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8 17.8 Fees, discounts, commissions, brand

names, purchasing agents, shipping

agents. (a) Consular fees. Consular fees imposed for the issuance or legalization of consular invoices or certificates in connection with the importation of commodities into a foreign country will not be financed by CCC.

(b) Discounts. If a contract provides for one or more discounts (including but not limited to trade or quantity discounts and discounts for prompt payment) whether expressed as such or as “commissions” to the importer, only the invoice amount after discount (supplier's contracted price less all discounts) will be eligible for financing.

(c) Commissions. (1) (i) For non-food commodities, a commission to a selling agent as defined in § 17.2(c)(19), employed or engaged by the supplier to obtain a contract, eligible for financing to the extent that such commission is included in the contract price, except as stated in this paragraph.

(ii) For food commodities, a commission, fee or other payment to a selling agent as defined in § 17.2(c)(19), employed or engaged by the supplier to obtain a contract, is prohibited.

INTERPRETATION Any act by a person on behalf of a commodity supplier, which would influence or tend to influence a buyer to award a contract to the supplier, or which may result in the supplier's having a competitive advantage in relation to other potential suppliers, constitutes an act “to obtain a contract. Furthermore, any act by a person on behalf of a commodity supplier to influence USDA to approve a contract for financing constitutes an act "to obtain a contract."

Services on behalf of a supplier which are purely ministerial in nature and do not require the exercise of personal influence, judgment, or discretion, such as attending bid openings or presenting offers at bid openings, would not in themselves be considered acts "to obtain a contract."

Services to implement a contract after it has been entered into by the parties thereto, such as handling documentation problems or contract disputes, would not constitute acts "to obtain a contract.'

Payments of any kind to a person who has acted as a selling agent to obtain a contract, including payments for services performed in connection with such contract which in themselves are not services to obtain a contract, are prohibited.

(2) If the supplier of the commodity has employed any person or firm, other than a selling agent, to obtain a contract, the sale is not eligible for financing.

(3) No commission paid or to be paid to any agency, including a corporation, owned or controlled by the participant or the government of the destination country will be eligible for financing.

(4) No commission paid or to be paid to any agent, broker or other representatives of the participant or the importer will be eligible for financing. This limitation is not applicable to ocean transportation brokerage commissions which do not exceed 242 percent of the freight financed.

(5) For ocean transportation, in addition to this paragraph, see also § 17.9(i)(8).

(6) If a commission is paid in violation of paragraph (c) (2), (3), or (4) of this section, CCC reserves the right to demand dollar refund of the entire amount financed by CCC under the contract.

(d) Brand names. Brand names are not required to be shown on packaged commodities. If, however, a brand name is used, it must be a bona fide U.S. brand. The container or attached label must show the name and U.S. business address of the supplier or the manufacturer. Any reference on the container or attached label to foreign addresses of suppliers or foreign brand names is prohibited and will make the sale ineligible for financing. If the markings on the shipping container include a brand name such brand name shall be identical with the brand name on the unit container.

(e) Purchasing agents; shipping agents. (1) A participant is not required to use a purchasing agent or shipping agent; however, if a purchasing or shipping agent is to be used, the participant shall submit the nomination(s) to the GSM in writing along with a copy of the proposed agency agreement. No person may act as purchasing or shipping agent, or as both, unless approved by the Assistant Sales Manager, Pub. L. 480 Programs, in accordance with the provisions of this paragraph.

(2) The term "affiliate" shall have the meaning as provided in § 17.2(c)(1) and in addition, persons will also be deemed to be affiliates if any of the following conditions are met:

(i) Such persons have any common officers or directors.

(ii) There is any investment by ships brokers, ocean transportation suppliers, approved commodity suppliers, or selling agents, or their officers, or directors in the purchasing agents or shipping agents.

(iii) There is any investment by the purchasing agent or shipping agent, or his officers or directors in ships brokers, ocean transportation suppliers, or approved commodity suppliers, or selling agents. These conditions include those cases in which investment has been concealed by the utilization of any scheme or device to circumvent the purposes of this section but does not include investment in any mutual fund.

(3) A person whose nomination has been submitted to act as a purchasing agent or shipping agent, or both, shall furnish to the Assistant Sales Manager, Pub. L. 480 Programs, the following:

(i) The names of all incorporators of the firm:

(ii) The names and titles of all officers and directors;

(iii) The names and proportionate share interest of all stockholders;

(iv) If the beneficial interest in the firm is held by persons other than the named shareholders, the names of the holders of the beneficial interest and the proportionate share of each;

(v) The amount of the subscribed capital of the firm;

(vi) A written undertaking signed by such person agreeing that if he is approved neither he nor any of his affiliates, as defined in § 17.8(e)(2), will act as a ships broker, ocean transportation supplier, commodity supplier, or selling agent in any Title I transactions with the participant during the term of the agency agreement;

(vii) A certification that the person has not arranged to give or receive any payment or other benefit in connection with his selection as agent.

(4) Consideration will not be given to approval of a person to act as a shipping or purchasing agent, or both,

until the documents required to be submitted by this paragraph are received by the Assistant General Sales Manager, Pub. L. 480 Programs. Approval of a nomination for purchasing agent or shipping agent may be withheld for a period not to exceed 30 days pending completion of any investigation deemed appropriate.

(5) Approval of a purchasing agent or shipping agent to act for a participant shall be coextensive with the term of the agency agreement or such shorter period as the Assistant Sales Manager, Pub. L. 480 Programs, may determine: Provided, That such approval will be automatically terminated if the shipping or purchasing agent or any of the affiliates of such agent, acts as ships broker, ocean transportation supplier, commodity supplier or selling agent in connection with any Title I transaction for such participant during the term of the agency agreement.

(6) If a participant uses an unapproved purchasing agent in the procurement of commodities made available under Title I, Pub. L. 480, sales approval may be withheld.

(7) If a participant uses an unapproved shipping agent in the shipping of commodities made available under Title I, Pub. L. 480, vessel approval may be withheld or the amount of the shipping agent's commission in connection with the shipment may be deducted from the ocean freight differential to be paid.

(8) The Assistant Sales Manager, Pub. L. 480 Programs, shall promptly notify persons seeking approval as purchasing or shipping agents of his determination or of the need for further investigation. If such person is not approved, the notification shall state the reasons therefor. The determination of the Assistant Sales Manager shall be effective immediately and shall continue in effect pending the result of any appeal to the General Sales Manager. Nothing herein shall be construed as to prohibit a shipping agent or purchasing agent, whose application has been disapproved or whose approval terminated, from being nominated at a later time.

(9) Any person whose nomination has been disapproved or whose approval has been terminated pursuant to the provisions of this section shall have the opportunity, within 30 days, to present to the General Sales Manager any reasons, orally or in writing, as to why such action should not stand.

(f) Reports required from suppliers of commodities and ocean transportation. (1) Suppliers of (i) agricultural commodities financed under the Act and (ii) U.S. flag vessels on which such commodities are transported, if ocean freight differential payments are made by CCC with respect thereto, shall report to the General Sales Manager (GSM) any commission, fee or other compensation of any kind (hereinafter referred to as “payment”) which, in connection with the supplying of such commodities or vessels, is paid or to be paid by the supplier to any agent, broker, or other representative of the importer or importing country, including a corporation owned or controlled by the importer or importing country, to which he supplies such commodities or vessels.

(2) The term "other compensation of any kind” means anything given in return for any consideration, services, or benefits received or to be received by the supplier in connection with the supplying of commodities or vessels financed under the Act.

(3) The supplier shall report in writing as soon as he knows that a payment as described in paragraph (f)(1) of this section is made or to be made. Reports shall be submitted to the GSM, Office of the General Sales Manager, Room 4073-S, U.S. Department of Agriculture, Washington, D.C. 20250. The supplier shall include in the report the following information with respect to each payment reported pursuant to paragraph (f)(1):

(i) The name and address of the person to whom the payment was made or is to be made, and his relationship to the importer or importing country.

(ii) Date payment made or approximate date when payment is to be made, and amount or approximate amount of payment.

(iii) An explanation of the transaction in connection with which the payment was made or is to be made.

(iv) The number(s) of the purchase authorization(s) providing for the financing under the Act of the sale of agricultural commodities to the importer or importing country to whose agent, broker or other representative the payment was made or is to be made.

(4) Knowledge of any fact material to obligations under paragraph (f) of this section shall be imputed to the supplier if the supplier should reasonably have known that such fact existed.

(5) The information in reports filed hereunder will be available for public inspection by contacting the General Sales Manager, OGSM USDA, at the address given in paragraph (f)(3) of this section.

(6) Failure to file a required report or the filing of a false report hereunder constitutes a cause for debarment pursuant to 7 CFR 1407.5(c). Whenever the GSM believes, or has reason to believe, that a supplier has failed to file a report as required by this paragraph (f) or has filed a false report thereunder, the GSM is authorized to institute suspension or debarment proceedings against the supplier in accordance with the provisions of 7 CFR Part 1407.

(7) If a final determination has been made under 7 CFR Part 1407 that a supplier has failed to file a report as required by this paragraph (f) or has filed a false report thereunder, the supplier shall be debarred, for a period of five years from the date of such final determination, from furnishingdirectly or indirectly-commodities financed under the Act or U.S. flag vessels on which such commodities are to be transported if ocean freight differential payments are to be made by CCC with respect thereto. Such supplier may also be debarred (in accordance with 7 CFR Part 1407) from participating in other programs administered or financed by CCC.

INTERPRETATIONS 1. Payments to a trading company owned by the government of the importing country.

The text of the applicable regulation ($ 17.8(f)(1)) states that a payment to

any . . . representative of the...

importing country, including a corpo- 5. Payments made to any representaration owned or controlled by the ... tive of the importer or importing counimporting country ....” must be re- try at a loading or discharge port. ported. This clearly indicates that a The regulations require that any payment to a state owned trading com- payment made by a supplier of company must be reported.

modities or ocean transportation to a 2. Business expenses in connection representative of the importer or imwith the entertainment of representa- porting government be reported. Actives of the importer, such as meals, cordingly, such payments must be retheatre tickets, etc.

ported. “Compensation” refers to anything 6. Payments made by a commodity given in return for consideration, sery- supplier to the importer for a quality ices, or benefits received or to be re

allowance, as specified in the sales ceived by the supplier in connection contract. with the supplying of commodities or Payments for bona fide quality alvessels financed under the Act. See lowances agreed upon between suppli$ 17.8(f)(2). There is no general re- er and importer in their sales contract quirement under this regulation for are not required to be reported. This is suppliers to report all business enter- considered a contract price adjustment tainment expenses; however, such ex- under the regulations and not a "compenses must be reported if made to a mission, fee or other compensation representative of the importer or im- ... porting country in return for any con

(Secs. 101-115, Pub. L. 83-480, as amended sideration, services, or benefits re

(7 U.S.C. 1701 et seq.); E.O. 10900, 26 FR ceived or to be received by the supplier 143, as amended, Sec. 1202, 91 Stat. 955, in connection with a Pub. L. 480 trans- Pub. L. 95-113, 7 U.S.C. 1715(b)) action financed under the Act.

(31 FR 16818, Dec. 31, 1966, as amended at 3. Certification to the commodity 34 FR 8963, June 5, 1969; 44 FR 26847, May supplier by representatives of the sup- 8, 1979) plier that they are not "agents, brokers, or other representatives of the im- 8 17.9 Ocean transportation. porter or importing country, including (a) General. (1) This section will a corporation owned or controlled by apply to the financing of ocean freight the importer or the government of the

differential for sales for foreign curcountry.

rencies and to the financing of ocean The commodity supplier may choose freight for long-term credit sales. to require a certification as described Ocean freight will be financed by CCC above from the supplier's representa- only to the extent specifically protives. However, the existence of such a vided for in the purchase authorizacertification would not relieve the sup- tion. The purchase authorization may plier from the responsibility to report provide requirements in addition to or payments made to any person whom in lieu of those specified in this secthe supplier knew, or should reason- tion. ably have known to be a representa- (2) The offices specified in parative of the importer or importing graph (b) of this section shall detercountry.

mine the quantity of the commodity 4. A broker acting on behalf of the which must be shipped on privately vessel's owner in offering a vessel to an owned U.S.-flag commercial vessels. importing country, and also the im- (3) The supplier of ocean transportaporting country in discharging the tion shall release copies of the ocean vessel under a free out contract.

bills of lading to the supplier of the The commission paid by the vessel's commodity promptly upon completion owner to the borker is reportable if of loading of the vessel. the supplier of ocean transportation (b) Request for vessel approval. The (vessel owner) knew, of should reason- pertinent terms of all proposed ably have known at the time of pay- charters (whether single voyage ment, of the relationship between the charters, consecutive voyage charters, broker and the importing country. or time charters) and all proposed

90-007

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liner bookings, regardless of whether any portion of ocean freight is financed by CCC must be submitted to the appropriate USDA office for review and approval before fixture of the vessel. Tentative advance vessel approvals may be obtained by telephone or telegram provided Form CCC-105, Ocean Shipment Data-Pub. L. 480 (Request for Vessel Approval), is furnished promptly confirming the information supplied by telephone or telegram. To obtain approval of proposed vessel charters and liner bookings the Form CCC-105 shall be submitted in duplicate to the office indicated:

(1) For cotton. Form CCC-105 (Cotton), Ocean Shipment Data-Pub. L. 480 Request for Vessel Approval, shall be submitted to the Director, ASCS Commodity Office, U.S. Department of Agriculture, Wirth Building, 120 Marais Street, New Orleans, La. 70112.

(2) For commodities other than cotton. Form CCC-105, Ocean Shipment Data-Pub. L. 480 Request for Vessel Approval shall be submitted to the Director, Ocean Transportation Division, Office of the General Sales Manager, U.S. Department of Agriculture, Washington, D.C. 20250.

(c) Advice of vessel approval. Approvals of charters and liner bookings will be given on Form CCC-106, Advice of Vessel Approval. The Form CCC-106 will state whether the vessel is approved as a dry cargo liner, dry bulk carrier, or tanker, and whether or not financing by CCC of any part of the ocean freight is authorized. Form CCC-106, Advice of Vessel Approval, will be issued as follows:

(1) For cotton. Form CCC-106-3 (white), signed for the Director, New Orleans ASCS Commodity Office, will be issued only to the supplier of the cotton on sales made on a c.i.f. or cost and freight basis. If CCC finances any part of the ocean freight when cotton is shipped on an f.a.s. basis, two signed original copies of this form will be issued, one to the supplier of the cotton and the other to the ocean carrier.

(2) For commodities other than cotton. Form CCC-106, signed for the

Director, Ocean Transportation Division, OGSM, will be issued as follows:

(i) For shipments to be made on an f.o.b. or f.a.s. basis, the original of Form CCC-106-1 (yellow) will be issued to the supplier of the commodity and when CCC finances any part of the cost of ocean freight, the original of Form CCC-106-2 (blue) will be issued to the ocean carrier.

(ii) For shipments to be made on a c.i.f. or cost and freight basis, the original of Form CCC-106-1 (yellow) will be issued to the supplier of the commodity.

(d) Special charter party provisions required when any part of ocean freight is financed by CCC. When CCC finances any part of the ocean freight for commodities booked on charter terms, a copy of the charter party shall be forwarded immediately after its execution to the Director, Ocean Transportation Division, OGSM, for review and approval prior to issuance of Form CCC-106-2. In the event of any conflict between the provisions of the regulations in this subpart and the charter party or ocean bills of lading issued pursuant thereto, the provisions of the regulations in this subpart shall prevail. The charter party shall contain or, for the purpose of financing pursuant to the regulations in this subpart, be deemed to contain the following provisions:

(1) That if there is any failure on the part of the supplier of ocean transportation to perform the charter party after the vessel has tendered at the loading port, the charterer shall be entitled to incur all expenses which in the judgment of the General Sales Manager are required to enable the vessel to undertake and carry out her obligations under the charter party including, but not limited to, expenses for lifting any liens asserted against the vessel.

(2) That, notwithstanding any prior assignments of freight made by the owner or operator, the expenses authorized in paragraph (d)(1) of this section may be deducted from the freight earned under the charter party.

(3) That ocean freight is earned and that 90 percent thereof is payable by the charterers when the vessel and

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