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B-204391 1 (1981-09-18)

handle is hein.gao/gaobabjbc0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON D.C. 20548 B-204391 September 18, 1981 Do not make available to Public readng Tj- The Honorable Walter B. Jones Chairman, Committee on Merchant Marine & Fisheries House of Representatives Dear Mr. Chairman: This responds to your request that we determine whether the cargo preference statutes apply to the sale by the Com- modity Credit Corporation (CCC) of 100,000 metric tons of butter to the New Zealand Dairy Board (NZDB) under a con- tract signed August 5, 1981. The NZDB is described in the contract as a quasi-governmental agency of the Government of New Zealand. Of concern is the term of the contract which provides for payment 180 days from the date of the CCC in- voice, and the absence of a contract requirement that ship- ment be made on United States flag vessels. The resolution of the questions raised depends on (1) whether the sale properly is considered a commercial transaction and (2) whether the 180 day payment period is a loan or an extension of credit. To assist us in the preparation of our response, we requested comments from the Department of Agriculture (Agriculture) and the Maritime Administration (MarAd). Based on the information presented, we believe the cargo preference statutes do not apply to the sale. The Statutes The principal cargo preference statute (the Act), 46 U.S.C. S 1241(b) (1976), provides in part that: Whenever the United States shall * * * furnish to or for the account of any foreign nation without provision for reimbursement any equipment, materials, or commodities, * * * or shall advance funds or credits * * * in connection with the furnishing of such equipment, materials, or commodities, the appropriate agency or agencies shall take such steps as may be necessary and practica- ble to assure that at least 50 per centum of * * * such equipment, materials or com- modities * * * which may be transported

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