Senate Report 108-317 - UNITED STATES-MOROCCO FREE TRADE AGREEMENT IMPLEMENTATION ACT

[Senate Report 108-317]
[From the U.S. Government Publishing Office]

Calendar No. 651
108th Congress Report
SENATE
2d Session 108-317

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UNITED STATES-MOROCCO FREE TRADE AGREEMENT IMPLEMENTATION ACT

_______

August 25, 2004.--Ordered to be printed

Filed, under authority of the order of the Senate of July 22, 2004

_______

Mr. Grassley, from the Committee on Finance, submitted the following

R E P O R T

[To accompany S. 2677]

[Including cost estimate of the Congressional Budget Office]

The Committee on Finance, to which was referred the bill
(S. 2677) to implement the United States-Morocco Free Trade
Agreement, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.

CONTENTS

Page
I. Report and Other Committee Material...............................2
A. Report of the Committee on Finance.................... 2
B. Summary of Congressional Consideration of the United
States-Morocco Free Trade Agreement.................. 2
1. Background........................................ 2
2. Trade Promotion Authority Procedures in General... 2
3. Notification Prior to Negotiations................ 3
4. Notification of Intent To Enter Into an Agreement. 3
5. Development of the Implementing Legislation....... 3
6. Formal Submission of the Agreement and
Implementing Legislation......................... 4
7. Committee and Floor Consideration................. 4
C. Trade Relations With Morocco.......................... 5
1. United States-Morocco Trade and Investment........ 5
2. Tariffs and Trade Agreements...................... 6
3. U.S. International Trade Commission Study......... 8
D. Overview of the United States-Morocco Free Trade
Agreement............................................ 8
1. Overview of the Agreement......................... 8
2. Chapter Summaries................................. 10
E. General Description of the Bill To Implement the
United States-Morocco Free Trade Agreement........... 28
Title I--Approval of, and General Provisions Relating to, the
Agreement........................................................28
Title II--Customs Provisions.....................................30
Title III--Relief From Imports...................................32
F. Vote of the Committee in Reporting the Bill........... 37
II. Budgetary Impact of the Bill.....................................38
III.Regulatory Impact of the Bill and Other Matters..................39

IV. Changes in Existing Law Made by the Bill, as Reported............39

I. REPORT AND OTHER COMMITTEE MATERIAL

A. Report of the Committee on Finance

B. Summary of Congressional Consideration of the United States-Morocco
Free Trade Agreement

1. Background

On April 23, 2002, President George W. Bush met with His
Majesty King Mohammed VI of Morocco at the White House. In the
Oval Office meeting, President Bush expressed his desire to
negotiate a comprehensive free trade agreement with Morocco as
soon as Congress granted him the authority, and King Mohammed
likewise expressed his interest in negotiating such an
agreement. On August 6, 2002, President Bush signed the Trade
Act of 2002 (Pub. L. 107-210), which grants the President the
authority to enter into trade agreements and provides expedited
procedures for consideration of legislation implementing trade
agreements that meet certain objectives provided for under the
Act. On October 1, 2002, President Bush authorized and directed
Ambassador Robert B. Zoellick, U.S. Trade Representative, to
notify Congress of the President's intention to enter into
negotiations for a free trade agreement with the Kingdom
ofMorocco. In letters dated October 1, 2002, to the Honorable Robert C.
Byrd, President Pro Tempore, U.S. Senate, and to the Honorable J.
Dennis Hastert, Speaker, U.S. House of Representatives, Ambassador
Zoellick notified Congress of the President's intention to negotiate a
trade agreement with Morocco. On January 21, 2003, the United States
and Morocco initiated negotiations for a free trade agreement, and the
negotiations were completed on March 2, 2004. On March 8, 2004,
President Bush notified Congress of his intention to enter into the
United States-Morocco Free Trade Agreement. U.S. Trade Representative
Robert B. Zoellick and Minister-Delegate of Foreign Affairs and
Cooperation Taib Fassi-Fihiri signed the Agreement on behalf of their
respective governments in Washington, DC, on June 15, 2004.

2. Trade Promotion Authority Procedures in General

The requirements for Congressional consideration of the
United States-Morocco 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 of 2002 (the
Act) (19 U.S.C. Sec. Sec. 3803-3806) and section 151 of the
Trade Act of 1974 (19 U.S.C. Sec. 2191).
Section 2103 of the Act authorizes the President, prior to
June 1, 2005 (or, prior to June 1, 2007, if TPA 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 Act, the President must
provide written notice to the Congress at least 90 calendar
days before initiating negotiations. In a Presidential
Memorandum dated October 1, 2002, President Bush authorized and
directed Ambassador Robert B. Zoellick, U.S. Trade
Representative, to notify the Congress, consistent with section
2104(a)(1) of the Act, of the President's intention to enter
into negotiations for a free trade agreement with Morocco.
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. The
Administration engaged in the requisite consultations,
including appearances by Ambassador Zoellick at meetings of the
Congressional Oversight Group on January 7, 2003, April 11,
2003, July 24, 2003, and May 6, 2004.

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 the agreement.
On March 8, 2004, President George W. Bush notified Congress of
his intention to enter into the United States-Morocco Free
Trade Agreement. The Agreement was signed on June 15, 2004.
Section 2105(a)(1)(B) of the Act also requires the
President, within 60 days of signing an agreement, to submit to
Congress a description of changes to existing laws that the
President considers would be required to bring the United
States into compliance with such agreement. On July 15, 2004,
the President transmitted to Congress a description of changes
to existing laws required to comply with the Agreement.

5. Development of the Implementing Legislation

Under TPA procedures, the Congress and the Administration
work together to produce the legislation to implement a free
trade agreement. Draft legislation is developed in close
consultation between the Administration and the Committees with
jurisdiction over the laws that must be enacted or amended to
implement the agreement. The Committees then hold informal
meetings to consider the draft legislation and recommend
changes to the Administration, if any. The Administration then
finalizes implementing legislation for formal submission to the
Congress and referral to the Committees of jurisdiction. These
procedures are meant to ensure that the final legislation
reflects only those provisions that are necessary or
appropriate to faithfully implement the agreement.
The Senate Committee on Finance met in open executive
session on July 14, 2004, to informally consider draft
implementing legislation for the Agreement.

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-Morocco 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,
2004. 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-Morocco
Free Trade Agreement and the Statement of Administrative Action
and contains provisions necessary or appropriate to implement
the Agreement into U.S. law--was referred to the Senate
Committee on Finance.

7. Committee and Floor Consideration

When the requirements of the Act are satisfied,
implementing revenue bills, such as the United States-Morocco
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 session 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 in session after the
Committees report the bill or are discharged from
further consideration.
(iii) Senate Committees must act within 15 days in
session of receiving the implementing revenue bill from
the House or within 45 days in session of Senate
introduction of the implementing bill, whichever is
later, or they will be discharged automatically.
(iv) The full Senate then must vote within 15 days in
session and without amendment on the implementing bill.
Thus, the Congress has a maximum of 90 days in session 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 in each House
is limited to no more than 20 hours, to be equally divided
between those favoring the bill and those opposing the bill.

C. Trade Relations With Morocco

1. United States-Morocco Trade and Investment

The World Bank ranks Morocco as a middle income developing
country. Morocco's gross domestic product (GDP) is 1.1 percent
of U.S. GDP, while Morocco's population is 10 percent of the
population of the United States. Services account for almost
one-half of Morocco's GDP, while the agriculture sector employs
more than one-third of Morocco's labor force. Morocco is the
leading exporter and third-largest producer of phosphates
(after the United States and China). Related industries include
the production of fertilizers and phosphoric acid. Morocco also
has a diverse manufacturing base, with over one-third of
Moroccan exports accounted for by apparel and footwear in 2002.
Relative to other trading partners, U.S. trade with Morocco
is small. U.S. exports to Morocco in 2003 were valued at $462
million, ranking Morocco as the 69th largest market for U.S.
exports that year. Foreign direct investment in Morocco
experienced a net increase during the period 1996-2001,
reflecting the Government's privatization efforts. The
telecommunications sector experienced the largest share of
foreign direct investment during this period, reflecting the
high priority the Moroccan Government has given to developing a
modern and competitive telecommunications sector. During 1996-
2001, the United States was Morocco's third-largest investor,
following France and Portugal. However, U.S. service firms are
effectively prohibited from competing in large segments of
Morocco's service economy due to Government bans on foreign
participation or the imposition of onerous requirements. The
Agreement will improve regulatory transparency and open
Morocco's market to U.S. service suppliers.
U.S. imports from Morocco in 2003 were valued at $396
million, ranking Morocco as the 82nd largest supplier of U.S.
imports that year. Approximately 5 percent of U.S. imports from
Morocco entered duty-free under the Generalized System of
Preferences (GSP) program. However, import/export and
investment data alone fail to capture Morocco's full importance
as a trading partner of the United States. In May 2003,
President Bush announced the goal of working toward a Middle
East Free Trade Area (MEFTA) by the year 2013. On July 22,
2004, the report of the 9/11 Commission (Final Report of the
National Commission on Terrorist Attacks Upon the United
States) was released; that report contains, as one of its key
recommendations, that a ``comprehensive U.S. strategy to
counter terrorism should include economic policies that
encourage development, more open societies, and opportunities
for people to improve the lives of their families and to
enhance prospects for their children's future.'' The Agreement
with Morocco is an important achievement in that effort.
Moreover, Morocco is an emerging market at the crossroads
of Europe, Africa, and the Middle East. The democratically-
elected Moroccan government has launched a comprehensive
economic reform program that is aimed at reducing inflation,
developing the tourism sector and liberalizing and privatizing
key sectors, such as telecommunications. The Agreement, with
its emphasis on the rule of law, improved competition and trade
liberalization, will enhance and solidify those reforms. The
Government of Morocco has also launched an initiative to
streamline investment procedures and eliminate barriers to
foreign and domestic investment. New investment will reinforce
Morocco's liberalization efforts and spur economic growth and
job creation. The Agreement will help to accelerate these
positive developments, to the benefit of both Parties.
The Agreement thus serves as a strong precedent and
building block for the development of MEFTA by the year 2013.
As the report of the 9/11 Commission notes, the Agreement
withMorocco joins free trade agreements between the United States and
Israel, Jordan, and Bahrain (concluded but not implemented by the date
of this Report), to serve as models to help other nations in the Middle
East become full participants in the rules-based global trading system.
The Agreement is therefore an important part of a broader effort to
encourage development, more open societies, and opportunities for
people to improve the lives of their families and to enhance prospects
for their children's future, throughout the Middle East.

2. Tariffs and Trade Agreements

In the World Trade Organization (WTO), Morocco has bound
its tariffs at ad valorem rates ranging from zero to 380
percent. According to WTO estimates, Morocco's simple average
bound rate is approximately 42 percent.
Morocco has negotiated regional trade agreements with: the
European Free Trade Association (Iceland, Liechtenstein,
Norway, and Switzerland); the European Union; and the Arab Free
Trade Area (Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon,
Libya, Oman, Palestinian Authority, Qatar, Saudi Arabia, Sudan,
Syria, Tunisia, United Arab Emirates, and Yemen). A free trade
agreement with the Gulf Cooperation Council (Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia, and the United Arab Emirates) is in
the early stages of discussion. Morocco also has bilateral
trade agreements with Turkey (signed April 2004), as well as
Egypt (signed May 1998, entered into force April 1999), Jordan
(signed June 1998, entered into force October 1999), and
Tunisia (signed March 1999, entered into force March 1999).
Geographic proximity and historical ties to Spain and France
have created a longstanding trading relationship between
Morocco and Europe. The United States-Morocco Free Trade
Agreement will improve the competitiveness of U.S. exporters
vis-a-vis their European competitors in the Moroccan market.
Under the United States-Morocco Free Trade Agreement,
immediate duty-free access will be provided to more than 90
percent of Morocco's imports of non-agricultural goods from the
United States. The Agreement also enhances access to the
Moroccan market for U.S. agricultural products. Significantly,
Morocco will provide preferential market access on all
agricultural products according to schedules negotiated on a
product-specific basis. Thus, as in virtually every other
bilateral trade agreement to which the United States is a
party, no agricultural products are excluded from trade
liberalization commitments under the Agreement. Preferential
tariff phase-outs on most products will occur in equal annual
installments over the following phase-out periods: immediate, 5
years, 8 years, 10 years, 12 years, 15 years, and 18 years.
Tariffs on other products will be phased out using non-linear
formulas applied over 6 years, 18 years, 19 years and 25 years.
Additional tariff cutting formulas apply to certain items on
which Morocco will establish preferential tariff-rate quotas
(TRQs).
The Agreement establishes preferential TRQs for high
quality and standard quality beef, whole birds (chicken and
turkey), leg quarters, durum wheat, non-durum wheat, almonds,
and apples. The details of the preferential TRQs vary by
product, but in general, the imported product receives a
preferential duty reduction for a specific quantity that
expands over time. Volumes imported over the specific amounts
have higher tariffs. The lower in-quota tariffs are eliminated,
except for common wheat, as are the higher over-quota tariffs,
except for durum wheat, non-durum wheat, and standard quality
beef. In addition, the Agreement contains a provision
(``preference clause'') that will afford U.S. exporters of
products such as wheat, beef, poultry, corn, soybeans, and corn
and soybean products any better market access that Morocco
gives to other trading partners, thereby ensuring that U.S.
exporters will be able to continue competing with Europe and
others in Morocco's market on an equal footing well into the
future.

U.S. EXPORTS TO MOROCCO 1998-2003
[In millions of U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Top 15 products, by HTS chapter 1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------------------
88 Aircraft.............................................. 136.2 143.0 148.4 17.0 295.1 131.3
10 Cereals............................................... 75.8 93.6 126.6 59.8 50.0 75.1
12 Oil seeds............................................. 12.7 21.3 17.8 16.1 37.1 56.8
84 Machinery............................................. 68.5 53.2 52.6 40.7 39.7 37.9
27 Fuels................................................. 10.2 4.1 35.5 24.9 10.6 26.6
85 Electrical machinery.................................. 18.8 30.9 35.3 21.5 16.5 19.3
90 Optical, medical equipment............................ 5.0 6.4 5.7 9.3 7.7 13.8
15 Animal or vegetable fats and oils..................... 22.4 25.9 2.2 1.2 18.9 13.7
98 Special classifications............................... 4.2 5.6 4.9 8.3 7.9 13.2
25 Earths and stone...................................... 3.1 1.8 6.3 3.5 6.6 9.4
39 Plastics.............................................. 8.4 7.2 7.3 9.3 6.5 9.1
87 Vehicles.............................................. 19.0 11.6 7.3 6.2 8.6 8.4
48 Paper and paperboard.................................. 2.2 3.1 4.2 4.4 4.9 8.0
72 Iron and steel........................................ 0.1 0.4 0.2 0.6 1.6 6.4
29 Organic chemicals..................................... 2.3 1.9 5.0 6.2 2.4 3.5
-----------------------------------------------------
Subtotal for top 15 products........................ 388.9 410.1 459.2 228.9 514.2 432.4
Subtotal for all other U.S. exports................. 160 160.7 63.2 54.6 46.2 30.2
-----------------------------------------------------
Total U.S. exports to Morocco....................... 548.9 570.8 522.4 283.5 560.4 462.6
----------------------------------------------------------------------------------------------------------------
Note: HTS is the Harmonized Tariff Schedule of the United States.

Source: U.S. International Trade Commission Dataweb.

U.S. IMPORTS FROM MOROCCO 1998-2003
[In millions of U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Top 15 products, by HTS chapter 1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------------------
85 Electrical machinery.................................. 103.2 122.5 163.1 97.8 119.1 107.4
25 Earths and stone...................................... 62.8 78.4 60.4 66.1 85.1 69.5
62 Apparel, not knitted or crocheted..................... 67.9 69.8 79.4 73.9 52.3 49.1
8 Fruit and nuts........................................ 1.2 6.0 1.4 0.3 13.4 30.4
61 Apparel, knitted or crocheted......................... 24.7 19.8 16.0 21.9 23.1 26.7
16 Preparations of meat.................................. 19.8 18.3 22.7 20.8 18.2 21.7
20 Preparations of vegetables............................ 18.6 19.4 19.4 20.0 22.7 19.8
27 Fuels................................................. 6.0 7.8 30.8 54.6 8.9 18.4
7 Vegetables............................................ 3.5 8.9 7.1 6.4 7.4 7.9
13 Resins and vegetable extracts......................... 8.2 7.1 8.1 6.7 5.2 7.2
98 Special classifications............................... 6.2 6.5 5.0 8.2 11.0 5.5
94 Furniture............................................. 2.9 3.8 3.7 3.1 2.6 3.0
28 Inorganic chemicals................................... 3.6 10.5 12.7 18.7 7.3 2.8
64 Footwear.............................................. 1.3 2.1 2.4 4.0 2.0 2.4
33 Essential Oils........................................ 1.4 2.3 1.8 1.3 0.9 2.3
-----------------------------------------------------
Subtotal for top 15 products........................ 331.4 383.2 434.2 404 379.1 374.1
Subtotal for all other U.S. imports................. 20.8 30.9 22 48.5 30.5 22
-----------------------------------------------------
Total U.S. imports from Morocco..................... 352.2 414.1 456.2 452.5 409.6 396.1
----------------------------------------------------------------------------------------------------------------
Note: HTS is the Harmonized Tariff Schedule of the United States.

Source: U.S. International Trade Commission Dataweb.

3. U.S. International Trade Commission Study

In June 2004, the U.S. International Trade Commission (ITC)
released the results of its investigation (Investigation No.
TA-2104-14) into the probable economic effects of a United
States-Morocco Free Trade Agreement. The ITC concluded that
when the economy-wide effects of the Agreement's tariff
liberalization are fully implemented and all economic
adjustments have occurred under the Agreement, the overall
welfare benefit to U.S. consumers should increase in the range
of $110.5 million to $131.6 million. The report projected that
U.S. exports to Morocco are likely to increase by $740.0
million, and U.S. imports from Morocco are likely to increase
by $198.6 million after full implementation of the Agreement.
The ITC's analysis indicates the sectors showing the greatest
value increase in U.S. exports to Morocco under the Agreement
are: grains; processed food and tobacco; machinery and
equipment; petroleum, coal, chemicals, rubber, and plastic
products; and textiles and apparel. The greatest increases in
the value of imports from Morocco are estimated to occur in
textiles and apparel and in processed food and tobacco.

D. Overview of the United States-Morocco Free Trade Agreement

1. Overview of the Agreement

The United States-Morocco Free Trade Agreement establishes
a bilateral free trade area that eliminates tariffs on most
bilateral merchandise trade. The Committee notes that the
Agreement will cover trade and investment in the territory of
Morocco as recognized by the United States, which currently
does not include the Western Sahara. The Agreement liberalizes
trade in services, and contains provisions that cover
investment, intellectual property, environment, labor, and
government procurement. The Agreement also contains a mechanism
for settling disputes that arise under the Agreement.
Throughout the Agreement there are important provisions that
promote bilateral consultation and cooperation, procedural and
substantive due process, administrative and judicial review,
transparency, and the rule of law.
Morocco is an emerging market that imported nearly $13
billion worth of goods in 2003, of which the United States
supplied over $462 million. Morocco's average bound rate of
duty is 42 percent ad valorem, and its average applied rate for
U.S. exports is 20 percent. By comparison, Moroccan exports to
the United States are subject to an average tariff of 4 percent
ad valorem because Morocco is eligible for duty-free treatment
under the U.S. Generalized System of Preferences (GSP) program.
The Agreement will eliminate this disparity in tariff levels.
Under the Agreement, more than 90 percent of bilateral trade in
consumer and industrial products will become duty-free on the
day that the Agreement is implemented, with tariffs on the
remaining products being eliminated in 10 years. Such
significant market access results led the Office of the U.S.
Trade Representative to describe the Agreement with Morocco as
``the best market access package of any U.S. free trade
agreement with a developing country.''
Key U.S. export sectors that will gain immediate duty-free
access include information technologies, machinery,
construction equipment and chemicals. Also, textile and apparel
articles that meet the Agreement's rule of origin will become
duty-free. Tariffs on agricultural products such as sorghum,
corn, soybeans and soybean products, will be cut significantly
or eliminated immediately. U.S. producers of poultry and beef
will benefit from new tariff-rate quotas that grow over time,
and U.S. wheat farmers will benefit from new tariff-rate quotas
on durum and common wheat that could lead to five-fold
increases in U.S. exports. The American Farm Bureau Federation
estimates that the Agreement will result in a 10-to-1 gain in
U.S.agricultural exports, compared to increased imports of
agricultural goods from Morocco, by the year 2015.
The Agreement also liberalizes markets for services,
including financial services and telecommunications,
establishes new protections for U.S. investors, strengthens
penalties for piracy and counterfeiting, and provides strong
protections for labor and the environment. It is noteworthy
that the negotiation of an FTA with the United States prompted
the Government of Morocco to complete a comprehensive reform of
its labor laws that took effect on June 8, 2004.
Finally, Morocco has begun implementing an association
agreement with the European Union (EU). The association
agreement, which covers only industrial products, gives EU
companies a competitive advantage in the Moroccan market.
Importantly, the United States-Morocco Free Trade Agreement
will give U.S. exporters of industrial products a chance to
compete in the Moroccan market on equal terms with European
competitors. Moreover, the Agreement gives U.S. agricultural
producers significant tariff advantages over competitors in the
EU and elsewhere.

2. Chapter Summaries

Establishment of a Free Trade Area and Definitions. Chapter
1 provides a number of general definitions that apply
throughout the Agreement, unless otherwise specified. Chapter 1
also provides that the Agreement establishes a free trade area
in accordance with the provisions of the Agreement, and
consistent with Article XXIV of the General Agreement on
Tariffs and Trade 1994 (GATT 1994) and Article V of the General
Agreement on Trade in Services (GATS).
Under Chapter 1, the Parties generally affirm their rights
and obligations under existing bilateral and multilateral
agreements, including the Marrakesh Agreement Establishing the
World Trade Organization (WTO). However, upon the entry into
force of the Agreement, Article VI (Investor-State dispute
settlement) and Article VII (State-State dispute settlement) of
the Treaty Between the United States of America and the Kingdom
of Morocco Concerning the Encouragement and Reciprocal
Protection of Investments, with Protocol (signed July 22,
1985), are suspended. Nevertheless, Articles VI and VII of the
bilateral investment treaty with Morocco will continue to
apply, for a period of 10 years from the date of entry into
force of the Agreement, with respect to investments covered by
the Treaty and with respect to disputes that arose prior to the
date of entry into force of the Agreement.
National Treatment and Market Access for Goods. Chapter 2
sets forth the core obligations under the Agreement with
respect to two-way trade in goods. Article 2.2 provides that
each Party shall accord national treatment to the goods of the
other Party in accordance with Article III of GATT 1994.
Article 2.3 provides that each Party shall progressively
eliminate its customs duties on originating goods of the other
Party in accordance with its schedule provided for in Annex IV
(Tariff Elimination) of the Agreement. The term ``originating
good'' is defined in Article 5.1 of the Agreement.
Article 2.5 provides that each Party shall grant duty-free
temporary admission for certain types of goods, regardless of
origin. Such types of goods include goods intended for display
or demonstration, commercial samples and advertising films and
recordings, and goods imported for sports purposes. Article 2.6
provides duty-free treatment for goods that are imported after
having been exported temporarily to the other Party for repair
or alteration, and for goods that are imported temporarily for
repair or alteration.
Annex IV of the Agreement contains the general staging
categories for tariff elimination, and a specific, item-by-item
schedule of tariff elimination for each Party. Under the
general staging categories, originating goods will either: (1)
remain duty-free, if they are currently duty-free; (2) become
duty-free on the date that the Agreement enters into force; (3)
become duty-free after equal annual reductions over 2 to 15
years; or, (4) become duty-free after non-linear reductions
over 6, 10, or 18 years. In addition, there are some special
staging categories for certain products that are set forth in
the general notes that accompany each Party's Schedule to Annex
IV. Finally, Morocco agreed that, for certain specified
agricultural products, if Morocco should ever provide market
access to another trading partner on better terms compared to
the market access granted to the United States under the
Agreement, then Morocco would immediately grant such better
market access to the United States.
A number of product-specific preferential tariff-rate
quotas (TRQs) for certain sensitive products are included in an
annex to the general notes accompanying the Schedule of the
United States in Annex IV. Products covered by preferential
TRQs include beef, cotton, dairy, dried garlic, dried onions,
peanuts, sugar, tobacco, tomato products, and wine.
Separately, in Annex 2-A of the Agreement, each Party
exempts certain measures from the national treatment obligation
of the Agreement and the prohibition on import or export
restrictions. The United States exempts its controls on the
export of U.S. logs and certain measures under the Merchant
Marine Act of 1920 and the Passenger Vessel Act.
Agriculture. Chapter 3 sets out rules for the
administration and implementation of the Parties' tariff rate
quotas (TRQs). Among these rules, each Party shall ensure: that
its procedures for administering its TRQs are transparent and
are minimally burdensome to trade; that solely government
authorities administer its TRQs; and that in-quota quantities
are allocated in commercially viable shipping quantities.
Chapter 3 also provides that neither Party may condition
application for, or use of, an import license or an allocation
under a TRQ on the re-export of an agricultural good. Further,
neither Party may count food aid in determining whether an in-
quota quantity under a TRQ has been filled.
The Parties agree to work together in WTO negotiations to
seek an agreement in the WTO to eliminate export subsidies for
agricultural goods. Except as noted immediately below, the
Parties agree not to introduce or maintain any export subsidy
on any agricultural good destined for the territory of the
other Party. Where an exporting Party considers that a non-
Partyis exporting an agricultural good to the territory of the
other Party with the benefit of export subsidies, the importing Party
shall, on written request of the exporting Party, consult with the
exporting Party with a view to agreeing on specific measures that the
importing Party may adopt to counter the effect of such subsidized
imports. If the importing Party adopts the agreed-on measures, the
exporting Party shall refrain from applying any export subsidy to
exports of such good to the territory of the importing Party. The
Parties are also committed to work together in WTO negotiations to
bring new disciplines to state trading enterprises (STEs).
Under the Agreement, the Parties may apply safeguard
measures on certain agricultural products listed in each
Party's Schedule to Annex 3-A. The United States may apply a
price-based safeguard on certain horticultural products--
including canned olives, dried garlic, and orange juice--if the
relevant good enters the United States at a unit import price
below a specified trigger price. Morocco may apply quantity-
based safeguard measures to certain agricultural products if,
in a calendar year, the volume of imports of a relevant good
exceeds the specified volume of the good (specified volumes are
set out in the Agreement). The products to which Morocco may
apply these safeguards are: whole birds (chicken and turkey);
leg quarters and wings (chicken); chickpeas; lentils; dried
prunes; and certain bitter almonds. A side letter delineates
the particular bitter almonds to which the safeguard may be
applied. Morocco may maintain an agricultural safeguard measure
on any of the above-listed products until the end of the
calendar year in which the measure is first applied.
The Agreement sets maximum rates for the application of
such a safeguard, i.e., the sum of such additional duty and any
other customs duty shall not exceed the lesser of the
prevailing normal trade relation/most-favored-nation (NTR/MFN)
applied rate of duty or the NTR/MFN applied rate of duty in
effect on the day immediately preceding the date of entry into
force of the Agreement. The Agreement stipulates that neither
Party may apply or maintain an agricultural safeguard measure
under the Agreement and at the same time apply or maintain,
with respect to the same good, a safeguard measure under
Chapter 8 (Safeguards) of the Agreement or a measure under both
Article XIX of GATT 1994 and the Safeguards Agreement. Neither
Party may impose an agricultural safeguard measure on a good
once the good is subject to duty-free treatment under the
Agreement.
The Parties affirm their desire to provide a forum, through
the Joint Committee established under Article 19.2 or a
subcommittee established thereunder, to address agricultural
trade matters under the Agreement, including sanitary and
phytosanitary matters.
The United States and Morocco affirm their existing rights
and obligations under the Agreement on the Application of
Sanitary and Phytosanitary Measures of the WTO. The Parties
also agree that neither Party may have recourse under the
Agreement for any disputes between them involving sanitary or
phytosanitary measures.
The Agreement states that Morocco may establish an import
licensing program for imports of high-quality beef from the
United States, to provide that the beef is sold to, or imported
by, hotels or restaurants designated on lists agreed to by the
Parties. The Agreement provides, inter alia, that Morocco shall
implement and administer any such import licensing program in
accordance with Article VIII of GATT 1994 and the WTO Agreement
on Import Licensing Procedures, and that Morocco shall limit
the amount of any fees charged in connection with an import
license to the cost of services rendered in processing the
license application. Further, the Parties shall review and
update the lists of eligible hotels and restaurants at least
once a year.
Morocco may implement and administer an auction system for
in-quota quantities of the TRQs on U.S. durum and non-durum
wheat provided for in the Agreement. Morocco's auction policies
and procedures shall be, inter alia, transparent and
implemented in a manner that minimizes the cost of
participation in the auction. Morocco shall ensure that solely
government authorities administer its auctions and that its
auctions are held on a regular basis. Moreover, Morocco shall
award licenses under the auction system in commercially viable
shipping quantities and in a manner that encourages
competition. Morocco also shall not condition application for,
or use of, an auction license on the re-exportation of the
auctioned good.
The Agreement's Side Letter on Certification Accompanying
U.S. Beef and Poultry states that beef and poultry imports must
be accompanied by an export certificate to be allowed entry
into Morocco. The letter provides that Morocco's veterinary
services, in cooperation with the Food Safety and Inspection
Service of the U.S. Department of Agriculture, will work
together in good faith to define the content of the
certificates that will accompany U.S. beef and poultry imports.
The Parties also agree upon certain acceptable language for
inclusion in the certificates.
Textiles and Apparel. Chapter 4 establishes the rules that
govern bilateral trade in textile and apparel goods under the
Agreement. Article 4.1 provides that each Party shall eliminate
its customs duties on originating textile and apparel goods in
accordance with its schedule in Annex IV of the Agreement.
Tariffs on originating goods will be phased out over 10 years
or less, though some originating apparel will be eligible for
immediate duty-free treatment under a TRQ.
The Agreement contains a specific safeguard mechanism for
textiles and apparel, and specific rules of origin for textile
and apparel goods. The rules of origin for textiles and apparel
include a ``fiber forward'' rule of origin for yarns and knit
fabrics, and a ``yarn forward'' rule of origin for woven
fabrics and apparel. Under a ``fiber forward'' rule, the fiber
must come from one of the Parties in order for the finished
product to qualify for preferential treatment under the
Agreement. Under a ``yarn forward'' rule, the fiber may be
imported but the yarn must be produced in one of the Parties in
order for the finished product to qualify for preferential
treatment under the Agreement--as long as all processes
subsequent to the yarn manufacturing stage occur within a Party
to the Agreement. For apparel, the rule of origin applies only
to the component that determines the tariff classification of
the apparel (i.e., the component that determines the
``essential character'' of the apparel). Visible lining fabrics
are subject to a ``yarn forward'' rule.
The Agreement provides for consultations, and the
possibility of modifying the rules of origin, to address the
availability of fibers, yarns or fabrics, and whether any given
input is produced in sufficient commercial quantities in a
timely manner. The Agreement contains a ``de minimis'' rule,
which provides that a good that does not satisfy the rule of
origin because certain fibers or yarns used in the production
of the component that determines the tariff classification of
the good do not undergo an applicable change in tariff
classification, may nonetheless qualify for preferential
treatment under the Agreement as long as the total weight of
such fibers or yarns in that component is not more than 7
percent of the total weight of the component. Article 4.1.7
provides so-called tariff preference levels (TPLs) for certain
fabric goods that are made with third-country fiber or yarn,
and certain apparel goods that are made with third-country yarn
or fabric, as provided in Annex 4-B. The Agreement preserves
the Berry Amendment for U.S. military procurement, which
provides that textiles and apparel for the military must be
made in the United States from U.S. inputs.
The Agreement contains a provision on customs cooperation.
Article 4.4 provides that the Parties shall cooperate: (1) to
enforce measures affecting trade in textile and apparel goods;
(2) to verify the accuracy of claims of origin; (3) to enforce
measures implementing international agreements affecting trade
in textile and apparel goods; and (4) to prevent circumvention
of such international agreements. Article 4.4 provides for
facility inspections, examinations of records, and other forms
of verification, to determine the accuracy of claims of origin
for textile and apparel goods and to determine that exporters
and producers are complying with applicable laws, regulations,
and procedures regarding trade in textile and apparel goods.
Under Articles 4.4.2 and 4.4.3, the United States may
request that Morocco: conduct a verification; allow the United
States to conduct a verification; or, collaborate with the
United States in conducting a verification, with respect to a
Moroccan exporter or producer. The object of a verification
under Article 4.4.2 is to determine that a claim of origin for
a textile or apparel good is accurate. The object of a
verification under Article 4.4.3 is to determine that an
exporter or producer is complying with applicable customs laws,
regulations, and procedures, and that claims of origin for
textile or apparel goods exported or produced by that person
are accurate.
Under Article 4.4.6 of the Agreement, the United States may
take appropriate action during a verification, including
suspending the application of preferential tariff treatment to
textile or apparel goods that are subject to verification or
that are exported or produced by a person subject to
verification. Under Article 4.4.8, if within 12 months after
requesting a verification, the United States is unable to make
a determination, or the United States makes a negative
determination, the United States may then deny preferential
tariff treatment to the textile or apparel good that is subject
to verification or is produced or exported by the person
subject to verification.
Rules of Origin. Rules of origin are used to determine
whether a good is an originating good for purposes of the
Agreement. A good must be an originating good in order to
qualify for preferential treatment under the Agreement. Chapter
5 provides the general rules of origin for goods under the
Agreement. Under Article 5.1, a good is an originating good if:
(1) it is wholly the growth, product, or manufacture of one or
both Parties; (2) for a good other than goods covered by either
Annex 4-A or Annex 5-A of the Agreement, it is a new or
different article of commerce that has been grown, produced, or
manufactured in the territory of one or both Parties and the
good satisfies a 35 percent local value requirement; or (3) it
is a good covered by Annex 4-A or Annex 5-A of the Agreement.
The second of these rules of origin is akin to the substantial
transformation rules of origin included in the Agreement on the
Establishment of a Free Trade Area between the Government of
the United States of America and the Government of Israel,
entered into on April 22, 1985, and the Agreement between the
United States of America and the Hashemite Kingdom of Jordan on
the Establishment of a Free Trade Area, entered into on October
24, 2000. Chapter 5 rules of origin apply to textile and
apparel goods unless otherwise provided in Chapter 4 of the
Agreement (Textiles and Apparel).
The term ``wholly the growth, product or manufacture'' is
defined in Article 5.14, and includes, for example, minerals
extracted in the territory of either Party, vegetables
harvested in the territory of either Party, and live animals
born and raised in the territory of either Party. A new or
different article of commerce is a good that has been
substantially transformed from a good or material that is not
wholly the growth, product, or manufacture of one or both
Parties and that has a new name, character, or use distinct
from the good or material from which it was so transformed. A
side letter to the Agreement provides that, in determining
whether a good is a new or different article of commerce for
purposes of the Agreement, the Parties should be guided by the
specific rules of origin set forth in section 102.20 of the
U.S. Customs Regulations (19 CFR Sec. 102.20). Additional rules
of origin for textile and apparel articles are provided for in
Annex 4-A of the Agreement.
An importer claiming preferential treatment under the
Agreement shall be deemed to certify that the subject good
qualifies for such treatment, but must be prepared to submit a
declaration with all relevant information--including a
description of the good, the production operations, the direct
costs of processing, and the foreign materials used. If
preferential treatment under the Agreement is denied, a written
determination must be issued that contains findings of fact and
the legal basis for the denial. The Parties shall consult and
cooperate to ensure the effective and uniform application of
the rules of origin.
Customs Administration. Chapter 6 contains standard customs
provisions that provide for transparency, due process, and the
rule of law. These provisions concern: the prompt publication
of customs laws, regulations, guidelines, procedures, and
administrative rulings on the Internet and in print form; the
designation of one or more official contacts for information
requests; a notice and comment process prior to any regulatory
changes; the opportunity to obtain advance written rulings
regarding tariff classification, valuation, origin, and whether
a product qualifies for preferential treatment under the
Agreement; and, an opportunity for administrative and judicial
review of administrative decisions. The Agreement provides for
mutual cooperation in implementing the Agreement and prior
notice of any significant modification of administrative
policy. The Agreement includes provisions calling for the
release of goods within 48 hours ofarrival (to the extent
possible), risk assessment procedures to focus inspection activities on
high-risk goods, and expedited procedures for express shipments (i.e.,
under normal circumstances, release of an express shipment no later
than six hours after the required information has been submitted).
Sanitary and Phytosanitary Measures. In a Joint Statement
that is part of the Agreement, the Parties affirm their support
for the full implementation of the WTO Agreement on the
Application of Sanitary and Phytosanitary Measures (SPS
Agreement) and pledge to enhance bilateral SPS cooperation. The
Parties agree to establish a Working Group on SPS Cooperation
and to engage in activities that promote full implementation of
the SPS Agreement, facilitate bilateral trade, and support
Moroccan agricultural reform.
Technical Barriers to Trade. Chapter 7 applies to all
standards, technical regulations and conformity assessment
procedures of the central level of government that may,
directly or indirectly, affect trade in goods between the
Parties. The Agreement provides for enhanced cooperation and
consultation with respect to technical barriers to trade. In
Article 7.2, the Parties affirm their existing rights and
obligations under the WTO Agreement on Technical Barriers to
Trade (TBT Agreement). The Parties commit to intensify their
joint work in the field of standards, technical regulations,
and conformity assessment procedures, with a view to
facilitating access to each other's markets.
Article 7.5 provides that the Parties shall intensify their
exchange of information on a broad range of mechanisms that may
be used to facilitate the acceptance in a Party's territory of
the results of conformity assessment procedures conducted in
the other Party's territory. Article 7.6 provides that each
Party shall allow persons of the other Party to participate in
the development of standards, technical regulations, and
conformity assessment procedures, on terms no less favorable
than those accorded to its own persons.
Safeguards. Chapter 8 provides for a transitional bilateral
safeguard mechanism. If, as a result of the reduction or
elimination of a customs duty according to the terms of the
Agreement, an originating good of the other Party is being
imported into the territory of a Party in such increased
quantities, in absolute terms or relative to domestic
production, and under such conditions that the imports of such
originating good constitute a substantial cause of serious
injury, or threat thereof, to a domestic industry producing a
like or directly competitive good, that Party may: (1) suspend
the further reduction of any rate of customs duty on the good
provided for under the Agreement; (2) increase the rate of
customs duty on the good, to a level not to exceed the lesser
of the NTR/MFN rate of duty on the good in effect at the time
the action is taken and the NTR/MFN rate of duty on the good in
effect on the day before the Agreement enters into force; or
(3) in the case of a customs duty applied to a good on a
seasonal basis, increase the rate of customs duty on the good
to a level not to exceed the lesser of the NTR/MFN rate of duty
on the good in effect for the immediately preceding
corresponding season and the NTR/MFN rate of duty on the good
in effect on the day before the Agreement enters into force.
A Party may impose a bilateral safeguard measure only after
conducting an investigation in accordance with Articles 3 and
4.2(a) and (c) of the WTO Agreement on Safeguards, which are
incorporated by reference into the Agreement. A bilateral
safeguard measure can be imposed for an initial period no
longer than 3 years, and for safeguards applied for more than 1
year the Party must progressively liberalize the safeguard
measure at regular intervals. A bilateral safeguard measure may
be extended for up to 2 additional years if the Party
determines that the measure continues to be necessary to remedy
or prevent serious injury and to facilitate adjustment and that
there is evidence that the domestic industry is adjusting to
import competition. A bilateral safeguard measure may not be
imposed on the same good more than once.
A Party may impose a bilateral safeguard measure on a
provisional basis pursuant to a preliminary determination that
there is clear evidence that imports of an originating good
from the other Party have increased as a result of the
reduction or elimination of a customs duty under the Agreement,
and that such imports constitute a substantial cause of serious
injury, or threat thereof, to a domestic industry. The duration
of any provisional measure shall not exceed 200 days. If a
final determination is made that such imports are not a
substantial cause of serious injury, or threat thereof, the
Party shall promptly refund any tariff increases imposed on a
provisional basis. If a final determination is made that such
imports are a substantial cause of serious injury, or threat
thereof, the duration of any provisional measure shall be
counted toward the 3-year limitation on the initial period of
relief for a bilateral safeguard measure.
Upon termination of a safeguard measure, the rate of duty
on the good shall be the rate that would have been in effect,
but for the safeguard measure, according to the Party's
Schedule to Annex IV (Tariff Elimination) to the Agreement.
The Party imposing a bilateral safeguard measure shall
endeavor to provide mutually agreed-upon trade liberalizing
compensation in the form of concessions having substantially
equivalent trade effects, or equivalent value, compared to the
value of additional duties resulting from the safeguard
measure. 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 safeguard
measure. A Party may not impose a bilateral safeguard measure
after 5 years from the date on which the Party must eliminate
customs duties on the good according to that Party's Schedule
to Annex IV to the Agreement, unless the other Party consents.
Each Party retains its rights and obligations under Article
XIX of GATT 1994 and the WTO Agreement on Safeguards. The
Agreement does not confer any additional rights or obligations
on the Parties with respect to actions taken in accordance with
Article XIX of GATT 1994 and the WTO Agreement on Safeguards.
Government Procurement. Morocco is not a party to the WTO
Agreement on Government Procurement. Thus, by including strong
provisions on government procurement, the Agreement
significantly opens Morocco's government procurement market to
U.S. suppliersof goods and services. Chapter 9 applies to
``covered procurement,'' which is defined as the procurement of goods
and services by any contractual means, above a specified threshold in
value, by a specified procuring entity, and not otherwise excluded.
Each Party and its procuring entities shall accord national treatment
to the goods and services of the other Party and to the suppliers of
the other Party offering goods and services. A procuring entity may not
discriminate against a locally established supplier based upon that
supplier's degree of foreign ownership or based upon the fact that
goods or services offered by that supplier are goods or services of the
other Party. The Agreement prohibits the use of offsets in any stage of
a covered procurement. Offsets are defined as any conditions or
undertakings that require use of domestic content, domestic suppliers,
the licensing of technology, technology transfer, investment, counter-
trade, or similar actions to encourage local development or to improve
a Party's balance-of-payments accounts.
The Agreement requires each Party to promptly publish all
laws, regulations, procedures and policy guidelines, as well as
judicial decisions and administrative rulings of general
application, related to covered procurement. Each Party shall
ensure that suppliers may challenge and appeal procurement
decisions before an impartial body. Under the Agreement, each
Party shall also ensure that it is a criminal offense under its
law, in matters affecting international trade or investment, to
engage in or abet, or conspire to engage in, bribery, and each
Party shall have procedures to declare a supplier ineligible
for participation in the Party's procurements, either
indefinitely or for a specified time, if the Party has
determined that the supplier engaged in fraudulent or illegal
action in relation to procurement.
Investment. Chapter 10 applies to measures adopted or
maintained by a Party relating to investors of the other Party
and covered investments. Investment is defined to mean every
asset that an investor owns or controls, directly or
indirectly, that has the characteristics of an investment,
including such characteristics as the commitment of capital or
other resources, the expectation of gain or profit, or the
assumption of risk. Forms that an investment may take include,
inter alia: an enterprise; shares, stock, and other forms of
equity participation in an enterprise; bonds, debentures, other
debt instruments, and loans; futures, options, and other
derivatives; intellectual property rights; licenses, permits,
and similar rights conferred pursuant to domestic law; and
other tangible or intangible property and related property
rights, such as leases, mortgages, liens, and pledges.
Each Party shall accord national treatment most-favored-
nation treatment to investors of the other Party, and to
covered investments, with respect to the establishment,
acquisition, expansion, management, conduct, operation, and
sale or other disposition of investments. Each Party shall
accord to covered investments treatment in accordance with
customary international law, including fair and equitable
treatment and full protection and security.
Each party shall permit all transfers relating to a covered
investment to be made freely and without delay into or out of
its territory. Such transfers include, inter alia:
contributions to capital; profits, dividends, capital gains,
and proceeds from the sale or liquidation of some or all of the
covered investment; interest, royalty payments, management
fees, and technical assistance and other fees; payments made
under a contract, including a loan agreement; and payments
arising out of a dispute. Neither Party may impose or enforce
any performance requirement in connection with the
establishment, acquisition, expansion, management, conduct,
operation, or sale or other disposition of an investment of an
investor, including, inter alia: requiring an investment to
export a given level or percentage of goods or services;
requiring an investment to achieve a given level or percentage
of domestic content; or, requiring an investment to transfer a
particular technology or other proprietary knowledge to a
person in the Party's territory.
Article 10.12 excludes specified non-conforming measures
and any measure that a Party adopts or maintains with respect
to specified sectors, sub-sectors, or activities, from certain
of the obligations in Chapter 10. Existing non-conforming
measures that are excluded from coverage are listed for each
Party in their respective Schedule to Annex I of the Agreement.
Non-conforming measures adopted or maintained with respect to
specified sectors, sub-sectors or activities that are excluded
from coverage are listed for each Party in their respective
Schedule to Annex II of the Agreement. Any existing non-
conforming measure maintained by a Party at a local level of
government is similarly excluded from coverage under Article
10.12.
The Committee is pleased to note that the Agreement also
includes provisions that govern the settlement of investment
disputes between investors of a Party and the other Party. The
Committee expects future trade agreements to contain similar
provisions. Article 10.14 provides that, in the event of an
investment dispute, the claimant and respondent should
initially seek to resolve the dispute through consultation and
negotiation. If the dispute cannot be settled through
consultation and negotiation, a claimant may then submit the
dispute to arbitration. Section B of Chapter 10 contains a
number of specific obligations relating to investor-state
dispute settlement procedures and the arbitration of investment
disputes.
Cross-Border Trade in Services. Chapter 11 of the Agreement
applies to measures that affect cross-border trade in services
by service suppliers of the other Party, including, inter alia,
measures that affect the production, distribution, marketing,
sale and delivery of a service, and the purchase or use of, or
payment for, a service. The measures covered by the Agreement
include measures adopted by central, regional, or local
governments and authorities, and non-governmental authorities
exercising governmental powers by delegation. Chapter 10 does
not apply to several service sectors, including: financial
services (which are covered in Chapter 12 of the Agreement)
other than financial services relating to the supply of a
service by a covered investment (as defined in Chapter 1 of the
Agreement); government procurement (which is covered in Chapter
9 of the Agreement); air services other than aircraft repair
and maintenance and specialty air services; subsidies or grants
provided by a Party; and, services supplied in the exercise of
governmental authority. While telecommunications services are
not excluded from the application of Chapter 11, additional
specific commitments relating to telecommunications services
are contained in Chapter 13 of the Agreement.
Chapter 11 further provides that each Party shall accord
national treatment andmost-favored-nation treatment to all
service suppliers of the other Party. Article 11.6 excludes specified
non-conforming measures and any measure that a Party adopts or
maintains with respect to specified sectors, sub-sectors, or
activities, from certain of the obligations in Chapter 11. Existing
non-conforming measures that are excluded from coverage are listed for
each Party in their respective Schedule to Annex I of the Agreement.
Non-conforming measures adopted or maintained with respect to specified
sectors, sub-sectors or activities that are excluded from coverage are
listed for each Party in their respective Schedule to Annex II of the
Agreement. Any existing non-conforming measure maintained by a Party at
a local level of government is similarly excluded from coverage under
Article 11.6.
Except for measures, sectors, sub-sectors, and activities
listed on a Party's Schedules to Annex I or Annex II of the
Agreement, neither Party may impose limitations on: the number
of service suppliers; the total value of service transactions
or assets; the total number of service operations or the total
quantity of services output; or, the total number of natural
persons that may be employed in a particular service sector or
that a service supplier may employ; nor may either Party
restrict or require a specific type of legal entity or joint
venture through which a service supplier may supply a service.
Similarly, unless a measure is listed on a Party's Schedules to
Annex I or Annex II of the Agreement, ``neither Party may
require a service supplier of the other Party to establish or
maintain a representative office or any form of enterprise, or
to be resident, in its territory as a condition for the cross-
border supply of a service.''
The Agreement provides for services liberalization beyond
Morocco's current commitments under the WTO General Agreement
on Trade in Services (GATS). Morocco, like the United States,
has a large service sector accounting for a significant share
of GDP in 2002. However, Morocco's total services exports are
equivalent to approximately 1.5 percent of U.S. service
exports. The Agreement will provide increased market access for
U.S. service providers in areas such as audio-visual, express
delivery, computer and related services, construction and
engineering.
Financial Services. Chapter 12 of the Agreement applies to
measures adopted or maintained by a Party relating to:
financial institutions of the other Party; investors and
investments of such investors in financial institutions within
the Party's territory; and, to cross-border trade in financial
services. Financial services are defined to include any service
of a financial nature, including insurance and insurance-
related services, banking and other financial services, as well
as services incidental or auxiliary to a service of a financial
nature. The provisions of Chapter 10 (Investment) and Chapter
11 (Cross-Border Trade in Services) apply to financial services
only to the extent that such provisions are incorporated into
Chapter 12.
The Agreement provides that each Party shall accord
national treatment to investors, financial institutions, and
cross-border financial service suppliers of the other Party,
with respect to the establishment, acquisition, expansion,
management, conduct, operation, and sale or other disposition
of financial institutions and investments in financial
institutions. It also provides that each Party shall accord
most-favored-nation treatment to investors, financial
institutions and cross-border financial services suppliers.
Article 12.9 excludes specified non-conforming measures and
any measure that a Party adopts or maintains with respect to
specified sectors, sub-sectors, or activities, from certain of
the obligations in Chapter 12. Existing non-conforming measures
that are excluded from coverage are listed for each Party in
Section A of their respective Schedule to Annex III of the
Agreement. Non-conforming measures approved or maintained with
respect to specified sectors, sub-sectors or activities that
are excluded from coverage are listed for each Party in Section
B of their respective Schedule to Annex III of the Agreement.
Any existing non-conforming measure maintained by a Party at a
local level of government is similarly excluded from coverage
under Article 12.9. To the extent any non-conforming measure
listed on a Party's Schedules to Annex I or Annex II of the
Agreement is also covered by Chapter 12, such measure is also
excluded from coverage under Article 12.9.
Except for measures, sectors, sub-sectors, and activities
listed in Section A or Section B of a Party's Schedule to Annex
III of the Agreement, a Party shall not impose limitations on,
inter alia: the number of financial institutions; the total
value of financial service transactions or assets; the total
number of financial service operations or the total quantity of
financial services output; or, the total number of natural
persons that may be employed in a particular financial service
sector. Similarly, a Party shall not restrict or require
specific types of legal entity or joint venture through which a
financial institution may supply a service.
Each Party shall permit, under terms and conditions that
accord national treatment, cross-border financial service
suppliers of the other Party to supply the services specified
in Annex 12-A of the Agreement. With respect to the cross-
border supply of insurance and insurance-related services,
Morocco listed a number of sectors under Annex 12-A, including,
inter alia: maritime shipping and commercial aviation; goods in
international transit; and, reinsurance. Morocco's obligations
with respect to maritime shipping and commercial aviation take
effect no later than two years after the Agreement enters into
force, whereas Morocco's obligation with respect to reinsurance
takes effect immediately upon the Agreement's entry into force.
With respect to the cross-border supply of banking and other
financial services (excluding insurance), Morocco listed a
number of sectors under Annex 12-A, including, inter alia: the
provision and transfer of financial information and financial
data processing.
Telecommunications. Chapter 13 of the Agreement applies to:
measures relating to access to and use of public
telecommunication services; measures relating to obligations of
suppliers of public telecommunications services, including
major suppliers; other measures relating to public
telecommunications networks or services; and, measures relating
to the provision of value-added services.
In general, Chapter 13 does not apply to any measure
relating to broadcast or cable distribution of radio or
television programming. Article 13.17 defines the term ``public
telecommunications service'' as any telecommunications service
that a Party requires, explicitlyor in effect, to be offered to
the public generally. Such services may include, inter alia, telephone
and data transmission typically involving customer-supplied information
between two or more points without any end-to-end change in the form or
content of the customer's information. Public telecommunications
services within the United States do not include value-added services.
Article 13.2 stipulates that each Party shall ensure that
service suppliers of the other Party have access to and use of
any public telecommunications service, including leased
circuits, offered in its territory or across its borders, on
reasonable and non-discriminatory terms and conditions. Each
Party shall also ensure that enterprises of the other Party may
use public telecommunications services for the movement of
information in its territory or across its borders and for
access to information contained in databases or otherwise
stored in machine-readable form in the territory of either
Party. Appropriate measures shall be maintained by each Party
to prevent suppliers that, alone or together, are a major
supplier, from engaging in anti-competitive practices.
Article 13.4 details the additional obligations relating to
major suppliers of public telecommunication services. A major
supplier is defined as being a supplier of public
telecommunications services that has the ability to materially
affect the terms of participation in the relevant market (with
respect to price and supply) as a result of control over
essential facilities or use of its position in the market.
Major suppliers must accord suppliers of public
telecommunications services of the other Party treatment no
less favorable than such major suppliers accord to their
subsidiaries, their affiliates, or non-affiliated suppliers,
regarding the availability, provisioning, rates, or quality of
like public telecommunications services, as well as the
availability of technical interfaces necessary for
interconnection. Additional provisions call for major suppliers
to provide, on a reasonable and non-discriminatory basis:
interconnection for the facilities and equipment of suppliers
of public telecommunications services of the other Party;
provisioning and pricing of leased circuits services for
enterprises of the other Party; physical co-location of
equipment necessary for interconnection for suppliers of the
other Party; access to rights-of-way for suppliers of the other
Party; and, access to submarine cable systems and satellite
services for suppliers of the other Party. These provisions
ensure U.S. access to former monopoly networks in Morocco at
non-discriminatory, cost-based rates. Due to the existing level
of openness of the U.S. market, Morocco already has market
access on the terms outlined above. Morocco has made
development of a competitive telecommunications sector a
priority. Morocco fully opened its market to foreign
competition at the end of 2002, as required under its
commitments under the WTO Basic Telecommunications Agreement.
The United States was Morocco's third-largest investor as a
result of government privatization efforts.
Significantly, neither Party may prevent suppliers of
public telecommunications services from choosing the
technologies that they use to supply their services, including
commercial mobile wireless services, except that a Party shall
be free to establish and apply spectrum and frequency
management policies and other measures necessary to satisfy
legitimate public policy interests.
Electronic Commerce. In Chapter 14 the Parties acknowledge
the value of electronic commerce, the importance of avoiding
barriers to its use and development, and the applicability of
WTO rules to measures affecting electronic commerce. Neither
Party may impose customs duties, fees, or other charges on, or
in connection with, the importation or exportation of digital
products by electronic transmission. Digital products are
defined as computer programs, text, video, images, sound
recordings, and other products that are digitally encoded,
regardless of whether they are fixed on a carrier medium or
transmitted electronically. The customs value of an imported
carrier medium bearing a digital product of the other Party
shall be based on the cost or value of the carrier medium
alone, without regard to the cost or value of the digital
product stored on the carrier medium. Digital products must
receive national treatment and most-favored-nation treatment
under the Agreement, except with respect to a Party's non-
conforming measures that are identified in accordance with
Articles 10.12, 11.6, and 12.9.
Intellectual Property Rights. Chapter 15 governs the
protection of intellectual property rights, including, inter
alia, patents, copyrights, and trademarks. The Agreement builds
on the common standards that are already codified in numerous
international agreements, including the WTO Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS).
Importantly, the provisions in the Agreement reflect the
significant technological and commercial developments that have
occurred since TRIPS was negotiated, particularly with respect
to the new and rapidly-evolving digital environment in which
music, videos, software and text can be readily copied and
transmitted over the Internet.
Article 15.1 provides that each Party shall ratify or
accede to a number of international agreements, including the
World Intellectual Property Organization (WIPO) Copyright
Treaty (1996) and the WIPO Performances and Phonograms Treaty
(1996), which provide the essential legal framework for digital
products, e-commerce, and the transmission of protected
material over the Internet. Article 15.1.3 provides that each
Party shall make all reasonable efforts to ratify or accede to
the Patent Law Treaty (2000) and the Hague Agreement Concerning
the International Registration of Industrial Designs (1999).
The United States has already ratified or acceded to each of
the agreements identified in Article 15.1.2 and implemented
them in domestic law, while Morocco has not. With respect to
Article 15.1.3, the United States has not yet completed its
process for ratifying the specified agreements. While Morocco
is a party to the Hague Agreement on Industrial Designs, it is
not a party to the most recent act (1999), nor is Morocco a
party to the Patent Law Treaty (2000). Specific provisions of
additional international intellectual property agreements are
incorporated by reference in other Articles of Chapter 15.
The Agreement provides that each Party shall make available
to right holders civil judicial procedures concerning the
enforcement of any intellectual property right, and that
judicial authorities shall have the authority to order, inter
alia, the infringer to pay the right holder damages adequate to
compensate for the injury the right holder has suffered as a
result of the infringement. The Agreement further provides that
judicial authorities shall have the authority to order the
seizure of suspected infringing goods and any related materials
and implements.
Each Party shall provide that in civil judicial
proceedings, at the right holder's request, goods that have
been found to be pirated or counterfeit shall be destroyed,
except in exceptional circumstances. In addition, judicial
authorities shall have the authority to order that materials
and implements that were used to manufacture the pirated or
counterfeit goods be destroyed without compensation. Judicial
authorities shall also have the authority to order the
infringer to disclose information about other persons involved
in any aspect of the infringement and regarding the means of
production or distribution. Each Party shall further provide
that its judicial authorities have the authority to fine or
imprison a party to a litigation who fails to abide by valid
orders issued by such authorities, and to impose sanctions on
parties to a litigation, their counsel, experts, or other
persons who violate a judicial order for the protection of
confidential business information produced or exchanged in a
judicial proceeding.
In addition to civil proceedings, the Agreement provides
that each Party shall provide for criminal procedures and
penalties to be applied at least in cases of willful trademark
counterfeiting or copyright or related rights piracy on a
commercial scale. In such cases, each Party shall provide
remedies that include imprisonment as well as monetary fines
sufficient to provide a deterrent to future infringements,
consistent with a policy of removing the monetary incentive to
the infringer. Judicial authorities shall have the authority to
order the seizure, forfeiture, and destruction of counterfeit
goods and the materials and equipment used to produce
counterfeit goods. Each Party shall provide that its
authorities may self-initiate criminal legal action without the
need for a formal complaint from a private party or right
holder. Similarly, each Party shall provide that its customs
authorities may self-initiate border measures against imported
merchandise suspected of infringing an intellectual property
right, without the need for a formal complaint from a private
party or right holder.
Labor. In Chapter 16 of the Agreement, the Parties reaffirm
their obligations as members of the International Labor
Organization (ILO) and their commitments under the ILO
Declaration on Fundamental Principles and Rights at Work and
its Follow-up (1998) (ILO Declaration). Under the Agreement,
each Party must strive to ensure that such labor principles and
the internationally recognized labor rights set forth in
article 16.7 of the Agreement are recognized and protected by
its domestic law. Article 16.7 provides that internationally
recognized labor rights include: ``the right of association;
the right to organize and bargain collectively; a prohibition
on the use of any form of forced or compulsory labor; labor
protections for children and young people, including a minimum
age for the employment of children and the prohibition 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.'' The Agreement
recognizes the right of each Party to adopt or modify its
domestic labor laws and standards.
Under the Agreement, ``neither Party shall 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. Also, ``(e)ach 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 internationally recognized labor rights. Each Party shall
provide for appropriate access by interested persons to
impartial and independent administrative, quasi-judicial, or
judicial tribunals for the enforcement of its domestic labor
laws, and that such proceedings be fair, equitable, and
transparent.
Article 16.4 provides that each Party shall designate an
office to serve as the contact point for the other Party and
the public for purposes of implementing this Chapter, and may
convene a national labor advisory committee to advise it on the
implementation of the Chapter. The Agreement also establishes a
Labor Cooperation Mechanism, as set forth in Annex 16-A,
whereby the Parties may cooperate to improve labor standards
and to further advance common commitments with respect to labor
matters, including the ILO Declaration and ILO Convention 182
Concerning the Prohibition and Immediate Action for the
Elimination of the Worst Forms of Child Labour (1999). In
addition, the Agreement provides for consultations on any
matter arising under Chapter 16 of the Agreement. If bilateral
consultations do not resolve the matter, then a Subcommittee on
Labor Affairs shall be convened under Article 19.2 to endeavor
to resolve the matter. If a Party considers that the other
Party is not effectively enforcing its domestic labor laws,
through a sustained or recurring course of action or inaction,
in a manner that affects trade between the Parties, then that
Party may initiate dispute settlement procedures under Chapter
20 of the Agreement.
If, pursuant to the dispute settlement procedures of
Chapter 20, a panel determines that a Party has not conformed
with its obligations to effectively enforce its domestic labor
laws, and the Parties are unable to agree on a resolution, or
there is an agreed resolution but the complaining Party
considers that the other Party has failed to observe the terms
of that agreement, then the complaining Party may suspend the
application to the other Party of benefits of equivalent
effect. The Party complained against may choose to pay an
annual monetary assessment in lieu of the suspension of
benefits. If the Party complained against fails to pay the
monetary assessment, the complaining Party may then suspend the
application to the other Party of benefits of equivalent
effect.
Finally, the Committee finds noteworthy that the
negotiation of this free trade agreement with the United States
prompted the Government of Morocco to complete a comprehensive
reform of its labor laws that took effect on June 8, 2004.
Environment. Chapter 17 of the Agreement provides that each
Party shall ensure that its domestic laws and policies provide
for and encourage high levels of environmental protection,
while recognizing the right of each Party to establish its own
levels of environmental protection and to adopt or modify its
domestic environmental laws and policies accordingly. Article
17.9 defines ``environmental law'' to mean any statute or
regulation of a Party, the primary purpose of which is the
protection of the environment, or the prevention of a danger to
human, animal, or plant life or health, through: the
prevention, abatement, or control of the release of pollutants
orenvironmental contaminants; the control of environmentally
hazardous or toxic chemicals, substances, materials, and wastes; or,
the protection or conservation of wild flora or fauna, including
endangered species, their habitat, and specially-protected natural
areas.
Under the Agreement, ``neither Party shall 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.'' Also, each Party recognizes that it is
inappropriate to encourage trade or investment by weakening or
reducing the protections afforded in their domestic
environmental 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 the protections afforded in those laws as an
encouragement for trade with the other Party. Each Party shall
ensure that interested persons have access to judicial, quasi-
judicial, or administrative proceedings for the enforcement of
its domestic environmental laws, and that such proceedings are
fair, equitable, and transparent.
The Agreement recognizes the importance of strengthening
capacity to protect the environment and to promote sustainable
development in concert with strengthening bilateral trade and
investment relations. Pursuant to a Joint Statement on
Environmental Cooperation, the Parties commit themselves to
undertaking cooperative environmental activities. Such
activities shall be coordinated by the Working Group on
Environmental Cooperation, in accordance with the Joint
Statement.
The Agreement provides for consultations on any matter
arising under Chapter 17 of the Agreement. If bilateral
consultations do not resolve the matter, then a Subcommittee on
Environmental Affairs shall be convened under Article 19.2 to
endeavor to resolve the matter. If a Party considers that the
other Party is not effectively enforcing its domestic
environmental laws, through a sustained or recurring course of
action or inaction, in a manner that affects trade between the
Parties, then that Party may initiate dispute settlement
procedures under Chapter 20 of the Agreement.
If, pursuant to the dispute settlement procedures of
Chapter 20, a panel determines that a Party has not conformed
with its obligations to effectively enforce its domestic
environmental laws, and the Parties are unable to agree on a
resolution, or there is an agreed resolution but the
complaining Party considers that the other Party has failed to
observe the terms of that agreement, then the complaining Party
may suspend the application to the other Party of benefits of
equivalent effect. The Party complained against may choose to
pay an annual monetary assessment in lieu of the suspension of
benefits. If the Party complained against fails to pay the
monetary assessment, the complaining Party may then suspend the
application to the other Party of benefits of equivalent
effect.
Transparency. Chapter 18 provides that each Party shall
ensure that its laws, regulations, procedures, and
administrative rulings of general application regarding any
matter covered by the Agreement are promptly published or
otherwise made available so as to enable interested persons and
the other Party to become acquainted with them. The Agreement
provides that, to the extent possible, each Party shall publish
in advance any such measures that it proposes to adopt, and
provide interested persons and the other Party a reasonable
opportunity to comment on such proposed measures. With respect
to Morocco, the advance publication obligation shall apply 1
year after the Agreement enters into force. To the maximum
extent possible, each Party shall notify the other Party of any
proposed or actual measure that might materially affect the
operation of the Agreement, and on request of the other Party,
a Party shall promptly provide information and respond to
questions pertaining to any proposed or actual measure that the
other Party considers might affect the operation of the
Agreement. Wherever possible, each Party shall ensure that
persons of the other Party directly affected by a proceeding
are provided reasonable notice when a proceeding is initiated,
and afforded a reasonable opportunity to present facts and
arguments in support of their positions prior to any final
administrative action. Moreover, each Party shall establish or
maintain impartial and independent judicial, quasi-judicial, or
administrative tribunals or procedures to promptly review and,
where warranted, correct final administrative actions regarding
matters covered by the Agreement. Chapter 18 also contains a
provision in which the Parties reaffirm their continuing
resolve to eliminate bribery and corruption in international
trade and investment, and each Party shall adopt or maintain
the necessary measures to establish that it is a criminal
offense for a public official to solicit or accept bribes, or
for a person to offer a bribe to a public official of the Party
or to a foreign official, or for a person to abet or conspire
in any of the foregoing actions.
Administration of the Agreement. Chapter 19 provides that
each Party shall designate a contact point to facilitate
communication between the Parties on any matter covered by the
Agreement. Chapter 19 also establishes a Joint Committee to
supervise the implementation of the Agreement. The
responsibilities of the Joint Committee include, inter alia: to
review the general functioning of the Agreement; to facilitate
the avoidance and settlement of disputes arising under the
Agreement; to consider and adopt any amendment to the
Agreement, subject to the completion of necessary domestic
legal procedures; to issue interpretations of the Agreement;
and to take such other action as the Parties may agree. The
Joint Committee is empowered to establish subcommittees and
working groups, and a side letter to the Agreement provides for
the establishment of subcommittees on agricultural trade,
environmental affairs, financial services, labor affairs,
sanitary and phytosanitary matters, trade in goods, and cross-
border trade in services (excluding financial services).
Dispute Settlement. Chapter 20 contains the general
provisions that govern the settlement of disputes between the
Parties. Article 20.1 provides that the Parties shall endeavor
to agree on the interpretation and application of the
Agreement, through cooperation and consultation, to arrive at a
mutually satisfactory solution. The dispute settlement
provisions apply with respect to the avoidance or settlement of
all disputes over the consistency of a measure with the
Agreement or the fulfillment of a Party's obligation under the
Agreement, unless otherwise provided in the Agreement. Article
20.5 provides that either Party may requestconsultations with
respect to any matter under the Agreement. If consultations fail to
resolve the matter within 60 days (or 20 days if the matter concerns
perishable goods), then either Party may refer the matter to the Joint
Committee for resolution. If the Joint Committee is unable to resolve
the matter within 60 days (or 30 days if the matter concerns perishable
goods), then the complaining Party may refer the matter to a dispute
settlement panel. If a dispute settlement panel issues a report finding
that a Party has not conformed with its obligations or has nullified or
impaired a benefit to the other Party under the Agreement, the Parties
shall try to agree on a resolution of the dispute. Whenever possible,
the resolution shall be to eliminate the non-conformity or the
nullification or impairment; however, if the parties are unable to
agree on such elimination, resolution of the dispute may include
mutually acceptable compensation, the suspension of benefits of
equivalent effect, or an annual monetary assessment.
Exceptions. Chapter 21 contains general exceptions to the
Agreement. With respect to Chapters 2 through 7 (i.e., National
Treatment and Market Access for Goods, Agriculture, Textiles
and Apparel, Rules of Origin, Customs Administration, and
Technical Barriers to Trade), the Agreement incorporates by
reference the general exceptions contained in Article XX of
GATT 1994 and its interpretive notes.
With respect to Chapters 11, 13, and 14 (i.e., Cross-Border
Trade in Services, Telecommunications, and Electronic
Commerce), the Agreement incorporates by reference the general
exceptions contained in GATS Article XIV, including its
footnotes. The Agreement also includes exceptions regarding:
essential security interests; taxation; disclosure of
information; and balance of payments measures on trade in
goods.
Final Provisions. The Agreement provides for the accession
of third countries to the Agreement, an amendment process, and
entry into force and termination of the Agreement. Article 22.6
provides that the Agreement will enter into force on the first
day of the third month after the date on which the United
States and Morocco exchange written notifications certifying
that they have completed their respective legal procedures (or
on such other date as the Parties may agree). The exchange of
notifications is a necessary precondition for the Agreement's
entry into force. The Agreement's entry into force is thus
conditioned on a determination by the President that Morocco
has taken measures necessary to comply with those of its
obligations that are to take effect at the time the Agreement
enters into force. Either Party may terminate the Agreement on
180-days written notice to the other Party.

E. General Description of the Bill To Implement the United States-
Morocco Free Trade Agreement

Sec. 1. Short Title; Table of Contents

This section provides that the short title of the
legislation implementing the United States-Morocco Free Trade
Agreement (the Agreement) is the ``United States-Morocco Free
Trade Agreement Implementation Act.'' Section 1 also provides
the table of contents for the implementing legislation.

Sec. 2. Purposes

This section provides that the purposes of the implementing
legislation are: to approve and implement the Agreement; to
strengthen and develop economic relations between the United
States and Morocco; to establish free trade between the United
States and Morocco through the reduction and elimination of
barriers to trade in goods and services and to investment; and,
to lay the foundation for further cooperation to expand and
enhance the benefits of the Agreement.

Sec. 3. Definitions

This section defines the terms ``Agreement,'' ``HTS,'' and
``Textile or Apparel Good,'' for purposes of the implementing
legislation.

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 the Government of Morocco to provide for entry into
force of the Agreement on or after January 1, 2005. The
exchange of notes is conditioned on a determination by the
President that Morocco 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 government, based on the
provisions of the Agreement.

Sec. 103. Implementing Actions in Anticipation of Entry Into Force and
Initial Regulations

This section authorizes the President to proclaim such
actions, and other appropriate officers of the U.S. Government
to issue such regulations, as may be necessary to ensure
thatprovisions of the implementing legislation are appropriately
implemented by the date the Agreement enters into force if such
provisions are required to be implemented by that date. Section 103
also provides that, with respect to any action proclaimed by the
President that is not subject to the consultation and layover
provisions contained in section 104, such action may not take effect
before the 15th day after the date on which the text of the
proclamation is published in the Federal Register. The 15-day
restriction is waived, however, to the extent it would prevent an
action from taking effect on the date the Agreement enters into force.
Section 103 also specifies that initial regulations necessary or
appropriate to carry out the provisions of the implementing legislation
shall, to the maximum extent feasible, be issued within 1 year after
the date on which the Agreement enters into force.

Sec. 104. 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, continuation, or additional duty, 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 to be proclaimed, the reasons therefore, 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
proposed action.

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 20 of the
Agreement. This section also authorizes the appropriation of
funds to support this office.

Sec. 106. Arbitration of Claims

This section authorizes the United States to use binding
arbitration to resolve claims against the United States covered
by Art. 10.15.1 of the Agreement (addressing investment
disputes). The United States is authorized to arbitrate
investment disputes pursuant to the Investor-State Dispute
Settlement procedures set forth in section B of chapter 10 of
the Agreement.

Sec. 107. Effective Dates; Effect of Termination

This section provides the dates that certain provisions of
the implementing legislation will go into effect. This section
also provides that the provisions of the implementing
legislation (other than section 107) will cease to be in effect
on the date on which the Agreement terminates.

TITLE II--CUSTOMS PROVISIONS

Sec. 201. Tariff Modifications

Section 201(a)(1) authorizes the President to implement by
proclamation the continuation, modification, or addition of
tariffs, or the continuation of duty-free or excise treatment,
as the President determines to be necessary or appropriate, to
carry out Articles 2.3, 2.5, 2.6, 4.1, 4.3.9, 4.3.10, 4.3.11,
4.3.13, 4.3.14, 4.3.15, and Annex IV, of the Agreement. Section
201(a)(2) requires the President to terminate the designation
of Morocco as a beneficiary developing country under the
Generalized System of Preferences (GSP) program on the date of
entry into force of the Agreement.
Section 201(b) authorizes the President, subject to the
consultation and layover provisions of section 104 of the bill,
to proclaim any continuation, modification, or addition of
tariffs, or the continuation of duty-free or excise treatment,
as the President determines to be necessary or appropriate, to
maintain the general level of reciprocal and mutually
advantageous concessions with respect to Morocco provided by
the Agreement.

Sec. 202. Additional Duties on Certain Agricultural Goods

This section implements a safeguard mechanism for
agricultural goods under the Agreement. Section 202(a) provides
applicable definitions for the safeguard mechanism, including
definitions for the terms ``agricultural safeguard good,''
``trigger price,'' and ``unit import price.''
Section 202(b) provides that if the unit import price of an
agricultural safeguard good is less than the trigger price for
that good when the good is entered into the United States, an
additional duty shall be assessed on the imported good based
upon the schedule provided in section 202(b)(2). The amount of
additional duty under section 202(b)(2) increases as the
difference increases between the unit import price and the
trigger price. Annex 3-A specifies trigger prices for the
agricultural safeguard goods that are covered by the safeguard
mechanism. The assessment of additional duty under this
provision terminates on the date on which duty-free treatment
must be provided to that good under the Tariff Schedule of the
United States to Annex IV of the Agreement. No additional duty
may be assessed on an agricultural safeguard good if that good
is already subject to a bilateral safeguard measure under the
Agreement, or if that good is subject to a global safeguard
measure under chapter 1 of title II of the Trade Act of 1974
(19 U.S.C. Sec. 2251 et seq.). Agricultural safeguard goods
listed in Annex 3-A of the Agreement include: dried onions and
garlic; processed tomato products; asparagus; olives; pears;
apricots; nectarines; peaches; fruit mixtures; and orange
juice.

Sec. 203. Rules of Origin

This section implements the general rules of origin set
forth in Chapter 5 of theAgreement. These rules define the
circumstances under which a good imported from Morocco qualifies as an
originating good and is therefore eligible for preferential tariff
treatment, according to the terms of the Agreement.
A good is an originating good if it is imported directly
from Morocco, and the good is wholly the growth, product, or
manufacture, of Morocco or the United States, or both.
A good imported directly from Morocco that does not satisfy
the foregoing criteria may still be an originating good if: the
good derives from a nonoriginating good or material that has
undergone a substantial transformation in Morocco (i.e. to
become a new or different article of commerce) and not less
than 35 percent of the appraised value of the good, at the time
the good enters the United States, is attributable to the sum
of the value of materials produced in Morocco or the United
States, or both, plus the direct costs of processing operations
performed in Morocco or the United States, or both. This
``substantial transformation'' rule of origin is akin to rules
of origin provided for in the United States-Israel Free Trade
Area Implementation Act of 1985 and the United States-Jordan
Free Trade Area Implementation Act.
In addition, a good imported directly from Morocco is an
originating good if: the good is covered by Annex 4-A or Annex
5-A of the Agreement; each of the nonoriginating materials used
in the production of the good undergoes an applicable change in
tariff classification specified in such Annex as a result of
production occurring entirely in Morocco or the United States,
or both (or the good otherwise satisfies the requirements
specified in such Annex); and the good satisfies all other
applicable requirements of section 203.
Section 203(c) provides a rule of cumulation for an
originating good or material produced in Morocco or the United
States, or both, that is then incorporated into a good in
either Morocco or the United States and then exported directly
to the other Party. Section 203(d) provides rules for valuing a
material produced in Morocco or the United States, or both.
Section 203(e) addresses the treatment of packaging materials
and containers for retail sale and for shipment. Section 203(f)
addresses indirect materials, while section 203(g) addresses
transit and transshipment of goods. Section 203(h) provides
specific rules of origin for textile and apparel goods, while
section 203(i) provides definitions of terms applicable to the
rules of origin. Section 203(j) authorizes the President to
proclaim, as part of the Harmonized Tariff Schedule of the
United States, the provisions set forth in Annex 4-A and Annex
5-A of the Agreement, and to modify certain of the Agreement's
specific rules of origin by proclamation subject to the
consultation and layover provisions of section 104 of the
implementing legislation.

Sec. 204. Enforcement Relating to Trade in Textile and Apparel Goods

This section authorizes the President to apply anti-
circumvention provisions concerning trade in textile and
apparel goods. The Secretary of the Treasury may request that
the Government of Morocco conduct a verification to determine
that an exporter or producer in Morocco is complying with
applicable customs laws, regulations, procedures, requirements,
or practices affecting trade in textile or apparel goods, or to
determine that a claim for preferential treatment of textile or
apparel goods is consistent with the terms of the Agreement.
Section 204 authorizes the President to order the suspension of
liquidation of entries from exporters or producers in Morocco
that are subject to a verification, and the suspension of
liquidation of any entry that is subject to verification. If
the Secretary of the Treasury determines that information
obtained within 12 months of a request for verification is
insufficient to make a determination, section 204 authorizes
the President to direct the Secretary to: publish the name and
address of the person subject to verification; deny
preferential tariff treatment under the Agreement to any
textile or apparel good exported or produced by the person
subject to verification; deny preferential tariff treatment
under the Agreement to the entry subject to verification; deny
entry into the United States of any textile or apparel good
exported or produced by the person subject to verification; or,
deny entry into the United States of the entry subject to
verification.

Sec. 205. Regulations

This section requires the Secretary of the Treasury to
prescribe such regulations as may be necessary to carry out the
provisions of section 203 (rules of origin).

TITLE III--RELIEF FROM IMPORTS

Sec. 301. Definitions

This section defines the terms ``Moroccan article'' and
``Moroccan textile or apparel article'' for purposes of the
general bilateral safeguard provision contained in Chapter 8 of
the Agreement and the textile and apparel bilateral safeguard
provision contained in Chapter 4 of the Agreement. The term
``Moroccan article'' is defined as an article that qualifies as
an originating good under section 203(b) of the implementing
legislation or receives preferential tariff treatment under
paragraphs 9 through 15 of Art. 4.3 of the Agreement. The term
``Moroccan textile or apparel article'' is defined as a
Moroccan 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)).
Section 301 also defines the term ``Commission'' as the U.S.
International Trade Commission.

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(a) permits a petitioning entity to request
provisional relief as if the petition had been filed under
section 202(a) of the Trade Act of 1974 (19 U.S.C.
Sec. 2252(a)). Any request for provisional relief shall include
an allegation of ``critical circumstances'' in the petition.
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
Agreement, a Moroccan article is being imported into the United
States in such increased quantities, and under such conditions,
that imports of the Moroccan 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 certain provisions, both substantive and
procedural, contained in subsections (b), (c), (d), and (i) of
section 202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252(b),
(c), (d), and (i)) 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 Moroccan article for which import relief
has already been provided under this bilateral safeguard
provision.

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 an equally 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 by the
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 for under Annex IV of
the 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 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
Agreement enters into force. In the case of a duty applied on a
seasonal basis to an article, the President may increase the
rate of duty imposed on such article to a level that does not
exceed the lesser of (1) the NTR/MFN duty rate imposed on like
articles for the immediately preceding corresponding season, or
(2) the NTR/MFN duty rate imposed on like articles on the day
before the date on which the 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 of such relief at
regular intervals during the period of its application.
Section 313(d) provides that the initial period for import
relief in a bilateral safeguard action shall not exceed 3
years. The President is authorized to 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 to facilitate adjustment to import competition, and
that the domestic industry is making a positive adjustment to
import competition. Section 313(d) also provides that the total
period for import relief in a bilateral safeguard action,
including any extension of such import relief, shall not exceed
5 years.
Section 313(e) provides that upon termination of import
relief under the bilateral safeguard provision, the rate of
duty to be applied is the rate of duty that would have been in
effect on that date with respect to the article, but for the
provision of such import relief.
Section 313(f) provides that no import relief may be
provided under the bilateral safeguard mechanism on any article
that previously has been subject to import relief under the
bilateral safeguard, or is subject to an assessment of
additional duty under the safeguard mechanism for agricultural
goods set forth in section 202 of the implementing legislation.

Sec. 314. Termination of Relief Authority

This section provides that the President's authority to
impose import relief with respect to a good under the bilateral
safeguard mechanism ends after the date that is 5 years after
the date on which duty-free treatment must be provided by the
United States to that good pursuant to Annex IV of the
Agreement. Section 314(b) provides that the President may
provide import relief under the bilateral safeguard mechanism
after the foregoing termination date if the President
determines that Morocco has consented to the imposition of such
import relief.

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 Morocco
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 subtitle A of
title III of the implementing legislation.

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 a summary of the request
and the dates by which comments and rebuttals must be received.
The Committee notes that our regulatory process should be
administered in an open and transparent manner that can serve
as a model for our trading partners. For example, in addition
to publishing a summary of a request for safeguard relief, the
Committee notes that the President plans to make available the
full text of the request on the website of the International
Trade Administration of the U.S. Department of Commerce,
subject to the protection of business confidential information.
The Committee encourages this and similar efforts to enhance
government transparency. In particular, the Committee
encourages the President to issue regulations on procedures
for: requesting a textile and apparel safeguard measure; making
a determination under section 322(a) of the implementing
legislation; providing safeguard relief under section 322(b) of
the implementing legislation; and extending safeguard relief
under section 323(b) of the implementing legislation.

Sec. 322. Determination and Provision of Relief

This section provides that following the President's
commencement of consideration of a request, the President shall
determine whether, as a result of the reduction or elimination
of a duty under the Agreement, a Moroccan 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)(2) 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)(2) 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 article to a
level that does not exceed the lesser of: (1) the 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 Agreement enters into
force.

Sec. 323. Period of Relief

This section provides that the initial period for import
relief in a textile and apparel safeguard action, including any
provisional relief, shall not exceed 3 years. The President is
authorized to extend the effective period of such relief by not
more than 2 years if the President determines that import
relief continues to be necessary to remedy or prevent serious
damage and to facilitate adjustment by the domestic industry to
import competition, and that there is evidence that the
domestic industry is making a positive adjustment to import
competition. Section 323(b) provides that the total period for
import relief in a textile and apparel safeguard action,
including any extension of such import relief, may not exceed 5
years.

Sec. 324. Articles Exempt From Relief

This section precludes the President from providing import
relief under the textile and apparel safeguard mechanism with
respect to any article to which import relief has already been
provided under the textile and apparel safeguard, or any
article that is subject to import relief under the global
safeguard mechanism set forth in chapter 1 of title II of the
Trade Act of 1974 (19 U.S.C. Sec. 2251 et seq.).

Sec. 325. Rate After Termination of Import Relief

This section provides that the duty rate applicable to a
textile or apparel article after termination of the import
relief shall be the duty rate that would have been in effect,
but for the provision of such import relief, on the date on
which the relief terminates.

Sec. 326. Termination of Relief Authority

This section provides that the President's authority to
provide import relief under the textile and apparel safeguard
mechanism terminates after the date that is 10 years after the
date on which duties on the article are eliminated pursuant to
the 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 Morocco
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, 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.

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 on July
20, 2004, S. 2677 was ordered favorably reported, without
amendment, by a unanimous vote of 21 ayes and 0 nays, a quorum
being present.

II. BUDGETARY IMPACT OF THE BILL

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

U.S. Congress,
Congressional Budget Office,
Washington, DC, July 21, 2004.
Hon. Charles E. Grassley,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2677, a bill to
implement the United States-Morocco Free Trade Agreement.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Annabelle
Bartsch.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.

S. 2677.--A bill to implement the United States-Morocco Free Trade
Agreement

Summary: S. 2677 would approve the free trade agreement
between the government of the United States and the government
of Morocco that was entered into on June 15, 2004. It would
provide for tariff reductions and other changes in law related
to implementation of the agreement.
The Congressional Budget Office estimates that enacting the
bill would reduce revenues by $5 million in 2005, by $52
million over the 2005-2009 period, and by $144 million over the
2005-2014 period, net of income and payroll tax offsets. The
bill would not affect federal spending.
CBO has determined that S. 2677 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. 2677 over the 2005-2014 period is shown
in the following table.

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
----------------------------------------------------------------------------------------------------------------
Changes in receipts............. -5 -9 -11 -13 -15 -16 -18 -19 -19 -20
----------------------------------------------------------------------------------------------------------------

Basis of estimate: Under the United States-Morocco
agreement, tariffs on U.S. imports from Morocco would be phased
out over time. The tariffs would be phased out for individual
products at varying rates according to one of several different
timetables ranging from immediate elimination on January 1,
2005, to gradual elimination over 18 years. According to the
U.S. International Trade Commission, the United States
collected $15 million in customs duties in 2003 on $396 million
of imports from Morocco. Those imports consist mostly of
various types of apparel articles and produce. Based on these
data, CBO estimates that phasing out tariff rates as outlined
in the U.S.-Morocco agreement would reduce revenues by $5
million in 2005, by $52 million over the 2005-2009 period, and
by $144 million over the 2005-2014 period, net of income and
payroll tax offsets.
This estimate includes the effects of increased imports
from Morocco 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 Morocco 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 Morocco would
displace imports from other countries.
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;
Impact on State, Local, and Tribal Governments: Melissa
Merrell; and Impact on the Private Sector: Crystal Taylor.
Estimate approved by: G. Thomas Woodward, Assistant
Director for Tax Analysis.

III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS

Pursuant to the requirements of 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, will not 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 (UMRA)
(Pub. L. No. 104-04). The Committee has reviewed the provisions
of S. 2677 as approved by the Committee on July 20, 2004. In
accordance with the requirement of Pub. L. No. 104-04, 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.

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):

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, title II of the
United States-Jordan Free Trade Area Implementation
Act, title III of the United States-Chile Free Trade
Agreement Implementation Act, [and] title III of the
United States-Singapore Free Trade Agreement
Implementation Act, and title III of the United States-
Morocco 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.

* * * * * * *