SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Nepal Trade Preferences Act''.

SEC. 2. ELIGIBILITY REQUIREMENTS.

    (a) In General.--The President may authorize the provision of 
preferential treatment under this Act to articles that are imported 
directly from Nepal into the customs territory of the United States 
pursuant to section 3 if the President determines--
            (1) that Nepal meets the requirements set forth in 
        paragraphs (1), (2), and (3) of section 104(a) of the African 
        Growth and Opportunity Act (19 U.S.C. 3703(a)); and
            (2) after taking into account the factors set forth in 
        paragraphs (1) through (7) of subsection (c) of section 502 of 
        the Trade Act of 1974 (19 U.S.C. 2462), that Nepal meets the 
        eligibility requirements of such section 502.
    (b) Withdrawal, Suspension, or Limitation of Preferential 
Treatment; Mandatory Graduation.--The provisions of subsections (d) and 
(e) of section 502 of the Trade Act of 1974 (19 U.S.C. 2462) shall 
apply with respect to Nepal to the same extent and in the same manner 
as such provisions apply with respect to beneficiary developing 
countries under title V of that Act (19 U.S.C. 2461 et seq.).

SEC. 3. ELIGIBLE ARTICLES.

    (a) Certain Manufactured and Other Articles.--
            (1) In general.--An article described in paragraph (2) may 
        enter the customs territory of the United States free of duty.
            (2) Articles described.--
                    (A) In general.--An article is described in this 
                paragraph if--
                            (i) the article is the growth, product, or 
                        manufacture of Nepal;
                            (ii) the article is imported directly from 
                        Nepal into the customs territory of the United 
                        States;
                            (iii) the article is described in 
                        subparagraphs (B) through (G) of subsection 
                        (b)(1) of section 503 of the Trade Act of 1974 
                        (19 U.S.C. 2463);
                            (iv) the President determines, after 
                        receiving the advice of the United States 
                        International Trade Commission in accordance 
                        with subsection (e) of that section, that the 
                        article is not import-sensitive in the context 
                        of imports from Nepal; and
                            (v) subject to subparagraph (C), the sum of 
                        the cost or value of the materials produced in, 
                        and the direct costs of processing operations 
                        performed in, Nepal or the customs territory of 
                        the United States is not less than 35 percent 
                        of the appraised value of the article at the 
                        time it is entered.
                    (B) Exclusions.--An article shall not be treated as 
                the growth, product, or manufacture of Nepal for 
                purposes of subparagraph (A)(i) by virtue of having 
                merely undergone--
                            (i) simple combining or packaging 
                        operations; or
                            (ii) mere dilution with water or mere 
                        dilution with another substance that does not 
                        materially alter the characteristics of the 
                        article.
                    (C) Limitation on united states cost.--For purposes 
                of subparagraph (A)(v), the cost or value of materials 
                produced in, and the direct costs of processing 
                operations performed in, the customs territory of the 
                United States and attributed to the 35-percent 
                requirement under that subparagraph may not exceed 15 
                percent of the appraised value of the article at the 
                time it is entered.
    (b) Textile and Apparel Articles.--
            (1) In general.--A textile or apparel article described in 
        paragraph (2) or (3) may enter the customs territory of the 
        United States free of duty.
            (2) Textile and apparel articles wholly assembled in 
        nepal.--
                    (A) In general.--A textile or apparel article is 
                described in this paragraph if the textile or apparel 
                article is--
                            (i) wholly assembled in Nepal, without 
                        regard to the country of origin of the yarn or 
                        fabric used to make the articles; and
                            (ii) imported directly from Nepal into the 
                        customs territory of the United States.
                    (B) Limitations.--
                            (i) Low volume of imports.--If, during a 
                        calendar year, imports of textile and apparel 
                        articles described in subparagraph (A) from 
                        Nepal are less than 1 percent of the aggregate 
                        square meter equivalents of all textile and 
                        apparel articles imported into the customs 
                        territory of the United States during that 
                        calendar year, such imports from Nepal may be 
                        increased to an amount that is equal to not 
                        more than 1.5 percent of the aggregate square 
                        meter equivalents of all textile and apparel 
                        articles imported into the customs territory of 
                        the United States during that calendar year for 
                        the succeeding calendar year.
                            (ii) Higher volume of imports.--If, during 
                        a calendar year, imports of textile and apparel 
                        articles described in subparagraph (A) from 
                        Nepal are at least 1 percent of the aggregate 
                        square meter equivalents of all textile and 
                        apparel articles imported into the customs 
                        territory of the United States during that 
                        calendar year, such imports from Nepal may be 
                        increased by an amount that is equal to not 
                        more than \1/3\ of 1 percent of the aggregate 
                        square meter equivalents of all textile and 
                        apparel articles imported into the customs 
                        territory of the United States during that 
                        calendar year for the succeeding calendar year.
                            (iii) Aggregate country limit.--In no case 
                        may the aggregate quantity of textile and 
                        apparel articles described in subparagraph (A) 
                        imported into the customs territory of the 
                        United States from Nepal during a calendar year 
                        under this subsection exceed the applicable 
                        percentage set forth in paragraph (4)(B) for 
                        that calendar year.
            (3) Handloomed, handmade, folklore articles and ethnic 
        printed fabrics.--
                    (A) In general.--A textile or apparel article is 
                described in this paragraph if the textile or apparel 
                article is--
                            (i) imported directly from Nepal into the 
                        customs territory of the United States;
                            (ii) on a list of textile and apparel 
                        articles determined by the President, after 
                        consultation with the Government of Nepal, to 
                        be handloomed, handmade, folklore articles or 
                        ethnic printed fabrics of Nepal; and
                            (iii) certified as a handloomed, handmade, 
                        folklore article or an ethnic printed fabric of 
                        Nepal by the competent authority of Nepal.
                    (B) Ethnic printed fabric.--For purposes of 
                subparagraph (A), an ethnic printed fabric of Nepal 
                is--
                            (i) fabric containing a selvedge on both 
                        edges, having a width of less than 50 inches, 
                        and classifiable under subheading 5208.52.30 or 
                        5208.52.40 of the Harmonized Tariff Schedule of 
                        the United States;
                            (ii) fabric of a type that contains 
                        designs, symbols, and other characteristics of 
                        Nepal--
                                    (I) normally produced for and sold 
                                in indigenous markets in Nepal; and
                                    (II) normally sold in Nepal by the 
                                piece as opposed to being tailored into 
                                garments before being sold in 
                                indigenous markets in Nepal;
                            (iii) printed, including waxed, in Nepal; 
                        and
                            (iv) fabric formed in the United States 
                        from yarns formed in the United States or from 
                        fabric formed in Nepal from yarns originating 
                        in either the United States or Nepal.
            (4) Limitations on benefits.--
                    (A) In general.--Preferential treatment under this 
                subsection shall be extended in the 1-year period 
                beginning January 1, 2014, and in each of the 
                succeeding 10 1-year periods, to imports of textile and 
                apparel articles from Nepal under this subsection in an 
                amount not to exceed the applicable percentage of the 
                aggregate square meter equivalents of all textile and 
                apparel articles imported into the customs territory of 
                the United States in the most recent 12-month period 
                for which data are available.
                    (B) Applicable percentage.--For purposes of this 
                paragraph, the term ``applicable percentage'' means 1.5 
                percent for the 1-year period beginning January 1, 
                2014, increased in each of the 10 succeeding 1-year 
                periods by equal increments, so that for the period 
                beginning January 1, 2023, the applicable percentage 
                does not exceed 3.5 percent.
            (5) Surge mechanism.--The provisions of subparagraph (B) of 
        section 112(b)(3) of the African Growth and Opportunity Act (19 
        U.S.C. 3721(b)(3)) shall apply to textile and apparel articles 
        imported from Nepal to which preferential treatment is extended 
        under this subsection to the same extent and in the same manner 
        that such provisions apply to textile and apparel articles 
        described in such section 112(b)(3) imported from a beneficiary 
        sub-Saharan African country.
            (6) Special eligibility rules; protections against 
        transshipment.--The provisions of subsection (e) of section 112 
        and section 113 of the African Growth and Opportunity Act (19 
        U.S.C. 3721 and 3722) shall apply to textile and apparel 
        articles imported from Nepal to which preferential treatment is 
        extended under this subsection to the same extent and in the 
        same manner that such provisions apply to textile and apparel 
        articles imported from beneficiary sub-Saharan countries to 
        which preferential treatment is extended under such section 
        112.

SEC. 4. REPORTING REQUIREMENT.

    The President shall monitor, review, and report to Congress, not 
later than one year after the date of the enactment of this Act, and 
annually thereafter, on the implementation of this Act and on the trade 
and investment policy of the United States with respect to Nepal.

SEC. 5. TERMINATION OF PREFERENTIAL TREATMENT.

    No preferential treatment extended under this Act shall remain in 
effect after December 31, 2023.

SEC. 6. EFFECTIVE DATE.

    The provisions of this Act shall take effect on January 1, 2014.
Nepal Trade Preferences Act - Authorizes the President to give preferential treatment to certain articles imported directly from Nepal into the U.S. customs territory if that country meets certain requirements under the African Growth and Opportunity Act, including a market-based economy and the rule of law, the protection of human rights and internationally-recognized worker rights, elimination of trade barriers to the United States, and non-engagement in activities that undermine U.S. national security or foreign policy interests or support acts of international terrorism. Requires Nepal also to meet certain eligibility criteria for designation as a beneficiary developing country under the Trade Act of 1974. Authorizes certain import-sensitive articles (watches, electronic articles, steel articles, footwear and certain other apparel, and glass products) imported directly from Nepal to enter the U.S. customs territory duty-free if: (1) the article is the growth, product, or manufacture of Nepal; (2) the President determines, after receiving advice from the U.S. International Trade Commission (USITC), that the article is not import-sensitive; and (3) the sum of the cost or value of the materials produced in, and the manufacturing costs performed in, Nepal or the U.S. customs territory is at least 35% of the appraised value of the article at the time it is entered. Limits to 15% of the appraised value of the article at the time it is entered the cost or value of the materials produced in, and the manufacturing costs performed in, the U.S. customs territory, and attributed to the 35% requirement. Grants duty-free treatment to certain textile or apparel articles: (1) wholly assembled in Nepal, without regard to the country of origin of the yarn or fabric used to make them; and (2) imported directly from Nepal into the U.S. customs territory.  Prescribes requirements for handloomed, handmade, folklore articles or ethnic printed fabrics. Terminates the extension of preferential treatment to Nepal after December 31, 2023. 
Nepal Trade Preferences Act