Status Report on GAO's Review of the Export Enhancement Program

GAO discussed the Department of Agriculture's (USDA) Export Enhancement Program (EEP). GAO found that: (1) because the supply of wheat has tightened since 1987, resulting in higher wheat prices, USDA has announced fewer new EEP initiatives and has not extended existing ones; (2) as of July 21, 1989, USDA had announced 103 initiatives, the market value of EEP bonuses totalled nearly $2.6 billion, and about 70 percent of the bonuses subsidized wheat exports; (3) the farm community and the administration viewed EEP as a valuable trade policy tool which encouraged the European Community (EC) to negotiate the liberalization of agricultural trade; (4) some critics believed that EEP had generated little, if any, increase in U.S. agricultural exports, and non-subsidizing competitors stated that EEP had adversely affected their exports by lowering their commodity prices and reducing their market shares; and (5) although some sales would not have taken place without EEP, an exact measure of the effect of EEP was difficult because of the many factors influencing exports. GAO believes that: (1) EEP is an important trade policy tool, which USDA should continue to use selectively during the current wheat shortage; and (2) USDA should not eliminate EEP, since that could demonstrate to EC and others the United States' unwillingness to seriously challenge unfair trading practices.