Agricultural Trade: Competitor Countries' Foreign Market Development Programs

Pursuant to a congressional request, GAO discussed: (1) competitor countries' foreign agricultural market development activities; and (2) state trading enterprises (STE). GAO noted that: (1) the European Union spends far more on total agricultural support than the United States; (2) foreign market development includes advertising, consumer promotion, trade servicing and market research; (3) although the multilateral trade agreement limits the amount of agricultural subsidies, it does not limit funding for foreign market development activities; (4) the four European countries reviewed spend less on promoting high-value products than the United States; (5) although their market development programs are similar, the United States tends to place more emphasis on consumer advertising than the European countries; (6) 3 of the countries use centralized marketing organizations to promote their exports, while the Netherlands and the United States use more decentralized approaches; (7) the 4 countries reviewed have greater incentives for ensuring that their promotional activities are effective, since program financing comes predominantly from the private sector; (8) U.S. marketing boards tend to focus more on the U.S. domestic market rather than exports; (9) switching program funding to the private sector would reduce federal expenditures and prompt the agricultural industry to ensure that foreign market development activities are effective; and (10) the Uruguay Round agreement requires member countries to report on STE activities, but it is too soon to tell if these measures will be effective.