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entitled 'Foreign Assistance: The United States Provides Wide-ranging 
Trade Capacity Building Assistance, but Better Reporting and 
Evaluation Are Needed' which was released on July 29, 2011. 

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United States Government Accountability Office: 
GAO:  

Report to Congressional Requesters: 

July 2011:  

Foreign Assistance: 

The United States Provides Wide-ranging Trade Capacity Building 
Assistance, but Better Reporting and Evaluation Are Needed: 

GAO-11-727: 

GAO Highlights: 

Highlights of GAO-11-727, a report to congressional requesters.  

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.  

View [hyperlink, http://www.gao.gov/products/GAO-11-727] or key 
components. For more information, contact Loren Yager at (202) 512-
4347 or yagerl@gao.gov.  

[End of section]  

Contents: 

Letter: 

Background: 

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

The TCB Database Does Not Provide Adequate Information Necessary to 
Understand Significant Changes in the Composition of Reported TCB 
Activities: 

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: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: USAID Plans Trade Capacity Building-Related Activities In-
Country, Often in Collaboration with Recipient Governments and 
Stakeholders: 

Appendix III: Coordination of U.S. Trade Capacity Building Assistance 
among Agencies: 

Appendix IV: Recipient Countries of Bilateral U.S. Trade Capacity 
Building Assistance and Funding Levels, Fiscal Years 2005-2010: 

Appendix V: MCC and the Army Assessments of Trade Capacity Building- 
Related Activities: 

Appendix VI: Comments from the U.S. Agency for International 
Development: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: U.S. TCB Categories and Definitions: 

Table 2: Countries Receiving TCB Funding Obligations, Fiscal Years 
2005ñ2010: 

Figures: 

Figure 1: U.S. TCB Funding by Agency, Fiscal Years 2001-2010: 

Figure 2: Shares of Total U.S. TCB Funding by Category, Fiscal Years 
2001-2004 and 2005-2010: 

Figure 3: TCB Funding by Category and Agency, Fiscal Years 2005-2010: 

Figure 4: Total U.S. TCB Funding by Agency and by Region, Fiscal Years 
2005-2010: 

Figure 5: Share of Bilateral Obligated TCB Funding by LDC Status, 
Fiscal Years 2005-2010: 

Abbreviations: 

AGOA: African Growth and Opportunity Act of 2000:  

Army: Department of the Army:  

CAFTA-DR: Central America-Dominican Republic Free Trade Agreement:  

CERP: Commander's Emergency Response Program:  

FTA: free trade agreement:  

LDC: least-developed country:  

MCC: Millennium Challenge Corporation:  

OECD: Organization for Economic Cooperation and Development:  

State: Department of State:  

TIFA: Trade and Investment Framework Agreement:  

TCB: trade capacity building:  

TPSC: Trade Policy Staff Committee:  

USAID: U.S. Agency for International Development:  

USTR: Office of the U.S. Trade Representative:  

WTO: World Trade Organization:  

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548:  

July 29, 2011: 

The Honorable Howard L. Berman: 
Ranking Member: 
Committee on Foreign Affairs: 
House of Representatives:  

The Honorable Joseph Crowley: 
House of Representatives:  

 The Honorable Jim McDermott: 
House of Representatives:  

Trade capacity building (TCB) is a form of development assistance 
provided by the United States and other countries to help developing 
countries participate in and benefit from global trade. Congress and 
the executive branch have identified TCB assistance as an important 
tool for U.S. trade and development policy based on evidence of the 
effectiveness of trade in reducing poverty and generating economic 
development and growth. According to the Office of the U.S. Trade 
Representative (USTR), poverty rates for countries engaged in 
international trade have fallen sharply over the last 20 years. In the 
context of the ongoing Doha Development Agenda multilateral trade 
negotiations of the World Trade Organization (WTO), WTO member 
countries have recognized the impact of trade on development, 
including the role that trade can play in reducing poverty, achieving 
economic growth, and raising income levels. WTO members have also 
recognized the importance of trade-related assistance for addressing 
the constraints that limit the ability of developing countries and, in 
particular the least-developed countries, to fully benefit from trade 
and the rules-based multilateral trading system. To respond to these 
concerns, in 2001 and 2005, the WTO affirmed the importance of TCB 
assistance and the United States and other donors pledged continued 
support, respectively. The U.S. government provides TCB assistance to 
help developing countries worldwide build the physical, human, and 
institutional capacity to participate in global trade. Multiple U.S. 
agencies have developed a variety of programs that provide such 
assistance and support more than 100 countries. When we examined U.S. 
government TCB efforts in 2005, we noted the importance of the 
linkages between trade and development and recommended that more 
evaluation be performed to help ensure that TCB activities are 
effective in helping countries benefit from trade. We also cited the 
importance of evaluation in demonstrating that the capacity building 
goals envisioned by the United States are being achieved.[Footnote 1] 

In response to your interest in U.S. TCB programs, this report 
examines (1) how agencies' TCB activities are aligned with the 
agencies' goals, (2) the extent to which the U.S. government TCB 
database provides sufficient information on key trends and funding, 
and (3) the extent to which the U.S. Agency for International 
Development (USAID) monitors and evaluates the effectiveness of its 
TCB activities. 

To address these objectives, we analyzed available data from the U.S. 
government TCB database, which is maintained by USAID and reports 
annual TCB data using a governmentwide survey. We have assessed these 
data as part of our previous and ongoing work and have determined that 
they are sufficiently reliable to identify TCB funding by agency, 
country, and category; although we found limitations to the use of the 
data, as discussed in this report. We focused our review on TCB 
activities provided by the Departments of the Army (Army) and State 
(State), the Millennium Challenge Corporation (MCC),[Footnote 2] and 
USAID, which together have funded more than 90 percent of total U.S. 
TCB assistance from fiscal years 2005 to 2010. In addition, we 
included USTR in our focus due to its unique trade policy role. In 
conducting our work, we analyzed strategic, budget, and programmatic 
documents describing these agencies' TCB funding and activities. We 
reviewed data and information these agencies use to measure the 
performance of their activities and, where available, evaluations of 
programs or projects. We conducted fieldwork in Colombia, Morocco, and 
Mozambique. We selected these countries because they were among the 10 
countries receiving the most TCB funding from fiscal years 2005 to 
2009. In addition, we sought a mix of U.S. agencies providing 
assistance in-country and the categories of assistance provided, as 
well as geographic diversity. In each country we reviewed agencies' 
strategy documents, and performance plans and reports. We also 
interviewed agency officials, host government officials, and 
contracted implementing partners and visited TCB projects. 

We conducted this performance audit from July 2010 through July 2011 
in accordance with generally accepted auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. Appendix I 
contains a more detailed description of our scope and methodology. 

Background: 

TCB assistance is based on the premise that international trade can 
positively benefit a country's overall growth and development. The 
United States and other countries increasingly view TCB assistance as 
an important tool in promoting economic growth and reducing poverty. 
Expanding trade with and among developing countries can be a critical 
driver of economic growth and poverty reduction because it encourages 
entrepreneurship, human resource development, technology transfer, 
technological innovation, and good governance. 

Developing countries have increasingly integrated into the global 
trading system, and some of those countries have become important U.S. 
trading partners. According to the World Bank, exports from developing 
countries have grown twice as fast as those of high-income countries 
since 2000. Moreover, imports in developing countries grew at almost 
twice the rate of high-income countries. As a result, developing 
countries account for a growing share of world imports. Furthermore, 
since 2000, many developing countries have acceded to the WTO. 
[Footnote 3] Currently, about two-thirds of WTO members are developing 
countries or least-developed countries.[Footnote 4] In addition, many 
developing countries have entered into free trade agreements (FTA) 
with the United States. FTAs phase out barriers to trade in goods with 
particular countries or groups of countries and contain rules designed 
to improve access in services, investment, and intellectual property 
rights. 

However, many developing countries--in particular the least developed--
face constraints that severely limit their ability to implement trade 
agreements and benefit from trade. Many developing countries lack the 
physical, institutional, or human capacity to participate effectively 
in global trade. Additionally, developing countries sometimes lack the 
financial and human resources to fulfill their trade commitments. USTR 
has indicated that TCB assistance is important to enable developing 
countries to negotiate and implement market-opening and reform-
oriented trade agreements. In addition, some view TCB assistance as 
important to securing broad-based reforms across countries so that all 
countries benefit from the trade rules negotiated in the WTO and in 
other trade agreements. In 2001, the WTO Doha Ministerial Declaration 
advised that technical assistance should be designed to assist 
developing, least-developed, and low-income countries to meet their 
WTO obligations, and draw on the benefits of an open, rules-based 
multilateral trading system. The WTO created the Doha Development 
Agenda Global Trust Fund to help developing countries build capacity 
and establish a reliable basis for funding WTO-related technical 
assistance. The 2005 Hong Kong WTO Ministerial Declaration called for 
the expansion and improvement of this type of assistance and set in 
motion a process to achieve this known as the Aid-for-Trade 
Initiative.[Footnote 5] Partnering with the WTO on this initiative, 
the Organization for Economic Cooperation and Development (OECD) 
jointly created a database to provide comprehensive information on 
bilateral donor and multilateral/regional agency support for TCB. The 
OECD has issued a number of reports on aid-for-trade issues and 
attempts to share good practices so that developing countries can 
capitalize on the opportunities of international trade. 

To identify and quantify the U.S. government's TCB activities in 
developing and transitional economies, USAID conducts an annual survey 
on behalf of USTR. The data gathered from this survey are used to 
inform and respond to inquiries from Congress, the executive branch, 
the general public, and multilateral organizations such as the WTO. 
USTR officials use the database regularly and, according to these 
officials, it is a useful tool for identifying U.S. agencies' TCB 
activities and funding in a particular country or region, as well as 
the full extent of assistance the U.S. government provides in that 
area. USAID oversees a contractor that collects and maintains the 
survey results in a publicly available online database. The survey 
defines TCB and asks agencies to place their assistance into a range 
of categories and estimate funding obligated for each category (table 
1 provides further information on these categories). In addition to 
administering this survey, USAID is also tasked with reviewing 
completed survey forms, and checking for accuracy and consistency in 
the reporting of funding and allocation into TCB categories. A variety 
of U.S. agencies have a role in providing TCB assistance, including 
the Departments of State, the Army, Labor, the Treasury, and Commerce; 
MCC; and USAID. 

Table 1: U.S. TCB Categories and Definitions: 

Category: WTO awareness, participation, and accession; 
Definition: Assistance to help governments and private sector 
institutions benefit from membership in the WTO or to understand fully 
the benefits of membership, and assistance to help countries in the 
WTO accession process meet the requirements of accession.  

Category: WTO agreements; 
Definition: Assistance that enables countries to better participate 
in, and benefit from, particular WTO agreements.  

Category: Trade facilitation; 
Definition: Generally defined as assistance in lowering the costs of 
engaging in, and benefiting from, particular WTO agreements.  

Category: Trade facilitation; 
* Business services and training; 
Definition: Support to improve the associations and networks in the 
business sector, as well as to enhance the skills of business people 
engaged in trade.  

Category: Trade facilitation; 
* Export promotion; 
Definition: Assistance to increase market opportunities for developing 
country and transition economy producers.  

Category: Trade facilitation; 
* Customs operation and administration; 
Definition: Assistance to help countries modernize and improve their 
customs offices.  

Category: Trade facilitation; 
* E-commerce development and information technologies; 
Definition: Assistance to help countries acquire and use information 
technology to promote trade by creating business networks and 
disseminating market information.  

Category: Trade facilitation; 
* Regional trade agreements; 
Definition: Assistance to increase the ability of regional trade 
agreements and individual countries to facilitate trade and help 
potential regional trade agreement members.  

Category: Trade facilitation; 
* Other trade facilitation; 
Definition: Support that facilitates the flow of trade in other ways.  

Category: Human resource and labor standards; 
Definition: Assistance to support the enforcement of labor standards 
and workers rights, development of trade unions and dispute resolution 
mechanisms, strategies for workforce development and training, and the 
elimination of child labor.  

Category: Physical infrastructure development; 
Definition: Assistance to establish trade-related telecommunications, 
transport, ports, airports, power, water, and industrial zones.  

Category: Trade-related agricultural development; 
Definition: Support for trade-related aspects of the agriculture and 
agribusiness sectors.  

Category: Environment sector trade and standards; 
Definition: Assistance to establish environmental standards or to 
promote environmental technology.  

Category: Governance, transparency and interagency coordination; 
Definition: Support for legal and institutional reform to improve 
governance and make policies more transparent as well as help 
government agencies function more effectively in the trade policy 
area.  

Category: Financial sector development and good governance; 
Definition: Support for financial sector work, monetary and fiscal 
policy, exchange rates, commodity markets, and capital markets.  

Category: Competition policy and foreign investment; 
Definition: Support for the design and implementation of antitrust 
laws, as well as of laws and regulations related to investment and 
investor protections.  

Category: Services trade development; 
Definition: Support to help developing countries increase their flows 
of trade in services.  

Category: Services trade development; 
* Tourism sector development; 
Definition: Assistance to help countries expand their international 
tourism sectors.  

Category: Services trade development; 
* Other services development; 
Definition: Assistance to help countries develop trade in services in 
all sectors other than tourism, including financial services, energy, 
transportation, and education.  

Sources: USAID and USTR.  

[End of table]  

In our 2005 report on U.S. TCB efforts, focusing on the period from 
2001 to 2004, we found that U.S. TCB assistance was primarily a 
collection of a variety of trade and development activities. We noted 
that 18 agencies had self-reported that they obligated almost $2.9 
billion for TCB activities in more than 100 countries and that USAID 
provided 71 percent of overall U.S. TCB assistance. We also found that 
the six agencies we reviewed were neither systematically monitoring 
nor measuring program performance in terms of TCB and recommended 
USAID and USTR develop a strategy to systematically monitor and 
measure results and evaluate effectiveness. In response, USAID, in 
consultation with USTR, took steps to develop a multicountry 
evaluation to measure the effectiveness of U.S. TCB assistance, which 
was issued in November 2010. 

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. USAID has developed a strategic plan for TCB, and 
State's joint strategic plan with USAID for fiscal years 2007 to 2012 
supports USAID's goal of advancing developing countries' participation 
in and benefits from trade agreements. MCC and the Army conduct TCB- 
related activities that support their broader strategic and agency 
mission goals. However, they do not have strategic plans and goals 
that specifically relate to TCB. 

USAID and State Provide Assistance that Directly and Indirectly 
Supports USAID's TCB Strategic Plan: 

USAID and State have strategic goals specific to promoting TCB and 
have incorporated these goals in the planning of their assistance. 
(For further information on USAID's planning of its TCB activities, 
see appendix II.) In 2003, USAID issued a formal strategic plan on 
TCB, to focus its TCB efforts and guide the selection of new 
activities.[Footnote 6] The plan calls for USAID's TCB projects to 
support the three primary objectives of helping countries participate 
in trade negotiations, implement trade agreements, and take advantage 
of trade opportunities. In addition, State supports USAID's TCB 
efforts outlined in its strategy. The USAID and State joint strategic 
plan for fiscal years 2007 to 2012 calls for supporting USAID's 
strategic goal of providing assistance to help countries participate 
in and benefit from trade agreement negotiations. We found that USAID 
and State planned and provided assistance that supported TCB strategic 
objectives. USAID also provided assistance that aligns with its April 
2008 strategy for economic growth that includes the goals of (1) 
developing well functioning markets in developing countries, primarily 
through supporting policy and regulatory reforms and (2) strengthening 
the international framework of policies and institutions that support 
countries' economic growth and opportunities by promoting 
international standards. 

USAID and State Directly Support Participation in Trade Negotiations: 

USAID and State, in collaboration with other U.S. government agencies, 
have provided TCB assistance as part of USTR-created TCB working 
groups in developing countries where the United States is negotiating 
a FTA. (For further information on interagency efforts to coordinate 
TCB assistance, see appendix III.) These working groups meet during 
the negotiations to identify and select TCB activities that assist 
developing country negotiating partners through regional and bilateral 
TCB programs. In particular, TCB working groups were a feature of the 
bilateral negotiations in support of the ratified Central America- 
Dominican Republic Free Trade Agreement (CAFTA-DR) and Peru FTA, and 
the signed FTAs with Colombia and Panama. For example: 

* During the CAFTA-DR negotiations, USAID, State, and other U.S. 
agencies helped to provide technical assistance to the Central 
American countries to address a variety of trade capacity issues, 
including the strengthening of plant and animal health and food safety 
regulatory systems, and the strengthening of customs procedures. 

* In conjunction with the U.S.-Colombian free trade negotiations a 
USAID program assisted the government of Colombia in adopting and 
implementing policy and regulatory reforms to facilitate the 
conclusion and implementation of the FTA. The program included 18 
components of trade-related policy reforms that led to Colombia's 
development of new regulations and procedures consistent with the 
FTA's requirements.[Footnote 7] For example, the program supported the 
establishment of a national food safety policy that ensured 
consistency with U.S. sanitary and phytosanitary[Footnote 8] standards. 

In addition, USAID provided TCB assistance to support countries' 
efforts to accede to the WTO. In fiscal year 2009, USAID provided TCB 
assistance supporting the accession and membership of nine countries 
to the WTO.[Footnote 9] USAID's activities supported foreign 
governments' implementation of regulatory reforms and the adoption of 
domestic policies, laws, and regulations that align with international 
standards. For example, under a 5-year joint-funded program with 
State, USAID provided the government of Laos with legal and economic 
analysis of needed reforms, particularly in the areas of services, and 
intellectual property rights and standards. 

USAID and State Directly Support the Implementation of Trade 
Agreements: 

USAID and State have provided TCB assistance to support the 
implementation of U.S. FTAs with developing country partners. The 
final texts of FTAs, including CAFTA-DR, and the Peru FTA, have 
provisions that created committees on TCB to assist partner countries 
in implementing the trade agreements and adjusting to more liberalized 
trade. USAID, State, and other U.S. agencies have provided TCB 
assistance in support of the work of these committees. For example, 
USAID's Regional Trade Program for CAFTA-DR provided training relevant 
to compliance with the provisions of the CAFTA-DR agreement, including 
training to some partner countries' foreign government officials, 
judicial officials, and private sector representatives in the area of 
intellectual property rights protections and investment regulations. 
The program also strengthened CAFTA-DR partner countries' customs 
operations and administration to meet international standards as well 
as the FTA's provisions. 

USAID also conducts TCB activities with the objective of building the 
capacity of firms to capitalize on the benefits of FTAs. For instance, 
in 2005, USAID created a program to provide technical assistance to 
Moroccan firms in various sectors, including apparel, textiles, 
leather footwear, and processed foods, with the goal of developing 
business opportunities between the United States and Morocco under the 
U.S.-Morocco FTA. Under the program, Moroccan firms and trade 
associations received technical assistance, including seminars and 
workshops on a variety of trade-related topics such as sales planning, 
transport logistics, and production standards and certification. 

USAID also assists countries in adopting requirements related to WTO 
agreements, and supports countries seeking to benefit from regional 
trade agreements. USAID funds and implements projects to help 
recipient countries comply with WTO agreements in areas such as 
government procurement, agriculture, the application of sanitary and 
phytosanitary measures, and the agreement on intellectual property 
rights.[Footnote 10] In addition, USAID provided technical assistance 
to address developing countries' capacities for meeting standards 
under regional trade agreements. For example, a primary objective of 
USAID's Southern Africa Trade Hub is to increase international 
competitiveness and intraregional trade in the Southern African 
Development Community region.[Footnote 11] 

USAID Directly Supports Trade-Related Opportunities Provided under 
U.S. Trade Preference Programs: 

In addition, USAID provides TCB assistance in support of opportunities 
provided under trade preference programs, most prominently the African 
Growth and Opportunity Act of 2000 (AGOA).[Footnote 12] To help 
countries take full advantage of increased trading opportunities under 
AGOA, USAID provides TCB assistance primarily through trade hubs in 
East, West, and Southern Africa and bilateral missions in sub-Saharan 
Africa. The trade hubs assisted firms in taking advantage of 
opportunities under AGOA by helping them develop market linkages, 
adapt products to the U.S. market, and facilitate business deals. One 
trade hub also developed national export strategies identifying 
countries' constraints and opportunities for exporting under AGOA, and 
another trade hub conducted workshops to help African firms and 
foreign government officials increase their understanding of AGOA. 

USAID Indirectly Supports TCB in a Number of Ways: 

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. These 
activities aim to address a wide range of development needs in the 
public and private sectors. In conducting our fieldwork and research, 
we identified USAID projects that missions conducted for various 
objectives in addition to TCB, but that mission officials identified 
as achieving outcomes related to international trade: 

* The mission in Mozambique conducted a TCB-related agriculture 
development program with the primary objective of increasing the 
sustainability and profitability of the country's private sector to 
strengthen rural income growth. While TCB was not an explicit 
objective, as part of the program, USAID funded a commercial food 
laboratory that provides screening services to reduce illnesses from 
contaminated local food supplies, which also helped producers meet 
quality standards for the export of commercial food products. 

* USAID implemented TCB-related programs in Colombia with the primary 
objective of generating economic alternatives to illicit crop 
production. However, the program also helped agricultural producers 
expand sales, including exports, and assisted the government of 
Colombia in implementing economic policies and institutional reforms 
to enhance the competitiveness of the Colombian economy in general, 
including those related to international trade. 

* In Morocco, the mission conducted TCB-related activities aimed at 
improving the general business environment and promoting broad-based 
economic growth, in part through a reduction in trade and investment 
barriers. One TCB-related program provided technical assistance in 
support of regulatory and legal reforms to promote investment and 
enhance the general ease of doing business, for instance. In addition, 
USAID implemented a program to improve the productivity and 
competitiveness of certain agricultural products, including those for 
export. 

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. While 23 other 
U.S. agencies, in addition to USAID, reported funding for TCB-related 
activities from fiscal years 2005 to 2010, MCC, in particular, 
reported obligating almost half of total U.S. government TCB funding 
over this period. In addition, over the same period, the Army reported 
obligating the fourth largest amount of funding for TCB among U.S. 
agencies, following MCC, USAID, and State. However, MCC and the Army 
do not have strategic plans and goals that specifically relate to TCB, 
but sometimes conduct TCB-related activities to fulfill their 
strategic and agency mission goals. MCC generally identifies TCB-
related activities as part of its poverty reduction goals in its 5-
year country compacts and threshold programs, although TCB is not an 
explicit objective.[Footnote 13] The Army conducts trade-related 
physical infrastructure projects, such as roads and telecommunications 
projects, that it reports as TCB to respond to its emergency and 
disaster response objectives in Afghanistan and in support of its 
reconstruction efforts in Iraq and Afghanistan. 

MCC's TCB-Related Activities Are Part of Its Larger Mission to Reduce 
Poverty and Support Economic Growth: 

Although from 2005 to 2010 MCC reported obligating the largest amount 
of TCB-related assistance funding of any U.S. government agency-- 
approximately $4.7 billion, or 65 percent, of its total assistance--
MCC does not fund TCB-related activities for the specific objective of 
TCB, according to officials. It funds TCB activities as part of its 
larger mission to reduce poverty and stimulate economic growth through 
its compact agreements, and to help countries address policy 
weaknesses through its threshold programs. MCC provides monetary 
assistance through multiyear compact agreements with developing 
countries that create and maintain sound policy environments. Its 
threshold programs fund a limited amount of assistance to certain 
developing countries to help them become eligible for compact funding. 
TCB is not an explicit objective of the agreements and programs, 
according to officials, and MCC funds are not earmarked for specific 
TCB projects. Compact countries define their own development 
priorities and project proposals, which may include projects 
considered as TCB. MCC first reported obligating funding for TCB 
assistance when it signed its initial compacts with recipient 
countries in fiscal year 2005. MCC has continued to report high levels 
of funding for TCB assistance as countries sign compacts, but the 
levels of funding and types of TCB-related activities depend on 
whether countries include TCB as a component in their proposals. 

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. For a country to be 
selected as eligible for MCC's compact assistance program, it must 
have demonstrated a commitment to ruling justly, encouraging economic 
freedom, and investing in people by performing well on 17 indicators 
that MCC uses to assess policy performance. Each compact is unique, 
and MCC works in partnership with eligible countries that identify the 
greatest constraints to their own development and establish 
priorities. In consultation with the private sector and 
nongovernmental organizations, a country government submits a proposal 
that may include TCB-related projects. The proposal forms the basis 
for the compact. To help focus the proposal on the root causes of 
constraints to private investments and identify the appropriate 
activities, MCC and country partners use a written analysis of a 
country's constraints. The analyses facilitate the consultative 
process for developing compacts that address country priorities. For 
example, according to MCC officials in Mozambique, MCC funded 
prefeasibility analyses of four potential TCB-related projects. Three 
of the projects were included in the compact. However, following 
consultations, a free trade zone project was determined not to be 
viable. 

As of fiscal year 2010, MCC reported TCB-related activities in 20 
compact countries and 9 threshold program countries.[Footnote 14] TCB- 
related activities in compact countries primarily consisted of 
physical infrastructure development activities, while activities in 
threshold program countries focused on customs operation and 
administration, such as strengthening border inspections to improve 
import and export monitoring. For example, in Benin, Honduras, Mali, 
Mozambique, and Tanzania, MCC has funded a variety of physical 
infrastructure projects, including port and airport improvement 
projects, as well as road construction and rehabilitation. The 
Moldova, Sao Tome and Principe, and Zambia threshold programs included 
a variety of activities related to customs operations and 
administration, including the upgrading and modernization of customs 
systems and enhancements to custom operations and inspection 
procedures. 

The Army's TCB-Related Activities Support Infrastructure Development 
in Iraq and Afghanistan: 

The Army does not have TCB-focused strategic objectives, according to 
Army officials. 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. 
[Footnote 15] Since fiscal year 2009, the Army has reported $615 
million in total obligated funding for TCB-related activities that 
support the Army's broader goal to achieve U.S. security objectives, 
provide basic humanitarian aid and services, and support economic 
stability and development as a means of responding to security 
concerns. For example, as part of its funding for humanitarian 
assistance, the Army constructed and restored a variety of physical 
infrastructure in Afghanistan that it reported contributed to trade, 
including telecommunications and electrical systems projects. Although 
the objectives of these projects are not directly focused on TCB, 
according to officials of one Army command, these projects further 
increase economic integration and trade by providing communication and 
electrical power linkages between Afghanistan and neighboring 
countries. The Army also undertook food production and distribution 
processes in Afghanistan that also helped meet sanitary and 
phytosanitary standards. In addition, as part of its mission, the Army 
supports economic stability and sustainable development to promote 
security, in part, through the development of infrastructure, such as 
roads, that facilitate trade. For example, the Army funded the 
restoration and construction of roads in 20 regions in Afghanistan, 
which it reported contributed to the development of physical 
infrastructure needed to promote trade. In addition, the Army reported 
funding to repair, improve, and create new infrastructure in Iraq and 
Afghanistan, including roads and bridges, necessary for trade routes 
and market access improvements. According to officials of one Army 
command, the road projects facilitated regional and international 
trade flows by linking Afghanistan with neighboring countries. 
Officials noted that recipient countries of the Army's assistance are 
identified through Department of Defense guidance and with input from 
in-country U.S. agencies on recipient countries' needs. 

The TCB Database Does Not Provide Adequate Information Necessary to 
Understand Significant Changes in the Composition of Reported TCB 
Activities: 

USAID does not adequately describe certain key factors underlying 
significant changes in the composition of TCB funding as reported by 
the TCB database. According to the database, from 2005 to 2010, 
overall annual funding increased 25 percent, from $1.35 billion to 
$1.69 billion. This increase is largely the result of the inclusion of 
funding from MCC beginning in 2005, and the Army beginning in 2009. 
Correspondingly, there has been a steep decline in the share of total 
funding reported by USAID and other agencies. MCC and the Army 
reported TCB funding primarily in the category of physical 
infrastructure, which has contributed to a steep rise in overall 
funding in that category.[Footnote 16] In addition, agencies that are 
newly identified for inclusion in the database, such as the Army, are 
sometimes unable to provide data for previous years, which may imply a 
certain amount of under reporting. Although the annual TCB survey 
attempts to identify and quantify just the trade-related components of 
projects, this can be difficult for officials to fully achieve in 
practice. It may also be challenging for survey administrators to 
fully clarify the distinction between direct and indirect TCB funding. 
The limitations involved in collecting and reporting TCB-related data 
do not necessarily invalidate the figures in the database; however, 
USAID is not providing sufficient context or explanation of these 
limiting factors with the dataset. Clear reporting and transparency in 
methodology and collection are essential for users of the data to 
understand changes in the nature of TCB over time. 

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. Our past report reviewed TCB 
funding obligated from 2001 to 2004. Over that period, the average 
annual amount reported by all agencies was about $735 million. In 
comparison the average annual amount reported by agencies during the 
period 2005-2010 was more than twice as much--$1.65 billion. From 2005 
to 2010, total funding levels have generally increased, with annually 
reported funding growing from $1.35 billion to $1.69 billion, a 25 
percent increase. Since 2005, the number of agencies reporting TCB 
obligations has grown from 18 to 24. However, the significant increase 
in total TCB funding is attributable to two agencies in particular-- 
MCC, which was established in 2004 and began reporting TCB funding in 
2005, and the Army, which began reporting TCB funding in 2009 (see 
figure 1). 

Figure 1: U.S. TCB Funding by Agency, Fiscal Years 2001-2010: 

[Refer to PDF for image: stacked vertical bar graph]  

Fiscal year: 2001; 
MCC: $0; 
USAID: $422.7 million; 
Other U.S. government agencies: $15.5 million; 
Army: $0.  

Fiscal year: 2002; 
MCC: $0; 
USAID: $476.8 million; 
Other U.S. government agencies: $23.8 million; 
Army: $0.  

Fiscal year: 2003; 
MCC: $0; 
USAID: $554.2 million; 
Other U.S. government agencies: $31.9 million; 
Army: $0.  

Fiscal year: 2004; 
MCC: $0; 
USAID: $617.3 million; 
Other U.S. government agencies: $56.8 million; 
Army: $0.  

Fiscal year: 2005; 
MCC: $369 million; 
USAID: $694.9 million; 
Other U.S. government agencies: $281.4 million; 
Army: $0.  

Fiscal year: 2006; 
MCC: $613.9 million; 
USAID: $487.3 million; 
Other U.S. government agencies: $316.3 million; 
Army: $0.  

Fiscal year: 2007; 
MCC: $777.3 million; 
USAID: $336.7 million; 
Other U.S. government agencies: $294.8 million; 
Army: $0.  

Fiscal year: 2008; 
MCC: $1.625 billion; 
USAID: $384.4 million; 
Other U.S. government agencies: $218 million; 
Army: $0.  

Fiscal year: 2009; 
MCC: $585.7 million; 
USAID: $478.9 million; 
Other U.S. government agencies: $254.8 million; 
Army: $497.4 million.  

Fiscal year: 2010; 
MCC: $731.7 million; 
USAID: $510.5 million; 
Other U.S. government agencies: $325 million; 
Army: $118.0 million.  

Source: GAO analysis of U.S. government TCB database.  

[End of figure] 

Over 2005-2010, MCC reported obligating $4.7 billion, or 48 percent of 
total TCB funding. In 2009, the first year Army began submitting data 
to the survey, it reported $497 million in funding or 27 percent of 
the total for that year. Combined funding from MCC and Army comprised 
54 percent of total TCB over 2005-2010. The significant amount of 
funding reported by MCC and the Army lowered the relative share of 
total TCB funding provided by USAID and other agencies. For example, 
over 2001-2004, USAID reported obligating 70 percent of total TCB 
funding, the largest share of any U.S. agency; while over 2005-2010, 
USAID's share declined to 29 percent of total funding. While the 
amount of TCB funding provided by USAID declined over that period, 
this does not account for such a large decline in relative share. In 
addition, the relative combined share of total funding for all other 
U.S. agencies also declined, going from 25 percent over 2001-2004 to 
10 percent over 2005-2010. 

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. Over 2005-2010, physical infrastructure was the largest 
category of total TCB funding, at 45 percent of the total, or $4.5 
billion out of $9.9 billion. In contrast, over 2001-2004, physical 
infrastructure comprised only 8 percent of total funding, or $226 
million out of $2.9 billion. The share of funding for all other TCB 
categories has declined between those two periods. For example, there 
has been a decline in the overall share of funding of trade 
facilitation, which was the largest category over 2001-2004, from 27 
percent to 16 percent, and a decline from 17 to 6 percent in human 
resources and labor standards, which was previously the second largest 
category. Figure 2 illustrates the large increase in the category of 
physical infrastructure and the proportional decline in the other 
categories of TCB, from 2001-2004 to 2005-2010. 

Figure 2: Shares of Total U.S. TCB Funding by Category, Fiscal Years 
2001-2004 and 2005-2010: 

[Refer to PDF for image: vertical bar graph]  

Category: Trade facilitation; 
2001-2004: 26.75%; 
2005-2010: 16.17%.  

Category: Trade-related agriculture; 
2001-2004: 12.04%; 
2005-2010: 12.68%.  

Category: Other TCB categories; 
2001-2004: 14.1%; 
2005-2010: 10.27%.  

Category: Financial sector development; 
2001-2004: 10.44%; 
2005-2010: 5.7%.  

Category: Human resources and labor standards; 
2001-2004: 16.54%; 
2005-2010: 5.6%.  

Category: WTO-related; 
2001-2004: 6.57%; 
2005-2010: 2.3%.  

Category: Governance, transparency and interagency coordination; 
2001-2004: 5.87; 
2.11 

Source: GAO analysis of U.S. government TCB database.  

Note: Other TCB categories included environmental sector trade and 
standards, competition policy and foreign investment incentives, and 
services trade development including tourism.  

[End of figure]  

The increase in the category of physical infrastructure since 2005 has 
been driven by the TCB funding reported by MCC and the Army. Physical 
infrastructure and trade-related agriculture constitute the primary 
categories of TCB assistance obligated by MCC. Over 2005-2010, MCC 
reported obligating $3.3 billion in the category of physical 
infrastructure development and $667 million in trade-related 
agriculture. MCC's funding made up a majority share of overall TCB 
funding for both categories. MCC accounts for 74 percent of total 
funding in physical infrastructure and for more than half of total 
funding in trade-related agriculture. Similarly, the $497 million in 
TCB funding reported by the Army in 2009 was exclusively for physical 
infrastructure development. This amount accounts for 13 percent of 
total funding in physical infrastructure, the majority of which--$396 
million--the Army reported as funding for road and bridge projects in 
Afghanistan. Figure 3 shows the amount of funding for each category of 
TCB by agency over 2005-2010. 

Figure 3: TCB Funding by Category and Agency, Fiscal Years 2005-2010: 

[Refer to PDF for image: stacked vertical bar graph]  

Category: Physical infrastructure; 
MCC: $3.32 billion; 
USAID: $336 million; 
Other U.S. government agencies: $243 million; 
Army: $572 million.  

Category: Trade facilitation; 
MCC: $288 million; 
USAID: $1.031 billion; 
Other U.S. government agencies: $267 million; 
Army: $15.5 million.  

Category: Trade-related Agriculture; 
MCC: $667 million; 
USAID: $465 million; 
Other U.S. government agencies: $99 million; 
Army: $27.5 million.  

Category: Other TCB categories; 
MCC: $187 million; 
USAID: $384 million; 
Other U.S. government agencies: $445 million.  

Category: Financial sector development; 
MCC: $195. million; 
USAID: $272 million; 
Other U.S. government agencies: $97 million.  

Category: Human resources and labor standards; 
MCC: $32.8 million; 
USAID: $108.5 million; 
Other U.S. government agencies: $412.9 million.  

Category: Governance, transparency and interagency coordination; 
MCC: $10.6 million; 
USAID: $143.4 million; 
Other U.S. government agencies: $74.2 million.  

Category: WTO-related; 
MCC: $1.2 million; 
USAID: $152.5 million; 
Other U.S. government agencies: $54.9 million.  

Source: GAO analysis of U.S. government TCB database.  

[End of figure] 

MCC and the Army have also impacted the regional distribution of TCB 
as reported by the database. Since 2005, U.S. agencies have provided 
TCB funding to 143 recipient countries in 6 geographic regions, 
including Southern Asia, Europe and Eurasia, East Asia/Oceania, Latin 
America and the Caribbean, the Middle East and North Africa, and sub-
Saharan Africa. The sub-Saharan African region received the most 
funding, driven primarily by projects funded by MCC (see figure 4). 
Funding for Southern Asia was largely made up of the Army's reported 
2009 funding of physical infrastructure projects in Afghanistan. In 
contrast, USAID funding is spread more evenly worldwide. (For a more 
detailed table of country funding, including TCB assistance to least 
developed countries, see appendix IV). 

Figure 4: Total U.S. TCB Funding by Agency and by Region, Fiscal Years 
2005-2010: 

[Refer to PDF for image: stacked vertical bar graph]  

Countries: Sub-Saharan Africa; 
MCC: $2.588 billion; 
USAID: $753 million; 
Other U.S. government agencies: $240 million.  

Countries: Latin America and Caribbean; 
MCC: $715 million; 
USAID: $762 million; 
Other U.S. government agencies: $359 million.  

Countries: Europe and Eurasia; 
MCC: $613 million; 
$USAID: $435 million; 
Other U.S. government agencies: $201 million.  

Countries: Middle East and North Africa; 
MCC: $541 million; 
USAID: $443 million; 
Other U.S. government agencies: $137 million; 
Army: $65 million.  

Countries: South Asia; 
USAID: $237 million; 
Other U.S. government agencies: $79 million; 
Army: $550 million.  

Countries: East Asia and Oceania; 
MCC: $246 million; 
USAID: $172 million; 
Other U.S. government agencies: $104 million.  

Source: GAO analysis of U.S. government TCB database.  

[End of figure] 

Certain Factors Drive the Impact of MCC TCB Funding: 

The methodology of the TCB survey, the multiyear nature of MCC 
compacts, and the relatively large size of those compacts are factors 
that drive the impact of MCC funding on the TCB funding landscape. The 
TCB survey collects and reports funding for each fiscal year on an 
obligation basis, as opposed to reporting funding in the year in which 
it was distributed. MCC obligates full funding for its 5-year compact 
agreements in the year the compacts enter into force.[Footnote 17] The 
TCB survey methodology captures the amount obligated in that year, 
resulting in large spikes in MCC annual figures. This is unique in 
that other U.S. agencies generally fund their multiyear projects 
through ongoing annual obligations. As a result, any comparisons 
between MCC funding and other agencies in any given year may be 
distorted. USAID officials noted that it may not be feasible to alter 
the data collection process in such a way as to address this issue. 

As we have previously reported, MCC's actual disbursements have 
substantially lagged behind planned disbursements for countries with 
compacts in force.[Footnote 18] This is because initial compact 
disbursement plans underestimated the time required for compact 
countries to establish the structures, agreements, and capabilities to 
begin implementing compact projects. For example, MCC signed a compact 
with Mozambique in fiscal year 2008 for $507 million and reported $222 
million of that total as TCB-related funding in that fiscal year. 
However, as of December 31, 2010, MCC reports having expended only $39 
million, or just less than 8 percent of the total compact amount. 
Furthermore, due to the multiyear nature of MCC compacts, MCC funding 
usually constitutes a significant amount of total annual TCB funding, 
so the MCC obligations that appear in the TCB database are large 
relative to other agencies and have an increased impact on overall TCB 
statistics (see figure 1). 

USAID management officials acknowledge the potential for the database 
to distort the portrayal of TCB funding by comparing what is, in 
effect, 5-year funding for MCC with 1-year funding for other agencies, 
but they maintain that it is not possible to reconfigure the data in 
any meaningful way due to the survey's methodology. They also note 
that they sometimes remove MCC from the dataset when conducting their 
own analyses. In response to the concerns we noted, USAID updated the 
TCB Web site in July 2011 to include a prominent notice on the Web 
site's home page of the unique nature of MCC obligations. Given the 
relative size and impact of MCC funding, such explanation is necessary 
to fully understand the data. 

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. The TCB survey team under contract 
with USAID annually reviews various sources, such as the President's 
budget request, to identify any TCB-related funding that is not 
currently being reported to the survey. In this way, the survey team 
identified the Army as a provider of TCB funding and requested that 
Army officials began submitting data beginning in 2009. The Army 
provided this funding for physical infrastructure development projects 
in Afghanistan and Iraq. The Army had provided funding for similar 
activities for a number of years prior; however, survey officials told 
us it was not practical to attempt to capture previous years' data. 
Although the TCB Web site notes that 2009 was the first year USAID 
received a submission from any of the U.S. Armed Services, it does not 
provide any further information. Specifically, it does not make users 
aware of the possibility that prior years' reporting is highly likely 
to be understated due to the challenges in reporting on the Army's 
previous funding. Furthermore, the TCB Web site does not note the 
process or describe the limitations of identifying new TCB funding 
sources in its methodology. The Army's funding made up 27 percent of 
the total TCB for 2009. Given the relative size and impact of Army 
funding, such an explanation is necessary to fully understand the data 
and the future impact of newly-identified agencies. 

U.S. Agencies and Other Donors Sometimes Struggle to Determine the 
Extent of Trade-Related Investments: 

Reporting and measuring TCB-related funding and activities, 
particularly for physical infrastructure projects, can be difficult, 
largely because of the need to distinguish between assistance focused 
on improving trade capacity, in particular, and support to promote 
economic growth or some other goal in general. While agencies such as 
USAID fund activities that have clear and direct links to TCB, other 
agencies, including MCC and the Army, fund activities that are 
sometimes more indirectly related to international trade. For example, 
technical assistance USAID provides to aid in a country's accession to 
the WTO has a clear and direct relation to trade, but activities such 
as constructing roads or electrical grids may not. In addition, 
certain types of projects might be related to trade in one context but 
not in another. For instance, an energy project might relate to trade 
if it is servicing a tourism complex but not if it is providing 
electricity to local neighborhoods. 

The TCB survey was developed to capture any and all U.S. government 
TCB-related funding at the activity level of all participating 
agencies. USAID and USTR officials have noted that the design of the 
TCB survey enables them to determine on a case-by-case basis the 
extent to which a project or program may relate to TCB because 
reporting officials understand the specific trade-related components 
of the project for which they are reporting data. 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. Officials with whom we spoke during our fieldwork agreed 
that the definition of TCB used in the survey was quite broad, which 
could sometimes make it difficult to identify the activities to report 
in their survey responses. They relied on the categorical definitions 
provided by the TCB survey and survey guidance. However, we found 
instances in which officials experienced challenges in clearly 
discriminating between components of projects that were TCB or non-TCB 
related, particularly in large TCB-related infrastructure projects. 
For example: 

* The Army reported $396 million in TCB funding for infrastructure 
projects in Afghanistan that consisted of activities intended to 
repair, restore, or build roads to respond to urgent humanitarian 
relief and reconstruction requirements and that also had trade-related 
effects. Army officials cited concerns about reporting the entire road 
project as related to TCB because it may only be minimally used for 
international trade. However, survey administrators advised Army 
officials responsible for reporting the Army's TCB data that the 
entire funding for the road project should be counted as TCB-related 
assistance "so long as the project is not designed to exclusively 
support a military installation and so long as the power/utility 
project is not designed to exclusively support residential use." As 
one official put it, "a road will support the ability of farmers to 
transport their products to a local market as well as to an export 
facility."  

* In Morocco, MCC reported $116 million in TCB funding for a small- 
scale fisheries project in the physical infrastructure category. The 
activity is described in the TCB database in this way: 

"Fishing is one of the most important industries in Morocco. Morocco 
is unable to satisfy current domestic demand for quality fish. Demand 
is expected to increase, driven by an expanding tourist sector and 
expected growth in domestic fish consumption. The Small Scale 
Fisheries Project seeks to modernize the means of catching, storing, 
and marketing fish, thereby improving the quality of the catch, 
maintaining the value chain, and increasing fishers' access to both 
local and export markets."  

According to MCC and foreign officials in Morocco, external trade was 
not in the forefront of their thinking on this particular project when 
the compact was being developed. When we originally discussed this 
project with one MCC official in Morocco, we were told that 100 
percent of the catch was intended for domestic consumption. However, 
we later learned from a host country project manager that an estimated 
20 to 30 percent of the catch would go to outlets that might be 
considered exports. There was no readily available quantitative data 
to verify this. Differing from both those estimates, MCC had 
previously reported to the survey that all $116 million of funding for 
the project was TCB-related. 

Other entities that report TCB-related funding face similar 
challenges. For example, the 2005 WTO Hong Kong Ministerial Conference 
established the Aid-for-Trade Initiative that prompted a joint effort 
by the OECD and the WTO to track TCB activities by all global donors 
in a manner similar to the approach of the TCB database. The U.S. TCB 
survey is used to generate the TCB activities and funding the U.S. 
government reports to that joint database. While the OECD and WTO 
effort collects and tracks aid-for-trade data using definitional 
categories similar to those used in the U.S. TCB survey, they more 
explicitly acknowledge the challenges associated with physical 
infrastructure projects. One OECD report notes that it is almost 
impossible to provide sound criteria that differentiate between trade-
related infrastructure and general economic infrastructure. In 
addition, they report that few international donors can identify the 
trade-related share in individual projects and programs. As stated 
earlier in this report, USTR maintains that the U.S. TCB survey has 
the ability to determine on a case-by-case basis the extent to which 
projects may have trade-related components. USTR has explained that 
this ability to dissect programs into their component parts is an 
important difference between the U.S. TCB definition and OECD's aid-
for-trade definition. However, we have noted examples when agency 
officials submitting TCB estimates have found it difficult to make 
this distinction. 

USAID does not provide any information on the difficulties involved in 
making these determinations on the TCB database Web site. In contrast, 
the 2007 report on global aid-for-trade issued jointly by the OECD and 
the WTO[Footnote 19] dedicates an appendix to discussing the 
difficulties in collecting data on infrastructure (as well as other 
categories of TCB) and the possibility that a significant over- 
estimation of the actual TCB-related volume is possible. The U.S. TCB 
survey attempts to make this differentiation but does not provide a 
clear explanation of how such a differentiation operates or the degree 
to which some of these determinations are subjective. Although the 
database states that the physical infrastructure category only 
includes assistance to establish telecoms, transport, ports, airports, 
power, water, and industrial zones that have a direct link to trade, 
it does not include a discussion of whether those projects are 
primarily for a non-TCB goal and how that might affect the project's 
value to TCB efforts. 

Furthermore, the TCB database Web site does not distinguish or explain 
"direct" and "indirect" linkages between projects and TCB. USAID 
recognizes in its annual Congressional Budget Justification that there 
is a distinction between direct and indirect TCB. It cites examples of 
"direct TCB" that include support for countries' efforts to streamline 
customs and examples of "indirect TCB" that include modernizing 
transport. In neither of the examples above, where we noted instances 
in which officials experienced challenges in clearly discriminating 
between components of projects that were TCB or non-TCB related, was 
TCB explicitly the primary goal of the project. However, USAID 
officials provide no such distinctions or explanations on TCB database 
Web site, which could lead to users misunderstanding the data. 

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. 
[Footnote 20] The evaluation provided valuable information about the 
effectiveness of USAID's TCB assistance worldwide, and the factors 
associated with project success; however, the agency has yet to make 
specific plans to incorporate the evaluation's key insights into its 
planning and management of activities and conduct such evaluations in 
the future. To assess the immediate results of its TCB activities, 
USAID uses standard trade and investment indicators, and missions may 
develop additional custom indicators. In addition, it has commissioned 
a limited number of evaluations of specific TCB programs to assess 
longer-term results. However, most significantly, in 2010, USAID took 
the positive step of issuing an independent multicountry evaluation of 
U.S. government TCB assistance that focused on activities USAID 
administered. The evaluation provided the agency useful information on 
the effectiveness of USAID's activities across countries, the factors 
that influenced project success, and the means by which monitoring and 
evaluation could be improved. 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. 

USAID Has Developed Indicators to Monitor Short-Term TCB Results, but 
Assessing Quality of Results Is Difficult: 

To assess and report on the immediate results of its TCB-related 
programs, USAID uses standard and custom indicators. (For further 
information on the frameworks agencies use for monitoring and 
evaluating their TCB activities, see appendix V.) USAID requires 
missions to report performance against standard indicators, which 
include agencywide trade and investment indicators.[Footnote 21] 
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.[Footnote 22] Missions and 
offices report on a subset of the standard indicators that relate to 
the trade and investment program elements they are funding. Examples 
of USAID trade and investment standard indicators include: 

* Number of customs harmonization procedures implemented in accordance 
with internationally accepted standards as a result of U.S. assistance. 

* Number of investment measures made consistent with international 
investment agreements as a result of U.S. assistance. 

* Reduction in the number of procedures required to trade goods across 
borders as a result of U.S. assistance. 

* Number of firms receiving capacity building assistance to export. 

* Number of participants in U.S. government-supported trade and 
investment capacity building trainings. 

* Number of trade and investment capacity building diagnostics 
conducted. 

* Number of U.S. government supported training events on topics 
related to investment capacity building and improving trade. 

The standard indicators are complemented by custom indicators that 
USAID missions and offices select to further measure and monitor 
particular programs. USAID uses the indicators in performance plans 
and reports summarizing project results. 

Some USAID officials noted that the standard indicators largely 
measure program outputs rather than results or outcomes of TCB 
assistance.[Footnote 23] Standard indicators generally gauge 
activities undertaken or services provided by USAID; for example, 
missions we visited used such output-oriented standard indicators as 
the number of U.S. government supported training events on topics 
related to investment capacity building and improving trade. However, 
they do not measure whether such activities contributed to a 
beneficiary country's capacity to trade. Our review of documentation 
of countries where USAID has conducted TCB activities revealed that 
these standard indicators serve certain USAID management purposes, but 
USAID mission officials told us it was difficult to use to such 
indicators to inform decisions about how TCB assistance could improve 
a country's capacity to trade. On the other hand, some USAID officials 
in recipient countries explained that in addition to the agencywide 
standard indicators, missions can develop project-specific custom 
indicators that tend to be more outcome-focused. For example, the 
mission in Morocco used the custom indicators, "total value of sales 
in target sectors (disaggregated by domestic sales and exports)" and 
"value of private investment (disaggregated by domestic and foreign 
direct investment)." Some program officers said that outcome-oriented 
custom indicators were more useful than the standard indicators for 
evaluating activities' effects on trade. Thus, based on data collected 
from a custom indicator that measured the volume of agricultural 
exports, program officials in Mozambique said that the mission 
modified the focus of an agriculture TCB-related program to target 
assistance to new crops with better export potential. 

While the agency uses project-specific custom indicators for virtually 
every project, USAID management and mission officials cited challenges 
in developing meaningful outcome custom indicators. Some USAID 
officials explained that it is difficult to identify indicators that 
measure the effects of TCB directly attributable to U.S. government 
assistance. For example, one USAID official noted that many missions 
supporting TCB activities may track export growth as an outcome 
indicator, but according to mission officials, a variety of factors 
may impact a country's exports, including fluctuations in market 
prices and currencies, and it is difficult to isolate these factors 
from the effects of TCB assistance. Similarly, mission officials cited 
challenges to collecting and using valid and reliable data to gauge an 
indicator. For instance, in Mozambique, mission officials explained 
that local government trade data are not reliable, so they may have to 
rely solely on private sector data from firms targeted by the 
mission's TCB-related programs to measure exports. They said that this 
makes it difficult to compare the export performance of targeted 
beneficiary firms in the same sector. In addition, many USAID TCB-
related activities are implemented as part of broader programs that 
have primary development objectives other than TCB. Consequently, the 
programs are assessed in relation to other objectives, and monitoring 
the effects on trade capacity may not be feasible if the performance 
indicators developed were not intended for that purpose. 

USAID Has Commissioned a Limited Number of Evaluations of TCB Programs 
to Assess Longer-Term Results: 

USAID also commissioned longer-term evaluations of a small proportion 
of specific TCB programs. These include evaluations of its regional 
TCB-focused programs, including the Regional Trade Program for CAFTA- 
DR, the Andean Regional TCB Program, and the regional trade hubs in 
sub-Saharan Africa.[Footnote 24] In addition, USAID has commissioned 
evaluations of its bilateral TCB programs, including the Colombia 
Trade Capacity Building Program implemented to support the U.S.-
Colombia FTA negotiations.[Footnote 25] The evaluations are intended 
to help missions and offices understand the progress of programs and 
any needed actions to improve performance. Although mission officials 
stated that evaluations are useful for identifying best practices and 
lessons learned, USAID's recent agencywide multicountry TCB evaluation 
found that only 15 percent of the agency's TCB projects were found to 
have been independently evaluated.[Footnote 26] Mission officials 
informed us that they conduct few independent evaluations of their TCB 
programs because of the resources required, and the difficulty of 
evaluating impact in the area of TCB. In addition, they noted that 
program evaluations had not been required. According to USAID's 2010 
evaluation guidance, missions are encouraged, but not required, to: 

conduct program evaluations during implementation unless certain 
management issues arise.[Footnote 27] 

USAID's Recent Agencywide Multicountry Evaluation Provided Valuable 
Insights, but USAID Has Yet to Take Action to Address Results: 

To learn from experience and identify ways to improve the 
implementation and assessment of TCB activities, and in response to 
our 2005 recommendation, USAID took the positive step of commissioning 
its first independent multicountry evaluation of U.S. government TCB 
assistance that focused on activities USAID administered.[Footnote 28] 
We support the evaluation as an important means of providing objective 
information on the progress of USAID's TCB efforts. It provided the 
agency valuable insights on the positive effects of USAID's TCB 
assistance across countries, particularly with regard to its impact on 
trade and income growth in recipient countries. It also provided 
useful information on the factors that contributed to and hindered 
project success, and the means by which monitoring and evaluation 
could be improved. Issued in November 2010, the evaluation examined 
documentation for 256 ongoing and completed USAID TCB projects the 
agency implemented in 78 countries from 2002 to 2006. 

The Evaluation Identified Positive Effects of USAID's TCB Assistance: 

Overall, the evaluation concluded that USAID and other U.S. government 
agencies' TCB activities are associated with increases in the value of 
recipient countries' exports, after controlling for other factors that 
have influenced international trade. According to the evaluation's 
findings: 

* USAID TCB activities had a positive effect on developing countries' 
exports, even in very poor countries, but the relationship between TCB 
assistance and export gains varied by country depending on factors 
that are known to influence export performance, including world prices 
and economic growth rates, and domestic economic and business policies. 

* USAID's TCB activities resulted in export gains in terms of value, 
but not volume, which suggested that exporters earned more from the 
same volume of production they exported. 

* Export gains associated with USAID's TCB projects stemmed from trade 
facilitation activities and from improvements in government practices, 
as well as from projects that work directly with exporters. 

* USAID's TCB activities contributed to employment and income growth 
for those firms and individuals directly reached by USAID projects, 
although the evaluation did not find sufficient information on 
projects' effects on net employment or poverty rates at a regional or 
national level. 

The Evaluation Identified Attributes that Are Associated with More 
Successful TCB Projects: 

The evaluation calls attention to characteristics that contributed to 
the success of USAID TCB projects and that tended to lead to 
sustainable outcomes. Some of these factors were associated with the 
focus of TCB assistance provided. For example, assistance that was 
directed at one type of beneficiary generally enjoyed better results 
than projects that included various categories of recipients. In 
addition, TCB projects that concentrated on a single sector generally 
performed better than projects that focused on multiple sectors. Thus, 
TCB projects that concentrated on the agricultural sector were more 
likely to successfully achieve their objectives than projects that 
attempted to cover diverse sectors, such as manufacturing and 
services, as well as agriculture. Conversely, projects that combined 
different types of assistance, such as performing a trade diagnostic 
study as well as providing training, were more likely to achieve their 
performance targets and objectives than projects that relied on a 
single approach. In some cases a combination of technical assistance, 
training and use of communications technologies helped change private 
sector practices, resulting in trade-related gains, such as new 
products for export and more timely delivery of goods. 

The evaluation also describes certain factors related to 
beneficiaries' participation that were found to contribute to 
successful project results. For example, encouraging participation of 
beneficiaries in project design and promoting private sector 
involvement were also found to be associated with assistance efforts 
that met performance targets or objectives. Projects characterized by 
adversarial relations among participants were, however, less likely to 
succeed. Other factors that the evaluation cited as hindering project 
success included excessive host government regulation and unexpected 
shifts in the recipient government's priorities. The evaluation also 
found that improvements resulting from TCB assistance were more likely 
to be sustained beyond the life of the project when anticipated 
funding sources, such as revenues from export earnings, were clearly 
set forth. 

The Evaluation Identified Weaknesses in USAID's Efforts to Assess TCB 
Progress: 

Recognizing the importance of learning from experience and improving 
the implementation of TCB activities, USAID and USTR commissioned the 
evaluation to inform their efforts to develop an interagency strategy 
to systematically monitor results and evaluate the effectiveness of 
TCB assistance. Accordingly, the evaluation identified certain gaps in 
the monitoring and evaluation of TCB projects and recommended ways to 
improve USAID's performance management practices. The evaluation found 
that USAID's practices for monitoring the performance of its TCB 
projects does not correspond, in many instances, to the agency's 
performance guidelines, and its evaluations of TCB projects are 
limited in number and suffer from methodological weaknesses. For 
example: 

* A large proportion of projects did not include baseline data for the 
performance indicators selected. 

* While most projects identified performance indicators, most of these 
TCB projects did not include performance targets for the indicators to 
track results. 

* While evaluations used both qualitative and quantitative data, most 
evaluations lacked data with which to compare circumstances before and 
after TCB projects to determine whether the project's activities or 
some other factor were the likely cause of the results. 

* Certain performance indicators intended to assess changes in 
institutional capacity, such as strengthening a given country's 
ministry of trade, lacked clarity in the outcome results they were 
designed to measure. 

To improve USAID's monitoring and evaluation of its TCB projects, the 
evaluation recommended steps the agency should take to better align 
its performance management practices with its existing guidance. These 
include adopting tools to facilitate the development of appropriate 
indicators and data collection methods with which to measure results, 
and helping missions improve performance baseline data and targets for 
those projects that currently lack these data. In addition, the 
evaluation recommended that USAID update its current TCB strategy to 
better reflect findings from recent studies on trade facilitation and 
on other factors that influence developing countries' export 
performance. 

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. USAID management officials explained that the 
evaluation has been helpful in identifying the factors that contribute 
to the success of TCB projects and the agency agreed with the 
evaluation's findings and recommendations, particularly with regard to 
needed improvements in monitoring and evaluation practices. According 
to these officials, the agency has identified the need to incorporate 
the evaluation's findings into USAID's trainings, guidance, and 
strategies, as well as implement its recommendations, but further 
actions are needed to do so. 

Officials explained that the written evaluation is lengthy, and 
technical officers managing TCB activities are not likely to easily 
understand its findings or find it useful for management purposes in 
its current form. USAID management officials stated that the 
evaluation's findings must be "repackaged" to help USAID missions and 
offices understand and use the information to improve the design, 
implementation, and the monitoring and evaluation of TCB activities. 
We have reported that performance information should be useful for 
decision making throughout an agency, and that agencies need to 
consider users' needs.[Footnote 29] Currently, the agency is in the 
initial phases of developing ways to use the evaluation's findings to 
help missions develop better defined and more useful indicators, 
baselines, and targets with which to measure the results of TCB 
activities. For example, based on the results of the evaluation, USAID 
commissioned the development of a pilot training course on methods for 
developing outcome measures for monitoring and evaluating TCB 
programs. The pilot course provided an overview of the evaluation, 
described challenges of developing indicators to assess the outcome 
results of policy and institutional reforms on TCB, and discussed 
approaches to defining indicators and collecting measurements. The 
pilot course was presented to mission officials in Bangkok, Thailand, 
which one USAID management official explained had been a useful 
preliminary effort to incorporate the evaluation's findings into 
mission training. The official stated that a more comprehensive 
training program will likely be developed and disseminated to 
missions, although the agency has no specific plans in place. 
Differences in countries' trade and investment environments have 
proven a challenge to developing training and guidance that would be 
useful to missions worldwide, according to officials. 

In addition, according to management officials, USAID has not 
determined its plans for conducting additional TCB evaluations to 
assess the effectiveness of its TCB activities on an ongoing basis. As 
the evaluation, published in November 2010, focused on TCB projects 
funded during the period 2002-2006, the agency does not have current 
plans to systematically evaluate its TCB projects worldwide and on an 
agencywide basis beyond this period. While USAID management officials 
stated that replicating the evaluation's methodology is likely to be 
too resource-intensive for future evaluations, any subsequent 
evaluations would similarly aim to assess a variety of TCB projects 
implemented across countries to identify those that are most 
successful in achieving their objectives and the factors that 
contribute to these successes. We have reported that it is important 
that agencies use timely performance information to assess the results 
of their activities to understand how they contribute to their agency 
missions and broader results.[Footnote 30] Conducting evaluations on 
an ongoing basis increases accountability and would help ensure that 
assistance is effectively delivered and implemented to maximize 
development. It also would provide opportunities to learn from project 
implementation by identifying which activities work, under what 
circumstances, and why. For example, USAID officials could use future 
evaluations to identify approaches to providing TCB assistance that 
have worked well and consider alternative approaches where 
improvements could be made. Furthermore, such evaluations might inform 
other donor and recipient countries' efforts to determine instances in 
which TCB assistance can be effective. 

Conclusions: 

The U.S. government and international organizations acknowledge the 
critical role of trade in promoting development and have made TCB an 
important aspect of making trade more effective in reducing poverty 
and increasing enduring economic growth. The U.S. government TCB 
database is a useful tool for identifying the many agencies and 
activities of the U.S. government that contribute to other nations' 
development through trade. In particular, the inclusion of MCC's 
funding and activities in the database creates opportunities to 
identify ways in which TCB funding and development goals relate. In 
addition, the Army's recent reporting highlights the linkage between 
security and development, as there is a recognition that economic 
stability and development contribute to peace and security. However, 
some U.S. agencies, including MCC and the Army, struggle to report 
their trade-related infrastructure assistance using the survey 
methodology of the database. The definition of TCB includes a wide 
array of activities implemented by multiple agencies to fulfill a 
variety of objectives. Some relate more directly to trade than others. 
While some agencies, such as USAID and State, conduct activities that 
are easily identified as intended to help a country build its capacity 
to trade, agencies such as MCC and the Army conduct activities that 
have trade-related effects but do not directly support TCB. This 
distinction has become increasingly important because of the 
significant funding reported by these two agencies, particularly for 
physical infrastructure, in USAID's TCB database. As a primary source 
of information on TCB funding for Congress and the public, it is 
important that its information create a clear picture of funding 
trends. But without explanations of the database's limitations, it may 
distort users' understanding and create misperceptions. 

While USAID has taken positive steps to track the progress of 
individual TCB activities, like other development organizations it 
continues to struggle to link this assistance to important trade and 
development benefits. USAID's recent agencywide evaluation of the 
effectiveness of its TCB activities in multiple countries is an 
important step, but USAID officials have not yet signaled how they 
plan to address the evaluation's valuable findings. Without planning 
actions to utilize the results of its evaluation, the agency may miss 
opportunities to take advantage of the insights from that analysis to 
improve the effectiveness of its TCB assistance. Moreover, by 
evaluating its TCB activities across countries on an ongoing basis, 
USAID could gain a better understanding of the linkage between TCB and 
development. It could also gain valuable experience regarding the 
types of assistance important for the diverse set of countries and 
situations that could potentially benefit from U.S. TCB assistance. 

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. 

* Develop a written plan that details the actions the agency intends 
to take to address the findings and recommendations of its recent 
multicountry evaluation of TCB, and its plans for conducting 
evaluations of its TCB activities on an on-going basis. 

Agency Comments and Our Evaluation: 

We received written comments from USAID, which are reprinted in 
appendix VI. USAID stated that it has already taken steps consistent 
with our recommendations. USAID also noted that it would take our 
recommendations into account in its ongoing plans and provided 
additional information and observations. 

USAID stated that it updated the TCB database to include fiscal year 
2010 data and noted it had revised the Web site for the database to 
clarify the unique nature of MCC obligations. We believe this is a 
positive step, and will improve users' ability to accurately compare 
and assess data over time. USAID further noted that it is reviewing 
its plans for the fiscal year 2011 survey of TCB activities and 
anticipates revamping and streamlining components of the database 
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. 

Further, USAID noted it had recently completed a synopsis of the TCB 
evaluation which it is distributing to key stakeholders and other 
target audiences both within and outside the agency to highlight 
elements of the evaluation. In addition, USAID stated it is building 
on the pilot training of the evaluation's lessons, which we noted in 
the report, and is actively developing further training modules. 
However, at the time of our review USAID did not provide us with 
specific documentation of the actions it is planning to take to make 
use of the evaluation's findings and recommendations. Without 
developing a plan documenting specific actions the agency intends to 
take to utilize the results of its evaluation, the agency may not take 
full advantage of opportunities for improving the effectiveness of its 
TCB assistance identified in the TCB evaluation. 

USAID also stated that under the agency's recently issued January 2011 
evaluation policy, it is committed to a systematic monitoring and 
evaluation of USAID's entire portfolio of activities, including TCB 
activities, as the policy is fully implemented. While USAID's January 
2011 evaluation policy encourages evaluations across the agency's 
portfolio of activities, the policy is not focused on TCB activities 
and does not specify the type of evaluation USAID will conduct on its 
TCB activities. We are suggesting that USAID document its specific 
plans for conducting TCB evaluations on an ongoing basis. 

MCC, State, the Army, and USTR received a draft copy of the report but 
did not provide formal comments. State, USAID, and USTR provided 
technical comments, which we have incorporated in the report, as 
appropriate. 

We are sending copies of this report to appropriate congressional 
committees, the Secretary of the Army, the Secretary of State, the 
Administrator for the U.S. Agency for International Development, Chief 
Executive Officer of the Millennium Challenge Corporation, and the 
U.S. Trade Representative. This report will also be available at no 
charge on GAO's Web site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-4347 or yagerl@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix VII.  

Signed by:  

Loren Yager: 
Director, International Affairs and Trade: 

[End of section] 

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. To address these objectives we 
built upon information collected for our 2005 report on the same 
topic. We conducted fieldwork in Colombia, Morocco, and Mozambique. We 
selected these countries because they (1) were among the 10 countries 
receiving the most TCB funding from fiscal years 2005 to 2009, (2) had 
a mix of U.S. agencies providing assistance and categories of TCB 
assistance provided in-country, and (3) had a diversity of geographic 
regions and country income levels. We limited our review to four 
agencies that provided more than 90 percent of total U.S. TCB 
assistance from fiscal years 2005 to 2010--the most recent fiscal year 
for which data are available. 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. We 
assessed these agencies' reports and strategic plans to determine the 
extent they addressed agencies' TCB-related strategies and objectives. 
We examined U.S. government reports on TCB assistance, annual agency 
reports, and agency TCB planning and project documents. In each 
country we examined program documents and interviewed agency officials 
to understand the types of TCB programs the agencies managed. In 
conjunction with our work at the missions, we held meetings with other 
key U.S. government officials, USAID contractors, host government 
ministry officials, and various TCB recipients. To assess how U.S. 
agencies coordinate the allocation of TCB assistance, we reviewed 
published reports on TCB activities, agency strategies, and program 
documents. We interviewed U.S. officials in the field responsible for 
implementing TCB programs and officials at agency headquarters, 
including the USTR. 

To describe the composition of TCB and determine the extent to which 
the TCB database provides sufficient information on key trends and 
funding, we analyzed available data on agencies' TCB activities and 
funding from the U.S. government TCB database. USAID is responsible 
for maintaining the database and gathering data annually through a 
governmentwide survey. We analyzed data from the database to identify 
the major funding categories, agencies, and recipients of TCB 
assistance. As part of our previous and ongoing work, we have assessed 
this data and determined that they are sufficiently reliable to 
identify TCB funding by agency, country, and category; although we 
found limitations to the use of the data, as discussed in this report. 
We examined the guidance, protocols, and definitions specified in the 
TCB survey. We also reviewed documents from the Organization for 
Economic Cooperation and Development and the World Trade Organization 
(WTO) to understand definitions and data collection methodologies used 
globally for trade-related funding. In addition, we interviewed the 
USAID contractor that manages the data collection and analyzed the 
steps the contractor took to ensure data reliability. For example, we 
asked the contractor how the survey data were collected, what quality 
checks were performed, and what other internal controls were in place. 
At the missions overseas, we reviewed various TCB activities and 
interviewed U.S. and host country officials to corroborate the 
descriptions and funding levels reported in the TCB database. 

To understand the extent to which USAID monitors and evaluates the 
effectiveness of their TCB activities, we analyzed strategic, budget, 
and programmatic documents describing these agencies' TCB funding and 
activities. We reviewed data and information these agencies use to 
measure the performance of their activities, and, where available, 
evaluations of programs or projects they undertake that may be related 
to TCB. In particular, we reviewed a recent USAID evaluation study, 
commissioned in response to our previous recommendations and intended 
to present findings of a cross-country evaluation of U.S. government 
TCB assistance. In each country we visited we reviewed agencies' 
strategy documents and performance plans and reports for activities 
reported as TCB. We also interviewed agency officials, host government 
officials, and contracted implementing partners and visited TCB 
projects. In addition, we examined performance and monitoring 
principles used by multilateral donors and international 
organizations, such as the Organization for Economic Cooperation and 
Development. 

We conducted this performance audit from July 2010 through July 2011 
in accordance with generally accepted auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: USAID Plans Trade Capacity Building-Related Activities In-
Country, Often in Collaboration with Recipient Governments and 
Stakeholders: 

USAID field missions plan TCB-related projects primarily in recipient 
countries, often in collaboration with recipient country governments 
and other in-country stakeholders. USAID's TCB strategy recognizes 
that priorities vary from country to country depending on the levels 
of income and development, and the missions' country strategic plans 
and resources will inform the selection and prioritization of the TCB 
activities the agency implements. According to USAID officials, 
mission officials understand country-specific factors such as the 
activities of other TCB donors and the composition of trade. The USAID 
officials informed us that missions identify their TCB projects as 
part of their mission strategic plans, which USAID's headquarters 
bureaus review in conjunction with the agency's budget planning 
process. They further explained that USAID's headquarters bureaus 
provide missions guidance and training, and help missions develop and 
design specific programs when necessary; however missions primarily 
identify the country-specific trade-related constraints and TCB 
assistance needs in consultation with governments and associations in 
recipient countries. In addition, missions use trade diagnostic 
studies and analyses of trade-related constraints and TCB needs. 

According to USAID officials, missions plan TCB activities using 
analyses of trade-related constraints and TCB-related needs prepared 
by the recipient government and in-country stakeholders, including 
business and trade associations. For example, specific activities of 
the USAID TCB programs related to the U.S.-Colombia free trade 
agreement (FTA) negotiations responded to priorities defined in 
collaboration between USAID and the government of Colombia as the 
negotiations were carried out. Specifically, USAID officials stated 
that they collaborated with the government of Colombia to identify 52 
TCB initiatives. Following the completion of the FTA negotiations in 
2006, USAID continued to provide technical assistance to support the 
initiatives, and by 2010 the mission had addressed all but two of 
these initiatives. According to mission officials, the mission in 
Mozambique identified TCB activities, in part, based on the country's 
trade association's evaluation of trade-related constraints. Mission 
officials cited the importance of involving the business association 
and various government ministries to identify feasible policy reforms 
and foster the collaboration. For example, the mission has worked with 
the business association and the Ministry of Commerce to reduce import 
and export barriers, and reform licensing and shipment processes. In 
addition, these officials explained that they have daily interactions 
with officials of various ministries and these discussions will often 
identify potential areas for TCB assistance. 

USAID missions also use trade diagnostic studies sponsored by USAID 
and developed by multilateral agencies to identify trade-related 
constraints and TCB needs. According to mission officials in Colombia 
and Mozambique, these diagnostic studies are important to encourage 
recipient governments to undertake needed reforms. For example, USAID 
commissioned three diagnostic studies to identify and plan TCB 
assistance in support of the U.S.-Colombia FTA negotiations. Based on 
study results, USAID developed seminars to increase awareness of both 
the Colombian congress and civil society about the importance of the 
FTA and how regions and productive sectors would benefit from it. In 
Mozambique, multilateral and bilateral stakeholders developed a 
diagnostic study that mission officials said contributed to the 
mission's decisions regarding sectors and areas of the country where 
it provided technical assistance under its TCB-related agribusiness 
and tourism programs. For example, according to mission officials, the 
study contributed to the agribusiness program's focus on commodities 
such as cashews and coconuts from the country's northern region that 
have the greatest export potential. Furthermore, according to one 
government of Mozambique official, the mission utilized the study 
results to encourage the government to develop a national strategy to 
address trade-related constraints to economic growth. 

We also found that USAID missions generally select TCB-related 
activities that align with broader country development strategies. In 
countries we visited, mission officials cited the importance of 
consulting with recipient governments' national development strategies 
and with foreign officials of recipient countries to identify 
potential TCB-related activities that have the support of the 
recipient governments. For example, the mission in Mozambique 
identified TCB-related activities under its agribusiness and policy 
reform programs that directly supported the implementation of 
priorities identified in national strategies of various ministries. In 
Morocco, the mission supported the government of Morocco's strategy of 
providing jobs, economic opportunities, and political stability 
through free trade. The mission identified the potential economic 
challenges posed by the FTA, particularly in the area of agriculture, 
and outlined activities to help the government of Morocco respond to 
the challenges and opportunities posed by the FTA. According to 
mission officials, the mission worked with Moroccan associations to 
promote transparent and simplified investment procedures, increase 
access to finance for small businesses, and increase assistance to the 
Ministry of Agriculture to promote a shift in the country's 
agricultural production to higher value crops. 

[End of section] 

Appendix III: Coordination of U.S. Trade Capacity Building Assistance 
among Agencies: 

USTR leads efforts to coordinate the TCB activities of USAID and other 
U.S. agencies through interagency groups and committees tied to FTAs 
and in response to multilateral initiatives related to TCB. USTR-led 
interagency groups often seek U.S. agencies' input into TCB-related 
issues and identify the types of assistance agencies have provided and 
may be able to provide in a particular area. In addition, U.S. 
agencies coordinate their TCB-related activities in recipient 
countries as part of interagency groups that discuss general 
development assistance activities, but which do not focus on TCB 
specifically. For example, USAID coordinates its TCB-related 
activities with other U.S. agencies in-country, as appropriate, 
through embassy-led task forces and working groups focused on 
development assistance in the area of economic growth. These 
interagency groups seek to prioritize projects with broader foreign 
assistance strategies, eliminate duplication of efforts, and identify 
where assistance gaps exist, for instance. 

USTR Leads Efforts to Coordinate U.S. TCB Assistance among U.S. 
Agencies: 

USTR leads efforts to coordinate the TCB activities of USAID and other 
U.S. agencies through interagency groups and committees tied to FTAs. 
USTR has created TCB interagency groups in free trade negotiations 
with developing countries and committees on TCB to prioritize and 
coordinate TCB activities to help FTA partner countries participate in 
negotiations and implement trade rules during the transition and 
implementation periods. Interagency groups have been a feature of the 
FTAs with Bahrain, Central America-Dominican Republic, Chile, Jordan, 
Morocco, Oman, and Peru. According to USTR officials, these 
interagency groups do not influence the outcomes of FTA negotiations; 
however, interagency groups and committees meet periodically in 
conjunction with ongoing and completed negotiations to discuss partner 
countries' TCB needs, determine the types of TCB activities agencies 
already provide, and identify the types of TCB assistance agencies 
might provide in the future. According to USTR officials, the 
interagency groups tied to the FTAs offer USTR the opportunity to work 
with other agencies to try to identify the types of assistance they 
may be able to provide in a particular area. USAID and other U.S. 
agencies participate in these working groups and committees so that 
identified TCB needs are incorporated into ongoing assistance 
programs. For example, according to USTR officials, during a 2008 
meeting of the Central America-Dominican Republic FTA TCB Committee, 
agencies identified sanitary and phytosanitary assistance as a 
priority, and with USDA assistance, each partner country's sanitary 
and phytosanitary system was assessed and gaps or deficiencies in 
those systems were identified. In response, State, USAID, USDA, and 
USTR reached agreement to provide further sanitary and phytosanitary 
assistance. In addition, in 2010, USAID, U.S. Customs and Border 
Protection, and USTR developed training sessions in all Central 
America-Dominican Republic FTA partner countries to address textiles 
compliance issues the interagency committee had identified, according 
to USTR officials. 

USTR also leads the coordination of agencies' TCB-related activities 
resulting from Trade and Investment Framework Agreements (TIFA) 
between the United States and partner countries.[Footnote 31] 
According to USTR officials, USTR works with other agencies--including 
the U.S. Patent and Trademark Office and the Departments of Commerce, 
Justice, and State--in working groups that respond to partner 
countries' assistance needs and priorities. TIFAs also prompt regular 
meetings between the U.S. government and the partner country. 
Officials explained that these discussions are led by USTR for the 
United States, but a number of other agencies also participate and TCB 
is often a part of these dialogues. For example, officials noted that 
USTR recently chaired a meeting with the government of Mauritius in 
which the Department of Commerce presented TCB tools and trainings 
that it provides. Similar meetings with South Africa and Nigeria have 
also included representatives from a number of different agencies and 
included TCB discussions. 

In addition, USTR coordinates TCB efforts with USAID and other 
agencies through the Trade Policy Staff Committee (TPSC) and its 
associated subcommittees.[Footnote 32] Following the Hong Kong WTO 
Ministerial in 2005, the U.S. administration formed a TPSC 
Subcommittee on TCB. According to officials, the subcommittee has 
focused on WTO developments in the area, including USTR's sharing of 
information regarding the WTO and other multilateral initiatives 
related to TCB, such as the Enhanced Integrated Framework,[Footnote 
33] and seeking other agencies' input. As these initiatives had near-
and long-term implications for the WTO, a permanent subcommittee of 
the TPSC was deemed the appropriate mechanism for interagency 
coordination, according to USTR officials. All members of the TPSC are 
invited to participate in meetings of the TPSC Subcommittee on TCB. In 
addition, other agencies that have a particular interest or expertise 
in TCB assistance are also invited, including MCC. USTR utilizes other 
TPSC subcommittees to coordinate U.S. agencies' TCB efforts in various 
contexts. For example, the TPSC Subcommittee on Africa has discussed 
TCB issues particularly related to the African Growth and Opportunity 
Act, and the TPSC Subcommittee on Labor has discussed TCB issues 
related to FTA labor commitments and trade preference program labor 
obligations. 

U.S. Agencies Coordinate TCB Activities In-Country as Part of 
Interagency Groups Focused on Broader Assistance Objectives: 

U.S. agencies generally coordinate their TCB-related activities in- 
country, primarily through mechanisms that do not focus on TCB, but 
which discuss TCB-related assistance in connection to broader foreign 
assistance objectives. In conducting our fieldwork we found that 
embassy-led task forces and working groups sometimes discuss agencies' 
TCB-related activities, as appropriate. For example, according to 
officials in Morocco, USAID, State, MCC, and other agencies discuss 
their TCB-related activities as part of the embassy's foreign 
assistance working group that aims to prioritize projects in alignment 
with broader foreign assistance strategies, eliminate duplication of 
efforts, and identify where assistance gaps exist. Through Ambassador- 
led working group meetings and communications with headquarters in 
Washington, D.C., agencies have identified and coordinated their 
specific TCB-related activities, such as USAID and State's 
collaboration on activities that promote access to finance, and 
USAID's focus on working with the government of Morocco to promote 
policy reforms, particularly in support of MCC's projects. In 
Mozambique, the mission coordinates TCB-related activities through the 
embassy's private sector working group that focuses on foreign 
assistance covering multiple economic sectors, according to officials. 
Officials noted that the working group has reviewed the mission's TCB-
related agricultural development projects in conjunction with similar 
projects conducted by other agencies. In particular, through the 
working group mission officials have worked regularly with USDA 
officials to coordinate the processing and storage of agricultural 
production supported by each agency's TCB-related projects. 

[End of section] 

Appendix IV: Recipient Countries of Bilateral U.S. Trade Capacity 
Building Assistance and Funding Levels, Fiscal Years 2005-2010: 

Table 2 shows the 143 countries that received roughly $8.5 billion in 
bilateral TCB funding between fiscal years 2005 and 2010. Of the 20 
countries receiving the largest obligations, all but 5--Afghanistan, 
Colombia, Sudan, Iraq, and Egypt--are MCC compact countries. These 20 
countries received $6.3 billion, or 74 percent, of total U.S. TCB 
assistance over the period. Among these 20 countries, 8 are least 
developed countries (LDC) according to the definition used by the 
United Nations. In total, 43 LDCs received $3.6 billion or 43 percent 
of total bilateral TCB funding. Of the four agencies we reviewed, MCC 
obligated the most funding, $2.3 billion, to LDCs, while USAID 
obligated $618 million, the Army obligated $550 million, and State 
obligated $8 million. Figure 5 illustrates the shares of TCB funding 
obligated to LDCs in total and for each agency. 

Table 2: Countries Receiving TCB Funding Obligations, Fiscal Years 
2005-2010: 

Country (by amount of funding): Afghanistan; 
Total TCB funding (fiscal years 2005-2010): $758,936,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Tanzania; 
Total TCB funding (fiscal years 2005-2010): $606,139,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Morocco; 
Total TCB funding (fiscal years 2005-2010): $577,406,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Senegal; 
Total TCB funding (fiscal years 2005-2010): $507,002,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): El Salvador; 
Total TCB funding (fiscal years 2005-2010): $452,537,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Burkina Faso; 
Total TCB funding (fiscal years 2005-2010): $398,015,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Georgia; 
Total TCB funding (fiscal years 2005-2010): $323,600,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Ghana; 
Total TCB funding (fiscal years 2005-2010): $292,134,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Colombia; 
Total TCB funding (fiscal years 2005-2010): $284,558,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Moldova; 
Total TCB funding (fiscal years 2005-2010): $263,643,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Mozambique; 
Total TCB funding (fiscal years 2005-2010): $258,409,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Honduras; 
Total TCB funding (fiscal years 2005-2010): $229,999,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Mongolia; 
Total TCB funding (fiscal years 2005-2010): $198,548,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Iraq; 
Total TCB funding (fiscal years 2005-2010): $196,702,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Benin; 
Total TCB funding (fiscal years 2005-2010): $188,979,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Nicaragua; 
Total TCB funding (fiscal years 2005-2010): $175,040,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Egypt; 
Total TCB funding (fiscal years 2005-2010): $169,551,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Mali; 
Total TCB funding (fiscal years 2005-2010): $159,492,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Armenia; 
Total TCB funding (fiscal years 2005-2010): $121,630,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Sudan; 
Total TCB funding (fiscal years 2005-2010): $120,771,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Lesotho; 
Total TCB funding (fiscal years 2005-2010): $102,085,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Jordan; 
Total TCB funding (fiscal years 2005-2010): $95,027,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Cape Verde; 
Total TCB funding (fiscal years 2005-2010): $87,318,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Namibia; 
Total TCB funding (fiscal years 2005-2010): $85,173,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Ukraine; 
Total TCB funding (fiscal years 2005-2010): $77,672,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Indonesia; 
Total TCB funding (fiscal years 2005-2010): $76,174,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Bolivia; 
Total TCB funding (fiscal years 2005-2010): $74,146,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): West Bank/Gaza; 
Total TCB funding (fiscal years 2005-2010): $73,905,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Peru; 
Total TCB funding (fiscal years 2005-2010): $69,972,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Dominican Republic; 
Total TCB funding (fiscal years 2005-2010): $69,140,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Madagascar; 
Total TCB funding (fiscal years 2005-2010): $66,658,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Ethiopia; 
Total TCB funding (fiscal years 2005-2010): $61,662,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Philippines; 
Total TCB funding (fiscal years 2005-2010): $60,875,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Vanuatu; 
Total TCB funding (fiscal years 2005-2010): $54,525,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Guatemala; 
Total TCB funding (fiscal years 2005-2010): $53,474,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Liberia; 
Total TCB funding (fiscal years 2005-2010): $49,195,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Kazakhstan; 
Total TCB funding (fiscal years 2005-2010): $46,206,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Serbia; 
Total TCB funding (fiscal years 2005-2010): $38,850,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Vietnam; 
Total TCB funding (fiscal years 2005-2010): $37,847,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Macedonia; 
Total TCB funding (fiscal years 2005-2010): $37,363,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Ecuador; 
Total TCB funding (fiscal years 2005-2010): $37,252,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): India; 
Total TCB funding (fiscal years 2005-2010): $36,641,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Uganda; 
Total TCB funding (fiscal years 2005-2010): $36,328,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Romania; 
Total TCB funding (fiscal years 2005-2010): $33,804,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Pakistan; 
Total TCB funding (fiscal years 2005-2010): $33,718,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Rwanda; 
Total TCB funding (fiscal years 2005-2010): $33,603,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Hungary; 
Total TCB funding (fiscal years 2005-2010): $32,332,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Paraguay; 
Total TCB funding (fiscal years 2005-2010): $32,257,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Mexico; 
Total TCB funding (fiscal years 2005-2010): $31,735,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Kyrgyzstan; 
Total TCB funding (fiscal years 2005-2010): $29,338,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Cambodia; 
Total TCB funding (fiscal years 2005-2010): $28,859,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): South Africa; 
Total TCB funding (fiscal years 2005-2010): $28,845,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Nigeria; 
Total TCB funding (fiscal years 2005-2010): $27,038,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Kenya; 
Total TCB funding (fiscal years 2005-2010): $26,922,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Azerbaijan; 
Total TCB funding (fiscal years 2005-2010): $24,040,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): China (P.R.C.); 
Total TCB funding (fiscal years 2005-2010): $22,210,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Zambia; 
Total TCB funding (fiscal years 2005-2010): $21,141,000; 
Least developed country: [Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Tajikistan; 
Total TCB funding (fiscal years 2005-2010): $20,207,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Bosnia and Herzegovina; 
Total TCB funding (fiscal years 2005-2010): $20,137,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Russia; 
Total TCB funding (fiscal years 2005-2010): $18,781,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Haiti; 
Total TCB funding (fiscal years 2005-2010): $18,635,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Brazil; 
Total TCB funding (fiscal years 2005-2010): $17,399,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Croatia; 
Total TCB funding (fiscal years 2005-2010): $16,961,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Thailand; 
Total TCB funding (fiscal years 2005-2010): $16,133,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Timor Leste; 
Total TCB funding (fiscal years 2005-2010): $15,258,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Guyana; 
Total TCB funding (fiscal years 2005-2010): $15,234,000; 
Least developed country: [Empty]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Malawi; 
Total TCB funding (fiscal years 2005-2010): $14,853,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Albania; 
Total TCB funding (fiscal years 2005-2010): $12,902,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Serbia and Montenegro (FRY); 
Total TCB funding (fiscal years 2005-2010): $12,306,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Lebanon; 
Total TCB funding (fiscal years 2005-2010): $11,640,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Uzbekistan; 
Total TCB funding (fiscal years 2005-2010): $11,149,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Turkmenistan; 
Total TCB funding (fiscal years 2005-2010): $10,574,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Angola; 
Total TCB funding (fiscal years 2005-2010): $10,178,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Nepal; 
Total TCB funding (fiscal years 2005-2010): $9,904,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Kosovo; 
Total TCB funding (fiscal years 2005-2010): $9,773,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Costa Rica; 
Total TCB funding (fiscal years 2005-2010): $9,228,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Democratic Republic of Congo 
(Kinshasa); 
Total TCB funding (fiscal years 2005-2010): $8,620,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Yemen; 
Total TCB funding (fiscal years 2005-2010): $8,438,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Sri Lanka; 
Total TCB funding (fiscal years 2005-2010): $8,278,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Bangladesh; 
Total TCB funding (fiscal years 2005-2010): $7,926,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Montenegro; 
Total TCB funding (fiscal years 2005-2010): $7,880,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Togo; 
Total TCB funding (fiscal years 2005-2010): $7,864,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Algeria; 
Total TCB funding (fiscal years 2005-2010): $6,796,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Turkey; 
Total TCB funding (fiscal years 2005-2010): $6,527,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Guinea; 
Total TCB funding (fiscal years 2005-2010): $6,149,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Chile; 
Total TCB funding (fiscal years 2005-2010): $5,589,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Oman; 
Total TCB funding (fiscal years 2005-2010): $5,575,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Central African Republic; 
Total TCB funding (fiscal years 2005-2010): $5,400,000; 
Least developed country: 
[Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Jamaica; 
Total TCB funding (fiscal years 2005-2010): $5,127,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Malaysia; 
Total TCB funding (fiscal years 2005-2010): $5,088,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Laos; 
Total TCB funding (fiscal years 2005-2010): $4,859,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Sao Tome and Principe; 
Total TCB funding (fiscal years 2005-2010): $4,000,000; 
Least developed country: 
[Check]; 
MCC recipient country: [Check]. 

Country (by amount of funding): Argentina; 
Total TCB funding (fiscal years 2005-2010): $3,927,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Burundi; 
Total TCB funding (fiscal years 2005-2010): $3,862,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Panama; 
Total TCB funding (fiscal years 2005-2010): $3,703,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Bulgaria; 
Total TCB funding (fiscal years 2005-2010): $3,100,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Cyprus; 
Total TCB funding (fiscal years 2005-2010): $2,928,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Botswana; 
Total TCB funding (fiscal years 2005-2010): $2,015,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Djibouti; 
Total TCB funding (fiscal years 2005-2010): $2,000,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Tunisia; 
Total TCB funding (fiscal years 2005-2010): $1,809,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Lithuania; 
Total TCB funding (fiscal years 2005-2010): $1,383,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Niger; 
Total TCB funding (fiscal years 2005-2010): $1,374,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Belarus; 
Total TCB funding (fiscal years 2005-2010): $1,266,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Papua New Guinea; 
Total TCB funding (fiscal years 2005-2010): $1,157,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Cote d'Ivoire; 
Total TCB funding (fiscal years 2005-2010): $1,105,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Maldives; 
Total TCB funding (fiscal years 2005-2010): $971,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Latvia; 
Total TCB funding (fiscal years 2005-2010): $840,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Cameroon; 
Total TCB funding (fiscal years 2005-2010): $818,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Mauritius; 
Total TCB funding (fiscal years 2005-2010): $813,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Chad; 
Total TCB funding (fiscal years 2005-2010): $667,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Slovak Republic; 
Total TCB funding (fiscal years 2005-2010): $646,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Guinea-Bissau; 
Total TCB funding (fiscal years 2005-2010): $600,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Uruguay; 
Total TCB funding (fiscal years 2005-2010): $599,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Bahrain; 
Total TCB funding (fiscal years 2005-2010): $580,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Poland; 
Total TCB funding (fiscal years 2005-2010): $472,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Trinidad and Tobago; 
Total TCB funding (fiscal years 2005-2010): $461,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Dominica; 
Total TCB funding (fiscal years 2005-2010): $446,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Gambia; 
Total TCB funding (fiscal years 2005-2010): $417,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Barbados; 
Total TCB funding (fiscal years 2005-2010): $404,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Libya; 
Total TCB funding (fiscal years 2005-2010): $337,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Gabon; 
Total TCB funding (fiscal years 2005-2010): $292,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Qatar; 
Total TCB funding (fiscal years 2005-2010): $272,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Korea, Rep.; 
Total TCB funding (fiscal years 2005-2010): $200,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Zimbabwe; 
Total TCB funding (fiscal years 2005-2010): $195,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): St. Lucia; 
Total TCB funding (fiscal years 2005-2010): $173,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Bahamas; 
Total TCB funding (fiscal years 2005-2010): $114,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): St. Kitts and Nevis; 
Total TCB funding (fiscal years 2005-2010): $80,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): St. Vincent and Grenadines; 
Total TCB funding (fiscal years 2005-2010): $69,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Solomon Islands; 
Total TCB funding (fiscal years 2005-2010): $60,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Seychelles; 
Total TCB funding (fiscal years 2005-2010): $51,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Fiji; 
Total TCB funding (fiscal years 2005-2010): $43,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Belize; 
Total TCB funding (fiscal years 2005-2010): $38,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Sierra Leone; 
Total TCB funding (fiscal years 2005-2010): $26,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Suriname; 
Total TCB funding (fiscal years 2005-2010): $23,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Swaziland; 
Total TCB funding (fiscal years 2005-2010): $23,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Bhutan; 
Total TCB funding (fiscal years 2005-2010): $21,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Venezuela; 
Total TCB funding (fiscal years 2005-2010): $20,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Micronesia (Fed States); 
Total TCB funding (fiscal years 2005-2010): $16,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Mauritania; 
Total TCB funding (fiscal years 2005-2010): $14,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Tonga; 
Total TCB funding (fiscal years 2005-2010): $13,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Congo (Brazzaville); 
Total TCB funding (fiscal years 2005-2010): $11,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Samoa; 
Total TCB funding (fiscal years 2005-2010): $11,000; 
Least developed country: [Check]; 
MCC recipient country: [Empty]. 

Country (by amount of funding): Grenada; 
Total TCB funding (fiscal years 2005-2010): $5,000; 
Least developed country: [Empty]; 
MCC recipient country: [Empty]. 

Source: U.S. government TCB database. 

Note: Many U.S. government departments and agencies fund and implement 
TCB activities that cannot be disaggregated by country, but are 
regional or global in scope. The obligations in this table were on a 
bilateral basis and do not include amounts obligated regionally or 
multilaterally.  

[End of table]  

Figure 5: Share of Bilateral Obligated TCB Funding by LDC Status, 
Fiscal Years 2005-2010: 

[Refer to PDF for image: 5 pie-charts]  

Total TCB funding: 
LDC countries: 43%; 
Non-LDC countries: 57%. 
Total: $8.5 billion.  

MCC TCB funding: 
LDC countries: 49%; 
Non-LDC countries: 51%; 
Total: $4.7 billion.  

USAID TCB funding: 
LDC countries: 27%; 
Non-LDC countries: 73%; 
Total: $2.3 billion.  

Army TCB funding[A]: 
LDC countries: 11%; 
Non-LDC countries: 89%; 
Total: $615 million.  

State TCB funding[B]: 
LDC countries: 4%; 
Non-LDC countries: 96%; 
Total: $207 million.  

Source: GAO analysis of U.S. government TCB database.  

Note: Many U.S. government departments and agencies fund and implement 
TCB activities that cannot be disaggregated by country, but are 
regional or global in scope. The obligations in this table were on a 
bilateral basis and do not include amounts obligated regionally or 
multilaterally. 

[A] The Army reported TCB funding for only three countries, with the 
bulk of funding going to Afghanistan, an LDC. 

[B] The majority of TCB reported by State was regional or global in 
scope which is not represented in these bilateral figures.  

[End of figure]  

[End of section]  

Appendix V: MCC and the Army Assessments of Trade Capacity Building- 
Related Activities: 

MCC and the Army do not use TCB-specific performance indicators and 
evaluations to assess the progress of their activities in terms of 
TCB. Each agency uses its overall monitoring and evaluation framework 
to assess their TCB-related activities in relation to the agency's 
missions and program goals. MCC monitors its TCB-related activities in 
terms of the progress they make towards the objectives of the compacts 
and threshold programs in which they are included. The procedures the 
Army uses to assess individual TCB-related projects are based on the 
types of project funding and the primary project objectives. 

Millennium Challenge Corporation: 

MCC does not monitor the results of its TCB-related activities in 
terms of TCB, but monitors progress using its overall policies for 
monitoring the results of its compacts and threshold programs. MCC 
monitors TCB-related activities in terms of their progress towards the 
immediate results and final program objectives of the compacts and 
threshold programs in which they are included. During compact 
development, project appraisals and development procedures include 
defining the objectives and benchmarks that will be used to measure 
progress over the duration of the compact. MCC performs an economic 
analysis on each compact project proposal, which includes assessing 
the economic growth rationale for the investment, calculating an 
economic rate of return, and estimating its poverty reduction impacts. 
The economic analysis results in the indicators MCC uses to monitor 
its compact projects, including those that it reports as TCB.[Footnote 
34] Project managers may monitor additional indicators for their own 
management purposes. While the economic analysis and the selection of 
additional indicators may result in indicators meaningful to measure 
the effects of activities on trade, MCC does not identify a particular 
set of TCB-specific performance indicators to monitor TCB-related 
compact projects in terms of their effectiveness in building the trade 
capacity of the compact country. Similarly, the indicators used to 
monitor TCB-related activities included in threshold programs are not 
specific to TCB, but are identified during program development. The 
selection of performance indicators for threshold programs are based 
on information on the policies and actions that may have affected the 
threshold country's standing in relation to the MCC's eligibility 
criteria. 

In the two compact countries we visited--Morocco and Mozambique--most 
projects MCC reported as related to TCB were not assessed using 
performance indicators meaningful for measuring progress in terms of 
TCB, according to in-country MCC officials. These officials explained 
that projects MCC reported as TCB could have been assessed using trade-
related indicators, such as the volume and value of exports stemming 
from projects, because they have trade-related effects. However, these 
officials explained the economic analysis of the compact projects and 
the project manager's selection of additional indicators did not 
result in indicators that directly measured the results of projects in 
terms of trade. For example, in Morocco, officials noted that the 
performance indicators used to monitor three TCB-related compact 
projects did not provide information to track results in terms TCB, 
but monitored projects' effects on household incomes and employment. 
Similarly, in Mozambique, none of the three compact projects MCC 
reported as TCB-related were monitored in terms of their effects on 
trade, according to in-country officials. Although these officials 
explained that all three projects result in trade-related outcomes, 
including a road rehabilitation project that facilitates the transport 
of goods for export and an agriculture development project that 
resulted in production for export, the projects were monitored in 
terms of other objectives. For example, the objectives of a TCB-
related roads rehabilitation project in the Mozambique compact 
included reduced transport costs, and increased public transport 
access for individuals to take advantage of job and other economic 
opportunities. The economic analysis of the project focused on the 
reduction of transport costs, including savings in vehicle operating 
costs, and time savings. Examples of performance indicators for the 
project included measures of the roughness of the road and the dollar 
value of time saved due to shorter trip times and increased speed on 
upgraded roads. 

In addition, MCC conducts independent evaluations of its compacts and 
threshold programs to better understand the effectiveness of its 
development programs; however, these evaluations are not intended to 
directly evaluate projects in terms of TCB. According to MCC's 
monitoring and evaluation policy, every compact project and each 
threshold program must undergo a comprehensive, independent evaluation 
after completion, and compact projects may be evaluated during compact 
implementation as necessary. The evaluations are intended to compile 
lessons learned and improve the effectiveness and efficiency of 
project implementation. Evaluations also are meant to compare 
projects' final results with a credible estimate of what would have 
happened without the project, including changes in individual, 
household, or community income that result from a particular project 
or program. According to MCC officials in the countries we visited, 
evaluations had not yet been conducted on compact projects, including 
TCB-related projects, but each project would be evaluated upon the 
completion of the compact. These officials explained that the 
evaluation will be conducted in accordance with agency guidance to 
assess the performance of specific activities and contribute to a 
broader understanding of development effectiveness. While the 
evaluation may assess the trade-related results of projects as trade 
may contribute to the economic growth and poverty reduction objectives 
of the compact, officials explained that an assessment of the 
effectiveness of compact projects in terms of TCB would not be a 
specific focus. 

The Department of the Army: 

The Army does not have a specific process for monitoring and 
evaluating the performance of projects reported as TCB, but uses its 
general guidance and processes for assessing projects. According to 
officials of one command, the infrastructure projects identified as 
TCB are not monitored using performance indicators specific to TCB, 
and the Army does not evaluate the effectiveness of its TCB-related 
infrastructure projects in terms of TCB. Officials explained that the 
monitoring and evaluation procedures used to assess individual TCB-
related projects depend on the types of funding used for specific 
projects and the project's primary objectives. For example, according 
to officials, TCB-related projects funded under the Commander's 
Emergency Response Program (CERP), which include TCB-related projects 
implemented to respond to humanitarian and reconstruction requirements 
in Afghanistan, are monitored and evaluated using processes outlined 
in CERP guidance, which do not include methods for monitoring and 
evaluating projects' effects on trade. TCB-related projects funded 
under CERP include the repair and restoration of telecommunications 
and electrical systems, and irrigation projects. According to the July 
2009 CERP guidance, performance indicators for CERP projects are 
selected based on each project's scope, complexity, and period of 
usefulness. In identifying procedures for evaluating projects, 
officials are to consider certain factors, including the benefits of 
the project to the local population, and the number of individuals in 
the local population engaged in and benefiting from the project; also 
the project must meet engineering standards. 

[End of section] 

Appendix VI: Comments from the U.S. Agency for International 
Development:  

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix.  

USAID: 
From The American People:  

July 19, 2011:  

Mr. Juan Gobel: 
Assistant Director: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington DC 20548:  

Dear Mr. Gobel: 

I am pleased to provide the U.S. Agency for International 
Development's formal response to the GAO draft report entitled: 
"Foreign Assistance: The United States Provides Wide-ranging Trade 
Capacity Building Assistance, but Better Reporting and Evaluation Are 
Needed." (GAO 11-727).  

The enclosed USAID comments are provided for incorporation with this 
letter as an appendix to the final report.  

Thank you for the opportunity to respond to the GAO draft report and 
for the courtesies extended by your staff in the conduct of this audit 
review.  

Sincerely,  

[The U.S. Agency for International Development letter was signed 
electronically by Sean C. Carroll, Chief Operating Officer] 

Sean Carroll /s/: 
Chief Operating Officer: 
U.S. Agency for International Development:  

Enclosure: a/s.  

[End of letter]  

"Foreign Assistance: The United States Provides Wide-ranging Trade 
Capacity Building Assistance, but Better Reporting and Evaluation Are 
Needed" (GAO 11-727):  

There are a number of issues raised in the report concerning the Trade 
Capacity Building (TCB) database as well as USAID's progress in 
applying the lessons from the TCB Evaluation on which we would like to 
comment.  

Recommendation 1: We recommend that the administrator of USAID 
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 Army's data issues; and 
consider ways to differentiate between categories of assistance that 
directly and indirectly relate to TCB.  

Response: USAID and its interagency counterparts have been acutely 
aware of the challenges associated with accurately tracking 
U.S.Government (USG) TCB contributions. As the report correctly 
reflects, the TCB database has evolved over the years of its 
existence. Every annual TCB survey to USG agencies has included 
further refinements in its methodology along with an effort to more 
inclusively reflect trade-related contributions made by other 
government entities. With the inclusion of the Millennium Challenge 
Corporation's (MCC) activities in 2005 and the Department of the Army 
in 2009, the database expanded to more accurately reflect the entirety 
of USG TCB activities, but to the detriment of user's ability to 
compare and assess data across the full time interval the database 
covers. With the recent updating of the TCB database on July 1 to 
include FY 2010 numbers, USAID has already responded to the GAO's 
concern by prominently indicating on the home page of the TCB database 
the unique nature of MCC obligations which cover five years of any 
given country compact. USAID is also reviewing its plans for the FY
2011 survey of TCB activities and anticipates revamping and 
streamlining components of the database and will be taking account of 
the GAO's recommendations for improving data collection and reporting. 
[See comment 1]  

Recommendation 2: We recommend that USIAD develop a written plan that 
details the actions the agency intends to take to address the findings 
and recommendations of its recent multi-country evaluation of TCB, and 
its plans for conducting evaluations of its activities on an ongoing 
basis.  

Response: The GAO report acknowledges the valuable insights afforded 
by USAID's recently completed cross country study on TCB, From Aid to 
Trade: Delivering Results, which identifies the positive effects of 
USAID TCB assistance. As noted in GAO's report, the study is lengthy 
and complex, but USAID has been focusing on disseminating and 
implementing the results of the study and the lessons to be learned in 
terms of project design, implementation, monitoring and evaluation. A 
significant aspect of the report's findings and recommendations is 
informing the international efforts on Aid for Trade being led jointly 
by the Organization for Economic Cooperation and Development (OECD) 
and World Trade Organization (WTO) on TCB and aid effectiveness.  

Closer to home, a number of initiatives related to the TCB evaluation 
have also been advancing. USAID has just completed a synopsis of the 
TCB evaluation which it is distributing to key stakeholders and other 
target audiences both within and outside the agency to highlight the 
core elements of the evaluation. Operationally, the evaluation is 
already guiding USAID/Washington's interactions with bilateral and 
regional missions as they design and implement new TCB interventions. 
[See comment 2]  

Still, USAID/Washington recognizes the need to broaden and deepen the 
understanding of the TCB evaluation. As noted in the draft report, 
USAID has already undertaken a pilot training course on the 
evaluation's lessons. We are building on that experience and we are 
actively developing further training modules. Because interaction with 
economic growth officers is essential to the successful adoption of 
the evaluation's findings and recommendations, the agency is 
undertaking a number of varied outreach efforts. A new in-depth 
training program on trade and investment issues is scheduled to be 
offered in Washington in October 2011 and will include a unit on the 
identification of successful approaches for the provision of TCB. The 
agency is also moving to complete a similar online training module for 
those unable to attend face-to face training sessions and will be 
rolling out opportunities for interactive discussions with USAID's 
field operations utilizing USAID Connect, the agency's collaborative 
meeting and web conferencing capability.  

Finally, the GAO report calls for ongoing evaluation of TCB activities 
across countries as a means to a better understanding of the linkages 
between TCB and development. USAID's new evaluation policy, which was 
promulgated in January 2011, addresses this issue by committing the 
agency to a systematic monitoring and evaluation of USAID's entire 
portfolio of activities. TCB activities are an integral part of that 
portfolio and as the evaluation policy is fully implemented, USAID 
will conduct evaluations of new and ongoing TCB interventions in order 
to generate new knowledge and apply those lessons to our development 
activities. [See comment 3]  

USAID is committed to improving TCB and aid effectiveness and GAO's 
report serves to strengthen our efforts in this important area.  

The following are our comments on the U.S. Agency for International 
Development letter dated July 19, 2011. 

GAO Comments: 

1. In response to the updated TCB database and the inclusion of 
information on the unique nature of MCC obligations, we incorporated 
fiscal year 2010 data into our analysis and revised our report as 
appropriate to reflect these developments. 

2. We welcome USAID's recent actions to make use of the findings of 
its recent evaluation. However, during the course of our review, USAID 
officials were unable to provide us with documentation of its synopsis 
of the evaluation and its specific plans for addressing the 
evaluation's findings and recommendations. We believe documenting 
specific actions the agency plans to take to make use of the 
evaluation's valuable information would provide a structured approach 
that would help ensure the lessons learned will be incorporated into 
the design, implementation, monitoring, and evaluation of TCB projects. 

3. We support USAID's commitment to systematically monitor and 
evaluate its portfolio of activities, including those related to TCB, 
and the agency's intent to conduct evaluations of new and ongoing TCB 
interventions in order to generate new knowledge and apply those 
lessons to its development activities. However, USAID's January 2011 
evaluation policy covers evaluations across the agency's portfolio of 
activities and thus is broad-based and does not target TCB 
specifically. We believe that USAID still should document its specific 
plans for conducting TCB evaluations on an ongoing basis as laid out 
in the November 2010 evaluation. 

[End of section]  

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Loren Yager, (202) 512-4347 or yagerl@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, the following persons made 
major contributions to this report: Juan Gobel, Assistant Director; 
Bradley Hunt; Karen Deans; David Dornisch; Ernie Jackson; and Brian 
Tremblay. Miriam Carroll Fenton, Howard Cott, Timothy Fairbanks, 
Victoria Lin, and Christina Werth provided technical assistance. 

[End of section]  

Footnotes:  

[1] GAO, Foreign Assistance: U.S. Trade Capacity Building Extensive, 
but Its Effectiveness Has Yet To Be Evaluated, [hyperlink, 
http://www.gao.gov/products/GAO-05-150] (Washington, D.C.: Feb. 11, 
2005). 

[2] In January 2004, Congress established MCC to administer the 
Millennium Challenge Account for foreign assistance.  

[3] The WTO has no formal definition of a "developing country." 
Members announce for themselves whether they are "developed" or 
"developing" countries. 

[4] WTO agreements contain special provisions that give developed 
countries the possibility to treat developing countries more favorably 
than other WTO members. These special provisions include, for example, 
longer time periods for implementing agreements and commitments or 
measures to increase trading opportunities for developing countries. 
The provisions are designed to help developing countries implement the 
agreements and to accentuate the benefits they might enjoy. 

[5] USTR uses the term "aid for trade" interchangeably with TCB.  

[6] USAID, USAID Strategy: Building Trade Capacity in the Developing 
World, PD-ABX-241 (Washington, D.C., March 2003). 

[7] The program's 18 components included (1) seminars on the FTA and 
its benefits, (2) labor capacity and compliance with labor laws and 
regulations, (3) customs reforms, (4) technical barriers to trade, (5) 
tax benchmarking, (6) securities market, (7) investment, (8) modeling 
of demand for transportation infrastructure, (9) sanitary and 
phytosanitary measures, (10) tax policy, (11) telecommunications, (12) 
technical cooperation strategy to build trade capacity and harmonize 
donor assistance, (13) services statistics, (14) professional services 
standards, (15) competitiveness, (16) arbitration, (17) intellectual 
property rights, and (18) energy sector. 

[8] Sanitary refers to human and animal health and safety, while 
phytosanitary refers to plant health. 

[9] Countries include Afghanistan, Azerbaijan, Ethiopia, Kazakhstan, 
Kyrgyzstan, Laos, Russia, Serbia, and Tajikistan. 

[10] Also knows as the Agreement on Trade Related Aspects of 
Intellectual Property Rights. 

[11] The 15 member countries of the Southern African Development 
Community (SADC) region launched a free trade area in 2008. In 
addition, SADC member states have begun negotiations to form a 
Tripartite FTA combining SADC, the Common Market for Eastern and 
Southern Africa, and the East African Community.  

[12] Pub. L. No. 106-200, Title I, 114 Stat. 252 (2000), as amended. 
AGOA requires the administration to produce an annual report on the 
U.S. trade and investment policy for sub-Saharan Africa and the 
implementation of AGOA. The report includes information about TCB 
efforts undertaken by U.S. agencies in the region, including USAID.  

[13] A compact is a multiyear agreement between the MCC and an 
eligible country to fund specific programs targeted at reducing 
poverty and stimulating economic growth. A threshold program is 
designed to assist countries that have not yet qualified for MCC 
compact funding, but are on the "threshold" of doing so, having 
demonstrated a significant commitment to improving their performance 
on the eligibility criteria for compact funding. See 22 USC 7708 (a), 
(j). 

[14] Compact countries include Armenia, Benin, Burkina Faso, Cape 
Verde, El Salvador, Georgia, Ghana, Honduras, Lesotho, Madagascar, 
Mali, Moldova, Mongolia, Morocco, Mozambique, Namibia, Nicaragua, 
Senegal, Tanzania, and Vanuatu. Threshold countries include Guyana, 
Jordan, Liberia, Moldova, Paraguay, the Philippines, Sao Tome and 
Principe, Ukraine, and Zambia. 

[15] The objective of the Commander's Emergency Response Program 
(CERP) is to enable local commanders in Iraq and Afghanistan to 
respond to urgent humanitarian relief and reconstruction requirements 
within their areas of responsibility. The Secretary of the Army serves 
as the executive agent and is responsible for developing detailed 
procedures necessary for commanders to carry out CERP in a manner that 
is consistent with applicable laws, regulations, and guidance. The 
Commander of U.S. Central Command is responsible for allocating CERP 
resources. CERP guidance applies to all U.S. Department of Defense 
organizations and activities.  

[16] For the purposes of analysis, we grouped the TCB categories used 
by the survey, and listed in table 1 in the background, into the 
following eight groupings: (1) physical infrastructure development; 
(2) trade facilitation; (3) WTO-related (includes WTO awareness and 
accession and WTO agreements); (4) governance, transparency and 
interagency coordination; (5) human resources and labor standards; (6) 
financial sector development and good governance; (7) trade-related 
agricultural development; and (8) other TCB categories (includes 
environmental sector trade and standards, competition policy and 
foreign investment, and services trade development including tourism).  

[17] The Millennium Challenge Act of 2003 (Pub. L. No.108-199, Div. D, 
Title VI, Sec. 605) authorizes MCC to provide assistance to countries 
that enter into public compacts with the United States. MCC has 
negotiated compacts with countries that contain agreed upon assistance 
objectives, responsibilities, implementation schedules, expected 
results, and evaluation strategies. The act stipulates that a compact 
may not last longer than 5 years and that MCC may have only one 
compact with a country at a time.  

[18] GAO, Millennium Challenge Corporation: Analysis of Compact 
Development and Future Obligations and Current Disbursements of 
Compact Assistance, [hyperlink, 
http://www.gao.gov/products/GAO-08-577R] (Washington, D.C.: Apr. 11, 
2008). 

[19] Organization for Economic Development and World Trade 
Organization, Aid for Trade At A Glance 2007: 1ST Global Review. 

[20] [hyperlink, http://www.gao.gov/products/GAO-05-150]. 

[21] State and USAID developed the standard indicators in 2006 as part 
of the State and USAID joint strategic framework to measure the 
results of U.S. government foreign assistance funding and the impact 
of efforts to advance countries' development. They are intended to 
facilitate the aggregate reporting of quantitative information across 
countries.  

[22] State divides standard indicators USAID uses into three 
categories, (1) strategic level, designed to capture the impact of 
foreign and host-government efforts at the objective level; (2) 
program area level, intended to measure results beyond what could be 
achieved solely by U.S. government-funded interventions; and (3) 
element level, designed to measure outputs that are directly 
attributable to the U.S. government's programs, projects and 
activities.  

[23] Output measures are the direct products and services delivered by 
a program. Outcome measures are the results of products and services 
provided.  

[24] Chemonics International, Inc., USAID Regional Trade Capacity 
Building Program for CAFTA-DR: Final Report (August 2010); Nathan 
Associates, Inc., USAID Andean Regional Trade Capacity Building 
Program: Final Report, October 1, 2005 to June 19, 2006 (June 2006); 
DAI/Nathan Group, African Trade Hub Best Practices Review: Building on 
Successes and Lessons Learned for the Next Generation of Trade Hub, 
(July 2010); and Global Business Solutions Inc., Evaluation of Trade 
Hubs Located in Accra, Ghana; Gaborone, Botswana, and Nairobi, Kenya: 
Final Report (August 2006). 

[25] Trade Services Group, Colombia Trade Capacity Building Support 
Project Final Report: December 2004 to December 2006 (December 2006).  

[26] Molly Hageboeck, Management Systems International, From Aid to 
Trade: Delivering Results: A Cross-Country Evaluation of USAID Trade 
Capacity Building (November 2004). 

[27] In January 2011, USAID issued a new evaluation policy. The policy 
requires that all major programs be evaluated at least once and that 
an evaluation include its methodology and plans for dissemination. In 
addition, the evaluation must be timed so that the findings will be 
available as decisions are made about new strategies, program designs, 
and procurements. Recognizing the need for the funding of evaluations, 
the policy suggests that at least 3 percent of program funds be used 
for commissioned independent evaluations.  

[28] Management Systems International, From Aid to Trade: Delivering 
Results, A Cross-Country Evaluation of USAID Trade Capacity Building 
(November 2010). 

[29] GAO, Results-Oriented Government: GPRA Has Established a Solid 
Foundation for Achieving Greater Results, [hyperlink, 
http://www.gao.gov/products/GAO-04-38] (Washington, D.C.: Mar. 10, 
2004). 

[30] GAO, Managing for Results: Enhancing Agency Use of Performance 
Information for Management Decision Making, [hyperlink, 
http://www.gao.gov/products/GAO-05-927] (Washington, D.C.: Sep. 9, 
2005). 

[31] TIFAs provide strategic frameworks and principles for dialogue on 
trade and investment issues between the United States and the other 
parties to the TIFA. These agreements serve as a forum for the United 
States and other governments to meet and discuss issues of mutual 
interest with the objective of improving cooperation and enhancing 
opportunities for trade and investment. 

[32] The TPSC is chaired by USTR and composed of 20 federal agencies 
and offices. It seeks to develop and coordinate U.S. government 
positions on international trade and trade-related investment issues. 
Supporting the TPSC are more than 90 subcommittees responsible for 
specialized areas and several task forces that work on particular 
issues. 

[33] The Enhanced Integrated Framework for Trade-Related Assistance to 
Least-developed Countries is a program comprised of multiple 
organizations and donors that operates as a coordination mechanism for 
trade-related assistance to least-developed countries (LDC). The 
program assists LDCs incorporate trade into national development 
strategies, establish structures needed to coordinate the delivery of 
trade-related technical assistance, and address trade-related 
constraints. Its members include the WTO, World Bank, the 
International Monetary Fund, United Nations Conference on Trade and 
Development, United Nations Development Program, and the International 
Trade Centre.  

[34] After a compact is signed, the partner country's accountable 
entity and MCC finalize a monitoring and evaluation plan that lays out 
the framework for monitoring and evaluating compact activities and the 
process for assessing progress towards the compact goal. The plan 
identifies the indicators, performance targets, and details for 
collecting data and reporting progress against performance targets.  

[End of section]  

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