II

104TH CONGRESS

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.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Caribbean Basin Trade

5 Security Act’’.

6 SEC. 2. FINDINGS AND POLICY.

7 (a) FINDINGS.—The Congress finds that—
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1 (1) the Caribbean Basin Economic Recovery

2 Act represents a permanent commitment by the

3 United States to encourage the development of

4 strong democratic governments and revitalized

5 economies in neighboring countries in the Caribbean

6 Basin;

7 (2) the economic security of the countries in the

8 Caribbean Basin is potentially threatened by the di9 version of investment to Mexico as a result of the

10 North American Free Trade Agreement;

11 (3) to preserve the United States commitment

12 to Caribbean Basin beneficiary countries and to help

13 further their economic development, it is necessary

14 to offer temporary benefits equivalent to the trade

15 treatment accorded to products of NAFTA mem16 bers;

17 (4) offering NAFTA equivalent benefits to Car18 ibbean Basin beneficiary countries, pending their

19 eventual accession to the NAFTA, will promote the

20 growth of free enterprise and economic opportunity

21 in the region, and thereby enhance the national se22 curity interests of the United States; and

23 (5) increased trade and economic activity be24 tween the United States and Caribbean Basin bene-
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1 ficiary countries will create expanding export oppor2 tunities for United States businesses and workers.

3 (b) POLICY.—It is therefore the policy of the United

4 States to offer to the products of Caribbean Basin bene5 ficiary countries tariff and quota treatment equivalent to

6 that accorded to products of NAFTA countries, and to

7 seek the accession of these beneficiary countries to the

8 NAFTA at the earliest possible date, with the goal of

9 achieving full participation in the NAFTA by all bene10 ficiary countries by not later than January 1, 2005.

11 SEC. 3. DEFINITIONS.

12 As used in this title:

13 (1) BENEFICIARY COUNTRY.—The term ‘‘bene14 ficiary country’’ means a beneficiary country as de15 fined in section 212(a)(1)(A) of the Caribbean Basin

16 Economic Recovery Act (19 U.S.C. 2702(a)(1)(A)).

17 (2) NAFTA.—The term ‘‘NAFTA’’ means the

18 North American Free Trade Agreement entered into

19 between the United States, Mexico, and Canada on

20 December 17, 1992.

21 (3) TRADE REPRESENTATIVE.—The term

22 ‘‘Trade Representative’’ means the United States

23 Trade Representative.

24 (4) WTO AND WTO MEMBER.—The terms

25 ‘‘WTO’’ and ‘‘WTO member’’ have the meanings
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1 given such terms in section 2 of the Uruguay Round

2 Agreements Act.

3 TITLE I—RELATIONSHIP OF

4 NAFTA IMPLEMENTATION TO

5 THE OPERATION OF THE CAR6 IBBEAN BASIN INITIATIVE

7 SEC. 101. TEMPORARY PROVISIONS TO PROVIDE NAFTA

8 PARITY TO BENEFICIARY COUNTRY ECONO9 MIES.

10 (a) TEMPORARY PROVISIONS.—Section 213(b) of the

11 Caribbean Basin Economic Recovery Act (19 U.S.C.

12 2703(b)) is amended to read as follows:

13 ‘‘(b) IMPORT-SENSITIVE ARTICLES.—

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

15 through (5), the duty-free treatment provided under

16 this title does not apply to—

17 ‘‘(A) textile and apparel articles which are

18 subject to textile agreements;

19 ‘‘(B) footwear not designated at the time

20 of the effective date of this title as eligible arti21 cles for the purpose of the generalized system

22 of preferences under title V of the Trade Act of

23 1974;

24 ‘‘(C) tuna, prepared or preserved in any

25 manner, in airtight containers;
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1 ‘‘(D) petroleum, or any product derived

2 from petroleum, provided for in headings 2709

3 and 2710 of the HTS;

4 ‘‘(E) watches and watch parts (including

5 cases, bracelets and straps), of whatever type

6 including, but not limited to, mechanical, quartz

7 digital or quartz analog, if such watches or

8 watch parts contain any material which is the

9 product of any country with respect to which

10 HTS column 2 rates of duty apply; or

11 ‘‘(F) articles to which reduced rates of

12 duty apply under subsection (h).

13 ‘‘(2) NAFTA TRANSITION PERIOD TREATMENT

14 OF CERTAIN TEXTILE AND APPAREL ARTICLES.—

15 ‘‘(A) EQUIVALENT TARIFF AND QUOTA

16 TREATMENT.—During the transition period—

17 ‘‘(i) the tariff treatment accorded at

18 any time to any textile or apparel article

19 that originates in the territory of a bene20 ficiary country shall be identical to the tar21 iff treatment that is accorded during such

22 time under section 2 of the Annex to a like

23 article that originates in the territory of

24 Mexico and is imported into the United

25 States;
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1 ‘‘(ii) duty-free treatment under this

2 title shall apply to any textile or apparel

3 article of a beneficiary country that is im4 ported into the United States and that—

5 ‘‘(I) meets the same require6 ments (other than assembly in Mex7 ico) as those specified in Appendix 2.4

8 of the Annex (relating to goods as9 sembled from fabric wholly formed

10 and cut in the United States) for the

11 duty free entry of a like article assem12 bled in Mexico, or

13 ‘‘(II) is identified under subpara14 graph (C) as a handloomed, hand15 made, or folklore article of such coun16 try and is certified as such by the

17 competent authority of such country;

18 and

19 ‘‘(iii) no quantitative restriction or

20 consultation level may be applied to the

21 importation into the United States of any

22 textile or apparel article that—

23 ‘‘(I) originates in the territory of

24 a beneficiary country,
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1 ‘‘(II) meets the same require2 ments (other than assembly in Mex3 ico) as those specified in Appendix

4 3.1.B.10 of the Annex (relating to

5 goods assembled from fabric wholly

6 formed and cut in the United States)

7 for the exemption of a like article as8 sembled in Mexico from United States

9 quantitative restrictions and consulta10 tion levels, or

11 ‘‘(III) qualifies for duty-free

12 treatment under clause (ii)(II).

13 ‘‘(B) NAFTA TRANSITION PERIOD TREAT14 MENT OF NONORIGINATING TEXTILE AND AP15 PAREL ARTICLES.—

16 ‘‘(i) PREFERENTIAL TARIFF TREAT17 MENT.—Subject to clause (ii), the United

18 States Trade Representative may place in

19 effect at any time during the transition pe20 riod with respect to any textile or apparel

21 article that—

22 ‘‘(I) is a product of a beneficiary

23 country, but
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1 ‘‘(II) does not qualify as a good

2 that originates in the territory of that

3 country,

4 tariff treatment that is identical to the

5 preferential tariff treatment that is ac6 corded during such time under Appendix

7 6.B of the Annex to a like article that is

8 a product of Mexico and imported into the

9 United States.

10 ‘‘(ii) PRIOR CONSULTATION.—The

11 United States Trade Representative may

12 implement the preferential tariff treatment

13 described in clause (i) only after consulta14 tion with representatives of the United

15 States textile and apparel industry and

16 other interested parties regarding—

17 ‘‘(I) the specific articles to which

18 such treatment will be extended,

19 ‘‘(II) the annual quantity levels

20 to be applied under such treatment

21 and any adjustment to such levels,

22 ‘‘(III) the allocation of such an23 nual quantities among the beneficiary

24 countries that export the articles con25 cerned to the United States, and
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1 ‘‘(IV) any other applicable provi2 sion.

3 ‘‘(iii) ADJUSTMENT OF CERTAIN BI4 LATERAL TEXTILE AGREEMENTS.—The

5 United States Trade Representative shall

6 undertake negotiations for purposes of

7 seeking appropriate reductions in the

8 quantities of textile and apparel articles

9 that are permitted to be imported into the

10 United States under bilateral agreements

11 with beneficiary countries in order to re12 flect the quantities of textile and apparel

13 articles of each respective country that are

14 exempt from quota treatment by reason of

15 paragraph (2)(A)(iii).

16 ‘‘(C) HANDLOOMED, HANDMADE, AND

17 FOLKLORE ARTICLES.—For purposes of sub18 paragraph (A), the United States Trade Rep19 resentative shall consult with representatives of

20 the beneficiary country for the purpose of iden21 tifying particular textile and apparel goods that

22 are mutually agreed upon as being handloomed,

23 handmade, or folklore goods of a kind described

24 in section 2.3 (a), (b), or (c) or Appendix

25 3.1.B.11 of the Annex.
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1 ‘‘(D) BILATERAL EMERGENCY ACTIONS.—

2 The President may take—

3 ‘‘(i) bilateral emergency tariff actions

4 of a kind described in section 4 of the

5 Annex with respect to any textile or ap6 parel article imported from a beneficiary

7 country if the application of tariff treat8 ment under subparagraph (A) to such arti9 cle results in conditions that would be

10 cause for the taking of such actions under

11 such section 4 with respect to a like article

12 that is a product of Mexico; or

13 ‘‘(ii) bilateral emergency quantitative

14 restriction actions of a kind described in

15 section 5 of the Annex with respect to im16 ports of any textile or apparel article de17 scribed in subparagraph (B)(i) (I) and (II)

18 if the importation of such article into the

19 United States results in conditions that

20 would be cause for the taking of such ac21 tions under such section 5 with respect to

22 a like article that is a product of Mexico.

23 ‘‘(3) NAFTA TRANSITION PERIOD TREATMENT

24 OF CERTAIN OTHER ARTICLES ORIGINATING IN BEN25 EFICIARY COUNTRIES.—
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1 ‘‘(A) EQUIVALENT TARIFF TREATMENT.—

2 ‘‘(i) IN GENERAL.—Subject to clause

3 (ii), the tariff treatment accorded at any

4 time during the transition period to any

5 article referred to in any of subparagraphs

6 (B) through (F) of paragraph (1) that

7 originates in the territory of a beneficiary

8 country shall be identical to the tariff

9 treatment that is accorded during such

10 time under Annex 302.2 of the NAFTA to

11 a like article that originates in the terri12 tory of Mexico and is imported into the

13 United States. Such articles shall be sub14 ject to the provisions for emergency action

15 under chapter 8 of part two of the NAFTA

16 to the same extent as if such articles were

17 imported from Mexico.

18 ‘‘(ii) EXCEPTION.—Clause (i) does not

19 apply to any article accorded duty-free

20 treatment under U.S. Note 2(b) to sub21 chapter II of chapter 98 of the HTS.

22 ‘‘(B) RELATIONSHIP TO SUBSECTION (h)

23 DUTY REDUCTIONS.—If at any time during the

24 transition period the rate of duty that would

25 (but for action taken under subparagraph (A)(i)
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1 in regard to such period) apply with respect to

2 any article under subsection (h) is a rate of

3 duty that is lower than the rate of duty result4 ing from such action, then such lower rate of

5 duty shall be applied for the purposes of imple6 menting such action.

7 ‘‘(4) CUSTOMS PROCEDURES.—The provisions

8 of chapter 5 of part two of the NAFTA regarding

9 customs procedures apply to importations of articles

10 from beneficiary countries under paragraphs (2) and

11 (3).

12 ‘‘(5) DEFINITIONS.—For purposes of this sub13 section:—

14 ‘‘(A) The term ‘the Annex’ means Annex

15 300–B of the NAFTA.

16 ‘‘(B) The term ‘NAFTA’ means the North

17 American Free Trade Agreement entered into

18 between the United States, Mexico, and Canada

19 on December 17, 1992.

20 ‘‘(C) The term ‘textile or apparel article’

21 means any article referred to in paragraph

22 (1)(A) that is a good listed in Appendix 1.1 of

23 the Annex.

24 ‘‘(D) The term ‘transition period’ means,

25 with respect to a beneficiary country, the period
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1 that begins on the date of the enactment of the

2 Caribbean Basin Trade Security Act and ends

3 on the earlier of—

4 ‘‘(i) the date that is the 6th anniver5 sary of such date of enactment; or

6 ‘‘(ii) the date on which—

7 ‘‘(I) the beneficiary country ac8 cedes to the NAFTA, or

9 ‘‘(II) there enters into force with

10 respect to the United States and the

11 beneficiary country a free trade agree12 ment comparable to the NAFTA that

13 makes substantial progress in achiev14 ing the negotiating objectives set forth

15 in section 108(b)(5) of the North

16 American Free Trade Agreement Im17 plementation Act.

18 ‘‘(E) An article shall be treated as having

19 originated in the territory of a beneficiary coun20 try if the article meets the rules of origin for

21 a good set forth in chapter 4 of part two of the

22 NAFTA or in Appendix 6.A of the Annex. In

23 applying such chapter 4 or Appendix 6.A with

24 respect to a beneficiary country for purposes of

25 this subsection, no countries other than the
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1 United States and beneficiary countries may be

2 treated as being Parties to the NAFTA.’’.

3 (b) CONFORMING AMENDMENTS.—The Caribbean

4 Basin Economic Recovery Act is amended—

5 (1) by amending section 212(e)(1)(B) to read

6 as follows:

7 ‘‘(B) withdraw, suspend, or limit the appli8 cation of the duty-free treatment under this

9 subtitle, and the tariff and preferential tariff

10 treatment under section 213(b)(2) and (3), to

11 any article of any country,’’; and

12 (2) by inserting ‘‘and except as provided in sec13 tion 213(b)(2) and (3),’’ after ‘‘Tax Reform Act of

14 1986,’’ in section 213(a)(1).

15 SEC. 102. EFFECT OF NAFTA ON SUGAR IMPORTS FROM

16 BENEFICIARY COUNTRIES.

17 The President shall monitor the effects, if any, that

18 the implementation of the NAFTA has on the access of

19 beneficiary countries under the Caribbean Basin Economic

20 Recovery Act to the United States market for sugars, syr21 ups, and molasses. If the President considers that the im22 plementation of the NAFTA is affecting, or will likely af23 fect, in an adverse manner the access of such countries

24 to the United States market, the President shall

25 promptly—
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1 (1) take such actions, after consulting with in2 terested parties and with the appropriate committees

3 of the House of Representatives and the Senate, or

4 (2) propose to the Congress such legislative ac5 tions,

6 as may be necessary or appropriate to ameliorate such ad7 verse effect.

8 SEC. 103. DUTY-FREE TREATMENT FOR CERTAIN BEV9 ERAGES MADE WITH CARIBBEAN RUM.

10 Section 213(a) of the Caribbean Basin Economic Re11 covery Act (19 U.S.C. 2703(a)) is amended—

12 (1) in paragraph (5), by striking ‘‘chapter’’ and

13 inserting ‘‘title’’; and

14 (2) by adding at the end the following new

15 paragraph:

16 ‘‘(6) Notwithstanding paragraph (1), the duty-free

17 treatment provided under this title shall apply to liqueurs

18 and spirituous beverages produced in the territory of Can19 ada from rum if—

20 ‘‘(A) such rum is the growth, product, or manu21 facture of a beneficiary country or of the Virgin Is22 lands of the United States;

23 ‘‘(B) such rum is imported directly from a ben24 eficiary country or the Virgin Islands of the United

25 States into the territory of Canada, and such li-
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1 queurs and spirituous beverages are imported di2 rectly from the territory of Canada into the customs

3 territory of the United States;

4 ‘‘(C) when imported into the customs territory

5 of the United States, such liqueurs and spirituous

6 beverages are classified in subheading 2208.90 or

7 2208.40 of the HTS; and

8 ‘‘(D) such rum accounts for at least 90 percent

9 by volume of the alcoholic content of such liqueurs

10 and spiritous beverages.’’.

11 TITLE II—RELATED PROVISIONS

12 SEC. 201. MEETINGS OF TRADE MINISTERS AND USTR.

13 (a) SCHEDULE OF MEETINGS.—The President shall

14 take the necessary steps to convene a meeting with the

15 trade ministers of the beneficiary countries in order to es16 tablish a schedule of regular meetings, to commence as

17 soon as is practicable, of the trade ministers and the

18 Trade Representative, for the purpose set forth in sub19 section (b).

20 (b) PURPOSE.—The purpose of the meetings sched21 uled under subsection (a) is to reach agreement between

22 the United States and beneficiary countries on the likely

23 timing and procedures for initiating negotiations for bene24 ficiary countries to accede to the NAFTA, or to enter into

25 mutually advantageous free trade agreements with the
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1 United States that contain provisions comparable to those

2 in the NAFTA and would make substantial progress in

3 achieving the negotiating objectives set forth in section

4 108(b)(5) of the North American Free Trade Agreement

5 Implementation Act (19 U.S.C. 3317(b)(5)).

6 SEC. 202. REPORT ON ECONOMIC DEVELOPMENT AND MAR7 KET ORIENTED REFORMS IN THE CARIB8 BEAN.

9 (a) IN GENERAL.—The Trade Representative shall

10 make an assessment of the economic development efforts

11 and market oriented reforms in each beneficiary country

12 and the ability of each such country, on the basis of such

13 efforts and reforms, to undertake the obligations of the

14 NAFTA. The Trade Representative shall, not later than

15 July 1, 1996, submit to the President and to the Commit16 tee on Finance of the Senate and the Committee on Ways

17 and Means of the House of Representatives a report on

18 that assessment.

19 (b) ACCESSION TO NAFTA.—

20 (1) ABILITY OF COUNTRIES TO IMPLEMENT

21 NAFTA.—The Trade Representative shall include in

22 the report under subsection (a) a discussion of pos23 sible timetables and procedures pursuant to which

24 beneficiary countries can complete the economic re25 forms necessary to enable them to negotiate acces-
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1 sion to the NAFTA. The Trade Representative shall

2 also include an assessment of the potential phase-in

3 periods that may be necessary for those beneficiary

4 countries with less developed economies to imple5 ment the obligations of the NAFTA.

6 (2) FACTORS IN ASSESSING ABILITY TO IMPLE7 MENT NAFTA.—In assessing the ability of each bene8 ficiary country to undertake the obligations of the

9 NAFTA, the Trade Representative should consider,

10 among other factors—

11 (A) whether the country has joined the

12 WTO;

13 (B) the extent to which the country pro14 vides equitable access to the markets of that

15 country;

16 (C) the degree to which the country uses

17 export subsidies or imposes export performance

18 requirements or local content requirements;

19 (D) macroeconomic reforms in the country

20 such as the abolition of price controls on traded

21 goods and fiscal discipline;

22 (E) progress the country has made in the

23 protection of intellectual property rights;

24 (F) progress the country has made in the

25 elimination of barriers to trade in services;
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1 (G) whether the country provides national

2 treatment to foreign direct investment;

3 (H) the level of tariffs bound by the coun4 try under the WTO (if the country is a WTO

5 member);

6 (I) the extent to which the country has

7 taken other trade liberalization measures; and

8 (J) the extent which the country works to

9 accommodate market access objectives of the

10 United States.

11 (c) PARITY REVIEW IN THE EVENT A NEW COUNTRY

12 ACCEDES TO NAFTA.—If—

13 (1) a country or group of countries accedes to

14 the NAFTA, or

15 (2) the United States negotiates a comparable

16 free trade agreement with another country or group

17 of countries,

18 the Trade Representative shall provide to the committees

19 referred to in subsection (a) a separate report on the eco20 nomic impact of the new trade relationship on beneficiary

21 countries. The report shall include any measures the

22 Trade Representative proposes to minimize the potential

23 for the diversion of investment from beneficiary countries
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1 to the new NAFTA member or free trade agreement

2 partner.

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