I

106TH CONGRESS

2D SESSION H. R. 4885

To provide tax and regulatory relief for farmers and to improve the competitiveness of American agricultural commodities and products in global

markets.

IN THE HOUSE OF REPRESENTATIVES

JULY 19, 2000

Mr. BOEHNER (for himself, Mr. BARRETT of Nebraska, Mr. COOKSEY, Mr.

EWING, Mr. GUTKNECHT, Mr. LAHOOD, Mr. LATHAM, Mr. LUCAS of

Oklahoma, Mr. NETHERCUTT, Mr. NUSSLE, Mr. PETERSON of Minnesota, Mr. SCHAFFER, Mr. SIMPSON, Mr. THUNE, and Mr. WALDEN of

Oregon) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Agriculture, Rules, and Government Reform, for a period to be subsequently

determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide tax and regulatory relief for farmers and to

improve the competitiveness of American agricultural

commodities and products in global markets.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Rural America Prosperity Act of 2000’’.
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1 (b) TABLE OF CONTENTS.—The table of contents of

2 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—TAX RELIEF FOR FARMERS

Subtitle A—General Tax Provisions

Sec. 101. Deduction for 100 percent of health insurance costs of self-employed

individuals.

Sec. 102. Exclusion of gain from sale of farmland.

Sec. 103. Income averaging for farmers not to increase alternative minimum

tax liability.

Sec. 104. Farm and ranch risk management accounts.

Subtitle B—Estate and Gift Tax Relief

Sec. 111. Repeal of estate, gift, and generation-skipping taxes.

Sec. 112. Termination of step up in basis at death.

Sec. 113. Carryover basis at death.

Sec. 114. Additional reductions of estate and gift tax rates.

Sec. 115. Unified credit against estate and gift taxes replaced with unified exemption amount.

Sec. 116. Deemed allocation of GST exemption to lifetime transfers to trusts;

retroactive allocations.

Sec. 117. Severing of trusts.

Sec. 118. Modification of certain valuation rules.

Sec. 119. Relief provisions.

Sec. 120. Expansion of estate tax rule for conservation easements.

TITLE II—STUDY OF COSTS OF REGULATIONS ON FARMERS,

RANCHERS, AND FORESTERS

Sec. 201. Definitions.

Sec. 202. Comptroller General study of regulations.

Sec. 203. Response of Secretary of Agriculture.

TITLE III—EXTENSION OF TRADE AUTHORITIES PROCEDURES

FOR RECIPROCAL TRADE AGREEMENTS

Sec. 301. Short title.

Sec. 302. Trade negotiating objectives.

Sec. 303. Trade agreements authority.

Sec. 304. Consultations.

Sec. 305. Implementation of trade agreements.

Sec. 306. Treatment of certain trade agreements.

Sec. 307. Conforming amendments.

Sec. 308. Definitions.

TITLE IV—AGRICULTURAL TRADE FREEDOM

Sec. 401. Short title.

Sec. 402. Definitions.
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Sec. 403. Agricultural commodities, livestock, and products exempt from unilateral agricultural sanctions.

Sec. 404. Sale or barter of food assistance.

1 TITLE I—TAX RELIEF FOR

2 FARMERS

3 Subtitle A—General Tax Provisions

4 SEC. 101. DEDUCTION FOR 100 PERCENT OF HEALTH IN5 SURANCE COSTS OF SELF-EMPLOYED INDI6 VIDUALS.

7 (a) IN GENERAL.—Paragraph (1) of section 162(l)

8 of the Internal Revenue Code of 1986 (relating to special

9 rules for health insurance costs of self-employed individ10 uals) is amended to read as follows:

11 ‘‘(1) ALLOWANCE OF DEDUCTION.—In the case

12 of an individual who is an employee within the

13 meaning of section 401(c)(1), there shall be allowed

14 as a deduction under this section an amount equal

15 to 100 percent of the amount paid during the tax16 able year for insurance which constitutes medical

17 care for the taxpayer, his spouse, and dependents.’’.

18 (b) EFFECTIVE DATE.—The amendment made by

19 this section shall apply to taxable years beginning after

20 December 31, 2000.

21 SEC. 102. EXCLUSION OF GAIN FROM SALE OF FARMLAND.

22 (a) IN GENERAL.—Part III of subchapter B of chap23 ter 1 of the Internal Revenue Code of 1986 (relating to
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1 items specifically excluded from gross income) is amended

2 by inserting after section 121 the following:

3 ‘‘SEC. 121A. EXCLUSION OF GAIN FROM SALE OF QUALIFIED

4 FARM PROPERTY.

5 ‘‘(a) EXCLUSION.—In the case of a natural person,

6 gross income shall not include gain from the sale or ex7 change of qualified farm property.

8 ‘‘(b) LIMITATION.—

9 ‘‘(1) IN GENERAL.—The amount of gain ex10 cluded from gross income under subsection (a) with

11 respect to any taxable year shall not exceed

12 $500,000 ($250,000 in the case of a married indi13 vidual filing a separate return), reduced by the ag14 gregate amount of gain excluded under subsection

15 (a) for all preceding taxable years.

16 ‘‘(2) SPECIAL RULE FOR JOINT RETURNS.—The

17 amount of the exclusion under subsection (a) on a

18 joint return for any taxable year shall be allocated

19 equally between the spouses for purposes of applying

20 the limitation under paragraph (1) for any suc21 ceeding taxable year.

22 ‘‘(c) QUALIFIED FARM PROPERTY.—For purposes of

23 this section—

24 ‘‘(1) IN GENERAL.—The term ‘qualified farm

25 property’ means real property located in the United
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1 States if, during periods aggregating 3 years or

2 more of the 5-year period ending on the date of the

3 sale or exchange of such real property—

4 ‘‘(A) such real property was used by the

5 taxpayer or a member of the family of the tax6 payer as a farm for farming purposes, and

7 ‘‘(B) there was material participation by

8 the taxpayer (or such a member) in the oper9 ation of the farm.

10 ‘‘(2) OTHER DEFINITIONS.—The terms ‘mem11 ber of the family’, ‘farm’, and ‘farming purposes’

12 have the respective meanings given such terms by

13 paragraphs (2), (4), and (5) of section 2032A(e).

14 ‘‘(3) SPECIAL RULES.—Rules similar to the

15 rules of paragraphs (4) and (5) of section 2032A(b)

16 and paragraphs (3) and (6) of section 2032A(e)

17 shall apply.

18 ‘‘(d) OTHER RULES.—For purposes of this section,

19 rules similar to the rules of subsection (e) and subsection

20 (f) of section 121 shall apply.’’

21 (b) CONFORMING AMENDMENT.—The table of sec22 tions for part III of subchapter B of chapter 1 of the In23 ternal Revenue Code of 1986 is amended by inserting

24 after the item relating to section 121 the following:

‘‘Sec. 121A. Exclusion of gain from sale of qualified farm property.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to any sale or exchange after the

3 date of the enactment of this Act in taxable years ending

4 after such date.

5 SEC. 103. INCOME AVERAGING FOR FARMERS NOT TO IN6 CREASE ALTERNATIVE MINIMUM TAX LIABIL7 ITY.

8 (a) IN GENERAL.—Section 55(c) of the Internal Rev9 enue Code of 1986 (defining regular tax) is amended by

10 redesignating paragraph (2) as paragraph (3) and by in11 serting after paragraph (1) the following:

12 ‘‘(2) COORDINATION WITH INCOME AVERAGING

13 FOR FARMERS.—Solely for purposes of this section,

14 section 1301 (relating to averaging of farm income)

15 shall not apply in computing the regular tax.’’

16 (b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply to taxable years beginning after

18 December 31, 1997.

19 SEC. 104. FARM AND RANCH RISK MANAGEMENT AC20 COUNTS.

21 (a) IN GENERAL.—Subpart C of part II of sub22 chapter E of chapter 1 of the Internal Revenue Code of

23 1986 (relating to taxable year for which deductions taken)

24 is amended by inserting after section 468B the following:
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1 ‘‘SEC. 468C. FARM AND RANCH RISK MANAGEMENT AC2 COUNTS.

3 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi4 vidual engaged in an eligible farming business, there shall

5 be allowed as a deduction for any taxable year the amount

6 paid in cash by the taxpayer during the taxable year to

7 a Farm and Ranch Risk Management Account (herein8 after referred to as the ‘FARRM Account’).

9 ‘‘(b) LIMITATION.—The amount which a taxpayer

10 may pay into the FARRM Account for any taxable year

11 shall not exceed 20 percent of so much of the taxable in12 come of the taxpayer (determined without regard to this

13 section) which is attributable (determined in the manner

14 applicable under section 1301) to any eligible farming

15 business.

16 ‘‘(c) ELIGIBLE FARMING BUSINESS.—For purposes

17 of this section, the term ‘eligible farming business’ means

18 any farming business (as defined in section 263A(e)(4))

19 which is not a passive activity (within the meaning of sec20 tion 469(c)) of the taxpayer.

21 ‘‘(d) FARRM ACCOUNT.—For purposes of this

22 section—

23 ‘‘(1) IN GENERAL.—The term ‘FARRM Ac24 count’ means a trust created or organized in the

25 United States for the exclusive benefit of the tax-
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1 payer, but only if the written governing instrument

2 creating the trust meets the following requirements:

3 ‘‘(A) No contribution will be accepted for

4 any taxable year in excess of the amount al5 lowed as a deduction under subsection (a) for

6 such year.

7 ‘‘(B) The trustee is a bank (as defined in

8 section 408(n)) or another person who dem9 onstrates to the satisfaction of the Secretary

10 that the manner in which such person will ad11 minister the trust will be consistent with the re12 quirements of this section.

13 ‘‘(C) The assets of the trust consist en14 tirely of cash or of obligations which have ade15 quate stated interest (as defined in section

16 1274(c)(2)) and which pay such interest not

17 less often than annually.

18 ‘‘(D) All income of the trust is distributed

19 currently to the grantor.

20 ‘‘(E) The assets of the trust will not be

21 commingled with other property except in a

22 common trust fund or common investment

23 fund.

24 ‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.—

25 The grantor of a FARRM Account shall be treated
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1 for purposes of this title as the owner of such Ac2 count and shall be subject to tax thereon in accord3 ance with subpart E of part I of subchapter J of

4 this chapter (relating to grantors and others treated

5 as substantial owners).

6 ‘‘(e) INCLUSION OF AMOUNTS DISTRIBUTED.—

7 ‘‘(1) IN GENERAL.—Except as provided in para8 graph (2), there shall be includible in the gross in9 come of the taxpayer for any taxable year—

10 ‘‘(A) any amount distributed from a

11 FARRM Account of the taxpayer during such

12 taxable year, and

13 ‘‘(B) any deemed distribution under—

14 ‘‘(i) subsection (f)(1) (relating to de15 posits not distributed within 5 years),

16 ‘‘(ii) subsection (f)(2) (relating to ces17 sation in eligible farming business), and

18 ‘‘(iii) subparagraph (A) or (B) of sub19 section (f)(3) (relating to prohibited trans20 actions and pledging account as security).

21 ‘‘(2) EXCEPTIONS.—Paragraph (1)(A) shall not

22 apply to—

23 ‘‘(A) any distribution to the extent attrib24 utable to income of the Account, and
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1 ‘‘(B) the distribution of any contribution

2 paid during a taxable year to a FARRM Ac3 count to the extent that such contribution ex4 ceeds the limitation applicable under subsection

5 (b) if requirements similar to the requirements

6 of section 408(d)(4) are met.

7 For purposes of subparagraph (A), distributions

8 shall be treated as first attributable to income and

9 then to other amounts.

10 ‘‘(f) SPECIAL RULES.—

11 ‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH

12 ARE NOT DISTRIBUTED WITHIN 5 YEARS.—

13 ‘‘(A) IN GENERAL.—If, at the close of any

14 taxable year, there is a nonqualified balance in

15 any FARRM Account—

16 ‘‘(i) there shall be deemed distributed

17 from such Account during such taxable

18 year an amount equal to such balance, and

19 ‘‘(ii) the taxpayer’s tax imposed by

20 this chapter for such taxable year shall be

21 increased by 10 percent of such deemed

22 distribution.

23 The preceding sentence shall not apply if an

24 amount equal to such nonqualified balance is

25 distributed from such Account to the taxpayer
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1 before the due date (including extensions) for

2 filing the return of tax imposed by this chapter

3 for such year (or, if earlier, the date the tax4 payer files such return for such year).

5 ‘‘(B) NONQUALIFIED BALANCE.—For pur6 poses of subparagraph (A), the term ‘non7 qualified balance’ means any balance in the Ac8 count on the last day of the taxable year which

9 is attributable to amounts deposited in such Ac10 count before the 4th preceding taxable year.

11 ‘‘(C) ORDERING RULE.—For purposes of

12 this paragraph, distributions from a FARRM

13 Account (other than distributions of current in14 come) shall be treated as made from deposits in

15 the order in which such deposits were made, be16 ginning with the earliest deposits.

17 ‘‘(2) CESSATION IN ELIGIBLE BUSINESS.—At

18 the close of the first disqualification period after a

19 period for which the taxpayer was engaged in an eli20 gible farming business, there shall be deemed dis21 tributed from the FARRM Account of the taxpayer

22 an amount equal to the balance in such Account (if

23 any) at the close of such disqualification period. For

24 purposes of the preceding sentence, the term ‘dis25 qualification period’ means any period of 2 consecu-
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1 tive taxable years for which the taxpayer is not en2 gaged in an eligible farming business.

3 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar

4 to the following rules shall apply for purposes of this

5 section:

6 ‘‘(A) Section 220(f)(8) (relating to treat7 ment on death).

8 ‘‘(B) Section 408(e)(2) (relating to loss of

9 exemption of account where individual engages

10 in prohibited transaction).

11 ‘‘(C) Section 408(e)(4) (relating to effect

12 of pledging account as security).

13 ‘‘(D) Section 408(g) (relating to commu14 nity property laws).

15 ‘‘(E) Section 408(h) (relating to custodial

16 accounts).

17 ‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.—

18 For purposes of this section, a taxpayer shall be

19 deemed to have made a payment to a FARRM Ac20 count on the last day of a taxable year if such pay21 ment is made on account of such taxable year and

22 is made on or before the due date (without regard

23 to extensions) for filing the return of tax for such

24 taxable year.
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1 ‘‘(5) INDIVIDUAL.—For purposes of this sec2 tion, the term ‘individual’ shall not include an estate

3 or trust.

4 ‘‘(6) DEDUCTION NOT ALLOWED FOR SELF-EM5 PLOYMENT TAX.—The deduction allowable by reason

6 of subsection (a) shall not be taken into account in

7 determining an individual’s net earnings from self8 employment (within the meaning of section 1402(a))

9 for purposes of chapter 2.

10 ‘‘(g) REPORTS.—The trustee of a FARRM Account

11 shall make such reports regarding such Account to the

12 Secretary and to the person for whose benefit the Account

13 is maintained with respect to contributions, distributions,

14 and such other matters as the Secretary may require

15 under regulations. The reports required by this subsection

16 shall be filed at such time and in such manner and fur17 nished to such persons at such time and in such manner

18 as may be required by such regulations.’’.

19 (b) TAX ON EXCESS CONTRIBUTIONS.—

20 (1) Subsection (a) of section 4973 of the Inter21 nal Revenue Code of 1986 (relating to tax on excess

22 contributions to certain tax-favored accounts and an23 nuities) is amended by striking ‘‘or’’ at the end of

24 paragraph (3), by redesignating paragraph (4) as
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1 paragraph (5), and by inserting after paragraph (3)

2 the following:

3 ‘‘(4) a FARRM Account (within the meaning of

4 section 468C(d)), or’’.

5 (2) Section 4973 of such Code, is amended by

6 adding at the end the following:

7 ‘‘(g) EXCESS CONTRIBUTIONS TO FARRM AC8 COUNTS.—For purposes of this section, in the case of a

9 FARRM Account (within the meaning of section

10 468C(d)), the term ‘excess contributions’ means the

11 amount by which the amount contributed for the taxable

12 year to the Account exceeds the amount which may be con13 tributed to the Account under section 468C(b) for such

14 taxable year. For purposes of this subsection, any con15 tribution which is distributed out of the FARRM Account

16 in a distribution to which section 468C(e)(2)(B) applies

17 shall be treated as an amount not contributed.’’.

18 (3) The section heading for section 4973 of

19 such Code is amended to read as follows:

20 ‘‘SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN AC21 COUNTS, ANNUITIES, ETC.’’.

22 (4) The table of sections for chapter 43 of such

23 Code is amended by striking the item relating to sec24 tion 4973 and inserting the following:

‘‘Sec. 4973. Excess contributions to certain accounts, annuities,

etc.’’.
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1 (c) TAX ON PROHIBITED TRANSACTIONS.—

2 (1) Subsection (c) of section 4975 of the Inter3 nal Revenue Code of 1986 (relating to tax on pro4 hibited transactions) is amended by adding at the

5 end the following:

6 ‘‘(6) SPECIAL RULE FOR FARRM ACCOUNTS.—

7 A person for whose benefit a FARRM Account

8 (within the meaning of section 468C(d)) is estab9 lished shall be exempt from the tax imposed by this

10 section with respect to any transaction concerning

11 such account (which would otherwise be taxable

12 under this section) if, with respect to such trans13 action, the account ceases to be a FARRM Account

14 by reason of the application of section 468C(f)(3)(A)

15 to such account.’’.

16 (2) Paragraph (1) of section 4975(e) of such

17 Code is amended by redesignating subparagraphs

18 (E) and (F) as subparagraphs (F) and (G), respec19 tively, and by inserting after subparagraph (D) the

20 following:

21 ‘‘(E) a FARRM Account described in sec22 tion 468C(d),’’.

23 (d) FAILURE TO PROVIDE REPORTS ON FARRM AC24 COUNTS.—Paragraph (2) of section 6693(a) of the Inter25 nal Revenue Code of 1986 (relating to failure to provide
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1 reports on certain tax-favored accounts or annuities) is

2 amended by redesignating subparagraphs (C) and (D) as

3 subparagraphs (D) and (E), respectively, and by inserting

4 after subparagraph (B) the following:

5 ‘‘(C) section 468C(g) (relating to FARRM

6 Accounts),’’.

7 (e) CLERICAL AMENDMENT.—The table of sections

8 for subpart C of part II of subchapter E of chapter 1 of

9 the Internal Revenue Code of 1986 is amended by insert10 ing after the item relating to section 468B the following:

‘‘Sec. 468C. Farm and Ranch Risk Management Accounts.’’.

11 (f) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after

13 December 31, 2000.

14 Subtitle B—Estate and Gift Tax

15 Relief

16 SEC. 111. REPEAL OF ESTATE, GIFT, AND GENERATION17 SKIPPING TAXES.

18 (a) IN GENERAL.—Subtitle B of the Internal Rev19 enue Code of 1986 is hereby repealed.

20 (b) EFFECTIVE DATE.—The repeal made by sub21 section (a) shall apply to the estates of decedents dying,

22 and gifts and generation-skipping transfers made, after

23 December 31, 2009.
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1 SEC. 112. TERMINATION OF STEP UP IN BASIS AT DEATH.

2 (a) TERMINATION OF APPLICATION OF SECTION

3 1014.—Section 1014 of the Internal Revenue Code of

4 1986 (relating to basis of property acquired from a dece5 dent) is amended by adding at the end the following:

6 ‘‘(f) TERMINATION.—In the case of a decedent dying

7 after December 31, 2009, this section shall not apply to

8 property for which basis is provided by section 1022.’’.

9 (b) CONFORMING AMENDMENT.—Subsection (a) of

10 section 1016 of the Internal Revenue Code of 1986 (relat11 ing to adjustments to basis) is amended by striking ‘‘and’’

12 at the end of paragraph (26), by striking the period at

13 the end of paragraph (27) and inserting ‘‘, and’’, and by

14 adding at the end the following:

15 ‘‘(28) to the extent provided in section 1022

16 (relating to basis for certain property acquired from

17 a decedent dying after December 31, 2009).’’.

18 SEC. 113. CARRYOVER BASIS AT DEATH.

19 (a) GENERAL RULE.—Part II of subchapter O of

20 chapter 1 of the Internal Revenue Code of 1986 (relating

21 to basis rules of general application) is amended by insert22 ing after section 1021 the following new section:
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1 ‘‘SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY

2 ACQUIRED FROM A DECEDENT DYING AFTER

3 DECEMBER 31, 2009.

4 ‘‘(a) CARRYOVER BASIS.—Except as otherwise pro5 vided in this section, the basis of carryover basis property

6 in the hands of a person acquiring such property from a

7 decedent shall be determined under section 1015.

8 ‘‘(b) CARRYOVER BASIS PROPERTY DEFINED.—

9 ‘‘(1) IN GENERAL.—For purposes of this sec10 tion, the term ‘carryover basis property’ means any

11 property—

12 ‘‘(A) which is acquired from or passed

13 from a decedent who died after December 31,

14 2009, and

15 ‘‘(B) which is not excluded pursuant to

16 paragraph (2).

17 The property taken into account under subpara18 graph (A) shall be determined under section 1014(b)

19 without regard to subparagraph (A) of the last sen20 tence of paragraph (9) thereof.

21 ‘‘(2) CERTAIN PROPERTY NOT CARRYOVER

22 BASIS PROPERTY.—The term ‘carryover basis prop23 erty’ does not include—

24 ‘‘(A) any item of gross income in respect

25 of a decedent described in section 691,
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1 ‘‘(B) property of the decedent to the extent

2 that the aggregate adjusted fair market value

3 of such property does not exceed $1,300,000,

4 and

5 ‘‘(C) property which was acquired from the

6 decedent by the surviving spouse of the dece7 dent (and which would be carryover basis prop8 erty without regard to this subparagraph) but

9 only if the value of such property would have

10 been deductible from the value of the taxable

11 estate of the decedent under section 2056, as in

12 effect on the day before the date of the enact13 ment of the Rural America Prosperity Act of

14 2000.

15 For purposes of this subsection, the term ‘adjusted

16 fair market value’ means, with respect to any prop17 erty, fair market value reduced by any indebtedness

18 secured by such property.

19 ‘‘(3) LIMITATION ON EXCEPTION FOR PROP20 ERTY ACQUIRED BY SURVIVING SPOUSE.—The ad21 justed fair market value of property which is not

22 carryover basis property by reason of paragraph

23 (2)(C) shall not exceed $3,000,000.
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1 ‘‘(4) ALLOCATION OF EXCEPTED AMOUNTS.—

2 The executor shall allocate the limitations under

3 paragraphs (2)(B) and (3).

4 ‘‘(5) INFLATION ADJUSTMENT OF EXCEPTED

5 AMOUNTS.—In the case of decedents dying in a cal6 endar year after 2010, the dollar amounts in para7 graphs (2)(B) and (3) shall each be increased by an

8 amount equal to the product of—

9 ‘‘(A) such dollar amount, and

10 ‘‘(B) the cost-of-living adjustment deter11 mined under section 1(f)(3) for such calendar

12 year, determined by substituting ‘2009’ for

13 ‘1992’ in subparagraph (B) thereof.

14 If any increase determined under the preceding sen15 tence is not a multiple of $10,000, such increase

16 shall be rounded to the nearest multiple of $10,000.

17 ‘‘(c) REGULATIONS.—The Secretary shall prescribe

18 such regulations as may be necessary to carry out the pur19 poses of this section.’’.

20 (b) MISCELLANEOUS AMENDMENTS RELATED TO

21 CARRYOVER BASIS.—

22 (1) CAPITAL GAIN TREATMENT FOR INHERITED

23 ART WORK OR SIMILAR PROPERTY.—

24 (A) IN GENERAL.—Subparagraph (C) of

25 section 1221(a)(3) of the Internal Revenue
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1 Code of 1986 (defining capital asset) is amend2 ed by inserting ‘‘(other than by reason of sec3 tion 1022)’’ after ‘‘is determined’’.

4 (B) COORDINATION WITH SECTION 170.—

5 Paragraph (1) of section 170(e) of such Code

6 (relating to certain contributions of ordinary in7 come and capital gain property) is amended by

8 adding at the end the following: ‘‘For purposes

9 of this paragraph, the determination of whether

10 property is a capital asset shall be made with11 out regard to the exception contained in section

12 1221(a)(3)(C) for basis determined under sec13 tion 1022.’’.

14 (2) DEFINITION OF EXECUTOR.—Section

15 7701(a) of such Code (relating to definitions) is

16 amended by adding at the end the following:

17 ‘‘(47) EXECUTOR.—The term ‘executor’ means

18 the executor or administrator of the decedent, or, if

19 there is no executor or administrator appointed,

20 qualified, and acting within the United States, then

21 any person in actual or constructive possession of

22 any property of the decedent.’’.

23 (3) CLERICAL AMENDMENT.—The table of sec24 tions for part II of subchapter O of chapter 1 of
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1 such Code is amended by adding at the end the fol2 lowing new item:

‘‘Sec. 1022. Carryover basis for certain property acquired from a

decedent dying after December 31, 2009.’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to estates of decedents dying after

5 December 31, 2009.

6 SEC. 114. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT

7 TAX RATES.

8 (a) MAXIMUM RATE OF TAX REDUCED TO 50 PER9 CENT.—

10 (1) IN GENERAL.—The table contained in sec11 tion 2001(c)(1) of the Internal Revenue Code of

12 1986 is amended by striking the two highest brack13 ets and inserting the following:

‘‘Over $2,500,000 .......................... $1,025,800, plus 50% of the excess

over $2,500,000.’’.

14 (2) PHASE-IN OF REDUCED RATE.—Subsection

15 (c) of section 2001 of such Code is amended by add16 ing at the end the following new paragraph:

17 ‘‘(3) PHASE-IN OF REDUCED RATE.—In the

18 case of decedents dying, and gifts made, during

19 2001, the last item in the table contained in para20 graph (1) shall be applied by substituting ‘53%’ for

21 ‘50%’.’’.

22 (b) REPEAL OF PHASEOUT OF GRADUATED

23 RATES.—Subsection (c) of section 2001 of the Internal
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1 Revenue Code of 1986 is amended by striking paragraph

2 (2) and redesignating paragraph (3), as added by sub3 section (a), as paragraph (2).

4 (c) ADDITIONAL REDUCTIONS OF RATES OF TAX.—

5 Subsection (c) of section 2001 of the Internal Revenue

6 Code of 1986, as so amended, is amended by adding at

7 the end the following new paragraph:

8 ‘‘(3) PHASEDOWN OF TAX.—In the case of es9 tates of decedents dying, and gifts made, during any

10 calendar year after 2002 and before 2010—

11 ‘‘(A) IN GENERAL.—Except as provided in

12 subparagraph (C), the tentative tax under this

13 subsection shall be determined by using a table

14 prescribed by the Secretary (in lieu of using the

15 table contained in paragraph (1)) which is the

16 same as such table; except that—

17 ‘‘(i) each of the rates of tax shall be

18 reduced by the number of percentage

19 points determined under subparagraph

20 (B), and

21 ‘‘(ii) the amounts setting forth the tax

22 shall be adjusted to the extent necessary to

23 reflect the adjustments under clause (i).

24 ‘‘(B) PERCENTAGE POINTS OF REDUC25 TION.—
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The number of

‘‘For calendar year: percentage points is:

2003 ............................................................................. 1.0

2004 ............................................................................. 2.0

2005 ............................................................................. 3.0

2006 ............................................................................. 4.0

2007 ............................................................................. 5.5

2008 ............................................................................. 7.5

2009 ............................................................................. 9.5.

1 ‘‘(C) COORDINATION WITH INCOME TAX

2 RATES.—The reductions under subparagraph

3 (A)—

4 ‘‘(i) shall not reduce any rate under

5 paragraph (1) below the lowest rate in sec6 tion 1(c), and

7 ‘‘(ii) shall not reduce the highest rate

8 under paragraph (1) below the highest rate

9 in section 1(c).

10 ‘‘(D) COORDINATION WITH CREDIT FOR

11 STATE DEATH TAXES.—Rules similar to the

12 rules of subparagraph (A) shall apply to the

13 table contained in section 2011(b) except that

14 the Secretary shall prescribe percentage point

15 reductions which maintain the proportionate re16 lationship (as in effect before any reduction

17 under this paragraph) between the credit under

18 section 2011 and the tax rates under subsection

19 (c).’’.

20 (d) EFFECTIVE DATES.—
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1 (1) SUBSECTIONS (a) AND (b).—The amend2 ments made by subsections (a) and (b) shall apply

3 to estates of decedents dying, and gifts made, after

4 December 31, 2000.

5 (2) SUBSECTION (c).—The amendment made by

6 subsection (c) shall apply to estates of decedents

7 dying, and gifts made, after December 31, 2002.

8 SEC. 115. UNIFIED CREDIT AGAINST ESTATE AND GIFT

9 TAXES REPLACED WITH UNIFIED EXEMPTION

10 AMOUNT.

11 (a) IN GENERAL.—

12 (1) ESTATE TAX.—Subsection (b) of section

13 2001 of the Internal Revenue Code of 1986 (relating

14 to computation of tax) is amended to read as fol15 lows:

16 ‘‘(b) COMPUTATION OF TAX.—

17 ‘‘(1) IN GENERAL.—The tax imposed by this

18 section shall be the amount equal to the excess (if

19 any) of—

20 ‘‘(A) the tentative tax determined under

21 paragraph (2), over

22 ‘‘(B) the aggregate amount of tax which

23 would have been payable under chapter 12 with

24 respect to gifts made by the decedent after De25 cember 31, 1976, if the provisions of subsection
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1 (c) (as in effect at the decedent’s death) had

2 been applicable at the time of such gifts.

3 ‘‘(2) TENTATIVE TAX.—For purposes of para4 graph (1), the tentative tax determined under this

5 paragraph is a tax computed under subsection (c) on

6 the excess of—

7 ‘‘(A) the sum of—

8 ‘‘(i) the amount of the taxable estate,

9 and

10 ‘‘(ii) the amount of the adjusted tax11 able gifts, over

12 ‘‘(B) the exemption amount for the cal13 endar year in which the decedent died.

14 ‘‘(3) EXEMPTION AMOUNT.—For purposes of

15 paragraph (2), the term ‘exemption amount’ means

16 the amount determined in accordance with the fol17 lowing table:

‘‘In the case of The exemption

calendar year: amount is:

2001 .......................................................................... $675,000

2002 and 2003 .......................................................... $700,000

2004 .......................................................................... $850,000

2005 .......................................................................... $950,000

2006 or thereafter ..................................................... $1,000,000.

18 ‘‘(4) ADJUSTED TAXABLE GIFTS.—For pur19 poses of paragraph (2), the term ‘adjusted taxable

20 gifts’ means the total amount of the taxable gifts

21 (within the meaning of section 2503) made by the

22 decedent after December 31, 1976, other than gifts
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1 which are includible in the gross estate of the dece2 dent.’’.

3 (2) GIFT TAX.—Subsection (a) of section 2502

4 of such Code (relating to computation of tax) is

5 amended to read as follows:

6 ‘‘(a) COMPUTATION OF TAX.—

7 ‘‘(1) IN GENERAL.—The tax imposed by section

8 2501 for each calendar year shall be the amount

9 equal to the excess (if any) of—

10 ‘‘(A) the tentative tax determined under

11 paragraph (2), over

12 ‘‘(B) the tax paid under this section for all

13 prior calendar periods.

14 ‘‘(2) TENTATIVE TAX.—For purposes of para15 graph (1), the tentative tax determined under this

16 paragraph for a calendar year is a tax computed

17 under section 2001(c) on the excess of—

18 ‘‘(A) the aggregate sum of the taxable gifts

19 for such calendar year and for each of the pre20 ceding calendar periods, over

21 ‘‘(B) the exemption amount under section

22 2001(b)(3) for such calendar year.’’.

23 (b) REPEAL OF UNIFIED CREDITS.—
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1 (1) Section 2010 of the Internal Revenue Code

2 of 1986 (relating to unified credit against estate

3 tax) is hereby repealed.

4 (2) Section 2505 of such Code (relating to uni5 fied credit against gift tax) is hereby repealed.

6 (c) CONFORMING AMENDMENTS.—

7 (1)(A) Subsection (b) of section 2011 of the In8 ternal Revenue Code of 1986 is amended—

9 (i) by striking ‘‘adjusted’’ in the table; and

10 (ii) by striking the last sentence.

11 (B) Subsection (f) of section 2011 of such Code

12 is amended by striking ‘‘, reduced by the amount of

13 the unified credit provided by section 2010’’.

14 (2) Subsection (a) of section 2012 of such Code

15 is amended by striking ‘‘and the unified credit pro16 vided by section 2010’’.

17 (3) Subparagraph (A) of section 2013(c)(1) of

18 such Code is amended by striking ‘‘2010,’’.

19 (4) Paragraph (2) of section 2014(b) of such

20 Code is amended by striking ‘‘2010, 2011,’’ and in21 serting ‘‘2011’’.

22 (5) Clause (ii) of section 2056A(b)(12)(C) of

23 such Code is amended to read as follows:

24 ‘‘(ii) to treat any reduction in the tax

25 imposed by paragraph (1)(A) by reason of
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1 the credit allowable under section 2010 (as

2 in effect on the day before the date of the

3 enactment of the Rural America Prosperity

4 Act of 2000) or the exemption amount al5 lowable under section 2001(b) with respect

6 to the decedent as a credit under section

7 2505 (as so in effect) or exemption under

8 section 2521 (as the case may be) allow9 able to such surviving spouse for purposes

10 of determining the amount of the exemp11 tion allowable under section 2521 with re12 spect to taxable gifts made by the sur13 viving spouse during the year in which the

14 spouse becomes a citizen or any subse15 quent year,’’.

16 (6) Subsection (a) of section 2057 of such Code

17 is amended by striking paragraphs (2) and (3) and

18 inserting the following new paragraph:

19 ‘‘(2) MAXIMUM DEDUCTION.—The deduction al20 lowed by this section shall not exceed the excess of

21 $1,300,000 over the exemption amount (as defined

22 in section 2001(b)(3)).’’.

23 (7)(A) Subsection (b) of section 2101 of such

24 Code is amended to read as follows:

25 ‘‘(b) COMPUTATION OF TAX.—
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1 ‘‘(1) IN GENERAL.—The tax imposed by this

2 section shall be the amount equal to the excess (if

3 any) of—

4 ‘‘(A) the tentative tax determined under

5 paragraph (2), over

6 ‘‘(B) a tentative tax computed under sec7 tion 2001(c) on the amount of the adjusted tax8 able gifts.

9 ‘‘(2) TENTATIVE TAX.—For purposes of para10 graph (1), the tentative tax determined under this

11 paragraph is a tax computed under section 2001(c)

12 on the excess of—

13 ‘‘(A) the sum of—

14 ‘‘(i) the amount of the taxable estate,

15 and

16 ‘‘(ii) the amount of the adjusted tax17 able gifts, over

18 ‘‘(B) the exemption amount for the cal19 endar year in which the decedent died.

20 ‘‘(3) EXEMPTION AMOUNT.—

21 ‘‘(A) IN GENERAL.—The term ‘exemption

22 amount’ means $60,000.

23 ‘‘(B) RESIDENTS OF POSSESSIONS OF THE

24 UNITED STATES.—In the case of a decedent

25 who is considered to be a nonresident not a cit-
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1 izen of the United States under section 2209,

2 the exemption amount under this paragraph

3 shall be the greater of—

4 ‘‘(i) $60,000, or

5 ‘‘(ii) that proportion of $175,000

6 which the value of that part of the dece7 dent’s gross estate which at the time of his

8 death is situated in the United States

9 bears to the value of his entire gross estate

10 wherever situated.

11 ‘‘(C) SPECIAL RULES.—

12 ‘‘(i) COORDINATION WITH TREA13 TIES.—To the extent required under any

14 treaty obligation of the United States, the

15 exemption amount allowed under this para16 graph shall be equal to the amount which

17 bears the same ratio to the exemption

18 amount under section 2001(b)(3) (for the

19 calendar year in which the decedent died)

20 as the value of the part of the decedent’s

21 gross estate which at the time of his death

22 is situated in the United States bears to

23 the value of his entire gross estate wher24 ever situated. For purposes of the pre25 ceding sentence, property shall not be
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1 treated as situated in the United States if

2 such property is exempt from the tax im3 posed by this subchapter under any treaty

4 obligation of the United States.

5 ‘‘(ii) COORDINATION WITH GIFT TAX

6 EXEMPTION AND UNIFIED CREDIT.—If an

7 exemption has been allowed under section

8 2521 (or a credit has been allowed under

9 section 2505 as in effect on the day before

10 the date of the enactment of the Rural

11 America Prosperity Act of 2000) with re12 spect to any gift made by the decedent,

13 each dollar amount contained in subpara14 graph (A) or (B) or the exemption amount

15 applicable under clause (i) of this subpara16 graph (whichever applies) shall be reduced

17 by the exemption so allowed under section

18 2521 (or, in the case of such a credit, by

19 the amount of the gift for which the credit

20 was so allowed).’’.

21 (8) Section 2102 of such Code is amended by

22 striking subsection (c).

23 (9)(A) Subsection (a) of section 2107 of such

24 Code is amended by adding at the end the following

25 new paragraph:
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1 ‘‘(3) LIMITATION ON EXEMPTION AMOUNT.—

2 Subparagraphs (B) and (C) of section 2101(b)(3)

3 shall not apply in applying section 2101 for purposes

4 of this section.’’.

5 (B) Subsection (c) of section 2107 of such Code

6 is amended—

7 (i) by striking paragraph (1) and by redes8 ignating paragraphs (2) and (3) as paragraphs

9 (1) and (2), respectively, and

10 (ii) by striking the second sentence of

11 paragraph (2) (as so redesignated).

12 (10) Paragraph (1) of section 6018(a) of such

13 Code is amended by striking ‘‘the applicable exclu14 sion amount in effect under section 2010(c)’’ and in15 serting ‘‘the exemption amount under section

16 2001(b)(3)’’.

17 (11) Subparagraph (A) of section 6601(j)(2) of

18 such Code is amended to read as follows:

19 ‘‘(A) the amount of the tentative tax which

20 would be determined under the rate schedule

21 set forth in section 2001(c) if the amount with

22 respect to which such tentative tax is to be

23 computed were $1,000,000, or’’.
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1 (12) The table of sections for part II of sub2 chapter A of chapter 11 of such Code is amended by

3 striking the item relating to section 2010.

4 (13) The table of sections for subchapter A of

5 chapter 12 of such Code is amended by striking the

6 item relating to section 2505.

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section—

9 (1) insofar as they relate to the tax imposed by

10 chapter 11 of the Internal Revenue Code of 1986,

11 shall apply to estates of decedents dying after De12 cember 31, 2000, and

13 (2) insofar as they relate to the tax imposed by

14 chapter 12 of such Code, shall apply to gifts made

15 after December 31, 2000.

16 SEC. 116. DEEMED ALLOCATION OF GST EXEMPTION TO

17 LIFETIME TRANSFERS TO TRUSTS; RETRO18 ACTIVE ALLOCATIONS.

19 (a) IN GENERAL.—Section 2632 of the Internal Rev20 enue Code of 1986 (relating to special rules for allocation

21 of GST exemption) is amended by redesignating sub22 section (c) as subsection (e) and by inserting after sub23 section (b) the following new subsections:

24 ‘‘(c) DEEMED ALLOCATION TO CERTAIN LIFETIME

25 TRANSFERS TO GST TRUSTS.—
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1 ‘‘(1) IN GENERAL.—If any individual makes an

2 indirect skip during such individual’s lifetime, any

3 unused portion of such individual’s GST exemption

4 shall be allocated to the property transferred to the

5 extent necessary to make the inclusion ratio for such

6 property zero. If the amount of the indirect skip ex7 ceeds such unused portion, the entire unused portion

8 shall be allocated to the property transferred.

9 ‘‘(2) UNUSED PORTION.—For purposes of para10 graph (1), the unused portion of an individual’s

11 GST exemption is that portion of such exemption

12 which has not previously been—

13 ‘‘(A) allocated by such individual,

14 ‘‘(B) treated as allocated under subsection

15 (b) with respect to a direct skip occurring dur16 ing or before the calendar year in which the in17 direct skip is made, or

18 ‘‘(C) treated as allocated under paragraph

19 (1) with respect to a prior indirect skip.

20 ‘‘(3) DEFINITIONS.—

21 ‘‘(A) INDIRECT SKIP.—For purposes of

22 this subsection, the term ‘indirect skip’ means

23 any transfer of property (other than a direct

24 skip) subject to the tax imposed by chapter 12

25 made to a GST trust.
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1 ‘‘(B) GST TRUST.—The term ‘GST trust’

2 means a trust that could have a generation3 skipping transfer with respect to the transferor

4 unless—

5 ‘‘(i) the trust instrument provides that

6 more than 25 percent of the trust corpus

7 must be distributed to or may be with8 drawn by one or more individuals who are

9 non-skip persons—

10 ‘‘(I) before the date that the indi11 vidual attains age 46,

12 ‘‘(II) on or before one or more

13 dates specified in the trust instrument

14 that will occur before the date that

15 such individual attains age 46, or

16 ‘‘(III) upon the occurrence of an

17 event that, in accordance with regula18 tions prescribed by the Secretary, may

19 reasonably be expected to occur before

20 the date that such individual attains

21 age 46;

22 ‘‘(ii) the trust instrument provides

23 that more than 25 percent of the trust cor24 pus must be distributed to or may be with25 drawn by one or more individuals who are
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1 non-skip persons and who are living on the

2 date of death of another person identified

3 in the instrument (by name or by class)

4 who is more than 10 years older than such

5 individuals;

6 ‘‘(iii) the trust instrument provides

7 that, if one or more individuals who are

8 non-skip persons die on or before a date or

9 event described in clause (i) or (ii), more

10 than 25 percent of the trust corpus either

11 must be distributed to the estate or estates

12 of one or more of such individuals or is

13 subject to a general power of appointment

14 exercisable by one or more of such individ15 uals;

16 ‘‘(iv) the trust is a trust any portion

17 of which would be included in the gross es18 tate of a non-skip person (other than the

19 transferor) if such person died immediately

20 after the transfer;

21 ‘‘(v) the trust is a charitable lead an22 nuity trust (within the meaning of section

23 2642(e)(3)(A)) or a charitable remainder

24 annuity trust or a charitable remainder
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1 unitrust (within the meaning of section

2 664(d)); or

3 ‘‘(vi) the trust is a trust with respect

4 to which a deduction was allowed under

5 section 2522 for the amount of an interest

6 in the form of the right to receive annual

7 payments of a fixed percentage of the net

8 fair market value of the trust property (de9 termined yearly) and which is required to

10 pay principal to a non-skip person if such

11 person is alive when the yearly payments

12 for which the deduction was allowed termi13 nate.

14 For purposes of this subparagraph, the value of

15 transferred property shall not be considered to

16 be includible in the gross estate of a non-skip

17 person or subject to a right of withdrawal by

18 reason of such person holding a right to with19 draw so much of such property as does not ex20 ceed the amount referred to in section 2503(b)

21 with respect to any transferor, and it shall be

22 assumed that powers of appointment held by

23 non-skip persons will not be exercised.

24 ‘‘(4) AUTOMATIC ALLOCATIONS TO CERTAIN

25 GST TRUSTS.—For purposes of this subsection, an
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1 indirect skip to which section 2642(f) applies shall

2 be deemed to have been made only at the close of

3 the estate tax inclusion period. The fair market

4 value of such transfer shall be the fair market value

5 of the trust property at the close of the estate tax

6 inclusion period.

7 ‘‘(5) APPLICABILITY AND EFFECT.—

8 ‘‘(A) IN GENERAL.—An individual—

9 ‘‘(i) may elect to have this subsection

10 not apply to—

11 ‘‘(I) an indirect skip, or

12 ‘‘(II) any or all transfers made

13 by such individual to a particular

14 trust, and

15 ‘‘(ii) may elect to treat any trust as a

16 GST trust for purposes of this subsection

17 with respect to any or all transfers made

18 by such individual to such trust.

19 ‘‘(B) ELECTIONS.—

20 ‘‘(i) ELECTIONS WITH RESPECT TO

21 INDIRECT SKIPS.—An election under sub22 paragraph (A)(i)(I) shall be deemed to be

23 timely if filed on a timely filed gift tax re24 turn for the calendar year in which the

25 transfer was made or deemed to have been
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1 made pursuant to paragraph (4) or on

2 such later date or dates as may be pre3 scribed by the Secretary.

4 ‘‘(ii) OTHER ELECTIONS.—An election

5 under clause (i)(II) or (ii) of subparagraph

6 (A) may be made on a timely filed gift tax

7 return for the calendar year for which the

8 election is to become effective.

9 ‘‘(d) RETROACTIVE ALLOCATIONS.—

10 ‘‘(1) IN GENERAL.—If—

11 ‘‘(A) a non-skip person has an interest or

12 a future interest in a trust to which any trans13 fer has been made,

14 ‘‘(B) such person—

15 ‘‘(i) is a lineal descendant of a grand16 parent of the transferor or of a grand17 parent of the transferor’s spouse or former

18 spouse, and

19 ‘‘(ii) is assigned to a generation below

20 the generation assignment of the trans21 feror, and

22 ‘‘(C) such person predeceases the trans23 feror,

24 then the transferor may make an allocation of any

25 of such transferor’s unused GST exemption to any
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1 previous transfer or transfers to the trust on a

2 chronological basis.

3 ‘‘(2) SPECIAL RULES.—If the allocation under

4 paragraph (1) by the transferor is made on a gift

5 tax return filed on or before the date prescribed by

6 section 6075(b) for gifts made within the calendar

7 year within which the non-skip person’s death

8 occurred—

9 ‘‘(A) the value of such transfer or trans10 fers for purposes of section 2642(a) shall be de11 termined as if such allocation had been made

12 on a timely filed gift tax return for each cal13 endar year within which each transfer was

14 made,

15 ‘‘(B) such allocation shall be effective im16 mediately before such death, and

17 ‘‘(C) the amount of the transferor’s unused

18 GST exemption available to be allocated shall

19 be determined immediately before such death.

20 ‘‘(3) FUTURE INTEREST.—For purposes of this

21 subsection, a person has a future interest in a trust

22 if the trust may permit income or corpus to be paid

23 to such person on a date or dates in the future.’’.

24 (b) CONFORMING AMENDMENT.—Paragraph (2) of

25 section 2632(b) of the Internal Revenue Code of 1986 is
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1 amended by striking ‘‘with respect to a direct skip’’ and

2 inserting ‘‘or subsection (c)(1)’’.

3 (c) EFFECTIVE DATES.—

4 (1) DEEMED ALLOCATION.—Section 2632(c) of

5 the Internal Revenue Code of 1986 (as added by

6 subsection (a)), and the amendment made by sub7 section (b), shall apply to transfers subject to chap8 ter 11 or 12 made after December 31, 1999, and to

9 estate tax inclusion periods ending after December

10 31, 1999.

11 (2) RETROACTIVE ALLOCATIONS.—Section

12 2632(d) of the Internal Revenue Code of 1986 (as

13 added by subsection (a)) shall apply to deaths of

14 non-skip persons occurring after December 31,

15 1999.

16 SEC. 117. SEVERING OF TRUSTS.

17 (a) IN GENERAL.—Subsection (a) of section 2642 of

18 the Internal Revenue Code of 1986 (relating to inclusion

19 ratio) is amended by adding at the end the following new

20 paragraph:

21 ‘‘(3) SEVERING OF TRUSTS.—

22 ‘‘(A) IN GENERAL.—If a trust is severed in

23 a qualified severance, the trusts resulting from

24 such severance shall be treated as separate

25 trusts thereafter for purposes of this chapter.
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1 ‘‘(B) QUALIFIED SEVERANCE.—For pur2 poses of subparagraph (A)—

3 ‘‘(i) IN GENERAL.—The term ‘quali4 fied severance’ means the division of a sin5 gle trust and the creation (by any means

6 available under the governing instrument

7 or under local law) of two or more trusts

8 if—

9 ‘‘(I) the single trust was divided

10 on a fractional basis, and

11 ‘‘(II) the terms of the new trusts,

12 in the aggregate, provide for the same

13 succession of interests of beneficiaries

14 as are provided in the original trust.

15 ‘‘(ii) TRUSTS WITH INCLUSION RATIO

16 GREATER THAN ZERO.—If a trust has an

17 inclusion ratio of greater than zero and

18 less than 1, a severance is a qualified sev19 erance only if the single trust is divided

20 into two trusts, one of which receives a

21 fractional share of the total value of all

22 trust assets equal to the applicable fraction

23 of the single trust immediately before the

24 severance. In such case, the trust receiving

25 such fractional share shall have an inclu-
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1 sion ratio of zero and the other trust shall

2 have an inclusion ratio of 1.

3 ‘‘(iii) REGULATIONS.—The term

4 ‘qualified severance’ includes any other

5 severance permitted under regulations pre6 scribed by the Secretary.

7 ‘‘(C) TIMING AND MANNER OF

8 SEVERANCES.—A severance pursuant to this

9 paragraph may be made at any time. The Sec10 retary shall prescribe by forms or regulations

11 the manner in which the qualified severance

12 shall be reported to the Secretary.’’.

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to severances after December 31,

15 1999.

16 SEC. 118. MODIFICATION OF CERTAIN VALUATION RULES.

17 (a) GIFTS FOR WHICH GIFT TAX RETURN FILED OR

18 DEEMED ALLOCATION MADE.—Paragraph (1) of section

19 2642(b) of the Internal Revenue Code of 1986 (relating

20 to valuation rules, etc.) is amended to read as follows:

21 ‘‘(1) GIFTS FOR WHICH GIFT TAX RETURN

22 FILED OR DEEMED ALLOCATION MADE.—If the allo23 cation of the GST exemption to any transfers of

24 property is made on a gift tax return filed on or be25 fore the date prescribed by section 6075(b) for such
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1 transfer or is deemed to be made under section 2632

2 (b)(1) or (c)(1)—

3 ‘‘(A) the value of such property for pur4 poses of subsection (a) shall be its value as fi5 nally determined for purposes of chapter 12

6 (within the meaning of section 2001(f)(2)), or,

7 in the case of an allocation deemed to have been

8 made at the close of an estate tax inclusion pe9 riod, its value at the time of the close of the es10 tate tax inclusion period, and

11 ‘‘(B) such allocation shall be effective on

12 and after the date of such transfer, or, in the

13 case of an allocation deemed to have been made

14 at the close of an estate tax inclusion period, on

15 and after the close of such estate tax inclusion

16 period.’’.

17 (b) TRANSFERS AT DEATH.—Subparagraph (A) of

18 section 2642(b)(2) of the Internal Revenue Code of 1986

19 is amended to read as follows:

20 ‘‘(A) TRANSFERS AT DEATH.—If property

21 is transferred as a result of the death of the

22 transferor, the value of such property for pur23 poses of subsection (a) shall be its value as fi24 nally determined for purposes of chapter 11; ex25 cept that, if the requirements prescribed by the
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1 Secretary respecting allocation of post-death

2 changes in value are not met, the value of such

3 property shall be determined as of the time of

4 the distribution concerned.’’.

5 (c) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to transfers subject to chapter 11

7 or 12 of the Internal Revenue Code of 1986 made after

8 December 31, 1999.

9 SEC. 119. RELIEF PROVISIONS.

10 (a) IN GENERAL.—Section 2642 of the Internal Rev11 enue Code of 1986 is amended by adding at the end the

12 following new subsection:

13 ‘‘(g) RELIEF PROVISIONS.—

14 ‘‘(1) RELIEF FROM LATE ELECTIONS.—

15 ‘‘(A) IN GENERAL.—The Secretary shall by

16 regulation prescribe such circumstances and

17 procedures under which extensions of time will

18 be granted to make—

19 ‘‘(i) an allocation of GST exemption

20 described in paragraph (1) or (2) of sub21 section (b), and

22 ‘‘(ii) an election under subsection

23 (b)(3) or (c)(5) of section 2632.

24 Such regulations shall include procedures for

25 requesting comparable relief with respect to
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1 transfers made before the date of the enactment

2 of this paragraph.

3 ‘‘(B) BASIS FOR DETERMINATIONS.—In

4 determining whether to grant relief under this

5 paragraph, the Secretary shall take into ac6 count all relevant circumstances, including evi7 dence of intent contained in the trust instru8 ment or instrument of transfer and such other

9 factors as the Secretary deems relevant. For

10 purposes of determining whether to grant relief

11 under this paragraph, the time for making the

12 allocation (or election) shall be treated as if not

13 expressly prescribed by statute.

14 ‘‘(2) SUBSTANTIAL COMPLIANCE.—An alloca15 tion of GST exemption under section 2632 that

16 demonstrates an intent to have the lowest possible

17 inclusion ratio with respect to a transfer or a trust

18 shall be deemed to be an allocation of so much of

19 the transferor’s unused GST exemption as produces

20 the lowest possible inclusion ratio. In determining

21 whether there has been substantial compliance, all

22 relevant circumstances shall be taken into account,

23 including evidence of intent contained in the trust

24 instrument or instrument of transfer and such other

25 factors as the Secretary deems relevant.’’.
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1 (b) EFFECTIVE DATES.—

2 (1) RELIEF FROM LATE ELECTIONS.—Section

3 2642(g)(1) of the Internal Revenue Code of 1986

4 (as added by subsection (a)) shall apply to requests

5 pending on, or filed after, December 31, 1999.

6 (2) SUBSTANTIAL COMPLIANCE.—Section

7 2642(g)(2) of such Code (as so added) shall apply

8 to transfers subject to chapter 11 or 12 of the Inter9 nal Revenue Code of 1986 made after December 31,

10 1999. No implication is intended with respect to the

11 availability of relief from late elections or the appli12 cation of a rule of substantial compliance on or be13 fore such date.

14 SEC. 120. EXPANSION OF ESTATE TAX RULE FOR CON15 SERVATION EASEMENTS.

16 (a) WHERE LAND IS LOCATED.—

17 (1) IN GENERAL.—Clause (i) of section

18 2031(c)(8)(A) of the Internal Revenue Code of 1986

19 (defining land subject to a conservation easement) is

20 amended—

21 (A) by striking ‘‘25 miles’’ both places it

22 appears and inserting ‘‘50 miles’’; and

23 (B) striking ‘‘10 miles’’ and inserting ‘‘25

24 miles’’.
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1 (2) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to estates of decedents

3 dying after December 31, 1999.

4 (b) CLARIFICATION OF DATE FOR DETERMINING

5 VALUE OF LAND AND EASEMENT.—

6 (1) IN GENERAL.—Section 2031(c)(2) of the

7 Internal Revenue Code of 1986 (defining applicable

8 percentage) is amended by adding at the end the fol9 lowing new sentence: ‘‘The values taken into account

10 under the preceding sentence shall be such values as

11 of the date of the contribution referred to in para12 graph (8)(B).’’.

13 (2) EFFECTIVE DATE.—The amendment made

14 by this subsection shall apply to estates of decedents

15 dying after December 31, 1997.

16 TITLE II—STUDY OF COSTS OF

17 REGULATIONS ON FARMERS,

18 RANCHERS, AND FORESTERS

19 SEC. 201. DEFINITIONS.

20 In this title:

21 (1) REGULATION.—

22 (A) IN GENERAL.—The term ‘‘regulation’’

23 means the whole or a part of an agency state24 ment of general or particular applicability and
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1 future effect designed to implement, interpret,

2 or prescribe law or policy.

3 (B) EXCLUSION.—The term ‘‘regulation’’

4 does not include—

5 (i) the approval or prescription, on a

6 case-by-case or consolidated case basis, for

7 the future of rates, wages, corporations, or

8 financial structures or reorganizations

9 thereof, prices, facilities, appliances, serv10 ices or allowances therefor, or of valu11 ations, costs, or accounting, or practices

12 bearing on activities described in this

13 clause; or

14 (ii) the granting of an application for

15 a license, registration, or similar authority,

16 granting or recognizing an exemption,

17 granting a variance or petition for relief

18 from a regulatory requirement, or other

19 action relieving a restriction or taking any

20 action necessary to permit new or im21 proved applications of technology.

22 (2) LICENSE.—The term ‘‘license’’ means the

23 whole or part of an agency permit, certificate, ap24 proval, registration, charter, membership, statutory

25 exemption, or other form of permission.
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1 SEC. 202. COMPTROLLER GENERAL STUDY OF REGULA2 TIONS.

3 (a) DATA REVIEW AND COLLECTION.—The Comp4 troller General of the United States shall—

5 (1) conduct a review of existing Federal and

6 non-Federal studies and data regarding the cost to

7 farmers, ranchers, and foresters of complying with

8 existing or proposed Federal regulations directly af9 fecting farmers, ranchers, and foresters; and

10 (2) as necessary, obtain and analyze new data

11 concerning the costs to farmers, ranchers, and for12 esters of complying with Federal regulations pro13 posed as of June 30, 2000, directly affecting farm14 ers, ranchers, and foresters.

15 (b) USE OF DATA.—Using the studies and data re16 viewed and collected under subsection (a), the Comptroller

17 General shall—

18 (1) assess the overall costs to farmers, ranch19 ers, and foresters of complying with existing and

20 proposed Federal regulations directly affecting farm21 ers, ranchers, and foresters; and

22 (2) identify and recommend reasonable alter23 natives to those regulations that will achieve the ob24 jectives of the regulations at less cost to farmers,

25 ranchers, and foresters.
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1 (c) SUBMISSION OF RESULTS.—Not later than June

2 30, 2001, the Comptroller General shall submit to the Sec3 retary of Agriculture, the Committee on Agriculture, Nu4 trition, and Forestry of the Senate, and the Committee

5 on Agriculture of the House of Representatives the results

6 of the assessment conducted under subsection (b)(1) and

7 the recommendations prepared under subsection (b)(2).

8 SEC. 203. RESPONSE OF SECRETARY OF AGRICULTURE.

9 Not later than September 30, 2001, the Secretary of

10 Agriculture shall submit to the Committee on Agriculture,

11 Nutrition, and Forestry of the Senate, and the Committee

12 on Agriculture of the House of Representatives a report

13 responding to the recommendations of the Comptroller

14 General under section 202 regarding reasonable alter15 natives that could achieve the objectives of Federal regula16 tions at less cost to farmers, ranchers, and foresters.

17 TITLE III—EXTENSION OF

18 TRADE AUTHORITIES PROCE19 DURES FOR RECIPROCAL

20 TRADE AGREEMENTS

21 SEC. 301. SHORT TITLE.

22 This title may be cited as the ‘‘Reciprocal Trade

23 Agreement Authorities Act of 2000’’.
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1 SEC. 302. TRADE NEGOTIATING OBJECTIVES.

2 (a) OVERALL TRADE NEGOTIATING OBJECTIVES.—

3 The overall trade negotiating objectives of the United

4 States for agreements subject to the provisions of section

5 303 are—

6 (1) to obtain more open, equitable, and recip7 rocal market access;

8 (2) to obtain the reduction or elimination of

9 barriers and distortions that are directly related to

10 trade and that decrease market opportunities for

11 United States exports or otherwise distort United

12 States trade;

13 (3) to further strengthen the system of inter14 national trading disciplines and procedures, includ15 ing dispute settlement; and

16 (4) to foster economic growth, raise living

17 standards, and promote full employment in the

18 United States and to enhance the global economy.

19 (b) PRINCIPAL TRADE NEGOTIATING OBJECTIVES.—

20 (1) TRADE BARRIERS AND DISTORTIONS.—The

21 principal negotiating objectives of the United States

22 regarding trade barriers and other trade distortions

23 are—

24 (A) to expand competitive market opportu25 nities for United States exports and to obtain

26 fairer and more open conditions of trade by re-
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1 ducing or eliminating tariff and nontariff bar2 riers and policies and practices of foreign gov3 ernments directly related to trade that decrease

4 market opportunities for United States exports

5 or otherwise distort United States trade; and

6 (B) to obtain reciprocal tariff and non7 tariff barrier elimination agreements, with par8 ticular attention to those tariff categories cov9 ered in section 111(b) of the Uruguay Round

10 Agreements Act (19 U.S.C. 3521(b)).

11 (2) TRADE IN SERVICES.—The principal negoti12 ating objective of the United States regarding trade

13 in services is to reduce or eliminate barriers to inter14 national trade in services, including regulatory and

15 other barriers that deny national treatment or un16 reasonably restrict the establishment or operations

17 of service suppliers.

18 (3) FOREIGN INVESTMENT.—The principal ne19 gotiating objective of the United States regarding

20 foreign investment is to reduce or eliminate artificial

21 or trade-distorting barriers to trade related foreign

22 investment by—

23 (A) reducing or eliminating exceptions to

24 the principle of national treatment;
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1 (B) freeing the transfer of funds relating

2 to investments;

3 (C) reducing or eliminating performance

4 requirements and other unreasonable barriers

5 to the establishment and operation of invest6 ments;

7 (D) seeking to establish standards for ex8 propriation and compensation for expropriation,

9 consistent with United States legal principles

10 and practice; and

11 (E) providing meaningful procedures for

12 resolving investment disputes.

13 (4) INTELLECTUAL PROPERTY.—The principal

14 negotiating objectives of the United States regarding

15 trade-related intellectual property are—

16 (A) to further promote adequate and effec17 tive protection of intellectual property rights,

18 including through—

19 (i)(I) ensuring accelerated and full

20 implementation of the Agreement on

21 Trade-Related Aspects of Intellectual

22 Property Rights referred to in section

23 101(d)(15) of the Uruguay Round Agree24 ments Act (19 U.S.C. 3511(d)(15)), par25 ticularly with respect to United States in-
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1 dustries whose products are subject to the

2 lengthiest transition periods for full com3 pliance by developing countries with that

4 Agreement, and

5 (II) ensuring that the provisions of

6 any multilateral or bilateral trade agree7 ment entered into by the United States

8 provide protection at least as strong as the

9 protection afforded by chapter 17 of the

10 North American Free Trade Agreement

11 and the annexes thereto;

12 (ii) providing strong protection for

13 new and emerging technologies and new

14 methods of transmitting and distributing

15 products embodying intellectual property;

16 (iii) preventing or eliminating dis17 crimination with respect to matters affect18 ing the availability, acquisition, scope,

19 maintenance, use, and enforcement of in20 tellectual property rights; and

21 (iv) providing strong enforcement of

22 intellectual property rights, including

23 through accessible, expeditious, and effec24 tive civil, administrative, and criminal en25 forcement mechanisms; and
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1 (B) to secure fair, equitable, and non2 discriminatory market access opportunities for

3 United States persons that rely upon intellec4 tual property protection.

5 (5) TRANSPARENCY.—The principal negotiating

6 objective of the United States with respect to trans7 parency is to obtain broader application of the prin8 ciple of transparency through—

9 (A) increased and more timely public ac10 cess to information regarding trade issues and

11 the activities of international trade institutions;

12 and

13 (B) increased openness of dispute settle14 ment proceedings, including under the World

15 Trade Organization.

16 (6) RECIPROCAL TRADE IN AGRICULTURE.—

17 The principal negotiating objective of the United

18 States with respect to agriculture is to obtain com19 petitive opportunities for United States exports in

20 foreign markets substantially equivalent to the com21 petitive opportunities afforded foreign exports in

22 United States markets and to achieve fairer and

23 more open conditions of trade in bulk and value24 added commodities by—
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1 (A) reducing or eliminating, by a date cer2 tain, tariffs or other charges that decrease mar3 ket opportunities for United States exports—

4 (i) giving priority to those products

5 that are subject to significantly higher tar6 iffs or subsidy regimes of major producing

7 countries; and

8 (ii) providing reasonable adjustment

9 periods for United States import-sensitive

10 products, in close consultation with the

11 Congress on such products before initiating

12 tariff reduction negotiations;

13 (B) reducing or eliminating subsidies that

14 decrease market opportunities for United States

15 exports or unfairly distort agriculture markets

16 to the detriment of the United States;

17 (C) developing, strengthening, and clari18 fying rules and effective dispute settlement

19 mechanisms to eliminate practices that unfairly

20 decrease United States market access opportu21 nities or distort agricultural markets to the det22 riment of the United States, including—

23 (i) unfair or trade-distorting activities

24 of export state trading enterprises and

25 other administrative mechanisms, with em-
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1 phasis on requiring price transparency in

2 the operation of export state trading enter3 prises and such other mechanisms;

4 (ii) unjustified trade restrictions or

5 commercial requirements affecting new

6 technologies, including biotechnology;

7 (iii) unjustified sanitary or

8 phytosanitary restrictions, including those

9 not based on scientific principles in con10 travention of the Uruguay Round Agree11 ments;

12 (iv) other unjustified technical bar13 riers to trade; and

14 (v) restrictive rules in the administra15 tion of tariff rate quotas;

16 (D) improving import relief mechanisms to

17 recognize the unique characteristics of perish18 able agriculture;

19 (E) taking into account whether a party to

20 the negotiations has failed to adhere to the pro21 visions of already existing trade agreements

22 with the United States or has circumvented ob23 ligations under those agreements;

24 (F) taking into account whether a product

25 is subject to market distortions by reason of a
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1 failure of a major producing country to adhere

2 to the provisions of already existing trade

3 agreements with the United States or by the

4 circumvention by that country of its obligations

5 under those agreements; and

6 (G) otherwise ensuring that countries that

7 accede to the World Trade Organization have

8 made meaningful market liberalization commit9 ments in agriculture.

10 (7) LABOR, THE ENVIRONMENT, AND OTHER

11 MATTERS.—The principal negotiating objective of

12 the United States regarding labor, the environment,

13 and other matters is to address the following aspects

14 of foreign government policies and practices regard15 ing labor, the environment, and other matters that

16 are directly related to trade:

17 (A) To ensure that foreign labor, environ18 mental, health, or safety policies and practices

19 do not arbitrarily or unjustifiably discriminate

20 or serve as disguised barriers to trade.

21 (B) To ensure that foreign governments do

22 not derogate from or waive existing domestic

23 environmental, health, safety, or labor meas24 ures, including measures that deter exploitative

25 child labor, as an encouragement to gain com-
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1 petitive advantage in international trade or in2 vestment. Nothing in this subparagraph is in3 tended to address changes to a country’s laws

4 that are consistent with sound macroeconomic

5 development.

6 (8) WTO EXTENDED NEGOTIATIONS.—The

7 principal negotiating objectives of the United States

8 regarding trade in financial services are those set

9 forth in section 135(a) of the Uruguay Round

10 Agreements Act (19 U.S.C. 3555(a)), regarding

11 trade in civil aircraft are those set forth in section

12 135(c) of that Act, and regarding rules of origin are

13 the conclusion of an agreement described in section

14 132 of that Act (19 U.S.C. 3552).

15 (c) INTERNATIONAL ECONOMIC POLICY OBJEC16 TIVES.—

17 (1) IN GENERAL.—The President should take

18 into account the relationship between trade agree19 ments and other important priorities of the United

20 States and seek to ensure that the trade agreements

21 entered into by the United States complement and

22 reinforce other policy goals. The United States prior23 ities in this area include—

24 (A) seeking to ensure that trade and envi25 ronmental policies are mutually supportive;
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1 (B) seeking to protect and preserve the en2 vironment and enhance the international means

3 for doing so, while optimizing the use of the

4 world’s resources;

5 (C) promoting respect for worker rights

6 and the rights of children and an understanding

7 of the relationship between trade and worker

8 rights, particularly by working with the Inter9 national Labor Organization to encourage the

10 observance and enforcement of core labor

11 standards, including the prohibition on exploita12 tive child labor; and

13 (D) supplementing and strengthening

14 standards for protection of intellectual property

15 under conventions administered by international

16 organizations other than the World Trade Or17 ganization, expanding these conventions to

18 cover new and emerging technologies, and elimi19 nating discrimination and unreasonable excep20 tions or preconditions to such protection.

21 (2) APPLICABILITY OF TRADE AUTHORITIES

22 PROCEDURES.—Nothing in this subsection shall be

23 construed to authorize the use of the trade authori24 ties procedures described in section 303 to modify

25 United States law.
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1 (d) GUIDANCE FOR NEGOTIATORS.—

2 (1) DOMESTIC OBJECTIVES.—In pursuing the

3 negotiating objectives described in subsection (b),

4 the negotiators on behalf of the United States shall

5 take into account United States domestic objectives,

6 including the protection of health and safety, essen7 tial security, environmental, consumer, and employ8 ment opportunity interests, and the law and regula9 tions related thereto.

10 (2) CONSULTATIONS WITH CONGRESSIONAL AD11 VISERS AND ENFORCEMENT OF THE TRADE LAWS.—

12 In the course of negotiations conducted under this

13 title, the United States Trade Representative shall—

14 (A) consult closely and on a timely basis

15 with, and keep fully apprised of the negotia16 tions, the congressional advisers on trade policy

17 and negotiations appointed under section 161 of

18 the Trade Act of 1974; and

19 (B) preserve the ability of the United

20 States to enforce rigorously its trade laws, in21 cluding the antidumping and countervailing

22 duty laws, and avoid agreements which lessen

23 the effectiveness of domestic and international

24 disciplines on unfair trade, especially dumping

25 and subsidies, in order to ensure that United
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1 States workers, agricultural producers, and

2 firms can compete fully on fair terms and enjoy

3 the benefits of reciprocal trade concessions.

4 (e) ADHERENCE TO OBLIGATIONS UNDER URUGUAY

5 ROUND AGREEMENTS.—In determining whether to enter

6 into negotiations with a particular country, the President

7 shall take into account the extent to which that country

8 has implemented, or has accelerated the implementation

9 of, its obligations under the Uruguay Round Agreements.

10 SEC. 303. TRADE AGREEMENTS AUTHORITY.

11 (a) AGREEMENTS REGARDING TARIFF BARRIERS.—

12 (1) IN GENERAL.—Whenever the President de13 termines that one or more existing duties or other

14 import restrictions of any foreign country or the

15 United States are unduly burdening and restricting

16 the foreign trade of the United States and that the

17 purposes, policies, and objectives of this title will be

18 promoted thereby, the President—

19 (A) may enter into trade agreements with

20 foreign countries before—

21 (i) October 1, 2002, or

22 (ii) October 1, 2006, if trade authori23 ties procedures are extended under sub24 section (c), and
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1 (B) may, subject to paragraphs (2) and

2 (3), proclaim—

3 (i) such modification or continuance

4 of any existing duty,

5 (ii) such continuance of existing duty6 free or excise treatment, or

7 (iii) such additional duties,

8 as the President determines to be required or

9 appropriate to carry out any such trade agree10 ment. The President shall notify the Congress

11 of the President’s intention to enter into an

12 agreement under this subsection.

13 (2) LIMITATIONS.—No proclamation may be

14 made under paragraph (1) that—

15 (A) reduces any rate of duty (other than a

16 rate of duty that does not exceed 5 percent ad

17 valorem on the date of the enactment of this

18 Act) to a rate of duty which is less than 50 per19 cent of the rate of such duty that applies on

20 such date of enactment;

21 (B) reduces the rate of duty on an article

22 to take effect on a date that is more than 10

23 years after the first reduction that is pro24 claimed to carry out a trade agreement with re25 spect to such article; or
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1 (C) increases any rate of duty above the

2 rate that applied on January 1, 2000.

3 (3) AGGREGATE REDUCTION; EXEMPTION FROM

4 STAGING.—

5 (A) AGGREGATE REDUCTION.—Except as

6 provided in subparagraph (B), the aggregate re7 duction in the rate of duty on any article which

8 is in effect on any day pursuant to a trade

9 agreement entered into under paragraph (1)

10 shall not exceed the aggregate reduction which

11 would have been in effect on such day if—

12 (i) a reduction of 3 percent ad valo13 rem or a reduction of one-tenth of the total

14 reduction, whichever is greater, had taken

15 effect on the effective date of the first re16 duction proclaimed under paragraph (1) to

17 carry out such agreement with respect to

18 such article; and

19 (ii) a reduction equal to the amount

20 applicable under clause (i) had taken effect

21 at 1-year intervals after the effective date

22 of such first reduction.

23 (B) EXEMPTION FROM STAGING.—No

24 staging is required under subparagraph (A)

25 with respect to a duty reduction that is pro-
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1 claimed under paragraph (1) for an article of a

2 kind that is not produced in the United States.

3 The United States International Trade Com4 mission shall advise the President of the iden5 tity of articles that may be exempted from stag6 ing under this subparagraph.

7 (4) ROUNDING.—If the President determines

8 that such action will simplify the computation of re9 ductions under paragraph (3), the President may

10 round an annual reduction by an amount equal to

11 the lesser of—

12 (A) the difference between the reduction

13 without regard to this paragraph and the next

14 lower whole number; or

15 (B) one-half of 1 percent ad valorem.

16 (5) OTHER LIMITATIONS.—A rate of duty re17 duction that may not be proclaimed by reason of

18 paragraph (2) may take effect only if a provision au19 thorizing such reduction is included within an imple20 menting bill provided for under section 305 and that

21 bill is enacted into law.

22 (6) OTHER TARIFF MODIFICATIONS.—Notwith23 standing paragraphs (1)(B) and (2) through (5),

24 and subject to the consultation and layover require25 ments of section 115 of the Uruguay Round Agree-
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1 ments Act, the President may proclaim the modifica2 tion of any duty or staged rate reduction of any duty

3 set forth in Schedule XX, as defined in section 2(5)

4 of that Act, if the United States agrees to such

5 modification or staged rate reduction in a negotia6 tion for the reciprocal elimination or harmonization

7 of duties under the auspices of the World Trade Or8 ganization or as part of an interim agreement lead9 ing to the formation of a regional free-trade area.

10 (7) AUTHORITY UNDER URUGUAY ROUND

11 AGREEMENTS ACT NOT AFFECTED.—Nothing in this

12 subsection shall limit the authority provided to the

13 President under section 111(b) of the Uruguay

14 Round Agreements Act (19 U.S.C. 3521(b)).

15 (b) AGREEMENTS REGARDING TARIFF AND NON16 TARIFF BARRIERS.—

17 (1) IN GENERAL.—(A) Whenever the President

18 determines that—

19 (i) one or more existing duties or any other

20 import restriction of any foreign country or the

21 United States or any other barrier to, or other

22 distortion of, international trade unduly bur23 dens or restricts the foreign trade of the United

24 States or adversely affects the United States

25 economy, or
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1 (ii) the imposition of any such barrier or

2 distortion is likely to result in such a burden,

3 restriction, or effect,

4 and that the purposes, policies, and objectives of this

5 title will be promoted thereby, the President may

6 enter into a trade agreement described in subpara7 graph (B) during the period described in subpara8 graph (C).

9 (B) The President may enter into a trade

10 agreement under subparagraph (A) with foreign

11 countries providing for—

12 (i) the reduction or elimination of a duty,

13 restriction, barrier, or other distortion described

14 in subparagraph (A), or

15 (ii) the prohibition of, or limitation on the

16 imposition of, such barrier or other distortion.

17 (C) The President may enter into a trade

18 agreement under this paragraph before—

19 (i) October 1, 2002, or

20 (ii) October 1, 2006, if trade authorities

21 procedures are extended under subsection (c).

22 (2) CONDITIONS.—A trade agreement may be

23 entered into under this subsection only if such

24 agreement makes progress in meeting the applicable
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1 objectives described in section 302 and the President

2 satisfies the conditions set forth in section 304.

3 (3) BILLS QUALIFYING FOR TRADE AUTHORI4 TIES PROCEDURES.—The provisions of section 151

5 of the Trade Act of 1974 (in this title referred to

6 as ‘‘trade authorities procedures’’) apply to a bill of

7 either House of Congress consisting only of—

8 (A) a provision approving a trade agree9 ment entered into under this subsection and ap10 proving the statement of administrative action,

11 if any, proposed to implement such trade agree12 ment,

13 (B) provisions directly related to the prin14 cipal trade negotiating objectives set forth in

15 section 302(b) achieved in such trade agree16 ment, if those provisions are necessary for the

17 operation or implementation of United States

18 rights or obligations under such trade agree19 ment,

20 (C) provisions that define and clarify, or

21 provisions that are related to, the operation or

22 effect of the provisions of the trade agreement,

23 (D) provisions to provide adjustment as24 sistance to workers and firms adversely affected

25 by trade, and
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1 (E) provisions necessary for purposes of

2 complying with section 252 of the Balanced

3 Budget and Emergency Deficit Control Act of

4 1985 in implementing the trade agreement,

5 to the same extent as such section 151 applies to

6 implementing bills under that section. A bill to

7 which this subparagraph applies shall hereafter in

8 this title be referred to as an ‘‘implementing bill’’.

9 (c) EXTENSION DISAPPROVAL PROCESS FOR CON10 GRESSIONAL TRADE AUTHORITIES PROCEDURES.—

11 (1) IN GENERAL.—Except as provided in sec12 tion 305(b)—

13 (A) the trade authorities procedures apply

14 to implementing bills submitted with respect to

15 trade agreements entered into under subsection

16 (b) before October 1, 2002; and

17 (B) the trade authorities procedures shall

18 be extended to implementing bills submitted

19 with respect to trade agreements entered into

20 under subsection (b) after September 30, 2002,

21 and before October 1, 2006, if (and only if)—

22 (i) the President requests such exten23 sion under paragraph (2); and

24 (ii) neither House of the Congress

25 adopts an extension disapproval resolution
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1 under paragraph (5) before October 1,

2 2002.

3 (2) REPORT TO CONGRESS BY THE PRESI4 DENT.—If the President is of the opinion that the

5 trade authorities procedures should be extended to

6 implementing bills described in paragraph (1)(B),

7 the President shall submit to the Congress, not later

8 than July 1, 2002, a written report that contains a

9 request for such extension, together with—

10 (A) a description of all trade agreements

11 that have been negotiated under subsection (b)

12 and the anticipated schedule for submitting

13 such agreements to the Congress for approval;

14 (B) a description of the progress that has

15 been made in negotiations to achieve the pur16 poses, policies, and objectives of this title, and

17 a statement that such progress justifies the

18 continuation of negotiations; and

19 (C) a statement of the reasons why the ex20 tension is needed to complete the negotiations.

21 (3) REPORT TO CONGRESS BY THE ADVISORY

22 COMMITTEE.—The President shall promptly inform

23 the Advisory Committee for Trade Policy and Nego24 tiations established under section 135 of the Trade

25 Act of 1974 (19 U.S.C. 2155) of the President’s de-
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1 cision to submit a report to the Congress under

2 paragraph (2). The Advisory Committee shall submit

3 to the Congress as soon as practicable, but not later

4 than August 1, 2002, a written report that

5 contains—

6 (A) its views regarding the progress that

7 has been made in negotiations to achieve the

8 purposes, policies, and objectives of this title;

9 and

10 (B) a statement of its views, and the rea11 sons therefor, regarding whether the extension

12 requested under paragraph (2) should be ap13 proved or disapproved.

14 (4) REPORTS MAY BE CLASSIFIED.—The re15 ports submitted to the Congress under paragraphs

16 (2) and (3), or any portion of such reports, may be

17 classified to the extent the President determines ap18 propriate.

19 (5) EXTENSION DISAPPROVAL RESOLUTIONS.—

20 (A) For purposes of paragraph (1), the term ‘‘exten21 sion disapproval resolution’’ means a resolution of

22 either House of the Congress, the sole matter after

23 the resolving clause of which is as follows: ‘‘That the

24 ll disapproves the request of the President for

25 the extension, under section 303(c)(1)(B)(i) of the
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1 Reciprocal Trade Agreement Authorities Act of

2 2000, of the provisions of section 151 of the Trade

3 Act of 1974 to any implementing bill submitted with

4 respect to any trade agreement entered into under

5 section 303(b) of the Reciprocal Trade Agreement

6 Authorities Act of 2000 after September 30, 2002.’’,

7 with the blank space being filled with the name of

8 the resolving House of the Congress.

9 (B) Extension disapproval resolutions—

10 (i) may be introduced in either House of

11 the Congress by any member of such House;

12 and

13 (ii) shall be referred, in the House of Rep14 resentatives, to the Committee on Ways and

15 Means and, in addition, to the Committee on

16 Rules.

17 (C) The provisions of sections 152(d) and (e) of

18 the Trade Act of 1974 (19 U.S.C. 2192(d) and (e))

19 (relating to the floor consideration of certain resolu20 tions in the House and Senate) apply to extension

21 disapproval resolutions.

22 (D) It is not in order for—

23 (i) the Senate to consider any extension

24 disapproval resolution not reported by the Com25 mittee on Finance;
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1 (ii) the House of Representatives to con2 sider any extension disapproval resolution not

3 reported by the Committee on Ways and Means

4 and, in addition, by the Committee on Rules; or

5 (iii) either House of the Congress to con6 sider an extension disapproval resolution after

7 September 30, 2002.

8 SEC. 304. CONSULTATIONS.

9 (a) NOTICE AND CONSULTATION BEFORE NEGOTIA10 TION.—

11 (1) IN GENERAL.—The President, with respect

12 to any agreement that is subject to the provisions of

13 section 303(b), shall—

14 (A) provide, at least 90 calendar days be15 fore initiating negotiations, written notice to the

16 Congress of the President’s intention to enter

17 into the negotiations and set forth therein the

18 date the President intends to initiate such nego19 tiations, the specific United States objectives

20 for the negotiations, and whether the President

21 intends to seek an agreement, or changes to an

22 existing agreement; and

23 (B) before and after submission of the no24 tice, consult regarding the negotiations with the

25 Committee on Finance of the Senate and the
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1 Committee on Ways and Means of the House of

2 Representatives and such other committees of

3 the House and Senate as the President deems

4 appropriate.

5 (2) CONSULTATIONS REGARDING NEGOTIA6 TIONS ON CERTAIN OBJECTIVES.—

7 (A) CONSULTATION.—In addition to the

8 requirements set forth in paragraph (1), before

9 initiating negotiations with respect to a trade

10 agreement subject to section 303(b) where the

11 subject matter of such negotiations is directly

12 related to the principal trade negotiating objec13 tives set forth in section 302(b)(1) or section

14 302(b)(7), the President shall consult with the

15 Committee on Ways and Means of the House of

16 Representatives and the Committee on Finance

17 of the Senate and with the appropriate advisory

18 groups established under section 135 of the

19 Trade Act of 1974 with respect to such negotia20 tions.

21 (B) SCOPE.—The consultations described

22 in subparagraph (A) shall concern the manner

23 in which the negotiation will address the objec24 tive of reducing or eliminating a specific tariff

25 or nontariff barrier or foreign government pol-
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1 icy or practice directly related to trade that de2 creases market opportunities for United States

3 exports or otherwise distorts United States

4 trade.

5 (3) NEGOTIATIONS REGARDING AGRI6 CULTURE.—Before initiating negotiations the sub7 ject matter of which is directly related to the subject

8 matter under section 302(b)(6)(A) with any country,

9 the President shall assess whether United States

10 tariffs on agriculture products that were bound

11 under the Uruguay Round Agreements are lower

12 than the tariffs bound by that country. In addition,

13 the President shall consider whether the tariff levels

14 bound and applied throughout the world with respect

15 to imports from the United States are higher than

16 United States tariffs and whether the negotiation

17 provides an opportunity to address any such dis18 parity. The President shall consult with the Com19 mittee on Ways and Means and the Committee on

20 Agriculture of the House of Representatives and the

21 Committee on Finance and the Committee on Agri22 culture, Nutrition, and Forestry of the Senate con23 cerning the results of the assessment, whether it is

24 appropriate for the United States to agree to further

25 tariff reductions based on the conclusions reached in
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1 the assessment, and how all applicable negotiating

2 objectives will be met.

3 (b) CONSULTATION WITH CONGRESS BEFORE

4 AGREEMENTS ENTERED INTO.—

5 (1) CONSULTATION.—Before entering into any

6 trade agreement under section 303(b), the President

7 shall consult with—

8 (A) the Committee on Ways and Means of

9 the House of Representatives and the Com10 mittee on Finance of the Senate; and

11 (B) each other committee of the House

12 and the Senate, and each joint committee of the

13 Congress, which has jurisdiction over legislation

14 involving subject matters which would be af15 fected by the trade agreement.

16 (2) SCOPE.—The consultation described in

17 paragraph (1) shall include consultation with respect

18 to—

19 (A) the nature of the agreement;

20 (B) how and to what extent the agreement

21 will achieve the applicable purposes, policies,

22 and objectives of this title; and

23 (C) the implementation of the agreement

24 under section 305, including the general effect

25 of the agreement on existing laws.
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1 (c) ADVISORY COMMITTEE REPORTS.—The report

2 required under section 135(e)(1) of the Trade Act of 1974

3 regarding any trade agreement entered into under section

4 303(a) or (b) of this Act shall be provided to the Presi5 dent, the Congress, and the United States Trade Rep6 resentative not later than 30 days after the date on which

7 the President notifies the Congress under section

8 303(a)(1) or 305(a)(1)(A) of the President’s intention to

9 enter into the agreement.

10 SEC. 305. IMPLEMENTATION OF TRADE AGREEMENTS.

11 (a) IN GENERAL.—

12 (1) NOTIFICATION AND SUBMISSION.—Any

13 agreement entered into under section 303(b) shall

14 enter into force with respect to the United States if

15 (and only if)—

16 (A) the President, at least 90 calendar

17 days before the day on which the President en18 ters into the trade agreement, notifies the

19 House of Representatives and the Senate of the

20 President’s intention to enter into the agree21 ment, and promptly thereafter publishes notice

22 of such intention in the Federal Register;

23 (B) within 60 days after entering into the

24 agreement, the President submits to the Con25 gress a description of those changes to existing
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1 laws that the President considers would be re2 quired in order to bring the United States into

3 compliance with the agreement;

4 (C) after entering into the agreement, the

5 President submits a copy of the final legal text

6 of the agreement, together with—

7 (i) a draft of an implementing bill de8 scribed in section 303(b)(3);

9 (ii) a statement of any administrative

10 action proposed to implement the trade

11 agreement; and

12 (iii) the supporting information de13 scribed in paragraph (2); and

14 (D) the implementing bill is enacted into

15 law.

16 (2) SUPPORTING INFORMATION.—The sup17 porting information required under paragraph

18 (1)(C)(iii) consists of—

19 (A) an explanation as to how the imple20 menting bill and proposed administrative action

21 will change or affect existing law; and

22 (B) a statement—

23 (i) asserting that the agreement

24 makes progress in achieving the applicable
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1 purposes, policies, and objectives of this

2 title;

3 (ii) setting forth the reasons of the

4 President regarding—

5 (I) how and to what extent the

6 agreement makes progress in achiev7 ing the applicable purposes, policies,

8 and objectives referred to in clause (i);

9 (II) whether and how the agree10 ment changes provisions of an agree11 ment previously negotiated;

12 (III) how the agreement serves

13 the interests of United States com14 merce; and

15 (IV) how the implementing bill

16 meets the standards set forth in sec17 tion 303(b)(3).

18 (3) RECIPROCAL BENEFITS.—In order to en19 sure that a foreign country that is not a party to a

20 trade agreement entered into under section 303(b)

21 does not receive benefits under the agreement unless

22 the country is also subject to the obligations under

23 the agreement, the implementing bill submitted with

24 respect to the agreement shall provide that the bene25 fits and obligations under the agreement apply only
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1 to the parties to the agreement, if such application

2 is consistent with the terms of the agreement. The

3 implementing bill may also provide that the benefits

4 and obligations under the agreement do not apply

5 uniformly to all parties to the agreement, if such ap6 plication is consistent with the terms of the agree7 ment.

8 (b) LIMITATIONS ON TRADE AUTHORITIES PROCE9 DURES.—

10 (1) FOR LACK OF CONSULTATIONS.—

11 (A) IN GENERAL.—The trade authorities

12 procedures shall not apply to any implementing

13 bill submitted with respect to a trade agreement

14 entered into under section 303(b) if during the

15 60-day period beginning on the date that one

16 House of Congress agrees to a procedural dis17 approval resolution for lack of notice or con18 sultations with respect to that trade agreement,

19 the other House separately agrees to a proce20 dural disapproval resolution with respect to that

21 agreement.

22 (B) PROCEDURAL DISAPPROVAL RESOLU23 TION.—For purposes of this paragraph, the

24 term ‘‘procedural disapproval resolution’’ means

25 a resolution of either House of Congress, the
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1 sole matter after the resolving clause of which

2 is as follows: ‘‘That the President has failed or

3 refused to notify or consult (as the case may

4 be) with Congress in accordance with section

5 304 or 305 of the Reciprocal Trade Agreement

6 Authorities Act of 2000 on negotiations with re7 spect to, or entering into, a trade agreement to

8 which section 303(b) of that Act applies and,

9 therefore, the provisions of section 151 of the

10 Trade Act of 1974 shall not apply to any imple11 menting bill submitted with respect to that

12 trade agreement.’’.

13 (2) PROCEDURES FOR CONSIDERING RESOLU14 TIONS.—(A) Procedural disapproval resolutions—

15 (i) in the House of Representatives—

16 (I) shall be introduced by the chair17 man or ranking minority member of the

18 Committee on Ways and Means or the

19 chairman or ranking minority member of

20 the Committee on Rules;

21 (II) shall be referred to the Com22 mittee on Ways and Means and, in addi23 tion, to the Committee on Rules; and

24 (III) may not be amended by either

25 Committee; and
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1 (ii) in the Senate shall be original resolu2 tions of the Committee on Finance.

3 (B) The provisions of section 152(d) and (e) of

4 the Trade Act of 1974 (19 U.S.C. 2192(d) and (e))

5 (relating to the floor consideration of certain resolu6 tions in the House and Senate) apply to procedural

7 disapproval resolutions.

8 (C) It is not in order for the House of Rep9 resentatives to consider any procedural disapproval

10 resolution not reported by the Committee on Ways

11 and Means and, in addition, by the Committee on

12 Rules.

13 (c) RULES OF HOUSE OF REPRESENTATIVES AND

14 SENATE.—Subsection (b) of this section and section

15 103(c) are enacted by the Congress—

16 (1) as an exercise of the rulemaking power of

17 the House of Representatives and the Senate, re18 spectively, and as such are deemed a part of the

19 rules of each House, respectively, and such proce20 dures supersede other rules only to the extent that

21 they are inconsistent with such other rules; and

22 (2) with the full recognition of the constitu23 tional right of either House to change the rules (so

24 far as relating to the procedures of that House) at
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1 any time, in the same manner, and to the same ex2 tent as any other rule of that House.

3 SEC. 306. TREATMENT OF CERTAIN TRADE AGREEMENTS.

4 (a) CERTAIN AGREEMENTS.—Notwithstanding sec5 tion 303(b)(2), if an agreement to which section 303(b)

6 applies—

7 (1) is entered into under the auspices of the

8 World Trade Organization regarding trade in infor9 mation technology products,

10 (2) is entered into under the auspices of the

11 World Trade Organization regarding extended nego12 tiations on financial services as described in section

13 135(a) of the Uruguay Round Agreements Act (19

14 U.S.C. 3555(a)),

15 (3) is entered into under the auspices of the

16 World Trade Organization regarding the rules of ori17 gin work program described in Article 9 of the

18 Agreement on Rules of Origin referred to in section

19 101(d)(10) of the Uruguay Round Agreements Act

20 (19 U.S.C. 3511(d)(10)), or

21 (4) is entered into with Chile,

22 and results from negotiations that were commenced before

23 the date of the enactment of this Act, subsection (b) shall

24 apply.
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1 (b) TREATMENT OF AGREEMENTS.—In the case of

2 any agreement to which subsection (a) applies—

3 (1) the applicability of the trade authorities

4 procedures to implementing bills shall be determined

5 without regard to the requirements of section

6 304(a), and any procedural disapproval resolution

7 under section 305(b)(1)(B) shall not be in order on

8 the basis of a failure or refusal to comply with the

9 provisions of section 304(a); and

10 (2) the President shall consult regarding the

11 negotiations described in subsection (a) with the

12 committees described in section 304(a)(1)(B) as

13 soon as feasible after the enactment of this Act.

14 SEC. 307. CONFORMING AMENDMENTS.

15 (a) IN GENERAL.—Title I of the Trade Act of 1974

16 (19 U.S.C. 2111 et seq.) is amended as follows:

17 (1) IMPLEMENTING BILL.—

18 (A) Section 151(b)(1) (19 U.S.C.

19 2191(b)(1)) is amended by striking ‘‘section

20 1103(a)(1) of the Omnibus Trade and Competi21 tiveness Act of 1988, or section 282 of the Uru22 guay Round Agreements Act’’ and inserting

23 ‘‘section 282 of the Uruguay Round Agree24 ments Act, or section 305(a)(1) of the Recip-
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1 rocal Trade Agreement Authorities Act of

2 2000’’.

3 (B) Section 151(c)(1) (19 U.S.C.

4 2191(c)(1)) is amended by striking ‘‘or section

5 282 of the Uruguay Round Agreements Act’’

6 and inserting ‘‘, section 282 of the Uruguay

7 Round Agreements Act, or section 305(a)(1) of

8 the Reciprocal Trade Agreement Authorities

9 Act of 2000’’.

10 (2) ADVICE FROM INTERNATIONAL TRADE COM11 MISSION.—Section 131 (19 U.S.C. 2151) is

12 amended—

13 (A) in subsection (a)—

14 (i) in paragraph (1), by striking ‘‘sec15 tion 123 of this Act or section 1102 (a) or

16 (c) of the Omnibus Trade and Competitive17 ness Act of 1988,’’ and inserting ‘‘section

18 123 of this Act or section 303(a) or (b) of

19 the Reciprocal Trade Agreement Authori20 ties Act of 2000,’’; and

21 (ii) in paragraph (2), by striking ‘‘sec22 tion 1102 (b) or (c) of the Omnibus Trade

23 and Competitiveness Act of 1988’’ and in24 serting ‘‘section 303(b) of the Reciprocal
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1 Trade Agreement Authorities Act of

2 2000’’;

3 (B) in subsection (b), by striking ‘‘section

4 1102(a)(3)(A)’’ and inserting ‘‘section

5 303(a)(3)(A) of the Reciprocal Trade Agree6 ment Authorities Act of 2000’’ before the end

7 period; and

8 (C) in subsection (c), by striking ‘‘section

9 1102 of the Omnibus Trade and Competitive10 ness Act of 1988,’’ and inserting ‘‘section 303

11 of the Reciprocal Trade Agreement Authorities

12 Act of 2000,’’.

13 (3) HEARINGS AND ADVICE.—Sections 132,

14 133(a), and 134(a) (19 U.S.C. 2152, 2153(a), and

15 2154(a)) are each amended by striking ‘‘section

16 1102 of the Omnibus Trade and Competitiveness

17 Act of 1988,’’ each place it appears and inserting

18 ‘‘section 303 of the Reciprocal Trade Agreement Au19 thorities Act of 2000,’’.

20 (4) PREREQUISITES FOR OFFERS.—Section

21 134(b) (19 U.S.C. 2154(b)) is amended by striking

22 ‘‘section 1102 of the Omnibus Trade and Competi23 tiveness Act of 1988’’ and inserting ‘‘section 303 of

24 the Reciprocal Trade Agreement Authorities Act of

25 2000’’.
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1 (5) ADVICE FROM PRIVATE AND PUBLIC SEC2 TORS.—Section 135 (19 U.S.C. 2155) is amended—

3 (A) in subsection (a)(1)(A), by striking

4 ‘‘section 1102 of the Omnibus Trade and Com5 petitiveness Act of 1988’’ and inserting ‘‘section

6 303 of the Reciprocal Trade Agreement Au7 thorities Act of 2000’’;

8 (B) in subsection (e)(1)—

9 (i) by striking ‘‘section 1102 of the

10 Omnibus Trade and Competitiveness Act

11 of 1988’’ each place it appears and insert12 ing ‘‘section 303 of the Reciprocal Trade

13 Agreement Authorities Act of 2000’’; and

14 (ii) by striking ‘‘section 1103(a)(1)(A)

15 of such Act of 1988’’ and inserting ‘‘sec16 tion 305(a)(1)(A) of the Reciprocal Trade

17 Agreement Authorities Act of 2000’’; and

18 (C) in subsection (e)(2), by striking ‘‘sec19 tion 1101 of the Omnibus Trade and Competi20 tiveness Act of 1988’’ and inserting ‘‘section

21 302 of the Reciprocal Trade Agreement Au22 thorities Act of 2000’’.

23 (6) TRANSMISSION OF AGREEMENTS TO CON24 GRESS.—Section 162(a) (19 U.S.C. 2212(a)) is

25 amended by striking ‘‘or under section 1102 of the
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1 Omnibus Trade and Competitiveness Act of 1988’’

2 and inserting ‘‘or under section 303 of the Recip3 rocal Trade Agreement Authorities Act of 2000’’.

4 (b) APPLICATION OF CERTAIN PROVISIONS.—For

5 purposes of applying sections 125, 126, and 127 of the

6 Trade Act of 1974 (19 U.S.C. 2135, 2136(a), and

7 2137)—

8 (1) any trade agreement entered into under sec9 tion 303 shall be treated as an agreement entered

10 into under section 101 or 102, as appropriate, of the

11 Trade Act of 1974 (19 U.S.C. 2111 or 2112); and

12 (2) any proclamation or Executive order issued

13 pursuant to a trade agreement entered into under

14 section 303 shall be treated as a proclamation or

15 Executive order issued pursuant to a trade agree16 ment entered into under section 102 of the Trade

17 Act of 1974.

18 SEC. 308. DEFINITIONS.

19 In this title:

20 (1) UNITED STATES PERSON.—The term

21 ‘‘United States person’’ means—

22 (A) a United States citizen;

23 (B) a partnership, corporation, or other

24 legal entity organized under the laws of the

25 United States; and
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1 (C) a partnership, corporation, or other

2 legal entity that is organized under the laws of

3 a foreign country and is controlled by entities

4 described in subparagraph (B) or United States

5 citizens, or both.

6 (2) URUGUAY ROUND AGREEMENTS.—The term

7 ‘‘Uruguay Round Agreements’’ has the meaning

8 given that term in section 2(7) of the Uruguay

9 Round Agreements Act (19 U.S.C. 3501(7)).

10 (3) WORLD TRADE ORGANIZATION.—The term

11 ‘‘World Trade Organization’’ means the organization

12 established pursuant to the WTO Agreement.

13 (4) WTO AGREEMENT.—The term ‘‘WTO

14 Agreement’’ means the Agreement Establishing the

15 World Trade Organization entered into on April 15,

16 1994.

17 TITLE IV—AGRICULTURAL

18 TRADE FREEDOM

19 SEC. 401. SHORT TITLE.

20 This title may be cited as the ‘‘Agricultural Trade

21 Freedom Act’’.

22 SEC. 402. DEFINITIONS.

23 In this title, the terms ‘‘agricultural commodity’’ and

24 ‘‘United States agricultural commodity’’ have the mean-
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1 ings given the terms in section 102 of the Agricultural

2 Trade Act of 1978 (7 U.S.C. 5602).

3 SEC. 403. AGRICULTURAL COMMODITIES, LIVESTOCK, AND

4 PRODUCTS EXEMPT FROM UNILATERAL AG5 RICULTURAL SANCTIONS.

6 Title IV of the Agricultural Trade Act of 1978 (7

7 U.S.C. 5661 et seq.) is amended by adding at the end

8 the following:

9 ‘‘SEC. 418. AGRICULTURAL COMMODITIES, LIVESTOCK, AND

10 PRODUCTS EXEMPT FROM UNILATERAL AG11 RICULTURAL SANCTIONS.

12 ‘‘(a) DEFINITIONS.—In this section:

13 ‘‘(1) CURRENT SANCTION.—The term ‘current

14 sanction’ means a unilateral agricultural sanction

15 that is in effect on the date of enactment of the Ag16 ricultural Trade Freedom Act.

17 ‘‘(2) NEW SANCTION.—The term ‘new sanction’

18 means a unilateral agricultural sanction that be19 comes effective after the date of enactment of that

20 Act.

21 ‘‘(3) UNILATERAL AGRICULTURAL SANCTION.—

22 The term ‘unilateral agricultural sanction’ means

23 any prohibition, restriction, or condition that is im24 posed on the export of an agricultural commodity to

25 a foreign country or foreign entity and that is im-
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1 posed by the United States for reasons of the na2 tional interest, except in a case in which the United

3 States imposes the measure pursuant to a multilat4 eral regime and the other members of that regime

5 have agreed to impose substantially equivalent meas6 ures.

7 ‘‘(b) EXEMPTION.—

8 ‘‘(1) IN GENERAL.—Subject to paragraphs (2)

9 and (3) and notwithstanding any other provision of

10 law, agricultural commodities made available as a re11 sult of commercial sales shall be exempt from a uni12 lateral agricultural sanction imposed by the United

13 States on another country.

14 ‘‘(2) EXCLUSIONS.—Paragraph (1) shall not

15 apply to agricultural commodities made available as

16 a result of programs carried out under—

17 ‘‘(A) the Agricultural Trade Development

18 and Assistance Act of 1954 (7 U.S.C. 1691 et

19 seq.);

20 ‘‘(B) section 416 of the Agricultural Act of

21 1949 (7 U.S.C. 1431);

22 ‘‘(C) the Food for Progress Act of 1985 (7

23 U.S.C. 1736o);

24 ‘‘(D) the Agricultural Trade Act of 1978

25 (7 U.S.C. 5601 et seq.); or
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1 ‘‘(E) section 153 of the Food Security Act

2 of 1985 (15 U.S.C. 713a–14).

3 ‘‘(3) DETERMINATION BY PRESIDENT.—The

4 President may include agricultural commodities

5 made available as a result of the activities described

6 in paragraph (1) in the unilateral agricultural sanc7 tion imposed on a foreign country or foreign entity

8 if—

9 ‘‘(A) a declaration of war by Congress is in

10 effect with respect to the foreign country or for11 eign entity; or

12 ‘‘(B)(i) the President determines that in13 clusion of the agricultural commodities is in the

14 national interest;

15 ‘‘(ii) the President submits the report re16 quired under subsection (d); and

17 ‘‘(iii) Congress has not approved a joint

18 resolution stating the disapproval of Congress

19 of the report submitted under subsection (d).

20 ‘‘(4) EFFECT ON AGRICULTURAL TRADE.—

21 Nothing in this subsection requires the imposition of

22 a unilateral agricultural sanction with respect to an

23 agricultural commodity, whether exported in connec24 tion with a commercial sale or a program described

25 in paragraph (2).
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1 ‘‘(c) CURRENT SANCTIONS.—

2 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

3 the exemption under subsection (b)(1) shall apply to

4 a current sanction.

5 ‘‘(2) PRESIDENTIAL REVIEW.—Not later than

6 90 days after the date of enactment of the Agricul7 tural Trade Freedom Act, the President shall review

8 each current sanction to determine whether the ex9 emption under subsection (b)(1) should apply to the

10 current sanction.

11 ‘‘(3) APPLICATION.—The exemption under sub12 section (b)(1) shall apply to a current sanction be13 ginning on the date that is 180 days after the date

14 of enactment of the Agricultural Trade Freedom Act

15 unless the President determines that the exemption

16 should not apply to the current sanction for reasons

17 of the national interest.

18 ‘‘(d) REPORT.—

19 ‘‘(1) IN GENERAL.—If the President determines

20 under subsection (b)(3)(B)(i) or (c)(3) that the ex21 emption should not apply to a unilateral agricultural

22 sanction, the President shall submit a report to Con23 gress not later than 15 days after the date of the

24 determination.
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1 ‘‘(2) CONTENTS OF REPORT.—The report shall

2 contain—

3 ‘‘(A) an explanation of—

4 ‘‘(i) the economic activity that is pro5 posed to be prohibited, restricted, or condi6 tioned by the unilateral agricultural sanc7 tion; and

8 ‘‘(ii) the national interest for which

9 the exemption should not apply to the uni10 lateral agricultural sanction; and

11 ‘‘(B) an assessment by the Secretary—

12 ‘‘(i) regarding export sales—

13 ‘‘(I) in the case of a current

14 sanction, whether markets in the

15 sanctioned country or countries

16 present a substantial trade oppor17 tunity for export sales of a United

18 States agricultural commodity; or

19 ‘‘(II) in the case of a new sanc20 tion, the extent to which any country

21 or countries to be sanctioned or likely

22 to be sanctioned are markets that ac23 counted for, during the preceding cal24 endar year, more than 3 percent of
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1 export sales of a United States agri2 cultural commodity;

3 ‘‘(ii) regarding the effect on United

4 States agricultural commodities—

5 ‘‘(I) in the case of a current

6 sanction, the potential for export sales

7 of United States agricultural commod8 ities in the sanctioned country or

9 countries; and

10 ‘‘(II) in the case of a new sanc11 tion, the likelihood that exports of

12 United States agricultural commod13 ities will be affected by the new sanc14 tion or by retaliation by any country

15 to be sanctioned or likely to be sanc16 tioned, including a description of spe17 cific United States agricultural com18 modities that are most likely to be af19 fected;

20 ‘‘(iii) regarding the income of agricul21 tural producers—

22 ‘‘(I) in the case of a current

23 sanction, the potential for increasing

24 the income of producers of the United
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1 States agricultural commodities in2 volved; and

3 ‘‘(II) in the case of a new sanc4 tion, the likely effect on incomes of

5 producers of the agricultural commod6 ities involved;

7 ‘‘(iv) regarding displacement of

8 United States suppliers—

9 ‘‘(I) in the case of a current

10 sanction, the potential for increased

11 competition for United States sup12 pliers of the agricultural commodity in

13 countries that are not subject to the

14 current sanction because of uncer15 tainty about the reliability of the

16 United States suppliers; and

17 ‘‘(II) in the case of a new sanc18 tion, the extent to which the new

19 sanction would permit foreign sup20 pliers to replace United States sup21 pliers; and

22 ‘‘(v) regarding the reputation of

23 United States agricultural producers as re24 liable suppliers—
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1 ‘‘(I) in the case of a current

2 sanction, whether removing the sanc3 tion would improve the reputation of

4 United States producers as reliable

5 suppliers of agricultural commodities

6 in general, and of specific agricultural

7 commodities identified by the Sec8 retary; and

9 ‘‘(II) in the case of a new sanc10 tion, the likely effect of the proposed

11 sanction on the reputation of United

12 States producers as reliable suppliers

13 of agricultural commodities in general,

14 and of specific agricultural commod15 ities identified by the Secretary.

16 ‘‘(e) CONGRESSIONAL PRIORITY PROCEDURES.—

17 ‘‘(1) JOINT RESOLUTION.—In this subsection,

18 the term ‘joint resolution’ means only a joint resolu19 tion introduced within 10 session days of Congress

20 after the date on which the report of the President

21 under subsection (d) is received by Congress, the

22 matter after the resolving clause of which is as fol23 lows: ‘That Congress disapproves the report of the

24 President pursuant to section 418(d) of the Agricul25 tural Trade Act of 1978, transmitted on
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1 lllllll.’, with the blank completed with

2 the appropriate date.

3 ‘‘(2) REFERRAL OF REPORT.—The report de4 scribed in subsection (d) shall be referred to the ap5 propriate committee or committees of the House of

6 Representatives and to the appropriate committee or

7 committees of the Senate.

8 ‘‘(3) REFERRAL OF JOINT RESOLUTION.—

9 ‘‘(A) IN GENERAL.—A joint resolution

10 shall be referred to the committees in each

11 House of Congress with jurisdiction.

12 ‘‘(B) REPORTING DATE.—A joint resolu13 tion referred to in subparagraph (A) may not

14 be reported before the eighth session day of

15 Congress after the introduction of the joint res16 olution.

17 ‘‘(4) DISCHARGE OF COMMITTEE.—If the com18 mittee to which is referred a joint resolution has not

19 reported the joint resolution (or an identical joint

20 resolution) at the end of 30 session days of Congress

21 after the date of introduction of the joint

22 resolution—

23 ‘‘(A) the committee shall be discharged

24 from further consideration of the joint resolu25 tion; and
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1 ‘‘(B) the joint resolution shall be placed on

2 the appropriate calendar of the House con3 cerned.

4 ‘‘(5) FLOOR CONSIDERATION.—

5 ‘‘(A) MOTION TO PROCEED.—

6 ‘‘(i) IN GENERAL.—When the com7 mittee to which a joint resolution is re8 ferred has reported, or when a committee

9 is discharged under paragraph (4) from

10 further consideration of, a joint

11 resolution—

12 ‘‘(I) it shall be at any time there13 after in order (even though a previous

14 motion to the same effect has been

15 disagreed to) for any member of the

16 House concerned to move to proceed

17 to the consideration of the joint reso18 lution; and

19 ‘‘(II) all points of order against

20 the joint resolution (and against con21 sideration of the joint resolution) are

22 waived.

23 ‘‘(ii) PRIVILEGE.—The motion to pro24 ceed to the consideration of the joint

25 resolution—
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1 ‘‘(I) shall be highly privileged in

2 the House of Representatives and

3 privileged in the Senate; and

4 ‘‘(II) shall not be debatable.

5 ‘‘(iii) AMENDMENTS AND MOTIONS

6 NOT IN ORDER.—The motion to proceed to

7 the consideration of the joint resolution

8 shall not be subject to—

9 ‘‘(I) amendment;

10 ‘‘(II) a motion to postpone; or

11 ‘‘(III) a motion to proceed to the

12 consideration of other business.

13 ‘‘(iv) MOTION TO RECONSIDER NOT IN

14 ORDER.—A motion to reconsider the vote

15 by which the motion is agreed to or dis16 agreed to shall not be in order.

17 ‘‘(v) BUSINESS UNTIL DISPOSITION.—

18 If a motion to proceed to the consideration

19 of the joint resolution is agreed to, the

20 joint resolution shall remain the unfinished

21 business of the House concerned until dis22 posed of.

23 ‘‘(B) LIMITATIONS ON DEBATE.—

24 ‘‘(i) IN GENERAL.—Debate on the

25 joint resolution, and on all debatable mo-
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1 tions and appeals in connection with the

2 joint resolution, shall be limited to not

3 more than 10 hours, which shall be divided

4 equally between those favoring and those

5 opposing the joint resolution.

6 ‘‘(ii) FURTHER DEBATE LIMITA7 TIONS.—A motion to limit debate shall be

8 in order and shall not be debatable.

9 ‘‘(iii) AMENDMENTS AND MOTIONS

10 NOT IN ORDER.—An amendment to, a mo11 tion to postpone, a motion to proceed to

12 the consideration of other business, a mo13 tion to recommit the joint resolution, or a

14 motion to reconsider the vote by which the

15 joint resolution is agreed to or disagreed to

16 shall not be in order.

17 ‘‘(C) VOTE ON FINAL PASSAGE.—Imme18 diately following the conclusion of the debate on

19 a joint resolution, and a single quorum call at

20 the conclusion of the debate if requested in ac21 cordance with the rules of the House concerned,

22 the vote on final passage of the joint resolution

23 shall occur.

24 ‘‘(D) RULINGS OF THE CHAIR ON PROCE25 DURE.—An appeal from a decision of the Chair
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1 relating to the application of the rules of the

2 Senate or House of Representatives, as the case

3 may be, to the procedure relating to a joint res4 olution shall be decided without debate.

5 ‘‘(6) COORDINATION WITH ACTION BY OTHER

6 HOUSE.—If, before the passage by 1 House of a

7 joint resolution of that House, that House receives

8 from the other House a joint resolution, the fol9 lowing procedures shall apply:

10 ‘‘(A) NO COMMITTEE REFERRAL.—The

11 joint resolution of the other House shall not be

12 referred to a committee.

13 ‘‘(B) FLOOR PROCEDURE.—With respect

14 to a joint resolution of the House receiving the

15 joint resolution—

16 ‘‘(i) the procedure in that House shall

17 be the same as if no joint resolution had

18 been received from the other House; but

19 ‘‘(ii) the vote on final passage shall be

20 on the joint resolution of the other House.

21 ‘‘(C) DISPOSITION OF JOINT RESOLUTIONS

22 OF RECEIVING HOUSE.—On disposition of the

23 joint resolution received from the other House,

24 it shall no longer be in order to consider the
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1 joint resolution originated in the receiving

2 House.

3 ‘‘(7) PROCEDURES AFTER ACTION BY BOTH

4 THE HOUSE AND SENATE.—If a House receives a

5 joint resolution from the other House after the re6 ceiving House has disposed of a joint resolution

7 originated in that House, the action of the receiving

8 House with regard to the disposition of the joint res9 olution originated in that House shall be deemed to

10 be the action of the receiving House with regard to

11 the joint resolution originated in the other House.

12 ‘‘(8) RULEMAKING POWER.—This subsection is

13 enacted by Congress—

14 ‘‘(A) as an exercise of the rulemaking

15 power of the Senate and House of Representa16 tives, respectively, and as such this

17 subsection—

18 ‘‘(i) is deemed to be a part of the

19 rules of each House, respectively, but ap20 plicable only with respect to the procedure

21 to be followed in that House in the case of

22 a joint resolution; and

23 ‘‘(ii) supersedes other rules only to

24 the extent that this subsection is incon25 sistent with those rules; and
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1 ‘‘(B) with full recognition of the constitu2 tional right of either House to change the rules

3 (so far as the rules relate to the procedure of

4 that House) at any time, in the same manner

5 and to the same extent as in the case of any

6 other rule of that House.’’.

7 SEC. 404. SALE OR BARTER OF FOOD ASSISTANCE.

8 It is the sense of Congress that the amendments to

9 section 203 of the Agricultural Trade Development and

10 Assistance Act of 1954 (7 U.S.C. 1723) made by section

11 208 of the Federal Agriculture Improvement and Reform

12 Act of 1996 (Public Law 104–127; 110 Stat. 954) were

13 intended to allow the sale or barter of United States agri14 cultural commodities in connection with United States

15 food assistance only within the recipient country or coun16 tries adjacent to the recipient country, unless—

17 (1) the sale or barter within the recipient coun18 try or adjacent countries is not practicable; and

19 (2) the sale or barter within countries other

20 than the recipient country or adjacent countries will

21 not disrupt commercial markets for the agricultural

22 commodity involved.

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