[House Report 108-501]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-501

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



 
                     AGOA ACCELERATION ACT OF 2004

                                _______
                                

  May 19, 2004.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 4103]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4103) to extend and modify the trade benefits under 
the African Growth and Opportunity Act, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
 I. Introduction......................................................8
        A. Purpose and Summary...................................     8
        B. Background............................................     8
            1. The African Growth and Opportunity Act (AGOA).....     8
            2. Trade with Sub-Saharan Africa.....................    11
        C. Legislative History...................................    13
II. Section by Section Summary.......................................15
III.Votes of the Committee...........................................23

        A. Motion to Report the Bill.............................    24
        B. Votes on Amendments...................................    24
IV. Budget Effects of the Bill.......................................24
        A. Committee Estimate of Budgetary Effects...............    24
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures.........................................    24
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................    24
 V. Other Matters To Be Discussed Under the Rules of the House.......27
        A. Committee Oversight Findings and Recommendations......    27
        B. Statement of General Performance Goals and Objectives.    27
        C. Constitutional Authority Statement....................    27
        D. Information Relating to Unfunded Mandates.............    27
VI. Changes in Existing Law Made by the Bill, as Reported............28

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

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``AGOA Acceleration Act of 2004''.

SEC. 2. FINDINGS.

  The Congress finds the following:
          (1) The African Growth and Opportunity Act (in this section 
        and section 3 referred to as ``the Act'') has helped to spur 
        economic growth and bolster economic reforms in the countries 
        of sub-Saharan Africa and has fostered stronger economic ties 
        between the countries of sub-Saharan Africa and the United 
        States; as a result, exports from the United States to sub-
        Saharan Africa reached record levels after the enactment of the 
        Act, while exports from sub-Saharan Africa to the United States 
        have increased considerably.
          (2) The Act's eligibility requirements have reinforced 
        democratic values and the rule of law, and have strengthened 
        adherence to internationally recognized worker rights in 
        eligible sub-Saharan African countries.
          (3) The Act has helped to bring about substantial increases 
        in foreign investment in sub-Saharan Africa, especially in the 
        textile and apparel sectors, where tens of thousands of new 
        jobs have been created.
          (4) As a result of the Agreement on Textiles and Apparel of 
        the World Trade Organization, under which quotas maintained by 
        WTO member countries on textile and apparel products end on 
        January 1, 2005, sub-Saharan Africa's textile and apparel 
        industry will be severely challenged by countries whose 
        industries are more developed and have greater capacity, 
        economies of scale, and better infrastructure.
          (5) The underdeveloped physical and financial infrastructure 
        in sub-Saharan Africa continues to discourage investment in the 
        region.
          (6) Regional integration establishes a foundation on which 
        sub-Saharan African countries can coordinate and pursue 
        policies grounded in African interests and history to achieve 
        sustainable development.
          (7) Expanded trade because of the Act has improved 
        fundamental economic conditions within sub-Saharan Africa. The 
        Act has helped to create jobs in the poorest region of the 
        world, and most sub-Saharan African countries have sought to 
        take advantage of the opportunities provided by the Act.
          (8) Agricultural biotechnology holds promise for helping 
        solve global food security and human health crises in Africa 
        and, according to recent studies, has made contributions to the 
        protection of the environment by reducing the application of 
        pesticides, reducing soil erosion, and creating an environment 
        more hospitable to wildlife.
          (9) (A) One of the greatest challenges facing African 
        countries continues to be the HIV/AIDS epidemic, which has 
        infected as many as one out of every four people in some 
        countries, creating tremendous social, political, and economic 
        costs. African countries need continued United States financial 
        and technical assistance to combat this epidemic.
          (B) More awareness and involvement by governments are 
        necessary. Countries like Uganda, recognizing the threat of 
        HIV/AIDS, have boldly attacked it through a combination of 
        education, public awareness, enhanced medical infrastructure 
        and resources, and greater access to medical treatment. An 
        effective HIV/AIDS prevention and treatment strategy involves 
        all of these steps.
          (10) African countries continue to need trade capacity 
        assistance to establish viable economic capacity, a well-
        grounded rule of law, and efficient government practices.

SEC. 3. STATEMENT OF POLICY.

  The Congress supports--
          (1) a continued commitment to increase trade between the 
        United States and sub-Saharan Africa and increase investment in 
        sub-Saharan Africa to the benefit of workers, businesses, and 
        farmers in the United States and in sub-Saharan Africa, 
        including by developing innovative approaches to encourage 
        development and investment in sub-Saharan Africa;
          (2) a reduction of tariff and nontariff barriers and other 
        obstacles to trade between the countries of sub-Saharan Africa 
        and the United States, with particular emphasis on reducing 
        barriers to trade in emerging sectors of the economy that have 
        the greatest potential for development;
          (3) development of sub-Saharan Africa's physical and 
        financial infrastructure;
          (4) international efforts to fight HIV/AIDS, malaria, 
        tuberculosis, other infectious diseases, and serious public 
        health problems;
          (5) many of the aims of the New Partnership for African 
        Development (NEPAD), which include--
                  (A) reducing poverty and increasing economic growth;
                  (B) promoting peace, democracy, security, and human 
                rights;
                  (C) promoting African integration by deepening 
                linkages between African countries and by accelerating 
                Africa's economic and political integration into the 
                rest of the world;
                  (D) attracting investment, debt relief, and 
                development assistance;
                  (E) promoting trade and economic diversification;
                  (F) broadening global market access for United States 
                and African exports;
                  (G) improving transparency, good governance, and 
                political accountability;
                  (H) expanding access to social services, education, 
                and health services with a high priority given to 
                addressing HIV/AIDS, malaria, tuberculosis, other 
                infectious diseases, and other public health problems;
                  (I) promoting the role of women in social and 
                economic development by reinforcing education and 
                training and by assuring their participation in 
                political and economic arenas; and
                  (J) building the capacity of governments in sub-
                Saharan Africa to set and enforce a legal framework, as 
                well as to enforce the rule of law;
          (6) negotiation of reciprocal trade agreements between the 
        United States and sub-Saharan African countries, with the 
        overall goal of expanding trade across all of sub-Saharan 
        Africa;
          (7) the President seeking to negotiate, with interested 
        eligible sub-Saharan African countries, bilateral trade 
        agreements that provide investment opportunities, in accordance 
        with section 2102(b)(3) of the Trade Act of 2002 (19 U.S.C. 
        3802(b)(3));
          (8) efforts by the President to negotiate with the member 
        countries of the Southern African Customs Union in order to 
        provide the opportunity to deepen and make permanent the 
        benefits of the Act while giving the United States access to 
        the markets of these African countries for United States goods 
        and services, by reducing tariffs and non-tariff barriers, 
        strengthening intellectual property protection, improving 
        transparency, establishing general dispute settlement 
        mechanisms, and investor-state and state-to-state dispute 
        settlement mechanisms in investment;
          (9) a comprehensive and ambitious trade agreement with the 
        Southern African Customs Union, covering all products and 
        sectors, in order to mature the economic relationship between 
        sub-Saharan African countries and the United States and because 
        such an agreement would deepen United States economic and 
        political ties to the region, lend momentum to United States 
        development efforts, encourage greater United States 
        investment, and promote regional integration and economic 
        growth;
          (10) regional integration among sub-Saharan African countries 
        and business partnerships between United States and African 
        firms; and
          (11) economic diversification in sub-Saharan African 
        countries and expansion of trade beyond textiles and apparel.

SEC. 4. SENSE OF CONGRESS ON RECIPROCITY AND REGIONAL ECONOMIC 
                    INTEGRATION.

  It is the sense of the Congress that--
          (1) the preferential market access opportunities for eligible 
        sub-Saharan African countries will be complemented and enhanced 
        if those countries are implementing actively and fully, 
        consistent with any remaining applicable phase-in periods, 
        their obligations under the World Trade Organization, including 
        obligations under the Agreement on Trade-Related Aspects of 
        Intellectual Property, the Agreement on the Application of 
        Sanitary and Phytosanitary Measures, and the Agreement on 
        Trade-Related Investment Measures, as well as the other 
        agreements described in section 101(d) of the Uruguay Round 
        Agreements Act (19 U.S.C. 3511(d));
          (2) eligible sub-Saharan African countries should participate 
        in and support mutual trade liberalization in ongoing 
        negotiations under the auspices of the World Trade 
        Organization, including by making reciprocal commitments with 
        respect to improving market access for industrial and 
        agricultural goods, and for services, recognizing that such 
        commitments may need to reflect special and differential 
        treatment for developing countries;
          (3) some of the most pernicious trade barriers against 
        exports by developing countries are the trade barriers 
        maintained by other developing countries; therefore, eligible 
        sub-Saharan African countries will benefit from the reduction 
        of trade barriers in other developing countries, especially in 
        developing countries that represent some of the greatest 
        potential markets for African goods and services; and
          (4) all countries should make sanitary and phytosanitary 
        decisions on the basis of sound science.

SEC. 5. SENSE OF CONGRESS ON INTERPRETATION OF TEXTILE AND APPAREL 
                    PROVISIONS OF AGOA.

  It is the sense of the Congress that the executive branch, 
particularly the Committee for the Implementation of Textile Agreements 
(CITA), the Bureau of Customs and Border Protection of the Department 
of Homeland Security, and the Department of Commerce, should interpret, 
implement, and enforce the provisions of section 112 of the African 
Growth and Opportunity Act, relating to preferential treatment of 
textile and apparel articles, broadly in order to expand trade by 
maximizing opportunities for imports of such articles from eligible 
sub-Saharan African countries.

SEC. 6. DEFINITION.

  In this Act, the term ``eligible sub-Saharan African country'' means 
an eligible sub-Saharan African country under the African Growth and 
Opportunity Act.

SEC. 7. EXTENSION OF AFRICAN GROWTH AND OPPORTUNITY ACT.

  (a) Generalized System of Preferences.--
          (1) Extension of program.--Section 506B of the Trade Act of 
        1974 (19 U.S.C. 2466b) is amended by striking ``2008'' and 
        inserting ``2015''.
          (2) Inputs from former beneficiary countries.--Section 506A 
        of the Trade Act of 1974 (19 U.S.C. 2466a) is amended--
                  (A) in subsection (b)(2)(B), by inserting ``or former 
                beneficiary sub-Saharan African countries'' after 
                ``countries''; and
                  (B) in subsection (c)--
                          (i) by striking ``title, the terms'' and 
                        inserting ``title--
          ``(1) the terms''; and
                          (ii) by adding at the end the following:
          ``(2) the term `former beneficiary sub-Saharan African 
        country' means a country that, after being designated as a 
        beneficiary sub-Saharan African country under the African 
        Growth and Opportunity Act, ceased to be designated as such a 
        country by reason of its entering into a free trade agreement 
        with the United States.''
  (b) Apparel Articles.--(1) Section 112(b)(1) of the African Growth 
and Opportunity Act (19 U.S.C. 3721(b)(1)) is amended by striking 
``(including'' and inserting ``or both (including''
  (2) Section 112(b)(3) of the African Growth and Opportunity Act (19 
U.S.C. 3721 (b)(3)) is amended--
          (A) in the matter preceding subparagraph (A)--
                  (i) by striking ``either in the United States or one 
                or more beneficiary sub-Saharan African countries'' 
                each place it appears and inserting ``in the United 
                States or one or more beneficiary sub-Saharan African 
                countries or former beneficiary sub-Saharan African 
                countries, or both''; and
                  (ii) by striking ``subject to the following:'' and 
                inserting ``whether or not the apparel articles are 
                also made from any of the fabrics, fabric components 
                formed, or components knit-to-shape described in 
                paragraph (1) or (2) (unless the apparel articles are 
                made exclusively from any of the fabrics, fabric 
                components formed, or components knit-to-shape 
                described in paragraph (1) or (2)), subject to the 
                following:''; and
          (B) by striking subparagraphs (A) and (B) and inserting the 
        following:
                  ``(A) Limitations on benefits.--
                          ``(i) In general.--Preferential treatment 
                        under this paragraph shall be extended in the 
                        1-year period beginning October 1, 2003, and in 
                        each of the 11 succeeding 1-year periods, to 
                        imports of apparel articles in an amount not to 
                        exceed the applicable percentage of the 
                        aggregate square meter equivalents of all 
                        apparel articles imported into the United 
                        States in the preceding 12-month period for 
                        which data are available.
                          ``(ii) Applicable percentage.--For purposes 
                        of this subparagraph, the term `applicable 
                        percentage' means--
                                  ``(I) 4.747 percent for the 1-year 
                                period beginning October 1, 2003, 
                                increased in each of the 5 succeeding 
                                1-year periods by equal increments, so 
                                that for the 1-year period beginning 
                                October 1, 2007, the applicable 
                                percentage does not exceed 7 percent; 
                                and
                                  ``(II) for each succeeding 1-year 
                                period until September 30, 2015, not to 
                                exceed 7 percent.
                  ``(B) Special rule for lesser developed countries.--
                          ``(i) In general.--Preferential treatment 
                        under this paragraph shall be extended though 
                        September 30, 2007, for apparel articles wholly 
                        assembled, or knit-to-shape and wholly 
                        assembled, or both, in one or more lesser 
                        developed beneficiary sub-Saharan African 
                        countries, regardless of the country of origin 
                        of the fabric or the yarn used to make such 
                        articles, in an amount not to exceed the 
                        applicable percentage of the aggregate square 
                        meter equivalents of all apparel articles 
                        imported into the United States in the 
                        preceding 12-month period for which data are 
                        available.
                          ``(ii) Applicable percentage.--For purposes 
                        of the subparagraph, the term `applicable 
                        percentage' means--
                                  ``(I) 2.3571 percent for the 1-year 
                                period beginning October 1, 2003;
                                  ``(II) 2.6428 percent for the 1-year 
                                period beginning October 1, 2004;
                                  ``(III) 2.9285 percent for the 1-year 
                                period beginning October 1, 2005; and
                                  ``(IV) 1.6071 percent for the 1-year 
                                period beginning October 1, 2006.
                          ``(iii) Lesser developed beneficiary sub-
                        saharan african country.--For purposes of this 
                        subparagraph, the term `lesser developed 
                        beneficiary sub-Saharan African country' 
                        means--
                                  ``(I) a beneficiary sub-Saharan 
                                African country that had a per capita 
                                gross national product of less than 
                                $1,500 in 1998, as measured by the 
                                International Bank for Reconstruction 
                                and Development;
                                  ``(II) Botswana; and
                                  ``(III) Namibia.''.
  (3) Section 112(b)(5)(A) of the African Growth and Opportunity Act 
(19 U.S.C. 3721(b)(5)(A)) is amended to read as follows:
                  ``(A) In general.--Apparel articles that are both cut 
                (or knit-to-shape) and sewn or otherwise assembled in 
                one or more beneficiary sub-Saharan African countries, 
                to the extent that apparel articles of such fabrics or 
                yarns would be eligible for preferential treatment, 
                without regard to the source of the fabrics or yarns, 
                under Annex 401 to the NAFTA.''.
  (c) Handloomed, Handmade, Folklore Articles and Ethnic Printed 
Fabrics.--Section 112(b)(6) of the African Growth and Opportunity Act 
(19 U.S.C. 3721(b)(6)) is amended to read as follows:
          ``(6) Handloomed, handmade, folklore articles and ethnic 
        printed fabrics.--
                  ``(A) In general.--A handloomed, handmade, folklore 
                article or an ethnic printed fabric of a beneficiary 
                sub-Saharan African country or countries that is 
                certified as such by the competent authority of such 
                beneficiary country or countries. For purposes of this 
                section, the President, after consultation with the 
                beneficiary sub-Saharan African country or countries 
                concerned, shall determine which, if any, particular 
                textile and apparel goods of the country (or countries) 
                shall be treated as being handloomed, handmade, or 
                folklore articles or an ethnic printed fabric.
                  ``(B) Requirements for ethnic printed fabric.--Ethnic 
                printed fabrics qualified under this paragraph are--
                          ``(i) fabrics containing a selvedge on both 
                        edges, having a width of less than 50 inches, 
                        classifiable under subheading 5208.52.30 or 
                        5208.52.40 of the Harmonized Tariff Schedule of 
                        the United States;
                          ``(ii) of the type that contains designs, 
                        symbols, and other characteristics of African 
                        prints--
                                  ``(I) normally produced for and sold 
                                on the indigenous African market; and
                                  ``(II) normally sold in Africa by the 
                                piece as opposed to being tailored into 
                                garments before being sold in 
                                indigenous African markets;
                          ``(iii) printed, including waxed, in one or 
                        more eligible beneficiary sub-Saharan 
                        countries; and
                          ``(iv) fabrics formed in the United States, 
                        from yarns formed in the United States, or from 
                        fabric formed in one or more beneficiary sub-
                        Saharan African country from yarn originating 
                        in either the United States or one or more 
                        beneficiary sub-Saharan African countries.''.
  (d) Regional and U.S. Sources.--Section 112(b)(7) of the African 
Growth and Opportunity Act (19 U.S.C. 3721(b)(7)) is amended by 
inserting ``or former beneficiary sub-Saharan African countries'' after 
``and one or more beneficiary sub-Saharan African countries'' each 
place it appears.
  (e) Special Rules.--
          (1) Certain components.--Section 112(d) of the African Growth 
        and Opportunity Act (19 U.S.C. 3721(d)) is amended by adding at 
        the end the following:
          ``(3) Certain components.--An article otherwise eligible for 
        preferential treatment under this section will not be 
        ineligible for such treatment because the article contains--
                  ``(A) any collars or cuffs (cut or knit-to-shape),
                  ``(B) drawstrings,
                  ``(C) shoulder pads or other padding,
                  ``(D) waistbands,
                  ``(E) belt attached to the article,
                  ``(F) straps containing elastic, or
                  ``(G) elbow patches,
        that do not meet the requirements set forth in subsection (b), 
        regardless of the country of origin of the item referred to in 
        the applicable subparagraph of this paragraph.''.
          (2) De minimis rule.--Section 112(d)(2) of the African Growth 
        and Opportunity Act (19 U.S.C. 3721(d)(2)) is amended--
                  (A) by inserting ``or former beneficiary sub-Saharan 
                African countries'' after ``countries''; and
                  (B) by striking ``7 percent'' and inserting ``10 
                percent''.
  (f) Definitions.--Section 112(e) of the African Growth and 
Opportunity Act (19 U.S.C. 3721(e)) is amended by adding at the end the 
following:
          ``(4) Former sub-saharan african country.--The term `former 
        sub-Saharan African country' means a country that, after being 
        designated as a beneficiary sub-Saharan African country under 
        this Act, ceased to be designated as such a beneficiary sub-
        Saharan country by reason of its entering into a free trade 
        agreement with the United States.''.

SEC. 8. ENTRIES OF CERTAIN APPAREL ARTICLES PURSUANT TO THE AFRICAN 
                    GROWTH AND OPPORTUNITY ACT.

  (a) In General.--Notwithstanding section 514 of the Tariff Act of 
1930 (19 U.S.C. 1514) or any other provision of law, the Secretary of 
the Treasury shall liquidate or reliquidate as free of duty and free of 
any quantitative restrictions, limitations, or consultation levels 
entries of articles described in subsection (d) made on or after 
October 1, 2000, and before the date of the enactment of this Act.
  (b) Requests.--Liquidation or reliquidation may be made under 
subsection (a) with respect to an entry described in subsection (d) 
only if a request therefor is filed with the Secretary of the Treasury 
within 90 days after the date of the enactment of this Act and the 
request contains sufficient information to enable the Secretary to 
locate the entry or reconstruct the entry if it cannot be located.
  (c) Payment of Amounts Owed.--Any amounts owed by the United States 
pursuant to the liquidation or reliquidation of any entry under 
subsection (a) shall be paid not later than 180 days after the date of 
such liquidation or reliquidation.
  (d) Entries.--The entries referred to in subsection (a) are entries 
of apparel articles that meet the requirements of section 112(b) of the 
African Growth and Opportunity Act, as amended by section 3108 of the 
Trade Act of 2002 and this Act.

SEC. 9. DEVELOPMENT STUDY AND CAPACITY BUILDING.

  (a) Reports.--The President shall, by not later than 1 year after the 
date of the enactment of this Act, conduct a study on each eligible 
sub-Saharan African country, that--
          (1) identifies sectors of the economy of that country with 
        the greatest potential for growth, including through export 
        sales;
          (2) identifies barriers, both domestically and 
        internationally, that are impeding growth in such sectors; and
          (3) makes recommendations on how the United States Government 
        and the private sector can provide technical assistance to that 
        country to assist in dismantling such barriers and in promoting 
        investment in such sectors.
  (b) Dissemination of Information.--The President shall disseminate 
information in each study conducted under subsection (a) to the 
appropriate United States agencies for the purpose of implementing 
recommendations on the provision of technical assistance and in 
identifying opportunities for United States investors, businesses, and 
farmers.

SEC. 10. ACTIVITIES IN SUPPORT OF INFRASTRUCTURE TO SUPPORT INCREASING 
                    TRADE CAPACITY AND ECOTOURISM.

  (a) Findings.--The Congress finds the following:
          (1) Ecotourism, which consists of--
                  (A) responsible and sustainable travel and visitation 
                to relatively undisturbed natural areas in order to 
                enjoy and appreciate nature (and any accompanying 
                cultural features, both past and present) and animals, 
                including species that are rare or endangered,
                  (B) promotion of conservation and provision for 
                beneficial involvement of local populations, and
                  (C) visitation designed to have low negative impact 
                upon the environment,
        is expected to expand 30 percent globally over the next decade.
          (2) Ecotourism will increase trade capacity by sustaining 
        otherwise unsustainable infrastructure, such as road, port, 
        water, energy, and telecommunication development.
          (3) According to the United States Department of State and 
        the United Nations Environment Programme, sustainable tourism, 
        such as ecotourism, can be an important part of the economic 
        development of a region, especially a region with natural and 
        cultural protected areas.
          (4) Sub-Saharan Africa enjoys an international comparative 
        advantage in ecotourism because it features extensive protected 
        areas that host a variety of ecosystems and traditional 
        cultures that are major attractions for nature-oriented 
        tourism.
          (5) National parks and reserves in sub-Saharan Africa should 
        be considered a basis for regional development, involving 
        communities living within and adjacent to them and, given their 
        strong international recognition, provide an advantage in 
        ecotourism marketing and promotion.
          (6) Desert areas in sub-Saharan Africa represent complex 
        ecotourism attractions, showcasing natural, geological, and 
        archaeological features, and nomad and other cultures and 
        traditions.
          (7) Many natural zones in sub-Saharan Africa cross the 
        political borders of several countries; therefore, 
        transboundary cooperation is fundamental for all types of 
        ecotourism development.
          (8) The commercial viability of ecotourism is enhanced when 
        small and medium enterprises, particularly microenterprises, 
        successfully engage with the tourism industry in sub-Saharan 
        Africa.
          (9) Adequate capacity building is an essential component of 
        ecotourism development if local communities are to be real 
        stakeholders that can sustain an equitable approach to 
        ecotourism management.
          (10) Ecotourism needs to generate local community benefits by 
        utilizing sub-Saharan Africa's natural heritage, parks, 
        wildlife reserves, and other protected areas that can play a 
        significant role in encouraging local economic development by 
        sourcing food and other locally produced resources.
  (b) Action by the President.--The President shall develop and 
implement policies to--
          (1) encourage the development of infrastructure projects that 
        will help to increase trade capacity and a sustainable 
        ecotourism industry in eligible sub-Saharan African countries;
          (2) encourage and facilitate transboundary cooperation among 
        sub-Saharan African countries in order to facilitate trade;
          (3) encourage the provision of technical assistance to 
        eligible sub-Saharan African countries to establish and sustain 
        adequate trade capacity development; and
          (4) encourage micro-, small-, and medium-sized enterprises in 
        eligible sub-Saharan African countries to participate in the 
        ecotourism industry.

SEC. 11. ACTIVITIES IN SUPPORT OF TRANSPORTATION, ENERGY, AGRICULTURE, 
                    AND TELECOMMUNICATIONS INFRASTRUCTURE.

  (a) Findings.--The Congress finds the following:
          (1) In order to increase exports from, and trade among, 
        eligible sub-Saharan African countries, transportation systems 
        in those countries must be improved to increase transport 
        efficiencies and lower transport costs.
          (2) Vibrant economic growth requires a developed 
        telecommunication and energy infrastructure.
          (3) Sub-Saharan Africa is rich in exportable agricultural 
        goods, but development of this industry remains stymied because 
        of an underdeveloped infrastructure.
  (b) Action by the President.--In order to enhance trade with Africa 
and to bring the benefits of trade to African countries, the President 
shall develop and implement policies to encourage investment in 
eligible sub-Saharan African countries, particularly with respect to 
the following:
          (1) Infrastructure projects that support, in particular, 
        development of land transport road and railroad networks and 
        ports, and the continued upgrading and liberalization of the 
        energy and telecommunications sectors.
          (2) The establishment and expansion of modern information and 
        communication technologies and practices to improve the ability 
        of citizens to research and disseminate information relating 
        to, among other things, the economy, education, trade, health, 
        agriculture, the environment, and the media.
          (3) Agriculture, particularly in processing and capacity 
        enhancement.

SEC. 12. FACILITATION OF TRANSPORTATION.

  In order to facilitate and increase trade flows between eligible sub-
Saharan African countries and the United States, the President shall 
foster improved port-to-port and airport-to-airport relationships. 
These relationships should facilitate--
          (1) increased coordination between customs services at ports 
        and airports in the United States and such countries in order 
        to reduce time in transit;
          (2) interaction between customs and technical staff from 
        ports and airports in the United States and such countries in 
        order to increase efficiency and safety procedures and 
        protocols relating to trade;
          (3) coordination between chambers of commerce, freight 
        forwarders, customs brokers, and others involved in 
        consolidating and moving freight; and
          (4) trade through air service between airports in the United 
        States and such countries by increasing frequency and capacity.

SEC. 13. AGRICULTURAL TECHNICAL ASSISTANCE.

  (a) Identification of Countries.--The President shall identify not 
fewer than 10 eligible sub-Saharan African countries as having the 
greatest potential to increase marketable exports of agricultural 
products to the United States and the greatest need for technical 
assistance, particularly with respect to pest risk assessments and 
complying with sanitary and phytosanitary rules of the United States.
  (b) Personnel.--The President shall assign at least 20 full-time 
personnel for the purpose of providing assistance to the countries 
identified under subsection (a) to ensure that exports of agricultural 
products from those countries meet the requirements of United States 
law.

SEC. 14. TRADE ADVISORY COMMITTEE ON AFRICA.

  The President shall convene the trade advisory committee on Africa 
established by Executive Order 11846 of March 27, 1975, under section 
135(c) of the Trade Act of 1974, in order to facilitate the goals and 
objectives of the African Growth and Opportunity Act and this Act, and 
to maintain ongoing discussions with African trade and agriculture 
ministries and private sector organizations on issues of mutual 
concern, including regional and international trade concerns and World 
Trade Organization issues.

                            I. INTRODUCTION


                         A. Purpose and Summary

    H.R. 4103 would extend and modify the trade benefits under 
the African Growth and Opportunity Act.

                             B. Background


1. The African Growth and Opportunity Act (AGOA)

    The African Growth and Opportunity Act was signed into law 
by President Clinton on May 18, 2000, as Title 1 of The Trade 
and Development Act of 2000. AGOA offers tangible incentives 
for sub-Saharan African (SSA) countries to continue their 
efforts to open their economies, promote the rule of law, build 
free markets, and encourage investment in the region. President 
Bush signed amendments to AGOA into law on August 6, 2002, as 
Section 3108 of the Trade Act of 2002 (Public Law 107-210). 
These amendments expanded preferential access for imports from 
beneficiary sub-Saharan African countries and thereby improved 
the operation and utilization of the AGOA program and 
encouraging more investment in the region.
    There are currently 37 countries eligible for AGOA 
benefits. Of those, only 24 are eligible for the apparel 
benefits. Twenty-two countries eligible for the apparel 
benefits meet the criteria for use of the Special Rule allowing 
use of third country fabric (for more information see sections 
below regarding AGOA benefits).

General AGOA Benefits

    AGOA authorizes the President to provide duty-free 
treatment under the U.S. Generalized System of Preferences 
(GSP) for any article when imported from African countries if 
the United States Trade Representative (USTR) and the United 
States International Trade Commission (USITC) have determined 
that the article is not import sensitive in the context of 
imports from SSA countries. On December 21, 2000, the President 
extended duty free treatment under GSP to AGOA-eligible 
countries for more than 1,800 tariff line items in addition to 
the standard GSP list of approximately 4,600 items available to 
non-AGOA GSP beneficiary countries. The duty-free treatment for 
the additional 1,800 products available to AGOA countries only, 
implemented after an extensive process of public comment and 
review, include such previously GSP-excluded items as footwear, 
luggage, handbags, watches, and flatware.
    In addition to the broader product list, AGOA extended GSP 
for eligible SSA beneficiaries until September 30, 2008, two 
years longer than GSP beneficiaries in other regions (GSP 
expires for non-AGOA countries December 31, 2006). Sub-Saharan 
Africa beneficiary countries are also exempted from competitive 
need limitations that cap the GSP benefits available to 
beneficiaries in other regions.

Apparel Provisions

    AGOA provides duty-free and quota-free access to the U.S. 
market for apparel made in eligible sub-Saharan African 
countries from U.S. fabric, yarn, and thread. It also provides 
for a substantial and growing quantity of duty-free apparel 
imports (subject to a cap) made from fabric produced in 
beneficiary SSA countries. Preferential treatment for apparel 
took effect on October 1, 2000, but beneficiary countries must 
first establish that they have effective visa systems to 
prevent illegal transshipment and use of counterfeit 
documentation and that they have instituted required 
enforcement and verification procedures. Under the initial AGOA 
legislation, apparel imports made with regional (African) 
fabric and yarn were subject to an initial cap of 1.5 percent 
of overall U.S. apparel imports, growing to 3.5 percent of 
overall imports over an 8-year period. The 2002 AGOA amendments 
doubled the applicable percentages of the cap to 7 percent. The 
table below shows the fill rate for each quota period's cap, 
measured in square meter equivalents (SMEs):

----------------------------------------------------------------------------------------------------------------
                                                                                                     Fill rate
                                                                    Cap in SMEs       Imports        (percent)
----------------------------------------------------------------------------------------------------------------
Quota Period 2004 (first 6 months)..............................     956,568,715     172,343,579           18.02
Quota Period 2003...............................................     735,905,928     264,469,209           35.94
Quota Period 2002...............................................     313,303,986     187,753,717           59.93
Quota Period 2001...............................................     246,500,393      41,769,757           16.95
----------------------------------------------------------------------------------------------------------------

    Under a Special Rule for Lesser Developed Beneficiary 
Countries (LDBCs), commonly referred to as the third country 
fabric provision, those countries with a per capita Gross 
National Product (GNP) under $1,500 enjoy duty-free access for 
apparel made from fabric originating anywhere in the world 
until September 30, 2004. Apparel imported under the Special 
Rule is subject to a cap within the overall 7 percent cap 
(measured in SMEs, with no dollar equivalent). In the initial 
AGOA legislation, the Special Rule and regional fabric were 
capped together at 1.5 percent growing to no more than 3.5 
percent of total U.S. apparel imports. The 2002 AGOA amendments 
doubled the overall cap to 7 percent but maintained a cap for 
apparel imported into the United States under the Special Rule 
at the original cap, i.e., 3.5 percent at the end of the 
period. For FY2003 the Special Rule cap was 2.0714 percent and 
has risen to 2.3571 percent in FY2004. Twenty-two countries 
have been designated as eligible for the Special Rule. The 2002 
AGOA amendments also granted LDBC status to Botswana and 
Namibia, qualifying both countries for the Special Rule. The 
table below shows the fill rate for the Special Rule:

----------------------------------------------------------------------------------------------------------------
                                                                                                     Fill rate
                                                                    Cap in SMEs       Imports        (percent)
----------------------------------------------------------------------------------------------------------------
Quota Period 2004 (first 6 months)..............................     470,411,241     151,504,106           32.21
Quota Period 2003...............................................     359,399,147     222,391,233           61.88
Quota Period 2002...............................................     313,303,986     158,878,925           50.71
Quota Period 2001...............................................     246,500,393      35,469,291           14.39
----------------------------------------------------------------------------------------------------------------

    The U.S. Secretary of Commerce is directed to monitor 
apparel imports on a monthly basis to guard against surges. If 
increased imports are causing or threatening serious damage to 
the U.S. apparel industry, the President is authorized to 
suspend duty-free treatment for the article(s) in question. To 
date, there have been no requests for such relief.

Other Provisions

    AGOA directs the President to organize a U.S.-sub-Saharan 
Africa Trade and Economic Forum, to be hosted by the U.S. 
Secretaries of State, Commerce, Treasury, and the U.S. Trade 
Representative. The Forum is to serve as the vehicle for a 
regular dialogue between the United States and SSA countries on 
issues of economics, trade, and investment. The Forum benefited 
greatly from concurrent fora presented by the private sector 
and civil society.
    The U.S. Secretary of Commerce is directed to ensure that 
at least twenty full-time Commercial Service employees are 
assigned in at least ten different Sub-Saharan African 
countries, subject to the availability of appropriations. AGOA 
also calls for annual reports to Congress through 2008 on U.S. 
trade and investment policy in Africa and implementation of the 
Act.
    AGOA Success and Support: The AGOA program has been a 
success for U.S. policy toward SSA. AGOA has helped expand SSA 
trade and brought about improvements in economic conditions in 
SSA. Expanded trade opportunities not only help sub-Saharan 
African countries develop a sustainable economic base but also 
foster efficient government practices, political stability, and 
a well-grounded rule of law. AGOA's eligibility requirements 
have reinforced democratic values and strengthened adherence to 
international recognized worker rights in eligible sub-Saharan 
African countries. These requirements will continue to be a 
useful tool to combat corruption, improve worker conditions, 
and encourage greater transparency with regard to revenues in 
the natural resource sectors. According to the USITC's ``Fourth 
Annual Report on U.S. Trade and Investment with Sub-Saharan 
Africa,'' in addition to spurring increased trade and 
investment, AGOA has begun to influence other activities that 
could be beneficial to SSA's long-term economic growth, 
including the improvement in business climate (for example, 
investing in infrastructure or implementing reforms, such as 
reduction of bureaucracy) and the encouragement of regional 
cooperation and integration to take advantage of AGOA benefits. 
The program has been lauded by African leaders, civil society 
organizations, American firms, and Congressional leaders of 
both parties. One African leader described the program as ``the 
greatest friendship act'' by the U.S. government towards 
Africa. The Committee has been told that the program has been 
so well-received and effective in Africa that the European 
Union is reexamining its preference program for Africa in light 
of AGOA's success.

2. Trade With Sub-Saharan Africa

U.S. Exports

    U.S. exports to SSA increased 13 percent from 2002 to 2003 
and continue to be greater than those to the former Soviet 
Republics and Central and Eastern Europe combined. From 2000 to 
2003, the United States averaged just over $6.2 billion in 
merchandise exports to SSA per year, which accounted for less 
than 1 percent of average total U.S. exports during that period 
of $665 billion. The top five export markets in SSA in 2003 for 
U.S. goods were, in order: South Africa, Nigeria, Angola, 
Ethiopia, and Equatorial Guinea. The top three U.S. exports to 
SSA in 2003 were certain machinery parts, wheat (other than 
durum), and airplanes and other aircraft.

U.S. Imports

    The United States is sub-Saharan Africa's largest single 
export market, accounting for 26 percent of the region's total 
exports in 2001 alone. From 2000 to 2003, the United States 
merchandise imports from the world averaged $1.2 trillion a 
year, while U.S. imports from SSA averaged $21.8 billion a 
year, or approximately 2 percent of total U.S. imports per year 
over that time period. U.S. imports under AGOA (excluding GSP) 
have almost doubled from their 2001 level of $7.6 billion to 
their 2003 level of $13.2 billion. The top five countries in 
SSA from which the U.S. imported the most goods in 2003 were 
Nigeria, South Africa, Angola, Gabon, and Equatorial Guinea. 
The top three U.S. imports from SSA in 2003 were petroleum 
oils, platinum, and distillate and residual fuels. In 2003, 
there were three apparel items in the top ten U.S. imports from 
SSA: women's or girl's trousers/shorts, sweaters/pullovers, and 
men's or boy's trousers/shorts.

Investment Flows

    The United States is the leading provider of foreign direct 
investment to Africa, but U.S. net direct investment flows to 
Africa in 2002, at $861 million, accounted for less than 1 
percent of total U.S. direct investment abroad. Nigeria and 
South Africa attracted the largest amounts of U.S. foreign 
investment flows: $922 million and $112 million, respectively. 
On balance, continuing net positive flows of U.S. direct 
investment into Africa yielded an increase of 12.3 percent in 
the U.S. direct investment position, which totaled $15.1 
billion in 2002. At the same time, 150,000 AGOA-related jobs 
have been created.
    U.S. International Trade Commission officials believe that 
the United States has relatively little portfolio investment in 
SSA due to the fact that few countries in the region have well-
established stock exchanges and few SSA companies are listed on 
U.S. exchanges. U.S. portfolio investment in SSA is largely 
channeled through investment companies that integrate stocks of 
SSA companies into broader emerging market mutual funds. 
Because the mining and extractive sectors consistently attract 
portfolio investment, it is likely that U.S. portfolio 
investment in SSA will continue to be concentrated in South 
Africa and, to a lesser extent, Nigeria.

Millennium Challenge Account (MCA)

    The United States provides trade capacity building 
assistance to SSA, and from 1999-2002 the United States 
provided over $345 million in assistance. Building on the 
successes of trade capacity building and the continued U.S. 
commitment to global economic development, President Bush in 
2002 announced his intent to establish a special development 
assistance program, the Millennium Challenge Account. The goal 
of the MCA is to achieve poverty reduction through economic 
growth by investing in areas such as agricultural development, 
education, enterprise and private sector development, 
governance, health, and trade and investment capacity building. 
The MCA will increase core U.S. development assistance by 50 
percent over the next few years, reaching annual levels by 
FY2006 that are $5 billion higher than core assistance when the 
MCA was announced. Even though the MCA is a global initiative, 
it is anticipated that a substantial portion of its funding 
will go to SSA.

Internal Conditions Affecting Trade and Development

    In 2002, Africa's average gross domestic product (GDP) 
growth rate was 3.2 percent, down from 2001's average 4.3 
percent. The USITC's ``Fourth Annual Report on U.S. Trade and 
Investment with Sub-Saharan Africa'' concludes that this 
declining average growth rate was attributed primarily to a 
weaker global economy, slower than expected rebound in world 
trade, drought in some parts of SSA, the impact of HIV/AIDS, 
and the eruption of social and political conflict in a number 
of countries across the continent. Although sub-Saharan 
Africa's average GDP growth rate continued to fall short of the 
estimated 7 percent required to reduce poverty significantly, 
five countries (Equatorial Guinea, Mozambique, Angola, Chad, 
and Rwanda) achieved a 7 percent or higher growth rate in 2002. 
The same USITC report concludes that efforts by SSA countries 
to increase integration into the global trading economy 
continue to be hampered by a number of obstacles, including 
social and political conflict and inadequate infrastructure, 
such as dilapidated road networks, congested ports, inefficient 
customs services, and prohibitively expensive air transport.
    Despite sub-Saharan Africa's increased participation in the 
global economy in the past few years and the accrual of 
benefits from the AGOA program, these systemic issues and 
inefficiencies prevent SSA from fully reaping the benefits of 
its trade relationship with the United States. A recent study 
by Paul Brenton and Takako Ikezuki of the World Bank--``The 
Initial and Potential Impact of Preferential Access to the U.S. 
Market underthe African Growth and Opportunity Act''--states 
``only when customs clearance procedures are improved, costs of 
transport and other trade related services are reduced and corruption 
and other disincentives toward investment are removed, will the full 
potential of preferential access to the United States under AGOA be 
realized.''

U.S.-Southern African Customs Union (SACU) FTA

    In June 2003, the United States launched free trade 
agreement negotiations with the five countries of the Southern 
African Customs Union (SACU): Botswana, Lesotho, Namibia, 
Swaziland, and South Africa. Pursuant to the direction Congress 
expressed in AGOA for the Administration to seek free trade 
negotiations with interested SSA countries, the U.S.-SACU FTA 
will be a catalyst for increasing trade and investment between 
the United States and SSA. While the SACU countries have 
already achieved some modest successes benefiting from the one-
way preferences of AGOA, this FTA will mark a progression in 
the trading relationship by moving to a two-way set of 
commitments. Building on the objectives of AGOA, trade capacity 
building is a fundamental element of bilateral cooperation in 
support of this FTA. The Cooperative Group on Trade Capacity 
Building has been formed and meets separately to identify and 
satisfy trade capacity building needs arising out of the FTA 
discussions. By May 2004, five rounds of negotiations have been 
held with the intensity of the negotiations expected to 
increase in an effort to conclude the negotiations by the end 
of 2004.

                         C. Legislative History


2003 Congressional Delegation to the AGOA Forum in Mauritius

    On January 12-23, 2003, Chairman Thomas led a bipartisan 
delegation of Members of Congress to an international forum 
established in AGOA. The delegation visited Namibia, South 
Africa, Madagascar, and Mauritius and toured several new firms 
established as a result of the trade benefits created by AGOA. 
The delegation participated in several speaking and discussion 
events at the AGOA forum in Mauritius. In January 2003 the 
Committee filed its ``Report on Trade Mission to Sub-Saharan 
Africa'' (WMCP: 108-2), which outlined the Committee's 
conclusions from the Congressional Delegation. The Committee 
found that AGOA had been very successful and had helped to 
create many jobs, particularly in the apparel sector. The 
expiration of the third country fabric benefits for the least 
developed countries in 2004 was the issue most discussed during 
the delegation's visit. The Members met with many African 
leaders who were very supportive of an extension. There was 
evidence that countries generally lacked sufficient current 
capacity to provide fabric for apparel manufacturing, and 
Members learned about planned investments in textile capacity 
but that such investment would need time to become operational. 
In its report, the Committee concluded that the best approach 
on third country fabrics is one of balance--i.e., providing 
incentives in the cut-and-sew area to bootstrap Africa into 
more value-added fabric production by creating a solid 
workforce and infrastructure and then transferring those skills 
to high-end production.
    Members noted the value of the programs presented by civil 
society and acknowledged their special expertise. Some Members 
made the point that just as the United States benefits from 
receiving civil society comments in the AGOA eligibility review 
process, African governments should also consider input from 
civil society organizations when developing strategies to 
implement and maximize benefits under AGOA.

2003 WTO Ministerial in Cancun

    Committee Members met with a number of African leaders 
during the WTO's Cancun Ministerial and in Washington during 
the AGOA Forum to discuss the operation of the AGOA. These 
leaders told the Committee that the legislation has led to 
substantial investment in African countries, improved the 
standard of living for thousands of Africans, and aided in 
general development of many poor African regions. However, many 
of these officials requested an extension of the program 
benefits and various enhancements to the program, while others 
expressed concern that extension of eligibility for the use of 
third country fabric could discourage regional fabric 
production.

Hearing on President Bush's Trade Agenda

    On March 11, 2004, Ambassador Zoellick testified before the 
Committee and stated the Administration's support for 
``legislation on AGOA that will accelerate its gains, including 
by extending provisions and enabling countries to take full 
advantage of AGOA through enhanced technical assistance.'' In 
response to questions about extension of the third country 
fabric benefits of AGOA, Ambassador Zoellick stated that a one-
year extension would not be enough.

2004 Hearing on AGOA

    On April 29, 2004, the Subcommittee on Trade held a hearing 
on U.S. trade relations with sub-Saharan Africa and H.R. 4103, 
the Africa Growth and Opportunity (AGOA) Acceleration Act. The 
Subcommittee received testimony from both invited and public 
witnesses, many of whom expressed support for the original AGOA 
program as well continuing the trade relationship in order to 
continue building the long-term economic viability of sub-
Saharan Africa. Witnesses from the U.S. private sector and 
representatives of three sub-Saharan African governments 
(Lesotho, Mauritius, and Kenya) expressed support for H.R. 
4103. While supportive of AGOA and its general objectives, 
several witnesses stated that the AGOA program needed to 
strengthen other areas of sub-Saharan trade, including 
agriculture, the development of infrastructure to better 
facilitate increasing trade, and poverty alleviation. One 
witness, the Union of Needletrades, Industrial and Textile 
Employees (UNITE!) expressed support for AGOA's overall goal of 
development but expressed disappointment with regard to a lack 
of enforcement of core international labor standards in the 
region.
    The hearing raised many issues related to the importance of 
extending the overall program, as well as the critical need for 
an extension of the third country fabric provision. Witnesses 
supported the extension of AGOA in H.R. 4103 to 2015 from its 
current end-date of 2008. An end-date of 2015 is consistent 
with the Administration's proposal in the WTO to seek 
elimination of all tariffs worldwide by that time. African 
countries and the private sector also expressed support for the 
provision allowing lesser-developed countries to use non-U.S. 
and non-AGOA fabric in the production of AGOA-eligible apparel. 
Because this provision is due to expire September 30, 2004, the 
private sector and many African countries and Members noted 
their support for H.R. 4103, which extends the provision for 
another three years to allow AGOA beneficiaries additional time 
to attract and develop yarn and fabric manufacturing that will 
supply the infant apparel industry in these countries. Lastly, 
several witnesses and Members complained of implementation 
setbacks such as unexpected and narrow interpretations by 
Administration officials that restrict the import of AGOA-
eligible apparel. Members voiced their support for most of the 
points raised and remained strongly supportive of correcting 
and enhancing provisions to allow for broad and liberal use of 
the programs to give African countries access to the U.S. 
market.
    H.R. 4103, The AGOA Acceleration Act of 2004: On April 1, 
2004, Chairman Thomas together with Representatives McDermott 
(D-WA), Crane (R-IL), Rangel (D-NY), Royce (R-CA), Houghton (R-
NY), Neal (D-MA), Dunn (R-WA), Jefferson (D-LA), Weller (R-IL), 
Brady (R-TX), Payne (D-NJ), and Levin (D-MI) introduced H.R. 
4103, the AGOA Acceleration Act.
    On May 5, 2004, the Committee on Ways and Means met to 
consider H.R. 4103. The Chairman offered a bipartisan amendment 
in the nature of a substitute, which the Committee approved. 
The Committee ordered H.R. 4103, as amended, favorably reported 
to the House of Representatives by a voice vote with a quorum 
present.

                     II. SECTION-BY-SECTION SUMMARY


Section 1: Short Title

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 1 provides that the Act may be cited as the ``AGOA 
Acceleration Act of 2004.''

                           REASON FOR CHANGE

    The section identifies the short title for the bill.

Section 2: Findings

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 2 states various findings by the Congress. Congress 
finds that AGOA has had a positive effect on economic growth 
and reforms in sub-Saharan Africa through increases in foreign 
investment and job creation, but Africa continues to face 
challenges such as inadequate infrastructure and HIV/AIDS. 
African countries continue to need trade capacity and technical 
assistance to establish viable economic capacity, a well-
grounded rule of law, and efficient government practices.

                           REASON FOR CHANGE

    The findings reflect Committee Members' observations from 
meetings with African leaders, the hearing on trade with 
Africa, and the Congressional Delegation to Africa in 2003.

Section 3: Statement of Policy

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 3 states several policy goals by the Congress. 
Congress supports a continued commitment to increase trade and 
investment and to reduce obstacles to trade between the United 
States and sub-Saharan Africa. It additionally backs the 
development of sub-Saharan Africa's physical and financial 
infrastructure and business partnerships between United States 
and African firms. Congress also endorses a comprehensive and 
ambitious trade agreement with the Southern African Customs 
Union international efforts to fight serious health problems 
including HIV/AIDS.

                           REASON FOR CHANGE

    The statements of policy in this section reflect the 
Committee's conclusions of the best way to pursue and develop a 
long-lasting and healthy trade relationship with countries of 
sub-Saharan Africa.

Section 4: Sense of Congress on Reciprocity and Regional Economic 
        Integration

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 4 expresses the Sense of Congress that eligible 
sub-Saharan African countries will greatly enhance their 
preferential market access opportunities by implementing their 
WTO obligations and supporting mutual trade liberalization.

                           REASON FOR CHANGE

    The Committee has noted the concerns of African countries 
in liberalizing trade in the context of current WTO 
negotiations. The Committee believes that AGOA benefits will be 
complemented and enhanced if AGOA countries comply with their 
WTO obligations and support mutual trade liberalization in 
ongoing negotiations. USTR officials have told the Committee 
that trade liberalization is in the interest of all developing 
countries, noting that 70 percent of the tariffs paid by 
developing countries are to other developing countries. 
Accordingly, AGOA countries will benefit from reducing barriers 
in other developing countries, particularly those representing 
the largest potential markets for African goods and services. 
At the same time, the Committee recognizes that new WTO 
commitments may need to reflect special and differential 
treatment for developing countries.

Section 5: Sense of Congress on Interpretation of Textile and Apparel 
        Provisions of AGOA

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 5 provides a Sense of Congress that the Executive 
Branch, including the Committee for the Implementation of 
Textile Agreements, the Bureau of Customs and Border Protection 
of the U.S. Department of Homeland Security, and the U.S. 
Department of Commerce, should implement and enforce the 
provisions of AGOA relating to preferential treatment of 
textile and apparel articles broadly to expand trade by 
maximizing opportunities for imports of such articles from 
Africa.

                           REASON FOR CHANGE

    The Committee has noted the frequent frustration of 
Congressional intent by Federal agencies implementing AGOA. 
Congress has been forced to revisit many issues in the original 
AGOA legislation and reverse decisions by the Executive Branch 
that have denied benefits to imports that Congress fully 
intended to cover. This provision admonishes Federal agencies 
to recognize the importance of interpreting the AGOA law in a 
trade liberalizing manner.

Section 6: Definition

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 6 defines the term ``eligible sub-Saharan African 
country'' as used frequently in the Act to mean those eligible 
sub-Saharan African countries under AGOA.

                           REASON FOR CHANGE

    The definition is necessary to clearly define the universe 
of countries affected by provisions in the legislation.

Section 7: Extension of African Growth and Opportunity Act

                              CURRENT LAW

    The AGOA program expires on September 30, 2008. The third 
country benefit provision of AGOA expires on September 30, 
2004.
    Section 112(b)(1), (2), and (3) of existing law (19 U.S.C. 
3721) provides that apparel products that originate in the 
United States or AGOA eligible countries shall receive 
preferential treatment under AGOA; however, the U.S. Bureau of 
Customs and Border Protection has interpreted section 112 
restrictively to deny benefits when an apparel product consists 
of a combination of U.S. and AGOA eligible inputs.
    Section 112(b)(5)(A) of existing law provides for 
preferential treatment for apparel articles that are made from 
fabric or yarns identified in Annex 401 of the NAFTA. Annex 401 
identifies products not produced in the United States or 
another NAFTA country (i.e., Canada or Mexico) and is designed 
to allow flexibility in sourcing these products. The provision 
applies only if the fabric or yarn is not formed in the United 
States or a beneficiary sub-Saharan African country.
    Section 112(b)(6) of existing law provides for preferential 
treatment for hand loomed, handmade, and folklore articles but 
does not specifically name ethnic printed articles. The Bureau 
of Customs and Border Protection has ruled that ethnic printed 
articles made from machine woven fabric are not covered by 
existing law.
    The current AGOA law has no provision related to use of 
inputs from former AGOA-eligible countries that ``graduate'' 
from the program because they enter into free trade agreements 
with the United States.
    Section 112(d) of existing law provides for special rules 
related to certain findings and trimmings but does not cover 
certain components such as collars, cuffs, drawstrings, 
waistbands, belts attached to garments, patches, straps using 
elastic, and padding and shoulder pads.
    Section 112(d)(2) of existing law provides a de minimis 
rule. Articles otherwise eligible for preferential treatment 
under this section are not ineligible because the article 
contains fibers or yarns not wholly formed in the United States 
or one or more beneficiary sub-Saharan African countries if the 
total weight of all such fibers and yarns is not more than 7 
percent of the total weight of the article.

                        EXPLANATION OF PROVISION

    Section 7(a) would extend the AGOA program from its current 
deadline of 2008 until 2015.
    Section 7(b)(2)(A) would clarify an existing provision in 
AGOA to allow apparel articles that are eligible for benefits 
because they contain fabric formed in AGOA beneficiary 
countries to remain eligible for benefits even if they include 
U.S. components or fabric in any combination.
    Section 7(b)(2)(B) would extend the current deadline for 
use of third country fabric benefits from September 30, 2004, 
until September 30, 2007. Benefits in 2005 and 2006 would 
remain capped, growing at the existing rate and then decrease 
by fifty percent in the final year of 2007. The current rate 
for 2004 is approximately 2.3% of total U.S. imports.
    Section 7(b)(3) clarifies as AGOA-eligible apparel made 
from fabrics or yarns that are identified in Annex 401 to the 
NAFTA without regard to the origin of the fabric or yarns, 
i.e., these fabrics or yarns may now be manufactured in the 
United States or an AGOA beneficiary country. Goods identified 
in Annex 401 are recognized as being in short supply in the 
United States.
    Section 7(c) would clarify the existing provision in AGOA 
providing AGOA benefits for African ethnic printed fabric even 
if made by machine provided such fabric meets certain criteria. 
Specifically, the fabric must have a width of less than 50 
inches, have designs, symbols, and characteristics of African 
prints normally produced for the indigenous African market, and 
be sold by the piece.
    Section 7(d) provides that AGOA-eligible products may 
continue to use inputs from countries that are no longer AGOA 
beneficiaries because they have entered into a free trade 
agreement with the United States.
    Section 7(e)(1) provides for a special rule to allow use of 
certain components (collars, cuffs, drawstrings, waistbands, 
belts attached to garments, patches, straps using elastic, and 
padding and shoulder pads) in AGOA eligible apparel products. 
An article otherwise eligible for preferential treatment under 
Section 112 of existing law would not be ineligible for such 
treatment because the article contains these components that do 
not meet the origin requirements of section 112. The component 
``belts attached to garments'' covers belts that are 
manufactured to accompany garments and will be sold together 
with garments at retail but need not actually be sewn onto 
garments.
    Section 7(e)(2) raises the current de minimis level of 7 
percent for non-AGOA originating fibers and yarns in apparel to 
10 percent.

                           REASON FOR CHANGE

    The Committee seeks to extend the AGOA program from its 
current deadline of 2008 until 2015 in section 7(a) in order to 
reinforce U.S. commitment to Africa and the AGOA program.
    Section 7(b)(2)(A) reverses an interpretation of AGOA by 
the U.S. Bureau of Customs and Border Protection requiring that 
an article contain either all U.S. fabric or components or all 
AGOA fabric or components, but not a combination of both. 
Section 7(b)(2)(A) was also included in section 2004 of H.R. 
1047, the Miscellaneous Trade and Technical Corrections Act of 
2004.
    The extension in section 7(b)(2)(B) of the current deadline 
for use of third country fabric benefits of September 30, 2004, 
until September 30, 2007, received more comments by the public, 
Members of Congress, and African leaders than any other 
provision during Committee investigation; the extension of this 
provision is considered by many to be the most important 
feature of H.R. 4103. The purpose of the provision is to 
continue to attract the needed basic investment in SSA without 
compromising the goal of developing regional apparel 
production. In the original AGOA law, the initial short period 
(four years) allowing for the use of third country fabric was 
aimed at allowing AGOA countries to attract quick investment 
and establish facilities and infrastructure to manufacture 
apparel from non-AGOA fabric and yarn inputs and then 
transition to regionally produced fabric and yarn.
    The dilemma in extending this period beyond September 30, 
2004, is that some AGOA countries are poised to develop fabric 
industries that could provide inputs to other countries and, 
thus, reinforce regional partnerships and development in 
general in SSA. Long-term use of third country fabrics or 
components in AGOA-eligible imports could create a risk that 
AGOA manufacturers will rely exclusively on non-AGOA inputs, 
which may discourage the development of meaningful regional 
fabric production. Nonetheless, given the slow start that many 
countries had in becoming eligible under AGOA, an extension of 
the third country fabric provision is necessary to allow 
countries to attract and entrench investments and build the 
critical mass necessary for diversification and vertical 
integration of apparel manufacturing. Thus, the three-year 
provision in H.R. 4103 is designed to provide a pragmatic 
approach that balances the needs of the sub-Saharan African 
countries, both fabric and apparel makers.
    Section 7(b)(3) clarifies the use of short-supply inputs 
into AGOA eligible apparel products, and these short-supply 
fabrics or yarns may now be manufactured in the United States 
or an AGOA beneficiary country. Specifically, the Committee has 
concluded that there is no reason to maintain the current 
restriction against U.S. or AGOA-made inputs being used in AGOA 
eligible apparel. Section 7(b)(3) was also included in section 
2004 of H.R. 1047, the Miscellaneous Trade and Technical 
Corrections Act of 2004.
    Section 7(c) would clarify the existing provision in AGOA 
providing AGOA benefits for African ethnic printed fabric. This 
provision would thereby reverse a decision by U.S. textile 
import authorities that restricted print imports to those made 
by traditional methods and not by machine. The Committee 
believes that the criteria set forth in H.R. 4103 will prevent 
abuse of the provision.
    Section 7(d) provides that AGOA eligible products may 
continue to use inputs from countries no longer AGOA 
beneficiaries because they have entered into a free trade 
agreement with the United States. The provision anticipates 
conclusion of a U.S. free trade with the five members of the 
Southern African Customs Union, some of which produce inputs 
that may be used by AGOA countries. The Committee hopes that 
the provision will promote further regional economic 
integration.
    Section 7(e)(1) addresses the Committee's concern that 
African apparel manufacturers may be unable to produce certain 
garments because they will be unable to obtain certain 
components made from U.S. or African inputs once the provision 
allowing use of third country fabrics expires in three years. 
This section would allow sourcing of these components 
regardless of country of origin. These components represent a 
very small part of any finished apparel good but are 
sufficiently different from fabric production and may be 
expensive to manufacture in commercially feasible quantities. 
The Committee is concerned that the burden of developing a 
source within Africa for such specialized components may be too 
great for a fledgling African apparel industry that is already 
struggling with developing significant fabric production. 
Accordingly, Members adopted the finite list of components 
found in section 7(e)(1).
    In developing this list of components, the Committee drew 
on the assistance of the U.S. International Trade Commission, 
the U.S. Department of Commerce, private and public sector 
testimony, and direct Member observations of African apparel 
operations.
    Section 7(e)(2), which would increase the de minimis level 
for AGOA inputs from 7 percent to 10 percent, would conform the 
de minimis rule to those currently being negotiated in trade 
agreements such as the Central American Free Trade Agreement. 
The Committee believes that the increase will provide AGOA 
countries with additional sourcing flexibility.

Section 8: Entries of Certain Apparel Articles Pursuant to the African 
        Growth and Opportunity Act

                              CURRENT LAW

    Section 3108 of the Trade Act of 2002 provides that knit-
to-shape garments assembled in beneficiary countries should 
receive preferential treatment under AGOA. That provision 
reversed a U.S. Bureau of Customs and Border Protection 
regulation that stipulated that such garments, because 
technically they do not go through the fabric stage, were not 
eligible for benefits. Section 3108 of the Act is effective 
only on a prospective basis.

                        EXPLANATION OF PROVISION

    Section 8 extends duty-free benefits retroactively to 
October 1, 2000, to apparel that was knit-to-shape in an AGOA-
eligible country.

                           REASON FOR CHANGE

    Congress took action in the Trade Act of 2002 to clarify 
that articles knit-to-shape in AGOA-eligible countries should 
be covered by the Act. Section 8 of the bill would apply that 
change retroactively to the time of enactment of the original 
AGOA law in 2000. The proposed language in section 8 was also 
included as section 1608 of H.R. 1047, the Miscellaneous Trade 
and Technical Corrections Act of 2004.

Section 9: Development Study and Capacity Building

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 9 directs the President to submit a report to 
Congress, no later than a year after the enactment of this Act, 
which identifies the sectors of each eligible sub-Saharan 
African country's economy that show the greatest potential for 
growth, identifies any barriers that may exist, and makes 
recommendations on how the United States Government and private 
sector can provide technical assistance to remove these 
barriers to maximize AGOA's benefits for U.S. and African 
investors, businesses, and farmers.

                           REASON FOR CHANGE

    The Committee is interested in collecting information that 
will ultimately assist African countries in developing their 
trade relationship with each other and with the United States. 
USTR, with the cooperation of the USITC and other federal 
agencies, as appropriate, should conduct this study and prepare 
a report to Congress.

Section 10: Activities in Support of Infrastructure To Support 
        Increasing Trade Capacity and Ecotourism

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 10 encourages the development of infrastructure 
projects that increase trade capacity through the ecotourism 
industry.

                           REASON FOR CHANGE

    Members of the Committee on the Congressional Delegation to 
southern Africa in 2003 noted the abundant wildlife and natural 
resources possessed by many countries. In order to take 
advantage of these resources and promote an ecotourism 
industry, African countries would benefit from improved 
infrastructure and coordination among neighboring countries.

Section 11: Activities in Support of Transportation, Energy, 
        Agriculture, and Telecommunications Infrastructure

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 11 directs the President to develop policies to 
encourage investment in: infrastructure projects that support 
the development of roads, railways, and ports, and the energy 
and telecommunications sectors; the expansion of modern 
information and communication technologies; and agriculture, 
particularly processing and capacity enhancement.

                           REASON FOR CHANGE

    Members of the Committee on the Congressional Delegation to 
southern Africa in 2003 noted the importance of infrastructure 
and economic diversification to countries attempting to develop 
and enhance their trade relationships with each other and with 
the United States. The issue was also raised in the Trade 
Subcommittee's hearing on trade with Africa. This provision 
directs the President to adopt policies to encourage investment 
in certain African infrastructure that would facilitate trade.

Section 12: Facilitation of Transportation

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 12 directs the President to foster improved 
coordination between customs services at ports and airports in 
the United States and sub-Saharan countries to reduce time in 
transit and increase efficiency and safety procedures.

                           REASON FOR CHANGE

    Members of the Committee on the Congressional Delegation to 
southern Africa in 2003 noted the importance of sea and airport 
operations to countries attempting to develop and enhance their 
trade relationships with each other and with the United States. 
This provision directs the President to adopt steps to improve 
African port operations and openness for trade. USTR, with the 
cooperation of the Bureau of Customs and Border Protection of 
the U.S. Department of Homeland Security and other federal 
agencies, as appropriate, should provide resources to 
accomplish this mandate.

Section 13: Agricultural Technical Assistance

                              CURRENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 13 directs the President to assign at least 20 
full-time personnel for the purpose of providing agricultural 
technical assistance to select AGOA countries based on their 
potential to increase marketable agricultural products and 
their need for technical assistance. While serving in this 
capacity, they are to advise AGOA countries on improvements in 
their sanitary and phytosanitary standards to help them meet 
U.S. requirements.

                           REASON FOR CHANGE

    African leaders have expressed to the Committee that it is 
difficult to export agricultural products to the United States 
owing to high U.S. sanitary and phytosanitary standards. While 
the Committee firmly supports USTR's position that these 
standards should not be lowered, the Committee believes it is 
important to advise and assist African countries on U.S. 
standards and how to meet them. In carrying out this provision 
the President shall not dilute or diminish existing personnel 
resources that are currently managing sanitary and 
phytosanitary issues for either U.S. commodities seeking to be 
exported or for interdiction and control of pest and diseases 
including for the evaluation of pest and disease concerns of 
foreign commodities seeking access to the U.S. market.

Section 14: Trade Advisory Committee on Africa

                              CURRENT LAW

    Presidential Executive Order 11846 of March 27, 1975, under 
section 135(c) of the Trade Act of 1974, authorizes the 
creation of a trade advisory committee on Africa.

                        EXPLANATION OF PROVISION

    Section 14 directs the Administration to convene the trade 
advisory committee on Africa in order to maintain ongoing 
discussions with African trade and agriculture ministries and 
private sector organizations to facilitate the goals of AGOA 
and this Act.

                           REASON FOR CHANGE

    The Committee supports the activation of this trade 
advisory committee on Africa in order to improve the collection 
of data and diverse comments by the Administration on African 
trade.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the vote of the Committee on Ways and Means in its 
consideration of the bill, H.R. 4103.

                      A. Motion To Report the Bill

    The bill, H.R. 4103, as amended, was ordered favorably 
reported by voice vote (with a quorum present).

                         B. Votes on Amendments

    An amendment in the nature of a substitute by Chairman 
Thomas was agreed to by voice vote.

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made concerning the effects on the budget of this bill, H.R. 
4103 as amended and reported: The Committee agrees with the 
estimate prepared by CBO which is included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that 
enactment of H.R. 4103 would reduce customs duty receipts due 
to lower tariffs imposed on goods from eligible African 
countries.

      C. Cost Estimate Prepared by the Congressional Budget Office

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

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 10, 2004.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4103, the AGOA 
Acceleration Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Annabelle 
Bartsch.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 4103--AGOA Acceleration Act of 2004

    Summary: H.R. 4103 would extend the trade benefits 
available under the African Growth and Opportunity Act (AGOA) 
that expire in 2008, and that special rule for certain lesser-
developed Sub-Saharan countries that expires in September 2004. 
The Congressional Budget Office estimates that those extensions 
would reduce revenues by $3 million in 2004, by $140 million 
over the 2004-2009 period, and by about $365 million over the 
2004-2014 period, net of income and payroll tax offsets.
    The bill also would direct the President to develop and 
implement certain policies to promote trade between the 
countries of Africa and the United States. U.S. agencies are 
currently undertaking most of these activities under more 
general authority. Based on information from the U.S. 
Department of Agriculture and the U.S. Agency for International 
Development, however, CBO estimates that implementing the bill 
would require hiring additional personnel and would increase 
spending by about $2 million each year, assuming the 
appropriation of the necessary funds. The bill would not affect 
direct spending.
    CBO has determined that H.R. 4103 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 costs to the Federal Government: The estimated 
budgetary impact of H.R. 4103 is shown in the following table. 
The costs of this legislation fall within budget function 150 
(international affairs).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2004     2005     2006     2007     2008     2009
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES

Estimated Revenues........................................       -3      -30      -33      -36        0      -39

                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.............................        0        2        2        2        2        2
Estimated Outlays.........................................        0        1        2        2        2        2
----------------------------------------------------------------------------------------------------------------

Basis of estimate

            Revenues
    H.R. 4103 would extend the preferential treatment given to 
certain U.S. imports from Sub-Saharan Africa under the AGOA 
program, which currently expires on September 30, 2008. This 
includes preferential treatment extended under the Generalized 
System of Preferences. According to the U.S. International 
Trade Commission, U.S. imports from countries in the region 
were about $25 billion in 2003. U.S. imports eligible for duty-
free treatment under AGOA totaled about $14 billion in that 
year. Those imports consisted largely of energy-related 
products and textile and apparel goods.
    Presently, upon expiration of the program, such imports 
would face normal trade relation tariff rates. CBO estimates 
that over the 2009-2014 period, the U.S. would import about $69 
billion worth of products from the region, resulting in $912 
million in customs duties. In the absence of specific data on 
the extent of any substitution effect, these estimates assume 
that half of the U.S. imports that would have otherwise been 
eligible under AGOA would be replaced with goods from other 
countries receiving preferential treatment under other special 
import programs.
    Under the bill, the AGOA program would be extended an 
additional seven years, through September 30, 2015. With the 
extension, CBO estimates that U.S. imports from the region 
would total about $212 billion over the 2009-2014 period, with 
most of the imports facing no duties. CBO estimates that 
importers would pay $561 million in customs duties on the 
imported goods with non-zero duty rates. Consequently, federal 
revenues would decrease by $264 milion between 2009 and 2014, 
net of income and payroll tax offsets.
    H.R. 4103 also would extend the special treatment that 
certain lesser-developed Sub-Saharan countries may receive 
under AGOA. Through September 30, 2004, a lesser-developed 
country (LDC) may export duty-free to the United States any 
apparel good that is assembled within the country, regardless 
of the origin of the fabric or yarn. Nearly all AGOA countries 
currently have LDC status; those that do not are limited to 
using fabric and yarn originating in the United States or the 
AGOA region in order to receive duty-free treatment. The bill 
would allow LDC countries to receive such special treatment for 
an additional three years, through September 30, 2007. CBO 
estimates that the extension would result in $98 million in 
forgone revenues from 2005 through 2007, net of income and 
payroll tax offsets. That amount is highly dependent upon the 
capability of countries in the AGOA region to manufacture the 
fabric and yarn needed to receive duty-free access to the U.S. 
market.
    Lastly, H.R. 4103 would refund certain duties already paid 
on imports from AGOA countries that did not receive duty-free 
treatment at the time of entry. CBO estimates that the 
reduction in net customs duties would amount to about $3 
million, all of which would occur in 2004.
            Spending Subject to Appropriation
    H.R. 4103 would require the President to conduct a study 
and make recommendations on how the U.S. government and private 
sector can assist the countries of Africa in dismantling 
barriers to trade and investment. In addition, the bill would 
require the President to develop and implement policies to 
increase trade with African countries through investments in 
infrastructure and tourism, to coordinate customs services 
between U.S. and African ports and airports, and to improve 
sanitary and phytosanitary standards on agricultural products 
imported from Africa to meet U.S. requirements.
    Various U.S. agencies are currently undertaking these 
activities under more general authority. Based on information 
from the U.S. Department of Agriculture and the U.S. Agency for 
International Development, however, CBO estimates that meeting 
the requirement in the bill for agricultural technical 
specialists would require hiring an additional 8 persons and 
that supporting them in Africa would cost between $200,000 to 
$250,000 per person. CBO estimates that implementing H.R. 4103 
would increase spending for technical assistance by about $2 
million each year, assuming the appropriation of the necessary 
funds.
    Summary of effects on revenues and direct spending: The 
overall effects of H.R. 4103 on revenues and direct spending 
are shown in the following table.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal year, in millions of dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   2004    2005    2006    2007    2008    2009    2010    2011    2012    2013    2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts.............................................      -3     -30     -33     -36       0     -39     -41     -43     -45     -47     -49
Changes in outlays..............................................                                       Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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. 
Federal Spending: Joseph Whitehill. Impact on State, Local, and 
Tribal Governments: Melissa Merrell. Impact on the Private 
Sector: Paige Piper/Bach.
    Estimate approved by: G. Thomas Woodward, Assistant 
Director for Tax Analysis; Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

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


          A. Committee Oversight Findings and Recommendations

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

        B. Statement of General Performance Goals and Objectives

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

                 C. Constitutional Authority Statement

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

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with Section 423 
of the Unfunded Mandates Reform Act of 1995 (P.L. 104-4).
    The Committee has determined that the bill does not impose 
a Federal intergovernmental mandate on State, local, or tribal 
governments. The Committee has determined that the bill does 
not contain Federal mandates on the private sector.

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

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

TRADE ACT OF 1974

           *       *       *       *       *       *       *



TITLE V--GENERALIZED SYSTEM OF PREFERENCES

           *       *       *       *       *       *       *


SEC. 506A. DESIGNATION OF SUB-SAHARAN AFRICAN COUNTRIES FOR CERTAIN 
                    BENEFITS.

  (a)  * * *
  (b) Preferential Tariff Treatment for Certain Articles.--
          (1)  * * *
          (2) Rules of origin.--The duty-free treatment 
        provided under paragraph (1) shall apply to any article 
        described in that paragraph that meets the requirements 
        of section 503(a)(2), except that--
                  (A)  * * * 
                  (B) the cost or value of the materials 
                included with respect to that article that are 
                produced in one or more beneficiary sub-Saharan 
                African countries or former beneficiary sub-
                Saharan African countries shall be applied in 
                determining such percentage.
  (c) Beneficiary Sub-Saharan African Countries, Etc.--For 
purposes of this [title, the terms] title--
          (1) the terms ``beneficiary sub-Saharan African 
        country'' and ``beneficiary sub-Saharan African 
        countries'' mean a country or countries listed in 
        section 107 of the African Growth and Opportunity Act 
        that the President has determined is eligible under 
        subsection (a) of this section.
          (2) the term ``former beneficiary sub-Saharan African 
        country'' means a country that, after being designated 
        as a beneficiary sub-Saharan African country under the 
        African Growth and Opportunity Act, ceased to be 
        designated as such a country by reason of its entering 
        into a free trade agreement with the United States.

SEC. 506B. TERMINATION OF BENEFITS FOR SUB-SAHARAN AFRICAN COUNTRIES.

  In the case of a beneficiary sub-Saharan African country, as 
defined in section 506A(c), duty-free treatment provided under 
this title shall remain in effect through September 30, [2008] 
2015.

           *       *       *       *       *       *       *

                              ----------                              


           SECTION 112 OF THE AFRICAN GROWTH OPPORTUNITY ACT

SEC. 112. TREATMENT OF CERTAIN TEXTILES AND APPAREL.

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

           *       *       *       *       *       *       *

          (3) Apparel articles from regional fabric or yarns.--
        Apparel articles wholly assembled in one or more 
        beneficiary sub-Saharan African countries from fabric 
        wholly formed in one or more beneficiary sub-Saharan 
        African countries from yarns originating either in the 
        United States or one or more beneficiary sub-Saharan 
        African countries (including fabrics not formed from 
        yarns, if such fabrics are classified under heading 
        5602 or 5603 of the Harmonized Tariff Schedule of the 
        United States and are wholly formed in one or more 
        beneficiary sub-Saharan African countries), or from 
        components knit-to-shape in one or more beneficiary 
        sub-Saharan African countries from yarns originating 
        [either in the United States or one or more beneficiary 
        sub-Saharan African countries] in the United States or 
        one or more beneficiary sub-Saharan African countries 
        or former beneficiary sub-Saharan African countries, or 
        both, or apparel articles wholly formed on seamless 
        knitting machines in a beneficiary sub-Saharan African 
        country from yarns originating [either in the United 
        States or one or more beneficiary sub-Saharan African 
        countries subject to the following:] in the United 
        States or one or more beneficiary sub-Saharan African 
        countries or former beneficiary sub-Saharan African 
        countries, or both, whether or not the apparel articles 
        are also made from any of the fabrics, fabric 
        components formed, or components knit-to-shape 
        described in paragraph (1) or (2) (unless the apparel 
        articles are made exclusively from any of the fabrics, 
        fabric components formed, or components knit-to-shape 
        described in paragraph (1) or (2)), subject to the 
        following:
                  [(A) Limitations on benefits.--
                          [(i) In general.--Preferential 
                        treatment under this paragraph shall be 
                        extended in the 1-year period beginning 
                        on October 1, 2000, and in each of the 
                        seven succeeding 1-year periods, to 
                        imports of apparel articles in an 
                        amount not to exceed the applicable 
                        percentage of the aggregate square 
                        meter equivalents of all apparel 
                        articles imported into the United 
                        States in the preceding 12-month period 
                        for which data are available.
                          [(ii) Applicable percentage.--For 
                        purposes of this subparagraph, the term 
                        ``applicable percentage'' means 1.5 
                        percent for the 1-year period beginning 
                        October 1, 2000, increased in each of 
                        the seven succeeding 1-year periods by 
                        equal increments, so that for the 
                        period beginning October 1, 2007, the 
                        applicable percentage does not exceed 
                        3.5 percent.
                  [(B) Special rule for lesser developed 
                countries.--
                          [(i) In general.--Subject to 
                        subparagraph (A), preferential 
                        treatment under this paragraph shall be 
                        extended through September 30, 2004, 
                        for apparel articles wholly assembled, 
                        or knit-to-shape and wholly assembled, 
                        or both, in one or more lesser 
                        developed beneficiary sub-Saharan 
                        African countries regardless of the 
                        country of origin of the fabric or the 
                        yarn used to make such articles.
                          [(ii) Lesser developed beneficiary 
                        sub-saharan african country.--For 
                        purposes of clause (i), the term 
                        ``lesser developed beneficiary sub-
                        Saharan African country'' means--
                                  [(I) a beneficiary sub-
                                Saharan African country that 
                                had a per capita gross national 
                                product of less than $1,500 in 
                                1998, as measured by the 
                                International Bank for 
                                Reconstruction and Development;
                                  [(II) Botswana; and
                                  [(III) Namibia.]
                  (A) Limitations on benefits.--
                          (i) In general.--Preferential 
                        treatment under this paragraph shall be 
                        extended in the 1-year period beginning 
                        October 1, 2003, and in each of the 11 
                        succeeding 1-year periods, to imports 
                        of apparel articles in an amount not to 
                        exceed the applicable percentage of the 
                        aggregate square meter equivalents of 
                        all apparel articles imported into the 
                        United States in the preceding 12-month 
                        period for which data are available.
                          (ii) Applicable percentage.--For 
                        purposes of this subparagraph, the term 
                        ``applicable percentage'' means--
                                  (I) 4.747 percent for the 1-
                                year period beginning October 
                                1, 2003, increased in each of 
                                the 5 succeeding 1-year periods 
                                by equal increments, so that 
                                for the 1-year period beginning 
                                October 1, 2007, the applicable 
                                percentage does not exceed 7 
                                percent; and
                                  (II) for each succeeding 1-
                                year period until September 30, 
                                2015, not to exceed 7 percent.
                  (B) Special rule for lesser developed 
                countries.
                          (i) In general.--Preferential 
                        treatment under this paragraph shall be 
                        extended though September 30, 2007, for 
                        apparel articles wholly assembled, or 
                        knit-to-shape and wholly assembled, or 
                        both, in one or more lesser developed 
                        beneficiary sub-Saharan African 
                        countries, regardless of the country of 
                        origin of the fabric or the yarn used 
                        to make such articles, in an amount not 
                        to exceed the applicable percentage of 
                        the aggregate square meter equivalents 
                        of all apparel articles imported into 
                        the United States in the preceding 12-
                        month period for which data are 
                        available.
                          (ii) Applicable percentage.--For 
                        purposes of the subparagraph, the term 
                        ``applicable percentage'' means--
                                  (I) 2.3571 percent for the 1-
                                year period beginning October 
                                1, 2003;
                                  (II) 2.6428 percent for the 
                                1-year period beginning October 
                                1, 2004;
                                  (III) 2.9285 percent for the 
                                1-year period beginning October 
                                1, 2005; and
                                  (IV) 1.6071 percent for the 
                                1-year period beginning October 
                                1, 2006.
                          (iii) Lesser developed beneficiary 
                        sub-saharan african country.--For 
                        purposes of this subparagraph, the term 
                        ``lesser developed beneficiary sub-
                        Saharan African country'' means--
                                  (I) a beneficiary sub-Saharan 
                                African country that had a per 
                                capita gross national product 
                                of less than $1,500 in 1998, as 
                                measured by the International 
                                Bank for Reconstruction and 
                                Development;
                                  (II) Botswana; and
                                  (III) Namibia.

           *       *       *       *       *       *       *

          (5) Apparel articles wholly assembled from fabric or 
        yarn not available in commercial quantities in the 
        united states.--
                  [(A) In general.--Apparel articles that are 
                both cut (or knit-to-shape) and sewn or 
                otherwise assembled in one or more beneficiary 
                sub-Saharan African countries, from fabric or 
                yarn that is not formed in the United States or 
                a beneficiary sub-Saharan African country, to 
                the extent that apparel articles of such 
                fabrics or yarns would be eligible for 
                preferential treatment, without regard to the 
                source of the fabric or yarn, under Annex 401 
                to the NAFTA.]
                  (A) In general.--Apparel articles that are 
                both cut (or knit-to-shape) and sewn or 
                otherwise assembled in one or more beneficiary 
                sub-Saharan African countries, to the extent 
                that apparel articles of such fabrics or yarns 
                would be eligible for preferential treatment, 
                without regard to the source of the fabrics or 
                yarns, under Annex 401 to the NAFTA.

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          [(6) Handloomed, handmade, and folklore articles.--A 
        handloomed, handmade, or folklore article of a 
        beneficiary sub-Saharan African country or countries 
        that is certified as such by the competent authority of 
        such beneficiary country or countries. For purposes of 
        this paragraph, the President, after consultation with 
        the beneficiary sub-Saharan African country or 
        countries concerned, shall determine which, if any, 
        particular textile and apparel goods of the country (or 
        countries) shall be treated as being handloomed, 
        handmade, or folklore articles.]
          (6) Handloomed, handmade, folklore articles and 
        ethnic printed fabrics.--
                  (A) In general.--A handloomed, handmade, 
                folklore article or an ethnic printed fabric of 
                a beneficiary sub-Saharan African country or 
                countries that is certified as such by the 
                competent authority of such beneficiary country 
                or countries. For purposes of this section, the 
                President, after consultation with the 
                beneficiary sub-Saharan African country or 
                countries concerned, shall determine which, if 
                any, particular textile and apparel goods of 
                the country (or countries) shall be treated as 
                being handloomed, handmade, or folklore 
                articles or an ethic printed fabric.
                  (B) Requirements for ethnic printed fabric.--
                Ethnic printed fabrics qualified under this 
                paragraph are--
                          (i) fabrics containing a selvedge on 
                        both edges, having a width of less than 
                        50 inches, classifiable under 
                        subheading 5208.52.30 or 5208.52.40 of 
                        the Harmonized Tariff Schedule of the 
                        United States;
                          (ii) of the type that contains 
                        designs, symbols, and other 
                        characteristics of African prints--
                                  (I) normally produced for and 
                                sold on the indigenous African 
                                market; and
                                  (II) normally sold in Africa 
                                by the piece as opposed to 
                                being tailored into garments 
                                before being sold in indigenous 
                                African markets;
                          (iii) printed, including waxed, in 
                        one or more eligible beneficiary sub-
                        Saharan countries; and
                          (iv) fabrics formed in the United 
                        States, from yarns formed in the United 
                        States, or from fabric formed in one or 
                        more beneficiary sub-Saharan African 
                        country from yarn originating in either 
                        the United States or one or more 
                        beneficiary sub-Saharan African 
                        countries.
          (7) Apparel articles assembled in one or more 
        beneficiary sub-saharan african countries from united 
        states and beneficiary sub-saharan african country 
        components.--Apparel articles sewn or otherwise 
        assembled in one or more beneficiary sub-Saharan 
        African countries with thread formed in the United 
        States from components cut in the United States and one 
        or more beneficiary sub-Saharan African countries or 
        former beneficiary sub-Saharan African countries from 
        fabric wholly formed in the United States from yarns 
        wholly formed in the United States, or from components 
        knit-to-shape in the United States and one or more 
        beneficiary sub-Saharan African countries or former 
        beneficiary sub-Saharan African countries from yarns 
        wholly formed in the United States, or both (including 
        fabrics not formed from yarns, if such fabrics are 
        classifiable under heading 5602 or 5603 of the 
        Harmonized Tariff Schedule of the United States).

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  (d) Special Rules.--
          (1)  * * *
          (2) De minimis rule.--An article otherwise eligible 
        for preferential treatment under this section shall not 
        be ineligible for such treatment because the article 
        contains fibers or yarns not wholly formed in the 
        United States or one or more beneficiary sub-Saharan 
        African countries or former beneficiary sub-Saharan 
        African countries if the total weight of all such 
        fibers and yarns is not more than [7 percent] 10 
        percent of the total weight of the article.
          (3) Certain components.--An article otherwise 
        eligible for preferential treatment under this section 
        will not be ineligible for such treatment because the 
        article contains--
                  (A) any collars or cuffs (cut or knit-to-
                shape),
                  (B) drawstrings,
                  (C) shoulder pads or other padding,
                  (D) waistbands,
                  (E) belt attached to the article,
                  (F) straps containing elastic, or
                  (G) elbow patches,
        that do not meet the requirements set forth in 
        subsection (b), regardless of the country of origin of 
        the item referred to in the applicable subparagraph of 
        this paragraph.
  (e) Definitions.--In this section and section 113:
          (1) * * *

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          (4) Former sub-saharan african country.--The term 
        ``former sub-Saharan African country'' means a country 
        that, after being designated as a beneficiary sub-
        Saharan African country under this Act, ceased to be 
        designated as such a beneficiary sub-Saharan country by 
        reason of its entering into a free trade agreement with 
        the United States.

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