International Trade

Congress authorized more than $1.25 billion for the Market Promotion Program during fiscal years 1986 to 1993, yet GAO found no clear relationship between the amount of money spent on the program and changes in the level of U.S. agricultural exports. The program works with not-for-profit associations that either run market promotion programs themselves or pass the funds along to commercial firms to promote their own brand-name products. In addition, the U.S. Department of Agriculture (USDA) has done few evaluations of efforts funded by the program. USDA cannot be sure that in the absence of the program, participants would not have funded these activities by themselves. USDA has not established criteria for determining when a participant's funding should be reduced or eliminated. The program's stated goals--to encourage the development, maintenance, and expansion of foreign markets for U.S. agricultural products--are so broad that they could provide a rationale for continued support under almost any market situation. GAO summarized this report in testimony before Congress; see: U.S. Department of Agriculture: Market Promotion Program Could Be More Effective, by Allan I. Mendelowitz, Director of International Trade, Finance, and Competitiveness Issues, before the Subcommittee on Foreign Agriculture and Hunger, House Committee on Agriculture. GAO/T-GGD-93-38, June 23, 1993 (22 pages).

GAO found that: (1) the Foreign Agricultural Service (FAS) believes that there is a positive correlation between MPP funding levels and U.S. export levels and the additional value of exports due to MPP ranges between $2 and $7 for each dollar in program expenditures; (2) the large number of variables that determine export levels makes it difficult to demonstrate a relationship between program-funded promotion activities and increased exports; (3) FAS has conducted only 12 MPP program evaluations between fiscal year (FY) 1986 and FY 1992; (4) some program activities in Japan have not achieved their objectives partially due to inadequate market research and management problems; (5) some MPP activities in Japan have helped remove trade restrictions and increased consumer awareness and sales of certain products; (6) FAS has no method for ensuring that MPP funds are used for additional promotion activities, since applicants are not required to provide information on their prior promotional expenditures; and (7) FAS has not established criteria regarding how long participants can remain in the program and is opposed to a mandatory graduation requirement.