[Federal Register Volume 74, Number 181 (Monday, September 21, 2009)]
[Proposed Rules]
[Pages 48014-48016]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-22661]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1493


Solicitation of Input from Stakeholders on Revised Fees for the 
Export Credit Guarantee (GSM-102) Program

AGENCY: Foreign Agricultural Service and Commodity Credit Corporation, 
USDA.

ACTION: Notice and request for comments.

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[[Page 48015]]

SUMMARY: This notice solicits comments on proposed revisions to the fee 
rate schedule for the U.S. Department of Agriculture (USDA), Commodity 
Credit Corporation (CCC) Export Credit Guarantee Program (GSM-102). The 
Food, Conservation, and Energy Act of 2008 (the Act) amended certain 
GSM-102 program provisions related to fees. CCC's goals in proposing 
this revised fee structure are to create fees more commensurate with 
risk, generate additional program revenue in fiscal year (FY) 2010 to 
offset program costs, and consider allowing program participation by 
riskier countries.

DATES: Comments on this notice must be received by October 21, 2009 to 
be assured of consideration.

ADDRESSES: You may submit comments by any of the following methods:
     E-mail: [email protected].
     Fax: (202) 720-2495; ``Attention: GSM-102 Fee Comments.''
     Mail: P. Mark Rowse, Director, Office of Trade Programs, 
Credit Programs Division, Foreign Agricultural Service, U.S. Department 
of Agriculture, 1400 Independence Avenue, SW., Mail Stop 1025, 
Washington, DC 20250-1025.
     Hand Delivery/Courier: 1250 Maryland Avenue, SW., Suite 
420, Washington, DC 20024.
    All comments received will be available for public inspection at 
the above address during regular business hours.

FOR FURTHER INFORMATION CONTACT: P. Mark Rowse, Director, Office of 
Trade Programs, Credit Programs Division, Foreign Agricultural Service, 
U.S. Department of Agriculture, 1400 Independence Avenue, SW., Mail 
Stop 1025, Washington, DC 20250-1025; telephone: (202) 720-6211.

SUPPLEMENTARY INFORMATION:

Background and Purpose

    The GSM-102 program is currently authorized under the Agricultural 
Trade Act of 1978, as amended. The GSM-102 program provides credit 
guarantees to encourage financing of commercial exports of U.S. 
agricultural products on competitive credit terms. The CCC currently 
has authorized availability of guarantees for transactions in at least 
176 countries and regions, with 2,900 exporters eligible to 
participate. Since 1981, CCC has issued nearly $92 billion in credit 
guarantees under the GSM-102 program. Under the terms of the guarantee, 
typically, 98 percent of principal and a portion of interest are 
covered on credit terms of up to 3 years. By financing less than 100 
percent of the exported value, CCC encourages risk-sharing by the 
exporter or the exporter's assignee.
    The issuance of the guarantee is subject to a fee paid by the 
applicant (the exporter). In July 2005, USDA initiated a risk-based fee 
structure. A fee is charged based on the tenor (length of credit 
period) of the guarantee and terms for principal payment installments, 
whether 6 months or annually, and the risk grade of the obligor 
country. CCC assigns a numeric risk category (0-7, lowest to highest 
risk) to each obligor country.
    The Food, Conservation, and Energy Act of 2008 (the Act) amended 
certain GSM-102 program provisions related to fees. The Act repealed 
the 1 percent cap on fees. The Act also requires the Secretary, in 
carrying out the GSM-102 program, to ``work with the industry to 
ensure, to the maximum extent practicable, that risk-based fees 
associated with the guarantees cover, but do not exceed, the operating 
costs and losses over the long-term.'' The Act defines the ``long 
term'' as ``a period of 10 or more years.''
    CCC intends to revise the current fee structure, which has been in 
place since July 2005. The revised fee structure is designed to 
accomplish the following goals:
    1. Create a fee structure more commensurate with risk. The 1 
percent fee cap in effect prior to the Act resulted in a program fee 
structure with disproportionately high fees for low-risk transactions 
and disproportionately low fees for higher-risk transactions. CCC 
proposes to correct this imbalance by reducing fees for transactions 
with lower risk countries and shorter tenors and increasing fees for 
certain higher risk countries and longer tenors. In doing so, CCC is 
responding to many program participants who have noted that fees for 
low-risk transactions are prohibitively expensive compared to fees for 
higher-risk transactions.
    2. Generate additional program revenue in fiscal year (FY) 2010 to 
offset program costs, as measured by budget subsidy. Although budget 
subsidy costs are re-estimated each fiscal year, the Office of 
Management and Budget's most recent calculations of estimated budget 
subsidy for FY 2008 and FY 2009 are 3.05 percent and 0.87 percent, 
respectively. Although the initial budget subsidy estimate for FY 2010 
is -1.21 percent (indicating revenues are projected to exceed costs), 
CCC must offset any costs that might ultimately be incurred in FY 2008 
and FY 2009 to meet the provisions of the Act.
    3. Consider allowing program participation by riskier countries. 
When CCC implemented risk-based fees in July 2005, the highest-risk 
countries were eliminated from programming because the 1 percent fee 
cap did not permit CCC to charge fees commensurate with the associated 
risk. With the elimination of the fee cap, CCC can now consider 
allowing some of these countries to participate, charging higher fees 
to offset risk. The chart below shows the proposed fee schedule:

                           GSM-102 Program: Proposed Premium per U.S. $100 of Coverage
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                                                  Risk category
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                  Tenor                      0        1        2        3        4        5        6        7
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                                           Annual Payment of Principal
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 9 months...............................   $0.087   $0.130   $0.191   $0.297   $0.429   $0.627   $0.850   $1.116
12 months...............................    0.116    0.173    0.254    0.394    0.569    0.832    1.127    1.480
15 months...............................    0.125    0.185    0.270    0.417    0.599    0.874    1.180    1.544
18 months...............................    0.148    0.213    0.308    0.469    0.671    0.970    1.303    1.694
24 months...............................    0.212    0.292    0.415    0.617    0.873    1.241    1.650    2.115
30 months...............................    0.249    0.340    0.482    0.712    1.000    1.408    1.856    2.353
36 months...............................    0.302    0.413    0.584    0.855    1.194    1.656    2.158    2.695
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                                        Semi-Annual Payment of Principal
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30 days.................................    0.010    0.015    0.021    0.033    0.048    0.070    0.095    0.125
60 days.................................    0.020    0.029    0.043    0.067    0.096    0.141    0.191    0.250

[[Page 48016]]

 
90 days.................................    0.029    0.044    0.064    0.100    0.144    0.211    0.286    0.376
 4 months...............................    0.039    0.058    0.086    0.133    0.192    0.281    0.381    0.500
 6 months...............................    0.058    0.087    0.128    0.199    0.287    0.420    0.569    0.748
 9 months...............................    0.068    0.102    0.149    0.231    0.334    0.489    0.662    0.870
12 months...............................    0.087    0.130    0.191    0.296    0.427    0.625    0.847    1.112
15 months...............................    0.102    0.150    0.219    0.338    0.486    0.707    0.955    1.249
18 months...............................    0.129    0.184    0.266    0.403    0.576    0.831    1.115    1.447
24 months...............................    0.173    0.240    0.343    0.512    0.725    1.035    1.378    1.770
30 months...............................    0.218    0.299    0.424    0.627    0.882    1.241    1.637    2.076
36 months...............................    0.262    0.358    0.506    0.743    1.040    1.447    1.891    2.371
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    For comparison purposes, the current GSM-102 fee structure may be 
found at http://www.fas.usda.gov/excredits/gsm102fees.html.

Implementation Plans

    CCC will consider stakeholder input in determining the revised fee 
structure. CCC plans to implement a revised fee structure no later than 
September 30, 2009, so that any revised fees will be in effect for the 
FY 2010 GSM-102 program. Review of the fee structure will be an on-
going process. CCC intends to make future revisions as internal and 
external events warrant, including in response to budget subsidy re-
estimates, with the goal of being responsive to comments from program 
participants and meeting the requirements of the Act.

    Signed at Washington, DC, on Sept. 3, 2009.
Michael V. Michener,
Administrator, Foreign Agricultural Service, and Vice President, 
Commodity Credit Corporation.
[FR Doc. E9-22661 Filed 9-18-09; 8:45 am]
BILLING CODE 3410-10-P