[House Report 108-224]
[From the U.S. Government Publishing Office]



108th Congress                                            Rept. 108-224
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 2

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



 
      UNITED STATES-CHILE FREE TRADE AGREEMENT IMPLEMENTATION ACT

                                _______
                                

                 July 22, 2003.--Ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2738]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2738) to implement the United States-Chile Free 
Trade Agreement, having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................    11
Committee Consideration..........................................    11
Vote of the Committee............................................    12
Committee Oversight Findings.....................................    12
New Budget Authority and Tax Expenditures........................    12
Congressional Budget Office Cost Estimate........................    12
Performance Goals and Objectives.................................    15
Constitutional Authority Statement...............................    15
Section-by-Section Analysis and Discussion.......................    15
Changes in Existing Law Made by the Bill, as Reported............    20
Agency Correspondence............................................    46
Markup Transcript................................................    51
Mock Markup Transcript...........................................   155
Minority Views...................................................   203

                          Purpose and Summary

    On June 6, 2003, the United States and Chile entered into a 
Free Trade Agreement (``FTA'') after several rounds of 
negotiation that commenced in December of 2000. H.R. 2738 
approves the U.S.-Chile FTA submitted to Congress on July 15, 
2003 and makes changes to United States law necessary to ensure 
compliance with the agreement. The legislation contains four 
titles: Title I, ``Approval of, and General Provisions Relating 
to the Agreement;'' Title II, ``Customs Provisions;'' Title 
III, ``Relief from Imports;'' and Title IV, ``Temporary Entry 
of Business Persons.'' The Committee's consideration of H.R. 
2738 was limited to title IV of the legislation. Title IV 
establishes 1,400 annual professional worker visas for Chilean 
citizens to enter the United States on a temporary basis.
    H.R. 2738 was considered pursuant to the Bipartisan Trade 
Promotion Authority Act of 2002 \1\ and the Trade Act of 
1974.\2\ As a result, the legislation was considered on an 
expedited basis which did not permit committees of jurisdiction 
to amend the legislation after its formal introduction. 
However, the Committee made several changes to draft 
implementing legislation transmitted to the Committee for a 
pre-introduction ``mock markup'' on July 10, 2003. These 
changes were substantially reflected in H.R. 2738.
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    \1\ 19 U.S.C. Sec. 3805 et. seq. (2002).
    \2\ 19 U.S.C. Sec. 2191 et. seq. (2002).
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                Background and Need for the Legislation

                    U.S.-CHILE FREE TRADE AGREEMENT

Background
    On June 6, 2003, the United States and Chile entered into a 
bilateral FTA, concluding a 14-round negotiation process that 
began in December of 2000.\3\ Chile is recognized as one of the 
most open, reformed, and developed economies in Latin America. 
The Bush Administration has asserted that a U.S.-Chile FTA 
would expand U.S. exports, provide a basis for broader 
hemispheric trade liberalization, enhance regional economic and 
political cooperation, and support economic and trade reform in 
Latin America. Chile has pursued trade liberalization 
agreements with a number of its trading partners, including 
Bolivia, Mexico, Venezuela, Colombia, Ecuador, Peru, and 
Argentina. In addition, Chile has signed FTAs with Canada and 
Mexico. In April and October 2002, Chile completed negotiations 
for an FTA with the European Union and South Korea, and is 
negotiating FTAs with Japan, New Zealand, and Singapore. 
Proponents of the U.S.-Chile FTA have argued that Chile's 
current trade agreements with U.S. economic competitors place 
U.S. exporters at a commercial disadvantage and that 
eliminating these tariffs would enhance U.S. commercial 
interests. In 2001, Chile's per capita income level was second 
only to Argentina's in Latin America and will likely be first 
once data reflect Argentina's current financial crisis.\4\
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    \3\ The full text of the U.S.-Chile FTA is available at: .
    \4\ See generally, J.F. Hornbeck, CRS Report for Congress, The 
U.S.-Chile Free Trade Agreement: Economic and Trade Policy Issues, June 
26, 2003.
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    The United States is Chile's largest trading partner, 
accounting for 20 percent of Chilean exports and 15 percent of 
imports in 2002. By contrast, Chile is the United States' 34th 
largest export destination and 36th largest import contributor, 
accounting for 0.3 percent of U.S. trade.\5\ U.S. products 
exported to Chile are mostly capital goods. These include: 
machinery (31 percent), particularly computers, office 
machinery, and industrial equipment such as gas turbines and 
bulldozers; electrical machinery (16 percent) including 
television and radio transmission apparatus, telephone 
equipment, spare parts, integrated circuits, sound recording 
equipment and media; vehicles (8 percent) mostly trucks and 
passenger cars; aircraft and parts (5 percent) and optical/
medical instruments (5 percent).\6\ The top five U.S. imports 
from Chile are natural resource based goods that reflect some 
refining of the basic resource, but little value-added 
manufacturing activity. They account for nearly 70 percent of 
total imports from Chile and include: copper articles (19 
percent), mostly refined alloys; edible fruits and nuts (18 
percent), most of which are grapes; fish (15 percent), mostly 
salmon; wood (13 percent), various types of lumber; and 
beverages (4 percent), virtually all wine.\7\
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    \5\ See U.S. Trade Balance With Chile, U.S. Census Bureau, Foreign 
Trade Division, U.S. Dept. of Commerce, .
    \6\ See Id.
    \7\ Inter-American Development Bank (IDB), Integration and Trade in 
the Americas: Periodic Note, December 2000, .
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    Last month, the United States International Trade 
Commission (ITC) released a comprehensive study assessing the 
likely impact of the U.S.-Chile FTA on the U.S. economy, 
providing both quantitative and qualitative estimates of the 
FTA's possible effects. The overall estimate of the ITC study 
was that by 2016, when the full effect of tariff eliminations 
would be felt, U.S. exports to Chile would increase in a range 
between 18 percent and 52 percent and U.S. imports would rise 
between 6 percent and 14 percent. The study notes that this 
flow of goods would be very small relative to total U.S. trade 
and that the economy-wide effects on trade, production, and 
overall economic welfare would be small to negligible (in a 
range of negative 0.001 percent to a positive 0.003 percent of 
GDP).\8\
---------------------------------------------------------------------------
    \8\ U.S.-Chile Free Trade Agreement: Potential Economywide and 
Selected Sectoral Effects, U.S. Intl. Trade Comm., Publication 3605, 
(June 2003), .
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Summary of U.S.-Chile FTA Provisions Pertaining to the Jurisdiction of 
        the Committee on the Judiciary
    Although the Committee's formal legislative consideration 
of H.R. 2738 was limited to title IV of the legislation, which 
implemented changes to United States immigration law, the U.S.-
Chile FTA also contained intellectual property and competition 
chapters that fall within the jurisdiction of the Committee.
Intellectual Property Rights (IPR)
    Chile is a signatory to the Trade Related Intellectual 
Property Rights (TRIPS), but has not yet ratified its 
implementing provisions. In addition, Chile has signed two 
World Intellectual Property Organization (WIPO) treaties, but 
has also not fully complied with these obligations. The U.S.-
Chile FTA reaffirms obligations under TRIPS and adds another 
layer of protection which would potentially increase revenues 
to a number of industries including: motion picture, sound 
recording, business software, book publishing, pharmaceuticals, 
and agricultural chemicals.\9\
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    \9\ Supra, note 5, at 109 and 118.
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    Chapter 17 of the Agreement requires Chile to ratify or 
accede to several international IPR agreements, including the 
International Convention for the Protection of New Varieties of 
Plants (UPOV 1991), the Trademark Law Treaty, the Brussels 
Convention relating to the Distribution of Program-Carrying 
Satellite Signals, and the Patent Cooperation Treaty. The FTA 
also enhances enforcement of intellectual property rights. Non-
discrimination obligations apply to all types of intellectual 
property. The FTA ensures government involvement in resolving 
disputes between trademarks and Internet domain names 
(important to prevent ``cyber-squatting'' of trademarked domain 
names). It also applies the principle of ``first-in-time, 
first-in-right'' to trademarks and geographical indicators 
(place-names) applied to products.
    The Agreement streamlines the trademark filing process by 
allowing applicants to use their own national patent/trademark 
offices for filing trademark applications. The FTA ensures that 
only authors, composers, and other copyright owners have the 
right the make their works available online. Copyright owners 
maintain rights to temporary copies of their works on 
computers. Copyrighted works and phonograms are protected for 
extended terms, consistent with U.S. standards and 
international trends. The FTA also contains anti-circumvention 
provisions aimed at preventing tampering with technologies 
(such as embedded codes on discs) that are designed to prevent 
piracy and unauthorized distribution over the Internet. It also 
ensures that governments use only legitimate computer software 
(in order to set a positive example for private users). Chile 
is to prohibit the production of optical discs (CDs, DVDs or 
software) without a source identification code unless 
authorized by the copyright holder in writing.
    Under the FTA, protection for encrypted program-carrying 
satellite signals extends to the signals themselves as well as 
the programming. This is designed to prevent piracy of 
satellite television programming. Both sides agreed to 
criminalize unauthorized reception and redistribution of 
satellite signals. The Agreement also contains limited 
liability for Internet Service Providers (ISPs)--reflecting the 
balance struck in the U.S. Digital Millennium Copyright Act 
between legitimate ISP activity and the infringement of 
copyrights. In essence, both sides are to provide immunity to 
Internet service providers for complying with notification and 
take-down procedures when material suspected to be infringing 
on copyright is hosted on their servers. The FTA provides for a 
patent term to be extended to compensate for up-front 
administrative or regulatory delays in granting the original 
patent, consistent with U.S. practice. The grounds for revoking 
a patent are limited to the same grounds required to originally 
refuse a patent. This is to protect against arbitrary 
revocation.
    The Agreement provides further protections for patents 
covering biotech plants and animals. Chile is to accede to the 
International Convention for the Protection of New Varieties of 
Plants. It also provides for protection against imports of 
pharmaceutical products without a patent-holder's consent by 
allowing lawsuits when contracts are breached. Under the FTA, 
test data and trade secrets submitted to a government for the 
purpose of product approval are to be protected against 
disclosure for a period of 5 years for pharmaceuticals and 10 
years for agricultural chemicals. The FTA also closes potential 
loopholes to these provisions and is designed to ensure that 
government marketing-approval agencies will not grant approval 
to patent-violating products.
    In addition, the Agreement provides for criminal penalties 
for companies that make pirated copies from legitimate 
products. The Chilean government guarantees that it has 
authority to seize, forfeit, and destroy counterfeit and 
pirated goods and the equipment used to produce them. IPR laws 
are to be enforced against traded goods, including trans-
shipments, to deter violators from using U.S. or Chilean ports 
or free-trade zones to traffic in pirated products. The FTA 
mandates both statutory and actual damages under Chilean law 
for IPR violations (as a deterrent against piracy) and provides 
that monetary damages be awarded even if actual economic harm 
(retail value, profits made by violators) cannot be determined. 
Chile is to cooperate in preventing pirated and counterfeit 
goods from being imported into the United States. Finally, the 
FTA sharply restricts Chile from using compulsory licenses to 
copy patented drugs and sets up new barriers to the import of 
patented drugs sold at lower prices in third countries.
Competition Policy/Antitrust
    H.R. 2738 contains no changes to United States antitrust 
law. However, a summary of provisions related to competition/
antitrust contained in the U.S.-Chile FTA is set forth below.
    Chapter 16 of the Agreement helps ensure that the 
opportunities created by trade liberalization are supported by 
healthy competitive domestic markets, allowing the firms of 
each country to compete unhampered by anticompetitive business 
conduct in either country's territory. Firms that are subject 
to antitrust enforcement action will be guaranteed some basic 
procedural safeguards. Since these protections already exist in 
the United States, no changes to United States law are 
necessary. While state monopolies and state enterprises do not 
account for a significant portion of either country's economy, 
the provisions governing these entities will help eliminate the 
potential for either party to favor domestic firms in the sale 
or purchase of goods and services.
    Specifically, chapter 16 ensures that both countries:

         LEnforce domestic antitrust law that prohibits 
        anticompetitive business conduct;

         LCooperate in the enforcement of antitrust 
        law;

         LEnsure that any private or public monopolies 
        designated by either country, and any state 
        enterprises, be subject to disciplinary action for 
        abusing their status or otherwise discriminating in a 
        manner that harms the interests of the other country.

         LExplicitly recognize that anticompetitive 
        conduct threatens the free flow of bilateral trade and 
        investment, and seek to secure the benefits of the FTA 
        by prohibiting such conduct, encouraging economically 
        sound competition policies, and furthering transparency 
        and cooperation;

         LExpand NAFTA's competition provisions by 
        affirming that antitrust laws be enforced in a neutral 
        manner that does not discriminate on the basis of 
        nationality;

         LEnsure basic procedural rights for firms that 
        are subject to antitrust enforcement actions: each 
        country will provide a right to be heard and to present 
        evidence before imposing a sanction or remedy;

         LProvide for consultations and further 
        transparency by allowing either country to request from 
        the other specific public information regarding 
        antitrust enforcement activity, official monopolies and 
        state enterprises, and any exemptions from their 
        antitrust laws.

    Finally, it is important to note that the provisions 
regarding antitrust law and enforcement are not subject to 
dispute settlement.
Temporary Entry
    Title IV of the pre-introduction draft implementing 
legislation for the U.S.-Chile FTA that the Administration 
forwarded to the Committee for its ``mock markup'' on July 10, 
2003, effectuated U.S. commitments under chapter 14 of the 
U.S.-Chile FTA pertaining to the temporary entry of business 
persons. However, this draft legislation was considerably 
amended during the Committee's ``mock markup'' on July 10, 
2003. These Committee recommendations were then incorporated 
into the introduced version of H.R. 2738. These changes are 
highlighted in the ``Pre-Introduction `Mock Markup' of U.S.-
Chile FTA Implementing Legislation and Committee Amendments 
Incorporated Into H.R. 2738'' section of this report.
    In general, chapter 14 of the U.S.-Chile FTA is consistent 
with existing provisions of the Immigration and Nationality Act 
(``INA''). The four categories of persons eligible for 
admission under the Agreement's expedited procedures correspond 
to existing INA nonimmigrant and related classifications.
    In order to provide for the admission of business visitors 
and intra-company transferees, no changes in U.S. statutes are 
required. Limited technical changes are needed to provide for 
the admission of traders and investors and professionals. 
Legislation is also required to implement article 14.3(2) of 
the Agreement regarding labor disputes.
            Traders and Investors
    Under Section B of Annex 14.3 of the Agreement, citizens of 
Chile are eligible for temporary entry as traders and 
investors. This category provides for admission under 
requirements identical to those governing admission under INA 
Sec. 101(a)(15)(E) (8 U.S.C. Sec. 1101(a)(15)(E)), which 
permits entry for persons to carry on substantial trade in 
goods or services or to develop and direct investment 
operations.
    Section 101(a)(15)(E) of the INA currently conditions 
admission into the United States upon authorization pursuant to 
a treaty of commerce and navigation. Since the Agreement is not 
a treaty of commerce and navigation, and no such treaty exists 
between the United States and Chile, legislation is necessary 
to accord treaty trader and investor status to Chilean citizens 
qualifying for entry under Section B.
    Section 401 of the draft legislation did not amend section 
101(a)(15)(E). Instead, it used a mechanism similar to that 
provided in Sec. 341(a) of the North American Free Trade 
Agreement Implementation Act, which in turn was based upon the 
Act of June 18, 1954 (68 Stat. 264, 8 U.S.C. Sec. 1184(a)). The 
Act of June 18, 1954 conferred treaty trader and investor 
status upon nationals of the Philippines on a reciprocal basis 
secured by an agreement entered into by the President of the 
United States and the President of the Philippines.
            Professionals
    Section 402(a) of the draft bill amended Sec. 101(a)(15) of 
the INA (8 U.S.C. Sec. 1101(a)(15)), which defines categories 
of persons entitled to enter the United States as 
nonimmigrants. Section 402(a) of the draft bill inserted a new 
subparagraph (W) at the end of INA Sec. 101(a)(15). 
Subparagraph (W) would have established a new category of 
aliens entitled to enter the United States temporarily as 
nonimmigrants. These aliens would have been citizens of 
countries with which the United States had entered into free 
trade agreements and who sought to come to the United States 
temporarily to engage in business activities at the 
professional level. Entry into the United States under 
subparagraph (W) would have been subject to regulations issued 
by the Secretary of Homeland Security implementing numerical 
limitations provided for in the applicable agreement, as set 
forth in new paragraph (8) of INA Sec. 214(g), as added by the 
bill. The Department of Labor would have issued regulations 
governing temporary entry of professionals under this proposed 
provision of law. This amendment to the INA would have 
implemented Section D of Annex 14.3 of the Agreement.
    New INA Sec. 101(a)(15)(W) also provided for the entry of 
spouses and children accompanying or following to join business 
persons entering under this category. The purpose of this 
provision was to grant express authorization for current 
Immigration and Naturalization Service practice, which is to 
admit such persons, but not allow them to be employed in the 
United States unless they independently met all applicable INA 
requirements.
    Persons seeking temporary entry into the United States 
under Sec. 101(a)(15)(W) would have been:

         Lconsidered to be seeking nonimmigrant status;

         Lsubject to general requirements relating to 
        admission of nonimmigrants, including those pertaining 
        to the issuance of entry documents and the presumption 
        set out in INA Sec. 214(b) (8 U.S.C. Sec. 1184(b)); and

         Laccorded nonimmigrant status on admission.

    It should be noted that while there are many similarities 
in the way professionals would have been treated under 
Sec. 101(a)(15)(W) of the INA, as proposed by the bill, and the 
way H-1B professionals are treated, a determination of 
admissibility under subparagraph (W) would have neither 
foreclosed nor established eligibility for entry as an H-1B 
professional. Further, Sec. 101(a)(15)(W) would not have 
authorized a professional to establish a business or practice 
in the United States in which the professional will be self-
employed.
            Numerical Limitations
    Paragraph six of Section D of Annex 14.3 of the Agreement 
permits the United States to establish an annual numerical 
limit on temporary entries under the Agreement of Chilean 
professionals. Under the proposed paragraph (8) of INA 
Sec. 214(g) that would have been added by Sec. 402(a) of the 
draft bill, the Secretary of Homeland Security would have 
issued regulations establishing an annual limit of up to 1,400 
new temporary entry applications from Chilean professionals, as 
provided in Appendix 14.3(D)(6) of the Agreement.
            Labor Attestations
    Under Sec. (D)(5) of Annex 14.3 of the Agreement, the 
United States may require that an attestation of compliance 
with labor and immigration laws be made a condition for the 
temporary entry of Chilean professionals. This provision allows 
U.S. labor and immigration officials to ensure that U.S. 
employers are not hiring Chilean professionals as a way to put 
pressure on U.S. employees to accept lower wages or less 
favorable terms and conditions of employment.
    Section 402(b) of the draft legislation would have 
implemented the attestation requirement under the Agreement. 
Section 402(b) of the draft bill would have amended Sec. 212 of 
the INA (8 U.S.C. Sec. 1182) by adding a new subsection (s) to 
the end of that section. INA Sec. 212(s)(1), which would have 
been added by Sec. 402(b) of the bill, required a U.S. employer 
seeking a temporary entry visa for a Chilean professional to 
file an attestation with the Secretary of Labor. The 
attestation would have consisted of four core elements similar 
to those required for attestations under the ``H-1B'' visa 
program. See 8 U.S.C. Sec. 1182(n)(1)(A)-(C). Thus, an employer 
would have been required to attest that:

         LIt would pay the employee the higher of: (a) 
        the actual wage paid to all other individuals with 
        similar experience and qualifications for the specific 
        employment in question, or (b) the prevailing wage 
        level for the occupational classification in the area 
        of employment.

         LIt will provide working conditions for the 
        employee that will not adversely affect the working 
        conditions of workers similarly employed.

         LThere is no strike or lockout in the course 
        of a labor dispute in the occupational classification 
        at the place of employment.

         LThe employer has provided notice of its 
        attestation to its employees' bargaining representative 
        in the occupational classification in the area for 
        which the employee is sought or, absent such a 
        representative, has otherwise notified its employees.

    The remainder of new INA Sec. 212(s) contains provisions 
for enforcing the labor attestation requirement. Like the 
contents of the attestation itself, the enforcement 
requirements are based on requirements under the ``H-1B'' visa 
program. INA Sec. 212(s)(2)(A) requires an employer to make 
copies of labor attestations (and such accompanying documents 
as are necessary) available for public examination at the 
employer's principal place of business or worksite. INA 
Sec. 212(s)(2)(B) requires the Secretary of Labor to compile a 
list of all labor attestations filed including, with respect to 
each attestation, the wage rate, number of alien professionals 
sought for employment, period of intended employment, and date 
of need. INA Sec. 212(s)(2)(C) provides that the Secretary of 
Labor shall accept a labor attestation within 7 days of filing 
and issue the certification necessary for an alien to enter the 
United States as a nonimmigrant under INA Sec. 101(a)(15)(W), 
unless the attestation is incomplete or obviously inaccurate.
    INA Sec. 212(s)(3)(A) requires the Secretary of Labor to 
establish a process for the receipt, investigation, and 
disposition of complaints respecting an employer's failure to 
meet a condition specified in a labor attestation or an 
employer's misrepresentation of material facts in such an 
attestation. Section 212(s)(3) also sets forth penalties that 
may be imposed for violation of the labor attestation 
requirements, including monetary fines and denial of 
applications for visas under INA section 101(a)(15)(W) for 
specified periods. INA Sec. 212(s)(4) defines certain terms 
used in INA Sec. 212(s).
            Labor Disputes
    Article 14.3(2) of the Agreement establishes an important 
safeguard for the domestic labor force in the United States and 
Chile, respectively. It permits either government to refuse to 
issue an immigration document authorizing employment where the 
temporary entry of a business person might affect adversely the 
settlement of a labor dispute or the employment of a person 
involved in such dispute. Article 14.3(2) thus allows the 
United States to deny temporary entry to a Chilean business 
person whose activities in the United States require employment 
authorization if admission might interfere with an ongoing 
labor dispute. If the United States invokes article 14.3(2), it 
must inform the business person in writing of the reasons for 
its action and notify Chile.
    Section 403 of the draft bill implements article 14.3(2) of 
the Agreement by amending INA Sec. 214(j) (8 U.S.C. 
Sec. 1184(j)), designating current subsection (j) as paragraph 
(1) and inserting a new paragraph (2). New paragraph (2) of INA 
Sec. 214(j) provides authority to refuse nonimmigrant 
classification under specified circumstances to a Chilean 
business person seeking to enter the United States under and 
pursuant to the Agreement. In particular, nonimmigrant 
classification must be refused if there is a strike or lockout 
affecting the relevant occupational classification at the 
Chilean business person's place of employment or intended place 
of employment in the United States, unless that person 
establishes, pursuant to regulations issued by the Secretary of 
Homeland Security after consultations with the Secretary of 
Labor, that the business person's entry will not adversely 
affect the settlement of the strike or lockout or the 
employment of any person involved in the strike or lockout.
    New paragraph (2) also requires the provision of notice to 
the affected Chilean business persons and to Chile of a 
determination to deny nonimmigrant classification, as required 
under article 14.3(3) of the Agreement. INA Sec. 214(j)(2) as 
inserted by the bill applies only to requests for temporary 
entry by traders and investors, intra-company transferees, and 
professionals--i.e., the categories of nonimmigrants that 
require employment authorization under U.S. law (corresponding 
to Sections B, C, and D of Annex 14.3 of the Agreement). 
Employment in the U.S. labor market is not permitted for 
business visitors, as defined in INA Sec. 101(a)(15)(B) (8 
U.S.C. 1101(a)(15)(B)) (corresponding to Section A of Annex 
14.3 of the Agreement); violations of status under that 
provision that involve labor disputes are fully redressable 
under existing law.
    Section 214(j)(2) is similar to existing INA provisions 
that prohibit admission in certain circumstances where 
interference with a labor dispute may result. For example, 
under INA Sec. 212(n)(1)(B) (8 U.S.C. Sec. 1182(n)(1)(B)), the 
U.S. employer sponsoring an alien for admission must certify 
that there is no strike or lockout in the occupational 
classification at the place of employment. Additionally, 
Sec. 214(j)(2) will supplement INA Sec. 237(a)(1)(C) (8 U.S.C. 
1227(a)(1)(C)) and related INA provisions that now authorize 
deportation of an alien admitted under a particular 
nonimmigrant category if the alien ceases to perform the type 
of work permitted under that category or misrepresented the 
nature of the work at the time of admission. The Department of 
Labor will provide strike certifications to the Department of 
Homeland Security, as it has provided to the Immigration and 
Naturalization Service under existing provisions, pursuant to 8 
C.F.R. 214.2(h)(17).
            Administrative Action
    Chile will be added to the list of countries, maintained by 
the Department of State, whose citizens are eligible for treaty 
trader and treaty investor status under INA Sec. 101(a)(15)(E). 
With respect to professionals provided for under Section D of 
Annex 14.3 of the Agreement, in all cases where a state license 
is required to engage in a particular activity in the United 
States, such professionals will be required to obtain the 
appropriate state license. Pursuant to INA Sec. 101(a)(15)(W) 
as added by section 402(a) of the bill, the Secretary of 
Homeland Security will issue regulations implementing the 
numerical limits set forth in Appendix 14.3(D)(6) of the 
Agreement. The Secretary of Labor would have issued regulations 
implementing the labor attestation provisions in new subsection 
(s) of INA Sec. 212. The administrative agencies responsible 
for administering the other amendments to the INA described 
above will promulgate regulations to implement those 
amendments.
Pre-Introduction ``Mock Markup'' of U.S.-Chile FTA Implementing 
        Legislation and Committee Amendments Incorporated Into H.R. 
        2738
    On July 10, 2003, the Committee held a pre-introduction 
``mock markup'' of draft implementing legislation submitted by 
the Administration to the Committee. The Committee's 
consideration of this draft legislation was limited to title IV 
of the draft implementing legislation. During this meeting, 
Chairman Sensenbrenner, Ranking Member Conyers, and several 
Members of the Committee made it clear that they opposed the 
inclusion of immigration provisions in H.R. 2738 and that they 
would not support any future FTA that included substantive 
changes to United States immigration law.
            Judiciary Committee Amendments to Draft Implementing 
                    Legislation
    The Committee reported several amendments to the 
immigration provisions by voice vote. The amendments were 
reflected in H.R. 2738.
    First, the Committee reported an amendment by 
Representative King to transfer the new ``W'' professional 
worker visa category for citizens of Chile to section 
101(a)(15)(H)(i)(b(1) of the Immigration and Nationality Act, 
rather than 101(a)(15)(W) as provided for in the draft 
implementing legislation. Representative King's amendment also 
ensured that in future years, the national H-1B visa cap will 
be reduced in two situations. First, the number of H-1B visas 
available in a fiscal year will be reduced by the number of 
Chilean citizens granted extensions of H-1B1 status in that 
fiscal year after having previously been granted five or more 
consecutive prior extensions. Second, the number of H-1B visas 
available in a fiscal year will be reduced by the number of H-
1B1 visas allocated (1,400 for citizens of Chile). However, if 
at the end of a fiscal year, the 6,800 slots reserved for 
citizens of Chile and Singapore have not been exhausted, the 
number of H-1B visas available for that fiscal year will be 
adjusted upwards by the number of unused Chile/Singapore visas. 
These newly available H-1B visas may be issued within the first 
45 days of the next fiscal year to aliens who had applied for 
such visas during the fiscal year for which the adjustment was 
made.
    The Committee also reported an amendment offered by 
Representatives Berman and Conyers requiring that an 
application for every second extension for an H-1B1 visa be 
accompanied by a new employer attestation. This will have the 
effect of requiring the employer to update the prevailing wage 
determination at such time. The amendment also requires that an 
employer pay a fee when H-1B1 status is initially granted and 
after every second extension of that status. The fee shall be 
the same as the fee an employer must pay when petitioning for 
an H-1B visa. However, if no fee is being assessed under the H-
1B program, no fee shall be imposed under the H-1B1 program.
    Finally, the implementing legislation now clarifies that an 
employer generally cannot sponsor an alien for an E, L, or H-
1B1 visa it there is any labor dispute occurring in the 
occupational classification at the place of employment, 
regardless of whether the labor dispute is classified as a 
strike or lockout. In this regard, worker protections in H.R. 
2738 are broader than those contained in the H-1B visa 
category.

                                Hearings

    No hearings were held on H.R. 2738 before the Committee on 
the Judiciary.

                        Committee Consideration

    On July 16, 2003, the Committee met in open session and 
ordered favorably reported the bill H.R. 2738 without amendment 
by voice vote, a quorum being present.

                         Vote of the Committee

    In compliance with clause 3(b) of Rule XIII of the Rules of 
the House of Representatives, the Committee notes that there 
were no recorded votes during the committee consideration of 
H.R. 2738.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of Rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of Rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of Rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 2738, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 21, 2003.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2738, a bill to 
implement the United States-Chile Free Trade Agreement.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Annabelle 
Bartsch, who can be reached at 226-2680.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 2738--A bill to implement the United States-Chile Free Trade 
        Agreement.

                                SUMMARY

    H.R. 2738 would approve the free trade agreement (FTA) 
between the government of the United States and the government 
of Chile that was entered into on June 6, 2003. It would 
provide for tariff reductions and other changes in law related 
to implementation of the agreement, such as provisions dealing 
with dispute settlement, rules of origin, and safeguard 
measures for textile and apparel industries. The bill also 
would allow the temporary entry of certain business persons 
into the United States.
    The Congressional Budget Office estimates that enacting the 
bill would reduce revenues by $5 million in 2004, by $38 
million over the 2004-2008 period, and by $109 million over the 
2004-2013 period, net of income and payroll tax offsets. The 
bill would not have a significant effect on direct spending or 
spending subject to appropriation. CBO has determined that H.R. 
2738 contains no intergovernmental or private-sector mandates 
as defined in the Unfunded Mandates Reform Act (UMRA) and would 
not affect the budgets of State, local, or tribal governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 2738 is shown in the 
following table.


                           BASIS OF ESTIMATE

Revenues
    Under the United States-Chile agreement, all tariffs on 
U.S. imports from Chile would be phased out over time. The 
tariffs would be phased out for individual products at varying 
rates according to one of several different timetables ranging 
from immediate elimination to partial elimination over 10 
years. According to the U.S. International Trade Commission 
(USITC), the U.S. collected $24 million in customs duties in 
2002 on about $3.6 billion of imports from Chile. These imports 
consist mostly of edible fruits and nuts, articles of wood or 
copper, fish and crustaceans, and certain organic chemicals. 
Based on these data, CBO estimates that phasing out tariff 
rates as outlined in the U.S.-Chile agreement would reduce 
revenues by $5 million in 2004, by $38 million over the 2004-
2008 period, and by $109 million over the 2004-2013 period, net 
of income and payroll tax offsets.
    This estimate includes the effects of increased imports 
from Chile that would result from the reduced prices of 
imported products in the United States, reflecting the lower 
tariff rates. It is likely that some of the increase in U.S. 
imports from Chile would displace imports from other countries. 
In the absence of specific data on the extent of this 
substitution effect, CBO assumes that an amount equal to one-
half of the increase in U.S. imports from Chile would displace 
imports from other countries.
    H.R. 2738 would also allow the Secretary of Labor to assess 
civil monetary penalties on employers for violations of the 
labor attestation process with respect to certain workers from 
Chile. CBO expects that any additional revenues collected as a 
result would amount to less than $500,000 in any year.
Direct Spending
    Title IV of the bill would establish a new nonimmigrant 
category for certain professional workers from Chile. The 
legislation would limit the number of annual entries under this 
category to 1,400, plus spouses and children. The Bureau of 
Citizenship and Immigration Services (BCIS) would charge fees 
of about $100 to provide nonimmigrant visas, so CBO estimates 
that the agency would collect less than $1 million annually in 
offsetting receipts (a credit against direct spending). The 
agency is authorized to spend such fees without further 
appropriation, so the net impact on BCIS spending would not be 
significant.
    Under current law, the Department of State also collects 
$100 application fee for nonimmigrant visas. These collections 
are spent on border security and consular functions. CBO 
estimates that the net budgetary impact would be less than 
$500,000 a year.
Spending Subject to Appropriation
    Title I of H.R. 2738 would authorize the appropriation the 
necessary funds for the Department of Commerce to pay the 
United States' share of the costs of the dispute settlement 
procedures established by the agreement. Based on information 
from the agency, CBO estimates that implementing this provision 
would cost $100,000 in 2004, and $250,000 in each of the 
following years, subject to the availability of appropriated 
funds.
    Title III would require the International Trade Commission 
(ITC) to investigate claims of injury to domestic industries as 
a result of the FTA. The ITC would have 120 days to determine 
whether a domestic industry has been injured, and if so, would 
recommend the necessary amount of import relief. The ITC would 
also submit a report on its determination to the President. 
According to the ITC, similar FTAs have resulted in only a 
handful of cases each year, at an average cost of about 
$200,000 per investigation. Based on this information, CBO 
estimates the bill would have no significant effect on spending 
subject to appropriation.

           SUMMARY OF EFFECT ON REVENUES AND DIRECT SPENDING

    The overall effects of H.R. 2738 on revenues and direct 
spending are shown in the following table.


              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    The bill contains no intergovernmental or private-sector 
mandates as defined in UMRA and would not affect the budgets of 
State, local, or tribal governments.

                         ESTIMATE PREPARED BY:

Federal Revenues: Annabelle Bartsch (226-2680)
Federal Spending:
  Dispute Settlements--Melissa Zimmerman (226-2860)
  Immigration--Mark Grabowicz (226-2860), Christi Hawley-Sadoti 
        (226-2820), and Sunita D'Monte (226-2840)
Impact on State, Local, and Tribal Governments: Melissa Merrell 
    (225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-0207)

                         ESTIMATE APPROVED BY:

G. Thomas Woodward
Assistant Director for Tax Analysis
Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    H.R. 2738 does not authorize funding. Therefore, clause 
3(c)(4) of Rule XIII of the Rules of the House of 
Representatives is inapplicable.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8 of the Constitution.

               Section-by-Section Analysis and Discussion

    The following section-by-section analysis describes the 
sections of H.R. 2738 within the rule X jurisdiction of the 
Committee on the Judiciary.

             TITLE IV. TEMPORARY ENTRY FOR BUSINESS PERSONS

    It should be emphasized that all grounds of inadmissibility 
found at section 212(a) of the Immigration and Nationality Act 
(INA), as the section currently exists or as it may be modified 
in the future, shall apply to any applicant for admission 
pursuant to title IV.
Sec. 401. Nonimmigrant Traders and Investors.
    ``E'' nonimmigrant visas are available for treaty traders 
and investors. A visa is available to an alien who:
    is entitled to enter the United States under and in 
pursuance of the provisions of a treaty of commerce and 
navigation between the United States and the foreign state of 
which he is a national, and the spouse and children of any such 
alien if accompanying or following to join him: i) solely to 
carry on substantial trade, including trade in services or 
trade in technology, principally between the United States and 
the foreign state of which he is a national, or ii) solely to 
develop and direct the operations of an enterprise in which he 
has invested . . . a substantial amount of capital[.]
            INA section 101(a)(15)(E).
    Section 401 of the bill provides that nationals of Chile 
(along with spouses and children, if accompanying or following 
to join), may, if otherwise eligible for a visa and admissible 
into the U.S., be considered to be classifiable as ``E'' 
nonimmigrants if entering solely for a purpose specified in 
clause (i) or (ii) of INA section 101(a)(15)(E). H.R. 2739 
contains a similar provision for nationals of Singapore.
Sec. 402. Nonimmigrant Professionals; Labor Attestations.
    Section 402 of the bill creates a new nonimmigrant 
classification--``H1B1''--at section 101(a)(15)(H)(i)(b1) of 
the INA. This classification, for nationals of Chile (and 
Singapore, as provided for in H.R. 2739), is generally derived 
from the ``H1B'' program, found at section 101(a)(15)(H)(i)(b). 
Already existing and future Executive Office for Immigration 
Review (Immigration Judges and the Board of Immigration 
Appeals) and Federal court precedent regarding the H-1B program 
shall be applicable to identical provisions of the H-1B1 
program, and shall be applicable to similar provisions where 
appropriate. In deciding whether to grant visas for aliens 
under the H-1B1 visas, State Department consular officers and 
supervising officers of the Department of Homeland Security 
shall be familiar with, and adhere to, this precedent.
    There are four principal differences between the H-1B 
program and the new H-1B1 program. First, the H-1B1 category 
has its own yearly numerical quota--1,400 for Chileans (and 
5,400 for Singaporeans, as contained in H.R. 2739). Second, 
under the H-1B1 program, there is no petition requirement. 
After the Department of Labor approves an employer's 
attestation, a State Department consular officer overseas will 
decide whether to grant visas to alien applicants, dependent in 
part on whether the prospective job meets the standards of a 
qualifying occupation and whether the alien meets the 
educational standards of a qualifying employee. Third, while an 
alien can be granted H-1B status for a maximum of 6 years which 
generally cannot be further extended, an alien will receive H-
1B1 status for a 1-year period, which may be extended in 1 year 
increments. Fourth, aliens seeking H-1B status do not have to 
prove, as most prospective nonimmigrants do, that they do not 
have an intent to become immigrants (see INA section 214(b)). 
Aliens seeking H-1B1 status will have to prove that they have 
no intent to become immigrants, as befits the purely temporary 
nature of visa provisions created as part of free trade 
agreements.
    H-1B1 visas are available for workers coming temporarily to 
the United States to perform services in a specialty 
occupation. Such an occupation is one that requires ``(A) 
theoretical and practical application of a body of specialized 
knowledge; and (B) attainment of a bachelor's or higher degree 
in the specific speciality (or its equivalent) as a minimum for 
entry into the occupation in the United States.'' This 
requirement is to be interpreted identically to the requirement 
to qualify as a professional under the H-1B category (except as 
regarding four professions listed in appendix 14.3(D)(2) of the 
U.S.-Chile Free Trade Agreement). Thus, to qualify as a 
professional for purposes of section 402, a person must be 
engaged in a specialty occupation requiring a theoretical and 
practical application of a body of highly specialized knowledge 
and the attainment of a bachelor's degree or higher in the 
specific specialty (or the equivalent of such a degree).
    H-1B1 visas shall authorize admission for 1 year. Such 
admission may be extended at the sole discretion of the 
Department of Homeland Security, but only in 1 year increments, 
and only if the alien is found to be in compliance with INA 
section 214(b). After every second extension of H-1B1 status, 
an application for a further extension must be accompanied by a 
new employer attestation. This will have the effect of 
requiring the employer to update the prevailing wage 
determination at such time.
    The total number of initial applications for admission 
under the H-1B1 program for Chilean nationals during any fiscal 
year is 1,400 (plus accompanying or following to join spouses 
and children). This will have the effect of reducing the H-1B 
visa quota in two ways. First, the number of aliens who may be 
issued visas or otherwise provided nonimmigrant status in a 
fiscal year under the H-1B program will be reduced by the 
maximum number of approvals of initial applications for 
admission permitted under the H-1B1 program in that fiscal 
year. However, if at the end of a fiscal year, the 1,400 
approvals for nationals of Chile (or the 5,400 for nationals of 
Singapore under H.R. 2739) have not been exhausted, the number 
of H-1B visas available for that fiscal year will be adjusted 
upwards by the number of unused Chile/Singapore visas. These 
newly available H-1B visas may be issued within the first 45 
days of the next fiscal year to aliens who had applied for such 
visas during the fiscal year for which the adjustment was made. 
Second, the number of aliens who may be issued visas or 
otherwise provided nonimmigrant status in a fiscal year under 
the H-1B program will be reduced by the number of extensions of 
H-1B1 status approved in that fiscal year to aliens who have 
previously been granted five or more consecutive prior 
extensions.
    As under the H-1B program, the H-1B1 program's mechanism 
for protecting American workers is not a lengthy pre-arrival 
review of the availability of suitable American workers (such 
as the labor certification process necessary to obtain most 
employer-sponsored immigrant visas). Instead, an employer files 
a ``labor condition attestation'' with the Department of Labor 
(identical to the labor condition application under the H-1B 
program) making certain basic attestations (promises) and the 
Department of Labor then investigates complaints alleging 
noncompliance.
    The H-1B1 program contains the four basic attestations of 
the H-1B1 program (found at INA sections 212(n)(1) for the H-1B 
program and at INA sections 212(t)(1) for the H-1B1 program):

         LThe employer will pay H-1B1 aliens wages that 
        are the higher of the actual wage level paid by the 
        employer to all other individuals with similar 
        experience and qualifications for the specific 
        employment in question or the prevailing wage level for 
        the occupational classification in the area of 
        employment, and the employer will provide working 
        conditions for H-1B1 aliens that will not adversely 
        affect those of workers similarly employed.

         LThere is no strike or lockout in the course 
        of a labor dispute in the occupational classification 
        at the place of employment.

         LAt the time of the filing of the application, 
        the employer has provided notice of the filing to the 
        bargaining representative of the employer's employees 
        in the occupational classification and area for which 
        the H-1B1 aliens are sought, or if there is no such 
        bargaining representative, the employer has posted 
        notice through such methods as physical posting in 
        conspicuous locations at the place of employment or 
        electronic notification to employees in the relevant 
        occupation classification.

         LThe attestation will contain a specification 
        of the number of aliens sought, the occupational 
        classification in which the aliens will be employed, 
        and the wage rate and conditions under which they will 
        be employed.

    There are two other attestations in the H-1B program that 
expire at the end of fiscal year 2003 that apply to specific 
employers, generally H-1B dependent employers. Should Congress 
decide to reauthorize these additional H-1B attestations and 
their enforcement mechanisms, or expand their scope, such as by 
requiring all employers to meet their terms, Congress can also 
make these changes applicable to the H-1B1 program. This is 
provided for specifically in annex 14.3(D)(5) of the U.S.-Chile 
Free Trade Agreement (``[A] party may require a business person 
seeking temporary entry [as a professional] to comply with 
procedures applicable to temporary entry of professionals, such 
as an attestation of compliance with the Party's labor and 
immigration laws.'') and similarly in the U.S.-Singapore Free 
Trade Agreement. More generally, should Congress extend or 
modify any provisions of the H-1B program, it may make 
corresponding modifications to the amendments to the INA made 
by this bill (and H.R. 2739), to the extent consistent with the 
obligations of the United States under the Agreement, as 
spelled out in side letters sent to the Chilean (and 
Singaporean) governments by Ambassador Zoellick. Thus, even 
though this implementing legislation does not include all 
requirements currently present in the H-1B visa program, 
Congress is not precluded from amending the INA to add 
additional requirements to the H1B1 program consistent with the 
H-1B program, such as the attestations for H-1B dependent 
employers (as mentioned, and found at INA section 212(n)(1)(E)-
(G)) or the self initiated investigations of employer 
compliance (found at INA section 212(n)(2)(G)).
    The enforcement scheme for the H-1B1 program is generally 
the same as that of the H-1B program (found at INA section 
212(n)(2) for the H-1B program and at INA section 212(t)(3) for 
the H-1B1 program). Department of Labor investigations as to 
whether an employer has failed to fulfill its promises or has 
misrepresented material facts in its attestation are triggered 
by complaints filed by aggrieved persons or organizations 
(including bargaining representatives). Investigations are to 
be conducted where there is reasonable cause to believe that a 
violation has occurred.
    An employer is subject to penalties for failing to fulfill 
the attestations--for willfully failing to pay the required 
wage, for there being a strike or lockout, for substantially 
failing to provide notice or provide all required information 
in an application, and for making a misrepresentation of 
material fact in an attestation. Penalties include 
administrative remedies (including civil monetary penalties of 
up to $35,000 per violation) that the Department of Labor 
determines to be appropriate and a bar for at least 1 year on 
the Department of State or the Department of Homeland 
Security's ability to approve petitions or applications filed 
by the employer for alien workers (both immigrant and 
nonimmigrant) (found at INA section 212(n)(2)(C) for the H-1B 
program and 212(t)(3)(C) for the H-1B1 program). In addition, 
the Department of Labor must order an employer to provide H-1B1 
nonimmigrants with back pay where wages were not paid at the 
required level, regardless of whether other penalties are 
imposed (found at INA section 212(n)(2)(D) for the H-1B program 
and INA section 212(t)(3)(D) for the H-1B program).
    Also included in the H-1B1 enforcement scheme is 1) the bar 
on retaliation (found at INA sections 212(n)(2)(C)(iv)-(v) for 
the H-1B program and at INA sections 212(t)(3)(C)(iv)-(v) for 
the H-1B1 program), 2) the ability of the Department of Labor 
to engage in random investigations in certain circumstances 
(found at INA section 212(n)(2)(D) for the H-1B program and at 
INA section 212(t)(3)(D) for the H-1B1 program), and 3) the 
preservation of any other enforcement authority under the INA 
(found at INA section 212(n)(2)(F) for the H-1B program and at 
INA section 212(t)(3)(F) for the H-1B1 program).
    Also included in the H-1B1 program are 1) the prohibition 
of an employer from seeking a penalty against an alien for 
ceasing employment (found at INA section 212(n)(2)(C)(vi) for 
the H-1B program and INA section 212(t)(3)(C)(vi) for the H-1B1 
program), 2) the prohibition of an employer from ``benching'' 
an alien (found at INA section 212(n)(2)(C)(vii) for the H-1B 
program and INA section 212(t)(3)(C)(vii) for the H-1B1 
program), 3) the requirement that an employer offer to an alien 
benefits and the eligibility for benefits on the same basis and 
criteria as the employer offers U.S. workers (found at INA 
section 212(n)(2)(C)(viii) for the H-1B program and INA section 
212(t)(3)(C)(viii) for the H-1B1 program), and 4) the special 
rule for computation of the prevailing wage for educational and 
research institutions (found at INA section 212(p) ).
    Under the H-1B1 program, an employer will have to pay a fee 
in order for an alien to be initially granted H-1B1 status and 
after every second extension of that status. The fee shall be 
the same as the fee an employer must pay when petitioning for 
an H-1B visa (currently $1,000 per alien). However, if no fee 
is being assessed under the H-1B program (the current fee 
expires at the end of the fiscal year), no fee shall be imposed 
under the H-1B1 program.
Sec. 403 Labor Disputes
    Section 403 of the bill provides that, except when 
superseded by the enhanced labor protections of the H-1B1 
program found at found at INA section 212(t)(1), an alien who 
seeks to enter the U.S. under and pursuant to the U.S.-Chile 
Free Trade Agreement (and the U.S-Singapore Free Trade 
Agreement as under H.R. 2739), and the spouse and children 
accompanying and following to join, may be denied admission as 
an ``E'', ``L'' or ``H1B1'' nonimmigrant if there is in 
progress a labor dispute in the occupational classification at 
the place or intended place of employment, unless the alien 
establishes that the alien's entry will not affect adversely 
the settlement of the labor dispute or the employment of any 
person who is involved in the labor dispute.
Section 404. Conforming Amendments
    Section 404 of the bill makes conforming amendments.

         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 italics, existing law in which no change 
is proposed is shown in roman):

                           TARIFF ACT OF 1930



           *       *       *       *       *       *       *
                     TITLE III--SPECIAL PROVISIONS

Part I--Miscellaneous

           *       *       *       *       *       *       *


SEC. 311. BONDED MANUFACTURING WAREHOUSES.

    All articles manufactured in whole or in part of imported 
materials, or of materials subject to internal-revenue tax, and 
intended for exportation without being charged with duty, and 
without having an internal-revenue stamp affixed thereto, 
shall, under such regulations as the Secretary of the Treasury 
may prescribe, in order to be so manufactured and exported, be 
made and manufactured in bonded warehouses similar to those 
known and designated in Treasury Regulations as bonded 
warehouses, class six: Provided, That the manufacturer of such 
articles shall first give satisfactory bonds for the faithful 
observance of all the provisions of law and of such regulations 
as shall be prescribed by the Secretary of the Treasury: 
Provided further, That the manufacture of distilled spirits 
from grain, starch, molasses, or sugar, including all dilutions 
or mixtures of them or either of them, shall not be permitted 
in such manufacturing warehouses.
    Whenever goods manufactured in any bonded warehouse 
established under the provisions of the preceding paragraph 
shall be exported directly therefrom or shall be duly laden for 
transportation and immediate exportation under the supervision 
of the proper officer who shall be duly designated for that 
purpose, such goods shall be exempt from duty and from the 
requirements relating to revenue stamps.
    No flour, manufactured in a bonded manufacturing warehouse 
from wheat imported from ninety days after the date of the 
enactment of this Act, shall be withdrawn from such warehouse 
for exportation without payment of a duty on such imported 
wheat equal to any reduction in duty which by treaty will apply 
in respect of such flour in the country to which it is to be 
exported.
    Any materials used in the manufacture of such goods, and 
any packages, coverings, vessels, brands, and labels used in 
putting up the same may, under the regulations of the Secretary 
of the Treasury, be conveyed without the payment of revenue tax 
or duty into any bonded manufacturing warehouse, and imported 
goods may, under the aforesaid regulations, be transferred 
without the exaction of duty from any bonded warehouse into any 
bonded manufacturing warehouse; but this privilege shall not be 
held to apply to implements, machinery, or apparatus to be used 
in the construction or repair of any bonded manufacturing 
warehouse or for the prosecution of the business carried on 
therein.
    Articles or materials received into such bonded 
manufacturing warehouse or articles manufactured therefrom may 
be withdrawn or removed therefrom for direct shipment and 
exportation or for transportation and immediate exportation in 
bond to foreign countries or to the Philippine Islands under 
the supervision of the officer duly designated therefor by the 
appropriate customs officer of the port, who shall certify to 
such shipment and exportation, or ladening for transportation, 
as the case may be, describing the articles by their mark or 
otherwise, the quantity, the date of exportation, and the name 
of the vessel: Provided, That the by-products incident to the 
processes of manufacture, including waste derived from cleaning 
rice in bonded warehouse under the Act of March 24, 1874, in 
said bonded warehouses may be withdrawn for domestic 
consumption on the payment of duty equal to the duty which 
would be assessed and collected by law if such waste or by-
products were imported from a foreign country: Provided, That 
all waste material may be destroyed under Government 
supervision. All labor performed and services rendered under 
these provisions shall be under the supervision of a duly 
designated officer of the customs and at the expense of the 
manufacturer.
    A careful account shall be kept by the appropriate custom 
officer of all merchandise delivered by him to any bonded 
manufacturing warehouse, and a sworn monthly return, verified 
by the customs officers in charge, shall be made by the 
manufacturer containing a detailed statement of all imported 
merchandise used by him in the manufacture of exported 
articles.
    Before commencing business the proprietor of any 
manufacturing warehouse shall file with the Secretary of the 
Treasury a list of all the articles intended to be manufactured 
in such warehouse, and state the formula of manufacture and the 
names and quantities of the ingredients to be used therein.
    Articles manufactured under these provisions may be 
withdrawn under such regulations as the Secretary of the 
Treasury may prescribe for transportation and delivery into any 
bonded warehouse for the sole purpose of export therefrom: 
Provided, That cigars manufactured in whole of tobacco imported 
from any one country, made and manufactured in such bonded 
manufacturing warehouses, may be withdrawn for home consumption 
upon the payment of the duties on such tobacco in its condition 
as imported under such regulations as the Secretary of the 
Treasury may prescribe, and the payment of the internal-revenue 
tax accruing on such cigars in their condition as withdrawn, 
and the boxes or packages containing such cigars shall be 
stamped to indicate their character, origin of tobacco from 
which made, and place of manufacture.
    The provisions of section 3433 of the Revised Statutes 
shall, so far as may be practicable, apply to any bonded 
manufacturing warehouse established under this Act and to the 
merchandise conveyed therein.
    Distilled spirits and wines which are rectified in bonded 
manufacturing warehouse, class six, and distilled spirits which 
are reduced in proof and bottled in such warehouses, shall be 
deemed to have been manufactured within the meaning of this 
section, and may be withdrawn as hereinbefore provided, and 
likewise for shipment in bond to Puerto Rico, subject to the 
provisions of this section, and under such regulations as the 
Secretary of the Treasury may prescribe, there to be withdrawn 
for consumption or be rewarehoused and subsequently withdrawn 
for consumption: Provided, That upon withdrawal in Puerto Rico 
for consumption, the duties imposed by the customs laws of the 
United States shall be collected on all imported merchandise 
(in its condition as imported) and imported containers used in 
the manufacture and putting up of such spirits and wines in 
such warehouses: Provided further, That no internal-revenue tax 
shall be imposed on distilled spirits and wines rectified in 
class six warehouses if such distilled spirits and wines are 
exported or shipped in accordance with the provisions of this 
section, and that no person rectifying distilled spirits or 
wines in such warehouses shall be subject by reason of such 
rectification to the payment of special tax as a rectifier.
    No article manufactured in a bonded warehouse from 
materials that are goods subject to NAFTA drawback, as defined 
in section 203(a) of the North American Free Trade Agreement 
Implementation Act, may be withdrawn from warehouse for 
exportation to a NAFTA country, as defined in section 2(4) of 
that Act, without assessment of a duty on the materials in 
their condition and quantity, and at their weight, at the time 
of importation into the United States. The duty shall be paid 
before the 61st day after the date of exportation, except that 
upon the presentation, before such 61st day, of satisfactory 
evidence of the amount of any customs duties paid to the NAFTA 
country on the article, the customs duty may be waived or 
reduced (subject to section 508(b)(2)(B)) in an amount that 
does not exceed the lesser of--
            (1) the total amount of customs duties paid or owed 
        on the materials on importation into the United States, 
        or
            (2) the total amount of customs duties paid on the 
        materials to the NAFTA country.
If Canada ceases to be a NAFTA country and the suspension of 
the operation of the United States-Canada Free-Trade Agreement 
thereafter terminates, no article manufactured in a bonded 
warehouse, except to the extent that such article is made from 
an article that is a drawback eligible good under section 
204(a) of the United States-Canada Free-Trade Agreement 
Implementation Act of 1988, may be withdrawn from such 
warehouse for exportation to Canada during the period such 
Agreement is in operation without payment of a duty on such 
imported merchandise in its condition, and at the rate of duty 
in effect, at the time of importation.
    No article manufactured in a bonded warehouse from 
materials that are goods subject to Chile FTA drawback, as 
defined in section 203(a) of the United States-Chile Free Trade 
Agreement Implementation Act, may be withdrawn from warehouse 
for exportation to Chile without assessment of a duty on the 
materials in their condition and quantity, and at their weight, 
at the time of importation into the United States. The duty 
shall be paid before the 61st day after the date of 
exportation, except that the duty may be waived or reduced by--
            (1) 100 percent during the 8-year period beginning 
        on January 1, 2004;
            (2) 75 percent during the 1-year period beginning 
        on January 1, 2012;
            (3) 50 percent during the 1-year period beginning 
        on January 1, 2013; and
            (4) 25 percent during the 1-year period beginning 
        on January 1, 2014.

SEC. 312. BONDED SMELTING AND REFINING WAREHOUSES.

    (a) * * *
    (b) The several charges against such bond may be canceled 
in whole or in part--
            (1) upon the exportation from the bonded warehouses 
        which treated the metal-bearing materials, or from any 
        other bonded smelting or refining warehouse, of a 
        quantity of the same kind of metal contained in any 
        product of smelting or refining of metal-bearing 
        materials equal to the dutiable quantity contained in 
        the imported metal-bearing materials less wastage 
        provided for in subsection (c); [except that in the 
        case of a withdrawal for exportation of such a product 
        to a NAFTA country, as defined in section 2(4) of the 
        North American Free Trade Agreement Implementation Act, 
        if any of the imported metal-bearing materials are 
        goods subject to NAFTA drawback, as defined in section 
        203(a) of that Act, the duties on the materials shall 
        be paid, and the charges against the bond canceled, 
        before the 61st day after the date of exportation; but 
        upon the presentation, before such 61st day, of 
        satisfactory evidence of the amount of any customs 
        duties paid to the NAFTA country on the product, the 
        duties on the materials may be waived or reduced 
        (subject to section 508(b)(2)(B)) in an amount that 
        does not exceed the lesser of--
                    [(A) the total amount of customs duties 
                owed on the materials on importation into the 
                United States, or
                    [(B) the total amount of customs duties 
                paid to the NAFTA country on the product, or] 
                except that--
                    (A) in the case of a withdrawal for 
                exportation of such a product to a NAFTA 
                country, as defined in section 2(4) of the 
                North American Free Trade Agreement 
                Implementation Act, if any of the imported 
                metal-bearing materials are goods subject to 
                NAFTA drawback, as defined in section 203(a) of 
                that Act, the duties on the materials shall be 
                paid, and the charges against the bond 
                canceled, before the 61st day after the date of 
                exportation; but upon the presentation, before 
                such 61st day, of satisfactory evidence of the 
                amount of any customs duties paid to the NAFTA 
                country on the product, the duties on the 
                materials may be waived or reduced (subject to 
                section 508(b)(2)(B)) in an amount that does 
                not exceed the lesser of--
                            (i) the total amount of customs 
                        duties owed on the materials on 
                        importation into the United States, or
                            (ii) the total amount of customs 
                        duties paid to the NAFTA country on the 
                        product, and
                    (B) in the case of a withdrawal for 
                exportation of such a product to Chile, if any 
                of the imported metal-bearing materials are 
                goods subject to Chile FTA drawback, as defined 
                in section 203(a) of the United States-Chile 
                Free Trade Agreement Implementation Act, the 
                duties on the materials shall be paid, and the 
                charges against the bond canceled, before the 
                61st day after the date of exportation, except 
                that the duties may be waived or reduced by--
                            (i) 100 percent during the 8-year 
                        period beginning on January 1, 2004,
                            (ii) 75 percent during the 1-year 
                        period beginning on January 1, 2012,
                            (iii) 50 percent during the 1-year 
                        period beginning on January 1, 2013, 
                        and
                            (iv) 25 percent during the 1-year 
                        period beginning on January 1, 2014, or

           *       *       *       *       *       *       *

            (4) upon the transfer of the bond charges to a 
        bonded customs warehouse other than a bonded smelting 
        or refining warehouse by physical shipment of a 
        quantity of the same kind of metal contained in any 
        product of smelting or refining equal to the dutiable 
        quantity contained in the imported metal-bearing 
        materials less wastage provided for in subsection (c), 
        and upon withdrawal from such other warehouse for 
        exportation or domestic consumption the provisions of 
        this section shall apply; [except that in the case of a 
        withdrawal for exportation of such a product to a NAFTA 
        country, as defined in section 2(4) of the North 
        American Free Trade Agreement Implementation Act, if 
        any of the imported metal-bearing materials are goods 
        subject to NAFTA drawback, as defined in section 203(a) 
        of that Act, the duties on the materials shall be paid, 
        and the charges against the bond canceled, before the 
        61st day after the date of exportation; but upon the 
        presentation, before such 61st day, of satisfactory 
        evidence of the amount of any customs duties paid to 
        the NAFTA country on the product, the duties on the 
        materials may be waived or reduced (subject to section 
        508(b)(2)(B)) in an amount that does not exceed the 
        lesser of--
                    [(A) the total amount of customs duties 
                owed on the materials on importation into the 
                United States, or
                    [(B) the total amount of customs duties 
                paid to the NAFTA country on the product, or] 
                except that--
                    (A) in the case of a withdrawal for 
                exportation of such a product to a NAFTA 
                country, as defined in section 2(4) of the 
                North American Free Trade Agreement 
                Implementation Act, if any of the imported 
                metal-bearing materials are goods subject to 
                NAFTA drawback, as defined in section 203(a) of 
                that Act, the duties on the materials shall be 
                paid, and the charges against the bond 
                canceled, before the 61st day after the date of 
                exportation; but upon the presentation, before 
                such 61st day, of satisfactory evidence of the 
                amount of any customs duties paid to the NAFTA 
                country on the product, the duties on the 
                materials may be waived or reduced (subject to 
                section 508(b)(2)(B)) in an amount that does 
                not exceed the lesser of--
                            (i) the total amount of customs 
                        duties owed on the materials on 
                        importation into the United States, or
                            (ii) the total amount of customs 
                        duties paid to the NAFTA country on the 
                        product, and
                    (B) in the case of a withdrawal for 
                exportation of such a product to Chile, if any 
                of the imported metal-bearing materials are 
                goods subject to Chile FTA drawback, as defined 
                in section 203(a) of the United States-Chile 
                Free Trade Agreement Implementation Act, the 
                duties on the materials shall be paid, and the 
                charges against the bond canceled, before the 
                61st day after the date of exportation, except 
                that the duties may be waived or reduced by--
                            (i) 100 percent during the 8-year 
                        period beginning on January 1, 2004,
                            (ii) 75 percent during the 1-year 
                        period beginning on January 1, 2012,
                            (iii) 50 percent during the 1-year 
                        period beginning on January 1, 2013, 
                        and
                            (iv) 25 percent during the 1-year 
                        period beginning on January 1, 2014, or

           *       *       *       *       *       *       *

    (d) Upon the exportation of a product of smelting or 
refining other than refined metal the bond shall be credited 
with a quantity of metal equivalent to the quantity of metal 
contained in the product exported less the proportionate part 
of the deductions allowed for losses in determination of the 
bond charge being cancelled that would not ordinarily be 
sustained in production of the specific product exported as 
ascertained from time to time by the Secretary of the Treasury; 
[except that in the case of a withdrawal for exportation to a 
NAFTA country, as defined in section 2(4) of the North American 
Free Trade Agreement Implementation Act, if any of the imported 
metal-bearing materials are goods subject to NAFTA drawback, as 
defined in section 203(a) of that Act, charges against the bond 
shall be paid before the 61st day after the date of 
exportation; but upon the presentation, before such 61st day, 
of satisfactory evidence of the amount of any customs duties 
paid to the NAFTA country on the product, the bond shall be 
credited (subject to section 508(b)(2)(B)) in an amount not to 
exceed the lesser of--
            [(1) the total amount of customs duties paid or 
        owed on the materials on importation into the United 
        States, or
            [(2) the total amount of customs duties paid to the 
        NAFTA country on the product.] except that--
            (1) in the case of a withdrawal for exportation to 
        a NAFTA country, as defined in section 2(4) of the 
        North American Free Trade Agreement Implementation Act, 
        if any of the imported metal-bearing materials are 
        goods subject to NAFTA drawback, as defined in section 
        203(a) of that Act, charges against the bond shall be 
        paid before the 61st day after the date of exportation; 
        but upon the presentation, before such 61st day, of 
        satisfactory evidence of the amount of any customs 
        duties paid to the NAFTA country on the product, the 
        bond shall be credited (subject to section 
        508(b)(2)(B)) in an amount not to exceed the lesser 
        of--
                    (A) the total amount of customs duties paid 
                or owed on the materials on importation into 
                the United States, or
                    (B) the total amount of customs duties paid 
                to the NAFTA country on the product; and
            (2) in the case of a withdrawal for exportation to 
        Chile, if any of the imported metal-bearing materials 
        are goods subject to Chile FTA drawback, as defined in 
        section 203(a) of the United States-Chile Free Trade 
        Agreement Implementation Act, charges against the bond 
        shall be paid before the 61st day after the date of 
        exportation, and the bond shall be credited in an 
        amount equal to--
                    (A) 100 percent of the total amount of 
                customs duties paid or owed on the materials on 
                importation into the United States during the 
                8-year period beginning on January 1, 2004,
                    (B) 75 percent of the total amount of 
                customs duties paid or owed on the materials on 
                importation into the United States during the 
                1-year period beginning on January 1, 2012,
                    (C) 50 percent of the total amount of 
                customs duties paid or owed on the materials on 
                importation into the United States during the 
                1-year period beginning on January 1, 2013, and
                    (D) 25 percent of the total amount of 
                customs duties paid or owed on the materials on 
                importation into the United States during the 
                1-year period beginning on January 1, 2014.

           *       *       *       *       *       *       *


SEC. 313. DRAWBACK AND REFUNDS.

    (a) * * *

           *       *       *       *       *       *       *

    (j) Unused Merchandise Drawback.--
            (1) * * *

           *       *       *       *       *       *       *

            (4)(A) Effective upon the entry into force of the 
        North American Free Trade Agreement, the exportation to 
        a NAFTA country, as defined in section 2(4) of the 
        North American Free Trade Agreement Implementation Act, 
        of merchandise that is fungible with and substituted 
        for imported merchandise, other than merchandise 
        described in paragraphs (1) through (8) of section 
        203(a) of that Act, shall not constitute an exportation 
        for purposes of paragraph (2).
            (B) Beginning on January 1, 2015, the exportation 
        to Chile of merchandise that is fungible with and 
        substituted for imported merchandise, other than 
        merchandise described in paragraphs (1) through (5) of 
        section 203(a) of the United States-Chile Free Trade 
        Agreement Implementation Act, shall not constitute an 
        exportation for purposes of paragraph (2). The 
        preceding sentence shall not be construed to permit the 
        substitution of unused drawback under paragraph (2) of 
        this subsection with respect to merchandise described 
        in paragraph (2) of section 203(a) of the United 
        States-Chile Free Trade Agreement Implementation Act.

           *       *       *       *       *       *       *

    [(n)] (n) Refunds, Waivers, or Reductions Under Certain 
Free Trade Agreements.--(1) For purposes of this subsection and 
subsection (o)--
            (A) * * *
            (B) the terms ``NAFTA country'' and ``good subject 
        to NAFTA drawback'' have the same respective meanings 
        that are given such terms in sections 2(4) and 203(a) 
        of the NAFTA Act; [and]
            (C) a refund, waiver, or reduction of duty under 
        paragraph (2) of this subsection or paragraph (1) of 
        subsection (o) is subject to section 508(b)(2)(B)[.]; 
        and
            (D) the term ``good subject to Chile FTA drawback'' 
        has the meaning given that term in section 203(a) of 
        the United States-Chile Free Trade Agreement 
        Implementation Act.

           *       *       *       *       *       *       *

    (4)(A) For purposes of subsections (a), (b), (f), (h), 
(j)(2), (p), and (q), if an article that is exported to Chile 
is a good subject to Chile FTA drawback, no customs duties on 
the good may be refunded, waived, or reduced, except as 
provided in subparagraph (B).
    (B) The customs duties referred to in subparagraph (A) may 
be refunded, waived, or reduced by--
            (i) 100 percent during the 8-year period beginning 
        on January 1, 2004;
            (ii) 75 percent during the 1-year period beginning 
        on January 1, 2012;
            (iii) 50 percent during the 1-year period beginning 
        on January 1, 2013; and
            (iv) 25 percent during the 1-year period beginning 
        on January 1, 2014.
    [(o)] (o) Special Rules for Certain Vessels and Imported 
Materials.--(1) For purposes of subsection (g), if--
            (A) * * *

           *       *       *       *       *       *       *

    (3) For purposes of subsection (g), if--
            (A) a vessel is built for the account and ownership 
        of a resident of Chile or the Government of Chile, and
            (B) imported materials that are used in the 
        construction and equipment of the vessel are goods 
        subject to Chile FTA drawback, as defined in section 
        203(a) of the United States-Chile Free Trade Agreement 
        Implementation Act,
no customs duties on such materials may be refunded, waived, or 
reduced, except as provided in paragraph (4).
    (4) The customs duties referred to in paragraph (3) may be 
refunded, waived or reduced by--
            (A) 100 percent during the 8-year period beginning 
        on January 1, 2004;
            (B) 75 percent during the 1-year period beginning 
        on January 1, 2012;
            (C) 50 percent during the 1-year period beginning 
        on January 1, 2013; and
            (D) 25 percent during the 1-year period beginning 
        on January 1, 2014.

           *       *       *       *       *       *       *


SEC. 508. RECORDKEEPING.

    (a) * * *
    (b) [Exportations to Free Trade Countries.--] Exportations 
to NAFTA Countries.--
            (1) * * *
            (2) Exports to nafta countries.--
                    (A) * * *
                    (B) Claims for certain waivers, reductions, 
                or refunds of duties or for credit against 
                bonds.--
                            (i) In general.--Any person that 
                        claims with respect to an article--
                                    (I) a waiver or reduction 
                                of duty under [the last 
                                paragraph of section 311] the 
                                eleventh paragraph of section 
                                311, section 312(b)(1) or (4), 
                                section 562(2), or [the last 
                                proviso to section 3(a)] the 
                                proviso preceding the last 
                                proviso to section 3(a) of the 
                                Foreign Trade Zones Act;

           *       *       *       *       *       *       *

    (f) Certificates of Origin for Goods Exported Under the 
United States-Chile Free Trade Agreement.--
            (1) Definitions.--In this subsection:
                    (A) Records and supporting documents.--The 
                term ``records and supporting documents'' 
                means, with respect to an exported good under 
                paragraph (2), records and documents related to 
                the origin of the good, including--
                            (i) the purchase, cost, and value 
                        of, and payment for, the good;
                            (ii) if applicable, the purchase, 
                        cost, and value of, and payment for, 
                        all materials, including recovered 
                        goods, used in the production of the 
                        good; and
                            (iii) if applicable, the production 
                        of the good in the form in which it was 
                        exported.
                    (B) Chile fta certificate of origin.--The 
                term ``Chile FTA Certificate of Origin'' means 
                the certification, established under article 
                4.13 of the United States-Chile Free Trade 
                Agreement, that a good qualifies as an 
                originating good under such Agreement.
            (2) Exports to chile.--Any person who completes and 
        issues a Chile FTA Certificate of Origin for a good 
        exported from the United States shall make, keep, and, 
        pursuant to rules and regulations promulgated by the 
        Secretary of the Treasury, render for examination and 
        inspection all records and supporting documents related 
        to the origin of the good (including the Certificate or 
        copies thereof).
            (3) Retention period.--Records and supporting 
        documents shall be kept by the person who issued a 
        Chile FTA Certificate of Origin for at least 5 years 
        after the date on which the certificate was issued.
    (g) Penalties.--Any person who fails to retain records and 
supporting documents required by subsection (f) or the 
regulations issued to implement that subsection shall be liable 
for the greater of--
            (1) a civil penalty not to exceed $10,000; or
            (2) the general record keeping penalty that applies 
        under the customs laws of the United States.

           *       *       *       *       *       *       *


SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.

    (a) * * *

           *       *       *       *       *       *       *

    (g) Denial of Preferential Tariff Treatment Under United 
States-Chile Free Trade Agreement.--If the Bureau of Customs 
and Border Protection or the Bureau of Immigration and Customs 
Enforcement finds indications of a pattern of conduct by an 
importer of false or unsupported representations that goods 
qualify under the rules of origin set out in section 202 of the 
United States-Chile Free Trade Agreement Implementation Act, 
the Bureau of Customs and Border Protection, in accordance with 
regulations issued by the Secretary of the Treasury, may deny 
preferential tariff treatment under the United States-Chile 
Free Trade Agreement to entries of identical goods imported by 
that person until the person establishes to the satisfaction of 
the Bureau of Customs and Border Protection that 
representations of that person are in conformity with such 
section 202.

           *       *       *       *       *       *       *


SEC. 520. REFUNDS AND ERRORS.

    (a) * * *

           *       *       *       *       *       *       *

    [(d)] (d) Goods Qualifying Under Free Trade Agreement Rules 
of Origin.--Notwithstanding the fact that a valid protest was 
not filed, the Customs Service may, in accordance with 
regulations prescribed by the Secretary, reliquidate an entry 
to refund any excess duties (including any merchandise 
processing fees) paid on a good qualifying under the rules of 
origin set out in section 202 of the North American Free Trade 
Agreement Implementation Act or section 202 of the United 
States-Chile Free Trade Agreement Implementation Act for which 
no claim for preferential tariff treatment was made at the time 
of importation if the importer, within 1 year after the date of 
importation, files, in accordance with those regulations, a 
claim that includes--
            (1) a written declaration that the good qualified 
        under [those] the applicable rules at the time of 
        importation;
            (2) copies of all applicable NAFTA Certificates of 
        Origin (as defined in section 508(b)(1)), or other 
        certificates of origin, as the case may be; and

           *       *       *       *       *       *       *


SEC. 562. MANIPULATION IN WAREHOUSE.

    Unless by special authority of the Secretary of the 
Treasury, no merchandise shall be withdrawn from bonded 
warehouse in less quantity than an entire bale, cask, box, or 
other package; or, if in bulk, in the entire quantity imported 
or in a quantity not less than one ton weight. All merchandise 
so withdrawn shall be withdrawn in the original packages in 
which imported unless, upon the application of the importer, it 
appears to the appropriate customs officer that it is necessary 
to the safety or preservation of the merchandise to repack or 
transfer the same; except that upon permission therefor being 
granted by the Secretary of the Treasury, and under customs 
supervision, at the expense of the proprietor, merchandise may 
be cleaned, sorted, repacked, or otherwise changed in 
condition, but not manufactured, in bonded warehouses 
established for that purpose and be withdrawn therefrom--
            (1) * * *

           *       *       *       *       *       *       *

            (3) without payment of duties for exportation to 
        any foreign country other than [to a NAFTA country] to 
        Chile, to a NAFTA country, or to Canada when exports to 
        that country are subject to paragraph (4);
            (4) without payment of duties for exportation to 
        Canada (if that country ceases to be a NAFTA country 
        and the suspension of the operation of the United 
        States-Canada Free-Trade Agreement thereafter 
        terminates), but the exemption from the payment of 
        duties under this paragraph applies only in the case of 
        an exportation during the period such Agreement is in 
        operation of merchandise that--
                    (A) * * *
                    (B) is a drawback eligible good under 
                section 204(a) of the United States-Canada 
                Free-Trade Agreement Implementation Act of 
                1988[; and]
            (5) without payment of duties for shipment to the 
        Virgin Islands, American Samoa, Wake Island, Midway 
        Island, Kingman Reef, Johnston Island or the island of 
        Guam[.]; and
            (6)(A) without payment of duties for exportation to 
        Chile, if the merchandise is of a kind described in any 
        of paragraphs (1) through (5) of section 203(a) of the 
        United States-Chile Free Trade Agreement Implementation 
        Act; and
            (B) for exportation to Chile if the merchandise 
        consists of goods subject to Chile FTA drawback, as 
        defined in section 203(a) of the United States-Chile 
        Free Trade Agreement Implementation Act, except that--
                    (i) the merchandise may not be withdrawn 
                from warehouse without assessment of a duty on 
                the merchandise in its condition and quantity, 
                and at its weight, at the time of withdrawal 
                from the warehouse with such additions to, or 
                deductions from, the final appraised value as 
                may be necessary by reason of a change in 
                condition, and
                    (ii) duty shall be paid on the merchandise 
                before the 61st day after the date of 
                exportation, except that such duties may be 
                waived or reduced by--
                            (I) 100 percent during the 8-year 
                        period beginning on January 1, 2004,
                            (II) 75 percent during the 1-year 
                        period beginning on January 1, 2012,
                            (III) 50 percent during the 1-year 
                        period beginning on January 1, 2013, 
                        and
                            (IV) 25 percent during the 1-year 
                        period beginning on January 1, 2014.

           *       *       *       *       *       *       *


SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.

    (a) * * *

           *       *       *       *       *       *       *

    (c) Maximum Penalties.--
            (1) * * *

           *       *       *       *       *       *       *

            (6) Prior disclosure regarding claims under the 
        united states-chile free trade agreement.--An importer 
        shall not be subject to penalties under subsection (a) 
        for making an incorrect claim that a good qualifies as 
        an originating good under section 202 of the United 
        States-Chile Free Trade Agreement Implementation Act if 
        the importer, in accordance with regulations issued by 
        the Secretary of the Treasury, voluntarily makes a 
        corrected declaration and pays any duties owing.
            [(6)] (7) Seizure.--If the Secretary has reasonable 
        cause to believe that a person has violated the 
        provisions of subsection (a) and that such person is 
        insolvent or beyond the jurisdiction of the United 
        States or that seizure is otherwise essential to 
        protect the revenue of the United States or to prevent 
        the introduction of prohibited or restricted 
        merchandise into the customs territory of the United 
        States, then such merchandise may be seized and, upon 
        assessment of a monetary penalty, forfeited unless the 
        monetary penalty is paid within the time specified by 
        law. Within a reasonable time after any such seizure is 
        made, the Secretary shall issue to the person concerned 
        a written statement containing the reasons for the 
        seizure. After seizure of merchandise under this 
        subsection, the Secretary may, in the case of 
        restricted merchandise, and shall, in the case of any 
        other merchandise (other than prohibited merchandise), 
        return such merchandise upon the deposit of security 
        not to exceed the maximum monetary penalty which may be 
        assessed under subsection (c).

           *       *       *       *       *       *       *

    (g) False Certifications of Origin Under the United States-
Chile Free Trade Agreement.--
            (1) In general.--Subject to paragraph (2), it is 
        unlawful for any person to certify falsely, by fraud, 
        gross negligence, or negligence, in a Chile FTA 
        Certificate of Origin (as defined in section 
        508(f)(1)(B) of this Act that a good exported from the 
        United States qualifies as an originating good under 
        the rules of origin set out in section 202 of the 
        United States-Chile Free Trade Agreement Implementation 
        Act. The procedures and penalties of this section that 
        apply to a violation of subsection (a) also apply to a 
        violation of this subsection.
            (2) Immediate and voluntary disclosure of incorrect 
        information.--No penalty shall be imposed under this 
        subsection if, immediately after an exporter or 
        producer that issued a Chile FTA Certificate of Origin 
        has reason to believe that such certificate contains or 
        is based on incorrect information, the exporter or 
        producer voluntarily provides written notice of such 
        incorrect information to every person to whom the 
        certificate was issued.
            (3) Exception.--A person may not be considered to 
        have violated paragraph (1) if--
                    (A) the information was correct at the time 
                it was provided in a Chile FTA Certificate of 
                Origin but was later rendered incorrect due to 
                a change in circumstances; and
                    (B) the person immediately and voluntarily 
                provides written notice of the change in 
                circumstances to all persons to whom the person 
                provided the certificate.

           *       *       *       *       *       *       *

                              ----------                              


                 SECTION 3 OF THE ACT OF JUNE 18, 1934

          (Commonly known as the ``Foreign Trade Zones Act'')

    Sec. 3. (a) Foreign and domestic merchandise of every 
description, except such as is prohibited by law, may, without 
being subject to the customs laws of the United States, except 
as otherwise provided in this Act, be brought into a zone and 
may be stored, sold, exhibited, broken up, repacked, assembled, 
distributed, sorted, graded, cleaned, mixed with foreign or 
domestic merchandise, or otherwise manipulated, or be 
manufactured except as otherwise provided in this Act, and be 
exported, destroyed, or sent into customs territory of the 
United States therefrom, in the original package or otherwise; 
but when foreign merchandise is so sent from a zone into 
customs territory of the United States it shall be subject to 
the laws and regulations of the United States affecting 
imported merchandise: Provided, That whenever the privilege 
shall be requested and there has been no manipulation or 
manufacture effecting a change in tariff classification, the 
appropriate customs officer shall take under supervision any 
lot or part of a lot of foreign merchandise in a zone, cause it 
to be appraised and taxes determined and duties liquidated 
thereon. Merchandise so taken under supervision may be stored, 
manipulated, or manufactured under the supervision and 
regulations prescribed by the Secretary of the Treasury, and 
whether mixed or manufactured with domestic merchandise or not 
may, under regulations prescribed by the Secretary of the 
Treasury, be exported or destroyed, or may be sent into customs 
territory upon the payment of such liquidated duties and 
determined taxes thereon. If merchandise so taken under 
supervision has been manipulated or manufactured, such duties 
and taxes shall be payable on the quantity of such foreign 
merchandise used in the manipulation or manufacture of the 
entered article. Allowance shall be made for recoverable and 
irrecoverable waste; and if recoverable waste is sent into 
customs territory, it shall be dutiable and taxable in its 
condition and quantity and at its weight at the time of entry. 
Where two or more products result from the manipulation or 
manufacture of merchandise in a zone the liquidated duties and 
determined taxes shall be distributed to the several products 
in accordance with their relative value at the time of 
separation with due allowance for waste as provided for above: 
Provided further, That subject to such regulations respecting 
identity and the safeguarding of the revenue as the Secretary 
of the Treasury may deem necessary, articles, the growth, 
product, or manufacture of the United States, on which all 
internal-revenue taxes have been paid, if subject thereto, and 
articles previously imported on which duty and/or tax has been 
paid, or which have been admitted free of duty and tax, may be 
taken into a zone from the customs territory of the United 
States, placed under the supervision of the appropriate customs 
officer, and whether or not they have been combined with or 
made part, while in such zone, of other articles, may be 
brought back thereto free of quotas, duty, or tax: Provided 
further, That if in the opinion of the Secretary of the 
Treasury their identity has been lost, such articles not 
entitled to free entry by reason of noncompliance with the 
requirements made hereunder by the Secretary of the Treasury 
shall be treated when they reenter customs territory of the 
United States as foreign merchandise under the provisions of 
the tariff and internal-revenue laws in force at that time: 
Provided further, That under the rules and regulations of the 
controlling Federal agencies, articles which have been taken 
into a zone from customs territory for the sole purpose of 
exportation, destruction (except destruction of distilled 
spirits, wines, and fermented malt liquors), or storage shall 
be considered to be exported for the purpose of--
            (1) * * *

           *       *       *       *       *       *       *

Such a transfer may also be considered an exportation for the 
purposes of other Federal laws insofar as Federal agencies 
charged with the enforcement of those laws deem it advisable. 
Such articles may not be returned to customs territory for 
domestic consumption except where the Foreign-Trade Zones Board 
deems such return to be in the public interest, in which event 
the articles shall be subject to the provisions of paragraph 
1615(f) of the Tariff Act of 1930, as amended: Provided 
further, That no operation involving any foreign or domestic 
merchandise brought into a zone which operation would be 
subject to any provision or provisions of section 1807, chapter 
15, chapter 16, chapter 17, chapter 21, chapter 23, chapter 24, 
chapter 25, chapter 26, or chapter 32 of the Internal Revenue 
Code if performed in customs territory, or involving the 
manufacture of any article provided for in paragraph 367 or 
paragraph 368 of the Tariff Act of 1930, shall be permitted in 
a zone except those operations (other than rectification of 
distilled spirits and wines, or the manufacture or production 
of alcoholic products unfit for beverage purposes) which were 
permissible under this Act prior to July 1, 1949: Provided 
further, That articles produced or manufactured in a zone and 
exported therefrom shall on subsequent importation into the 
customs territory of the United States be subject to the import 
laws applicable to like articles manufactured in a foreign 
country, except that articles produced or manufactured in a 
zone exclusively with the use of domestic merchandise, the 
identity of which has been maintained in accordance with the 
second proviso of this section, may, on such importation, be 
entered as American goods returned: Provided further, That no 
merchandise that consists of goods subject to NAFTA drawback, 
as defined in section 203(a) of the North American Free Trade 
Agreement Implementation Act, that is manufactured or otherwise 
changed in condition shall be exported to a NAFTA country, as 
defined in section 2(4) of that Act, without an assessment of a 
duty on the merchandise in its condition and quantity, and at 
its weight, at the time of its exportation (or if the privilege 
in the first proviso to this subsection was requested, an 
assessment of a duty on the merchandise in its condition and 
quantity, and at its weight, at the time of its admission into 
the zone) and the payment of the assessed duty before the 61st 
day after the date of exportation of the article, except that 
upon the presentation, before such 61st day, of satisfactory 
evidence of the amount of any customs duties paid or owed to 
the NAFTA country on the article, the customs duty may be 
waived or reduced (subject to section 508(b)(2)(B) of the 
Tariff Act of 1930) in an amount that does not exceed the 
lesser of (1) the total amount of customs duties paid or owed 
on the merchandise on importation into the United States, or 
(2) the total amount of customs duties paid on the article to 
the NAFTA country: Provided further, That if Canada ceases to 
be a NAFTA country and the suspension of the operation of the 
United States-Canada Free-Trade Agreement thereafter 
terminates, with the exception of drawback eligible goods under 
section 204(a) of the United States-Canada Free-Trade Agreement 
Implementation Act of 1988, no article manufactured or 
otherwise changed in condition (except a change by cleaning, 
testing or repacking) shall be exported to Canada during the 
period such Agreement is in operation without the payment of a 
duty that shall be payable on the article in its condition and 
quantity, and at its weight, at the time of its exportation to 
Canada unless the privilege in the first proviso to this 
subsection was requested[.]: Provided, further, That no 
merchandise that consists of goods subject to Chile FTA 
drawback, as defined in section 203(a) of the United States-
Chile Free Trade Agreement Implementation Act, that is 
manufactured or otherwise changed in condition shall be 
exported to Chile without an assessment of a duty on the 
merchandise in its condition and quantity, and at its weight, 
at the time of its exportation (or if the privilege in the 
first proviso to this subsection was requested, an assessment 
of a duty on the merchandise in its condition and quantity, and 
at its weight, at the time of its admission into the zone) and 
the payment of the assessed duty before the 61st day after the 
date of exportation of the article, except that the customs 
duty may be waived or reduced by (1) 100 percent during the 8-
year period beginning on January 1, 2004; (2) 75 percent during 
the 1-year period beginning on January 1, 2012; (3) 50 percent 
during the 1-year period beginning on January 1, 2013; and (4) 
25 percent during the 1-year period beginning on January 1, 
2014.

           *       *       *       *       *       *       *

                              ----------                              


SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.

    (a) * * *
    (b) Limitations on Fees.--(1) * * *

           *       *       *       *       *       *       *

    (12) No fee may be charged under subsection (a) (9) or (10) 
with respect to goods that qualify as originating goods under 
section 202 of the United States-Chile Free Trade Agreement 
Implementation Act. Any service for which an exemption from 
such fee is provided by reason of this paragraph may not be 
funded with money contained in the Customs User Fee Account.

           *       *       *       *       *       *       *

                              ----------                              


                  SECTION 202 OF THE TRADE ACT OF 1974

SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY 
                    COMMISSION.

    (a) Petitions and Adjustment Plans.--
            (1) * * *

           *       *       *       *       *       *       *

            (8) The procedures concerning the release of 
        confidential business information set forth in section 
        332(g) of the Tariff Act of 1930 shall apply with 
        respect to information received by the Commission in 
        the course of investigations conducted under this 
        chapter, part 1 of title III of the North American Free 
        Trade Agreement Implementation Act, [and] title II of 
        the United States-Jordan Free Trade Area Implementation 
        Act, and title III of the United States-Chile Free 
        Trade Agreement Implementation Act. The Commission may 
        request that parties providing confidential business 
        information furnish nonconfidential summaries thereof 
        or, if such parties indicate that the information in 
        the submission cannot be summarized, the reasons why a 
        summary cannot be provided. If the Commission finds 
        that a request for confidentiality is not warranted and 
        if the party concerned is either unwilling to make the 
        information public or to authorize its disclosure in 
        generalized or summarized form, the Commission may 
        disregard the submission.

           *       *       *       *       *       *       *

                              ----------                              


IMMIGRATION AND NATIONALITY ACT

           *       *       *       *       *       *       *


                            TITLE I--GENERAL

                              definitions

    Section 101. (a) As used in this Act--
    (1) * * *

           *       *       *       *       *       *       *

    (15) The term ``immigrant'' means every alien except an 
alien who is within one of the following classes of 
nonimmigrant aliens--
            (A) * * *

           *       *       *       *       *       *       *

            (H) an alien (i)(b) subject to section 212(j)(2), 
        who is coming temporarily to the United States to 
        perform services (other than services described in 
        subclause (a) during the period in which such subclause 
        applies and other than services described in subclause 
        (ii)(a) or in subparagraph (O) or (P)) in a specialty 
        occupation described in section 214(i)(1) or as a 
        fashion model, who meets the requirements for the 
        occupation specified in section 214(i)(2) or, in the 
        case of a fashion model, is of distinguished merit and 
        ability, and with respect to whom the Secretary of 
        Labor determines and certifies to the Attorney General 
        that the intending employer has filed with the 
        Secretary an application under section [212(n)(1), or 
        (c)] 212(n)(1), or (b1) who is entitled to enter the 
        United States under and in pursuance of the provisions 
        of an agreement listed in section 214(g)(8)(A), who is 
        engaged in a specialty occupation described in section 
        214(i)(3), and with respect to whom the Secretary of 
        Labor determines and certifies to the Secretary of 
        Homeland Security and the Secretary of State that the 
        intending employer has filed with the Secretary of 
        Labor an attestation under section 212(t)(1), or (c) 
        who is coming temporarily to the United States to 
        perform services as a registered nurse, who meets the 
        qualifications described in section 212(m)(1), and with 
        respect to whom the Secretary of Labor determines and 
        certifies to the Attorney General that an unexpired 
        attestation is on file and in effect under section 
        212(m)(2) for the facility (as defined in section 
        212(m)(6)) for which the alien will perform the 
        services; or (ii)(a) having a residence in a foreign 
        country which he has no intention of abandoning who is 
        coming temporarily to the United States to perform 
        agricultural labor or services, as defined by the 
        Secretary of Labor in regulations and including 
        agricultural labor defined in section 3121(g) of the 
        Internal Revenue Code of 1954 and agriculture as 
        defined in section 3(f) of the Fair Labor Standards Act 
        of 1938 (29 U.S.C. 203(f)), of a temporary or seasonal 
        nature, or (b) having a residence in a foreign country 
        which he has no intention of abandoning who is coming 
        temporarily to the United States to perform other 
        temporary service or labor if unemployed persons 
        capable of performing such service or labor cannot be 
        found in this country, but this clause shall not apply 
        to graduates of medical schools coming to the United 
        States to perform services as members of the medical 
        profession; or (iii) having a residence in a foreign 
        country which he has no intention of abandoning who is 
        coming temporarily to the United States as a trainee, 
        other than to receive graduate medical education or 
        training, in a training program that is not designed 
        primarily to provide productive employment; and the 
        alien spouse and minor children of any such alien 
        specified in this paragraph if accompanying him or 
        following to join him;

           *       *       *       *       *       *       *


TITLE II--IMMIGRATION

           *       *       *       *       *       *       *


 Chapter 2--Qualifications for Admission of Aliens; Travel Control of 
Citizens and Aliens

           *       *       *       *       *       *       *


 GENERAL CLASSES OF ALIENS INELIGIBLE TO RECEIVE VISAS AND INELIGIBLE 
               FOR ADMISSION; WAIVERS OF INADMISSIBILITY

      Sec. 212. (a) * * *

           *       *       *       *       *       *       *

    (p)(1) In computing the prevailing wage level for an 
occupational classification in an area of employment for 
purposes of subsections [(n)(1)(A)(i)(II) and (a)(5)(A)] 
(a)(5)(A), (n)(1)(A)(i)(II), and (t)(1)(A)(i)(II) in the case 
of an employee of--
            (A) * * *

           *       *       *       *       *       *       *

    [(p)] (s) In determining whether an alien described in 
subsection (a)(4)(C)(i) is inadmissible under subsection (a)(4) 
or ineligible to receive an immigrant visa or otherwise to 
adjust to the status of permanent resident by reason of 
subsection (a)(4), the consular officer or the Attorney General 
shall not consider any benefits the alien may have received 
that were authorized under section 501 of the Illegal 
Immigration Reform and Immigrant Responsibility Act of 1996 (8 
U.S.C. 1641(c)).
    (t)(1) No alien may be admitted or provided status as a 
nonimmigrant under section 101(a)(15)(H)(i)(b1) in an 
occupational classification unless the employer has filed with 
the Secretary of Labor an attestation stating the following:
            (A) The employer--
                    (i) is offering and will offer during the 
                period of authorized employment to aliens 
                admitted or provided status under section 
                101(a)(15)(H)(i)(b1) wages that are at least--
                            (I) the actual wage level paid by 
                        the employer to all other individuals 
                        with similar experience and 
                        qualifications for the specific 
                        employment in question; or
                            (II) the prevailing wage level for 
                        the occupational classification in the 
                        area of employment,
                whichever is greater, based on the best 
                information available as of the time of filing 
                the attestation; and
                    (ii) will provide working conditions for 
                such a nonimmigrant that will not adversely 
                affect the working conditions of workers 
                similarly employed.
            (B) There is not a strike or lockout in the course 
        of a labor dispute in the occupational classification 
        at the place of employment.
            (C) The employer, at the time of filing the 
        attestation--
                    (i) has provided notice of the filing under 
                this paragraph to the bargaining representative 
                (if any) of the employer's employees in the 
                occupational classification and area for which 
                aliens are sought; or
                    (ii) if there is no such bargaining 
                representative, has provided notice of filing 
                in the occupational classification through such 
                methods as physical posting in conspicuous 
                locations at the place of employment or 
                electronic notification to employees in the 
                occupational classification for which 
                nonimmigrants under section 
                101(a)(15)(H)(i)(b1) are sought.
            (D) A specification of the number of workers 
        sought, the occupational classification in which the 
        workers will be employed, and wage rate and conditions 
        under which they will be employed.
    (2)(A) The employer shall make available for public 
examination, within one working day after the date on which an 
attestation under this subsection is filed, at the employer's 
principal place of business or worksite, a copy of each such 
attestation (and such accompanying documents as are necessary).
    (B)(i) The Secretary of Labor shall compile, on a current 
basis, a list (by employer and by occupational classification) 
of the attestations filed under this subsection. Such list 
shall include, with respect to each attestation, the wage rate, 
number of aliens sought, period of intended employment, and 
date of need.
    (ii) The Secretary of Labor shall make such list available 
for public examination in Washington, D.C.
    (C) The Secretary of Labor shall review an attestation 
filed under this subsection only for completeness and obvious 
inaccuracies. Unless the Secretary of Labor finds that an 
attestation is incomplete or obviously inaccurate, the 
Secretary of Labor shall provide the certification described in 
section 101(a)(15)(H)(i)(b1) within 7 days of the date of the 
filing of the attestation.
    (3)(A) The Secretary of Labor shall establish a process for 
the receipt, investigation, and disposition of complaints 
respecting the failure of an employer to meet a condition 
specified in an attestation submitted under this subsection or 
misrepresentation by the employer of material facts in such an 
attestation. Complaints may be filed by any aggrieved person or 
organization (including bargaining representatives). No 
investigation or hearing shall be conducted on a complaint 
concerning such a failure or misrepresentation unless the 
complaint was filed not later than 12 months after the date of 
the failure or misrepresentation, respectively. The Secretary 
of Labor shall conduct an investigation under this paragraph if 
there is reasonable cause to believe that such a failure or 
misrepresentation has occurred.
    (B) Under the process described in subparagraph (A), the 
Secretary of Labor shall provide, within 30 days after the date 
a complaint is filed, for a determination as to whether or not 
a reasonable basis exists to make a finding described in 
subparagraph (C). If the Secretary of Labor determines that 
such a reasonable basis exists, the Secretary of Labor shall 
provide for notice of such determination to the interested 
parties and an opportunity for a hearing on the complaint, in 
accordance with section 556 of title 5, United States Code, 
within 60 days after the date of the determination. If such a 
hearing is requested, the Secretary of Labor shall make a 
finding concerning the matter by not later than 60 days after 
the date of the hearing. In the case of similar complaints 
respecting the same applicant, the Secretary of Labor may 
consolidate the hearings under this subparagraph on such 
complaints.
    (C)(i) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, a failure to meet a condition of 
paragraph (1)(B), a substantial failure to meet a condition of 
paragraph (1)(C) or (1)(D), or a misrepresentation of material 
fact in an attestation--
            (I) the Secretary of Labor shall notify the 
        Secretary of State and the Secretary of Homeland 
        Security of such finding and may, in addition, impose 
        such other administrative remedies (including civil 
        monetary penalties in an amount not to exceed $1,000 
        per violation) as the Secretary of Labor determines to 
        be appropriate; and
            (II) the Secretary of State or the Secretary of 
        Homeland Security, as appropriate, shall not approve 
        petitions or applications filed with respect to that 
        employer under section 204, 214(c), or 
        101(a)(15)(H)(i)(b1) during a period of at least 1 year 
        for aliens to be employed by the employer.
    (ii) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, a willful failure to meet a 
condition of paragraph (1), a willful misrepresentation of 
material fact in an attestation, or a violation of clause 
(iv)--
            (I) the Secretary of Labor shall notify the 
        Secretary of State and the Secretary of Homeland 
        Security of such finding and may, in addition, impose 
        such other administrative remedies (including civil 
        monetary penalties in an amount not to exceed $5,000 
        per violation) as the Secretary of Labor determines to 
        be appropriate; and
            (II) the Secretary of State or the Secretary of 
        Homeland Security, as appropriate, shall not approve 
        petitions or applications filed with respect to that 
        employer under section 204, 214(c), or 
        101(a)(15)(H)(i)(b1) during a period of at least 2 
        years for aliens to be employed by the employer.
    (iii) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, a willful failure to meet a 
condition of paragraph (1) or a willful misrepresentation of 
material fact in an attestation, in the course of which failure 
or misrepresentation the employer displaced a United States 
worker employed by the employer within the period beginning 90 
days before and ending 90 days after the date of filing of any 
visa petition or application supported by the attestation--
            (I) the Secretary of Labor shall notify the 
        Secretary of State and the Secretary of Homeland 
        Security of such finding and may, in addition, impose 
        such other administrative remedies (including civil 
        monetary penalties in an amount not to exceed $35,000 
        per violation) as the Secretary of Labor determines to 
        be appropriate; and
            (II) the Secretary of State or the Secretary of 
        Homeland Security, as appropriate, shall not approve 
        petitions or applications filed with respect to that 
        employer under section 204, 214(c), or 
        101(a)(15)(H)(i)(b1) during a period of at least 3 
        years for aliens to be employed by the employer.
    (iv) It is a violation of this clause for an employer who 
has filed an attestation under this subsection to intimidate, 
threaten, restrain, coerce, blacklist, discharge, or in any 
other manner discriminate against an employee (which term, for 
purposes of this clause, includes a former employee and an 
applicant for employment) because the employee has disclosed 
information to the employer, or to any other person, that the 
employee reasonably believes evidences a violation of this 
subsection, or any rule or regulation pertaining to this 
subsection, or because the employee cooperates or seeks to 
cooperate in an investigation or other proceeding concerning 
the employer's compliance with the requirements of this 
subsection or any rule or regulation pertaining to this 
subsection.
    (v) The Secretary of Labor and the Secretary of Homeland 
Security shall devise a process under which a nonimmigrant 
under section 101(a)(15)(H)(i)(b1) who files a complaint 
regarding a violation of clause (iv) and is otherwise eligible 
to remain and work in the United States may be allowed to seek 
other appropriate employment in the United States for a period 
not to exceed the maximum period of stay authorized for such 
nonimmigrant classification.
    (vi)(I) It is a violation of this clause for an employer 
who has filed an attestation under this subsection to require a 
nonimmigrant under section 101(a)(15)(H)(i)(b1) to pay a 
penalty for ceasing employment with the employer prior to a 
date agreed to by the nonimmigrant and the employer. The 
Secretary of Labor shall determine whether a required payment 
is a penalty (and not liquidated damages) pursuant to relevant 
State law.
    (II) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, that an employer has committed a 
violation of this clause, the Secretary of Labor may impose a 
civil monetary penalty of $1,000 for each such violation and 
issue an administrative order requiring the return to the 
nonimmigrant of any amount paid in violation of this clause, 
or, if the nonimmigrant cannot be located, requiring payment of 
any such amount to the general fund of the Treasury.
    (vii)(I) It is a failure to meet a condition of paragraph 
(1)(A) for an employer who has filed an attestation under this 
subsection and who places a nonimmigrant under section 
101(a)(15)(H)(i)(b1) designated as a full-time employee in the 
attestation, after the nonimmigrant has entered into employment 
with the employer, in nonproductive status due to a decision by 
the employer (based on factors such as lack of work), or due to 
the nonimmigrant's lack of a permit or license, to fail to pay 
the nonimmigrant full-time wages in accordance with paragraph 
(1)(A) for all such nonproductive time.
    (II) It is a failure to meet a condition of paragraph 
(1)(A) for an employer who has filed an attestation under this 
subsection and who places a nonimmigrant under section 
101(a)(15)(H)(i)(b1) designated as a part-time employee in the 
attestation, after the nonimmigrant has entered into employment 
with the employer, in nonproductive status under circumstances 
described in subclause (I), to fail to pay such a nonimmigrant 
for such hours as are designated on the attestation consistent 
with the rate of pay identified on the attestation.
    (III) In the case of a nonimmigrant under section 
101(a)(15)(H)(i)(b1) who has not yet entered into employment 
with an employer who has had approved an attestation under this 
subsection with respect to the nonimmigrant, the provisions of 
subclauses (I) and (II) shall apply to the employer beginning 
30 days after the date the nonimmigrant first is admitted into 
the United States, or 60 days after the date the nonimmigrant 
becomes eligible to work for the employer in the case of a 
nonimmigrant who is present in the United States on the date of 
the approval of the attestation filed with the Secretary of 
Labor.
    (IV) This clause does not apply to a failure to pay wages 
to a nonimmigrant under section 101(a)(15)(H)(i)(b1) for 
nonproductive time due to non-work-related factors, such as the 
voluntary request of the nonimmigrant for an absence or 
circumstances rendering the nonimmigrant unable to work.
    (V) This clause shall not be construed as prohibiting an 
employer that is a school or other educational institution from 
applying to a nonimmigrant under section 101(a)(15)(H)(i)(b1) 
an established salary practice of the employer, under which the 
employer pays to nonimmigrants under section 
101(a)(15)(H)(i)(b1) and United States workers in the same 
occupational classification an annual salary in disbursements 
over fewer than 12 months, if--
            (aa) the nonimmigrant agrees to the compressed 
        annual salary payments prior to the commencement of the 
        employment; and
            (bb) the application of the salary practice to the 
        nonimmigrant does not otherwise cause the nonimmigrant 
        to violate any condition of the nonimmigrant's 
        authorization under this Act to remain in the United 
        States.
    (VI) This clause shall not be construed as superseding 
clause (viii).
    (viii) It is a failure to meet a condition of paragraph 
(1)(A) for an employer who has filed an attestation under this 
subsection to fail to offer to a nonimmigrant under section 
101(a)(15)(H)(i)(b1), during the nonimmigrant's period of 
authorized employment, benefits and eligibility for benefits 
(including the opportunity to participate in health, life, 
disability, and other insurance plans; the opportunity to 
participate in retirement and savings plans; and cash bonuses 
and non-cash compensation, such as stock options (whether or 
not based on performance)) on the same basis, and in accordance 
with the same criteria, as the employer offers to United States 
workers.
    (D) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, that an employer has not paid wages 
at the wage level specified in the attestation and required 
under paragraph (1), the Secretary of Labor shall order the 
employer to provide for payment of such amounts of back pay as 
may be required to comply with the requirements of paragraph 
(1), whether or not a penalty under subparagraph (C) has been 
imposed.
    (E) The Secretary of Labor may, on a case-by-case basis, 
subject an employer to random investigations for a period of up 
to 5 years, beginning on the date on which the employer is 
found by the Secretary of Labor to have committed a willful 
failure to meet a condition of paragraph (1) or to have made a 
willful misrepresentation of material fact in an attestation. 
The authority of the Secretary of Labor under this subparagraph 
shall not be construed to be subject to, or limited by, the 
requirements of subparagraph (A).
    (F) Nothing in this subsection shall be construed as 
superseding or preempting any other enforcement-related 
authority under this Act (such as the authorities under section 
274B), or any other Act.
    (4) For purposes of this subsection:
            (A) The term ``area of employment'' means the area 
        within normal commuting distance of the worksite or 
        physical location where the work of the nonimmigrant 
        under section 101(a)(15)(H)(i)(b1) is or will be 
        performed. If such worksite or location is within a 
        Metropolitan Statistical Area, any place within such 
        area is deemed to be within the area of employment.
            (B) In the case of an attestation with respect to 
        one or more nonimmigrants under section 
        101(a)(15)(H)(i)(b1) by an employer, the employer is 
        considered to ``displace'' a United States worker from 
        a job if the employer lays off the worker from a job 
        that is essentially the equivalent of the job for which 
        the nonimmigrant or nonimmigrants is or are sought. A 
        job shall not be considered to be essentially 
        equivalent of another job unless it involves 
        essentially the same responsibilities, was held by a 
        United States worker with substantially equivalent 
        qualifications and experience, and is located in the 
        same area of employment as the other job.
            (C)(i) The term ``lays off'', with respect to a 
        worker--
                    (I) means to cause the worker's loss of 
                employment, other than through a discharge for 
                inadequate performance, violation of workplace 
                rules, cause, voluntary departure, voluntary 
                retirement, or the expiration of a grant or 
                contract; but
                    (II) does not include any situation in 
                which the worker is offered, as an alternative 
                to such loss of employment, a similar 
                employment opportunity with the same employer 
                at equivalent or higher compensation and 
                benefits than the position from which the 
                employee was discharged, regardless of whether 
                or not the employee accepts the offer.
            (ii) Nothing in this subparagraph is intended to 
        limit an employee's rights under a collective 
        bargaining agreement or other employment contract.
            (D) The term ``United States worker'' means an 
        employee who--
                    (i) is a citizen or national of the United 
                States; or
                    (ii) is an alien who is lawfully admitted 
                for permanent residence, is admitted as a 
                refugee under section 207 of this title, is 
                granted asylum under section 208, or is an 
                immigrant otherwise authorized, by this Act or 
                by the Secretary of Homeland Security, to be 
                employed.

           *       *       *       *       *       *       *


                       admission of nonimmigrants

      Sec. 214. (a) * * *
      (b) Every alien [(other than a nonimmigrant described in 
subparagraph (H)(i), (L), or (V) of section 101(a)(15))] (other 
than a nonimmigrant described in subparagraph (L) or (V) of 
section 101(a)(15), and other than a nonimmigrant described in 
any provision of section 101(a)(15)(H)(i) except subclause (b1) 
of such section) shall be presumed to be an immigrant until he 
establishes to the satisfaction of the consular officer, at the 
time of application for a visa, and the immigration officers, 
at the time of application for admission, that he is entitled 
to a nonimmigrant status under section 101(a)(15). An alien who 
is an officer or employee of any foreign government or of any 
international organization entitled to enjoy privileges, 
exemptions, and immunities under the International 
Organizations Immunities Act, or an alien who is the attendant, 
servant, employee, or member of the immediate family of any 
such alien shall not be entitled to apply for or receive an 
immigrant visa, or to enter the United States as an immigrant 
unless he executes a written waiver in the same form and 
substance as is prescribed by section 247(b).
      (c)(1) The question of importing any alien as a 
nonimmigrant under [section 101(a)(15)(H), (L), (O), or (P)(i)] 
subparagraph (H), (L), (O), or (P)(i) of section 101(a)(15) 
(excluding nonimmigrants under section 101(a)(15)(H)(i)(b1)) in 
any specific case or specific cases shall be determined by the 
Attorney General, after consultation with appropriate agencies 
of the Government, upon petition of the importing employer. 
Such petition shall be made and approved before the visa is 
granted. The petition shall be in such form and contain such 
information as the Attorney General shall prescribe. The 
approval of such a petition shall not, of itself, be construed 
as establishing that the alien is a nonimmigrant. For purposes 
of this subsection with respect to nonimmigrants described in 
section 101(a)(15)(H)(ii)(a), the term ``appropriate agencies 
of Government'' means the Department of Labor and includes the 
Department of Agriculture. The provisions of section 218 shall 
apply to the question of importing any alien as a nonimmigrant 
under section 101(a)(15)(H)(ii)(a).

           *       *       *       *       *       *       *

    (11)(A) Subject to subparagraph (B), the Secretary of 
Homeland Security or the Secretary of State, as appropriate, 
shall impose a fee on an employer who has filed an attestation 
described in section 212(t)--
            (i) in order that an alien may be initially granted 
        nonimmigrant status described in section 
        101(a)(15)(H)(i)(b1); or
            (ii) in order to satisfy the requirement of the 
        second sentence of subsection (g)(8)(C) for an alien 
        having such status to obtain certain extensions of 
        stay.
    (B) The amount of the fee shall be the same as the amount 
imposed by the Secretary of Homeland Security under paragraph 
(9), except that if such paragraph does not authorize such 
Secretary to impose any fee, no fee shall be imposed under this 
paragraph.
    (C) Fees collected under this paragraph shall be deposited 
in the Treasury in accordance with section 286(s).

           *       *       *       *       *       *       *

      (g)(1) * * *

           *       *       *       *       *       *       *

    (8)(A) The agreement referred to in section 
101(a)(15)(H)(i)(b1) is the United States-Chile Free Trade 
Agreement.
    (B)(i) The Secretary of Homeland Security shall establish 
annual numerical limitations on approvals of initial 
applications by aliens for admission under section 
101(a)(15)(H)(i)(b1).
    (ii) The annual numerical limitations described in clause 
(i) shall not exceed 1,400 for nationals of Chile for any 
fiscal year. For purposes of this clause, the term ``national'' 
has the meaning given such term in article 14.9 of the United 
States-Chile Free Trade Agreement.
    (iii) The annual numerical limitations described in clause 
(i) shall only apply to principal aliens and not to the spouses 
or children of such aliens.
    (iv) The annual numerical limitation described in paragraph 
(1)(A) is reduced by the amount of the annual numerical 
limitations established under clause (i). However, if a 
numerical limitation established under clause (i) has not been 
exhausted at the end of a given fiscal year, the Secretary of 
Homeland Security shall adjust upwards the numerical limitation 
in paragraph (1)(A) for that fiscal year by the amount 
remaining in the numerical limitation under clause (i). Visas 
under section 101(a)(15)(H)(i)(b) may be issued pursuant to 
such adjustment within the first 45 days of the next fiscal 
year to aliens who had applied for such visas during the fiscal 
year for which the adjustment was made.
    (C) The period of authorized admission as a nonimmigrant 
under section 101(a)(15)(H)(i)(b1) shall be 1 year, and may be 
extended, but only in 1-year increments. After every second 
extension, the next following extension shall not be granted 
unless the Secretary of Labor had determined and certified to 
the Secretary of Homeland Security and the Secretary of State 
that the intending employer has filed with the Secretary of 
Labor an attestation under section 212(t)(1) for the purpose of 
permitting the nonimmigrant to obtain such extension.
    (D) The numerical limitation described in paragraph (1)(A) 
for a fiscal year shall be reduced by one for each alien 
granted an extension under subparagraph (C) during such year 
who has obtained 5 or more consecutive prior extensions.
      (h) The fact that an alien is the beneficiary of an 
application for a preference status filed under section 204 or 
has otherwise sought permanent residence in the United States 
shall not constitute evidence of an intention to abandon a 
foreign residence for purposes of obtaining a visa as a 
nonimmigrant described in subparagraph [(H)(i)] (H)(i)(b) or 
(c), (L), or (V) of section 101(a)(15) or otherwise obtaining 
or maintaining the status of a nonimmigrant described in such 
subparagraph, if the alien had obtained a change of status 
under section 248 to a classification as such a nonimmigrant 
before the alien's most recent departure from the United 
States.
      (i)(1) [For purposes] Except as provided in paragraph 
(3), for purposes of section 101(a)(15)(H)(i)(b) and paragraph 
(2), the term ``specialty occupation'' means an occupation that 
requires--
            (A) * * *

           *       *       *       *       *       *       *

    (3) For purposes of section 101(a)(15)(H)(i)(b1), the term 
``specialty occupation'' means an occupation that requires--
            (A) theoretical and practical application of a body 
        of specialized knowledge; and
            (B) attainment of a bachelor's or higher degree in 
        the specific specialty (or its equivalent) as a minimum 
        for entry into the occupation in the United States.
    (j)(1) Notwithstanding any other provision of this Act, an 
alien who is a citizen of Canada or Mexico who seeks to enter 
the United States under and pursuant to the provisions of 
Section B, Section C, or Section D of Annex 1603 of the North 
American Free Trade Agreement, shall not be classified as a 
nonimmigrant under such provisions if there is in progress a 
strike or lockout in the course of a labor dispute in the 
occupational classification at the place or intended place of 
employment, unless such alien establishes, pursuant to 
regulations promulgated by the Attorney General, that the 
alien's entry will not affect adversely the settlement of the 
strike or lockout or the employment of any person who is 
involved in the strike or lockout. Notice of a determination 
under this [subsection] paragraph shall be given as may be 
required by paragraph 3 of article 1603 of such Agreement. For 
purposes of this [subsection] paragraph, the term ``citizen of 
Mexico'' means ``citizen'' as defined in Annex 1608 of such 
Agreement.
    (2) Notwithstanding any other provision of this Act except 
section 212(t)(1), and subject to regulations promulgated by 
the Secretary of Homeland Security, an alien who seeks to enter 
the United States under and pursuant to the provisions of an 
agreement listed in subsection (g)(8)(A), and the spouse and 
children of such an alien if accompanying or following to join 
the alien, may be denied admission as a nonimmigrant under 
subparagraph (E), (L), or (H)(i)(b1) of section 101(a)(15) if 
there is in progress a labor dispute in the occupational 
classification at the place or intended place of employment, 
unless such alien establishes, pursuant to regulations 
promulgated by the Secretary of Homeland Security after 
consultation with the Secretary of Labor, that the alien's 
entry will not affect adversely the settlement of the labor 
dispute or the employment of any person who is involved in the 
labor dispute. Notice of a determination under this paragraph 
shall be given as may be required by such agreement.

           *       *       *       *       *       *       *


Chapter 9--Miscellaneous

           *       *       *       *       *       *       *


   disposition of moneys collected under the provisions of this title

    Sec. 286. (a) * * *

           *       *       *       *       *       *       *

    (s) H-1B Nonimmigrant Petitioner Account.--
            (1) In general.--There is established in the 
        general fund of the Treasury a separate account, which 
        shall be known as the ``H-1B Nonimmigrant Petitioner 
        Account''. Notwithstanding any other section of this 
        title, there shall be deposited as offsetting receipts 
        into the account all fees collected under [section 
        214(c)(9).] paragraphs (9) and (11) of section 214(c).

           *       *       *       *       *       *       *


                         Agency Correspondence


                           Markup Transcript



                            BUSINESS MEETING

                        WEDNESDAY, JULY 16, 2003

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr., [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will come to order. A 
working quorum is present.
    Pursuant to notice, I now call up H.R. 2738, the 
implementing legislation for the U.S.-Chile Free Trade 
Agreement, and move its favorable recommendation to the House. 
This legislation was introduced by the majority leader, by 
request of the Administration, as provided by the Trade 
Promotion Authority law. It makes necessary changes in U.S. law 
to ensure compliance with the U.S.-Chile Free Trade Agreement.
    Last week, the Committee considered draft implementing 
legislation for this agreement and recommended changes to 
provisions within this Committee's jurisdiction. The underlying 
agreement contains several provisions within the jurisdiction 
of this Committee. However, only those pertaining to the 
immigration law require accompanying implementing legislation.
    Thus, our consideration of the draft implementing 
legislation last week was confined to those provisions. The 
changes we recommended to those provisions have now been 
incorporated in the introduced legislation that is before us 
today, and they have greatly improved the product. Under the 
Trade Promotion Authority law, no amendments to this introduced 
legislation are in order.
    In addition, Members should keep in mind that the 
legislation has been referred to us only for consideration of 
those provisions that fall under our jurisdiction.
    Without objection the bill will be considered as read.
    [The bill, H.R. 2738, follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner. And without objection, the 
transcript of the mock markup that was held on this legislation 
last week will be included in the record following opening 
statements by myself and whoever the Democratic designated 
hitter is.
    I think that we thoroughly explained all of this last week, 
and I am just going to ask unanimous consent that my opening 
statement be placed in the record at this point.
    [The prepared statement of Mr. Sensenbrenner follows:]
  Prepared Statement of the Honorable F. James Sensenbrenner, Jr., a 
         Representative in Congress From the State of Wisconsin
    H.R. 2738, the ``U.S.-Chile Free Trade Agreement Implementation 
Act,'' and H.R. 2739, the ``U.S.-Singapore Free Trade Agreement 
Implementation Act'' were referred to the Judiciary Committee for 
consideration of provisions that fall within the Committee's 
jurisdiction.
    As we were all reminded last week, Trade Promotion Authority (TPA) 
requires the Administration to actively consult with Congress when 
initiating, negotiating, and implementing trade agreements. TPA also 
provides that legislation to implement free trade agreements may not be 
amended by committees of jurisdiction and may only receive an up or 
down vote on the floor of the House.
    The U.S.-Chile and U.S.-Singapore Free Trade Agreements contain 
several issues within the purview of this Committee. Both agreements 
contain competition clauses that ensure antitrust laws are applied in a 
neutral, transparent, nondiscriminatory manner while safeguarding basic 
procedural rights. The agreements also contain robust intellectual 
property protections, requiring the governments of Chile and Singapore 
to take affirmative steps to eradicate the piracy of trademarks, 
patents, satellite television signals, and other forms of intellectual 
property.
    While the antitrust and intellectual property provisions within 
these agreements are critical, they do not require any substantive 
changes to U.S. law. As a result, our consideration of H.R. 2738 and 
H.R. 2739 must be confined to Title IV of each bill, which pertains to 
``Temporary Entry of Business Persons.''
    I have long expressed concern about substantive changes to U.S. law 
contained in free trade agreements. Before passage of Trade Promotion 
Authority, immigration provisions were included in earlier free trade 
agreements such as NAFTA, without any consultation with this Committee. 
This practice unfortunately created precedent for subsequent trade 
agreements, such as those we consider today, and immigration provisions 
were included in the Chile and Singapore Free Trade Agreements before 
passage of TPA last year.
    At last week's mock markup, Members of this Committee spoke with a 
united bipartisan voice that immigration provisions in future free 
trade agreements will not receive the support of this Committee. In 
addition, the implementing legislation we consider today contains a 
number of modifications recommended by the Committee at last week's 
mock markup.
    While the draft implementing legislation created a separate visa 
category for skilled workers from Chile and Singapore, the bills we 
consider today amend the Immigration and Nationality Act to ensure that 
these visas--6,800 in total--are deducted from the national H-1B cap 
when they are issued or when a Chilean or Singaporean citizen is 
granted an extension after five or more consecutive prior extensions.
    In addition, the implementing legislation now provides that after 
every second extension of H-1B1 status for a citizen of Chile or 
Singapore, an application for a further extension must be accompanied 
by a new employer attestation. This will have the effect of requiring 
the employer to update the prevailing wage determination at such time.
    Moreover, the legislation provides that an employer will have to 
pay a fee in order for an alien to be initially granted H-1B1 status 
and after every second extension of that status. The fee shall be the 
same as the fee an employer must pay when petitioning for an H-1B visa. 
However, if no fee is being assessed under the H-1B program, no fee 
shall be imposed under the H-1B1 program.
    Finally, the legislation now clarifies that an employer generally 
cannot sponsor an alien for an E, L, or H-1B1 visa if there is any 
labor dispute occurring in the occupational classification at the place 
of employment, regardless of whether the labor dispute is classified as 
a strike or lockout. In this regard, the implementing language provides 
greater worker protections than those contained in the current H-1B 
program.
    The legislation we consider today is a considerable improvement 
over the draft implementing legislation we considered last week. The 
Committee's bipartisan commitment to ensuring that our recommendations 
were incorporated into these bills reaffirms the constitutional 
prerogative of Congress and this Committee's commitment to ensuring 
that future free trade agreements are not used to substantively alter 
United States immigration law. It is my hope and expectation that our 
actions over the last week will not go unnoticed by this and future 
Administrations.
    These implementing bills as the result of extensive negotiation and 
cooperation between the USTR and Members of this Committee, both 
majority and minority. They represent true bipartisan compromise. 
Several concerns of the minority were addressed and are represented in 
the legislation before us. In recognition of the diligent work by the 
Committee and the USTR to improve the implementing legislation, and in 
light of the fact that our limited jurisdictional referral requires the 
Committee to consider only provisions within our jurisdiction, I would 
urge all members who support our work on the immigration sections in 
Title IV of both bills to support reporting this legislation today. For 
members who do not support portions of the implementing legislation 
outside of this Committee's jurisdiction or the underlying trade 
agreements themselves, I encourage you to vote to report the 
legislation and then submit supplemental views to the committee report 
outlining your position on the broader implementing legislation.
    I now recognize the Ranking Member for his remarks.

    Chairman Sensenbrenner. Without objection, all opening 
statements will be placed in the record at this point.
    [The prepared statement of Ms. Jackson Lee follows:]
       Prepared Statement of the Honorable Sheila Jackson Lee, a 
           Representative in Congress From the State of Texas
    I have serious reservations about the actions the U.S. Trade 
Representative (USTR) has taken with respect to the temporary entry 
provisions in the Chile and Singapore Free Trade Agreements. In my 
opinion, they have overstepped their bounds and usurped this 
Committee's jurisdiction. The negotiating objectives that Congress laid 
out for USTR in the Trade Act of 2002 (TPA) do not include even one 
word on temporary entry. There is no specific authority in TPA to 
negotiate new visa categories or impose new requirements on our 
temporary entry system, yet that is exactly what USTR has done in the 
Chile and Singapore FTAs.
    The Singapore and Chile FTAs create a new visa classification for 
the temporary admission of nonimmigrant professionals that is similar 
in many respects to the existing H-1B nonimmigrant classification. The 
new nonimmigrant visa classification, however, would differ from the 
existing H-1B program in significant ways.
    Both agreements include caps on the number of professionals that 
can be granted entry each year (1,400 for Chile and 5,400 for 
Singapore).
    The provisions for the new nonimmigrant visa permit an unlimited 
number of extensions in 1-year increments. This makes it possible to 
transform a temporary entry program into a permanent program. In 
effect, employers would have the power to keep permanent workers in a 
temporary legal status. In contrast, under the H-1B program, workers 
are granted a three-year visa that can be renewed only once.
    The Labor Certification Attestation (LCA) is one of the few 
safeguards we have in our H-1B system for ensuring that employers do 
not abuse temporary workers to undermine the domestic labor market. The 
implementing legislation contains some, but not all, of the LCA 
requirements that apply in our H-1B programs.
    The implementing legislation completely omits the category of H-1B 
dependent employers and the additional LCA requirements that apply to 
them. H-1B dependent employers are required to attest that new entrants 
will not displace U.S. workers and demonstrate that they have tried to 
recruit U.S. workers. The implementing legislation should have a 
similar provision.
    In addition, the H-1B program authorizes the Secretary of Labor to 
initiate her own investigations and enforcement proceedings based on 
credible information that an employer is violating the rules of the H-
1B program. No such authority is granted in the administration of the 
Chile and Singapore visa programs.
    The Singapore and Chile FTAs require permanent changes to our 
immigration system, but for now these changes are limited to two 
countries. Unfortunately, we may see these programs expanded to dozens 
of additional countries in future free trade agreements. The 
administration is currently negotiating additional FTAs with Australia, 
Morocco, five countries in Southern Africa, five countries in Central 
America, and the 34 countries of the Western Hemisphere.
    Immigration policy is a sensitive, political matter. Changes in 
immigration policy have traditionally been the result of intense, open 
negotiations between workers, employers, immigration advocates, and 
Members of Congress. These issues simply do not belong in fast-tracked 
trade agreements negotiated by executive agencies.

    Chairman Sensenbrenner. Without objection, the previous 
question is ordered, since a reporting quorum is not present.
    [Intervening business.]
    Chairman Sensenbrenner. Because a reporting quorum is 
present, the unfinished business is the motion to report 
favorably the bill H.R. 2738, the implementing legislation for 
the U.S.-Chile Free Trade Agreement on which the previous 
question has been ordered.
    Ms. Jackson Lee. Mr. Chairman?
    Chairman Sensenbrenner. The previous question has been 
ordered. No debate is in order.
    Those in favor will say aye.
    Opposed, no.
    The ayes appear to have it, the ayes have it, and the 
motion to report favorably is agreed to. And all Members will 
be given 2 days, as provided by House rules, in which to submit 
additional dissenting supplemental or minority views.

                         Mock Markup Transcript



                            BUSINESS MEETING

                        THURSDAY, JULY 10, 2003

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:49 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr., [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order. A 
working quorum is present.
    The next item on the agenda for consideration is the draft 
implementing legislation for the U.S.-Chile Free Trade 
Agreement, which was signed by the President on June 6, 2003. 
This draft legislation was provided to the Committee by the 
U.S. Trade Representative and makes changes to U.S. law to 
ensure compliance with the agreement.
    Under the Trade Promotion Authority law, Congress cannot 
amend either trade agreements or implementing legislation after 
their formal introduction. The U.S.-Chile legislation will be 
introduced next week, and today's markup will be to recommend 
changes to provisions in a draft bill that are within the 
jurisdiction of the Committee.
    While the underlying agreement contains several provisions 
within the jurisdiction of this Committee, only those 
pertaining to immigration law require accompanying implementing 
legislation. Thus, our markup today will be confined to these 
provisions.
    At the conclusion of today's session, these recommendations 
will be forwarded to the Administration. While the 
Administration will weigh recommendations made by the 
Committee, it is not required to accept them. And with that in 
mind, I now move that the Committee approve the U.S.-Chile 
draft implementing legislation and forward it to the United 
States Trade Representative.
    Without objection, the draft implementing legislation will 
be considered as read and opening for amendment at any time.
    [The legislation follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner. And the Chair recognizes himself to 
strike the last word.
    The entire issue of trade agreements has been a matter of 
great controversy in the Congress, and the Trade Promotion 
Authority or fast-track legislation passed the House by one 
vote last year, and the conference report was adopted by three 
votes last year. And basically what it does is make non-
amendable trade agreements that have been negotiated and signed 
by the President and thus subject to an up-or-down vote by the 
Congress.
    What the TPA law did do, however, is to require extensive 
consultation by the U.S. Trade Representative to Congress and 
congressional Committees relative to issues within each of the 
congressional Committee's jurisdiction. The Ranking Member Mr. 
Conyers and I, immediately following the enactment of the trade 
promotion authority, sent a letter to Ambassador Zoellick, the 
U.S. Trade Representative, asking for that consultation.
    At the time TPA was enacted into law, a lot of the 
negotiations in both of these trade agreements had been well 
underway and tentative agreements had been reached between the 
United States, on the one hand, and either Chile or Singapore, 
on the other hand, including agreements pertaining to increased 
immigration quotas and various types of immigration visas.
    I expressed both in writing and verbally my concerns to Mr. 
Zoellick on these areas as well as my hope that trade 
agreements would not derogate U.S. antitrust law or U.S. 
intellectual property protection law. And I can say that in 
these latter two areas, the trade agreement reflects the 
concerns that I have expressed to Mr. Zoellick, and they also 
do not require any implementing legislation. So both the IP 
protection issues as well as the antitrust and competition 
issues are not before the Committee, and the agreement does not 
derogate our national law in either of these respects.
    However, with respect to the immigration provision, the 
draft implementing legislation creates a new W non-immigrant 
professional worker visa category for nationals of Chile and 
Singapore. And what this does is that it increases the total 
number of aliens who would be admitted into the United States 
by 5,400 in the case of Singapore and 1,400 in the case of 
Chile.
    It is my concern that immigration policy really does not 
belong in any trade promotion authority bill or any free trade 
agreement. And as a result, there will be an amendment that 
will be offered shortly that will basically not authorize the 
new W non-immigrant professional worker visa category that is 
contained in the draft implementing legislation and require 
that the number of people who are eligible for these visas be 
deducted from the national H-1B visa cap. Thus, the amendment 
will create a new category of H-1B visas to effect the 
temporary entry provisions in the free trade agreements without 
increasing the total number of temporary entries that are 
allowed into the United States.
    I would also point out that the H-1B visa category requires 
certain labor certifications as well as a $1,000 fee. So there 
will be no distinction between how applicants from Singapore 
and Chile will be treated versus applicants for this type of 
visa category from other countries.
    I think that this is a good amendment, but I am also 
concerned that there not be future changes in the basic 
immigration law contained in future trade agreements. Article 
I, section 8 of the Constitution makes immigration and 
naturalization law an exclusive enumerated power of the 
Congress, and we intend to follow the Constitution and not to 
delegate this authority to the executive branch of Government.
    I intend to send a letter to Ambassador Zoellick, which I 
will invite Mr. Conyers to co-sign with me, stating our strong 
opposition to any type of changes in the immigration law in any 
future free trade agreements that will be put in the Committee 
report when we formally mark up the introduced legislation next 
week, as well as any response that Ambassador Zoellick cares to 
give to us. There will also be some rather strong report 
language that says that changes in immigration law are off the 
table as far as this Committee is concerned in future free 
trade agreements.
    With that, I will be happy to yield to the gentleman from 
Michigan, Mr. Conyers, for whatever remarks he chooses to make.
    Mr. Conyers. Thank you, Chairman Sensenbrenner.
    I come to the markup this morning in extreme agreement with 
you, as contrasted with 24 hours ago, for example. So here we 
meet in amity and peace and accord. And so I have nothing to 
add except the comment that the Judiciary portion is to me very 
well crafted. The bigger problem is with trade agreements in 
general. I am part of that group that they just go through by 
one or two or three votes. I was one of those that was trying 
to let it not get through.
    The problem, the bigger problem is that with these trade 
agreements increasingly--and this was true in the previous 
Administration, maybe not to the same extent it looks like it's 
going to develop now. But we are opening the gates to workers 
coming in to whom the standard of living that we enjoy is so 
different from theirs that it increases our unemployment. The 
other problem is that we have companies taking jobs and 
industry out at the same time--all of this under the rubric of 
free trade. Isn't globalization wonderful. Well. And the only--
the small thing I would like to do with the immigration portion 
that is before the Committee today is that we have a little 
amendment on line 23 at page 3 that says you can't stay forever 
in this country once you come in without the numbers being 
counted against the cap of the country from which the immigrant 
comes. Not unreasonable. I mean, otherwise, we're driving a 
huge hole into the whole concept of immigration because here 
you just come in and that's it, you stay. Frequently you become 
a citizen or you become lost in the 275 million others.
    And so I'm happy to join with our Chairman and all of us in 
today's markup.
    Chairman Sensenbrenner. The gentleman from Texas, Mr. 
Smith.
    Mr. Smith. Mr. Chairman, I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Smith. Mr. Chairman, thank you.
    I do want to point out that in both of these two trade 
agreements there are some good provisions, particularly those 
that have strong intellectual property protections, and we 
ought not overlook the fact that this is good for American 
industry, good for American high-tech companies to have these 
strong intellectual property protections in these two trade 
agreements. And in regard to those intellectual property 
protections, I think they do set a good precedent that we hope 
to establish in future trade agreements as well.
    Mr. Chairman, like you, I share your concerns about the 
immigration provisions in both these trade agreements, and I 
think that you have done as much as humanly possible to try to 
correct the problems with the immigration provisions. We are no 
longer going to have an indefinite category of a new visa. That 
is being corrected by the amendment. Hopefully in the future we 
will be able to send a message to the trade reps that we do not 
want a trade negotiator or the Administration establishing 
immigration policy, which is clearly the prerogative of the 
U.S. Congress. And I am glad that we have bipartisan agreement 
on that.
    Also, Mr. Chairman, I just want to point out that I'm not 
aware of any trade agreement in the last 12 years or so that 
has had these type of immigration provisions in it. So I'm glad 
that we can get back in the future to having trade agreements 
without immigration provisions and leaving those 
determinations, again, to be made by Congress.
    Mr. Chairman, I just want to say I appreciate very much all 
that you've done to negotiate with the--with Ambassador 
Zoellick and others to try to work out, as I say, the best 
compromise that I think is possible and that will establish a 
good precedent in the future for not having others determine 
what the immigration policy of the United States is.
    I will yield back.
    Chairman Sensenbrenner. The gentleman from California, Mr. 
Berman.
    Mr. Berman. Well, thank you, Mr. Chairman.
    First, I want to echo the comments of our Ranking Member 
and Mr. Smith in praising you for, I think, standing up both 
for the jurisdiction of the Committee and for the powers of 
Congress in this context. I agree very much with--every once in 
a while, for reasons I'm never quite sure of, I find myself 
agreeing with Mr. Smith, the former Chairman of the Immigration 
Subcommittee, on these issues. And this is one of those times.
    The fact is, although in all fairness we can't blame the 
Trade Representative this time for initiating something new, 
because I believe NAFTA and some of our other earlier 
agreements also had some immigration provisions in them which 
were not separately enacted by Congress but just stuck into the 
implementing legislation. But, Mr. Chairman, I was wondering if 
it would be possible, since this is a mockup and not a markup, 
and since what we do here are simply in the form of 
recommendations to the Trade Representative for the legislation 
that they will be presenting next week, which will come up at 
an up-or-down vote, to ask a representative of that office just 
to clarify a few of the questions that have gone on in the 
discussions so that there's no doubt that when they prepare 
this legislation, we are all--we have a shared understanding of 
what that implementing legislation will look like before it's 
too late and it can no longer be amended.
    So could I--only because this is not a regular----
    Chairman Sensenbrenner. Can we find out for the record if a 
USTR representative would like--since this is a mock markup--
ordinarily we do not allow witnesses at a markup. But would a 
representative of the USTR mind answering questions of Members 
of the Committee?
    Mr. Berman. In the spirit of the compromise which you have 
been----
    Mr. Conyers. A few friendly questions.
    [Pause.]
    Mr. Berman. I don't know if ``mind'' should be the 
standard.
    Mr. Chairman, in the meantime, while they are making up 
their mind----
    Chairman Sensenbrenner. I see them nodding yes.
    Mr. Berman. Oh, okay.
    Chairman Sensenbrenner. Could whomever wants to answer the 
questions sit at the witness table? Please identify yourselves 
for the record and I'll swear you in.
    Mr. Shigetomi. Mr. Chairman, my name is Kent Shigetomi----
    Chairman Sensenbrenner. Could you press the mike button, 
please.
    Mr. Shigetomi. Mr. Chairman, my name is Kent Shigetomi. I'm 
from the Office of the U.S. Trade Representative.
    Chairman Sensenbrenner. Is there anybody else with the USTR 
that will be testifying?
    Mr. Posner. Mr. Chairman, my name is Ted Posner. I'm with 
the Office of General Counsel at the Office of the U.S. Trade 
Representative.
    Chairman Sensenbrenner. Would both of you please stand and 
raise your right hands?
    [Witnesses sworn.]
    Chairman Sensenbrenner. Let the record indicate that both 
witnesses answered in the affirmative. Mr. Berman, you have 
some questions.
    Mr. Berman. Yes, Mr. Chairman. As I understand it, Mr. King 
will be--I don't know if it's a manager's amendment or it's an 
amendment by Mr. King, but there will be an amendment, a mock 
amendment to this mocked-up bill being offered later. And my 
questions pertain to some of the fundamental issues that that 
amendment, I understand, will be trying to deal with.
    As I understand it, the W visas that were proposed in the 
proposed legislation will now become part of the H-1B--they'll 
be H-1B visas. Am I--is that correct?
    Mr. Posner. Congressman, I should preface my response by 
saying I have not seen the text, but in concept, my 
understanding is that is what is intended.
    Mr. Berman. And does that mean that the fees that now apply 
to the H-1B program will apply to each of these individual 
visas as well?
    Mr. Posner. That is my understanding.
    Mr. Berman. Okay. And that the fees collected, those fees 
will be allocated the way the H-1B visa's fees are now 
allocated?
    Mr. Posner. That is also my understanding.
    Mr. Berman. Okay. Secondly, the H-1B program has provisions 
with respect to replacing workers in a time of strike or 
lockout. And the H-1B law requires petitioning employers to 
attest that there is not a strike or lockout in the 
occupational classification that the visa holder will fill. 
Will that language now apply to these visas as well?
    Mr. Posner. My understanding is that the employer, the 
intended employer, will make an attestation including elements 
substantively identical, including the item you just described, 
the no strike or lockout attestation.
    Mr. Berman. Say that one more time.
    Mr. Posner. My understanding is that the substantive 
elements of the attestation that the employer will make will be 
the same as the H-1B attestation items, including the no strike 
or lockout attestation.
    Mr. Berman. Okay. Then on the issue of the renewals and 
the--in effect, these visas--let's just--it's 5,000 for 
Singapore?
    Mr. Shigetomi. Five thousand four hundred for Singapore, 
1,400 for Chile.
    Mr. Berman. Five thousand one hundred----
    Mr. Shigetomi. Five thousand four hundred----
    Mr. Berman. Five thousand four hundred for Singapore, 
5,100----
    Mr. Shigetomi. One thousand four hundred for Chile.
    Mr. Berman. And to the extent those visas are allotted in 
any given year, they will come off the H-1B overall cap for 
that year? They will come out of that cap?
    Mr. Posner. That's my understanding.
    Mr. Berman. Okay. And then the issue of the renewals, those 
visas as to Singapore and Chile, unlike the H-1B visas, as I 
understand the negotiated agreement, they are permitted an 
infinite number of annual visa renewals. Is that--not infinite. 
As long as the person and the--is it the employer who keeps 
petitioning for the annual renewal, or is it the visa holder 
who petitions for the renewal?
    Mr. Shigetomi. Congressman, I should preface my remarks by 
saying I haven't seen the actual text of the amendment.
    Mr. Berman. Conceptually. We're talking----
    Mr. Shigetomi. One difference I would point out is that 
under the implementation of the entry for Singaporeans and 
Chileans, there would be no petition. In fact, petitions are 
not permitted under the terms of the--of both free trade 
agreements.
    Mr. Berman. There would be an attestation, but not a 
petition.
    Mr. Shigetomi. That's correct.
    Mr. Berman. All right. But the granting of the visa would 
come out of the H-1B cap?
    Mr. Shigetomi. That's correct.
    Mr. Berman. All right. Now the question of the renewal of 
the visa. Somebody has to initiate that renewal. Who is it, the 
employer or the employee?
    Mr. Shigetomi. Well, there are certain elements that fall 
to the responsibility of the alien and certain that fall to the 
responsibility of the employer. Only the employer can make the 
attestation, and it's my understanding that the attestation 
would be--a new attestation would be required after 3 years.
    Mr. Berman. That's under H-1B?
    Mr. Shigetomi. And under the operation of this proposed 
program.
    Mr. Berman. But I understand that the agreement that was 
negotiated allows an annual renewal----
    Mr. Shigetomi. Oh, I'm sorry, sir. That was for the 
attestation of compliance with U.S. labor laws.
    Mr. Berman. I am not----
    Mr. Shigetomi. For the period that the alien is in the 
United States, there is nothing in the text of the agreement 
that mandates a specific time. It was our understanding that 
the program would operate in a manner similar to the NAFTA TN 
professional system under which an alien is permitted an 
initial stay of 1 year and then an extension granted in 1-year 
increments thereafter.
    Mr. Berman. I think the thing the Committee should be aware 
of is that under the H-1B program you're entitled to 3 years--
--
    Mr. Shigetomi. For an initial stay.
    Mr. Berman. For an initial stay, and one renewal, for a 
maximum of 6 years under the H-1B status. Here, you--the plan 
is to have annual renewals with no limit for this non-immigrant 
temporary visa program. It could be--it could be perpetual. Is 
that right?
    Mr. Shigetomi. Again, I should preface my remarks by saying 
I haven't seen the text of the amendment, but any alien who 
seeks entry under this category would still be required to 
comply or meet--overcome the presumptions of an immigrant 
intent that are established in another section of the 
Immigration and Nationality Act. So all of the exclusions, the 
rights, or privileges that apply to non-immigrants would also 
apply to aliens.
    Mr. Berman. My only point is, were this Committee to adopt 
an amendment that said--it gets complicated. The way it works 
under the H-1B program is you have an annual cap of a hundred--
what is it now?--190----
    Mr. Shigetomi. Five thousand.
    Mr. Berman. A hundred ninety-five thousand. The renewals 
don't count against the cap. If there were a provision that 
said renewals after 6 years for these sub-quotas inside the cap 
for Singapore and Chile, if the renewals were to count against 
the H-1B cap after 6 years, would that in any way violate the 
provisions of this agreement? It would not?
    Mr. Shigetomi. Congressman, that would create a problem.
    Mr. Berman. Why?
    Mr. Shigetomi. Under both agreements there is language--
I'll just read it to you. This is from the Singaporean text 
under Appendix 11A.3: ``Beginning on the date of entry into 
force of this agreement, the United States shall annually 
approve as many as 5,400 initial applications of 
businesspersons.'' And then in paragraph 2, subparagraph (a), 
``The United States shall not take into account: (a), the 
renewal of a period of temporary entry.''
    Mr. Berman. I'm aware of that. But if the amendment were 
simply to say that after 6 years the renewal of a period of 
temporary entry would count--would count--6 consecutive years, 
would count against the H-1B cap, that is not a prevention of 
renewals. It doesn't violate the agreement. It simply says in 
the seventh year it----
    Mr. Shigetomi. It would count against----
    Mr. Berman. It would count against the overall H-1B cap. It 
wouldn't in any way violate the agreement. It would simply 
limit the other visas that could be granted under H-1B.
    Mr. Shigetomi. I think I understand your point now. So 
you're saying that in the--after the 6-year period, in the 
seventh year that extension would count against the H-1B cap 
and not against the separate cap established.
    Mr. Berman. That's right.
    Mr. Shigetomi. I'm not an attorney, sir, but that would not 
seem to be in conflict with the terms of the free trade 
agreement.
    Mr. Berman. All right. Then are we----
    Chairman Sensenbrenner. The gentleman from Iowa would like 
to offer an amendment now. Do you have an amendment at the 
desk?
    Ms. Jackson Lee. Excuse me. Are we allowed to have opening 
remarks or what?
    Chairman Sensenbrenner. Wait a minute.
    Mr. King. Mr. Chairman, I have an amendment, an amendment 
at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to the draft implementing legislation 
for the United States-Chile Free Trade Agreement, offered by 
Mr. King. Page 2----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. The gentleman from Iowa will be 
recognized for 5 minutes to explain his amendment.
    Mr. King. Thank you, Mr. Chairman, and ladies and gentlemen 
of the Committee, much of this amendment has been discussed. 
I'd like to preface my remarks on the amendment with a 
philosophy on immigration, which is I believe the United States 
of America needs to continue to develop an immigration policy 
that's designed to enhance the economic, the social, and the 
cultural well-being of the United States of America. That 
should be our endeavor here in this Committee and in this 
Congress, and, in fact, we have a constitutional authority and 
a constitutional obligation to provide that policy to the 
Administration rather than have the Administration provide the 
policy to Congress for our ratification. And I am a strong 
supporter of free trade and a strong supporter of trade 
promotion authority, although I do not believe that it was the 
intent of Congress to consider trade and immigration as part of 
those negotiations, and that's the effort here in this 
Committee, is to help the Administration have some guidance on 
limitation of what you might be negotiating with free trade.
    This amendment then before us today takes the new W 
category for immigration that's been negotiated, particularly 
this first amendment with the Chile agreement, and rolls that 
new category of the W into a new subcategory under H-1B called 
H-1B2. And it just simply limits the number under the cap, the 
existing cap of 195,000 that's there for H-1B, and it will 
statutorily roll back to 65,000 sometime later this fall.
    So it is exactly as described by the Committee and 
announced by the Chairman, and I'd point out also that the H-1B 
program is one of the best programs that we have with--
immigration program because it is designed to go out and 
identify highly skilled, highly talented people who can come 
into this economy and make a positive contribution right away. 
I believe it has some flaws in it that at some point we will 
need to address in another bill on another issue down the road 
a few months. But what's in front of us today is this amendment 
that simply rolls the W category underneath the H-1B, sets up a 
new subcategory of H-1B2, and that I think is the intent of 
this Committee, and I'm asking----
    Mr. Nadler. Would the gentleman yield for a question?
    Mr. King.--for your support on this amendment. I will 
yield.
    Mr. Nadler. I really don't understand what you're trying to 
do. How does that differ from what the Chairman outlined in the 
Chairman's amendment?
    Mr. King. I'm not aware there was a Chairman's amendment 
before us, but it's consistent----
    Mr. Nadler. Never mind. Thank you.
    Mr. King. You're welcome.
    That would conclude my remarks, and I'd yield back.
    Mr. Conyers. Mr. Chairman?
    Chairman Sensenbrenner. I am going to recognize myself for 
5 minutes at this point.
    I support the King amendment, and I think the important 
thing to note in the King amendment is that the new visas that 
have been negotiated as a part of both the Singapore and the 
Chile Free Trade Agreement will not result in an increase in 
the total number of visas that will be allowed on a worldwide 
basis, meaning that the 5,400 for Singapore and the 1,400 for 
Chile will come under the existing H-1B cap, be subject to the 
same fee, which is $1,000 for applications, and will also be 
subject to the labor attestation provisions and the anti-strike 
and lockout provisions that are contained in H-1B.
    So what this amendment does is decouple immigration policy 
from free trade policy. I don't think it ever should have been 
merged. It was merged in the past. I think that we're 
decoupling this in the future. And I intend to support this 
amendment.
    I also intend to support an amendment that will shortly be 
offered by Mr. Conyers to make sure that renewals go against 
the worldwide cap on H-1B visa, and according to the testimony 
of the USTR representative, the Conyers amendment will not 
conflict with either the Chile or the Singapore Free Trade 
Agreement.
    With that, I yield back the balance of my time, and for 
what purpose does the gentleman from Michigan seek recognition?
    Mr. Conyers. Mr. Chairman, I have that amendment.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Conyers. It's the Conyers-Berman amendment now.
    Mr. Goodlatte. Point of order, Mr. Chairman. Is that an 
amendment to this amendment?
    Chairman Sensenbrenner. Yes, it is.
    The Clerk. Mr. Chairman, I don't have a copy.
    Chairman Sensenbrenner. Would the----
    The Clerk. Amendment to the draft implementing legislation 
for the United States-Chile----
    Mr. Conyers. No, that's not the right one.
    The Clerk. Amendment to draft implementing legislation for 
the United States-Chile Free Trade Agreement, offered by Mr. 
Conyers. Page 3, line 23, strike the quotation----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. And the gentleman from Michigan is 
recognized for 5 minutes.
    Mr. Conyers. Thank you. Mr. Chairman and Members of the 
Committee, after talking this over with the Chairman, Howard 
Berman, and Perry Applebaum, what are we trying to do with the 
amendment to the amendment, the King amendment, which I 
support? Well, it's because we've supported in the past H-1B 
extensions and renewals, but we always know at the end of the 
day that the stay of the aliens would be temporary and would be 
subject to a cap. That protection is not contained in the bill 
as it's currently written, and so all we do is make that 
important. And all of you who are concerned about the labor, 
domestic labor aspects, this would be very important.
    It's a kind of a loophole in the bill that we're correcting 
because, as currently written, individuals could come into and 
remain indefinitely and not count against any subsequent 
overall annual cap once they're given entry. So we fixed the 
problem by providing that any extensions beyond 6 years count 
against the H-1B cap in that year. And we think that's very 
fair, and I would yield to the gentleman from California.
    Mr. Berman. I thank the gentleman for yielding, and I think 
he just expressed it exactly the way it is. This is consistent 
with the whole premise of the H-1B program, which is to have an 
annual cap that allows people to stay here for 6 years, and by 
this amendment it will be consistent with it and won't violate 
the underlying agreement reached between the two countries, or 
the three countries in this case. I support it.
    Mr. Watt. Mr. Chairman, might I make a parliamentary 
inquiry?
    Chairman Sensenbrenner. State your inquiry.
    Mr. Watt. I'm a little confused about what it is we're 
marking up. Are we marking up the King amendment as the 
underlying bill, the thing that was given out yesterday? Is Mr. 
Conyers' an amendment to King's?
    Chairman Sensenbrenner. Okay. The answer to the gentleman's 
parliamentary inquiry is the base bill is the draft 
implementing legislation, which was given to the Members 
yesterday. That.
    Mr. Watt. All right.
    Chairman Sensenbrenner. Mr. King has an amendment to the 
draft implementing legislation. Mr. Conyers' amendment is an 
amendment to the King amendment.
    Mr. Watt. All right. May I make a further--I think I 
understand substantively what we're doing. I just----
    Chairman Sensenbrenner. The questions will be put as 
follows: the adoption of the Conyers amendment to the King 
amendment, the adoption of the King amendment, presumably as 
amended, then the draft implementing legislation. The 
immigration provisions of it are open to further amendment, and 
then we would make a recommendation to the USTR to make these 
changes in his draft implementing legislation. And then we will 
be back here next week to deal with the actual formal markup.
    Mr. Watt. Thank you, Mr. Chairman.
    Chairman Sensenbrenner. Okay. The question----
    Mr. Goodlatte. Mr. Chairman?
    Chairman Sensenbrenner. For what--the gentleman from 
Virginia, Mr. Goodlatte.
    Mr. Goodlatte. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    I first want to comment you for making the best of a very 
difficult situation, and I want to thank the them from 
Michigan, the gentleman from Iowa, and others who've worked in 
a bipartisan way to try to resolve this problem.
    The real problem here is not what I consider to be bad 
immigration policy. It is bad immigration policy. The real 
problem here is--as the gentleman from California has noted, 
this is a mock markup, and what we're trying to do is to avoid 
making a mockery of the jurisdiction of the United States 
Congress that we've inherited.
    And I also want to make it very clear to our friends from 
the U.S. Trade Representative's office that I know that this is 
something that's been going on for a long time, and I don't 
hold them, those here today, personally accountable for this. 
But I hope they can see from what we've been put through in the 
last few days and the Chairman's been put through for the last 
few months that this is a major, major insult to the United 
States Congress. That is exactly what we're confronting here. 
This has no business being in trade agreements of the past, 
certainly not in this one, and quite frankly, all we're able to 
do today is try to patch together a bad situation and then send 
it down to the Trade Representative, hope that's the 
understanding that he reached with the Chairman, and that it'll 
come back in that form when we get it back from the USTR next 
week.
    So we'll have to see what we get from them and reserve 
judgment on that before we make any final decision on how to 
proceed. And all of that's a shame because these are good free 
trade agreements. As the gentleman from Texas noted, there are 
good provisions in here promoting trade in a whole host of 
areas between countries in which we have a great deal of 
interest in increasing exports and allowing our American 
consumers to have choice of new goods from these countries.
    But to add this to the process is very, very problematic, 
and I----
    Mr. Berman. Would the gentleman yield?
    Mr. Goodlatte. I will yield in just a minute. I would hope 
that the Chairman's assurance that his discussions with the 
U.S. Trade Representative will lead to this not occurring again 
in the future, will be very strongly and carefully heeded. And 
I would like to ask the USTR representatives what their 
understanding is of future trade negotiations that the USTR may 
be presently involved in or intending to be involved in in the 
future with regard to changing U.S. immigration policy.
    Mr. Shigetomi. Congressman Goodlatte, my experiences here 
for the last 2 days have made it perfectly clear what the views 
of this Committee are in this particular aspect of trade 
negotiation.
    Mr. Goodlatte. You don't need to tell me what the views of 
the Committee are. I want to know what the views of the U.S. 
Trade Representative are on this issue.
    Mr. Shigetomi. Congressman, I am not in a position to 
address the views of my agency with regard to the other trade 
negotiations that we're undertaking.
    Mr. Goodlatte. Well, I would hope that you would convey to 
the Representative that before I cast my vote on these 
agreements, which I've already stated have much merit--as the 
Chairman of the Agriculture Committee, I've looked at the 
provisions related to agricultural trade, and while there is 
not unanimity of support for them, there's a great deal of 
comfort in the United States on these being well negotiated in 
that regard. But prior to that, I hope to receive that 
assurance from the U.S. Trade Representative that we're not 
going to see this in future trade agreements.
    Mr. Nadler. Would the gentleman yield?
    Mr. Goodlatte. I would be happy to yield to the gentleman 
from New York.
    Mr. Nadler. Thank you. I just wanted to say that I would 
hope the U.S. Trade Representative would take from this little 
colloquy the fact that if there are such provisions in this 
trade agreement when it finally comes down to us or in future 
trade agreements, you run a real risk of not having the trade 
agreement agreed to because an immigration provision is a 
real--and after this Committee has made its opinion clear, a 
studied and deliberate insult to the Congress, which many 
people who might support those trade agreements on the merits 
would not stand for.
    I'll yield back.
    Mr. Berman. Would the gentleman yield?
    Mr. Goodlatte. The gentleman from California----
    Mr. Berman. I ask unanimous consent for the gentleman to 
have one additional minute.
    Chairman Sensenbrenner. Without objection.
    Mr. Berman. Thank you. I thank the gentleman for yielding. 
Let's just clarify one point. First, just as a preface, it is 
not this Trade Representative who started the insults.
    Mr. Goodlatte. I--reclaiming my time, I fully agree with 
that and thought I had indicated that.
    Mr. Berman. Oh, okay. But what I would--to look at this as 
half-full rather than half-empty, this is the first time this 
Committee has pushed back. And as I understand it--and let's 
just clarify that. As to these two agreements, my understanding 
is that it is subject to technical corrections and those kinds 
of things that frequently come up after an amendment's adopted. 
It is my understanding that it is the intention of the Trade 
Representative in proposing the implementing legislation which 
we will be seeing next year to reflect the--next week, I mean, 
the agreements that you have already discussed and that are 
reflected in the King amendment, now amended, soon to be 
hopefully amended by the Conyers amendment.
    Mr. Conyers. Mr. Chairman, could the gentleman from 
Virginia get 30 seconds additional?
    Chairman Sensenbrenner. Without objection.
    Mr. Conyers. I'd like to scare these two guys a little bit 
more during that time. [Laughter.]
    Mr. Conyers. They're such fine fellows. Obviously some of 
these questions may be slightly below their pay grade. But 
here's the problem, men, is that these are relatively small 
trade agreements, Chile and so forth. But we know that around 
the corner entire continents may be involved in massive 
situations like the one before us. And this would have 
incredible implications in terms of our immigration law, and 
that's the point.
    So, so nice of you being here.
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from California wants 
a direct answer to the question that he asked, which we'll put 
on the record.
    Mr. Posner. Right. Thank you, Mr. Chairman. With respect to 
recommendations by the Committee that the USTR can agree to, 
there are certain provisions, including the provisions of the 
King amendment, that were discussed among staff of the 
Committee and staff of USTR, which it is my understanding we 
are prepared to agree to. The provisions of the Conyers 
amendment to the King amendment is not one that we have 
discussed, and so I'm not prepared at this time to say one way 
or the other whether the agency would be prepared to accept it.
    Mr. Conyers. Bring out the leg irons, then. That's it. 
[Laughter.]
    Mr. Goodlatte. Would the gentleman yield?
    Mr. Berman. Well, it's your time, but I'd just like--but 
as--I'd just like the record to show that as to the--what we 
have described as the Conyers amendment--you'll be able to 
analyze it--I think we've had a statement from the office, from 
your office, that that does not violate the underlying 
agreements, that its impact is on the overall H-1B quota, cap 
in the seventh year.
    Mr. Posner. If I could just make one point of clarification 
on that. It is correct to the extent that it doesn't draw down 
the agreement-specific cap, it is not a violation of the 
agreement. If you had a particular factual situation in a given 
year where you were not able to renew a Singaporean or a 
Chilean citizen's stay under this W category because the H-1B 
cap had already been exhausted, in that particular--in that 
particular factual scenario, I can't say definitively that we 
would not in that case be violating the agreement.
    What I'm saying--what we intended to say previously is that 
nothing about the amendment appears to us per se to violate 
provision of the agreement to the extent that you're not 
drawing down the 5,400 or 1,400 cap. So if I could just have 
that clarification on the record.
    Ms. Lofgren. Mr. Chairman?
    Chairman Sensenbrenner. I believe the time of the gentleman 
from Virginia has expired.
    Ms. Lofgren. Mr. Chairman?
    Chairman Sensenbrenner. The gentlewoman from California, 
Ms. Lofgren.
    Ms. Lofgren. Thank you, Mr. Chairman.
    First, I would like unanimous consent to make a part of the 
record several letters that were exchanged between Congressman 
Boucher and myself and the USTR relative to the IT provisions. 
It's not before us today, but I'd just like to make that----
    Chairman Sensenbrenner. If the gentlewoman from California 
would yield, this is a mock markup.
    Ms. Lofgren. I understand.
    Chairman Sensenbrenner. We will not be filing a Committee 
report following this markup. This is kind of advice to the 
USTR on what to put in the bill that we'll be marking up next 
week.
    Ms. Lofgren. So I'll save these for next week.
    Chairman Sensenbrenner. And I think the proper time--you 
know, if you want this to be preserved and read forever and 
ever----
    Ms. Lofgren. That's my goal.
    Chairman Sensenbrenner.--is to ask UC next week, and I have 
no objection to doing that.
    Ms. Lofgren. I will do that, then.
    On the issue before us----
    Mr. Berman. Would the gentlelady just yield on this first 
point first?
    Ms. Lofgren. Yes.
    Mr. Berman. Would it then be appropriate to say that we 
want to--some of us on the Committee want to congratulate the 
Representative for the intellectual property provisions? Is 
this the appropriate time?
    Ms. Lofgren. No. That will be next week.
    Mr. Berman. Next week I will----
    Ms. Lofgren. Reclaiming my time, I want to talk about--I 
voted against the fast-track bill last year because I was 
afraid that this would happen, and I was right. You know, the 
Ways and Means Committee doesn't know anything about matters 
within our jurisdiction. And I was focusing on antitrust, but 
the--I'll just say that the drafting of these immigration 
provisions is defective in my judgment. They're poorly drafted. 
They're not well thought out. And because the numbers are 
small, it's not going to prevent us from passing these 
agreements. But if this a template for the future, you're not 
going to have any trade agreements, because we know that there 
are many--there are many in the labor community who oppose 
these free trade agreements. There are many people who are very 
concerned about immigration. You're not going to have any free 
trade agreements if you don't stop doing this. And I think it's 
important that you understand that.
    What I object--and I've spent a lot of time on immigration. 
I used to teach immigration law. I've been on the Immigration 
Subcommittee for many years. What we're going to end up doing 
is skewing a program that is supposed to bring the brightest 
people in the world to the United States to help our country. 
And what we've said is now, you know, 10,000 of those people 
must come from two little countries. Well, maybe we don't have 
Ph.D.s in astrophysics from Chile and Singapore. So you're 
really messing up a program that should charge the economy.
    If we do this down the road with whole continents, you're 
going to seriously disrupt the technology economy of the United 
States, and I think that's a big problem.
    So I would just hope that we--out of this public session we 
can have a sit-down with people who work on this stuff with the 
USTR and make sure that you don't continue to cause problems 
for our country by faulty and defective drafting of these 
agreements.
    I understand that we will have a proposal--it's an up-and-
down vote on the trade agreement, but I think you're in very--
you may lose this even with these amendments that are being 
proposed. And I think, you know, this isn't the first time. 
When I went to do some reforms on the H-1B program, I found 
out--I mean, I was stunned--that the WTO got there first and 
that we were constrained on what we could do in reforming the 
H-1B program. There are still some things that I think we need 
to do on the H-1B program that I wanted to do when we last 
touched the agreement in terms of protections for employees and 
the like.
    I think that the--what you've done on this agreement, I'm 
sure with the best intentions in the world, has even caused 
problems in that arena.
    So I would just like to counsel the USTR, number one, not 
to be negotiating matters that are really within the purview of 
this Committee, and certainly not to do so without a full 
communication, not just with the Chairman and Ranking Member, 
but with the Members of the Committee who in many cases have 
spent several decades working on these issues and actually know 
quite a bit about--I don't want to just say myself, but Mr. 
Berman and Ms. Jackson Lee and others on the other side of the 
aisle who actually know something about this more than you do, 
because you've made a mess of this, I must say.
    And I yield back my time.
    Chairman Sensenbrenner. The gentleman from Indiana, Mr. 
Hostettler.
    Mr. Hostettler. Mr. Chairman, I ask to strike the last 
word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Hostettler. Mr. Chairman, I want to commend Mr. Conyers 
and Mr. King for their amendments, and I support them. And I 
want to also commend the representatives here today from the 
U.S. Trade Representative and your willingness to help us in 
this process. It's very encouraging that--you did not have to 
testify. You did not have to answer our questions on the 
record. But you chose to, and that's very helpful and we want 
to thank you for that.
    Mr. Chairman, I want to commend you and the gentleman from 
Virginia and the gentleman from Texas as well as the gentleman 
from Iowa and the gentleman from Michigan for jealously 
guarding the prerogatives not only of this Committee but of 
this Congress in our constitutional obligations. You are in a 
sense, this Committee is in a sense today attempting to put the 
genie back in the bottle, because, as has been pointed out 
several times today, this U.S. Trade Representative was simply 
working from a template of previously agreed-to agreements, not 
only between the United States and other countries but of this 
United States Congress. And so I don't hold these folks at any 
fault because they did it before, we did it before--I guess I 
should say that Congress did it before, and so they were simply 
working on that assumption that it would be okay to continue 
this.
    But just as this Committee is jealously guarding our 
constitutional prerogatives with regard to article I, section 
8, when it says, ``Congress shall have power to establish a 
uniform rule of naturalization,'' I would hope that at some 
time in the future that the entire Congress would once again 
re-establish our primacy when it comes to trade agreements in 
general, because in the same Constitution, in the same section 
of that Constitution, article I, section 8, it says that 
``Congress shall have power to regulate commerce with foreign 
nations.''
    We are delegating that power to the executive branch with 
every single trade agreement that we do. Every time we pass 
what has previously been referred to as fast-track, now as 
trade promotion authority, we are essentially ceding them the 
legislative authority to fashion law for this country, and then 
they are granting us the law that we pass--I should say trade 
promotion authority grants us essentially a veto authority, 
turning the constitutional prerogatives and obligations on 
their head. They fashioned the law. They fashioned the policy. 
And all we get to do, because, as we said earlier, this is a 
mockup and not a markup, we basically get an up-or-down vote in 
the House of Representatives. So we can either veto the bill or 
we can--we can essentially put the bill into law, even though 
the President has to sign our piece of legislation afterwards.
    And so I would hope that in our discussion today that we go 
from this point and as a Committee we maybe make the case to 
the rest of the Congress that we are trying to do our part with 
regard to immigration law, antitrust law, intellectual property 
law, and that maybe the rest of the Congress should do our job 
into making the case that maybe Congress is capable of 
regulating commerce with foreign nations since the Framers of 
the Congress--Framers of the Constitution gave us that 
obligation over 200 years ago.
    And I yield back the balance of my time.
    Ms. Jackson Lee. Mr. Chairman?
    Chairman Sensenbrenner. The gentlewoman from Texas, Ms. 
Jackson Lee.
    Ms. Jackson Lee. Mr. Chairman, thank you very much. I want 
to add my appreciation to the Chairman and the Ranking Member 
for demanding jurisdiction on this question or oversight over 
this trade deal that has become a legislative initiative. And 
I'd like to emphasize that the agreements that we are looking 
at are simply that. They are deals. And when you're in 
negotiations, two nations are dealing--dealing on matters of 
who can benefit the most or, as they say, it's a lot of horse 
trading. And I think it's very difficult to horse trade on a 
very technical area of the law and area of responsibility of 
the Congress such as immigration.
    And I want to cite to you gentlemen--and I assume that 
there is a record--that one of the difficulties we have or that 
I have with this process and with the fact that immigration 
policies are included in a trade deal is that we have throngs 
of individuals who are in line to access legalization, who are 
proceeding through a process to achieve legal status and 
permanent status. These are temporary statuses. And they're 
waiting years and years because of backlog to be able to enter 
into this country or to be able to achieve either legal 
permanent resident status or citizenship.
    And then we have an additional burden that I believe this 
Committee and this Congress has abdicated its responsibility, 
and that is, of course, to deal with the throngs of others who 
are in this country that may have entered illegally, but many 
of us know are working, paying taxes, and we should develop 
policies to allow them to earn access to legalization. That is 
certainly an issue beyond the jurisdiction--not the 
jurisdiction but the discussion today.
    But I raise it only because I'm concerned about this 
temporary status that goes on and on and on, and as I recall--
and I'd appreciate it if the witnesses could listen while I'm 
speaking. I listened to the inquiry being made by Congressman 
Berman, and I'm not clear on the answer. It goes to the 
amendment that is before us, and that is the temporary annual 
renewal of the visas that would be allowed. I think you said 
5,000 from Singapore and 1,400 from Chile. And my question is: 
Are we still at that point where they are annually renewed, 
even with this amendment? I didn't understand. This means that 
these are 1-year visas, if I understand them, and they're 
temporary, but they are renewed every year and there's no--
there's no ending time. Is that correct?
    Mr. Shigetomi. Congresswoman, my understanding is that each 
extension would be granted in 1-year increments.
    Ms. Jackson Lee. Right.
    Mr. Shigetomi. By virtue of its inclusion as a--by virtue 
of its classification as a non-immigrant, these aliens would be 
subject to the same grounds of exclusions, rights, 
responsibilities, and privileges as all other classes of non-
immigrants. As a result, they are held to the same standard as 
any other non-immigrant.
    Ms. Jackson Lee. And I appreciate that you are not well 
versed in immigration law, and I appreciate your attempting to 
answer the question. What I am suggesting is, are you--I 
understand criteria and standards, but am I to understand that 
the provision suggests that you can renew and renew and renew 
and renew, as long as you meet the standards, but it could be 
12 years and you could still be here on that visa? Is that my 
understanding?
    Mr. Shigetomi. That's theoretically possible, yes.
    Ms. Jackson Lee. Then what I would say to my colleagues, I 
find that totally unacceptable. And because I juxtapose it 
against our responsibilities with respect to immigration 
policies, immigration--or applicants for immigration status, 
and also the H-1Bs, as I understand the present structure, is 
you have a 3-year and then you have a renewal. And as my 
colleague said from California, those were based upon a certain 
expertise that you brought.
    I am making no speculation of the expertise in Chile or 
Singapore. I am sure there are an enormous number of 
individuals who qualify for H-1B, but they're not coming in 
under H-1B.
    So I would simply say that I have a--I take great umbrage 
with the process. I, too, celebrate my vote in opposition to 
the free trade act, the speed trade act, because I believe it's 
very important that these issues not be unaddressed.
    I would also ask you to take back a message that they have 
made a large mistake in adding this to the trade legislation.
    I'd ask for an additional 1 minute.
    Chairman Sensenbrenner. Without objection.
    Ms. Jackson Lee. And I believe that we can move further, if 
you will, with the understanding that there is great difficulty 
in this process. When we hear--when Members hear that you have 
a perpetual 1-year renewal, regardless of whether or not they 
meet criteria, it certainly begs the question of the 
difficulties we have. I'll do that in just a second.
    I would like to also suggest to my colleagues that I will 
have an amendment that I hope to gain support, even though one 
suggests that it might be in, and that is the distribution of 
the user fees. I think it'll be very helpful to give 
instruction on the user fees that may be offered in terms of 
the immigration process. I hope to offer it in a moment. I'd be 
happy to yield to the distinguished gentlelady.
    Ms. Lofgren. If I--and I thank the gentlelady for yielding. 
I just think it's a huge mistake to have a temporary visa that 
theoretically could go on for 25 years. I mean--or 50 years. 
You know, we have a temporary visa program. It serves a 
purpose. But it's limited. And if somebody's going to come here 
and live for 20 years, they should meet the labor certification 
standard, they should apply just like any other immigrant. This 
is a huge problem. It's fraught with abuse. The potential for 
abuse of individuals is huge. And I just think it's a huge 
mistake. And if you bring this to the floor without changing 
that, I mean, I think you risk having this thing come down.
    Chairman Sensenbrenner. The time of the gentlewoman has 
expired.
    Mr. Coble. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Coble.
    Mr. Coble. Mr. Chairman, move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Coble. Mr. Chairman, I realize that the King and the 
Conyers amendment are before us, but you've been very generous 
procedurally. I'd like to make a general comment or two.
    First of all, I want to associate with the remarks made by 
Mr. Berman and Mr. Smith regarding the intellectual property 
feature. I'm pleased that that received a good amount of 
attention in this bill.
    When the appropriate time comes, Mr. Chairman, to send this 
bill to the floor, I will vote to send it to the floor because 
I think it deserves full floor attention.
    I am concerned, however, that most of these--well, strike 
that. Many of these--some of these trade amendments initiated 
by Democrat administrations as well as Republican 
administrations strongly emphasize free trade, but fair trade 
oftentimes is conspicuously missing. And I hope that's not the 
case with this bill. I'll dig into that more in more detail. 
But when fairness is omitted in the scenario, it oftentimes 
works to the detriment of U.S. manufacturers. I'm talking 
textiles, furniture, et cetera.
    But I repeat, Mr. Chairman, when the appropriate day comes 
to send it to the floor, I will vote to send it to the floor. I 
don't know how I'll do at that point, but it's good to have you 
all----
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Coble. I will yield.
    Ms. Jackson Lee. I thank the gentleman very much. You were 
mentioning intellectual property, but I wanted to finish on a 
point that somewhat ties to the comment of intellectual 
property, just to explain why I have such difficulty in this 
perpetual visa, Mr. Coble, is that we're having difficulty in 
even getting research scientists for some of our institutions 
of higher learning and research institutions to be able to get 
visas to come into the country post-9/11.
    We're also having difficulty, coming from Texas--and I know 
others who have medical centers such as the Texas Medical 
Center--where patients who are attempting to come in for unique 
and particular services at our medical facilities, who 
typically have been able, or previously to 9/11 been able to 
achieve visas are not able to get them, some to the extent 
where we're hearing indications that patients have died waiting 
for a visa to come into this country for legitimate medical 
treatment.
    Mr. Coble. Ms. Jackson Lee, if you would suspend, I need to 
make another point.
    Ms. Jackson Lee. I'd be happy to suspend.
    Mr. Coble. If you want to wrap up quickly.
    Ms. Jackson Lee. All right. I would beg you to take this 
message back that what you do when you put a perpetual visa 
alongside of individuals who have decided needs and then 
Americans who have decided needs for them to be here, it makes 
it a very difficult mountain to climb. And I think these 
provisions should not be in there, and I think there should be 
some modification.
    I yield back to the gentleman.
    Mr. Coble. Let me reclaim my time. I just want to reiterate 
what's already been suggested from both sides of the aisle. 
This is a bad precedent to lump--and I'm not blaming you 
gentlemen--to lump immigration matters into a trade bill. And I 
hope that can be avoided subsequently.
    And I yield back, Mr. Chairman.
    Chairman Sensenbrenner. The question--or the gentleman from 
California has a modification he wishes to propose to the 
Conyers amendment.
    Mr. Berman. Thank you, Mr. Chairman. I guess I'd ask 
unanimous consent that the--that on line 4 of the Conyers 
amendment, the number 6 be replaced by the following: 5 or 
more.
    Chairman Sensenbrenner. Without objection, the modification 
is agreed to. The question is----
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina, 
Mr. Watt.
    Mr. Watt. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. I will try not to take the 5 minutes because it's 
quite obvious the Chairman doesn't want to hear me since he 
passed on me several times trying to get recognition. But I 
wanted to make a couple of comments.
    Number one, to seize the historic opportunity to be on the 
same side of an issue with Mr. Hostettler, which doesn't happen 
very often.
    Number two, to say that I generally agree with most of the 
comments that have been made about the substance of what's 
being done here.
    But, number three, to--and I'm the last person that ought 
to be trying to defend the U.S. Trade Representative's office--
to make it clear that this is a logical result when you support 
fast-track legislation.
    I mean, I--you know, it's like these people have done 
something outrageous. This is like what you get when you pass a 
law and you leave the details to be written by the regulators. 
This is what you get when you pass fast-track, and then they 
take the authority that they've been given under fast-track and 
come back to you, and then you say, well, I'm praising you for 
what I agree with, which is the intellectual property part of 
it, because I consider that trade, yet I'm absolutely 
condemning you for the other parts of it that I don't agree 
with.
    There is no way you're going to be able to get off of that 
slippery slope. And so the problem from my opinion all along 
with Democratic administrations and Republican administrations 
is that this is our authority as a Congress. And we shouldn't 
be delegating it under fast-track to the Administration. And if 
we do delegate it, then I think you're going to get exactly the 
same result in the future that you got this time. I mean, this 
is just--these people are just doing the job you told them to 
do. They're going and negotiating an agreement, and I'm even 
surprised that we're back here a week early to even get 
consultation on it as opposed to being here next week with the 
agreement already done and saying either vote it up or down, 
which has been historically the precedent that's been followed.
    So this righteous indignation that we're expressing up here 
is a little misplaced, in my opinion. Although I agree with the 
content of the righteous indignation, I just take issue with 
our right to be righteously indignant in this circumstance.
    Mr. Berman. Would the gentleman yield?
    Mr. Watt. I'd be happy to yield.
    Mr. Berman. One could be righteously indignant about 
delegating our jurisdiction and not care too much about 
delegating the Ways and Means jurisdiction.
    Mr. Watt. Yes, and that's exactly what I'm saying, is once 
you get--there's somewhere along the spectrum, and you are on a 
very slippery slope, and I don't think you can say to the Trade 
Representative, okay, you've got to do only what's in the--
because, I mean, we don't even know what's in that Committee's 
jurisdiction over--versus our Committee's jurisdiction versus 
Commerce Committee's jurisdiction. We've been arguing about 
that for years and years and can't even resolve it among 
ourselves. How are we going to expect the Administration to 
resolve it?
    Ms. Lofgren. Would the gentleman yield?
    Mr. Watt. And I'm not--I mean, this is not about the 
substance of this conversation. It's about me watching this on 
television, which the Chairman wants me to do rather than 
participate in it, and just giving you my observations as a 
casual observed.
    I'll yield to the gentlelady.
    Ms. Lofgren. Thank you, and----
    Chairman Sensenbrenner. Without objection, the gentleman 
from North Carolina will be given 5 additional minutes.
    Mr. Watt. I don't care for 5 additional minutes.
    Ms. Lofgren. I do.
    Mr. Watt. I'll take 1 additional minute, and I'll yield it 
to Ms. Lofgren.
    Ms. Lofgren. I would just like to say, you know, the idea 
of fast-track is not antithetical to me. I mean, I do 
understand that the Trade Representative needs to be able to 
make a deal and that you can't then come to Congress and have 
435 people micromanage every line.
    I mean, the problem I have with what's happened here is 
that the Ways and Means Committee was supposed to be consulted. 
I don't know if they were. I presume and hope that they were 
under the fast-track. But there was no consultation with me 
about the issues under the jurisdiction of this Committee. And 
I don't know what communication occurred with the senior 
Members of the Committee, but I will say the result is inept. 
And it reflects the fact that there was no consultation with 
people who knew something about this, and that's the problem.
    And I think if we move forward with these deals, you guys 
better deal with the people who are in charge of these 
substantive law areas, or you're not going to have any deals.
    Mr. Watt. Reclaiming my time long enough to say that I 
definitely agree with the gentlelady from California that this 
is inept. But I've also agreed that most of the other parts of 
the agreements that you've come back with in the other 
Committees' jurisdiction have been inept, too.
    So we can't do this on the basis of what we consider inept. 
We gave these people this authority, and they've taken it, and 
now I'm----
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Watt. I don't want any more time because I don't want 
to offend the Chairman. I'm going to yield back.
    Mr. Chabot. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina 
never offends the Chairman.
    Let me say that we've got this one to do, which is the 
Chile one. We've also got the Singapore one to do. And I would 
encourage the Members to be succinct in their comments on this 
and not repetitious.
    The gentleman from Ohio.
    Mr. Chabot. Thank you, Mr. Chairman. I'll be very brief and 
won't take up the 5 minutes. But there's been a--I think this 
has been a beneficial and instructive and helpful discussion 
here this morning. There have been a number of shots taken at 
fast-track or trade promotion authority or whatever one wants 
to call it, and I think it's important to again at least point 
out that the reason that I think the majority--it was only by 
one--in the Congress voted for this legislation is because many 
of us believe that it's--these agreements will be mutually 
beneficial to both the United States and some other country or 
group of countries that will ultimately create more jobs in 
this country, will improve the standard of living in this 
country, will enable the American public to buy more affordable 
products, that other countries' standard of living will 
increase as well as they're able to have jobs and those folks 
then will buy products from our country, and that creates jobs 
here.
    And so I think the Congress was appropriate--or taking 
appropriate action in passing that, but I think this has been a 
very good discussion this morning. I thank the gentlemen here 
for their candor, and I yield back the balance of my time.
    Ms. Jackson Lee. Mr. Chabot, would you yield for a moment?
    Mr. Chabot. I'm going to yield back my time because the 
Chairman wants to get this----
    Chairman Sensenbrenner. The question is on agreeing to the 
Conyers-Berman amendment as modified to the King amendment. 
Those in favor will say aye? Opposed, no?
    The ayes appear to have it. The ayes have it, and the 
Conyers-Berman amendment is modified as agreed to.
    The question now is on the King amendment as amended by the 
Conyers-Berman amendment. Those in favor say aye? Opposed, no?
    The ayes appear to have it. The ayes have it, and the 
amendment as amended is agreed to.
    Are there further amendments to the draft implementing 
legislation?
    Ms. Jackson Lee. Mr. Chairman?
    Chairman Sensenbrenner. The gentlewoman from Texas.
    Ms. Jackson Lee. Thank you. I have an amendment that I 
would like to pursue with the Trade Representative this coming 
week as we move toward the formal markup. I will not--I'd like 
to bring it up at this point to describe it, Mr. Chairman. I'm 
going to ask to withdraw it if you can----
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    Mr. Goodlatte. Mr. Chairman, I reserve a point of order.
    Chairman Sensenbrenner. A point of order is reserved. The 
clerk will report the amendment.
    The Clerk. Amendment to draft implementing legislation, 
offered by Ms. Jackson Lee of Texas. Add at the end the 
following----
    Ms. Jackson Lee. I ask that the amendment be considered as 
read.
    Chairman Sensenbrenner. Without objection, so ordered.
    [The amendment follows:]
      
      

  


    Chairman Sensenbrenner. And the gentlewoman from Texas is 
recognized for 5 minutes.
    Ms. Jackson Lee. Since I do not understand fully the King 
amendment, I am going to at this time withdraw this amendment 
so that I can understand the revenue stream that the King 
amendment and the Conyers amendment have actually now produced.
    Chairman Sensenbrenner. Will the gentlewoman yield?
    Ms. Jackson Lee. I'd be happy to yield.
    Chairman Sensenbrenner. The issue of what happens to the 
fees that are generated for H-1B applications is not a part of 
the free trade agreement, and I assume that the gentleman from 
Virginia will insist on his point of order and that the Chair 
will say that he's prepared to sustain----
    Ms. Jackson Lee. I have already indicated--if I could 
reclaim my time----
    Chairman Sensenbrenner. However--however, the Chair is 
intending to deal with the entire issue of the H-1B visa cap 
and the H-1B visa law after we return from the August recess, 
and the proper time to deal with the allocation of fees would 
be at that time.
    Ms. Jackson Lee. Excuse me. Let me just say, Mr. Chairman, 
that I would be happy to work with this Committee on that 
issue, and I hope that any review of the H-1B fees because of 
all of our interest will be an inclusive process. But I still 
desire--as I said, I was going to withdraw this amendment 
because I wanted to make the point that I do think it is 
important to utilize some of the resources to help in the 
backlog as this is indicated for some of the consular offices, 
and then also to help with the processing of these particularly 
expansive visas.
    But I hope that we can have an opportunity to discuss this, 
and I hope that this coming week I'd like to discuss it with 
you as--I'm talking about the gentlemen here, your office or 
representative thereof, so I can understand the implications of 
the King and Conyers amendment as to whether or not they impact 
that.
    I'd be happy to yield to the gentlelady from California.
    Ms. Lofgren. I realize we're speaking on the point of 
order. The fees do expire this fall, and I am just hopeful that 
as we move forward--I was--that the Chairman will consider--
many of us have discussing the GAO report that basically 
describes the training programs in less than glorious terms, 
and that we might pursue the math and scholarship program that 
was discussed in 1998 that would actually yield a greater level 
of Ph.D. among Americans. And I----
    Chairman Sensenbrenner. If the gentlewoman----
    Ms. Jackson Lee. Reclaiming my time----
    Chairman Sensenbrenner.--from Texas would yield again, 
that's, you know, one of the things that we have to do when we 
deal with the H-1B visa program. I certainly think that the 
fees have not been spent in as proper a manner as they could 
be. I certainly would not want to take money away from training 
American students to do these high-tech jobs in order to hire 
more consular officials overseas. I think that we would like to 
get Americans to take these jobs rather than issue more H-1B 
visas for aliens to take these jobs.
    But certainly the allocation of the funds needs to be 
better monitored and fine-tuned, and we will have an 
opportunity to do that in September.
    Ms. Jackson Lee. Well, reclaiming my time, I'm not ruling 
out any use of the H-1B fees that would enhance the 
opportunities for training Americans. If the Chairman will 
recollect, Mr. Smith and myself, in fact, drafted legislation 
that was rejected by this Committee that had to do with 
enhancing training in H-1B for Americans. So I'm not someone 
who has not done that.
    I hope this process will be inclusive, that all of us will 
have input. I still think it's important to provide resources 
that are needed for processing visa applications, and we can 
look at other alternatives. But I at this time offer to 
withdraw the amendment, and if I could inquire of Mister--I'm 
sorry. Please forgive me.
    Mr. Shigetomi. Shigetomi.
    Ms. Jackson Lee. Atomi, is that correct?
    Mr. Shigetomi. Shigetomi.
    Ms. Jackson Lee. Shigetomi. Thank you very much, sir. The 
opportunity to meet with some representative this week in my 
office on this issue.
    Chairman Sensenbrenner. The amendment is withdrawn.
    Ms. Jackson Lee. I'm sorry. I didn't get his--is that--can 
we----
    Mr. Shigetomi. That's fine, yes.
    Ms. Jackson Lee. Thank you very much.
    Thank you, Mr. Chairman. I ask unanimous consent to 
withdraw the amendment.
    Chairman Sensenbrenner. The amendment is withdrawn.
    Are there further amendments? If there are no further 
amendments, the question is on agreeing to the draft 
legislation that has been put before. Those in favor will say 
aye? Opposed, no?
    The ayes appear to have it. The ayes have it, and the draft 
legislation as amended is sent back to the USTR for a redo job.
    Without objection, this staff is directed to make technical 
and conforming changes.
                             Minority Views

    We write these views to explain that, as a general 
proposition we oppose efforts by the Administration to distort 
our immigration laws by offering new visa categories to 
specific nations as a bargaining chip in trade negotiations. 
This should not have been done as part of the North American 
Free Trade Agreement and it should not have been done as part 
of the Chile Free Trade Agreement.
    We would note that Article I, section 8, clause 4 of the 
Constitution provides that Congress shall have the power to 
``establish an uniform Rule of Naturalization.'' The Supreme 
Court has long found that this provision of the Constitution 
grants Congress plenary power over immigration policy.\1\ 
Moreover, the Court has found that ``the formulation of 
policies [pertaining to the entry of aliens and their right to 
remain here] is entrusted exclusively to Congress has become 
firmly imbedded in the legislative and judicial tissues of our 
body politics as any aspect of our government.''\2\ Nonetheless 
the Administration has negotiated a new visa program in the 
U.S.-Chile FTA; usurping Congress' clear constitutional role in 
creating immigration law.
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    \1\ See: Kleindienst v. Mandel, 408 U.S. 753, 766 (1972) and 
Boutilier v. INS, 387 U.S. 118, 123 (1967)
    \2\ Galvan v. Press, 347 U.S. 522,531(1954)
---------------------------------------------------------------------------
    Having stated that, we do appreciate the efforts of the 
Majority to work with us in improving the implementing language 
with regard to immigration as best we could, given the 
unfortunate constraints of the underlying agreement. For 
example, the initial draft of the legislation we received 
contained several major loopholes and flaws. It would have 
created 1,400 new visas for persons to come into this country 
from Chile. There was no requirement that employers pay any 
fees when such temporary workers were brought in. There was no 
requirement that employers certify that they were unable to 
find American workers before they hired these foreign workers. 
And there was no real limitation on the ability of these 
individuals to stay in this country indefinitely.
    Many of these problems were mitigated as a result of this 
Committee's input in the process. We enacted language which 
would insure that several H-1b requirements apply to these new 
visas.\3\ We also enacted a requirement that the new visas not 
go beyond the current H-1b limits.
---------------------------------------------------------------------------
    \3\ Although the amount of the fee was specified, the implementing 
legislation fails to include the requirement in INA section 
212(n)(2)(C)(vi)(II) that forbids the employer from requiring the 
employee to pay the fee.
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    We would note that we have a significant remaining concern 
that the Administration was unwilling to include in the text of 
the implementing legislation. First and foremost, the Chile 
implementing bill provides no overall limitation on how many 
times professional visas can be renewed. While the implementing 
language included the Conyers/Berman language insuring that 
renewals beyond 6 years count against the overall H-1b cap, it 
does not include language present in the current H-1b 
provisions that limits authorized admission to 6 years. Thus, 
it is possible that employers could renew their employees' 
visas each and every year under the Chile agreement, with no 
limits, while also bringing in new entrants to fill up the 
annual numerical limit for new visas. This would rob the 
program of its supposedly temporary nature and harm American 
workers.
    In addition we are concerned that the implementing 
legislation does not contain all of the Labor Condition 
Application requirements that apply in the current H-1b 
programs. Most importantly, the implementing legislation 
completely omits the category of H-1b dependent employers 
present in existing law that requires employers to demonstrate 
that they have tried to recruit U.S. workers and attest that 
new entrants will not displace U.S. workers.\4\ In addition, 
the implementing legislation does not grant the authority given 
to Secretary of Labor in the H-1b to initiate her own 
investigations based on credible information that the employer 
is violating the rules of employment of the H-1b program. USTR 
has argued that these provisions expire in October 1, 2003 and 
that should Congress extend or modify provisions of the H-1b 
program, it may make corresponding modifications to the 
amendments to the INA made by the implementing bill. However, 
omission of these important worker protections sets a dangerous 
precedent for inclusion in future agreements.
---------------------------------------------------------------------------
    \4\ The implementing language also omits H-1b dependent requirement 
in 212(n)(2)(E) that the H-1b dependent employer not place the H-1b 
worker with a third employer that is displacing U.S. workers.
---------------------------------------------------------------------------
    Finally, we strongly object to any notion that the U.S.-
Chile Free Trade Agreement will be used as a model for future 
FTAs. We have been informed by the Majority that the 
Administration will not seek immigration in future possible 
free trade agreements, such as the Central American Free Trade 
Agreement, and this is spelled out in the letter from Chairman 
Sensenbrenner and Ranking Member Conyers to Ambassador 
Zoellick. It is critical that the administration interpret the 
inherent problems in the new visa program not as a precedent 
for future agreements, but rather as a sign that immigration 
has no place in trade agreements.

                                   John Conyers, Jr.
                                   Jerrold Nadler.
                                   Robert C. Scott.
                                   Sheila Jackson Lee.
                                   Martin T. Meehan.
                                   William D. Delahunt.
                                   Tammy Baldwin.
                                   Linda T. Sanchez.

                                
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