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International Trade: Competitors' Tied Aid Practices Affect U.S. Exports

GGD-94-81 Published: May 25, 1994. Publicly Released: May 25, 1994.
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Highlights

Pursuant to a congressional request, GAO reviewed the tied aid practices of the United States and its major competitors, focusing on: (1) the amount of aid provided by the United States and its competitors; (2) the types of tied aid programs available from each country; and (3) how U.S. competitors' tied aid programs affect U.S. exports.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Commerce In order to provide greater assurance to U.S. exporters that the U.S. government is serious about combating foreign competitors' tied aid practices, the Secretary of Commerce should, as chair of the Trade Promotion Coordinating Committee, work with other member agencies to ensure that the budget for the Tied Aid Capital Projects Fund is sufficient to counter competitors' trade-distorting tied aid offers when U.S. economic interests are adversely affected.
Closed – Implemented
TPCC addressed the recommendation in its 1994 report to Congress. On page 24, the report said, "as recommended in the September 1993 report, Ex-Im Bank established the Tied Aid Capital Projects Fund to counter and ultimately eliminate the use of trade-distorting foreign tied aid credits. The Fund, operating with a subsidy budget of $150 million, seeks to level the international playing field for U.S. exporters. Ex-Im Bank does not use the Capital Projects Fund to initiate tied aid credits, but is prepared to counter potential foreign tied aid offers. Whenever possible, Ex-Im Bank seeks agreement among member governments of the Organization for Economic Cooperations and Development against providing tied aid financing for specific projects. If such agreements are not reached, Ex-Im Bank provides U.S. exporters with an early indication of its willingness to counter foreign tied aid efforts."

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Topics

Comparative analysisDeveloping countriesEconomic developmentExportingForeign economic assistanceForeign governmentsForeign trade policiesInteragency relationsInternational economic relationsInternational trade