US Exim chairman Fred Hochberg has told GTR that he is open to working with the China-led Asia Infrastructure Investment Bank (AIIB), despite the US government’s refusal to become a founding member.
In an interview with GTR in Mumbai, on his first overseas trip since the government’s primary export lending institution was reauthorised in December, Hochberg said that provided the AIIB met requisite social and environmental standards and provided there was an opportunity for exports, US Exim would “without question” be open to working alongside it.
“I’m eager to work with any entity, including the AIIB, as long as we’re talking about US procurement and jobs,” Hochberg said, adding: “The AIIB, although it’s been formed, hasn’t been launched. What their criteria is, how they will look at issues like the environment, how they look at social impact and sourcing and procurement, is still unknown.
“I’m confident… the needs for infrastructure are enormous. And there’s more than enough room for a number of financial institutions, be it US Exim, the ADB, be it… other entities that want to lend into this area, because by lending here and putting in this infrastructure, as we’ve heard Prime Minister [Narendra] Modi is doing [in India], is going to make commerce move more quickly, with less friction,” Hochberg said.
US Treasury officials were critical of the likes of the UK, France and Germany for signing up to become a member of the AIIB, which is set to unleash US$100bn of infrastructure spend across Asia, with the majority of the capital coming from China. US officials also reportedly attempted to pressure South Korea and Australia out of joining the bank, without success.
It has been billed as a rival to the US-backed World Bank Group institutions, with China hoping it will allow it to increase its political clout on the international stage. The US has since been criticised for its actions.
At the time, the CEO of the US Chamber of Commerce in Sydney Niels Marquardt told GTR that the US approach “didn’t work, so we ended up looking silly”, and the general consensus among trade policy analysts is that the US missed out on an opportunity to exert some influence on the nascent bank.
“It’s always hard to look at the wider economy but I can tell you specifically there were three satellite deals, sales that we lost,” Fred Hochberg, US Exim
Hochberg also reiterated the damage the five-month close-down of US Exim did to US exporters. The bank had its operations frozen in a political row over its reauthorisation. Large factions of the Republican Party are opposed to the bank’s existence, accusing it of corporate welfare and of doing jobs which could be handled by the private sector. Since the bank’s reauthorisation in December, it has completed more than US$2bn in approvals, Hochberg said.
“It’s always hard to look at the wider economy but I can tell you specifically there were three satellite deals, sales that we lost: two to France, one to Canada. The buyer said: ‘If you’re not going to have ECA backing, we’re not going to even consider the bid.’ Those are three we lost right off the top.
“Another, a small business in Chicago called Howe Manufacturing, they make refrigeration equipment used on fishing boats and supermarkets that stock fresh fish, they stopped all overseas proposals during that five-month period. As soon as we got reauthorised Mary Howe told me they’ve added six more people, that’s on a company that has 35 employees. Adding six is a big deal: those people didn’t have a job when we were shut down. So that’s on the very small side and the large side, but there’s lots more in between.
The reauthorisation extends the bank’s charter until 2019, which effectively saves it from becoming an issue in the upcoming US elections. Hochberg described this as “critical”, saying that the long-term reauthorisation allows the bank to plan for the future.