[Senate Report 105-105]
[From the U.S. Government Publishing Office]
Calendar No. 207
105th Congress Report
SENATE
1st Session 105-105
_______________________________________________________________________
UNITED STATES-CARIBBEAN BASIN TRADE ENHANCEMENT ACT
_______
October 9, 1997.--Ordered to be printed
_______________________________________________________________________
Mr. Roth, from the Committee on Finance, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 1278]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, having considered legislation to
expand the trade preferences available to beneficiary countries
designated under the Caribbean Basin Economic Recovery Act,
reports favorably thereon and refers the bill to the full
Senate with a recommendation that the bill do pass.
I. Background
Congress enacted the Caribbean Basin Economic Recovery Act
(``CBERA'') in 1983 to respond to an economic crisis in Central
America and the Caribbean. The principal U.S. response to that
crisis under CBERA was a broad grant of unilateral tariff
preferences to qualifying beneficiary countries.
In order to qualify, the beneficiary country had to
request the opportunity to participate. The President then
determined whether the country was eligible based on a variety
of factors, including, among others, the country's commitment
to afford the United States reciprocal market access, the
country's participation (at the time) in the General Agreement
on Tariffs and Trade (GATT), its willingness to accept subsidy
disciplines, the extent to which the country afforded adequate
intellectual property protection, whether or not the country
had taken steps to afford internationally recognized worker
rights, and the extent to which the country's economic policies
would contribute to the goals of the Caribbean Basin
Initiative, or ``CBI'' as it is widely known.
The original grant of preferences was limited to a period
of 12 years. It covered virtually all trade with the CBI
countries with the exception of textiles and apparel, canned
tuna, petroleum and petroleum products, and certain watches and
watch parts, handbags, luggage, flat goods such as wallets,
change purses and key and eyeglass cases, work gloves and
leather wearing apparel.
The current CBI beneficiaries include Antigua and Barbuda,
Aruba, Bahamas, Barbados, Belize, Costa Rica, Dominica,
Dominican Republic, El Salvador, Grenada, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Montserrat, Netherlands Antilles,
Nicaragua, Panama, Saint Kitts and Nevis, Saint Lucia, Saint
Vincent and the Grenadines, Trinidad and Tobago, and the
British Virgin Islands.
In 1990, Congress passed the Caribbean Basin Economic
Recovery Expansion Act of 1990, the so-called ``CBI II.'' That
Act made the unilateral grant of preferences permanent. It also
expanded the tariff preferences. CBI II permitted the President
to proclaim a tariff reduction of 20 percent (but not more than
2.5 percent ad valorem on any article) in tariffs applicable to
a subset of the previously excluded products--handbags,
luggage, flat goods, work gloves, and leather wearing apparel.
CBI II also allowed for duty-free treatment on articles, other
than textiles and petroleum-based products, if made from U.S.
fabricated components.
In 1993, the United States, Canada, and Mexico signed the
North American Free Trade Agreement (NAFTA). Among the
commitments made by the United States to Mexico were the sharp
reduction in duties and quantitative limits applicable to
products ineligible for CBI treatment, including textiles and
apparel. The Committee's bill is intended to afford CBI
beneficiaries treatment akin to that afforded Mexican products
in order to avoid undermining investment in the Caribbean Basin
based on preferences previously available under the CBI.
Like the CBI II, enacted in 1990, the Committee's bill
would expand the existing CBI by providing for additional
tariff preferences on a number of products not previously
covered by the program. Those benefits, however, are
conditioned on the eligible beneficiary countries' trade
policies, their participation and cooperation in the Free Trade
Area of the Americas (FTAA) and other trade initiatives, as
well as certain non-trade factors provided for in the bill.
II. General Description of the Bill
What follows is a section-by-section description of the
bill.
Section 1: Short Title
Section 1 provides that, if enacted, the measure would be
cited as the ``United States-Caribbean Basin Trade Enhancement
Act.''
Section 2: Findings and Policy
The findings contained in section 2 of the Chairman's
proposal set out the underlying rationale for expansion of the
CBI program. The over-arching purpose of the bill is to provide
opportunities that will enhance the beneficiary countries'
economic development and integration into the international
trading system, while providing expanded export opportunities
for U.S. goods as a result of the increased trade and economic
growth that the enhanced CBI program is designed to foster. The
findings underscore that point, as well as emphasize the United
States' commitment to encouraging the development of strong
democratic governments and revitalized economies throughout the
region.
The policy provisions of section 2 reflect the policy of
the United States to encourage CBI beneficiaries to become a
party to the FTAA or a comparable trade agreement at the
earliest possible date. The provisions make the preferences
afforded under the Committee's bill expressly contingent on a
CBI beneficiary country's willingness to join the United States
in those initiatives.
Section 3: Definitions
Section 3 provides certain definitions applicable to the
provisions of the bill, including definitions of ``beneficiary
country,'' ``CBTEA,'' ``NAFTA,'' ``NAFTA country,'' ``WTO,''
and ``WTO member.''
Section 4: Temporary Provisions to Provide Additional Trade Benefits
to Certain Beneficiary Countries
The Committee's bill would amend subsection 213(b) of the
CBERA to provide a tariff preference to imports from the
Caribbean Basin of products previously excluded from the CBI,
including certain textile and apparel products, footwear,
canned tuna, petroleum and derivatives, watches and watch
parts. The bill would establish a ``transition period'' of
three years (from January 1, 1998 through December 31, 2000)
during which additional tariff preferences could be made
available on certain of those items.
Eligibility for the program is left in the discretion of
the President, but the proposal would provide very specific
guidance as to the criteria the President should apply in
making that determination. The starting point under the
Committee's bill is compliance with the eligibility criteria
set out in the original CBERA. The bill would add certain
trade-related criteria, such as the extent to which the
beneficiary country fully implements the various Uruguay Round
agreements, whether the beneficiary country affords adequate
intellectual property protection and protection to U.S.
investors, and the extent to which the country applies
internationally accepted rules on government procurement and
customs valuation.
The proposal also adds other criteria that reflect
important U.S. initiatives. They include, among others, the
extent to which the country has become a party to the Inter-
American Convention Against Corruption, is or becomes a party
to a convention regarding the extradition of its nationals,
satisfies the criteria for counter-narcotics certification
under section 490 of the Foreign Assistance Act of 1961, and
provides internationally recognized worker rights.
The Committee's bill would impose two reporting
requirements. The first obliges the President to report at the
outset of the program and at the end of the three-year
transition period on the performance of each beneficiary
country in meeting the applicable criteria. Before submitting
such report, the United States Trade Representative must seek
public comment. The second reporting requirement obliges the
United States International Trade Commission to assess the
impact of the various CBI programs on U.S. industries and
consumers.
The preferences offered under the Committee's bill are
divided between those made available for imports of certain
textile and apparel products and those available for all other
products covered by the legislation.
Textiles
With respect to textiles, the Committee's bill adopts an
approach consistent with that of the CBI II--one that will both
provide expanded benefits to the CBI beneficiaries' apparel
industry while affording new opportunities for U.S. textile,
yarn, and thread producers. The Committee's bill would extend
immediate duty-free and quota-free treatment to the following
products--
apparel articles assembled in an eligible CBI
beneficiary country from U.S. fabrics wholly formed
from U.S. yarns and cut in the United States that would
enter the United States under Harmonized Tariff
Schedule (HTS) item number 9802.00.80 (a provision that
otherwise allows an importer to pay duty solely on the
value-added abroad when U.S. components are shipped
abroad for assembly);
apparel articles entered under chapters 61 and 62 of
the HTS where they would have qualified for HTS
9802.00.80 treatment but for the fact that the articles
were subjected to certain types of washing and
finishing;
apparel articles cut and assembled in the eligible
CBI country from U.S. fabric formed from U.S. yarn and
sewn in the Caribbean with U.S. thread; and
handloomed, handmade and folklore articles
originating in the CBI beneficiary country.
With respect to the fourth category, the bill provides
that the President, in consultation with the relevant
beneficiary country, will determine which, if any, particular
textile and apparel articles are to be treated as handloomed,
handmade or folklore goods eligible for trade preferences under
this program. The Committee expects that only genuinely
handcrafted articles, normally produced in limited quantities,
will be designated as eligible; this provision is not intended
to benefit large-scale, industrial production of textile or
apparel articles.
The Committee's bill would allow for the snapback of the
tariff preferences provided under this bill in the event of
surges in imports that could cause serious damage to the U.S.
industry producing a like product in the United States. To
ensure that the preferences made available under the
Committee's bill do not lead to the transshipment of textile
and apparel products from other countries where the goods would
be subject to U.S. quotas, the bill includes two provisions
penalizing such actions. First, the bill would penalize
exporters found, on the basis of sufficient evidence, to have
engaged in transshipment--all benefits under the program would
be denied for a period of two years. Second, any country that
was found, on the basis of sufficient evidence, to have failed
to take action to prevent transshipment after a specific
request for assistance in that regard from the President would
have its exports reduced by three times the quantities found to
have been transshipped. The Committee intends the ``sufficient
evidence'' standard used here to be the same as that applied
under Article 5:4 of the Agreement on Textiles and Clothing
administered by the World Trade Organization (WTO).
Other Products
On all other products covered by the Committee's bill
(footwear, canned tuna, petroleum and derivatives, and watches
and watch parts, and certain leather goods), the program would
provide an immediate reduction in tariffs equal to 50 percent
of the preference Mexican products enjoy under NAFTA relative
to imports of the same articles from CBI beneficiaries. In
other words, the applicable duty paid by importers on such
goods would be equal to the duty applicable to the same good if
entered from Mexico, plus one-half of the difference between
the duty rate afforded Mexico on that product and the duty rate
that would otherwise apply to the product if imported from the
CBI beneficiary country but for the enactment of this bill. The
Committee's bill allows for additional reductions over the
duration of the program if the President determines that
eligible CBI beneficiary countries are making progress toward
fulfilling the criteria set out in the eligibility criteria set
out in the bill.
In order for their products to qualify for the preferences
afforded under the Committee's bill, whether applied to
textiles and apparel or other products, the beneficiary country
must comply with customs procedures equivalent to those
required under the NAFTA.
Section 5: Adequate and Effective Protection for Intellectual Property
Rights
Section 5 of the Committee's bill clarifies that, for
purposes of assessing whether a CBI beneficiary is offering
adequate intellectual property protection, compliance with the
WTO Agreement on Trade-Related Aspects of Intellectual Property
is not determinative.
Section 6: Fees for Certain Customs Services
Section 13031(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) establishes a $5 fee on
passengers arriving in the United States from abroad on
commercial vessels or aircraft. COBRA section 13031(b), as
initially enacted, provided that passengers arriving from
Mexico, Canada, Caribbean nations and U.S. territories (other
than Puerto Rico) were exempt from the fee. Section 521 of the
North American Free Trade Agreement Implementation Act
temporarily increased the fee to $6.50 and applied it as well
to passengers previously exempt from the fee. These
modifications terminated on September 30, 1997. Section 9
provides that the current fee (which reverted to $5 on October
1, 1997) will apply to passengers arriving from Mexico, Canada,
the Caribbean and the territories through March 31, 2000. The
revenue thus generated is sufficient to offset the estimated
reduction in revenue attributable to the reduced duties the
Treasury will collect as a result of the preferences afforded
by the Committee's bill.
The Committee notes that the amendments to COBRA section
13031 by section 38 of the Miscellaneous Trade and Technical
Corrections Act of 1996, Pub. L. No. 104-295, 110 Stat. 3514,
3539, continue to apply. Specifically, these amendments
provided that the Customs Service may collect passenger
processing fees only one time for each passenger aboard a
commercial vessel in the course of a single voyage involving
two or more U.S. ports.
IV. Congressional Action
On September 17, 1997, the Committee held a hearing on the
President's proposal for enhanced trade benefits for CBI
beneficiary countries, which was transmitted to the Congress on
June 17, 1997. On October 1, 1997, the Committee considered and
approved an original bill proposed by Mr. Roth.
V. Vote of the Committee
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that the
legislation was ordered favorably reported by voice vote on
October 1, 1997.
VI. Budgetary Impact
In compliance with sections 308 and 403 of the
Congressional Budget Act of 1974, and paragraph 11(a) of Rule
XXVI of the Standing Rules of the Senate, the following letter
has been received from the Congressional Budget Office on the
budgetary impact of the bill:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 9, 1997
Hon. William V. Roth, Jr.,
Chairman, Committee on Finance, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for the United States-
Caribbean Basin Trade Enhancement Act, as ordered reported by
the Senate Committee Finance on October 1, 1997.
Sincerely,
June E. O'Neill, Director.
SUMMARY
The Congressional Budget Office has reviewed the United
States-Caribbean Basin Trade Enhancement Act, as ordered
reported on October 1, 1997, by the Senate Committee on
Finance. This bill offers temporary NAFTA-parity benefits to
Caribbean Basin countries in order to enhance trade between the
United States and this region. The bill would also extend a
customs user fee established by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA). CBO estimates that the bill
would decrease receipts by $80 million in fiscal year 1998 and
by $362 million over the l998-2002 period, and would reduce
outlays by $86 million and by $371 million over those years.
Because enacting the bill would affect direct spending and
receipts, pay-as-you-go procedures would apply.
The bill contains no new private-sector or
intergovernmental mandates as defined in the Unfunded Mandates
Reform Act of 1995 (UMRA), and would not impose any costs on
state, local, or tribal governments.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of the bill is shown in the
following table.
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 1998-2002
----------------------------------------------------------------------------------------------------------------
OUTLAYS
Extension of COBRA Customs User Fee................ -86 -154 -131 0 0 -371
RECEIPTS
CBI NAFTA Parity................................... -80 -118 -132 33 0 -362
----------------------------------------------------------------------------------------------------------------
BASIS OF ESTIMATE
Revenues
Under current law, the United States offers duty-free
treatment to products of 24 countries in the region through the
Caribbean Basin Initiative (CBI)--a preferential trade program
that extends duty-free treatment to a wide range of products
imported from beneficiary countries. The CBI excludes the
following products from such treatment: textile and apparel
articles, luggage and handbags, certain leather goods,
footwear, tuna, petroleum, and watches and watch parts.
This bill would provide tariff quota treatment equivalent
to that accorded to products under the North American Free
Trade Agreement (NAFTA) to the excluded products of CBI
beneficiaries. NAFTA parity would begin January 1, 1998, and
would terminate on December 31, 2000. The bill would encourage
the United States Trade Representative to seek the accession of
these beneficiary counties to NAFTA or a comparable free trade
agreement at the earliest possible date, with the goal of
achieving full participation by all beneficiary countries by no
later than January 1, 2005.
The estimate of revenue loss is based on 1996 trade data.
Tariff reductions follow the staged rate reductions that are
stipulated in NAFTA, under which the President proclaims a rate
of duty that is equal to the lesser of the current duty at the
time of importation or the rate of duty that applies to a like
article of Mexico under NAFTA. Further reductions may be
proclaimed if the President determines that the performance of
the country is satisfactory under specific criteria. CBO's
estimate assumes a three-year phasein for these NAFTA-parity
reductions. This bill would also extend immediate duty-free and
quota-free treatment to apparel articles assembled in an
eligible CBI beneficiary country from U.S. fabric, articles
subjected to certain types of washing and finishing, articles
cut and assembled in CBI countries from U.S. fabric sewn with
Caribbean thread, and handloomed, handmade, and folklore
articles originating in CBI beneficiary countries. Textile and
apparel tariff reductions account for about 97 percent of the
revenue loss; petroleum and footwear tariff reductions account
for the remainder of the decrease.
Outlays
Section 13031 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) established a schedule of
flat fees for processing conveyances and passengers entering
the United States. This bill would direct the Customs Service
to collect a passenger processing fee of $5 from persons
arriving by commercial vessel or aircraft from Mexico, Canada,
and certain other areas. This fee would be collected through
March 31, 2000. CBO estimates that this provision would result
in additional offsetting receipts of about $86 million in
fiscal year 1998 and $371 million over the 1998-2002 period.
The Reciprocal Trade Agreements Act of 1997, as ordered
reported by the Senate Committee on Finance on October 1, 1997,
would extend the same fee through August 31, 1998.
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. The
projected changes in direct spending through 2007 are shown in
the following table. For purposes of enforcing pay-as-you-go
procedures, however, only the effects in the budget year and
the succeeding four years are counted.
PAY-AS-YOU-GO CONSIDERATIONS
[By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998-2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in Outlays............. -86 -154 -131 0 0 0 0 0 0 0 -371
Changes in Receipts............ -80 -118 -132 -33 0 0 0 0 0 0 -362
--------------------------------------------------------------------------------------------------------------------------------------------------------
intergovernmental and private-sector impact
The bill contains no new private-sector or
intergovernmental mandates as defined in UMRA and would not
impose any costs on state, tribal, or local governments.
VII. Regulatory Impact
In compliance with paragraph 12 of Rule XXVI of the
Standing Rules of the Senate, the Committee states that the
bill will not significantly regulate any individuals or
businesses, will not impact on the personal privacy of
individuals, and will result in no significant additional
paperwork.
VIII. Additional Views of Senator Frank H. Murkowski
I am compelled to file additional views regarding the
funding provisions of the United States-Caribbean Basin Trade
Enhancement Act. While I support expansion of the Caribbean
Basin Economic Recovery Act, I believe that the way the
Committee funded this initiative is inappropriate. Under
section 6 of this bill, passengers arriving from Mexico,
Canada, Caribbean nations and U.S. territories aboard
commercial vessels or aircraft are once again being forced to
pick up the tab for this program unrelated to customs or any
other service associated with their travel. Furthermore, these
Americans (of the four million cruise passengers last year,
over 90 percent were Americans) are being asked to pay again
for customs services for which they already pay, both directly
and indirectly, through income taxes, and other customs fees.
I believe that the Committee should have turned to
spending cuts, not new user fees or taxes to pay for
legislation to expand a trade preference program.
In 1985, Congress specifically did not impose a fee on
passengers arriving from Mexico, Canada, Caribbean nations and
U.S. territories aboard commercial vessels or aircraft as part
of Section 13031(b) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA). To offset the costs of the
North American Free Trade Agreement (NAFTA), however, Section
521 of the NAFTA Implementation Act imposed a fee on these
previously exempt passengers. This fee was intended to be
temporary, and, in fact, did terminate on September 30, 1997.
But the very next day, October 1, 1997, the Committee reimposed
the fee to pay for changes to the Caribbean Basin Initiative.
I find it especially disheartening that the Committee
would impose a burden on an industry that supports 500,000 U.S.
jobs, and already pays over $8 billion in the form of 64
different taxes and fees to 12 different government agencies.
I do note my satisfaction that the Committee makes clear
that the amendment I offered to COBRA section 13031 by section
38 of the Miscellaneous Trade and Technical Corrections Act of
1996 continues to apply. This section directs that the Customs
Service may collect passenger processing fees only one time for
each passenger aboard a commercial vessel in the course of a
single voyage involving two or more U.S. ports. This will
prevent the unfortunate interpretation by the Customs Service
that a fee could be extracted, for example, at every Alaskan
port of call when the vessel simply sailed outside the customs
territory of the United States on its voyage, without stopping
at a foreign port.
IX. Changes in Existing Law
In compliance with paragraph 12 of Rule XXVI of the
Standing Rules of the Senate, 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 italics, existing law in which no change
is proposed is shown in roman):
Caribbean Basin Economic Recovery Act
Subtitle A--Duty-Free Treatment
SEC. 211. AUTHORITY TO GRANT DUTY-FREE TREATMENT.
The President may proclaim duty-free treatment (or other
preferential treatment) for all eligible articles from any
beneficiary country in accordance with the provisions of this
title.
SEC. 212. BENEFICIARY COUNTRY.
(a)(1) For purposes of this title--
(A) The term ``beneficiary country'' means any
country listed in subsection (b) with respect to which
there is in effect a proclamation by the President
designating such country as a beneficiary country for
purposes of this title. Before the President designates
any country as a beneficiary country for purposes of
this title, he shall notify the House of
Representatives and the Senate of his intention to make
such designation, together with the considerations
entering into such decision.
(B) The term ``entered'' means entered, or withdrawn
from warehouse for consumption, in the customs
territory of the United States.
(C) The term ``HTS'' means Harmonized Tariff Schedule
of the United States (19 U.S.C. 1202).
(D) The term ``NAFTA'' means the North American Free
Trade Agreement entered into between the United States,
Mexico, and Canada on December 17, 1992.
(E) The terms ``WTO'' and ``WTO member'' have the
meanings given those terms in section 2 of the Uruguay
Round Agreements Act (19 U.S.C. 3501).
* * * * * * *
(c) In determining whether to designate any country a
beneficiary country under this title, the President shall take
into account--
* * * * * * *
(9) the extent to which such country provides under
its law adequate and effective means for foreign
nationals to secure, exercise, and enforce exclusive
rights in intellectual property, including patent,
trademark, and copyright rights;
* * * * * * *
Notwithstanding any other provision of law, the President may
determine that a country is not providing adequate and
effective protection of intellectual property rights under
paragraph (9), even if the country is in compliance with the
country's obligations under the Agreement on Trade-Related
Aspects of Intellectual Property Rights described in section
101(d)(15) of the Uruguay Round Agreements Act (19 U.S.C.
3511(d)(15)).
* * * * * * *
(e)(1)(A) The President may, after the requirements of
subsection (a)(2) and paragraph (2) have been met--
[(A)](i) withdraw or suspend the designation of any
country as a beneficiary country, or
[(B)](ii) withdraw, suspend, or limit the application
of duty-free treatment under this subtitle to any
article of any country,
if, after such designation, the President determines that as a
result of changed circumstances such country [would be barred
from designation as a beneficiary country under subsection
(b).] no longer satisfies one or more of the conditions for
designation as a beneficiary country set forth in subsection
(b) or such country fails adequately to meet one or more of the
criteria set forth in subsection (c).
(B) The President may, after the requirements of
subsection (a)(2) and paragraph (2) have been met--
(i) withdraw or suspend the designation of
any country as a CBTEA beneficiary country, or
(ii) withdraw, suspend, or limit the
application of preferential treatment under
section 213(b) (2) and (3) to any article of
any country, if, after such designation, the
President determines that as a result of
changed circumstances, the performance of such
country is not satisfactory under the criteria
set forth in section 213(b)(5)(B).
(2)(A) The President shall publish in the Federal Register
notice of the action the President proposes to take under
paragraph (1) at least 30 days prior to taking such action.
(B) The United States Trade Representative shall, within
the 30-day period beginning on the date on which the President
publishes under subparagraph (A) notice of proposed action--
(i) accept written comments from the public regarding
such proposed action,
(ii) hold a public hearing on such proposed action,
and
(iii) publish in the Federal Register--
(I) notice of the time and place of such
hearing prior to the hearing, and
(II) the time and place at which such written
comments will be accepted.
(3) If preferential treatment under section 213(b) (2) and
(3) is withdrawn, suspended, or limited with respect to a CBTEA
beneficiary country, such country shall not be deemed to be a
``party'' for the purposes of applying section 213(b)(5)(C) to
imports of articles for which preferential treatment has been
withdrawn, suspended, or limited with respect to such country.
* * * * * * *
[(f) On or before October 1, 1993, and the close of each 3-
year period thereafter, the President shall submit to the
Congress a complete report regarding the operation of this
title, including the results of a general review of beneficiary
countries based on the considerations described in subsections
(b) and (c).]
(f) Reporting Requirements.--
(1) In general.--Not later than December 31, 1997,
and at the end of each 3-year period thereafter, the
President shall submit to Congress a report regarding
the operation of this title, including--
(A) with respect to subsections (b) and (c),
the results of a general review of beneficiary
countries based on the considerations described
in such subsections; and
(B) the performance of each beneficiary
country or CBTEA beneficiary country, as the
case may be, under the criteria set forth in
section 213(b)(5)(B)(ii).
(2) Public comment.--Before submitting the report
described in paragraph (1), the United States Trade
Representative shall publish a notice in the Federal
Register requesting public comments on whether
beneficiary countries are meeting the criteria listed
in section 213(b)(5)(B)(i), and on the performance of
each beneficiary country or CBTEA beneficiary country,
as the case may be, with respect to the criteria listed
in section 213(b)(5)(B)(ii).
SEC. 213. ELIGIBLE ARTICLES.
(a)(1) Unless otherwise excluded from eligibility by this
title, and subject to section 423 of the Tax Reform Act of
1986, and except as provided in subsection (b) (2) and (3), the
duty-free treatment provided under this title shall apply to
any article which is the growth, product, or manufacture of a
beneficiary country if--
(A) that article is imported directly from a
beneficiary country into the customs territory of the
United States; and
(B) the sum of (i) the cost or value of the materials
produced in a beneficiary country or two or more
beneficiary countries, plus (ii) the direct costs of
processing operations performed in a beneficiary
country or countries is not less than 35 per centum
of.the appraised value of such article at the time it
is entered.
* * * * * * *
[(b) The duty-free treatment provided under this title
shall not apply to--
[(1) textile and apparel articles which are subject to
textile agreements;
[(2) footwear not designated at the time of the effective
date of this title as eligible articles for the purpose of the
generalized system of preferences under title V of the Trade
Act of 1974;
[(3) tuna, prepared or preserved in any manner, in airtight
containers;
[(4) petroleum, or any product derived from petroleum,
provided for in headings 2709 and 2710 of the Harmonized Tariff
Schedule of the United States;
[(5) watches and watch parts (including cases, bracelets
and straps), of whatever type including, but not limited to,
mechanical, quartz digital or quartz analog, if such watches or
watch parts contain any material which is the product of any
country with respect to which HTS column 2 rates of duty apply;
or
[(6) articles to which reduced rates of duty apply under
subsection (h).]
(b) Import-Sensitive Articles.--
(1) In general.--Subject to paragraphs (2) through
(5), the duty-free treatment provided under this title
does not apply to--
(A) textile and apparel articles which were
not eligible articles for purposes of this
title on January 1, 1994, as this title was in
effect on that date;
(B) footwear not designated at the time of
the effective date of this title as eligible
articles for the purpose of the generalized
system of preferences under title V of the
Trade Act of 1974;
(C) tuna, prepared or preserved in any
manner, in airtight containers;
(D) petroleum, or any product derived from
petroleum, provided for in headings 2709 and
2710 of the HTS;
(E) watches and watch parts (including cases,
bracelets, and straps), of whatever type
including, but not limited to, mechanical,
quartz digital or quartz analog, if such
watches or watch parts contain any material
which is the product of any country with
respect to which HTS column 2 rates of duty
apply; or
(F) articles to which reduced rates of duty
apply under subsection (h).
(2) Transition period treatment of certain textile
and apparel articles.--
(A) Products covered.--During the transition
period, the preferential treatment described in
subparagraph (B) shall apply to the following
products:
(i) Apparel articles assembled in a
cbtea beneficiary country.--Apparel
articles assembled in a CBTEA
beneficiary country from fabrics wholly
formed and cut in the United States,
from yarns wholly formed in the United
States that are--
(I) entered under subheading
9802.00.80 of the HTS; or
(II) entered under chapter 61
or 62 of the HTS, if, after
such assembly, the articles
would have qualified for entry
under subheading 9802.00.80 of
the HTS but for the fact that
the articles were subjected to
stone-washing, enzyme-washing,
acid washing, perma-pressing,
oven-baking, bleaching,
garment-dyeing, or other
similar processes.
(ii) Apparel articles cut and
assembled in a cbtea beneficiary
country.--Apparel articles cut in a
CBTEA beneficiary country from fabric
wholly formed in the United States from
yarns wholly formed in the United
States, if such articles are assembled
in such country with thread formed in
the United States.
(iii) Handloomed, handmade, and
folklore articles.--A handloomed,
handmade, or folklore article of a
CBTEA beneficiary country identified
under subparagraph (C) that is
certified as such by the competent
authority of such beneficiary country.
(B) Preferential treatment.--Except as
provided in subparagraph (E), during the
transition period, the articles described in
subparagraph (A) shall enter the United States
free of duty and free of any quantitative
limitations.
(C) Handloomed, handmade, and folklore
articles defined.--For purposes of subparagraph
(A)(iii), the President, after consultation
with the CBTEA beneficiary country concerned,
shall determine which, if any, particular
textile and apparel goods of the country shall
be treated as being handloomed, handmade, or
folklore goods of a kind described in section
2.3 (a), (b), or (c) or Appendix 3.1.B.11 of
the Annex.
(D) Penalties for transshipments.--
(i) Penalties for exporters.--If the
President determines, based on
sufficient evidence, that an exporter
has engaged in transshipment with
respect to textile or apparel products
from a CBTEA beneficiary country, then
the President shall deny all benefits
under this title to such exporter, and
any successor of such exporter, for a
period of 2 years.
(ii) Penalties for countries.--
Whenever the President finds, based on
sufficient evidence, that transshipment
has occurred, the President shall
request that the CBTEA beneficiary
country or countries through whose
territory the transshipment has
occurred take all necessary and
appropriate actions to prevent such
transshipment. If the President
determines that a country is not taking
such actions, the President shall
reduce the quantities of textile and
apparel articles that may be imported
into the United States from such
country by the quantity of the
transshipped articles multiplied by 3.
(iii) Transshipment described.--
Transshipment within the meaning of
this subparagraph has occurred when
preferential treatment for a textile or
apparel article under subparagraph (B)
has been claimed on the basis of
material false information concerning
the country of origin, manufacture,
processing, or assembly of the article
or any of its components. For purposes
of this clause, false information is
material if disclosure of the true
information would mean or would have
meant that the article is or was
ineligible for preferential treatment
under subparagraph (B).
(E) Bilateral emergency actions.--
(i) In general.--The President may
take bilateral emergency tariff actions
of a kind described in section 4 of the
Annex with respect to any apparel
article imported from a CBTEA
beneficiary country if the application
of tariff treatment under subparagraph
(B) to such article results in
conditions that would be cause for the
taking of such actions under such
section 4 with respect to a like
article described in the same 8-digit
subheading of the HTS that is imported
from Mexico.
(ii) Rules relating to bilateral
emergency action.--For purposes of
applying bilateral emergency action
under this subparagraph--
(I) the requirements of
paragraph (5) of section 4 of
the Annex (relating to
providing compensation) shall
not apply;
(II) the term ``transition
period'' in section 4 of the
Annex shall have the meaning
given that term in paragraph
(5)(D) of this subsection; and
(III) the requirements to
consult specified in section 4
of the Annex shall be treated
as satisfied if the President
requests consultations with the
beneficiary country in question
and the country does not agree
to consult within the time
period specified under section
4.
(3) Preferential tariff treatment of certain other
articles originating in cbtea beneficiary countries.--
(A) In general.--During the transition
period, the President shall proclaim a rate of
duty, with respect to any article referred to
in any of subparagraphs (B) through (F) of
paragraph (1) that is a CBTEA originating good,
equal to the lesser of--
(i) ``x'', or
(ii) the amount determined by using
the formula ``.5(x-y)+y''.
For purposes of the preceding sentence, the
terms ``x'' and ``y'' have the meanings given
such terms in subparagraph (C).
(B) Additional reductions.--
(i) In general.--The President may
proclaim further reductions in the rate
of duty for any article described in
subparagraph (A) in accordance with
this subparagraph if the President
determines that the performance of the
country is satisfactory under the
criteria listed in paragraph
(5)(B)(ii).
(ii) Rate of duty.--The rate of duty
proclaimed by the President under this
subparagraph shall be no less than the
lesser of--
(I) the rate of duty that
would apply to the article at
the time of importation from
the country but for the
enactment of the CBTEA, or
(II) the rate of duty that
applies to a like article of
Mexico under Annex 302.2 of
NAFTA as implemented pursuant
to United States law.
(C) Certain definitions.--For purposes of
subparagraph (A), the term ``x'' means the rate
of duty described in subparagraph (B)(ii)(I)
and the term ``y'' means the rate of duty
described in subparagraph (B)(ii)(II).
(D) Exception.--Subparagraphs (A) and (B) do
not apply to any article accorded duty-free
treatment under U.S. Note 2(b) to subchapter II
of chapter 98 of the HTS.
(E) Relationship to duty reductions under
subsection (h).--If at any time during the
transition period the rate of duty that would
(but for action taken under subparagraph (A) or
(B)) apply with respect to any article under
subsection (h) is a rate of duty that is lower
than the rate of duty resulting from such
action, then such lower rate of duty shall be
applied.
(4) Customs procedures.--
(A) In general.--
(i) Regulations.--Any importer that
claims preferential treatment under
paragraph (2) or (3) shall comply with
customs procedures similar in all
material respects to the requirements
of Article 502(1) of the NAFTA as
implemented pursuant to United States
law, in accordance with regulations
promulgated by the Secretary of the
Treasury.
(ii) Determination.--
(I) In general.--In order to
qualify for the preferential
treatment under paragraph (2)
or (3) and for a Certificate of
Origin to be valid with respect
to any article for which such
treatment is claimed, there
shall be in effect a
determination by the President
that each country described in
subclause (II)--
(aa) has implemented
and follows, or
(bb) is making
substantial progress
toward implementing and
following,
procedures and requirements
similar in all material
respects to the relevant
procedures and requirements
under chapter 5 of the NAFTA.
(II) Country described.--A
country is described in this
subclause if it is a CBTEA
beneficiary country--
(aa) from which the
article is exported, or
(bb) in which
materials used in the
production of the
article originate or in
which the article or
such materials undergo
production that
contributes to a claim
that the article is
eligible for
preferential treatment.
(B) Certificate of origin.--The Certificate
of Origin that otherwise would be required
pursuant to the provisions of subparagraph (A)
shall not be required in the case of an article
imported under paragraph (2) or (3) if such
Certificate of Origin would not be required
under Article 503 of the NAFTA (as implemented
pursuant to United States law), if the article
were imported from Mexico.
(5) Definitions and special rules.--For purposes of
this subsection--
(A) Annex.--The term ``the Annex'' means
Annex 300-B of the NAFTA.
(B) CBTEA beneficiary country.--
(i) In general.--The term ``CBTEA
beneficiary country'' means any
``beneficiary country'', as defined by
section 212(a)(1)(A) of this title,
which the President determines has
demonstrated a commitment to--
(I) undertake its obligations
under the WTO on or ahead of
schedule;
(II) participate in
negotiations toward the
completion of the FTAA or a
comparable trade agreement; and
(III) undertake other steps
necessary for that country to
become a party to the FTAA or a
comparable trade agreement.
(ii) Criteria for determination.--In
making the determination under clause
(i), the President may consider the
criteria in sections 212 (b) and (c)
and other appropriate criteria,
including--
(I) the extent to which the
country follows accepted rules
of international trade provided
for under the agreements listed
in section 101(d) of the
Uruguay Round Agreements Act;
(II) the extent to which the
country provides protection of
intellectual property rights--
(aa) in accordance
with standards
established in the
Agreement on Trade-
Related Aspects of
Intellectual Property
Rights described in
section 101(d)(15) of
the Uruguay Round
Agreements Act;
(bb) in accordance
with standards
established in chapter
17 of the NAFTA; and
(cc) by granting the
holders of copyrights
the ability to control
the importation and
sale of products that
embody copyrighted
works, extending the
period set forth in
Article 1711(6) of
NAFTA for protecting
test data for
agricultural chemicals
to 10 years, protecting
trademarks regardless
of their subsequent
designation as
geographic indications,
and providing
enforcement against the
importation of
infringing products at
the border;
(III) the extent to which the country
provides protections to investors and
investments of the United States
substantially equivalent to those set
forth in chapter 11 of the NAFTA;
(IV) the extent to which the country
provides the United States and other
WTO members nondiscriminatory,
equitable, and reasonable market access
with respect to the products for which
benefits are provided under paragraphs
(2) and (3), and in other relevant
product sectors as determined by the
President;
(V) the extent to which the country
provides internationally recognized
worker rights, including--
(aa) the right of
association,
(bb) the right to
organize and bargain
collectively,
(cc) prohibition on
the use of any form of
coerced or compulsory
labor,
(dd) a minimum age
for the employment of
children, and
(ee) acceptable
conditions of work with
respect to minimum
wages, hours of work,
and occupational safety
and health;
(VI) whether the country has
met the counter-narcotics
certification criteria set
forth in section 490 of the
Foreign Assistance Act of 1961
(22 U.S.C. 2291j) for
eligibility for United States
assistance;
(VII) the extent to which the
country becomes a party to and
implements the Inter-American
Convention Against Corruption,
and becomes party to a
convention regarding the
extradition of its nationals;
(VIII) the extent to which
the country--
(aa) supports the
multilateral and
regional objectives of
the United States with
respect to government
procurement, including
the negotiation of
government procurement
provisions as part of
the FTAA and conclusion
of a WTO transparency
agreement as provided
in the declaration of
the WTO Ministerial
Conference held in
Singapore on December 9
through 13, 1996, and
(bb) applies
transparent and
competitive procedures
in government
procurement equivalent
to those contained in
the WTO Agreement on
Government Procurement
(described in section
101(d)(17) of the
Uruguay Round
Agreements Act);
(IX) the extent to which the
country follows the rules on
customs valuation set forth in
the WTO Agreement on
Implementation of Article VII
of the GATT 1994 (described in
section 101(d)(8) of the
Uruguay Round Agreements Act);
(X) the extent to which the
country affords to products of
the United States which the
President determines to be of
commercial importance to the
United States with respect to
such country, and on a
nondiscriminatory basis to like
products of other WTO members,
tariff treatment that is no
less favorable than the most
favorable tariff treatment
provided by the country to any
other country pursuant to any
free trade agreement to which
such country is a party, other
than the Central American
Common Market or the Caribbean
Community and Common Market.
(C) CBTEA originating good.--
(i) In general.--The term ``CBTEA
originating good'' means a good that
meets the rules of origin for a good
set forth in chapter 4 of the NAFTA as
implemented pursuant to United States
law.
(ii) Application of chapter 4.--In
applying chapter 4 with respect to a
CBTEA beneficiary country for purposes
of this subsection--
(I) no country other than the
United States and a CBTEA
beneficiary country may be
treated as being a party to the
NAFTA;
(II) any reference to trade
between the United States and
Mexico shall be deemed to refer
to trade between the United
States and a CBTEA beneficiary
country;
(III) any reference to a
party shall be deemed to refer
to a CBTEA beneficiary country
or the United States; and
(IV) any reference to parties
shall be deemed to refer to any
combination of CBTEA
beneficiary countries or to the
United States and a CBTEA
beneficiary country (or any
combination thereof).
(D) Transition period.--The term ``transition
period'' means, with respect to a CBTEA
beneficiary country, the period that begins on
January 1, 1998, and ends on the earlier of--
(i) December 31, 2000, or
(ii) the date on which the FTAA or a
comparable trade agreement enters into
force with respect to the United States
and the CBTEA beneficiary country.
(E) CBTEA.--The term ``CBTEA'' means the
United States-Caribbean Basin Trade Enhancement
Act.
(F) FTAA.--The term ``FTAA'' means the Free
Trade Area of the Americas.
* * * * * * *
SEC. 215. INTERNATIONAL TRADE COMMISSION REPORTS ON IMPACT OF THIS ACT.
[(a) The United States International Trade Commission
(hereinafter in this section referred to as the
``Commission'') shall prepare, and submit to the
Congress and to the President, a report regarding the
economic impact of this Act on United States industries
and consumers during-
[(1) the twenty-four-month period beginning with the
date of enactment of this Act, and
[(2) each calendar year occuring thereafter until
duty-free treatment under this title is terminated
under section 216(b). For purposes of this section,
industries in the Commonwealth of Puerto Rico and the
insular possessions of the United States shall be
considered to be United States industries.]
(a) Reporting Requirement.--
(1) In general.--The United States International
Trade Commission (in this section referred to as the
``Commission'') shall submit to Congress and the
President, biennial reports regarding the economic
impact of this title on United States industries and
consumers.
(2) First report.--The first report shall be
submitted not later than September 30 of the year
following the year in which the United States-Caribbean
Basin Trade Enhancement Act is enacted. No report shall
be required under this section after September 30,
2005.
(3) Treatment of puerto rico, etc.--For purposes of
this section, industries in the Commonwealth of Puerto
Rico and the insular possessions of the United States
are considered to be United States industries.
* * * * * * *
Consolidated Omnibus Budget Reconciliation Act of 1985
* * * * * * *
SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) Schedule of Fees.--In addition to any other fee
authorized by law, the Secretary of the Treasury shall charge
and collect the following fees for the provision of customs
services in connection with the following:
* * * * * * *
(b) Limitations on Fees.--(1)(A) No fee may be charged
under subsection (a) of this section for customs services
provided in connection with--
(i) the arrival of any passenger whose journey--
(I) originated in--
(aa) Canada,
(bb) Mexico,
(cc) a territory or possession of the
United States, or
(dd) any adjacent island (within the
meaning of section 101(b)(5) of the
Immigration and Nationality Act (8
U.S.C. 101(b)(5))), or
(II) originated in the United States and was
limited to--
(aa) Canada
(bb) Mexico,
(cc) territories and possessions of the
United States, and
(dd) such adjacent islands;
(ii) the arrival of any railroad car the journey of
which originates and terminates in the same country,
but only if no passengers board or disembark from the
train and no cargo is loaded or unloaded from such car
while the car is within any country other than the
country in which such car originates and terminates;
(iii) the arrival of any ferry; or
(iv) the arrival of any passenger on board a
commercial vessel traveling only between ports which
are within the customs territory of the United States.
(B) The exemption provided for in subparagraph (A) shall
not apply in the case of the arrival of any passenger on board
a commercial vessel whose journey originates and terminates at
the same place in the United States if there are no intervening
stops.
(C) The exemption provided for in subparagraph (A)(i) shall
not apply [to fiscal years 1994, 1995, 1996, and 1997] before
April 1, 2000.
(2) No fee may be charged under subsection (a)(2) for the
arrival of a commercial truck during any calendar year after a
total of $100 in fees has been paid to the Secretary of the
Treasury for the provision of customs services for all arrivals
of such commercial truck during such calendar year.
(3) No fee may be charged under subsection (a)(3) for the
arrival of a railroad car whether passenger or freight during
any calendar year after a total of $100 in fees has been paid
to the Secretary
* * * * * * *
Andean Trade Preference Act
* * * * * * *
SEC. 206. INTERNATIONAL TRADE COMMISSION REPORTS ON IMPACT OF THE
ANDEAN TRADE PREFERENCE ACT.
[(a) In General.--The United States International Trade
Commission (hereinafter in this section referred to as the
``Commission'') shall prepare, and submit to the Congress, a
report regarding the economic impact of this title on United
States industries and consumers, and, in conjunction with other
agencies, the effectiveness of this title in promoting drug-
related crop eradication and crop substitution efforts of the
beneficiary countries, during--
[(1) and 24-month period beginning with the date of
enactment of this title; and
[(2) each calendar year occurring thereafter until
duty-free treatment under this title is terminated
under section 208(b).
[For purposes of this section, industries in the Commonwealth
of Puerto Rico and the insular possessions of the United States
shall be considered to be United States industries.]
(a) Reporting Requirements.--
(1) In general.--The United States International
Trade Commission (in this section referred to as the
``Commission'') shall submit to Congress and the
President, biennial reports regarding the economic
impact of this title on United States industries and
consumers, and, in conjunction with other agencies, the
effectiveness of this title in promoting drug-related
crop eradication and crop substitution efforts of the
beneficiary countries.
(2) Submission.--During the period that this title is
in effect, the report required by paragraph (1) shall
be submitted on September 30 of each year that the
report required by section 215 of the Caribbean Basin
Economic Recovery Act is not submitted.
(3) Treatment of puerto rico, etc.--For purposes of
this section, industries in the Commonwealth of Puerto
Rico and the insular possessions of the United States
are considered to be United States industries.
* * * * * * *