Unfair Competition Costs US Jobs

The Export-Import Bank (Ex Im) was established in 1934 to encourage US exports by providing financing and insurance towards the purchase of US manufactured goods by foreign countries.  Ex Im has become even more crucial in recent years as President Obama has set the goal for the US to double exports within the next few years.  Ex Im will play a major role in this by allowing international buyers to by US products when they may have been previously unable to due to unwillingness to accept credit risk or being unable to pay high interest rates.  Ex Im insures these buyers from the risks and extends loans often well below market rates. 

Boeing aircraft make up a significant portion of the financing Ex Im extends to buyers.  This is the source of many issues for the US airline industry and its employees.  In recent years, foreign air carriers have been placing HUGE orders for wide body commercial aircraft.  Often times, they secure the financing for these orders through Ex Im financing.  Although good for Boeing and US aircraft manufacturing employees this poses a major concern.  Since foreign carriers are able to finance aircraft at much lower rates, they save tens of millions in interest payments per aircraft over the life of the loan.  An asset that costs less can offer lower costs to customers that use that asset.  These air carriers have a MUCH lower barrier to entry than US carriers when buying aircraft, therefore they are able to underprice their US competitors on routes.  This has led to a major loss of previously successful routes for US carriers and a loss of US airline jobs.  Low loan rates, and recent cabatoge strategies have caused major concern among airlines and their employees.  If this issue is not corrected many US airline jobs could be lost.

Personally, I feel that Ex Im is a major issue for US airlines and one that needs to be resolved before our airline industry is jeopardized by foreign carriers.  Although Ex Im does perform some useful services,  things need to change or the bank needs to be dissolved entirely.  A possible solution to this issue is requiring thorough research of the impacts of these loans on US industries before they can be made and setting hard limits on the amount of loans available on specific assets such as wide body aircraft.  Making these loans competitive would set reasonable limits and limit the long term negative effects.  Additionally, setting up an agreement with European financing institutions to match US policies and rates would ensure fair competition between Boeing and Airbus.  ALPA has an extensive report regarding the most pressing issues that US airlines face including this and can be found HERE.