[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1654 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 1654

            To renew the Generalized System of Preferences.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 17, 1995

 Mr. Crane (for himself and Mr. Rangel) introduced the following bill; 
         which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
            To renew the Generalized System of Preferences.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``GSP Renewal Act of 1995''.

SEC. 2. GENERALIZED SYSTEM OF PREFERENCES.

    (a) In General.--Title V of the Trade Act of 1974 is amended to 
read as follows:

              ``TITLE V--GENERALIZED SYSTEM OF PREFERENCES

``SEC. 501. AUTHORITY TO EXTEND PREFERENCES.

    ``The President may provide duty-free treatment for any eligible 
article from any beneficiary developing country in accordance with the 
provisions of this title. In taking any such action, the President 
shall have due regard for--
            ``(1) the effect such action will have on furthering the 
        economic development of developing countries through the 
        expansion of their exports;
            ``(2) the extent to which other major developed countries 
        are undertaking a comparable effort to assist developing 
        countries by granting generalized preferences with respect to 
        imports of products of such countries;
            ``(3) the anticipated impact of such action on United 
        States producers of like or directly competitive products; and
            ``(4) the extent of the beneficiary developing country's 
        competitiveness with respect to eligible articles.

``SEC. 502. DESIGNATION OF BENEFICIARY DEVELOPING COUNTRIES.

    ``(a) Authority To Designate Countries.--
            ``(1) Beneficiary developing countries.--The President is 
        authorized to designate countries as beneficiary developing 
        countries for purposes of this title.
            ``(2) Least-developed beneficiary developing countries.--
        The President is authorized to designate countries as least-
        developed beneficiary developing countries for purposes of this 
        title, based on the considerations in section 501 and 
        subsection (c) of this section.
    ``(b) Countries Ineligible for Country Designation.--
            ``(1) Specific countries.--The following countries may not 
        be designated as beneficiary developing countries for purposes 
        of this title:
                    ``(A) Australia.
                    ``(B) Canada.
                    ``(C) European Union member states.
                    ``(D) Iceland.
                    ``(E) Japan.
                    ``(F) Monaco.
                    ``(G) New Zealand.
                    ``(H) Norway.
                    ``(I) Switzerland.
            ``(2) Other bases for ineligibility.--The President shall 
        not designate any country a beneficiary developing country 
        under this title if any of the following applies:
                    ``(A) Such country is a Communist country, unless--
                            ``(i) the products of such country receive 
                        nondiscriminatory treatment,
                            ``(ii) such country is a WTO Member (as 
                        such term is defined in section 2 of the 
                        Uruguay Round Agreements Act,) and a member of 
                        the International Monetary Fund, and
                            ``(iii) such country is not dominated or 
                        controlled by international communism.
                    ``(B) Such country is a party to an arrangement of 
                countries and participates in any action pursuant to 
                such arrangement, the effect of which is--
                            ``(i) to withhold supplies of vital 
                        commodity resources from international trade or 
                        to raise the price of such commodities to an 
                        unreasonable level, and
                            ``(ii) to cause serious disruption of the 
                        world economy.
                    ``(C) Such country affords preferential treatment 
                to the products of a developed country, other than the 
                United States, which has, or is likely to have, a 
                significant adverse effect on United States commerce.
                    ``(D)(i) Such country--
                            ``(I) has nationalized, expropriated, or 
                        otherwise seized ownership or control of 
                        property, including patents, trademarks, or 
                        copyrights, owned by a United States citizen or 
                        by a corporation, partnership, or association 
                        which is 50 percent or more beneficially owned 
                        by United States citizens,
                            ``(II) has taken steps to repudiate or 
                        nullify an existing contract or agreement with 
                        a United States citizen or a corporation, 
                        partnership, or association which is 50 percent 
                        or more beneficially owned by United States 
                        citizens, the effect of which is to 
                        nationalize, expropriate, or otherwise seize 
                        ownership or control of property, including 
                        patents, trademarks, or copyrights, so owned, 
                        or
                            ``(III) has imposed or enforced taxes or 
                        other exactions, restrictive maintenance
                         or operational conditions, or other measures 
with respect to property, including patents, trademarks, or copyrights, 
so owned, the effect of which is to nationalize, expropriate, or 
otherwise seize ownership or control of such property,
                unless clause (ii) applies.
                    ``(ii) This clause applies if the President 
                determines that--
                            ``(I) prompt, adequate, and effective 
                        compensation has been or is being made to the 
                        citizen, corporation, partnership, or 
                        association referred to in clause (i),
                            ``(II) good faith negotiations to provide 
                        prompt, adequate, and effective compensation 
                        under the applicable provisions of 
                        international law are in progress, or the 
                        country described in clause (i) is otherwise 
                        taking steps to discharge its obligations under 
                        international law with respect to such citizen, 
                        corporation, partnership, or association, or
                            ``(III) a dispute involving such citizen, 
                        corporation, partnership, or association over 
                        compensation for such a seizure has been 
                        submitted to arbitration under the provisions 
                        of the Convention for the Settlement of 
                        Investment Disputes, or in another mutually 
                        agreed upon forum,
                and the President promptly furnishes a copy of such 
                determination to the Senate and House of 
                Representatives.
                    ``(E) Such country fails to act in good faith in 
                recognizing as binding or in enforcing arbitral awards 
                in favor of United States citizens or a corporation, 
                partnership, or association which is 50 percent or more 
                beneficially owned by United States citizens, which 
                have been made by arbitrators appointed for each case 
                or by permanent arbitral bodies to which the parties 
                involved have submitted their dispute.
                    ``(F) Such country aids or abets, by granting 
                sanctuary from prosecution to, any individual or group 
                which has committed an act of international terrorism.
                    ``(G) Such country has not taken or is not taking 
                steps to afford internationally recognized worker 
                rights to workers in the country (including any 
                designated zone in that country).
        Subparagraphs (D), (E), (F), and (G) shall not prevent the 
        designation of any country as a beneficiary developing country 
        under this title if the President determines that such 
        designation will be in the national economic interest of the 
        United States and reports such determination to the Congress 
        with the reasons therefor.
    ``(c) Factors Affecting Country Designation.--In determining 
whether to designate any country as a beneficiary developing country 
under this title, the President shall take into account--
            ``(1) an expression by such country of its desire to be so 
        designated;
            ``(2) the level of economic development of such country, 
        including its per capita gross national product, the living 
        standards of its inhabitants, and any other economic factors 
        which the President deems appropriate;
            ``(3) the extent to which other major developed countries 
        are extending generalized preferential tariff treatment to such 
        country;
            ``(4) the extent to which such country has assured the 
        United States that it will provide equitable and reasonable 
        access to the markets and basic commodity resources of such 
        country and the extent to which such country has assured the 
        United States that it will refrain from engaging in 
        unreasonable export practices;
            ``(5) whether such country is providing adequate and 
        effective protection of intellectual property rights;
            ``(6) the extent to which such country has taken action 
        to--
                    ``(A) reduce trade distorting investment practices 
                and policies (including export performance 
                requirements); and
                    ``(B) reduce or eliminate barriers to trade in 
                services; and
            ``(7) whether or not such country has taken or is taking 
        steps to afford to workers in that country (including any 
        designated zone in that country) internationally recognized 
        worker rights.
A country may be found to not provide adequate and effective protection 
of intellectual property rights under paragraph (5) and section 
503(d)(2)(B), notwithstanding the fact that it may be in compliance 
with the specific obligations of the Agreement on Trade-Related Aspects 
of Intellectual Property Rights referred to in section 101(d)(15) of 
the Uruguay Round Agreements Act.
    ``(d) Withdrawal, Suspension, or Limitation of Country 
Designation.--
            ``(1) In general.--The President may withdraw, suspend, or 
        limit the application of the duty-free treatment accorded under 
        this title with respect to any country. In taking any action 
        under this subsection, the President shall consider the factors 
        set forth in section 501 and subsection (c) of this section.
            ``(2) Changed circumstances.--The President shall, after 
        complying with the requirements of subsection (f)(2), withdraw 
        or suspend the designation of any country as a beneficiary 
        developing country if, after such designation, the President 
        determines that as the result of changed circumstances such 
        country would be barred from designation as a beneficiary 
        developing country under subsection (b)(2). Such country shall 
        cease to be a beneficiary developing country on the day on 
        which the President issues an Executive order or Presidential 
        proclamation revoking the designation of such country under 
        this title.
    ``(e) Mandatory Graduation of Beneficiary Developing Countries.--If 
during any calendar year the official statistics of the International 
Bank for Reconstruction and Development demonstrate that a beneficiary 
developing country has become a `high income' country, as defined by 
such Bank, then the President shall terminate the designation of such 
country as a beneficiary developing country for purposes of this title, 
effective on the day after December 31 of the year following such 
calendar year.
    ``(f) Congressional Notification.--
            ``(1) Notification of designation.--(A) Before the 
        President designates any country as a beneficiary developing 
        country under this title, the President shall notify the 
        Congress of the President's intention to make such designation, 
        together with the considerations entering into such decision.
            ``(B) At least 60 days before the President designates any 
        country as a least-developed beneficiary developing country, 
        the President shall notify the Congress of the President's 
        intention to make such designation.
            ``(2) Notification of termination.--If the President has 
        designated any country as a beneficiary developing country 
        under this title, the President shall not terminate such 
        designation unless, at least 60 days before such termination, 
        the President has notified the Congress and has notified such 
        country of the President's intention to terminate such 
        designation, together with the considerations entering into 
        such decision.

``SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES.

    ``(a) Eligible Articles.--
            ``(1) Designation.--
                    ``(A) In general.--Except as provided in subsection 
                (b), the President is authorized to designate articles 
                as eligible articles for all beneficiary developing 
                countries for purposes of this title by Executive order 
                or Presidential proclamation after receiving the advice 
                of the International Trade Commission in accordance 
                with subsection (e).
                    ``(B) Least-developed beneficiary developing 
                countries.--Except as provided in subsection (b), the 
                President is authorized to designate additional 
                articles as eligible articles only for countries 
                designated as least-developed beneficiary developing 
                countries under section 502(a)(2) if, after receiving 
                the advice of the International Trade Commission in 
                accordance with subsection (e) of this section, the 
                President determines that such articles are not import-
                sensitive in the context of imports from least-
                developed beneficiary developing countries.
                    ``(C) Three-year rule.--If, after receiving the 
                advice of the International Trade Commission under 
                subsection (e), an article has been formally considered 
                for designation as an eligible article under this title 
                and denied such designation, such article may not be 
                reconsidered for such designation for a period of three 
                years after such denial.
            ``(2) Rule of origin.--
                    ``(A) General rule.--The duty-free treatment 
                provided under this title shall apply to any eligible 
                article which is the growth, product, or manufacture of 
                a beneficiary developing country if--
                            ``(i) that article is imported directly 
                        from a beneficiary developing country into the 
                        customs territory of the United States; and
                            ``(ii) the sum of--
                                    ``(I) the cost or value of the 
                                materials produced in the beneficiary 
                                developing country or any two or more 
                                countries which are members of the same 
                                association of countries which is 
                                treated as one country under section 
                                506(2), plus
                                    ``(II) the direct costs of 
                                processing operations performed in such 
                                beneficiary developing country or such 
                                member countries,
                is not less than 35 percent of the appraised value of 
                such article at the time it is entered.
                    ``(B) Exclusions.--An article shall not be treated 
                as the growth, product, or manufacture of a beneficiary 
                developing country by virtue of having merely 
                undergone--
                            ``(i) simple combining or packaging 
                        operations, or
                            ``(ii) mere dilution with water or mere 
                        dilution with another substance that does not 
                        materially alter the characteristics of the 
                        article.
            ``(3) Regulations.--The Secretary of the Treasury, after 
        consulting with the United States Trade Representative, shall 
        prescribe such regulations as may be necessary to carry out 
        paragraph (2), including, but not limited to, regulations 
        providing that, in order to be eligible for duty-free treatment 
        under this title, an article--
                    ``(A) must be wholly the growth, product, or 
                manufacture of a beneficiary developing country, or
                    ``(B) must be a new or different article of 
                commerce which has been grown, produced, or 
                manufactured in the beneficiary developing country.
    ``(b) Articles That May Not Be Designated As Eligible Articles.--
            ``(1) Import sensitive articles.--The President may not 
        designate any article as an eligible article under subsection 
        (a) if such article is within one of the following categories 
        of import-sensitive articles:
                    ``(A) Textile and apparel articles which were not 
                eligible articles for purposes of this title on January 
                1, 1994.
                    ``(B) Watches, except those watches that the 
                President specifically determines, after public notice 
                and comment, will not cause material injury to watch or 
                watch band, strap, or bracelet manufacturing and 
                assembly operations in
                 the United States or the United States insular 
possessions.
                    ``(C) Import-sensitive electronic articles.
                    ``(D) Import-sensitive steel articles.
                    ``(E) Footwear, handbags, luggage, flat goods, work 
                gloves, and leather wearing apparel which were not 
                eligible articles for purposes of this title on January 
                1, 1995.
                    ``(F) Import-sensitive semimanufactured and 
                manufactured glass products.
                    ``(G) Any other articles which the President 
                determines to be import-sensitive in the context of the 
                Generalized System of Preferences.
            ``(2) Articles against which other actions taken.--An 
        article shall not be an eligible article for purposes of this 
        title for any period during which such article is the subject 
        of any action proclaimed pursuant to section 203 of this Act 
        (19 U.S.C. 2253) or section 232 or 351 of the Trade Expansion 
        Act of 1962 (19 U.S.C. 1862, 1981).
            ``(3) Agricultural products.--No quantity of an 
        agricultural product subject to a tariff-rate quota that 
        exceeds the in-quota quantity shall be eligible for duty-free 
        treatment under this title.
    ``(c) Withdrawal, Suspension, or Limitation of Duty-Free Treatment; 
Competitive Need Limitation.--
            ``(1) In general.--The President may withdraw, suspend, or 
        limit the application of the duty-free treatment accorded under 
        this title with respect to any article, except that no rate of 
        duty may be established with respect to any article pursuant to 
        this subsection other than the rate which would apply but for 
        this title. In taking any action under this subsection, the 
        President shall consider the factors set forth in sections 501 
        and 502(c).
            ``(2) Competitive need limitation.--
                    ``(A) Basis for withdrawal of duty-free 
                treatment.--Except as provided in this paragraph and 
                subject to subsection (d), whenever the President 
                determines that a beneficiary developing country has 
                exported (directly or indirectly) to the United States 
                during any calendar year beginning after December 31, 
                1994--
                            ``(i) a quantity of an eligible article 
                        having an appraised value in excess of 
                        $75,000,000, except that, in applying this 
                        clause, the amount of $75,000,000 shall be 
                        increased by $5,000,000 on January 1 of each 
                        calendar year after calendar year 1995, or
                            ``(ii) a quantity of an eligible article 
                        equal to or exceeding 50 percent of the 
                        appraised value of the total imports of that 
                        article into the United States during the 
                        calendar year,
                then the President shall, not later than July 1 of the 
                next calendar year, terminate the duty-free treatment 
                for that article from that beneficiary developing 
                country.
                    ``(B) Country defined.--For purposes of this 
                paragraph, the term `country' does not include an 
                association of countries which is treated as one 
                country under section 506(2), but does include a 
                country which is a member of any such association.
                    ``(C) Redesignations.--A country which is no longer 
                treated as a beneficiary developing country with 
                respect to an eligible article by reason of 
                subparagraph (A) may be redesignated a beneficiary 
                developing country with respect to such article, 
                subject to the considerations set forth in sections 501 
                and 502, if imports of such article from such country 
                did not exceed the limitations in subparagraph (A) 
                during the preceding calendar year.
                    ``(D) Least-developed beneficiary developing 
                countries.--Subparagraph (A) shall not apply to any 
                least-developed beneficiary developing country.
                    ``(E) Articles not produced in the united states 
                excluded.--Subparagraph (A)(ii) shall not apply with 
                respect to any eligible article if a like or directly 
                competitive article was not produced in the United 
                States on January 1, 1995.
                    ``(F) De minimis waivers.--The President may 
                disregard subparagraph (A)(ii) with respect to any 
                eligible article from any beneficiary developing 
                country if the appraised value of the total imports of 
                such article into the United States during calendar 
                year 1995 or any calendar year thereafter does not 
                exceed $13,000,000, except that, in applying this 
                subparagraph, the amount of $13,000,000 shall be 
                increased by $500,000 on January 1 of each calendar 
                year after calendar year 1995.
    ``(d) Waiver of Competitive Need Limitation.--
            ``(1) In general.--The President may waive the application 
        of subsection (c)(2) with respect to any eligible article of 
        any beneficiary developing country if, before July 1 of the 
        calendar year beginning after the calendar year for which a 
        determination described in subsection (c)(2)(A) was made with 
        respect to such eligible article, the President--
                    ``(A) receives the advice of the International 
                Trade Commission under section 332 of the Tariff Act of 
                1930 on whether any industry in the United States is 
                likely to be adversely affected by such waiver,
                    ``(B) determines, based on the considerations 
                described in sections 501 and 502(c) and the advice 
                described in subparagraph (A), that such waiver is in 
                the national economic interest of the United States, 
                and
                    ``(C) publishes the determination described in 
                subparagraph (B) in the Federal Register.
            ``(2) Considerations by the president.--In making any 
        determination under paragraph (1), the President shall give 
        great weight to--
                    ``(A) the extent to which the beneficiary 
                developing country has assured the United States that 
                such country will provide equitable and reasonable 
                access to the markets and basic commodity resources of 
                such country, and
                    ``(B) the extent to which such country provides 
                adequate and effective protection of intellectual 
                property rights.
            ``(3) Effective period of waiver.--Any waiver granted under 
        this subsection shall remain in effect until the President 
        determines that such waiver is no longer warranted due to 
        changed circumstances.
    ``(e) International Trade Commission Advice.--Before designating 
articles as eligible articles under section 503(a)(1), the President 
shall publish and furnish the International Trade Commission with lists 
of articles which may be considered for designation as eligible 
articles for purposes of this title. The provisions of sections 131, 
132, 133, and 134 shall be complied with as though action under section 
501 and this section were action under section 123 to carry out a trade 
agreement entered into under section 123.
    ``(f) Special Rule Concerning Puerto Rico.--No action under this 
title may affect any tariff duty imposed by the Legislature of Puerto 
Rico pursuant to section 319 of the Tariff Act of 1930 on coffee 
imported into Puerto Rico.
``SEC. 504. REVIEW AND REPORTS TO CONGRESS.

    ``(a) Report on Operation of Title.--On or before December 15, 
1999, the President shall submit to the Congress a full and complete 
report regarding the operation of this title.
    ``(b) Annual Reports on Worker Rights.--The President shall submit 
an annual report to the Congress on the status of internationally 
recognized worker rights within each beneficiary developing country.

``SEC. 505. DATE OF TERMINATION.

    ``No duty-free treatment provided under this title shall remain in 
effect after July 31, 2000.

``SEC. 506. DEFINITIONS.

    ``For purposes of this title:
            ``(1) Beneficiary developing country.--The term 
        `beneficiary developing country' means any country with respect 
        to which there is in effect an Executive order or Presidential 
        proclamation by the President designating such country as a 
        beneficiary developing country for purposes of this title.
            ``(2) Country.--The term `country' means any foreign 
        country or territory, including any overseas dependent 
        territory or possession of a foreign country, or the Trust 
        Territory of the Pacific Islands. In the case of an association 
        of countries which is a free trade area or customs union, or 
        which is contributing to comprehensive regional economic 
        integration among its members through appropriate means, 
        including, but not limited to, the reduction of duties, the 
        President may by Executive order or Presidential proclamation 
        provide that all members of such association other than members 
        which are barred from designation under section 502(b) shall be 
        treated as one country for purposes of this title.
            ``(3) Entered.--The term `entered' means entered, or 
        withdrawn from warehouse for consumption, in the customs 
        territory of the United States.
            ``(4) Internationally recognized worker rights.--The term 
        `internationally recognized worker rights' includes--
                    ``(A) the right of association;
                    ``(B) the right to organize and bargain 
                collectively;
                    ``(C) a prohibition on the use of any form of 
                forced or compulsory labor;
                    ``(D) a minimum age for the employment of children; 
                and
                    ``(E) acceptable conditions of work with respect to 
                minimum wages, hours of work, and occupational safety 
                and health.
            ``(5) Least developed beneficiary developing country.--The 
        term `least developed beneficiary developing country' means a 
        beneficiary developing country that is designated as a least 
        developed beneficiary developing country under section 
        502(a)(2).''.
    (b) Table of Contents.--The items relating to title V in the table 
of contents of the Trade Act of 1974 are amended to read as follows:
              ``TITLE V--GENERALIZED SYSTEM OF PREFERENCES

        ``Sec. 501. Authority to extend preferences.
        ``Sec. 502. Designation of beneficiary developing countries.
        ``Sec. 503. Designation of eligible articles.
        ``Sec. 504. Review and reports to Congress.
        ``Sec. 505. Date of termination.
        ``Sec. 506. Definitions.''.
SEC. 3. CONFORMING AMENDMENTS.

    (a) Trade Laws.--
            (1) Section 1211(b) of the Omnibus Trade and 
        Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is amended--
                    (A) in paragraph (1), by striking ``(19 U.S.C. 
                2463(a), 2464(c)(3))'' and inserting ``(as in effect on 
                the day before the date of the enactment of the GSP 
                Renewal Act of 1995)''; and
                    (B) in paragraph (2), by striking ``(19 U.S.C. 
                2464(c)(1))'' and inserting the following: ``(as in 
                effect on the day before the date of the enactment of 
                the GSP Renewal Act of 1995)''.
            (2) Section 203(c)(7) of the Andean Trade Preference Act 
        (19 U.S.C. 3202(c)(7)) is amended by striking ``502(a)(4)'' and 
        inserting ``506(4)''.
            (3) Section 212(b)(7) of the Caribbean Basin Economic 
        Recovery Act (19 U.S.C. 2702(b)(7)) is amended by striking 
        ``502(a)(4)'' and inserting ``506(4)''.
            (4) Section 213(d) of the Caribbean Basin Economic Recovery 
        Act (19 U.S.C. 2703(d)) is amended--
                    (A) in paragraph (1)(A) by striking ``504(c)(1)'' 
                and inserting ``503(c)(1)''; and
                    (B) in paragraph (2) by inserting ``(as in effect 
                on the day before the date of the enactment of the GSP 
                Renewal Act of 1995)'' after ``1974''.
            (5) General note 3(a)(iv)(C) of the Harmonized Tariff 
        Schedule of the United States is amended--
                    (A) by striking ``503(b)'' and inserting 
                ``503(a)''; and
                    (B) by striking ``504(c)'' and inserting ``503 (c) 
                and (d)''.
    (b) Other Laws.--
            (1) Section 871(f)(2)(B) of the Internal Revenue Code of 
        1986 (26 U.S.C. 871(f)(2)(B)) is amended by striking ``within 
        the meaning of section 502'' and inserting ``under title V''.
            (2) Section 2202(8) of the Export Enhancement Act of 1988 
        (15 U.S.C. 4711(8)) is amended by striking ``502(a)(4)'' and 
        inserting ``506(4)''.
            (3) Section 231A(a) of the Foreign Assistance Act of 1961 
        (22 U.S.C. 2191a(a)) is amended--
                    (A) in paragraph (1) by striking ``502(a)(4) of the 
                Trade Act of 1974 (19 U.S.C. 2462(a)(4))'' and 
                inserting ``506(4) of the Trade Act of 1974'';
                    (B) in paragraph (2) by striking ``505(c) of the 
                Trade Act of 1974 (19 U.S.C. 2465(c))'' and inserting 
                ``504(b) of the Trade Act of 1974''; and
                    (C) in paragraph (4) by striking ``502(a)(4)'' and 
                inserting ``506(4)''.
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HR 1654 IH----2