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# Legislative Bulletin..................................................December 7, 2006

**Contents:**

> **H.R. 6406**---To extend certain trade preference programs, to
> authorize the extension of nondiscriminatory treatment (normal trade
> relations treatment) to the products of Vietnam, to modify temporarily
> certain rates of duty and make other technical amendments to the trade
> laws, and for other purposes

H.R. 6406---To extend certain trade preference programs, to authorize
the extension of nondiscriminatory treatment (normal trade relations
treatment) to the products of Vietnam, to modify temporarily certain
rates of duty and make other technical amendments to the trade laws, and
for other purposes---*as introduced* (Thomas, R-CA)

**[Order of Business]{.underline}**: The bill is scheduled to be
considered on Thursday, December 7^th^, subject to a closed rule.

On November 13, 2006, a related bill (H.R. 5602) that would have
extended normal trade relations treatment to Vietnam failed on
suspension by a vote of 228-161 (two-thirds required for passage):
<http://clerk.house.gov/cgi-bin/vote.asp?year=2006&rollnumber=519>. To
read the RSC Legislative Bulletin on H.R. 5602, visit this webpage:
<http://www.house.gov/pence/rsc/doc/LB_111306_suspensions.doc>.

**[Summary]{.underline}**: H.R. 6406 would extend a variety of trade
provisions and make normal trade relations treatment for Vietnam
permanent. Highlights of the bill are as follows:

**[African Growth and Opportunity Act (AGOA)]{.underline}**

-   Allows duty-free treatment for lesser-developed countries for
    certain textiles (non-apparel) of wholly-made African fabric. 

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-   Extends until September 2012 the current provision allowing AGOA
    benefits for apparel made with fabric from third countries.

-   Replaces the current third country fabric benefit with a new
    value-added rule of origin for lesser developed countries (see the
    Haiti section below).  

-   Provides a tax credit for new U.S. labor and capital investments in
    AGOA-eligible countries. The credit, which expires after December
    31, 2015, is 60% of additional wages and fringe benefits plus an
    amount of depreciation on new investments in (most) tangible
    property. The credit could be carried forward for 10 years.

[]{.mark}

**[Generalized System of Preferences (GSP)]{.underline}**

[]{.mark}

-   Extends GSP, which offers developing countries duty-free access to
    the U.S. market for certain products, from the end of 2006 to the
    end of 2008.

-   Authorizes the President to stop GSP from applying in certain
    circumstances (so that the program is focused on countries in true
    need).  

**[Haitian Hemispheric Opportunity through Partnership Encouragement
("HOPE") Act]{.underline}**

[]{.mark}

-   Allows duty-free entry to specified apparel articles made and/or
    assembled in Haiti, the U.S., a beneficiary country of a U.S. trade
    preference program, or a country party to a U.S. free trade
    agreement. The sum of material and production costs would have to be
    an increasing percentage of the customs value over a five-year
    period (starting at 50% in year one).

-   Applies to Haiti the same political, economic, and labor criteria,
    and the same textile and apparel transshipment requirements as AGOA
    (which Haiti must meet to qualify for benefits).

[]{.mark}

**[Andean Bridge to a Reciprocal Trade Partnership Act]{.underline}**

[]{.mark}

-   Grants a straightforward six-month extension of the Andean Trade
    Preference Act (which provides duty-free access to the U.S. market
    for a variety of Colombia, Peruvian, Ecuadorian, and Bolivian
    products), followed by an additional six-month extension for a
    country, only if the U.S. and that country both complete their
    legislative process to approve a trade promotion agreement. These
    preferences would otherwise expire at the end of 2006.

-   For Ecuador and Bolivia: Permits a rebate of duties from a country
    from January 1, 2007, if a trade promotion agreement enters into
    force between the U.S. and that country within one year.

[]{.mark}

**[Permanent Normal Trade Relations (PNTR) for Vietnam]{.underline}**

[]{.mark}

-   Authorizes the permanent extension of nondiscriminatory treatment
    (normal trade relations treatment, or "NTR") to the products of
    Vietnam. Specifically, the bill would remove Vietnam from the
    current-law prohibition on permanently adding new countries to which
    NTR treatment applies. *(NTR refers to nondiscriminatory tariff
    treatment. Embargoes and other non-tariff barriers can still exist
    under NTR.)*

-   Establishes an enforcement mechanism, as set forth in the
    U.S.-Vietnam commercial agreement signed earlier this year, to
    ensure that the President implements quotas on Vietnam, if Vietnam
    grants any prohibited subsidies to its textile and apparel industry
    (in violation of the terms of its accession to the World Trade
    Organization---the "WTO").

-   Directs the U.S. Trade Representative (USTR) to determine whether to
    initiate an investigation and to request consultations with Vietnam
    within 20 days of receiving a petition. \[The USTR could also
    initiate an investigation without a petition.\] The USTR would have
    to make a determination and, if affirmative, refer the dispute to a
    WTO arbitrator within 60 days of initiating the investigation (and
    alert Vietnam).

-   Directs the Administration to impose up-to-one-year quotas within
    120 days after referring the dispute to the WTO, even if the WTO has
    not yet made a decision. The quotas would apply to [all]{.underline}
    textiles and apparel, regardless of the nature of the prohibited.
    The quotas would be lifted when Vietnam completely eliminates the
    prohibited subsidy to its textile and apparel industry (as certified
    by the USTR).

-   [Background]{.underline}: Countries that wish to have permanent NTR
    ("PNTR") must comply with the Jackson-Vanik provisions of the Trade
    Act of 1974 (requiring that the President of the United States
    determine that a country neither denies nor impedes the right or
    opportunity of its citizens to emigrate), and must reach a bilateral
    commercial agreement with the United States (which Vietnam did
    earlier this year). Vietnam has been granted one-year NTR treatment
    extensions since 2001 (in accordance with the Jackson-Vanik
    requirements).

[]{.mark}

**[Miscellaneous Trade and Technical Corrections Act]{.underline}**

[]{.mark}

-   Suspends or reduces the tariff rate on more than 500 selected
    products. This reduction of tariff rates allows these products, many
    of which are niche chemicals and not manufactured in the U.S., to
    enter without being charged duty. Many of these provisions have
    already passed the House earlier this year as part of H.R. 4944 (and
    were *not* attached to the pension bill---H.R. 4).

-   Corrects certain errors that the government made in assessing duties
    against importers (such corrections are known as "reliquidations").

-   Makes certain modifications to the Harmonized Tariff Schedule of the
    United States, including extending the timeframe for implementation
    of changes to the tariff schedule from 15 days to 30 days.

[]{.mark}

-   Creates a Pima Cotton Trust Fund, funded by up to \$16 million a
    year from the general fund of the U.S. Treasury (an amount
    equivalent to the duties on certain cotton received by the Treasury
    since 1994).  The bill then suspends duties on certain cotton
    fabrics. Money in the trust Fund would be distributed among eligible
    yarn spinners and shirt manufacturers, and to a nationally
    recognized association established to promote the growth of pima
    cotton in the United States.  The trust fund terminates October 1,
    2008.

**[Committee Action]{.underline}**: On December 5, 2006, the bill was
introduced and referred to the Ways & Means Committee.

**[Administration Position]{.underline}**: The Administration is
strongly supportive of this legislation.

**[Cost to Taxpayers]{.underline}**: A complete revenue estimate was
unavailable at press time. A CBO cost estimate for S. 3495 reports that
permanently extending NTR to Vietnam would increase revenues (tariff
collections) by \$18 million in FY2007 and a total of \$108 million over
the FY2007-FY2011 period (due to increased trade with Vietnam).

**[Does the Bill Expand the Size and Scope of the Federal
Government?]{.underline}**: No.

**[Does the Bill Contain Any New State-Government, Local-Government, or
Private-Sector Mandates?]{.underline}**: No.

**[Constitutional Authority]{.underline}**: Although a committee report
citing constitutional authority is unavailable, Article I, Section 8,
Clause 1 grants Congress the power to lay and collect taxes, duties,
imposts, and excises. Additionally, Article I, Section 8, Clause 3
grants Congress the power to regulate commerce with foreign nations.

**[RSC Staff Contact]{.underline}**: Paul S. Teller,
<paul.teller@mail.house.gov>, (202) 226-9718