U.S. Department of Agriculture

This report reviews the participation of foreign-owned companies in the Export Enhancement Program, which is run by the Agriculture Department's Foreign Agricultural Service. The program is intended to discourage unfair trade practices of other countries and boost the competitiveness of U.S. agricultural commodities. GAO discusses whether (1) providing bonuses to foreign-owned exporters is consistent with program goals and objectives and (2) restricting foreign-owned exporters from participation would harm the program. GAO also discusses whether current Foreign Agricultural Service controls adequately protect against unauthorized diversion of program shipments to countries other than those originally targeted.

GAO found that: (1) foreign exporters' participation in EEP is consistent with the program's basic objectives of discouraging other countries' unfair trade practices and increasing the competitiveness of U.S. agricultural commodities; (2) exporters help achieve these objectives by facilitating U.S. agricultural product sales in targeted countries; (3) restricting foreign exporters' EEP participation could reduce the effectiveness of the program; (4) eliminating foreign-owned exporters would reduce the number of bidders for EEP bonuses, which would reduce competition and result in higher program costs; (5) it is unclear whether domestic-owned exporters could easily replace foreign-owned exporters; and (6) FAS ability to detect unauthorized diversions of EEP shipments, consisting mainly of checking exporters' documents which may be unreliable or inaccurate, will be affected by limitations in the database.