Title III:
Trade

Highlights

Title III
Trade
Programs are designed to develop and expand commercial outlets for U.S. commodities and to provide international food assistance.

All trade programs reauthorized through 2007. New programs include the McGovern-Dole International Food for Education and Nutrition Program, the Biotechnology and Agricultural Trade Program that addresses nontariff barriers to U.S. exports, a Technical Assistance for Specialty Crops Program that addresses barriers affecting exports of specialty crops, and an online Exporter Assistance Initiative. A long-range agricultural trade strategy that identifies export growth opportunities is to be prepared.

Provisions

1996-2001 farm legislation

2002 Farm Bill

General provisions
Similar goals and roles appear in the subtitles for P.L. 480 Food for Peace, Section 416, and Food for Progress programs.

Programs encourage approval of multiyear and multicountry agreements and are expanded to include all eligible organizations rather than just private voluntary organizations (PVOs).

Each program is to streamline, improve, and clarify the application, approval, and implementation process, and to report progress to congressional committees.

Export credit guarantee programs facilitate commercial sales of U.S. agricultural products. The Export Credit Guarantee Program (GSM-102) covers private credit extended for up to 3 years. The Intermediate Export Credit Guarantee Program (GSM-103) covers private credit extended for up to 7 years.

Authorized short-term supplier credit guarantees. Listed criteria to be used by the Secretary in deciding whether a country is creditworthy for GSM-103 intermediate-term credit guarantees. Mandated annual program levels for GSM-102 and GSM-103 at $5.5 billion through 2002, but allowed flexibility in how much was available for each program. Allowed credit guarantees for high-value products with at least 90% U.S. content (by weight). Minimum shares of credit guarantees were required to be available for processed and high-value products: 25% in 1996 and 1997; 30% in 1998 and 1999; and 35% thereafter. Minimum requirements were not applicable if they caused a reduction in total commodity sales under the programs.

Extends the export credit guarantee programs and annual funding through 2007.

Requires the Secretary and U.S. Trade Representative to consult regularly with relevant House and Senate committees on multilateral negotiations at the World Trade Organization and the Organization for Economic Cooperation and Development regarding agricultural export credit guarantee programs.

Continues requirement that not less than 35% of export credit guarantees issued be used to promote exports of processed or high-value agricultural products.

Extends terms of repayment for the Supplier Credit Program from 180 to 360 days, subject to appropriations to fund the additional costs of covering repayment of credit beyond 180 days.

Provisions

1996-2001 farm legislation

2002 Farm Bill

Market development programs

Market Access Program (MAP) develops, maintains, and expands markets for agricultural products.

Authorized funding for the Market Access Program (formerly the MPP) at $90 million annually for fiscal years (FY) 1996-2002. Participating organizations included nonprofit agricultural trade organizations, regional trade groups, and private companies.

Reauthorizes the program and gradually increases funding to not more than $100 million in FY 2002, $110 million in FY 2003, $125 million in FY 2004, $140 million in FY 2005, and $200 million in FY 2006 and FY 2007 in Commodity Credit Corporation (CCC) funds or equivalent CCC commodities.

For funding in excess of the FY 2001 level, equal consideration is given to organizations that have or have not participated in the past, and to activities in emerging markets or other markets.

Foreign Market Development Program (FMD) helps maintain and develop foreign markets for U.S. agricultural commodities, primarily through trade associations.

Extended through 2002. Funded at $27.5 million per year.

Authorizes use of CCC funds to support the program and increases funding to $34.5 million.

Requires continued emphasis on exporting value-added products to emerging markets.

For funding in excess of the FY 2001 level, equal consideration is given to organizations that have or have not participated in the past, and to activities in emerging markets or in markets other than emerging markets.

Emerging Markets Program targets "emerging markets" that offer growth potential for U.S. agricultural exports.

Required that CCC make available not less than $1 billion of direct credit or credit guarantees to emerging markets during FY 1996-2002. Funds could be used to establish or provide facilities, services, or U.S. products to improve handling, marketing, processing, storage, or distribution of imported agricultural products.

Required the Secretary to provide an Agricultural Fellowship Program of not more than $10 million.

Reauthorizes program at current funding levels through 2007.

Online Exporter Assistance Initiative

No similar provisions.

USDA shall maintain a website that provides comprehensive information to assist exporters and potential exporters of U.S. agricultural commodities. No funds authorized.

Global market strategy

No similar provisions.

Mandates preparing a long-range agricultural trade strategy that identifies opportunities for growth in exports; ensures that resources, programs, and policies are coordinated with those of other agencies; and removes barriers to trade in overseas markets. Consultations with relevant congressional committees shall occur before November 9, 2002, and every 2 years subsequently.

Provisions

1996-2001 farm legislation

2002 Farm Bill

Export Enhancement Program (EEP) provides funding to U.S. exporters to help compete against subsidized prices in specific export markets.

EEP expenditures were capped at $350 million in FY 1996, $250 million in FY 1997, $500 million in FY 1998, $550 million in FY 1999, $579 million in FY 2000, and $478 million for FY 2001 and FY 2002. The Secretary was allowed to make available up to $100 million annually for sale of intermediate-value products to attain the volume of these products exported by the U.S. during the Uruguay Round base period years of 1986-90.

Extends annual funding through 2007 at current funding level of $478 million per year.

Expands definition of unfair trade practices to include:
• practices of state trading enterprises that "are not consistent with sound commercial practices conducted in the ordinary course of trade;"
• subsidies that decrease market opportunities for U.S. exports or unfairly distort agricultural markets to the detriment of the U.S.;
• unjustified trade restrictions or commercial requirements, such as labeling, that affect new technologies, including biotechnology;
• unjustified sanitary or phytosanitary restrictions;
• other unjustified technical barriers to trade;
• rules that unfairly restrict imports of U.S. products in the administration of tariff-rate quotas; and
• failure of a country to adhere to already existing trade agreements with the U.S.

Provisions

Food aid and development programs

P.L. 480
The U.S. Government provides overseas food aid primarily through the P.L. 480 Program, also known as "Food for Peace." P.L. 480 includes concessional sales through Title I and donations and grants through Titles II and III.

Extended the authority to enter into new P.L. 480 agreements through 2002. Authorized Title I agreements with private entities in addition to foreign governments. Modified repayment terms for Title I credit, including 1) elimination of the minimum repayment period of 10 years and 2) reduction of the maximum grace period from 7 to 5 years.

Reauthorizes program through 2007.

Adds conflict prevention as a program objective.

Increased the maximum level of funding for overseas administrative support to eligible organizations under Title II, from $13.5 million to $28 million. Added intergovernmental organizations, such as the World Food Program, to the organizations eligible to receive funds.

Funding for administrative support and internal transportation and distribution costs of sponsoring agencies are required to be between 5% and 10% of the annual Title II program level.

Increased the minimum shares of commodities to be sold for local currencies under nonemergency programs under Title II from 10% to 15%.

New "nonemergency assistance" provision encourages proposals that address 1 or more aspects of Food for Peace, and incorporates program objectives to assist development.

Extended the minimum levels of assistance under Title II through 2002 at 1995 level of 2.025 million metric tons (MMT). Amended P.L. 480 Title IV (Administrative Provisions) to broaden the range of commodities available under the P.L. 480 program and provided greater programming flexibility.

Increases the minimum level of assistance to 2.5 MMT per year. The minimum for nonemergency programs is 1.875 MMT.

Allowed up to 15% of the funds available for any title of P.L. 480 to be used for any other P.L. 480 title. Up to 50% of Title III funds may be used for Title II.

Eliminates the $1-billion cap on annual Title II spending.

Authorizes sale of commodities for U.S. dollars, as well as non-U.S. currencies, for monetization in P.L. 480.

Food Aid Consultative Group

Extended the authority for the Food Aid Consultative Group through 2002.

Reauthorizes the Food Aid Consultative Group through 2007.

CCC (Section 416) surplus donations

Permanent law provides for overseas donations of CCC-owned surplus commodities.

Maintains current law. Secretary is encouraged to finalize program agreements not later than December 31 of each fiscal year.

Monetization allows use of other currencies in addition to U.S. dollars.

George McGovern-Robert Dole International Food for Education and Nutrition Program

The Global Food for Education Initiative began as a pilot program in FY 2001. USDA committed to provide up to $300 million under Section 416 authority for commodities and transportation costs for school and preschool nutrition projects in developing countries.

Authorizes a program to provide commodities and financial and technical assistance for foreign preschool and school feeding programs. Goal is to reduce hunger and improve literacy and nutrition programs for pregnant and nursing women and for young children.

President has authority to designate the administering Federal agency. Eligible recipients include governments, PVOs, cooperatives, and other entities.

Provides $100 million of CCC funds to continue existing pilot projects, and an authorization for appropriations to continue the program in subsequent years.

Bill Emerson Humanitarian Trust/Food Security Commodity Reserve provides for a reserve to meet emergency humanitarian food needs in developing countries.

The Food Security Commodity Reserve replaced the Food Security Wheat Reserve. Commodities authorized for the 4-MMT reserve were expanded to include corn, grain sorghum, and rice in addition to wheat. Raised the existing 300,000-MT release authority for urgent humanitarian relief in disasters to 500,000 MT in the case of unanticipated need. Allowed for release of an additional 500,000 MT of eligible commodities that could have been released but were not released in previous years. Commodities could be acquired from eligible CCC stocks, purchased from producers, or purchased on the market to replace the reserve. Authorized reimbursement of the CCC for release of eligible commodities from the reserve from funds appropriated in subsequent fiscal years.

Renamed the Bill Emerson Humanitarian Trust in 1998. CCC was authorized to retain and use funds from P.L. 480 reimbursements to replenish the reserve (up to $20 million per year). CCC was also authorized to hold funds as well as commodities in the reserve.

Reauthorizes replenishment and reimbursement authorities through 2007.

Food for Progress (FFP) was originally authorized in the Food Security Act of 1985. Provides commodities to governments of developing countries and emerging democracies or to PVOs to strengthen private sector agriculture.

Extended the authority for FFP agreements. Authority to provide assistance in the administration, sale, and monitoring of food assistance programs through 2002. Included intergovernmental organizations in FFP programming. Expanded authority to make sales on credit terms to all eligible countries.

Reauthorizes program through 2007.

Provision of eligible commodities to developing countries shall not be less than 400,000 MT.

Increases annual limits on administrative costs to $15 million and on noncommodity costs to $40 million. Excludes from tonnage limitations commodities furnished on a grant basis or on credit terms under P.L. 480 Title I.

Encourages the President to finalize agreements before beginning of the fiscal year and provide congressional committees a list of approved programs, countries, and commodities by December 1.

The President ensures that each eligible organization is optimizing use of donated commodities by:
• taking into account the needs of target populations in recipient countries;
• working with recipient countries and institutions within those countries to design mutually acceptable programs;
• monitoring and reporting on distribution and sale of eligible commodities using accurate and timely reporting methods; and
• periodically evaluating the eligible organization's program effectiveness.

John Ogonowski Farmer-to-Farmer Program assists developing countries to increase farm production and farmer incomes.

Up to 0.4% of funding for P.L. 480 Title I and Title II can be diverted to support the program.

Reauthorizes program through 2007. Increases share of P.L. 480 that can be diverted to support the program to 0.5%.

A special emphasis on Sub-Saharan African and Caribbean Basin countries authorizes additional funding of $10 million per year.

Provisions

Technical barriers to trade

No similar provisions.

New programs established to remove, resolve, or mitigate sanitary and phytosanitary (SPS) and other technical barriers to trade.

Biotechnology and Agricultural Trade Program

No similar provisions.

Addresses regulatory nontariff barriers to the export of U.S. agricultural commodities. Authorizes grants for public and private-sector projects for:
• quick-response intervention regarding nontariff barriers to U.S. exports involving issues of biotechnology, food safety, disease, or other sanitary or phytosanitary concerns;
• developing protocols as part of bilateral negotiations with other countries on issues such as animal health, grain quality, and genetically modified organisms.

Program is authorized at $6 million per year through 2007.

Technical assistance for specialty crops

No similar provisions.

Establishes an export assistance program to address unique barriers that prohibit or threaten the export of U.S. specialty crops. Provides for public- and private-sector projects and technical assistance to address time-sensitive and strategic issues of market retention, market access, and market expansion. Authorized at $2 million a year.

Provisions

Trade-related programs in other titles

Uruguay Round compliance
The Uruguay Round Agreement on Agriculture puts a maximum allowable level on trade-distorting domestic support programs as measured by the aggregate measurement of support (AMS). The ceiling on U.S. AMS support declined from $23.1 billion in 1995 to $19.1 billion in 2000. The $19.1-billion ceiling continues until a new World Trade Organization agreement is reached.

No similar provisions.

If the Secretary determines that the AMS ceiling will be exceeded, the Secretary shall, to the maximum extent practicable, adjust expenditures to avoid exceeding allowable levels. (Provisions are covered in Title I.)

Before making any adjustments, the Secretary shall submit a report to Congress describing the adjustments to be made.

Country-of-origin labeling

Most imports, including many food items, must bear labels informing the final purchaser of their country of origin. Certain natural products were exempt.

Requires that meat, fish, produce, and peanuts be labeled with the country of origin, starting in 2004. (Provisions are covered in Title X.)

Dairy Export Incentive Program (DEIP) subsidizes exports of U.S. dairy products. Under the DEIP, the CCC was required to make payments, on a bid basis, to an entity that sells U.S. dairy products for export.

DEIP was extended to 2002. The Secretary was directed to authorize subsidies sufficient to export the maximum volume of dairy products allowable under Uruguay Round-GATT (UR-GATT) (net of exports under the dairy sales program), subject to UR-GATT funding limits for export subsidies. DEIP is to be used for market development purposes.

DEIP was extended to 2007.
(Provisions are covered in Title I.)

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