International Trade: Combating U.S. Competitors' Tied Aid Practices
(Testimony, 05/25/94, GAO/T-GGD-94-156).

Tied aid refers to foreign assistance that is linked to the purchase of
exports from the country extending the assistance. Tied aid can consist
of foreign aid grants alone, grants mixed with commercial financing or
official export credits, or low-interest loans.  Competitors' tied aid
practices can put U.S. exporters at a competitive disadvantage in
bidding on overseas projects. GAO estimates the potential loss of U.S.
capital goods exports due to these tied aid practices to be as high as
$1.8 billion annually. Although most countries provide tied aid,
significant differences exist between U.S. tied aid programs and those
of its competitors: most U.S. tied aid is linked to programs meeting
basic human needs, such as education, health, and food aid, while other
countries' tied aid programs focus on capital projects.  Donor countries
obtain greater economic benefits from tying aid to capital projects
because they usually involve importing large quantities of
high-value-added goods.  Capital projects also involve follow-on sales
in later years.  This testimony discusses (1) the amounts of tied aid
provided by the United States and six of its competitors, (2) the types
of tied aid programs of each country, (3) the potential impact on U.S.
exports of U.S. competitors' tied aid practices, (4) the Organization
for Economic Cooperation and Development's 1992 agreement on tied aid,
and (5) the Trade Promotion Coordinating Committee's new Tied Aid
Capital Projects Fund.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-94-156
     TITLE:  International Trade: Combating U.S. Competitors' Tied Aid 
             Practices
      DATE:  05/25/94
   SUBJECT:  International trade
             Exporting
             Foreign governments
             Foreign trade agreements
             International economic relations
             Economic development
             Developing countries
             Foreign economic assistance
             Foreign trade policies
             Comparative analysis
IDENTIFIER:  Tied Aid Capital Projects Fund
             Canada
             France
             Germany
             Italy
             Japan
             United Kingdom
             International Monetary Fund
             European Community
             European Union
             
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