International Trade: Combating U.S. Competitors' Tied Aid Practices

GAO discussed tied aid, focusing on the: (1) adverse impact on U.S. exports of six major U.S. competitors' tied aid practices; (2) differences between U.S. tied aid programs and those of major competitors; (3) U.S. policy toward tied aid; (4) Organization for Economic Cooperation and Development's (OECD) 1992 tied aid agreement; and (5) Trade Promotion Coordinating Committee's (TPCC) new Tied Aid Capital Projects Fund. GAO noted that: (1) the United States could lose up to $1.8 billion per year because of U.S. competitors' tied aid practices; (2) while most U.S. tied aid is devoted to programs geared toward basic human needs, other countries' tied aid programs focus on capital projects; (3) capital projects generally accrue greater economic benefits from tied aid than basic human needs programs; (4) U.S. trade policy has generally opposed tied aid and dissuaded U.S. competitors from using it; (5) the 1992 OECD agreement strengthens previously established guidelines to discourage the use of tied aid; and (6) the Administration has established a $150 billion Tied Aid Capital Projects Fund to finance major capital projects overseas and combat other countries' use of tied aid.