Tobacco Exports:

USDA's Foreign Agriculture Service Lacks Specific Guidance for Congressional Restrictions on Promoting Tobacco

GAO-03-618: Published: May 30, 2003. Publicly Released: Jul 1, 2003.

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Since 1994, the Agriculture Appropriations Act has prohibited the funding of tobacco export programs and restricted the U.S. Department of Agriculture's (USDA) tobacco-related activities. Since 1998, the Commerce, Justice, and State Appropriations Act has placed similar restrictions on the Departments of Commerce and State and the Office of the U.S. Trade Representative (USTR), although it has not prohibited them from addressing foreign discriminatory trade practices. Congressional requesters asked GAO to (1) assess the agencies' guidance on the restrictions to their overseas personnel, (2) describe how the agencies' activities changed in response to the restrictions, and (3) identify the mechanisms that the agencies use to monitor compliance.

Commerce, State, and USTR have issued timely guidance implementing the tobacco-related restrictions specified in their annual appropriations act. However, USDA's Foreign Agricultural Service (FAS) has not issued guidance specific to its appropriations act. Instead, since 1998, FAS has relied on the tobacco-related guidance in a periodic cable sent to the overseas staffs of USDA, State, Commerce, and USTR. This guidance does not address whether certain FAS activities, such as providing tobacco-related information reports and assisting in trade negotiations on tobacco-related issues, are consistent with USDA's 1994 restrictions. GAO did not seek to determine whether ongoing FAS activities are prohibited by the appropriations restrictions. The agencies have discontinued some tobacco-related activities and continued others. For instance, Commerce overseas staff ceased providing market research information to tobacco exporters, but staffs of Commerce and State still provide routine business assistance to exporters. FAS ended the tobacco component of USDA's Export Credit Guarantee Program, Foreign Market Development Program, and Market Access Program. However, FAS has continued, as part of its commodity-reporting program, to gather and disseminate tobacco-related information that identifies foreign production and consumption rates, import trends, and changes in foreign regulations. Our analysis showed that some of FAS's reports provided insights into market niches for tobacco exporters. To monitor compliance with the restrictions, senior FAS and Foreign Commercial Service officers at overseas posts review their staffs' tobacco-related activities. Overseas staffs refer to headquarters U.S. firms' requests for assistance that could violate the restrictions contained in the periodic guidance.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: GAO found that the U.S. Department of Agriculture's Foreign Agricultural Service, unlike other affected trade agencies, had not issued guidance implementing tobacco-related restrictions contained in its annual appropriations since fiscal year 1994. In response to the report recommendation, the Secretary of Agriculture has instructed overseas offices on not promoting the sale or export of tobacco or tobacco products. The Department has taken action to provide detailed instructions on tobacco related activities to overseas staff, emphasizing the restrictions on not challenging a country's laws and regulations on tobacco promotion. The Department also emphasized that overseas staff are to ensure that reported material is consistent with legislated restrictions on tobacco promotion.

    Recommendation: To ensure that the Foreign Agricultural Service has fully addressed its restriction on the promotion of tobacco or tobacco-related products, the Secretary of Agriculture should develop guidance to implement the legislative restrictions on promoting the sale or export of tobacco or tobacco-related products that fully reflects FAS programs and activities.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: The U.S. Department of Agriculture's Foreign Agricultural Service has been prohibited since fiscal year 1994, from promoting the sale or export of tobacco or tobacco-related products. The Service has continued as part of its commodity reporting program to gather and disseminate tobacco-related information that identifies foreign production and consumption rates, import trends, and changes in foreign regulations that may assist tobacco exporters. In response to GAO's recommendation, the Department has reviewed all of its ongoing activities, revised its reporting guidelines, and instructed overseas offices not to comment on product and price matters. The Department emphasizes that overseas staff are to ensure that reported material is consistent with legislated restrictions on tobacco promotion.

    Recommendation: The Secretary should also review all ongoing activities that pertain to tobacco or tobacco-related products--specifically, the collection and dissemination of information on tobacco--to determine whether these activities are consistent with the Department of Agriculture's restrictions in its appropriations.

    Agency Affected: Department of Agriculture

 

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