[The Disposition of Certain Temporary Excess Funds]

The Department of the Treasury requested the advice of GAO on the disposition of certain temporary excess funds now held by the International Natural Rubber Organization (INRO), pursuant to the International Natural Rubber Agreement, and available for distribution to several member countries, including the United States. The funds are currently available for return to the original member countries either: (1) because additional members have joined the agreement and their contributions have increased the total organization funds beyond what is immediately necessary for current buffer stock options; or (2) because the United States' proportionate share has been reduced based on a comparison of the amount of rubber it has imported in relation to the amount imported by other member countries. It is also possible that proceeds from the sale of rubber might be returned to the United States, although it is not clear that INRO has the authority to do so prior to the termination of the agreement. INRO has offered its members three options for the distribution of excess funds which include: (1) the return of the funds to the member country; (2) the retention of the funds in an account which will be invested by INRO for the benefit of the member governments; or (3) the establishment of a separate account for the particular member's excess funds, over which the member will retain investment control. In the opinion of GAO, Treasury may legally exercise any of the three options. If the first option is exercised, the returned funds may be recredited to the appropriation account only if they represent a reduction in the U.S. contribution due to increased membership in INRO or the reduction of the U.S. trade share. If any portion of the repayment is derived from the sale of rubber, the entire repayment must be deposited in the Treasury as miscellaneous receipts. The second and third options present no legal difficulties, since INRO would maintain custody of the funds. However, any funds paid out to the United States prior to the termination of the agreement as a result of the investment, such as earnings or interest, must be deposited as miscellaneous receipts.