Agricultural Trade

Government Support Calculations Under the U.S.-Canada Free Trade Agreement Gao ID: RCED-90-210 August 8, 1990

GAO reviewed methods used to calculate levels of government support under the U.S.-Canada Free Trade Agreement, focusing on the accuracy of the 1989 government support calculations for U.S. wheat.

GAO found that: (1) to measure the level of government support, the agreement includes a formula that measures the amount of producer revenue derived from government policies; (2) the U.S. government support calculations for wheat were composed of 13 categories of direct and indirect support; (3) with one exception, there were no material discrepancies in the calculation of the 1989 U.S. government support totals for wheat, but there were several opportunities to adjust state expenditures data to more precisely show how much state governments were supporting their agricultural sectors; (4) state expenditures represented a relatively small portion of government support, and in crop year 1989 state expenditures totalled $106 million, representing approximately 2 percent of government transfers to U.S. wheat producers; (5) some government support calculation adjustments would either increase or decrease state expenditures; (6) when two countries' government support calculations were close, those adjustments could affect whether a country was required to lift its grain import restrictions; (7) agricultural organizations funded by user charges and check-off fees earned interest on some of their funds, primarily because they often received total funding at the beginning of the fiscal year and earned interest until they spent the money; (8) states often issued public debt to fund certain projects, some of which could be related to agriculture; and (9) state agricultural budgets did not report some state contributions to funds for some state agricultural employees.

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.

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