and the mutual health of our industry. We appreciate the tireless efforts of the U.S. Trade Representative over the 14 years of this investigation to strengthen the global aerospace industry by ending illegal subsidies.” (Press Release, “Boeing Statement On WTO Ruling,” PRNewswire, 5/15/18)
During 2017, Boeing General Counsel J. Michael Luttig Called On The EU And Airbus To Eliminate “Massive” And “Illegal” Subsidies. “Boeing’s general counsel, J. Michael Luttig, said in a statement: ‘The latest of the false claims Airbus and its government sponsors have made has now been rejected by the WTO. ‘The EU and Airbus, meanwhile, continue to be in flagrant breach of WTO rulings and must eliminate the massive illegal subsidies the WTO said a full year ago had not been addressed, or risk US sanctions against European exports.’” (“Boeing Declares Victory In Airbus Subsidies Dispute,” BBC News, 9/4/17)
…Echoing Boeing Exec. Statements That They Would Survive Without The Export-Import Bank.
During A 2015 Earnings Call, Boeing Said It Would Not Feel Near-Term Financing Pressure Without The Bank. “Boeing Co. won’t feel near-term financial pressure if Congress fails to reauthorize the Export-Import Bank in coming days, said the company’s new chief executive officer, Dennis Muilenburg . . . during a conference call to discuss the aircraft maker’s second-quarter earnings.” (Vipal Monga, “Boeing Doesn’t Fear Near-Term Financing Risk If Ex-Im Fails,” The Wall Street Journal, 07/22/15)
Boeing CEO Dennis Muilenburg: “There Are Multiple Commercial Credit Sources Available Today. . . . [The Current Financing Market] Doesn’t Create Risk For Us.” (Vipal Monga, “Boeing Doesn’t Fear Near-Term Financing Risk If Ex-Im Fails,” The Wall Street Journal, 07/22/15)
During 2013, The Managing Director Of Boeing’s Finance Arm Said He Was Confident The Company Could Find Alternative Funding Sources For Customers. “Kostya Zolotusky, a managing director at Boeing’s finance arm . . . said he was confident the company could find alternative funding sources for customers that wouldn’t require it to boost its support of aircraft sales, but said Boeing remains ‘mindful’ of the debate over Ex-Im’s future.” (Doug Cameron, “Boeing Cites Jitters Over Airplane Financing From Ex-Im Bank,” The Wall Street Journal, 08/07/13)
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### Americans for Prosperity (AFP) exists to recruit, educate, and mobilize citizens in support of the policies and goals of a free society at the local, state, and federal level, helping every American live their dream – especially the least fortunate. Freedom Partners is a non-profit, non-partisan chamber of commerce dedicated to protecting freedom and expanding opportunity for every American—no matter where they live, what they do or how much money they have. |
