GAO-08-1182R, Export Promotion: The Export-Import Bank's Financing of Dual-Use Exports


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GAO-08-1182R: 

United States Government Accountability Office: 
Washington, DC 20548: 

September 30, 2008: 

Congressional Committees: 

Subject: Export Promotion: The Export-Import Bank's Financing of Dual- 
Use Exports: 

Since October 1994, the Export-Import Bank of the United States (Ex-Im) 
has had statutory authority[Footnote 1] to provide loans, guarantees, 
and insurance to help finance U.S. exports of dual-use (military and 
civilian) defense articles and services, provided that it determines 
these items are nonlethal and meant primarily for civilian 
use.[Footnote 2] These dual-use exports include such items as vehicles 
that are primarily used by the military for civilian or humanitarian 
purposes. Legislation providing this authority also requires us to 
report annually on the end uses of the dual-use exports financed by Ex- 
Im during the second preceding fiscal year--which, for the purposes of 
this letter, corresponds to 2006. 

Ex-Im Did Not Finance Dual-Use Exports in 2006: 

Ex-Im did not finance any dual-use export projects in fiscal year 2006. 
According to an Ex-Im official, the Vice President of the Engineering 
and Environment Division, and our review of relevant data on Ex-Im 
authorizations, Ex-Im last financed dual-use items in fiscal year 2002. 

Agency Comments: 

We provided a copy of the draft version of this correspondence to Ex- 
Im. The agency provided technical comments, which we incorporated. 

Scope and Methodology: 

To determine the extent of financing and end uses of the dual-use 
exports financed in 2006, we reviewed Ex-Im data on dual use 
determinations and an Ex-Im report on the current status of dual use 
cases approved in prior years. In addition, we interviewed an Ex-Im 
official who monitors end user compliance with dual-use requirements, 
the Vice President of the Engineering and Environment Division. We 
determined that Ex-Im data on dual use financing are sufficiently 
reliable for this review. 

We conducted this performance audit from August 2008 to September 2008 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

We are sending copies of this report to interested congressional 
committees. We will also send copies to the President and Chairman of 
Ex-Im, the Secretary of Defense, and the Secretary of State. We will 
also make copies available to others upon request. In addition, this 
report will be available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-4347 or yagerl@gao.gov. Key contributors to 
this report were Celia Thomas, Assistant Director; Leah DeWolf; Martin 
DeAlteriis; and Ernie Jackson. 

Signed by: 

Loren Yager:
Director, International Affairs and Trade: 

List of Committees: 

The Honorable Christopher J. Dodd:
Chairman:
The Honorable Richard C. Shelby:
Ranking Member:
Committee on Banking, Housing, and Urban Affairs:
United States Senate: 

The Honorable Robert C. Byrd:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Committee on Appropriations:
United States Senate: 

The Honorable Barney Frank:
Chairman:
The Honorable Spencer Bachus:
Ranking Member:
Committee on Financial Services:
House of Representatives: 

The Honorable David R. Obey:
Chairman:
The Honorable Jerry Lewis:
Ranking Member:
Committee on Appropriations:
House of Representatives: 

Footnotes: 

[1] The Export-Import Bank Reauthorization Act of 2006 (P.L. 109-438, 
Dec. 20, 2006) extended through September 30, 2011 provisions in 1994 
legislation (P.L. 103-428, Oct. 31, 1994) authorizing Ex-Im to finance 
certain dual-use exports. Under this legislation, Ex-Im can use up to 
10 percent of its total annual loan, guarantee, and insurance authority 
to support the sale of these dual-use exports. 

[2] According to Ex-Im, a dual-use export is eligible for financing if 
convincing evidence exists that the export is nonlethal in nature, the 
export will be used mainly for civilian activities, and the buyer or 
end-user provides certification to that effect. 

[End of section] 

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