II 113th CONGRESS 1st Session S. 431 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 authorize preferential treatment for certain imports from Nepal, and for other purposes.

1. Short title This Act may be cited as the Nepal Trade Preferences Act . 2. Eligibility requirements (a) In general The President may authorize the provision of preferential treatment under this Act to articles that are imported directly from Nepal into the customs territory of the United States pursuant to section 3 if the President determines— (1) that Nepal 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 Nepal meets the eligibility requirements of such section 502. (b) Withdrawal, suspension, or limitation of preferential treatment; mandatory graduation 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 Nepal 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.). 3. Eligible articles (a) Certain manufactured and other articles (1) In general An article described in paragraph (2) may enter the customs territory of the United States free of duty. (2) Articles described (A) In general An article is described in this paragraph if— (i) the article is the growth, product, or manufacture of Nepal; (ii) the article is imported directly from Nepal into the customs territory of the United States; (iii) the article is described in subparagraphs (B) through (G) of subsection (b)(1) of section 503 of the Trade Act of 1974 (19 U.S.C. 2463); (iv) the President determines, after receiving the advice of the United States International Trade Commission in accordance with subsection (e) of that section, that the article is not import-sensitive in the context of imports from Nepal; and (v) subject to subparagraph (C), the sum of the cost or value of the materials produced in, and the direct costs of processing operations performed in, Nepal or the customs territory of the United States is not less than 35 percent of the appraised value of the article at the time it is entered. (B) Exclusions An article shall not be treated as the growth, product, or manufacture of Nepal for purposes of subparagraph (A)(i) by virtue of having merely undergone— (i) simple combining or packaging operations; or (ii) mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article. (C) Limitation on United States cost For purposes of subparagraph (A)(v), 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. (b) Textile and apparel articles (1) In general A textile or apparel article described in paragraph (2) or (3) may enter the customs territory of the United States free of duty. (2) Textile and apparel articles wholly assembled in Nepal (A) In general A textile or apparel article is described in this paragraph if the textile or apparel article is— (i) wholly assembled in Nepal, without regard to the country of origin of the yarn or fabric used to make the articles; and (ii) imported directly from Nepal into the customs territory of the United States. (B) Limitations (i) Low volume of imports If, during a calendar year, imports of textile and apparel articles described in subparagraph (A) from Nepal 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 Nepal 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) Higher volume of imports If, during a calendar year, imports of textile and apparel articles described in subparagraph (A) from Nepal are at least 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 Nepal 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 from Nepal during a calendar year under this subsection exceed the applicable percentage set forth in paragraph (4)(B) for that calendar year. (3) 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) imported directly from Nepal into the customs territory of the United States; (ii) on a list of textile and apparel articles determined by the President, after consultation with the Government of Nepal, to be handloomed, handmade, folklore articles or ethnic printed fabrics of Nepal; and (iii) certified as a handloomed, handmade, folklore article or an ethnic printed fabric of Nepal by the competent authority of Nepal. (B) Ethnic printed fabric For purposes of subparagraph (A), an ethnic printed fabric of Nepal 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 Nepal— (I) normally produced for and sold in indigenous markets in Nepal; and (II) normally sold in Nepal by the piece as opposed to being tailored into garments before being sold in indigenous markets in Nepal; (iii) printed, including waxed, in Nepal; and (iv) fabric formed in the United States from yarns formed in the United States or from fabric formed in Nepal from yarns originating in either the United States or Nepal. (4) 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 succeeding 10 1-year periods, to imports of textile and apparel articles from Nepal under this subsection in an amount not to exceed the applicable percentage 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 1.5 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, 2023, the applicable percentage does not exceed 3.5 percent. (5) 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 Nepal 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. (6) 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 Nepal 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. 4. Reporting requirement The President shall monitor, review, and report to Congress, not later than one year after the date of the enactment of this Act, and annually thereafter, on the implementation of this Act and on the trade and investment policy of the United States with respect to Nepal. 5. Termination of preferential treatment No preferential treatment extended under this Act shall remain in effect after December 31, 2023. 6. Effective date The provisions of this Act shall take effect on January 1, 2014.