[Federal Register Volume 60, Number 21 (Wednesday, February 1, 1995)]
[Rules and Regulations]
[Pages 6352-6372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2477]
[[Page 6351]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
Commodity Credit Corporation
_______________________________________________________________________
7 CFR Part 1485
Agreements for the Development of Foreign Markets for Agricultural
Commodities; Final Rule
Market Promotion Program FY 1995; Notice
Federal Register / Vol. 60, No. 21 / Wednesday, February 1, 1995 /
Rules and Regulations
[[Page 6352]]
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1485
Agreements for the Development of Foreign Markets for
Agricultural Commodities
AGENCY: Commodity Credit Corporation (CCC).
ACTION: Final rule.
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SUMMARY: This final rule adopts the substantive provisions of the
Interim Rules published August 16, 1991, (56 FR 40747) and November 17,
1993, (58 FR 60550) regarding implementation of the Market Promotion
Program with changes to reflect public comments and recent legislative
changes to the authorizing statute. The interim rule was also edited to
present a more logical and understandable regulation.
EFFECTIVE DATE: February 1, 1995.
FOR FURTHER INFORMATION CONTACT: Sharon L. McClure, Director, Marketing
Operations Staff, Foreign Agricultural Service, United States
Department of Agriculture, 14th and Independence Avenue, SW.,
Washington, DC, 20250-1042. Telephone: (202) 720-5521. The Final
Regulatory Impact Analysis concerning this rule is available on request
from the Director, Marketing Operations Staff, Foreign Agricultural
Service, United States Department of Agriculture, 14th and Independence
Avenue, SW., Washington, DC, 20250-1000. Telephone: (202) 720-5521. The
United States Department of Agriculture (USDA) prohibits discrimination
in its programs on the basis of race, color, national origin, sex,
religion, age, disability, political beliefs and marital or familial
status. Persons with disabilities who require alternative means for
communication of program information (braille, large print, audiotape,
etc.) should contact the USDA Office of Communications at (202) 720-
5881 (voice) or (202) 720-7808 (TDD).
SUPPLEMENTARY INFORMATION: This rule is issued in conformance with
Executive Order 12866. Based on information compiled by USDA it has
been determined that this rule is ``economically significant'' and has
been reviewed by the Office of Management and Budget.
This final rule amends the existing information collection as
approved by the Office of Management and Budget (OMB) pursuant to the
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.), under OMB
control numbers 0563-0001, 0563-0003, and 0563-0029. Due to the time
constraints of implementing the rule immediately, the agency has
requested emergency clearance of this addendum from OMB. Comments on
the information collection may be sent to the Office of Information and
Regulatory Affairs, Office of Management and Budget, room 10202, NEOB,
Washington, DC 20503. Attention: Desk Officer for USDA.
It has been determined that the Regulatory Flexibility Act is not
applicable to the final rule since CCC is not required by 5 U.S.C. 553
or any other provision of law to publish a notice of rulemaking with
respect to the subject matter of this rule.
This program is not subject to the provisions of Executive Order
12372, which requires intergovernmental consultation with State and
local officials. See notice related to 7 CFR part 3015, subpart V,
published at 48 FR 29115 (June 24, 1983).
This rule has been reviewed under the Executive Order 12778, Civil
Justice Reform. The 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.
The rule would not have retroactive effect. The rule requires that
certain administrative remedies be exhausted before suit may be filed.
The Department of Agriculture is committed to carrying out its
statutory and regulatory mandates in a manner that best serves the
public interest. Therefore, where legal discretion permits, the
Department actively seeks to promulgate regulations that promote
economic growth, create jobs, are minimally burdensome and are easy for
the public to understand, use or comply with. In short, the Department
is committed to issuing regulations that maximize net benefits to
society and minimize costs imposed by those regulations.
Background
Section 203 of the Agricultural Trade Act of 1978, as amended,
directs the CCC to carry out a program to encourage the development,
maintenance and expansion of commercial export markets for agricultural
commodities through cost-share assistance to eligible trade
organizations. Such assistance may be provided in the form of CCC funds
or CCC owned commodities.
Since the inception of the MPP, CCC has monitored the program
closely, strengthened program controls and implemented changes to
improve the effectiveness of the program. In administering the program,
CCC is committed to ensuring efficient and effective use of public
funds. In this regard, CCC considers an applicant's need for Federal
financial assistance, an applicant's use of rigorous performance
measurements in its plans, and increasing contribution levels from
participants as important factors in the overall management of the MPP.
Summary and Analysis of General Comments
On August 16, 1991 (56 FR 40747), and November 17, 1993 (58 FR
60550), interim rules were published governing the operations of the
Market Promotion Program authorized by Section 203 of the Agricultural
Trade Act of 1978, as amended by Section 1531 of the Food, Agriculture,
Conservation, and Trade Act of 1990 (Pub. L. 101-624) and the Omnibus
Budget Reconciliation Act of 1993 (Pub. L. 103-66).
Following is a summary of the comments which specifically address
the provisions of the interim rules and CCC's responses to these
comments. The discussion addresses each interim rule separately and,
therefore, may not follow the sequence of the interim rules. General
comments relating to the value and success of the program, editorial
suggestions, and non-substantive comments have been omitted.
CCC received 46 letters containing nearly 200 comments from
nonprofit U.S. trade associations, U.S. companies, state organizations,
regional trade associations, cooperatives and consulting firms in
response to the interim rule published on August 16, 1991 (56 FR
40747).
Definitions
CCC received 42 comments on this section.
Comment: Revise the definition of ``foreign third party'' to
include individuals.
Response: CCC agrees with the commenter and has expanded the
definition to encompass ``foreign entity'', thereby including
individuals.
Comment: Include a definition for ``foreign third party
contribution''.
Response: CCC defined ``contribution'' in Sec. 1485.11(i) to refer
to costs incurred in support of an approved activity. The rule contains
detailed provisions as to the expenditures that may be counted as
contributions.
Comment: Define the term ``allowances'' as used in Sec. 1485.20(b).
Response: The term ``allowances'' refers to the cost of housing and
educational tuition and cost of living adjustments. Further
clarification is provided in Sec. 1485.16(c). [[Page 6353]]
Comment: Clarify the term ``fiscal year''.
Response: CCC deleted all references to the term ``fiscal year'' in
the final rule since it had no significant bearing on the
administrative operations of the program.
Comment: Revise the definition of ``trade servicing'' to include
processors.
Response: CCC did not intend to exclude activities directed at
processors. Therefore, CCC deleted the definition of ``trade
servicing'' in favor of its ordinary and customary meaning.
Comment: CCC's definitions for ``brand product or brand commodity''
and ``brand promotion'' restrict or prevent the use of brand names in
worthwhile promotional activities. Furthermore, the definitions do not
account for the way in which high value products are marketed. These
definitions should be amended so that if all brands within an industry
sector are included on an advertising copy, then it would be considered
a generic promotion.
Response: CCC recognizes the merit of this suggestion and amended
the definition of ``brand promotion'' in Sec. 1485.11(g).
Comment: Print or media advertising containing the name of a retail
outlet should be considered a generic promotion rather than a brand
promotion since a retailer's name is not a private label.
Response: CCC adopted the concept that print or media advertising
containing the name of a retail outlet is a generic promotion rather
than a brand promotion.
Comment: Include ``private label products'' in the definition of
``brand promotion.''
Response: The revised definition of brand promotion would encompass
promotion of private label products.
Comment: Clarify the difference between the terms ``U.S. commercial
entity'' and ``U.S. entity''.
Response: CCC deleted all references to the term ``U.S. entity'' in
the final rule. The term ``U.S. commercial entity'' is defined at
Sec. 1485.11(ff).
Comment: Clarify the term ``incurred expense''. A strict
interpretation of this term could pose serious problems for non-
refundable deposits. For example, an MPP participant makes a non-
refundable deposit in October for an advertisement which will air in
January. Is the expense ``incurred'' on the date the space is reserved
and a deposit is made (October) or on the date the advertisement
actually airs (January)?
Response: CCC defines ``incurred'' as the date a participant or
third party transfers funds to pay for an expenditure. In this example,
the expense is incurred when the deposit is made.
Comment: Define the terms ``market'' and ``functions''.
Response: The term ``market'' is defined as ``a country'' in the
final rule. CCC also deleted all references to the term ``functions''.
Comment: Define the term ``sales expenses''.
Response: CCC did not define the term ``sales expenses'' since it
has an ordinary and customary meaning. The term ``sales expenditures''
appears in Sec. 1485.13(c)(3)(x) and Sec. 1485.16(d)(6).
Comment: Define the term ``permanent display''. On what basis is
something determined to be ``permanent''--time used, material used,
level of use?
Response: The term ``permanent'' as used in Sec. 1485.16(d)(7)
means enduring or lasting beyond one activity plan year.
Comment: Expand the definition of ``agricultural commodity or
commodity'' to include high value items such as beverages, pet foods,
vitamin and mineral supplements, flowers, ornamental plants, seeds, and
mineral water.
Response: CCC revised the definition of ``agricultural commodity''
at Sec. 1485.11(d) to match the statutory definition applicable to the
MPP. This definition includes ``products'' thereby covering many of the
items listed by the commenter. Mineral water, however, does not fall
within this statutory definition.
CCC added definitions for ``eligible commodity'', ``exported
commodity'' and ``promoted commodity'' in Sec. 1485.11(o),
Sec. 1485.11(p) and Sec. 1485.11(x), respectively, because a
description of each of these is required for each application. This
information is necessary for determining appropriate reimbursement
rates and for evaluating MPP and EIP/MPP proposals.
Slotting Fees and Display Space Rental Fees
CCC received 14 comments on this issue.
Comment: The interim rule should clearly distinguish between
slotting fees and display space rental fees since they are not one and
the same. Slotting fees--the cost of getting a new product into the
warehouse or obtaining shelf space in the store--should not be
reimbursable under the MPP. Display space fees, on the other hand, are
promotional expenses associated with using store space for end-aisle
displays, case stack displays, demonstrations, etc., and should be
eligible for reimbursement. Temporary off-shelf display space is one of
the most effective promotional tools available because it stimulates
impulse purchases and provides high in-store visibility.
Response: CCC agrees with the commenters that display space fees
are appropriate promotional expenditures. Therefore, CCC amended the
final rule to allow participants to seek reimbursement for display
space fees. Slotting fees, however, are not eligible for reimbursement.
Contributions
CCC received ten comments on this issue.
Comment: What is meant by the phrase ``to be eligible as a
participant's contribution, an expense must be directly incurred by the
MPP participant. . .''? For example, can contributions made by regional
or product associations which are members of an MPP participant count
as a participant contribution?
Comment: Expenses incurred and time spent by employees of state
departments of agriculture involved in the design and execution of the
MPP should be considered eligible participant contributions.
Response: An MPP participant may count, as part of its participant
contribution, time and expenses incurred by member organizations
provided the costs incurred are for the overall administration or
management of the participant's entire MPP.
Comment: CCC should not require MPP participants to enter into
written agreements with foreign third parties in order to count the
expenses incurred as contributions. When pressed on the issue of
entering into written agreements, foreign third parties often withdraw
their support and participation in promotional activities.
Response: A participant is no longer required to enter into a
written agreement with a third party if the expenses incurred by the
third party are claimed solely as contributions. However, to the extent
that the U.S. industry or a foreign third party participates in an
activity, the expenses incurred by the contributing party must be
documented and available for audit. The final rule is adopted in this
regard.
Comment: Expenses incurred by target audiences should be considered
eligible contributions. Their willingness to bear costs such as travel
expenses and registration fees indicates a strong support for a
participant's program.
Response: CCC agrees with the commenter and considers costs
incurred by a target audience, other than any portion of salary or
compensation, as [[Page 6354]] eligible contributions. This change is
reflected in Sec. 1485.13(c)(3)(ii).
Comment: Sections 1485.16(a)(7) and (8) of the interim rule should
be revised to permit expenditures that are incurred prior to CCC's
approval of the activity plan to be eligible contributions.
Response: The MPP is a cost-share program designed to develop,
maintain and expand commercial export markets for U.S. agricultural
commodities. Allowing unauthorized expenditures to be claimed as
contributions would eliminate this basic principle of the MPP.
Comment: Why does CCC consider all expenditures on brand promotions
to be ineligible contributions? In some cases the contributions made by
brand participants are considerably higher than the minimum 50 percent
and such contributions are essential for achieving overall goals in the
target markets.
Response: It is not necessary to consider contributions in
connection with brand promotion activities since CCC reimburses these
activities on a set cost-share basis. However, expenditures incurred by
an MPP participant in administering its brand program are eligible
contributions. This point is clarified in Sec. 1485.13(c)(3)(i).
Brand Promotion Program Operations
CCC received 22 comments on this issue.
Comment: CCC should not require an applicant to provide plans and
budgets for its brand program as part of the application. This
requirement is both excessive and redundant since the same information
is provided in the activity plan.
Response: CCC allocates MPP resources on the basis of several
specific criteria, one of which is the adequacy of the applicant's
proposed strategic plan. In order to make this determination, CCC
evaluates the applicant's proposed program in its entirety which
includes plans for both generic and brand promotion activities and
corresponding budgets. CCC also establishes budget ceilings (maximum
funding levels) by country and program type--generic versus brand--
based on the strategic plan. Accordingly, this aspect of the interim
rule is adopted.
Comment: CCC should not require an MPP participant to reannounce
the availability of unexpended brand promotion funds nor should
redistribution of such funds require prior CCC approval. These
requirements are inefficient, time-consuming and counterproductive
since in many cases brand participants are funded at lower than
justified levels due to budgetary constraints.
Response: CCC agrees with much of this comment. An MPP participant
is no longer required to reannounce the availability of unexpended
brand promotion funds. However, redistribution of brand promotion funds
must be made in accordance with the MPP participant's approved budget
ceilings and activity plans. If, for example, a redistribution of brand
promotion funds will increase a country budget ceiling or add a new
brand participant to the activity plan, then the MPP participant must
submit an activity plan amendment request (APAR) to CCC for approval
prior to redistribution. CCC omitted the substance of
Sec. 1485.14(e)(5) from the final rule.
Comment: CCC should allow advance payments under EIP/MPP agreements
and MPP brand promotion programs. Advertising agencies and suppliers
working on brand promotions should not have to wait longer for payment
than similar organizations working on generic promotions. Furthermore,
advance billing and payment is standard practice in the broadcast and
print media business. Advances allow participants to negotiate lower
rates and ensure better positioning and placement of advertising in the
media.
Response: CCC expects brand participants to have sufficient working
capital to cover the total cost of promotional activities since they
are expected to directly profit from such activities.
Comment: EIP/MPP participants and brand participants should only be
required to maintain receipts for expenditures on brand promotions
which exceed $25.00, as is the case with generic promotions.
Response: CCC adopted the suggestion to only require receipts for
program related expenditures, other than STRE, which exceed $25.00.
This change is reflected in Sec. 1485.20(a)(3)(i) and (ii).
Comment: New brand participants should not be limited to a maximum
reimbursement rate of 50 percent when former participants in the
Targeted Export Assistance program are eligible to receive
reimbursement rates that exceed 50 percent. This rule precludes funds
from being distributed equitably throughout the agricultural sector. It
also violates the Robinson-Patman and Clayton Antitrust acts because it
restrains trade by providing an advantage to one company over another.
Response: This provision is specifically mandated by Congress in
section 203(g)(2) and (3) of the Agricultural Trade Act of 1978, as
amended by section 1531 of the Food, Agriculture, Conservation, and
Trade (FACT) Act of 1990. New participants are only eligible for a
higher reimbursement rate if, as described in Sec. 1485.16(g)(1) and
(2), there has been an affirmative action by the U.S. Trade
Representative under section 301 of the Trade Act of 1974 with respect
to the unfair trade practice cited and U.S. market share of the
agricultural commodity concerned has decreased. In such case, CCC shall
determine the appropriate rate of reimbursement.
Comment: Are fees charged by a contracted firm eligible
expenditures under the MPP brand promotion program? For example, ``a
contracted firm, either domestic or international, is hired by a MPP
brand participant. The contracted firm is hired to make and manage all
arrangements for the company's participation in a trade show--order the
booth space, rent the tables and A-V equipment, hire the booth
attendants --* * * The contracted firm charges a fee for their [sic]
services to coordinate the details for the company's participation in
the trade show.''
Response: CCC will reimburse an MPP participant or EIP/MPP
participant for fees charged by a contractor to implement a brand
promotion activity. This point is clarified in Sec. 1485.16(b)(9).
Comment: Why are MPP participants required to announce the
availability of the MPP to U.S. commercial entities when the
participant chooses to conduct brand promotions solely with foreign
firms? CCC should establish different procedures for administering
brand programs with U.S. and foreign commercial entities.
Response: It appears that Sec. 1485.14(e)(3) of the interim rule
has been misinterpreted by the commenter. An MPP participant may
request approval to conduct brand promotion activities with either U.S.
commercial entities or foreign firms or both. If an MPP participant
requests approval to conduct brand promotion activities exclusively
with foreign firms, then the MPP participant is not required to
announce the program to U.S. commercial entities. CCC is unable to
respond to the second comment concerning different procedures for
administering brand programs with U.S. commercial entities and foreign
firms since the commenter failed to indicate why or how this should be
done.
U.S. Origin Identification
CCC received two similar comments on this issue.
Comment: CCC should waive the requirement that ``all product
labels, promotional material and advertising identify the origin of the
agricultural [[Page 6355]] commodity or products* * *'' in those
instances where U.S. identification would adversely affect the
marketability or acceptability of a promotional campaign.
Response: The goal of the MPP is to increase U.S. agricultural
exports and establish a reputation for the U.S. as a supplier of
quality products. The origin identification helps to distinguish U.S.
products from other competing foreign products. CCC recognizes the
commenters' concern that in some countries the ``U.S.A'' origin
identification may hinder a participant's promotional efforts.
Therefore, a participant may request an exemption to the ``U.S.A''
labelling requirement. The Deputy Administrator will determine, on a
case by case basis, whether sufficient justification exists to grant
such an exemption. CCC also recognizes that one could interpret the
phrase in the interim rule, ``the origin of the agricultural * * *
products'', as the place where a product is processed, packaged or
manufactured. This, however, does not emphasize the source of the
commodities and, therefore, necessarily further the market development
goals of the MPP. CCC clarified this issue in Sec. 1485.23(e)(6) and
(f) of the final rule by: 1) Listing those specific terms which are
acceptable for U.S. origin identification; 2) allowing other U.S.
regional designations if approved in advance by CCC; and 3) adopting a
size standard for such origin identification.
Consumer-oriented Shows and Advertising
CCC received 10 similar comments on this issue.
Comment: CCC should reimburse participants for promotional costs
associated with consumer shows. Consumer shows are an extremely cost-
effective means for reaching a target audience and offer the best
opportunity to reach the greatest number of people in a short amount of
time with a low per person cost. Consumer shows are also particularly
important for introducing new products into a market because they help
build brand awareness. Limiting reimbursement to trade-only shows fails
to recognize the power of the consumer in the buying decision of
retailers and importers.
Response: CCC agrees that consumer-oriented shows and consumer
advertising can be effective market development activities by
stimulating demand for U.S. agricultural commodities. CCC amended
Sec. 1485.16(b)(6) to include ``consumer exhibits and shows''.
Compensation/Allowances for U.S. Citizens and U.S. Contractors
CCC received six comments on this issue.
Comment: Increase the limit on payment of salary and allowances for
U.S. citizens stationed overseas.
Response: CCC recognizes that compensation levels may need to be
adjusted periodically to attract and retain qualified individuals to
manage overseas offices. Therefore, CCC will reimburse, in whole or in
part, the cost of compensation and allowances for each U.S. citizen
stationed overseas not to exceed 125 percent of the level of a GS-15
Step 10 salary for U.S. Government employees. This change is reflected
in Sec. 1485.16(c)(1) of the final rule.
Comment: Give MPP participants the flexibility to establish a
``pool of funds'' to pay U.S. citizen salaries and allowances. The
maximum amount authorized for this ``pool'' would be based on the
actual number of U.S. citizens stationed overseas multiplied by the GS-
15 Step 10 salary. MPP participants should also have the flexibility to
pay only salary or allowances or a combination of the two.
Response: CCC disagrees with this suggestion. Congress has given
CCC discretion to operate and manage the MPP. In doing so, CCC must
balance benefits to program participants against limited financial
resources. CCC has established maximum compensation levels for which it
will reimburse to ensure the efficient use of public funds and to
preserve consistency across all commodity programs. An MPP participant
may use its own funds to pay compensation and allowance expenses which
exceed the prescribed maximum level and count the difference as a
contribution, provided that such compensation adjustments are included
in the MPP participant's approved activity plan.
Compensation Levels for Foreign Nationals
CCC received five similar comments on this issue.
Comment: The limitation on salary levels for foreign national
employees is too restrictive, particularly in those countries where
there is a shortage of qualified personnel. In those cases where the
Foreign Service National (FSN) compensation schedule is too low, MPP
participants should be allowed to establish salary ranges or
alternative compensation systems for foreign nationals based on in-
country surveys.
Response: Congress has given CCC discretion to operate and manage
the MPP. In doing so, CCC must balance benefits to program participants
against limited financial resources. CCC has established a maximum
level for compensation of a non-U.S. employee or non-U.S. contractor
for which it will reimburse to ensure the efficient use of public funds
and to preserve consistency across all commodity programs. An MPP
participant may use its own funds to pay compensation that exceeds the
prescribed maximum level and count the difference as a contribution,
provided that such salary adjustment is included in the MPP
participant's approved activity plan.
Comment: The rule does not provide guidance for those instances
where there is no FSN salary plan in the local embassy.
Response: In countries where an FSN salary plan does not exist, CCC
will not reimburse any portion of compensation that exceeds locally
prevailing levels. The MPP participant is responsible for documenting
such compensation levels by a salary survey or other means. A
justification for the compensation levels must be presented in the MPP
participant's activity plan. This point is clarified in
Sec. 1485.16(c)(3)(ii).
Comment: Once established, salary levels of supergrades should not
be reduced unless the top grade of the local FSN salary plan is
reduced.
Response: An MPP participant is only required to reduce the
compensation levels for supergrades when the FSN salary plan is
reduced. However, an MPP participant may reduce the compensation levels
for supergrades at other times if deemed appropriate by the MPP
participant.
Fees Paid to Consultants and Contractors
CCC received three similar comments on this issue.
Comment: Define the terms ``consultant'' and ``contractor''.
Comment: The limitation on fees paid to consultants is too
restrictive. The final rule should permit participants to pay
prevailing local rates.
Response: CCC recognizes that the terms ``consultant'' and
``contractor'' are not clearly defined and in some instances may not be
discernibly different. Therefore, to eliminate this ambiguity, CCC has
deleted all references to the term ``consultant'' and replaced it with
the term ``contractor''. CCC has established a maximum level for
contractor fees for which it will reimburse to ensure the efficient use
of public funds and to preserve consistency across all commodity
programs. CCC will not reimburse any portion of a daily contractor fee
that [[Page 6356]] exceeds the daily gross salary of a GS-15 Step 10
for U.S. Government employees in effect on the date the fee is earned.
A participant may use its own funds to pay contractor fees which exceed
the prescribed maximum level and count the difference as a
contribution, provided that the fee adjustment is included in the
participant's approved activity plan.
Contracting Standards
CCC received two similar comments on this issue.
Comment: The final rule should contain additional guidance in the
area of contracting. Specifically, CCC should provide language relating
to contracting standards.
Response: CCC requires all participating organizations to have the
resources and ability to effectively manage the program. CCC also
expects participants to have either a solid understanding of
contracting principles and practices or the resources to obtain this
expertise. In general, participants must ensure that all fees for goods
and services reimbursed in any part by CCC are adequately documented by
a purchase order, invoice or contract. Participants must also maintain
records with regard to the competitive bidding process used to acquire
the goods or services. To assist participants, CCC has included
contracting procedures in Sec. 1485.23(c).
Payment of Foreign National Salaries in Local Currencies
CCC received six similar comments on this section.
Comment: Why are MPP participants required to pay salaries of
foreign nationals in the local currency and salaries of U.S. citizens
stationed overseas in U.S. dollars? MPP participants should be
permitted to pay FSN salaries in any currency so long as it does not
violate local laws. This would alleviate problems arising from foreign
nationals employed in countries other than their country of origin.
Response: CCC agrees with the commenters and amended
Sec. 1485.19(c) to allow participants to pay salaries and fees in any
currency if approved by the Attache/Counselor. However, participants
are cautioned to consult local laws and ordinances governing this
issue.
Use of Part-time Contractors for Services
CCC received one comment on this issue.
Comment: Can fees paid to translators or demonstrators for
promotional activities be reimbursed by CCC?
Response: CCC will reimburse a participant for the cost of part-
time contractors such as translators and demonstrators if such costs
are included in a participant's approved activity plan.
Overseas Administrative Expenses
CCC received three comments on this issue.
Comment: Participants should not be solely liable for all forward
financial obligations, i.e., severance payments, rental agreements and
contracts, as stipulated in Sec. 1485.19(c)(2) and Sec. 1485.21(d)(6)
of the interim rule.
Response: CCC disagrees with this comment. The availability of new
MPP resources may be limited annually by Congress. Therefore, CCC is
unable to prepare for forward year obligations beyond the period of
availability of funds specified in a participant's program agreement.
CCC funding of forward year obligations would unduly hinder promotional
efforts by tying up MPP resources that may otherwise be used for actual
activities. Accordingly, the substance of the interim rule is adopted.
Comment: Are EIP/MPP participants prohibited from sharing
administrative expenses, i.e., salaries, utilities and travel, with
foreign third parties to conduct joint promotional activities?
Response: An EIP/MPP participant may share administrative expenses
with a foreign third party to conduct a joint promotion. However, such
expenses will not be reimbursed by CCC under an EIP/MPP agreement.
Application Process and Strategic Plan
CCC received four comments on this issue.
Comment: The initial EIP/MPP participant should not be required to
include a strategic plan in its application for program funding, but
rather the strategic plan should be included in the activity plan. The
initial application for program funding should be a ``generic''
application which describes the worldwide marketing situation for the
U.S. industry as a whole.
Response: CCC disagrees with this comment. The strategic plan
describes the overall situation for the agricultural commodity and the
applicant's plans, projections, targeted markets and budget for the
activity plan year. The strategic plan is essential for determining
appropriate funding levels and program activities. Accordingly, the
substance of the interim rule is adopted.
Comment: The final rule should contain provisions which protect
proprietary and confidential information of individual companies from
public disclosure.
Response: CCC's policy is to treat all program documents with the
utmost respect for any proprietary information. CCC does not release
information which could cause substantial competitive harm to the
submitter of the information. If the information submitted is not
readily identifiable as privileged or business confidential, CCC will
obtain and consider the views of the submitter of the information. If
CCC disagrees with the arguments presented by the submitter, CCC will
give the submitter sufficient time to pursue legal action to prevent
the release of the information.
Activity Plans
CCC received 10 comments on this section.
Comment: Activity plans should not be required for each year within
a multiyear program, particularly when there are no changes to the
original proposal. The time it takes to submit annual activity plans
and receive approval from CCC causes undue delays in the construction
of demonstration structures and risks continued third party
participation.
Response: CCC agrees that timing for large-scale, multiyear
projects is extremely important. However, CCC requires separate
activity plans for each year covered by a multiyear agreement to ensure
proper management of limited CCC resources. The annual activity plans
also assist CCC in determining whether program design requires
modification to improve cost effectiveness or impact. The final rule is
adopted as written.
Comment: The final rule should contain a provision which
accommodates immediate or unanticipated changes to activity plans. This
could be accomplished by: (1) allowing retroactive approval of APARs,
(2) establishing a same-day or immediate approval process for APARs,
(3) allowing a 10 percent budget overrun for each activity, (4)
allowing a 10 percent budget shift at the end of the plan year, or (5)
allowing a participant to verbally notify the Division Director prior
to implementation of the activity.
Response: Past experience has proven that retroactive approval
authority creates unnecessary administrative burdens and that ``after-
the-fact'' change becomes the norm rather than the exception.
Adjustments to activity plans can be made with CCC approval in an
expeditious manner using existing policies and procedures. Accordingly,
the final rule is adopted in this regard. [[Page 6357]]
Comment: Activity plan years should correspond to the U.S.
Government's fiscal year.
Response: CCC would prefer to have a single activity plan year for
all participants. However, CCC recognizes that factors such as varying
crop seasons and the Federal budget process make this illogical.
Comment: Will CCC consider approval of individual activities prior
to the approval of an entire activity plan?
Response: Program planning is a primary tool used to guide the
implementation and successful completion of market development
activities. CCC will not grant approval for activities prior to the
announcement of program allocations nor prior to the start of a
participant's activity plan. However, CCC may grant approval for
individual activities on a case-by-case basis before approving a
participant's entire activity plan.
Comment: CCC should provide more detailed information about
deadlines for submission of activity plans.
Response: The rule does not contain a deadline for the submission
of activity plans; however, MPP participants should submit activity
plans at least 45 business days prior to the start of the proposed
activities in order to ensure adequate time for review and approval by
CCC.
Comment: CCC should be required to approve or disapprove APARs
within two weeks of receipt.
Response: CCC's policy is to review activity plans and APARs in an
expeditious manner. A specific time period is not practical. However,
participants should allow adequate time for review and approval of
APARs.
Allocation of CCC Resources
CCC received one comment on this issue.
Comment: CCC should not consider, as one criterion for allocating
resources, the applicant's ability to monitor and evaluate the
activities proposed in the strategic plan since this information was
not specifically solicited as part of the application.
Response: The rule explicitly states that CCC takes into account
the applicant's provisions for monitoring and evaluating activities
proposed in the strategic plan when reviewing applications for program
funding. Evaluation is an integral part of the MPP and serves as a
basis for continuing, altering or eliminating activities proposed in
the strategic plan. The application approval criteria and allocation
factors are provided in Sec. 1485.14(b) and (c) of the final rule.
Product Samples, Product Development, Packaging and Labeling
CCC received nine comments on these issues.
Comment: Packaging and design expenses should be eligible for
reimbursement by CCC.
Comment: CCC should amend Sec. 1485.17(d)(14) of the interim rule
to read ``Labeling, packaging and associated design expenses, except
when the MPP participant's logo or generic symbol is made part of the
packaging for the branded promotion activity. In that case, a pro-rated
expense based on the size of the logo or symbol in relation to the
entire package surface area will be reimbursed.''
Response: Congress has given CCC discretion to operate and manage
the MPP. In doing so, CCC must balance benefits to program participants
against limited financial resources. CCC will not provide reimbursement
for packaging, labeling and other design expenditures because these
costs are associated with the production of the final product rather
than the promotion. CCC also considers origin identification stickers
to be a type of label and, therefore, not reimbursable by CCC. This
change is reflected in Sec. 1485.16(d)(3). The suggestion that CCC
calculate a pro-rata reimbursement is not practical to administer.
Comment: The Deputy Administrator should have the authority to
approve the use of MPP funds for the purchase of commodity samples,
particularly in those instances where the participant does not own the
commodity or product.
Response: Congress has given CCC discretion to operate and manage
the MPP. In doing so, CCC must balance benefits to program participants
against limited financial resources. CCC will not provide reimbursement
for product samples because products samples are of minimal cost to the
industry involved and could easily be contributed towards the program.
Comment: Does the exclusion of product development expenses from
reimbursement by CCC pertain only to new products? In other words, can
participants be reimbursed by CCC for expenses related to the
modification of an existing product?
Response: CCC will not reimburse participants for the cost of
product development, product modification or product research. This
prohibition applies to all products for the reasons identified in
previous responses.
Comment: Product development and design expenses should be eligible
for reimbursement by CCC because such expenses are included in the
example in the MPP handbook.
Response: The particular example cited by the commenter refers to a
consultant's work in introducing a new product to the market (a
promotional activity), not in the actual development or design of the
product. The substance of the interim rule is adopted.
Financial Policies and Procedures, Reimbursement Claims and Advances
CCC received 24 comments on these issues.
Comment: Why are reimbursement claims limited to no less than
$10,000?
Response: CCC requires participants to consolidate their
reimbursement claims to ensure a more effective use of resources and to
accelerate the reimbursement process. Accordingly, the final rule is
adopted in this regard.
Comment: Why does CCC charge reimbursement claims against the
oldest unexpended program agreement balance?
Response: This is simply a procedure used by CCC to ensure
efficient use and accurate accounting of MPP funds. Since
Sec. 1485.17(h) of the interim rule had no significant bearing on a
participant, CCC omitted this subsection from the final rule.
Comment: Why do the regulations make reference to reimbursement
with CCC commodity certificates?
Response: Although all MPP claims are currently reimbursed by CCC
in cash, circumstances could change where it might become necessary to
return to the use of certificates.
Comment: CCC should revise Sec. 1485.17(k)(2) of the interim rule
so that participants are not precluded from claiming previously billed
amounts which had been erroneously disallowed by CCC.
Response: CCC agrees with the commenter and amended the final rule
in Sec. 1485.17(a)(8) to include any amount previously claimed that has
not been reimbursed.
Comment: CCC should extend the deadline for submitting
reimbursement claims to CCC.
Response: The 180-day period is reasonable based upon the standard
business practice for submitting reports and expense claims. For
administrative ease, CCC replaced the phrase ``180 calendar days'' with
``6 months''. This change is reflected in Sec. 1485.17(d).
Comment: Participants operating brand programs should be allowed to
receive advances.
Comment: Brand participants should be allowed to receive advances
for electronic media advertising since this [[Page 6358]] type of
advertising is normally contracted one year in advance.
Response: CCC expects participating firms to have sufficient
working capital to cover the total cost of promotional activities since
they are expected to directly profit from the activities. Furthermore,
CCC has determined that reimbursement, rather than advance payment,
ensures the most efficient use of MPP funds. The substance of the
interim rule is adopted.
Comment: CCC should amend Sec. 1485.18(b)(1) of the interim rule
which limits advances to no more than 40 percent of a participant's
annual generic budget approved by CCC. For example, CCC could: (1)
provide a ``working advance'' of up to 15 percent of a participant's
annual budget with additional special advances for large expenditures,
(2) calculate the 40 percent advance on the basis of the total approved
budget and eliminate the 90-day expenditure rule, (3) increase the
percentage, or (4) replace the 40 percent advance limit with the
special advance payment request system used in the Cooperator program.
Response: Since CCC is given limited resources by Congress to
administer the MPP, CCC must balance benefits to program participants
with efforts to reduce operating costs of the program. The limitation
on authorized advance payments reduces the amount of money CCC borrows
from the U.S. Treasury. CCC's policy is to reimburse participants for
expenditures incurred rather than finance initial costs. Accordingly,
the final rule is adopted in this regard.
Comment: Extend the time period that MPP participants have to fully
expend their advances from 90 to 180 days.
Response: The 90-day period is sufficient time to expend any
advance. The final rule is adopted in this regard.
Comment: Does Sec. 1485.17(l)(3) of the interim rule which provides
that ``activity expenses incurred up to 30 days beyond the end of an
activity plan year may be charged back to the budget for that activity
plan year'' apply to MPP participants?
Response: This provision applies to MPP and EIP/MPP participants.
CCC has provided additional clarification in Sec. 1485.16(h) of the
final rule.
Travel Expenses
CCC received 18 comments on this issue.
Comment: CCC should amend the regulations to permit reimbursement
for ``business class'' travel.
Response: CCC recognizes that participants may be able to obtain a
particular class of air travel at a lower rate than full fare economy.
Since CCC's policy is to ensure the efficient use of public funds, CCC
will not preclude business class travel, but will not reimburse any
portion of air travel in excess of the full fare economy rate. This
change is reflected in Sec. 1485.16(c)(8) of the final rule.
Comment: Travel expenditures should be reimbursable under an EIP/
MPP agreement.
Response: Congress has given CCC discretion to operate and manage
the MPP. In doing so, CCC must balance benefits to program participants
against limited financial resources. Private entities engaged in brand
promotion activities should bear their own travel expenses. The
substance of the interim rule is adopted.
Comment: Participants should be permitted to develop their own in-
house travel guidelines.
Response: Congress has given CCC discretion to operate and manage
the MPP. CCC has established limits on the amount and type of travel
expenditures that will be reimbursed by CCC to ensure the efficient use
of public funds and to preserve consistency across all commodity
programs. Accordingly, the final rule is adopted in this regard.
Comment: Are participants allowed to calculate per diem at a rate
lower than that permitted under the U.S. Federal Travel Regulations
(USFTR)?
Response: CCC established a maximum reimbursement rate for per diem
which is no more than the rate specified under the USFTR. Consequently,
a lower rate of reimbursement is permissible.
Comment: Eliminate Sec. 1485.22(b) of the interim rule which
requires participants to notify the Attache/Counselor in writing in
advance of proposed travel to that country. This provision is more
restrictive than the former Targeted Export Assistance program
guidelines and is inconsistent with the Paperwork Reduction Act.
Response: The Attache/Counselor must be notified prior to any
travel in order to effectively supervise and support program activities
in his or her country of responsibility. Accordingly, the final rule is
adopted in this regard.
Comment: Participants should be permitted to choose one of two
reimbursement options for travel expenses--either per diem or living
expenses.
Response: Congress has given CCC discretion to operate and manage
the MPP. CCC has adopted the USFTR to ensure uniformity in
administering the program and accounting for travel expenditures.
Accordingly, the final rule is adopted in this regard.
Comment: Participants should be permitted to use MPP funds to lease
vehicles when it can be shown that the lease cost would be lower than
the cost associated with the use of a privately owned vehicle.
Response: CCC's policy is to ensure the most efficient use of
limited resources. It would be virtually impossible for a participant
to provide an accurate number of miles to be travelled for project
business during the term of a leasing agreement. Consequently, CCC
would not be able to compare the cost of leasing a vehicle for an
extended time period to the cost of using a privately owned vehicle.
Accordingly, the substance of the interim rule is adopted.
Comment: CCC should amend Sec. 1485.22(d) of the interim rule which
states that reimbursement for the use of privately owned automobiles
will be calculated on the basis of the local U.S. Embassy's fixed rate
per mile. Participants should be reimbursed by CCC for costs based on
prevailing local practices rather than the Embassy rate, particularly
in those instances where the U.S. Embassy does not have a fixed rate
per mile or where U.S. Embassy personnel can buy gas from a Post
Exchange.
Response: Congress has given CCC discretion to operate and manage
the MPP. CCC's policy is to ensure the efficient use of limited
resources and to preserve consistency across all commodity programs. In
support of this policy, CCC has established a maximum reimbursement
rate for the authorized use of a privately owned automobile equal to
the U.S. Embassy's fixed rate per mile. This uniform policy also
simplifies administration and program compliance requirements. A
participant may expend an amount in excess of the amount reimbursed by
CCC and count the difference as a contribution, provided that the
adjustment is included in the participant's approved activity plan.
Accordingly, the final rule is adopted in this regard.
Promotional Items and Token Gifts
CCC received nine similar comments on this issue.
Comment: CCC should either reimburse participants for the total
cost of giveaways, awards and prizes or establish a maximum allowable
amount for these items.
Response: CCC agrees that inexpensive promotional items such as
giveaways, awards and prizes can be useful market development tools.
CCC will reimburse the cost of giveaways, awards, prizes, gifts and
other similar promotional materials up to $1.00 per
[[Page 6359]] promotional item This change is reflected in
Sec. 1485.16(b)(10) and (d)(11) of the final rule.
Comment: The term ``token gift'' is not defined and, therefore,
should be deleted from the rule.
Comment: CCC should define ``token gift'' as ``any promotional item
costing under $5.00''.
Response: CCC deleted the word ``token'' from the final rule. The
term ``gift'' has ordinary and customary meaning and does not require
further definition. CCC will reimburse a participant for the cost of
gifts subject to the limitation that CCC will not reimburse more than
$1.00 per item.
Activities in the United States
CCC received one comment on this issue.
Comment: All MPP participants should be permitted to claim
reimbursement for market development activities conducted in the United
States. Foreign market development programs have typically allowed
travel expenditures in the United States for foreign trade teams when
part of an international trip and participation fees for foreign
participants in grain grading seminars in the United States.
Response: CCC agrees that certain activities conducted in the
United States may be valuable and appropriate for specific foreign
market development programs. Consequently, CCC will reimburse an MPP
participant for the cost of trade shows, seminars and educational
training conducted in the United States. This change is reflected in
Sec. 1485.16(c)(25).
Participation Fees
CCC received one comment on this issue.
Comment: Clarify Sec. 1485.17(d)(7) of the interim rule which
states that participation fees for United States Government-sponsored
activities will not be reimbursed by CCC.
Response: CCC will not reimburse the cost of fees for participating
in United States Government sponsored activities, other than trade
fairs and exhibits, because in these instances the United States
Government finances most of the activity expenses. Although
participation fees for United States government-sponsored activities,
other than trade fairs and exhibits, are not reimbursable by CCC, they
may be counted as a contribution.
Export Availability
CCC received one comment on this issue.
Comment: Why are MPP applicants required to describe the export
availability of the agricultural commodity, product, or brand product
over the duration of the proposed agreement? Some agricultural products
are always in sufficient supply.
Response: The primary objective of the MPP is to increase U.S.
agricultural exports by stimulating demand in foreign markets. The
development and maintenance of new export markets for U.S. agricultural
commodities are dependent, in part, upon knowledge of the U.S. supply
situation. Accordingly, the final rule is adopted in this regard.
Reimbursement for Demonstration or Training Activities
CCC received four comments on this section.
Comment: What is meant by the phrase ``training activities'' in
Sec. 1485.17(c) of the interim rule? Does this refer to the
construction of training facilities or technical training activities in
general?
Response: CCC recognizes that the term ``training activities'' is
ambiguous. To clarify this issue, CCC replaced the phrase
``demonstration and training activities'' with ``demonstration
projects'' in the final rule. ``Demonstration projects'' is defined in
Sec. 1485.11(j) and does not include technical training activities.
Comment: CCC should not impose a limit of no more than one
demonstration or training activity under each MPP agreement for each
market.
Comment: Does the limitation on demonstration and training
activities apply to the annual activity plan or any successive year in
the market?
Response: CCC recognizes that more than one demonstration project
may be appropriate to overcome different constraints within a
particular market. Therefore, CCC will consider proposals for
demonstration projects provided that: (1) no more than one such
demonstration project per constraint is undertaken in a market; (2) the
constraint to be addressed in the market is a lack of technical
knowledge or expertise; (3) the demonstration project is a practical
and cost effective method of overcoming the constraint; and (4) a
foreign third party participates in the demonstration project through a
written agreement.
Significant Program Provisions
CCC received one comment on this section.
Comment: How will CCC apply the 50 percent reimbursement rule when
a brand product is not entirely 100 percent U.S. origin?
Response: Each MPP or EIP/MPP applicant must declare, in its
application, the percentage of U.S. origin of the promoted agricultural
commodity by weight, exclusive of added water. For any promoted brand
product, the reimbursement rate generally equals the lesser of the
percentage of U.S. origin in the brand product or 50 percent. Each
participant must be able to prove the percentage of U.S. origin it
declares. Failure to document this percentage will result in repayment
to CCC.
Business Confidentiality
CCC received seven similar comments on this issue.
Comment: The final regulation should contain language which
protects the contents of a participant's application and activity
plans.
Response: CCC's policy is to treat all program documents with the
utmost respect for proprietary information. CCC does not release
information which could cause substantial competitive harm to the
submitter of the information. If the information submitted is not
readily identifiable as privileged or business confidential, CCC will
obtain and consider the views of the submitter of the information. If
CCC disagrees with the arguments presented by the submitter, CCC will
give the submitter sufficient time to pursue legal action to prevent
the release of the information. The release of information is governed
by the Freedom of Information Act (FOIA), 5 U.S.C. 552, and 7 CFR Part
1, Subpart A--Official Records, specifically 7 CFR 1.11, Handling
Information from a Private Business. CCC added Sec. 1485.23(a) to the
final rule relating to this issue.
Appeals
CCC received one comment on this issue.
Comment: Amend Sec. 1485.27(b) of the interim rule to include
procedures for appealing compliance findings.
Response: CCC has included specific provisions and procedures in
the final rule for the resolution of disputes that involve the
remittance of resources to CCC. The appeal procedure is designed to
ensure prompt and reasonable evaluation and resolution of program
disputes. Most compliance findings are minor infractions of program
rules which, when brought to the attention of participants, are
routinely resolved. Participants will be notified promptly when program
discrepancies are found and given an opportunity to remit resources to
CCC or, where there is a disagreement, present additional information
in support of the participant's position. See Sec. 1485.20(d) of the
final rule. [[Page 6360]]
Export Incentive Program
CCC received three comments on this section.
Comment: CCC should not differentiate MPP participants from EIP/MPP
participants because generic promotions simply create demand for
foreign products.
Response: Congress has directed CCC to make certain distinctions
between brand and generic promotions in recognition of the benefit that
private companies receive from brand promotion. For example, the FACT
Act of 1990 provides that assistance for brand activities shall not
exceed 50 percent of the cost of implementing the plans. CCC also makes
minor distinctions between brand and generic promotions to ensure the
efficient use of limited resources.
CCC received 38 letters containing nearly 200 comments from
nonprofit trade associations, U.S. companies, state organizations,
state regional trade groups, cooperatives, professional associations
and consulting firms in response to the interim rule published on
November 17, 1993, (58 FR 60550).
Independent Audits
CCC received 14 comments on this issue.
Comment: CCC should not have the authority to require independent
audits of program activities.
Comment: If the provision for independent audits is necessary, then
CCC should develop specific criteria to avoid arbitrary implementation
and to keep costs reasonable for MPP participants.
Comment: The Compliance Review Staff and the General Accounting
Office are in the best position to conduct audits of the MPP because of
their familiarity with federal regulations.
Comment: The current system used for compliance reviews is
thorough, rigorous, professional and nonpartial, and fulfills the audit
needs of the program.
Comment: This provision should be clarified so as not to preclude
the use of CCC resources for other types of program evaluations.
Comment: CCC should only require independent audits in extreme
cases of mismanagement or fraud.
Comment: CCC's sole discretion to require independent audits poses
a jeopardy.
Comment: In the absence of confirmed non-compliance with program
regulations, CCC should pay for any independent audits it requires.
Comment: CCC should amend the final rule to allow a participant to
document its compliance with program requirements.
Comment: Independent audits could be beneficial in those instances
where compliance reviews reveal the need for such audits.
Comment: Each participant in the program should be required to have
an annual independent audit of its own accounting system.
Response: CCC's authority to require independent audits was
legislated by Congress in section 1302(b)(2)(E) of the Omnibus Budget
Reconciliation Act of 1993. CCC will only use this authority when it
determines that further review is necessary in order to ensure
compliance with program requirements. This provision is contained in
Sec. 1485.20(c)(5).
Definitions
CCC received 63 comments on this section.
Comment: CCC should clearly define the term ``U.S. entities'' and
limit participation in the MPP to U.S. entities.
Response: CCC limits direct participation in the MPP to U.S.
agricultural trade organizations, nonprofit state regional trade
groups, agricultural cooperatives and State agencies. Participation by
foreign entities only occurs through third party arrangements. The term
``U.S. commercial entity'' is defined at Sec. 1485.11(ff) of the final
rule.
Comment: The definition of ``market'' as ``a single country'' is
too narrow and rigid. The definition should be modified to take into
account the different types of market segments within a country such as
discrete geographic regions, audiences and distribution outlets.
Comment: Defining ``market'' as anything other than ``a single
country'' would create more uncertainty.
Comment: If participants defined markets in terms of geographic
regions, it would likely be perceived by the public as an attempt to
circumvent the graduation requirement.
Response: CCC recognizes that many market segments can exist within
a single country. Depending on the particular agricultural commodity
promoted, a market could be defined by a geographic region, target
audience or demographic group. Because numerous market segments could
exist within a country, CCC decided to define ``market'' as ``a single
country''. This eliminates the need for interpretation and reduces the
administrative burden on both the participant and CCC. Accordingly, the
final rule is adopted in this regard.
Comment: The term ``U.S. firm'' should be defined as ``any firm
that is incorporated in the U.S. and has a physical entity located
within the U.S.''
Response: CCC did not define the term ``U.S. firm'' in the final
rule because a definition is not necessary in the context of the final
regulation.
Comment: CCC should define the terms ``supplement'' and
``supplant''.
Response: ``Supplement'' and ``supplant'' are statutory terms for
which Congress did not assign any special meaning. CCC has determined
that these terms have ordinary and customary meanings and, therefore,
do not require further definitions in the final rule.
Unfair Trade Practices
CCC received comments regarding the requirement that assistance
under the MPP only address unfair trade practices. Recent legislation
implementing the Uruguay Round negotiations of the General Agreement on
Tariffs and Trade deleted this requirement. Accordingly, CCC has
revised the final rule to delete this requirement from the regulation.
However, an unfair trade practice is still relevant in determining
reimbursement rates for brand promotions. See Sec. 1485.16(g).
Graduation
CCC received 31 comments on this issue.
Comment: CCC should retain the provision which limits promotional
assistance for brand products to no more than five years in a single
market.
Comment: Does the five-year limit on promotional assistance apply
to individual products or product lines?
Comment: CCC should retain the provision which allows for continued
promotional assistance beyond the five-year limit based on the
continued existence of an unfair trade practice or identification of a
new unfair trade practice.
Comment: The final rule should contain a provision which allows for
exceptions to the five-year limit in unusual or unexpected
circumstances. For example, in the event of market disruptions or new
trade barriers which restrict market access, the affected years should
not count toward the five-year limit.
Comment: CCC should consider providing assistance for more than
five years in a market when there is ``the obvious threat of unfair
foreign trade practices'' or when industries have successfully expanded
exports to that market.
Comment: ``When significant changes in restrictive laws or in
distribution channels effectively create a new market, these countries
should be [[Page 6361]] considered for funding beyond five years.''
Comment: The five-year limitation on promotional assistance for a
specific brand product in a single market does not take into account
the dynamic nature of the international marketplace and diminishes the
flexibility and impact of the program. The limitation on promotional
assistance should be based on factors such as return on investment,
product life cycle and market share.
Comment: CCC should continue to provide assistance to all
commercial entities in a market until the unfair trade practice is
eliminated.
Comment: ``The interim regulations unnecessarily limit the
Secretary's authority to waive the five-year limit.''
Response: CCC recognizes that circumstances other than the
continued existence of an unfair trade practice or identification of a
new unfair trade practice may warrant consideration for assistance to
promote a specific brand product in a single market for more than five
years. Therefore, CCC eliminated this requirement from the final rule.
CCC may provide assistance to promote a specific product in a single
market for more than five years when CCC determines that further
assistance is necessary to meet the objectives of the program. CCC will
apply the five-year limitation to single brand products in a market,
not to product lines. However, the Deputy Administrator shall
determine, at the Deputy Administrator's discretion, whether two or
more brand products in any given country are substantially the same
product. These changes are reflected in Sec. 1485.14(d) (2) and (3).
Comment: Generic programs should not be subject to the five-year
limit on promotional assistance.
Response: Section 1302(b)(2)(B) of the Omnibus Budget
Reconciliation Act of 1993 and, therefore, this final rule, establish a
five-year limit on promotional assistance for brand products, not
generic products or programs.
Contributions
CCC received four comments on this issue.
Comment: Although it is extremely important for MPP participants to
commit their own resources to the program, a strict 10 percent minimum
contribution for nonbrand promotion may be a burden to some
participants. The regulations should contain a provision which allows
CCC to grant exceptions to the 10 percent contribution level.
Response: This contribution requirement is statutorily mandated by
section 1302(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1993.
CCC cannot change the language of this statute through regulations.
Accordingly, the final rule is adopted in this regard.
Comment: State groups should be allowed to count ``in-kind
expenses'', i.e., staff time of member State Departments of
Agriculture, toward their MPP participant contribution.
Response: Any MPP participant may count, as part of its
contribution, time and expenses incurred by member organizations
provided such contributions are for the overall administration or
management of the participant's entire MPP.
Comment: Clarify the sentence ``CCC may increase the required
contribution level in any subsequent year that an eligible trade
organization receives assistance for nonbrand promotion.'' What
criteria or standards will be used for increasing a participant's
contribution level?
Response: This provision is statutorily mandated by section
1302(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1993.
Therefore, in deciding whether to increase the required contribution,
CCC will consider the participant's ability to increase its
contribution above the minimum level. This is explicitly stated in the
rule and requires no further clarification.
Comment: Is the 10 percent minimum contribution level calculated on
an individual activity basis or on an aggregate basis?
Response: An MPP participant is required to contribute an amount
which is not less than 10 percent of total CCC resources expended for
nonbrand promotions during the approved activity plan year.
Comment: Does the minimum 10 percent contribution requirement apply
to multiyear proposals?
Response: Yes. This requirement applies to single and multiyear
funded proposals.
Size Standards and Size Determinations
CCC received 13 comments on this issue.
Comment: CCC should retain the definitions and criteria established
by the Small Business Administration (SBA) for size determinations.
Comment: Does the term ``small-sized entity'' apply to both U.S.
and foreign entities?
Comment: ``Small'' should be defined as any non-multinational
corporation.
Comment: Personnel and sales are not accurate measurements of a
company's size.
Comment: What are the criteria for determining the number of
employees of an entity?
Comment: CCC should not use SBA's criteria and size standards
because the issue of affiliation is complex, difficult to understand,
and time-consuming. ``Small-sized entity'' should be defined as ``a
business which has less than 500 full-time employees, excluding
employees of subsidiaries and affiliates''.
Comment: CCC should not consider a business' affiliation when
determining company size. Combining affiliated corporate entities would
frustrate the intent of the legislation.
Comment: The regulations should provide flexibility ``to
accommodate industries that are `small' in terms of revenues and total
employees [as compared with] their direct industry competitors.''
Comment: Application of the SBA criteria would ``require an
inordinate amount of investigation which when completed, [would] still
be largely inaccurate in many cases.'' Therefore, CCC should establish
standard definitions for ``large'' and ``small'' entities.
Response: The term ``small-sized entity'' applies only to U.S.
entities. Use of SBA size standards is an efficient and effective
method to resolve business size issues since it relies upon a set of
existing standards promulgated by the agency with expertise in this
area.
Comment: CCC should not use the size standards and criteria
established by the SBA to define ``small-sized entity'' because they do
not account for the unique characteristics of farmer cooperatives.
Comment: Member-growers of cooperatives should not be considered
affiliates for purposes of size determination unless a member-grower
owns a majority share of the cooperative or has a majority voting right
in the cooperative.
Comment: Member-growers of cooperatives should not be included in
the employee count for purposes of size determination.
Response: The SBA is solely responsible for establishing size
standards and determining which concerns qualify as ``small''. However,
SBA size standards may not always be appropriate for programs. If a
Federal agency decides that the SBA size standard is not appropriate
for the program involved, the agency may request SBA approval to
establish a more appropriate size standard. CCC [[Page 6362]] submitted
a proposal to the SBA requesting that all agricultural cooperatives be
considered ``small-sized entities'' for purposes of the MPP. However,
the SBA did not accept this proposal. Consequently, existing SBA rules
govern whether a particular cooperative will be considered a small-
sized entity. In this regard, SBA considers a cooperative as a single
entity.
Priority Assistance
CCC received 22 comments on this issue.
Comment: How will CCC establish ``priorities'' among small-sized
entities?
Comment: When establishing priorities, CCC should not penalize
industries or sectors that either have no small entities or that have
only generic programs.
Comment: The allocation of MPP funds solely on the basis of size is
not consistent with normal business practice and discriminates against
larger entities. Resources should be allocated to companies based on
several criteria including performance, viability of marketing plans
and proposals, the ability of applicants to execute plans, and past
performance in MPP activities.
Comment: CCC should give priority to small-sized entities based on
factors such as the entity's level of production, its level of export
resources, its compliance record, and the expected impact of its
strategic and activity plan.
Comment: Small-sized entities should be given priority through the
reimbursement process.
Comment: CCC should allocate funds to deserving small-sized
entities first, with any remaining funds going to ``large'' entities.
Comment: ``Priority'' should not mean a fixed percentage or amount
given to small-sized entities, but rather a goal within the industry.
Comment: CCC should not interpret ``priority'' in a way that would
set aside a portion of funds for small-sized entities because there may
not be a sufficient number of these companies to use the funds.
Comment: CCC should set ``a maximum brand allocation'' per company,
irrespective of company size. Evaluations of brand proposals should be
based on the merits of the proposal, not on the size of the company
seeking funds. Furthermore, funds should not be used for large
advertising campaigns due to the limited amount of resources available.
Response: Priority for small-sized entities conducting brand
promotions is statutorily mandated by section 1302(b)(2)(A) of the
Omnibus Budget Reconciliation Act of 1993. Congress does not define
``priority'' in the law and, therefore, leaves this interpretation to
the discretion of CCC. The legislation also does not specifically
prohibit participation by medium- and large-sized companies, nor does
it preclude the use of criteria, other than size, for allocating
resources to private entities. CCC gives priority to small-sized
entities by setting aside funds for such entities in the allocation
process. An MPP participant who administers a brand program may also
establish criteria for recommending priority funding to small-sized
entities.
Comment: The regulations should clearly state that ``foreign
entities with no U.S. place of business are not eligible for priority
funding.''
Response: This is the way in which CCC has interpreted the rule.
This operating practice is expressly set forth in the final rule.
Comment: Participants should not be held to the ``anticipated
percentage of CCC resources to be made available to small-sized
entities for brand promotion'' cited in their MPP applications.
Response: The percentage estimated by an organization in its MPP
application is an important factor because, without this information,
CCC would not be able to comply with the requirements of the
legislation.
Additionality
CCC received 26 comments on this issue.
Comment: CCC should retain the provision requiring MPP participants
to certify that MPP funds will supplement but not supplant any private
or third party funds or other contributions. However, because of market
dynamics and the need to adjust marketing activities, participants
should not be held to a rigid standard based on prior-year
expenditures.
Comment: The rule does not enumerate specific criteria or
documentation requirements that would substantiate a participant's
certification of additionality. How will CCC audit this provision?
Comment: In order to determine whether CCC resources received
actually supplement or supplant private or third party funds or other
contributions to program activities, specific objective criteria must
be established and the applicable professional standards must be
specified. ``Under professional standards independent accountants may
not certify the accuracy of management's representation.''
Comment: Current and continuing participants in the MPP should be
required to provide evidence of increased competitiveness of U.S.
exporters.
Comment: The regulations should allow brand participants to
demonstrate success by showing increases in sales after participating
in the program over a finite period.
Comment: Brand participants should be required to demonstrate an
increase in the ratio between their total expenditures and government
funding in each successive year of the program's life. The ratio should
be applied on a market and individual product line basis.
Comment: The additionality requirement ``. . . could hinder
[smaller companies in] their effectiveness as they rely on the program
for cost sharing (50/50) to further their own marketing budgets.''
Comment: The additionality requirement, although good in its
intent, poses major challenges and difficulties in the area of
compliance.
Response: The additionality provision is statutorily mandated by
section 1302(b)(2)(D) of the Omnibus Budget Reconciliation Act of 1993.
CCC cannot eliminate this requirement from the rule. In determining
whether federal funds received supplement or supplant private or third
party funds or contributions, CCC will consider the participant's
overall marketing budget from year to year, variations in promotional
strategies within a country and new markets. It will be each
participant's responsibility to maintain appropriate records or
documentation which substantiate its certification that any CCC
resources received supplement, but do not supplant, any private or
third party funds or other contributions to program activities.
Comment: When will the additionality provision be audited.
Response: The audit will occur during the normal compliance review
process.
Applicability Date
This rule is effective February 1, 1995, but it applies no sooner
than the beginning of each participant's 1995 program and corresponding
activity plan year. Therefore, present participants will not be
required to revise previously approved activity plans in order to
comply with the new rules and should have sufficient time to take the
new rules into consideration in the planning of future activities.
List of Subjects in 7 CFR Part 1485
Agricultural commodities, Exports.
[[Page 6363]] Accordingly, Part 1485 of Title 7 of the Code of
Federal Regulations is revised to read as follows:
PART 1485--COOPERATIVE AGREEMENTS FOR THE DEVELOPMENT OF FOREIGN
MARKETS FOR AGRICULTURAL COMMODITIES
Subpart A--[Reserved]
Subpart B--Market Promotion Program
Sec.
1485.10 General purpose and scope.
1485.11 Definitions.
1485.12 Participation eligibility.
1485.13 Application process and strategic plan.
1485.14 Application approval and formation of agreements.
1485.15 Activity plan.
1485.16 Reimbursement rules.
1485.17 Reimbursement procedures.
1485.18 Advances.
1485.19 Employment practices.
1485.20 Financial management, reports, evaluations and appeals.
1485.21 Failure to make required contribution.
1485.22 Submissions.
1485.23 Miscellaneous provisions.
1485.24 Applicability date.
1485.25 Paperwork reduction requirement.
Authority: 7 U.S.C. 5623, 5662-5664 and sec. 1302, Pub. L. 103-
66, 107 Stat. 330.
Subpart A--[Reserved]
Subpart B--Market Promotion Program
Sec. 1485.10 General purpose and scope.
(a) This Subpart sets forth the policies underlying the Commodity
Credit Corporation's (CCC) operation of the Market Promotion Program
(MPP), and a subcomponent of that program, the Export Incentive
Program/Market Promotion Program (EIP/MPP). It also establishes the
general terms and conditions applicable to MPP and EIP/MPP agreements.
(b) Under the MPP, CCC enters into agreements with nonprofit trade
organizations to share the costs of certain overseas marketing and
promotion activities that are intended to develop, maintain or expand
commercial export markets for U.S. agricultural commodities and
products. MPP participants may receive assistance for either generic or
brand promotion activities. EIP/MPP participants are U.S. commercial
entities that receive assistance for brand promotion activities.
(c) The MPP and EIP/MPP generally operate on a reimbursement basis,
and CCC may, at its option, provide such reimbursement either in cash
or in CCC commodity certificates.
(d) CCC's policy is to ensure that benefits generated by MPP and
EIP/MPP agreements are broadly available throughout the relevant
agricultural sector and no one entity gains an undue advantage. The MPP
and EIP/MPP are administered by personnel of the Foreign Agricultural
Service.
Sec. 1485.11 Definitions.
For purposes of this Subpart the following definitions apply:
(a) Activity--a specific market development effort undertaken by a
participant.
(b) Activity plan--a document which details a participant's
proposed activities and budget. (``Activity Plan'' is used in lieu of
the term ``Marketing Plan'' to avoid administrative confusion with
plans submitted under the Cooperator Foreign Market Development
Program.)
(c) Administrator--the Administrator, FAS, USDA, or designee.
(d) Agricultural commodity--an agricultural commodity, food, feed,
fiber, wood, livestock or insect, and any product thereof; and fish
harvested from a U.S. aquaculture farm, or harvested by a vessel as
defined in title 46, United States Code, in waters that are not waters
(including the territorial sea) of a foreign country.
(e) APAR--activity plan amendment request.
(f) Attache/Counselor--the FAS employee representing USDA interests
in the foreign country in which promotional activities are conducted.
(g) Brand promotion--an activity that involves the exclusive or
predominant use of a single company name or logo(s) or brand name(s) of
a single company.
(h) CCC--the Commodity Credit Corporation.
(i) Contribution--the cost-share incurred in support of an approved
activity.
(j) Demonstration projects--activities involving the erection or
construction of a structure or facility or the installation of
equipment.
(k) Deputy Administrator--the Deputy Administrator, Commodity and
Marketing Programs, FAS, USDA, or designee.
(l) Division Director--the director of a commodity division,
Commodity and Marketing Programs, FAS, USDA.
(m) EIP/MPP--the Export Incentive Program/Market Promotion Program.
(n) EIP/MPP participant--a U.S. commercial entity which has entered
into an EIP/MPP agreement with CCC.
(o) Eligible commodity--the agricultural commodity that is
represented by an applicant.
(p) Exported commodity--an agricultural commodity that is sold to
buyers in, or is donated to, a foreign country.
(q) FAS--Foreign Agricultural Service, USDA.
(r) Foreign third party--a foreign entity that assists, in
accordance with an approved activity plan, in promoting the export of a
U.S. agricultural commodity.
(s) Generic promotion--a promotion that is not a brand promotion.
(t) Market--a country in which an activity is conducted.
(u) MPP--the Market Promotion Program.
(v) MPP participant--an entity which has entered into an MPP
agreement with CCC.
(w) Participant--a entity which has entered into an agreement with
CCC.
(x) Promoted commodity--an agricultural commodity whose sale is the
intended result of a promotion activity.
(y) Sales team--a group of individuals engaged in an approved
activity intended to result in specific sales.
(z) Small-sized entity--a U.S. commercial entity which meets the
small business size standards published at 13 CFR part 121, Small
Business Size Regulations.
(aa) SRTG--an association of State Departments of Agriculture
referred to as State Regional Trade Group(s).
(bb) STRE--sales and trade relations expenditures.
(cc) Supergrade--a salary level designation that is applicable to
certain non-U.S. employees who direct participants' overseas offices.
(dd) Trade team--a group of individuals engaged in an approved
activity intended to promote the interests of an entire agricultural
sector rather than to result in specific sales by any of its members.
(ee) Unfair trade practice--an act, policy, or practice of a
foreign government that:
(1) violates, is inconsistent with, or otherwise denies benefits to
the United States under, any trade agreement to which the United States
is a party; or
(2) is unjustifiable, unreasonable, or discriminatory and burdens
or restricts United States commerce.
(ff) U.S. commercial entity--an agricultural cooperative or for-
profit firm located and doing business in the United States, and
engaged in the export or sale of an agricultural commodity.
(gg) U.S. industry contribution--the cost incurred by the U.S
industry in support of an approved activity.
(hh) USDA--the United States Department of Agriculture.
Sec. 1485.12 Participation Eligibility.
(a) To participate in the MPP, an entity: [[Page 6364]]
(1) Shall be:
(i) A nonprofit U.S agricultural trade organization;
(ii) A nonprofit state regional trade group;
(iii) A U.S. agricultural cooperative; or
(iv) A State agency; and
(2) Shall contribute:
(i) In the case of generic promotion, at least 10 percent of the
value of resources provided by CCC for such generic promotion; or
(ii) In the case of brand promotion, at least 50 percent of the
total cost of such brand promotions.
(b) To participate in the EIP/MPP, an entity:
(1) Shall be a U.S. commercial entity that either owns the brand(s)
of the agricultural commodity(s) to be promoted or has the exclusive
rights to use such brand(s); and
(2) Shall contribute at least 50 percent of the total cost of the
brand promotion.
(c) CCC may require a contribution level greater than that
specified in paragraphs (a) and (b) of this section. In requiring a
higher contribution level, CCC will take into account such factors as
past participant contributions, previous MPP funding levels, the length
of time an entity participates in the program and the entity's ability
to increase its contribution.
(d) CCC may require an EIP/MPP applicant to participate through an
MPP participant.
(e) CCC will enter into MPP or EIP/MPP agreements only where the
eligible agricultural commodity is comprised of at least 50 percent
U.S. origin content by weight, exclusive of added water.
(f) CCC will not enter into an MPP or EIP/MPP agreement for the
promotion of tobacco or tobacco products.
Sec. 1485.13 Application process and strategic plan.
(a) General application requirements.
CCC will periodically publish a Notice in the Federal Register that
it is accepting applications for participation in MPP and EIP/MPP.
Applications shall be submitted in accordance with the terms and
requirements specified in the Notice. An application shall contain
basic information about the applicant and the proposed program, a
program justification and a strategic plan.
(1) Basic applicant and program information.
(i) All MPP and EIP/MPP applications shall contain:
(A) The name and address of the applicant;
(B) The name of the Chief Executive Officer;
(C) The name and telephone number of the applicant's primary
contact person;
(D) The name(s) of the person(s) responsible for managing the
program;
(E) Type of organization--see Sec. 1485.12(a)(1);
(F) Tax exempt identification number, if applicable;
(G) Activity plan year (mm/dd/yy-mm/dd/yy);
(H) Dollar amount of CCC resources requested for generic
activities;
(I) Dollar amount of CCC resources requested for brand activities;
(J) Percentage of CCC resources requested for brand activities that
will be made available to small-sized entities;
(K) Total dollar amount of CCC resources requested;
(L) Percentage of CCC resources requested for general
administrative costs and overhead; and
(M) Estimated cumulative carryover--i.e., the estimated amount of
unexpended funds allocated to the applicant in any prior year;
(ii) Applications submitted by nonprofit entities shall also
contain:
(A) A description of the organization;
(B) A description of the organization's membership and membership
criteria;
(C) A list of affiliated organizations;
(D) A description of management and administrative capability;
(E) A description of prior export promotion experience;
(F) Value, in dollars, that the applicant will contribute;
(G) Applicant's contribution stated as a percent of 1(i)(K) above;
(H) Value, in dollar, of contributions from other sources;
(2) Program justification.
(i) All MPP and EIP/MPP applications shall contain:
(A) A description of the eligible agricultural commodity(s), its
harmonized system code, the commodity aggregate code and the percentage
of U.S. origin content by weight, exclusive of added water;
(B) A description of the exported agricultural commodity(s), its
harmonized system code, the commodity aggregate code and the percentage
of U.S. origin content by weight, exclusive of added water;
(C) A description of the promoted agricultural commodity(s), its
harmonized system code, the commodity aggregate code and the percentage
of U.S. origin content by weight, exclusive of added water;
(D) A description of the anticipated supply and demand situation
for the exported agricultural commodity(s);
(E) The volume and value of the exported agricultural commodity(s)
for the most recent 3-year period;
(F) If the proposal is for two or more years, an explanation why
the proposal should be funded on a multiyear basis; and
(G) A certification and, if requested by the Deputy Administrator,
a written explanation supporting the certification, that any funds
received will supplement, but not supplant, any private or third party
funds or other contributions to program activities. The justification
shall indicate why the participant is unlikely to carry out the
activities without Federal financial assistance. In determining whether
federal funds received supplemented or supplanted private or third
party funds or contributions, CCC will consider the participant's
overall marketing budget from year to year, variations in promotional
strategies within a country and new markets.
(ii) Applications submitted by a small-sized entity seeking funds
under an EIP/MPP agreement shall contain a certification that it is a
small business within the standards established by 13 CFR part 121. For
purposes of determining size, a cooperative will be considered a single
entity.
(iii) Applicants seeking funds for brand promotion shall contain
the information required by Sec. 1485.16(g)(1) and (2) in order to
justify a rate of reimbursement higher than specified therein.
(3) Strategic plan.
(i) All MPP and EIP/MPP applications shall contain:
(A) A summary of proposed budgets by country and commodity
aggregate code;
(B) A description of the world market situation for the exported
agricultural commodity;
(C) A description of competition from other exporters, including
U.S. firms, where applicable;
(D) A statement of goals and the applicant's plans for monitoring
and evaluating performance towards achieving these goals.
(E) For each country, if applicable, five years of:
(1) historical U.S. export data;
(2) U.S. market share; and
(3) MPP funds received;
(F) For each country, three years of projected U.S. export data and
U.S. market share;
(G) Country strategy, including constraint(s) impeding U.S.
exports, strategy to overcome constraints, previous activities in the
country, the projected impact of the proposed program on U.S. exports;
(H) A justification for any new overseas office;
(I) A description of any demonstration projects, if applicable (see
Sec. 1485.13(d)(1) through (4)); [[Page 6365]]
(J) Data summarizing historical and projected exports, market share
and MPP budgets for the world; and
(K) A description of overall program goals for the ensuing 3-5
years; (ii) MPP applications for brand promotion assistance shall also
contain:
(A) A description of how the brand promotion program will be
publicized to U.S. and foreign commercial entities;
(B) The criteria that will be used to allocate funds to U.S. and
foreign commercial entities; and
(C) A justification for conducting a brand promotion program with
foreign commercial entities, if applicable.
(b) CCC may request any additional information which it deems
necessary to evaluate an MPP or EIP/MPP application. In particular, CCC
may require additional performance measurement, as required by the
Government Performance and Results Act of 1993.
(c) Eligible contributions.
(1) In calculating the amount of contributions that it will make,
and the contributions it will receive from a U.S. industry, a foreign
third party or a State agency, the MPP applicant may include the costs
(or such prorated costs) listed under paragraph (c)(2) of this section
if:
(i) Such costs will be incurred as part of an approved activity,
and
(ii) The contributor has not been or will not be reimbursed by any
other source for such costs.
(2) Subject to paragraph (c)(1) of this section, eligible
contributions are:
(i) Cash;
(ii) Compensation paid to personnel;
(iii) The cost of acquiring materials, supplies or services;
(iv) The cost of office space;
(v) A reasonable and justifiable proportion of general
administrative costs and overhead;
(vi) Payments for indemnity and fidelity bond expenses;
(vii) The cost of business cards;
(viii) The cost of seasonal greeting cards;
(ix) Fees for office parking;
(x) The cost of subscriptions to publications;
(xi) The cost of activities conducted overseas;
(xii) Credit card fees;
(xiii) The cost of any independent evaluation or audit that is not
required by CCC to ensure compliance with program requirements;
(xiv) The cost of giveaways, awards, prizes and gifts;
(xv) The cost of product samples;
(xvi) Fees for participating in U.S. government activities;
(xvii) The cost of air and local travel in the United States;
(xviii) Payment of employee's or contractor's share of personal
taxes; and
(xix) The cost associated with trade shows, seminars, entertainment
and STRE conducted in the United States.
(3) The following are not eligible contributions:
(i) Any expenditure on brand promotion, except for expenditures
incurred by the MPP participant in administering its brand promotion
program;
(ii) Any portion of salary or compensation of an individual who is
the target of an approved promotional activity;
(iii) Any expenditure, including that portion of salary and time
spent in promoting membership in the participant organization or in
promoting the MPP among its members (sometimes referred to in the
industry as ``backsell'');
(iv) Any land costs other than allowable costs for office space;
(v) Depreciation;
(vi) The cost of refreshments and related equipment provided to
office staff;
(vii) The cost of insuring articles owned by private individuals;
(viii) The cost of any arrangement which has the effect of reducing
the selling price of an agricultural commodity;
(ix) The cost of product development, product modifications, or
product research;
(x) Slotting fees or similar sales expenditures;
(xi) Membership fees in clubs and social organizations; and
(xii) Any expenditure for an activity prior to CCC's approval of
that activity or amendment.
(4) The Deputy Administrator shall determine, at the Deputy
Administrator's discretion, whether any cost not expressly listed in
this section may be included by the participant as an eligible
contribution.
(d) Special rules governing demonstration projects funded with CCC
resources. CCC will consider proposals for demonstration projects
provided:
(1) No more than one such demonstration project per constraint is
undertaken within a market;
(2) The constraint to be addressed in the market is a lack of
technical knowledge or expertise;
(3) The demonstration project is a practical and cost effective
method of overcoming the constraint;
(4) A third party participates in such project through a written
agreement which provides that title to the structure, facility or
equipment may transfer to the third party and that the MPP participant
may use the structure, facility or equipment for a period specified in
the agreement for the purpose of removing the constraint.
Sec. 1485.14 Application approval and formation of agreements.
(a) General. CCC will, consistent with available resources, approve
those applications which it considers to present the best opportunity
for developing or expanding export markets for U.S. agricultural
commodities. The selection process, by its nature, involves the
exercise of judgment. CCC's choice of participants and proposed
promotion projects requires that it consider and weigh a number of
factors that cannot be mathematically measured--i.e., market
opportunity, market strategy and management capability.
(b) Approval criteria.
In assessing the applications it receives and determining which it
will approve, CCC considers the following criteria:
(1) The effectiveness of program management;
(2) Soundness of accounting procedures;
(3) The nature of the applicant organization, with greater weight
given to those organizations with the broadest base of producer
representation;
(4) Prior export promotion or direct export experience;
(5) Previous MPP funding;
(6) Adequacy of the applicant's strategic plan in the following
categories:
(i) Description of market conditions;
(ii) Description of, and plan for addressing, market constraints;
(iii) Reasonable likelihood of plan success;
(iv) Export volume and value and market share goals in each
country;
(v) Description of evaluation plan and suitability of the plan for
performance measurement; and
(vi) Past program results and evaluations, if applicable.
(c) Allocation factors.
After determining which applications to approve, CCC determines how
it will allocate resources among participants based on the following
factors, in addition to those in paragraph (b) of this section:
(1) Size of the budget request in relation to projected value of
exports;
(2) Where applicable, size of the budget request in relation to
actual value of exports in prior years;
(3) Where applicable, participant's past projections of exports
compared with actual exports;
(4) Level of participant's contribution; [[Page 6366]]
(5) Market share goals in target country(ies);
(6) The degree to which the product to be exported consists of U.S.
grown agricultural commodities;
(7) The degree of value-added processing in the U.S.; and
(8) General administrative and overhead costs compared to direct
promotional costs.
(9) In the case of a brand promotion program, the percentage of the
budget that will be made available to small-sized entities as a means
of providing priority assistance to such entities.
(d) Approval decision.
(1) CCC will approve those applications which it determines best
satisfy the criteria and factors specified above. In addition, CCC will
only approve applications for EIP/MPP when there is sufficient U.S.
industry need for a brand promotion and there is no eligible MPP
participant interested in or capable of undertaking the brand
promotion.
(2) CCC will not provide assistance to promote a specific brand
product in a single country for more than five years. This five year
period shall not begin prior to the 1994 program or the participant's
first activity plan year, whichever is later. In limited circumstances,
the five year limitation may be waived if the Deputy Administrator
determines that further assistance is necessary in order to meet the
objectives of the program.
(3) The Deputy Administrator shall determine, at the Deputy
Administrator's discretion, whether two or more brand products in any
given country are substantially the same product.
(e) Formation of agreements.
CCC will notify each applicant in writing of the final disposition
of its application. CCC will send a program agreement, allocation
approval letter and a signature card to each approved applicant. The
allocation approval letter will specify any special terms and
conditions applicable to a participant's program, including the
required level of participant contribution. An applicant that decides
to accept the terms and conditions contained in the program agreement
and allocation approval letter should so indicate by having its Chief
Executive Officer sign the program agreement and by submitting the
signed agreement to the Director, Marketing Operations Staff, FAS,
USDA. Final agreement shall occur when the Administrator signs the
agreement on behalf of CCC. The application, the program agreement, the
allocation approval letter and these regulations shall establish the
terms and conditions of an MPP or EIP/MPP agreement between CCC and the
approved applicant.
(f) Signature cards.
The participant shall designate at least two individuals in its
organization to sign program agreements, reimbursement claims and
advance requests. The participant shall submit the signature card
signed by those designated individuals and by the participant's Chief
Executive Officer to the Director, Marketing Operations Staff, FAS,
USDA, and shall immediately notify the Director of any changes in
signatories and shall submit a revised signature card accordingly.
Sec. 1485.15 Activity plan.
(a) General.
A participant shall develop a specific activity plan(s) based on
its strategic plan and the allocation approval letter and shall submit
an activity plan for each year in which it engages in program
activities. An activity plan handbook, available from the Division
Director, provides suggested formats and codes for activity plans and
amendments.
(b) An activity plan shall contain:
(1) A written presentation of all proposed activities including:
(i) A short description of the relevant constraint;
(ii) A description of any changes in strategy from the strategic
plan;
(iii) A budget for each proposed activity, identifying the source
of funds;
(iv) Specific goals and benchmarks to be used to measure the
effectiveness of each activity. This will assist CCC in carrying out
its responsibilities under the Government Performance and Results Act
of 1993 that requires performance measurement of Federal programs,
including the MPP. Evaluation of MPP's effectiveness will depend on a
clear statement by participants of goals, method of achievement, and
results of activities at regular intervals. The overall goal of the MPP
and of individual participants' activities is to achieve additional
exports of U.S. agricultural products, that is, sales that would not
have occurred in the absence of MPP funding.
(2) A staffing plan for any overseas office, including a listing of
job titles, position descriptions, salary ranges and any request for
approval of supergrade salaries; and
(3) An itemized administrative budget for any overseas office.
(c) Activity plans for small-sized entities operating through an
SRTG shall contain a certification that it is a small-sized entity
within the standards established by 13 CFR Part 121.
(d) Requests for approval of ``supergrades''.
(1) Ordinarily, CCC will not reimburse any portion of a non-U.S.
citizen employees compensation that exceeds the highest salary level in
the Foreign Service National (FSN) salary plan applicable to the
country in which the employee works. However, a participant may seek a
higher level of reimbursement for a non-U.S. citizen who will be
employed as a country director or regional director by requesting that
CCC approve that employee as a ``supergrade''.
(2) To request approval of a ``supergrade'', the participant shall
include in its activity plan a detailed description of both the duties
and responsibilities of the position, and of the qualifications and
background of the employee concerned. The participant shall also
justify why the highest FSN salary level is insufficient.
(3) Where a non-U.S. citizen will be employed as a country
director, the MPP participant may request approval for a ``Supergrade
I'' salary level, equivalent to a grade increase over the existing top
grade of the FSN salary plan. The ``supergrade'' and its step increases
are calculated as the percentage difference between the second highest
and the highest grade in the FSN salary plan with that percentage
applied to each of the steps in the top grade. Where the non-U.S.
citizen will be employed as a regional director, with responsibility
for activities and/or offices in more than one country, the MPP
participant may request approval for a ``Supergrade II'' salary level
which is calculated relative to a ``Supergrade I'' in the same way the
latter is calculated relative to the highest grade in the FSN salary
plan.
(e) Submission of the activity plan.
A participant shall submit three copies of an activity plan to the
Division Director and a copy of the relevant country section(s) to the
Attache/Counselor(s) concerned.
(f) Activity plan approval.
CCC shall indicate in an activity plan approval letter which
activities and budgets are approved or disapproved, and shall indicate
any special terms and conditions that apply to the participant
including any requirements with respect to contributions and program
evaluations. A participant may undertake promotional activities
directly or through a foreign third party; however, the participant
shall be responsible and accountable to CCC for all such promotional
activities and related expenditures.
(g) Activity plan changes. [[Page 6367]]
(1) A participant may request changes to an activity plan by
submitting one copy of an APAR to each of the Division Director and the
Attache/Counselor(s) concerned.
(2) An APAR for a new activity shall contain the information
required in paragraph (b) of this section. All other APAR's shall
contain the activity description, the proposed budget and a
justification for transfer of funds, if applicable.
Sec. 1485.16 Reimbursement rules.
(a) A participant may seek reimbursement for an expenditure if:
(1) An expenditure has been made in furtherance of an approved
activity;
(2) The participant has transferred funds to pay for the
expenditure; and
(3) The participant has not been or will not be reimbursed for such
expenditure by any other source.
(b) Subject to paragraph (a) of this section, CCC will reimburse,
in whole or in part, the cost of:
(1) Production and placement of advertising in print or electronic
media or on billboards or posters;
(2) Production and distribution of banners, recipe cards, table
tents, shelf talkers and other similar point of sale materials;
(3) Direct mail advertising;
(4) In-store and food service promotions, product demonstrations to
the trade and to consumers, and distribution of promotional samples;
(5) Temporary displays and rental of space for temporary displays;
(6) Fees for participation in retail, trade, and consumer exhibits
and shows and booth construction and transportation of related
materials to such shows;
(7) Trade seminars including space, equipment rental and
duplication of seminar materials;
(8) Publications;
(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; and
(10) Giveaways, awards, prizes, gifts and other similar promotional
materials subject to the limitation that CCC will not reimburse more
than $1.00 per item;
(c) Subject to paragraph (a) of this section, but for generic
promotion activities only, CCC will also reimburse, in whole or in
part, the cost of:
(1) Compensation and allowances for housing, educational tuition,
and cost of living adjustments paid to a U.S. citizen employee or a
U.S. citizen contractor stationed overseas subject to the limitation
that CCC shall not reimburse that portion of:
(i) The total of compensation and allowances that exceed 125
percent of the level of a GS-15 Step 10 salary for U.S. Government
employees, and
(ii) Allowances that exceed the rate authorized for U.S. Embassy
personnel;
(2) Approved ``supergrade'' salaries for non-U.S. citizens and non-
U.S. contractors;
(3) Compensation of a non-U.S. citizen staff employee or non-U.S.
contractor subject to the following limitations:
(i) Where there is a local U.S. Embassy Foreign Service National
(FSN) salary plan, CCC shall not reimburse any portion of such
compensation that exceeds the compensation prescribed for the most
comparable position in the FSN salary plan, or
(ii) Where an FSN salary plan does not exist, CCC will not
reimburse any portion of such compensation that exceeds locally
prevailing levels which the MPP participant shall document by a salary
survey or other means.
(4) A retroactive salary adjustment that conforms to a change in
FSN salary plans, effective as of the date of such change;
(5) Accrued annual leave at such time when employment is terminated
or when required by local law;
(6) Overtime paid to clerical staff;
(7) Daily contractor fees subject to the limitation that CCC will
not reimburse any portion of such fee that exceeds the daily gross
salary of a GS-15, Step 10 for U.S. Government employees in effect on
the date the fee is earned;
(8) Air travel plus passports, visas and inoculations subject to
the limitation that CCC will not reimburse any portion of air travel in
excess of the full fare economy rate or when the participant fails to
notify the Attache/Counselor in the destination country in advance of
the travel unless the Deputy Administrator determines it was
impractical to provide such notification;
(9) Per diem subject to the limitation that CCC will not reimburse
per diem in excess of the rates allowed under the U.S. Federal Travel
Regulations (41 CFR parts 301 through 304);
(10) Automobile mileage at the local U.S. Embassy rate or rental
cars while in travel status;
(11) Other allowable expenditures while in travel status as
authorized by the U.S. Federal Travel Regulations (41 CFR parts 301
through 304);
(12) An overseas office, including rent, utilities, communications
originating overseas, office supplies, accident liability insurance
premiums and legal and accounting services;
(13) The purchase, lease, or repair of, or insurance premiums for,
capital goods that have an expected useful life of at least one year
such as furniture, equipment, machinery, removable fixtures, draperies,
blinds, floor coverings, computer hardware and software;
(14) Premiums for health or accident insurance or other benefits
for foreign national employees that the employer is required by law to
pay;
(15) Accident liability insurance premiums for facilities used
jointly with third party participants for MPP activities or for travel
of non-MPP participant personnel;
(16) Market research;
(17) Evaluations, if not required by CCC to ensure compliance with
program requirements;
(18) Legal fees to obtain advice on the host country's labor laws;
(19) Employment agency fees;
(20) STRE including breakfast, lunch, dinner, receptions and
refreshments at approved activities; miscellaneous courtesies such as
checkroom fees, taxi fares and tips; and decorations for a special
promotional occasion;
(21) Educational travel of dependent children, visitation travel,
rest and recuperation travel, home leave travel, emergency visitation
travel for U.S. overseas employees allowed under the Foreign Affairs
Manual, Foreign Affairs Manual, OIS/RA/PSG, Room B-264 Main State,
Washington, D.C. 20520, Telephone: 202-736-4881, FAX: 202-736-7214.
(22) Evacuation payments (safe haven), shipment and storage of
household goods and motor vehicles;
(23) Domestic administrative support expenses for the National
Association of State Departments of Agriculture and the SRTGs;
(24) Generic commodity promotions (see Sec. 1485.13(e));
(25) Expenditures associated with trade shows, seminars, and
educational training conducted in the United States; and
(26) Demonstration projects.
(d) CCC will not reimburse any cost of:
(1) Forward year financial obligations, such as severance pay,
attributable to employment of foreign nationals;
(2) Expenses, fines, settlements or claims resulting from suits,
challenges or disputes emanating from employment terms, conditions,
contract provisions and related formalities;
(3) The design and production of packaging, labeling or origin
identification stickers;
(4) Product development, product modification or product research;
[[Page 6368]]
(5) Product samples;
(6) Slotting fees or similar sales expenditures;
(7) The purchase, construction or lease of space for permanent
displays, i.e., displays lasting beyond one activity plan year;
(8) Rental, lease or purchase of warehouse space;
(9) Coupon redemption or price discounts;
(10) Refundable deposits or advances;
(11) Giveaways, awards, prizes, gifts and other similar promotional
materials in excess of $1.00 per item;
(12) Alcoholic beverages that are not an integral part of an
approved promotional activity;
(13) The purchase, lease (except for use in authorized travel
status) or repair of motor vehicles;
(14) Travel of applicants for employment interviews;
(15) Unused non-refundable airline tickets or associated penalty
fees except where travel is restricted by U.S. government action or
advisory;
(16) Independent evaluation or audit, including activities of the
subcontractor if CCC determines that such a review is needed in order
to ensure program compliance;
(17) Any arrangement which has the effect of reducing the selling
price of an agricultural commodity;
(18) Goods and services and salaries of personnel provided by U.S.
industry or foreign third party;
(19) Membership fees in clubs and social organizations;
(20) Indemnity and fidelity bonds;
(21) Fees for participating in U.S. Government sponsored
activities, other than trade fairs and exhibits;
(22) Business cards;
(23) Seasonal greeting cards;
(24) Office parking fees;
(25) Subscriptions to publications;
(26) Home office domestic administrative expenses, including
communication costs;
(27) Travel in the United States unless in transit to or from a
foreign country in which travel is not restricted;
(28) Payment of U.S. and foreign employees or contractors share of
personal taxes, except as legally required in a foreign country, and;
(29) Any expenditure incurred for an activity prior to CCC's
approval of that activity or amendment.
(e) The Deputy Administrator may determine, at the Deputy
Administrator's discretion, whether any cost not expressly listed in
this section will be reimbursed.
(f) For a generic promotion activity involving the use of company
names, logos or brand names, the MPP participant must ensure that all
companies seeking to promote U.S. agricultural commodities have an
equal opportunity to participate in the activity.
(g) For a brand promotion activity, CCC will reimburse at a rate
equal to the percentage of U.S. origin content of the promoted
agricultural commodity or at a rate of 50 percent, whichever is the
lesser, except that CCC may reimburse for a higher rate if:
(1) There has been an affirmative action by the U.S. Trade
Representative under Section 301 of the Trade Act of 1974 with respect
to the unfair trade practice cited and there has been no final
resolution of the case; and
(2) The participant shows, in comparison to the year such Section
301 case was initiated, that U.S. market share of the agricultural
commodity concerned has decreased; and
(3) In such case, CCC shall determine the appropriate rate of
reimbursement.
(h) CCC will reimburse for expenditures, other than administrative
expenditures, made after the conclusion of participant's activity plan
year provided:
(1) The activity was approved prior to the end of the activity plan
year;
(2) Funds were transferred to pay for a portion of the
expenditure(s) prior to the end of the activity plan year; and
(3) Expenditures were incurred not more than 30 calendar days
beyond the end of an activity plan year.
Sec. 1485.17 Reimbursement procedures.
(a) A format for reimbursement claims is available from the
Division Director. Claims for reimbursement shall contain the following
information:
(1) Activity type--brand or generic;
(2) Activity number;
(3) Commodity aggregate code;
(4) Country code;
(5) Cost category;
(6) Amount to be reimbursed;
(7) If applicable, any reduction in the amount of reimbursement
claimed to offset CCC demand for refund of amounts previously
reimbursed, and reference to the relevant Compliance Report; and
(8) If applicable, any amount previously claimed that has not been
reimbursed.
(b) All claims for reimbursement shall be submitted by the
participant's U.S. office to the Director, Marketing Operations Staff,
FAS, USDA.
(c) In general, CCC will not reimburse a claim for less than
$10,000 except that CCC will reimburse a final claim for a
participant's activity plan year for a lesser amount.
(d) CCC will not reimburse claims submitted later than 6 months
after the end of a participant's activity plan year.
(e) If CCC reimburses a claim with commodity certificates, CCC will
issue commodity certificates with a face value equivalent to the amount
of the claim which shall be in full accord and satisfaction of such
claim.
(f) If CCC overpays a reimbursement claim, the participant shall
repay CCC within 30 days the amount of the overpayment either by
submitting a check payable to CCC or by offsetting its next
reimbursement claim.
(g) If a participant receives a reimbursement or offsets an
advanced payment which is later disallowed, the participant shall
within 30 days of such disallowance repay CCC the amount owed either by
submitting a check payable to CCC or by offsetting its next
reimbursement claim.
(h) The participant shall report any actions having a bearing on
the propriety of any claims for reimbursement to the Attache/Counselor
and its U.S. office shall report such actions in writing to the
Division Director(s).
Sec. 1485.18 Advances.
(a) Policy.
In general, CCC operates MPP and EIP/MPP on a reimbursable basis.
CCC will not advance funds to an EIP/MPP participant or to an MPP
participant for brand promotion activities.
(b) Exception.
Upon request, CCC may advance payments to an MPP participant for
generic promotion activities. Prior to making an advance, CCC may
require the participant to submit security in a form and amount
acceptable to CCC to protect CCC's financial interests. Total payments
advanced shall not exceed 40 percent of a participant's approved annual
generic activity budget. However, CCC will not make any advance to an
MPP participant where an advance is outstanding from a prior activity
plan year.
(c) Refunds due CCC.
A participant shall expend the advance on approved generic
promotion activities within 90 calendar days after the date of
disbursement by CCC. A participant shall return any unexpended portion
of the advance, plus a prorated share of all proceeds generated (i.e.,
premiums generated from certificate sales and interest earned), either
by submitting a check payable to CCC or by offsetting its next
reimbursement claim. All checks shall be mailed to the Director,
Marketing Operations Staff, FAS, USDA. [[Page 6369]]
Sec. 1485.19 Employment practices.
(a) An MPP participant shall enter into written contracts with all
employees and shall ensure that all terms, conditions, and related
formalities of such contracts conform to governing local law.
(b) An MPP participant shall, in its overseas office, conform its
office hours, work week and holidays to local law and to the custom
generally observed by U.S. commercial entities in the local business
community.
(c) An MPP participant may pay salaries or fees in any currency
(U.S. or foreign) if approved by the Attache/Counselor. However,
participants are cautioned to consult local laws regarding currency
restrictions.
1485.20 Financial management, reports, evaluations and appeals.
(a) Financial Management.
(1) An MPP participant shall implement and maintain a financial
management system that conforms to generally accepted principles and
standards of accounting.
(2) An MPP participant shall institute internal controls and
provide written guidance to commercial entities participating in its
activities to ensure their compliance with these provisions. Each
participant shall maintain all original records and documents relating
to program activities for five calendar years following the end of the
applicable activity plan year and shall make such records and documents
available upon request to authorized officials of the U.S. Government.
An MPP participant shall also maintain all documents related to
employment such as employment applications, contracts, position
descriptions, leave records and salary changes, and all records
pertaining to contractors.
(3) A participant shall maintain its records of expenditures and
contributions in a manner that allows it to provide information by
activity plan, country, activity number and cost category. Such records
shall include:
(i) Receipts for all STRE (actual vendor invoices or restaurant
checks, rather than credit card receipts);
(ii) Original receipts for any other program related expenditure in
excess of $25.00;
(iii) The exchange rate used to calculate the dollar equivalent of
expenditures incurred in a foreign currency and the basis for such
calculation;
(iv) Copies of reimbursement claims;
(v) An itemized list of claims charged to each of the participant's
CCC resources accounts;
(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 and travel
vouchers. (Credit memos are not acceptable types of documentation for
participant reimbursement claims); and
(vii) Documentation supporting contributions must include: the
dates, purpose and location of the activity for which the cash or in-
kind items were claimed as a contribution; who conducted the activity;
the participating groups or individuals; and, the method of computing
the claimed contributions. MPP participants must retain and make
available for audit documentation related to claimed contributions.
(4) Upon request, a participant shall provide to CCC originals of
documents supporting reimbursement claims.
(b) Reports.
(1) End-of-Year Contribution Report.
Not later than 6 months after the end of its activity plan year, a
participant shall submit two copies of a report which identifies, by
activity and cost category and in U.S. dollar equivalent, contributions
made by the participant, the U.S. industry and foreign third parties
during that activity plan year. A suggested format of a contribution
report is available from the Division Director.
(2) Trip Reports.
Not later than 45 days after completion of travel (other than local
travel), an MPP participant shall submit a trip report. The report must
include the name(s) of the traveler(s), purpose of travel, itinerary,
names and affiliations of contacts, and a brief summary of findings,
conclusions, recommendations or specific accomplishments.
(3) Research Reports.
Not later than 6 months after the end of its activity plan year, an
MPP participant shall submit a report on any research conducted in
accordance with the activity plan.
(4) A participant shall submit the reports required by this
subsection to the appropriate Division Director. Trip reports and
research reports shall also be submitted to the Attache/Counselor
concerned. All reports shall be in English and include the
participant's agreement number, the countries covered, date of the
report and the period covered in the report.
(5) CCC may require the submission of additional reports.
(6) A participant shall provide to the FAS Compliance Review Staff
upon request any audit reports by independent public accountants.
(c) Evaluation.
(1) Policy.
(i) The Government Performance and Results Act (GPRA) of 1993 (5
U.S.C. 306; 31 U.S.C. 1105, 1115-1119, 3515, 9703-9704) requires
performance measurement of Federal programs, including MPP. Evaluation
of MPP's effectiveness will depend on a clear statement by participants
of goals to be met within a specified time, schedule of measurable
milestones for gauging success, plan for achievement, and results of
activities at regular intervals. The overall goal of the MPP and of
individual participants' activities is to achieve additional exports of
U.S. agricultural products, that is, sales that would not have occurred
in the absence of MPP funding. A participant that can demonstrate
additional sales compared to a representative base period, taking into
account extenuating factors beyond the participant's control, will have
met the overall objective of the GPRA and the need for evaluation.
(ii) Evaluation is an integral element of program planning and
implementation, providing the basis for the strategic plan and activity
plan. The evaluation results guide the development and scope of a
participant's program, contributing to program accountability and
providing evidence of program effectiveness.
(iii) An MPP participant shall conduct periodic evaluations of its
program and activities and may contract with an independent evaluator
to satisfy this requirement. CCC reserves the right to have direct
input and control over design, scope and methodology of any such
evaluation, including direct contact with and provision of guidance to
the independent evaluator.
(2) Types of evaluation.
(i) An activity evaluation is a review of an activity to determine
whether such activity achieved the goals specified in the activity
plan. Unless specifically exempted in the activity plan, all activity
evaluations shall be completed within 90 days following the end of the
MPP participant's activity plan year.
(ii) A brand promotion evaluation is a review of the U.S. and
foreign commercial entities' export sales to determine whether the
activity achieved the goals specified in the activity plan. These
evaluations shall be completed within 90 days following the end of the
participant's activity plan year.
(iii) A program evaluation is a review of the MPP participant's
entire program or any appropriate portion of the program to determine
the effectiveness of the participant's strategy in meeting specified
goals. An MPP participant shall complete at least one program
evaluation each year. Actual scope and [[Page 6370]] timing of the
program evaluation shall be determined by the MPP participant and the
Division Director and specified in the MPP participant's activity plan
approval letter.
(3) Contents of program evaluation.
A program evaluation shall contain:
(i) The name of the party conducting the evaluation;
(ii) The activities covered by the evaluation (including the
activity numbers);
(iii) A concise statement of the constraint(s) and the goals
specified in the activity plan;
(iv) A description of the evaluation methodology;
(v) A description of additional export sales achieved, including
the ratio of additional export sales in relation to MPP funding
received;
(vi) A summary of the findings, including an analysis of the
strengths and weaknesses of the program(s); and
(vii) Recommendations for future programs.
(4) An MPP participant shall submit via a cover letter to the
Division Director, an executive summary which provides assessment of
the program evaluation's findings and recommendations and proposed
changes in program strategy or design as a result of the evaluation.
(5) If as a result of an evaluation or audit of activities of a
participant under the program, CCC determines that further review is
needed in order to ensure compliance with the requirements of the
program, CCC may require the participant to contract for an independent
audit of the program activities,
(d) Appeals.
(1) The Director, Compliance Review Staff (Director, CRS) will
notify a participant through a compliance report when it appears that
CCC may be entitled to recover funds from that participant. The
compliance report will state the basis for this action.
(2) A participant may, within 60 days of the date of the compliance
report, submit a response to the Director, CRS. The Director, CRS, at
the Director's discretion, may extend the period for response up to an
additional 30 days. If the participant does not respond to the
compliance report within the required time period or, if after review
of the participant's response, the Director, CRS, determines that CCC
may be entitled to recover funds from the participant, the Director,
CRS, will refer the compliance report to the Deputy Administrator.
(3) If after review of the compliance report and response, the
Deputy Administrator determines that the participant owes any money to
CCC he will so inform the participant and provide the basis for the
decision. The Deputy Administrator may initiate action to collect such
amount pursuant to 7 C.F.R. Part 1403, Debt Settlement Policies and
Procedures. Determinations of the Deputy Administrator will be in
writing and in sufficient detail to inform the participant of the basis
for the determination. The participant may request reconsideration
within 30 days of the date of the Deputy Administrator's initial
determination.
(4) The Participant may appeal determinations of the Deputy
Administrator to the Administrator. An appeal must be in writing and be
submitted to the office of the Deputy Administrator within 30 days
following the date of the initial determination by the Deputy
Administrator or the determination on reconsideration. The participant
may request a hearing.
(5) If the participant submits its appeal and requests a hearing,
the Administrator, or the Administrator's designee, will set a date and
time, generally within 60 days. The hearing will be an informal
proceeding. A transcript will not ordinarily be prepared unless the
participant bears the cost of a transcript; however, the Administrator
may have a transcript prepared at CCC's expense.
(6) The Administrator will base the determination on appeal upon
information contained in the administrative record and will endeavor to
make a determination within 60 days after submission of the appeal,
hearing or receipt of any transcript, whichever is later. The
determination of the Administrator will be the final determination of
CCC. The participant must exhaust all administrative remedies contained
in this subsection before pursuing judicial review of a determination
by the Administrator.
Sec. 1485.21 Failure to make required contribution.
An MPP participant's contribution requirement will be specified in
the MPP allocation letter and the activity plan approval letter. If an
MPP participant fails to contribute the amount specified in its
allocation approval letter, the MPP participant shall pay to CCC in
U.S. dollars the difference between the amount it has contributed and
the amount specified in the allocation approval letter. An MPP
participant shall remit such payment within 90 days after the end of
its activity plan year.
Sec. 1485.22 Submissions.
The participant may make any submissions required by this
regulation either by hand delivery to the Director, Marketing
Operations Staff, FAS, USDA or by commercial service delivery or U.S.
mail. If delivery occurs by commercial ``next-day'' mail service or
U.S. regular mail, first class prepaid, the material shall be deemed
submitted as of the date of the commercial service or U.S. registered
mail receipt. For all other permissible methods of delivery, the
material shall be deemed submitted as of the date received by the
Director, Marketing Operations Staff, FAS, USDA.
Sec. 1485.23 Miscellaneous provisions.
(a) Disclosure of Program Information.
(1) Documents submitted to CCC by participants are subject to the
provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7
CFR Part 1, Subpart A--Official Records, and specifically 7 C.F.R.
1.11, Handling Information from a Private Business.
(2) If requested by a person located in the United States, a
participant shall provide a copy of any document in its possession or
control containing market information developed and produced under the
terms of its agreement. The participant may charge a fee not to exceed
the costs incurred in assembling, duplicating and distributing the
materials.
(3) The results of any research conducted by a participant under an
agreement, shall be the property of the U.S. Government.
(b) Ethical Conduct.
(1) A participant shall conduct its business in accordance with the
laws and regulations of the country in which an activity is carried
out.
(2) Neither an MPP participant nor its affiliates shall make export
sales of agricultural commodities and products covered under the terms
of the agreement. Neither an MPP participant nor its affiliates shall
charge a fee for facilitating an export sale. A participant may,
however, collect check-off funds and membership fees that are required
for membership in the participating organization. For the purposes of
this paragraph, ``affiliate'' means any partnership, association,
company, corporation, trust, or any other such party in which the
participant has an investment other than in a mutual fund.
(3) An MPP participant shall not limit participation to members of
its organization. The MPP participant shall publicize its program and
make participation possible for commercial entities throughout the
participant's industry or, in the case of SRTGs, throughout the
corresponding region. [[Page 6371]]
(4) A participant shall select U.S. agricultural industry
representatives to participate in activities such as trade teams, sales
teams, and trade fairs based on criteria that ensure participation on
an equitable basis by a broad cross section of the U.S. industry. If
requested, a participant shall submit such selection criteria to CCC
for approval.
(5) All participants should endeavor to ensure fair and accurate
fact-based advertising. Deceptive or misleading promotions may result
in cancellation or termination of an agreement.
(6) The participant must report any actions or circumstances that
have a bearing on the propriety of the program to the Attache/Counselor
and its U.S. office shall report such actions in writing to the
Division Director.
(c) Contracting Procedures.
(1) Neither the Commodity Credit Corporation (CCC) nor any other
agency of the United States Government or any official or employee of
the CCC or the United States Government has any obligation or
responsibility with respect to participant contracts with third
parties.
(2) A participant shall:
(i) Ensure that all expenditures for goods and services reimbursed,
in excess of $25.00, by CCC are documented by a purchase order,
invoice, or contract and that such documentation demonstrates
competition in acquiring the goods or services;
(ii) Ensure that no employee or officer participates in the
selection or award of a contract in which such employee or official, or
the employee's or officer's family or partners has a financial
interest;
(iii) Conduct all contracting in an openly competitive manner.
Individuals who develop or draft specifications, requirements,
statements of work, invitations for bids and requests for proposals for
procurement of any goods or services shall be excluded from competition
for such procurement;
(iv) Base solicitations for professional and technical services on
a clear and accurate description of the requirements for the services
to be procured;
(v) Perform a price or cost analysis for each contract;
(vi) Maintain the following procurement records:
(A) A written justification for each contractor selection or
procurement award;
(B) Documentation to demonstrate:
(1) If the procurement is for less than $2,500, that the
participant has solicited two or more quotations via telephone or
advertised to obtain competitive bids;
(2) If the procurement is for more than $2,500 but less than
$25,000, that the participant has actively solicited competitive bids
through normal commercial channels and has received at least three bids
or advertised to obtain competitive bids;
(3) If the procurement is for more than $25,000, that the
participant has advertised to obtain competitive bids. Procurement for
goods and services shall not be split in an effort to avoid specified
advertising requirements.
(d) Disposable Capital Goods.
(1) Capital goods purchased by the MPP participant and reimbursed
by CCC that are unusable, unserviceable, or no longer needed for
project purposes shall be disposed of in one of the following ways:
(i) The participant may exchange or sell the goods provided that it
applies any exchange allowance, insurance proceeds or sales proceeds
toward the purchase of other property needed in the project;
(ii) The participant may, with CCC approval, transfer the goods to
other MPP participants and activities, or to a foreign third party; or
(iii) The participant may, upon Attache'/Counselor approval, donate
the goods to a local charity, or convey the goods to the Attache/
Counselor, along with an itemized inventory list and any documents of
title.
(2) A participant shall maintain an inventory of all capital goods
with a value of $100 acquired in furtherance of program activities. The
inventory shall list and number each item and include the date of
purchase or acquisition, cost of purchase, replacement value, serial
number, make, model, and electrical requirements.
(3) The participant shall insure all capital goods acquired in
furtherance of program activities and safeguard such goods against
theft, damage and unauthorized use. The participant shall promptly
report any loss, theft, or damage of property to the insurance company.
(e) Contracts between MPP participants and brand participants.
Where CCC approves an application for brand promotion, the MPP
participant shall enter into an agreement with each approved brand
participant which shall:
(1) Specify a time period for such brand promotion, and require
that all brand promotion expenditures be made within the MPP
participant's approved activity plan period;
(2 Make no allowance for extension or renewal;
(3) Limit reimbursable expenditures to those made in countries and
for activities approved in the activity plan;
(4) Specify the percentage of promotion expenditures that will be
reimbursed, reimbursement procedures and documentation requirements;
(5) Include a written certification that the brand participant
either owns the brand of the product it will promote or has exclusive
rights to promote the brand in each of the countries in which promotion
activities will occur;
(6) Require that all product labels, promotional material and
advertising will identify the origin of the agricultural commodity as
``Product of the U.S.'', ``Product of the U.S.A.'', ``Grown in the
U.S.'', ``Grown in the U.S.A.'', ``Made in America'' or other U.S.
regional designation if approved in advance by CCC; that such origin
identification will be conspicuously displayed, in a manner that is
easily observed; and that such origin identification will conform, to
the extent possible, to the U.S. standard of 1/6'' (.42 centimeters) in
height based on the lower case letter ``o''. A participant may request
an exemption from this requirement. All such requests shall be in
writing and include justification satisfactory to the Deputy
Administrator that this labelling requirement would hinder a
participant's promotional efforts. The Deputy Administrator will
determine, on a case by case basis, whether sufficient justification
exists to grant an exemption from the labelling requirement;
(7) Specify documentation requirements for a U.S. brand applicant
seeking priority consideration for assistance based on eligibility as a
small-sized entity;
(8) Require that the U.S. brand participant submit to the MPP
participant a statement certifying that any Federal funds received will
supplement, but not supplant, any private or third party funds or other
contributions to program activities; and
(9) The participant shall require the brand participant to maintain
all original records and documents relating to program activities for
five calendar years following the end of the applicable activity plan
year and shall make such records and documents available upon request
to authorized officials of the U.S. Government.
(f) EIP/MPP participants shall ensure that all product labels,
promotional material and advertising will identify the origin of the
agricultural commodity as ``Product of the U.S.'', ``Product of the
U.S.A.'', ``Grown in the U.S.'', ``Grown in the U.S.A.'', ``Made in
America'' or other U.S. regional designation if [[Page 6372]] approved
in advance by CCC; such origin identification is conspicuously
displayed in a manner that is easily observed, and that, to the fullest
extent possible, the origin identification conforms to the U.S.
standard of 1/6'' (.42 centimeters) in height based on the lower case
letter ``o''. An EIP/MPP participant may request an exemption from this
requirement. All such requests shall be in writing and include
justification satisfactory to the Deputy Administrator that this
labelling requirement would hinder a participant's promotional efforts.
The Deputy Administrator will determine, on a case by case basis,
whether sufficient justification exists to grant an exemption from the
labelling requirement;
(g) Travel shall conform to U.S. Federal Travel Regulations (41 CFR
parts 301 through 304) and air travel shall conform to the requirements
of the ``Fly America Act (49 U.S.C. 1517).'' The MPP participant shall
notify the Attache/Counselor in the destination countries in writing in
advance of any proposed travel.
(h) Proceeds.
Any income or refunds generated from an activity, i.e.,
participation fees, proceeds of sales, refunds of value added taxes
(VAT), the expenditures for which have been wholly or partially
reimbursed, shall be repaid by submitting a check payable to CCC or
offsetting the participant's next reimbursement claim. However, where
CCC reimburses a participant with CCC commodity certificates, such
participant may retain any income generated by the sale of such
certificates.
Sec. 1485.24 Applicability date.
This Subpart applies to activities that are approved in accordance
with the participant's 1995 program and corresponding activity plan
year.
Sec. 1485.25 Paperwork reduction requirements.
The paperwork and record keeping requirements imposed by this final
rule have been submitted to the Office of Management and Budget (OMB)
for review under the Paperwork Reduction Act of 1980. OMB has assigned
control number 05510027 for this information collection.
Signed at Washington, D.C. on January 27, 1995.
Christopher E. Goldthwait,
General Sales Manager and Vice President, Commodity Credit Corporation.
[FR Doc. 95-2477 Filed 1-30-95; 10:09 am]
BILLING CODE 3410-10-P