[House Report 105-423]
[From the U.S. Government Publishing Office]



105th Congress                                            Rept. 105-423
 2d Session             HOUSE OF REPRESENTATIVES                 Part 2
_______________________________________________________________________


 
                   AFRICAN GROWTH AND OPPORTUNITY ACT

                                _______
                                

 March 2, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1432]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 1432) to authorize a new trade and investment policy 
for sub-Saharan Africa, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
  I. Introduction................................................    12
           A. Purpose and Summary................................    12
          B. Background and Need for Legislation.................    13
          C. Legislative History.................................    14
 II. Explanation of the bill.....................................    15
          A. Short Title.........................................    15
          B. Findings............................................    15
          C. Statement of Policy.................................    16
          D. Eligibility Requirements............................    17
          E. United States-sub-Saharan Africa Trade and Economic 
              Cooperation Forum..................................    18
          F. United States-sub-Saharan Africa Free Trade Area....    20
          G. Eliminating Trade Barriers and Encouraging Exports..    21
          H. Generalized System of Preferences...................    24
          I. Establishment of Assistant United States Trade 
              Representative for Sub-Saharan Africa..............    26
          J. Reporting Requirement...............................    27
          K. Sub-Saharan Africa Defined..........................    27
          L. Revenue Provisions: Employer Deduction for Severance 
              Pay................................................    28
III. Vote of the Committee.......................................    30
 IV. Budget effects of the bill..................................    31
          A. Committee Estimate of Budgetary Effects.............    31
          B. Budget Authority and Tax Expenditures...............    31
          C. Cost Estimates Prepared by the Congressional Budget 
              Office.............................................    31
  V. Other Matter to be Discussed Under the Rules of the House...    33
          A. Committee Oversight Findings and Recommendations....    33
          B. Summary of Findings and Recommendations of the 
              Committee on Government Reform and Oversight.......    33
          C. Constitutional Authority Statement..................    34
          D. Information Relating to Unfunded Mandates...........    34
 VI. Changes in Existing Law Made by the Bill as Reported........    34

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``African Growth and Opportunity Act''.

SEC. 2. FINDINGS.

  The Congress finds that it is in the mutual economic interest of the 
United States and sub-Saharan Africa to promote stable and sustainable 
economic growth and development in sub-Saharan Africa. To that end, the 
United States seeks to facilitate market-led economic growth in, and 
thereby the social and economic development of, the countries of sub-
Saharan Africa. In particular, the United States seeks to assist sub-
Saharan African countries, and the private sector in those countries, 
to achieve economic self-reliance by--
          (1) strengthening and expanding the private sector in sub-
        Saharan Africa, especially women-owned businesses;
          (2) encouraging increased trade and investment between the 
        United States and sub-Saharan Africa;
          (3) reducing tariff and nontariff barriers and other trade 
        obstacles;
          (4) expanding United States assistance to sub-Saharan 
        Africa's regional integration efforts;
          (5) negotiating free trade areas;
          (6) establishing a United States-Sub-Saharan Africa Trade and 
        Investment Partnership;
          (7) focusing on countries committed to accountable 
        government, economic reform, and the eradication of poverty;
          (8) establishing a United States-Sub-Saharan Africa Economic 
        Cooperation Forum; and
          (9) continuing to support development assistance for those 
        countries in sub-Saharan Africa attempting to build civil 
        societies.

SEC. 3. STATEMENT OF POLICY.

  The Congress supports economic self-reliance for sub-Saharan African 
countries, particularly those committed to--
          (1) economic and political reform;
          (2) market incentives and private sector growth;
          (3) the eradication of poverty; and
          (4) the importance of women to economic growth and 
        development.

SEC. 4. ELIGIBILITY REQUIREMENTS.

  (a) In General.--A sub-Saharan African country shall be eligible to 
participate in programs, projects, or activities, or receive assistance 
or other benefits under this Act if the President determines that the 
country does not engage in gross violations of internationally 
recognized human rights and has established, or is making continual 
progress toward establishing, a market-based economy, such as the 
establishment and enforcement of appropriate policies relating to--
          (1) promoting free movement of goods and services between the 
        United States and sub-Saharan Africa and among countries in 
        sub-Saharan Africa;
          (2) promoting the expansion of the production base and the 
        transformation of commodities and nontraditional products for 
        exports through joint venture projects between African and 
        foreign investors;
          (3) trade issues, such as protection of intellectual property 
        rights, improvements in standards, testing, labeling and 
        certification, and government procurement;
          (4) the protection of property rights, such as protection 
        against expropriation and a functioning and fair judicial 
        system;
          (5) appropriate fiscal systems, such as reducing high import 
        and corporate taxes, controlling government consumption, 
        participation in bilateral investment treaties, and the 
        harmonization of such treaties to avoid double taxation;
          (6) foreign investment issues, such as the provision of 
        national treatment for foreign investors and other measures to 
        create an environment conducive to domestic and foreign 
        investment;
          (7) supporting the growth of regional markets within a free 
        trade area framework;
          (8) governance issues, such as eliminating government 
        corruption, minimizing government intervention in the market 
        such as price controls and subsidies, and streamlining the 
        business license process;
          (9) supporting the growth of the private sector, in 
        particular by promoting the emergence of a new generation of 
        African entrepreneurs;
          (10) encouraging the private ownership of government-
        controlled economic enterprises through divestiture programs;
          (11) removing restrictions on investment; and
          (12) observing the rule of law, including equal protection 
        under the law and the right to due process and a fair trial.
  (b) Additional Factors.--In determining whether a sub-Saharan African 
country is eligible under subsection (a), the President shall take into 
account the following factors:
          (1) An expression by such country of its desire to be an 
        eligible country under subsection (a).
          (2) The extent to which such country has made substantial 
        progress toward--
                  (A) reducing tariff levels;
                  (B) binding its tariffs in the World Trade 
                Organization and assuming meaningful binding 
                obligations in other sectors of trade; and
                  (C) eliminating nontariff barriers to trade.
          (3) Whether such country, if not already a member of the 
        World Trade Organization, is actively pursuing membership in 
        that Organization.
          (4) Where applicable, the extent to which such country is in 
        material compliance with its obligations to the International 
        Monetary Fund and other international financial institutions.
          (5) The extent to which such country has a recognizable 
        commitment to reducing poverty, increasing the availability of 
        health care and educational opportunities, the expansion of 
        physical infrastructure in a manner designed to maximize 
        accessibility, increased access to market and credit facilities 
        for small farmers and producers, and improved economic 
        opportunities for women as entrepreneurs and employees, and 
        promoting and enabling the formation of capital to support the 
        establishment and operation of micro-enterprises.
          (6) Whether or not such country engages in activities that 
        undermine United States national security or foreign policy 
        interests.
  (c) Continuing Compliance.--
          (1) Monitoring and review of certain countries.--The 
        President shall monitor and review the progress of sub-Saharan 
        African countries in order to determine their current or 
        potential eligibility under subsection (a). Such determinations 
        shall be based on quantitative factors to the fullest extent 
        possible and shall be included in the annual report required by 
        section 15.
          (2) Ineligibility of certain countries.--A sub-Saharan 
        African country described in paragraph (1) that has not made 
        continual progress in meeting the requirements with which it is 
        not in compliance shall be ineligible to participate in 
        programs, projects, or activities, or receive assistance or 
        other benefits, under this Act.
  (d) Violations of Human Rights and Ineligible Countries.--It is the 
sense of the Congress that a sub-Saharan African country should not be 
eligible to participate in programs, projects, or activities, or 
receive assistance or other benefits under this Act if the government 
of that country is determined by the President to engage in a 
consistent pattern of gross violations of internationally recognized 
human rights.

SEC. 5. ADDITIONAL AUTHORITIES AND INCREASED FLEXIBILITY TO PROVIDE 
                    ASSISTANCE UNDER THE DEVELOPMENT FUND FOR AFRICA.

  (a) Use of Sustainable Development Assistance To Support Further 
Economic Growth.--It is the sense of the Congress that sustained 
economic growth in sub-Saharan Africa depends in large measure upon the 
development of a receptive environment for trade and investment, and 
that to achieve this objective the United States Agency for 
International Development should continue to support programs which 
help to create this environment. Investments in human resources, 
development, and implementation of free market policies, including 
policies to liberalize agricultural markets and improve food security, 
and the support for the rule of law and democratic governance should 
continue to be encouraged and enhanced on a bilateral and regional 
basis.
  (b) Declarations of Policy.--The Congress makes the following 
declarations:
          (1) The Development Fund for Africa established under chapter 
        10 of part I of the Foreign Assistance Act of 1961 (22 U.S.C. 
        2293 et seq.) has been an effective tool in providing 
        development assistance to sub-Saharan Africa since 1988.
          (2) The Development Fund for Africa will complement the other 
        provisions of this Act and lay a foundation for increased trade 
        and investment opportunities between the United States and sub-
        Saharan Africa.
          (3) Assistance provided through the Development Fund for 
        Africa will continue to support programs and activities that 
        promote the long term economic development of sub-Saharan 
        Africa, such as programs and activities relating to the 
        following:
                  (A) Strengthening primary and vocational education 
                systems, especially the acquisition of middle-level 
                technical skills for operating modern private 
                businesses and the introduction of college level 
                business education, including the study of 
                international business, finance, and stock exchanges.
                  (B) Strengthening health care systems.
                  (C) Strengthening family planning service delivery 
                systems.
                  (D) Supporting democratization, good governance and 
                civil society and conflict resolution efforts.
                  (E) Increasing food security by promoting the 
                expansion of agricultural and agriculture-based 
                industrial production and productivity and increasing 
                real incomes for poor individuals.
                  (F) Promoting an enabling environment for private 
                sector-led growth through sustained economic reform, 
                privatization programs, and market-led economic 
                activities.
                  (G) Promoting decentralization and local 
                participation in the development process, especially 
                linking the rural production sectors and the industrial 
                and market centers throughout Africa.
                  (H) Increasing the technical and managerial capacity 
                of sub-Saharan African individuals to manage the 
                economy of sub-Saharan Africa.
                  (I) Ensuring sustainable economic growth through 
                environmental protection.
          (4) The African Development Foundation has a unique 
        congressional mandate to empower the poor to participate fully 
        in development and to increase opportunities for gainful 
        employment, poverty alleviation, and more equitable income 
        distribution in sub-Saharan Africa. The African Development 
        Foundation has worked successfully to enhance the role of women 
        as agents of change, strengthen the informal sector with an 
        emphasis on supporting micro and small sized enterprises, 
        indigenous technologies, and mobilizing local financing. The 
        African Development Foundation should develop and implement 
        strategies for promoting participation in the socioeconomic 
        development process of grassroots and informal sector groups 
        such as nongovernmental organizations, cooperatives, artisans, 
        and traders into the programs and initiatives established under 
        this Act.
  (c) Additional Authorities.--
          (1) In general.--Section 496(h) of the Foreign Assistance Act 
        of 1961 (22 U.S.C. 2293(h)) is amended--
                  (A) by redesignating paragraph (3) as paragraph (4); 
                and
                  (B) by inserting after paragraph (2) the following:
          ``(3) Democratization and conflict resolution capabilities.--
        Assistance under this section may also include program 
        assistance--
                  ``(A) to promote democratization, good governance, 
                and strong civil societies in sub-Saharan Africa; and
                  ``(B) to strengthen conflict resolution capabilities 
                of governmental, intergovernmental, and nongovernmental 
                entities in sub-Saharan Africa.''.
          (2) Conforming amendment.--Section 496(h)(4) of such Act, as 
        amended by paragraph (1), is further amended by striking 
        ``paragraphs (1) and (2)'' in the first sentence and inserting 
        ``paragraphs (1), (2), and (3)''.
  (d) Waiver Authority.--Section 496 of the Foreign Assistance Act of 
1961 (22 U.S.C. 2293) is amended by adding at the end the following:
  ``(p) Waiver Authority.--
          ``(1) In general.--Except as provided in paragraph (2), the 
        President may waive any provision of law that earmarks, for a 
        specified country, organization, or purpose, funds made 
        available to carry out this chapter if the President 
        determines, subject to the notification procedures under 
        section 634A, that the waiver of such provision of law would 
        provide improved conditions for the people of Africa. The 
        President shall notify the appropriate congressional 
        committees, in accordance with the procedures applicable to 
        reprogramming notifications under section 634A of this Act, at 
        least 15 days before any determination under this paragraph 
        takes effect.
          ``(2) Exceptions.--
                  ``(A) Child survival activities.--The authority 
                contained in paragraph (1) may not be used to waive a 
                provision of law that earmarks funds made available to 
                carry out this chapter for the following purposes:
                          ``(i) Immunization programs.
                          ``(ii) Oral rehydration programs.
                          ``(iii) Health and nutrition programs, and 
                        related education programs, which address the 
                        needs of mothers and children.
                          ``(iv) Water and sanitation programs.
                          ``(v) Assistance for displaced and orphaned 
                        children.
                          ``(vi) Programs for the prevention, 
                        treatment, and control of, and research on, 
                        tuberculosis, HIV/AIDS, polio, malaria, and 
                        other diseases.
                          ``(vii) Basic education programs for 
                        children.
                          ``(viii) Contribution on a grant basis to the 
                        United Nations Children's Fund (UNICEF) 
                        pursuant to section 301 of this Act.
                  ``(B) Requirement to supersede waiver authority.--The 
                provisions of this subsection shall not be superseded 
                except by a provision of law enacted after the date of 
                the enactment of the African Growth and Opportunity Act 
                which specifically repeals, modifies, or supersedes 
                such provisions.''.

SEC. 6. UNITED STATES-SUB-SAHARAN AFRICA TRADE AND ECONOMIC COOPERATION 
                    FORUM.

  (a) Declaration of Policy.--The President shall convene annual high-
level meetings between appropriate officials of the United States 
Government and officials of the governments of sub-Saharan African 
countries in order to foster close economic ties between the United 
States and sub-Saharan Africa.
  (b) Establishment.--Not later than 12 months after the date of the 
enactment of this Act, the President, after consulting with the 
governments concerned, shall establish a United States-Sub-Saharan 
Africa Trade and Economic Cooperation Forum (hereafter in this section 
referred to as the ``Forum'').
  (c) Requirements.--In creating the Forum, the President shall meet 
the following requirements:
          (1) The President shall direct the Secretary of Commerce, the 
        Secretary of the Treasury, the Secretary of State, and the 
        United States Trade Representative to host the first annual 
        meeting with the counterparts of such Secretaries from the 
        governments of sub-Saharan African countries eligible under 
        section 4, the Secretary General of the Organization of African 
        Unity, and government officials from other appropriate 
        countries in Africa, to discuss expanding trade and investment 
        relations between the United States and sub-Saharan Africa and 
        the implementation of this Act.
          (2)(A) The President, in consultation with the Congress, 
        shall encourage United States nongovernmental organizations to 
        host annual meetings with nongovernmental organizations from 
        sub-Saharan Africa in conjunction with the annual meetings of 
        the Forum for the purpose of discussing the issues described in 
        paragraph (1).
          (B) The President, in consultation with the Congress, shall 
        encourage United States representatives of the private sector 
        to host annual meetings with representatives of the private 
        sector from sub-Saharan Africa in conjunction with the annual 
        meetings of the Forum for the purpose of discussing the issues 
        described in paragraph (1).
          (3) The President shall, to the extent practicable, meet with 
        the heads of governments of sub-Saharan African countries 
        eligible under section 4 not less than once every two years for 
        the purpose of discussing the issues described in paragraph 
        (1). The first such meeting should take place not later than 
        twelve months after the date of the enactment of this Act.
  (d) Dissemination of Information by USIA.--In order to assist in 
carrying out the purposes of the Forum, the United States Information 
Agency shall disseminate regularly, through multiple media, economic 
information in support of the free market economic reforms described in 
this Act.
  (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section.
  (f) Limitation on Use of Funds.--None of the funds authorized under 
this section may be used to create or support any nongovernmental 
organization for the purpose of expanding or facilitating trade between 
the United States and sub-Saharan Africa.

SEC. 7. UNITED STATES-SUB-SAHARAN AFRICA FREE TRADE AREA.

  (a) Declaration of Policy.--The Congress declares that a United 
States-Sub-Saharan Africa Free Trade Area should be established, or 
free trade agreements should be entered into, in order to serve as the 
catalyst for increasing trade between the United States and sub-Saharan 
Africa and increasing private sector development in sub-Saharan Africa.
  (b) Plan Requirement.--
          (1) In general.--The President, taking into account the 
        provisions of the treaty establishing the African Economic 
        Community and the willingness of the governments of sub-Saharan 
        African countries to engage in negotiations to enter into free 
        trade agreements, shall develop a plan for the purpose of 
        entering into one or more trade agreements with sub-Saharan 
        African countries eligible under section 4 in order to 
        establish a United States-Sub-Saharan Africa Free Trade Area 
        (hereafter in this section referred to as the ``Free Trade 
        Area'').
          (2) Elements of plan.--The plan shall include the following:
                  (A) The specific objectives of the United States with 
                respect to the establishment of the Free Trade Area and 
                a suggested timetable for achieving those objectives.
                  (B) The benefits to both the United States and sub-
                Saharan Africa with respect to the Free Trade Area.
                  (C) A mutually agreed-upon timetable for establishing 
                the Free Trade Area.
                  (D) The implications for and the role of regional and 
                sub-regional organizations in sub-Saharan Africa with 
                respect to the Free Trade Area.
                  (E) Subject matter anticipated to be covered by the 
                agreement for establishing the Free Trade Area and 
                United States laws, programs, and policies, as well as 
                the laws of participating eligible African countries 
                and existing bilateral and multilateral and economic 
                cooperation and trade agreements, that may be affected 
                by the agreement or agreements.
                  (F) Procedures to ensure the following:
                          (i) Adequate consultation with the Congress 
                        and the private sector during the negotiation 
                        of the agreement or agreements for establishing 
                        the Free Trade Area.
                          (ii) Consultation with the Congress regarding 
                        all matters relating to implementation of the 
                        agreement or agreements.
                          (iii) Approval by the Congress of the 
                        agreement or agreements.
                          (iv) Adequate consultations with the relevant 
                        African governments and African regional and 
                        subregional intergovernmental organizations 
                        during the negotiations of the agreement or 
                        agreements.
  (c) Reporting Requirement.--Not later than 12 months after the date 
of the enactment of this Act, the President shall prepare and transmit 
to the Congress a report containing the plan developed pursuant to 
subsection (b).

SEC. 8. ELIMINATING TRADE BARRIERS AND ENCOURAGING EXPORTS.

  (a) Findings.--The Congress makes the following findings:
          (1) The lack of competitiveness of sub-Saharan Africa in the 
        global market, especially in the manufacturing sector, make it 
        a limited threat to market disruption and no threat to United 
        States jobs.
          (2) Annual textile and apparel exports to the United States 
        from sub-Saharan Africa represent less than 1 percent of all 
        textile and apparel exports to the United States, which totaled 
        $45,932,000,000 in 1996.
          (3) Sub-Saharan Africa has limited textile manufacturing 
        capacity. During 1998 and the succeeding 4 years, this limited 
        capacity to manufacture textiles and apparel is projected to 
        grow at a modest rate. Given this limited capacity to export 
        textiles and apparel, it will be very difficult for these 
        exports from sub-Saharan Africa, during 1998 and the succeeding 
        9 years, to exceed 3 percent annually of total imports of 
        textile and apparel to the United States. If these exports from 
        sub-Saharan Africa remain around 3 percent of total imports, 
        they will not represent a threat to United States workers, 
        consumers, or manufacturers.
  (b) Sense of the Congress.--It is the sense of the Congress that--
          (1) it would be to the mutual benefit of the countries in 
        sub-Saharan Africa and the United States to ensure that the 
        commitments of the World Trade Organization and associated 
        agreements are faithfully implemented in each of the member 
        countries, so as to lay the groundwork for sustained growth in 
        textile and apparel exports and trade under agreed rules and 
        disciplines;
          (2) reform of trade policies in sub-Saharan Africa with the 
        objective of removing structural impediments to trade, 
        consistent with obligations under the World Trade Organization, 
        can assist the countries of the region in achieving greater and 
        greater diversification of textile and apparel export 
        commodities and products and export markets; and
          (3) the President should support textile and apparel trade 
        reform in sub-Saharan Africa by, among other measures, 
        providing technical assistance, sharing of information to 
        expand basic knowledge of how to trade with the United States, 
        and encouraging business-to-business contacts with the region.
  (c) Treatment of Quotas.--
          (1) Kenya and mauritius.--Pursuant to the Agreement on 
        Textiles and Clothing, the United States shall eliminate the 
        existing quotas on textile and apparel exports to the United 
        States--
                  (A) from Kenya within 30 days after that country 
                adopts an efficient visa system to guard against 
                unlawful transshipment of textile and apparel goods and 
                the use of counterfeit documents; and
                  (B) from Mauritius within 30 days after that country 
                adopts such a visa system.
        The Customs Service shall provide the necessary technical 
        assistance to Kenya and Mauritius in the development and 
        implementation of those visa systems.
          (2) Other sub-saharan countries.--The President shall 
        continue the existing no quota policy for countries in sub-
        Saharan Africa. The President shall submit to the Congress, not 
        later than March 31 of each year, a report on the growth in 
        textiles and apparel exports to the United States from 
        countries in sub-Saharan Africa in order to protect United 
        States consumers, workers, and textile manufacturers from 
        economic injury on account of the no quota policy.
  (d) Customs Procedures and Enforcement.--
          (1) Actions by countries against transshipment and 
        circumvention.--The President should ensure that any country in 
        sub-Saharan Africa that intends to export textile and apparel 
        goods to the United States--
                  (A) has in place a functioning and effective visa 
                system and domestic laws and enforcement procedures to 
                guard against unlawful transshipment of textile and 
                apparel goods and the use of counterfeit documents; and
                  (B) will cooperate fully with the United States to 
                address and take action necessary to prevent 
                circumvention, as provided in Article 5 of the 
                Agreement on Textiles and Clothing.
          (2) Penalties against exporters.--If the President 
        determines, based on sufficient evidence, that an exporter has 
        willfully falsified information regarding the country of 
        origin, manufacture, processing, or assembly of a textile or 
        apparel article for which duty-free treatment under section 
        503(a)(1)(C) of the Trade Act of 1974 is claimed, then the 
        President shall deny to such exporter, and any successors of 
        such exporter, for a period of 2 years, duty-free treatment 
        under such section for textile and apparel articles.
          (3) Applicability of united states laws and procedures.--All 
        provisions of the laws, regulations, and procedures of the 
        United States relating to the denial of entry of articles or 
        penalties against individuals or entities for engaging in 
        illegal transshipment, fraud, or other violations of the 
        customs laws shall apply to imports from Sub-Saharan countries.
          (4) Monitoring and reports to congress.--The Customs Service 
        shall monitor and the Commissioner of Customs shall submit to 
        the Congress, not later than March 31 of each year, a report on 
        the effectiveness of the visa systems described in subsection 
        (c)(1) and paragraph (1) of this subsection and on measures 
        taken by countries in Sub-Saharan Africa which export textiles 
        or apparel to the United States to prevent circumvention as 
        described in Article 5 of the Agreement on Textiles and 
        Clothing.
  (e) Definition.--For purposes of this section, the term ``Agreement 
on Textiles and Clothing'' means the Agreement on Textiles and Clothing 
referred to in section 101(d)(4) of the Uruguay Round Agreements Act 
(19 U.S.C. 3511(d)(4)).

SEC. 9. GENERALIZED SYSTEM OF PREFERENCES.

  (a) Preferential Tariff Treatment for Certain Articles.--Section 
503(a)(1) of the Trade Act of 1974 (19 U.S.C. 2463(a)(1)) is amended--
          (1) by redesignating subparagraph (C) as subparagraph (D); 
        and
          (2) by inserting after subparagraph (B) the following:
                  ``(C) Eligible countries in sub-saharan africa.--The 
                President may provide duty-free treatment for any 
                article set forth in paragraph (1) of subsection (b) 
                that is the growth, product, or manufacture of an 
                eligible country in sub-Saharan Africa that is a 
                beneficiary developing country, if, after receiving the 
                advice of the International Trade Commission in 
                accordance with subsection (e), the President 
                determines that such article is not import-sensitive in 
                the context of imports from eligible countries in sub-
                Saharan Africa. This subparagraph shall not affect the 
                designation of eligible articles under subparagraph 
                (B).''.
  (b) Rules of Origin.--Section 503(a)(2) of the Trade Act of 1974 (19 
U.S.C. 2463(a)(2)) is amended by adding at the end the following:
                  ``(C) Eligible countries in sub-saharan africa.--For 
                purposes of determining the percentage referred to in 
                subparagraph (A) in the case of an article of an 
                eligible country in sub-Saharan Africa that is a 
                beneficiary developing country--
                          ``(i) if the cost or value of materials 
                        produced in the customs territory of the United 
                        States is included with respect to that 
                        article, an amount not to exceed 15 percent of 
                        the appraised value of the article at the time 
                        it is entered that is attributed to such United 
                        States cost or value may be applied toward 
                        determining the percentage referred to in 
                        subparagraph (A); and
                          ``(ii) the cost or value of the materials 
                        included with respect to that article that are 
                        produced in any beneficiary developing country 
                        that is an eligible country in sub-Saharan 
                        Africa shall be applied in determining such 
                        percentage.''.
  (c) Waiver of Competitive Need Limitation.--Section 503(c)(2)(D) of 
the Trade Act of 1974 (19 U.S.C. 2463(c)(2)(D)) is amended to read as 
follows:
                  ``(D) Least-developed beneficiary developing 
                countries and eligible countries in sub-saharan 
                africa.--Subparagraph (A) shall not apply to any least-
                developed beneficiary developing country or any 
                eligible country in sub-Saharan Africa.''.
  (d) Extension of Program.--Section 505 of the Trade Act of 1974 (19 
U.S.C. 2465) is amended to read as follows:

``SEC. 505. DATE OF TERMINATION.

  ``(a) Countries in Sub-Saharan Africa.--No duty-free treatment 
provided under this title shall remain in effect after June 30, 2008, 
with respect to beneficiary developing countries that are eligible 
countries in sub-Saharan Africa.
  ``(b) Other Countries.--No duty-free treatment provided under this 
title shall remain in effect after June 30, 1998, with respect to 
beneficiary developing countries other than those provided for in 
subsection (a).''.
  (e) Definition.--Section 507 of the Trade Act of 1974 (19 U.S.C. 
2467) is amended by adding at the end the following:
          ``(6) Eligible country in sub-saharan africa.--The terms 
        `eligible country in sub-Saharan Africa' and `eligible 
        countries in sub-Saharan Africa' mean a country or countries 
        that the President has determined to be eligible under section 
        4 of the African Growth and Opportunity Act.''.
  (f) Effective Date.--The amendments made by this section take effect 
on July 1, 1998.

SEC. 10. INTERNATIONAL FINANCIAL INSTITUTIONS AND DEBT REDUCTION.

  (a) Better Mechanisms To Further Goals for Sub-Saharan Africa.--It is 
the sense of the Congress that the Secretary of the Treasury should 
instruct the United States Executive Directors of the International 
Bank for Reconstruction and Development, the International Monetary 
Fund, and the African Development Bank to use the voice and votes of 
the Executive Directors to encourage vigorously their respective 
institutions to develop enhanced mechanisms which further the following 
goals in eligible countries in sub-Saharan Africa:
          (1) Strengthening and expanding the private sector, 
        especially among women-owned businesses.
          (2) Reducing tariffs, nontariff barriers, and other trade 
        obstacles, and increasing economic integration.
          (3) Supporting countries committed to accountable government, 
        economic reform, the eradication of poverty, and the building 
        of civil societies.
          (4) Supporting deep debt reduction at the earliest possible 
        date with the greatest amount of relief for eligible poorest 
        countries under the ``Heavily Indebted Poor Countries'' (HIPC) 
        debt initiative.
  (b) Sense of Congress.--It is the sense of the Congress that relief 
provided to countries in sub-Saharan Africa which qualify for the 
Heavily Indebted Poor Countries debt initiative should primarily be 
made through grants rather than through extended-term debt, and that 
interim relief or interim financing should be provided for eligible 
countries that establish a strong record of macroeconomic reform.
  (c) Executive Branch Initiatives.--The Congress supports and 
encourages the implementation of the following initiatives of the 
executive branch:
          (1) American-african business partnership.--The Agency for 
        International Development devoting up to $1,000,000 annually to 
        help catalyze relationships between United States firms and 
        firms in sub-Saharan Africa through a variety of business 
        associations and networks.
          (2) Technical assistance to promote reforms.--The Agency for 
        International Development providing up to $5,000,000 annually 
        in short-term technical assistance programs to help the 
        governments of sub-Saharan African countries to--
                  (A) liberalize trade and promote exports;
                  (B) bring their legal regimes into compliance with 
                the standards of the World Trade Organization in 
                conjunction with membership in that Organization; and
                  (C) make financial and fiscal reforms, as well as the 
                United States Department of Agriculture providing 
                support to promote greater agribusiness linkages.
          (3) Agricultural market liberalization.--The Agency for 
        International Development devoting up to $15,000,000 annually 
        as part of the multi-year Africa Food Security Initiative to 
        help address such critical agricultural policy issues as market 
        liberalization, agricultural export development, and 
        agribusiness investment in processing and transporting 
        agricultural commodities.
          (4) Trade promotion.--The Trade Development Agency increasing 
        the number of reverse trade missions to growth-oriented 
        countries in sub-Saharan Africa.
          (5) Trade in services.--Efforts by United States embassies in 
        the countries in sub-Saharan Africa to encourage their host 
        governments--
                  (A) to participate in the ongoing negotiations on 
                financial services in the World Trade Organization;
                  (B) to revise their existing schedules to the General 
                Agreement on Trade in Services of the World Trade 
                Organization in light of the successful conclusion of 
                negotiations on basic telecommunications services; and
                  (C) to make further commitments in their schedules to 
                the General Agreement on Trade in Services in order to 
                encourage the removal of tariff and nontariff barriers 
                and to foster competition in the services sector in 
                those countries.

SEC. 11. SUB-SAHARAN AFRICA EQUITY AND INFRASTRUCTURE FUNDS.

  (a) Initiation of Funds.--It is the sense of the Congress that the 
Overseas Private Investment Corporation should, within 12 months after 
the date of the enactment of this Act, exercise the authorities it has 
to initiate 2 or more equity funds in support of projects in the 
countries in sub-Saharan Africa.
  (b) Structure and Types of Funds.--
          (1) Structure.--Each fund initiated under subsection (a) 
        should be structured as a partnership managed by professional 
        private sector fund managers and monitored on a continuing 
        basis by the Corporation.
          (2) Capitalization.--Each fund should be capitalized with a 
        combination of private equity capital, which is not guaranteed 
        by the Corporation, and debt for which the Corporation provides 
        guaranties.
          (3) Types of funds.--
                  (A) Equity fund for sub-saharan africa.--One of the 
                funds should be an equity fund, with assets of up to 
                $150,000,000, the primary purpose of which is to 
                achieve long-term capital appreciation through equity 
                investments in support of projects in countries in sub-
                Saharan Africa.
                  (B) Infrastructure fund.--One or more of the funds, 
                with combined assets of up to $500,000,000, should be 
                used in support of infrastructure projects in countries 
                of sub-Saharan Africa. The primary purpose of any such 
                fund would be to achieve long-term capital appreciation 
                through investing in financing for infrastructure 
                projects in sub-Saharan Africa, including for the 
                expansion of businesses in sub-Saharan Africa, 
                restructurings, management buyouts and buyins, 
                businesses with local ownership, and privatizations.
          (4) Emphasis.--The Corporation shall ensure that the funds 
        are used to provide support in particular to women 
        entrepreneurs and to innovative investments that expand 
        opportunities for women and maximize employment opportunities 
        for poor individuals.

SEC. 12. OVERSEAS PRIVATE INVESTMENT CORPORATION AND EXPORT-IMPORT BANK 
                    INITIATIVES.

  (a) Overseas Private Investment Corporation.--
          (1) Advisory committee.--Section 233 of the Foreign 
        Assistance Act of 1961 is amended by adding at the end the 
        following:
  ``(e) Advisory Committee.--The Board shall take prompt measures to 
increase the loan, guarantee, and insurance programs, and financial 
commitments, of the Corporation in sub-Saharan Africa, including 
through the establishment and use of an advisory committee to assist 
the Board in developing and implementing policies, programs, and 
financial instruments with respect to sub-Saharan Africa. In addition, 
the advisory committee shall make recommendations to the Board on how 
the Corporation can facilitate greater support by the United States for 
trade and investment with and in sub-Saharan Africa. The advisory 
committee shall terminate 4 years after the date of the enactment of 
this subsection.''.
          (2) Reports to the congress.--Within 6 months after the date 
        of the enactment of this Act, and annually for each of the 4 
        years thereafter, the Board of Directors of the Overseas 
        Private Investment Corporation shall submit to the Congress a 
        report on the steps that the Board has taken to implement 
        section 233(e) of the Foreign Assistance Act of 1961 (as added 
        by paragraph (1)) and any recommendations of the advisory board 
        established pursuant to such section.
  (b) Export-Import Bank.--
          (1) Advisory committee for sub-saharan africa.--Section 2(b) 
        of the Export-Import Bank Act of 1945 (12 U.S.C. 635(b)) is 
        amended by inserting after paragraph (12) the following:
  ``(13)(A) The Board of Directors of the Bank shall take prompt 
measures, consistent with the credit standards otherwise required by 
law, to promote the expansion of the Bank's financial commitments in 
sub-Saharan Africa under the loan, guarantee, and insurance programs of 
the Bank.
  ``(B)(i) The Board of Directors shall establish and use an advisory 
committee to advise the Board of Directors on the development and 
implementation of policies and programs designed to support the 
expansion described in subparagraph (A).
  ``(ii) The advisory committee shall make recommendations to the Board 
of Directors on how the Bank can facilitate greater support by United 
States commercial banks for trade with sub-Saharan Africa.
  ``(iii) The advisory committee shall terminate 4 years after the date 
of the enactment of this subparagraph.''.
          (2) Reports to the congress.--Within 6 months after the date 
        of the enactment of this Act, and annually for each of the 4 
        years thereafter, the Board of Directors of the Export-Import 
        Bank of the United States shall submit to the Congress a report 
        on the steps that the Board has taken to implement section 
        2(b)(13)(B) of the Export-Import Bank Act of 1945 (as added by 
        paragraph (1)) and any recommendations of the advisory 
        committee established pursuant to such section.

SEC. 13. ESTABLISHMENT OF ASSISTANT UNITED STATES TRADE REPRESENTATIVE 
                    FOR SUB-SAHARAN AFRICA.

  (a) Establishment.--The President shall establish a position of 
Assistant United States Trade Representative within the Office of the 
United States Trade Representative to focus on trade issues relating to 
sub-Saharan Africa.
  (b) Funding and Staff.--The President shall ensure that the Assistant 
United States Trade Representative appointed pursuant to subsection (a) 
has adequate funding and staff to carry out the duties described in 
subsection (a).

SEC. 14. EXPANSION OF THE UNITED STATES AND FOREIGN COMMERCIAL SERVICE 
                    IN SUB-SAHARAN AFRICA.

  (a) Sense of the Congress.--It is the sense of the Congress that the 
United States and Foreign Commercial Service should expand its presence 
in sub-Saharan Africa by increasing the number of posts and the number 
of personnel it allocates to sub-Saharan Africa.
  (b) Reporting Requirement.--Not later than 120 days after the date of 
the enactment of this Act, the Secretary of Commerce, in consultation 
with the Secretary of State, should report to the Congress on the 
feasibility of expanding the presence in sub-Saharan Africa of the 
United States and Foreign Commercial Service.

SEC. 15. REPORTING REQUIREMENT.

  The President shall submit to the Congress, not later than 1 year 
after the date of the enactment of this Act, and not later than the end 
of each of the next 4 1-year periods thereafter, a report on the 
implementation of this Act.

SEC. 16. SUB-SAHARAN AFRICA DEFINED.

  For purposes of this Act, the terms ``sub-Saharan Africa'', ``sub-
Saharan African country'', ``country in sub-Saharan Africa'', and 
``countries in sub-Saharan Africa'' refer to the following:
          Republic of Angola (Angola)
          Republic of Botswana (Botswana)
          Republic of Burundi (Burundi)
          Republic of Cape Verde (Cape Verde)
          Republic of Chad (Chad)
          Democratic Republic of Congo
          Republic of the Congo (Congo)
          Republic of Djibouti (Djibouti)
          State of Eritrea (Eritrea)
          Gabonese Republic (Gabon)
          Republic of Ghana (Ghana)
          Republic of Guinea-Bissau (Guinea-Bissau)
          Kingdom of Lesotho (Lesotho)
          Republic of Madagascar (Madagascar)
          Republic of Mali (Mali)
          Republic of Mauritius (Mauritius)
          Republic of Namibia (Namibia)
          Federal Republic of Nigeria (Nigeria)
          Democratic Republic of Sao Tome and Principe (Sao Tome and 
        Principe)
          Republic of Sierra Leone (Sierra Leone)
          Somalia
          Kingdom of Swaziland (Swaziland)
          Republic of Togo (Togo)
          Republic of Zimbabwe (Zimbabwe)
          Republic of Benin (Benin)
          Burkina Faso (Burkina)
          Republic of Cameroon (Cameroon)
          Central African Republic
          Federal Islamic Republic of the Comoros (Comoros)
          Republic of Cote d'Ivoire (Cote d'Ivoire)
          Republic of Equatorial Guinea (Equatorial Guinea)
          Ethiopia
          Republic of the Gambia (Gambia)
          Republic of Guinea (Guinea)
          Republic of Kenya (Kenya)
          Republic of Liberia (Liberia)
          Republic of Malawi (Malawi)
          Islamic Republic of Mauritania (Mauritania)
          Republic of Mozambique (Mozambique)
          Republic of Niger (Niger)
          Republic of Rwanda (Rwanda)
          Republic of Senegal (Senegal)
          Republic of Seychelles (Seychelles)
          Republic of South Africa (South Africa)
          Republic of Sudan (Sudan)
          United Republic of Tanzania (Tanzania)
          Republic of Uganda (Uganda)
          Republic of Zambia (Zambia)

SEC. 17. CLARIFICATION OF DEDUCTION FOR SEVERANCE PAY.

  (a) In General.--Section 404(a) of the Internal Revenue Code of 1986 
(relating to deduction for contributions of an employer to an 
employee's trust or annuity plan and compensation under a deferred-
payment plan) is amended by adding at the end the following new 
paragraph:
          ``(11) Determinations relating to severance pay.--For 
        purposes of determining under this section--
                  ``(A) whether severance pay is deferred compensation, 
                and
                  ``(B) when severance pay is paid,
        no amount shall be treated as received by the employee, or 
        paid, until it is actually received by the employee.''
  (b) Effective Date.--
          (1) In general.--The amendment made by subsection (a) shall 
        apply to taxable years ending after October 8, 1997.
          (2) Change in method of accounting.--In the case of any 
        taxpayer required by the amendment made by subsection (a) to 
        change its method of accounting for its first taxable year 
        ending after October 8, 1997--
                  (A) such change shall be treated as initiated by the 
                taxpayer,
                  (B) such change shall be treated as made with the 
                consent of the Secretary of the Treasury, and
                  (C) the net amount of the adjustments required to be 
                taken into account by the taxpayer under section 481 of 
                the Internal Revenue Code of 1986 shall be taken into 
                account in such first taxable year.

                            I. INTRODUCTION

                         A. Purpose and Summary

    H.R. 1432 would authorize a new trade and investment policy 
toward countries in sub-Saharan Africa.
    H.R. 1432, as ordered reported by the Committee on 
International Relations, and further amended by the Committee 
on Ways and Means, authorizes a new trade and investment policy 
toward the countries of sub-Saharan Africa. The bill states 
that the United States seeks to facilitate market-led economic 
growth in the countries in sub-Saharan Africa. To this end, 
H.R. 1432 contains a statement of policy that Congress supports 
economic self-reliance for sub-Saharan African countries, 
particularly those committed to economic and political reform; 
market incentives and private sector growth; the eradication of 
poverty; and the importance of women to economic growth and 
development.
    The bill would require the President to identify individual 
countries in sub-Saharan Africa that have established, or are 
making continual progress toward establishing, a market-based 
economy consistent with the criteria outlined. After consulting 
with the governments of eligible countries, H.R. 1432 would 
require the President to establish a United States-sub-Saharan 
Africa Trade and Economic Cooperation Forum, not later than 12 
months after the date of enactment, for the purpose of 
convening annual high-level meetings between U.S. government 
officials and officials of participating sub-Saharan African 
countries.
    H.R. 1432 also declares that a United States-sub-Saharan 
Africa Free Trade Area should be established, or free trade 
agreements entered into, to serve as the catalyst for 
increasing trade between the United States and sub-Saharan 
Africa and for increasing private sector development in the 
region. To this end, the bill would require the President to 
develop a plan for entering into one or more trade agreements 
with eligible sub-Saharan African countries, and report to 
Congress within 12 months of enactment.
    The bill would also require the United States to eliminate 
the existing quotas on textile and apparel exports to the 
United States from Kenya and Mauritius within 30 days of those 
countries adopting visa systems to guard against unlawful 
transshipments of textile and apparel goods and the use of 
counterfeit documents. In addition, the provision requires the 
President to continue the existing policy of not imposing 
quotas on textile and apparel exports to the United States from 
other sub-Saharan African countries.
    The bill would direct the President to ensure that any 
country in Africa that intends to export textile and apparel 
goods to the United States: 1) has in place an effective visa 
system and domestic laws and enforcement procedures to guard 
against unlawful transshipment and the use of counterfeit 
documents; and 2) cooperates fully with the U.S. to address and 
take action necessary to prevent circumvention. In addition, 
the bill would require the President to deny all trade benefits 
under the bill for two years to any exporter, or the successor 
of any exporter, determined to have engaged in illegal 
transshipment.
    The bill would extend duty-free treatment under the 
Generalized System of Preferences (GSP) for beneficiary 
countries in sub-Saharan Africa that are eligible to 
participate in the Act until June 30, 2008. In addition, 
effective July 1, 1998, the bill amends the GSP statute to 
extend a series of enhanced benefits to sub-Saharan African 
beneficiary countries participating in the bill, subject to 
those countries also meeting the statutory criteria and rules 
of origin under the GSP program. Specifically, these amendments 
would authorize the President to grant duty-free treatment to 
products from eligible sub-Saharan African countries that are 
currently excluded from the GSP program, if he makes a 
determination after receiving advice from the International 
Trade Commission that imports of those products are not import 
sensitive in the context of imports from sub-Saharan Africa. 
The bill would also provide that the competitive need limits in 
the GSP program do not apply to imports from sub-Saharan 
African countries and would allow up to 15 percent U.S. content 
of an article to count toward the 35 percent local content 
requirement of the GSP program. Moreover, the bill would allow 
the 35 percent minimum value content requirement to be 
cumulated in any eligible sub-Saharan African country.
    H.R. 1432, as approved by the Committee, would direct the 
President to establish a position of Assistant United States 
Trade Representative for Africa within the Office of the United 
States Trade Representative to focus on trade issues relating 
to sub-Saharan Africa.
    Finally, the bill would require the President to submit to 
Congress a report on the implementation of the Act, not later 
than one year after the date of enactment, and not later than 
the end of each of the next four one-year periods thereafter.

                 B. Background and Need for Legislation

    Sub-Saharan Africa consists of a diverse set of 48 
countries, many of which have undergone significant political 
and economic change in recent years. Since 1990, more than 25 
African nations have held democratic elections. At the same 
time, more than 30 countries have instituted programs to 
replace their centralized economies with free markets under the 
guidance of bilateral and multilateral donors such as the World 
Bank and the International Monetary Fund.
    Despite the fact that 33 of the 48 countries in sub-Saharan 
Africa are members of the World Trade Organization (WTO), U.S. 
trade with sub-Saharan African countries relative to overall 
U.S. trade levels remains low. In 1996, U.S. merchandise 
exports to the region were valued at $6.1 billion, while U.S. 
merchandise imports in return totaled $15.2 billion. Although 
virtually all countries in sub-Saharan Africa qualify for duty-
free entry on a wide range of products under the GSP program, 
GSP imports from the region totaled only $576.5 million in 
1996, a figure representing only 3.4 percent of all U.S. GSP 
imports for the year.
    In 1994, Congress passed the Uruguay Round Agreements Act, 
which contained a provision requiring the President to produce 
a comprehensive trade and development policy for the countries 
of Africa. The first of the five reports called for by this 
legislation was submitted to Congress on February 5, 1996, the 
second on February 18, 1997, and the third on December 23, 
1997. Among other provisions, the President's reports set forth 
a policy framework centered around the five basic objectives of 
the Administration's Partnership for Growth and Opportunity in 
Africa. These objectives include trade liberalization and 
promotion, investment liberalization and promotion, development 
of the private sector, infrastructure enhancement, and economic 
reform.
    On January 14, 1997, the Committee on Ways and Means 
requested the International Trade Commission (ITC) to conduct a 
study of the effect on the U.S. economy of providing quota-free 
and duty-free access to textiles and apparel from sub-Saharan 
Africa. In the report sent to Congress on September 2, 1997, 
the ITC found that the effect on the U.S. industry and workers 
would be negligible. The ITC noted that sub-Saharan Africa 
represents a small portion of overall textiles and apparel 
imports, accounting for less than one percent, or $383 million, 
of total U.S. imports in this sector which were $46 billion in 
1996.
    The ITC report states that removal of all duties and quotas 
on imports from sub-Saharan Africa would result in a 26-46 
percent increase in these imports from the region (between $100 
million and $175 million), partly displacing imports from other 
countries. According to these estimates, imports from sub-
Saharan Africa are likely to remain below 2 percent of total 
U.S. imports of textile and apparel products for at least ten 
years after the provisions in H.R. 1432 take effect. In fact, 
the ITC indicated that this estimate most likely overstates the 
potential increase in sub-Saharan African imports because of 
structural problems in many of these economies.
    With certain exceptions, the ITC found that the textile and 
apparel industry in sub-Saharan Africa is underdeveloped 
because of lack of capital, management expertise, experience 
exporting to developed countries, and poor infrastructure and 
transportation problems. The exceptions to this finding are 
Mauritius, which has a well developed, exporting industry 
(including investment in nearby Madagascar), South Africa 
(including investments in nearby Lesotho and Swaziland), 
Zimbabwe, and Kenya. However, the report notes that the 
industries in these countries have traditionally focused their 
exports to Europe because of longstanding colonial ties.
    Currently, Mauritius and Kenya are the only two sub-Saharan 
countries under textile and apparel quota arrangements in the 
U.S. market. Kenya has two quotas, and did not fill either in 
1997. Mauritius filled two quota categories in 1997.

                         C. Legislative History

Committee bill

    On April 24, 1997, Messrs. Crane, Rangel, McDermott, 
Houghton, Jefferson, McNulty, et al. introduced H.R. 1432, the 
``African Growth and Opportunity Act'' to authorize a new trade 
and investment policy toward the countries of sub-Saharan 
Africa.
    On May 22, 1997, the Committee on International Relations 
Subcommittee on Africa ordered the bill H.R. 1432, as amended, 
favorably reported to the full International Relations 
Committee. On June 25, 1997, the Committee on International 
Relations ordered the bill H.R. 1432, as further amended, 
favorably reported to the House.
    On October 23, 1997, the Subcommittee on Trade of the 
Committee on Ways and Means ordered H.R. 1432, as ordered 
reported by the Committee on International Relations and as 
further amended, favorably reported to the Full Committee by a 
voice vote, with a quorum present.
    On February 25, 1998, the Committee on Ways and Means, 
ordered H.R. 1432, as reported by the Committee on 
International Relations and as further amended, favorably 
reported to the House by a voice vote, with a quorum present. 
The Administration statedits strong support for H.R. 1432.

Legislative hearing

    On April 29, 1997, the Subcommittee on Trade held a hearing 
on ways to expand U.S. trade with the countries of sub-Saharan 
Africa. The Subcommittee received testimony from both invited 
and public witnesses, many of whom stressed the importance of 
trade and investment relations with sub-Saharan Africa to the 
economic development and future self- reliance of countries in 
the region. To this end, witnesses from both the U.S. and 
African private sectors expressed support for H.R. 1432.

                      II. EXPLANATION OF THE BILL

                       A. Section 1: Short Title

Present law

    No provision.

Explanation of provision

    Section 1 states that the Act may be cited as the ``African 
Growth and Opportunity Act.''

Reason for change

    The section names the legislation for identification 
purposes.

Effective date

    The provision is effective upon enactment.

                         B. Section 2: Findings

Present law

    No provision.

Explanation of provision

    Section 2 contains the findings of the Congress that it is 
in the mutual economic interest of the United States and sub-
Saharan Africa to promote stable and sustainable economic 
growth and development in sub-Saharan Africa. To that end, the 
United States seeks to facilitate market-led economic growth 
in, and thereby the social and economic development of, the 
countries of sub-Saharan Africa. In particular, the United 
States seeks to assist sub-Saharan African countries, and the 
private sector in those countries, to achieve economic self-
reliance by:
          (1) strengthening and expanding the private sector in 
        sub-Saharan Africa, especially women-owned businesses;
          (2) encouraging increased trade and investment 
        between the U.S. and sub-Saharan Africa;
          (3) reducing tariff and non-tariff barriers and other 
        trade obstacles;
          (4) expanding U.S. assistance to sub-Saharan Africa's 
        regional integration efforts;
          (5) negotiating free trade areas;
          (6) establishing a United States-sub-Saharan Africa 
        Trade and Investment Partnership;
          (7) focusing on countries committed to accountable 
        government, economic reform, and the eradication of 
        poverty;
          (8) establishing a United States-sub-Saharan Africa 
        Economic Cooperation Forum; and
          (9) continuing to support development assistance for 
        those countries in sub-Saharan Africa attempting to 
        build civil societies.

Reason for change

    In the section, Congress finds that the United States and 
countries in sub-Saharan Africa have a shared interest in the 
economic development of sub-Saharan Africa. On this basis, the 
provision notes ways in which the United States seeks to assist 
the region in achieving economic self-reliance.

Effective date

    The provision is effective upon enactment.

                   C. Section 3: Statement of Policy

Present law

    No provision.

Explanation of provision

    In Section 3, the Congress expresses its support for the 
economic self-reliance of sub-Saharan African countries, 
particularly those committed to economic and political reform, 
market incentives and private sector growth; the eradication of 
poverty; and the importance of women to economic growth and 
development.

Reason for change

    Congress expresses its support for the economic self-
reliance of countries in sub-Saharan Africa, particularly those 
committed to implementing free market principles, political 
reform, and economic opportunity for all citizens.

Effective date

    The provision is effective upon enactment.

                 D. Section 4: Eligibility Requirements

Present law

    No provision.

Explanation of provision

    Section 4(a) states that a sub-Saharan African country 
shall be eligible to participate in this Act only if the 
President determines that the country does not engage in gross 
violations of internationally recognized human rights and has 
established, or is making continual progress toward 
establishing, a market economy, such as the establishment and 
enforcement of appropriate policies relating to:
          (1) promoting free movement of goods and services 
        between the U.S. and sub-Saharan Africa and among 
        countries in the region;
          (2) promoting the expansion of the production base 
        and the transformation of commodities and 
        nontraditional products for export through partnerships 
        between African and foreign investors;
          (3) trade issues, such as the protection of 
        intellectual property rights, improvements in 
        standards, testing, labeling and certification, and 
        government procurement;
          (4) the protection of property rights, such as 
        protection against expropriation and a functioning and 
        fair judicial system;
          (5) appropriate fiscal systems, such as reducing high 
        import and corporate taxes, controlling government 
        consumption, participation in bilateral investment 
        treaties, and the harmonization of such treaties to 
        avoid double taxation;
          (6) foreign investment issues, such as the provision 
        of national treatment for investors and other measures 
        conducive to domestic and foreign investment;
          (7) supporting the growth of regional markets within 
        a free trade area framework;
          (8) governance issues, such as eliminating government 
        corruption and minimizing government intervention in 
        the market;
          (9) supporting the growth of the private sector, in 
        particular by promoting the emergence of a new 
        generation of African entrepreneurs;
          (10) encouraging the private ownership of government-
        controlled economic enterprises through divestiture 
        programs;
          (11) removing restrictions on investment; and,
          (12) observing the rule of law, including equal 
        protection under the law and the right to due process 
        and a fair trial.
    In determining whether a sub-Saharan African country is 
eligible, section 4(b) requires the President to take into 
account the following factors:
          (1) An expression by such country of its desire to be 
        an eligible country.
          (2) The extent to which such country has made 
        substantial progress toward reducing tariff and non-
        tariff levels, binding its tariffs in the World Trade 
        Organization (WTO) and assuming meaningful binding 
        obligations in other sectors of trade.
          (3) Whether such country, if not already a member of 
        the WTO, is actively pursuing membership.
          (4) Where applicable, the extent to which such 
        country is in material compliance with its obligation 
        to the International Monetary Fund and other 
        international financial institutions.
          (5) The extent to which such country has a 
        recognizable commitment to reducing poverty, increasing 
        the availability of health care and educational 
        opportunities, the expansion of physical 
        infrastructure, increased access to market and credit 
        facilities for small farmers and producers, and 
        improved economic opportunities for women as 
        entrepreneurs and employees and promoting and enabling 
        the formation of capital to support the establishment 
        and operation of micro-enterprises.
          (6) Whether or not such country engages in activities 
        that undermine U.S. national security or foreign policy 
        interests.
    Section 4(c) requires the President to monitor and review 
the progress of sub-Saharan African countries in order to 
determine their current or potential eligibility under 
subsection (a). Such determinations shall be based on 
quantitative factors to the fullest extent possible and shall 
be included in the annual report required by section 15. The 
provision also states that a sub-Saharan African country that 
has not made continual progress in meeting the requirements 
with which it is not in compliance shall be ineligible to 
participate in this Act.
    Section 4(d) expresses the sense of the Congress that a 
sub-Saharan African country should not be eligible to 
participate in programs, projects, or activities, or receive 
assistance or other benefits under this Act if the government 
of that country is determined by the President to engage in a 
consistent pattern of gross violations of internationally 
recognized human rights.

Reason for change

    Section 4 outlines the eligibility requirements for 
countries in sub-Saharan Africa to participate in the Act. In 
particular, the provision requires the President to determine 
whether individual countries in sub-Saharan Africa have 
established, or are making continual progress toward 
establishing, a market-based economy consistent with the 
criteria outlined. The Committee urges the President to make 
determinations regarding country eligibility as soon as 
practicable.

Effective date

    The provision is effective upon enactment.

   E. Section 6: United States-Sub-Saharan Africa Trade and Economic 
                           Cooperation Forum

Present law

    No provision.

Explanation of provision

    In order to foster close economic ties between the United 
States and sub-Saharan Africa, section 6(a) directs the 
President to convene annual high-level meetings between 
appropriate officials of the U.S. government and government 
officials of the sub-Saharan African countries eligible to 
participate in the Act. After consulting with the governments 
concerned, section 6(b) directs the President to establish a 
United States-sub-Saharan Africa Trade and Economic Cooperation 
Forum not later than 12 months after the date of enactment.
    In creating the Forum, the President shall, under section 
6(c), direct the Secretary of Commerce, the Secretary of the 
Treasury, the Secretary of State, and the United States Trade 
Representative to host the first annual meeting with their 
counterparts from the eligible governments, as well as the 
Secretary General of the Organization of African Unity, and 
government officials from other appropriate countries in 
Africa, to discuss expanding trade and investment relations 
between the United States and sub-Saharan Africa and the 
implementation of this Act. In consultation with Congress, the 
President shall encourage U.S. non-governmental organizations 
(NGOs) to host annual meetings with NGOs from sub-Saharan 
Africa, and representatives of the U.S. private sector to host 
annual meetings with representatives of the private sector in 
sub-Saharan Africa, in conjunction with the annual Forum 
meetings. To the extent practicable, the President shall meet 
with the heads of governments of eligible sub-Saharan African 
countries not less than once every two years for the purposes 
of discussing expanding trade and investment relations between 
the United States and sub-Saharan Africa and the implementation 
of this Act. The President's first meeting with other heads of 
state from sub-Saharan Africa should take place not less than 
12 months after the date of enactment.
    In order to assist in carrying out the purposes of the 
Forum, section 6(d) requires the United States Information 
Agency to disseminate regularly, through multiple media, 
economic information in support of the free market economic 
reforms described in this Act.
    Section 6(e) authorizes such sums as may be necessary to 
carry out this section. Section 6(f) prohibits the use of funds 
authorized under the section to create or support any 
nongovernmental organization for the purpose of expanding or 
facilitating trade between the United States and sub-Saharan 
Africa.

Reason for change

    In order to expand U.S. trade and investment relations with 
sub-Saharan Africa and achieve the goals of the Act, the 
Committee believes that it is important to foster aregular 
dialogue between U.S. government officials and their counterparts from 
eligible sub-Saharan African countries. To this end, after consulting 
with eligible sub-Saharan African governments, section 6 requires the 
President to direct the Secretary of Commerce, the Secretary of the 
Treasury, the Secretary of State, and the United States Trade 
Representative to host the first annual meeting of a United States-sub-
Saharan Africa Trade and Economic Cooperation Forum. The Committee also 
believes that it would help to promote the goals of this Act if the 
President, to the extent practicable, met with the heads of state of 
the governments eligible to participate in the Act not less than once 
every two years.

Effective date

    The provision is effective upon enactment.

     F. Section 7: United States-Sub-Saharan Africa Free Trade Area

Present law

    No provision.

Explanation of provision

    In section 7(a), Congress declares that a United States-
sub-Saharan Africa Free Trade Area should be established, or 
free trade agreements entered into, in order to serve as the 
catalyst for increasing trade between the United States and 
sub-Saharan Africa and increasing private sector development in 
sub-Saharan Africa.
    To this end, section 7(b) requires the President, taking 
into account the provisions of the treaty establishing the 
African Economic Community and the willingness of the 
governments of sub-Saharan African countries to engage in 
negotiations to enter into free trade agreements, to develop a 
plan for the purpose of entering into one or more trade 
agreements with sub-Saharan African countries eligible to 
participate in the Act. The President's plan shall include the 
following:
          (1) The specific objectives of the U.S. with respect 
        to the establishment of the Free Trade Area and a 
        suggested timetable for achieving those objectives.
          (2) The benefits to both the U.S. and sub-Saharan 
        Africa with respect to the Free Trade Area.
          (3) A mutually agreed-upon timetable for establishing 
        the Free Trade Area.
          (4) The implications for and the role of regional and 
        sub-regional organizations in sub-Saharan Africa with 
        respect to the Free Trade Area.
          (5) Subject matter anticipated to be covered by the 
        Free Trade Area and U.S. laws, programs, and policies, 
        as well as the laws of participating eligible African 
        countries and existing bilateral and multilateral and 
        economic cooperation and trade agreements, that may be 
        affected by the agreement or agreements.
          (6) Procedures to ensure adequate consultation with 
        Congress and the private sector, consultation with 
        Congress regarding all matters related to 
        implementation and approval, and adequate consultation 
        with the relevant African governments and African 
        regional and subregional intergovernmental 
        organizations during the negotiations of the agreement 
        or agreements.
    Section 7(c) requires the President, not later than 12 
months after the date of enactment, to prepare and transmit to 
Congress a report on the plan developed.

Reason for change

    By eliminating the barriers that presently exist to 
developing stronger, mutually beneficial trade and investment 
relations between the United States and sub-Saharan Africa, the 
Committee believes that the establishment of a Free Trade Area, 
or the negotiation of one or more free trade agreements, would 
serve as an important catalyst in the economic development of 
sub-Saharan Africa. After taking into account the provisions of 
the treaty establishing the African Economic Community and the 
willingness of the governments of eligible countries in sub-
Saharan Africa, the section requires the President to develop a 
plan for the purpose of entering into one or more trade 
agreements with sub-Saharan African countries. In the 
development of the plan, the Committee believes that the 
President should seek to complete the negotiations within a 
similar time frame agreed to in other multilateral fora, such 
as the Asia-Pacific Economic Cooperation (APEC) forum, or 
sooner if practicable.

Effective date

    The provision is effective upon enactment.

    G. Section 8: Eliminating Trade Barriers and Encouraging Exports

Present law

    Certain textile and apparel products from Kenya and 
Mauritius are subject to import quotas under bilateral 
agreements negotiated on a product-category basis under 
authority of section 204 of the Agriculture Act of 1956 and in 
accordance with the WTO Agreement on Textiles and Clothing.

Explanation of provision

    Section 8(a) contains findings of Congress that:
          (1) The lack of competitiveness of sub-Saharan Africa 
        in the global market make it a limited threat to market 
        disruption and no threat to United States jobs.
          (2) Annual textile and apparel exports to the United 
        States from sub-Saharan Africa represent less than 1 
        percent of all textile and apparel exports to the 
        United States, which totaled $45,932,000,000 in 1996.
          (3) Sub-Saharan Africa has limited textile 
        manufacturing capacity. During 1998 and the succeeding 
        4 years, this limited capacity to manufacture textiles 
        and apparel is projected to grow at a modest rate. 
        Given this limited capacity to export textiles and 
        apparel, it will be very difficult for these exports 
        from sub-Saharan Africa, during 1998 and the succeeding 
        9 years, to exceed 3 percent annually of total imports 
        of textile and apparel to the United States. If these 
        exports from sub-Saharan Africa remain around 3 percent 
        of total imports, they will not represent a threat to 
        United States workers, consumers, or manufacturers.
    Section 8(b) expresses the sense of Congress that:
          (1) It would be to the mutual benefit of the 
        countries in sub-Saharan Africa and the United States 
        to ensure that the commitments of the World Trade 
        Organization are faithfully implemented in each of the 
        member countries;
          (2) Reform of trade policies in sub-Saharan Africa 
        with the objective of removing structural impediments 
        to trade can assist the countries of the region in 
        achieving greater diversification of textile and 
        apparel export commodities and products and export 
        markets; and,
          (3) The President should support textile and apparel 
        trade reform in sub-Saharan Africa by providing 
        technical assistance and encouraging business-to-
        business contacts with the region.
    Section 8(c)(1) provides that, pursuant to the WTO 
Agreement on Textiles and Clothing, the United States shall 
eliminate the existing quotas on textile and apparel exports to 
the United States from Kenya and Mauritius within 30 days after 
these countries adopt an efficient visa system to guard against 
unlawful transshipment of textile and apparel goods and the use 
of counterfeit documents. The provision requires the Customs 
Service to provide technical assistance to Kenya and Mauritius 
in the development and implementation of visa systems.
    Section 8(c)(2) requires the President to: (1) continue the 
existing no quota policy for other countries in sub-Saharan 
Africa; and, (2) submit a report to the Congress by March 31 of 
each year concerning the growth in textiles and apparel exports 
to the United States from countries in sub-Saharan Africa in 
order to protect United States consumers, workers, and textile 
manufacturers from economic injury due to the no quota policy.
    Section 8(d)(1) states that the President should ensure 
that any sub-Saharan African country that intends to export 
textile and apparel goods to the United States: 1) has in place 
an effective visa system to guard against unlawful 
transshipment of textile and apparel goods and the use of 
counterfeit documents; and, 2) will cooperate fully with the 
United States to address and take action necessary to prevent 
circumvention, as provided in Article 5 of the WTO Agreement on 
Textiles and Clothing (see below).
    Section 8(d)(2) increases penalties on exporters who have 
been found to have engaged in illegal transshipment. If the 
President determines, based on sufficient evidence, that an 
exporter has willfully falsified information regarding the 
country of origin, manufacture, processing, or assembly of a 
textile or apparel article for which duty-free treatment under 
the Generalized System of Preferences program is claimed, then 
the President shall deny to such an exporter duty-free 
treatment under this section for textile and apparel articles 
for a period of two years.
    Section 8(d)(3) underscores the fact that all provisions of 
the laws, regulations, and procedures of the United States 
relating to the denial of entry of articles or penalties 
against individuals or entities for engaging in illegal 
transshipment, fraud, or other violations of the customs laws 
shall apply to imports from sub-Saharan countries.
    In order to facilitate close monitoring by the 
Administration and expanded oversight by the Committee, Section 
8(d)(4) requires that the Customs Service submit to the 
Congress, by not later than March 31 of each year, a report on 
the effectiveness of visa systems required of Kenya and 
Mauritius and other countries that intend to export textiles 
and apparel products to the U.S., and on measures taken by 
countries in sub-Saharan Africa to prevent circumvention as 
described in Article 5 of the WTO Agreement on Textiles and 
Clothing.
    Pursuant to Article 5 of the WTO Agreement on Textiles and 
Clothing, countries agree that circumvention by transshipment, 
re-routing, false declaration concerning country or place of 
origin, and falsification of official documents undermines the 
effectiveness of trade restraints on textile and apparel 
products. Therefore WTO countries have agreed to establish the 
necessary legal provisions and/or administrative procedures to 
address and take action, consistent with their domestic laws 
and procedures, against such circumvention.
    Article 5 obligates countries to cooperate fully to 
establish the relevant facts in places of import, export, and 
transshipment. The Agreement establishes that such cooperation 
will include: 1) an investigation of circumvention practices 
which increase exports to the WTO Member maintaining quotas; 2) 
exchange of documents, correspondence and other relevant 
information to the extent available; and, 3) facilitation of 
plant visits and contacts. Under the WTO, the U.S. maintains 
full authority to immediately deny entry of any goods suspected 
of being transshipped, and to appropriately adjust charges to 
quota levels in order to reflect the true country or place of 
origin, provided that the WTO is adequately notified of the 
charges, including a full justification.

Reason for change

    In developing countries around the world, the textile and 
apparel industry has served as a primary sector for economic 
development and job creation. Given the limited manufacturing 
capacity that exists in sub-Saharan Africa now and for the 
foreseeable future, the Committee believes that the existing 
policy of not imposing quotas on textile and apparel imports 
from the region should remain in place. In order to ensure that 
textile and apparel products shipped to the United States are 
manufactured in the region, the section envisages that 
countries which intend to export textiles and apparel to the 
United States will have in place an effective visa system to 
guard against unlawful transshipments and the use of 
counterfeit documents and will cooperate fully with the United 
States in preventing transshipments.
    The Administration is committed to closely monitoring the 
issue. Combined with the provisions for cooperation with sub-
Saharan African countries and the expanded penalties against 
violators contained in the bill, the Committee believes that 
U.S. firms and workers will be sufficiently protected against 
problems caused by illegal transshipment and other Customs 
fraud.
    The Committee also believes that the reports required of 
the President and the Customs Service under this section will 
be useful to the Committee in monitoring the effect of the 
provision on the growth in textile and apparel exports to the 
United States from countries in sub-Saharan Africa in order to 
protect U.S. consumers, workers, and textile manufacturers from 
economic injury due to the no quota policy.

Effective date

    The provision is effective upon enactment.

            H. Section 8: Generalized System of Preferences

Present law

    Title V of the Trade Act of 1974, as amended, grants 
authority to the President to provide duty-free treatment on 
imports of eligible articles from beneficiary developing 
countries (BDC). Under section 503(a)(1) the President may not 
designate any article as GSP eligible within the following 
categories:
          (1) textiles and apparel articles which were not 
        eligible articles for purposes of this title on January 
        1, 1994;
          (2) watches, except watches entered after June 30, 
        1989 that the President determines will not cause 
        material injury to watch or watch band, strap, or 
        bracelet manufacturing and assembly operations in the 
        United States or U.S. insular possessions;
          (3) import-sensitive electronic articles;
          (4) import-sensitive steel articles;
          (5) footwear, handbags, luggage, flat goods, work 
        gloves, and leather wearing apparel which were not GSP 
        eligible articles on January 1, 1995;
          (6) import-sensitive semimanufactured and 
        manufactured glass products; and,
          (7) any other articles the President determines to be 
        import-sensitive in the context of GSP.
    Under section 502(a)(2) the President is authorized to 
designate any article that is the growth, product, or 
manufacture of a least developed developing country (LDDC) as 
an eligible article with respect to imports from LDDCs, if the 
President determines such article is not import-sensitive in 
the context of imports from LDDCs. This authority does not 
apply to statutorily exempt articles listed under paragraphs 
(1), (2) , and (5) above.
    Under section 503(b)(3), no quantity of an agricultural 
product subject to a tariff-rate quota that exceeds the in-
quota quantity is eligible for duty-free treatment.
    Under section 503(c)(2)(D), whenever the President 
determines that exports by any BDC to the United States of a 
GSP eligible article--
          (1) exceed a dollar limit of $80 million a year (a 
        number which increases by $5 million annually), or
          (2) equal or exceed a 50 percent share of the total 
        value of U.S. imports of the article, then, not later 
        than July 1 of the next year, such country is not 
        treated as a BDC with respect to such article.
    Under section 503(c)(2)(A), GSP duty-free treatment applies 
to any eligible article which is the growth, product or 
manufacture of a BDC if: (1) that article is imported directly 
from a BDC into the U.S. customs territory; and, (2) the sum of 
(a) the cost or value of the materials produced in the BDC or 
member countries in an association which is treated as one BDC, 
plus (b) the direct costs of processing operations performed in 
such BDC or member countries is not less than 35 percent of the 
value of the article.
    Under section 505, no duty-free treatment shall remain in 
effect after June 30,1998.

Explanation of provision

    All of the criteria in current law regarding designation of 
beneficiary developing countries under the GSP program would 
continue to apply without change to African countries to 
receive extension of the GSP program and additional product 
coverage benefits under this bill. That is, in order to receive 
duty-free GSP benefits under the bill, African countries must 
meet both GSP designation criteria and the eligibility 
requirements set forth in section 4 of H.R. 1432 . The 
statutory GSP designation criteria include internationally-
recognized worker rights, intellectual property rights, 
compensation for property expropriation, and market access.
    Section 9(a) of the bill amends section 503(a)(1) of the 
Trade Act of 1974 to authorize the President to grant duty-free 
GSP treatment for products from eligible African GSP 
beneficiary countries that are currently excluded from the GSP 
program, if, after receiving advice from the International 
Trade Commission (ITC), he determines that imports of these 
products are not import sensitive in the context of imports 
from sub-Saharan African countries. Opportunities for public 
comment would be provided in making this determination.
    The bill does not change the rule of origin requirements 
under current law for GSP duty-free treatment on any currently 
eligible or any additional products, including textiles and 
apparel, namely that articles must be the growth, product, or 
manufacture of an eligible country and also contain a minimum 
35 percent local value. As under present law, processes such as 
simple combining, packaging, or dilution would not constitute 
substantial transformation to qualify an article for trade 
benefits under this program. The article must also be directly 
imported from a beneficiary country.
    Textile and apparel products eligible for duty-free and 
quota-free treatment must be substantially transformed in sub-
Saharan Africa as determined by the ``Breaux-Cardin'' rules of 
origin enacted into law in 1994 (section 334 of P.L. 103-465).
    With respect to the second required test of value content, 
section 9(b) of the bill amends section 503(a) (2) of the Trade 
Act of 1974 to allow up to 15 percent of the total value of the 
article from U.S.-made materials to count toward the 35 percent 
local value requirement for duty-free entry under the GSP 
program. In order to encourage regional economic integration in 
Africa, the bill provides that the minimum 35 percent local 
value content may be cumulated in any eligible African country.
    Section 9(c) amends section 503(c)(2)(D) of the Trade Act 
of 1974 to stipulate that the competitive need limits do not 
apply to imports from eligible countries in sub-Saharan Africa.
    Section 9(d) amends section 505 of the Trade Act of 1974 to 
extend the GSP program for ten years, until June 30, 2008, for 
designated countries in sub-Saharan Africa.
    Section 9(f) establishes July 1, 1998 as the effective date 
for the amendments made to the GSP program for sub-Saharan 
Africa.

Reason for change

    The GSP program, which provides duty-free access to the 
U.S. market for eligible articles from BDCs, has proven to be 
an effective program in the development of many countries 
around the world. In recent years, however, the program has 
undergone a series of short term extensions due to budgetary 
constraints. For this reason, the Committee believes that it is 
important to give the business community greater certainty 
about the program's existence for sub-Saharan African countries 
eligible to participate in theAfrican Growth and Opportunity 
Act, thereby encouraging long-term investment and development in the 
region. At the same time, the Committee continues to seek the renewal 
of the existing GSP program for BDCs worldwide beyond the current 
expiration date of June 30, 1998.
    Given the low utilization of the GSP program by exporters 
in sub-Saharan Africa at present, the Committee believes that 
these reforms of the program are appropriate for beneficiaries 
in sub-Saharan Africa that are eligible to participate in the 
benefits of this Act.
    The bill establishes the date of July 1, 1998 as an 
effective date in order to clarify when the new sub-Saharan 
elements of the GSP program established by this bill will begin 
to apply to these countries.

     I. Section 13: Establishment of Assistant United States Trade 
                 Representative for Sub-Saharan Africa

Present law

    Section 141 of the Trade Act of 1974 established the Office 
of the United States Trade Representative within the Executive 
Office of the President and directed the President to appoint a 
person to head the office and to serve as United States Trade 
Representative (USTR).

Explanation of provision

    Section 13(a) requires the President to establish a 
position of Assistant United States Trade Representative 
(AUSTR) within the Office of the United States Trade 
Representative to focus on trade issues relating to sub-Saharan 
Africa. Section 13(b) requires the President to ensure that the 
AUSTR for Africa has adequate funding and staff.

Reason for change

    The combined population of sub-Saharan Africa represents a 
potential market of nearly 700 million consumers for exports of 
U.S. goods and services. Given the importance of exports to 
future U.S. economic growth and job creation, the Committee 
believes that a position of AUSTR for Africa should be created 
within the Office of USTR to focus on trade issues relating to 
sub-Saharan Africa. The Committee also believes that the 
President should ensure that the AUSTR for Africa has adequate 
funding and staff to carry out his or her responsibilities 
consistent with the goals of this Act.

Effective date

    The provision is effective upon enactment.

                  J. Section 15: Reporting Requirement

Present law

    No provision.

Explanation of provision

    The President shall submit to Congress not later than one 
year after the date of enactment, and not later than the end of 
each of the next four one-year periods thereafter, a report on 
the implementation of this Act.

Reason for change

    The Committee requests that the President submit five 
annual reports to Congress on the implementation of this Act in 
order to assist the Committee in its oversight responsibilities 
on trade between the United States and the countries in sub-
Saharan Africa.

Effective date

    The provision is effective upon enactment.

               K. Section 16: Sub-Saharan Africa Defined

Present law

    No provision.

Explanation of provision

    For purposes of this Act, the terms `sub-Saharan Africa', 
`sub-Saharan Africancountry', `country in sub-Saharan Africa', 
and `countries in sub-Saharan Africa' refer to the following: Republic 
of Angola (Angola), Republic of Botswana (Botswana), Republic of 
Burundi (Burundi), Republic of Cape Verde (Cape Verde), Republic of 
Chad (Chad), Democratic Republic of Congo, Republic of the Congo 
(Congo), Republic of Djibouti (Djibouti), State of Eritrea (Eritrea), 
Gabonese Republic (Gabon), Republic of Ghana (Ghana), Republic of 
Guinea-Bissau (Guinea-Bissau), Kingdom of Lesotho (Lesotho), Republic 
of Madagascar (Madagascar), Republic of Mali (Mali), Republic of 
Mauritius (Mauritius), Republic of Namibia (Namibia), Federal Republic 
of Nigeria (Nigeria), Democratic Republic of Sao Tome and Principe (Sao 
Tome and Principe), Republic of Sierra Leone (Sierra Leone), Somalia, 
Kingdom of Swaziland (Swaziland), Republic of Togo (Togo), Republic of 
Zimbabwe (Zimbabwe), Republic of Benin (Benin), Burkina Faso (Burkina), 
Republic of Cameroon (Cameroon), Central African Republic, Federal 
Islamic Republic of the Comoros (Comoros), Republic of Cote d'Ivoire 
(Cote d'Ivoire), Republic of Equatorial Guinea (Equatorial Guinea), 
Ethiopia, Republic of the Gambia (Gambia), Republic of Guinea (Guinea), 
Republic of Kenya (Kenya), Republic of Liberia (Liberia), Republic of 
Malawi (Malawi), Islamic Republic of Mauritania (Mauritania), Republic 
of Mozambique (Mozambique), Republic of Niger (Niger), Republic of 
Rwanda (Rwanda), Republic of Senegal (Senegal), Republic of Seychelles 
(Seychelles), Republic of South Africa (South Africa), Republic of 
Sudan (Sudan), United Republic of Tanzania (Tanzania), Republic of 
Uganda (Uganda), Republic of Zambia (Zambia).

Reason for change

    The section identifies the countries in sub-Saharan Africa 
for the purposes of this Act.

Effective date

    The provision is effective upon enactment.

 L. Section 17: Revenue Provision: Employer Deduction for Severance Pay

Present law

    For deduction purposes, any method or arrangement that has 
the effect of a plan deferring the receipt of compensation or 
other benefits for employees is treated as a deferred 
compensation plan (sec. 404(b)). In general, contributions 
under a deferred compensation plan (other than certain pension, 
profit-sharing and similar plans) are deductible in the taxable 
year in which an amount attributable to the contribution is 
includible in income of the employee. However, vacation pay 
which is treated as deferred compensation is deductible for the 
taxable year of the employer in which the vacation pay is paid 
to the employee (sec. 404(a)(5)).
    Temporary Treasury regulations provide that a plan, method, 
or arrangement defers the receipt of compensation or benefits 
to the extent it is one under which an employee receives 
compensation or benefits more than a brief period of time after 
the end of the employer's taxable year in which the services 
creating the right to such compensation or benefits are 
performed. A plan, method or arrangement is presumed to defer 
the receipt of compensation for more than a brief period of 
time after the end of an employer's taxable year to the extent 
that compensation is received after the 15th day of the 3rd 
calendar month after the end of the employer's taxable year in 
which the related services are rendered (the ``2\1/2\ month'' 
period). A plan, method or arrangement is not considered to 
defer the receipt of compensation or benefits for more than a 
brief period of time after the end of the employer's taxable 
year to the extent that compensation or benefits are received 
by the employee on or before the end of the applicable 2\1/2\ 
month period. (Temp. Treas. Reg. sec. 1.404(b)-1T A-2).
    The Tax Court recently addressed the issue of when vacation 
pay and severance pay are considered deferred compensation in 
Schmidt Baking Co., Inc., 107 T.C. 271 (1996). In Schmidt 
Baking, the taxpayer was an accrual basis taxpayer with a 
fiscal year that ended December 28, 1991. The taxpayer funded 
its accrued vacation and severance pay liabilities for 1991 by 
purchasing an irrevocable letter of credit on March 13, 1992. 
The parties stipulated that the letter of credit represented a 
transfer of substantially vested interest in property to 
employees for purposes of section 83, and that the fair market 
value of such interest was includible in the employees' gross 
incomes for 1992 as a result of the transfer.\1\ The Tax Court 
held that the purchase of the letter of credit, and the 
resulting income inclusion, constituted payment of the vacation 
and severance pay within the 2\1/2\ month period. Thus, the 
vacation and severance pay were treated as received by the 
employees within the 2\1/2\ month period and were not treated 
as deferred compensation. The vacation pay and severance pay 
were deductible by the taxpayer for its 1991 fiscal year 
pursuant to its normal accrual method of accounting.
---------------------------------------------------------------------------
    \1\ While the rules of section 83 may govern the income inclusion, 
section 404 governs the deduction if the amount involved is deferred 
compensation.
---------------------------------------------------------------------------

Reasons for change

    The Committee believes that the decision in Schmidt Baking 
reaches an inappropriate and unintended result. To permit 
methods such as that used in Schmidt Baking to be considered 
payment or receipt would allow taxpayers to avoid the 2\1/2\ 
month rule and inappropriately accelerate deductions. The 
Committee believes that the intent of the 2\1/2\ month rule was 
clearly to provide that a deduction for deferred compensation 
is not available for the current taxable year unless the 
compensation is actually paid to employees within 2\1/2\ months 
after the end of the year. Moreover, previous legislative 
histories reflect Congressional intent and understanding that 
compensation actually paid beyond the 2\1/2\ month period is 
deferred compensation.\2\
---------------------------------------------------------------------------
    \2\ See, e.g., the legislative history to the Omnibus Budget 
Reconciliation Act of 1987.
---------------------------------------------------------------------------
    The Committee is only addressing the issue of Schmidt 
Baking at this time with respect to severance pay because of 
the revenue needs associated with this bill. The effect of 
Schmidt Baking with respect to vacation pay and other types of 
deferred compensation (other than severance pay) is addressed 
in other legislation.\3\
---------------------------------------------------------------------------
    \3\ A provision that overrules Schmidt Baking with respect to 
vacation pay and other deferred compensation (including severance pay) 
is included in H.R. 2646, the ``Education Savings Act for Public and 
Private Schools,'' as passed by the House on October 23, 1997. (See H. 
Rept. 105-332, October 21, 1997.) A provision that overrules Schmidt 
Baking with respect to vacation pay and other deferred compensation 
(other than severance pay) is included in H.R. 2676, the ``Internal 
Revenue Service Restructuring and Reform Act of 1997,'' as passed by 
the House. (See H. Rept. 105-364, October 31, 1997).
---------------------------------------------------------------------------
    Further, the Committee is concerned that taxpayers may 
inappropriately extend the rationale of Schmidt Baking to other 
situations in which a deduction or other tax consequences are 
contingent upon an item being paid. The Committee does not 
believe that, as a general rule, letters of credit and similar 
mechanisms should be considered payment for any purposes of the 
Code.

Explanation of provision

    The bill provides that, for purposes of determining whether 
severance pay is deferred compensation (under Code sec. 404), 
the severance pay is not considered to be paid or received 
until actually received by the employee. In addition, severance 
pay is not considered paid to an employee until actually 
received by the employee. The provision is intended to overrule 
the result in Schmidt Baking. Thus, with respect to the 
determination of whether severance pay is deferred 
compensation, the fact that the value of the severance pay is 
includible in the income of employees within the applicable 
2\1/2\ month period is not relevant. Rather, the severance pay 
must have been actually received by employees within the 2\1/2\ 
month period in order for the severance pay not to be treated 
as deferred compensation.
    It is intended that similar arrangements, in addition to 
the letter of credit approach used in Schmidt Baking, do not 
constitute actual receipt by the employee, even if there is an 
income inclusion. Thus, for example, actual receipt does not 
include the furnishing of a note or letter or other evidence of 
indebtedness of the taxpayer, whether or not the evidence is 
guaranteed by any other instrument or by any third party. As a 
further example, actual receipt does not include a promise of 
the taxpayer to provide service or property in the future 
(whether or not the promise is evidenced by a contract or other 
written agreement). In addition, actual receipt does not 
include an amount transferred as a loan, refundable deposit, or 
contingent payment. Amounts set aside in a trust for employees 
generally are not considered to be actually received by the 
employee.
    The provision does not change the rule under which deferred 
compensation (other than vacation pay and deferred compensation 
under qualified plans) is deductible in the year includible in 
the gross income of employees participating in the plan if 
separate accounts are maintained for each employee.
    There is concern that the type of arrangement used in 
Schmidt Baking may be tried to circumvent other provisions of 
the Code where payment is required in order for a deduction to 
occur. Thus, it is intended that the Secretary will prevent the 
use of similar arrangements. No inference is intended that the 
result in Schmidt Baking is present law beyond its immediate 
facts or that the use of similar arrangements is permitted 
under present law.
    The provision does not affect the determination of whether 
an item is includible in income.

Effective date

    The provision is effective for taxable years ending after 
October 8, 1997. Any change in method of accounting required by 
the provision would be treated as initiated by the taxpayer 
with the consent of the Secretary of the Treasury. Any 
adjustment required by section 481 as a result of the change 
would be taken into account in the year of the change.

                       III. VOTE OF THE COMMITTEE

    In compliance with clause 2(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the following statement 
is made concerning the vote of the Committee on Ways and Means 
in its consideration of the bill H.R. 1432.

                       Motion to Report the Bill

    The bill, H.R. 1432, as ordered reported by the Committee 
on International Relations and further amended, was ordered 
favorably reported, by voice vote on February 25, 1998, with a 
quorum present.

                     IV. BUDGET EFFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effect

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee agrees 
with cost estimates furnished by the Congressional Budget 
Office (CBO) on H.R. 1432, as amended, set forth below.

                B. Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that H.R. 1432 reduces tax expenditures by the amount of the 
revenue offset provision amending Internal Revenue Code section 
404(a), and reduces revenue as a result of the extension of the 
Generalized System of Preferences.

      C. Cost Estimate Prepared by the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 26, 1998.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1432, the African 
Growth and Opportunity Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Alyssa 
Trzeszkowski.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 1432.--The African Growth and Opportunity Act

    Summary: The Congressional Budget Office has reviewed the 
African Growth and Opportunity Act, as ordered reported on 
February 25, 1998 by the House Committee on Ways and Means. 
H.R. 1432 would authorize a new trade and investment policy for 
sub-Saharan Africa. The bill would also clarify the Internal 
Revenue Code to overrule the Schmidt Baking Company case with 
respect to severance pay. CBO and the Joint Committee on 
Taxation (JCT) estimate that enacting this bill would increase 
governmental receipts by $62 million in 1998, and by $50 
million over the 1998-2003 period, net of income and payroll 
tax offsets. Because enacting H.R. 1432 would affect receipts, 
pay-as-you-go procedures would apply to the bill.
    H.R. 1432 contains one new private-sector mandate, but does 
not contain any intergovernmental mandates as defined in the 
Unfunded Mandates Reform Act of 1995 (UMRA), and therefore 
would not impose any costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1432 is shown in the following table.

                 ESTIMATED BUDGETARY IMPACT OF H.R. 1432, THE AFRICAN GROWTH AND OPPORTUNITY ACT                
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                         1998    1999    2000    2001    2002    2003    1998-03
----------------------------------------------------------------------------------------------------------------
                                                    REVENUES                                                    
                                                                                                                
Permanent extension and expansion of GSP to Sub-                                                                
 Saharan Africa.......................................      -4     -30     -46     -48     -50     -53      -231
Repeal Schmidt Baking with respect to severance pay...      66     105      75      11      12      12       281
----------------------------------------------------------------------------------------------------------------

                           basis of estimate

Revenues

    The Generalized System of Preferences (GSP) affords 
nonreciprocal tariff preferences to approximately 145 
developing countries to aid their economic development and to 
diversify and expand their production and exports. The United 
States GSP currently expires on June 30, 1998. H.R. 1432 would 
renew GSP for eligible sub-Saharan African countries and extend 
the program through May 31, 2005. The bill also would amend the 
program to lessen the rule of origin and competitive need 
limitation requirements for products from the region. CBO 
estimates that the renewal of GSP would reduce governmental 
receipts by about $180 million over the 1998-2003 period. CBO 
assumes that this provision would be effective July 1, 1998.
    In addition, the bill would authorize the President to 
grant duty-free GSP treatment for products currently excluded 
from GSP that the International Trade Commission (ITC) 
determines are not import sensitive in the context of imports 
from sub-Saharan Africa. CBO estimates that this provision 
would reduce governmental receipts by about $52 million overthe 
1998-2003 period. This estimate assumes that some products (including 
most textile and apparel goods) that have been considered import 
sensitive by ITC in the past would remain ineligible for GSP under the 
bill. CBO assumes that the expansion of products from sub-Saharan 
Africa eligible for GSP would be effective July 1, 1998. H.R. 1432 also 
would eliminate the existing textile quotas on imports from Kenya and 
Mauritius, if these countries adopt an effective visa system to guard 
against transhipments. CBO estimates that this provision would have a 
negligible effect on receipts.
    The bill also clarifies the Internal Revenue Code of 1986 
with respect to deductions for accrued severance pay to reverse 
the result reached in the case of the Schmidt Baking Company, 
Inc. v. Commissioner of Internal Revenue. JCT estimates this 
provision will increase revenues by $66 million in 1998, and by 
$281 million in the years 1998 through 2002. CBO concurs with 
this estimate.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act of 1985 sets up pay-
as-you-go procedures for legislation affecting direct spending 
or receipts through 1998. CBO estimates that H.R. 1432 would 
affect receipts. Therefore, pay-as-you-go procedures would 
apply to the bill. The pay-as-you-go impact is summarized 
below.

                                          PAY-AS-YOU-GO CONSIDERATIONS                                          
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                         1998    1999    2000    2001    2002    2003    1998-03
----------------------------------------------------------------------------------------------------------------
Changes in outlays....................................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)     (\1\)
Changes in receipts...................................      62      75      29     -37     -38     -51        50
----------------------------------------------------------------------------------------------------------------
\1\ Not applicable.                                                                                             

    Intergovernmental and private-sector impact: The Joint 
Committee on Taxation has determined that H.R. 1432 contains 
one new private sector mandate, as defined in UMRA. The 
provision relating to clarification of deduction for accrued 
severance pay is estimated to increase tax revenue by $281 
million over fiscal years 1998 through 2003, which is the 
estimated amount that the private sector will be required to 
spend in order to comply with this federal private sector 
mandate. The revenue provision will offset the budget cost of 
the reduced tariffs under the trade provision of the bill. The 
revenue provision will not impose a federal intergovernmental 
mandate on State, local, or tribal governments, as such 
governmental entities are generally exempt from federal income 
tax.
    Estimate prepared by: Alyssa Trzeszkowski.
    Estimate approved by: Frank Sammartino, Acting Assistant 
Director for Tax Analysis.

 ESTIMATED BUDGET EFFECTS OF H.R. 1432, THE ``AFRICAN GROWTH AND OPPORTUNITY ACT'' AS PASSED BY THE COMMITTEE ON
                                     WAYS AND MEANS--FISCAL YEARS 1998-2003                                     
                                              [Millions of dollars]                                             
----------------------------------------------------------------------------------------------------------------
             Provision                   Effective       1998    1999    2000    2001    2002    2003    1998-03
----------------------------------------------------------------------------------------------------------------
1. Permanent extension of GSP to    7/1/98                  -4     -30     -46     -48     -50     -53      -231
 Sub-Saharan Africa \1\.                                                                                        
2. Repeal Schmidt Baking with       tyea 10/8/97            66     105      75      11      12      12       281
 respect to severance pay.                                                                                      
                                                       ---------------------------------------------------------
      Net total...................  ..................      62      75      29     -37     -38     -41        50
----------------------------------------------------------------------------------------------------------------
\1\ Estimate provided by the Congressional Budget Office.                                                       
Note: Details may not add to totals due to rounding.                                                            
Legend for ``Effective'' column: tyea=taxable years ending after                                                
Source: Joint Committee on Taxation.                                                                            

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    With respect to subdivision (A) of clause 2(l)(3) of rule 
XI of the Rules of the House of Representatives, the Committee 
concludes that the action taken in this legislation are 
appropriate given its oversight of international trade and tax 
matters.

    B. Summary of Findings and Recommendations of the Committee on 
                    Government Reform and Oversight

    With respect to subdivision (D) of clause 2(l)(4) of rule 
XI of the Rules of the House of Representatives (relating to 
oversight findings), the Committee states that no oversight 
findings or recommendations have been submitted to the 
Committee by the Committee on Government Reform and Oversight 
with respect to the provisions in H.R. 1432.

                 C. Constitutional Authority Statement

    With respect to clause 2(l)(4) of rule XI of the Rules of 
the House of Representatives, relating to Constitutional 
Authority, the Committee states that the Committee's action in 
reporting the bill is derived from Article 1 of the 
Constitution, Section 8 (``The Congress shall have power to lay 
and collect taxes, duties, imposts and excises, to pay the 
debts and to provide for * * * the general Welfare of the 
United States.'')

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has reviewed the provisions of the bill (H.R. 
1432) as approved by the Committee on February 25, 1998. In 
accordance with the requirements of Public Law 104-4, the 
Committee has determined that the following provision of the 
bill contains a Federal private sector mandate.

          Repeal Schmidt Baking case with respect to the 
        employer deduction for severance pay.

    As indicated in the budget table (in III.A., above), the 
severance pay provision is estimated to increase revenue by 
$281 million over fiscal years 1998-2003. This is no greater 
than the aggregate estimated amount that the private sector 
will be required to pay during fiscal years 1998-2003 in order 
to comply with this Federal private sector mandate. The revenue 
raised from this provision will offset the budget cost of the 
trade provisions of the bill. The bill will not impose any 
Federal intergovernmental mandate on State, local, or tribal 
governments.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                     FOREIGN ASSISTANCE ACT OF 1961

          * * * * * * *

                                 PART I

          * * * * * * *

                       Chapter 2--Other Programs

          * * * * * * *
  Sec. 233. Organization and Management.--(a) * * *
          * * * * * * *
  (e) Advisory Committee.--The Board shall take prompt measures 
to increase the loan, guarantee, and insurance programs, and 
financial commitments, of the Corporation in sub-Saharan 
Africa, including through the establishment and use of an 
advisory committee to assist the Board in developing and 
implementing policies, programs, and financial instruments with 
respect to sub-Saharan Africa. In addition, the advisory 
committee shall make recommendations to the Board on how the 
Corporation can facilitate greater support by the United States 
for trade and investment with and in sub-Saharan Africa. The 
advisory committee shall terminate 4 years after the date of 
the enactment of this subsection.
          * * * * * * *

                Chapter 10--Development Fund for Africa

          * * * * * * *
  Sec. 496. Long-Term Development Assistance for Sub-Saharan 
Africa.--(a) * * *
          * * * * * * *
  (h) Types of Assistance.--
          (1) * * *
          * * * * * * *
          (3) Democratization and conflict resolution 
        capabilities.--Assistance under this section may also 
        include program assistance--
                  (A) to promote democratization, good 
                governance, and strong civil societies in sub-
                Saharan Africa; and
                  (B) to strengthen conflict resolution 
                capabilities of governmental, 
                intergovernmental, and nongovernmental entities 
                in sub-Saharan Africa.
          [(3)] (4) Other assistance.--Funds made available to 
        carry out this section shall be used almost exclusively 
        for assistance in accordance with [paragraphs (1) and 
        (2)] paragraphs (1), (2), and (3). Assistance 
        consistent with the purpose of subsection (c) may also 
        be furnished under this section to carry out the 
        provisions of sections 103 through 106 of this Act.
          * * * * * * *
  (p) Waiver Authority.--
          (1) In general.--Except as provided in paragraph (2), 
        the President may waive any provision of law that 
        earmarks, for a specified country, organization, or 
        purpose, funds made available to carry out this chapter 
        if the President determines, subject to the 
        notification procedures under section 634A, that the 
        waiver of such provision of law would provide improved 
        conditions for the people of Africa. The President 
        shall notify the appropriate congressional committees, 
        in accordance with the procedures applicable to 
        reprogramming notifications under section 634A of this 
        Act, at least 15 days before any determination under 
        this paragraph takes effect.
          (2) Exceptions.--
                  (A) Child survival activities.--The authority 
                contained in paragraph (1) may not be used to 
                waive a provision of law that earmarks funds 
                made available to carry out this chapter for 
                the following purposes:
                          (i) Immunization programs.
                          (ii) Oral rehydration programs.
                          (iii) Health and nutrition programs, 
                        and related education programs, which 
                        address the needs of mothers and 
                        children.
                          (iv) Water and sanitation programs.
                          (v) Assistance for displaced and 
                        orphaned children.
                          (vi) Programs for the prevention, 
                        treatment, and control of, and research 
                        on, tuberculosis, HIV/AIDS, polio, 
                        malaria, and other diseases.
                          (vii) Basic education programs for 
                        children.
                          (viii) Contribution on a grant basis 
                        to the United Nations Children's Fund 
                        (UNICEF) pursuant to section 301 of 
                        this Act.
                  (B) Requirement to supersede waiver 
                authority.--The provisions of this subsection 
                shall not be superseded except by a provision 
                of law enacted after the date of the enactment 
                of the African Growth and Opportunity Act which 
                specifically repeals, modifies, or supersedes 
                such provisions.
          * * * * * * *
                              ----------                              


                           TRADE ACT OF 1974

          * * * * * * *

               TITLE V--GENERALIZED SYSTEM OF PREFERENCES

          * * * * * * *

SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES.

  (a) Eligible Articles.--
          (1) Designation.--
                  (A) * * *
          * * * * * * *
                  (C) Eligible countries in sub-saharan 
                africa.--The President may provide duty-free 
                treatment for any article set forth in 
                paragraph (1) of subsection (b) that is the 
                growth, product, or manufacture of an eligible 
                country in sub-Saharan Africa that is a 
                beneficiary developing country, if, after 
                receiving the advice of the International Trade 
                Commission in accordance with subsection (e), 
                the President determines that such article is 
                not import-sensitive in the context of imports 
                from eligible countries in sub-Saharan Africa. 
                This subparagraph shall not affect the 
                designation of eligible articles under 
                subparagraph (B).
                  [(C)] (D) 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 3 years after such denial.
          (2) Rule of origin.--
                  (A) * * *
          * * * * * * *
                  (C) Eligible countries in sub-saharan 
                africa.--For purposes of determining the 
                percentage referred to in subparagraph (A) in 
                the case of an article of an eligible country 
                in sub-Saharan Africa that is a beneficiary 
                developing country--
                          (i) if the cost or value of materials 
                        produced in the customs territory of 
                        the United States is included with 
                        respect to that article, an amount not 
                        to exceed 15 percent of the appraised 
                        value of the article at the time it is 
                        entered that is attributed to such 
                        United States cost or value may be 
                        applied toward determining the 
                        percentage referred to in subparagraph 
                        (A); and
                          (ii) the cost or value of the 
                        materials included with respect to that 
                        article that are produced in any 
                        beneficiary developing country that is 
                        an eligible country in sub-Saharan 
                        Africa shall be applied in determining 
                        such percentage.
          * * * * * * *
  (c) Withdrawal, Suspension, or Limitation of Duty-Free 
Treatment; Competitive Need Limitation.--
          (1) * * *
          (2) Competitive need limitation.--
                  (A) * * *
          * * * * * * *
                  [(D) Least-developed beneficiary developing 
                countries.--Subparagraph (A) shall not apply to 
                any least-developed beneficiary developing 
                country.]
                  (D) Least-developed beneficiary developing 
                countries and eligible countries in sub-saharan 
                africa.--Subparagraph (A) shall not apply to 
                any least-developed beneficiary developing 
                country or any eligible country in sub-Saharan 
                Africa.
          * * * * * * *

[SEC. 505. DATE OF TERMINATION.

  [No duty-free treatment provided under this title shall 
remain in effect after June 30, 1998.]

SEC. 505. DATE OF TERMINATION.

  (a) Countries in Sub-Saharan Africa.--No duty-free treatment 
provided under this title shall remain in effect after June 30, 
2008, with respect to beneficiary developing countries that are 
eligible countries in sub-Saharan Africa.
  (b) Other Countries.--No duty-free treatment provided under 
this title shall remain in effect after June 30, 1998, with 
respect to beneficiary developing countries other than those 
provided for in subsection (a).
          * * * * * * *

SEC. 507. DEFINITIONS.

  For purposes of this title:
          (1) * * *
          * * * * * * *
          (6) Eligible country in sub-saharan africa.--The 
        terms ``eligible country in sub-Saharan Africa'' and 
        ``eligible countries in sub-Saharan Africa'' mean a 
        country or countries that the President has determined 
        to be eligible under section 4 of the African Growth 
        and Opportunity Act.
          * * * * * * *
                              ----------                              


            SECTION 2 OF THE EXPORT-IMPORT BANK ACT OF 1945

  Sec. 2. (a) * * *
  (b)(1) * * *
          * * * * * * *
  (13)(A) The Board of Directors of the Bank shall take prompt 
measures, consistent with the credit standards otherwise 
required by law, to promote the expansion of the Bank's 
financial commitments in sub-Saharan Africa under the loan, 
guarantee, and insurance programs of the Bank.
  (B)(i) The Board of Directors shall establish and use an 
advisory committee to advise the Board of Directors on the 
development and implementation of policies and programs 
designed to support the expansion described in subparagraph 
(A).
  (ii) The advisory committee shall make recommendations to the 
Board of Directors on how the Bank can facilitate greater 
support by United States commercial banks for trade with sub-
Saharan Africa.
  (iii) The advisory committee shall terminate 4 years after 
the date of the enactment of this subparagraph.
          * * * * * * *
                              ----------                              


            SECTION 404 OF THE INTERNAL REVENUE CODE OF 1986

SEC. 404. DEDUCTION FOR CONTRIBUTIONS OF AN EMPLOYER TO AN EMPLOYEES' 
                    TRUST OR ANNUITY PLAN AND COMPENSATION UNDER A 
                    DEFERRED-PAYMENT PLAN

  (a) General Rule.--If contributions are paid by an employer 
to or under a stock bonus, pension, profit-sharing, or annuity 
plan, or if compensation is paid or accrued on account of any 
employee under a plan deferring the receipt of such 
compensation, such contributions or compensation shall not be 
deductible under this chapter; but, if they would otherwise be 
deductible, they shall be deductible under this section, 
subject, however, to the following limitations as to the 
amounts deductible in any year:
          (1) * * *
          * * * * * * *
          (11) Determinations relating to severance pay.--For 
        purposes of determining under this section--
                  (A) whether severance pay is deferred 
                compensation, and
                  (B) when severance pay is paid,
        no amount shall be treated as received by the employee, 
        or paid, until it is actually received by the employee.
          * * * * * * *

                                
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