RESTRICTED
WORLD TRADE G/STR/N/2/USA
18July1996
ORGANIZATION(96-2817)
Original: English Working Party onState Trading Enterprises
STATE TRADING
Updating Notification Pursuant toArticle XVII:4(a) oftheGATT 1994 and
Paragraph 1oftheUnderstanding ontheInterpretation ofArticle XVII
UNITED STATES
Thefollowingcommunication,dated1July1996,hasbeenreceivedfromthePermanentMission
oftheUnited States.
_______________
With reference toSecretariat document G/STR/N/2 of10May 1996 andpursuant to
Article XVII:4(a) oftheGATT 1994 andparagraph 1oftheUnderstanding ontheInterpretation of
Article XVII, theUnited States submits herewith anotification updating thefullnotification circulated
inG/STR/N/1/USA.
COMMODITY CREDIT CORPORATION
I. Enumeration ofstatetrading enterprises
TheUSDepartment ofAgriculture 'sCommodity Credit Corporation (CCC): miscellaneous
agricultural products.
II. Reasons andpurpose forintroducing andmaintaining statetrading enterprises
TheCommodity Credit Corporation (CCC) isagovernment-owned andoperated entity within
theUSDepartment ofAgriculture (USDA). TheCorporation wascreated tostabilize, support, and
protect farmincome andprices. CCCalsohelpsmaintain balanced andadequate supplies ofagricultural
commodities andhelps intheirorderly distribution.
History :CCC wasincorporated on17October 1933, under aDelaware charter witha
capitalization of$3million. Itwasinitially managed andoperated inclose affiliation withthe
ReconstructionFinanceCorporation,whichfundeditsoperations.On1July1939,CCC wastransferred
toUSDA bythePresident 'sReorganization PlanI.Itwasreincorporated on1July1948, asafederal
corporation within USDA bytheCommodity Credit Corporation Charter Act(62Stat. 1070,
15U.S.C. 714).
Basic Responsibilities :TheCCC Charter Act,asamended, authorizes theCorporation to
support prices ofagricultural commodities through loans, purchases, payments, andother operations,
andmakes available materials andfacilities required intheproduction andmarketing ofagriculturalG/STR/N/2/USA
Page2
commodities. TheCCC Charter Actalsoauthorizes thesaleofagricultural commodities toother
government agencies andforeign governments, andfooddonations todomestic, foreign, orinternational
reliefagencies.CCCalsoassistsinthedevelopmentofnewdomesticandforeignmarketsandmarketing
facilities foragricultural commodities.
III. Description ofthefunctioning ofstatetrading enterprises
Organization :CCC ismanaged byaBoard ofDirectors, subject tothegeneral supervision
anddirection oftheSecretary ofAgriculture, whoisanexofficio Director andChairman oftheBoard.
TheBoard consists ofseven members, inaddition totheSecretary, whoareappointed bythePresident
oftheUnited States byandwiththeadvice andconsent oftheSenate. Themembers oftheBoard
andtheCorporation 'sofficers areallofficials ofUSDA.
CCChasnooperating personnel. Itspricesupport, storage, reserve anddiversion programmes,
anditsdomestic acquisition anddisposal activities forprice-supported commodities, arecarried out
primarilythroughthepersonnelandfacilitiesoftheConsolidatedFarmServiceAgency(CFSA),formerly
theAgricultural Stabilization andConservation Service. CCC alsousestheservices ofother USDA
agenciestocarryoutitsauthoritiesandresponsibilities.TheAgriculturalMarketingServiceoccasionally
usesCCCauthoritytoacquirevariouscommoditiesfordomesticandforeignfoodassistanceprogrammes.
Export sales(except fortobacco andpeanuts) andforeign assistance disposal ofCCC-controlled stocks
areadministered through theGeneral Sales Manager oftheForeign Agricultural Service (FAS).
Financing :CCC hasanauthorized capital stock of$100 million heldbytheUnited States,
withtheauthority tohaveoutstanding borrowings ofupto$30billion atanyonetime. Thefiscal
year1988 appropriation act,P.L.100-202, increased thestatutory borrowing authority from $25to
$30billion.
Funds areborrowed fromtheTreasury andmayalsobeborrowed fromprivate lending agencies
andothers. TheCorporation reserves asufficient amount ofitsborrowing authority topurchase at
anytimeallnotes andother obligations evidencing loans made bysuchagencies andothers. Allbonds,
notes, debentures, andsimilar obligations issued bytheCorporation aresubject toapproval bythe
Secretary oftheTreasury asrequired bytheActof8March 1938 (15U.S.C. 713a-4). Reservation
ofborrowing authority forthese purposes hasnotbeenrequired formany years.
Interest onborrowings from theTreasury (andoncapital stock) ispaidataratebased upon
theaverage interest rateofalloutstanding marketable obligations (ofcomparable maturity date) of
theUSGovernment asofthepreceding month. Interest mayalsobepaidonother notes andobligations
atarateprescribed bytheCCC andapproved bytheSecretary oftheTreasury. TheDepartment of
Agriculture andRelated Agencies Appropriation Act,1966, made provision forterminating interest
after30June1964, ontheportion oftheCCC'sborrowings fromtheTreasury equal totheunreimbursed
realized losses recorded onthebooks oftheCorporation aftertheendofthefiscal yearinwhich such
losses arerealized.
Commodity Support Activities :Thebasic structure andoperational elements ofcommodity
support programmes arecontained inlegislation commonly known as"theFarm Bill". TheFederal
Agriculture, Improvement andReform Actof1996(P.L. 104-127, 110Stat.888)authorizes commodity
support programmes for1996-2002.
Commodity support operations, handled primarily through loan, purchase andpayment
programmes,includethoseforwheat,corn,oilseeds,cotton(uplandandextralongstaple),rice,tobacco,
milkandmilkproducts, barley, oats,sorghum, peanuts, andsugar. Loan ratesaredesigned tokeep
commoditiescompetitive,andtargetprices,whereapplicable,aredesignedtoreflectcostsofproduction.G/STR/N/2/USA
Page3
Thefarmer-owned grain reserve programme enables farmers tostore designated commodities when
stocks arehigher thanneeded tomeetdomestic andexport requirements andtorelease them inthe
market, when stocks runlowandprices aremore advantageous. Support formilkandtheproducts
ofmilkiscarried outthrough purchases ofbutter, cheese andnon-fat drymilkfrom processors and
handlers. There arenoCCC support programmes forprocessed products, other thandairy products.
Operational details ofsupport programmes generally areprepared byCFSA andapproved by
theBoard ofDirectors and/or theSecretary ofAgriculture. Once approved, USDA releases apublic
announcement, usually apress release. Detailed operating instructions aresenttopersonnel incharge
ofadministeringtheprogrammeinWashingtonandthefield,andregulationsarepublishedintheFederal
Register .CFSA county office personnel assist farmers inthepreparation ofsupport documents, check
theireligibility forsupport, andkeepthem informed ofprogramme details.
Incarrying outcommodity support programmes, theCCC acquires inventory intwoprincipal
ways:
"Takeover" -Ifaproducer doesnotredeem thecommodity byloanrepayment time, CCC
takes overtitleandpossession ofthecommodity which waspledged ascollateral forthe
non-recourse price-support loan. Non-recourse loans aredefined asloans thatproducers are
notobligated torepay orfulfil. Instead, producers havetheoption todeliver and/or forfeit
thecollateral (thecommodity) totheCCC. Settlement oftheloanisthenmade attheloan
ratebased onthequantity andquality ofthecommodity involved. CCC alsooffers recourse
loans; however, theloans cannot beforfeited andcommodities involved arenotasource of
CCC inventory.
Purchases -Prices ofspecified commodities aresupported through CCC purchases ofthe
commodities fromproducers orprocessors. Forexample, support formilkandtheproducts
ofmilkiscarried outthrough purchases ofbutter, cheese, andnon-fat drymilkfromprocessors
andhandlers. Asnoted previously, CCC alsoiscommitted toacquire eligible commodities
from producers, attheproducer 'soption, under theloanprogramme.
DomesticFoodAssistanceProgrammes:Incertaincircumstances,CCC isauthorizedtodonate
foodcommodities acquired through support programmes orfromprivate stocks totheBureau ofIndian
Affairs, andfederal, State, andprivate agencies. Thecommodities areusedforUSschool lunch
programmes, summer camps forchildren, andtheassistance ofneedy persons. They arealsoused
incharitable institutions, including hospitals, totheextent needy persons areserved. Inmostinstances,
arrangements aremade toprocess thecommodities intofood.
CCC alsoprovidessurplusdairyproductstothearmedservicesandtoveteranshospitalswithout
charge, except forthecostofpackaging. CCC alsodonates foodacquired through support programmes
tofederal penal andcorrectional institutions andtoState correctional institutions forminors, except
where service isprovided onaconcessional basis. CCC makes available totheSecretary oftheInterior
grain acquired through support operations tobeusedasfeedformigratory waterfowl forthepurpose
ofpreventing cropdamage. TheSecretary oftheInterior mayalsorequisition CCC-owned grain for
feeding starving migratory birds, andanyState mayrequisition CCC-owned grain upon thefinding
oftheSecretary oftheInterior thatresident game birds andother resident wildlife arethreatened with
starvation.
CCC makes available farmcommodities orproducts inareas ofacute economic distress, and
inconnectionwithcertainmajordisasters,asdeterminedbythePresidentoftheUnitedStates.Inventory
Operations: TheCCC isauthorized totransport, store, process, anddispose ofvarious agricultural
commodities andtheirproducts inorder tocarry outdomestic andexport programmes defined inG/STR/N/2/USA
Page4
legislation.
Export Programmes :CCCisauthorized topromote theexport ofUSagricultural commodities
andproducts through sales, payments toexporters, direct credits andtheconduct ofother activities
related totheexportation ofcommodities. CCC alsoadministers international fooddonation andfood
assistance programmes (e.g.PL-480).
CCC actsasthefinancing agent forexport credit guarantee programmes andseveral export
subsidy programmes. CCCadministers threeexport credit guarantee programmes: theveryshort-term
"suppliercredit"programme,theshort-termexportguaranteeprogramme(GSM-102)andtheintermediate
export credit guarantee programme (GSM-103). Under theExport Enhancement Programme (EEP),
CCC payscashtoUSexporters asabonus, allowing themtosellUSagricultural products totargeted
countries atprices below those theexporter paystoacquire andexport them. Under theDairy Export
Incentive Programme (DEIP), CCC payscashtoUSexporters asbonuses, anditallows them tosell
certain USdairy products atprices below theexporter 'scostsofacquisition. EEPandDEIP currently
operate onthebasis ofdirect cashpayments toexporters.
Under theMarket Access Programme (MAP) (formerly theMarket Promotion Programme
orMPP), USDA funds thedevelopment, maintenance andexpansion ofcommercial export markets
foragricultural commodities through costshare assistance toeligible tradeorganizations thatimplement
aforeign market development programme. AllMAP funding isonacashbasis. MAP isadministered
byFASthrough cooperative agreements between CCC andnonprofit agricultural trade commodity
groups.
CCCalsomakesdirect(subsidized)salesofdairyproductsfromitsinventoriestoexportmarkets.
Imports :CCC doesnotimport anycommodities.
Summary: CCC Purchase andSales (Inventory Operations)
CCC inventory levels given inTable 1(seeIVbelow) include commodity operations under
thedomestic commodity support programmes aswellas"throughput" required tooperate domestic
andforeign foodassistance programmes.
Under thecommodity support programmes, CCC acquires commodities through purchases
andloanforfeitures. Commodity inventories arevalued attheiracquisition cost(oramount ofcollateral
forfeited byproducers) plusthecostofprocessing andpackaging afteracquisition. Theforfeiture
amount istheacquisition costplusthesettlement cost,excluding interest. Crops acquired byCCC
aresubsequently disposed ofaccording tovarious statutes. These dispositions include sales, barter
anddonations. CCC'srealized gains andlosses arerecognized atthetimeofdisposition.
CCC isauthorized tocontract foruseofprivately owned facilities incarrying outitsactivities.
CCC alsohasauthority toacquire personal property andtorentorleaseoffice space necessary
foritsbusiness. CCC isprohibited from acquiring realproperty, oranyinterest inproperty, except
forthepurpose ofprotecting itsfinancial interests andforproviding adequate storage tocarry outits
programmes.
DataonCCCsalesofcommodities frominventory intothedomestic market andexport markets
areprovided under IVbelow. These datadonotinclude CCC disposals frominventory fordomestic
orforeign foodassistance programmes. CCC inventory operations aredetailed eachyearintheReport
ofthePresident oftheCommodity Credit Corporation.G/STR/N/2/USA
Page5
IV. Statistical information
Seeattached tables.
V. Reason whynoforeign trade hastaken place inproducts affected
TheUSimports and/or exports commodities thathavebeensubject toCCC commodity support
programmes andinventory operations.
VI. Additional information
None.G/STR/N/2/USA
Page6TABLE 1
Total USProduction, Imports, Exports, &CCC Inventories
Production Imports Exports CCC Inventories3
Selected commodities
1992Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)
Butter1625 $1,238 2.0 $3,902 159.0 $261,055 300.4 $646,109
Cheese 2,885 n.a. 138.6 $455,360 14.6 $46,215 3.0 $8,954
Non-fat drymilk2396 $888 0.6 $909 126.0 $198,502 29.6 $55,782
Barley 9,908 $928,000 194.8 $18,032 2,089.9 $219,580 120.7 $10,511
Corn 189,874 $17,715,750 165.9 $14,864 40,693.1 $4,605,404 3,285.5 $322,303
Oats 4,271 $388,080 1,093.9 $106,199 49.7 $6,603 0.9 $88
Sorghum 14,860 $13,616,250 0.0 $10 7,454.6 $836,242 211.0 $22,537
Soybeans 50,472 $11,087,460 56.5 $11,662 19,276.8 $4,318,075 4.1 $721
Wheat 67,135 $7,967,160 1,454.0 $169,377 34,321.5 $4,323,416 4,123.9 $582,934
Rice 7,320 $1,208,252 196.8 $106,892 2,279.0 $756,764 19.8 $2,558
Honey 100 $121,300 49.5 $47,218 4,669.0 $6,205 1.9 $2,560
Cotton 3,835 $4,912,192 0.3 $334 1,494.1 $2,183,195 0.7 $954
Rye 290 $28,405 96.9 $8,419 0.9 $89 0.6 $47
Peanuts 2,235 $1,394,341 0.2 $198 347.8 $210,436 0 $0
Sunflowerseeds 1,639 $314,688 45.9 $11,617 105.0 $58,897 6.2 $1,212
Flaxseed 157 $21,824 114.2 $23,256 10.6 $1,928 1.0 $213
Drybeans 1,026 $457,300 43.0 $26,680 504.0 $219,413 0 $0
Sugar (raw value) 6,628 $3,222,000 1,623.0 $633,203 492.0 $153,850 0 $0
1 Butter value calculated using Chicago Grade AAprice. FAS estimates oftrade data.
2 Non-fat drymilk value calculated using manufacturers 'average selling price. FAS estimates oftrade data.
3 Endof1992 fiscal year.G/STR/N/2/USA
Page7Example: 1992: 1991/92 marketing yearforcorn, sorghum, soybeans, rice,cotton, peanuts, sunflowerseed, andflaxseed; 1992/93 marketing yearforbarley, oats,
wheat, andrye; 1992 calendar yearforbutter, cheese, non-fat drymilk, andhoney.
Source: USDA
Production Imports Exports CCC Inventories3
Selected commodities
1993Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)
Butter1599 $1,042 1.3 $2,256 161.0 $226,178 247.9 $498,829
Cheese 2,969 n.a. 157.8 $492,882 16.3 $54,609 0.6 $1,942
Non-fat drymilk2425 $996 0.8 $1,303 147.0 $256,443 10.2 $17,270
Barley 8,666 $792,020 2,042.3 $184,126 1,610.4 $168,826 117.4 $10,202
Corn 240,719 $19,617,390 482.6 $52,312 41,765.7 $4,250,915 1,438.2 $144,827
Oats 3,001 $281,520 1,922.0 $165,395 79.7 $12,006 0.6 $59
Sorghum 22,227 $1,653,750 0.0 $0 6,651.5 $662,437 100.3 $12,084
Soybeans 59,612 $12,176,400 175.4 $43,014 20,399.5 $4,606,024 5.5 $1,219
Wheat 65,220 $7,810,960 2,790.7 $311,591 36,039.3 $4,736,915 108.2 $14,785
Rice 8,151 $1,058,433 238.3 $122,192 2,709.9 $766,408 38.4 $5,308
Honey 104 $125,000 57.3 $50,541 4,038.0 $6,281 1.3 $1,743
Cotton 3,531 $4,273,767 1.8 $4,193 1,125.2 $1,525,944 19.4 $27,354
Rye 262 $26,367 60.2 $6,095 0.4 $42 0 $0
Peanuts 1,943 $1,285,200 0.0 $0 300.5 $186,492 0 $0
Sunflowerseeds 1,163 $250,045 25.3 $8,145 83.8 $61,380 0 $0
Flaxseed 84 $13,547 135.2 $29,447 3.5 $472 0.1 $22
Drybeans 994 $539,500 38.0 $23,980 442 $207,754 0 $0
Sugar (raw value) 7,111 $3,369,000 1,569.0 $591,427 337 $106,076 0 $0
1 Butter value calculated using Chicago Grade AAprice. FAS estimates oftrade data.
2 Non-fat drymilk value calculated using manufacturers 'average selling price. FAS estimates oftrade data.
3 Endof1993 fiscal year.
Data ispreliminary
Source: USDAG/STR/N/2/USA
Page8Production Imports Exports CCC Inventories3
Selected commodities
1994Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)Quantity
('000MT)Value
($'000)
Butter1584 $915 2.0 $2,944 87.0 $118,480 83.3 $145,098
Cheese 3,029 n.a. 44.3 $152,308 19.6 $65,341 0 $0
Non-fat drymilk2513 $1,205 0.6 $899 131.0 $222,803 22.7 $50,818
Barley 8,126 $761,250 330.1 $32,660 1,550.3 $148,231 115.8 $10,051
Corn 160,954 $15,840,000 75.5 $7,490 33,057.3 $3,816,766 1,135.3 $110,281
Oats 3,336 $280,600 587.5 $49,261 20.3 $3,322 0 $0
Sorghum 13,589 $1,233,540 0.1 $7 5,216.6 $600,160 18.8 $1,670
Soybeans 50,919 $11,974,400 68.6 $14,528 16,363.9 $4,160,933 4.2 $773
Wheat 63,157 $8,007,450 418.4 $55,785 31,145.2 $4,026,012 87.2 $11,959
Rice 7,081 $1,245,678 60.3 $33,530 2,432.7 $888,804 0.5 $65
Honey 100 $111,104 60.1 $48,016 3,251.0 $5,162 2.9 $3,822
Cotton 3,513 $4,521,562 0.9 $2,755 1,565.7 $2,286,576 28.7 $90,949
Rye 282 $28,402 155.5 $14,684 0.7 $66 0 $0
Peanuts 1,539 $1,030,900 0.2 $184 159.8 $135,843 0 $0
Sunflowerseeds 1,167 $331,428 11.8 $3,370 72.9 $62,602 0 $0
Flaxseed 88 $14,616 23.1 $5,107 2.9 $366 0.8 $148
Drybeans 1,324 $628,500 49.0 $28,935 501.0 $256,597 0 $0
Sugar (raw value) 6,944 $3,275,000 1,619.0 $615,760 392.0 $130,492 7.4 $3,919
1 Butter value calculated using Chicago Grade AAprice. FASestimates oftrade data.
2 Non-fat drymilkvalue calculated using manufacturers 'average selling price. FASestimates oftrade data.
3 Endof1994 fiscal year.
Data ispreliminary
Source: USDAG/STR/N/2/USA
Page9TABLE 2
Cumulative Total Exports forCCC Direct Sales
USFiscal Years* 1992, 1993, 1994
FY1992
MTValue
($'000)FY1993
MTValue
($'000)FY1994
MTValue
($'000)
Non-fat drymilk 36,079 $63,284 1,948 $3,506 0 $0
Butteroil** 46,496 $70,032 9,804 $12,413 15,591 $19,189
* TheUSfiscal yearrunsfrom 1October through 30September.
** Onanbutter equivalent basis.
TABLE 3
Domestic Sales from CCC Inventories, inthousands
1992 1993 1994 Quantity u
Quantity Cost Proceeds Quantity Cost Proceeds Quantity Cost Proceeds
Butter 4,089 4,502 3,229 32,553 28,942 23,828 57,972 48,637 41,446 pound
Cheese 18 23 9 120 153 112 2 2 1 pound
Non-fat drymilk 24 65 1 677 637 630 33 29 26 pound
Barley 2,066 4,415 3,873 117 260 184 0 0 0 bushel
Corn 180,488 504,561 411,061 36,976 112,626 76,615 0 0 0 bushel
Oats 291 433 386 22 33 25 0 0 0 bushel
Sorghum 38,052 104,156 85,922 254 713 451 0 0 0 bushel
Soybeans 93 479 349 1,560 7,845 8,540 3 11 57 bushel
Wheat 31,881 125,125 108,319 46,967 178,161 158,299 0 0 0 bushel
Rice 16,677 107,847 89,321 4,754 31,515 28,920 2,386 15,345 12,338 hundredw
Honey 373 192 171 956 570 337 1,421 849 462 pound
Cotton, staple 0 0 0 1 578 374 98 45,886 39,923 baleG/STR/N/2/USA
Page101992 1993 1994 Quantity u
Quantity Cost Proceeds Quantity Cost Proceeds Quantity Cost Proceeds
Cotton, upland 252 65,738 52,807 423 113,124 93,182 236 62,947 52,326 bale
Rye 22 44 34 22 46 35 0 0 0 bushel
Peanuts 688 109 53 1,345 455 160 547 172 70 pound
Sunflowerseeds 23 210 177 200 1,829 1,794 0 0 0 hundredw
Flaxseed 38 343 258 35 318 264 12 114 100 hundredw
Drybeans 0 0 0 78 1,421 322 0 0 0 hundredw
Sugar 0 0 0 0 0 0 11,678 2,821 2,896 pound
Datafor1993 and1994 arepreliminary.
Source: "Report ofthePresident oftheCommodity Credit Corporation", USDA.