EXIM Bank is prohibited by law from financing defense articles and defense services. In defining what is a "defense article" or "defense service", EXIM Bank uses criteria based on the identity of the foreign end-user, the nature of the item, and the use to which the item will be put. If the items are sold to a military organization or designed primarily for military use, they are presumed to be defense articles unless proven otherwise. For sales to non-military security forces, please see the security forces sales policy.
Humanitarian items such as lifesaving, rescue and medical equipment (ambulances, hospital supplies, etc.) are not considered defense articles, even if sold to a military entity.
Small craft (marine vessels, small aircraft) used for routine border patrol, drug interdiction and natural resource monitoring are not considered defense articles, even if sold to a military entity.
Exports of food that ultimately will be consumed by the U.S. military are not considered defense articles.
There are two exceptions to this policy:
- If the export item has "dual use" (both military and commercial or civilian applications), it is eligible for support if there exists convincing evidence that the item is non-lethal in nature and will be used primarily for civilian activities. EXIM Bank may require that the buyer or end-user provide certification to that extent. Specifically, EXIM Bank's investigation must indicate that the item is non-lethal, that the end user has a legitimate civilian requirement which the dual-use item will meet, and that the primary motivation for the purchase is indeed based on the civilian requirement.
- Under provisions of the U.S. "Anti-Drug Abuse Act of 1988" as amended, if EXIM Bank determines that an item constitutes a defense article and is not eligible for financing, a limited waiver of the statutory prohibition against EXIM Bank support may be obtained. If the item in question is on the US munitions list and a "Presidential Determination of National Interest" is granted and obtained (through a request from the host government directed to the U.S. Department of State), which concludes that the item is to be used for drug interdiction purposes, then EXIM Bank may provide guarantee or insurance support for the defense article.
A final determination of eligibility can be obtained only in conjunction with a Preliminary Commitment or Final Application. Hence, items covered in a transaction may be determined to be defense articles, and ineligible for support, even though the transaction was previously the subject of a Letter of Interest. Questions regarding the eligibility of exports that have military implications should be directed to the EXIM Bank's Engineering & Environment Division (202 565-3570).