(Corrects Delta’s position on the Export-Import Bank’s reauthorization in paragraphs 10 and 11 of article published March 8.)

U.S. exports have been a rare bright spot in an otherwise sluggish economy, increasing by about 20 percent over the last two years and driving about half of all economic growth.

It’s curious, then, that some U.S. companies, conservative groups and lawmakers are arguing against reauthorizing the Export-Import Bank of the United States, whose sole purpose is to help strengthen the economy and create jobs by supporting the nation’s exports.

The bank, little known outside Washington, provides direct loans, loan guarantees and insurance to help finance sales of American goods and services overseas. So-called trade finance has long been used by developed and developing countries to boost exports by assisting foreign buyers and domestic companies that want to sell into a global market.

The bank makes direct loans at low interest rates, guarantees loans made by private banks and offers insurance to protect exporters and lenders against the risk of nonpayment for commercial or political reasons. Its role seems small: Out of $2 trillion in U.S. exports last year, it provided $32 billion in loans, loan guarantees and other support for about $41 billion worth of sales. But it helps enable deals that might not happen otherwise, including the purchase of General Electric Co. locomotives in Pakistan and decorative wall coverings made by Wallquest Inc., a small, family-owned Pennsylvania company looking to expand overseas.

Obama’s Goal

President Barack Obama, who has called for doubling U.S. exports by 2014, recently asked Congress to reauthorize the bank and raise its lending cap 40 percent to $140 billion. Emerging markets such as Brazil, India and Mexico are prime targets -- they are growing, and a weak dollar makes U.S. products cheaper overseas. About 55 percent of U.S. merchandise exports are to emerging economies.

Equipping the bank with the tools it needs to help U.S. exporters has long made sense, but it’s even more critical now, as emerging markets begin making aggressive use of trade financing. Rather than adhering to international standards set by the Organization for Economic Cooperation and Development, countries such as Brazil and China are offering much more generous terms to give their own exporters an advantage. China has begun offering lower interest rates or longer repayment terms than international guidelines allow. In 2010, China supplied $45 billion in long-term export loans and loan guarantees, while the U.S. provided just $13 billion, according to a Bloomberg Government analysis. Last year, the U.S. for the first time agreed to match China’s cheaper financing terms to get the Pakistani government to buy those GE trains.

In normal times, reauthorization would happen without controversy. But these aren’t normal times, and the bank is falling victim to a larger fight over budgets, subsidies and globalization.

Some conservative lawmakers and a few companies say the bank distorts markets by giving a leg up to selected U.S. companies, displacing private-sector banks and risking taxpayer money. The bank is drawing comparisons with Fannie Mae and Freddie Mac, the mortgage giants that required a taxpayer bailout, and failed solar-panel maker Solyndra LLC, a beneficiary of government loans.

The Air Transport Association of America even sued over $3.4 billion in loan guarantees the bank provided to support the sale of 30 Boeing Co. aircraft to Air India. Delta Air Lines Inc., a party to the lawsuit, said it was forced to abandon its New York to Mumbai route after Air India -- with an abundance of aircraft -- cut ticket prices by 33 percent.

Delta Lobbyists

Delta has engaged lobbyists to persuade Congress to limit the bank’s support to projects that benefit U.S. companies and employees. Otherwise, Delta argues, the bank’s assistance reduces the capital costs of overseas competitors and contributes to a glut of aircraft that will hurt an already beleaguered airline industry. Some lawmakers seem inclined to agree, and the conservative Club for Growth this week issued an alert, urging members to vote no.

The airline, which says it doesn’t oppose reauthorizing the bank as long as certain conditions are met, makes some valid points. Financing too many planes may lower fares in the short run but will ultimately make it uneconomical for airlines to operate. Ex-Im officials, however, say Delta’s proposal would be impractical, leaving the bank unable to assist overseas carriers looking to purchase Boeing jets.

The U.S., however, can’t unilaterally withdraw from trade finance without harming many other exporters and handing rival countries an advantage. Canada, Germany, the U.K. and many others have state-backed credit agencies. Even Delta has benefited from billions in export assistance from Brazil and Canada, which helped finance the carrier’s purchase of regional jets made by Embraer SA and Bombardier Inc.

Rather than trying to stifle the Export-Import Bank, Delta should focus on diplomatic efforts seeking broader agreement among countries on rules for aircraft financing. For instance, the European Union and the U.S. honor an unwritten “home market rule,” under which they refrain from providing credit for purchases by their carriers of Boeing or Airbus SAS aircraft. That rule, however, isn’t followed by other countries, tilting the field in their favor.

There is something unsettling about the U.S. taxpayer underwriting a foreign company’s purchase of U.S. equipment. But Ex-Im helps create U.S. jobs (288,000 in 2011, by the bank’s count) and it has taken precautions to protect taxpayers, including a reserve account to cover loans that implode. Its historic default rate is about 2 percent, and the bank is self-financed through fees paid on its loans, guarantees and insurance. Last year it returned $275 million to the U.S. Treasury. (And though Fannie and Freddie make an eye-catching comparison, their $5.2 trillion in obligations in 2008 were for real-estate assets only. The Export-Import Bank’s obligations are about $90 billion, diversified among a multitude of asset types.)

Given the weak recovery and the need for exports to power economic growth, it would be irresponsible to pull the plug on the Export-Import Bank.

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