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page 5 

 FAS Mission 

 Richard Krajeck 

 November 10, 1993 



2) In the process of writing and getting approval for marketing plans, PAS and 

 the Council often reach agreement on exceptional circumstances that require a 

 different interpretation of the regulations. These negotiated agreements are 

 often challenged by the auditors months after the activities are completed. 



As you can see from these examples, trying to comply with the rules is nearly 

 impossible. We have already begun the planning process for our Fiscal Year 1995 

 marketing plans. We must finalize those plans by June of 1994, which means 

 nearly 15 months before some of the activities will be implemented. There is no 

 way that we can anticipate every market opportunity, every change that may happen 

 to render a proposed project either unnecessary or the need to change it to 

 better address market conditions. But, vre are now into carrying out projects 

 which may not achieve their maximum impact because the rules prevent us from 

 changing it. 



We need FAS to have strong internal controls that everyone understemds and 

 implements judiciously. Just that simple change could free up staff time and 

 resources to increase overseas programming. But most Ixaportantly, we need 

 consistency within FAS. We need to be given broad program direction that 

 provides for audits but encourages flexibility to meet changing market 

 conditions. 



New Approaches/Programs 



One of the most effective tools that FAS has at its disposal for increasing U.S. 

 agricultural exports has been the GSM program. In many emerging markets the 

 difference between buying from the United States or going to a competitor is the 

 availability of credit. Mexico is an excellent example of the benefits arising 

 from these programs. With the assistance of the GSM-102 program the Onited 

 States has been able to develop our third most important marlcet for agricultural 

 exports. 



But the world economy has changed rapidly during the past decade and the GSM 

 program is no longer able to meet all the challenges in this new credit 

 environment. This is especially true in Russia and the republics of the Former 

 Soviet Union. In order to keep a U.S. presence in these markets and build toward 

 the day they return to being cash customers we need credit programs that take 

 into account the increased risk and uncertainty of these countries. One action 

 that FAS could immediately tcUce is to return to 100 percent principal guarantees 

 rather them the current 98 percent if this is to remain a commercial program. 



If it is decided to take Russia and the former republics out of the commercial 

 GSM programs, then we need to look at a direct credit program such as direct 

 loans using the CCC borrowing authority. 



The credit worthiness criteria also needs to be revisited. We understand the 

 need for a review process to assist in the determination of reasonable levels of 

 credit, but this must be balanced against market development potential and policy 

 objectives. 



As countries move toward greater market liberalization we need to increase the 

 private sector lines of credit to countries in the transition from state trading. 

 This will support their privatization and trade liberalization efforts and 

 strengthen the market for U.S. agriculture. 



