State Trading Enterprises:

Compliance with the General Agreement on Tariffs and Trade

GGD-95-208: Published: Aug 30, 1995. Publicly Released: Aug 30, 1995.

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Pursuant to a congressional request, GAO reviewed the activities of other countries' agricultural state trading enterprises (STE), focusing on: (1) General Agreement on Tariffs and Trade (GATT) members' reporting of STE activities from 1980 to 1994; (2) Uruguay Round commitments relating to STE; (3) the potential increase of STE under GATT and the World Trade Organization (WTO); and (4) U.S. efforts to monitor the activities of other countries' STE with respect to GATT and WTO requirements.

GAO found that: (1) some information on STE in GATT member countries has been obtained through the notification process, but only about 21 percent of the member countries complied with the reporting requirement between 1980 and 1994; (2) GATT and WTO officials attributed the noncompliance to definitional problems, the lack of a systematic review of STE notifications, and the overall burden and the low priority that some member countries assigned to GATT reporting; (3) WTO officials plan to evaluate the questionnaire used to collect information about STE in order to improve member countries' compliance with the reporting requirements; (4) the Uruguay Round Agreement on Agriculture requires member countries to reduce market access restrictions, export subsidies, and internal support and report on how they complied with these commitments, beginning in 1996; (5) while countries like Russia and China are undertaking privatization efforts to move toward more market-oriented economies, the role of STE in GATT and WTO will likely increase if these countries become members of GATT and WTO; and (6) the U.S. Trade Representative is responsible for monitoring STE activities and their compliance with Uruguay Round commitments, while the Foreign Agricultural Service and the Foreign Commercial Service are responsible for monitoring STE activities in the countries where they are located and reporting on STE activities as needed.

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