$201.21

Purchase prices-(a) Scope of this section-(1) Price limitations— Section 510 of the act (i) Criteria. establishes an upper limit to the prices that may be approved by ICA for purchases in bulk of commodities (see § 201.20). Within that limitation, it is the policy of ICA to make payment for purchases of commodities, whether or not in bulk, which are made at prices that approximate, as nearly as practicable, lowest competitive market prices. It is expected that buyers, making adequate solicitatior of suppliers from authorized sources and exercising prudence in their negotiations, will agree to pay no more than such prices.

(ii) Compliance. The rules set forth in this section are intended as a guide to buyers and sellers in conducting their negotiations. The rules in this part fix the point beyond which purchases will not be eligible for reimbursement by ICA. Compliance with them will make a purchase eligible for financing, and postaudit will be made by ICA to determine whether there has been compliance. If, apart from the rules set forth herein, it appears that the objective of lowest competitive market prices is not being met, ICA will take appropriate action to impose additional limitations, and may, in cases where failure to follow this policy is deemed unreasonable by the Director, require from the cooperating country a refund of the entire amount reimbursed.

(2) Applicability of section. The provisions of this section shall apply to all purchases.

(b) Meaning of terms in this section(1) Similar commodity. One commodity shall be deemed similar to another commodity if both have the same use, afford the purchaser equivalent serviceability, and belong to a type which would ordinarily be sold in the same price line.

(2) Comparable sale—(i) In general. The term "comparable sale" includes all sales which are comparable as to quantity, quality, grade, period of delivery, supply area, terms of sale and class of customer.

(ii) Under special market conditions. If special market conditions exist in a country other than the United States, a sale for export to such country shall not necessarily be deemed to be comparable to a sale for export to any other country.

(3) Competitive sellers. "Competitive sellers" means sellers of the same class (manufacturers, merchant exporters,

etc.) who are selling the same or similar commodities from the same supply area.

(4) Manufacturers, producers or processors. "Manufacturers, producers or processors" means sellers who operate a factory, mill, assembly plant, well, mine or similar facility in which, by mechanical or chemical apparatus or other similar means, raw materials or ingredients are processed, component parts assembled or manipulated, in the preparation of the product for sale. A seller shall not be deemed to be a manufacturer, producer or processor in an export sale which involves a commodity which he did not manufacture, produce or process.

(5) Export differential. "Export differential" means the difference between a domestic sale price and an export sale price computed either as a percentage of the domestic price or in accordance with any other established practice of the seller.

(6) Time of purchase. "Time of purchase" means the date of the purchase contract unless the contract fixes the price as of the delivery date or postpones the date of delivery longer than is customary in the trade for such contracts in which cases "time of purchase" means the date of delivery.

(c) Comparison of prices-(1) When

to use same or similar commodity.

Wherever, in this section, the term "same or a similar commodity" is used, comparison, where possible, shall be made with reference to the same commodity. Where such comparison is not possible, comparison shall then be made with a reference to a similar commodity.

(2) Adjustment of domestic price. Wherever, in this section, a comparison with a domestic sales price is required and such domestic price is on a different delivered basis than the export sales price as, for example, where the domestic price is on an f. o. b. plant basis and the export price is on an f. a. s. basis, addition of inland transportation costs and other related and necessary inland costs to the domestic price may be made in order to afford a proper comparison with the export sales price.

(d) Prices for purchases in the United States (1) Class I; certain listed commodities—(i) Transactions included.

(2) Class 11; purchases of unlisted commodities from manufacturers, producers or processors (primary sellers) – (i) Transactions included. Transactions in Class II shall include all purchases in the United States from a manufacturer, producer, or processor of any commodity except commodities listed in Class I, or subject to special rules under Class IV below.

(ii) Price limitation. The price (not including ocean freight or ocean marine insurance) for a Class II purchase shall in no case exceed any price charged by the supplier at the time of purchase in a comparable export sale of the same or a similar commodity. Nor shall it exceed the sum of the applicable figures determined under (a) and (b) of this subdivision.

Sup

(a) Domestic price base—(1) plier's comparable sales. The price charged by the supplier in comparable domestic sales of the same or a similar commodity made during the period in which the supplier's current domestic prices have been in effect. If, during that period, more than one price was charged in such sales, the figure under this subdivision shall be the price charged in the comparable domestic sale made nearest, in point of time, to the purchase being submitted for ICA reimbursement.

(2) Supplier's non-comparable sales. If the supplier made domestic sales of the same or a similar commodity during the aforementioned period, but such sales were not comparable, the figure under this subdivision shall be the price charged in the domestic sale made nearest, in point of time, to the purchase being submitted for ICA reimbursement, adjusted by the supplier's customary differential between such sales and the sale involved in the ICA transaction.

(3) Competitor's comparable sales. If the supplier made no domestic sales of the same or a similar commodity during the aforementioned period, the figure under this subdivision shall be the price prevailing in the United States at the time of purchase, in comparable domestic sales of the same or a similar commodity by the supplier's competitive sellers.

(b) Export differential—(1) Supplier's comparable sales. An export differential, if any, customarily used by the supplier in comparable sales of the

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same or a similar commodity or currently being used by the supplier in comparable non-ICA sales of the same or a similar commodity.

(2) Competitor's comparable sales. If the supplier has not previously made any export sales of the same or a similar commodity, the figure under this subdivision shall be an export differential which would be recognized for reimbursement by ICA, in comparable sales, at the time of purchase of the same or a similar commodity by any of the supplier's competitive sellers.

(iii) Non-recognition of excessive export differential. With respect to Class II transactions, ICA may refuse to recognize for reimbursement any purchase price which includes an export differential that is patently out of line with appropriate export differentials of the supplier's competitive sellers.

(3) Class III; purchases of unlisted commodities from sellers (secondary sellers) other than manufacturers, producers or processors-(i) Transactions included. Transactions in Class III shall include all purchases within the United States from a seller other than a manufacturer, producer, or processor of any commodity except commodities listed in Class I or subject to special rules under Class IV below.

(ii) Price limitation. The price (not including ocean freight or ocean marine insurance) for a Class III purchase shall in no case exceed any price charged by the supplier at the time of purchase in a comparable export sale of the same or a similar commodity except to the extent necessary to reflect a difference in his acquisition cost of the commodity. Nor shall it exceed the sum of the applicable figures determined under (a) and (b) of this subdivision:

(a) Domestic price base—(1) Domestic price of manufacturer, producer or processor. The domestic price of the manufacturer, producer or processor of the commodity, in effect at the time of the purchase by the importer.

(2) Domestic price of other manufacturers, producers or processors. If the supplier is unable to ascertain the domestic price of the manufacturer, producer or processor of the commodity, the figure under this subdivision shall be the domestic price of manufacturers, producers or processors of the same or

a similar commodity, prevailing at the time of purchase by the importer.

(3) Supplier's cost of acquisition. If the same or a similar commodity is not sold in the domestic market, the figure under this subdivision shall be the supplier's cost of acquisition.

(b) Export differential—(1) Supplier's comparable sales. An export differential, if any, customarily used by the supplier in comparable sales of the same or a similar commodity or currently being used by the supplier in comparable nonICA sales of the same or a similar commodity.

(2) Competitor's comparable sales. If the supplier has not previously made any export sales of the same or a similar commodity the figure under this subdivision shall be an export differential which would be recognized for reimbursement by ICA, in comparable sales at the time of purchase of the same or similar commodity by any of the supplier's competitive sellers.

(iii) Non-recognition of excessive export differential. With respect to Class III transactions, ICA may refuse to recognize for reimbursement any purchase price which includes an export differential that is patently out of line with appropriate export differentials of the supplier's competitive sellers.

(4) Class IV; special rules for certain commodities. Special rules for certain commodities may be established from time to time by the Director.

(i) Petroleum products-(a) Purchases from any source. Purchases from any source: A price for a purchase of a petroleum product from any source will not be approved for reimbursement if it results in a delivered cost to the cooperating country which is in excess of the lowest prevailing delivered cost on the date the purchase price is fixed for a comparable export sale of the same or similar commodity to such cooperating country from any alternative source of supply from which the commodity is available for export in sufficient quantity.

(b) Purchases from non-United States sources. Purchases from sources other than the United States: A price for a purchase of a petroleum product from sources other than the United States will be approved for reimbursement if it complies with the requirements of § 201.20

and of paragraph (e) (2) of this section, and, unless from a supply area excepted by ICA, does not exceed the lowest competitive market price in the United States for a comparable export sale of the same or a similar commodity on the date the purchase price is fixed.

(c) Special meaning of price. For purposes of this subdivision "price" shall mean the realized f. o. b. price or realized netback.

(e) Prices for purchases outside the United States-(1) Commodities listed in Class I in paragraph (d) (1) of this section (i) Price limitation-(a) United States export price. The price plus cost of transportation to the port of entry in the cooperating country for a purchase outside the United States of a commodity listed in Class I in paragraph (d) (1) of this section shall not exceed the price prevailing in the United States in comparable sales of the commodity at the time of purchase, as evidenced by current bid and ask quotations, adjusted by costs customarily and necessarily incurred in making the export sale, plus cost of transportation to the port of entry in the cooperating country.

(b) Source country export price. Nor shall the price exceed the prevailing export market price at the time of purchase in comparable sales of the commodity from the source country.

(ii) Additional price limit for sugar. In addition, in the case of sugar, the purchase price shall not exceed the world price as derived from the daily market quotation on World Raws, No. 4 Contract, F. A. S. Cuban Ports, adjusted for differences in quality, bagging, cost of transportation to destination, and other appropriate considerations.

Price

(2) Unlisted commodities—(i) limitation. A price for a purchase outside the United States of a commodity which is not listed in Class I in paragraph (d) (1) of this section or subject to special rules under Class IV in paragraph (d) (4) of this section will be approved for reimbursement if:

(ii) Suppliers' comparable export sale. It does not exceed any price charged by the supplier at the time of purchase in a comparable export sale of the same or a similar commodity; and

(iii) Source country principal supplier's export sale. It does not exceed the export market price prevailing at

the time of purchase in comparable sales of the same or a similar commodity by the "principal suppliers" in the source country, determined by applying to that country as nearly as may be, the rules set forth in paragraph (d) (2) or (3) of this section as applicable; and

(iv) United States principal supplier's export sale. It results in a delivered cost to the port of entry in the cooperating country no higher than the delivered cost which would have been incurred in a purchase for export of the same or a similar commodity from one of the "principal suppliers" in the United States.

(v) Meaning of principal supplier. For the purposes of this subparagraph, a supplier shall be deemed a "principal supplier" if he is one of the group of the largest volume sellers responsible for 50 percent of the export sales of the commodity from the United States, or source country, whichever is applicable. SUBPART E-RESPONSIBILITIES OF BANKING INSTITUTIONS

§ 201.22 Responsibilities of banking institutions in connection with letters of commitment issued to them-(a) Documents reimbursement. required for Documents required for reimbursement are enumerated in § 201.18. Any additional documents required for reimbursement with respect to any particular transaction will be specified as such in the PA or PIO related to that transaction and to the corresponding letter of commitment, or in the letter of commitment itself. A banking institution in the United States (called "bank" in this subpart) holding a letter of commitment is not required by ICA to obtain any documents other than those enumerated in § 201.18 and any additional documents so specified.

(b) Non-responsibility of bank for contents of documents. A bank is not responsible for the truth or accuracy of the statements contained in any of the documents required for reimbursement. A bank is not obliged to look beyond these documents nor to make independent investigation as to the accuracy of statements made therein. A bank has no responsibility for the terms or conditions of any project agreement.

(c) Responsibility of bank for examination of documents-(1) Nature of responsibility. A bank's examination of

the documents required for reimbursement must be made in accordance with good commercial practice. A bank is responsible to see that the documents required for reimbursement are consistent with the relative PA or PIO and letter of commitment in the following particulars, and no other:

(1) Delivery, to the extent described in paragraph (d) of this section;

(ii) Source, to the extent described in paragraph (e) of this section;

(iii) Destination, to the extent described in paragraph (f) of this section;

(iv) Description, to the extent described in paragraph (g) of this section;

(v) Discounts and purchasing agents' commissions, to the extent described in paragraph (h) of this section;

(vi) If the bank is to be responsible for any additional particulars, these will be specified in the PA, PIO or letter of commitment as additional documents required for reimbursement, or as additional statements to be contained in the documents required for reimbursement.

(2) Limitation on responsibility. The right of reimbursement for payments made by a bank in accordance with good commercial practice will not be affected by the information contained in the invoice-and-contract abstract, nor, except with respect to those particulars listed in subdivisions (i) through (vi) of subparagraph (1) of this paragraph, by the fact that the other documents received by the bank, or information or notice received from any source, indicate noncompliance with any provision of this part, or of the PA, PIO or of the letter of commitment.

(3) Reservation of rights by ICA against supplier and cooperating country. The foregoing shall not be construed to limit any rights the Director may have against a supplier by reason of statements contained in the supplier's certificate, nor against a cooperating country under § 201.6 (d).

(d) Delivery. Section 201.5 (a) (3) and (c) (1) permit delivery under a PA or PIO at any time on or after the initial delivery date and on or before the terminal delivery date specified on the PA

2 In paragraphs (c), (e), (f), (g), and (h) of this section, the phrase "documents required for reimbursement" does not include the invoice-and-contract abstract, as to which, see § 201.16 (c) (2) (11).

or PIO. If any of the documents specified in § 201.18 (a) (3), (b) (4), or (c) (3) (or in the PA, PIO, or letter of commitment) are dated at any time within the period during which delivery is permissible under the above subsections, or any other period permitted by ICA they are acceptable.

(e) Source. If the documents required for reimbursement show shipment from or storage in the area shown as "source" in the PA or PIO, they are acceptable unless a statement furnished under § 201.18 (a) (4) indicates that the "source" is not the one shown in the PA or PIO. If such documents show shipment from or storage in another area, the requirement as to source will be satisfied if the bank receives a certificate from the supplier, indicating that the area of "source", as that term is defined in § 201.1 (m), is in fact the same as that indicated in the PA or PIO.

(f) Destination. The PA or PIO will show the recipient country. If the documents required for reimbursement are consistent, under good commercial practice, with shipment or transshipment to such country, they are acceptable.

(g) Description. The PA or PIO will show the commodity or services by description and ICA commodity code number. In issuing or confirming credits, a bank should see that the commodities or services described are not inconsistent with the ICA description and commodity code number. In making payment, whether under letters of credit or otherwise, the bank should act in accordance with good commercial practice, based on the description contained in the documents required for reimbursement, and without regard to the commodity code number.

(h) Discounts and purchasing agents' commissions. A bank is not required to make independent inquiry as to whether an invoice price includes either discounts or commissions payable to purchasing agents, but should not make payment of any such items when disclosed by the documents required for reimbursement.

(i) General provisions of PAs and PIOS (1) Reliance by bank on supplier's certificate. Section 201.6 sets forth certain provisions to be deemed incorporated in each PA or PIO, unless otherwise specified. The documents required for reimbursement by § 201.18 include a supplier's certificate showing compliance with some of these provi