[House Report 107-290]
[From the U.S. Government Publishing Office]




107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    107-290

======================================================================




 
            ANDEAN TRADE PROMOTION AND DRUG ERADICATION ACT

                                _______
                                

 November 14, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 3009]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3009) to extend the Andean Trade Preference Act, to 
grant additional trade benefits under that Act, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

  I. Introduction.....................................................9
          A. Purpose and Summary.................................     9
          B. Background..........................................     9
          C. Legislative History.................................     9
 II. Explanation of the Bill.........................................10
III. Votes of the Committee..........................................21
 IV. Budget Effect...................................................22
          A. Committee Estimate of Budgetary Effects.............    22
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures.......................................    22
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    22
  V. Other Matters to be Discussed Under the Rules of the House......24
          A. Committee Oversight Findings and Recommendations....    24
          B. Statement of General Performance Goals and 
              Objectives.........................................    24
          C. Constitutional Authority Statement..................    25
 VI. Changes in Existing Law Made by the Bill, as Reported...........25
VII. Additional Views................................................40
VIII.Dissenting Views................................................42


  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Andean Trade Promotion and Drug 
Eradication Act''.

SEC. 2. FINDINGS.

  Congress makes the following findings:
          (1) Since the Andean Trade Preference Act was enacted in 
        1991, it has had a positive impact on United States trade with 
        Bolivia, Colombia, Ecuador, and Peru. Two-way trade has 
        doubled, with the United States serving as the leading source 
        of imports and leading export market for each of the Andean 
        beneficiary countries. This has resulted in increased jobs and 
        expanded export opportunities in both the United States and the 
        Andean region.
          (2) The Andean Trade Preference Act has been a key element in 
        the United States counternarcotics strategy in the Andean 
        region, promoting export diversification and broad-based 
        economic development that provides sustainable economic 
        alternatives to drug-crop production, strengthening the 
        legitimate economies of Andean countries and creating viable 
        alternatives to illicit trade in coca.
          (3) Notwithstanding the success of the Andean Trade 
        Preference Act, the Andean region remains threatened by 
        political and economic instability and fragility, vulnerable to 
        the consequences of the drug war and fierce global competition 
        for its legitimate trade.
          (4) The continuing instability in the Andean region poses a 
        threat to the security interests of the United States and the 
        world. This problem has been partially addressed through 
        foreign aid, such as Plan Colombia, enacted by Congress in 
        2000. However, foreign aid alone is not sufficient. Enhancement 
        of legitimate trade with the United States provides an 
        alternative means for reviving and stabilizing the economies in 
        the Andean region.
          (5) The Andean Trade Preference Act constitutes a tangible 
        commitment by the United States to the promotion of prosperity, 
        stability, and democracy in the beneficiary countries.
          (6) Renewal and enhancement of the Andean Trade Preference 
        Act will bolster the confidence of domestic private enterprise 
        and foreign investors in the economic prospects of the region, 
        ensuring that legitimate private enterprise can be the engine 
        of economic development and political stability in the region.
          (7) Each of the Andean beneficiary countries is committed to 
        conclude negotiation of a Free Trade Area of the Americas by 
        the year 2005, as a means of enhancing the economic security of 
        the region.
          (8) Temporarily enhancing trade benefits for Andean 
        beneficiary countries will promote the growth of free 
        enterprise and economic opportunity in these countries and 
        serve the security interests of the United States, the region, 
        and the world.

SEC. 3. ARTICLES ELIGIBLE FOR PREFERENTIAL TREATMENT.

  (a) Eligibility of Certain Articles.--Section 204 of the Andean Trade 
Preference Act (19 U.S.C. 3203) is amended--
          (1) by striking subsection (c) and redesignating subsections 
        (d) through (g) as subsections (c) through (f), respectively; 
        and
          (2) by amending subsection (b) to read as follows:
  ``(b) Exceptions and Special Rules.--
          ``(1) Certain articles that are not import-sensitive.--The 
        President may proclaim duty-free treatment under this title for 
        any article described in subparagraph (A), (B), (C), or (D) 
        that is the growth, product, or manufacture of an ATPDEA 
        beneficiary country and that meets the requirements of this 
        section, if the President determines that such article is not 
        import-sensitive in the context of imports from ATPDEA 
        beneficiary countries:
                  ``(A) Footwear not designated at the time of the 
                effective date of this Act as eligible for the purpose 
                of the generalized system of preferences under title V 
                of the Trade Act of 1974.
                  ``(B) Petroleum, or any product derived from 
                petroleum, provided for in headings 2709 and 2710 of 
                the HTS.
                  ``(C) Watches and watch parts (including cases, 
                bracelets and straps), of whatever type including, but 
                not limited to, mechanical, quartz digital or quartz 
                analog, if such watches or watch parts contain any 
                material which is the product of any country with 
                respect to which HTS column 2 rates of duty apply.
                  ``(D) Handbags, luggage, flat goods, work gloves, and 
                leather wearing apparel that were not designated on 
                August 5, 1983, as eligible articles for purposes of 
                the generalized system of preferences under title V of 
                the Trade Act of 1974.
          ``(2) Exclusions.--Subject to paragraph (3), duty-free 
        treatment under this title may not be extended to--
                  ``(A) textiles and apparel articles which were not 
                eligible articles for purposes of this title on January 
                1, 1994, as this title was in effect on that date;
                  ``(B) rum and tafia classified in subheading 2208.40 
                of the HTS; or
                  ``(C) sugars, syrups, and sugar-containing products 
                subject to over-quota duty rates under applicable 
                tariff-rate quotas.
          ``(3) Apparel articles.--
                  ``(A) In general.--Apparel articles that are imported 
                directly into the customs territory of the United 
                States from an ATPDEA beneficiary country shall enter 
                the United States free of duty and free of any 
                quantitative restrictions, limitations, or consultation 
                levels, but only if such articles are described in 
                subparagraph (B).
                  ``(B) Covered articles.--The apparel articles 
                referred to in subparagraph (A) are the following:
                          ``(i) Apparel articles assembled from 
                        products of the united states and atpdea 
                        beneficiary countries or products not available 
                        in commercial quantities.--Apparel articles 
                        sewn or otherwise assembled in 1 or more ATPDEA 
                        beneficiary countries, or the UnitedStates, or 
both, exclusively from any one or any combination of the following:
                                  ``(I) Fabrics or fabric components 
                                formed, or components knit-to-shape, in 
                                the United States, from yarns formed in 
                                the United States or 1 or more ATPDEA 
                                beneficiary countries (including 
                                fabrics not formed from yarns, if such 
                                fabrics are classifiable under heading 
                                5602 or 5603 of the HTS and are formed 
                                in the United States).
                                  ``(II) Fabrics or fabric components 
                                formed or components knit-to-shape, in 
                                1 or more ATPDEA beneficiary countries, 
                                from yarns formed in 1 or more ATPDEA 
                                beneficiary countries, if such fabrics 
                                (including fabrics not formed from 
                                yarns, if such fabrics are classifiable 
                                under heading 5602 or 5603 of the HTS 
                                and are formed in 1 or more ATPDEA 
                                beneficiary countries) or components 
                                are in chief weight of llama or alpaca.
                                  ``(III) Fabrics or yarn that is not 
                                formed in the United States or in one 
                                or more ATPDEA beneficiary countries, 
                                to the extent that apparel articles of 
                                such fabrics or yarn would be eligible 
                                for preferential treatment, without 
                                regard to the source of the fabrics or 
                                yarn, under Annex 401 of the NAFTA.
                          ``(ii) Additional fabrics.--At the request of 
                        any interested party, the President is 
                        authorized to proclaim additional fabrics and 
                        yarns as eligible for preferential treatment 
                        under clause (i)(III) if--
                                  ``(I) the President determines that 
                                such fabrics or yarns cannot be 
                                supplied by the domestic industry in 
                                commercial quantities in a timely 
                                manner;
                                  ``(II) the President has obtained 
                                advice regarding the proposed action 
                                from the appropriate advisory committee 
                                established under section 135 of the 
                                Trade Act of 1974 (19 U.S.C. 2155) and 
                                the United States International Trade 
                                Commission;
                                  ``(III) within 60 days after the 
                                request, the President has submitted a 
                                report to the Committee on Ways and 
                                Means of the House of Representatives 
                                and the Committee on Finance of the 
                                Senate that sets forth the action 
                                proposed to be proclaimed and the 
                                reasons for such action, and the advice 
                                obtained under subclause (II);
                                  ``(IV) a period of 60 calendar days, 
                                beginning with the first day on which 
                                the President has met the requirements 
                                of subclause (III), has expired; and
                                  ``(V) the President has consulted 
                                with such committees regarding the 
                                proposed action during the period 
                                referred to in subclause (III).
                          ``(iii) Apparel articles assembled in 1 or 
                        more atpdea beneficiary countries from regional 
                        fabrics or regional components.--(I) Subject to 
                        the limitation set forth in subclause (II), 
                        apparel articles sewn or otherwise assembled in 
                        1 or more ATPDEA beneficiary countries from 
                        fabrics or from fabric components formed or 
                        from components knit-to-shape, in 1 or more 
                        ATPDEA beneficiary countries, from yarns formed 
                        in the United States or 1 or more ATPDEA 
                        beneficiary countries (including fabrics not 
                        formed from yarns, if such fabrics are 
                        classifiable under heading 5602 or 5603 of the 
                        HTS and are formed in 1 or more ATPDEA 
                        beneficiary countries), whether or not the 
                        apparel articles are also made from any of the 
                        fabrics, fabric components formed, or 
                        components knit-to-shape described in clause 
                        (i).
                          ``(II) The preferential treatment referred to 
                        in subclause (I) shall be extended in the 1-
                        year period beginning December 1, 2001, and in 
                        each of the 5 succeeding 1-year periods, to 
                        imports of apparel articles in an amount not to 
                        exceed the applicable percentage of the 
                        aggregate square meter equivalents of all 
                        apparel articles imported into the United 
                        States in the preceding 12-month period for 
                        which data are available.
                          ``(III) For purposes of subclause (II), the 
                        term `applicable percentage' means 3 percent 
                        for the 1-year period beginning December 1, 
                        2001, increased in each of the 5 succeeding 1-
                        year periods by equal increments, so that for 
                        the period beginning December 1, 2005, the 
                        applicable percentage does not exceed 6 
                        percent.
                          ``(iv) Handloomed, handmade, and folklore 
                        articles.--A handloomed, handmade, or folklore 
                        article of an ATPDEA beneficiary country 
                        identified under subparagraph (C) that is 
                        certified as such by the competent authority of 
                        such beneficiary country.
                          ``(v) Special rules.--
                                  ``(I) Exception for findings and 
                                trimmings.--An article otherwise 
                                eligible for preferential treatment 
                                under this paragraph shall not be 
                                ineligible for such treatment because 
                                the article contains findings or 
                                trimmings of foreign origin, if such 
                                findings and trimmings do not exceed 25 
                                percent of the cost of the components 
                                of the assembled product. Examples of 
                                findings and trimmings are sewing 
                                thread, hooks and eyes, snaps, buttons, 
                                `bow buds', decorative lace, trim, 
                                elastic strips, zippers, including 
                                zipper tapes and labels, and other 
                                similar products.
                                  ``(II) Certain interlining.--(aa) An 
                                article otherwise eligible for 
                                preferential treatment under this 
                                paragraph shall not be ineligible for 
                                such treatment because the article 
                                contains certain interlinings of 
                                foreign origin, if the value of such 
                                interlinings (and any findings and 
                                trimmings) does not exceed 25 percent 
                                of the cost of the components of the 
                                assembled article.
                                  ``(bb) Interlinings eligible for the 
                                treatment described in division (aa) 
                                include only a chest type plate, `hymo' 
                                piece, or `sleeve header', of woven or 
                                weft-inserted warp knit construction 
                                and of coarse animal hair or man-made 
                                filaments.
                                  ``(cc) The treatment described in 
                                this subclause shall terminate if the 
                                President makes a determination that 
                                United States manufacturers are 
                                producing such interlinings in the 
                                United States in commercial quantities.
                                  ``(III) De minimis rule.--An article 
                                that would otherwise be ineligible for 
                                preferential treatment under this 
                                subparagraph because the article 
                                contains fibers or yarns not wholly 
                                formed in the United States or in one 
                                or more ATPDEA beneficiary countries 
                                shall not be ineligible for such 
                                treatment if the total weight of all 
                                such fibers or yarns is not more than 7 
                                percent of the total weight of the 
                                good.
                  ``(C) Handloomed, handmade, and folklore articles.--
                For purposes of subparagraph (B)(iv), the President 
                shall consult with representatives of the ATPDEA 
                beneficiary countries concerned for the purpose of 
                identifying particular textile and apparel goods that 
                are mutually agreed upon as being handloomed, handmade, 
                or folklore goods of a kind described in section 
                2.3(a), (b), or (c) of the Annex or Appendix 3.1.B.11 
                of the Annex.
                  ``(D) Penalties for transshipment.--
                          ``(i) Penalties for exporters.--If the 
                        President determines, based on sufficient 
                        evidence, that an exporter has engaged in 
                        transshipment with respect to apparel articles 
                        from an ATPDEA beneficiary country, then the 
                        President shall deny all benefits under this 
                        title to such exporter, and any successor of 
                        such exporter, for a period of 2 years.
                          ``(ii) Penalties for countries.--Whenever the 
                        President finds, based on sufficient evidence, 
                        that transshipment has occurred, the President 
                        shall request that the ATPDEA beneficiary 
                        country or countries through whose territory 
                        the transshipment has occurred take all 
                        necessary and appropriate actions to prevent 
                        such transshipment. If the President determines 
                        that a country is not taking such actions, the 
                        President shall reduce the quantities of 
                        apparel articles that may be imported into the 
                        United States from such country by the quantity 
                        of the transshipped articles multiplied by 3, 
                        to the extent consistent with the obligations 
                        of the United States under the WTO.
                          ``(iii) Transshipment described.--
                        Transshipment within the meaning of this 
                        subparagraph has occurred when preferential 
                        treatment under subparagraph (A) has been 
                        claimed for an apparel article on the basis of 
                        material false information concerning the 
                        country of origin, manufacture, processing, or 
                        assembly of the article or any of its 
                        components. For purposes of this clause, false 
                        information is material if disclosure of the 
                        true information would mean or would have meant 
                        that the article is or was ineligible for 
                        preferential treatment under subparagraph (A).
                  ``(E) Bilateral emergency actions.--
                          ``(i) In general.--The President may take 
                        bilateral emergency tariff actions of a kind 
                        described in section 4 of the Annex with 
                        respect to any apparel article imported from an 
                        ATPDEA beneficiary country if the application 
                        of tariff treatment under subparagraph (A) to 
                        such article results in conditions that would 
                        be cause for the taking of suchactions under 
such section 4 with respect to a like article described in the same 8-
digit subheading of the HTS that is imported from Mexico.
                          ``(ii) Rules relating to bilateral emergency 
                        action.--For purposes of applying bilateral 
                        emergency action under this subparagraph--
                                  ``(I) the requirements of paragraph 
                                (5) of section 4 of the Annex (relating 
                                to providing compensation) shall not 
                                apply;
                                  ``(II) the term `transition period' 
                                in section 4 of the Annex shall mean 
                                the period ending December 31, 2006; 
                                and
                                  ``(III) the requirements to consult 
                                specified in section 4 of the Annex 
                                shall be treated as satisfied if the 
                                President requests consultations with 
                                the ATPDEA beneficiary country in 
                                question and the country does not agree 
                                to consult within the time period 
                                specified under section 4.
          ``(4) Customs procedures.--
                  ``(A) In general.--
                          ``(i) Regulations.--Any importer that claims 
                        preferential treatment under paragraph (1) or 
                        (3) shall comply with customs procedures 
                        similar in all material respects to the 
                        requirements of Article 502(1) of the NAFTA as 
                        implemented pursuant to United States law, in 
                        accordance with regulations promulgated by the 
                        Secretary of the Treasury.
                          ``(ii) Determination.--
                                  ``(I) In general.--In order to 
                                qualify for the preferential treatment 
                                under paragraph (1) or (3) and for a 
                                Certificate of Origin to be valid with 
                                respect to any article for which such 
                                treatment is claimed, there shall be in 
                                effect a determination by the President 
                                that each country described in 
                                subclause (II)--
                                          ``(aa) has implemented and 
                                        follows; or
                                          ``(bb) is making substantial 
                                        progress toward implementing 
                                        and following,
                                procedures and requirements similar in 
                                all material respects to the relevant 
                                procedures and requirements under 
                                chapter 5 of the NAFTA.
                                  ``(II) Country described.--A country 
                                is described in this subclause if it is 
                                an ATPDEA beneficiary country--
                                          ``(aa) from which the article 
                                        is exported; or
                                          ``(bb) in which materials 
                                        used in the production of the 
                                        article originate or in which 
                                        the article or such materials 
                                        undergo production that 
                                        contributes to a claim that the 
                                        article is eligible for 
                                        preferential treatment under 
                                        paragraph (1) or (3).
                  ``(B) Certificate of origin.--The Certificate of 
                Origin that otherwise would be required pursuant to the 
                provisions of subparagraph (A) shall not be required in 
                the case of an article imported under paragraph (1) or 
                (3) if such Certificate of Origin would not be required 
                under Article 503 of the NAFTA (as implemented pursuant 
                to United States law), if the article were imported 
                from Mexico.
          ``(5) Definitions.--In this subsection--
                  ``(A) Annex.--The term `the Annex' means Annex 300-B 
                of the NAFTA.
                  ``(B) ATPDEA beneficiary country.--The term `ATPDEA 
                beneficiary country' means any `beneficiary country', 
                as defined in section 203(a)(1) of this title, which 
                the President designates as an ATPDEA beneficiary 
                country, taking into account the criteria contained in 
                subsections (c) and (d) of section 203 and other 
                appropriate criteria, including the following:
                          ``(i) Whether the beneficiary country has 
                        demonstrated a commitment to--
                                  ``(I) undertake its obligations under 
                                the WTO, including those agreements 
                                listed in section 101(d) of the Uruguay 
                                Round Agreements Act, on or ahead of 
                                schedule; and
                                  ``(II) participate in negotiations 
                                toward the completion of the FTAA or 
                                another free trade agreement.
                          ``(ii) The extent to which the country 
                        provides protection of intellectual property 
                        rights consistent with or greater than the 
                        protection afforded under the Agreement on 
                        Trade-Related Aspects of Intellectual Property 
                        Rights described in section 101(d)(15) of the 
                        Uruguay Round Agreements Act.
                          ``(iii) The extent to which the country 
                        provides internationally recognized worker 
                        rights, including--
                                  ``(I) the right of association;
                                  ``(II) the right to organize and 
                                bargain collectively;
                                  ``(III) a prohibition on the use of 
                                any form of forced or compulsory labor;
                                  ``(IV) a minimum age for the 
                                employment of children; and
                                  ``(V) acceptable conditions of work 
                                with respect to minimum wages, hours of 
                                work, and occupational safety and 
                                health;
                          ``(iv) Whether the country has implemented 
                        its commitments to eliminate the worst forms of 
                        child labor, as defined in section 507(6) of 
                        the Trade Act of 1974.
                          ``(v) The extent to which the country has met 
                        the counternarcotics certification criteria set 
                        forth in section 490 of the Foreign Assistance 
                        Act of 1961 (22 U.S.C. 2291j) for eligibility 
                        for United States assistance.
                          ``(vi) The extent to which the country has 
                        taken steps to become a party to and implements 
                        the Inter-American Convention Against 
                        Corruption.
                          ``(vii) The extent to which the country--
                                  ``(I) applies transparent, 
                                nondiscriminatory, and competitive 
                                procedures in government procurement 
                                equivalent to those contained in the 
                                Agreement on Government Procurement 
                                described in section 101(d)(17) of the 
                                Uruguay Round Agreements Act; and
                                  ``(II) contributes to efforts in 
                                international fora to develop and 
                                implement international rules in 
                                transparency in government procurement.
                  ``(C) NAFTA.--The term `NAFTA' means the North 
                American Free Trade Agreement entered into between the 
                United States, Mexico, and Canada on December 17, 1992.
                  ``(D) WTO.--The term `WTO' has the meaning given that 
                term in section 2 of the Uruguay Round Agreements Act 
                (19 U.S.C. 3501).
                  ``(E) ATPDEA.--The term `ATPDEA' means the Andean 
                Trade Promotion and Drug Eradication Act.''.
  (b) Determination Regarding Retention of Designation.--Section 
203(e)(1) of the Andean Trade Preference Act (19 U.S.C. 3202(e)(1)) is 
amended--
          (1) by redesignating subparagraphs (A) and (B) as clauses (i) 
        and (ii), respectively;
          (2) by inserting ``(A)'' after ``(1)''; and
          (3) by adding at the end the following:
  ``(B) The President may, after the requirements of paragraph (2) have 
been met--
          ``(i) withdraw or suspend the designation of any country as 
        an ATPDEA beneficiary country, or
          ``(ii) withdraw, suspend, or limit the application of 
        preferential treatment under section 204(b)(1) or (3) to any 
        article of any country,
if, after such designation, the President determines that, as a result 
of changed circumstances, the performance of such country is not 
satisfactory under the criteria set forth in section 204(b)(5)(B).''.
  (c) Conforming Amendments.--(1) Section 202 of the Andean Trade 
Preference Act (19 U.S.C. 3201) is amended by inserting ``(or other 
preferential treatment)'' after ``treatment''.
  (2) Section 204(a) of the Andean Trade Preference Act (19 U.S.C. 
3203(a)) is amended--
          (A) in paragraph (1), by inserting ``(or otherwise provided 
        for)'' after ``eligibility''; and
          (B) in paragraph (2), by striking ``subsection (a)'' and 
        inserting ``paragraph (1)''.

SEC. 4. TERMINATION OF PREFERENTIAL TREATMENT.

  Section 208 of the Andean Trade Preference Act (19 U.S.C. 3206) is 
amended to read as follows:

``SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.

  ``No duty-free treatment or other preferential treatment extended to 
beneficiary countries under this title shall remain in effect after 
December 31, 2006.''.

SEC. 5. TRADE BENEFITS UNDER THE CARIBBEAN BASIN ECONOMIC RECOVERY ACT.

  Section 213(b)(2)(A) of the Carribean Basin Economic Recovery Act (19 
U.S.C. 2703(b)(2)(A)) is amended as follows:
          (1) Clause (i) is amended by striking the matter preceding 
        subclause (I) and inserting the following:
                          ``(i) Apparel articles assembled in one or 
                        more cbtpa beneficiary countries.--Apparel 
                        articles sewn or otherwise assembled inone or 
more CBTPA beneficiary countries from fabrics wholly formed and cut, or 
from components knit-to-shape, in the United States from yarns wholly 
formed in the United States, (including fabrics not formed from yarns, 
if such fabrics are classifiable under heading 5602 or 5603 of the HTS 
and are wholly formed and cut in the United States) that are--''.
          (2) Clause (ii) is amended to read as follows:
                          ``(ii) Other apparel articles assembled in 
                        one or more cbtpa beneficiary countries.--
                        Apparel articles sewn or otherwise assembled in 
                        one or more CBTPA beneficiary countries with 
                        thread formed in the United States from fabrics 
                        wholly formed in the United States and cut in 
                        one or more CBTPA beneficiary countries from 
                        yarns wholly formed in the United States, or 
                        from components knit-to-shape in the United 
                        States from yarns wholly formed in the United 
                        States, or both (including fabrics not formed 
                        from yarns, if such fabrics are classifiable 
                        under heading 5602 or 5603 of the HTS and are 
                        wholly formed in the United States).''.
          (3) Clause (iii)(II) is amended to read as follows:
                          ``(II) The amount referred to in subclause 
                        (I) is as follows:
                                  ``(aa) 290,000,000 square meter 
                                equivalents during the 1-year period 
                                beginning on October 1, 2001.
                                  ``(bb) 500,000,000 square meter 
                                equivalents during the 1-year period 
                                beginning on October 1, 2002.
                                  ``(cc) 850,000,000 square meter 
                                equivalents during the 1-year period 
                                beginning on October 1, 2003.
                                  ``(dd) 970,000,000 square meter 
                                equivalents in each succeeding 1-year 
                                period through September 30, 2008.''.
          (4) Clause (iii)(IV) is amended to read as follows:
                          ``(IV) The amount referred to in subclause 
                        (III) is as follows:
                                  ``(aa) 4,872,000 dozen during the 1-
                                year period beginning on October 1, 
                                2001.
                                  ``(bb) 9,000,000 dozen during the 1-
                                year period beginning on October 1, 
                                2002.
                                  ``(cc) 10,000,000 dozen during the 1-
                                year period beginning on October 1, 
                                2003.
                                  ``(dd) 12,000,000 dozen in each 
                                succeeding 1-year period through 
                                September 30, 2008.''.
          (5) Section 213(b)(2)(A) of such Act is further amended by 
        adding at the end the following new clause:
                          ``(ix) Apparel articles assembled in one or 
                        more cbtpa beneficiary countries from united 
                        states and cbtpa beneficiary country 
                        components.--Apparel articles sewn or otherwise 
                        assembled in one or more CBTPA beneficiary 
                        countries with thread formed in the United 
                        States from components cut in the United States 
                        and in one or more CBTPA beneficiary countries 
                        from fabric wholly formed in the United States 
                        from yarns wholly formed in the United States, 
                        or from components knit-to-shape in the United 
                        States and one or more CBTPA beneficiary 
                        countries from yarns wholly formed in the 
                        United States, or both (including fabrics not 
                        formed from yarns, if such fabrics are 
                        classifiable under heading 5602 or 5603 of the 
                        HTS).''.

SEC. 6. TRADE BENEFITS UNDER THE AFRICAN GROWTH AND OPPORTUNITY ACT.

  Section 112(b) of the African Growth and Opportunity Act (19 U.S.C. 
3721(b)) is amended as follows:
          (1) Paragraph (1) is amended by amending the matter preceding 
        subparagraph (A) to read as follows:
          ``(1) Apparel articles assembled in one or more beneficiary 
        sub-saharan african countries.--Apparel articles sewn or 
        otherwise assembled in one or more beneficiary sub-Saharan 
        African countries from fabrics wholly formed and cut, or from 
        components knit-to-shape, in the United States from yarns 
        wholly formed in the United States, (including fabrics not 
        formed from yarns, if such fabrics are classifiable under 
        heading 5602 or 5603 of the HTS and are wholly formed and cut 
        in the United States) that are--''.
          (2) Paragraph (2) is amended to read as follows:
          ``(2) Other apparel articles assembled in one or more 
        beneficiary sub-saharan african countries.--Apparel articles 
        sewn or otherwise assembled in one or more beneficiary sub-
        Saharan African countries with thread formed in the United 
        States from fabrics wholly formed in the United States and cut 
        in one or more beneficiary sub-Saharan African countries from 
        yarns wholly formed in the United States, or from components 
        knit-to-shape in the United States from yarns wholly formed in 
        the United States, or both (including fabrics not formed from 
        yarns, if such fabrics are classifiable under heading 5602 or 
        5603 of the HTS and are wholly formed in the United States).''.
          (3) Paragraph (3) is amended--
                  (A) by amending the matter preceding subparagraph (A) 
                to read as follows:
          ``(3) Apparel articles from regional fabric or yarns.--
        Apparel articles wholly assembled in one or more beneficiary 
        sub-Saharan African countries from fabric wholly formed in one 
        or more beneficiary sub-Saharan African countries from yarns 
        originating either in the United States or one or more 
        beneficiary sub-Saharan African countries (including fabrics 
        not formed from yarns, if such fabrics are classified under 
        heading 5602 or 5603 of the HTS and are wholly formed in one or 
        more beneficiary sub-Saharan African countries), or from 
        components knit-to-shape in one or more beneficiary sub-Saharan 
        African countries from yarns originating either in the United 
        States or one or more beneficiary sub-Saharan African 
        countries, or apparel articles wholly formed on seamless 
        knitting machines in a beneficiary sub-Saharan African country 
        from yarns originating either in the United States or one or 
        more beneficiary sub-Saharan African countries, subject to the 
        following:'';
                  (B) in subparagraph (A)(ii)--
                          (i) by striking ``1.5'' and inserting ``3''; 
                        and
                          (ii) by striking ``3.5'' and inserting ``7''; 
                        and
                  (C) by amending subparagraph (B) to read as follows:
                  ``(B) Special rules for lesser developed countries.--
                          ``(i) In general.--Subject to subparagraph 
                        (A), preferential treatment under this 
                        paragraph shall be extended through September 
                        30, 2004, for apparel articles wholly 
                        assembled, or knit-to-shape and wholly 
                        assembled, or both, in one or more lesser 
                        developed beneficiary sub-Saharan African 
                        countries regardless of the country of origin 
                        of the fabric or the yarn used to make such 
                        articles.
                          ``(ii) Lesser developed beneficiary sub-
                        saharan african country.--For purposes of 
                        clause (i), the term `lesser developed 
                        beneficiary sub-Saharan African country' 
                        means--
                                  ``(I) a beneficiary sub-Saharan 
                                African country that had a per capita 
                                gross national product of less than 
                                $1,500 in 1998, as measured by the 
                                International Bank for Reconstruction 
                                and Development;
                                  ``(II) Botswana; and
                                  ``(III) Namibia.''.
          (4) Paragraph (4)(B) is amended by striking ``18.5'' and 
        inserting ``21.5''.
          (5) Section 112(b) of such Act is further amended by adding 
        at the end the following new paragraph:
          ``(7) Apparel articles assembled in one or more beneficiary 
        sub-saharan african countries from united states and 
        beneficiary sub-saharan african country components.--Apparel 
        articles sewn or otherwise assembled in one or more beneficiary 
        sub-Saharan African countries with thread formed in the United 
        States from components cut in the United States and one or more 
        beneficiary sub-Saharan African countries from fabric wholly 
        formed in the United States from yarns wholly formed in the 
        United States, or from components knit-to-shape in the United 
        States and one or more beneficiary sub-Saharan African 
        countries from yarns wholly formed in the United States, or 
        both (including fabrics not formed from yarns, if such fabrics 
        are classifiable under heading 5602 or 5603 of the HTS).''.

                            I. INTRODUCTION


                         A. Purpose and Summary

    H.R. 3009, the ``Andean Trade Promotion and Drug 
Eradication Act,'' would extend (through December 31, 2006) and 
enhance the Andean Trade Preference Act (ATPA), which expires 
on December 4, 2001. The purpose of the bill is to expand trade 
and promote economic development as a way to create viable 
alternatives to illicit trade in coca, thereby enhancing 
political security in the Andean region and the hemisphere.

                             B. Background

    The Andean Trade Preference Act (ATPA) was enacted on 
December 4, 1991 as title II of P.L. 102-182. Modeled after the 
Caribbean Basin Initiative (P.L. 98-67, title II), the Act 
authorized preferential trade benefits to four Andean 
countries--Bolivia, Colombia, Ecuador, and Peru. Because the 
ATPA's authority was limited to 10 years, it will expire on 
December 4, 2001, unless renewed.
    The ATPA has been cornerstone of U.S. efforts to encourage 
the Andean countries to move out of illegal drug production and 
trafficking and into legitimate products. Its success is 
demonstrated by the growth in trade between the United States 
and the Andean nations. Between 1991 and 2000, total two-way 
trade nearly doubled: U.S. exports to the ATPA countries 
increased 66 percent, while imports more than doubled, rising 
from $5 billion to $11 billion. Although the Andean countries 
supply only a fraction of U.S. imports, the United States is 
the leading export market for each of these countries.
    Another mark of the ATPA's success can be seen in the 
market reforms of the Andean countries. As these countries 
shift their polices to favor private enterprise and initiative 
and open their markets to the free flow of goods and services, 
they are realizing that legitimate trade creates jobs, reduces 
poverty, and decreases the incentive to trade in illegal 
narcotics.

                         C. Legislative History


                            Committee action

    H.R. 3009, the Andean Trade Promotion and Drug Eradication 
Act, was introduced on October 3, 2001, by Congressman Crane, 
on behalf of himself, and Chairman Thomas. The bill was 
referred to the Committee on Ways and Means.
    On October 5, 2001, the Committee on Ways and Means met to 
consider H.R. 3009. At that time, Chairman Thomas offered an 
amendment in the nature of a substitute which was adopted by 
voice vote. An amendment offered by Mr. Rangel to allow Namibia 
and Botswana to use third country fabric for the transition 
period under the regional fabric cap established in the Africa 
Growth and Opportunity Act (AGOA,) was accepted by voice vote. 
An amendment offered by Mr. Rangel to add tuna and tuna 
products to the list of items excluded from duty-free treatment 
under the bill was defeated by a roll call vote of 17 yeas to 
23 nays. The Committee then ordered the bill favorably 
reported, as amended, by voice vote.

                   Legislative hearing and oversight

    On May 8, 2001 the Trade Subcommittee held a hearing on the 
prospects and timing for achieving the Free Trade Area of the 
Americas (FTAA) and on proposals to increase trade with Andean 
countries through the extension and expansion of the Andean 
Trade Preference Act. The Subcommittee received testimony from 
both invited and public witnesses, many of whom stressed the 
importance of expanding trade and investment relations with 
Andean countries in order to create legitimate economic 
alternatives to the illicit production of coca in the region. 
Testimony in favor of expanding trade benefits available under 
the Andean Trade Preference Act was received from the U.S. 
Trade Representative, Ambassador Robert Zoellick.

                      II. EXPLANATION OF THE BILL


Section 1: Short Title

                              Present law

    No provision.

                        Explanation of the bill

    Section 1 of H.R. 3009, as amended, provides that the Act 
may be cited as the ``Andean Trade Promotion and Drug 
Eradication Act.''

                           Reasons for change

    This section names the legislation for identification 
purposes.

Section 2: Findings

                              Present law

    No provision.

                        Explanation of provision

    Section 2 contains findings of Congress that:
    (1) Since the Andean Trade Preference Act was enacted in 
1991, it has had a positive impact on United States trade with 
Bolivia, Colombia, Ecuador, and Peru. Two-way trade has 
doubled, with the United States serving as the leading source 
of imports and leading export market for each of the Andean 
beneficiary countries. This has resulted in increased jobs and 
expanded export opportunities in both the United States and the 
Andean region.
    (2) The Andean Trade Preference Act has been a key element 
in the United States counter narcotics strategy in the Andean 
region, promoting export diversification and broad-based 
economic development that provide sustainable economic 
alternatives to drug-crop production, strengthening the 
legitimate economies of Andean countries and creating viable 
alternatives to illicit trade in coca.
    (3) Notwithstanding the success of the Andean Trade 
Preference Act, the Andean region remains threatened by 
political and economic instability and fragility, vulnerable to 
the consequences of the drug war and fierce global competition 
for its legitimate trade.
    (4) The continuing instability in the Andean region poses a 
threat to the security interests of the United States and the 
world. This problem has been partially addressed through 
foreign aid, such as Plan Colombia, enacted by Congress in 
2000. However, foreign aid alone is not sufficient. Enhancement 
of legitimate trade with the United States provides an 
alternative means for reviving and stabilizing the economies in 
the Andean region.
    (5) The Andean Trade Preference Act constitutes a tangible 
commitment by the United States to the promotion of prosperity, 
stability, and democracy in the beneficiary countries.
    (6) Renewal and enhancement of the Andean Trade Preference 
Act will bolster the confidence of domestic private enterprise 
and foreign investors in the economic prospects of the region, 
ensuring that legitimate private enterprise can be the engine 
of economic development and political stability in the region.
    (7) Each of the Andean beneficiary countries is committed 
to conclude negotiation of a Free Trade Area of the Americas by 
the year 2005 as a means of enhancing the economic security of 
the region.
    (8) Temporarily enhancing trade benefits for Andean 
beneficiaries countries will promote the growth of free 
enterprise and economic opportunity in these countries and 
serve the security interests of the United States, the region, 
and the world.

                           Reason for change

    Section 2 expresses the Committee's view that extension and 
enhancement of the Andean Trade Preference Act will promote 
free enterprise as an engine of economic development that will 
create viable alternatives to illicit trade in coca, thereby 
enhancing political security in the region.

Section 3: Articles eligible for preferential treatment

            Articles (except apparel) eligible for preferential 
                    treatment

                              Present law

    The Andean Trade Preference Act (ATPA), enacted on December 
4, 1991 as title II of Public Law 102-182, authorizes 
preferential trade benefits for the Andean nations of Bolivia, 
Colombia, Ecuador, and Peru, similar to those benefits granted 
to beneficiaries under the Caribbean Basin Initiative program. 
The ATPA authorizes the President to proclaim duty-free 
treatment for all eligible articles from Bolivia, Colombia, 
Ecuador, Peru. This authority applies only to normal column 1 
rates of duty in the Harmonized Tariff Schedule of the United 
States (HTS); any additional duties imposed under U.S. unfair 
trade practice laws, such as the antidumping or countervailing 
duty laws, are not affected by this authority.
    The ATPA contains a list of products that are ineligible 
for duty-free treatment. More specifically, ATPA duty-free 
treatment does not apply to textile and apparel articles that 
are subject to textile agreements; petroleum and petroleum 
products; footwear not eligible for duty-free treatment under 
the Generalized System of Preferences; certain watches and 
watch parts; certain leather products; and sugar, syrups and 
molasses subject to over-quota rates of duty.

                        Explanation of provision

    Section 3(a) amends the Andean Trade Preference Act to 
authorize the President to proclaim duty-free treatment for any 
of the following articles which were previously excluded from 
duty-free treatment under the ATPA, if the President determines 
that the article is not import-sensitive in the context of 
imports from beneficiary countries:
          (1) Footwear not designated at the time of the 
        effective date of this Act as eligible for the purposes 
        of the Generalized System of Preferences under title V 
        of the Trade Act of 1974;
          (2) Petroleum, or any product derived from petroleum, 
        provided for in headings 2709 and 2710 of the HTS;
          (3) Watches and watch parts (including cases, 
        bracelets and straps), of whatever type including, but 
        not limited to, mechanical, quartz digital or quartz 
        analog, if such watches or watch parts contain any 
        material which is the product of any country with 
        respect to which HTS column 2 rates of duty apply;
        (4) Handbags, luggage, flat goods, work gloves, and 
        leather wearing apparel that--(i) are the product of 
        any beneficiary country; and (ii) were not designated 
        on August 5, 1983, as eligible articles for purposes of 
        the Generalized System of Preferences under title V of 
        the Trade Act of 1974.
    Under H.R. 3009, textiles subject to textile agreements; 
sugar, syrups and molasses subject to over-quota tariffs; and 
rum and tafia classified in subheading 2208.40.00 of the HTS 
would continue to be ineligible for duty-free treatment, as 
would apparel products other than those specifically described 
below. Imports of tuna, prepared or preserved in any manner, in 
airtight containers would receive immediate duty-free 
treatment.

                           Reason for change

    The Committee believes that extending and enhancing 
economic benefits to countries under the Andean Trade 
Preference Act, by authorizing duty-free treatment for products 
excluded from duty-free treatment under current law, as long as 
they are not import-sensitive, will promote economic 
alternatives to the production of illicit drugs, while 
encouraging these nations to make necessary economic reforms.
            Eligible apparel articles

                              Present law

    Under the ATPA, apparel articles are on the list of 
products excluded from eligibility for duty-free treatment.

                        Explanation of provision

    Under Section 3, the President may proclaim duty-free and 
quota-free treatment for apparel articles sewn or otherwise 
assembled in one or more beneficiary countries exclusively from 
any one or any combination of the following:
    (1) Fabrics or fabric components formed, or components 
knit-to-shape, in the United States (including fabrics not 
formed from yarns, if such fabrics are classifiable under 
heading 5602 or 5603 of the HTS and are formed in the United 
States).
    (2) Fabrics or fabric components formed, or components 
knit-to-shape, in one or more beneficiary countries, from yarns 
formed in one or more beneficiary countries, if such fabrics 
(including fabrics not formed from yarns, if such fabrics are 
classifiable under heading 5602 or 5603 of the HTS and are 
formed in one or more beneficiary countries) are in chief 
weight of llama, or alpaca.
    (3) Fabrics or yarn not produced in the United States or in 
the region, to the extent that apparel articles of such fabrics 
or yarn would be eligible for preferential treatment, without 
regard to the source of the fabrics or yarn, under Annex 401 of 
the NAFTA (short supply provisions). Any interested party may 
request the President to consider such treatment for additional 
fabrics and yarns on the basis that they cannot be supplied by 
the domestic industry in commercial quantities in a timely 
manner, and the President must make a determination within 60 
calendar days of receiving the request from the interested 
party.
    (4) Apparel articles sewn or otherwise assembled in one or 
more beneficiary countries from fabrics or fabric components 
formed or components knit-to-shape, in one or more beneficiary 
countries, from yarns formed in the United States or in one or 
more beneficiary countries (including fabrics not formed from 
yarns, if such fabrics are classifiable under heading 5602 or 
5603 of the HTS and are formed in one or more beneficiary 
countries), whether or not the apparel articles are also made 
from any of the fabrics, fabric components formed, or 
components knit-to-shape in the United States described in 
paragraph 1. Imports of apparel made from regional fabric and 
regional yarn would be capped at 3 percent of U.S. imports 
growing to 6 percent of U.S. imports in 2006, measured in 
square meter equivalents.

                           Reason for change

    As described above, the Committee believes that extending 
and enhancing economic benefits to countries under the Andean 
Trade Preference Act, by authorizing duty-free treatment for 
certain products excluded from duty-free treatment under 
current law, will promote economic alternatives to the 
production of illicit drugs, while encouraging these nations to 
make necessary economic reforms. The Committee believes that an 
ATPA enhancement bill should be tailored to the nature of 
textile and apparel production in the region. Unlike the 
Caribbean Basin region, the Andean region produces much of its 
own fabric and yarn. A bill that made benefits contingent on 
U.S. fabric and yarn content would provide very little benefit 
to Andean countries. In addition, the region manufactures a 
considerable amount of woven fabric, so limiting the use of 
regional fabric to knit fabric made of U.S. yarn, as in 
Caribbean Basin Trade Partnership Act, would not provide 
meaningful benefits to Andean economies.
            Penalties for transshipment

                              Present law

    The Tariff Act of 1930, as amended, provides for civil 
monetary penalties forunlawful transshipment. These include 
penalties under section 1592 for up to a maximum of the domestic value 
of the imported merchandise or eight times the loss of revenue, as well 
as denial of entry, redelivery or liquidated damages for failure to 
redeliver the merchandise determined to be inaccurately represented. In 
addition, an importer may be liable for criminal penalties, including 
imprisonment for up to five years, under section 1001 of title 18 of 
the United States Code for making false statements on import 
documentation.
    Under the North American Free Trade Agreement (NAFTA), 
Parties to the Agreement must observe Customs procedures and 
documentation requirements, which are established in Chapter 5 
of NAFTA. Requirements regarding Certificates of Origin for 
imports receiving preferential tariffs are detailed in Article 
502.1 of NAFTA.

                        Explanation of provision

    Section 3 requires that importers comply with requirements 
similar in all material respects to the requirements regarding 
Certificates of Origin contained in Article 502.1 of the North 
American Free Trade Agreement (NAFTA) for a similar importation 
from Mexico.
    In addition, if an exporter is determined under the laws of 
the United States to have engaged in illegal transshipment of 
apparel products from an Andean country, then the President 
shall deny all benefits under the bill to such exporter, and to 
any successors of such exporter, for a period of two years.
    In cases where the President has requested a beneficiary 
country to take action to prevent transshipment and the country 
has failed to do so, the President shall reduce the quantities 
of textile and apparel articles that may be imported into the 
United States from that country by three times the quantity of 
articles transshipped, to the extent that such action is 
consistent with World Trade Organization (WTO) rules.

                           Reason for change

    The Committee believes these hard-hitting transshipment 
provisions will address concerns raised by the textile and 
apparel industry that increasing trade with the Andean 
countries could result in illegal transshipment of textile and 
apparel products through the region.
            Import relief actions

                              Present law

    The import relief procedures and authorities under sections 
201-204 of the Trade Act of 1974 apply to imports from ATPA 
beneficiary countries, as they do to imports from other 
countries. If ATPA imports cause serious injury, or threat of 
such injury, to the domestic industry producing a like or 
directly competitive article, section 204(d) of the ATPA 
authorizes the President to suspend ATPA duty-free treatment 
and proclaim a rate of duty or other relief measures.
    Under NAFTA, the United States may invoke a special 
safeguard provision at any time during the tariff phase-out 
period if a NAFTA-origin textile or apparel good is being 
imported in such increased quantities and under such conditions 
as to cause ``serious damage, or actual threat thereof,'' to a 
domestic industry producing a like or directly competitive 
good. The President is authorized to either suspend further 
duty reductions or increase the rate of duty to the NTR rate 
for up to three years.

                        Explanation of provision

    Under Section 3(E) normal safeguard authorities under ATPA 
would apply to imports of all products except textiles and 
apparel. A NAFTA equivalent safeguard authorities would apply 
to imports of apparel products from ATPA countries, except 
that, United States, if it applied a safeguard action, would 
not be obligated to provide equivalent trade liberalizing 
compensation to the exporting country.

                           Reason for change

    The Committee believes that NAFTA equivalent safeguard 
authority is appropriate in order to ensure that the domestic 
apparel industry is not damaged by increased imports from the 
Andean region.
            Designation criteria

                              Present law

    In determining whether to designate any country as an ATPA 
beneficiary country, the President must take into account seven 
mandatory and 12 discretionary criteria, which are listed in 
section 203 of the ATPA.
    Under Section 203 of the ATPA, the President shall not 
designate any country a ATPA beneficiary country if:
          (1) The country is a Communist country;
          (2) The country has nationalized, expropriated, 
        imposed taxes or other exactions or otherwise seized 
        ownership or control of U.S. property (including 
        intellectual property), unless he determines that 
        prompt, adequate, and effective compensation has been 
        or is being made, or good faith negotiations to provide 
        such compensation are in progress, or the country is 
        otherwise taking steps to discharge its international 
        obligations, or a dispute over compensation has been 
        submitted to arbitration;
          (3) The country fails to act in good faith in 
        recognizing as binding or in enforcing arbitral awards 
        in favor of U.S. citizens;
          (4) The country affords ``reverse'' preferences to 
        developed countries and whether such treatment has or 
        is likely to have a significant adverse effect on U.S. 
        commerce;
          (5) A government-owned entity in the country engages 
        in the broadcast of copyrighted material belonging to 
        U.S. copyright owners without their express consent or 
        the country fails to work toward the provision of 
        adequate and effective intellectual property rights;
          (6) The country is not a signatory to an agreement 
        regarding the extradition of U.S. citizens;
          (7) If the country has not or is not taking steps to 
        afford internationally recognized worker rights to 
        workers in the country;
    In determining whether to designate a country as eligible 
for ATPA benefits, the President shall take into account 
(discretionary criteria):
          (1) An expression by the country of its desire to be 
        designated;
          (2) The economic conditions in the country, its 
        living standards, and any other appropriate economic 
        factors;
          (3) The extent to which the country has assured the 
        United States it will provide equitable and reasonable 
        access to its markets and basic commodity resources;
          (4) The degree to which the country follows accepted 
        rules of international trade under the World Trade 
        Organization;
          (5) The degree to which the country uses export 
        subsidies or imposes export performance or local 
        content requirements which distort international trade;
          (6) The degree to which the trade policies of the 
        country are contributing to the revitalization of the 
        region;
          (7) The degree to which the country is undertaking 
        self-help measures to protect its own economic 
        development;
          (8) Whether or not the country has taken or is taking 
        steps to afford to workers in that country (including 
        any designated zone in that country) internationally 
        recognized workers rights;
          (9) The extent to which the country provides under 
        its law adequate and effective means for foreign 
        nationals to secure, exercise, and enforce exclusive 
        intellectual property rights;
          (10) The extent to which the country prohibits its 
        nationals from engaging in the broadcast of copyrighted 
        material belonging to U.S. copyright owners without 
        their express consent;
          (11) Whether such country has met the narcotics 
        cooperation certification criteria of the Foreign 
        Assistance Act of 1961 for eligibility for U.S. 
        assistance; and
          (12) The extent to which the country is prepared to 
        cooperate with the United States in the administration 
        of the Act.
    Under the ATPA the President is prohibited from designating 
a country a beneficiary country if any of criteria (1)-(7) 
apply to that country, subject to waiver if the President 
determines that country designation will be in the U.S. 
national economic or security interest. The waiver does not 
apply to criteria (4) and (6). Under the ATPA criteria on (7) 
is included as both mandatory and discretionary.
    The President may withdraw or suspend beneficiary country 
status or duty-free treatment on any article if he determines 
the country should be barred from designation asa result of 
changed circumstances. The President must submit a triennial report to 
the Congress on the operation of the program. The report shall include 
any evidence that the crop eradication and crop substitution efforts of 
the beneficiary country are directly related to the effects of the 
legislation

                        Explanation of provision

    Section 3 provides that the President, in designating a 
country as eligible for the enhanced ATPDEA benefits, shall 
take into account the existing eligibility criteria established 
under ATPA described above, as well as other appropriate 
criteria, including: whether a country has demonstrated a 
commitment to undertake its WTO obligations and participate in 
negotiations toward the completion of the FTAA or comparable 
trade agreement; the extent to which the country provides 
intellectual property protection consistent with or greater 
than that afforded under the Agreement on Trade-Related Aspects 
of Intellectual Property Rights; the extent to which the 
country provides internationally recognized worker rights; 
whether the country has implemented its commitments to 
eliminate the worst forms of child labor; the extent to which a 
country has taken steps to become a party to and implement the 
Inter-American Convention Against Corruption; and the extent to 
which the country applies transparent, nondiscriminatory and 
competitive procedures in government procurement equivalent to 
those included in the WTO Agreement on Government Procurement 
and otherwise contributes to efforts in international fora to 
develop and implement international rules in transparency in 
government procurement.
    In evaluating a potential beneficiary's compliance with its 
WTO obligations, the Committee expects the President to take 
account the extent to which the country follows the rules on 
customs valuation set forth in the WTO Customs Valuation 
Agreement. With respect to intellectual property protection, it 
is the intention of the conferees that the President will also 
take into account the extent to which potential beneficiary 
countries are providing or taking steps to provide protection 
of intellectual property rights comparable to the protections 
provided to the United States in bilateral intellectual 
property agreements.
    The Committee has serious concerns about the Government of 
Colombia's compliance with the mandatory condition for 
eligibility in Section 203(c)(2) relating to protections of 
property and businesses owned by U.S. citizens. The Committee 
urges the Government to resolve its outstanding disputes with 
US corporations immediately. The Committee reminds the 
Government of Colombia it is obligated, as a beneficiary of the 
ATPA program, to fulfill its responsibility toward U.S. 
corporations which have received favorable arbitral awards from 
internationally recognized arbitration panels.
    Unfortunately, the Committee is aware of several cases in 
which the Colombian Government has ignored these obligations, 
in clear violation of the ATPA. For example, despite a binding 
arbitration award by an official tribunal of the Government of 
Colombia to Nortel Networks, the Government of Colombia has not 
paid Nortel. Similarly, in December 2000, TermoRio, a power 
plant project which included Sithe Energies, received a $60.3 
million award in a binding arbitration by a tribunal of 
Colombian legal scholars under the auspices of the Centro de 
Conciliacion y Arbitraje de la Camara de Comericio de 
Barranquilla and the International Chamber of Commerce. The 
Committee urges the Government of Colombia to comply with such 
decisions and compensate Nortel, Sithe Energies and other U.S. 
corporations appropriately in order to maintain its beneficiary 
status under status ATPA.
    Since April 1995, Colombia has applied a variable import 
duty system, known as the ``price band'' system, on fourteen 
basic agriculture products such as wheat, corn, and soybean 
oil. An additional 147 commodities, considered substitutes or 
related products, are subject to the price band system which 
establishes ceiling, floor, and reference prices on imports. 
The Committee's view is that the price band system is non-
transparent and easily manipulated as a protectionist device. 
In early 2000, the United States reached agreement with 
Colombia in the WTO that Colombia would delink wet pet food, 
the only finished product in this system, from the price band 
system. In implementing the eligibility criteria relating to 
market access and implementation of WTO commitments, it is the 
Committees intent that USTR insist that Colombia implement its 
WTO commitment to remove pet food from the price band tariff 
system and to apply the 20 percent common external tariff to 
imported pet food.
    With respect to whether beneficiary countries are following 
established WTO rules, the Committee believes it is important 
for Andean governments to provide transparent and non-
discriminatory regulatory procedures. Unfortunately, the 
Committee knows of instances where regulatory policies in 
Andean countries are opaque, unpredictable, and arbritarily 
applied. As such, its is the Committee's view that Andean 
countries that seek trade benefits should adopt, implement, and 
apply transparent and non-discriminatory regulatory procedures. 
The development of such procedures would help create regulatory 
stability in the Andean region and thus provide mere certainty 
to U.S. companies that would like to invest in these countries.

Section 4: Termination of Duty-free treatment

                              Present law

    Duty-free treatment under the ATPA expires on December 4, 
2001.

                        Explanation of provision

    Duty-free treatment terminates under the Act on December 
31, 2006.

                           Reason for change

    A termination date one year after the scheduled conclusion 
of negotiations to establish the Free Trade Area of the 
Americas will provide a necessary transition period to phase in 
reductions in duties pursuant to the larger hemispheric 
agreement.

Section 5. Trade Benefits under the Caribbean Basin Trade Partnership 
        Act (CBTPA and the Africa Growth and Opportunity Act (AGOA)

            Knit-to-shape apparel

                              Present law

    Draft regulations issued by Customs to implement P.L. 106-
200 stipulate that knit-to-shape garments, because technically 
they do not go through the fabric stage, are not eligible for 
trade benefits under the act.

                        Explanation of provision

    Sec. 5 of H.R. 3009 amends AGOA and CBTPA to clarify that 
preferential treatment is provided to knit-to-shape apparel 
articles assembled in beneficiary countries.

                           Reason for change

    Although the Committee believes that the AGOA and CBTPA 
language stated clearly that knit-to-shape apparel articles are 
to receive benefits, draft Customs regulations do not so 
provide. Accordingly, this provision gives effect to 
Congressional intent.

                              Present law

    Draft regulations issued by Customs to implement P.L. 106-
200 deny preferential access to garments that are cut both in 
the United States and beneficiary countries, on the rationale 
that the legislation does not specifically list this variation 
in processing (the so-called ``hybrid cutting problem'').

                        Explanation of provision

    Sec. 5 of H.R. 3009 adds new rules in CBTPA and AGOA to 
provide preferential treatment for apparel articles that are 
cut both in the United States and beneficiary countries.

                           Reason for change

    Although the Committee believes that the CBTPA and AGOA 
language stated clearly that articles that are both cut in the 
United States and beneficiary countries, draft Customs 
regulations do not so provide. Accordingly, this provision 
gives effect to Congressional intent.
            CBI knit cap

                              Present law

    P.L. 106-200 extended duty-free benefits to knit apparel 
made in CBI countries from regional fabric made with U.S. yarn 
and to knit-to-shape apparel (except socks), up to a cap of 
250,000,000 square meter equivalents (SMEs), with a growth rate 
of 16 percent per year for first 3 years.

                        Explanation of provision

    Sec. 5 of H.R. 2009 would raise this cap to the following 
amounts: 250,000,000 SMEs for the 1-year period beginning 
October 1, 2001; 500,000,000 SMEs for the 1-year period 
beginning on October 1, 2002; 850,000,000 SMEs for the 1-year 
period beginning on October 1, 2003; 970,000,000 SMEs in each 
succeeding 1-year period through September 30, 2009.

                           Reason for change

    Now that P.L. 106-200 has been in effect for one year, the 
Committee believes it is appropriate to increase these caps.
            CBI T-shirt cap

                              Present law

    P.L. 106-200 extends benefits for an additional category of 
CBI regional knit apparel products (T-shirts) up to a cap of 
4.2 million dozen, growing 16 percent per year for the first 3 
years.

                        Explanation of provision

    Section 5 of H.R 3009 would raise this cap to the following 
amounts: 4,200,000 dozen during the 1-year period beginning 
October 1, 2001; 9,000,000 dozen for the 1-year period 
beginning on October 1, 2002; 10,000,00 dozen for the 1-year 
period beginning on October 1, 2003; 12,000,000 dozen in each 
succeeding 1-year period through September 30, 2009.

                           Reason for change

    Now that P.L. 106-200 has been in effect for one-year, the 
Committee believes it is appropriate to increase these caps in 
current law which will limit trade under the bill in the future

                              Present law

    Section 112(b)(3) of the AGOA provides preferential 
treatment for apparel made in beneficiary sub-Saharan African 
countries from ``regional'' fabric (i.e., fabric formed in one 
or more beneficiary countries) from yarn originating either in 
the United States or one or more such countries. Section 
112(b)(3)(B) establishes a special rule for lesser developed 
beneficiary sub-Saharan African countries, which provides 
preferential treatment, through September 30, 2004, for apparel 
wholly assembled in one or more such countries regardless of 
the origin of the fabric used to make the articles. Section 
112(b)(3)(A) establishes a quantitative limit or ``cap'' on the 
amount of apparel that may be imported under section 112(b)(3) 
or section 112(b)(3)(B). This ``cap'' is 1.5 percent of the 
aggregate square meter equivalents of all apparel articles 
imported into the United States for the year that began October 
1, 2000, and increases in equal increments to 3.5 percent for 
the year beginning October 1, 2007.

                        Explanation of provision

    Section 5 would clarify that apparel wholly assembled in 
one or more beneficiary sub-Saharan African countries from 
components knit-to-shape in one or more such countries from 
U.S. or regional yarn is eligible for preferential treatment 
under section 112(b)(3) of AGOA. Similarly, Section 5 would 
clarify that apparel knit-to-shape and wholly assembled in one 
or more lesser developed beneficiary sub-Saharan African 
countries is eligible for preferential treatment, regardless of 
the origin of the yarn used to make such articles. Section 5 
also would increase the ``cap'' by changing the applicable 
percentages from 1.5 percent to 3 percent in the year that 
began October 1, 2000, and from 3.5 percent to 7 percent in the 
year beginning October 1, 2007.

                              Present law

    AGOA was supposed to provide duty-free, quota-free 
treatment to sweaters knit in African beneficiary countries 
from fine merino wool yarn, regardless of where the yarn was 
formed. AGOA was supposed to provide duty-free, quota-free 
treatment to sweaters knit in African beneficiary countries 
from fine merino wool yarn, regardless of where the yarn was 
formed. However, due to a drafting problem, the wrong diameter 
was included, making it impossible to use the provision.

                        Explanation of provision

    Section 5 corrects the yarn diameter in the AGOA 
legislation so that sweaters knit to shape from merino wool of 
a specific diameter are eligible.

                           Reason for change

    This provision gives effect to Congressional intent in the 
AGOA legislation.
            Africa: Namibia and Botswana

                              Present Law

    The GDBs of Botswana and Namibia exceed the LLDC limit of 
$1500 and therefore these countries are not eligible to use 
third country fabric for the transition period under the AGOA 
regional fabric country cap.

                        Explanation of provision

    Section 5 allows Namibia and Botswana to use third country 
fabric for the transition period under the AGOA regional fabric 
country cap.

                           Reason for change

    Because, neither Botswana nor Namibia has regional fabric 
making capacity, both countries need the ability to use third 
country fabric for a limited period to assist in the 
development of their indigenous textile and apparel industries.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of the bill, H.R. 3009.

                          VOTES ON AMENDMENTS

    A rollcall vote was conducted on the following amendment to 
the Chairman's amendment in the nature of a substitute.
    An amendment by Mr. Rangel, to the Chairman's amendment in 
the nature of a substitute to add tuna or tuna products to the 
list of items that are excluded from duty-free treatment under 
the bill, was defeated by a rollcall vote of 17 yeas to 23 
nays. The vote was as follows:


        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present

Mr. Thomas.....................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Crane......................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........   Mr. Matsui......        X   ........  .........
Mrs. Johnson...................  ........        X   .........   Mr. Coyne.......  ........        X   .........
Mr. Houghton...................  ........  ........  .........   Mr. Levin.......        X   ........  .........
Mr. Herger.....................  ........        X   .........   Mr. Cardin......        X   ........  .........
Mr. McCrery....................  ........        X   .........   Mr. McDermott...        X   ........  .........
Mr. Camp.......................  ........        X   .........   Mr. Kleczka.....        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Lewis (GA)...        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. McNulty......        X   ........  .........
Ms. Dunn.......................  ........        X   .........  Mr. Jefferson....        X   ........  .........
Mr. Collins....................        X   ........  .........  Mr. Tanner.......        X   ........  .........
Mr. Portman....................  ........        X   .........  Mr. Becerra......        X   ........  .........
Mr. English....................  ........        X   .........  Mrs. Thurman.....        X   ........  .........
Mr. Watkins....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Mr. Hayworth...................  ........        X   .........  Mr. Pomeroy......        X   ........  .........
Mr. Weller.....................  ........        X   .........  .................
Mr. Hulshof....................  ........        X   .........  .................
Mr. McInnis....................  ........        X   .........  .................
Mr. Lewis (KY).................  ........        X   .........  .................
Mr. Foley......................  ........        X   .........  .................
Mr. Brady......................  ........        X   .........  .................
Mr. Ryan.......................  ........        X   .........  .................


                       MOTION TO REPORT THE BILL

    The bill, H.R. 3009, was ordered favorably reported by 
voice vote (with a quorum being present).

                           IV. BUDGET EFFECTS


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made concerning the effects on the budget of this bill, H.R. 
3009 as reported: The Committee agrees with the estimate 
prepared by CBO which is included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that 
enactment of H.R. 3009 would reduce customs duty receipts due 
to lower tariffs imposed on goods from Andean countries.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the Congressional Budget Office, the following 
report prepared by CBO is provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 11, 2001.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3009, the Andean 
Trade Promotion and Drug Eradication Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Erin 
Whitaker.
            Sincerely,
                                         Barry B. Anderson,
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 3009--Andean Trade Promotion and Drug Eradication Act

    Summary: H.R. 3009 would extend the period in which 
preferential treatment provided to certain products of 
countries under the Andean Trade Preference Act (ATPC) is in 
effect. In addition, the bill would provide preferential 
treatment under ATPA for additional articles, including certain 
footwear and petroleum products. The bill also would extend 
preferential treatment to knit-to-shape apparel articles 
imported from countries under the Caribbean Basin Economic 
Recovery Act (CBERA) and the African Growth and Opportunity Act 
(AGOA).
    The Congressional Budget Office estimates that enacting the 
bill would reduce revenues by $41 million in 2002, by $247 
million over the 2002-2006 period, and by $263 million over the 
2002-2011 period. Because enacting H.R. 3009 would affect 
receipts, pay-as-your-go procedures would apply. CBO has 
determined that H.R. 3009 contains no private-sector or 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act (UMRA) and would not affect the budgets of state, 
local, or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3009 is shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                               -------------------------------------------------
                                                                  2002      2003      2004      2005      2006
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES

                      Estimated Revenues                             -41       -47       -50       -53       -57
----------------------------------------------------------------------------------------------------------------

    Basis of Estimate: ATPA is scheduled to expire on December 
4, 2001. H.R. 3009 would extend the ATPA program until December 
31, 2006. Several products of beneficiary countries would 
continue to receive preferential duty treatment if the bill 
were enacted. Based on information from the International Trade 
Commission and other trade sources, CBO estimates that 
extending the ATPA program would reduce revenues by $18 million 
in 2002, by $119 million over the 2002-2006 period, and by $126 
million over the 2002-2007 period.
    Under current law, ATPA does not extend preferential 
treatment to footwear that is ineligible for treatment under 
the generalized system of preferences (GSP), petroleum and 
certain products derived from petroleum, watches and watch 
parts containing material that is the product of countries not 
receiving normal trade relations (NTR) treatment, certain 
sugars and molasses, and certain leather goods. H.R. 3009 would 
allow the President to extend duty-free treatment to those 
products. CBO expects that all imports of these products would 
receive duty-free treatment.
    Under current law, apparel articles that are the product or 
manufacture of an ATPA beneficiary country are entitled to 
preferential treatment. The bill would allow apparel articles 
assembled from fabrics formed or knit-to-shape in the United 
States and certain other apparel articles to receive duty-free 
treatment. Apparel articles assembled from regional fabrics 
would also receive preferential treatment if they do not exceed 
certain percentages of imports on apparel articles. All 
preferential treatment would expire after December 31, 2006. 
Based on information from the International Trade Commission, 
the Office of Textiles and Apparel in the Department of 
Commerce, and private-sector sources, CBO estimates that if 
enacted, the provisions that expand ATPA treatment to new 
products would reduce revenues by $22 million in 2002, by $125 
million over the 2002-2006 period, and by $132 million over the 
2002-2011 period.
    H.R. 3009 would extend preferential treatment to apparel 
articles formed from components knit-to-shape in the United 
States for beneficiary countries under CBERA and AGOA. It would 
also increase the amount of certain apparel articles assembled 
from regional fabrics that would receive preferential 
treatment. Preferential treatment for the beneficiary countries 
is scheduled to expire after September 30, 2008. Based on 
information from the International Trade Commission, the Office 
of Textiles and Apparel in the Department of Commerce and 
private-sector sources, CBO estimates that if enacted, these 
provisions would reduce revenues by $1 million in 2002, by $3 
million over the 2002-2006 period, and by $5 million over the 
2002-2008 period.
    Pay-as-you-go-considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up procedures for 
legislation affecting receipts or direct spending. The net 
changes in 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 budget year and the succeeding four years are 
counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                     ---------------------------------------------------------------------------
                                       2002    2003    2004    2005    2006    2007    2008   2009   2010   2011
----------------------------------------------------------------------------------------------------------------
Changes in receipts.................     -41     -47     -50     -53     -57     -16     -1      0      0      0
Changes in outlays..................                                Not applicable
----------------------------------------------------------------------------------------------------------------

    Impact on State, local, and tribal governments: 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.
    Estimate prepared by: Federal Revenues: Erin Whitaker. 
Impact on State, Local, and Tribal Governments: Elyse Goldman. 
Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Robertson Williams, Assistant 
Director for Tax Analysis.

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


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee, based on public hearing testimony and 
information from the Administration, concluded that it is 
appropriate and timely to consider the bill as reported.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives, relating to Constitutional 
Authority, the Committee states that the Committee's action in 
reporting the bill is derived from Article 1 of the 
Constitution, Section 8 (``The Congress shall have power to lay 
and collect taxes, duties, imposts and excises, to pay the 
debts and to provide for * * * the general Welfare of the 
United States.'')

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

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

ANDEAN TRADE PREFERENCE ACT

           *       *       *       *       *       *       *



            TITLE II--TRADE PREFERENCE FOR THE ANDEAN REGION


SEC. 201. SHORT TITLE.

  This title may be cited as the ``Andean Trade Preference 
Act''.

SEC. 202. AUTHORITY TO GRANT DUTY-FREE TREATMENT.

  The President may proclaim duty-free treatment (or other 
preferential treatment) for all eligible articles from any 
beneficiary country in accordance with the provisions of this 
title.

SEC. 203. BENEFICIARY COUNTRY.

  (a) * * *

           *       *       *       *       *       *       *

  (e) Withdrawal or Suspension of Designation.--(1)(A) The 
President may--
          [(A)] (i) withdraw or suspend the designation of any 
        country as a beneficiary country, or
          [(B)] (ii) withdraw, suspend, or limit the 
        application of duty-free treatment under this title to 
        any article of any country, if, after such designation, 
        the President determines that as a result of changed 
        circumstances such a country should be barred from 
        designation as a beneficiary country.
  (B) The President may, after the requirements of paragraph 
(2) have been met--
          (i) withdraw or suspend the designation of any 
        country as an ATPDEA beneficiary country, or
          (ii) withdraw, suspend, or limit the application of 
        preferential treatment under section 204(b)(1) or (3) 
        to any article of any country,
if, after such designation, the President determines that, as a 
result of changed circumstances, the performance of such 
country is not satisfactory under the criteria set forth in 
section 204(b)(5)(B).

           *       *       *       *       *       *       *


SEC. 204. ELIGIBLE ARTICLES.

  (a) In General.--(1) Unless otherwise excluded from 
eligibility (or otherwise provided for) by this title, the 
duty-free treatment provided under this title shall apply to 
any article which is the growth, product, or manufacture of a 
beneficiary country if--
          (A) * * *

           *       *       *       *       *       *       *

  (2) The Secretary of the Treasury shall prescribe such 
regulations as may be necessary to carry out [subsection (a)] 
paragraph (1) including, but not limited to, regulations 
providing that, in order to be eligible for duty-free treatment 
under this title, an article must be wholly the growth, 
product, or manufacture of a beneficiary country, or must be a 
new or different article of commerce which has been grown, 
produced, or manufactured in the beneficiary country; but no 
article or material of a beneficiary country shall be eligible 
for such treatment by virtue of having merely undergone--
          (A) simple combining or packaging operations, or
          (B) mere dilution with water or mere dilution with 
        another substance that does not materially alter the 
        characteristics of the article.

           *       *       *       *       *       *       *

  [(b) Exceptions to Duty-Free Treatment.--The duty-free 
treatment provided under this title shall not apply to--
          [(1) textile and apparel articles which are subject 
        to textile agreements;
          [(2) footwear not designated at the time of the 
        effective date of this Act as eligible for the purpose 
        of the generalized system of preferences under title V 
        of the Trade Act of 1974;
          [(3) tuna, prepared or preserved in any manner, in 
        airtight containers;
          [(4) petroleum, or any product derived from 
        petroleum, provided for in headings 2709 and 2710 of 
        the HTS;
          [(5) watches and watch parts (including cases, 
        bracelets and straps), of whatever type including, but 
        not limited to, mechanical, quartz digital or quartz 
        analog, if such watches or watch parts contain any 
        material which is the product of any country with 
        respect to which HTS column 2 rates of duty apply;
          [(6) articles to which reduced rates of duty apply 
        under subsection (c);
          [(7) sugars, syrups, and molasses classified in 
        subheadings 1701.11.03, 1701.12.02, 1701.99.02, 
        1702.90.32, 1806.10.42, and 2106.90.12 of the HTS; or
          [(8) rum and tafia classified in subheading 
        2208.40.00 of the HTS.
  [(c) Duty Reductions for Certain Goods.--(1) Subject to 
paragraph (2), the President shall proclaim reductions in the 
rates of duty on handbags, luggage, flat goods, work gloves, 
and leather wearing apparel that--
          [(A) are the product of any beneficiary country; and
          [(B) were not designated on August 5, 1983, as 
        eligible articles for purposes of the generalized 
        system of preferences under title V of the Trade Act of 
        1974.
  [(2) The reduction required under paragraph (1) in the rate 
of duty on any article shall--
          [(A) result in a rate that is equal to 80 percent of 
        the rate of duty that applies to the article on 
        December 31, 1991, except that, subject to the 
        limitations in paragraph (3), the reduction may not 
        exceed 2.5 percent ad valorem; and
          [(B) be implemented in 5 equal annual stages with the 
        first 1/5 of the aggregate reduction in the rate of 
        duty being applied to entries, or withdrawals from 
        warehouse for consumption, of the article on or after 
        January 1, 1992.
  [(3) The reduction required under this subsection with 
respect to the rate of duty on any article is in addition to 
any reduction in the rate of duty on that article that may be 
proclaimed by the President as being required or appropriate to 
carry out any trade agreement entered into under the Uruguay 
Round of trade negotiations; except that if the reduction so 
proclaimed--
          [(A) is less than 1.5 percent ad valorem, the 
        aggregate of such proclaimed reduction and the 
        reduction under this subsection may not exceed 3.5 
        percent ad valorem, or
          [(B) is 1.5 percent ad valorem or greater, the 
        aggregate of such proclaimed reduction and the 
        reduction under this subsection may not exceed the 
        proclaimed reduction plus 1 percent ad valorem.]
  (b) Exceptions and Special Rules.--
          (1) Certain articles that are not import-sensitive.--
        The President may proclaim duty-free treatment under 
        this title for any article described in subparagraph 
        (A), (B), (C), or (D) that is the growth, product, or 
        manufacture of an ATPDEA beneficiary country and that 
        meets the requirements of this section, if the 
        President determines that such article is not import-
        sensitive in the context of imports from ATPDEA 
        beneficiary countries:
                  (A) Footwear not designated at the time of 
                the effective date of this Act as eligible for 
                the purpose of the generalized system of 
                preferences under title V of the Trade Act of 
                1974.
                  (B) Petroleum, or any product derived from 
                petroleum, provided for in headings 2709 and 
                2710 of the HTS.
                  (C) Watches and watch parts (including cases, 
                bracelets and straps), of whatever type 
                including, but not limited to, mechanical, 
                quartz digital or quartz analog, if such 
                watches or watch parts contain any material 
                which is the product of any country with 
                respect to which HTS column 2 rates of duty 
                apply.
                  (D) Handbags, luggage, flat goods, work 
                gloves, and leather wearing apparel that were 
                not designated on August 5, 1983, as eligible 
                articles for purposes of the generalized system 
                of preferences under title V of the Trade Act 
                of 1974.
          (2) Exclusions.--Subject to paragraph (3), duty-free 
        treatment under this title may not be extended to--
                  (A) textiles and apparel articles which were 
                not eligible articles for purposes of this 
                title on January 1, 1994, as this title was in 
                effect on that date;
                  (B) rum and tafia classified in subheading 
                2208.40 of the HTS; or
                  (C) sugars, syrups, and sugar-containing 
                products subject to over-quota duty rates under 
                applicable tariff-rate quotas.
          (3) Apparel articles.--
                  (A) In general.--Apparel articles that are 
                imported directly into the customs territory of 
                the United States from an ATPDEA beneficiary 
                country shall enter the United States free of 
                duty and free of any quantitative restrictions, 
                limitations, or consultation levels, but only 
                if such articles are described in subparagraph 
                (B).
                  (B) Covered articles.--The apparel articles 
                referred to in subparagraph (A) are the 
                following:
                          (i) Apparel articles assembled from 
                        products of the united states and 
                        atpdea beneficiary countries or 
                        products not available in commercial 
                        quantities.--Apparel articles sewn or 
                        otherwise assembled in 1 or more ATPDEA 
                        beneficiary countries, or the United 
                        States, or both, exclusively from any 
                        one or any combination of the 
                        following:
                                  (I) Fabrics or fabric 
                                components formed, or 
                                components knit-to-shape, in 
                                the United States, from yarns 
                                formed in the United States or 
                                1 or more ATPDEA beneficiary 
                                countries (including fabrics 
                                not formed from yarns, if such 
                                fabrics are classifiable under 
                                heading 5602 or 5603 of the HTS 
                                and are formed in the United 
                                States).
                                  (II) Fabrics or fabric 
                                components formed or components 
                                knit-to-shape, in 1 or more 
                                ATPDEA beneficiary countries, 
                                from yarns formed in 1 or more 
                                ATPDEA beneficiary countries, 
                                if such fabrics (including 
                                fabrics not formed from yarns, 
                                if such fabrics are 
                                classifiable under heading 5602 
                                or 5603 of the HTS and are 
                                formed in 1 or more ATPDEA 
                                beneficiary countries) or 
                                components are in chief weight 
                                of llama or alpaca.
                                  (III) Fabrics or yarn that is 
                                not formed in the United States 
                                or in one or more ATPDEA 
                                beneficiary countries, to the 
                                extent that apparel articles of 
                                such fabrics or yarn would be 
                                eligible for preferential 
                                treatment, without regard to 
                                the source of the fabrics or 
                                yarn, under Annex 401 of the 
                                NAFTA.
                          (ii) Additional fabrics.--At the 
                        request of any interested party, the 
                        President is authorized to proclaim 
                        additional fabrics and yarns as 
                        eligible for preferential treatment 
                        under clause (i)(III) if--
                                  (I) the President determines 
                                that such fabrics or yarns 
                                cannot be supplied by the 
                                domestic industry in commercial 
                                quantities in a timely manner;
                                  (II) the President has 
                                obtained advice regarding the 
                                proposed action from the 
                                appropriate advisory committee 
                                established under section 135 
                                of the Trade Act of 1974 (19 
                                U.S.C. 2155) and the United 
                                States International Trade 
                                Commission;
                                  (III) within 60 days after 
                                the request, the President has 
                                submitted a report to the 
                                Committee on Ways and Means of 
                                the House of Representatives 
                                and the Committee on Finance of 
                                the Senate that sets forth the 
                                action proposed to be 
                                proclaimed and the reasons for 
                                such action, and the advice 
                                obtained under subclause (II);
                                  (IV) a period of 60 calendar 
                                days, beginning with the first 
                                day on which the President has 
                                met the requirements of 
                                subclause (III), has expired; 
                                and
                                  (V) the President has 
                                consulted with such committees 
                                regarding the proposed action 
                                during the period referred to 
                                in subclause (III).
                          (iii) Apparel articles assembled in 1 
                        or more atpdea beneficiary countries 
                        from regional fabrics or regional 
                        components.--(I) Subject to the 
                        limitation set forth in subclause (II), 
                        apparel articles sewn or otherwise 
                        assembled in 1 or more ATPDEA 
                        beneficiary countries from fabrics or 
                        from fabric components formed or from 
                        components knit-to-shape, in 1 or more 
                        ATPDEA beneficiary countries, from 
                        yarns formed in the United States or 1 
                        or more ATPDEA beneficiary countries 
                        (including fabrics not formed from 
                        yarns, if such fabrics are classifiable 
                        under heading 5602 or 5603 of the HTS 
                        and are formed in 1 or more ATPDEA 
                        beneficiary countries), whether or not 
                        the apparel articles are also made from 
                        any of the fabrics, fabric components 
                        formed, or components knit-to-shape 
                        described in clause (i).
                          (II) The preferential treatment 
                        referred to in subclause (I) shall be 
                        extended in the 1-year period beginning 
                        December 1, 2001, and in each of the 5 
                        succeeding 1-year periods, to imports 
                        of apparel articles in an amount not to 
                        exceed the applicable percentage of the 
                        aggregate square meter equivalents of 
                        all apparel articles imported into the 
                        United States in the preceding 12-month 
                        period for which data are available.
                          (III) For purposes of subclause (II), 
                        the term ``applicable percentage'' 
                        means 3 percent for the 1-year period 
                        beginning December 1, 2001, increased 
                        in each of the 5 succeeding 1-year 
                        periods by equal increments, so that 
                        for the period beginning December 1, 
                        2005, the applicable percentage does 
                        not exceed 6 percent.
                          (iv) Handloomed, handmade, and 
                        folklore articles.--A handloomed, 
                        handmade, or folklore article of an 
                        ATPDEA beneficiary country identified 
                        under subparagraph (C) that is 
                        certified as such by the competent 
                        authority of such beneficiary country.
                          (v) Special rules.--
                                  (I) Exception for findings 
                                and trimmings.--An article 
                                otherwise eligible for 
                                preferential treatment under 
                                this paragraph shall not be 
                                ineligible for such treatment 
                                because the article contains 
                                findings or trimmings of 
                                foreign origin, if such 
                                findings and trimmings do not 
                                exceed 25 percent of the cost 
                                of the components of the 
                                assembled product. Examples of 
                                findings and trimmings are 
                                sewing thread, hooks and eyes, 
                                snaps, buttons, ``bow buds'', 
                                decorative lace, trim, elastic 
                                strips, zippers, including 
                                zipper tapes and labels, and 
                                other similar products.
                                  (II) Certain interlining.--
                                (aa) An article otherwise 
                                eligible for preferential 
                                treatment under this paragraph 
                                shall not be ineligible for 
                                such treatment because the 
                                article contains certain 
                                interlinings of foreign origin, 
                                if the value of such 
                                interlinings (and any findings 
                                and trimmings) does not exceed 
                                25 percent of the cost of the 
                                components of the assembled 
                                article.
                                  (bb) Interlinings eligible 
                                for the treatment described in 
                                division (aa) include only a 
                                chest type plate, ``hymo'' 
                                piece, or ``sleeve header'', of 
                                woven or weft-inserted warp 
                                knit construction and of coarse 
                                animal hair or man-made 
                                filaments.
                                  (cc) The treatment described 
                                in this subclause shall 
                                terminate if the President 
                                makes a determination that 
                                United States manufacturers are 
                                producing such interlinings in 
                                the United States in commercial 
                                quantities.
                                  (III) De minimis rule.--An 
                                article that would otherwise be 
                                ineligible for preferential 
                                treatment under this 
                                subparagraph because the 
                                article contains fibers or 
                                yarns not wholly formed in the 
                                United States or in one or more 
                                ATPDEA beneficiary countries 
                                shall not be ineligible for 
                                such treatment if the total 
                                weight of all such fibers or 
                                yarns is not more than 7 
                                percent of the total weight of 
                                the good.
                  (C) Handloomed, handmade, and folklore 
                articles.--For purposes of subparagraph 
                (B)(iv), the President shall consult with 
                representatives of the ATPDEA beneficiary 
                countries concerned for the purpose of 
                identifying particular textile and apparel 
                goods that are mutually agreed upon as being 
                handloomed, handmade, or folklore goods of a 
                kind described in section 2.3(a), (b), or (c) 
                of the Annex or Appendix 3.1.B.11 of the Annex.
                  (D) Penalties for transshipment.--
                          (i) Penalties for exporters.--If the 
                        President determines, based on 
                        sufficient evidence, that an exporter 
                        has engaged in transshipment with 
                        respect to apparel articles from an 
                        ATPDEA beneficiary country, then the 
                        President shall deny all benefits under 
                        this title to such exporter, and any 
                        successor of such exporter, for a 
                        period of 2 years.
                          (ii) Penalties for countries.--
                        Whenever the President finds, based on 
                        sufficient evidence, that transshipment 
                        has occurred, the President shall 
                        request that the ATPDEA beneficiary 
                        country or countries through whose 
                        territory the transshipment has 
                        occurred take all necessary and 
                        appropriate actions to prevent such 
                        transshipment. If the President 
                        determines that a country is not taking 
                        such actions, the President shall 
                        reduce the quantities of apparel 
                        articles that may be imported into the 
                        United States from such country by the 
                        quantity of the transshipped articles 
                        multiplied by 3, to the extent 
                        consistent with the obligations of the 
                        United States under the WTO.
                          (iii) Transshipment described.--
                        Transshipment within the meaning of 
                        this subparagraph has occurred when 
                        preferential treatment under 
                        subparagraph (A) has been claimed for 
                        an apparel article on the basis of 
                        material false information concerning 
                        the country of origin, manufacture, 
                        processing, or assembly of the article 
                        or any of its components. For purposes 
                        of this clause, false information is 
                        material if disclosure of the true 
                        information would mean or would have 
                        meant that the article is or was 
                        ineligible for preferential treatment 
                        under subparagraph (A).
                  (E) Bilateral emergency actions.--
                          (i) In general.--The President may 
                        take bilateral emergency tariff actions 
                        of a kind described in section 4 of the 
                        Annex with respect to any apparel 
                        article imported from an ATPDEA 
                        beneficiary country if the application 
                        of tariff treatment under subparagraph 
                        (A) to such article results in 
                        conditions that would be cause for the 
                        taking of such actions under such 
                        section 4 with respect to a like 
                        article described in the same 8-digit 
                        subheading of the HTS that is imported 
                        from Mexico.
                          (ii) Rules relating to bilateral 
                        emergency action.--For purposes of 
                        applying bilateral emergency action 
                        under this subparagraph--
                                  (I) the requirements of 
                                paragraph (5) of section 4 of 
                                the Annex (relating to 
                                providing compensation) shall 
                                not apply;
                                  (II) the term ``transition 
                                period'' in section 4 of the 
                                Annex shall mean the period 
                                ending December 31, 2006; and
                                  (III) the requirements to 
                                consult specified in section 4 
                                of the Annex shall be treated 
                                as satisfied if the President 
                                requests consultations with the 
                                ATPDEA beneficiary country in 
                                question and the country does 
                                not agree to consult within the 
                                time period specified under 
                                section 4.
          (4) Customs procedures.--
                  (A) In general.--
                          (i) Regulations.--Any importer that 
                        claims preferential treatment under 
                        paragraph (1) or (3) shall comply with 
                        customs procedures similar in all 
                        material respects to the requirements 
                        of Article 502(1) of the NAFTA as 
                        implemented pursuant to United 
Stateslaw, in accordance with regulations promulgated by the Secretary 
of the Treasury.
                          (ii) Determination.--
                                  (I) In general.--In order to 
                                qualify for the preferential 
                                treatment under paragraph (1) 
                                or (3) and for a Certificate of 
                                Origin to be valid with respect 
                                to any article for which such 
                                treatment is claimed, there 
                                shall be in effect a 
                                determination by the President 
                                that each country described in 
                                subclause (II)--
                                          (aa) has implemented 
                                        and follows; or
                                          (bb) is making 
                                        substantial progress 
                                        toward implementing and 
                                        following,
                                procedures and requirements 
                                similar in all material 
                                respects to the relevant 
                                procedures and requirements 
                                under chapter 5 of the NAFTA.
                                  (II) Country described.--A 
                                country is described in this 
                                subclause if it is an ATPDEA 
                                beneficiary country--
                                          (aa) from which the 
                                        article is exported; or
                                          (bb) in which 
                                        materials used in the 
                                        production of the 
                                        article originate or in 
                                        which the article or 
                                        such materials undergo 
                                        production that 
                                        contributes to a claim 
                                        that the article is 
                                        eligible for 
                                        preferential treatment 
                                        under paragraph (1) or 
                                        (3).
                  (B) Certificate of origin.--The Certificate 
                of Origin that otherwise would be required 
                pursuant to the provisions of subparagraph (A) 
                shall not be required in the case of an article 
                imported under paragraph (1) or (3) if such 
                Certificate of Origin would not be required 
                under Article 503 of the NAFTA (as implemented 
                pursuant to United States law), if the article 
                were imported from Mexico.
          (5) Definitions.--In this subsection--
                  (A) Annex.--The term ``the Annex'' means 
                Annex 300-B of the NAFTA.
                  (B) ATPDEA beneficiary country.--The term 
                ``ATPDEA beneficiary country'' means any 
                ``beneficiary country'', as defined in section 
                203(a)(1) of this title, which the President 
                designates as an ATPDEA beneficiary country, 
                taking into account the criteria contained in 
                subsections (c) and (d) of section 203 and 
                other appropriate criteria, including the 
                following:
                          (i) Whether the beneficiary country 
                        has demonstrated a commitment to--
                                  (I) undertake its obligations 
                                under the WTO, including those 
                                agreements listed in section 
                                101(d) of the Uruguay Round 
                                Agreements Act, on or ahead of 
                                schedule; and
                                  (II) participate in 
                                negotiations toward the 
                                completion of the FTAA or 
                                another free trade agreement.
                          (ii) The extent to which the country 
                        provides protection of intellectual 
                        property rights consistent with or 
                        greater than the protection afforded 
                        under the Agreement on Trade-Related 
                        Aspects of Intellectual Property Rights 
                        described in section 101(d)(15) of the 
                        Uruguay Round Agreements Act.
                          (iii) The extent to which the country 
                        provides internationally recognized 
                        worker rights, including--
                                  (I) the right of association;
                                  (II) the right to organize 
                                and bargain collectively;
                                  (III) a prohibition on the 
                                use of any form of forced or 
                                compulsory labor;
                                  (IV) a minimum age for the 
                                employment of children; and
                                  (V) acceptable conditions of 
                                work with respect to minimum 
                                wages, hours of work, and 
                                occupational safety and health;
                          (iv) Whether the country has 
                        implemented its commitments to 
                        eliminate the worst forms of child 
                        labor, as defined in section 507(6) of 
                        the Trade Act of 1974.
                          (v) The extent to which the country 
                        has met the counternarcotics 
                        certification criteria set forth in 
                        section 490 of the Foreign Assistance 
                        Act of 1961 (22 U.S.C. 2291j) for 
                        eligibility for United States 
                        assistance.
                          (vi) The extent to which the country 
                        has taken steps to become a party to 
                        and implements the Inter-American 
                        Convention Against Corruption.
                          (vii) The extent to which the 
                        country--
                                  (I) applies transparent, 
                                nondiscriminatory, and 
                                competitive procedures in 
                                government procurement 
                                equivalent to those contained 
                                in the Agreement on Government 
                                Procurement described in 
                                section 101(d)(17) of the 
                                Uruguay Round Agreements Act; 
                                and
                                  (II) contributes to efforts 
                                in international fora to 
                                develop and implement 
                                international rules in 
                                transparency in government 
                                procurement.
                  (C) NAFTA.--The term ``NAFTA'' means the 
                North American Free Trade Agreement entered 
                into between the United States, Mexico, and 
                Canada on December 17, 1992.
                  (D) WTO.--The term ``WTO'' has the meaning 
                given that term in section 2 of the Uruguay 
                Round Agreements Act (19 U.S.C. 3501).
                  (E) ATPDEA.--The term ``ATPDEA'' means the 
                Andean Trade Promotion and Drug Eradication 
                Act.
  [(d)] (c) Suspension of Duty-Free Treatment.--(1) The 
President may by proclamation suspend the duty-free treatment 
provided by this title with respect to any eligible article and 
may proclaim a duty rate for such article if such action is 
proclaimed under chapter 1 of title II of the Trade Act of 1974 
or section 232 of the Trade Expansion Act of 1962.

           *       *       *       *       *       *       *

  [(e)] (d) Emergency Relief With Respect to Perishable 
Products.--(1) If a petition is filed with the United States 
International Trade Commission pursuant to the provisions of 
section 201 of the Trade Act of 1974 regarding a perishable 
product and alleging injury from imports from beneficiary 
countries, then the petition may also be filed with the 
Secretary of Agriculture with a request that emergency relief 
be granted pursuant to paragraph (3) of this subsection with 
respect to such article.

           *       *       *       *       *       *       *

  [(f)] (e) Section 22 Fees.--No proclamation issued pursuant 
to this title shall affect fees imposed pursuant to section 22 
of the Agricultural Adjustment Act of 1933 (7 U.S.C. 624).
  [(g)] (f) Tariff-Rate Quotas.--No quantity of an agricultural 
product subject to a tariff-rate quota that exceeds the in-
quota quantity shall be eligible for duty-free treatment under 
this Act.

           *       *       *       *       *       *       *


[SEC. 208. EFFECTIVE DATE AND TERMINATION OF DUTY-FREE TREATMENT.

  [(a) Effective Date.--This title shall take effect on the 
date of enactment.
  [(b) Termination of Duty-Free Treatment.--No duty-free 
treatment extended to beneficiary countries under this title 
shall remain in effect 10 years after the date of the enactment 
of this title.]

SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.

  No duty-free treatment or other preferential treatment 
extended to beneficiary countries under this title shall remain 
in effect after December 31, 2006.
                              ----------                              


        SECTION 213 OF THE CARIBBEAN BASIN ECONOMIC RECOVERY ACT

SEC. 213. ELIGIBLE ARTICLES.

  (a) * * *
  (b) Import-Sensitive Articles.--
          (1) In general.--Subject to paragraphs (2) through 
        (5), the duty-free treatment provided under this title 
        does not apply to--
                  (A) * * *

           *       *       *       *       *       *       *

          (2) Transition period treatment of certain textile 
        and apparel articles.--
                  (A) Articles covered.--During the transition 
                period, the preferential treatment described in 
                subparagraph (B) shall apply to the following 
                articles:
                          [(i) Apparel articles assembled in 
                        one or more cbtpa beneficiary 
                        countries.--Apparel articles assembled 
                        in one or more CBTPA beneficiary 
                        countries from fabrics wholly formed 
                        and cut in the United States, from 
                        yarns wholly formed in the United 
                        States, (including fabrics not formed 
                        from yarns, if such fabrics are 
                        classifiable under heading 5602 or5603 
of the HTS and are wholly formed and cut in the United States) that 
are--
                          (i) Apparel articles assembled in one 
                        or more cbtpa beneficiary countries.--
                        Apparel articles sewn or otherwise 
                        assembled in one or more CBTPA 
                        beneficiary countries from fabrics 
                        wholly formed and cut, or from 
                        components knit-to-shape, in the United 
                        States from yarns wholly formed in the 
                        United States, (including fabrics not 
                        formed from yarns, if such fabrics are 
                        classifiable under heading 5602 or 5603 
                        of the HTS and are wholly formed and 
                        cut in the United States) that are--
                                  (I) * * *

           *       *       *       *       *       *       *

                          [(ii) Apparel articles cut and 
                        assembled in one or more cbtpa 
                        beneficiary countries.--Apparel 
                        articles cut in one or more CBTPA 
                        beneficiary countries from fabric 
                        wholly formed in the United States from 
                        yarns wholly formed in the United 
                        States (including fabrics not formed 
                        from yarns, if such fabrics are 
                        classifiable under heading 5602 or 5603 
                        of the HTS and are wholly formed in the 
                        United States), if such articles are 
                        assembled in one or more such countries 
                        with thread formed in the United 
                        States.
                          (ii) Other apparel articles assembled 
                        in one or more cbtpa beneficiary 
                        countries.--Apparel articles sewn or 
                        otherwise assembled in one or more 
                        CBTPA beneficiary countries with thread 
                        formed in the United States from 
                        fabrics wholly formed in the United 
                        States and cut in one or more CBTPA 
                        beneficiary countries from yarns wholly 
                        formed in the United States, or from 
                        components knit-to-shape in the United 
                        States from yarns wholly formed in the 
                        United States, or both (including 
                        fabrics not formed from yarns, if such 
                        fabrics are classifiable under heading 
                        5602 or 5603 of the HTS and are wholly 
                        formed in the United States).
                          (iii) Certain knit apparel 
                        articles.--(I) * * *
                          [(II) The amount referred to in 
                        subclause (I) is--
                                  [(aa) 250,000,000 square 
                                meter equivalents during the 1-
                                year period beginning on 
                                October 1, 2000, increased by 
                                16 percent, compounded 
                                annually, in each succeeding 1-
                                year period through September 
                                30, 2004; and
                                  [(bb) in each 1-year period 
                                thereafter through September 
                                30, 2008, the amount in effect 
                                for the 1-year period ending on 
                                September 30, 2004, or such 
                                other amount as may be provided 
                                by law.
                          (II) The amount referred to in 
                        subclause (I) is as follows:
                                  (aa) 290,000,000 square meter 
                                equivalents during the 1-year 
                                period beginning on October 1, 
                                2001.
                                  (bb) 500,000,000 square meter 
                                equivalents during the 1-year 
                                period beginning on October 1, 
                                2002.
                                  (cc) 850,000,000 square meter 
                                equivalents during the 1-year 
                                period beginning on October 1, 
                                2003.
                                  (dd) 970,000,000 square meter 
                                equivalents in each succeeding 
                                1-year period through September 
                                30, 2008.

           *       *       *       *       *       *       *

                          [(IV) the amount referred to in 
                        subclause (III) is--
                                  [(aa) 4,200,000 dozen during 
                                the 1-year period beginning on 
                                October 1, 2000, increased by 
                                16 percent, compounded 
                                annually, in each succeeding 1-
                                year period through September 
                                30, 2004; and
                                  [(bb) in each 1-year period 
                                thereafter, the amount in 
                                effect for the 1-year period 
                                ending on September 30, 2004, 
                                or such other amount as may be 
                                provided by law.
                          (IV) The amount referred to in 
                        subclause (III) is as follows:
                                  (aa) 4,872,000 dozen during 
                                the 1-year period beginning on 
                                October 1, 2001.
                                  (bb) 9,000,000 dozen during 
                                the 1-year period beginning on 
                                October 1, 2002.
                                  (cc) 10,000,000 dozen during 
                                the 1-year period beginning on 
                                October 1, 2003.
                                  (dd) 12,000,000 dozen in each 
                                succeeding 1-year period 
                                through September 30, 2008.

           *       *       *       *       *       *       *

                          (ix) Apparel articles assembled in 
                        one or more cbtpa beneficiary countries 
                        from united states and cbtpa 
                        beneficiary country components.--
                        Apparel articles sewn or otherwise 
                        assembled in one or more CBTPA 
                        beneficiary countries with thread 
                        formed in the United States from 
                        components cut in the United States and 
                        in one or more CBTPA beneficiary 
                        countries from fabric wholly formed in 
                        the United States from yarns wholly 
                        formed in the United States, or from 
                        components knit-to-shape in the United 
                        States and one or more CBTPA 
                        beneficiary countries from yarns wholly 
                        formed in the United States, or both 
                        (including fabrics not formed from 
                        yarns, if such fabrics are classifiable 
                        under heading 5602 or 5603 of the HTS).

           *       *       *       *       *       *       *


         SECTION 112 OF THE AFRICAN GROWTH AND OPPORTUNITY ACT


SEC. 112. TREATMENT OF CERTAIN TEXTILES AND APPAREL.

  (a) * * *
  (b) Products Covered.--The preferential treatment described 
in subsection (a) shall apply only to the following textile and 
apparel products:
          [(1) Apparel articles assembled in beneficiary sub-
        saharan african countries.--Apparel articles assembled 
        in one or more beneficiary sub-Saharan African 
        countries from fabrics wholly formed and cut in the 
        United States, from yarns wholly formed in the United 
        States, (including fabrics not formed from yarns, if 
        such fabrics are classifiable under heading 5602 or 
        5603 of the Harmonized Tariff Schedule of the United 
        States and are wholly formed and cut in the United 
        States) 
        that are--]
          (1) Apparel articles assembled in one or more 
        beneficiary sub-saharan african countries.--Apparel 
        articles sewn or otherwise assembled in one or more 
        beneficiary sub-Saharan African countries from fabrics 
        wholly formed and cut, or from components knit-to-
        shape, in the United States from yarns wholly formed in 
        the United States, (including fabrics not formed from 
        yarns, if such fabrics are classifiable under heading 
        5602 or 5603 of the HTS and are wholly formed and cut 
        in the United States) that are--
                  (A) * * *

           *       *       *       *       *       *       *

          [(2) Apparel articles cut and assembled in 
        beneficiary sub-saharan african countries.--Apparel 
        articles cut in one or more beneficiary sub-Saharan 
        African countries from fabric wholly formed in the 
        United States from yarns wholly formed in the United 
        States, (including fabrics not formed from yarns, if 
        such fabrics are classifiable under heading 5602 or 
        5603 of the Harmonized Tariff Schedule of the United 
        States and are wholly formed in the United States) if 
        such articles are assembled in one or more beneficiary 
        sub-Saharan African countries with thread formed in the 
        United States.
          [(3) Apparel articles assembled from regional and 
        other fabric.--Apparel articles wholly assembled in one 
        or more beneficiary sub-Saharan African countries from 
        fabric wholly formed in one or more beneficiary sub-
        Saharan African countries from yarn originating either 
        in the United States or one or more beneficiary sub-
        Saharan African countries (including fabrics not formed 
        from yarns, if such fabrics are classifiable under 
        heading 5602 or 5603 of the Harmonized Tariff Schedule 
        of the United States and are wholly formed and cut in 
        one or more beneficiary sub-Saharan African countries), 
        subject to the following:]
          (2) Other apparel articles assembled in one or more 
        beneficiary sub-saharan african countries.--Apparel 
        articles sewn or otherwise assembled in one or more 
        beneficiary sub-Saharan African countries with thread 
        formed in the United States from fabrics wholly formed 
        in the United States and cut in one or more beneficiary 
        sub-Saharan African countries from yarns wholly formed 
        in the United States, or from components knit-to-shape 
        in the United States from yarns wholly formed in the 
        United States, or both (including fabrics not formed 
        from yarns, if such fabrics are classifiable under 
        heading 5602 or 5603 of the HTS and are wholly formed 
        in the United States).
          (3) Apparel articles from regional fabric or yarns.--
        Apparel articles wholly assembled in one or more 
        beneficiary sub-Saharan African countries from fabric 
        wholly formed in one or more beneficiary sub-Saharan 
        African countries from yarns originating either in the 
        United States or one or more beneficiary sub-Saharan 
        African countries (including fabrics not formed from 
        yarns, if such fabrics are classified under heading 
        5602 or 5603 of the HTS and are wholly formed in one or 
        more beneficiary sub-Saharan African countries), or 
        from components knit-to-shape in one or more 
        beneficiary sub-Saharan African countries from yarns 
        originating either in the United States or one or more 
        beneficiary sub-Saharan African countries, or apparel 
        articles wholly formed on seamless knitting machines in 
        a beneficiary sub-Saharan African country from yarns 
        originating either in the United States or one or more 
        beneficiary sub-Saharan African countries, subject to 
        the following:
                  (A) Limitations on benefits.--
                          (i) * * *

           *       *       *       *       *       *       *

                          (ii) Applicable percentage.--For 
                        purposes of this subparagraph, the term 
                        ``applicable percentage'' means [1.5] 3 
                        percent for the 1-year period beginning 
                        October 1, 2000, increased in each of 
                        the seven succeeding 1-year periods by 
                        equal increments, so that for the 
                        period beginning October 1, 2007, the 
                        applicable percentage does not exceed 
                        [3.5] 7 percent.
                  [(B) Special rule for lesser developed 
                countries.--
                          [(i) In general.--Subject to 
                        subparagraph (A), preferential 
                        treatment shall be extended through 
                        September 30, 2004, for apparel 
                        articles wholly assembled in one or 
                        more lesser developed beneficiary sub-
                        Saharan African countries regardless of 
                        the country of origin of the fabric 
                        used to make such articles.
                          [(ii) Lesser developed beneficiary 
                        sub-saharan african country.--For 
                        purposes of this subparagraph the term 
                        ``lesser developed beneficiary sub-
                        Saharan African country'' means a 
                        beneficiary sub-Saharan African country 
                        that had a per capita gross national 
                        product of less than $1,500 a year in 
                        1998, as measured by the World Bank.]
                  (B) Special rules for lesser developed 
                countries.--
                          (i) In general.--Subject to 
                        subparagraph (A), preferential 
                        treatment under this paragraph shall be 
                        extended through September 30, 2004, 
                        for apparel articles wholly assembled, 
                        or knit-to-shape and wholly assembled, 
                        or both, in one or more lesser 
                        developed beneficiary sub-Saharan 
                        African countries regardless of the 
                        country of origin of the fabric or the 
                        yarn used to make such articles.
                          (ii) Lesser developed beneficiary 
                        sub-saharan african country.--For 
                        purposes of clause (i), the term 
                        ``lesser developed beneficiary sub-
                        Saharan African country'' means--
                                  (I) a beneficiary sub-Saharan 
                                African country that had a per 
                                capita gross national product 
                                of less than $1,500 in 1998, as 
                                measured by the International 
                                Bank for Reconstruction and 
                                Development;
                                  (II) Botswana; and
                                  (III) Namibia.

           *       *       *       *       *       *       *

          (4) Sweaters knit-to-shape from cashmere or merino 
        wool.--
                  (A) * * *
                  (B) Merino wool.--Sweaters, 50 percent or 
                more by weight of wool measuring [18.5] 21.5 
                microns in diameter or finer, knit-to-shape in 
                one or more beneficiary sub-Saharan African 
                countries.

           *       *       *       *       *       *       *

          (7) Apparel articles assembled in one or more 
        beneficiary sub-saharan african countries from united 
        states and beneficiary sub-saharan african country 
        components.--Apparel articles sewn or otherwise 
        assembled in one or more beneficiary sub-Saharan 
        African countries with thread formed in the United 
        States from components cut in the United States and one 
        or more beneficiary sub-Saharan African countries from 
        fabric wholly formed in the United States from yarns 
        wholly formed in the United States, or from components 
        knit-to-shape in the United States and one or more 
        beneficiary sub-Saharan African countries from yarns 
        wholly formed in the United States, or both (including 
        fabrics not formed from yarns, if such fabrics are 
        classifiable under heading 5602 or 5603 of the HTS).

           *       *       *       *       *       *       *


                         VII. ADDITIONAL VIEWS

    As a co-chair of the African Trade and Investment Caucus, 
and as an ardent supporter of the African Growth and 
Opportunity Act (AGOA), which was signed into law just over a 
year ago, I was very pleased to see the Committee take action 
to address some of the concerns raised regarding the 
implementation of AGOA.
    The new provisions reported from the Committee would 
clarify and narrowly expand the trade opportunities for sub-
Saharan Africa countries under AGOA, and are designed to 
encourage more investment in the region, particularly in the 
apparel sector. I along with Representatives Rangel, Royce, 
Crane, Payne, and McDermott, were in the process of developing 
AGOA II legislation to address these and other issues.
    AGOA is the most significant U.S. policy statement to date 
on the U.S. commitment to assist the countries of sub-Saharan 
Africa (SSA) with their efforts to stimulate economic growth 
and development in the region. The bill was many years in the 
making, and enjoyed broad, bi-partisan support.
    Increased international trade and investment is a key 
component leading to economic development and growth in sub-
Saharan Africa. Economic growth is an integral element of any 
sub-Saharan strategy to overcome the many and severe social, 
health, political, environmental and other challenges. I have 
recently returned from a trip to the region and was pleased to 
find AGOA has demonstrated initial success in promoting greater 
commercial activity between the United States and sub-Saharan 
Africa. According to the Office of the United States Trade 
Representative, AGOA has resulted in nearly $4 billion dollars 
in expanded trade and investment in the region and has spurred 
and bolstered economic reform in several African countries.
    Now that the bill is law, the U.S. must ensure that the 
objective of stimulating regional economic development and 
growth is achieved. The African Trade and Investment Caucus 
(ATIC) has been following closely the Administration's efforts 
to implement this bill as well as the efforts of sub-Saharan 
countries to comply with the bill's eligibility criteria. Two 
major issues have come to our attention. First, sub-Saharan 
beneficiary countries need additional assistance from the 
United States to meet the stringent customs and visa 
requirements in the legislation. Currently, only a handful of 
SSA countries designated as beneficiaries have been certified 
as eligible to ship apparel products since the effective date 
of October 1, 2000. Many of the countries are willing to 
upgrade their customs systems to comply with the law; however 
they need additional technical assistance from the United 
States to undertake this important task.
    Second, we need to ensure that the authorized resources 
under the bill are available to assist U.S. companies and 
African companies in realizing the opportunities created by 
AGOA. Many U.S. and African companies are unaware that AGOA 
provides preferential treatment to many non-apparel items.
    To make this information known and to spur participation of 
U.S. and African businesses in the AGOA program full support 
for AGOA-related programs is needed. The first step is ensuring 
that each agency with responsibility for AGOA has adequate 
personnel to carry out its duties. This is a priority for the 
Office of African Affairs at the Office of the U.S. Trade 
Representative in particular. Second, it is important for the 
Administration to make available the resources to provide 
technical assistance for AGOA-related programs.
    In Committee, I offered an amendment that would have 
established a technical assistance fund designed to improve the 
trade capacity of sub-Saharan countries that would have ensured 
funding for the technical assistance authorized in Section 
122(b) of AGOA to promote economic reforms and development in 
sub-Saharan Africa. Building trade capacity is essential for 
sub-Saharan countries to fully utilize the benefits provided 
under AGOA. While the amendment was not in order, I appreciated 
the commitments given by yourselves and Ambassador Zoellick to 
continue to work on ensuring resources to:
           Improve the trade capacity of sub-Saharan 
        countries;
           Improve the ability of sub-Saharan countries 
        to comply with the eligibility requirements of AGOA;
           Ensure proper implementation of AGOA 
        provisions in beneficiary countries;
           Promote economic reform; and
           Improve capacity of WTO member-countries 
        from the sub-Saharan region to implement and negotiate 
        WTO agreements.
    Without the appropriate resources, AGOA will fail to 
achieve its important goals; and the United States will have 
reneged on its commitment to the poorest region of the world.

                                              William J. Jefferson.

                         VIII. DISSENTING VIEWS

    It is with great regret that we oppose H.R. 3009, the 
Andean Trade Promotion and Drug Eradication Act.
    We believe that in the long term, an indispensable way we 
can assist the Andean region and help combat the scourge of 
illegal drugs is by promoting economic development and growth 
in these countries. As observed when we discussed benefits to 
the Caribbean countries and the African countries, the path and 
strategies that have proven the most successful are those that 
provide a framework to ensure that development benefits the 
greatest number of people in the entire hemispheric region.
    Assisting economic development abroad must take into full 
account the needs of, and outcomes for, workers and businesses 
in the United States. In crafting unilateral preference 
programs like the existing Andean Trade Preferences Act (ATPA), 
and the Africa and Caribbean programs, Congress has sought to 
match the strengths of businesses and workers in the United 
States with the strengths of businesses and workers in the 
region.
    And that is the approach we had hoped to take with respect 
to enhancement of the ATPA program. In fact, that is the 
direction in which we had been headed. For the last several 
months, the majority and the minority staff have been working 
on an ATPA renewal and expansion bill that would have expanded 
the trade benefits under the ATPA in a manner that would ensure 
benefits to the greatest number of people in the region and the 
United States, and that would have created the broadest 
coalition of support in the Congress.
    The majority chose to abruptly end those discussions, 
however. Without any prior notice or consultation, the Chairman 
of the Trade Subcommittee introduced H.R. 3009, and Chairman 
Thomas scheduled a markup for about 36 hours later. The bill 
that they introduced does reflect several items from our 
discussions. But, the bill's approach to many key issues is not 
satisfactory. The bill does not effectively build upon the 
complementarities between the U.S. and Andean textile and 
apparel industries, rather, it would make them competitors on 
unequal terms.
    Additionally, by bringing this bill up without any notice, 
Congress and the groups affected have been denied the 
opportunity to take one last look at other key concerns, the 
most serious of which is the very real issue of labor rights 
abuses in the Andean countries, particularly the murder with 
impunity of labor leaders in Colombia. The bill reported by the 
Committee does require the Administration to evaluate the 
extent to which each Andean country adheres to core workers 
rights in making the determination as to which countries are 
eligible for enhanced benefits. However, this Administration 
has not rigorously applied this eligibility criteria in the 
past. We need a clear understanding that it will do so in this 
case, with particular attention paid to the situation in 
Colombia.
    There are other important issues that were left unresolved 
because of the haste with which the Majority chose to bring 
this legislation to Committee. These include issues related to 
treatment of U.S. companies, such as Nortel, in Colombia, and 
the continued denial of non-discriminatory market access to 
U.S. goods in Andean markets.
    We want to be clear. We are not opposing this bill only 
because of the fundamental process flaws that preceded this 
mark-up. Those flaws are troubling. But, those flaws also led 
to a bill that is flawed on policy. This situation is deeply 
regrettable, because we think with more time an agreement that 
advanced everyone's interests could have been achieved. We 
actively favor that result.

                                   Sander Levin.
                                   Michael R. McNulty.
                                   John Lewis.
                                   Karen L. Thurman.
                                   Jerry Kleczka.
                                   Richard E. Neal.

                                
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