STATEMENT
of the
Honorable Nydia Velázquez, Chair
Committee on Small Business
Hearing on
Oversight of the US Export-Import Bank’s Implementation of its
Small Business Mandate
Thursday, January 17, 2008
Today, the Committee will review the Export-Import Bank’s efforts to assist small businesses. Congress established the Bank seven decades ago to promote national competitiveness in an increasingly globalized economy. It was envisioned that this agency would serve as a critical resource for domestic firms of all sizes as they began to look abroad for new business opportunities. But, unfortunately, this has not fully materialized.
Currently, it is small US firms that dominate foreign market sales and operate at a trade surplus in numerous industries. Due to the ingenuity of this sector, small exporters are growing two times faster than their corporate counterparts.
However, many still face hurdles when it comes to fully accessing the international marketplace.
In order to provide assistance for these small firms, Congress has revised the Bank’s charter multiple times. In 2006, with the input of this Committee’s members, legislation was enacted that refocuses the agency’s structure to better promote small exporters. Since adoption, it has been working on meeting its obligations under the legislation. However, there is still a long way to go before it is fully implemented. Overall, if I were to assign a grade, it would be an “Incomplete.”
While the Bank will point out that they have met their small business goal, the facts tell a different story. The number of small business loans is on the decline. In 2005, right before the legislation was enacted, there were 2,600 awards. But today, there are only 2,300 – a drop of more than 10 percent.
These figures indicate that affordable trade financing is on the decline. The reality is that a smaller number of businesses are getting larger loans. What we need to see is more loans and more dollars. Until we see increases in both, it will be questionable if small businesses are the priority that they are supposed to be. If it had fully implemented the 2006 legislation, perhaps these numbers would have been better.
The Bank has failed to establish several key initiatives, including changes aimed at increasing bank lending and reducing regulatory burden – for both of which, little progress has been made. The 2006 law also provides the authority to put US firms on equal footing against heavily-subsidized foreign firms. But again, this is a tool that has failed to be used and again small firms are left waiting.
The effect of these delays is significant. By not implementing these programs, the Bank’s actions are tantamount to cutting off assistance to small firms that are trying to access foreign markets. It is also deterring greater private sector involvement with export financing programs, which is a critical step to their expansion. Without the assistance mandated in the reauthorization legislation, many firms will be left at a disadvantage against their foreign competitors.
As a result of the Bank’s failure to establish key provisions of the 2006 reauthorization legislation, the Committee wants quick and decisive action on implementing these reforms. Going forward, we will continue to conduct regular oversight of its progress.
Small exporters must be the priority at the Bank that Congress had envisioned. The 2006 legislation should be administered in a way that fulfills the mandate’s specific requirements as well as its underlying purpose, which is to expand trade opportunities across the small business sector.
As small firms increasingly look to international markets and the nation’s trade deficit remains unbalanced, Congress, Eximbank, and business leaders must collaborate to promote US interests in a global economy. I look forward to hearing ideas from the Bank, as well as industry representatives, on ways to improve its outreach and service to small exporters. Thank you all for your attendance today.
