Normal-Trade-Relations (Most-Favored-Nation) Policy of the United States
Released: 2005-12-15T00:00:00

What is Normal-Trade-Relations (Most-Favored-Nation) Treatment?

In international trade, the expression "most-favored-nation," usually abbreviated "MFN,"status (or treatment) has a specific meaning quite different from what it appears to mean. Whilesuggesting special and exclusive privileges granted to one country, it means in reality equal treatmentof all countries granted the MFN treatment. Defined in a more specific detail in Article I of theGeneral Agreements on Tariffs and Trade (GATT) 1994, an integral part of the World TradeOrganization Agreement, the term denotes the reciprocal extension of any concessions, privileges,or immunities granted, or yet to be granted, by a country in a trade agreement (or in some other way)to one country which is, or would be, the "most favored" in this respect to all countries to which itaccords MFN treatment. As a consequence, all countries to which a country extends MFN treatmentare, or would be, treated by the extending country equally or in a "nondiscriminatory" fashion.

The understandable misinterpretation of the most-favored-nation term in its literal meaning,particularly in the context of U.S. trade policy of the mid-1990s toward China, gave rise tolegislation (1) to replace theoften misleading term "most-favored-nation" treatment in the seven instances in the existing and inall future U.S. legislation with the term "normal trade relations" (NTR) or another appropriateexpression. The MFN term, however, has remained universally in use in international trade relations,including trade agreements to which the United States is party. Because of this fact and for reasonsof historical continuity both terms (MFN and NTR) are used in this report with the identical meaningand also interchangeably with the term "nondiscriminatory," a term also often used in U.S. tradelegislation.

In practice, the principal benefit a country gains from being accorded MFN status by anothercountry is that the latter's imports from the former are dutied at concessional rates (often referred toas "MFN" rates, and listed in the U.S. tariff schedules as "General") rather than full rates. Thus, theextension of MFN treatment to a country can often mean a significantly lower cost and, hence,greater competitiveness of its products in the extending country's markets than would otherwise bethe case. In this report, the MFN (NTR) treatment is discussed in the specific context of tariffs,because of the origins and historical development of the concept in the U.S. law and practice,particularly the denial or restoration of such treatment to nonmarket economy countries

Evolution of U.S. Most-Favored-Nation Policy

There are three basic, often overlapping, ways in which the United States accords generalMFN treatment to its trading partners. One is by means of a bilateral compact (e.g., a "friendship,commerce, and navigation" or similar treaty, or an executive trade agreement) in which MFN statusis accorded reciprocally. Another, much broader in its reach, is through being a member of theWorld Trade Organization (WTO), which, as a rule, carries with it the obligation of according MFNtreatment to all other members.

In addition, the United States specifically accords to all foreign countries any concession ontariffs or other import restrictions agreed to in reciprocal negotiations with any trading partner by itsown law, first enacted in 1934 and now contained in Section 126 of the Trade Act of 1974 (19U.S.C. 2136). U.S. legislation provides no specific procedure for extending MFN status to a country(except in the case of restoration of the status to "nonmarket economy" countries discussed below)nor is there an official list of countries with MFN status. All countries other than those to whichMFN treatment is specifically denied by law (as listed in General Note 3(b) of the Harmonized TariffSchedule of the United States) have MFN status.

The policy of general application of MFN treatment was modified when the President, in1951 and 1952, suspended (2) the application of MFN tariff rates to the Soviet Union and to allcountries or areas then under the control of international communism (in practice, the suspensionapplied to all countries of the then Sino-Soviet bloc but not to Yugoslavia). This action resulted inthe increase of customs duties assessed on the U.S. imports from the countries involved from theconcessional levels resulting from trade agreements with third countries to considerably higher levelsas enacted by the highly protectionist Tariff Act of 1930.

The Communist countries and areas initially denied MFN tariff treatment under Section 5were: Albania, Bulgaria, China (any part under Communist domination or control), Czechoslovakia,Estonia, Germany (Soviet Zone and Soviet Sector of Berlin), Hungary, Indochina (any part ofCambodia, Laos, or Vietnam under Communist domination or control), Korea (any part underCommunist domination or control), Kurile Islands, Latvia, Lithuania, Outer Mongolia, Poland andareas under Polish domination or control, Rumania, Southern Sakhalin Island, Soviet Union, TannaTuva, and Tibet. (3)

Subsequently, Poland's MFN tariff status was restored by the President in December 1960,while Cuba's was added to Section 5 suspensions by law in May 1962. Also in 1962, a list of"Communist countries" (all "Section 5" countries except Poland), to which MFN tariff status wasbeing currently denied, was included in the newly revised Tariff Schedules of the United States,enacted by the Tariff Classification Act of 1962, and thereby the denial of MFN treatment toindividual countries became part of the U.S. law rather than of implementing regulations astheretofore.

Section 231 of the Trade Expansion Act of 1962 (P.L. 87-794; 76 Stat. 876) applied theSection 5 suspension to "any country or area dominated by Communism" and thereby placed injeopardy MFN tariff status of Yugoslavia as well as of Poland. The implementation of this directivewas delayed and the law was later amended by allowing any country with MFN status at the time ofits enactment (December 16, 1963) to retain it if the President determines it to be in the nationalinterest. Such determination was made on March 26, 1964, for both countries (29 F.R. 4851 or4913).

Procedure for Restoring NTR Treatment to Nonmarket Economy Countries

The Trade Expansion Act of 1962 also made the restoration of MFN tariff status to a countrysubject to Section 5 suspension possible only by legislation. While restoration of permanent NTRtreatment can take place only through legislation enacted under general legislative procedure, NTRtreatment as such can be restored to a "nonmarket economy" (NME) country subject to Section 5suspension on a temporary basis by a specific procedure provided in Title IV of the Trade Act of1974. While Section 401 of the act requires the continuation in force of the then existing suspensionsof MFN tariff status, it also, in other provisions of its Title IV, authorizes the President to restore"nondiscriminatory" status to a nonmarket economy country and maintain it in effect on a temporarybasis by a specific procedure.

The key elements of the procedure for temporary restoration of the MFN status to an NMEcountry are (1) conclusion of a bilateral trade agreement, containing a reciprocal grant of the MFNstatus and additional provisions required by law (Section 405, Trade Act of 1974; 19 U.S.C. 2435),and approved by the enactment of a joint resolution (4) considered under a specific fast-track procedure set out in Section151 of the Trade Act of 1974 (19 U.S.C. 2191); and (2) compliance with the freedom-of-emigrationrequirements ("Jackson-Vanik amendment;" Section 402; 19 U.S.C. 2432). The latter requirementcan be fulfilled either by a presidential report to Congress that the country is not in violation of (ineffect, is in full compliance with) the freedom-of-emigration criteria of the statute, or by apresidential waiver of such compliance under specified conditions.

Neither the initial presidential determination of full compliance with the Jackson-Vanikamendment requirements nor his initial waiver of full compliance with them requires positivecongressional approval . However, the initial presidential determination of full compliance with suchrequirements (but not the initial waiver) is subject to congressional disapproval by a jointresolution (5) of eitherhouse, enacted under a specific fast-track procedure, laid out in Section 152 of the Trade Act of 1974(19 U.S.C. 2432).

Following the main steps of the procedure, the disapproval resolution, whose language isprescribed by law, is referred, respectively, to the House Ways and Means Committee or the SenateFinance Committee, and must be reported within 30 days of session, or else the committeeconsidering it is subject to a discharge motion, the resolution may be amended only with respect toits country applicability, and the debate on the resolution and any procedural motions is subject tolimits. The resolution must be adopted within 90 days of session after the date the presidentialdetermination is delivered to Congress, and enters into force -- thereby, in effect, denying thenondiscriminatory treatment and other trade benefits to which it applies -- on the 61st day after itsenactment. If the President vetoes the resolution, the veto must be overridden within the 90 days orwithin 15 days of session after the receipt of the veto message, whichever is later. The date of theoverride is considered as the date of enactment.

After the enactment of legislation approving the bilateral agreement, restorations ofnondiscriminatory treatment are implemented by presidential proclamation, which, in the case ofpermanent restorations, usually sets the date of their entry into force, whereas temporary restorationsenter into force on the date the exchange of notices of acceptance of the agreement by the twocountries takes place.

The continuation in force of an NME country's temporary MFN status is contingent on (1)automatic triennial extensions of the underlying trade agreement and (2) periodic renewal of theauthority of the Jackson-Vanik amendment.

The agreement, usually concluded for a three-year initial term, itself provides for automaticthree-year extensions (which do not require congressional approving action), but is subject totermination by either party upon notice at least 30 days before the expiration of any three-year term.The continuation in force of the agreement is also subject to the requirement of Section 405(b)(1)(B)of the Trade Act of 1974 (19 U.S.C. 2435(b)(1)(B)) under which any trade agreement concludedunder Title IV is renewed triennially if a satisfactory balance of concessions has been maintainedduring the life of the agreement and the President determines "that actual and foreseeable reductionsin United States tariff and nontariff barriers ... resulting from multilateral negotiations [which benefitthe country in question unilaterally because of its MFN status] are satisfactorily reciprocated by theother party to the bilateral agreement."

Periodic renewal of the Jackson-Vanik amendment authority by the President must takeplace: (1) in the case of full compliance with the requirements of the amendment, by semiannualreports (by June 30 and December 31) by the President to Congress that the country continues to be,in effect, in full compliance with the freedom-of-emigration requirements of the statute; and (2) inthe case of waivers, by a Presidential recommendation, which must be made by June 3 of every year,that the overall waiver authority and the existing individual country waivers be extended for another12-month period (through July 2 of the following year).

In either case, the renewal is automatic unless the year-end (but not the mid-year) report offull compliance or the annual recommendation of waiver renewal is disapproved by the enactmentof a joint resolution, considered under specific fast-track procedures: that under Section 152 (seeprevious page) for year-end renewals of the determination of full compliance, and a separate one,under Section 153 of the Trade Act of 1974 (19 U.S.C. 2433), for mid-year renewals of the waiverauthority. The procedure under Section 153 differs, in its major steps, from that involving year-enddeterminations of full compliance only in that the deadline for the committee report is of 30 calendar days, and that the resolution must be adopted and transmitted to the President by August 31 of thecurrent year.

NTR Action Through the 105th Congress

Shortly after its enactment (January 3, 1975), Title IV of the Trade Act of 1974 was used toextend MFN treatment an annually renewable basis under the waiver provision to Romania (August1975), followed by Hungary (July 1978), China (including Tibet) (February 1980), andCzechoslovakia (November 1990). Romania, however, as of July 1988, renounced the continuationof its MFN tariff status subject to the conditions of Title IV.

With the legislation for conditional restoration of nondiscriminatory tariff treatment to NMEcountries already on the books, Poland's MFN tariff status was suspended again in October 1982after the Polish martial-law government increased its repressive measures, but was restored inFebruary 1987, after most such measures had been repealed. (6) In January 1986, Afghanistan'sMFN status was suspended by specific law which also provided for its eventual restoration, underspecified conditions, by executive action without congressional involvement (Section 118, P.L.99-190 ; 18 U.S.C. 2434 note). In 1989, the designation "Communist countries" was omitted fromthe title of the list of countries denied MFN tariff treatment in the newly enacted Harmonized TariffSchedule of the United States (7) (HTSUS) and the designation of the countries themselves wasstreamlined to reflect the actual post-World War II international border changes. This streamliningdid not affect the Baltic countries (Estonia, Latvia, and Lithuania), which remained listedindividually, since their incorporation into the USSR had not been recognized by the United States.The suspension of East Germany's MFN tariff status automatically ended with the unification of thetwo Germanies on October 3, 1990. By the end of 1990, MFN status had also been restored.

On June 1, 1990, the United States and the Soviet Union signed a bilateral trade agreement,providing among other benefits, reciprocal most-favored-nation treatment. Implementing legislationwas introduced with some delay (October 1991) and enacted on December 9, 1991 ( P.L. 102-197 ).Because of the dissolution of the Soviet Union in late December 1991, the agreement did not enterinto force for the Soviet Union, but became the master agreement for subsequent extensions of MFNtreatment to the 12 individual newly independent republics (the Baltic republics excepted), formerlyconstituting the USSR. Appropriately retitled, with the required technical changes, and signed ineach individual instance, it entered into force for each former Soviet republic upon the exchange ofnotices of acceptance (see below).

Much activity related to MFN tariff status of U.S. trading partners took place during the102nd through 105th Congresses (1991-1998).

MFN status was restored temporarily under the waiver provision of Title IV to Bulgaria andMongolia in November 1991; and permanently by law in December 1991 to previously non-MFNcountries Estonia, Latvia, and Lithuania, after they declared their independence from the SovietUnion, and, in April 1992, to Czechoslovakia (as of January 1, 1993, split into the Czech Republicand Slovakia) and Hungary (both of which already had MFN status under Title IV). After thedissolution of the Soviet Union in late December 1991, the suspension of MFN tariff statuscontinued in force individually with respect to the Soviet Union's other (than the three Baltic) 12former constituent republics. Most of these had their MFN status restored within the next two yearsunder the waiver provision of Title IV and by acceding to the U.S.-Soviet trade agreement of June1, 1990, modified to apply to each individual republic. Thus annually renewable MFN status wasrestored to Armenia in April 1992, Russia and Ukraine in June 1992, Moldova in July 1992,Kyrgyzstan in August 1992, Belarus and Kazakhstan in February 1993, Georgia in August 1993,Turkmenistan in October 1993, Tajikistan in November 1993, and Uzbekistan in January 1994.Azerbaijan was the only former Soviet republic whose MFN status had not been restored under TitleIV by the end of 1994, since the agreement was still awaiting (since April 1993) the approval by thatcountry.

During the same period, MFN tariff status also was regained under Title IV waiver provisionby Albania (November 1992) and Romania (November 1993, following the September 1992 refusal,for the second time, of the House to restore it). MFN status of Bulgaria and the Russian Federation,restored earlier under the waiver provision (see above), was continued in force by presidentialdeterminations of full compliance with the freedom-of-emigration requirements (made, respectively,in June 1993 and September 1994).

Although President Bush issued in October 1992 a notice of intention to restore MFN statusto Afghanistan, suspended in 1986 (see p. 5), the restoration did not take place until June 2002 (seep. 12).

Also in October 1992, legislation ( P.L. 102-420 ; 19 U.S.C. 2432 note) was enacted towithdraw MFN tariff status from Serbia and Montenegro (constituent republics of Yugoslavia in itsreduced size). The status could be restored by the President to either republic 30 days after hecertifies to the Congress that such republic had ceased its warlike activities in the former Yugoslavia.(See also p. 16.)

In the 104th Congress, MFN tariff status was extended in April 1995 to Azerbaijan under theJackson-Vanik waiver provision, and permanent and unconditional MFN tariff status was restoredin late 1996 by specific law to three countries: Bulgaria, and Romania (both of which at the timealready had MFN status under the full-compliance provision of the Jackson-Vanik amendment),respectively, by P.L. 104-162 and Presidential proclamation 6922, effective October 25, 1996, and P.L. 104-171 and Presidential proclamation 6951, effective November 12, 1996; and Cambodia (thenstill a non-MFN country, but considered as not being subject to Title IV) by P.L. 104-203 , effectiveOctober 25, 1996, upon the reciprocal exchange of notices of acceptance of the bilateral tradeagreement of October 4, 1996 (61 F.R. 56256).

Measures introduced in the 104th Congress to restore MFN tariff status, either temporarilyor permanently, to a number of other countries were not given further consideration, nor weremeasures denying or restricting MFN status of certain countries in a variety of circumstances. TheSenate did, however, approve in September 1996 a bill to substitute in all U.S. statutes the oftenmisunderstood term "most favored nation treatment" with "normal trade relations;" a similar Housebill, using the term "standard trade relations," remained pending (see next page). (Also suggestedduring the consideration of this change were other replacement terms, among them some technicallymore accurate terms such as "standard tariff relations" and "standard tariff treatment.")

In 1996, the President renewed his determinations of full compliance with the Jackson-Vanikamendment requirements for Bulgaria, Romania (both subsequently granted permanent MFN status;see above), and Russia, and made, in September, the initial such determination for Mongolia.

By the end of 1996 (104th Congress), the President, as required by Section 405(b)(1)(B) ofthe Trade Act of 1974 (see p. 4), also confirmed three-year extensions of trade agreements with 17of the 19 NME countries that required such action (in several instances with considerable delays).No such determinations were published for two countries upon the lapse of the initial three-year termprovided in the agreement itself, and unconditional nondiscriminatory treatment was accorded bylegislation during the same period to two countries subject to Title IV (thus eliminating the need fortheir triennial determinations).

During the105th Congress, several bills affecting the MFN status of U.S. trading partnerswere introduced, but none enacted. Most legislative action involved bills to permanently restoreMFN tariff status to Mongolia (passed by the House and favorably reported in the Senate) and Laos(favorably reported in the Senate). Introduced but not further considered was a bill grantingpermanent nondiscriminatory status to Kyrgyzstan, and one that would grant, under certainconditions, permanent MFN status to any country still without it. On the other hand, bills also wereintroduced (but not acted upon) which would withdraw MFN tariff treatment from certain countries.

The President, at the appropriate times, extended all the existing Jackson-Vanik waivers,made the initial determination of full compliance with the free-emigration requirements by all buttwo countries (Belarus and China) then still subject to the waiver (8) , and subsequently reconfirmedsuch compliance. The President also issued, in April 1998, the initial Jackson-Vanik waiver forVietnam. Joint resolutions to disapprove this waiver were introduced in both houses and reportedunfavorably, whereupon the House resolution was defeated, allowing Vietnam's waiver to remainin force. (9)

No Presidential determinations of satisfactory reciprocation of concessions (see previouspage), however, were published during the 105th Congress (nor since, except for Vietnam in 2004;see p. 16) providing for the triennial renewal of the relevant trade agreements with six more NMEcountries whose initial or earlier renewed agreements had meanwhile lapsed. This lapse, however,has not in practice affected the NTR status of the countries involved, since they are all still treatedas having NTR status, apparently solely on the basis of the standard provision for automatic triennialrenewal contained in the trade agreements themselves.

During the entire period from mid-1989 to the statutory extension of PNTR in 2001, the mostcontroversial issue of the U.S. MFN policy has been the MFN status of China . The President'sannual renewals of China's Jackson-Vanik waiver and MFN status faced strong opposition inCongress. Nevertheless, joint resolutions introduced every year in the aftermath of the June 1989Tiananmen Square incident to disapprove such renewals were not adopted. Two bills to subjectChina's MFN status to additional restrictions, passed during the 2nd session of the 102nd Congress,were vetoed by the President, and in both cases the veto was upheld by the Senate. Similar legislationas well as joint resolutions disapproving China's waiver in subsequent Congresses were not enacted.

Without actually affecting the practical effect of MFN treatment, legislation, first introducedin 1996 (see previous page), was finally enacted in 1998 (Section 5003 of the Internal RevenueService Restructuring and Reform Act of 1998; P.L. 105-206 ; 19 U.S.C. 2481 note) to replace theterm "most favored nation" in seven specific statutes in which it appeared, with "normal traderelations" or another similar appropriate term (e.g., nondiscriminatory), and required the new termto be used in all subsequent trade legislation. The term "most favored nation," however, continuesto be used in international practice and in U.S. trade agreements with other countries, occasionallyin conjunction with the new term.

In view of the then-prospective accession of the Kyrgyz Republic (Kyrgyzstan) to the WorldTrade Organization (which eventually took effect on December 20, 1998) and the obligation of aWTO member to accord permanent and unconditional most-favored-nation treatment to all WTOmembers, the United States on October 9, 1998, invoked Article XIII of the WTO Agreement. Thearticle allows the nonapplication of the entire WTO Agreement (and not merely of one part of it,which had been possible under the comparable Article XXXV of the GATT 1947) between anycurrent WTO member and the acceding member, upon written notice to the WTO by either, beforethe latter's accession. Without invoking Article XIII, the United States would have been in violationof its WTO MFN obligation toward the Kyrgyz Republic because of the latter's, at the time,nonpermanent and conditional MFN status, subject to the Jackson-Vanik amendment. (Identicalaction had been taken in similar circumstances on July 11, 1996, with respect to Mongolia, then acandidate for WTO membership. After Mongolia's accession to the WTO (January 29, 1997) andthe eventual extension of permanent MFN status to Mongolia by the United States (see below), U.S.recourse to Article XIII with respect to Mongolia was rescinded by the United States on July 7,1999.)

Developments During the 106th Congress

In the 106th Congress, legislation was enacted and implemented to extend permanentnondiscriminatory status to Mongolia, Albania, Kyrgyzstan, Georgia, and China; and the requiredsemiannual reports of full compliance with the requirements of the Jackson-Vanik provision by tenformer Soviet Union republics were made by the President, as was the renewal of Jackson-Vanikwaivers for Belarus, China, and Vietnam; joint resolutions to disapprove the latter two extensions,introduced in both houses, failed to be enacted.

Extensions of permanent nondiscriminatory tariff status were enacted and implemented asfollows:

(1) Mongolia -- enacted June 25, 1999, by Section 2424 of the Miscellaneous Trade andTechnical Corrections Act of 1999 ( P.L. 106-36 ) (19 U.S.C.2434 note) and implemented byPresidential proclamation 7207, effective July 1, 1999 (64 F.R. 36549).

(2) Albania , and Kyrgyzstan -- enacted May 18, 2000, respectively, by Sections 301 and 302of the Trade and Development Act of 2000 ( P.L. 106-200 ) (19 U.S.C. 2434 note) and implementedby Presidential proclamation 7326, effective June 29, 2000 (65 F.R. 41547). (Subsequently(September 18, 2000), the United States withdrew the October 9, 1998, invocation of WTOnonapplication Article XIII with respect to Kyrgyzstan; see p. 9).

(3) Georgia -- enacted November 9, 2000, as Title III of the Miscellaneous Trade andTechnical Corrections Act of 2000 ( P.L. 106-476 ) (9 U.S.C. 2434 note) and implemented byPresidential proclamation 7389, effective December 29, 2000 (66 F.R. 703).

(4) China -- enacted October 10, 2000, as Title I of P.L. 106-286 (Normal Trade Relationsfor the People's Republic of China) (19 U.S.C. 2431 note) and implemented by Presidentialproclamation 7516, effective January 1, 2002 (67 F.R. 479). The delayed entry into force of P.L.106-286 was due to the provision of Section 102 of the law, which precluded the actual extensionof permanent NTR to China before China's accession to the World Trade Organization (whicheventually took place on December 11, 2001).

The tie-in between the U.S. grant of permanent NTR treatment to China and China'saccession to the WTO ran in both directions. On the one hand, although China's very comprehensivetrade agreement with the United States was negotiated outside the Working Party for China'saccession to the WTO, it became part of China's protocol of accession; on the other hand,most-favored-nation treatment of China by the United States was required by the WTO Agreementas a reciprocal obligation of WTO members. Such obligation could have been avoided only by theUnited States' (or China's) invocation of WTO Article XIII, which allows reciprocal nonapplicationof obligations under the WTO Agreement (including the MFN treatment) between a current and theacceding WTO member (cf. Kyrgyzstan, p. 9). Invoking Article XIII would have meant that theUnited States would be precluded from benefitting not only from China's comprehensive concessionsin its 1999 bilateral agreement with the United States but also from those in the agreements withother WTO members. Such action would have meant that the United States' benefits from trade withChina would have remained limited to those -- of very general nature -- contained in the much lesscomprehensive bilateral agreement concluded in 1979, provided China did not decide to renounceeven that in accordance with the provisions of that agreement itself.

The bilateral trade agreement with China had been signed on November 15, 1999, afterprotracted negotiations. Even before the President Clinton transmitted the agreement to Congressfor approval in a message on March 8, 2000 (H.Doc. 106-207), the House Ways and MeansCommittee held a hearing (February 16, 2000) on the U.S.-China trade agreement and China'saccession to the WTO. Shortly thereafter, legislation approving the agreement (containing in TitleI permanent restoration of NTR treatment) was introduced in both houses ( S. 2277 ,March 23; H.R. 4444 , May 15, 2000). Both bills authorized the President to determinethat the provisions of Title IV of the Trade Act of 1974 (providing for temporary conditionalrestoration of nondiscriminatory treatment) should no longer apply to China and to proclaim theextension of permanent nondiscriminatory treatment to China. Before making such determination,however, the President was to certify to Congress that the terms and conditions for China's accessionto the WTO are at least equivalent to those contained in the U.S.-China agreement of November 15,1999.

Both bills were reported favorably: H.R. 4444 , amended, on May 22, 2000( H.Rept.106-632 , by Ways and Means Committee) and on May 23 ( H.Rept. 106-636 , by RulesCommittee); and S. 2277 , unamended, on May 25 ( S.Rept. 106-305 , by FinanceCommittee). H.R. 4444, as amended, was passed by the House on May 24 in a roll-callvote of 237 to 197, and, in the House-approved version, by the Senate on September 19, 2000, bya vote of 83 to 15. It was signed by the President on October 10, 2000 ( P.L. 106-286 ). (S.2277 was not voted on.) (Entry into force was delayed until January 1, 2002; see below:Developments during the 107th Congress).

Also signed during the 106th Congress (July 13, 2000) was a comprehensive trade agreementwith Vietnam , which, however, did not enter into force until December 2001 (see Developmentsduring the107th Congress). The agreement was in many ways similar to the one with China andcontained among many other provisions a reciprocal grant of nondiscriminatory (MFN; NTR) status.

All required Presidential semiannual determinations of continued full compliance with therequirements of the Jackson-Vanik amendment -- due in mid- and late 1999 and 2000 -- were made,although occasionally with some delay. Since, in the meantime, several countries had been grantedpermanent NTR treatment, the end-of-2000 determination (January 20, 2001) involved only ninecountries, all former republics of the Soviet Union (Armenia, Azerbaijan, Kazakhstan, Moldova, theRussian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan).

On June 3, 1999, the President recommended one-year extensions of Jackson-Vanik waiversfor Belarus, China, and Vietnam, triggering the introduction of joint resolutions disapproving theextensions for China and Vietnam. Both resolutions failed to pass the House, respectively on July27 and August 3, 1999. Similarly, Presidential mid-2000 (June 2) recommendations (Presidentialdeterminations Nos. 2000-21, -22, and -23) to extend the waivers, respectively, for Vietnam, Belarus,and China were followed by the introduction on June 6 of H.J.Res. 99 and S.J.Res. 47 to disapprove the extension of Vietnam's waiver and of H.J.Res. 103 to disapprove the extension of China's waiver. H.J.Res. 99 wasreported adversely ( H.Rept. 106-794 ) and defeated in the House (91- 332) on July 26, 2000; H.J.Res.103 was reported adversely ( H.Rept. 106-755 ) and defeated in the House (147-281) on July18, 2000.

In addition to the trade agreements whose Presidential triennial renewals (see p. 8) had lapsedearlier, renewal determinations of six more agreements lapsed during the 106th Congress. During thesame period, however, unconditional nondiscriminatory treatment was restored by law to four NMEcountries, all with lapsed renewal determinations.

The earlier invocation of the nonapplication Article XIII of the WTO Agreement with respectto Kyrgyzstan (see p. 8) was rescinded on September 18, 2000, in view of the U.S. extension ofpermanent nondiscriminatory treatment to Kyrgyzstan by P.L. 106-200 (see p. 9).

Developments During the 107th Congress

During the 107th Congress, two major trade agreements (one with Vietnam, and one withChina), both signed during the preceding Congress, entered into force.

As required by Section 101 of P.L.106-286 , the President, on November 9, 2001, transmittedto Congress the report on the equivalency of the terms and conditions of China 's accession to theWTO to those contained in the 1999 U.S.-China trade agreement (H.Doc.107-146) (see p. 10), and,subsequent to China's accession to the WTO on December 11, 2001, in Proclamation 7516 ofDecember 27, 2001 (67 F.R. 479) extended to China permanent nondiscriminatory treatment,effective January 1, 2002.

The agreement with Vietnam , together with Presidential proclamation 7449 (66 F.R. 31375)to implement it, was transmitted by the President on June 8, 2001 (H.Doc. 107-85), to Congress forlegislative approval. Legislation to approve the extension of nondiscriminatory status (and therebyalso implement the agreement) ( S.J.Res. 16 and H.J.Res. 51 ) wasintroduced, respectively, on June 11 and 12, 2001. A hearing on the U.S.-Vietnam trade relationswas held by the House Ways and Means Trade Subcommittee on June 15, 2001, and on the tradeagreement by the Senate Committee on Finance on June 26, 2001. Both resolutions were reportedfavorably ( H.Rept. 107-198 , September 5, 2001; S.Rept. 107-49 ; July 27, 2001); H.J.Res.51 was passed by the House (by voice vote) on September 6, 2001, and by the Senate(88-12) on October 3, 2001 (on the same date, S.J.Res. 16 was indefinitely postponed byunanimous consent), and signed by the President on October 16, 2001 ( P.L. 107-52 ). A resolutionratifying the agreement was approved by Vietnam's National Assembly on November 28, 2001, andsigned by Vietnam's President on December 4, 2001. The agreement and reciprocalnondiscriminatory tariff treatment entered into effect on December 10, 2001, by an exchange ofnotices of acceptance of the agreement (66 F.R. 65019). The agreement is to remain in force bymeans of triennial extensions according to its own terms and by Presidential determinations ofsatisfactory reciprocation of trade concessions (see p. 4, and also p. 16). Vietnam'snondiscriminatory status is still conditional and subject to the Jackson-Vanik amendment, hence itsrestoration remains subject to Title IV requirements and procedure.

Legislation was introduced, but not acted upon, to extend permanent nondiscriminatory tarifftreatment to Afghanistan (whose PNTR status has since been restored by Presidential action; seebelow), Cuba, Kazakhstan, Russia, Ukraine, Uzbekistan, and Yugoslavia (Serbia and Montenegro).

Under the authority of Section 118(b)(2)(C) of P.L. 99-100 (19 U.S.C. 2434 note), underwhich Afghanistan's MFN status was suspended (Pres. Proc. 5437; 51 F.R. 4287) effective February18, 1982 (see. p. 5), President Bush restored nondiscriminatory status to Afghanistan byProclamation 7553 (67 F.R. 30535; H.Doc. 107-208), effective June 2, 2002.

Semiannual Presidential reports of nonviolation of the Jackson-Vanik amendment'sfreedom-of-emigration criteria were issued with respect to the nine former Soviet Union republicssubject to such reporting, on January 17, 2001 (H.Doc. 107-17), July 2, 2001 (H.Doc. 107-98),January 18, 2002 (H.Doc. 107-169), and July 3, 2002 (H.Doc.107-240),

China's and Vietnam's (but -- possibly by an oversight -- not Belarus's) Jackson-Vanikwaivers were extended for another year on June 1, 2001 (Presidential determinations Nos. 2001-16and -17) (66 F.R. 30631 and 30633); and resolutions to disapprove them were introduced,respectively, on June 5, 2001 ( H.J.Res. 50 ) and June 21, 2001 ( H.J.Res. 55 ). H.J.Res. 50 was reported adversely ( H.Rept. 107-145 ) and defeated in the House(169-259) on July 19, 2001; H.J.Res. 55 also was reported adversely on July 23 ( H.Rept.107-154 ) and defeated in the House (91-324) on July 26, 2001, thus allowing the temporary NTRtreatment of both countries to continue in force. Belarus' waiver, which had not been extended bythe statutory deadline (June 3, 2001), was issued anew on July 2, 2001 by Executive Order 13220(66 F.R. 35527).

By the time the mid-2001 waiver was issued for China , legislation to approve thecomprehensive bilateral trade agreement with China, containing a reciprocal grant of permanentnondiscriminatory treatment, had already been enacted (see p. 10). Nevertheless, a mid-2001extension of the waiver was necessary to maintain in force the temporary NTR treatment under TitleIV, based on the 1979 Agreement, because of the statutorily mandated delay in the actual extensionof permanent NTR treatment to China. Section 102(a) of P.L. 106-286 precluded such extensionbefore China's accession to the World Trade Organization, which was then being negotiated, butforeseen as unlikely to take place before the expiration, in mid-2001, of China's 2000 one-yearwaiver (cf. p. 9).

Waivers for Belarus and Vietnam were renewed again on June 3, 2002, by Presidentialdeterminations 02-21 and -22 (67 F.R. 40833 and 48035). H.J.Res. 101 , introduced onJune 25, 2002, disapproving the extension of Vietnam's waiver ,was reported adversely on July 22,2002 ( H.Rept. 107-602 ), and defeated (91 - 338) on the following day.

No action took place regarding the lapsed triennial renewals of trade agreements with NMEcountries, based on the President's determinations of satisfactory reciprocation of concessions (seep. 4), but one country theretofore subject to the determination requirement (Mongolia) wasmeanwhile granted permanent nondiscriminatory status (see p. 9)

On January 8, 2001, the September 30, 1999, recourse by the United States to Article XIIIwith respect to Georgia (whose accession to the WTO took effect June 14, 2000) was rescinded uponthe implementation of permanent NTR for that country. In view of the impending accession ofMoldova to the WTO (eventually approved by the WTO General Council on May 8, 2001, andtaking effect on July 26, 2001), the United States, on May 2, 2001, invoked the application of ArticleXIII with respect to Moldova. The invocation is still in effect since Moldova is still subject to theconditional MFN treatment under Title IV of the 1974 Trade Act. Similarly, on December 9, 2002,the United States invoked WTO Article XIII with respect to Armenia, at the time in the last stageof accession to the WTO, but not a beneficiary of unconditional MFN treatment by the United States(see also p. 17).

Based on a determination by the U.S. Trade Representative under Section 301 of the TradeAct of 1974 that Ukraine failed to adequately protect U.S. intellectual property rights, prohibitiveimports duties of 100 percent -- in addition to an earlier suspension of Ukraine's designation as abeneficiary developing country for duty-free imports under the generalized system of preferences --were imposed as of January 23, 2002, on imports under 23 tariff items in total annual value ofapproximately $75 million, many of them normally free of duty (67 F.R. 120). This action, in effect,rescinded in part the nondiscriminatory treatment applicable to Ukraine under the provisions of TitleIV of the Trade Act of 1974, it did not, however, affect the U.S. general MFN obligation under theWTO since Ukraine is not a WTO member. (See also p. 17).

Developments During the 108th Congress

A great deal of legislative activity to restore PNTR to a number of countries took place inthe 108th Congress, but in a few instances NTR-adverse action also was initiated. Except for twoPNTR-granting measures (in favor of Armenia, and Laos), all proposed legislation died in therelevant committees.

As a move apparently preliminary to some of the pending and prospective extensions ofPNTR, the chairman of the House Trade subcommittee, on March 5, 2003, announced a request forcomments on the extension of PNTR to Armenia , Laos , and Moldova . The received comments werepublished on April 21, 2003, as Ways and Means Committee Print 108-8 ( Written comments onextension of permanent normal trade relations status to Armenia, Moldova, and Laos, 218 p.).

On February 4, 2003 -- one day before Armenia acceded to the WTO -- H.R. 528 was introduced to extend permanent nondiscriminatory treatment to that country. An identical bill( S. 1557 ) was later (August 1, 2003) introduced also in the Senate; a provision withidentical operative language was contained in Section 3601 of H.R. 3521 , introducedon November 19, 2003, and passed by the House on the following day, but not considered in theSenate. Armenia's PNTR status was eventually enacted by Section 2001 of the Miscellaneous Tradeand Technical Corrections Act of 2004

( P.L. 108-429 ; H.R. 1047 (10) ; December 3, 2004) and implemented by PresidentialProclamation 7860, effective January 7, 2005 (70 F.R. 2321) (see p. 17).

PNTR-restoring legislation was introduced, but not further considered, with regard to: Belarus ( H.R. 3823 ; February 24, 2004), Cuba (Section 8 of the United States-CubaTrade Act of 2003; S. 403 ; February 13, 2003); Kazakhstan ( H.R. 3708 ;January 20, 2004); Laos ( H.R. 3195 , September 29, 2003; H.R. 3943 and S. 2200 , March 11, 2004 (11) ); Russia ( S. 580 , March 10, 2003; companion bills H.R. 1224 and S. 624 , March 12 and 13, 2003, in which PNTR statuswould not be extended if a joint resolution were enacted disapproving the bilateral U.S.-Russia tradeagreement to be negotiated as part of Russia's accession to the WTO); and Ukraine ( H.R. 3906 , H.R. 3958 , and H.R. 4619 , and S. 2205 , introduced, respectively, March. 4, and 11, June 18, and March 11, 2004).

While separate bills to restore PNTR status to Laos died in their respective committees, therestoration of nondiscriminatory treatment to Laos was provided for in Section 2005 of P.L. 108-429 (see above), added during the conference on that measure. Its operative provisions are identical tothose of the three measures referred to in footnote 11. The provision entered into force on February4, 2005, pursuant to a USTR's Federal Register notice, published on February 11, 2005 (70 F.R.7319).

As an NTR-adverse action, H.R. 3228 , introduced on October 2, 2003, would rescind China 's NTR treatment and prohibit its restoration in the future. Moreover, S. 1586 and H.R. 3364 , introduced respectively on September 5 and October 21, 2003,would, in effect, nullify China's NTR status by imposing on any import from China a 27.5-percentad valorem duty in addition to any other duty, unless the President certifies to Congress that Chinano longer manipulates the exchange rate between the U.S. dollar and Chinese yuan and that the latteris valued in accordance with accepted market-based trading policies. (12) In the same context, H.R. 3058 and S. 1758 , introduced respectively on September 10 andOctober 20, 2003, would require the Secretary of the Treasury to determine whether Chinamanipulates its yuan/dollar exchange rate, compute the rate of manipulation, and submit a reportthereon to Congress; the Secretary would be authorized to impose on all imports from China anadditional duty at the rate equal to the rate of manipulation. (13)

NTR-adverse action also was initiated against Laos. H.R. 3000 , prohibiting theUnited States to enter with Laos into a trade agreement providing for reciprocal extension ofmost-favored-nation treatment, was introduced on November 18, 2004. By that date, however, suchagreement had already been long signed (see footnote 11) and legislation providing for Laos' PNTRwas in its final stages of enactment.

In the general context, Section 4(1)(B)(iv) of S. 1861 (Sanctions Policy ReformAct, introduced November 14, 2003) listed the imposition of increased tariffs, including the denial,revocation, or conditioning of nondiscriminatory trade treatment, as a sanction falling within thescope of the legislation.

Except as indicated above (concerning Armenia, and Laos), all of these bills died in thecommittees of referral.

On January 29, 2003, the President transmitted to Congress the 2002 year-end report on fullcompliance with the freedom-of-emigration requirements of the Jackson-Vanik amendment by nineformer Soviet republics (H.Doc. 108-28), and on May 29, 2003, extended the waivers for Belarusand Vietnam (Pres. Determinations 2003-25 and -24; 68 F.R. 35527 and 35525; H.Docs. 108-81 and108-80), thereby continuing in force these countries' temporary nondiscriminatory tariff treatmentby the United States. Legislation disapproving Vietnam's waiver ( H.J.Res. 64 ) wasintroduced on July 9, 2003, but died in committee.

On July 31, 2003, the full-compliance reporting function was delegated by the President tothe Secretary of State by Executive Order 13313 (68 F.R. 46073; August 5, 2003), and the lastfull-compliance report by the President was transmitted to Congress on August 8, 2003, for nineformer Soviet republics (H.Doc. 108-111). On the same date, Turkmenistan's full-compliancedetermination was rescinded (Pres. Det. 2003-31; 68 F.R. 49325; August 18, 2003), and itsJackson-Vanik status (and temporary NTR treatment) reverted to one based on the waiver, whichwas issued on the same date (E.O. 13314, 68 F.R. 48249; August 13, 2005).

On November 4, 2003, the Secretary of State, under delegation of Presidential authoritycontained in the statute suspending the PNTR treatment of Serbia and Montenegro (formerlyYugoslavia) ( P.L.102-420 ) (see p. 7), notified to Congress his certification of that country'scompliance with the statute's requirements for executive restoration of PNTR status, which tookeffect on December 4, 2003 (Public Notice 4526; 68 F.R. 64410; November 13, 2003).

The 2003 year-end full-compliance report was submitted to Congress -- for the first timeunder the Presidential delegation of function (see above) -- by the Assistant Secretary of State forLegislative Affairs, with a positive determination for eight former Soviet republics. On June 3, 2004,the President renewed the Jackson-Vanik waivers for Belarus (H.Doc.108-190; Pres. Det. 2004-33,69 F.R. 32431), Turkmenistan (H.Doc. 108-189; Pres. Det. 2004-32, 69 F.R. 32429), and Vietnam(H.Doc. 108-191; Pres. Det. 2004-34, 69 F.R. 32433); and on July 1, 2004, a full-compliancedetermination was submitted to Congress for the eight former Soviet republics.

Similarly to the mid-2003 delegation of full-compliance-reporting function under theJackson-Vanik amendment, the President delegated, effective July 8, 2004, to the Secretary of Statealso the functions of making waivers, determinations, certifications, recommendations, and reportsin connection with the Jackson-Vanik waiver provision (19 U.S.C.2432(d)(1)) (E.O.13346, 69 F.R.41905, July 13, 2004).

As required by 19 U.S.C. 2435(b)(1)(B)), the President, on December 10, 2004, made thedetermination of satisfactory reciprocation of trade concessions with Vietnam, provided in thebilateral trade agreement with that country (see p. 12) (Pres. Det. 2005-11; 69 F.R. 76587, December21, 2004), and thereby renewed that agreement for the following three years.

The 2004 year-end report on full compliance with the amendment's requirements (technicallydue by December 31, 2004) was submitted by the Assistant Secretary of State for Legislative Affairson January 11, 2005, for the eight former Soviet republics.

Developments During the 109th Congress

In the 109th Congress, legislative activity to extend permanent normal trade relationstreatment has focused on Ukraine . Operationally identical as to the termination of application of theJackson-Vanik provision and proclamation of the extension of permanent nondiscriminatorytreatment (although in several instances differing from each other in Congressional findings andadditional trade-related provisions) are (with their respective 2005 dates of introduction): H.R. 885 (February 17), H.R. 1053 (March 2), H.R. 1170 (March 8), S. 46 (January 24), S. 410 (February 2), and S. 632 (March 16), all pending in respective committees.

Also pending are two NTR-adverse measures: H.R. 728 (February 9, 2005),which would terminate NTR treatment of China and prohibit its restoration under any circumstance,and H.R. 967 (February 17, 2005), which would deny NTR treatment to any countrythat, based on the Secretary of State's report to Congress, denies or violates basic human rights ofits citizens.

On the executive side, the President by Proclamation 7860, effective January 7, 2005 (70F.R. 2321; January 12, 2005), extended permanent nondiscriminatory trade treatment to Armenia pursuant to Section 2001(b) of P.L. 108-429 (see p. 14); and subsequently (on February 2, 2005) theUnited States rescinded the invocation of WTO Article XIII with respect to Armenia (see p. 13) andeffected full application of the WTO Agreement between the two countries.

On June 1, 2005, the Secretary of State issued Public Notice 5120, extending the overallJackson-Vanik waiver authority and the waiver for Vietnam for one year (70 F.R. 36998). Inaddition, the Acting Assistant Secretary of State for Legislative Affairs transmitted to Congressreports continuing in force the Jackson-Vanik waivers for Belarus, Turkmenistan , and Vietnam , and,on July 7, 2005, also the semiannual report on full compliance with the Jackson-Vanik requirementsby seven former Soviet republics (omitting Armenia, which in the meantime had been extendedpermanent nondiscriminatory treatment), thereby continuing in effect for one year their conditionalNTR status.

With effect on August 30, 2005, the U.S. Trade Representative terminated the 100-percentad valorem duties placed in early 2002 on imports of products under 23 tariff items from Ukraine (see p. 13), thereby restoring to Ukraine full -- if still conditional -- nondiscriminatory tradetreatment (70 F.R. 53410, September 8, 2005).

Present Status

In view of the statutory general applicability of permanent MFN status to U.S. tradingpartners under Section 126 of the Trade Act of 1974, there is no official specific list of countries withMFN status: all countries other than those to which MFN tariff status has been specifically deniedby law or extended conditionally under Title IV of the Trade Act of 1974, have permanent andunconditional MFN status. The United States also extends permanent MFN treatment tomember-countries of the World Trade Organization on the basis of the obligation of generalmost-favored-nation treatment under Article I of GATT 1994. Excepted from this obligation areWTO members with regard to which the invocation of the nonapplication Article XIII of the WTOAgreement is in effect (at present: Moldova; see next page)

Countries to which MFN tariff status is denied altogether are: Cuba , and North Korea , andits restoration requires congressional action through either direct legislation (for permanent NTRstatus) or use of Title IV of the Trade Act of 1974 (for conditional NTR status).

Countries to which MFN tariff status is at present being extended after having beenconditionally restored temporarily under the provisions of Title IV are:

(1) under the waiver of Jackson-Vanik amendment requirements, which must be renewedannually and the renewal of which is subject to disapproval by joint resolution of Congress: Belarus,Turkmenistan, and Vietnam (see p.17); and

(2) under the determination of continued "nonviolation" (i.e., full compliance with) theJackson-Vanik amendment criteria, which, after the initial one, must be renewed semiannually andis subject to disapproval by joint resolution of Congress at the time of year-end renewal: Azerbaijan,Kazakhstan, Moldova, Russia, Tajikistan, Ukraine , and Uzbekistan (see p. 16).

Permanent or temporary nondiscriminatory treatment can normally be restored to any countryby direct legislation enacted under regular legislative procedure or, if qualifying for Title IVprocedure, under that procedure, likewise requiring legislative action. Legislation is pending fordirect restoration of unconditional and permanent nondiscriminatory treatment to Ukraine . A recentexception to this norm, effective as of December 4, 2003), has been executive restoration of PNTRstatus to (formerly Yugoslavia) under the already existing specific authority (see p. 15).

Presidential determinations of satisfactory reciprocation of concessions, which the lawrequires for renewing the triennial terms of bilateral trade agreements with NME countries (see p.4), have in the past been published with delays or, in recent years, not at all. At present, renewaldeterminations regarding agreements with all NME countries still subject to the renewal requirement(other than the recently renewed agreement with Vietnam ; see p. 16) have technically lapsed. Thislapse, however, has not in practice affected the NTR status of these countries, since they are all stilltreated as having NTR status, apparently solely on the basis of the standard provision for automatictriennial renewal contained in the trade agreements themselves.

Although Moldova has been a member of the WTO since July 26, 2002, the WTO agreementdoes not apply between it and the United States because the United States has invoked thenonapplication Article XIII of the WTO with respect to Moldova, due to the still conditional andtemporary NTR treatment of Moldova by the United States, subject to the Jackson-Vanikamendment. In similar circumstances, Article XIII had been invoked also with respect of Armenia,which acceded to the WTO on December 9, 2002, and was disinvoked on February 4, 2005, afterthe legislative extension by the United States of PNTR to Armenia.

PNTR treatment of China would be either rescinded or, in effect, nullified by legislation toimpose additional duty on all imports from China to counteract China's manipulation of the U.S.dollar/Chinese yuan exchange rate . In one measure, a 27.5- percent duty would be imposed, unlessthe President certifies that China no longer manipulates the U.S. dollar/Chinese yuan exchange rate;in another, the Secretary of the Treasury would be authorized to impose the duty at a rate equal tothe percentage rate of exchange manipulation (see p. 15).

The term "most favored nation" has been replaced in U.S. legislation by law in all seveninstances in which it appeared with the expression "normal trade relations" or another appropriateterm and is to be so replaced in all future legislation. The MFN term, however, is still being used inpractice internationally and in U.S. trade agreements; in some of the latter, both terms are used inparallel (see pp. 8-9).

Appendix A. Legislation

Note: All measures authorizing the extension of permanent normal-trade-relations treatmentto Ukraine contain functionally identical operative provision (application of NTR treatment itself),but are listed separately due to variations in their other provisions (findings, additional provisions).

H.R. 728 (Sanders)

Terminates China's NTR treatment and prohibits its restoration. Introduced February 9, 2005;referred to Committee on Ways and Means.

H.R. 885 (Hyde)/ S. 410 (McCain)

Authorize the extension of nondiscriminatory treatment to products of Ukraine. Introduced,respectively, February 17 and 16; referred, respectively, to Committees on Ways and Means, andFinance.

H.R. 967 (Saxton)

Prohibits extension of NTR treatment to any country that engages in violation of certainhuman rights. Introduced February 17, 2005; referred to Committee on Ways and Means.

H.R. 1053 (Gerlach)

Authorizes the extension of nondiscriminatory treatment to products of Ukraine. IntroducedMarch 2, 2005; referred to Committee on Ways and Means.

H.R. 1170 (Levin)

Authorizes the extension of nondiscriminatory treatment to products of Ukraine. IntroducedMarch 8, 2005; referred to Committee on Ways and Means.

H.R. 1575 (Myrick)

Provides for the imposition of 27.5-percent additional duty on all imports from China, ifnegotiations on China's currency undervaluation and manipulation are not successful. IntroducedApril 12, 2005; referred to Committee on Ways and Means.

S. 46 (Levin)

Authorizes the extension of nondiscriminatory treatment to products of Ukraine. IntroducedJanuary 24, 2005; referred to Committee on Finance.

S. 295 (Schumer)

Provides for the imposition of 27.5-percent additional duty on all imports from China, ifnegotiations on China's currency undervaluation and manipulation are not successful. IntroducedFebruary 3, 2005; referred to Committee on Finance.

S. 632 (Lugar)

Authorizes the extension of nondiscriminatory treatment to products of Ukraine. IntroducedMarch 16, 2005; referred to Committee on Finance.

Appendix B. Recent Chronology (108th through 109th Congresses)

08/31/05 -- The U.S. Trade Representative lifted the 100% additional tariff on certainimports from Ukraine (imposed as of January 23, 2002, as a sanction forviolation of intellectual property rights), thereby restoring full -- but stillconditional -- NTR treatment.

07/07/05 -- The Assistant Secretary of State for Legislative Affairs reported to Congressthat eight former Soviet republics are in full compliance with therequirements of the Jackson-Vanik amendment,

06/??/05 -- The Acting Assistant Secretary of State for Legislative Affairs extended thewaivers for Belarus, Turkmenistan, and Vietnam for a year.

06/01/05 -- The Secretary of State extended the waiver authority and Vietnam's waiverfor a year (see 06/03/04).

04/12/05 -- H.R. 1575 introduced to extend permanent NTR to Ukraine.

03/16/05 -- S. 632 introduced to extend permanent NTR to Ukraine.

03/08/05 -- H.R. 1170 introduced to extend permanent NTR to Ukraine.

03/02/05 -- H.R. 1053 introduced to extend permanent NTR to Ukraine.

02/17/05 -- H.R. 885 (identical with S. 410 ) introduced toextend permanent NTR to Ukraine.

-- H.R. 967 introduced to prohibit extension of NTR treatment toany country that engages in violation of certain human rights..

02/16/05 -- S. 410 introduced to extend permanent NTR to Ukraine.

02/09/05 -- H.R. 728 introduced to withdraw NTR treatment from China andprohibit its reinstatement.

02/05/05 -- The United States disinvoked recourse to nonapplication Article XIII of theGATT 1994 with regard to Armenia (invoked December 12, 2002).

02/04/05 -- Permanent NTR treatment extended to Laos pursuant to U.S. TradeRepresentative's notice (70 F.R. 7319) (see 12/03/04).

02/03/05 -- S. 295 introduced to impose an additional 27.5-percent duty onall imports from China unless China takes action to revalue its currencyupward to or near its fair value.

01/24/05 -- S. 46 introduced to extend permanent NTR to Ukraine.

01/11/05 -- Assistant Secretary of State for Legislative Affairs reported to Congress thateight former Soviet republics are in full compliance with the requirements ofthe Jackson-Vanik amendment. (Since the report was due by December 30,2004, it reflected the status as of that date and, hence, still included Armenia).

01/07/05 -- The President extended permanent nondiscriminatory treatment to Armenia(Pres. Procl. 7860, 70 F.R. 2321, January 12, 2005).

12/10/04 -- The President renewed for three years the trade agreement with Vietnam(Pres. Det. 2005-11; 69 F.R. 76587, December 21, 2004).

12/03/04 -- P.L. 108-429 ( H.R. 1047 ) enacted, in Sections 2001 and 2005,respectively, extending permanent NTR treatment to Armenia and to Laos.

07/08/04 -- The President delegated to the Secretary of State the function of one-yearextension of Jackson-Vanik waiver authority and wavers in force (E.O.13346, 69 F.R. 41905, July 13, 2004).

07/01/04 -- The President reported to Congress that eight former Soviet republics are infull compliance with the requirements of the Jackson-Vanik amendment,thereby continuing in force their NTR treatment by the United States.

06/03/04 -- The President extended for one year the Jackson-Vanik overall waiverauthority, and waivers for Turkmenistan, Vietnam. and Belarus (Pres.Determinations. 2004-32, -33 and -34 (69 F.R. 32429, 32431 and 32433; H.Docs. 108-189, -190 and -191).

03/11/04 -- H.R. 3943 to extend nondiscriminatory treatment to Laosintroduced.

-- H.R. 3958 to extend nondiscriminatory treatment to Ukraineintroduced.

12/31/03 -- The President reported to Congress that eight former Soviet republics are infull compliance with the requirements of the Jackson-Vanik amendment,

12/04/03 -- Permanent NTR treatment restored to Serbia and Montenegro by Executiveaction (Notice by Secretary of State under delegated Presidential authority of P.L. 102-420 ; 68 F.R. 64410).

11/20/03 -- H.R. 3521 (see 11/19/03) passed by the House.

11/19/03 -- H.R. 3521 introduced, in Section 3601 authorizing extension ofpermanent nondiscriminatory treatment to Armenia.

10/21/03 -- H.R. 3364 (identical with S. 1568 ; see 09/05/03)introduced.

10/20/03 -- S. 1758 (identical with H.R. 3058 ; see 09/10/03)introduced.

10/02/03 -- H.R. 3228 introduced to rescind China's NTR treatment andprohibit its restoration in the future.

09/29/03 -- H.R. 3195 introduced to extend permanent nondiscriminatorytreatment to Laos.

09/18/03 -- U.S.-Laos bilateral trade agreement, containing reciprocal extension ofmost-favored-nation treatment, signed.

09/10/03 -- H.R. 3058 was introduced, requiring the Secretary of theTreasury to analyze China's exchange rate policies and impose additionalduties on imports from China at a rate equal to the rate of China'smanipulation of the U.S. dollar/Chinese yuan exchange rate.

09/05/03 -- S. 1586 was introduced to impose an additional 27.5-percentduty on imports from China, unless the President certifies that China nolonger manipulates the U.S. dollar/Chinese yuan exchange rate.

08/08/03 -- The President reported to Congress (H.Doc. 108-111) that nine former Sovietrepublics are in full compliance with the requirements of the Jackson-Vanikamendment, but terminated Turkmenistan's full-compliance determination(Pres. Det. 2003-31; 68 F.R. 49325) and instead issued a Jackson-Vanikwaiver for Turkmenistan (E.O. 13314; 68 F.R. 48249), thereby continuing inforce their NTR treatment by the United States.

08/01/03 -- S. 1557 (identical with H.R. 528 ; see 02/04/03) wasintroduced to grant permanent nondiscriminatory treatment to Armenia.

07/31/03 -- The President delegated to the Secretary of State the function of reporting oncontinued full compliance with the provisions of the Jackson-Vanikamendment (E.O. 13313, 68 F.R. 46073).

05/29/03 -- The President extended for one year the Jackson-Vanik waiver authorityand waivers for Vietnam and Belarus (Pres. Determinations. 2003-24 and -25(68 F.R. 35525 and 35527; H.Docs. 108-80 and -81).

03/13/03 -- S. 624 (identical with H.R. 1224 ) was introducedto extend permanent nondiscriminatory treatment to Russia.

03/12/03 -- H.R. 1224 was introduced to authorize extension of permanentnondiscriminatory treatment to Russia, unless the U.S.-Russia agreementnegotiated as part of Russia's accession to the WTO is disapproved by jointresolution.

03/10/03 -- S. 580 was introduced to authorize extension of permanentnondiscriminatory treatment to Russia.

03/05/03 -- -- Chairman Crane of the House Trade Subcommittee announces request forwritten comments on extension of permanent nondiscriminatory treatment toArmenia, Laos, and Moldova.

02/13/03 -- "United States-Cuba Trade Act of 2003" ( S. 403 ) wasintroduced, in Section 8 authorizing the extension of permanentnondiscriminatory treatment to Cuba.

02/05/03 -- Armenia acceded to the World Trade Organization, but the WTO Agreementdid not apply between it and the United States because of the invocation bythe United States (on December 9, 2002) of WTO "nonapplication" articleXIII, until permanent MFN treatment is granted to Armenia by the UnitedStates (see 01/07/05 and 02/05/05).

02/04/03 -- H.R. 528 was introduced to grant permanent nondiscriminatorytreatment to Armenia..

01/29/03 -- The President reported to Congress (H.Doc. 108-28) that nine former Sovietrepublics are in full compliance with the requirements of the Jackson-Vanikamendment, thereby continuing in force their NTR treatment by the UnitedStates.

Appendix C. Congressional Hearings, Reports, and Documents (108th through 109th Congresses)

U.S. Congress. House. Committee on Ways and Means. Subcommittee on Trade. Written commentson extension of permanent normal trade relations status to Armenia, Moldova, and Laos.April 21. 2003. (WMCP: 108-8). Washington, U.S. Govt. Print. Off, 2003. 218 p.

U.S. President, 2001- (Bush). Continuation of waiver under the Trade Act of 1974 with respect tothe Republic of Belarus; communication from the President of the United States...Washington, U.S. Govt. Print. Off., 2003. 5 p. (108th Congress, 1st Session. H. Doc. 108-81.)Communication dated May 29, 2003.

Continuation of waiver under the Trade Act of 1974 with respect to Vietnam; communication fromthe President of the United States... Washington, U.S. Govt. Print. Off., 2003. 7 p. (108thCongress, 1st Session. H. Doc. 108-80.) Communication dated May 29, 2003.

Emigration laws and policies; message from the President of the United States... Washington, U.S.Govt. Print. Off., 2003. 6 p. (108th Congress, 1st Session. H.Doc. 108-28). Message datedJanuary 29, 2003.

Emigration laws and policies of Armenia, Azerbaijan, Kazakhstan, Moldova, the RussianFederation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan; communication from thePresident of the United States...Washington, U.S. Govt. Print. Off., 2003. 6 p. (108thCongress, 1st Session. H.Doc. 108-111). Communication dated August 8, 2003).

Extension of waiver authority for the Republic of Belarus; communication from the President of theUnited States ... Washington, U.S. Govt. Print. Off., 2004. 5 p. (108th Congress, 2d Session.H.Doc. 108-190). Communication dated June 3, 2004.

Extension of waiver authority for Turkmenistan; communication from the President of the UnitedStates ... Washington, U.S. Govt. Print. Off., 2004. 5 p. (108th Congress, 2d Session. H.Doc.108-189). Communication dated June 3, 2004.

Extension of waiver authority for Vietnam; communication from the President of the United States... Washington, U.S. Govt. Print. Off., 2004. 7 p. (108th Congress, 2d Session. H.Doc.108-191). Communication dated June 3, 2004.

Appendix D. For Additional Reading

CRS Reports

CRS Report 96-463 . Country Applicability of the U.S. Most-favored-nation Status , by Vladimir N.Pregelj.

CRS Report 96-317. Extension, Renewal, or Denial of Most-favored-nation Status to NonmarketEconomy Countries , by [author name scrubbed].

CRS Report 98-545. The Jackson-Vanik Amendment: A Survey , by [author name scrubbed].

CRS Report RS21123 . Permanent Normal Trade Relations (PNTR) Status for Russia andU.S.-Russian Economic Ties , by [author name scrubbed].

CRS Report RS20717 . Vietnam Trade Agreement: Approval and Implementing Procedure, by[author name scrubbed].

CRS Report RL30416 . The Vietnam-U.S. Bilateral Trade Agreement , by [author name scrubbed].