U.S. Department of State

I. Public Benefit

Continued economic prosperity for the U.S. depends on the expansion of prosperity, freedom, and economic opportunity worldwide. The Department and USAID have increased U.S. economic security by reducing terrorist financing, increasing energy security, improving the security of transportation and information networks, and building international coalitions to deny financial support to terrorists and their supporters. The U.S. promotes prosperity at home and abroad by opening markets through ambitious trade and investment agendas, strengthening development efforts through private sector participation and recipient country accountability, and supporting U.S. businesses through outreach and advocacy. Working with private and public sectors and labor, the Department and USAID contribute to a stronger, more dynamic international economic system that creates new opportunities for American business, workers, and farmers. In addition, the Department leads the U.S. representation at the International Atomic Energy Agency, the primary mechanism for maintaining oil market stability in times of crisis. The Department was able to secure the release of up to 60 million barrels of emergency petroleum stockpiles when prices increased due to Hurricane Katrina, saving American taxpayers hundreds of millions of dollars per day.

II. Performance Summary

The table below summarizes the performance ratings for Department of State and USAID results for the Economic Prosperity and Security strategic goal.

III. Resources Invested

IV. Performance Analysis

Performance Trends. There are a number of positive trends in this strategic goal area. For example, USAID extension assistance has reached more than one million farmers, a tenfold increase over the 2003 baseline, and USAID programs disbursed more than six million microfinance loans, a fivefold increase over the 2003 baseline.

Key Initiatives And Programs. The Department and USAID received more than $2.6 billion in Economic Support Funds. More than $200 million in FY 2006 funds was earmarked to USAID for trade capacity building and Congress also authorized USAID to spend up to $21 million for loan guarantees in support of micro and small enterprise programs.

V. FY 2006 Performance Results

INDICATOR: Status of Negotiations on Open Markets for Services, Trade, and Investment

	Outcome
JUSTIFICATION: These agreements expand the international framework to create a dynamic, free and open trade system, which contributes directly to the prosperity of the United States.
FY 2006 PERFORMANCE	Target	World Trade Organization (WTO) Doha round and Free Trade of the Americas negotiations completed. Andean Countries Free Trade Agreement (FTA) and South African Customs Union (SACU) implemented. Two FTAs concluded. Central American Free Trade Agreement (CAFTA), Dominican Republic, Morocco and Australia FTAs enter into force. Three new Bilateral Investment Treaties (BITs) concluded.
	Results	WTO and FTAA negotiations were not completed. Implementation of Andean Countries Free Trade Agreement progressing; South African Customs Union postponed. Two FTAs concluded. Oman FTA ratified. Korea and Malaysia FTAs launched. CAFTA, Bahrain and Morocco FTAs entered into force. The Australia FTA went into force in January 2005 (see below). Three new BITs concluded.
	Rating	Below Target
	Impact	Although the suspension of the Doha Round will hinder U.S. efforts to open markets, excellent progress was achieved on liberalizing trade and opening markets through free trade agreements and bilateral investment treaties. Trade Promotion Authority is scheduled to expire in mid-2007, so the Department will make every effort to restart the Doha Round in FY 2007.
	Reason for Shortfall	The WTO Doha Round was suspended due to lack of agreement on major issues. The United States prioritized expanded agricultural market access, the EU tried to link agricultural subsidy and tariff reductions to cross-sector reciprocal improvements in market access for manufactured goods and services, and developing countries sought the elimination of agricultural subsidies and industrial tariffs.
	Steps to Improve	At the December 2005 WTO ministerial in Hong Kong, WTO members were able to set 2013 as the date to end agricultural export subsidies and agree to a number of important development initiatives. Expanded market access, particularly in agriculture, is key to a final agreement. In Hong Kong, the U.S. announced a doubling of annual trade-related assistance from $1.34 billion in 2005 to $2.7 billion by 2010. The U.S. is the largest single-country donor of trade capacity building assistance, which helps countries build the necessary legal, administrative, and physical infrastructure to participate fully in the market openings that will be created by a successful conclusion of the Doha Round.

INDICATOR: World Emergency Oil Stocks

	Output
JUSTIFICATION: Oil is the major energy import for the U.S. and an adequate supply is key for the U.S. and global economies. Increasing world oil stocks increases ability to withstand possible oil shocks.
FY 2006 PERFORMANCE	Target	International Energy Agency (IEA) and non-IEA Emergency oil stocks at or above FY 2005 stock levels equivalent to 114 days of imports.
	Results	115 days of import coverage.
	Rating	On Target
	Impact	Healthy oil stock allowed for a robust response to oil supply disruptions caused by Hurricane Katrina, calming markets ensuring continued supplies of oil.

INDICATOR: Percentage of Debt Crisis Countries on International Monetary Fund (IMF)
Programs Successfully Reforming

	Outcome
JUSTIFICATION: Successful completion of reform programs is key to nations achieving long-term financial stability.
FY 2006 PERFORMANCE	Target	60% of countries facing financial crisis that have sought and received Paris Club sponsored debt relief are successfully implementing economic reforms that will promote long-term financial stability.
	Results	A total of 84% of countries receiving help from the United States and the international community to overcome financial crises are successfully implementing economic reforms that promote long-term financial stability. As of September 30, 2006, 69 countries facing financial crises had active Paris Club agreements. Of these, 36 countries were successfully implementing an IMF-sponsored reform program and an additional 22 countries had completed their reform programs. A total of 11 countries had abandoned their IMF program and were not pursuing sound macroeconomic policies. This result can be explained, in part, by the benign global economic environment that has helped to improve macroeconomic performance, reducing the risk of financial crises and generally making it easier to comply with IMF program goals.
	Rating	On Target
	Impact	U.S. Government debt relief program has provided effective leverage to encourage countries in financial crisis to adopt solid fiscal and monetary policies that have resulted in individual country and international financial stability.

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