USAID and State Conduct TCB Activities Aligned with Their Primary Goals; TCB Is Secondary to Goals of Other Agencies

Of the four agencies we reviewed that fund and implement TCB activities,  only USAID and State have strategic plans that include TCB-focused  goals. In conjunction with objectives other than TCB, USAID conducts TCB- related activities that indirectly support TCB by helping countries take  advantage of trade-related economic opportunities. TCB Is Secondary to the Goals of MCC and the Army

Other agencies we reviewed do not have TCB-focused strategic goals,  but conduct activities that have trade-related effects and that are  considered TCB to fulfill their broader mission goals. MCC operates differently than USAID and other U.S. agencies in that it  only provides assistance to developing countries based on criteria  involving governance and economic reform measures. However, the Army funds trade-related physical  infrastructure projects considered TCB as part of the Commander’s  Emergency Response Program in Afghanistan and in support of its  infrastructure development efforts in both Iraq and Afghanistan. According to the database, from 2005 to 2010, overall  annual funding increased 25 percent, from $1.35 billion to $1.69 billion. The Inclusion of MCC and the Army Has Significantly Increased the Reported Levels of and Changed the Composition of Total TCB Funding

Since our previous review of TCB assistance in 2005, there have been  significant changes in the level and composition of total TCB funding as  reported by the U.S. TCB database. Annual TCB funding in the category of physical infrastructure has grown  from $346 million in 2005 to $787 million in 2010, a 127 percent increase. The TCB Database Does Not Adequately Explain Significant Factors Driving Changes in the Composition of TCB Funding

			The Database Does Not Fully Explain Limitations That May Cause Prior Years’ Reporting to be Understated

Difficulties reporting previous years’ data for newly identified sources of  TCB funding may mean that funding levels for those years are  understated in certain cases. USAID officials explained that the TCB survey is  designed to solicit such a determination because it surveys those officials  responsible for managing the projects “on the ground.”
Although the TCB survey attempts to identify and quantify just the trade- related components of a physical infrastructure project, we found  examples where the application of this distinction was challenging. USAID Has Improved Its Assessment of TCB, but Has Not Made Plans to Make Use of Insights from a Recent Multicountry Evaluation, or to Conduct Additional Evaluations

USAID has made improvements in assessing the results of its TCB  assistance, including developing indicators and taking the positive step of  commissioning its first independent agencywide multicountry evaluation  of TCB activities, as we recommended in our 2005 report. In addition, it has commissioned a limited number of  evaluations of specific TCB programs to assess longer-term results. Although the agency is developing training based on the results of the  evaluation, it has not developed plans for disseminating best practices to  missions nor has it made plans for conducting such evaluations on an  ongoing basis. Activities in the trade and  investment program area relate to TCB, and USAID uses 20 trade and  investment standard indicators to measure the immediate results of its  TCB activities. USAID Has Yet to Take Action on the Evaluation’s Results or Plan for Additional Evaluations

Although the evaluation examined the results of USAID’s TCB activities  for the purpose of learning from experiences, improving the design and  implementation of TCB assistance, and informing efforts to systematically  monitor and evaluate results, it has yet to take action to incorporate the  results of the evaluation into its management of TCB activities. Recommendations for Executive Action

To enhance the management and evaluation of TCB activities, we  recommend that the Administrator of USAID take the following two  actions:    Explicitly and publicly report the identified limitations associated with  the methodology used to collect and report data in the U.S.  government TCB database, including MCC and the Army’s data  issues, and consider ways to differentiate between categories of  assistance that directly and indirectly relate to TCB. USAID stated that it has already taken steps consistent with  our recommendations. Clear reporting and transparency in methodology and  collection are essential for users of the TCB database; the actions USAID  has already taken, as well as those they state they intend to take, should  facilitate the ability of users to understand changes in the nature of TCB  over time. We are  suggesting that USAID document its specific plans for conducting TCB  evaluations on an ongoing basis. Appendix I: Objectives, Scope, and Methodology

This report examines (1) how agencies’ trade capacity building (TCB)  activities are aligned with the agencies’ goals, (2) the extent to which the  U.S. TCB database provides sufficient information on key trends and  funding, and (3) the extent to which U.S. Agency for International  Development (USAID) monitors and evaluates the effectiveness of its  TCB activities. These include the  Millennium Challenge Corporation (MCC), the Departments of the Army  (Army) and State (State), and USAID. In addition, we included the Office  of the U.S. Trade Representative (USTR) in our review due to its role in  trade policy coordination. To understand how agencies’ TCB activities are aligned with the  agencies’ goals, we analyzed strategic, budget, and programmatic  documents describing these agencies’ TCB funding and activities. U.S.
Why GAO Did This Study

From 2005 to 2010, 24 U.S. agencies provided more than $9 billion in trade capacity building (TCB) assistance to help more than 100 countries reduce poverty, increase economic growth, and achieve stability through trade. To report on TCB funding, the U.S. government conducts an annual survey of agencies and publicly reports the data in a TCB database administered by the U.S. Agency for International Development (USAID). GAO examined (1) how agencies' TCB activities are aligned with the agencies' goals, (2) the extent to which the TCB database provides sufficient information on key trends and funding, and (3) the extent to which USAID monitors and evaluates the effectiveness of its TCB activities. GAO focused on the agencies that reported the most funding for TCB activities since 2005--the Departments of the Army and State, the Millennium Challenge Corporation (MCC), and USAID--and the Office of the U.S. Trade Representative (USTR). GAO analyzed U.S. government data; reviewed agencies' strategic, budget, and program documents; and met with U.S. and foreign government officials in select countries.

What GAO Found

USAID and State conduct TCB activities that are aligned with their primary goals, but TCB is secondary to the goals of other agencies. USAID and State have developed strategic plans that include TCB-focused goals. Aligned with these goals, USAID and State assist countries in negotiating and implementing trade agreements. In addition, USAID assists countries in taking advantage of economic growth opportunities stemming from trade, often in conjunction with other agency goals. TCB is not a primary focus of MCC and the Army, however, they conduct activities to meet their broader agency goals that have trade-related effects. MCC identifies trade-related assistance it considers TCB as part of its programs' poverty reduction goals. The Army implements TCB-related physical infrastructure projects as part of its disaster response objectives and in support of its reconstruction and economic development efforts in Iraq and Afghanistan. The U.S. government TCB database has reported that annual TCB funding has increased from $1.35 billion in 2005 to $1.69 billion in 2010, but the database does not adequately describe certain factors underlying this growth and other significant changes in the composition of TCB funding. From 2005 to 2010, two agencies--MCC and the Army--began reporting significant TCB funding, primarily for physical infrastructure projects. Their funding comprised 54 percent of total TCB, and physical infrastructure projects comprised 45 percent of total TCB. However, the TCB database does not adequately explain significant factors driving changes in the composition of TCB funding. In particular, the annual TCB survey methodology attempts to identify and quantify just the trade-related components of projects, but this can be difficult in practice, particularly for physical infrastructure projects. Although GAO found the survey data to be generally reliable, these factors can lead to limitations in the data that are not described for its users. Clear reporting and transparent methodology and data collection are essential to understanding levels of funding and changes in the nature of TCB over time. USAID has improved its assessment of TCB activities, including developing performance indicators and taking the positive step of commissioning a multicountry evaluation of the effects of TCB, but it has yet to develop plans to make use of the evaluation's valuable insights. USAID uses trade and investment indicators to assess the immediate results of its TCB activities. However, officials explained that it is difficult to attribute trade-related trends revealed by the indicators to the effects of TCB assistance and collect valid and reliable data to measure progress. To assess longer-term results, USAID has commissioned evaluations of TCB programs in specific countries, but these are limited in number. It recently commissioned a multicountry evaluation of the long-term effectiveness of its TCB activities agencywide. While USAID is beginning to incorporate the evaluation's results in its training, it has yet to develop plans for disseminating best practices to missions and offices on the methods they may use to better manage and assess their activities. Furthermore, it has not made plans for conducting evaluations on an ongoing basis.

What GAO Recommends

GAO recommends that the Administrator of USAID publicly report identified limitations and key distinctions in the categories of TCB assistance in the database. GAO also recommends that USAID develop a written plan for using its recent TCB evaluation and for conducting evaluations on an ongoing basis. USAID stated that it has already taken steps consistent with the GAO recommendations.