International Trade

Seven years of negotiations culminated recently in the "Uruguay Round" of the General Agreement on Tariffs and Trade, whose signatories agreed to discipline the use of trade-distorting practice, such as tariffs and subsidies. GAO concludes that the proposed Uruguay Round trade agreements would require that the United States reduce its agricultural export subsidies beginning in 1995, raising questions about whether the goals and objectives of the Export Enhancement Program--which is designed to pressure U.S. agricultural competitors--need to be revised. Specifically, this report identifies the (1) likely impact of the Uruguay Round on U.S. agricultural export programs and (2) proposals by industry participants and interest groups that Congress could consider for changing the Export Enhancement Program and other agricultural trade programs run by the Agriculture Department's Foreign Agricultural Service.

GAO found that: (1) the United States may have to reduce its agricultural export subsidies by 1995 if the agreement is implemented; (2) the potential subsidized export reductions would be based on a commodity-specific basis and phased in over a 6-year period; (3) the impact of subsidy reductions on EEP and other U.S. agricultural export programs would vary; (4) although the agreement would not directly restrict USDA export credit, food aid, or market promotion and development programs, it establishes guidelines for food aid and market promotion to ensure export subsidy reduction compliance; (5) proposed EEP changes include expanding or eliminating EEP targeting, making the program more flexible for exporters and buyers, changing U.S. agricultural trade policies, and having Congress establish a marketing board; (6) there is no consensus among exporters about the continued need for EEP or its ideal structure; (7) the Foreign Agricultural Service is preparing a position paper on the implications of the agreement for EEP; (8) if the agreement is implemented, the goals and objectives of EEP will need to be revised; and (9) any alternative proposals or significant changes to EEP will need to be evaluated against the role and purpose of the program.