Surprisingly, the abolition of a federal agency that many Americans have never heard of has become a cause celebre in certain political circles. It is all the more astonishing, considering that the Export-Import Bank requires no tax dollars. Indeed, it actually makes money for the government. The bank’s renewable charter, first set in 1945, is due to expire Sept. 30, so Congress must act or Ex-Im will have to wind down.

The bank extends direct loans, loan guarantees and credit insurance to companies and other entities outside the U.S. to buy American goods and services—including commercial airplanes, business and general aviation aircraft, satellites and launch services, engines, parts and maintenance. Aerospace companies are the largest group of beneficiaries. In fact, by dollar value, 65% of the $27.3 billion in long-term guarantees the bank made last year were for the sale of just one company’s aircraft. So it is no wonder that Ex-Im is sometimes referred to derisively as “Boeing’s bank.”

Hence a big part of the criticism: that Ex-Im subsidizes a small group of businesses that know how to wield clout in Washington, that government bureaucrats are picking winners and losers in the marketplace. Closely related is the criticism that when Washington tries to help one industry (aerospace), it can end up hurting another (airlines), since the latter’s foreign competitors get loans for equipment at lower rates. Better to end “corporate welfare” entirely, this reasoning goes.      

We are sympathetic to the desire to let free markets reign and keep governments from distorting them, but we find this reasoning faulty on two grounds. First, even if every government were to end export subsidies, there would likely still be gaps in financing that the private market could not fill. No serious observer of global trade makes the case that private credit markets are perfect. (To find problems with that theory, one has to look no further into history than 2008-09, when global credit markets froze.) Rather, the Ex-Im critics worth listening to argue that government-backed lending causes more problems than it solves. They say the benefits in job stimulation at home and economic development abroad are exaggerated and outweighed by unintended consequences.

There is certainly room for improvement in how the bank works. Its flaws need not be fatal, however. What is more, some arguments against Ex-Im are spurious. For example, there is hand-wringing about Ex-Im’s $114 billion portfolio being backed, ultimately, by U.S. tax dollars. Still, the bank has a default rate of just 0.211%, and under current law, hitting just a 2% rate would trigger a requirement that the bank develop a plan to reduce its risk.

Our second and more important reason for rejecting the argument of the free market ideologues is that the Ex-Im bank must be considered in its international context, not in some theoretical vacuum. All told, 60 nations have export credit agencies. The ECAs of major industrialized countries like the U.S., Germany, France and the U.K. are governed by rules set by the Organization for Economic Cooperation and Development (OECD), while those of nations like Russia, India and China play by their own rules.

The biggest problem with the U.S.’s and Europe’s ECAs is that in helping aerospace they harm some airlines. This serious shortcoming has been articulated most forcefully by Delta Air Lines in the U.S. and Lufthansa in Europe. Why should these airlines’ own governments help Gulf carriers intent on besting them in competition for international traffic with cheaper financing for long-haul aircraft? It’s one thing to help a struggling Third World carrier buy 737s or A320s, quite another to assist an oil-rich nation’s flag carrier in getting cheaper 777s or A380s.

The U.S. has consistently pushed to reduce—or even eliminate—export subsidies globally. Ex-Im opponents seem to think the U.S. can accelerate the movement toward free and open markets by unilaterally disarming in the battle for international trade. It would be folly to act alone. Instead, Congress should reauthorize the bank but direct trade officials to work to amend the OECD’s Aircraft Sector Understanding to disallow ECA financing of long-haul aircraft for airlines worthy of commercial credit.

In addition, Washington should act with European governments to get more nations to abide by OECD rules on export support. And they should work to further close the gap between commercial lending rates and those offered by ECAs, so government-backed loans are a last resort for borrowers, not the preferred mechanism to finance debt.

Refusing to participate in a flawed system is not the solution. Were Congress to simply shut down the Export-Import Bank, hundreds of thousands of U.S. jobs would be placed at risk. We believe in free trade and level playing fields. We don’t believe in the tooth fairy and wishful thinking.