On Tuesday, the Government Accountability Office (GAO) released its report on the Department of Treasury’s voting policies at Multilateral Development Institutions (MDIs) for projects implicating the “Surplus Commodities Rule” (22 U.S.C. § 262h). The rule mandates that Treasury “use the voice and vote of the United States” to oppose funding for projects that 1) increase production of a commodity or mineral in surplus on world markets, and 2) the export of which would cause substantial injury to U.S. producers of the same, similar, or competing products.
Congressmen Comer (R-KY), Higgins (R-LA), and Nehls (R-TX) of the House Oversight Committee requested this report in response to serious concerns that U.S. tax dollars were being improperly spent to support shrimp aquaculture overseas, at the expense of our domestic shrimping industry.
GAO’s Key Findings
The report found that Treasury supported at least $200 million in funding for shrimp aquaculture projects between 2015 and 2025 that implicated the rule, and that these projects contributed to falling prices and rising costs for domestic shrimpers.
The report highlighted several failings in Treasury’s internal policies that have led to inconsistency, confusion, and a lack of transparency in its application of the Surplus Commodities Rule. To apply the rule effectively and consistently, Treasury needs to set out clear and actionable criteria for three things: 1) what commodities and minerals it considers subject to the rule, 2) assessing whether commodities or minerals are in surplus on world markets, and 3) assessing substantial injury to U.S. producers of same, similar, or competing products.
Despite the rule first being passed in 1986, Treasury has since 1) failed to establish criteria for determining what products it considers subject to the rule, 2) established, but according to Treasury officials rarely applied, criteria for assessing whether products are in surplus on world markets, and 3) lacks criteria for assessing substantial injury to U.S. producers. Treasury officials describe the lack of, or ignorance of, guiding criteria as giving its evaluators flexibility in applying the rule. But a lack of guidance, and especially a lack of published guidance, leaves open the door to inconsistency and a lack of accountability, several instances of which the report highlights.
U.S. representatives at the various MDIs, which are sometimes called International Financial Institutions (IFIs), have voted “no” or “abstain” for projects related to mineral products (37.0 percent) at over twice the rate for fisheries and aquaculture projects (17.3 percent) with no clear basis for the discrepancy. Treasury officials told GAO analysts that the rule is a component of their evaluation of proposed projects, but as the GAO points out, Treasury has never cited the rule in its stated reasons for voting against a project. Without clear, actionable, and objective criteria for Treasury analysts to apply, and without guidelines for what types of projects must pass the Surplus Commodities Rule to receive U.S. support, the rule is always at risk of being ignored or being made subservient to some other policy goal or preference.
Treasury officials also told GAO analysts that they evaluate each project for the applicability of the Surplus Commodities Rule “based on the specific facts and circumstances of each project.” But looking at each individual project in a vacuum ignores the larger problem that Treasury’s voting behavior exacerbates. Exports from Ecuador, for example, have ballooned at the same time that over $100 million in shrimp aquaculture projects were being funded in the country. Each project supports long-term shrimp farm and infrastructure developments that cumulatively harm U.S. shrimpers.
GAO’s Recommendations
The GAO outlines four recommendations in its report to increase transparency and consistency that Treasury has concurred with:
- Treasury should update its guidance to include specific criteria for identifying “commodities and minerals” to consider under 22 U.S.C. § 262h
- Treasury should review the existing criteria in its guidance for assessing “surplus on world markets” under 22 U.S.C. § 262h and, if necessary, update its guidance
- Treasury should update its guidance to include specific criteria for assessing “substantial injury to U.S. producers” under 22 U.S.C. §262h
- Treasury should include in the public voting record when Treasury determined a project implicates 22 U.S.C. § 262h
In concurring with these recommendations, Treasury noted that when voting decisions have implicated the Surplus Commodities Rule in the past, it has recorded its reason as the more general “economic and policy considerations.” It committed to more explicitly identifying when the rule is applied.
What’s Next
The SSA will continue to monitor Treasury’s voting decisions, look forward to Treasury’s compliance with these recommendations, and will continue to press Treasury to comply fully with this country’s laws.
“The Southern Shrimp Alliance deeply appreciates Congressmen Comer, Higgins, and Nehls for requesting and supporting this thorough investigation. And, we thank the GAO team for visiting and speaking with shrimpers and processors in Texas and Louisiana to learn firsthand how devastating these projects have been to our industry,” said Blake Price, Executive Director of the Southern Shrimp Alliance. “I’m glad Treasury agrees that its policies need to change, and that more consistency and transparency is necessary. This rule is 40 years old. It’s time for Treasury to take it seriously.”
Read the GAO Report (GAO-27-108667): https://www.gao.gov/products/gao-27-108667?utm_source=outreach&utm_medium=email&utm_campaign=MDBs