Export-Import Bank:

Key Factors in Considering Eximbank Reauthorization

T-NSIAD-97-215: Published: Jul 17, 1997. Publicly Released: Jul 17, 1997.

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Benjamin F. Nelson
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contact@gao.gov

 

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GAO discussed issues concerning the reauthorization of the U.S. Export-Import Bank (Eximbank), focusing on: (1) the rationales regarding the Eximbank's programs; (2) foreign competitors' export finance programs; (3) available options to achieve budgetary savings at the Eximbank; and (4) the ways in which Eximbank's assistance is distributed.

GAO noted that: (1) proponents and opponents continue to debate the economic benefits of Eximbank activity to the U.S. economy and the extent to which it helps achieve U.S. trade and foreign policy objectives; (2) the most compelling case that can be made for these programs is that they help level the international playing field for U.S. exporters and provide leverage to induce foreign governments to reduce export subsidies; (3) 73 countries have export credit agencies; (4) however, about half of all export credit support worldwide is extended by the seven largest (Group of 7 (G-7)) industrial nations, each of which maintains various types of export finance assistance programs; (5) although considerable differences exist among these programs, they all help exporters compete for market share in developing markets by providing loans, guarantees, and insurance; (6) the Eximbank's programs require substantial levels of taxpayer support, about $4 billion over r last 5 years; (7) Eximbank could possibly achieve budgetary savings by raising fees or reducing program risks while still maintaining a competitive position relative to other export credit agencies; (8) the U.S. government's ultimate objectives continue to be reducing and eliminating export financing subsidies, allowing exporters to compete on the basis of price, quality, and service, not subsidized financing; (9) regarding the ways its financing assistance is distributed, during fiscal years 1994 to 1996, the top 15 users (lead U.S. exporters or contractors) of Eximbank financing accounted for about 38 percent of the value of the Eximbank's financing commitments; (10) while about 80 percent of its assistance went to support large and medium-sized companies, the Eximbank also reported that 20 percent of its assistance went to support small business during the same period; (11) in geographical terms, China, Indonesia, and Mexico were Eximbank's top three markets in fiscal year 1996; (12) the Eximbank also supports the sale of dual-use, military and civilian, export items provided that the items are non-lethal and for primarily civilian use; (13) in fiscal years 1995 through 1997, the Eximbank made financing commitments totalling $226 million, less than 1 percent of its total financing commitments made during that period, to support 10 dual-use exports to 4 countries; and (14) GAO's review indicated that the Eximbank appears to have established procedures that should provide a sound basis for determining whether these exports are nonlethal and primarily used for civilian purposes, as required by law.

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