Senate Report 105-219 - TROPICAL FOREST CONSERVATION ACT OF 1998

[Senate Report 105-219]
[From the U.S. Government Publishing Office]

Calendar No. 420
105th Congress Report
SENATE

2d Session 105-219
_______________________________________________________________________

TROPICAL FOREST CONSERVATION ACT OF 1998

_______

June 22, 1998.--Ordered to be printed

_______________________________________________________________________

Mr. Helms, from the Committee on Foreign Relations,

submitted the following

R E P O R T

[To accompany S. 1758]

The Committee Foreign Relations, to which was referred S.
1758, a bill to amend the Foreign Assistance Act of 1961 to
facilitate protection of tropical forests through debt
reduction with developing countries with tropical forests,
having considered the same, reports favorably thereon with
amendments and recommends that the bill as amended do pass.

CONTENTS

Page

Background and Purpose........................................... 1
Committee Action................................................. 4
Section by Section Analysis...................................... 4
Cost Estimate.................................................... 13
Evaluation of Regulatory Impact.................................. 16
Changes in Existing Law.......................................... 16

Background and Purpose

The United States has a significant national interest in
protecting tropical forests in developing countries. Twenty
five percent of prescription drugs come from tropical forests.
The United States National Cancer Institute has identified over
3000 plants that are active against cancer. Seventy percent of
them can be found in rain forests. Tropical forests regulate
the hydrological cycle on which world agriculture depends. The
genetic diversity contained in tropical forests is also
important for plant breeding, accounting for half of all the
gains in agricultural yields from 1930 to 1980. When the U.S.
corn blight hit in the 1970s, an answer was found by breeding
for resistance using heritage strains from the wild. Tropical
forests serve as carbon sinks, storing carbon to mitigate the
potential effects of the increase in greenhouse gases on the
world's climate.
Forests are estimated to cover 8.5 billion acres or 27
percent of the total land area of the world. Half of these
forests are tropical forests in the developing world. From 1980
to 1995, the developing world lost 540 million acres of its
natural forests, an average of 37 million acres per year.
It has been estimated that approximately 5 million acres of
forests in the developing world are destroyed by fire every
year. This threat has been increased not only by drought
conditions but by the inappropriate clearing of natural forests
for agricultural production that cannot be sustained.
The Tropical Forest Conservation Act is designed to help
protect the world's significant tropical forests through
``debt-for-nature'' mechanisms.
The first major debt-for-nature swap was arranged by
Conservation International (CI) in 1987 using a $100,000 grant
from the Frank Weeden Foundation to purchase $650,000 in debt
owed by the Bolivian Government to a commercial creditor. CI
agreed to cancel that debt in return for the Bolivian
Government's willingness to protect 3.7 million acres of what
became the Beni Biosphere Reserve and, in conjunction with the
U.S. Agency for International Development (USAID), to endow a
fund to help manage that reserve.
Other international environmental organizations such as the
World Wildlife Fund and The Nature Conservancy facilitated
similar debt-for-nature swaps in Costa Rica, Ecuador,
Madagascar and the Philippines. They proved to be an effective
way of leveraging scarce conservation dollars. For example, in
a major debt swap in Costa Rica, commercial debt was bought
back at a discounted value of fourteen cents on the dollar. In
return, the government of Costa Rica agreed to endow an
environmental fund at the rate of seventy cents for every
dollar of its commercial debt which was canceled.
In 1989, the Global Environmental Protection Assistance
Act, coauthored by Senator Biden and Senator Lugar, was enacted
into law as Title VII A of the International Finance and
Development Act of 1989 (Public Law 101-240, December 19,
1989). That Act authorized USAID to use its funds for debt-for-
nature swaps. Under the authority of the Act, USAID has used
$95 million of its funds to establish environmental endowments
totaling $146 million in Costa Rica, Honduras, Indonesia,
Jamaica, Madagascar, Mexico, Panama and the Philippines.
President Bush's Enterprise for the Americas Initiative
(EAI) carried forward this linkage between debt reduction and
the generation of local funds to protect the environment. The
EAI has provided $876 million in debt relief and $154 million
in local endowments for environmental and child survival at a
federal cost of $90 million in seven countries in Latin America
and the Caribbean: Argentina, Bolivia, Chile, Columbia, El
Salvador, Jamaica and Uruguay.
The Tropical Forest Conservation Act applies to bilateral
governmental debt resulting from concessional loans made under
the Foreign Assistance Act of 1961 and credits granted under
the Agricultural Trade and Assistance Act of 1954. It is
consistent with established Treasury Department practices as
well as the Federal Credit Reform Act of 1990.
The Act extends the debt-for-nature mechanism of the EAI
to the protection of significant tropical forests in lower and
middle income developing countries throughout the world, not
just those in Latin America and the Caribbean. Unlike the EAI,
however, grants under the Tropical Forest Conservation Act must
be directed toward protection of tropical forests, not the
broader purposes of environmental protection and child survival
as under the EAI. Furthermore, the Tropical Forest Conservation
Act authorizes the use of two new, no cost ``debt-for-nature''
models, the Buy Back option and Debt Swap option.
Under the Buy Back option, an eligible country would be
able to buy back its debt at its net present value in exchange
for its willingness to place an additional forty percent of
this value in local currency in a tropical forest fund.
Suppose, for example, that the net present value of the
country's debt was fifty cents on the dollar. In return for
being allowed to buy back its debt at its net present value,
the developing country would have to agree to place forty
percent of that value, or twenty cents, into a fund to protect
its tropical forests.
Under the Buy Back option, there would be no cost to the
United States Government since the debt is being bought back at
its net present value as determined under section 502 (5) of
the Federal Credit Reform Act of 1990.
Second, the Act authorizes a Debt Swap option under which
an individual or organization would be able to engage in Debt-
for-Nature Swaps with lower income developing nations. These
purchasers would work with the United States government, but
would use nonfederal funds to assist these developing countries
to reduce or buy back their bilateral debt owed to the United
States Government in return for their placing local currencies
in a fund to protect their tropical forests.
Under this option, there would also be no cost to the
United States Government because the subsidy involved would
come from these purchasers.
Third, the Act authorizes a debt reduction mechanism based
upon the Enterprise for the Americas Initiative. Under the EAI
model, a new reduced debt instrument is negotiated and the
developing country is allowed to place the interest on the
reduced debt instrument in a tropical forest fund.
When the EAI option is exercised, the Act authorizes
appropriations to compensate the United States Treasury for the
reduction in the revenue stream which occurs. This is
equivalent to the difference between the net present value of
the old debt instrument and the net present value of the new
debt instrument. However, as in the case of the EAI, these
funds would be effectively leveraged because the amounts placed
by an eligible country in its tropical forest fund would exceed
the revenues foregone by the U.S. Treasury.
Within each developing country, the tropical forest fund
would be administered by a tropical forest board consisting of
one or more U.S. government officials; one or more individuals
appointed by the recipient country's government; and
representatives of environmental, community development,
scientific, academic and agroforestry organizations of the host
country. The nongovernmental members must constitute a majority
of the board and only in exceptional circumstances could grants
be made to the government.
Oversight of this program would be accomplished through
expanding the existing Enterprise for the Americas Board by two
federal and two nongovernmental representatives so that the
Board would consist of thirteen members, seven of whom would
represent federal agencies involved in the preservation,
restoration and sustainable uses of tropical forests and six of
whom would represent nongovernmental organizations and experts
engaged in these activities. This Board would annually review
the programs, operations and fiscal audits of each
administering body and would have veto power over all grants of
$100,000 or more.
To be eligible for assistance, a lower or middle income
developing country with a tropical forest must meet the same
criteria as established by Congress under the EAI. These
criteria are that the government must be democratically
elected, has not repeatedly provided support for acts of
international terrorism, is not failing to cooperate on
international narcotics control matters, does not engage in a
consistent pattern of gross violations of internationally
recognized human rights and has participated in any needed
investment reforms.
The President would have to notify the appropriate
congressional committees at least fifteen days in advance of
his intention to designate a country as an eligible country.
This legislation provides an incentive for the lower and
middle income developing nations to reduce their debt owed to
the United States government. It protects outstanding tropical
forests throughout the world. And it stretches the limited
federal dollars which are available to assist in this effort,
therefore making an effective use of international
environmental assistance.

Committee Action

The Committee on Foreign Relations considered S. 1758 on
May 19, 1998 and ordered the bill, as amended, favorably
reported by a voice vote.

Section By Section Analysis

Sec. 801. Short Title

This section allows this section of the Foreign Assistance
Act to be cited as the ``Tropical Forest Conservation Act of
1998''.

Sec. 802. Findings and Purposes

This section makes the following findings by Congress:
(1) It is the established policy of the United States
to support and seek protection of tropical forests
around the world.
(2) Tropical forests provide a wide range of benefits
to humankind by--
(A) harboring a major share of the Earth's
biological and terrestrial resources, which are
the basis for developing pharmaceutical
products and revitalizing agricultural crops;
(B) playing a critical role as carbon sinks
in reducing greenhouse gases in the atmosphere,
thus moderating potential global climate
change; and
(C) regulating hydrological cycles on which
far-flung agricultural and coastal resources
depend.
(3) International negotiations and assistance
programs to conserve forest resources have proliferated
over the past decade, but the rapid rate of tropical
deforestation continues unabated.
(4) Developing countries with urgent needs for
investment and capital for development have allocated a
significant amount of their forests to logging
concessions.
(5) Poverty and economic pressures on the populations
of developing countries have, over time, resulted in
clearing of vast areas of forest for conversion to
agriculture, which is often unsustainable in the poor
soils underlying tropical forests.
(6) Debt reduction can reduce economic pressures on
developing countries and result in increased protection
for tropical forests.
(7) Finding economic benefits to local communities
from sustainable uses of tropical forests is critical
to the protection of tropical forests.

The section also sets out the following purposes of the
Act:

(1) to recognize the values received by United States
citizens from protection of tropical forests;
(2) to facilitate greater protection of tropical
forests (and to give priority to protecting tropical
forests with the highest levels of biodiversity and
under the most severe threat) by providing for the
alleviation of debt in countries where tropical forests
are located, thus allowing the use of additional
resources to protect these critical resources and
reduce economic pressures that have led to
deforestation;
(3) to ensure that resources freed from debt in such
countries are targeted to protection of tropical
forests and their associated values; and
(4) to rechannel existing resources to facilitate the
protection of tropical forests.

Sec. 803. Definitions

This section defines the following terms used in the Act:

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

Sec. 804. Establishment of the Facility

This section establishes the Tropical Forest Facility in
the Department of the Treasury.
The Committee encourages the Treasury Department to show
flexibility in the administration and operation of the Tropical
Forest Facility, Tropical Forest Funds and Tropical Forest
Agreements to limit bureaucracy and to maximize efficiencies.
It may be appropriate to consolidate the work of, share
resources with, and otherwise coordinate the Tropical Forest
Facility and the EAI Facility within the Treasury Department.
However, because the eligible activities under this
legislation are different from the Enterprise for the Americas
Initiative and other programs, it is essential that funds for
this program remain segregated from funds for any other
program. Tropical Forest Agreements must also be separate and
apart from EAI Framework Agreements for the same reasons.

Sec. 805. Eligibility For Benefits

This section establishes the eligibility requirements for
benefits under the Act. Subsection (a)(1) requires the
developing country with a tropical forest to meet the
requirements applicable to Latin American or Caribbean
countries under paragraphs (1) through (5) and (7) of section
703(a) of the Foreign Assistance Act.
These paragraphs contain several requirements. First, the
government must be democratically elected. Second, the
government is prohibited from: repeatedly supporting acts of
international terrorism; failing to cooperate on international
narcotics control matters; and engaging in violations of
internationally recognized human rights. Finally, the
government must receive approval for or (in exceptional cases)
make significant progress towards an IMF standby arrangement;
have a structural or sectoral adjustment loan of the World Bank
in place (unless the President determines that the standby or
adjustment requirements could reasonably be expected to have
significant adverse social or environmental effects); and, as
appropriate, have reached an agreement with commercial bank
lenders on a satisfactory lending program.
Subsection (a)(2) requires the developing country to have
put in place major investment reforms, as evidenced by the
conclusion of a bilateral investment treaty with the United
States, implementation of an investment sector loan with the
Inter-American Development Bank, World Bank-supported
investment reforms, or other measures, as appropriate. The
Committee intends that such reforms would be consistent with
the goals of the Act.
Subsection (b)(1) provides that, consistent with subsection
(a), the President shall determine which countries are eligible
to receive benefits. Subsection (b)(2) requires that the
President shall notify the appropriate congressional committees
of his intention to designate a country as an eligible country
at least 15 days in advance of any formal determination

Sec. 806. Reduction of Debt Owed to the United States as a Result of
Concessional Loans Under the Foreign Assistance Act of 1961

Subsection (a) provides the President with the authority to
reduce debt owed to the United States (or any agency of the
United States) that is outstanding as of January 1, 1998, as a
result of concessional loans made to an eligible country by the
United States under development assistance (part I of the FAA)
or the economic support fund (chapter 4 of part II), or
predecessor foreign economic assistance legislation.
Subsection (a)(2) authorizes appropriations for the cost
(as defined in section 502(5) of the Federal Credit Reform Act
of 1990) for the reduction of any debt pursuant to this section
in the following amounts: $25,000,000 for fiscal year 1999,
$75,000,000 for fiscal year 2000, and $100,000,000 for fiscal
year 2001.
Under subsection (3)(A) debt reductions under this section
are not considered to be assistance for purposes of any
provision of law limiting assistance to a country. Subsection
(3)(B) provides that this authority may be exercised
notwithstanding requirements for the full repayment of debts to
the U.S. under section 620(r) of the FAA or section 321 of the
International Development and Food Assistance Act of 1975.
Subsection (b) requires the Facility to carry out any debt
reduction by exchanging new obligations for obligations of the
type referred to in subsection (a) outstanding as of the date
specified in subsection (a)(1). Subsection (2)(A) requires the
Facility to notify AID (the agency primarily responsible for
administering part I of the FAA) of an agreement entered into
under paragraph (1) with an eligible country to exchange a new
obligation for outstanding obligations.
Subsection (c) provides that the provisions relating to
repayment of principal in U.S. dollars (section 705 of the FAA)
and that interest be charged at concessional rates (section 706
of the FAA) be applied to debt reduction under subsection
(a)(1) in the same manner as such terms and conditions apply to
the reduction of debt under the EAI (section 704(a)(1) of the
FAA).

Sec. 807. Reduction of Debt Owed to the United States as a Result of
Credits Extended Under Title I of the Agricultural Trade
Development and Assistance Act of 1954

This section follows the example of section 806 but
concerns debt extended under Title I of the Agricultural Trade
Act of 1954. Subsection (a)(1) provides the authority to the
President to reduce the amount owed to the United States (or
any agency of the United States) that is outstanding as of
January 1, 1998, as a result of any credits extended under
title I of the Agricultural Trade Development and Assistance
Act of 1954 (7 U.S.C. 1701 et seq.) to a country eligible for
benefits from the Facility.
Subsection (a)(2) authorizes the appropriations of the
following amounts for cost as defined under section 502(5) of
the Federal Credit Reform Act of 1990: $25,000,000 for fiscal
year 1999, $50,000,000 for fiscal year 2000, and $50,000,000
for fiscal year 2001. Subsection (b)(2) requires the Facility
to notify the Commodity Credit Corporation of an agreement
entered into under paragraph (1) with an eligible country to
exchange a new obligation for outstanding obligations.
Subsection (c) provides that the provisions relating to
repayment of principal in U.S. dollars (section 605) and that
interest be charged at concessional rates (section 606) be
applied to debt reduction under subsection (a) (1) in the same
manner as such terms and conditions apply to the reduction of
debt under the EAI section 604(a)(1) of the Agricultural Trade
and Assistance Act of 1954 (section 604(a)(1) or 7 U.S.C.
1738c).

Sec. 808. Authority to Engage in Debt-For-Nature Swaps and Debt Buy
Backs

This section permits debtors who can afford to do so to
repurchase their debts at their net present value in return for
financial commitments to protect their tropical forests.
Under subsection (a), the President may, in accordance with
this section, sell to any eligible purchaser described in
subparagraph (B) any concessional development assistance loans
described in section 806(a)(1) or any agricultural credits
described in section 807(a)(1), or on receipt of payment from
an eligible purchaser described in subparagraph (B), reduce or
cancel such loans (or credits) or portion thereof, only for the
purpose of facilitating a debt-for-nature swap to support
eligible activities described in section 809(d).
Under subsection (B), loans or credits may be sold,
reduced, or canceled under subparagraph (A) only to a purchaser
who presents plans satisfactory to the President for using the
loan or credit for the purpose of engaging in debt-for-nature
swaps to support eligible activities described in section
809(d). Subsection (C) requires that before the sale, or any
reduction or cancellation of debt, that the President consult
with the country concerning the amount of loans or credits to
be sold, reduced, or canceled and their uses for debt-for-
nature swaps to support eligible activities described in
section 809(d). Subsection (D) limits the authorization of
appropriations for such purchases to the amounts authorized to
be appropriated under sections 806(a)(2) and 807(a)(2).
Under subsection (2) the President may sell to any eligible
country any development assistance concessional loans
(described in section 806(a)(1)) or any agricultural credits
(described in section 807(a)(1)). On receipt of payment from an
eligible country, the President may reduce or cancel such loans
(or credits) or portion thereof, only for the purpose of
facilitating a debt buy back by an eligible country of its own
qualified debt. The President may only do this if the eligible
country uses an additional amount of its local currency which
is not less than the lesser of the difference between the price
paid for such debt and the face value of such debt or 40
percent of the price paid for such debt by such eligible
country to support eligible activities described in section
809(d).
For example, if an eligible country owed the U.S.
government $1 million in development loan debt with a net
present value of $600,000, the President could sell that debt
to that country for $600,000 only if it committed to provide at
least the lesser of the difference between the purchase price
and the face value ($400,000) or 40 percent of the price paid
($240,000). In sum, the eligible country could purchase $1
million of its debt if it paid the U.S. government $600,000 and
committed at least $240,000 to tropical forest conservation
projects managed under an international agreement specified
under this Act.
The Committee intends that all sales under this subsection
be at no ``cost'' to the federal government as that term is
defined by section 502 (5) of the Federal Credit Reform Act of
1990.
Subsection (3) authorizes the President to establish the
terms and conditions under which loans and credits may be sold,
reduced, or canceled pursuant to this section. Subsection (5)
requires the Facility to notify the administrator of USAID or
the Commodity Credit Corporation (CCC) of eligible purchasers
described in paragraph (1)(B) that the President has determined
to be eligible under paragraph (1), and shall direct USAID or
the CCC to carry out the sale, reduction, or cancellation of a
loan. USAID or the CCC would then make adjustments in its
accounts to reflect the sale, reduction, or cancellation.
Subsection (b) requires the proceeds from the sale,
reduction, or cancellation of any loan sold, reduced, or
canceled pursuant to this section to be deposited in the United
States Government account or accounts established for the
repayment of such loan.

Sec. 809. Tropical Forest Agreement

This section authorizes the Secretary of State to enter
into a Tropical Forest Agreement with any eligible country
concerning the operation and use of the Fund for that country.
The Secretary must consult with the Board in accordance with
section 811. These agreements must contain the requirements
contained in section 708(b) of the FAA (relating to interest
payments, prompt disbursements, conservation of value, purposes
of the agreement and enforcement terms), applied in the same
manner as such requirements apply to an EAI Americas Framework
Agreement.
Funds disbursed from the Fund in each beneficiary country
must be administered by a body constituted under the laws of
that country. The administering body must consist of one or
more individuals appointed by the United States Government; one
or more individuals appointed by the government of the
beneficiary country; and individuals who represent a broad
range of environmental non-governmental organizations of, or
active in, the beneficiary country; local community development
non-governmental organizations of the beneficiary country; and
scientific academic, or agroforestry organizations of the
beneficiary country. A majority of the members of the
administering body must be representatives of environmental
nongovernmental organizations of, or active in the beneficiary
country, local community development nongovernmental
organizations of the beneficiary country and scientific,
academic or agroforestry organizations of the beneficiary
country.
The Committee intends that individuals who are appointed to
the local administering body described in section
809(c)(iii)(III) should represent organizations with expertise
and experience in the conservation, preservation, restoration,
and sustainable economic uses of tropical forests that lead to
their long-term protection and the maintenance of their
biological diversity.
The required responsibilities of the administering bodies
are contained in section 708(c)(3) of the FAA (relating to the
receipt of grant proposals, program oversight, annual audits,
access by the U.S. General Accounting Office, and annual
reports) and apply in the same manner as such requirements
apply to an administering body described in section 708(c)(1)
of the FAA.
Subsection (d) details the eligible activities that can be
supported. The administering bodies may provide grants to
preserve, maintain, and restore the tropical forests in the
beneficiary country, including one or more of the following
activities:

(1) Establishment, restoration, protection, and
maintenance of parks, protected areas, and reserves,
(2) Development and implementation of scientifically
sound systems of natural resource management, including
land and ecosystem management practices,
(3) Training programs to strengthen conservation
institutions and increase scientific, technical, and
managerial capacities of individuals and organizations
involved in conservation efforts,
(4) Restoration, protection, or sustainable use of
diverse animal and plant species,
(5) Research and identification of medicinal uses of
tropical forest plant life to treat human diseases and
illnesses and health related concerns.
(6) Mitigation of greenhouse gases in the atmosphere,
and
(7) Development and support of the livelihoods of
individuals living in or near a tropical forest,
including the cultures of such individuals, in a manner
consistent with protecting such tropical forest.

In conjunction with these activities, a beneficiary country
is encouraged to enforce its laws against illegal logging and
illegal trade in tropical timber.
The Committee intends that the only activities which are
eligible to be funded by administering bodies under this Act
are those which directly relate to the preservation,
conservation, maintenance and restoration of tropical forests.
The Committee recognizes that funds for foreign assistance
programs described as environmental or child survival have
occasionally been used for family planning or population
control programs. The Committee does not consider family
planning or population control activities as legitimate
activities under the Act.
Subsection (e) specifies eligible grant recipients who are:

(A) nongovernmental environmental,
conservation, and indigenous people
organizations of, or active in, the beneficiary
country;
(B) other appropriate local or regional
entities of, or active in, the beneficiary
country; and
(C) in exceptional circumstances, the
government of the beneficiary country.

Subsection (f) provides that any grant of more than
$100,000 from a Fund is also subject to a veto either by the
Government of the United States or the government of the
beneficiary country.
Subsection (g) provides that if a government ceases to meet
the eligibility requirements for countries set forth in section
805(a), as determined by the President pursuant to section
805(b), then grants from the Fund for that country may only be
made to nongovernmental organizations until such time as the
President determines that such country meets the eligibility
requirements set forth in section 805(a).

Sec. 810. Tropical Forest Fund

This section requires that each beneficiary country that
enters into a Tropical Forest Agreement under section 809 shall
be required to establish a Tropical Forest Fund to receive
payments of interest on new obligations undertaken by that
beneficiary country under this part.
Subsection (b) requires that the terms and conditions shall
apply to the Fund in the same manner as such terms as
conditions apply to an Enterprise for the Americas Fund under
section 707 of the FAA (relating to the deposit of local
currencies not considered as assistance, the investment of
funds not expended and the requirement that funds be disbursed
only pursuant to the agreement).

Sec. 811. Board

This section expands the duties of the Enterprise for the
Americas Board which, in addition to carrying out the
responsibilities of the Board under section 610 (c) of the FAA,
will carry out the duties described in subsection (c) of this
section for the purposes of this part. The Act requires the
addition of four members to the EAI board appointed by the
President as follows:
(A) Two representatives from the United
States Government, one of which shall be a
representative of the International Division of
the U.S. Forest Service.
(B) Two representatives from private
nongovernmental environmental, scientific,
agricultural and academic organizations with
experience and expertise in preservation,
maintenance, sustainable uses and restoration
of tropical forests.

This section provides, notwithstanding section 610(b)(2) of
the Agricultural Trade Development and Assistance Act of 1954
(7 U.S.C. 1738i(b)(2)) that the Enterprise for the Americas
Board shall be headed by a chairperson who shall be appointed
by the President from among the representatives appointed under
section 610(b)(1)(A) of such Act or paragraph (1)(A) of this
subsection. The duties of the Board are expanded to include
advising the Secretary of State on the negotiations of Tropical
Forest Agreements; ensure, in consultation with the appropriate
parties, that suitable administering body is identified for
each fund; and review the programs, operations, and fiscal
audits of each administering body.
Under the Enterprise for the Americas Initiative,
individual Environmental Framework Agreements limit
administrative expenses to a certain percentage (typically 10
percent) of the total annual interest payments made into the
account by the host country. The purpose of this cap was to
minimize the risk that funds would be diverted from
environmental (and child survival) projects to overhead. The
Committee understands that six of the seven countries
participating in Enterprise for the Americas Initiative have a
cap on administrative expenses equal to or less than 10 percent
of the total annual interest payments. The Committee also
understands that this administrative cap can be changed only by
amending the bilateral agreements through an exchange of notes
between the U.S. Government and the beneficiary country.
It is the intention of the Committee that administrative
expenses are generally not to exceed 10 percent of the total
annual interest payments made into a Tropical Forest Fund and
that such cap should be included in all Tropical Forest
Agreements with the beneficiary country.
In order to avoid duplication of effort and to maximize
efficiencies, the bill provides that the EAI Board shall have
expanded authority and membership to oversee the operational
implementation of the Tropical Forest Agreements and Funds.
The Committee intends that the EAI Board actively oversee
the operations of each administering body to ensure that only
eligible activities are funded and that there is full
compliance bodies with the audit and reporting requirements of
the Act.
The Committee intends that the two additional individuals
who are appointed to the Enterprise for the Americas Board
under section 811(b)(1)(B) should represent organizations with
expertise in the preservation, maintenance, restoration, and
sustainable economic uses of tropical forests that lead to
their long-term protection and maintenance of their biological
diversity.

Sec. 812. Consultations With the Congress

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

Sec. 813. Annual Reports to the Congress

Section (a) requires the President to transmit a report,
not later than December 31 of each year, concerning the
operation of the Facility for the prior fiscal year. This
report must include a description of the activities undertaken
by the Facility during the previous fiscal year, a description
of any Agreement entered into under this part, a report on any
Funds that have been established under this part and on the
operations of such Funds and a description of any grants that
have been provided by administering bodies pursuant to
Agreements under this part.
Subsection (b) requires that not later than December 15 of
each year, each member of the Board shall be entitled to
receive a copy of the report required in subsection (a). Each
member of the Board may prepare and submit supplemental views
to the President on the implementation of this part by December
31 for inclusion in the annual report when it is transmitted to
Congress pursuant to this section.
The Committee intends that these annual reports shall
include a clear description of each activity funded by each
administering body, a progress report on activities previously
funded and the conclusions of the annual independent audit
required of each Tropical Forest Fund.

Cost Estimate

In accordance with Rule XXVI, paragraph 11(a) of the
Standing Rules of the Senate, the Committee provides the
following estimate of the cost of this legislation prepared by
the Congressional Budget Office. The Committee does not intend
that debt be bought back at less than ``cost'' as determined by
section 502(5) of the Federal Credit Reform Act of 1990 and
will offer a technical amendment to resolve the pay-as-you-go
problem referred to in the CBO letter.

U.S. Congress,
Congressional Budget Office,
Washington, D.C. 20515.
Hon. Jesse Helms,
Chairman, Committee on Foreign Relations,
United States Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1758, the Tropical
Forest Conservation Act of 1998.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Joseph C.
Whitehill, who can be reached at 226-2840.
Sincerely,
June E. O'Neill,
Director.

Enclosure.

cc: Hon. Joseph R. Biden, Jr.,
Ranking Minority Member.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

1. Bill number: S. 1758.
2. Bill title: Tropical Forest Conservation Act of 1998.
3. Bill status: As ordered reported by the Senate Committee
on Foreign Relations on May 19, 1998.
4. Bill purpose: S. 1758 would authorize the Secretary of
State to negotiate agreements with eligible countries to create
local funds administered by local boards with the authority to
make grants to preserve, maintain, and restore tropical
forests. The local funds would receive a stream of interest
payments generated by modifying the terms of outstanding debt
owed to the United States for development assistance or food
aid. In addition, S. 1758 would authorize the President to sell
development assistance or food-aid debt to eligible investors
to use in debt-for-nature swaps. The bill would authorize the
appropriation of $325 million over the fiscal years 1999-2001
for the cost of such modifications and sales. CBO estimates
that outlays totaling that amount would be recorded over the
1999-2003 period.
The bill would also authorize the President to sell debt
back to an eligible country, notwithstanding any other
provision of law and without appropriation action. Sales to
eligible countries would therefore increase direct spending to
the extent that sale prices are less than the value of the
debt. CBO estimates that this provision would have no cost in
1999 but that costs would total about $150 million over the
2000-2006 period. Because S. 1758 would affect direct spending,
pay-as-you-go procedures would apply.
The bill contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA),
and would not affect the budgets of state, local, or tribal
governments.
5. Estimated cost to the federal government: The estimated
budgetary impact of S. 1758 is shown in the following table.
The costs of this legislation fall within budget function 150
(international affairs).

[by fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------------------
Spending Subject to Appropriation
Spending under current law for debt restructuring:
Budget authority\1\............................... 27 0 0 0 0 0
Estimated outlays................................. 31 15 1 0 0 0
Proposed changes:
Authorization level............................... 0 50 125 150 0 0
Estimated outlays................................. 0 23 81 133 81 8
Spending under S. 1758 for debt restructuring:
Authorization level\1\............................ 27 50 125 150 0 0
Estimated outlays................................. 31 38 82 133 81 8
Direct Spending
Proposed changes:
Estimated budget authority........................ 0 0 25 50 35 20
Estimated outlays................................. 0 0 25 50 35 20
----------------------------------------------------------------------------------------------------------------
\1\The 1998 level is the amount appropriated for that year.

Basis of estimate: S. 1758 would authorize spending subject
to appropriation action and provide indefinite authority to
sell certain outstanding direct loans.

Spending subject to appropriation

The bill would authorize the appropriation of $325 million
over the fiscal years 1999-2001 for the cost of modifying debt
so as to reduce principal and to divert interest payments to
local conservation funds. The estimate assumes appropriation of
the authorized amounts over the next three years. Those sums
represent the present value of the debt that would be reduced
and the interest that would be diverted to local funds. Outlays
would be recorded at the time outstanding debts are modified.
The estimate assumes it would take from one to three years to
negotiate agreements with eligible countries and to sign
bilateral agreements that cancel, reduce, or otherwise modify
the debt.
S. 1758 would also authorize the President to sell
development assistance or food-aid debt to eligible investors
for debt-for-nature swaps. The sale of a loan asset is a loan
modification as defined by the Federal Credit Reform Act. Any
cost to the federal government from these sales would also be
met from the amounts authorized for appropriation.

Direct spending

The bill would give the President the authority to sell
debt back to an eligible country and to set terms and
conditions, including price, notwithstanding any other
provision of law. However, an advance appropriation would not
be required to exercise this authority. Any such sale would
increase budget authority and outlays to the extent that the
sale prices were less than the estimated value of the loans.
The President has similar authority to engage in debt buy
backs for debt-for-equity, debt-for-development, and debt-for-
nature swaps, but only if appropriations are provided in
advance for the cost of any modification. That authority has
not been used much because of limited appropriations and little
demand for unsubsidized sales. CBO estimates that the authority
under the bill would not be used to a great extent unless loans
were offered for sale below cost; in that case, the costs would
depend on how the President would use the discretion permitted
under the bill. CBO estimates that the bill would not have a
cost in 1999 because of the time it would take to negotiate
agreements but that costs would total about $25 million in 2000
and about $150 million over the 2000-2006 period. This estimate
assumes debt buy-backs on only a very small proportion of
eligible development and food-aid debt, which has a face value
of almost $13 billion.
7. Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays and governmental receipts that are subject
to pay-as-you-go procedures are shown in the following table.
For the purposes of enforcing pay-as-you-go procedures, only
the effects in the current year, the budget year, and the
succeeding four years are counted.

[By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * Changes in outlays 0 0 25 50 35 20 10 5 5 0 0
Changes in receipts.................................. na na na na na na na na na na na
--------------------------------------------------------------------------------------------------------------------------------------------------------
na = Not applicable.

8. Intergovernmental and private-sector impact: The bill
contains no intergovernmental or private-sector mandates as
defined in UMRA, and would not affect the budgets of state,
local, or tribal governments.
9. Previous CBO estimate: On March 13, 1998, CBO prepared
an estimate for the companion bill in the House of
Representatives, H.R. 2870. All spending in that bill would be
subject to appropriation, and the amounts authorized are the
same as in S. 1758.
10. Estimate prepared by: Federal Costs--Joseph C.
Whitehill (226-2840); Impact on State, Local, and Tribal
Governments--Pepper Santalucia (225-3220); Impact on the
Private Sector--Lesley Frymier (226-2940).
11. Estimate approved by: Robert A. Sunshine, Deputy
Assistant Director for Budget Analysis.

Evaluation of Regulatory Impact

In accordance with Rule XXVI, paragraph 11(b) of the
Standing Rules of the Senate, the committee has concluded that
there is no regulatory impact from this legislation.

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 (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):

FOREIGN ASSISTANCE ACT OF 1961

* * * * * * *

Part V--Debt Reduction for Developing Countries With Tropical Forests

Sec. 801. Short Title.
This part may be cited as the ``Tropical Forest
Conservation Act of 1998''.
Sec. 802. Findings and Purposes.
(1) It is the established policy of the United States
to support and seek protection of tropical forests
around the world.
(2) Tropical forests provide a wide range of benefits
to humankind by--
(A) harboring a major share of the Earth's
biological and terrestrial resources, which are
the basis for developing pharmaceutical
products and revitalizing agricultural crops;
(B) playing a critical role as carbon sinks
in reducing greenhouse gases in the atmosphere,
thus moderating potential global climate
change; and
(C) regulating hydrological cycles on which
far-flung agricultural and coastal resources
depend.
(3) International negotiations and assistance
programs to conserve forest resources have proliferated
over the past decade, but the rapid rate of tropical
deforestation continues unabated.
(4) Developing countries with urgent needs for
investment and capital for development have allocated a
significant amount of their forests to logging
concessions.
(5) Poverty and economic pressures on the populations
of developing countries have, over time, resulted in
clearing of vast areas of forest for conversion to
agriculture, which is often unsustainable in the poor
soils underlying tropical forests.
(6) Debt reduction can reduce economic pressures on
developing countries and result in increased protection
for tropical forests.
(7) Finding economic benefits to local communities
from sustainable uses of tropical forests is critical
to the protection of tropical forests.
(b) Purposes.--The purposes of this part are--
(1) to recognize the values received by United States
citizens from protection of tropical forests;
(2) to facilitate greater protection of tropical
forests (and to give priority to protecting tropical
forests with the highest levels of biodiversity and
under the most severe threat) by providing for the
alleviation of debt in countries where tropical forests
are located, thus allowing the use of additional
resources to protect these critical resources and
reduce economic pressures that have led to
deforestation;
(3) to ensure that resources freed from debt in such
countries are targeted to protection of tropical
forests and their associated values; and
(4) to rechannel existing resources to facilitate the
protection of tropical forests.
Sec. 803. Definitions.
As used in this part:
(1) Administering body.--The term ``administering
body'' means the entity provided for in section 809(c).
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on International Relations
and the Committee on Appropriations of the
House of Representatives; and
(B) the Committee on Foreign Relations and
the Committee on Appropriations of the Senate.
(3) Beneficiary country.--The term ``beneficiary
country'' means an eligible country with respect to
which the authority of section 806(a)(1), section
807(a)(1), or paragraph (1) or (2) of section 808(a) is
exercised.
(4) Board.--The term ``Board'' means the board
referred to in section 811.
(5) Developing country with a tropical forest.--The
term ``developing country with a tropical forest''
means--
(A)(i) a country that has a per capita income
of $725 or less in 1994 United States dollars
(commonly referred to as ``low-income
country''), as determined and adjusted on an
annual basis by the International Bank for
Reconstruction and Development in its World
Development Report; or
(ii) a country that has a per capita income
of more than $725 but less than $8,956 in 1994
United States dollars (commonly referred to as
``middle-income country''), as determined and
adjusted on an annual basis by the
International Bank for Reconstruction and
Development in its World Development Report;
and
(B) a country that contains at least one
tropical forest that is globally outstanding in
terms of its biological diversity or represents
one of the larger intact blocks of tropical
forests left, on continental or global scale.
(6) Eligible country.--The term ``eligible country''
means a country designated by the President in
accordance with section 805.
(7) Tropical forest agreement.--The term ``Tropical
Forest Agreement'' or ``Agreement'' means a Tropical
Forest Agreement provided for in section 809.
(8) Tropical forest facility.--The term ``Tropical
Forest Facility'' or ``Facility'' means the Tropical
Forest Facility established in the Department of the
Treasury by section 804.
(9) Tropical forest fund.--The term ``Tropical Forest
Fund'' or ``Fund'' means a Tropical Forest Fund
provided for in section 810.
Sec. 804. Establishment of the Facility.
There is established in the Department of the Treasury an
entity to be known as the ``Tropical Forest Facility'' for the
purpose of providing for the administration of debt reduction
in accordance with this part.
Sec. 805. Eligibility for Benefits.
(a) In General.--To be eligible for benefits from the
Facility under this part, a country shall be a developing
country with a tropical forest--
(1) whose government meets the requirements
applicable to Latin American or Caribbean countries
under paragraphs (1) through (5) and (7) of section
703(a) of this Act;
(2) that has put in place major investment reforms,
as evidenced by the conclusion of a bilateral
investment treaty with the United States,
implementation of an investment sector loan with the
Inter-American Development Bank, World Bank-supported
investment reforms, or other measures, as appropriate.
(b) Eligibility Determinations.--
(1) In general.--Consistent with subsection (a), the
President shall determine whether a country is eligible
to receive benefits under this part.
(2) Congressional notification.--The President shall
notify the appropriate congressional committees of his
intention to designate a country as an eligible country
at least 15 days in advance of any formal
determination.
Sec. 806. Reduction of Debt Owed to the United States as a Result of
Concessional Loans Under the Foreign Assistance Act of 1961.
(a) Authority To Reduce Debt.--
(1) Authority.--The President may reduce the amount
owed to the United States (or any agency of the United
States) that is outstanding as of January 1, 1998, as a
result of concessional loans made to an eligible
country by the United States under part I of this Act,
chapter 4 of part II of this Act, or predecessor
foreign economic assistance legislation.
(2) Authorization of appropriations.--For the cost
(as defined in section 502(5) of the Federal Credit
Reform Act of 1990) for the reduction of any debt
pursuant to this section, there are authorized to be
appropriated to the President--
(A) $25,000,000 for fiscal year 1999;
(B) $75,000,000 for fiscal year 2000; and
(C) $100,000,000 for fiscal year 2001.
(3) Certain prohibitions inapplicable.--
(A) In general.--A reduction of debt pursuant
to this section shall not be considered
assistance for purposes of any provision of law
limiting assistance to a country.
(B) Additional requirement.--The authority of
this section may be exercised notwithstanding
section 620(r) of this Act or section 321 of
the International Development and Food
Assistance Act of 1975.
(b) Implementation of Debt Reduction.--
(1) In general.--Any debt reduction pursuant to
subsection (a) shall be accomplished at the direction
of the Facility by the exchange of a new obligation for
obligations of the type referred to in subsection (a)
outstanding as of the date specified in subsection
(a)(1).
(2) Exchange of obligations.--
(A) In general.--The Facility shall notify
the agency primarily responsible for
administering part I of this Act of an
agreement entered into under paragraph (1) with
an eligible country to exchange a new
obligation for outstanding obligations.
(B) Additional requirement.--At the direction
of the Facility, the old obligations that are
the subject of the agreement shall be canceled
and a new debt obligation for the country shall
be established relating to the agreement, and
the agency primarily responsible for
administering part I of this Act shall make an
adjustment in its accounts to reflect the debt
reduction.
(c) Additional Terms and Conditions.--The following
additional terms and conditions shall apply to the reduction of
debt under subsection (a)(1) in the same manner as such terms
and conditions apply to the reduction of debt under section
704(a)(1) of this Act:
(1) The provisions relating to repayment of principal
under section 705 of this Act.
(2) The provisions relating to interest on new
obligations under section 706 of this Act.
Sec. 807. Reduction of Debt Owed to the United States as a Result of
Credits Extended Under Title I of the Agricultural Trade
Development and Assistance Act of 1954.
(a) Authority To Reduce Debt.--
(1) Authority.--Notwithstanding any other provision
of law, the President may reduce the amount owed to the
United States (or any agency of the United States) that
is outstanding as of January 1, 1998, as a result of
any credits extended under title I of the Agricultural
Trade Development and Assistance Act of 1954 (7 U.S.C.
1701 et seq.) to a country eligible for benefits from
the Facility.
(2) Authorization of appropriations.--For the cost
(as defined in section 502(5) of the Federal Credit
Reform Act of 1990) for the reduction of any debt
pursuant to this section, there are authorized to be
appropriated to the President--
(i) $25,000,000 for fiscal year 1999;
(ii) $50,000,000 for fiscal year 2000; and
(iii) $50,000,000 for fiscal year 2001.
(b) Implementation of Debt Reduction.--
(1) In general.--Any debt reduction pursuant to
subsection (a) shall be accomplished at the direction
of the Facility by the exchange of a new obligation for
obligations of the type referred to in subsection (a)
outstanding as of the date specified in subsection
(a)(1).
(2) Exchange of obligations.--
(A) In general.--The Facility shall notify
the Commodity Credit Corporation of an
agreement entered into under paragraph (1) with
an eligible country to exchange a new
obligation for outstanding obligations.
(B) Additional requirement.--At the direction
of the Facility, the old obligations that are
the subject of the agreement shall be canceled
and a new debt obligation shall be established
for the country relating to the agreement, and
the Commodity Credit Corporation shall make an
adjustment in its accounts to reflect the debt
reduction.
(c) Additional Terms and Conditions.--The following
additional terms and conditions shall apply to the reduction of
debt under subsection (a)(1) in the same manner as such terms
and conditions apply to the reduction of debt under section
604(a)(1) of the Agricultural Trade Development and Assistance
Act of 1954 (7 U.S.C. 1738c):
(1) The provisions relating to repayment of principal
under section 605 of such Act.
(2) The provisions relating to interest on new
obligations under section 606 of such Act.
Sec. 808. Authority to Engage in Debt-For-Nature Swaps and Debt
Buybacks.
(a) Loans and Credits Eligible for Sale, Reduction, or
Cancellation.--
(1) Debt-for-nature swaps.--
(A) In general.--Notwithstanding any other
provision of law, the President may, in
accordance with this section, sell to any
eligible purchaser described in subparagraph
(B) any concessional loans described in section
806(a)(1) or any credits described in section
807(a)(1), or on receipt of payment from an
eligible purchaser described in subparagraph
(B), reduce or cancel such loans (or credits)
or portion thereof, only for the purpose of
facilitating a debt-for-nature swap to support
eligible activities described in section
809(d).
(B) Eligible purchaser described.--A loan or
credit may be sold, reduced, or canceled under
subparagraph (A) only to a purchaser who
presents plans satisfactory to the President
for using the loan or credit for the purpose of
engaging in debt-for-nature swaps to support
eligible activities described in section
809(d).
(C) Consultation requirement.--Before the
sale under subparagraph (A) to any eligible
purchaser described in subparagraph (B), or any
reduction or cancellation under such
subparagraph (A), of any loan or credit made to
an eligible country, the President shall
consult with the country concerning the amount
of loans or credits to be sold, reduced, or
canceled and their uses for debt-for-nature
swaps to support eligible activities described
in section 809(d).
(D) Authorization of appropriations.--For the
cost (as defined in section 502(5) of the
Federal Credit Reform Act of 1990) for the
reduction of any debt pursuant to subparagraph
(A), amounts authorized to appropriated under
sections 806(a)(2) and 807(a)(2) shall be made
available for such reduction of debt pursuant
to subparagraph (A).
(2) Debt buybacks.--Notwithstanding any other
provision of law, the President may, in accordance with
this section, sell to any eligible country any
concessional loans described in section 806(a)(1) or
any credits described in section 807(a)(1), or on
receipt of payment from an eligible country, reduce or
cancel such loans (or credits) or portion thereof, only
for the purpose of facilitating a debt buyback by an
eligible country of its own qualified debt, only if the
eligible country uses an additional amount of the local
currency of the eligible country, equal to not less
than 40 percent of the price paid for such debt by such
eligible country, or the difference between the price
paid for such debt and the face value of such debt, to
support eligible activities described in section
809(d).
(3) Terms and conditions.--Notwithstanding any other
provision of law, the President shall, in accordance
with this section, establish the terms and conditions
under which loans and credits may be sold, reduced, or
canceled pursuant to this section.
(4) Administration.--
(A) In general.--The Facility shall notify
the administrator of the agency primarily
responsible for administering part I of this
Act or the Commodity Credit Corporation, as the
case may be, of eligible purchasers described
in paragraph (1)(B) that the President has
determined to be eligible under paragraph (1),
and shall direct such agency or Corporation, as
the case may be, to carry out the sale,
reduction, or cancellation of a loan pursuant
to such paragraph.
(B) Additional requirement.--Such agency or
Corporation, as the case may be, shall make an
adjustment in its accounts to reflect the sale,
reduction, or cancellation.
(b) Deposit of Proceeds.--The proceeds from the sale,
reduction, or cancellation of any loan sold, reduced, or
canceled pursuant to this section shall be deposited in the
United States Government account or accounts established for
the repayment of such loan.
Sec. 809. Tropical Forest Agreement.
(a) Authority.--
(1) In general.--The Secretary of State is
authorized, in consultation with other appropriate
officials of the Federal Government, to enter into a
Tropical Forest Agreement with any eligible country
concerning the operation and use of the Fund for that
country.
(2) Consultation.--In the negotiation of such an
Agreement, the Secretary shall consult with the Board
in accordance with section 811.
(b) Contents of Agreement.--The requirements contained in
section 708(b) of this Act (relating to contents of an
agreement) shall apply to an Agreement in the same manner as
such requirements apply to an Americas Framework Agreement.
(c) Administering Body.--
(1) In general.--Amounts disbursed from the Fund in
each beneficiary country shall be administered by a
body constituted under the laws of that country.
(2) Composition.--
(A) In general.--The administering body shall
consist of--
(i) one or more individuals appointed
by the United States Government;
(ii) one or more individuals
appointed by the government of the
beneficiary country; and
(iii) individuals who represent a
broad range of--
(I) environmental
nongovernmental organizations
of, or active in, the
beneficiary country;
(II) local community
development nongovernmental
organizations of the
beneficiary country; and
(III) scientific, academic or
agroforestry organizations of
the beneficiary country.
(B) Additional requirement.--A majority of
the members of the administering body shall be
individuals described in subparagraph (A)(iii).
(3) Responsibilities.--The requirements contained in
section 708(c)(3) of this Act (relating to
responsibilities of the administering body) shall apply
to an administering body described in paragraph (1) in
the same manner as such requirements apply to an
administering body described in section 708(c)(1) of
this Act.
(d) Eligible Activities.--Amounts deposited in a Fund shall
be used to provide grants to preserve, maintain, and restore
the tropical forests in the beneficiary country, including one
or more of the following activities:
(1) Establishment, restoration, protection, and
maintenance of parks, protected areas, and reserves.
(2) Development and implementation of scientifically
sound systems of natural resource management, including
land and ecosystem management practices.
(3) Training programs to strengthen conservation
institutions and increase scientific, technical, and
managerial capacities of individuals and organizations
involved in conservation efforts.
(4) Restoration, protection, or sustainable use of
diverse animal and plant species.
(5) Research and medicinal uses of tropical forest
plant life to treat human diseases and illnesses and
health related concerns.
(6) Mitigation of greenhouse gases in the atmosphere.
(7) Development and support of the livelihoods of
individuals living in or near a tropical forest,
including the cultures of such individuals, in a manner
consistent with protecting such tropical forest.
(e) Grant Recipients.--
(1) In general.--Grants made from a Fund shall be
made to--
(A) nongovernmental environmental,
conservation, and indigenous people
organizations of, or active in, the beneficiary
country;
(B) other appropriate local or regional
entities of, or active in, the beneficiary
country; or
(C) in exceptional circumstances, the
government of the beneficiary country.
(2) Priority.--In providing grants under paragraph
(1), priority shall be given to projects that are run
by nongovernmental organizations and other private
entities and that involve local communities in their
planning and execution.
(f) Review of Larger Grants.--Any grant of more than
$100,000 from a Fund shall be subject to veto by the Government
of the United States or the government of the beneficiary
country.
(g) Eligibility Criteria.--In the event that a country
ceases to meet the eligibility requirements set forth in
section 805(a), as determined by the President pursuant to
section 805(b), then grants from the Fund for that country may
only be made to nongovernmental organizations until such time
as the President determines that such country meets the
eligibility requirements set forth in section 805(a).
Sec. 810. Tropical Forest Fund.
(a) Establishment.--Each beneficiary country that enters
into a Tropical Forest Agreement under section 809 shall be
required to establish a Tropical Forest Fund to receive
payments of interest on new obligations undertaken by the
beneficiary country under this part.
(b) Requirements Relating to Operation of Fund.--The
following terms and conditions shall apply to the Fund in the
same manner as such terms and conditions apply to an Enterprise
for the Americas Fund under section 707 of this Act:
(1) The provision relating to deposits under
subsection (b) of such section.
(2) The provision relating to investments under
subsection (c) of such section.
(3) The provision relating to disbursements under
subsection (d) of such section.
Sec. 811. Board.
(a) Enterprise for the Americas Board.--The Enterprise for
the Americas Board established under section 610(a) of the
Agricultural Trade Development and Assistance Act of 1954 (7
U.S.C. 1738i(a)) shall, in addition to carrying out the
responsibilities of the Board under section 610 (c)of such Act,
carry out the duties described in subsection (c)of this section
for the purposes of this part.
(b) Additional Membership.--
(1) In general.--The Enterprise for the Americas
Board shall be composed of an additional four members
appointed by the President as follows:
(A) Two representatives from the United
States Government, including a representative
of the International Forestry Division of the
United States Forest Service.
(B) Two representatives from private
nongovernmental environmental, scientific,
agricultural, or academic organizations with
experience and expertise in preservation,
maintenance, sustainable uses, and restoration
of tropical forests.
(2) Chairperson.--Notwithstanding section 610(b)(2)
of the Agricultural Trade Development and Assistance
Act of 1954 (7 U.S.C. 1738i(b)(2)), the Enterprise for
the Americas Board shall be headed by a chairperson who
shall be appointed by the President from among the
representatives appointed under section 610(b)(1)(A) of
such Act or paragraph (1)(A) of this subsection.
(c) Duties.--The duties described in this subsection are as
follows:
(1) Advise the Secretary of State on the negotiations
of Tropical Forest Agreements.
(2) Ensure, in consultation with--
(A) the government of the beneficiary
country,
(B) nongovernmental organizations of the
beneficiary country,
(C) nongovernmental organizations of the
region (if appropriate),
(D) environmental, scientific, and academic
leaders of the beneficiary country, and
(E) environmental, scientific, and academic
leaders of the region (as appropriate), that a
suitable administering body is identified for
each Fund.
(3) Review the programs, operations, and fiscal
audits of each administering body.
Sec. 812. Consultations With the Congress.
The President shall consult with the appropriate
congressional committees on a periodic basis to review the
operation of the Facility under this part and the eligibility
of countries for benefits from the Facility under this part.
Sec. 813. Annual Reports to the Congress.
(a) In General.--Not later than December 31 of each year,
the President shall prepare and transmit to the Congress an
annual report concerning the operation of the Facility for the
prior fiscal year. Such report shall include--
(1) a description of the activities undertaken by the
Facility during the previous fiscal year;
(2) a description of any Agreement entered into under
this part;
(3) a report on any Funds that have been established
under this part and on the operations of such Funds;
and
(4) a description of any grants that have been
provided by administering bodies pursuant to Agreements
under this part.
(b) Supplemental Views in Annual Report.--Not later than
December 15 of each year, each member of the Board shall be
entitled to receive a copy of the report required under
subsection (a). Each member of the Board may prepare and submit
supplemental views to the President on the implementation of
this part by December 31 for inclusion in the annual report
when it is transmitted to Congress pursuant to this section.