Principles for Using Tied Aid

In setting up the Tied Aid Capital Projects Fund, Ex-Im Bank and Treasury agreed on a set of broadly stated principles that would guide its use. Ex-Im Bank and Treasury Place Different Emphases on Tied Aid Principles

While Ex-Im Bank and Treasury both seek to help U.S. exporters, they place different emphases on the principles used for matching foreign tied aid financing, based on their differing missions and perspectives. Treasury, which takes the lead in negotiating and policing the OECD tied aid rules, takes a strategic approach to financing tied aid. Ex-Im Bank, which works directly with exporters, takes a transactional approach to financing tied aid, placing emphasis on helping U.S. exporters match foreign tied aid offers that would disadvantage their competitive position for future commercial sales. Appendix I: Activity under the Tied Aid Program

Tied aid is government-to-government concessional financing of public- sector capital projects in developing countries that is linked to the procurement of goods and services from the donor country. Once the U.S. exporter notifies Ex-Im Bank of the foreign tied aid offer and requests matching tied aid financing, the application process starts with a determination by Ex-Im Bank of whether the Organization for Economic Cooperation and Development (OECD) has been notified of the foreign tied aid offer.
What GAO Found

The Export-Import Bank (Ex-Im Bank) uses tied air to support U.S. exporters facing foreign competitors. Tied aid is government-to-government concessional financing of public sector capital projects in developing countries that is linked to the procurement of goods and services from the donor country. Through the Tied Aid Capital projects fund, Ex-Im Bank may provide financing to support the negotiations and policing of the Organization for Economic Cooperation and Development (OECD) tied aid rules and to match foreign aid offers to level the playing field for U.S. exporters. Under the tied aid program legislation, the Department of the Treasury has the authority to direct and control the use of Ex-Im Bank's Tied Aid Capital Projects Fund. This allows Treasury to veto individual tied aid proposals. Ex-Im Bank and Treasury have agreed on a set of broadly stated principles for decisions on the Tied Aid Capital Projects Fund. Although Ex-Im Bank and Treasury both seek to help U.S. exporters, they have different missions and perspectives. Treasury takes a strategic approach to financing tied aid. Ex-Im Bank takes a transactional approach, placing emphasis on helping U.S. exporters by matching foreign tied aid offers that would disadvantage their competitive position for future commercial-term sales.