49–006 

109TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 109–574 

UNITED STATES-OMAN FREE TRADE AGREEMENT 

IMPLEMENTATION ACT 

JULY 17, 2006.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

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

submitted the following 

R E P O R T 

together with 

ADDITIONAL AND DISSENTING VIEWS 

[To accompany H.R. 5684] 

[Including cost estimate of the Congressional Budget Office] 

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

bill (H.R. 5684) to implement the United States-Oman Free Trade 

Agreement, having considered the same, report favorably thereon 

without amendment and recommend that the bill do pass. 

CONTENTS 

Page 

I. Introduction .................................................................................................... 2 

A. Purpose and Summary ..................................................................... 2 

B. Background ........................................................................................ 2 

C. Legislative History ............................................................................ 11 

II. Section-by-Section Summary ........................................................................ 13 

A. Title I: Approval and General Provisions ....................................... 13 

B. Title II: Customs Provisions ............................................................. 15 

C. Title III: Relief from Imports ........................................................... 18 

D. Title IV: Government Procurement ................................................. 21 

III. Vote of the Committee ................................................................................... 21 

IV. Budget Effects of the Bill .............................................................................. 22 

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

B. Budget Authority and Tax Expenditures ........................................ 22 

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

V. Other Matters To Be Discussed Under the Rules of the House ................ 24 

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

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

C. Constitutional Authority Statement ................................................ 24 


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D. Information Relating to Unfunded Mandates ................................ 25 

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

VII. Correspondence Related To Labor Reforms ................................................. 28 

A. July 12, 2006 letter to Ambassador Schwab from Omani Ambassador Hunaina Al-Mughairy .......................................................... 28 

B. June 26, 2006 letter to Chairman Thomas from Ambassador 

Schwab with attached June 21, 2006 letter to Ambassador 

Schwab from U.S. Ambassador to Oman Gary Grappo ............... 31 

C. June 22, 2006 letter to Chairman Grassley from USTR General 

Counsel James E. Mendenhall ...................................................... 45 

D. May 8, 2006 letter to Ambassador Portman from Omani Minister of Commerce and Industry Maqbool Ali Sultan .................. 48 

E. March 26, 2006 letter to Chairman Thomas from Omani Minister of Commerce and Industry Maqbool Ali Sultan .................. 52 

F. March 3, 2006 letter to Chairman Thomas from Omani Ambassador Hunaina Al-Mughairy .......................................................... 54 

VIII. Correspondence Related To Trade With Israel ........................................... 54 

A. June 28, 2006 AIPAC letter to Rep. Shaw and Rep. Cardin ......... 54 

B. June 22, 1996 memo from Omani Director General of Customs .. 56 

C. June 9, 2006 letter to Omani Sultan bin Said from Rep. Wexler . 58 

D. September 28, 2005 letter to Ambassador Portman from Omani 

Minister of Commerce and Industry Maqbool Ali Sultan ........... 60 

IX. Views ............................................................................................................... 61 

I. INTRODUCTION 

A. PURPOSE AND SUMMARY

H.R. 5684 would implement the January 19, 2006 Agreement establishing a free trade area between the United States and Oman. 

B. BACKGROUND

I. The United States-Oman Free Trade Agreement 

The Committee believes that the Agreement meets the objectives 

and priorities set forth in the Bipartisan Trade Promotion Authority Act of 2002 (TPA). The Agreement covers all agricultural and 

industrial sectors, provides for some of the greatest market access 

for U.S. services of any Free Trade Agreement (FTA), contains robust protections for U.S. intellectual property rights holders, and 

includes strong labor and environment provisions. In addition to 

the new commercial opportunities it provides, the Agreement will 

support many of the recent governance, legal, and economic reforms in Oman. 

Trade Impact.—All bilateral trade in consumer and industrial 

products will become duty-free immediately upon entry into force 

of the Agreement. According to the United States International 

Trade Commission (ITC), the Agreement will likely have a ‘‘small 

but positive effect on the U.S. economy’’ due to Oman’s relatively 

small share of total U.S. trade. Many Omani goods already enjoy 

duty free treatment because of Oman’s Generalized System of Preferences (GSP) status and Normal Trade Relations (NTR) status. 

Agriculture.—All agriculture products are covered by the Agreement, which will provide immediate duty-free access for U.S. agriculture exports in 87% of agriculture tariff lines. Oman will phase 

out tariffs on remaining products within ten years. The United 

States exported $12 million in agricultural products to Oman in 

2005, including sugars, sweeteners, and beverage bases. 

The United States will provide immediate duty free access to 

100% of Oman’s current agricultural exports to the United States. 


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Oman has not traditionally been a large agricultural exporter to 

the U.S. market, and USTR reports that the United States imported $1.7 million in agricultural products from Oman in 2005. 

Accordingly, the Agreement does not contain an agricultural safeguard. 

Textiles and Apparel.—The Agreement contains a yarn-forward 

rule of origin for textiles. Like other FTAs (including Bahrain, Morocco, Chile, Singapore, and NAFTA), the Agreement contains limited, temporary allowances for the use of yarn and fabric from a 

non-party under a Tariff Preference Level (TPL). It is set at an annual level of 50 million square meters equivalent (SMEs) for the 

first ten years and is equal to approximately 0.1% of total U.S. imports of textile and apparel. U.S. exporters are provided with the 

same TPL access to Oman’s market. After the TPL expires, all 

trade under the Oman FTA must adhere to the yarn-forward rule 

of origin. While ITC estimates that the Agreement will result in an 

increase in Oman’s textile exports to the United States, it also estimates that this increase will not have a significant impact on overall U.S. imports because it will be offset by reduced levels of imports from other nations. 

In addition, the Agreement contains a special textile safeguard, 

which allows either party to re-impose tariffs that were in place before the agreement if imports from the other party cause or threaten to cause serious damage to the domestic industry. Furthermore, 

the FTA has special, state-of-art customs enforcement and cooperation provisions for textiles, allowing the customs authorities of the 

parties to verify production and ultimately to deny duty preferences or entry if production cannot be authenticated. 

The Committee believes that maintaining a current short supply 

list under the FTA is integral to the effective functioning of the 

rule of origin for textiles and apparel. The Committee expects the 

President to seek to incorporate all existing and future affirmative 

short supply determinations from other trade agreements and 

trade preference programs into the textile and apparel rule of origin for this FTA. Moreover, given that prior short supply designations have already undergone public comment and consultation 

with domestic parties, the President should apply those designations to this FTA without further public investigation. Finally, the 

Committee clarifies that the short supply provision included in this 

FTA, as well as previous FTAs and trade preference programs enacted by Congress, contemplates items only being added to the list 

of short supply items, with a limited exception in the Dominican 

Republic-Central America FTA (DR–CAFTA). In other words, once 

an item is designated as being in short supply, the item is permanently designated as such unless otherwise provided for by the 

statute implementing the FTA or trade preference program. Indeed, the fact that Congress specifically designated procedures for 

removal of products from the list in DR–CAFTA signifies that the 

authority to do so does not exist in implementing legislation or 

trade preference programs where that authority is not explicitly 

provided, such as this FTA. 

Furthermore, the Committee expects that all short supply parties 

will be able to participate in an open and transparent process. Specifically, Committee for the Implementation of Textile Agreements 

(CITA) should publish procedures that clearly explain the criteria 


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it uses to make its determinations on whether and why a good is 

or is not available in commercial quantities. At the very least, 

when CITA determines that a good is available in commercial 

quantities, a sample of the good should be readily available for 

physical inspection by all parties as well as by evidence of some effort to market the good in the United States. Moreover, all parties 

should have open access to the full evidence being considered by 

CITA as well as the opportunity to respond to the full evidence before a determination is made. 

Services.—Under the Agreement, Oman will accord broad market 

access across its services industries and will provide increased market access and regulatory transparency in most industries. The 

Agreement utilizes the negative list approach for coverage with 

very few reservations, which means that all services are covered 

except those few specifically excluded. The few exceptions taken by 

Oman include areas such as employment placement, internal waterway transport, investigation and security, licensed tour guides, 

real estate brokerage, specialty air service, and taxi cabs. The 

Agreement offers new access in key sectors such as audiovisual, express delivery, telecommunications, computer and related services, 

distribution, healthcare, services incidental to mining, construction, 

architecture, and engineering. Benefits are provided for businesses 

that wish to supply services cross-border (for example, by electronic 

means over the Internet) as well as those that wish to establish a 

local presence in Oman. In particular, U.S. financial service providers will have the right to establish subsidiaries, branches, and 

joint ventures inside Oman. The Agreement provides new opportunities for U.S. managers, professionals, and specialty personnel by 

removing requirements that U.S. companies hire Omanis for these 

positions. The ITC report on the Agreement states that the Agreement will provide additional market access to U.S. services firms 

and that these firms and their affiliates in Oman will likely benefit 

from the improved transparency and market access. 

The agreement does not allow any foreign entity to control, manage, or operate any U.S. port, and this function remains the responsibility of U.S. port authorities. The Agreement, like previous 

FTAs, simply treats Omani landside service suppliers and investors 

no less favorably than U.S. landside service providers. Any such 

service providers are still subject to a rigorous security review because the Agreement does not circumvent the Exon-Florio Act’s 

Committee on Foreign Investment in the United States (CFIUS) 

process, which authorizes the President to block any proposed foreign investment in the United States that threatens U.S. national 

security. If the President were to block a transaction on these 

grounds, it would be consistent with the Agreement. Finally, the 

Agreement contains an explicit and self-judging exception under 

the Agreement’s Article 21.2 allowing a country to take actions or 

deny benefits to protect its essential security interests. 

Investment.—The Agreement contains an investor-state provision, which allows investors alleging a breach in investment obligations to seek binding arbitration with Oman directly, giving U.S. 

foreign investors enhanced protections. These provisions level the 

playing field for U.S. investors by giving them legal protections in 

Oman comparable to the protections that foreign investors already 

receive in the United States. 


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The investment language in the Agreement follows the guidance 

set forth in TPA, which states that foreign investors in the United 

States should not be accorded ‘‘greater substantive rights’’ than 

those afforded to U.S. investors in the United States. While the 

procedures for resolving disputes between a foreign investor and a 

government may differ from the procedures for resolving disputes 

between a domestic investor and a government, the Committee 

notes that the substantive standards in the Agreement are essentially the same as those found in the U.S. Constitution. Specifically, the Agreement’s investment provisions are modeled after the 

Takings, Due Process and Equal Protections provisions of the U.S. 

Constitution, the Administrative Procedures Act, and other U.S. 

laws. 

The Committee believes that there have been significant misrepresentations about investment protection provisions in this and 

other free trade agreements. Nothing in this Agreement or any 

other U.S. free trade agreement or bilateral investment treaty 

interferes with a state or local government’s right to regulate. An 

investor cannot enjoin regulatory action through arbitration, nor 

can arbitral tribunals. Also, the Agreement makes improvements 

over former FTAs by incorporating standards in the expropriation 

provisions drawn directly from U.S. Supreme Court decisions and 

by taking regulatory interests fully into account. Consistent with 

U.S. law, for example, the Agreement’s text specifies that nondiscriminatory regulatory actions designed and applied to protect 

the public welfare do not constitute indirect expropriations ‘‘except 

in rare circumstances.’’ Moreover, the arbitration process under the 

Agreement is more open and transparent, and hearings and documents are public, and amicus curiae submissions are expressly authorized. 

Building on the NAFTA experience, the Agreement’s investment 

chapter includes checks to help ensure that investors cannot abuse 

the arbitration process. The Agreement includes a special provision 

(based on U.S. court rules) that allows tribunals to dismiss frivolous claims at an early stage of the proceedings, and it expressly 

authorizes awards of attorneys’ fees and costs if a claim is found 

to be frivolous. 

The Committee believes that the allegations and anti-trade rhetoric surrounding NAFTA Chapter 11 investor-state cases are exaggerated. The United States has never lost a single case under 

NAFTA or any other FTA or bilateral investment treaty, nor has 

the United States ever paid to settle such a case. 

Labor and Environment.—Labor and environmental obligations 

are part of the core text of the trade agreement, consistent with 

Trade Promotion Authority requirements, and are similar to provisions in prior FTAs. The Agreement states that both parties shall 

ensure that their domestic labor laws provide for labor standards 

consistent with internationally recognized labor principles, and 

that environmental laws provide for high levels of environmental 

protection. The Agreement also provides that parties shall strive to 

continue to improve such laws. The Agreement states that it is inappropriate to weaken or reduce domestic labor or environmental 

protections to encourage trade or investment. The core commitment—that a party shall not fail to effectively enforce its labor or 

environmental laws, through a sustained or recurring course of acVerDate Aug 31 2005 07:36 Jul 18, 2006 Jkt 049006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR574.XXX HR574

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tion or inaction, in a manner affecting trade between the parties— 

is subject to dispute settlement under the Agreement. Oman and 

the United States will pursue a number of cooperative projects to 

promote environmental protection, and both governments will utilize a Memorandum of Understanding on Environmental Cooperation to prioritize environmental projects and develop plans of action. The Agreement contains a cooperative mechanism to promote 

respect for the principles embodied in the International Labor Organization (ILO) Declaration on Fundamental Principles and 

Rights at Work, and compliance with ILO Convention 182 on the 

Worst Forms of Child Labor. 

Oman has undertaken significant labor and governance reforms. 

In 2003 Oman issued a new labor law (Royal Decree No. 35), which 

removes a 1973 ban on strikes and protects the rights of foreign 

and national workers to establish representative committees with 

collective bargaining powers. In the context of Congressional consideration of the Agreement, Committee Members of both parties 

asked that Oman look to Bahrain as a model in terms of the labor 

commitments needed to secure broad, bipartisan support. 

By any measure, Oman has met or exceeded the example and 

commitments of Bahrain that helped the Bahrain FTA obtain the 

largest number of votes in the House of Representatives of any 

FTA considered under Trade Promotion Authority. During the 

Committee’s markup of the Agreement’s implementing legislation, 

Assistant USTR for Europe and the Middle East Shaun Donnelly 

stated that, compared with Bahrain, the overall Omani labor commitment is stronger and that based on his knowledge, it is fair to 

say that Oman has made a more dramatic commitment to labor reform than any government which has entered into such an agreement with the United States. The Committee believes that Oman 

has provided extensive answers, commitments, and materials to respond to and address every substantive issue raised by Committee 

Members. As described in the letters from the Omani government 

included as part of this report, Oman, like Bahrain, has committed 

to extensive labor reforms, including: 

• Strengthening its collective bargaining laws; 

• Ensuring that workers have the option of reinstatement 

for improper termination due to union activity; 

• Allowing more than one worker representative committee 

per enterprise; 

• Allowing more than one federation or representative group 

for individual worker representative committees and removing 

requirement that each representative committee belong to the 

current Main Representative Committee; 

• Ensuring that penalties for anti-union discrimination are 

sufficient to deter such discrimination; 

• Ensuring that technical standards for strikes do not exceed 

the requirements of the ILO; 

• Providing for notice to impacted groups of changes to its 

labor laws and interim application of principles under existing 

law; and 

• Ensuring that its commitments are reviewable under the 

FTA consultation mechanism. 

In addition, Oman has made further commitments: 

• Strengthening efforts against forced labor; 


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• Taking action to stop the withholding of foreign workers’ 

documents; • Strengthening efforts against child labor; and • Removing all government involvement in representative 

committees’ activities. 

Overall, while many of Bahrain’s commitments involved only submitting legislation to its parliament, Oman has pledged to enact all 

of these reforms by a date certain: October 31, 2006. Oman has already taken major action ahead of schedule by enacting a Royal 

Degree on July 8, 2006 (described in a July 12, 2006 letter from 

the Omani Ambassador) that addressed its commitments in the following areas: • Strengthening its collective bargaining laws; • Allowing more than one union per enterprise; • Specifying penalties for anti-union discrimination; • Reinforcing the right to strike; • Removing all government involvement in union activity; • Strengthening efforts against forced labor; • Prohibiting the withholding of travel documents by employers of foreign workers; and • Strengthening efforts against child labor. 

In her letter, the Omani Ambassador reaffirmed her commitment 

to fulfilling all remaining commitments by the October 31 deadline. 

The Committee believes that Oman’s pledges and concrete action 

demonstrate Oman’s commitment to move rapidly on these issues, 

while abiding by its legislative process and rule of law, including 

through consulting with interested parties, such as Omani labor 

groups and the ILO, as several Committee Members have specifically requested. 

In addition, United States Ambassador to Oman Gary Grappo 

conducted an extensive review of the labor situation on the ground 

in Oman and issued on June 21, 2006 a letter stating that Oman 

is already ‘‘complying with ILO core labor standards in practice, if 

not yet in law.’’ This finding was based on an examination of the 

major areas raised as concerns regarding Oman’s labor laws. For 

example, in the key area of government involvement in labor matters, the Ambassador stated that in ‘‘regards to the perceived government interference in the labor committees, let me be firm in assuring you that the Ministry of Manpower (MOM) is not intrusively 

overseeing labor union representative committee activities . . . and 

that the actual application of the law is already ILO-consistent.’’ In 

contrast, Bahrain provided no such showing that the application of 

its laws was already ILO-consistent. In fact contrary to claims by 

some, Bahrain made no commitment to apply all of its laws in an 

ILO-consistent manner until changes were made to its laws. Finally, Oman, like Bahrain, has agreed to have all of its commitments fully verifiable under the Agreement’s labor consultation 

mechanisms. 

The Committee finds that after Oman’s extensive good faith actions to address every substantive labor issue raised by the Committee and make verifiable commitments that meet or exceed the 

standard of Bahrain, it would be unreasonable on the basis of labor 

issues to fail to provide the same support for the Oman Agreement 

as provided for the Bahrain Agreement. Changing the standard on 

one of our strongest allies in the Middle East on the basis that 


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Congress could not trust its labor commitments would send a disturbing signal to the people of the Middle East, to allies of the 

United States around the world, and to Americans who rely on our 

responsible exercise of trade and foreign policy to strengthen the 

U.S. economy and protect our citizens. 

Dispute Settlement.—The Agreement sets out detailed procedures 

for the resolution of disputes over compliance, with high standards 

of openness and transparency. Dispute settlement procedures promote compliance through consultation and trade-enhancing remedies, rather than relying solely on trade sanctions. The Agreement’s dispute settlement procedures also provide for ‘‘equivalent’’ 

remedies for commercial and labor/environmental disputes, in 

keeping with TPA requirements. In addition to the use of trade 

sanctions in commercial disputes, the Agreement provides the parties the option of using monetary assessments to enforce commercial, labor, and environmental obligations of the Agreement, with 

the possibility that assessments from labor and environmental 

cases may be used to fund labor and environmental initiatives. If 

a party does not pay its annual assessment in a labor or environmental dispute, the complaining party may suspend tariff benefits, 

while bearing in mind the objective of eliminating barriers to trade 

and while seeking not to unduly affect parties or interests not 

party to the dispute. 

Access to Medicines.—The Agreement provides protections for developers and manufacturers of innovative pharmaceutical drugs 

consistent with U.S. law and recent trade agreements. Consistent 

with the WTO TRIPs Agreement, parties must provide that a drug 

innovator’s data submitted for the purpose of obtaining marketing 

approval for a new drug be protected from use by competitors for 

five years. The Agreement expressly states that nothing in the intellectual property chapter affects the countries’ ability to protect 

public health. Nor will the Agreement prevent effective utilization 

of the recent WTO consensus allowing developing countries that 

lack pharmaceutical manufacturing capacity to import drugs under 

compulsory licenses. 

Stronger patent and data protection increases the willingness of 

companies to release innovative drugs in the markets of free trade 

partners, potentially increasing, rather than decreasing, the availability of medicines. For example, the U.S.-Jordan FTA, signed in 

2000, contained an intellectual property chapter that covered data 

protection. As a result of the FTA and effective IP protection, a 

large number of innovative products have been registered since the 

FTA went into force. Between 1995–1999, only 25 new pharmaceuticals products were registered, but since 2000, at least 65 new 

products have been registered. Moreover, data protection for more 

than 50 innovative products has now expired, and these products 

are now being produced and exported by the local manufacturers. 

In fact, the Jordanian generic pharmaceutical sector is flourishing, 

as evidenced by a significant increase in exports. In 2004 the local 

industry generated at least $224 million, a 21% increase from the 

year 2003. In 2005, this figure increased by 25%, to $281 million. 

Pharmaceuticals were Jordan’s second largest export in 2005. Also, 

since the enactment of the FTA, the Jordanian drug industry has 

begun to develop its own innovative medicines. The Committee emphasizes that the Jordan case is an example of how strong intellecVerDate Aug 31 2005 07:36 Jul 18, 2006 Jkt 049006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR574.XXX HR574

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tual property protection can bring substantial benefits to developing countries. 

Intellectual Property Rights.—Because the WTO agreement in intellectual property contains only rudimentary intellectual property 

protection requirements, bilateral free trade agreements are an important means of raising international practices to the higher U.S. 

standards. The U.S.-Oman FTA requires no change to the already 

highly developed U.S. law and practice. According to the Industry 

Trade Advisory Committee on Intellectual Property (ITAC 15), the 

U.S.-Oman FTA reflects the ‘‘highest standards of protection’’ of 

any of the FTAs negotiated to date in the areas of trademarks, geographical indications, copyrights, and enforcement. U.S. authors, 

performers, inventors, and other producers of creative material will 

benefit from the higher and extended standards that the FTA requires of Oman for protecting intellectual property rights such as 

copyrights, patents, trademarks, and trade secrets as well as enhanced means of enforcing those rights. Each partner country must 

grant national treatment to nationals of the other, and all laws, 

regulations, procedures, and final judicial decisions must be in 

writing and published or made publicly available. The Agreement 

lengthens terms for copyright protection, covering electronic and 

digital media, and increases enforcement to go beyond WTO obligations. Each party is obliged to provide appropriate civil and criminal remedies for willful violators, and parties must provide legal incentives for services providers to cooperate with rights holders as 

well as limitations on liability. 

Government Procurement.—Oman is not a party to the WTO 

Agreement on Government Procurement, but the U.S.-Oman FTA 

provides comparable benefits to U.S. interests, putting them at an 

advantage over other U.S. trading partners. Specifically, the Agreement grants non-discriminatory rights to bid on most contracts offered by Oman’s ministries, agencies, and departments. It calls for 

transparent and fair procurement procedures including clear advanced notice of purchases and effective review. The parties are 

obliged to make bribery a criminal offense in matters affecting 

international trade and investment. 

The 9/11 Commission Report Recommendations.—The 9/11 Commission Report specifically noted the importance of the FTAs 

signed with nations in the Middle East, stating that they are ‘‘models [that] are drawing the interest of their neighbors.’’ Citing the 

Administration’s strategy for creating a Middle East Free Trade 

Area (MEFTA), the 9/11 Commission specifically recommended that 

a ‘‘comprehensive U.S. strategy to counter terrorism should include 

economic policies that encourage development, more open societies, 

and opportunities for people to improve the lives of their families 

and to enhance prospects for their children’s future.’’ 

U.S.-Oman Cooperation in the War on Terror and International 

Security.—Oman has long been a committed ally of the United 

States. The United States signed a treaty of friendship with Oman 

in 1833, one of the first of its kind with an Arab state. On April 

21, 1980, just after the Iranian Islamic Revolution, Oman became 

the first Persian Gulf state to formalize defense relations with the 

United States, allowing U.S. forces access to Omani military facilities. That agreement was renewed in 2000 for ten years. Oman’s 

facilities made significant contributions to recent major U.S. comVerDate Aug 31 2005 07:36 Jul 18, 2006 Jkt 049006 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\HR574.XXX HR574

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bat operations in Afghanistan (Operation Enduring Freedom, OEF) 

and Iraq (Operation Iraqi Freedom, OIF). There were approximately 4,300 U.S. personnel in Oman during OEF and approximately 3,750 U.S. personnel in Oman during OIF. During these operations, Omani military facilities served as important logistical 

hubs and launch points for Air Force missions that helped protect 

U.S. servicemen and support U.S. foreign policy objectives. 

After the terrorist attacks of September 11, 2001, Oman issued 

new laws to prevent terrorist organizations from raising or laundering money in Oman. The State Department’s report on global 

terrorism for 2004 noted that Oman has established systems to 

identify unusual transactions and that Oman has demonstrated a 

commitment to freeze assets of suspected Al Qaeda members and 

other terrorists. On November 22, 2005, Oman joined the U.S. Container Security Initiative, agreeing to the prescreening of U.S.- 

bound cargo from the port of Salalah. 

Political and Economic Reforms.—Under the government of Sultan Qaboos, Oman has been expanding political liberalization in 

Oman since the 1980s. In 1991, the Sultan established the Consultative Council, and in 2000 the Council held its first elections. Voting rights in the 2003 Consultative Council elections were extended 

to all citizens over the age of 21, increasing the number of eligible 

voters from the 2000 elections, during which the electorate consisted of only 25 percent of all citizens over 21. Women are allowed 

to run for seats in the Council, and the Sultan of Oman has appointed a number of women to cabinet positions and to the Sultanappointed State Council. In 2004, Sultan Qaboos named five 

women as appointees to the office of the public prosecutor, making 

Oman unique in the Gulf for appointing women to the judiciary. In 

addition, Oman in 2005 became the first Arab state to name a female ambassador to the United States. 

Among Gulf Cooperation Council countries (Bahrain, Kuwait, 

Oman, Qatar, Saudi Arabia, and the United Arab Emirates), Oman 

has the second highest percentage of oil-based GDP (40%), yet 

Oman’s oil reserves could be exhausted within fifteen or twenty 

years. Given this situation, Oman has been acting to open and expand its economy beyond oil and gas exports. The Economic Freedom of the World 2005 report published by Canada’s Fraser Institute ranks Oman 17th of the 127 countries analyzed in terms of 

economic freedom, and as the second highest among the proposed 

Middle East Free Trade Area (MEFTA) countries. The Omani Center for Investment Promotion and Export Development was opened 

in 1997 to smooth the path for business formation and private sector project development. The permitted level of foreign ownership 

in privatization projects increased to 100 percent in July 2004, 

based on a Royal Decree providing an updated privatization framework. 

Arab League Boycott of Israel.—Oman has been a leader in the 

Persian Gulf in establishing trade and other ties with Israel. In 

September 1994, Oman renounced its secondary and tertiary boycotts of Israel. The secondary boycott bans entities in the Arab 

League States where it applies from doing business with firms that 

contribute to Israel’s military or economic development, while the 

tertiary boycott deals with the injunction on Arab countries from 

doing business with firms that are blacklisted because of their ties 


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to Israel. On December 26, 1994, Oman became the first Gulf State 

to host an Israeli Prime Minister. Oman has also eliminated all aspects of the primary (direct) boycott of Israel, and when Oman acceded to the WTO in 2000, it did not request an exemption for 

Israel that would allow it to maintain a boycott. 

In the context of Congressional consideration of the U.S.-Oman 

FTA, Oman has reiterated its commitment to not enforce any aspect of a boycott on Israel, in letters on September 28, 2005 and 

June 15, 2006. In addition, in June 2006 Oman issued an official 

government circular to its relevant agencies reiterating this policy 

and commitment. 

II. TPA Procedures 

As noted above, this legislation is being considered by Congress 

under TPA procedures. As such, the Agreement has been negotiated by the President in close consultation with Congress, and it 

can be approved and implemented through legislation using 

streamlined procedures. Pursuant to TPA requirements, the President is required to provide written notice to Congress of the President’s intention to enter into the negotiations. Throughout the negotiating process and prior to entering into an agreement, the 

President is required to consult with Congress regarding the ongoing negotiations. 

The President must notify Congress of his intent to enter into a 

trade agreement at least 90 calendar days before the agreement is 

signed. Within 60 days after entering into the agreement, the 

President must submit to Congress a description of those changes 

to existing laws that the President considers would be required to 

bring the United States into compliance with the agreement. After 

entering into the agreement, the President must also submit to 

Congress the formal legal text of the agreement, draft implementing legislation, a statement of administrative action proposed 

to implement the agreement, and other related supporting information as required under section 2105(a) of TPA. Following submission of these documents, the implementing bill is introduced, by request, by the Majority Leader in each chamber. The House then 

has up to 60 days to consider implementing legislation for the 

agreement (the Senate has up to an additional 30 days). No amendments to the legislation are allowed under TPA requirements. 

C. LEGISLATIVE HISTORY

On November 15, 2004, the President first notified Congress of 

his intent to negotiate an FTA with Oman. FTA negotiations between the United States and Oman began in March 2005 and concluded in October 2005. During and after the negotiations, the 

President continued his consultations with Congress pursuant to 

the letter and spirit of the TPA requirements. On October 17, 2005, 

the President notified the Congress of his intent to enter into an 

FTA with Oman. Under TPA procedures, the President is able to 

sign an FTA ninety calendar days after he has notified Congress. 

On January 19, 2006, then-U.S. Trade Representative Rob 

Portman signed the U.S.-Oman FTA. 

On April 5, 2006, the Committee on Ways and Means held a 

hearing on the United States-Oman FTA. The Committee received 

testimony supporting the Agreement from the Administration and 


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U.S. private sector entities. On May 10, 2006, the Committee on 

Ways and Means considered in an informal markup session draft 

legislation to implement the Oman FTA. The Committee approved 

the draft implementing legislation by a recorded vote of 23 yeas to 

15 nays with 3 Members voting present, without amendment. 

During the Finance’s Committee’s non-markup of the Oman FTA 

implementing legislation, the Finance Committee voted to recommend that the bill included language, known as the Conrad 

Amendment, to ban under the Agreement products made from 

forced labor. No Member of the Ways and Means Committee proposed similar language during the Committee’s informal markup, 

and appropriately the Committee recommended that the version of 

the bill voted on by the Ways and Means Committee be used by 

USTR. As was done when the Finance and Ways and Means Committees recommended different language for the implementing legislation or Statements of Administrative Actions for the U.S.-Australia FTA, the U.S.-Dominican Republic Central America FTA, 

and the U.S.-Bahrain FTA, USTR received the views of the two 

Committees and made a determination. Using the standard adopted by the Way and Means committee under TPA, USTR properly 

determined that the Conrad Amendment was not ‘‘necessary or appropriate’’ to implement the bill and could not be included in the 

bill it submitted to Congress. In making this determination, USTR 

noted that the Conrad Amendment duplicates existing law which 

already imposes a ban on goods made from forced labor. Instead of 

including the Conrad Amendment language, USTR agreed to specific language in the Statement of Administrative Action stating 

that the Administration would ‘‘update the Congress periodically 

on the progress that Oman achieves in realizing all commitments 

made to labor law reform,’’ citing the May 8, 2006 letter from the 

Minister of Commerce and Industry of Oman to then-USTR 

Portman. 

In accordance with TPA requirements, President Bush submitted 

to Congress on February 28, 2006, a description of the changes to 

existing U.S. laws that would be required to bring the United 

States into compliance with the Agreement. 

On June 26, 2006, President Bush formally transmitted to Congress the formal legal text of the United States-Oman FTA, implementing legislation, a statement of administrative action proposed 

to implement the Agreement, and other related supporting information as required under section 2105(a) of TPA. Following this 

transmittal, on June 26, 2006, Majority Leader John Boehner introduced, by request, H.R. 5684 to implement the United StatesOman FTA. The bill was referred to the Committee on Ways and 

Means. 

On June 29, 2006, the Committee on Ways and Means formally 

met to consider H.R. 5684. The Committee ordered H.R. 5684 favorably reported to the House of Representatives by a recorded 

vote of 23 yeas to 15 nays; under the requirements of TPA, amendments were not permitted. 


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II. SECTION-BY-SECTION SUMMARY 

TITLE I: APPROVAL AND GENERAL PROVISIONS 

SECTION 101: APPROVAL AND ENTRY INTO FORCE

Current law 

No provision. 

Explanation of provision 

Section 101 states that Congress approves the Agreement and 

the Statement of Administrative Action and provides that the 

Agreement enters into force when the President determines that 

Oman is in compliance and has exchanged notes, on or after January 1, 2007. 

Reason for change 

Approval of the Agreement and the Statement of Administrative 

Action is required under the procedures of section 2103(b)(3) of the 

Bipartisan Trade Promotion Authority Act of 2002. The remainder 

of section 101 provides for entry into force of the Agreement. 

SECTION 102: RELATIONSHIP OF THE AGREEMENT TO U.S. AND STATE

LAW

Current law 

No provision. 

EXPLANATION OF PROVISION

Section 102 provides that U.S. law is to prevail in a conflict and 

states that the Agreement does not preempt state rules that do not 

comply with the Agreement. Only the United States is entitled to 

bring a court action to resolve a conflict between a state law and 

the Agreement. 

Reason for change 

Section 102 is necessary to make clear the relationship between 

the Agreement and federal and state law, respectively. 

SECTION 103: IMPLEMENTING ACTIONS IN ANTICIPATION OF ENTRY

INTO FORCE AND INITIAL REGULATIONS

Current law 

No provision. 

Explanation of provision 

Section 103(a) provides that after the date of enactment, the 

President may proclaim actions and issue regulations as necessary 

to ensure that any provision of this Act that takes effect on the 

date that the Agreement is entered into force is appropriately implemented, but not before the date the Agreement enters into force. 

Section 103(b) establishes that regulations necessary or appropriate to carrying out the actions proposed in the Statement of Administrative Action shall, to the maximum extent feasible, be 

issued within one year of entry into force or the effective date of 

the provision. 


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Reason for change 

Section 103 provides for the issuance of regulations. The Committee strongly believes that regulations should be issued in a 

timely manner to provide maximum clarity to parties claiming benefits under the Agreement. As noted in the Statement of Administrative Action, the regulation-issuing agency will provide a report 

to Congress not later than thirty days before one year elapses on 

any regulation that is going to be issued later than one year. 

SECTION 104: CONSULTATION AND LAYOVER FOR PROCLAIMED ACTIONS

Current law 

No provision. 

Explanation of provision 

Section 104 provides that if the President implements proclamation authority subject to consultation and layover, the President 

may proclaim action only after he has: obtained advice from the 

International Trade Commission and the appropriate private sector 

advisory committees; submitted a report to the Ways and Means 

and Finance Committees concerning the reasons for the action; and 

consulted with the Committees. The action takes effect after 60 

days have elapsed. 

Reason for change 

The bill gives the President certain proclamation authority but 

requires extensive consultation with Congress before such authority may be exercised. The Committee believes that such consultation is an essential component of the delegation of authority to the 

President and expects that such consultations will be conducted in 

a thorough manner. 

SECTION 105: ADMINISTRATION OF DISPUTE SETTLEMENT

PROCEEDINGS

Current law 

No provision. 

Explanation of provision 

Section 105 authorizes the President to establish an office within 

the Commerce Department responsible for providing administrative 

assistance to any panels that may be established under chapter 20 

of the Agreement and authorizes appropriations for the office and 

for payment of the U.S. share of expenses. 

Reason for change 

The Committee believes that the Department of Commerce is the 

appropriate agency to provide administrative assistance to panels. 

SECTION 106: ARBITRATION OF CLAIMS

Current law 

No provision. 


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Explanation of provision 

Section 106 authorizes the United States to resolve certain 

claims covered by the Investor-State Dispute Settlement Procedures set forth in the Agreement. 

Reason for change 

This provision is necessary to meet U.S. obligations under section 

B of chapter 10 of the Agreement. 

SECTION 107: EFFECTIVE DATES; EFFECT OF TERMINATION

Current law 

No provision. 

Explanation of provision 

The effective date of the Act is the date the Agreement enters 

into force with respect to the United States, except sections 1 

through 3 and Title I take effect upon the date of enactment. The 

provisions of the Act terminate on the date on which the Agreement terminates. 

Reason for change 

Section 107 implements U.S. obligations under the Agreement. 

TITLE II: CUSTOMS PROVISIONS 

SECTION 201: TARIFF MODIFICATIONS

Current law 

No provision. 

Explanation of provision 

Section 201(a) provides the President with the authority to proclaim tariff modifications to carry out the Agreement and requires 

the President to terminate Oman’s designation as a beneficiary developing country for the purposes of the Generalized System of 

Preferences program. 

Section 201(b) gives the President the authority to proclaim further tariff modifications, subject to consultation and layover, as the 

President determines to be necessary or appropriate to maintain 

the general level of reciprocal and mutually advantageous concessions with respect to Oman provided for by the Agreement. 

Section 201(c) allows the President, for any goods for which the 

base rate is a specific or compound rate of duty, to substitute for 

the base rate an ad valorem rate to carry out the tariff modifications in subsections (a) and (b). 

Reason for change 

Section 201(a) is necessary to put the United States in compliance with the market access provisions of the Agreement. Section 

201(b) gives the President flexibility to maintain the trade liberalizing nature of the Agreement. The Committee expects the President to comply with the letter and spirit of the consultation and 

layover provisions of this Act in carrying out this subsection. Section 201(c) allows the President to convert tariffs to ad valorem 

rates to carry out the tariff modifications in the Agreement. 


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SECTION 202: RULES OF ORIGIN

Current law 

No provision. 

Explanation of provision 

Section 202 codifies the rules of origin set out in chapter 4 of the 

Agreement. Under the general rules, there are four basic ways for 

a good of Oman to qualify as an ‘‘originating good’’ and therefore 

be eligible for preferential tariff treatment when it is imported into 

the United States. A good is an originating good if it is imported 

directly from the territory of Oman into the territory of the United 

States and: (1) it is ‘‘wholly the growth, product, or manufacture of 

Oman or the United States, or both’’; (2) it is a new or different 

good that has been ‘‘grown, produced, or manufactured in Oman or 

the United States, or both’’ and the value of the materials produced 

and the direct cost of processing operations performed in Oman or 

the United States, or both is not less than 35% of the appraised 

value of the good; (3) it satisfies certain rules of origin for textile 

or apparel goods specified in Annex 3–A of the Agreement; or (4) 

it satisfies certain product-specific rules of origin specified in Annex 

4–A of the Agreement. 

Under the rules in chapter 3 and Annex 3–A of the Agreement, 

an apparel product must generally meet a tariff shift rule that implicitly imposes a ‘‘yarn forward’’ requirement. Thus, to qualify as 

an originating good imported into the United States from Oman, an 

apparel product must have been cut (or knit to shape) and sewn 

or otherwise assembled in Oman from yarn, or fabric made from 

yarn, that originates in Oman or the United States, or both. However, Article 3.2.9 provides an exception to this general rule allowing access for 50 million square meter equivalents of apparel that 

does not meet the yarn forward rule of origin for each of the first 

ten years of the Agreement. Section 202 also includes a de minimis 

exemption providing that in most cases a textile or apparel good 

will be considered originating if the total weight of all nonoriginating fibers or yarns is not more than 7 percent of the total 

weight of the good. 

The remainder of section 202 addresses valuation of materials 

and special definitions. 

Reason for change 

Rules of origin are needed to confine Agreement benefits, such as 

tariff cuts, to Omani goods and to prevent third-country goods from 

being transshipped through Oman and claiming benefits under the 

Agreement. Section 202 puts the United States in compliance with 

the rules of origin provisions of the agreement. The Committee 

notes that the limited exception to the textile and apparel yarn forward rule of origin is phased down over ten years and covers approximately 0.1 percent of U.S. textile and apparel imports by volume. 


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SECTION 203: CUSTOMS USER FEES

Current law 

Section 58c of the title 19 of the U.S. Code lays out various user 

fees applied by customs officials to imports, including the Merchandise Processing Fee (MPF), which is applied on an ad valorem basis 

subject to a cap. 

Explanation of provision 

Section 203 of the bill implements U.S. commitments under article 2.9 of the Agreement, regarding the exemption of the merchandise processing fee on originating goods. This provision is similar 

to those included in the implementing legislation for the North 

American Free Trade Agreement, the U.S.-Singapore Free Trade 

Agreement, the U.S-Chile Free Trade Agreement, the U.S.-Australia Free Trade Agreement, the U.S-Dominican Republic-Central 

America-Free Trade Agreement, and the U.S.-Bahrain Free Trade 

Agreement. The provision also prohibits the use of funds in the 

Customs User Fee Account to provide services related to the entry 

of originating goods, in accordance with U.S. obligations under the 

General Agreement on Tariffs and Trade 1994. 

Reason for change 

As with other Free Trade Agreements, the Agreement eliminates 

the merchandise processing fee on qualifying goods from Oman. 

Other customs user fees remain in place. Section 203 is necessary 

to put the United States in compliance with the user fee elimination provisions of the Agreement. The Committee expects that 

the President, in his yearly budget request, will take into account 

the need for funds to pay expenses for entries under the Agreement 

given that MPF funds will not be available. 

SECTION 204: ENFORCEMENT RELATING TO TRADE IN TEXTILE AND

APPAREL GOODS

Current law 

No provision. 

Explanation of provision 

Section 204 implements the verification provisions of the Agreement at Article 3.3 and authorizes the President to take appropriate action while the verification is being conducted. Such appropriate action includes suspending liquidation of the textile or apparel good for which a claim of origin has been made or, in a case 

where the request for verification was based on a reasonable suspicion of unlawful activity related to such goods, for textile or apparel goods exported or produced by the person subject to a 

verification. If the Secretary of the Treasury determines that the 

information obtained from verification is insufficient to make a determination, the President may take appropriate action described 

in section 204(d), including publishing the name and address of the 

person subject to the verification and denial of preferential treatment and denial of entry to certain textile and apparel goods produced or exported by the person subject to the verification. 


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Reason for change 

In order to ensure that only qualifying textile and apparel goods 

receive preferential treatment under the Agreement, special textile 

enforcement provisions are included in the Agreement. Section 204 

is necessary to authorize these enforcement mechanisms for use by 

U.S. authorities. 

SECTION 205: RELIQUIDATION OF ENTRIES

Current law 

No provision. 

Explanation of provision 

Section 205 implements article 4.11.4 of the Agreement and provides authority for the Customs Service to reliquidate an entry to 

refund any excess duties (including any merchandise processing 

fees) paid on a good qualifying under the rules of origin for which 

no claim for preferential tariff treatment was made at the time of 

importation if the importer so requests, within one year after the 

date of importation. 

Reason for change 

Article 4.11.4 of the Agreement anticipates that private parties 

may err in claiming preferential benefits under the Agreement and 

provides a one-year period for parties to make such claims for preferential tariff treatment even if the entry of the goods at issue has 

already been liquidated, i.e., legally finalized by customs officials. 

Section 205 is necessary to put the United States into compliance 

with article 4.11.4 of the Agreement. 

SECTION 206: REGULATIONS

Current law 

No provision. 

Explanation of provision 

Section 206 provides that the Secretary of the Treasury shall 

issue regulations to carry out provisions of this bill related to rules 

of origin and customs user fees. 

Reason for change 

Because the implementing bill involves lengthy and complex implementation procedures by customs officials, section 206 is necessary in order to authorize the Secretary of the Treasury to carry 

out provisions of the implementing bill through regulations. 

TITLE III: RELIEF FROM IMPORTS 

Subtitle A: Relief from imports benefiting from the agreement (sections 311–316) 

Current law 

No provision. 


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19 

Explanation of provision 

Sections 311–316 authorize the President, after an investigation 

and affirmative determination by the U.S. International Trade 

Commission (ITC) or a determination that the President may consider to be affirmative under paragraph (1) of section 330(d) of the 

Tariff Act of 1930 (19 U.S.C. 1330(d)), to impose specified import 

relief when, as a result of the reduction or elimination of a duty 

under the Agreement, an Omani product is being imported into the 

United States in such increased quantities and under such conditions as to be a substantial cause of serious injury or threat of serious injury to the domestic industry. 

Section 311(c) defines ‘‘substantial cause’’ and applies factors in 

making determinations in the same manner as section 202 of the 

Trade Act of 1974. 

Section 311(d) exempts from investigation under this section 

Omani articles for which import relief has been provided under this 

safeguard since the Agreement entered into force. 

Under sections 312(b) and (c), if the ITC makes an affirmative 

determination, it must find and recommend to the President the 

amount of import relief that is necessary to remedy or prevent serious injury and to facilitate the efforts of the domestic industry to 

make a positive adjustment to import competition. 

Under section 313(a), the President shall provide import relief to 

the extent that the President determines is necessary to remedy or 

prevent the injury found by the ITC and to facilitate the efforts of 

the domestic industry to make a positive adjustment to import 

competition. 

Under section 313(b), the President is not required to provide import relief if the President determines that the relief will not provide greater economic and social benefits than costs. 

Section 313(c) sets forth the nature of the relief that the President may provide as: a suspension of further reductions for the article; or an increase to a level that does not exceed the lesser of the 

existing NTR/MFN rate or the NTR/MFN rate imposed when the 

Agreement entered into force. Section 313(c)(2) states that if the 

President provides relief for greater than one year, it must be subject to progressive liberalization at regular intervals over the 

course of its application. 

Section 313(d) states that the import relief that the President is 

authorized to provide may not, in the aggregate, exceed three 

years. 

Section 314 provides that no relief may be provided under this 

subtitle after ten years from the date on which the Agreement enters into force, unless the President determines under section 

314(b) that Oman has consented to such relief. 

Section 315 authorizes the President to provide compensation to 

Oman consistent with article 8.3 of the Agreement. 

Section 316 provides for the treatment of confidential business 

information. 

Reason for change 

The Committee believes that it is important to have in place a 

temporary, extraordinary mechanism if a U.S. industry experiences 

injury by reason of increased import competition from Oman in the 

future, with the understanding that the President is not required 


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to provide relief if the relief will not provide greater economic or 

social benefits than costs. The Committee intends that administration of this safeguard be consistent with U.S. obligations under 

chapter 8 (Safeguards) of the Agreement. 

Subtitle B: Textile and apparel safeguard (sections 321–328) 

Current law 

No provision. 

Explanation of provision 

Section 321 provides that a request for safeguard relief under 

this subtitle may be filed with the President by an interested party. 

The President is to review the request and determine whether to 

commence consideration of the request. If the President determines 

to commence consideration of the request, he is to publish a notice 

commencing consideration and seeking comments. The notice is to 

include a summary of the request. 

Section 322(a) of the Act provides for the President to determine, 

pursuant to a request by an interested party, whether, as a result 

of the elimination of a duty provided under the Agreement, an 

Omani textile or apparel article is being imported into the United 

States in such increased quantities, in absolute terms or relative 

to the domestic market for that article, and under such conditions 

as to cause serious damage, or actual threat thereof, to a domestic 

industry producing an article that is like, or directly competitive 

with, the imported article. 

Section 322(b) identifies the relief that the President may provide, which is the lesser of the existing NTR/MFN rate or the NTR/ 

MFN rate imposed when the Agreement entered into force. 

Section 323 of the bill provides that the period of relief shall be 

no longer than three years. The President may extend the relief if 

the initial period for relief was less than three years, but the aggregate period of relief, including extensions, may not exceed three 

years. 

Section 324 provides that relief may not be granted to an article 

under this safeguard if relief has previously been granted under 

this safeguard, or the article is subject to import relief under chapter 1 of title II of the Trade Act of 1974. 

Under section 325, after a safeguard expires, the rate of duty on 

the article that had been subject to the safeguard shall be the rate 

that would have been in effect but for the safeguard action. 

Section 326 states that the authority to provide safeguard relief 

under this subtitle expires ten years after the date on which duties 

on the article are eliminated pursuant to the Agreement. 

Section 327 of the Act gives authority to the President to provide 

compensation to Oman if he orders relief. 

Section 328 provides for the treatment of confidential business 

information. 

Reason for change 

The Committee intends that the provisions of subtitle B be administered in a manner that is in compliance with U.S. obligations 

under Article 3.1 of the Agreement. In particular, the Committee 

expects that the President will implement a transparent process 


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21 

that will serve as an example to our trading partners. For example, 

in addition to publishing a summary of the request for safeguard 

relief, the Committee notes that the President plans to make available the full text of the request, subject to the protection of business confidential data, on the Department of Commerce, International Trade Administration’s website. In addition, the Committee encourages the President to issue regulations on procedures 

for requesting such safeguard measures, for making its determinations under section 322(a), and for providing relief under section 

322(b). 

TITLE IV: GOVERNMENT PROCUREMENT 

Section 401: Eligible products 

Current law 

U.S. procurement law (the Buy American Act of 1933 and the 

Buy American Act of 1988) discriminates against foreign suppliers 

of goods and services in favor of U.S. providers of goods and services. Most discriminatory purchasing provisions are waived if the 

United States is party to a bilateral or multilateral procurement 

agreement, such as the WTO Agreement on Government Procurement and the North American Free Trade Agreement. 

Explanation of provision 

Section 401 implements chapter 9 of the Agreement and amends 

the definition of ‘‘eligible product’’ in section 308 of the Trade 

Agreements Act of 1979. As amended, section 308(4)(A) will provide 

that, for a party to United States-Oman Free Trade Agreement, an 

‘‘eligible product’’ means ‘‘a product or service of that country or instrumentality which is covered under that Agreement for procurement by the United States.’’ 

Reason for change 

This provision implements U.S. obligations under chapter 9 of 

the Agreement. 

III. VOTE OF THE COMMITTEE 

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

House of Representatives, the following statements are made concerning the vote of the Committee on Ways and Means in its consideration of the bill, H.R. 5684. 

MOTION TO REPORT THE BILL 

The bill, H.R. 5684, was ordered favorably reported by a rollcall 

vote of 23–15 (with a quorum being present). 

Representatives Yea Nay Present Representative Yea Nay Present 

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

Mr. Shaw ............................... X ........... ............. Mr. Stark .............................. ........... X 

Mrs. Johnson ......................... X ........... ............. Mr. Levin .............................. ........... X 

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

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

Mr. Camp .............................. X ........... ............. Mr. Lewis (GA) ..................... ........... X 

Mr. Ramstad ......................... X ........... ............. Mr. Neal ............................... ........... X 

Mr. Nussle ............................. X ........... ............. Mr. McNulty .......................... ........... X 


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22 

Representatives Yea Nay Present Representative Yea Nay Present 

Mr. Johnson ........................... ........... ........... ............. Mr. Tanner ............................ ........... X 

Mr. English ........................... X ........... ............. Mr. Becerra .......................... ........... ...........

Mr. Hayworth ......................... X ........... ............. Mr. Doggett .......................... ........... X 

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

Mr. Hulshof ........................... X ........... ............. Ms. Tubbs Jones .................. ........... X 

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

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

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

Mr. Reynolds ......................... X 

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

Mr. Cantor ............................. X 

Mr. Linder ............................. X 

Mr. Beauprez ......................... X 

Ms. Hart ................................ X 

Mr. Chocola ........................... X 

Mr. Nunes ............................. X 

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

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

House of Representatives, the following statement is made concerning the effects on the budget of this bill, H.R. 5684, as reported: The Committee agrees with the estimate prepared by the 

Congressional Budget Office (CBO) which is included below. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES

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

House of Representatives, the Committee states that enactment of 

H.R. 5684 would reduce customs duty receipts due to lower tariffs 

imposed on goods from Oman. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

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

House of Representatives, requiring a cost estimate prepared by 

the CBO, the following report prepared by the CBO is provided. 

H.R. 5684—United States-Oman Free Trade Agreement Implementation Act 

Summary: H.R. 5684 would approve the free trade agreement between the government of the United States and the government of 

Oman that was entered into on January 19, 2006. It would provide 

for tariff reductions and other changes in law related to implementation of the agreement. 

The Congressional Budget Office estimates that enacting the bill 

would reduce revenues by $15 million in 2007, by $111 million over 

the 2007–2011 period, and by $271 million over the 2007–2016 period, net of income and payroll tax offsets. CBO estimates that enacting H.R. 5684 also would increase direct spending by $1 million 

in 2007, $6 million over the 2007–2011 period, and $10 million over 

the 2007–2016 period. Further, CBO estimates that implementing 

the legislation would incur new discretionary spending of less than 


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23 

$1 million per year, assuming the availability of appropriated 

funds. 

CBO has determined that H.R. 5684 contains no intergovernmental or private-sector mandates as defined in the Unfunded 

Mandates Reform Act (UMRA) and would not directly affect the 

budgets of state, local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 5684 over the 2007–2016 period is shown in 

the following table. The cost for spending under this legislation 

falls within budget function 750 (administration of justice). 

By fiscal year, in millions of dollars— 

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

CHANGES IN REVENUES 

Changes in revenues .................... ¥15 ¥21 ¥23 ¥25 ¥26 ¥28 ¥30 ¥32 ¥34 ¥37 

CHANGES IN DIRECT SPENDING 

Estimated budget authority .......... 1 1 1 1 1 1 1 1 0 0 

Estimated outlays ......................... 1 1 1 1 1 1 1 1 0 0 

Note.—Negative changes in revenues and positive changes in direct spending correspond to increases in budget deficits. 

Basis of estimate 

Revenues 

Under the United States-Oman agreement, tariffs on U.S. imports from Oman would be phased out over time. The tariffs would 

be phased out for individual products at varying rates according to 

one of several different timetables ranging from immediate elimination on the date the agreement enters into force to gradual elimination over 10 years. According to the U.S. International Trade 

Commission, the United States collected about $20 million in customs duties in 2004 or $422 million of imports from Oman. Those 

imports consist largely of various types of apparel articles and oils. 

Based on these data, CBO estimates that phasing out tariff rates 

as outlined in the U.S.-Oman agreement would reduce revenues by 

$15 million in 2007, by $111 million over the 2007–2011 period, 

and by $271 million over the 2007–2016 period, net of income and 

payroll tax offsets. 

This estimate includes the effects of increased imports from 

Oman that would result from the reduced prices of imported products in the United States, reflecting the lower tariff rates. It is likely that some of the increase in U.S. imports from Oman would displace imports from other countries. In the absence of specific data 

on the extent of this substitution effect, CBO assumes that an 

amount equal to one-half of the increse in U.S. imports from Oman 

would displace imports from other countries. 

Direct spending 

This legislation would exempt certain goods imported from Oman 

from merchandise processing fees collected by the Department of 

Homeland Security. Such fees are recorded as offsetting receipts (a 

credit against direct spending). Based on the value of goods imported from Oman in 2005, CBO estimates that implementing this 

provision would reduce fee collections by about $1 million in fiscal 

year 2007 and in each year through 2014, for a total of $10 million 

over the 2007–2014 period. There would be no effects in later years 


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because the authority to collect merchandise processing fees expires 

at the end of 2014. 

Spending subject to appropriation 

Title I of H.R. 5684 would authorize the appropriation of necessary funds for the Department of Commerce to pay the United 

States share of the costs of the dispute settlement procedures established by the agreement. Based on information from the agency, 

CBO estimates that implementing this provision would cost less 

than $1 million per year, subject to the availability of appropriated 

funds. 

Intergovernmental and private-sector impact: The bill contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would not affect the budgets of state, local, or tribal 

governments. 

Previous CBO estimate: On June 28, 2006, CBO transmitted a 

cost estimate of S. 3569, an identically titled bill ordered reported 

by the Senate Committee on Finance on June 28, 2006. The two 

bills are identical, as are CBO’s estimates. 

Estimate prepared by: Federal revenues: Emily Schlect; Federal 

spending: Mark Grabowicz and Kim Cawley; Impact on state, local, 

and tribal governments: Melissa Merrell; Impact on the private sector: Craig Cammarata. 

Estimate approved by: G. Thomas Woodward, Assistant Director 

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

Budget Analysis. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

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

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

the Administration, concluded that it is appropriate and timely to 

consider the bill as reported. In addition, the legislation is governed 

by procedures of the Bipartisan Trade Promotion Authority Act of 

2002. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

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

House of Representatives, the Committee advises that the bill H.R. 

5684 makes de minimis authorization of funding, and the Administration has in place program goals and objectives, which have been 

reviewed by the Committee. 

C. CONSTITUTIONAL AUTHORITY STATEMENT

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

House of Representatives, relating to Constitutional Authority, the 

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

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

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


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D. INFORMATION RELATING TO UNFUNDED MANDATES

This information is provided in accordance with section 423 of 

the Unfunded Mandates Act of 1995 (P.L. 104–4). 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

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

REPORTED 

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

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

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

SECTION 13031 OF THE CONSOLIDATED OMNIBUS 

BUDGET RECONCILIATION ACT OF 1985 

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES. 

(a) * * * 

(b) LIMITATIONS ON FEES.—(1) * * * 

* * * * * * * 

(17) No fee may be charged under subsection (a) (9) or (10) with 

respect to goods that qualify as originating goods under section 202 

of the United States-Oman Free Trade Agreement Implementation 

Act. Any service for which an exemption from such fee is provided 

by reason of this paragraph may not be funded with money contained in the Customs User Fee Account. 

* * * * * * * 

SECTION 520 OF THE TARIFF ACT OF 1930 

SEC. 520. REFUNDS AND ERRORS. 

(a) * * * 

* * * * * * * 

(d) GOODS QUALIFYING UNDER FREE TRADE AGREEMENT RULES

OF ORIGIN.—Notwithstanding the fact that a valid protest was not 

filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess 

duties (including any merchandise processing fees) paid on a good 

qualifying under the rules of origin set out in section 202 of the 

North American Free Trade Agreement Implementation Act, section 202 of the United States-Chile Free Trade Agreement Implementation Act, øor¿ section 203 of the Dominican Republic-Central 

America-United States Free Trade Agreement Implementation Act 

øfor which¿, or section 202 of the United States-Oman Free Trade 

Agreement Implementation Act for which no claim for preferential 

tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files, in accordance with those regulations, a claim that includes— 


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(1) * * * 

* * * * * * * 

(3) such other documentation and information relating to the 

importation of the goods as the Customs Service may require. 

SECTION 202 OF THE TRADE ACT OF 1974 

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

(a) PETITIONS AND ADJUSTMENT PLANS.— 

(1) * * * 

* * * * * * * 

(8) The procedures concerning the release of confidential 

business information set forth in section 332(g) of the Tariff 

Act of 1930 shall apply with respect to information received by 

the Commission in the course of investigations conducted 

under this chapter, part 1 of title III of the North American 

Free Trade Agreement Implementation Act, title II of the 

United States-Jordan Free Trade Area Implementation Act, 

title III of the United States-Chile Free Trade Agreement Implementation Act, title III of the United States-Singapore Free 

Trade Agreement Implementation Act, title III of the United 

States-Australia Free Trade Agreement Implementation Act, 

title III of the United States-Morocco Free Trade Agreement 

Implementation Act, title III of the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, øand¿ title III of the United States-Bahrain Free 

Trade Agreement Implementation Act, and title III of the 

United States-Oman Free Trade Agreement Implementation 

Act. The Commission may request that parties providing confidential business information furnish nonconfidential summaries thereof or, if such parties indicate that the information 

in the submission cannot be summarized, the reasons why a 

summary cannot be provided. If the Commission finds that a 

request for confidentiality is not warranted and if the party 

concerned is either unwilling to make the information public or 

to authorize its disclosure in generalized or summarized form, 

the Commission may disregard the submission. 

* * * * * * * 

SECTION 308 OF THE TRADE AGREEMENTS ACT OF 1979 

SEC. 308. DEFINITIONS. 

As used in this title— 

(1) * * * 

* * * * * * * 

(4) ELIGIBLE PRODUCTS.— 

(A) IN GENERAL.—The term ‘‘eligible product’’ means, 

with respect to any foreign country or instrumentality that 

is— 


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(i) * * * 

* * * * * * * 

(iv) a party to the Dominican Republic-Central 

America-United States Free Trade Agreement, a product or service of that country or instrumentality which 

is covered under that Agreement for procurement by 

the United States; øor¿ 

(v) a party to a free trade agreement that entered 

into force with respect to the United States after December 31, 2005, and before July 2, 2006, a product or 

service of that country or instrumentality which is covered under the free trade agreement for procurement 

by the United Statesø.¿; or 

(vi) a party to the United States-Oman Free Trade 

Agreement, a product or service of that country or instrumentality which is covered under that Agreement 

for procurement by the United States. 

* * * * * * * 


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(61) 

IX. VIEWS 

ADDITIONAL VIEWS 

Democratic Members of the Committee believe that international 

trade agreements, properly structured, can be an important tool for 

promoting broad-based economic growth in the United States and 

around the world, and can enhance bilateral relationships between 

the United States and its trading partners. 

However, the consideration of trade agreements in Congress has 

become more partisan with every agreement negotiated since the 

Trade Act of 2002. The lack of constructive dialogue between Republicans and Democrats on the Committee, and between Committee Members from both parties and the Administration, has exacerbated differences in views among the Members of the Committee. 

The manner in which the U.S.-Oman Free Trade Agreement was 

handled is a perfect example of how not to treat our trade relationships with foreign countries. Rather than dealing solely with the 

U.S. Trade Representative, Oman also was forced to negotiate separately with Republican trade leadership and Democratic trade 

leadership. This is inappropriate, as the differences between Republicans and Democrats in Congress should not be the direct concern of foreign countries. 

We hope that the concerns we have raised in relation to the U.S.- 

Oman Free Trade Agreement still can be addressed. We also stand 

ready to engage with Republican Members of the Committee in an 

honest dialogue to determine how to resolve the areas where Members have differences so that the Committee’s support for future 

trade agreements will be truly bipartisan. 

CHARLES B. RANGEL. 

SANDER M. LEVIN. 

JOHN LEWIS. 

LLOYD DOGGETT. 

PETE STARK. 

MIKE THOMPSON. 

JOHN B. LARSON. 

JIM MCDERMOTT. 

XAVIER BECERRA. 

STEPHANIE TUBBS JONES. 

EARL POMEROY. 

RAHM EMANUEL. 

RICHARD E. NEAL. 

MICHAEL R. MCNULTY. 

BEN CARDIN. 

JOHN TANNER. 


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DISSENTING VIEWS 

The United States-Oman Free Trade Agreement (FTA) represents another missed opportunity for U.S. trade policy. As with 

previous agreements, the Administration had an opportunity to negotiate and submit to Congress for approval an agreement that 

would have ensured that the benefits of trade flow broadly 

throughout society—to working people; farmers, large and small; 

and businesses, large and small. The Administration had an opportunity to craft a lasting, bipartisan approach to U.S. trade policy. 

Instead, the Administration negotiated a free trade agreement with 

Oman and submitted a bill to Congress that does little to ensure 

that our trade policy raises living standards in the United States 

and abroad, and that once again exacerbates, rather than bridges, 

differences in views among the Members of this Committee. 

The United States and Oman have enjoyed good relations for 

more than 170 years. The two countries signed a treaty of friendship in 1833. Today, Oman is a key friend and ally of the United 

States in the Middle East. A correctly drafted trade agreement 

with Oman would solidify this already strong relationship. However, the agreement negotiated by the Administration fails to adequately address several important issues. 

I. INADEQUATE LABOR PROVISIONS

As in all other FTAs negotiated by the Bush Administration, the 

single enforceable labor provision in the text of the U.S.-Oman FTA 

requires only that each Party ‘‘effectively enforce its labor laws.’’ 

Further, that labor provision is subject to a weaker enforcement 

mechanism than that applicable to other provisions in the agreement. 

This structure is inadequate in this case, particularly because 

Oman’s labor laws and practices fail to comply with basic international labor standards, as reported by the International Labor 

Organization, U.S. Department of State, and U.S. Department of 

Labor. In view of these shortcomings, a correctly drafted agreement 

would require that the Parties to the agreement meet basic international labor standards so as to ensure that workers have the 

ability to organize and collectively bargain for better working conditions and wages. A correctly drafted agreement would ensure 

that U.S. firms and workers are not asked to compete against companies that gain a competitive advantage by suppressing their 

workers. A correctly drafted agreement would not promote a race 

to the bottom. 

A correctly drafted agreement, particularly an agreement with a 

country whose labor laws and practices do not comply with basic 

ILO standards, would require each party to the agreement to commit to: (1) bring its labor laws into compliance with the basic 

standards of the International Labor Organization (ILO) within 3 


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years; (2) subject this commitment to meet basic ILO labor standards and other obligations set forth in the Chapter on Labor to the 

regular dispute settlement mechanisms that apply to all other commercial provisions in the agreement; and (3) engage in an intensive 

process—in which the United States and international institutions 

provide amply technical and other assistance—such as the government is able to meet ILO standards in its laws, practices and enforcement activities as rapidly as possible and on a sustained basis. 

In the case of Oman, Committee Democrats sought to overcome 

the lack of enforceable commitments in the U.S.-Oman FTA regarding compliance with basic labor standards. Ways and Means Democrats identified to the Government of Oman in November 2005 and 

February 2006, the changes to Oman’s laws that need to be made 

for Oman to comply with ILO standards. The changes were limited 

to those changes necessary to bring Oman’s law into compliance 

with basic ILO standards: the right to associated; the right to bargain collectively; and bans on exploitative child labor and forced 

labor. 

Despite eight months of discussions, the Government of Oman’s 

laws and practices remain far short of basic ILO standards and the 

Government of Oman has not yet brought its laws into compliance 

with ILO standards. Instead, the Government of Oman has promised to amend its laws by October 31, 2006. Further, Oman has not 

committed to apply its labor standards in a manner consistent with 

basic international standards, pending formal changes to its laws. 

Oman’s failure to ensure that working people on the ground 

today enjoy basic internationally-recognized rights stands in sharp 

contrast to the clear and binding commitments made by the Government of Bahrain regarding the continued application of its labor 

laws when Congress considered the U.S.-Bahrain FTA in December 

2005. In that case, Bahrain made a binding commitment prior to 

the House vote to (1) continued applying its existing labor laws in 

a manner consistent with ILO standards; as well as (2) promptly 

present to its Parliament formal amendments to its laws to ensure 

they were fully ILO-compliant. 

Had Oman made the same demonstration and undertook the 

same commitments—no more and no less—prior to the Committee 

markup as did the Government of Bahrain in November 2005, 

there would have been a basis in Committee for a broad majority 

of Democratic Committee Members to support the FTA and implementing legislation as related to basic labor standards. 

II. ADMINISTRATION DISREGARDED ACTION BY FINANCE COMMITTEE

We also have strong concerns about the fact that the President 

submitted the formal Oman implementing legislation to Congress 

on June 26, 2006, without including an amendment that was approved unanimously by the Senate Finance Committee during its 

mock markup on May 18. The amendment would have prohibited 

products manufactured by companies that engage in human trafficking or indentured labor from receiving preferential treatment 

under the FTA. 

At the least, the Members of the Ways and Means Committee 

and Finance Committee should have convened a ‘‘mock’’ conference 

to discuss how to handle this amendment. (This was the procedure 


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used for NAFTA and the Uruguay Round in the 1990s.) The fact 

that the Administration went ahead and submitted the implementing bill to Congress without such a conference makes a mockery of the procedures that were established under the fast track 

procedures in the Trade Act of 2002. 

III. REPORTS RE: OMAN’S PARTICIPATION IN ARAB LEAGUE BOYCOTT

In many ways, Oman has been a leader in the Middle East with 

regard to its ties to Israel. Unfortunately, recent reports, including 

press reports, indicate that Oman has not taken a key step to advancing its relationship with Israel, eliminating the Arab League 

boycott against Israel. 

In a letter sent by the Omani Minister of Commerce and Industry to U.S. Trade Representative Portman in September 2005, 

‘‘Oman does not apply any aspect of the [Arab League boycott], 

whether primary, secondary or tertiary or have any laws to that effect.’’ However, despite the statement of the Government of Oman 

that it does not participate in the Arab League boycott, independent evidence suggests that the boycott may be still be enforced 

on the ground in Oman. A June 8, 2006 article in the Jerusalem 

Post quotes the Chief of Customs Officers at Seeb International 

Airport outside Muscat, the Omani capital, as stating: 

No products from Israel are allowed. If it is a personal 

item or two, they will probably not check. But if it is for 

marketing or to sell, then it is not allowed. 

The article further quotes an official with Oman’s Directorate 

General of Customs as stating, ‘‘Products from Israel are not permitted because of the boycott.’’ 

In response to the Jerusalem Post article, the Government of 

Oman issued a circular to its relevant agencies reiterating its policy of not enforcing the boycott. We urge the Government of Oman 

to continue its efforts to ensure the enforcement of the boycott is 

terminated permanently on the ground in Oman. 

IV. OTHER CONTINUING CONCERNS

We also continue to have reservations about sections of the U.S.- 

Oman FTA that, like other recently negotiated U.S. FTAs, could affect the availability of affordable drugs. In particular, we are concerned about test data requirements in the U.S.-Oman FTA, which 

could affect a country’s ability to address public health problems 

and delay the introduction of generic pharmaceuticals. Further, we 

are concerned that the U.S.-Oman FTA, like other recent FTAs, 

fails to balance appropriately the promotion of access to affordable 

medicines through a streamlined process for generic competition 

with the protection of intellectual property of pharmaceuticals. 

Similarly, we object to the FTA’s Chapter on the Environment, 

which like other recently negotiated FTAs, includes only minimal 

commitments. The Chapter includes no benchmarks for the Parties 

to meet in improving their environmental laws and practices, and 

instead requires only that the countries enforce their existing laws. 

Further, this requirement is subject to a weaker enforcement mechanism than other provisions in the agreement. 


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Another area of concern is the so-called ‘‘investor-state’’ dispute 

settlement mechanism provided for in the U.S.-Oman FTA’s Chapter on Investment. The investor-state mechanism can be a useful 

tool to ensure that U.S. investors overseas are protected against 

unfair treatment. However, if not properly crafted to reflect current 

U.S. laws, the investor-state mechanism can provide foreign investors greater rights than U.S. investors in the U.S. market. 

Unfortunately, the U.S.-Oman FTA still leaves out key elements 

of U.S. law, notwithstanding that it arguably is an improvement 

over the standard contained at Chapter 11 of the NAFTA. The result is to empower panels to issue decisions that could go well beyond U.S. law—allowing foreign investors to receive greater rights 

than U.S. investors in the U.S. market. 

CHARLES B. RANGEL. 

SANDER M. LEVIN. 

JOHN LEWIS. 

LLOYD DOGGETT. 

PETE STARK. 

RICHARD E. NEAL. 

JOHN B. LARSON. 

JIM MCDERMOTT. 

XAVIER BECERRA. 

STEPHANIE TUBBS JONES. 

EARL POMEROY. 

RAHM EMANUEL. 

BEN CARDIN. 

MICHAEL R. MCNULTY. 

Æ 


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