April 16, 2019

Accountability and the Ex-Im Bank: Country-Level Data

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From FY 2007 through FY 2014, the time period during which the board of directors of the Export-Import (Ex-Im) Bank had a quorum (which enabled the bank to make commitments greater than $10 million), businesses in Mexico received the most exports of US goods subsidized by the agency than those in any other foreign nation. During this period, the top destinations were (in order from greatest amount of subsidized exports received to least) “Multiple – Countries,” United States, Mexico, India, United Arab Emirates, Saudi Arabia, Ireland, Australia, Turkey and China. (The term “Multiple – Countries” is used in the Ex-Im Bank’s data when the bank fails to identify which countries are being supported.) Most of the identifiable countries on this list have strong economies relative to the rest of the world and do not pose substantial commercial or political risks to exporters.

The two nations on this list that stand out most are Mexico and Saudi Arabia, largely owing to the rhetoric of US politicians (China stands out as well owing to it its economic size, but this has been discussed previously). Mexico’s trade practices have been a frequent target by President Trump. Saudi Arabia is not often cited for particular trade practices, but trade is a frequently suggested means of responding to human rights abuses in the country, such as the recent alleged murder of journalist Jamal Khashoggi.

Given the relative safety of exporting to these nations, the decreases in support for US exports directed to these two nations since FY 2014 is promising. The decreases took place with the loss of the Ex-Im Bank’s quorum starting in 2015.

Between FY 2014 and FY 2018, aid for exports to Mexico and Saudi Arabia fell to a share of the Ex-Im Bank’s total aid that more appropriately fit the size of those countries’ economies and the relative safety of exporting to them. The decreases in total aid for exports to companies in these nations outpaced the overall decrease in the Ex-Im Bank’s authorizations as a whole. This represents a rebalancing of the Ex-Im Bank’s actions away from prosperous and relatively stable nations to those where US exporters may actually face higher risk, putting the bank’s actions in line with its own charter. However, it should be noted that both Mexico and Saudi Arabia remain on the list of the Ex-Im Bank’s top beneficiaries, with Mexico remaining as the top foreign nation whose companies were identified as receiving Ex-Im Bank–aided exports.

While decreased aid for exports to relatively safe locations is a positive development, there is a reason to question the accuracy of the Ex-Im Bank’s records on this matter. In 2014, 35 percent of exports supported by the Ex-Im Bank were for multiple countries or for the United States. Additionally, the second destination, the United States, is particularly problematic. By definition, the United States cannot be an export destination for American goods. By 2018 the total of these two categories had risen to 87 percent of US exports supported by the Ex-Im Bank, from 35 percent in 2014.

While the decrease in support for exports to relatively stable nations is a plus for American taxpayers, poor standards for reporting where the aided exports are directed calls into question how much progress has actually been made on this front.

More importantly, it obfuscates who is being helped, how much they are being helped, and what the potential risks are. This lack of transparency makes it impossible to know how well the Ex-Im Bank is meeting its express objective of supporting US exports to risky markets.

The Ex-Im Bank’s aid for exports to affluent nations has decreased, but so has the bank’s accountability about which nations it is aiding.