Export-Import Bank Wary of Trade Partners : Agency President Fears Some May Compensate for Competitiveness of Dollar

As revitalized U.S. exports continue to grow stronger, the Export-Import Bank is concerned that America’s trading partners may increasingly seek ways to offset the dollar-value advantage.

A sharp reduction in the value of the dollar has made U.S. products much more attractive overseas while making foreign goods more expensive in the American market.

This is causing some long-awaited improvement in the punishing American trade deficit, which some economists believe would have come sooner if foreign companies--particularly the Japanese--had not been willing to shave their profits to the bone to maintain sales.

“It would not surprise me, for example, to see other kinds of (foreign) government support to try to compensate for the competitiveness of the dollar,” Export-Import President John Bohn said in an interview.

He did not spell out what moves might be made, but they could include a wide variety of techniques to support exports that would not directly violate existing agreements.

Bohn and others in the Reagan Administration see the bank as a defensive institution that the United States would dismantle if other countries did the same.

Its role is increasingly under review these days as Congress and the Administration consider ways to help the bank, its capital being eroded by a tight federal budget and interest rate problems.

At the same time, hard-won agreements among the Organization for Economic Cooperation and Development countries to set what is called a consensus interest rate for loans has reduced demand.

As interest rates have declined, companies have found they can do just as well in the private markets.

Still, the United States believes that foreign credit banks help their industries more than should be allowed, undermining the free market system.

Export agencies lend money to foreign customers at favorable interest rates to allow them to buy exports.

“Our role is to defend against other export credit agencies and other export insurance schemes which tend to give non-market advantages to their exporters,” Bohn said.

The Reagan Administration has never been happy with this exercise, pressuring U.S. trading partners to offer rates approaching market levels.