USDA is making changes in three export credit guarantee programs as the first stop on the long road to complying with the World Trade Organization ruling in the case brought by Brazil against the U.S. cotton program.
Agriculture Secretary Mike Johanns said USDA will alter 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, the deadline the WTO set for the initial U.S. response to the ruling.
“Today's announcement demonstrates the U.S. intent to live up to its WTO obligations,” said 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.”
Beginning July 1, CCC will use a risk-based fee structure for the GSM-102 and SCGP programs, he said. 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.”
Johanns' announcement came as press reports said Brazil was expected to file a request with the WTO for retaliation rights in the case against the United States by July 5.
Reports quoted Brazilian officials as saying they were taking the step to preserve their rights, but that the government had not made a formal decision to retaliate against damages purportedly caused by the U.S. cotton program.
National Cotton Council leaders have been consulting with USDA and the U.S. Trade Representative’s office on responses to the ruling, but have declined comment on what direction those responses might take.
Details of the changes to the export credit guarantee programs can be found on the Foreign Agricultural Service website at http://www.fas.usda.gov
Additional Information: USDA Changes Its Fees To Risk-Based Method For The GSM-102 And Supplier Credit Guarantee Programs http://www.usda.gov/documents/0093RiskBasedFeesGSMSCGP.doc
Notice To GSM-103 Program Participants- http://www.usda.gov/documents/0094GSM103Notice.doc