[Congressional Record Volume 144, Number 27 (Friday, March 13, 1998)]
[Senate]
[Pages S1951-S1956]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LUGAR (for himself, Mr. Biden, Mr. Chafee, Mr. Leahy, Mr. 
        Abraham, Mr. Akaka, Mr. Allard, Mr. Craig, Mr. Cochran, Mr. 
        DeWine, Mr. Glenn, Mr. Harkin, Mr. Inhofe, Mr. Jeffords, Mr. 
        Johnson, Mr. Kerrey, Mr. Kerry, Mr. Kempthorne, Mr. Levin, Mr. 
        Moynihan, and Mr. Murkowski):
  S. 1758. A bill to amend the Foreign Assistance Act of 1961 to 
facilitate protection of tropical forests through debt reduction with 
developing countries with tropical forests; to the Committee on Foreign 
Relations.


              the tropical forest conservation act of 1998

  Mr. LUGAR. Mr. President, along with Senators Biden, Chafee and 
Leahy, I am today introducing the Tropical Forest Conservation Act of 
1998, a bill to protect outstanding tropical forests in developing 
countries through Debt for Nature Swaps. We are joined in this effort 
by Senators Abraham, Akaka, Allard, Cochran, Craig, DeWine, Glenn, 
Harkin, Inhofe, Jeffords, Johnson, Kempthorne, Kerrey, Kerry, Levin, 
Moynihan, and Murkowski.

  The Tropical Forest Conservation Act builds upon the success of 
President Bush's Enterprise for the Americas Initiative (EAI) and 
extends the debt reduction portion of that initiative to the protection 
of tropical forests in lower and middle income developing countries 
outside of Latin America and the Caribbean.
  Under the EAI, $154 million has been devoted to environmental 
protection and child survival in Argentina, Bolivia, Chile, Colombia, 
El Salvador, Jamaica and Uruguay. One of the novel features of the EAI 
has been the linkage between debt reduction and the generation of local 
funds for the environmental protection and child survival. Whereas the 
U.S. receives dollar payments for the remaining principal payments 
after debt reduction, interest streams on the remaining debt are 
channeled into these local funds.

[[Page S1952]]

  The first Debt for Nature bill enacted into law was the ``Debt for 
Nature Exchange'' provision of the International Finance and 
Development Act of 1989. Under the authority of the Biden Lugar bill, 
the U.S. Agency for International Development has established 
environmental endowment funds in Costa Rica, Honduras, Indonesia, 
Jamaica, Madagascar, Mexico, Panama, and the Philippines. By committing 
$ 95 million of its own funds, US AID has leveraged an additional $51 
million. This is an effective use of scarce federal conservation 
dollars.
  The Tropical Forest Conservation Act of 1998 is a companion bill to 
H.R. 2870, coauthored by Representatives Rob Portman (R.-Ohio), John 
Kasich (R- Ohio) and Lee Hamilton (R.-Indiana), which was recently 
ordered to be reported by the House International Relations Committee.
  The Tropical Forest Conservation Act of 1998 would authorize the use 
of three ``debt for nature'' mechanisms to protect outstanding tropical 
forests in lower and middle income developing countries.
  Under the Buy Back option, an eligible country would be able to buy 
back its debt at its asset value in exchange for its willingness to 
place an additional forty percent of this value in local currency in a 
tropical forest fund. Suppose, for example, that the asset value of the 
country's debt was fifty cents on the dollar. In return for being 
allowed to buy back its debt at its asset value, the developing country 
would have to agree to place forty percent of that value, or twenty 
cents, into a fund to protect its tropical forests.
  Under this option, there would be no cost to the United States 
Government since the debt is being bought back at its value as 
determined under the Federal Credit Reform Act of 1990.
  Second, the bill authorizes a Debt Swap option under which a 
nonfederal individual or organization would be able to engage in Debt 
for Nature Swaps with lower income developing nations. These purchasers 
would work with the United States government, but would use their own 
funds to assist these developing countries to reduce or buy back their 
bilateral debt owed to the United States Government in return for their 
placing local currencies in a tropical forest fund.
  Under this second option, there would also be no cost to the United 
States Government because the financial assistance involved would come 
from nongovernmental or private entities.
  Third, the bill authorizes a debt reduction mechanism based upon the 
Enterprise for the Americas Initiative. Under the EAI Model, the 
developing country is allowed to place the interest on the reduced debt 
instrument in a tropical forest fund to be administered by a tropical 
forest board within that country.
  When the third option is exercised, the bill authorizes 
appropriations to compensate the United States Treasury for the 
reduction in the revenue stream which occurs. However, as in the case 
of the EAI, these funds would be effectively leveraged because the 
amounts placed by a eligible country in its tropical forest fund would 
exceed the amount of revenues foregone by the United States Treasury. 
For example, in the case of the EAI, $90 million in U.S. funds resulted 
in $154 million being placed by the Latin American and Caribbean 
countries in these local funds.
  The Tropical Forest Conservation Act applies to concessional loans 
made under the Foreign Assistance Act of 1961 and credits granted under 
the Agricultural Trade and Assistance Act of 1954. It is consistent 
with established Treasury Department debt reduction practices as well 
as with the Federal Credit Reform Act of 1990.
  The bill authorizes $50 million in FY 99, $125 million in FY 2000 and 
$225 million in FY 2001, subject to appropriations.
  Within each developing country, the tropical forest fund would be 
administered by a commission representing a majority of local 
nongovernmental, community development and scientific and academic 
organizations, representatives of the host government and a 
representative of the United States Government.
  The tropical forest fund could be used to provide grants for the 
following purposes:
  (1) to preserve, maintain or restore the tropical forest of the 
beneficiary country through establishing parks and reserves;
  (2) to develop and implement scientifically sound systems of natural 
resource management;
  (3) to provide training programs to strengthen conservation 
institutions and the scientific, technical and managerial capacities of 
individuals and organizations involved in conservation;
  (4) to provide for restoration, protection and sustainable use of 
diverse animal and plant species;
  (5) to mitigate greenhouse gases in the atmosphere;
  (6) to develop and support individuals living in or near a tropical 
forest, including the cultures of such individuals.
  Oversight of this program would be accomplished through expanding the 
existing Enterprise for the Americas Board by two federal and two 
nongovernmental representatives so that the Board would be composed of 
fifteen members, eight of whom would represent federal agencies 
involved in the protection, restoration and sustainable use of tropical 
forests and seven of whom would represent nongovernmental organizations 
and experts engaged in these activities.
  This legislation provides an incentive for the lower income 
developing nations to repay their debt owed to the United States. 
Government. It protects outstanding tropical forests throughout the 
world. And it stretches the limited federal dollars which are available 
to assist in this effort, therefor making an effective use of 
international environmental assistance.
  I ask unanimous consent that a copy of the bill be printed in the 
Record. I urge my colleagues to join in this effort.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1758

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DEBT REDUCTION FOR DEVELOPING COUNTRIES WITH 
                   TROPICAL FORESTS.

       The Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.) 
     is amended by adding at the end the following:

``PART V--DEBT REDUCTION FOR DEVELOPING COUNTRIES WITH TROPICAL FORESTS

     ``SEC. 801. SHORT TITLE.

       ``This part may be cited as the `Tropical Forest 
     Conservation Act of 1998'.

     ``SEC. 802. FINDINGS AND PURPOSES.

       ``(a) Findings.--The Congress finds the following:
       ``(1) It is the established policy of the United States to 
     support and seek protection of tropical forests around the 
     world.
       ``(2) Tropical forests provide a wide range of benefits to 
     humankind by--
       ``(A) harboring a major share of the Earth's biological and 
     terrestrial resources, which are the basis for developing 
     pharmaceutical products and revitalizing agricultural crops;
       ``(B) playing a critical role as carbon sinks in reducing 
     greenhouse gases in the atmosphere, thus moderating potential 
     global climate change; and
       ``(C) regulating hydrological cycles on which far-flung 
     agricultural and coastal resources depend.
       ``(3) International negotiations and assistance programs to 
     conserve forest resources have proliferated over the past 
     decade, but the rapid rate of tropical deforestation 
     continues unabated.
       ``(4) Developing countries with urgent needs for investment 
     and capital for development have allocated a significant 
     amount of their forests to logging concessions.
       ``(5) Poverty and economic pressures on the populations of 
     developing countries have, over time, resulted in clearing of 
     vast areas of forest for conversion to agriculture, which is 
     often unsustainable in the poor soils underlying tropical 
     forests.
       ``(6) Debt reduction can reduce economic pressures on 
     developing countries and result in increased protection for 
     tropical forests.
       ``(b) Purposes.--The purposes of this part are--
       ``(1) to recognize the values received by United States 
     citizens from protection of tropical forests;
       ``(2) to facilitate greater protection of tropical forests 
     (and to give priority to protecting tropical forests with the 
     highest levels of biodiversity and under the most severe 
     threat) by providing for the alleviation of debt in countries 
     where tropical forests are located, thus allowing the use of 
     additional resources to protect these critical resources and 
     reduce economic pressures that have led to deforestation;
       ``(3) to ensure that resources freed from debt in such 
     countries are targeted to protection of tropical forests and 
     their associated values; and
       ``(4) to rechannel existing resources to facilitate the 
     protection of tropical forests.

[[Page S1953]]

     ``SEC. 803. DEFINITIONS.

       ``As used in this part:
       ``(1) Administering body.--The term `administering body' 
     means the entity provided for in section 809(c).
       ``(2) Appropriate congressional committees.--The term 
     `appropriate congressional committees' means--
       ``(A) the Committee on International Relations and the 
     Committee on Appropriations of the House of Representatives; 
     and
       ``(B) the Committee on Foreign Relations and the Committee 
     on Appropriations of the Senate.
       ``(3) Beneficiary country.--The term `beneficiary country' 
     means an eligible country with respect to which the authority 
     of section 806(a)(1), section 807(a)(1), or paragraph (1) or 
     (2) of section 808(a) is exercised.
       ``(4) Board.--The term `Board' means the board referred to 
     in section 811.
       ``(5) Developing country with a tropical forest.--The term 
     `developing country with a tropical forest' means--
       ``(A)(i) a country that has a per capita income of $725 or 
     less in 1994 United States dollars (commonly referred to as 
     `low-income country'), as determined and adjusted on an 
     annual basis by the International Bank for Reconstruction and 
     Development in its World Development Report; or
       ``(ii) a country that has a per capita income of more than 
     $725 but less than $8,956 in 1994 United States dollars 
     (commonly referred to as `middle-income country'), as 
     determined and adjusted on an annual basis by the 
     International Bank for Reconstruction and Development in its 
     World Development Report; and
       ``(B) a country that contains at least one tropical forest 
     that is globally outstanding in terms of its biological 
     diversity or represents one of the larger intact blocks of 
     tropical forests left, on a continental or global scale.
       ``(6) Eligible country.--The term `eligible country' means 
     a country designated by the President in accordance with 
     section 805.
       ``(7) Tropical forest agreement.--The term `Tropical Forest 
     Agreement' or `Agreement' means a Tropical Forest Agreement 
     provided for in section 809.
       ``(8) Tropical forest facility.--The term `Tropical Forest 
     Facility' or `Facility' means the Tropical Forest Facility 
     established in the Department of the Treasury by section 804.
       ``(9) Tropical forest fund.--The term `Tropical Forest 
     Fund' or `Fund' means a Tropical Forest Fund provided for in 
     section 810.

     ``SEC. 804. ESTABLISHMENT OF THE FACILITY.

       ``There is established in the Department of the Treasury an 
     entity to be known as the `Tropical Forest Facility' for the 
     purpose of providing for the administration of debt reduction 
     in accordance with this part.

     ``SEC. 805. ELIGIBILITY FOR BENEFITS.

       ``(a) In General.--To be eligible for benefits from the 
     Facility under this part, a country shall be a developing 
     country with a tropical forest--
       ``(1) whose government meets the requirements applicable to 
     Latin American or Caribbean countries under paragraphs (1) 
     through (5) and (7) of section 703(a) of this Act; and
       ``(2) that has put in place major investment reforms, as 
     evidenced by the conclusion of a bilateral investment treaty 
     with the United States, implementation of an investment 
     sector loan with the Inter-American Development Bank, World 
     Bank-supported investment reforms, or other measures, as 
     appropriate.
       ``(b) Eligibility Determinations.--
       ``(1) In general.--Consistent with subsection (a), the 
     President shall determine whether a country is eligible to 
     receive benefits under this part.
       ``(2) Congressional notification.--The President shall 
     notify the appropriate congressional committees of his 
     intention to designate a country as an eligible country at 
     least 15 days in advance of any formal determination.

     ``SEC. 806. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A 
                   RESULT OF CONCESSIONAL LOANS UNDER THE FOREIGN 
                   ASSISTANCE ACT OF 1961.

       ``(a) Authority To Reduce Debt.--
       ``(1) Authority.--The President may reduce the amount owed 
     to the United States (or any agency of the United States) 
     that is outstanding as of January 1, 1998, as a result of 
     concessional loans made to an eligible country by the United 
     States under part I of this Act, chapter 4 of part II of this 
     Act, or predecessor foreign economic assistance legislation.
       ``(2) Authorization of appropriations.--For the cost (as 
     defined in section 502(5) of the Federal Credit Reform Act of 
     1990) for the reduction of any debt pursuant to this section, 
     there are authorized to be appropriated to the President--
       ``(A) $25,000,000 for fiscal year 1999;
       ``(B) $75,000,000 for fiscal year 2000; and
       ``(C) $100,000,000 for fiscal year 2001.
       ``(3) Certain prohibitions inapplicable.--
       ``(A) In general.--A reduction of debt pursuant to this 
     section shall not be considered assistance for purposes of 
     any provision of law limiting assistance to a country.
       ``(B) Additional requirement.--The authority of this 
     section may be exercised notwithstanding section 620(r) of 
     this Act or section 321 of the International Development and 
     Food Assistance Act of 1975.
       ``(b) Implementation of Debt Reduction.--
       ``(1) In general.--Any debt reduction pursuant to 
     subsection (a) shall be accomplished at the direction of the 
     Facility by the exchange of a new obligation for obligations 
     of the type referred to in subsection (a) outstanding as of 
     the date specified in subsection (a)(1).
       ``(2) Exchange of obligations.--
       ``(A) In general.--The Facility shall notify the agency 
     primarily responsible for administering part I of this Act of 
     an agreement entered into under paragraph (1) with an 
     eligible country to exchange a new obligation for outstanding 
     obligations.
       ``(B) Additional requirement.--At the direction of the 
     Facility, the old obligations that are the subject of the 
     agreement shall be canceled and a new debt obligation for the 
     country shall be established relating to the agreement, and 
     the agency primarily responsible for administering part I of 
     this Act shall make an adjustment in its accounts to reflect 
     the debt reduction.
       ``(c) Additional Terms and Conditions.--The following 
     additional terms and conditions shall apply to the reduction 
     of debt under subsection (a)(1) in the same manner as such 
     terms and conditions apply to the reduction of debt under 
     section 704(a)(1) of this Act:
       ``(1) The provisions relating to repayment of principal 
     under section 705 of this Act.
       ``(2) The provisions relating to interest on new 
     obligations under section 706 of this Act.

     ``SEC. 807. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A 
                   RESULT OF CREDITS EXTENDED UNDER TITLE I OF THE 
                   AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE 
                   ACT OF 1954.

       ``(a) Authority To Reduce Debt.--
       ``(1) Authority.--Notwithstanding any other provision of 
     law, the President may reduce the amount owed to the United 
     States (or any agency of the United States) that is 
     outstanding as of January 1, 1998, as a result of any credits 
     extended under title I of the Agricultural Trade Development 
     and Assistance Act of 1954 (7 U.S.C. 1701 et seq.) to a 
     country eligible for benefits from the Facility.
       ``(2) Authorization of appropriations.--For the cost (as 
     defined in section 502(5) of the Federal Credit Reform Act of 
     1990) for the reduction of any debt pursuant to this section, 
     there are authorized to be appropriated to the President--
       ``(A) $25,000,000 for fiscal year 1999;
       ``(B) $50,000,000 for fiscal year 2000; and
       ``(C) $50,000,000 for fiscal year 2001.
       ``(b) Implementation of Debt Reduction.--
       ``(1) In general.--Any debt reduction pursuant to 
     subsection (a) shall be accomplished at the direction of the 
     Facility by the exchange of a new obligation for obligations 
     of the type referred to in subsection (a) outstanding as of 
     the date specified in subsection (a)(1).
       ``(2) Exchange of obligations.--
       ``(A) In general.--The Facility shall notify the Commodity 
     Credit Corporation of an agreement entered into under 
     paragraph (1) with an eligible country to exchange a new 
     obligation for outstanding obligations.
       ``(B) Additional requirement.--At the direction of the 
     Facility, the old obligations that are the subject of the 
     agreement shall be canceled and a new debt obligation shall 
     be established for the country relating to the agreement, and 
     the Commodity Credit Corporation shall make an adjustment in 
     its accounts to reflect the debt reduction.
       ``(c) Additional Terms and Conditions.--The following 
     additional terms and conditions shall apply to the reduction 
     of debt under subsection (a)(1) in the same manner as such 
     terms and conditions apply to the reduction of debt under 
     section 604(a)(1) of the Agricultural Trade Development and 
     Assistance Act of 1954 (7 U.S.C. 1738c):
       ``(1) The provisions relating to repayment of principal 
     under section 605 of such Act.
       ``(2) The provisions relating to interest on new 
     obligations under section 606 of such Act.

     ``SEC. 808. AUTHORITY TO ENGAGE IN DEBT-FOR-NATURE SWAPS AND 
                   DEBT BUYBACKS.

       ``(a) Loans and Credits Eligible for Sale, Reduction, or 
     Cancellation.--
       ``(1) Debt-for-nature swaps.--
       ``(A) In general.--Notwithstanding any other provision of 
     law, the President may, in accordance with this section, sell 
     to any eligible purchaser described in subparagraph (B) any 
     concessional loans described in section 806(a)(1) or any 
     credits described in section 807(a)(1), or on receipt of 
     payment from an eligible purchaser described in subparagraph 
     (B), reduce or cancel such loans (or credits) or portion 
     thereof, only for the purpose of facilitating a debt-for-
     nature swap to support eligible activities described in 
     section 809(d).
       ``(B) Eligible purchaser described.--A loan or credit may 
     be sold, reduced, or canceled under subparagraph (A) only to 
     a purchaser who presents plans satisfactory to the President 
     for using the loan or credit for the purpose of engaging in 
     debt-for-nature swaps to support eligible activities 
     described in section 809(d).
       ``(C) Consultation requirement.--Before the sale under 
     subparagraph (A) to any eligible purchaser described in 
     subparagraph (B), or any reduction or cancellation under such 
     subparagraph (A), of any loan or credit made to an eligible 
     country, the President shall consult with the country 
     concerning the amount of loans or credits to be sold, 
     reduced, or canceled and their uses for debt-

[[Page S1954]]

     for-nature swaps to support eligible activities described in 
     section 809(d).
       ``(D) Authorization of appropriations.--For the cost (as 
     defined in section 502(5) of the Federal Credit Reform Act of 
     1990) for the reduction of any debt pursuant to subparagraph 
     (A), amounts authorized to appropriated under sections 
     806(a)(2) and 807(a)(2) shall be made available for such 
     reduction of debt pursuant to subparagraph (A).
       ``(2) Debt buybacks.--Notwithstanding any other provision 
     of law, the President may, in accordance with this section, 
     sell to any eligible country any concessional loans described 
     in section 806(a)(1) or any credits described in section 
     807(a)(1), or on receipt of payment from an eligible country, 
     reduce or cancel such loans (or credits) or portion thereof, 
     only for the purpose of facilitating a debt buyback by an 
     eligible country of its own qualified debt, only if the 
     eligible country uses an additional amount of the local 
     currency of the eligible country, equal to not less than 40 
     percent of the price paid for such debt by such eligible 
     country, or the difference between the price paid for such 
     debt and the face value of such debt, to support eligible 
     activities described in section 809(d).
       ``(3) Terms and conditions.--Notwithstanding any other 
     provision of law, the President shall, in accordance with 
     this section, establish the terms and conditions under which 
     loans and credits may be sold, reduced, or canceled pursuant 
     to this section.
       ``(4) Administration.--
       ``(A) In general.--The Facility shall notify the 
     administrator of the agency primarily responsible for 
     administering part I of this Act or the Commodity Credit 
     Corporation, as the case may be, of eligible purchasers 
     described in paragraph (1)(B) that the President has 
     determined to be eligible under paragraph (1), and shall 
     direct such agency or Corporation, as the case may be, to 
     carry out the sale, reduction, or cancellation of a loan 
     pursuant to such paragraph.
       ``(B) Additional requirement.--Such agency or Corporation, 
     as the case may be, shall make an adjustment in its accounts 
     to reflect the sale, reduction, or cancellation.
       ``(b) Deposit of Proceeds.--The proceeds from the sale, 
     reduction, or cancellation of any loan sold, reduced, or 
     canceled pursuant to this section shall be deposited in the 
     United States Government account or accounts established for 
     the repayment of such loan.

     ``SEC. 809. TROPICAL FOREST AGREEMENT.

       ``(a) Authority.--
       ``(1) In general.--The Secretary of State is authorized, in 
     consultation with other appropriate officials of the Federal 
     Government, to enter into a Tropical Forest Agreement with 
     any eligible country concerning the operation and use of the 
     Fund for that country.
       ``(2) Consultation.--In the negotiation of such an 
     Agreement, the Secretary shall consult with the Board in 
     accordance with section 811.
       ``(b) Contents of Agreement.--The requirements contained in 
     section 708(b) of this Act (relating to contents of an 
     agreement) shall apply to a Agreement in the same manner as 
     such requirements apply to an Americas Framework Agreement.
       ``(c) Administering Body.--
       ``(1) In general.--Amounts disbursed from the Fund in each 
     beneficiary country shall be administered by a body 
     constituted under the laws of that country.
       ``(2) Composition.--
       ``(A) In general.--The administering body shall consist 
     of--
       ``(i) one or more individuals appointed by the United 
     States Government;
       ``(ii) one or more individuals appointed by the government 
     of the beneficiary country; and
       ``(iii) individuals who represent a broad range of--

       ``(I) environmental nongovernmental organizations of, or 
     active in, the beneficiary country;
       ``(II) local community development nongovernmental 
     organizations of the beneficiary country; and
       ``(III) scientific or academic organizations or 
     institutions of the beneficiary country.

       ``(B) Additional requirement.--A majority of the members of 
     the administering body shall be individuals described in 
     subparagraph (A)(iii).
       ``(3) Responsibilities.--The requirements contained in 
     section 708(c)(3) of this Act (relating to responsibilities 
     of the administering body) shall apply to an administering 
     body described in paragraph (1) in the same manner as such 
     requirements apply to an administering body described in 
     section 708(c)(1) of this Act.
       ``(d) Eligible Activities.--Amounts deposited in a Fund 
     shall be used to provide grants to preserve, maintain, and 
     restore the tropical forests in the beneficiary country, 
     including one or more of the following activities:
       ``(1) Establishment, restoration, protection, and 
     maintenance of parks, protected areas, and reserves.
       ``(2) Development and implementation of scientifically 
     sound systems of natural resource management, including land 
     and ecosystem management practices.
       ``(3) Training programs to strengthen conservation 
     institutions and increase scientific, technical, and 
     managerial capacities of individuals and organizations 
     involved in conservation efforts.
       ``(4) Restoration, protection, or sustainable use of 
     diverse animal and plant species.
       ``(5) Mitigation of greenhouse gases in the atmosphere.
       ``(6) Development and support of the livelihoods of 
     individuals living in or near a tropical forest, including 
     the cultures of such individuals, in a manner consistent with 
     protecting such tropical forest.
       ``(e) Grant Recipients.--
       ``(1) In general.--Grants made from a Fund shall be made 
     to--
       ``(A) nongovernmental environmental, conservation, and 
     indigenous peoples organizations of, or active in, the 
     beneficiary country;
       ``(B) other appropriate local or regional entities of, or 
     active in, the beneficiary country; and
       ``(C) in exceptional circumstances, the government of the 
     beneficiary country.
       ``(2) Priority.--In providing grants under paragraph (1), 
     priority shall be given to projects that are run by 
     nongovernmental organizations and other private entities and 
     that involve local communities in their planning and 
     execution.
       ``(f) Review of Larger Grants.--Any grant of more than 
     $100,000 from a Fund shall be subject to veto by the 
     Government of the United States or the government of the 
     beneficiary country.
       ``(g) Eligibility Criteria.--In the event that a country 
     ceases to meet the eligibility requirements set forth in 
     section 805(a), as determined by the President pursuant to 
     section 805(b), then grants from the Fund for that country 
     may only be made to nongovernmental organizations until such 
     time as the President determines that such country meets the 
     eligibility requirements set forth in section 805(a).

     ``SEC. 810. TROPICAL FOREST FUND.

       ``(a) Establishment.--Each beneficiary country that enters 
     into a Tropical Forest Agreement under section 809 shall be 
     required to establish a Tropical Forest Fund to receive 
     payments of interest on new obligations undertaken by the 
     beneficiary country under this part.
       ``(b) Requirements Relating to Operation of Fund.--The 
     following terms and conditions shall apply to the Fund in the 
     same manner as such terms as conditions apply to an 
     Enterprise for the Americas Fund under section 707 of this 
     Act:
       ``(1) The provision relating to deposits under subsection 
     (b) of such section.
       ``(2) The provision relating to investments under 
     subsection (c) of such section.
       ``(3) The provision relating to disbursements under 
     subsection (d) of such section.

     ``SEC. 811. BOARD.

       ``(a) Enterprise for the Americas Board.--The Enterprise 
     for the Americas Board established under section 610(a) of 
     the Agricultural Trade Development and Assistance Act of 1954 
     (7 U.S.C. 1738i(a)) shall, in addition to carrying out the 
     responsibilities of the Board under section 610(c) of such 
     Act, carry out the duties described in subsection (c) of this 
     section for the purposes of this part.
       ``(b) Additional Membership.--
       ``(1) In general.--The Enterprise for the Americas Board 
     shall be composed of an additional four members appointed by 
     the President as follows:
       ``(A) Two representatives from the United States 
     Government, including a representative of the International 
     Forestry Division of the United States Forest Service.
       ``(B) Two representatives from private nongovernmental 
     environmental, scientific, and academic organizations with 
     experience and expertise in preservation, maintenance, and 
     restoration of tropical forests.
       ``(2) Chairperson.--Notwithstanding section 610(b)(2) of 
     the Agricultural Trade Development and Assistance Act of 1954 
     (7 U.S.C. 1738i(b)(2)), the Enterprise for the Americas Board 
     shall be headed by a chairperson who shall be appointed by 
     the President from among the representatives appointed under 
     section 610(b)(1)(A) of such Act or paragraph (1)(A) of this 
     subsection.
       ``(c) Duties.--The duties described in this subsection are 
     as follows:
       ``(1) Advise the Secretary of State on the negotiations of 
     Tropical Forest Agreements.
       ``(2) Ensure, in consultation with--
       ``(A) the government of the beneficiary country,
       ``(B) nongovernmental organizations of the beneficiary 
     country,
       ``(C) nongovernmental organizations of the region (if 
     appropriate),
       ``(D) environmental, scientific, and academic leaders of 
     the beneficiary country, and
       ``(E) environmental, scientific, and academic leaders of 
     the region (as appropriate),

     that a suitable administering body is identified for each 
     Fund.
       ``(3) Review the programs, operations, and fiscal audits of 
     each administering body.

     ``SEC. 812. CONSULTATIONS WITH THE CONGRESS.

       ``The President shall consult with the appropriate 
     congressional committees on a periodic basis to review the 
     operation of the Facility under this part and the eligibility 
     of countries for benefits from the Facility under this part.

     ``SEC. 813. ANNUAL REPORTS TO THE CONGRESS.

       ``(a) In General.--Not later than December 31 of each 
     fiscal year, the President shall prepare and transmit to the 
     Congress an annual report concerning the operation of the 
     Facility for the prior fiscal year. Such report shall 
     include--
       ``(1) a description of the activities undertaken by the 
     Facility during the previous fiscal year;

[[Page S1955]]

       ``(2) a description of any Agreement entered into under 
     this part;
       ``(3) a report on any Funds that have been established 
     under this part and on the operations of such Funds; and
       ``(4) a description of any grants that have been provided 
     by administering bodies pursuant to Agreements under this 
     part.
       ``(b) Supplemental Views in Annual Report.--Not later than 
     December 15 of each fiscal year, each member of the Board 
     shall be entitled to receive a copy of the report required 
     under subsection (a). Each member of the Board may prepare 
     and submit supplemental views to the President on the 
     implementation of this part by December 31 for inclusion in 
     the annual report when it is transmitted to Congress pursuant 
     to this section.''.

  Mr. BIDEN. Mr. President, I am pleased to join today with my good 
friend, the distinguished senior Senator from Indiana, to introduce 
important legislation that will benefit all Americans by helping-- in 
important ways--both our global environment and our global economy.
  I first became interested in this issue almost ten years ago, when 
the world's attention was focused on an international debt crisis, much 
of it centered in Latin American countries. At that same time, we were 
beginning to understand the crucial role that tropical rainforests--all 
over the world--play in our own lives here in the United States.
  Tropical rainforests are among the most complex and fundamental 
components of our planet's ecology. These natural wonders affect the 
global climate through their influence on rainfall patterns, which in 
turn makes them the sources of some of the world's greatest rivers, 
which in its turn affects farmlands and coastal fisheries all over the 
world.
  Tropical rainforests are also the richest environments for all forms 
of life--they harbor the greatest biodiversity of any ecosystem. With 
increasing frequency, we find there the chemicals that go into new 
medicines, more robust food crops, and other direct economic 
applications of the rainforests' riches.
  We may picture rainforests as among the most primitive environments--
with climate and wildlife left over from the beginnings of time. But it 
is only now, with the accelerating integration of the global economy 
and the realization that burning fossil fuels can alter our planets 
weather, that we recognize that rainforests must be preserved if we 
want to protect our modern way of life.
  The accumulation of over one hundred years of man-made greenhouse 
gases from the industrial world is now joined by the increasing 
emissions of industrializing nations, accelerating the threat of global 
climate change. Rainforests absorb the carbon dioxide that can change 
our climate, and that would change every assumption we have about how 
what our future will be.
  But these crucially important rainforests are under increasing threat 
from fundamental trends in our international economy. As the nations 
whose borders contain important rainforests take their place in the 
world market, they face increasing incentives to turn their rainforests 
into cash crops--cutting them for lumber, clearing them for croplands--
trading the long-term global benefits of rainforests for short-term 
needs.
  Not just the lumber and agricultural markets offer short-term local 
gains in exchange for long-term global costs. The explosion of 
international capital flows has brought the benefits and dangers of 
debt to many nations with rainforests. To manage debt owed to nations 
such as the United States, these nations turn to their rainforests for 
quick cash. However appropriate their borrowing may be--who among us 
here does not use debt to finance a house, a car, an education?--that 
choice has consequences for the whole planet.
  So we have the convergence of two important global trends--the 
cutting of rainforests, and the spread of international debt.
  Ten years ago, when these trends were at a much earlier stage, I 
brought the idea of debt-for-nature swaps to Senator Lugar, who agreed 
that we faced a classic public policy problem: short-term, local 
incentives to engage in behavior that has long-term, global costs. That 
is why we introduced the first legislation that facilitated debt-for-
nature swaps. That legislation was signed into law in 1989.
  The following year, we made debt-for-nature swaps part of President 
Bush's Enterprise for the Americas Act. Since then, $154 million in 
developing country debt has been restructured into environmental 
protection programs in Latin America.
  The legislation I am introducing here today, with Senator Lugar, 
Senator Chafee, Senator Leahy, and my other distinguished colleagues, 
will expand the techniques of debt-for-nature exchanges to meet a wider 
variety of financial situations, and will include qualified countries 
in every part of the world.
  In essence, we arrange for the repayment of sovereign debt owed by 
qualfied countries to the United States, in exchange for their 
commitment to use the savings to establish local trust funds to protect 
their rainforests. We gain the environmental protection that would 
otherwise not occur, they reduce their foreign exchange and debt 
burdens. It's a classic win-win deal.
  Two of the options allow us to transform debt owed to the United 
States into funds to protect the world's rainforests at no cost to the 
Treasury. The third option, for the poorest nations of the world, 
provides funds to subsidize the debt exchange--and the rainforest 
protection--that they could not otherwise afford.
  As we watch with concern the developments in Asia, Mr. President, we 
see the importance of far-sighted, creative debt management programs 
for developing economies. The accumulation of unmanageable debt burdens 
threatens both the stability of the international economy and the 
health of our planet's ecology.
  At the margin, but in important ways, the legislation we are 
introducing today addresses both of those concerns, and weakens the 
link between the burden of developing country debt and the wasting of 
our rainforests.
  I am pleased to see that the House companion to this legislation is 
already moving in the International Relations Committee. I look forward 
to working with Senator Lugar and all my colleagues on both sides of 
the aisle here in the Senate.
  Mr. CHAFEE. Mr. President, I am pleased to be here today with my 
distinguished colleagues to introduce the Tropical Forest Conservation 
Act of 1998. This bipartisan legislation addresses one of the most 
important global environmental issues today--the protection and 
preservation of tropical rain forests.
  Since 1950 the world has lost as much as half of its tropical 
forests, and the destruction is continuing unabated. The most 
comprehensive survey of global deforestation estimated that, last year 
alone, we lost more than 30 million acres of tropical rain forest--an 
area the size of the State of Washington. This is a devastating loss 
because of the potential biological impacts deforestation can have both 
regionally and globally.
  Tropical forests contain the world's richest stores of biological 
diversity, and their health is essential for life on Earth. Scientists 
estimate that more than 50 percent of the Earth's terrestrial 
biological diversity is contained within these forests, which account 
for less than 2 percent of the planet's land surface. Almost 40 percent 
of all terrestrial plants and at least 25 percent of terrestrial 
vertebrate species are endemic to these areas. That is, they are found 
no where else on Earth. Consider that in the Tropical Andes region 
alone, there are 320 species of endemic birds, 558 species of endemic 
reptiles and amphibians, and 20,000 species of endemic plants. 
Moreover, many of these species are found only in a small area of the 
forests. And as the forests are destroyed, Mr. President, the species 
are permanently lost through extinction.
  Tropical forests also function as carbon ``sinks,'' storing 
greenhouse gasses that could otherwise contribute to global climate 
change. While there are still many scientific uncertainties related to 
climate change, it is undeniable that atmospheric carbon dioxide levels 
are rising rapidly. A significant number of scientists believe that 
humans have already influenced our global climate. In order to lessen 
the risks associated with this change, such as sea level rise, extreme 
weather conditions, and higher average temperatures, it is important 
that the United

[[Page S1956]]

States join with other nations to take preventative action. Protecting 
our tropical rain forests, and thus preserving their vital function of 
reducing greenhouse gases in the atmosphere, is one such action.
  These forests are important to human health in other ways. They 
harbor many of the biological resources that are used in life-saving 
medicines, and provide the genetic sources to revitalize agricultural 
crops that supply most of the world's food. They significantly affect 
rainfall, and therefore the health of crops and coastal resources 
worldwide.
  Many of the world's tropical forests are located in developing 
countries that, since the international debt crisis of the 1970s, have 
been unable to repay loans to foreign lenders. These countries are in 
need of hard currency, and to come up with cash, they have resorted to 
exploiting their natural resources with little regard for environmental 
planning. Vast areas of tropical forests are destroyed each year for 
logging, agriculture and livestock operations. This trend will continue 
as debt continues to mount.
  Mr. President, the Tropical Forest Conservation Act would help turn 
the tide against this deforestation. This legislation builds upon 
President Bush's Enterprise for the Americas Initiative, or EAI. EAI 
created a system by which Latin American and Carribean governments 
could restructure some of their official debt to the United States, 
while channeling local currency into funds to support environmental and 
child development programs.
  Using so-called ``debt-for-nature swaps,'' EAI restructured bilateral 
debt to provide $154 million to environmental trust funds in Latin 
America. Under these swaps, a nation's debt is modified, rescheduled, 
or written off, in return for the borrower nation's commitment of its 
own currency towards local conservation. The legislation before us 
today would utilize this same principle, but would focus exclusively on 
tropical forest conservation and extend eligibility to include 
countries in Africa and Asia.
  The Tropical Forest Conservation Act would authorize $325 million 
over three years to be used for debt-for-nature swaps with developing 
countries that have forests with the greatest biodiversity and the 
highest risk of threat. The bill assists countries with tropical 
forests that are globally outstanding in terms of their biodiversity, 
and applies to any lesser developed country with tropical forests and 
qualified U.S. debt. The authorized amount would be used to compensate 
the Treasury Department for any revenues lost due to the restructuring 
of outstanding debt.
  This legislation gives the President authority to reduce debt owed to 
the United States as a result of any credit extended through specific 
loan programs. In exchange, the developing countries would establish 
funds in their local currency to preserve and restore tropical forests. 
To ensure accountability, funds shall be administered and overseen by 
U.S. Government officials, environmental nongovernmental organizations 
active in the beneficiary country, and scientific or academic 
organizations.
  To qualify for assistance, countries must meet the criteria 
established by Congress under EAI, including that the government must 
be democratically elected, has not provided support for acts of 
international terrorism, is not failing to cooperate on international 
narcotics control matters, and does not participate in a consistent 
pattern of gross violations of internationally recognized human rights.
  Mr. President, I believe this is an important bill that, if passed, 
will go a long way to helping protect some of the world's most 
ecologically sensitive and vital areas. The Tropical Forest 
Conservation Act promotes debt reduction, investment reforms, community 
based conservation, and sustainable use of the environment. It has the 
support of numerous environmental organizations, including Conservation 
International, the Nature Conservancy, and the World Wildlife Fund. I 
urge my colleagues here in the Senate to support the legislation as 
well.
  Mr. LEAHY. Mr. President, I am pleased to join Senators Lugar, Biden, 
and Chafee in introducing the ``Tropical Forest Conservation Act of 
1998.'' This legislation embodies a motto we take to heart in Vermont: 
``Act Locally, Think Globally.'' From our campaign to ban landmines, 
Vermonters again learned the power of this maxim.
  Vermonters understand the social, economic and environmental impacts 
of deforestation. We started this century with 75 percent of Vermont 
forestland cleared for agriculture. Today, more than 80 percent of 
Vermont is forested. Rebuilding our forests and the Vermont tradition 
of living close to the land has helped Vermonters recognize that our 
healthy forests are a valued legacy which holds the key to achieving 
prosperity. This is the purpose of the Tropical Forest Conservation Act 
of 1998.
  The Tropical Forest Conservation Act will authorize more than $350 
million over three years to enable developing countries to restructure 
their debt and use the new resources to protect their tropical forests. 
The Tropical Forest Conservation Act of 1998 gives each country the 
power to protect its own resources without having to risk the health of 
its forests.
  Many developing countries have resorted to rapid development, 
including clear-cutting and slash-and-burn stripping of tropical 
forests, as ways to try to escape their debts. These forests contain a 
majority of the Earth's biological resources which provide the 
ingredients for many lifesaving medicines as well as providing us with 
the genetic sources to maintain healthy agricultural crops.
  Protection of these tropical forests also gives us with an 
opportunity to address one of the most critical global environmental 
issues facing us in the next century--global climate change. These 
forests serve important carbon sinks which store greenhouse gases and 
help regulate global temperatures.
  If we are going to reap these benefits though, we have to let nature 
do its work. This requires creative approaches to offer incentives to 
these developing countries to conserve forest resources for theirs, and 
our, children and grandchildren. The Tropical Forest Conservation Act 
will help stem the rapid rate of deforestation and degradation of these 
sensitive ecosystems.
  As a Vermonter, I respect the importance of forests and the tough 
decisions which often have to be made in order to preserve them. I 
believe that this bill will make those tough decisions easier for 
countries which possess some of our world's most precious resources--
tropical forests.
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