Central America Poultry Export Quota, Inc.--FAQ

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A PDF of the CA-PEQ FAQs
is available here.

CA-PEQ Preguntas frecuentes
en Español.

CA-PEQ Frequently Asked Questions
What is CA-PEQ?
Central America Poultry Export Quota, Inc. is a not-for-profit corporation formed to administer the chicken leg quarter quota negotiated in the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) between the United States and four Central American countries in 2005. The company operates as an Export Trading Company (ETC) and has received an Export Trade Certificate of Review from the U.S. Department of Commerce covering its activities in administering the quota.

How much is the quota and what are the tariffs?
The quota volume consists of 21,809 MT for 2008. Guatemala was allocated 100% of the quota in 2006 and 2007. In 2008, specific portions of the quota will be allocated among four Central American countries. El Salvador will receive 464 MT, Honduras will receive 534 MT, Nicaragua will receive 317 MT and Guatemala will receive 20,494 MT. Chicken leg quarters within the quota will enter the importing country duty free. Over quota imports will pay a tariff set by the importing country which can be up to 164.4%. The over-quota tariff will gradually be reduced and eliminated by 2023.

How does the auction operate?
The tariff rate quota for chicken leg quarters is allocated through an open and public auction system. Bids are submitted specifying the total amount (in 1 metric ton increments) of quota eligibility the bidder seeks, and the price (minimum $22.04/metric ton) the bidder is offering. The bidders submitting the highest priced bids — irrespective of the volume they seek — are awarded the amount of quota they seek until the full amount of quota available in the auction has been allocated.

What is an Export Trading Company (ETC)?
An Export Trading Company is “… a person, partnership, association or similar organization…organized and operating principally for the purpose of (A) exporting goods…produced in the United States; or (B) facilitating the exports of goods produced in the United States…by providing one or more export trade services.” » [15 U.S.C § 4002(a)(4)].

Who are the members of CA-PEQ?
Members of CA-PEQ are national trade associations representing the poultry industries of The United States, El Salvador, Guatemala, Honduras and Nicaragua. The Company is governed by an eight-member Board of Directors appointed by these Associations.

How ‘fair’ is the system for companies not on the Board?
The system ensures fairness to all persons and provides no special benefits to companies who have a representative on the CA-PEQ Board. The Certificate of Review issued by the Department of Commerce that entitles CA-PEQ to operate under the Export Trading Company Act specifically stipulates that members of the Board of Directors may not be involved in determining the results of any auction or in issuing export certificates. Only the CA-PEQ Administrator, its independent auditors and legal counsel can be involved in those determinations. The duties of the Board of Directors are to hire an Administrator, to provide general guidance about trade in poultry that aids the Administrator in developing the auction system, and to ensure that the proceeds of the auction are disbursed in accordance with the terms of the ETC certificate of review. In addition, CA-PEQ will have to provide annual reports about its operations to the Department of Commerce and is subject to oversight by the Department of Commerce.

What security measures are in place to guarantee transparency and fairness?
The Department of Commerce, in consultation with the Justice Department, has stipulated a number of requirements that ensure fairness and transparency in the Certificate of Review issued to CA-PEQ that enables it to operate under the terms of the Export Trading Company Act. CA-PEQ is required to provide annual reports to the U.S. government and is subject to Department of Commerce oversight.

What do companies bid on?
Interested parties bid on a certificate that gives them the right to import chicken leg quarters duty free into El Salvador, Guatemala, Honduras and Nicaragua. Under the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) importing countries are authorized to establish an out-of-quota duty of up to 164.4%.

What is the minimal bid amount, increments, and limits?
Bid can be submitted in units of metric tons, with a minimum bid of one metric ton, and a minimum bid price of $22.04 US dollars per metric ton. Bids should not be submitted in amounts that include fractions of a cent. Bids must be accompanied by a security deposit.

How much is the security deposit?
Bidders in the auction must submit, with their bid, acceptable payment security in the amount of $50,000 or the bid amount, whichever is less.

What is an acceptable form of payment for the security deposit?
Bidders can present their security deposit by wire transfer of funds to CA-PEQ, Inc., verifiable irrevocable Letter of Credit for the benefit of CA-PEQ issued by an FDIC-insured U.S. bank and advised through Chevy Chase Bank, or Cashier’s check payable to “Central America Poultry Export Quota, Inc.”

What happens if a winning bidder can’t use the total amount of the quota that it obtains in the auction?
Quota certificates or portions thereof, are fully transferable. If a party cannot use the entire amount of the quota that it obtained in the auction, it can sell or transfer that portion to another exporter, and provisions regarding such transfers are included in the Certificate of Review. Rules for transfer of the certificates can be reviewed on this website.

What will be the quota amount and auction dates for 2008?
The quota will be 21,809 MT for 2008, divided among the 4 participant countries (El Salvador, Guatemala, Honduras and Nicaragua). The countries will receive respectively 464 MT, 20,494 MT, 534 MT and 317 MT. Auctions will be held throughout the year, according to a calendar found on CAPEQ’s website.

When will the awarded quota expire?
Certificates issued in the auctions will be valid for entry into their respective importing countries through December 31 of the year in which they were issued.

What are the auction proceeds used for?
Proceeds from the auction will be used first to cover the administrative cost of the auction. Of the remaining proceeds, fifty percent will be used to fund export market development, educational, scientific and technical projects to benefit the United States poultry industry and fifty percent will be used to fund market development, educational, scientific and technical projects to benefit the poultry industries of El Salvador, Guatemala, Honduras and Nicaragua.

Central America Poultry Export Quota, Inc.
c/o DTB Associates, LLP
901 New York Avenue, N.W.
Third Floor
Washington, D.C. 20001
Office phone: 1-202-661-7092 Office fax: 1-202-661-7091
E-mail: Administrator@CA-PEQ.org www.ca-peq.org