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QUESTION FROM HON. COMBEST: 

 ISSDE; 



The Texas Cotton Association has raised a issue concerning the GSH program and 

 entry certificates for exports to Mexico. OSDA has stated that entry 

 certificates are required to assure that the coaaodity was actually exported 

 before disbursing federal funds. However, this does not address the Texas 

 Cotton Association's problem that in Mexico the entry certificate is issued only 

 after the connodlty has entered Mexico. Therefore, exporters lose control of 

 the coonodity exported before the exporter receives all the documents necessary 

 to receive pajnsent. If an entry certificate is never issued, the exporter runs 

 the risk of nonpayment although all terms of the letter of credit have been met. 



QOESTION; 



What advice can you give to the members of the Texas Cotton Association to 

 remedy this problem? 



ANS9ER: 



It is not a GSM-102/103 program requirement that the entry certificate be 

 submitted in order for the U.S. bank to pay the exporter. However, for 

 shipments by rail or truck, in order to file a claim on CCC, the bank must 

 submit to CCC a copy of the entry certificate. Thus, it is understandable that 

 the U.S. bank may require the certificate, or other arrangements to protect its 

 financial interests, before paying the exporter. 



It is our understanding that the official Mexican entry "certificate 

 ("Pedimento") can normally be obtained promptly (within a few days) If the 

 services of a qualified Mexican customs agent are utilized (some U.S. agents 

 have standing arrangements with Mexican counterparts). Ve also understand that 

 another technique to ensure prompt payment by the U.S. bcuik is for U.S. 

 exporters to provide the U.S. bank with a letter of indemnity. This letter may 

 be used in the event the exporter fails to provide the entry certificate at the 

 time a default occurs and the bank must claim on CCC. 



?hile it would be inappropriate for CCC to advise exporters how they might best 

 deal with this question, I hope that these observations may be of Interest. 



In general, I would observe that we have not had many complaints from exporters 

 about payment problems relating to the entry certificate Issue. If the Texas 

 Cotton Association has specific recommendations concerning CCC program 

 regulations, we would be pleased to receive them. 



FAS/EC/CCCOD/Robert Slmpson/lw/720-62 11/11-29-93 



cc: Goldthwalt, Vhiteman, McElvain, Hawkins, Chewning 



