Programs To Help Develop Foreign Markets for Agricultural Commodities (Foreign Market Development Cooperator Program)

DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR Part 1550

RIN 0551-AA26

Programs To Help Develop Foreign Markets for Agricultural

Commodities (Foreign Market Development Cooperator Program)

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Final Rule.

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SUMMARY: This rule revises regulations applicable to the Foreign Market

Development Cooperator (Cooperator) Program. The revisions provide more

detailed information concerning program administration, including

participant eligibility, the application review process, allocation

criteria, strategic planning and goal setting requirements,

reimbursement rules and procedures, financial reporting and program

evaluation requirements, appeal procedures, and program controls. The

intent of this rule is to improve the effective administration of the

Cooperator Program.

DATES: Effective October 1, 1999. Applicability date: This rule does

not apply to Cooperator marketing plan years prior to the Fiscal Year

2000 program.

FOR FURTHER INFORMATION CONTACT: Kent Sisson or Denise Huttenlocker at

(202) 720-4327.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule is issued in conformance with Executive Order

12866. It has been determined that this final rule will not have an

annual economic effect in excess of $100 million; will not cause a

major increase in costs to consumers, individual industries, Federal,

State, or local government agencies, or geographic regions; and will

not have an adverse effect on competition, employment, investment,

productivity, innovation, or the ability of U.S.-based enterprises to

compete with foreign-based enterprises in domestic or foreign markets.

Executive Order 12988

This final rule has been reviewed in accordance with Executive

Order 12988, Civil Justice Reform. The rule would have preemptive

effect with respect to any State or local laws, regulations or policies

which conflict with such provisions or which otherwise impede their

full implementation; does not have retroactive effect; and does require

administrative proceedings before suit may be filed.

Executive Order 12372

This program is not subject to the provisions of Executive Order

12372 which requires intergovernmental consultation with State and

local officials (see the Notice related to 7 CFR part 3015, subpart V,

published at 48 FR 29115).

Regulatory Flexibility Act

It has been determined that the Regulatory Flexibility Act is not

applicable to this final rule because the Foreign Agricultural Service

(FAS) is not required by any provision of law to publish a notice of

rulemaking with respect to the subject matter of this rule.

Paperwork Reduction Act

The information collection requirements for participating in the

Cooperator program were approved for use by the Office of Management

and Budget (OMB) through December 31, 1999, and assigned OMB No. 0551-

0026. This final rule does not impose new information collection

requirements.

Background

The Foreign Market Development Cooperator Program's first

participants (known as Cooperators) entered into agreements with FAS in

1954. The Cooperator program is currently authorized by Title VII of

the Agricultural Trade Act of 1978, which directs the Secretary of

Agriculture to ``establish and, in cooperation with eligible trade

organizations, carry out a foreign market development cooperator

program to maintain and develop foreign markets for United States

agricultural commodities and products.'' FAS implements this provision

by entering into agreements with non-profit U.S. agricultural trade

organizations that have the broadest possible producer representation

of the commodity being promoted and gives priority to those

organizations that are nationwide in membership and scope.

Summary and Analysis of Comments

On June 15, 1999, FAS published a rule in the Federal Register (64

FR 32156) proposing to revise the regulations which govern the

Cooperator program. That rule also requested interested parties to

submit comments by July 14, 1999. FAS received seven comments on the

proposed rule. Following is a summary of the comments which

specifically address the proposed rule and FAS's response to each.

General comments relating to the value of the program, editorial

suggestions, and non-substantive comments have been omitted.

Premium Class Travel

FAS received 4 comments on this issue.

Comment: Extensive travel in business class is often less expensive

than the full fare economy rate. Preventing business class travel in

such cases would increase program costs.

Comment: Business class travel is especially important when hosting

foreign trade teams. Both government and private representatives are

accustomed to business class travel for transoceanic travel in many

countries. The savings in cost from using economy class rather than

business class would quickly become a net loss if the entire program is

undermined by the poor experiences or feelings of disrespect that

result.

Comment: If FAS personnel at a certain level are permitted to

travel business class, then it seems unfair in the extreme that

individuals who are equally influential within their governments or

trade organizations or companies should not be permitted the same

consideration and accommodations and courtesy.

Response: This new rule does not prevent any class of travel. It

merely limits reimbursement, generally to the full fare economy rate.

If a business (or higher) class ticket can be purchased at

[[Page 52628]]

a price equal to or less than the full fare economy rate, it may be

reimbursed in its entirety subject to proper documentation. If a

Cooperator believes that purchase of a higher class ticket at a rate

higher than the full fare economy rate is necessary to achieve its

market promotion goals, then the amount exceeding the reimbursable full

fare economy rate can be claimed as a contribution to the program.

Comment: Elimination of reimbursement of business class travel will

materially weaken the Cooperator program. Business class travel for

flights longer than 6 hours ensures that staff, consultants, and

foreign visitors arrive without the delays of mid-journey rest stops,

are less stressed and fatigued by the flight, and are more quickly

available to work.

Response: The FTR only allows for authorization of business class

due to flight time when the origin or destination is outside of the

continental U.S. and the scheduled flight time exceeds 14 hours. As an

aid to organizations which may not be familiar with the FTR, FAS will

issue a program notice to Cooperators which lists the exceptions under

which FAS will reimburse the full price of business class travel.

Contributions

FAS received 5 comments on this issue.

Comment: The proposed rule states that Cooperators must contribute

at least 50 percent of the value of resources provided by FAS. Can this

50 percent include contributions from U.S. industry members? Also,

``third party'' contributions are mentioned in the proposed rule. Does

this refer only to the U.S. industry?

Response: As defined in Sec. 1550.13, contributions from the U.S.

industry are counted toward a Cooperator's contributions. FAS agrees

that the term ``third party'' is misleading, and has replaced it with

``U.S. industry'' where appropriate in the final rule.

Comment: If a Cooperator contributes less to the program than was

specified in its application, the Cooperator should not be required to

pay to FAS the difference between the contribution estimate and actual

contributions. There are several good reasons why a Cooperator might

contribute less than expected.

Response: Cooperator program applicants compete against each other

for funds based, in part, on the contributions promised in their

applications. To maintain the integrity of the competitive process, the

level of contributions specified in each Cooperator's application must

be met. Therefore, FAS is adopting the rule as proposed.

Comment: This rule establishes a due date of ``January 31 of the

year following the completion of the marketing plan year'' for

Cooperators' end-of-year contribution reports. This allows only four

months, while the Market Access Program (MAP) allows six months to

submit contribution reports.

Response: The Cooperator program currently operates with the

January 31 due date. FAS needs to receive these reports earlier in the

calendar year because the data contained therein is used in the FAS

budget process. Therefore, FAS is adopting the rule as proposed.

Comment: The proposed rule states that product research may not be

reimbursed and that product development and modifications may not even

be claimed as contributions. This seems to be inconsistent with the

statement in the ``General Background'' section that activities address

constraints or opportunities by focusing on matters such as

``identifying new markets or new applications or uses'' for products in

the foreign market. Perhaps the rule should only exclude branded

product research, development, and modifications.

Response: The language regarding new applications or uses in the

foreign market refers to market research which would identify foreign

marketing opportunities. It is not meant to refer to developing or

modifying products, which are activities generally undertaken to

benefit a company. FAS will allow certain types of product research,

which are generally undertaken to benefit an industry and have a

specific export application, to be claimed as a contribution.

Therefore, FAS is adopting the rule as proposed.

Contingent Liabilities

FAS received 2 comments on this issue.

Comment: The proposed rule is silent on the issue of contingent

liabilities. Under the existing guidelines, FAS may reimburse costs

that would be due or forfeited if an overseas office closed on the last

day of the marketing plan year, such as severance payments, deposits,

and rent.

Response: FAS agrees that contingent liabilities should remain

reimbursable under the program, and is amending Sec. 1550.54

accordingly by adding a new paragraph (38).

Wireless Phones

FAS received 2 comments on this issue.

Comment: Please clarify whether monthly service fees for wireless

phones are reimbursable in their entirety or if these fees must be

prorated based on airtime devoted to program activities.

Response: Monthly service fees must be prorated based on airtime

devoted to program activities. The prorated portion is reimbursable by

FAS. FAS is amending Sec. 1550.54 for clarification.

Comment: The costs of purchasing wireless phones should be

reimbursable by FAS. How is the purchase of a wireless phone different

from wireless phone usage or the purchase of a portable computer?

Response: Unlike portable computers, wireless phones are often used

for non-business purposes and incoming non-business calls accrue

charges. Wireless phone usage can be separated into business and non-

business calls, but the purchase of the wireless phone cannot be

separated or prorated because the Cooperator is not able to determine

in advance the amount of usage that would be devoted to program

activities. FAS has decided to disallow reimbursement of the costs of

purchasing wireless phones, and, thus, the rule is adopted as proposed.

The cost of purchasing a wireless phone can be claimed as a

contribution to the program.

Required Notification of Attaches/Counselors of In-Country Travel

FAS received 2 comments on this issue.

Comment: The proposed rule would require that Cooperators notify

the attache in any destination country in writing in advance of any

proposed travel. Failure to provide advance notification may result in

disallowance of the travel expenses. This penalty seems to be too

severe, considering that some attaches do not respond to such

notifications.

Response: This requirement, which is currently in effect, was added

to the program at the request of several attaches. Although attaches

may not always respond to travel notification, it is important that

they be notified because their awareness of Cooperator activity in

their countries of responsibility is important to the success of the

program. The regulations do not require that attaches specifically

approve Cooperator travel. Acceptable written notification includes

electronic mail and facsimile. Thus, the rule is adopted as proposed.

Salaries and Allowances

FAS received 3 comments on this issue.

Comment: The proposed regulations do not mention several important

[[Page 52629]]

allowances currently reimbursable with FMD funds, such as: foreign

transfer allowance, temporary lodging, post hardship differential. We

request that these and other similar allowances be authorized for use

of FMD funds.

Response: The proposed rule was not intended to change the

allowances which are eligible for reimbursement under the program. FAS

is amending Sec. 1550.54 for clarification.

Comment: The proposed rule limits a combination of salary and

certain allowances to the amount paid to a GS-15, step 10. The proposed

limit should be rejected and replaced with a salary limitation and

unlimited allowances.

Response: FAS must balance benefits to program participants against

limited financial resources. FAS is establishing this limit to be

consistent with the MAP, and, accordingly, is adopting the rule as

proposed.

Comment: Our major concern is with clarity on the compensation

limit for non-U.S. citizen employees who occupy the position of country

or regional director. We had been led to believe that the Cooperator

regulations would parallel the MAP regulations thereby permitting these

positions to be compensated at the Foreign Service National (FSN)

``Supergrade'' levels. Would cooperators have this latitude to exceed

the published FSN wage scales for country or regional directors under

section 1550.20(b)(8)?

Response: Under the new regulations, a Cooperator may request to

exceed a published FSN wage scale if the Cooperator can show that the

existing scale is inappropriate. This provides greater flexibility in

that there would be no limitations imposed by a ``supergrade''

structure, however, Cooperators could certainly maintain the

``supergrade'' scale for their own use. FAS is adopting the rule as

proposed.

Contracting

FAS received 3 comments on this issue.

Comment: Past practice did not require written contracts for

certain services for which written contracts are not customary (i.e.,

lawyer fees, interpreter or translation services, part time secretarial

help and other short term services). We hope that the intent of the new

Cooperator program regulations is not to change that practice.

Response: The existing guidelines require written contracts with

legal firms. FAS believes that entering into written contracts for

interpreter and translation services is prudent and would also assist

in FAS compliance efforts. FAS did not intend to include short-term or

part-time secretarial help. FAS is amending Sec. 1550.35 to clarify

these points.

Comment: The wording in this contracting section of the proposed

rule is similar to the Market Access Program regulations. FAS issued a

Program Notice about a year after those final regulations were

published. It provided some contracting guidelines for MAP

participants. Does this Program Notice apply to the Cooperator program?

Response: FAS intends to issue a Cooperator Program Notice

providing contracting guidance.

Consumer Promotion

FAS received 1 comment on this issue.

Comment: The proposed rule states that the program provides

assistance for generic promotion and, therefore, does not involve

activities targeted directly toward individual consumers. We believe

that generic promotions can be directed toward individual consumers.

Response: It was the intent of the proposed rule to remove the

eligibility of consumer promotions from the Cooperator program.

Assistance for consumer promotions remains available through the MAP.

FAS is amending Sec. 1550.12 and Sec. 1550.55 to clarify that

promotions directed toward consumers are not reimbursable under the

Cooperator program.

Miscellaneous

FAS received comments on several other topics.

Comment: The proposed rule requires that Cooperators maintain an

inventory of all capital goods valued at over $100. We recommend

increasing this minimum value to $500. Also, what is meant by ``capital

goods'?

Response: FAS agrees that the minimum value for inventory items

should be increased to $500 and is amending Sec. 1550.36 accordingly.

FAS is amending the rule by replacing the term ``capital goods'' with

the term ``property'' throughout and adding a definition of

``property'' in Sec. 1550.13.

Comment: In some sections the proposed rule refers to contributions

as cash and goods and services, in others it refers to cash and in-kind

items. Is this intentional?

Response: FAS meant to refer only to cash and goods and services in

the proposed rule. FAS is amending the rule by removing all references

to in-kind items from the final rule.

Comment: Section 1550.54(a)(2) should be removed to make the final

rule consistent with the MAP regulations.

Response: The parallel language in the MAP regulations was removed

when a definition was added for ``expenditure''. For consistency, FAS

will remove Sec. 1550.54(a)(2) and add a definition of ``expenditure''

in Sec. 1550.13.

Comment: Sometimes an expenditure is listed as reimbursable but

does not seem to be a prudent way to expend Federal funds. Are

expenditures that are listed as reimbursable always acceptable?

Response: FAS agrees that some levels of expenditures associated

with reimbursable items could be unreasonable. To clarify this, FAS is

amending Sec. 1550.54 (a) and Sec. 1550.55 (a) to clearly establish a

standard that expenditures must be reasonable.

Comment: The proposed rule lists, among application requirements,

market assessments including constraints facing exporters. In the

annual program announcement, FAS also asks for opportunities for

increasing exports. Does this signify a change in direction for the

program?

Response: FAS prefers that market assessments also include export

growth opportunities, and is amending sections 1550.12, 1550.13,

1550.20, and 1550.72 for clarification.

Comment: The proposed rule would require a receipt, purchase order,

invoice, or contract for every expenditure in excess of $25.00. The

Federal Travel Regulation only requires receipts for expenditures over

$75.00. FAS should only require receipts, purchase orders, invoices, or

contracts for expenditures in excess of $75.00.

Response: In order to maintain the integrity of the program and

ensure effective program compliance, FAS will continue to require that

Cooperators maintain expenditure documentation as detailed in the

proposed rule. This includes that Cooperators must maintain original

receipts for travel expenditures in excess of $25.00. Therefore, FAS is

adopting the rule as proposed.

Comment: The proposed rule would require that Cooperators designate

at least 2 individuals who can sign documents, including reimbursement

claims. Our organization submits all of its claims electronically, with

no signature.

Response: The rule does not require that all reimbursement claims

be signed. Reimbursement claims submitted on paper require signatures.

Reimbursement claims submitted electronically require identification

codes and passwords for security. The rule merely requires that

individuals be designated to act on the behalf of each

[[Page 52630]]

Cooperator so that it is clear to FAS when an authorized official has

signed a document. Thus, FAS is adopting the rule as proposed.

Comment: The proposed rule does not mention reimbursement of

storage fees for necessary program items, e.g., past records, current

brochures. It is generally cheaper to find warehouse space than to

lease extra office space for such items. Are storage fees still

reimbursable?

Response: FAS intends for storage fees to remain reimbursable. FAS

is amending Sec. 1550.54 to include storage fees.

Effective Date

Pursuant to 5 U.S.C. 553, it is found and determined that good

cause exists for making this final rule effective prior to 30 days

after publication in the Federal Register because: (1) this action

codifies program guidelines which have been in effect for many years

and participants do not, therefore, need a transition period; and (2)

delaying this rule beyond the beginning of the 2000 marketing plan year

(October 1, 1999), would postpone the implementation of the marketing

programs of more than two dozen agricultural trade organizations.

This rule is effective October 1, 1999, but does not apply to

Cooperator marketing plan years prior to the Fiscal Year 2000 program.

List of Subjects in 7 CFR Part 1550

Agricultural commodities, Exports, Grant programs-agriculture,

Reporting and recordkeeping requirements.

Accordingly, part 1550 of Title 7 of the Code of Federal

Regulations is revised as follows:

PART 1550--PROGRAMS TO HELP DEVELOP FOREIGN MARKETS FOR

AGRICULTURAL COMMODITIES

Subpart A--General Information

1550.10 What is the effective date of this part?

1550.11 Has the Office of Management and Budget reviewed the

paperwork and record keeping requirements contained in this part?

1550.12 What is the Cooperator program?

1550.13 What special definitions apply to the Cooperator program?

1550.14 Is my organization eligible to participate in the

Cooperator program?

Subpart B--Application and Fund Allocation

1550.20 How can my organization apply to the Cooperator program?

1550.21 How does FAS determine which Cooperator program

applications are approved?

1550.22 How are Cooperator program funds allocated?

Subpart C--Program Operations

1550.30 How does FAS formalize its working relationship with

approved Cooperators?

1550.31 Who acts on behalf of each Cooperator?

1550.32 Must Cooperators follow specific employment practices?

1550.33 Must Cooperators follow certain financial management

guidelines?

1550.34 Must Cooperators adhere to specific standards of ethical

conduct?

1550.35 Must Cooperators follow specific contracting procedures?

1550.36 How do Cooperators dispose of disposable property?

1550.37 Must Cooperators adhere to Federal Travel Regulations?

1550.38 Can a Cooperator keep proceeds generated from an activity?

Subpart D--Contributions and Reimbursements

1550.50 What cost share contributions are eligible?

1550.51 What are ineligible contributions?

1550.52 What are the guidelines for computing the value of non-cash

contributions?

1550.53 What are the requirements for documenting and reporting

contributions?

1550.54 What expenditures may FAS reimburse under the Cooperator

program?

1550.55 What expenditures may not be reimbursed under the

Cooperator program?

1550.56 How are Cooperators reimbursed?

1550.57 Will FAS make advance payments to a Cooperator?

Subpart E--Reporting, Evaluation, and Compliance

1550.70 Must Cooperators report to FAS?

1550.71 Are Cooperator documents subject to the provisions of the

Freedom of Information Act?

1550.72 How is program effectiveness measured?

1550.73 Are Cooperators penalized for failing to make required

contributions?

1550.74 How is Cooperator program compliance monitored?

1550.75 How does a Cooperator respond to a compliance report?

1550.76 Can a Cooperator appeal the determinations of the Deputy

Administrator?

Authority: 7 U.S.C. 5721-5723.

Subpart A--General Information

Sec. 1550.10 What is the effective date of this part?

This part applies to activities that are conducted in accordance

with the Cooperators' FY 2000 and subsequent marketing plan years.

Sec. 1550.11 Has the Office of Management and Budget reviewed the

paperwork and record keeping requirements contained in this part?

The paperwork and record keeping requirements imposed by this part

have been submitted to the Office of Management and Budget (OMB) for

emergency review and reinstatement under the Paperwork Reduction Act of

1995 (44 U.S.C. 3501 et seq.). OMB has previously assigned control

number 0551-0026 for this information collection.

Sec. 1550.12 What is the Cooperator program?

(a) Under the Foreign Market Development Cooperator (Cooperator)

Program, FAS enters into project agreements with eligible nonprofit

U.S. trade organizations to share the costs of certain overseas

marketing and promotion activities that are intended to create, expand,

or maintain foreign markets for U.S. agricultural commodities and

products. FAS does not provide brand promotion assistance to

Cooperators under this program.

(b) FAS enters into project agreements with those eligible

nonprofit U.S. trade organizations that have the broadest possible

producer representation of the commodity being promoted and gives

priority to those organizations that are nationwide in membership and

scope. Project agreements involve the promotion of agricultural

commodities on a generic basis. Project agreements do not involve

activities targeted directly toward consumers purchasing as

individuals. Activities must contribute to the maintenance or growth of

demand for the agricultural commodities and generally address long-term

foreign import constraints and export growth opportunities by focusing

on matters such as reducing infra-structural or historical market

impediments; improving processing capabilities; modifying codes and

standards; and identifying new markets or new applications or uses for

the agricultural commodity or product in the foreign market.

(c) The Cooperator program generally operates on a reimbursement

basis.

(d) FAS policy is to ensure that benefits generated by Cooperator

agreements are broadly available throughout the relevant agricultural

sector and no one entity gains an undue advantage or sole benefit from

program activities.

Sec. 1550.13 What special definitions apply to the Cooperator program?

For purposes of this part the following definitions apply:

[[Page 52631]]

Activity--a specific market development effort undertaken by a

Cooperator to address a constraint or opportunity.

Administrator--the Administrator, FAS, USDA, or designee.

Agricultural Commodity--an agricultural commodity, food, feed,

fiber, wood, livestock or insect, and any product thereof; and fish

harvested from a U.S. aquaculture farm, or harvested by a vessel as

defined in title 46, United States Code, in waters that are not waters

(including the territorial sea) of a foreign country.

Attache/Counselor--the FAS employee representing USDA interests in

the foreign country in which promotional activities are conducted.

Commodity Division--the office within the Foreign Agricultural

Service responsible for the commodity covered by the project agreement.

Compliance Review Staff--the office within the Foreign Agricultural

Service responsible for performing periodic reviews of Cooperators to

ensure compliance with this part.

Constraint--a condition in a particular country or region which

needs to be addressed in order to develop, expand, or maintain exports

of a specific U.S. agricultural commodity.

Consumer Promotion--activities that are designed to directly

influence consumers by changing attitudes or purchasing behaviors

towards U.S. agricultural products.

Contribution--the cost-share expenditure made by a Cooperator or

the U.S. industry in support of an activity; e.g., money, personnel,

materials, services, facilities, or supplies.

Cooperator or U.S. Cooperator--a nonprofit U.S. agricultural trade

organization which has entered into a foreign market development

agreement with FAS.

Cooperator Program--the Foreign Market Development Cooperator

Program.

Deputy Administrator--the Deputy Administrator, Commodity and

Marketing Programs, FAS, USDA, or designee.

Division Director--the director of a commodity division, Commodity

and Marketing Programs, FAS, USDA.

Eligible Commodity--an agricultural commodity that is comprised of

at least 50 percent U.S. origin content by weight, exclusive of added

water.

Eligible Trade Organization--a United States trade organization

that promotes the exports of one or more United States agricultural

commodities or products and does not have a business interest in or

receive remuneration from specific sales of agricultural commodities or

products.

Expenditure--transfer of funds.

FAS--Foreign Agricultural Service, USDA.

Foreign Third Party--a foreign entity that assists, in accordance

with this part, in promoting the export of a U.S. agricultural

commodity.

Generic Promotion--a promotion that does not involve the exclusive

or predominant use of a single company name or logo(s) or brand name(s)

of a single company.

Market--a country or region in which an activity is conducted.

Marketing Plan Year--the program year beginning on October 1 and

ending on September 30, during which Cooperators can undertake

activities, consistent with this part and their agreements with FAS,

and seek reimbursement. For example, marketing plan year 2000 begins on

October 1, 1999, and ends on September 30, 2000.

Project Agreement--a contract between FAS and a Cooperator in which

the basic working relationship is described including the program and

financial obligations of each.

Project Funds--the funds made available to a Cooperator by FAS

under a project agreement, and authorized for expenditure in accordance

with this part.

Property--furniture or equipment having a useful life of over one

year and an acquisition cost of $500 or more.

STRE--sales and trade relations expenditures.

Trade Team--a group of individuals engaged in an activity intended

to promote the interests of an entire agricultural sector rather than

to result in specific sales by any of its members.

USDA--the United States Department of Agriculture.

Sec. 1550.14 Is my organization eligible to participate in the

Cooperator program?

(a) To participate in the Cooperator program, an entity must be a

nonprofit U.S. agricultural trade organization and contribute at least

50 percent of the value of resources provided by FAS for activities

conducted under the project agreement.

(b) FAS may require that a project agreement include a contribution

level greater than that specified in paragraph (a) of this section. In

requiring a higher contribution level, FAS will take into account such

factors as past Cooperator contributions, previous Cooperator program

funding levels, the length of time an entity participates in the

program, and the entity's ability to increase its contribution.

(c) FAS will enter into Cooperator agreements only for the

promotion of eligible commodities.

Subpart B--Application and Fund Allocation

Sec. 1550.20 How can my organization apply to the Cooperator program?

FAS will publish a Notice in the Federal Register that it is

accepting applications for participation in the Cooperator program for

a specified marketing plan year. Applications shall be submitted in

accordance with the terms and requirements specified in the Notice. An

application shall contain basic information about the applicant and the

proposed program, a strategic plan, and performance measures. FAS may

request any additional information which it deems necessary to evaluate

a Cooperator program application.

(a) Basic applicant and program information. All Cooperator program

applications shall contain:

(1) The name and address of the applicant;

(2) The name of the Chief Executive Officer (or designee);

(3) The name and telephone number of the applicant's primary

contact person;

(4) A description of management and administrative capability;

(5) The name(s) of the person(s) responsible for managing the

program;

(6) A description of prior export promotion experience;

(7) A description of the organization, its membership, and

membership criteria;

(8) A list of affiliated organizations;

(9) The applicant's Federal Tax Identification Number;

(10) The dollar amount of FAS resources requested under the

Cooperator program;

(11) The value of the applicant's contribution, stated in dollars

or as a percentage of paragraph (a)(10) of this section;

(12) The value of contributions from other sources, stated in

dollars or as a percentage of paragraph (a)(10) of this section;

(13) A description of the eligible commodity(s); the associated

commodity aggregate code(s), obtained from FAS; and the percentage of

U.S. origin content by weight, exclusive of added water; and

(14) A certification statement, and, if requested by the Deputy

Administrator, a written explanation supporting the certification, that

any funds received will supplement, but not supplant, any private or

industry funds or other contributions to program activities. The

[[Page 52632]]

written explanation, if necessary, shall indicate why the Cooperator is

unlikely to carry out the activities without Federal financial

assistance. The certification shall also state that information

contained in the application is true and accurate and that all records

supporting the claim that project funds do not supplant other funds

will be made available to authorized officials of the U.S. Government.

(b) Strategic plan and performance measures. All Cooperator program

applications shall also contain:

(1) A description of the U.S. and world market situation for the

eligible commodity;

(2) Data summarizing historical and projected U.S. production, U.S.

exports to the world, world trade, and U.S. market share;

(3) A summary of proposed activity budgets by country or region;

(4) A summary of proposed administrative budgets by country or

region;

(5) A list of all countries that define any designated region;

(6) For each country or region for which activities are proposed:

(i) A market assessment, including the constraint(s) impeding U.S.

exports, the export growth opportunities, the performance of competing

suppliers, expected changes in demand, etc.;

(ii) The long-term strategy that will be used to counteract the

constraints and achieve additional U.S. exports;

(iii) Previous activities, performance, and evaluation results;

(iv) Projected export goals and U.S. market share; and

(v) Performance indicators against which future success in

addressing the constraint(s) or opportunities may be measured;

(7) A description of all proposed activities, including the

requested FAS resources and the specific goals and benchmarks to be

used to measure the effectiveness of each activity;

(8) A justification for any new overseas office, including a list

of job titles, corresponding position descriptions, salary ranges, and

any request for approval of salaries above the Foreign Service National

(FSN) salary plan. To request approval of a salary above the FSN salary

plan, the Cooperator shall include a detailed description of both the

duties and responsibilities of the position, and of the qualifications

and background of the individual concerned. The Cooperator shall also

justify, based on a verifiable local salary survey or other documented

local salary information, why the highest FSN salary level is

inappropriate.

Sec. 1550.21 How does FAS determine which Cooperator program

applications are approved?

(a) General. FAS allocates funds in a manner that effectively

supports the strategic decision-making initiatives of the Government

Performance and Results Act (GPRA) of 1993. In deciding whether a

proposed project will contribute to the effective creation, expansion,

or maintenance of foreign markets, FAS seeks to identify those projects

that would demonstrate a clear, long-term agricultural trade strategy

by market or product and a program effectiveness time line against

which results can be measured at specific intervals using quantifiable

product or country or region goals. These performance indicators are

part of FAS' resource allocation strategy to fund applicants which can

demonstrate performance based on a long-term strategic plan and address

the performance measurement objectives of the GPRA.

(b) Approval criteria. FAS will consider a number of factors when

reviewing proposed projects, including:

(1) The ability of the organization to provide an experienced U.S.-

based staff with technical and international trade expertise to ensure

adequate development, supervision, and execution of the proposed

project;

(2) The organization's willingness to contribute resources,

including cash and goods and services of the U.S. industry and foreign

third parties;

(3) The conditions or constraints affecting the level of U.S.

exports and market share for the agricultural commodities and products;

(4) The degree to which the proposed project is likely to

contribute to the creation, expansion, or maintenance of foreign

markets;

(5) The degree to which the strategic plan is coordinated with

other private or U.S. government-funded market development projects;

(6) Past program results and evaluations, if applicable; and

(7) Previous Cooperator program funding.

Sec. 1550.22 How are Cooperator program funds allocated?

After determining which applications to recommend for approval, the

Commodity Divisions recommend funding levels for the approved

applicants within their respective divisions. Applications then compete

for funds on the basis of the following allocation criteria (the number

in parentheses represents a percentage weight factor). Data used in the

calculations for contribution levels, past export performance and past

demand expansion performance will cover not more than a 6-year period,

to the extent such data is available. The method for applying the

following criteria will be described in the Cooperator program

announcement in the Federal Register:

(a) Contribution Level (40%).

(b) Past Export Performance (20%).

(c) Past Demand Expansion Performance (20%).

(d) Future Demand Expansion Goals (10%).

(e) Accuracy of Past Demand Expansion Projections (10%).

Subpart C--Program Operations

Sec. 1550.30 How does FAS formalize its working relationship with

approved Cooperators?

FAS will notify each applicant in writing of the final disposition

of its application. FAS will send a program agreement, allocation

approval letter, and a signature card to each approved applicant. The

allocation approval letter will specify any special terms and

conditions applicable to a Cooperator's program, including the required

level of Cooperator contribution. An applicant that accepts the terms

and conditions contained in the program agreement and allocation

approval letter should so indicate by having its Chief Executive

Officer sign the program agreement and submit the signed agreement to

the Director, Marketing Operations Staff, FAS, USDA. Final agreement

shall occur when the Administrator signs the agreement on behalf of

FAS. The application, the program agreement, the allocation approval

letter, and this part shall establish the terms and conditions of a

Cooperator agreement between FAS and the approved applicant.

Sec. 1550.31 Who acts on behalf of each Cooperator?

The Cooperator shall designate at least two individuals in its

organization to sign program agreements, reimbursement claims, and

requests. The Cooperator shall submit the signature card signed by

those designated individuals and by the Cooperator's Chief Executive

Officer to the Director, Marketing Operations Staff, FAS, USDA, prior

to the start of the marketing plan year. The Cooperator shall

immediately notify the Director of any changes in signatories (e.g.,

removal or addition of individuals, name changes, etc.), and shall

submit a revised signature card accordingly.

[[Page 52633]]

Sec. 1550.32 Must Cooperators follow specific employment practices?

(a) A Cooperator shall enter into written contracts with all

overseas employees and shall ensure that all terms, conditions, and

related formalities of such contracts conform to governing local law.

(b) A Cooperator shall, in its overseas offices, conform its office

hours, work week, and holidays to local law and to the custom generally

observed by U.S. commercial entities in the local business community.

(c) A Cooperator may pay salaries or fees in any currency (U.S. or

foreign) in conformance with contract specifications. Cooperators are

cautioned to consult local laws regarding currency restrictions.

Sec. 1550.33 Must Cooperators follow certain financial management

guidelines?

(a) A Cooperator shall implement and maintain a financial

management system that conforms to generally accepted accounting

principles.

(b) A Cooperator shall institute internal controls and provide

written guidance to commercial entities participating in its activities

to ensure their compliance with these provisions. Each Cooperator shall

maintain all original records and documents relating to program

activities for 5 calendar years following the end of the applicable

marketing plan year and shall make such records and documents available

upon request to authorized officials of the U.S. Government. A

Cooperator shall also maintain all documents related to employment,

such as employment applications, contracts, position descriptions,

leave records, and salary changes; and all records pertaining to

contractors. A Cooperator shall also maintain adequate documentation

related to the proper disposition of all property purchased by the

Cooperator and for which the Cooperator is reimbursed with program

funds.

(c) A Cooperator shall maintain its records of expenditures and

contributions in a manner that allows it to provide information by

marketing plan year, country or region, activity number, and cost

category. Such records shall include:

(1) Receipts for all STRE (actual vendor invoices or restaurant

checks, rather than credit card receipts);

(2) Original receipts for any other program related expenditure in

excess of $25.00;

(3) The exchange rate used to calculate the dollar equivalent of

each expenditure made in a foreign currency and the basis for such

calculation;

(4) Copies of reimbursement claims;

(5) An itemized list of claims charged to the Cooperator's FMD

account;

(6) Documentation with accompanying English translation supporting

each reimbursement claim, including original evidence to support the

financial transactions, such as canceled checks, receipted paid bills,

contracts or purchase orders, per diem calculations, and travel

vouchers; and

(7) Documentation supporting contributions including: the date(s),

purpose, and location(s) of each activity for which cash, goods, or

services were claimed as a contribution; who conducted the activity;

the participating groups or individuals; and the method of computing

the claimed contributions. Cooperators must retain, and make available

for audit, documentation related to claimed contributions.

(d) Upon request, a Cooperator shall provide to FAS the original

documents which support the Cooperator's reimbursement claims. FAS may

deny a claim for reimbursement if the claim is not supported by

adequate documentation.

Sec. 1550.34 Must Cooperators adhere to specific standards of ethical

conduct?

(a) A Cooperator shall conduct its business in accordance with the

laws and regulations of the country(s) in which each activity is

carried out.

(b) Neither a Cooperator nor its affiliates shall make export sales

of agricultural commodities covered under the terms of a project

agreement. Neither a Cooperator nor its affiliates shall charge a fee

for facilitating an export sale. For the purposes of this paragraph,

``affiliate'' means any partnership, association, company, corporation,

trust, or any other such party in which the Cooperator has an

investment, other than a mutual fund. A Cooperator may collect check-

off funds and membership fees that are required for membership in the

Cooperator's organization.

(c) The Cooperator shall not use program activities or program

funds to promote private self interests or conduct private business,

except as members of sales teams.

(d) A Cooperator shall select U.S. agricultural industry

representatives to participate in activities such as trade teams or

trade fairs based on criteria that ensure participation on an equitable

basis by a broad cross section of the U.S. industry. If requested, a

Cooperator shall submit such selection criteria to FAS for approval.

(e) All Cooperators should endeavor to ensure fair and accurate

fact-based advertising. Deceptive or misleading promotions may result

in cancellation or termination of a project agreement.

(f) The Cooperator must report any actions or circumstances that

have a bearing on the propriety of program activities to the Attache/

Counselor and the Cooperator's U.S. office shall report such actions in

writing to the appropriate Division Director.

Sec. 1550.35 Must Cooperators follow specific contracting procedures?

(a) Cooperators have full and sole responsibility for the legal

sufficiency of all contracts and assume financial liability for any

costs or claims resulting from suits, challenges, or other disputes

based on contracts entered into by the Cooperator. Neither FAS nor any

other agency of the United States Government or any official or

employee of FAS or the United States Government has any obligation or

responsibility with respect to Cooperator contracts with third parties.

(b) Cooperators are responsible for ensuring to the extent possible

that the terms, conditions, and costs of contracts constitute the most

economical and effective use of project funds.

(c) All fees for professional and consulting services paid in any

part with project funds must be covered by written contracts.

(d) A Cooperator shall:

(1) Ensure that all expenditures for goods and services reimbursed,

in excess of $25.00, by FAS are documented by a purchase order,

invoice, or contract;

(2) Ensure that no employee or officer participates in the

selection or award of a contract in which such employee or officer, or

the employee's or officer's family or partners has a financial

interest;

(3) Conduct all contracting in an open manner. Individuals who

develop or draft specifications, requirements, statements of work,

invitations for bids, or requests for proposals for procurement of any

goods or services shall be excluded from competition for such

procurement;

(4) Base each solicitation for professional or consulting services

on a clear and accurate description of the requirements for the

services to be procured;

(5) Perform some form of price or cost analysis, such as a

comparison of price quotations to market prices or other price indicia,

to determine the reasonableness of the offered prices; and

(6) Document the decision-making process.

[[Page 52634]]

Sec. 1550.36 How do Cooperators dispose of disposable property?

(a) Property purchased by the Cooperator and for which the

Cooperator is reimbursed by FAS that is unusable, unserviceable, or no

longer needed for project purposes shall be disposed of in one of the

following ways. The Cooperator may:

(1) Exchange or sell the property, provided that it applies any

exchange allowance, insurance proceeds, or sales proceeds toward the

purchase of other property needed in the project;

(2) With FAS approval, transfer the goods to other Cooperators for

their activities, or to a foreign third party; or

(3) Upon Attache/Counselor approval, donate the goods to a local

charity, or convey the goods to the Attache/Counselor, along with an

itemized inventory list and any documents of title.

(b) A Cooperator shall maintain an inventory of all property valued

at $500 or more which was acquired in furtherance of program

activities. The inventory shall list and number each item and include

the date of purchase or acquisition, cost of purchase, replacement

value, serial number, make, model, and electrical requirements.

(c) The Cooperator shall insure all property which was acquired

with program funds and safeguard such property against theft, damage,

and unauthorized use. The Cooperator shall promptly report any loss,

theft, or damage of such property to the insurance company.

(d) The Cooperator is responsible for reimbursing FAS for the value

of any uninsured property at the time of the loss or theft of the

property.

Sec. 1550.37 Must Cooperators adhere to Federal Travel Regulations?

Travel shall conform to the U.S. Federal Travel Regulation (41 CFR

Chapters 300 through 304) and air travel shall conform to the

requirements of the ``Fly America Act'' (49 U.S.C. 1517). The

Cooperator shall notify the Attache/Counselor in the destination

countries in writing in advance of any proposed travel. The timing of

such notice should be far enough in advance to enable the Attache/

Counselor to schedule appointments, make preparations, or otherwise

provide any assistance being requested. Failure to provide advance

notification of travel may result in disallowance of the expenses

related to the travel.

Sec. 1550.38 Can a Cooperator keep proceeds generated from an

activity?

Any income or refunds generated from an activity, i.e.,

participation fees, proceeds of sales, refunds of value added taxes

(VAT), the expenditures for which have been wholly or partially

reimbursed, shall be repaid by submitting a check payable to FAS or by

offsetting the Cooperator's next reimbursement claim.

Subpart D--Contributions and Reimbursements

Sec. 1550.50 What cost share contributions are eligible?

(a) The Cooperator shall pay all costs necessary for the operation

of the Cooperator's U.S. office.

(b) In calculating the amount of contributions that it will make,

and the contributions it will receive from a U.S. industry or a State

agency, a Cooperator program applicant may include the costs (or such

prorated costs) listed under paragraph (c) of this section if:

(1) Expenditures will be made in furtherance of the Cooperator's

overall foreign market development program;

(2) The contributor has not been or will not be reimbursed by any

other source for such costs; and

(3) The contribution is made during the period covered by the

project agreement.

(c) Subject to paragraph (b) of this section, eligible

contributions are:

(1) Cash;

(2) Compensation paid to personnel;

(3) The cost of acquiring materials, supplies, or services;

(4) The cost of office space;

(5) A reasonable and justifiable proportion of general

administrative costs and overhead;

(6) Payments for indemnity and fidelity bond expenses;

(7) The cost of business cards;

(8) The cost of seasonal greeting cards;

(9) Fees for office parking;

(10) The cost of subscriptions to publications;

(11) The cost of activities conducted overseas;

(12) Credit card fees;

(13) The cost of any independent evaluation or audit that is not

required by FAS to ensure compliance with program requirements;

(14) The cost of giveaways, awards, prizes and gifts;

(15) The cost of product samples;

(16) Fees for participating in U.S. government activities;

(17) The cost of air and local travel in the United States related

to a foreign market development effort;

(18) Transportation and shipping costs;

(19) The cost of displays and promotional materials;

(20) Advertising costs;

(21) Reasonable travel costs and expenses related to undertaking a

foreign market development activity;

(22) Payment of employee's or contractor's share of personal taxes;

(23) The cost associated with trade shows, seminars, entertainment

and STRE conducted in the United States;

(24) Product research that is undertaken to benefit an industry and

has a specific export application; and

(25) Consumer promotions.

Sec. 1550.51 What are ineligible contributions?

(a) The following are not eligible contributions:

(1) Any portion of salary or compensation of an individual who is

the target of a promotional activity;

(2) Any land costs other than allowable costs for office space;

(3) Depreciation;

(4) The cost of refreshments and related equipment provided to

office staff;

(5) The cost of insuring articles owned by private individuals;

(6) The cost of any arrangement which has the effect of reducing

the selling price of an agricultural commodity;

(7) The cost of product development or product modifications;

(8) Slotting fees or similar sales expenditures;

(9) Funds, services, or personnel provided by any U.S. government

agency;

(10) Capital investments made by a third party, such as permanent

structures, real estate, and the purchase of office equipment and

furniture;

(11) The value of any services generated by a Cooperator or third

party which involve no expenditure by the Cooperator or third party,

e.g., free publicity;

(12) Membership fees in clubs and social organizations; and

(13) costs included as contributions for any other federally-

assisted project or program.

(b) The Deputy Administrator shall determine, at the Deputy

Administrator's discretion, whether any cost not expressly listed in

this section may be included by the Cooperator as an eligible

contribution.

Sec. 1550.52 What are the guidelines for computing the value of non-

cash contributions?

(a) Computing the value of an individual's time. If an individual's

salary is known, allocate the individual's salary on the basis of time

spent on foreign market development activities. If the individual's

salary is unknown, claim up to the equivalent of

[[Page 52635]]

a step 10, GS-15 for professional personnel and up to the current

estimated industry rate at the person's level of employment for

nonprofessional personnel.

(b) Computing the value of indirect expenditures. Allocate value on

the basis of sound management and accounting procedures when

considering indirect expenditures, such as overhead and facilities,

which are furnished by the industry.

Sec. 1550.53 What are the requirements for documenting and reporting

contributions?

(a) Each claimed contribution must be documented by the Cooperator,

showing the method of computing non-cash contributions, salaries, and

travel expenses.

(b) Each Cooperator must keep records of the methods used to

compute the value of non-cash contributions, and

(1) Copies of invoices or receipts for expenses paid by the U.S.

industry and not reimbursed by the Cooperator for the joint activity;

or

(2) If invoices are not available, an itemized statement from the

U.S. industry as to what costs it incurred pursuant to the joint

activity; or

(3) If neither of the foregoing is available, a statement from the

U.S. industry as to what goods and services it provided; or

(4) If none of the foregoing are available, a memo to the files of

the U.S. Cooperator's estimate of what contributions were made by the

U.S. industry, item by item, and the method used to assign a value to

each.

(c) Each Cooperator must report its contributions as described in

Sec. 1550.70 (a).

Sec. 1550.54 What expenditures may FAS reimburse under the Cooperator

program?

(a) A Cooperator may seek reimbursement for an expenditure if:

(1) The expenditure is reasonable and has been made in furtherance

of a market development activity; and

(2) The Cooperator has not been or will not be reimbursed for such

expenditure by any other source.

(b) Subject to paragraph (a) of this section, FAS will reimburse,

in whole or in part, the cost of:

(1) Production and placement of advertising in print or electronic

media or on billboards or posters;

(2) Production and distribution of banners, recipe cards, table

tents, shelf talkers, and similar point of sale materials;

(3) Direct mail advertising;

(4) Food service promotions, product demonstrations to the trade,

and distribution of promotional samples;

(5) Temporary displays and rental of space for temporary displays;

(6) Fees for participation in retail and trade exhibits and shows,

and booth construction and transportation of related materials to such

exhibits and shows;

(7) Trade seminars, including space rental, equipment rental, and

duplication of seminar materials;

(8) Production and distribution of publications;

(9) Part-time contractors, such as interpreters, translators, and

receptionists, to help with the implementation of promotional

activities, such as trade shows, food service promotions, and trade

seminars;

(10) Giveaways, awards, prizes, gifts, and other similar

promotional materials, subject to the limitation that FAS will not

reimburse more than $1.00 per item;

(11) Compensation and allowances for housing, educational tuition,

and cost of living adjustments paid to U.S. citizen employees or U.S.

citizen contractors stationed overseas, subject to the limitation that

FAS shall not reimburse that portion of:

(i) The total of compensation and allowances that exceed 125

percent of the level of a GS-15, Step 10 salary for U.S. Government

employees, and

(ii) Allowances that exceed the rate authorized for U.S. Embassy

personnel;

(12) Foreign transfer, temporary lodging, and post hardship

differential allowances for U.S. citizen employees;

(13) Approved salaries or compensation for non-U.S. citizens and

non-U.S. contractors. Generally, FAS will not reimburse any portion of

a non-U.S. citizen employee's compensation that exceeds the

compensation prescribed for the most comparable position in the Foreign

Service National (FSN) salary plan applicable to the country in which

the employee works. However, if the local FSN salary plan is

inappropriate, a Cooperator may request a higher level of reimbursement

for a non-U.S. citizen in accordance with Sec. 1550.20 (b)(8);

(14) A retroactive salary adjustment that conforms to a change in

FSN salary plans, effective as of the date of such change;

(15) Accrued annual leave at such time when employment is

terminated or when required by local law;

(16) Overtime paid to clerical staff;

(17) Fees for professional and consultant services;

(18) Air travel, plus passports, visas, and inoculations, subject

to the limitation that FAS will not reimburse any portion of air travel

in excess of the full fare economy rate or when the Cooperator fails to

notify the Attach/Counselor in the destination country in advance of

the travel, unless the Deputy Administrator determines it was

impractical to provide such notification;

(19) Per diem, subject to the limitation that FAS will not

reimburse per diem in excess of the rates allowed under the U.S.

Federal Travel Regulation (41 CFR Chapters 300 through 304);

(20) Automobile mileage at the local U.S. Embassy rate, or rental

cars while in travel status;

(21) Other allowable expenditures while in travel status as

authorized by the U.S. Federal Travel Regulation (41 CFR Chapters 300

through 304);

(22) An overseas office, including rent, utilities, communications

originating overseas, office supplies, accident liability insurance

premiums, and legal and accounting services;

(23) The purchase, lease, or repair of, or insurance premiums for,

property that has an expected useful life of at least one year, such as

furniture, equipment, machinery, removable fixtures, floor coverings,

and computer hardware and software;

(24) Office decor, such as draperies or blinds;

(25) Premiums for health or accident insurance or other benefits

for foreign national employees that the employer is required by law to

pay;

(26) Accident liability insurance premiums for facilities used

jointly with third party participants for Cooperator program

activities, or such insurance premiums for travel of non-Cooperator

personnel;

(27) Market research;

(28) Evaluations, if not required by FAS to ensure compliance with

program requirements;

(29) Legal fees to obtain advice on the host country's labor laws;

(30) Employment agency fees;

(31) STRE, including breakfast, lunch, dinner, receptions, and

refreshments at activities; miscellaneous courtesies such as checkroom

fees, taxi fares, and tips; and decorations for a special promotional

occasion;

(32) Educational travel of dependent children, visitation travel,

rest and recuperation travel, home leave travel, and emergency

visitation travel for U.S. overseas employees as allowed under the

Foreign Affairs Manual;

(33) Evacuation payments (safe haven), and shipment and storage of

household goods and motor vehicles;

(34) Demonstration projects;

(35) Purchase of trade and business periodicals containing material

related to market development activities for use by overseas staffs;

(36) Training expenses in the U.S. for FSNs;

[[Page 52636]]

(37) Language training for U.S. citizen employees at the foreign

post of assignment;

(38) Forward year financial obligations required by local law or

custom; such as severance pay, attributable to employment of foreign

nationals; or forfeiture of rent or deposits, attributable to the

closure of an office;

(39) Fees for storage of necessary program materials;

(40) Shipment of samples or other program materials from the U.S.

to foreign countries; and

(41) That portion of airtime for wireless phones that is devoted to

program activities and monthly service fees prorated at the proportion

of program-related airtime to total airtime.

Sec. 1550.55 What expenditures may not be reimbursed under the

Cooperator program?

(a) FAS will not reimburse expenditures made prior to approval of a

Cooperator's program, unreasonable expenditures, or any cost of:

(1) Expenses, fines, settlements, or claims resulting from suits,

challenges, or disputes emanating from employment terms, conditions,

contract provisions, or related formalities;

(2) Product development, product modification, or product research;

(3) Product samples;

(4) Slotting fees or similar sales expenditures;

(5) The purchase, construction, or lease of space for permanent

displays, i.e., displays lasting beyond one marketing plan year;

(6) Office parking fees;

(7) Coupon redemption or price discounts;

(8) Refundable deposits or advances;

(9) Giveaways, awards, prizes, gifts, and other similar promotional

materials in excess of $1.00 per item;

(10) Alcoholic beverages that are not an integral part of a

promotional activity;

(11) The purchase, lease (except for use in authorized travel

status), or repair of motor vehicles;

(12) Travel of applicants for employment interviews;

(13) Unused non-refundable airline tickets or associated penalty

fees, except where travel is restricted by U.S. government action or

advisory;

(14) Any arrangement which has the effect of reducing the selling

price of an agricultural commodity;

(15) Goods and services and salaries of third party personnel;

(16) Membership fees in clubs and social organizations;

(17) Indemnity and fidelity bonds;

(18) Fees for participating in U.S. Government sponsored

activities, other than trade fairs, shows, and exhibits;

(19) Business cards;

(20) Seasonal greeting cards;

(21) Subscriptions to non-trade related publications;

(22) Credit card fees;

(23) Refreshments, or related equipment, for office staff;

(24) Insurance on household goods and personal effects, including

privately-owned automobiles, whether overseas or stored in the U.S.,

belonging to U.S. citizen employees;

(25) Home office domestic administrative expenses, including

communication costs;

(26) Payment of U.S. or foreign employee's or contractor's share of

personal taxes, except as legally required in a foreign country;

(27) Wireless phone equipment, equipment repair, insurance, and

other related charges;

(28) STRE expenses incurred in the U.S;

(29) Entertainment, e.g., amusements, diversions, cover charges,

personal gifts, or tickets to theatrical or sporting events;

(30) Functions (including receptions and meals at Cooperator staff

conferences) at which target groups, such as members of the overseas

trade, opinion leaders, foreign government officials, and other similar

groups, are not present; or

(31) Promotions directed at consumers purchasing in their

individual capacity.

(b) The Deputy Administrator may determine, at the Deputy

Administrator's discretion, whether any cost not expressly listed in

this section will be reimbursed.

(c) FAS will reimburse for expenses incurred up to 30 calendar days

beyond the conclusion of the marketing plan year.

Sec. 1550.56 How are Cooperators reimbursed?

(a) A format for reimbursement claims is available from the

Director, Marketing Operations Staff, FAS, USDA. Claims for

reimbursement shall contain at least the following information:

(1) Activity code;

(2) Country code;

(3) Cost category;

(4) Amount to be reimbursed or credited;

(5) If applicable, any reduction in the amount of reimbursement

claimed to offset FAS demand for refund of amounts previously

reimbursed, and reference to the relevant Compliance Report; and

(6) If applicable, any amount previously claimed that has not been

reimbursed.

(b) All claims for reimbursement shall be submitted by the

Cooperator's U.S. office to the Director, Marketing Operations Staff,

FAS, USDA.

(c) FAS will not reimburse claims submitted later than 6 months

after the end of a marketing plan year.

(d) If FAS overpays a reimbursement claim, the Cooperator shall

repay FAS within 30 days the amount of the overpayment either by

submitting a check payable to FAS or by offsetting its next

reimbursement claim.

(e) If a Cooperator receives a reimbursement or offsets an advanced

payment which is later disallowed, the Cooperator shall within 30 days

of such disallowance repay FAS the amount owed either by submitting a

check payable to FAS or by offsetting its next reimbursement claim.

(f) The Cooperator shall report any actions having a bearing on the

propriety of any claims for reimbursement to the Attache/Counselor and

its U.S. office shall report such actions in writing to the Division

Director(s).

Sec. 1550.57 Will FAS make advance payments to a Cooperator?

(a) Policy. In general, FAS operates the Cooperator program on a

reimbursable basis.

(b) Exception. Upon request, FAS may make two types of advance

payments to a Cooperator. The first is a revolving fund operating

advance provided by FAS only to Cooperators with foreign offices

supported with project funds. The second is a special advance payment

used to pay an impending large cost item. FAS will provide this type of

advance expense payment in lieu of direct payments by FAS to vendors or

other third parties. All Cooperators, with or without project fund-

supported foreign offices, are eligible to request special advance

payments. Normally, special advance payments received from FAS must be

liquidated by the Cooperator within 90 days from the date of receipt.

Prior to making an advance, FAS may require the participant to submit

security in a form and amount acceptable to FAS to protect FAS'

financial interests. FAS will not make any special advance payment to a

Cooperator where a special advance is outstanding from a prior

marketing plan year. Cooperators shall deposit and maintain advances in

insured, interest-bearing accounts, unless such accounts are prohibited

by law or custom of a host country.

[[Page 52637]]

(c) Refunds due FAS. A participant shall return any unexpended

portion of an advance, plus any interest earned, either by submitting a

check payable to FAS or by offsetting its next reimbursement claim. All

checks shall be mailed to the Director, Marketing Operations Staff,

FAS, USDA.

Subpart E--Reporting, Evaluation, and Compliance

Sec. 1550.70 Must Cooperators report to FAS?

(a) End-of-Year contribution report. Not later than January 31 of

the year following the completion of the marketing plan year, a

Cooperator shall submit two copies of a report which identifies

contributions made by the Cooperator and the U.S. industry during that

marketing plan year. A suggested format of a contribution report is

available on the FAS home page

(http://www.fas.usda.gov/mos/programs/fnotice.html) on the Internet or

from the Director, Marketing Operations Staff, FAS, USDA.

(b) Trip reports. Not later than 45 days after completion of travel

(other than local travel), a Cooperator shall submit a trip report. The

report must include the name(s) of the traveler(s), purpose of travel,

itinerary, names and affiliations of contacts, and a brief summary of

findings, conclusions, recommendations, or specific accomplishments.

(c) Research reports. Not later than 6 months after the end of its

marketing plan year, a Cooperator shall submit a report on any research

conducted in accordance with its application.

(d) Submission of reports. A Cooperator shall submit the reports

required by this section to the appropriate Division Director. Trip

reports and research reports shall also be submitted to the appropriate

Attache/Counselor(s). All reports shall be in English and include the

Cooperator's agreement number, the countries and period covered, and

the date of the report.

(e) Additional reports. FAS may require the submission of

additional reports.

(f) Independent audit reports. A Cooperator shall provide to the

FAS Compliance Review Staff, upon request, any audit reports by

independent public accountants.

Sec. 1550.71 Are Cooperator documents subject to the provisions of the

Freedom of Information Act?

(a) Documents submitted to FAS by Cooperators are subject to the

provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, 7

CFR part 1, Subpart A--Official Records, and, specifically, 7 CFR

1.11--Handling Information from a Private Business.

(b) If requested by a person located in the United States, a

Cooperator shall provide to such person a copy of any document in its

possession or control containing market information developed and

produced under the terms of its agreement. The Cooperator may charge a

fee not to exceed the costs for assembling, duplicating, and

distributing the materials.

(c) The results of any research conducted by a Cooperator under an

agreement shall be the property of the U.S. Government.

Sec. 1550.72 How is program effectiveness measured?

(a) The Government Performance and Results Act (GPRA) of 1993 (5

U.S.C. 306; 31 U.S.C. 1105, 1115-1119, 3515, 9703-9704) requires

performance measurement of Federal programs, including the Cooperator

program. Evaluation of the Cooperator program's effectiveness will

depend on a clear statement by each Cooperator of the constraints and

opportunities facing U.S. exports, goals to be met within a specified

time, a schedule of measurable milestones for gauging success, a plan

for achievement, and reports of activity results.

(b) Evaluation is an integral element of program planning and

implementation, providing the basis for the strategic plan. The

evaluation results guide the development and scope of a Cooperator's

program, contribute to program accountability, and provide evidence of

program effectiveness.

(c) A Cooperator shall conduct periodic evaluations of its program

and activities and may contract with an independent evaluator to

satisfy this requirement. FAS reserves the right to have direct input

and control over design, scope, and methodology of any such evaluation,

including direct contact with and provision of guidance to the

independent evaluator.

(d) A Cooperator shall complete at least one program evaluation

each year. Actual scope and timing of the program evaluation shall be

determined by the Cooperator and the Division Director and specified in

the Cooperator's application approval letter. A program evaluation

shall contain:

(1) The name of the party conducting the evaluation;

(2) The activities covered by the evaluation;

(3) A concise statement of the constraint(s) and opportunities and

the goals specified in the application;

(4) A description of the evaluation methodology;

(5) A description of additional export sales achieved, including

the ratio of additional export sales in relation to Cooperator program

funding received;

(6) A summary of the findings, including an analysis of the

strengths and weaknesses of the program(s); and

(7) Recommendations for future programs.

(e) A Cooperator shall submit, via a cover letter to the Division

Director, an executive summary which assesses the program evaluation's

findings and recommendations and proposes changes in program strategy

or design as a result of the evaluation.

Sec. 1550.73 Are Cooperators penalized for failing to make required

contributions?

A Cooperator's contribution requirement is specified in the

Cooperator program allocation letter. If a Cooperator fails to

contribute the amount specified in its allocation approval letter, the

Cooperator shall pay to FAS in U.S. dollars the difference between the

amount it has contributed and the amount specified in the allocation

approval letter. A Cooperator shall remit such payment by December 31

following the end of the marketing plan year.

Sec. 1550.74 How is Cooperator program compliance monitored?

(a) The Compliance Review Staff (CRS), FAS, performs periodic on-

site reviews of Cooperators to ensure compliance with this part.

(b) In order to verify that federal funds received by a Cooperator

do not supplant private or U.S. industry funds or contributions

pursuant to Sec. 1550.20(a)(14), FAS will consider the Cooperator's

overall marketing budget from year to year, variations in promotional

strategies within a country or region, and new markets.

(c) The Director, CRS, will notify a Cooperator through a

compliance report when it appears that FAS may be entitled to recover

funds from that Cooperator. The compliance report will state the basis

for this action.

Sec. 1550.75 How does a Cooperator respond to a compliance report?

(a) A Cooperator shall, within 60 days of the date of the

compliance report, submit a written response to the Director, CRS. This

response shall include any money owed to FAS if the Cooperator does not

wish to contest the compliance report. The Director, CRS, at the

Director's discretion, may extend the period for response up to an

additional 30 days. If the Cooperator does not respond to the

compliance report within

[[Page 52638]]

the required time period or, if after review of the Cooperator's

response, the Director, CRS, determines that FAS may be entitled to

recover funds from the Cooperator, the Director, CRS, will refer the

compliance report to the Deputy Administrator.

(b) If, after review of the compliance report and response, the

Deputy Administrator determines that the Cooperator owes money to FAS,

the Deputy Administrator will so inform the Cooperator. The Deputy

Administrator may initiate action to collect such amount pursuant to 7

CFR Part 1403, Debt Settlement Policies and Procedures. Determinations

of the Deputy Administrator will be in writing and in sufficient detail

to inform the Cooperator of the basis for the determination. The

Cooperator has 30 days from the date of the Deputy Administrator's

initial determination to submit any money owed to FAS or to request

reconsideration.

Sec. 1550.76 Can a Cooperator appeal the determinations of the Deputy

Administrator?

(a) The Cooperator may appeal the determinations of the Deputy

Administrator to the Administrator. An appeal must be in writing and be

submitted to the Office of the Administrator within 30 days following

the date of the initial determination by the Deputy Administrator or

the determination on reconsideration. The Cooperator may request a

hearing.

(b) If the Cooperator submits its appeal and requests a hearing,

the Administrator, or the Administrator's designee, will set a date and

time, generally within 60 days. The hearing will be an informal

proceeding. A transcript will not ordinarily be prepared unless the

Cooperator bears the cost of a transcript; however, the Administrator

may have a transcript prepared at FAS's expense.

(c) The Administrator will base the determination on appeal upon

information contained in the administrative record and will endeavor to

make a determination within 60 days after submission of the appeal,

hearing, or receipt of any transcript, whichever is later. The

determination of the Administrator will be the final determination of

FAS. The Cooperator must exhaust all administrative remedies contained

in this section before pursuing judicial review of a determination by

the Administrator.

Signed at Washington, D.C., on September 23, 1999.

Timothy J. Galvin,

Administrator, Foreign Agricultural Service.

[FR Doc. 99-25415 Filed 9-29-99; 8:45 am]

BILLING CODE 3410-10-P