ernments. This justification is slightly more defensible thanthe others, but it is still motivated by a misguided mercantilistworldview in which foreign governments’ subsidies are seenas something to lament and correct.In any event, spending by rich-country governmentson official export credit has actually fallen in recent years,although the bank and its supporters claim that export creditfinancing has increased markedly in fast-growing developingcountries against which U.S. firms have to compete. It is thislast role that the Obama administration hopes to expand insize and scope, by increasing Ex-Im’s exposure cap and byallowing the bank to finance domestic sales. It is not difficultto imagine a never-ending cycle of subsidies and countersubsi-dies as official export credit agencies seek to gain advantagesat home and abroad.
It is worth examining just how much of the bank’sresources are currently devoted to “countervailing” subsidiesgiven to U.S. exporters’ competitors abroad, simply becausethe administration and the bank’s supporters stress that as avital role of the bank. It is also useful to gauge how big the bank’s footprint could become if its countervailing role isexpanded and broadened.Historically, that role has been small, although it hasincreased in recent years. Buried in appendices of the bank’sannual competitiveness reports and its annual report areaggregate expenditure figures and numbers of transactions byfunding rationale (i.e., whether the finance was sought becauseno private sector financing was available, or to “meet competi-tion”—that is, to match official export credit financing givento competitors.) Table 1 was constructed from data in thoseappendices.
The data reveal a few salient points. First, we could cutthe bank’s funding and size by half immediately, and the bank would still be able to play the “countervailing” role that isostensibly so vital. The data show that between 2002 and 2010 just under 40 percent of the bank’s transactions by value wereauthorized to “meet competition.” A majority of its activi-ties—just over 60 percent by value, and over 90 percent bynumber of transactions—occurred because “no private sector financing was available.”
Second, the information provided by Ex-Im about itsfunding activities is of limited quality and value. The bank provides little to no detail about how it evaluates the accu-racy or legitimacy of applicants’ claims, what the standardsare (if they even exist), or how much effort applicantsundertook to justify their claims. Taxpayers are entitled toknow more about the process of how the bank determineswhich firms “deserve” their support, and to have that infor-mation easily accessible.Third, even though “countervailing” financing accountedfor 40 percent of the bank’s business by dollar value, it con-stituted just 4 percent of the bank’s transactions. The obviousimplication is that those seeking countervailing finance areresponsible for disproportionately large transaction values.The beneficiaries of the bank’s largesse are, in other words, asmall number of firms. Knowing more about those firms andthose transactions would seem to be a minimal requirement of transparent government.
Table 1Justifications for Ex-Im Bank Transactions
No Private Sector Financing (average)Meet Competition (average)Total Authorizations(average)YearTrans-actionsShare of Total (%)Amount($ m)Share of Total (%)Trans-actionsShare of Total (%)Amount($m)Share of Total (%)Trans-actionsAmount($m)
20103,31693.88 1253651.23 1584.47 895236.593,53224,46820092,65891.94 1526372.61 1184.08 1148954.652,89121,02120082,38388.13 784854.50 2338.62 794255.162,70414,39920072,44787.61 622149.49 2468.81 580946.222,79312,56920062,35487.93 744961.31 511.91 418234.422,67712,15120052,71686.83 791856.82 431.37 341324.493,12813,93620042,89793.24 909668.28 411.32 450233.803,10713,32120032,56594.75 826878.69 200.74 268925.592,70710,50720022,48998.93 682867.48 311.23 2881.528.482,51610,119Average,2002–102,64791.44 904761.46 1053.61 576239.142,89514,721
Sources: Fiscal Year Authorizations Summaries, Ex-Im Bank Annual Reports, 2002–2010; Appendix B: Purpose of Ex-Im Transactions, AnnualCompetitiveness Reports, 2002–10.