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

Pursuant to a congressional request, GAO reviewed the Export Enhancement Program (EEP), focusing on: (1) recent program changes; and (2) the program's continued role in fostering the liberalization of agricultural trade. GAO found that: (1) while its commodity divisions maintained files on each proposed program under review, the Foreign Agricultural Service (FAS) did not identify a proposal until the division forwarded it for review; (2) FAS top management was not aware of all proposals under consideration and could not monitor the proposals' progress or ensure that all proposals received equal treatment; (3) since FAS officials did not verify all categories of required information, FAS could not ensure that ineligible exporters were not participating in the program; (4) FAS officials received the necessary information to make informed decisions, but still did not document adjustments to price and bonus amounts, making it difficult to determine whether bonus calculations were higher than needed to make a sale, particularly when bonuses exceeded sales prices; (5) FAS developed written guidelines for determining price and bonus levels to require that all relevant calculations be fully documented; and (6) to further improve its operations, FAS was in the process of recouping overpayments and developing and implementing a new computer program, but further improvements in management controls were still needed.