Background on Faircloth Tobacco Export Money

[Robert Weissman <rob@essential.org>]

Following is a note from John Bloom of the National Center for
Tobacco-Free Kids explaining exactly what it is that Sen. Faircloth has
been trying to win by way of tobacco export promotion subsidies. We should
probably know today how this fight turned out.

Robert Weissman
Essential Information			|   Internet:	rob@essential.org


Senator Lauch Faircloth and other pro-tobacco Members of Congress are
attempting to insert language into the Omnibus Appropriations Bill to
explicitly overturn Congress's 1993 decision to disallow export credit
guarantees for tobacco.  

The export credit guarantee program and other export promotions were
discontinued for tobacco as a result of language authored by
then-Representative Dick Durbin in 1993.  The restriction helps bring
U.S. export policy in line with its longstanding health policy.  It has
been included in every Agriculture Appropriations bill since then.  The
Durbin language was never challenged since the House had previously
voted in 1992 by an overwhelming and bipartisan margin (331-82) to
prohibit assistance for tobacco in another export promotion program.  

These earlier actions reflect the widely shared belief in Congress and
among the American public that tobacco export promotion is an
inappropriate use of taxpayer funds.  Another contributing factor was
that there had been extensive fraud and abuse of tobacco export
guarantees, and losses of tens of millions of dollars.

Export loan guarantees are administered by the Foreign Agricultural
Service at USDA.  Under these programs, private U.S. financial
institutions extend financing at interest rates which are at prevailing
market levels to countries that want to purchase U.S. agricultural
exports but are short of cash. The U.S. Government, or more
specifically, the Commodities Credit Corporation (CCC), assumes the risk
of default on payments by the foreign purchasers on loans for U.S. farm
exports. 	 

Senator Faircloth's proposal specifically involves the "GSM-102"
program, which guarantees repayment of short-term financing (6 months to
3 years) extended to eligible countries that purchase U.S. farm
products.  A related program, GSM-103, provides intermediate-term
financing of up to 10 years.