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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3039 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 3039

To provide for preferential duty treatment to certain apparel articles 
                          of the Philippines.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 25, 2009

 Mr. McDermott (for himself and Mr. Bilbray) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
To provide for preferential duty treatment to certain apparel articles 
                          of the Philippines.

    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 ``Save Our Industries Act of 2009'' or 
the ``SAVE Act''.

SEC. 2. FINDINGS; PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) The United States and the Republic of the Philippines 
        (in this Act referred to as the ``Philippines''), a former 
        colony, share deep historical and cultural connections. The 
        United States has developed preferential trading relations with 
        former colonies such as the Marshall Islands, the Federated 
        States of Micronesia and the Republic of Palau.
            (2) The Philippines represents a tremendous economic 
        potential and enduring political and security significance to 
        the United States.
            (3) The United States and the Philippines maintain a fair 
        trading relationship that should be expanded to the mutual 
        benefit of both countries. In 2008, United States exports to 
        the Philippines were valued at $8,300,000,000, and United 
        States imports from the Philippines were valued at 
        $8,700,000,000.
            (4) United States textile exports to the Philippines were 
        valued at nearly $20,000,000 in 2008, consisting mostly of 
        broadwoven, industrial or specialty, and nonwoven fabrics. The 
        potential for export growth in this area can sustain and create 
        thousands of jobs.
            (5) The Philippines' textile and apparel industries, like 
        that of their counterparts in the United States, share the same 
        challenges and risks stemming from the end of the United States 
        quota system and from the end of safeguards that continued to 
        control apparel imports from the People's Republic of China 
        until January 1, 2009.
            (6) The United States apparel fabrics industry is heavily 
        dependent on sewing outside the United States, and, for the 
        first time, United States textile manufacturers would have a 
        program that utilizes sewing done in an Asian country. In 
        contrast, most sewing of United States fabric occurs in the 
        Western Hemisphere, with about 75 percent of United States 
        fabric exports presently going to countries that are parties to 
        the North American Free Trade Agreement and the Dominican 
        Republic-Central America-United States Free Trade Agreement. 
        Increased demand for United States fabric in Asia will increase 
        opportunities for the United States industry.
            (7) Apparel producers in the Western Hemisphere are 
        excellent at making basic garments such as T-shirts and 
        standard 5-pocket jeans. However, the needle capability does 
        not exist to make high-fashion, more sophisticated garments 
        such as embroidered T-shirts and fashion jeans with 
        embellishments. Such apparel manufacturing is done almost 
        exclusively in Asia.
            (8) A program that provides preferential duty treatment for 
        certain apparel articles of the Philippines will provide a 
        strong incentive for Philippine apparel manufacturers to use 
        United States fabrics, which will open new opportunities for 
        the United States textile industry and increase opportunities 
        for United States yarn manufactures. At the same time, the 
        United States would be provided a more diverse range of 
        sourcing opportunities.
    (b) Purposes.--The purposes of this Act are--
            (1) to encourage higher levels of trade in textiles and 
        apparel between the United States and the Philippines and 
        enhance the commercial well-being of their respective 
        industries in times of global economic hardship;
            (2) to enhance and broaden the economic, security, and 
        political ties between the United States and the Philippines;
            (3) to stimulate economic activity and development 
        throughout the Philippines, including regions such as Manila 
        and Mindanao; and
            (4) to provide a stepping stone to an eventual free trade 
        agreement between the United States and the Philippines, either 
        bilaterally or as part of a regional agreement.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Classification under the hts.--The term 
        ``classification under the HTS'' means, with respect to an 
        article, the 10-digit subheading under which the article is 
        classified in the HTS.
            (2) HTS.--The term ``HTS'' means the Harmonized Tariff 
        Schedule of the United States.
            (3) Entered.--The term ``entered'' means entered, or 
        withdrawn from warehouse for consumption, in the customs 
        territory of the United States.
            (4) Knit-to-shape.--An article is ``knit-to-shape'' if 50 
        percent or more of the exterior surface area of the article is 
        formed by major parts that have been knitted or crocheted 
        directly to the shape used in the article, with no 
        consideration being given to patch pockets, appliques, or the 
        like. Minor cutting, trimming, or sewing of those major parts 
        shall not affect the determination of whether an article is 
        ``knit-to-shape''.
            (5) Wholly assembled.--An article is ``wholly assembled in 
        the Philippines or the United States'' if--
                    (A) all components of the article pre-existed in 
                essentially the same condition as found in the finished 
                article and were combined to form the finished article 
                in the Philippines or the United States; and
                    (B) the article is comprised of at least 2 
                components.
            (6) Wholly formed.--A yarn is ``wholly formed in the United 
        States'' if all of the production processes and finishing 
        operations, starting with the extrusion of filaments, strips, 
        film, or sheet, and including slitting a film or sheet into 
        strip, or the spinning of all fibers into yarn, or both, and 
        ending with a finished yarn or plied yarn, takes place in the 
        United States.

SEC. 4. TRADE BENEFITS.

    (a) Articles Covered.--For purposes of this section, an eligible 
apparel article is any of the following:
            (1) Men's and boys' cotton knit shirts.
            (2) Women's and girls' cotton knit shirts and blouses.
            (3) Men's and boys' cotton trousers, breeches, and shorts.
            (4) Women's and girls' cotton trousers, slacks, and shorts.
            (5) Men's and boys' cotton underwear.
            (6) Men's and boys' manmade fiber underwear.
            (7) Men's and boys' manmade fiber knit shirts.
            (8) Women's and girls' manmade fiber knit shirts and 
        blouses.
            (9) Men's and boys' manmade fiber trousers, breeches, and 
        shorts.
            (10) Women's and girls' manmade fiber slacks, breeches, and 
        shorts.
            (11) Men's and boys' non-knit manmade fiber shirts.
            (12) Brassieres and other body support garments.
            (13) Manmade fiber brassieres and other body support 
        garments.
            (14) Manmade fiber swimwear.
            (15) Cotton swimwear.
    (b) Duty-free Treatment for Certain Eligible Apparel Articles.--
            (1) Duty-free treatment.--Subject to paragraphs (2) and 
        (3), an eligible apparel article shall enter the United States 
        free of duty if the article is wholly assembled in the United 
        States or the Philippines, or both, and if the component 
        determining the article's classification under the HTS consists 
        entirely of--
                    (A) fabric components cut in the United States or 
                the Philippines, or both, from fabric wholly formed in 
                the United States from yarns wholly formed in the 
                United States;
                    (B) components knit-to-shape in the United States 
                from yarns wholly formed in the United States; or
                    (C) any combination of the fabric components or 
                components knit-to-shape described in subparagraphs (A) 
                and (B).
            (2) Dyeing, printing, or finishing.--An apparel article 
        described in paragraph (1) shall be ineligible for duty-free 
        treatment under such paragraph if the component determining the 
        article's classification under the HTS comprises any fabric, 
        fabric component, or component knit-to-shape in the United 
        States that was dyed, printed, or finished at any place other 
        than in the United States.
            (3) Other processes.--An apparel article described in 
        paragraph (1) shall not be disqualified from eligibility for 
        duty-free treatment under such paragraph because it undergoes 
        stone-washing, enzyme-washing, acid-washing, permapressing, 
        oven-baking, bleaching, garment-dyeing, screen printing, or 
        other similar processes in either the United States or the 
        Philippines.
    (c) Duty Reduction for Certain Eligible Apparel Articles.--
            (1) Duty reduction.--An eligible apparel article shall 
        enter the United States at a reduced rate of duty specified in 
        paragraph (2) if it is wholly assembled in the United States or 
        the Philippines, or both, and if the component determining the 
        article's classification under the HTS consists entirely of--
                    (A) fabric components cut in the United States or 
                the Philippines, or both, from fabric wholly formed in 
                the United States or the Philippines, or both, from 
                yarns wholly formed in the United States;
                    (B) components knit-to-shape in the United States 
                or the Philippines, or both, from yarns wholly formed 
                in the United States; or
                    (C) any combination of fabric components or 
                components knit-to-shape that are described in 
                subparagraphs (A) and (B).
            (2) Reduced tariff rate.--An eligible apparel article 
        described in paragraph (1) shall be dutiable at the lesser of--
                    (A) 50 percent of the column 1 rate of duty that 
                applies to the apparel article under its classification 
                under the HTS; or
                    (B) the column 1 rate of duty under the HTS that 
                applies to the article, assessed upon the value of the 
                article, less the cost or value of yarns in the article 
                that are wholly formed in the United States.
    (d) Articles Eligible Under Both Categories.--An eligible apparel 
article that meets the requirements of both subsections (b) and (c) 
shall be eligible for duty-free treatment under subsection (b).
    (e) De Minimis.--
            (1) In general.--An otherwise eligible apparel article 
        shall not be ineligible for preferential treatment because 
        fibers or yarns used in the production of the component that 
        determines the article's classification under the HTS do not 
        meet the requirements of subsection (b) or (c), if the total 
        weight of all such fibers or yarns in the component that 
        determines the article's classification under the HTS is not 
        more than 10 percent of the total weight of that component.
            (2) Elastomeric yarns.--Notwithstanding paragraph (1), an 
        article described in subsection (b) or (c) that contains 
        elastomeric yarns in the component of the article that 
        determines the article's classification under the HTS shall be 
        eligible for duty-free treatment under this section only if 
        such elastomeric yarns are wholly formed in the United States 
        or the Philippines.
            (3) Direct shipment.--Any apparel article described in 
        subsection (b) or (c) is an eligible article only if it is 
        imported directly into the United States from the Philippines.
    (f) Single Transformation Rules.--Any of the following apparel 
articles that are wholly assembled, or knit-to-shape, in the 
Philippines from any combination of fabrics, fabric components, 
components knit-to-shape, or yarns and are imported directly into the 
United States from the Philippines shall enter the United States free 
of duty, without regard to the source of the fabric, fabric components, 
components knit-to-shape, or yarns from which the articles are made:
            (1) Any apparel article that is of a type listed in chapter 
        rule 3, 4, or 5 for chapter 61 of the HTS (as such chapter 
        rules are contained in paragraph 1 of section A of the Annex to 
        Proclamation 8213 of the President of December 20, 2007) as 
        being excluded from the scope of such chapter rule, when such 
        chapter rule is applied to determine whether an apparel article 
        is an originating good for purposes of general note 29(n) to 
        the HTS, except that, for purposes of this paragraph, reference 
        in such chapter rule to ``6104.12.00'' shall be deemed to be 
        reference to ``6104.19.60''.
            (2) Any apparel article that is of a type listed in chapter 
        rule 3(a), 4(a), or 5(a) for chapter 62 of HTS, as such chapter 
        rules are contained in paragraph 9 of section A of the Annex to 
        Proclamation 8213 of the President of December 20, 2007.
            (3) Any article not described in paragraph (1) or (2) that 
        is any of the following:
                    (A) Playsuits and sunsuits.
                    (B) Babies' garments and clothing accessories.
                    (C) Women's and girls' cotton coats.
                    (D) Cotton dresses.
                    (E) Manmade fiber dresses.
                    (F) Men's and boys' cotton, non-knit, shirts.
                    (G) Cotton nightwear and pajamas.
                    (H) Manmade fiber nightwear and pajamas.
                    (I) Women's and girls' wool coats.
                    (J) Wool dresses.
                    (K) Wool skirts.
                    (L) Women's and girls' wool suits.
                    (M) Women's and girls' wool slacks, breeches, and 
                shorts.
                    (N) Women's and girls' cotton, non-knit, shirts and 
                blouses.
                    (O) Women's and girls' non-knit, manmade fiber 
                shirts and blouses.
                    (P) Women's and girls' manmade fiber suits.
                    (Q) Men's and boys' wool coats.
                    (R) Cotton dressing gowns and robes.
                    (S) Manmade fiber robes and dressing gowns.
                    (T) Women's and girls' manmade fiber coats.
                    (U) Cotton skirts.
                    (V) Manmade fiber skirts.
                    (W) Men's and boys' manmade fiber coats.
                    (X) Women's and girls' cotton underwear.
                    (Y) Women's and girls' manmade fiber underwear.
                    (Z) Women's and girls' coats of silk and vegetable 
                blends.
                    (AA) Skirts made of silk and vegetable blends.
    (g) Review and Report.--The Comptroller General shall, at the end 
of the 2-year period beginning on the effective date under section 5, 
review the program established under this section for the purpose of 
evaluating the effectiveness of, and making recommendations to Congress 
for improvements in, the program.
    (h) Enforcement.--
            (1) Presidential certification of conditions.--No apparel 
        article shall be afforded the preferential treatment under this 
        section unless the President certifies to Congress that the 
        Philippines is meeting the following conditions:
                    (A) The Philippines reestablishes the Electronic 
                Visa Information System (ELVIS) to further assist with 
                prevention of transshipment of apparel articles and the 
                use of counterfeit documents relating to the 
                importation of apparel articles into the United States.
                    (B) The Philippines continues to enforce the 
                Memorandum of Understanding between the United States 
                of America and the Republic of the Philippines 
                Concerning Cooperation in Trade in Textile and Apparel 
                Goods, signed on August 23, 2006.
                    (C) The Philippines agrees to provide, on a timely 
                basis at the request of U.S. Customs and Border 
                Protection, and consistently with the manner in which 
                the records are kept in the Philippines, a report on 
                exports from the Philippines of apparel articles 
                eligible for preferential treatment under this section, 
                and on imports into the Philippines of yarns, fabrics, 
                fabric components, or components knit-to-shape that are 
                wholly formed in the United States.
                    (D) The Philippines agrees to cooperate fully with 
                the United States to address and take action necessary 
                to prevent circumvention as provided in Article 5 of 
                the Agreement on Textiles and Clothing referred to in 
                section 101(d)(4) of the Uruguay Round Agreements Act 
                (19 U.S.C. 3511(d)(4)).
                    (E) The Philippines agrees to require its producers 
                and exporters of articles eligible for preferential 
                treatment under this section to maintain, for at least 
                3 years after export, complete records of the 
                production and the export of such articles, including 
                records of yarns, fabrics, fabric components, and 
                components knit-to-shape and used in the production of 
                such articles.
                    (F) The Philippines agrees to report, on a timely 
                basis, at the request of U.S. Customs and Border 
                Protection, documentation establishing the country of 
                origin of articles eligible for preferential treatment 
                under this section, as used by that country in 
                reimplementing an effective visa system.
                    (G) The Philippines is to establish, within 60 days 
                after the date of the President's certification under 
                this paragraph, procedures that allow the Office of 
                Textiles and Apparel of the Department of Commerce 
                (OTEXA) to obtain information when fabric wholly formed 
                in the United States is exported to the Philippines to 
                allow for monitoring and verification before the 
                imports of apparel articles containing the fabric for 
                which preferential treatment is sought under this 
                section reach the United States. The information 
                provided upon export of the fabrics shall include, 
                among other things, the name of the importer of the 
                fabric in the Philippines, the 10-digit HTS subheading 
                of the apparel articles to be made from the fabric, and 
                the quantity of the apparel articles to be made from 
                the fabric for importation into the United States.
            (2) Definition of transhipment.--As used in paragraph (1), 
        transshipment has occurred when preferential treatment for an 
        apparel article under this section has been claimed on the 
        basis of material false information concerning the country of 
        origin, manufacture, processing, or assembly of the article or 
        of any fabric, fabric component, or component knit-to-shape 
        from which the apparel article was assembled. For purposes of 
        this paragraph, false information is material if disclosure of 
        the true information would have meant that the article is or 
        was ineligible for preferential treatment under this section.
    (i) Proclamation Authority.--The President shall issue a 
proclamation to carry out this section not later than 60 days after the 
date of the enactment of this Act. The President shall consult with the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate in preparing such proclamation.

SEC. 5. EFFECTIVE DATE.

    This Act shall apply to articles entered, or withdrawn from 
warehouse for consumption, on or after the 15th day after the date on 
which the President issues the proclamation under section 4(i).

SEC. 6. TERMINATION.

    (a) In General.--The preferential duty treatment provided under 
this Act shall remain in effect for a period of 10 years beginning on 
the effective date provided in section 5.
    (b) GSP Eligibility.--The preferential duty treatment provided 
under this Act shall terminate if and when the Philippines becomes 
ineligible for designation as a beneficiary developing country under 
title V of the Trade Act of 1974 (19 U.S.C. 2461 et seq.).
                                 <all>
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