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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3843 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 3843

To amend the African Growth and Opportunity Act to extend certain trade 
   benefits to eligible sub-Saharan African countries, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           September 5, 2006

   Mr. Lugar introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To amend the African Growth and Opportunity Act to extend certain trade 
   benefits to eligible sub-Saharan African countries, and for other 
                               purposes.

    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 ``AGOA Extension Act of 2006''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) the African Growth and Opportunity Act (19 U.S.C. 3701 
        et seq.) has helped to spur economic growth and bolster 
        economic reforms in the countries in sub-Saharan Africa and 
        fostered stronger economic ties between the countries in sub-
        Saharan Africa and the United States;
            (2) the African Growth and Opportunity Act has helped to 
        promote investment in sub-Saharan Africa, especially in the 
        textile and apparel sectors;
            (3) the major challenges facing the often nascent textile 
        and apparel sector in sub-Saharan Africa are--
                    (A) unrestrained competition from well-established, 
                and in some cases, subsidized, producers, particularly 
                following the January 1, 2005, elimination of quotas 
                previously maintained by members of the World Trade 
                Organization (WTO); and
                    (B) inadequate infrastructure and access to capital 
                and other supply-side constraints;
            (4) during the first year since the elimination of quotas, 
        United States imports of apparel from sub-Saharan Africa 
        declined by 16 percent, contributing to the closing of dozens 
        of factories and the loss of an estimated 100,000 jobs in the 
        region;
            (5) the rules of origin under the African Growth and 
        Opportunity Act do not reflect the current market reality, 
        which is that African textile mills cannot in general produce 
        yarns or fabric in sufficient variety and quantity to meet the 
        needs of African apparel producers or market demand in the 
        United States and other countries;
            (6) to increase the ability of African apparel 
        manufacturers to meet market demands, the rules of origin under 
        the African Growth and Opportunity Act should be replaced by a 
        simple value-added rule of origin, as advocated by the 
        Commission for Africa and recognized by the World Bank;
            (7) sustainable development and economic growth in sub-
        Saharan Africa require the diversification of the economies of 
        countries in sub-Saharan Africa, utilizing the countries' vast 
        agricultural, natural, and human resources in a just and 
        sustainable manner; and
            (8) to assist countries in sub-Saharan Africa in developing 
        and diversifying their economies, the United States should 
        continue to pursue trade liberalization bilaterally and 
        multilaterally, and in addition, the United States should 
        provide the technical assistance needed and identified in the 
        AGOA Competitiveness Report, published by the United States 
        Trade Representative in 2005, and establish programs to provide 
        sustainable technical assistance to small- and medium-sized 
        African enterprises.

                TITLE I--DESIGNATIONS AND CONSULTATIONS

SEC. 101. DESIGNATION OF ELIGIBLE COUNTRIES.

    Section 104 of the African Growth and Opportunity Act (19 U.S.C. 
3703) is amended by striking subsection (b) and inserting the 
following:
    ``(b) Continuing Compliance.--If the President determines that an 
eligible sub-Saharan African country no longer meets the criteria set 
forth in subsection (a), including by failing to maintain the 
institutions described in subparagraphs (A) through (F) of subsection 
(a)(1), the President may terminate the designation of the country made 
pursuant to subsection (a) if--
            ``(1) the President transmits to Congress notice of the 
        proposed termination; and
            ``(2) the Congress, within 90 days after receiving such 
        notice, does not enact a law prohibiting such termination.''.

SEC. 102. UNITED STATES-SUB-SAHARAN AFRICA TRADE AND ECONOMIC 
              COOPERATION FORUM.

    (a) Grants.--In order to ensure that nongovernmental organizations 
and the private sector continue to host the annual meetings described 
in section 105(c)(2) of the African Growth and Opportunity Act (19 
U.S.C. 3704(c)(2)), the United States Trade Representative, in 
coordination with the heads of other appropriate Federal departments 
and agencies, is authorized to provide grants to United States 
nongovernmental organizations referred to in section 105(c)(2) of that 
Act and to United States representatives of the private sector referred 
to in section 105(c)(2)(B) of that Act, for the purpose of hosting such 
meetings.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated to the United States Trade Representative such sums as may 
be necessary to carry out this section.

SEC. 103. SENSE OF CONGRESS REGARDING LIBERIA.

    It is the sense of Congress that--
            (1) the October 2005 presidential elections in Liberia 
        represented a key step in building peace in Liberia, following 
        nearly two decades of civil war;
            (2) the election of Ms. Ellen Johnson Sirleaf as President 
        of Liberia marks an important milestone for Africa, as 
        President Johnson Sirleaf is the first elected female president 
        in African history;
            (3) in her inaugural address, President Johnson Sirleaf 
        laid out a detailed, multifaceted governance agenda emphasizing 
        security, public- and private-sector led economic 
        revitalization, good governance and anticorruption efforts, 
        regional and international cooperation, and political 
        reconciliation and inclusiveness; and
            (4) in light of the recent progress in Liberia, the 
        President should make a determination as soon as possible, 
        pursuant to section 104(a) of the African Growth and 
        Opportunity Act (19 U.S.C. 3703(a)), regarding whether to 
        designate Liberia as eligible for trade benefits under the 
        African Growth and Opportunity Act.

          TITLE II--TREATMENT OF CERTAIN TEXTILES AND APPAREL

SEC. 201. TREATMENT OF CERTAIN TEXTILES.

    (a) Certain Other Apparel Articles That Are Both Cut (or Knit-to-
Shape) and Sewn or Otherwise Assembled in One or More Beneficiary Sub-
Saharan African Countries.--
            (1) Amendments.--Section 112(b)(3) of the African Growth 
        and Opportunity Act (19 U.S.C. 3721(b)(3)) is amended--
                    (A) by amending the heading to read as follows: 
                ``Certain other apparel articles that are both cut (or 
                knit-to-shape) and sewn or otherwise assembled in one 
                or more beneficiary sub-saharan african countries.--'';
                    (B) by redesignating subparagraphs (A) through (C) 
                as subparagraphs (B) through (D), respectively; and
                    (C) by striking the matter preceding subparagraph 
                (B) (as redesignated) and inserting the following new 
                subparagraph:
                    ``(A) Certain other apparel articles.--
                            ``(i) In general.--Apparel articles that 
                        are both cut (or knit-to-shape) and sewn or 
                        otherwise assembled in one or more beneficiary 
                        sub-Saharan African countries if--
                                    ``(I) the articles are imported 
                                directly from a beneficiary sub-Saharan 
                                African country into the customs 
                                territory of the United States; and
                                    ``(II) the sum of--
                                            ``(aa) the cost or value of 
                                        the materials of the articles 
                                        produced in the beneficiary 
                                        sub-Saharan African country or 
                                        any two or more of such 
                                        beneficiary sub-Saharan African 
                                        countries or the United States; 
                                        plus
                                            ``(bb) the direct costs of 
                                        processing operations performed 
                                        in such beneficiary country or 
                                        such beneficiary countries or 
                                        the United States, is not less 
                                        than the applicable percentage 
                                        of the appraised value of the 
                                        articles at the time the 
                                        articles are imported into the 
                                        customs territory of the United 
                                        States.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the term `applicable percentage' 
                        means--
                                    ``(I) 20 percent for the 10-year 
                                period beginning October 1, 2006, or 
                                the date of the enactment of the AGOA 
                                Extension Act of 2006, whichever occurs 
                                later; and
                                    ``(II) 35 percent thereafter.''.
            (2) Effective date; applicability.--The amendments made by 
        paragraph (1) shall take effect on October 1, 2006, or the date 
        of the enactment of this Act, whichever occurs later. The 
        preferential treatment described in subsection (a) of section 
        112 of the African Growth and Opportunity Act shall apply to 
        apparel articles described in subparagraph (A) of section 
        112(b)(3) of such Act (as added by paragraph (1)) that are 
        imported directly into the customs territory of the United 
        States on or after such date.
            (3) Transition rule.--The preferential treatment described 
        in subsection (a) of section 112 of the African Growth and 
        Opportunity Act shall continue to apply to apparel articles 
        described in the matter preceding subparagraph (A) of section 
        112(b)(3) of such Act (as such section is in effect on the day 
        before the date of the enactment of this Act) that are imported 
        directly into the customs territory of the United States for--
                    (A) the period beginning on the date of the 
                enactment of this Act and ending on March 31, 2007; or
                    (B) the 180-day period beginning on the date of the 
                enactment of this Act, whichever occurs later.
    (b) Special Rule for Lesser Developed Countries.--
            (1) Applicable percentage.--Clause (ii) of section 
        112(b)(3)(C) of the African Growth and Opportunity Act (as 
        redesignated by subsection (a)(1)(B) of this section) is 
        amended--
                    (A) in subclause (II), by adding ``and'' at the 
                end;
                    (B) in subclause (III)--
                            (i) by striking ``1-year period'' and 
                        inserting ``2-year period''; and
                            (ii) by striking ``; and'' and inserting a 
                        period; and
                    (C) by striking subclause (IV).
            (2) Separate limitation for mauritius.--
                    (A) Amendment.--Clause (iv) of section 112(b)(3)(C) 
                of the African Growth and Opportunity Act (as 
                redesignated by subsection (a)(1)(B) of this section) 
                is amended to read as follows:
                            ``(iv) Separate limitation for mauritius.--
                        For the 1-year period beginning October 1, 
                        2005, and the 1-year period beginning October 
                        1, 2006, the term `lesser developed beneficiary 
                        sub-Saharan African country' includes 
                        Mauritius.''.
                    (B) Retroactive application for certain 
                liquidations and reliquidations.--
                            (i) In general.--Notwithstanding section 
                        514 of the Tariff Act of 1930 (19 U.S.C. 1514) 
                        or any other provision of law, and subject to 
                        clause (ii), the entry of any article--
                                    (I) that was made on or after 
                                October 1, 2005, and before the date of 
                                the enactment of this Act; and
                                    (II) with respect to which 
                                preferential treatment under section 
                                112(b)(3) of the African Growth and 
                                Opportunity Act would have applied if 
                                the amendment made by subparagraph (A) 
                                applied with respect to the entry of 
                                such article, shall be liquidated or 
                                reliquidated as if such amendment 
                                applied to the entry of such article.
                            (ii) Requests.--Liquidation or 
                        reliquidation may be made under clause (i) with 
                        respect to the entry of an article only if 
                        proper request therefor is filed with the 
                        Bureau of Customs and Border Protection of the 
                        Department of Homeland Security within 90 days 
                        after the date of the enactment of this Act.
                            (iii) Payment of amounts owed.--Any amounts 
                        owed by the United States pursuant to the 
                        liquidation or reliquidation made under clause 
                        (i) with respect to the entry of an article 
                        shall be paid not later than 180 days after the 
                        date of such liquidation or reliquidation.
                            (iv) Definition.--As used in this 
                        subparagraph, the term ``entry'' includes a 
                        withdrawal from warehouse for consumption.
    (c) Certain Textile Fabrics and Other Made-Up Textile Articles.--
            (1) Amendment.--Section 112(b) of the African Growth and 
        Opportunity Act (19 U.S.C. 3721(b)) is amended by adding at the 
        end the following new paragraph:
            ``(8) Certain textile fabrics and other made-up textile 
        articles.--
                    ``(A) In general.--Notwithstanding section 503 of 
                the Trade Act of 1974 (19 U.S.C. 2463) or any other 
                provision of law, textile fabrics and other made-up 
                textile articles classifiable under any heading of 
                chapters 50 through 60 and chapter 63 of the Harmonized 
                Tariff Schedule of the United States (other than 
                headings 5101 through 5105 and headings 5201 through 
                5203 of such Schedule) that are wholly the product of 
                one or more beneficiary sub-Saharan African countries.
                    ``(B) Surge mechanism.--The requirements of 
                subparagraph (D) of paragraph (3) shall apply with 
                respect to imports of textile fabrics and other made-up 
                textile articles described in this paragraph to the 
                same extent and in the same manner as such requirements 
                apply with respect to imports of articles described in 
                paragraph (3).''.
            (2) Effective date; applicability.--The amendment made by 
        paragraph (1) shall take effect on October 1, 2006, or the date 
        of the enactment of this Act, whichever occurs later. The 
        preferential treatment described in subsection (a) of section 
        112 of the African Growth and Opportunity Act shall apply to 
        textile fabrics and other made-up textile articles described in 
        paragraph (8) of section 112(b) of such Act (as added by 
        paragraph (1)) that are imported directly into the customs 
        territory of the United States on or after such date.

                 TITLE III--INITIATIVES ON AGRICULTURE

SEC. 301. INCREASED ACCESS.

    Section 122(b)(3) of the African Growth and Opportunity Act (19 
U.S.C. 3732(b)(3)) is amended to read as follows:
            ``(3) addressing critical agricultural policy issues, in 
        part, by developing a comprehensive plan, which shall be 
        submitted to Congress, and shall take into consideration the 
        October 2005 report of the International Trade Commission on 
        Export Opportunities and Barriers in African Growth and 
        Opportunity Act Eligible Countries and the July 2005 African 
        Growth and Opportunity Act Competitiveness Report prepared by 
        the Office of the United States Trade Representative, to--
                    ``(A) increase market liberalization;
                    ``(B) develop agricultural exports;
                    ``(C) remove barriers and constraints to United 
                States-Africa agricultural trade;
                    ``(D) increase investment in processing and 
                transporting commodities;
                    ``(E) develop and increase capacity by working with 
                farmers and farmer groups, especially small farmers, in 
                order to improve productivity and ability to access 
                local and international markets, as well as address 
                other supply-side constraints;
                    ``(F) increase access to vital market information, 
                including prices, product quality and demand, inputs 
                quality and costs, and customs rules and regulations, 
                for farmers and farmer groups and cooperatives and for 
                relevant government ministries; and
                    ``(G) enable public-private partnerships in 
                eligible sub-Saharan African countries to promote trade 
                in agricultural products between the United States and 
                eligible sub-Saharan African countries;''.

SEC. 302. ENHANCED TRADE.

    (a) Enhanced Trade in Agriculture.--
            (1) Duty-free access.--In order to enhance the 
        opportunities for increased agricultural trade, the President 
        shall establish additional duty-free access for countries 
        designated as beneficiary sub-Saharan African countries under 
        section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 
        2466a(a)(1)) for agricultural products governed by tariff-rate 
        quotas as of the date of the enactment of this Act. The 
        expanded access for countries described in the preceding 
        sentence shall be subject to a safeguard mechanism to prevent 
        market disruption or the threat of market disruption.
            (2) Amount.--The amount of additional duty-free access for 
        agricultural products restrained by tariff rate quotas that is 
        established pursuant to paragraph (1) shall be set at a level 
        equal to actual imports of such products from beneficiary sub-
        Saharan African countries during the 12-month period ending 
        September 30, 2005. If an agricultural product that is 
        restrained by tariff rate quotas was not imported from any 
        beneficiary sub-Saharan African country during the 12-month 
        period ending September 30, 2005, the amount of additional 
        duty-free access shall be set at a level equal to that portion 
        of the applicable tariff rate quota that was reserved for ``all 
        other countries'' for the quota period ending September 30, 
        2005.
            (3) Additional duty-free access.--The President shall 
        annually allocate such additional duty-free access among 
        beneficiary sub-Saharan African countries--
                    (A) that were net surplus producers of the 
                agricultural product in question during the preceding 
                year; and
                    (B) on the basis of traditional market shares and 
                such other criteria as the President shall consider 
                appropriate, such as the level of economic development 
                of the beneficiary countries, and that are consistent 
                with United States obligations under Article XIII of 
                GATT 1994, provided that reasonable access is allocated 
                to new entrants.
            (4) Definition.--As used in paragraph (3), the term ``GATT 
        1994'' means the General Agreement on Tariffs and Trade annexed 
        to the Agreement Establishing the World Trade Organization 
        entered into on April 15, 1994.
    (b) Assistance to Agribusiness.--The Administrator of the United 
States Agency for International Development is authorized to provide 
grants in each of the fiscal years 2007 through 2020 to governmental 
and nongovernmental entities that are located in countries designated 
as beneficiary sub-Saharan African countries under section 506A(a)(1) 
of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) and can provide 
assistance, consultation, and equipment to agribusinesses, particularly 
small- and medium-sized, locally-owned enterprises, located in those 
countries in order to enable agricultural products of those businesses 
to meet the requirements under United States law when imported into the 
United States. Such funds may be used for grants to national plant 
protection organizations for the purpose of obtaining equipment to 
achieve the purposes of this subsection.
    (c) Foreign Agriculture Service.--The Secretary of Agriculture 
shall direct the Foreign Agriculture Service (FAS) to work with 
national African agricultural organizations to identify agricultural 
equipment and supply needs and implement programs that strengthen the 
ability of members of African agricultural organizations to fulfill 
these needs in conjunction with export credit guarantee programs.

                     TITLE IV--INCREASED INVESTMENT

SEC. 401. INCENTIVES THROUGH EXPORT-IMPORT BANK.

    (a) Export-Import Bank of the United States.--Section 2(b)(1)(B) of 
the Export-Import Bank Act of 1945 (12 U.S.C. 635(b)(1)(B) is amended--
            (1) by inserting ``(i)'' after ``(B)''; and
            (2) by adding at the end the following:
    ``(ii) The Bank shall implement such regulations and procedures as 
may be appropriate to ensure that full consideration is given to the 
extent to which any loan, guarantee, insurance, extension of credit, or 
participation in an extension of credit is likely to have a positive 
effect on industries, including the textile and apparel industry and 
agricultural production, in countries designated as beneficiary sub-
Saharan African countries under section 506A(a)(1) of the Trade Act of 
1974 (19 U.S.C. 2466a(a)(1)). To carry out the purposes of this clause, 
the Bank shall work with the Administrator of the United States Agency 
for International Development, the United States Trade Representative, 
and the Secretary of Commerce in identifying opportunities to use the 
resources of the Bank to encourage industrial and agricultural 
development in such beneficiary sub-Saharan African countries.''.

                   TITLE V--TAX AND INVESTMENT POLICY

SEC. 501. TAX REVENUES.

    (a) Development of Domestic Tax Policies To Replace Lost Trade Tax 
Revenues.--
            (1) Findings.--Congress finds that--
                    (A) trade tax revenues remain important in many 
                countries designated as beneficiary sub-Saharan African 
                countries under section 506A(a)(1) of the Trade Act of 
                1974 (19 U.S.C. 2466a(a)(1));
                    (B) studies conducted by the International Monetary 
                Fund show that the revenue losses a developing country 
                experiences due to trade liberalization can be 
                recovered by improving the domestic tax system in the 
                affected country; and
                    (C) technical assistance provided by the United 
                States to such beneficiary countries in fiscal or 
                economic policy programs has focused on tax system 
                enhancement or development that has been helpful in 
                moving tax regimes away from trade-related tax revenue 
                toward other tax revenue sources.

SEC. 502. TECHNICAL ASSISTANCE.

    It is the sense of Congress that--
            (1) the United States Agency for International Development, 
        in cooperation with the Department of the Treasury, the 
        International Monetary Fund, the International Bank for 
        Reconstruction and Development, and the African Development 
        Bank, should exercise the authorities it has to continue to 
        provide technical assistance to countries designated as 
        beneficiary sub-Saharan African countries under section 
        506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) in 
        tax policy, revenue administration, and anti-corruption 
        efforts; and
            (2) particular focus should be given to projects that 
        assist such beneficiary countries in developing domestic 
        policies and measures to replace lost trade tax revenues 
        resulting from trade liberalization.

SEC. 503. TAXATION TREATIES.

    In order to encourage investment in and certainty in the movement 
of capital, the Secretary of the Treasury shall seek negotiations with 
those countries designated as beneficiary sub-Saharan African countries 
under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 
2466a(a)(1)) which the Secretary determines will benefit most from an 
income tax treaty with the United States.

SEC. 504. BILATERAL INVESTMENT TREATIES.

    In order to encourage investment in countries designated as 
beneficiary sub-Saharan African countries under section 506A(a)(1) of 
the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) and reduce the 
uncertainties that arise from investing in developing countries, the 
Secretary of State shall seek to negotiate, with interested eligible 
sub-Saharan African countries, bilateral investment treaties. Any such 
agreement shall comply with section 2102(b)(3) of the Trade Act of 2002 
(19 U.S.C. 3802(b)(3)).

           TITLE VI--DEVELOPMENT AND TRADE CAPACITY BUILDING

SEC. 601. SUB-SAHARAN AFRICAN ECONOMIC GROWTH.

    It is the sense of Congress that--
            (1) sub-Saharan Africa faces critical challenges to 
        economic growth and progress toward the United Nations 
        Millennium Development Goals (as contained in United Nations 
        General Assembly Resolution 55/2 (September 2000));
            (2) the January 1, 2005, elimination of textile and apparel 
        quotas previously maintained by members of the World Trade 
        Organization (WTO) and competition from subsidized producers in 
        countries such as the People's Republic of China continue to 
        reverse the economic gains in sub-Saharan Africa that resulted 
        from implementation of the African Growth and Opportunity Act 
        (19 U.S.C. 3701 et seq.); and
            (3) the United States should play a leadership role in 
        expanding trade benefits to sub-Saharan Africa and providing a 
        substantial increase in development and trade capacity 
        assistance for sub-Saharan Africa.

SEC. 602. ASSISTANCE.

    (a) Assistance.--In order to give sub-Saharan Africa the necessary 
infrastructure and industry-building assistance needed for sustainable 
economic development, the President shall--
            (1) provide targeted capacity building assistance through 
        bilateral assistance and seek to establish a multilateral 
        capacity-building fund or facility for Africa, potentially 
        within the World Bank, in a gender-sensitive manner, aimed at--
                    (A) diversifying the economies of sub-Saharan 
                Africa, in part by promoting the growth of sub-Saharan 
                Africa's agricultural sector;
                    (B) increasing the production of value-added 
                agriculture and food products;
                    (C) lowering costs and increasing efficiencies 
                relating to the transport of food and agriculture;
                    (D) increasing food storage capacity;
                    (E) improving dissemination of market information 
                for farmers and farmer groups;
                    (F) providing technical assistance to small- and 
                medium-sized enterprises;
                    (G) providing technical assistance to local retail 
                banks to provide loans to small- and medium-sized 
                enterprises;
                    (H) facilitating the transfer of manufacturing and 
                food production technology;
                    (I) raising labor standards and productivity; and
                    (J) promoting the rule of law, contract 
                enforcement, and government transparency in the 
                administration of trade and economic policy;
            (2) provide targeted assistance to sub-Saharan Africa to 
        ensure the formal recognition of land and property rights in 
        urban and rural settings to increase access to capital and 
        thereby promote economic growth and investment, including 
        training and capacity building programs, as well as 
        multilateral aid, aimed at local legal officials, policymakers, 
        and nongovernmental organizations regarding property law, 
        surveying, land registration, and land use planning;
            (3) coordinate efforts under paragraph (2) with 
        multinational organizations such as the World Bank, the African 
        Development Bank, and the High Level Commission on Legal 
        Empowerment of the Poor; and
            (4) establish a Legal Aid Corps, comprised of legally-
        trained volunteers from the United States, to provide technical 
        advice to countries of sub-Saharan Africa regarding property 
        law, surveying, land registration, and land use planning.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated to the President to carry out this section such sums as 
may be necessary.
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