Export Promotion: Trade Promotion Coordinating Committee's Role  
Remains Limited (26-APR-06, GAO-06-660T).			 
                                                                 
In 1992, Congress established the Trade Promotion Coordinating	 
Committee (TPCC) to provide a unifying interagency framework to  
coordinate U.S. export promotion activities and to develop a	 
governmentwide strategic plan. TPCC member agencies' activities  
include providing training, market information, advocacy, trade  
finance and other services to U.S. companies, especially small-  
and medium-sized businesses. These U.S. government agencies	 
together have $1.5 billion in budget authority for export	 
promotion programs and activities for fiscal year 2006. Each	 
year, the TPCC submits to Congress a mandated national export	 
strategy, reporting member agencies' activities and trade	 
promotion budget authority and establishing broad priorities. The
TPCC secretariat, which has no budget of its own, is housed in	 
the Commerce Department, which chairs the committee. In this	 
testimony, which updates findings from a 2002 report, GAO (1)	 
reports on trends in TPCC member agencies' budget authority; (2) 
assesses TPCC's coordination of trade promotion and its national 
export strategies; and (3) discusses small- and medium-sized	 
businesses' participation in trade promotion activities.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-660T					        
    ACCNO:   A52599						        
  TITLE:     Export Promotion: Trade Promotion Coordinating	      
Committee's Role Remains Limited				 
     DATE:   04/26/2006 
  SUBJECT:   Budget authority					 
	     Exporting						 
	     Federal agencies					 
	     Interagency relations				 
	     International trade				 
	     Small business					 
	     Strategic planning 				 
	     Reporting requirements				 

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GAO-06-660T

     

     * Summary
     * Background
     * Total Reported TPCC Agency Budget Authority Has Declined but
     * TPCC Has Taken Steps to Improve Coordination, but Strategies
          * TPCC Has Made Some Progress in Improving Coordination
          * TPCC Strategies Continue to Provide Little Guidance for Expo
     * Lack of Systematic Data Hampers Assessment of Small and Medi
     * Concluding Observations
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Testimony

Before the Committee on Small Business House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:00 p.m. EDT

Wednesday, April 26, 2006

EXPORT PROMOTION

Trade Promotion Coordinating Committee's Role Remains Limited

Statement of Loren Yager, Director International Affairs and Trade

GAO-06-660T

Mr. Chairman and Members of the Committee:

I am pleased to be here today to report on our work on the Trade Promotion
Coordinating Committee (TPCC). Established by Congress in 1992, the TPCC's
mission is to provide a unifying framework to coordinate U.S. agencies'
export promotion activities and to develop a governmentwide strategic plan
to carry out those activities.1 TPCC member agencies' activities include
providing training, market information, advocacy, trade finance and other
services to U.S. companies, especially small- and medium-sized businesses,
seeking to export their products. In fiscal year 2006, almost a dozen TPCC
member agencies have a combined $1.5 billion in budget authority for
export promotion programs and activities; for fiscal year 2007, these
agencies have requested $1.3 billion in export-related budget authority.
The TPCC secretariat has no budget of its own. The secretariat, which is
housed in the International Trade Administration at the Department of
Commerce, a key export promotion agency, is currently moving from the
office of the Under Secretary for International Trade to the office of the
Assistant Secretary for Trade Promotion/Director General for the U.S. and
Foreign Commercial Service.

GAO has reviewed the TPCC several times since its inception. In a 2002
review,2 GAO found that it had made modest but inconsistent progress in
coordinating trade promotion activities and that its mandated yearly
reports to Congress,3 known as national export strategies, do not identify
and measure progress toward agency goals in relation to broad federal
priorities. GAO also reviewed agencies' efforts to involve small and
medium-sized businesses in their export promotion programs.

Today, as requested, I will (1) report on trends in the budget authorities
of TPCC member agencies since 2002 and (2) update some of our 2002 and
earlier findings regarding the TPCC's trade promotion coordination and
national export strategies. In addition, responding to the interest you
expressed, I will discuss TPCC agencies' progress in involving small- and
medium-sized businesses in trade promotion activities.

1 Section 201 of the Export Enhancement Act of 1992 (P.L. 102-429), 15
U.S.C. 4727(a)(1) and (2).

2GAO, Export Promotion: Mixed Progress in Achieving a Governmentwide
Strategy, GAO-02-850 (Washington, D.C.: September 4, 2002).

315 U.S.C. 4727(f).

My remarks are based on GAO's review of TPCC and member agency documents,
including agency strategic plans and budgets and the four most recent
national export strategies. We also interviewed officials from the
agencies that have consistently represented the largest share of the
TPCC's program budget authority or been involved in recent efforts to
enhance export-related services for small- and medium-sized businesses-the
Departments of Agriculture, Commerce, and State; the Export-Import Bank of
the United States (Ex-Im Bank); the Overseas Private Investment
Corporation (OPIC); and the Small Business Administration (SBA). In
addition, we spoke with officials at the Office of Management and Budget
(OMB). Although we noted some limitations in the national export
strategies' budget data, we found the data sufficiently reliable for our
purposes. We conducted our work from February through April 2006 in
accordance with generally accepted government auditing standards.

                                    Summary

As reported in the national export strategies, TPCC agency resources have
declined or remained unchanged since 2002, but the implications of these
trends for U.S. trade promotion activities are not clear. Overall, TPCC
agencies' trade promotion budget authority for fiscal years 2002-2007
dropped by more than one-third, primarily as a result of budget decreases
at two of four agencies that account for most of U.S. trade promotion
budget authority: funding for three Department of Agriculture program
areas dropped in fiscal years 2005-2007, and Ex-Im Bank lowered its
projected costs for providing financing and its appropriations requests.
At the same time, budget authority for the other two key agencies, the
Departments of Commerce and State, remained relatively steady. The effect
of these trends on the agencies' trade promotion activities is unclear.
For example, the decline in Ex-Im Bank's budget authority did not reduce
its ability to provide export financing. Further, according to Commerce
officials, although the department's trade promotion authority has changed
little, recent increases in the cost of security for overseas
offices-included in the department's trade promotion budget
authority-diminish the resources available for trade promotion activities.

The TPCC has made some progress in improving coordination, but its
national export strategies continue to provide limited information on
agencies' goals and progress, relative to broad national priorities, to
guide future efforts. TPCC member agencies have taken several steps to
improve interagency coordination in response to results of market research
that the TPCC secretariat commissioned. Since 2002, the TPCC initiated
several efforts such as interagency training, joint outreach to better
serve small businesses, and improved support for trade promotion
activities at U.S. embassies overseas. According to agency officials,
however, some interagency coordination challenges persist, particularly
among the Departments of Commerce, State, and Agriculture regarding the
allocation of overseas staff for trade promotion activities and agreement
on agency roles and responsibilities in helping U.S. exporters. In
addition, as we found in 2002, the TPCC's annual strategies provide
limited information regarding U.S. export promotion goals or progress
toward achieving those goals, thereby constraining the TPCC's ability to
carry out its mandate of coordinating federal trade promotion activities.
For example, the strategies do not identify, or measure progress toward,
member agency goals in relation to the strategies' broad federal trade
promotion priorities, and the agencies have not articulated measurable
goals in support of these priorities. Moreover, the annual strategies do
not review agencies' allocation of resources in relation to the broad
priorities, and the TPCC has little influence over agencies' allocation of
resources to support their goals or its priorities.

A lack of systematic information makes it difficult to assess progress or
trends in small and medium-sized businesses' participation in trade
promotion activities across agencies. TPCC agencies track small business
participation in a variety of ways. For example, according to Commerce
officials at the U.S. and Foreign Commercial Service, the agency tracks
the number of small and medium-sized business export sales transactions
per year and is updating its tracking system to allow it to observe
transactions by client as the transactions develop over time and involve
other TPCC agencies. In contrast, a Department of Agriculture program
tracks other indicators, such as the number of small businesses making a
first export sale. We also note that the national export strategies
provide only anecdotal information on these businesses' participation in
trade promotion activities. Further, TPCC officials said that they do not
compile information on small- and medium-sized businesses' participation
in agency programs and activities.

                                   Background

As we discussed in our 2002 report, TPCC member agencies perform functions
that include identifying export opportunities, providing financing and
insurance, and working to create open markets for U.S. exports and
investments. Chaired by the Secretary of Commerce, the TPCC currently has
a staff of three Commerce trade professionals who work with other member
agency officials on trade promotion initiatives and prepare the national
export strategy. The TPCC generally meets once or twice a year at the
head-of-agency level and quarterly or monthly at the deputy level (e.g.,
assistant secretary or under secretary); TPCC member agency staff discuss
issues frequently but meet on an ad hoc basis.

The TPCC's national export strategies include a table showing member
agencies' budget authority for trade promotion activities. Since 2000,
this table has included all or part of the budgets of 11 of the TPCC's
member agencies-the Departments of Agriculture, Commerce, Energy, Labor,4
State, and the Treasury; Ex-Im Bank; OPIC;5 SBA; the U.S. Trade and
Development Agency; and the U.S. Trade Representative.6 Although the TPCC,
together with the agencies, determines which agencies' budgets are
included in this table, the agencies themselves decide which of their
programs or activities constitute trade promotion. However, the tables
present only the total trade promotion budget authority for each agency
without detailing the programs and activities. The Department of
Agriculture counts nine programs as trade promotion, along with salaries
and expenses for its Foreign Agricultural Service.7 The Commerce
Department counts three units within its International Trade
Administration-Trade Promotion and U.S. and Foreign Commercial Service,
Manufacturing and Services, and Market Access and Compliance-and a grant
for promoting foreign tourism within the United States. The State
Department considers a portion of its budget to be related to trade
promotion. This portion includes part of State's budgets for its regional
bureaus, some of which have overseas staff in locations with no Foreign
Commercial Service officers. It also includes State's budget for trade
capacity building, advocacy, and promotion activities performed by, or
funded through, department offices such as the Office of Commercial and
Business Affairs. The national export strategies' trade promotion program
budget authority tables also include the entire budgets of Ex-Im Bank,
OPIC, the U.S. Trade and Development Agency, and the U.S. Trade
Representative as well as very small amounts of the budgets of the
Departments of Energy, Labor, and the Treasury and SBA.

4The table to be published in the 2006 national export strategy shows zero
trade promotion program budget authority for the Department of Labor for
fiscal year 2005 (actual), fiscal year 2006 (enacted), and fiscal year
2007 (requested).

5OPIC is authorized to spend funds from the fees it collects and the
income it earns from Treasury securities and generally does not receive a
direct appropriation. OPIC's budget authority figure, which is negative,
is not included in the total.

6The 2005 national export strategy lists eight additional member agencies:
the Council of Economic Advisors; the Departments of Defense, Interior,
and Transportation; the Environmental Protection Agency; the National
Security Council/National Economic Council; OMB; and the U.S. Agency for
International Development.

7The Department of Agriculture counts the following nine programs as trade
promotion: (1) Market Access Program; (2) Foreign Market Development
(Cooperator) Program; (3) Export Enhancement Program and (4) Dairy Export
Incentive Program; (5) Public Law 480 Title I credit and Food for Progress
grants; (6) Commodity Credit Corporation export credit guarantee programs;
(7) Emerging Markets Program; (8) Technical Assistance for Specialty Crops
Program; and (9) Quality Samples Program. Of these nine programs, the last
three were not included in previous national export strategy budget tables
but will be included in the 2006 table.

To help agencies address barriers to working collaboratively, GAO has
previously evaluated efforts such as export promotion that cut across more
than one agency. In an October 2005 review of several joint agency efforts
that was intended to help agencies address barriers to working
collaboratively, we identified eight key practices that can help enhance
and sustain interagency collaboration: 8

           o  Define and articulate a common outcome-that is, a measurable
           goal.
           o  Establish mutually reinforcing or joint strategies.
           o  Identify and address needs by leveraging resources.
           o  Agree on roles and responsibilities.
           o  Establish compatible policies, procedures, and other means to
           operate across agency boundaries.
           o  Develop mechanisms to monitor, evaluate, and report on results.
           o  Reinforce agency accountability for collaborative efforts
           through agency plans and reports.
           o  Reinforce individual accountability for collaborative efforts
           through performance management systems.

           GAO reported on the need for an export strategy before the
           creation of the TPCC: in 1992, we found significant problems
           associated with inefficiency, overlap, and duplication of U.S.
           trade promotion efforts.9 Since its inception, we have reviewed
           the TPCC's progress in coordinating trade promotion several times.
           For example, in 1994, we recommended that the TPCC should
           establish priorities with a well-reasoned and strong analytical
           basis, and in 1996, we commented that the TPCC lacked measures of
           value added by export services and that this limited its ability
           to contribute to the budget process.10 We made similar comments in
           1998 and 2002.11 In our 2002 report, we recommended that the
           Chairman of the TPCC ensure that its national export strategies
           consistently identify specific goals established by the agencies
           within the strategies' broad priorities; identify allocation of
           agencies' resources in support of their specific goals; and
           analyze the progress made in addressing the recommendations in the
           TPCC's prior annual strategies.12

           Since 2002, the budget authority for trade promotion reported in
           the national export strategies has fallen or remained relatively
           unchanged at TPCC member agencies, but the implication of these
           trends for agencies' trade promotion activities is not clear. The
           total reported budget authority for trade promotion fell by more
           than one-third between fiscal years 2002 and 2007, primarily owing
           to decreased authority for Agriculture and Ex-Im Bank. At the same
           time, the trade promotion budget authority for other key TPCC
           agencies remained relatively flat. (See fig. 1.)

           Figure 1: TPCC Agency Budget Authority Related to Trade Promotion,
           Fiscal Years 2002-2007

           Note: "Other" includes the Departments of Energy, Labor, and the
           Treasury; the Small Business Administration; the U.S. Trade and
           Development Agency; and the U.S. Trade Representative. OPIC is not
           included because its budget authority figure is negative: although
           OPIC is authorized to spend funds from the fees it collects and
           the income it earns from Treasury securities, it generally does
           not receive a direct appropriation.

           The four agencies named in figure 1 account for more than 90
           percent of TPCC member agencies' combined budget authority related
           to trade promotion, which ranged from $2.2 billion in fiscal year
           2002 to $1.5 billion in fiscal year 2006 (enacted) and $1.3
           (requested) in fiscal year 2007. The Agriculture Department has
           consistently held the largest share, more than 40 percent over the
           last 4 years. During this period, Agriculture's share dropped from
           a high of 63 percent to 44 percent in fiscal year 2007 as funding
           was reduced or eliminated in three program areas: export credit
           guarantee programs, Public Law 480 Title I food assistance, and
           the Market Access Program.13 The budget authorities related to
           trade promotion at the Departments of Commerce and State, while
           remaining relatively steady in dollar terms, rose from 15 to 27
           percent and 6 to 15 percent of the total, respectively. Ex-Im
           Bank's share of the total dropped sharply, from 38 percent in
           fiscal year 2002 to 4 percent in fiscal year 2004, and has
           remained at less than 10 percent since then.

           It is difficult to determine the effect of these budgetary trends
           on the availability of trade promotion resources. For example:

           o  Although Commerce's trade promotion budget authority has not
           changed significantly, its trade promotion activities may
           nonetheless be affected by increases in related costs. According
           to Commerce officials, the Commerce budget data includes budget
           authority for security at overseas offices. The officials provided
           us with information showing that security costs for these offices
           have risen by 8 percent since fiscal year 2005, leaving fewer
           resources available for trade promotion activities.14 
           o  The decline in Ex-Im Bank's budget authority, shown in figure
           1, did not reduce its ability to provide export financing. OMB
           changed its method for determining expected loss rates for U.S.
           international credits, which took effect after fiscal year 2002
           and contributed to lower Ex-Im Bank projections of subsidy costs
           and budget needs. Also, Ex-Im Bank had accumulated carryovers from
           prior years, which resulted in its requesting zero program
           appropriations beyond administrative expenses in fiscal year 2004
           and program appropriations of less than $100 million in fiscal
           years 2005-2007.

           In addition, reasons for the national export strategies' inclusion
           or exclusion of agencies' budget authority as related to trade
           promotion are not always apparent. For example, until fiscal year
           2007, Agriculture's trade promotion budget authority reported in
           the strategies included Public Law 480 Title I food assistance,
           although the primary objective of this program is to assist
           developing countries in obtaining needed resources, rather than
           promoting trade. Similarly, since 2000, the strategies have
           excluded the U.S. Agency for International Development (USAID)
           from the program budget authority table, stating that the agency's
           activities "support trade promotion indirectly through broad
           economic growth and reform, unlike other activities that more
           directly fund trade finance or promotion." However, the 2002
           national export strategy included USAID in a letter from 10 key
           TPCC agencies and portions of the 2002, 2003, and 2004 strategies
           were devoted to a possible joint USAID-Ex-Im Bank program to
           support capital projects in developing countries. In addition, the
           strategies' budget tables include agencies such as the U.S. Trade
           Representative, Treasury, and Labor, which do not directly fund
           trade promotion activities.15

           Coordination among TPCC agencies has improved, although there is
           still room for improvement. However, the national export
           strategies continue to provide little information on which to base
           future efforts to establish consistent, shared, measurable goals
           and align resources in agencies' export promotion programs to
           focus on results.

           TPCC's member agencies have pursued a number of efforts to improve
           coordination of trade promotion activities, responding to
           recommendations in its 2002 national export strategy.16 These
           recommendations resulted from a 2001-2002 survey of more than
           3,000 small businesses and other research commissioned by the
           secretariat. According to agency officials, these efforts included
           several successful initiatives such as joint training and other
           activities that leverage resources from other TPCC agencies. For
           example:

           o  Interagency training. Since 2003, the TPCC has sponsored three
           annual interagency training sessions, attended by a total of 297
           people. The sessions have included participants and presenters
           from a variety of member agencies, including Agriculture,
           Commerce, Ex-Im Bank, OPIC, SBA, State, the U.S. Trade and
           Development Agency, and USAID, and according to agency officials
           have fostered greater cooperation through the sharing of
           information.17 In one instance, a State Department official
           recounted how a training session led by a colleague resulted in
           collaboration between Commerce and State that (1) improved service
           to companies seeking U.S. visas for their foreign partners and (2)
           produced a list of State Foreign Service contacts who could assist
           exporters in important markets such as Africa, where many
           countries have no Foreign Commercial Service presence.
           o  Joint outreach. Ex-Im Bank and OPIC have partnered with SBA to
           improve outreach and service to small- and medium-sized
           businesses. In May 2002, Ex-Im Bank and SBA signed a memorandum of
           cooperation to increase small businesses' awareness and use of
           each agency's financing products, and the agencies share the same
           application form for their respective products. In September 2004,
           the two agencies signed a memorandum of understanding that
           provides for a Ex-Im Bank to co-guarantee loans to small-business
           exporters when SBA has already agreed to guarantee its established
           maximum amount. In addition, on April 5, 2006, Ex-Im Bank's acting
           chairman and president announced a new position of Senior Vice
           President for Small Business and the establishment of a Small
           Business Committee to coordinate, evaluate, and enhance the
           agency's services to small businesses. In September 2002, OPIC and
           SBA formally integrated their efforts to promote the expansion of
           U.S. small businesses into emerging markets; as part of this
           effort, each agency is to provide training on its programs to the
           other's personnel. OPIC and SBA have signed a cooperative
           agreement, SBA has detailed staff to OPIC, and OPIC has
           streamlined its approval process for small business clients.
           o  Overseas support. In January 2005, State and the Commerce
           Department's Foreign Commercial Service completed a strategic plan
           to provide coordinated support at embassies with no Foreign
           Commercial Service staff. According to State officials, as a
           result of this plan, 75 percent of State-funded export promotion
           activities at these embassies are now tied directly to regional
           Foreign Commercial Service offices, up from 25 percent in 2002.
           Further, we were told that more of these embassies are submitting
           the commercial guide for their country via a new, Web-based
           process to Commerce's market research database, which is
           accessible to the public via www.Export.gov . State has also
           linked the embassies electronically to domestic U.S. Export
           Assistance Centers and recently developed an electronic commercial
           diplomacy toolbox for its Foreign Service officers in the field
           that helps them assist U.S. firms seeking to export. The toolbox
           provides links to joint State-Commerce strategic planning,
           interagency training, and Commerce and other TPCC agency Web sites
           that provide guidance on export-related issues such as business
           travel and export controls. According to State officials, these
           resources are primarily used by small businesses, which often lack
           the means to obtain such information on their own.

           However, despite this progress, coordination problems persist,
           according to member agency officials. For example, State
           Department officials said that concurrent realignments of
           Agriculture and Commerce overseas staff are not being coordinated,
           a situation that could lead to gaps in country coverage and
           thereby adversely impact U.S. commercial interests. State
           officials also described instances of poor coordination between
           some regional Foreign Commercial Service offices and nearby
           embassies that lack Commercial Service staff. They said that
           Commerce is working with State to improve this situation. For
           example, Commerce's regional office in Johannesburg will host a
           training program for the 11 embassies in southern Africa without
           Commercial Service officers. Another agency official told us that
           staff from at least two TPCC agencies were not aware of how
           certain other TPCC initiatives or agencies support their own
           agencies' trade promotion efforts.

           In addition, according to Agriculture officials, Commerce field
           staff have not adhered to roles, responsibilities, and procedures
           outlined in a January 2001 agreement between the two agencies and
           reiterated in a March 2004 cable. As a result, the officials told
           us, a joint Agriculture-Commerce effort to help U.S. companies
           export agricultural goods-described in the 2004 national export
           strategy as a "huge success"-was never fully implemented. Commerce
           officials acknowledged these issues but told us that coordination
           between the two agencies had improved. Citing a June 2005 Commerce
           report, the Agriculture officials noted that both agencies have
           formally agreed to increase their joint cooperation.

           As we found in 2002, the TPCC's annual strategies provide limited
           information regarding agencies' export promotion goals and
           progress. In addition, the strategies do not review agencies'
           budget allocation or represent the goals of some key agencies, and
           the strategies' focus varies yearly. Consequently, the TPCC's
           ability to provide in the strategy a plan for coordinating federal
           trade promotion activities, as directed by Congress, is
           constrained.

           o  As in 2002, the national export strategies do not identify
           member agencies' goals or assess their progress toward the TPCC's
           broad trade promotion priorities. According to agency officials,
           the TPCC secretariat does not systematically collect or compare
           agency plans and performance measures to define agency goals and
           assess progress. In addition, the agencies have not articulated
           mutual, measurable goals for trade promotion. Some member agency
           officials noted that their agencies' plans and performance
           evaluations are prepared independently of the TPCC. Although
           several agencies mention the TPCC in their strategic plans, each
           agency, as we noted in our 2002 report, generally measures the
           results of its export promotion activities according to the extent
           to which its own mandate emphasizes export promotion.
           o  Despite the TPCC's mandate to propose an annual unified trade
           promotion budget,18 the TPCC's annual strategy does not review
           member agency budgets in relation to their goals and the agencies
           do not adjust their budgets to reflect the national export
           strategy. As we reported in 2002, the TPCC does not have specific
           authority to direct member agencies' allocation of their
           resources.19 Agency representatives told us, as they had during
           our 2002 review, that they would resist any effort by the TPCC to
           review their budgets; they said that each agency has its own
           statutory requirements and that TPCC agencies' budgets are
           appropriated by different congressional subcommittees. The
           agencies submit their proposed budgets separately to OMB. TPCC
           officials told us that the TPCC does not recommend budget
           priorities to OMB, a practice that, as we noted in our 2002
           report, was last performed in 2000.

           o  The national export strategies do not represent the goals of
           some key member agencies. For example, although Agriculture's
           Foreign Agricultural Service has accounted for about half of TPCC
           member agencies' combined budget authority over the past 4 years,
           the 2005 strategy contains only one notable reference to this
           agency. In addition, the 2005 strategy identifies Brazil as a
           "spotlight" market, although Agriculture does not consider it a
           high-priority market because it competes with the United States in
           exporting agricultural products. Further, the 2005 strategy
           included very little of the information that the Foreign
           Agricultural Service provided to the TPCC secretariat in
           commenting on a draft of the strategy. However, Agriculture
           officials told us that a draft of the 2006 strategy, due out in
           May, would likely incorporate more information about their
           agency.20 Regarding other agencies, recent strategies have focused
           on China, a market in which USAID and OPIC do little or no
           business.
           o  The focus of the national export strategies continues to change
           from year to year with little evaluation of previous efforts'
           effectiveness. For example, although TPCC officials noted that the
           national export strategies have consistently focused on China, the
           strategies describe a series of new China-related initiatives
           without following up on the outcome of specific activities from
           one year to the next.21 The exception to this pattern was a 3-year
           focus on recommendations from the TPCC's survey and other client
           research, from 2002 through 2004; however, new areas of focus
           continued to be introduced. For example, the 2003 strategy
           introduced capacity building, Russia, and transportation security.
           The 2004 strategy highlighted China and free trade agreements, as
           well as coordination in crisis regions (primarily Iraq and
           Afghanistan), which had resulted from the survey and other
           information gathering and had been briefly raised in the 2002 and
           2003 strategies. The 2005 strategy covered free trade agreements,
           China, and six "growth markets" (Japan, South Korea, India,
           Brazil, Russia, and the European Union). Some member agency
           officials commented on the ad hoc nature of the national export
           strategies and the lack of staff-level meetings focused on
           specific issues.

           Although available data suggest that TPCC member agencies have
           involved small and medium-sized businesses in trade promotion
           activities, a lack of systematically collected information makes
           it difficult to assess progress or trends. First, member agencies
           measure small and medium-sized businesses' participation in trade
           promotion activities to varying extents and using various
           indicators. For example:

           o  Department of Commerce. U.S. and Foreign Commercial Service
           officials stated that they have recorded about 10,000 transaction
           "successes" a year over the past 5 years involving small and
           medium-sized business export sales and that they are currently in
           the process of updating their client management system to enable
           them to observe a transaction for a given client as it develops
           over time, progressing through interactions with other TPCC member
           agencies such as Ex-Im Bank, SBA, and other agencies. The U.S. and
           Foreign Commercial Service also runs an Advocacy Center, which
           helps U.S. companies compete for specific foreign sales contracts
           on a case-by-case basis. According to information posted on the
           U.S. Government's export-related website ( www.Export.gov ), the
           center has helped 28 small and medium-sized enterprises win
           contracts valued at a total of $637 million since June 2002.22
           Commerce's Office of Trade and Industry Information within its
           Manufacturing and Services unit compiles detailed statistics on
           small and medium-sized business exports.23 
           o  Ex-Im Bank. Ex-Im Bank tracks small business' participation in
           its programs because Congress requires it to make available a
           certain percentage of its export financing to small businesses.
           For fiscal years 2000-2005, Ex-Im Bank reported that slightly less
           than 20 percent of the value of its financing directly benefited
           small businesses, and in recent years it has reported that about
           85 percent of its authorized transactions directly benefited these
           clients. However, we recently found flaws in the bank's data and
           methodology, including shortcomings in its system for estimating
           about one-third of its small business financing annually and
           conflicting records for the same companies.24 
           o  Department of Agriculture. The Foreign Agricultural Service's
           Market Development Program tracks a variety of indicators related
           to small businesses, including the number of its activities that
           support small businesses, the number of small businesses making a
           first export sale, the number of small businesses with increased
           sales of 20 percent or more, and the value of small companies'
           sales.
           o  OPIC. OPIC measures the number of small business projects that
           result from its outreach through a Small Business Center. OPIC's
           2003-2008 strategic goals include supporting these clients and
           reducing to 60 days the time it takes to process their
           applications for OPIC assistance. OPIC officials stated that the
           center targets small businesses with annual revenues of less than
           $35 million and that since the center's establishment in 2002, the
           share of OPIC transactions involving such companies increased from
           67 percent in 2002 to 80 percent in 2005.
           o  Department of State. State does not presently collect data on
           small and medium-sized businesses' involvement in trade promotion
           activities. However, according to a State Department official who
           works with small businesses, the agency has recently initiated a
           system to track commercial "success stories." The official said
           the system, which State anticipates will be operational by June
           2006, will track requests for help with commercial transactions
           and will also include data on the requesting companies-such as
           their number of employees and annual sales-that will enable State
           to identify small- and medium-sized businesses.

           Finally, although 2006 TPCC agency goals include increasing the
           number of small and medium-sized businesses that use member agency
           programs, the TPCC does not collect information from member
           agencies on these businesses' participation in agency programs and
           activities, according to TPCC officials. Moreover, the national
           export strategies provide anecdotal, rather than systematic,
           reporting on small and medium-sized business participation in
           trade promotion activities. Although the national export
           strategies describe activities such as a cooperative agreement
           between SBA and OPIC, they provide no comprehensive summary of
           small and medium-sized business participation in all member agency
           activities. Further, the strategies do not assess agency reporting
           on small and medium-sized enterprise participation during the
           current year or identify trends in such participation. This makes
           it difficult to assess progress or trends in participation across
           agencies.

           Our review of the TPCC's efforts shows it has achieved some
           important progress. For example, the TPCC has pursued a number of
           initiatives to improve agency coordination of trade promotion
           activities. Since our most recent report in 2002, the TPCC has
           completed and implemented a number of changes as a result of its
           private sector outreach efforts, including joint training and
           other activities that leverage resources of other TPCC member
           agencies. Although coordination challenges continue, there appears
           to be more discussion among TPCC member agencies and a higher
           level of awareness of the activities of the other agencies. This
           is a noteworthy improvement over the situation that existed in the
           early 1990s, when GAO began to evaluate the federal government's
           trade promotion efforts.25

           Despite this progress, the TPCC continues to face challenges in
           its ability to achieve other aspects of its mission of
           coordinating federal export promotion activities. For example, the
           TPCC's annual export strategies do not review or assess agency
           goals or activities. Moreover, despite its mandate to propose a
           unified federal trade promotion budget, the TPCC continues to have
           little influence over agencies' allocation of resources for trade
           promotion. GAO has consistently reported on the TPCC's lack of
           progress in these fundamental objectives.

           Based on our long record of oversight over the TPCC, we believe
           that it can continue to make improvements in agency coordination
           as well as lead future outreach efforts to the private sector. In
           addition, we believe that the TPCC can do a better job of tracking
           small and medium-size businesses' participation in a consistent
           manner. However, we question whether the TPCC's current structure
           will allow it to overcome the challenges associated with assessing
           agency goals and influencing the allocation of resources. We also
           question whether the TPCC's current move into the office of the
           Assistant Secretary for Trade Promotion within the Commerce
           Department will help it overcome these challenges. As we noted in
           previous reviews of the TPCC, sustained high-level administration
           involvement is necessary for the TPCC to achieve its fundamental
           objectives.26

           Mr. Chairman, this concludes my prepared remarks. I would be happy
           to address any questions that you may have.

           Loren Yager, Director, International Affairs and Trade

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8GAO, Results-Oriented Government: Practices That Can Help Enhance and
Sustain Collaboration among Federal Agencies, GAO-06-15 (October 21,
2005).

9GAO, Export Promotion: Federal Programs Lack Organizational and Funding
Cohesiveness, GAO/NSIAD-92-49 (Washington, D.C.: January 10, 1992).

 Total Reported TPCC Agency Budget Authority Has Declined but Implications are
                                    Unclear

10GAO, Export Promotion: Governmentwide Plan Contributes to Improvements,
T-GGD-94-35 (October 26, 1993); National Export Strategy,
GAO-NSIAD-96-132R (Washington, D.C.: March 26, 1996).

11GAO, Export Promotion: Issues for Assessing the Governmentwide Strategy,
T-NSIAD-98-105 (February 26, 1998); GAO-02-850 .

12The Chairman of the TPCC generally agreed with our recommendations at
the time. However, TPCC and OMB officials have no record of the TPCC's
having submitted to OMB a subsequent action plan in response to these
recommendations, as required by OMB cir. A-50 and 31 U.S.C. 720.

13The subsidy level for the Department of Agriculture's export credit
guarantee programs was reduced in July 2005 in response to a World Trade
Organization appellate panel ruling. In addition, the fiscal year 2007
budget proposes no funding for Public Law 480 Title I food assistance, and
the Market Access Program is being cut back as a deficit reduction measure
and in response to an OMB review.

14Security costs jumped from 2 percent of the budget authority for
Commerce's Trade Promotion/U.S. and Foreign Commercial Service unit
(fiscal year 2005, actual) to 10 percent (fiscal year 2007 requested). We
did not subtract these costs from the data used for figure 1 because
Commerce did not do so in the budget authority figures it submitted for
publication in the 2006 national export strategy.

  TPCC Has Taken Steps to Improve Coordination, but Strategies Provide Limited
                    Guidance for Export Promotion Activities

TPCC Has Made Some Progress in Improving Coordination

15The table also includes budget authority for the U.S. Trade and
Development Agency, which funds feasibility studies and other activities
for U.S. firms seeking to export. It had not previously included several
Agriculture programs such as the Emerging Markets Program, which provide
similar services for exporters of agricultural products. However, in
response to questioning from GAO, Agriculture is including these programs
in the 2006 strategy's budget table.

16As we reported in 2002, these recommendations focused on the need to (1)
cross train agency personnel so that they are knowledgeable about other
agency programs, (2) improve exporters' access to timely and accurate
trade information, and (3) expand outreach and trade education for
new-to-export firms.

17In our 2005 report on interagency collaboration, we noted that
face-to-face interaction through activities like interagency training
fosters trust, which is a key to enhancing and sustaining collaborative
efforts. See GAO-06-15 .

TPCC Strategies Continue to Provide Little Guidance for Export Promotion
Activities

1815 U.S.C. 4727(c)(4).

19See GAO-02-850 .

20TPCC officials provided us with a partial draft of the 2006 strategy
that describes a series of initiatives by member agencies.

21For instance, the 2004 strategy identifies five priority sectors in
China and the 2005 strategy also identifies five, but only three of the
sectors are discussed in both strategies. Regarding one of the overlapping
sectors-health care-the 2005 strategy lists a series of upcoming trade
events but makes no mention of any sales or other business resulting from
the two China health-care-related trade events described in the 2004
strategy.

Lack of Systematic Data Hampers Assessment of Small and Medium-Sized Businesses'
                                 Participation

22The site contained no information showing when this data was posted or
when the site was last updated.

23For example, the Statistical Handbook released in June 2005 by this
office provides information on the number of small- and medium-sized
exporting companies, firms' known export revenues, and the destination of
exports. [See Office of Trade and Industry Information, Small &
Medium-Sized Exporting Companies: A Statistical Handbook: Results from the
Exporter Data Base (Washington, D.C.:  Department of Commerce, 2005)].

24GAO, Export-Import Bank: Changes Would Improve the Reliability of
Reporting on Small Business Financing, GAO-06-351 (Washington, D.C.: March
3, 2006).

                            Concluding Observations

25 GAO/NSIAD-92-49 .

(320404)

26GAO, Export Promotion: Initial Assessment of Governmentwide Strategic
Plan, T-GGD-93-48 (Washington, D.C.: Sept. 29, 1993), p. 5; Export
Promotion: Governmentwide Plan Contributes to Improvements, T-GGD-94-35
(Washington, D.C.: Oct. 26, 1993).

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Highlights of GAO-06-660T , a report to the House Committee on Small
Business

April 26, 2006

EXPORT PROMOTION

Trade Promotion Coordinating Committee's Role Remains Limited

In 1992, Congress established the Trade Promotion Coordinating Committee
(TPCC) to provide a unifying interagency framework to coordinate U.S.
export promotion activities and to develop a governmentwide strategic
plan. TPCC member agencies' activities include providing training, market
information, advocacy, trade finance and other services to U.S. companies,
especially small- and medium-sized businesses. These U.S. government
agencies together have $1.5 billion in budget authority for export
promotion programs and activities for fiscal year 2006. Each year, the
TPCC submits to Congress a mandated national export strategy, reporting
member agencies' activities and trade promotion budget authority and
establishing broad priorities. The TPCC secretariat, which has no budget
of its own, is housed in the Commerce Department, which chairs the
committee.

In this testimony, which updates findings from a 2002 report, GAO (1)
reports on trends in TPCC member agencies' budget authority; (2) assesses
TPCC's coordination of trade promotion and its national export strategies;
and (3) discusses small- and medium-sized businesses' participation in
trade promotion activities.

TPCC's national export strategies for fiscal years 2002-2006 show that
agencies' trade promotion-related budget authority dropped by about one
third. This resulted mainly from budget changes at the Department of
Agriculture and Ex-Im Bank, which account for more than half of U.S. trade
promotion budget authority. At the same time, budget authority for two
other key agencies, the Departments of Commerce and State, remained
relatively steady. However, the effect of these trends on the agencies'
trade promotion activities is unclear. For example, the decline in Ex-Im
Bank's budget authority did not reduce its ability to provide export
financing.

TPCC member agencies have taken several steps, such as participating in
interagency training and outreach to exporters, to improve coordination of
trade promotion efforts. However, coordination challenges persist, for
example, among the Departments of Commerce, State, and Agriculture
regarding the allocation of overseas staff for trade promotion activities.
In addition, as GAO found in 2002, the annual national export strategies
have several limitations that affect the TPCC's ability to coordinate
trade promotion activities. For example, the strategies do not identify or
measure agencies' progress toward mutual goals or review their budget
allocations. In addition, they focus on different topics each year without
evaluating progress in addressing previous years' topics. GAO has made
similar comments in several prior reviews of the TPCC.

A lack of systematic information makes it difficult to assess progress or
trends in small and medium-sized businesses' participation in trade
promotion activities across agencies. TPCC agencies track small-business
participation in a variety of ways. The national export strategies provide
only anecdotal information on these businesses' participation in trade
promotion activities.

TPCC Program Budget Authority FY 2006 (Enacted)

Source: TPCC, for publication in the 2006 national export strategy.

Note: TPCC's other members are the Council of Economic Advisors; the
Departments of Defense, Interior, and Transportation; the Environmental
Protection Agency; the National Security Council/National Economic
Council; OMB; the U.S. Agency for International Development; and the
Overseas Private Investment Corporation.
*** End of document. ***