[Federal Register Volume 63, Number 37 (Wednesday, February 25, 1998)]
[Proposed Rules]
[Pages 9451-9453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4706]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 63, No. 37 / Wednesday, February 25, 1998 /
Proposed Rules
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1485
Agreements for the Development of Foreign Markets for
Agricultural Commodities
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Proposed rule.
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SUMMARY: This rule proposes to amend the regulations applicable to the
Market Access Program (MAP) authorized by section 203 of the
Agricultural Trade Act of 1978. This proposed rule would incorporate
into the MAP allocation process the level of export contributions made
by U.S. industry participants; authorize reimbursement of certain
travel expenses for brand participants and certain necessary packaging
and labeling design expenses; extend the activity payment deadline
following the end of an activity plan year; establish a 5-year limit,
per country, on CCC assistance for brand promotion by single companies;
and permit reimbursement to participants based upon issuance of a
credit memo as an alternative to a transfer of funds.
DATES: Written comments must be received by March 27, 1998 to be
assured of consideration.
ADDRESSES: Comments should be submitted to: Kent Sisson, Director,
Marketing Operations Staff, Foreign Agricultural Service, United States
Department of Agriculture, 1400 Independence Avenue, SW., Ag Box 1042,
Room 4932S, Washington, DC 20250-1042. Fax: (202) 720-9361.
FOR FURTHER INFORMATION CONTACT: Kent Sisson or Denise Fetters at (202)
720-4327.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This proposed rule is issued in conformance with Executive Order
12866. It has been determined that this proposed rule would not have an
annual economic effect in excess of $100 million; would not cause a
major increase in costs to consumers, individual industries, Federal,
State, or local government agencies, or geographic regions; and would
not have an adverse effect on competition, employment, investment,
productivity, innovation, or the ability of U.S.-based enterprises to
compete with foreign-based enterprises in domestic or foreign markets.
Executive Order 12988
This proposed rule has been reviewed in accordance with Executive
Order 12988, Civil Justice Reform. This rule would have preemptive
effect with respect to any State or local laws, regulations or policies
which conflict with such provisions or which otherwise impede their
full implementation; does not have retroactive effect; and does not
require administrative proceedings before suit may be filed.
Executive Order 12372
This program is not subject to the provisions of Executive Order
12372 which requires intergovernmental consultation with State and
local officials (see the notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115).
Regulatory Flexibility Act
It has been determined that the Regulatory Flexibility Act is not
applicable to this proposed rule because CCC is not required by any
other provision of law to publish a notice of proposed rulemaking with
respect to the subject matter of this proposed rule.
Paperwork Reduction Act
The information collection requirements for participating in the
MAP were approved for use by the Office of Management and Budget (OMB)
through April 30, 2000, and assigned OMB No. 0551-0027. This proposed
rule would not impose new information collection requirements.
Background
The MAP is authorized by section 203 of the Agricultural Trade Act
of 1978, as amended (7 U.S.C. 5623), which directs the Commodity Credit
Corporation (CCC) to establish ``a program to encourage the
development, maintenance, and expansion of commercial markets for
agricultural commodities through cost-share assistance to eligible
trade organizations.'' CCC implements this provision by entering into
agreements with non-profit trade associations, private organizations,
State agencies, and cooperatives. These agreements provide for sharing
the costs of overseas advertising, technical assistance, and other
export promotion activities, and may include either generic or brand
promotions.
On February 1, 1995, CCC published a final rule in the Federal
Register (60 FR 6352) governing the operations of the MAP. Since
publication of that rule, CCC has had ongoing discussions with program
participants concerning program improvements. Some of the changes
proposed herein are based on these discussions.
CCC proposes to take State and industry contributions into
consideration during the MAP allocation process. Currently, such
contributions are not considered in the allocation process. This
approach does not recognize the value and significance of contributions
made by the States and industries in support of foreign market
development efforts. Therefore, CCC is proposing to amend
Sec. 1485.14(c)(4) to include State and industry export promotion
contributions in the MAP allocation process. In order to protect the
integrity of the allocation process, CCC also proposes to amend
Sec. 1485.21 to make the participant responsible to CCC for the full
contribution upon which the allocation would be based. In other words,
the regulations would require the participant to pay to CCC the
difference between the amount actually contributed and the amount
specified in the allocation approval letter.
Section 1485.16(d)(3) currently disallows reimbursement for costs
associated with the design and production of packaging, labeling, and
origin identification. However, CCC believes that when changes in
packaging, labeling, or origin identification are necessary to meet
another country's importing requirements, reimbursement is appropriate.
Therefore, this rule proposes to amend Sec. 1485.16(d)(3) and to add a
Sec. 1485.16(b)(11) which specifically authorizes reimbursement of
necessary costs associated with the design and production of packaging,
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labeling, and origin identification. The participant will be
responsible for demonstrating that the change was necessitated by
foreign importing requirements. CCC will not reimburse any cost for
creative artwork and design.
MAP participants currently must transfer payment for expenditures
within 4 months of the completion of the activity plan year in order to
be reimbursed. For activities which occur near the end of he activity
plan year, some participants occasionally fail to meet the 4-month
deadline due to delays in receiving the necessary paperwork, such as
invoices or purchase orders, from their overseas counterparts.
Extending the period of time for payment to 6 months would facilitate
participant compliance and still allow for efficient program
management. Because reimbursement for these approved activities
effectuates the goals of the program, CCC believes that extending the
deadline to 6 months is justifiable and proposes such amendment to
Sec. 1485.16(h)(3).
CCC currently will not reimburse brand participants for any travel
expenses. CCC believes that company participation in a trade show is a
crucial step for entering new export markets. Because international
travel can be expensive, small firms sometimes must forego attending
trade shows which could greatly increase their chances for successful
market entry and result in actual sales. To encourage trade show
participation by brand participants, CCC is proposing to amend section
1485.16 to authorize reimbursement for the air travel and per diem
associated with participation in foreign trade shows. Other travel
costs would not be reimbursed. Reimbursement would be limited to travel
and per diem expenses for no more than two representatives of the brand
participant. Travel and per diem expenses would not be reimbursed
unless the participant is an exhibitor.
The MAP currently limits any company to five years of CCC
assistance per country per product for brand promotion. CCC believes,
however, that it can expand export opportunities more effectively by
limiting each company to five years of brand promotion in any country.
In other words, after five years of receiving assistance from CCC for
brand promotion in a given country, a company would ``graduate'' from
the program in that country. Such company would remain eligible to
participate in any other country in which it had received brand
promotion assistance for less than five years. This would allow CCC to
share its limited resources with a wider variety of American exporters
and in a wider variety of markets. After five years of assistance in a
country, a company should have established itself in that country and
be able to finance 100 percent of its costs. CCC proposes to amend
Sec. 1485.14(d)(2) accordingly. CCC will calculate this five-year
period as is done under the current rule.
Finally, another participant suggestion is to accept credit memos
as documentation for participant reimbursement claims. Credit memos are
widely used in business transactions throughout the world; however, CCC
does not currently accept such memos as proof of eligible promotion
expenditures. CCC had been concerned that monitoring compliance might
be difficult if credit memos were allowed. After careful examination
and review, including consultation with the Office of Inspector
General, CCC believes it can adopt and implement audit controls to
permit the use of credit memos while adequately protecting CCC's
interests.
CCC believes this policy regarding credit memos prevents some
participants, in particular small businesses who would prefer to pay
for certain promotional activities using credit memos, from deriving
the full benefits of the program. Therefore, CCC proposes to amend
Sec. 1485.20(a)(3)(vi) to accept credit memos as supporting
documentation for reimbursement and auditing purposes. CCC proposes to
add a definition of ``credit memo'' as a notice that a vendor has
decreased an amount owed for promotional expenditures at the time the
credit memo is issued. CCC also proposes to add a definition of
``expenditure,'' in Sec. 1485.11, to clarify that an expenditure can be
either a transfer of funds or a payment via a credit memo in lieu of a
transfer of funds. This rule also proposes conforming changes to
accompany the six proposed substantive changes discussed herein.
List of Subjects in 7 CFR Part 1485
Agricultural commodities, Exports.
In consideration of the foregoing, the Commodity Credit Corporation
proposes to amend 7 CFR part 1485 as follows:
PART 1485--[AMENDED]
1. The authority citation for 7 CFR 1485 continues to read as
follows:
Authority: 7 U.S.C. 5623; 7 U.S.C. 5662-5663 and sec. 1302, Pub.
L. 103-66, 107 Stat. 330.
Subpart B--Market Promotion Program
2. Section 1485.11 is amended by deleting the paragraph
designations and adding the following two new definitions in
alphabetical order:
Sec. 1485.11 Definitions.
* * * * *
Credit memo--a notice that a vendor has decreased an amount owned
for promotional expenditures at the time the credit memo is issued.
* * * * *
Expenditure--the transfer of funds or payment via a credit memo in
lieu of a transfer of funds.
* * * * *
3. Section 1485.14 is amended by removing paragraph (d)(3) and
revising paragraphs (c)(4) and the first sentence of (d)(2) to read as
follows:
Sec. 1485.14 Application approval and formation of agreements.
* * * * *
(c) * * *
(4) Level of participant's State's, and industry's contributions;
* * * * *
(d) * * *
(2) CCC will not provide assistance to a single company for brand
promotion in a single country for more than five years. * * *
* * * * *
4. Section 1485.16 is amended by removing paragraph (a)(2);
redesignating paragraph (a)(3) as paragraph (a)(2); adding paragraphs
(b)(11) and (12); and revising paragraphs (a)(1), (b)(9), (d)(3), and
(h)(3) to read as follows:
Sec. 1485.16 Reimbursement rules.
(a) * * *
(1) The expenditure was made in furtherance of an approved
activity; and
* * * * *
(b) * * *
(9) Part-time contractors such as demonstrators, interpreters,
translators and receptionists to help with the implementation of
promotional activities such as trade shows, in-store promotions, food
service promotions, and trade seminars;
* * * * *
(11) The design and production of packaging, labeling or origin
identification, if necessary to meet the importing requirements in a
foreign country; and
(12) Air travel not to exceed the full fare economy rate and per
diem as allowed under the U.S. Federal Travel Regulations (41 CFR parts
301 through 304) for no more than two representatives of a single brand
participants to participate as trade show exhibitors.
* * * * *
(d) * * *
(3) The design and production of packaging, labeling or origin
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identification, except as described in paragraph (b)(11) of this
section.
* * * * *
(h) * * *
(3) all expenditures were made for the activity within 6 months
following the end of the activity plan year.
5. Section 1485.20 is amended by revising paragraph (a)(3)(vi) to
read as follows:
Sec. 1485.20 Financial management, reports, evaluations and appeals.
(a) * * *
(3) * * *
(vi) Documentation with accompanying English translation supporting
each reimbursement claim, including original evidence to support the
financial transactions such as canceled checks, receipted paid bills,
contracts or purchase orders, per diem calculations, travel vouchers,
and credit memos; and
* * * * *
6. Section 1485.21 is revised to read as follows:
Sec. 1485.21 Failure to make required contribution.
An MAP participant's contribution requirement will be specified in
the MAP allocation letter and the activity plan approval letter. The
amount specified will be in the amount of contribution to be furnished
by the applicant and other sources as indicated in the participant's
application. The MAP participant shall pay to CCC in dollars the
difference between the amount actually contributed and the amount
specified in the allocation approval letter. An MAP participant shall
remit such payment within 90 days after the end of its activity plan
year
Signed at Washington, DC, on February 9, 1998.
Lon Hatamiya,
Administrator, Foreign Agricultural Service and Vice President,
Commodity Credit Corporation.
[FR Doc. 98-4706 Filed 2-24-98; 8:45 am]
BILLING CODE 3410-10-M
