International Trade: Coordination of U.S. Export Promotion Activities in
Pacific Rim Countries (Letter Report, 08/29/94, GAO/GGD-94-192).

In recent years, Congress has been concerned about the lack of
coordination among federal agencies that conduct export promotion
activities. This report identifies (1) the nature of export promotion
activities in Pacific Rim countries by U.S. agencies--primarily the
Department of Commerce, Agriculture, and State and the U.S. Agency for
International Development and (2) the extent to which the programs are
coordinated among U.S. agencies within each market. In addition, GAO
provides information on the role that single, consolidated country
commercial plans could play as part of an overall, governmentwide
strategic plan to promote exports. GAO's review included U.S. embassies
and consulates in China, Hong Kong, Indonesia, Malaysia, Singapore, and
Thailand, as well as the American Institute in Taiwan.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-94-192
     TITLE:  International Trade: Coordination of U.S. Export Promotion 
             Activities in Pacific Rim Countries
      DATE:  08/29/94
   SUBJECT:  Interagency relations
             International trade
             Exporting
             International economic relations
             Agency missions
             Embassies
             Business assistance
             Strategic planning
             Prioritizing
             Export regulation
IDENTIFIER:  United Kingdom
             Taiwan
             China
             Hong Kong
             Indonesia
             Malaysia
             Singapore
             Thailand
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Commerce, Consumer, and
Monetary Affairs, Committee on Government Operations, House of
Representatives

August 1994

INTERNATIONAL TRADE - COORDINATION
OF U.S.  EXPORT PROMOTION
ACTIVITIES IN PACIFIC RIM
COUNTRIES

GAO/GGD-94-192

International Trade


Abbreviations
=============================================================== ABBREV

  AID - Agency for International Development
  ASEAN - Association of South East Asian Nations
  ATO - Agricultural Trade Office
  FAS - Foreign Agricultural Service
  TPCC - Trade Promotion Coordinating Committee
  US&FCS - U.S.  & Foreign Commercial Service

Letter
=============================================================== LETTER


B-257998

August 29, 1994

The Honorable John M.  Spratt, Jr.
Chairman, Subcommittee on Commerce, Consumer,
 and Monetary Affairs
Committee on Government Operations
House of Representatives

Dear Mr.  Chairman: 

In the past few years, Congress has been concerned about the lack of
coordination among federal agencies that conduct export promotion
activities.  As you requested, we identified (1) the nature of export
promotion programs conducted in selected Pacific Rim countries\1 by
U.S.  agencies-- primarily the Departments of Commerce, Agriculture,
and State and the U.S.  Agency for International Development (AID);
and (2) the extent to which these programs are coordinated among U.S. 
agencies within each market.  In addition, we have provided some
information on the role that single, consolidated country commercial
plans could play as part of an overall, governmentwide strategic plan
to promote exports.  Our review included U.S.  embassies and
consulates in China, Hong Kong, Indonesia, Malaysia, Singapore, and
Thailand; and the American Institute in Taiwan.\2


--------------------
\1 In this report we refer to Hong Kong and Taiwan as among the
Pacific Rim "countries" we visited, but we recognize that Hong Kong
is a colony of Great Britain and Taiwan is not formally recognized as
a country by most nations. 

\2 On January 1, 1979, the United States changed its diplomatic
recognition of China from Taipei, Taiwan, to Beijing, China.  Since
then, U.S.  commercial and cultural interaction with the people of
Taiwan has been facilitated through the American Institute in Taiwan,
a nongovernmental entity.  The American Institute has been included
in the portions of this report dealing with the Department of State's
embassies and consulates because its functions are similar. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

In the countries we visited, we found a range of export promotion
services available to U.S.  businesses.  Both the U.S.  Department of
Commerce's U.S.  & Foreign Commercial Service (US&FCS) and the U.S. 
Department of Agriculture's Foreign Agricultural Service (FAS) were
providing services such as giving information on local market
conditions, supplying assistance in establishing business contacts
within the country, and offering opportunities to participate in
trade shows.  The Department of State and the American Institute in
Taiwan were providing trade policy assistance to help promote
exports, and they occasionally intervened with foreign government
officials on behalf of U.S.  businesses.  AID promoted exports
through regional projects and bilateral development projects.  Other
U.S.  agencies were occasionally involved in export promotion
activities. 

Generally, export promotion activities in the countries we visited
were coordinated.  Commercial activities became a priority for
embassies and consulates in December 1991, when the State Department
instructed all overseas offices to be more commercially oriented and
supportive of U.S.  businesses.  Also, as the central point of
control for U.S.  activities in each embassy or consulate, the
ambassadors or consuls general had directed the formation of
coordinating groups and/or had held regularly scheduled meetings to
coordinate commercial activities.  Nevertheless, in some of these
countries we identified a few coordination problems.  Finally, in
contrast to the United States, where the Trade Promotion Coordinating
Committee (TPCC)\3 determined that 19 U.S.  agencies are involved in
export promotion, there were 4 U.S.  agencies that had staff
permanently located in most of the countries we visited. 

To assist TPCC in developing governmentwide priorities and allocating
money and staff, as required by the Export Enhancement Act of 1992,
single, consolidated country commercial plans recently required by
the Departments of State, Commerce, and Agriculture could be used. 


--------------------
\3 TPCC is an interagency committee authorized under the Export
Enhancement Act of 1992 (P.L.  102-429, Oct.  21, 1992).  It consists
of 19 executive branch agencies and is chaired by the Secretary of
Commerce.  Members include the U.S.  Departments of Agriculture,
Commerce, Defense, Energy, the Interior, Labor, State,
Transportation, and the Treasury; the U.S.  Agency for International
Development; the U.S.  Export-Import Bank; the Overseas Private
Investment Corporation; the U.S.  Small Business Administration; the
U.S.  Trade and Development Agency; the Office of Management and
Budget; the Office of the U.S.  Trade Representative; the Council of
Economic Advisers; the U.S.  Information Agency; and the
Environmental Protection Agency. 


   BACKGROUND
------------------------------------------------------------ Letter :2

The U.S.  government devotes significant resources to export
promotion activities.  In fiscal year 1993, the U.S.  government
spent about $3 billion on export-related expenditures.  These
expenditures included, for example, providing creditworthy emerging
markets with otherwise unavailable credit to purchase U.S.  goods,
matching foreign export subsidies, and making other trade-related
outlays. 

The Pacific Rim countries selected for this review represent some of
the most promising markets in the world for U.S.  exports.  However,
with the exception of Hong Kong, the United States currently imports
more from these countries than the United States exports to them. 
Table 1 compares U.S.  exports and imports for fiscal year 1993 for
the countries selected for this review. 



                           Table 1
           
             U.S. Trade With Selected Pacific Rim
                Countries for Fiscal Year 1993

                    (Dollars in millions)

                                                  U.S. trade
Country\a         U.S. exports   U.S. imports        balance
---------------  -------------  -------------  -------------
Taiwan                 $16,250        $25,105       $ -8,855
Singapore               11,676         12,796         -1,120
Hong Kong                9,873          9,558           +315
People's                 8,767         31,535        -22,768
 Republic of
 China
Malaysia                 6,064         10,568         -4,504
Thailand                 3,768          8,542         -4,774
Indonesia                2,770          5,439         -2,669
------------------------------------------------------------
\a The countries are listed in rank order based on the total value of
U.S.  exports to those countries in 1993. 

Source:  U.S.  Department of Commerce, International Trade
Administration, Office of Trade and Economic Analysis. 

During 1991-1992, our reviews of federal trade promotion programs
reported that the U.S.  government's export promotion efforts were
fragmented.\4 The Export Enhancement Act of 1992 sought to remedy
this fragmentation and confusion by requiring TPCC to develop a
governmentwide strategic plan.  The plan was, among other things,
expected to set priorities for federal trade promotion activities,
improve coordination among federal agencies and bring them into line
with the new priorities, and eliminate overlap and duplication among
agencies.  The goal was to improve the delivery of U.S.  government
export promotion services.  One of the primary methods for achieving
these improvements was to determine the resources needed for these
activities on a governmentwide basis and to prepare a unified budget
for these activities. 

On September 30, 1993, TPCC issued its first report, Toward a
National Export Promotion Strategy.  The report identified a number
of problems and proposed measures to improve the effectiveness and
efficiency of U.S.  government export promotion programs.  However,
as we have previously reported, the plan did not provide an overall
governmentwide strategy for allocating resources such as money and
staff or a unified budget for export promotion activities based on
that strategy.\5


--------------------
\4 See Related GAO Products. 

\5 Export Promotion:  Governmentwide Plan Contributes to Improvements
(GAO/T-GGD-94-35, Oct.  26, 1993). 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To identify the nature of export promotion services offered in the
selected Pacific Rim countries and the extent to which export
promotion programs were coordinated among U.S.  agencies within each
country, we did the following: 

  In the United States, to identify principal export promotion
     services offered, we interviewed program and country desk
     officials and reviewed documents at the headquarters levels of
     the Departments of Agriculture, Commerce, and State; AID; and
     TPCC.  We also interviewed officials at the Departments of
     Energy, Transportation, and the Treasury; and the U.S.  Small
     Business Administration to learn the nature of their export
     activities.  We obtained available documentation on the export
     promotion activities of these agencies overseas. 

  To assess the nature of program coordination among U.S.  agencies
     overseas, we visited seven U.S.  embassies or consulates in
     Pacific Rim locations including Beijing, China; Guangzhou,
     China; Hong Kong; Jakarta, Indonesia; Kuala Lumpur, Malaysia;
     Singapore; and Bangkok, Thailand; and the American Institute in
     Taiwan.  We used structured interviews to obtain information
     from officials of the State Department, the American Institute
     in Taiwan, US&FCS, FAS, AID, and the Federal Aviation
     Administration in Singapore regarding the coordination of export
     services.  We also obtained documentation, where available,
     showing the export promotion services provided to U.S. 
     businesses by these agencies and the methods used to coordinate
     the activities among agencies.  We also interviewed officials of
     (1) 53 U.S.  businesses located in the countries, including 5
     U.S.  consulting firms providing exporting assistance; (2) 5
     state export promotion offices; (3) 7 agricultural
     cooperators;\6 and (4) the American Chambers of Commerce or
     their counterparts.  The U.S.  businesses were selected on a
     judgmental basis to provide a cross section of new-to-market and
     old-to-market businesses and small, medium, and large
     businesses.  The results of these interviews are not projectable
     to all U.S.  businesses located in these countries. 

We also obtained information from TPCC publications, our recent
testimony on TPCC's strategic planning efforts, and State Department
cables for background on export promotion efforts. 

We did our review from May 1993 through May 1994 in accordance with
generally accepted government auditing standards. 

We obtained oral agency comments from the Departments of Agriculture,
Commerce, and State, and from the Agency for International
Development.  These comments are discussed at the end of this report. 


--------------------
\6 Cooperators are nonprofit commodity groups that represent U.S. 
producers, farmers, and farm-related interests or trade associations
conducting market development activities in foreign countries.  They
are funded in part by FAS. 


   U.S.  AGENCIES OFFER A RANGE OF
   EXPORT PROMOTION SERVICES
   OVERSEAS
------------------------------------------------------------ Letter :4

In the countries we visited, US&FCS, FAS, the State Department, AID,
and other U.S.  government agencies were providing a range of export
promotion services. 


      COMMERCE'S US&FCS WORKS WITH
      U.S.  BUSINESSES TO
      FACILITATE EXPORT PROMOTION
---------------------------------------------------------- Letter :4.1

As part of the Department of Commerce's International Trade
Administration, US&FCS is the primary U.S.  export promotion agency
for nonagricultural products.  US&FCS provides a range of export
promotion services for U.S.  businesses and works with other U.S. 
government agencies and foreign organizations to help U.S. 
businesses compete more effectively overseas. 

In the countries we visited, US&FCS offices geared their services
primarily toward U.S.  businesses that were new to the local markets. 
These services included providing market information, business
counseling, and opportunities for the businesses to participate in
trade promotion activities such as trade shows.  US&FCS commercial
libraries maintained local market data and other materials for U.S. 
businesses to use, as well as reference materials for local
businesses wanting to contact U.S.  suppliers.  US&FCS commercial
officers counseled U.S.  businesses on how to do business in the host
country and arranged for contacts with potential agents and/or
distributors.  Additionally, some US&FCS offices sponsored and
participated in seminars that provided information on export
controls, export financing, and US&FCS services. 

US&FCS charges various fees for its services.  Some fees are fixed
worldwide, while others vary by country.  Some export promotion
services, such as business counseling and access to reference
materials in the commercial library, are free. 

As the result of a US&FCS management review in fiscal year 1991,
US&FCS started placing less emphasis on arranging overseas trade
shows.  US&FCS shifted its emphasis to providing product-specific
market information and setting up trade events that would showcase
small and medium-sized new-to-market and new-to-export firms.  US&FCS
is expanding programs designed to produce high-quality sales leads
and market information, such as analyses on specific industries and
"Matchmaker" trade missions. 

More recently, the Department of Commerce has again shifted its
emphasis to target 10 "big emerging markets." It has determined that
its target selections represent large markets, big populations, and
pent-up demand for many export products.  The Department of Commerce
also estimated that these markets may offer about 44 percent of the
total new trade opportunities around the world for the next 20 years. 
The Department of Commerce plans to concentrate its commercial
efforts on some of the Pacific Rim countries we visited--Indonesia,
China, Hong Kong, and Taiwan--as well as Argentina, Brazil, India,
Mexico, Poland, South Africa, South Korea, and Turkey. 


      AGRICULTURE OFFERS EXPORT
      PROMOTION SERVICES THROUGH
      TWO ORGANIZATIONS
---------------------------------------------------------- Letter :4.2

The Department of Agriculture's FAS conducts export promotion for
U.S.  agricultural products through FAS attachï¿½ posts and
Agricultural Trade Offices (ATO).  FAS attachï¿½s generally focus their
efforts on gathering agricultural intelligence, performing analyses
of the agricultural sectors of the host country, and providing trade
policy support.  ATOs usually work on developing, expanding, and
maintaining international markets for U.S.  agricultural commodities. 

FAS' export promotion activities included organizing restaurant and
retail promotions, setting up food shows and exhibits, providing
agricultural information and marketing services, and doing market
research studies.  These activities were generally conducted in
cooperation with agricultural cooperators and/or Market Promotion
Program participants, and local supermarkets or restaurants. 
Together with US&FCS, ATOs were also involved in trade shows jointly
promoting agricultural food products and food equipment.  FAS staff
also participated in activities to formulate trade policy and in
briefing U.S.  trade delegation representatives. 

Unlike US&FCS trade promotion functions, which are done on a
cost-reimbursable basis, the Department of Agriculture subsidizes the
costs of participation in these activities for U.S.  agricultural
producers.  The Department of Agriculture provides funding for a
share of the costs through its Foreign Market Development\7 and
Market Promotion Programs to individual businesses and to
agricultural cooperators to perform export promotion activities
overseas.  FAS administers these two programs.  For the countries we
visited, the fiscal year 1993 agricultural export promotion funds
totaled over $32 million and ranged from a total of $1.7 million in
Thailand to $11.2 million in Taiwan.  (See table 2.)



                           Table 2
           
             Market Promotion Program and Foreign
            Market Development Funding in Selected
                 Markets for Fiscal Year 1993

                    (Dollars in millions)

                                      Foreign
                        Market         Market
                     Promotion    Development
Market                 Program        Program          Total
---------------  -------------  -------------  =============
Taiwan                   $8.86          $2.32         $11.17
Hong Kong                 6.96           0.89           7.85
Singapore                 3.71           0.41           4.12
China                     1.06           1.74           2.80
Indonesia                 1.72           0.86           2.57
Malaysia                  1.38           0.62           2.00
Thailand                  1.13           0.57           1.70
------------------------------------------------------------
Note:  Totals may not add due to rounding. 

Source:  FAS country attachï¿½ reports. 


--------------------
\7 The Foreign Market Development Program was designed to assist the
promotion of U.S.  exports of bulk agricultural commodities.  It was
established by the Agriculture Trade Development and Assistance Act
of 1954 (P.L.  480).  Total worldwide funding for fiscal year 1993
was $30 million. 


      DEPARTMENT OF STATE
      ACTIVITIES ALSO FACILITATE
      THE EXPORT PROMOTION PROCESS
---------------------------------------------------------- Letter :4.3

In the countries we visited, the Department of State was providing
U.S.  businesses export promotion assistance in several areas. 

  The ambassadors and consuls general were called upon to intervene
     with the respective country's government in areas of disputes
     and contract competition.  They also helped provide greater
     visibility for U.S.  businesses and assisted in establishing
     relationships between the host governments and U.S.  businesses. 

  The embassy and consulate economic sections were generally
     providing assistance for issues related to import/export
     policies.  For example, they dealt with areas affecting U.S. 
     market access such as quotas, tariffs, and inspection policies. 
     They also assisted US&FCS and FAS when trade policy issues arose
     that affected those agencies' promotional efforts. 

Additionally, we found that in some countries, individuals with
expertise in technical or scientific areas were also assisting the
export promotion process. 

  In Singapore, the Federal Aviation Administration representative
     was helping US&FCS staff promote U.S.  air traffic control
     systems and aviation and avionics items and equipment. 

  In Indonesia, one of the economic officers was helping US&FCS staff
     to promote exports of U.S.  products related to the energy
     sector. 

  In Beijing, the science and technology officer was assisting US&FCS
     staff in promoting telecommunications and environmental
     technology. 

  In Guangzhou, an economic officer was assisting US&FCS staff with
     financial markets issues. 

In several countries, the defense or security attachï¿½s were assisting
U.S.  businesses to compete for government contracts for military
weapons systems and components. 


      AID ASSISTS EXPORT PROMOTION
      THROUGH REGIONAL AND
      BILATERAL PROJECTS
---------------------------------------------------------- Letter :4.4

AID's principal concern is to foster sustainable economic growth, and
AID officials noted that success in achieving growth indirectly
promotes U.S.  exports through increasing demand for U.S.  products. 
In addition, AID's direct export promotion activities were primarily
concentrated in three regional projects that promoted U.S. 
environmental technology, equipment, and experience.  AID also worked
on bilateral development projects that indirectly promoted U.S. 
exports.  AID was involved in some export promotion activities in all
of the countries we visited except China.\8

The three regional projects that promoted the export of U.S. 
environmental technology and equipment were the following: 

  The Private Investment and Trade Opportunities Project.  This
     project was established in 1990 to provide a mechanism for
     promoting expanded private sector trade and investment between
     the Association of South East Asian Nations (ASEAN)\9 and the
     United States.  Export promotion activities were conducted under
     a trade and investment promotion component that targeted four
     sectors--energy, environmental protection, food processing and
     packaging, and health care equipment and services.  The total
     estimated AID funding for the project was $13 million over a
     5-year period. 

  The Environmental Improvement Project.  The project was initiated
     in 1992 to promote private sector initiatives to deal with urban
     and industrial pollution and to strengthen local, national, and
     regional capabilities in environmental management.  Project
     activities included sponsoring trade missions, cofunding
     feasibility studies and technology demonstrations, and assisting
     ASEAN and U.S.  companies in obtaining financing for projects. 
     The total estimated AID funding for the project was $17.5
     million over a 6-year period. 

  The U.S.-Asia Environmental Partnership.  This project was
     established in 1992 to promote environmental improvements in
     Asia.  Its aim was to coordinate the participation of 25 U.S. 
     government departments and agencies and numerous businesses and
     nongovernmental organizations in solving Asian environmental
     problems through U.S.  technology.  In March 1993, AID provided
     $3.1 million to the Department of Commerce to promote U.S. 
     environmental and energy technology in Asian markets by
     establishing project offices in Hong Kong, India, Indonesia,
     Malaysia, the Philippines, Singapore, South Korea, Thailand, and
     Taiwan.  AID plans to fund the total project at $100 million
     over a 5-year period. 

AID missions in Indonesia and Thailand were also involved in
bilateral projects to solve development problems, such as pollution
and health care, through the use of U.S.  expertise and technology. 
Although the emphasis for these projects was on solving development
problems, it is expected that U.S.  technology will be used in the
projects, and U.S.  equipment exports should result as a byproduct. 


--------------------
\8 AID was prohibited from conducting programs in China after the
Tiananmen Square demonstration in June 1989. 

\9 Formed in 1967, ASEAN includes the countries of Indonesia,
Malaysia, the Philippines, Singapore, Thailand and, since 1984,
Brunei Darussalam. 


      OTHER U.S.  AGENCIES
      INVOLVED IN EXPORT PROMOTION
      OVERSEAS
---------------------------------------------------------- Letter :4.5

Other U.S.  agencies also were involved occasionally in export
promotion activities.  However, they did not maintain a staff or
offices in the countries we visited.  Some of the activities included
the following: 

  The U.S.  Trade and Development Agency was active in all of the
     countries we visited except China.  The agency assists U.S. 
     businesses by providing grants for feasibility studies for large
     capital-intensive projects, training, and orientation visits. 

  The U.S.  Export-Import Bank was involved in providing export
     financing in all of the countries we visited.  These loans
     allowed governments and other organizations to purchase U.S. 
     products with more competitive financing terms. 

  The Department of Energy was involved in trade missions and
     conferences promoting the use of U.S.  technology for electric
     power generation in several of the countries we visited.  For
     example, in 1992 a trade mission promoting clean coal technology
     presented information on U.S.  equipment and methods to nations
     that have severe pollution problems because they burn coal to
     generate electricity. 


   EXPORT PROMOTION MANAGED
   DIFFERENTLY OVERSEAS, RESULTING
   IN BETTER COORDINATION OF
   ACTIVITIES
------------------------------------------------------------ Letter :5

Export promotion activities in the countries we visited were managed
differently than they are in the United States, resulting in better
coordination.  Several primary factors contributed to this better
coordination:  (1) commercial activities were given a high priority
in the embassies and consulates, (2) the Ambassador or the Consul
General was the central point of control for export promotion
activities and could direct the formation of coordinating groups and
meetings, and (3) there were fewer U.S.  agencies directly involved
in export promotion activities.  However, there were still some areas
that did not have coordinated activities. 


      COMMERCIAL ACTIVITIES GIVEN
      A HIGH PRIORITY OVERSEAS
---------------------------------------------------------- Letter :5.1

Commercial activities have been given a high priority in embassy and
consulate plans during the past 2 to 3 years, according to embassy
and consulate officials we interviewed.  Commercial activities were
given more emphasis during the early days of the Bush administration
and then were formally given priority in a December 1991 State
Department cable.  Also, a May 1993 State Department cable emphasized
the Clinton administration's commitment to supporting U.S.  business
and economic interests overseas, and asked ambassadors to take
personal charge of integrated programs to eliminate barriers to trade
and investment and to support U.S.  businesses actively. 

The embassy and consulate officials we spoke to said they believed
that with the end of the Cold War, the Bush administration realized a
shift was needed in U.S.  activities overseas to more accurately
reflect the changing times.  This change in emphasis was reflected in
most of the current embassy and consulate plans for the countries we
visited.  In addition, some offices have begun to make organizational
changes to reflect the new emphasis.  For example, the consulate in
Hong Kong recently changed the name of the Political and Economic
Section to the Economic and Political Section to reflect the emphasis
away from the political side to the commercial side.  In one embassy,
we found that fewer staff were being devoted to political activities,
and more staff were being assigned to activities to enhance U.S. 
commercial interests. 


      U.S.  AGENCIES REPORT TO A
      CENTRAL POINT OF CONTROL IN
      EACH COUNTRY
---------------------------------------------------------- Letter :5.2

Generally, U.S.  agencies in the countries we visited reported
directly to the Ambassador or the Consul General.  They also received
direction and approval for their activities and reported the results
of their activities to the embassy or consulate, as well as to their
agency headquarters in Washington, D.C. 

Most of the ambassadors and consuls general had established special
meetings or reporting requirements that facilitated U.S.  agencies'
awareness of activities, problems, and coordination needs for
commercial activities.  Some ambassadors and consuls general had set
up periodic meetings to coordinate the activities of all of the U.S. 
agencies and offices, including the commercial activities, while
others had established special commercial groups and meetings.  For
example, in Malaysia the commercial activities were discussed as part
of the embassy's weekly economic meeting.  In Indonesia, the
Ambassador had established periodic commercial meetings for all
embassy groups involved in commercial activities. 

U.S.  agency officials we interviewed generally expressed the opinion
that these meetings enabled all of those involved in commercial
activities, such as export promotion of U.S.  products and services,
to coordinate their activities and to prevent confusion among the
groups or overlap and duplication of effort.  The Director of the
American Institute in Taiwan told us that he planned to establish
such meetings to resolve potential coordination problems among groups
involved in commercial activities. 

U.S.  agencies that do not have a presence in a particular country,
and visiting trade delegations, are required to coordinate their
visits through the State Department and through the U.S.  embassy or
consulate, according to officials we contacted.  This requirement
generally ensures that the embassy or consulate and the other U.S. 
agencies coordinate planned visits; nevertheless, we were told by
several officials that coordination does not occur in all cases. 


      FOUR U.S.  AGENCIES WERE
      USUALLY DIRECTLY INVOLVED IN
      EXPORT PROMOTION
---------------------------------------------------------- Letter :5.3

According to TPCC, 19 federal agencies administer more than 100
export promotion programs.  However, in the countries we visited, the
number of U.S.  agencies involved in export promotion having
permanent offices and/or staff overseas was usually limited to
four--the State Department, US&FCS, FAS, and AID.  Other U.S. 
agencies, such as the Department of Energy and the Environmental
Protection Agency, had conducted export promotion activities in some
of the countries, but they did not maintain an office or conduct
export promotion activities on an ongoing basis. 

Agency officials generally agreed that the smaller number of U.S. 
agencies represented overseas tended to simplify coordination of
activities among the agencies.  These offices were usually located
within the embassy or consulate complexes or in close proximity. 
This location made it easier for the ambassadors and consuls general
to schedule meetings or obtain coordination between agencies as
needed. 

We also found a number of federally subsidized offices and projects
that directly promoted the export of U.S.  goods and services located
outside an embassy's or consulate's organizational structures.  For
example, the Department of Agriculture provided funding for
agricultural cooperators in most of the countries we visited. 
However, cooperators were not included directly in the embassy's or
consulate's coordination meetings.  FAS officials said they
coordinated with the cooperators separately. 


      COORDINATION WAS LACKING IN
      SOME ACTIVITIES
---------------------------------------------------------- Letter :5.4

Although export promotion activities generally appeared to be
coordinated in the countries we visited, we identified several
activities that lacked such coordination.  AID's Private Investment
and Trade Opportunities Project activities were not always
coordinated.  Additionally, we noted in Taiwan that agricultural
products were being actively promoted by the American Institute's
commercial section, resulting in the duplication of a report being
developed by the American Institute's agricultural affairs section. 
Actions have been taken or are planned by AID or FAS that, if
properly implemented, will attempt to correct these problems. 


         SOME AID PROJECT
         ACTIVITIES NOT
         COORDINATED
-------------------------------------------------------- Letter :5.4.1

AID's Private Investment and Trade Opportunities Project was not
always coordinated, as illustrated by the following examples. 

In an AID interim evaluation report on the project done for the
1990-92 period, several areas involving lack of coordination were
noted. 

  The coordination of project activities with AID Indonesia's
     bilateral program activities were minimal before the arrival of
     a new project representative in late 1992.  The reasons given
     for the lack of coordination included turnover in AID mission
     personnel, gaps in assignments of personnel who were interested
     in coordinating the project's activities, and shortcomings of
     the previous representative in keeping the mission advised of
     project activities.  The report recommended increased
     coordination and communication with related organizations such
     as US&FCS, the American Chamber of Commerce, and the AID
     Indonesia mission. 

  The interim evaluation report stated that although there were a lot
     of problems when the project first started in Malaysia,
     coordination problems were improved after the project office was
     separated from a host government office and became an
     independent entity.  Still, the interim evaluation recommended
     that the Project Director develop a more effective line of
     communication with US&FCS and the U.S.  embassy's economic
     section.  It also stated that "[t]he ultimate goal for this is
     to achieve better coordination on activities that both
     organizations will be involved in so that duplication of effort
     for either side will be minimized."

In March 1993, the State Department's Office of the Inspector General
reported that AID, through the regional ASEAN office in Bangkok, was
involved in some commercial trade and investment promotion activities
that duplicated functions traditionally performed by US&FCS and that
the trade missions conducted by the Private Investment and Trade
Opportunities Project duplicated a traditional role of US&FCS.  The
report noted particular concern about the potential duplication of
functions between the two offices.  The report also stated that
although "AID has the money, while [US&] FCS currently lacks adequate
funding, [this] is not necessarily a compelling reason for two U.S. 
Government entities to continue to engage in the same work" and that
"[e]ven moderate duplication between AID/ASEAN and [US&] FCS bears
examination."

The report further noted concern that the AID/ASEAN representative
was responsible to neither the Ambassador nor the AID Country
Director, but to the AID Assistant Administrator for Asia located in
Washington, D.C.  The report said that U.S.  business leaders in
Bangkok had been uneasy about engaging in trade promotion activities
with AID instead of US&FCS. 

Based on the Inspector General's report, AID determined in February
1994 that the Private Investment and Trade Opportunities Project
would be closed by the end of fiscal year 1994.  The problems
involved in this project were attributed to "a conflict of agency
roles and budgets with regard to trade and investment promotion
activities."

Also in February 1994, AID's role under the Clinton administration
was redefined so that it no longer included direct support of U.S. 
trade and investment promotion activities. 


         AMERICAN INSTITUTE IN
         TAIWAN DUPLICATED EFFORTS
-------------------------------------------------------- Letter :5.4.2

Although we found that in general, US&FCS was promoting
nonagricultural exports and FAS was promoting agricultural exports,
in Taiwan the American Institute's commercial section had actively
promoted agricultural products.  In one instance, this situation
resulted in duplicate reporting efforts for one agricultural sector. 

Although FAS or an ATO usually sponsors and organizes trade shows for
agricultural products, the American Institute's commercial section,
rather than its agricultural affairs section, organized the U.S. 
pavilion for the biannual Taipei International Food Industry Show in
1988, 1990, and 1992.  According to the two section chiefs, the
commercial section organized the food shows because (1) there was a
shortage of personnel within the agricultural affairs section, (2)
the commercial section had developed a relationship with the show's
sponsoring organization, and (3) there was a preponderance of
food-processing equipment in the shows rather than food products. 

However, the commercial section also conducted market research and
prepared reports on the seafood, processed foods, dairy products, and
frozen foods industries in Taiwan as a follow-on to the shows.  These
reports were not adequately coordinated with the agricultural affairs
section because the agricultural affairs section was not aware of
which agricultural sectors were being analyzed until the commercial
section's reports were ready for issuance.  As a result, one of the
commercial section reports duplicated an effort under way in the
agricultural affairs section. 

We discussed this matter with the American Institute Director and the
two section chiefs.  They said that the opening of the ATO in Taipei
in late 1993 should help preclude the commercial section's further
participation in functions usually undertaken by agricultural
offices.  They also said the staff and resources available within the
new ATO should provide the agricultural export promotion area with
the resources to perform needed agricultural export promotion
activities in Taiwan. 


   ROLE OF COUNTRY PLANS IN
   GOVERNMENTWIDE STRATEGIC EXPORT
   PROMOTION PLANNING
------------------------------------------------------------ Letter :6

Title II of the Export Enhancement Act of 1992 called for TPCC to
develop a strategic plan that (1) establishes priorities for all
federal export promotion activities; (2) brings these activities into
line with the priorities and improves their coordination; (3)
identifies areas of overlap and duplication among federal export
promotion activities and proposes means of eliminating them; and (4)
proposes an annual unified federal trade promotion budget to support
the plan, improve coordination, and eliminate funding for areas of
overlap and duplication. 

The rationale for requiring TPCC to coordinate such a strategic plan
for the federal government as a whole also applies to the varied
export promotion activities of U.S.  agencies overseas.  Heads of
U.S.  embassies and consulates overseas are facing the same task of
bringing together all of the export promotion activities of the
various U.S.  agencies within each country under a comprehensive,
coordinated plan.  However, at the time of our visits in the summer
and fall of 1993, none of the embassies or consulates had developed a
document that contained an overall strategic plan for carrying out
export promotion activities even though they had made other changes
to coordinate these activities. 

Most embassy and consulate heads we talked to said that in order to
have a truly effective export promotion program, each embassy or
consulate needed to devise a strategic plan that identified export
sectors, set priorities for all of the country's export promotion
activities, and specified the staff and other resources needed to
carry out the plan.  The plan could serve as a vehicle for tailoring
staffing requirements, including areas where special knowledge or
expertise would be required, and for allocating money and staff to
those areas of highest priority within each country. 

TPCC recognized the need for single, consolidated country commercial
plans in its September 1993 report.  The Departments of State,
Commerce, and Agriculture also determined the feasibility of such
plans.  In January 1994 it issued a cable directing U.S.  embassies
to prepare a single country-specific strategic commercial plan that
would indicate all of the commercial activities and strategies
planned for the country, including performance measures. 

These plans could serve as building blocks for the strategic
governmentwide plan under development by TPCC by helping focus
government activities on specific markets, products, and services
that represent the best potential for U.S.  exports.  But these plans
will not constitute the overall integrated strategy called for by the
Export Enhancement Act that would identify governmentwide resource
priorities. 

TPCC is expected to address the subject of a unified strategy in its
update of the National Export Strategy by October 1, 1994. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In July 1994, we discussed a draft of this report with
representatives of AID (including the Acting Director of the Office
of East Asia), State (including, indirectly, the Acting Coordinator
for Business Affairs), Agriculture (including the Assistant
Administrator for Commodity and Marketing Programs), and Commerce
(including the Director, East Asia and Pacific, US&FCS).  They
generally agreed with the information presented in the report, and
they provided minor clarifications that we incorporated. 
Representatives of AID emphasized that AID's primary contribution to
U.S.  exports comes through the sustainable economic growth that AID
programs seek to achieve in developing countries. 


---------------------------------------------------------- Letter :7.1

As agreed with you, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date.  At that time, we will send copies to
interested Members of Congress; the Secretaries of Agriculture,
Commerce, Energy, State, Transportation, and Treasury; the Director
of AID; and appropriate congressional committees.  We also plan to
send copies to the U.S.  businesses that participated in our review,
and other interested parties.  We will make copies available to
others upon request. 

Please contact me at (202) 512-4812 if you have any questions
concerning this report.  Other major contributors to this report are
listed in the appendix. 

Sincerely yours,

Allan I.  Mendelowitz, Managing Director
International Trade, Finance, and
 Competitiveness


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I


   GENERAL GOVERNMENT DIVISION,
   WASHINGTON, D.C. 
--------------------------------------------------------- Appendix I:1

Virginia C.  Hughes, Assistant Director
Michael J.  Avenick, Deputy Project Manager


   FAR EAST OFFICE
--------------------------------------------------------- Appendix I:2

Priscilla M.  Harrison, Project Manager
Joyce L.  Akins, Deputy Project Manager
Jeffrey D.  Malcolm, Deputy Project Manager

RELATED GAO PRODUCTS

High-Value Product Exports:  Good Potential Exists for More Trade
With Taiwan, Malaysia, and Indonesia (GAO/GGD-94-52, Nov.  19, 1993). 

Export Promotion:  Governmentwide Plan Contributes to Improvements
(GAO/T-GGD-94-35, Oct.  26, 1993). 

Export Promotion:  Initial Assessment of Governmentwide Strategic
Plan (GAO/T-GGD-93-48, Sept.  29, 1993). 

Export Promotion Strategic Plan:  Will It Be a Vehicle for Change? 
(GAO/T-GGD-93-43, July 26, 1993). 

Export Promotion:  Governmentwide Strategy Needed for Federal
Programs (GAO/T-GGD-93-7, Mar.  15, 1993). 

U.S.  Department of Agriculture:  Better Management Could Increase
Effectiveness of FAS Export Operations (GAO/T-GGD-93-5, Feb.  23,
1993). 

Transition Series:  International Trade Issues (GAO/OCG-93-11TR, Dec. 
1992). 

Export Finance:  The Role of the U.S.  Export-Import Bank
(GAO/GGD-93-39, Dec.  23, 1992). 

Export Promotion:  A Comparison of Programs in Five Industrialized
Nations (GAO/GGD-92-97, June 22, 1992). 

Export Promotion:  Overall U.S.  Strategy Needed (GAO/T-GGD-92-40,
May 20, 1992). 

U.S.  Department of Agriculture:  Improved Management Could Increase
the Effectiveness of Export Promotion Activities (GAO/T-GGD-92-30,
Apr.  7, 1992). 

Export Promotion:  U.S.  Programs Lack Coherence (GAO/T-GGD-92-19,
Mar.  4, 1992). 

Export Promotion:  Federal Programs Lack Organizational and Funding
Cohesiveness (GAO/NSIAD-92-49, Jan.  10, 1992). 
