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The Export Enhancement Program (EEP) is designed to help U.S. farm products
meet competition from subsidizing countries, especially the European Union.
Under the program, the U.S. Department of Agriculture pays cash to exporters as
bonuses, allowing them to sell U.S. agricultural products in targeted countries
at prices below the exporter’s costs of acquiring them. The major objectives are
to expand U.S. agricultural exports and to challenge unfair trade practices.
The EEP was announced by USDA on May 15, 1985, and is operated under
authority of the Agricultural Trade Act of 1978 as amended, the Uruguay Round
Agreements Act, the Federal Agriculture Improvement and Reform Act of 1996, and
the Farm Security and Rural Investment Act of 2002. Consistent with its World
Trade Organization commitments under the Uruguay Round Agreement on Agriculture,
the United States has established annual ceilings by commodity with respect to
export quantities and budget outlays. The EEP has been inactive in recent years,
and no allocations were announced for fiscal 2005.
Who Benefits
The EEP, administered by USDA’s Foreign Agricultural
Service (FAS), is used to help U.S. agricultural producers, processors, and
exporters gain access to foreign markets. Through the program, sales of U.S.
agricultural products are made that would not otherwise have been possible
because of subsidized prices offered by competitor countries.
Eligible Products
EEP bonuses become available only when USDA
announces an operational EEP initiative for a specific commodity or commodities.
Commodities eligible for EEP initiatives are wheat, wheat flour, rice, frozen
poultry, barley, barley malt, table eggs, and vegetable oil.
Participation
An exporter interested in participating in the EEP
must provide specific information and meet qualification standards, including:
- an office and agent for service of legal process in the United States,
with names and street addresses
- a description and documented proof of business structure—how and where
incorporated, etc.
- a certified statement describing participation, if any, during the past
3 years in U.S. government programs, contracts, or agreements
- a certified statement that the exporter is not debarred, suspended, or
proposed for debarment from any federally administered program
In addition to the above qualification standards, exporters are required to
post a performance security before submitting a request for a bonus.
Making a Sale
All sales under the EEP are made by the private
sector, not the U.S. government. Once an invitation is issued, it is up to
agricultural exporters to contact prospective buyers in eligible countries and
negotiate a sales contract including price, quantity, quality, delivery, and
other terms. The sale may be contingent on USDA’s approval of a bonus. Each
prospective exporter submits a bid to USDA requesting a subsidy—or bonus—that
would allow the sale to take place at the agreed price.
USDA reviews all bids for the competitiveness of the bonus value requested
and compares bids with offers from other U.S. exporters and with sales of
competitor countries. USDA has the right to reject any or all bids.
Once USDA accepts a bid, the exporter and the Commodity Credit Corporation (CCC)
enter into an agreement. USDA announces bid acceptances under the EEP by 10 a.m.
Eastern U.S. time and makes the information available in a program announcement
on the FAS Web site. As noted above, no allocations and therefore no sales were
made under the EEP in fiscal 2005.
Receiving the Bonus
The bonus is paid to the U.S. exporter in
cash. The CCC determines the bonus payment by multiplying the CCC bonus
specified in the agreement by the net quantity of the commodity exported. Once
an exporter furnishes USDA with evidence that the specified commodity has been
exported to the target country under the terms of the agreement, the exporter
can request payment of the bonus.
Additional Information
For more information, contact: Operations
Division, Export Credits, FAS/USDA, 1400 Independence Ave. SW, Washington, DC
20250-1035; tel.: (202) 720-6211; fax: (202) 720-2495.
Program information is available on the FAS web site:
http://www.fas.usda.gov/exportprograms.asp
FAS program announcements of EEP allocations are posted at:
http://www.fas.usda.gov/scriptsw/PressRelease/pressrel_frm.asp
General information about FAS programs, resources, and services can be found
at: http://www.fas.usda.gov
