[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.

                                
