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PART 1488—FINANCING OF SALES
OF AGRICULTURAL COMMODITIES
Subpart A-Financing of Export Sales

of Agricultural Commodities From
Private Stocks Under CCC Export
Credit Sales Program (GSM-4,
Revised)

of linseed oil the “official inspection certificate” may also mean an inspection certificate issued by or under the supervision of a surveyor or chemist mutually agreed upon by the seller, buyer, and CCC. § 1486.157 U.S. Government agency.

U.S. Government agency means any corporation wholly owned by the Federal Government and any department, bureau, administration or other unit of the Federal Government, as for example, the Departments of the Army, Navy, and Air Force, the Agency for International Development, the Army and Air Force Exchange Service, and the Panama Canal Company. Sales to foreign buyers, including foreign governments, though inanced with funds made available by & U.S. agency such as the Agency for International Development or the ExportImport Bank, are not sales to a U.S. Government agency, provided the commodity is not for transfer by such buyer to à U.S. Government agency.

NOTE: The record keeping and reporting requirements contained herein have been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

APPENDIX

NOTICE TO EXPORTERS

Sec. 1488.1 General statement. 1488.2 Definition of terms. 1488.3 Submission of applications for

financing. 1488.4 Coverage of bank obligations. 1488.5 CCC drafts. 1488.6 Interest charges. 1488.7 Expiration of period for delivery

and export. 1488.8 Advance payment. 1488.9 Documents required after delivery. 1488.10 Evidence of export and warranty. 1488.11 Evidence of entry into country of

destination. 1488.12 Liability for payment, 1488.13 Liquidated damages. 1488.14 Assignment. 1488.15 Covenant against contingent fees. 1488.16 Shipment of commodities on vessels

calling at Cuban and North Viet

namese ports. 1488.17 Officials not to benefit. 1488.18 Exporter's records and accounts. 1488.19 Communications. Supplement I–Beef Breeding Cattle. Supplement II—Dairy Breeding Cattle.

AUTHORITY: The provisions of this Subpart A issued under sec. 5(1), 62 Stat. 1072; 15 U.S.C. 714c; sec. 407, 68 Stat. 1065, as amended, 7 U.S.C. 1427; sec. 4, 80 Stat. 1538, 7 U.S.C. 1707a.

SOURCE: The provisions of this Subpart A appear at 34 F.R. 19705, Dec. 16, 1969, unless otherwise noted. § 1488.1

General statement. (a) Except as otherwise provided in this paragraph, the regulations contained in this subpart supersede Announcement GSM-3, Revision II, as amended, and set forth the terms and conditions governing the CCC Export Credit Sales Program (GSM-4). The maximum financing period shall be 3 years. GSM-3, Revision II, as amended, shall remain in effect for all transactions under credit approvals issued thereunder before April 27, 1967, the effective date of GSM-4.

(b) On approval by CCC of an appllcation for financing under this program, an eligible exporter may, but will not be obligated to, make export sales of agri

The Department of Commerce, Bureau of International Commerce, pursuant to regulations under the Export Control Act of 1949, prohibits the exportation or reexportation by anyone of any commodities under this program to Cuba, the Soviet Bloc or Communist-controlled areas of the Far East including Communist China, North Korea, and the Communist-controlled area of Viet Nam, except under validated license issued by the U.S. Department of Commerce, Bureau of International Commerce.

For all exportations, one of the destination control statements specified in Commerce Department Regulations (Comprehensive Export Schedule $ 379.10(c)) is required to be placed on all copies of the shipper's export declaration, all copies of the bill of lading, and all copies of the commercial invoices. For additional information as to which destination control statement to use, the exporter should communicate with the Bureau of International Commerce or one of the field ofices of the Department of Commerce,

Exporters should consult the applicable Commerce Department regulations for more detailed information I desired and for any changes that may be made therein.

cultural commodities from private stocks on a deferred payment basis in accordance with the applicable financing arrangement. After delivery, subject to the terms and conditions set forth in this subpart, CCC will purchase for cash the exporter's account receivable arising from such export sale.

(c) The provisions of Public Law 83664 are not applicable to the exporter's shipments under this program.

(d) The regulations contained in this subpart may be supplemented by such additional terms and conditions, applicable to specified agricultural commodities, as may be set forth in supplements hereto, and, to the extent that they may be in conflict or inconsistent with any other provisions of this subpart, such additional terms and conditions shall prevail. $ 1488.2 Definition of terms.

Terms used in this subpart are defined as follows:

(a) “Account receivable" means the contractual obligation of the foreign importer to the exporter for the portion of the port value of the commodity delivered for which the exporter is extending credit to the importer. The account receivable shall be evidenced by a promissory note or accepted draft in form and substance satisfactory to CCC, except that it may be evidenced by other documents, in form and substance satisfactory to CCC, evidencing the contractual obligation of the foreign importer when the account receivable is assured by an obligation issued by a U.S. bank or when the Vice President, CCC, or his designee, determines under special circumstances that it is in the interest of CCC. All such notes, accepted drafts and other documents evidencing the account receivable shall provide for (1) payment in U.S. dollars in the United States, (2) interest in accordance with $ 1488.6, and (3) acceleration of payment thereunder in accordance with the terms and conditions of GSM-4. As used in GSM-4, "instrument” means a promissory note or accepted draft.

(b) "Agency or branch bank" means a foreign agency or branch bank supervised by New York State banking authorities or the banking authorities of any other State providing similar supervision, as approved by the Vice President, CCC, or his designee.

(c) "ASCS office" means the New Orleans Commodity Omce of the Agricultural Stabilization and Conservation Service, U.S. Department of Agriculture.

(d) “Bank obligation" means an obligation, acceptable to CCC, of a U.S. bank, agency or branch bank, or foreign bank to pay to CCC in U.S. dollars the amount of the port value which is to be financed by CCC, plus interest in accordance with $ 1488.6. The bank obligation shall be in the form of an irrevocable letter of credit. issued, confirmed or advised by a U.S. bank or an agency or branch bank. The bank obligation shall provide for payment under the terms and conditions of the financing agreement and shall be payable not later than the date of expiration of the financing period or of the bank obligation, whichever occurs first, If payment is not received from other sources.

(e) "CCC” means the Commodity Credit Corporation, U.S. Department of Agriculture.

(f) "Commercial risk” means risk of loss due to any cause other than a political risk.

(g) (1) "Delivery" means the delivery, either before or at point of export, required by the export sale contract to transfer to the importer full or conditional title to the agricultural commodities. Delivery before export shall be at a warehouse in the United States acceptable to CCC, Delivery at point of export shall be f.a.s. or f.o.b. export carrier at U.S. ports, at U.S. border ports of exit or, if transshipped through Canada via the Great Lakes, at ports on the St. Lawrence River.

(2) “Date of delivery" means the onboard date of the ocean bill of lading or, if exported by rail or truck, the date of entry shown on an authenticated landing certificate or similar document issued by an official of the government of the importing country, or, if delivery is before export, the date(s) of the warehouse receipts or other evidence of delivery, acceptable to CCC, of the commodity to a warehouse.

(h) "EMS" means the Export Marketing Service, U.S. Department of Agriculture.

(1) "Eligible commodities" means those agricultural commodities, including eligible cotton, which are produced in the United States and which are designated as eligible for export under CCC's

Export Credit Sales Program in either the CCC Monthly Sales List or other announcement by CCC in effect for the calendar month in which the financing approval is issued. Commodities which have been purchased from CCC are eligible for export as private stocks. Commodities shall not be eligible for financing under this program if they are exported under a barter contract or arrangement.

(j) "Eligible cotton" means: (1) Extra long staple cotton grown in the United States of Grade No. 9 or better under the Oficial Cotton Standards of the United States for Grades of American-Egyptian Cotton (§ 28.501 et seq. of this title), or Grade No. 5 or better under the Official Cotton Standards of the United States for Grades of Sea Island Cotton (§ 28.551 et seq. of this title), and having a staple length of 138 inches or longer: Provided, however, That, all (i) reginned or repacked cotton, as defined in regulations of the Department of Agriculture under the U.S. Cotton Standards Act (§ 28.40 of this title), and (ii) cotton which the exporter has any reason to believe may be shorter in staple length than 138 inches or below grade, shall be eligible for export hereunder only if a Form A certificate or other classification record acceptable to CCC issued by a board of cotton examiners of the U.S. Department of Agriculture covering each such bale shows that all such cotton exported was 138 inches or longer in staple length and of Grade No. 9 or better for AmericanEgyptian Cotton or Grade No. 5 or better for Sea Island Cotton. CCC's determination as to the eligibility of cotton hereunder shall be final. (2) Upland cotton grown in the United States, of a grade named in the Universal Standards for American Upland Cotton (§ 28.401 et seq. of this title), and having a staple length of 1346-inch or longer: Provided, however, That, all (i) reginned or repacked cotton, as defined in regulations of the U.S. Department of Agriculture under the U.S. Cotton Standards Act ($ 28.40 of this title), and (ii) cotton which the exporter has any reason to believe may be shorter in staple length than 1346-inch or below grade, shall be eligible for export hereunder only if a Form A, Form B, or Form M certificate or other classification record acceptable to CCC issued by a board of cotton examiners of the U.S. Department of Agriculture covering each such bale shows that all such cotton exported was 1316-inch or longer in staple

and of a grade named in the Universal Standards for American Upland Cotton. (Reginned or repacked cotton, unless proof of export includes an acceptable classification record, cotton shorter in staple length than 1316-inch, below grade cotton, byproducts of cotton such as cotton mill waste, motes, and linters, and any cotton that contains any byproduct of cotton are not eligible for export hereunder.) CCC's determination as to the eligibility of cotton hereunder shall be final.

(k) "Eligible exporter” or “exporter" means a person (1) who is regularly engaged in the business of buying or selling commodities and for this purpose maintains a bona fide business office in the United States, its territories or possessions, and has someone on whom service of judicial process may be had within the United States, (2) who is financially responsible, and (3) who is not suspended or debarred from contracting with or participating in any program financed by CCC on the date of issuance of his financing approval.

(1) "Eligible destination" means the country which is named in the financing approval and which meets the licensing requirements of the U.S. Department of Commerce.

(m) “Financing agreement” means the financing approval issued by either the Assistant Sales Manager for Export Credit, EMS, or the Director, ASCS office, including the terms and conditions of the regulations in this subpart and any amendments thereto in effect on the date of the issuance of the letter of credit.

(n) "Financing approval” means (1) the exporter's written application for financing as approved by the Assistant Sales Manager for Export Credit or by the Director, ASCS office, or (2) the written confirmation by the Director, ASCS office, of a telephonic application approved by the Director, ASCS office.

(0) "Financing period” means the number of months specified in the financing approval. Such period shall start on the date of delivery, or the weighted average delivery date, of the commodities to be exported under the financing agreement.

(p) "Foreign bank” means a bank which is neither a U.S. bank nor an agency or branch bank, and includes a foreign branch of a U.S. bank.

(q) "Foreign importer” or “importer" means the foreign buyer who purchases

the commodities to be exported under a () "Vice President, CCC means the financing agreement and who executes Vice President who is the General Sales the instruments or other documents evi- Manager, Export Marketing Service. dencing the account receivable assigned [34 FR 19705, Dec. 16. 1989, as amended by to CCC

Amdt. 1.35 FR 19567, Dec. 24. 1970) (8) "GSM-4" means the regulations contained in this subpart setting forth

$ 1488.3 Submission of applications for the terms and conditions governing the

financing. CCC Export Credit Sales Program.

(a! An elizible exporter may submit (5) “Monthis Sales List" means the an application for financing. Except as CCC Monthly Sales List which is pub- otherwise provided in this paragraph, lished monthly in the FEDERAL REGISTER. all applications for financing shall be

(t) “Political risk means risk of loss submitted to the Assistant Sales Mandue to (1) inability of the foreign bank ager for Export Credit, Export Marketthrough no fault of its own to convert ing Service, Us. Department of Agriforeign currency to dollars, or (2) non- culture, Washington, D.C. 20250. An delivery into the eligible destination of application for financing export sales of the commodity covered by a financing cotton under which the financing period agreement through no fault of the fore will not exceed 12 months, the amount eign bank or importer or exporter be of financing will not exceed $4 million, cause of the cancellation by the gov

and the bank obligation will be issued by ernment of the eligible destination of a US. bank may be submitted to the previously issued valid authority to im- Director, ASCS office, as provided in port such shipment into the eligible des- paragraph (e) of this section. tination or because of the imposition of

b) CCC reserves the right to reject any law or of any order, decree, or regu

any and all applications. lation having the force of law which

(cApplications submitted to the Asprevents the import of such shipment sistant Sales Manager for Export Credit into the eligible destination, or (3) in

shall be in writing and shall refer to ability of the foreign bank to make pay

GSM-4, thereby incorporating by referment due to war, hostilities, civil war,

ence into the application all the terms rebellion, revolution, insurrection, civil

and conditions of GSM-4. On approval. commotion, or other like disturbance

the Assistant Sales Manager for Export occurring in the eligible destination, ex

Credit shall assign a financing approval propriation, confiscation, or other ac

number and issue the financing approval. tion by the government of the eligible

The following information shall be indestination

cluded in the exporter's application: (u) "Port value" means the net

(1) The name of the commodity to be amount of the exporter's sales price of

exported the class, grade, or quality, as the commodity to be exported under the

applicable, and the quantity. financing agreement, basis fas. or fo.b.

(2 The country of destination.

(3) The approximate port value of the export carrier at US. ports, at US. bor

commodity to be exported. der points of exit or, if transshipped (4) The financing period. through Canada via the Great Lakes, at (5) Justification for a financing period ports on the St. Lawrence River. The in excess of 12 months. port value shall not include the ocean (6) Whether the bank obligation asfreight for a c. & 1. sale or ocean freight suring payment of the account receivand marine and war risk insurance for able will be issued by a US. bank, an a c.i.f. sale. The net amount of the ex. agency or branch bank, or a foreign porter's sales price means the contract

bank, and if by a foreign bank or an price for the commodities less any pay

agency or branch bank its name and

address. ments made by the importer and less any discounts, credits, or allowances to

(7) The name and address of the for

eign importer. the importer. (V) "United States” means the 50 exported is before export, the name and

(8) If delivery of the commodity to be States, the District of Columnbia, and address of the warehouse to which dePuerto Rico.

livery is to be made. (W) "US. bank” means a bank organ- (9) II delivery of the commodity to be Ized under the laws of the United States, exported is before export, the period for a State, or the District of Columbia. export.

(d) A financing period in excess of 12 months but not in excess of 36 months may be approved by the Assistant Sales Manager for Export Credit when such longer period will achieve one or more of the following results:

(1) Permit U.S. exporters to meet credit terms offered by competitors from other Free World countries.

(2) Prevent a loss or decline in established U.S. commercial export sales caused by noncommercial factors.

(3) Permit U.S. exporters to establish or retain U.S. markets in the face of penetration by Communist suppliers.

(4) Substitute commercial dollar sales for sales for local currencies and sales on long-term credits.

(5) Result in a new use of the imported agricultural commodities in the importing country.

(6) Permit expanded consumption of agricultural commodities in an importing country and thereby increase total commercial sales of agricultural commodities to the importing country by the United States and other exporting countries.

In considering applications involving export of commodities to countries in a good financial and balance of payments situation, principal reliance will be placed on subparagraphs (1), (2), and (3) of this paragraph.

(e) Applications submitted to the ASCS office shall designate that the commodity is cotton and shall specify the financing period, the country of destination, the approximate port value of the commodity and the name and address of the foreign importer. Application may be made by phone or in writing. On approval of an application, the ASCS office shall assign a financing approval number and issue the financing approval which shall refer to GSM-4, thereby incorporating by reference into the approval all the terms and conditions of GSM-4. For financing approvals issued by the ASCS office, bank obligations must be irrevocable letters of credit. Obligations issued by foreign banks or by agency or branch banks are not acceptable under this paragraph.

(f) If the Assistant Sales Manager for Export Credit or the ASCS office requires additional information, the applicant shall furnish it on request.

(g) The financing approval may contain such terms and conditions as the Assistant Sales Manager for Export Credit or the ASCS office deems in the

interest of CCC not inconsistent with GSM-4.

(h) The official who approved the financing application may, on written application of the exporter, amend the financing approval provided the provisions of such amendment are in conformity with the regulations in this subpart at the time of such amendment and are determined by such official to be in the interest of CCC. Such amendments may include an extension of the period for delivery required by § 1488.7(a) provided the exporter furnishes to CCC acceptable evidence of an export sale contract requiring deliveries during a longer period, as well as an extension of the period for export. CCC may prescribe such additional conditions to such extensions as it determines to be in its interests. A new or amended bank obligation may be required by CCC if the financing approval is amended after the issuance of the related bank obligation. § 1488.4 Coverage of bank obligations.

(a) U.S. banks and agency or branch banks shall be liable without regard to risks for payment of bank obligations issued by them.

(b) If the obligation is issued by a foreign bank, it must be confirmed and advised as provided in paragraphs (c), (d), and (e) of this section.

(c) A U.S. bank must confirm the full account of an obligation issued by its foreign branch. CCC will look to the U.S. bank for payment without regard to risks.

(d) If an agency or branch bank confirms an obligation issued by a bank in the country in which the home office of the agency or branch bank is located, it must confirm the full amount thereof. CCC will look to the agency or branch bank for payment without regard to risks.

(e) Except as provided above in paragraphs (c) and (d) of this section, if a U.S. bank or an agency or branch bank confirms an obligation issued by a foreign bank, it must confirm at least 10 percent pro rata and must advise the remainder of the foreign bank obligation. For the confirmed amount, CCC will hold the U.S. bank or the agency or branch bank liable for commercial risks but not for political risks. For the advised amount, CCC will not hold the U.S. bank or the agency or branch bank liable for commercial or political risks. CCC will hold the foreign bank liable

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