[Senate Report 109-364]
[From the U.S. Government Publishing Office]
109th Congress Report
SENATE
2d Session 109-364
======================================================================
UNITED STATES-OMAN FREE TRADE AGREEMENT IMPLEMENTATION ACT
_______
December 5, 2006.--Ordered to be printed
_______
Mr. Grassley, from the Committee on Finance, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 3569]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, to which was referred the bill
(S. 3569) to implement the United States-Oman Free Trade
Agreement, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
CONTENTS
Page
I. Report and Other Materials of the Committee.......................2
A. Report of the Committee on Finance.............................2
B. Summary of Congressional Consideration of the United States-Oman
Free Trade Agreement..............................................2
1. Background............................................ 2
2. Trade Promotion Authority Procedures in General....... 2
3. Notification Prior to Negotiations.................... 3
4. Notification of Intent to Enter Into an Agreement..... 3
5. Development of the Implementing Legislation........... 4
6. Formal Submission of the Agreement and Implementing
Legislation.......................................... 8
7. Committee and Floor Consideration..................... 9
C. Trade Relations with Oman.....................................10
1. United States-Oman Trade.............................. 10
2. Tariffs and Trade Agreements.......................... 12
3. U.S. International Trade Commission Study............. 13
D. Overview of the United States-Oman Free Trade Agreement.......14
1. Overview of the Agreement............................. 14
2. USTR Summary of the Agreement......................... 14
E. General Description of the Bill to Implement the United States-
Oman Free Trade Agreement........................................35
Title I--Approval of, and General Provisions Relating
to, The Agreement................................ 36
Title II--Customs Provisions......................... 38
Title III--Relief From Imports....................... 41
Title IV--Procurement................................ 46
F. Vote of the Committee in Reporting the Bill...................46
II. Budgetary Impact of the Bill....................................46
III. Regulatory Impact of the Bill and Other Matters.................48
IV. Changes in Existing Law Made by the Bill, as Reported............48
V. Additional Views.................................................51
I. REPORT AND OTHER MATERIALS OF THE COMMITTEE
A. Report of the Committee on Finance
The Committee on Finance, to which was referred the bill
(S. 3569) to implement the United States-Oman Free Trade
Agreement, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
B. Summary of Congressional Consideration of the United States-Oman
Free Trade Agreement
1. Background
On November 15, 2004, United States Trade Representative
Robert B. Zoellick announced the Administration's intent to
negotiate a bilateral free trade agreement with Oman as one
step toward achieving a Middle East Free Trade Area proposed by
President George W. Bush on May 9, 2003. Ambassador Zoellick
consulted with the relevant congressional committees, including
the Senate Committee on Finance, with respect to the initiation
of negotiations with Oman. Ambassador Zoellick also attended a
meeting of the Congressional Oversight Group on September 8,
2004, to discuss the initiation of negotiations with Oman. The
negotiations were launched on March 12, 2005. On October 3,
2005, United States Trade Representative Rob Portman announced
that the United States and Oman had successfully concluded the
negotiations. President George W. Bush notified Congress of his
intent to enter into the United States-Oman Free Trade
Agreement on October 17, 2005. Notice of the President's
notification was published in the Federal Register on October
19, 2005. On November 15, 2005, Ambassador Portman submitted to
Chairman Grassley the reports from 27 trade advisory groups
commenting on the final text of the Agreement with Oman. These
reports were also made publicly available on the website of the
Office of the United States Trade Representative. Ambassador
Portman and Minister of Commerce and Industry Maqbool bin Ali
Sultan of the Sultanate of Oman signed the United States-Oman
Free Trade Agreement on January 19, 2006.
2. Trade promotion authority procedures in general
Article I, section 8 of the Constitution of the United
States vests Congress with the authority to regulate
international trade. Congress has periodically delegated a
portion of this authority to the President in order to advance
the economic interests of the United States. This delegation
represents a compact between Congress and the Executive, by
which Congress guarantees it will vote on a trade agreement
entered into by the Executive without amendment and the
Executive guarantees close consultation with Congress during
the negotiation of the trade agreement in order to achieve
objectives identified by Congress. Thorough and timely
consultation by the Executive with Congress is the essential
bedrock upon which Congress' delegation of constitutional
authority rests. This longstanding compact, spanning decades,
has resulted in the successful negotiation and implementation
of numerous trade agreements that have contributed
significantly to increased economic growth and prosperity in
the United States.
The most recent incarnation of this compact is found in the
Bipartisan Trade Promotion Authority Act of 2002 (the Act),
which was included in the Trade Act of 2002 (Pub. L. 107-210).
The Act includes prerequisites for congressional consideration
of a trade agreement under expedited procedures (known as Trade
Promotion Authority (TPA) procedures), which are found in
sections 2103 through 2106 of the Act (19 U.S.C.
Sec. Sec. 3803-3806) and section 151 of the Trade Act of 1974
(19 U.S.C. Sec. 2191). Section 2103 of the Act authorizes the
President to enter into reciprocal trade agreements with
foreign countries to reduce or eliminate tariff or nontariff
barriers and other trade-distorting measures. Section 2102 of
the Act outlines the negotiating objectives the President is to
achieve if the President intends to use TPA procedures to
implement a trade agreement. Section 151 of the Trade Act of
1974 sets forth expedited procedures for congressional
consideration of a trade agreement without amendment. The
President's authority under section 2103 extends to trade
agreements entered into on or before June 30, 2007.
3. Notification prior to negotiations
Under section 2104(a)(1) of the Act, the President must
provide written notice to Congress at least 90 calendar days
before initiating negotiations. On November 15, 2004, the
United States Trade Representative sent letters to The
Honorable Ted Stevens, President Pro Tempore, United States
Senate, and The Honorable J. Dennis Hastert, Speaker, United
States House of Representatives, to notify Congress of the
President's intention to initiate negotiations with Oman. The
negotiations were initiated on March 12, 2005. Section
2104(a)(2) requires the President, before and after submission
of the notice, to consult regarding the negotiations with the
relevant congressional committees and the Congressional
Oversight Group established under section 2107 of the Act. The
Administration engaged in the requisite consultations,
including an appearance by the United States Trade
Representative at a meeting of the Congressional Oversight
Group on September 8, 2004.
4. Notification of intent to enter into an agreement
Under section 2105(a)(1)(A) of the Act, the President is
required, at least 90 days before entering into an agreement,
to notify Congress of his intention to enter into the
agreement. On October 17, 2005, President George W. Bush
notified Congress of his intention to enter into the United
States-Oman Free Trade Agreement. The Agreement was signed on
January 19, 2006.
5. Development of the implementing legislation
Under TPA procedures, Congress and the Administration work
together to produce the legislation to implement a free trade
agreement. Draft legislation is developed in close consultation
between the Administration and the committees with jurisdiction
over the laws that must be enacted or amended to implement the
agreement. The committees may then hold informal meetings to
consider the draft legislation and to make non-binding
recommendations to the Administration, if any. The
Administration then finalizes implementing legislation for
formal submission to Congress and referral to the committees of
jurisdiction. These procedures are meant to ensure close
cooperation between the executive and legislative branches of
government to develop legislation that faithfully implements
the agreement. The final legislation should include only those
provisions that are necessary or appropriate to faithfully
implement the agreement.
The Senate Committee on Finance met in open executive
session on May 18, 2006, to informally consider draft
implementing legislation for the Agreement. Chairman Grassley
introduced a chairman's modification to the proposed Statement
of Administrative Action to accompany the draft legislation to
implement the Agreement. The chairman's modification called for
the Administration to monitor and report annually to Congress
on the efforts of the Government of Oman to prohibit compulsory
or indentured labor, including efforts to prohibit any coercive
action by an employer to compel such labor. The chairman's
modification was adopted without objection.
Two amendments were filed in committee to the draft
implementing legislation. One of those amendments (Conrad-
Bingaman-Kerry #1) was offered by Senator Conrad. This
amendment provided that ``(a)t an appropriate place, add a
provision to prevent goods made with slave labor (including
under sweatshop conditions so egregious as to be tantamount to
slave labor), or with the benefit of human trafficking, from
benefiting from the agreement.''
Appearing before the Committee were James Mendenhall,
General Counsel in the Office of the United States Trade
Representative, and Shaun Donnelly, Assistant U.S. Trade
Representative for Europe and the Middle East. Mr. Mendenhall
questioned whether the offered amendment was necessary or
appropriate to implement the Agreement because Omani law
already prohibited forced labor and the Agreement obligates the
Government of Oman to enforce that law. Mr. Mendenhall also
noted that Oman is a signatory to Convention 29 of the
International Labor Organization, which prohibits forced labor.
Finally, Mr. Mendenhall noted that section 1307 of title 19,
United States Code, prohibits the importation of goods produced
with convict labor, as well as with forced labor and indentured
labor. Chairman Grassley requested a detailed written response
from the Office of the United States Trade Representative
addressing whether existing U.S. law already provided greater
impediments to forced labor than the offered amendment.
Senator Conrad requested a roll call vote and the Conrad-
Bingaman-Kerry amendment was adopted by recorded vote, 18 ayes,
0 nays, a quorum being present. Ayes: Grassley, Hatch (proxy),
Lott (proxy), Snowe, Thomas, Santorum, Frist, Smith, Bunning,
Crapo, Baucus, Conrad, Jeffords, Bingaman, Kerry, Lincoln,
Wyden, Schumer. Chairman Grassley recessed the meeting and,
later that day, reconvened the meeting to approve the
Committee's recommendations, as amended, to implement the
United States-Oman Free Trade Agreement. The Committee approved
the recommendations, as amended, by recorded vote, 19 ayes, 0
nays, a quorum being present. Ayes: Grassley, Hatch, Lott,
Snowe, Kyl, Thomas, Santorum, Frist, Smith, Bunning, Crapo,
Baucus, Conrad, Jeffords, Bingaman, Kerry, Lincoln, Wyden,
Schumer.
Separately, on May 10, 2006, the Committee on Ways and
Means in the House of Representatives informally approved draft
legislation to implement the Agreement and accompanying draft
Statement of Administrative Action, without amendment. The
Senate Finance Committee and House Ways and Means Committee
sent their respective recommendations to the President. The
committees did not conduct a formal ``mock conference'' to
reconcile the different versions of informal non-binding
recommendations that had been approved by the two committees.
Committee precedent does not mandate that a formal ``mock
conference'' take place to reconcile differences in informal
recommendations. For example, the two committees approved
different versions of draft implementing legislation for the
North American Free Trade Agreement, but there is no record of
a formal mock conference taking place to reconcile the
differences. In contrast, the committees did proceed with a
formal mock conference to reconcile different versions of draft
implementing legislation for the Uruguay Round Agreements Act.
The need for a formal ``mock conference'' depends upon the type
and degree of differences between the informal committee
recommendations. In this case, the Office of the United States
Trade Representative consulted with each committee, and based
upon those consultations, the President subsequently reconciled
the two versions by including a broader version of the
Chairman's modification in the Statement of Administrative
Action and by omitting the amendment relating to slave labor
and human trafficking. On June 22, 2006, the General Counsel in
the Office of the United States Trade Representative, James
Mendenhall, transmitted to Chairman Grassley a letter
explaining the Administration's view that existing U.S. law
already prohibited the importation of products made with forced
or indentured labor and why the Administration did not consider
the amendment adopted by the Committee in its informal
consideration to be necessary or appropriate to implement the
Agreement. As a result, the Administration did not include the
adopted amendment in the formal implementing legislation
subsequently submitted to Congress. Mr. Mendenhall's letter is
reprinted below:
June 22, 2006.
Hon. Charles Grassley,
Chairman, Senate Finance Committee, Dirksen Senate Office Building,
Room 219, U.S. Senate, Washington, DC.
Dear Chairman Grassley: During the Finance Committee
hearing on May 18, Senator Conrad introduced an addition to the
draft implementing legislation for the United States-Oman Free
Trade Agreement (FTA) to ``add a provision to prevent goods
made with slave labor (including conditions of de facto
indentured servitude), or with the benefit of human
trafficking, from benefiting from the agreement.'' At the
hearing, I promised to provide you with a letter detailing our
views on this proposal.
The proposed addition is neither necessary nor appropriate
because the FTA already deals effectively with products of
forced or indentured labor. In addition, U.S. law prohibits the
importation of products produced with convict, forced, or
indentured labor under penal sanctions. Moreover, we are aware
of no evidence suggesting that goods are produced in Oman using
slave labor or with the benefit of human trafficking.
First, Oman already prohibits forced labor and Oman has
promised to take steps to clarify and strengthen its laws
further. Article 12 of Oman's Basic Law provides that ``Every
citizen has the right to engage in the work of his choice
within the limits of the law. It is not permitted to impose any
compulsory work on anyone except in accordance with the Law and
for the performance of public service, for a fair wage.'' Oman
has further committed in writing to ``issue a Royal Decree, no
later than October 31, 2006, specifying the forms of public
service that could be required in the event the Government were
ever to exercise its power under Article 12, consistent with
ILO Convention 29.'' Oman is, in fact, already a signatory to
ILO Conventions 29 and 105, which prohibit forced labor. At
your request, the Administration has committed to update the
Congress periodically on the progress that Oman achieves in
realizing all its commitments made to labor law reform.
Second, Article 16.2.1(a) of the FTA requires Oman to
enforce its labor laws. If it fails to do so, then the United
States is entitled to resort to the FTA's dispute settlement
procedures, and if the United States prevails, Oman may be
required to pay up to $15 million per year in fines that can be
used for appropriate labor initiatives in Oman, including
enforcement.
Third, U.S. law already prohibits the importation of
products produced with convict labor, forced labor, and
indentured labor under penal sanctions. Specifically, 19 U.S.C.
Sec. 1307 states as follows:
All goods, wares, articles, and merchandise mined,
produced, or manufactured wholly or in part in any foreign
country by convict labor or/and forced labor or/and indentured
labor under penal sanctions shall not be entitled to entry at
any of the ports of the United States, and the importation
thereof is hereby prohibited, and the Secretary of the Treasury
is authorized and directed to prescribe such regulations as may
be necessary for the enforcement of this provision. The
provisions of this section relating to goods, wares, articles,
and merchandise mined, produced, or manufactured by forced
labor or/and indentured labor, shall take effect on January 1,
1932; but in no case shall such provisions be applicable to
goods, wares, articles, or merchandise so mined, produced, or
manufactured which are not mined, produced, or manufactured in
such quantities in the United States as to meet the consumptive
demands of the United States.
``Forced labor'', as herein used, shall mean all work or
service which is exacted from any person under the menace of
any penalty for its nonperformance and for which the worker
does not offer himself voluntarily. For purposes of this
section, the term ``forced labor or/and indentured labor''
includes forced or indentured child labor.
Notably, the statute is not limited to prison labor, but
extends to products manufactured with forced or indentured
labor. In fact, the statute was specifically amended in 1930 to
add forced and indentured labor.
The statute is also not limited to involuntary labor. The
term ``indentured labor'' is understood to mean labor
undertaken pursuant to a `` `contract entered into by an
employee the enforcement of which can be accompanied by process
or penalties.' '' China Diesel Imports, Inc. v. United States,
855 F. Supp. 380, 384 (CIT 1994) (citing 71 Cong. Rec. 4489
(1929) (statement of Senator Blaine)).
While the statute provides for an exception in the case of
goods that are not produced in the United States, we cannot
envision a situation where this exception would be applied in
practice. Given the broad economic base of the United States,
we do not anticipate a situation where the United States would
be obliged to import an otherwise banned product from Oman to
satisfy domestic demand because it cannot be obtained in the
United States.
In determining whether importation of a product should be
prohibited, Customs will look closely at the circumstances of
the case. For example, the Forced Child Labor Advisory issued
by the Department of Treasury and U.S. Customs Service in
December 2000 lists several ``red flag'' factors indicating the
existence of forced or indentured child labor. These red flags
may alone provide evidence of forced/indentured labor, and
include, e.g., slave labor conditions, employment to discharge
a debt, fmancial penalties that eliminate wages, etc. The
Advisory also lists several ``yellow flag'' factors that may
indicate the need for further investigation. These yellow flag
factors include, for example, employment in violation of local
laws and regulations, or employment in hazardous industries or
under extreme conditions.
Other agencies have interpreted the statute in a similar
way. Pursuant to Executive Order 13126, the Department of Labor
applies the Section 1307 standard in developing a list of
products produced by child labor that are not eligible for
federal government procurement. According to the Department of
Labor, ``The essential elements of the definition [of forced or
indentured child labor] are either the presence of coercion or
the existence of a contract enforceable by penalties.'' The
Department has listed illustrative factors it will look at in
making this determination, including, e.g., confinement, little
or no pay, deprivation of basic needs, etc. Bureau of
International Labor Affairs; Notice of Preliminary List of
Products Requiring Federal Contractor Certification as to
Forced or Indentured Labor Under Executive Order No. 13126;
Request for Comments, 65 Fed. Reg. 54108 (Sept. 6, 2000).
Fourth, Congress recently affirmed that goods made with
forced or child labor in violation of international standards
cannot be imported into the United States. On February 17,
2005, the President signed into law the Trafficking Victims
Protection Reauthorization Act of 2005 (P. L. 109-164).
Specifically, section 105(b) of that Act requires United States
Government departments and agencies to ``consult with other
departments and agencies of the United States Government to
reduce forced and child labor internationally and ensure that
products made by forced labor and child labor in violation of
international standards are not imported into the United
States.''
For these reasons, the Administration does not consider the
proposed addition to be ``necessary or appropriate to
implement'' the Oman trade agreement under the terms of 19
U.S.C. Sec. 3803(b)(3)(B)(ii) and the Administration will not
include the proposed addition in the text of the legislation
implementing the United States-Oman Free Trade Agreement.
Sincerely,
James E. Mendenhall,
General Counsel.
On July 9, 2006, His Majesty, Sultan Qaboos bin Said,
issued a Royal Decree amending Oman's labor law to address many
of the issues raised during the course of congressional
consideration of the United States-Oman Free Trade Agreement.
That action followed through on commitments made by the
Government of Oman in letters to Chairman Thomas of the House
Ways and Means Committee (March 2006) and Ambassador Portman
(May 2006).
6. Formal submission of the agreement and implementing legislation
When the President formally submits a trade agreement to
Congress under section 2105 of the Act, the President must
include in the submission the final legal text of the
agreement, together with implementing legislation, a Statement
of Administrative Action (describing regulatory and other
changes that are necessary or appropriate to implement the
agreement), a statement setting forth the reasons of the
President regarding how and to what extent the agreement makes
progress in achieving the applicable policies, purposes,
priorities, and objectives set forth in the Act, and a
statement setting forth the reasons of the President regarding
how the agreement serves the interests of U.S. commerce.
The implementing legislation is introduced in both Houses
of Congress on the day it is submitted by the President and is
referred to committees with jurisdiction over its provisions.
President George W. Bush transmitted the final text of the
United States-Oman Free Trade Agreement, along with
implementing legislation, a Statement of Administrative Action,
and other supporting information, as required under section
2105 of the Trade Act of 2002, to Congress on June 26, 2006.
The legislation was introduced that same day in both the House
(H.R. 5684) and the Senate (S. 3569). In lieu of the Chairman's
modification to the draft Statement of Administrative Action
adopted by the Committee during its informal consideration, the
President included in the final Statement of Administrative
Action a broader commitment to update Congress periodically
with respect to the progress that Oman achieves in realizing
all commitments made to labor law reform, and not just with
respect to Oman's efforts to prohibit compulsory or indentured
labor. The legislation did not include the amendment adopted by
the Committee during its informal consideration.
To qualify for TPA procedures, the implementing bill itself
must contain provisions formally approving the agreement and
the Statement of Administrative Action. Further, the
implementing bill must contain only those provisions necessary
or appropriate to implement the Agreement. The implementing
bill reported here--which approves the United States-Oman Free
Trade Agreement (Agreement) and the accompanying Statement of
Administrative Action and contains provisions necessary or
appropriate to implement the Agreement into U.S. law--was
referred to the Senate Committee on Finance.
7. Committee and floor consideration
When the requirements of the Act are satisfied,
implementing revenue bills, such as the United States-Oman Free
Trade Agreement Implementation Act (Implementation Act), are
subject to the legislative procedures of section 151 of the
Trade Act of 1974. The following schedule for congressional
consideration applies under these procedures:
(i) House committees have up to 45 calendar days in session
in which to report the bill; any committee which does not do so
in that period will be automatically discharged from further
consideration.
(ii) A vote on final passage by the House must occur on or
before the 15th calendar day in session after the committees
report the bill or are discharged from further consideration.
(iii) Senate committees must act within 15 calendar days in
session of receiving the implementing revenue bill from the
House or within 45 calendar days in session of Senate
introduction of the implementing bill, whichever is later, or
they will be discharged automatically.
(iv) The full Senate then must vote within 15 calendar days
in session on the implementing bill.
Thus, Congress has a maximum of 90 calendar days in session
to complete action on the bill. Once the implementing bill has
been formally submitted by the President and introduced, no
amendments to the bill are in order in either House of
Congress. Floor debate in each House is limited to no more than
20 hours, to be equally divided between those favoring the bill
and those opposing the bill.
The Committee on Finance met in open executive session on
June 28, 2006, to consider favorably reporting S. 3569. The
agenda for that session did not provide for amendments to be
filed with respect to S. 3569 because, pursuant to section
151(d) of the Trade Act of 1974, no amendment to an
implementing bill is in order under TPA procedures.
Nevertheless, Senator Conrad again filed the amendment that was
adopted by the Committee during its informal consideration.
Senator Conrad discussed, but did not offer, his amendment,
which would have been subject to a non-germaneness ruling by
the Chairman. In addition to Senator Conrad, several Members
also expressed frustration because the amendment adopted by the
Committee during its informal consideration was omitted from
the final implementing legislation. One Member expressed the
view that the subject matter of the amendment adopted by the
Committee during its informal consideration was already
addressed in U.S. and Omani law. Chairman Grassley pledged to
take steps to improve communication between Committee Members
and the Office of the United States Trade Representative in an
effort to defuse concerns before the Administration notifies
Congress of the President's intent to enter into a trade
agreement.\1\
---------------------------------------------------------------------------
\1\ As an initial step, Chairman Grassley convened a closed-door
Members meeting with United States Trade Representative Susan C. Schwab
on July 19, 2006, to address, inter alia, Member concerns over
implementation of the United States-Oman Free Trade Agreement.
---------------------------------------------------------------------------
Chairman Grassley called for a roll call vote to favorably
report S. 3569, without amendment. The Committee favorably
reported S. 3569 by a recorded vote of those present and
voting, 10 ayes, 3 nays, a quorum being present. Ayes:
Grassley, Hatch, Lott (proxy), Kyl, Thomas, Santorum (proxy),
Frist, Smith, Bunning, Crapo, Baucus, Jeffords (proxy), Kerry
(proxy), Schumer. Nays: Snowe, Rockefeller (proxy), Conrad
(proxy), Bingaman (proxy), Lincoln, Wyden.
The Senate passed S. 3569 on June 29, 2006, by a roll call
vote of 60 ayes, 34 nays. The House of Representatives passed
H.R. 5684 on July 20, 2006, by a recorded vote of 221 ayes, 205
nays. The Senate passed H.R. 5684 on September 19, 2006, by a
roll call vote of 62 ayes, 32 nays. President George W. Bush
signed H.R. 5684 into law on September 26, 2006 (Pub. L. 109-
283).
C. Trade Relations With Oman
1. United States-Oman trade
Oman is a small country, with a gross domestic product
(GDP) that is less than 1 percent of U.S. GDP, and a population
that is less than 1 percent of U.S. population. U.S. trade with
Oman accounted for less than 0.5 percent of total U.S. goods
trade in 2004. Trade between the United States and Oman is
currently concentrated in a few products. In 2004, imports of
petroleum and energy-related products accounted for 50 percent
of total U.S. imports from Oman, while imports of apparel
accounted for 30 percent of total U.S. imports from Oman.
Similarly, 2004 exports of machinery and parts accounted for 46
percent of total U.S. exports to Oman, while 2004 exports of
vehicles and parts accounted for 16 percent of total U.S.
exports to Oman. About 11 percent of U.S. imports from Oman
entered duty free under the U.S. Generalized System of
Preferences in 2004. Apparel accounted for 98 percent of all
duties collected on U.S. imports from Oman in 2004. The United
States accounted for 4.3 percent of Oman's exports and 6.8
percent of Oman's imports in 2004.
The following tables summarize the top U.S. merchandise
exports to Oman and the top U.S. merchandise imports from Oman
during the past 6 years.
U.S. EXPORTS TO OMAN, 2000-2005
[In thousands of U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Top 15 product descriptions, by HTS chapter 2000 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
88 Aircraft, spacecraft, and parts thereof......... 4,853 66,699 148,140 69,374 6,428 170,195
87 Vehicles, other than railway or tramway rolling 22,259 35,393 27,384 23,792 51,254 134,385
stock, and parts and accessories thereof...........
84 Nuclear reactors, boilers, machinery and 71,548 87,944 74,181 103,491 126,929 115,580
mechanical appliances; parts thereof...............
85 Electrical machinery and equipment and parts 14,329 19,418 14,138 14,990 18,428 24,232
thereof; sound recorders and reproducers,
television recorders and reproducers, parts and
accessories........................................
90 Optical, photographic, cinematographic, 9,544 13,859 13,552 15,798 17,806 21,579
measuring, checking, precision, medical or surgical
instruments and apparatus; parts and accessories
thereof............................................
98 Special classification provisions, not elsewhere 12,131 13,642 10,241 17,478 15,282 18,216
specified or otherwise included....................
38 Miscellaneous chemical products................. 2,231 2,096 3,699 3,632 2,546 10,768
93 Arms and ammunition; parts and accessories 899 1,237 179 2,682 5,187 6,074
thereof............................................
39 Plastics and articles thereof................... 12,233 10,920 5,745 11,505 11,898 5,759
29 Organic chemicals............................... 2,166 1,369 2,809 1,071 2,678 5,205
73 Articles of iron or steel....................... 2,480 1,397 2,945 2,061 3,386 4,950
21 Miscellaneous edible preparations............... 6,810 7,017 7,162 6,188 6,241 3,620
24 Tobacco and manufactured tobacco substitutes.... 8,380 6,867 4,336 4,191 4,298 3,537
82 Tools, implements, cutlery, spoons and forks, of 212 577 606 731 2,238 2,421
base metal; parts thereof..........................
25 Salt; sulfur; earths and stone; plastering 2,753 411 4,731 10,113 3,624 2,226
materials, lime and cement.........................
-----------------------------------------------------------
Subtotal for top 15 products.................... 172,827 268,846 319,849 287,095 278,221 528,749
-----------------------------------------------------------
Subtotal for all other U.S. exports............. 21,105 30,211 30,844 30,075 36,097 33,024
===========================================================
Total U.S. exports to Oman.................. 193,932 299,057 350,694 317,170 314,318 561,772
----------------------------------------------------------------------------------------------------------------
Note.--HTS is the Harmonized Tariff Schedule of the United States.
Source.--U.S. International Trade Commission Dataweb from official statistics of the U.S. Department of
Commerce.
U.S. Imports from Oman, 2000-2005
[In thousands of U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Top 15 product descriptions, by HTS chapter 2000 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
27 Mineral fuels, mineral oils and products of 37,796 216,517 115,492 338,869 211,838 341,225
their distillation; bituminous substances; mineral
waxes..............................................
71 Natural or cultured pearls, precious or 48,563 35,742 28,566 39,268 45,725 57,212
semiprecious stones, precious metals; precious
metal clad metals, articles thereof; imitation
jewelry; coin......................................
62 Articles of apparel and clothing accessories, 125,581 110,489 94,109 106,655 90,107 35,372
not knitted or crocheted...........................
61 Articles of apparel and clothing accessories, 27,828 35,526 30,884 25,196 35,194 17,773
knitted or crocheted...............................
73 Articles of iron or steel....................... 1,455 3,016 4,152 5,802 18,066 10,145
28 Inorganic chemicals; organic or inorganic 0 0 130 30 23 7,368
compounds of precious metals, of rare-earth metals,
of radioactive elements or of isotopes.............
03 Fish and crustaceans, molluscs and other aquatic 7,244 9,411 12,189 13,779 7,316 4,012
invertebrates......................................
98 Special classification provisions, not elsewhere 3,463 4,984 91,963 67,778 6,250 2,776
specified or otherwise included....................
25 Salt; sulfur; earths and stone; plastering 0 1,970 3,162 289 1,512 1,625
materials, lime and cement.........................
68 Articles of stone, plaster, cement, asbestos, 1,442 2,785 1,272 710 1,182 1,470
mica or similar materials..........................
99 Special import reporting provisions, not 383 858 794 1,685 888 1,185
elsewhere specified or otherwise included..........
29 Organic chemicals............................... 0 1,300 179 348 16 853
19 Preparations of cereals, flour, starch or milk; 0 231 287 486 529 782
bakers' wares......................................
20 Preparations of vegetables, fruit, nuts, or 558 544 926 1,324 1,560 754
other parts of plants..............................
39 Plastics and articles thereof................... 652 1,571 1,223 642 386 391
-----------------------------------------------------------
Subtotal for top 15 products.................... 254,962 424,944 385,328 602,862 420,593 482,945
-----------------------------------------------------------
Subtotal for all other U.S. imports............. 1,941 6,178 4,267 3,695 1,870 1,219
-----------------------------------------------------------
Total U.S. imports from Oman................ 256,903 431,122 389,595 606,557 422,463 484,164
----------------------------------------------------------------------------------------------------------------
Note.--HTS is the Harmonized Tariff Schedule of the United States.
Source.--U.S. International Trade Commission Dataweb from official statistics of the U.S. Department of
Commerce.
2. Tariffs and trade agreements
Oman acceded to the World Trade Organization (WTO) on
November 9, 2000, with an average bound tariff rate of 13.8
percent for all goods (28.0 percent for agricultural goods and
11.6 percent for nonagricultural goods), and an average applied
tariff rate of 5.7 percent for all goods (10.2 percent for
agricultural goods and 5.0 percent for nonagricultural goods).
Oman's petroleum reserves are projected to be depleted in less
than 20 years. As a result, the Government of Oman plans to
continue to diversify the economy, increase private-sector
employment, privatize state-owned enterprises, and liberalize
the services sector. Other sectors targeted for expansion
include manufacturing, information technology, tourism, and
fisheries. Textile and apparel production is a major source of
manufacturing activity in Oman, accounting for an estimated 3.4
percent of GDP and 14 percent of manufacturing jobs in 2003, as
well as 16 percent of non-energy exports in 2004.
In addition to the United States-Oman Free Trade Agreement,
the Government of Oman has signed bilateral investment treaties
with 24 countries, i.e. Algeria, Austria, Belarus, Brunei,
China, Croatia, Egypt, Finland, France, Germany, India, Iran,
Italy, Korea, Morocco, the Netherlands, Pakistan, Sudan,
Sweden, Switzerland, Tunisia, Ukraine, the United Kingdom, and
Yemen. In addition, Oman is a member of the Arab free trade
area (in force since 1998), which also includes Bahrain, Egypt,
Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, the Palestinian
Authority, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, the
United Arab Emirates, and Yemen. Oman is also a member of the
Gulf Cooperation Council (founded in 1981), which in addition
to Oman includes Bahrain, Kuwait, Qatar, Saudi Arabia, and the
United Arab Emirates. The Gulf Cooperation Council launched a
customs union in 2003, with additional plans to establish a
monetary union, a common market, and a single currency. In
addition, the Gulf Cooperation Council is engaged in ongoing
negotiations with the European Union to conclude a free trade
agreement.
By letter dated September 28, 2005, Oman's Minister of
Commerce and Industry Maqbool bin Ali Sultan assured United
States Trade Representative Rob Portman that Oman does not
apply any aspect of the Arab League boycott of Israel, whether
primary, secondary or tertiary, nor does Oman have any laws to
that effect.
Bilateral trade data alone fail to capture the full
importance of Oman as a trading partner of the United States.
In May 2003, President Bush proposed a plan of graduated steps
for Middle Eastern nations to increase trade and investment
with the United States and others in the world economy,
culminating with the establishment of a Middle East Free Trade
Area by the year 2013. On July 22, 2004, the report of the 9/11
Commission (Final Report of the National Commission on
Terrorist Attacks Upon the United States) was released; that
report contains, as one of its key recommendations, that a
``comprehensive U.S. strategy to counter terrorism should
include economic policies that encourage development, more open
societies, and opportunities for people to improve the lives of
their families and to enhance prospects for their children's
future.'' The Agreement with Oman is an important achievement
in that effort, and joins previously concluded bilateral trade
agreements between the United States and Israel, Jordan,
Morocco, and Bahrain, as a sound model for other nations in the
Middle East to become full participants in the rules-based
system of global trade. The Agreement with Oman is therefore an
important part of a broader effort to encourage development,
more open societies, and opportunities for people to improve
the lives of their families and to enhance prospects for their
children's future, throughout the Middle East.
3. U.S. International Trade Commission Study
In February 2006, the U.S. International Trade Commission
(ITC) released the results of its investigation (Investigation
No. TA-2104-19) into the probable economic effect of a United
States-Oman Free Trade Agreement (USITC Pub. 3837). In some of
its prior investigations, the ITC utilized a general
equilibrium model to estimate the effects of a particular trade
agreement on the overall U.S. economy. In this case, because
the apparel sector accounted for almost all (98 percent) of the
duties paid on U.S. goods imported from Oman in 2004, and
because the Omani economy is relatively small compared to the
U.S. economy, the ITC utilized a partial equilibrium model to
estimate the probable economic effect of tariff elimination
under the Agreement. This is the same methodology that the ITC
utilized in its prior investigation of the probable economic
effects of the United States-Bahrain Free Trade Agreement. The
ITC did not utilize a partial equilibrium model to estimate the
effects of the Agreement on U.S. exports to Oman because of a
lack of information on Oman's domestic market; instead, the ITC
estimated such effects based on assumptions about the
responsiveness of Omani demand to changes in export prices.
The ITC concluded that elimination of U.S. apparel tariffs
under the Agreement will likely increase U.S. net welfare by
$302,000 as a result of an $8.9 million increase in U.S.
consumer surplus, a $1.6 million decrease in U.S. producer
surplus, and a $7.0 million decline in U.S. tariff revenue. The
ITC also concluded that U.S. exports of machinery,
transportation equipment, and measuring instruments, including
parts for boring or sinking machinery, heat exchange units,
passenger vehicles, and parts of gas turbines, would likely
increase by between 5 percent and 14 percent under the
Agreement.
More generally, the ITC found that the expected growth in
U.S. trade with Oman would likely have a small but positive
impact on the U.S. economy, with the benefits moderated by the
relatively small size of Oman's economy and Oman's share of
total U.S. trade. The majority of U.S. imports from Oman
already enter duty-free or at low tariffs, while most U.S.
exports to Oman face a tariff of 5 percent ad valorem. The
expected increase in U.S. apparel imports from Oman would
likely be small in absolute value and quantity terms, and the
resulting increased annual level of U.S. apparel imports from
Oman would likely remain below the 2004 level of U.S. apparel
imports from Oman. Most of the expected increase in apparel
imports from Oman would displace U.S. apparel imports from
other countries rather than domestic production, and thus have
almost no effect on U.S. industry. Under the Agreement, Oman
will eliminate tariffs immediately on U.S. products that
accounted for 91 percent of U.S. exports to Oman in 2004,
including 87 percent of all agricultural tariff lines. All
tariffs on the remaining eligible goods will be phased out over
10 years.
With respect to services, the ITC concluded that U.S.-based
service firms are likely to benefit from improved market access
and greater regulatory transparency, though these benefits will
be moderated by the relatively small size of Oman's economy. On
January 18, 2006, Oman's Minister of Commerce and Industry
Maqbool bin Ali Sultan remarked that the Agreement will provide
new opportunities for U.S. service providers in areas such as
banking, insurance, telecommunications, express delivery
services, and construction.
D. Overview of the United States-Oman Free Trade Agreement
1. Overview of the agreement
The United States-Oman Free Trade Agreement establishes a
bilateral free trade area that eliminates tariffs on
merchandise trade in originating goods between the United
States and Oman. The Agreement eliminates non-tariff barriers,
liberalizes trade in services, and contains provisions that
cover telecommunications, electronic commerce, intellectual
property rights, labor, environment, government procurement,
and investment. The Agreement also contains a mechanism for
settling disputes that arise under the Agreement. Throughout
the Agreement there are important provisions that promote
bilateral consultation and cooperation, procedural and
substantive due process, administrative and judicial review,
transparency, and the rule of law. The Agreement is intended to
strengthen economic relations between the United States and
Oman, create employment and raise the standard of living,
enhance the competitiveness of firms, set a structure of clear
and mutually advantageous rules for bilateral trade, build on
commitments in the WTO, and promote creativity and innovation.
In addition, commitments to transparency, worker rights,
eliminating corruption and bribery, and strengthening
environmental protection are cited as important goals under the
Agreement.
2. USTR summary of the agreement
The Office of the United States Trade Representative (USTR)
prepared a summary of the United States-Oman Free Trade
Agreement which was included among the documents transmitted to
Congress on June 26, 2006. This summary was distributed to
Members of the Committee to aid in their consideration of the
implementing legislation, and is reprinted below:
UNITED STATES-OMAN FREE TRADE AGREEMENT
Summary of the Agreement
This summary briefly describes key provisions of the United
States-Oman Free Trade Agreement (``FTA'' or ``Agreement'').
Preamble
The Preamble to the Agreement provides the Parties'
underlying objectives in entering into the Agreement and
provides context to the provisions that follow.
CHAPTER ONE: ESTABLISHMENT OF A FREE TRADE AREA AND DEFINITIONS
Chapter One sets out provisions establishing a free trade
area. The Parties affirm their existing rights and obligations
under the Marrakesh Agreement Establishing the World Trade
Organization (``WTO'') and other agreements to which both the
United States and Oman are party. Chapter One also includes
definitions of certain terms that recur in various Chapters of
the Agreement.
CHAPTER TWO: NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS
Chapter Two sets out the Agreement's principal rules
governing trade in goods. It requires each Party to treat goods
from the other Party in a non-discriminatory manner, provides
for the phase- out of tariffs on ``originating goods'' (as
defined in Chapter Four (Rules of Origin)) traded between the
two Parties, and requires the elimination of a wide variety of
non-tariff barriers that restrict or distort trade flows.
Tariff Elimination. Chapter Two provides rules for the
elimination of customs duties on originating goods traded
between the Parties no later than 10 years after the Agreement
enters into force. The Agreement is comprehensive, containing
U.S. and Omani elimination commitments on all tariffs. For
example, 100 percent of bilateral trade in consumer and
industrial goods will become duty-free immediately upon the
Agreement's entry into force, with the exception of certain
textile products subject to a longer phase-out period. In
addition, Oman will provide immediate duty-free access for U.S.
agricultural exports in 87 percent of its agricultural tariff
lines. Certain sensitive agricultural goods in Oman and the
United States will have longer periods for duty elimination (up
to 10 years) or will be subject to other provisions, including,
in some cases, the application of transitional preferential
tariff-rate quotas (``TRQs'') by the United States. Annex 2-B
of the Agreement includes detailed provisions on staging of
tariff reductions and application of TRQs for certain textile
and apparel and agricultural goods. Chapter Two also provides
that the Parties may agree to speed up tariff phase-outs on a
product- by-product basis after the Agreement takes effect.
Temporary Admission. Chapter Two requires the Parties to
provide duty-free temporary admission for certain goods without
the usual bonding requirement that applies to imports. Such
items include professional equipment, goods for display or
demonstration, and commercial samples.
Import/Export Restrictions, Fees, and Formalities. The
Agreement incorporates the prohibition on import and export
restrictions set out in Article XI of the General Agreement on
Tariffs and Trade (``GATT'') 1994 and specifies that these
include: (1) export and import price requirements (except under
antidumping and countervailing duty orders); (2) import
licensing conditioned on the fulfillment of a performance
requirement; and (3) voluntary export restraints inconsistent
with Article VI of GATT 1994. In addition, a Party must limit
fees and charges imposed on or in connection with importation
or exportation to the approximate cost of services rendered, in
accordance with Article VIII of GATT 1994. Finally, the United
States also has agreed not to apply its merchandise processing
fee on imports of originating goods from Oman.
Agricultural Export Subsidies. Chapter Two provides that
the Parties will work together in WTO agriculture negotiations
to eliminate all forms of agricultural export subsidies. The
Chapter further provides that each Party will eliminate export
subsidies on agricultural goods destined for the other country.
According to Article 2.11, neither Party may introduce or
maintain a subsidy on agricultural goods destined for the other
Party unless the exporting Party believes that a third country
is subsidizing its exports to the other Party. In such a case,
the exporting Party may initiate consultations with the
importing Party to develop measures the importing Party may
adopt to counteract such subsidies. If the importing Party
agrees to such measures, the exporting Party must refrain from
applying export subsidies to its exports of the good to the
importing Party.
CHAPTER THREE: TEXTILES AND APPAREL
Chapter Three sets out provisions addressing trade in
textile and apparel goods, including an ``emergency action''
provision, special rules of origin, and customs cooperation
provisions aimed at preventing circumvention.
Emergency Actions. To deal with emergency conditions
resulting from the elimination or reduction of customs duties,
the Agreement includes an ``emergency action'' provision that
permits the importing country temporarily to re-impose normal
trade relations (most-favored-nation) (``NTR (MFN)'') duty
rates on imports of textile or apparel goods that cause or
threaten serious damage to a domestic industry. Emergency
measures may be applied for a maximum aggregate period of three
years, and a Party may not apply an emergency measure on a good
beyond 10 years after the Party must eliminate duties on that
good under the Agreement.
A Party applying an emergency action must provide the other
Party with mutually agreed compensation in the form of trade
concessions that are substantially equivalent to the increased
duties. If the Parties cannot agree on compensation, the
exporting Party may raise duties up to NTR (MFN) levels on any
goods from the importing Party to achieve trade effects
substantially equivalent to the emergency action.
Rules of Origin and Related Matters. Chapter Three includes
special rules for determining whether a textile or apparel good
is an ``originating good,'' including a de minimis exception
for non-originating yarns or fibers, a rule for treatment of
sets, and consultation provisions. The de minimis rule applies
to goods that ordinarily would not be considered originating
goods because certain of their fibers or yarns do not undergo
an applicable change in tariff classification. Under the rule,
the Parties will consider a good to be originating if such
fibers or yarns constitute seven percent or less of the total
weight of the component of the good that determines the tariff
classification. This special rule does not apply to elastomeric
yarns.
Chapter Three also calls for the United States and Oman to
provide tariff preference levels (``TPLs'') for a limited
quantity of specific non-originating apparel goods. TPL goods
will be accorded preferential tariff treatment as if they were
originating goods. For the specified cotton and man-made fiber
apparel goods, TPL status will apply to a maximum of 50 million
square meter equivalents for each of the first 10 years after
the Agreement's entry into force. After 10 years, TPL status
will not be available for such goods.
The Annex to Chapter Three includes specific rules of
origin for textile and apparel goods. A textile or apparel good
will generally qualify as an ``originating good'' only if all
processing after fiber formation (i.e., yarn-spinning, fabric
production, cutting, and assembly) takes place in the territory
of one or both of the Parties, or if there is an applicable
change in tariff classification under Annex 3-A.
Customs Cooperation. Chapter Three also includes a customs
cooperation article that sets out detailed commitments designed
to prevent circumvention of the Agreement's rules governing
textiles and apparel. The Parties will cooperate in enforcing
relevant laws, in ensuring the accuracy of claims of origin,
and in preventing circumvention of relevant international
agreements. A Party may conduct site visits under certain
conditions to verify that circumvention is not occurring, and
the other Party must provide information necessary for the
visits. An importing Party may respond to circumvention and
actions that impede it from detecting circumvention, including
by denying preferential tariff treatment under the Agreement to
imports of specific textile or apparel goods or to all imports
of textile or apparel goods from particular enterprises. Either
Party may convene bilateral consultations to resolve technical
or interpretive issues that arise under the Chapter's customs
cooperation article.
Committee on Textiles and Apparel Trade Matters. In Chapter
Three, the Parties establish a Committee on Textiles and
Apparel Trade Matters that will meet upon the request of either
party or the Joint Committee provided for in Article 19.2, to
consider matters arising under Chapter Three.
CHAPTER FOUR: RULES OF ORIGIN
To benefit from various trade preferences provided under
the Agreement, including reduced duties or duty-free treatment,
a good must qualify as an ``originating good'' under the rules
of origin set out in Chapters Three (Textiles and Apparel) and
Four and Annexes 3-A and 4-A. These rules ensure that the
tariff and other benefits of the Agreement accrue primarily to
firms that produce or manufacture goods in the two Parties'
territories. They are similar in approach to those included in
the United States-Bahrain, United States-Morocco, United
States-Jordan, and United States-Israel free trade agreements.
Key Concepts. Chapter Four provides general criteria under
which a good that has been imported directly from one Party
into the other Party may qualify as an ``originating good'':
When the good is wholly grown, produced, or
manufactured in one or both of the Parties (e.g., crops
grown or minerals extracted in the United States);
When the good: (1) is not covered by the
rules in Annex 3-A or Annex 4-A; (2) is a ``new or
different article of commerce'' that has been grown,
produced, or manufactured in the territory of one or
both of the Parties; and (3) the sum of (a) the value
of materials produced in the territory of one or both
of the Parties and (b) the ``direct costs of processing
operations'' performed in the territory of one or both
of the Parties is at least 35 percent of the appraised
value of the good at the time it is imported into the
territory of a Party; or
When the good is covered by the rules in
Annex 3-A or Annex 4-A and meets the requirements of
the applicable Annex. (Annex 3-A contains specific
rules of origin for certain textile and apparel goods.
Annex 4-A contains specific rules of origin on goods
such as citrus juices; dairy products; sugar; and
sweetened cocoa powder.)
Chapter Four defines ``new or different article of
commerce'' as ``a good that has been substantially transformed
from a good or material that is not wholly the growth, product,
or manufacture of one or both of the Parties and that has a new
name, character, or use distinct from the good or material from
which it was transformed.'' It defines ``direct costs of
processing operations'' as ``those costs either directly
incurred in, or that can be reasonably allocated to, the
growth, production, or manufacture of the good.'' Such costs
typically include labor costs, depreciation on machinery or
equipment, research and development, inspection costs, and
packaging costs, among others. They typically do not include
profit and general business expenses, such as salaries,
insurance, and advertising.
Chapter Four clarifies that a good will not be considered a
``new or different article of commerce'' merely by virtue of
simple combining or packaging operations or mere dilution with
water or another substance that does not change the
characteristics of the good.
Importer Requirements. Under the Chapter, importers who
wish to claim preferential tariff treatment for goods must
submit, on the request of the importing Party's customs
authorities, a ``declaration'' providing all pertinent
information concerning the production of the good. The
Agreement provides that a Party should request a declaration
only when it has reason to question the accuracy of a claim for
preferential tariff treatment or when the Party is conducting a
random verification. A Party may only deny preferential
treatment in writing and must provide legal and factual
findings. The Chapter also includes requirements for a
procedure for filing post-importation claims for preferential
treatment up to one year from importation and for seeking a
refund of any excess duties paid.
Consultations. Chapter Four calls for the Parties to work
together to ensure the effective and uniform application of the
Chapter. The Chapter permits the creation of ad hoc working
groups or a subcommittee of the Joint Committee to discuss
necessary amendments or revisions. In addition, Article 4.13
provides that, within six months of the date of entry into
force of the Agreement, the United States and Oman ``shall
endeavor to develop to the extent practicable . . . a regional
cumulation regime covering the United States and Middle Eastern
countries that have free trade agreements with the United
States.''
CHAPTER FIVE: CUSTOMS ADMINISTRATION
Chapter Five establishes specific commitments intended to
facilitate trade through increased transparency,
predictability, and efficiency in each Party's customs
procedures. It also provides for cooperation between the
Parties on a variety of customs matters.
General Principles. The United States and Oman agree to
implement certain transparency requirements. For example, the
Parties must promptly publish their customs measures, including
on the Internet and, where possible, solicit public comments
before introducing or amending their customs regulations. The
agreement requires the Parties to release goods from customs
promptly and establishes separate, expedited customs procedures
for the clearance of express shipments. Each Party also must
provide written advance rulings, upon request, to its importers
and to exporters of the other Party regarding whether a good
qualifies as an ``originating good'' under the Agreement, as
well as on other customs matters. The Agreement allows Oman up
to two years to comply with the provisions relating to advance
rulings. In addition, each Party must guarantee importers
access to both independent administrative and judicial review
of customs determinations.
Cooperation. Chapter Five also contains provisions designed
to enhance customs cooperation between the Parties. It
encourages the Parties to give each other advance notice of
changes to customs laws and regulations that are likely to
affect the operation of the Agreement. The Chapter calls for
the Parties to cooperate in securing compliance with each
other's customs measures related to the Agreement and to import
and export restrictions. It also includes specific provisions
requiring the Parties to share customs information where a
Party has a reasonable suspicion of unlawful activity in
connection with goods traded between the two countries.
CHAPTER SIX: SANITARY AND PHYTOSANITARY MEASURES
Chapter Six defines the Parties' obligations to one another
regarding sanitary and phytosanitary (``SPS'') measures. SPS
measures are laws or regulations that protect human, animal, or
plant life or health from certain risks, including plant- and
animal-borne pests and diseases, additives, contaminants,
toxins, or disease-causing organisms in food and beverages.
Under Chapter Six, the Parties affirm their rights and
obligations with respect to each other under the WTO Agreement
on the Application of Sanitary and Phytosanitary Measures. They
also affirm their desire to create a forum through the Joint
Committee on SPS matters. However, neither Party may invoke the
FTA's dispute settlement procedures for a matter arising under
the Chapter. Instead, any SPS dispute between the Parties must
be resolved under the applicable WTO agreement(s) and rules.
CHAPTER SEVEN: TECHNICAL BARRIERS TO TRADE
Under Chapter Seven, the Parties will build on WTO rules to
promote transparency, accountability, and cooperation between
the Parties on standards issues.
Key Concepts. The term ``technical barriers to trade''
(``TBT'') refers to barriers that may arise in preparing,
adopting, or applying voluntary product standards, mandatory
product standards (``technical regulations''), and procedures
used to determine whether a particular good meets such
standards (``conformity assessment'' procedures).
International Standards. The principles articulated in the
WTO TBT Committee Decision on Principles for the Development of
International Standards, Guides and Recommendations emphasize
the need for openness and consensus in the development of
international standards. Chapter Seven requires the Parties to
apply these principles.
Cooperation. Chapter Seven sets out multiple means for
cooperation between the Parties to reduce barriers and improve
market access. The Chapter specifies that the Office of the
United States Trade Representative and Oman's Ministry of
Commerce and Industry will serve as TBT Chapter Coordinators
responsible for facilitating this cooperation.
Conformity Assessment. Chapter Seven provides for a
dialogue between the Parties on ways to facilitate the
acceptance of conformity assessment (i.e., testing to determine
whether a product or service meets applicable standards)
results. Chapter Seven further provides that, where a Party
recognizes conformity assessment bodies in its own territory,
it should recognize bodies in the territory of the other Party
on the same terms.
Transparency. Chapter Seven contains various transparency
obligations, including obligations to: (1) permit persons of
the other Party to participate in the development of technical
regulations, standards, and conformity assessment procedures on
a non-discriminatory basis; (2) transmit regulatory proposals
notified under the TBT Agreement directly to the other Party;
(3) describe in writing the objectives of and reasons for
regulatory proposals; and (4) accept and respond in writing to
comments on regulatory proposals. These provisions become
effective no later than five years after the Agreement enters
into force.
CHAPTER EIGHT: SAFEGUARDS
Chapter Eight establishes a bilateral safeguard mechanism
that will be available to aid domestic industries that sustain
or are threatened with serious injury due to increased imports
resulting from tariff reductions or elimination under the
Agreement. The Chapter does not affect either government's
rights or obligations under the WTO's safeguard provisions
(global safeguards) or under other WTO trade remedy rules.
Chapter Eight authorizes each Party to impose temporary
duties on a good imported from the other Party if, as a result
of the reduction or elimination of a duty under the Agreement,
the good is being imported in such increased quantities and
under such conditions as to constitute a substantial cause of
serious injury, or threat of serious injury, to a domestic
industry producing a ``like'' or ``directly competitive'' good.
Absent agreement by the other Party, a Party may only apply
a safeguard measure to a good during the first 10 years that
the FTA is in force. A safeguard measure may take one of two
forms--a temporary increase in duties to NTR (MFN) levels or a
temporary suspension of duty reductions called for under the
Agreement. A safeguard measure may last for a maximum aggregate
period of three years. If a measure lasts more than one year,
the Party must liberalize it at regular intervals. Chapter
Eight incorporates by reference certain procedural and
substantive investigation requirements of the WTO Agreement on
Safeguards.
If a Party imposes a bilateral safeguard measure, Chapter
Eight requires it to provide the other Party offsetting trade
compensation. If the Parties cannot agree on the amount or
nature of the compensation, the Party entitled to compensation
may suspend ``substantially equivalent'' trade concessions that
it has made to the other Party. A Party may not impose a
safeguard measure under Chapter Eight more than once on any
good. Special safeguard provisions are set out for textile and
apparel goods in Chapter Three (Textiles and Apparel).
Global Safeguards. Chapter Eight maintains each Party's
right to take action under Article XIX of GATT 1994 and the WTO
Agreement on Safeguards against imports from all sources.
CHAPTER NINE: GOVERNMENT PROCUREMENT
Chapter Nine provides comprehensive obligations requiring
each Party to apply fair and transparent procurement procedures
and rules and prohibiting each government and its procuring
entities from discriminating in purchasing practices against
goods, services, and suppliers from the other country. The
rules of Chapter Nine are broadly based on WTO procurement
rules. (Oman is not a party to the WTO Agreement on Government
Procurement.)
General Principles. Chapter Nine establishes a basic rule
of ``national treatment,'' meaning that each Party's
procurement rules and the entities applying those rules must
treat goods, services, and suppliers of such goods and services
from the other Party in a manner that is ``no less favorable''
than the treatment their domestic counterparts receive. The
Chapter similarly bars discrimination against locally
established suppliers on the basis of foreign affiliation or
ownership. Chapter Nine also provides rules aimed at ensuring a
fair and transparent procurement process.
Coverage and Thresholds. Chapter Nine applies to purchases
and other means of obtaining goods and services valued above
certain monetary thresholds by those government departments,
agencies, and enterprises listed in each Party's schedule.
Specifically, the Chapter applies to procurements by listed
``central'' (i.e., Omani or U.S. federal) government agencies
of goods and services valued at $193,000 or more and
construction services valued at $8,422,165 or more.\1\ The
equivalent thresholds for purchases by ``other entities'' are
$250,000 for goods and services ($593,000 for the U.S. Rural
Utilities Service) and $10,366,227 for construction services.
All thresholds, except the $250,000 threshold, are subject to
adjustment for inflation.
---------------------------------------------------------------------------
\1\ These thresholds are subject to adjustment every two years
according to a ``Threshold Adjustment Formula'' set out in the Annex to
Chapter Nine. In addition, as stated in that Annex, there are specific
required threshold amounts during the first two years of the
Agreement's effectiveness.
---------------------------------------------------------------------------
Transparency. Chapter Nine establishes rules designed to
ensure transparency in procurement procedures. Each Party must
publish its laws, regulations, and other measures governing
procurement, along with any changes to those measures, and
must, upon request, provide an explanation regarding any such
measure to the other Party. Procuring entities must publish
notices of procurement opportunities in advance. The Chapter
also lists minimum information that such notices must include.
Tendering Rules. Chapter Nine provides rules for setting
deadlines on ``tendering'' (bidding on government contracts).
It requires procuring entities to give suppliers all the
information they need to prepare tenders, including the
criteria that procuring entities will use to evaluate tenders.
Entities must also, where appropriate, base their technical
specifications (i.e., detailed descriptions of the goods or
services to be procured) on performance-oriented criteria and
international standards. Chapter Nine provides that procuring
entities may not write technical specifications to favor a
particular supplier, good, or service. It also sets out rules
that procuring entities must follow when they use limited
tendering, i.e., when they limit the set of suppliers that may
bid on a contract.
Award Rules. Chapter Nine requires all tenders for a
contract must be considered, unless submitted by an otherwise
disqualified supplier. The tender must meet the criteria set
out in the tender documentation, and procuring entities must
base their award of contracts on those criteria. Procuring
entities must publish information on awards, including the name
of the supplier, a description of the goods or services
procured, and the value of the contract. Chapter Nine also
calls for each Party to ensure that suppliers may bring
challenges against procurement decisions before independent
reviewers.
Additional Provisions. Chapter Nine is designed to promote
integrity in each Party's procurement practices, including by
requiring the Parties to adopt and maintain procedures that
disqualify suppliers that a Party has determined to have
engaged in fraudulent or illegal action in relation to
procurement. It establishes procedures under which a Party may
change the extent to which the Chapter applies to its
government entities, such as when a Party privatizes an entity
whose purchases are covered under the Chapter. It also provides
that Parties may adopt or maintain measures necessary to
protect: (1) public morals, order, or safety; (2) human,
animal, or plant life or health; or (3) intellectual property.
Parties may also adopt measures relating to procurement of
goods or services of handicapped persons, philanthropic
institutions, or prison labor.
CHAPTER TEN: INVESTMENT
Chapter Ten includes rules to protect investors from one
Party against discriminatory and certain other restrictive
government actions when they make or attempt to make
investments in the other Party's territory. Its provisions
reflect traditional standards incorporated in earlier U.S.
investment agreements (including those in the North American
Free Trade Agreement (NAFTA) and U.S. bilateral investment
treaties) and in customary international law. It also contains
several innovations that were incorporated in the free trade
agreements the United States has negotiated with the countries
of the Dominican Republic-Central American Free Trade Agreement
(CAFTA-DR), Morocco, Chile, and Singapore.
Key Concepts. Under Chapter Ten, the term ``investment''
covers all forms of investment, including enterprises,
securities, debt, intellectual property rights, concessions,
and contracts. It includes both existing and future
investments. The term ``investor of a Party'' encompasses both
U.S. and Omani nationals as well as firms (including branches)
established in one of the Parties.
General Principles. Chapter Ten provides six basic
protections: (1) non-discriminatory treatment relative to
domestic investors as well as investors of non-Parties
(including where a Party takes measures to deal with armed
conflict or civil strife in its territory); (2) the ``minimum
standard of treatment of aliens'' in conformity with customary
international law; (3) protection from expropriation other than
in conformity with customary international law; (4) free
transfer of funds related to an investment; (5) freedom from
``performance requirements''; and (6) the ability to hire key
managerial personnel without regard to nationality. (As to this
last protection, a Party may require that a majority or less of
the board of directors be of a particular nationality, as long
as this does not prevent the investor from controlling its
investment.)
Sectoral Coverage and Non-Conforming Measures. With the
exception of investments in or by regulated financial
institutions (which are treated in Chapter Twelve), Chapter Ten
generally applies to all sectors, including service sectors.
However, each Party has listed in annexes to the Chapter
particular sectors or measures for which it negotiated an
exemption from the Chapter's rules relating to national
treatment, MFN treatment, performance requirements, or senior
management and boards of directors. All current U.S. state and
local laws and regulations are exempted from these rules. A
Party may liberalize a measure that it has exempted, but it may
not make such measures more restrictive.
Investor-State Disputes. Chapter Ten provides for a
mechanism for an investor of a Party to pursue a claim against
the other Party. The investor may assert that the Party has
breached a substantive obligation under Section A of Chapter
Ten or that the Party has breached an investment agreement
with, or an investment authorization granted to, the investor
or its investment. Innovative provisions afford public access
to information on Chapter Ten investor-State proceedings and
ensure proper application of dispute settlement rules. For
example, Chapter Ten requires the Parties to make public all
documents and hearings, with limited exceptions for business
and other legally confidential information, and authorizes
tribunals to accept amicus submissions from the public. The
Chapter also includes provisions based on those used in U.S.
courts to quickly dispose of frivolous claims.
CHAPTER ELEVEN: CROSS-BORDER TRADE IN SERVICES
Chapter Eleven governs measures affecting cross-border
trade in services between the United States and Oman. Chapter
provisions are drawn in part from the services provisions of
the NAFTA and the WTO General Agreement on Trade in Services
(``GATS''), as well as priorities that have emerged since those
agreements.
Key Concepts. Under the Agreement, cross-border trade in
services covers the supply of a service:
from the territory of one Party into the
territory of the other (e.g., electronic delivery of
services from the United States to Oman);
in the territory of a Party by a person of
that Party to a person of the other Party (e.g., an
Omani company provides services to U.S. visitors in
Oman); and
by a national of a Party in the territory of
the other Party (e.g., a U.S. lawyer provides legal
services in Oman).
General Principles. Among Chapter Eleven's core obligations
are requirements to provide national treatment and MFN
treatment to service suppliers of the other Party. Thus, each
Party must treat service suppliers of the other Party no less
favorably than its own suppliers or those of any other country.
This commitment applies to state and local governments as well
as the federal government. The Chapter's provisions relate to
the rights of existing service suppliers as well as those who
seek to supply services, subject to any reservations by either
Party. The Chapter also includes a provision prohibiting the
Parties from requiring firms to establish a local presence as a
condition for supplying a service on a cross-border basis. In
addition, certain types of market access restrictions to the
supply of services (e.g., rules that limit the number of firms
that may offer a particular service or that restrict or require
specific types of legal structures or joint ventures with local
companies in order to supply a service) are also barred. The
Chapter's market access rules apply both to services supplied
on a cross-border basis and through local investments.
Sectoral Coverage and Non-Conforming Measures. Chapter
Eleven applies across virtually all services sectors. The
Chapter excludes most financial services and air
transportation, although it does apply to specialty air
services and aircraft repair and maintenance. Each Party has
listed in Annexes those measures in particular sectors for
which it negotiated particular exemptions from the Chapter's
core obligations. Any non-conforming aspects of all current
U.S. state and local laws and regulations are exempted from
these core obligations. A Party may liberalize a measure that
it has exempted, but in most cases it may not make such
measures more restrictive (though certain market access
commitments are exempted from this obligation).
Transparency and Domestic Regulation. Provisions on
transparency and domestic regulation complement the core rules
of Chapter Eleven. The transparency rules apply to the
development and application of regulations governing services.
The Chapter's rules on domestic regulation govern the operation
of approval and licensing systems for service suppliers. Like
the Chapter's market access rules, its provisions on
transparency and domestic regulation cover services supplied
both on a cross-border basis and through a local investment.
Exclusions. Chapter Eleven excludes any service supplied
``in the exercise of governmental authority,'' that is, a
service that is provided on a non-commercial and non-
competitive basis. Chapter Eleven also does not generally apply
to government subsidies, although the Parties have undertaken a
commitment relating to cross-subsidization of express delivery
services. The Parties have also negotiated an Annex regarding
the regulation of professional services. Under Annex 11.9, the
Parties will endeavor to develop mutually acceptable standards
and criteria for licensing and certification of professional
service suppliers. Such standards and criteria may be developed
with regard, among other things, to: (1) accreditation of
schools or academic programs; (2) qualifying examinations for
licensing; (3) standards of professional conduct and the nature
of disciplinary action for non-conformity with those standards;
(4) requirements for knowledge of such matters as local laws,
regulations, language, geography, or climate; and (5) consumer
protection. Under Annex 11.12, Oman will permit U.S. companies
established in Oman to employ U.S. professionals and specialty
personnel, and to hire personnel of any nationality for any
position for which no Omani national is qualified.
Side Letter. Finally in a side letter, the Parties agree
that no provision of the Agreement imposes obligations on the
Parties with respect to immigration.
CHAPTER TWELVE: FINANCIAL SERVICES
Chapter Twelve provides rules governing each Party's
treatment of financial institutions of the other Party and
cross-border trade in financial services.
Key Concepts. The Chapter defines a ``financial
institution'' as any financial intermediary or other enterprise
authorized to do business and regulated or supervised as a
financial institution under the law of the Party where it is
located. A ``financial service'' is any service of a financial
nature, including, for example, insurance, banking, securities,
asset management, financial information and data processing
services, and financial advisory services.
General Principles. Chapter Twelve's core obligations are
similar to those in Chapter Ten (Investment) and Chapter Eleven
(Cross-Border Trade in Services). Specifically, Chapter Twelve
imposes rules requiring national treatment and MFN treatment,
prohibits certain quantitative restrictions on market access,
and bars restrictions on the nationality of senior management.
These rules apply to measures affecting financial institutions,
including preestablishment, and to financial service suppliers
that are currently supplying or seek to supply financial
services on a cross-border basis.
Non-Conforming Measures. Similar to Chapters Ten and
Eleven, each Party has listed in an Annex to Chapter Twelve
particular financial services measures for which it has
negotiated exemptions from the Chapter's core obligations. Any
non-conforming aspects of all current U.S. state and local laws
and regulations are exempted from these obligations. A Party
may liberalize a measure that it has exempted, but it may not
make such measures more restrictive (though certain market
access commitments are exempted from this obligation).
Other Provisions. Chapter Twelve includes provisions on
transparency, as well as rules regarding ``new'' financial
services, self-regulatory organizations, payment and clearing
systems and the expedited availability of insurance products.
The Agreement allows Oman up to three years to comply with
certain provisions on transparency in this Chapter.
Relationship to Other Chapters. Measures that a Party
applies to financial services suppliers of another Party, other
than regulated financial institutions, that make or operate
investments in the Party's territory are covered principally by
Chapter Ten (Investment) and certain provisions of Chapter
Eleven (Cross-Border Trade in Services). In particular, certain
obligations of Chapter Ten, including the expropriation and
transfers articles, apply to such measures, as do the market
access, transparency, and domestic regulation provisions of
Chapter Eleven.
CHAPTER THIRTEEN: TELECOMMUNICATIONS
Chapter Thirteen includes disciplines beyond those imposed
under Chapters Ten (Investment) and Eleven (Cross-Border Trade
in Services) on regulatory measures affecting
telecommunications trade and investment. Chapter Thirteen is
designed to ensure that service suppliers of each Party have
non-discriminatory access to public telecommunications services
in the other country. In addition, the Chapter requires each
Party to regulate its dominant telecommunications suppliers in
ways that will ensure a level playing field for new entrants
from the other Party. Chapter Thirteen also seeks to ensure
that telecommunications regulations are set by independent
regulators applying transparent procedures and is designed to
encourage adherence to principles of deregulation and
technological neutrality.
Key Concepts. Under Chapter Thirteen, a ``public
telecommunications service'' is any telecommunications service
that a Party requires to be offered to the public generally.
The term includes voice and data transmission services. It does
not include the offering of ``value-added services'' (e.g.,
services that enable users to create, store, or process
information over a network).
Competition. Chapter Thirteen establishes rules that
reflect the common elements of the Parties' laws promoting
competition in telecommunications services. It also provides
flexibility to account for changes that may occur through new
legislation or regulatory decisions. The Chapter includes
commitments by each Party to:
ensure that all service suppliers of the
other Party that seek to access or use a public
telecommunications service in the Party's territory can
do so on reasonable and non-discriminatory terms (e.g.,
Oman must ensure that its public phone companies do not
provide preferential access to Omani banks or Internet
service providers, to the detriment of U.S.
competitors);
give the other Party's telecommunications
suppliers, in particular, the right to interconnect
their networks with public networks in its territory at
reasonable rates;
ensure that telecommunications suppliers of
the other Party that seek to build physical networks in
the Party's territory have access to key physical
facilities of dominant carriers, such as buildings,
where they can install equipment, thus facilitating
cost-effective investment;
ensure that telecommunications suppliers of
the other Party enjoy the right to lease lines to
supplement their own networks or, alternatively,
purchase telecommunications services from dominant
domestic suppliers and resell them in order to build a
customer base; and
Regulation. The Chapter also addresses key regulatory
concerns that may create barriers to trade and investment in
telecommunications services. In particular, the Parties:
ensure that they will maintain open and
transparent telecommunications regulatory regimes,
including requirements to publish licensing
requirements and criteria and other government measures
relating to public telecommunications services;
will require their telecommunications
regulators to explain their rule-making decisions and
provide foreign suppliers the right to challenge those
decisions;
may elect to deregulate telecommunications
services when competition exists and certain standards
are met; and
may not prevent telecommunications service
suppliers from choosing the technologies they consider
appropriate for supplying their services, subject to
legitimate public policy requirements.
CHAPTER FOURTEEN: ELECTRONIC COMMERCE
Chapter Fourteen establishes rules designed to prohibit
discriminatory regulation of electronic trade in digitally
encoded products, such as computer programs, video, images, and
sound recordings. The Chapter contains state-of-the-art
provisions on electronic commerce, similar to those in recent
U.S. free trade agreements with Chile, Singapore, Australia,
Morocco, and Bahrain.
Customs Duties. Chapter Fourteen provides that a Party may
not impose customs duties on digital products of the other
Party that are transmitted electronically. The Chapter does not
preclude a Party from imposing duties on digital products of
the other Party that are fixed on a carrier medium, provided
that the duty is based on the cost or value of that medium
alone, rather than the cost or value of the digital content
stored on that medium.
Non-Discrimination. Chapter Fourteen requires the Parties
to apply the principles of national treatment and MFN treatment
to trade in electronically transmitted digital products. In
particular, a Party may not treat digital products less
favorably because such digital products: (1) have undergone
certain specific activities (e.g., creation, production, first
sale) in the territory of the other Party; or (2) are
associated with certain categories of persons of the other
Party (e.g., authors, performers, producers). Nor may a Party
treat digital products that have such a nexus to the other
Party less favorably than it treats like digital products with
such a nexus to a non-Party. These non-discrimination rules do
not apply to actions taken in accordance with the non-
conforming measures specifically exempted from the rules set
out in Chapter Eleven (Cross-Border Trade in Services) or
Chapter Twelve (Financial Services).
CHAPTER FIFTEEN: INTELLECTUAL PROPERTY RIGHTS
Chapter Fifteen complements and enhances existing
international standards for the protection of intellectual
property and the enforcement of intellectual property rights,
consistent with U.S. law.
General Provisions. Chapter Fifteen calls for the Parties
to ratify or accede to certain agreements on intellectual
property rights, including the International Convention for the
Protection of New Varieties of Plants, the Trademark Law
Treaty, the Convention Relating to the Distribution of
Programme-Carrying Signals Transmitted by Satellite (the
``Brussels Convention''), the Protocol Relating to the Madrid
Agreement Concerning the International Registration of Marks,
the Budapest Treaty on the International Recognition of the
Deposit of Microorganisms (the ``Budapest Treaty''), the Patent
Cooperation Treaty, the WIPO Copyright Treaty, and the WIPO
Performances and Phonograms Treaty. The United States is
already a party to these agreements.
Chapter Fifteen also requires broad application of the
principle of national treatment, with only limited exceptions.
The general provisions further clarify the coverage of existing
subject matter and requirements for publication of all laws,
regulations, and procedures relating to the protection and
enforcement of intellectual property rights.
Trademarks and Geographical Indications. Chapter Fifteen
establishes rules concerning the protection of trademarks and
geographical indications. For example, Parties must provide the
owner of a registered trademark the exclusive right to prevent
its use in the course of trade for related goods and services
by any Party not having the owner's consent. The Chapter also
sets out rules with respect to the registration of trademarks.
Each Party must provide protection for trademarks, including
protecting preexisting trademarks against infringement by later
geographical indications. Furthermore, the Chapter requires
that the Parties provide efficient and transparent procedures
governing the application for protection of trademarks and
geographical indications. The Chapter also provides for rules
on domain name management that require a dispute resolution
procedure to prevent trademark cyber-piracy.
Copyright and Related Rights. Chapter Fifteen provides for
broad protection of copyright and related rights, affirming and
building on rights set out in several international agreements.
For instance, each Party must provide copyright protection for
the life of the author plus 70 years (for works measured by a
person's life), or 95 to 120 years (for corporate works,
depending on whether they were published within 25 years of
their creation). The Chapter clarifies that the right to
reproduce literary and artistic works, recordings, and
performances encompasses temporary copies, an important
principle in the digital realm. It also calls for each Party to
provide a right of communication to the public, which will
further ensure that right holders have the exclusive right to
make their works available online. The Chapter specifically
requires protection for the rights of performers and producers
of phonograms.
To curb copyright piracy, Chapter Fifteen the Parties agree
to use only legitimate computer software, setting an example
for the private sector. The Chapter also includes provisions on
anti-circumvention, under which the Parties commit to prohibit
tampering with technology used to protect copyrighted works. In
addition, Chapter Fifteen sets out obligations with respect to
the liability of Internet service providers in connection with
copyright infringements that take place over their networks.
Finally, recognizing the importance of satellite broadcasts,
Chapter Fifteen ensures that each Party will protect encrypted
program-carrying satellite signals. It obligates the Parties to
extend protection to the signals themselves, as well as to the
content contained in the signals.
Patents. Chapter Fifteen also includes a variety of
provisions for the protection of patents. The Parties may only
exclude inventions from patentability to protect ordre public
or morality, including to protect human, animal, or plant life
or health or to avoid serious prejudice to the environment. The
Parties also may exclude from patentability animals and
diagnostic, therapeutic, and surgical procedures for the
treatment of humans or animals. The Parties also confirm the
availability of patents for new uses or methods of using a
known product. To guard against arbitrary revocation of
patents, each Party must limit the grounds for revoking a
patent to the grounds that would have justified a refusal to
grant the patent. The Chapter requires the Parties to provide
for patent term adjustments to compensate for unreasonable
delays that occur while granting the patent, as well as for
unreasonable curtailment of the effective patent term as a
result of the marketing approval process for pharmaceutical
products.
Certain Regulated Products. Chapter Fifteen includes
specific measures relating to certain regulated products,
specifically pharmaceuticals and agricultural chemicals. Among
other things, the Parties must protect test information
regarding safety and efficacy submitted in seeking marketing
approval for such products by precluding other firms from
relying on the information. It provides specific periods for
such protection--for example, five years for new
pharmaceuticals and 10 years for new agricultural chemicals. It
also requires the Parties to adopt measures to prevent the
marketing of a pharmaceutical product during the term of a
patent covering that product.
Enforcement Provisions. Chapter Fifteen also creates
obligations with respect to the enforcement of intellectual
property rights. Among these, it requires the Parties, in
determining damages, to take into account the value of the
legitimate goods as well as the infringer's profits.
The Chapter also provides for award of damages based on a
fixed range (i.e., ``statutory damages''), on the election of
the right holder in cases involving infringement of copyright
and related rights and trademark counterfeiting.
Chapter Fifteen provides that the Parties' law enforcement
agencies must have authority to seize suspected pirated and
counterfeit goods, the equipment used to make or transmit them,
and documentary evidence. Each Party must give its courts
authority to order the forfeiture and/or destruction of such
items. Chapter Fifteen also requires each Party to empower its
law enforcement agencies to take enforcement action at the
border against pirated or counterfeit goods without waiting for
a formal complaint. Chapter Fifteen provides that each Party
must apply criminal penalties against counterfeiting and
piracy, including end-user piracy.
Side Letters. Finally, two side letters to Chapter Fifteen
that are part of the Agreement contain additional obligations
on the part of Oman with respect to intellectual property
rights. In particular, Oman will adopt further measures: (1)
requiring effective written notice to Internet service
providers with respect to materials that are claimed to be
infringing a copyright; and (2) regarding the manufacture of
optical discs, including provisions concerning licensure,
registration, record keeping, and inspections, among others.
CHAPTER SIXTEEN: LABOR
Chapter Sixteen sets out the Parties' commitments regarding
core labor rights. As with other recent free trade agreements,
this Chapter draws on, but does not replicate, the North
American Agreement on Labor Cooperation (the supplemental NAFTA
labor agreement) and the labor provisions of the U.S. free
trade agreements in force with, for example, Australia, Chile,
Singapore, and Jordan.
General Principles. Under Chapter Sixteen, the Parties
reaffirm their obligations as members of the International
Labor Organization (``ILO'') and their commitments under the
1998 ILO.
Declaration on Fundamental Principles and Rights at Work
and its Follow-Up. Each Party must strive to ensure that its
law recognizes and protects such labor principles and the
internationally recognized labor rights listed in the Chapter.
Each Party also must strive to ensure it does not waive or
otherwise derogate from its labor laws to encourage bilateral
trade or investment. The Parties also commit to afford
procedural guarantees that ensure workers and employers have
access to fair, equitable, and transparent procedures for the
enforcement of labor laws.
Effective Enforcement. Each Party commits not to fail to
effectively enforce its labor laws on a sustained or recurring
basis in a manner affecting bilateral trade. While committing
each Party to effective labor law enforcement, the Chapter also
recognizes each Party's right to establish its own labor laws,
exercise discretion in investigatory, regulatory,
prosecutorial, and compliance matters, and allocate enforcement
resources. The Chapter defines labor laws to mean those
directly related to: (1) the right of association; (2) the
right to organize and bargain collectively; (3) a prohibition
on the use of any form of forced or compulsory labor; (4) labor
protections for children and young people, including a minimum
age for the employment of children and elimination of the worst
forms of child labor; and (5) acceptable conditions of work
with respect to minimum wages, hours, and occupational safety
and health and, for the United States, that are enforceable by
actions of the federal government. The U.S. commitment includes
federal statutes and regulations addressing these areas, but it
does not cover state or local labor laws.
Institutional Arrangements. Each Party may convene a
national labor advisory committee, made up of members of its
public, including representatives of labor and business
organizations, to advise it on the implementation of the
Chapter. Each Party also will designate a contact point for
communications with the other Party and the public regarding
operation of the Chapter. In addition, the Joint Committee (see
Article 19.2) may establish a Subcommittee on Labor Affairs
comprising officials from each Party's labor ministry and other
appropriate agencies to discuss the operation of Chapter
Sixteen. Meetings of the Subcommittee will, unless the Parties
otherwise agree, include a public session.
Cooperation. The Parties will establish a Labor Cooperation
Mechanism to address labor matters of common interest, such as:
(1) fundamental rights and their effective application; (2)
improving working conditions; (3) labor statistics; and (4)
human resources development and lifelong learning.
Consultations and Dispute Settlement. If a Party considers
that the other Party is not complying with its obligations,
Chapter Sixteen provides for consultations regarding any matter
arising under the Chapter, including the opportunity to refer a
matter to the Subcommittee on Labor Affairs. If the matter
concerns a Party's compliance with the Chapter's effective
enforcement obligation, the complaining Party may choose to
pursue consultations under Chapter Sixteen or Chapter Twenty
(Dispute Settlement). If a Party chooses to request
consultations under Chapter Twenty, consultations under Chapter
Sixteen on the same matter cease. In addition, after 60 days of
consultations under Chapter Sixteen, the Parties may agree to
refer the matter concerning compliance with the effective
enforcement obligation directly to the Joint Committee for
resolution under Chapter Twenty.
CHAPTER SEVENTEEN: ENVIRONMENT
Chapter Seventeen sets out the Parties' commitments
regarding environmental protection.
Chapter Seventeen draws on, but does not replicate, the
North American Agreement on Environmental Cooperation (the
supplemental NAFTA environmental agreement) and the
environmental provisions included in U.S. free trade agreements
in force with, for example,
Australia, Chile, Singapore, and Jordan.
General Principles. Each Party commits not to fail to
effectively enforce its environmental laws on a sustained or
recurring basis in a manner affecting bilateral trade. The
Parties must ensure that their laws provide for high levels of
environmental protection. Each Party also must strive not to
weaken or reduce its environmental laws to encourage bilateral
trade or an investment in its territory. The Chapter also
includes commitments to ensure fair, equitable, and transparent
proceedings for the administration and enforcement of
environmental laws. In addition, the Chapter calls on the
Parties to encourage the development of voluntary measures and
market-based mechanisms for achieving and maintaining high
levels of environmental protection. The Parties also must
ensure that opportunities exist for the public to provide input
concerning the implementation of the Chapter.
Cooperation. Chapter Seventeen includes commitments to
enhance bilateral cooperation in environmental matters. In
particular, the Parties agree to undertake activities pursuant
to a United States-Oman Memorandum of Understanding on
Environmental Cooperation. The Parties also commit to continue
to seek means to enhance the mutual supportiveness of the
multilateral environmental agreements to which they are both
party and the international trade agreements to which they are
both party.
Institutional Arrangements. At the request of either Party,
a Subcommittee on Environmental Affairs (``Subcommittee'') will
be established to discuss the operation of Chapter Seventeen.
The Subcommittee will include government officials from each
Party. Unless the Parties otherwise agree, Subcommittee
meetings will include an open session, and Subcommittee
decisions will be made public. In addition, the Subcommittee
may prepare reports concerning implementation of Chapter
Seventeen and such reports will be made public. Each Party may
convene a national environment advisory committee, made up of
members of its public to advise it on the implementation of the
Chapter.
Effective Enforcement. The U.S. commitment on enforcement
of environmental laws applies to federal environmental statutes
and regulations enforceable by action of the federal
government, but it does not cover state or local environmental
laws. The Chapter also recognizes the right of each Party to:
(1) establish its own environmental laws; (2) exercise
discretion in regulatory, prosecutorial, and compliance
matters; and (3) allocate enforcement resources.
Consultations and Dispute Settlement. If a Party considers
that the other Party is not complying with its obligations
under the Chapter, it may convene bilateral consultations and
then may refer the matter to the Subcommittee on Environmental
Affairs. If the matter concerns a Party's compliance with the
Chapter's effective enforcement obligation, the complaining
Party may choose to pursue consultations under Chapter
Seventeen or Chapter Twenty (Dispute Settlement). If a Party
chooses to request consultations under Chapter Twenty,
consultations under Chapter Seventeen on the same matter cease.
In addition, after 60 days of consultations under Chapter
Seventeen, the Parties may agree to refer the matter concerning
compliance with the effective enforcement obligation directly
to the Joint Committee for resolution under Chapter Twenty.
CHAPTER EIGHTEEN: TRANSPARENCY
Chapter Eighteen sets out requirements designed to foster
openness, transparency, and fairness in the adoption and
application of administrative measures covered by the
Agreement. For example, it requires that, to the extent
possible, each Party must promptly publish all measures
concerning subjects covered by the Agreement and give
interested persons a reasonable opportunity to comment.
Wherever possible, each Party must provide reasonable notice to
the other Party's nationals and enterprises that are directly
affected by an administrative proceeding applying measures to
particular persons, goods, or services. A Party is to afford
such persons a reasonable opportunity to present facts and
arguments prior to any final administrative action when time,
the nature of the process, and the public interest permit.
Chapter Eighteen also provides for independent review and
appeal of final administrative actions. Appeal rights must
include a reasonable opportunity to present arguments and to
obtain a decision based on evidence in the administrative
record.
In addition, Chapter Eighteen contains innovative
provisions on combating bribery and corruption. Each Party must
adopt or maintain prohibitions on bribery in matters affecting
international trade and investment, including bribery of
foreign officials, and establish criminal penalties for such
offenses. In addition, both governments will adopt or maintain
appropriate measures to protect those who, in good faith,
report acts of bribery and will work jointly to encourage and
support appropriate regional and multilateral initiatives.
CHAPTER NINETEEN: ADMINISTRATION OF THE AGREEMENT
Chapter Nineteen requires that each Party designate a
contact point to facilitate communication between the Parties
on any matter relating to the Agreement. The Chapter also
creates a Joint Committee to supervise the implementation and
operation of the Agreement and to review the trade relationship
between the Parties. Among others, its tasks will be to: (1)
facilitate the prevention and settlement of disputes arising
under the Agreement; (2) consider and adopt any amendment or
other modification to the Agreement; and (3) consider ways to
further enhance trade relations between the Parties. The Joint
Committee will convene at least once a year.
CHAPTER TWENTY: DISPUTE SETTLEMENT
Chapter Twenty sets out detailed procedures for the
resolution of disputes between the Parties over compliance with
the Agreement. Those procedures emphasize amicable settlements,
relying wherever possible on bilateral cooperation and
consultations. When disputes arise under provisions common to
the Agreement and other agreements (e.g., the WTO Agreement),
the complaining Party may choose the forum for resolving the
matter. The selected forum is the exclusive venue for resolving
that dispute.
Consultations. Either Party may request consultations on
any matter that it believes might affect the operation of the
Agreement. After requesting or receiving a request for
consultations, each Party must solicit the views of the public
on the matter. If the Parties cannot resolve the matter through
consultations within 60 days, a Party may refer the matter to
the Joint Committee, which will attempt to resolve the dispute.
Panel Procedures. If the Joint Committee cannot resolve the
dispute within 60 days after delivery of the request, the
complaining Party may refer the matter to a panel comprising
independent experts that the Parties select. In disputes
related to a Party's enforcement of its labor or environmental
laws, panelists must have expertise or experience relevant to
the subject matter that is under dispute. The Parties will set
rules to protect confidential information, provide for open
hearings and public release of submissions, and allow an
opportunity for the panel to accept submissions from non-
governmental entities in the Parties' territories.
Unless the Parties agree otherwise, a panel is to present
its initial report within 180 days after the chair is selected.
Once the panel presents its initial report containing findings
of fact and a determination on whether a Party has met its
obligations, the Parties will have the opportunity to provide
written comments to the panel. When the panel receives these
comments, it may reconsider its report and make any further
examination that it considers appropriate. Within 45 days after
it presents its initial report, the panel will submit its final
report. The Parties will then seek to agree on how to resolve
the dispute, normally in a way that conforms to the panel's
determinations and recommendations. Subject to protection of
confidential information, the panel's final report will be made
available to the public 15 days after the Parties receive it.
Suspension of Benefits. In disputes involving the
Agreement's ``commercial'' obligations (i.e., obligations other
than enforcement of labor and environmental laws), if the
Parties cannot resolve the dispute after they receive the
panel's final report, the Parties will seek to agree on
acceptable trade compensation. If they cannot agree on
compensation, or if the complaining Party believes the
defending Party has failed to implement an agreed resolution,
the complaining Party may provide notice that it intends to
suspend trade benefits of equivalent effect.
If the defending Party considers that the proposed level of
benefits to be suspended is ``manifestly excessive,'' or
believes that it has modified the disputed measure to make it
conform to the Agreement, it may request the panel to reconvene
and decide the matter. The panel must issue its determination
no later than 90 days after the request is made (or 120 days if
the panel is reviewing both the level of the proposed
suspension and a modification of the measure).
The complaining Party may suspend trade benefits up to the
level that the panel sets or, if the panel has not been asked
to determine the level, up to the amount that the complaining
Party has proposed. The complaining Party cannot suspend
benefits, however, if the defending Party provides notice that
it will pay an annual monetary assessment to the other Party.
The amount of the assessment will be established by agreement
of the Parties or, failing that, will be set at 50 percent of
the level of trade concessions the complaining Party was
authorized to suspend.
Labor and Environment Disputes. Equivalent compliance
procedures apply to disputes over a Party's conformity with the
labor and environmental law enforcement provisions of the
Agreement. If a panel determines that a Party has not met its
enforcement obligations and the Parties cannot agree on how to
resolve the dispute, or if the complaining Party believes that
the defending Party has failed to implement an agreed
resolution, the complaining Party may ask the panel to
determine the amount of an annual monetary assessment to be
imposed on the defending Party. The Panel will establish the
amount of the assessment, subject to a $15 million annual cap,
taking into account relevant trade- and non-trade-related
factors. The assessment will be paid into a fund established by
the Joint Committee for appropriate labor or environmental
initiatives. If the defending Party fails to pay an assessment,
the complaining Party may take other appropriate steps, which
may include suspending tariff benefits, as necessary to collect
the assessment, while bearing in mind the Agreement's objective
of eliminating barriers to bilateral trade and while seeking to
avoid unduly affecting parties or interests not party to the
dispute.
Compliance Review Mechanism. If, at any time, the defending
Party believes it has made changes in its laws or regulations
sufficient to comply with its obligations under the Agreement,
it may refer the matter to the panel. If the panel agrees, the
dispute ends and the complaining Party must withdraw any
offsetting measures it has put in place, and the defending
Party will be relieved of any obligation to pay a monetary
assessment.
The Parties will review the operation of the compliance
procedures for both commercial and labor and environment
disputes either five years after the entry into force of the
Agreement or within six months after benefits have been
suspended or assessments paid in five proceedings initiated
under this Agreement, whichever occurs first.
CHAPTER TWENTY-ONE: EXCEPTIONS
Chapter Twenty-One sets out exceptions that apply to the
entire Agreement. Article XX of GATT 1994 and its interpretive
notes are incorporated into and made part of the Agreement and
apply to those Chapters related to treatment of goods.
Likewise, for the purposes of Chapters Eleven (Cross Border
Trade in Services), Thirteen (Telecommunications), and Fourteen
(Electronic Commerce), GATS Article XIV (including its
footnotes) is incorporated into and made part of the Agreement.
For both goods and services, the Parties understand that these
exceptions include certain environmental measures.
Essential Security. Chapter Twenty-One allows each Party to
take actions it considers necessary to protect its essential
security interests.
Taxation. An exception for taxation limits the field of tax
measures subject to the Agreement. For example, the exception
generally provides that the Agreement does not affect either
Party's rights or obligations under any tax convention. The
exception sets out certain circumstances under which tax
measures are subject to the Agreement's (1) national treatment
obligation for goods; (2) national treatment and MFN
obligations for services and investment; (3) prohibition on
performance requirements; and (4) expropriation rules.
Disclosure of Information. The Chapter also provides that a
Party may withhold confidential information from the other
Party where such disclosure would impede domestic law
enforcement or otherwise be contrary to the public interest, or
would prejudice legitimate commercial interests.
CHAPTER TWENTY-TWO: FINAL PROVISIONS
Chapter Twenty-Two provides that the Parties may amend the
Agreement subject to applicable domestic procedures. It also
provides for consultations if any provision of the WTO
Agreement that the Parties have incorporated into the Agreement
is amended.
Chapter Twenty-Two establishes that any other country or
group of countries may become a party to the Agreement on terms
and conditions that are agreed upon between the country or
countries and the Parties and that are approved according to
each country's domestic procedures. The Chapter also permits
non-application of the agreement between a Party and a newly
acceding country or group of countries. It also provides for
the entry into force of the Agreement and for its termination
180 days after a Party provides written notice that it intends
to withdraw.
E. General Description of the Bill to Implement The United States-Oman
Free Trade Agreement
Sec. 1. Short title; table of contents
This section provides that the short title of the act
implementing the United States-Oman Free Trade Agreement (the
Agreement) is the ``United States-Oman Free Trade Agreement
Implementation Act'' (Implementation Act). Section 1 also
provides the table of contents for the Implementation Act.
Sec. 2. Purposes
This section provides that the purposes of the
Implementation Act are to approve and implement the Agreement,
to strengthen and develop economic relations between the United
States and Oman, to establish free trade between the United
States and Oman through the reduction and elimination of
barriers to trade in goods and services and to investment, and
to lay the foundation for further cooperation to expand and
enhance the benefits of the Agreement.
Sec. 3. Definitions
This section defines the terms ``Agreement,'' ``HTS,'' and
``Textile or apparel good,'' for purposes of the Implementation
Act.
TITLE I--APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE AGREEMENT
Sec. 101. Approval and entry into force of the agreement
This section provides congressional approval for the
Agreement and its accompanying Statement of Administration
Action. Section 101 also provides that, if the President
determines that Oman has taken measures necessary to come into
compliance with obligations that take effect at the time the
Agreement enters into force, the President is authorized to
exchange notes with Oman to provide for the entry into force of
the Agreement with respect to the United States on or after
January 1, 2007.
Sec. 102. Relationship of the agreement to United States and state law
This section establishes the relationship between the
Agreement and U.S. law. Section 102 clearly states that no
provision of the Agreement will be given effect under U.S. law
if it is inconsistent with any federal law.
Section 102 provides that only the United States may bring
an action in court if there is an unresolved conflict between a
state law and the Agreement. This section also precludes any
private right of action against the federal government, state
or local governments, or against a private party, based on the
provisions of the Agreement.
Sec. 103. Implementing actions in anticipation of entry into force and
initial regulations
This section provides that, following the enactment of the
Implementation Act, the President may proclaim such actions,
and other appropriate officers of the federal government may
issue such regulations, as may be necessary to ensure that
provisions of the legislation that take effect on the date the
Agreement enters into force are appropriately implemented on
such date. Section 103 provides that, with respect to any
action proclaimed by the President that is not subject to the
consultation and layover provisions contained in section 104,
such action may not take effect before the 15th day after the
date on which the text of the proclamation is published in the
Federal Register. The 15-day restriction is waived, however, to
the extent that it would prevent an action from taking effect
on the date the Agreement enters into force. Section 103 also
provides that, to the maximum extent feasible, initial
regulations necessary or appropriate to carry out the actions
required by the Implementation Act or proposed in the Statement
of Administrative Action shall be issued within 1 year of the
date on which the Agreement enters into force. In accordance
with the accompanying Statement of Administrative Action, any
agency unable to issue a regulation within one year must report
to the Committee, at least 30 days prior to the end of the 1-
year period, the reasons for the delay and the expected date
for issuance of the regulation.
Sec. 104. Consultation and layover provisions for, and effective date
of, proclaimed actions
This section sets forth consultation and layover steps that
must precede the President's implementation of any action by
proclamation that is subject to the requirements of this
section. Under the consultation and layover provisions, the
President is required to obtain advice regarding a proposed
action from the appropriate advisory committees established
under section 135 of the Trade Act of 1974 (19 U.S.C.
Sec. 2155) and the U.S. International Trade Commission.
The President must also submit to the Senate Committee on
Finance and the House Committee on Ways and Means a report
setting forth the action proposed, the reasons for the proposed
action, and the advice of the appropriate advisory committees
and the U.S. International Trade Commission. Section 104 sets
aside a 60-day period following the date of transmittal of the
report for the President to consult with the Senate Committee
on Finance and the House Committee on Ways and Means on the
proposed action.
Sec. 105. Administration of dispute settlement proceedings
This section authorizes the President to establish or
designate within the Department of Commerce an office
responsible for providing administrative assistance to dispute
settlement panels established under Chapter 20 of the
Agreement. Section 105 also authorizes the appropriation of
funds to support this office.
Sec. 106. Arbitration of claims
This section authorizes the United States to resolve
certain claims pursuant to the Investor-State Dispute
Settlement procedures set forth in section B of chapter 10 of
the Agreement.
Sec. 107. Effective dates; effect of termination
This section provides that the provisions of the
Implementation Act and the amendments made by it take effect on
the date on which the Agreement enters into force, except for
sections 1 through 3 and Title I, which take effect on the date
of enactment of the Implementation Act. Under section 107, the
provisions of the Implementation Act and the amendments to
other statutes made by it will cease to have effect on the date
on which the Agreement terminates.
TITLE II--CUSTOMS PROVISIONS
Sec. 201. Tariff modifications
Section 201(a) authorizes the President to implement by
proclamation the modification of any duty, continuation of any
duty, or imposition of additional duties, or the continuation
of duty-free or excise treatment, as the President determines
to be necessary or appropriate to carry out or apply articles
2.3, 2.5, 2.6, 3.2.8, and 3.2.9, and Annex 2-B of the
Agreement. In addition, section 201(a) requires the President
to terminate the designation of Oman as a beneficiary
developing country for purposes of the U.S. Generalized System
of Preferences on the date on which the Agreement enters into
force.
Section 201(b) authorizes the President, subject to the
consultation and layover provisions of section 104, to proclaim
the modification of any duty or modification to the staging of
any duty elimination, the continuation of any duty, the
imposition of additional duties, or the continuation of duty-
free or excise treatment, as the President determines to be
necessary or appropriate to maintain the general level of
reciprocal and mutually advantageous concessions with respect
to Oman provided for by the Agreement.
Section 201(c) authorizes the President, with respect to
any good for which the base rate of duty in the Tariff Schedule
of the United States to Annex 2-B of the Agreement is a
specific or compound rate of duty, to substitute for the base
rate an ad valorem rate that the President determines to be
equivalent to the base rate.
Sec. 202. Rules of origin
Section 202 implements the general rules of origin set
forth in Chapter 4 of the Agreement. These rules define the
circumstances under which a good imported from Oman qualifies
as an originating good and is thus eligible for preferential
tariff treatment according to the terms of the Agreement.
Under section 202(b), for a good entering the United States
to qualify as an originating good, it must be imported directly
from the territory of Oman. Further, section 202(b) provides
that the good must be covered by one of three specified
categories. First, a good is an originating good if it is
wholly the growth, product, or manufacture of Oman or the
United States, or both.
Second, a good is an originating good if it is a new or
different article of commerce that has been grown, produced, or
manufactured in Oman or the United States, or both, from a good
or material that is not wholly the growth, product, or
manufacture of Oman or the United States, or both (i.e. the
good has undergone a ``substantial transformation'').
Additionally, the sum of the value of each material produced in
Oman or the United States, or both, and the direct costs of
processing operations performed in Oman or the United States,
or both, must be at least 35 percent of the appraised value of
the good at the time the good is entered into the United
States. This ``substantial transformation'' rule of origin is
akin to rules of origin provided for in the United States-
Israel Free Trade Area Implementation Act, the United States-
Jordan Free Trade Area Implementation Act, the United States-
Morocco Free Trade Agreement Implementation Act, and the United
States-Bahrain Free Trade Agreement Implementation Act.
Third, a good is an originating good if it meets the
product-specific rules set out in Annex 3-A (Rules of Origin
for Textile or Apparel Goods for Chapters 42, 50 Through 63,
70, and 94) or Annex 4-A (Certain Product-Specific Rules of
Origin) of the Agreement and satisfies all other applicable
requirements of section 202. Moreover, each of the non-
originating materials used in the production of the good must
have undergone an applicable change in tariff classification
specified in Annex 3-A or Annex 4-A as a result of production
occurring entirely in the territory of Oman or the United
States, or both, or the good must otherwise satisfy the
requirements specified in Annex 3-A or Annex 4-A.
Section 202(c) provides a rule of cumulation for an
originating good or material produced in the territory of Oman
or the United States, or both, that is incorporated into a good
in the territory of the other country. Section 202(d) provides
rules for valuing a material produced in the territory of Oman
or the United States, or both. Section 202(e) addresses the
treatment of packaging and packing materials and containers for
retail sale and for shipment in determining whether a good
qualifies as an originating good. Section 202(f) addresses the
treatment of indirect materials in determining whether a good
qualifies as an originating good. Section 202(g) addresses the
issue of transit and transshipment in determining the origin of
a good.
Section 202(h) provides certain specific rules of origin
for textile and apparel goods, including a de minimis rule.
Section 202(h)(1)(A) provides that a textile or apparel good
that is not an originating good because certain fibers or yarns
used in the production of the component of the good that
determines the tariff classification of the good do not undergo
an applicable change in tariff classification set out in Annex
3-A of the Agreement shall be considered to be an originating
good if the total weight of all such fibers or yarns in that
component is not more than 7 percent of the total weight of
that component. An exception to section 202(h)(1)(A) is
provided, however, at section 202(h)(1)(B), which states that a
textile or apparel good containing elastomeric yarns in the
component of the good that determines the tariff classification
of the good shall be considered to be an originating good only
if such yarns are wholly formed in the territory of Oman or the
United States.
Section 202(i) provides definitions of the following terms
applicable to the rules of origin: (1) ``direct costs of
processing operations,'' (2) ``good,'' (3) ``good wholly the
growth, product, or manufacture of Oman or the United States,
or both,'' (4) ``indirect material,'' (5) ``material,'' (6)
``material produced in the territory of Oman or the United
States, or both,'' (7) ``new or different article of
commerce,'' (8) ``recovered goods,'' (9) ``remanufactured
good,'' (10) ``simple combining or packaging operations,'' and
(11) ``substantially transformed.''
Section 202(j) authorizes the President to proclaim, as
part of the Harmonized Tariff Schedule of the United States,
the provisions set forth in Annex 3-A (Rules of Origin for
Textile or Apparel Goods for Chapters 42, 50 Through 63, 70,
and 94) and Annex 4-A (Certain Product-Specific Rules of
Origin) of the Agreement, and to modify certain of the
Agreement's rules of origin by proclamation subject to the
consultation and layover provisions of section 104.
Sec. 203. Customs user fees
This section provides for the immediate elimination of the
merchandise processing fee for goods qualifying as originating
goods under the Agreement. Processing of goods qualifying as
originating goods will be financed from the General Fund of the
Treasury.
Sec. 204. Enforcement relating to trade in textile and apparel goods
This section authorizes the President to apply anti-
circumvention provisions concerning trade in textile and
apparel goods. Pursuant to article 3.3 of the Agreement, the
Secretary of the Treasury may request that the Government of
Oman conduct a verification to determine the compliance of
exporters and producers with applicable customs laws,
regulations, procedures, requirements, or practices affecting
trade in textile or apparel goods, and to determine the
accuracy of a claim of origin for a textile or apparel good.
Section 204(a) provides that the President may direct the
Secretary of the Treasury to take ``appropriate action'' while
such a verification is being conducted. Under section 204(b),
such appropriate action includes the suspension of liquidation
of the entry of any textile or apparel good exported or
produced by the person subject to a verification, and the
suspension of liquidation of the entry of a textile or apparel
good for which a claim has been made that is the subject of a
verification.
Section 204(c) provides that, if the Secretary of the
Treasury is unable to confirm within 12 months of making a
verification request that an Omani exporter or producer is
complying with applicable customs laws, regulations,
procedures, requirements, or practices regarding trade in
textile or apparel goods, or that a claim of origin for a
textile or apparel good is accurate, the President may
determine what additional ``appropriate action'' to take. Under
section 204(d), such additional appropriate action includes:
the publication of the name and address of the person subject
to the verification; the denial of preferential tariff
treatment under the Agreement to (1) any textile or apparel
good exported or produced by the person subject to the
verification or (2) a textile or apparel good for which a claim
has been made that is the subject of the verification; and, the
denial of entry into the United States of (1) any textile or
apparel good exported or produced by the person subject to the
verification or (2) a textile or apparel good for which a claim
has been made that is the subject of the verification. Section
204(c) also provides that such additional appropriate action
may remain in effect until such time as the Secretary of the
Treasury receives information sufficient to make a
determination that an exporter or producer in Oman is complying
with applicable customs laws, regulations, procedures,
requirements, and practices affecting trade in textile or
apparel goods, or a determination that a claim of origin for a
textile or apparel good under the Agreement is accurate.
Section 204(c) further provides that such additional
appropriate action may remain in effect until such earlier date
as the President may direct.
Sec. 205. Reliquidation of entries
Section 205 amends section 520(d) of the Tariff Act of 1930
(19 U.S.C. 1520(d)) to authorize the reliquidation of an entry
of a good qualifying under the rules of origin specified in the
Agreement and for which no claim for preferential treatment was
made at the time of importation, notwithstanding the fact that
a valid protest was not filed. However, the importer must file
a claim for such reliquidation within 1 year after the date of
importation.
Sec. 206. Regulations
Section 206 authorizes the Secretary of the Treasury to
prescribe regulations necessary to carry out the rules of
origin and customs user fee provisions in the Implementation
Act, as well as with respect to the President's proclamation
authority under section 202(j).
TITLE III--RELIEF FROM IMPORTS
Sec. 301. Definitions
This section defines the terms ``Omani article,'' ``Omani
textile or apparel article,'' and ``Commission,'' for purposes
of the general bilateral safeguard provision contained in
Chapter 8 of the Agreement and the textile and apparel
bilateral safeguard provision contained in Chapter 3 of the
Agreement. The term ``Omani article'' is defined as an article
that qualifies as an originating good under section 202(b) of
the Implementation Act or receives preferential tariff
treatment under paragraphs 8 through 11 of article 3.2 of the
Agreement. The term ``Omani textile or apparel article'' is
defined as an Omani article that is listed in the Annex to the
Agreement on Textiles and Clothing referred to in section
101(d)(4) of the Uruguay Round Agreements Act (19 U.S.C.
Sec. 3511(d)(4)). The term ``Commission'' is defined as the
United States International Trade Commission.
Subtitle A. Relief From Imports Benefiting From the Agreement
Sec. 311. Commencing of action for relief
This section requires the filing of a petition with the
Commission by an entity, including a trade association, firm,
certified or recognized union, or group of workers, that is
representative of an industry, in order to commence a bilateral
safeguard investigation.
Section 311(b) provides that, upon the filing of a
petition, the Commission shall promptly initiate an
investigation to determine whether, as a result of the
reduction or elimination of a duty provided for under the
Agreement, an Omani article is being imported into the United
States in such increased quantities and under such conditions
that imports of the Omani article constitute a substantial
cause of serious injury, or threat of serious injury, to the
domestic industry producing an article that is like, or
directly competitive with, the imported article.
Section 311(c) extends certain provisions (both substantive
and procedural) contained in subsections (b), (c), and (i) of
section 202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252(b),
(c), and (i)) that apply to global safeguard investigations, to
any bilateral safeguard initiated under the Agreement. These
provisions include, inter alia, the requirement that the
Commission publish notice of the commencement of an
investigation; the requirement that the Commission hold a
public hearing at which interested parties and consumers have
the right to be present and to present evidence; the factors to
be taken into account by the Commission in making its
determinations; and, authorization for the Commission to
promulgate regulations to provide access to confidential
business information under protective order to authorized
representatives of interested parties in an investigation.
Section 311(d) precludes the initiation of a bilateral
safeguard investigation with respect to any Omani article for
which import relief has already been provided under this
bilateral safeguard provision.
Sec. 312. Commission action on petition
This section establishes deadlines for Commission action
following the initiation of a bilateral safeguard
investigation. Section 312(b) applies certain statutory
provisions that address an equally divided vote by the
Commission in a global safeguard investigation under section
202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252) to
Commission determinations and findings under this section. If
the Commission renders an affirmative injury determination, or
a determination that the President may consider to be an
affirmative determination in the event of an equally divided
vote by the Commission, section 312(c) requires that the
Commission also find and recommend to the President the amount
of import relief that is necessary to remedy or prevent the
injury found by the Commission and to facilitate the efforts of
the domestic industry to make a positive adjustment to import
competition. Section 312(d) specifies the information to be
included by the Commission in a report to the President
regarding its determination. Upon submitting the requisite
report to the President, section 312(e) requires the Commission
to promptly make public such report, except for any
confidential information contained in the report, and to
publish in the Federal Register a summary of such report.
Sec. 313. Provision of relief
This section directs the President, not later than 30 days
after receiving the report from the Commission, to provide
relief from imports of the article subject to an affirmative
determination by the Commission, or a determination that the
President considers to be an affirmative determination in the
event of an equally divided vote by the Commission, to the
extent that the President determines necessary to remedy or
prevent the injury and to facilitate the efforts of the
domestic industry to make a positive adjustment to import
competition. Under section 313(b), the President is not
required to provide import relief if the President determines
that the provision of the import relief will not provide
greater economic and social benefits than costs.
Section 313(c) specifies the nature of the import relief
that the President may impose, to include: the suspension of
any further reduction in duty provided for under Annex 2-B of
the Agreement; and, an increase in the rate of duty imposed on
such article to a level that does not exceed the lesser of: (1)
the normal trade relations (most-favored-nation) (NTR (MFN))
duty rate imposed on like articles at the time the import
relief is provided, or (2) the NTR (MFN) duty rate imposed on
like articles on the day before the date on which the Agreement
enters into force. Section 313(c) also requires that, if the
period for which import relief is provided exceeds one year,
the President shall provide for the progressive liberalization
of such relief at regular intervals during the period of its
application.
Section 313(d) provides that any import relief that the
President imposes in a bilateral safeguard action may not, in
the aggregate, be in effect for more than 3 years. If the
initial period of import relief is less than 3 years, the
President may extend the effective period of such import relief
to a total of no more than 3 years; however, the Commission
must first report an affirmative determination to the President
that import relief continues to be necessary to remedy or
prevent serious injury and that there is evidence that the
domestic industry is making a positive adjustment to import
competition (or a determination that the President considers to
be an affirmative determination in the event of an equally
divided vote by the Commission). The President may then extend
the effective period of import relief to a total of no more
than 3 years if the President determines that import relief
continues to be necessary to remedy or prevent serious injury
and to facilitate adjustment by the domestic industry to import
competition, and that there is evidence that the domestic
industry is making a positive adjustment to import competition.
Section 313(e) provides that upon termination of import
relief with respect to an article under the bilateral safeguard
provision, the rate of duty to be applied to imports of that
article shall be the rate that would have been in effect, but
for the provision of such relief, on the date on which the
relief terminates.
Section 313(f) precludes the application of import relief
pursuant to the bilateral safeguard provision with respect to
any Omani article for which import relief has already been
provided under the bilateral safeguard provision after the date
on which the Agreement enters into force.
Sec. 314. Termination of relief authority
This section provides that the President's authority to
impose import relief under the bilateral safeguard provision
ends after the date that is 10 years after the date on which
the Agreement enters into force; however, import relief may
continue to be provided beyond such date with respect to an
article subject to such import relief pursuant to the bilateral
safeguard provision if the President determines that Oman
consents to the application of such relief.
Sec. 315. Compensation authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Oman new
concessions as compensation for the imposition of import relief
pursuant to the bilateral safeguard provision, in order to
maintain the general level of reciprocal concessions under the
Agreement.
Sec. 316. Confidential business information
This section applies the same procedures for the treatment
and release of confidential business information by the
Commission in a global safeguard investigation under chapter 1
of title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et
seq.) to bilateral safeguard investigations under title III of
the Implementation Act.
Subtitle B. Textile and Apparel Safeguard Measures
Sec. 321. Commencement of action for relief
This section requires the filing of a request with the
President by an interested party in order to commence action
for relief under the textile and apparel safeguard provision.
Upon the filing of a request, the President shall review the
request to determine, from information presented in the
request, whether to commence consideration of the request.
Section 321(b) provides that, if the President determines that
the request provides the information necessary for the request
to be considered, the President shall cause to be published in
the Federal Register a notice of commencement of consideration
of the request, and notice seeking public comments regarding
the request. The notice shall include a summary of the request
and the dates by which comments and rebuttals must be received.
The Committee notes that our regulatory processes should be
administered in an open and transparent manner that can serve
as a model for our trading partners. For example, in addition
to publishing a summary of a request for safeguard relief, the
Committee notes that the President plans to make available the
full text of the request on the website of the International
Trade Administration of the U.S. Department of Commerce,
subject to the protection of business confidential information,
if any. The Committee encourages this and similar efforts to
enhance government transparency. In particular, the Committee
encourages the President to issue regulations on procedures
for: requesting a textile and apparel safeguard action under
section 321(a) of the Implementation Act; making a
determination under section 322(a) of the Implementation Act;
providing safeguard relief under section 322(b) of the
Implementation Act; and, extending safeguard relief under
section 323(b) of the Implementation Act.
Sec. 322. Determination and provision of relief
This section provides that following the President's
commencement of consideration of a request, the President shall
determine whether, as a result of the reduction or elimination
of a duty under the Agreement, an Omani textile or apparel
article is being imported into the United States in such
increased quantities and under such conditions as to cause
serious damage, or actual threat thereof, to a domestic
industry producing an article that is like, or directly
competitive with, the imported article. Section 322(a) provides
that in making such a determination the President shall examine
the effect of increased imports on the domestic industry's
output, productivity, capacity utilization, inventories, market
share, exports, wages, employment, domestic prices, profits,
and investment, none of which is necessarily decisive. Section
322(a) also provides that the President shall not consider
changes in technology or consumer preference as factors
supporting a determination of serious damage or actual threat
thereof.
Section 322(b) authorizes the President, in the event of an
affirmative determination of serious damage or actual threat
thereof, to provide import relief to the extent that the
President determines necessary to remedy or prevent the serious
damage and to facilitate adjustment by the domestic industry to
import competition. Section 322(b) also specifies the nature of
the import relief that the President may impose, to consist of
an increase in the rate of duty imposed on the article to a
level that does not exceed the lesser of: (1) the NTR (MFN)
duty rate imposed on like articles at the time the import
relief is provided, or (2) the NTR (MFN) duty rate imposed on
like articles on the day before the date on which the Agreement
enters into force.
Sec. 323. Period of relief
Section 323(a) provides that any import relief that the
President imposes under the textile and apparel safeguard
provision may not, in the aggregate, be in effect for more than
3 years. If the initial period of import relief is less than 3
years, then under section 323(b) the President may extend the
effective period of such import relief to a total of no more
than 3 years if the President determines that the import relief
continues to be necessary to remedy or prevent serious damage
and to facilitate adjustment by the domestic industry to import
competition, and that there is evidence that the domestic
industry is making a positive adjustment to import competition.
Sec. 324. Articles exempt from relief
This section precludes the President from providing import
relief under the textile and apparel safeguard provision with
respect to any article for which import relief has already been
provided under the textile and apparel safeguard provision
after the date on which the Agreement enters into force.
Section 324 also precludes the President from providing import
relief under the textile and apparel safeguard provision with
respect to any article that is already subject to import relief
pursuant to the global safeguard provision set forth in chapter
1 of title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et
seq.).
Sec. 325. Rate after termination of import relief
This section provides that the duty rate applicable to a
textile or apparel article after termination of the import
relief shall be the duty rate that would have been in effect,
but for the provision of such import relief, on the date on
which the relief terminates.
Sec. 326. Termination of relief authority
This section provides that the President's authority to
provide import relief with respect to an article under the
textile and apparel safeguard provision terminates after the
date that is 10 years after the date on which duties on the
article are eliminated pursuant to the Agreement.
Sec. 327. Compensation authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Oman new
concessions as compensation for the imposition of import relief
pursuant to the textile and apparel safeguard provision, in
order to maintain the general level of reciprocal concessions
under the Agreement.
Sec. 328. Confidential business information
This section precludes the President from releasing
information received in a textile and apparel safeguard
proceeding that the President considers to be confidential
business information unless the party submitting the
confidential business information had notice, at the time of
submission, that such information would be released by the
President, or such party subsequently consents to the release
of the information. This section also provides that, to the
extent a party submits confidential business information to the
President, the party shall also submit a nonconfidential
version of the information in which the confidential business
information is summarized or, if necessary, deleted.
TITLE IV--PROCUREMENT
Sec. 401. Eligible products
This section amends section 308(4)(A) of the Trade
Agreements Act of 1979 (19 U.S.C. Sec. 2518(4)(A)) to implement
the government procurement provisions of the Agreement.
F. Vote of the Committee in Reporting the Bill
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that on June
28, 2006, S. 3569 was ordered favorably reported, without
amendment, by a recorded vote of those present and voting, 10
ayes, 3 nays, a quorum being present.
II. BUDGETARY IMPACT OF THE BILL
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 28, 2006.
Hon. Charles E. Grassley,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3569, a bill to
implement the United States-Oman Free Trade Agreement.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Emily
Schlect, who may be reached at 226-2680.
Sincerely,
Donald B. Marron,
Acting Director.
Enclosure.
S. 3569--United States-Oman Free Trade Agreement Implementation Act
Summary: S. 3569 would approve the free trade agreement
between the government of the United States and the government
of Oman that was entered into on January 19, 2006. It would
provide for tariff reductions and other changes in law related
to implementation of the agreement.
The Congressional Budget Office estimates that enacting the
bill would reduce revenues by $15 million in 2007, by $111
million over the 2007-2011 period, and by $271 million over the
2007-2016 period, net of income and payroll tax offsets. CBO
estimates that enacting S. 3569 also would increase direct
spending by $1 million in 2007, $6 million over the 2007-2011
period, and $10 million over the 2007-2016 period. Further, CBO
estimates that implementing the legislation would incur new
discretionary spending of less than $1 million per year,
assuming the availability of appropriated funds.
CBO has determined that S. 3569 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would not directly
affect the budgets of state, local, or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 3569 over the 2007-2016 period is shown
in the following table. The cost for spending under this
legislation falls within budget function 750 (administration of
justice).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Changes in Revenues............. -15 -21 -23 -25 -26 -28 -30 -32 -34 -37
CHANGES IN DIRECT SPENDING
Estimated Budget Authority...... 1 1 1 1 1 1 1 1 0 0
Estimated Outlays............... 1 1 1 1 1 1 1 1 0 0
----------------------------------------------------------------------------------------------------------------
Note: Negative changes in revenues and positive changes in direct spending correspond to increases in budget
deficits.
Basis of Estimate
Revenues
Under the United States-Oman agreement, tariffs on U.S.
imports from Oman would be phased out over time. The tariffs
would be phased out for individual products at varying rates
according to one of several different timetables ranging from
immediate elimination on the date the agreement enters into
force to gradual elimination over 10 years. According to the
U.S. International Trade Commission, the United States
collected about $20 million in customs duties in 2004 on $422
million of imports from Oman. Those imports consist largely of
various types of apparel articles and oils. Based on these
data, CBO estimates that phasing out tariff rates as outlined
in the U.S.-Oman agreement reduce revenues by $15 million in
2007, by $111 million over the 2007-2011 period, and by $271
million over the 2007-2016 period, net of income and payroll
tax offsets.
This estimate includes the effects of increased imports
from Oman that would result from the reduced prices of imported
products in the United States, reflecting the lower tariff
rates. It is likely that some of the increase in U.S. imports
from Oman would displace imports from other countries. In the
absence of specific data on the extent of this substitution
effect, CBO assumes that an amount equal to one-half of the
increase in U.S. imports from Oman would displace imports from
other countries.
Direct Spending
This legislation would exempt certain goods imported from
Oman from merchandise processing fees collected by the
Department of Homeland Security. Such fees are recorded as
offsetting receipts (a credit against direct spending). Based
on the value of goods imported from Oman in 2005, CBO estimates
that implementing this provision would reduce fee collections
by about $1 million in fiscal year 2007 and in each year
through 2014, for a total of $10 million over the 2007-2014
period. There would be no effects in later years because the
authority to collect merchandise processing fees expires at the
end of 2014.
Spending Subject to Appropriation
Title I of S. 3569 would authorize the appropriation of
necessary funds for the Department of Commerce to pay the
United States' share of the costs of the dispute settlement
procedures established by the agreement. Based on information
from the agency, CBO estimates that implementing this provision
would cost less than $1 million per year, subject to the
availability of appropriated funds.
Intergovernmental and Private-Sector Impact: The bill
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Revenues: Emily Schlect;
Federal Spending: Mark Grabowicz and Kim Cawley. Impact on
State, Local, and Tribal Governments: Melissa Merrell. Impact
on the Private Sector: Craig Cammarata.
Estimate approved by: Roberton C. Williams, Deputy
Assistant Director for Tax Analysis; Peter H. Fontaine, Deputy
Assistant Director for Budget Analysis.
III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS
Pursuant to the requirements of paragraph 11(b) of Rule
XXVI of the Standing Rules of the Senate, the Committee states
that the bill will not significantly regulate any individuals
or businesses, will not affect the personal privacy of
individuals, and will result in no significant additional
paperwork.
The following information is provided in accordance with
section 423 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. No. 104-04). The Committee has reviewed the provisions
of S. 3569 as approved by the Committee on June 28, 2006. 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.
IV. 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):
SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF
1985
SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) * * *
(b) Limitations on Fees.--(1) * * *
* * * * * * *
(17) No fee may be charged under subsection (a) (9) or (10)
with respect to goods that qualify as originating goods under
section 202 of the United States-Oman Free Trade Agreement
Implementation Act. Any service for which an exemption from
such fee is provided by reason of this paragraph may not be
funded with money contained in the Customs User Fee Account.
* * * * * * *
----------
SECTION 520 OF THE TARIFF ACT OF 1930
SEC. 520. REFUNDS AND ERRORS.
(a) * * *
* * * * * * *
(d) Goods Qualifying Under Free Trade Agreement Rules of
Origin.--Notwithstanding the fact that a valid protest was not
filed, the Customs Service may, in accordance with regulations
prescribed by the Secretary, reliquidate an entry to refund any
excess duties (including any merchandise processing fees) paid
on a good qualifying under the rules of origin set out in
section 202 of the North American Free Trade Agreement
Implementation Act, section 202 of the United States-Chile Free
Trade Agreement Implementation Act, [or] section 203 of the
Dominican Republic-Central America-United States Free Trade
Agreement Implementation Act [for which], or section 202 of the
United States-Oman Free Trade Agreement Implementation Act for
which no claim for preferential tariff treatment was made at
the time of importation if the importer, within 1 year after
the date of importation, files, in accordance with those
regulations, a claim that includes--
(1) * * *
* * * * * * *
(3) such other documentation and information relating
to the importation of the goods as the Customs Service
may require.
----------
SECTION 202 OF THE TRADE ACT OF 1974
SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY
COMMISSION.
(a) Petitions and Adjustment Plans.--
(1) * * *
* * * * * * *
(8) The procedures concerning the release of
confidential business information set forth in section
332(g) of the Tariff Act of 1930 shall apply with
respect to information received by the Commission in
the course of investigations conducted under this
chapter, part 1 of title III of the North American Free
Trade Agreement Implementation Act, title II of the
United States-Jordan Free Trade Area Implementation
Act, title III of the United States-Chile Free Trade
Agreement Implementation Act, title III of the United
States-Singapore Free Trade Agreement Implementation
Act, title III of the United States-Australia Free
Trade Agreement Implementation Act, title III of the
United States-Morocco Free Trade Agreement
Implementation Act, title III of the Dominican
Republic-Central America-United States Free Trade
Agreement Implementation Act, [and] title III of the
United States-Bahrain Free Trade Agreement
Implementation Act, and title III of the United States-
Oman Free Trade Agreement Implementation Act. The
Commission may request that parties providing
confidential business information furnish
nonconfidential summaries thereof or, if such parties
indicate that the information in the submission cannot
be summarized, the reasons why a summary cannot be
provided. If the Commission finds that a request for
confidentiality is not warranted and if the party
concerned is either unwilling to make the information
public or to authorize its disclosure in generalized or
summarized form, the Commission may disregard the
submission.
* * * * * * *
----------
SECTION 308 OF THE TRADE AGREEMENTS ACT OF 1979
SEC. 308. DEFINITIONS.
As used in this title--
(1) * * *
* * * * * * *
(4) Eligible products.--
(A) In general.--The term ``eligible
product'' means, with respect to any foreign
country or instrumentality that is--
(i) * * *
* * * * * * *
(iv) a party to the Dominican
Republic-Central America-United States
Free Trade Agreement, a product or
service of that country or
instrumentality which is covered under
that Agreement for procurement by the
United States; [or]
(v) a party to a free trade agreement
that entered into force with respect to
the United States after December 31,
2005, and before July 2, 2006, a
product or service of that country or
instrumentality which is covered under
the free trade agreement for
procurement by the United States[.]; or
(vi) a party to the United States-
Oman Free Trade Agreement, a product or
service of that country or
instrumentality which is covered under
that Agreement for procurement by the
United States.
* * * * * * *
V. ADDITIONAL VIEWS
ADDITIONAL VIEWS OF SENATOR MAX BAUCUS
Regarding the development of the implementing legislation,
Senator Conrad's amendment (Conrad-Bingaman-Kerry #1) was
introduced and discussed with a view toward recent events and
apparent failures to enforce measures to prevent the
importation of goods produced with slave labor. Specifically,
the sponsors of the amendment cited recent examples of U.S.
imports of goods from Jordan produced under conditions
tantamount to slave labor and involving human trafficking. The
existence of these imports, which benefited from the U.S.-
Jordan Free Trade Agreement, called into question the adequacy
of existing measures that prohibit the importation of such
goods. The sponsors of the amendment also noted that while
United States law prohibits the importation of goods produced
with convict labor, as well as with forced labor and indentured
labor, the law does not expressly address the use of human
trafficking in the production of these goods.
In terms of the process by which the United States-Oman
Free Trade Agreement was considered, the Trade Promotion
Authority Act of 2002 stipulates the procedures under which
this Agreement was considered and builds on a history of
Congressional-Executive consultation procedures. These
procedures were designed to facilitate the negotiation,
conclusion, and consideration of international trade
agreements. This process was designed to be a Congressional-
Executive partnership. The ``mock'' consideration of the draft
implementing bill is both symbolic of and integral to this
partnership. Congress and the President first used these
procedures adopted in the Trade Act of 1974 to implement the
GATT Tokyo Round agreements in 1979. Congress and the
Administration have since used these procedures to implement
the WTO Uruguay Round Agreements, as well as subsequent free
trade agreements.
Throughout the history of these procedures, the Committee
has on many occasions considered and adopted amendments to
implementing legislation. When the Committee considered the
United States-Israel Free Trade Agreement in 1984, Committee
Members offered 13 amendments, and the Committee adopted 3. In
1988, when the Committee considered the Canada-United States
Free Trade Agreement, Members offered 9 amendments, all of
which were adopted. When the Finance Committee considered draft
implementing legislation for the North American Free Trade
Agreement in 1993, members offered at least 15 amendments, of
which 14 were adopted. These amendments added in the mock
markup led to differences between the versions of the draft
bill approved by the Finance Committee and the bill approved by
the Ways and Means Committee.
Consistent with normal legislative practice since 1974, the
two Committees resolved these differences in informal or
``mock'' conferences. Although these informal procedures are
not statutory, they are critical to Congress's Constitutional
oversight authority over trade policy, and to the smooth
operation of the Congressional-Executive partnership on trade.
These informal procedures included consultation on the Member
as well as the staff levels, both formally and informally.
In the case of the United States-Oman Free Trade Agreement
implementing legislation, the Committee unanimously adopted the
Conrad-Bingaman-Kerry amendment, while the Ways and Means
Committee adopted no amendments. The Democratic staff of the
Finance Committee and the Ways and Means Committee both
requested a mock conference in line with historical precedent.
The request was denied and no conference was convened, despite
the differences in the legislation.
The Trade Promotion Authority Act of 2002 was intended to
build on and enhance Congressional oversight of United States
trade policy. The consultative process by which the United
States-Oman Free Trade Agreement was handled was a departure
from the longstanding Congressional-Executive partnership on
trade.