Foreign Companies Use US Funds for Own Advertising

REP. Peter Kostmayer (D) of Pennsylvania was so appalled by what he saw as signs of waste and excess in a United States Agriculture Department (USDA) program that pays for the advertising for the products of dozens of foreign-owned companies that he asked the General Accounting Office to investigate the program.

In fact, he got so angry he ordered an investigation by his office into the bankrolling of hundreds of such foreign ads through the Agriculture Department's $200 million-a-year Market Promotion Program (MPP).

What his investigation revealed resulted in his introducing legislation to overhaul the program and attach it to the 1993 House Agriculture spending bill. On March 25 he was to testify before the Senate Agricultural Committee on the MPP.

Some of the expenses for advertising that greatly concerned Mr. Kostmayer are: 1991 funds of $61,000 for Godiva Chocolates, $339,000 for Schenley's International (liquor); a total of $8.6 million to the US Mink Export Council for overseas mink-coat advertising since the program began in 1986; $5,121,000 to Gallo wines. Reforms are sought

A USDA spokesman, Phillip Mackie, assistant administrator of the Foreign Agriculture Service, explained how the disputed program began: "It was legislated in the 1990 farm bill, following on to the 1985 farm bill, as Targeted Export Assistance. The Market Promotion Program was designed into legislation to provide assistance to commodities [and] agricultural products that had been negatively affected in the export market by unfair trade practises of other countries...."

Among the reforms Kostmayer proposes are the following:

* Limit the size of companies allowed to participate to companies earning under $500 million a year.

* Place a $50 million cap on the amount any single company can receive.

* Require that the products advertised be processed in the US and at least 50 percent of the content be grown here.

* Examine whether the US should be promoting the sale of products that have proved to be harmful to the health of people. (Some $12,540,000 has been spent to promote the sale of tobacco products since the program began in 1986.) Large companies prohibited

Such reforms would knock out 80 percent of the largest companies in the program, says Kostmayer. "We would really gear it toward small US companies, as opposed to large multinational corporations.... I'm dubious about taxpayers subsidizing multinational corporations to advertise their products overseas where they could be using their own dollars to do that," he says.

Mr. Mackie says the USDA's position at the hearing today is that "we have administered it [MPP] primarily from the point of view of the producer, within the guidelines of current legislation."

He denies that there is waste or excess in the program. "If Congress wants to change the purpose or put additional limits on, that's theirs to do. We feel the funds are being administered properly within the guidelines of the administration."

"We ought not to be responsible for sales of products harmful to people's health," says Kostmayer. He is particularly angry over what he considers "corporate welfare" existing at a time when necessary programs to help people are not being fully funded: "No wonder people are irritated at us [Congress]. They're right. And we're going to give the members of the House a chance sometime before summer to vote on this, to kill this program once and for all," he says.