`[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1387 Placed on Calendar Senate (PCS)]





                                                       Calendar No. 212

106th CONGRESS

  1st Session

                                S. 1387

_______________________________________________________________________

                                 A BILL

 To extend certain trade preferences to sub-Saharan African countries.

_______________________________________________________________________

                             July 16, 1999

                 Read twice and placed on the calendar





                                                       Calendar No. 212
106th CONGRESS
  1st Session
                                S. 1387

 To extend certain trade preferences to sub-Saharan African countries.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 16, 1999

    Mr. Roth, from the Committee on Finance, reported the following 
     original bill; which was read twice and placed on the calendar

_______________________________________________________________________

                                 A BILL


 
 To extend certain trade preferences to sub-Saharan African countries.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``African Growth and 
Opportunity Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Statement of policy.
Sec. 4. Sub-Saharan Africa defined.
   TITLE I--EXTENSION OF CERTAIN TRADE BENEFITS TO SUB-SAHARAN AFRICA

Sec. 101. Eligibility for certain benefits.
Sec. 102. Treatment of certain textiles and apparel.
Sec. 103. United States-sub-Saharan African trade and economic 
                            cooperation forum.
Sec. 104. United States-sub-Saharan Africa free trade area.
Sec. 105. Reporting requirement.
                      TITLE II--REVENUE PROVISIONS

Sec. 201. Limitation on use of non-accrual experience method of 
                            accounting.
Sec. 202. Returns relating to cancellations of indebtedness by 
                            organizations lending money.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) it is in the mutual interest of the United States and 
        the countries of sub-Saharan Africa to promote stable and 
        sustainable economic growth and development in sub-Saharan 
        Africa;
            (2) the 48 countries of sub-Saharan Africa form a region 
        richly endowed with both natural and human resources;
            (3) sub-Saharan Africa represents a region of enormous 
        economic potential and of enduring political significance to 
        the United States;
            (4) the region has experienced a rise in both economic 
        development and political freedom as countries in sub-Saharan 
        Africa have taken steps toward liberalizing their economies and 
        encouraged broader participation in the political process;
            (5) the countries of sub-Saharan Africa have made progress 
        toward regional economic integration that can have positive 
        benefits for the region;
            (6) despite those gains, the per capita income in sub-
        Saharan Africa averages less than $500 annually;
            (7) United States foreign direct investment in the region 
        has fallen in recent years and the sub-Saharan African region 
        receives only minor inflows of direct investment from around 
        the world;
            (8) trade between the United States and sub-Saharan Africa, 
        apart from the import of oil, remains an insignificant part of 
        total United States trade;
            (9) trade and investment, as the American experience has 
        shown, can represent powerful tools both for economic 
        development and for building a stable political environment in 
        which political freedom can flourish;
            (10) increased trade and investment flows have the greatest 
        impact in an economic environment in which trading partners 
        eliminate barriers to trade and capital flows and encourage the 
        development of a vibrant private sector that offers individual 
        African citizens the freedom to expand their economic 
        opportunities and provide for their families;
            (11) offering the countries of sub-Saharan Africa enhanced 
        trade preferences will encourage both higher levels of trade 
        and direct investment in support of the positive economic and 
        political developments under way throughout the region; and
            (12) encouraging the reciprocal reduction of trade and 
        investment barriers in Africa will enhance the benefits of 
        trade and investment for the region as well as enhance 
        commercial and political ties between the United States and 
        sub-Saharan Africa.

SEC. 3. STATEMENT OF POLICY.

    Congress supports--
            (1) encouraging increased trade and investment between the 
        United States and sub-Saharan Africa;
            (2) reducing tariff and nontariff barriers and other 
        obstacles to sub-Saharan African and United States trade;
            (3) expanding United States assistance to sub-Saharan 
        Africa's regional integration efforts;
            (4) negotiating reciprocal and mutually beneficial trade 
        agreements, including the possibility of establishing free 
        trade areas that serve the interests of both the United States 
and the countries of sub-Saharan Africa;
            (5) focusing on countries committed to accountable 
        government, economic reform, and the eradication of poverty;
            (6) strengthening and expanding the private sector in sub-
        Saharan Africa;
            (7) supporting the development of civil societies and 
        political freedom in sub-Saharan Africa; and
            (8) establishing a United States-Sub-Saharan African 
        Economic Cooperation Forum.

SEC. 4. SUB-SAHARAN AFRICA DEFINED.

    In this Act, the terms ``sub-Saharan Africa'', ``sub-Saharan 
African country'', ``country in sub-Saharan Africa'', and ``countries 
in sub-Saharan Africa'' refer to the following:
            (1) Republic of Angola (Angola).
            (2) Republic of Botswana (Botswana).
            (3) Republic of Burundi (Burundi).
            (4) Republic of Cape Verde (Cape Verde).
            (5) Republic of Chad (Chad).
            (6) Democratic Republic of Congo.
            (7) Republic of the Congo (Congo).
            (8) Republic of Djibouti (Djibouti).
            (9) State of Eritrea (Eritrea).
            (10) Gabonese Republic (Gabon).
            (11) Republic of Ghana (Ghana).
            (12) Republic of Guinea-Bissau (Guinea-Bissau).
            (13) Kingdom of Lesotho (Lesotho).
            (14) Republic of Madagascar (Madagascar).
            (15) Republic of Mali (Mali).
            (16) Republic of Mauritius (Mauritius).
            (17) Republic of Namibia (Namibia).
            (18) Federal Republic of Nigeria (Nigeria).
            (19) Democratic Republic of Sao Tome and Principe (Sao Tome 
        and Principe).
            (20) Republic of Sierra Leone (Sierra Leone).
            (21) Somalia.
            (22) Kingdom of Swaziland (Swaziland).
            (23) Republic of Togo (Togo).
            (24) Republic of Zimbabwe (Zimbabwe).
            (25) Republic of Benin (Benin).
            (26) Burkina Faso (Burkina).
            (27) Republic of Cameroon (Cameroon).
            (28) Central African Republic.
            (29) Federal Islamic Republic of the Comoros (Comoros).
            (30) Republic of Cote d'Ivoire (Cote d'Ivoire).
            (31) Republic of Equatorial Guinea (Equatorial Guinea).
            (32) Ethiopia.
            (33) Republic of the Gambia (Gambia).
            (34) Republic of Guinea (Guinea).
            (35) Republic of Kenya (Kenya).
            (36) Republic of Liberia (Liberia).
            (37) Republic of Malawi (Malawi).
            (38) Islamic Republic of Mauritania (Mauritania).
            (39) Republic of Mozambique (Mozambique).
            (40) Republic of Niger (Niger).
            (41) Republic of Rwanda (Rwanda).
            (42) Republic of Senegal (Senegal).
            (43) Republic of Seychelles (Seychelles).
            (44) Republic of South Africa (South Africa).
            (45) Republic of Sudan (Sudan).
            (46) United Republic of Tanzania (Tanzania).
            (47) Republic of Uganda (Uganda).
            (48) Republic of Zambia (Zambia).

   TITLE I--EXTENSION OF CERTAIN TRADE BENEFITS TO SUB-SAHARAN AFRICA

SEC. 101. ELIGIBILITY FOR CERTAIN BENEFITS.

    (a) In General.--Title V of the Trade Act of 1974 is amended by 
inserting after section 506 the following new section:

``SEC. 506A. DESIGNATION OF SUB-SAHARAN AFRICAN COUNTRIES FOR CERTAIN 
              BENEFITS.

    ``(a) Authority To Designate.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the President is authorized to designate a country listed 
        in section 4 of the African Growth and Opportunity Act as a 
        beneficiary sub-Saharan African country eligible for the 
        benefits described in subsection (b), if the President 
        determines that the country--
                    ``(A) has established, or is making continual 
                progress toward establishing--
                            ``(i) a market-based economy, where private 
                        property rights are protected and the 
                        principles of an open, rules-based trading 
                        system are observed;
                            ``(ii) a democratic society, where the rule 
                        of law, political freedom, participatory 
                        democracy, and the right to due process and a 
                        fair trial are observed;
                            ``(iii) an open trading system through the 
                        elimination of barriers to United States trade 
                        and investment and the resolution of bilateral 
                        trade and investment disputes; and
                            ``(iv) economic policies to reduce poverty, 
                        increase the availability of health care and 
                        educational opportunities, expand physical 
                        infrastructure, and promote the establishment 
                        of private enterprise;
                    ``(B) does not engage in gross violations of 
                internationally recognized human rights or provide 
                support for acts of international terrorism and 
                cooperates in international efforts to eliminate human 
                rights violations and terrorist activities; and
                    ``(C) subject to the authority granted to the 
                President under section 502 (a), (d), and (e), 
                otherwise satisfies the eligibility criteria set forth 
                in section 502.
            ``(2) Monitoring and review of certain countries.--The 
        President shall monitor and review the progress of each country 
        listed in section 4 of the African Growth and Opportunity Act 
in meeting the requirements described in paragraph (1) in order to 
determine the current or potential eligibility of each country to be 
designated as a beneficiary sub-Saharan African country for purposes of 
subsection (a). The President shall include the reasons for the 
President's determinations in the annual report required by section 105 
of the African Growth and Opportunity Act.
            ``(3) Continuing compliance.--If the President determines 
        that a beneficiary sub-Saharan African country is not making 
        continual progress in meeting the requirements described in 
        paragraph (1), the President shall terminate the designation of 
        that country as a beneficiary sub-Saharan African country for 
        purposes of this section, effective on January 1 of the year 
        following the year in which such determination is made.
    ``(b) Preferential Tariff Treatment for Certain Articles.--
            ``(1) In general.--The President may provide duty-free 
        treatment for any article described in section 503(b)(1) (B) 
        through (G) (except for textile luggage) that is the growth, 
        product, or manufacture of a beneficiary sub-Saharan African 
        country described in subsection (a), if, after receiving the 
        advice of the International Trade Commission in accordance with 
        section 503(e), the President determines that such article is 
        not import-sensitive in the context of imports from beneficiary 
        sub-Saharan African countries.
            ``(2) Rules of origin.--The duty-free treatment provided 
        under paragraph (1) shall apply to any article described in 
        that paragraph that meets the requirements of section 
        503(a)(2), except that--
                    ``(A) if the cost or value of materials produced in 
                the customs territory of the United States is included 
                with respect to that article, an amount not to exceed 
                15 percent of the appraised value of the article at the 
                time it is entered that is attributed to such United 
                States cost or value may be applied toward determining 
                the percentage referred to in subparagraph (A) of 
                section 503(a)(2); and
                    ``(B) the cost or value of the materials included 
                with respect to that article that are produced in one 
                or more beneficiary sub-Saharan African countries shall 
                be applied in determining such percentage.
    ``(c) Beneficiary Sub-Saharan African Countries, etc.--For purposes 
of this title, the terms `beneficiary sub-Saharan African country' and 
`beneficiary sub-Saharan African countries' mean a country or countries 
listed in section 4 of the African Growth and Opportunity Act that the 
President has determined is eligible under subsection (a) of this 
section.''.
    (b) Waiver of Competitive Need Limitation.--Section 503(c)(2)(D) of 
the Trade Act of 1974 (19 U.S.C. 2463(c)(2)(D)) is amended to read as 
follows:
                    ``(D) Least-developed beneficiary developing 
                countries and beneficiary sub-saharan african 
                countries.--Subparagraph (A) shall not apply to any 
                least-developed beneficiary developing country or any 
                beneficiary sub-Saharan African country.''.
    (c) Termination.--Title V of the Trade Act of 1974 is amended by 
inserting after section 505 the following new section:

``SEC. 505A. TERMINATION OF BENEFITS FOR SUB-SAHARAN AFRICAN COUNTRIES.

    ``In the case of a country listed in section 4 of the African 
Growth and Opportunity Act that is a beneficiary developing country, 
duty-free treatment provided under this title shall remain in effect 
through September 30, 2006.''.
    (d) Clerical Amendments.--The table of contents for title V of the 
Trade Act of 1974 is amended--
            (1) by inserting after the item relating to section 505 the 
        following new item:

``505A. Termination of benefits for sub-Saharan African countries.'';
        and
            (2) by inserting after the item relating to section 506 the 
        following new item:

``506A. Designation of sub-Saharan African countries for certain 
                            benefits.''.
    (e) Effective Date.--The amendments made by this section take 
effect on October 1, 1999.

SEC. 102. TREATMENT OF CERTAIN TEXTILES AND APPAREL.

    (a) Preferential Treatment.--Notwithstanding any other provision of 
law, textile and apparel articles described in subsection (b) 
(including textile luggage) imported from a beneficiary sub-Saharan 
African country, described in section 506A(c) of the Trade Act of 1974, 
shall enter the United States free of duty and free of any quantitative 
limitations, if--
            (1) the country adopts an efficient visa system to guard 
        against unlawful transshipment of textile and apparel goods and 
        the use of counterfeit documents; and
            (2) the country enacts legislation or promulgates 
        regulations that would permit United States Customs 
        verification teams to have the access necessary to investigate 
        thoroughly allegations of transshipment through such country.
    (b) Products Covered.--The preferential treatment described in 
subsection (a) shall apply only to the following textile and apparel 
products:
            (1) Apparel articles assembled in beneficiary sub-saharan 
        african countries.--Apparel articles assembled in one or more 
        beneficiary sub-Saharan African countries from fabrics wholly 
        formed and cut in the United States, from yarns wholly formed 
        in the United States that are--
                    (A) entered under subheading 9802.00.80 of the 
                Harmonized Tariff Schedule of the United States; or
                    (B) entered under chapter 61 or 62 of the 
                Harmonized Tariff Schedule of the United States, if, 
                after such assembly, the articles would have qualified 
                for entry under subheading 9802.00.80 of the Harmonized 
                Tariff Schedule of the United States but for the fact 
                that the articles were subjected to stone-washing, 
                enzyme-washing, acid washing, perma-pressing, oven-
                baking, bleaching, garment-dyeing, or other similar 
                processes.
            (2) Apparel articles cut and assembled in beneficiary sub-
        saharan african countries.--Apparel articles cut in one or more 
        beneficiary sub-Saharan African countries from fabric wholly 
        formed in the United States from yarns wholly formed in the 
        United States, if such articles are assembled in one or more 
        beneficiary sub-Saharan African countries with thread formed in 
        the United States.
            (3) Handloomed, handmade, and folklore articles.--A 
        handloomed, handmade, or folklore article of a beneficiary sub-
        Saharan African country or countries that is certified as such 
        by the competent authority of such beneficiary country or 
        countries. For purposes of this paragraph, the President, after 
        consultation with the beneficiary sub-Saharan African country 
        or countries concerned, shall determine which, if any, 
        particular textile and apparel goods of the country (or 
        countries) shall be treated as being handloomed, handmade, or 
        folklore goods.
    (c) Penalties for Transshipments.--
            (1) Penalties for exporters.--If the President determines, 
        based on sufficient evidence, that an exporter has engaged in 
        transshipment with respect to textile or apparel products from 
        a beneficiary sub-Saharan African country, then the President 
        shall deny all benefits under this section and section 506A of 
        the Trade Act of 1974 to such exporter, any successor of such 
        exporter, and any other entity owned or operated by the 
        principal of the exporter for a period of 2 years.
            (2) Transshipment described.--Transshipment within the 
        meaning of this subparagraph has occurred when preferential 
        treatment for a textile or apparel article under subsection (a) 
        has been claimed on the basis of material false information 
        concerning the country of origin, manufacture, processing, or 
        assembly of the article or any of its components. For purposes 
        of this clause, false information is material if disclosure of 
        the true information would mean or would have meant that the 
        article is or was ineligible for preferential treatment under 
        subsection (a).
    (d) Technical Assistance.--The Customs Service shall provide 
technical assistance to the beneficiary sub-Saharan African countries 
for the implementation of the requirements set forth in subsection 
(a)(1) and (2).
    (e) Monitoring and Reports to Congress.--The Customs Service shall 
monitor and the Commissioner of Customs shall submit to Congress, not 
later than March 31 of each year, a report on the effectiveness of the 
anti-circumvention systems described in this section and on measures 
taken by countries in sub-Saharan Africa which export textiles or 
apparel to the United States to prevent circumvention as described in 
article 5 of the Agreement on Textiles and Clothing.
    (f) Safeguard.--The President shall have the authority to impose 
appropriate remedies, including restrictions on or the removal of 
quota-free and duty-free treatment provided under this section, in the 
event that textile and apparel articles from a beneficiary sub-Saharan 
African country are being imported in such increased quantities as to 
cause serious damage, or actual threat thereof, to the domestic 
industry producing like or directly competitive articles. The President 
shall exercise his authority under this subsection consistent with the 
Agreement on Textiles and Clothing.
    (g) Definitions.--In this section:
            (1) Agreement on textiles and clothing.--The term 
        ``Agreement on Textiles and Clothing'' means the Agreement on 
        Textiles and Clothing referred to in section 101(d)(4) of the 
Uruguay Round Agreements Act (19 U.S.C. 3511(d)(4)).
            (2) Beneficiary sub-saharan african country, etc.--The 
        terms ``beneficiary sub-Saharan African country'' and 
        ``beneficiary sub-Saharan African countries'' have the same 
        meaning as such terms have under section 506A(c) of the Trade 
        Act of 1974.
            (3) Customs service.--The term ``Customs Service'' means 
        the United States Customs Service.
    (h) Effective Date.--The amendments made by this section take 
effect on October 1, 1999 and shall remain in effect through September 
30, 2006.

SEC. 103. UNITED STATES-SUB-SAHARAN AFRICAN TRADE AND ECONOMIC 
              COOPERATION FORUM.

    (a) Declaration of Policy.--The President shall convene annual 
meetings between senior officials of the United States Government and 
officials of the governments of sub-Saharan African countries in order 
to foster close economic ties between the United States and sub-Saharan 
Africa.
    (b) Establishment.--Not later than 12 months after the date of 
enactment of this Act, the President, after consulting with the 
officials of interested sub-Saharan African governments, shall 
establish a United States-Sub-Saharan African Trade and Economic 
Cooperation Forum (in this section referred to as the ``Forum'').
    (c) Requirements.--In creating the Forum, the President shall meet 
the following requirements:
            (1) First meeting.--The President shall direct the 
        Secretary of Commerce, the Secretary of the Treasury, the 
        Secretary of State, and the United States Trade Representative 
        to invite their counterparts from interested sub-Saharan 
        African governments and representatives of appropriate regional 
        organizations to participate in the first annual meeting to 
        discuss expanding trade and investment relations between the 
        United States and sub-Saharan Africa.
            (2) Nongovernmental organizations.--
                    (A) In general.--The President, in consultation 
                with Congress, shall invite United States 
                nongovernmental organizations to host meetings with 
                their counterparts from sub-Saharan Africa in 
                conjunction with meetings of the Forum for the purpose 
                of discussing the issues described in paragraph (1).
                    (B) Private sector.--The President, in consultation 
                with Congress, shall invite United States 
                representatives of the private sector to host meetings 
                with their counterparts from sub-Saharan Africa in 
                conjunction with meetings of the Forum for the purpose 
                of discussing the issues described in paragraph (1).
            (3) Annual meetings.--As soon as practicable after the date 
        of enactment of this Act, the President shall meet with the 
        heads of the governments of interested sub-Saharan African 
        countries for the purpose of discussing the issues described in 
        paragraph (1).

SEC. 104. UNITED STATES-SUB-SAHARAN AFRICA FREE TRADE AREA.

    (a) In General.--The President shall examine the feasibility of 
negotiating a free trade agreement (or agreements) with interested sub-
Saharan African countries.
    (b) Report to Congress.--Not later than 12 months after the date of 
enactment of this Act, the President shall submit a report to the 
Committee on Finance of the Senate and the Committee on Ways and Means 
of the House of Representatives regarding the President's conclusions 
on the feasibility of negotiating such agreement (or agreements). If 
the President determines that the negotiation of any such free trade 
agreement is feasible, the President shall provide a detailed plan for 
such negotiation that outlines the objectives, timing, any potential 
benefits to the United States and sub-Saharan Africa, and the likely 
economic impact of any such agreement.

SEC. 105. REPORTING REQUIREMENT.

    Not later than 1 year after the date of enactment of this Act, and 
annually thereafter for 4 years, the President shall submit a report to 
Congress on the implementation of this Act.

                      TITLE II--REVENUE PROVISIONS

SEC. 201. LIMITATION ON USE OF NON-ACCRUAL EXPERIENCE METHOD OF 
              ACCOUNTING.

    (a) In General.--Section 448(d)(5) of the Internal Revenue Code of 
1986 (relating to special rule for services) is amended--
            (1) by inserting ``in fields described in paragraph 
        (2)(A)'' after ``services by such person'', and
            (2) by inserting ``certain personal'' before ``services'' 
        in the heading.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years ending after the date of enactment of 
        this Act.
            (2) Change in method of accounting.--In the case of any 
        taxpayer required by the amendments made by this section to 
        change its method of accounting for its first taxable year 
        ending after the date of enactment of this Act--
                    (A) such change shall be treated as initiated by 
                the taxpayer,
                    (B) such change shall be treated as made with the 
                consent of the Secretary of the Treasury, and
                    (C) the net amount of the adjustments required to 
                be taken into account by the taxpayer under section 481 
                of the Internal Revenue Code of 1986 shall be taken 
                into account over a period (not greater than 4 taxable 
                years) beginning with such first taxable year.

SEC. 202. RETURNS RELATING TO CANCELLATIONS OF INDEBTEDNESS BY 
              ORGANIZATIONS LENDING MONEY.

    (a) In General.--Paragraph (2) of section 6050P(c) of the Internal 
Revenue Code of 1986 (relating to definitions and special rules) is 
amended--
            (1) by striking ``and'' at the end of subparagraph (B);
            (2) by striking the period at the end of subparagraph (C) 
        and inserting ``, and''; and
            (3) by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) any organization a significant trade or 
                business of which is the lending of money.''
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to discharges of indebtedness after December 31, 1999.`