99–006

107TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 107–290

ANDEAN TRADE PROMOTION AND DRUG ERADICATION ACT

NOVEMBER 14, 2001.—Committed to the Committee of the Whole House on the

State of the Union and ordered to be printed

Mr. THOMAS, from the Committee on Ways and Means,

submitted the following

R E P O R T

together with

ADDITIONAL AND DISSENTING VIEWS

[To accompany H.R. 3009]

[Including cost estimate of the Congressional Budget Office]

The Committee on Ways and Means, to whom was referred the

bill (H.R. 3009) to extend the Andean Trade Preference Act, to

grant additional trade benefits under that Act, and for other purposes, having considered the same, report favorably thereon with

an amendment and recommend that the bill as amended do pass.

CONTENTS

I. Introduction .................................................................................................... 9

A. Purpose and Summary .................................................................... 9

B. Background ....................................................................................... 9

C. Legislative History ........................................................................... 9

II. Explanation of the Bill .................................................................................. 10

III. Votes of the Committee ................................................................................. 21

IV. Budget Effect .................................................................................................. 22

A. Committee Estimate of Budgetary Effects ..................................... 22

B. Statement Regarding New Budget Authority and Tax Expenditures ................................................................................................. 22

C. Cost Estimate Prepared by the Congressional Budget Office ...... 22

V. Other Matters to be Discussed Under the Rules of the House .................. 24

A. Committee Oversight Findings and Recommendations ................ 24

B. Statement of General Performance Goals and Objectives ............ 24

C. Constitutional Authority Statement ............................................... 25

VI. Changes in Existing Law Made by the Bill, as Reported ........................... 25

VII. Additional Views ............................................................................................ 40

VIII. Dissenting Views ........................................................................................... 42

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The amendment is as follows:

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Andean Trade Promotion and Drug Eradication

Act’’.

SEC. 2. FINDINGS.

Congress makes the following findings:

(1) Since the Andean Trade Preference Act was enacted in 1991, it has had

a positive impact on United States trade with Bolivia, Colombia, Ecuador, and

Peru. Two-way trade has doubled, with the United States serving as the leading

source of imports and leading export market for each of the Andean beneficiary

countries. This has resulted in increased jobs and expanded export opportunities in both the United States and the Andean region.

(2) The Andean Trade Preference Act has been a key element in the United

States counternarcotics strategy in the Andean region, promoting export diversification and broad-based economic development that provides sustainable economic alternatives to drug-crop production, strengthening the legitimate economies of Andean countries and creating viable alternatives to illicit trade in coca.

(3) Notwithstanding the success of the Andean Trade Preference Act, the Andean region remains threatened by political and economic instability and fragility, vulnerable to the consequences of the drug war and fierce global competition for its legitimate trade.

(4) The continuing instability in the Andean region poses a threat to the security interests of the United States and the world. This problem has been partially addressed through foreign aid, such as Plan Colombia, enacted by Congress in 2000. However, foreign aid alone is not sufficient. Enhancement of legitimate trade with the United States provides an alternative means for reviving and stabilizing the economies in the Andean region.

(5) The Andean Trade Preference Act constitutes a tangible commitment by

the United States to the promotion of prosperity, stability, and democracy in the

beneficiary countries.

(6) Renewal and enhancement of the Andean Trade Preference Act will bolster the confidence of domestic private enterprise and foreign investors in the

economic prospects of the region, ensuring that legitimate private enterprise

can be the engine of economic development and political stability in the region.

(7) Each of the Andean beneficiary countries is committed to conclude negotiation of a Free Trade Area of the Americas by the year 2005, as a means of

enhancing the economic security of the region.

(8) Temporarily enhancing trade benefits for Andean beneficiary countries

will promote the growth of free enterprise and economic opportunity in these

countries and serve the security interests of the United States, the region, and

the world.

SEC. 3. ARTICLES ELIGIBLE FOR PREFERENTIAL TREATMENT.

(a) ELIGIBILITY OF CERTAIN ARTICLES.—Section 204 of the Andean Trade Preference Act (19 U.S.C. 3203) is amended— (1) by striking subsection (c) and redesignating subsections (d) through (g) as

subsections (c) through (f), respectively; and

(2) by amending subsection (b) to read as follows: ‘‘(b) EXCEPTIONS AND SPECIAL RULES.— ‘‘(1) CERTAIN ARTICLES THAT ARE NOT IMPORT-SENSITIVE.—The President may

proclaim duty-free treatment under this title for any article described in subparagraph (A), (B), (C), or (D) that is the growth, product, or manufacture of

an ATPDEA beneficiary country and that meets the requirements of this section, if the President determines that such article is not import-sensitive in the

context of imports from ATPDEA beneficiary countries:

‘‘(A) Footwear not designated at the time of the effective date of this Act

as eligible for the purpose of the generalized system of preferences under

title V of the Trade Act of 1974.

‘‘(B) Petroleum, or any product derived from petroleum, provided for in

headings 2709 and 2710 of the HTS.

‘‘(C) Watches and watch parts (including cases, bracelets and straps), of

whatever type including, but not limited to, mechanical, quartz digital or

quartz analog, if such watches or watch parts contain any material which

is the product of any country with respect to which HTS column 2 rates

of duty apply.

‘‘(D) Handbags, luggage, flat goods, work gloves, and leather wearing apparel that were not designated on August 5, 1983, as eligible articles for

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purposes of the generalized system of preferences under title V of the Trade

Act of 1974. ‘‘(2) EXCLUSIONS.—Subject to paragraph (3), duty-free treatment under this

title may not be extended to— ‘‘(A) textiles and apparel articles which were not eligible articles for purposes of this title on January 1, 1994, as this title was in effect on that

date; ‘‘(B) rum and tafia classified in subheading 2208.40 of the HTS; or

‘‘(C) sugars, syrups, and sugar-containing products subject to over-quota

duty rates under applicable tariff-rate quotas. ‘‘(3) APPAREL ARTICLES.— ‘‘(A) IN GENERAL.—Apparel articles that are imported directly into the

customs territory of the United States from an ATPDEA beneficiary country

shall enter the United States free of duty and free of any quantitative restrictions, limitations, or consultation levels, but only if such articles are

described in subparagraph (B). ‘‘(B) COVERED ARTICLES.—The apparel articles referred to in subparagraph (A) are the following: ‘‘(i) APPAREL ARTICLES ASSEMBLED FROM PRODUCTS OF THE UNITED

STATES AND ATPDEA BENEFICIARY COUNTRIES OR PRODUCTS NOT AVAIL- ABLE IN COMMERCIAL QUANTITIES.—Apparel articles sewn or otherwise

assembled in 1 or more ATPDEA beneficiary countries, or the United

States, or both, exclusively from any one or any combination of the following:

‘‘(I) Fabrics or fabric components formed, or components knit-toshape, in the United States, from yarns formed in the United

States or 1 or more ATPDEA beneficiary countries (including fabrics not formed from yarns, if such fabrics are classifiable under

heading 5602 or 5603 of the HTS and are formed in the United

States).

‘‘(II) Fabrics or fabric components formed or components knit-toshape, in 1 or more ATPDEA beneficiary countries, from yarns

formed in 1 or more ATPDEA beneficiary countries, if such fabrics

(including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and are formed in

1 or more ATPDEA beneficiary countries) or components are in

chief weight of llama or alpaca.

‘‘(III) Fabrics or yarn that is not formed in the United States or

in one or more ATPDEA beneficiary countries, to the extent that

apparel articles of such fabrics or yarn would be eligible for preferential treatment, without regard to the source of the fabrics or

yarn, under Annex 401 of the NAFTA.

‘‘(ii) ADDITIONAL FABRICS.—At the request of any interested party, the

President is authorized to proclaim additional fabrics and yarns as eligible for preferential treatment under clause (i)(III) if—

‘‘(I) the President determines that such fabrics or yarns cannot

be supplied by the domestic industry in commercial quantities in

a timely manner;

‘‘(II) the President has obtained advice regarding the proposed

action from the appropriate advisory committee established under

section 135 of the Trade Act of 1974 (19 U.S.C. 2155) and the

United States International Trade Commission;

‘‘(III) within 60 days after the request, the President has submitted a report to the Committee on Ways and Means of the House

of Representatives and the Committee on Finance of the Senate

that sets forth the action proposed to be proclaimed and the reasons for such action, and the advice obtained under subclause (II);

‘‘(IV) a period of 60 calendar days, beginning with the first day

on which the President has met the requirements of subclause

(III), has expired; and

‘‘(V) the President has consulted with such committees regarding

the proposed action during the period referred to in subclause (III).

‘‘(iii) APPAREL ARTICLES ASSEMBLED IN 1 OR MORE ATPDEA BENEFICIARY COUNTRIES FROM REGIONAL FABRICS OR REGIONAL COMPONENTS.—(I) Subject to the limitation set forth in subclause (II), apparel

articles sewn or otherwise assembled in 1 or more ATPDEA beneficiary

countries from fabrics or from fabric components formed or from components knit-to-shape, in 1 or more ATPDEA beneficiary countries, from

yarns formed in the United States or 1 or more ATPDEA beneficiary

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countries (including fabrics not formed from yarns, if such fabrics are

classifiable under heading 5602 or 5603 of the HTS and are formed in

1 or more ATPDEA beneficiary countries), whether or not the apparel

articles are also made from any of the fabrics, fabric components

formed, or components knit-to-shape described in clause (i). ‘‘(II) The preferential treatment referred to in subclause (I) shall be

extended in the 1-year period beginning December 1, 2001, and in each

of the 5 succeeding 1-year periods, to imports of apparel articles in an

amount not to exceed the applicable percentage of the aggregate square

meter equivalents of all apparel articles imported into the United

States in the preceding 12-month period for which data are available. ‘‘(III) For purposes of subclause (II), the term ‘applicable percentage’ means 3 percent for the 1-year period beginning December 1, 2001, increased in each of the 5 succeeding 1-year periods by equal increments,

so that for the period beginning December 1, 2005, the applicable percentage does not exceed 6 percent. ‘‘(iv) HANDLOOMED, HANDMADE, AND FOLKLORE ARTICLES.—A

handloomed, handmade, or folklore article of an ATPDEA beneficiary

country identified under subparagraph (C) that is certified as such by

the competent authority of such beneficiary country. ‘‘(v) SPECIAL RULES.—

‘‘(I) EXCEPTION FOR FINDINGS AND TRIMMINGS.—An article otherwise eligible for preferential treatment under this paragraph shall

not be ineligible for such treatment because the article contains

findings or trimmings of foreign origin, if such findings and trimmings do not exceed 25 percent of the cost of the components of the

assembled product. Examples of findings and trimmings are sewing

thread, hooks and eyes, snaps, buttons, ‘bow buds’, decorative lace,

trim, elastic strips, zippers, including zipper tapes and labels, and

other similar products.

‘‘(II) CERTAIN INTERLINING.—(aa) An article otherwise eligible for

preferential treatment under this paragraph shall not be ineligible

for such treatment because the article contains certain interlinings

of foreign origin, if the value of such interlinings (and any findings

and trimmings) does not exceed 25 percent of the cost of the components of the assembled article.

‘‘(bb) Interlinings eligible for the treatment described in division

(aa) include only a chest type plate, ‘hymo’ piece, or ‘sleeve header’,

of woven or weft-inserted warp knit construction and of coarse animal hair or man-made filaments.

‘‘(cc) The treatment described in this subclause shall terminate

if the President makes a determination that United States manufacturers are producing such interlinings in the United States in

commercial quantities.

‘‘(III) DE MINIMIS RULE.—An article that would otherwise be ineligible for preferential treatment under this subparagraph because

the article contains fibers or yarns not wholly formed in the United

States or in one or more ATPDEA beneficiary countries shall not

be ineligible for such treatment if the total weight of all such fibers

or yarns is not more than 7 percent of the total weight of the good.

‘‘(C) HANDLOOMED, HANDMADE, AND FOLKLORE ARTICLES.—For purposes of

subparagraph (B)(iv), the President shall consult with representatives of

the ATPDEA beneficiary countries concerned for the purpose of identifying

particular textile and apparel goods that are mutually agreed upon as being

handloomed, handmade, or folklore goods of a kind described in section

2.3(a), (b), or (c) of the Annex or Appendix 3.1.B.11 of the Annex.

‘‘(D) PENALTIES FOR TRANSSHIPMENT.—

‘‘(i) PENALTIES FOR EXPORTERS.—If the President determines, based

on sufficient evidence, that an exporter has engaged in transshipment

with respect to apparel articles from an ATPDEA beneficiary country,

then the President shall deny all benefits under this title to such exporter, and any successor of such exporter, for a period of 2 years.

‘‘(ii) PENALTIES FOR COUNTRIES.—Whenever the President finds,

based on sufficient evidence, that transshipment has occurred, the

President shall request that the ATPDEA beneficiary country or countries through whose territory the transshipment has occurred take all

necessary and appropriate actions to prevent such transshipment. If

the President determines that a country is not taking such actions, the

President shall reduce the quantities of apparel articles that may be

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imported into the United States from such country by the quantity of

the transshipped articles multiplied by 3, to the extent consistent with

the obligations of the United States under the WTO.

‘‘(iii) TRANSSHIPMENT DESCRIBED.—Transshipment within the meaning of this subparagraph has occurred when preferential treatment

under subparagraph (A) has been claimed for an apparel article 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 subparagraph (A).

‘‘(E) BILATERAL EMERGENCY ACTIONS.—

‘‘(i) IN GENERAL.—The President may take bilateral emergency tariff

actions of a kind described in section 4 of the Annex with respect to

any apparel article imported from an ATPDEA beneficiary country if

the application of tariff treatment under subparagraph (A) to such article results in conditions that would be cause for the taking of such actions under such section 4 with respect to a like article described in the

same 8-digit subheading of the HTS that is imported from Mexico.

‘‘(ii) RULES RELATING TO BILATERAL EMERGENCY ACTION.—For purposes of applying bilateral emergency action under this subparagraph—

‘‘(I) the requirements of paragraph (5) of section 4 of the Annex

(relating to providing compensation) shall not apply;

‘‘(II) the term ‘transition period’ in section 4 of the Annex shall

mean the period ending December 31, 2006; and

‘‘(III) the requirements to consult specified in section 4 of the

Annex shall be treated as satisfied if the President requests consultations with the ATPDEA beneficiary country in question and

the country does not agree to consult within the time period specified under section 4.

‘‘(4) CUSTOMS PROCEDURES.—

‘‘(A) IN GENERAL.—

‘‘(i) REGULATIONS.—Any importer that claims preferential treatment

under paragraph (1) or (3) shall comply with customs procedures similar in all material respects to the requirements of Article 502(1) of the

NAFTA as implemented pursuant to United States law, in accordance

with regulations promulgated by the Secretary of the Treasury.

‘‘(ii) DETERMINATION.—

‘‘(I) IN GENERAL.—In order to qualify for the preferential treatment under paragraph (1) or (3) and for a Certificate of Origin to

be valid with respect to any article for which such treatment is

claimed, there shall be in effect a determination by the President

that each country described in subclause (II)—

‘‘(aa) has implemented and follows; or

‘‘(bb) is making substantial progress toward implementing

and following,

procedures and requirements similar in all material respects to the

relevant procedures and requirements under chapter 5 of the

NAFTA.

‘‘(II) COUNTRY DESCRIBED.—A country is described in this subclause if it is an ATPDEA beneficiary country—

‘‘(aa) from which the article is exported; or

‘‘(bb) in which materials used in the production of the article

originate or in which the article or such materials undergo production that contributes to a claim that the article is eligible

for preferential treatment under paragraph (1) or (3).

‘‘(B) CERTIFICATE OF ORIGIN.—The Certificate of Origin that otherwise

would be required pursuant to the provisions of subparagraph (A) shall not

be required in the case of an article imported under paragraph (1) or (3)

if such Certificate of Origin would not be required under Article 503 of the

NAFTA (as implemented pursuant to United States law), if the article were

imported from Mexico.

‘‘(5) DEFINITIONS.—In this subsection—

‘‘(A) ANNEX.—The term ‘the Annex’ means Annex 300-B of the NAFTA.

‘‘(B) ATPDEA BENEFICIARY COUNTRY.—The term ‘ATPDEA beneficiary

country’ means any ‘beneficiary country’, as defined in section 203(a)(1) of

this title, which the President designates as an ATPDEA beneficiary counVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00005 Fmt 6659 Sfmt 6621 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
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try, taking into account the criteria contained in subsections (c) and (d) of

section 203 and other appropriate criteria, including the following:

‘‘(i) Whether the beneficiary country has demonstrated a commitment

to—

‘‘(I) undertake its obligations under the WTO, including those

agreements listed in section 101(d) of the Uruguay Round Agreements Act, on or ahead of schedule; and

‘‘(II) participate in negotiations toward the completion of the

FTAA or another free trade agreement.

‘‘(ii) The extent to which the country provides protection of intellectual property rights consistent with or greater than the protection afforded under the Agreement on Trade-Related Aspects of Intellectual

Property Rights described in section 101(d)(15) of the Uruguay Round

Agreements Act.

‘‘(iii) The extent to which the country provides internationally recognized worker rights, including—

‘‘(I) the right of association;

‘‘(II) the right to organize and bargain collectively;

‘‘(III) a prohibition on the use of any form of forced or compulsory

labor;

‘‘(IV) a minimum age for the employment of children; and

‘‘(V) acceptable conditions of work with respect to minimum

wages, hours of work, and occupational safety and health;

‘‘(iv) Whether the country has implemented its commitments to eliminate the worst forms of child labor, as defined in section 507(6) of the

Trade Act of 1974.

‘‘(v) The extent to which the country has met the counternarcotics

certification criteria set forth in section 490 of the Foreign Assistance

Act of 1961 (22 U.S.C. 2291j) for eligibility for United States assistance.

‘‘(vi) The extent to which the country has taken steps to become a

party to and implements the Inter-American Convention Against Corruption.

‘‘(vii) The extent to which the country—

‘‘(I) applies transparent, nondiscriminatory, and competitive procedures in government procurement equivalent to those contained

in the Agreement on Government Procurement described in section

101(d)(17) of the Uruguay Round Agreements Act; and

‘‘(II) contributes to efforts in international fora to develop and

implement international rules in transparency in government procurement.

‘‘(C) NAFTA.—The term ‘NAFTA’ means the North American Free Trade

Agreement entered into between the United States, Mexico, and Canada on

December 17, 1992.

‘‘(D) WTO.—The term ‘WTO’ has the meaning given that term in section

2 of the Uruguay Round Agreements Act (19 U.S.C. 3501).

‘‘(E) ATPDEA.—The term ‘ATPDEA’ means the Andean Trade Promotion

and Drug Eradication Act.’’.

(b) DETERMINATION REGARDING RETENTION OF DESIGNATION.—Section 203(e)(1) of

the Andean Trade Preference Act (19 U.S.C. 3202(e)(1)) is amended—

(1) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively;

(2) by inserting ‘‘(A)’’ after ‘‘(1)’’; and

(3) by adding at the end the following:

‘‘(B) The President may, after the requirements of paragraph (2) have been met—

‘‘(i) withdraw or suspend the designation of any country as an ATPDEA beneficiary country, or

‘‘(ii) withdraw, suspend, or limit the application of preferential treatment

under section 204(b)(1) or (3) to any article of any country,

if, after such designation, the President determines that, as a result of changed circumstances, the performance of such country is not satisfactory under the criteria

set forth in section 204(b)(5)(B).’’.

(c) CONFORMING AMENDMENTS.—(1) Section 202 of the Andean Trade Preference

Act (19 U.S.C. 3201) is amended by inserting ‘‘(or other preferential treatment)’’

after ‘‘treatment’’.

(2) Section 204(a) of the Andean Trade Preference Act (19 U.S.C. 3203(a)) is

amended—

(A) in paragraph (1), by inserting ‘‘(or otherwise provided for)’’ after ‘‘eligibility’’; and

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(B) in paragraph (2), by striking ‘‘subsection (a)’’ and inserting ‘‘paragraph

(1)’’.

SEC. 4. TERMINATION OF PREFERENTIAL TREATMENT.

Section 208 of the Andean Trade Preference Act (19 U.S.C. 3206) is amended to

read as follows:

‘‘SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.

‘‘No duty-free treatment or other preferential treatment extended to beneficiary

countries under this title shall remain in effect after December 31, 2006.’’.

SEC. 5. TRADE BENEFITS UNDER THE CARIBBEAN BASIN ECONOMIC RECOVERY ACT.

Section 213(b)(2)(A) of the Carribean Basin Economic Recovery Act (19 U.S.C.

2703(b)(2)(A)) is amended as follows:

(1) Clause (i) is amended by striking the matter preceding subclause (I) and

inserting the following:

‘‘(i) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE CBTPA BENEFICIARY COUNTRIES.—Apparel articles sewn or otherwise assembled in

one or more CBTPA beneficiary countries from fabrics wholly formed

and cut, or from components knit-to-shape, in the United States from

yarns wholly formed in the United States, (including fabrics not formed

from yarns, if such fabrics are classifiable under heading 5602 or 5603

of the HTS and are wholly formed and cut in the United States) that

are—’’.

(2) Clause (ii) is amended to read as follows:

‘‘(ii) OTHER APPAREL ARTICLES ASSEMBLED IN ONE OR MORE CBTPA

BENEFICIARY COUNTRIES.—Apparel articles sewn or otherwise assembled in one or more CBTPA beneficiary countries with thread formed

in the United States from fabrics wholly formed in the United States

and cut in one or more CBTPA beneficiary countries from yarns wholly

formed in the United States, or from components knit-to-shape in the

United States from yarns wholly formed in the United States, or both

(including fabrics not formed from yarns, if such fabrics are classifiable

under heading 5602 or 5603 of the HTS and are wholly formed in the

United States).’’.

(3) Clause (iii)(II) is amended to read as follows:

‘‘(II) The amount referred to in subclause (I) is as follows:

‘‘(aa) 290,000,000 square meter equivalents during the 1-year period beginning on October 1, 2001.

‘‘(bb) 500,000,000 square meter equivalents during the 1-year period beginning on October 1, 2002.

‘‘(cc) 850,000,000 square meter equivalents during the 1-year period beginning on October 1, 2003.

‘‘(dd) 970,000,000 square meter equivalents in each succeeding 1-

year period through September 30, 2008.’’.

(4) Clause (iii)(IV) is amended to read as follows:

‘‘(IV) The amount referred to in subclause (III) is as follows:

‘‘(aa) 4,872,000 dozen during the 1-year period beginning on October 1, 2001.

‘‘(bb) 9,000,000 dozen during the 1-year period beginning on October 1, 2002.

‘‘(cc) 10,000,000 dozen during the 1-year period beginning on October 1, 2003.

‘‘(dd) 12,000,000 dozen in each succeeding 1-year period through

September 30, 2008.’’.

(5) Section 213(b)(2)(A) of such Act is further amended by adding at the end

the following new clause:

‘‘(ix) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE CBTPA BENEFICIARY COUNTRIES FROM UNITED STATES AND CBTPA BENEFICIARY COUNTRY COMPONENTS.—Apparel articles sewn or otherwise assembled in

one or more CBTPA beneficiary countries with thread formed in the

United States from components cut in the United States and in one or

more CBTPA beneficiary countries from fabric wholly formed in the

United States from yarns wholly formed in the United States, or from

components knit-to-shape in the United States and one or more CBTPA

beneficiary countries from yarns wholly formed in the United States, or

both (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS).’’.

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SEC. 6. TRADE BENEFITS UNDER THE AFRICAN GROWTH AND OPPORTUNITY ACT.

Section 112(b) of the African Growth and Opportunity Act (19 U.S.C. 3721(b)) is

amended as follows:

(1) Paragraph (1) is amended by amending the matter preceding subparagraph (A) to read as follows: ‘‘(1) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE BENEFICIARY SUB-SAHARAN

AFRICAN COUNTRIES.—Apparel articles sewn or otherwise assembled in one or

more beneficiary sub-Saharan African countries from fabrics wholly formed and

cut, or from components knit-to-shape, in the United States from yarns wholly

formed in the United States, (including fabrics not formed from yarns, if such

fabrics are classifiable under heading 5602 or 5603 of the HTS and are wholly

formed and cut in the United States) that are—’’. (2) Paragraph (2) is amended to read as follows:

‘‘(2) OTHER APPAREL ARTICLES ASSEMBLED IN ONE OR MORE BENEFICIARY SUB- SAHARAN AFRICAN COUNTRIES.—Apparel articles sewn or otherwise assembled in

one or more beneficiary sub-Saharan African countries with thread formed in

the United States from fabrics wholly formed in the United States and cut in

one or more beneficiary sub-Saharan African countries from yarns wholly

formed in the United States, or from components knit-to-shape in the United

States from yarns wholly formed in the United States, or both (including fabrics

not formed from yarns, if such fabrics are classifiable under heading 5602 or

5603 of the HTS and are wholly formed in the United States).’’.

(3) Paragraph (3) is amended—

(A) by amending the matter preceding subparagraph (A) to read as follows:

‘‘(3) APPAREL ARTICLES FROM REGIONAL FABRIC OR YARNS.—Apparel articles

wholly assembled in one or more beneficiary sub-Saharan African countries

from fabric wholly formed in one or more beneficiary sub-Saharan African countries from yarns originating either in the United States or one or more beneficiary sub-Saharan African countries (including fabrics not formed from yarns,

if such fabrics are classified under heading 5602 or 5603 of the HTS and are

wholly formed in one or more beneficiary sub-Saharan African countries), or

from components knit-to-shape in one or more beneficiary sub-Saharan African

countries from yarns originating either in the United States or one or more beneficiary sub-Saharan African countries, or apparel articles wholly formed on

seamless knitting machines in a beneficiary sub-Saharan African country from

yarns originating either in the United States or one or more beneficiary subSaharan African countries, subject to the following:’’;

(B) in subparagraph (A)(ii)—

(i) by striking ‘‘1.5’’ and inserting ‘‘3’’; and

(ii) by striking ‘‘3.5’’ and inserting ‘‘7’’; and

(C) by amending subparagraph (B) to read as follows:

‘‘(B) SPECIAL RULES FOR LESSER DEVELOPED COUNTRIES.—

‘‘(i) IN GENERAL.—Subject to subparagraph (A), preferential treatment under this paragraph shall be extended through September 30,

2004, for apparel articles wholly assembled, or knit-to-shape and wholly

assembled, or both, in one or more lesser developed beneficiary sub-Saharan African countries regardless of the country of origin of the fabric

or the yarn used to make such articles.

‘‘(ii) LESSER DEVELOPED BENEFICIARY SUB-SAHARAN AFRICAN COUNTRY.—For purposes of clause (i), the term ‘lesser developed beneficiary

sub-Saharan African country’ means—

‘‘(I) a beneficiary sub-Saharan African country that had a per

capita gross national product of less than $1,500 in 1998, as measured by the International Bank for Reconstruction and Development;

‘‘(II) Botswana; and

‘‘(III) Namibia.’’.

(4) Paragraph (4)(B) is amended by striking ‘‘18.5’’ and inserting ‘‘21.5’’.

(5) Section 112(b) of such Act is further amended by adding at the end the

following new paragraph:

‘‘(7) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE BENEFICIARY SUB-SAHARAN

AFRICAN COUNTRIES FROM UNITED STATES AND BENEFICIARY SUB-SAHARAN AFRICAN COUNTRY COMPONENTS.—Apparel articles sewn or otherwise assembled in

one or more beneficiary sub-Saharan African countries with thread formed in

the United States from components cut in the United States and one or more

beneficiary sub-Saharan African countries from fabric wholly formed in the

United States from yarns wholly formed in the United States, or from components knit-to-shape in the United States and one or more beneficiary sub-SahaVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00008 Fmt 6659 Sfmt 6621 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
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ran African countries from yarns wholly formed in the United States, or both

(including fabrics not formed from yarns, if such fabrics are classifiable under

heading 5602 or 5603 of the HTS).’’.

I. INTRODUCTION

A. PURPOSE AND SUMMARY

H.R. 3009, the ‘‘Andean Trade Promotion and Drug Eradication

Act,’’ would extend (through December 31, 2006) and enhance the

Andean Trade Preference Act (ATPA), which expires on December

4, 2001. The purpose of the bill is to expand trade and promote economic development as a way to create viable alternatives to illicit

trade in coca, thereby enhancing political security in the Andean

region and the hemisphere.

B. BACKGROUND

The Andean Trade Preference Act (ATPA) was enacted on December 4, 1991 as title II of P.L. 102–182. Modeled after the Caribbean Basin Initiative (P.L. 98–67, title II), the Act authorized preferential trade benefits to four Andean countries—Bolivia, Colombia, Ecuador, and Peru. Because the ATPA’s authority was limited

to 10 years, it will expire on December 4, 2001, unless renewed.

The ATPA has been cornerstone of U.S. efforts to encourage the

Andean countries to move out of illegal drug production and trafficking and into legitimate products. Its success is demonstrated by

the growth in trade between the United States and the Andean nations. Between 1991 and 2000, total two-way trade nearly doubled:

U.S. exports to the ATPA countries increased 66 percent, while imports more than doubled, rising from $5 billion to $11 billion. Although the Andean countries supply only a fraction of U.S. imports,

the United States is the leading export market for each of these

countries.

Another mark of the ATPA’s success can be seen in the market

reforms of the Andean countries. As these countries shift their polices to favor private enterprise and initiative and open their markets to the free flow of goods and services, they are realizing that

legitimate trade creates jobs, reduces poverty, and decreases the incentive to trade in illegal narcotics.

C. LEGISLATIVE HISTORY

COMMITTEE ACTION

H.R. 3009, the Andean Trade Promotion and Drug Eradication

Act, was introduced on October 3, 2001, by Congressman Crane, on

behalf of himself, and Chairman Thomas. The bill was referred to

the Committee on Ways and Means.

On October 5, 2001, the Committee on Ways and Means met to

consider H.R. 3009. At that time, Chairman Thomas offered an

amendment in the nature of a substitute which was adopted by

voice vote. An amendment offered by Mr. Rangel to allow Namibia

and Botswana to use third country fabric for the transition period

under the regional fabric cap established in the Africa Growth and

Opportunity Act (AGOA,) was accepted by voice vote. An amendment offered by Mr. Rangel to add tuna and tuna products to the

list of items excluded from duty-free treatment under the bill was

10

defeated by a roll call vote of 17 yeas to 23 nays. The Committee

then ordered the bill favorably reported, as amended, by voice vote.

LEGISLATIVE HEARING AND OVERSIGHT

On May 8, 2001 the Trade Subcommittee held a hearing on the

prospects and timing for achieving the Free Trade Area of the

Americas (FTAA) and on proposals to increase trade with Andean

countries through the extension and expansion of the Andean

Trade Preference Act. The Subcommittee received testimony from

both invited and public witnesses, many of whom stressed the importance of expanding trade and investment relations with Andean

countries in order to create legitimate economic alternatives to the

illicit production of coca in the region. Testimony in favor of expanding trade benefits available under the Andean Trade Preference Act was received from the U.S. Trade Representative, Ambassador Robert Zoellick.

II. EXPLANATION OF THE BILL

Section 1: Short Title

PRESENT LAW

No provision.

EXPLANATION OF THE BILL

Section 1 of H.R. 3009, as amended, provides that the Act may

be cited as the ‘‘Andean Trade Promotion and Drug Eradication

Act.’’

REASONS FOR CHANGE

This section names the legislation for identification purposes.

Section 2: Findings

PRESENT LAW

No provision.

EXPLANATION OF PROVISION

Section 2 contains findings of Congress that:

(1) Since the Andean Trade Preference Act was enacted in 1991,

it has had a positive impact on United States trade with Bolivia,

Colombia, Ecuador, and Peru. Two-way trade has doubled, with the

United States serving as the leading source of imports and leading

export market for each of the Andean beneficiary countries. This

has resulted in increased jobs and expanded export opportunities

in both the United States and the Andean region.

(2) The Andean Trade Preference Act has been a key element in

the United States counter narcotics strategy in the Andean region,

promoting export diversification and broad-based economic development that provide sustainable economic alternatives to drug-crop

production, strengthening the legitimate economies of Andean

countries and creating viable alternatives to illicit trade in coca.

(3) Notwithstanding the success of the Andean Trade Preference

Act, the Andean region remains threatened by political and ecoVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
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nomic instability and fragility, vulnerable to the consequences of

the drug war and fierce global competition for its legitimate trade.

(4) The continuing instability in the Andean region poses a

threat to the security interests of the United States and the world.

This problem has been partially addressed through foreign aid,

such as Plan Colombia, enacted by Congress in 2000. However, foreign aid alone is not sufficient. Enhancement of legitimate trade

with the United States provides an alternative means for reviving

and stabilizing the economies in the Andean region.

(5) The Andean Trade Preference Act constitutes a tangible commitment by the United States to the promotion of prosperity, stability, and democracy in the beneficiary countries.

(6) Renewal and enhancement of the Andean Trade Preference

Act will bolster the confidence of domestic private enterprise and

foreign investors in the economic prospects of the region, ensuring

that legitimate private enterprise can be the engine of economic development and political stability in the region.

(7) Each of the Andean beneficiary countries is committed to conclude negotiation of a Free Trade Area of the Americas by the year

2005 as a means of enhancing the economic security of the region.

(8) Temporarily enhancing trade benefits for Andean beneficiaries countries will promote the growth of free enterprise and

economic opportunity in these countries and serve the security interests of the United States, the region, and the world.

REASON FOR CHANGE

Section 2 expresses the Committee’s view that extension and enhancement of the Andean Trade Preference Act will promote free

enterprise as an engine of economic development that will create

viable alternatives to illicit trade in coca, thereby enhancing political security in the region.

Section 3: Articles eligible for preferential treatment

Articles (except apparel) eligible for preferential treatment

PRESENT LAW

The Andean Trade Preference Act (ATPA), enacted on December

4, 1991 as title II of Public Law 102–182, authorizes preferential

trade benefits for the Andean nations of Bolivia, Colombia, Ecuador, and Peru, similar to those benefits granted to beneficiaries

under the Caribbean Basin Initiative program. The ATPA authorizes the President to proclaim duty-free treatment for all eligible

articles from Bolivia, Colombia, Ecuador, Peru. This authority applies only to normal column 1 rates of duty in the Harmonized Tariff Schedule of the United States (HTS); any additional duties imposed under U.S. unfair trade practice laws, such as the antidumping or countervailing duty laws, are not affected by this authority.

The ATPA contains a list of products that are ineligible for dutyfree treatment. More specifically, ATPA duty-free treatment does

not apply to textile and apparel articles that are subject to textile

agreements; petroleum and petroleum products; footwear not eligible for duty-free treatment under the Generalized System of PrefVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
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erences; certain watches and watch parts; certain leather products;

and sugar, syrups and molasses subject to over-quota rates of duty.

EXPLANATION OF PROVISION

Section 3(a) amends the Andean Trade Preference Act to authorize the President to proclaim duty-free treatment for any of the following articles which were previously excluded from duty-free

treatment under the ATPA, if the President determines that the

article is not import-sensitive in the context of imports from beneficiary countries:

(1) Footwear not designated at the time of the effective date

of this Act as eligible for the purposes of the Generalized System of Preferences under title V of the Trade Act of 1974;

(2) Petroleum, or any product derived from petroleum, provided for in headings 2709 and 2710 of the HTS;

(3) Watches and watch parts (including cases, bracelets and

straps), of whatever type including, but not limited to, mechanical, quartz digital or quartz analog, if such watches or watch

parts contain any material which is the product of any country

with respect to which HTS column 2 rates of duty apply;

(4) Handbags, luggage, flat goods, work gloves, and leather

wearing apparel that—(i) are the product of any beneficiary

country; and (ii) were not designated on August 5, 1983, as eligible articles for purposes of the Generalized System of Preferences under title V of the Trade Act of 1974.

Under H.R. 3009, textiles subject to textile agreements; sugar,

syrups and molasses subject to over-quota tariffs; and rum and

tafia classified in subheading 2208.40.00 of the HTS would continue to be ineligible for duty-free treatment, as would apparel

products other than those specifically described below. Imports of

tuna, prepared or preserved in any manner, in airtight containers

would receive immediate duty-free treatment.

REASON FOR CHANGE

The Committee believes that extending and enhancing economic

benefits to countries under the Andean Trade Preference Act, by

authorizing duty-free treatment for products excluded from dutyfree treatment under current law, as long as they are not importsensitive, will promote economic alternatives to the production of illicit drugs, while encouraging these nations to make necessary economic reforms.

Eligible apparel articles

PRESENT LAW

Under the ATPA, apparel articles are on the list of products excluded from eligibility for duty-free treatment.

EXPLANATION OF PROVISION

Under Section 3, the President may proclaim duty-free and

quota-free treatment for apparel articles sewn or otherwise assembled in one or more beneficiary countries exclusively from any one

or any combination of the following:

(1) Fabrics or fabric components formed, or components knit-toshape, in the United States (including fabrics not formed from

13

yarns, if such fabrics are classifiable under heading 5602 or 5603

of the HTS and are formed in the United States).

(2) Fabrics or fabric components formed, or components knit-toshape, in one or more beneficiary countries, from yarns formed in

one or more beneficiary countries, if such fabrics (including fabrics

not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and are formed in one or more beneficiary countries) are in chief weight of llama, or alpaca.

(3) Fabrics or yarn not produced in the United States or in the

region, to the extent that apparel articles of such fabrics or yarn

would be eligible for preferential treatment, without regard to the

source of the fabrics or yarn, under Annex 401 of the NAFTA (short

supply provisions). Any interested party may request the President

to consider such treatment for additional fabrics and yarns on the

basis that they cannot be supplied by the domestic industry in commercial quantities in a timely manner, and the President must

make a determination within 60 calendar days of receiving the request from the interested party.

(4) Apparel articles sewn or otherwise assembled in one or more

beneficiary countries from fabrics or fabric components formed or

components knit-to-shape, in one or more beneficiary countries,

from yarns formed in the United States or in one or more beneficiary countries (including fabrics not formed from yarns, if such

fabrics are classifiable under heading 5602 or 5603 of the HTS and

are formed in one or more beneficiary countries), whether or not

the apparel articles are also made from any of the fabrics, fabric

components formed, or components knit-to-shape in the United

States described in paragraph 1. Imports of apparel made from regional fabric and regional yarn would be capped at 3 percent of

U.S. imports growing to 6 percent of U.S. imports in 2006, measured in square meter equivalents.

REASON FOR CHANGE

As described above, the Committee believes that extending and

enhancing economic benefits to countries under the Andean Trade

Preference Act, by authorizing duty-free treatment for certain products excluded from duty-free treatment under current law, will promote economic alternatives to the production of illicit drugs, while

encouraging these nations to make necessary economic reforms.

The Committee believes that an ATPA enhancement bill should be

tailored to the nature of textile and apparel production in the region. Unlike the Caribbean Basin region, the Andean region produces much of its own fabric and yarn. A bill that made benefits

contingent on U.S. fabric and yarn content would provide very little

benefit to Andean countries. In addition, the region manufactures

a considerable amount of woven fabric, so limiting the use of regional fabric to knit fabric made of U.S. yarn, as in Caribbean

Basin Trade Partnership Act, would not provide meaningful benefits to Andean economies.

Penalties for transshipment

PRESENT LAW

The Tariff Act of 1930, as amended, provides for civil monetary

penalties for unlawful transshipment. These include penalties

14

under section 1592 for up to a maximum of the domestic value of

the imported merchandise or eight times the loss of revenue, as

well as denial of entry, redelivery or liquidated damages for failure

to redeliver the merchandise determined to be inaccurately represented. In addition, an importer may be liable for criminal penalties, including imprisonment for up to five years, under section

1001 of title 18 of the United States Code for making false statements on import documentation.

Under the North American Free Trade Agreement (NAFTA), Parties to the Agreement must observe Customs procedures and documentation requirements, which are established in Chapter 5 of

NAFTA. Requirements regarding Certificates of Origin for imports

receiving preferential tariffs are detailed in Article 502.1 of

NAFTA.

EXPLANATION OF PROVISION

Section 3 requires that importers comply with requirements similar in all material respects to the requirements regarding Certificates of Origin contained in Article 502.1 of the North American

Free Trade Agreement (NAFTA) for a similar importation from

Mexico.

In addition, if an exporter is determined under the laws of the

United States to have engaged in illegal transshipment of apparel

products from an Andean country, then the President shall deny all

benefits under the bill to such exporter, and to any successors of

such exporter, for a period of two years.

In cases where the President has requested a beneficiary country

to take action to prevent transshipment and the country has failed

to do so, the President shall reduce the quantities of textile and apparel articles that may be imported into the United States from

that country by three times the quantity of articles transshipped,

to the extent that such action is consistent with World Trade Organization (WTO) rules.

REASON FOR CHANGE

The Committee believes these hard-hitting transshipment provisions will address concerns raised by the textile and apparel industry that increasing trade with the Andean countries could result in

illegal transshipment of textile and apparel products through the

region.

Import relief actions

PRESENT LAW

The import relief procedures and authorities under sections 201–

204 of the Trade Act of 1974 apply to imports from ATPA beneficiary countries, as they do to imports from other countries. If

ATPA imports cause serious injury, or threat of such injury, to the

domestic industry producing a like or directly competitive article,

section 204(d) of the ATPA authorizes the President to suspend

ATPA duty-free treatment and proclaim a rate of duty or other relief measures.

Under NAFTA, the United States may invoke a special safeguard

provision at any time during the tariff phase-out period if a

NAFTA-origin textile or apparel good is being imported in such inVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
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creased quantities and under such conditions as to cause ‘‘serious

damage, or actual threat thereof,’’ to a domestic industry producing

a like or directly competitive good. The President is authorized to

either suspend further duty reductions or increase the rate of duty

to the NTR rate for up to three years.

EXPLANATION OF PROVISION

Under Section 3(E) normal safeguard authorities under ATPA

would apply to imports of all products except textiles and apparel.

A NAFTA equivalent safeguard authorities would apply to imports

of apparel products from ATPA countries, except that, United

States, if it applied a safeguard action, would not be obligated to

provide equivalent trade liberalizing compensation to the exporting

country.

REASON FOR CHANGE

The Committee believes that NAFTA equivalent safeguard authority is appropriate in order to ensure that the domestic apparel

industry is not damaged by increased imports from the Andean region.

Designation criteria

PRESENT LAW

In determining whether to designate any country as an ATPA

beneficiary country, the President must take into account seven

mandatory and 12 discretionary criteria, which are listed in section

203 of the ATPA.

Under Section 203 of the ATPA, the President shall not designate any country a ATPA beneficiary country if:

(1) The country is a Communist country;

(2) The country has nationalized, expropriated, imposed

taxes or other exactions or otherwise seized ownership or control of U.S. property (including intellectual property), unless he

determines that prompt, adequate, and effective compensation

has been or is being made, or good faith negotiations to provide

such compensation are in progress, or the country is otherwise

taking steps to discharge its international obligations, or a dispute over compensation has been submitted to arbitration;

(3) The country fails to act in good faith in recognizing as

binding or in enforcing arbitral awards in favor of U.S. citizens;

(4) The country affords ‘‘reverse’’ preferences to developed

countries and whether such treatment has or is likely to have

a significant adverse effect on U.S. commerce;

(5) A government-owned entity in the country engages in the

broadcast of copyrighted material belonging to U.S. copyright

owners without their express consent or the country fails to

work toward the provision of adequate and effective intellectual property rights;

(6) The country is not a signatory to an agreement regarding

the extradition of U.S. citizens;

(7) If the country has not or is not taking steps to afford

internationally recognized worker rights to workers in the

country;

16

In determining whether to designate a country as eligible for

ATPA benefits, the President shall take into account (discretionary

criteria):

(1) An expression by the country of its desire to be designated;

(2) The economic conditions in the country, its living standards, and any other appropriate economic factors;

(3) The extent to which the country has assured the United

States it will provide equitable and reasonable access to its

markets and basic commodity resources;

(4) The degree to which the country follows accepted rules of

international trade under the World Trade Organization;

(5) The degree to which the country uses export subsidies or

imposes export performance or local content requirements

which distort international trade;

(6) The degree to which the trade policies of the country are

contributing to the revitalization of the region;

(7) The degree to which the country is undertaking self-help

measures to protect its own economic development;

(8) Whether or not the country has taken or is taking steps

to afford to workers in that country (including any designated

zone in that country) internationally recognized workers rights;

(9) The extent to which the country provides under its law

adequate and effective means for foreign nationals to secure,

exercise, and enforce exclusive intellectual property rights;

(10) The extent to which the country prohibits its nationals

from engaging in the broadcast of copyrighted material belonging to U.S. copyright owners without their express consent;

(11) Whether such country has met the narcotics cooperation

certification criteria of the Foreign Assistance Act of 1961 for

eligibility for U.S. assistance; and

(12) The extent to which the country is prepared to cooperate

with the United States in the administration of the Act.

Under the ATPA the President is prohibited from designating a

country a beneficiary country if any of criteria (1)–(7) apply to that

country, subject to waiver if the President determines that country

designation will be in the U.S. national economic or security interest. The waiver does not apply to criteria (4) and (6). Under the

ATPA criteria on (7) is included as both mandatory and discretionary.

The President may withdraw or suspend beneficiary country status or duty-free treatment on any article if he determines the country should be barred from designation as a result of changed circumstances. The President must submit a triennial report to the

Congress on the operation of the program. The report shall include

any evidence that the crop eradication and crop substitution efforts

of the beneficiary country are directly related to the effects of the

legislation

EXPLANATION OF PROVISION

Section 3 provides that the President, in designating a country

as eligible for the enhanced ATPDEA benefits, shall take into account the existing eligibility criteria established under ATPA described above, as well as other appropriate criteria, including:

whether a country has demonstrated a commitment to undertake

17

its WTO obligations and participate in negotiations toward the

completion of the FTAA or comparable trade agreement; the extent

to which the country provides intellectual property protection consistent with or greater than that afforded under the Agreement on

Trade-Related Aspects of Intellectual Property Rights; the extent to

which the country provides internationally recognized worker

rights; whether the country has implemented its commitments to

eliminate the worst forms of child labor; the extent to which a

country has taken steps to become a party to and implement the

Inter-American Convention Against Corruption; and the extent to

which the country applies transparent, nondiscriminatory and competitive procedures in government procurement equivalent to those

included in the WTO Agreement on Government Procurement and

otherwise contributes to efforts in international fora to develop and

implement international rules in transparency in government procurement.

In evaluating a potential beneficiary’s compliance with its WTO

obligations, the Committee expects the President to take account

the extent to which the country follows the rules on customs valuation set forth in the WTO Customs Valuation Agreement. With respect to intellectual property protection, it is the intention of the

conferees that the President will also take into account the extent

to which potential beneficiary countries are providing or taking

steps to provide protection of intellectual property rights comparable to the protections provided to the United States in bilateral

intellectual property agreements.

The Committee has serious concerns about the Government of

Colombia’s compliance with the mandatory condition for eligibility

in Section 203(c)(2) relating to protections of property and businesses owned by U.S. citizens. The Committee urges the Government to resolve its outstanding disputes with US corporations immediately. The Committee reminds the Government of Colombia it

is obligated, as a beneficiary of the ATPA program, to fulfill its responsibility toward U.S. corporations which have received favorable

arbitral awards from internationally recognized arbitration panels.

Unfortunately, the Committee is aware of several cases in which

the Colombian Government has ignored these obligations, in clear

violation of the ATPA. For example, despite a binding arbitration

award by an official tribunal of the Government of Colombia to

Nortel Networks, the Government of Colombia has not paid Nortel.

Similarly, in December 2000, TermoRio, a power plant project

which included Sithe Energies, received a $60.3 million award in

a binding arbitration by a tribunal of Colombian legal scholars

under the auspices of the Centro de Conciliacion y Arbitraje de la

Camara de Comericio de Barranquilla and the International Chamber of Commerce. The Committee urges the Government of Colombia to comply with such decisions and compensate Nortel, Sithe Energies and other U.S. corporations appropriately in order to maintain its beneficiary status under status ATPA.

Since April 1995, Colombia has applied a variable import duty

system, known as the ‘‘price band’’ system, on fourteen basic agriculture products such as wheat, corn, and soybean oil. An additional 147 commodities, considered substitutes or related products,

are subject to the price band system which establishes ceiling,

floor, and reference prices on imports. The Committee’s view is that

18

the price band system is non-transparent and easily manipulated

as a protectionist device. In early 2000, the United States reached

agreement with Colombia in the WTO that Colombia would delink

wet pet food, the only finished product in this system, from the

price band system. In implementing the eligibility criteria relating

to market access and implementation of WTO commitments, it is

the Committees intent that USTR insist that Colombia implement

its WTO commitment to remove pet food from the price band tariff

system and to apply the 20 percent common external tariff to imported pet food.

With respect to whether beneficiary countries are following established WTO rules, the Committee believes it is important for

Andean governments to provide transparent and non-discriminatory regulatory procedures. Unfortunately, the Committee knows of

instances where regulatory policies in Andean countries are

opaque, unpredictable, and arbritarily applied. As such, its is the

Committee’s view that Andean countries that seek trade benefits

should adopt, implement, and apply transparent and non-discriminatory regulatory procedures. The development of such procedures

would help create regulatory stability in the Andean region and

thus provide mere certainty to U.S. companies that would like to

invest in these countries.

Section 4: Termination of Duty-free treatment

PRESENT LAW

Duty-free treatment under the ATPA expires on December 4,

2001.

EXPLANATION OF PROVISION

Duty-free treatment terminates under the Act on December 31,

2006.

REASON FOR CHANGE

A termination date one year after the scheduled conclusion of negotiations to establish the Free Trade Area of the Americas will

provide a necessary transition period to phase in reductions in duties pursuant to the larger hemispheric agreement.

Section 5. Trade Benefits under the Caribbean Basin Trade Partnership Act (CBTPA and the Africa Growth and Opportunity

Act (AGOA)

Knit-to-shape apparel

PRESENT LAW

Draft regulations issued by Customs to implement P.L. 106–200

stipulate that knit-to-shape garments, because technically they do

not go through the fabric stage, are not eligible for trade benefits

under the act.

EXPLANATION OF PROVISION

Sec. 5 of H.R. 3009 amends AGOA and CBTPA to clarify that

preferential treatment is provided to knit-to-shape apparel articles

assembled in beneficiary countries.

19

REASON FOR CHANGE

Although the Committee believes that the AGOA and CBTPA

language stated clearly that knit-to-shape apparel articles are to

receive benefits, draft Customs regulations do not so provide. Accordingly, this provision gives effect to Congressional intent.

PRESENT LAW

Draft regulations issued by Customs to implement P.L. 106–200

deny preferential access to garments that are cut both in the

United States and beneficiary countries, on the rationale that the

legislation does not specifically list this variation in processing (the

so-called ‘‘hybrid cutting problem’’).

EXPLANATION OF PROVISION

Sec. 5 of H.R. 3009 adds new rules in CBTPA and AGOA to provide preferential treatment for apparel articles that are cut both in

the United States and beneficiary countries.

REASON FOR CHANGE

Although the Committee believes that the CBTPA and AGOA

language stated clearly that articles that are both cut in the United

States and beneficiary countries, draft Customs regulations do not

so provide. Accordingly, this provision gives effect to Congressional

intent.

CBI knit cap

PRESENT LAW

P.L. 106–200 extended duty-free benefits to knit apparel made in

CBI countries from regional fabric made with U.S. yarn and to

knit-to-shape apparel (except socks), up to a cap of 250,000,000

square meter equivalents (SMEs), with a growth rate of 16 percent

per year for first 3 years.

EXPLANATION OF PROVISION

Sec. 5 of H.R. 2009 would raise this cap to the following

amounts: 250,000,000 SMEs for the 1-year period beginning October 1, 2001; 500,000,000 SMEs for the 1-year period beginning on

October 1, 2002; 850,000,000 SMEs for the 1-year period beginning

on October 1, 2003; 970,000,000 SMEs in each succeeding 1-year

period through September 30, 2009.

REASON FOR CHANGE

Now that P.L. 106–200 has been in effect for one year, the Committee believes it is appropriate to increase these caps.

CBI T-shirt cap

PRESENT LAW

P.L. 106–200 extends benefits for an additional category of CBI

regional knit apparel products (T-shirts) up to a cap of 4.2 million

dozen, growing 16 percent per year for the first 3 years.

20

EXPLANATION OF PROVISION

Section 5 of H.R 3009 would raise this cap to the following

amounts: 4,200,000 dozen during the 1-year period beginning October 1, 2001; 9,000,000 dozen for the 1-year period beginning on October 1, 2002; 10,000,00 dozen for the 1-year period beginning on

October 1, 2003; 12,000,000 dozen in each succeeding 1-year period

through September 30, 2009.

REASON FOR CHANGE

Now that P.L. 106–200 has been in effect for one-year, the Committee believes it is appropriate to increase these caps in current

law which will limit trade under the bill in the future

PRESENT LAW

Section 112(b)(3) of the AGOA provides preferential treatment for

apparel made in beneficiary sub-Saharan African countries from

‘‘regional’’ fabric (i.e., fabric formed in one or more beneficiary

countries) from yarn originating either in the United States or one

or more such countries. Section 112(b)(3)(B) establishes a special

rule for lesser developed beneficiary sub-Saharan African countries,

which provides preferential treatment, through September 30,

2004, for apparel wholly assembled in one or more such countries

regardless of the origin of the fabric used to make the articles. Section 112(b)(3)(A) establishes a quantitative limit or ‘‘cap’’ on the

amount of apparel that may be imported under section 112(b)(3) or

section 112(b)(3)(B). This ‘‘cap’’ is 1.5 percent of the aggregate

square meter equivalents of all apparel articles imported into the

United States for the year that began October 1, 2000, and increases in equal increments to 3.5 percent for the year beginning

October 1, 2007.

EXPLANATION OF PROVISION

Section 5 would clarify that apparel wholly assembled in one or

more beneficiary sub-Saharan African countries from components

knit-to-shape in one or more such countries from U.S. or regional

yarn is eligible for preferential treatment under section 112(b)(3) of

AGOA. Similarly, Section 5 would clarify that apparel knit-toshape and wholly assembled in one or more lesser developed beneficiary sub-Saharan African countries is eligible for preferential

treatment, regardless of the origin of the yarn used to make such

articles. Section 5 also would increase the ‘‘cap’’ by changing the

applicable percentages from 1.5 percent to 3 percent in the year

that began October 1, 2000, and from 3.5 percent to 7 percent in

the year beginning October 1, 2007.

PRESENT LAW

AGOA was supposed to provide duty-free, quota-free treatment to

sweaters knit in African beneficiary countries from fine merino

wool yarn, regardless of where the yarn was formed. AGOA was

supposed to provide duty-free, quota-free treatment to sweaters

knit in African beneficiary countries from fine merino wool yarn,

regardless of where the yarn was formed. However, due to a drafting problem, the wrong diameter was included, making it impossible to use the provision.

21

EXPLANATION OF PROVISION

Section 5 corrects the yarn diameter in the AGOA legislation so

that sweaters knit to shape from merino wool of a specific diameter

are eligible.

REASON FOR CHANGE

This provision gives effect to Congressional intent in the AGOA

legislation.

Africa: Namibia and Botswana

PRESENT LAW

The GDBs of Botswana and Namibia exceed the LLDC limit of

$1500 and therefore these countries are not eligible to use third

country fabric for the transition period under the AGOA regional

fabric country cap.

EXPLANATION OF PROVISION

Section 5 allows Namibia and Botswana to use third country fabric for the transition period under the AGOA regional fabric country cap.

REASON FOR CHANGE

Because, neither Botswana nor Namibia has regional fabric making capacity, both countries need the ability to use third country

fabric for a limited period to assist in the development of their indigenous textile and apparel industries.

III. VOTES OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of the

House of Representatives, the following statements are made concerning the votes of the Committee on Ways and Means in its consideration of the bill, H.R. 3009.

VOTES ON AMENDMENTS

A rollcall vote was conducted on the following amendment to the

Chairman’s amendment in the nature of a substitute.

An amendment by Mr. Rangel, to the Chairman’s amendment in

the nature of a substitute to add tuna or tuna products to the list

of items that are excluded from duty-free treatment under the bill,

was defeated by a rollcall vote of 17 yeas to 23 nays. The vote was

as follows:

Representatives Yea Nay Present Representatives Yea Nay Present

Mr. Thomas ........................... ........... X ............. Mr. Rangel ........................... X ........... .............

Mr. Crane .............................. ........... X ............. Mr. Stark .............................. X ........... .............

Mr. Shaw ............................... ........... X ............. Mr. Matsui ............................ X ........... .............

Mrs. Johnson ......................... ........... X ............. Mr. Coyne ............................. ........... X .............

Mr. Houghton ........................ ........... ........... ............. Mr. Levin .............................. X ........... .............

Mr. Herger ............................. ........... X ............. Mr. Cardin ............................ X ........... .............

Mr. McCrery ........................... ........... X ............. Mr. McDermott ..................... X ........... .............

Mr. Camp .............................. ........... X ............. Mr. Kleczka ........................... X ........... .............

Mr. Ramstad ......................... ........... X ............. Mr. Lewis (GA) ..................... X ........... .............

Mr. Nussle ............................. ........... X ............. Mr. Neal ............................... X ........... .............

Mr. Johnson ........................... ........... X ............. Mr. McNulty .......................... X ........... .............

Ms. Dunn .............................. ........... X ............. Mr. Jefferson ........................ X ........... .............

22

Representatives Yea Nay Present Representatives Yea Nay Present

Mr. Collins ............................ X ........... ............. Mr. Tanner ............................ X ........... .............

Mr. Portman .......................... ........... X ............. Mr. Becerra .......................... X ........... .............

Mr. English ........................... ........... X ............. Mrs. Thurman ....................... X ........... .............

Mr. Watkins ........................... ........... X ............. Mr. Doggett .......................... X ........... .............

Mr. Hayworth ......................... ........... X ............. Mr. Pomeroy ......................... X ........... .............

Mr. Weller .............................. ........... X ............. .

Mr. Hulshof ........................... ........... X ............. .

Mr. McInnis ........................... ........... X ............. .

Mr. Lewis (KY) ...................... ........... X ............. .

Mr. Foley ............................... ........... X ............. .

Mr. Brady .............................. ........... X ............. .

Mr. Ryan ............................... ........... X ............. .

MOTION TO REPORT THE BILL

The bill, H.R. 3009, was ordered favorably reported by voice vote

(with a quorum being present).

IV. BUDGET EFFECTS

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d)(2) of rule XIII of the Rules of the

House of Representatives, the following statement is made concerning the effects on the budget of this bill, H.R. 3009 as reported:

The Committee agrees with the estimate prepared by CBO which

is included below.

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the

House of Representatives, the Committee states that enactment of

H.R. 3009 would reduce customs duty receipts due to lower tariffs

imposed on goods from Andean countries.

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the

House of Representatives, requiring a cost estimate prepared by

the Congressional Budget Office, the following report prepared by

CBO is provided.

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, October 11, 2001.

Hon. WILLIAM ‘‘BILL’’ M. THOMAS,

Chairman, Committee on Ways and Means,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3009, the Andean Trade

Promotion and Drug Eradication Act.

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.

23

H.R. 3009—Andean Trade Promotion and Drug Eradication Act

Summary: H.R. 3009 would extend the period in which preferential treatment provided to certain products of countries under

the Andean Trade Preference Act (ATPC) is in effect. In addition,

the bill would provide preferential treatment under ATPA for additional articles, including certain footwear and petroleum products.

The bill also would extend preferential treatment to knit-to-shape

apparel articles imported from countries under the Caribbean

Basin Economic Recovery Act (CBERA) and the African Growth

and Opportunity Act (AGOA).

The Congressional Budget Office estimates that enacting the bill would reduce revenues by $41 million in 2002, by $247 million over

the 2002–2006 period, and by $263 million over the 2002–2011 period. Because enacting H.R. 3009 would affect receipts, pay-asyour-go procedures would apply. CBO has determined that H.R.

3009 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 H.R. 3009 is shown in the following table.

By fiscal year, in millions of dollars—

2002 2003 2004 2005 2006

CHANGES IN REVENUES

Estimated Revenues ¥41 ¥47 ¥50 ¥53 ¥57

Basis of Estimate: ATPA is scheduled to expire on December 4,

2001. H.R. 3009 would extend the ATPA program until December

31, 2006. Several products of beneficiary countries would continue

to receive preferential duty treatment if the bill were enacted.

Based on information from the International Trade Commission

and other trade sources, CBO estimates that extending the ATPA

program would reduce revenues by $18 million in 2002, by $119

million over the 2002–2006 period, and by $126 million over the

2002–2007 period.

Under current law, ATPA does not extend preferential treatment

to footwear that is ineligible for treatment under the generalized

system of preferences (GSP), petroleum and certain products derived from petroleum, watches and watch parts containing material

that is the product of countries not receiving normal trade relations

(NTR) treatment, certain sugars and molasses, and certain leather

goods. H.R. 3009 would allow the President to extend duty-free

treatment to those products. CBO expects that all imports of these

products would receive duty-free treatment.

Under current law, apparel articles that are the product or manufacture of an ATPA beneficiary country are entitled to preferential

treatment. The bill would allow apparel articles assembled from

fabrics formed or knit-to-shape in the United States and certain

other apparel articles to receive duty-free treatment. Apparel articles assembled from regional fabrics would also receive preferential

treatment if they do not exceed certain percentages of imports on

apparel articles. All preferential treatment would expire after December 31, 2006. Based on information from the International

Trade Commission, the Office of Textiles and Apparel in the Department of Commerce, and private-sector sources, CBO estimates

24

that if enacted, the provisions that expand ATPA treatment to new

products would reduce revenues by $22 million in 2002, by $125

million over the 2002–2006 period, and by $132 million over the

2002–2011 period.

H.R. 3009 would extend preferential treatment to apparel articles formed from components knit-to-shape in the United States for

beneficiary countries under CBERA and AGOA. It would also increase the amount of certain apparel articles assembled from regional fabrics that would receive preferential treatment. Preferential treatment for the beneficiary countries is scheduled to expire after September 30, 2008. Based on information from the

International Trade Commission, the Office of Textiles and Apparel

in the Department of Commerce and private-sector sources, CBO

estimates that if enacted, these provisions would reduce revenues

by $1 million in 2002, by $3 million over the 2002–2006 period, and

by $5 million over the 2002–2008 period.

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 budget year and the succeeding

four years are counted.

By fiscal year, in millions of dollars—

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Changes in receipts ................................................ ¥41 ¥47 ¥50 ¥53 ¥57 ¥16 ¥1000

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

Impact on State, local, and tribal governments: 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. Impact

on State, Local, and Tribal Governments: Elyse Goldman. Impact

on the Private Sector: Paige Piper/Bach.

Estimate approved by: Robertson Williams, Assistant Director for

Tax Analysis.

V. OTHER MATTERS TO BE DISCUSSED UNDER THE

RULES OF THE HOUSE

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the

House of Representatives (relating to oversight findings), the Committee, based on public hearing testimony and information from

the Administration, concluded that it is appropriate and timely to

consider the bill as reported.

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of genVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00024 Fmt 6659 Sfmt 6602 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
25

eral performance goals and objectives for which any measure authorizes funding is required.

C. CONSTITUTIONAL AUTHORITY STATEMENT

With respect to clause 3(d)(1) of rule XIII of the Rules of the

House of Representatives, relating to Constitutional Authority, the

Committee states that the Committee’s action in reporting the bill

is derived from Article 1 of the Constitution, Section 8 (‘‘The Congress shall have power to lay and collect taxes, duties, imposts and

excises, to pay the debts and to provide for * * * the general Welfare of the United States.’’)

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS

REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

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):

ANDEAN TRADE PREFERENCE ACT

* * * * * * *

TITLE II—TRADE PREFERENCE FOR THE ANDEAN

REGION

SEC. 201. SHORT TITLE.

This title may be cited as the ‘‘Andean Trade Preference Act’’.

SEC. 202. AUTHORITY TO GRANT DUTY-FREE TREATMENT.

The President may proclaim duty-free treatment (or other preferential treatment) for all eligible articles from any beneficiary

country in accordance with the provisions of this title.

SEC. 203. BENEFICIARY COUNTRY.

(a) * * *

* * * * * * *

(e) WITHDRAWAL OR SUSPENSION OF DESIGNATION.—(1)(A) The

President may—

ø(A)¿ (i) withdraw or suspend the designation of any country

as a beneficiary country, or

ø(B)¿ (ii) withdraw, suspend, or limit the application of dutyfree treatment under this title to any article of any country, if,

after such designation, the President determines that as a result of changed circumstances such a country should be barred

from designation as a beneficiary country.

(B) The President may, after the requirements of paragraph (2)

have been met—

(i) withdraw or suspend the designation of any country as an

ATPDEA beneficiary country, or

(ii) withdraw, suspend, or limit the application of preferential

treatment under section 204(b)(1) or (3) to any article of any

country,

26

if, after such designation, the President determines that, as a result

of changed circumstances, the performance of such country is not

satisfactory under the criteria set forth in section 204(b)(5)(B).

* * * * * * *

SEC. 204. ELIGIBLE ARTICLES.

(a) IN GENERAL.—(1) Unless otherwise excluded from eligibility

(or otherwise provided for) by this title, the duty-free treatment

provided under this title shall apply to any article which is the

growth, product, or manufacture of a beneficiary country if— (A) * * *

* * * * * * *

(2) The Secretary of the Treasury shall prescribe such regulations as may be necessary to carry out øsubsection (a)¿ paragraph

(1) including, but not limited to, regulations providing that, in

order to be eligible for duty-free treatment under this title, an article must be wholly the growth, product, or manufacture of a beneficiary country, or must be a new or different article of commerce

which has been grown, produced, or manufactured in the beneficiary country; but no article or material of a beneficiary country

shall be eligible for such treatment 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.

* * * * * * *

ø(b) EXCEPTIONS TO DUTY-FREE TREATMENT.—The duty-free

treatment provided under this title shall not apply to—

ø(1) textile and apparel articles which are subject to textile

agreements;

ø(2) footwear not designated at the time of the effective date

of this Act as eligible for the purpose of the generalized system

of preferences under title V of the Trade Act of 1974;

ø(3) tuna, prepared or preserved in any manner, in airtight

containers;

ø(4) petroleum, or any product derived from petroleum, provided for in headings 2709 and 2710 of the HTS;

ø(5) watches and watch parts (including cases, bracelets and

straps), of whatever type including, but not limited to, mechanical, quartz digital or quartz analog, if such watches or watch

parts contain any material which is the product of any country

with respect to which HTS column 2 rates of duty apply;

ø(6) articles to which reduced rates of duty apply under subsection (c);

ø(7) sugars, syrups, and molasses classified in subheadings

1701.11.03, 1701.12.02, 1701.99.02, 1702.90.32, 1806.10.42, and

2106.90.12 of the HTS; or

ø(8) rum and tafia classified in subheading 2208.40.00 of the

HTS.

ø(c) DUTY REDUCTIONS FOR CERTAIN GOODS.—(1) Subject to paragraph (2), the President shall proclaim reductions in the rates of

duty on handbags, luggage, flat goods, work gloves, and leather

wearing apparel that—

27

ø(A) are the product of any beneficiary country; and

ø(B) were not designated on August 5, 1983, as eligible articles for purposes of the generalized system of preferences

under title V of the Trade Act of 1974.

ø(2) The reduction required under paragraph (1) in the rate of

duty on any article shall—

ø(A) result in a rate that is equal to 80 percent of the rate

of duty that applies to the article on December 31, 1991, except

that, subject to the limitations in paragraph (3), the reduction

may not exceed 2.5 percent ad valorem; and

ø(B) be implemented in 5 equal annual stages with the first

1/5 of the aggregate reduction in the rate of duty being applied

to entries, or withdrawals from warehouse for consumption, of

the article on or after January 1, 1992.

ø(3) The reduction required under this subsection with respect to

the rate of duty on any article is in addition to any reduction in

the rate of duty on that article that may be proclaimed by the

President as being required or appropriate to carry out any trade

agreement entered into under the Uruguay Round of trade negotiations; except that if the reduction so proclaimed—

ø(A) is less than 1.5 percent ad valorem, the aggregate of

such proclaimed reduction and the reduction under this subsection may not exceed 3.5 percent ad valorem, or

ø(B) is 1.5 percent ad valorem or greater, the aggregate of

such proclaimed reduction and the reduction under this subsection may not exceed the proclaimed reduction plus 1 percent

ad valorem.¿

(b) EXCEPTIONS AND SPECIAL RULES.—

(1) CERTAIN ARTICLES THAT ARE NOT IMPORT-SENSITIVE.—The

President may proclaim duty-free treatment under this title for

any article described in subparagraph (A), (B), (C), or (D) that

is the growth, product, or manufacture of an ATPDEA beneficiary country and that meets the requirements of this section,

if the President determines that such article is not import-sensitive in the context of imports from ATPDEA beneficiary countries:

(A) Footwear not designated at the time of the effective

date of this Act as eligible for the purpose of the generalized

system of preferences under title V of the Trade Act of 1974.

(B) Petroleum, or any product derived from petroleum,

provided for in headings 2709 and 2710 of the HTS.

(C) Watches and watch parts (including cases, bracelets

and straps), of whatever type including, but not limited to,

mechanical, quartz digital or quartz analog, if such watches or watch parts contain any material which is the product of any country with respect to which HTS column 2

rates of duty apply.

(D) Handbags, luggage, flat goods, work gloves, and

leather wearing apparel that were not designated on August 5, 1983, as eligible articles for purposes of the generalized system of preferences under title V of the Trade Act of

1974.

(2) EXCLUSIONS.—Subject to paragraph (3), duty-free treatment under this title may not be extended to—

28

(A) textiles and apparel articles which were not eligible

articles for purposes of this title on January 1, 1994, as

this title was in effect on that date;

(B) rum and tafia classified in subheading 2208.40 of the

HTS; or

(C) sugars, syrups, and sugar-containing products subject

to over-quota duty rates under applicable tariff-rate quotas.

(3) APPAREL ARTICLES.— (A) IN GENERAL.—Apparel articles that are imported directly into the customs territory of the United States from

an ATPDEA beneficiary country shall enter the United

States free of duty and free of any quantitative restrictions,

limitations, or consultation levels, but only if such articles

are described in subparagraph (B).

(B) COVERED ARTICLES.—The apparel articles referred to

in subparagraph (A) are the following:

(i) APPAREL ARTICLES ASSEMBLED FROM PRODUCTS

OF THE UNITED STATES AND ATPDEA BENEFICIARY

COUNTRIES OR PRODUCTS NOT AVAILABLE IN COMMER- CIAL QUANTITIES.—Apparel articles sewn or otherwise

assembled in 1 or more ATPDEA beneficiary countries,

or the United States, or both, exclusively from any one

or any combination of the following:

(I) Fabrics or fabric components formed, or components knit-to-shape, in the United States, from

yarns formed in the United States or 1 or more

ATPDEA beneficiary countries (including fabrics

not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and

are formed in the United States).

(II) Fabrics or fabric components formed or components knit-to-shape, in 1 or more ATPDEA beneficiary countries, from yarns formed in 1 or more

ATPDEA beneficiary countries, if such fabrics (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of

the HTS and are formed in 1 or more ATPDEA

beneficiary countries) or components are in chief

weight of llama or alpaca.

(III) Fabrics or yarn that is not formed in the

United States or in one or more ATPDEA beneficiary countries, to the extent that apparel articles

of such fabrics or yarn would be eligible for preferential treatment, without regard to the source of

the fabrics or yarn, under Annex 401 of the

NAFTA.

(ii) ADDITIONAL FABRICS.—At the request of any interested party, the President is authorized to proclaim

additional fabrics and yarns as eligible for preferential

treatment under clause (i)(III) if— (I) the President determines that such fabrics or

yarns cannot be supplied by the domestic industry

in commercial quantities in a timely manner;

(II) the President has obtained advice regarding

the proposed action from the appropriate advisory

29

committee established under section 135 of the

Trade Act of 1974 (19 U.S.C. 2155) and the United

States International Trade Commission;

(III) within 60 days after the request, the President has submitted a report to the Committee on

Ways and Means of the House of Representatives

and the Committee on Finance of the Senate that

sets forth the action proposed to be proclaimed and

the reasons for such action, and the advice obtained under subclause (II);

(IV) a period of 60 calendar days, beginning

with the first day on which the President has met

the requirements of subclause (III), has expired;

and

(V) the President has consulted with such committees regarding the proposed action during the

period referred to in subclause (III).

(iii) APPAREL ARTICLES ASSEMBLED IN 1 OR MORE

ATPDEA BENEFICIARY COUNTRIES FROM REGIONAL FAB- RICS OR REGIONAL COMPONENTS.—(I) Subject to the

limitation set forth in subclause (II), apparel articles

sewn or otherwise assembled in 1 or more ATPDEA

beneficiary countries from fabrics or from fabric components formed or from components knit-to-shape, in 1

or more ATPDEA beneficiary countries, from yarns

formed in the United States or 1 or more ATPDEA beneficiary countries (including fabrics not formed from

yarns, if such fabrics are classifiable under heading

5602 or 5603 of the HTS and are formed in 1 or more

ATPDEA beneficiary countries), whether or not the apparel articles are also made from any of the fabrics,

fabric components formed, or components knit-to-shape

described in clause (i).

(II) The preferential treatment referred to in subclause (I) shall be extended in the 1-year period beginning December 1, 2001, and in each of the 5 succeeding

1-year periods, to imports of apparel articles in an

amount not to exceed the applicable percentage of the

aggregate square meter equivalents of all apparel articles imported into the United States in the preceding

12-month period for which data are available.

(III) For purposes of subclause (II), the term ‘‘applicable percentage’’ means 3 percent for the 1-year period

beginning December 1, 2001, increased in each of the

5 succeeding 1-year periods by equal increments, so

that for the period beginning December 1, 2005, the applicable percentage does not exceed 6 percent.

(iv) HANDLOOMED, HANDMADE, AND FOLKLORE ARTICLES.—A handloomed, handmade, or folklore article of

an ATPDEA beneficiary country identified under subparagraph (C) that is certified as such by the competent authority of such beneficiary country.

(v) SPECIAL RULES.—

(I) EXCEPTION FOR FINDINGS AND TRIMMINGS.—

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30

ment under this paragraph shall not be ineligible

for such treatment because the article contains

findings or trimmings of foreign origin, if such

findings and trimmings do not exceed 25 percent of

the cost of the components of the assembled product. Examples of findings and trimmings are sewing thread, hooks and eyes, snaps, buttons, ‘‘bow

buds’’, decorative lace, trim, elastic strips, zippers,

including zipper tapes and labels, and other similar products.

(II) CERTAIN INTERLINING.—(aa) An article otherwise eligible for preferential treatment under this

paragraph shall not be ineligible for such treatment because the article contains certain interlinings of foreign origin, if the value of such interlinings (and any findings and trimmings) does not

exceed 25 percent of the cost of the components of

the assembled article.

(bb) Interlinings eligible for the treatment described in division (aa) include only a chest type

plate, ‘‘hymo’’ piece, or ‘‘sleeve header’’, of woven or

weft-inserted warp knit construction and of coarse

animal hair or man-made filaments.

(cc) The treatment described in this subclause

shall terminate if the President makes a determination that United States manufacturers are

producing such interlinings in the United States in

commercial quantities.

(III) DE MINIMIS RULE.—An article that would

otherwise be ineligible for preferential treatment

under this subparagraph because the article contains fibers or yarns not wholly formed in the

United States or in one or more ATPDEA beneficiary countries shall not be ineligible for such

treatment if the total weight of all such fibers or

yarns is not more than 7 percent of the total

weight of the good.

(C) HANDLOOMED, HANDMADE, AND FOLKLORE ARTI- CLES.—For purposes of subparagraph (B)(iv), the President

shall consult with representatives of the ATPDEA beneficiary countries concerned for the purpose of identifying

particular textile and apparel goods that are mutually

agreed upon as being handloomed, handmade, or folklore

goods of a kind described in section 2.3(a), (b), or (c) of the

Annex or Appendix 3.1.B.11 of the Annex.

(D) PENALTIES FOR TRANSSHIPMENT.—

(i) PENALTIES FOR EXPORTERS.—If the President determines, based on sufficient evidence, that an exporter

has engaged in transshipment with respect to apparel

articles from an ATPDEA beneficiary country, then the

President shall deny all benefits under this title to such

exporter, and any successor of such exporter, for a period of 2 years.

(ii) PENALTIES FOR COUNTRIES.—Whenever the President finds, based on sufficient evidence, that transVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00030 Fmt 6659 Sfmt 6603 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
31

shipment has occurred, the President shall request that

the ATPDEA beneficiary country or countries through

whose territory the transshipment has occurred take all

necessary and appropriate actions to prevent such

transshipment. If the President determines that a country is not taking such actions, the President shall reduce the quantities of apparel articles that may be imported into the United States from such country by the

quantity of the transshipped articles multiplied by 3, to

the extent consistent with the obligations of the United

States under the WTO.

(iii) TRANSSHIPMENT DESCRIBED.—Transshipment

within the meaning of this subparagraph has occurred

when preferential treatment under subparagraph (A)

has been claimed for an apparel article 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 subparagraph (A).

(E) BILATERAL EMERGENCY ACTIONS.—

(i) IN GENERAL.—The President may take bilateral

emergency tariff actions of a kind described in section

4 of the Annex with respect to any apparel article imported from an ATPDEA beneficiary country if the application of tariff treatment under subparagraph (A) to

such article results in conditions that would be cause

for the taking of such actions under such section 4 with

respect to a like article described in the same 8-digit

subheading of the HTS that is imported from Mexico.

(ii) RULES RELATING TO BILATERAL EMERGENCY ACTION.—For purposes of applying bilateral emergency

action under this subparagraph—

(I) the requirements of paragraph (5) of section

4 of the Annex (relating to providing compensation) shall not apply;

(II) the term ‘‘transition period’’ in section 4 of

the Annex shall mean the period ending December

31, 2006; and

(III) the requirements to consult specified in section 4 of the Annex shall be treated as satisfied if

the President requests consultations with the

ATPDEA beneficiary country in question and the

country does not agree to consult within the time

period specified under section 4.

(4) CUSTOMS PROCEDURES.—

(A) IN GENERAL.—

(i) REGULATIONS.—Any importer that claims preferential treatment under paragraph (1) or (3) shall

comply with customs procedures similar in all material

respects to the requirements of Article 502(1) of the

NAFTA as implemented pursuant to United States

32

law, in accordance with regulations promulgated by

the Secretary of the Treasury.

(ii) DETERMINATION.— (I) IN GENERAL.—In order to qualify for the preferential treatment under paragraph (1) or (3) and

for a Certificate of Origin to be valid with respect

to any article for which such treatment is claimed,

there shall be in effect a determination by the

President that each country described in subclause

(II)— (aa) has implemented and follows; or

(bb) is making substantial progress toward

implementing and following,

procedures and requirements similar in all material respects to the relevant procedures and requirements under chapter 5 of the NAFTA.

(II) COUNTRY DESCRIBED.—A country is described in this subclause if it is an ATPDEA beneficiary country— (aa) from which the article is exported; or

(bb) in which materials used in the production of the article originate or in which the article or such materials undergo production

that contributes to a claim that the article is

eligible for preferential treatment under paragraph (1) or (3).

(B) CERTIFICATE OF ORIGIN.—The Certificate of Origin

that otherwise would be required pursuant to the provisions

of subparagraph (A) shall not be required in the case of an

article imported under paragraph (1) or (3) if such Certificate of Origin would not be required under Article 503 of

the NAFTA (as implemented pursuant to United States

law), if the article were imported from Mexico.

(5) DEFINITIONS.—In this subsection—

(A) ANNEX.—The term ‘‘the Annex’’ means Annex 300–B

of the NAFTA.

(B) ATPDEA BENEFICIARY COUNTRY.—The term ‘‘ATPDEA beneficiary country’’ means any ‘‘beneficiary

country’’, as defined in section 203(a)(1) of this title, which

the President designates as an ATPDEA beneficiary country, taking into account the criteria contained in subsections (c) and (d) of section 203 and other appropriate criteria, including the following:

(i) Whether the beneficiary country has demonstrated

a commitment to— (I) undertake its obligations under the WTO, including those agreements listed in section 101(d) of

the Uruguay Round Agreements Act, on or ahead

of schedule; and

(II) participate in negotiations toward the completion of the FTAA or another free trade agreement.

(ii) The extent to which the country provides protection of intellectual property rights consistent with or

greater than the protection afforded under the AgreeVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00032 Fmt 6659 Sfmt 6603 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
33

ment on Trade-Related Aspects of Intellectual Property

Rights described in section 101(d)(15) of the Uruguay

Round Agreements Act.

(iii) The extent to which the country provides internationally recognized worker rights, including— (I) the right of association;

(II) the right to organize and bargain collectively;

(III) a prohibition on the use of any form of

forced or compulsory labor;

(IV) a minimum age for the employment of children; and

(V) acceptable conditions of work with respect to

minimum wages, hours of work, and occupational

safety and health;

(iv) Whether the country has implemented its commitments to eliminate the worst forms of child labor,

as defined in section 507(6) of the Trade Act of 1974.

(v) The extent to which the country has met the counternarcotics certification criteria set forth in section 490

of the Foreign Assistance Act of 1961 (22 U.S.C. 2291j)

for eligibility for United States assistance.

(vi) The extent to which the country has taken steps

to become a party to and implements the Inter-American Convention Against Corruption.

(vii) The extent to which the country— (I) applies transparent, nondiscriminatory, and

competitive procedures in government procurement

equivalent to those contained in the Agreement on

Government Procurement described in section

101(d)(17) of the Uruguay Round Agreements Act;

and

(II) contributes to efforts in international fora to

develop and implement international rules in

transparency in government procurement.

(C) NAFTA.—The term ‘‘NAFTA’’ means the North American Free Trade Agreement entered into between the United

States, Mexico, and Canada on December 17, 1992.

(D) WTO.—The term ‘‘WTO’’ has the meaning given that

term in section 2 of the Uruguay Round Agreements Act (19

U.S.C. 3501).

(E) ATPDEA.—The term ‘‘ATPDEA’’ means the Andean

Trade Promotion and Drug Eradication Act.

ø(d)¿ (c) SUSPENSION OF DUTY-FREE TREATMENT.—(1) The President may by proclamation suspend the duty-free treatment provided by this title with respect to any eligible article and may proclaim a duty rate for such article if such action is proclaimed under

chapter 1 of title II of the Trade Act of 1974 or section 232 of the

Trade Expansion Act of 1962.

* * * * * * *

ø(e)¿ (d) EMERGENCY RELIEF WITH RESPECT TO PERISHABLE

PRODUCTS.—(1) If a petition is filed with the United States International Trade Commission pursuant to the provisions of section

201 of the Trade Act of 1974 regarding a perishable product and

alleging injury from imports from beneficiary countries, then the

34

petition may also be filed with the Secretary of Agriculture with a

request that emergency relief be granted pursuant to paragraph (3)

of this subsection with respect to such article.

* * * * * * *

ø(f)¿ (e) SECTION 22 FEES.—No proclamation issued pursuant to

this title shall affect fees imposed pursuant to section 22 of the Agricultural Adjustment Act of 1933 (7 U.S.C. 624).

ø(g)¿ (f) TARIFF-RATE QUOTAS.—No quantity of an agricultural

product subject to a tariff-rate quota that exceeds the in-quota

quantity shall be eligible for duty-free treatment under this Act.

* * * * * * *

øSEC. 208. EFFECTIVE DATE AND TERMINATION OF DUTY-FREE

TREATMENT.

ø(a) EFFECTIVE DATE.—This title shall take effect on the date of

enactment.

ø(b) TERMINATION OF DUTY-FREE TREATMENT.—No duty-free

treatment extended to beneficiary countries under this title shall

remain in effect 10 years after the date of the enactment of this

title.¿

SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.

No duty-free treatment or other preferential treatment extended to

beneficiary countries under this title shall remain in effect after December 31, 2006.

SECTION 213 OF THE CARIBBEAN BASIN ECONOMIC

RECOVERY ACT

SEC. 213. ELIGIBLE ARTICLES.

(a) * * *

(b) IMPORT-SENSITIVE ARTICLES.— (1) IN GENERAL.—Subject to paragraphs (2) through (5), the

duty-free treatment provided under this title does not apply

to— (A) * * *

* * * * * * *

(2) TRANSITION PERIOD TREATMENT OF CERTAIN TEXTILE AND

APPAREL ARTICLES.— (A) ARTICLES COVERED.—During the transition period,

the preferential treatment described in subparagraph (B)

shall apply to the following articles:

ø(i) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE

CBTPA BENEFICIARY COUNTRIES.—Apparel articles assembled in one or more CBTPA beneficiary countries

from fabrics wholly formed and cut in the United

States, from yarns wholly formed in the United States,

(including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the

HTS and are wholly formed and cut in the United

States) that are—

(i) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE

CBTPA BENEFICIARY COUNTRIES.—Apparel articles sewn

or otherwise assembled in one or more CBTPA beneficiary countries from fabrics wholly formed and cut, or

35

from components knit-to-shape, in the United States

from yarns wholly formed in the United States, (including fabrics not formed from yarns, if such fabrics

are classifiable under heading 5602 or 5603 of the

HTS and are wholly formed and cut in the United

States) that are—

(I) * * *

* * * * * * *

ø(ii) APPAREL ARTICLES CUT AND ASSEMBLED IN ONE

OR MORE CBTPA BENEFICIARY COUNTRIES.—Apparel articles cut in one or more CBTPA beneficiary countries

from fabric wholly formed in the United States from

yarns wholly formed in the United States (including

fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and

are wholly formed in the United States), if such articles are assembled in one or more such countries with

thread formed in the United States.

(ii) OTHER APPAREL ARTICLES ASSEMBLED IN ONE OR

MORE CBTPA BENEFICIARY COUNTRIES.—Apparel articles sewn or otherwise assembled in one or more

CBTPA beneficiary countries with thread formed in the

United States from fabrics wholly formed in the United

States and cut in one or more CBTPA beneficiary countries from yarns wholly formed in the United States, or

from components knit-to-shape in the United States

from yarns wholly formed in the United States, or both

(including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the

HTS and are wholly formed in the United States).

(iii) CERTAIN KNIT APPAREL ARTICLES.—(I) * * *

ø(II) The amount referred to in subclause (I) is—

ø(aa) 250,000,000 square meter equivalents during the 1-year period beginning on October 1,

2000, increased by 16 percent, compounded annually, in each succeeding 1-year period through

September 30, 2004; and

ø(bb) in each 1-year period thereafter through

September 30, 2008, the amount in effect for the

1-year period ending on September 30, 2004, or

such other amount as may be provided by law.

(II) The amount referred to in subclause (I) is as follows:

(aa) 290,000,000 square meter equivalents during the 1-year period beginning on October 1,

2001.

(bb) 500,000,000 square meter equivalents during the 1-year period beginning on October 1,

2002.

(cc) 850,000,000 square meter equivalents during

the 1-year period beginning on October 1, 2003.

36

(dd) 970,000,000 square meter equivalents in

each succeeding 1-year period through September

30, 2008.

* * * * * * *

ø(IV) the amount referred to in subclause (III) is— ø(aa) 4,200,000 dozen during the 1-year period

beginning on October 1, 2000, increased by 16 percent, compounded annually, in each succeeding 1-

year period through September 30, 2004; and

ø(bb) in each 1-year period thereafter, the

amount in effect for the 1-year period ending on

September 30, 2004, or such other amount as may

be provided by law.

(IV) The amount referred to in subclause (III) is as

follows:

(aa) 4,872,000 dozen during the 1-year period

beginning on October 1, 2001.

(bb) 9,000,000 dozen during the 1-year period

beginning on October 1, 2002.

(cc) 10,000,000 dozen during the 1-year period

beginning on October 1, 2003.

(dd) 12,000,000 dozen in each succeeding 1-year

period through September 30, 2008.

* * * * * * *

(ix) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE

CBTPA BENEFICIARY COUNTRIES FROM UNITED STATES

AND CBTPA BENEFICIARY COUNTRY COMPONENTS.—Apparel articles sewn or otherwise assembled in one or

more CBTPA beneficiary countries with thread formed

in the United States from components cut in the United

States and in one or more CBTPA beneficiary countries

from fabric wholly formed in the United States from

yarns wholly formed in the United States, or from components knit-to-shape in the United States and one or

more CBTPA beneficiary countries from yarns wholly

formed in the United States, or both (including fabrics

not formed from yarns, if such fabrics are classifiable

under heading 5602 or 5603 of the HTS).

* * * * * * *

SECTION 112 OF THE AFRICAN GROWTH AND

OPPORTUNITY ACT

SEC. 112. TREATMENT OF CERTAIN TEXTILES AND APPAREL.

(a) * * *

(b) PRODUCTS COVERED.—The preferential treatment described in

subsection (a) shall apply only to the following textile and apparel

products:

ø(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, (including fabrics not formed from

yarns, if such fabrics are classifiable under heading 5602 or

37

5603 of the Harmonized Tariff Schedule of the United States

and are wholly formed and cut in the United States)

that are—¿

(1) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE BENE- FICIARY SUB-SAHARAN AFRICAN COUNTRIES.—Apparel articles

sewn or otherwise assembled in one or more beneficiary sub-Saharan African countries from fabrics wholly formed and cut, or

from components knit-to-shape, in the United States from yarns

wholly formed in the United States, (including fabrics not

formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and are wholly formed and cut

in the United States) that are— (A) * * *

* * * * * * *

ø(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, (including fabrics not formed from yarns,

if such fabrics are classifiable under heading 5602 or 5603 of

the Harmonized Tariff Schedule of the United States and are

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.

ø(3) APPAREL ARTICLES ASSEMBLED FROM REGIONAL AND

OTHER FABRIC.—Apparel articles wholly assembled in one or

more beneficiary sub-Saharan African countries from fabric

wholly formed in one or more beneficiary sub-Saharan African

countries from yarn originating either in the United States or

one or more beneficiary sub-Saharan African countries (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the Harmonized Tariff

Schedule of the United States and are wholly formed and cut

in one or more beneficiary sub-Saharan African countries), subject to the following:¿

(2) OTHER APPAREL ARTICLES ASSEMBLED IN ONE OR MORE

BENEFICIARY SUB-SAHARAN AFRICAN COUNTRIES.—Apparel articles sewn or otherwise assembled in one or more beneficiary

sub-Saharan African countries with thread formed in the

United States from fabrics wholly formed in the United States

and cut in one or more beneficiary sub-Saharan African countries from yarns wholly formed in the United States, or from

components knit-to-shape in the United States from yarns wholly formed in the United States, or both (including fabrics not

formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and are wholly formed in the

United States).

(3) APPAREL ARTICLES FROM REGIONAL FABRIC OR YARNS.— Apparel articles wholly assembled in one or more beneficiary

sub-Saharan African countries from fabric wholly formed in

one or more beneficiary sub-Saharan African countries from

yarns originating either in the United States or one or more

beneficiary sub-Saharan African countries (including fabrics

not formed from yarns, if such fabrics are classified under

heading 5602 or 5603 of the HTS and are wholly formed in one

38

or more beneficiary sub-Saharan African countries), or from

components knit-to-shape in one or more beneficiary sub-Saharan African countries from yarns originating either in the

United States or one or more beneficiary sub-Saharan African

countries, or apparel articles wholly formed on seamless knitting machines in a beneficiary sub-Saharan African country

from yarns originating either in the United States or one or

more beneficiary sub-Saharan African countries, subject to the

following:

(A) LIMITATIONS ON BENEFITS.— (i) * * *

* * * * * * *

(ii) APPLICABLE PERCENTAGE.—For purposes of this

subparagraph, the term ‘‘applicable percentage’’ means

ø1.5¿ 3 percent for the 1-year period beginning October 1, 2000, increased in each of the seven succeeding

1-year periods by equal increments, so that for the period beginning October 1, 2007, the applicable percentage does not exceed ø3.5¿ 7 percent.

ø(B) SPECIAL RULE FOR LESSER DEVELOPED COUNTRIES.— ø(i) IN GENERAL.—Subject to subparagraph (A), preferential treatment shall be extended through September 30, 2004, for apparel articles wholly assembled

in one or more lesser developed beneficiary sub-Saharan African countries regardless of the country of origin of the fabric used to make such articles.

ø(ii) LESSER DEVELOPED BENEFICIARY SUB-SAHARAN

AFRICAN COUNTRY.—For purposes of this subparagraph

the term ‘‘lesser developed beneficiary sub-Saharan African country’’ means a beneficiary sub-Saharan African country that had a per capita gross national product of less than $1,500 a year in 1998, as measured by

the World Bank.¿

(B) SPECIAL RULES FOR LESSER DEVELOPED COUNTRIES.—

(i) IN GENERAL.—Subject to subparagraph (A), preferential treatment under this paragraph shall be extended through September 30, 2004, for apparel articles wholly assembled, or knit-to-shape and wholly assembled, or both, in one or more lesser developed beneficiary sub-Saharan African countries regardless of the

country of origin of the fabric or the yarn used to make

such articles.

(ii) LESSER DEVELOPED BENEFICIARY SUB-SAHARAN

AFRICAN COUNTRY.—For purposes of clause (i), the term

‘‘lesser developed beneficiary sub-Saharan African

country’’ means—

(I) a beneficiary sub-Saharan African country

that had a per capita gross national product of

less than $1,500 in 1998, as measured by the

International Bank for Reconstruction and Development;

(II) Botswana; and

(III) Namibia.

* * * * * * *

39

(4) SWEATERS KNIT-TO-SHAPE FROM CASHMERE OR MERINO

WOOL.—

(A) * * *

(B) MERINO WOOL.—Sweaters, 50 percent or more by

weight of wool measuring ø18.5¿ 21.5 microns in diameter

or finer, knit-to-shape in one or more beneficiary sub-Saharan African countries.

* * * * * * *

(7) APPAREL ARTICLES ASSEMBLED IN ONE OR MORE BENEFICIARY SUB-SAHARAN AFRICAN COUNTRIES FROM UNITED STATES

AND BENEFICIARY SUB-SAHARAN AFRICAN COUNTRY COMPONENTS.—Apparel articles sewn or otherwise assembled in one or

more beneficiary sub-Saharan African countries with thread

formed in the United States from components cut in the United

States and one or more beneficiary sub-Saharan African countries from fabric wholly formed in the United States from yarns

wholly formed in the United States, or from components knitto-shape in the United States and one or more beneficiary subSaharan African countries from yarns wholly formed in the

United States, or both (including fabrics not formed from yarns,

if such fabrics are classifiable under heading 5602 or 5603 of

the HTS).

* * * * * * *

(40)

VII. ADDITIONAL VIEWS

As a co-chair of the African Trade and Investment Caucus, and

as an ardent supporter of the African Growth and Opportunity Act

(AGOA), which was signed into law just over a year ago, I was very

pleased to see the Committee take action to address some of the

concerns raised regarding the implementation of AGOA.

The new provisions reported from the Committee would clarify

and narrowly expand the trade opportunities for sub-Saharan Africa countries under AGOA, and are designed to encourage more investment in the region, particularly in the apparel sector. I along

with Representatives Rangel, Royce, Crane, Payne, and

McDermott, were in the process of developing AGOA II legislation

to address these and other issues.

AGOA is the most significant U.S. policy statement to date on

the U.S. commitment to assist the countries of sub-Saharan Africa

(SSA) with their efforts to stimulate economic growth and development in the region. The bill was many years in the making, and

enjoyed broad, bi-partisan support.

Increased international trade and investment is a key component

leading to economic development and growth in sub-Saharan Africa. Economic growth is an integral element of any sub-Saharan

strategy to overcome the many and severe social, health, political,

environmental and other challenges. I have recently returned from

a trip to the region and was pleased to find AGOA has demonstrated initial success in promoting greater commercial activity

between the United States and sub-Saharan Africa. According to

the Office of the United States Trade Representative, AGOA has

resulted in nearly $4 billion dollars in expanded trade and investment in the region and has spurred and bolstered economic reform

in several African countries.

Now that the bill is law, the U.S. must ensure that the objective

of stimulating regional economic development and growth is

achieved. The African Trade and Investment Caucus (ATIC) has

been following closely the Administration’s efforts to implement

this bill as well as the efforts of sub-Saharan countries to comply

with the bill’s eligibility criteria. Two major issues have come to

our attention. First, sub-Saharan beneficiary countries need additional assistance from the United States to meet the stringent customs and visa requirements in the legislation. Currently, only a

handful of SSA countries designated as beneficiaries have been certified as eligible to ship apparel products since the effective date

of October 1, 2000. Many of the countries are willing to upgrade

their customs systems to comply with the law; however they need

additional technical assistance from the United States to undertake

this important task.

Second, we need to ensure that the authorized resources under

the bill are available to assist U.S. companies and African compaVerDate 06-NOV-2001 05:36 Nov 15, 2001 Jkt 099008 PO 00000 Frm 00040 Fmt 6604 Sfmt 6604 E:\HR\OC\HR290.XXX pfrm01 PsN: HR290
41

nies in realizing the opportunities created by AGOA. Many U.S.

and African companies are unaware that AGOA provides preferential treatment to many non-apparel items.

To make this information known and to spur participation of

U.S. and African businesses in the AGOA program full support for

AGOA-related programs is needed. The first step is ensuring that

each agency with responsibility for AGOA has adequate personnel

to carry out its duties. This is a priority for the Office of African

Affairs at the Office of the U.S. Trade Representative in particular.

Second, it is important for the Administration to make available

the resources to provide technical assistance for AGOA-related programs.

In Committee, I offered an amendment that would have established a technical assistance fund designed to improve the trade capacity of sub-Saharan countries that would have ensured funding

for the technical assistance authorized in Section 122(b) of AGOA

to promote economic reforms and development in sub-Saharan Africa. Building trade capacity is essential for sub-Saharan countries

to fully utilize the benefits provided under AGOA. While the

amendment was not in order, I appreciated the commitments given

by yourselves and Ambassador Zoellick to continue to work on ensuring resources to: • Improve the trade capacity of sub-Saharan countries; • Improve the ability of sub-Saharan countries to comply

with the eligibility requirements of AGOA; • Ensure proper implementation of AGOA provisions in beneficiary countries; • Promote economic reform; and • Improve capacity of WTO member-countries from the subSaharan region to implement and negotiate WTO agreements.

Without the appropriate resources, AGOA will fail to achieve its

important goals; and the United States will have reneged on its

commitment to the poorest region of the world.

WILLIAM J. JEFFERSON.

(42)

VIII. DISSENTING VIEWS

It is with great regret that we oppose H.R. 3009, the Andean

Trade Promotion and Drug Eradication Act.

We believe that in the long term, an indispensable way we can

assist the Andean region and help combat the scourge of illegal

drugs is by promoting economic development and growth in these

countries. As observed when we discussed benefits to the Caribbean countries and the African countries, the path and strategies

that have proven the most successful are those that provide a

framework to ensure that development benefits the greatest number of people in the entire hemispheric region.

Assisting economic development abroad must take into full account the needs of, and outcomes for, workers and businesses in

the United States. In crafting unilateral preference programs like

the existing Andean Trade Preferences Act (ATPA), and the Africa

and Caribbean programs, Congress has sought to match the

strengths of businesses and workers in the United States with the

strengths of businesses and workers in the region.

And that is the approach we had hoped to take with respect to

enhancement of the ATPA program. In fact, that is the direction

in which we had been headed. For the last several months, the majority and the minority staff have been working on an ATPA renewal and expansion bill that would have expanded the trade benefits under the ATPA in a manner that would ensure benefits to the

greatest number of people in the region and the United States, and

that would have created the broadest coalition of support in the

Congress.

The majority chose to abruptly end those discussions, however.

Without any prior notice or consultation, the Chairman of the

Trade Subcommittee introduced H.R. 3009, and Chairman Thomas

scheduled a markup for about 36 hours later. The bill that they introduced does reflect several items from our discussions. But, the

bill’s approach to many key issues is not satisfactory. The bill does

not effectively build upon the complementarities between the U.S.

and Andean textile and apparel industries, rather, it would make

them competitors on unequal terms.

Additionally, by bringing this bill up without any notice, Congress and the groups affected have been denied the opportunity to

take one last look at other key concerns, the most serious of which

is the very real issue of labor rights abuses in the Andean countries, particularly the murder with impunity of labor leaders in Colombia. The bill reported by the Committee does require the Administration to evaluate the extent to which each Andean country

adheres to core workers rights in making the determination as to

which countries are eligible for enhanced benefits. However, this

Administration has not rigorously applied this eligibility criteria in

43

the past. We need a clear understanding that it will do so in this

case, with particular attention paid to the situation in Colombia.

There are other important issues that were left unresolved because of the haste with which the Majority chose to bring this legislation to Committee. These include issues related to treatment of

U.S. companies, such as Nortel, in Colombia, and the continued denial of non-discriminatory market access to U.S. goods in Andean

markets.

We want to be clear. We are not opposing this bill only because

of the fundamental process flaws that preceded this mark-up.

Those flaws are troubling. But, those flaws also led to a bill that

is flawed on policy. This situation is deeply regrettable, because we

think with more time an agreement that advanced everyone’s interests could have been achieved. We actively favor that result.

SANDER LEVIN.

MICHAEL R. MCNULTY.

JOHN LEWIS.

KAREN L. THURMAN.

JERRY KLECZKA.

RICHARD E. NEAL.

Æ