U.S. Agricultural Exports:

Factors Affecting Competitiveness in World Markets

RCED-87-35BR: Published: Oct 9, 1986. Publicly Released: Nov 3, 1986.

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Pursuant to a congressional request, GAO addressed the issues of: (1) declining U.S. agricultural exports; and (2) waning U.S. competitiveness in the world agricultural market. GAO defined competitiveness as the ability to sell U.S. products in the world market at a level sufficient to sustain the U.S. market share.

GAO identified a number of factors that affect U.S. agricultural competitiveness, including public policy factors, economic factors, and natural resource constraints. Public policy factors affecting competitiveness include: (1) trade and countertrade agreements, some of which inhibit trade; (2) price supports and other subsidies that increase the market price of U.S. products; (3) government organizations, especially in non-market economies, that control and restrict agricultural trade; (4) such nontariff trade barriers as quality or safety standards, or quotas; (5) levies or duties imposed to protect countries' domestic industries; (6) restrictive international credit policies; and (7) sales moratoria or embargoes. Economic factors affecting competitiveness include: (1) a decreasing U.S. edge in production and distribution costs; (2) productivity increases in other exporting countries; (3) a growing perception in other countries that U.S. products are substandard; (4) fluctuations in the growth rate of the world economy; (5) exchange rate fluctuations; and (6) world population increases, which positively affect U.S. competitiveness. Natural resource factors affecting competitiveness include: (1) increasing climatic variability across the world; and (2) the amount of arable land and available water. GAO noted that it is difficult to make trade comparisons among different countries because many countries have different accounting standards, policies, and practices.

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