U.S. Export-Import Bank

The Export-Import Bank of the United States (Eximbank) has authority to finance exports of defense items and services, provided that it determines that these exports are nonlethal and for primarily civilian use. Such exports are referred to as "dual-use" exports. GAO found that Eximbank's support for dual-use exports has increased during the last three years, but it has remained well under the annual 10-percent cap set by law. GAO also found that Eximbank's process for financing and monitoring dual-use exports should provide a sound basis for determining whether these exports are nonlethal and primarily used for civilian purposes.

GAO noted that: (1) the Eximbank's support for dual-use exports has increased during the last 3 fiscal years (FY) but has remained well under the annual 10-percent cap established by law; (2) as of June 1997, the Eximbank had made commitments totalling $226.1 million in loans and loan guarantees to support 10 dual-use exports to four countries; (3) however, only one of the dual-use exports--involving aircraft parts and services to Indonesia--has actually been delivered overseas; (4) according to the Eximbank, 1 of the 10 exports will be used by a civil aviation authority; the other nine exports will be used by military organizations for primarily civilian purposes; (5) the Eximbank has established a process to help ensure that it can determine whether the dual-use exports it supports are nonlethal and primarily used for civilian purposes as required by law; (6) for example, this process calls for Eximbank to: (a) review and approve applications for financing dual-use exports; (b) monitor the actual end use of these exports overseas; (c) obtain the views of other federal entities, such as the Departments of State, Treasury, and Commerce, for the purpose of approving the financing of dual-use exports and monitoring their end use; and (d) take appropriate corrective actions if the Eximbank discovers that the dual-use exports have been misused; (7) the Eximbank is using electronic data bases to assist in tracking information on dual-use exports for monitoring purposes; (8) GAO's review indicated that the Eximbank process aimed at financing and monitoring dual-use exports, as currently implemented, should provide a sound basis for determining whether these exports are nonlethal and primarily used for civilian purposes; (9) in the spring of 1997, for the one dual-use export that has taken place, Eximbank officials, assisted by other U.S. government officials, were able to verify that it was being primarily used for civilian purposes; and (10) the State Department, in response to GAO's request, obtained information from its pertinent missions overseas confirming that the other nine dual-use exports financed by the Eximbank were nonlethal and intended for primarily civilian use.