[Senate Report 108-116]
[From the U.S. Government Publishing Office]
Calendar No. 222
108th Congress
SENATE
1st Session Report 108-116
======================================================================
UNITED STATES-CHILE FREE TRADE AGREEMENT IMPLEMENTATION ACT
_______
July 29 (legislative day, July 21), 2003.--Ordered to be printed
_______
Mr. Grassley, from the Committee on Finance, and on behalf of Mr.
Hatch, from the Committee on the Judiciary; filed the following
JOINT REPORT
together with
ADDITIONAL VIEWS
[To accompany S. 1416]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, and the Committee on the
Judiciary, to which was jointly referred the bill (S. 1416) to
implement the United States-Chile Free Trade Agreement, having
considered the same, reports thereon and recommends that the
bill do pass.
CONTENTS
Page
I. Reports and Other Materials of the Committees.....................2
Part I. Report of the Committee on Finance........................2
A. Summary of Congressional Consideration of the United
States-Chile Free Trade Agreement.................... 2
B. General Background.................................... 5
C. Overview of the United States-Chile Free Trade
Agreement............................................ 7
D. General Description of the Bill....................... 22
Title I--Approval of, and General Provisions Relating
to, the Agreement................................ 22
Title II--Customs Provisions......................... 24
Title III--Relief From Imports....................... 27
Title IV--Temporary Entry of Business Persons........ 32
E. Congressional Action.................................. 32
F. Vote of the Committee in Reporting the Bill........... 34
G. Regulatory Impact and Other Matters................... 34
Part II. Report of the Committee on the Judiciary................34
A. Background............................................ 34
B. Implementing Legislation on Temporary Professional
Workers.............................................. 36
C. Judiciary Committee Action............................ 37
II. Budgetary Impact of the Bill.....................................37
III.Additional Views.................................................41
IV. Changes in Existing Law..........................................53
I. REPORTS AND OTHER MATERIALS OF THE COMMITTEES
This joint report compiles the reports and other materials
of the Committees to which S. 1416, the bill to approve and
implement the United States-Chile Free Trade Agreement, was
jointly referred.
Part I. Report of the Committee on Finance
The Committee on Finance, to which was referred the bill
(S. 1416) to approve and implement the United States-Chile Free
Trade Agreement, having considered the same, reports favorably
thereon and recommends that the bill do pass.
A. SUMMARY OF CONGRESSIONAL CONSIDERATION OF THE UNITED STATES-CHILE
FREE TRADE AGREEMENT
1. Background
At the first Summit of the Americas in December 1994,
President William J. Clinton pledged that Chile would become
the fourth member of the North American Free Trade Agreement.
In April 1998, during President Clinton's state visit to Chile,
efforts to expand the North American Free Trade Agreement were
halted in favor of the establishment of a United States-Chile
Joint Commission on Trade and Investment. In November 2000,
President Clinton and President Ricardo Lagos of Chile agreed
to launch bilateral negotiations for a United States-Chile Free
Trade Agreement. The United States and Chile initiated
negotiations on a Free Trade Agreement on December 6, 2000. On
August 6, 2002, President George W. Bush signed the Trade Act
of 2002, which provides expedited procedures for the
consideration of legislation implementing trade agreements that
meet objectives under the Act. After 14 negotiating rounds, the
United States and Chile concluded negotiations in December
2002. On January 29, 2003, President Bush notified Congress of
his intention to sign the Agreement. On June 6, 2003, the
Agreement was signed in Miami, Florida, by U.S. Trade
Representative Robert B. Zoellick and Chilean Foreign Minister
Soledad Alvear.
2. Trade Promotion Authority Procedures In General
The requirements for congressional consideration of the
United States-Chile Free Trade Agreement (the Agreement) under
expedited procedures (known as Trade Promotion Authority (TPA)
Procedures) are set forth in sections 2103 through 2106 of the
Bipartisan Trade Promotion Authority Act (the Act) of 2002 and
section 151 of the Trade Act of 1974.
Section 2103 of the Act authorizes the President, prior to
June 1, 2005 (or prior to June 1, 2007, if trade authority
procedures are extended under section 2103(c) of the Act), to
enter into reciprocal trade agreements with foreign countries
to reduce or eliminate tariff or nontariff barriers and other
trade-distorting measures. The purpose of section 2103
procedures is to provide the means to achieve U.S. negotiating
objectives set forth under section 2102 of the Act in
international trade negotiations.
3. Notification Prior to Negotiations
Under section 2104(a)(1) of the Trade Act of 2002, the
President must provide written notice to the Congress at least
90 calendar days before initiating negotiations. Section
2104(a)(2) requires the President, before and after submission
of the notice, to consult regarding the negotiations with the
relevant Committees of Congress and the Congressional Oversight
Group established under section 2107 of the Act. Section 2106
exempts Chile from the prenegotiation notification and
consultation requirements of section 2014(a) only. Section
2106(b)(2), however, requires the President, as soon as
feasible after the enactment of the Trade Act of 2002, to
notify Congress of, and consult with Congress about, the
negotiations. On October 1, 2002, President George W. Bush
notified the Congress of the United States ongoing negotiations
with Chile on a free trade agreement.
4. Notification of Intent To Enter Into an Agreement
Under section 2105(a)(1)(A) of the Act, the President is
required, at least 90 days before entering into an agreement,
to notify Congress of his intent to enter into an agreement. On
January 29, 2003, President George W. Bush notified Congress of
his intention to enter into the United States-Chile Free Trade
Agreement.
Section 2105(a)(1)(B) requires the President, within 60
days of signing an agreement, to submit to Congress a
preliminary list of existing laws that the President considers
would be required to bring the United States into compliance
with the agreement. On June 6, 2003, the United States Trade
Representative signed the Agreement. On July 3, 2003, the
President transmitted to Congress a description of changes in
existing law required to comply with the Agreement.
5. Development of the Implementing Legislation
Under TPA Procedures, the Congress and the Administration
traditionally work together to produce the legislation to
implement the agreement. The drafting occurs in informal
meetings of the Committees with jurisdiction over the laws that
must be amended to implement the agreement. At times this
process may also include one or more House-Senate conference
meetings. The objective is to produce one bill to be
transmitted by the House and Senate Leadership to the President
as the recommended legislation to implement the trade
agreement. The drafting is done in close consultation with the
Administration in an effort to ensure that the legislation
faithfully implements the agreement and that the
Administration's subsequent formal submission is, to the
greatest degree possible, consistent with the legislation
recommended by the Congress.
In meetings in June and July 2003, the Senate Committee on
Finance and the House Committee on Ways and Means considered
and made recommendations for the implementing bills. Other
Committees of the Senate and House also considered provisions
of the implementinglegislation within their respective
jurisdictions.
6. Formal Submission of the Agreement and Legislation
When the President formally submits a trade agreement to
the Congress under section 2105 of the Act, the President must
include in the submission the final legal text of the
agreement, together with implementing legislation, a statement
of administrative action (describing regulatory and other
changes that are necessary or appropriate to implement the
agreement), a statement setting forth the reasons of the
President regarding how and to what extent the agreement makes
progress in achieving the applicable policies, purposes,
priorities, and objectives set forth in the Act, and a
statement setting forth the reasons of the President regarding
how the agreement serves the interests of U.S. commerce.
The implementing legislation is introduced in both Houses
of Congress on the day it is submitted by the President and is
referred to Committees with jurisdiction over its provisions.
President George W. Bush transmitted the final text of the
United States-Chile Free Trade Agreement, along with
implementing legislation, a Statement of Administrative Action,
and other supporting information, as required under section
2105 of the Trade Act of 2002, to the Congress on July 15,
2003. The legislation was introduced that same day in both the
House and the Senate.
To qualify for TPA Procedures, the implementing bill itself
must contain provisions formally approving the agreement and
the statement of administrative action. Further, the
implementing bill must contain only those provisions necessary
or appropriate to implement the agreement. The implementing
bill reported here--which approves the United States-Chile Free
Trade Agreement and the Statement of Administrative Action and
contains a number of additional provisions necessary or
appropriate to implement the United States-Chile Free Trade
Agreement into U.S. law--was referred to the Senate Committee
on Finance and the Senate Committee on the Judiciary.
7. Committee and Floor Consideration
When the requirements of the Act are satisfied,
implementing revenue bills, such as the United States-Chile
Free Trade Agreement Implementation Act (Implementation Act),
are subject to the legislative procedures of section 151 of the
Trade Act of 1974. The following schedule for Congressional
consideration applies under these procedures:
(i) House Committees have up to 45 days in which to
report the bill; any Committee which does not do so in
that period will be automatically discharged from
further consideration.
(ii) A vote on final passage by the House must occur
on or before the 15th day after the Committees report
or are discharged.
(iii) Senate Committees must act within 15 days of
receiving the implementing revenue bill from the House
or within 45 days of Senate introduction of the
implementing bill, whichever is longer, or they will be
discharged automatically.
(iv) The full Senate then must vote within 15 days.
Thus, the Congress has a maximum of 90 days to complete
action on the bill, although the time period can be shortened.
Once the implementing bill has been formally submitted by
the President and introduced, no amendments to the bill are in
order in either House of Congress. Floor debate is limited in
each House to no more than 20 hours.
The Senate Committee on Finance and the Senate Committee on
the Judiciary ordered S. 1416, the United States-Chile Free
Trade Agreement Implementation Act, favorably reported on July
17, 2003.
B. GENERAL BACKGROUND
The United States and Chile initiated negotiations on a
free trade agreement on December 6, 2000. After 14 negotiating
rounds, negotiations were concluded in December 2002. On
January 29, 2003, President Bush notified Congress of his
intention to sign the Agreement. The Agreement was signed on
June 6, 2003 in Miami, Florida, by United States Trade
Representative Robert B. Zoellick and Chilean Foreign Minister
Soledad Alvear. The United States-Chile Free Trade Agreement,
along with the United States-Singapore Free Trade Agreement, is
the first agreement to be submitted under TPA Procedures
established by the Act.
1. United States-Chile Trade
In 2002, Chile was the United States' 34th largest export
destination and 36th largest import contributor. By contrast,
the United States is Chile's largest single-country trading
partner, accounting for 20 percent of Chilean exports and 15
percent of its imports in 2002. The United States has
experienced a merchandise trade deficit with Chile in recent
years, after running merchandise trade surpluses from 1988 to
1999. In 2002, total bilateral merchandise trade was valued at
$5.9 billion, with U.S. exports to Chile totaling $2.3 billion
and U.S. imports from Chile totaling $3.6 billion. Two-way
trade in agricultural, food, and fishery products between the
United States and Chile in fiscal year 2002 totaled nearly $2.3
billion.
U.S. products exported to Chile are comprised predominantly
of capital goods. These include: machinery (32 percent),
particularly computers, office machinery, and industrial
equipment such as gas turbines and bulldozers; electrical
machinery (12 percent) including television and radio
transmission apparatuses, telephone equipment, spare parts,
integrated circuits, sound recording equipment and media;
vehicles (8 percent) mostly trucks and passenger cars; and
optical/medical instruments (5 percent). In recent years, U.S.
export trends have exhibited a slowing in heavy transportation
equipment and in computer and electronicequipment, but vehicle
parts exports to Chile have increased.
The largest category of U.S. imports from Chile in 2002
consisted of agricultural products. This category accounts for
more a large portion of imports followed by minerals and
metals. Major imports from Chile included: copper articles (13
percent), mostly refined alloys; wood (16 percent), including
various types of lumber; and beverages (4 percent), virtually
all wine. Recent trends have seen an increase in imports of
grapes, fish, wood products, apricots, peaches, plums, and with
a steady level or slight decline in demand for copper and wine
products relative to other goods.
2. Tariffs and Trade Agreements
Chile has bound most of its industrial tariffs at the World
Trade Organization (WTO) at a maximum of 25 percent ad valorem.
Some agricultural tariffs are bound at 31.5 percent ad valorem,
and some commodities, including wheat, flour, vegetable oils,
and sugar are subject to an additional variable rate, under a
price band system. Most actual applied tariff rates are much
lower; a uniform ad valorem rate of 6 percent has been applied
on nearly all non-agricultural goods from January 1, 2003. In
addition, Chile has negotiated free or preferential trade
agreements with Canada, Mexico, the European Union, the Central
American Common Market (Costa Rica, El Salvador, Guatemala,
Honduras and Nicaragua), and as an associate member
participates in the free trade area of Mercosur (Argentina,
Brazil, Paraguay, and Uruguay. Bolivia is an associate member).
Chile completed negotiations in March 2003 with the European
Free Trade Area, which includes Iceland, Liechtenstein, Norway
and Sweden.
LEADING U.S. EXPORTS TO CHILE, 1998-2002
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
HTS 4-digit classification 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
8471--Computers, data processing equipment.......... 160,778 161,539 168,562 138,367 128,860
8431--Parts for heavy equipment and machinery....... 173,592 30,684 167,559 154,877 128,286
9880--Low value shipments........................... 136,350 113,350 121,649 109,662 93,155
8473--Parts for computers and other office equipment 105,713 117,568 135,548 117,846 92,868
8525--Television and radio transmission and 128,923 215,607 181,444 99,142 69,682
recording equipment................................
8704--Trucks, dump trucks........................... 122,297 41,445 125,985 70,477 65,189
8411--Gas turbines, turbojets turbo-propellers and 18,383 50,370 39,208 36,017 62,635
parts..............................................
8708--Motor vehicle parts........................... 48,734 35,387 37,901 43,936 56,972
8703--Motor cars.................................... 64,758 31,979 46,761 41,982 45,039
2710--Petroleum oils................................ 39,910 43,675 66,023 54,586 39,540
All other........................................... 2,742,320 1,939,014 2,091,967 1,956,222 1,561,832
-----------------------------------------------------------
Total......................................... 3,741,759 2,880,436 3,182,608 2,823,11 2,344,059
----------------------------------------------------------------------------------------------------------------
Note.--HTS=harmonized tariff schedule number
Source: U.S. International Trade Commission Dataweb.
LEADING U.S. IMPORTS FROM CHILE, 1998-2002
[in thousands of dollars]
----------------------------------------------------------------------------------------------------------------
HTS 4-digit classification 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
0806--Grapes, raisins............................... 280,404 312,784 396,012 383,378 464,077
0304--Fish fillets and fish meat (fresh, chilled or 247,082 263,524 377,051 395,736 422,853
frozen)............................................
7403--Unwrought refined copper and copper alloys.... 131,236 229,986 443,138 292,255 375,857
4409--Wood, continuously shaped (tongued, grooved, 116,745 157,727 140,485 175,723 192,625
molded)............................................
4407--Wood sawn or chipped lengthwise, sliced or 96,881 150,505 144,098 133,066 170,940
peeled, more than 6mm thick........................
2204--Wine of fresh grapes, including fortified wine 116,241 116,546 134,294 137,379 136,890
2905--Acyclic alcohol and derivatives............... 34,239 45,737 65,647 123,793 135,654
9801--Exports of articles imported for repair or 62,640 80,513 79,802 96,125 127,737
returned...........................................
0809--Apricots, peaches, plums, nectarines, cherries 51,421 75,872 69,810 91,827 108,787
1005--Corn.......................................... 54,499 58,566 81,901 84,530 82,245
All other........................................... 1,149,852 1,331,562 1,325,284 1,365,213 1,339,325
-----------------------------------------------------------
Total......................................... 2,341,240 2,823,322 3,257,520 3,279,027 3,556,991
----------------------------------------------------------------------------------------------------------------
Note.--HTS=harmonized tariff schedule number
Source: U.S. International Trade Commission Dataweb.
3. International Trade Commission Study
As part of the Congressional consultation process, the
United States International TradeCommission (ITC) released a
comprehensive study in June 2003 assessing the probable economic
effects of the Agreement on the U.S. economy, providing both
quantitative and qualitative estimates of the Agreement's probable
effects. The study projected that by 2016, when the full effect of the
tariff eliminations would be felt, U.S. exports to Chile would increase
in a range between 18 percent and 52 percent; and U.S. imports would
rise between 6 percent and 14 percent. The study notes that this would
be very small relative to total U.S. trade and that the economy-wide
effects on trade, production, and overall economic welfare would be
small to negligible, although the impact would be significant in
sectors with high initial trade barriers. This outcome was expected due
to the fact that Chile is already a relatively open economy with a
relatively small trade position with the United States. The ITC
finding, however, serves as an estimate of confirmation, focusing
largely on the implications of tariff reduction, which may be
quantified, unlike changes in many non-tariff barriers.
The ITC investigation found that the FTA would have
implications for most sectors of the U.S. economy, either with
increased import competition from Chile, or increased export
opportunities. Imports to the United States from Chile are
likely to increase in textiles, apparel and leather goods,
dairy, tobacco products and other crops. A general expansion in
U.S. exports to Chile is expected, with the greatest increase
in electronic and transportation equipment. Sectors with the
highest initial trade barriers would see the largest impact.
C. OVERVIEW OF THE UNITED STATES-CHILE FREE TRADE AGREEMENT
1. The Agreement
The Agreement comprises an integrated set of reciprocal
obligations that will eliminate barriers to trade between Chile
and the United States in a manner that is consistent with
Article XXIV of the General Agreements on Tariffs and Trade
1994 (GATT 1994) and Article V of the General Agreement on
Trade in Services (GATS).
2. Chapters
Market Access.--The Agreement calls for the mutual
elimination of all tariffs between the two countries within 12
years. More than 85 percent of bilateral trade in industrial
and consumer products will become duty-free immediately upon
the entry into force of the Agreement. The majority of
remaining industrial and consumer products will become duty-
free within 4 years, and all tariffs on these products will be
phased out within 10 years. With regard to agriculture, tariffs
on more than 75 percent of agricultural products will be
eliminated within 4 years, and all tariffs on these products
will be phased out over 12 years. Most basic textile products
would be accorded immediate duty-free treatment by both
Parties, with a few products given staged reductions and with
shipments of some apparel goods, notably those of cotton or of
man-made fibers, controlled by tariff preference levels. The
Parties may consult to accelerate tariff elimination on goods.
Chile agrees to eliminate its 50 percent surcharge on the
importation of originating used goods. The Agreement also
provides for the duty-free entry of commercial samples of
negligible value, printed advertising materials, and goods
reentered following repair or alteration. The Agreement
provides for a phase-out of duty drawback and duty deferral
programs over a 3 year period commencing 8 years after the
Agreement enters into force.
The Agreement reaffirms and qualifies GATT commitments on
import and export restrictions and allows either Party to
ensure that a ban on trade with a non-Agreement party is not
circumvented by the Agreement. Each Party is to ensure that
administrative fees associated with imports and exports are
commensurate with the service rendered, and that a current list
of such fees is published. The United States agrees to
eliminate the merchandise processing fee for originating goods
from Chile. Export taxes are prohibited, except when the tax is
also applied to domestic goods, and Chile agrees to phase out
its luxury tax on automobiles in 4 years. The Parties agree to
respect certain geographic indications on U.S. whiskey and
certain Chilean alcoholic beverage products. A Committee on
Trade in Goods is also established to promote trade in goods
between the Parties, including through consultations on
accelerating tariff elimination under the Agreement and other
issues, as appropriate.
Agricultural Trade.--The Agreement's tariff schedules
provide tariff-free treatment for about 75 percent of the
agricultural products traded between the United States and
Chile within 4 years. Tariffs and quotas on remaining products
will be phased out over periods of up to 12 years with a
special rule applying to trade in specified sugar products.
With regard to these specified sugar products, each Party
agrees that its access to the other's market under the
Agreement is limited to the amount of its net trade surplus in
these products. Protection for certain import-sensitive
agricultural products will be provided using tariff-rate quotas
(TRQs), tariff phase-outs, and agricultural safeguards. The
special safeguards are price-based and will be implemented
automatically using specified trigger prices.
The U.S. Schedule details the TRQ provisions (initial quota
amount, annual rate of quota increase, tariff reduction
schedule for over-quota quantities) that will apply to imports
from Chile of beef, poultry, cheese, milk powder, butter,
condensed milk, other dairy products, sugar, tobacco, avocados,
and processed artichokes. The U.S. Schedule provides tariff
phase-outs for the relevant agricultural products. Chilean
products covered by the U.S. price-based agricultural safeguard
include specified vegetables and fruit, various canned fruits,
frozen concentrated orange juice, tomato products, and
avocados.
The Agreement commits Chile to eliminate its price band
mechanism as it relates to imports of wheat, wheat flour,
vegetable oils, and sugar from the United States over a 12 year
period. U.S. products subject to Chile's agricultural safeguard
include certain meat products; broken, brown, and partially-
milled rice; rice flour; and certain wheat products.
The Agreement eliminates the use of export subsidies on
agricultural trade between both countries, but allows each
country to respond if third countries use such subsidies to
displace its sales in the other country's market. It commits
each Party to recognize the other's beef grading systems. An
exchange of letters, dated June 6, 2003, pledges both countries
to urge theirregulatory agencies to implement technical and
scientific work dedicated to achieving market access to make the
bilateral trade of poultry products of mutual benefit for both Parties.
Textiles and Apparel.--Chapter 3 of the Agreement
establishes a specific bilateral safeguard mechanism for
textiles and apparel goods. A Party may take emergency action
with respect to a textile or apparel good benefiting from
preferential tariff treatment under the Agreement if that good
is being imported in such increased quantities and under such
conditions as to cause serious damage, or actual threat
thereof, to a domestic industry. The emergency action
authorized in the Agreement consists of an increase in the rate
of duty on the good, to a level not to exceed the lesser of:
the normal trade relations/most-favored-nation (NTR/MFN)
applied rate of duty in effect at the time the action is taken;
or, the NTR/MFN applied rate of duty in effect on the date of
entry into force of the Agreement.
The importing Party may take an emergency action under
Chapter 3 of the Agreement only following an investigation by
its competent authorities. No emergency action may be
maintained under this safeguard for a period exceeding 3 years,
and no emergency action may be taken or maintained beyond the
period ending 8 years after duties on a good have been
eliminated pursuant to the Agreement. In addition, no emergency
action may be taken by an importing Party against a particular
textile or apparel good of the other Party more than once, and
upon termination of an emergency action, the good will return
to duty-free status.
The Party taking an emergency action must provide mutually
agreed-upon trade liberalizing compensation in the form of
concessions having substantially equivalent trade effects, or
equivalent value, compared to the additional duties resulting
from the emergency action. Such concessions shall be limited to
textile and apparel goods, unless the Parties agree otherwise.
If the Parties are unable to reach an agreement on
compensation, the exporting Party may take tariff action having
trade effects substantially equivalent to the trade effects of
the emergency action taken under Chapter 3 of the Agreement.
Such tariff action may be taken against any goods of the Party
taking the emergency action. The Party taking the tariff action
shall apply such action only for the minimum period necessary
to achieve substantially equivalent trade effects. The
importing Party's obligation to provide trade compensation and
the exporting Party's right to take tariff action shall
terminate when the emergency action terminates.
Nothing in Chapter 3 of the Agreement shall be construed to
limit a Party's right to restrain imports of textile and
apparel goods in a manner consistent with the WTO Agreement on
Textiles and Clothing or the WTO Agreement on Safeguards.
However, a Party may not take or maintain an emergency action
against a textile or apparel good that is subject, or becomes
subject, to a safeguard measure that a Party imposes pursuant
to domestic law in accordance with either such WTO agreement.
Rules of Origin.--This section provides the criteria for
determining whether a good is an originating goods for purposes
of the Agreement. Originating status is conferred: (1) when a
good is wholly obtained or produced entirely in the territory
of one or both of the Parties; (2) when a good is produced
entirely in the territory of one or both Parties and each of
the non-originating materials used in the production of the
good undergoes an applicable change in tariff classification,
and the good satisfies all other applicable requirements of
Chapter 4; (3) when a good is produced entirely in the
territory of one or both Parties and the good otherwise
satisfies any applicable regional value content, and the good
satisfies all other applicable requirements of Chapter 4; or
(4) when the good is produced entirely in the territory of one
or both Parties exclusively from originating materials.
Product-specific rules of origin are set forth in an Annex.
This section also covers certain rules of origin topics such
as: the treatment of accessories; spare parts and tools shipped
with a good; fungible goods; accumulation; a de minimis rule;
indirect materials; and packaging. The Agreement provides for
the use of certificates of origin and establishes verification
and documentation obligations on importers and exporters.
Customs Administration.--The Agreement commits the Parties
to transparency in regard to their customs laws, regulations,
and administrative procedures. Each Party is obligated to
establish customs procedures for the prompt release of goods,
to promote the use of automation, to protect confidential
information, to promulgate procedures for express shipments, to
issue advanced rulings, to endeavor to adopt or maintain risk
management systems with a concentration on high-risk goods, and
to ensure that importers have access to administrative and
judicial review of customs determinations.
Sanitary and Phytosanitary Measures.--Under the Agreement,
the Parties affirm their existing rights and obligations with
respect to one another under the WTO Agreement on the
Application of Sanitary and Phytosanitary Measures (SPS
Agreement). The Parties agree that they may not have recourse
to dispute settlement under the Agreement for disputes
involving sanitary and phytosanitary (SPS) measures.
The Parties commit to establish a Committee on Sanitary and
Phytosanitary Matters. The objectives of this Committee will
include enhancing the implementation by each Party of the SPS
Agreement, enhancing cooperation on SPS matters, and
facilitating trade between the Parties. The Committee will
provide a forum in which to consult on the development and
application of SPS measures that affect, or may affect, trade
between the Parties.
Technical Barriers to Trade.--This chapter refers to
standards, technical regulations, and conformity assessment
procedures that may affect trade in goods between the Parties.
The Parties affirm their existing commitments under the WTO
Agreement on Technical Barriers to Trade and endeavor to
promote bilateral cooperation in the field of standards,
regulations, and procedures. The Agreement provides for
transparency and for the participation of the other Party in
the development of such standards, regulations, and procedures.
The Agreement encourages acceptance of the equivalence of
foreign technical regulations by requiring that a Party not
recognizing the technical standards of the other Party explain
the reasons for non-acceptance of such regulations. The
Agreement provides a range of mechanisms to facilitate the
acceptance of conformity assessment results. A Committee on
Technical Barriers to Trade is established to monitor the
implementation of the Agreement, facilitate bilateral
cooperation, exchangeinformation, and to provide a venue for
consultation.
Trade Remedies.--The Agreement establishes a bilateral
safeguard mechanism that allows a Party to impose a temporary
safeguard on a good of the other Party if, as a result of the
reduction or elimination of a duty pursuant to the Agreement,
that good is being imported in such increased quantities and
under such conditions as to constitute a substantial cause of
serious injury, or threat of serious injury, to a domestic
industry.
If serious injury to a domestic industry, or threat
thereof, is found under procedural and investigative
requirements pursuant to domestic law and in accordance with
the WTO Agreement on Safeguards, the importing Party may
suspend any further staged reductions in duty on the good, or
may increase the duty rate to a level not greater than a
specified normal trade relations/most-favored nation (NTR/MFN)
rate. A bilateral safeguard measure can be imposed for no
longer than 3 years; for safeguards applied for more than 1
year, the Party must progressively liberalize the safeguard
measure at regular intervals. In general, upon termination of
the safeguard measure, the rate of duty on the good must return
to the applicable level of duty as if the safeguard measure had
never been applied, or, alternatively, the tariff must be
eliminated in equal annual stages ending on the date the tariff
is scheduled to be eliminated in the Agreement.
The Party imposing a safeguard measure must provide
mutually agreed-upon trade liberalizing compensation in the
form of concessions having substantially equivalent trade
effects, or equivalent value, compared to the additional duties
resulting from the safeguard measure. If the Parties are unable
to reach an agreement on compensation, the exporting Party
shall be free to suspend the application of substantially
equivalent concessions to the other Party. Under Chapter 8 of
the Agreement, a bilateral safeguard measure cannot be applied
more than once to a good, nor may a bilateral safeguard be
applied or maintained to a good that is subject to a global
safeguard measure imposed pursuant to domestic law and in
accordance with the WTO Agreement on Safeguards. Chapter 8 of
the Agreement permits the imposition of a bilateral safeguard
measure only during the 10-12 year transition period identified
in the Agreement.
Each Party retains its rights and obligations under the WTO
Agreement on Safeguards, and the Agreement does not confer any
additional rights or obligations on the Parties with respect to
actions taken in accordance with the WTO Agreement on
Safeguards. The Agreement reaffirms the rights of each Party
under the WTO regarding the application of antidumping (AD) or
countervailing duty (CVD) measures, and provides that the
application of AD or CVD measures by each Party is not subject
to dispute settlement procedures under Chapter 22 of the
Agreement.
Government Procurement.--The Agreement obligates each Party
to accord national treatment to the procurement of goods,
services, and suppliers of the other Party. The section
provides transparency in the procurement process by requiring
publication of advanced notice of intended procurement;
provision of time frames in which to tender a procurement bid;
publication of procurement specifications; limitations on
restrictions on tender participation; and provision of open
tendering procedures. It provides for domestic review of
supplier challenges, including the establishment of an
impartial review authority. Each Party is also required to
establish or maintain bribery as a criminal offense.
Above certain monetary thresholds, the Agreement applies to
procurement by 20 Chilean central government and 13 Chilean
regional government entities, and by 79 entities of the United
States Government-including the General Services
Administration, departments of the Federal Government, and
independent agencies, boards, and commissions. The
applicability of the Agreement to certain goods procured for
national security purposes is restricted. The Agreement also
covers procurement by 341 Chilean municipalities and 37 U.S.
States, above certain monetary thresholds and subject to
specified conditions. In addition, the Agreement applies to
certain port authorities in each country and to U.S. power
authorities such as the Tennessee Valley Authority.
Investment.--The investment chapter has three sections.
Section A lays out general rules on the treatment of
investment. Each Party agrees to accord national treatment and
normal trade relation/most-favored-nation (NTR/MFN) treatment
to investors of the other Party and to their investments. Each
Party commits to minimum standards of treatment for the other
Party's investors and investments according to customary
international law, including: (1) the obligation to not deny
justice under the legal system; (2) police protection; (3)
nondiscriminatory treatment for losses from armed conflict or
civil strife; and (4) compensation for loss in the other
Party's territory from requisition or destruction of the
investment by the other Party's forces. The Parties agree not
to impose mandatory performance requirements on an investment,
whether the investor is from the other Party or from a non-
Agreement party. Parties may not make an advantage conditional
on meeting certain performance requirements. Performance
requirements would be allowed, however, in some situations,
such as to protect human, animal, or plant life or health.
Neither Party may impose a nationality requirement on a senior
manager of a company that is owned by an investor in the other
Party; however, a Party may require that a majority of the
company's board of directors be of a particular nationality, as
long as the requirement does not impair the investor's control
over the investment. The preceding rules in this paragraph do
not apply to existing non-conforming measures at the central or
regional level, as identified by the Parties, or to measures at
the local level. Some of the rules do not apply to government
procurement or government subsidies or grants.
Parties agree to permit transfers such as profits or
proceeds from a sale to be made freely and without delay except
in certain cases such as bankruptcy. Neither Party may require
its investors to transfer, or penalize its investors that fail
to transfer, amounts from investments in the other Party.
Neither Party may expropriate a covered investment unless
prompt and adequate compensation is paid or other conditions
are met. The Agreement allows a Party to require information
concerning an investment solely for informational or
statistical purposes. It recognizes situations where a Party
may deny benefits under the investment Chapter to an investor
in one of the Parties that is owned or controlled by an
investor in a non-Agreementparty. It does not prevent a Party
from taking measures to ensure that investments are sensitive to
environmental concerns.
Section B sets out rules for investor-State disputes.
Parties to an investor-State dispute should try to resolve the
dispute through consultation and negotiation. If a dispute
cannot be settled in that manner, the claimant may submit a
claim to arbitration, but must notify the respondent at least
90 days before submitting a claim. Some 6 months must pass
since events giving rise to the claim before a claimant may
submit a claim to an arbitration tribunal. The Agreement has
provisions on the consent of each Party, including a rule that
no claim may be submitted to arbitration if more than 3 years
have elapsed from when the claimant first acquired knowledge of
the breach and damage. The Agreement describes the number of
arbitrators and how they are appointed. It has rules for the
conduct of the arbitration, including the place of arbitration,
submissions by non-disputing Parties, objections by the
respondent, interim measures of protection, and awards. Several
provisions pertain to transparency of arbitral proceedings; for
example, the tribunal must conduct hearings open to the public.
Some provisions pertain to protection of confidential business
information. The Agreement has provisions on governing law when
a claim is submitted and the appointment of experts to report
to the tribunal on scientific matters. It covers consolidation
of two or more claims that arise from the same events. Rules on
awards: state that a tribunal may award only monetary damages
and restitution of property and may not award punitive damages;
require each Party to provide for the enforcement of an award
in its territory; and, present guidelines when a respondent
fails to abide by or comply with a final award. Section C
contains applicable definitions.
Cross-Border Trade in Services.--Chapter 11 of the
Agreement applies to measures of central, regional, or local
governments, and to certain measures by non-governmental
bodies. It does not apply to financial services, most air
services, government procurement, or public subsidies or
grants. It requires that each Party provide national treatment
and normal trade relation/most-favored-nation treatment (NTR/
MFN) to service suppliers of the other Party and prohibits
limitations on the number of service providers, the value of
service transactions, the number of operations or output, or
the number of persons employed in a sector. The Agreement would
not apply these obligations to non-conforming measures
identified by the Parties, such as cultural industries in Chile
and social services and maritime transportation in both
countries. It commits the Parties to respond to inquiries
regarding regulations and to address in writing comments
received from interested persons regarding proposed
regulations. It calls for national authorities to respond
promptly to service providers applying for authorization to
supply a service, and emphasizes that measures on qualification
requirements should not constitute unnecessary barriers to
trade in services. The Agreement allows mutual recognition of
qualifications met in another country as long as such
recognition is in a non-discriminatory manner.
The Chapter on trade in services has two Annexes. One Annex
states that express delivery services are subject to the
Agreement. The other Annex covers professional services. It
states that Parties shall encourage relevant national bodies to
develop mutually acceptable standards for licensing and
certification and to provide recommendations to the Free Trade
Commission established under the Agreement. The Free Trade
Commission shall review the recommendations, and based on this
review, the Parties shall encourage their respective
authorities to implement the recommendation. The Annex includes
provisions on licensing standards specific to foreign legal
consultants and engineers.
Financial Services.--This section accords to each Party
national treatment and normal trade relation/most-favored-
nation (NTR/MFN) treatment to the other Party's financial
institutions, investments in financial institutions, and cross-
border financial service suppliers. It grants market access to
each Party's financial institutions by barring restrictions on
the number of financial institutions, or restrictions based on
the value of financial transactions, the number of service
operations, or the number of persons employed. The Agreement
commits each Party to permit a financial institution of the
other Party to introduce new financial services that are
permissible under the laws and regulations of the Party. The
Agreement contains confidentiality provisions which place no
obligation on either Party to disclose account information on
individual customers or information that would impede law
enforcement, the public interest, or legitimate commercial
interests. The imposition of nationality or residency
requirements on senior management or essential personnel is
prohibited, and a Party may not require that more than a
minority of the board of directors in a financial institution
in the other Party be composed of nationals or residents of the
Party.
A Committee on Financial Services is established to
implement the Agreement, and to provide a venue for
consultations. If a measure is deemed inconsistent with the
Agreement, certain suspension of benefits is authorized. Each
Party commits to the transparency of regulations and policies,
including the advance publication of regulations, reasonable
opportunities for comment on proposed regulations, and
procedural openness in the application process. The Agreement
allows for provisions excepting certain measures necessary to
the safety, soundness, integrity, or financial responsibility
of financial institutions and cross-border service providers.
The Agreement contains an Annex listing existing non-conforming
measures to remain in effect after the Agreement enters into
force. It also contains an Annex comprised of specific
commitments in the areas of right of establishment for banking
and other financial services, portfolio management, and
insurance.
Telecommunications.--The Agreement ensures access on
reasonable and non-discriminatory terms to each Party's public
telecommunications network service by enterprises of the other
Party. Each Party is obligated to allow such enterprises to
attach interface equipment to the public communications
network, to offer services to individual or multiple users, to
connect owned or leased circuits to the network, to perform
signaling, switching, processing and conversion functions, and
to use the operating protocols of their choice. The Parties
also agree to obligations on maintaining competitive
safeguards, unbundling of network elements consistent with
national laws and regulations, physical co-location of
telecommunications equipment, resale of telecommunications
services, provision of dialing parity and number portability,
and interconnection. The Agreement obligates each Party to
ensure the independence of itstelecommunications regulatory
body and to provide transparency in licensing procedures and licensing
criteria. The Parties agree to provide procedures to resolve domestic
telecommunications disputes including recourse to telecommunications
regulatory bodies, reconsideration of an adverse decision by a
regulatory body, and judicial review of that decision.
Temporary Entry for Business Persons.--Chapter 14 of the
Agreement sets forth general principles and obligations with
respect to providing for the temporary entry of business
persons. These provisions are more fully addressed in Part II,
Report of the Committee on the Judiciary.
Electronic Commerce.--The Agreement commits the Parties to
accord non-discriminatory treatment to a digital product from
the other Party, and to accord a digital product from the other
Party no less favorable treatment than from third countries.
Under the Agreement, neither Party may apply customs duties on
digital products of the other Party. In addition, the Agreement
stipulates that the supply of a service using electronic means
must be provided in accordance with the Chapters on Cross-
Border Trade in Services and Financial Services.
Competition.--The Parties agree to adopt or maintain
competition laws to proscribe anticompetitive business
behavior, and each Party shall maintain an authority to enforce
national competition laws. This authority shall establish
certain procedural safeguards for firms alleged to be in
violation, and decisions of this body are subject to review by
an independent tribunal. The Parties also agree to cooperate on
competition law enforcement. While specifically permitting the
designation of privately-owned monopolies or state enterprises,
the Agreement obligates each Party to ensure that such a
monopoly or state enterprise acts in a manner not inconsistent
with the Agreement in terms of the exercise of administrative,
regulatory, or governmental authority, and the non-
discriminatory provision of goods and services to covered
investments. The Agreement also provides for transparency
measures concerning each Party's enforcement activities and
each Party's designated monopolies and state enterprises.
Intellectual Property Rights.--The intellectual property
rights (IPR) provisions of the Agreement base IPR protection on
principles of national treatment and transparency. Each Party
agrees to ratify or accede to several IPR related treaties.
The Agreement specifies particular obligations of the
Parties regarding protections of trademarks, geographical
indications, copyrights, and patents. Each Party is to provide
the means for persons of the other Party to apply for
protection or petition for recognition of geographical
indications. Each Party agrees to provide criminal penalties
for certain copyright violations.
The Agreement provides that each country shall make patents
available for any invention whether a product or a process.
Each Party is to develop a patent protection for plants. It
provides that a patent may only be revoked if grounds exist
that would have justified an initial refusal to grant the
patent. It also provides for adjustment of a patent term if a
patent application is subject to unreasonable administrative
delays. The Agreement also protects the confidentiality of
information submitted for marketing approval or sanitary
permits for pharmaceuticals and agricultural chemicals. The
Agreement contains provisions to prevent the marketing approval
of a pharmaceutical product subject to a patent prior to
expiration of the patent term.
The Agreement provides transparency obligations for the
Parties with regard to the enforcement of intellectual property
rights. The Agreement provides for damages payable to rights-
holders in civil cases. It provides authority to initiate
actions to destroy infringing goods and the material and
implements used to manufacture them, and it mandates that each
Party provide criminal penalties for willful counterfeiting or
piracy on a commercial scale. Certain provisions of the Chapter
will take effect over periods of up to 2 to 5 years.
Labor.--In Chapter 18 of the Agreement, the Parties
reaffirm their obligations as members of the International
Labor Organization (ILO) and under the 1998 ILO Declaration on
Fundamental Principles and Rights at Work and its Follow-up
(ILO Declaration). Each Party must strive to ensure that its
domestic labor laws recognize and protect the fundamental labor
principles spelled out in the ILO declaration and listed in
Chapter 18. The Agreement defines labor laws to mean those
statutes or regulations directly related to: the right of
association; the right to organize and bargain collectively; a
prohibition of forced or compulsory labor; a minimum age for
the employment of children and elimination of the worst forms
of child labor; and acceptable conditions of work with respect
to minimum wages, hours of work, and occupational safety and
health. Under the Agreement, each Party recognizes that it is
inappropriate to encourage trade or investment by weakening or
reducing the protections afforded in domestic labor laws.
Accordingly, each Party shall strive to ensure that it does not
waive or otherwise derogate from, or offer to waive or derogate
from such laws in a manner that weakens or reduces adherence to
the internationally recognized labor rights referred to in
Article 18.1 of the Agreement.
The Agreement recognizes the right of each Party to
establish its own domestic labor standards, and to adopt or
modify its labor laws. The Agreement provides that each Party
shall not fail to effectively enforce its labor laws, through a
sustained or recurring course of action or inaction, in a
manner affecting trade between the Parties. The Agreement
recognizes that each Party retains the right to exercise
discretion with respect to investigatory, prosecutorial,
regulatory, and compliance matters and to make decisions
regarding the allocation of resources to enforcement with
respect to other labor matters determined to have higher
priorities. Each Party is obliged to provide fair, equitable,
and transparent proceedings for the enforcement of labor laws
to persons with a legally recognized interest in a particular
matter, and each Party guarantees that parties to such
proceedings may seek remedies to ensure the enforcement of
their rights under domestic labor laws. Decisions by each
Party's judicial tribunals are not subject to revision under
the provisions of Chapter 18 of the Agreement.
The Agreement creates a United States-Chile Labor Affairs
Council (LAC) to provide a forum for consultation on the
Agreement and its implementation. A separate Labor Cooperation
Mechanism is also established to: promote respect for ILO labor
principles and other common commitments; establish priorities
for cooperative activities on labor matters; develop
specificcooperative activities; exchange information; promote the
collection and publication of comparable labor data and enforcement
activity; arrange periodic labor cooperation review sessions at the
request of either Party; and develop recommendations for the respective
Parties for their consideration.
A Party can request consultations with the other Party
regarding any matter arising under Chapter 18 of the Agreement.
If the Parties fail to resolve the matter through
consultations, either Party may then request that the LAC be
convened to address the matter. Dispute settlement procedures
are available only when a Party asserts under Article
18.2(1)(a) that the other Party has failed to effectively
enforce its labor laws, through a sustained or recurring course
of action or inaction, in a manner affecting trade between the
Parties. In that instance, the complaining Party may request
dispute settlement proceedings under Chapter 22 of the
Agreement, after an initial 60-day consultation period, by
requesting a meeting of the Agreement's Free Trade Commission
(FTC). The Parties commit to establishing a roster of up to 12
individuals having expertise in labor law who may serve as
panelists in any dispute settlement proceedings arising under
Chapter 18 of the Agreement.
If a panel determines that a Party has not conformed with
its obligations under Article 18.2(1)(a) and the Parties are
unable to reach agreement on a resolution, the complaining
Party may request that the panel reconvene to impose an annual
monetary assessment on the other Party not to exceed $15
million, adjusted for inflation pursuant to Annex 22.16 of the
Agreement. Any assessments will be paid into a fund established
by the FTC and utilized for labor initiatives. Suspension of
tariff benefits of an equivalent dollar value may result from a
Party's failure to pay the monetary assessment.
Environment.--Chapter 19 of the Agreement recognizes the
right of each Party to establish its own levels of domestic
environmental protection and environmental development policies
and priorities, and to adopt or modify its environmental laws.
Each Party is obliged to provide fair, equitable, and open
proceedings for the enforcement of its environmental laws, as
well as appropriate and effective remedies for violation of its
environmental laws.
Under the Agreement, a Party shall not fail to effectively
enforce its environmental laws, through a sustained or
recurring course of action or inaction, in a manner affecting
trade between the Parties. The Agreement recognizes that each
Party retains the right to exercise discretion with respect to
investigatory, prosecutorial, regulatory, and compliance
matters and to make decisions regarding the allocation of
resources to enforcement with respect to other environment
matters determined to have higher priorities.
The Parties commit to ensure that domestic laws provide for
high levels of environmental protection, and to strive to
continue to improve those laws. Each Party also recognizes that
it is inappropriate to encourage trade or investment by
weakening or reducing the protections afforded in domestic
environmental laws. Thus, each Party under the Agreement shall
strive to ensure that it does not waive or otherwise derogate
from, or offer to waive or derogate from, such laws in a manner
that weakens or reduces protections afforded in those laws as
an encouragement for trade with the other Party.
Chapter 19 of the Agreement defines an environmental law as
any statute or regulation of a Party, or provision thereof, the
primary purpose of which is to protect the environment or
prevent a danger to human life or health, through: the
prevention, abatement, or control of the release or emission of
pollutants or environmental contaminants; the control of
environmentally hazardous or toxic chemicals, substances,
materials, and wastes; or, the protection or conservation of
wild flora and fauna, including endangered species, their
habitat, and specially protected natural areas. The Agreement
excludes from the definition of environmental law any statute
or regulation, or provision thereof, directly related to worker
safety or health. The Agreement also excludes from the
definition of environmental law any statute or regulation, or
provision thereof, the primary purpose of which is managing the
commercial harvest or exploitation, or subsistence or
aboriginal harvesting, of natural resources. The Agreement
states that for purposes of the definition of environmental
law, the primary purpose of a particular statutory or
regulatory provision shall be determined by reference to its
primary purpose, rather than to the primary purpose of the
statute or regulation of which it is a part.
The Agreement creates an Environment Affairs Council (EAC)
to provide a forum for consultation on the Agreement and its
implementation. The EAC is obliged to ensure a process for
promoting public participation in its work, including by
seeking advice from the public in developing agendas for
council meetings and by engaging in a dialogue with the public
on those issues. Separately, each Party commits to provide for
the receipt and consideration of public communications on
matters related to Chapter 19 of the Agreement. The Parties
also commit to pursue a number of cooperative projects
specified in Annex 19.3 of the Agreement, and to promptly
negotiate a United States-Chile Environmental Cooperation
Agreement that will establish priorities for further
cooperative environmental activities, as elaborated in Annex
19.3.
A Party can request consultations with the other Party
regarding any matter arising under Chapter 19 of the Agreement.
If the Parties fail to resolve the matter through
consultations, either Party may then request that the EAC be
convened to address the matter. Dispute settlement procedures
are available only when a Party asserts under Article
19.2(1)(a) that the other Party has failed to effectively
enforce its environmental laws, through a sustained or
recurring course of action or inaction, in a manner affecting
trade between the Parties. In that instance, the complaining
Party may request dispute settlement proceedings under Chapter
22 of the Agreement, after an initial 60-day consultation
period, by requesting a meeting of the Agreement's Free Trade
Commission (FTC). The Parties commit to establishing a roster
consisting of at least 12 individuals having expertise in
environmental law who may serve as panelists in any dispute
settlement proceedings arising under Chapter 19 of the
Agreement.
If a panel determines that a Party has not conformed with
its obligations under Article 19.2(1)(a) and the Parties are
unable to reach agreement on a resolution, the complaining
Party may request that the panel reconvene to impose an annual
monetary assessment on the otherParty not to exceed $15
million, adjusted for inflation pursuant to Annex 22.16 of the
Agreement. Any assessments will be paid into a fund established by the
FTC and utilized for environmental initiatives. Suspension of tariff
benefits of an equivalent dollar value may result from a Party's
failure to pay the monetary assessment.
The Parties recognize the importance of multilateral
environmental agreements (MEAs) and agree to consult on the
extent to which the outcome of ongoing WTO negotiations,
regarding the relationship between WTO rules and trade
obligations specified in MEAs, applies to the Agreement. The
Parties also agree to encourage businesses to voluntarily
incorporate sound principles of corporate stewardship into
their internal policies.
Transparency.--In this Chapter, the Parties commit to
several requirements to foster openness, transparency, and
fairness in administrative procedures covered by the Agreement.
Each Party is required to designate a point of contact for
Agreement-related communication between the Parties. In
addition, the Parties commit to publish legal material relating
to the Agreement, to notify of proposed or actual measures that
potentially affect the operation of the Agreement, to accord
persons reasonable notice of administrative proceedings and an
opportunity to provide evidence, and to provide the opportunity
of judicial review and appeal of final administrative actions.
Administration.--The Agreement establishes a joint Free
Trade Commission (FTC) which is composed of cabinet-level
representatives or their designees from each Party. The FTC is
to supervise the implementation of the Agreement, to oversee
the work of committees established under the Agreement, and to
assist in the resolution of disputes. The FTC may also
establish and delegate authority to committees and working
groups and may approve certain modifications to the Agreement,
such as the acceleration of tariff elimination and the
modification of the rules of origin.
Dispute Settlement.--Chapter 22 of the Agreement
establishes a dispute settlement mechanism applicable to the
avoidance or settlement of all disputes between the Parties
regarding: the interpretation or application of the Agreement;
claims that a measure of a Party is inconsistent with the
Agreement or that a Party has otherwise failed to carry out its
obligations under the Agreement; or, claims that a measure of
one Party causes nullification or impairment of benefits to the
other Party. The Agreement specifies the chapters under which a
claim of nullification or impairment may be made as being:
Chapter 3 (National Treatment and Market Access for Goods;
Chapter 4 (Rules of Origin and Origin Procedures); Chapter 5
(Customs Administration); Chapter 7 (Technical Barriers to
Trade); Chapter 9 (Government Procurement); Chapter 11 (Cross
Border Trade in Services), subject to minor exceptions
contained in Article 23.1 pursuant to Annex 22.2(2) of the
Agreement; and Chapter 17 (Intellectual Property Rights),
subject to minor exceptions contained in Article 23.1 pursuant
to Annex 22.2(2) of the Agreement. For disputes arising under
Chapter 18 (Labor) or Chapter 19 (Environment), dispute
settlement procedures under Chapter 22 of the Agreement may be
invoked only with respect to a Party's obligation to not fail
to effectively enforce its labor or environmental laws, as the
case may be, through a sustained or recurring course of action
or inaction, in a manner affecting trade between the Parties.
A Party must first make a written request for consultations
and deliver the request to the other Party. If the Parties fail
to resolve the matter within 60 days of delivery of the request
(15 days for disputes involving perishable goods), or within a
period agreed upon by the Parties, a Party may request a
meeting of the Free Trade Commission (FTC). The FTC should
ordinarily convene within 10 days. If the Parties fail to
resolve a matter within: 30 days after the FTC convenes; 75
days after a request for consultations, if the FTC has not
convened; 30 days after a request involving perishable goods,
if the FTC has not convened; or within another period agreed
upon by the Parties, either Party may request that a 3-member
panel be established. The Parties are obliged to establish a
roster of at least 20 individuals who can serve as panelists, 6
of whom are to be non-Agreement party nationals unless the
Parties agree otherwise. Procedures for panel selection are set
forth in the Agreement. The Agreement commits the FTC to
establish rules of procedure for panels; these rules shall
include the right to at least one public hearing before the
panel, subject to the protection of confidential information.
A panel is to present its initial report within 120 days
after the last panelist is selected. The initial report shall
contain: findings of fact; a determination as to whether a
Party has not conformed with its obligations under the
Agreement or that a measure is causing nullification or
impairment of benefits to the other Party; any other
determination requested in the terms of reference; and, the
panel's recommendations, if the Parties have requested them,
for resolving the dispute. After Party comment, the panel is to
issue a final report to the Parties within 30 days of the
initial report, unless the Parties agree otherwise. Public
release of the final report is to occur within 15 days
thereafter, subject to the protection of confidential
information. Upon receiving the final report, the Parties are
to agree on a resolution of the dispute and, in instances of
non-conformance with obligations under the Agreement or
nullification or impairment of benefits as defined under the
Agreement, such resolution, wherever possible, should be the
elimination of the nonconformity or the nullification or
impairment. Where appropriate, the Parties may agree on an
action plan to resolve the dispute; if the Parties agree on
such an action plan, additional measures under Chapter 22 of
the Agreement may be pursued only for failure to carry out the
action plan.
If the panel has found nonconformance with obligations
under the Agreement or nullification or impairment of benefits
as defined under the Agreement, and the Parties cannot resolve
their dispute generally within 45 days of receiving the panel's
final report, the Parties must enter into compensation
negotiations. If the Parties cannot agree on compensation
within 30 days, or the Parties agree on compensation or some
other resolution of the dispute and the complaining Party
believes that the other Party has failed to observe the terms
of such resolution, the complaining Party may propose a
suspension of trade benefits of equivalent effect. In general,
the complaining Party may begin suspending trade benefits 30
days after providing notice of its intent to do so. If the
other Party believes that either the proposed suspension of
benefits is manifestly excessive, or that it has eliminated the
nonconformity or nullification orimpairment identified by the
panel and therefore suspension of benefits is not warranted, the Party
may request that the panel be reconvened in order to consider the
matter. In that instance, the complaining Party may not begin
suspending benefits until 30 days after receiving the determination of
the reconvened panel; if the panel determines that the proposed level
of benefits to be suspended is manifestly excessive, it shall determine
the level of benefits it considers to be of equivalent effect.
The complaining Party may not suspend benefits if the
reconvened panel determines that the other Party has eliminated
the nonconformity or nullification or impairment. Similarly,
the complaining Party may not suspend benefits if the other
Party chooses to pay an annual monetary assessment; if the
Parties cannot agree on an amount of monetary assessment, the
amount will be set at a level equal to 50 percent of the level
determined by the reconvened panel or, if the panel has not
reconvened, 50 percent of the amount proposed by the
complaining Party. The monetary assessment is to be paid to the
complaining Party, or, if the FTC so decides, into a fund
established by the FTC. Monies paid into such a fund shall be
expended at the direction of the FTC for appropriate
initiatives to facilitate trade between the Parties. Suspension
of the full amount of benefits previously identified pursuant
to the Agreement may result from a Party's failure to pay a
monetary assessment.
Where a dispute involves Article 18.2(1)(a) (Enforcement of
Labor Laws) or Article 19.2(1)(a) (Enforcement of Environmental
Laws), however, and the Parties either: are unable to reach
agreement on a resolution within 45 days of receiving the
panel's final report; or the Parties agree on a resolution of
the dispute and the complaining Party considers that the other
Party has failed to observe the terms of such resolution, the
complaining Party may at any time thereafter request that the
panel be reconvened to impose an annual monetary assessment on
the other Party. The panel is to take certain enumerated
factors into account in setting the level of monetary
assessment; the amount of the assessment shall not exceed $15
million annually, adjusted for inflation pursuant to Annex
22.16 of the Agreement. The amount is to be paid into a fund
established by the FTC and is to be expended at the direction
of FTC for appropriate labor or environmental initiatives, as
the case may be, in the territory of the Party complained
against. If the assessment is not paid, the complaining Party
may take other appropriate steps to collect the assessment,
including suspending tariff benefits under the Agreement.
The Agreement also establishes a compliance review
procedure available in all disputes, under which the Party
complained against may request that the panel determine whether
a previously identified nonconformity or nullification or
impairment has been eliminated. The panel must report within 90
days, and if it decides that the Party is in compliance, the
complaining Party must promptly reinstate any benefits that it
has suspended and the other Party will no longer be required to
pay any monetary assessment.
Not later than 5 years after the Agreement enters into
force, the FTC is required to review the operation and
effectiveness of the provisions in Chapter 22 of the Agreement
that address non-implementation of the final report (i.e. the
provisions allowing for suspension of benefits or imposition of
monetary assessments). In the event five proceedings initiated
under Chapter 22 of the Agreement result in either the
suspension of benefits or the imposition of monetary
assessments, the FTC shall complete its review within 6 months
of the fifth such occurrence, if sooner than 5 years after the
Agreement enters into force.
General Exceptions.--This Chapter identifies general
exceptions applicable to the Agreement. This Chapter also
addresses essential security interests, taxation, balance of
payment measures, and the disclosure of information.
Final Provisions.--The Agreement is subject to amendment by
mutual consent of the Parties. The Agreement enters into force
60 days after the Parties exchange written notification that
necessary domestic legal procedures by each Party have been
completed. Either Party may withdraw from the Agreement,
effective 180 days after notification to the other Party.
D. GENERAL DESCRIPTION OF THE BILL
TITLE I. APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE AGREEMENT
Sec. 101. Approval and Entry Into Force of the Agreement
This section provides Congressional approval for the
Agreement and its accompanying Statement of Administrative
Action. Section 101 also authorizes the President to exchange
notes with Chile to provide for entry into force of the
Agreement on or after January 1, 2004. The exchange of notes is
conditioned on a determination by the President that Chile has
taken measures necessary to comply with those of its
obligations that take effect at the time the Agreement enters
into force.
Sec. 102. Relationship of the Agreement to United States and State Law
This section establishes the relationship between the
Agreement and U.S. law. It clarifies that no provision of the
Agreement will be given effect under domestic law if
inconsistent with Federal law; this would include provisions of
Federal law enacted or amended by the Act.
Section 102 also provides that no State law may be declared
invalid on the ground that the law is inconsistent with the
Agreement, except in an action brought by the United States for
the purpose of declaring such law invalid.
This section precludes any private right of action or
remedy against the Federal Government, or a State, based on the
provisions of the Agreement.
Sec. 103. Consultation and Layover Provisions for, and Effective Date
of, Proclaimed Actions
This section sets forth consultation and layover steps that
must precede the President's implementation of any tariff
modification by proclamation. Under the consultation and
layover provisions, the President must obtain the advice of the
relevant private sector advisory committees and the U.S.
International Trade Commission (ITC) on a proposed action. The
President must submit a report to the Senate Committee on
Finance and the House Committee on Ways and Means setting forth
the action proposed, the reasons therefor, and the advice of
the private sector advisors and the ITC. The Act sets aside a
60 day period following the date of transmittal of the report
for the Committees to consult with the President on the action.
Sec. 104. Implementing Actions in Anticipation of Entry Into Force and
Initial Regulations
This section provides the authority for new or amended
regulations to be issued, and for the President to proclaim
actions implementing the provisions of the Agreement, on the
date the Agreement enters into force. This section also
requires that, whenever possible, all Federal regulations
required or authorized under the Implementation Act are to be
developed and promulgated within 1 year of the Agreement's
entry into force.
Sec. 105. Administration of Dispute Settlement Proceedings
This section authorizes the President to establish or
designate within the Department of Commerce an office
responsible for providing administrative assistance to dispute
settlement panels established under Chapter 22 of the
Agreement. This section also authorizes the appropriation of
funds to support this office.
Sec. 106. Arbitration of Certain Claims
This section authorizes the United States to use binding
arbitration to resolve claims covered by two provisions of the
Agreement that concern government contracts. This section also
provides that contracts executed by an agency of the United
States on or after the entry into force of the Agreement shall
contain a clause specifying the law that will apply to resolve
any breach of contract claim.
Sec. 107. Effective Dates; Effect of Termination
This section provides the dates that certain provisions of
the Act will go into effect. Section 107 also provides that the
provisions of the Implementation Act will no longer be in
effect on the date on which the Agreement ceases to be in
force.
TITLE II. CUSTOMS PROVISIONS
Sec. 201. Tariff Modifications
Section 201(a) of the bill grants the President the
authority to implement by proclamation the continuation,
modification or elimination of tariffs as the President
determines to be necessary or appropriate to carry out the
terms of the Agreement.
Section 201(a)(2) requires the President to withdraw
Chile's beneficiary status under the Generalized System of
Preferences program once the Agreement takes effect. Section
201(b) authorizes the President, subject to the consultation
and layover provisions of section 103(a) of the bill, to:
modify or continue any duty; modify the staging of duty
elimination pursuant to an agreement with Chile under Article
3.3(4) of the Agreement; keep in place duty-free or excise
treatment; or impose any duty by proclamation whenever the
President determines it to be necessary or appropriate to
maintain the general level of reciprocal and mutually
advantageous concessions with respect to Chile provided by the
Agreement.
Section 201(c) authorizes the Secretary of the Treasury to
implement the agricultural safeguard provisions of Article 3.18
of the Agreement. Article 3.18 permits the United States to
impose an agricultural safeguard measure--in the form of
additional duties--on imports from Chile of an agricultural
good listed in Annex 3.18 of the Agreement. The United States
may apply the additional duties to shipments of any such good
whose price is below the threshold (``trigger price'') for the
good set out in Annex 3.18.
The agricultural safeguard may not be imposed on a product
already subject to a measure under the bilateral safeguard
provisions of Chapter 8 of the Agreement or under a global
safeguard imposed pursuant to domestic law and in accordance
with the WTO Agreement on Safeguards. Once a product has
achieved duty-free status under the Agreement, the agricultural
safeguard may not be imposed upon the product. The agricultural
safeguard may not be applied to increase a zero in-quota duty
on a good subject to a tariff-rate quota. Moreover, the sum of
additional duties imposed under the agricultural safeguard
cannot exceed the lesser of the prevailing normal trade
relation/most-favored-nation (NTR/MFN) applied rate or the NTR/
MFN applied rate in effect prior to the entry into force of the
Agreement.
The agricultural safeguard is applicable only during the 12
year implementation period of the Agreement. Some of the
products for which the United States may impose an agricultural
safeguard are: apricots, artichokes, asparagus, avocados,
broccoli, brussels sprouts, carrots, celery, cherries, garlic
products, grapefruit, melons, mushrooms, onion products,
oranges, orange juice, orange pulp, peaches, pears, spinach,
sweet corn, tomato products, and water chestnuts. Chile may
impose an agricultural safeguard to imports of various forms of
the following products from the United States: bird eggs; meat
and edible offals; rice; rice flour; wheat starch; wheat
gluten; and groats and meals of wheat.
Sec. 202. Rules of Origin
This section implements the general rules of origin of the
Agreement. Under the general rules, there are different ways
for a good of Chile to qualify as an originating good, and
thereforebe eligible for preferential tariff treatment when the
good is imported into the United States. For example, as provided in
this section, a good is an originating good if it is ``wholly obtained
or produced entirely in the territory of Chile, the United States, or
both.'' As another example, the general rules of origin provide that a
good is an ``originating good'' if those materials used to produce the
good, that are not themselves originating goods, are transformed in
such a way that they meet or satisfy a required change in tariff
classification. This section sets forth other specific rules related to
determining whether a good meets the Agreement's requirements for
qualifying as an originating good.
This section authorizes the President to modify certain of
the Agreement's specific rules of origin by proclamation,
subject to the consultation and layover provisions of section
103 of the Implementation Act. Various provisions of the
Agreement expressly contemplate modifications to the rules of
origin. For example, Article 3.20(5) contemplates that the
United States and Chile may agree to revise the Agreement's
rules of origin for particular textile and apparel goods in
light of the availability of fibers, yarns, or fabrics in their
respective territories. Section 202 expressly limits the
President's authority to modify specific rules of origin
pertaining to textile and apparel goods.
The remainder of section 202 sets forth specific rules
related to determining whether a good meets the Agreement's
other requirements for qualifying as an originating good. For
example, section 202(b) provides that a good is not
disqualified as an originating good if it contains de minimis
quantities of non-originating materials that do not undergo a
tariff transformation. Section 202(d) implements provisions of
the Agreement that require certain goods to have at least a
specified percentage of regional value content to qualify as
originating goods. Section 202(d) prescribes alternative
methods for calculating regional value content. Other
provisions in section 202 address valuation of materials and
the determination of originating or non-originating status for
fungible goods and materials.
Sec. 203. Drawback
This section implements Article 3.8 of the Agreement, which
phases out duty drawback and duty deferral programs between the
United States and Chile over 3 years, beginning 8 years after
the Agreement enters into force. The bill sets forth a formula
which will be used to calculate the amount of the refund,
waiver, or remission that will be allowed for duties owed or
paid during the 3 year period that drawback is phased out. The
formula, which is drawn from Article 3.8(5) of the Agreement,
limits the amount of duty paid or owed that may be refunded,
waived or reduced to no more than: 75 percent during 2012; 50
percent during 2013; and 25 percent during 2014.
The formula will be applied to drawback claims for duties
paid on imported goods that are subsequently exported, as well
as duties that are deferred because the imported goods fall
under provisions for foreign trade zones or another duty
deferral program. Beginning January 1, 2015, with limited
exceptions, no drawback will be available for imports from and
exports to Chile.
Sec. 204. Customs User Fees
This section amends section 13031(b) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c) to
provide for the immediate elimination of the merchandise
processing fee for goods qualifying for preferential treatment
under the terms of the United States-Chile Free Trade
Agreement. Processing of goods under the Agreement will be
financed by money from the General Fund of the Treasury.
Sec. 205. Disclosure of Incorrect Information; Denial of Preferential
Tariff Treatment; False Certificates of Origin
Under this section, the United States may not impose a
penalty on an importer who makes an invalid claim for
preferential tariff treatment under the Agreement if, after
discovering that the claim is invalid, the importer voluntarily
corrects the claim and pays any duty owing. If it is determined
that an importer has certified more than once, falsely or
without substantiation, that a good qualifies as originating,
the United States may suspend preferential tariff treatment
under the Agreement for identical goods imported by that
person. The suspension may continue until the importer proves
that it has complied with the laws and regulations governing
claims for preferential tariff treatment.
Sec. 206. Reliquidation of Entries
Article 4.12(3) of the Agreement provides that an importer
may claim preferential tariff treatment for an originating good
within 1 year of importation, even if no such claim was made at
the time of importation. In seeking a refund for excess duties
paid, the importer must provide the customs authorities
information substantiating that the good was in fact an
originating good at the time of importation.
Section 206 of the bill implements U.S. obligations under
Article 4.12(3) of the Agreement by amending section 520(d) of
the Tariff Act of 1930 (19 U.S.C. 1520(d)) to allow an importer
to claim preferential tariff treatment for originating goods
within 1 year of their importation.
Sec. 207. Recordkeeping Requirements
This section establishes recordkeeping requirements which
are necessary or appropriate to carry out the terms of the
Agreement, including the requirement that any person who
completes and issues a Chile FTA Certificate of Origin keep a
copy of the Certificate for a period of at least 5 years from
the date of issuance of the Certificate.
Sec. 208. Enforcement of Textile and Apparel Rules of Origin
Under section 208, U.S. customs officials may request that
Chile initiate verifications and work with Chilean officials in
conducting them. Following a U.S. request for a verification,
the Committee for the Implementation of Textile Agreements
(CITA), by delegation of authority from the President, may
direct the Secretary of the Treasury to take appropriate action
described in section 208(b) while the verification is being
conducted. U.S. customs officials will determine whether the
exporter or producer that is subject to the verification is
complying with applicable customs rules, and whether statements
regarding the origin of textile or apparel goods exported or
produced by that firm are accurate. If U.S. customs officials
determine that an exporter or producer is not complying with
applicable customs rules or that it is making false statements
regarding the origin of textile or apparel goods, they will
report their findings to CITA. Similarly, if U.S. customs
officials are unable to make the necessary determination (e.g.,
due to lack of cooperation by the exporter or producer), they
will report that fact to CITA. For its part, CITA may direct
the Secretary to take appropriate action described in section
208(d) in the case of an adverse determination or a report that
customs officials are unable to make the necessary
determination. Such appropriate action includes suspending the
liquidation of entries of textile and apparel goods, publishing
the identity of the person subject to the verification, and, in
certain circumstances, denying the entry of goods into the
United States.
Sec. 209. Conforming Amendments
This section makes conforming amendments to the Tariff Act
of 1930 to reflect changes in paragraph numbering as a result
of amendments resulting from the Agreement.
Sec. 210. Regulations
This section requires the Secretary of the Treasury to
prescribe such regulations as may be necessary to carry out
provisions of the Agreement concerning rules of origin,
drawback, and customs user fees.
TITLE III. RELIEF FROM IMPORTS
Sec. 301. Definitions
This section defines the terms ``Commission'' and ``Chilean
Article'' for purposes of the bilateral safeguard provision
contained in Chapter 8 of the United States-Chile Free Trade
Agreement. The term ``Commission'' is defined as the United
States International Trade Commission, and the term ``Chilean
Article'' is defined as an article that qualifies as an
originating good under section 202(a) of the United States-
Chile Free Trade Agreement Implementation Act. This section
also defines the term ``Chilean Textile or Apparel Article''
for purposes of the textile and apparel safeguard provision
contained in Chapter 3 of the United States-Chile Free Trade
Agreement. The term ``Chilean Textile or Apparel Article'' is
defined as an article that is listed in the Annex to the
Agreement on Textiles and Clothing referred to in section
101(d)(4) of the Uruguay Round Agreements Act (19 U.S.C.
Sec. 3511(d)(4)), and that satisfies the definition of a
Chilean article as provided for in this section.
Subtitle A. Relief From Imports Benefiting From the Agreement
Sec. 311. Commencing of Action for Relief
This section requires the filing of a petition with the
Commission by an entity that is representative of an industry
in order to commence a bilateral safeguard investigation.
Section 311(b) provides that, upon the filing of a petition,
the Commission shall promptly initiate an investigation to
determine whether, as a result of the reduction or elimination
of a duty provided for under the United States-Chile Free Trade
Agreement, a Chilean article is being imported into the United
States in such increased quantities, and under such conditions,
that imports of the Chilean article constitute a substantial
cause of serious injury, or threat of serious injury, to the
domestic industry producing an article that is like, or
directly competitive with, the imported article.
Section 311(c) applies to any bilateral safeguard initiated
under the Agreement pursuant to certain provisions, both
substantive and procedural, contained in section 202 of the
Trade Act of 1974 (19 U.S.C. Sec. 2252) that apply to global
safeguard investigations. These provisions include, inter alia,
the requirement that the Commission publish notice of the
commencement of an investigation; the requirement that the
Commission hold a public hearing at which interested parties
and consumers have the right to be present, to present
evidence, and to respond to the presentations of other parties
and consumers; the factors to be taken into account by the
Commission in making its determinations; and authorization for
the Commission to promulgate regulations to provide access to
confidential business information under protective order to
authorized representatives of interested parties in an
investigation.
Section 311(d) precludes the initiation of an investigation
with respect to any Chilean article to which import relief has
already been provided under this section, or any Chilean
article that is subject, at the time the petition is filed, to
global safeguard relief pursuant to Chapter 1 of title II of
the Trade Act of 1974 (19 U.S.C. Sec. 2251 et seq.).
Sec. 312. Commission Action on Petition
This section establishes deadlines for Commission
determinations following the initiation of a bilateral
safeguard investigation. Section 312(b) applies certain
statutory provisions that address a divided vote by the
Commission in a global safeguard investigation under section
202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252) to
Commission determinations under this section. If the Commission
renders an affirmative injury determination, or a determination
that the President may consider to be an affirmative
determination in the event of a divided vote by the Commission,
section 312(c) requires that the Commission also find and
recommend to the President the amount of import relief that is
necessary to remedy or prevent the injury found bythe
Commission and to facilitate the efforts of the domestic industry to
make a positive adjustment to import competition. Section 312(d)
specifies the information to be included by the Commission in a report
to the President regarding its determination. Upon submitting the
requisite report to the President, section 312(e) requires the
Commission to promptly make public such report, except for confidential
information contained in the report.
Sec. 313. Provision of Relief
This section directs the President, not later than 30 days
after receiving the report from the Commission, to provide
relief from imports of the article subject to an affirmative
determination by the Commission, or a determination that the
President considers to be an affirmative determination in the
event of a divided vote by the Commission, to the extent that
the President determines necessary to remedy or prevent the
injury and to facilitate the efforts of the domestic industry
to make a positive adjustment to import competition. Under
section 313(b), the President is not required to provide import
relief if the President determines that the provision of the
import relief will not provide greater economic and social
benefits than costs.
Section 313(c) specifies the nature of the import relief
that the President may impose, to include: the suspension of
any further reduction in duty provided under Annex 3.3. of the
United States-Chile Free Trade Agreement; and an increase in
the rate of duty imposed on such article to a level that does
not exceed the lesser of (1) the normal trade relation/most-
favored-nation (NTR/MFN) duty rate imposed on like articles at
the time the import relief is provided, or (2) the NTR/MFN duty
rate imposed on like articles on the day before the date on
which the United States-Chile Free Trade Agreement enters into
force. Section 313(c) also requires that if the period for
which import relief is provided exceeds 1 year, the President
shall provide for the progressive liberalization (described in
article 8.2(2) of the United States-Chile Free Trade Agreement)
of such relief at regular intervals during the period of its
application.
Section 313(d) provides that the period for import relief
in a bilateral safeguard action, including any extension of
such import relief, shall not exceed 3 years. If the initial
period for import relief is less than 3 years, the President
may extend the effective period of such relief under section
313(d) if the President determines that import relief continues
to be necessary to remedy or prevent serious injury and to
facilitate adjustment to import competition, and that there is
evidence that the domestic industry is making a positive
adjustment to import competition. Before the President can
extend the period of import relief, the President must first
receive a report from the Commission under section 313(d)(2)(B)
containing an affirmative determination, or a determination
that the President may consider to be an affirmative
determination in the event of a divided vote by the Commission,
that import relief continues to be necessary to remedy or
prevent serious injury and that the domestic industry is making
a positive adjustment to import competition.
Section 313(e) provides that upon termination of import
relief under the bilateral safeguard provision, the rate of
duty to be applied through December 31 of the year in which
such termination occurred shall be the rate of duty that would
have been in effect 1 year after the provision of import
relief, as specified in the Schedule of the United States
contained in Annex 3.3 of the United States-Chile Free Trade
Agreement. Thereafter, the President is afforded the discretion
to set the rate of duty applied to the article formerly subject
to import relief as either: the applicable rate of duty for
such article as specified in the Schedule of the United States
contained in Annex 3.3 of the United States-Chile Free Trade
Agreement, or the rate of duty resulting from the elimination
of the tariff in equal annual stages ending on the date set out
in Annex 3.3 of the United States-Chile Free Trade Agreement
for elimination of the tariff.
Section 313(f) provides that no import relief may be
provided under the bilateral safeguard provision on any article
that is subject to global safeguard relief pursuant to Chapter
1 of title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et
seq.). This section is necessary to implement article 8.2(4) of
the United States-Chile Free Trade Agreement, in the event that
an article subject to import relief under the bilateral
safeguard subsequently becomes subject to global safeguard
relief pursuant to Chapter 1 of title II of the Trade Act of
1974 (19 U.S.C. Sec. 2251 et seq.).
Sec. 314. Termination of Relief Authority
This section provides that the President's authority to
impose import relief under the bilateral safeguard provision
ends after the date that is 10 years after the date on which
the United States-Chile Free Trade Agreement enters into force
or, if an article is subject to a 12 year period for tariff
elimination pursuant to the Schedule of the United States
contained in Annex 3.3 of the United States-Chile Free Trade
Agreement, the President's authority to impose import relief
terminates after the date that is 12 years after the date on
which the United States-Chile Free Trade Agreement enters into
force.
Sec. 315. Compensation Authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Chile new
concessions as compensation for the imposition of import relief
in a bilateral safeguard investigation, in order to maintain
the general level of reciprocal concessions.
Sec. 316. Confidential Business Information
This section applies the same procedures for the treatment
and release of confidential business information by the
Commission in a global safeguard investigation under Chapter 1
of title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et
seq.) to bilateral safeguard investigations under this
provision.
Subtitle B. Textile and Apparel Safeguard Measures
Sec. 321. Commencement of Action for Relief
This section requires the filing of a request with the
President by an interested party in order to commence action
for relief under the textile and apparel safeguard provision.
Upon the filing of a request, the President shall review the
request to determine, from the information presented in the
request, whether to commence consideration of the request.
Section 321(b) provides that, if the President determines that
the request provides the information necessary for the request
to be considered, the President shall cause to be published in
the Federal Register a notice of commencement of consideration
of the request, and notice seeking public comments regarding
the request. The notice shall include the request and the dates
by which comments and rebuttals must be received.
Sec. 322. Determination and Provision of Relief
This section provides that following the President's
commencement of consideration of the request, the President
shall determine whether, as a result of the elimination of a
duty under the United States-Chile Free Trade Agreement, a
Chilean textile or apparel article is being imported into the
United States in such increased quantities and under such
conditions as to cause serious damage, or actual threat
thereof, to a domestic industry producing an article that is
like, or directly competitive with, the imported article.
Section 322(a) identifies certain economic factors that the
President shall examine in making a determination, including
changes in the domestic industry's output, productivity,
capacity utilization, inventories, market share, exports,
wages, employment, domestic prices, profits, and investment,
none of which is necessarily decisive. Section 322(a) also
provides that the President shall not consider changes in
technology or consumer preference as factors supporting a
determination of serious damage or actual threat thereof.
Section 322(b) authorizes the President, in the event of an
affirmative determination of serious damage or actual threat
thereof, to provide import relief to the extent that the
President determines necessary to remedy or prevent the serious
damage and to facilitate adjustment by the domestic industry to
import competition. Section 322(b) also specifies the nature of
the import relief that the President may impose, to consist of
an increase in the rate of duty imposed on the textile or
apparel article to a level that does not exceed the lesser of:
the normal trade relation/most-favored-nation (NTR/MFN) duty
rate in place for like articles at the time the import relief
is provided, or, the NTR/MFN duty rate for like articles on the
day before the date on which the United States-Chile Free Trade
Agreement enters into force.
Sec. 323. Period of Relief
This section provides that the period for import relief in
a textile and apparel safeguard action, including any extension
of such import relief, shall not exceed 3 years. If the initial
period for import relief is less than 3 years, the President
may extend the effective period of such relief if the President
determines that the import relief continues to be necessary to
remedy or prevent serious damage and to facilitate adjustment
to import competition, and that there is evidence that the
domestic industry is making a positive adjustment to import
competition.
Sec. 324. Articles Exempt From Relief
This section precludes the President from providing import
relief under the textile and apparel safeguard provision with
respect to any article to which import relief has already been
provided under the textile and apparel safeguard provision.
Sec. 325. Rate After Termination of Import Relief
This section provides that upon termination of import
relief under the textile and apparel safeguard, the rate of
duty on such article shall be duty-free.
Sec. 326. Termination of Relief Authority
This section provides that the President's authority to
provide relief under the textile and apparel safeguard
provision terminates after the date that is 8 years after the
date on which duties on the article are eliminated pursuant to
the United States-Chile Free Trade Agreement.
Sec. 327. Compensation Authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Chile new
concessions as compensation for the imposition of import relief
in a textile and apparel safeguard proceeding, in order to
maintain the general level of reciprocal concessions.
Sec. 328. Business Confidential Information
This section precludes the President from releasing
information that the President considers to be confidential
business information unless the party submitting the
confidential business information had notice, at the time of
submission, that such information would be released by the
President, or such party subsequently consents to the release
of the information. This section also provides that, to the
extent business confidential information is provided, a
nonconfidential version of the information shall also be
provided in which the business confidential information is
summarized or, if necessary, deleted.
TITLE IV. TEMPORARY ENTRY OF BUSINESS PERSONS
Sections 401 through 404 implement Chapter 14 of the
Agreement with respect to providing for the temporary entry of
business persons. These provisions are more fully addressed in
Part II, Report of the Committee on the Judiciary.
E. CONGRESSIONAL ACTION
On November 29, 2000, President William J. Clinton
announced that the United States and Chile had agreed to
negotiate a bilateral free trade agreement. On December 6,
2000, the two countries commenced negotiations. On October 1,
2002, President George W. Bush notified the Congress of ongoing
negotiations with Chile on a free trade agreement. On December
11, 2002, the United States Trade Representative (USTR)
announced that the United States and Chile had successfully
concluded negotiations for the United States-Chile Free Trade
Agreement. On January 29, 2003, President Bush notified
Congress of his intention to enter into the Agreement. The
Agreement was signed on June 6, 2003, by USTR Robert B.
Zoellick and Chilean Foreign Minister Soledad Alvear. The
Administration informally submitted draft implementing
legislation to the 108th Congress in June 2003.
On June 10, 2003, the House Ways and Means Committee,
Subcommittee on Trade, held a hearing on the implementation of
the bilateral Free Trade Agreements with Chile and Singapore.
The Subcommittee received testimony from the Hon. Earl
Blumenauer (Representative in Congress from the State of
Oregon); the Hon. Pete Sessions (Representative in Congress
from the State of Texas); the Hon. Judy Biggert (Representative
in Congress from the State of Illinois); the Hon. Peter F.
Allgeier (Deputy United States Trade Representative); E. Leon
Trammell (founder and chief executive officer, Tramco,
Incorporated, on behalf of the U.S. Chamber of Commerce); Jeff
Jacobs (president, Global Business Development, QUALCOMM,
Incorporated); Keith Gottfried (senior vice president and
general counsel, Borland Software Corporation, on behalf of the
Business Software Alliance); Bob Haines (manager, International
Relations, Exxon Mobil Corporation, and co-chair, U.S.-
Singapore Free Trade Agreement Business Coalition); Joseph
Papovich (senior vice president, international, Recording
Industry Association of America, on behalf of the Entertainment
Industry Coalition for Free Trade); David Spence (managing
director, regulatory and industry affairs, Legal Department,
Federal Express, and chairman, Trade Committee, Air Courier
Conference of America); Gawain Kripke (senior policy advisor,
Oxfam America); Thea M. Lee (chief international economist,
American Federation of Labor and Congress of Industrial
Organizations); John Audley (senior associate and director,
Project on Trade, Equity, and Development, Carnegie Endowment
for International Peace).
On June 17, 2003, the Senate Committee on Finance held a
public hearing on the implementation of the bilateral Free
Trade Agreements with Chile and Singapore. The Committee
received testimony from the Hon. Peter Allgeier (Deputy United
States Trade Representative); Norman Sorensen (president,
Principal International Incorporated, on behalf of the
Coalition of Service Industries); James Jarrett (vice president
for worldwide government affairs, Intel Corporation, on behalf
of the Business Software Alliance and the High Tech Trade
Coalition); Jeffrey Shafer (managing director, Citigroup, on
behalf of the U.S.-Singapore Free Trade Agreement Business
Coalition); Sandra Polaski (senior associate, Carnegie
Endowment for International Peace); Larry Liebenow (president
and chief executive officer, Quaker Fabric Corporation, and
chairman of the executive committee of the U.S. Chamber of
Commerce); Jon Caspers (Pleasant Valley Pork Corporation, and
president of the National Pork Producers Council); Keith Schott
(Bar Four F Ranch Incorporated, and treasurer, Montana Grain
Growers Association); David Johnson (executive vice president
and general counsel, Warner Music Group, on behalf of the
Entertainment Industry Coalition for Free Trade); and Paul
Joffe (senior director for international affairs, National
Wildlife Federation).
On July 10, 2003, the Senate Committee on Finance conducted
an informal consideration of the implementing language
submitted by the Administration. During the informal
consideration, Senators Thomas and Conrad sought clarification
on the sugar provisions of the Agreement. In subsequent
correspondence, Ambassador Zoellick clarified that each Party
agreed that its access to the other's market under the
Agreement will be limited to the amount of its net trade
surplus in specified sugar products. The House Ways and Means
Committee and the House Judiciary Committee conducted their
informal considerations of the implementing language on July
10, 2003, respectively. On July 14, 2003, the Senate Judiciary
Committee notified an informal consideration of the
Administration's implementing language.
On July 15, 2003, the Administration formally transmitted
to Congress the implementing legislation for the United States-
Chile Free Trade Agreement. On July 15, 2003, Senator Charles
E. Grassley introduced legislation in the Senate (S. 1416),
with Senators Max Baucus and William Frist as cosponsors, to
implement the Agreement. Congressman Tom DeLay, with
Congressman Charles Rangel as a cosponsor, both by request,
introduced the identical legislation in the House (H.R. 2738),
on July 15, 2003.
On July 14, 2003, the Senate Judiciary Committee held a
public hearing on draft implementing legislation for the
proposed United States-Chile Free Trade Agreement. The
Committee received testimony from Regina Vargo (Assistant
United States Trade Representative for the Americas), and Ralph
Ives (Assistant United States Trade Representative for
Southeast Asia, Pacific, and APEC Affairs).
On July 17, 2003, the Senate Committee on Finance
unanimously reported out S. 1416, a bill to implement the
United States-Chile FTA by a vote of 21-0. The House Ways and
Means Committee also favorably reported out H.R. 2738 on July
17, 2003, by a vote of 33-5. On the same day, the Senate
Judiciary Committee also favorably reported out the measure by
a vote of 11-4. The House Judiciary Committee favorably voted
out the measure on July 16, 2003, with a voice vote.
F. VOTE OF THE COMMITTEE IN REPORTING THE BILL
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that S. 1416
was ordered favorably reported, without amendment, by a
unanimous recorded vote with a quorum present on July 17, 2003.
G. REGULATORY IMPACT AND OTHER MATTERS
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee states that the
bill will not significantly regulate any individuals or
businesses, willnot affect the personal privacy of individuals,
and will result in no significant additional paperwork.
The following information is provided in accordance with
section 423 of the Unfunded Mandates Reform Act of 1995 (Pub.
L. No. 104-4). The committee has reviewed the provisions of S.
1416 as approved by the Committee on July 17, 2003. In
accordance with the requirement of Pub. L. No. 104-4, the
Committee has determined that the bill contains no
intergovernmental mandates, as defined in the UMRA, and would
not affect the budgets of State, local, or tribal governments.
Part II. Report of the Committee on the Judiciary
A. BACKGROUND
As provided in Article 14.1 et seq. and Annex 14.3, the
United States-Chile Free Trade Agreement (FTA) creates separate
categories of entry for citizens of each country to engage in a
wide range of business and investment activities on a temporary
basis. The FTA addresses four specific categories of temporary
nonimmigrant admissions currently governed by U.S. immigration
law. They are: business visitors, treaty traders and investors,
intra-company transfers, and professional workers. These
categories parallel the visa categories commonly referred to by
the letter and numeral that denotes their subsection in
Sec. 101(a)(15) of the Immigration and Nationality Act: B-1
visitors, E treaty traders and investors, L-1 intra-company
transferees, and H-1B professional workers.
B-1 nonimmigrants are visitors for business purposes and
are required to be seeking admission for activities other than
purely employment or hire. The difference between a business
visitor and a temporary worker depends also on the source of
the alien's salary. To be classified as a visitor for business,
an alien must receive his or her salary from abroad and must
not receive any remuneration from a U.S. source other than an
expense allowance and reimbursement for other expenses
incidental to temporary stay.
Foreign nationals who are treaty traders enter on the E-1
visa, while those who are treaty investors use the E-2 visa.
Treaty trader is defined as one who seeks temporary admission
to the United States solely to carry on substantial trade,
including trade in services or trade in technology, principally
between the United States and the foreign state of which he/she
is a national. Treaty investor is defined as one who seeks
temporary admission to the United States solely to develop and
direct the operations of an enterprise in which he/she has
invested, or of an enterprise in which he/she is actively in
the process of investing a substantial amount of capital.
Intracompany transferees who work for an international firm
or corporation in executive and managerial positions or have
specialized product knowledge are admitted on L-1 visas. The
prospective L-1 nonimmigrant must demonstrate that he or she
meets the qualifications for the particular job as well as the
visa category. The alien must have been employed by the firm
for at least 6 months in the preceding 3 years in the capacity
for which the transfer is sought.
Foreign nationals seeking H-1B visas for professional
specialty workers go through a 2-step admissions process. Using
a streamlined form of the Labor Condition Application (LCA)
known as labor attestation, employers wishing to bring in an H-
1B professional foreign worker first must attest in an
application to the U.S. Department of Labor (DOL) that the
employer will pay the nonimmigrant the greater of the actual
wages paid other employees in the same job or the prevailing
wages for that occupation; the employer will provide working
conditions for the nonimmigrant that do not cause the working
conditions of the other employees to be adversely affected;
and, there is no strike or lockout. Firms categorized as H-1B
dependent (generally if at least 15 percent of the workforce
are H-1B workers) must also attest that they have attempted to
recruit U.S. workers and that they have not laid off U.S.
workers 90 days prior to or after hiring any H-1B
nonimmigrants. The prospective H-1B nonimmigrants then must
demonstrate that they have the requisite education and work
experience for the posted positions as well as a baccalaureate
degree (or equivalent experience) necessary to be considered a
professional specialty worker. The admission of H-1B
nonimmigrants is numerically limited, with a statutory cap of
65,000 that is temporarily increased to 195,000 through FY2003.
B. IMPLEMENTING LEGISLATION ON TEMPORARY PROFESSIONAL WORKERS
The USTR's legislation that would implement the Chile
agreement was introduced July 15, 2003, as S. 1416. Title IV of
this bill would amend several sections of the Immigration and
Nationality Act. Foremost, the bills would amend
Sec. 101(a)(15)(H) of INA to carve out a portion of the H-1B
visas--to be designated the H-1B-1 visa--for professional
workers entering through the FTAs. In many ways the proposed
FTA professional worker visa requirements parallel the H-1B
visa requirements, notably having similar educational
requirements. Although the implementing language, for the
purpose of consistency with the actual FTA, requires
``specialized knowledge'' instead of ``highly specialized
knowledge'' as stated in the current H-1B statute, the
Administration's Statement of Administrative Action (SAA)
clearly instructs that specialized knowledge and highly
specialized knowledge are to be treated similarly. The bill
also amends Sec. 212 of INA to add a labor attestation
requirement for employers bringing in potential FTA
professional workers that is similar to the H-1B labor
attestation statutory requirements. The additional attestation
requirements for ``H-1B dependent employers'' currently
specified in Sec. 212 are not included in the labor attestation
requirements for employers of the proposed FTA professional
workers. The Administration omitted some of the requirements
that are due to ``sunset'' at the end of FY 2003 because it did
not know whether the provisions will continue after the current
fiscal year, and did not wish to impose harsher conditions on
trade partners than the United States currently imposes on
other nations. However, nothing in the implementing language
precludes application of future restrictions on these FTA visas
so long as the restrictions do not conflict with the underlying
terms of the FTA.
S. 1416 contains numerical limits of 1,400 new entries
under the proposed FTA professional worker visa from Chile. The
bill does not limit the number of times that an alien may renew
the FTA professional worker visa on an annual basis, unlike H-
1B workers who are limited to a total of 6 years. However, the
bar on immigrant intent under INA Sec. 214(b) applies here,
whereas such ban does not apply to H-1B visa holders. This
means that a holder of theFTA visa must show that he or she
intends to return to Chile and has maintained substantial ties to
Chile. Otherwise, the United States government may deny the renewal
request. H-1B visa holders may intend to remain permanently in the
United States.
There is also a numerical limitation on the entry of
professional workers. The legislation limits the number of
Chilean professional workers coming into the United States to
1,400 annually. Further, the Secretary of Homeland Security may
set a cap lower than the 1,400 limit for any given year. Each
FTA professional worker visa granted is charged against the
total H-1B cap, whether it remains at 195,000, goes down to
65,000, or if a new cap is set after the current law sunsets.
Moreover, after the fifth year, a number is charged against the
overall H1-B cap for each year that the FTA professional worker
visa is extended.
There is little debate on the investor (E) and business
visitor (B-1) visa provisions of the FTA. Some members of the
Committee have criticized that the intra-company transferee (L-
1) provisions of the FTA do not permit labor certification or
numerical limitations to be placed on these visas. However,
neither the FTA nor S. 1416 precludes imposition of conditions
that would be intended to thwart fraud or to punish fraudulent
use of this visa category.
C. JUDICIARY COMMITTEE ACTION
On July 14, 2003, the Judiciary Committee held a hearing on
the temporary entry provisions of the FTAs with Chile and
Singapore. The USTR provided two witnesses, Regina Vargo and
Ralph Ives, who were the lead negotiators with Chile and
Singapore, respectively.
At the hearing, members of this Committee expressed serious
concerns about the propriety of using trade agreements as the
vehicle to enter into immigration agreements with foreign
countries. The concerns were shared by Republican as well as
Democrat senators.
On July 15, 2003, the Administration transmitted the entire
implementing language for the two trade agreements, including
the provisions for temporary entry of professional workers,
business visitors, intra-company transferees, and investors.
On July 17, 2003, at an Executive Business Meeting of the
Judiciary Committee, the members discussed the temporary entry
provisions of both trade agreements. There was a bipartisan
sentiment the trade agreements were not the appropriate vehicle
to negotiate immigration provisions, and that such agreements
usurped the prerogative of Congress to legislate immigration
law. Despite the general displeasure, the Committee voted in
favor of the temporary entry provisions.
The Committee voted in the following manner for both the
Chile and the Singapore agreements:
YES NO PASS
Mr. Hatch Mr. Sessions Mr. Leahy
Mr. Grassley Mr. Kohl Mr. Biden
Mr. Specter Mrs. Feinstein Mr. Durbin
Mr. Kyl Mr. Feingold Mr. Edwards
Mr. DeWine
Mr. Graham
Mr. Craig
Mr. Cornyn
Mr. Chambliss
Mr. Kennedy
Mr. Schumer
II. BUDGETARY IMPACT OF THE BILL
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
S. 1416--A bill to implement the United States-Chile Free Trade
Agreement
Summary: S. 1416 would approve the free trade agreement
(FTA) between the government of the United States and the
government of Chile that was entered into on June 6, 2003. It
would provide for tariff reductions and other changes in law
related to implementation of the agreement, such as provisions
dealing with dispute settlement, rules of origin, and safeguard
measures for textile and apparel industries. The bill also
would allow the temporary entry of certain business persons
into the United States.
The Congressional Budget Office estimates that enacting the
bill would reduce revenues by $5 million in 2004, by $38
million over the 2004-2008 period, and by $109 million over the
2004-2013 period, net of income and payroll tax offsets. The
bill would not have a significant effect on direct spending or
spending subject to appropriation. CBO has determined that S.
1416 contains no intergovernmental or private-sector mandates
as defined in the Unfunded Mandates Reform Act (UMRA) and would
not affect the budgets of state, local, or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1416 is shown in the following table.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES \1\
Reductions in tariff rates......................................... -5 -7 -8 -9 -10
Civil penalties for attestation violations......................... * * * * *
--------------------------------------------
Total........................................................ -5 -7 -8 -9 -10
----------------------------------------------------------------------------------------------------------------
\1\ S. 1416 also would affect direct spending and spending subject to appropriation, but the amounts of those
changes would be less than $500,000 a year.
Note.--*=Less than $500,000.
Basis of estimate
REVENUES
Under the United States-Chile agreement, all tariffs on
U.S. imports from Chile would be phased out over time. The
Tariffs would be phased out for individual products at varying
rates according to one of the several different timetables
ranging from immediate elimination to partial elimination over
10 years. According to the U.S. International Trade Commission
(USITC), the U.S. collected $24 million in customs duties in
2002 on about $3.6 billion of imports from Chile. These imports
consist mostly of edible fruits and nuts, articles of wood or
copper, fish and crustaceans, and certain organic chemicals.
Based on these data, CBO estimates that phasing out tariffs
rates as outlined in the U.S.-Chile agreement would reduce
revenues by $5 million in 2004, by $38 million over the 2004-
2008 period, and by $109 million over the 2004-2013 period, net
of income and payroll tax offsets.
This estimate includes the effects of increased imports
from Chile that would result from the reduced prices of
imported products in the United States, reflecting the lower
tariff rates. It is likely that some of the increase in U.S.
imports from Chile would displace imports from other countries.
In the absence of specific data on the extent of this
substitution effect, CBO assumes that an amount equal to one-
half of the increase in U.S. imports from Chile would displace
imports from other countries.
S. 1416 would also allow the Secretary of Labor to assess
civil monetary penalties on employers for violations of the
labor attestation process with respect to certain workers from
Chile. CBO expects that any additional revenues collected as a
result would amount to less than $500,000 in any year.
Direct spending
Title IV of the bill would establish a new nonimmigrant
category for certain professional workers from Chile. The
legislation would limit the number of annual entries under this
category to 1,400, plus spouses and children. The Bureau of
Citizenship and Immigration Services (BCIS) would charge fees
of about $100 to provide nonimmigrant visas, so CBO estimates
that the agency would collect less than $1 million annually in
offsetting receipts (a credit against direct spending). The
agency is authorized to spend such fees without further
appropriation, so the net impact on BCIS spending would not be
significant.
Under current law, the Department of State also collects
$100 application fee for nonimmigrant visas. These collections
are spent on border security and consular functions. CBO
estimates that the net budgetary impact would be less than
$500,000 a year.
Spending subject to appropriation
Title I of S. 1416 would authorize the appropriation the
necessary funds for the Department of Commerce to pay the
United States' share of the costs of the dispute settlement
procedures established by the agreement. Based on information
from the agency, CBO estimates that implementing this provision
would cost $100,000 in 2004, and $250,000 in each of the
following years, subject to the availability of appropriated
funds.
Title III would require the International Trade Commission
(ITC) to investigate claims of injury to domestic industries as
a result of the FTA. The ITC would have 120 days to determine
whether a domestic industry has been injured, and if so, would
recommend the necessary amount of import relief. The ITC would
also submit a report on its determination to the President.
According to the ITC, similar FTAs have resulted in only a
handful of cases each year, at an average cost of about
$200,000 per investigation. Based on this information, CBO
estimates the bill would have no significant effect on spending
subject to appropriation.
Summary of effect on revenues and direct spending: The
overall effects of S. 1416 on revenues and direct spending are
shown in the following table.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------------------------
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts............................................. 0 -5 -7 -8 -9 -10 -11 -13 -14 -16 -18
Changes in outlays.............................................. * * * * * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--*=Less than $500,000.
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: Dispute Settlements--Melissa Zimmerman;
Immigration--Mark Grabowicz, Christi Hawley-Sadoti, and Sunita
D'Monte. 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; and Peter H. Fontaine, Deputy
Assistant Director for Budget Analysis.
III. ADDITIONAL VIEWS
----------
ADDITIONAL VIEWS OF SENATORS FEINSTEIN AND LEAHY
Article 14.1 et seq. and Annex 14.3 of the United States-
Chile Free Trade Agreement (FTA) contains provisions governing
the temporary entry of foreign nationals from Chile.
Specifically, the agreement would require the United States to
grant temporary entry to business persons under categories that
parallel four nonimmigrant visa categories: the B-1 business
visitor visa, E-1 treaty trader or investor visa, the L-1
intra-company transfer visa, and the H-1b professional visa.
With the exception of the H-1b visa equivalent, the trade
agreement does not impose numerical limits on the number of
nonimmigrant visas that may be issued in a given year. In fact,
the trade agreement expressly prohibits numerical limits on the
visa categories. In addition, neither party to the agreement
would be permitted to impose labor certification tests or other
similar conditions of entry upon foreign nationals of Chile.
On July 15, 2003, despite concerns expressed by members of
Congress over the immigration provisions, the President
transmitted to Congress legislation to implement the U.S.-Chile
agreement. The legislation was subsequently introduced in the
Senate as S.1416. Title IV of the legislation establishes a new
H-1B(1) category for the temporary entry of foreign
professionals from Chile.
BINDING IMMIGRATION POLICY SHOULD NOT BE ENACTED IN TRADE AGREEMENTS
Trade agreements are not the appropriate vehicle for
broadening or constraining immigration policy. Such agreements
are meant to have a permanent impact. They cannot be amended or
modified by subsequent legislation, should Congress choose for
other compelling reasons to alter those provisions. The end
result would be a patchwork of inconsistent immigration laws
that may not serve our national interest.
The authority to establish immigration laws and policies
has historically rested with Congress. Article I, section 8,
clause 4 of the Constitution provides that Congress shall have
power to ``establish a uniform Rule of Naturalization.'' The
Supreme Court has long interpreted this provision of the
Constitution to grant Congress plenary power over immigration
policy.
As the Court found in Galvan v. Press, 347 U.S. 522, 531
(1954), ``that the formulation of policies [pertaining to the
entry of aliens and their right to remain here] is entrusted
exclusively to Congress has become about as firmly imbedded in
the legislative and judicial tissues of our body politic as any
aspect of our government.'' And, as the Court found in
Kleindienst v. Mandel, 408 U.S. 753, 766 (1972) (quoting
Boutilier v. INS, 387 U.S. 118, 123 (1967)), ``[t]he Court
without exception has sustained Congress' `plenary power to
make rules for the admission of aliens and to exclude those who
possess those characteristics which Congress has forbidden.' ''
The practice of trading immigration visas for business
opportunities restricts the ability of Congress to legislate
and the Executive Branch to administer U.S. immigration law and
protect the interests of American and immigrant workers.
Moreover, such agreements usually involve negotiating legally
binding provisions that limit the ability of policymakers to
correct abuses or deficiencies in our immigration system.
Because the Office of the United States Trade
Representative has agreed to binding commitments on the
movement of people, congressional measures to correct abuses in
a given visa program could be deemed inconsistent with the
U.S.'s obligations under the agreement, and thus, subject to
penalty. Without express authority from Congress, the U.S.
Trade Representative should not be permitted to negotiate new
visa categories and impose new obligations on our temporary
entry system in the trade agreements.
THE UNITED STATES TRADE REPRESENTATIVE HAS NOT DEMONSTRATED A NEED FOR
ADDITIONAL TEMPORARY ENTRY PROVISIONS
Our current immigration laws accommodate the entry of
foreign workers, providing employers access to a broad range of
temporary professionals. Each year, hundreds of thousands of
visas are issued to temporary workers and their family members.
The growth in the number of foreign professionals admitted for
temporary stays reflects global economic trends.
Not only has the U.S. Trade Representative not demonstrated
a need for negotiating the temporary entry provisions, the
Office did not provide any evidence that current immigration
law would be a barrier to meeting the U.S. obligation to
further trade in goods and services. In fact, current law is
sufficient to accommodate these obligations as evidenced by the
millions of temporary workers that enter the United States each
year.
The principal nonimmigrant visa categories under which
temporary business professionals enter are the B-1 visa for
business visitors, the E visa for traders and investors
entering under bilateral treaties, the H-1b for professionals
working in specialty occupations and the L visa for
intracompany transfers. These categories parallel the
categories of temporary admissions under the U.S.-Chile Free
Trade Agreement.
In Fiscal Year 2002, 4,376,935 foreign nationals entered
under the B-1 temporary business visitor visa; 171,368 entered
under the E treaty-trader visa; another 313,699 entered under
the L intracompany transfer visa; and an additional 370,490
entered the U.S. under the H-1b professional visa. In all, the
United States admitted a total of 5,232,492 foreign nationals
under the current temporary visa categories.
While the Free Trade Agreement with Chile specifically
expresses the desire to facilitate the temporary entry of
persons fitting these categories, only the E visa category
would need to be modified in order to meet the obligations of
the U.S. and Chile. Thus, with the possible exception of the E
visa, no evidence has been presented to substantiate the need
to include the temporary entry provisions in the trade
agreement.
Members of the Judiciary committee asked why the U.S. Trade
Representative believed it necessary to include immigration
provisions in a fast-tracked agreement. The Office of the
United States Trade Representative offered the following
response: ``The international mobility of business persons,
whether in their personal capacity or as employees providing
services, hasbecome an increasingly important component of
competitive markets for suppliers and consumers alike.''
The assertion that there is a direct link between the
temporary entry of ``professionals'' and increased market
access for corporations involved in foreign direct investment
or trade in services, as the U.S. Trade Representative claims,
is questionable. Companies that use the new professional visa
programs would not have to be involved in international trade
and investment in any way. They can be domestic companies,
providing goods or services to domestic consumers. The only
global feature about these companies is their workforce.
Bringing in additional professionals outside of our traditional
H-1b framework has little to do with eliminating barriers to
services trade and foreign direct investment, and thus cannot
be justified as a logical extension of the limited authority
granted to the U.S. Trade Representative by the Trade Promotion
Authority Act.
FREE TRADE VISAS SHOULD NOT BE INDEFINITELY RENEWABLE
Under the trade agreement, the visas for temporary business
persons entering under all the categories in the agreement are
indefinitely renewable. This, in effect, transforms what on
paper is a temporary entry visa program into a permanent visa
program.
While the trade agreement requires professionals who enter
under its terms count against the overall cap imposed on H-1b
visas, each visa holder would be permitted to remain in the
United States for an indefinite period of time. Thus, employers
could renew their employees' visas each and every year under
the agreements, with no limits, while also bringing in new
entrants to fill up the annual numerical limits for new visas.
This effectively would prevent Congress from limiting the
duration of such visas when it is in the national interest to
do so.
INSUFFICIENT PROTECTIONS FOR WORKERS--BOTH DOMESTIC AND FOREIGN
TEMPORARY
Today 15.3 million people are unemployed, underemployed, or
have given up looking for work. Of that number, 9.4 million are
considered officially unemployed. These unemployment figures
are the highest in almost a decade. The average person has been
out of work nearly 20 weeks, one of the longest periods since
1948.
While employers are generally good actors, the provisions
as drafted in the trade agreement would increase the number of
temporary foreign workers exposed to exploitation and leave
more to face an uncertain future. By making the visas
indefinitely extendable these workers will remain in limbo with
year-to-year extensions of their stay.
Despite these concerns, the U.S. Trade Representative has
seen fit to push through a free trade agreement with
immigration provisions that significantly weaken the worker
protections under current immigration law. The provisions would
expand the types of occupation currently covered under H-1B to
include: management consultants, disaster relief claims
adjusters, physical therapists, and agricultural managers--
professions that do not require a bachelor's degree. (U.S.-
Chile Free Trade Agreement, Appendix 14.3(D)(2), p. 14-12.) Nor
would employers be required to demonstrate a shortage of
workers in these professions before hiring foreign nationals
under the agreement.
Essentially, these provisions would open the door to the
inclusion of new occupations in the trade agreement that are
not currently included in the H-1b program. The definition of
``specialty occupation'' in the H-1b program is specifically
designed to ensure that employers do not abuse the H-1b program
to undercut American workers in occupations where there is no
skill shortage. The H-1b program defines a ``specialty
occupation'' as one that requires the application of a ``body
of highly specialized knowledge.'' The free trade agreement
with Chile and implementing legislation, on the other hand,
broadens the definition of ``specialty occupation'' to include
any job that requires the application ``of a body of
specialized knowledge.'' Thus, the agreement omits the
important qualifier that the intending foreign professional's
knowledge be highly specialized, thus lowering the standard for
admission. This is unacceptable.
Moreover, unlike the provisions in the agreement, current
law requires ``H-1b dependent'' employers seeking temporary
workers to attest that they are actively trying to recruit U.S.
workers for the positions filled by the foreign workers. They
must also attest that they have not laid off U.S. workers 90
days prior to or after hiring H-1b nonimmigrants. These
additional requirements are not included in the agreement with
Chile.
Neither the free trade agreement nor the implementing
legislation require the employer to attest and the Department
of Labor to certify that employer has not laid off a U.S.
worker either 90 days before or after hiring the foreign worker
before the foreign national is permitted to enter the U.S. A
labor certification would require the Department of Labor to
undertake an investigation to verify that the employer's
attestation is accurate and truthful before permitting the
entry of the foreign national. Labor certifications are
expressly prohibited under the trade agreement. Under the
implementing provisions, the Labor Department may review
attestations only for completeness and obvious inaccuracies and
must provide the certification within seven days.
Neither the trade agreement nor the implementing language
provide the Department of Labor the authority to initiate
investigations or conduct spot checks at work sites to uncover
instances of U.S. worker displacement and other labor
violations pertaining to the entry of foreign workers. This is
particularly troublesome, given that in the last two fiscal
years, the Department of Labor investigated 166 businesses with
H-1b violations. As a result of those investigations, H-1b
employers were required to pay more than $5 million in back pay
awards to 678 H-1b workers. This suggests a compelling need to
exercise greater oversight over employers reliant upon foreign
labor.
NO LIMITATIONS ON OTHER VISA CATEGORIES
While the Administration has included a cap of 1,400 on the
foreign professional visa category, there are other categories
under which an unlimited number of foreign nationals from Chile
could enter: the B-1 visitor visa; the E-treaty/investor visas;
and L-1 intracompany visas (which have recently been the
subject of investigations). None of these categories are
numerically limited under the agreement, and once enacted,
Congress may not subsequently impose caps on these categories
for nationals entering pursuant to this agreement.
Moreover, the agreement expressly prohibits the imposition
of labor certification tests or other similar conditions on
temporary entries under the B-1, E-1 and L-1 visa categories.
While Congress could certainly correct some aspects of the law
implementing the trade agreements, it would be limited in what
it could do by the underlying trade agreement itself.
For example, if Congress decided to better protect U.S.
businesses and workers by amending the laws governing the L-1
visa category to require a labor certification or a numerical
limit before a foreign worker from Chile could enter the U.S.,
it would not be able to do so. Both are plausible options for
dealing with perceived abuses in the visa category. The trade
agreement with Chile states: ``Neither party may:
(a) As a condition for temporary entry under
paragraph 1, require labor certifications, or other
procedures of similar effect; or
(b) Impose or maintain any numerical restriction
relating to temporary entry under paragraph 1.'' [U.S.-
Chile Free Trade Agreement, Chapter 14, Annex 14.3,
section 3, p. 14-6.]
These provisions under the trade agreements would
significantly limit Congress' authority to: (a) establish more
stringent labor protections when warranted; and (b) limit the
number of visas that could be issued to nationals of Chile,
should it deem that it is in the national interest.
The negotiation of temporary entry provisions demands
Congressional oversight and input and public scrutiny,
especially during a time when national security issues are of
such paramount concern to us all. Congress should not
relinquish its traditional authority over immigration power to
any administration, to other countries or to a panel of
international arbiters.
Behind the abstraction, the theories, and the statistics of
the Free Trade Agreement and its implementing provisions, there
is one inescapable factor: the real faces of the working men
and women of this country, and what will happen to them. For
this reason, we dissent from the Committee's majority views on
the temporary entry provisions of the U.S.-Chile Free Trade
Agreement.
Dianne Feinstein.
Patrick J. Leahy.
ADDITIONAL VIEWS OF SENATOR KENNEDY
I voted in favor of the temporary entry provisions of the
Singapore and Chile Free Trade Agreements, but I have serious
concerns about the inclusion of immigration provisions in trade
agreements.
The implementing legislation submitted to the Committee
reflects a substantial improvement over the provisions
originally shown to the Committee. Many of us had major
concerns about the lack of worker protections in these
agreements, but in the several days before S. 1416 and S. 1417
were transmitted to Congress, bipartisan members of the House
and Senate Judiciary Committees succeeded in making
improvements in this legislation to strengthen these
protections.
The Constitution clearly gives Congress authority over
immigration issues and trade agreements should not change
immigration law without House and Senate approval. The Trade
Promotion Authority process used to implement free trade
agreements requires consultations with Congress, but not the
approval of Congress, amendments to implementing legislation
are prohibited after the legislation is transmitted to
Congress.
Although the number of workers who come to the United
States from Chile and Singapore under these agreements will be
relatively low, the Administration intends to negotiate similar
agreements with Morocco, Central American nations, South
Africa, Australia and other countries. These agreements with
Singapore and Chile should not be allowed to become a precedent
for the Administration to bypass Congress on immigration
issues.
Trade agreements are not an acceptable venue for changing
immigration law unless appropriate approval by Congress has
been obtained to make such changes.
Edward M. Kennedy.
ADDITIONAL VIEWS OF SENATOR KYL
I voted for the entry provisions of the U.S.-Chile and
U.S.-Singapore Free Trade Agreements because I understand the
importance of passing the legislation to implement these
underlying trade agreements. They would both be jeopardized if
forced to be renegotiated. I would like to point out, however,
that I am troubled that the U.S. Trade Representative
negotiated the immigration provisions, and proposed substantive
changes to immigration law, without any real input from the
Congress.
Broadly speaking, I am concerned that such U.S. immigration
law was changed not just by an executive branch of the United
States, but by other countries. It is also troubling that such
changes were negotiated by the United States Trade
Representative (USTR), and not by the U.S. Congress, even
though Congress is solely responsible for regulating the
nation's immigration policy, including the admission of foreign
nationals. Finally, as we prepare to reauthorize the INA's
expiring H1-B law, changes to the H1-B law included in these
agreements could serve as an unwelcome precedent for future
congressional negotiations on the H1-B visa policy.
I would note on the positive side, that within the
immigration requirements included in the treaties with Chile
and Singapore, numerous improvements to the implementing
legislation have been made. The agreements allow for the entry
of 5,400 Singapore nationals and 1,400 Chile nationals to enter
the United States under the H1-B visa. The fact that the
proposed visa carve-outs are included in the existing H1-B
category, and that the Chile and Singapore numbers must be
included in the overall H1-B limit, are welcome improvements
over the original legislation's draft. In the original
implementing legislation draft, a separate visa category (an
H1-B(1)) was created that would have prevented any future
changes in our H1-B laws from affecting the proposed new visas
for Chile and Singapore nationals. It is also good that any
future improvements to the H1-B law will also be applicable to
these visas. I am also pleased that the legislation requires
that H1-B visas granted to Chile and Singapore nationals be
included in the nation's overall H1-B cap.
Other improvements from the original draft include a ban on
dual intent, in that a potential employee must be able to prove
that he intends to return home. Current H1-B visa holders do
not have to prove that they ever intend to return home. Another
improvement is the requirement that an attestation be completed
by the sponsoring employer that he sought out available U.S.
workers before offering the job to the person from Chile or
Singapore, just as current H1-B laws require. Moreover, an
additional attestation must be completed after the worker has
been working here for three years, which strengthens current
law. The legislation, unlike the original draft, also requires
that, as does current H1-B law, a fee to be paid by the
sponsoring employer. Other labor assurances were also included
in the final bill.
I am concerned, however, that the implementing legislation
still strays from our current H1-B law in numerous ways. First,
under current H1-B policy, workers can only adjust status twice
and then must adjust status or depart. Workers from Chile and
Singapore, however, will adjust annually--and, they can adjust
annually forever. Admittedly, such workers will be required to
prove that they intend to eventually return to home country but
a worker could conceivably prove that every year for the next
25 years. Such workers who seek renewal will also not be
included in the H1-B cap until the fifth year they apply for a
renewal of their visa.
There is also no requirement in the implementing
legislation that H1-B-dependent employers (15 percent or more
H1-B workers) in the United States undergo additional
attestational requirements before being allowed to bring in
Chilean or Singaporian workers. Current H1-B law requires that
H1-B-dependent employers show that they are ``actively trying
to recruit U.S. workers and that they have not laid off workers
in the last 90 days'' but there is no such requirement included
for H1-B-dependent employers in the U.S.
Immigration law is complicated, not only from a legal
perspective, but from a social and economic perspective. The
implementing legislation was improved a good deal before it was
sent to us. But, changes to the immigration policies
established by Congress should not have been a part of the
underlying trade negotiations. I would hope that the USTR would
commit that any future trade agreements negotiated and
completed under its watch include minimal, and acceptable to
Congress, changes to our immigration laws. In order to move
these agreements forward and hopefully complete action on them
before the August recess, I have voted them out of committee. I
would urge, again, that in future trade negotiations that we
concentrate on the issue of trade and leave changes to
immigration law to the Congress to work on for the good of
country. Thank you.
Jon Kyl.
ADDITIONAL VIEWS OF SENATOR SESSIONS
The legislation that we have before use is deeply
troubling. The U.S. Trade Representative, by implementing new
immigration provisions in treaty negotiations, has usurped the
role of the legislative branch, without any consent from this
Congress.
The inclusion of immigration provisions in the Free Trade
Agreements with Chile and Singapore interferes with Congress'
plenary power to regulate the nation's immigration policy. This
power belongs to Congress alone and includes both the temporary
and permanent admissions of foreign nationals into the United
States.
Article I, section 8, clause 4 of the Constitution provides
that Congress shall have power to ``establish a uniform Rule of
Naturalization.'' The Supreme Court has long interpreted this
provision of the Constitution to grant Congress plenary power
over immigration policy. As the Court found in Galvan v. Press,
347 U.S. 522, 531 (1954), ``the formulation of policies
[pertaining to the entry of aliens and their right to remain
here] is entrusted exclusively to Congress has become about as
firmly embedded in the legislative and judicial tissues of our
body politic as any aspect of our government.'' And, as the
Court held in Kleindienst v. Mandel, 408 U.S. 753, 766 (1972)
(quoting Boutilier v. INS, 386 U.S. 123 (1967)), ``[t]he Court
without exception has sustained Congress' `plenary power to
make rules for the admission of aliens and to exclude those who
possess those characteristics which Congress has forbidden.' ''
As a Senator of the Committee, which has jurisdiction over
immigration policy, it is my duty to preserve the plenary power
of Congress to make immigration policy--I am dedicated to
opposing any erosions of that power.
At the hearing on Monday, the witness for the U.S. Trade
Representative, Mrs. Regina Vargo, was asked what legal
authority that USTR was relying on as a basis for including
immigration law negotiations in trade treaties. The USTR
witness responded by differentiating between temporary and
permanent entries into the United States, stating that because
the Chile and Singapore Free Trade Agreements only contained
provisions regarding temporary entries of foreign persons, the
USTR was acting within the bounds of its negotiating authority.
This is not the case.
By negotiating and including immigration law provisions in
a binding bilateral treaty that Congress does not have the
power to amend, the USTR has established a dangerous precedent
that will not be tolerated in future trade agreements.
It would have been especially appropriate for the USTR to
ensure that employers who repeatedly use the visa programs
established under the trade agreements abide by all laws
governing the entry of the foreign workers.
The legislation before use today makes the H-1B
requirements under the Chile and Singapore agreements weaker
than the requirements for other H-1B workers and may restrict
Congress' ability to reform the L-1 visa program. Specifically,
the legislation--
Permits the admission of up to 5,400
professionals from Singapore and up to 1,400
professionals from Chile each year;
Permits the almost unlimited renewal of
these visas each year, which could have the effect of
turning a temporary entry visa program into a permanent
visa program; and
Permits the entry of dependent spouses and
children to join these professionals without their
entry into the U.S. being subject to a numerical cap.
If the U.S. Trade Representative continues to negotiate
treaty terms such as the ones before us today, I will be unable
to support them.
I am concerned with the current unemployment rate among
U.S. workers and I am dedicated to preserving their jobs. The
abuse surrounding some immigration visas is contributing to a
record level of unemployment for U.S. high-tech workers.I
welcome, when appropriate, foreign industries within our borders, and,
when appropriate, I fully support foreign workers coming here to work.
I believe the only way to protect the job market for American workers
is to preserve Congress' plenary power to make laws that affect the
ability of foreign workers to displace American workers from their
jobs.
Any provision of a future trade agreement that restricts
the ability of this Congress to protect U.S. jobs will not be
looked upon favorably.
I have great respect and appreciation for both Chile and
Singapore. They are great allies of this country and I want,
very much, to support the Free Trade Agreements that have been
negotiated with them. In this single instance, however, my
support of the trade provisions of the underlying treaty
agreements should not be read as support of the immigration
policies included therein or included in the implementing
legislation.
We have seen some improvement from the provisions included
in the initial draft, and I though the administration had heard
our message loud and clear. The answers to written follow up
questions, however, do not indicate that the message was clear
enough. My support for the trade agreements should not be
questioned, but the assertion that the USSR now has the
authority to effectively legislate in the area of immigration
was detrimental to my support of the immigration provisions
included therein. I deeply desire to support Chile and
Singapore and had fully planned on voting for the Free Trade
Agreements at every turn. However, in light of the answers that
we received this morning from the USTR--answers to the written
questions submitted by Senators Feinstein, Kennedy and Graham
after Monday's hearing--I cannot support the committee vote
concerning the immigration provisions.
I continue to rely fully on the verbal guarantees we have
received that this process will not happen again in treaty
negotiations. I look forward to working with colleagues from
each nation, but in particular, the businessmen and women who
are engaged in the expansion of trade between our respective
business communities. In Alabama we are indeed fortunate that
several company's from Singapore found opportunities which they
developed into thriving businesses. One such business is
located in my home town of Mobile, Alabama. Mobile Aerospace
Engineering (MAE) is Singapore-owned, but more importantly it
is a vibrant business employing over 1,000 local workers. MAE
is a community leader not just in the number of its employees,
but in its community outlook and community involvement. My
visits have revealed that Singapore is indeed a valued economic
partner and trusted ally.
I believe the Governments of Singapore and Chile clearly
understand the message my colleagues and I communicated to the
USTR. Our commitment to trade is not diminished; our message
however is quite clear.
Jeff Sessions.
ADDITIONAL VIEWS OF SENATOR CHAMBLISS
[Excerpted from page 36 of the transcript of the hearing
held on July 14, 2003, by the Committee on the Judiciary
regarding the temporary entry provisions of the Free Trade
Agreements with Chile and Singapore.]
Senator Chambliss. Mr. Chairman, as Chairman of the
Immigration Subcommittee, Senator Kennedy and I have a hearing
set next week to discuss H1-B and L-1 visa programs. There is
the potential that after that hearing and subsequent thereto
and other hearings or whatever, we may be talking about
reducing the numbers available under those programs, for
various reasons.
I think for USTR to come in and to, in effect, legislate
immigration policy, as Senator Feinstein has said, is wrong. I
am going to vote for it to get it out of Committee. I am not
committed to voting for it on the floor.
It may be that we need USTR to go back--if they are
planning on, as this article indicates, bringing this type of
legislation forward in every agreement they negotiate under
Fast Track, then we have got a problem. And I think it needs to
be addressed now with the first agreements, and USTR needs to
know that this Subcommittee has jurisdiction over immigration
and we intend to assert it.
Saxby Chambliss.
IV. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
Pursuant to the requirements of paragraph 12 of rule XXVI of
the Standing Rules of the Senate, changes in existing law made
by the bill, as reported, are shown as follows (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):
TARIFF ACT OF 1930
* * * * * * *
TITLE III--SPECIAL PROVISIONS
Part I--Miscellaneous
* * * * * * *
SEC. 311. BONDED MANUFACTURING WAREHOUSES.
All articles manufactured in whole or in part of imported
materials, or of materials subject to internal-revenue tax, and
intended for exportation without being charged with duty, and
without having an internal-revenue stamp affixed thereto,
shall, under such regulations as the Secretary of the Treasury
may prescribe, in order to be so manufactured and exported, be
made and manufactured in bonded warehouses similar to those
known and designated in Treasury Regulations as bonded
warehouses, class six: Provided, That the manufacturer of such
articles shall first give satisfactory bonds for the faithful
observance of all the provisions of law and of such regulations
as shall be prescribed by the Secretary of the Treasury:
Provided further, That the manufacture of distilled spirits
from grain, starch, molasses, or sugar, including all dilutions
or mixtures of them or either of them, shall not be permitted
in such manufacturing warehouses.
Whenever goods manufactured in any bonded warehouse
established under the provisions of the preceding paragraph
shall be exported directly therefrom or shall be duly laden for
transportation and immediate exportation under the supervision
of the proper officer who shall be duly designated for that
purpose, such goods shall be exempt from duty and from the
requirements relating to revenue stamps.
No flour, manufactured in a bonded manufacturing warehouse
from wheat imported from ninety days after the date of the
enactment of this Act, shall be withdrawn from such warehouse
for exportation without payment of a duty on such imported
wheat equal to any reduction in duty which by treaty will apply
in respect of such flour in the country to which it is to be
exported.
Any materials used in the manufacture of such goods, and any
packages, coverings, vessels, brands, and labels used in
putting up the same may, under the regulations of the Secretary
of the Treasury, be conveyed without the payment of revenue tax
or duty into any bonded manufacturing warehouse, and imported
goods may, under the aforesaid regulations, be transferred
without the exaction of duty from any bonded warehouse into any
bonded manufacturing warehouse; but this privilege shall not be
held to apply to implements, machinery, or apparatus to be used
in the construction or repair of any bonded manufacturing
warehouse or for the prosecution of the business carried on
therein.
Articles or materials received into such bonded manufacturing
warehouse or articles manufactured therefrom may be withdrawn
or removed therefrom for direct shipment and exportation or for
transportation and immediate exportation in bond to foreign
countries or to the Philippine Islands under the supervision of
the officer duly designated therefor by the appropriate customs
officer of the port, who shall certify to such shipment and
exportation, or ladening for transportation, as the case may
be, describing the articles by their mark or otherwise, the
quantity, the date of exportation, and the name of the vessel:
Provided, That the by-products incident to the processes of
manufacture, including waste derived from cleaning rice in
bonded warehouse under the Act of March 24, 1874, in said
bonded warehouses may be withdrawn for domestic consumption on
the payment of duty equal to the duty which would be assessed
and collected by law if such waste or by-products were imported
from a foreign country: Provided, That all waste material may
be destroyed under Government supervision. All labor performed
and services rendered under these provisions shall be under the
supervision of a duly designated officer of the customs and at
the expense of the manufacturer.
A careful account shall be kept by the appropriate custom
officer of all merchandise delivered by him to any bonded
manufacturing warehouse, and a sworn monthly return, verified
by the customs officers in charge, shall be made by the
manufacturer containing a detailed statement of all imported
merchandise used by him in the manufacture of exported
articles.
Before commencing business the proprietor of any
manufacturing warehouse shall file with the Secretary of the
Treasury a list of all the articles intended to be manufactured
in such warehouse, and state the formula of manufacture and the
names and quantities of the ingredients to be used therein.
Articles manufactured under these provisions may be withdrawn
under such regulations as the Secretary of the Treasury may
prescribe for transportation and delivery into any bonded
warehouse for the sole purpose of export therefrom: Provided,
That cigars manufactured in whole of tobacco imported from any
one country, made and manufactured in such bonded manufacturing
warehouses, may be withdrawn for home consumption upon the
payment of the duties on such tobacco in its condition as
imported under such regulations as the Secretary of the
Treasury may prescribe, and the payment of the internal-revenue
tax accruing on such cigars in their condition as withdrawn,
and the boxes or packages containing such cigars shall be
stamped to indicate their character, origin of tobacco from
which made, and place of manufacture.
The provisions of section 3433 of the Revised Statutes shall,
so far as may be practicable, apply to any bonded manufacturing
warehouse established under this Act and to the merchandise
conveyed therein.
Distilled spirits and wines which are rectified in bonded
manufacturing warehouse, class six, and distilled spirits which
are reduced in proof and bottled in such warehouses, shall be
deemed to have been manufactured within the meaning of this
section, and may be withdrawn as hereinbefore provided, and
likewise for shipment in bond to Puerto Rico, subject to the
provisions of this section, and under such regulations as the
Secretary of the Treasury may prescribe, there to be withdrawn
for consumption or be rewarehoused and subsequently withdrawn
for consumption: Provided, That upon withdrawal in Puerto Rico
for consumption, the duties imposed by the customs laws of the
United States shall be collected on all imported merchandise
(in its condition as imported) and imported containers used in
the manufacture and putting up of such spirits and wines in
such warehouses: Provided further, That no internal-revenue tax
shall be imposed on distilled spirits and wines rectified in
class six warehouses if such distilled spirits and wines are
exported or shipped in accordance with the provisions of this
section, and that no person rectifying distilled spirits or
wines in such warehouses shall be subject by reason of such
rectification to the payment of special tax as a rectifier.
No article manufactured in a bonded warehouse from materials
that are goods subject to NAFTA drawback, as defined in section
203(a) of the North American Free Trade Agreement
Implementation Act, may be withdrawn from warehouse for
exportation to a NAFTA country, as defined in section 2(4) of
that Act, without assessment of a duty on the materials in
their condition and quantity, and at their weight, at the time
of importation into the United States. The duty shall be paid
before the 61st day after the date of exportation, except that
upon the presentation, before such 61st day, of satisfactory
evidence of the amount of any customs duties paid to the NAFTA
country on the article, the customs duty may be waived or
reduced (subject to section 508(b)(2)(B)) in an amount that
does not exceed the lesser of--
(1) the total amount of customs duties paid or owed
on the materials on importation into the United States,
or
(2) the total amount of customs duties paid on the
materials to the NAFTA country.
If Canada ceases to be a NAFTA country and the suspension of
the operation of the United States-Canada Free-Trade Agreement
thereafter terminates, no article manufactured in a bonded
warehouse, except to the extent that such article is made from
an article that is a drawback eligible good under section
204(a) of the United States-Canada Free-Trade Agreement
Implementation Act of 1988, may be withdrawn from such
warehouse for exportation to Canada during the period such
Agreement is in operation without payment of a duty on such
imported merchandise in its condition, and at the rate of duty
in effect, at the time of importation.
No article manufactured in a bonded warehouse from materials
that are goods subject to Chile FTA drawback, as defined in
section 203(a) of the United States-Chile Free Trade Agreement
Implementation Act, may be withdrawn from warehouse for
exportation to Chile without assessment of a duty on the
materials in their condition and quantity, and at their weight,
at the time of importation into the United States. The duty
shall be paid before the 61st day after the date of
exportation, except that the duty may be waived or reduced by--
(1) 100 percent during the 8-year period beginning on
January 1, 2004;
(2) 75 percent during the 1-year period beginning on
January 1, 2012;
(3) 50 percent during the 1-year period beginning on
January 1, 2013; and
(4) 25 percent during the 1-year period beginning on
January 1, 2014.
SEC. 312. BONDED SMELTING AND REFINING WAREHOUSES.
(a) * * *
(b) The several charges against such bond may be canceled in
whole or in part--
(1) upon the exportation from the bonded warehouses
which treated the metal-bearing materials, or from any
other bonded smelting or refining warehouse, of a
quantity of the same kind of metal contained in any
product of smelting or refining of metal-bearing
materials equal to the dutiable quantity contained in
the imported metal-bearing materials less wastage
provided for in subsection (c); [except that in the
case of a withdrawal for exportation of such a product
to a NAFTA country, as defined in section 2(4) of the
North American Free Trade Agreement Implementation Act,
if any of the imported metal-bearing materials are
goods subject to NAFTA drawback, as defined in section
203(a) of that Act, the duties on the materials shall
be paid, and the charges against the bond canceled,
before the 61st day after the date of exportation; but
upon the presentation, before such 61st day, of
satisfactory evidence of the amount of any customs
duties paid to the NAFTA country on the product, the
duties on the materials may be waived or reduced
(subject to section 508(b)(2)(B)) in an amount that
does not exceed the lesser of--
[(A) the total amount of customs duties owed
on the materials on importation into the United
States, or
[(B) the total amount of customs duties paid
to the NAFTA country on the product, or] except
that--
(A) in the case of a withdrawal for
exportation of such a product to a NAFTA
country, as defined in section 2(4) of the
North American Free Trade Agreement
Implementation Act, if any of the imported
metal-bearing materials are goods subject to
NAFTA drawback, as defined in section 203(a) of
that Act, the duties on the materials shall be
paid, and the charges against the bond
canceled, before the 61st day after the date of
exportation; but upon the presentation, before
such 61st day, of satisfactory evidence of the
amount of any customs duties paid to the NAFTA
country on the product, the duties on the
materials may be waived or reduced (subject to
section 508(b)(2)(B)) in an amount that does
not exceed the lesser of--
(i) the total amount of customs
duties owed on the materials on
importation into the United States, or
(ii) the total amount of customs
duties paid to the NAFTA country on the
product, and
(B) in the case of a withdrawal for
exportation of such a product to Chile, if any
of the imported metal-bearing materials are
goods subject to Chile FTA drawback, as defined
in section 203(a) of the United States-Chile
Free Trade Agreement Implementation Act, the
duties on the materials shall be paid, and the
charges against the bond canceled, before the
61st day after the date of exportation, except
that the duties may be waived or reduced by--
(i) 100 percent during the 8-year
period beginning on January 1, 2004,
(ii) 75 percent during the 1-year
period beginning on January 1, 2012,
(iii) 50 percent during the 1-year
period beginning on January 1, 2013,
and
(iv) 25 percent during the 1-year
period beginning on January 1, 2014, or
* * * * * * *
(4) upon the transfer of the bond charges to a bonded
customs warehouse other than a bonded smelting or
refining warehouse by physical shipment of a quantity
of the same kind of metal contained in any product of
smelting or refining equal to the dutiable quantity
contained in the imported metal-bearing materials less
wastage provided for in subsection (c), and upon
withdrawal from such other warehouse for exportation or
domestic consumption the provisions of this section
shall apply; [except that in the case of a withdrawal
for exportation of such a product to a NAFTA country,
as defined in section 2(4) of the North American Free
Trade Agreement Implementation Act, if any of the
imported metal-bearing materials are goods subject to
NAFTA drawback, as defined in section 203(a) of that
Act, the duties on the materials shall be paid, and the
charges against the bond canceled, before the 61st day
after the date of exportation; but upon the
presentation, before such 61st day, of satisfactory
evidence of the amount of any customs duties paid to
the NAFTA country on the product, the duties on the
materials may be waived or reduced (subject to section
508(b)(2)(B)) in an amount that does not exceed the
lesser of--
[(A) the total amount of customs duties owed
on the materials on importation into the United
States, or
[(B) the total amount of customs duties paid
to the NAFTA country on the product, or] except
that--
(A) in the case of a withdrawal for
exportation of such a product to a NAFTA
country, as defined in section 2(4) of the
North American Free Trade Agreement
Implementation Act, if any of the imported
metal-bearing materials are goods subject to
NAFTA drawback, as defined in section 203(a) of
that Act, the duties on the materials shall be
paid, and the charges against the bond
canceled, before the 61st day after the date of
exportation; but upon the presentation, before
such 61st day, of satisfactory evidence of the
amount of any customs duties paid to the NAFTA
country on the product, the duties on the
materials may be waived or reduced (subject to
section 508(b)(2)(B)) in an amount that does
not exceed the lesser of--
(i) the total amount of customs
duties owed on the materials on
importation into the United States, or
(ii) the total amount of customs
duties paid to the NAFTA country on the
product, and
(B) in the case of a withdrawal for
exportation of such a product to Chile, if any
of the imported metal-bearing materials are
goods subject to Chile FTA drawback, as defined
in section 203(a) of the United States-Chile
Free Trade Agreement Implementation Act, the
duties on the materials shall be paid, and the
charges against the bond canceled, before the
61st day after the date of exportation, except
that the duties may be waived or reduced by--
(i) 100 percent during the 8-year
period beginning on January 1, 2004,
(ii) 75 percent during the 1-year
period beginning on January 1, 2012,
(iii) 50 percent during the 1-year
period beginning on January 1, 2013,
and
(iv) 25 percent during the 1-year
period beginning on January 1, 2014, or
* * * * * * *
(d) Upon the exportation of a product of smelting or refining
other than refined metal the bond shall be credited with a
quantity of metal equivalent to the quantity of metal contained
in the product exported less the proportionate part of the
deductions allowed for losses in determination of the bond
charge being cancelled that would not ordinarily be sustained
in production of the specific product exported as ascertained
from time to time by the Secretary of the Treasury; [except
that in the case of a withdrawal for exportation to a NAFTA
country, as defined in section 2(4) of the North American Free
Trade Agreement Implementation Act, if any of the imported
metal-bearing materials are goods subject to NAFTA drawback, as
defined in section 203(a) of that Act, charges against the bond
shall be paid before the 61st day after the date of
exportation; but upon the presentation, before such 61st day,
of satisfactory evidence of the amount of any customs duties
paid to the NAFTA country on the product, the bond shall be
credited (subject to section 508(b)(2)(B)) in an amount not to
exceed the lesser of--
[(1) the total amount of customs duties paid or owed
on the materials on importation into the United States,
or
[(2) the total amount of customs duties paid to the
NAFTA country on the product.] except that--
(1) in the case of a withdrawal for exportation to a
NAFTA country, as defined in section 2(4) of the North
American Free Trade Agreement Implementation Act, if
any of the imported metal-bearing materials are goods
subject to NAFTA drawback, as defined in section 203(a)
of that Act, charges against the bond shall be paid
before the 61st day after the date of exportation; but
upon the presentation, before such 61st day, of
satisfactory evidence of the amount of any customs
duties paid to the NAFTA country on the product, the
bond shall be credited (subject to section
508(b)(2)(B)) in an amount not to exceed the lesser
of--
(A) the total amount of customs duties paid
or owed on the materials on importation into
the United States, or
(B) the total amount of customs duties paid
to the NAFTA country on the product; and
(2) in the case of a withdrawal for exportation to
Chile, if any of the imported metal-bearing materials
are goods subject to Chile FTA drawback, as defined in
section 203(a) of the United States-Chile Free Trade
Agreement Implementation Act, charges against the bond
shall be paid before the 61st day after the date of
exportation, and the bond shall be credited in an
amount equal to--
(A) 100 percent of the total amount of
customs duties paid or owed on the materials on
importation into the United States during the
8-year period beginning on January 1, 2004,
(B) 75 percent of the total amount of customs
duties paid or owed on the materials on
importation into the United States during the
1-year period beginning on January 1, 2012,
(C) 50 percent of the total amount of customs
duties paid or owed on the materials on
importation into the United States during the
1-year period beginning on January 1, 2013, and
(D) 25 percent of the total amount of customs
duties paid or owed on the materials on
importation into the United States during the
1-year period beginning on January 1, 2014.
* * * * * * *
SEC. 313. DRAWBACK AND REFUNDS.
(a) * * *
* * * * * * *
(j) Unused Merchandise Drawback.--
(1) * * *
* * * * * * *
(4)(A) Effective upon the entry into force of the
North American Free Trade Agreement, the exportation to
a NAFTA country, as defined in section 2(4) of the
North American Free Trade Agreement Implementation Act,
of merchandise that is fungible with and substituted
for imported merchandise, other than merchandise
described in paragraphs (1) through (8) of section
203(a) of that Act, shall not constitute an exportation
for purposes of paragraph (2).
(B) Beginning on January 1, 2015, the exportation to
Chile of merchandise that is fungible with and
substituted for imported merchandise, other than
merchandise described in paragraphs (1) through (5) of
section 203(a) of the United States-Chile Free Trade
Agreement Implementation Act, shall not constitute an
exportation for purposes of paragraph (2). The
preceding sentence shall not be construed to permit the
substitution of unused drawback under paragraph (2) of
this subsection with respect to merchandise described
in paragraph (2) of section 203(a) of the United
States-Chile Free Trade Agreement Implementation Act.
* * * * * * *
[(n)] (n) Refunds, Waivers, or Reductions Under Certain Free
Trade Agreements.--(1) For purposes of this subsection and
subsection (o)--
(A) * * *
(B) the terms ``NAFTA country'' and ``good subject to
NAFTA drawback'' have the same respective meanings that
are given such terms in sections 2(4) and 203(a) of the
NAFTA Act; [and]
(C) a refund, waiver, or reduction of duty under
paragraph (2) of this subsection or paragraph (1) of
subsection (o) is subject to section 508(b)(2)(B)[.];
and
(D) the term ``good subject to Chile FTA drawback''
has the meaning given that term in section 203(a) of
the United States-Chile Free Trade Agreement
Implementation Act.
* * * * * * *
(4)(A) For purposes of subsections (a), (b), (f), (h),
(j)(2), (p), and (q), if an article that is exported to Chile
is a good subject to Chile FTA drawback, no customs duties on
the good may be refunded, waived, or reduced, except as
provided in subparagraph (B).
(B) The customs duties referred to in subparagraph (A) may be
refunded, waived, or reduced by--
(i) 100 percent during the 8-year period beginning on
January 1, 2004;
(ii) 75 percent during the 1-year period beginning on
January 1, 2012;
(iii) 50 percent during the 1-year period beginning
on January 1, 2013; and
(iv) 25 percent during the 1-year period beginning on
January 1, 2014.
[(o)] (o) Special Rules for Certain Vessels and Imported
Materials.--(1) For purposes of subsection (g), if--
(A) * * *
* * * * * * *
(3) For purposes of subsection (g), if--
(A) a vessel is built for the account and ownership
of a resident of Chile or the Government of Chile, and
(B) imported materials that are used in the
construction and equipment of the vessel are goods
subject to Chile FTA drawback, as defined in section
203(a) of the United States-Chile Free Trade Agreement
Implementation Act,
no customs duties on such materials may be refunded, waived, or
reduced, except as provided in paragraph (4).
(4) The customs duties referred to in paragraph (3) may be
refunded, waived or reduced by--
(A) 100 percent during the 8-year period beginning on
January 1, 2004;
(B) 75 percent during the 1-year period beginning on
January 1, 2012;
(C) 50 percent during the 1-year period beginning on
January 1, 2013; and
(D) 25 percent during the 1-year period beginning on
January 1, 2014.
* * * * * * *
SEC. 508. RECORDKEEPING.
(a) * * *
(b) [Exportations to Free Trade Countries.--] Exportations to
NAFTA Countries.--
(1) * * *
(2) Exports to nafta countries.--
(A) * * *
(B) Claims for certain waivers, reductions,
or refunds of duties or for credit against
bonds.--
(i) In general.--Any person that
claims with respect to an article--
(I) a waiver or reduction of
duty under [the last paragraph
of section 311] the eleventh
paragraph of section 311,
section 312(b)(1) or (4),
section 562(2), or [the last
proviso to section 3(a)] the
proviso preceding the last
proviso to section 3(a) of the
Foreign Trade Zones Act;
* * * * * * *
(f) Certificates of Origin for Goods Exported Under the
United States-Chile Free Trade Agreement.--
(1) Definitions.--In this subsection:
(A) Records and supporting documents.--The
term ``records and supporting documents''
means, with respect to an exported good under
paragraph (2), records and documents related to
the origin of the good, including--
(i) the purchase, cost, and value of,
and payment for, the good;
(ii) if applicable, the purchase,
cost, and value of, and payment for,
all materials, including recovered
goods, used in the production of the
good; and
(iii) if applicable, the production
of the good in the form in which it was
exported.
(B) Chile fta certificate of origin.--The
term ``Chile FTA Certificate of Origin'' means
the certification, established under article
4.13 of the United States-Chile Free Trade
Agreement, that a good qualifies as an
originating good under such Agreement.
(2) Exports to chile.--Any person who completes and
issues a Chile FTA Certificate of Origin for a good
exported from the United States shall make, keep, and,
pursuant to rules and regulations promulgated by the
Secretary of the Treasury, render for examination and
inspection all records and supporting documents related
to the origin of the good (including the Certificate or
copies thereof).
(3) Retention period.--Records and supporting
documents shall be kept by the person who issued a
Chile FTA Certificate of Origin for at least 5 years
after the date on which the certificate was issued.
(g) Penalties.--Any person who fails to retain records and
supporting documents required by subsection (f) or the
regulations issued to implement that subsection shall be liable
for the greater of--
(1) a civil penalty not to exceed $10,000; or
(2) the general record keeping penalty that applies
under the customs laws of the United States.
* * * * * * *
SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.
(a) * * *
* * * * * * *
(g) Denial of Preferential Tariff Treatment Under United
States-Chile Free Trade Agreement.--If the Bureau of Customs
and Border Protection or the Bureau of Immigration and Customs
Enforcement finds indications of a pattern of conduct by an
importer of false or unsupported representations that goods
qualify under the rules of origin set out in section 202 of the
United States-Chile Free Trade Agreement Implementation Act,
the Bureau of Customs and Border Protection, in accordance with
regulations issued by the Secretary of the Treasury, may deny
preferential tariff treatment under the United States-Chile
Free Trade Agreement to entries of identical goods imported by
that person until the person establishes to the satisfaction of
the Bureau of Customs and Border Protection that
representations of that person are in conformity with such
section 202.
* * * * * * *
SEC. 520. REFUNDS AND ERRORS.
(a) * * *
* * * * * * *
[(d)] (d) Goods Qualifying Under Free Trade Agreement Rules
of Origin.--Notwithstanding the fact that a valid protest was
not filed, the Customs Service may, in accordance with
regulations prescribed by the Secretary, reliquidate an entry
to refund any excess duties (including any merchandise
processing fees) paid on a good qualifying under the rules of
origin set out in section 202 of the North American Free Trade
Agreement Implementation Act or section 202 of the United
States-Chile Free Trade Agreement Implementation Act for which
no claim for preferential tariff treatment was made at the time
of importation if the importer, within 1 year after the date of
importation, files, in accordance with those regulations, a
claim that includes--
(1) a written declaration that the good qualified
under [those] the applicable rules at the time of
importation;
(2) copies of all applicable NAFTA Certificates of
Origin (as defined in section 508(b)(1)), or other
certificates of origin, as the case may be; and
* * * * * * *
SEC. 562. MANIPULATION IN WAREHOUSE.
Unless by special authority of the Secretary of the Treasury,
no merchandise shall be withdrawn from bonded warehouse in less
quantity than an entire bale, cask, box, or other package; or,
if in bulk, in the entire quantity imported or in a quantity
not less than one ton weight. All merchandise so withdrawn
shall be withdrawn in the original packages in which imported
unless, upon the application of the importer, it appears to the
appropriate customs officer that it is necessary to the safety
or preservation of the merchandise to repack or transfer the
same; except that upon permission therefor being granted by the
Secretary of the Treasury, and under customs supervision, at
the expense of the proprietor, merchandise may be cleaned,
sorted, repacked, or otherwise changed in condition, but not
manufactured, in bonded warehouses established for that purpose
and be withdrawn therefrom--
(1) * * *
* * * * * * *
(3) without payment of duties for exportation to any
foreign country other than [to a NAFTA country] to
Chile, to a NAFTA country, or to Canada when exports to
that country are subject to paragraph (4);
(4) without payment of duties for exportation to
Canada (if that country ceases to be a NAFTA country
and the suspension of the operation of the United
States-Canada Free-Trade Agreement thereafter
terminates), but the exemption from the payment of
duties under this paragraph applies only in the case of
an exportation during the period such Agreement is in
operation of merchandise that--
(A) * * *
(B) is a drawback eligible good under section
204(a) of the United States-Canada Free-Trade
Agreement Implementation Act of 1988[; and]
(5) without payment of duties for shipment to the
Virgin Islands, American Samoa, Wake Island, Midway
Island, Kingman Reef, Johnston Island or the island of
Guam[.]; and
(6)(A) without payment of duties for exportation to
Chile, if the merchandise is of a kind described in any
of paragraphs (1) through (5) of section 203(a) of the
United States-Chile Free Trade Agreement Implementation
Act; and
(B) for exportation to Chile if the merchandise
consists of goods subject to Chile FTA drawback, as
defined in section 203(a) of the United States-Chile
Free Trade Agreement Implementation Act, except that--
(i) the merchandise may not be withdrawn from
warehouse without assessment of a duty on the
merchandise in its condition and quantity, and
at its weight, at the time of withdrawal from
the warehouse with such additions to, or
deductions from, the final appraised value as
may be necessary by reason of a change in
condition, and
(ii) duty shall be paid on the merchandise
before the 61st day after the date of
exportation, except that such duties may be
waived or reduced by--
(I) 100 percent during the 8-year
period beginning on January 1, 2004,
(II) 75 percent during the 1-year
period beginning on January 1, 2012,
(III) 50 percent during the 1-year
period beginning on January 1, 2013,
and
(IV) 25 percent during the 1-year
period beginning on January 1, 2014.
* * * * * * *
SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.
(a) * * *
* * * * * * *
(c) Maximum Penalties.--
(1) * * *
* * * * * * *
(6) Prior disclosure regarding claims under the
united states-chile free trade agreement.--An importer
shall not be subject to penalties under subsection (a)
for making an incorrect claim that a good qualifies as
an originating good under section 202 of the United
States-Chile Free Trade Agreement Implementation Act if
the importer, in accordance with regulations issued by
the Secretary of the Treasury, voluntarily makes a
corrected declaration and pays any duties owing.
[(6)] (7) Seizure.--If the Secretary has reasonable
cause to believe that a person has violated the
provisions of subsection (a) and that such person is
insolvent or beyond the jurisdiction of the United
States or that seizure is otherwise essential to
protect the revenue of the United States or to prevent
the introduction of prohibited or restricted
merchandise into the customs territory of the United
States, then such merchandise may be seized and, upon
assessment of a monetary penalty, forfeited unless the
monetary penalty is paid within the time specified by
law. Within a reasonable time after any such seizure is
made, the Secretary shall issue to the person concerned
a written statement containing the reasons for the
seizure. After seizure of merchandise under this
subsection, the Secretary may, in the case of
restricted merchandise, and shall, in the case of any
other merchandise (other than prohibited merchandise),
return such merchandise upon the deposit of security
not to exceed the maximum monetary penalty which may be
assessed under subsection (c).
* * * * * * *
(g) False Certifications of Origin Under the United States-
Chile Free Trade Agreement.--
(1) In general.--Subject to paragraph (2), it is
unlawful for any person to certify falsely, by fraud,
gross negligence, or negligence, in a Chile FTA
Certificate of Origin (as defined in section
508(f)(1)(B) of this Act that a good exported from the
United States qualifies as an originating good under
the rules of origin set out in section 202 of the
United States-Chile Free Trade Agreement Implementation
Act. The procedures and penalties of this section that
apply to a violation of subsection (a) also apply to a
violation of this subsection.
(2) Immediate and voluntary disclosure of incorrect
information.--No penalty shall be imposed under this
subsection if, immediately after an exporter or
producer that issued a Chile FTA Certificate of Origin
has reason to believe that such certificate contains or
is based on incorrect information, the exporter or
producer voluntarily provides written notice of such
incorrect information to every person to whom the
certificate was issued.
(3) Exception.--A person may not be considered to
have violated paragraph (1) if--
(A) the information was correct at the time
it was provided in a Chile FTA Certificate of
Origin but was later rendered incorrect due to
a change in circumstances; and
(B) the person immediately and voluntarily
provides written notice of the change in
circumstances to all persons to whom the person
provided the certificate.
* * * * * * *
----------
SECTION 3 OF THE ACT OF JUNE 18, 1934
(Commonly known as the ``Foreign Trade Zones Act'')
Sec. 3. (a) Foreign and domestic merchandise of every
description, except such as is prohibited by law, may, without
being subject to the customs laws of the United States, except
as otherwise provided in this Act, be brought into a zone and
may be stored, sold, exhibited, broken up, repacked, assembled,
distributed, sorted, graded, cleaned, mixed with foreign or
domestic merchandise, or otherwise manipulated, or be
manufactured except as otherwise provided in this Act, and be
exported, destroyed, or sent into customs territory of the
United States therefrom, in the original package or otherwise;
but when foreign merchandise is so sent from a zone into
customs territory of the United States it shall be subject to
the laws and regulations of the United States affecting
imported merchandise: Provided, That whenever the privilege
shall be requested and there has been no manipulation or
manufacture effecting a change in tariff classification, the
appropriate customs officer shall take under supervision any
lot or part of a lot of foreign merchandise in a zone, cause it
to be appraised and taxes determined and duties liquidated
thereon. Merchandise so taken under supervision may be stored,
manipulated, or manufactured under the supervision and
regulations prescribed by the Secretary of the Treasury, and
whether mixed or manufactured with domestic merchandise or not
may, under regulations prescribed by the Secretary of the
Treasury, be exported or destroyed, or may be sent into customs
territory upon the payment of such liquidated duties and
determined taxes thereon. If merchandise so taken under
supervision has been manipulated or manufactured, such duties
and taxes shall be payable on the quantity of such foreign
merchandise used in the manipulation or manufacture of the
entered article. Allowance shall be made for recoverable and
irrecoverable waste; and if recoverable waste is sent into
customs territory, it shall be dutiable and taxable in its
condition and quantity and at its weight at the time of entry.
Where two or more products result from the manipulation or
manufacture of merchandise in a zone the liquidated duties and
determined taxes shall be distributed to the several products
in accordance with their relative value at the time of
separation with due allowance for waste as provided for above:
Provided further, That subject to such regulations respecting
identity and the safeguarding of the revenue as the Secretary
of the Treasury may deem necessary, articles, the growth,
product, or manufacture of the United States, on which all
internal-revenue taxes have been paid, if subject thereto, and
articles previously imported on which duty and/or tax has been
paid, or which have been admitted free of duty and tax, may be
taken into a zone from the customs territory of the United
States, placed under the supervision of the appropriate customs
officer, and whether or not they have been combined with or
made part, while in such zone, of other articles, may be
brought back thereto free of quotas, duty, or tax: Provided
further, That if in the opinion of the Secretary of the
Treasury their identity has been lost, such articles not
entitled to free entry by reason of noncompliance with the
requirements made hereunder by the Secretary of the Treasury
shall be treated when they reenter customs territory of the
United States as foreign merchandise under the provisions of
the tariff and internal-revenue laws in force at that time:
Provided further, That under the rules and regulations of the
controlling Federal agencies, articles which have been taken
into a zone from customs territory for the sole purpose of
exportation, destruction (except destruction of distilled
spirits, wines, and fermented malt liquors), or storage shall
be considered to be exported for the purpose of--
(1) * * *
* * * * * * *
Such a transfer may also be considered an exportation for the
purposes of other Federal laws insofar as Federal agencies
charged with the enforcement of those laws deem it advisable.
Such articles may not be returned to customs territory for
domestic consumption except where the Foreign-Trade Zones Board
deems such return to be in the public interest, in which event
the articles shall be subject to the provisions of paragraph
1615(f) of the Tariff Act of 1930, as amended: Provided
further, That no operation involving any foreign or domestic
merchandise brought into a zone which operation would be
subject to any provision or provisions of section 1807, chapter
15, chapter 16, chapter 17, chapter 21, chapter 23, chapter 24,
chapter 25, chapter 26, or chapter 32 of the Internal Revenue
Code if performed in customs territory, or involving the
manufacture of any article provided for in paragraph 367 or
paragraph 368 of the Tariff Act of 1930, shall be permitted in
a zone except those operations (other than rectification of
distilled spirits and wines, or the manufacture or production
of alcoholic products unfit for beverage purposes) which were
permissible under this Act prior to July 1, 1949: Provided
further, That articles produced or manufactured in a zone and
exported therefrom shall on subsequent importation into the
customs territory of the United States be subject to the import
laws applicable to like articles manufactured in a foreign
country, except that articles produced or manufactured in a
zone exclusively with the use of domestic merchandise, the
identity of which has been maintained in accordance with the
second proviso of this section, may, on such importation, be
entered as American goods returned: Provided further, That no
merchandise that consists of goods subject to NAFTA drawback,
as defined in section 203(a) of the North American Free Trade
Agreement Implementation Act, that is manufactured or otherwise
changed in condition shall be exported to a NAFTA country, as
defined in section 2(4) of that Act, without an assessment of a
duty on the merchandise in its condition and quantity, and at
its weight, at the time of its exportation (or if the privilege
in the first proviso to this subsection was requested, an
assessment of a duty on the merchandise in its condition and
quantity, and at its weight, at the time of its admission into
the zone) and the payment of the assessed duty before the 61st
day after the date of exportation of the article, except that
upon the presentation, before such 61st day, of satisfactory
evidence of the amount of any customs duties paid or owed to
the NAFTA country on the article, the customs duty may be
waived or reduced (subject to section 508(b)(2)(B) of the
Tariff Act of 1930) in an amount that does not exceed the
lesser of (1) the total amount of customs duties paid or owed
on the merchandise on importation into the United States, or
(2) the total amount of customs duties paid on the article to
the NAFTA country: Provided further, That if Canada ceases to
be a NAFTA country and the suspension of the operation of the
United States-Canada Free-Trade Agreement thereafter
terminates, with the exception of drawback eligible goods under
section 204(a) of the United States-Canada Free-Trade Agreement
Implementation Act of 1988, no article manufactured or
otherwise changed in condition (except a change by cleaning,
testing or repacking) shall be exported to Canada during the
period such Agreement is in operation without the payment of a
duty that shall be payable on the article in its condition and
quantity, and at its weight, at the time of its exportation to
Canada unless the privilege in the first proviso to this
subsection was requested[.]: Provided, further, That no
merchandise that consists of goods subject to Chile FTA
drawback, as defined in section 203(a) of the United States-
Chile Free Trade Agreement Implementation Act, that is
manufactured or otherwise changed in condition shall be
exported to Chile without an assessment of a duty on the
merchandise in its condition and quantity, and at its weight,
at the time of its exportation (or if the privilege in the
first proviso to this subsection was requested, an assessment
of a duty on the merchandise in its condition and quantity, and
at its weight, at the time of its admission into the zone) and
the payment of the assessed duty before the 61st day after the
date of exportation of the article, except that the customs
duty may be waived or reduced by (1) 100 percent during the 8-
year period beginning on January 1, 2004; (2) 75 percent during
the 1-year period beginning on January 1, 2012; (3) 50 percent
during the 1-year period beginning on January 1, 2013; and (4)
25 percent during the 1-year period beginning on January 1,
2014.
* * * * * * *
----------
SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF
1985
SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) * * *
(b) Limitations on Fees.--(1) * * *
* * * * * * *
(12) No fee may be charged under subsection (a) (9) or (10)
with respect to goods that qualify as originating goods under
section 202 of the United States-Chile Free Trade Agreement
Implementation Act. Any service for which an exemption from
such fee is provided by reason of this paragraph may not be
funded with money contained in the Customs User Fee Account.
* * * * * * *
----------
SECTION 202 OF THE TRADE ACT OF 1974
SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY
COMMISSION.
(a) Petitions and Adjustment Plans.--
(1) * * *
* * * * * * *
(8) The procedures concerning the release of
confidential business information set forth in section
332(g) of the Tariff Act of 1930 shall apply with
respect to information received by the Commission in
the course of investigations conducted under this
chapter, part 1 of title III of the North American Free
Trade Agreement Implementation Act, [and] title II of
the United States-Jordan Free Trade Area Implementation
Act, and title III of the United States-Chile Free
Trade Agreement Implementation Act. The Commission may
request that parties providing confidential business
information furnish nonconfidential summaries thereof
or, if such parties indicate that the information in
the submission cannot be summarized, the reasons why a
summary cannot be provided. If the Commission finds
that a request for confidentiality is not warranted and
if the party concerned is either unwilling to make the
information public or to authorize its disclosure in
generalized or summarized form, the Commission may
disregard the submission.
* * * * * * *
----------
IMMIGRATION AND NATIONALITY ACT
* * * * * * *
TITLE I--GENERAL
definitions
Section 101. (a) As used in this Act--
(1) * * *
* * * * * * *
(15) The term ``immigrant'' means every alien except an alien
who is within one of the following classes of nonimmigrant
aliens--
(A) * * *
* * * * * * *
(H) an alien (i)(b) subject to section 212(j)(2), who
is coming temporarily to the United States to perform
services (other than services described in subclause
(a) during the period in which such subclause applies
and other than services described in subclause (ii)(a)
or in subparagraph (O) or (P)) in a specialty
occupation described in section 214(i)(1) or as a
fashion model, who meets the requirements for the
occupation specified in section 214(i)(2) or, in the
case of a fashion model, is of distinguished merit and
ability, and with respect to whom the Secretary of
Labor determines and certifies to the Attorney General
that the intending employer has filed with the
Secretary an application under section [212(n)(1), or
(c)] 212(n)(1), or (b1) who is entitled to enter the
United States under and in pursuance of the provisions
of an agreement listed in section 214(g)(8)(A), who is
engaged in a specialty occupation described in section
214(i)(3), and with respect to whom the Secretary of
Labor determines and certifies to the Secretary of
Homeland Security and the Secretary of State that the
intending employer has filed with the Secretary of
Labor an attestation under section 212(t)(1), or (c)
who is coming temporarily to the United States to
perform services as a registered nurse, who meets the
qualifications described in section 212(m)(1), and with
respect to whom the Secretary of Labor determines and
certifies to the Attorney General that an unexpired
attestation is on file and in effect under section
212(m)(2) for the facility (as defined in section
212(m)(6)) for which the alien will perform the
services; or (ii)(a) having a residence in a foreign
country which he has no intention of abandoning who is
coming temporarily to the United States to perform
agricultural labor or services, as defined by the
Secretary of Labor in regulations and including
agricultural labor defined in section 3121(g) of the
Internal Revenue Code of 1954 and agriculture as
defined in section 3(f) of the Fair Labor Standards Act
of 1938 (29 U.S.C. 203(f)), of a temporary or seasonal
nature, or (b) having a residence in a foreign country
which he has no intention of abandoning who is coming
temporarily to the United States to perform other
temporary service or labor if unemployed persons
capable of performing such service or labor cannot be
found in this country, but this clause shall not apply
to graduates of medical schools coming to the United
States to perform services as members of the medical
profession; or (iii) having a residence in a foreign
country which he has no intention of abandoning who is
coming temporarily to the United States as a trainee,
other than to receive graduate medical education or
training, in a training program that is not designed
primarily to provide productive employment; and the
alien spouse and minor children of any such alien
specified in this paragraph if accompanying him or
following to join him;
* * * * * * *
TITLE II--IMMIGRATION
* * * * * * *
Chapter 2--Qualifications for Admission of Aliens; Travel Control of
Citizens and Aliens
* * * * * * *
GENERAL CLASSES OF ALIENS INELIGIBLE TO RECEIVE VISAS AND INELIGIBLE
FOR ADMISSION; WAIVERS OF INADMISSIBILITY
Sec. 212. (a) * * *
* * * * * * *
(p)(1) In computing the prevailing wage level for an
occupational classification in an area of employment for
purposes of subsections [(n)(1)(A)(i)(II) and (a)(5)(A)]
(a)(5)(A), (n)(1)(A)(i)(II), and (t)(1)(A)(i)(II) in the case
of an employee of--
(A) * * *
* * * * * * *
[(p)] (s) In determining whether an alien described in
subsection (a)(4)(C)(i) is inadmissible under subsection (a)(4)
or ineligible to receive an immigrant visa or otherwise to
adjust to the status of permanent resident by reason of
subsection (a)(4), the consular officer or the Attorney General
shall not consider any benefits the alien may have received
that were authorized under section 501 of the Illegal
Immigration Reform and Immigrant Responsibility Act of 1996 (8
U.S.C. 1641(c)).
(t)(1) No alien may be admitted or provided status as a
nonimmigrant under section 101(a)(15)(H)(i)(b1) in an
occupational classification unless the employer has filed with
the Secretary of Labor an attestation stating the following:
(A) The employer--
(i) is offering and will offer during the
period of authorized employment to aliens
admitted or provided status under section
101(a)(15)(H)(i)(b1) wages that are at least--
(I) the actual wage level paid by the
employer to all other individuals with
similar experience and qualifications
for the specific employment in
question; or
(II) the prevailing wage level for
the occupational classification in the
area of employment,
whichever is greater, based on the best
information available as of the time of filing
the attestation; and
(ii) will provide working conditions for such
a nonimmigrant that will not adversely affect
the working conditions of workers similarly
employed.
(B) There is not a strike or lockout in the course of
a labor dispute in the occupational classification at
the place of employment.
(C) The employer, at the time of filing the
attestation--
(i) has provided notice of the filing under
this paragraph to the bargaining representative
(if any) of the employer's employees in the
occupational classification and area for which
aliens are sought; or
(ii) if there is no such bargaining
representative, has provided notice of filing
in the occupational classification through such
methods as physical posting in conspicuous
locations at the place of employment or
electronic notification to employees in the
occupational classification for which
nonimmigrants under section
101(a)(15)(H)(i)(b1) are sought.
(D) A specification of the number of workers sought,
the occupational classification in which the workers
will be employed, and wage rate and conditions under
which they will be employed.
(2)(A) The employer shall make available for public
examination, within one working day after the date on which an
attestation under this subsection is filed, at the employer's
principal place of business or worksite, a copy of each such
attestation (and such accompanying documents as are necessary).
(B)(i) The Secretary of Labor shall compile, on a current
basis, a list (by employer and by occupational classification)
of the attestations filed under this subsection. Such list
shall include, with respect to each attestation, the wage rate,
number of aliens sought, period of intended employment, and
date of need.
(ii) The Secretary of Labor shall make such list available
for public examination in Washington, D.C.
(C) The Secretary of Labor shall review an attestation filed
under this subsection only for completeness and obvious
inaccuracies. Unless the Secretary of Labor finds that an
attestation is incomplete or obviously inaccurate, the
Secretary of Labor shall provide the certification described in
section 101(a)(15)(H)(i)(b1) within 7 days of the date of the
filing of the attestation.
(3)(A) The Secretary of Labor shall establish a process for
the receipt, investigation, and disposition of complaints
respecting the failure of an employer to meet a condition
specified in an attestation submitted under this subsection or
misrepresentation by the employer of material facts in such an
attestation. Complaints may be filed by any aggrieved person or
organization (including bargaining representatives). No
investigation or hearing shall be conducted on a complaint
concerning such a failure or misrepresentation unless the
complaint was filed not later than 12 months after the date of
the failure or misrepresentation, respectively. The Secretary
of Labor shall conduct an investigation under this paragraph if
there is reasonable cause to believe that such a failure or
misrepresentation has occurred.
(B) Under the process described in subparagraph (A), the
Secretary of Labor shall provide, within 30 days after the date
a complaint is filed, for a determination as to whether or not
a reasonable basis exists to make a finding described in
subparagraph (C). If the Secretary of Labor determines that
such a reasonable basis exists, the Secretary of Labor shall
provide for notice of such determination to the interested
parties and an opportunity for a hearing on the complaint, in
accordance with section 556 of title 5, United States Code,
within 60 days after the date of the determination. If such a
hearing is requested, the Secretary of Labor shall make a
finding concerning the matter by not later than 60 days after
the date of the hearing. In the case of similar complaints
respecting the same applicant, the Secretary of Labor may
consolidate the hearings under this subparagraph on such
complaints.
(C)(i) If the Secretary of Labor finds, after notice and
opportunity for a hearing, a failure to meet a condition of
paragraph (1)(B), a substantial failure to meet a condition of
paragraph (1)(C) or (1)(D), or a misrepresentation of material
fact in an attestation--
(I) the Secretary of Labor shall notify the Secretary
of State and the Secretary of Homeland Security of such
finding and may, in addition, impose such other
administrative remedies (including civil monetary
penalties in an amount not to exceed $1,000 per
violation) as the Secretary of Labor determines to be
appropriate; and
(II) the Secretary of State or the Secretary of
Homeland Security, as appropriate, shall not approve
petitions or applications filed with respect to that
employer under section 204, 214(c), or
101(a)(15)(H)(i)(b1) during a period of at least 1 year
for aliens to be employed by the employer.
(ii) If the Secretary of Labor finds, after notice and
opportunity for a hearing, a willful failure to meet a
condition of paragraph (1), a willful misrepresentation of
material fact in an attestation, or a violation of clause
(iv)--
(I) the Secretary of Labor shall notify the Secretary
of State and the Secretary of Homeland Security of such
finding and may, in addition, impose such other
administrative remedies (including civil monetary
penalties in an amount not to exceed $5,000 per
violation) as the Secretary of Labor determines to be
appropriate; and
(II) the Secretary of State or the Secretary of
Homeland Security, as appropriate, shall not approve
petitions or applications filed with respect to that
employer under section 204, 214(c), or
101(a)(15)(H)(i)(b1) during a period of at least 2
years for aliens to be employed by the employer.
(iii) If the Secretary of Labor finds, after notice and
opportunity for a hearing, a willful failure to meet a
condition of paragraph (1) or a willful misrepresentation of
material fact in an attestation, in the course of which failure
or misrepresentation the employer displaced a United States
worker employed by the employer within the period beginning 90
days before and ending 90 days after the date of filing of any
visa petition or application supported by the attestation--
(I) the Secretary of Labor shall notify the Secretary
of State and the Secretary of Homeland Security of such
finding and may, in addition, impose such other
administrative remedies (including civil monetary
penalties in an amount not to exceed $35,000 per
violation) as the Secretary of Labor determines to be
appropriate; and
(II) the Secretary of State or the Secretary of
Homeland Security, as appropriate, shall not approve
petitions or applications filed with respect to that
employer under section 204, 214(c), or
101(a)(15)(H)(i)(b1) during a period of at least 3
years for aliens to be employed by the employer.
(iv) It is a violation of this clause for an employer who has
filed an attestation under this subsection to intimidate,
threaten, restrain, coerce, blacklist, discharge, or in any
other manner discriminate against an employee (which term, for
purposes of this clause, includes a former employee and an
applicant for employment) because the employee has disclosed
information to the employer, or to any other person, that the
employee reasonably believes evidences a violation of this
subsection, or any rule or regulation pertaining to this
subsection, or because the employee cooperates or seeks to
cooperate in an investigation or other proceeding concerning
the employer's compliance with the requirements of this
subsection or any rule or regulation pertaining to this
subsection.
(v) The Secretary of Labor and the Secretary of Homeland
Security shall devise a process under which a nonimmigrant
under section 101(a)(15)(H)(i)(b1) who files a complaint
regarding a violation of clause (iv) and is otherwise eligible
to remain and work in the United States may be allowed to seek
other appropriate employment in the United States for a period
not to exceed the maximum period of stay authorized for such
nonimmigrant classification.
(vi)(I) It is a violation of this clause for an employer who
has filed an attestation under this subsection to require a
nonimmigrant under section 101(a)(15)(H)(i)(b1) to pay a
penalty for ceasing employment with the employer prior to a
date agreed to by the nonimmigrant and the employer. The
Secretary of Labor shall determine whether a required payment
is a penalty (and not liquidated damages) pursuant to relevant
State law.
(II) If the Secretary of Labor finds, after notice and
opportunity for a hearing, that an employer has committed a
violation of this clause, the Secretary of Labor may impose a
civil monetary penalty of $1,000 for each such violation and
issue an administrative order requiring the return to the
nonimmigrant of any amount paid in violation of this clause,
or, if the nonimmigrant cannot be located, requiring payment of
any such amount to the general fund of the Treasury.
(vii)(I) It is a failure to meet a condition of paragraph
(1)(A) for an employer who has filed an attestation under this
subsection and who places a nonimmigrant under section
101(a)(15)(H)(i)(b1) designated as a full-time employee in the
attestation, after the nonimmigrant has entered into employment
with the employer, in nonproductive status due to a decision by
the employer (based on factors such as lack of work), or due to
the nonimmigrant's lack of a permit or license, to fail to pay
the nonimmigrant full-time wages in accordance with paragraph
(1)(A) for all such nonproductive time.
(II) It is a failure to meet a condition of paragraph (1)(A)
for an employer who has filed an attestation under this
subsection and who places a nonimmigrant under section
101(a)(15)(H)(i)(b1) designated as a part-time employee in the
attestation, after the nonimmigrant has entered into employment
with the employer, in nonproductive status under circumstances
described in subclause (I), to fail to pay such a nonimmigrant
for such hours as are designated on the attestation consistent
with the rate of pay identified on the attestation.
(III) In the case of a nonimmigrant under section
101(a)(15)(H)(i)(b1) who has not yet entered into employment
with an employer who has had approved an attestation under this
subsection with respect to the nonimmigrant, the provisions of
subclauses (I) and (II) shall apply to the employer beginning
30 days after the date the nonimmigrant first is admitted into
the United States, or 60 days after the date the nonimmigrant
becomes eligible to work for the employer in the case of a
nonimmigrant who is present in the United States on the date of
the approval of the attestation filed with the Secretary of
Labor.
(IV) This clause does not apply to a failure to pay wages to
a nonimmigrant under section 101(a)(15)(H)(i)(b1) for
nonproductive time due to non-work-related factors, such as the
voluntary request of the nonimmigrant for an absence or
circumstances rendering the nonimmigrant unable to work.
(V) This clause shall not be construed as prohibiting an
employer that is a school or other educational institution from
applying to a nonimmigrant under section 101(a)(15)(H)(i)(b1)
an established salary practice of the employer, under which the
employer pays to nonimmigrants under section
101(a)(15)(H)(i)(b1) and United States workers in the same
occupational classification an annual salary in disbursements
over fewer than 12 months, if--
(aa) the nonimmigrant agrees to the compressed annual
salary payments prior to the commencement of the
employment; and
(bb) the application of the salary practice to the
nonimmigrant does not otherwise cause the nonimmigrant
to violate any condition of the nonimmigrant's
authorization under this Act to remain in the United
States.
(VI) This clause shall not be construed as superseding clause
(viii).
(viii) It is a failure to meet a condition of paragraph
(1)(A) for an employer who has filed an attestation under this
subsection to fail to offer to a nonimmigrant under section
101(a)(15)(H)(i)(b1), during the nonimmigrant's period of
authorized employment, benefits and eligibility for benefits
(including the opportunity to participate in health, life,
disability, and other insurance plans; the opportunity to
participate in retirement and savings plans; and cash bonuses
and non-cash compensation, such as stock options (whether or
not based on performance)) on the same basis, and in accordance
with the same criteria, as the employer offers to United States
workers.
(D) If the Secretary of Labor finds, after notice and
opportunity for a hearing, that an employer has not paid wages
at the wage level specified in the attestation and required
under paragraph (1), the Secretary of Labor shall order the
employer to provide for payment of such amounts of back pay as
may be required to comply with the requirements of paragraph
(1), whether or not a penalty under subparagraph (C) has been
imposed.
(E) The Secretary of Labor may, on a case-by-case basis,
subject an employer to random investigations for a period of up
to 5 years, beginning on the date on which the employer is
found by the Secretary of Labor to have committed a willful
failure to meet a condition of paragraph (1) or to have made a
willful misrepresentation of material fact in an attestation.
The authority of the Secretary of Labor under this subparagraph
shall not be construed to be subject to, or limited by, the
requirements of subparagraph (A).
(F) Nothing in this subsection shall be construed as
superseding or preempting any other enforcement-related
authority under this Act (such as the authorities under section
274B), or any other Act.
(4) For purposes of this subsection:
(A) The term ``area of employment'' means the area
within normal commuting distance of the worksite or
physical location where the work of the nonimmigrant
under section 101(a)(15)(H)(i)(b1) is or will be
performed. If such worksite or location is within a
Metropolitan Statistical Area, any place within such
area is deemed to be within the area of employment.
(B) In the case of an attestation with respect to one
or more nonimmigrants under section
101(a)(15)(H)(i)(b1) by an employer, the employer is
considered to ``displace'' a United States worker from
a job if the employer lays off the worker from a job
that is essentially the equivalent of the job for which
the nonimmigrant or nonimmigrants is or are sought. A
job shall not be considered to be essentially
equivalent of another job unless it involves
essentially the same responsibilities, was held by a
United States worker with substantially equivalent
qualifications and experience, and is located in the
same area of employment as the other job.
(C)(i) The term ``lays off'', with respect to a
worker--
(I) means to cause the worker's loss of
employment, other than through a discharge for
inadequate performance, violation of workplace
rules, cause, voluntary departure, voluntary
retirement, or the expiration of a grant or
contract; but
(II) does not include any situation in which
the worker is offered, as an alternative to
such loss of employment, a similar employment
opportunity with the same employer at
equivalent or higher compensation and benefits
than the position from which the employee was
discharged, regardless of whether or not the
employee accepts the offer.
(ii) Nothing in this subparagraph is intended to
limit an employee's rights under a collective
bargaining agreement or other employment contract.
(D) The term ``United States worker'' means an
employee who--
(i) is a citizen or national of the United
States; or
(ii) is an alien who is lawfully admitted for
permanent residence, is admitted as a refugee
under section 207 of this title, is granted
asylum under section 208, or is an immigrant
otherwise authorized, by this Act or by the
Secretary of Homeland Security, to be employed.
* * * * * * *
admission of nonimmigrants
Sec. 214. (a) * * *
(b) Every alien [(other than a nonimmigrant described in
subparagraph (H)(i), (L), or (V) of section 101(a)(15))] (other
than a nonimmigrant described in subparagraph (L) or (V) of
section 101(a)(15), and other than a nonimmigrant described in
any provision of section 101(a)(15)(H)(i) except subclause (b1)
of such section) shall be presumed to be an immigrant until he
establishes to the satisfaction of the consular officer, at the
time of application for a visa, and the immigration officers,
at the time of application for admission, that he is entitled
to a nonimmigrant status under section 101(a)(15). An alien who
is an officer or employee of any foreign government or of any
international organization entitled to enjoy privileges,
exemptions, and immunities under the International
Organizations Immunities Act, or an alien who is the attendant,
servant, employee, or member of the immediate family of any
such alien shall not be entitled to apply for or receive an
immigrant visa, or to enter the United States as an immigrant
unless he executes a written waiver in the same form and
substance as is prescribed by section 247(b).
(c)(1) The question of importing any alien as a
nonimmigrant under [section 101(a)(15)(H), (L), (O), or (P)(i)]
subparagraph (H), (L), (O), or (P)(i) of section 101(a)(15)
(excluding nonimmigrants under section 101(a)(15)(H)(i)(b1)) in
any specific case or specific cases shall be determined by the
Attorney General, after consultation with appropriate agencies
of the Government, upon petition of the importing employer.
Such petition shall be made and approved before the visa is
granted. The petition shall be in such form and contain such
information as the Attorney General shall prescribe. The
approval of such a petition shall not, of itself, be construed
as establishing that the alien is a nonimmigrant. For purposes
of this subsection with respect to nonimmigrants described in
section 101(a)(15)(H)(ii)(a), the term ``appropriate agencies
of Government'' means the Department of Labor and includes the
Department of Agriculture. The provisions of section 218 shall
apply to the question of importing any alien as a nonimmigrant
under section 101(a)(15)(H)(ii)(a).
* * * * * * *
(11)(A) Subject to subparagraph (B), the Secretary of
Homeland Security or the Secretary of State, as appropriate,
shall impose a fee on an employer who has filed an attestation
described in section 212(t)--
(i) in order that an alien may be initially granted
nonimmigrant status described in section
101(a)(15)(H)(i)(b1); or
(ii) in order to satisfy the requirement of the
second sentence of subsection (g)(8)(C) for an alien
having such status to obtain certain extensions of
stay.
(B) The amount of the fee shall be the same as the amount
imposed by the Secretary of Homeland Security under paragraph
(9), except that if such paragraph does not authorize such
Secretary to impose any fee, no fee shall be imposed under this
paragraph.
(C) Fees collected under this paragraph shall be deposited in
the Treasury in accordance with section 286(s).
* * * * * * *
(g)(1) * * *
* * * * * * *
(8)(A) The agreement referred to in section
101(a)(15)(H)(i)(b1) is the United States-Chile Free Trade
Agreement.
(B)(i) The Secretary of Homeland Security shall establish
annual numerical limitations on approvals of initial
applications by aliens for admission under section
101(a)(15)(H)(i)(b1).
(ii) The annual numerical limitations described in clause (i)
shall not exceed 1,400 for nationals of Chile for any fiscal
year. For purposes of this clause, the term ``national'' has
the meaning given such term in article 14.9 of the United
States-Chile Free Trade Agreement.
(iii) The annual numerical limitations described in clause
(i) shall only apply to principal aliens and not to the spouses
or children of such aliens.
(iv) The annual numerical limitation described in paragraph
(1)(A) is reduced by the amount of the annual numerical
limitations established under clause (i). However, if a
numerical limitation established under clause (i) has not been
exhausted at the end of a given fiscal year, the Secretary of
Homeland Security shall adjust upwards the numerical limitation
in paragraph (1)(A) for that fiscal year by the amount
remaining in the numerical limitation under clause (i). Visas
under section 101(a)(15)(H)(i)(b) may be issued pursuant to
such adjustment within the first 45 days of the next fiscal
year to aliens who had applied for such visas during the fiscal
year for which the adjustment was made.
(C) The period of authorized admission as a nonimmigrant
under section 101(a)(15)(H)(i)(b1) shall be 1 year, and may be
extended, but only in 1-year increments. After every second
extension, the next following extension shall not be granted
unless the Secretary of Labor had determined and certified to
the Secretary of Homeland Security and the Secretary of State
that the intending employer has filed with the Secretary of
Labor an attestation under section 212(t)(1) for the purpose of
permitting the nonimmigrant to obtain such extension.
(D) The numerical limitation described in paragraph (1)(A)
for a fiscal year shall be reduced by one for each alien
granted an extension under subparagraph (C) during such year
who has obtained 5 or more consecutive prior extensions.
(h) The fact that an alien is the beneficiary of an
application for a preference status filed under section 204 or
has otherwise sought permanent residence in the United States
shall not constitute evidence of an intention to abandon a
foreign residence for purposes of obtaining a visa as a
nonimmigrant described in subparagraph [(H)(i)] (H)(i)(b) or
(c), (L), or (V) of section 101(a)(15) or otherwise obtaining
or maintaining the status of a nonimmigrant described in such
subparagraph, if the alien had obtained a change of status
under section 248 to a classification as such a nonimmigrant
before the alien's most recent departure from the United
States.
(i)(1) [For purposes] Except as provided in paragraph (3),
for purposes of section 101(a)(15)(H)(i)(b) and paragraph (2),
the term ``specialty occupation'' means an occupation that
requires--
(A) * * *
* * * * * * *
(3) For purposes of section 101(a)(15)(H)(i)(b1), the term
``specialty occupation'' means an occupation that requires--
(A) theoretical and practical application of a body
of specialized knowledge; and
(B) attainment of a bachelor's or higher degree in
the specific specialty (or its equivalent) as a minimum
for entry into the occupation in the United States.
(j)(1) Notwithstanding any other provision of this Act, an
alien who is a citizen of Canada or Mexico who seeks to enter
the United States under and pursuant to the provisions of
Section B, Section C, or Section D of Annex 1603 of the North
American Free Trade Agreement, shall not be classified as a
nonimmigrant under such provisions if there is in progress a
strike or lockout in the course of a labor dispute in the
occupational classification at the place or intended place of
employment, unless such alien establishes, pursuant to
regulations promulgated by the Attorney General, that the
alien's entry will not affect adversely the settlement of the
strike or lockout or the employment of any person who is
involved in the strike or lockout. Notice of a determination
under this [subsection] paragraph shall be given as may be
required by paragraph 3 of article 1603 of such Agreement. For
purposes of this [subsection] paragraph, the term ``citizen of
Mexico'' means ``citizen'' as defined in Annex 1608 of such
Agreement.
(2) Notwithstanding any other provision of this Act except
section 212(t)(1), and subject to regulations promulgated by
the Secretary of Homeland Security, an alien who seeks to enter
the United States under and pursuant to the provisions of an
agreement listed in subsection (g)(8)(A), and the spouse and
children of such an alien if accompanying or following to join
the alien, may be denied admission as a nonimmigrant under
subparagraph (E), (L), or (H)(i)(b1) of section 101(a)(15) if
there is in progress a labor dispute in the occupational
classification at the place or intended place of employment,
unless such alien establishes, pursuant to regulations
promulgated by the Secretary of Homeland Security after
consultation with the Secretary of Labor, that the alien's
entry will not affect adversely the settlement of the labor
dispute or the employment of any person who is involved in the
labor dispute. Notice of a determination under this paragraph
shall be given as may be required by such agreement.
* * * * * * *
Chapter 9--Miscellaneous
* * * * * * *
disposition of moneys collected under the provisions of this title
Sec. 286. (a) * * *
* * * * * * *
(s) H-1B Nonimmigrant Petitioner Account.--
(1) In general.--There is established in the general
fund of the Treasury a separate account, which shall be
known as the ``H-1B Nonimmigrant Petitioner Account''.
Notwithstanding any other section of this title, there
shall be deposited as offsetting receipts into the
account all fees collected under [section 214(c)(9).]
paragraphs (9) and (11) of section 214(c).
* * * * * * *