Ex-Im Bank: The U.S. Export-Import Bank's Financing of Dual-Use
Exports (27-SEP-07, GAO-07-1234R).
Since October 1994, the U.S. Export-Import Bank (Ex-Im) has had
statutory authority 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. These
dual-use exports include such items as vehicles that are used by
the military for civilian or humanitarian purposes. The
legislation 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 2005. Since we last issued a letter in 2001
reporting on Ex-Im financed dual-use exports, the enclosure to
this letter provides detailed information regarding the dual-use
exports financed during fiscal years 2002 through 2004.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-1234R
ACCNO: A76775
TITLE: Ex-Im Bank: The U.S. Export-Import Bank's Financing of
Dual-Use Exports
DATE: 09/27/2007
SUBJECT: Accountability
Bank loans
Dual-use technologies
Exporting
Federal funds
Fund audits
Insurance
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-07-1234R
* [1]PDF6-Ordering Information.pdf
* [2]Order by Mail or Phone
September 27, 2007
Congressional Committees
Subject: Ex-Im Bank: The U.S. Export-Import Bank's Financing of Dual-Use
Exports
Since October 1994, the U.S. Export-Import Bank (Ex-Im) has had statutory
authority^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.^2 These dual-use exports include such items as
vehicles that are used by the military for civilian or humanitarian
purposes. The legislation 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 2005.
Since we last issued a letter in 2001 reporting on Ex-Im financed dual-use
exports, the enclosure to this letter provides detailed information
regarding the dual-use exports financed during fiscal years 2002 through
2004.^3
Ex-Im Did Not Finance Dual-Use Exports in 2005
In fiscal year 2005, Ex-Im did not finance any dual-use export projects.
According to Ex-Im officials, dual-use items were last financed in 2002,
and Ex-Im has not considered any requests for dual-use financing since
then. The officials attributed the program's decline to a shift in Ex-Im's
portfolio from transactions with governments to private sector
transactions.
Agency Comments
We provided a copy of the draft version of this letter to Ex-Im's
Engineering and Environment Division, which is responsible for monitoring
end user compliance with dual-use requirements. The agency had no
comments.
^1The Export-Import Bank Reauthorization Act of 2006 (P.L. 109-438,
December 20, 2006) extended through September 1, 2011, provisions in 1994
legislation (P.L. 103-428, October 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.
^2According to Ex-Im officials, 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.
^3GAO, Export-Import Bank: The U.S. Export-Import Bank's Financing of
Dual-Use Exports, GAO-01-1110R (Washington, D.C.), August 31, 2001.
United States Government Accountability Office
Washington, DC 20548
Scope and Methodology
To determine the extent of financing and end uses of the dual-use exports
financed from fiscal years 2002 to the present, we reviewed Ex-Im
documents and interviewed Ex-Im officials who monitor end user compliance
with dual-use requirements, including the Vice President of the
Engineering and Environment Division.
We conducted our work from July 2007 through September 2007 in accordance
with generally accepted government auditing standards.
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
[3]http://www.gao.gov .
If you or your staffs have any questions about this report, please contact
me at (202) 512-4347 or [4][email protected] . The key contributors to this
report were Anthony Moran, Assistant Director; Leah DeWolf; Karen Deans;
and Ernie Jackson.
Loren Yager
Director, International Affairs and Trade
Enclosure
List of Recipients
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
Dual-Use Exports Financed by Ex-Im for Fiscal Years 2002-2004
In fiscal year 2002, Ex-Im financed four dual-use export projects for a
total of $24.6 million and processed an additional project that expired
before it was financed. ^4 Ex-Im officials provided us with documentation
for each of the 2002 projects showing that they monitored them to ensure
their end uses were for civilian and humanitarian purposes. In fiscal
years 2003 and 2004, Ex-Im did not finance any dual-use projects. (See
table 1.)
Table 1: Dual-Use Exports Financed by U.S. Export-Import Bank, Fiscal
Years 2002-2004
Dollars in millions
Fiscal Recipient Project End user Export Amount
year country value financed
2002 Venezuela Refurbish aircraft used in Venezuelan
support of civilian Air Force
activities, such as
assistance in the case of a
natural disaster. $0^a $0
Venezuela Aircraft repair parts and Venezuelan
equipment for aircraft used Air Force
for civilian and
humanitarian missions 8.5 7.2
Venezuela Engine and propeller repair Venezuelan
services for aircraft used Air Force
for civilian and
humanitarian missions 6 5.1
Venezuela Construction equipment Venezuelan
(such as road construction Armed Forces
maintenance equipment) to
be used in support of road
construction projects 3.3 2.8
Dominican Vehicles, helicopters, and Secretary of
Republic training to assist the State of the
Dominican Republic in Armed Forces
implementing a humanitarian
relief program to provide
civil services and
assistance for natural
disasters 10.4 9.5
Total for 2002 $28.2 $24.6
2003: Ex-Im did not finance any dual-use projects 0 0
2004: Ex-Im did not finance any dual-use projects 0 0
Total 2002-2004 28.2 24.6
Source: GAO presentation of Ex-Im data.
^aAs noted above, this project expired before it was financed.
^4In fiscal year 2002, Ex-Im's 10 percent cap on dual-use financing was
$1.04 billion.
(320523)
This is a work of the U.S. government and is not subject to copyright
protection in the United States. The published product may be reproduced
and distributed in its entirety without further permission from GAO.
However, because this work may contain copyrighted images or other
material, permission from the copyright holder may be necessary if you
wish to reproduce this material separately.
GAO's Mission
The Government Accountability Office, the audit, evaluation, and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony
The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site ( [5]www.gao.gov ). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site. To
have GAO e-mail you a list of newly posted products every afternoon, go to
[6]www.gao.gov and select "E-mail Updates."
Order by Mail or Phone
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
DC 20548
To order by Phone: Voice: (202) 512-6000
TDD: (202) 512-2537
Fax: (202) 512-6061
To Report Fraud, Waste, and Abuse in Federal Programs
Contact:
Web site: [7]www.gao.gov/fraudnet/fraudnet.htm
E-mail: [8][email protected]
Automated answering system: (800) 424-5454 or (202) 512-7470
Congressional Relations
Gloria Jarmon, Managing Director, [9][email protected] , (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125 Washington,
DC 20548
Public Affairs
Susan Becker, Acting Manager, [10][email protected] , (202) 512-4800 U.S.
Government Accountability Office, 441 G Street NW, Room 7149 Washington,
DC 20548
References
Visible links
3. http://www.gao.gov
4. mailto:[email protected]
5. http://www.gao.gov/
6. http://www.gao.gov/
7. http://www.gao.gov/fraudnet/fraudnet.htm
8. mailto:[email protected]
9. mailto:[email protected]
10. mailto:[email protected]
*** End of document. ***