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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 529 Introduced in Senate (IS)]

  1st Session
                                 S. 529

To provide, temporarily, tariff and quota treatment equivalent to that 
accorded to members of the North American Free Trade Agreement (NAFTA) 
               to Caribbean Basin beneficiary countries.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

               March 10 (legislative day, March 6), 1995

 Mr. Graham (for himself, Mr. Mack, Mr. Lott, Mr. Bradley, Ms. Moseley-
  Braun, Mr. Hatch, and Mr. Grassley) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To provide, temporarily, tariff and quota treatment equivalent to that 
accorded to members of the North American Free Trade Agreement (NAFTA) 
               to Caribbean Basin beneficiary countries.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Caribbean Basin Trade Security 
Act''.

SEC. 2. FINDINGS AND POLICY.

    (a) Findings.--The Congress finds that--
            (1) the Caribbean Basin Economic Recovery Act represents a 
        permanent commitment by the United States to encourage the 
        development of strong democratic governments and revitalized 
        economies in neighboring countries in the Caribbean Basin;
            (2) the economic security of the countries in the Caribbean 
        Basin is potentially threatened by the diversion of investment 
        to Mexico as a result of the North American Free Trade 
        Agreement;
            (3) to preserve the United States commitment to Caribbean 
        Basin beneficiary countries and to help further their economic 
        development, it is necessary to offer temporary benefits 
        equivalent to the trade treatment accorded to products of NAFTA 
        members;
            (4) offering NAFTA equivalent benefits to Caribbean Basin 
        beneficiary countries, pending their eventual accession to the 
        NAFTA, will promote the growth of free enterprise and economic 
        opportunity in the region, and thereby enhance the national 
        security interests of the United States; and
            (5) increased trade and economic activity between the 
        United States and Caribbean Basin beneficiary countries will 
        create expanding export opportunities for United States 
        businesses and workers.
    (b) Policy.--It is therefore the policy of the United States to 
offer to the products of Caribbean Basin beneficiary countries tariff 
and quota treatment equivalent to that accorded to products of NAFTA 
countries, and to seek the accession of these beneficiary countries to 
the NAFTA at the earliest possible date, with the goal of achieving 
full participation in the NAFTA by all beneficiary countries by not 
later than January 1, 2005.

SEC. 3. DEFINITIONS.

    As used in this title:
            (1) Beneficiary country.--The term ``beneficiary country'' 
        means a beneficiary country as defined in section 212(a)(1)(A) 
        of the Caribbean Basin Economic Recovery Act (19 U.S.C. 
        2702(a)(1)(A)).
            (2) NAFTA.--The term ``NAFTA'' means the North American 
        Free Trade Agreement entered into between the United States, 
        Mexico, and Canada on December 17, 1992.
            (3) Trade representative.--The term ``Trade 
        Representative'' means the United States Trade Representative.
            (4) WTO and wto member.--The terms ``WTO'' and ``WTO 
        member'' have the meanings given such terms in section 2 of the 
        Uruguay Round Agreements Act.

 TITLE I--RELATIONSHIP OF NAFTA IMPLEMENTATION TO THE OPERATION OF THE 
                       CARIBBEAN BASIN INITIATIVE

SEC. 101. TEMPORARY PROVISIONS TO PROVIDE NAFTA PARITY TO BENEFICIARY 
              COUNTRY ECONOMIES.

    (a) Temporary Provisions.--Section 213(b) of the Caribbean Basin 
Economic Recovery Act (19 U.S.C. 2703(b)) is amended to read as 
follows:
    ``(b) Import-Sensitive Articles.--
            ``(1) In general.--Subject to paragraphs (2) through (5), 
        the duty-free treatment provided under this title does not 
        apply to--
                    ``(A) textile and apparel articles which are 
                subject to textile agreements;
                    ``(B) footwear not designated at the time of the 
                effective date of this title as eligible articles for 
                the purpose of the generalized system of preferences 
                under title V of the Trade Act of 1974;
                    ``(C) tuna, prepared or preserved in any manner, in 
                airtight containers;
                    ``(D) petroleum, or any product derived from 
                petroleum, provided for in headings 2709 and 2710 of 
                the HTS;
                    ``(E) watches and watch parts (including cases, 
                bracelets and straps), of whatever type including, but 
                not limited to, mechanical, quartz digital or quartz 
                analog, if such watches or watch parts contain any 
                material which is the product of any country with 
                respect to which HTS column 2 rates of duty apply; or
                    ``(F) articles to which reduced rates of duty apply 
                under subsection (h).
            ``(2) NAFTA transition period treatment of certain textile 
        and apparel articles.--
                    ``(A) Equivalent tariff and quota treatment.--
                During the transition period--
                            ``(i) the tariff treatment accorded at any 
                        time to any textile or apparel article that 
                        originates in the territory of a beneficiary 
                        country shall be identical to the tariff 
                        treatment that is accorded during such time 
                        under section 2 of the Annex to a like article 
                        that originates in the territory of Mexico and 
                        is imported into the United States;
                            ``(ii) duty-free treatment under this title 
                        shall apply to any textile or apparel article 
                        of a beneficiary country that is imported into 
                        the United States and that--
                                    ``(I) meets the same requirements 
                                (other than assembly in Mexico) as 
                                those specified in Appendix 2.4 of the 
                                Annex (relating to goods assembled from 
                                fabric wholly formed and cut in the 
                                United States) for the duty free entry 
                                of a like article assembled in Mexico, 
                                or
                                    ``(II) is identified under 
                                subparagraph (C) as a handloomed, 
                                handmade, or folklore article of such 
                                country and is certified as such by the 
                                competent authority of such country; 
                                and
                            ``(iii) no quantitative restriction or 
                        consultation level may be applied to the 
                        importation into the United States of any 
                        textile or apparel article that--
                                    ``(I) originates in the territory 
                                of a beneficiary country,
                                    ``(II) meets the same requirements 
                                (other than assembly in Mexico) as 
                                those specified in Appendix 3.1.B.10 of 
                                the Annex (relating to goods assembled 
                                from fabric wholly formed and cut in 
                                the United States) for the exemption of 
                                a like article assembled in Mexico from 
                                United States quantitative restrictions 
                                and consultation levels, or
                                    ``(III) qualifies for duty-free 
                                treatment under clause (ii)(II).
                    ``(B) NAFTA transition period treatment of 
                nonoriginating textile and apparel articles.--
                            ``(i) Preferential tariff treatment.--
                        Subject to clause (ii), the United States Trade 
                        Representative may place in effect at any time 
                        during the transition period with respect to 
                        any textile or apparel article that--
                                    ``(I) is a product of a beneficiary 
                                country, but
                                    ``(II) does not qualify as a good 
                                that originates in the territory of 
                                that country,
                        tariff treatment that is identical to the 
                        preferential tariff treatment that is accorded 
                        during such time under Appendix 6.B of the 
                        Annex to a like article that is a product of 
                        Mexico and imported into the United States.
                            ``(ii) Prior consultation.--The United 
                        States Trade Representative may implement the 
                        preferential tariff treatment described in 
                        clause (i) only after consultation with 
                        representatives of the United States textile 
                        and apparel industry and other interested 
                        parties regarding--
                                    ``(I) the specific articles to 
                                which such treatment will be extended,
                                    ``(II) the annual quantity levels 
                                to be applied under such treatment and 
                                any adjustment to such levels,
                                    ``(III) the allocation of such 
                                annual quantities among the beneficiary 
                                countries that export the articles 
                                concerned to the United States, and
                                    ``(IV) any other applicable 
                                provision.
                            ``(iii) Adjustment of certain bilateral 
                        textile agreements.--The United States Trade 
                        Representative shall undertake negotiations for 
                        purposes of seeking appropriate reductions in 
                        the quantities of textile and apparel articles 
                        that are permitted to be imported into the 
                        United States under bilateral agreements with 
                        beneficiary countries in order to reflect the 
                        quantities of textile and apparel articles of 
                        each respective country that are exempt from 
                        quota treatment by reason of paragraph 
                        (2)(A)(iii).
                    ``(C) Handloomed, handmade, and folklore 
                articles.--For purposes of subparagraph (A), the United 
                States Trade Representative shall consult with 
                representatives of the beneficiary country for the 
                purpose of identifying particular textile and apparel 
                goods that are mutually agreed upon as being 
                handloomed, handmade, or folklore goods of a kind 
                described in section 2.3 (a), (b), or (c) or Appendix 
                3.1.B.11 of the Annex.
                    ``(D) Bilateral emergency actions.--The President 
                may take--
                            ``(i) bilateral emergency tariff actions of 
                        a kind described in section 4 of the Annex with 
                        respect to any textile or apparel article 
                        imported from a beneficiary country if the 
                        application of tariff treatment under 
                        subparagraph (A) to such article results in 
                        conditions that would be cause for the taking 
                        of such actions under such section 4 with 
                        respect to a like article that is a product of 
                        Mexico; or
                            ``(ii) bilateral emergency quantitative 
                        restriction actions of a kind described in 
                        section 5 of the Annex with respect to imports 
                        of any textile or apparel article described in 
                        subparagraph (B)(i) (I) and (II) if the 
                        importation of such article into the United 
                        States results in conditions that would be 
                        cause for the taking of such actions under such 
                        section 5 with respect to a like article that 
                        is a product of Mexico.
            ``(3) NAFTA transition period treatment of certain other 
        articles originating in beneficiary countries.--
                    ``(A) Equivalent tariff treatment.--
                            ``(i) In general.--Subject to clause (ii), 
                        the tariff treatment accorded at any time 
                        during the transition period to any article 
                        referred to in any of subparagraphs (B) through 
                        (F) of paragraph (1) that originates in the 
                        territory of a beneficiary country shall be 
                        identical to the tariff treatment that is 
                        accorded during such time under Annex 302.2 of 
                        the NAFTA to a like article that originates in 
                        the territory of Mexico and is imported into 
                        the United States. Such articles shall be 
                        subject to the provisions for emergency action 
                        under chapter 8 of part two of the NAFTA to the 
                        same extent as if such articles were imported 
                        from Mexico.
                            ``(ii) Exception.--Clause (i) does not 
                        apply to any article accorded duty-free 
                        treatment under U.S. Note 2(b) to subchapter II 
                        of chapter 98 of the HTS.
                    ``(B) Relationship to subsection (h) duty 
                reductions.--If at any time during the transition 
                period the rate of duty that would (but for action 
                taken under subparagraph (A)(i) in regard to such 
period) apply with respect to any article under subsection (h) is a 
rate of duty that is lower than the rate of duty resulting from such 
action, then such lower rate of duty shall be applied for the purposes 
of implementing such action.
            ``(4) Customs procedures.--The provisions of chapter 5 of 
        part two of the NAFTA regarding customs procedures apply to 
        importations of articles from beneficiary countries under 
        paragraphs (2) and (3).
            ``(5) Definitions.--For purposes of this subsection:--
                    ``(A) The term `the Annex' means Annex 300-B of the 
                NAFTA.
                    ``(B) The term `NAFTA' means the North American 
                Free Trade Agreement entered into between the United 
                States, Mexico, and Canada on December 17, 1992.
                    ``(C) The term `textile or apparel article' means 
                any article referred to in paragraph (1)(A) that is a 
                good listed in Appendix 1.1 of the Annex.
                    ``(D) The term `transition period' means, with 
                respect to a beneficiary country, the period that 
                begins on the date of the enactment of the Caribbean 
                Basin Trade Security Act and ends on the earlier of--
                            ``(i) the date that is the 6th anniversary 
                        of such date of enactment; or
                            ``(ii) the date on which--
                                    ``(I) the beneficiary country 
                                accedes to the NAFTA, or
                                    ``(II) there enters into force with 
                                respect to the United States and the 
                                beneficiary country a free trade 
                                agreement comparable to the NAFTA that 
                                makes substantial progress in achieving 
                                the negotiating objectives set forth in 
                                section 108(b)(5) of the North American 
                                Free Trade Agreement Implementation 
                                Act.
                    ``(E) An article shall be treated as having 
                originated in the territory of a beneficiary country if 
                the article meets the rules of origin for a good set 
                forth in chapter 4 of part two of the NAFTA or in 
                Appendix 6.A of the Annex. In applying such chapter 4 
                or Appendix 6.A with respect to a beneficiary country 
                for purposes of this subsection, no countries other 
                than the United States and beneficiary countries may be 
                treated as being Parties to the NAFTA.''.
    (b) Conforming Amendments.--The Caribbean Basin Economic Recovery 
Act is amended--
            (1) by amending section 212(e)(1)(B) to read as follows:
                    ``(B) withdraw, suspend, or limit the application 
                of the duty-free treatment under this subtitle, and the 
                tariff and preferential tariff treatment under section 
                213(b)(2) and (3), to any article of any country,''; 
                and
            (2) by inserting ``and except as provided in section 
        213(b)(2) and (3),'' after ``Tax Reform Act of 1986,'' in 
        section 213(a)(1).

SEC. 102. EFFECT OF NAFTA ON SUGAR IMPORTS FROM BENEFICIARY COUNTRIES.

    The President shall monitor the effects, if any, that the 
implementation of the NAFTA has on the access of beneficiary countries 
under the Caribbean Basin Economic Recovery Act to the United States 
market for sugars, syrups, and molasses. If the President considers 
that the implementation of the NAFTA is affecting, or will likely 
affect, in an adverse manner the access of such countries to the United 
States market, the President shall promptly--
            (1) take such actions, after consulting with interested 
        parties and with the appropriate committees of the House of 
        Representatives and the Senate, or
            (2) propose to the Congress such legislative actions,
as may be necessary or appropriate to ameliorate such adverse effect.

SEC. 103. DUTY-FREE TREATMENT FOR CERTAIN BEVERAGES MADE WITH CARIBBEAN 
              RUM.

    Section 213(a) of the Caribbean Basin Economic Recovery Act (19 
U.S.C. 2703(a)) is amended--
            (1) in paragraph (5), by striking ``chapter'' and inserting 
        ``title''; and
            (2) by adding at the end the following new paragraph:
    ``(6) Notwithstanding paragraph (1), the duty-free treatment 
provided under this title shall apply to liqueurs and spirituous 
beverages produced in the territory of Canada from rum if--
            ``(A) such rum is the growth, product, or manufacture of a 
        beneficiary country or of the Virgin Islands of the United 
        States;
            ``(B) such rum is imported directly from a beneficiary 
        country or the Virgin Islands of the United States into the 
        territory of Canada, and such liqueurs and spirituous beverages 
        are imported directly from the territory of Canada into the 
        customs territory of the United States;
            ``(C) when imported into the customs territory of the 
        United States, such liqueurs and spirituous beverages are 
        classified in subheading 2208.90 or 2208.40 of the HTS; and
            ``(D) such rum accounts for at least 90 percent by volume 
        of the alcoholic content of such liqueurs and spiritous 
        beverages.''.

                      TITLE II--RELATED PROVISIONS

SEC. 201. MEETINGS OF TRADE MINISTERS AND USTR.

    (a) Schedule of Meetings.--The President shall take the necessary 
steps to convene a meeting with the trade ministers of the beneficiary 
countries in order to establish a schedule of regular meetings, to 
commence as soon as is practicable, of the trade ministers and the 
Trade Representative, for the purpose set forth in subsection (b).
    (b) Purpose.--The purpose of the meetings scheduled under 
subsection (a) is to reach agreement between the United States and 
beneficiary countries on the likely timing and procedures for 
initiating negotiations for beneficiary countries to accede to the 
NAFTA, or to enter into mutually advantageous free trade agreements 
with the United States that contain provisions comparable to those in 
the NAFTA and would make substantial progress in achieving the 
negotiating objectives set forth in section 108(b)(5) of the North 
American Free Trade Agreement Implementation Act (19 U.S.C. 
3317(b)(5)).

SEC. 202. REPORT ON ECONOMIC DEVELOPMENT AND MARKET ORIENTED REFORMS IN 
              THE CARIBBEAN.

    (a) In General.--The Trade Representative shall make an assessment 
of the economic development efforts and market oriented reforms in each 
beneficiary country and the ability of each such country, on the basis 
of such efforts and reforms, to undertake the obligations of the NAFTA. 
The Trade Representative shall, not later than July 1, 1996, submit to 
the President and to the Committee on Finance of the Senate and the 
Committee on Ways and Means of the House of Representatives a report on 
that assessment.
    (b) Accession to NAFTA.--
            (1) Ability of countries to implement nafta.--The Trade 
        Representative shall include in the report under subsection (a) 
        a discussion of possible timetables and procedures pursuant to 
        which beneficiary countries can complete the economic reforms 
        necessary to enable them to negotiate accession to the NAFTA. 
        The Trade Representative shall also include an assessment of 
        the potential phase-in periods that may be necessary for those 
        beneficiary countries with less developed economies to 
        implement the obligations of the NAFTA.
            (2) Factors in assessing ability to implement nafta.--In 
        assessing the ability of each beneficiary country to undertake 
        the obligations of the NAFTA, the Trade Representative should 
        consider, among other factors--
                    (A) whether the country has joined the WTO;
                    (B) the extent to which the country provides 
                equitable access to the markets of that country;
                    (C) the degree to which the country uses export 
                subsidies or imposes export performance requirements or 
                local content requirements;
                    (D) macroeconomic reforms in the country such as 
                the abolition of price controls on traded goods and 
                fiscal discipline;
                    (E) progress the country has made in the protection 
                of intellectual property rights;
                    (F) progress the country has made in the 
                elimination of barriers to trade in services;
                    (G) whether the country provides national treatment 
                to foreign direct investment;
                    (H) the level of tariffs bound by the country under 
                the WTO (if the country is a WTO member);
                    (I) the extent to which the country has taken other 
                trade liberalization measures; and
                    (J) the extent which the country works to 
                accommodate market access objectives of the United 
                States.
    (c) Parity Review in the Event a New Country Accedes to NAFTA.--
If--
            (1) a country or group of countries accedes to the NAFTA, 
        or
            (2) the United States negotiates a comparable free trade 
        agreement with another country or group of countries,
the Trade Representative shall provide to the committees referred to in 
subsection (a) a separate report on the economic impact of the new 
trade relationship on beneficiary countries. The report shall include 
any measures the Trade Representative proposes to minimize the 
potential for the diversion of investment from beneficiary countries to 
the new NAFTA member or free trade agreement partner.
                                 <all>
S 529 IS----2
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