Agriculture and Food:

Commodity Credit Corporation's Export Credit Guarantee Programs

T-NSIAD-89-9: Published: Mar 1, 1989. Publicly Released: Mar 1, 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) in September 1988, FAS issued a policy change to exporters to clarify commodity eligibility under the programs and to allow the value of exports to include up to 25 percent imported agricultural commodities; (2) under the new policy, only the value of the U.S. portion of the agricultural commodities would receive the CCC guarantee; (3) for the 5-month period that the policy was in effect, CCC-approved guarantees for exports of mixed U.S. and foreign content totalled only about $23.7 million, including about $19.2 million in U.S. content, while total loan guarantees exceeded $2 billion; (4) FAS reversed the policy in February 1989 to include only commodities containing 100-percent U.S. ingredients for loan eligibility; (5) there was evidence that large quantities of foreign tobacco shipments were shipped under the programs prior to September 1988, but the Department of Agriculture did not consider debarment or suspension of violators; (6) although FAS directed its compliance review staff to perform compliance checks on the export programs, the compliance staff was too small to handle the added responsibilities; and (7) FAS lacked proper internal controls, did not make foreign content compliance checks, and issued the last two policy changes without a comprehensive evaluation. GAO believes that, before FAS makes any program changes, it should: (1) assess the impact of different options on exports; (2) consider the appropriateness of uniform or specific commodity guidance; and (3) solicit program participants' views.

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