[Senate Report 107-126]
[From the U.S. Government Publishing Office]
Calendar No. 295
107th Congress Report
SENATE
1st Session 107-126
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ANDEAN TRADE PREFERENCE EXPANSION ACT
_______
December 14, 2001.--Ordered to be printed
_______
Mr. Baucus, from the Committee on Finance, submitted the following
R E P O R T
[To accompany H.R. 3009]
The Committee on Finance, to which was referred the bill
(H.R. 3009) to extend the Andean Trade Preference Act, to grant
additional trade benefits under the Act, and for other
purposes, having considered the same, reports favorably thereon
with an amendment and recommends that the bill (as amended) do
pass.
The amendment is as follows:
Strike out all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Andean Trade Preference Expansion
Act''.
TITLE I--ANDEAN TRADE PREFERENCE
SEC. 101. FINDINGS.
Congress makes the following findings:
(1) Since the Andean Trade Preference Act was enacted in
1991, it has had a positive impact on United States trade with
Bolivia, Colombia, Ecuador, and Peru. Two-way trade has
doubled, with the United States serving as the leading source
of imports and leading export market for each of the Andean
beneficiary countries. This has resulted in increased jobs and
expanded export opportunities in both the United States and the
Andean region.
(2) The Andean Trade Preference Act has been a key element in
the United States counternarcotics strategy in the Andean
region, promoting export diversification and broad-based
economic development that provides sustainable economic
alternatives to drug-crop production, strengthening the
legitimate economies of Andean countries and creating viable
alternatives to illicit trade in coca.
(3) Notwithstanding the success of the Andean Trade
Preference Act, the Andean region remains threatened by
political and economic instability and fragility, vulnerable to
the consequences of the drug war and fierce global competition
for its legitimate trade.
(4) The continuing instability in the Andean region poses a
threat to the security interests of the United States and the
world. This problem has been partially addressed through
foreign aid, such as Plan Colombia, enacted by Congress in
2000. However, foreign aid alone is not sufficient. Enhancement
of legitimate trade with the United States provides an
alternative means for reviving and stabilizing the economies in
the Andean region.
(5) The Andean Trade Preference Act constitutes a tangible
commitment by the United States to the promotion of prosperity,
stability, and democracy in the beneficiary countries.
(6) Renewal and enhancement of the Andean Trade Preference
Act will bolster the confidence of domestic private enterprise
and foreign investors in the economic prospects of the region,
ensuring that legitimate private enterprise can be the engine
of economic development and political stability in the region.
(7) Each of the Andean beneficiary countries is committed to
conclude negotiation of a Free Trade Area of the Americas by
the year 2005, as a means of enhancing the economic security of
the region.
(8) Temporarily enhancing trade benefits for Andean
beneficiaries countries will promote the growth of free
enterprise and economic opportunity in these countries and
serve the security interests of the United States, the region,
and the world.
SEC. 102. TEMPORARY PROVISIONS.
(a) In General.--Section 204(b) of the Andean Trade Preference Act
(19 U.S.C. 3203(b)) is amended to read as follows:
(b) Import-Sensitive Articles.--
(1) In general.--Subject to paragraphs (2) through (5), the
duty-free treatment provided under this title does not apply
to--
(A) textile and apparel articles which were not
eligible articles for purposes of this title on January
1, 1994, as this title was in effect on that date;
(B) footwear not designated at the time of the
effective date of this title as eligible articles for
the purpose of the generalized system of preferences
under title V of the Trade Act of 1974;
(C) tuna, prepared or preserved in any manner, in
airtight containers;
(D) petroleum, or any product derived from petroleum,
provided for in headings 2709 and 2710 of the HTS;
(E) watches and watch parts (including cases,
bracelets, and straps), of whatever type including, but
not limited to, mechanical, quartz digital, or quartz
analog, if such watches or watch parts contain any
material which is the product of any country with
respect to which HTS column 2 rates of duty apply;
(F) articles to which reduced rates of duty apply
under subsection (c);
(G) sugars, syrups, and sugar containing products
subject to tariff-rate quotas; or
(H) rum and tafia classified in subheading 2208.40 of
the HTS.
(2) Transition period treatment of certain textile and
apparel articles.--
(A) Articles covered.--During the transition period,
the preferential treatment described in subparagraph
(B) shall apply to the following articles:
(i) Apparel articles assembled from products
of the united states and atpea beneficiary
countries or products not available in
commercial quantities.--Apparel articles sewn
or otherwise assembled in 1 or more ATPEA
beneficiary countries, or the United States, or
both, exclusively from any one or any
combination of the following:
(I) Fabrics or fabric components
formed, or components knit-to-shape, in
the United States, from yarns wholly
formed in the United States (including
fabrics not formed from yarns, if such
fabrics are classifiable under heading
5602 or 5603 of the HTS and are formed
in the United States), provided that
apparel articles sewn or otherwise
assembled from materials described in
this subclause are assembled with
thread formed in the United States.
(II) Fabric components knit-to-shape
in the United States from yarns wholly
formed in the United States and fabric
components knit-to-shape in 1 or more
ATPEA beneficiary countries from yarns
wholly formed in the United States.
(III) Fabrics or fabric components
formed or components knit-to-shape, in
1 or more ATPEA beneficiary countries,
from yarns wholly formed in 1 or more
ATPEA beneficiary countries, if such
fabrics (including fabrics not formed
from yarns, if such fabrics are
classifiable under heading 5602 or 5603
of the HTS and are formed in 1 or more
ATPEA beneficiary countries) or
components are in chief weight of
llama, alpaca, or vicuna.
(IV) Fabrics or yarns that are not
formed in the United States or in 1 or
more ATPEA beneficiary countries, to
the extent that apparel articles of
such fabrics or yarns would be eligible
for preferential treatment, without
regard to the source of the fabrics or
yarns, under Annex 401 of the NAFTA.
(ii) Knit-to-shape apparel articles.--Apparel
articles knit-to-shape (other than socks
provided for in heading 6115 of the HTS) in 1
or more ATPEA beneficiary countries from yarns
wholly formed in the United States.
(iii) Regional fabric.--
(I) General rule.--Knit apparel
articles wholly assembled in 1 or more
ATPEA beneficiary countries exclusively
from fabric formed, or fabric
components formed, or components knit-
to-shape, or any combination thereof,
in 1 or more ATPEA beneficiary
countries from yarns wholly formed in
the United States, in an amount not
exceeding the amount set forth in
subclause (II).
(II) Limitation.--The amount referred
to in subclause (I) is 70,000,000
square meter equivalents during the 1-
year period beginning on March 1, 2002,
increased by 16 percent, compounded
annually, in each succeeding 1-year
period through February 28, 2006.
(iv) Certain other apparel articles.--
(I) General rule.--Subject to
subclause (II), any apparel article
classifiable under subheading 6212.10
of the HTS, if the article is both cut
and sewn or otherwise assembled in the
United States, or one or more of the
ATPEA beneficiary countries, or both.
(II) Limitation.--During the 1-year
period beginning on March 1, 2003, and
during each of the 2 succeeding 1-year
periods, apparel articles described in
subclause (I) of a producer or an
entity controlling production shall be
eligible for preferential treatment
under subparagraph (B) only if the
aggregate cost of fabric components
formed in the United States that are
used in the production of all such
articles of that producer or entity
that are entered during the preceding
1-year period is at least 75 percent of
the aggregate declared customs value of
the fabric contained in all such
articles of that producer or entity
that are entered during the preceding
1-year period.
(III) Development of procedure to
ensure compliance.--The United States
Customs Service shall develop and
implement methods and procedures to
ensure ongoing compliance with the
requirement set forth in subclause
(II). If the Customs Service finds that
a producer or an entity controlling
production has not satisfied such
requirement in a 1-year period, then
apparel articles described in subclause
(I) of that producer or entity shall be
ineligible for preferential treatment
under subparagraph (B) during any
succeeding 1-year period until the
aggregate cost of fabric components
formed in the United States used in the
production of such articles of that
producer or entity that are entered
during the preceding 1-year period is
at least 85 percent of the aggregate
declared customs value of the fabric
contained in all such articles of that
producer or entity that are entered
during the preceding 1-year period.
(v) Apparel articles assembled from fabrics
or yarn not widely available in commercial
quantities.--At the request of any interested
party, the President is authorized to proclaim
additional fabrics and yarn as eligible for
preferential treatment under clause (i)(IV)
if--
(I) the President determines that
such fabrics or yarn cannot be supplied
by the domestic industry in commercial
quantities in a timely manner;
(II) the President has obtained
advice regarding the proposed action
from the appropriate advisory committee
established under section 135 of the
Trade Act of 1974 (19 U.S.C. 2155) and
the United States International Trade
Commission;
(III) within 60 days after the
request, the President has submitted a
report to the Committee on Ways and
Means of the House of Representatives
and the Committee on Finance of the
Senate that sets forth the action
proposed to be proclaimed and the
reasons for such actions, and the
advice obtained under subclause (II);
(IV) a period of 60 calendar days,
beginning with the first day on which
the President has met the requirements
of subclause (III), has expired; and
(V) the President has consulted with
such committees regarding the proposed
action during the period referred to in
subclause (III).
(vi) Handloomed, handmade, and folklore
articles.--A handloomed, handmade, or folklore
article of an ATPEA beneficiary country
identified under subparagraph (C) that is
certified as such by the competent authority of
such beneficiary country.
(vii) Special rules.--
(I) Exception for findings and
trimmings.--(aa) An article otherwise
eligible for preferential treatment
under this paragraph shall not be
ineligible for such treatment because
the article contains findings or
trimmings of foreign origin, if such
findings and trimmings do not exceed 25
percent of the cost of the components
of the assembled product. Examples of
findings and trimmings are sewing
thread, hooks and eyes, snaps, buttons,
`bow buds', decorative lace, trim,
elastic strips, zippers, including
zipper tapes and labels, and other
similar products. Elastic strips are
considered findings or trimmings only
if they are each less than 1 inch in
width and are used in the production of
brassieres.
(bb) In the case of an article
described in clause (i)(I) of this
subparagraph, sewing thread shall not
be treated as findings or trimmings
under this subclause.
(II) Certain interlinings.--(aa) An
article otherwise eligible for
preferential treatment under this
paragraph shall not be ineligible for
such treatment because the article
contains certain interlinings of
foreign origin, if the value of such
interlinings (and any findings and
trimmings) does not exceed 25 percent
of the cost of the components of the
assembled article.
(bb) Interlinings eligible for the
treatment described in division (aa)
include only a chest type plate, `hymo'
piece, or `sleeve header', of woven or
weft-inserted warp knit construction
and of coarse animal hair or man-made
filaments.
(cc) The treatment described in this
subclause shall terminate if the
President makes a determination that
United States manufacturers are
producing such interlinings in the
United States in commercial quantities.
(III) De minimis rule.--An article
that would otherwise be ineligible for
preferential treatment under this
paragraph because the article contains
yarns not wholly formed in the United
States or in 1 or more ATPEA
beneficiary countries shall not be
ineligible for such treatment if the
total weight of all such yarns is not
more than 7 percent of the total weight
of the good. Notwithstanding the
preceding sentence, an apparel article
containing elastomeric yarns shall be
eligible for preferential treatment
under this paragraph only if such yarns
are wholly formed in the United States.
(IV) Special origin rule.--An article
otherwise eligible for preferential
treatment under clause (i) of this
subparagraph shall not be ineligible
for such treatment because the article
contains nylon filament yarn (other
than elastomeric yarn) that is
classifiable under subheading
5402.10.30, 5402.10.60, 5402.31.30,
5402.31.60, 5402.32.30, 5402.32.60,
5402.41.10, 5402.41.90, 5402.51.00, or
5402.61.00 of the HTS duty-free from a
country that is a party to an agreement
with the United States establishing a
free trade area, which entered into
force before January 1, 1995.
(V) Clarification of certain knit
apparel articles.--Notwithstanding any
other provision of law, an article
otherwise eligible for preferential
treatment under clause (iii)(I) of this
subparagraph, shall not be ineligible
for such treatment because the article,
or a component thereof, contains fabric
formed in the United States from yarns
wholly formed in the United States.
(viii) Textile luggage.--Textile luggage--
(I) assembled in an ATPEA beneficiary
country from fabric wholly formed and
cut in the United States, from yarns
wholly formed in the United States,
that is entered under subheading
9802.00.80 of the HTS; or
(II) assembled from fabric cut in an
ATPEA beneficiary country from fabric
wholly formed in the United States from
yarns wholly formed in the United
States.
(B) Preferential treatment.--Except as provided in
subparagraph (E), during the transition period, the
articles to which subparagraph (A) applies shall enter
the United States free of duty and free of any
quantitative restrictions, limitations, or consultation
levels.
(C) Handloomed, handmade, and folklore articles.--For
purposes of subparagraph (A)(vi), the President shall
consult with representatives of the ATPEA beneficiary
countries concerned for the purpose of identifying
particular textile and apparel goods that are mutually
agreed upon as being handloomed, handmade, or folklore
goods of a kind described in section 2.3(a), (b), or
(c) of the Annex or Appendix 3.1.B.11 of the Annex.
(D) Penalties for transshipments.--
(i) Penalties for exporters.--If the
President determines, based on sufficient
evidence, that an exporter has engaged in
transshipment with respect to textile or
apparel articles from an ATPEA beneficiary
country, then the President shall deny all
benefits under this title to such exporter, and
any successor of such exporter, for a period of
2 years.
(ii) Penalties for countries.--Whenever the
President finds, based on sufficient evidence,
that transshipment has occurred, the President
shall request that the ATPEA beneficiary
country or countries through whose territory
the transshipment has occurred take all
necessary and appropriate actions to prevent
such transshipment. If the President determines
that a country is not taking such actions, the
President shall reduce the quantities of
textile and apparel articles that may be
imported into the United States from such
country by the quantity of the transshipped
articles multiplied by 3, to the extent
consistent with the obligations of the United
States under the WTO.
(iii) Transshipment described.--Transshipment
within the meaning of this subparagraph has
occurred when preferential treatment under
subparagraph (B) has been claimed for a textile
or apparel article on the basis of material
false information concerning the country of
origin, manufacture, processing, or assembly of
the article or any of its components. For
purposes of this clause, false information is
material if disclosure of the true information
would mean or would have meant that the article
is or was ineligible for preferential treatment
under subparagraph (B).
(E) Bilateral emergency actions.--
(i) In general.--The President may take
bilateral emergency tariff actions of a kind
described in section 4 of the Annex with
respect to any apparel article imported from an
ATPEA beneficiary country if the application of
tariff treatment under subparagraph (B) to such
article results in conditions that would be
cause for the taking of such actions under such
section 4 with respect to a like article
described in the same 8-digit subheading of the
HTS that is imported from Mexico.
(ii) Rules relating to bilateral emergency
action.--For purposes of applying bilateral
emergency action under this subparagraph--
(I) the requirements of paragraph (5)
of section 4 of the Annex (relating to
providing compensation) shall not
apply;
(II) the term `transition period' in
section 4 of the Annex shall have the
meaning given that term in paragraph
(5)(D) of this subsection; and
(III) the requirements to consult
specified in section 4 of the Annex
shall be treated as satisfied if the
President requests consultations with
the ATPEA beneficiary country in
question and the country does not agree
to consult within the time period
specified under section 4.
(3) Transition period treatment of certain other articles
originating in beneficiary countries.--
(A) Equivalent tariff treatment.--
(i) In general.--Subject to clause (ii), the
tariff treatment accorded at any time during
the transition period to any article referred
to in any of subparagraphs (B), (D) through
(F), or (H) of paragraph (1) that is an ATPEA
originating good shall be identical to the
tariff treatment that is accorded at such time
under Annex 302.2 of the NAFTA to an article
described in the same 8-digit subheading of the
HTS that is a good of Mexico and is imported
into the United States.
(ii) Exception.--Clause (i) does not apply to
any article accorded duty-free treatment under
U.S. Note 2(b) to subchapter II of chapter 98
of the HTS.
(B) Relationship to subsection (c) duty reductions.--
If at any time during the transition period the rate of
duty that would (but for action taken under
subparagraph (A)(i) in regard to such period) apply
with respect to any article under subsection (c) is a
rate of duty that is lower than the rate of duty
resulting from such action, then such lower rate of
duty shall be applied for the purposes of implementing
such action.
(C) Special rule for sugars, syrups, and sugar
containing products.--Duty-free treatment under this
Act shall not be extended to sugars, syrups, and sugar-
containing products subject to over-quota duty rates
under applicable tariff-rate quotas.
(D) Special rule for certain tuna products.--
(i) In general.--The President may proclaim
duty-free treatment under this Act for tuna
that is harvested by United States vessels or
ATPEA beneficiary country vessels, and is
prepared or preserved in any manner, in
airtight containers in an ATPEA beneficiary
country. Such duty-free treatment may be
proclaimed in any calendar year for a quantity
of such tuna that does not exceed 20 percent of
the domestic United States tuna pack in the
preceding calendar year. As used in the
preceding sentence, the term `tuna pack' means
tuna pack as defined by the National Marine
Fisheries Service of the United States
Department of Commerce for purposes of
subheading 1604.14.20 of the HTS as in effect
on the date of enactment of the Andean Trade
Preference Expansion Act.
(ii) United States vessel.--For purposes of
this subparagraph, a `United States vessel' is
a vessel having a certificate of documentation
with a fishery endorsement under chapter 121 of
title 46, United States Code.
(iii) ATPEA vessel.--For purposes of this
subparagraph, an `ATPEA vessel' is a vessel--
(I) which is registered or recorded
in an ATPEA beneficiary country;
(II) which sails under the flag of an
ATPEA beneficiary country;
(III) which is at least 75 percent
owned by nationals of an ATPEA
beneficiary country or by a company
having its principal place of business
in an ATPEA beneficiary country, of
which the manager or managers, chairman
of the board of directors or of the
supervisory board, and the majority of
the members of such boards are
nationals of an ATPEA beneficiary
country and of which, in the case of a
company, at least 50 percent of the
capital is owned by an ATPEA
beneficiary country or by public bodies
or nationals of an ATPEA beneficiary
country;
(IV) of which the master and officers
are nationals of an ATPEA beneficiary
country; and
(V) of which at least 75 percent of
the crew are nationals of an ATPEA
beneficiary country.
(4) Customs procedures.--
(A) In general.--
(i) Regulations.--Any importer that claims
preferential treatment under paragraph (2) or
(3) shall comply with customs procedures
similar in all material respects to the
requirements of Article 502(1) of the NAFTA as
implemented pursuant to United States law, in
accordance with regulations promulgated by the
Secretary of the Treasury.
(ii) Determination.--
(I) In general.--In order to qualify
for the preferential treatment under
paragraph (2) or (3) and for a
Certificate of Origin to be valid with
respect to any article for which such
treatment is claimed, there shall be in
effect a determination by the President
that each country described in
subclause (II)--
(aa) has implemented and
follows; or
(bb) is making substantial
progress toward implementing
and following,
procedures and requirements similar in
all material respects to the relevant
procedures and requirements under
chapter 5 of the NAFTA.
(II) Country described.--A country is
described in this subclause if it is an
ATPEA beneficiary country--
(aa) from which the article
is exported; or
(bb) in which materials used
in the production of the
article originate or in which
the article or such materials
undergo production that
contributes to a claim that the
article is eligible for
preferential treatment under
paragraph (2) or (3).
(B) Certificate of origin.--The Certificate of Origin
that otherwise would be required pursuant to the
provisions of subparagraph (A) shall not be required in
the case of an article imported under paragraph (2) or
(3) if such Certificate of Origin would not be required
under Article 503 of the NAFTA (as implemented pursuant
to United States law), if the article were imported
from Mexico.
(C) Report by ustr on cooperation of other countries
concerning circumvention.--The United States
Commissioner of Customs shall conduct a study analyzing
the extent to which each ATPEA beneficiary country--
(i) has cooperated fully with the United
States, consistent with its domestic laws and
procedures, in instances of circumvention or
alleged circumvention of existing quotas on
imports of textile and apparel goods, to
establish necessary relevant facts in the
places of import, export, and, where
applicable, transshipment, including
investigation of circumvention practices,
exchanges of documents, correspondence,
reports, and other relevant information, to the
extent such information is available;
(ii) has taken appropriate measures,
consistent with its domestic laws and
procedures, against exporters and importers
involved in instances of false declaration
concerning fiber content, quantities,
description, classification, or origin of
textile and apparel goods; and
(iii) has penalized the individuals and
entities involved in any such circumvention,
consistent with its domestic laws and
procedures, and has worked closely to seek the
cooperation of any third country to prevent
such circumvention from taking place in that
third country.
The Trade Representative shall submit to Congress, not
later than October 1, 2002, a report on the study
conducted under this subparagraph.
(5) Definitions and special rules.--For purposes of this
subsection--
(A) Annex.--The term ``the Annex'' means Annex 300-B
of the NAFTA.
(B) ATPEA beneficiary country.--The term ``ATPEA
beneficiary country'' means any ``beneficiary
country'', as defined in section 203(a)(1) of this
title, which the President designates as an ATPEA
beneficiary country, taking into account the criteria
contained in subsections (c) and (d) of section 203 and
other appropriate criteria, including the following:
(i) Whether the beneficiary country has
demonstrated a commitment to--
(I) undertake its obligations under
the WTO, including those agreements
listed in section 101(d) of the Uruguay
Round Agreements Act, on or ahead of
schedule; and
(II) participate in negotiations
toward the completion of the FTAA or
another free trade agreement.
(ii) The extent to which the country provides
protection of intellectual property rights
consistent with or greater than the protection
afforded under the Agreement on Trade-Related
Aspects of Intellectual Property Rights
described in section 101(d)(15) of the Uruguay
Round Agreements Act.
(iii) The extent to which the country
provides internationally recognized worker
rights, including--
(I) the right of association;
(II) the right to organize and
bargain collectively;
(III) a prohibition on the use of any
form of forced or compulsory labor;
(IV) a minimum age for the employment
of children; and
(V) acceptable conditions of work
with respect to minimum wages, hours of
work, and occupational safety and
health;
(iv) Whether the country has implemented its
commitments to eliminate the worst forms of
child labor, as defined in section 507(6) of
the Trade Act of 1974.
(v) The extent to which the country has met
the counter-narcotics certification criteria
set forth in section 490 of the Foreign
Assistance Act of 1961 (22 U.S.C. 2291j) for
eligibility for United States assistance.
(vi) The extent to which the country has
taken steps to become a party to and implements
the Inter-American Convention Against
Corruption.
(vii) The extent to which the country--
(I) applies transparent,
nondiscriminatory, and competitive
procedures in government procurement
equivalent to those contained in the
Agreement on Government Procurement
described in section 101(d)(17) of the
Uruguay Round Agreements Act; and
(II) contributes to efforts in
international fora to develop and
implement international rules in
transparency in government procurement.
(C) ATPEA originating good.--
(i) In general.--The term ``ATPEA originating
good'' means a good that meets the rules of
origin for a good set forth in chapter 4 of the
NAFTA as implemented pursuant to United States
law.
(ii) Application of chapter 4.--In applying
chapter 4 of the NAFTA with respect to an ATPEA
beneficiary country for purposes of this
subsection--
(I) no country other than the United
States and an ATPEA beneficiary country
may be treated as being a party to the
NAFTA;
(II) any reference to trade between
the United States and Mexico shall be
deemed to refer to trade between the
United States and an ATPEA beneficiary
country;
(III) any reference to a party shall
be deemed to refer to an ATPEA
beneficiary country or the United
States; and
(IV) any reference to parties shall
be deemed to refer to any combination
of ATPEA beneficiary countries or to
the United States and one or more ATPEA
beneficiary countries (or any
combination thereof ).
(D) Transition period.--The term ``transition
period'' means, with respect to an ATPEA beneficiary
country, the period that begins on the date of
enactment, and ends on the earlier of--
(i) February 28, 2006; or
(ii) the date on which the FTAA or another
free trade agreement that makes substantial
progress in achieving the negotiating
objectives set forth in section 108(b)(5) of
Public Law 103-182 (19 U.S.C. 3317(b)(5))
enters into force with respect to the United
States and the ATPEA beneficiary country.
(E) ATPEA.--The term ``ATPEA'' means the Andean Trade
Preference Expansion Act.
(F) FTAA.--The term ``FTAA'' means the Free Trade
Area of the Americas.
(b) Determination Regarding Retention of Designation.--Section 203(e)
of the Andean Trade Preference Act (19 U.S.C. 3202(e)) is amended--
(1) in paragraph (1)--
(A) by redesignating subparagraphs (A) and (B) as
clauses (i) and (ii), respectively;
(B) by inserting ``(A)'' after ``(1)''; and
(C) by adding at the end the following:
(B) The President may, after the requirements of paragraph (2) have
been met--
(i) withdraw or suspend the designation of any country as an
ATPEA beneficiary country; or
(ii) withdraw, suspend, or limit the application of
preferential treatment under section 204(b) (2) and (3) to any
article of any country, if, after such designation, the
President determines that, as a result of changed
circumstances, the performance of such country is not
satisfactory under the criteria set forth in section
204(b)(5)(B).''; and
(2) by adding after paragraph (2) the following new
paragraph:
(3) If preferential treatment under section 204(b)(2) and (3) is
withdrawn, suspended, or limited with respect to an ATPEA beneficiary
country, such country shall not be deemed to be a `party' for the
purposes of applying section 204(b)(5)(C) to imports of articles for
which preferential treatment has been withdrawn, suspended, or limited
with respect to such country.
(c) Reporting Requirements.--Section 203(f) of the Andean Trade
Preference Act (19 U.S.C. 3202(f)) is amended to read as follows:
(f) Reporting Requirements.--
(1) In general.--Not later than December 31, 2002, and every
2 years thereafter during the period this title is in effect,
the United States Trade Representative shall submit to Congress
a report regarding the operation of this title, including--
(A) with respect to subsections (c) and (d), the
results of a general review of beneficiary countries
based on the considerations described in such
subsections; and
(B) the performance of each beneficiary country or
ATPEA beneficiary country, as the case may be, under
the criteria set forth in section 204(b)(5)(B).
(2) Public comment.--Before submitting the report described
in paragraph (1), the United States Trade Representative shall
publish a notice in the Federal Register requesting public
comments on whether beneficiary countries are meeting the
criteria listed in section 204(b)(5)(B).
(d) Conforming Amendments.--
(1) In general.--
(A) Section 202 of the Andean Trade Preference Act
(19 U.S.C. 3201) is amended by inserting ``(or other
preferential treatment)'' after ``treatment''.
(B) Section 204(a)(1) of the Andean Trade Preference
Act (19 U.S.C. 3203(a)(1)) is amended by inserting
``(or otherwise provided for)'' after ``eligibility''.
(C) Section 204(a)(1) of the Andean Trade Preference
Act (19 U.S.C. 3203(a)(1)) is amended by inserting
``(or preferential treatment)'' after ``duty-free
treatment''.
(2) Definitions.--Section 203(a) of the Andean Trade
Preference Act (19 U.S.C. 3202(a)) is amended by adding at the
end the following new paragraphs:
(4) The term ``NAFTA'' means the North American Free Trade
Agreement entered into between the United States, Mexico, and
Canada on December 17, 1992.
(5) The terms ``WTO'' and ``WTO member'' have the meanings
given those terms in section 2 of the Uruguay Round Agreements
Act (19 U.S.C. 3501).''.
SEC. 103. TERMINATION.
Section 208(b) of the Andean Trade Preference Act (19 U.S.C. 3206(b))
is amended to read as follows:
``(b) Termination of Preferential Treatment.--No preferential duty
treatment extended to beneficiary countries under this Act shall remain
in effect after February 28, 2006.
TITLE II--MISCELLANEOUS TRADE PROVISIONS
SEC. 201. WOOL PROVISIONS.
(a) Short Title.--This section may be cited as the ``Wool
Manufacturer Payment Clarification and Technical Corrections Act''.
(b) Clarification of Temporary Duty Suspension.--Heading 9902.51.13
of the Harmonized Tariff Schedule of the United States is amended by
inserting ``average'' before ``diameters''.
(c) Payments to Manufacturers of Certain Wool Products.--
(1) Payments.--Section 505 of the Trade and Development Act
of 2000 (Public Law 106-200; 114 Stat. 303) is amended as
follows:
(A) Subsection (a) is amended--
(i) by striking ``In each of the calendar
years'' and inserting ``For each of the
calendar years''; and
(ii) by striking ``for a refund of duties''
and all that follows through the end of the
subsection and inserting ``for a payment equal
to an amount determined pursuant to subsection
(d)(1).
(B) Subsection (b) is amended to read as follows:
(b) Wool Yarn.--
(1) Importing manufacturers.--For each of the calendar years
2000, 2001, and 2002, a manufacturer of worsted wool fabrics
who imports wool yarn of the kind described in heading
9902.51.13 of the Harmonized Tariff Schedule of the United
States shall be eligible for a payment equal to an amount
determined pursuant to subsection (d)(2).
(2) Nonimporting manufacturers.--For each of the calendar
years 2001 and 2002, any other manufacturer of worsted wool
fabrics of imported wool yarn of the kind described in heading
9902.51.13 of the Harmonized Tariff Schedule of the United
States shall be eligible for a payment equal to an amount
determined pursuant to subsection (d)(2).
(C) Subsection (c) is amended to read as follows:
(c) Wool Fiber and Wool Top.--
(1) Importing manufacturers.--For each of the calendar years
2000, 2001, and 2002, a manufacturer of wool yarn or wool
fabric who imports wool fiber or wool top of the kind described
in heading 9902.51.14 of the Harmonized Tariff Schedule of the
United States shall be eligible for a payment equal to an
amount determined pursuant to subsection (d)(3).
(2) Nonimporting manufacturers.--For each of the calendar
years 2001 and 2002, any other manufacturer of wool yarn or
wool fabric of imported wool fiber or wool top of the kind
described in heading 9902.51.14 of the Harmonized Tariff
Schedule of the United States shall be eligible for a payment
equal to an amount determined pursuant to subsection (d)(3).
(D) Section 505 is further amended by striking
subsection (d) and inserting the following new
subsections:
(d) Amount of Annual Payments to Manufacturers.--
(1) Manufacturers of men's suits, etc. of imported worsted
wool fabrics.--
(A) Eligible to receive more than $5,000.--Each
annual payment to manufacturers described in subsection
(a) who, according to the records of the Customs
Service as of September 11, 2001, are eligible to
receive more than $5,000 for each of the calendar years
2000, 2001, and 2002, shall be in an amount equal to
one-third of the amount determined by multiplying
$30,124,000 by a fraction--
(i) the numerator of which is the amount
attributable to the duties paid on eligible
wool products imported in calendar year 1999 by
the manufacturer making the claim, and
(ii) the denominator of which is the total
amount attributable to the duties paid on
eligible wool products imported in calendar
year 1999 by all the manufacturers described in
subsection (a) who, according to the records of
the Customs Service as of September 11, 2001,
are eligible to receive more than $5,000 for
each such calendar year under this section as
it was in effect on that date.
(B) Eligible wool products.--For purposes of
subparagraph (A), the term `eligible wool products'
refers to imported worsted wool fabrics described in
subsection (a).
(C) Others.--All manufacturers described in
subsection (a), other than the manufacturer's to which
subparagraph (A) applies, shall each receive an annual
payment in an amount equal to one-third of the amount
determined by dividing $1,665,000 by the number of all
such other manufacturers.
(2) Manufacturers of worsted wool fabrics of imported wool
yarn.--
(A) Importing manufacturers.--Each annual payment to
an importing manufacturer described in subsection
(b)(1) shall be in an amount equal to one-third of the
amount determined by multiplying $2,202,000 by a
fraction--
(i) the numerator of which is the amount
attributable to the duties paid on eligible
wool products imported in calendar year 1999 by
the importing manufacturer making the claim,
and
(ii) the denominator of which is the total
amount attributable to the duties paid on
eligible wool products imported in calendar
year 1999 by all the importing manufacturers
described in subsection (b)(1).
(B) Eligible wool products.--For purposes of
subparagraph (A), the term ``eligible wool products''
refers to imported wool yarn described in subsection
(b)(1).
(C) Nonimporting manufacturers.--Each annual payment
to a nonimporting manufacturer described in subsection
(b)(2) shall be in an amount equal to one-half of the
amount determined by multiplying $141,000 by a
fraction--
(i) the numerator of which is the amount
attributable to the purchases of imported
eligible wool products in calendar year 1999 by
the nonimporting manufacturer making the claim,
and
(ii) the denominator of which is the total
amount attributable to the purchases of
imported eligible wool products in calendar
year 1999 by all the nonimporting manufacturers
described in subsection (b)(2).
(3) Manufacturers of wool yarn or wool fabric of imported
wool fiber or wool top.--
(A) Importing manufacturers.--Each annual payment to
an importing manufacturer described in subsection
(c)(1) shall be in an amount equal to one-third of the
amount determined by multiplying $1,522,000 by a
fraction--
(i) the numerator of which is the amount
attributable to the duties paid on eligible
wool products imported in calendar year 1999 by
the importing manufacturer making the claim,
and
(ii) the denominator of which is the total
amount attributable to the duties paid on
eligible wool products imported in calendar
year 1999 by all the importing manufacturers
described in subsection (c)(1).
(B) Eligible wool products.--For purposes of
subparagraph (A), the term ``eligible wool products''
refers to imported wool fiber or wool top described in
subsection (c)(1).
(C) Nonimporting manufacturers.--Each annual payment
to a nonimporting manufacturer described in subsection
(c)(2) shall be in an amount equal to one-half of the
amount determined by multiplying $597,000 by a
fraction--
(i) the numerator of which is the amount
attributable to the purchases of imported
eligible wool products in calendar year 1999 by
the nonimporting manufacturer making the claim,
and
(ii) the denominator of which is the amount
attributable to the purchases of imported
eligible wool products in calendar year 1999 by
all the nonimporting manufacturers described in
subsection (c)(2).
(4) Letters of intent.--Except for the nonimporting
manufacturers described in subsections (b)(2) and (c)(2) who
may make claims under this section by virtue of the enactment
of the Wool Manufacturer Payment Clarification and Technical
Corrections Act, only manufacturers who, according to the
records of the Customs Service, filed with the Customs Service
before September 11, 2001, letters of intent to establish
eligibility to be claimants are eligible to make a claim for a
payment under this section.
(5) Amount attributable to purchases by nonimporting
manufacturers.--
(A) Amount attributable.--For purposes of paragraphs
(2)(C) and (3)(C), the amount attributable to the
purchases of imported eligible wool products in
calendar year 1999 by a nonimporting manufacturer shall
be the amount the nonimporting manufacturer paid for
eligible wool products in calendar year 1999, as
evidenced by invoices. The nonimporting manufacturer
shall make such calculation and submit the resulting
amount to the Customs Service, within 45 days after the
date of enactment of the Wool Manufacturer Payment
Clarification and Technical Corrections Act, in a
signed affidavit that attests that the information
contained therein is true and accurate to the best of
the affiant's belief and knowledge. The nonimporting
manufacturer shall retain the records upon which the
calculation is based for a period of five years
beginning on the date the affidavit is submitted to the
Customs Service.
(B) Eligible wool product.--For purposes of
subparagraph (A)--
(i) the eligible wool product for
nonimporting manufacturers of worsted wool
fabrics is wool yarn of the kind described in
heading 9902.51.13 of the Harmonized Tariff
Schedule of the United States purchased in
calendar year 1999; and
(ii) the eligible wool products for
nonimporting manufacturers of wool yarn or wool
fabric are wool fiber or wool top of the kind
described in heading 9902.51.14 of such
Schedule purchased in calendar year 1999.
(6) Amount attributable to duties paid.--For purposes of
paragraphs (1), (2)(A), and (3)(A), the amount attributable to
the duties paid by a manufacturer shall be the amount shown on
the records of the Customs Service as of September 11, 2001,
under this section as then in effect.
(7) Schedule of payments; reallocations.--
(A) Schedule.--Of the payments described in
paragraphs (1), (2)(A), and (3)(A), the Customs Service
shall make the first installment on or before December
31, 2001, the second installment on or before April 15,
2002, and the third installment on or before April 15,
2003. Of the payments described in paragraphs (2)(C)
and (3)(C), the Customs Service shall make the first
installment on or before April 15, 2002, and the second
installment on or before April 15, 2003.
(B) Reallocations.--In the event that a manufacturer
that would have received payment under subparagraph (A)
or (C) of paragraph (1), (2), or (3) ceases to be
qualified for such payment as such a manufacturer, the
amounts otherwise payable to the remaining
manufacturers under such subparagraph shall be
increased on a pro rata basis by the amount of the
payment such manufacturer would have received.
(8) Reference.--For purposes of paragraphs (1)(A) and (6),
the `records of the Customs Service as of September 11, 2001'
are the records of the Wool Duty Unit of the Customs Service on
September 11, 2001, as adjusted by the Customs Service to the
extent necessary to carry out this section. The amounts so
adjusted are not subject to administrative or judicial review.
(e) Affidavits by Manufacturers.--
(1) Affidavit Required.--A manufacturer may not receive a
payment under this section for calendar year 2000, 2001, or
2002, as the case may be, unless that manufacturer has
submitted to the Customs Service for that calendar year a
signed affidavit that attests that, during that calendar year,
the affiant was a manufacturer in the United States described
in subsection (a), (b), or (c).
(2) Timing.--An affidavit under paragraph (1) shall be
valid--
(A) in the case of a manufacturer described in
paragraph (1), (2)(A), or (3)(A) of subsection (d)
filing a claim for a payment for calendar year 2000,
only if the affidavit is postmarked no later than 15
days after the date of enactment of the Wool
Manufacturer Payment Clarification and Technical
Corrections Act; and
(B) in the case of a claim for a payment for calendar
year 2001 or 2002, only if the affidavit is postmarked
no later than March 1, 2002, or March 1, 2003,
respectively.
(f) Offsets.--Notwithstanding any other provision of this section,
any amount otherwise payable under subsection (d) to a manufacturer in
calendar year 2001 and, where applicable, in calendar years 2002 and
2003, shall be reduced by the amount of any payment received by that
manufacturer under this section before the enactment of the Wool
Manufacturer Payment Clarification and Technical Corrections Act.
(g) Definition.--For purposes of this section, the manufacturer is
the party that owns--
(1) imported worsted wool fabric, of the kind described in
heading 9902.51.11 or 9902.51.12 of the Harmonized Tariff
Schedule of the United States, at the time the fabric is cut
and sewn in the United States into men's or boys' suits, suit-
type jackets, or trousers;
(2) imported wool yarn, of the kind described in heading
9902.51.13 of such Schedule, at the time the yarn is processed
in the United States into worsted wool fabric; or
(3) imported wool fiber or wool top, of the kind described in
heading 9902.51.14 of such Schedule, at the time the wool fiber
or wool top is processed in the United States into wool yarn.
(2) Funding.--There is authorized to be appropriated and is
appropriated, out of amounts in the General Fund of the
Treasury not otherwise appropriated, $36,251,000 to carry out
the amendments made by paragraph (1).
SEC. 202. CEILING FANS.
(a) In General.--Notwithstanding any other provision of law, ceiling
fans classified under subheading 8414.51.00 of the Harmonized Tariff
Schedule of the United States imported from Thailand shall enter duty-
free and without any quantitative limitations, if duty-free treatment
under title V of the Trade Act of 1974 (19 U.S.C. 2461 et seq.) would
have applied to such entry had the competitive need limitation been
waived under section 503(d) of such Act.
(b) Applicability.--The provisions of this section shall apply to
ceiling fans described in subsection (a) that are entered, or withdrawn
from warehouse for consumption--
(1) on or after the date that is 15 days after the date of
enactment of this Act; and
(2) before July 30, 2002.
SEC. 203. CERTAIN STEAM OR OTHER VAPOR GENERATING BOILERS USED IN
NUCLEAR FACILITIES.
(a) In General.--Subheading 9902.84.02 of the Harmonized Tariff
Schedule of the United States is amended--
(1) by striking ``4.9%'' and inserting ``Free''; and
(2) by striking ``12/31/2003'' and inserting ``12/31/2006''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to goods entered, or withdrawn from warehouse for consumption, on
or after January 1, 2002.
I. SUMMARY
H.R. 3009 extends and expands a trade preference program
for four beneficiary countries--Bolivia, Colombia, Ecuador and
Peru--established in 1991 and expired on December 4, 2001. The
Andean Trade Preference Act (19 U.S.C. Sec. Sec. 3201-06)
(``ATPA'') provides duty-free treatment for most products that
are the growth, product, or manufacture of any of the four ATPA
beneficiary countries and that are imported directly into the
customs territory of the United States. The present bill
extends the ATPA through February 28, 2006 and expands the
program by giving duty-free or reduced-duty treatment to most
products currently excluded from ATPA.
Additionally, the bill contains three miscellaneous
provisions. The first establishes a procedure for importers of
certain wool products to obtain refunds of duties paid in
calendar year 1999. The second waives quantitative restrictions
on ceiling fans imported from Thailand eligible for duty-free
treatment under the Generalized System of Preferences. The
third provides duty-free treatment for steam or other vapor
generating boilers used in nuclear facilities, imported into
the United States from January 1, 2002 through December 31,
2006.
II. GENERAL EXPLANATION
A. Current Law
The ATPA was enacted in 1991 as Title II of Public Law
Number 102-182. It is codified at 19 U.S.C. Sec. Sec. 3201-06.
The ATPA in its current form expired on December 4, 2001. A
measure to continue the ATPA in its current form for six months
(through June 4, 2002) was included in section 502 of H.R. 3090
as reported in the Senate by the Committee on Finance on
November 9, 2001.
Under the ATPA, most categories of goods that are the
growth, product or manufacture of Bolivia, Colombia, Ecuador,
and Peru receive duty-free treatment when imported directly
into the customs territory of the United States. The ATPA grew
out of a commitment that President Bush made at the February
1990 Cartagena Drug Summit to provide economic benefits to the
four listed Andean countries as part of an effort to reduce
illegal drug production and trafficking in those countries. By
promoting legitimate economic activity in the beneficiary
countries, ATPA was designed to displace investment and
employment in illegitimate sectors.
For a good to qualify as the growth, product or manufacture
of an ATPA beneficiary country or countries, the value of
materials produced in a beneficiary country or countries, plus
the direct cost of processing operations performed in such
country or countries must equal not less than 35 percent of the
appraised value of the good upon entry into the customs
territory of the United States. The statute provides that
materials produced in beneficiary countries under the Caribbean
Basin Economic Recovery Act, as well as operations performed in
those countries, may contribute towards this 35 percent
threshold. Materials produced in the Commonwealth of Puerto
Rico and the United States Virgin Islands, as well as
operations performed in those territories, also may contribute
toward the threshold. Finally, up to 15 percent of the 35
percent threshold may consist of materials produced in the
customs territory of the United States (excluding Puerto Rico).
Under the ATPA as expired on December 4, 2001, certain
categories of goods are treated as import-sensitive and,
therefore, are excluded from duty-free treatment on importation
into the United States. These excluded categories are: (1)
textile and apparel articles which are subject to textile
agreements; (2) certain footwear; (3) tuna, prepared or
preserved in any manner, in airtight containers; (4) petroleum
and petroleum products; (5) certain watches and watch parts;
(6) certain handbags, luggage, flat goods, work gloves, and
leather apparel; (7) certain sugars, syrups and molasses; and
(8) rum and tafia. Further, the articles in category (6) in the
latter list of exceptions are subject to reduced (though not
zero) duty rates.
In order to qualify for ATPA benefits, each of the four
countries must be designated by the President as a
``beneficiary country.'' To attain that designation, each of
the countries must meet certain mandatory criteria, as follows:
(1) the country cannot be a communist country; (2) the country
cannot have taken measures the effect of which is to
nationalize, expropriate or otherwise seize ownership or
control of property owned by U.S. citizens or companies, absent
the provision of prompt, adequate and effective compensation;
(3) the country must act in good faith to recognize as binding
and to enforce arbitral awards in favor of U.S. citizens and
companies; (4) the country cannot give trade preferences to
developed countries that have a significant adverse effect on
U.S. commerce; (5) the country must provide adequate and
effective protection of intellectual property rights; (6) the
country must be signatory to a treaty, convention, protocol or
other agreement regarding the extradition of U.S. citizens; and
(7) the country must be taking steps to afford internationally
recognized worker rights to workers in the country.
Of the foregoing criteria, items (1), (2), (3), (5), and
(7) can be waived for a given country, if the President
determines and reports to Congress that doing so is in the
national economic or security interest of the United States.
Additionally, the ATPA sets forth certain discretionary
criteria for the President to take into account in deciding
whether to designate any of the four listed countries as
beneficiary countries. These criteria are: (1) the country's
expressed desire to be so designated; (2) economic conditions
in the country; (3) the country's assurances to the United
States of equitable and reasonable access to its markets and to
basic commodity resources; (4) the country's compliance with
the rules of the World Trade Organization; (5) the degree to
which the country uses export subsidies or imposes local
content requirements which distort trade; (6) the degree to
which the country's trade policies are contributing to regional
revitalization; (7) the degree to which the country is helping
its own economic development; (8) whether the country is taking
steps to protect internationally recognized worker rights; (9)
the extent to which the country's laws give foreign nationals
adequate and effective means to secure, exercise, and enforce
intellectual property rights; (10) the extent to which the
country prohibits broadcast of U.S. copyrighted material
without the copyright owner's express consent; (11) whether the
country is certified as cooperating in anti-narcotics
trafficking efforts; and (12) the extent to which the country
is prepared to cooperate with the United States in
administering the ATPA.
By presidential proclamations, Colombia and Bolivia have
been designated as ATPA beneficiary countries since July 22,
1992. Ecuador has been designated an ATPA beneficiary country
since April 30, 1993. And, Peru has been designated an ATPA
beneficiary country since August 31, 1993.
The ATPA further authorizes the President to withdraw or
suspend a country's beneficiary country status, or to withdraw,
suspend, or limit benefits with respect to particular articles,
as a result of changed circumstances. Such actions may be taken
only after public notice and an opportunity for comment and a
public hearing have been provided. Further, the President may
suspend duty-free treatment under the ATPA pursuant to action
taken under either the general safeguard provision of the Trade
Act of 1974 (chapter 1 of title II of such Act) (i.e., when
increased imports of a good, regardless of origin, are causing
or threatening serious injury to a U.S. producer of like or
directly competitive goods), or section 232 of the Trade
Expansion Act of 1962 (i.e., when it is determined that goods
are being imported in such quantities or under such
circumstances as to threaten to impair national security).
B. Impact of ATPA
The ATPA required the United States International Trade
Commission (``the ITC'') to submit to Congress annual reports
on the operation of the ATPA, including its impact on U.S.
industries and consumers. In its most recent report (Andean
Trade Preference Act: Impact on U.S. Industries and Consumers
and on Drug Crop Eradication and Crop Substitution, Inv. No.
332-352, USITC Pub. 3385 (Sep. 2000)) (``ITC Report''), the ITC
found that the overall impact of ``ATPA-exclusive'' imports
(i.e., imports not also eligible for preferences under other
programs, primarily the Generalized System of Preferences
(``GSP'')) on the U.S. economy and consumers was negligible in
1999. ITC Report at i.\1\ However, the ITC also identified
``potentially significant effects on domestic industries
producing asparagus; chrysanthemums, carnations, anthuriums,
and orchids; and fresh-cut roses.'' Id. The ITC found the
program to have had ``a small but positive effect on the
economies of the ATPA beneficiaries'' and ``a slight but
positive effect on drug-crop eradication.'' Id.
---------------------------------------------------------------------------
\1\ The ITC found that $1.75 billion in goods entered the United
States under ATPA in 1999. Of these imports, about $0.9 billion could
not have received tariff preferences under any program other than ATPA.
---------------------------------------------------------------------------
Based upon United States Department of Commerce statistics,
the United States imported $11.1 billion in goods from ATPA
beneficiary countries in 2000, which represented a 13.1 percent
increase over 1999 import levels. These imports represented 0.9
percent of total imports into the United States in 2000.
Imports from ATPA beneficiary countries represented about 0.97
percent of total imports into the United States in 1999.
In 2000, imports from ATPA beneficiary countries entering
duty-free exclusively under the ATPA program totaled $1.312
billion. This represented 11.8 percent of total imports from
ATPA beneficiary countries, and 0.1 percent of total imports
into the United States from all sources. Total imports entered
under ATPA in 2000 (including imports that entered at reduced
rates of duty and imports that could have entered duty-free
under other programs) amounted to $1.981 billion, representing
17.8 percent of imports from ATPA beneficiary countries. Walker
Pollard, ``Renewal and Expansion of ATPA Could Enhance
Effectiveness of the Program,'' International Economic Review,
USITC Pub. 3442 at 20 (July/August 2001) (estimate of ITC staff
from official statistics of the U.S. Department of Commerce).
In 1999, imports from ATPA beneficiary countries entering
duty-free exclusively under the ATPA program totaled $939
million, representing 9.6 percent of total imports from ATPA
beneficiary countries, and 0.09 percent of total imports into
the United States from all sources. Total imports entered under
ATPA in 1999 (including imports that entered at reduced rates
of duty and imports that could have entered duty-free under
other programs) amounted to $1.75 billion, representing 17.8
percent of imports from the ATPA beneficiary countries. ITC
Report at 34.
Primary imports from ATPA beneficiary countries have tended
to be: petroleum products (not eligible for ATPA benefits);
precious metals, stones, and jewelry; coffee; fresh or dried
bananas; and shrimp. In 1999, almost 60 percent of imports from
ATPA beneficiary countries came from Colombia. Imports from
Peru and Ecuador represented 19 percent each of total imports
from ATPA beneficiary countries. Imports from Bolivia
represented 2.3 percent of total imports from ATPA beneficiary
countries.
Primary imports receiving duty-free treatment exclusively
under ATPA have tended to include fresh cut flowers (mostly
from Colombia); copper cathodes (mostly from Peru); precious
metals, gemstones, and jewelry; pigments (mostly from
Colombia); processed tuna other than tuna in airtight
containers (mostly from Ecuador); zinc products (from Peru);
and asparagus (from Peru).
The ITC Report identified certain sectors that have
benefitted from new investment in the Andean region and that
might lead to increased exports under the ATPA program. These
sectors are pigments, sugar cane, candy, gold jewelry, and
fruit. ITC Report at viii.
The U.S. trade deficit with the ATPA beneficiary countries
in 2000 was $4.8 billion, up from $3.6 billion in 1999. The
2000 deficit represented $11.1 billion in imports and $6.3
billion in exports, compared with $9.8 billion in imports and
$6.3 billion in exports in 1999. 1999 was the first year since
1996 in which the United States had a trade deficit with the
ATPA beneficiary countries. The trade deficit in 2000 was the
largest trade deficit the United States has had with these
countries collectively since the program began. According to
the ITC, the size of the deficit is attributable, in part, to a
strong dollar and economic difficulties in the Andean region.
Notably, U.S. exports of aircraft, motor vehicles and
electrical machinery to the Andean region dropped by about 40
percent in 1999. Id. at 7.
On the subject of drug eradication, the ITC Report found
that
[i]ndustries that produce ATPA-related goods provide
alternative development opportunities, and although
ATPA-related investment has flourished in regions where
there is no presence of illicit crops, the program
indirectly provides new sources of employment for
workers that may otherwise turn to illicit crop-
producing activities.
Id. at 73-74.
The report concluded that ``[a]lthough it is difficult to
illustrate the positive impact of ATPA other than anecdotally,
the success of eradication and alternative development efforts
in the Andean region appears to be spreading.'' Id. at 74.
The ATPA also required the Secretary of Labor to report
annually to Congress on the impact of ATPA on U.S. labor. The
most recent such report (based on year 2000 data) reached the
following conclusion:
Preferential tariff treatment under the ATPA does not
appear to have had an adverse impact on, or have
constituted a significant threat to, U.S. employment.
While declines in production and possibly employment in
some sectors of the cut flower industry (standard
carnations, standard and pompon chrysanthemums, and
roses) may have been affected to some extent by the
tariff preferences granted under the ATPA program,
other factors may also have contributed to these
production and employment declines.
U.S. Dept. of Labor, Trade and Employment Effects of the Andean
Trade Preference Act at i (Nov. 2001).
C. Action in Committee
On March 13, 2001, Senator Graham introduced a bill (S.
525) to extend and expand ATPA. That bill was co-sponsored by
Senators Biden, Breaux, DeWine, Dodd, Hagel, Kyl, Landrieu,
Lieberman, Lugar, McCain, Murkowski, Nelson of Florida, Nelson
of Nebraska, Specter and Thompson. The bill as introduced would
extend ATPA through September 30, 2005. Its approach to
expansion of ATPA was largely modeled on the expansion of the
Caribbean Basin Initiative, enacted in 2000 as Title II of the
Trade and Development Act of 2000 (Pub. L. No. 106-200).
S. 525 would extend tariff preferences to most of the
products excluded from such treatment under current law. For
most currently excluded products other than apparel, the
preference consists of a reduction of rate of duty to the rate
currently imposed on like products from Mexico, with continued
reductions on the schedule that applies to like products from
Mexico. For apparel, the preference consists of duty-free
treatment, subject to certain limitations. With limited
exceptions, apparel eligible for duty-free treatment under the
bill must be made from yarns wholly formed in the United
States. The yarns, in turn, may be knit or woven into fabric in
either the United States or the beneficiary countries. However,
the bill places a limit on the quantity of apparel made from
fabric knit in the beneficiary countries that can be imported
into the United States duty-free. (Apparel made from fabric
woven in the beneficiary countries is not eligible for duty-
free treatment under the bill as introduced.)
1. Hearing
On August 3, 2001, the Subcommittee on International Trade
of the Committee on Finance held a hearing on expansion of the
Andean Trade Preference Act. The Subcommittee heard testimony
from Congressman Phil Crane; Deputy U.S. Trade Representative
Peter Allgeier; Under Secretary of State for Economic, Business
and Agricultural Affairs, Alan P. Larson; President of ARC
International, Paul Arcia; President of Dole Fresh Fruit
International, Richard Harrah; Executive Vice President of the
American Textile Manufacturers Institute, Carlos Moore; General
Manager (Retired) of Heinz International, K. Ward Rodgers; and
Vice President for Law of Defenders of Wildlife, William Snape
III. Additionally, the Subcommittee received written
submissions from ATPA beneficiary country governments, trade
associations, and other interested parties.
The witnesses generally expressed support for extension and
expansion of ATPA, although there were some differences over
which products should be included in the expanded program.
Ambassador Allgeier observed that, over the past decade, ATPA
has successfully promoted economic diversification, but that
about 40 percent of exports from ATPA beneficiary countries
still face duty upon importation into the United States. He
urged developing the broadest possible product coverage for a
renewed ATPA, taking the unique features of the ATPA
beneficiary country economies into account. Ambassador Allgeier
further emphasized that a renewed and expanded ATPA should be a
bridge to integrating the Andean countries into a Free Trade
Area of the Americas.
Under Secretary Larson emphasized that the leaders
currently in place in the Andean countries are committed to
reforming their economic and political institutions. He
observed that a renewed and expanded ATPA would bolster their
efforts.
Private sector witnesses (as well as statements submitted
by beneficiary country governments and industry groups)
underscored the successes of the current ATPA and the likely
benefits that would flow from its renewal and enhancement. For
example, Mr. Harrah described the case of fresh cut flowers,
which have received duty-free treatment under the current ATPA.
He testified that Dole, through its subsidiary, owns and
operates 23 flower farms in Colombia and Ecuador, employing
11,133 workers in Colombia and 1,028 workers in Ecuador. He
observed that intense competition would make these operations
difficult to sustain, absent continued duty-free treatment for
fresh cut flowers.
Mr. Arcia, whose company ARC International has apparel-
making operations in Colombia, testified that he began losing
customer orders after enactment last year of the Caribbean
Basin Trade Preferences Act, which provided duty-free treatment
to certain apparel products from the Caribbean and Central
America. Mr. Arcia urged that ATPA be enhanced in order to
reduce this disparity. He added that, given the structure of
the apparel industry in the Andean countries, it would not be
economically meaningful to extend duty preferences to apparel
made from U.S. fabric only. Due to factors such as higher
labor, transportation, and security costs, he testified that
ATPA enhancement should include duty-free treatment for apparel
made from fabric produced in the ATPA beneficiary countries
themselves.
This view was opposed by Mr. Moore of the American Textile
Manufacturers Institute. Mr. Moore testified that the question
of whether to include textile and apparel in an enhanced ATPA
should be viewed in the context of increasing competitive
pressure on the U.S. textile industry, due to currency
devaluations in Asia since 1997. He stated that the U.S.
industry is in crisis, with textile mills closing and jobs
being cut at an accelerating pace. Mr. Moore stated that a
duty-free benefit to the Andean countries that includes apparel
made from regional fabrics and yarns would exacerbate the
crisis in the U.S. industry.
Other interested parties drew the International Trade
Subcommittee's attention to other U.S. industries that are
concerned about the impact of continued or enhanced duty-free
treatment to products from the ATPA beneficiary countries. For
example, the American Farm Bureau Federation submitted a
statement describing the displacement of U.S. asparagus
production by increasing imports of asparagus from Peru (which
enters the United States duty-free under the current ATPA).
Finally, the Subcommittee heard testimony and received
statements on the subject of whether to extend trade
preferences to tuna in airtight containers, a product excluded
from duty-free treatment under current law. As Mr. Rodgers,
former General Manager of Heinz North America (owner of the
Starkist brand of tuna) testified, this question is of
particular importance to Ecuador. Mr. Rodgers testified that
Starkist hopes to expand production of its pouched tuna product
in Ecuador, while continuing to operate tuna processing
facilities in the U.S. Territory of American Samoa at full
capacity. He observed that, without duty-free treatment, it
would be difficult for tuna from Ecuador to compete with tuna
from Thailand.
However, other statements submitted for the record differed
with Mr. Rogers' testimony concerning the likely impact on U.S.
tuna production of granting duty-free treatment to processed
tuna from Ecuador. In particular, a statement by Mr.
Christopher Lischewski, President of Bumble Bee Seafoods,
argued that ``[g]ranting special duty privileges to Ecuador and
other Andean nations will divert tuna canning operations away
from these U.S. plants [in Puerto Rico, California, and
American Samoa] and result in the loss of thousands of American
jobs.''
2. Markup
On November 16, 2001, the Senate received from the House of
Representatives a bill to expand the ATPA (H.R. 3009). That
bill was referred to the Committee on Finance, which held a
markup on November 29, 2001. The Committee's mark consisted of
an amendment in the nature of a substitute to H.R. 3009,
offered by the Chairman. The amendment in the nature of a
substitute contained the substance of S. 525, with some
modifications. In particular, the different categories of
apparel articles eligible for duty-free treatment were re-
organized to more closely reflect the organization in the bill
as adopted by the House, and sugars, syrups, and sugar-
containing products subject to over-quota duty rates under
tariff-rate quotas were excluded from preferential treatment.
Additionally, the Chairman's amendment in the nature of a
substitute included a non-ATPA provision related to refunds of
certain duties charged on imports of wool products in calendar
year 1999. The refunds at issue originally were provided for in
section 505 of the Trade and Development Act of 2000 (Pub. L.
No. 106-200). However, certain documents filed by interested
parties in connection with that provision were lost in the
September 11, 2001 attack on the World Trade Center in New
York, New York. The provision in the Chairman's amendment in
the nature of a substitute was designed to ensure that parties
seeking the refunds at issue would not be prejudiced by the
loss of documents in the September 11 attacks.
During the markup, three other amendments were adopted by
the Committee. The first amendment would restrict the quantity
of tuna in airtight containers eligible for duty-free treatment
under the expanded ATPA. Further, this amendment would
condition the trade preference for tuna in airtight containers
on the tuna's having been harvested by either United States
vessels or beneficiary country vessels. The amendment defines
the nationality of a vessel in terms of criteria including
ownership and crew membership.
The second amendment adopted by the Committee would waive,
through July 30, 2002, certain quantitative restrictions on
duty-free imports of ceiling fans from Thailand. The third
amendment adopted by the Committee would suspend duties imposed
on certain steam or other vapor generating boilers used in
nuclear facilities, for a period from January 1, 2002 through
December 31, 2006.
The Chairman's amendment in the nature of a substitute, as
amended, was adopted by the Committee by voice vote.
III. THE COMMITTEE BILL
Section 1. Short title
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 1 provides that the Act may be cited as the
``Andean Trade Preference Expansion Act.''
REASONS FOR CHANGE
The provision assigns a short-hand title to the bill for
ease of reference.
TITLE I--ANDEAN TRADE PREFERENCE
Section 101. Findings
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 101 contains eight findings of the Congress that
form the basis for expanding the Andean Trade Preference Act.
These findings may be summarized as follows:
(1) Since its enactment in 1991, the ATPA has had a
mutually beneficial trade impact on the United States and the
beneficiary countries, leading to increased jobs and export
opportunities in both the United States and the beneficiary
countries.
(2) By promoting legitimate economic development in the
beneficiary countries, ATPA has contributed significantly to
counter-narcotics efforts by the United States.
(3) Notwithstanding the success of ATPA, the beneficiary
countries remain vulnerable to political and economic
instability, dangers of the war on drugs, and more intense
economic competition from other countries.
(4) Instability in the Andean region threatens the security
of the United States. This threat is only partially alleviated
by foreign aid.
(5) The ATPA represents a tangible commitment by the United
States to the promotion of prosperity, stability and democracy
in the beneficiary countries.
(6) Renewal and expansion of ATPA will support private
enterprises' decisions to invest in the Andean region, which
will help to solidify economic and political stability in the
region.
(7) Each of the ATPA beneficiary countries is committed to
establishing a Free Trade Area of the Americas (``FTAA'') by
2005, as a means of enhancing economic security in the region.
(8) A temporary enhancement of trade benefits to the ATPA
countries will stimulate economic activity and thereby support
the security interests of the United States, the region, and
the world.
REASONS FOR CHANGE
The Andean Trade Preference Act (19 U.S.C. Sec. Sec. 3201-
06) (``ATPA'') was enacted in 1991 as Title II of Public Law
Number 102-182, and expired on December 4, 2001. The findings
of Congress in section 101 of the present bill lay a foundation
for extending and enhancing trade benefits under ATPA. They
make the case that ATPA has been largely successful at
promoting development in the Andean region and encouraging the
beneficiary countries to shift from drug production and
trafficking to legitimate economic activities. The program has
been important not only to the countries themselves, but also
to the United States, which has benefitted from the economic
activity generated by ATPA, as well as from the improvement in
regional stability that ATPA has helped to bring about.
The success of the program over the past decade is
precisely the reason not to let it lapse now. Indeed, a number
of factors that have arisen since 1991 support an expansion of
ATPA. These factors include intensified economic competition
from the rest of the world, due to a steady lowering of tariffs
and other trade barriers and a proliferation of other trade
preference programs.
Factors supporting enhancement also include continued
political and economic instability within the beneficiary
countries. For example, in a statement submitted to the
Subcommittee on International Trade at its August 3, 2001
hearing, representatives of the Government of Colombia
explained that unemployment in that country has reached an
unprecedented 20 percent, and coffee, an important staple of
the national economy, has reached its lowest price in decades.
Similarly, representatives of the Government of Bolivia
explained, ``In a country where there is chronic under-
employment and 70% of its population live with less than US$2 a
day, increased unemployment has resulted in massive social
unrest, which if unchecked is likely to threaten democracy and
the rule of law.''
Because ATPA enhancement should give a boost to growth in
the beneficiary countries and help to stabilize the economies
of those countries, it is as much a matter of promoting the
security interests of the United States as it is a matter of
preserving and building upon the success of the first ten years
in helping the region to develop.
Section 102. Temporary provisions
General rule
PRESENT LAW
The ATPA authorizes the President to proclaim duty-free
treatment for all eligible articles from any beneficiary
country in accordance with the provisions of that Act. Under
the ATPA, Bolivia, Ecuador, Colombia and Peru may be designated
as beneficiary countries, provided that they meet certain
eligibility criteria. Under the law as expired on December 4,
2001, they had been so designated, pursuant to presidential
proclamations issued in 1992 and 1993.
Section 204 of the ATPA (19 U.S.C. Sec. 3203) defines an
eligible article as an article that, subject to certain
exceptions, (1) is the growth, product, or manufacture of a
beneficiary country, (2) is imported directly from a
beneficiary country, and (3) meets certain quantitative
criteria with respect to materials from and processing
performed in the beneficiary country.
Section 204(b) of the ATPA expressly excludes from the
class of eligible articles eight categories of products, as
follows:
(1) textile and apparel articles which are subject to
textile agreements;
(2) certain footwear;
(3) tuna, prepared or preserved in any manner, in
airtight containers;
(4) petroleum and petroleum products;
(5) certain watches and watch parts;
(6) certain handbags, luggage, flat goods, work
gloves, and leather apparel;
(7) certain sugars, syrups and molasses; and
(8) rum and tafia.
Further, section 204(c) of the ATPA provides for reductions
(but not elimination) of duty rates on imports of certain
handbags, luggage, flat goods, work gloves, and leather apparel
imported from the ATPA beneficiary countries.
EXPLANATION OF PROVISION
Section 102 of the bill replaces the list of excluded
products under section 204(b) of the current ATPA with a new
provision that extends duty preferences to most of those
products. The new preferences take the form of exceptions to
the general rule that the excluded products are not eligible
for duty-free treatment.
The enhanced preferences are made available to ``ATPEA
beneficiary countries.'' As discussed below, paragraph (5) of
section 204(b) of the ATPA as amended by the present bill
defines ATPEA beneficiary countries as those countries
previously designated by the President as ``beneficiary
countries'' (i.e., Bolivia, Colombia, Ecuador, and Peru) which
subsequently are designated by the President as ``ATPEA
beneficiary countries,'' based on the President's consideration
of additional eligibility criteria.
In the event that the President did not designate a current
``beneficiary country'' as an ``ATPEA beneficiary country,''
that country would remain eligible for ATPA benefits under the
law as expired on December 4, 2001, but would not be eligible
for the enhanced benefits provided under the present bill.
REASONS FOR CHANGE
As explained above, the view of the Committee is that
renewing and enhancing the ATPA to provide duty preferences to
products excluded under current law will serve several
important policy purposes. It is expected that enhancement of
the program will spur further development and diversification
in the Andean region, cultivate an environment hospitable to
increased investment by private enterprises, encourage the
elimination of illegitimate economic activity, and promote
regional stability.
Transition period treatment of certain textile and apparel
articles
PRESENT LAW
Under the ATPA, textile and apparel articles generally are
excluded from duty-free treatment.
EXPLANATION OF PROVISION
Paragraph (2) of section 204(b) of the ATPA as amended by
section 102 of the present bill extends duty-free treatment to
certain textile and apparel articles from ATPEA beneficiary
countries. The provision divides articles eligible for this
treatment into several different categories and limits duty-
free treatment to a period defined as the ``transition
period.'' The transition period is defined in paragraph (5) of
section 204(b) of the ATPA as amended to be the period from
enactment of the present bill through the earlier of February
28, 2006 or establishment of a FTAA.
In general, the different categories of textile and apparel
articles eligible for duty-free treatment are defined according
to the origin of the yarn and fabric from which the articles
are made. Under the first category, apparel sewn or otherwise
assembled in one or more ATPEA beneficiary countries is
eligible for duty-free treatment if it is made exclusively from
one or a combination of several sub-categories of components,
as follows:
(1) United States fabric, fabric components, or knit-
to-shape components, made from yarns wholly formed in
the United States;
(2) A combination of both United States and ATPEA
beneficiary country components knit-to-shape from yarns
wholly formed in the United States;
(3) ATPEA beneficiary country fabric, fabric
components, or knit-to-shape components, made from
yarns wholly formed in one or more ATPEA beneficiary
countries, if the constituent fibers are primarily
llama, alpaca, or vicuna hair; and
(4) Fabrics or yarns, regardless of origin, if such
fabrics or yarns have been deemed, under the North
American Free Trade Agreement, not to be widely
available in commercial quantities in the United
States. A separate provision of section 204(b) of the
ATPA as amended by the present bill sets forth a
process for interested parties to petition the
President for inclusion of additional yarns and fabrics
in the ``short supply'' list. This process includes
obtaining advice from the United States International
Trade Commission and industry advisory groups, and
consultation with the Committee on Finance of the
Senate and the Committee on Ways and Means of the House
of Representatives.
An example of an article eligible for duty-free treatment
under this first category would be a shirt sewn in an ATPEA
beneficiary country from fabric formed in the United States
from yarns wholly formed in the United States. Another example
would be a shirt sewn in an ATPEA beneficiary country from a
combination of U.S. fabric made from U.S. yarns and fabrics
from a foreign country, other than an ATPEA beneficiary,
determined to be in short supply in the United States.
A second category of apparel articles eligible for duty-
free treatment is apparel articles knit-to-shape (except socks)
in one or more ATPEA beneficiary countries from yarns wholly
formed in the United States. To qualify under this category,
the entire article must be knit-to-shape--as opposed to being
assembled from components that are themselves knit-to-shape.
A third category of apparel articles eligible for duty-free
treatment is apparel articles wholly assembled in one or more
ATPEA beneficiary countries from fabric or fabric components
knit, or components knit-to-shape in one or more ATPEA
beneficiary countries from yarns wholly formed in the United
States. The quantity of apparel eligible for this benefit is
subject to an annual cap. The cap is set at 70 million square
meter equivalents for the one-year period beginning March 1,
2002. The cap will increase by 16 percent, compounded annually,
in each succeeding one-year period, through February 28, 2006.
Thus, the cap applied to this category in each year
following enactment will be as follows:
70 million square meter equivalents (``SME'') in the
year beginning March 1, 2002;
81.2 million SME in the year beginning March 1, 2003;
94.19 million SME in the year beginning March 1,
2004; and 109.26 million SME in the year beginning
March 1, 2005.
By way of comparison, in the 12-month period ending in
September 2001, the United States imported approximately 151.2
million SME worth of apparel products from the Andean region.
That number includes apparel entered under the so-called ``807
program,'' meaning that the apparel is made from fabric cut
(and possibly, though not necessarily, formed) in the United
States. Total non-807 imports from the Andean region during the
same period were 107.4 million SME. Thus, under the present
bill, the initial cap on the third category of apparel articles
represents slightly less than half of total apparel imports
from the Andean region over the past year, and slightly more
than half of total non-807 apparel imports from the Andean
region during that period.
A separate provision makes clear that goods otherwise
qualifying under the latter category will not be disqualified
if they happen to contain United States fabric made from United
States yarn.
A fourth category of apparel eligible for duty-free
treatment under the present bill is brassieres that are cut or
sewn, or otherwise assembled, in one or more ATPEA beneficiary
countries, or in such countries and the United States. This
separate category requires that, in the aggregate, brassieres
manufactured by a given producer claiming duty-free treatment
for such products contain certain quantities of United States
fabric. The provision contains special rules for determining
whether producers meet this aggregate requirement.
A fifth category of textile and apparel eligible for duty-
free treatment is handloomed, handmade, and folklore articles.
To qualify under this category, the government of an ATPEA
beneficiary country must certify particular products as
handloomed, handmade, or folklore in nature, following
consultations with the President.
A final category of textile and apparel goods eligible for
duty-free treatment is textile luggage assembled in an ATPEA
beneficiary country from fabric and yarns formed in the United
States.
In addition to the foregoing categories, the bill sets
forth special rules for determining whether particular textile
and apparel articles qualify for duty-free treatment. For
example, the bill provides that an apparel article otherwise
eligible for duty-free treatment will not be disqualified
simply because it contains zippers, snaps, lace or other
``findings and trimmings'' of non-U.S., non-ATPEA beneficiary
country origin, as long as such findings and trimmings do not
make up more than 25 percent of the cost of the components of
the assembled product. A similar rule exists for certain
garment interlinings. Other special rules make clear that an
otherwise qualifying garment will not be disqualified from
duty-free treatment simply because it contains de minimis
quantities of non-U.S., non-ATPEA country yarns, or because it
contains certain yarns from countries with which the United
States has free trade agreements.
REASONS FOR CHANGE
It is the view of the Committee that one of the most
important enhancements of the current ATPA program is to extend
duty-free treatment to textile and apparel products from the
beneficiary countries. This is a sector of commercial
significance to each of the countries, which is excluded from
benefits under current law. Further, the beneficiary countries
presently face and will continue to face increasing competitive
pressures in this sector. This pressure comes in part from the
extension last year of duty-free treatment to certain apparel
imports from the Caribbean and Central America, under the
Caribbean Basin Initiative (``CBI''). An additional source of
pressure is the impending elimination, in 2005, of the United
States' and other countries' quotas on imports of textile and
apparel products under World Trade Organization (``WTO'')
rules.
At the same time, the Committee recognizes that other
factors counsel the establishment of limits on the quantity of
apparel made from regional fabric that is eligible for duty-
free treatment. Similar limits were placed on apparel eligible
for duty-free treatment under the CBI. The Committee does not
wish to inadvertently undercut the recently conferred benefits
to the CBI countries by giving a more expansive benefit to the
ATPEA beneficiary countries. Further, the Committee is aware of
the import-sensitive nature of apparel made from non-U.S.
fabric. Concern for the state of the import-competing industry
in the United States is another reason for limiting the
quantity of apparel made from regional fabric that is eligible
for duty-free treatment under the present bill.
Penalties for transshipment
PRESENT LAW
Under present law, a person who provides materially false
information to the United States Government, or who fails to
provide material information required by the United States
Government, in connection with the importation of goods into
the United States may be liable for civil and criminal
penalties. Section 1592 of the Tariff Act of 1930 (19 U.S.C.
Sec. 1592) sets forth penalties for fraud, gross negligence and
negligence in connection with importation. More generally,
section 1001 of the United States Criminal Code (18 U.S.C.
Sec. 1001) sets forth penalties for knowingly and willfully
making materially false, fictitious or fraudulent statements or
representations in any matter within the jurisdiction of the
United States Government.
EXPLANATION OF PROVISION
In amending section 204(b) of the ATPA, section 102 of the
present bill provides special penalties for transshipment of
textile and apparel articles from an ATPEA beneficiary country.
Transshipment is defined as claiming duty-free treatment for
textile and apparel imports on the basis of materially false
information. An exporter found to have engaged in such
transshipment (or a successor of such exporter) shall be denied
all benefits under the ATPA for a period of two years.
The bill further provides penalties for an ATPEA
beneficiary country that fails to cooperate with the United
States in efforts to prevent transshipment. Where textile and
apparel articles from such country are subject to quotas on
importation into the United States consistent with WTO rules,
the President must reduce the quantity of such articles that
may be imported into the United States by three times the
quantity of transshipped articles, to the extent consistent
with WTO rules.
Similar anti-transshipment provisions are contained in the
Carribean Basin Trade Partnership Act (19 U.S.C.
Sec. 2703(b)(2)(D)).
REASONS FOR CHANGE
The special anti-transshipment provision for textile and
apparel articles is designed to serve as an additional
deterrent, beyond what current law provides, to transshipment
of these products. An additional deterrent is required in part
because of the import-sensitivity of the articles at issue.
Bilateral emergency actions
PRESENT LAW
Under present law, the safeguards provisions contained in
sections 201 to 204 of the Trade Act of 1974 authorize the
President to provide relief to domestic industries seriously
injured or threatened with serious injury by increased imports
of products like or directly competitive with products produced
by those industries. Relief may take the form of increased
tariffs, imposition of quotas, or imposition of tariff-rate
quotas. Further, the North American Free Trade Agreement
(``NAFTA'') contains a special safeguard for textile and
apparel products. Under that provision, relief is available to
an industry seriously injured or threatened with serious injury
by increased textile and apparel imports from a NAFTA Party as
the result of reduction or elimination of a duty pursuant to
NAFTA. Relief may take the form of suspension of tariff
reductions or reversion of tariff rates to the lesser of (1)
most-favored-nation tariff rates on the date relief is
provided, and (2) most-favored-nation tariff rates on the date
before NAFTA went into effect. Generally, such relief may
remain in place for not more than three years.
EXPLANATION OF PROVISION
The bill establishes a textile and apparel safeguard
provision based on the NAFTA textile and apparel safeguard
provision. A similar provision is contained in the Caribbean
Basin Trade Partnership Act (19 U.S.C. Sec. 2703(b)(2)(E)).
REASONS FOR CHANGE
The special safeguard for textile and apparel products is
intended to help ensure against serious injury (or threat
thereof) to the U.S. textile and apparel industry as a result
of the elimination of tariffs on like products imported from
ATPEA beneficiary countries.
Articles other than textile and apparel articles
PRESENT LAW
As discussed above, seven categories of goods, in addition
to textile and apparel articles, are excluded from ATPA
benefits under current law.
EXPLANATION OF PROVISION
With two exceptions, paragraph (3) of section 204(b) of the
ATPA as amended by the present bill reduces tariff rates on
currently excluded products to the rates that apply to like
products imported into the United States from Mexico. These
rates will continue to be reduced according to the schedule of
reductions under NAFTA that apply to like products from Mexico.
(However, if a lower rate or zero duty would otherwise apply
under other provisions of U.S. law, then such other rate or
zero duty will apply.)
The first exception to the latter provision concerns
sugars, syrups, and sugar-containing products. Such products
subject to over-quota duty rates under tariff-rate quotas will
not receive duty-free treatment.
The second exception concerns tuna prepared or preserved in
airtight containers. The bill authorizes the President to
extend duty-free treatment to imports of such goods up to a
quantitative cap equal in each calendar year to 20 percent of
the domestic United States tuna pack in the preceding calendar
year. The bill further requires that tuna eligible for duty-
free treatment under this provision have been harvested by a
United States vessel or an ATPEA beneficiary country vessel.
Designation as a United States or ATPEA vessel is determined by
factors including country of registry, ownership, and
nationality of the crew, master, and officers.
REASONS FOR CHANGE
The bill provides benefits with respect to currently
excluded products from ATPEA beneficiary countries in order to
expand the development opportunities available to these
countries. Sugars, syrups and sugar-containing products subject
to tariff-rate quotas remain on the excluded list, due to the
import-sensitivity of these products in the United States. For
similar reasons, the Committee adopted an amendment limiting
the quantity of tuna in airtight containers eligible for duty-
free treatment. Also of concern to the Committee in the latter
case was the impact of duty-free tuna imports on the tuna
canning industry in Puerto Rico and American Samoa.
Customs procedures
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Paragraph (4) of section 204(b) of the ATPA as amended by
section 102 of the present bill contains a requirement that
ATPEA beneficiary countries maintain customs procedures similar
to those required under NAFTA, to ensure against transshipment.
The requirement includes establishment of an ATPEA certificate
of origin to ensure that products for which duty-free treatment
is claimed are, in fact, entitled to that treatment. The U.S.
Commissioner of Customs is required to study, and USTR is
required to report to Congress, on ATPEA countries' cooperation
in anti-transshipment efforts. Similar provisions are contained
in the Caribbean Basin Trade Partnership Act (19 U.S.C.
Sec. 2703(b)(4)).
REASONS FOR CHANGE
The enhancement of benefits provided for under this bill
increases the importance of guarding against transshipment. As
benefits increase, so does the risk of parties claiming those
benefits for goods that are not, in fact, qualifying goods. The
customs procedures established under this bill will increase
the barriers to such circumvention.
Definitions and special rules
PRESENT LAW
Under present law, a country must be designated by the
President as a ``beneficiary country'' in order to receive
trade preferences under ATPA. Only Bolivia, Ecuador, Colombia,
and Peru can be designated as beneficiary countries.
To attain that designation, each of the countries must meet
certain mandatory criteria, as follows: (1) the country cannot
be a communist country; (2) the country cannot have taken
measures the effect of which is to nationalize, expropriate or
otherwise seize ownership or control of property owned by U.S.
citizens or companies, absent the provision of prompt, adequate
and effective compensation; (3) the country must act in good
faith to recognize as binding and to enforce arbitral awards in
favor or U.S. citizens and companies; (4) the country cannot
give trade preferences to developed countries that have a
significant adverse effect on U.S. commerce; (5) the country
must provide adequate and effective protection of intellectual
property rights; (6) the country must be signatory to a treaty,
convention, protocol or other agreement regarding the
extradition of U.S. citizens; and (7) the country must be
taking steps to afford internationally recognized worker rights
to workers in the country.
Of the foregoing criteria, items (1), (2), (3), (5), and
(7) can be waived for a given country, if the President
determines and reports to Congress that doing so is in the
national economic or security interest of the United States.
Additionally, the ATPA sets forth certain discretionary
criteria for the President to take into account in deciding
whether to designate any of the four listed countries as
beneficiary countries. These criteria are: (1) the country's
expressed desire to be so designated; (2) economic conditions
in the country; (3) the country's assurances to the United
States of equitable and reasonable access to its markets and to
basic commodity resources; (4) the country's compliance with
rules of the World Trade Organization; (5) the degree to which
the country uses export subsidies or imposes local content
requirements which distort trade; (6) the degree to which the
country's trade policies are contributing to regional
revitalization; (7) the degree to which the country is helping
its own economic development; (8) whether the country is taking
steps to protect internationally recognized worker rights; (9)
the extent to which the country's laws give foreign nationals
adequate and effective means to secure, exercise, and enforce
intellectual property rights; (10) the extent to which the
country prohibits broadcast of copyrighted material without the
copyright owner's express consent; (11) whether the country is
certified as cooperating in anti-narcotics trafficking efforts;
and (12) the extent to which the country is prepared to
cooperate with the United States in administering the ATPA.
By presidential proclamations, Colombia and Bolivia have
been designated as ATPA beneficiary countries since July 22,
1992. Ecuador has been designated an ATPA beneficiary country
since April 30, 1993. And, Peru has been designated an ATPA
beneficiary country since August 31, 1993.
EXPLANATION OF PROVISION
The provision defines terms used in section 204(b) of the
ATPA as amended by section 102 of the present bill. Among other
terms, the provision defines ``ATPEA beneficiary country.''
Enhanced benefits under the bill are available only to
countries that have been designated by the President as ATPEA
beneficiary countries.
The President may designate only those countries previously
designated as ``beneficiary countries'' under the ATPA as
expired on December 4, 2001. In determining whether an ATPA
beneficiary country should receive the enhanced ATPEA
beneficiary country designation, the President must take into
account the mandatory and discretionary factors relevant to the
basic designation under current law, as well as certain
additional factors, as follows:
(1) whether the country has demonstrated a commitment
to undertake its obligations in the WTO and to
participate in negotiations toward a FTAA;
(2) the extent to which the country provides
protection of intellectual property rights consistent
with or greater than that required under the WTO
Agreement on Trade-Related Aspects of Intellectual
Property Rights;
(3) the extent to which the country provides
internationally recognized worker rights;
(4) whether the country has implemented its
commitment to eliminate the worst forms of child labor;
(5) the extent to which the country cooperates with
the United States in counter-narcotics efforts;
(6) the extent to which the country has taken steps
to become a party to and implement the Inter-American
Convention Against Corruption; and
(7) the extent to which the country applies
transparent, non-discriminatory, and competitive
procedures in government procurement and contributes to
international efforts to enhance transparency in
government procurement.
REASONS FOR CHANGE
The Committee is of the view that in enhancing the benefits
available to beneficiary countries, it is reasonable to enhance
the eligibility criteria that must be met in order to receive
the new benefits. Further, it is appropriate at this juncture
for the President to reexamine the criteria that the countries
had to meet in order to be designated as beneficiary countries
in the first place.
The Committee is particularly concerned about credible
reports that certain countries have fallen short of the
standards set forth in key eligibility criteria under current
law. As discussed above, current law requires a beneficiary
country to act in good faith in recognizing as binding and in
enforcing arbitral awards in favor of United States citizens
and companies. 19 U.S.C. Sec. 3202(c)(3). In at least two
recent cases that have come to the Committee's attention--one
involving Nortel Networks and another involving Sithe
Energies--United States companies (or their foreign affiliates
or subsidiaries) have prevailed in arbitrations against the
Government of Colombia. However, rather than pay the arbitral
awards in these cases, the Government has instituted collateral
proceedings and undertaken other delaying measures.
During the November 29, 2001 meeting of the Committee to
consider the present bill, the Chairman asked Deputy United
States Trade Representative Peter Allgeier how the Office of
the United States Trade Representative (``USTR'') intended to
address this issue in its evaluation of Colombia's eligibility
for ATPEA beneficiary country status. Ambassador Allgeier
responded, ``We have raised this with the Colombians.
Specifically, Ambassador Zoellick and Secretary Evans recently
wrote to President Pastrana to raise these two cases to his
attention, and our understanding is that he has instructed his
officials to look into that and to respond to us how they are
dealing with that. We certainly seek prompt and proper
settlement of those arbitral awards.''
The Committee emphasizes the importance of beneficiary
countries' honoring arbitral awards in favor of United States
citizens and companies. The Committee strongly urges the
Government of Colombia to promptly honor its obligations in the
Nortel and Sithe Energies matters. The Committee further urges
USTR to take the handling of these cases into account in
determining Colombia's eligibility for ATPEA beneficiary
country status.
The Committee has similar concerns with respect to
treatment of U.S. businesses by the Government of Peru. In one
case brought to the Committee's attention, a U.S. company, STM
Wireless, was the lowest bidder in an international public
tender by OSIPTEL, a telecommunications agency of the
Government of Peru. Although STM Wireless was led to believe
that it had won the contract, a necessary license subsequently
was issued to another company, despite a court order
prohibiting the government agency from withdrawing the contract
to STM Wireless.
The Committee is aware of other allegations concerning the
telecommunications sector in Peru, including a complaint by
Telinfor, S.A. that a local telephone service provider in Peru
engaged in misconduct in connection with the establishment of a
pay-per-call service. Of particular concern in this case are
allegations of conflicts of interest among the members of the
panel arbitrating the dispute.
Another case that has come to the Committee's attention
concerns the Engelhard company of New Jersey. The Committee
understands that certain assets of this company were
confiscated by Peru's tax authority under the government of
Alberto Fujimori, and that these assets have not been returned
by the current government. The Committee urges the Government
of Peru to resolve this matter quickly and fairly.
The Committee urges USTR to closely examine these matters
in determining whether Peru should be designated as an ATPEA
beneficiary country.
Finally, the Committee notes that, under the present bill,
among the criteria for ATPEA beneficiary country designation is
whether the country has demonstrated a commitment to undertake
its obligations under the WTO. Among countries' obligations
under the WTO are those set forth in the Agreement on
Implementation of Article VII of the General Agreement on
Tariffs and Trade 1994 (``the Customs Valuation Agreement'').
The Customs Valuation Agreement sets forth rules for
establishing the value of goods on importation, for purposes of
assessing duties. The ordinary rule is that the customs value
of a good is the transaction value--i.e., the price actually
paid or payable when the good is sold for export--with certain
adjustments provided for in the Agreement. These rules help to
ensure that countries do not use customs valuation as a
disguised trade barrier.
The Andean Community, including Colombia, sets duties on
imports of 14 basic agricultural products--such as wheat, corn,
and soybean oil--according to a variable import duty system,
known as a ``price band'' system. An additional 147
commodities, considered substitutes or related products, also
are subject to the price band system. Under this system,
maximum, minimum, and reference prices for imports are
determined administratively as the basis for assessing duties.
The Committee's view is that the price-band system is non-
transparent and easily manipulated as a measure to reduce
market access for U.S. and other producers. Ordinarily, it
would not comport with a country's obligations under the
Customs Valuation Agreement. As developing countries, the
participants in the Andean Community price band system were
given until the year 2000 to phase in their obligations under
the Customs Valuation Agreement.
In early 2000, Colombia sought an extension of this
transition period. In agreeing to an extension, the United
States obtained from Colombia a commitment to seek to de-link
wet pet food, the only finished product in the price band
system, from this system. It is the Committee's expectation
that, in reviewing the eligibility criteria relating to market
access and WTO commitments, USTR will insist that Colombia
implement its WTO commitment to pursue the removal of wet pet
food from the price band tariff system, and to apply the 20
percent common external tariff to imported pet food.
In general, the Committee believes it is important for
Andean governments to provide transparent and non-
discriminatory regulatory procedures in fulfilling their WTO
obligations. Unfortunately, the Committee knows of instances
where regulatory policies in Andean countries are opaque,
unpredictable, and arbitrarily applied. It is the Committee's
view that Andean countries that seek trade benefits should
adopt, implement, and apply transparent and non-discriminatory
regulatory procedures. The development of such procedures would
help create regulatory stability in the Andean region, and thus
provide more certainty to U.S. companies that would like to
invest in these countries.
Determination regarding retention of designation
PRESENT LAW
Under section 203(e) of the ATPA, the President may
withdraw or suspend a country's ``beneficiary country''
designation, or withdraw, suspend or limit the application of
duty-free treatment to particular articles of a beneficiary
country, due to changed circumstances.
EXPLANATION OF PROVISION
Section 102(b) of the present bill amends section 203(e) of
the ATPA to provide that the President may withdraw or suspend
a country's ``ATPEA beneficiary country'' designation, or
withdraw, suspend, or limit the application of enhanced duty-
free treatment as provided under this bill, due to changed
circumstances. Specifically, unsatisfactory performance under
the enhanced eligibility criteria constitutes changed
circumstances that may lead to withdrawal, suspension, or
limitation of benefits.
REASONS FOR CHANGE
Section 102(b) establishes a provision for withdrawal,
suspension or limitation of enhanced benefits that parallels
the provision for withdrawal, suspension or limitation of basic
benefits under current law.
Reporting requirements
PRESENT LAW
Section 203(f) of the ATPA required the President to report
to Congress every three years on operation of the ATPA.
EXPLANATION OF PROVISION
Section 102(c) of the present bill requires USTR to report
to Congress by December 31, 2002 and every two years thereafter
on operation of the enhanced ATPA. The report shall include the
results of a review of countries' performance under the basic
eligibility criteria set forth in sections 203(c) and (d) of
the ATPA and under the enhanced eligibility criteria under
section 204(b)(5)(B) of the ATPA as added by the present bill.
Before submitting its report, USTR shall request public
comments on countries' performance under the enhanced
eligibility criteria.
REASONS FOR CHANGE
The new reporting requirement provided for in the bill is
designed to facilitate congressional oversight of the enhanced
ATPA.
Conforming amendments
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 102(d) of the bill makes certain technical changes
to the ATPA to conform to the changes described above.
Section 103. Termination
PRESENT LAW
Under present law, duty-free treatment under the ATPA
terminated 10 years after the date of enactment--that is, on
December 4, 2001.
EXPLANATION OF PROVISION
Section 103 of the bill amends section 208(b) of the ATPA
to provide for a termination date of February 28, 2006.
REASONS FOR CHANGE
The termination date in section 103 of the bill is shortly
after the December 2005 expected date for establishment of a
FTAA. Terminating the enhanced ATPA on February 28, 2006 will
facilitate the beneficiary countries' transition to
participation in the broader FTAA.
TITLE II--MISCELLANEOUS TRADE PROVISIONS
Section 201. Wool provisions
PRESENT LAW
Title V of the Trade and Development Act of 2000 (Pub. L.
No. 106-200) included certain tariff relief for the domestic
tailored clothing and textile industries. The relief was
largely aimed at reducing the harmful affects of a ``tariff
inversion''--i.e., a tariff structure that levies higher duties
on the raw material (such as wool fabric) than on the finished
goods (such as men's suits). The relief was intended to begin
redressing an anomaly in NAFTA that has resulted in a greater
than intended advantage to Canadian exporters of tailored
clothing. A component of the relief to the U.S. tailored
clothing and textile industry was a refund of duties paid in
calendar year 1999, spread out over calendar years 2000, 2001
and 2002. Pub. L. No. 106-200, Sec. 505.
EXPLANATION OF PROVISION
During its consideration of the present bill, the Committee
accepted a modification to the Chairman's amendment in the
nature of a substitute. The modification, entitled the ``Wool
Manufacturer Payment Clarification and Technical Corrections
Act,'' amends section 505 of the Trade and Development Act of
2000. This provision simplifies the process for refunding to
eligible parties duties paid in 1999. Specifically, it creates
three special refund pools for each of the affected wool
articles (fabric, yarn, and fiber and top). Refunds will be
distributed in three installments--the first by December 31,
2001, the second by April 15, 2002, and the third by April 15,
2003. The provision also streamlines the paperwork process, in
light of the destruction of previously filed claims and
supporting information in the September 11, 2001 attacks on the
World Trade Center in New York, New York. Finally, the
provision identifies all persons eligible for the refunds.
REASONS FOR CHANGE
The tariff refunds authorized by section 505 of the Trade
and Development Act had not been fully processed when the
September 11, 2001 attack in New York resulted in the physical
loss of the initial refund filings made with the Customs
Service. As of November 29, 2001, the Customs Service was able
to send refund checks for calendar year 2000 to only one
textile mill and one apparel company. Other parties eligible
for refunds likely would experience substantial delays in
obtaining those refunds, absent legislative relief.
Section 202. Ceiling fans
PRESENT LAW
Under the Generalized System of Preferences (19 U.S.C.
Sec. Sec. 2461-67) (``GSP'') eligible articles from countries
designated as beneficiary developing countries may be imported
into the United States duty-free, up to certain quantitative
thresholds (known as ``competitive need limitations'').
Generally, the competitive need limitation for a given article
is either (1) a quantity, the appraised value of which exceeds
a statutory threshold (which was $100 million in calendar year
2001), or (2) a quantity equal to or exceeding 50 percent of
the appraised value of the total imports of that article into
the United States during any calendar year. (19 U.S.C.
Sec. 2463(c)(2)(A)) The President may waive the competitive
need limitation with respect to a given article based on advice
from the ITC concerning any adverse effect on a U.S. industry
and a determination that such a waiver would be in the national
economic interest. (19 U.S.C. Sec. 2463(d)(1))
The President has determined that ceiling fans imported
into the United States from Thailand have passed the applicable
competitive need limitation. Accordingly, such importations are
no longer duty-free. It is the Committee's understanding that a
waiver of the competitive need limitation with respect to
ceiling fans from Thailand is likely, but that the earliest
this would happen is the middle of 2002.
EXPLANATION OF PROVISION
Section 202 of the present bill waives the competitive need
limitation with respect to ceiling fans from Thailand entered,
or withdrawn from warehouse for consumption, during the period
beginning 15 days after enactment and ending before July 30,
2002.
REASONS FOR CHANGE
It is the understanding of the Committee that the President
is likely to waive the competitive need limitation with respect
to ceiling fans from Thailand, but that this is unlikely to
happen until the middle of 2002. Further, it is the Committee's
understanding that no U.S. industry would be harmed by a waiver
of the competitive need limitation, and that the waiver would
benefit certain retailers and consumers in the United States.
Section 203. Certain steam or other vapor generating boilers used in
nuclear facilities
PRESENT LAW
Under present law, certain steam or other vapor generating
boilers used in nuclear facilities imported into the United
States prior to December 31, 2003 are charged a duty rate of
4.9 percent ad valorem. This rate took effect pursuant to
section 1268 of Public Law Number 106-476 (``Tariff Suspension
and Trade Act of 2000''). Previously, the rate had been 5.2
percent ad valorem.
EXPLANATION OF PROVISION
Section 203 of the present bill changes the duty rate on
certain steam or other vapor generating boilers used in nuclear
facilities to zero for such goods entered, or withdrawn from
warehouse for consumption, on or after January 1, 2002 and on
or before December 31, 2006.
REASONS FOR CHANGE
The provision is intended to lower the cost of inputs into
the operation of nuclear facilities, and thereby lower the cost
of energy to consumers.
IV. CONGRESSIONAL ACTION
On March 13, 2001, Senator Graham (for himself and others)
introduced S. 525, a bill to expand trade benefits to certain
Andean countries, and for other purposes. The bill was read
twice and referred to the Committee on Finance.
On August 3, 2001, the Subcommittee on International Trade
of the Senate Finance Committee held a hearing on expansion of
the Andean Trade Preference Act.
On October 3, 2001, Congressman Crane (for himself and
Congressman Thomas) introduced H.R. 3009, a bill to extend the
Andean Trade Preference Act, to grant additional trade benefits
under that Act, and for other purposes. The bill was referred
to the Committee on Ways and Means. On October 5, 2001, the
Committee on Ways and Means held a markup and, upon a voice
vote, ordered reported to the full House an amendment in the
nature of a substitute to H.R. 3009.
On November 16, 2001, the House of Representatives agreed
to H.R. 3009 as amended by a voice vote. The bill was received
in the Senate that same day and referred to the Committee on
Finance.
On November 29, 2001, the Committee on Finance held a
markup session to consider H.R. 3009. The Chairman offered an
amendment in the nature of a substitute to H.R. 3009. The
substance of the amendment in the nature of a substitute was
the text of S. 525 with certain modifications. Several
amendments to the amendment in the nature of a substitute were
accepted by the Committee. The bill as amended was ordered
favorably reported on the basis of a voice vote, with a quorum
present, on November 29, 2001.
V. VOTES OF THE COMMITTEE IN REPORTING THE BILL
In compliance with paragraph 7(c) of Rule XXVI of the
Standing Rules of the Senate, the following statements are made
concerning the roll call votes in the Committee's consideration
of H.R. 3009.
A. Motion to Report the Bill
H.R. 3009 as amended by the Chairman's amendment in the
nature of a substitute and as further amended was ordered
favorably reported by voice vote with a quorum present on
November 29, 2001.
B. Votes on Amendments
(1) An amendment to provide for the distribution of refunds
of duties paid in calendar year 1999 on importation of certain
wool products was included in the Chairman's amendment in the
nature of a substitute as a modification.
(2) An amendment by Senator Breaux to limit the quantity of
tuna in airtight containers from ATPEA beneficiary countries
eligible for duty-free treatment on entry into the United
States, and to establish certain other requirements for such
goods to be eligible for duty-free treatment, passed by a vote
of 11 ayes and 9 nays.
Ayes: Baucus, Rockefeller, Daschle (proxy), Breaux, Conrad
(proxy), Torricelli, Lincoln, Hatch (proxy), Murkowski, Snowe,
Thomas.
Nays: Graham, Jeffords, Bingaman, Grassley, Nickles
(proxy), Gramm, Lott (proxy), Thompson, Kyl.
(3) An amendment by Senators Kyl and Thompson to extend
duty-free treatment to certain steam or other vapor generating
boilers used in nuclear facilities entered into the United
States, or withdrawn from warehouse for consumption, from
January 1, 2002 through December 31, 2006 passed by a vote of
15 ayes and 6 nays.
Ayes: Conrad (proxy), Graham, Jeffords, Bingaman,
Torricelli, Lincoln, Grassley, Hatch (proxy), Murkowski,
Nickles (proxy), Gramm, Lott (proxy), Thompson, Kyl, Thomas.
Nays: Baucus, Rockefeller, Daschle (proxy), Breaux, Kerry
(proxy), Snowe.
(4) An amendment by Senator Thompson to waive, through July
30, 2002, competitive need limitations on duty-free treatment
for ceiling fans imported from Thailand was adopted by voice
vote.
VI. BUDGETARY IMPACT OF THE BILL
A. Budget Authority and Tax Expenditures
1. Budget authority
In accordance with section 308(a)(1) of the Budget Act, the
Committee states that the Andean Trade Preference Expansion Act
involves no new or increased budget authority.
2. Tax expenditures
In accordance with section 308(a)(2) of the Budget Act, the
Committee states that the Andean Trade Preference Expansion Act
will result in no change in tax expenditures over the period
fiscal years 2002-2012.
B. Cost Estimate
Due to time constraints, the Congressional Budget Office
estimate was not included in the report. When received by the
Committee, it will appear in the Congressional Record at a
later time.
VII. REGULATORY IMPACT AND OTHER MATTERS
In compliance with paragraph 11(b) of Rule XXVI of the
Standing Rules of the Senate, the Committee states that the
bill will not significantly regulate any individuals or
businesses, will not affect the personal privacy of
individuals, and will result in no significant additional
paperwork.
The following information is provided in accordance with
section 423 of the Unfunded Mandates Reform Act of 1995 (Pub.
L. No. 104-4). The Committee has reviewed the provisions of
H.R. 3009 as approved by the Committee on November 29, 2001. In
accordance with the requirements of Pub. L. No. 104-04, the
Committee has determined that the bill contains no
intergovernmental mandates, as defined in the UMRA, and would
not affect the budgets of state, local or tribal governments.
VIII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with paragraph 12 of Rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
ANDEAN TRADE PREFERENCE ACT
* * * * * * *
TITLE II--TRADE PREFERENCE FOR THE ANDEAN REGION
SEC. 201. SHORT TITLE.
This title may be cited as the ``Andean Trade Preference
Act''.
SEC. 202. AUTHORITY TO GRANT DUTY-FREE TREATMENT.
The President may proclaim duty-free treatment (or other
preferential treatment) for all eligible articles from any
beneficiary country in accordance with the provisions of this
title.
SEC. 203. BENEFICIARY COUNTRY.
(a) Definitions.--For purposes of this title--
(1) The term ``beneficiary country'' means any
country listed in subsection (b)(1) with respect to
which there is in effect a proclamation by the
President designating such country as a beneficiary
country for purposes of this title.
(2) The term ``entered'' means entered, or withdrawn
from warehouse for consumption, in the customs
territory of the United States.
(3) The term ``HTS'' means Harmonized Tariff Schedule
of the United States.
(4) The term ``NAFTA'' means the North American Free
Trade Agreement entered into between the United States,
Mexico, and Canada on December 17, 1992.
(5) The terms ``WTO'' and ``WTO member'' have the
meanings given those terms in section 2 of the Uruguay
Round Agreements Act (19 U.S.C. 3501).
* * * * * * *
(e) Withdrawal or Suspension of Designation.--(1)(A) The
President may--
[A](i) withdraw or suspend the designation of any
country as a beneficiary country, or
[B](ii) withdraw, suspend, or limit the application
of duty-free if, after such designation, the President
determines that as a result of changed circumstances
such a country should be barred from designation as a
beneficiary country.
(B) The President may, after the requirements of paragraph
(2) have been met--
(i) withdraw or suspend the designation of any
country as an ATPEA beneficiary country; or
(ii) withdraw, suspend, or limit the application of
preferential treatment under section 204(b) (2) and (3)
to any article of any country,
if, after such designation, the President determines that, as a
result of changed circumstances, the performance of such
country is not satisfactory under the criteria set forth in
section 204(b)(5)(B).
(2)(A) The President shall publish in the Federal Register
notice of the action the President proposes to take under
paragraph (1) at least 30 days before taking such action.
(B) The United States Trade Representative shall, within
the 30-day period beginning on the date on which the President
publishes under subparagraph (A) notice of proposed action--
(i) accept written comments from the public regarding
such proposed action.
(ii) hold a public hearing on such proposed action,
and
(iii) publish in the Federal Register--
(I) notice of the time and place of such
hearing prior to the hearing, and
(II) the time and place at which such written
comments will be accepted.
(3) If preferential treatment under section 204(b) (2) and
(3) is withdrawn, suspended, or limited with respect to an
ATPEA beneficiary country, such country shall not be deemed to
be a ``party'' for the purposes of applying section
204(b)(5)(C) to imports of articles for which preferential
treatment has been withdrawn, suspended, or limited with
respect to such country.
[(f) Report.--On or before the 3rd, 6th, and 9th
anniversaries of the date of the enactment of this title, the
President shall submit to the Congress a complete report
regarding the operation of this title, including the results of
a general review of beneficiary countries based on the
considerations described in subsection (c) and (d). In
reporting on the considerations described in subsection
(d)(11), the President shall report any evidence that the crop
eradication and crop substitution efforts of the beneficiary
are directly related to the effects of this title.]
(f) Reporting Requirements.--
(1) In general.--Not later than December 31, 2002,
and every 2 years thereafter during the period this
title is in effect, the United States Trade
Representative shall submit to Congress a report
regarding the operation of this title, including--
(A) with respect to subsections (c) and (d),
the results of a general review of beneficiary
countries based on the considerations described
in such subsections; and
(B) the performance of each beneficiary
country or ATPEA beneficiary country, as the
case may be, under the criteria set forth in
section 204(b)(5)(B).
(2) Public comment.--Before submitting the report
described in paragraph (1), the United States Trade
Representative shall publish a notice in the Federal
Register requesting public comments on whether
beneficiary countries are meeting the criteria listed
in section 204(b)(5)(B).
SEC. 204. ELIGIBLE ARTICLES.
(a) In General.--(1) Unless otherwise excluded from
eligibility (or otherwise provided for) by this title, the
duty-free treatment (or preferential treatment) provided under
this title shall apply to any article which is the growth,
product, or manufacture of a beneficiary country if--
* * * * * * *
[(b) Exceptions to Duty-Free Treatment.--The duty free
treatment provided under this title shall not apply to--
[(1) textile and apparel articles which are subject
to textile agreements;
[(2) footwear not designated at the time of the
effective date of this Act as eligible for the purpose
of the generalized system of preferences under title V
of the Trade Act of 1974;
[(3) tuna, prepared or preserved in any manner, in
airtight containers;
[(4) petroleum, or any product derived from
petroleum, provided for in headings 2709 and 2710 of
the HTS;
[(5) watches and watch parts (including, but not
limited to, mechanical, quartz digital or quartz
analog, if such watches or watch parts contain any
material which is the product of any country with
respect to which HTS column 2 rates of duty apply;
[(6) articles to which reduced rates of duty apply
under subsection (c).
[(7) sugars, syrups, and molasses classified in
subheadings 1701.11.03, 1701.12.02, 1701.99.02,
1702.90.32, 1806.10.42, and 2106.90.12 of the HTS; or
[(8) rum and tafia classified in subheading
2208.40.00 of the HTS.]
(b) Import-Sensitive Articles.--
(1) In general.--Subject to paragraphs (2) through
(5), the duty-free treatment provided under this title
does not apply to--
``(A) textile and apparel articles which were
not eligible articles for purposes of this
title on January 1, 1994, as this title was in
effect on that date;
(B) footwear not designated at the time of
the effective date of this title as eligible
articles for the purpose of the generalized
system of preferences under title V of the
Trade Act of 1974;
(C) tuna, prepared or preserved in any
manner, in airtight containers;
(D) petroleum, or any product derived from
petroleum, provided for in headings 2709 and
2710 of the HTS;
(E) watches and watch parts (including cases,
bracelets, and straps), of whatever type
including, but not limited to, mechanical,
quartz digital, or quartz analog, if such
watches or watch parts contain any material
which is the product of any country with
respect to which HTS column 2 rates of duty
apply;
(F) articles to which reduced rates of duty
apply under subsection (c);
(G) sugars, syrups, and sugar containing
products subject to tariff-rate quotas; or
(H) rum and tafia classified in subheading
2208.40 of the HTS.
(2) Transition period treatment of certain textile
and apparel articles.--
(A) Articles covered.--During the transition
period, the preferential treatment described in
subparagraph (B) shall apply to the following
articles:
(i) Apparel articles assembled from
products of the united states and atpea
beneficiary countries or products not
available in commercial quantities.--
Apparel articles sewn or otherwise
assembled in 1 or more ATPEA
beneficiary countries, or the United
States, or both, exclusively from any
one or any combination of the
following:
(I) Fabrics or fabric
components formed, or
components knit-to-shape, in
the United States, from yarns
wholly formed in the United
States (including fabrics not
formed from yarns, if such
fabrics are classifiable under
heading 5602 or 5603 of the HTS
and are formed in the United
States), provided that apparel
articles sewn or otherwise
assembled from materials
described in this subclause are
assembled with thread formed in
the United States.
(II) Fabric components knit-
to-shape in the United States
from yarns wholly formed in the
United States and fabric
components knit-to-shape in 1
or more ATPEA beneficiary
countries from yarns wholly
formed in the United States.
(III) Fabrics or fabric
components formed or components
knit-to-shape, in 1 or more
ATPEA beneficiary countries,
from yarns wholly formed in 1
or more ATPEA beneficiary
countries, if such fabrics
(including fabrics not formed
from yarns, if such fabrics are
classifiable under heading 5602
or 5603 of the HTS and are
formed in 1 or more ATPEA
beneficiary countries) or
components are in chief weight
of llama, alpaca, or vicuna.
(IV) Fabrics or yarns that
are not formed in the United
States or in 1 or more ATPEA
beneficiary countries, to the
extent that apparel articles of
such fabrics or yarns would be
eligible for preferential
treatment, without regard to
the source of the fabrics or
yarns, under Annex 401 of the
NAFTA.
(ii) Knit-to-shape apparel
articles.--Apparel articles knit-to-
shape (other than socks provided for in
heading 6115 of the HTS) in 1 or more
ATPEA beneficiary countries from yarns
wholly formed in the United States.
(iii) Regional fabric.--
(I) General rule.--Knit
apparel articles wholly
assembled in 1 or more ATPEA
beneficiary countries
exclusively from fabric formed,
or fabric components formed, or
components knit-to-shape, or
any combination thereof, in 1
or more ATPEA beneficiary
countries from yarns wholly
formed in the United States, in
an amount not exceeding the
amount set forth in subclause
(II).
(II) Limitation.--The amount
referred to in subclause (I) is
70,000,000 square meter
equivalents during the 1-year
period beginning on March 1,
2002, increased by 16 percent,
compounded annually, in each
succeeding 1-year period
through February 28, 2006.
(iv) Certain other apparel
articles.--
(I) General rule.--Subject to
subclause (II), any apparel
article classifiable under
subheading 6212.10 of the HTS,
if the article is both cut and
sewn or otherwise assembled in
the United States, or one or
more of the ATPEA beneficiary
countries, or both.
(II) Limitation.--During the
1-year period beginning on
March 1, 2003, and during each
of the 2 succeeding 1-year
periods, apparel articles
described in subclause (I) of a
producer or an entity
controlling production shall be
eligible for preferential
treatment under subparagraph
(B) only if the aggregate cost
of fabric components formed in
the United States that are used
in the production of all such
articles of that producer or
entity that are entered during
the preceding 1-year period is
at least 75 percent of the
aggregate declared customs
value of the fabric contained
in all such articles of that
producer or entity that are
entered during the preceding 1-
year period.
(III) Development of
procedure to ensure
compliance.--The United States
Customs Service shall develop
and implement methods and
procedures to ensure ongoing
compliance with the requirement
set forth in subclause (II). If
the Customs Service finds that
a producer or an entity
controlling production has not
satisfied such requirement in a
1-year period, then apparel
articles described in subclause
(I) of that producer or entity
shall be ineligible for
preferential treatment under
subparagraph (B) during any
succeeding 1-year period until
the aggregate cost of fabric
components formed in the United
States used in the production
of such articles of that
producer or entity that are
entered during the preceding 1-
year period is at least 85
percent of the aggregate
declared customs value of the
fabric contained in all such
articles of that producer or
entity that are entered during
the preceding 1-year period.
(v) Apparel articles assembled from
fabrics or yarn not widely available in
commercial quantities.--At the request
of any interested party, the President
is authorized to proclaim additional
fabrics and yarn as eligible for
preferential treatment under clause
(i)(IV) if--
(I) the President determines
that such fabrics or yarn
cannot be supplied by the
domestic industry in commercial
quantities in a timely manner;
(II) the President has
obtained advice regarding the
proposed action from the
appropriate advisory committee
established under section 135
of the Trade Act of 1974 (19
U.S.C. 2155) and the United
States International Trade
Commission;
(III) within 60 days after
the request, the President has
submitted a report to the
Committee on Ways and Means of
the House of Representatives
and the Committee on Finance of
the Senate that sets forth the
action proposed to be
proclaimed and the reasons for
such actions, and the advice
obtained under subclause (II);
(IV) a period of 60 calendar
days, beginning with the first
day on which the President has
met the requirements of
subclause (III), has expired;
and
(V) the President has
consulted with such committees
regarding the proposed action
during the period referred to
in subclause (III).
(vi) Handloomed, handmade, and
folklore articles.--A handloomed,
handmade, or folklore article of an
ATPEA beneficiary country identified
under subparagraph (C) that is
certified as such by the competent
authority of such beneficiary country.
(vii) Special rules.--
(I) Exception for findings
and trimmings.--(aa) An article
otherwise eligible for
preferential treatment under
this paragraph shall not be
ineligible for such treatment
because the article contains
findings or trimmings of
foreign origin, if such
findings and trimmings do not
exceed 25 percent of the cost
of the components of the
assembled product. Examples of
findings and trimmings are
sewing thread, hooks and eyes,
snaps, buttons, `bow buds',
decorative lace, trim, elastic
strips, zippers, including
zipper tapes and labels, and
other similar products. Elastic
strips are considered findings
or trimmings only if they are
each less than 1 inch in width
and are used in the production
of brassieres.
(bb) In the case of an
article described in clause
(i)(I) of this subparagraph,
sewing thread shall not be
treated as findings or
trimmings under this subclause.
(II) Certain interlinings.--
(aa) An article otherwise
eligible for preferential
treatment under this paragraph
shall not be ineligible for
such treatment because the
article contains certain
interlinings of foreign origin,
if the value of such
interlinings (and any findings
and trimmings) does not exceed
25 percent of the cost of the
components of the assembled
article.
(bb) Interlinings eligible
for the treatment described in
division (aa) include only a
chest type plate, ``hymo''
piece, or ``sleeve header'', of
woven or weft-inserted warp
knit construction and of coarse
animal hair or man-made
filaments.
(cc) The treatment described
in this subclause shall
terminate if the President
makes a determination that
United States manufacturers are
producing such interlinings in
the United States in commercial
quantities.
(III) De minimis rule.--An
article that would otherwise be
ineligible for preferential
treatment under this paragraph
because the article contains
yarns not wholly formed in the
United States or in 1 or more
ATPEA beneficiary countries
shall not be ineligible for
such treatment if the total
weight of all such yarns is not
more than 7 percent of the
total weight of the good.
Notwithstanding the preceding
sentence, an apparel article
containing elastomeric yarns
shall be eligible for
preferential treatment under
this paragraph only if such
yarns are wholly formed in the
United States.
(IV) Special origin rule.--An
article otherwise eligible for
preferential treatment under
clause (i) of this subparagraph
shall not be ineligible for
such treatment because the
article contains nylon filament
yarn (other than elastomeric
yarn) that is classifiable
under subheading 5402.10.30,
5402.10.60, 5402.31.30,
5402.31.60, 5402.32.30,
5402.32.60, 5402.41.10,
5402.41.90, 5402.51.00, or
5402.61.00 of the HTS duty-free
from a country that is a party
to an agreement with the United
States establishing a free
trade area, which entered into
force before January 1, 1995.
(V) Clarification of certain
knit apparel articles.--
Notwithstanding any other
provision of law, an article
otherwise eligible for
preferential treatment under
clause (iii)(I) of this
subparagraph, shall not be
ineligible for such treatment
because the article, or a
component thereof, contains
fabric formed in the United
States from yarns wholly formed
in the United States.
(viii) Textile luggage.--Textile
luggage--
(I) assembled in an ATPEA
beneficiary country from fabric
wholly formed and cut in the
United States, from yarns
wholly formed in the United
States, that is entered under
subheading 9802.00.80 of the
HTS; or
(II) assembled from fabric
cut in an ATPEA beneficiary
country from fabric wholly
formed in the United States
from yarns wholly formed in the
United States.
(B) Preferential treatment.--Except as
provided in subparagraph (E), during the
transition period, the articles to which
subparagraph (A) applies shall enter the United
States free of duty and free of any
quantitative restrictions, limitations, or
consultation levels.
(C) Handloomed, handmade, and folklore
articles.--For purposes of subparagraph
(A)(vi), the President shall consult with
representatives of the ATPEA beneficiary
countries concerned for the purpose of
identifying particular textile and apparel
goods that are mutually agreed upon as being
handloomed, handmade, or folklore goods of a
kind described in section 2.3(a), (b), or (c)
of the Annex or Appendix 3.1.B.11 of the Annex.
(D) Penalties for transshipments.--
(i) Penalties for exporters.--If the
President determines, based on
sufficient evidence, that an exporter
has engaged in transshipment with
respect to textile or apparel articles
from an ATPEA beneficiary country, then
the President shall deny all benefits
under this title to such exporter, and
any successor of such exporter, for a
period of 2 years.
(ii) Penalties for countries.--
Whenever the President finds, based on
sufficient evidence, that transshipment
has occurred, the President shall
request that the ATPEA beneficiary
country or countries through whose
territory the transshipment has
occurred take all necessary and
appropriate actions to prevent such
transshipment. If the President
determines that a country is not taking
such actions, the President shall
reduce the quantities of textile and
apparel articles that may be imported
into the United States from such
country by the quantity of the
transshipped articles multiplied by 3,
to the extent consistent with the
obligations of the United States under
the WTO.
(iii) Transshipment described.--
Transshipment within the meaning of
this subparagraph has occurred when
preferential treatment under
subparagraph (B) has been claimed for a
textile or apparel article on the basis
of material false information
concerning the country of origin,
manufacture, processing, or assembly of
the article or any of its components.
For purposes of this clause, false
information is material if disclosure
of the true information would mean or
would have meant that the article is or
was ineligible for preferential
treatment under subparagraph (B).
(E) Bilateral emergency actions.--
(i) In general.--The President may
take bilateral emergency tariff actions
of a kind described in section 4 of the
Annex with respect to any apparel
article imported from an ATPEA
beneficiary country if the application
of tariff treatment under subparagraph
(B) to such article results in
conditions that would be cause for the
taking of such actions under such
section 4 with respect to a like
article described in the same 8-digit
subheading of the HTS that is imported
from Mexico.
(ii) Rules relating to bilateral
emergency action.--For purposes of
applying bilateral emergency action
under this subparagraph--
(I) the requirements of
paragraph (5) of section 4 of
the Annex (relating to
providing compensation) shall
not apply;
(II) the term ``transition
period'' in section 4 of the
Annex shall have the meaning
given that term in paragraph
(5)(D) of this subsection; and
(III) the requirements to
consult specified in section 4
of the Annex shall be treated
as satisfied if the President
requests consultations with the
ATPEA beneficiary country in
question and the country does
not agree to consult within the
time period specified under
section 4.
(3) Transition period treatment of certain other
articles originating in beneficiary countries.--
(A) Equivalent tariff treatment.--
(i) In general.--Subject to clause
(ii), the tariff treatment accorded at
any time during the transition period
to any article referred to in any of
subparagraphs (B), (D) through (F), or
(H) of paragraph (1) that is an ATPEA
originating good shall be identical to
the tariff treatment that is accorded
at such time under Annex 302.2 of the
NAFTA to an article described in the
same 8-digit subheading of the HTS that
is a good of Mexico and is imported
into the United States.
(ii) Exception.--Clause (i) does not
apply to any article accorded duty-free
treatment under U.S. Note 2(b) to
subchapter II of chapter 98 of the HTS.
(B) Relationship to subsection (c) duty
reductions.--If at any time during the
transition period the rate of duty that would
(but for action taken under subparagraph (A)(i)
in regard to such period) apply with respect to
any article under subsection (c) is a rate of
duty that is lower than the rate of duty
resulting from such action, then such lower
rate of duty shall be applied for the purposes
of implementing such action.
(C) Special rule for sugars, syrups, and
sugar containing products.--Duty-free treatment
under this Act shall not be extended to sugars,
syrups, and sugar-containing products subject
to over-quota duty rates under applicable
tariff-rate quotas.
(D) Special rule for certain tuna products.--
(i) In general.--The President may
proclaim duty-free treatment under this
Act for tuna that is harvested by
United States vessels or ATPEA
beneficiary country vessels, and is
prepared or preserved in any manner, in
airtight containers in an ATPEA
beneficiary country. Such duty-free
treatment may be proclaimed in any
calendar year for a quantity of such
tuna that does not exceed 20 percent of
the domestic United States tuna pack in
the preceding calendar year. As used in
the preceding sentence, the term ``tuna
pack'' means tuna pack as defined by
the National Marine Fisheries Service
of the United States Department of
Commerce in the purposes of subheading
1604.14.20 of the HTS as in effect on
the date of enactment of the Andean
Trade Preference Expansion Act.
(ii) United States vessel.--For
purposes of this subparagraph, a
``United States vessel'' is a vessel
having a certificate of documentation
with a fishery endorsement under
chapter 121 of title 46, United States
Code.
(iii) ATPEA vessel.--For purposes of
this subparagraph, an ``ATPEA vessel''
is a vessel--
(I) which is registered or
recorded in an ATPEA
beneficiary country;
(II) which sails under the
flag of an ATPEA beneficiary
country;
(III) which is at least 75
percent owned by nationals of
an ATPEA beneficiary country or
by a company having its
principal place of business in
an ATPEA beneficiary country,
of which the manager or
managers, chairman of the board
of directors or of the
supervisory board, and the
majority of the members of such
boards are nationals of an
ATPEA beneficiary country and
of which, in the case of a
company, at least 50 percent of
the capital is owned by an
ATPEA beneficiary country or by
public bodies or nationals of
an ATPEA beneficiary country;
(IV) of which the master and
officers are nationals of an
ATPEA beneficiary country; and
(V) of which at least 75
percent of the crew are
nationals of an ATPEA
beneficiary country.
(4) Customs procedures.--
(A) In general.--
(i) Regulations.--Any importer that
claims preferential treatment under
paragraph (2) or (3) shall comply with
customs procedures similar in all
material respects to the requirements
of Article 502(1) of the NAFTA as
implemented pursuant to United States
law, in accordance with regulations
promulgated by the Secretary of the
Treasury.
(ii) Determination.--
(I) In general.--In order to
qualify for the preferential
treatment under paragraph (2)
or (3) and for a Certificate of
Origin to be valid with respect
to any article for which such
treatment is claimed, there
shall be in effect a
determination by the President
that each country described in
subclause (II)--
(aa) has implemented
and follows; or
(bb) is making
substantial progress
toward implementing and
following, procedures
and requirements
similar in all material
respects to the
relevant procedures and
requirements under
chapter 5 of the NAFTA.
(II) Country described.--A
country is described in this
subclause if it is an ATPEA
beneficiary country--
(aa) from which the
article is exported; or
(bb) in which
materials used in the
production of the
article originate or in
which the article or
such materials undergo
production that
contributes to a claim
that the article is
eligible for
preferential treatment
under paragraph (2) or
(3).
(B) Certificate of origin.--The Certificate
of Origin that otherwise would be required
pursuant to the provisions of subparagraph (A)
shall not be required in the case of an article
imported under paragraph (2) or (3) if such
Certificate of Origin would not be required
under Article 503 of the NAFTA (as implemented
pursuant to United States law), if the article
were imported from Mexico.
(C) Report by ustr on cooperation of other
countries concerning circumvention.--The United
States Commissioner of Customs shall conduct a
study analyzing the extent to which each ATPEA
beneficiary country--
(i) has cooperated fully with the
United States, consistent with its
domestic laws and procedures, in
instances of circumvention or alleged
circumvention of existing quotas on
imports of textile and apparel goods,
to establish necessary relevant facts
in the places of import, export, and,
where applicable, transshipment,
including investigation of
circumvention practices, exchanges of
documents, correspondence, reports, and
other relevant information, to the
extent such information is available;
(ii) has taken appropriate measures,
consistent with its domestic laws and
procedures, against exporters and
importers involved in instances of
false declaration concerning fiber
content, quantities, description,
classification, or origin of textile
and apparel goods; and
(iii) has penalized the individuals
and entities involved in any such
circumvention, consistent with its
domestic laws and procedures, and has
worked closely to seek the cooperation
of any third country to prevent such
circumvention from taking place in that
third country.
The Trade Representative shall submit to
Congress, not later than October 1, 2002, a
report on the study conducted under this
subparagraph.
(5) Definitions and special rules.--For purposes of
this subsection--
(A) Annex.--The term ``the Annex'' means
Annex 300-B of the NAFTA.
(B) ATPEA beneficiary country.--The term
``ATPEA beneficiary country'' means any
``beneficiary country'', as defined in section
203(a)(1) of this title, which the President
designates as an ATPEA beneficiary country,
taking into account the criteria contained in
subsections (c) and (d) of section 203 and
other appropriate criteria, including the
following:
(i) Whether the beneficiary country
has demonstrated a commitment to--
(I) undertake its obligations
under the WTO, including those
agreements listed in section
101(d) of the Uruguay Round
Agreements Act, on or ahead of
schedule; and
(II) participate in
negotiations toward the
completion of the FTAA or
another free trade agreement.
(ii) The extent to which the country
provides protection of intellectual
property rights consistent with or
greater than the protection afforded
under the Agreement on Trade-Related
Aspects of Intellectual Property Rights
described in section 101(d)(15) of the
Uruguay Round Agreements Act.
(iii) The extent to which the country
provides internationally recognized
worker rights, including--
(I) the right of association;
(II) the right to organize
and bargain collectively;
(III) a prohibition on the
use of any form of forced or
compulsory labor;
(IV) a minimum age for the
employment of children; and
(V) acceptable conditions of
work with respect to minimum
wages, hours of work, and
occupational safety and health;
(iv) Whether the country has
implemented its commitments to
eliminate the worst forms of child
labor, as defined in section 507(6) of
the Trade Act of 1974.
(v) The extent to which the country
has met the counter-narcotics
certification criteria set forth in
section 490 of the Foreign Assistance
Act of 1961 (22 U.S.C. 2291j) for
eligibility for United States
assistance.
(vi) The extent to which the country
has taken steps to become a party to
and implements the Inter-American
Convention Against Corruption.
(vii) The extent to which the
country--
(I) applies transparent,
nondiscriminatory, and
competitive procedures in
government procurement
equivalent to those contained
in the Agreement on Government
Procurement described in
section 101(d)(17) of the
Uruguay Round Agreements Act;
and
(II) contributes to efforts
in international fora to
develop and implement
international rules in
transparency in government
procurement.
(C) ATPEA originating good.--
(i) In general.--The term ``ATPEA
originating good'' means a good that
meets the rules of origin for a good
set forth in chapter 4 of the NAFTA as
implemented pursuant to United States
law.
(ii) Application of chapter 4.--In
applying chapter 4 of the NAFTA with
respect to an ATPEA beneficiary country
for purposes of this subsection--
(I) no country other than the
United States and an ATPEA
beneficiary country may be
treated as being a party to the
NAFTA;
(II) any reference to trade
between the United States and
Mexico shall be deemed to refer
to trade between the United
States and an ATPEA beneficiary
country;
(III) any reference to a
party shall be deemed to refer
to an ATPEA beneficiary country
or the United States; and
(IV) any reference to parties
shall be deemed to refer to any
combination of ATPEA
beneficiary countries or to the
United States and one or more
ATPEA beneficiary countries (or
any combination thereof ).
(D) Transition period.--The term ``transition
period'' means, with respect to an ATPEA
beneficiary country, the period that begins on
the date of enactment, and ends on the earlier
of--
(i) February 28, 2006; or
(ii) the date on which the FTAA or
another free trade agreement that makes
substantial progress in achieving the
negotiating objectives set forth in
section 108(b)(5) of Public Law 103-182
(19 U.S.C. 3317(b)(5)) enters into
force with respect to the United States
and the ATPEA beneficiary country.
(E) ATPEA.--The term ``ATPEA'` means the
Andean Trade Preference Expansion Act.
(F) FTAA.--The term ``FTAA'' means the Free
Trade Area of the Americas.
* * * * * * *
SEC. 208. EFFECTIVE DATE AND TERMINATION OF DUTY-FREE TREATMENT.
(a) Effective Date.--This title shall take effect on the
date of enactment.
[(b) Termination of Duty.--No duty-free treatment extended
to beneficiary countries under this title shall remain in
effect 10 years after the date of the enactment of this title.]
(b) Termination of Preferential Treatment.--No preferential
duty treatment extended to beneficiary countries under this Act
shall remain in effect after February 28, 2006.
* * * * * * *
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES
CHAPTER 99--TEMPORARY LEGISLATION; TEMPORARY MODIFICATIONS ESTABLISHED
PURSUANT TO TRADE LEGISLATION; ADDITIONAL IMPORT RESTRICTIONS
ESTABLISHED PURSUANT TO SECTION 22 OF THE AGRICULTURAL ADJUSTMENT ACT,
AS AMENDED
* * * * * * *
9902.51.13 \1\ Yarn, of combed \1\ Free No change No change On or
wool, not put before 12/
up for retail 31/2003
sale,
containing 85
percent or more
by weight of
wool, formed
with wool
fibers having
average
diameters of
18.5 micron or
less (provided
for in
subheading
5107.10.30)....
9902.84.02 \1\ Watertube \1\ [4.9%] Free No change No change On or
boilers with a before [12/
steam 31/2003]
production 12/31/2006
exceeding 45 t
per hour, for
use in nuclear
facilities
(provided for
in subheading
8402.11.00)....
* * * * * * *
TRADE AND DEVELOPMENT ACT OF 2000
* * * * * * *
TITLE V--IMPORTS OF CERTAIN WOOL ARTICLES
* * * * * * *
SEC. 505. REFUND OF DUTIES PAID ON IMPORTS OF CERTAIN WOOL ARTICLES.
(a) Worsted Wool Fabrics.--[In each of the calendar years]
For each of the calendar years 2000, 2001, and 2002, a
manufacturer of men's or boys' suits, suit-type jackets, or
trousers (not a broker or other individual acting on behalf of
the manufacturer to process the import) of imported worsted
wool fabrics of the kind described in heading 9902.51.11 or
9902.51.12 of the Harmonized Tariff Schedule of the United
States shall be eligible [for a refund of duties paid on
entries of such fabrics in each such calendar year in an amount
equal to one-third of the amount of duties paid by the importer
on such worsted wool fabrics (without regard to micron level)
imported in calendar year 1999.] for a payment equal to an
amount determined pursuant to subsection (d)(1).
[(b) Wool Yarn.--In each of the calendar years 2000, 2001,
and 2002, a manufacturer of worsted wool fabrics who imports
wool yarn of the kind described in heading 9902.51.13 of the
Harmonized Tariff Schedule of the United States shall be
eligible for a refund of duties paid on entries of such wool
yarn in each such calendar year in an amount equal to one-third
of the amount of duties paid by the manufacturer on such wool
yarn (without regard to micron level) imported in calendar year
1999.]
(b) Wool Yarn.--
(1) Importing manufacturers.--For each of the
calendar years 2000, 2001, and 2002, a manufacturer of
worsted wool fabrics who imports wool yarn of the kind
described in heading 9902.51.13 of the Harmonized
Tariff Schedule of the United States shall be eligible
for a payment equal to an amount determined pursuant to
subsection (d)(2).
(2) Nonimporting manufacturers.--For each of the
calendar years 2001 and 2002, any other manufacturer of
worsted wool fabrics of imported wool yarn of the kind
described in heading 9902.51.13 of the Harmonized
Tariff Schedule of the United States shall be eligible
for a payment equal to an amount determined pursuant to
subsection (d)(2).
[(c) Wool Fiber and Wool Top.--In each of the calendar
years 2000, 1001, and 2002, a manufacturer of wool yarn or wool
fabric who imports wool fiber or wool top of the kind described
in heading 9902.51.14 of the Harmonized Tariff Schedule of the
United States shall be eligible for a refund of duties paid on
entries of such wool fiber in each such calendar year in an
amount equal to one-third of the amount of duties paid by the
manufacturer on such wool fiber (without regard to micron
level) imported in calendar year 1999.]
(c) Wool Fiber and Wool Top.--
(1) Importing manufacturers.--For each of the
calendar years 2000, 2001, and 2002, a manufacturer of
wool yarn or wool fabric who imports wool fiber or wool
top of the kind described in heading 9902.51.14 of the
Harmonized Tariff Schedule of the United States shall
be eligible for a payment equal to an amount determined
pursuant to subsection (d)(3).
(2) Nonimporting manufacturers.--For each of the
calendar years 2001 and 2002, any other manufacturer of
wool yarn or wool fabric of imported wool fiber or wool
top of the kind described in heading 9902.51.14 of the
Harmonized Tariff Schedule of the United States shall
be eligible for a payment equal to an amount determined
pursuant to subsection (d)(3).
[(d) Proper Identification and Appropriate Claim.--Any
person applying for a rebate under this section shall properly
identify and make appropriate claim to the United States
Customs Service for each entry involved.]
(d) Amount of Annual Payments to Manufacturers.--
(1) Manufacturers of men's suits, etc. of imported
worsted wool fabrics.--
(A) Eligible to receive more than $5,000.--
Each annual payment to manufacturers described
in subsection (a) who, according to the records
of the Customs Service as of September 11,
2001, are eligible to receive more than $5,000
for each of the calendar years 2000, 2001, and
2002, shall be in an amount equal to one-third
of the amount determined by multiplying
$30,124,000 by a fraction--
(i) the numerator of which is the
amount attributable to the duties paid
on eligible wool products imported in
calendar year 1999 by the manufacturer
making the claim, and
(ii) the denominator of which is the
total amount attributable to the duties
paid on eligible wool products imported
in calendar year 1999 by all the
manufacturers described in subsection
(a) who, according to the records of
the Customs Service as of September 11,
2001, are eligible to receive more than
$5,000 for each such calendar year
under this section as it was in effect
on that date.
(B) Eligible wool products.--For purposes of
subparagraph (A), the term ``eligible wool
products'' refers to imported worsted wool
fabrics described in subsection (a).
(C) Others.--All manufacturers described in
subsection (a), other than the manufacturer's
to which subparagraph (A) applies, shall each
receive an annual payment in an amount equal to
one-third of the amount determined by dividing
$1,665,000 by the number of all such other
manufacturers.
(2) Manufacturers of worsted wool fabrics of imported
wool yarn.--
(A) Importing manufacturers.--Each annual
payment to an importing manufacturer described
in subsection (b)(1) shall be in an amount
equal to one-third of the amount determined by
multiplying $2,202,000 by a fraction--
(i) the numerator of which is the
amount attributable to the duties paid
on eligible wool products imported in
calendar year 1999 by the importing
manufacturer making the claim, and
(ii) the denominator of which is the
total amount attributable to the duties
paid on eligible wool products imported
in calendar year 1999 by all the
importing manufacturers described in
subsection (b)(1).
(B) Eligible wool products.--For purposes of
subparagraph (A), the term ``eligible wool
products'' refers to imported wool yarn
described in subsection (b)(1).
(C) Nonimporting manufacturers.--Each annual
payment to a nonimporting manufacturer
described in subsection (b)(2) shall be in an
amount equal to one-half of the amount
determined by multiplying $141,000 by a
fraction--
(i) the numerator of which is the
amount attributable to the purchases of
imported eligible wool products in
calendar year 1999 by the nonimporting
manufacturer making the claim, and
(ii) the denominator of which is the
total amount attributable to the
purchases of imported eligible wool
products in calendar year 1999 by all
the nonimporting manufacturers
described in subsection (b)(2).
(3) Manufacturers of wool yarn or wool fabric of
imported wool fiber or wool top.--
(A) Importing manufacturers.--Each annual
payment to an importing manufacturer described
in subsection (c)(1) shall be in an amount
equal to one-third of the amount determined by
multiplying $1,522,000 by a fraction--
(i) the numerator of which is the
amount attributable to the duties paid
on eligible wool products imported in
calendar year 1999 by the importing
manufacturer making the claim, and
(ii) the denominator of which is the
total amount attributable to the duties
paid on eligible wool products imported
in calendar year 1999 by all the
importing manufacturers described in
subsection (c)(1).
(B) Eligible wool products.--For purposes of
subparagraph (A), the term ``eligible wool
products'' refers to imported wool fiber or
wool top described in subsection (c)(1).
(C) Nonimporting manufacturers.--Each annual
payment to a nonimporting manufacturer
described in subsection (c)(2) shall be in an
amount equal to one-half of the amount
determined by multiplying $597,000 by a
fraction--
(i) the numerator of which is the
amount attributable to the purchases of
imported eligible wool products in
calendar year 1999 by the nonimporting
manufacturer making the claim, and
(ii) the denominator of which is the
amount attributable to the purchases of
imported eligible wool products in
calendar year 1999 by all the
nonimporting manufacturers described in
subsection (c)(2).
(4) Letters of intent.--Except for the nonimporting
manufacturers described in subsections (b)(2) and
(c)(2) who may make claims under this section by virtue
of the enactment of the Wool Manufacturer Payment
Clarification and Technical Corrections Act, only
manufacturers who, according to the records of the
Customs Service, filed with the Customs Service before
September 11, 2001, letters of intent to establish
eligibility to be claimants are eligible to make a
claim for a payment under this section.
(5) Amount attributable to purchases by nonimporting
manufacturers.--
(A) Amount attributable.--For purposes of
paragraphs (2)(C) and (3)(C), the amount
attributable to the purchases of imported
eligible wool products in calendar year 1999 by
a nonimporting manufacturer shall be the amount
the nonimporting manufacturer paid for eligible
wool products in calendar year 1999, as
evidenced by invoices. The nonimporting
manufacturer shall make such calculation and
submit the resulting amount to the Customs
Service, within 45 days after the date of
enactment of the Wool Manufacturer Payment
Clarification and Technical Corrections Act, in
a signed affidavit that attests that the
information contained therein is true and
accurate to the best of the affiant's belief
and knowledge. The nonimporting manufacturer
shall retain the records upon which the
calculation is based for a period of five years
beginning on the date the affidavit is
submitted to the Customs Service.
(B) Eligible wool product.--For purposes of
subparagraph (A)--
(i) the eligible wool product for
nonimporting manufacturers of worsted
wool fabrics is wool yarn of the kind
described in heading 9902.51.13 of the
Harmonized Tariff Schedule of the
United States purchased in calendar
year 1999; and
(ii) the eligible wool products for
nonimporting manufacturers of wool yarn
or wool fabric are wool fiber or wool
top of the kind described in heading
9902.51.14 of such Schedule purchased
in calendar year 1999.
(6) Amount attributable to duties paid.--For purposes
of paragraphs (1), (2)(A), and (3)(A), the amount
attributable to the duties paid by a manufacturer shall
be the amount shown on the records of the Customs
Service as of September 11, 2001, under this section as
then in effect.
(7) Schedule of payments; reallocations.--
(A) Schedule.--Of the payments described in
paragraphs (1), (2)(A), and (3)(A), the Customs
Service shall make the first installment on or
before December 31, 2001, the second
installment on or before April 15, 2002, and
the third installment on or before April 15,
2003. Of the payments described in paragraphs
(2)(C) and (3)(C), the Customs Service shall
make the first installment on or before April
15, 2002, and the second installment on or
before April 15, 2003.
(B) Reallocations.--In the event that a
manufacturer that would have received payment
under subparagraph (A) or (C) of paragraph (1),
(2), or (3) ceases to be qualified for such
payment as such a manufacturer, the amounts
otherwise payable to the remaining
manufacturers under such subparagraph shall be
increased on a pro rata basis by the amount of
the payment such manufacturer would have
received.
(8) Reference.--For purposes of paragraphs (1)(A) and
(6), the ``records of the Customs Service as of
September 11, 2001'' are the records of the Wool Duty
Unit of the Customs Service on September 11, 2001, as
adjusted by the Customs Service to the extent necessary
to carry out this section. The amounts so adjusted are
not subject to administrative or judicial review.
(e) Affidavits by Manufacturers.--
(1) Affidavit Required.--A manufacturer may not
receive a payment under this section for calendar year
2000, 2001, or 2002, as the case may be, unless that
manufacturer has submitted to the Customs Service for
that calendar year a signed affidavit that attests
that, during that calendar year, the affiant was a
manufacturer in the United States described in
subsection (a), (b), or (c).
(2) Timing.--An affidavit under paragraph (1) shall
be valid--
(A) in the case of a manufacturer described
in paragraph (1), (2)(A), or (3)(A) of
subsection (d) filing a claim for a payment for
calendar year 2000, only if the affidavit is
postmarked no later than 15 days after the date
of enactment of the Wool Manufacturer Payment
Clarification and Technical Corrections Act;
and
(B) in the case of a claim for a payment for
calendar year 2001 or 2002, only if the
affidavit is postmarked no later than March 1,
2002, or March 1, 2003, respectively.
(f) Offsets.--Notwithstanding any other provision of this
section, any amount otherwise payable under subsection (d) to a
manufacturer in calendar year 2001 and, where applicable, in
calendar years 2002 and 2003, shall be reduced by the amount of
any payment received by that manufacturer under this section
before the enactment of the Wool Manufacturer Payment
Clarification and Technical Corrections Act.
(g) Definition.--For purposes of this section, the
manufacturer is the party that owns--
(1) imported worsted wool fabric, of the kind
described in heading 9902.51.11 or 9902.51.12 of the
Harmonized Tariff Schedule of the United States, at the
time the fabric is cut and sewn in the United States
into men's or boys' suits, suit-type jackets, or
trousers;
(2) imported wool yarn, of the kind described in
heading 9902.51.13 of such Schedule, at the time the
yarn is processed in the United States into worsted
wool fabric; or
(3) imported wool fiber or wool top, of the kind
described in heading 9902.51.14 of such Schedule, at
the time the wool fiber or wool top is processed in the
United States into wool yarn.
* * * * * * *