International Trade:

Export Enhancement Program's Recent Changes and Future Role

NSIAD-90-204: Published: Jun 14, 1990. Publicly Released: Jun 14, 1990.

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Pursuant to a congressional request, GAO reviewed the Export Enhancement Program (EEP), focusing on: (1) recent program changes; and (2) the program's continued role in fostering the liberalization of agricultural trade.

GAO found that: (1) while its commodity divisions maintained files on each proposed program under review, the Foreign Agricultural Service (FAS) did not identify a proposal until the division forwarded it for review; (2) FAS top management was not aware of all proposals under consideration and could not monitor the proposals' progress or ensure that all proposals received equal treatment; (3) since FAS officials did not verify all categories of required information, FAS could not ensure that ineligible exporters were not participating in the program; (4) FAS officials received the necessary information to make informed decisions, but still did not document adjustments to price and bonus amounts, making it difficult to determine whether bonus calculations were higher than needed to make a sale, particularly when bonuses exceeded sales prices; (5) FAS developed written guidelines for determining price and bonus levels to require that all relevant calculations be fully documented; and (6) to further improve its operations, FAS was in the process of recouping overpayments and developing and implementing a new computer program, but further improvements in management controls were still needed.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: The Uruguay Round was scheduled to conclude the week of December 3, 1990; however, participating countries failed to reach a compromise on agricultural reform. Thus, the entire round of negotiations has been suspended, with the ultimate outcome uncertain. Meanwhile, Congress appropriated $425 million for fiscal year 1991.

    Matter: Congress, in reauthorizing the program, should consider conditioning the level of appropriations on the outcome of the current negotiating round scheduled to end in December 1990. At that time, Congress should reevaluate the need for the program in light of any agreement reached on agricultural trade liberalization.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FAS has implemented an expanded status report that includes the status of proposals being analyzed in the commodity divisions.

    Recommendation: The Secretary of Agriculture should continue to improve EEP operations by directing the Administrator, FAS, to require the Commodity and Marketing Programs section to expand its status report on proposals by including those being analyzed in the commodity divisions so that the General Sales Manager can monitor their progress and ensure their consistent, fair, and timely treatment.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: FAS has adopted a revised format for the decision memos which includes a written justification for each decision made to reject an official proposal for a new program initiative. This revised format applies to decisions made by the Under Secretary for International Affairs and Commodity Programs.

    Recommendation: The Secretary of Agriculture should continue to improve EEP operations by directing the Administrator, FAS, to require written justification for each decision to reject an official proposal for a new program initiative, including decisions made by the Under Secretary for International Affairs and Commodity Programs.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: The FAS Commodity Credit Corporation Operations Division has implemented verification measures regarding eligible exporters under EEP, including verification of eligibility submissions, proof of exporter experience, and the existence of a valid sales contract. An accomplishment report will be prepared.

    Recommendation: The Secretary of Agriculture should continue to improve EEP operations by directing the Administrator, FAS, to randomly verify all categories of information needed to prove exporter eligibility to help ensure that only eligible exporters with valid sales contracts participate in the bidding process.

    Agency Affected: Department of Agriculture

 

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