[Senate Report 104-265]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 399
104th Congress                                                   Report
                                 SENATE

 2d Session                                                     104-265
_______________________________________________________________________


               EXTENSION OF NONDISCRIMINATORY TREATMENT
 
     (MOST-FAVORED-NATION TREATMENT) TO THE PRODUCTS OF BULGARIA

                                _______


                  May 9, 1996.--Ordered to be printed

_______________________________________________________________________


    Mr. Roth, from the Committee on Finance, submitted the following

                              R E P O R T

                        [To accompany H.R. 2853]

      [Including cost estimate of the Congressional Budget Office]

     The Committee on Finance, to which was referred the bill 
(H.R. 2853) to authorize the extension of nondiscriminatory, 
most-favored-nation (MFN) tariff treatment to the products of 
the Republic of Bulgaria, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                             I. Background

     Bulgaria's MFN status is currently governed by Title IV of 
the Trade Act of 1974, as amended by the Customs and Trade Act 
of 1990 (``Title IV''). Section 402 of Title IV (also known as 
the Jackson-Vanik amendment) sets forth requirements relating 
to freedom of emigration, which must be met or waived by the 
President in order for the President to grant 
nondiscriminatory, MFN status to nonmarket-economy countries. 
Title IV also requires that a trade agreement remain in force 
between the United States and a nonmarket-economy country 
receiving MFN status and sets forth minimum provisions which 
must be included in such agreement.
     The United States and Bulgaria signed a trade agreement on 
April 22, 1991, which, among other things, provides for the 
protection of intellectual property and the promotion and 
facilitation of trade between the two countries. In October 
1991, Congress passed legislation approving MFN for Bulgaria, 
which the President proclaimed on November 22, 1991. Since 
then, the President has renewed Bulgaria's MFN status annually 
according to the requirements of Title IV. Since June 1993, the 
President has found Bulgaria to be in full compliance with the 
freedom of emigration requirements of Jackson-Vanik.

                        II. Summary of the Bill

     Section 1(a) of H.R. 2853 sets forth four Congressional 
findings that support removing Bulgaria from the requirements 
of Title IV and extending to Bulgaria permanent unconditional 
non-discriminatory MFN status. First, Bulgaria has received MFN 
treatment under the requirements of Title IV since 1991 and has 
been in compliance with the freedom of emigration requirements 
of Title IV since 1993. Second, Bulgaria has instituted a 
constitutional republic with a democratically-elected 
government and has undertaken basic market-oriented reforms, 
including privatization of state-owned enterprises. Third, 
Bulgaria is in the process of acceding to the General Agreement 
on Tariffs and Trade (GATT) and the World Trade Organization 
(WTO), and the extension of unconditional MFN treatment would 
allow the United States to avail itself of all rights under the 
GATT and WTO with respect to Bulgaria. Fourth, Bulgaria has 
demonstrated a strong desire to build friendly relationships 
and to cooperate fully with the United States on trade matters.
     In section 1(b) of H.R. 2853, Congress notes the intention 
of the U.S. Trade Representative to negotiate with Bulgaria to 
preserve commitments made by that country in the U.S.-Bulgaria 
bilateral commercial agreement, that are consistent with the 
GATT and the WTO.
     Section 2 of H.R. 2853 would grant the President authority 
to determine that Title IV should no longer apply to Bulgaria. 
After making such a determination, the President would have the 
authority to proclaim the permanent extension of unconditional 
MFN treatment to the products of Bulgaria.

                        III. General Explanation

                A. Presidential and Congressional Action

1. Presidential Action
    On June 3, 1993, the President determined that Bulgaria is 
in full compliance with the freedom of emigration criteria 
listed in sections 402 and 409 of Title IV. Under Title IV, 
this finding allows for the continuation of MFN status for 
Bulgaria without the requirement of a waiver.
     On January 29, 1996, in his most recent report to Congress 
concerning Bulgarian emigration laws and policies, the 
President found that Bulgaria continues to be in full 
compliance with the emigration requirements under Title IV.
     Specifically, the President's report stated that freedom 
of movement within Bulgaria and the right to leave the country 
are enshrined in the 1991 constitution and are not limited in 
practice. No exit visa is required to leave Bulgaria, and no 
more than nominal fees must be paid by potential emigres. In 
addition, every citizen has the right to return to Bulgaria, 
may not be forcefully expatriated, and may not be forcibly 
deprived of citizenship acquired by birth.
     The President also found that Bulgaria has made 
substantial progress toward the protection of human rights and 
the development of a democratic, free-market society. Bulgaria 
held several free elections and cooperative relations with the 
United States have continued.
2. Congressional Action
    On July 10, 1995, the House passed legislation (H.R. 1643), 
which would authorize the President: (1) to determine that the 
requirements of Title IV should no longer apply to Bulgaria, 
and (2) proclaim the permanent extension of unconditional MFN 
treatment to the products of Bulgaria. H.R. 1643 was referred 
to the Committee on Finance on July 12, 1995.
     On July 27, 1995, legislation identical to H.R. 1643 was 
introduced in the Senate, and the bill (S. 1081) was referred 
to the Committee on Finance. On August 1, 1995, the 
International Trade Subcommittee of the Committee on Finance 
held a hearing on the Bulgaria MFN legislation, during which it 
received testimony in favor of granting Bulgaria unconditional 
MFN status and no testimony in opposition.
     On January 2, 1996, the Committee on Finance was 
discharged from consideration of H.R. 1643, which passed the 
Senate with an amendment in the nature of a substitute to make 
appropriations for certain activities for fiscal year 1996. 
H.R. 1643, as amended, did not contain the original Bulgaria 
MFN legislative language. This amended form of the bill passed 
Congress and was signed into law by the President on January 6, 
1996.
     On March 5, 1996, the House again passed identical 
legislation to H.R. 1643, to authorize the extension of 
permanent and unconditional MFN status to Bulgaria. This second 
bill (H.R. 2853) was referred to the Committee on Finance on 
March 6, 1996.

                        B. U.S.-Bulgarian Trade

     Since Bulgaria first received MFN tariff treatment under 
Title IV in 1991, two-way trade between the United States and 
Bulgaria has nearly doubled, from $164 million in 1992 to $315 
million in 1995. During this period, the United States' balance 
in merchandise trade with Bulgaria has gone from a surplus of 
$6 million in 1992 to a deficit of $51 million in 1995. U.S. 
exports to Bulgaria have risen from $85 million in 1992 to $132 
million in 1995. Leading U.S. exports included coal, data-
processing machinery, and telecommunications equipment. U.S. 
imports from Bulgaria have risen from $79 million in 1992 to 
$183 million in 1995. Principal imports included fertilizers, 
tobacco, certain types of apparel, zinc, and iron and steel 
flat-rolled products.

                           C. Committee Views

     The Committee believes that, as a result of providing 
Bulgaria MFN status in 1991, U.S. companies have been in a 
position to provide substantial assistance for Bulgaria's 
transition to a market-based economy. The Committee expects 
that granting Bulgaria unconditional MFN will help to 
accelerate trade and investment between the United States and 
Bulgaria. Growth in trade and investment will, in turn, further 
promote the development of the Bulgarian economy, help to 
improve the productivity of Bulgarian companies, allow for an 
improving standard of living for the Bulgarian people, and 
facilitate Bulgaria's integration into the world economy.
     Accordingly, the Committee strongly supports enactment of 
H.R. 2853 and the extension of unconditional MFN treatment to 
Bulgaria.

            IV. Vote of the Committee in Reporting the Bill

     In compliance with section 133 of the Legislative 
Reorganization Act of 1946, the Committee states that H.R. 2853 
was ordered favorably reported by voice vote on May 8, 1996.

                    V. Budgetary Impact of the Bill

     In compliance with sections 308 and 403 of the 
Congressional Budget Act of 1974, and paragraph 11(a) of Rule 
XXVI of the Standing Rules of the Senate, the following letter 
has been received from the Congressional Budget Office stating 
that the bill would have no budgetary impact:
                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 8, 1996.

Hon. William V. Roth, Jr.,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 2853, a bill to authorize the extension of 
nondiscriminatory treatment (most-favored-nation treatment) to 
the products of Bulgaria, as ordered reported by the Senate 
Committee on Finance on May 8, 1996. CBO estimates that 
extending most-favored-nation (MFN) status to the products of 
Bulgaria would have no budgetary effect over fiscal years 1996 
through 2005. Because H.R. 2853 could affect receipts, pay-as-
you-go procedures would apply to the bill. H.R. 2853 contains 
no intergovernmental or private sector mandates as defined in 
Public Law 104-4 and would impose no direct costs on state, 
local, or tribal governments.
     Under Title IV of the Trade Act of 1974, MFN status may 
not be conferred on a country with a nonmarket economy if that 
country maintains restrictive emigration policies. The 
President may waive this prohibition on an annual basis if he 
certifies that granting MFN status would promote freedom of 
emigration in that country. Under current law, Bulgaria is 
subject to the requirements of Title IV. However, it has 
received MFN treatment since 1991 through a Presidential waiver 
and has fully complied with the freedom of emigration 
requirements since 1993.
     H.R. 2853 would grant the President the authority to stop 
applying Title IV of the Trade Act of 1974 to Bulgaria, thereby 
allowing Bulgaria to receive MFN status on a permanent basis. 
The CBO baseline revenue projections assume that MFN status for 
Bulgaria will be extended on an annual basis. Therefore, 
enacting H.R. 2853 would have no budgetary impact when measured 
relative to the CBO baseline.
    If you wish further details, please feel free to contact me 
or your staff may wish to contact Stephanie Weiner.

            Sincerely,
                                         June E. O'Neill, Director.

                   VI. Regulatory Impact of the Bill

     In compliance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill will not significantly regulate any individuals or 
businesses, will not impact on the personal privacy of 
individuals, and will result in no significant additional 
paperwork.

             VII. Changes in Existing Law Made by the Bill

     In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, the Committee finds no changes in 
existing law caused by passage of H.R. 2853.

                                 
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