Commodity Credit Corporation's Export Credit Guarantee Programs

T-NSIAD-89-41: Published: Jun 14, 1989. Publicly Released: Jun 14, 1989.

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GAO discussed the Foreign Agricultural Service's (FAS) management of the Commodity Credit Corporation's (CCC) export credit guarantee programs. GAO found that: (1) prior to September 1988, FAS provided export credit guarantees for only those agricultural commodities that were 100-percent U.S.-origin content; (2) FAS changed its policy to provide export credit guarantees for agricultural products that were a mixture of U.S. and up to 25 percent foreign origin, but the guarantees covered only the value of the U.S. portion; (3) although the policy set a ceiling on the value of foreign content, it did not set a limit on the volume of foreign content; (4) FAS changed the policy in February 1989 to cover only commodities certified by the exporters as zero-percent foreign content; (5) FAS increased its compliance review staff to conduct guarantee program reviews; and (6) although FAS considered but had not taken suspension or debarment actions against companies that violated program requirements, it notified exporters that they might be liable to CCC for any amounts under the payment guarantees. GAO believes that: (1) although the zero-percent-foreign-content policy was appropriate for such bulk commodities as wheat, it was not appropriate for such processed agricultural products as powdered infant and soft drink formulas that contained only small percentages of import content; (2) FAS should consider establishing a working group of representatives of interested parties to assess the impact of different policy options and develop appropriate guidance; and (3) suspension or debarment proceedings were appropriate.

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