Foreign Assistance: USAID Should Update Its Trade Capacity Building Strategy
Released: 2014-09-10T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: Since at least 2001, the United States has provided TCB assistance to developing countries to help them participate in and benefit from global trade. Multiple agencies provide this assistance, which may include support for World Trade Organization accession, customs procedures improvement, or development of infrastructure such as ports and roads. In this report, GAO focuses primarily on USAID because it provided the most funding for TCB in fiscal year 2012 and has a formal strategy focused entirely on TCB. GAO was asked to review the strategy, which is more than a decade old. GAO was also asked to examine USAID efforts to coordinate TCB activities to ensure that the United States is fulfilling its commitment in the most effective way.

In this report, GAO (1) determines the extent to which USAID's 2003 strategy guides USAID's TCB activities and (2) describes methods USAID uses to coordinate TCB efforts with other U.S. government agencies at home and abroad. GAO analyzed agency documents, interviewed relevant officials, and conducted fieldwork in six countries in Africa and Asia, selected for their diverse stages of development and geographic locations.

section_title: What GAO Found
paragraphs: The U.S. Agency for International Development's (USAID) 2003 trade capacity building (TCB) strategy does not directly guide TCB activities, and parts of the strategy no longer reflect the current TCB environment. USAID's TCB activities are primarily guided by country needs and many of these activities are elements of large development projects that have their own objectives. According to USAID, the strategy's priority areas—participation in trade negotiations, implementation of trade agreements, and economic responsiveness to opportunities for trade—remain relevant. However, some parts of the strategy are not current. For example, the strategy does not include discussion of how USAID should coordinate with the Millennium Challenge Corporation (MCC), which did not exist in 2003 and is a major TCB contributor (see figure). USAID officials told GAO that they had not updated the strategy because they questioned the costs and benefits of doing so given that trade resources were declining and they believed the priorities presented in the strategy were still relevant. However, USAID is still committing significant resources to TCB, and TCB contributes to goals outlined in USAID and the Department of State's joint strategic plan. USAID's TCB strategy may not be as useful as it could be for informing TCB activities because parts of it are no longer current. Moreover, directives, such as those in the Government Performance and Results Act Modernization Act of 2010, can serve as guidance for periodic updating of strategic plans.

The 2003 strategy calls for USAID to be the primary coordinator for U.S. government TCB efforts, and GAO found that USAID coordinates TCB activities at home and abroad using a range of methods, including structured and informal dialogue between stakeholders. Specifically, USAID staff report that they participate in interagency working groups and maintain ongoing discussions with counterparts from other agencies to coordinate TCB activities. For example, at headquarters USAID participates in the Trade Policy Staff Committee, an interagency working group that includes a range of stakeholders and has subcommittees on development and TCB. In the countries GAO visited, GAO found that USAID missions coordinate TCB through formal mechanisms, such as working groups, as well as informal communication.

section_title: What GAO Recommends
paragraphs: GAO recommends that the Administrator of USAID update the 2003 TCB strategy to reflect the current TCB environment. USAID agreed with the recommendation.

section_title: Letter
paragraphs: Since at least 2001, the United States has been committed to providing  trade capacity building (TCB) assistance to developing countries to help  them participate in and benefit from global trade. TCB assistance may  include support for World Trade Organization (WTO) accession, customs  procedures improvement, or development of infrastructure such as ports  and roads. TCB covers multiple categories of assistance across  numerous types of trade and development programs that have many  goals and are implemented by multiple agencies. Given the diffused  nature of TCB assistance, Congress has expressed concern about which  agency is ultimately accountable for TCB activities. While the U.S.  government is committed to providing TCB, no single agency is  responsible for it. We found in 2011 that U.S. agencies provided more  than $9 billion in TCB assistance from 2005 through 2010, based on data  from the U.S. government TCB database, administered by the U.S.  Agency for International Development (USAID). In fiscal year 2012, U.S.  government agencies provided nearly $1 billion for TCB activities in more  than 120 countries, customs territories, and regional groupings. Given the  diverse and disparate nature of TCB activities, congressional oversight of  key aspects of this effort, including strategy, coordination, and program  management, is important to ensuring that the U.S. government is  meeting its TCB commitment. In this report, we focus primarily on USAID  because it is the agency that provided the most funding for TCB—about  $418 million—in fiscal year 2012, and has a strategy focused entirely on  TCB, released in 2003.primary role in coordinating TCB assistance.

In addition, the strategy calls for USAID to take a  You expressed an interest in the current status of USAID’s TCB strategy,  which is more than a decade old. In addition, you asked us to gain a  better understanding of USAID efforts to coordinate TCB activities and to  use evaluations to manage them, to help ensure that the United States is  fulfilling its TCB commitment in the most effective way. In this report, we  (1) determine the extent to which USAID’s 2003 strategy guides USAID’s  TCB activities; (2) describe methods USAID uses to coordinate TCB  efforts with other U.S. government agencies at home and abroad; and (3)  describe how, if at all, USAID has used TCB evaluations in its program  and project management. You also asked us for information on USAID’s  and the Department of State’s (State) obligations and appropriations  accounts for TCB efforts. We identified, for fiscal years 2011 and 2012,  the appropriation accounts from which USAID and State allocated funds  for TCB-related activities and the obligations from these accounts for  such activities and provided this information to you in a February 2014  briefing (see app. I).

To address these objectives, we built upon information collected for our  2005 and 2011 reports on TCB and analyzed data from the U.S.  government TCB database. Data from the TCB database were  previously deemed reliable for our 2005 and 2011 reports on TCB. We  identified limitations to the TCB database in our 2011 report on TCB,  including that the database did not adequately explain significant factors  driving changes in the composition of TCB funding over time. For this  report, we assessed data from fiscal years 2008 through 2012 and  determined that the data were sufficiently reliable to identify TCB funding  by agency, country, and category. Furthermore, in assessing the data, we  interviewed key USAID officials and the contractor responsible for  administering the database and reviewed supporting documentation.

We primarily focused on TCB activities that USAID conducted because  USAID provided the most funding of all U.S. agencies for TCB activities in  2012. However, we also sought the views of three other entities in our  review regarding coordination with USAID on TCB activities: (1) State,  because it is committed to supporting the negotiation and implementation  of trade agreements and thereby helps countries advance trade  initiatives; (2) the Millennium Challenge Corporation (MCC) because it  conducts TCB-related activities that support its broader strategic and  agency mission goals, although it does not have a specific TCB mission;  and (3) the Office of the U.S. Trade Representative (USTR) because of  its role in leading trade efforts. In conducting our work, we analyzed  strategic, budget, and programmatic documents describing these  agencies’ TCB funding and activities. We also reviewed evaluations of  TCB projects. We conducted fieldwork in Vietnam, Laos, Thailand,  Ethiopia, Tanzania, and Kenya. We selected these countries because  they (1) had a cross-section of projects that would allow us to compare  and contrast different types of activities, (2) are at different stages of  economic development, (3) are in diverse geographic regions, or (4) had  signed an MCC compact and received MCC-related TCB assistance. In  each country, we analyzed agencies’ strategy, coordination, and program  management efforts. We also interviewed agency officials, host  government officials, and contractors implementing TCB activities in the  field and visited TCB project sites. Our findings from these countries are  not generalizable to the universe of all USAID TCB activities. Appendix II  provides a detailed discussion of our objectives, scope, and methodology.

We conducted this performance audit from October 2013 to August 2014  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: Definition and Goal of Trade Capacity Building
paragraphs: TCB is usually defined broadly to include all types of development  assistance that positively affect a country’s ability to secure benefits from  international trade. Such assistance includes addressing  the regulatory environment for business, trade, and investment;  constraints such as low capacity for production and entrepreneurship;  and  inadequate physical infrastructure, such as poor transport and storage  facilities. (See app. III for a detailed list of TCB category definitions in  the U.S. government TCB database.)

USAID’s TCB goal is to increase the number of developing countries that  are harnessing global economic forces to accelerate growth and increase  incomes.

section_title: Roles of Key Agencies Involved in TCB
paragraphs: A variety of U.S. agencies have a role in providing TCB assistance. In  fiscal year 2012, according to the U.S. government TCB database, a total  of 19 organizations obligated funding for TCB-related activities. The roles  and responsibilities of four key agencies involved are described below:

USAID: One of USAID’s core development objectives is to promote  sustainable, broad-based economic growth by helping developing  countries increase their exports through trade capacity building. As  outlined in its March 2003 document, Building Trade Capacity in the  Developing World, USAID aims to achieve its TCB goal by supporting  participation in trade negotiations, implementation of trade  agreements, and economic responsiveness to trade opportunities.  USAID plans, funds, and implements TCB activities at both the  agency and country levels. According to USAID’s 2003 TCB strategy,  USAID should take a primary role in coordinating assistance among  agencies engaged in TCB activities. In fiscal year 2012, USAID  obligated about $418 million for TCB-related activities worldwide.

State: Under its strategic goal of promoting economic growth and  prosperity, State has committed to supporting the negotiation and  implementation of trade agreements. State’s Trade Policy and  Programs staff help countries advance global, regional, and bilateral  trade initiatives, including free trade agreements (FTA) and World  Trade Organization (WTO) initiatives. In fiscal year 2012, State  obligated about $143 million for TCB-related activities worldwide.

MCC: As we reported in 2011, MCC conducts TCB-related activities— mostly associated with infrastructure development—that support its  broader strategic and agency mission goals. However, MCC does not  have a specific TCB mission or strategic plans and goals relating  specifically to TCB. In fiscal year 2012, MCC obligated about $351  million for TCB-related activities worldwide.

USTR: USTR does not implement or fund any TCB programs but  leads trade negotiations that may create demand for TCB assistance  or may result in agreements that create opportunities for TCB to  improve the ability of the recipient to benefit from its provisions. USTR  also plays an advisory role to agencies with programmatic  responsibilities, informing those agencies about TCB needs or  opportunities related to trade initiatives or negotiations and needs that  might emerge related to USTR’s broader responsibilities for U.S.  international trade policy.

Sixteen other organizations also obligated about $80 million in TCB- related assistance in fiscal year 2012. See figure 1 for illustrative  examples of TCB activities that agencies conducted in the countries we  visited during our fieldwork.

section_title: USAID Obligated the Most Funds for TCB-Related Activities of Any Agency in Fiscal Years 2011 and 2012
paragraphs: For the two most recent years for which data are available (fiscal years  2011 and 2012), USAID TCB-related obligations totaled more than $1  billion, making USAID the agency that contributed the largest amount  during that period. Some obligations reflect agencies’ provision of  infrastructure and development projects that had trade-related effects— and were therefore counted as TCB—but were conducted to fulfill broader  objectives. For example, while USAID reported more than $1 billion in  TCB-related obligations for fiscal years 2011 through 2012, the trade and  investment program area of USAID’s budget for those years consisted of  a total of about $348 million.

Over the past 5 years, USAID, State, and MCC provided a total of about  $6.7 billion in TCB-related assistance (see fig. 2).

section_title: USAID’s TCB Strategy
paragraphs: In 2003, USAID issued a formal strategic plan on TCB—Building Trade  Capacity in the Developing World—to focus its TCB efforts and guide the  selection of new activities. The plan calls for USAID’s TCB projects to  support the three priority areas of helping countries participate in trade  negotiations, implement trade agreements, and take advantage of trade  opportunities. The strategy was developed partly in response to the  Doha Development Agenda and U.S. commitments to increase global  economic growth through free markets and free trade, according to  USAID officials.

Among other things, the strategy defines overall TCB priorities and includes discussion of agency-wide  and country-level TCB strategies; discusses specific considerations that influence the agency’s TCB  approach, including labor and environment issues, and negotiations  concerning trade agreements; provides information on TCB categories and definitions and USAID’s discusses coordination with other U.S. agencies on TCB activities,  calling for USAID to take a primary role in coordination assistance  among all the agencies providing TCB assistance to developing  countries.

Among the four key agencies that we reviewed, USAID is the only one  that has issued a formal strategy focused entirely on TCB.

section_title: Prior GAO Work on TCB
paragraphs: In response to continued congressional interest in oversight, we  undertook reviews of U.S. TCB activities and issued reports in 2005 and  2011. In our 2005 report, we recommended that USTR and USAID  develop a cost-effective strategy to monitor and measure program results  and to evaluate the effectiveness of U.S. TCB assistance. In response,  USAID in consultation with USTR developed a multicountry evaluation to  measure the effectiveness of U.S. TCB assistance that was issued in  November 2010. In our 2011 report, we recommended that the  Administrator of USAID publicly report identified limitations and key  distinctions in the definitional categories of TCB assistance in the U.S.  government TCB database. (For more information about the TCB  database and definitional categories, see app. III.) Beginning in 2011,  USAID streamlined and clarified the definitions of TCB categories to  facilitate reporting and improve transparency. This change was reflected  in the “technical notes” section of the TCB database.

section_title: USAID’s TCB Strategy Does Not Guide TCB Activities and Parts of It Are No Longer Current
subsections: section_title: TCB Activities in the Field Are Guided by Country- Specific Needs
paragraphs: According to USAID officials, development and implementation of TCB  activities in the field are guided more by country-specific strategies that  incorporate country needs, circumstances, and priorities than by USAID’s  2003 TCB strategy. This approach is consistent with guidance provided  by the TCB strategy, as well. Specifically, USAID’s TCB strategy states  that the selection and prioritization of TCB activities at the country level  will continue to be determined by missions’ country-specific strategic  plans and resources. USAID officials also stated that in countries  associated with specific trade negotiations or agreements, TCB activities  are also derived from the needs identified through those negotiations or  agreements.

The main strategy document that guides USAID activities in the field,  including TCB activities, is the missions’ Country Development  Cooperation Strategy (CDCS), according to USAID officials. USAID policy  requires most USAID missions to prepare a CDCS, which is a 5-year  strategy that serves as the basis for the mission’s assistance planning,  budgeting, and resource allocation and is based on country needs and  U.S. priorities. It is developed in consultation with partner country  governments and citizens, civil society organizations, the private sector,  multilateral organizations, other donors, and other USG agencies. USAID  officials at the USAID Mission in Ethiopia stated that the mission’s CDCS  is the main strategy guiding their TCB activities. For example, Ethiopia’s  CDCS calls for TCB-related activities under its objective of increasing  economic growth with resiliency in rural Ethiopia. This objective focuses  on strengthening agricultural value chains—the process or activities by  which relevant firms add value to a product—by increasing the availability  of market-based information, among other things. The objective also  focuses on improving private sector competitiveness through efforts such  as trade and customs reform. The Agribusiness and Market Development  Project is an example of TCB activities in Ethiopia that were guided by  this objective. The Agribusiness and Market Development project has  activities aimed at improving the global competitiveness of selected value  chains for products such as sesame, chickpeas, and coffee, and  increasing private sector access to finance and investment.

To help identify TCB needs and provide further strategic guidance for  their development of specific TCB programs, USAID missions also use  ongoing trade negotiations—such as bilateral trade agreements or World  Trade Organization (WTO) accession—and commitments made under  existing trade agreements. During our fieldwork, USAID officials in both  Vietnam and Laos reported that development and implementation of the  mission’s TCB activities were guided by needs identified by USAID and  the host government during the negotiation and implementation of trade  agreements and WTO accession. Specific examples of TCB assistance  that was guided by these events are Vietnam’s Support for Trade  Acceleration Projects (STAR I and STAR II), which ran from 2001-2010.  STAR I and II provided technical assistance to the Vietnamese  government to facilitate revision of its commercial laws, legal procedures,  transparency, and appeals processes to meet requirements under the  U.S. and Vietnam bilateral trade agreement and the WTO.

section_title: Many TCB Activities Are Components of Large Development Projects That May Not Have TCB as a Primary Objective
paragraphs: According to USAID officials, a large portion of the agency’s TCB  assistance is provided as a component of large development programs  with their own strategies, goals, and objectives. These large programs  provide TCB as a means to achieving other development objectives, such  as food security, adaptation to climate change, or democracy and  governance, and are therefore guided by strategies and policies directed  at those objectives. We found examples of such programs in the African  countries we visited, Tanzania and Ethiopia. USAID’s officials in the East  Africa and Tanzania missions reported that most of the TCB-related  activities in Tanzania are part of the “Feed the Future” initiative and are  therefore guided by USAID’s Feed the Future strategy for the country.  An example of such activities is the Staples Value Chain Development  project in Tanzania. This project includes activities aimed at improving the  competitiveness and productivity of maize and rice value chains in  Tanzania, and facilitating improved domestic and regional trade.activity is guided by the Feed the Future Strategy but also clearly  facilitates trade and thus has TCB components.

A USAID official reported that because TCB assistance is often a  component of large development programs, USAID’s total reported TCB  assistance deliberately includes a broad range of activities to capture all  types of U.S.-provided TCB assistance. The official stated that a large  portion of USAID’s total reported TCB assistance is for non-TCB focused  development projects that have TCB-related effects. USAID officials  reported that in some cases TCB needs to be woven into other  development projects as there is no dedicated funding source for TCB  activities. For example, USAID mission officials in Ethiopia reported that  they work TCB into broader agriculture and other development programs  because they have no dedicated funding for specific TCB programs.

section_title: USAID’s 2003 TCB Strategy Identifies Priorities for TCB Activities but Does Not Reflect the Current TCB Environment
paragraphs: The 2003 TCB strategy identifies priorities for TCB that USAID officials  told us are still relevant but does not reflect changes in the TCB  environment that have occurred over the past decade. The strategy,  while not directive, is intended to provide guidance, context, and options  to help operating units understand their specific roles related to TCB,  according to USAID officials. For example, agency-level strategies, such  as the TCB strategy, should be incorporated into missions’ CDCS,  according to USAID guidance on mission-specific strategies. According to  USAID officials, the priorities presented in the TCB strategy—participation  in trade negotiations, implementation of trade agreements, and economic  responsiveness to opportunities for trade— are still relevant and cover all  TCB activities although the strategy has not been updated since 2003.  USAID officials also noted that the strategy is supplemented with  guidance related to specific TCB activities and trade agreements.  However, since the strategy was developed, the TCB environment in  which USAID operates has changed significantly. For example, the total  number of free trade agreements the United States has entered into has  increased from 3 in 2003 to 14 as of May 2014, and the number of trade  and investment framework agreements signed by the United States  increased from 19 in 2003 to 50 as of May 2014. In addition, according to  USAID, most of the developing countries it has worked with have become  WTO members.

It is generally accepted that strategies should be periodically updated to  reflect the current environment. For example, according to USAID’s  guidance, its mission country development cooperation strategies are  only 5-year strategies. We also note that the Government Performance  and Results Act Modernization Act of 2010 requires agencies to update  and revise their strategic plans at least every 4 years. In addition,  desirable characteristics of a national strategy include discussion of the  current operating environment. Moreover, a multicountry evaluation of  USAID’s TCB assistance, released in 2010, stated that the usefulness of  USAID’s 2003 TCB strategy diminishes as time passes and the base of  empirical literature on TCB and U.S. development policy evolves. The  evaluation recommended that USAID update the 2003 strategy to reflect  the latest developments and findings on trade facilitation and other  determinants of developing country export performance.

Given the changes that have occurred over the past 11 years, USAID’s  2003 TCB strategy is outdated in several areas. For example,

The coordination section of the strategy does not include all agencies  now providing TCB assistance. The number of agencies involved in  providing TCB increased from 15 in 2003 to 19 in 2012, but the  coordination section of the strategy does not reflect that change. For  example, the strategy does not discuss how USAID is to coordinate  with MCC, the second-largest contributor of TCB assistance in fiscal  year 2012, since MCC was established after 2003.

Some trade initiatives discussed in the strategy are no longer current.

The strategy refers to a number of outdated initiatives, including the  proposed Free Trade Area of the Americas, for which negotiations  ended in 2005 with no agreement. It also refers to a number of  potential trade agreements that have since been completed, including  the Dominican Republic-Central American Free Trade Agreement and  the U.S.–Morocco Free Trade Area.

The strategy does not reflect changes in emphasis placed on TCB  priorities. Changes since 2003 in the emphasis, or importance, USAID  places on each priority are not reflected in the strategy. For example,  USAID reported that it has placed more emphasis recently on trade  facilitation initiatives, such as streamlining customs clearance  procedures and increasing transparency. USAID has also reported  utilizing fewer resources on the priority of participation in trade  negotiations in recent years, conducting fewer activities related to  WTO accession because many of the developing countries USAID  has worked with have become WTO members.

The TCB database categories of TCB activities, included as an  appendix to the strategy, have changed. The original list of categories  of TCB activities provided in the strategy’s appendix no longer match  up exactly with the current database categories that USAID uses.  USAID streamlined the categories in fiscal year 2011, resulting in  fewer overall.

The strategy does not incorporate lessons learned from over 10 years  of TCB assistance. For example, the strategy does not reflect  changes in USAID’s approaches to providing TCB assistance since  2003, and it does not include lessons learned identified in the 2010  multicountry evaluation of TCB assistance.

USAID officials in Washington, D.C., told us that although they have had  discussions about updating the strategy, they have not updated it  because they question the costs and benefits of a new strategy given that  trade resources are declining and because the priorities presented in the  strategy still remain relevant, in their view. A USAID official reported that  the focus in recent years had been on supporting ongoing field programs  and that these efforts took precedence over updating the TCB strategy.  USAID officials also reported that they believe an update to the existing  strategy would have limited impact, largely serving to maintain the status  quo, since the priorities have remained the same and all activities still fit  under the strategy. However, we previously found that assessing the  current environment has a critical impact on the success of strategic  planning. Further, even though USAID reports that trade resources are  declining, it continues to commit significant resources, obligating over $1  billion for TCB-related activities in fiscal years 2011 and 2012. TCB also  contributes to meeting goals outlined in USAID and State’s Joint Strategic  Plan.

Given the changes in the TCB environment since 2003, updating the  strategy to reflect those changes could put USAID missions in a better  position to select and implement TCB activities. Moreover, an updated  strategy could provide USAID missions with important information on  changing priorities and lessons learned from evaluations and other  assessments, which could also help guide their investments in TCB  activities. The outdated nature of some parts of the strategy and the fact  that it was released over 10 years ago may also limit its use. Multiple  USAID officials we met with in the field were not aware that the strategy  existed and did not use it. The number of agencies involved in TCB, and  its crosscutting nature, calls for collaboration and coordination to ensure  that TCB assistance is meeting U.S. objectives. A USAID official reported  that USAID involved relevant agencies in the development of the 2003  TCB strategy to achieve interagency buy-in. However, several other  agencies, primarily MCC, have since begun providing TCB assistance. In  the absence of an updated strategy, these agencies may be less aware of  USAID’s TCB priorities and may miss opportunities to leverage resources  and ensure that their activities complement USAID’s efforts.

section_title: USAID Uses Various Methods to Coordinate Trade Capacity Building Activities with Other Agencies
subsections: section_title: At Headquarters, USAID Participates in Coordinating Bodies and Uses Informal Dialogue to Coordinate TCB Activities
paragraphs: The 2003 strategy calls for USAID to be the primary coordinator for U.S.  government TCB efforts, and we found that USAID headquarters staff  participate in coordinating bodies, such as interagency working groups,  and maintain ongoing discussions with relevant counterparts to  coordinate TCB activities. One coordinating body USAID uses is the  Trade Policy Staff Committee (TPSC), a USTR-chaired interagency  working group that includes a broad range of stakeholders, meets  multiple times a year, and has subcommittees focused on development  and TCB. According to a USTR official, the TPSC’s subcommittees  provide channels for USAID to identify developing country trade capacity  needs and opportunities. For example, USAID participates in the TPSC  Development and Trade Capacity subcommittee, which focuses on topics  such as WTO policy and agreements. In this forum, USAID may discuss  needs associated with WTO accession with USTR and other agencies to  see if an acceding developing country needs help understanding or  meeting requirements. The subcommittee communicates informally and  meets on an ad hoc basis, but USAID relies on it as a vehicle to identify  ways agencies can leverage TCB resources, according to officials.

The USAID Standards Alliance is an example of project-level  coordination. The Alliance involves U.S. government trade and regulatory  agencies, as well as the private sector, to address trade barriers. Officially  introduced in November 2012, the Standards Alliance is a public-private  partnership between USAID and the American National Standards  Institute, a private non-profit organization whose membership is made up  of businesses, professional societies, trade associations, standards  developers, and consumer and labor organizations. The Alliance provides  capacity-building assistance to developing countries specifically related to  the implementation of the WTO Technical Barriers to Trade Agreement.  According to USAID, assistance aims to help developing countries  improve the quality and safety of the products they export abroad and  increase exports, while reducing costs and bureaucratic hurdles. In  addition, Standards Alliance activities are implemented in collaboration  with USTR and draw heavily on expertise and technical support from  other U.S. agencies including the Department of Commerce/National  Institute of Standards and Technology and the Consumer Product Safety  Commission. In 2013, USAID worked with the Standards Alliance to  conduct workshops in Peru that brought together industry representatives  and government officials to discuss U.S. and Peruvian experiences and  perspectives related to standardization and regulatory practices. About  130 individuals took part in the event, representing a mix of stakeholders  in government, industry, testing and certification bodies, and academia.

USAID also reports using other mechanisms, such as shared  management structures and cross-agency agreements, to facilitate TCB  coordination. For example, the Administrator of USAID sits on the MCC  Board of Directors and contributes to the approval of MCC compacts.  According to USAID officials, this shared management structure is  intended to ensure stakeholder involvement and provides an opportunity  to leverage resources on TCB matters. In addition, USAID is represented  on the board of the Overseas Private Investment Corporation (OPIC) and  contributes to the approval of OPIC deals, which may have TCB-related  components. The USAID Office of Development Credit and OPIC also  hold quarterly meetings to discuss project plans and other issues of  relevance to both units to help ensure relevant skills and expertise are  being utilized for TCB and other activities, according to USAID. In addition  to shared management structures, a USAID official reported that it has  agreements and works with other agencies that play relatively small roles  in TCB, such as the Trade and Development Agency and the  Departments of Justice and Labor. Involving stakeholders in this way  facilitates leveraging TCB resources, according to a USAID official. For  example, in Bangladesh, USAID and the Department of Labor are  cooperating on implementation of a program to improve labor conditions,  promote independent and democratic labor unions, and support labor  rights and worker representation. Such activities fall in line with USAID’s  TCB objective to address labor issues related to trade and to leverage  expertise from across the U.S. government.

In addition to using mechanisms that facilitate coordination, officials at  USAID, State, and USTR, told us that they discuss TCB matters  frequently and on an ad hoc basis, particularly at the staff level. As TCB  needs, opportunities, or issues arise, relevant stakeholders communicate  informally to coordinate, according to a USTR official. For example,  State’s Office of Multilateral Trade Affairs monitors trade-related activities  and considers how State could help with TCB. The office coordinates with  USAID and USTR counterparts and may suggest TCB opportunities  related to free trade agreement (FTA) negotiations or WTO obligations in  certain countries, according to a State official. A USTR official also told us  that USTR shares its annual TCB priorities with USAID and State using  an unofficial document that outlines an inventory of possible efforts. This  document provides a notional framework that facilitates informal dialogue  and stakeholder involvement.

section_title: Abroad, USAID Uses Formal Mechanisms and Informal Dialogue with Stakeholders to Coordinate TCB Activities
paragraphs: In countries we visited, including Ethiopia, Tanzania, Vietnam, and Laos,  we found that USAID uses certain formal mechanisms, such as working  groups, and informal dialogue with stakeholders to coordinate TCB.  According to officials we met, in most locations, USAID participates in a  formal embassy working group that addresses TCB matters and involves  a range of stakeholders, sometimes including the Chief of Mission.  Specifically, in countries we visited, we found the following:

Ethiopia. According to officials we met with, USAID coordinates TCB  activities primarily through the Economic Growth and Development  working group, which meets monthly. This interagency group, one of  five created about a year ago under an ambassadorial directive to  address the highest-level embassy priorities, covers TCB matters and  related topics, such as WTO accession progress and upcoming visits  of U.S. government or private sector personnel. Generally, the Chief  of Mission and the USAID Mission Director or their deputies report  that they attend the meeting, along with representatives from the  Foreign Agricultural Service, USAID, and State. Embassy officials told  us that this formal channel, along with frequent informal  communication among stakeholders, helps ensure a whole-of- government approach to TCB.

Tanzania. According to officials we met with, USAID and its  counterparts discuss TCB and development issues at the embassy’s  biweekly Governance and Prosperity Working Group. The group  includes participants from State, USAID, and MCC, and covers  ongoing TCB initiatives and development issues. USAID and relevant  agencies also may discuss TCB at the embassy’s Power Africa  working group, a regular meeting that focuses on power and energy  sector projects, which may have trade-related effects such as  improving competitiveness or capacity. Officials told us that informal  communication about TCB matters occurs frequently on an ad hoc  basis as well, helping to ensure that resources and expertise across  agencies are fully leveraged.

Vietnam. According to officials we met with, the main mechanism  through which TCB is coordinated is the interagency commercial task  force, which convenes stakeholders from USAID, State, and other  relevant agencies weekly. The embassy Deputy Chief of Mission sets  the agenda for the task force and participants provide updates on  active projects, issues, and policy considerations related to TCB and  commercial activities. According to embassy officials, TCB is a key  embassy priority and requires a broad range of engagement with the  host government, so coordination is critical. In addition, these officials  noted that USAID and its counterparts interact frequently and maintain  good working relationships, providing an appropriate environment to  enable stakeholders to leverage the range of TCB resources at the  embassy.

Laos. According to officials we met with, USAID coordinates its TCB  activities in Laos from its regional office in Thailand. USAID does not  have a mission in Laos, although it does have a USAID representative  (a U.S. Personal Services Contractor) located in the U.S. embassy in  Laos who helps to coordinate USAID regional and bilateral projects,  including TCB activities. According to a USAID official, TCB efforts in  Laos are relatively small and focused, so formal coordination  structures are not necessary or practical. Instead, this official  explained that the USAID representative regularly liaises with the  State Economics Officer, who meets with the Ambassador weekly.  Although no official working group has been established, the  Economic Officer, Ambassador, and USAID representative meet at  least quarterly to discuss TCB assistance. These discussions help to  ensure conflicts are avoided and resources are used effectively.  Because economic development and TCB projects have been key  priorities of the embassy in Laos in recent years, USAID  communicates frequently with State counterparts in-country,  according to an official. In addition, another official told us that USAID  and State worked together to develop the Integrated Country Strategy  for Laos, helping to ensure that TCB fit into a common set of  interagency goals and priorities.

section_title: USAID Has Taken Steps to Use Evaluations in Its Management of TCB Activities
subsections: section_title: At the Headquarters Level, USAID Has Introduced a Web-based Tool and Taken Other Actions in Response to its 2010 Evaluation
paragraphs: At the headquarters level, USAID officials noted that they have introduced  a web-based tool and taken various actions, such as committing to  regularly identify best practices, based on the multicountry evaluation  completed in 2010. In 2013, USAID launched a web-based tool, called  “Project Starter,” designed to bring together guidance, templates,  examples, and checklists to facilitate monitoring, evaluation, and adaptive  learning in TCB activities. From January 1, 2014, through March 31,  2014, the Project Starter website had nearly 4,000 visitors, including a  mix of technical, program, and managerial staff from headquarters and  the field.

In our 2011 report, we found that USAID had commissioned a limited  number of evaluations of TCB programs to assess long-term results, in  part because of the resources required and the difficulty of evaluating  impact in the area of TCB. We recommended that USAID develop a  written plan for using the 2010 multicountry evaluation and conduct  further evaluations on an ongoing basis. As a result of our  recommendation, USAID committed to conduct every 5 years an analysis  of evaluations completed by missions, to identify best practices for trade  projects. However, USAID has not incorporated lessons learned identified  in the 2010 multicountry evaluation into its TCB strategy.

USAID officials at headquarters also told us that they provide guidance to  field staff to facilitate TCB program management, leveraging best  practices and lessons learned from evaluations and experience. For  example, subject matter experts at headquarters regularly respond to  requests for assistance from field staff on designing or evaluating  projects. In addition, headquarters staff helped in the design and award of  TCB activities in Jordan, Laos, Ghana, Afghanistan, Tanzania, Nigeria,  Pakistan, and USAID regional missions in Thailand and West Africa.  These activities account for approximately 60 percent of USAID fiscal  year 2013 trade funds, according to USAID. In addition, headquarters  officials report they provided support for evaluations, results frameworks,  and strategy development, to field staff in Morocco, Liberia, West Bank- Gaza, Kenya, and South Africa.

section_title: Abroad, USAID Field Staff Have Used Evaluations to Manage Projects at the Country Level
paragraphs: Abroad, USAID field staff have used evaluations and assessments of  projects to manage current and future TCB efforts in the countries we  visited. During fieldwork, we found that USAID field staff had conducted  evaluations and assessments of specific activities and used the  information to make changes to ongoing or planned projects as follows:

Ethiopia. USAID conducted a cost-benefit analysis of its support for  agricultural value chain projects in 2012, designed to improve  productivity and efficiency, among other things. USAID officials told us  that based on the analysis, they changed the investment allocation  while projects were under way to favor those with better potential for  results. In addition, USAID’s Ethiopia CDCS calls for elevating the role  of evaluations and impact assessments as learning tools throughout  the project cycle for continuous updating and promotion of best  practices. Officials indicated that the CDCS is the central guiding  document for USAID TCB and other activities in-country and that, in  accordance with this directive, continuous improvement processes are  part of regular operations.

Tanzania. In 2011, USAID’s East Africa Trade Hub in Kenya—a  regional mission that plays a significant role in managing TCB projects  in Tanzania—conducted an assessment of its activities and made  changes as a result, according to an official. For example, the  assessment recommended that the Trade Hub work with the  embassies in the countries it covers, including Tanzania, to develop a  shared vision and to facilitate mutually beneficial relationships.  According to a USAID official, the Trade Hub responded by taking  steps to address this issue. Specifically, the Trade Hub committed to  send a person to visit each embassy in the region at least once a year  to discuss goals and priorities, and it provided additional country- specific information on its website so stakeholders could see and  monitor its activities anytime. The assessment also recommended  that the Trade Hub shift to assisting the East Africa Community, a  regional economic group that includes Tanzania, and national  authorities with the implementation of policies and procedures. As a  result, the Trade Hub reallocated some of its TCB resources away  from supporting trade-related business development activities to  supporting the East Africa Community, its five members, and regional  trade associations focused on regional policy implementation,  according to a USAID official.

Vietnam. USAID conducted a performance evaluation of STAR, its  main TCB activity, in 2011. One of the evaluation’s recommendations  was that USAID should focus its future efforts on trade facilitation  activities, such as improving customs, transportation, and the  commercial regulatory environment. According to the evaluation, this  would benefit the trading community and help the host government  implement and enforce some of the legal and regulatory reforms put  in place over recent years with the support of STAR. A USAID official  told us that in response to the recommendation, they designed TCB  activities to focus on leveraging relationships with the host  government’s customs ministry. Specifically, they targeted support  toward streamlining customs procedures and regulations with the aim  of helping the government and business build on prior reforms. A  USAID official also told us that one lesson learned over the years was  that involving multiple host government ministries in TCB projects may  slow progress. To address this weakness, USAID shifted its approach  to focus on a limited number of areas with committed stakeholders  while maintaining an ad hoc mechanism for other ministries as needs  and opportunities arise.

Laos. Because USAID does not have a presence in Laos, officials told  us that they regularly monitor TCB activities in Laos from the regional  office in Thailand, working in close coordination with the USAID  representative in Laos and embassy staff. They also indicated that  early TCB work in Laos focused on establishing a basic legal  framework to meet WTO requirements, but as a result of monitoring  and evaluating progress, USAID shifted the focus of assistance to  facilitating implementation of the laws and regulations put in place. A  USAID official also told us that this year they are updating a Lao  Business and Commercial Law and Institutional Reform assessment  that will provide a baseline for the new TCB assistance for Laos.

section_title: Conclusions
paragraphs: The U.S. government continues to demonstrate a commitment to  providing TCB for developing countries, and over the years multiple U.S.  agencies have provided this assistance across numerous types of trade  and development programs. Given the diffused nature of TCB assistance,  Congress has expressed concern about which agency is ultimately  accountable for TCB activities. While no single agency is responsible for  this type of assistance, USAID has a 2003 TCB strategy that defines  overall TCB priorities and discusses coordination with other U.S.  agencies. In addition, in fiscal year 2012, USAID provided about $418  million for TCB, the most funding of any U.S. government agency.  Therefore, it is important that USAID’s strategy reflect the current TCB  environment. USAID officials asserted that the priorities in the strategy  are still relevant, but we observed that neither USAID nor other agency  officials we met with in the field used, or in some cases even knew about,  the strategy. Moreover, we found that the strategy may not be as useful  as it could be because it is outdated in several areas. For example, the  coordination section of the strategy does not include all agencies now  providing TCB assistance, the trade initiatives discussed in the strategy  are no longer current, and the categories of TCB activities identified in the  strategy have changed. Updating the strategy to reflect the current TCB  environment would provide USAID an opportunity to examine its TCB  priorities in light of changes to the environment and ensure that the  priorities are indeed still relevant. A strategy update would also raise  awareness of the agency’s TCB priorities in relevant missions and offices.  In the absence of a government-wide TCB strategy, an effort to update  the USAID TCB strategy could also bring together other agencies  involved in providing TCB assistance, helping to ensure interagency buy- in on current TCB priorities and goals.

section_title: Recommendation for Executive Action
paragraphs: To help ensure that USAID’s 2003 TCB strategy is as useful as it could  be for informing TCB activities, we recommend that the Administrator of  USAID update the strategy to reflect the current TCB environment.

section_title: Agency Comments and Our Evaluation
paragraphs: We requested comments on a draft of this report from the Administrator of  USAID, the Secretary of State, the Chief Executive Officer of the  Millennium Challenge Corporation, and the U.S. Trade Representative.

On July 15, 2014, USAID indicated via e-mail that it agreed with the  recommendation and intended to explore options for providing additional  guidance to operating units. USAID further indicated that the additional  guidance might take the form of drafting a new TCB strategy, updating or  amending the old strategy, issuing a separate policy paper, contributing to  a broader U.S. government-wide strategy, or some other type of  guidance. In its written comments, reproduced in appendix IV, MCC  stated that it was in the process of updating the MCC data in the U.S.  government TCB database. We did not receive comments from State or  USTR.

As agreed with your office, 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 of this report to the  appropriate congressional committees, the Administrator of USAID, the  Secretary of State, the Chief Executive Officer of the Millennium  Challenge Corporation, the U.S. Trade Representative, and other  interested parties. In addition, this report is 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) 512-8612 or GianopoulosK@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 V.

section_title: Appendix I: USAID and State Trade Capacity Building Funding Data, Fiscal Years 2011 through 2012
paragraphs: In fiscal years 2011 through 2012, the U.S. Agency for International  Development (USAID) and the Department of State (State) together  obligated a total of approximately $1.36 billion for trade capacity building  (TCB) related activities. Of that amount, USAID obligated approximately  $1.1 billion with funds from seven different accounts. State obligated the  approximately $262 million remaining, with funds from seven funding  accounts. (See table 1 below.) USAID officials noted that there is no  dedicated funding account or directive for TCB activities. USAID officials  also noted that the majority of the TCB assistance reported in the  database are obligations for development projects that had trade-related  effects—and were therefore counted as TCB—but were conducted to  fulfill other development objectives.

section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) determine the extent to which the U.S. Agency  for International Development’s (USAID) 2003 strategy guides USAID’s  trade capacity building (TCB) activities; (2) describe methods USAID uses  to coordinate TCB efforts with other U.S. government agencies at home  and abroad; and (3) describe how, if at all, USAID has used TCB  evaluations in its program and project management. For fiscal years 2011  and 2012, we also identified the appropriations accounts from which  USAID and State allocated funds for TCB-related activities and the  obligations from these accounts for such activities (see app. I).

To address these objectives, we built upon information collected for our  2005 and 2011 reports on TCB and analyzed data from the U.S.  government TCB database. Data from the TCB database were previously  deemed reliable for our 2005 and 2011 reports on TCB. We identified  limitations to the TCB database in our 2011 report on TCB, including that  the database did not adequately explain significant factors driving  changes in the composition of TCB funding over time. For this 2014  report on TCB, we assessed data from fiscal years 2008 through 2012  and determined that the data were sufficiently reliable to identify TCB  funding by agency, country, and category. Furthermore, in assessing the  data, we interviewed key USAID officials and the contractor responsible  for administering the database, and reviewed supporting documentation.

We primarily focused on TCB activities that USAID conducted because  USAID provided the most funding of all U.S. agencies for TCB activities in  2012. However, we also sought the views of three other entities in our  review regarding coordination with USAID on TCB activities: (1) the  Department of State (State) because it is committed to supporting the  negotiation and implementation of trade agreements and thereby helps  countries advance trade initiatives; (2) the Millennium Challenge  Corporation (MCC) because it conducts TCB-related activities that  support its broader strategic and agency mission goals, although it does  not have a specific TCB mission; and (3) the Office of the U.S. Trade  Representative (USTR) because of its role in leading trade efforts. In  conducting our work, we analyzed strategic, budget, and programmatic  documents describing these agencies’ TCB-related funding and activities.  We also reviewed the 2010 TCB evaluation, along with evaluations and  assessments of TCB projects in the countries we visited. We conducted  fieldwork in Vietnam, Laos, Thailand, Ethiopia, Tanzania, and Kenya. We  selected these countries because they (1) had a cross-section of projects  that would allow us to compare and contrast different types of activities,  (2) are at different stages of economic development, (3) are in diverse  geographic regions, or (4) had signed an MCC compact and received  MCC-related TCB assistance. In each country, we analyzed agencies’  strategy, coordination, and program management efforts. We also  interviewed agency officials, host government officials, and contractors  implementing TCB activities in the field, and visited TCB project sites. Our  findings from these countries are not generalizable to the universe of all  USAID TCB activities.

To determine the extent to which USAID’s 2003 strategy guides USAID’s  TCB activities, we reviewed the strategy and relevant documents and  interviewed USAID officials in Washington, D.C.; Ethiopia; Kenya; Laos;  Tanzania; Thailand; and Vietnam about what they use to guide TCB  activities in their countries. We also interviewed these officials about the  agencies’ TCB priorities and the relevance of the strategy to the current  environment. We reviewed guidance on strategic planning from several  sources, including USAID’s internal policies, the Government  Performance and Results Act Modernization Act of 2010, and prior GAO  work on strategic planning, for criteria on updating strategies. We did not  review USAID’s 2003 TCB strategy using the full set of six characteristics  of a national strategy that we identified in prior work; we determined that  many of the characteristics may not apply to it because it is only an  agency document and not a national strategy. However, in reviewing the  strategy we did examine the extent to which it reflected the current TCB  environment, because the strategy was developed over 10 years ago.  TCB environment refers to the context—including all conditions, entities,  events, and surrounding factors—in which agencies providing TCB  assistance are operating.

To describe methods USAID uses to coordinate TCB efforts with other  U.S. government agencies at home and abroad, we interviewed officials  from USAID, State, USTR, and MCC, and analyzed relevant documents.  During our fieldwork, we also spoke with officials from other agencies,  such as the U.S. Department of Agriculture and the Department of  Commerce, which in some cases play a role in TCB activities. We used  GAO’s prior work on collaboration, which reports on collaboration  mechanisms and key practices for consideration, to develop our interview  questions for USAID and other agency officials, and to help identify  actions USAID has taken. However, we did not formally assess USAID’s  TCB coordination with other agencies.

To describe how, if at all, USAID has used TCB evaluations in its program  and project management, we interviewed officials from USAID and  analyzed relevant documents. During our fieldwork, we reviewed  evaluations and assessments of projects in the countries we visited. We  did not assess the challenges or effectiveness of TCB measurement and  evaluation processes in place because we addressed these issues in our  2011 report.

We conducted this performance audit from October 2013 to August 2014  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 III: U.S. Government Trade Capacity Building Database and Definitional Categories
subsections: section_title: TCB Database
paragraphs: As we previously noted in 2011, the U.S. Agency for International  Development (USAID) collects data to identify and quantify the U.S.  government’s trade capacity building (TCB) activities in developing  countries through an annual survey of agencies on behalf of the Office of  the U.S. Trade Representative (USTR), and oversees a contractor that  collects and maintains the survey results in the U.S. government’s  publicly available online TCB database. The data gathered from this  survey are used to inform and respond to inquiries from Congress, the  executive branch, the general public, and multilateral organizations such  as the World Trade Organization (WTO). USTR officials use the database  regularly and, according to these officials, it is a useful tool for identifying  U.S. agencies’ TCB activities and funding in a particular country or region,  as well as the full extent of assistance the U.S. government provides in  that area. In addition to administering this survey, USAID is also tasked  with reviewing completed survey forms, and checking for accuracy and  consistency in the reporting of funding and their allocation into TCB  categories. A variety of U.S. agencies have a role in providing TCB  assistance, including the Departments of State, the Army, Labor, the  Treasury, and Commerce; the Millennium Challenge Corporation (MCC);  and USAID.

section_title: TCB Category Definitions
paragraphs: USAID’s survey asks agencies to place their TCB assistance into a range  of categories and estimate funding obligated for each category. The U.S.  government TCB database defines the categories as follows:

WTO Accession and Compliance: Support for countries to benefit  from membership in the WTO, or to understand fully the benefits of  membership. Also assistance to help countries in the WTO accession  process meet the requirements of accession. In addition, it includes  assistance to meet the obligations of the specific WTO agreements,  except for Agreements on Sanitary and Phyto-sanitary Measures  (SPS), Technical Barriers to Trade (TBT), Intellectual Property Rights  (IPR), and Trade-related Procurement. Those four agreements benefit  from TCB in their own categories.

Sanitary and Phyto-Sanitary Measures: Support for countries to meet  SPS standards for trade and to comply with the WTO Agreement on  SPS.

Technical Barriers to Trade: Support for countries to reduce technical  barriers to trade and to comply with the WTO Agreement on TBT.  Intellectual Property Rights: Support for countries to observe  international standards on intellectual property rights protection and to  comply with the WTO Agreement on IPR.

Trade-related Procurement: Support for increased trade related to  government procurement and to comply with the WTO Agreement on  Government Procurement.

Trade Facilitation: Generally defined as assistance in lowering the  costs of engaging in, or eliminating obstacles to international trade  flows. Trade facilitation (for 2011) is a sum of the following four  subcategories:

Customs Operations: Includes assistance to help countries  modernize and improve their customs offices.

Trade Promotion: Includes assistance to increase market  opportunities for developing country and transition economy  producers.

Enterprise Development: Includes support to improve the  associations and networks in the business sector, as well as to  enhance the skills of business people engaged in trade. Also  includes assistance to help countries acquire and use information  technology to promote trade by creating business networks and  disseminating market information.

FTAs and Trade Integration: Includes assistance to an FTA, an

Trade-related Labor: Assistance to support the enforcement of labor  standards and worker rights, development of trade unions and dispute  resolution mechanisms, strategies for workforce development and  worker training, and the elimination of child labor.

Financial Sector: Support for financial sector work, monetary and  fiscal policy, exchange rates, commodity markets, and capital  markets.

Trade-related Infrastructure: Assistance to establish trade-related  telecoms, transport, ports, airports, power, water, and industrial  zones.

Environmental Sector Trade and Standards: Assistance to establish  environmental standards or to promote environmental technology.

Competition Policy, Business Environment, and Governance: Support  for the design and implementation of antitrust laws, as well as of laws  and regulations related to investment and investor protections.  Includes support for legal and institutional reform to improve  governance and make policies more transparent, and assistance to  help the different agencies of a host country government function  more effectively in the trade policy arena.

Trade-related Agriculture: Support for trade-related aspects of the

Trade-related Services: Includes support to help developing countries  and transition economies increase their flows of trade in services.  Services Trade Development is a sum of two subcategories:

Trade-related Services (excluding tourism): Assistance to help  countries develop trade in services in all sectors other than  tourism, including financial services, energy, transportation, and  education.

Trade-related Tourism: Assistance to help countries expand their  international tourism sectors, including eco-tourism.

Other Trade Capacity Building: A small number of TCB activities did  not fit in any of the above categories, including some activities of a  crosscutting nature. These were categorized as “Other Trade  Capacity Building.”

section_title: Appendix IV: Comments from the Millennium Challenge Corporation

section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact listed above, Juan Gobel (Assistant Director),  Marc Castellano, Debbie Chung, Martin De Alteriis, Ernie Jackson,  Michael Maslowski, and Oziel Trevino made key contributions to this  report.


Question-summary annotations: questions: question: To what extent does USAID TCB strategy guide TCB activities?
answer: The U.S. Agency for International Development's (USAID) 2003 trade capacity building (TCB) strategy does not directly guide TCB activities, and parts of the strategy no longer reflect the current TCB environment.
child_questions: question: What are TCB activities guided by?
answer: USAID's TCB activities are primarily guided by country needs and many of these activities are elements of large development projects that have their own objectives.

question: To what extent is the strategy guide still relevant?
answer: According to USAID, the strategy's priority areas—participation in trade negotiations, implementation of trade agreements, and economic responsiveness to opportunities for trade—remain relevant. However, some parts of the strategy are not current. For example, the strategy does not include discussion of how USAID should coordinate with the Millennium Challenge Corporation (MCC), which did not exist in 2003 and is a major TCB contributor (see figure).

question: Why haven't USAID officials updated the strategy?
answer: USAID officials told GAO that they had not updated the strategy because they questioned the costs and benefits of doing so given that trade resources were declining and they believed the priorities presented in the strategy were still relevant.
child_questions: question: Why is it nevertheless important that USAID update its strategy?
answer: However, USAID is still committing significant resources to TCB, and TCB contributes to goals outlined in USAID and the Department of State's joint strategic plan. USAID's TCB strategy may not be as useful as it could be for informing TCB activities because parts of it are no longer current.

question: How can the strategy be updated?
answer: Moreover, directives, such as those in the Government Performance and Results Act Modernization Act of 2010, can serve as guidance for periodic updating of strategic plans.

questions: question: What is USAID's role regarding TCB efforts?
answer: The 2003 strategy calls for USAID to be the primary coordinator for U.S. government TCB efforts, and GAO found that USAID coordinates TCB activities at home and abroad using a range of methods, including structured and informal dialogue between stakeholders.
child_questions: question: How does USAID coordinate with other agencies regarding TCB activities?
answer: Specifically, USAID staff report that they participate in interagency working groups and maintain ongoing discussions with counterparts from other agencies to coordinate TCB activities. For example, at headquarters USAID participates in the Trade Policy Staff Committee, an interagency working group that includes a range of stakeholders and has subcommittees on development and TCB.

question: How did USAID missions coordinate TCB in the countries GAO visited?
answer: In the countries GAO visited, GAO found that USAID missions coordinate TCB through formal mechanisms, such as working groups, as well as informal communication.

questions: question: Why does the United States provide TCB assistance to developing countries?
answer: Since at least 2001, the United States has provided TCB assistance to developing countries to help them participate in and benefit from global trade.
child_questions: question: What does this assistance consist of?
answer: Multiple agencies provide this assistance, which may include support for World Trade Organization accession, customs procedures improvement, or development of infrastructure such as ports and roads.

question: Why does this report focus on USAID?
answer: In this report, GAO focuses primarily on USAID because it provided the most funding for TCB in fiscal year 2012 and has a formal strategy focused entirely on TCB.
child_questions: question: What was GAO asked to review?
answer: GAO was asked to review the strategy, which is more than a decade old. GAO was also asked to examine USAID efforts to coordinate TCB activities to ensure that the United States is fulfilling its commitment in the most effective way.