International Trade

Pursuant to a congressional request, GAO examined Iraq's participation in the Department of Agriculture's (USDA) Export Credit Guarantee Programs, focusing on the: (1) development of Iraq as a U.S. agricultural export market; (2) Iraq's participation in other agricultural export development programs; and (3) investigations into program improprieties.

GAO found that: (1) the Commodity Credit Corporation (CCC) increased export credit guarantees for Iraq from $400 million in fiscal year (FY) 1983 to $1.1 billion for FY 1988 and FY 1989 and $500 million for FY 1990; (2) although USDA rated Iraq as a high-risk market, its Foreign Agricultural Service (FAS) concluded that the risk facing CCC was minimal; (3) although interagency deliberations on Iraq's participation in the programs raised concerns about its creditworthiness and capacity to service additional debt, FAS continued to approve credit guarantees through FY 1990; (4) the Export Enhancement Program provided $157.2 million in bonuses to U.S. exporters to Iraq, while the Targeted Export Assistance and Cooperator Foreign Market Development Programs provided $1.9 million in market development assistance to U.S. commodity groups targeting Iraq from FY 1986 to 1990; (5) USDA adopted a more cautious approach to providing additional GSM guarantees to Iraq following impropriety investigations by its Office of Inspector General and the Department of Justice; and (6) CCC had a $2-billion liability under its export credit guarantee programs covering loans to Iraq, when the President announced a trade embargo that included a prohibition on granting credits for the purchase of U.S. agricultural commodities.