ECS has 27 years of combined experience serving as the independent third-party administrator for tariff rate quotas (“TRQs”).
A TRQ is a combination of (1) a tariff or customs duty paid on imports of a good, and (2) an import quota specifying a fixed quantity of a good that is allowed to be imported. A TRQ allows a certain fixed quantity of a good to be imported duty-free or at a reduced duty. Quantities that exceed the fixed quota amount are subject to the higher tariff rate. ECS’ experience in this field has involved three non-profit entities that were formed to administer tariff-rate quotas:
The Association for the Administration of Rice Quotas, Inc. (AARQ) manages the TRQs for milled and brown rice granted by the European Union (EU) to the United States (U.S.) under the U.S.—EU Enlargement Agreement of July 1996. ECS has served as the administrator for AARQ since 2003.
Colombia Rice Export Quota, Inc. (COL-RICE) manages the tariff-rate quota for rice established by the U.S.—Colombia Trade Promotion Agreement (TPA) of May 2012. ECS has served as the administrator for COL-RICE since 2013.
Colombia Poultry Export Quota, Inc. (COLOM-PEQ) manages the tariff-rate quota for chicken leg quarters established by the U.S.—Colombia Trade Promotion Agreement (TPA) of May 2012. ECS served as the administrator for COLOM-PEQ from 2012—2016.
Each of these entities operates as an Export Trading Company (ETC) and has received an Export Trade Certificate of Review (ETCR) from the U.S. Department of Commerce. The ETCR provides limited antitrust protection for the export activities of these entities. In addition, ECS assisted all three entities in obtaining tax-exempt status under section 501(c)(6) of the Internal Revenue Code.
Association for the Administration of Rice Quotas, Inc. (AARQ)
Formed in 1997, AARQ is a not-for-profit Delaware membership corporation consisting of 31 U.S. rice millers or exporters. Currently in its 16th year as the TRQ administrator ECS bears responsibility for administering the AARQ TRQ system subject to the oversight and supervision of the AARQ Board of Directors. ECS has successfully held three auctions per year allocating the TRQs through an open tender process. TRQ certificates are issued to successful bidders and the European Commission is notified of the issuance of all TRQ certificates.
Of the net proceeds received from the AARQ auctions 22 percent is distributed annually to The Rice Foundation for research and development projects for the improvement of U.S. rice production. The remaining net proceeds are distributed back to AARQ’s member companies based on their percentage shares by volume of exports worldwide.
As AARQ administrator, ECS performs many other tasks including (a) maintaining AARQ membership records, (b) preparing AARQ’s internal financial statements, (c) arranging and facilitating an audit, (d) arranging and facilitating the annual preparation and filing of the IRS Form 990 and Form 990-N, (e) preparing for and attending the annual AARQ Members Meeting and Board of Directors Meeting, (f) presenting an oral report at the annual AARQ meeting, (g) maintaining records of operating expenses and authorizing payment of such expenses, (h) reconciling monthly financial statements with income received and expenditures, (i) renewing the insurance policy for AARQ’s directors and officers, (j) compiling confidential member data for annual reporting requirements to the U.S. Department of Commerce, (k) facilitating arbitration of disputes, (l) responding to member requests, (m) reviewing applications for membership, and (n) consulting with the AARQ Executive Committee and AARQ’s counsel as needed.
Colombia Rice Export Quota, Inc. (COL-RICE)
COL-RICE is a not-for-profit Delaware corporation formed in 2012 by the rice industries of the Republic of Colombia and the United States to administer the TRQ for rice established by the TPA. COL-RICE has nine member companies: the six U.S. state chartered rice research boards, the USA Rice Millers’ Association, the USA Rice Merchants’ Association, and Federación Nacional de Arroceros de Colombia (FEDEARROZ).
Currently in its sixth year as COL-RICE administrator ECS bears responsibility for administering the COL-RICE TRQ system subject to the oversight and supervision of the COL-RICE Board of Directors. ECS has successfully held three auctions per year allocating the TRQs through an open tender process. TRQ certificates are issued to successful bidders and the Colombian Customs, Dirección de Impuestos y Aduanas Nacionales (DIAN), is notified of the issuance of all TRQ certificates.
Of the net proceeds received from the COL-RICE auctions 50 percent is distributed to the six U.S. state chartered rice research boards to fund rice research projects and 50 percent is distributed to the Colombian member FEDEARROZ to fund market development and/or competitiveness projects for the benefit of the rice production sector of the Republic of Colombia.
As COL-RICE administrator ECS’ primary functions are: (1) auction administration, (2) accounting functions, (3) distribution of tender proceeds, net of operating expenses, (4) maintaining the COL-RICE web site, (5) periodic reporting to the Board of Directors, (6) association management functions, and (7) maintenance of data confidentiality.