In recent years, Greater New Orleans’ — and Louisiana’s — economy has been stronger than ever. The region was recently ranked the top region in the country for export growth by the U.S. Chamber of Commerce, and in 2012, the state was ranked the top state for business growth by Business Facilities. Our low-cost environment, renowned culture and local leadership combined have turned Louisiana’s economy around.
However, Congress is considering a move that could hamper economic growth not only in Louisiana but around the United States. Some legislators are looking to abolish a federal agency that’s proven crucial in helping Louisiana businesses compete globally.
At issue is the Export-Import Bank, or “Ex-Im” for short. Originally created by President Franklin Roosevelt in 1934, the bank provides financing to enhance exports of American goods and services. Since its founding, the Ex-Im Bank has facilitated nearly $600 billion in transactions.
The benefits of this lending are particularly critical for small businesses, which tend to lack the resources necessary to establish themselves in foreign markets. Small businesses accounted for 80 percent of the exports supported by the bank last year.
The Ex-Im also plays a vital role in the Louisiana economy. It has supported $2 billion in local exports, including $400 million this year alone. Many of these exports move through the Port of New Orleans and the Port of South Louisiana, which represents the largest tonnage port district in the Western Hemisphere.
This year alone, Ex-Im has financed the export of nearly $378,000 worth of goods from the Baton Rouge-based Bradford Food Group. This company has been able to establish strong relationships with Mexican groceries and supermarkets thanks in large part to the bank’s loans. The Harvey-based RSI Global has received $4 million in export support this year and now has customers in more than 40 countries.
And that’s not even the full extent of the Ex-Im Bank’s benefits. It also offers low-cost insurance to businesses to defray the risks inherent in selling abroad. Firms always face the danger of misreading important local factors like consumer culture when entering new foreign markets. This coverage helps make up for any unexpected losses.
Such insurance also is especially beneficial to small businesses, which accounted for 90 percent of the policies issued last year.
Despite its obvious economic contributions, the Ex-Im Bank is now at risk. Its charter requires congressional renewal. Ex-Im, which operates at no cost to taxpayers, is set to expire at the end of September. And a growing group of lawmakers has come out against reauthorization.
Most of their criticism stems from a misperception of what this bank actually does. Many claim it’s a tool for crony capitalism, funneling special favors to big, well-connected corporations.
But, in truth, the Ex-Im Bank massively benefits businesses of all sizes. Its loan program helps smaller operations compete with more-established firms. Without it, many small firms would be incapable of taking on the huge financial risks inherent to entering new foreign markets.
There’s also a misguided idea that somehow the Ex-Im Bank interferes with the workings of the free market. In fact, the loans and insurance offered by this institution actually serve to encourage open commerce, boosting consumer demand and making the America economy more dynamic — and competitive. Ex-Im puts American businesses on a more even playing field with foreign competitors, whose governments frequently provide extensive financial support to their exporters.
Failing to reauthorize the Ex-Im Bank would hurt jobs and growth opportunity in the Louisiana economy and in America as a whole.
This bank serves a vital role in boosting foreign demand for Louisiana-made exports and helping local small businesses establish a presence on the global marketplace. Congress needs to renew Ex-Im’s charter immediately in order to keep Louisiana’s — and the nation’s — economy growing.
Michael Hecht is president and CEO of Greater New Orleans Inc., a regional economic development alliance serving southeast Louisiana.