```

[House Report 108-225]
[From the U.S. Government Publishing Office]

108th Congress                                            Rept. 108-225
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================

 
    UNITED STATES-SINGAPORE FREE TRADE AGREEMENT IMPLEMENTATION ACT

                                _______
                                

                 June 21, 2003.--Ordered to be printed

                                _______
                                

    Mr. Thomas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                    DISSENTING AND ADDITIONAL VIEWS

                        [To accompany H.R. 2739]

     [Including cost estimates of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2739) to implement the United States-Singapore Free 
Trade Agreement, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Introduction.....................................................2
          A. Purpose and Summary.................................     2
          B. Background..........................................     2
          C. Legislative History.................................     3
 II. Section-by-Section Summary.......................................4
          A. Title I: Approval and General Provisions............     4
          B. Title II: Customs Provisions........................     7
          C. Title III: Relief from Imports......................    10
III. Vote of the Committee...........................................13
 IV. Budget Effects of the Bill......................................14
          A. Committee Estimates and Budgetary Effects...........    14
          B. Budget Authority and Tax Expenditures...............    14
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    14
  V. Other Matters to be Discussed Under the Rules of the House......17
          A. Committee Oversight Findings and Recommendations....    17
          B. Statement of General Performance Goals and 
              Objectives.........................................    17
          C. Constitutional Authority Statement..................    17
 VI. Changes in Existing Law Made by the Bill, as Reported...........17
VII. Executive Correspondence........................................20
VIII.Views...........................................................22

                            I. INTRODUCTION

                         A. Purpose and Summary

    H.R. 2739 would implement the May 6, 2003 Agreement 
establishing a free trade area between the United States and 
Singapore.

                             B. Background

    The United States-Singapore Free Trade Agreement (FTA), 
signed May 6, 2003, is one of the first trade agreements, 
together with the United States-Chile FTA, to be considered by 
the Congress under the ``fast-track'' procedures outlined in 
the Bipartisan Trade Promotion Authority Act (TPA), which was 
approved by the 107th Congress and signed into law in August 
2002 as part of the Trade Act of 2002 (P.L. 107-210).
    Negotiations for a U.S.-Singapore FTA were launched in 
December 2000. The final round of negotiations was held in 
November 2002, and the formal Agreement was concluded on 
January 15, 2003. Pursuant to requirements established under 
TPA, President Bush formally notified the Congress on January 
30, 2003, of his intention to sign the Agreement. On May 6, 
2003, President Bush and Singaporean Prime Minister Goh Chok 
Tong signed the FTA during a visit to Washington, D.C. by Prime 
Minister Goh. The U.S.-Singapore FTA is the first U.S. FTA with 
an Asian nation. The Agreement establishes standards for trade 
that mirror U.S. law and sets a precedent for future 
agreements. The U.S.-Singapore FTA will serve as the foundation 
for other possible FTAs in Southeast Asia. It will also enhance 
and strengthen the strong U.S.- Singapore trade relationship. 
Currently, Singapore is the 11th largest trading partner of the 
United States, with two-way trade approaching $40 billion in 
2002. Singapore is the United States' largest trading partner 
in Southeast Asia.
    The Committee believes that the Agreement meets the 
objectives and priorities set forth in the Trade Act of 2002. 
Specifically, when the Agreement enters into force, most 
tariffs will be eliminated immediately, with the remaining 
tariffs phased-out over a three- to ten-year period. As most 
trade in goods with Singapore is already tariff-free, the FTA 
focuses on removing restrictions in trade in services, an 
important sector in the United States, accounting for around 80 
percent of U.S. gross domestic product. The Agreement, through 
use of a ``negative list'' approach, benefits U.S. service 
providers by offering new opportunities for these service 
providers in the form of barrier-free market access, a 
transparent regulatory environment, and non-discriminatory 
treatment across many service sectors. Services firms will not 
only enjoy equal treatment in cross-border supply of services 
but will gain the right to invest and establish a local 
services presence.
    Additionally, by binding all of its tariffs at zero, 
Singapore will open its markets to American agricultural 
products and create new opportunities for American farmers to 
sell their produce to a nation whose small size prevents it 
from being able to grow enough food for consumption by its 
citizens. Trade in agricultural products represents a net trade 
surplus for the United States. In 2002, American farmers 
exported around $259 million worth of food products to 
Singapore.
    The U.S.-Singapore FTA will create a secure and predictable 
legal framework for U.S. investors operating in Singapore; they 
will be treated fairly and equitably and will have access to 
meaningful dispute settlement. These protections cover key 
sectors such as agriculture, manufacturing, and services. In 
addition, the Agreement makes improvements to the NAFTA 
investor-state dispute settlement (``Chapter 11'') model called 
for in TPA by providing more transparency, public input into 
dispute settlement, mechanisms to improve the investor-state 
process by eliminating frivolous claims, and a place marker for 
a future appellate body or similar review mechanisms. The 
Financial Services chapter provides strong protections for 
existing and future U.S. investors and investments in 
Singapore. The Agreement also contains obligations under which 
each government commits to enforce its domestic labor and 
environmental laws.
    The Agreement additionally contains state of the art 
protection for U.S. intellectual property, which is 
increasingly vital in the digital age. The FTA includes 
specific commitments regarding the conduct of Singapore's 
government enterprises; reinforced commitments to strong and 
transparent disciplines on government procurement procedures; 
strong, simple, and transparent rules of origin; commitments to 
combat illegal transshipments of traded goods and to prevent 
circumvention of disciplines pertaining to trade in textiles 
and apparel; and requirements to ensure effective enforcement 
of domestic labor and environmental laws.
    As noted above, this legislation is being considered under 
the Bipartisan Trade Promotion Authority Act of 2002. Under 
TPA, new trade pacts that the President negotiates in close 
consultation with Congress can be approved and implemented 
through legislation that Congress considers using streamlined 
procedures. Pursuant to TPA procedures, the President is 
required to provide written notice to Congress of the 
President's intention to enter into the negotiations. 
Throughout the negotiating process, and prior to entering into 
an Agreement, the President is required to consult with 
Congress regarding the ongoing negotiations.
    The President must notify the Congress of his intent to 
enter into a trade Agreement at least 90 calendar days before 
the Agreement is signed. Within 60 days after entering in the 
Agreement, the President must submit to the Congress a 
description of those changes to existing laws that the 
President considers would be required in order to bring the 
United States into compliance with the Agreement. After 
entering into the Agreement, the President must also submit to 
the Congress the formal legal text of the Agreement, draft 
implementing legislation, a statement of administrative action 
proposed to implement the trade Agreement, and other related 
supporting information as required under section 2105(a) of 
TPA. Following submission of these documents, theimplementing 
bill is introduced, by request, by the Majority Leader in each chamber. 
The House then has up to 60 days to consider the bill (the Senate has 
up to an additional 30 days). No amendments to the legislation are 
allowed under TPA requirements.

                         C. Legislative History

    On November 16, 2000, the President provided notification 
to Congress of his intent to negotiate an FTA with Singapore. 
The President provided formal notification to Congress of the 
negotiations with Singapore as required under TPA (which was 
enacted subsequent to the start of the U.S.-Singapore FTA 
negotiations) on August 22, 2002. During and after the 
negotiations, the President continued his consultations with 
Congress pursuant to the letter and spirit of the TPA 
requirements.
    Following the May 6, 2003 signing of the U.S.-Singapore 
FTA, in accordance with TPA requirements, President Bush 
submitted to Congress on July 3, 2003 a description of the 
changes to existing U.S. laws that would be required to bring 
the United States into compliance with the Agreement.
    On June 10, 2003, the Subcommittee on Trade of the 
Committee on Ways and Means held a hearing on the United 
States-Chile and United States-Singapore FTAs. The Subcommittee 
received testimony supporting these Agreements from the 
Administration and Members of Congress. The Subcommittee also 
heard testimony from numerous U.S. private sector companies and 
organizations.
    On July 10, 2003, the Committee on Ways and Means 
considered in an informal markup session draft proposals of the 
implementing legislation for the Singapore and Chile FTAs 
concerning matters within the jurisdiction of the Committee.
    On July 15, 2003, President Bush formally transmitted to 
Congress the formal legal text of the U.S.-Singapore FTA, draft 
implementing legislation, a statement of administrative action 
proposed to implement the trade Agreement, and other related 
supporting information as required under section 2105(a) of 
TPA. Following this transmittal, on July 15, 2003, Majority 
Leader DeLay and Congressman Rangel introduced, by request, 
H.R. 2739 to implement the U.S.-Singapore FTA. The bill was 
referred to the Committee on Ways and Means and the Committee 
on the Judiciary.
    On July 17, 2003, the Committee on Ways and Means formally 
met to consider H.R. 2739. The Committee ordered H.R. 2739 
favorably reported to the House of Representatives by a roll 
call vote of 32-5. Under the requirements of TPA, amendments 
were not permitted.

                     II. SECTION-BY-SECTION SUMMARY

                TITLE I: APPROVAL AND GENERAL PROVISIONS

Section 101: Approval and entry into force

            Current law
    No provision.
            Explanation of provision
    Section 101 states that Congress approves the U.S.-
Singapore Free Trade Agreement and the Statement of 
Administrative Action and provides that the Agreement enters 
into force when the President determines that Singapore is in 
compliance with its Agreement obligations and has exchanged 
notes with the United States. Section 101 provides that the 
date of entry into forced will be no sooner than January 1, 
2004.
            Reason for change
    Approval of the Agreement and the Statement of 
Administrative Action is required under the procedures of 
section 2103(b)(3) of the Bipartisan Trade Promotion Authority 
Act of 2002. The remainder of section 101 provides for entry 
into force.

Section 102: Relationship of the Agreement to U.S. and state law

            Current law
    No provision.
            Explanation of provision
    Section 102 provides that U.S. law is to prevail in a 
conflict between the Agreement and such law. It also states 
that the Agreement does not preempt state law that may conflict 
with the Agreement. Only the United States is entitled to bring 
a court action to resolve a conflict between a state law and 
the Agreement.
            Reason for change
    Section 102 is necessary to make clear the relationship 
between the Agreement and federal and state law, respectively.

Section 103: Consultation and layover for proclaimed actions

            Current law
    No provision.
            Explanation of provision
    Section 103 provides that where the President is given 
proclamation authority subject to consultation and layover, he 
may proclaim action only after he has: obtained advice from the 
International Trade Commission and the appropriate private 
sector advisory committees; submitted a report to the House 
Ways & Means and Senate Finance Committees concerning the 
reasons for the action; and consulted with the Committees. The 
President may proclaim the proposed action after 60 days have 
elapsed.
            Reason for change
    The bill gives the President certain proclamation authority 
but requires extensive consultation with Congress before that 
authority may be exercised. The Committee believes that such 
consultation is an essential component of the delegation of 
authority to the President and expects that such consultations 
will be conducted in a thorough manner.

Section 104: Implementing actions in anticipation of entry into force 
        and initial regulations

            Current law
    No provision.
            Explanation of provision
    Section 104(a) provides that after the date of enactment, 
the President may proclaim actions and agencies may issue 
regulations as necessary to ensure that any provision of this 
Act that takes effect on the date that the Agreement enters 
into force is appropriately implemented, but not before the 
effective date.
    Section 104(b) establishes that regulations necessary or 
appropriate to carrying out the actions proposed in the 
Statement of Administrative Action shall, to the maximum extent 
feasible, be issued within one year of entry into force of the 
Agreement or the effective date of the provision, as the case 
may be.
            Reason for change
    Section 104 provides for the issuance of regulations. The 
Committee strongly believes that regulations should be issued 
in a timely manner in order to provide maximum clarity to 
parties claiming benefits under the Agreement. As noted in the 
Statement of Administrative Action, a regulation-issuing agency 
will provide a report to Congress not later than thirty days 
before one year elapses on any regulation that is going to be 
issued later than one year.

Section 105: Administration of dispute settlement proceedings

            Current law
    No provision.
            Explanation of provision
    Section 105 authorizes the President to establish an office 
within the Commerce Department responsible for providing 
administrative assistance to any state-to-state dispute 
settlement panels that may be established under the Agreement 
and authorizes appropriations for the office and for payment of 
the U.S. share of expenses.
            Reason for change
    The Committee believes that the Commerce Department is the 
appropriate agency to provide administrative assistance to 
panels.

Section 106: Arbitration of claims

            Current law
    No provision.
            Explanation of provision
    Section 106 authorizes the United States to resolve certain 
claims covered by the investor-state dispute settlement 
procedures set forth in the Agreement and specifies that all 
U.S. government contracts are to contain a choice of law 
provision for resolving any breach of contract claim.
            Reason for change
    This provision is necessary to meet U.S. obligations under 
Article 15.21 of the Agreement.

Section 107: Effective dates; effect of termination

            Current law
    No provision.
            Explanation of provision
    The effective date of this Act is the date of entry into 
force of the Agreement. However, sections 1-3 and Title I take 
effect upon enactment, and section 205 takes effect on the date 
in which the textile and apparel provisions of the Agreement 
take effect. The Act shall cease to be effective on the date on 
which the Agreement ceases to be in effect.
            Reason for change
    Section 107 implements U.S. obligations under the 
Agreement.

                      TITLE II: CUSTOMS PROVISIONS

Section 201: Tariff modifications

            Current law
    No provision.
            Explanation of provision
    Section 201(a) provides the President with the authority to 
proclaim tariff modifications to carry out the Agreement.
    Section 201(b) gives the President the authority, subject 
to consultation and layover procedures, to proclaim further 
tariff modifications as the President determines to be 
necessary or appropriate to maintain the general level of 
reciprocal and mutually advantageous concessions with respect 
to Singapore provided for by the Agreement.
            Reason for change
    Section 201(a) is necessary to put the United States in 
compliance with the market access provisions of the Agreement. 
Section 201(b) gives the President flexibility to maintain the 
trade liberalizing nature of the Agreement. The Committee 
expects the President to comply with the letter and spirit of 
the consultation and layover provisions of this Act in carrying 
out this subsection.

Section 202: Rules of origin

            Current law
    No provision.
            Explanation of provision
    Section 202 codifies the rules of origin set out in Chapter 
3 of the Agreement. Under the general rules, there are three 
basic ways for a good of Singapore to qualify as an 
``originating good,'' and therefore be eligible for 
preferential tariff treatment when it is imported into the 
United States. A good is an originating good if: (1) it is 
``wholly obtained or produced entirely in the territory of 
Singapore, the United States or both''; (2) those materials 
used to produce the good that are not themselves originating 
goods are transformed in such a way as to cause their tariff 
classification to change or meet other requirements, as 
specified in Annex 3A of the Agreement; or (3) it is a good 
listed in Annex 3B of the Agreement and thus considered to be 
an ``originating good'' if the good itself is imported into the 
territory of the United States from the territory of Singapore.
    Annex 3A of the Agreement sets forth product-specific rules 
of origin for a wide variety of products. Under Annex 3A rules, 
an apparel product must generally meet a tariff shift rule that 
implicitly imposes a ``yarn forward'' requirement. Thus, to 
qualify as an originating good imported into the United States 
from Singapore, an apparel product must have been cut (or knit 
to shape) and sewn or otherwise assembled in Singapore from 
yarn, or fabric made from yarn, that originates in Singapore or 
the United States. There is a limited amount of apparel that 
may enter the United States duty free, subject to tariff 
preference level (TPL) caps if it does not meet the rule of 
origin.
    The goods listed in Annex 3B (also called Integrated 
Sourcing Initiative or ISI products) are predominantly 
information technology goods for which the current United 
States Normal Trade Relations or Most Favored Nation duty rate 
is zero. In general, imports of these goods into the United 
States would receive duty-free treatment regardless of origin. 
The bill makes clear that the Annex 3B good ``itself, as 
imported,'' is deemed to be an originating good. This means 
that an Annex 3B good produced outside of Singapore is 
originating only when transshipped through Singapore, not when 
the good is incorporated as a component into another product, 
unless the Annex 3B good is first shipped from the third 
country to Singapore and then to the United States and back to 
Singapore. Thus, for purposes of determining origin by way of a 
transformation using the regional value content formula in 
section 202(d) of the bill, an Annex 3B good would not be 
``originating'' for purposes of the regional value content 
calculation unless it was shipped from the United States to 
Singapore, where it was then incorporated into the final 
product.
    The remainder of section 202 of the implementing bill sets 
forth more detailed rules for determining whether a good meets 
the Agreement's requirements under the second method for 
qualifying as an originating good. These provisions include 
rules pertaining to de minimis quantities of non-originating 
materials that do not undergo a tariff transformation and the 
alternative methods for calculating regional value content. 
Other provisions in section 202 address valuation of materials 
and determination of the originating or non-originating status 
of fungible goods and materials.
            Reason for change
    Rules of origin are needed in order to confine Agreement 
benefits, such as tariffcuts, to Singapore goods to prevent 
third-country goods from being transshipped through Singapore and 
claiming benefits from the United States. Section 202 puts the United 
States into compliance with the rules of origin provisions of the 
Agreement.
    The Committee believes that the ISI provisions are 
sufficiently restrictive that they will not disrupt trade. The 
Committee will ask the International Trade Commission to 
monitor whether trade in any regional value content good which 
could contain an ISI component surges after the Agreement goes 
into effect. If such a surge is detected the Commission will 
examine whether the increase is due to reliance on ISI 
provisions allowing third country ISI components in RVC goods 
to be considered originating under the Agreement because they 
were first shipped to the United States and then to Singapore 
and then for final assembly.
    In addition, the committee expects the President to carry 
out faithfully the obligations specified in article 3.18 of the 
Agreement by applying any affirmative short supply 
determination in effect on November15, 2002 under another U.S. 
free trade agreement or trade preference program.

Section 203: Customs user fees

            Current law
    Section 58c of Title 19 lays out various user fees applied 
by customs officials to imports, including the Merchandise 
Processing Fee, which is applied on an ad valorem basis with a 
cap.
            Explanation of provision
    Section 203 of the bill implements U.S. commitments under 
Article 2.8 of the Agreement, regarding the exemption from the 
merchandise processing fee for originating goods. This 
provision is similar to the one from the implementing 
legislation for the North American Free Trade Agreement. The 
provision also prohibits use of funds in the Customs User Fee 
Account to provide services related to entry of originating 
goods in accordance with U.S. obligations under the General 
Agreement on Tariffs and Trade 1994.
            Reason for change
    As with other free trade agreements, the Agreement 
eliminates the customs merchandise processing fee on qualifying 
goods from Singapore. Other customs user fees remain in place. 
Section 203 is necessary to put the United States in compliance 
with the user fee elimination provisions of the Agreement. The 
Committee expects that the President, in his yearly budget 
request, will take into account the need for funds to pay 
expenses for entries under the Agreement given that MPF funds 
will not be available.

Section 204: Disclosure of incorrect information

            Current law
    No provision.
            Explanation of provision
    Section 204 of the bill implements Article 3.14.4(a) of the 
Agreement. The provision prohibits the imposition of a penalty 
upon an importer who makes an invalid claim for preferential 
tariff treatment under the Agreement if the importer acts 
promptly and voluntarily to disclose the error. The Secretary 
of the Treasury may prescribe regulations that allow one year 
or more as a time period for such voluntary disclosures.
            Reason for change
    Section 204 is necessary to put the United States into 
compliance with Article 3.14.4(a) of the Agreement.

Section 205: Enforcement relating to trade in textile and apparel goods

            Current law
    No provision.
            Explanation of provision
    Section 205 of the bill implements the textile and apparel 
good anti-circumvention enforcement provisions of the 
Agreement. In accordance with Articles 5.4.5, 5.5.5, and 5.8.2 
of the Agreement, the provision allows the President to exclude 
from entry textile and apparel goods from any enterprise that 
does not permit site visits requested by U.S. officials or that 
engages in intentional circumvention. The President may also 
take further action against circumventing enterprises or 
related enterprises, such as barring future entries of goods, 
if consultations with Singapore authorities fail to address 
problems of circumvention.
            Reason for change
    Avoiding textile transshipment remains a concern, and for 
this reason special textile enforcement provisions were 
included in the Agreement. Section 205 is necessary to 
authorize these enforcement mechanisms for use by U.S. 
authorities.

Section 206: Regulations

            Current law
    No provision.
            Explanation of provision
    Section 206 of the implementing bill provides that the 
Secretary of the Treasury shall issue regulations to carry out 
provisions of this bill related to rules of origin and customs 
user fees.
            Reason for change
    Because the implementing bill involves lengthy and complex 
implementation procedures by customs officials, section 206 is 
necessary in order to authorize the Secretary of the Treasury 
to carry out provisions of the implementing bill through 
regulations.

                     TITLE III: RELIEF FROM IMPORTS

Subtitle A: Relief from imports benefiting from the Agreement (sections 
                                311-316)

Current law

    No provision.

Explanation of provision

    Sections 311-316 authorize the President, after an 
investigation and affirmative determination by the U.S. 
International Trade Commission, to impose specified import 
relief when, as a result of the reduction or elimination of a 
duty under the Agreement, a Singaporean product is being 
imported into the United States in such increased quantities 
and under such conditions as to be a substantial cause of 
serious injury or threat of serious injury to the domestic 
industry. Section 311(a) permits the award of provisional 
relief under certain circumstances.
    Section 311(c) defines ``substantial cause'' in the same 
manner as section 201 of the Trade Act of 1974.
    Section 311(d) exempts from investigation under this 
section Singaporean articles that have previously received 
relief since entry into force of the Agreement under: the 
bilateral safeguard provision; the textile and apparel 
safeguard set out in Subtitle B of Title III of this Act; the 
global safeguard provisions in section 201 of the Trade Act of 
1974; article 6 of the WTO Agreement on Textiles and Clothing; 
or Article 5 of the WTO Agreement on Agriculture.
    Under section 312(c), if the ITC makes an affirmative 
determination, it must find and recommend to the President the 
amount of import relief that is necessary to remedy or prevent 
serious injury and to facilitate the efforts of the domestic 
industry to make a positive adjustment to import competition.
    Under section 313(a), the President must provide import 
relief to the extent that the President determines is necessary 
to remedy or prevent the injury found by the ITC and to 
facilitate the efforts of the domestic industry to make a 
positive adjustment to import competition. Under section 
313(b), the President is not required to provide import relief 
if the President determines that the relief will not provide 
greater economic or social benefits than costs. Section 313(c) 
sets forth the nature of the relief that the President may 
provide as: a suspension of further tariff reductions for the 
article; or an increase of tariffs to a level that does not 
exceed the lesser of the existing most favored nation (MFN)/
normal trade relation (NTR) rate or the MFN/NTR rate in effect 
when the Agreement entered into force. The provision further 
states that if the President provides relief for greater than 
one year, the relief must be subject to progressive 
liberalization at regular intervals over the course of its 
application.
    Section 313(d) provides that the import relief that the 
President is authorized to provide may not exceed two years. 
However, the President may extend the relief under certain 
circumstances, but the aggregate period of relief, including 
extensions, may not exceed four years. According to section 
313(e), the rate of duty at the end of the relief period is to 
be the rate that would have been in effect on that date but for 
such action.
    Section 314 provides that no relief may be provided under 
this subtitle after ten years from the Agreement's entry into 
force unless Singapore consents.
    Section 315 authorizes the President to provide 
compensation to Singapore consistent with Article 7.4 of the 
Agreement.

Reason for change

    The Committee believes that it is important to have in 
place a temporary, extraordinary mechanism if a U.S. industry 
experiences injury by reason of increased import competition 
from Singapore in the future, with the understanding that the 
President is not required to provide relief if the relief will 
not provide greater economic or social benefits than costs. The 
Committee intends that administration of this safeguard be 
consistent with U.S. obligations under Chapter 7 of the 
Agreement.

      Subtitle B: Textile and Apparel Safeguard (Sections 321-328)

Current law

    No provision.

Explanation of provision

    Section 321 provides that a request for safeguard relief 
under this subtitle may be filed with the President by an 
interested party. The President is to review the request and 
determine whether to commence consideration of the request. If 
the President determines to commence consideration of the 
request, he is to publish a notice commencing consideration and 
seeking comments. The notice is to include the request itself.
    Section 322(a) of the Act provides for the President to 
determine, pursuant to a request by an interested party, 
whether, as a result of the reduction or elimination of a duty 
provided under the Agreement, a Singaporean textile or apparel 
article is being imported into the United States in such 
increased quantities, in absolute terms or relative to the 
domestic market for that article, and under such conditions 
that imports of the article constitute a substantial cause of 
serious damage or actual threat thereof, to a domestic industry 
producing an article that is like, or directly competitive 
with, the imported article. The section defines ``substantial 
cause'' as well as ``serious damage,'' directing the President 
to examine the effect of increased imports on the domestic 
industry producing the article that is like, or directly 
competitive with, the imported article.
    Section 322(b) identifies the relief that the President may 
provide as either a suspension of further duty reductions or an 
increase in tariffs to the normal trade relations/most-favored-
nation duty rate for the article at the time relief is granted. 
Section 323 of the bill provides that the initial period of 
relief will be no longer than two years, although an extension 
is permitted under certain circumstances as long as total 
relief, including any extension, does not exceed four years. 
Section 324 provides that relief may not be granted to an 
article under the textile safeguard if relief has previously 
been granted under subtitle A of this title. Under section 325, 
the duty rate applicable to the article after the safeguard 
expires is the rate that would have been in force on that date, 
but for application of the safeguard.
    Section 326 of the bill provides that the authority to 
provide this safeguard relief expires ten years after the 
textile and apparel provisions of the Agreement take effect. 
Section 327 of the Act gives authority to the President to 
provide compensation to Singapore if he orders relief. Section 
328 provides for the treatment of business confidential 
information.

Reason for change

    The Committee intends that the provisions of Subtitle B be 
administered in a manner that is in compliance with U.S. 
obligations under article 5.9 of the Agreement. In particular, 
the Committee expects that the President will implement a 
transparent process that will serve as an example to our 
trading partners.

Subtitle C: Cases Under Title II of the Trade Act of 1974 (Section 331)

Current law

    The President has no authority under Title II of the Trade 
Act of 1974 (``section 201'') to exclude Singapore articles 
from the application of a safeguard remedy.

Explanation of provision

    If, in any investigation initiated under Title II of the 
Trade Act of 1974 (``section 201'' action), the International 
Trade Commission makes an affirmative determination, the ITC 
will also find and report to the President whether imports of 
the article from Singapore are a substantial cause of serious 
injury or threat thereof. In determining relief to be taken 
under section 201, the President will determine whether imports 
from Singapore are a substantial cause of the serious injury or 
threat thereof found by the Commission and, if such 
determination is negative, may exclude products from Singapore 
from the safeguard relief provided.

Reason for change

    This provision implements U.S. obligations under Article 
7.5 of the Agreement.

                       III. VOTE 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 vote of the Committee on Ways and Means in its 
consideration of the bill, H.R. 2739.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 2739, was ordered favorably reported by a 
rollcall vote of 32 yeas to 5 nays (with a quorum being 
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      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. Levin........        X   ........
Mr. Houghton...................        X   ........  .........  Mr. Cardin.......        X   ........
Mr. Herger.....................        X   ........  .........  Mr. McDermott....        X   ........
Mr. McCrery....................        X   ........  .........  Mr. Kleczka......  ........        X
Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........        X
Mr. Ramstad....................        X   ........  .........  Mr. Neal.........        X   ........
Mr. Nussle.....................        X   ........  .........  Mr. McNulty......  ........        X
Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........  ........
Ms. Dunn.......................        X   ........  .........  Mr. Tanner.......        X   ........
Mr. Collins....................        X   ........  .........  Mr. Becerra......  ........  ........
Mr. Portman....................        X   ........  .........  Mr. Doggett......  ........
Mr. English....................        X   ........  .........  Mr. Pomeroy......        X   ........
Mr. Hayworth...................        X   ........  .........  Mr. Sandlin......        X   ........
Mr. Weller.....................        X   ........  .........  Ms. Tubbs Jones..  ........        X
Mr. Hulshof....................        X   ........  .........  .................  ........  ........
Mr. McInnis....................        X   ........  .........  .................  ........  ........
Mr. Lewis (KY).................        X   ........  .........  .................  ........  ........
Mr. Foley......................        X   ........  .........  .................  ........  ........
Mr. Brady......................  ........  ........  .........  .................  ........  ........
Mr. Ryan.......................        X   ........  .........  .................  ........  ........
Mr. Cantor.....................        X   ........  .........  .................  ........  ........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL

               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. In addition, the 
legislation is governed by procedures of the Trade Agreements 
Act of 2002.

    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 Singapore.

      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, July 21, 2003.
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. 2739, a bill to 
implement the United States-Singapore Free Trade Agreement.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Annabelle 
Bartsch.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 2739--A bill to implement the United States-Singapore Free Trade 
        Agreement

    Summary: H.R. 2739 would approve the free trade agreement 
(FTA) between the government of the United States and the 
government of Singapore that was entered into on May 6, 2003. 
It would provide for tariff reductions and other changes in law 
related to implementation of the agreement, such as provisions 
dealing with dispute settlement, rules of origin, and safeguard 
measures for textile and apparel industries. The bill also 
would allow the temporary entry of certain business persons 
into the United States.
    The Congressional Budget Office estimates that enacting the 
bill would reduce revenues by $55 million in 2004, by $410 
million over the 2004-2008 period, and by about $1 billion over 
the 2004-2013, net of income and payroll tax offsets. The bill 
would not have a significant effect on direct spending or 
spending subject to appropriation. CBO has determined that H.R. 
2739 contains no intergovernmental or private-sector 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. 2739 is shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2004     2005     2006     2007     2008
----------------------------------------------------------------------------------------------------------------
                                             CHANGES IN REVENUES \1\

Estimated Revenues.................................................      -55      -80      -86      -92      -98
----------------------------------------------------------------------------------------------------------------
\1\ H.R. 2739 also would affect direct spending and discretionary spending, but the amounts of those changes
  would be less than $500,000 a year.

Basis of estimate

            Revenues
    Under the United States-Singapore agreement, all tariffs on 
U.S. imports from Singapore would be phased out over time. The 
tariffs would be phased out for individual products at varying 
rates according to one of several different timetables ranging 
from immediate elimination to partial elimination over 10 
years. According to the U.S. International Trade Commission, 
the U.S. collected $88 million in customs duties in 2002 on 
about $14.1 billion of imports from Singapore. Of the imports, 
only $1.3 billion faced non-zero tariff rates. These dutiable 
imports from Singapore consist mostly of certain electrical 
machinery, knitted or crocheted apparel, mineral fuels and 
oils, surgical and precision instruments, and certain nuclear 
reactor components. Based on these data, CBO estimates that 
phasing out tariff rates as outlined in the U.S.-Singapore 
agreement would reduce revenues by $55 million in 2004, by $410 
million over the 2004-2008 period, and by about $1 billion over 
the 2004-2013 period, net of income and payroll tax offsets.
    This estimate includes the effects of increased imports 
from Singapore that would result from the reduced prices of 
imported products in the United States, reflecting the lower 
tariff rates. It is likely that some of the increase in U.S. 
imports from Singapore would displace imports from other 
countries. In the absence of specific data on the extent of 
this substitution effect, CBO assumes that an amount equal to 
one-half of the increase in U.S. imports from Singapore would 
displace imports from other countries.
    Based on current law, H.R. 2739 would not provide for the 
assessment of civil monetary penalties on employers for 
violations of the labor attestation process with respect to 
certain workers from Singapore. However, if H.R. 2738, a bill 
to implement the United States-Chile FTA, were to be enacted 
prior to this bill, H.R. 2739 would allow the Secretary of 
Labor to assess such penalties. CBO expects that any additional 
revenues collected as a result would amount to less than 
$500,000 in any year.
            Direct spending
    Title IV of H.R. 2739 would permit certain traders and 
investors from Singapore, and their spouses and children, to 
enter the United States as nonimmigrants. The Bureau of 
Citizenship and Immigration Services (BCIS) would charge fees 
of about $100 to provide nonimmigrant visas, so CBO estimates 
that the agency could collect several million dollars annually 
in offsetting receipts (a credit against direct spending). The 
agency is authorized to spend such fees without further 
appropriation, so the net impact on BCIS spending would not be 
significant.
    However, if H.R. 2738 (a bill to implement the United 
States-Chile FTA) were to be enacted prior to this bill, title 
IV would establish a new nonimmigrant category for certain 
professional workers from Singapore. The legislation would 
limit the number of annual entries under this category to 
5,400, plus spouses and children. The BCIS would charge fees of 
about $100 to provide nonimmigrant visas, so CBO estimates that 
the agency would collect less than $3 million annually in 
offsetting receipts. Again, the agency is authorized to spend 
such fees without further appropriation, so the net impact on 
BCIS spending would not be significant.
    Under current law, the Department of State also collects 
$100 application fee for nonimmigrant visas. These collections 
are spent on border security and consular functions. CBO 
estimates that the net budgetary impact would be less than 
$500,000 a year.
            Spending subject to appropriation
    Title I of H.R. 2739 would authorize the appropriation the 
necessary funds for the Department of Commerce to pay the 
United States' share of the costs of the dispute settlement 
procedures established by the agreement. Based on information 
from the agency, CBO estimates that implementing this provision 
would cost $100,000 in 2004, and $250,000 in each of the 
following years, subject to the availability of appropriated 
funds.
    Title III would require the International Trade Commission 
(ITC) to investigate claims of injury to domestic industries as 
a result of the FTA. The ITC would have 120 days to determine 
whether a domestic industry has been injured, and if so, would 
recommend the necessary amount of import relief. The ITC would 
also submit a report on its determination to the President. 
According to the ITC, similar FTAs have resulted in only a 
handful of cases each year, at an average cost of about 
$200,000 per investigation. Based on this information, CBO 
estimates the bill would have no significant effect on spending 
subject to appropriation.
    Summary of effect on revenues and direct spending: The 
overall effects of H.R. 2739 on revenues and direct spending 
are shown in the following table.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                         2003     2004     2005     2006     2007     2008     2009     2010     2011     2012     2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts..................................        0      -55      -80      -86      -92      -98     -104     -110     -117     -124     -132
Changes in outlays...................................        *        *        *        *        *        *        *        *        *        *        *
--------------------------------------------------------------------------------------------------------------------------------------------------------
*=Less than $500,000.

*Source: The Congressional Budget Office.

    Intergovernmental and private-sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Revenues: Annabelle Bartsch. 
Federal Spending: Dispute Settlements--Melissa Zimmerman; 
Immigration--Mark Grabowixz, Christi Hawley-Sadoti, and Sunita 
D'Monte. Impact on State, Local, and Tribal Governments: 
Melissa Merrell. Impact on the Private Sector: Paige Piper/
Bach.
    Estimate approved by: G. Thomas Woodward, Assistant 
Director for Tax Analysis and, Peter H. Fontaine, Deputy 
Assistant Director for Budget 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 general 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):

SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.

  (a) * * *
  (b) Limitations on Fees.--(1) * * *

           *       *       *       *       *       *       *

          (13) No fee may be charged under subsection (a) (9) 
        or (10) with respect to goods that qualify as 
        originating goods under section 202 of the United 
        States-Singapore Free Trade Agreement Implementation 
        Act. Any service for which an exemption from such fee 
        is provided by reason of this paragraph may not be 
        funded with money contained in the Customs User Fee 
        Account.

           *       *       *       *       *       *       *

                              ----------                              

                 SECTION 592 OF THE TARIFF ACT OF 1930

SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Maximum Penalties.--
          (1) * * *

           *       *       *       *       *       *       *

          (7) Prior disclosure regarding claims under the 
        united states-singapore free trade agreement.--
                  (A) An importer shall not be subject to 
                penalties under subsection (a) for making an 
                incorrect claim that a good qualifies as an 
                originating good under section 202 of the 
                United States-Singapore Free Trade Agreement 
                Implementation Act if the importer, in 
                accordance with regulations issued by the 
                Secretary of the Treasury, voluntarily and 
                promptly makes a corrected declaration and pays 
                any duties owing.
                  (B) In the regulations referred to in 
                subparagraph (A), the Secretary of the Treasury 
                is authorized to prescribe time periods for 
                making a corrected declaration and paying 
                duties owing under subparagraph (A), if such 
                periods are not shorter than 1 year following 
                the date on which the importer makes the 
                incorrect claim that a good qualifies as an 
                originating good.

           *       *       *       *       *       *       *

                              ----------                              

                  SECTION 202 OF THE TRADE ACT OF 1974

SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY 
                    COMMISSION.

  (a) Petitions and Adjustment Plans.--
          (1) * * *

           *       *       *       *       *       *       *

          (8) The procedures concerning the release of 
        confidential business information set forth in section 
        332(g) of the Tariff Act of 1930 shall apply with 
        respect to information received by the Commission in 
        the course of investigations conducted under this 
        chapter, part 1 of title III of the North American Free 
        Trade Agreement Implementation Act, [and] title II of 
        the United States-Jordan Free Trade Area Implementation 
        Act, and title III of the United States-Singapore Free 
        Trade Agreement Implementation Act. The Commission may 
        request that parties providing confidential business 
        information furnish nonconfidential summaries thereof 
        or, if such parties indicate that the information in 
        the submission cannot be summarized, the reasons why a 
        summary cannot be provided. If the Commission finds 
        that a request for confidentiality is not warranted and 
        if the party concerned is either unwilling to make the 
        information public or to authorize its disclosure in 
        generalized or summarized form, the Commission may 
        disregard the submission.

           *       *       *       *       *       *       *

           SECTION 214 OF THE IMMIGRATION AND NATIONALITY ACT

                       admission of nonimmigrants

      Sec. 214. (a) * * *
      (g)(1) * * *

           *       *       *       *       *       *       *

[The purported changes made to paragraph (8) of section 214(g) by this 
bill are shown below. Section 402(a)(2)(B) of H.R. 2738 inserts at the 
 end of subsection (g) a new paragraph (8), which is presumed to take 
          effect prior to the execution of these amendments.]

  [(8)(A) The agreement referred to in section 
101(a)(15)(H)(i)(b1) is the United States-Chile Free Trade 
Agreement.]
  (8)(A) The agreements referred to in section 
101(a)(15)(H)(i)(b1) are--
          (i) the United States-Chile Free Trade Agreement; and
          (ii) the United States-Singapore Free Trade 
        Agreement.
  (B)(i) * * *
  [(ii) The annual numerical limitations described in clause 
(i) shall not exceed 1,400 for nationals of Chile for any 
fiscal year. For purposes of this clause, the term ``national'' 
has the meaning given such term in article 14.9 of the United 
States-Chile Free Trade Agreement.]
  (ii) The annual numerical limitations described in clause (i) 
shall not exceed--
          (I) 1,400 for nationals of Chile (as defined in 
        article 14.9 of the United States-Chile Free Trade 
        Agreement) for any fiscal year; and
          (II) 5,400 for nationals of Singapore (as defined in 
        Annex 1A of the United States-Singapore Free Trade 
        Agreement) for any fiscal year.

           *       *       *       *       *       *       *

                     VII. EXECUTIVE CORRESPONDENCE

                 Executive Office of the President,
                    The United States Trade Representative,
                                     Washington, DC, July 18, 2003.
Hon. William M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: I appreciate your leadership in moving 
through the Ways and Means Committee legislation to implement 
the United States-Singapore and United States-Chile free trade 
agreements.
    Because we have received inquiries about how the tariff 
suspension provisions of the agreements would operate, I 
thought it would be useful to provide the relevant text for the 
enforcement of dispute settlement panel reports. The following 
provisions are set out in articles 20.5-7 of the U.S.-Singapore 
Free Trade Agreement (FTA) and articles 22.14-16 of the U.S.-
Chile FTA.

Commercial disputes

    If, in its final report, the panel determines that a Party 
has not conformed with its obligations under this Agreement or 
that a Party's measure is causing nullification or impairment * 
* *, the resolution, whenever possible, shall be to eliminate 
the non-conformity or the nullification or impairment. * * * If 
* * * the Parties are unable to reach agreement on a 
resolution, * * * the Party complained against shall enter into 
negotiations with the other Party with a view to developing 
mutually acceptable compensation.
    If the Parties * * * are unable to agree on compensation 
within 30 days after the period for developing such 
compensation has begun; or * * * have agreed on compensation or 
on a resolution * * * and the complaining Party considers that 
the other Party has failed to observe the terms of such 
agreement, the complaining Party may at any time thereafter 
provide written notice * * * that it intends to suspend the 
application to the other Party of benefits of equivalent 
effect. * * *
    If the Party complained against considers that * * * the 
level of benefits [that the other Party has] proposed to be 
suspended is manifestly excessive; or * * * [that the defending 
party] has eliminated the non-conformity or the nullification 
or impairment that the panel has found, it may * * * request 
that the panel be reconvened to consider the matter. * * * If 
the panel determines that the level of benefits proposed to be 
suspended is manifestly excessive, it shall determine the level 
of benefits it considers to be of equivalent effect.
    The complaining Party may suspend benefits up to the level 
the panel has determined * * * or, if the panel has not 
determined the level, the level the Party has proposed to 
suspend * * * unless the panel has determined that the Party 
complained against has eliminated the non-conformity or the 
nullification or impairment.
    The complaining Party may not suspend benefits if, within 
30 days after it provides written notice of intent to suspend 
benefits or * * * the Party complained against provides written 
notice * * * that it will pay an annual monetary assessment. 
The Parties shall consult * * * with a view to reaching 
agreement on the amount of the assessment. If the Parties are 
unable to reach an agreement within 30 days after consultations 
begin, the amount of the assessment shall be set at a level, in 
U.S. dollars, equal to 50 percent of the level of the benefits 
the panel has determined * * * to be of equivalent effect or, 
if the panel has not determined the level, 50 percent of the 
level that the complaining Party has proposed to suspend.* * *
    If the Party complained against fails to pay a monetary 
assessment, the complaining Party may suspend the application 
to the Party complained against of benefits [under the 
Agreement].

Labor and environment disputes

    If, in its final report, a panel determines that a party 
has not conformed with its [labor or environment] obligations * 
* * and the Parties * * * are unable to reach agreement on a 
resolution * * *; or have agreed on a resolution * * * and the 
complaining Party considers that the other Party has failed to 
observe the terms of the agreement, the complaining Party may 
at any time thereafter request that the panel be reconvened to 
impose an annual monetary assessment on the other Party. * * *
    The panel shall determine the amount of the monetary 
assessment in U.S. dollars. * * * In determining the amount of 
the assessment, the panel shall take into account [various 
factors set forth in the agreement.]
    The amount of the assessment shall not exceed 15 million 
U.S. dollars annually. * * * Assessments shall be * * * 
expended * * * for appropriate labor or environmental 
initiatives, including efforts to improve or enhance labor or 
environmental law enforcement, as the case may be, in the 
territory of the Party complained against, consistent with its 
law.
    If the Party complained against fails to pay a monetary 
assessment, [or, under the U.S.-Singapore FTA, does not make 
funds available through an escrow account] the complaining 
Party may take other appropriate steps to collect the 
assessment or otherwise secure compliance. These steps may 
include suspending tariff benefits under the Agreement as 
necessary to collect the assessment, while bearing in mind the 
Agreement's objective of eliminating barriers to bilateral 
trade and while seeking to avoid unduly affecting parties or 
interests not party to the dispute.
    Again, thank you for your efforts in securing passage of 
this important legislation.
            Sincerely,
                                                Robert B. Zoellick.

                              VIII. VIEWS

                            DISSENTING VIEWS

    If these two trade agreements were truly going to benefit 
U.S. workers, as the Administration claims, then we would have 
no reservations and would gladly support both agreements today. 
However, the lack of strong labor enforcement language, the 
addition of new permanent work visa program, and the use of 
these agreements as a template for future trade agreements is 
sufficient reason to oppose both agreements and the 
implementing legislation.
    Our nation's unemployment rate reached 6.4 percent in 
June--the highest rate in more than nine years, causing a loss 
of more than one million jobs in the last three months alone. 
The Bush Administration's solution to pursue trade agreements 
that depart from the standard set by the US-Jordan Free Trade 
Agreement and return to the failed North American Free Trade 
Agreement (NAFTA) model. As of September 2000, the U.S. lost 
over half a million jobs due to NAFTA. Over three-quarters of 
the jobs lost due to NAFTA have been in the manufacturing 
sector. These are good paying U.S. jobs that have been shipped 
overseas. But rather than take the successes of the US-Jordan 
FTA which was heralded by the Clinton Administration, labor and 
environment organizations, as the new model for trade 
agreements, the Bush Administration is taking us down the path 
of further job losses.
    Neither trade agreements includes the International Labor 
Organization's (ILO) five core labor standards. While both 
countries claim to uphold the ILO's core labor standards, there 
is nothing in the agreements that require either country to do 
so. If these countries are truly committed to the five core 
labor standards then there is no reason to exclude binding 
agreement language that would have committed these countries to 
adhering to them. It is time to make labor standards as serious 
and issue in trade agreements as the commercial provisions--
especially when the involved parties claim to uphold ILO's 
policies anyway.
    Furthermore, these agreements fail to provide the same 
enforcement mechanisms for labor and environmental violations 
as the agreements provide for commercial violations. Once 
again, the Administration chooses to relegate labor and 
environment to a substandard class. Under the Chile and 
Singapore agreements, once a determination that a labor 
violation has been made the first course of action is a fine, 
which is capped at $15 million annually. This is a mere slap on 
the wrist for a country that could be found in serious 
violation of the labor provisions. The negotiated course of 
enforcement pales in comparison to the sanctions that are 
available for commercial violations.
    In addition to the failures of the labor provisions in both 
trade agreements, both agreements set up a new immigration visa 
program. This sets a dangerous precedent by including U.S. 
immigration law in trade agreements. Nor was this provision 
authorized in the Fast Track negotiating language that narrowly 
passed the House of Representatives. House Judiciary members of 
both the majority and minority have expressed serious 
reservations about including U.S. immigration law in trade 
agreements, and usurping Congress's constitutional authority. 
The current H1-B visa program is a 3-year temporary work visa, 
which may be renewed one time. The new visa program negotiated 
in these trade agreements will allow an indefinite renewal of 
5,800 nationals from Singapore and Chile. This means that we 
are earmarking ten percent of the current H1-B visa program to 
nationals from these small countries in these small agreements.
    Another serious concern we have is the fact that the 
implementing language contradicts the trade agreement language 
with respect to the new visa program. It is doublespeak. The 
implementing language attempts to address the concern of 
allowing new immigrant workers only upon certifying that U.S. 
workers won't be displaced; the negotiated trade agreements 
prohibit such certification as a condition of entry. As the 
U.S. experienced with NAFTA, it is the trade agreement, and not 
the domestic statute that takes precedent under global trade 
rules.
    Finally, these two agreements should not be used as a model 
for future trade agreements. A vote in support of the 
agreements signals to the Administration that the model used 
for Chile and Singapore is acceptable, when it is far from 
acceptable. We oppose both agreements, the implementing 
legislation and urge the Administration to avoid using the 
flawed Chile and Singapore model for future trade agreements.

                                   Pete Stark.
                                   Stephanie Tubbs Jones.
                                   Jerry Kleczka.
                                   Mike R. McNulty.
                                   John Lewis.

                 ADDITIONAL VIEWS OF DEMOCRATIC MEMBERS

The U.S.-Singapore Free Trade Agreement
    The U.S.-Singapore Free Trade Agreement (FTA) includes 
strong and comprehensive commitments by Singagore to open its 
goods, agricultural and services markets to U.S. producers. The 
agreement includes commitments that will increase regulatory 
transparency and act to the benefit of U.S. workers, investors, 
intellectual property holders, businesses and consumers.
    At the same time, the economic impact of the Singapore 
agreement is likely to be minuscule. The U.S. International 
Trade Commission estimates that the Singapore FTA will account 
for just one one hundredth of one percent of U.S. GNP.
    While some of the provisions in the FTA could serve as a 
template for other agreements, a number of provisions clearly 
cannot. In some instances, this is because the provision, while 
workable in the Singapore context, is not appropriate for FTAs 
with other coiuntries, where very different circumstances 
prevail. In other cases, it is because the policy being pursued 
by the Administration is just plain wrong.
    In fact, one of the concerns raised in the consideration of 
both the Chile and Singapore FTAs has been that the 
Administration is beginning to use some of their provisions as 
models for other FTAs, for example the CAFTA, where the 
conditions make it inappropriate to do so.
    We cannot change in the implementing bill major provisions 
in the basic agreements specifically negotiated between the 
parties. Unfortunately, the provisions relating to core labor 
and environmental standards, and investment issues raise 
serious concerns.
    For example, there are separate dispute settlement rules 
that place arbitrary caps on the enforceability of those 
provisions. This is a mistaken approach, the difficulties of 
which would only be magnified if used as a precedent for future 
FTAs involving very different circumstances.
    That is doubly true of any attempt to use as a model for 
other FTAs the ``enforce your own law'' standard used in Chile 
and Singapore. The laws of Chile and Singapore essentially 
reflect core internationally recognized labor rights and these 
countries have a history of enforcing their laws. How they are 
applied does vary in the two countries, reflecting the 
different characteristics of the two nations. At the same time, 
there is little practical concern that these countries will 
back track.
    Singapore is very diferent from many other FTA negotiating 
partners, including certainly most Central American countries 
and many others that would be a part of an FTAA. Use of the 
``enforce your own law'' standard is invalid as a precedent--
indeed, it contradicts the purpose of promoting enforceable 
core labor standards--when a country's laws clearly do not 
reflect international standards and when there is a history, 
not only of non-enforcement, but of a hostile environment 
towards the rights of workers to organize and bargain 
collectively. Using this standard in different circumstances 
will lead to totally different results.
    The Office of the U.S. Trade Representative (USTR) has 
undertaken this misapplication of the ``enforce your own law'' 
standard by using it in the core labor proposal tabled in CAFTA 
and Free Trade Area of the Americas (FTAA). USTR justifies this 
action by arguing that the Trade Act of 2002 does not allow it 
to go further. That interpretation is erroneous. Under Trade 
Promotion Authority USTR can negotiate a provision to adopt and 
enforce the five core ILO labor standards (ban on child labor, 
forced labor, discrimination, and the right to associate and 
bargain collectively).
    Expanded trade is important to this country and the world. 
Benefits will accrue to a broad range of persons in our nation 
and in other nations if these trade agreements include 
enforceable commitments on basic labor standards. With such a 
provision, workers in developing countries, including in 
Central America, will have the opportunity to become real 
partners in economic progress and help develop the expanded 
middle class so vital to those nations, and to the United 
States.
    With regard to other provisions that the Administration has 
stated it intends to use as a model, we are seriously concerned 
about any such use and we will be watching carefully their 
implementation. These provisions include: (1) certain 
intellectual property provisions that lock in the current state 
of U.S. law, thereby making it much more difficult for Congress 
to change those rules in the future; (2) the investor-state 
provisions and the issue of whether the USTR has adequately 
ensured that foreign investors will not have greater rights 
than provided under U.S. law; and (3) the provisions on capital 
controls and the question of whether USTR's and Treasury's 
effort to eliminate a country's flexibility to impose on an 
emergency basis temporary capital controls, is sound policy and 
should be pursued in future FTAs. In addition, we are 
interested to know whether more can be done by Singapore to 
stop the trans-shipment of illegally harvested timber.
    Finally, one area where we would like to see improvements 
in future FTAs is in the rules of origin. To a large extent, 
the provisions on rules of origin in the implementing 
legislation are dictated by the underlying agreements.
    The Committee report states that the Agreement contains 
``strong, simple, and transparent rules of origin.'' The rules 
of origin used for the Agreement are different than those for 
theNAFTA and for other previous FTAs. It is extremely difficult 
for Congress to gauge whether the rules of origin strike the correct 
balance between the dual goals of preventing trans-shipment/ensuring 
economic activity in the FTA partners and ease of compliance and 
administration. While we trust that the USTR negotiators are seeking 
the correct balance, the Committee should request the ITC to conduct a 
study into the operation of various types of rules or origin and their 
impact on trade.

The U.S.-Singapore implementing legislation

    The Committee Democrats pressed for the Committee to hold 
the July 10, 2003, traditional ``mock'' mark-up. the informal 
legislative drafting process ensures active congressional 
involvement in shaping the legislation necessary to implement 
changes to U.S. law that are required by trade agreements.
    In the past, the informal legislative drafting process in 
the House--prior to the Administration's introduction of the 
formal, and nonamendable, legislation--has culminated in the 
Ways and Means Committee holding an informal markup (sometimes 
called a ``mock markup'') of the draft legislation. This 
process was used in the case of implementing legislation for 
the North American Free Trade Agreement (NAFTA), the Uruguay 
Round agreements and prior agreements dating back more than 20 
years.
    The mock markup reflects a broadly agreed-upon and well-
established practice. Further, it enables the Members of the 
Committee and the public to understand more fully and clearly 
the content of the legislation, raise questions about it, and 
offer ``mock amendments'' when necessary. Ensuring that the 
legislative process for the implementing legislation is as open 
as possible is consistent with the great importance the United 
States has attached to improving the transparency of 
international trade agreements and foreign government laws and 
regulatory practices.
    The implementing legislation includes only addresses those 
portions of the FTA where implementation requires changes to 
U.S. law. With respect to these provisions, it is important to 
note the improvements that we have been successful in making to 
several controversial areas.
    First, the Integrated Sourcing Initiative (ISI) was 
initially described by USTR as a special program to benefit two 
Indonesian islands near Singapore. In fact, the ISI was much 
wider than USTR had initially described it. Any country could 
benefit from the ISI, and it would have allowed Singapore to 
import certain components directly from any country in the 
world, incorporate them into other products, and count the 
components as ``Singapore content.'' Further, the ISI called 
for considering an expansion of the list of products that could 
benefit from this unusual treatment, and the initial draft of 
the implementing legislation would have allowed expansion 
through an Executive proclamation.
    Democrats on the Ways & Means Committee began raising 
questions and concerns about the ISI with USTR. The result has 
been a number of changes:
     Expansion of the ISI Requires Congressional 
Approval. Under the ISI's primary feature, certain goods listed 
in an annex to the FTA can be trans-shipped through Singapore 
and receive the benefits of the FTA. The ``trans-shipment'' 
feature of the ISI is not significant in practice, however, as 
all of the goods currently on the ISI Annex already enter the 
U.S. duty-free regardless of where they originate. However, 
Ways and Means Democrats were concerned that the ISI Annex 
could be expanded by Executive proclamation in the future to 
include other goods which could be more sensitive. Accordingly, 
Ways and Means Democrats and other offices succeeded in 
modifying the implementing legislation to require congressional 
approval for expanding the ISI.
     Local Content Feature Restricted. Ways and Means 
Democrats raised a number of questions about the fact that the 
``local content'' feature of the ISI would allow components 
from any other country to be counted as Singapore content in 
``downstream goods,'' helping those goods benefit from duty-
free treatment under the FTA. As a result, a key sentence in 
the agreement was deleted. The initial draft of the legislation 
implementing the agreement contained an ambiguity and the 
implementation language was modified. While it was our 
expectation that as a result, the local content feature was 
being eliminated entirely, the Statement of Administrative 
Action contained language that indicated that the local content 
feature had been restricted so that ISI components would first 
have to be trans-shipped between the U.S. and Singapore before 
they could count as local content for another good which would 
itself have to be shipped between the two countries.
    In sum, as a practical matter, it would appear that use of 
the local content feature would be severely restricted. 
Nonetheless, we are taking steps to ensure adequate monitoring, 
including through agreement with the Chairman to request 
detailed monitoring by the U.S. International Trade Commission 
for the first two years of the agreement to follow trade in 
products that could be affected by the ISI and to detect 
surges, if any, in use of the ISI local content provision. If 
such a surge is detected, the ITC would conduct a special 
investigation. In any event, the Commission would prepare a 
report to the Committee on the results of its monitoring.
    A second set of troublesome issues in both the U.S.-Chile 
and U.S.-Singapore FTAs related to H1-B immigration visas. 
Although not under the jurisdiction of this Committee, we 
worked actively with our colleagues in both parties on the 
Judiciary Committee to make meaningful changes to these 
provisions. The most significant changes include: (1) inclusion 
of the Singapore and Chile visas within the overall H1-B cap; 
(2) a requirement that employers pay the H1-B fee (currently 
$1000) for the initial visa, and for every third renewal of the 
visa (these fees are used to fund training programs for workers 
in the United States); (3) a requirement that employers submit 
labor attestations not only for the initial visa, but also for 
every third renewal; (4) clarification in the Statement of 
Administrative Action that visas issued under the Chile and 
Singapore programs are temporary, and that laws governing 
temporary visas, including requirements that the visa holder 
show that the stay is temporary, continue to apply; and (5) a 
clarification in the Statement of Administrative Action on the 
scope of occupations covered.
    Additionally, as first drafted, bills did not require 
Administration to consult with trade advisory committees, ITC, 
or Congress when exercising discretionary authority granted by 
the legislation. The bill has been amended to require 
consultation with each of these entities, helping provide 
greater role for Congress and a more balanced and well-founded 
trade policy.
    This process has worked for improving the problematic 
provisions in the implementing legislation.
    Finally, we are concerned that the legislative 
implementation of the rules of origin may create unnecessary 
confusion. The rules of origin in the Chile and Singapore FTAs 
differ in a number of ways, some substantive, but most non-
substantive. In a number of instances, the implementing 
legislation mirrored the language in the agreements, despite 
the fact that there were no substantive differences intended. 
We are concerned that the differences in legislative language 
between two contemporaneously considered bills could create 
confusion for Customs and traders. Generally, Congress does not 
use different language when it means the same thing. 
Accordingly, we encourage Customs to issue harmonized 
implementing regulations for the Singapore and Chile FTAs to 
the maximum extent possible.

U.S. Trade policy for economic growth and jobs

    Even as we support the Singapore and Chile free trade 
agreements, it is vital that American trade policy restore a 
focus on opening markets that achieve big gains for Americans. 
In particular, numerous barriers to exports of American goods 
and services, and other unfair trade practices have been 
allowed to stand for too long. These barriers include 
international piracy of American copyrights and other 
intellectual property, discrimination by China against key 
American high-tech exports, and Japan's discrimination against 
myriad of manufactured and agricultural goods. A more concerted 
effort needs to be undertaken to reduce these barriers that 
cost American jobs and exports.
    Additionally, there is a great deal at stake in 
negotiations currently ongoing under the auspices of the World 
Trade Organization--the so-called Doha round. These 
negotiations should be conducted carefully to achieve potential 
significant benefits to American manufacturing, agriculture and 
services, and to prove benefits to both the United States and 
other developed countries, as well as developing countries. 
Ways and Means Democrats are monitoring these negotiations 
carefully and urge a greater focus by the Administration on 
ensuring real and meaningful progress at the upcoming 
Ministerial meeting in September in Mexico.

                                   Charles B. Rangel.
                                   Jim McDermott.
                                   Max Sandlin.
                                   Robert T. Matsui.
                                   Earl Pomeroy.
                                   Richard E. Neal.
                                   Ben Cardin.
                                   Sander Levin.
                                   Xavier Becerra.

                                

```