Agricultural Trade

The European Community has become the world's largest exporter of agricultural high-value products, capturing 20 percent of the world's $160 billion trade in these products during 1990, as compared with the United States' 15.6 percent share. This report (1) identifies factors that limit high-value product sales under the Export Enhancement Program and (2) discusses other U.S. Department of Agriculture (USDA) efforts to increase exports of high-value products. GAO concludes that the program is not a good way to boost sales of these products. Restrictive program guidelines, foreign policy considerations, and cumbersome proposal and bidding processes make it hard to significantly increase the percentage of program bonus awards supporting sales of high-value products. Other USDA programs not bound by the Export Enhancement Program's restrictive guidelines may be in a better position to increase sales. The recently developed Long-Term Agricultural Trade Strategy should help USDA to focus on attaining the best mix of export assistance programs to increase sales.

GAO found that: (1) in fiscal years 1990 and 1991, HVP sales represented only 8 percent of total EEP funds instead of the 25 percent specified in the 1990 farm bill; (2) HVP sales under EEP are limited by restrictive program guidelines, foreign policy considerations, and cumbersome administrative processes; (3) other USDA export subsidy programs may be better able to promote HVP exports, since these programs allow USDA to provide cash bonuses to U.S. exporters to facilitate HVP sales in selected foreign markets; and (4) in response to a congressional mandate, USDA has proposed a long-term agricultural trade strategy to expand the total dollar amount of HVP exports and the percentage of U.S. exports represented by HVP.