Calendar No. 165

105TH CONGRESS

1ST SESSION S. 1093

[Report No. 105–83]

A BILL

To extend nondiscriminatory (most-favored-nation)

Democratic Republic, and for other purposes.treatment to the products of the Lao People’s

SEPTEMBER 17, 1997

Reported with an amendment
II

Calendar No. 165

105TH CONGRESS

1ST SESSION S. 1093

[Report No. 105–83]

To extend nondiscriminatory (most-favored-nation) treatment to the products

of the Lao People’s Democratic Republic, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 30, 1997

Mr. KERRY (for himself, Mr. MCCAIN, and Mr. THOMAS) introduced the

following bill; which was read twice and referred to the Committee on Finance

SEPTEMBER 17, 1997

Reported by Mr. ROTH, with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To extend nondiscriminatory (most-favored-nation) treatment

to the products of the Lao People’s Democratic Republic,

and for other purposes.

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

3 SECTION 1. CONGRESSIONAL FINDINGS.

4 The Congress finds that—
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1 (1) the Lao People’s Democratic Republic is

2 striving to shed centralized government control of its

3 economy in favor of market-oriented reforms;

4 (2) extension of unconditional most-favored-na5 tion treatment would assist the Lao People’s Demo6 cratic Republic in developing its economy based on

7 free market principles and becoming competitive in

8 the global marketplace;

9 (3) establishing normal commercial relations on

10 a reciprocal basis with the Lao People’s Democratic

11 Republic will promote United States exports to the

12 rapidly growing Southeast Asian region and expand

13 opportunities for United States business and invest14 ment in the Lao People’s Democratic Republic econ15 omy;

16 (4) United States and Laotian commercial in17 terests would benefit from a commercial agreement

18 between the United States and the Lao People’s

19 Democratic Republic providing for market access

20 and the protection of intellectual property rights;

21 (5) economic reform in the Lao People’s Demo22 cratic Republic is increasingly important as that

23 country integrates into the ASEAN Free Trade

24 Area and accedes to the World Trade Organization;

25 and
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1 (6) expanding bilateral trade relations that in2 clude a commercial agreement may promote further

3 progress by the Lao People’s Democratic Republic

4 on human rights and democratic rule and assist that

5 country in adopting regional and world trading rules

6 and principles.

7 SEC. 2. EXTENSION OF NONDISCRIMINATORY TREATMENT

8 TO THE PRODUCTS OF THE LAO PEOPLES

9 DEMOCRATIC REPUBLIC.

10 (a) HARMONIZED TARIFF SCHEDULE AMEND11 MENT.—General note 3(b) of the Harmonized Tariff

12 Schedule of the United States is amended by striking

13 ‘‘Laos’’.

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

15 subsection (a) applies with respect to goods entered, or

16 withdrawn from warehouse for consumption, on or after

17 the effective date of a notice published in the Federal Reg18 ister by the United States Trade Representative that a

19 trade agreement obligating reciprocal most-favored-nation

20 treatment between the Lao People’s Democratic Republic

21 and the United States has entered into force.

22 SEC. 3. REPORT TO CONGRESS.

23 The President shall submit to the Congress, not later

24 than 18 months after the date of the enactment of this

25 Act, a report on the trade relations between the United
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1 States and the Lao People’s Democratic Republic pursu2 ant to the trade agreement described in section 2(b).

3 TITLE I—EXTENSION OF MOST4 FAVORED-NATION TREAT5 MENT TO LAOS

6 SEC. 101. CONGRESSIONAL FINDINGS.

7 Congress finds that—

8 (1) the Lao People’s Democratic Republic is

9 striving to shed centralized government control of its

10 economy in favor of market-oriented reforms;

11 (2) extension of unconditional most-favored-na12 tion treatment would assist the Lao People’s Demo13 cratic Republic in developing its economy based on

14 free market principles and becoming competitive in

15 the global marketplace;

16 (3) establishing normal commercial relations on

17 a reciprocal basis with the Lao People’s Democratic

18 Republic will promote United States exports to the

19 rapidly growing Southeast Asian region and expand

20 opportunities for United States business and invest21 ment in the Lao People’s Democratic Republic econ22 omy;

23 (4) United States and Laotian commercial inter24 ests would benefit from a commercial agreement be25 tween the United States and the Lao People’s Demo-
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1 cratic Republic providing for market access and the

2 protection of intellectual property rights;

3 (5) economic reform in the Lao People’s Demo4 cratic Republic is increasingly important as that

5 country integrates into the ASEAN Free Trade Area

6 and accedes to the World Trade Organization; and

7 (6) expanding bilateral trade relations that in8 clude a commercial agreement may promote further

9 progress by the Lao People’s Democratic Republic on

10 human rights and democratic rule and assist that

11 country in adopting regional and world trading rules

12 and principles.

13 SEC. 102. EXTENSION OF NONDISCRIMINATORY TREAT14 MENT TO THE PRODUCTS OF THE LAO PEO15 PLES DEMOCRATIC REPUBLIC.

16 (a) HARMONIZED TARIFF SCHEDULE AMENDMENT.—

17 General note 3(b) of the Harmonized Tariff Schedule of the

18 United States is amended by striking ‘‘Laos’’.

19 (b) EFFECTIVE DATE.—The amendment made by sub20 section (a) applies with respect to goods entered, or with21 drawn from warehouse for consumption, after December 31,

22 1997.

23 SEC. 103. REPORT TO CONGRESS.

24 The President shall submit to Congress, not later than

25 18 months after the date of enactment of this Act, a report
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1 on the trade relations between the United States and the

2 Lao People’s Democratic Republic pursuant to the trade

3 agreement described in section 102(b).

4 TITLE II—INTERNATIONAL

5 SHIPPING INCOME DISCLOSURE

6 SEC. 201. PENALTIES FOR FAILURE TO DISCLOSE POSITION

7 THAT CERTAIN INTERNATIONAL SHIPPING

8 INCOME IS NOT INCLUDIBLE IN GROSS IN9 COME.

10 (a) IN GENERAL.—Section 883 of the Internal Revenue

11 Code of 1986 is amended by adding at the end the following

12 new subsection:

13 ‘‘(d) PENALTIES FOR FAILURE TO DISCLOSE POSITION

14 THAT CERTAIN INTERNATIONAL SHIPPING INCOME IS NOT

15 INCLUDIBLE IN GROSS INCOME.—

16 ‘‘(1) IN GENERAL.—A taxpayer who, with re17 spect to any tax imposed by this title, takes the posi18 tion that any of its gross income derived from the

19 international operation of a ship or ships is not in20 cludible in gross income by reason of subsection (a)(1)

21 or section 872(b)(1) (or by reason of any applicable

22 treaty) shall be entitled to such treatment only if such

23 position is disclosed (in such manner as the Secretary

24 may prescribe) on the return of tax for such tax (or

25 any statement attached to such return).
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1 ‘‘(2) ADDITIONAL PENALTIES FOR FAILING TO

2 DISCLOSE POSITION.—If a taxpayer fails to meet the

3 requirement of paragraph (1) with respect to any tax4 able year—

5 ‘‘(A) the amount of the income from the

6 international operation of a ship or ships—

7 ‘‘(i) which is from sources without the

8 United States, and

9 ‘‘(ii) which is attributable to a fixed

10 place of business in the United States,

11 shall be treated for purposes of this title as effec12 tively connected with the conduct of a trade or

13 business within the United States, and

14 ‘‘(B) no deductions or credits shall be al15 lowed which are attributable to income from the

16 international operation of a ship or ships.

17 ‘‘(3) REASONABLE CAUSE EXCEPTION.—This

18 subsection shall not apply to a failure to disclose a

19 position if it is shown that such failure is due to rea20 sonable cause and not due to willful neglect.’’

21 (b) CONFORMING AMENDMENTS.—

22 (1) Paragraph (1) of section 872(b) of such Code

23 is amended by striking ‘‘Gross income’’ and inserting

24 ‘‘Except as provided in section 883(d), gross income’’.
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1 (2) Paragraph (1) of section 883(a) of such Code

2 is amended by striking ‘‘Gross income’’ and inserting

3 ‘‘Except as provided in subsection (d), gross income’’.

4 (c) EFFECTIVE DATE.—

5 (1) IN GENERAL.—The amendments made by

6 this section shall apply to taxable years beginning

7 after December 31, 1997, and before April 1, 2000.

8 (2) COORDINATION WITH TREATIES.—The

9 amendments made by this section shall not apply in

10 any case where their application would be contrary

11 to any treaty obligation of the United States.

12 (d) INFORMATION TO BE PROVIDED BY CUSTOMS

13 SERVICE.—The United States Customs Service shall pro14 vide the Secretary of the Treasury or his delegate with such

15 information as may be specified by such Secretary in order

16 to enable such Secretary to determine whether ships which

17 are not registered in the United States are engaged in

18 transportation to or from the United States.