U.S. Agricultural Exports:

Strong Growth Likely But U.S. Export Assistance Programs' Contribution Uncertain

NSIAD-97-260: Published: Sep 30, 1997. Publicly Released: Sep 30, 1997.

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Pursuant to a congressional request, GAO assessed: (1) the way in which the 1996 Federal Agriculture Improvement and Reform Act (FAIR) will likely affect U.S. agricultural exports; and (2) the continued relevance of U.S. agricultural export assistance programs.

GAO noted that: (1) agricultural experts generally expect that FAIR's domestic policy reforms will modestly contribute to increased U.S. agricultural exports; (2) the extent to which FAIR's domestic reforms increase exports is dependent on the degree to which farmers add additional land to production and use FAIR's planting flexibility to respond to international and domestic market conditions; (3) much of the forecasted growth in U.S. agricultural exports is expected to come from: (a) the anticipated rise in income levels in East and Southeast Asian nations and other regions; and (b) the liberalization of agricultural markets brought about by the 1994 Uruguay Round trade agreements, which brought agriculture under multilateral disciplines for the first time, and by unilateral policy changes of other nations; (4) FAIR's domestic policy reforms remove a primary benefit associated with most U.S. export assistance programs--the exporting of surplus stocks generated by domestic price supports; (5) nevertheless, program proponents maintain that U.S. agricultural export assistance programs have continued relevance because they benefit the overall U.S. economy, benefit the U.S. agricultural sector, counter competitor nations' agricultural export programs, and promote U.S. trade negotiating objectives; (6) program performance under past conditions may not always be helpful in predicting future program relevance because of changing conditions in the global trading environment, such as Uruguay Round trade liberalization, or the potential for commodity supply and price volatility; and (7) nevertheless, using applicable economic research and expert opinion, GAO's review provides an indication of these programs' future contribution in four key areas: (a) with regard to the U.S. economy, no conclusive evidence exists that these programs have measurably expanded aggregate employment and output or reduced the trade and budget deficits; (b) concerning the U.S. agricultural sector, while U.S. agricultural export assistance programs may provide some income and employment benefits to the sector, there is limited evidence of these benefits; (c) regarding competitor nations' programs, the lack of transparency in these nations' agricultural export assistance efforts makes it difficult to conclusively determine how effectively U.S. export programs counter these foreign practices; and (d) concerning U.S. trade negotiating objectives, there are widely divergent views about the amount of leverage these programs provided in the past.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: Given the mixed evidence concerning the continued relevance of U.S. agricultural export assistance programs, their decreased funding levels, and the trend toward increased liberalization of global agricultural trade from which the U.S. agricultural sector is likely to benefit with or without further government support, the Congress may wish to reassess the continued viability and/or focus of the programs the next time these programs are reviewed.

    Status: Closed - Not Implemented

    Comments: Congress will not legislate a new Agriculture Act until 2002. At that time, Congress may consider action on GAO's matters for consideration.

    Matter: To support such an assessment, the Congress may wish to direct the Department of Agriculture (USDA) to develop more systematic information on the potential strategic value of U.S. export assistance programs--for example, in countering competitor nations' agricultural export programs or in providing negotiating leverage. Specifically, the Congress may direct USDA to develop more systematic information on: (1) competitors' programs and negotiating objectives; and (2) how effective each U.S. agricultural export assistance program is in furthering U.S. interests.

    Status: Closed - Not Implemented

    Comments: Congress will not legislate a new Agriculture Act until 2002, and GAO's matters for consideration address issues should be considered at that time.

    Matter: Once this information is in hand, the Congress may wish to refocus the thrust of the programs.

    Status: Closed - Not Implemented

    Comments: Congress will not legislate a new Agriculture Act until 2002. At that time, Congress may consider action on GAO's matters for consideration.

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