Agricultural Trade:

Changes Made to Market Access Program, but Questions Remain on Economic Impact

NSIAD-99-38: Published: Apr 5, 1999. Publicly Released: Apr 5, 1999.

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Pursuant to a congressional request, GAO reviewed the Department of Agriculture's implementation of legislative reforms to the Market Access Program (MAP) and their impact on program participation.

GAO noted that: (1) as directed by Congress, the Foreign Agricultural Service (FAS) implemented operational changes to MAP; these changes have affected program participation and distribution of funds; (2) since fiscal year (FY) 1994, FAS has increased the number of small businesses participating in MAP to promote brand-name products as well as small businesses' share of program funds; (3) as required by statute, FAS prohibited direct assistance for brand-name promotions to large companies beginning in FY 1996; (4) this prohibition does not apply to cooperatives and certain associations; (5) also, beginning in FY 1998, FAS prohibited indirect assistance to large companies; (6) FAS implemented a graduation requirement that will affect about a quarter of the small businesses with brand-name promotions totalling $4.3 million in FY 1999, as well as the number of MAP brand-name promotions conducted in individual country markets; (7) this graduation requirement also could have affected about half of the cooperatives; however, in December 1998, FAS chose to use its statutory authority and waive the graduation requirement for all cooperatives, citing special considerations; (8) since FY 1995, FAS has required all participants to self-certify that MAP funds supplement, not supplant, their activities to develop new foreign markets for their products; (9) while FAS regularly verifies that the participants and the companies they fund have completed their certification statements, FAS' Director of Compliance Review Staff reports that it is difficult to ensure that these funds are additional because it is hard to determine what would have been spent in the absence of MAP funds; (10) also, this requirement has had no apparent impact on program participation; (11) questions remain about the overall economic benefits derived from MAP funding; (12) FAS estimates of MAP's macroeconomic impact are overstated because they rely on a methodology that assumes that the resources used were not employed prior to the funding; (13) GAO noted that this is inconsistent with Office of Management and Budget cost/benefit guidelines; and (14) in addition, the evidence from market-level studies is inconclusive regarding MAP's impact on specific commodities in specific markets.

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