Export Promotion:

Export-Import Bank and Treasury Differ in Their Approaches to Using Tied Aid

GAO-02-741: Published: Jun 28, 2002. Publicly Released: Jun 28, 2002.

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The Export-Import Bank (Ex-Im Bank) uses tied air to support U.S. exporters facing foreign competitors. Tied aid is government-to-government concessional financing of public sector capital projects in developing countries that is linked to the procurement of goods and services from the donor country. Through the Tied Aid Capital projects fund, Ex-Im Bank may provide financing to support the negotiations and policing of the Organization for Economic Cooperation and Development (OECD) tied aid rules and to match foreign aid offers to level the playing field for U.S. exporters. Under the tied aid program legislation, the Department of the Treasury has the authority to direct and control the use of Ex-Im Bank's Tied Aid Capital Projects Fund. This allows Treasury to veto individual tied aid proposals. Ex-Im Bank and Treasury have agreed on a set of broadly stated principles for decisions on the Tied Aid Capital Projects Fund. Although Ex-Im Bank and Treasury both seek to help U.S. exporters, they have different missions and perspectives. Treasury takes a strategic approach to financing tied aid. Ex-Im Bank takes a transactional approach, placing emphasis on helping U.S. exporters by matching foreign tied aid offers that would disadvantage their competitive position for future commercial-term sales.

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