U.S. Department of Agriculture: Foreign-Owned Exporters' Participation in
the Export Enhancement Program (Letter Report, 05/11/95, GAO/GGD-95-127).
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-95-127
TITLE: U.S. Department of Agriculture: Foreign-Owned Exporters'
Participation in the Export Enhancement Program
DATE: 05/11/95
SUBJECT: Economic analysis
Agricultural programs
International trade
Foreign corporations
Agricultural products
Commodity marketing
Sales promotion
Exporting
International economic relations
Foreign sales
IDENTIFIER: USDA Export Enhancement Program
USDA Market Promotion Program
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Cover
================================================================ COVER
Report to Congressional Requesters
May 1995
U.S. DEPARTMENT OF AGRICULTURE -
FOREIGN-OWNED EXPORTERS'
PARTICIPATION IN THE EXPORT
ENHANCEMENT PROGRAM
GAO/GGD-95-127
Foreign-Owned EEP Exporters
(280068)
Abbreviations
=============================================================== ABBREV
EEP - Export Enhancement Program
FAS - Foreign Agricultural Service
GATT - General Agreement on Tariffs and Trade
Letter
=============================================================== LETTER
B-260183
May 11, 1995
The Honorable Kent Conrad
The Honorable Thomas A. Daschle
The Honorable Byron L. Dorgan
The Honorable Tom Harkin
United States Senate
The Honorable Tim Johnson
House of Representatives
As you requested, we reviewed the participation of foreign-owned
companies in the Export Enhancement Program (EEP) and the Market
Promotion Program, which are administered by the U.S. Department of
Agriculture's Foreign Agricultural Service (FAS). We provided the
results of our Market Promotion Program analysis in a prior report.\1
This report assesses whether (1) providing bonuses\2 to foreign-owned
exporters (i.e., either exporters headquartered in foreign countries
or the U.S. subsidiaries of foreign companies) is consistent with
EEP's goals and objectives and (2) restricting foreign-owned
exporters from participation would adversely affect the program. In
addition, this report discusses whether relying on current FAS
internal controls adequately protects against unauthorized diversions
of EEP shipments to countries other than those originally targeted.
--------------------
\1 International Trade: Changes Needed to Improve Effectiveness of
the Market Promotion Program (GAO/GGD-93-125, July 7, 1993).
\2 Bonuses are cash payments FAS makes to exporters that allow
specified U.S. commodities to be sold in targeted export markets at
competitive prices.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
We found that foreign-owned exporters' participation in EEP was
consistent with the program's basic objectives: discouraging unfair
trade practices\3 of other countries and increasing the
competitiveness of U.S. agricultural commodities. Exporters, both
foreign and domestically owned, help achieve these objectives by
facilitating the sale of U.S. agricultural products in targeted
countries. Moreover, we found that the 1990 Food, Agriculture,
Conservation, and Trade Act, under which EEP is currently authorized,
does not preclude foreign-owned exporters from EEP participation.
According to FAS officials, changes to EEP contained in the
implementing legislation for the Uruguay Round of the General
Agreement on Tariffs and Trade (GATT)\4 do not exclude them from the
program.
Restricting EEP participation by foreign-owned exporters would reduce
the effectiveness of the program, if domestic-owned exporters did not
replace foreign-owned exporters' volume of exports at the same price.
Eliminating foreign-owned exporters would reduce the number of
bidders for EEP bonuses. Economic analysis suggests that a reduction
in the number of bidders would reduce competition and could result in
higher program costs--in this case, larger EEP bonus amounts. Larger
EEP bonuses per ton of EEP-supported agricultural exports would also
result in a smaller volume of commodities exported under the program
for any given level of EEP appropriation. Given the number of
variables that affect whether an exporter participates in EEP, we
could not determine if domestic-owned exporters could easily replace
foreign-owned exporters.
Internal FAS controls devised to detect unauthorized diversions of
EEP shipments may not have detected all such diversions. These
controls consisted primarily of FAS checking documents provided by
exporters. However, the information submitted by exporters may not
be reliable or accurate. For example, our review of 125 EEP
shipments made during fiscal year 1992 showed that some exporters had
submitted erroneous information to FAS on EEP shipments regarding the
names of the vessels used to transport EEP commodities and the dates
that the commodities arrived in the destination countries. FAS has
contracted for information on the movement of marine vessels from an
on-line database service that could provide FAS with a greater
ability to monitor for possible diversions. However, FAS' ability to
detect unauthorized diversions of EEP shipments will be affected by
limitations in the database service, such as its inability to track
vessels in some parts of the world.
--------------------
\3 Under the 1990 Food, Agriculture, Conservation, and Trade Act
(P.L. 101-624, Nov. 28, 1990), the term "unfair trade practices"
means "any act, policy, or practice of a foreign country that (1)
violates, or is inconsistent with the provisions of, or otherwise
denies benefits to the United States under, any trade agreement to
which the United States is a party; or (2) is unjustifiable,
unreasonable, or discriminatory and burdens or restricts U.S.
commerce."
\4 Established in 1948, GATT is a multilateral accord subscribed to
by 115 countries that has the basic aim of liberalizing world trade.
Before the Uruguay Round, there were seven other rounds of GATT
negotiations.
BACKGROUND
------------------------------------------------------------ Letter :2
In May 1985, the Secretary of Agriculture established EEP to address,
in part, continuing declines in U.S. agricultural exports and to
pressure foreign nations to reduce trade barriers and eliminate
trade-distorting practices. Subsequently, the Food Security Act of
1985 (P.L. 99-198, Dec. 23, 1985) specifically authorized EEP as an
export subsidy program. The program was reauthorized by the Food,
Agriculture, Conservation, and Trade Act of 1990, which extended EEP
through 1995.
From May 1985 to May 1994, FAS awarded bonuses valued at $7.1 billion
(in constant 1993 dollars) to EEP exporters to sell mainly bulk
commodities, such as wheat or rice.\5
To qualify for EEP funding, proposed commodities and countries must
be approved under an interagency process.
FAS receives oral and written recommendations for countries and
commodities to target under EEP; most of the recommendations come
from trade associations and from within FAS. Recommendations are
also submitted by importing countries, exporters, U.S. and foreign
government officials, and other members of the U.S. agricultural
community.
EEP regulations outline four criteria to be used, among other things,
by FAS in determining if commodities and countries proposed for EEP
participation meet the program's objectives.
How will the proposal contribute to furthering trade policy
negotiations with foreign competitor nations that use unfair
trade practices?
How will the proposal contribute toward developing, expanding, or
maintaining U.S. agricultural export markets?
What will be the impact on countries that do not subsidize their
agricultural exports?
What is the cost of the proposal compared to the expected benefits?
FAS recently changed the emphasis in its review of EEP proposals from
furthering trade policy negotiations to market development.
According to FAS, the implementing legislation for the GATT Uruguay
Round agreement made furthering trade policy negotiations with
competitor nations less significant.
If FAS recommends approving the proposal, the proposal must then be
approved by the Department of Agriculture's Under Secretary for Farm
and International Trade Services and by the interagency Trade Policy
Review Group. The Group includes representatives from agencies with
an interest in foreign trade issues.
Once a proposal is approved, FAS issues invitations for bids
specifying the targeted country or countries, the commodity, the
maximum quantity of the commodity eligible for a bonus, the eligible
buyers, and the other terms and conditions of the sale. Exporters
can then bid for an EEP bonus award. First, exporters must negotiate
a sales price with an eligible buyer in the target country. After
determining what bonus amount is needed to close the gap between the
going price for the commodity in the targeted country (world price)
and the U.S. price, the competing exporters then submit this
information to FAS as bids. Next, FAS reviews the bids to determine
if the price and bonus amounts are within FAS' acceptable ranges.
FAS calculates the prevailing price for the commodity in the target
market using various information sources. FAS rejects bids proposing
prices that undercut the world price it calculated for the commodity
as well as those proposing bonus amounts that exceed the difference
between the world price and the U.S. market price. FAS then awards
bonuses starting with the lowest bonus amount requested per unit of
the commodity and proceeds to the next highest bonus amount until the
quantity of the commodity eligible for EEP bonuses is exhausted.
--------------------
\5 Before November 1991, bonus payments were made in the form of
generic commodity certificates redeemable for surplus agricultural
production held by the U.S. government. Since that time, bonuses
have been paid in cash.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3
To assess whether providing EEP bonuses to foreign-owned exporters is
consistent with program goals and objectives, we researched the
legislative and regulatory history of the program to identify (1) the
objectives of the program and (2) the intended role of exporters in
the program. We also interviewed FAS headquarters officials to
discuss those issues and whether changes to EEP contained in
legislation recently passed by Congress would alter the role of
exporters in the program.
To assess whether restricting foreign-owned exporters from
participation would adversely affect EEP, we obtained and analyzed
fiscal year 1992 FAS data on EEP bids and awards for eight
commodities.\6 Fiscal year 1992 data were used because they were the
most current and complete fiscal year data available at the start of
our review. We also obtained and analyzed data from FAS on exporters
participating in the program from May 1985 to May 1994. We did not
verify the accuracy of data obtained from FAS. Because there is no
standard definition of what constitutes a foreign- or domestic-owned
firm, we used the location of company headquarters and parent company
headquarters to categorize exporters as foreign- or domestic-owned.
If the company was headquartered outside the United States or if it
was the U.S. subsidiary\7 of a company headquartered outside the
United States, we classified the exporter as foreign- owned.
We then used these data to determine (1) the extent to which
foreign-owned exporters bid for and received EEP bonuses and (2) the
quantity of EEP commodities exported by these foreign-owned companies
on a commodity- and country-specific basis. We also reviewed
economic literature regarding the relationship between the number of
bidders and the extent of competition.
To identify FAS' internal controls for detecting unauthorized
diversions of EEP shipments, we reviewed EEP regulations and FAS
written guidelines and procedures on controls over EEP shipments. We
also interviewed officials from FAS headquarters in Washington, D.C.,
and the Agricultural Stabilization and Conservation Service in Kansas
City, Missouri, about features of the control system. To assess the
adequacy of the controls, we initially tested the controls by
reviewing 25 judgmentally selected EEP shipments. The shipments
reviewed were selected to cover the various commodities exported
under EEP and to provide a mix of foreign- and domestic-owned
exporters. On the basis of our preliminary results, we expanded our
testing by randomly selecting 100 shipments from the 3,356 shipments
that occurred under EEP during fiscal year 1992. During our testing,
we compared data provided by exporters on EEP shipments with data
maintained by Lloyd's Maritime Information Services, Inc., on the
movement of marine vessels.
We did our review from July 1993 to September 1994 in accordance with
generally accepted government auditing standards.
We received written comments on a draft of this report from the FAS
Administrator. They are summarized on page 13 and presented in full
in appendix II.
--------------------
\6 There were nine commodities covered by EEP in fiscal year 1992.
The eight commodities whose EEP bidding we reviewed were wheat,
barley, barley malt, rice, wheat flour, frozen poultry, eggs, and
canned peaches. We were unable to review the EEP bids for vegetable
oil, the other commodity active in fiscal year 1992, because of the
lack of available data. We present the data on awards for vegetable
oil in figure 1.
\7 A subsidiary company is one in which another company (referred to
as the "parent company") has at least a 50-percent ownership.
PARTICIPATION OF FOREIGN-OWNED
EXPORTERS IS CONSISTENT WITH
EEP'S OBJECTIVES
------------------------------------------------------------ Letter :4
FAS' award of EEP bonuses to foreign-owned corporations is consistent
with program objectives set forth in the Food, Agriculture,
Conservation, and Trade Act of 1990. These objectives are to
"discourage unfair trade practices by making U.S. agricultural
commodities competitive."\8 The nationality of an exporter's
ownership is not germane to the pursuit of these objectives, since
both foreign- and domestic-owned EEP exporters act as intermediaries
in the program's sales of U.S. agricultural commodities in overseas
markets. Exporters help ensure that U.S. agricultural commodities
compete on the world market by negotiating sales and prices with
potential foreign buyers and by arranging for commodity deliveries to
foreign buyers.
The 1990 statute does not preclude foreign-owned exporters from
receiving cash payments or commodities under the program as long as
such payments serve the stated purpose of discouraging unfair foreign
trade practices by making the prices of U.S. agricultural
commodities competitive. In addition, the statute does not make a
distinction regarding the treatment of domestic- and foreign-owned
exporters under the program.
Pending changes to EEP resulting from the implementation of the GATT
Uruguay Round agreement are unlikely to alter the role of exporters
in the program, according to FAS officials. In April 1994, U.S.
officials joined delegates from more than 100 other countries in
signing the GATT Uruguay Round agreement. The agreement, among other
things, requires participating developed countries to reduce their
subsidies for agricultural exports by 36 percent in budgetary outlays
and reduce the quantities of subsidized exports by 21 percent. The
agreement also prohibits member nations from introducing or
reintroducing subsidies for agricultural products that were not
subsidized during the 1986 to 1990 base year period.\9
In December 1994, Congress enacted implementing legislation for the
Uruguay Round agreement (P.L. 103-465, Dec. 8, 1994). The
legislation extended EEP through 2001 and refocused EEP so that it
would not be limited to countries where the United States faces
unfair foreign trade practices. While the Uruguay Round agreement
established annual ceilings on the use of subsidies, it did not
prohibit the use of agricultural export subsidies. Therefore, the
Clinton administration recommended, and Congress agreed, that it was
necessary to maintain EEP and other U.S. agricultural subsidy
programs as a means of inducing other nations to negotiate further
reductions on the use of agricultural export subsidies. According to
FAS officials, the implementing legislation allows EEP to be used to
export U.S. agricultural commodities to a greater number of
countries. FAS officials we spoke with did not yet know how the
change in EEP's objectives would affect the program's operation.
However, they did not anticipate changes being made to the role of
exporters in the program.
--------------------
\8 With respect to the agricultural commodities exported under EEP,
the Food, Agriculture, Conservation, and Trade Act of 1990 defines
"U.S. agricultural commodities" as those products that are entirely
produced in the United States.
\9 For a more comprehensive discussion of the agricultural subsidy
provisions contained in the Uruguay Round agreement, see
International Trade: Impact of the Uruguay Round Agreement on the
Export Enhancement Program (GAO/GGD-94-180BR, Aug. 5, 1994).
ELIMINATING FOREIGN-OWNED
EXPORTERS' PARTICIPATION COULD
ADVERSELY AFFECT THE PROGRAM
------------------------------------------------------------ Letter :5
Eliminating foreign-owned exporters from EEP participation could
impair competition for EEP bonuses, which could ultimately lead to
higher subsidies being paid for each unit of commodity exported under
the program. In addition, our analysis of EEP award data suggested
that restricting foreign-owned exporters from EEP participation could
significantly lower the amount of barley malt, barley, and wheat
exported under EEP unless the extent of foreign-owned exporter
participation could be replaced by domestic-owned exporters.
However, we could not determine whether domestic-owned exporters
could easily replace foreign-owned exporters in the program.
Currently, foreign-owned exporters receive a substantial portion of
EEP bonuses--over 39 percent--as shown in table 1.
Table 1
EEP Bonus Awards to Foreign-Owned and
Domestic-Owned Companies, May 1985 to
May 1994
(Dollars in millions (constant 1993
dollars))
Bonus Percent of
Number of amount total
Company ownership exporters awarded bonuses
---------------------------------- ---------- ---------- ----------
Foreign 38 $2,795 39.3
U.S. 95 4,309 60.7
======================================================================
Total 133 $7,104 100.0
----------------------------------------------------------------------
Note: There were 135 companies that received EEP bonuses from May
1985 to May 1994. However, we were unable to categorize two
companies because ownership information was not readily available for
these companies, which are no longer in business.
Source: GAO analysis of data obtained from FAS and business
directories and databases.
It is important to note that of the 38 exporters we classified as
foreign owned, 36 are the U.S. subsidiaries of parent companies
located outside of the United States. Many of these U.S.
subsidiaries have a substantial presence in the United States. For
example, the Pillsbury Company, which is the subsidiary of a British
firm, is headquartered in Minnesota and employs 8,000 workers
throughout the United States. (See app. I for a complete listing of
EEP exporters participating in the program from May 1985 to May 1994
and their ownership classification.)
Eliminating foreign-owned exporters from the program would reduce the
number of bidders for EEP bonuses. The economic studies we reviewed
suggested that eliminating potential bidders from participating in
EEP would reduce competition for EEP bonuses. Reduced competition
among a smaller pool of bidders for EEP bonuses could lead to payment
of larger EEP bonuses per unit of commodity subsidized under the
program. FAS officials hold a similar view. They explained that
strong competition for bonuses should result in smaller bonus awards
as exporters vie for a fixed amount of EEP bonuses. These smaller
awards per unit of export should allow FAS to subsidize a greater
quantity of EEP commodities since lower bonus payments per unit of
export enable FAS to subsidize more exports with available EEP funds.
Our analysis of bidding activity by exporters during fiscal year 1992
for eight commodities showed that foreign-owned exporters submitted
over one-third of the bids for bonus awards. Foreign-owned exporters
were particularly active bidders for wheat and barley malt bonuses,
submitting 44 and 72 percent, respectively, of the bids for those
commodities during fiscal year 1992.
Foreign-owned exporters received a significant share of the winning
bids, with foreign-owned exporters being more important for some
commodities than others. As shown in figure 1, foreign-owned
exporters accounted for about 79 percent of the quantity of barley
malt sold under EEP during fiscal year 1992.
Figure 1: Percent of Commodity
Quantities Awarded Under EEP to
Domestic- and Foreign-Owned
Exporters During Fiscal Year
1992
(See figure in printed
edition.)
Source: GAO analysis of data provided by FAS.
As with barley malt and barley, a major portion (50 percent) of the
quantity of wheat sold under EEP during fiscal year 1992 was exported
by foreign-owned exporters. This is significant because wheat
exports have overshadowed all other commodities in the EEP program.
During fiscal year 1992, bonuses for wheat shipments accounted for
about 84 percent of all EEP funds.
Given the number of variables that affect whether an exporter
participates in and receives bonuses under EEP, we could not
determine if domestic-owned exporters could easily replace
foreign-owned exporters in the program. For example, FAS does not
know whether the domestic-owned exporters currently participating in
the program would bid for the volume of EEP commodities currently
exported by foreign-owned exporters. Domestic-owned exporters would
still need to meet FAS' price and bonus thresholds for EEP bonuses.
FAS also does not know to what extent domestic-owned exporters not
currently participating in EEP would enter into the program and
compete successfully for EEP bonuses.
Currently, exporters must provide FAS with documentation showing
their experience in selling at least a minimal amount of the targeted
commodity during the previous 3 calendar years to qualify for EEP
participation. FAS issued a proposed rule on January 18, 1995, that
would eliminate this requirement. According to FAS officials, some
exporters have complained that the experience requirement prevented
them from otherwise qualifying for program participation. FAS
officials told us that eliminating the experience requirement should
increase the number of exporters eligible to participate in the
program. However, they stated that the number of additional
exporters that would actually receive bonuses under the program and
the extent of their participation are not known.
INTERNAL CONTROLS TO DETECT
UNAUTHORIZED DIVERSIONS OF EEP
SHIPMENTS ARE NOT COMPLETELY
RELIABLE
------------------------------------------------------------ Letter :6
FAS has only a limited ability to detect unauthorized diversions of
EEP shipments. Unauthorized diversions occur when commodities do not
arrive at the destination country and, instead, are sent to another
country. Unauthorized diversions of EEP shipments are both illegal
and counter to the current targeting aspects of the program.
Internal FAS controls to detect unauthorized diversions primarily
consisted of examining exporter-provided documentation to determine
if EEP commodities arrived at the destination country. However,
information the exporters provided was not reliable or accurate in
some cases. While FAS is attempting to improve its monitoring of EEP
shipments, key limitations hinder its ability to verify that
shipments were not diverted.
The possibility of unauthorized diversions of EEP shipments has long
concerned Congress. The Food, Agriculture, Conservation, and Trade
Act of 1990, which prohibits such diversions, requires exporters to
maintain proof that EEP commodities arrived at the intended
destination. The act also requires FAS to ensure that the
agricultural commodities arrived at the intended destination country
as provided for in the EEP agreement.
FAS relied primarily on information supplied by exporters to monitor
for possible unauthorized diversions. FAS required EEP exporters to
provide bills of lading\10 to document the export of EEP commodities.
FAS also required exporters to provide documentation showing the
receipt of EEP commodities in the intended destination countries.
FAS officials told us that their staff then compared the certificates
of entry\11 to the bills of lading to monitor for possible diversions
of EEP shipments and to ensure that EEP bonuses were paid only for
commodities that actually had arrived at the intended destination.
Our review of individual EEP shipments showed that exporters did not
always provide reliable and accurate information regarding the
arrival of EEP commodities in destination countries. To assess the
reliability of documents submitted by exporters, we first reviewed
the documentation provided by exporters in support of 25 EEP
shipments made in fiscal year 1992. During our review of the 25
shipments, we found discrepancies that led us to question the
accuracy and validity of the documentation provided by the exporters.
For example, we compared the information on the bills of lading to
the certificates of entry and found that one exporter had provided
certificates of entry showing the arrival of the ship in the
destination country before the cargo loading date shown on the bills
of lading. We then expanded our analysis to include a review of 100
randomly selected fiscal year 1992 shipments.
Although we did not find any discrepancies between the bills of
lading and the certificates of entry upon our review of the 100
shipments, we did find 6 shipments for which the exporters had
submitted questionable or inaccurate information. We used an on-line
data service, known as SeaData, subscribed to by FAS, to verify the
accuracy of the certificates of entry. FAS had been testing and
using the SeaData system, which is maintained by Lloyd's Maritime
Information Services, Inc., since January 1992 to obtain information
on the movement of commercial trading vessels worldwide. We found
six cases in which SeaData had reported that the vessels shown on the
certificates of entry had been in different areas of the world and
had not visited the ports or countries shown on the certificates of
entry.
At our request, FAS contacted the exporters for the six shipments and
verified that five of the shipments had been taken off the vessel
shown on the bill of lading and loaded onto another vessel for
delivery to the target country. It also verified that the
certificates of entry did not list the vessel from which the EEP
commodity had actually been unloaded in the destination country.
Instead, the certificates of entry showed the name of the vessel that
the EEP commodity had been transferred from. The remaining case was
not resolved because the exporter was unable to supply additional
documentation to support the arrival of the EEP commodity in the
destination country. FAS subsequently notified exporters of the need
to provide further documentation whenever EEP commodities are
transferred from one vessel onto another for delivery to the target
country. Given that five of the six discrepancies identified in our
random sample were resolved, we would not expect many of the 3,356
shipments to have unresolvable discrepancies.
Any unauthorized diversion of EEP shipments undermines the targeting
aspect of the program. According to FAS, EEP's targeting aspect was
intended to (1) demonstrate a direct response to subsidized
competition; (2) minimize the impact on foreign competitor nations
that do not subsidize their agricultural exports; and (3) provide a
more focused and, therefore, effective use of EEP funds. By
targeting markets where foreign nations are providing subsidized
exports, EEP is intended to pressure subsidizing foreign nations to
eliminate the use of subsidies and other trade-distorting practices.
Although the United States has made progress in obtaining foreign
competitor nations' commitment to reduce the use of agricultural
export subsidies, FAS officials told us that EEP is still necessary
to induce foreign competitor nations to negotiate further reductions.
As a result, any unauthorized diversions of EEP shipments reduce the
program's effectiveness as a trade policy tool.
FAS plans to use SeaData to strengthen its ability to ensure that
unauthorized diversions of EEP shipments do not occur. FAS officials
told us that they will randomly select EEP shipments and use SeaData
to verify the accuracy of the data provided by the exporters.
However, SeaData has some significant limitations. The SeaData
system provides information on ship movement but not on whether
commodities were unloaded from the ship in the ports it visited. In
addition, the SeaData system does not provide data on ship movement
in certain parts of the world. For example, the SeaData system
cannot be used to verify whether ships bound for some ports in the
former Soviet Union arrived as shown on the exporter's certificate of
entry.
FAS officials told us they were exploring other methods of verifying
the arrival of EEP commodities in the destination countries. They
said that random on-site inspections of EEP shipment arrivals were
not feasible because of resource constraints and because some foreign
countries would not allow U.S. government officials physical access
to their ports. However, they said they were considering more
cost-effective alternatives to on-site inspections. For example, FAS
staff may be able to perform on-site reviews of documents maintained
by some large EEP buyers in foreign countries.
--------------------
\10 Bills of lading are documents signed by the captain, owner, or
agent of a carrier, furnishing written evidence of commitment to
convey and deliver the merchandise. They are both a receipt and a
contract to deliver merchandise. The bills of lading must show (1)
the identification of the export carrier, (2) the date and place of
issuance, (3) the quantity of the eligible commodity, (4) the date
the commodity was loaded on the ship, and (5) the name of the
eligible country for which the eligible commodity was destined.
\11 Certificates of entry are required to identify (1) the name of
the export carrier, (2) the quantity of the commodity unloaded, (3)
the specifications of the commodity, and (4) the date and place of
unloading of the commodity in the eligible country.
AGENCY COMMENTS
------------------------------------------------------------ Letter :7
The Foreign Agricultural Service provided written comments on a draft
of this report. It said that FAS had recently shifted the emphasis
of its review of EEP proposals from the impact on furthering trade
policy negotiations to market development. FAS said that the shift
in emphasis was in accordance with the implementing legislation for
the GATT Uruguay Round agreement. FAS pointed out that the draft
report did not acknowledge that it had been testing and using the
SeaData system for over a year before making it available to GAO.
FAS provided some additional information on its efforts to obtain
reliable third-party sources of information that could be used to
verify the quantity of commodity discharged at the destination port.
Lastly, FAS said that one of the EEP exporters shown in the draft
report as being foreign-owned was currently owned by a U.S. company.
Where appropriate, FAS' comments have been incorporated into the text
of the report. The complete text of FAS' comments, along with our
specific responses, is included in appendix II.
---------------------------------------------------------- Letter :7.1
We are sending copies of this report to the Secretary of Agriculture
and other interested parties. Copies will be made available to
others on request.
The major contributors to this report are listed in appendix III.
Please contact me at (202) 512-4812 if you have any questions
concerning this report.
Allan I. Mendelowitz, Managing Director
International Trade, Finance, and
Competitiveness
EEP EXPORTERS AND THEIR OWNERSHIP
CLASSIFICATION
=========================================================== Appendix I