We discussed the results of the Uruguay Round as contained in GATT 1994 and the Agreement on Agriculture with officials from the United States, GATT/WTO, and other countries, including the chairmen of the WTO Working Party on State Trading Enterprises and the WTO Committee on Agriculture. We discussed U.S. efforts to monitor the activities of STEs in other countries with respect to GATT/WTO requirements with officials from USTR, USDA/FAS, the Department of Commerce, and the International Trade Commission. The evidence we obtained suggested the lack of compliance could be attributed to (1) confusion over the definition of STEs, (2) the lack of systematic review of notifications received, (3) the apparent low priority some GATT members assigned to article XVII’s reporting requirement, and (4) the overall burden associated with GATT reporting requirements. Under these circumstances, it is impossible to determine whether article XVII has yielded information on the full nature and extent of STE activity in GATT/WTO member countries. 1). Member countries also reported that they maintained state trading in alcoholic beverages and petroleum products. However, our review of STE notifications confirmed what GATT/WTO and member country officials told us—that some member countries continued to struggle with the definition of STEs. The Understanding did not change the questionnaire used to collect information about STEs, but WTO members have agreed to review the questionnaire and the adequacy of information provided about STEs. GATT/WTO members are required to make specific reductions in three types of agricultural support—market access restrictions, export subsidies, and internal support—over a 6-year period beginning in 1995. In addition, the agreement established a WTO Committee on Agriculture to monitor implementation of Uruguay Round commitments. The state has been instrumental in opening China’s economy and implementing market-oriented reforms. USDA/FAS and Foreign Commercial Service staff are also responsible for monitoring STE activities in the countries where they are located as part of their regular reporting responsibilities. For example, USDA/FAS reports on major commodity sectors like wheat and dairy have covered STE activities. We are sending copies of this report to the Secretary of Agriculture and to the U.S. Trade Representative.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the activities of other countries' agricultural state trading enterprises (STE), focusing on: (1) General Agreement on Tariffs and Trade (GATT) members' reporting of STE activities from 1980 to 1994; (2) Uruguay Round commitments relating to STE; (3) the potential increase of STE under GATT and the World Trade Organization (WTO); and (4) U.S. efforts to monitor the activities of other countries' STE with respect to GATT and WTO requirements.

What GAO Found

GAO found that: (1) some information on STE in GATT member countries has been obtained through the notification process, but only about 21 percent of the member countries complied with the reporting requirement between 1980 and 1994; (2) GATT and WTO officials attributed the noncompliance to definitional problems, the lack of a systematic review of STE notifications, and the overall burden and the low priority that some member countries assigned to GATT reporting; (3) WTO officials plan to evaluate the questionnaire used to collect information about STE in order to improve member countries' compliance with the reporting requirements; (4) the Uruguay Round Agreement on Agriculture requires member countries to reduce market access restrictions, export subsidies, and internal support and report on how they complied with these commitments, beginning in 1996; (5) while countries like Russia and China are undertaking privatization efforts to move toward more market-oriented economies, the role of STE in GATT and WTO will likely increase if these countries become members of GATT and WTO; and (6) the U.S. Trade Representative is responsible for monitoring STE activities and their compliance with Uruguay Round commitments, while the Foreign Agricultural Service and the Foreign Commercial Service are responsible for monitoring STE activities in the countries where they are located and reporting on STE activities as needed.