Published: 2002
Total Pages: 41
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Under the tied aid program legislation,4 Treasury had the authority to direct and control the use of Ex-Im Bank's Tied Aid Capital Projects Fund, in effect allowing Treasury to veto individual tied aid proposals. This legislation required Ex-Im Bank to administer the program in consultation with the Secretary of the Treasury and in accordance with the Secretary's recommendations on the most effective use of the fund in carrying out the program's purposes of achieving certain U.S. trade policy objectives, a responsibility assigned to the Secretary. The provision's legislative history makes clear that, to assist the Secretary in carrying out this responsibility, Congress gave the Secretary control of the fund as a negotiation and enforcement tool and intended that the Secretary's authority to direct use of the fund extend beyond the policy level to a case-by-case basis. Therefore, the legislation required Ex-Im Bank to comply with a Treasury recommendation that the fund not be used to support an export financing package for a particular project. Ex-Im Bank and Treasury have agreed on a set of broadly stated principles for making decisions on using the Tied Aid Capital Projects Fund. Tied aid can be used to support the negotiation and policing of the OECD tied aid rules. It can also be used to match otherwise allowable foreign tied aid offers that would disadvantage a U.S. exporter's competitive position for future commercial-term sales. In the latter case, two primary criteria must be met: tied aid recipient countries must have sufficient economic growth to support future commercial-term sales (the dynamic markets criteria), and the U.S. exporter requesting tied aid must demonstrate the potential for additional future sales on commercial terms (the follow-on sales criteria).
