Curbing Ex-lm

For most of its 40 years, the Export-Import Bank has enjoyed a quiet, effective and even profitable existence. Started in 1934 by President Franklin D. Roosevelt to finance American trade with the Soviet Union, which the U.S. had just recognized, the bank was soon authorized by Congress to grant credits to other countries so that they could buy more U.S. goods and services. By using its $20 billion lending authority to extend credit to countries and companies on which commercial banks would not take a risk, Ex-lm has helped expand U.S. exports. It facilitated a record $10.5 billion sales last year and continued as a rare moneymaker among federal agencies. In fiscal 1973 it collected $140 million in interest and paid its 23rd consecutive dividend, of $50 million, to the Treasury. Yet now this unobtrusive institution has come under hot attack from politicians, labor leaders and others who charge that its liberal lending policies have unduly rewarded rich nations, robbed the U.S. of jobs, and worsened domestic inflation.

Congress must decide by the end of this week whether to renew Ex-Im's lending authority, which expires June 30. There is no doubt that Congress will keep Ex-lm alive, but probably with new limitations on its autonomy. Last week the Senate Banking Committee approved an amendment drafted by Democrats Henry ("Scoop") Jackson of Washington and Adlai Stevenson III of Illinois that would require Ex-lm to give Congress 30 days' advance notice of any proposed credit of $50 million or more; Congress could then veto the loan. Tougher restrictions could be added on the Senate floor.

Ex-Im Chairman William J. Casey, formerly head of the Securities and Exchange Commission and Under Secretary of State, complains that the Jackson-Stevenson restriction would hinder the bank's ability to compete in a fast-moving global credit market where time is money. The House has yet to draft an Ex-Im bill, but opposition to the bank's recent policies is even stronger there than in the Senate.

Cheap Credit. Recently, Ex-Im granted a $469 million credit package to finance an $80 million trade center in Moscow and plants to make chemicals, iron-ore pellets and fertilizers, to be built with assistance and hardware from U.S. companies. By 1978, Ex-Im loans to the Soviets could total $1.4 billion. Senator Stevenson charges that the credits are going to a nation that does not really need the help. "Soviet gross national product," he points out, "is second only to our own."

Opponents are particularly incensed by the low interest rates on Ex-Im loans. While U.S. corporations have to pay 11 1/2% or more interest on borrowings from commercial banks, the Soviets are getting Ex-Im money at 61/2%. Iran is paying around 6% on Ex-Im loans of $877 million to finance such things as oil refineries, airplanes and diesel locomotives--even though, as Scoop Jackson points out, Iran is awash in oil dollars. Casey persuasively defends the rates as competitive with those charged by export-finance agencies in Britain, France, Japan, Canada, Italy and Germany. If the Soviets and Iranians cannot get cheap credit from Ex-Im, he says, they will go elsewhere, and U.S. exporters will lose their business.

Labor leaders charge that some Ex-Im loans have gone to foreign companies that export goods to the U.S., taking sales and jobs from domestic firms. AFL-CIO Lobbyist Ray Denison says Ex-Im has financed a Mexican factory that makes automobile springs that are shipped to the U.S. Recently, Ex-Im lent $75 million to the Bank of Tokyo to finance purchase by Japanese firms of 260,000 bales of U.S. cotton. Critics fear that that loan will worsen American inflation by raising the price of domestic cotton.

Casey says that such deals are necessary to stabilize the balance of payments and strengthen the dollar abroad. In general, the bank has done an effective job of promoting U.S. exports; but in an era when international economic relations are increasingly fraught with political significance, Ex-Im's leaders hardly hope to avoid closer congressional scrutiny of their policies. Restrictions that would weaken the bank's competitiveness, though, could hamper America's trade drive.

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