International Trade

Although the Foreign Agricultural Service (FAS) has tried to focus and tighten requirements for Market Promotion Program funding, more changes are needed to ensure that program funds are being used effectively. GAO believes that the program's current funding process fails to address several important factors. FAS has no guarantee that program funds are being used to increase the overseas promotional activities of commercial firms rather than simply replacing funds that would have been spent anyway. In addition, there are no criteria addressing the graduation from the program of participating commercial firms. FAS also has not developed criteria governing the participation of foreign versus domestic firms and large versus small firms. Lastly, FAS has only limited information on the U.S. content and processing of products promoted with program funds--one of the criteria used in funding decisions. FAS believes that it has received conflicting guidance from Congress and that it would benefit from explicit legislation clarifying the program's objectives.

GAO found that: (1) FAS has no mechanism for ensuring that MPP funds are used to increase promotional activities; (2) there is evidence that commercial firms have substituted MPP funds for promotional expenditures; (3) FAS has no criteria for ending firms' participation in MPP; (4) FAS opposes limiting the length of time successful participants can remain in the program, but it does phase out firms with ineffective promotional activities; (5) FAS has no criteria for foreign firms' participation in MPP; (6) foreign firms receive a significant proportion of MPP funds despite congressional guidance that MPP funds go to U.S. firms; (7) FAS believes that foreign firms can help create demand for U.S. products in foreign markets, but they may do so at the expense of U.S. firms trying to compete in those foreign markets; (8) FAS does not collect data on firms' size and cannot determine if it has met Congress' recommendation that it encourage participation by small, medium-sized, and new-to-export firms; (9) FAS has developed criteria for using domestic content and processing in funding MPP recipients, but it has relied on unverified information for its funding decisions; and (10) FAS believes Congress needs to clarify its guidance for MPP.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: