II 113th CONGRESS 1st Session S. 432 IN THE SENATE OF THE UNITED STATES February 28, 2013 Mrs. Feinstein introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To extend certain trade preferences to certain least-developed countries in Asia and the South Pacific, and for other purposes.

1. Short title This Act may be cited as the Asia–South Pacific Trade Preferences Act . 2. Findings Congress finds the following: (1) It is in the mutual interest of the United States and least-developed countries to promote stable and sustainable economic growth and development. (2) Trade and investment are powerful economic tools and can be used to reduce poverty and raise the standard of living in a country. (3) A country that is open to trade may increase its economic growth. (4) Trade and investment often lead to employment opportunities and often help alleviate poverty. (5) Least-developed countries have a particular challenge in meeting the economic requirements of and competitiveness necessary for globalization and international markets. (6) The United States has recognized the benefits that international trade provides to least-developed countries by enacting the Generalized System of Preferences under title V of the Trade Act of 1974 ( 19 U.S.C. 2461 et seq. ) and trade benefits for developing countries in the Caribbean, Andean, and sub-Saharan African regions of the world. (7) Enhanced trade with least-developed Muslim countries, including Afghanistan and Bangladesh, is consistent with other United States objectives of encouraging a strong private sector and individual economic empowerment in those countries. (8) Offering least-developed countries enhanced trade preferences will encourage both higher levels of trade and direct investment in support of positive economic and political developments throughout the world. (9) Encouraging the reciprocal reduction of trade and investment barriers will enhance the benefits of trade and investment as well as enhance commercial and political ties between the United States and the countries designated for benefits under this Act. (10) Economic opportunity and engagement in the global trading system together with support for democratic institutions and a respect for human rights are mutually reinforcing objectives and key elements of a policy to confront and defeat global terrorism. 3. Definitions In this Act: (1) Asia or South Pacific country The term Asia or South Pacific country means— (A) Afghanistan; (B) Bangladesh; (C) Bhutan; (D) Cambodia; (E) Kiribati; (F) Lao People’s Democratic Republic; (G) Maldives; (H) Nepal; (I) Samoa; (J) Solomon Islands; (K) Timor-Leste (East Timor); (L) Tuvalu; (M) Vanuatu; or (N) a successor political entity of a country specified in subparagraphs (A) through (M). (2) Beneficiary Asia or South Pacific country The term beneficiary Asia or South Pacific country means an Asia or South Pacific country that the President has designated as eligible for preferential treatment under this Act. (3) Former beneficiary Asia or South Pacific country The term former beneficiary Asia or South Pacific country means a country that, after being designated as a beneficiary Asia or South Pacific country under this Act, ceased to be designated as such a country by reason of its entering into a free trade agreement with the United States. 4. Authority to designate (a) In general The President is authorized to designate an Asia or South Pacific country as a beneficiary Asia or South Pacific country eligible for preferential treatment under this Act if the President determines— (1) that the country meets the requirements set forth in paragraphs (1), (2), and (3) of section 104(a) of the African Growth and Opportunity Act ( 19 U.S.C. 3703(a) ); and (2) after taking into account the factors set forth in paragraphs (1) through (7) of subsection (c) of section 502 of the Trade Act of 1974 ( 19 U.S.C. 2462 ), that the country meets the eligibility requirements of such section 502. (b) Withdrawal, suspension, or limitation of preferential treatment; mandatory graduation of countries The provisions of subsections (d) and (e) of section 502 of the Trade Act of 1974 ( 19 U.S.C. 2462 ) shall apply with respect to beneficiary Asia or South Pacific countries to the same extent and in the same manner as such provisions apply with respect to beneficiary developing countries under title V of that Act ( 19 U.S.C. 2461 et seq. ). 5. Eligible articles (a) Certain manufactured or other articles (1) Duty-free treatment An article described in paragraph (2) may enter the customs territory of the United States free of duty. (2) Articles described An article is described in this paragraph if— (A) the article is the growth, product, or manufacture of a beneficiary Asia or South Pacific country; (B) the article is imported directly from that country into the customs territory of the United States; (C) the article is described in subparagraphs (B) through (G) of section 503(b)(1) of the Trade Act of 1974 (19 U.S.C. 2463(b)(1)); (D) the President determines, after receiving the advice of the International Trade Commission in accordance with section 503(e) of the Trade Act of 1974 ( 19 U.S.C. 2463(e) ), that the article is not import-sensitive in the context of imports from beneficiary Asia or South Pacific countries; and (E) the article meets the requirements of paragraph (3). (3) Rules of origin (A) In general Subject to subparagraph (B), an article imported from a beneficiary Asia or South Pacific country meets the requirements of this paragraph if not less than 35 percent of the appraised value of the article at the time it is entered is attributable to— (i) the cost or value of the materials produced in one or more beneficiary Asia or South Pacific countries, one or more former beneficiary Asia or South Pacific countries, the customs territory of the United States, or any combination thereof; and (ii) the direct costs of processing operations performed in one or more beneficiary Asia or South Pacific countries, one or more former beneficiary Asia or South Pacific countries, or any combination thereof. (B) Limitation on United States cost or value of materials For purposes of subparagraph (A), the cost or value of materials produced in, and the direct costs of processing operations performed in, the customs territory of the United States and attributed to the 35-percent requirement under that subparagraph may not exceed 15 percent of the appraised value of the article at the time it is entered. (4) Exclusions An article shall not be treated as the growth, product, or manufacture of a beneficiary Asia or South Pacific country for purposes of paragraph (2)(A) by virtue of having merely undergone— (A) simple combining or packaging operations; or (B) mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article. (b) Textile and apparel articles (1) Duty-free treatment A textile or apparel article may enter the customs territory of the United States free of duty if the article— (A) is imported directly into the customs territory of the United States from a beneficiary Asia or South Pacific country; and (B) is described in— (i) paragraph (1), (2), (4), (5), or (7) of section 112(b) of the African Growth and Opportunity Act ( 19 U.S.C. 3721(b) ), as applied and administered pursuant to paragraph (2); or (ii) paragraph (3) or (4). (2) Application and administration of section 112 of the African Growth and Opportunity Act Section 112 of the African Growth and Opportunity Act (19 U.S.C. 3721) shall be applied and administered for purposes of this subsection— (A) in subsection (a), by substituting a beneficiary Asia or South Pacific country (as defined in section 3 of the Asia–South Pacific Trade Preferences Act ) for a beneficiary sub-Saharan African country described in section 506A(c) of the Trade Act of 1974 ; and (B) in paragraphs (1), (2), (4), (5), and (7) of subsection (b), by substituting beneficiary Asia or South Pacific country and beneficiary Asia or South Pacific countries for beneficiary sub-Saharan African country and beneficiary sub-Saharan African countries , respectively, each place such terms appear in the text and the paragraph headings. (3) Textile and apparel articles assembled from regional and other fabric (A) In general A textile or apparel article described in this paragraph is a textile or apparel article wholly assembled in one or more beneficiary Asia or South Pacific countries or former beneficiary Asia or South Pacific countries, or both, from— (i) fabric wholly formed in one or more beneficiary Asia or South Pacific countries or former beneficiary Asia or South Pacific countries, or both, from yarn originating either in the customs territory of the United States or one or more beneficiary Asia or South Pacific countries or former beneficiary Asia or South Pacific countries, or both; or (ii) from fabric not formed from yarn, if such fabric is classifiable under heading 5602 or 5603 of the Harmonized Tariff Schedule of the United States and wholly formed and cut in the customs territory of the United States, in one or more beneficiary Asia or South Pacific countries or former beneficiary Asia or South Pacific countries, or any combination thereof. (B) Exception Textile and apparel articles described in this paragraph do not include textile and apparel articles that are made exclusively from any of the fabrics, fabric components formed, or components knit-to-shape described in paragraph (1) or (2) of section 112(b) of the African Growth and Opportunity Act (19 U.S.C. 3721(b)), as applied and administered pursuant to paragraph (2). (4) Handloomed, handmade, folklore articles and ethnic printed fabrics (A) In general A textile or apparel article is described in this paragraph if the textile or apparel article is— (i) a textile or apparel article of a beneficiary Asia or South Pacific country or countries; (ii) certified as handloomed, handmade, folklore articles or ethnic printed fabric by the competent authority of such beneficiary country or countries; and (iii) on a list of textile or apparel articles determined by the President, after consultation with the government of the beneficiary Asia or South Pacific country or countries concerned, to be treated as being handloomed, handmade, or folklore articles or ethnic printed fabrics of such beneficiary Asia or South Pacific country or countries. (B) Additional requirements for ethnic printed fabric For purposes of subparagraph (A), an ethnic printed fabric of a beneficiary Asia or South Pacific country or countries is— (i) fabric containing a selvedge on both edges, having a width of less than 50 inches, and classifiable under subheading 5208.52.30 or 5208.52.40 of the Harmonized Tariff Schedule of the United States; (ii) fabric of a type that contains designs, symbols, and other characteristics of Asian or South Pacific prints— (I) normally produced for and sold in indigenous Asian or South Pacific markets; and (II) normally sold in Asia or South Pacific countries by the piece as opposed to being tailored into garments before being sold in indigenous Asian or South Pacific markets; (iii) fabric printed, including waxed, in one or more beneficiary Asia or South Pacific countries; and (iv) fabric formed in the customs territory of the United States, from yarn formed in the customs territory of the United States, or from fabric formed in one or more beneficiary Asia or South Pacific countries from yarn originating in either the customs territory of the United States or one or more beneficiary Asia or South Pacific countries. (5) Special rule (A) In general Preferential treatment under this subsection shall be extended through December 31, 2019, for textile and apparel articles that are wholly assembled in one or more beneficiary Asia or South Pacific countries or former beneficiary Asia or South Pacific countries, or both, regardless of the country of origin of the yarn or fabric used to make such articles. (B) Country limitations (i) Small suppliers If, during a calendar year, imports of textile and apparel articles described in subparagraph (A) from a beneficiary Asia or South Pacific country are less than 1 percent of the aggregate square meter equivalents of all textile and apparel articles imported into the customs territory of the United States during that calendar year, such imports from that country may be increased to an amount that is equal to not more than 1.5 percent of the aggregate square meter equivalents of all textile and apparel articles imported into the customs territory of the United States during that calendar year for the succeeding calendar year. (ii) Other suppliers If, during a calendar year, imports of textile and apparel articles described in subparagraph (A) from a beneficiary Asia or South Pacific country are not less than 1 percent of the aggregate square meter equivalents of all textile and apparel articles imported into the customs territory of the United States during that calendar year, such imports from that country may be increased by an amount that is equal to not more than 1/3 of 1 percent of the aggregate square meter equivalents of all textile and apparel articles imported into the customs territory of the United States during that calendar year for the succeeding calendar year. (iii) Aggregate country limit In no case may the aggregate quantity of textile and apparel articles described in subparagraph (A) imported into the customs territory of the United States during a calendar year under this subsection exceed the applicable percentage set forth in paragraph (8)(B) for that calendar year. (6) Surge mechanism The provisions of subparagraph (B) of section 112(b)(3) of the African Growth and Opportunity Act ( 19 U.S.C. 3721(b)(3) ) shall apply to textile and apparel articles imported from a beneficiary Asia or South Pacific country to which preferential treatment is extended under this subsection to the same extent and in the same manner that such provisions apply to textile and apparel articles described in such section 112(b)(3) imported from a beneficiary sub-Saharan African country. (7) Special eligibility rules; protections against transshipment The provisions of subsection (e) of section 112 and section 113 of the African Growth and Opportunity Act (19 U.S.C. 3721 and 3722) shall apply to textile and apparel articles imported from a beneficiary Asia or South Pacific country to which preferential treatment is extended under this subsection to the same extent and in the same manner that such provisions apply to textile and apparel articles imported from beneficiary sub-Saharan countries to which preferential treatment is extended under such section 112. (8) Limitations on benefits (A) In general Preferential treatment under this subsection shall be extended in the 1-year period beginning January 1, 2014, and in each of the 10 succeeding 1-year periods, to imports of textile and apparel articles described in this subsection in an amount not to exceed the applicable percentage, as defined in subparagraph (B), of the aggregate square meter equivalents of all textile and apparel articles imported into the customs territory of the United States in the most recent 12-month period for which data are available. (B) Applicable percentage For purposes of this paragraph, the term applicable percentage means 11 percent for the 1-year period beginning January 1, 2014, increased in each of the 10 succeeding 1-year periods by equal increments, so that for the period beginning January 1, 2024, the applicable percentage does not exceed 14 percent. (c) Technical amendment Section 6002(a)(2)(B) of the Africa Investment Incentive Act of 2006 ( Public Law 109–432 ; 120 Stat. 3190) is amended by inserting in paragraph (3), before by striking . 6. Reporting requirement Not later than 1 year after the date of the enactment of this Act, and annually thereafter, the President shall report to Congress on the implementation of this Act and on the trade and investment policy of the United States with respect to the Asia or South Pacific countries. 7. Termination of preferential treatment No preferential treatment extended to a beneficiary Asia or South Pacific country under this Act shall remain in effect after December 31, 2024. 8. Effective date The provisions of this Act shall take effect on January 1, 2014.