The U.S. Department of Agriculture has
increased by $500 million the amount of operational
credit guarantees available for sales of U.S.
agricultural commodities to Mexico under the Commodity
Credit Corporation’s Export Credit Guarantee Program
(GSM-102) for fiscal year 1999. The total fiscal year
1999 authorization for coverage to Mexico under GSM-102
remains unchanged at $1.25 billion and is now fully
allocated.
Exporters may apply for credit guarantees
for the Mexico GSM-102 program, on a first-come,
first-served basis to cover sales of any of the
commodities specified in the GSM list published in FAS
announcement PR 0434-98, issued September 8, 1998, or as
superseded. The following horticultural products are
eligible under the export credit guarantee programs for
FY 1999: dried fruit; fresh fruit; 100 percent fruit
juices; fruit and vegetable concentrates, pastes, pulps
and purees; honey; hops or hops extract; tree nuts canned
vegetables; dried vegetables; wine; and brandy.
The Export Credit Guarantee Program
(GSM-102 program) makes available financing for the 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 amounts 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.
The table on page 11 presents the FY 1999
GSM-102 programs for which USDA has authorized credit
guarantees for sales of U.S. horticultural products as of
March 25, 1999. Additional information about the GSM-102
program, regulations, country specific press releases and
program announcements, and a Monthly Summary of Export
Credit Guarantee Program Activity may be accessed on the
Internet at:
Supplier Credit Guarantee Program: No
Activity Since Last Publication
The Supplier Credit Guarantee Program
(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.
This publication includes a table that
presents the FY 1999 SCGPs for which USDA has authorized
credit guarantees for sales of U.S. horticultural
products as of March 25, 1999. Additional information
about the SCGP, regulations, country specific press
releases and program announcements, and a Monthly Summary
of Export Credit Guarantee Program Activity may be
accessed on the Internet at:
Note: The GSM will consider requests to
establish a SCGP and/or GSM Program for a country or
region or amend an authorized program to include
horticultural commodities and products which are
currently not eligible.
(For further information on the SCGP or
GSM-102 Program for horticultural commodities, contact
Yvette Wedderburn Bomersheim, 202-720-0911).
