USDA Changes Export Credit Program

WASHINGTON - Jul 1/05 - SNS -- The USDA will change three export credit guarantee programs to comply with a recent World Trade Organization (WTO) cotton decision in a dispute with Brazil.

"Today's announcement demonstrates the U.S. intent to live up to its WTO obligations," said Agriculture Secretary Mike Johanns. "By implementing these changes, we ensure continued U.S. leadership in the WTO Doha negotiations as we work toward an ambitious outcome that will be beneficial for U.S. agriculture."

The three Commodity Credit Corporation (CCC) programs that will be changed are the Export Credit Guarantee Program (GSM-102), the Intermediate Export Credit Guarantee Program (GSM-103) and the Supplier Credit Guarantee Program (SCGP).

Beginning July 1, CCC will use a risk-based fee structure for the GSM-102 and SCGP programs. Fee rates will be based on the country risk that CCC is undertaking, as well as the repayment term (tenor) and repayment frequency (annual or semi-annual) under the guarantee. The new fees respond to a key finding by the WTO that the fees charged by the programs should be risk based.

Also as of July 1, the CCC will no longer accept applications for payment guarantees under GSM-103. Any remaining country and regional allocations for GSM-103 coverage under fiscal year 2005 program announcements will be reallocated to the existing GSM-102 program for that country or region.

"We have worked closely with the Congress and our agricultural industries to respond to the WTO cotton decision," Johanns said. "The export credit guarantee programs are one part of the WTO case. The Administration continues to evaluate other steps that could be taken to respond to the WTO cotton decision."