[House Report 110-421]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-421

======================================================================
 
    UNITED STATES-PERU TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT

                                _______
                                

November 5, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3688]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3688) to implement the United States-Peru Trade 
Promotion Agreement, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                            I. INTRODUCTION


                         A. Purpose and Summary

    H.R. 3688 would implement the agreement establishing a free 
trade area between the United States and Peru.

                             B. Background


            THE UNITED STATES-PERU TRADE PROMOTION AGREEMENT

    The United States-Peru Trade Promotion Agreement 
(hereinafter ``Peru FTA''), originally signed in April 2006, 
was amended in May 2007 to incorporate key aspects of an 
historic Congressional-Executive accord (the ``May 10 
Agreement''). As a result of this amendment, the Peru FTA has 
become the first U.S. free trade agreement to include, in its 
core text, fully-enforceable commitments by the Parties to 
adopt, maintain, and enforce basic international labor 
standards, as stated in the 1988 ILO Declaration on Fundamental 
Principles and Rights at Work. It is also the first U.S. free 
trade agreement to require the Parties to implement and enforce 
their obligations under certain common multilateral 
environmental agreements and, further, to require Peru to take 
major, specific steps to address illegal logging. These changes 
make the Peru FTA the strongest free trade agreement ever to be 
considered by the Committee with regard to basic 
internationally recognized labor standards and basic 
protections for the environment.
    The May 10 Agreement also required other important changes 
to the Peru FTA, including: (a) modification of the 
intellectual property chapter to balance promoting access to 
medicines and protecting pharmaceutical innovation; (b) 
modification of the government procurement chapter to allow 
conditioning of contracts on adherence to basic and minimum 
labor standards; (c) clarification that, where there are 
national security concerns, the United States can prevent 
foreign companies from operating U.S. ports; and (d) 
clarification that the Peru FTA accords Peruvian investors in 
the United States no greater substantive rights with respect to 
investment protections than U.S. investors in the United 
States.
    With all of these changes, the Peru FTA reflects a new 
approach in U.S. trade policy--one that couples traditional 
market access initiatives with strong, fully enforceable 
commitments on basic worker rights, international environmental 
standards, access to medicines, and other key issues. The 
Committee believes that such an approach is critically 
important to level the playing field for U.S. workers and 
business and spread the benefits of globalization more broadly.
    Peru has set itself out as an important partner in this 
approach. In August 2007, during a Committee delegation visit 
to Peru, President Garcia referred to the Peru FTA as an 
historic ``New Deal'' for workers and countries, marking the 
beginning of a ``grand transformation'' in how governments 
should approach world trade. The Committee believes that this 
new partnership will broaden and deepen what is already a 
strong economic and political relationship between the United 
States and Peru.
    Under the new rules of the Peru FTA, nearly 90 percent of 
current exports by U.S. farmers and ranchers will receive duty-
free treatment immediately upon entry into force of the FTA. In 
addition, 80 percent of U.S. exports of consumer and industrial 
products to Peru will be duty-free immediately upon entry into 
force, with remaining tariffs phased out over ten years. 
Average Peruvian tariffs on imports of goods from the United 
States were: 5.8% for information technology equipment, 7.1% 
for chemicals, 8.8% for metals and ores, 5.9% for 
infrastructure and machinery, 5.5% for transportation 
equipment, 7.4% for autos and auto parts, 7.9% for building 
products, 9.7% for paper and paper products, and 11.1% for 
consumer goods.
    These and the other trade liberalization benefits of the 
Peru agreement are more likely to be spread broadly in both 
countries due to the historic provisions on basic international 
labor standards, multilateral environmental standards, and 
other issues that will raise standards both in the United 
States and abroad. This is important for Peru, in its efforts 
to improve labor standards and environmental conditions and for 
the development of a strong middle class. It is also important 
for workers in the United States who do not want to compete 
with other nations whose entities suppress their workers or 
negatively affect the environment, and for U.S. companies and 
workers who depend increasingly on the development of middle 
class societies abroad to buy the goods and services produced 
in the United States.
    The following are key aspects of the Peru FTA, beginning 
with those aspects that were amended as a result of the May 10 
Agreement:
    Labor: Under the May 10 Agreement, the labor chapter of the 
Peru FTA was substantially revised to include a fully 
enforceable obligation that the Parties adopt and effectively 
enforce the five core international labor rights, as stated in 
the 1998 International Labor Organization Declaration on 
Fundamental Principles and Rights and Work. The Peru FTA also 
requires both countries to enforce laws related to a sixth set 
of rights--those pertaining to acceptable conditions of work 
with respect to minimum wages, hours of work and occupational 
safety and health. These obligations are subject to a binding 
non-derogation provision.
    For the first time in any U.S. free trade agreement, the 
obligations under the labor chapter are subject to the same 
dispute settlement mechanisms and remedies as all other FTA 
obligations. A party seeking to challenge violations is 
required to demonstrate that the failure to adopt or maintain 
ILO rights has been in a manner affecting either trade or 
investment between the countries.
    Peru has already been bringing its laws, regulations, and 
practices into compliance with internationally-recognized labor 
standards. Most recently, in August 2007, Peruvian President 
Alan Garcia announced his commitment to change Peru's legal 
framework in a number of key areas to implement obligations 
under the FTA. PresidentGarcia has since followed through on 
his commitment by implementing changes to the legal framework 
governing: (1) temporary employment contracts; (2) subcontracting/
outsourcing contracts; (3) the right of workers to strike; (4) recourse 
against anti-union discrimination; and (5) workers' right to organize. 
The Committee applauds the changes made by the Peruvian government. The 
Committee believes that, with these and other recent changes, and the 
commitments and mechanisms under the FTA, Peru has in place a framework 
to ensure compliance with basic international labor standards.
    Environment.--Under the May 10 agreement, the environmental 
chapter of the Peru FTA was substantially revised to include a 
fully enforceable commitment that the Parties will implement 
and enforce in their laws and regulations, their obligations 
under certain common major multilateral environmental 
agreements (``MEAs''), including the Convention on 
International Trade in Endangered Species (``CITES'') and the 
Montreal Protocol on Ozone Depleting Substances, as well 
certain other environmental laws. The agreement also includes a 
fully enforceable, binding commitment that prohibits Peru from 
lowering environmental standards in the future in a manner 
affecting trade or investment. Further, the agreement 
establishes that, in the event of an inconsistency between a 
covered MEA obligation and an obligation under the Peru FTA, 
the Peru FTA cannot be used to undermine the MEA obligation.
    The Peru FTA is not only the first free trade agreement to 
include these strong environmental obligations, it is also the 
first free trade agreement to make them subject to the same 
dispute settlement mechanisms and remedies that apply for other 
FTA obligations. The Peru FTA requires a Party challenging a 
violation to show that the failure to adopt, maintain or 
implement an MEA or enforce other environmental laws has been 
in a manner affecting either trade or investment between the 
countries.
    The Peru FTA also includes specific provisions to address 
the problem of illegal logging in Peru. For many years, leading 
environmental groups have raised concerns about illegal 
logging. Some reports have indicated, for example, that much of 
the mahogany exported from Peru--over 80% of which is exported 
to the United States--is illegally logged. As a result of the 
May 10 Agreement, the Peru FTA includes an extensive Forest 
Sector Governance Annex to address this problem.
    Under the Annex, Peru is required to take specific steps to 
address illegal logging and improve forest sector governance. 
The Forest Sector Governance Annex also requires additional 
actions to stop illegal logging of mahogany and all CITES-
listed tree species. Further, it establishes innovative new 
enforcement tools, permitting the United States to investigate 
illegal logging in-country through audits and verifications, 
and to stop questionable shipments at the border. Like the 
environmental commitments on MEAs and other environmental laws, 
no previous FTA has included such commitments on illegal 
logging or provided this broad range of enforcement tools.
    Intellectual Property Rights and Access to Medicines.--
Under the Peru FTA, Peru will adopt higher and extended 
standards for the protection of intellectual property rights 
such as copyrights, patents, trademarks and trade secrets. The 
Peru FTA also provides enhanced means for enforcing those 
rights. Under the agreement, national treatment must be granted 
by each partner country to nationals of the other, and all 
laws, regulations, procedures and final judicial decisions must 
be in writing and published or made publicly available. The 
Peru FTA will lengthen terms for copyright protection, covering 
electronic and digital media, and increase enforcement to go 
beyond the WTO Agreement on Trade-Related Aspects of 
Intellectual Property Rights (``TRIPS''). Both parties are 
obliged to provide appropriate civil and criminal remedies for 
willful violators, and parties must provide legal incentives 
for service providers to cooperate with rights holders and 
limitations on liability.
    With respect to pharmaceuticals, the Peru FTA was amended 
in accordance with the May 10 Agreement to balance better the 
need for access to medicines with promotion of pharmaceutical 
innovation. The amendments include changes to the ``data 
exclusivity'' provision (the period in which a generic 
manufacturer may not use clinical test data of an innovative 
drug manufacturer to obtain approval for a generic version of 
the drug) to allow generics to enter the market more quickly 
than under the old provision. New provisions also establish a 
clear exception that the IPR commitments in the FTA do not and 
should not prevent the Parties from taking any measures to 
protect public health in accordance with the WTO Doha 
Declaration or from utilizing the TRIPS/health solution. 
Similarly, the new text eliminates the requirement that an FTA 
country extend the term of a patent on a pharmaceutical product 
for delays in the patent and regulatory approval process. At 
the same time, the FTA requires each Party to ensure an 
expeditious patent and regulatory approval process for the 
benefit of patients and patent applicants. Finally, the new 
text eliminates the requirement that a drug regulatory agency 
withhold approval of a generic until it can certify that no 
patent would be violated if the generic were marketed. Instead 
of that ``linkage'' requirement, the new text provides that 
each Party must adopt procedures and remedies for the 
expeditious resolution of patent disputes.
    Government Procurement.--Peru is not a party to the WTO 
Agreement on Government Procurement, but the Peru FTA provides 
comparable benefits to U.S. interests. Specifically, U.S. 
suppliers will be granted non-discriminatory rights to bid on 
contracts above a certain value from Peruvian government 
ministries, agencies and departments. The Peru FTA will cover 
the purchases of most Peruvian central government entities, 
including key ministries and state-owned enterprises, including 
Peru's oil company as well as all of its first-tier sub-central 
entities (comparable to U.S. states). The Peru FTA requires 
fair and transparent procurement procedures, such as advance 
notice of purchases and timely and effective bid review 
procedures.
    For the United States, the Peru FTA excludes from FTA 
procurement commitments all procurements by local government 
entities. The FTA also excludes all procurements by states that 
have not ``opted in'' to the agreement (and only 8 states have 
done so). The FTA also excludes, for federal procurements, the 
large number of government contracts that fall below the high 
monetary threshold and under carve-outs (for example, for small 
and minority business set asides, purchase of goods in 27 broad 
Federal Supply Classification categories by the Department of 
Defense, and for ``Berry Amendment'' procurements of textiles 
and machine tools by the Department of Defense).
    Like other chapters in the agreement, the Government 
Procurement Chapter of the FTA was amended pursuant to the May 
10 Agreement. As amended, the Peru FTA provides that U.S. 
federal and state governments may condition government 
contracts on contractors adhering to the five core labor rights 
and acceptable conditions of work and minimum wages.
    Port Security.--Pursuant to the May 10 Agreement, the Peru 
FTA was amended to clarify that, if there are national security 
concerns, the United States has full, non-challengeable 
authority to prevent foreign companies from operating U.S. 
ports, based on national security concerns.
    Agriculture.--More than two-thirds of current U.S. farm 
exports to Peru will become duty-free immediately under the 
Peru FTA. Tariffs on the remaining U.S. farm products are to be 
phased out within 17 years. Many Peruvian agricultural products 
enter the United States duty-free currently under the Andean 
Trade Preference Act (``ATPA'') and other preference programs. 
The Peru FTA would make the duty-free treatment permanent.
    In recognition of Peru's large number of small and 
subsistence farmers, the Peru FTA includes longer tariff phase-
out periods for some products (such as standard quality beef, 
yellow corn, rice, and processed dairy products), with no 
tariff cuts required in the initial years of the agreement. The 
longer phase-outs are intended to provide a period for Peruvian 
farmers to adjust to import competition. Safeguard measures 
will also be available for specified products, providing for 
tariff increases if import quantities increase to specified 
levels. The possibility of employing safeguards will expire 
when tariff protection has been phased out.
    Services.--The agreement will provide broader market access 
and greater regulatory transparency in most industries. The 
agreement utilizes the negative list approach for coverage with 
very few reservations, which means that all services are 
covered unless specifically excluded.
    Textile and Apparel.--Under the Peru FTA, textiles and 
apparel will be duty-free and quota-free immediately if the 
products meet the agreement's rules of origin. Rules of origin 
are generally based on the yarn forward standard. The agreement 
does not make use of tariff preference levels. A ``de minimis'' 
provision will allow limited amounts of specified third-country 
content to go into U.S. and Peruvian apparel, giving producers 
in both countries needed flexibility. The FTA does allow use of 
``short supply'' fabrics (that is, fabrics not made in Peru or 
the United States that have been determined not to be 
commercially available in either country). The Parties agreed 
to 20 short supply fabrics, and the Peru FTA includes a process 
for adding more.
    Customs cooperation commitments between the United States 
and Peru will allow for verification of claims of origin or 
preferential treatment, and denial of preferential treatment or 
entry if claims cannot be verified. A special textile safeguard 
will provide for temporary tariff relief if imports under the 
Agreement prove to be damaging to domestic producers.
    Investment.--The Peru FTA draws from U.S. legal principles 
and practices to provide U.S. investors in Peru with a basic 
set of substantive and procedural protections that Peruvian 
investors currently enjoy under the U.S. legal system. These 
include due process protections and the right to receive a fair 
market value for property in the event of an expropriation. The 
Peru FTA includes recourse to an investor-state dispute 
settlement mechanism.
    The investment rules in the Peru FTA are significantly 
changed from those originally included in NAFTA's Chapter 11 in 
response to concerns about overly broad interpretations by some 
arbitration panels and creative claims brought by some private 
companies against the governments of Mexico, the United States 
and Canada. The changes clarified that, except in rare 
circumstances, legitimate ``public welfare'' regulations do not 
constitute regulatory expropriations, required investor-state 
panels to consider the same factors as those considered in U.S. 
courts in determining whether there is an expropriation of 
property, provided guidance regarding the ``minimum standard of 
treatment'' obligation, and imposed new transparency 
requirements.
    In addition, pursuant to the May 10 agreement, new language 
was included in the Peru FTA's Preamble to clarify that foreign 
investors in the United States are not to be accorded greater 
substantive rights with respect to investment provisions than 
U.S. investors under U.S. law.
    Dispute Settlement.--The Peru FTA sets out detailed 
procedures for the resolution of disputes over compliance with 
the obligations under the agreement.

                  PROCEDURES OF THE TRADE ACT OF 2002

    H.R. 3688 is being considered by Congress under the 
procedures of the Trade Act of 2002. Pursuant to these 
requirements, the President is required to provide written 
notice to Congress of the President's intention to enter into 
the negotiations. Throughout the negotiating process, and prior 
to entering into an agreement, the President is required to 
consult with Congress regarding the ongoing negotiations.
    The President must notify Congress of his intent to enter 
into a trade agreement at least 90 calendar days before the 
agreement is signed. Within 60 days after entering in the 
Agreement, the President must submit to Congress a description 
of those changes to existing laws that the President considers 
would be required to bring the United States into compliance 
with the Agreement. After entering into the Agreement, the 
President must also submit to Congress the formal legal text of 
the agreement, draft implementing legislation, a statement of 
administrative action proposed to implement the Agreement, and 
other related supporting information as required under section 
2105(a) of the Trade Act of 2002.
    Following submission of these documents, the implementing 
bill is introduced, by request, by the Majority Leader and the 
Minority Leader in each chamber. The House then has up to 60 
days to consider implementing legislation for the Agreement 
(the Senate has up to an additional 30 days). No amendments to 
the legislation are allowed under the requirements of the Trade 
Act of 2002.

                         C. Legislative History

    Negotiations for a free trade agreement between the United 
States and Peru began in May 2004. On January 6, 2006, the 
United States Trade Representative (``USTR'') formally notified 
the Congress of its intention to enter into a free trade 
agreement with Peru. Thereafter, on April 12, 2006, then-U.S. 
Trade Representative Rob Portman and Peruvian Minister of 
Foreign Trade and Tourism Alfredo Ferrero Diez Canseco signed 
the United States-Peru Trade Promotion Agreement. The agreement 
was ratified by the Peruvian Congress in June 2006.
    USTR submitted to Congress on June 9, 2006, a description 
of the changes to existing U.S. laws that would be required to 
bring the United States into compliance with the Agreement.
    On June 24 and 25, 2007, respectively, the United States 
and Peru signed a Protocol of Amendment, revising the Peru FTA 
to include key aspects of the May 10 Agreement. The Peruvian 
Congress approved the amendments to the Peru FTA by a vote of 
70-38 on June 27, 2007.

                          LEGISLATIVE HEARING

    On July 12, 2006, the Committee held a hearing on the 
implementation of the Peru FTA, as originally negotiated.

                            COMMITTEE ACTION

    On July 20, 2006, the Committee on Ways and Means 
considered in an informal mark-up session draft legislation to 
implement the Peru FTA, as originally negotiated, and a 
Statement of Administrative Action. The Committee approved the 
draft legislation by a vote of 23-13, without amendment. No 
further action was taken on the draft legislation.
    On September 25, 2007, the Committee considered in an 
informal mark-up session draft legislation to implement the 
Peru FTA, as re-negotiated pursuant to the May 10 Agreement. 
The Committee approved the draft legislation, without 
amendment, by voice vote.
    On September 27, 2007, President Bush transmitted the 
United States-Peru Trade Promotion Agreement, a legislative 
proposal to implement the agreement, a Statement of 
Administrative Action and supporting documents to Congress. On 
the same day, H.R. 3688, a bill to implement the United States-
Peru Trade Promotion Agreement, was introduced by Majority 
Leader Hoyer, by request, for himself and Minority Leader 
Boehner. H.R. 3688 was then referred to the Committee on Ways 
and Means.
    On October 31, 2007, Committee on Ways and Means formally 
met to consider H.R. 3688. The Committee ordered H.R. 3688 
favorably reported to the House of Representatives by a vote of 
39-0, without amendment (under the procedures of the Trade Act 
of 2002, no amendments are permitted after introduction).

                     II. SECTION-BY-SECTION SUMMARY


                Title I: Approval and General Provisions


               SECTION 101: APPROVAL AND ENTRY INTO FORCE

Present law

    No provision.

Explanation of provision

    Section 101 states that Congress approves the Peru FTA and 
the Statement of Administrative Action. The Peru FTA enters 
into force when the President determines that Peru is in 
compliance with all provisions that take effect on the date of 
entry into force of the Agreement and exchanges notes with the 
Government of Peru providing for entry into force on or after 
January 1, 2008.

Reason for change

    Approval of the Peru FTA and the Statement of 
Administrative Action is required under the procedures of 
section 2103(b)(3) of the Trade Act of 2002. Section 101 
provides for such approval and for entry into force of the Peru 
FTA.

 SECTION 102: RELATIONSHIP OF THE AGREEMENT TO UNITED STATES AND STATE 
                                  LAW

Present law

    No provision.

Explanation of provision

    Section 102(a) provides that U.S. law prevails in the case 
of a conflict with the Peru FTA. Section 102(b) provides that 
only the United States is entitled to bring a courtaction 
challenging a state law as being invalid on grounds of inconsistency 
with the FTA. Section 102(c) states that there is no private cause of 
action or defense under the FTA and no person other than the United 
States may challenge a federal or state law in court as being 
inconsistent with the FTA.

Reason for change

    The provision addresses the issue of the operation of the 
agreement relative to federal and state law, as well as private 
remedies. Section 102 is necessary to make clear that no 
provision of the Peru FTA will be given effect if it is 
inconsistent with federal law and that entry into force of the 
agreement creates no new private remedy.

 SECTION 103: IMPLEMENTING ACTIONS IN ANTICIPATION OF ENTRY INTO FORCE 
                        AND INITIAL REGULATIONS

Present law

    No provision.

Explanation of provision

    Section 103(a) provides that, after the date of enactment, 
the President may proclaim such actions, and other U.S. 
Government officers may issue such regulations, as are 
necessary to ensure the appropriate implementation of any 
provision of the legislation that is to take effect on the date 
of entry into force of the Agreement. The effective date of 
such actions and regulations may not be earlier than the date 
of entry into force of the Peru FTA. Where proclaimed actions 
are not subject to consultation and layover requirements under 
the Act, proclamations generally may not take effect earlier 
than 15 days after their publication.
    Section 103(b) establishes that regulations necessary or 
appropriate to carry out actions under the Act and Statement of 
Administrative Action must, to the maximum extent feasible, be 
issued within one year of entry into force of the Peru FTA or, 
where a provision takes effect on a later date, within one year 
of the effective date of the provision.

Reason for change

    Section 103 provides for the issuance of regulations. The 
Committee strongly believes that regulations should be issued 
in a timely manner to provide maximum clarity to parties 
claiming benefits under the Peru FTA. The Committee, therefore, 
notes the importance of the one-year period for issuing 
regulations and, further, that the Statement of Administrative 
Action commits each agency that will be issuing regulations to 
provide a report to Congress if it cannot do so within that 
time. Such reports must be submitted at least 30 days prior to 
the end of the one-year period.

      SECTION 104: CONSULTATION AND LAYOVER FOR PROCLAIMED ACTIONS

Present law

    No provision.

Explanation of provision

    Section 104 establishes requirements for proclamation of 
actions that are subject to consultation and layover provisions 
under the Act. The President may proclaim such action only 
after: (1) obtaining advice from the U.S. International Trade 
Commission (``ITC'') and the appropriate private sector 
advisory committees, (2) submitting a report to the Ways and 
Means and Finance Committees concerning the reasons for the 
action, and (3) providing for a 60-day layover period (starting 
after the President has both obtained the required advice and 
provided the required report). The proposed action cannot take 
effect until after the expiration of the 60-day period and 
after the President has consulted with the Ways and Means and 
Finance Committees regarding the proposed action.

Reason for change

    The bill gives the President certain proclamation authority 
but requires extensive consultation with Congress before such 
authority may be exercised. The Committee believes that such 
consultation is an essential component of the delegation of 
authority to the President and expects that such consultations 
will be conducted in a thorough and timely manner.

     SECTION 105: ADMINISTRATION OF DISPUTE SETTLEMENT PROCEEDINGS

Present law

    No provision.

Explanation of provision

    Section 105 authorizes the President to establish an office 
within the Department of Commerce responsible for providing 
administrative assistance to dispute settlement panels that are 
established under the Peru FTA. The section also authorizes 
appropriations necessary for the establishment and operation of 
the office and to pay the U.S. share of expenses of the panels.

Reason for change

    Dispute settlement procedures and panels are necessary to 
ensure that disputes over compliance with FTA provisions can be 
resolved effectively. The Committee believes that the Commerce 
Department is the appropriate agency to provide administrative 
assistance to such panels.

                   SECTION 106: ARBITRATION OF CLAIMS

Present law

    No provision.

Explanation of provision

    Section 106 authorizes the United States to resolve certain 
claims covered by the Investor-State Dispute Settlement 
Procedures set forth in the Peru FTA.

Reason for change

    This provision is necessary to meet U.S. obligations under 
Section B of Chapter 10 of the Peru free trade agreement.

          SECTION 107: EFFECTIVE DATES; EFFECT OF TERMINATION

Present law

    No provision.

Explanation of provision

    Section 107 provides that, with the exception of Sections 
1-3 and Title I, which take effect on the date of enactment of 
the Act, the effective date of the Act is the date the Peru FTA 
enters into force with respect to the United States. The 
provisions of the Act terminate on the date on which the Peru 
FTA terminates.

Reason for change

    Section 107 implements provisions of the Peru FTA relating 
to the effective date and date of termination of the Act.

                      Title II: Customs Provisions


                   SECTION 201: TARIFF MODIFICATIONS

Present law

    No provision.

Explanation of provision

    Section 201(a) provides the President with the authority to 
proclaim tariff modifications necessary or appropriate to carry 
out the Agreement and requires the President to terminate 
Peru's designation as a beneficiary developing country for the 
purpose of the Generalized System of Preferences program as of 
the date the Agreement enters into force.
    Section 201(b) gives the President the authority, subject 
to consultation and layover, to proclaim further tariff 
modifications necessary or appropriate to maintain the general 
level of reciprocal and mutually advantageous concessions with 
respect to Peru provided for by the Agreement.
    Section 201(c) allows the President, for any goods for 
which the base rate under the Agreement is a specific or 
compound rate of duty, to substitute for the base rate an ad 
valorem rate to carry out the tariff modifications in 
subsections (a) and (b).
    Section 201(d) directs the President, when implementing 
tariff rate quotas under the Agreement, to ensure that imports 
of agricultural goods do not disrupt the orderly marketing of 
commodities in the United States.

Reason for change

    The provision implements the duty reduction commitments 
made in the Peru FTA.

      SECTION 202: ADDITIONAL DUTIES ON CERTAIN AGRICULTURAL GOODS

Present law

    No provision.

Explanation of provision

    Section 202 implements the agricultural safeguard 
provisions of Article 2.18 and Annex 2.18 of the Peru FTA. 
Section 202(b) directs the Secretary of the Treasury 
(``Secretary'') to assess an additional duty in any year when 
the volume of imports of a ``safeguard good'' exceeds 130 
percent of the in-quota quantity allocated to Peru for the good 
in that calendar year as set forth in Annex 2.3 of the 
Agreement. The additional duty is calculated as a specified 
percentage of the difference between the Normal Trade Relations 
(``NTR'' or ``MFN'') rate of duty and the duty set out in the 
Schedule of the United States to Annex 2.3 of the Agreement. 
The sum of the duties assessed under the agricultural safeguard 
and the applicable rate of duty in the U.S. Schedule may not 
exceed the NTR (MFN) rate of duty. No additional duty may be 
applied on a good if, at the time of entry, the good is subject 
to a safeguard measure under the procedures set out in Subtitle 
A of Title III of the bill or under the safeguard procedures 
set out in Chapter 1 of Title II of the Trade Act of 1974 (the 
``Section 201'' global safeguard). The additional duties remain 
in effect only until the end of the calendar year in which they 
are imposed.

Reason for change

    This provision implements commitments made in the Peru FTA 
relating to agricultural safeguards. Such safeguards provide 
important temporary relief to farmers in the United States and 
Peru who face a surge in certain agricultural imports following 
entry into force of the Peru FTA.

                      SECTION 203: RULES OF ORIGIN

Present law

    No provision.

Explanation of provision

    Section 203 codifies the rules of origin set out in Chapter 
4 of the Peru FTA. Section 203(b) establishes three basic ways 
for a Peruvian good to qualify as an ``originating good'' and 
therefore be eligible for preferential tariff treatment when it 
is imported into the United States. A good is an originating 
good if: (1) it is ``wholly obtained or produced entirely in 
the territory of Peru, the United States, or both''; (2) it is 
produced entirely in the United States, Peru, or both and any 
materials used to produce the good that are not themselves 
originating goods are transformed in such a way as to cause 
their tariff classification to change or the good otherwise 
meets regional content and other requirements, as specified in 
Annex 3-A or Annex 4.1 of the Peru FTA; or (3) it is produced 
entirely in the territory of Peru, the United States, or both 
exclusively from originating materials.
    Under the rules in Chapter 3, Annex 3-A, Chapter 4, and 
Annex 4.1 of the Peru FTA, an apparel product must generally 
meet a tariff shift rule that effectively imposes a ``yarn 
forward'' requirement. Thus, to qualify as an originating good 
imported into the United States from Peru, an apparel product 
must have been cut (or knit to shape) and sewn or otherwise 
assembled in Peru, the United States, or both from yarn, or 
fabric made from yarn that originates in Peru, the United 
States, or both.
    Section 203(o)(2) provides authority for the President to 
add fabrics or yarns to a list of products that are unavailable 
in commercial quantities in a timely manner, and such products 
are treated as if they originate in Peru, regardless of their 
actual origin, when used as inputs in the production of textile 
or apparel goods. Section 203(o)(4) provides a process by which 
the President may modify that list at the request of interested 
entities, defined as Peru and potential and actual suppliers 
and purchasers of textile or apparel goods.
    The remainder of Section 203 sets forth more detailed rules 
for determining whether a good meets the FTA's requirements 
under the second method of qualifying as an originating good. 
These rules include those pertaining to de minimis quantities 
of non-originating materials that do not undergo a tariff 
transformation, transformation by regional content, and 
alternative methods for calculating regional value-content. 
Other provisions in section 203 address valuation of materials, 
determination of the originating or non-originating status of 
fungible goods and materials, and treatment of accessories, 
spare parts and tools, packaging materials, indirect materials, 
and goods put up in sets. Section 203(1) specifies that goods 
that undergo further production or other operations outside 
Peru or the United States (with certain exceptions) or do not 
remain under the control of the customs authorities of such 
other countries do not qualify as originating goods.

Reason for change

    Rules of origin are needed to confine FTA benefits, such as 
tariff cuts, to Peruvian goods and to prevent third-country 
goods from being transshipped through Peru and claiming 
benefits under the FTA. This provision implements the 
commitments made in the Peru FTA with respect to rules of 
origin applying to imports from Peru.

                     SECTION 204: CUSTOMS USER FEES

Present law

    No provision.

Explanation of provision

    Section 204 of the bill implements the U.S. commitments 
under Article 2.10.4 of the Peru FTA to eliminate the 
Merchandise Processing Fee (``MPF'') on originating goods. In 
accordance with U.S. obligations under the General Agreement on 
Tariffs and Trade 1994, the provision also prohibits use of 
funds in the Customs User Fee Account to provide services 
related to entry of originating goods.

Reason for change

    As with other free trade agreements, the Peru FTA 
eliminates the MPF on qualifying goods from Peru. Other customs 
user fees remain in place. Section 204 is necessary to put the 
United States in compliance with the user fee elimination 
provisions of the Peru FTA. The Committee expects that the 
President, in his yearly budget request, will take into account 
the need for funds to pay expenses for entries under the Peru 
FTA given that MPF funds will not be available.

SECTION 205: DISCLOSURE OF INCORRECT INFORMATION; FALSE CERTIFICATIONS 
           OF ORIGIN; DENIAL OF PREFERENTIAL TARIFF TREATMENT

Present law

    No provision.

Explanation of provision

    Section 205 implements Articles 4.18.5 and 4.19.3 of the 
Peru FTA. Section 205(a) prohibits the imposition of a penalty 
upon importers who make an invalid claim for preferential 
tariff treatment under the agreement if the importer acts 
promptly and voluntarily to correct the error and pays any 
duties owed on the good in question. The provision also makes 
it unlawful for a person to certify falsely, by fraud, gross 
negligence, or negligence that a good exported from the United 
States is an originating good. However, the provision prohibits 
the imposition of a penalty if the exporter or producer 
promptly and voluntarily provides notice of the incorrect 
information to every person to whom a certification was issued.
    Section 205(b) provides that if an importer, exporter or 
producer has engaged in a pattern of conduct in providing false 
or unsupported representations, U.S. authorities may suspend 
preferential treatment with respect to identical goods imported 
by that importer, exporter or producer.

Reason for change

    This provision is necessary to implement commitments in the 
Peru FTA relating to application of penalties for submission of 
false information or certifications by importers, exporters and 
producers.

                 SECTION 206: RELIQUIDATION OF ENTRIES

Present law

    No provision.

Explanation of provision

    Section 206 implements Article 4.19.5 of the Peru FTA and 
provides authority for the Customs Service to reliquidate an 
entry to refund any excess duties (including any merchandise 
processing fees) paid on a good qualifying under the rules of 
origin for which no claim for preferential tariff treatment was 
made at the time of importation if the importer so requests, 
within one year after the date of importation.

Reason for change

    Article 4.19.5 of the Peru FTA anticipates that private 
parties may err in claiming preferential benefits under the 
agreement and provides a one-year period for parties to make 
such claims for preferential tariff treatment even if the entry 
of the goods at issue has already been liquidated, i.e., 
legally finalized by customs officials. Section 207 is 
necessary to put the United States into compliance with Article 
4.19.5.

                SECTION 207: RECORDKEEPING REQUIREMENTS

Present law

    No provision.

Explanation of provision

    Section 207 of the bill implements Article 4.17 of the Peru 
FTA. The provision requires any person who completes and issues 
a certificate of origin under Article 4.15 of the agreement for 
a good exported from the United States to maintain, for a 
period of five years after the date of certification, specified 
documents demonstrating that the good qualifies as originating.

Reason for change

    Section 207 is necessary to put the United States in 
compliance with the recordkeeping requirement provisions in the 
Article 4.17 of the Peru FTA.

 SECTION 208: ENFORCEMENT RELATING TO TRADE IN TEXTILE OR APPAREL GOODS

Present law

    No provision.

Explanation of provision

    Section 208 implements the customs cooperation and 
verification of origin provisions in Article 3.2 of the Peru 
FTA. Under Article 3.2, the United States may request the 
Government of Peru to conduct a verification of whether a claim 
of origin for a textile or apparel good is accurate or a 
particular exporter or producer is complying with applicable 
customs laws, regulations, and procedures regarding trade in 
textile or apparel goods. Section 208(a) provides that the 
President may direct the Secretary to take ``appropriate 
action'' while such a verification is being conducted. 
``Appropriate action'' may include: (i) suspending preferential 
tariff treatment for textile or apparel goods that the person 
subject to the verification has produced or exported if the 
Secretary believes there is insufficient information to sustain 
a claim for such treatment; (ii) denying preferential tariff 
treatment to such goods if the Secretary decides that a person 
has provided incorrect information to support a claim for such 
treatment; (iii) detaining such goods if the Secretary 
considers there is not enough information to determine their 
country of origin; and (iv) denying entry to such goods if the 
Secretary determines that a person has provided erroneous 
information on their origin.
    Under Section 208(c), the President may also direct the 
Secretary to take ``appropriate action'' after a verification 
has been completed. Such action may include: (i) denying 
preferential tariff treatment to textile or apparel goods that 
the person subject to the verification has exported or produced 
if the Secretary considers there is insufficient information to 
support a claim for such treatment or determines that a person 
has provided incorrect information to support a claim for such 
treatment; and (ii) denying entry to such goods if the 
Secretary decides that a person has provided incorrect 
information regarding their origin or that there is 
insufficient information to determine their origin. Unless the 
President sets an earlier date, any such action may remain in 
place until the Secretary obtains enough information to decide 
whether the exporter or producer that was subject to the 
verification is complying with applicable customs rules or 
whether a claim that the goods qualify for preferential tariff 
treatment or originate in an FTA country is accurate.
    Under Section 208(e), the Secretary may publish the name of 
a person that the Secretary has determined: (i) is engaged in 
circumvention of applicable laws, regulations, or procedures 
affecting trade in textile or apparel goods; or (ii) has failed 
to demonstrate that it produces, or is capable of producing, 
textile or apparel goods.

Reason for change

    To avoid textile transshipment, special textile enforcement 
provisions were included in the Peru FTA. Section 208 is 
necessary to authorize these enforcement mechanisms for use by 
U.S. authorities.

                        SECTION 209: REGULATIONS

Present law

    No provision.

Explanation of provision

    Section 209 directs the Secretary to prescribe regulations 
necessary to carry out the tariff-related provisions of the 
Act, including the rules of origin and customs user fee 
provisions.

Reason for change

    This provision gives the President necessary regulatory 
authority to carry out the agreement. No such regulation may 
take effect before the Peru FTA enters into force.

                     Title III: Relief From Imports


                        SECTION 301: DEFINITIONS

Present law

    No provision.

Explanation of provision

    Section 301 defines ``Peruvian article'' and ``Peruvian 
textile or apparel article,'' which are key terms for Title 
III.

Reason for change

    This provision clarifies the scope of the provisions in 
Title III.

     Subtitle A: Relief from Imports Benefiting from the Agreement


                            SECTIONS 311-316

Present law

    No provision.

Explanation of provisions

    Sections 311-316 authorize the President, after an 
investigation and affirmative determination by the U.S. 
International Trade Commission (``ITC''), to impose certain 
import relief measures when, as a result of the reduction or 
elimination of a duty under the Agreement, a Peruvian product 
is being imported into the United States in such increased 
quantities and under such conditions as to be a substantial 
cause of serious injury or threat of serious injury to a 
domestic industry.
    Section 311 provides for the filing of petitions with the 
ITC and for the ITC to conduct safeguard investigations under 
Subtitle A. Section 311(a)(1) provides that a petition 
requesting a safeguard action may be filed by an entity that is 
``representative of an industry.'' As under Section 202(a)(1) 
of the Trade Act of 1974, a trade association, firm, certified 
or recognized union, or a group of workers can be considered 
such an entity. Section 311(b) sets out the standard to be used 
by the ITC in undertaking an investigation and making a 
determination in Subtitle A safeguard proceedings.
    Section 311(c) provides that certain provisions of Section 
202 of the Trade Act of 1974 also apply with respect to 
investigations initiated under Section 311(b), including 
provisions defining ``substantial cause'' and listing factors 
to be taken into account in making safeguard determinations.
    Section 311(d) exempts from investigation under the section 
Peruvian articles with respect to which relief has previously 
been provided under Subtitle A.
    Section 312 requires the ITC to make a determination not 
later than 120 days after the date on which the Section 311 
investigation is initiated. Under Sections 312(b) and (c), if 
the ITC makes an affirmative determination, it must find and 
recommend to the President the amount of import relief that is 
necessary to remedy or prevent serious injury and to facilitate 
the efforts of the domestic industry to make a positive 
adjustment to import competition. Section 312(d) directs the 
ITC to submit a report to the President regarding the 
determination no later than 30 days after the determination is 
made. Section 312(e) requires the ITC to make this report 
public and to publish a summary of it in the Federal Register.
    Section 313(a) provides that the President, within 30 days 
of receiving a report from the ITC under Section 312, must 
provide import relief to the extent that the President 
determines is necessary to remedy or prevent the injury found 
by the ITC 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 relief will not provide greater economic 
and social benefits than costs.
    Section 313(c) sets forth the nature of the relief that the 
President may provide. The President may take action in the 
form of a suspension of further reductions in the rate of duty 
to be applied to the articles in question, or an increase in 
the rate of duty on the articles in question to a level that 
does not exceed the lesser of the existing NTR (MFN) rate or 
the NTR (MFN) rate of duty that was imposed on the day before 
the Peru FTA entered into force. Under Section 313(c)(2), if 
the relief the President provides has a duration greater than 
one year, the relief must be subject to progressive 
liberalization at regular intervals over the course of its 
application.
    Section 313(d) provides that the President may initially 
provide import relief for up to two years. This period may be 
extended for an additional two years (to a maximum aggregate 
period of four years) if, after an investigation by the ITC and 
receipt of an ITC report, the President determines that import 
relief continues to be necessary and there is evidence that the 
industry is making a positive adjustment to import competition. 
The ITC must conduct an investigation on these issues if, 
within a specified period before the relief terminates, a 
concerned industry files a petition requesting an 
investigation. The ITC must issue a report on its investigation 
to the President no later than 60 days before the termination 
of the import relief.
    Section 313(e) specifies that on the termination of import 
relief, the rate of duty for the remainder of the calendar year 
is the rate that was scheduled to have been in effect one year 
after the initial provision of import relief. In the calendar 
year that follows the year of termination of import relief, the 
President may either apply the rate of duty set out in the 
relevant U.S. Schedule to the Peru FTA or eliminate the duty in 
equal annual stages until the end of the scheduled phase-out 
period.
    Section 313(f) exempts from relief any article that is: (i) 
subject to import relief under the global safeguard provisions 
in U.S. law (Chapter 1 of Title II of the Trade Act of 1974); 
(ii) subject to import relief under Subtitle B; or (iii) 
subject to additional duties as an agricultural good under 
Section 202(b).
    Section 314 provides that no relief may be provided under 
this subtitle after ten years from the date the Peru FTA enters 
into force, unless the scheduled phase-out period for the 
article under the agreement is greater than ten years, in which 
case relief may not be provided for that article after the 
scheduled phase-out period ends.
    Section 315 authorizes the President to provide 
compensation to Peru consistent with Article 8.5 of the Peru 
FTA if relief is ordered.
    Section 316 provides for the treatment of confidential 
business information.

Reason for change

    These provisions establish a mechanism for providing 
temporary import relief where a U.S. industry experiences 
injury or threat of injury by reason of increased import 
competition from Peru resulting from reduction or elimination 
of a duty under the Peru FTA. The Committee notes that the 
President is not required to provide relief if the relief will 
not provide greater economic and social benefits than costs and 
expects that the President will use this discretion only to the 
extent consistent with the letter, spirit and purpose of the 
safeguard provisions. The Committee intends that administration 
of this safeguard be consistent with U.S. obligations under 
Section A of Chapter Eight (Trade Remedies) of the Peru FTA.

           Subtitle B: Textile and Apparel Safeguard Measures


                            SECTIONS 321-328

Present law

    No provision.

Explanation of provisions

    Sections 321-328 authorize the President to impose certain 
import relief measures when he determines that, as a result of 
the elimination or reduction of a duty provided under the Peru 
FTA, a Peruvian textile or apparel article is being imported 
into the United States in such increased quantities, in 
absolute terms or relative to the domestic market for that 
article, and under such conditions as to cause serious damage, 
or actual threat thereof, to the domestic industry.
    Section 321 provides that a request for safeguard relief 
under this subtitle may be filed with the President by an 
interested party. The President must review the request and 
determine whether to commence consideration of the request. 
Under Section 321(b), if the President determines that the 
request contains information necessary to warrant consideration 
on the merits, the President must provide notice stating that 
the request will be considered and seeking public comments on 
the request.
    Section 322(a) provides that the President shall determine, 
pursuant to a request by an interested party, whether, as a 
result of the elimination or reduction of a duty provided under 
the Peru FTA, a Peruvian textile or apparel article is being 
imported intothe United States in such increased quantities, in 
absolute terms or relative to the domestic market for that article, 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. The President must 
make this determination within 30 days after the completion of 
consultations held pursuant to Article 3.1.5 of the Agreement.
    Section 322(b) sets forth the relief that the President may 
provide, which is an increase in the rate of duty on the 
articles in question to a level that does not exceed the lesser 
of the existing NTR (MFN) rate or the NTR (MFN) rate of duty 
that was imposed on the day before the Agreement entered into 
force.
    Section 323 of the bill provides that the period of relief 
shall be no longer than two years. The period may be extended 
for an additional period not more than one year, if the 
President determines that continuation is necessary to remedy 
or prevent serious damage and to facilitate adjustment by the 
domestic industry and there is evidence the industry is making 
a positive adjustment. The aggregate period of relief, 
including any extension, may not exceed three years.
    Section 324 provides that relief may not be granted to an 
article under this subtitle if relief has previously been 
granted under this subtitle for that article, or the article is 
subject to import relief under Subtitle A of Title III of this 
bill or under Chapter 1 of Title II of the Trade Act of 1974.
    Under Section 325, after a safeguard expires, the rate of 
duty on the article that had been subject to the safeguard 
shall be the rate that would have been in effect, but for the 
safeguard action.
    Section 326 provides that the authority to provide 
safeguard relief under this subtitle expires five years after 
the date on which the Agreement enters into force.
    Section 327 authorizes the President to provide 
compensation to Peru if relief is ordered.
    Section 328 provides for the treatment of confidential 
business information.

Reason for change

    This provision implements the commitments under the Peru 
FTA relating to textile and apparel safeguard measures. The 
Committee intends that the provisions of subtitle B be 
administered in a manner that is transparent and that will 
serve as an example to our trading partners. In addition, the 
Committee encourages the President promptly to issue 
regulations on procedures for requesting such safeguard 
measures, for making determinations under section 322(a), and 
for providing relief under section 322(b).

       Subtitle C: Cases Under Title II of the Trade Act of 1974


          SECTION 331: FINDINGS AND ACTION ON GOODS FROM PERU

Present law

    No provision.

Explanation of provision

    Section 331(a) provides that if the ITC makes an 
affirmative determination, or a determination that the 
President may consider to be an affirmative determination, in a 
global safeguard investigation under Section 202(b) of the 
Trade Act of 1974, the ITC must find and report to the 
President whether Peruvian imports of the article that qualify 
as originating goods under the Peru FTA are a substantial cause 
of serious injury or threat thereof. Under Section 331(b), if 
the ITC makes a negative finding under Section 331(a), the 
President may exclude any imports that are covered by the ITC's 
finding from the global safeguard action.

Reason for change

    This provision implements commitments under the Peru FTA 
relating to treatment of Peruvian imports in global safeguard 
investigations under Section 202(b) of the Trade Act of 1974.

                         Title IV: Procurement


                  SECTION 401: GOVERNMENT PROCUREMENT

Present law

    No provision.

Explanation of provision

    Section 401 implements Chapter 9 of the Peru FTA and amends 
the definition of ``eligible product'' in Section 308(4)(A) of 
the Trade Agreements Act of 1979. As amended, Section 308(4)(A) 
will provide that an ``eligible product'' means a product or 
service of Peru that is covered under the Agreement for 
procurement by the United States.

Reason for change

    This provision implements U.S. commitments under Chapter 9 
of the Peru FTA (Government Procurement).

               Title V: Trade in Timber Products of Peru


                            SECTIONS 501-502

Present law

    No provision.

Explanation of provision

    Sections 501-502 implement obligations set out in Annex 
18.3.4 to the Peru FTA (Annex on Forest Sector Governance). 
Section 501(a) provides that, within 90 days of entry into 
force of the agreement, the President shall establish an 
interagency committee responsible for overseeing the 
implementation of the Annex on Forest Sector Governance.
    Section 501(b) authorizes the interagency committee to 
request the Government of Peru to conduct an audit to determine 
whether a particular producer or exporter in Peru is complying 
with all applicable Peruvian laws, regulations and measures 
governing the harvest of, and trade in, timber products.
    Section 501(c) also authorizes the interagency committee to 
request the Government of Peru to conduct a verification with 
respect to a particular shipment of timber products from Peru 
to the United States, to determine whether the exporter or 
producer of the products has complied with the applicable 
Peruvian laws, regulations and measures governing the harvest 
of, and trade in, timber products. The interagency committee 
may request that officials of an agency represented on the 
committee participate in a verification visit conducted by the 
Government of Peru. While a verification is pending, the 
interagency committee may direct U.S. Customs and Border 
Protection to detain the shipment that is the subject of the 
verification. If the Government of Peru has denied a request 
that a U.S. government official participate in a verification 
visit, the interagency committee may also direct U.S. Customs 
and Border Protection to deny entry to the shipment that is the 
subject of the verification.
    Upon receipt of a report of the results of a verification 
from the Government of Peru, the interagency committee shall 
determine whether it is appropriate to take any action with 
respect to the shipment that was the subject of the 
verification, or the products of the relevant producer or 
exporter. Under paragraph 7 of Section 501(c), appropriate 
actions may include: (1) directing U.S. Customs and Border 
Protection to deny entry to the shipment, (2) directing U.S 
Customs and Border Protection to deny entry to any products of 
the producer or exporter derived from any tree species listed 
in Appendices to the Convention on International Trade in 
Endangered Species of Wild Fauna and Flora in those cases in 
which a producer or exporter is found to have knowingly 
provided false information to Peruvian or U.S. officials 
regarding a shipment, and (3) any other action the interagency 
committee determines to be appropriate. In determining the 
appropriate action to take, and duration thereof, the 
interagency committee must consider anyrelevant information 
available to it, including the verification report from the Government 
of Peru and any information obtained by U.S. officials during a 
verification visit. Any appropriate action is to terminate no later 
than the date notified by the interagency committee to the Government 
of Peru or, if the Government of Peru conducts an audit and concludes 
that the subject of the audit has come into compliance with all 
applicable laws, regulations, and other measures of Peru governing the 
harvest of, and trade in, timber products, within 15 days after the 
Government of Peru submits the results of such an audit to the United 
States.
    If the Government of Peru fails to provide a verification 
report, the interagency committee may take such action with 
respect to the relevant exporter's timber products as the 
committee considers appropriate, including any action described 
in paragraph 7 of Section 501(c).
    Section 501(d) provides for confidential treatment of 
documents or information received in the course of an audit 
under Section 501(b) or a verification under Section 501(c). 
Section 501(e) directs the interagency committee to make 
publicly available in a timely manner any information on 
bilateral trade in timber products exchanged with Peru under 
paragraph 17 of Annex 18.3.4 of the Peru FTA.
    Section 501(f) addresses coordination with other laws, 
including with respect to the authority of various 
administering agencies and the effect on proceedings and 
determinations under other laws.
    Section 501(g) directs the Secretary of Agriculture, the 
Secretary of Homeland Security, the Secretary of the Interior, 
and the Secretary of the Treasury, in consultation with the 
interagency committee, to prescribe such regulations as are 
necessary to carry out Section 501. In addition, Section 501(h) 
provides that, within 90 days of entry into force of the Peru 
FTA, the President shall consult with the Ways and Means and 
Finance Committees on the resources, including staffing, needed 
to implement Annex 18.3.4 of the Agreement.
    Section 502 directs the USTR, in consultation with the 
appropriate agencies, to report to the Ways and Means and 
Finance Committees regarding implementation of Annex 18.3.4 of 
the Peru FTA and activities related to forest sector governance 
carried out under the Environmental Cooperation Agreement 
entered into between the United States and Peru on July 24, 
2006. Reports are to be provided by the end of each of the 
first and second years following entry into force of the Peru 
FTA and periodically thereafter.

Reason for change

    These provisions implement obligations under Annex 18.3.4 
to the Peru FTA (Annex on Forest Sector Governance). As noted 
above, this Annex, negotiated as a result of the May 10 
Agreement, addresses the problem of illegal logging in Peru. 
Peru lies at the heart of the Tropical Andes and is one of the 
most biologically rich and diverse eco-regions in world. 
Illegal logging poses a severe threat to Peru's irreplaceable 
plant and animal communities. The Committee notes the critical 
importance of stopping this practice of illegal logging. The 
Annex on Forest Sector Governance and Sections 501-502 of this 
Act provide groundbreaking new tools for the United States to 
use in that fight. The Committee expects that the President and 
the interagency committee will make the fullest possible use of 
these tools to ensure that the commitments under the Annex on 
Forest Sector Governance are being faithfully implemented and 
enforced and that any violation of the applicable Peruvian 
laws, regulations and measures governing the harvest of, and 
trade in, timber products is addressed.
    The Committee also notes the requirement under Section 502 
for the USTR to report to the Ways and Means and Finance 
Committees regarding implementation of obligations under the 
Annex on Forest Sector Governance. Given the critical 
importance of addressing the problem of illegal logging, the 
Committee expects that the USTR will provide timely, frequent 
and thorough reports regarding implementation of the 
obligations both of Peru and the United States (for example, 
regarding the work of the interagency committee, regulations to 
implement the obligations under the agreement, cases considered 
by the interagency committee and the Peruvian authorities and 
their resolution, audits and verifications conducted, and other 
related matters).

                           Title VI: Offsets


                     SECTION 601: CUSTOMS USER FEES

Present law

    Section 13031 of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (``COBRA'') authorized the Secretary 
of the Treasury to collect certain service fees. Section 412 of 
the Homeland Security Act of 2002 authorized the Secretary of 
the Treasury to delegate such authority to the Secretary of 
Homeland Security. Provided for under 19 U.S.C. 58c, these fees 
include: Processing fees for air and sea passengers, commercial 
trucks, rail cars, private aircraft and vessels, commercial 
vessels, dutiable mail packages, barges and bulk carriers, 
merchandise, and Customs broker permits. COBRA was amended on 
several occasions. The current authorization for the collection 
of the passenger and conveyance processing fees is through 
September 30, 2014. The current authorization for the 
collection of the merchandise processing fees is through 
October 21, 2014.

Description of proposal

    The proposal extends the passenger and conveyance 
processing fees and the merchandise processing fees authorized 
under COBRA through December 13, 2014.

Reason for change

    The Committee believes it is appropriate to extend the 
passenger and conveyance processing fees and the merchandise 
processing fees authorized under COBRA.

       SECTION 602: TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES

Present law

    In general, corporations are required to make quarterly 
estimated tax payments of their income tax liability. For a 
corporation whose taxable year is a calendar year, these 
estimated tax payments must be made by April 15, June 15, 
September 15, and December 15.
    Under present law, in the case of a corporation with assets 
of at least $1 billion, the payments due in July, August, and 
September, 2012, shall be increased to 115 percent of the 
payment otherwise due and the next required payment shall be 
reduced accordingly.

Explanation of provision

    The provision increases the percentage by 0.75 of a 
percentage point, from 115 percent to 115.75 percent.

Reason for change

    The Committee believes it is appropriate to adjust the 
corporate estimated tax payments.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the vote of the Committee on Ways and Means in its 
consideration of the bill H.R. 3688.

                       Motion to Report the Bill

    The bill, H.R. 3688, was ordered favorably reported by a 
roll call vote of 39 yeas to 0 nays (with a quorum being 
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Rangel.....................        X   ........  .........  Mr. McCrery......        X   ........  .........
Mr. Stark......................        X   ........  .........  Mr. Herger.......        X   ........  .........
Mr. Levin......................        X   ........  .........  Mr. Camp.........        X   ........  .........
Mr. McDermott..................        X   ........  .........  Mr. Ramstad......        X   ........  .........
Mr. Lewis (GA).................        X   ........  .........  Mr. Johnson......        X   ........  .........
Mr. Neal.......................        X   ........  .........  Mr. English......        X   ........  .........
Mr. McNulty....................        X   ........  .........  Mr. Weller.......  ........  ........  .........
Mr. Tanner.....................        X   ........  .........  Mr. Hulshof......        X   ........  .........
Mr. Becerra....................        X   ........  .........  Mr. Lewis (KY)...        X   ........  .........
Mr. Doggett....................        X   ........  .........  Mr. Brady........        X   ........  .........
Mr. Pomeroy....................        X   ........  .........  Mr. Reynolds.....        X   ........  .........
Ms. Tubbs Jones................        X   ........  .........  Mr. Ryan.........        X   ........  .........
Mr. Thompson...................        X   ........  .........  Mr. Cantor.......        X   ........  .........
Mr. Larson.....................        X   ........  .........  Mr. Linder.......        X   ........  .........
Mr. Emanuel....................        X   ........  .........  Mr. Nunes........        X   ........  .........
Mr. Blumenauer.................        X   ........  .........  Mr. Tiberi.......        X   ........  .........
Mr. Kind.......................        X   ........  .........  Mr. Porter.......        X   ........  .........
Mr. Pascrell...................        X   ........  .........
Ms. Berkley....................  ........  ........  .........
Mr. Crowley....................        X   ........  .........
Mr. Van Hollen.................        X   ........  .........
Mr. Meek.......................        X   ........  .........
Ms. Schwartz...................        X   ........  .........
Mr. Davis......................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                           IV. BUDGET EFFECTS


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of the rule XIII of the 
Rules of the House of Representatives, the following statement 
is made concerning the effects on the budget of this bill, H.R. 
3688, as reported: The Committee agrees with the estimate 
prepared by the Congressional Budget Office (``CBO'') which is 
included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with subdivision 3(c)(2) of rule XIII of the 
Rules of the House of Representatives, the Committee states 
that the provisions of H.R. 3688 would reduce customs duty 
receipts due to lower tariffs imposed on goods from Peru.

      C. Cost Estimate Prepared by the Congressional Budget Office

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

                                     U.S. Congress,
                                Congressional Budget Office
                                  Washington, DC, November 2, 2007.
Hon. Charles B. Rangel,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3688, the United 
States-Peru Trade Promotion Agreement Implementation Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Zachary 
Epstein.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 3688--United States-Peru Trade Promotion Agreement Implementation 
        Act

    Summary: H.R. 3688 would approve the free trade agreement 
between the government of the United States and the government 
of Peru that was entered into on April 12, 2006. It would 
provide for tariff reductions and other changes in law related 
to implementation of the agreement. It also would shift some 
corporate income tax payments between fiscal years.
    The Congressional Budget Office (CBO) and the Joint 
Committee on Taxation (JCT) estimate that enacting the 
legislation would reduce revenues by $20 million in 2008, 
increase revenues by $292 million over the 2008-2012 period, 
and reduce revenues by $423 million over the 2008-2017 period. 
CBO estimates that enacting H.R. 3688 also would increase 
direct spending by $4 million in 2008 and by $27 million over 
the 2008-2012 period, and reduce direct spending by $443 
million over the 2008-2017 period. Further, CBO estimates that 
implementing the legislation would result in new discretionary 
spending of less than $500,000 per year, assuming the 
availability of appropriated funds.
    CBO and JCT have determined that the bill contains no 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act (UMRA). CBO has determined that the non-tax 
provisions of the bill contain private-sector mandates with 
costs that would greatly exceed the annual threshold 
established in UMRA for private-sector mandates ($131 million 
in 2007, adjusted annually for inflation) in fiscal year 2015. 
JCT has determined that the tax provision of the bill (section 
602) contains no private-sector mandate as defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the legislation over the 2008-2017 period 
is shown in the following table. The cost of this legislation 
falls within budget function 750 (administration of justice).

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         By fiscal year, in millions of dollars--
                                                         ---------------------------------------------------------------------------------------------------------------------------------------
                                                             2008       2009       2010       2011       2012       2013       2014       2015       2016       2017     2008- 2012   2008- 2017
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       CHANGES IN REVENUES

Free Trade Agreement....................................        -20        -35        -37        -39        -41        -44        -47        -50        -53        -56         -173         -423
Payment of Corporate Estimated Tax......................          0          0          0          0        465       -465          0          0          0          0          465            0
Total Changes in Revenues...............................        -20        -35        -37        -39        424       -509        -47        -50        -53        -56          292         -423

                                                                                   CHANGES IN DIRECT SPENDING

Customs User Fees:
    Estimated Budget Authority..........................          4          5          6          6          6          7          7       -484          0          0           27         -443
    Estimated Outlays...................................          4          5          6          6          6          7          7       -484          0          0           27        -443
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office and Joint Committee on Taxation.

    Basis of estimate:

Revenues

    Under the United States-Peru agreement, tariffs on U.S. 
imports from Peru 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 the date the agreement enters into 
force to gradual elimination over 10 years.
    According to the U.S. International Trade Commission, the 
United States collected about $5 million in customs duties in 
2006 on $6 billion of imports from Peru. However, since 1991, 
imports to the United States from Peru have been subject to 
reduced tariff rates in accordancewith the Andean Trade 
Preference Act (ATPA), which was expanded in legislation enacted in 
2002, and is currently scheduled to expire on February 29, 2008. The 
ATPA overlaps to a large extent with the free trade agreement that 
would be implemented by this bill. As a result, enacting the bill would 
effectively extend the ATPA for Peru after February 29, 2008, while 
also lowering tariff rates not covered by the ATPA. Based on expected 
imports from Peru, CBO estimates that implementing the tariff schedule 
outlined in the U.S.-Peru agreement would reduce revenues by $20 
million in 2008, by $173 million over the 2008-2012 period, and by $423 
million over the 2008-2017 period, net of income and payroll tax 
offsets.
    This estimate includes the effects of increased imports 
from Peru 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 Peru 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 Peru would displace imports from 
other countries.
    H.R. 3688 would also shift payments of corporate estimated 
taxes between 2012 and 2013. For corporations with at least $1 
billion in assets, the bill would increase the portion of 
corporate estimated payments due from July through September of 
2012. JCT estimates that this change would increase revenues by 
$465 billion in 2012 and decrease revenues by $465 billion in 
2013.

Direct spending

    Under current law, customs user fees will expire either 
after October 7, 2014 (for COBRA fees) or after October 21, 
2014 (for merchandise processing fees). Such fees are recorded 
in the budget as offsetting receipts (a credit against direct 
spending). H.R. 3688 would extend both COBRA fees and 
merchandise processing fees through December 13, 2014. CBO 
estimates that this provision would increase offsetting 
receipts by $485 million in fiscal year 2015.
    In addition, the bill would exempt certain goods imported 
from Peru from merchandise processing fees. Based on the value 
of goods imported from Peru in 2007, CBO estimates that 
implementing this provision would reduce fee collections by 
about $4 million in fiscal year 2008 and by about $42 million 
over the 2008-2015 period. There would be no effects after 
December 13, 2014, because fees expire after that date.

Spending subject to appropriation

    Title I of the bill would authorize the appropriation of 
necessary funds for the Department of Commerce to pay the 
United States' share of the costs of the dispute settlement 
procedures established by the agreement. Based on information 
from the agency, CBO estimates that implementing this provision 
would cost less than $500,000 per year, subject to the 
availability of appropriated funds.
    Title III would authorize the International Trade 
Commission (ITC) to conduct investigations, if petitioned, into 
whether Peruvian imports might threaten or cause serious injury 
to domestic competitors. The ITC would report to the President 
on its findings and determinations, and if necessary, recommend 
the appropriate amount of import relief. Based on information 
from the agency, CBO estimates that implementing these 
provisions would cost less than $500,000 per year, subject to 
the availability of appropriated funds.
    Title V would require the United States Trade 
Representative to prepare a report for Congress regarding 
activities carried out to promote legal trade in timber 
products as stipulated in the agreement. CBO estimates that 
complying with this reporting requirement also would cost less 
than $500,000 per year.
    Estimated impact on state, local, and tribal governments: 
CBO and JCT have determined that the provisions of H.R. 3688 
contain no intergovernmental mandates as defined in UMRA.
    Estimated impact on the private sector: CBO has determined 
that the non-tax provisions of H.R. 3688 would impose private-
sector mandates, as defined in UMRA, by extending the customs 
user fees and by enforcing new record-keeping requirements on 
exporters of goods to Peru. The aggregate costs of those 
mandates would greatly exceed the annual threshold established 
in UMRA for private-sector mandates ($131 million in 2007, 
adjusted annually for inflation) in 2015. JCT has determined 
that the tax provision of the bill (section 602) contains no 
private-sector mandate as defined in UMRA.

Customs user fees

    The bill would extend through December 13, 2014 the customs 
user fees that are scheduled to expire on October 7, 2014 or 
October 21, 2014. These fees are used to fund the processing 
costs of the U.S. Customs Service. CBO estimates that the 
aggregate cost to the private sector to comply with this 
mandate relative to the case where the mandate is allowed to 
expire would be about $485 million in fiscal year 2015.

Record-keeping requirement

    The bill also would require any person exporting goods to 
Peru who is required to complete a certificate of origin to 
keep all documents that relate to the origin of goods being 
certified for at least five years after the date of 
certification. CBO estimates that the cost of that record-
keeping requirement for the private sector would be minimal.
    Previous CBO estimate: On October 24, 2007, CBO transmitted 
a cost estimate of S. 2113, an identically titled bill ordered 
reported by the Senate Committee on Finance on October 4, 2007. 
The provisions of S. 2113 and H.R. 3688 are identical, as are 
CBO's estimates.
    Estimate prepared by: Federal revenues: Andrew Langan, 
Zachary Epstein; Direct spending: Mark Grabowicz; Spending 
subject to appropriation: Susan Willie, Sunita D'Monte; Impact 
on state, local, and tribal governments: Neil Hood; Impact on 
the private sector: Jacob Kuipers.
    Estimate approved by: G. Thomas Woodward, Assistant 
Director for Tax Analysis; Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

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


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee, based on public hearing testimony and 
information from the Administration, concluded that it is 
appropriate and timely to consider H.R. 3688 as reported.

B. Summary of Findings and Recommendations of the Government Reform and 
                          Oversight Committee

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the performance goals and 
objectives of the part of this legislation that authorizes 
funding are for (a) the payment of the U.S. share of the 
expenses incurred in dispute settlement proceedings established 
under Chapter 21 of the Peru FTA and (b) the establishment and 
operation of an office within the Department of Commerce 
responsible for providing assistance to the panels in such 
proceedings.

                 C. Constitutional Authority Statement

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

              D. Information Relation to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4) (``UMRA''). 
The Committee has determined that the non-tax provisions of the 
bill do impose federal mandates on the private sector by 
extending the customs user fees and by enforcing new record-
keeping requirements on exporters of goods to Peru. The 
aggregate costs of those mandates will exceed the annual 
threshold established in UMRA for private-sector mandates ($131 
million in 2007, adjusted annually for inflation) in 2015.
    The Committee has determined that the bill does not impose 
a federal intergovernmental mandate on State, local, or tribal 
governments.

                        E. Limited Tax Benefits

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the Ways and Means Committee has determined 
that the bill as reported contains no congressional earmarks, 
limited tax benefits, or limited tariff benefits within the 
meaning of that Rule.

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

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

SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985


SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.

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

           *       *       *       *       *       *       *

  (18) No fee may be charged under subsection (a) (9) or (10) 
with respect to goods that qualify as originating goods under 
section 203 of the United States-Peru Trade Promotion Agreement 
Implementation Act. Any service for which an exemption from 
such fee is provided by reason of this paragraph may not be 
funded with money contained in the Customs User Fee Account.

           *       *       *       *       *       *       *

  (j) Effective Dates.--(1)  * * *

           *       *       *       *       *       *       *

  (3)(A) Fees may not be charged under paragraphs (9) and (10) 
of subsection (a) after [October 21, 2014] December 13, 2014.
  (B)(i) Subject to clause (ii), Fees may not be charged under 
paragraphs (1) through (8) of subsection (a) after [October 7, 
2014] December 13, 2014.

           *       *       *       *       *       *       *

                              ----------                              


TARIFF ACT OF 1930

           *       *       *       *       *       *       *


SEC. 508. RECORDKEEPING.

  (a)  * * *

           *       *       *       *       *       *       *

  (h) Certifications of Origin for Goods Exported Under the 
United States-Peru Trade Promotion Agreement.--
          (1) Definitions.--In this subsection:
                  (A) Records and supporting documents.--The 
                term ``records and supporting documents'' 
                means, with respect to an exported good under 
                paragraph (2), records and documents related to 
                the origin of the good, including--
                          (i) the purchase, cost, and value of, 
                        and payment for, the good;
                          (ii) the purchase, cost, and value 
                        of, and payment for, all materials, 
                        including indirect materials, used in 
                        the production of the good; and
                          (iii) the production of the good in 
                        the form in which it was exported.
                  (B) PTPA certification of origin.--The term 
                ``PTPA certification of origin'' means the 
                certification established under article 4.15 of 
                the United States-Peru Trade Promotion 
                Agreement that a good qualifies as an 
                originating good under such Agreement.
          (2) Exports to peru.--Any person who completes and 
        issues a PTPA certification of origin for a good 
        exported from the United States shall make, keep, and, 
        pursuant to rules and regulations promulgated by the 
        Secretary of the Treasury, render for examination and 
        inspection all records and supporting documents related 
        to the origin of the good (including the certification 
        or copies thereof).
          (3) Retention period.--The person who issues a PTPA 
        certification of origin shall keep the records and 
        supporting documents relating to that certification of 
        origin for a period of at least 5 years after the date 
        on which the certification is issued.
  [(h)] (i) Penalties.--Any person who fails to retain records 
and supporting documents required by subsection [(f) or (g)] 
(f), (g), or (h) or the regulations issued to implement [either 
such subsection] any such subsection shall be liable for the 
greater of--
          (1)  * * *

           *       *       *       *       *       *       *


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

  (a)  * * *

           *       *       *       *       *       *       *

  (i) Denial of Preferential Tariff Treatment Under the United 
States-Peru Trade Promotion Agreement.--If U.S. Customs and 
Border Protection or U.S. Immigration and Customs Enforcement 
of the Department of Homeland Security finds indications of a 
pattern of conduct by an importer, exporter, or producer of 
false or unsupported representations that goods qualify under 
the rules of origin provided for in section 203 of the United 
States-Peru Trade Promotion Agreement Implementation Act, U.S. 
Customs and Border Protection, in accordance with regulations 
issued by the Secretary of the Treasury, may suspend 
preferential tariff treatment under the United States-Peru 
Trade Promotion Agreement to entries of identical goods covered 
by subsequent representations by that importer, exporter, or 
producer until U.S. Customs and Border Protection determines 
that representations of that person are in conformity with such 
section 203.

           *       *       *       *       *       *       *


SEC. 520. REFUNDS AND ERRORS.

  (a)  * * *

           *       *       *       *       *       *       *

  (d) Goods Qualifying Under Free Trade Agreement Rules of 
Origin.--Notwithstanding the fact that a valid protest was not 
filed, the Customs Service may, in accordance with regulations 
prescribed by the Secretary, reliquidate an entry to refund any 
excess duties (including any merchandise processing fees) paid 
on a good qualifying under the rules of origin set out in 
section 202 of the North American Free Trade Agreement 
Implementation Act, section 202 of the United States-Chile Free 
Trade Agreement Implementation Act, section 203 of the 
Dominican Republic-Central America-United States Free Trade 
Agreement Implementation Act, [or] section 202 of the United 
States-Oman Free Trade Agreement Implementation Act [for 
which], or section 203 of the United States-Peru Trade 
Promotion Agreement Implementation Act for which no claim for 
preferential tariff treatment was made at the time of 
importation if the importer, within 1 year after the date of 
importation, files, in accordance with those regulations, a 
claim that includes--
          (1)  * * *

           *       *       *       *       *       *       *


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

  (a)  * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (10) Prior disclosure regarding claims under the 
        united states-peru trade promotion agreement.--An 
        importer shall not be subject to penalties under 
        subsection (a) for making an incorrect claim that a 
        good qualifies as an originating good under section 203 
        of the United States-Peru Trade Promotion Agreement 
        Implementation Act if the importer, in accordance with 
        regulations issued by the Secretary of the Treasury, 
        promptly and voluntarily makes a corrected declaration 
        and pays any duties owing with respect to that good.
          [(10)] (11) Seizure.--If the Secretary has reasonable 
        cause to believe that a person has violated the 
        provisions of subsection (a) and that such person is 
        insolvent or beyond the jurisdiction of the United 
        States or that seizure is otherwise essential to 
        protect the revenue of the United States or to prevent 
        the introduction of prohibited or restricted 
        merchandise into the customs territory of the United 
        States, then such merchandise may be seized and, upon 
        assessment of a monetary penalty, forfeited unless the 
        monetary penalty is paid within the time specified by 
        law. Within a reasonable time after any such seizure is 
        made, the Secretary shall issue to the person concerned 
        a written statement containing the reasons for the 
        seizure. After seizure of merchandise under this 
        subsection, the Secretary may, in the case of 
        restricted merchandise, and shall, in the case of any 
        other merchandise (other than prohibited merchandise), 
        return such merchandise upon the deposit of security 
        not to exceed the maximum monetary penalty which may be 
        assessed under subsection (c).

           *       *       *       *       *       *       *

  (i) False Certifications of Origin Under the United States-
Peru Trade Promotion Agreement.--
          (1) In general.--Subject to paragraph (2), it is 
        unlawful for any person to certify falsely, by fraud, 
        gross negligence, or negligence, in a PTPA 
        certification of origin (as defined in section 
        508(h)(1)(B) of this Act) that a good exported from the 
        United States qualifies as an originating good under 
        the rules of origin provided for in section 203 of the 
        United States-Peru Trade Promotion Agreement 
        Implementation Act. The procedures and penalties of 
        this section that apply to a violation of subsection 
        (a) also apply to a violation of this subsection.
          (2) Prompt and voluntary disclosure of incorrect 
        information.--No penalty shall be imposed under this 
        subsection if, promptly after an exporter or producer 
        that issued a PTPA certification of origin has reason 
        to believe that such certification contains or is based 
        on incorrect information, the exporter or producer 
        voluntarily provides written notice of such incorrect 
        information to every person to whom the certification 
        was issued.
          (3) Exception.--A person shall not be considered to 
        have violated paragraph (1) if--
                  (A) the information was correct at the time 
                it was provided in a PTPA certification of 
                origin but was later rendered incorrect due to 
                a change in circumstances; and
                  (B) the person promptly and voluntarily 
                provides written notice of the change in 
                circumstances to all persons to whom the person 
                provided the certification.

           *       *       *       *       *       *       *

                              ----------                              


                  SECTION 202 OF THE TRADE ACT OF 1974

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

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

           *       *       *       *       *       *       *

          (8) The procedures concerning the release of 
        confidential business information set forth in section 
        332(g) of the Tariff Act of 1930 shall apply with 
        respect to information received by the Commission in 
        the course of investigations conducted under this 
        chapter, part 1 of title III of the North American Free 
        Trade Agreement Implementation Act, title II of the 
        United States-Jordan Free Trade Area Implementation 
        Act, title III of the United States-Chile Free Trade 
        Agreement Implementation Act, title III of the United 
        States-Singapore Free Trade Agreement Implementation 
        Act, title III of the United States-Australia Free 
        Trade Agreement Implementation Act, title III of the 
        United States-Morocco Free Trade Agreement 
        Implementation Act, title III of the Dominican 
        Republic-Central America-United States Free Trade 
        Agreement Implementation Act, title III of the United 
        States-Bahrain Free Trade Agreement Implementation Act, 
        [and] title III of the United States-Oman Free Trade 
        Agreement Implementation Act, and title III of the 
        United States-Peru Trade Promotion 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.

           *       *       *       *       *       *       *

                              ----------                              


            SECTION 308 OF THE TRADE AGREEMENTS ACT OF 1979

SEC. 308. DEFINITIONS.

  As used in this title--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) Eligible products.--
                  (A) In general.--The term ``eligible 
                product'' means, with respect to any foreign 
                country or instrumentality that is--
                          (i)  * * *

           *       *       *       *       *       *       *

                          (v) a party to a free trade agreement 
                        that entered into force with respect to 
                        the United States after December 31, 
                        2005, and before July 2, 2006, a 
                        product or service of that country or 
                        instrumentality which is covered under 
                        the free trade agreement for 
                        procurement by the United States; [or]
                          (vi) a party to the United States-
                        Oman Free Trade Agreement, a product or 
                        service of that country or 
                        instrumentality which is covered under 
                        that Agreement for procurement by the 
                        United States[.]; or
                          (vii) a party to the United States-
                        Peru Trade Promotion Agreement, a 
                        product or service of that country or 
                        instrumentality which is covered under 
                        that agreement for procurement by the 
                        United States.

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 401 OF THE TAX INCREASE PREVENTION AND RECONCILIATION ACT OF 
                                  2005

SEC. 401. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

  Notwithstanding section 6655 of the Internal Revenue Code of 
1986--
          (1) in the case of a corporation with assets of not 
        less than $1,000,000,000 (determined as of the end of 
        the preceding taxable year)--
                  (A)  * * *
                  (B) the amount of any required installment of 
                corporate estimated tax which is otherwise due 
                in July, August, or September of 2012 shall be 
                [115 percent] 115.75 percent of such amount,

           *       *       *       *       *       *       *


                               VII. VIEWS

ADDITIONAL VIEWS ON H.R. 3688, THE ``UNITED STATES-PERU TRADE PROMOTION 
                     AGREEMENT IMPLEMENTATION ACT''

                            A. INTRODUCTION

    We are pleased to join with our colleagues across the aisle 
to support the Peru Trade Promotion Agreement (PTPA). We write 
these additional views to: (1) put the debate on the United 
States-Peru Trade Promotion Agreement (PTPA) in the context of 
our complete trade agenda; (2) highlight some of the commercial 
benefits of the PTPA for American businesses, workers, farmers, 
ranchers, and consumers; and (3) explain why the PTPA and the 
other pending Free Trade Agreements (FTA) with Colombia and 
Panama are so important for promoting stability and economic 
development in these countries and in Latin America, not to 
mention the importance of the pending FTA with our 7th largest 
trading partner, Korea.

                B. PERU AND THE ENTIRE U.S. TRADE AGENDA

    On May 10, 2007, Congressional Republicans and the 
Administration agreed to a ``bipartisan trade deal'' with 
Congressional Democrats to consider trade agreements on a 
bipartisan basis and improve our trading partners' standards 
for labor, environmental, intellectual property rights, port 
security, and investment. We believe that agreement is a good 
and fair compromise that takes into account the concerns of all 
parties. The breakthrough addresses concerns about labor, the 
environment, and other issues without compromising American 
sovereignty or jeopardizing future trade agreements. It will 
improve our trading partners' standards on labor, environmental 
regulation, intellectual property, port security, and 
investment. In short, this agreement balances long-standing 
concerns of Democrats and Republicans with a continuing 
bipartisan commitment to free trade, which has improved the 
economy and raised standards of living here in the United 
States and around the world. The text of the agreement is now 
reflected in all of our pending free trade agreements (Peru, 
Colombia, Panama, and Korea). We strongly believe that this 
agreement should pave the way for moving forward on all of the 
pending free trade agreements without delay.
    In June 2007, Peru's legislature overwhelmingly approved a 
Protocol of Amendment to the PTPA reflecting the terms of the 
May 10th deal; Peru had already approved the original PTPA last 
year. Over the last few months, Peru has been implementing all 
of the required labor obligations described below in the PTPA, 
despite the unprecedented demand by Congressional Democrats 
that a U.S. FTA partner do so before Congressional 
consideration.
    As amended by the May 10th deal, the PTPA will do the 
following:
     The PTPA requires the parties to comply with 
internationally recognized core labor standards, as defined by 
the 1998 ILO Declaration on Fundamental Principles and Rights 
at Work, to which the United States is already in compliance. 
Peru, under the leadership of President Garcia and former 
President Toledo, has consistently been making massive strides 
in the last several years to improve its labor conditions, and 
the PTPA reaffirms Peru's commitment and cements these 
improvements within the context of the agreement. At the same 
time, U.S. federal and state laws are protected.
     The PTPA will improve environmental enforcement in 
Peru with no new obligations for the United States. The United 
States and Peru commit to enforce their own domestic 
environmental laws and also seven multilateral environment 
agreements to which the United States is already a party in 
full compliance. The PTPA also establishes a process to prevent 
the imports of illegally harvested mahogany from Peru.
     The PTPA balances the interest in access to 
medicines in Peru with need to encourage development and sales 
of innovative medicines.
     The PTPA allows the United States to prevent an 
investor from providing port security services if the U.S. 
essential security is threatened.
     The PTPA recognizes that foreign investors in the 
United States will not be accorded greater investment 
protections than U.S. investors in the United States.

    C. NEW MARKET OPPORTUNITIES FOR AMERICAN BUSINESSES AND WORKERS

    The PTPA promises to provide significant economic benefits 
to American businesses, workers, farmers, ranchers, and 
consumers. The United States already provides duty-free access 
to almost all imports from Peru under the Andean Trade 
Preferences and Drug Eradication Act. However, Peru continues 
to maintain significant tariffs and other barriers to U.S. 
exports of goods and services.
    U.S. exports to Peru currently face an average tariff of 8% 
and many exports face tariffs of up to 70 percent. 
Additionally, U.S. service sector firms are subject to 
employment and investment restrictions in Peru. The PTPA will 
remedy the unequal treatment faced by U.S. exporters. 
Immediately upon implementation the average tariff faced by 
U.S. exports will decline by 72%. The U.S. International Trade 
Commission estimates that the market access provisions of the 
PTPA alone will increase U.S. exports by $1.1 billion. Because 
the PTPA also improves access for U.S. services exports and 
investment, the actual increase in U.S. exports should be much 
larger. Indeed, U.S. exports to every country with which the 
United States has implemented a free trade agreement under 
Trade Promotion Authority has exceeded the ITC's estimate.
    The PTPA will benefit small and medium sized American 
businesses that rely on Peru as an important export market. 
While small and medium size businesses account for 29% of total 
U.S. exports, they account for 38% of U.S. exports to Peru. The 
PTPA will benefit America's farmers and ranchers, as more than 
two-thirds of Peru's tariffs on U.S. agriculture exports are 
removed immediately.
    The PTPA will also improve the position of U.S. businesses 
competing in Peru against imports from third-countries. Peru 
maintains: preferential trading programs with several of its 
South American neighbors. The PTPA turns this disadvantage into 
an advantage, as U.S. firms will receive even better market 
access. For example, U.S. exporters of wheat and white corn 
currently pay a 17% tariff in Peru, while Argentina pays only 
3.4% and controls two-thirds of Peru's market. The PTPA will 
eliminate the 17% tariff on U.S. exports, while Argentina will 
still be subject to the 3.4% duty.
    The implementation of PTPA will further the positive 
economic impact of free trade agreements on U.S. businesses and 
workers. The U.S. trade balance with the twelve countries with 
which free trade agreements were implemented under TPA have 
improved by 162 percent, swinging from a deficit to a surplus 
of $13.9 billion. The implantation of the PTPA, and the free 
trade agreements with Colombia, Panama, and Korea, will 
continue to increase U.S. exports and improve the U.S. trade 
balance.

   D. PROMOTING STABILITY AND ECONOMIC DEVELOPMENT IN PERU AND LATIN 
                                AMERICA

    Peru has resisted the efforts of Venezuela's authoritarian 
President Hugo Chavez to wage a war of words and ideas in Latin 
America against the United States. Chavez has promoted 
restricting free markets and increasing the role of the state 
in the economy, and his demagogic actions ultimately harm the 
people he purports to help by eliminating investment and job 
creation. His troubling and short-sighted economic policies 
would leave Latin American economies in ruins and condemn the 
people to a generation of poverty. Peru's market-oriented 
policies under former President Toledo and current President 
Garcia have made that country one of the world's fastest-
growing emerging economies.
    Chavez blatantly tried to intervene in Peru's democratic 
elections, espousing sentiments against the United States and 
the principles for which America stands--democracy, free 
markets, liberty. On June 4, 2006, Peruvian voters decisively 
rejected Chavez's candidate in Peru, Ollanta Humala, and 
instead chose Alan Garcia to be their next President. The 
election was a clear sign of support from the people of Peru 
that they reject Chavez's fiery populism and instead support 
continuing Peru's current policies of economic engagement with 
the United States and market reform.
    On June 28, 2006, Peru's legislature followed the direction 
set by its electorate and overwhelmingly approved the PTPA by a 
vote of 79-14, with the full support of members of then 
President-elect Garcia's political party. On June 27, 2007, 
Peru's legislature voted to approve a Protocol of Amendment to 
the PTPA, reflecting the May 10th bipartisan trade deal, by a 
vote of 70 to 38. It is past time for the U.S. Congress to 
respond positively to these strong Peruvian actions by 
immediately passing the PTPA by a strong bipartisan vote.
    The PTPA and the pending FTAs with Panama and Colombia are 
an important part of promoting democracy and economic stability 
in Latin America. Congressional passage and implementation of 
all three of these FTAs will help these countries continue to 
provide a positive alternative to the efforts by Venezuelan 
President Hugo Chavez to restrict free markets and increase the 
role of the state in Latin America. Not giving these PTAs the 
broad, bipartisan, and immediate support they deserve from the 
U.S. Congress would only strengthen the hand of Chavez, support 
radical policies in neighboring Bolivia and Ecuador, and 
undermine U.S. foreign policy in the region.

                             E. CONCLUSION

    We are glad that, more than five and a half months after 
Congressional Democrats agreed to the May 10th ``bipartisan 
trade deal'' with the Administration and Congressional 
Republicans we are finally moving the PTPA to the House floor. 
But we would note that the majority has made no commitments on 
the other three pending FTAs with Colombia, Panama, and Korea. 
It is time for us to act on these FTAs as well. Each day we 
fail to do so delays the ability of our businesses, workers, 
farmers, ranchers, and consumers to begin to reap the same 
types of commercial benefits and legal protections that they 
will vis-a-vis Peru.

                                   Jim McCrery.
                                   Wally Herger.
                                   Jim Ramstad.
                                   Jerry Weller.
                                   Kenny Hulshof.
                                   Ron Lewis.
                                   Kevin Brady.
                                   Paul Ryan.
                                   Eric Cantor.
                                   Pat Tiberi.
                                   Jon Porter.

                                  
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