Fred Hochberg, Chairman of the Export-Import Bank of the United States, told 60 executives in Boston this week that US companies must be able to compete for global business on a “level and transparent playing field.”
Hochberg said that manufacturing companies in emerging markets such as China, Brazil and India have the advantage of receiving loans from their governments at low, subsidized rates. Those loans represent a big challenge for companies in the US that compete with foreign entities for business because the federal government here doesn’t offer these artificially low loan rates.
But the US is making progress, Hochberg said, in leveling the financial playing field.
“The rules have changed, and when the US sees examples of non-fair play, we will go the extra step,” he said.
Hochberg cited two recent situations in which US manufacturers were competing for large overseas contracts and Ex-Im Bank was able to procure advantageous funding for those companies so that “financing came off the table” as a deciding factor in the negotiation.
According to Hochberg: “Products and services should compete on their own merits” rather than having financing be the critical factor in sealing a global deal.
Hochberg offered several suggestions about how to increase US exports:
- The US needs to work multilaterally and bi-laterally to remove barriers; the nation must also and pass Free Trade Agreements.
- The US must re-orient its economy around the importance of exports. In Great Britain and Germany, exports represent 30-40 percent of total economic output. US exports represent only 13 percent of Gross Domestic Product. One goal should be a healthy balance in the US between consumption and production.
- US domestic issues that hold back the economy and stifle competitiveness must be resolved. Health care costs, federal debt, and low investment in education all have a negative impact.
The Export-Import Bank provides working capital, loan guarantees and receivables insurance to US companies doing business overseas. In 2010, Ex-Im Bank approved more dollars for loans than in any previous year. Ex-Im Bank works with many banks in Massachusetts to provide financing to Bay State companies.