Export Finance

GAO reviewed the types of export-financing assistance that national governments provide to exporters and banks in the United States, particularly through the U.S. Export-Import Bank (Eximbank), and in the five largest exporting countries of the European Union--France, Germany, Italy, the Netherlands, and the United Kingdom. The distinguishing characteristic of this type of financing is that it is generally tied to the export of foods and services from the countries providing the export financing assistance. Congress is debating the level of resources that the Eximbank should receive to support U.S. exporters. Some believe that the Eximbank plays an important role by correcting market failures and helping U.S. exporters compete on a level playing field against their foreign counterparts. Critics argue that the Eximbank distorts capital markets and provides unwarranted taxpayers subsidies to U.S. exporters. This report (1) identifies the magnitude of export financing that the United States and the five European Union countries provides, (2) describes the types of export-financing delivery systems used in these countries, (3) highlights key differences in and the trade-offs among U.S. and European Union members state programs, and (4) summarizes the status of international efforts to limit the use of government-supported export financing.

GAO found that: (1) the Export-Import Bank (Eximbank) financed $15.1 billion of U.S. exports in 1993 and the five EU member states collectively financed $74.8 billion of their total exports in that same year; (2) Eximbank provides a wide range of export-financing assistance to the U.S. exporting community, including direct loans, loan guarantees, and export credit insurance; (3) the five EU member states use a single government agency, as well as private and public sector providers to deliver export-financing capital; (4) Eximbank medium- and long-term loan guarantees are unconditional, and Eximbank assumes most of the risk involved in export transactions; (5) there are trade-offs between the time export credit agencies (ECA) spend scrutinizing loan applications and the time that elapses before the claims are paid, the level of risk assumed by ECA and participating banks, and the premium levels charged for financing assistance; (6) the Organization for Economic Cooperation and Development (OECD) has implemented an agreement that limits government subsidies and provides common guidelines for national export-financing assistance programs; and (7) this agreement does not currently apply to the premiums charged for export credits relating to defense goods or agricultural products.