[Federal Register Volume 63, Number 105 (Tuesday, June 2, 1998)]
[Rules and Regulations]
[Pages 29938-29941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14522]



[[Page 29938]]

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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: Final rule.

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

EFFECTIVE DATE: June 2, 1998. See Supplementary Information.

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

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This final rule is issued in conformance with Executive Order 
12866. It has been determined that this final rule will not have an 
annual economic effect in excess of $100 million; will not cause a 
major increase in costs to consumers, individual industries, Federal, 
State, or local government agencies, or geographic regions; and will 
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 final 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 final rule because CCC is not required by any other 
provision of law to publish a notice of rulemaking with respect to the 
subject matter of this 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 final rule 
does 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.

Summary and Analysis of Comments

    On February 25, 1998, CCC published a rule in the Federal Register 
(63 FR 9451) proposing several changes to the regulations which govern 
the operations of the MAP. That rule also requested interested parties 
to submit comments by March 27, 1998. CCC received 17 comments on the 
proposed rule. Following is a summary of the comments which 
specifically address the proposed rule and CCC's responses to these 
comments. General comments relating to the value of the program, 
editorial suggestions, and non-substantive comments have been omitted.

State and Industry Contributions

    CCC received 14 comments on this issue. None of these opposed the 
inclusion of state and industry contributions in the allocation 
process.
    Comment: Matching funds provided by companies for brand promotion 
should be included as industry contributions, and, in turn, be 
considered in the MAP allocation process.
    Response: CCC agrees with the commenters that company expenditures 
on brand promotion should be included as industry contributions. The 
focus of this program has shifted somewhat, with more emphasis being 
placed on market entry and access for agricultural cooperatives and 
small companies. For the first time, the 1998 MAP will include 
reimbursement for brand promotion undertaken by only cooperatives and 
small companies; large companies are no longer eligible to participate. 
By recognizing the contributions to the program made by such entities, 
and including those contributions in the allocation process, CCC 
expects that a greater number of cooperatives and small businesses will 
receive assistance through the MAP. Therefore, CCC is amending the 
final rule by removing Sec. 1485.13(c)(3)(i), which disallows all non-
administrative brand promotion expenditures as eligible contributions. 
We also agree that these non-administrative costs should be included in 
the allocation process in order to reflect the true industry 
contribution to the market development effort.
    Comment: MAP participants should not be held responsible for 
shortfalls in industry or State contributions. Under certain economic 
situations (e.g., crop failure) it is prudent for an industry to scale 
back its promotional efforts, and penalizing a participant for its 
industry's wisdom would be illogical.
    Response: MAP applicants compete against each other for funds 
based, in part, on the contributions promised in their MAP 
applications. To maintain the integrity of the competitive process, the 
level of contributions specified in each participant's MAP application 
must be met, regardless of the source of the contributions. Because it 
is the participant which applies for funding and enters into the 
program agreement with CCC, the participant must be held responsible 
for reaching the contribution level specified in the application.
    Comment: Contribution levels are proposed in conjunction with 
allocation

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requests. When funds are allocated at less than requested levels, the 
proposed contribution levels should not be considered commitments. CCC 
should use a contribution rate rather than an absolute level.
    Response: Each applicant has the option of submitting in the 
application its contribution level in the form of a percentage of CCC 
resources expended or an absolute dollar value. When an applicant 
chooses to submit a contribution level as a percentage of CCC resources 
expended, the applicant is not required to spend an absolute dollar 
amount, but a specified percentage of the resources reimbursed by CCC. 
When an applicant chooses to submit an absolute dollar value in its 
application, the absolute dollar value prevails irrespective of the 
amount reimbursed by CCC. If a participant is not able to meet its 
percentage contribution requirement, it has two options available. The 
first is to curtail expenditures of CCC resources in order to maintain 
the specified ratio of contributions to expenditures. The second option 
is to repay CCC the difference between the amount it has contributed 
and the amount specified. Therefore, CCC is adopting the rule as 
proposed.

Packaging, Labeling, and Origin Identification

    CCC received 10 comments on this issue.
    Comment: If market-specific labels are required and developed, can 
the company claim production costs in perpetuity for all reprints?
    Response: No, companies can claim only costs for production of 
labels to be used during the activity plan year in which the 
expenditure is made. CCC has revised the final rule to clarify this 
point.
    Comment: Where package and label design changes are implemented to 
comply with local laws, it is difficult to isolate those costs 
attributable solely to regulation compliance from those attributed to 
``creative artwork and design''.
    Response: Because other comments indicated that isolating such 
costs was possible and no evidence was provided in this comment to show 
otherwise, the proposed rule is adopted in this regard. To clarify, 
this rule allows for reimbursement of costs associated with the design 
and production of packaging, labeling, and origin identification when 
changes are necessary to meet another country's importing requirements. 
Any costs of design and production which are not necessary to meet such 
requirements are not reimbursable.
    Comment: A written statement from an importer detailing packaging, 
labeling, or origin identification requirements, rather than copies of 
actual laws or regulations, should be considered sufficient 
documentation of a foreign country's import requirements.
    Response: In order to keep reimbursement of these expenses 
auditable, participants will need to maintain copies of foreign 
government documents detailing packaging, labeling, or origin 
identification requirements. Other comments indicated that acquiring 
such documentation would be possible. A written statement from an 
importer may be helpful in understanding the requirements, but such a 
statement cannot be considered adequate documentation to support a 
reimbursement claim.
    Comment: Importers sometimes reimburse costs of this type. It is 
inappropriate for this program to reimburse costs that importers 
already cover.
    Response: If an importer reimburses or will reimburse such a cost, 
requesting reimbursement from CCC would violate Sec. 1485.16(a)(3), 
which provides that a participant may seek reimbursement for 
expenditures on activities if there has not been and will not be 
reimbursement from another source. Also, Sec. 1485.13(a)(2)(i)(G) 
requires participants to certify that MAP funds will not be used to 
supplant any other contributions to program activities. Consequently, 
this provision only applies to situations in which a participant would 
not be reimbursed by any other source and the funds would not supplant 
any other contributions to program activities.

Extension of Deadline for Transferring Payments After Completion of 
Activity Plan Year

    CCC received 6 comments on this issue, all of which favored the 
proposed change.
    Comment: Does this extension apply to both generic and brand 
promotion?
    Response: Yes; unless otherwise specified, the reimbursement rules 
apply to both generic and brand promotion activities. The rule is 
adopted as proposed.

Trade Show Travel for Brand Participants

    CCC received 11 comments on this issue, all of which favored the 
proposed change.
    Comment: CCC needs to be cautious that companies don't claim trade 
show travel that would have been performed with or without assistance.
    Response: Again, Sec. 1485.13(a)(2)(i)(G) requires participants to 
certify that MAP funds will not be used to supplant any other 
contributions to program activities. However, many small companies have 
said that the high costs associated with international travel have 
prevented their participation in foreign trade shows. For such 
companies, this rule change facilitates market access.
    Comment: Requirements such as trip reports, keeping original 
tickets, and mandatory use of U.S. carriers should be eliminated 
because they would be burdensome on small companies. Also, trip reports 
would contain business confidential information.
    Response: Trip reports are essential to maintaining sufficient 
records for program evaluation. CCC believes it is in the best interest 
of the program as a whole to file a report of activities during trade 
show participation. CCC will protect business confidential information 
to the extent permitted by law. Travel would not be so frequent, or 
records so voluminous, as to constitute a burden on small business. CCC 
applies the U.S. Federal Travel Regulations and the Fly America Act, 
which generally require the use of U.S. carriers. Thus, the rule is 
adopted as proposed.
    Comment: What must brand representatives do at a foreign trade show 
for their travel expenses to qualify for reimbursement?
    Response: CCC intends to reimburse travel and per diem costs only 
for those company representatives (maximum of two) who devote their 
time and efforts to exhibiting their company's products at a booth at 
the trade show. The booth could be for the company alone or for a group 
including the company, but the representatives must be exhibiting their 
own products, not the products of other companies. CCC will not 
reimburse company representatives who attend trade shows as visitors. 
CCC has revised the final rule to clarify this point.
    Comment: CCC should allow for reimbursement of overland 
transportation costs to trade shows, not just airfare. Sometimes it is 
easier and less expensive to get to a trade show by other means.
    Response: CCC agrees with this comment and will amend the proposed 
regulation to provide for reimbursement, consistent with the U.S. 
Federal Travel Regulations, of other means of transportation to 
international trade shows. For consistency, CCC will also amend 
Sec. 1485.16(c)(8) to provide reimbursement for other means of 
international travel for generic promotion activities.

[[Page 29940]]

Five Year Brand Graduation

    CCC received 9 comments on this issue. Eight of these opposed the 
rule.
    Comment: The rule proposes to limit brand promotion assistance to a 
company in a country to five years. Does ``assistance'' refer to 
reimbursements or allocations?
    Response: Assistance refers to the MAP as a whole. CCC will not 
approve or reimburse activities for the same company for brand 
promotions in the same country for more than five years. No further 
clarification is required in the final rule.
    Comment: Because market entry and growth cannot always be achieved 
in five years, particularly for companies with multiple products, the 
proposal to move to a five year assistance limit per company should be 
rejected.
    Response: CCC recognizes that individual companies may not achieve 
market entry or growth for all products in a country within five years. 
However, CCC must operate and manage this program with limited 
resources. In order to provide the opportunity for the greatest number 
of companies to reap the benefits of the MAP, it is necessary to 
graduate companies from countries after five years of assistance.
    Comment: Some branded participants have formulated their marketing 
strategies and plans believing that their companies would be able to 
remain in their current markets by switching their promoted products 
after five years. Thus, promotional activities which occurred prior to 
the 1998 activity plan year should not be counted toward the five year 
company limit.
    Response: The MAP is administered on a year-to-year basis. Funding 
and program commitments are made on a program year basis. Although some 
participants may make plans assuming a continuing program, CCC has not 
made commitments beyond one program year. Companies may, of course, 
continue to promote their products in the country after five years; 
however, such activities must be supported with their own resources. 
Therefore, CCC is adopting the rule as proposed.

Use of Credit Memos as Proof of Eligible Promotion Expenditures

    CCC received 9 comments on this issue, all of which favor the 
proposed change. The final rule is adopted accordingly.
    This rule includes other conforming and clarifying changes to 
accompany the substantive changes discussed herein.

Effective Date

    This rule is effective June 2, 1998 but it only applies to 
authorized activities beginning with the 1998 program. Therefore, 
present participants will not be required to revise previously approved 
activity plans in order to comply with the new rules.

List of Subjects in 7 CFR Part 1485

    Agricultural commodities, Exports.

    In consideration of the foregoing, 7 CFR part 1485 is amended as 
follows:

PART 1485--COOPERATIVE AGREEMENTS FOR THE DEVELOPMENT OF FOREIGN 
MARKETS FOR AGRICULTURAL COMMODITIES

    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 Access Program

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


Sec. 1485  Definitions.

* * * * *
    Credit memo--a notice that a vendor has decreased an amount owned 
for promotional expenditures at the time the notice is issued.
* * * * *
    Expenditure--either the transfer of funds, or payment via a credit 
memo in lieu of a transfer of funds.
* * * * *
    3. In section 1485.13, paragraph (c)(3)(i) is removed and 
paragraphs (c)(3)(ii) through (c)(3)(xii) are redesignated as 
paragraphs (c)(3)(i) through (c)(3)(xi) respectively.
    4. 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. * * *
* * * * *
    Section 1485.16 is amended by removing paragraph (a)(2); 
redesignating paragraph (a)(3) as paragraph (a)(2); adding paragraph 
(b)(11); and revising paragraphs (a)(1), (b)(6), (b)(7), (b)(9), 
(c)(8), (c)(25), (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) * * *
    (b) Expenditures, other than travel expenditures, associated with 
retail, trade, and consumer exhibits and shows; seminars; and 
educational training; including participation fees, booth construction, 
transportation of related materials, rental of space and equipment, and 
duplication of related printed materials;
    (7) International air travel, not to exceed the full fare economy 
rate, or other means of international transportation, 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 
participant to exhibit their company's products at a foreign trade 
show.
* * * * *
    (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, to be used during the activity plan in which the 
expenditure is made, if such packaging, labeling or origin 
identification are necessary to meet the importing requirements in a 
foreign country; and
    (c) * * *
    (8) International travel expenses 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 its was impractical to provide such 
notification;
* * * * *
    (25) Travel expenditures associated with trade shows, seminars, and 
educational training conducted in the United States; and
* * * * *
    (d) * * *

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    (3) The design and production of packaging, labeling or origin 
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.
    6. 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
* * * * *
    7. 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 the amount of contribution to be furnished by 
the applicant and other sources as directed in the participant's 
application. The MAP participants shall pay 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 May 11, 1998.
Lon Hatamiya,
Adminstrator, Foreign Agricultural Service and Vice President, 
Commodity Credit Corporation.
[FR Doc. 98-14522 Filed 6-1-98; 8:45 am]
BILLING CODE 3410-01-M