(7) Verification of computation of ocean freight differential and notification to approved applicant. Whenever Form CCC 106 provides for an ocean freight rate differential on a c. & f. or c.i.f. sale and authorizes financing of ocean transportation costs by CCC, the banking institution shall determine that the supplier's detailed invoice shows a computation of the dollar amount of ocean freight differential; shall verify the computation of such amount of differential, using the rate stated in Form CCC 106 and the gross weight shown on the supplier's detailed invoice or the bill of lading, whichever is less; and shall include with the advice of dollar disbursement under the letter of credit, a request that the approved applicant notify the importing country or the private trade entity of the amount of such differential:

(i) In the case of the importing country, the notice shall be: "The amount of $------ paid to the beneficiary includes an ocean freight differential of $------. The importing country is indebted to the Government of the United States for the net amount of $----

(8) Reimbursement of CCC for losses. Upon demand therefor made by the ASCS Office named in the letter of commitment, the banking institution shall promptly reimburse CCC for any losses sustained as a direct result of failure on the part of the banking institution to carry out its responsibilities as required by this section.

(9) Adjustment refunds. The banking institution shall, at the end of each calendar quarter, remit to the Controller, CCC, the total amount of any adjustment refunds received during the quarter. A copy of each advice sent to approved applicants or agents shall accompany each quarterly report. (See also § 14.8 (a) (3).)

(10) Credit purchase authorization number. The banking institution shall examine required documents to determine that they bear the appropriate credit purchase authorization number or are readily identifiable therewith.

Any

(11) Additional_requirements. additional particulars for which the banking institution is to be responsible will be specified in the credit purchase authorization or letter of commitment as (i) additional required documents, (ii) additional statements to be contained in the required documents or (iii) additional actions to be performed.

(b) The banking institution shall have limited responsibilities for transactions under a letter of commitment as follows:

(1) Contracting. Section 14.6(a) provides that contracts must meet certain specified requirements in order to be eligible for financing. The banking institution is responsible only to the extent of ascertaining that the required documents show delivery terms as required by the credit purchase authorization (f.o.b., f.a.s., c. & f. or c.i.f.). The banking institution has no responsibility under § 14.6(b) with regard to invitations to bid.

(2) Vessel approval. The banking institution shall not make payment under the letter of credit unless the name of the vessel shown on Form CCC 196 is identical with the name of the vessel shown on the bill of lading. The banking institution is not required to verify the signature appearing on Form CCC 106 or to make an independent inquiry as to the correctness of the information shown thereon.

(3) Discounts, purchasing agent's commissions and consular fees. The banking institution is not required to make independent inquiry as to whether the net invoice price includes either discounts (whether expressed as such or as "commissions" to the importer, or made or to be made through payments, credits or other allowances to the buyer or consignee), commissions payable to purchasing agents, or consular fees, but shall not honor any such items when disclosed by the required documents other than Form CCC-529, Invoice-and-Contract Abstract. The provisions of § 14.10 (c) regarding commissions are included primarily for the instruction of suppliers, and banking institutions are not responsible for compliance therewith except to the extent set forth above.

(4) Weight certificate. The banking institution is responsible for ascertaining that a weight certificate is included in the documentation when required by the credit purchase authorization and

that the quantity invoiced does not exceed the weight shown on the certificate. The banking institution is not responsible for ascertaining that the weight certificate meets the requirement of § 14.14(e).

(5) Insurance. The banking institution shall be responsible for determining compliance with § 14.9 only to the extent of ascertaining that the policy or certificate of insurance includes a loss payable clause which provides for payment of any claims in United States dollars to the Controller, CCC.

(6) Deduction for ocean transportation on c.&f. or c.i.f. invoices. If Form CCC 106 provides that the cost of ocean transportation is not to be financed by CCC, the banking institution shall not make payment under the letter of credit unless a deduction for the cost of ocean transportation is shown on the CCC copy of the supplier's detailed invoice. The banking institution is not required to verify the correctness of the amount(s) of such deduction (s).

(c) For transactions under a letter of commitment, the banking institution is not responsible for the following:

(1) Supplier's certification. The banking institution shall have no responsibility for the truth or accuracy of the statements contained in the supplier's certificates or in any special certification required by this subpart, the terms of the purchase authorization or the letter of commitment. The banking institution is entitled to rely on such certifications.

(2) Invoice and contract abstract. The banking institution is not responsible for the truth or accuracy of information contained in the invoice-andcontract abstract, for the sufficiency or completeness of such information, or for any indication by such information of noncompliance with any provision of this subpart or of the purchase authorization, or for any inconsistency with other required documents.

(3) Contracting period. The credit purchase authorization specifies the period during which contracts may be entered into by suppliers and importers. A banking institution has no responsibility with regard to compliance with this requirement.

(4) Other required documents. The banking institution is not responsible for the truth or accuracy of the statements

contained in any of the required documents. A banking institution is not obligated to look beyond these documents nor to make independent investigation as to the accuracy of statements made therein.

(5) Affiliate. The banking institution is not responsible for determining whether or not the supplier and the importer are affiliates. Also the banking institution is not responsible for the furnishing or verification of any information required to be furnished pursuant to § 14.14(c) (3).

(d) Responsibilities under reimbursement method of financing for transportation purchase authorizations. Purchase authorizations for the procurement of ocean transportation are of the reimbursement type. No letters of commitment are issued for such purchase authorizations.

§ 14.17 Supplier's records.

The Administrator shall have access to and the right to examine any directly pertinent books, documents, papers, and records of the supplier involving transactions related to contracts between the supplier and the importer until the expiration of three years after final payment under such contracts.

§ 14.18 ASCS Commodity Offices.

The addresses of the ASCS Commodity Offices are as follows:

ASCS Commodity Office, U.S. Department of Agriculture, 2201 Howard Street, Evanston, Ill.

ASCS Commodity Office, U.S. Department of Agriculture, 560 Westport Road, Kansas City 41, Mo.

ASCS Commodity Office, U.S. Department of Agriculture, 6400 France Avenue South, Minneapolis 10, Minn.

ASCS Commodity Office, U.S. Department of Agriculture, 120 Marais Street, New Orleans 16, La.

Subpart B-Policies and Procedures Applicable to Agreements With the Private Trade Pursuant to Title IV of Public Law 480, the Agricultural Trade Development and Assistance Act of 1954, as Amended

AUTHORITY: The provisions of this Subpart B issued under secs. 101-103, 106, 107, 68 Stat. 455-457, 69 Stat. 44, secs. 401-404, 406, 73 Stat. 610, sec. 201, 76 Stat. 610; 7 U.S.C. 1701-1703, 1707, 1708, 1731-1734, 1736.

SOURCE: The provisions of this Subpart B appear at 28 F.R. 7285, July 17, 1963; 28 F.R. 7419, July 20, 1963, unless otherwise noted. § 14.51 General statement.

Title IV of Public Law 480, 83d Congress, the Agricultural Trade Development and Assistance Act of 1954, as amended (7 U.S.C. 1731-1736) authorizes the Secretary of Agriculture to enter into agreements with foreign or United States private trade entities, under which the Secretary will provide for the delivery of United States surplus agricultural commodities and for the extension of dollar credit in connection therewith, over the periods of time and under the terms and conditions set forth in Title IV. This subpart outlines the policies and procedures applicable to the negotiation of such private trade agreements including the requirements for filing applications therefor. Except as is otherwise provided in the particular private trade agreement, Subpart A-Regulations Governing the Financing of Commercial Export Sales of Surplus Agricultural Commodities on Credit (26 F.R. 1388) as amended and revised will apply to agreements with private trade entities.

Terms used in this subpart are defined as follows:

(a) "Administrator" means the Administrator of the Foreign Agricultural Service, United States Department of Agriculture, or his designee.

(b) "Assurer" means the institution which assures, on behalf of the private trade entity, repayment in dollars of the amount financed for the account of the private trade entity with interest as due, in accordance with the provisions of the private trade agreement.

(c) "CCC" means the Commodity Credit Corporation, United States Department of Agriculture.

(d) "Friendly nation" means any country other than (1) the U.S.S.R., or (2) any nation or area dominated or controlled by the foreign government or foreign organization controlling the world Communist movement.

(e) "General Sales Manager” means the General Sales Manager of the Foreign Agricultural Service, United States Department of Agriculture, or his designee.

(f) "Private trade agreement” means an agreement between CCC and a private trade entity for the supply and financing of surplus agricultural commodities on credit, entered into pursuant to this subpart.

(g) "Private trade entity" means the private individual or organization which enters into the private trade agreement.

(h) "Project" means the private enterprise or other non-governmental activities to be undertaken by a private trade entity in accordance with the provisions of the private trade agreement.

(i) "Secretary" means the Secretary of Agriculture of the United States, or his designee.

(j) "Subpart A" means Subpart ARegulations Governing the Financing of Commercial Export Sales of Surplus Agricultural Commodities on Credit (26 F.R. 1388) as amended and revised. Terms defined in Subpart A shall have the same meaning under this subpart. § 14.53 Basic considerations.

The purpose of this program is to stimulate and increase the sale of surplus agricultural commodities for dollars through long-term supply agreements and through the extension of credit for the purchase of such commodities, by agreements with the private trade, thereby assisting the development of the economies of friendly nations and maximizing dollar trade. The private trade agreements will require that cash dollar exports of the United States be safeguarded and will require assurance that sales thereunder will not unduly disrupt world prices of agricultural commodities or normal patterns of commercial trade with friendly countries. Emphasis under this program will be placed on agreements pursuant to which commodities or credit or both will be used for economic development by private enterprise in less developed countries, especially agreements covering projects which will assist in the development of markets for United States agricultural commodities.

§ 14.54 Eligibility of private trade entities.

Private trade entities of the United States and friendly foreign countries, which will utilize the credit for the project, are eligible for private trade agreements.

§ 14.55 Commodity eligibility.

(a) To be eligible for inclusion in a private trade agreement, commodities must have been determined by the Secretary, as of the date the agreement is entered into, to be surplus agricultural commodities produced in the United States and otherwise eligible for supply under Title IV private trade agreements.

(b) Even though included in an agreement, the commodities must be surplus agricultural commodities at time of delivery in order to be eligible for financing under the agreement. Private trade entities will be notified in the event that commodities included in private trade agreements are determined not to be eligible for export under the agreement because they are no longer surplus agricultural commodities or for other reasons. In such event, the Administrator will give consideration to a request for the delivery of substitute commodities.

(c) Information about the eligibility of commodities and other matters dealt with in this section may be obtained from the General Sales Manager.

§ 14.56 Supply periods.

Private trade agreements shall provide for delivery of specified eligible surplus agricultural commodities and quantities thereof for specified periods. As a general policy, supply periods shall not exceed three years, but longer supply periods not to exceed 10 years may be provided if the longer period is essential in order to accomplish the purposes of the project. Generally, the supply period shall be expressed in terms of calendar years or United States fiscal years, but other periods may be authorized.

institutions be advised by or through a United States bank.

(b) Payment of amounts due for commodities financed under private trade agreements shall be secured by the irrevocable assurance of an assurer, except where an acceptable financial institution signs the agreement as the private trade entity or jointly with another private trade entity.

(c) The assurance of payment shall obligate the assurer, in case of default on any scheduled annual payment, to pay CCC in dollars the amount of principal in default with accrued interest. In addition, depending on the particular circumstances, the assurer may be required to assure performance of other provisions of the agreement.

(d) Applications for private trade agreements will be rejected if the proposed assurer is not acceptable from the standpoint of providing reasonable and adequate assurance of payment.

(e) The private trade entity shall furnish CCC an acceptable assurance of payment prior to the issuance of the purchase authorization.

§ 14.58

Credit terms and other financing provisions.

(a) The maximum period over which payments may be made for all deliveries of all commodities in a particular calendar year is 20 years from the date of the last delivery in such calendar year. The credit period approved for a particular private trade agreement shall be related to the project to be undertaken under the agreement.

(b) Payment of the principal amount due for commodities delivered in each calendar year, including ocean transportation or other costs applicable to such deliveries which are financed by CCC under the agreement, shall be made in approximately equal annual amounts, the first payment being due on a date specified in the agreement but in no event later than December 31 following the calendar year in which such deliveries were made. Subsequent annual payments shall become due on the anniversary dates of such first payment provided that, in the case of agreements calling for 20 annual payments, the final payment for commodities delivered in any calendar year shall become due 20 years from the date of last delivery of commodities in such calendar year. Any annual payment may be made prior to the due date thereof.

(c) The interest rate fixed in an agreement shall be the cost of funds to the United States Treasury for comparable maturities. The interest rate shall be fixed as of the time the agreement is entered into, such rate continuing for the life of the agreement. Interest on the unpaid balance of the principal amount due with respect to commodities delivered in each calendar year shall begin on the date of last delivery of commodities in such calendar year. Interest on each such unpaid balance shall be paid annually not later than the date on which the annual payment of principal becomes due.

(d) Information as to interest rates may be obtained from the General Sales Manager.

§ 14.59

Countries to which commodities may be exported.

(a) Exports of commodities may be made to any friendly nation if it is determined that exports to such nation under the proposed private trade agreement are in accordance with the basic considerations as set forth in § 14.53. Information as to eligibility of specific nations may be obtained from the General Sales Manager.

(b) Commodities shall be exported only to friendly nations specified in the private trade agreement and shall not be transshipped or reexported to other nations.

(c) The private trade agreement will require that imports of commodities into the countries specified in the agreement be additional to imports of such commodities from the United States and friendly historic supplying nations on a cash dollar or other commercial basis. Information with regard to this requirement may be obtained from the General Sales Manager.

(d) As a general policy, agreements will provide that commodities will be exported to countries in which the credit is to be utilized. Exceptions may be made when it is determined that the basic purposes set forth in § 14.53 can best be achieved by an exception.

§ 14.60 Purposes for which credit may be utilized.

(a) Benefits derived from credit extended to the private trade entity under a private trade agreement shall be used only for private enterprise or other nongovernmental projects set forth in the agreement, to accomplish one or more

of the following objectives: The expansion of dollar exports of United States surplus agricultural commodities, the development of foreign markets for United States agricultural commodities, and assistance in the economic development of friendly nations. The provision of relatively short-term working capital assistance for foreign importers or users of the commodity, which in turn will result in an expansion of dollar exports of United States surplus agricultural commodities, is an acceptable project.

(b) Benefits derived from credit extended to the private trade entity under the private trade agreement shall not be used to procure supplies, materials, equipment, or services from nations unfriendly to the United States. Private trade agreements involving procurement of United States supplies, materials, equipment, or services shall be given preference, other factors being equal.

§ 14.61 Export costs to be financed.

CCC will finance only such costs relating to the sale and exportation of commodities as are specified in the private trade agreement.

§ 14.62 Submission of applications.

(a) The private trade entity shall submit an application in duplicate in English. Information as to such application may be obtained from the General Sales Manager. Prior to preparing a complete application, the private trade entity may informally discuss with the General Sales Manager proposals for private trade agreements. The Administrator reserves the right to reject any application.

(b) The application shall be signed by the private trade entity. In the case of a corporation or similar entity, a duly authorized officer of the entity shall sign on its behalf.

§ 14.63 Principals preferred.

CCC prefers to deal with principals, especially in the negotiation of the pri« vate trade agreement, but the applicant; may engage attorneys, engineers, or other qualified persons to advise and assist in preparing material required to be submitted in connection with the application, or to assist in carrying out activities pursuant to the agreement.

§ 14.64 Fees for services in obtaining agreements.

(a) Every applicant for a private trade agreement shall warrant that no person