These objectives are to “discourage unfair trade practices by making U.S. agricultural commodities competitive.” The nationality of an exporter’s ownership is not germane to the pursuit of these objectives, since both foreign- and domestic-owned EEP exporters act as intermediaries in the program’s sales of U.S. agricultural commodities in overseas markets. Eliminating foreign-owned exporters from the program would reduce the number of bidders for EEP bonuses. The economic studies we reviewed suggested that eliminating potential bidders from participating in EEP would reduce competition for EEP bonuses. Given the number of variables that affect whether an exporter participates in and receives bonuses under EEP, we could not determine if domestic-owned exporters could easily replace foreign-owned exporters in the program. Any unauthorized diversion of EEP shipments undermines the targeting aspect of the program. Agency Comments

The Foreign Agricultural Service provided written comments on a draft of this report. Copies will be made available to others on request.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the participation of foreign-owned companies in the Foreign Agricultural Service's (FAS) Export Enhancement Program (EEP).

What GAO Found

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.