To ensure that the Enhanced Highly Indebted Poor Countries Initiative achieves the objective of substantially increasing resources available for human development and poverty reduction in heavily indebted poor countries, and for other purposes.

Summary: Debt Relief Enhancement Act of 2002 - Directs the Secretary of the Treasury to commence efforts immediately within the Paris Club of Official Creditors, the International Bank for Reconstruction and Development (IBRD), the International Monetary Fund (IMF), and other appropriate multilateral development institutions to modify the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative so that the amount of debt stock reduction approved for a country eligible for debt relief shall be sufficient to reduce, by a specified deadline, the net present value of the outstanding public and publicly guaranteed debt of the country, and the annual payments due, to levels determined according to certain formulae.Requires the Secretary to report to Congress on the options and costs associated with expanding debt relief under the Initiative to poor countries not eligible for inclusion in it.Authorizes the President to reduce amounts owed to the United States (or any Federal agency) by an eligible country as a result of: (1) certain guarantees issued under the Foreign Assistance Act of 1961; (2) credits extended or guarantees issued under the Arms Export Control Act; or (3) any obligation (or portion of it) to pay for purchases of U.S. agricultural commodities guaranteed by the Commodity Credit Corporation under specified export credit programs.Prescribes other specified conditions and prohibitions with respect to country eligibility.Requires any country otherwise eligible to receive debt cancellation under the modifications to the Initiative made by this Act, among other things, to agree to: (1) ensure that the financial benefits of debt cancellation are applied to programs to combat HIV/AIDS and poverty; and (2) implement transparent and participatory policymaking and budget procedures, good governance, and effective anticorruption measures.Amends the Foreign Assistance Act of 1961 (including the Enterprise for the Americas Initiative), the Arms Export Control Act, and the Export Administration Act of 1979 to modify specified prohibitions on assistance to countries to include countries that have failed to cooperate with the United States on efforts to combat international terrorism.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Debt Relief Enhancement Act of 
2002''.

SEC. 2. MODIFICATION OF ENHANCED HIPC INITIATIVE.

    (a) In General.--The Secretary of the Treasury shall immediately 
commence efforts within the Paris Club of Official Creditors, the 
International Bank for Reconstruction and Development, the 
International Monetary Fund, and other appropriate multilateral 
development institutions to modify the Enhanced HIPC Initiative so that 
the amount of debt stock reduction approved for a country eligible for 
debt relief under the Enhanced HIPC Initiative shall be sufficient to 
reduce, for at least each year through 2005, or each of the first 3 
years after the Decision Point--
            (1) the net present value of the outstanding public and 
        publicly guaranteed debt of the country to not more than 150 
        percent of the annual value of exports of the country for the 
        year preceding the Decision Point; and
            (2) the annual payments due on such public and publicly 
        guaranteed debt--
                    (A) to not more than 10 percent of the amount of 
                the annual current revenues received by the country 
                from internal sources; or
                    (B) in the case of a country suffering a severe 
                public health crisis, to not more than 5 percent of the 
                amount of the annual current revenues received by the 
                country from internal sources.
    (b) Definitions.--In this section:
            (1) Enhanced hipc initiative.--The term ``Enhanced HIPC 
        Initiative'' means the multilateral debt initiative for heavily 
        indebted poor countries presented in the Report of G-7 Finance 
        Ministers on the Cologne Debt Initiative to the Cologne 
        Economic Summit, Cologne, 18-20 June, 1999.
            (2) Decision point.--The term ``Decision Point'' means, 
        with respect to a country, the point in time at which the 
        Executive Boards of the International Bank for Reconstruction 
        and Development and the International Monetary Fund review the 
        debt sustainability analysis for the country and decide that 
        the country is eligible for debt relief under the Enhanced HIPC 
        Initiative.
            (3) Public health crisis.--A country is deemed to be 
        suffering a ``public health crisis'' if--
                    (A) the nationwide HIV/AIDS infection rate for the 
                country, as reported in the most recent epidemiological 
                data as compiled by the Joint United Nations Program on 
HIV/AIDS, is at least 5 percent among women attending prenatal clinics, 
or 20 percent or more among individuals in groups with high-risk 
behavior; or
                    (B) the country is suffering a health crisis or 
                epidemic, as defined by the World Health Organization.

SEC. 3. REPORT ON EXPANSION OF DEBT RELIEF TO NON-HIPC COUNTRIES.

    (a) In General.--Within 90 days after the date of the enactment of 
this Act, the Secretary of the Treasury shall submit to the Congress a 
report on--
            (1) the options and costs associated with expanding debt 
        relief to include poor countries who were not eligible for 
        inclusion in the Enhanced HIPC Initiative (as defined in 
        section 2(b)(1));
            (2) options for burden-sharing among donor countries and 
        multilateral institutions of costs associated with expanding 
        debt relief; and
            (3) options, in addition to the Enhanced HIPC Initiative 
        (as so defined), to ensure debt sustainability in poor 
        countries, particularly in cases when the poor country has 
        suffered an external economic shock or a natural disaster.
    (b) Specific Options To Be Considered.--Among the options for 
expansion of debt relief, consideration should be given to making 
eligible for the relief poor countries for which outstanding public and 
publicly guaranteed debt requires annual payments in excess of 10 
percent of the amount of the annual current revenues received by the 
countries from internal sources.

SEC. 4. DEBT RELIEF FOR THE POOREST COUNTRIES.

    (a) Authority To Reduce Debt.--The President may reduce amounts 
owed to the United States (or any agency of the United States) by an 
eligible country as a result of--
            (1) guarantees issued under sections 221 and 222 of the 
        Foreign Assistance Act of 1961;
            (2) credits extended or guarantees issued under the Arms 
        Export Control Act; or
            (3) any obligation or portion of such obligation, to pay 
        for purchases of United States agricultural commodities 
        guaranteed by the Commodity Credit Corporation under export 
        credit guarantee programs authorized pursuant to section 5(f) 
        of the Commodity Credit Corporation Charter Act of June 29, 
        1948, section 4(b) of the Food for Peace Act of 1966, or 
        section 202 of the Agricultural Trade Act of 1978.
    (b) Limitations.--(1) The authority provided by subsection (a) may 
be exercised only to implement multilateral official debt relief and 
referendum agreements, commonly referred to as ``Paris Club Agreed 
Minutes''.
    (2) The authority provided by subsection (a) may be exercised only 
in such amounts or to such extent as is provided in advance by 
appropriations Acts.
    (3) The authority provided by subsection (a) may be exercised only 
with respect to countries with heavy debt burdens that are eligible to 
borrow from the International Development Association, but not from the 
International Bank for Reconstruction and Development, commonly 
referred to as ``IDA-only'' countries.
    (c) Conditions.--The authority provided by subsection (a) may be 
exercised only with respect to a country whose government--
            (1) does not have an excessive level of military 
        expenditures;
            (2) has not repeatedly provided support for acts of 
        international terrorism and is not failing to cooperate with 
        the United States on efforts to combat international terrorism;
            (3) is not failing to cooperate on international narcotics 
        control matters;
            (4) (including its military or other security forces) does 
        not engage in a consistent pattern of gross violations of 
        internationally recognized human rights;
            (5) is not ineligible for assistance because of the 
        application of section 527 of the Foreign Relations 
        Authorization Act, Fiscal Years 1994 and 1995; and
            (6) has not been designated, in the most recent Department 
        of State `Trafficking in Persons Report', as a `Tier 3' nation 
        pursuant to the Victims of Trafficking and Violence Protection 
        Act of 2000 (Public Law 106-386) for its failure to cooperate 
        on international trafficking in persons prevention efforts.
    (d) Additional Requirements Relating to Actions To Prevent HIV/AIDS 
and Poverty.--In addition to the requirements of subsection (c), the 
authority provided by subsection (a) may be exercised only with respect 
to an eligible country if the country has agreed that--
            (1) the financial benefits of debt reduction will be 
        applied to programs to combat HIV/AIDS and poverty, in 
        particular through concrete measures to improve basic services 
        in health, education, nutrition, and other development 
        priorities, and to redress environmental degradation;
            (2) the financial benefits of debt reduction are in 
        addition to the total spending of the country's government on 
        poverty reduction for the previous year, or the average total 
        of such expenditures for the previous 3 years, whichever is 
        greater;
            (3) the eligible country will implement transparent and 
        participatory policy making and budget procedures, good 
        governance, and effective anti-corruption measures; and
            (4) the eligible country will broaden public participation 
        and popular understanding of the principles and goals of 
        poverty reduction.
    (e) Availability of Funds.--The authority provided by subsection 
(a) may be used only with regard to funds appropriated by an Act making 
appropriations for foreign operations, export financing, and related 
programs under the heading ``Debt Restructuring''.
    (f) Certain Prohibitions Inapplicable.--A reduction of debt 
pursuant to subsection (a) shall not be considered assistance for 
purposes of any provision of law limiting assistance to a country. The 
authority provided by subsection (a) may be exercised notwithstanding 
section 620(r) of the Foreign Assistance Act of 1961 or section 321 of 
the International Development and Food Assistance Act of 1975.

SEC. 5. MODIFICATION OF DETERMINATION OF COUNTRIES SUPPORTING TERRORISM 
              UNDER CERTAIN INTERNATIONAL AFFAIRS LAWS.

    (a) Foreign Assistance Act of 1961.--
            (1) General prohibition on assistance.--Section 620A(a) of 
        the Foreign Assistance Act of 1961 (22 U.S.C. 2371(a)) is 
        amended by inserting after ``international terrorism'' the 
        following: ``or has failed to cooperate with the United States 
        on efforts to combat international terrorism''.
            (2) Enterprise for the americas initiative.--Section 
        703(a)(2) of such Act (22 U.S.C. 2430b(a)(2)) is amended by 
        inserting after ``international terrorism'' the following: 
        ``and has cooperated with the United States on efforts to 
        combat international terrorism''.
    (b) Arms Export Control Act.--
            (1) General prohibition on transactions.--Section 40(d) of 
        the Arms Export Control Act (22 U.S.C. 2780(d)) is amended in 
        the first sentence by inserting after ``international 
        terrorism'' the following: ``or has failed to cooperate with 
        the United States on efforts to combat international 
        terrorism''.
            (2) Transfer of missile equipment or technology by united 
        states person.--Section 72(c) of such Act (22 U.S.C. 2797a(c)) 
        is amended by inserting after ``international terrorism'' the 
        following: ``or has failed to cooperate with the United States 
        on efforts to combat international terrorism''.
            (3) Transfer of missile equipment or technology by foreign 
        person.--Section 73(f) of such Act (22 U.S.C. 2797b(f)) is 
        amended by inserting after ``international terrorism'' the 
        following: ``or has failed to cooperate with the United States 
        on efforts to combat international terrorism''.
            (4) Transfer of chemical or biological weapons by foreign 
        person.--Section 81(a)(2)(B) of such Act (22 U.S.C. 
        2798(a)(2)(B)) is amended by inserting after ``international 
        terrorism'' the following: ``or has failed to cooperate with 
        the United States on efforts to combat international 
        terrorism''.
    (c) Export Administration Act of 1979.--
            (1) General requirements.--Section 6(j)(1)(A) of the Export 
        Administration Act of 1979 (50 U.S.C. app. 2405(j)(1)(A)) is 
        amended--
                    (A) in subsection (j)(1)(A), by inserting after 
                ``international terrorism'' the following: ``or has 
                failed to cooperate with the United States on efforts 
                to combat international terrorism''; and
                    (B) in subsection (l)(3)(B), by inserting after 
                ``international terrorism'' the following: ``or to have 
                failed to cooperate with the United States on efforts 
                to combat international terrorism''.
            (2) Transfer of chemical or biological weapons by foreign 
        person.--Section 11C(a)(2)(B) of such Act (50 U.S.C. app. 
        2410c(a)(2)(B)) is amended by inserting after ``international 
        terrorism'' the following: ``or has failed to cooperate with 
        the United States on efforts to combat international 
        terrorism''.