The Agricultural Export Enhancement Program

GAO discussed whether the Agricultural Export Enhancement Program could achieve its objectives to: (1) increase U.S. farm product exports; and (2) encourage negotiations with trading partners on agricultural problems. The program was established with $2 billion in surplus Commodity Credit Corporation (CCC) agricultural commodities, which CCC used to expand sales of U.S. agricultural commodities in targeted markets. CCC recently issued initiatives that targeted wheat or wheat flour to several countries, but only two initiatives for Egypt resulted in sales. GAO found that: (1) the targeting aspect of the program limits activity, since the subjects of initiatives are to be competitors who subsidize their exports; (2) the targeting aspect could cause traditional U.S. commercial customers to view the program as discriminatory; (3) the initiatives have only involved wheat and wheat flour, and the potential use of the program for other commodities is limited; (4) the Department of Agriculture estimates that most of the additional sales will consist of CCC commodities, and direct impacts on commercial markets and farm incomes will be slight; (5) if a subsidy collapses, the resulting market share would revert to European Community suppliers; (6) although countersubsidies may be used to bring subsidizing competitors to negotiations, foreign actions to offset U.S. export subsidies or to find new markets will raise the cost of competitor export subsidies, and may not be sufficient to bring about the desired negotiations; and (7) cargo preference requirements would increase program costs and undermine program objectives.