Export Credit Guarantee Program: USDA
Amends Credit Guarantees to South Korea
On April 13, the U.S. Department of
Agriculture (USDA) amended the terms of coverage
available to U.S. exporters for sales of U.S.
agricultural commodities to South Korea under the
Commodity Credit Corporation’s Export Credit
Guarantee Program (GSM-102) for fiscal year 1999.
Coverage up to 98 percent of the principal is offered on
credit terms from 90 days to 2 years, except for solid
wood products and wood pulp. In any case where the credit
period exceeds 6 months, principal repayments plus
accrued interest are due at 6-month intervals. Adjustable
interest coverage is also offered in accordance with FAS
program announcement PR 1080-94, issued September 26,
1994. All other terms and conditions previously announced
remain the same. The total fiscal year 1999 allocation to
Korea remains unchanged at $1 billion, with $503
allocated and $497 million unallocated.
Korea is an important market for U.S.
horticultural exports. In fiscal year 1998, Korea was the
seventh largest market for U.S. horticultural exports.
U.S. horticultural sales totaled $166 million, down 40
percent from 1997. As a result of a decline in U.S.
horticultural exports to Korea, USDA authorized $5
million in credit guarantees for horticultural products
under the Korea GSM-102 program. These credit guarantees
will provide Korea with the assistance in financing
horticultural imports as it works to rebuild its economy,
and the $5 million authorization will help the United
States export its horticultural products. Exporters may
apply for credit guarantees on a first-come, first-served
basis to cover sales of the following horticultural
products:
Dried fruit: raisins; prunes; dates; figs;
and apples
Fresh fruit: apples; apricots; avocados;
blueberries; cherries; grapefruit; grapes; kiwi; lemons;
melons, including watermelon, cantaloupe, and honey dew;
nectarines; oranges; peaches; pears; plums; raspberries;
strawberries; and tangerines
Potatoes: cut and chilled or frozen;
flakes; granules; dried and dehydrated refers to flakes
and granules
Tree nuts: almonds, pecans, pistachios,
walnuts, and hazelnuts
The $5 million Korea GSM-102 authorization
for horticultural products includes an allocated $3
million and an unallocated $2 million. The unallocated
amount is to ensure that credit guarantees are available
throughout the year given the seasonality of
horticultural products.
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
June 4, 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: http://www.fas.usda.gov/excredits/exp-cred-guar.html
Supplier Credit Guarantee Program: USDA
Amends Credit Guarantees to Andean Region
On June 14, the U.S. Department of
Agriculture (USDA) amended the Commodity Credit
Corporation’s Supplier Credit Guarantee Program
(SCGP) for the Andean Region for fiscal year 1999 to
change the country destinations. Eligible destinations
are Bolivia, Chile, and Peru. Authorization for coverage
to the Andean Region remains unchanged at $10 million.
All other terms and conditions previously announced
remain the same.
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
0122-99, issued April 8, 1999, or as superseded. The
following horticultural products are eligible under the
export credit guarantee programs for FY 1999: dried
fruit; fresh fruit; frozen fruit; 100 percent fruit
juices; canned fruit; fruit and vegetable concentrates,
pastes, pulps and purees; honey; hops or hops extract;
potatoes; tree nuts; canned vegetables; dried vegetables;
fresh vegetables; frozen vegetables; wine; beer; and
brandy. The latest commodity program announcement can be
obtained by accessing the FAS homepage as specified
below.
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 table on page 12 presents the FY 1999
SCGPs for which USDA has authorized credit guarantees for
sales of U.S. horticultural products as of June 4, 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: http://www.fas.usda.gov/excredits/scgp.html
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.
FY 1999 GSM-102 Credit Guarantee
Coverage 1/
1/Coverage is detailed in FAS
Program Announcements for all commodities, including
those not listed as of June 4, 1999. FAS news releases
are available on the Internet at http://www.fas.usda.gov/excredits/exp-cred-guar.html.
FY 1999 Supplier Credit Coverage 1/
1/ Coverage is detailed in FAS Program
Announcements for all commodities, including those not
listed as of June 4, 1999. FAS news releases are
available on the Internet at http://www.fas.usda.gov/excredits/scgp.html.
