89–010

Calendar No. 148

107TH CONGRESS REPORT

1st Session " ! SENATE 107–59

UNITED STATES-JORDAN FREE TRADE AREA

IMPLEMENTATION ACT

SEPTEMBER 4, 2001.—Ordered to be printed

Mr. BAUCUS, from the Committee on Finance,

submitted the following

REPORT

[To accompany S. 643]

[Including cost estimate of the Congressional Budget Office]

The Committee on Finance, having considered legislation (S. 643)

to implement the agreement establishing a United States-Jordan

free trade area, reports favorably thereon with an amendment and

refers the bill as amended to the full Senate with a recommendation that the bill do pass.

The amendment is as follows:

Strike out all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘United States-Jordan Free Trade Area Implementation Act’’.

SEC. 2. PURPOSES.

The purposes of this Act are—

(1) to implement the agreement between the United States and Jordan establishing a free trade area;

(2) to strengthen and develop the economic relations between the United

States and Jordan for their mutual benefit; and

(3) to establish free trade between the 2 nations through the removal of trade

barriers.

SEC. 3. DEFINITIONS.

For purposes of this Act:

(1) AGREEMENT.—The term ‘‘Agreement’’ means the Agreement between the

United States of America and the Hashemite Kingdom of Jordan on the Establishment of a Free Trade Area, entered into on October 24, 2000.

(2) HTS.—The term ‘‘HTS’’ means the Harmonized Tariff Schedule of the

United States.

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SEC. 4. APPROVAL OF AGREEMENT.

Congress approves the Agreement between the United States of America and the

Hashemite Kingdom of Jordan on the establishment of a free trade area, entered

into on October 24, 2000, and submitted to Congress on January 6, 2001.

TITLE I—TARIFF MODIFICATIONS; RULES OF

ORIGIN

SEC. 101. TARIFF MODIFICATIONS.

(a) TARIFF MODIFICATIONS PROVIDED FOR IN THE AGREEMENT.—The President may

proclaim—

(1) such modifications or continuation of any duty,

(2) such continuation of duty-free or excise treatment, or

(3) such additional duties,

as the President determines to be necessary or appropriate to carry out article 2.1

of the Agreement and the schedule of duty reductions with respect to Jordan set

out in Annex 2.1 of the Agreement.

(b) OTHER TARIFF MODIFICATIONS.—The President may proclaim—

(1) such modifications or continuation of any duty,

(2) such continuation of duty-free or excise treatment, or

(3) such additional duties,

as the President determines to be necessary or appropriate to maintain the general

level of reciprocal and mutually advantageous concessions with respect to Jordan

provided for by the Agreement.

SEC. 102. RULES OF ORIGIN.

(a) IN GENERAL.—

(1) ELIGIBLE ARTICLES.—

(A) IN GENERAL.—The reduction or elimination of any duty imposed on

any article by the United States provided for in the Agreement shall apply

only if—

(i) that article is imported directly from Jordan into the customs territory of the United States; and

(ii) that article—

(I) is wholly the growth, product, or manufacture of Jordan; or

(II) is a new or different article of commerce that has been

grown, produced, or manufactured in Jordan and meets the requirements of subparagraph (B).

(B) REQUIREMENTS.—

(i) GENERAL RULE.—The requirements of this subparagraph are that

with respect to an article described in subparagraph (A)(ii)(II), the sum

of—

(I) the cost or value of the materials produced in Jordan, plus

(II) the direct costs of processing operations performed in Jordan,

is not less than 35 percent of the appraised value of such article at the

time it is entered.

(ii) MATERIALS PRODUCED IN UNITED STATES.—If the cost or value of

materials produced in the customs territory of the United States is included with respect to an article to which this paragraph applies, an

amount not to exceed 15 percent of the appraised value of the article

at the time it is entered that is attributable to such United States cost

or value may be applied toward determining the percentage referred to

in clause (i).

(2) EXCLUSIONS.—No article may be considered to meet the requirements of

paragraph (1)(A) by virtue of having merely undergone—

(A) simple combining or packaging operations; or

(B) mere dilution with water or mere dilution with another substance

that does not materially alter the characteristics of the article.

(b) DIRECT COSTS OF PROCESSING OPERATIONS.—

(1) IN GENERAL.—As used in this section, the term ‘‘direct costs of processing

operations’’ includes, but is not limited to—

(A) all actual labor costs involved in the growth, production, manufacture,

or assembly of the specific merchandise, including fringe benefits, on-thejob training, and the cost of engineering, supervisory, quality control, and

similar personnel; and

(B) dies, molds, tooling, and depreciation on machinery and equipment

which are allocable to the specific merchandise.

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(2) EXCLUDED COSTS.—The term ‘‘direct costs of processing operations’’ does

not include costs which are not directly attributable to the merchandise concerned, or are not costs of manufacturing the product, such as—

(A) profit; and

(B) general expenses of doing business which are either not allocable to

the specific merchandise or are not related to the growth, production, manufacture, or assembly of the merchandise, such as administrative salaries,

casualty and liability insurance, advertising, and salesmen’s salaries, commissions, or expenses.

(c) TEXTILE AND APPAREL ARTICLES.—

(1) IN GENERAL.—A textile or apparel article imported directly from Jordan

into the customs territory of the United States shall be considered to meet the

requirements of paragraph (1)(A) of subsection (a) only if—

(A) the article is wholly obtained or produced in Jordan;

(B) the article is a yarn, thread, twine, cordage, rope, cable, or braiding,

and—

(i) the constituent staple fibers are spun in Jordan, or

(ii) the continuous filament is extruded in Jordan;

(C) the article is a fabric, including a fabric classified under chapter 59

of the HTS, and the constituent fibers, filaments, or yarns are woven, knitted, needled, tufted, felted, entangled, or transformed by any other fabricmaking process in Jordan; or

(D) the article is any other textile or apparel article that is wholly assembled in Jordan from its component pieces.

(2) DEFINITION.—For purposes of paragraph (1), an article is ‘‘wholly obtained

or produced in Jordan’’ if it is wholly the growth, product, or manufacture of

Jordan.

(3) SPECIAL RULES.—

(A) CERTAIN MADE-UP ARTICLES, TEXTILE ARTICLES IN THE PIECE, AND CERTAIN OTHER TEXTILES AND TEXTILE ARTICLES.—Notwithstanding paragraph

(1)(D) and except as provided in subparagraphs (C) and (D) of this paragraph, subparagraph (A), (B), or (C) of paragraph (1), as appropriate, shall

determine whether a good that is classified under one of the following headings or subheadings of the HTS shall be considered to meet the requirements of paragraph (1)(A) of subsection (a): 5609, 5807, 5811,

6209.20.50.40, 6213, 6214, 6301, 6302, 6304, 6305, 6306, 6307.10, 6307.90,

6308, and 9404.90.

(B) CERTAIN KNIT-TO-SHAPE TEXTILES AND TEXTILE ARTICLES.—Notwithstanding paragraph (1)(D) and except as provided in subparagraphs (C) and

(D) of this paragraph, a textile or apparel article which is knit-to-shape in

Jordan shall be considered to meet the requirements of paragraph (1)(A) of

subsection (a).

(C) CERTAIN DYED AND PRINTED TEXTILES AND TEXTILE ARTICLES.—Notwithstanding paragraph (1)(D), a good classified under subheading 6117.10,

6213.00, 6214.00. 6302.22, 6302.29, 6302.52, 6302.53, 6302.59, 6302.92,

6302.93, 6302.99, 6303.92, 6303.99, 6304.19, 6304.93, 6304.99, 9404.90.85,

or 9404.90.95 of the HTS, except for a good classified under any such subheading as of cotton or of wool or consisting of fiber blends containing 16

percent or more by weight of cotton, shall be considered to meet the requirements of paragraph (1)(A) of subsection (a) if the fabric in the good is

both dyed and printed in Jordan, and such dyeing and printing is accompanied by 2 or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent

embossing, or moireing.

(D) FABRICS OF SILK, COTTON, MANMADE FIBER OR VEGETABLE FIBER.—

Notwithstanding paragraph (1)(C), a fabric classified under the HTS as of

silk, cotton, man-made fiber, or vegetable fiber shall be considered to meet

the requirements of paragraph (1)(A) of subsection (a) if the fabric is both

dyed and printed in Jordan, and such dyeing and printing is accompanied

by 2 or more of the following finishing operations: bleaching, shrinking,

fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing.

(4) MULTICOUNTRY RULE.—If the origin of a textile or apparel article cannot

be determined under paragraph (1) or (3), then that article shall be considered

to meet the requirements of paragraph (1)(A) of subsection (a) if—

(A) the most important assembly or manufacturing process occurs in Jordan; or

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(B) if the applicability of paragraph (1)(A) of subsection (a) cannot be determined under subparagraph (A), the last important assembly or manufacturing occurs in Jordan.

(d) EXCLUSION.—A good shall not be considered to meet the requirements of paragraph (1)(A) of subsection (a) if the good—

(1) is imported into Jordan, and, at the time of importation, would be classified under heading 0805 of the HTS; and

(2) is processed in Jordan into a good classified under any of subheadings

2009.11 through 2009.30 of the HTS.

(e) REGULATIONS.—The Secretary of the Treasury, after consultation with the

United States Trade Representative, shall prescribe such regulations as may be necessary to carry out this section.

TITLE II—RELIEF FROM IMPORTS

Subtitle A—General Provisions

SEC. 201. DEFINITIONS.

As used in this title:

(1) COMMISSION.—The term ‘‘Commission’’ means the United States International Trade Commission.

(2) JORDANIAN ARTICLE.—The term ‘‘Jordanian article’’ means an article that

qualifies for reduction or elimination of a duty under section 102.

Subtitle B—Relief From Imports Benefiting From

The Agreement

SEC. 211. COMMENCING OF ACTION FOR RELIEF.

(a) FILING OF PETITION.—

(1) IN GENERAL.—A petition requesting action under this subtitle for the purpose of adjusting to the obligations of the United States under the Agreement

may be filed 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. The Commission shall transmit a copy of any petition filed

under this subsection to the United States Trade Representative.

(2) PROVISIONAL RELIEF.—An entity filing a petition under this subsection

may request that provisional relief be provided as if the petition had been filed

under section 202(a) of the Trade Act of 1974.

(3) CRITICAL CIRCUMSTANCES.—Any allegation that critical circumstances

exist shall be included in the petition.

(b) INVESTIGATION AND DETERMINATION.—

(1) IN GENERAL.—Upon the filing of a petition under subsection (a), the Commission, unless subsection (d) applies, shall promptly initiate an investigation

to determine whether, as a result of the reduction or elimination of a duty provided for under the Agreement, a Jordanian article is being imported into the

United States in such increased quantities, in absolute terms or relative to domestic production, and under such conditions that imports of the Jordanian article alone constitute a substantial cause of serious injury or threat thereof to

the domestic industry producing an article that is like, or directly competitive

with, the imported article.

(2) CAUSATION.—For purposes of this subtitle, a Jordanian article is being imported into the United States in increased quantities as a result of the reduction or elimination of a duty provided for under the Agreement if the reduction

or elimination is a cause that contributes significantly to the increase in imports. Such cause need not be equal to or greater than any other cause.

(c) APPLICABLE PROVISIONS.—The following provisions of section 202 of the Trade

Act of 1974 (19 U.S.C. 2252) apply with respect to any investigation initiated under

subsection (b):

(1) Paragraphs (1)(B) and (3) of subsection (b).

(2) Subsection (c).

(3) Subsection (d).

(d) ARTICLES EXEMPT FROM INVESTIGATION.—No investigation may be initiated

under this section with respect to any Jordanian article if import relief has been

provided under this subtitle with respect to that article.

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SEC. 212. COMMISSION ACTION ON PETITION.

(a) DETERMINATION.—By no later than 120 days (180 days if critical circumstances

have been alleged) after the date on which an investigation is initiated under section 211(b) with respect to a petition, the Commission shall make the determination

required under that section.

(b) ADDITIONAL FINDING AND RECOMMENDATION IF DETERMINATION AFFIRMATIVE.—If the determination made by the Commission under subsection (a) with respect to imports of an article is affirmative, the Commission shall find, and recommend to the President in the report required under subsection (c), the amount

of import relief that is necessary to remedy or prevent the injury found by the Commission in the determination and to facilitate the efforts of the domestic industry

to make a positive adjustment to import competition. The import relief recommended by the Commission under this subsection shall be limited to that described in section 213(c).

(c) REPORT TO PRESIDENT.—Not later than the date that is 30 days after the date

on which a determination is made under subsection (a) with respect to an investigation, the Commission shall submit to the President a report that shall include—

(1) a statement of the basis for the determination;

(2) dissenting and separate views; and

(3) any finding made under subsection (b) regarding import relief.

(d) PUBLIC NOTICE.—Upon submitting a report to the President under subsection

(c), the Commission shall promptly make public such report (with the exception of

information which the Commission determines to be confidential) and shall cause

a summary thereof to be published in the Federal Register.

(e) APPLICABLE PROVISIONS.—For purposes of this subtitle, the provisions of paragraphs (1), (2), and (3) of section 330(d) of the Tariff Act of 1930 (19 U.S.C. 1330(d))

shall apply with respect to determinations and findings made under this section as

if such determinations and findings were made under section 202 of the Trade Act

of 1974 (19 U.S.C. 2252).

SEC. 213. PROVISION OF RELIEF.

(a) IN GENERAL.—Not later than the date that is 30 days after the date on which

the President receives the report of the Commission containing an affirmative determination of the Commission under section 212(a), the President shall provide relief

from imports of the article that is the subject of such determination to the extent

that the President determines necessary to prevent or remedy the injury found by

the Commission and to facilitate the efforts of the domestic industry to make a positive adjustment to import competition, unless the President determines that the

provision of such relief is not in the national economic interest of the United States

or, in extraordinary circumstances, that the provision of such relief would cause serious harm to the national security of the United States.

(b) NATIONAL ECONOMIC INTEREST.—The President may determine under subsection (a) that providing import relief is not in the national economic interest of

the United States only if the President finds that taking such action would have

an adverse impact on the United States economy clearly greater than the benefits

of taking such action.

(c) NATURE OF RELIEF.—The import relief (including provisional relief) that the

President is authorized to provide under this subtitle with respect to imports of an

article is—

(1) the suspension of any further reduction provided for under the United

States Schedule to Annex 2.1 of the Agreement in the duty imposed on that article;

(2) an increase in the rate of duty imposed on such article to a level that does

not exceed the lesser of—

(A) the column 1 general rate of duty imposed under the HTS on like articles at the time the import relief is provided; or

(B) the column 1 general rate of duty imposed under the HTS on like articles on the day before the date on which the Agreement enters into force;

or

(3) in the case of a duty applied on a seasonal basis to that article, an increase in the rate of duty imposed on the article to a level that does not exceed

the column 1 general rate of duty imposed under the HTS on the article for the

corresponding season occurring immediately before the date on which the

Agreement enters into force.

(d) PERIOD OF RELIEF.—The import relief that the President is authorized to provide under this section may not exceed 4 years.

(e) RATE AFTER TERMINATION OF IMPORT RELIEF.—When import relief under this

subtitle is terminated with respect to an article—

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(1) the rate of duty on that article after such termination and on or before

December 31 of the year in which termination occurs shall be the rate that, according to the United States Schedule to Annex 2.1 of the Agreement for the

staged elimination of the tariff, would have been in effect 1 year after the initiation of the import relief action under section 211; and

(2) the tariff treatment for that article after December 31 of the year in which

termination occurs shall be, at the discretion of the President, either— (A) the rate of duty conforming to the applicable rate set out in the

United States Schedule to Annex 2.1; or

(B) the rate of duty resulting from the elimination of the tariff in equal

annual stages ending on the date set out in the United States Schedule to

Annex 2.1 for the elimination of the tariff.

SEC. 214. TERMINATION OF RELIEF AUTHORITY.

(a) GENERAL RULE.—Except as provided in subsection (b), no import relief may

be provided under this subtitle after the date that is 15 years after the date on

which the Agreement enters into force.

(b) EXCEPTION.—Import relief may be provided under this subtitle in the case of

a Jordanian article after the date on which such relief would, but for this subsection, terminate under subsection (a), but only if the Government of Jordan consents to such provision.

SEC. 215. COMPENSATION AUTHORITY.

For purposes of section 123 of the Trade Act of 1974 (19 U.S.C. 2133), any import

relief provided by the President under section 213 shall be treated as action taken

under chapter 1 of title II of such Act.

SEC. 216. SUBMISSION OF PETITIONS.

A petition for import relief may be submitted to the Commission under—

(1) this subtitle;

(2) chapter 1 of title II of the Trade Act of 1974; or

(3) under both this subtitle and such chapter 1 at the same time, in which

case the Commission shall consider such petitions jointly.

Subtitle C—Cases Under Title II of The Trade Act

of 1974

SEC. 221. FINDINGS AND ACTION ON JORDANIAN IMPORTS.

(a) EFFECT OF IMPORTS.—If, in any investigation initiated under chapter 1 of title

II of the Trade Act of 1974, the Commission makes an affirmative determination

(or a determination which the President may treat as an affirmative determination

under such chapter by reason of section 330(d) of the Tariff Act of 1930), the Commission shall also find (and report to the President at the time such injury determination is submitted to the President) whether imports of the article from Jordan

are a substantial cause of serious injury or threat thereof.

(b) PRESIDENTIAL ACTION REGARDING JORDANIAN IMPORTS.—In determining the

nature and extent of action to be taken under chapter 1 of title II of the Trade Act

of 1974, the President shall determine whether imports from Jordan are a substantial cause of the serious injury found by the Commission and, if such determination

is in the negative, may exclude from such action imports from Jordan.

SEC. 222. TECHNICAL AMENDMENT.

Section 202(a)(8) of the Trade Act of 1974 (19 U.S.C. 2252(a)(8)) is amended in

the first sentence—

(1) by striking ‘‘and part 1’’ and inserting ‘‘, part 1’’; and

(2) by inserting before the period at the end ‘‘, and title II of the United

States-Jordan Free Trade Area Implementation Act’’.

TITLE III—TEMPORARY ENTRY

SEC. 301. NONIMMIGRANT TRADERS AND INVESTORS.

Upon the basis of reciprocity as provided for by the Agreement, an alien who is

a national of Jordan (and any spouse or child (as defined in section 101(b)(1) of the

Immigration and Nationality Act (8 U.S.C. 1101(b)(1)) of the alien, if accompanying

or following to join the alien) shall be considered to be entitled to enter the United

States under and in pursuance of the provisions of the Agreement as a nonimmigrant described in section 101(a)(15)(E) of the Immigration and Nationality Act

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(8 U.S.C. 1101(a)(15)(E)), if the entry is solely for a purpose described in clause (i)

or (ii) of such section and the alien is otherwise admissible to the United States as

such a nonimmigrant.

TITLE IV—GENERAL PROVISIONS

SEC. 401. RELATIONSHIP OF THE AGREEMENT TO UNITED STATES AND STATE LAW.

(a) RELATIONSHIP OF AGREEMENT TO UNITED STATES LAW.—

(1) UNITED STATES LAW TO PREVAIL IN CONFLICT.—No provision of the Agreement, nor the application of any such provision to any person or circumstance,

that is inconsistent with any law of the United States shall have effect.

(2) CONSTRUCTION.—Nothing in this Act shall be construed—

(A) to amend or modify any law of the United States, or

(B) to limit any authority conferred under any law of the United States,

unless specifically provided for in this Act.

(b) RELATIONSHIP OF AGREEMENT TO STATE LAW.—

(1) LEGAL CHALLENGE.—No State law, or the application thereof, may be declared invalid as to any person or circumstance on the ground that the provision

or application is inconsistent with the Agreement, except in an action brought

by the United States for the purpose of declaring such law or application invalid.

(2) DEFINITION OF STATE LAW.—For purposes of this subsection, the term

‘‘State law’’ includes—

(A) any law of a political subdivision of a State; and

(B) any State law regulating or taxing the business of insurance.

(c) EFFECT OF AGREEMENT WITH RESPECT TO PRIVATE REMEDIES.—No person

other than the United States—

(1) shall have any cause of action or defense under the Agreement; or

(2) may challenge, in any action brought under any provision of law, any action or inaction by any department, agency, or other instrumentality of the

United States, any State, or any political subdivision of a State on the ground

that such action or inaction is inconsistent with the Agreement.

SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated for each fiscal year after fiscal year 2001

to the Department of Commerce not more than $100,000 for the payment of the

United States share of the expenses incurred in dispute settlement proceedings

under article 17 of the Agreement.

SEC. 403. IMPLEMENTING REGULATIONS.

After the date of enactment of this Act—

(1) the President may proclaim such actions, and

(2) other appropriate officers of the United States may issue such regulations,

as may be necessary to ensure that any provision of this Act, or amendment made

by this Act, that takes effect on the date the Agreement enters into force is appropriately implemented on such date, but no such proclamation or regulation may

have an effective date earlier than the date the Agreement enters into force.

SEC. 404. EFFECTIVE DATES; EFFECT OF TERMINATION.

(a) EFFECTIVE DATES.—Except as provided in subsection (b), the provisions of this

Act and the amendments made by this Act take effect on the date the Agreement

enters into force.

(b) EXCEPTIONS.—Sections 1 through 4 and this title take effect on the date of enactment of this Act.

(c) TERMINATION OF THE AGREEMENT.—On the date on which the Agreement

ceases to be in force, the provisions of this Act (other than this subsection) and the

amendments made by this Act, shall cease to have effect.

I. SUMMARY

S. 643 implements the Agreement Between the United States of

America and the Hashemite Kingdom of Jordan on the Establishment of a Free Trade Area (‘‘the Agreement’’) in order to strengthen and develop economic relations between the United States and

Jordan for their mutual benefit. The bill establishes free trade between the two countries through the removal of trade barriers.

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On October 24, 2000, President Clinton and His Majesty King

Abdullah II bin Al-Hussein signed an agreement to establish a free

trade area between the United States and Jordan. On January 6,

2001, President Clinton transmitted the Agreement to the 107th

Congress for approval, together with the necessary implementing

legislation.

S. 643 approves the Agreement and makes changes to U.S. law

necessary to implement the Agreement. The bill authorizes the

President to proclaim reductions, and eventual elimination, of tariffs on goods imported from Jordan according to a schedule provided for in the Agreement. The bill also establishes rules of origin

for determining whether goods imported from Jordan are, in fact,

Jordanian goods subject to tariff treatment under the Agreement.

Additionally, consistent with the Agreement, the bill establishes

a safeguard mechanism to enable the extension of relief to American industries seriously injured (or threatened with serious injury)

due to increased imports resulting from tariff reductions and elimination. The bill also amends the general safeguards provision in

U.S. law (chapter 1 of title II of the Trade Act of 1974), to include

special rules governing the treatment of products from Jordan in

any measure imposed under that provision.

The bill contains a provision to facilitate the entry of Jordanian

nationals into the United States as non-immigrants. Finally, the

bill authorizes certain expenditures by the U.S. Government to

support operation of the Agreement’s dispute settlement mechanism.

II. GENERAL EXPLANATION

A. BACKGROUND

On June 6, 2000, President Clinton and King Abdullah II announced their intention to launch negotiation of an agreement to

establish a free trade area between the United States and Jordan.

Negotiations concluded, and the two leaders signed an agreement

on October 24, 2000. President Clinton submitted the Agreement to

the 107th Congress on January 6, 2001.

On March 28, 2001, Senator Max Baucus introduced legislation

in the Senate (S. 643) to implement the Agreement. Congressman

Sander M. Levin introduced identical legislation in the House (H.R.

1484) on April 4, 2001. Congressman William M. Thomas introduced similar legislation (H.R. 2603) on July 26, 2001.

On March 20, 2001, the Committee on Finance held a public

hearing on the Agreement. Witnesses appearing before the Committee were Charlene Barshefsky (former U.S. Trade Representative); Samuel R. Berger (former National Security Advisor); Michael B. Smith (former Deputy U.S. Trade Representative); Timothy E. Deal (Senior Vice President, U.S. Council for International

Business); Thomas J. Donohue (President and CEO, U.S. Chamber

of Commerce); Professor Jagdish Bhagwati (Arthur Lehman Professor of Economics and Political Science, Columbia University, and

Andrew Meyer Senior Fellow in International Economics, Council

on Foreign Relations); Roger Schlickeisen (President, Defenders of

Wildlife); and John Sweeney (President, AFL–CIO). Other persons

submitted written testimony for the record.

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The principal negotiator of the Agreement, former U.S. Trade

Representative Charlene Barshefsky, expressed strong support for

early enactment of the Agreement ‘‘as both a critical element of

America’s Middle East policy, and a market opening free trade

agreement.’’ Barshefsky noted that, in negotiating the Agreement,

the Clinton Administration had three specific strategic goals: first,

to encourage regional economic integration in the Middle East generally; second, to support Jordan’s economic reform program in particular; and third, to develop a comprehensive and innovative free

trade agreement, which would set a new standard for rigorous

trade liberalization and help bolster bipartisan consensus for trade

policy in the United States.

On April 5, 2001, Finance Committee members met in executive

session with King Abdullah II in Washington, DC to discuss the

Agreement and congressional support for its implementation.

The Jordanian Parliament ratified the Agreement on May 9,

2001.

In a markup begun on July 17, 2001, the Finance Committee debated the bill implementing the Agreement and approved an

amendment in the nature of a substitute. The amendment made

certain technical corrections to the bill as introduced.

Separate from the Agreement itself, on July 23, 2001, the United

States and Jordan exchanged letters, signed by U.S. Trade Representative Robert Zoellick and Jordanian Ambassador Marwan

Muasher, respectively, clarifying each Government’s understanding

of the implementation of the Agreement’s dispute settlement procedures. The letters state the view of both Governments that few, if

any, differences will arise over interpretation or application of the

Agreement. In the event that differences do arise under the Agreement, the letters state that each Government will make every effort to resolve them without resort to the dispute settlement procedures in the Agreement. The Governments also state their intention not to apply the Agreement’s dispute settlement enforcement

procedures in a manner that results in blocking trade. The letters

further state that bilateral consultations and other procedures, particularly alternative mechanisms, would be appropriate measures

to secure compliance without resort to traditional trade sanctions.

The markup of S. 643 continued on July 26, 2001, at which time

the Finance Committee reported S. 643 to the full Senate without

further amendment.

B. UNITED STATES-JORDAN TRADE

The United States has consistently had a merchandise trade surplus with Jordan, its 101st largest trading partner. In 2000, total

bilateral trade between the United States and Jordan was valued

at $386 million, with U.S. exports to Jordan totaling $312.7 million, and imports from Jordan totaling $73.2 million.

Principal U.S. exports to Jordan include wheat and grains, aircraft and helicopter parts, tobacco, and radio transceivers. Exports

of durum wheat, other wheat and meslin, and barley—which comprise about 20 percent of total U.S. exports to Jordan—already

enter Jordan duty-free. Tariff rates for other commodities vary

from as low as 0–10 percent for aircraft turbine engines, to as high

as 70 percent for tobacco.

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Principal Jordanian exports to the United States include trunks

and suitcases, women’s and girl’s clothing, men’s and boy’s suits,

sweaters and pullovers, and jewelry. In 2000, approximately 40

percent (or $30 million) of all Jordanian exports to the United

States entered the United States duty-free, because they were

products of Qualifying Industrial Zones (‘‘QIZs’’).

QIZs are areas along the Israel-Jordan and Israel-Egypt borders

that are specially designated by the U.S. Trade Representative

(‘‘USTR’’). Pursuant to the United States-Israel Free Trade Area

Implementation Act of 1985 (19 U.S.C. § 2112 note) as amended by

Public Law No. 104–234, products originating in a QIZ receive

duty-free treatment upon entry into the United States. The first

QIZ in Jordan was opened in 1998. Since then, USTR has designated nine additional QIZs along the Israel-Jordan border.

In addition to imports into the United States originating from QIZs in Jordan, another 14 percent (or $10 million) of imports into

the United States from Jordan in 2000 received duty-free treatment under the U.S. Generalized System of Preferences.

U.S. TOTAL EXPORTS TO JORDAN 1996–2000

[In actual dollars]

1996 1997 1998 1999 2000

100110—Durum wheat .............................. 3,850 444,611 3,683,790 0 44,469,720

880330—Parts of airplanes or helicopters 11,955,736 24,641,479 51,582,815 25,121,207 16,104,902

100190—Wheat (other than durum wheat)

and meslin .............................................. 51,871,145 56,674,184 32,536,312 26,803,267 14,154,073

240310—Smoking tobacco ........................ 2,674,625 4,945,736 11,312,858 9,308,040 14,077,933

470321—Chemical woodpulp .................... 6,234,344 3,774,668 6,215,596 5,195,956 10,770,393

890590—Floating cranes, floating docks,

fire floats, etc. ........................................ 0 0 0 0 9,137,800

852520—TV and Radio Receivers ............. 1,631,983 4,121,849 6,613,537 1,320,473 8,781,037

841112—Turbojets (thrust exceeding 25

KN) .......................................................... 0 0 0 0 7,098,800

988000—Low value export shipments

(non-Canadian) ....................................... 6,702,389 7,425,816 7,098,136 5,314,233 5,720,249

100300—Barley .......................................... 7,510,327 6,825,000 0 0 5,150,000

Other ............................................................ 256,224,017 293,493,316 234,043,085 202,577,507 177,278,661

Total ............................................... 344,808,416 402,346,659 353,086,129 275,640,683 312,743,568

Source: U.S. International Trade Commission Dataweb.

U.S. TOTAL IMPORTS FROM JORDAN 1996–2000

[In actual dollars]

1996 1997 1998 1999 2000

420212—Trunks, suitcases and vanity

cases ....................................................... 0 0 0 194,670 8,510,447

620462—Women’s and girls’ cotton trousers and shorts ...................................... 621,308 516,151 0 97,641 6,651,841

620463—Women’s and girls’ trousers and

shorts made from synthetic fibers ......... 68,538 76,916 317,380 0 5,230,343

711319—Jewelry (not made from silver) ... 2,494,053 2,321,864 2,628,522 3,594,888 4,953,719

620311—Men’s or boys’ suits of wool (or

other fine animal hair) ........................... 48,036 297,368 82,329 466,952 4,544,712

611020—Cotton sweaters and pullovers ... 3,127,162 739,214 594,509 178,137 4,407,223

620342—Men’s or boys’ trousers and

shorts of cotton ...................................... 412,016 2,140 191,472 493,108 4,388,537

711311—Silver jewelry ............................... 0 0 23,294 842,697 4,316,705

611030—Knitted or crocheted sweaters

and pullovers of manmade fibers .......... 45,108 0 0 2,305 4,107,626

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U.S. TOTAL IMPORTS FROM JORDAN 1996–2000—Continued

[In actual dollars]

1996 1997 1998 1999 2000

980100—Imports of articles exported and

returned .................................................. 6,335,233 13,605,588 2,953,908 18,520,997 4,011,492

Other ............................................................ 11,953,617 8,074,936 9,598,964 6,603,826 21,718,925

Total ............................................... 25,105,071 25,634,177 16,390,378 30,995,221 72,841,570

Source: U.S. International Trade Commission Dataweb.

The Agreement provides for a 10-year transitional period, during

which duties on almost all goods (with the exception of tobacco and

tobacco-related products) will be phased out, leading to duty-free

trade in goods between the United States and Jordan. Duties on

many goods will be phased out well before the end of the 10-year

transitional period. The Agreement also provides for a liberalization of bilateral trade in services. It addresses specific marketopening commitments in various sectors, including (but not limited

to) communications, construction and engineering, distribution,

education, environmental services, finance, healthcare, tourism,

recreation, and transportation.

A study by the U.S. International Trade Commission (Economic

Impact on the United States of a U.S.-Jordan Free Trade Agreement, Inv. No. 332–418) concluded that a U.S.-Jordan free trade

agreement ‘‘would have no measurable impacts on total U.S. exports, total U.S. imports, U.S. production, or U.S. employment.’’ As

noted above, much of the trade between the United States and Jordan already is duty-free. The International Trade Commission

study did conclude that a U.S.-Jordan free trade agreement could

lead to a modest increase in bilateral trade. In particular, exports

of Jordanian textiles and apparel to the United States, as well as

U.S. exports to Jordan of commodities that face relatively high tariffs today, could expand under an agreement.

C. THE AGREEMENT

The Agreement comprises an integrated set of reciprocal obligations that will eliminate barriers to trade between Jordan and the

United States in a manner that is consistent with Article XXIV of

the General Agreement on Tariffs and Trade 1994 (‘‘GATT 1994’’)

and Article V of the General Agreement on Trade in Services

(‘‘GATS’’).

Trade in Goods.—The principal feature of the Agreement is the

mutual elimination of tariffs within 10 years. Various provisions

also limit non-tariff trade barriers and distortions of trade.

For purposes of tariff elimination, the Agreement divides products into ‘‘staging’’ categories. Where current tariffs are less than

5 percent, the tariffs will be eliminated in 2 years. In general, tariffs between 5 and 10 percent will be eliminated in 4 years. Tariffs

between 10 and 20 percent will be eliminated in 5 years. Tariffs

in excess of 20 percent will be eliminated in 10 years.

Some of the Jordanian products that will receive duty-free treatment 2 years after the Agreement comes into force are jewelry, sea

bath salts, certified handloomed fabric, and a variety of chemicals

and fruit. Some Jordanian exports that will be subject to tariff reductions but will not enter the United States duty-free until the

12

end of the 10-year phase-in period are footwear, ceramics, dairy,

sugar, and certain textiles and apparel currently subject to tariffs

in excess of 20 percent.

Some of the U.S. products that will receive duty-free treatment

2 years after the Agreement comes into force are certain chemicals

(including plastics), machinery and parts, paper products, and agricultural items such as seed and rice. Some U.S. exports that will

be subject to tariff reductions but will not enter Jordan duty-free

until the end of the 10-year phase-in period are fruit juice, fruit,

wood and paper, scientific equipment, and textiles.

Trade in Services.—The Agreement commits the countries to provide increased market access in particular service sectors identified

in schedules attached to the Agreement. For Jordan, these sectors

include (but are not limited to): legal services, accounting and auditing, architectural and engineering services, computer and related services, research and development, real estate, telecommunications, and financial services. The U.S. schedule contains a similarly broad array of service sectors. The schedules set forth certain

terms, limitations and conditions specific to particular sectors. Subject to these terms, limitations and conditions, each country agrees

to accord services and service suppliers of the other country treatment no less favorable than it accords to its own like services and

service suppliers.

Intellectual Property Rights.—The Agreement contains obligations in the area of intellectual property that supplement the countries’ obligations under the World Trade Organization Agreement

on Trade-Related Aspects of Intellectual Property. For example, the

Agreement requires the countries to give effect to provisions contained in other conventions on intellectual property, such as the

World Intellectual Property Organization (‘‘WIPO’’) Copyright Treaty (1996) and the WIPO Performances and Phonograms Treaty

(1996). The Agreement contains a general obligation that each

country accord to nationals of the other country treatment no less

favorable than it accords to its own nationals with regard to the

protection and enjoyment of all intellectual property rights. It also

contains general obligations with respect to enforcement. Thus, for

example, with respect to copyright and trademark piracy, both

countries are required to provide for the initiation of criminal and

seizure actions by its national authorities without advance notice

to the alleged pirates. The Agreement then specifies particular obligations in the areas of trademarks and geographical indications,

copyright and related rights, and patents. Most obligations concerning intellectual property rights will take effect three years

after the Agreement enters into force.

Concurrent with conclusion of the Agreement, the United States

and Jordan entered into a Memorandum of Understanding on

Issues Related to the Protection of Intellectual Property Rights.

That document identifies certain changes to Jordanian law that

will be made pursuant to the intellectual property provisions in the

Agreement itself.

Environment.—In article 5, the Agreement states that the United

States and Jordan ‘‘shall strive to ensure’’ that they do not ‘‘waive

or otherwise derogate from, or offer to waive or otherwise derogate

from,’’ their respective environmental laws ‘‘as an encouragement

for trade’’ with each other. Article 5 also states that each country

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‘‘shall strive to ensure’’ that its laws provide for ‘‘high levels of environmental protection’’ and ‘‘shall strive to continue to improve

those laws.’’ Article 5.3 of the Agreement states that each country shall not

fail to effectively enforce its own environmental laws, through a

sustained or recurring course of action or inaction, in a manner affecting trade between the countries. This provision is not implicated when either country undertakes a course of action or inaction

which reflects a reasonable exercise of discretion or results from a

bona fide decision regarding the allocation of resources.

Additionally, in a joint statement annexed to the Agreement, the

United States and Jordan agreed to establish a Joint Forum on Environmental Technical Cooperation. The Joint Forum will meet on

a regular basis and has a mandate to develop technical cooperation

initiatives for environmental protection in Jordan.

Labor.—Article 6.4 of the Agreement states that each country

shall not fail to effectively enforce its own labor laws, through a

sustained or recurring course of action or inaction, in a manner affecting trade between the countries. This provision is not implicated when either country undertakes a course of action or inaction

which reflects a reasonable exercise of discretion or results from a

bona fide decision regarding the allocation of resources. Each country also reaffirms its obligations as a member of the International

Labor Organization (‘‘ILO’’) and its commitments under the ILO

Declaration of Fundamental Principles and Rights at Work and its

Follow-up. The countries agree to ‘‘strive to ensure’’ that principles

defined by the ILO as ‘‘core’’ are ‘‘recognized and protected by domestic law.’’ The five core principles, as set forth in article 6.6 of

the Agreement, are: (a) right of association; (b) right to organize

and bargain collectively; (c) prohibition on the use of any form of

forced or compulsory labor; (d) minimum age for the employment

of children; and (e) acceptable conditions of work with respect to

minimum wages, hours of work, and occupational safety and

health.

In article 6.2, the Agreement states that the United States and

Jordan ‘‘shall strive to ensure’’ that they do not ‘‘waive or otherwise

derogate from, or offer to waive or otherwise derogate from,’’ their

respective labor laws ‘‘as an encouragement for trade’’ with each

other.

Electronic Commerce.—The United States and Jordan agree to

‘‘seek to refrain’’ from imposing new barriers, including both tariffs

and non-tariff barriers, on electronic transmissions.

Visa Commitments.—The United States and Jordan each agree

to allow nationals of the other to enter and remain in their respective territories for purposes of facilitating trade and investment.

Government Procurement.—The United States and Jordan agree

to enter into negotiations on Jordan’s accession to the World Trade

Organization Agreement on Government Procurement.

Safeguard Measures.—Under the Agreement, a country may put

a ‘‘safeguard’’ measure in place if, as a result of the reduction or

elimination of a duty, imports of a good from the other country are

increasing in such quantities and under such conditions as to be a

substantial cause of serious injury, or threat thereof, to a domestic

industry producing a like or directly competitive product. A safeguard measure may take the form of a suspension of the reduction

14

of a duty or an increase in a duty rate. However, in the case of an

increase, the duty rate may not exceed the most-favored-nation

(‘‘MFN’’) duty rate.

Procedural requirements for putting a safeguard measure in

place under the Agreement are identical to the requirements for

putting a general safeguard measure in place under WTO rules.

For the United States, this means an investigation and determination by the U.S. International Trade Commission (‘‘ITC’’) into

whether the requirements for a safeguard have been met. If the

ITC’s determination is affirmative, then the President must decide,

in light of that determination, whether to put a measure in place

and, if so, what measure.

A safeguard measure may remain in place only for the period

necessary to prevent or remedy serious injury to, and to facilitate

adjustment by, the domestic industry and, in any event, not longer

than 4 years. No measure may be put in place against a good as

to which a safeguard measure was previously imposed under the

Agreement. A country imposing a measure for longer than 1 year

is required to liberalize the measure (i.e., reduce tariff rates) on a

regular basis.

Upon termination of a safeguard measure, duties on the subject

goods will be the rates that ordinarily would have applied 1 year

after the measure was initiated. The Agreement provides for further duty reductions beginning on January 1 of the year after a

measure is terminated.

A country imposing a safeguard measure is required to provide ‘‘concessions having substantially similar trade effects’’ to the other

country. In the event that the countries are unable to agree on concessions, the other country may raise tariffs on imports from the

country imposing the measure. However, in general, it may do so

only after the measure has been in effect for 2 years.

The safeguard provisions under the Agreement are in addition to

the general safeguard provisions under WTO rules. Thus, if the

United States were to put a safeguard measure in place under

Chapter 1 of Title II of the Trade Act of 1974, such measure could

include imports from Jordan, along with imports from all other

sources. However, under the Agreement, imports from Jordan may

be excluded from a general safeguard measure if such imports, by

themselves, are not a substantial cause of serious injury or threat

thereof.

Balance of Payments.—In taking trade-restrictive measures to

safeguard their balance of payments, Jordan and the United States

agree to abide by WTO balance-of-payments disciplines.

Exceptions.—The Agreement sets forth three categories of exceptions to its ordinary rules. These include the general exceptions to

WTO rules on trade in goods, set forth in article XX of the GATT

1994; certain measures taken for national security reasons; and, in

general, measures concerning taxation.

Economic Cooperation and Technical Assistance.—The Agreement commits the United States and Jordan to foster economic cooperation and, given Jordan’s developing country status, commits

the United States to provide Jordan economic technical assistance,

as appropriate.

Rules of Origin and Cooperation in Customs Administration.—

Preferential tariff treatment under the Agreement is available only

15

to goods originating in Jordan or the United States. An annex to

the Agreement sets forth rules for determining the origin of goods.

The Agreement states that each country ‘‘shall strive to administer

such rules effectively, uniformly, and consistently with the object

and purpose of [the] Agreement and the WTO Agreement.’’ The

Agreement further provides for consultations on the operation of

these rules.

Joint Committee.—The Agreement establishes a joint committee

to oversee implementation of the Agreement. The Joint Committee

consists of the U.S. Trade Representative and the Jordanian Minister for Trade, or their respective designees. The Joint Committee

will meet once a year in regular session, and in special sessions

within 30 days of a request by either country. Its responsibilities

will include (among other tasks) reviewing the functioning of the

Agreement, avoiding trade disputes, considering amendments to

the Agreement, and establishing guidelines for administering rules

of origin.

Consultations.—The United States and Jordan agree to consult

on all matters concerning interpretation and application of the

Agreement, and each commits to reply promptly to requests by the

other for consultations.

Dispute Settlement.—The Agreement establishes a dispute settlement mechanism to resolve disputes over interpretation of the

Agreement, claims that a country has violated obligations under

the Agreement, and claims that measures taken by a country ‘‘severely distort the balance of trade benefits’’ accorded by the Agreement or ‘‘substantially undermine fundamental objectives’’ of the

Agreement.

When a dispute arises, the parties are required, first, to make ‘‘every attempt to arrive at a mutually agreeable resolution’’ through consultations. Should consultations fail, either country

may refer the matter to the Joint Committee, described above. If

the Joint Committee fails to resolve the matter within 90 days,

then the matter may be referred to a dispute settlement panel,

composed of one member chosen by each country and a chairman

chosen by the first two members.

A dispute settlement panel is required to make findings of fact

and a determination as to whether either country has violated an

obligation under the Agreement or taken measures that severely

distort the balance of trade benefits or substantially undermine the

fundamental objectives of the Agreement. The panel may make recommendations concerning resolution of the dispute only if both

countries ask it to do so.

A dispute settlement panel’s report is non-binding. Resolution of

a dispute ultimately is in the hands of the Joint Committee, which

must ‘‘endeavor to resolve the dispute, taking the report into account, as appropriate.’’ If the Joint Committee fails to resolve the

dispute within 30 days of presentation of the panel’s report, then

the country affected by any measures found by the panel to be violations of the Agreement or to severely distort trade benefits or to

substantially undermine the Agreement’s fundamental objectives

‘‘shall be entitled to take any appropriate and commensurate measure.’’

Concurrently with conclusion of the Agreement, the United

States and Jordan entered into a Memorandum of Understanding

16

on Transparency in Dispute Settlement. That document requires

that, when dispute settlement is triggered, both countries ‘‘shall solicit and consider the views of members of their respective publics

in order to draw upon a broad range of perspectives.’’ It further requires that submissions to panels be made available to the public

within 10 days of filing, that oral presentations to panels be made

open to the public, that amicus briefs be accepted and considered,

and that panel reports be released to the public ‘‘at the earliest

possible time.’’ The foregoing requirements do not obligate the

countries to disclose confidential information.

In a Joint Statement issued concurrently with conclusion of the

Agreement, the United States and Jordan agreed to support the application of similar transparency-related procedures in disputes between the two countries that may be brought before panels in the

WTO.

No Private Right of Action.—Neither the United States nor Jordan may provide for a private right of action under domestic law

that would allow a person to claim that a measure taken by the

other country constituted a violation of the Agreement.

Entry Into Force.—The Agreement will enter into force 2 months

after the United States and Jordan exchange written notifications

of ratification of the Agreement by their respective legislatures.

Termination.—Either country may terminate the Agreement by

providing written notice to the other. In that case, the Agreement

will expire six months after the provision of such notification.

III. THE COMMITTEE BILL

Section 1. Short title

The short title of the bill is the ‘‘United States-Jordan Free Trade

Area Implementation Act.’’

Section 2. Purposes

Section 2 identifies the following three purposes of the bill: (1)

to implement the Agreement between the United States and Jordan establishing a free trade area, (2) to strengthen and develop

the economic relations between the United States and Jordan for

their mutual benefit, and (3) to establish free trade between the

two nations through the removal of trade barriers.

Section 3. Definitions

Section 3 defines the terms ‘‘Agreement’’ and ‘‘HTS.’’ For the purpose of this bill, the term ‘‘Agreement’’ means the Agreement between the United States of America and the Hashemite Kingdom

of Jordan on the Establishment of a Free Trade Area, entered into

on October 24, 2000. The term ‘‘HTS’’ means the Harmonized Tariff

Schedule of the United States.

Section 4. Approval of Agreement

Section 4 expresses congressional approval of the Agreement.

17

Title I—Tariff Modifications; Rules of Origin

Section 101. Tariff modifications

Section 101 authorizes the President to proclaim changes to duties (or, as the case may be, continuation of duties) on goods imported from Jordan as necessary or appropriate to implement the

Agreement.

Section 102. Rules of origin

Section 102 provides that in order for an article to receive dutyfree or reduced tariff treatment under the Agreement, it must be

imported into the United States directly from Jordan and meet one

of two rules of origin. The article must be either (1) wholly the

growth, product, or manufacture of Jordan, or (2) partially the

growth, product, or manufacture of Jordan, provided that it meets

certain criteria. The principal criterion under this second rule is

that materials produced in Jordan plus the direct costs of processing operations performed in Jordan constitute not less than 35

percent of the appraised value of the article upon entry into the

United States. However, if materials produced in the United States

are included in the article, the value of such materials up to 15

percent of the appraised value of the article may contribute to the

35 percent requirement. Additional special rules of origin apply to

textile and apparel products.

Title II—Relief From Imports

SUBTITLE A—GENERAL PROVISIONS

Section 201. Definitions

Section 201 defines the terms ‘‘Commission’’ and ‘‘Jordanian article.’’ The term ‘‘Commission’’ means the United States International Trade Commission. The term ‘‘Jordanian article’’ means

an article that qualifies for reduction or elimination of a duty

under section 102 of the bill.

SUBTITLE B—RELIEF FROM IMPORTS BENEFITING FROM THE

AGREEMENT

Subtitle B establishes a mechanism for certain U.S. persons to

petition for and receive relief from serious injury (or the threat

thereof) resulting from import surges of products receiving dutyfree or reduced tariff treatment under the Agreement.

Section 211. Commencing of action for relief

Parties eligible to petition for relief under this subtitle would include trade associations, firms, unions, or groups of workers representative of an industry. As under the general safeguards provisions in U.S. law (Chapter 1 of Title II of the Trade Act of 1974),

parties would file their petitions with the U.S. International Trade

Commission (‘‘ITC’’). The ITC then would be required to investigate

and determine whether, as a result of the reduction or elimination

of a duty under the Agreement, a Jordanian article is being imported into the United States in such increased quantities and

under such conditions that imports of the article alone constitute

a substantial cause of serious injury (or threat thereof) to the U.S.

18

industry producing a like or directly competitive article. Procedures

for investigating and making this determination would be similar

to the general safeguards procedures. An investigation could not be

initiated with respect to a Jordanian article if import relief under

this subtitle previously had been granted with respect to that article.

Section 212. Commission action on petition

The time for the ITC to act upon a petition filed under section

211 of the bill would be identical to the time for ITC action under

the general safeguard provisions of the Trade Act of 1974. Ordinarily, the ITC must make its determination within 120 days following initiation of an investigation. Where a petitioner alleges

that critical circumstances exist and, therefore, seeks provisional

relief, the ITC would have 180 days in which to make its final determination. (The present bill incorporates by reference (at section

211(c)(3)) the procedures for making a determination on provisional

relief set forth at section 202(d) of the Trade Act of 1974.)

If the ITC determined that ‘‘a Jordanian article is being imported

into the United States in such increased quantities, in absolute

terms or relative to domestic production, and under such conditions

that imports of the Jordanian article alone constitute a substantial

cause of serious injury or threat thereof to the domestic industry

producing an article that is like, or directly competitive with, the

imported article,’’ then the ITC would be required to recommend

the amount of relief necessary to remedy or prevent serious injury

to the U.S. industry. Within 30 days of making its determination,

the ITC would be required to submit a report to the President explaining the basis for its determination and recommended relief,

along with any dissenting and separate views. The bill would require that report to be promptly made public.

Section 213. Provision of relief

Within 30 days of receipt of the ITC’s report containing an affirmative determination, the President ordinarily would be required to provide relief to the U.S. industry to the extent necessary

to prevent or remedy the injury identified by the ITC and to facilitate the industry’s positive adjustment to import competition. The

President could decline to provide such relief only if (1) he found

that ‘‘taking such action would have an adverse impact on the

United States economy clearly greater than the benefits of taking

such action,’’ or (2) in ‘‘extraordinary circumstances,’’ he found that

‘‘the provision of such relief would cause serious harm to the national security of the United States.’’

In general, the relief granted could be either a suspension of tariff reductions or a ‘‘snap-back’’ of tariffs to their ordinary, MFN

rate. Relief could be granted for up to 4 years. Prior to December

31 in the year in which relief ended, upon the termination of relief,

tariff rates would be the rates that would have applied 1 year after

the initiation of the action. After December 31, tariff rates could be

either (at the President’s discretion) (1) the rates that ordinarily

would have applied at that date, or (2) the rates resulting from the

elimination of the tariff in equal annual stages ending on the

scheduled date for tariff elimination.

19

Section 214. Termination of relief authority

Section 214 would cause the safeguard provision of subtitle B to

expire 15 years after the Agreement entered into force unless, in

a particular case, Jordan agreed to have a safeguard measure applied after the initial 15-year period.

Section 215. Compensation authority

Section 215 establishes that section 123 of the Trade Act of 1974,

which authorizes the President to compensate another country in

the event certain safeguards measures are imposed on products

from that country, would apply to safeguards imposed under the

Agreement.

Section 216. Submission of petitions

Section 216 would permit a petition for safeguard relief to be

submitted to the ITC under either subtitle B of the present bill,

section 201 of the Trade Act of 1974, or both.

SUBTITLE C—CASES UNDER TITLE II OF THE TRADE ACT OF 1974

This subtitle would govern the treatment of imports from Jordan

in general safeguards investigations and relief determinations

under section 201 of the Trade Act of 1974.

Section 221. Findings and action on Jordanian imports

When the ITC makes an affirmative determination under section

201 of the Trade Act of 1974 (i.e., that increased imports of a given

product are a substantial cause of serious injury (or threat thereof)

to a domestic producer of like or directly competitive products), section 221 of the present bill would require it to make a separate determination regarding imports from Jordan of the product under

investigation. The ITC would have to determine whether imports

from Jordan were themselves a substantial cause of serious injury

(or threat thereof). The President, too, would have to make a separate determination regarding products from Jordan and, if that determination were negative, he could opt to exclude products from

Jordan from the relief provided to the U.S. industry.

Section 222. Technical amendment

Section 222 would extend the general rules governing ITC treatment of confidential information to information received in connection with a safeguards investigation under the Agreement.

Title III—Temporary Entry

Section 301. Nonimmigrant traders and investors

Section 301 would implement the Agreement’s requirement that

each country allow nationals of the other to enter and remain in

its territory for purposes of facilitating trade and investment.

Title IV—General Provisions

Section 401. Relationship of the Agreement to United States and

state law

Section 401 provides that the Agreement would not have direct

effect in the United States. Rather, the Agreement would take efVerDate 11-MAY-2000 04:29 Sep 05, 2001 Jkt 089010 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\SR059.XXX pfrm03 PsN: SR059
20

fect through the present implementing legislation. To the extent

that there may be inconsistencies between U.S. law and the Agreement, U.S. law would prevail. Further, only the U.S. Government

would be authorized to sue to have a state law declared invalid due

to a conflict with the Agreement. Finally, section 401 provides that

the Agreement would not give rise to any private rights of action.

Section 402. Authorization of appropriations

Section 402 would authorize up to $100,000 in appropriations to

the Department of Commerce for each fiscal year after fiscal year

2001 to support the United States’ share of expenses incurred in

dispute settlement proceedings under article 17 of the Agreement.

Section 403. Implementing regulations

Section 403 would authorize the President and Executive Branch

agencies to promulgate regulations and to take such other actions

as may be necessary to make the present bill effective when the

Agreement enters into force.

Section 404. Effective dates; effect of termination

Section 404 would make this bill and amendments to current law

made thereby effective on the date the Agreement enters into force.

Certain provisions, such as congressional approval of the Agreement, would take effect upon enactment. Finally, the bill and any

amendments to U.S. law made by it would cease to have effect on

the date on which the Agreement ceased to be in force.

IV. CONGRESSIONAL ACTION

On January 6, 2001, President Clinton, in a message to Congress, transmitted the Agreement between the Hashemite Kingdom

of Jordan and the United States of America on the Establishment

of a Free Trade Area, signed October 24, 2000, including annexes

forming an integral part of the Agreement.

On March 28, 2001, Senator Baucus (for himself and others) introduced S. 643, a bill to implement the Agreement. The bill was

read twice and referred to the Committee on Finance.

On April 4, 2001, Congressman Levin (for himself and others) introduced a substantively identical bill (H.R. 1484). The bill was referred to the Committee on Ways and Means.

On July 17, 2001, the Finance Committee began debate on the

bill implementing the Agreement and approved an amendment in

the nature of a substitute to the bill. The amendment in the nature

of a substitute added to S. 643 a provision expressing congressional

approval of the Agreement and made certain technical corrections

to the bill as introduced.

On July 24, 2001, Congressman Thomas introduced H.R. 2603,

the United States-Jordan Free Trade Area Implementation Act,

which was referred to the Committee on Ways and Means and the

Committee on the Judiciary. The Committee on Ways and Means

held a markup on July 26, 2001 and, upon a voice vote, ordered reported to the full House an amendment in the nature of a substitute to H.R. 2603.

On July 26, 2001, the Finance Committee completed its markup

of S. 643 and ordered the bill reported to the full Senate without

further amendment.

21

On July 31, 2001, the House of Representatives, on a motion to

suspend the rules and pass the bill, agreed to H.R. 2603 by voice

vote. The bill was received in the Senate that same day and referred to the Committee on Finance.

V. VOTE OF THE COMMITTEE IN REPORTING THE BILL

In compliance with section 133 of the Legislative Reorganization

Act of 1946, the committee states that S. 643 was ordered favorably

reported, with an amendment, by voice vote with a quorum present

on July 26, 2001. Senators Gramm and Nickles asked to be recorded as voting nay.

VI. BUDGETARY IMPACT OF THE BILL

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, July 30, 2001.

Hon. MAX BAUCUS,

Chairman, Committee on Finance,

U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 643, a bill to implement the

agreement establishing a United States-Jordan Free Trade Area.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Erin Whitaker.

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

S. 643—A bill to implement the agreement establishing a United

States-Jordan Free Trade Area

Summary: S. 643 would approve the agreement between the government of the United States and the government of the

Hashemite Kingdom of Jordan that was entered into on October

24, 2000. It would provide for tariff reductions and other changes

in law related to implementation of the agreement, such as provisions dealing with dispute settlement and intellectual property

rights protection. The Congressional Budget Office estimates that

enacting the bill would reduce revenues by $2 million in 2002, by

$15 million over the 2002–2006 period, and by $44 million over the

2002–2011 period. Because enacting S. 643 would affect receipts,

pay-as-you-go procedures would apply. CBO has determined that S.

463 contains no private-sector or intergovernmental mandates as

defined in the Unfunded Mandates Reform Act (UMRA) and would

not affect the budgets of state, local, or tribal governments.

Estimated cost to the Federal Government: The estimated budgetary impact of S. 643 is shown in the following table.

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By fiscal year, in millions of dollars—

2002 2003 2004 2005 2006

CHANGES IN REVENUES

Estimated revenues ............................................................................. ¥2 ¥3 ¥3 ¥4 ¥4

Basis of estimate

Revenues

Under the United States-Jordan agreement, all tariffs on U.S.

imports from Jordan would be phased out for individual products

at varying rates according to one of nine different timetables ranging from immediate elimination to partial elimination over 10

years. One schedule would allow goods to enter at current rates of

duty until year ten of the agreement, at which time such goods

would enter duty-free. Based on Census Bureau data on imports

from Jordan, CBO estimates that the reduction of tariff rates

would reduce revenues by about $15 million over the 2002–2006

period, net of income and payroll tax offsets. This estimate includes

the effects of increased imports from Jordan that would result from

the reduced prices of imported products in the U.S.—reflecting the

lower tariff rates—and has been estimated based on the expected

substitution between U.S. products and imports from Jordan. In

addition, it is likely that some of the increase in U.S. imports from

Jordan 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 Jordan will displace imports from other countries.

Spending subject to appropriation

S. 643 would authorize the appropriation of $100,000 for the Department of Commerce to pay the United States’ share of the costs

of the dispute settlement procedures established by the agreement.

CBO estimates that implementing this provision would cost the

same amount, subject to the availability of appropriated funds.

Pay-as-you-go considerations: The Balanced Budget and Emergency Deficit Control Act sets up procedures for legislation affecting receipts or direct spending. The net changes in governmental

receipts that are subject to pay-as-you-go procedures are shown in

the following table. For the purposes of enforcing pay-as-you-go

procedures, only the effects in the current year, the budget year,

and the succeeding four years are counted.

By fiscal year, in millions of dollars—

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Changes in receipts ....... 0 ¥2 ¥2 ¥3 ¥4 ¥4 ¥5 ¥5 ¥5 ¥6 ¥9

Changes in outlays ........ Not applicable

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: Erin Whitaker; Federal

costs: Ken Johnson; Impact on State, local and tribal governments:

Scott Marsters; Impact on the private sector: Lauren Marks.

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Estimate approved by: G. Thomas Woodward, Assistant Director

for Tax Analysis; Peter H. Fontaine, Deputy Assistant Director for

Budget Analysis.

VII. REGULATORY IMPACT AND OTHER MATTERS

In compliance with 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 (Pub. L. No.

104–4). The committee has reviewed the provisions of S. 643 as approved by the Committee on July 26, 2001. 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.

VIII. CHANGES IN EXISTING LAW

Pursuant to the requirements of paragraph 12 of rule XXVI of

the Standing Rules of the Senate, changes in existing law made by

the bill, S. 643, 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):

UNITED STATES CODE

* * * * * * *

TITLE 19—CUSTOMS DUTIES

* * * * * * *

CHAPTER 12—TRADE ACT OF 1974

* * * * * * *

Subchapter II—Relief from Injury Caused by Import

Competition

* * * * * * *

Part 1—Positive Adjustment by Industries Injured by

Imports

SEC. 2252. 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

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the Commission in the course of investigations conducted

under this part øand part 1¿, part 1 of title III of the North

American Free Trade Agreement Implementation Act, and title

II of the United Sates-Jordan Free Trade Area 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.

* * * * * * *

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