274 



One arguflient for utilizing our existing authorities Is that they are 

 operational and that they contain specifically mandated restrictions 

 against cargo preference requirements. New legislation would 

 undoubtedly lead to demands to expand cargo preference Into these 

 comnerciai programs. It would add a huge cost to either the U.S. 

 Treasury or to Russia — and In the latter case would oiean a loss in the 

 U.S. competitive advantage In maintaining that vast market. 



We also must be aware of whether the programs we adopt put us at a 

 competitive advantage or disadvantage. I hardly need remind you that 

 the European Community (EC) has very large stocks of grain, a direct 

 credit program that is operational out of Brussels specifically 

 targeted to Russia, and recently-announced plans to bring Russia and 

 the other Independent states of the FSU under a free trade agreement. 

 The EC objective is to bring all of East Europe under the restrictive 

 trade regime of the Community. In the case of agriculture, this would 

 close off U.S. farmers from the dynamic growth opportunities In the 

 FSU, and I am sure that is one of the objectives of the EC. 



A Proposal to Clarify GSM Credit Worthiness 



To utilize QSU 103 for Russia would be assisted by either clarifying 

 amendments or Congressional resolutions to current law: 



First, the statutory minimum annual level for GSM 103 Is $500 million 

 while GSM 102 Is $5 billion. I would recommend that a total minimum 

 amount be allocated to the two programs, giving USDA the flexibility 

 to determine what share should be In 102 or 103. Clearly, the GSM 102 

 program will remain the dominant commercial credit vehicle, but 

 without programs like Russia, the amount utilized during the fiscal 

 year will be only around half the authorized minimum that oiust be 

 offered or available. 



Second, Congress needs to clarify Its intent in the application of 

 credit worthiness requirements. At this Juncture It is placing a 

 straight Jacket on the administration of the Export Credit Guarantee 

 programs. Some Congressional staff argue that the language was 

 sufficiently vague to allow the Secretary of Agriculture great 

 discretion in determining whether to issue a credit or not. 



However, this is hardly the case in practice. I believe that there 

 needs to be clarification and some differentiation between what Is 

 considered the criteria for assessing credit worthiness under short vs 

 intermediate-term programs. 



Certainly, It could be useful to recognize that different economic 

 conditions in the short and long term represent a different credit 

 worthiness test, if a country is involved In an 



internationally-supported economic restructuring and an official debt 

 rescheduling, an argument could actually be made that the 

 creditworthiness risk Is lower on a longer-term loan than a short-tern 

 program. 



