[Federal Register Volume 63, Number 37 (Wednesday, February 25, 1998)]
[Proposed Rules]
[Pages 9451-9453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4706]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 63, No. 37 / Wednesday, February 25, 1998 / 
Proposed Rules  

[[Page 9451]]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1485


Agreements for the Development of Foreign Markets for 
Agricultural Commodities

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to amend the regulations applicable to the 
Market Access Program (MAP) authorized by section 203 of the 
Agricultural Trade Act of 1978. This proposed rule would incorporate 
into the MAP allocation process the level of export contributions made 
by U.S. industry participants; authorize reimbursement of certain 
travel expenses for brand participants and certain necessary packaging 
and labeling design expenses; extend the activity payment deadline 
following the end of an activity plan year; establish a 5-year limit, 
per country, on CCC assistance for brand promotion by single companies; 
and permit reimbursement to participants based upon issuance of a 
credit memo as an alternative to a transfer of funds.

DATES: Written comments must be received by March 27, 1998 to be 
assured of consideration.

ADDRESSES: Comments should be submitted to: Kent Sisson, Director, 
Marketing Operations Staff, Foreign Agricultural Service, United States 
Department of Agriculture, 1400 Independence Avenue, SW., Ag Box 1042, 
Room 4932S, Washington, DC 20250-1042. Fax: (202) 720-9361.

FOR FURTHER INFORMATION CONTACT: Kent Sisson or Denise Fetters at (202) 
720-4327.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule is issued in conformance with Executive Order 
12866. It has been determined that this proposed rule would not have an 
annual economic effect in excess of $100 million; would not cause a 
major increase in costs to consumers, individual industries, Federal, 
State, or local government agencies, or geographic regions; and would 
not have an adverse effect on competition, employment, investment, 
productivity, innovation, or the ability of U.S.-based enterprises to 
compete with foreign-based enterprises in domestic or foreign markets.

Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. This rule would have preemptive 
effect with respect to any State or local laws, regulations or policies 
which conflict with such provisions or which otherwise impede their 
full implementation; does not have retroactive effect; and does not 
require administrative proceedings before suit may be filed.

Executive Order 12372

    This program is not subject to the provisions of Executive Order 
12372 which requires intergovernmental consultation with State and 
local officials (see the notice related to 7 CFR part 3015, subpart V, 
published at 48 FR 29115).

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this proposed rule because CCC is not required by any 
other provision of law to publish a notice of proposed rulemaking with 
respect to the subject matter of this proposed rule.

Paperwork Reduction Act

    The information collection requirements for participating in the 
MAP were approved for use by the Office of Management and Budget (OMB) 
through April 30, 2000, and assigned OMB No. 0551-0027. This proposed 
rule would not impose new information collection requirements.

Background

    The MAP is authorized by section 203 of the Agricultural Trade Act 
of 1978, as amended (7 U.S.C. 5623), which directs the Commodity Credit 
Corporation (CCC) to establish ``a program to encourage the 
development, maintenance, and expansion of commercial markets for 
agricultural commodities through cost-share assistance to eligible 
trade organizations.'' CCC implements this provision by entering into 
agreements with non-profit trade associations, private organizations, 
State agencies, and cooperatives. These agreements provide for sharing 
the costs of overseas advertising, technical assistance, and other 
export promotion activities, and may include either generic or brand 
promotions.
    On February 1, 1995, CCC published a final rule in the Federal 
Register (60 FR 6352) governing the operations of the MAP. Since 
publication of that rule, CCC has had ongoing discussions with program 
participants concerning program improvements. Some of the changes 
proposed herein are based on these discussions.
    CCC proposes to take State and industry contributions into 
consideration during the MAP allocation process. Currently, such 
contributions are not considered in the allocation process. This 
approach does not recognize the value and significance of contributions 
made by the States and industries in support of foreign market 
development efforts. Therefore, CCC is proposing to amend 
Sec. 1485.14(c)(4) to include State and industry export promotion 
contributions in the MAP allocation process. In order to protect the 
integrity of the allocation process, CCC also proposes to amend 
Sec. 1485.21 to make the participant responsible to CCC for the full 
contribution upon which the allocation would be based. In other words, 
the regulations would require the participant to pay to CCC the 
difference between the amount actually contributed and the amount 
specified in the allocation approval letter.
    Section 1485.16(d)(3) currently disallows reimbursement for costs 
associated with the design and production of packaging, labeling, and 
origin identification. However, CCC believes that when changes in 
packaging, labeling, or origin identification are necessary to meet 
another country's importing requirements, reimbursement is appropriate. 
Therefore, this rule proposes to amend Sec. 1485.16(d)(3) and to add a 
Sec. 1485.16(b)(11) which specifically authorizes reimbursement of 
necessary costs associated with the design and production of packaging,

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labeling, and origin identification. The participant will be 
responsible for demonstrating that the change was necessitated by 
foreign importing requirements. CCC will not reimburse any cost for 
creative artwork and design.
    MAP participants currently must transfer payment for expenditures 
within 4 months of the completion of the activity plan year in order to 
be reimbursed. For activities which occur near the end of he activity 
plan year, some participants occasionally fail to meet the 4-month 
deadline due to delays in receiving the necessary paperwork, such as 
invoices or purchase orders, from their overseas counterparts. 
Extending the period of time for payment to 6 months would facilitate 
participant compliance and still allow for efficient program 
management. Because reimbursement for these approved activities 
effectuates the goals of the program, CCC believes that extending the 
deadline to 6 months is justifiable and proposes such amendment to 
Sec. 1485.16(h)(3).
    CCC currently will not reimburse brand participants for any travel 
expenses. CCC believes that company participation in a trade show is a 
crucial step for entering new export markets. Because international 
travel can be expensive, small firms sometimes must forego attending 
trade shows which could greatly increase their chances for successful 
market entry and result in actual sales. To encourage trade show 
participation by brand participants, CCC is proposing to amend section 
1485.16 to authorize reimbursement for the air travel and per diem 
associated with participation in foreign trade shows. Other travel 
costs would not be reimbursed. Reimbursement would be limited to travel 
and per diem expenses for no more than two representatives of the brand 
participant. Travel and per diem expenses would not be reimbursed 
unless the participant is an exhibitor.
    The MAP currently limits any company to five years of CCC 
assistance per country per product for brand promotion. CCC believes, 
however, that it can expand export opportunities more effectively by 
limiting each company to five years of brand promotion in any country. 
In other words, after five years of receiving assistance from CCC for 
brand promotion in a given country, a company would ``graduate'' from 
the program in that country. Such company would remain eligible to 
participate in any other country in which it had received brand 
promotion assistance for less than five years. This would allow CCC to 
share its limited resources with a wider variety of American exporters 
and in a wider variety of markets. After five years of assistance in a 
country, a company should have established itself in that country and 
be able to finance 100 percent of its costs. CCC proposes to amend 
Sec. 1485.14(d)(2) accordingly. CCC will calculate this five-year 
period as is done under the current rule.
    Finally, another participant suggestion is to accept credit memos 
as documentation for participant reimbursement claims. Credit memos are 
widely used in business transactions throughout the world; however, CCC 
does not currently accept such memos as proof of eligible promotion 
expenditures. CCC had been concerned that monitoring compliance might 
be difficult if credit memos were allowed. After careful examination 
and review, including consultation with the Office of Inspector 
General, CCC believes it can adopt and implement audit controls to 
permit the use of credit memos while adequately protecting CCC's 
interests.
    CCC believes this policy regarding credit memos prevents some 
participants, in particular small businesses who would prefer to pay 
for certain promotional activities using credit memos, from deriving 
the full benefits of the program. Therefore, CCC proposes to amend 
Sec. 1485.20(a)(3)(vi) to accept credit memos as supporting 
documentation for reimbursement and auditing purposes. CCC proposes to 
add a definition of ``credit memo'' as a notice that a vendor has 
decreased an amount owed for promotional expenditures at the time the 
credit memo is issued. CCC also proposes to add a definition of 
``expenditure,'' in Sec. 1485.11, to clarify that an expenditure can be 
either a transfer of funds or a payment via a credit memo in lieu of a 
transfer of funds. This rule also proposes conforming changes to 
accompany the six proposed substantive changes discussed herein.

List of Subjects in 7 CFR Part 1485

    Agricultural commodities, Exports.
    In consideration of the foregoing, the Commodity Credit Corporation 
proposes to amend 7 CFR part 1485 as follows:

PART 1485--[AMENDED]

    1. The authority citation for 7 CFR 1485 continues to read as 
follows:

    Authority: 7 U.S.C. 5623; 7 U.S.C. 5662-5663 and sec. 1302, Pub. 
L. 103-66, 107 Stat. 330.

Subpart B--Market Promotion Program

    2. Section 1485.11 is amended by deleting the paragraph 
designations and adding the following two new definitions in 
alphabetical order:


Sec. 1485.11  Definitions.

* * * * *
    Credit memo--a notice that a vendor has decreased an amount owned 
for promotional expenditures at the time the credit memo is issued.
* * * * *
    Expenditure--the transfer of funds or payment via a credit memo in 
lieu of a transfer of funds.
* * * * *
    3. Section 1485.14 is amended by removing paragraph (d)(3) and 
revising paragraphs (c)(4) and the first sentence of (d)(2) to read as 
follows:


Sec. 1485.14  Application approval and formation of agreements.

* * * * *
    (c) * * *
    (4) Level of participant's State's, and industry's contributions;
* * * * *
    (d) * * *
    (2) CCC will not provide assistance to a single company for brand 
promotion in a single country for more than five years. * * *
* * * * *
    4. Section 1485.16 is amended by removing paragraph (a)(2); 
redesignating paragraph (a)(3) as paragraph (a)(2); adding paragraphs 
(b)(11) and (12); and revising paragraphs (a)(1), (b)(9), (d)(3), and 
(h)(3) to read as follows:


Sec. 1485.16  Reimbursement rules.

    (a) * * *
    (1) The expenditure was made in furtherance of an approved 
activity; and
* * * * *
    (b) * * *
    (9) Part-time contractors such as demonstrators, interpreters, 
translators and receptionists to help with the implementation of 
promotional activities such as trade shows, in-store promotions, food 
service promotions, and trade seminars;
* * * * *
    (11) The design and production of packaging, labeling or origin 
identification, if necessary to meet the importing requirements in a 
foreign country; and
    (12) Air travel not to exceed the full fare economy rate and per 
diem as allowed under the U.S. Federal Travel Regulations (41 CFR parts 
301 through 304) for no more than two representatives of a single brand 
participants to participate as trade show exhibitors.
* * * * *
    (d) * * *
    (3) The design and production of packaging, labeling or origin

[[Page 9453]]

identification, except as described in paragraph (b)(11) of this 
section.
* * * * *
    (h) * * *
    (3) all expenditures were made for the activity within 6 months 
following the end of the activity plan year.
    5. Section 1485.20 is amended by revising paragraph (a)(3)(vi) to 
read as follows:


Sec. 1485.20  Financial management, reports, evaluations and appeals.

    (a) * * *
    (3) * * *
    (vi) Documentation with accompanying English translation supporting 
each reimbursement claim, including original evidence to support the 
financial transactions such as canceled checks, receipted paid bills, 
contracts or purchase orders, per diem calculations, travel vouchers, 
and credit memos; and
* * * * *
    6. Section 1485.21 is revised to read as follows:


Sec. 1485.21  Failure to make required contribution.

    An MAP participant's contribution requirement will be specified in 
the MAP allocation letter and the activity plan approval letter. The 
amount specified will be in the amount of contribution to be furnished 
by the applicant and other sources as indicated in the participant's 
application. The MAP participant shall pay to CCC in dollars the 
difference between the amount actually contributed and the amount 
specified in the allocation approval letter. An MAP participant shall 
remit such payment within 90 days after the end of its activity plan 
year

    Signed at Washington, DC, on February 9, 1998.
Lon Hatamiya,
Administrator, Foreign Agricultural Service and Vice President, 
Commodity Credit Corporation.
[FR Doc. 98-4706 Filed 2-24-98; 8:45 am]
BILLING CODE 3410-10-M