Tobacco Exports: Agencies Have Implemented Restrictions on Promoting Tobacco Overseas but Additional Actions Could Strengthen Their Efforts
Released: 2019-01-04T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The World Health Organization estimates that tobacco use kills over 7 million people each year, more than tuberculosis, HIV/AIDS, and malaria combined. Since the 1990s, Congress has enacted restrictions regarding the use of certain appropriated funds to promote U.S. tobacco exports.

GAO was asked to review the implementation of these restrictions. This report examines (1) guidance select U.S. agencies have issued to implement these restrictions, (2) whether overseas officials from select U.S. agencies were aware of the restrictions and guidance, and (3) select U.S. agencies' implementation of the guidance overseas. GAO reviewed U.S. laws, agency guidance, and internal communications; analyzed Commerce data; and interviewed agency officials in Washington, D.C. and in 24 offices across 11 overseas posts in 9 countries. GAO selected these countries based on criteria that included U.S. tobacco export totals, smoking rates, and geographic dispersion.

section_title: What GAO Found
paragraphs: Congress has restricted the use of certain appropriated funding to promote tobacco exports and the Departments of State (State), Commerce (Commerce), and Agriculture (USDA) have issued interagency guidance through the cable system that they rely on to implement these restrictions. State collaborates with these and other agencies to periodically update this cable. The cable informs officials about the types of actions they should take—such as providing routine business facilitation services to all U.S. companies—and the types of actions they should not take—such as attending events sponsored by tobacco companies.

Most, but not all, officials overseas that GAO interviewed were aware of the restrictions and received some guidance concerning the restrictions. However, GAO found that some officials did not recall receiving the interagency guidance cable. In addition, State and USDA's current training materials do not address the restrictions. Federal internal control standards state that appropriate training is essential to an organization's operational success. Thus, providing officials overseas with training about the funding restrictions and related guidance would help to ensure that officials are aware of the restrictions.

U.S. officials overseas have implemented restrictions on promoting tobacco, but some officials said that the interagency guidance lacks clarity. Officials said that they have not promoted tobacco by, for example, attending events sponsored solely by tobacco companies. However, officials identified three areas of the guidance that are unclear: (1) attendance at events not sponsored by U.S. tobacco companies but attended by representatives of these companies; (2) the types of services officials can provide tobacco companies; and (3) the description of tobacco products, such as whether component parts for electronic cigarettes are included. Federal standards for internal control state that management should clearly document internal controls in policies and guidance to prevent officials from failing to achieve an objective or address a risk. By providing more specific guidance, the agencies would help ensure that officials consistently implement the funding restrictions on promoting tobacco.

section_title: What GAO Recommends
paragraphs: GAO recommends that (1) State and USDA include information about the funding restrictions and guidance in training materials for relevant employees and (2) State, in consultation with Commerce and USDA, assess and update the interagency guidance cable, as needed, on promoting tobacco in light of questions raised by officials at posts overseas. State and USDA concurred with the recommendations.

section_title: Letter
paragraphs: The World Health Organization (WHO) estimates that tobacco use kills  over 7 million people each year, more than tuberculosis, HIV/AIDS, and  malaria combined. The U.S. National Cancer Institute and the WHO  reported in 2016 that tobacco-related deaths are projected to increase to  over 8 million by 2030, with the majority of those deaths occurring in low-  and middle-income countries. As smoking rates have declined in  developed markets, the global tobacco industry has shifted sales to  emerging markets in Asia and Africa.

Since the 1990s, Congress has annually enacted appropriation acts with  restrictions on the use of certain appropriated funds to promote the sale  or export of U.S. tobacco or tobacco products. Current law prohibits  appropriated funds from being made available to the Secretary of  Agriculture acting through the Foreign Agricultural Service to promote the  sale or export of tobacco or tobacco products. Similarly, the acts  annually appropriating funds for the Departments of State (State) and  Commerce (Commerce) from fiscal year 1998 through fiscal year 2017  have prohibited the funds appropriated therein from being used to  promote the sale or export of tobacco or tobacco products and to seek  the reduction or removal by any foreign country of restrictions on the  marketing of tobacco or tobacco products.

You asked us to review the implementation of these restrictions at  overseas posts. This report examines (1) the guidance select U.S.  agencies have issued to implement funding restrictions on promoting  tobacco overseas, (2) to what extent overseas officials from select U.S.  agencies were aware of the restrictions and guidance, and (3) to what  extent select U.S. agencies have implemented this guidance overseas.

To address these objectives, we reviewed U.S. laws and guidance on  tobacco promotion issued by State and Commerce. We also interviewed  officials in headquarters from State, Commerce, the U.S. Department of  Agriculture (USDA), and the Office of the U.S. Trade Representative  (USTR) about the development of guidance on tobacco promotion and its  implementation. In addition, we held structured interviews with 45 State,  Commerce, and USDA officials overseas who were conducting  promotion-related activities in 24 offices across 11 posts and in 9  countries, about tobacco promotion guidance, training, and their activities.  When multiple officials from one agency attended a meeting, we reported  their combined responses as one “office” response. Thus, we are  reporting the results from the 24 offices we interviewed—9 State, 8  Commerce, and 7 USDA offices. We selected this non-generalizable  sample of countries based on criteria that included the countries’ large or  increasing amounts of U.S. tobacco imports, relatively high tobacco  smoking prevalence rates, and geographic dispersion.

We also analyzed Commerce’s fee-based services data, reviewed State  cables from six countries sent between January 2013 and December  2017 that named a tobacco company, and conducted a literature search  to identify instances in which U.S. government officials may have  conducted activities addressed by the interagency tobacco guidance  cable. We determined that Commerce’s fee-based services data were  sufficiently reliable for the purposes of our reporting objectives. In  addition, we analyzed Commerce email communications concerning  tobacco-related issues sent between January 2015 and February 2018 to  identify commonly asked questions or concerns about the existing  guidance and actions the agencies should or should not take to support  U.S. tobacco companies or the tobacco industry. We also interviewed  representatives from the World Health Organization, the tobacco control  community, and business associations. Our scope and methodology are  described in detail in appendix I.

We conducted this performance audit from November 2017 to December  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Roles and Responsibilities
paragraphs: U.S. agencies perform a wide variety of activities that contribute to export  promotion, and responsibility for these activities is widely dispersed.  Some of the services these agencies provide are intended, at least in  part, to assist U.S. companies in entering foreign markets or expanding  their presence abroad. For example, the U.S. government distributes  trade-related information to exporters, conducts foreign country market  research, and provides counseling to U.S. companies throughout the  export process. U.S. agencies may also use diplomatic tools to advocate  on behalf of U.S. companies to help ensure they can compete on a level  playing field in export markets.

Three of these agencies—State, Commerce, and USDA—receive  appropriations that are restricted from being used to promote the sale or  export of U.S. tobacco or tobacco products. These agencies promote the  growth of other U.S. exports through various activities, as discussed in  table 1.

section_title: Funding Restrictions on Promoting Tobacco
paragraphs: Congress has restricted the use of funds that are generally appropriated  for State, Commerce, and USDA from being used to promote the sale or  export of U.S. tobacco and tobacco products since the 1990s. In 1990,  we reported that U.S. policy and programs for assisting the export of  tobacco and tobacco products worked at cross purposes to U.S. health  policy and initiatives, both domestically and internationally. Congress  later restricted the use of funds that are generally appropriated to State,  Commerce, and USDA from being used to promote the sale or export of  U.S. tobacco and tobacco products.

During fiscal years 1994 through 2003, Congress prohibited funds  generally appropriated for USDA through annual appropriations acts from  being used to promote the sale or export of tobacco or tobacco products.  In fiscal year 2004, Congress permanently prohibited funds appropriated  for USDA from being used to promote the sale or export of tobacco or  tobacco products. According to USDA officials, USDA stopped its efforts  to gather and disseminate tobacco-related production and consumption  information overseas in the early 2000s.

Congress restricted the use of certain appropriated funds, including  appropriations for Commerce and State, from being used to promote the  sale or export of U.S. tobacco and tobacco products from fiscal years  1998 through 2017. Congress passed the Departments of Commerce,  Justice, State, the Judiciary and Related Agencies Appropriations Act,  1998, which prohibited the funds provided by the act from being used to  promote the sale or export of tobacco or tobacco products. This act also  prohibited the funds provided by the act from being used to seek the  reduction or removal of foreign country restrictions on the marketing of  tobacco or tobacco products. The act provided an exception for the funds  to be used to address foreign-country restrictions on tobacco marketing  that are not applied equally to all tobacco or tobacco products of the  same type. These restrictions have been enacted through annual  appropriations acts through fiscal year 2018.

In fiscal year 2018, Congress altered the restriction language on tobacco  promotion in the act making appropriations for State, which, according  to State, makes promotion activities permissive with respect to the use of  State appropriations. Congress used the term “should” in the Department  of State, Foreign Operations, and Related Programs Appropriations Act,  2018 (2018 State Appropriations Act) instead of the term “shall” as in prior  acts making appropriations for State. Specifically, the 2018 State  Appropriations Act states that “None of the funds made available by this  Act should be available to promote the sale or export of tobacco or  tobacco products. . . .” In contrast, prior acts making appropriations for  State stated “None of the funds made available by this Act shall be  available to promote the sale or export of tobacco or tobacco  products. . . .” According to State officials, they interpreted the term  “shall” in prior appropriations acts as a mandatory action, whereas the  use of the term “should” gives the agency more discretion in how it  addresses the restrictions. However, State has not changed how it  addresses the restrictions and does not plan to promote the sale or export  of U.S. tobacco, according to State officials.

The legislation restricting fiscal year 2018 appropriations provided to  Commerce and USDA from being used to promote tobacco retains the  mandatory “shall” language. According to Commerce and USDA  officials, the change to State’s restriction language does not affect the  agencies’ activities because Commerce and USDA are still subject to the  mandatory restrictions outlined in their agencies’ appropriations language.

section_title: U.S. Agencies Have Issued Guidance to Implement Funding Restrictions on Promoting Tobacco
paragraphs: State collaborates with Commerce, USDA, and other agencies to develop  and periodically issue an interagency guidance cable to implement  funding restrictions on promoting tobacco. According to officials, this  cable serves as the primary source of guidance for implementing the  restrictions on promoting tobacco for their officials at all posts overseas.
subsections: section_title: State Periodically Issues an Interagency Guidance Cable to Implement Funding Restrictions
paragraphs: State collaborates with Commerce, USDA, and other agencies to develop  and periodically issue an interagency guidance cable to all posts  overseas to facilitate their implementation of funding restrictions on  promoting tobacco. State officials draft the updated cable and  Commerce, USDA, and other agency officials have the opportunity to  review and comment on it before State issues it through its cable system.  This cable serves as the primary source of guidance for implementing the  restrictions, according to officials at these agencies (see table 2).

State has updated and issued the interagency guidance cable four times  since 2013 to address changes in tobacco technology and other  emerging issues, according to State officials. We identified two significant  changes to the cable over the past 5 years.

Addition of information concerning attendance at corporate  social responsibility events: In May 2013, State added a provision  that post officials should consult with headquarters before attending  corporate social responsibility events involving U.S. tobacco  companies. State officials in headquarters acknowledged that post  officials may not link some activities, such as participating in corporate  social responsibility events, to the promotion of or selling of products.  They noted that this is why it is important to make post officials aware  of the actions they should or should not take through the interagency  guidance cable.

Changes to the scope of tobacco products: In recent updates to  the cable, State expanded the description of “tobacco and tobacco  products” to address the emergence of new delivery systems for  tobacco. Specifically, in 2014 State added the language “tobacco  delivering products, such as electronic cigarettes” to provide an  example of a tobacco product. In 2016, State changed the description  to “electronic nicotine delivery systems such as e-cigarettes.” Then in  2018, State added “non-combustible products such as smokeless  tobacco” to the description of tobacco products.

In response to the revised funding restriction language in the 2018 State  Appropriations Act, State modified the 2018 cable stating that the  changes make promotion activities permissive with respect to the use of  State appropriations. However, State decided not to change the portion of  the cable describing specific actions officials should or should not take in  the version it issued in April 2018, because according to State officials,  they do not plan to promote tobacco. In addition, Commerce and USDA  officials said that the change to State’s restriction language has not  changed how they interpret the guidance.

section_title: Commerce’s Policy on Client Eligibility Implements Funding Restrictions
paragraphs: Commerce relies on both the interagency guidance cable as well as its  client eligibility policy to implement restrictions on promoting tobacco.  Commerce’s client eligibility policy applies to all export promotion services  that Commerce provides and educates officials on how to effectively  manage U.S. company requests for commercial assistance. The policy’s  section on exceptions and other bases for declining services to  companies states that Commerce is prohibited by law from promoting the  export of tobacco or tobacco-related products. Commerce issued its  updated client eligibility policy in October 2018.

section_title: USDA Relies on the Interagency Guidance Cable to Implement Funding Restrictions
paragraphs: USDA relies on the interagency guidance cable to provide direction to its  officials overseas, and does not have agency-specific guidance for  implementing its permanent funding restrictions on promoting tobacco.  USDA officials said that the cable sufficiently addresses the funding  restrictions on the agency’s promotion activities and helps to ensure that  all officials serving at posts overseas conduct activities in a consistent  manner.

section_title: Most Post Officials Interviewed Were Aware of the Restrictions and Received Guidance but Many Did Not Receive Training
paragraphs: Most State, Commerce, and USDA officials overseas we interviewed  were aware of the restrictions on promoting tobacco. Most officials we  interviewed had received some guidance concerning the restrictions, but  several officials did not recall receiving the interagency guidance cable.  Moreover, two of the agencies’ current training courses do not address  the restrictions.
subsections: section_title: Most Post Officials Were Aware of the Restrictions
paragraphs: Officials in 21 of the 24 offices overseas we interviewed were aware of  the restrictions. The three offices that were not aware of the restrictions  were from State. Although these officials were not aware of the  restrictions, they said they had never provided services to U.S. tobacco  companies.

Commerce and USDA headquarters officials said that it is widely known  within their agencies that staff should not promote tobacco. Commerce  and USDA officials said the guidance concerning these restrictions has  been consistent for many years and that staff in the field and in  headquarters are very aware of the restrictions.

section_title: Most Post Officials Received Some Guidance Concerning the Restrictions
paragraphs: Most officials overseas had received some guidance concerning the  restrictions on promoting tobacco. Officials in 21 of the 24 offices  overseas we interviewed had received written or verbal guidance  concerning the restrictions on promoting tobacco at some point in their  career. For example, officials in 15 offices mentioned receiving the State-issued interagency guidance cable when we asked them what type of  tobacco-related guidance they had received. In addition, officials in four of  the eight Commerce offices recalled receiving agency-specific guidance.  Some officials said that their supervisors had informed them they are not  allowed to promote tobacco exports.

Some officials did not recall receiving the interagency guidance cable,  which agency officials said serves as the primary source of guidance for  implementing the restrictions, and some were not aware that State  periodically issues the cable. For example, one USDA official stated that  he could not recall the last time he received guidance and noted that  cables can easily be overlooked. He recommended that USDA improve  its efforts to distribute the cable and have supervisors maintain an annual  checklist to ensure staff have read and understand it or incorporate it into  annual training. A State official told us that he was in Washington, D.C.  when State issued the prior cable and he did not learn about it until he  had been stationed at his next overseas post for several months. A  Commerce official noted that some officials new to post may not receive  the interagency guidance cable for several months.

All officials working overseas can access the interagency guidance cable  through the State cable database or access other resources if a tobacco- related issue arises. For example, the Commerce client eligibility policy  and the interagency guidance cable are available on an internal  Commerce website. USDA officials in headquarters stated that they do  not remind officials overseas about the restrictions or available guidance,  but that, in response to our audit work, they plan to send an annual  reminder. Finally, many post officials we interviewed said that they are  aware of the activities their colleagues are undertaking and would have  the opportunity to educate their colleagues before they provided any  services to a tobacco company.

section_title: Many Post Officials Did Not Receive Training Concerning the Restrictions
paragraphs: Officials in 15 of the 24 offices overseas we interviewed said they did not  receive any training concerning restrictions on promoting tobacco. In the  past, State, Commerce, and USDA did not include information about the  funding restrictions or related guidance in training materials. State and  USDA officials in headquarters confirmed that training materials for  officials conducting export promotion activities overseas do not address  funding restrictions on promoting tobacco. According to an official at  State’s Foreign Service Institute, tobacco products may be discussed in  a trade-related course when describing those products officials should not  advocate for, or in the 6-month economic studies course when examining  the nexus between trade issues and public policy. However, State could  not provide documentation of where this is specifically addressed in its  curriculum. A USDA official stated that none of the Foreign Agricultural  Service training courses explicitly discuss restrictions on promoting  tobacco. According to Commerce officials, the training for new trade  specialists did not include information about the restrictions on promoting  tobacco when Commerce last provided the training in 2014. However, in  response to our audit work, Commerce added this information into its  training materials for new trade specialists in September 2018.

Officials who do not receive training on the restrictions early in their  careers may not be aware that they are prohibited from promoting  tobacco. For example, one Commerce official told us he did not know  about the restrictions while serving at his first post when he attended a  meeting that involved representatives from the tobacco industry. He noted  that he now questions whether he would have attended the meeting if he  had known about the restrictions. Federal internal control standards state  that appropriate training, aimed at developing employee knowledge,  skills, and abilities, is essential to an organization’s operational success.  If agencies do not explicitly include information about the restrictions and  related guidance in training materials for officials conducting export  promotion activities overseas, officials may work at a post for several  months, or longer, before learning about the restrictions.

section_title: Post Officials Have Implemented Restrictions on Promoting Tobacco but Guidance Lacks Clarity
paragraphs: The State, Commerce, and USDA officials we interviewed said they have  implemented the funding restrictions on tobacco as outlined in the  interagency guidance cable issued by State. For example, post officials  said they have not promoted the sale or export of tobacco or tobacco  products or attended events solely sponsored by tobacco companies,  though many officials said they attended events at which officials from  tobacco companies were present. Post officials identified three areas of  the guidance that may benefit from additional clarification, according to  interviews with agency officials and our review of agency emails.
subsections: section_title: Post Officials Have Implemented Funding Restrictions on Promoting Tobacco
paragraphs: Our interviews with State, Commerce, and USDA officials in 24 offices in  nine countries and our review of agency documents, showed that posts  have implemented the interagency guidance outlining actions they should  not take (see table 3.)

section_title: Some Sections of the Interagency Guidance Cable Lack Clarity
paragraphs: Post officials identified three areas of the guidance that may benefit from  additional clarification, according to our interviews with agency officials  and our review of agency emails: attendance at events, the types of  permitted services, and the description of tobacco products.
subsections: section_title: Officials Questioned When It is Permissible to Attend Certain Events
paragraphs: Officials from all three agencies raised questions about whether and  when it is permissible to attend events at which tobacco company  representatives are present. The guidance does not specifically address  attendance at events also attended by representatives of tobacco  companies. State headquarters officials said the vast majority of  questions received from posts concern whether personnel at a post may  participate in an event when representatives from a company engaged in  the tobacco industry are also expected to participate in that event. We  also reviewed emails in which Commerce officials asked for additional  guidance about attending events or meetings with tobacco companies.  For example, one post official asked whether the embassy could invite a  tobacco company to participate in an embassy-organized trade mission  that would include meetings with the local governor and mayor. In this  case, Commerce headquarters officials advised that the tobacco  company’s participation could be construed as U.S. government support  for the company’s commercial activities and recommended against  including the tobacco company. A USDA official in headquarters also  noted that attending events could, in some cases, be construed as  supporting tobacco companies, and noted that this is an area where staff  could use more guidance.

Representatives from several tobacco control organizations expressed  concern that interactions between U.S. government officials and  representatives from tobacco companies at events organized by business  associations created a perception that the U.S. government supported  tobacco company sales in the country. For example, in 2017 a business  association hosted a trade mission to one Southeast Asian country that  included representatives from 30 U.S. companies, including a U.S.  tobacco company. In response, two tobacco control organizations wrote  to the U.S. ambassador in that country voicing their concern that U.S.  government officials’ attendance at meetings that included the tobacco  company representatives violated the spirit of the interagency guidance  cable and gave the appearance that the U.S. government supports the  tobacco company. Subsequently, the Deputy Chief of Mission distributed  guidance specific to that post stating that officials were not allowed to  attend a trade mission’s events or meetings if representatives from a  tobacco company were scheduled to give a presentation.

Several post officials said that attending events organized by business  associations is a key function of their job. They attend these events to,  among other things, exchange information about the local business  climate and learn about the concerns of American companies.

section_title: Officials Questioned the Types of Services They Can Provide
paragraphs: Commerce and USDA officials identified ambiguities in the guidance  concerning the types of services they are allowed to provide to tobacco  companies or the tobacco industry. In 14 of the 21 Commerce emails we  reviewed, officials at posts asked for additional guidance about the types  of services they are permitted to provide to tobacco companies or the  types of companies or products they can support. For example, some  post officials asked whether they could engage with the host country  government to obtain information about pending tobacco-related  legislation at the request of a tobacco company. In one case, Commerce  headquarters advised post officials that the restrictions did not prohibit  them from raising concerns on a legislative proposal that would  discriminate against foreign tobacco companies. They further noted that  because of the sensitive nature of tobacco-related issues, any policy  decision to engage should be weighed carefully. Commerce’s client  eligibility policy does not provide a description of the types of actions  Commerce officials should and should not take with regards to tobacco  companies and products. The interagency guidance cable also does not  provide information about some types of services, such as whether  officials should engage with host country government officials to learn  about pending tobacco-related legislation. According to a USDA official,  some officials overseas interpret “promotional” activities differently and  did not agree on whether both marketing and trade-related activities, such  as enforcing trade agreements, are promotional activities.

section_title: Officials Questioned the Description of Tobacco Products
paragraphs: Commerce officials at post asked for additional guidance about whether  they could provide export promotion services to companies exporting  certain tobacco-related products in 3 of the 21 emails we reviewed. For  example, some Commerce officials asked whether they could provide  services to companies selling component parts for electronic nicotine  delivery systems, such as e-liquids. Commerce’s prior client eligibility  policy, issued in May 2017, did not include a list of tobacco products  covered by the policy; whereas, the interagency guidance cable issued  in 2014 states that tobacco products include tobacco delivery systems,  such as electronic cigarettes, and the updated version issued in 2018  added non-combustible products, such as smokeless tobacco, to this  description. However, neither the interagency guidance cable nor  Commerce’s updated client eligibility policy specifically states whether the  description includes component parts for electronic cigarettes and other  tobacco products. GAO previously reported that electronic cigarettes  include a wide range of products that share the same basic design and  generally consist of three main parts: a power source, a heating element,  and a cartridge or tank containing liquid solution, which is often sold  separately.

According to State officials in headquarters, the guidance on promoting  tobacco was written for a broad audience and to make post officials  mindful of the restrictions. They said they trust that officials overseas will  use their professional judgment and in-country expertise to determine if  post’s support for an event or a company will be construed as promotion  of a tobacco product. Moreover, State and Commerce officials said that  they expect officials overseas to ask headquarters questions to clarify the interagency guidance cable. While federal standards for internal control  state that management should clearly document internal controls in  policies and guidance to prevent officials from failing to achieve an  objective or address a risk, we found that the interagency guidance  does not provide examples of the factors post officials should consider  when attending business association events. The guidance also lacks  sufficient examples of the types of services officials are allowed to provide  to tobacco companies and a clear description of tobacco products. More  specific guidance would help ensure that State, Commerce, and USDA  officials consistently implement their agency-specific funding restrictions  on promoting tobacco exports.

section_title: Conclusions
paragraphs: The United States exported over $2 billion in tobacco and tobacco-related  products in 2017. Congress has enacted restrictions on the use of certain  appropriated funds to promote the sale or export of U.S. tobacco or  tobacco products since the 1990s, and State, Commerce, and USDA  have developed and updated guidance to implement these restrictions.  However, not all officials were aware of the restrictions and more than  half had not received training about the restrictions. Including information  about the restrictions in training materials would help make officials aware  of the restrictions early in their careers and prompt them to seek guidance  if a tobacco-related issue arises. If officials conducting export promotion  activities are unaware of the funding restrictions on promoting tobacco  sales and exports, they may also be unaware of the activities they should  and should not undertake. Moreover, some officials said that the  guidance is unclear in some areas. Although officials said they need to  attend business association events to support all U.S. companies  conducting business in a country, they were unsure whether they can  attend events where representatives from U.S. tobacco companies may  be present. In addition, some officials also indicated that the current  guidance lacks clarity on the types of services officials are allowed to  provide to tobacco interests and what constitutes a tobacco product.  Although we did not identify any instances in which a State, Commerce,  or USDA official directly promoted U.S. tobacco products, clearer  guidance would help to ensure that officials will consistently implement  their agency-specific funding restrictions.

section_title: Recommendations for Executive Action
paragraphs: We are making three recommendations, including two to State and one to  USDA. Specifically:  The Secretary of State should work with the Foreign Service Institute to  include information about the funding restrictions and relevant guidance  on promoting the sale or export of tobacco or tobacco products in its  training materials for employees conducting export promotion activities  overseas. (Recommendation 1)

The Secretary of Agriculture should include information about the funding  restrictions and relevant guidance on promoting the sale or export of  tobacco or tobacco products in training materials for employees  conducting export promotion activities overseas. (Recommendation 2)

The Secretary of State, in consultation with the Secretary of Commerce  and the Secretary of Agriculture, should assess the interagency guidance  cable on promoting tobacco in light of questions raised by officials at  posts overseas and update it to address ambiguities, as needed.  (Recommendation 3)

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to State, Commerce, USDA, and USTR  for review and comment. In their comments, reproduced in appendix III,  State concurred with our recommendations and described planned  actions to address them. USDA concurred with the recommendation and  told us that they had no comments on the draft report. Commerce and  USTR told us that they had no comments on the draft report.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of the Department of State, the  Secretary of the Department of Commerce, the Secretary of the U.S.  Department of Agriculture, the U.S. Trade Representative, and other  interested parties. In addition, the report will be available at no charge on  the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-3149 or gootnickd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report examines (1) the guidance select U.S. agencies have issued  to implement funding restrictions on promoting tobacco exports overseas,  (2) to what extent overseas officials from select U.S. agencies were  aware of the restrictions and guidance, and (3) to what extent select U.S.  agencies have implemented this guidance overseas.

To address our first objective, we reviewed U.S. appropriations laws that  prohibited the funds appropriated therein from being used to promote the  sale or export of tobacco or tobacco products. We also reviewed  guidance issued by the Departments of State (State) and Commerce  (Commerce) concerning the promotion of tobacco exports overseas. We  also interviewed officials in headquarters from State, Commerce, the U.S.  Department of Agriculture (USDA), and the Office of the U.S. Trade  Representative (USTR) about the funding restrictions on promoting  tobacco exports overseas and the development and revision of guidance  on tobacco promotion.

To address our second objective, we interviewed officials in headquarters  from State, Commerce, and USDA about any training officials posted  overseas receive concerning the funding restrictions on promoting  tobacco exports. In addition, we held structured interviews with 35 State,  Commerce, and USDA officials overseas conducting export promotion  activities and reached out to an additional 10 officials to ask about  activities associated with the solicitation of gifts and attendance at  corporate social responsibility events. These officials were located across  11 posts and in 9 countries. We interviewed officials in Cambodia,  Croatia, Dominican Republic, Honduras, Indonesia, Philippines, South  Africa, Thailand, and Vietnam. Because multiple officials from one agency  attended a meeting in some cases, we are reporting their combined  responses as one “office” response. Thus, we are reporting the results  from the 24 offices we interviewed—9 State, 8 Commerce, and 7 USDA  offices. We selected this non-generalizable sample of countries based  on criteria that included the countries’ large or increasing amounts of U.S.  tobacco imports, relatively high tobacco smoking prevalence rates, and  geographic dispersion. The information obtained from these interviews is  neither generalizable nor reflects the experiences of all State, Commerce,  and USDA officials serving at posts overseas, but it does provide insights  into officials’ experiences at post and illustrative examples across our  sample on the topics discussed.

To address our third objective, we interviewed officials in headquarters  from State, Commerce, and USDA about post officials’ implementation of  guidance regarding the promotion of tobacco exports, the types of  questions they receive from post officials about the funding restrictions  and guidance, and the additional advice they provide to post officials  overseas. We asked post officials about the clarity of guidance, whether  they attended events sponsored or attended by representatives of U.S.  tobacco companies, and whether they discussed tobacco-related issues  with host country government officials during our structured interviews  with the 24 State, Commerce, and USDA offices overseas.

We also analyzed a Commerce database, agency emails, and State  cables and conducted a literature search. Commerce documents all the  fee-based services it provides to companies in a database. We obtained  a list of approximately 30,000 fee-based services Commerce provided in  fiscal years 2013 through 2017, which included the name of the  companies to which Commerce provided these services. We then  downloaded a list of 763 U.S. tobacco companies from Nexus using  criteria such as industry classification codes related to tobacco and  tobacco products and the location of company headquarters. We limited  the list of U.S. tobacco companies to those with revenues greater than $5  million. We then compared the two lists to determine if Commerce  provided any fee-based services to U.S. tobacco companies. To assess  the reliability of the Commerce fee-based services data, we reviewed  relevant documentation and interviewed knowledgeable officials about  system controls. We determined that Commerce’s fee-based services  data were sufficiently reliable for the purposes of our reporting objectives.

In addition, we requested State, Commerce, and USDA email  communications concerning tobacco-related issues sent between  January 2015 and February 2018 from post officials to headquarters.  State was only able to provide one such email. USDA provided several  emails, but the emails were not from USDA post officials to USDA officials  in headquarters. Commerce provided us 21 emails that matched our  request and an additional 20 emails from officials working throughout the  United States. We analyzed the Commerce email communications to  identify commonly asked questions or concerns about the existing  guidance and actions the agencies should take to support U.S. tobacco  companies or the tobacco industry. We also requested State cables from  the eight countries in our sample sent between January 2013 and  December 2017 that referenced at least 1 of the 10 U.S. tobacco  companies with the highest revenues. We received and reviewed cables  from six of these countries. We also conducted a literature search to  identify instances in which U.S. government officials may have conducted  activities addressed by the interagency tobacco guidance cable. To  identify relevant articles, such as trade or industry articles, we searched  various databases, including ProQuest and Nexus. From these sources,  we identified one article relevant to our research objective. We performed  these searches in December 2017 and searched for articles published  from January 2013 to December 2017.

We also interviewed representatives of the tobacco control community  and business associations to obtain their perspectives concerning U.S.  government support for tobacco exports and U.S. government  interactions with U.S. tobacco companies. Specifically, we interviewed the  World Health Organization (WHO), four global or regional tobacco control  nongovernmental organizations, and several local nongovernmental  organizations in two countries in our scope. In addition, we interviewed  officials from the local American Chamber of Commerce and the U.S.- Association of Southeast Asian Nations Business Council in two  countries. The information obtained from these interviews is neither  generalizable nor reflects the experiences of all tobacco control  organizations or business associations, but it does provide insights into  these officials’ experiences.

We conducted this performance audit from November 2017 to December  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

section_title: Appendix II: Trends in U.S. Tobacco Exports
paragraphs: The United States exported over $2.1 billion in tobacco and tobacco  products in 2017. Figure 1 shows how tobacco exports fluctuated from  2007 to 2017. Specifically, total tobacco exports have ranged from a high  of approximately $2.4 billion in 2007 to a low of about $1.7 billion in  2012.

U.S. tobacco exports to Asia have decreased by 68 percent over the past  11 years, whereas exports to North America have increased 10-fold (see  fig. 2). Most of the decrease in exports to Asia is attributable to reduced  exports to Japan, which fell 95 percent from 2007 to 2017. Most of the  increases in exports to North America are attributable to Canada, which  accounted for approximately 40 percent of total U.S. tobacco exports in  2017.

section_title: Appendix III: Comments from the Department of State

section_title: Appendix IV: GAO Contact and Staff Acknowledgements
subsections: section_title: GAO Contact
paragraphs: David B. Gootnick, (202) 512-3149 or gootnickd@gao.gov.

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Cheryl Goodman (Assistant  Director), Celia Thomas (Assistant Director), Amanda Bartine, Leah  DeWolf, Jewel Conrad, Aldo Salerno, and Neil Doherty made key  contributions to this report. Grace Lui, Justin Fisher, and Ming Chen  provided technical assistance.

Fast facts: Worldwide, tobacco use kills more people annually than tuberculosis, malaria, and HIV/AIDS combined.

Congress restricts the Departments of State, Commerce, and Agriculture's promotion of tobacco exports. We found that most, but not all, officials overseas were aware of the restrictions and didn't promote tobacco.

However, officials told us that some of the guidance around the restrictions was unclear. For example, descriptions of restricted tobacco products didn't indicate whether the component parts of e-cigarettes were included.

We made 3 recommendations to improve training and guidance.

Question-summary annotations: questions: question: How has Congress changed funding for tobacco exports?
answer: Congress has restricted the use of certain appropriated funding to promote tobacco exports and the Departments of State (State), Commerce (Commerce), and Agriculture (USDA) have issued interagency guidance through the cable system that they rely on to implement these restrictions.

question: How is the cable system updated?
answer: State collaborates with these and other agencies to periodically update this cable.
child_questions: question: What does the cable system do?
answer: The cable informs officials about the types of actions they should take—such as providing routine business facilitation services to all U.S. companies—and the types of actions they should not take—such as attending events sponsored by tobacco companies.

questions: question: What did GAO discover about whether officials were aware of restrictions?
answer: Most, but not all, officials overseas that GAO interviewed were aware of the restrictions and received some guidance concerning the restrictions. However, GAO found that some officials did not recall receiving the interagency guidance cable.
child_questions: question: How do the training materials reinforce this knowledge?
answer: In addition, State and USDA's current training materials do not address the restrictions.
child_questions: question: Why is appropriate training so important?
answer: Federal internal control standards state that appropriate training is essential to an organization's operational success.

question: How could overseas officials be kept in the loop about restrictions?
answer: Thus, providing officials overseas with training about the funding restrictions and related guidance would help to ensure that officials are aware of the restrictions.

questions: question: Why is it difficult for officials to follow the interagency guidance on tobacco promotions?
answer: U.S. officials overseas have implemented restrictions on promoting tobacco, but some officials said that the interagency guidance lacks clarity. Officials said that they have not promoted tobacco by, for example, attending events sponsored solely by tobacco companies.
child_questions: question: What areas of guidance are unclear?
answer: However, officials identified three areas of the guidance that are unclear: (1) attendance at events not sponsored by U.S. tobacco companies but attended by representatives of these companies; (2) the types of services officials can provide tobacco companies; and (3) the description of tobacco products, such as whether component parts for electronic cigarettes are included.

question: How could federal standards be improved to clarify this guidance?
answer: Federal standards for internal control state that management should clearly document internal controls in policies and guidance to prevent officials from failing to achieve an objective or address a risk.
child_questions: question: How would more specific guidance help officials?
answer: By providing more specific guidance, the agencies would help ensure that officials consistently implement the funding restrictions on promoting tobacco.

questions: question: What does this report examine?
answer: This report examines (1) guidance select U.S. agencies have issued to implement these restrictions, (2) whether overseas officials from select U.S. agencies were aware of the restrictions and guidance, and (3) select U.S. agencies' implementation of the guidance overseas.

question: What did GAO review in their examination?
answer: GAO reviewed U.S. laws, agency guidance, and internal communications; analyzed Commerce data; and interviewed agency officials in Washington, D.C. and in 24 offices across 11 overseas posts in 9 countries.
child_questions: question: How did GAO choose certain countries for officials to interview for the examination?
answer: GAO selected these countries based on criteria that included U.S. tobacco export totals, smoking rates, and geographic dispersion.