I
104TH CONGRESS
1ST SESSION
H. R. 553
To provide, temporarily, tariff and quota treatment equivalent to that ac-
corded to members of the North American Free Trade Agreement
(NAFTA) to Caribbean Basin beneficiary countries.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 18, 1995
Mr. CRANE (for himself, Mr. SHAW, Mr. GIBBONS, and Mr. RANGEL) intro-
duced the following bill; which was referred to the Committee on Ways
and Means
A BILL
To provide, temporarily, tariff and quota treatment equiva-
lent 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 Representa-
tives 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 di-
version 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 mem-
bers;
(4) offering NAFTA equivalent benefits to Car-
ibbean 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 se-
curity interests of the United States; and
(5) increased trade and economic activity be-
tween the United States and Caribbean Basin bene-
ficiary countries will create expanding export oppor-
tunities 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 bene-
ficiary 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 bene-
ficiary countries by not later than January 1, 2005.
SEC. 3. DEFINITIONS.
As used in this title:
(1) BENEFICIARY COUNTRY.—The term ‘‘bene-
ficiary country’’ means a beneficiary country as de-
fined 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 those terms in section 2 of the Uruguay
Round Agreements Act.
TITLE 
I—RELATIONSHIP 
OF
NAFTA IMPLEMENTATION TO
THE OPERATION OF THE CAR-
IBBEAN BASIN INITIATIVE
SEC. 101. TEMPORARY PROVISIONS TO PROVIDE NAFTA
PARITY TO BENEFICIARY COUNTRY ECONO-
MIES.
(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 arti-
cles 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 bene-
ficiary country shall be identical to the tar-
iff 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 im-
ported into the United States and that—
‘‘(I) meets the same require-
ments (other than assembly in Mex-
ico) as those specified in Appendix 2.4
of the Annex (relating to goods as-
sembled from fabric wholly formed
and cut in the United States) for the
duty free entry of a like article assem-
bled in Mexico, or
‘‘(II) is identified under subpara-
graph (C) as a handloomed, hand-
made, or folklore article of such coun-
try 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 require-
ments (other than assembly in Mex-
ico) 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 as-
sembled in Mexico from United States
quantitative restrictions and consulta-
tion levels, or
‘‘(III) 
qualifies 
for 
duty-free
treatment under clause (ii)(II).
‘‘(B) NAFTA TRANSITION PERIOD TREAT-
MENT OF NONORIGINATING TEXTILE AND AP-
PAREL ARTICLES.—
‘‘(i) PREFERENTIAL
TARIFF
TREAT-
MENT.—Subject to clause (ii), the United
States Trade Representative may place in
effect at any time during the transition pe-
riod 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 ac-
corded 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 consulta-
tion 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 an-
nual quantities among the beneficiary
countries that export the articles con-
cerned to the United States, and
‘‘(IV) any other applicable provi-
sion.
‘‘(iii) ADJUSTMENT
OF
CERTAIN
BI-
LATERAL
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 re-
flect 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 sub-
paragraph (A), the United States Trade Rep-
resentative shall consult with representatives of
the beneficiary country for the purpose of iden-
tifying 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 ap-
parel article imported from a beneficiary
country if the application of tariff treat-
ment under subparagraph (A) to such arti-
cle 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 im-
ports of any textile or apparel article de-
scribed 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 ac-
tions 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 BEN-
EFICIARY 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 terri-
tory of Mexico and is imported into the
United States. Such articles shall be sub-
ject 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 sub-
chapter 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 result-
ing from such action, then such lower rate of
duty shall be applied for the purposes of imple-
menting such action.
‘‘(4) CUSTOMS
PROCEDURES.—The provisions
of chapter 5 of part two of the NAFTA regarding
customs procedures apply to importations under
paragraphs (2) and (3) of articles from beneficiary
countries.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section—
‘‘(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 anniver-
sary of such date of enactment; or
‘‘(ii) the date on which—
‘‘(I) the beneficiary country ac-
cedes to the NAFTA, or
‘‘(II) there enters into force with
respect to the United States 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 coun-
try 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 further amended—
(1) by amending section 212(e)(1)(B) to read
as follows:
‘‘(B) withdraw, suspend, or limit the appli-
cation 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 sec-
tion 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, syr-
ups, and molasses. If the President considers that the im-
plementation of the NAFTA is affecting, or will likely af-
fect, in an adverse manner the access of such countries
to the United States market, the President shall prompt-
ly—
(1) take such actions, after consulting with in-
terested parties and with the appropriate committees
of the House of Representatives and the Senate, or
(2) propose to the Congress such legislative ac-
tions,
as may be necessary or appropriate to ameliorate such ad-
verse effect.
SEC. 103. DUTY-FREE TREATMENT FOR CERTAIN BEV-
ERAGES MADE WITH CARIBBEAN RUM.
Section 213(a) of the Caribbean Basin Economic Re-
covery 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 Can-
ada from rum if—
‘‘(A) such rum is the growth, product, or manu-
facture of a beneficiary country or of the Virgin Is-
lands of the United States;
‘‘(B) such rum is imported directly from a ben-
eficiary country or the Virgin Islands of the United
States into the territory of Canada, and such li-
queurs and spirituous beverages are imported di-
rectly 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 es-
tablish 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 sub-
section (b).
(b) PURPOSE.—The purpose of the meetings sched-
uled under subsection (a) is to reach agreement between
the United States and beneficiary countries on the likely
timing and procedures for initiating negotiations for bene-
ficiary 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 MAR-
KET ORIENTED REFORMS IN THE CARIB-
BEAN.
(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 Commit-
tee 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 pos-
sible timetables and procedures pursuant to which
beneficiary countries can complete the economic re-
forms necessary to enable them to negotiate acces-
sion 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 imple-
ment the obligations of the NAFTA.
(2) FACTORS IN ASSESSING ABILITY TO IMPLE-
MENT NAFTA.—In assessing the ability of each bene-
ficiary 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 pro-
vides 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 coun-
try 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 eco-
nomic 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.
Æ
HR 553 IH——2