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Export News and Opportunities
Every
U.S. exporter wants to get paid. However,
credit can make or break a deal. It can shift the advantage to you or to your competitor.
That’s why many exporters turn to U.S. Department of Agriculture’s
(USDA) Export Credit Guarantee Programs. With
USDA’s guarantee behind the credit, you can arrange competitive financing with
less risk. Your buyers may benefit too, from longer terms and lower
rates. In FY 2002, USDA has made
available over $4 billion in credit guarantees to facilitate sales to selected
developing countries, Western Europe, Japan, Hong Kong, and Taiwan.
Invest the time to learn more about the Export Credit Guarantee Programs,
(GSM-102) and Supplier Credit Guarantee Program (SCGP), to increase your sales
and lower your risks. Use GSM and
SCGP to avoid possible importer and foreign bank defaults on payments and ensure
that American farm and food products continue to move to markets around the
world. USDA does not provide
financing, but it guarantees payments due to U.S. exporters in case the foreign
banks or importers default.
You
may learn more about GSM-102 and SCGP regulations, country specific press
releases and program announcements, and a Monthly Summary of Export Credit
Guarantee Program Activity on the Internet at:
http://www.fas.usda.gov/export.html
GSM-102
On
February 7, USDA amended the GSM-102 program for the Southeast Asia Region for
fiscal year 2002. The amendment increases the allocation from $90 million to
$190 million. The Southeast Asia Region includes Indonesia, Malaysia, Papua New
Guinea, the Philippines, Singapore, Thailand and Vietnam.
All other terms and conditions as previously announced remain the same.
The previous FAS announcement pertinent to this allocation is PR 0294-01.
Also
on February 7, USDA amended the GSM-102 program for the Caribbean Region for
fiscal year 2002. The amendment increases the allocation from $120 million to
$220 million. The Caribbean Region includes Barbados, Dominican Republic,
Grenada, Guyana, Haiti, Jamaica, Netherlands Antilles, St. Lucia, St. Vincent
and the Grenadines, and Trinidad and Tobago.
All other terms and conditions as previously announced remain the same.
On
February 4, USDA amended the GSM-102 program for Mexico for fiscal year 2002.
The amendment changes the credit terms from 2 years to 3 years on applications
received for guarantee coverage on or after this date of the program
announcement. The total FY 2002
allocation for coverage to Mexico under the GSM-102 program remains unchanged at
$1.0 billion. Of this amount, $500 million is allocated, and $500 million
remains unallocated.
The
GSM-102 program makes available credit guarantees for sales of U.S. agricultural
commodities overseas. USDA does not provide financing, but guarantees payments due
from foreign banks. USDA typically
guarantees 98 percent of the principal and a portion of the interest.
The GSM-102 program covers credit terms from 90 days to 3 years.
Under
the program, once a firm sale exists, the qualified U.S. exporter applies for a
payment guarantee before the date of export.
The U.S. exporter pays a fee calculated on the dollar amount guaranteed,
based on a schedule of rates applicable to different lengths of credit periods. The CCC-approved foreign bank issues a dollar-denominated,
irrevocable letter of credit in favor of the U.S. exporter, ordinarily advised
or confirmed by the financial institution in the United States agreeing to
extend credit to the foreign bank. The
U.S. exporter may negotiate an arrangement to be paid as exports occur by
assigning the U.S. financial institution the right to proceeds that may become
payable under the guarantee, and later presenting required documents to that
financial institution. Such
documents normally include a copy of the export report.
If a foreign bank fails to make any payment as agreed, the exporter or
the assignee may file a claim with USDA for the amount due and covered by the
guarantee. USDA will pay the U.S.
bank and will take on the responsibility of collecting the overdue amount from
the foreign bank.
Supplier
Credit Guarantee Program
On February 7, the USDA amended the SCGP for the Southeast Asia Region under fiscal year 2002. The amendment increases the allocation from $50 million to $150 million. The Southeast Asia Region includes Indonesia, Malaysia, the Philippines, Singapore and Thailand. All other terms and conditions as previously announced remain the same. The previous FAS announcement pertinent to this allocation is PR 0324-01.
On
January 30, the USDA authorized $10 million in supplier credit guarantees for
sales of U.S. agricultural commodities to South Africa under the SCGP for fiscal
year 2002. Exporters may apply for
credit guarantees on a first-come, first-served basis to cover sales of any of
the commodities specified in the GSM list of commodities published in FAS
program announcement PR 0096-01, issued March 20, 2001, or as superseded. The
latest commodity list can be obtained by accessing the FAS home page as
specified below. The
allocation does not assign dollar amounts to any of the commodities specified in
the GSM list of commodities, providing buyers and sellers maximum flexibility in
arranging the size of their transactions within the scope of the overall
allocation.
On
January 28, USDA clarified information required in applications for the SCGP.
FAS program announcement PR 0029-02 provides information to more fully
identify the obligor of the payment guarantee and payment instrument, as well as
provide necessary information under 7 CFR part 1493, subpart D, Section
1493.520(a) wherein CCC will provide notification to the importer of CCC=s rights under the subrogation agreement to recover all moneys in
default where CCC has made payment of loss to the exporter or the exporter=s
assignee.
The
SCGP is unique because it covers short-term financing extended directly by U.S.
exporters to foreign buyers and requires that the importers sign a promissory
note in case of default on the CCC-backed payment guarantee.
The SCGP emphasizes high-value and value-added products, but may include
commodities or products that also have been programmed under the GSM-102
program.
The
SCGP encourages exports to buyers in countries where credit is necessary to
maintain or increase U.S. sales but where financing may not be available without
CCC guarantees. Under the SCGP, CCC
guarantees a portion of payments due from importers under short‑term
financing (up to 180 days) that exporters have extended directly to the
importers for the purchase of U.S. agricultural commodities and products. These
direct credits must be secured by promissory notes signed by the importers. CCC
does not provide financing but guarantees payment due from the importer.
GSM-102
and SCGP
The
following tables present the FY 2002 GSM-102 and SCCP for which USDA has
allocated credit guarantees for sales of U.S. horticultural products.
The table also includes horticultural sales (exporter applications
received) that have been registered under GSM-102 and SCGP.
For most countries and regions, exporters may apply for credit guarantees
on a first-come-first-served basis to cover sales of any of the eligible
commodities published in FAS program announcement PR 0096‑01, issued March
20, 2001 or as superseded. The
following horticultural products are eligible under the export credit guarantee
programs: dried fruit; fresh fruit; frozen fruit; canned fruit; 100-percent
fruit juices; fruit and vegetable concentrates, pastes, pulps and purees; honey;
hops or hops extract; beer; tree nuts; fresh vegetables; canned vegetables;
dried vegetables; wine; and brandy. The General Sales Manager will consider requests to establish
an SCGP and/or GSM Program for a country or region or amend an authorized
program to include horticultural commodities and products that are currently not
eligible.
(For
further information on the SCGP or GSM-102 Program for horticultural
commodities, contact Yvette Wedderburn Bomersheim on 202-720-0911 or Rochelle
Foster on 202-720-2936).
FY 2002 GSM-102 COVERAGE
FY 2002 SUPPLIER CREDIT GUARANTEE COVERAGE
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