[House Report 112-238]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-238
======================================================================
UNITED STATES-PANAMA TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT
_______
October 6, 2011.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Camp, from the Committee on Ways and Means,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 3079]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 3079) to implement the United States-Panama Trade
Promotion Agreement, having considered the same, report
favorably thereon without amendment and recommend that the bill
do pass.
CONTENTS
Page
I. Summary and Background...........................................2
A. Purpose and Summary................................... 2
B. Background............................................ 2
C. Legislative History................................... 6
II. Section-by-Section Summary.......................................7
A. Title I: Approval and General Provisions.............. 7
B. Title II: Customs Provisions.......................... 10
C. Title III: Relief from Imports........................ 16
D. Title IV: Miscellaneous............................... 20
E. Title V: Offsets...................................... 21
III. Votes of the Committee..........................................22
IV. Budget Effects of the Bill......................................22
A. Committee Estimate of Budgetary Effects............... 22
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority.......................... 23
C. Cost Estimate Prepared by the Congressional Budget
Office................................................. 23
D. Macroeconomic Impact Analysis......................... 29
V. Other Matters to be Discussed Under the Rules of the House of
Representatives.................................................29
A. Committee Oversight Findings and Recommendations...... 29
B. Statement of General Performance Goals and Objectives. 29
C. Information Relating to Unfunded Mandates............. 30
D. Applicability of House Rule XXI 5(b).................. 30
E. Tax Complexity Analysis............................... 30
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits................................ 30
VI. Changes in Existing Law Made by the Bill, as Reported...........30
VII. Additional Views................................................36
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 3079 would implement the agreement establishing a free
trade area between the United States and Panama.
B. Background
The United States-Panama Trade Promotion Agreement
The United States-Panama Trade Promotion Agreement
(hereinafter the ``Agreement'') was signed on June 28, 2007.
The Agreement covers all agricultural and industrial sectors,
provides for greatly expanded market access for U.S. services,
contains robust protections for U.S. intellectual property
rights holders, and includes strong labor and environment
provisions. The Committee believes that the Agreement meets the
objectives and priorities set forth in the Bipartisan Trade
Promotion Authority Act of 2002 (``TPA''). Moreover, the
agreement reflects the May 10, 2007 agreement between
Congressional leaders and the last Administration regarding
labor, environment, intellectual property, investment,
government procurement, and port security (``May 10
agreement'').
U.S. industrial goods currently face an average tariff of 7
percent in Panama, with some tariffs as high as 81 percent.
Conversely, almost all Panamanian exports enter the United
States duty free due to low U.S. tariffs and U.S. trade
preference programs. The Agreement would transition the U.S.-
Panama trading relationship from one-way preferences to full
partnership and reciprocal commitments, helping U.S. exporters
gain greater access to the Panamanian market, one of the
fastest growing in Latin America. The International Trade
Commissions (``ITC'') estimates that U.S. exports to Panama for
certain sectors would increase up to 145 percent.
The following are key sectoral benefits and aspects of the
Agreement:
Agriculture: U.S. agriculture exports to Panama currently
face an average tariff of 15 percent, whereas more than 99
percent of Panamanian agricultural exports to the United States
enter duty-free. The Agreement would remedy this by making more
than half of current U.S. farm exports to Panama by value duty-
free immediately upon implementation, including U.S. exports of
pork, rice, soybeans, cotton, wheat, and most fresh fruit. The
Agreement would also address key non-tariff barriers. For
example, Panama would recognize the equivalence of the U.S.
food safety system for meat, poultry, and processed foods and
would provide access for all U.S. beef and beef products
consistent with international norms.
Manufacturing: The Agreement would significantly lower both
tariff and non-tariff barriers to U.S. exports of manufactured
goods. Upon implementation, over 87 percent of U.S. exports of
consumer and industrial products to Panama would immediately
become duty-free, with remaining tariffs phased out over ten
years. Key U.S. export sectors that would receive immediate
duty-free treatment include aircraft, construction equipment,
and medical and scientific equipment. As a result, the ITC
estimates significant gains in U.S. exports in key sectors and
products. For example, the ITC estimates that exports of cars
and light trucks would increase by 43 percent. Similarly,
exports of appliances, HVAC equipment, and parts would increase
between 9 and 20 percent. Per the Agreement, Panama has also
reaffirmed its commitment to fulfill its obligations under the
WTO Information Technology Agreement, which would further open
Panama's market to U.S. high-tech exports. The Agreement would
provide U.S. firms with lower tariff barriers than major
competitors from countries that do not have trade agreements
with Panama in effect.
Services: The services sector accounts for nearly 78
percent of Panama's GDP, making improved market access for U.S.
services critical. The Agreement would provide U.S. service
firms with market access, national treatment, and regulatory
transparency exceeding that afforded by the WTO General
Agreement on Services. Under the Agreement, the United States
would receive access to key services markets, including retail
trade, financial services, and professional services. For
example, the agreement would end the current Panamanian
restriction allowing only Panamanian nationals to provide
professional services. In addition, the Agreement would ban the
current requirement of having to open a subsidiary in Panama to
do business in Panama. U.S. service providers that establish a
local presence in Panama would benefit from strong investor
protections included in the Agreement. In addition, the
Agreement would lift the cap on foreign direct investment in
multi-brand retail in Panama. Overall, the opening of Panama's
services market would allow U.S. service providers to benefit
in the region, as well as Panama, because Panama is considered
a prime logistical hub for the whole of Latin America.
Government Procurement and Canal Expansion: The government
procurement provisions of the Agreement are essential to
guaranteeing non-discriminatory access for U.S. goods,
services, and suppliers to the Panamanian central and regional
governments, as well as to significant government enterprises,
including the Panama Canal Authority, particularly because
Panama is not a member of the WTO Government Procurement
Agreement. The procurement provisions would grant U.S. entities
greater access and protection than they currently have. The
Canal expansion now underway is expected to double capacity
with a third lane and a new set of locks. The expansion will
total $5.25 billion in new contract opportunities. In addition
to the Canal expansion, upcoming procurement opportunities in
Panama are expected to be between $1.5 billion and $2.3
billion.
Intellectual Property Rights: Under the Agreement, Panama
would adopt higher and extended standards for the protection of
intellectual property rights, such as copyrights, patents,
trademarks and trade secrets. The Agreement also provides
enhanced means for enforcing those rights. Under the Agreement,
each partner country would be required to grant national
treatment to nationals of the other, and all laws, regulations,
procedures and final judicial decisions would need to be be in
writing and published or made publicly available. The Agreement
would lengthen terms for copyright protection, cover electronic
and digital media, and increase enforcement to go beyond the
WTO Agreement on Trade-Related Aspects of Intellectual Property
Rights. Both parties would be obliged to provide appropriate
civil and criminal remedies for willful violators of
intellectual property rights.
Textile and Apparel: Many U.S. textiles and apparel
products meeting the Agreement's rules of origin would
immediately become duty-free and quota-free when exported to
Panama. The Agreement's rules of origin are generally based on
the ``yarn forward'' standard. A ``de minimis'' provision would
allow limited amounts of specified third-country content to go
into U.S. and Panamanian apparel, giving producers in both
countries needed flexibility. The Agreement would allow the use
of ``short supply'' fabrics, yarns, and fibers (that is,
fabrics, yarns, and fibers not made in Panama or the United
States that have been determined not to be commercially
available in either country) as inputs. The Parties agreed to a
list of short supply fabrics, yarns, and fibers, and the
Agreement includes a process for adding more.
Customs cooperation commitments between the United States
and Panama would 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
would provide for temporary tariff relief if imports under the
Agreement prove to cause or threaten serious damage to U.S.
producers.
Investment: The Agreement would ensure a stable legal
framework for U.S. investors operating in Panama. All forms of
investment would be protected under the Agreement, including
enterprises, debt, concessions and similar contracts, and
intellectual property. With very few exceptions, U.S. investors
would be treated as well as Panamanian investors in the
establishment, acquisition, and operation of investments in
Panama.
The Agreement draws from U.S. legal principles and
practices to provide U.S. investors in Panama with a basic set
of substantive and procedural protections that Panamanian
investors currently enjoy under the U.S. legal system. These
include due process protections and the right to receive fair
market value for property in the event of an expropriation. The
Agreement includes recourse to an investor-state dispute
settlement mechanism for certain types of claims.
In the preamble, the Parties agree that ``foreign investors
are not hereby accorded greater substantive rights with respect
to investment protections than domestic investors under
domestic law where, as in the United States, protections of
investor rights under domestic law equal or exceed those set
forth in this Agreement.'' This provision reflects one of the
negotiating objectives of TPA to ensure ``that foreign
investors in the United States are not accorded greater
substantive rights with respect to investment protections than
United States investors in the United States.''
Labor: The labor chapter of the Agreement includes the
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 at Work. The Agreement would also require
each country to enforce its own existing laws concerning
acceptable conditions of work with respect to minimum wages,
hours of work, and occupational safety and health. The
obligations under the labor chapter would be subject to the
same dispute settlement mechanisms and enforcement mechanisms
as obligations in other chapters of the Agreement. Neither
Party would be permitted to waive or otherwise derogate from
its laws that implement this obligation in a manner affecting
trade or investment between the Parties. Procedural guarantees
in the Agreement would ensure that workers and employers have
fair, equitable, and transparent access to labor tribunals or
courts. The Committee notes that Panama has shown a strong
commitment to the protection of labor rights for Panamanian
workers. Panama has made more than a dozen changes to its Labor
Code since 2009. It recently passed legislation addressing
worker rights in export processing zones, collective bargaining
issues in companies under two years of age, and collective
bargaining and temporary worker issues in its Baru District.
Environment: The Agreement would commit the Parties to
effectively enforce their own domestic environmental laws and
adopt, maintain, and implement laws and all other measures to
fulfill obligations under covered multilateral environmental
agreements. The Agreement also includes a fully enforceable,
binding commitment that would prohibit the Parties from
lowering environmental standards in the future in a manner
affecting trade or investment. The Agreement would promote a
comprehensive approach to environmental protection by
encouraging voluntary, market-based mechanisms to protect the
environment and by providing procedural guarantees that ensure
fair, equitable and transparent proceedings for the
administration and enforcement of environmental laws. The
Agreement would call for a public submissions process with an
independent secretariat for environmental matters to ensure
that views of civil society are appropriately considered. All
obligations in the environment chapter would be subject to the
same dispute settlement procedures and enforcement mechanisms
as obligations in other chapters of the Agreement.
Tax Transparency: The Committee notes Panama's significant
steps to address concerns raised by certain critics that the
country has tax transparency issues, although these steps are
distinct from the Agreement. Panama and the United States now
have an operational Tax Information Exchange Agreement
(``TIEA'') in force. Signed in November 2010, the TIEA was
touted by Treasury Secretary Geithner as an agreement that
``usher[s] in a new era of openness and transparency for tax
information between the United States and Panama.'' Panama
ratified the TIEA in April and had already passed the necessary
implementing legislation. Moreover, the OECD has recently added
Panama to the list of those countries, including the United
States, that meet internationally agreed upon tax standards.
The OECD Secretary General praised Panama's efforts, stating
that ``Panama has worked hard to achieve this milestone, making
remarkable strides toward complying with the international
standards in a very short time.''
Procedures of the Trade Act of 2002
H.R. 3079 is being considered by Congress under the
procedures of the Bipartisan Trade Promotion Authority Act of
2002, included in 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 into 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
legislative days to consider implementing legislation for the
Agreement, and the Senate has up to an additional 30
legislative days. No amendments to the legislation are allowed
under TPA requirements.
C. Legislative History
On November 18, 2003, the United States Trade
Representative (``USTR'') formally notified the Congress of its
intention to initiate negotiation of a trade agreement with
Panama. Negotiations on a trade agreement between the United
States and Panama began on April 25, 2004. On March 30, 2007,
the President notified the Congress of his intention to enter
into a trade agreement with Panama. On June 28, 2007, then-U.S.
Trade Representative Susan Schwab and Panamanian Minister of
Commerce and Industry Alejandro Ferrer signed the United
States-Panama Trade Promotion Agreement. Panama's National
Assembly approved the agreement on July 11, 2007. On August 24,
2007, the USTR transmitted to Congress a description of the
changes to existing U.S. laws required to comply with the
Agreement.
Legislative hearings
On January 25, 2011, the Committee on Ways and Means held a
hearing on the Panama trade agreement, as well as the U.S-
Colombia Trade Promotion Agreement and the U.S.-Korea Free
Trade Agreement. The Trade Subcommittee of the Committee on
Ways and Means then held a hearing on the Panama trade
agreement on March 30, 2011.
Committee action
On July 7, 2011, the Committee on Ways and Means considered
in an informal mark-up session draft legislation to implement
the Agreement and a statement of administrative action. The
Committee approved the draft legislation by a vote of 22-15,
after agreeing to an amendment in the nature of a substitute
offered by Chairman Camp.
On October 3, 2011, President Obama transmitted the United
States-Panama 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. 3079, a bill to implement the United States-Panama Trade
Promotion Agreement, was introduced by Majority Leader Eric
Cantor (R-VA), by request, for himself and Rep. Jim McDermott
(D-WA). H.R. 3079 was then referred to the Committee on Ways
and Means.
On October 5, 2011, Committee on Ways and Means formally
met to consider H.R. 3079. The Committee ordered H.R. 3079
favorably reported to the House of Representatives by a vote of
32-3, without amendment. Under the procedures of TPA, no
amendments are permitted after introduction.
II. SECTION-BY-SECTION SUMMARY
Title I: Approval and General Provisions
SECTIONS 1-3: SHORT TITLE, TABLE OF CONTENTS, PURPOSES, AND DEFINITIONS
Present law
No provision.
Explanation of provision
Section 2 sets forth the purposes of the implementing act
(``Act''), which include approving and implementing the
Agreement.
Reason for change
The provision makes clear that the bill implements and
approves the Agreement.
SECTION 101: APPROVAL AND ENTRY INTO FORCE
Present law
No provision.
Explanation of provision
Section 101 states that Congress approves the Agreement and
the Statement of Administrative Action. The Agreement enters
into force when the President determines that Panama 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 Panama providing for entry into force on or after
January 1, 2012.
Reason for change
Approval of the Agreement and the Statement of
Administrative Action is required under the procedures of
section 2103(b)(3) of Trade Act of 2002.
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 Agreement. Section 102(b) provides that
only the United States is entitled to bring a court action
challenging a state law as being invalid on grounds of
inconsistency with the Agreement. Section 102(c) states that
there is no private cause of action or defense under the
Agreement and no person other than the United States may
challenge a federal or state law in court as being inconsistent
with the Agreement.
Reason for change
The provision addresses 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
Agreement 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 Act 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 Agreement. 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 Agreement or,
where a provision takes effect on a date after which the
Agreement enters into force, 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 Agreement. The Committee notes,
further, that the Statement of Administrative Action commits
each agency that will be issuing regulations to provide a
report to Congress if it cannot issue regulations within one
year of the Agreement's entry into force and that such report
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 International Trade
Commission 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 Agreement. The section also authorizes
appropriations of up to $150,000 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 Agreement provisions
can be resolved effectively. The authorization is necessary for
the Commerce Department to provide administrative assistance to
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 Agreement.
Reason for change
This provision is necessary to meet U.S. obligations under
Section B of Chapter 10 of the 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
through 3 and Titles I and V of the Act, which take effect on
the date of enactment of the Act, the effective date of the Act
is the date that the Agreement enters into force with respect
to the United States. Amendments made to U.S. law by Sections
204, 205, 207, and 401 of the Act take effect on the date of
enactment of the Act but apply with respect to Panama on the
date on which the Agreement enters into force. Other than Title
V, the provisions of the Act terminate on the date on which the
Agreement terminates.
Reason for change
Section 107 implements provisions of the Agreement 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
Panama's designation as a beneficiary developing country for
the purpose of the Generalized System of Preferences (``GSP'')
program and as a beneficiary country for the purposes of the
Caribbean Basin Economic Recovery Act (``CBERA''), with certain
exceptions, as of the date that 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 Panama 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
equivalent ad valorem rate to carry out the tariff
modifications in subsections (a) and (b) of Section 201.
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 is necessary to ensure United States
compliance with the market access provisions of the Agreement.
The Committee expects the President to comply with the letter
and spirit of the consultation and layover provisions of this
Act in carrying out section 201(b).
SECTION 202: ADDITIONAL DUTIES ON CERTAIN AGRICULTURAL GOODS
Present law
No provision.
Explanation of provision
Section 202 implements the agricultural safeguard
provisions of Article 3.17 and Annex 3.17 of the Agreement.
Section 202(b) directs the Secretary of the Treasury
(``Secretary'') to assess an additional duty in any year when
the volume of imports to the United States of a ``safeguard
good'' exceeds the trigger level for the good in that calendar
year as set forth in the Schedule of the United States to Annex
3.17 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 3.3 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 Act 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 Agreement
relating to agricultural safeguards. Such safeguards provide
temporary relief to farmers in the United States who face a
surge in certain agricultural imports following entry into
force of the Agreement.
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 Agreement. Section 203(b) establishes three basic ways
for a Panamanian good to qualify as an ``originating good'' and
therefore to 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 Panama, the United States, or both''; (2) it
is produced entirely in the United States, Panama, 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 value-content and other requirements, as
specified in Annex 4.1 of the Agreement; or (3) it is produced
entirely in the territory of Panama, the United States, or both
exclusively from originating materials.
Under the rules in Chapter 4 and Annex 4.1 of the
Agreement, 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 Panama, an apparel product must
have been cut (or knit to shape) and sewn or otherwise
assembled in Panama, the United States, or both from yarn, or
fabric made from yarn, that originates in Panama, the United
States, or both.
Section 203(o)(2) provides authority for the President to
add fabrics, yarns, or fibers 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 Panama,
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 Panama 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 Agreement's
requirements under the second method of qualifying as an
originating good. These include rules 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(l) specifies that goods
that undergo further production or other operations outside
Panama 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
This provision implements the commitments made in the
Agreement with respect to rules of origin applying to imports
from Panama. Rules of origin are needed to confine Agreement
benefits, such as tariff cuts, to Panamanian goods and to
prevent third-country goods from being transshipped through
Panama and claiming benefits under the Agreement.
SECTION 204: CUSTOMS USER FEES
Present law
Section 13031(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (``COBRA''), at 19 U.S.C. 58c(a),
authorizes the Secretary of the Treasury to collect a
merchandise processing fee for formal and informal entries of
merchandise into the United States (``Merchandise Processing
Fee''). Section 13031(b) of COBRA exempts from the Merchandise
Processing Fee all originating goods under each of the trade
agreements currently in force between the United States and
other countries.
Explanation of provision
Section 204 implements the U.S. commitments under Article
3.10.4 of the Agreement to eliminate the Merchandise Processing
Fee on originating goods under the Agreement. 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 trade agreements, the Agreement eliminates
the Merchandise Processing Fee on qualifying goods from Panama.
Other customs user fees remain in place. Section 204 is
necessary to ensure United States compliance with the user fee
elimination provisions of the Agreement. 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 Agreement given that Merchandise Processing Fee 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 4.16.3 and 4.20.5 of the
Agreement. 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 falsely certify, 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 U.S. authorities find that
an importer, exporter or producer has engaged in a pattern of
conduct of providing false or unsupported representations, the
authorities may suspend preferential treatment with respect to
identical goods covered by subsequent representations made by
that importer, exporter, or producer, until U.S. authorities
have determined that its representations are accurate.
Reason for change
This provision is necessary to implement commitments in the
Agreement 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 4.16.5 of the Agreement and
provides authority for U.S. Customs and Border Protection
(``CBP'') 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 4.16.5 of the Agreement 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 206 is
necessary to ensure United States compliance with Article
4.16.5.
SECTION 207: RECORDKEEPING REQUIREMENTS
Present law
No provision.
Explanation of provision
Section 207 implements Article 4.19 of the Agreement. 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 ensure United States compliance
with the recordkeeping requirement provisions in Article 4.19
of the Agreement.
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 3.21 of the
Agreement. Under Article 3.21, the United States may request
the Government of Panama 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 determines that there is insufficient information to
sustain a claim for such treatment; (ii) denying preferential
tariff treatment to such goods if the Secretary determines that
a person has provided incorrect information to support a claim
for such treatment; (iii) detaining such goods if the Secretary
determines that 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 determines that 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 determines 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 Agreement 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
intentional 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 that are the subject of a
verification.
Reason for change
To avoid textile transshipment, special textile enforcement
provisions have been included in the Agreement. 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
Because the Act involves lengthy and complex implementation
procedures by customs officials, this provision is necessary to
authorize the Secretary of Treasury to carry out provisions of
the Act through regulations. No such regulations may take
effect before the Agreement enters into force.
Title III: Relief From Imports
SECTION 301: DEFINITIONS
Present law
No provision.
Explanation of provision
Section 301 defines ``Panamanian article'' and ``Panamanian
textile or apparel article,'' which are key terms for Title III
of the Act.
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
Subtitle A to Title III of the Act (Sections 311 to 316)
authorizes the President, after an investigation and
affirmative determination by the ITC, to impose certain import
relief measures when, as a result of the reduction or
elimination of a duty under the Agreement, a Panamanian 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 the
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) 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 safeguard proceedings under Subtitle A of
Title III of the Act.
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 this
section Panamanian articles with respect to which relief has
previously been provided under Subtitle A of Title III of the
Act.
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 in the form of 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. Under Section
313(c)(2), if the relief the President provides has 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 provide
import relief for up to four years. If the initial period of
import relief is less than four years, this period may be
extended 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 upon 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 Agreement 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 of Title III of
the Act (Sections 321 to 328); or (iii) subject to additional
duties as an agricultural good under Section 202(b).
Section 314 provides that no relief may be provided under
Subtitle A to Title III of the Act after ten years from the
date the Agreement enters into force, unless the scheduled
tariff 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 Panama consistent with Article 8.5 of the
Agreement if relief is ordered.
Section 316 provides for the treatment of confidential
business information submitted to the ITC in the course of
investigations conducted under Title III of the Act.
Reason for change
Sections 311 to 316 establish a mechanism for providing
temporary import relief where a U.S. industry experiences
serious injury or threat of serious injury by reason of
increased import competition from Panama resulting from
reduction or elimination of a duty under the Agreement. 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. The Committee intends that
administration of this safeguard be consistent with U.S.
obligations under Section A of Chapter Eight (Trade Remedies)
of the Agreement.
Subtitle B: Textile and Apparel Safeguard Measures
SECTIONS 321-328
Present law
No provision.
Explanation of provisions
Subtitle B of Title III of the Act (Sections 321 to 328)
authorizes 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
Agreement, a Panamanian 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 an interested party may file a
request with the President for safeguard relief under Subtitle
B of Title III of the Act. 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 publish notice
in the Federal Register 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 Agreement, a Panamanian 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 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 3.24.4 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 Act provides that the period of relief
shall be no longer than three years. If the initial period of
import relief is less than three years, this period may be
extended to a maximum aggregate period of three years if the
President determines that continuation is necessary to remedy
or prevent serious damage and to facilitate adjustment by the
domestic industry to import competition and there is evidence
the industry is making a positive adjustment to import
competition.
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 the
Act 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 at that time,
but for the safeguard action.
Section 326 provides that the authority to provide
safeguard relief under Subtitle B to Title III of the Act
expires five years after the date on which the Agreement enters
into force.
Section 327 authorizes the President to provide
compensation to Panama if relief is ordered.
Section 328 provides for the treatment of confidential
business information received by the President in connection
with an investigation or determination under Subtitle B to
Title III of the Act.
Reason for change
Sections 321 to 328 implement the commitments under the
Agreement relating to textile and apparel safeguard measures.
The Committee intends that the provisions of Subtitle B of
Title III of the Act be administered in a manner that is
transparent and that will serve as an example to our trading
partners. For example, in addition to publishing a summary of
the request for safeguard relief, the Committee notes that the
President plans to make available the full text of the request,
subject to the protection of business confidential data, on the
website of the Department of Commerce, International Trade
Administration. 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 PANAMA
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
Panamanian imports of the article that qualify as originating
goods under the Agreement 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 Agreement
relating to treatment of Panamanian imports in global safeguard
investigations under Section 202(b) of the Trade Act of 1974.
Title IV: Miscellaneous
SECTION 401: ELIGIBLE PRODUCTS
Present law
U.S. procurement law (such as the Buy American Act of 1933
and the Buy American Act of 1988) limits procurement from
certain foreign suppliers of goods and services in favor of
U.S. providers of goods and services. Most discriminatory
purchasing provisions are waived if the United States is a
party to a bilateral or multilateral procurement agreement,
such as the WTO Agreement on Government Procurement, or a
bilateral or multilateral trade agreement that includes
provisions on procurement.
Explanation of provision
Section 401 implements Chapter 9 of the Agreement 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) provides that an ``eligible product'' means a
product or service of Panama 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 Agreement (Government Procurement).
SECTION 402: MODIFICATION TO THE CARIBBEAN BASIN ECONOMIC RECOVERY ACT
Present law
Panama is currently a beneficiary under the Caribbean Basin
Economic Recovery Act (``CBERA''). As such, goods from Panama
receive preferential trade treatment when entering the United
States subject to various requirements.
Explanation of provision
Section 402 of the bill amends the CBERA in light of the
fact that the President will withdraw Panama's status as a
CBERA beneficiary country on the date that the Agreement takes
effect.
Reason for change
This provision amends section 212(b) of the CBERA to delete
Panama from the list of countries that the President may
designate as beneficiary countries.
Title V: Offsets
SECTION 501: CUSTOMS USER FEES
Present law
Section 13031 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (``COBRA'') authorizes 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(a)(1)-(8),
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, and Customs broker permits. COBRA has been amended on
several occasions. The current authorization for the collection
of the passenger and conveyance processing fees is through
January 14, 2020.
Explanation of provision
Section 501 extends the passenger and conveyance processing
fees authorized under Section 13031 of the COBRA through
September 30, 2021.
Reason for change
The Committee believes it is appropriate to extend the
passenger and conveyance processing fees authorized under COBRA
for budgetary offset purposes.
SECTION 502: 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.
Explanation of provision
For corporations with assets of at least $1 billion, the
provision increases the amount of the required installment of
estimated tax otherwise due in July, August, or September 2012
and 2016 by 0.25 of such amount (determined without regard to
any increase in such amount not contained in the Internal
Revenue Code). The next required installment is reduced
accordingly.
Reason for change
The Committee believes it is appropriate to adjust the
corporate estimated tax payments for budgetary offset purposes.
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. 3079.
Motion To Report the Bill
The bill, H.R. 3079, was ordered favorably reported by a
rollcall vote of 32 yeas to 3 nays (with a quorum being
present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ X ........ .........
Mr. Herger..................... X ........ ......... Mr. Rangel....... X ........ .........
Mr. Johnson.................... X ........ ......... Mr. Stark........ ........ X .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... X ........ .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Neal......... X ........ .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... X ........ .........
Mr. Davis...................... X ........ ......... Mr. Doggett...... ........ ........
Mr. Reichert................... X ........ ......... Mr. Thompson..... X ........ .........
Mr. Boustany................... X ........ ......... Mr. Larson....... ........ ........
Mr. Roskam..................... X ........ ......... Mr. Blumenauer... X ........ .........
Mr. Gerlach.................... X ........ ......... Mr. Kind......... X ........ .........
Mr. Price...................... X ........ ......... Mr. Pascrell..... X ........ .........
Mr. Buchanan................... X ........ ......... Ms. Berkley...... ........ X .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... X ........ .........
Mr. Schock..................... X ........ .........
Ms. Jenkins.................... X ........ .........
Mr. Paulsen.................... X ........ .........
Mr. Berg....................... X ........ .........
Ms. Black...................... X ........ .........
Mr. Reed....................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of this bill, H.R. 3079,
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 Budget
Authority
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. 3079 would reduce customs duty
receipts due to lower tariffs imposed on goods from Panama.
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, October 5, 2011.
Hon. Dave Camp,
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. 3079, the United
States-Panama Trade Promotion Agreement.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kalyani
Parthasarathy.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
H.R. 3079--United States-Panama Trade Promotion Agreement
Implementation Act
Summary: H.R. 3079 would approve the trade promotion
agreement between the government of the United States and the
government of Panama that was signed on June 28, 2007. It would
provide for tariff reductions and other changes in law related
to implementation of the agreement. In addition, the bill would
extend user fees collected by Customs and Border Protection
(CBP) that expire under current law. The bill also would shift
some corporate income tax payments between fiscal years.
The Congressional Budget Office (CBO) and the staff of the
Joint Committee on Taxation (JCT) estimate that enacting H.R.
3079 would increase revenues by $118 million in 2012 but would
reduce revenues by $6 million over the 2012-2021 period. CBO
estimates that enacting H.R. 3079 would increase direct
spending by $1 million in 2012 but would decrease direct
spending by $8 million over the 2012-2021 period. Thus, the net
impact of those effects is an estimated reduction in deficits
of $2 million over the 2012-2021 period. Pay-as-you-go
procedures apply because enacting the legislation would affect
direct spending and revenues.
Further, CBO estimates that implementing the legislation
would cost $4 million over the 2012-2016 period, assuming the
availability of appropriated funds.
CBO has determined that the nontax provisions of H.R. 3079
contain no intergovernmental mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments.
CBO has determined that the nontax provisions of the bill
contain private-sector mandates with costs that would fall
below the annual threshold established in UMRA for private-
sector mandates ($142 million in 2011, adjusted annually for
inflation).
JCT has determined that the tax provision of H.R. 3079
contains no intergovernmental or private-sector mandates as
defined in UMRA.
Estimated cost to the federal government: The estimated
budgetary impact of H.R. 3079 is shown in the following table.
The costs of this legislation fall within budget functions 150
(international affairs), 370 (commerce and housing credit), 750
(administration of justice), and 800 (general government).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-2016 2012-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Preferential Trade Agreement.. * * * * -1 -1 -1 -1 -1 -2 -2 -6
Corporate Payment Shift....... 118 -118 0 0 172 -172 0 0 0 0 172 0
Estimated Revenues........ 118 -118 * * 171 -173 -1 -1 -1 -2 170 -6
CHANGES IN DIRECT SPENDING\a\
Extend Customs User Fees:
Estimated Budget Authority 0 0 0 0 0 0 0 0 0 -16 0 -16
Estimated Outlays......... 0 0 0 0 0 0 0 0 0 -16 0 -16
Exemption from Merchandise
Processing Fee:
Estimated Budget Authority 1 1 1 1 1 1 1 1 0 0 5 8
Estimated Outlays......... 1 1 1 1 1 1 1 1 0 0 5 8
Total Direct Spending:\a\
Estimated Budget 1 1 1 1 1 1 1 1 0 -16 5 -8
Authority............
Estimated Outlays..... 1 1 1 1 1 1 1 1 0 -16 5 -8
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
Impact on Deficit............. -117 119 1 1 -170 174 2 2 1 -14 -165 -2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\In addition, CBO estimates that implementing the provisions of H.R. 3079 would have a discretionary cost of $4 million over the 2012-2016 period,
assuming appropriation of the necessary amounts.
Notes: Components may not sum to totals because of rounding; *Indicates a loss of revenue less than $500,000.
Sources: Congressional Budget Office and the staff of the Joint Committee on Taxation.
Basis of estimate: For the purposes of this estimate, CBO
assumes that H.R. 3079 will be enacted early in fiscal year
2012.
REVENUES
Under the United States-Panama trade promotion agreement,
tariffs on U.S. imports from Panama would be phased out over
time. The tariffs would be phased out for individual products
at varying rates, ranging from immediate elimination on the
date the agreement enters into force to gradual elimination
over 10 or more years. According to the U.S. International
Trade Commission, the United States collected about $240,000 in
customs duties in 2010 on $380 million of imports from Panama.
However, since 1983, imports to the United States from Panama
have been subject to reduced tariff rates in accordance with
the Caribbean Basin Initiative (CBI), which was expanded in
legislation enacted in 2000, and is scheduled to expire on
September 30, 2020. The CBI overlaps to a large extent with the
trade promotion agreement that would be implemented by this
bill. As a result, enacting the bill would effectively replace
trade preferences under the CBI for Panama until 2021, while
also lowering tariff rates not covered by the CBI.
Based on expected imports from Panama, CBO estimates that
implementing the tariff schedule outlined in the U.S.-Panama
trade promotion agreement would reduce revenues by less than
$500,000 in 2012 and by $6 million over the 2012-2021 period,
net of income and payroll tax offsets.
This estimate includes the effects of increased imports
from Panama 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 Panama 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 Panama would
displace imports from other countries.
H.R. 3079 also would shift payments of corporate estimated
taxes between fiscal years 2012 and 2013 and between fiscal
years 2016 and 2017. For corporations with at least $1 billion
in assets, the bill would increase the portion of corporate
estimated payments due from July through September in both 2012
and 2016. JCT estimates that those changes would increase
revenues by $118 million in 2012 and decrease them by $118
million in 2013, and would increase revenues by $172 million in
2016 and decrease them by $172 million in 2017.
DIRECT SPENDING
Under current law, certain fees (known as COBRA fees, which
were established in the Consolidated Omnibus Budget
Reconciliation Act of 1985) collected by CBP will expire in
January 2020. The bill would permit CBP to collect those fees
from September 1, 2021, to September 30, 2021. CBO estimates
that this change would increase offsetting receipts (a credit
against direct spending) by $16 million in 2021.
In addition, the bill would exempt imports from Panama from
merchandise processing fees. CBO estimates that this would
reduce offsetting receipts by $8 million over the 2012-2021
period.
SPENDING SUBJECT TO APPROPRIATION
Implementing provisions of H.R. 3079 would increase the
costs of several agencies affected by the bill including:
The Department of Commerce to provide
administrative support for dispute-settlement panels
established in the agreement;
The International Trade Commission to
conduct investigations, if petitioned, into whether
Panamanian imports might threaten or cause serious
injury to domestic competitors; and
The Department of the Treasury and the
United States Trade Representative to establish
regulations to carry out provisions of the agreement.
Based on information from the agencies, CBO estimates that
those activities would cost $4 million over the 2012-2016
period, assuming appropriation of the necessary amounts.
Pay-as-you-go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3079 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON OCTOBER 5, 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-2016 2012-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact -117 119 1 1 -170 174 2 2 1 -14 -165 -2
Memorandum:
Changes in Revenues....... 118 -118 0 0 171 -173 -1 -1 -1 -2 170 -6
Changes in Outlays........ 1 1 1 1 1 1 1 1 0 -16 5 -8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated impact on state, local, and tribal governments:
CBO has determined that the nontax provisions of H.R. 3079
contain no intergovernmental mandates as defined in UMRA, and
would impose no costs on state, local, or tribal governments.
JCT has determined that the tax provision of H.R. 3079 contains
no intergovernmental mandates as defined in UMRA.
Estimated impact on the private sector: CBO has determined
that the nontax provisions of H.R. 3079 would impose private-
sector mandates, as defined in UMRA, by extending the customs
user fees and by enforcing new recordkeeping requirements on
exporters of goods to Panama. CBO estimates that the aggregate
costs of those mandates would not exceed the annual threshold
established in UMRA for private-sector mandates ($142 million
in 2011, adjusted annually for inflation). JCT has determined
that the tax provision of H.R. 3079 contains no private-sector
mandates as defined in UMRA.
Estimate prepared by: Federal Revenues: Kalyani
Parthasarathy. Federal Spending: Sunita D'Monte, Mark
Grabowicz, Matthew Pickford, and Susan Willie. Impact on State,
Local, and Tribal Governments: Lisa Ramirez-Branum. Impact on
the Private Sector: Marin Randall.
Estimate approved by: Peter H. Fontaine, Assistant Director
for Budget Analysis. Frank Sammartino, Assistant Director for
Tax Analysis.
D. Macroeconomic Impact Analysis
In compliance with clause 3(h)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made by the Joint Committee on Taxation with respect to the
provisions of the bill amending the Internal Revenue Code of
1986: the effects of the tax provisions of the bill on economic
activity are so small as to be incalculable within the context
of a model of the aggregate economy.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE OF
REPRESENTATIVES
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 concluded that it is appropriate and timely to
consider H.R. 3079, as reported. In addition, the legislation
is governed by procedures of the Bipartisan Trade Promotion
Authority Act of 2002.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the 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 20 of the U.S.-Panama Trade Promotion Agreement
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. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (P.L. 104-4). The
Committee has determined that the revenue provisions of the
bill do not impose a Federal mandate on the private sector. The
Committee has determined that the revenue provisions of the
bill do not impose a Federal intergovernmental mandate on
State, local, or tribal governments.
D. Applicability of House Rule XXI 5(b)
Clause 5(b) of rule XXI of the Rules of the House of
Representatives provides, in part that, ``A bill or joint
resolution, amendment, or conference report carrying a Federal
income tax increase may not be considered as passed or agreed
to unless so determined by a vote of not less than three-fifths
of the Members voting, a quorum being present.'' The Committee
has carefully reviewed the sections of the bill and states that
the bill does not involve any Federal income tax rate increases
within the meaning of the rule.
E. Tax Complexity Analysis
The Joint Committee on Taxation, in consultation with the
Internal Revenue Service and the Department of the Treasury,
will provide a tax complexity analysis to Members of the
Committee as soon as practicable after the report is filed.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
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) * * *
* * * * * * *
(21) 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-Panama 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) * * *
* * * * * * *
(D) Notwithstanding subparagraph (B)(i), fees may be charged
under paragraphs (1) through (8) of subsection (a) during the
period beginning on September 1, 2021, and ending on September
30, 2021.
* * * * * * *
----------
TARIFF ACT OF 1930
* * * * * * *
TITLE IV--ADMINISTRATIVE PROVISIONS
* * * * * * *
Part III--Ascertainment, Collection, and Recovery of Duties
* * * * * * *
SEC. 508. RECORDKEEPING.
(a) * * *
* * * * * * *
(k) Certifications of Origin for Goods Exported Under the
United States-Panama 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) Panama tpa certification of origin.--The
term ``Panama TPA certification of origin''
means the certification established under
article 4.15 of the United States-Panama Trade
Promotion Agreement that a good qualifies as an
originating good under such Agreement.
(2) Exports to panama.--Any person who completes and
issues a Panama TPA 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 Panama
TPA 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.
* * * * * * *
SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.
(a) * * *
* * * * * * *
(l) Denial of Preferential Tariff Treatment Under the United
States-Panama 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-Panama 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-
Panama 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, section 202 of the United States-
Oman Free Trade Agreement Implementation Act, [or] section 203
of the United States-Peru Trade Promotion Agreement
Implementation Act [for which], or section 203 of the United
States-Panama 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) * * *
* * * * * * *
Part V--Enforcement Provisions
* * * * * * *
SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.
(a) * * *
* * * * * * *
(c) Maximum Penalties.--
(1) * * *
* * * * * * *
(13) Prior disclosure regarding claims under the
united states-panama 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-Panama 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.
* * * * * * *
(l) False Certifications of Origin Under the United States-
Panama 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 Panama TPA
certification of origin (as defined in section 508 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-Panama 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 Panama TPA 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 Panama TPA 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.
* * * * * * *
----------
TRADE ACT OF 1974
* * * * * * *
TITLE II--RELIEF FROM INJURY CAUSED BY IMPORT COMPETITION
CHAPTER 1--POSITIVE ADJUSTMENT BY INDUSTRIES INJURED BY IMPORTS
* * * * * * *
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,
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, and title III of the United States-
Panama 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.
* * * * * * *
----------
TRADE AGREEMENTS ACT OF 1979
* * * * * * *
TITLE III--GOVERNMENT PROCUREMENT
* * * * * * *
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) * * *
* * * * * * *
(x) a party to the United States-
Panama Trade Promotion Agreement, a
product or service of that country or
instrumentality which is covered under
that agreement for procurement by the
United States.
* * * * * * *
----------
CARIBBEAN BASIN ECONOMIC RECOVERY ACT
* * * * * * *
TITLE II--CARIBBEAN BASIN INITIATIVE
* * * * * * *
Subtitle A--Duty-Free Treatment
* * * * * * *
SEC. 212. BENEFICIARY COUNTRY.
(a) * * *
(b) In designating countries as ``beneficiary countries''
under this title the President shall consider only the
following countries and territories or successor political
entities:
Anguilla
Antigua and Barbuda
Bahamas, The
Barbados
Belize
Costa Rica
Dominica
Dominican Republic
El Salvador
Grenada
Guatemala
Guyana
Haiti
Honduras
Jamaica
Nicaragua
[Panama]
Saint Lucia
Saint Vincent and the Grenadines
Suriname
Trinidad and Tobago
Cayman Islands
Montserrat
Netherlands Antilles
Saint Christopher-Nevis
Turks and Caicos Islands
Virgin Islands, British
In addition, the President shall not designate any country a
beneficiary country under this title--
(1) * * *
* * * * * * *
VII. ADDITIONAL VIEWS
We support the United States-Panama Trade Promotion
Agreement. The Agreement is the product of our work over many
years to better ensure that U.S. trade policy reflects American
values and shapes globalization to spread its benefits more
broadly. We write these additional views to describe how this
Agreement achieves those objectives and to put this Agreement
in its broader context.
THE AGREEMENT WITH PANAMA
On May 10, 2007, we won a major breakthrough to change U.S.
trade policy. We insisted that this Agreement, and others like
it, be renegotiated to: (1) require our Panama to comply with
international labor standards, fully enforceable through the
Agreement's normal dispute settlement mechanism; (2) require
Panama to comply with key mutually-accepted international
environmental agreements, again fully enforceable through
dispute settlement; (3) help to ensure that poor patients in
Panama have access to affordable medicines; (4) allow U.S.
government agencies to base government procurement decisions on
compliance with core labor standards; (5) make clear that
nothing in the agreement should be interpreted to provide
foreign investors greater rights than U.S. investors have under
U.S. law; and (6) make clear that the United States has the
non-challengeable authority to prevent foreign companies from
operating in U.S. ports, based on national security concerns.
We then worked with the Obama Administration to ensure that
Panama addressed a variety of deficiencies in Panama's labor
laws--in particular, those laws related to the right of unions
to organize and collectively bargain. In April of this year,
Panama's President signed into law the last remaining changes
needed to bring Panama's laws into compliance with the labor
obligations of the agreement.
We also pressed for Panama to sign and implement a tax
information exchange agreement (``TIEA'') with the United
States. For six years, the last Administration tried but failed
to conclude a TIEA with Panama. But, once the Agreement was
conditioned on the conclusion of the TIEA, Panama was persuaded
to sign, ratify and fully implement the TIEA. According to the
Economist Intelligence Unit, Panama's ratification ``marks the
most significant step to date on the road to ending over four
decades of virtually water-tight banking secrecy laws.''\1\ In
July, the OECD officially removed Panama from its ``grey list''
of tax havens.\2\
---------------------------------------------------------------------------
\1\Economist Intelligence Unit, ``Tax Deal Lifts FTA's Chances,''
May 23, 2011.
\2\http://www.oecd/org/dataoecd/50/0/43606256.pdf.
---------------------------------------------------------------------------
This Agreement also provides a more balanced approach to
ensuring that the rights of U.S. investors are protected while
preserving the rights of governments to protect legitimate
public welfare objectives. Early arbitral decisions under the
investor-state dispute settlement mechanism of the North
American Free Trade Agreement demonstrated the need for
improvements in this regard. Thus, unlike NAFTA's investment
chapter, the investment chapter of the Panama Agreement: (1)
clarifies that regulations that protect legitimate public-
welfare objectives, such as public health, safety, and the
environment, generally are not considered expropriations; (2)
provides for the expeditious dismissal of frivolous investor
claims; (3) provides for transparency in the arbitration
process; (4) provides for input in the arbitration process from
environmental groups and other non-governmental organizations;
and (5) clarifies that the agreement does not provide foreign
investors greater substantive rights than U.S. investors have
under U.S. law. The Agreement also limits so-called ``minimum
standard'' investor claims (e.g., regarding ``fair and
equitable treatment'' of investors) and provides a mechanism
for the governments to agree to dispose of investor claims.
The United States has consistently maintained a trade
surplus with Panama for over 20 years ($5.7 billion in 2010),
and the trade agreement is widely expected to increase that
surplus.
THE AGREEMENT IN ITS BROADER CONTEXT
The May 10 components that are included in the Panama FTA
are, without question, some of the most forward-looking
provisions in U.S. trade agreements. While more work can be
done to ensure that our trade agreements reflect our values and
interests, those components are a critical basis to the
successful conclusion of any future bilateral or regional trade
agreement. New agreements also should address new challenges,
such as unfair competition from, and distortions caused by,
state-owned and state-supported enterprises.
Moreover, it is important to recognize that the May 10
Changes were just one part of our vision for a ``new trade
policy for America.'' In March 2007, House Democrats coalesced
around a number of initiatives to improve U.S. trade policy,
including in areas that eventually were reflected in the May 10
Changes. Beyond those changes, initiatives included the need
to: (1) strengthen the enforcement of trade agreements and U.S.
trade laws (in particular, by addressing massive Chinese
subsidies and violations of intellectual property rights;
eliminating currency manipulation; and by addressing non-tariff
barriers that limit U.S. exports); (2) strengthen American
competitiveness, including through worker retraining, education
and health care improvements, and community revitalization
programs; and (3) foster development in the poorest countries
of the world.
Some progress has been made on these initiatives. For
example, the 2009 reforms to Trade Adjustment Assistance (TAA)
dramatically improved the program, including by covering
service workers and many more manufacturing workers, increasing
training funding and mandating counseling to ensure appropriate
training, promoting on-the-job, part-time and longer-term
training, and by increasing the TAA health coverage tax credit.
We now have agreement to extend the program, which the new
Majority allowed to expire in February. And while modifications
have been made, both the integrity of the program and the major
2009 improvements are preserved. And the Affordable Care Act of
2010 will make the United States more competitive by reining in
health care costs.
But much more needs to be done, particularly with respect
to enforcement and global trade imbalances. For example, Fred
Bergsten, the Director of the Peterson Institute for
International Economics recently described China's currency
manipulation as ``by far the largest protectionist measure
adopted by any country since the Second World War--and probably
in all of history.'' Eliminating currency misalignments (caused
in large part by China's currency manipulation) is expected to
improve the U.S. current account position by $200 billion to
$250 billion annually and produce at least a million good jobs,
mainly in manufacturing. Years of ``quiet diplomacy'' to
address this issue have produced only meager results. And more
tools and resources are needed to address the many trade-
distorting policies of our trading partners, including China's
massive subsidies and other industrial policies in key sectors
such as clean energy. Those policies have been allowed to
persist even as important incentives for our companies like the
Section 48C Advanced Manufacturing Credit have lapsed due to
Republican opposition.
In addition to leveling the playing field, more must be
done to invest in American competitiveness and to create
American jobs. For example, last month, the President submitted
the American Jobs Act to Congress. Among other things, the bill
would help to rebuild and modernize American schools and put
teachers laid off by State budget cuts back to work. It would
make needed investments in our nation's infrastructure to
create jobs today and lay the foundation for future growth.
Enactment of the President's American Jobs Act will help to
promote American competitiveness in the global economy.
Sander M. Levin.
Jim McDermott.
Xavier Becerra.
John B. Larson.
Richard E. Neal.
Mike Thompson.
Earl Blumenauer.
Charles B. Rangel.