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importing country, including a corporation owned or controlled by the ... importing country . . . must be reported. This clearly indicates that a payment to a state owned trading company must be reported.

2. Business expenses in connection with the entertainment of representatives of the importer, such as meals, theatre tickets, etc.

"Compensation" refers to anything given in return for consideration, services, or benefits received or to be received by the supplier in connection with the supplying of commodities or vessels financed under the Act. See § 17.8(f)(2). There is no general requirement under this regulation for suppliers to report all business entertainment expenses; however, such expenses must be reported if made to a representative of the importer or importing country in return for any consideration, services, or benefits received or to be received by the supplier in connection with a Pub. L. 480 transaction financed under the Act.

3. Certification to the commodity supplier by representatives of the supplier that they are not "agents, brokers, or other representatives of the importer or importing country, including a corporation owned or controlled by the importer or the government of the country.

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The commodity supplier may choose to require a certification as described above from the supplier's representatives. However, the existence of such a certification would not relieve the supplier from the responsibility to report payments made to any person whom the supplier knew, or should reasonably have known to be a representative of the importer or importing country.

4. A broker acting on behalf of the vessel's owner in offering a vessel to an importing country, and also the importing country in discharging the vessel under a free out contract.

The commission paid by the vessel's owner to the borker is reportable if the supplier of ocean transportation (vessel owner) knew, of should reasonably have known at the time of payment, of the relationship between the broker and the importing country.

5. Payments made to any representative of the importer or importing country at a loading or discharge port.

The regulations require that any payment made by a supplier of commodities or ocean transportation to a representative of the importer or importing government be reported. Accordingly, such payments must be reported.

6. Payments made by a commodity supplier to the importer for a quality allowance, as specified in the sales contract.

Payments for bona fide quality allowances agreed upon between supplier and importer in their sales contract are not required to be reported. This is considered a contract price adjustment under the regulations and not a "commission, fee or other compensation

(Secs. 101-115, Pub. L. 83-480, as amended (7 U.S.C. 1701 et seq.); E.O. 10900, 26 FR 143, as amended, Sec. 1202, 91 Stat. 955, Pub. L. 95-113, 7 U.S.C. 1715(b))

[31 FR 16818, Dec. 31, 1966, as amended at 34 FR 8963, June 5, 1969; 44 FR 26847, May 8, 1979]

§ 17.9 Ocean transportation.

(a) General. (1) This section will apply to the financing of ocean freight differential for sales for foreign currencies and to the financing of ocean freight for long-term credit sales. Ocean freight will be financed by CCC only to the extent specifically provided for in the purchase authorization. The purchase authorization may provide requirements in addition to or in lieu of those specified in this section.

(2) The offices specified in paragraph (b) of this section shall determine the quantity of the commodity which must be shipped on privately owned U.S.-flag commercial vessels.

(3) The supplier of ocean transportation shall release copies of the ocean bills of lading to the supplier of the commodity promptly upon completion of loading of the vessel.

(b) Request for vessel approval. The pertinent terms of all proposed charters (whether single voyage charters, consecutive voyage charters, or time charters) and all proposed

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

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

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

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

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

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

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

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

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

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

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

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

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

cargo arrive at the first port of discharge, subject of paragraph (d)(4) of this section, and to the further condition that if a force majeure as described in paragraph (k)(7) of this section results in the loss of part of the vessel's cargo, 90 percent of the ocean freight is payable on the part so lost as well as the quantity which arrives when the vessel arrives at the first port of discharge. This provision does not relieve the carrier of the obligation to carry to other points of discharge if so required by the charter party. The final 10 percent on the cargo which arrives shall be settled promptly, subject to adjustments, if any, after submission of loading and discharging laytime statements and statement(s) of fact. The remaining 10 percent on the cargo lost shall not be due or payable.

(4) That if a force majeure as described in paragraph (k)(7) of this section prevents the vessel's arrival at the first port of discharge, not to exceed 90 percent of the freight shall be payable by the charterer at the time the General Sales Manager determines that such force majeure was the cause of nonarrival. Any despatch earned at loading port will be deducted pro rata from amounts reimbursed by CCC as provided in § 17.9(1). The remaining 10 percent of freight shall not be due or payable.

(5) That laydays are reversible.

(6) That in a dispute involving any rights and obligations of CCC, including rights and obligations as successor or assignee, which cannot be settled by agreement, the dispute shall not be subject to arbitration.

(e) Special charter party information required when any part of ocean freight is financed by CCC. When CCC finances any part of the ocean freight for commodities booked on charter terms, the charter party shall contain the following information:

(1) The name of each party participating in the ocean freight brokerage commission, if any, and the percentage thereof payable to each party;

(2) The name of the vessel and the name of the substitute vessel, if any. (f) Notice of arrival. Each Form CCC-106-2 will indicate whether a notice of arrival is required. A notice

of arrival, when required, must be furnished promptly by the participant or its designated agent or other source acceptable to CCC (excluding the carrier or his agent) and must include the name of the vessel, the purchase authorization number, the first port of discharge, and the date of arrival. The notice of arrival of the vessel also constitutes prima facie evidence of arrival of the cargo.

(g) Foreign-flag vessels. CCC will not finance any part of the ocean freight on foreign-flag vessel(s), either as a part of the commodity contract price or separately.

(h) U.S.-flag vessels. When a commodity is required to be shipped on privately owned U.S.-flag commercial vessel, Form CCC-106 will set forth:

(1) The rate of the ocean freight differential, if any, which the Director, Ocean Transportation Division, OGSM (or Director, New Orleans ASCS Commodity Office, for cotton), determines to exist between the prevailing foreign-flag vessel rate and the U.S.-flag vessel rate; and (2) the approximate tonnage for which CCC will authorize reimbursement of ocean freight or ocean freight differential, as appropriate.

(i) Items not eligible for CCC financing. The following costs will not be financed either separately or as part of the commodity contract price:

(1) Loading, trimming, and other related shipping expenses unless included in the ocean freight rate;

(2) Discharge costs except when in accordance with trade custom;

(3) The cost of "dead freight"; (4) Cargo dues and taxes assessed by the country of import;

(5) Surcharges assessed by steamship conferences or carriers, unless specifically authorized by the Director, Ocean Transportation Division, OGSM.

(6) General average contributions;

(7) Stevedoring overtime and vessel crew overtime;

(8) Address commissions, brokerage commissions in excess of 21⁄2 percent of the freight financed and ship's disbursements.

(j) General financing provisions. When any part of ocean freight will be financed either separately or as part

of the commodity contract price, the following shall apply:

(1) Charters and liner booking contracts must show the ocean freight rate from one loading port to one discharge port. A charter or liner booking contract may provide for an increase in rate for an additional port of loading or discharge, any alternate route or other option; CCC, however, will finance initially the lowest such rate or ocean freight differential, as appropriate. Increased amounts (if any) due because of the exercise of such option will be financed only after receipt of evidence that an option was exercised. Such increased financing shall apply to the ocean freight differential for shipments involving sales for foreign currencies, and to the full rate on long-term credit sales. If an option is exercised conclusively before the issuance of an ocean bill of lading, as shown thereon, CCC will finance the ocean freight or ocean freight differential, as appropriate, applicable to the option so exercised without further evidence that the option was exercised.

(2) When transshipment from a U.S.-flag vessel to a foreign-flag vessel occurs, CCC will finance the ocean freight or ocean freight differential, as appropriate, only to the point of transshipment, at a rate determined by the General Sales Manager, and no part of the ocean freight beyond the point of transshipment will be financed by CCC unless specifically approved by the General Sales Manager. If the commodity was transported from a U.S. port and was transshipped at another U.S. port, CCC will not finance, without prior approval of the General Sales Manager, any part of the ocean freight incurred before transshipment.

(3) The ocean freight rate eligible for CCC financing and the rate used for the U.S.-flag vessel in calculating ocean freight differential shall not exceed the following rates for the category of the vessel concerned:

(i) For commodities covered by published tariff rates-the published conference contract rate;

(ii) For other commodities (bulk commodities and other commodities for which no tariff rates are currently effective, whether carried on liners,

dry bulk carriers, or tankers)—the market rate prevailing at the time of request for approval as determined by the Director, Ocean Transportation Division, OGSM (or for cotton by the Director, New Orleans ASCS Commodity Office,) but in any event not in excess of rates charged other shippers (irrespective of booking dates) for like commodities on the voyage concerned. (4) Reimbursement will be made for ocean freight or ocean freight differential as appropriate, from loading points to discharge points at rates approved by the Director, Ocean Transportation Division, OGSM (or for cotton, by the Director, New Orleans ASCS Commodity Office), on Form CCC-106 in conformity with the preceding paragraph (j)(3) of this section. (5) Freight shall not be eligible for financing unless the vessel complies with the provisions of Pub. L. 87-266. The bank is required to obtain a certification from the carrier that the provision has been complied with but is not responsible for the truth or accuracy of the certification.

(6) For cost and freight, c.i.f., and f.a.s. sales of cotton when the financing of ocean freight differential is authorized on Form CCC-106-3 and such differential is not financed by a banking institution under a letter of credit the supplier may obtain payment for the differential on application to the New Orleans ASCS Commodity Office.

(k) Initial reimbursement for ocean freight or ocean freight differential separately financed. (1) When the Form CCC-106 states that a notice of arrival is not required and the carrier's invoice includes a certification that the contract does not provide for despatch earnings, reimbursement will be made for 100 percent of the ocean freight or ocean freight differential, as appropriate, on presentation of required documents.

(2) When the Form CCC-106 indicates that a notice of arrival is required and the carrier's invoice includes a certification that the contract does not provide for despatch earnings, reimbursement for advances up to 90 percent of the ocean freight or ocean freight differential, as appropriate, may be obtained before arrival at the first port of discharge if the sup

plier furnishes CCC financial coverage in the form of an acceptable letter of credit from a U.S. bank.

(3) When the Form CCC-106 indicates that a notice of arrival is not required and the carrier's contract provides for despatch earnings, reimbursement for 90 percent of the ocean freight or ocean freight differential, as appropriate, will be made on presentation of required documents.

(4) When the Form CCC-106 indicates that a notice of arrival is required and the charter party provides for despatch earnings, reimbursement for advances made to the supplier of ocean transportation up to 90 percent of ocean freight or ocean freight differential, as appropriate, may be obtained prior to arrival at the first port of discharge if the supplier furnishes CCC financial coverage in the form of an acceptable letter of credit from a U.S. bank.

(5) The amount of financial coverage required by CCC under paragraphs (k) (2) and (4) of this section may be computed as follows:

(i) If a copy of an ocean bill of lading is not furnished CCC, 100 percent of the ocean freight or ocean freight differential, as appropriate, on the basis of the tonnage stated in the charter party (without tolerance) times the ocean freight rate or ocean freight differential rate, as appropriate, shown on the related Form CCC-106;

(ii) If a copy of an ocean bill of lading is furnished CCC, 90 percent of the ocean freight or ocean freight differential, as appropriate, on the basis of the tonnage shown on the related ocean bill of lading times the approved ocean freight rate or ocean freight differential rate, as appropriate, shown on the related Form CCC-106.

(6) On receipt of an acceptable letter of credit, the Controller will issue a waiver of the notice of arrival which is required under § 17.13(d)(2) for initial reimbursement of 90 percent of the ocean freight or ocean freight differential, as appropriate.

(7) The General Sales Manager will waive the requirement for the notice of arrival required by Form CCC-1062 by a written notice to the supplier of ocean transportation on the receipt of evidence satisfactory to the General

Sales Manager that the vessel is lost or unable to proceed to destination after completion of loading as a result of one or more of the following causes: Damage caused by perils of the sea or other waters; collisions; wrecks; stranding without the fault of the carrier; jettison; fire from any cause; Act of God; public enemies or pirates; arrest or restraint of princes, rulers, or peoples without the fault of the supplier of ocean transportation; wars; public disorders; captures; or detention by public authority in the interest of public safety. Such waiver may be substituted for the notice of arrival and in such cases reimbursement will be made for 90 percent of the ocean freight or ocean freight differential, as appropriate, or if the General Sales Manager determines that less than 90 percent of the ocean freight is payable to the carrier, reimbursement will be made for a corresponding percentage of the ocean freight or ocean freight differential, as appropriate, as provided in paragraph (k)(8) of this section.

(8) When the General Sales Manager determines that a force majeure has occurred, as specified in the paragraph (k)(7) of this section, the following shall apply:

(i) For shipments under long-term credit sales, not to exceed 90 percent of the ocean freight shall be eligible for reimbursement by CCC. Despatch shall be deducted in determining amounts to be reimbursed by CCC. The 10 percent balance of ocean freight shall not be eligible for financing.

(ii) For shipments under sales for foreign currencies, not to exceed 90 percent of the ocean freight differential shall be eligible for reimbursement by CCC. A pro rata portion of despatch will be deducted in determining amount to be reimbursed by CCC. The 10 percent balance of the ocean freight differential shall not be eligible for financing.

(9) The determination of a force majeure by the General Sales Manager shall not relieve the participant from its obligation under the Agricultural Commodities Agreement to pay CCC, when due, the dollar amount of ocean freight, plus interest (exclusive of

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