The U.S. Export-Import Bank:

Review of a Proposal to Finance Military Exports

T-NSIAD-91-16: Published: May 2, 1991. Publicly Released: May 2, 1991.

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GAO discussed the U.S. Export-Import Bank's (Eximbank) proposal to finance military exports. GAO noted that: (1) the proposed legislation would establish a pilot program for Eximbank to provide guarantees or insurance for military exports to U.S. allies and other foreign countries through fiscal year 1992; (2) Eximbank believed that the proposed legislation would create a balanced market for U.S. competitors facing foreign competitors who were assisted by their governments' export credit agencies; (3) the proposal did not consider such other factors as price, operating costs, availability, performance, and offsetting arrangements that could affect the decision to buy one defense-related product over another; (4) the proposed program could overlap existing financing programs and add to the complexities of congressional monitoring and oversight of Department of Defense (DOD) financing programs; (5) some exporters of civilian products believed that they would be unable to compete with military exporters for limited Eximbank financing; (6) military exporters could potentially monopolize Eximbank funds, but Eximbank has not used all of its budget authority in the last 10 years, suggesting that civilian firms could still compete for funds; and (7) opponents of the proposed legislation believed that Eximbank should not finance military exports because the proposal permits Eximbank-financed DOD items to be exported to any nation if the President determined such a transaction to be in the national interest.

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