[House Report 112-237]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-237
======================================================================
UNITED STATES-COLOMBIA TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT
_______
October 6, 2011.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Camp, from the Committee on Ways and Means,
submitted the following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3078]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 3078) to implement the United States-Colombia Trade
Promotion Agreement, having considered the same, report
favorably thereon without amendment and recommend that the bill
do pass.
CONTENTS
Page
I. Summary and Background...........................................2
A. Purpose and Summary................................. 2
B. Background.......................................... 2
C. Legislative History................................. 7
II. Section-by-Section Summary.......................................8
A. Title I: Approval and General Provisions............ 8
B. Title II: Customs Provisions........................ 11
C. Title III: Relief from Imports...................... 17
D. Title IV: Procurement............................... 21
E. Title V: Extension of Andean Trade Preference Act... 22
F. Title VI: Offsets................................... 22
III. Votes of the Committee..........................................24
IV. Budget Effects of the Bill......................................24
A. Committee Estimate of Budgetary Effects............. 24
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 24
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 25
D. Macroeconomic Impact Analysis....................... 31
V. Other Matters to be Discussed Under the Rules of the House of
Representatives.................................................31
A. Committee Oversight Findings and Recommendations.... 31
B. Statement of General Performance Goals and
Objectives......................................... 31
C. Information Relating to Unfunded Mandates........... 32
D. Applicability of House Rule XXI 5(b)................ 32
E. Tax Complexity Analysis............................. 32
F. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 32
VI. Changes in Existing Law Made by the Bill, as Reported...........32
VII. Views...........................................................40
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 3078 would implement the agreement establishing a free
trade area between the United States and Colombia.
B. Background
The United States-Colombia Trade Promotion Agreement
The United States-Colombia Trade Promotion Agreement was
signed on November 22, 2006. In 2007, the agreement was
modified to reflect provisions required by the deal reached on
May 10, 2007, between Congressional leaders and the last
Administration, regarding labor, environment, intellectual
property, investment, government procurement, and port security
(``May 10 deal''). The trade agreement, as modified by the May
10 deal, is hereinafter referred to as ``the Agreement.'' The
Agreement covers all agricultural and industrial sectors,
provides for greatly expanded market access for U.S. services,
contains robust protections for U.S. intellectual property
rights holders, and includes strong labor and environment
provisions. The Committee believes that the Agreement meets the
objectives and priorities set forth in the Bipartisan Trade
Promotion Authority Act of 2002.
U.S. exports to Colombia face an average tariff of 12.5
percent, whereas the average U.S. tariff on Colombian exports
to the United States is just three percent, according to the
U.S. International Trade Commission (``ITC''). Due in large
part to preference programs, the vast majority of Colombia's
exports to the United States--about 90 percent in 2010--have
received duty-free treatment, although the Andean Trade
Preference Act expired on February 12, 2011. The Agreement
would transition the U.S.-Colombia trading relationship from
one-way preferences to full partnership and reciprocal
commitments, helping U.S. exporters gain greater access to the
Colombian market, which is the third largest U.S. export market
in Latin America, behind only Mexico and Brazil. The ITC
estimates that annual U.S. exports to Colombia would increase
by $1.1 billion under the Agreement.
The following are key sectoral benefits and aspects of the
Agreement:
Agriculture: U.S. agriculture exports to Colombia currently
face an average tariff of 20 percent, whereas only two
Colombian agricultural exports to the United States face
tariffs above three percent. The Agreement would remedy this by
providing immediate duty-free treatment for 77.5 percent of
Colombia's agricultural tariff lines, including U.S. exports of
soybeans, cotton, wheat, barley, peanuts, bacon, high-quality
beef, the vast majority of processed products, and almost all
fruit and vegetable products, with tariffs eliminated on almost
93 percent of agricultural tariff lines within 10 years. The
Agreement would immediately eliminate Colombia's separate
``price band'' variable tariffs for U.S. exports, which the
European Union's trade agreement with Colombia does not
eliminate for EU exports.
As a result, the ITC estimates significant gains in U.S.
agricultural exports. For example, the ITC estimates that U.S.
exports of grains could increase by 55 to 77 percent and
soybeans, soybean products, and animal feeds by 30 to 50
percent. The Agreement would also provide guarantees against
key non-tariff barriers. For example, Colombia has committed to
continuing to recognize the equivalence of the U.S. food safety
system for meat and poultry and would provide access for all
U.S. beef and beef products consistent with international
norms.
Manufacturing: The Agreement would significantly lower both
tariff and non-tariff barriers to U.S. exports of manufactured
goods. Tariffs on U.S. manufactured goods exported to Colombia
average over nine percent, with tariffs on auto and auto parts
at 17.4 percent, consumer goods at 15 percent, and building
products at 13.2 percent. Upon implementation, over 80 percent
of U.S. exports of consumer and industrial products to Colombia
would immediately become duty-free, with remaining tariffs
phased out over ten years. Key U.S. export sectors that would
receive immediate duty-free treatment include aircraft and auto
parts; agricultural and construction equipment; agro-chemicals;
and medical, scientific, and information technology equipment.
The Agreement would also guarantee access to Colombia for U.S.
exports of remanufactured products, such as industrial
machinery and consumer electronics.
As a result, the ITC estimates significant gains in U.S.
exports in key sectors and products. For example, the ITC
estimates that exports of motor vehicles and parts would be
likely to increase by 43.8 percent. Exports of miscellaneous
machinery would be likely to increase by 14.9 percent and
electronics by 8 percent. Colombia also agreed in the Agreement
to become a full participant under the WTO Information
Technology Agreement, which would further open Colombia's
market to U.S. high-tech exports. The Agreement would provide
U.S. firms with lower tariff barriers than major competitors
from countries that do not have trade agreements with Colombia
in effect.
Services: The services sector accounts for over half of
Colombia's GDP, making improved market access for U.S. services
critical. The Agreement would provide U.S. service firms with
market access, national treatment, and regulatory transparency
exceeding that afforded by the WTO General Agreement on
Services. The Agreement would eliminate significant
restrictions on the ability of U.S. firms to compete in the
engineering, architecture, real estate, telecommunications,
computer, and financial services markets. U.S. nationals would
be allowed to serve in key executive and professional posts,
which Colombia now prohibits. The ITC estimates, based on
tariff equivalents, that the Agreement would reduce barriers in
the banking sector by more than half. Significant restrictions
on U.S. asset managers would be eliminated four years after the
Agreement's entry into force. U.S. service providers that
establish a local presence in Colombia would benefit from
strong investor protections included in the Agreement.
Government Procurement: The government procurement
provisions of the Agreement are essential to guaranteeing non-
discriminatory access for U.S. goods, services, and suppliers
to 28 key Colombian central government agencies, all state-
level governments, and certain significant government
enterprises, including ECOPETROL (national oil company), ISS
(public healthcare provider), and ADPOSTAL (postal service).
These provisions are particularly important because Colombia is
not a member of the WTO Government Procurement Agreement and is
only an observer. The procurement provisions would grant U.S.
entities greater access and protection than they currently have
to Colombia's government procurement market, which, by one
measure, is $28.3 billion to $42.4 billion annually.
(Government procurement is generally 10 to 15 percent of a
country's gross domestic product (``GDP''), and Colombia's 2010
GDP was over $283 billion.)
Intellectual Property Rights: Under the Agreement, Colombia
would adopt higher and extended standards for the protection of
intellectual property rights, such as copyrights, patents,
trademarks, and trade secrets. The Agreement would also provide
enhanced means for enforcing those rights. Under the Agreement,
each partner country would be required to grant national
treatment to nationals of the other, and all laws, regulations,
procedures, and final judicial decisions would need to be in
writing and published or made publicly available. The Agreement
would lengthen terms for copyright protection, cover electronic
and digital media, and increase enforcement to go beyond the
WTO Agreement on Trade-Related Aspects of Intellectual Property
Rights. Both parties would be obliged to provide appropriate
civil and criminal remedies for willful violators of
intellectual property rights.
Textile and Apparel: All U.S. textiles and apparel products
meeting the Agreement's rules of origin would immediately
become duty-free and quota-free when exported to Colombia. The
Agreement's rules of origin are generally based on the ``yarn-
forward'' standard. A ``de minimis'' provision would allow
limited amounts of specified third-country content to go into
U.S. and Colombian apparel, giving producers in both countries
needed flexibility. The Agreement would allow the use of
``short supply'' fabrics, yarns, and fibers (that is, fabrics,
yarns, and fibers not made in Colombia or the United States
that have been determined not to be commercially available in
either country) as inputs. The Parties agreed to a list of
short supply fabrics, and the Agreement includes a process for
adding more.
Customs cooperation commitments between the United States
and Colombia would allow for verification of claims of origin
or preferential treatment, and denial of preferential treatment
or entry if claims cannot be verified. A special textile
safeguard would provide for temporary tariff relief if
increased imports under the Agreement prove to cause serious
damage to U.S. producers.
Investment: The Agreement would ensure a stable legal
framework for U.S. investors operating in Colombia. All forms
of investment would be protected under the Agreement, including
enterprises, debt, concessions and similar contracts, and
intellectual property. With very few exceptions, U.S. investors
would be treated as well as Colombian investors in the
establishment, acquisition, and operation of investments in
Colombia.
The Agreement draws from U.S. legal principles and
practices to provide U.S. investors in Colombia with a basic
set of substantive and procedural protections that Colombian
investors currently enjoy under the U.S. legal system. These
include due process protections and the right to receive fair
market value for property in the event of an expropriation. The
Agreement includes recourse to an investor-state dispute
settlement mechanism for certain types of claims.
In the preamble, the Parties agree that ``foreign investors
are not hereby accorded greater substantive rights with respect
to investment protections than domestic investors under
domestic law where, as in the United States, protections of
investor rights under domestic law equal or exceed those set
forth in this Agreement.'' This provision reflects one of the
negotiating objectives of TPA to ensure ``that foreign
investors in the United States are not accorded greater
substantive rights with respect to investment protections than
United States investors in the United States.''
Labor: The labor chapter of the Agreement includes the
obligation that the Parties adopt and effectively enforce the
five core international labor rights as stated in the 1998
International Labor Organization Declaration on Fundamental
Principles and Rights at Work. The Agreement would also require
each country to enforce its own existing laws concerning
acceptable conditions of work with respect to minimum wages,
hours of work, and occupational safety and health. The
obligations under the labor chapter would be subject to the
same dispute settlement mechanisms and enforcement mechanisms
as obligations in other chapters of the Agreement. Neither
Party would be permitted to waive or otherwise derogate from
its laws that implement this obligation in a manner affecting
trade or investment between the Parties. Procedural guarantees
in the Agreement would ensure that workers and employers have
fair, equitable, and transparent access to labor tribunals or
courts.
Environment: The Agreement would commit the Parties to
effectively enforce their own domestic environmental laws and
adopt, maintain, and implement laws and all other measures to
fulfill obligations under covered multilateral environmental
agreements. The Agreement also includes a fully enforceable,
binding commitment that would prohibit the Parties from
lowering environmental standards in the future in a manner
affecting trade or investment. The Agreement would promote a
comprehensive approach to environmental protection by
encouraging voluntary, market-based mechanisms to protect the
environment and by providing procedural guarantees that ensure
fair, equitable and transparent proceedings for the
administration and enforcement of environmental laws. The
Agreement would call for a public submissions process with an
independent secretariat for environmental matters to ensure
that views of civil society are appropriately considered. All
obligations in the environment chapter would be subject to the
same dispute settlement procedures and enforcement mechanisms
as obligations in other chapters of the Agreement.
Colombia's importance as a faithful ally and strategic partner of the
United States
Colombia has a long history of standing with the United
States as an important strategic ally in a region that includes
several increasingly anti-American governments. Colombia serves
on the United Nations Security Council and chairs its Iran
Sanctions Committee. Colombian troops served alongside U.S.
troops in the Korean War and serve under the United Nations
mandate in Haiti, Sierra Leone, and--since 1956--the Sinai.
Colombia has also been training militaries and police forces in
counter-narcotics and counterinsurgency measures in numerous
countries.
The Committee notes that Colombia has shown dramatic
improvement over the last decade in protection of labor rights
for Colombian workers, in recognition of which the
International Labor Organization (ILO) removed Colombia from
its labor watch list in 2010. According to Vice President
Garzon's Observatory for Human Rights, homicides against trade
union members declined from 196 in 2002 to 37 in 2010--a
decline of 81 percent. The decline has continued in 2011, with
22 homicides against trade union members through the end of
September 2011. Prosecutions and convictions for crimes against
trade union members have also increased substantially since
2006, when the Prosecutor General established a team of 114
specialists focused solely on labor violence cases. Convictions
increased from 16 in 2006 to 84 in 2009 to over 100 in 2010,
and the total since 2006 stood at 391 as of the end of August
2011. As a result of these and other improvements, the ILO
removed Colombia from its labor watch list in 2010, recognizing
``all the measures . . . adopt[ed] recently to combat . . .
violence against the trade union movement.''
Particularly noteworthy is the Colombian Action Plan
Related to Labor Rights, to which Presidents Obama and Santos
agreed on April 7, 2011. The Office of the U.S. Trade
Representative has certified that Colombia has completed all
action items that were due by September 15, 2011, accounting
for almost all of the actions required under the action plan.
The few actions that remain to be completed are due in December
2011 and in 2012. For example, Colombia massively expanded
labor union eligibility for its protection program, which has
already provided security for over 10,000 people, none of whom
were killed while in the program. Colombia also assigned 95 new
investigators to labor violence cases and significantly
increased funding for the special labor violence unit within
the Prosecutor General's office. In endorsing the action plan,
the president of one of Colombia's three main labor
confederations called it the most significant social
achievement of the last 50 years in Colombia.
Procedures of the Trade Act of 2002
H.R. 3078 is being considered by the Senate under the
procedures of the Bipartisan Trade Promotion Authority Act of
2002, included in the Trade Act of 2002 (``TPA''). In the
House, all provisions of TPA applied to negotiation, signature,
submission, and consideration of the Agreement until passage of
H. Res. 1092, on April 10, 2008, as described below.
Pursuant to the requirements of TPA, the President is
required to provide written notice to Congress of the
President's intention to enter into the negotiations.
Throughout the negotiating process, and prior to entering into
an agreement, the President is required to consult with
Congress regarding the ongoing negotiations. Under TPA, the
President must notify Congress of his intent to enter into a
trade agreement at least 90 calendar days before the agreement
is signed. Within 60 days after entering in the Agreement, the
President must submit to Congress a description of those
changes to existing laws that the President considers would be
required to bring the United States into compliance with the
Agreement. After entering into the Agreement, the President
must also submit to Congress the formal legal text of the
agreement, draft implementing legislation, a statement of
administrative action proposed to implement the Agreement, and
other related supporting information as required under section
2105(a) of the Trade Act of 2002.
Under TPA, following submission of these documents, the
implementing bill is introduced, by request, by the Majority
Leader and the Minority Leader in each chamber. The House then
has up to 60 legislative days to consider implementing
legislation for the Agreement, and the Senate has up to an
additional 30 legislative days. No amendments to the
legislation are allowed under TPA requirements.
C. Legislative History
On November 18, 2003, the United States Trade
Representative (``USTR'') formally notified the Congress of its
intention to initiate negotiation of a trade agreement with
Colombia. Negotiations on a trade agreement between the United
States and Colombia began on May 18, 2004. On August 24, 2006,
the President notified the Congress of his intention to enter
into a trade agreement with Colombia. On November 22, 2006, the
Deputy U.S. Trade Representative and the Colombian Minister of
Commerce, Industry and Tourism signed the United States-
Colombia Trade Promotion Agreement. On January 17, 2007, the
USTR transmitted to Congress a description of the changes to
existing U.S. laws required to comply with the Agreement. On
June 14, 2007, Colombia's National Assembly approved the trade
agreement, as signed on November 22, 2006.
On June 28, 2007, the USTR and the Colombian Minister of
Trade, Industry and Tourism entered into a Protocol amending
the trade agreement to reflect the May 10 deal. Colombia's
National Assembly approved the Agreement, as amended, on
October 30, 2007. On April 8, 2008, President Bush sent a bill
to Congress to implement the Agreement, and it was introduced
by request that day by then-Majority Leader Hoyer and then-
Minority Leader Boehner (H.R. 5724). On April 9, 2008, Rep.
Slaughter (D-NY) introduced H. Res. 1092, to eliminate the
procedures providing for expedited consideration of the
implementing bill by the House under TPA. On April 10, 2008,
the House adopted H. Res. 1092 by a vote of 224 to 195.
Congress did not consider the implementing bill.
Legislative hearings
On January 25, 2011, the Committee on Ways and Means held a
hearing on the Agreement, as well as the U.S.-Panama Trade
Promotion Agreement and the U.S.-Korea Free Trade Agreement.
The Trade Subcommittee of the Committee on Ways and Means then
held a hearing on the Colombia Agreement on March 17, 2011.
Committee action
On July 7, 2011, the Committee on Ways and Means
considered, in an informal mark-up session, draft legislation
to implement the Agreement and a statement of administrative
action. The Committee approved the draft legislation by a vote
of 22 to 14, after agreeing to an amendment in the nature of a
substitute offered by Chairman Camp.
On October 3, 2011, President Obama transmitted the United
States-Colombia Trade Promotion Agreement, a legislative
proposal to implement the agreement, a Statement of
Administrative Action, and supporting documents to Congress. On
the same day, H.R. 3078, a bill to implement the United States-
Colombia Trade Promotion Agreement, was introduced by Majority
Leader Eric Cantor (R-VA), by request, for himself and Rep. Sam
Farr (D-CA). H.R. 3078 was then referred to the Committee on
Ways and Means.
On October 5, 2011, the Committee on Ways and Means
formally met to consider H.R. 3078. The Committee ordered H.R.
3078 favorably reported to the House of Representatives by a
vote of 24 to 12, without amendment.
II. SECTION-BY-SECTION SUMMARY
Title I: Approval and General Provisions
SECTIONS 1-3: SHORT TITLE, TABLE OF CONTENTS, PURPOSES, AND DEFINITIONS
Present law
No provision.
Explanation of provision
Section 2 sets forth the purposes of the Act, which include
approving and implementing the Agreement.
Reason for change
The provision makes clear that the bill implements the
Agreement.
SECTION 101: APPROVAL AND ENTRY INTO FORCE
Present law
No provision.
Explanation of provision
Section 101 states that Congress approves the United
States-Colombia Trade Promotion Agreement (``Agreement'') and
the Statement of Administrative Action. The Agreement enters
into force when the President determines that Colombia is in
compliance with all provisions that take effect on the date of
entry into force of the Agreement and exchanges notes with the
Government of Colombia providing for entry into force on or
after January 1, 2012.
Reason for change
Approval of the Agreement and the Statement of
Administrative Action is required under the procedures of
section 2103(b)(3) of the Trade Act of 2002.
SECTION 102: RELATIONSHIP OF THE AGREEMENT TO UNITED STATES AND STATE
LAW
Present law
No provision.
Explanation of provision
Section 102(a) provides that U.S. law prevails in the case
of a conflict with the Agreement. Section 102(b) provides that
only the United States is entitled to bring a court action
challenging a state law as being invalid on grounds of
inconsistency with the Agreement. Section 102(c) states that
there is no private cause of action or defense under the
Agreement and no person other than the United States may
challenge a federal or state law in court as being inconsistent
with the Agreement.
Reason for change
The provision addresses the operation of the Agreement
relative to federal and state law, as well as private remedies.
Section 102 is necessary to make clear that no provision of the
Agreement will be given effect if it is inconsistent with
federal law and that entry into force of the Agreement creates
no new private remedy.
SECTION 103: IMPLEMENTING ACTIONS IN ANTICIPATION OF ENTRY INTO FORCE
AND INITIAL REGULATIONS
Present law
No provision.
Explanation of provision
Section 103(a) provides that, after the date of enactment,
the President may proclaim such actions, and other U.S.
government officers may issue such regulations, as are
necessary to ensure the appropriate implementation of any
provision of the implementing act (``Act'') that is to take
effect on the date of entry into force of the Agreement. The
effective date of such actions and regulations may not be
earlier than the date of entry into force of the Agreement.
Where proclaimed actions are not subject to consultation and
layover requirements under the Act, proclamations generally may
not take effect earlier than 15 days after their publication.
Section 103(b) establishes that regulations necessary or
appropriate to carry out actions under the Act and Statement of
Administrative Action must, to the maximum extent feasible, be
issued within one year of entry into force of the Agreement or,
where a provision takes effect on a date after which the
Agreement enters into force, within one year of the effective
date of the provision.
Reason for change
Section 103 provides for the issuance of regulations. The
Committee strongly believes that regulations should be issued
in a timely manner to provide maximum clarity to parties
claiming benefits under the Agreement. The Committee notes,
further, that the Statement of Administrative Action commits
each agency that will be issuing regulations to provide a
report to Congress if it cannot issue regulations within one
year of the Agreement's entry into force and that such report
must be submitted at least 30 days prior to the end of the one-
year period.
SECTION 104: CONSULTATION AND LAYOVER FOR PROCLAIMED ACTIONS
Present law
No provision.
Explanation of provision
Section 104 establishes requirements for proclamation of
actions that are subject to consultation and layover provisions
under the Act. The President may proclaim such action only
after: (1) obtaining advice from the International Trade
Commission and the appropriate private sector advisory
committees; (2) submitting a report to the Ways and Means and
Finance Committees concerning the reasons for the action; and
(3) providing for a 60-day layover period (starting after the
President has both obtained the required advice and provided
the required report). The proposed action cannot take effect
until after the expiration of the 60-day period and after the
President has consulted with the Ways and Means and Finance
Committees regarding the proposed action.
Reason for change
The bill gives the President certain proclamation authority
but requires extensive consultation with Congress before such
authority may be exercised. The Committee believes that such
consultation is an essential component of the delegation of
authority to the President and expects that such consultations
will be conducted in a thorough and timely manner.
SECTION 105: ADMINISTRATION OF DISPUTE SETTLEMENT PROCEEDINGS
Present law
No provision.
Explanation of provision
Section 105 authorizes the President to establish an office
within the Department of Commerce responsible for providing
administrative assistance to dispute settlement panels that are
established under the Agreement. The section also authorizes
appropriations of up to $262,500 for the establishment and
operation of the office and to pay the U.S. share of expenses
of the panels.
Reason for change
Dispute settlement procedures and panels are necessary to
ensure that disputes over compliance with Agreement provisions
can be resolved effectively. The authorization is necessary for
the Commerce Department to provide administrative assistance to
panels.
SECTION 106: ARBITRATION OF CLAIMS
Present law
No provision.
Explanation of provision
Section 106 authorizes the United States to resolve certain
claims covered by the Investor-State Dispute Settlement
Procedures set forth in the Agreement.
Reason for change
This provision is necessary to meet U.S. obligations under
Section B of Chapter 10 of the Agreement.
SECTION 107: EFFECTIVE DATES; EFFECT OF TERMINATION
Present law
No provision.
Explanation of provision
Section 107 provides that, with the exception of Sections 1
through 3 and Titles I and VI of the Act, which take effect on
the date of enactment of the Act, and Title V of the Act, which
contains effective date provisions applicable to that title,
the effective date of the Act is the date that the Agreement
enters into force with respect to the United States. Amendments
made to U.S. law by Sections 204, 205, 207, and 401 of the Act
take effect on the date of enactment of the Act but apply with
respect to Colombia on the date on which the Agreement enters
into force. Other than Titles V and VI, the provisions of the
Act terminate on the date on which the Agreement terminates.
Reason for change
Section 107 implements provisions of the Agreement relating
to the effective date and date of termination of the Act.
Title II: Customs Provisions
SECTION 201: TARIFF MODIFICATIONS
Present law
No provision.
Explanation of provision
Section 201(a) provides the President with the authority to
proclaim tariff modifications necessary or appropriate to carry
out the Agreement and requires the President to terminate
Colombia's designation as a beneficiary developing country for
the purposes of the Generalized System of Preferences program
(``GSP'') and as a beneficiary country for the purposes of the
Andean Trade Preference Act (``ATPA''), as of the date that the
Agreement enters into force.
Section 201(b) gives the President the authority, subject
to consultation and layover, to proclaim further tariff
modifications necessary or appropriate to maintain the general
level of reciprocal and mutually advantageous concessions with
respect to Colombia provided for by the Agreement.
Section 201(c) allows the President, for any goods for
which the base rate under the Agreement is a specific or
compound rate of duty, to substitute for the base rate an
equivalent ad valorem rate to carry out the tariff
modifications in subsections (a) and (b) of Section 201.
Section 201(d) directs the President, when implementing
tariff rate quotas under the Agreement, to ensure that imports
of agricultural goods do not disrupt the orderly marketing of
commodities in the United States.
Reason for change
The provision is necessary to ensure United States
compliance with the market access provisions of the Agreement.
The Committee expects the President to comply with the letter
and spirit of the consultation and layover provisions of this
Act in carrying out Section 201(b).
SECTION 202: ADDITIONAL DUTIES ON CERTAIN AGRICULTURAL GOODS
Present law
No provision.
Explanation of provision
Section 202 implements the agricultural safeguard
provisions of Article 2.18 and Annex 2.18 of the Agreement.
Section 202(b) directs the Secretary of the Treasury
(``Secretary'') to assess an additional duty in any year when
the volume of imports to the United States of a ``safeguard
good'' exceeds 140 percent of the in-quota quantity allocated
to Colombia for the good in that calendar year, as set forth in
Appendix I of the General Notes to the Schedule of the United
States to Annex 2.3 of the Agreement. The additional duty is
calculated as a specified percentage of the difference between
the Normal Trade Relations (``NTR'' or ``MFN'') rate of duty
and the duty set out in the Schedule of the United States to
Annex 2.3 of the Agreement. The sum of the duties assessed
under the agricultural safeguard and the applicable rate of
duty in the U.S. Schedule may not exceed the NTR (MFN) rate of
duty. No additional duty may be applied on a good if, at the
time of entry, the good is subject to a safeguard measure under
the procedures set out in Subtitle A of Title III of the Act or
under the safeguard procedures set out in Chapter 1 of Title II
of the Trade Act of 1974 (the ``Section 201'' global
safeguard). The additional duties remain in effect only until
the end of the calendar year in which they are imposed.
Reason for change
This provision implements commitments made in the Agreement
relating to agricultural safeguards. Such safeguards provide
temporary relief to farmers in the United States who face a
surge in certain agricultural imports following entry into
force of the Agreement.
SECTION 203: RULES OF ORIGIN
Present law
No provision.
Explanation of provision
Section 203 codifies the rules of origin set out in Article
3.3 and Chapter 4 of the Agreement. Section 203(b) establishes
three basic ways for a Colombian good to qualify as an
``originating good'' and therefore to be eligible for
preferential tariff treatment when it is imported into the
United States. A good is an originating good if (1) it is
``wholly obtained or produced entirely in the territory of
Colombia, the United States, or both''; (2) it is produced
entirely in the United States, Colombia, or both, and any
materials used to produce the good that are not themselves
originating goods are transformed in such a way as to cause
their tariff classification to change or the good otherwise
meets regional value-content and other requirements, as
specified in Annex 3-A or Annex 4.1 of the Agreement; or (3) it
is produced entirely in the territory of Colombia, the United
States, or both, exclusively from originating materials.
Under the rules in Chapter 3, Annex 3-A, Chapter 4, and
Annex 4.1 of the Agreement, an apparel product must generally
meet a tariff shift rule that effectively imposes a ``yarn
forward'' requirement. Thus, to qualify as an originating good
imported into the United States from Colombia, an apparel
product must have been cut (or knit to shape) and sewn or
otherwise assembled in Colombia, the United States, or both,
from yarn, or fabric made from yarn, that originates in
Colombia, the United States, or both.
Section 203(o)(2) provides authority for the President to
add fabrics, yarns, or fibers to a list of products that are
unavailable in commercial quantities in a timely manner, and
such products are treated as if they originate in Colombia,
regardless of their actual origin, when used as inputs in the
production of textile or apparel goods. Section 203(o)(4)
provides a process by which the President may modify that list
at the request of interested entities, defined as Colombia and
potential and actual suppliers and purchasers of textile or
apparel goods.
The remainder of Section 203 sets forth more detailed rules
for determining whether a good meets the Agreement's
requirements under the second method of qualifying as an
originating good. These include rules pertaining to de minimis
quantities of non-originating materials that do not undergo a
tariff transformation, transformation by regional content, and
alternative methods for calculating regional value-content.
Other provisions in Section 203 address valuation of materials;
determination of the originating or non-originating status of
fungible goods and materials; and treatment of accessories,
spare parts and tools, packaging materials, indirect materials,
and goods put up in sets. Section 203(l) specifies that goods
that undergo further production or other operations outside
Colombia or the United States (with certain exceptions) or do
not remain under the control of the customs authorities of such
other countries do not qualify as originating goods.
Reason for change
This provision implements the commitments made in the
Agreement with respect to rules of origin applying to imports
from Colombia. Rules of origin are needed to confine Agreement
benefits, such as tariff cuts, to Colombian goods and to
prevent third-country goods from being transshipped through
Colombia and claiming benefits under the Agreement.
SECTION 204: CUSTOMS USER FEES
Present law
Section 13031(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (``COBRA''), at 19 U.S.C. 58c(a),
authorizes the Secretary of the Treasury to collect a
merchandise processing fee for formal and informal entries of
merchandise into the United States (``Merchandise Processing
Fee''). Section 13031(b) of COBRA exempts from the Merchandise
Processing Fee all originating goods under each of the trade
agreements currently in force between the United States and
other countries.
Explanation of provision
Section 204 implements the U.S. commitments under Article
2.10.4 of the Agreement to eliminate the Merchandise Processing
Fee on originating goods under the Agreement. In accordance
with U.S. obligations under the General Agreement on Tariffs
and Trade 1994, the provision also prohibits use of funds in
the Customs User Fee Account to provide services related to
entry of originating goods.
Reason for change
As with other trade agreements, the Agreement eliminates
the Merchandise Processing Fee on qualifying goods from
Colombia. Other customs user fees remain in place. Section 204
is necessary to ensure United States compliance with the user
fee elimination provisions of the Agreement. The Committee
expects that the President, in his yearly budget request, will
take into account the need for funds to pay expenses for
entries under the Agreement given that Merchandise Processing
Fee funds will not be available.
SECTION 205: DISCLOSURE OF INCORRECT INFORMATION; FALSE CERTIFICATIONS
OF ORIGIN; DENIAL OF PREFERENTIAL TARIFF TREATMENT
Present law
No provision.
Explanation of provision
Section 205 implements Articles 4.18.5 and 4.19.3 of the
Agreement. Section 205(a) prohibits the imposition of a penalty
upon importers who make an invalid claim for preferential
tariff treatment under the Agreement if the importer acts
promptly and voluntarily to correct the error and pays any
duties owed on the good in question. The provision also makes
it unlawful for a person to falsely certify, by fraud, gross
negligence, or negligence, that a good exported from the United
States is an originating good. However, the provision prohibits
the imposition of a penalty if the exporter or producer
promptly and voluntarily provides notice of the incorrect
information to every person to whom a certification was issued.
Section 205(b) provides that if U.S. authorities find that
an importer, exporter, or producer has engaged in a pattern of
conduct of providing false or unsupported representations, the
authorities may suspend preferential treatment with respect to
identical goods covered by subsequent representations made by
that importer, exporter, or producer, until U.S. authorities
have determined that its representations are accurate.
Reason for change
This provision is necessary to implement commitments in the
Agreement relating to application of penalties for submission
of false information or certifications by importers, exporters,
and producers.
SECTION 206: RELIQUIDATION OF ENTRIES
Present law
No provision.
Explanation of provision
Section 206 implements Article 4.19.5 of the Agreement and
provides authority for U.S. Customs and Border Protection
(``CBP'') to reliquidate an entry to refund any excess duties
(including any merchandise processing fees) paid on a good
qualifying under the rules of origin for which no claim for
preferential tariff treatment was made at the time of
importation if the importer so requests within one year after
the date of importation.
Reason for change
Article 4.19.5 of the Agreement anticipates that private
parties may err in claiming preferential benefits under the
Agreement and provides a one-year period for parties to make
such claims for preferential tariff treatment even if the entry
of the goods at issue has already been liquidated, i.e.,
legally finalized by customs officials. Section 206 is
necessary to ensure United States compliance with Article
4.19.5.
SECTION 207: RECORDKEEPING REQUIREMENTS
Present law
No provision.
Explanation of provision
Section 207 implements Article 4.17 of the Agreement. The
provision requires any person who completes and issues a
certificate of origin under Article 4.15 of the Agreement for a
good exported from the United States to maintain, for a period
of five years after the date of certification, specified
documents demonstrating that the good qualifies as originating.
Reason for change
Section 207 is necessary to ensure United States compliance
with the recordkeeping requirement provisions in Article 4.17
of the Agreement.
SECTION 208: ENFORCEMENT RELATING TO TRADE IN TEXTILE OR APPAREL GOODS
Present law
No provision.
Explanation of provision
Section 208 implements the customs cooperation and
verification of origin provisions in Article 3.2 of the
Agreement. Under Article 3.2, the United States may request the
Government of Colombia to conduct a verification of whether a
claim of origin for a textile or apparel good is accurate or a
particular exporter or producer is complying with applicable
customs laws, regulations, and procedures regarding trade in
textile or apparel goods. Section 208(a) provides that the
President may direct the Secretary to take ``appropriate
action'' while such a verification is being conducted.
``Appropriate action'' may include (i) suspending preferential
tariff treatment for textile or apparel goods that the person
subject to the verification has produced or exported if the
Secretary determines that there is insufficient information to
sustain a claim for such treatment; (ii) denying preferential
tariff treatment to such goods if the Secretary determines that
a person has provided incorrect information to support a claim
for such treatment; (iii) detaining such goods if the Secretary
determines that there is not enough information to determine
their country of origin; and (iv) denying entry to such goods
if the Secretary determines that a person has provided
erroneous information on their origin.
Under Section 208(c), the President may also direct the
Secretary to take ``appropriate action'' after a verification
has been completed. Such action may include (i) denying
preferential tariff treatment to textile or apparel goods that
the person subject to the verification has exported or produced
if the Secretary determines that there is insufficient
information to support a claim for such treatment or determines
that a person has provided incorrect information to support a
claim for such treatment; and (ii) denying entry to such goods
if the Secretary determines that a person has provided
incorrect information regarding their origin or that there is
insufficient information to determine their origin. Unless the
President sets an earlier date, any such action may remain in
place until the Secretary obtains enough information to decide
whether the exporter or producer that was subject to the
verification is complying with applicable customs rules or
whether a claim that the goods qualify for preferential tariff
treatment or originate in an Agreement country is accurate.
Under Section 208(e), the Secretary may publish the name of
a person that the Secretary has determined (i) is engaged in
circumvention of applicable laws, regulations, or procedures
affecting trade in textile or apparel goods; or (ii) has failed
to demonstrate that it produces, or is capable of producing,
textile or apparel goods.
Reason for change
To avoid textile transshipment, special textile enforcement
provisions have been included in the Agreement. Section 208 is
necessary to authorize these enforcement mechanisms for use by
U.S. authorities.
SECTION 209: REGULATIONS
Present law
No provision.
Explanation of provision
Section 209 directs the Secretary to prescribe regulations
necessary to carry out the tariff-related provisions of the
Act, including the rules of origin and customs user fee
provisions.
Reason for change
Because the Act involves lengthy and complex implementation
procedures by customs officials, this provision is necessary to
authorize the Secretary of the Treasury to carry out provisions
of the Act through regulations. No such regulations may take
effect before the Agreement enters into force.
Title III: Relief From Imports
SECTION 301: DEFINITIONS
Present law
No provision.
Explanation of provision
Section 301 defines ``Colombian article'' and ``Colombian
textile or apparel article,'' which are key terms for Title III
of the Act.
Reason for change
This provision clarifies the scope of the provisions in
Title III.
Subtitle A: Relief From Imports Benefiting From the Agreement
SECTIONS 311-316
Present law
No provision.
Explanation of provisions
Subtitle A to Title III of the Act (Sections 311 to 316)
authorizes the President, after an investigation and
affirmative determination by the ITC, to impose certain import
relief measures when, as a result of the reduction or
elimination of a duty under the Agreement, a Colombian product
is being imported into the United States in such increased
quantities and under such conditions as to be a substantial
cause of serious injury or threat of serious injury to the
domestic industry.
Section 311 provides for the filing of petitions with the
ITC and for the ITC to conduct safeguard investigations under
Subtitle A. Section 311(a) provides that a petition requesting
a safeguard action may be filed by an entity that is
``representative of an industry.'' As under Section 202(a)(1)
of the Trade Act of 1974, a trade association, firm, certified
or recognized union, or a group of workers can be considered
such an entity. Section 311(b) sets out the standard to be used
by the ITC in undertaking an investigation and making a
determination in safeguard proceedings under Subtitle A of
Title III of the Act.
Section 311(c) provides that certain provisions of Section
202 of the Trade Act of 1974 also apply with respect to
investigations initiated under Section 311(b), including
provisions defining ``substantial cause'' and listing factors
to be taken into account in making safeguard determinations.
Section 311(d) exempts from investigation under this
section Colombian articles with respect to which relief has
previously been provided under Subtitle A of Title III of the
Act.
Section 312 requires the ITC to make a determination not
later than 120 days after the date on which the Section 311
investigation is initiated. Under Sections 312(b) and (c), if
the ITC makes an affirmative determination, it must find and
recommend to the President the amount of import relief that is
necessary to remedy or prevent serious injury and to facilitate
the efforts of the domestic industry to make a positive
adjustment to import competition. Section 312(d) directs the
ITC to submit a report to the President regarding the
determination no later than 30 days after the determination is
made. Section 312(e) requires the ITC to make this report
public and to publish a summary of it in the Federal Register.
Section 313(a) provides that the President, within 30 days
of receiving a report from the ITC under Section 312, must
provide import relief to the extent that the President
determines is necessary to remedy or prevent the injury found
by the ITC and to facilitate the efforts of the domestic
industry to make a positive adjustment to import competition.
Under Section 313(b), the President is not required to provide
import relief if the relief will not provide greater economic
and social benefits than costs.
Section 313(c) sets forth the nature of the relief that the
President may provide. The President may take action in the
form of a suspension of further reductions in the rate of duty
to be applied to the articles in question, or in the form of an
increase in the rate of duty on the articles in question to a
level that does not exceed the lesser of the existing NTR (MFN)
rate or the NTR (MFN) rate of duty that was imposed on the day
before the Agreement entered into force. Under Section
313(c)(2), if the relief the President provides has duration
greater than one year, the relief must be subject to
progressive liberalization at regular intervals over the course
of its application.
Section 313(d) provides that the President may initially
provide import relief for up to two years. This period may be
extended for an additional two years (to a maximum aggregate
period of four years) if, after an investigation by the ITC and
receipt of an ITC report, the President determines that import
relief continues to be necessary and there is evidence that the
industry is making a positive adjustment to import competition.
The ITC must conduct an investigation on these issues if,
within a specified period before the relief terminates, a
concerned industry files a petition requesting an
investigation. The ITC must issue a report on its investigation
to the President no later than 60 days before the termination
of the import relief.
Section 313(e) specifies that upon the termination of
import relief, the rate of duty for the remainder of the
calendar year is the rate that was scheduled to have been in
effect one year after the initial provision of import relief.
In the calendar year that follows the year of termination of
import relief, the President may either apply the rate of duty
set out in the relevant U.S. Schedule to the Agreement or
eliminate the duty in equal annual stages until the end of the
scheduled phase-out period.
Section 313(f) exempts from relief any article that is (i)
subject to import relief under the global safeguard provisions
in U.S. law (Chapter 1 of Title II of the Trade Act of 1974);
(ii) subject to import relief under Subtitle B of Title III of
the Act (Sections 321 to 328); or (iii) subject to additional
duties as an agricultural good under Section 202(b).
Section 314 provides that no relief may be provided under
Subtitle A to Title III of the Act after ten years from the
date the Agreement enters into force, unless the scheduled
tariff phase-out period for the article under the Agreement is
greater than ten years, in which case relief may not be
provided for that article after the scheduled phase-out period
ends.
Section 315 authorizes the President to provide
compensation to Colombia consistent with Article 8.5 of the
Agreement if relief is ordered.
Section 316 provides for the treatment of confidential
business information submitted to the ITC in the course of
investigations conducted under Title III of the Act.
Reason for change
Sections 311 to 316 establish a mechanism for providing
temporary import relief where a U.S. industry experiences
serious injury or threat of serious injury by reason of
increased import competition from Colombia resulting from
reduction or elimination of a duty under the Agreement. The
Committee notes that the President is not required to provide
relief if the relief will not provide greater economic and
social benefits than costs. The Committee intends that
administration of this safeguard be consistent with U.S.
obligations under Section A of Chapter Eight (Trade Remedies)
of the Agreement.
Subtitle B: Textile and Apparel Safeguard Measures
SECTIONS 321-328
Present law
No provision.
Explanation of provisions
Subtitle B of Title III of the Act (Sections 321 to 328)
authorizes the President to impose certain import relief
measures when he determines that, as a result of the
elimination or reduction of a duty provided under the
Agreement, a Colombian textile or apparel article is being
imported into the United States in such increased quantities,
in absolute terms or relative to the domestic market for that
article, and under such conditions, as to cause serious damage,
or actual threat thereof, to the domestic industry.
Section 321 provides that an interested party may file a
request with the President for safeguard relief under Subtitle
B of Title III of the Act. The President must review the
request and determine whether to commence consideration of the
request. Under Section 321(b), if the President determines that
the request contains information necessary to warrant
consideration on the merits, the President must publish notice
in the Federal Register stating that the request will be
considered and seeking public comments on the request.
Section 322(a) provides that the President shall determine,
pursuant to a request by an interested party, whether, as a
result of the elimination or reduction of a duty provided under
the Agreement, a Colombian textile or apparel article is being
imported into the United States in such increased quantities,
in absolute terms or relative to the domestic market for that
article, and under such conditions as to cause serious damage,
or actual threat thereof, to a domestic industry producing an
article that is like, or directly competitive with, the
imported article.
Section 322(b) sets forth the relief that the President may
provide, which is an increase in the rate of duty on the
articles in question to a level that does not exceed the lesser
of the existing NTR (MFN) rate or the NTR (MFN) rate of duty
that was imposed on the day before the Agreement entered into
force.
Section 323 of the Act provides that the period of relief
shall be no longer than two years. The period may be extended
for an additional period of not more than one year if the
President determines that continuation is necessary to remedy
or prevent serious damage and to facilitate adjustment by the
domestic industry to import competition and there is evidence
the industry is making a positive adjustment to import
competition. The aggregate period of relief, including any
extension, may not exceed three years.
Section 324 provides that relief may not be granted to an
article under this subtitle if relief has previously been
granted under this subtitle for that article, or the article is
subject to import relief under Subtitle A of Title III of the
Act or under Chapter 1 of Title II of the Trade Act of 1974.
Under Section 325, after a safeguard expires, the rate of
duty on the article that had been subject to the safeguard
shall be the rate that would have been in effect at that time,
but for the safeguard action.
Section 326 provides that the authority to provide
safeguard relief under Subtitle B to Title III of the Act
expires five years after the date on which the Agreement enters
into force.
Section 327 authorizes the President to provide
compensation to Colombia if relief is ordered.
Section 328 provides for the treatment of confidential
business information received by the President in connection
with an investigation or determination under Subtitle B to
Title III of the Act.
Reason for change
Sections 321 to 328 implement the commitments under the
Agreement relating to textile and apparel safeguard measures.
The Committee intends that the provisions of Subtitle B of
Title III of the Act be administered in a manner that is
transparent and that will serve as an example to our trading
partners. For example, in addition to publishing a summary of
the request for safeguard relief, the Committee notes that the
President plans to make available the full text of the request,
subject to the protection of business confidential data, on the
website of the Department of Commerce, International Trade
Administration. In addition, the Committee encourages the
President promptly to issue regulations on procedures for
requesting such safeguard measures, for making determinations
under Section 322(a), and for providing relief under Section
322(b).
Subtitle C: Cases Under Title II of the Trade Act of 1974
SECTION 331: FINDINGS AND ACTION ON GOODS FROM COLOMBIA
Present law
No provision.
Explanation of provision
Section 331(a) provides that, if the ITC makes an
affirmative determination or a determination that the President
may consider to be an affirmative determination in a global
safeguard investigation under Section 202(b) of the Trade Act
of 1974, the ITC must find and report to the President whether
Colombian imports of the article that qualify as originating
goods under the Agreement are a substantial cause of serious
injury or threat thereof. Under Section 331(b), if the ITC
makes a negative finding under Section 331(a), the President
may exclude any imports that are covered by the ITC's finding
from the global safeguard action.
Reason for change
This provision implements commitments under the Agreement
relating to treatment of Colombian imports in global safeguard
investigations under Section 202(b) of the Trade Act of 1974.
Title IV: Procurement
SECTION 401: ELIGIBLE PRODUCTS
Present law
U.S. procurement law (such as the Buy American Act of 1933
and the Buy American Act of 1988) limits procurement from
certain foreign suppliers of goods and services in favor of
U.S. providers of goods and services. Most discriminatory
purchasing provisions are waived if the United States is a
party to a bilateral or multilateral procurement agreement,
such as the WTO Agreement on Government Procurement, or a
bilateral or multilateral trade agreement that includes
provisions on procurement.
Explanation of provision
Section 401 implements Chapter 9 of the Agreement and
amends the definition of ``eligible product'' in Section
308(4)(A) of the Trade Agreements Act of 1979. As amended,
Section 308(4)(A) provides that an ``eligible product'' means a
product or service of Colombia that is covered under the
Agreement for procurement by the United States.
Reason for change
This provision implements U.S. commitments under Chapter 9
of the Agreement (Government Procurement).
Title V: Extension of Andean Trade Preference Act
SECTION 501: EXTENSION OF ANDEAN TRADE PREFERENCE ACT
Present law
ATPA, as amended in 2002 by the Andean Trade Promotion and
Drug Eradication Act, provides duty-free treatment to most
products originating in Bolivia, Colombia, Ecuador, and Peru,
for the purpose of assisting these Andean countries in their
fight against drug production and trafficking by expanding
their economic alternatives.
Explanation of provision
Section 501 extends ATPA through July 31, 2013, with duty-
free treatment under ATPA applying to articles that enter
fifteen days or more after enactment of the Act. ATPA expired
on February 12, 2011. Section 501 lays out procedures for
retroactive application of ATPA treatment (and reimbursement of
duties paid) for articles that entered the United States after
February 12, 2011, but before articles begin qualifying for
duty-free treatment under the ATPA extension provided for in
Section 501.
Reason for change
This provision is ``necessary or appropriate'' to implement
the Agreement. Benefits under ATPA (including for Colombia)
expired on February 12, 2011. This extension will allow imports
from Colombia to continue to benefit under the program until
the earlier of the date on which the Agreement enters into
force or July 31, 2013.
Title VI: Offsets
SECTION 601: ELIMINATION OF CERTAIN NAFTA CUSTOMS FEES EXEMPTION
Present law
Section 13031 of COBRA authorizes the Secretary of the
Treasury to collect certain customs user fees. Section 412 of
the Homeland Security Act of 2002 authorized the Secretary of
the Treasury to delegate such authority to the Secretary of
Homeland Security. One of these fees, provided for under 19
U.S.C. 58c(a)(5), is a fee for air and sea passenger
processing. The arrival of any passenger whose journey
originated in Canada, Mexico, a territory or possession of the
United States, or adjacent islands is currently exempted from
that fee.
Explanation of provision
Section 601 eliminates the current exemption from the
customs user fee for air and sea passengers arriving from
Canada, Mexico, and the Caribbean.
Reason for change
The Committee believes it is appropriate, for budgetary
offset purposes, to eliminate the exemption from the Passenger
and Conveyance Processing fee for air and sea passengers
arriving from Canada, Mexico, and the Caribbean.
SECTION 602: EXTENSION OF CUSTOMS USER FEES
Present law
Section 13031 of COBRA, at 19 U.S.C. 58c, authorizes the
Secretary of the Treasury to collect certain service fees.
Section 412 of the Homeland Security Act of 2002 authorized the
Secretary of the Treasury to delegate such authority to the
Secretary of Homeland Security. The fees include the
Merchandise Processing Fee and, under 19 U.S.C. 58c(a)(1)
through (8), processing fees for air and sea passengers,
commercial trucks, rail cars, private aircraft and vessels,
commercial vessels, dutiable mail packages, barges and bulk
carriers, and Customs broker permits (``Passenger and
Conveyance Processing Fees''). COBRA has been amended on
several occasions. The current authorization for the collection
of the Passenger and Conveyance Processing Fees is through
January 14, 2020. The current authorization for the collection
of the Merchandise Processing Fee is through January 7, 2020.
Explanation of provision
Section 602 extends the Passenger and Conveyance Processing
Fees authorized under Section 13031 of COBRA from December 9,
2020 to August 31, 2021 and extends the Merchandise Processing
Fee authorized under Section 13031 of COBRA from August 3, 2021
to September 30, 2021.
Reason for change
The Committee believes it is appropriate, for budgetary
offset purposes, to extend the Passenger and Conveyance
Processing Fees and the Merchandise Processing Fee authorized
under COBRA.
SECTION 603: TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES
Present law
In general, corporations are required to make quarterly
estimated tax payments of their income tax liability. For a
corporation whose taxable year is a calendar year, these
estimated tax payments must be made by April 15, June 15,
September 15, and December 15.
Explanation of provision
For corporations with assets of at least $1 billion, the
provision increases the amount of the required installment of
estimated tax otherwise due in July, August, or September 2016
by 0.50 percent of such amount (determined without regard to
any increase in such amount not contained in the Internal
Revenue Code). The next required installment is reduced
accordingly.
Reason for change
The Committee believes it is appropriate to adjust the
corporate estimated tax payments, for budgetary offset
purposes.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the vote of the Committee on Ways and Means in its
consideration of the bill, H.R. 3078.
MOTION TO REPORT THE BILL
The bill, H.R. 3078, was ordered favorably reported by a
rollcall vote of 24 yeas to 12 nays (with a quorum being
present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp....................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Herger..................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Stark........ ........ X .........
Mr. Brady...................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Ryan....................... X ........ ......... Mr. Lewis........ ........ X .........
Mr. Nunes...................... X ........ ......... Mr. Neal......... ........ X .........
Mr. Tiberi..................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. Davis...................... X ........ ......... Mr. Doggett...... ........ X .........
Mr. Reichert................... X ........ ......... Mr. Thompson..... ........ X .........
Mr. Boustany................... X ........ ......... Mr. Larson....... ........ ........ .........
Mr. Roskam..................... X ........ ......... Mr. Blumenauer... ........ X .........
Mr. Gerlach.................... X ........ ......... Mr. Kind......... X ........ .........
Mr. Price...................... X ........ ......... Mr. Pascrell..... ........ X .........
Mr. Buchanan................... X ........ ......... Ms. Berkley...... ........ X .........
Mr. Smith...................... X ........ ......... Mr. Crowley...... X ........ .........
Mr. Schock..................... X ........ .........
Ms. Jenkins.................... X ........ .........
Mr. Paulsen.................... X ........ .........
Mr. Berg....................... X ........ .........
Ms. Black...................... X ........ .........
Mr. Reed....................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of this bill, H.R. 3078,
as reported: The Committee agrees with the estimate prepared by
the Congressional Budget Office (CBO) which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with subdivision 3(c)(2) of rule XIII of the
Rules of the House of Representatives, the Committee states
that the provisions of H.R. 3078 would reduce customs duty
receipts, due to lower tariffs imposed on goods from Colombia.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by CBO, the following report prepared by CBO is
provided:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 5, 2011.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3078, the United
States-Colombia Trade Promotion Agreement Implementation Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kalyani
Parthasarathy.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 3078--United States-Colombia Trade Promotion Agreement
Implementation Act
Summary: H.R. 3078 would approve the trade promotion
agreement between the government of the United States and the
government of Colombia that was signed on November 22, 2006. It
would provide for tariff reductions and other changes in law
related to implementation of the agreement. It also would
retroactively extend the Andean Trade Preference Act (ATPA)
from February 12, 2011, through July 31, 2013, while removing
Colombia from eligibility for trade preferences under that
program. The bill would extend user fees collected by Customs
and Border Protection (CBP) that expire under current law, and
remove an exemption from those fees for travelers to the United
States from Mexico, Canada, and certain Caribbean countries. It
also would shift some corporate income tax payments between
fiscal years.
The Congressional Budget Office (CBO) and the staff of the
Joint Committee on Taxation (JCT) estimate that enacting H.R.
3078 would reduce revenues by $139 million in 2012 and by about
$1.5 billion over the 2012-2021 period. CBO estimates that
enacting H.R. 3078 would decrease direct spending by $68
million in 2012 and by about $1.5 billion over the 2012-2021
period. The net impact of those effects is an estimated
reduction in deficits of $22 million over the 2012-2021 period.
Pay-as-you-go procedures apply because enacting the legislation
would affect direct spending and revenues.
Further, CBO estimates that implementing the legislation
would result in discretionary costs of $4 million over the
2012-2016 period, assuming the availability of appropriated
funds.
CBO has determined that the nontax provisions of H.R. 3078
contain no intergovernmental mandates as defined in the
Unfunded Mandates Reform Act (UMRA), and would impose no costs
on state, local, or tribal governments.
CBO has determined that the nontax provisions of the bill
contain private-sector mandates with costs that would exceed
the annual threshold established in UMRA for private-sector
mandates ($142 million in 2011, adjusted annually for
inflation).
JCT has determined that the tax provision of H.R. 3078
contains no private-sector or intergovernmental mandates as
defined in UMRA.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 3078 is shown in the following table.
The costs of this legislation fall within budget functions 150
(international affairs), 370 (commerce and housing credit), 750
(administration of justice), and 800 (general government).
Basis of estimate: For the purposes of this estimate, CBO
assumes that H.R. 3078 will be enacted early in fiscal year
2012.
REVENUES
Under the United States-Colombia trade promotion agreement,
tariffs on U.S. imports from Colombia would be phased out over
time. The tariffs would be phased out for individual products
at varying rates, ranging from immediate elimination on the
date the agreement enters into force to gradual elimination
over 10 or more years. According to the U.S. International
Trade Commission, the United States collected about $9 million
in customs duties in 2010 on $16 billion of imports from
Colombia. However, since 1991, imports to the United States
from Colombia have been subject to reduced tariff rates in
accordance with the ATPA, which was expanded in legislation
enacted in 2002, and expired on February 12, 2011. The ATPA
overlaps to a large extent with the trade promotion agreement
that would be implemented by this bill. As a result, enacting
the bill would effectively extend the ATPA for Colombia, while
also lowering tariff rates not covered by the ATPA.
Based on expected imports from Colombia, CBO estimates that
implementing the tariff schedule outlined in the U.S.-Colombia
trade promotion agreement would reduce revenues by $55 million
in 2012, and by about $1.4 billion over the 2012-2021 period,
net of income and payroll tax offsets.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-2016 2012-2021
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Preferential Trade Agreement................................ -55 -100 -110 -122 -135 -148 -159 -171 -185 -199 -522 -1,384
Extend ATPA................................................. -84 -19 0 0 0 0 0 0 0 0 -103 -103
Corporate Payment Shift..................................... 0 0 0 0 344 -344 0 0 0 0 344 0
-----------------------------------------------------------------------------------------------------------------------------------
Estimated Revenues...................................... -139 -119 -110 -122 209 -492 -159 -171 -185 -199 -282 -1,488
CHANGES IN DIRECT SPENDINGa
Extend Customs User Fees....................................
Estimated Budget Authority.............................. 0 0 0 0 0 0 0 0 0 -754 0 -754
Estimated Outlays....................................... 0 0 0 0 0 0 0 0 0 -754 0 -754
Eliminate COBRA Fee Exemption...............................
Estimated Budget Authority.............................. -83 -111 -112 -113 -114 -116 -117 -118 -35 -80 -533 -999
Estimated Outlays....................................... -83 -111 -112 -113 -114 -116 -117 -118 -35 -80 -533 -999
Exemption from Merchandise Processing Fee...................
Estimated Budget Authority.............................. 15 26 28 29 30 32 34 35 10 5 128 243
Estimated Outlays....................................... 15 26 28 29 30 32 34 35 10 5 128 243
Total, Direct Spendinga.....................................
Estimated Budget Authority.............................. -68 -85 -84 -84 -84 -84 -83 -83 -25 -829 -405 -1,510
Estimated Outlays....................................... -68 -85 -84 -84 -84 -84 -83 -83 -25 -829 -405 -1,510
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND RECEIPTS
Impact on Deficit........................................... 71 34 26 38 -293 408 76 88 160 -630 -123 -22
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office and the staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding. ATPA = Andean Trade Preference Act; COBRA = Consolidated Omnibus Budget Reconciliation Act.
aIn addition, CBO estimates that implementing the provisions of H.R. 3078 would have a discretionary cost of $4 million over the 2012-2016 period, assuming appropriation of the necessary
amounts.
This estimate includes the effects of increased imports
from Colombia that would result from the reduced prices of
imported products in the United States, reflecting the lower
tariff rates. It is likely that some of the increase in U.S.
imports from Colombia would displace imports from other
countries. In the absence of specific data on the extent of
this substitution effect, CBO assumes that an amount equal to
one-half of the increase in U.S. imports from Colombia would
displace imports from other countries.
The Generalized System of Preferences, which allows duty-
free importation of a wide range of products from 129
countries, including Colombia, expired on December 31, 2010. If
those preferences were extended through July 13, 2013, in other
legislation enacted prior to H.R. 3078 (such as in H.R. 2832 as
passed by the Senate on September 22, 2011), then the revenue
loss from implementing the tariff reductions in H.R. 3078 would
be reduced by $6 million over the 2012-2021 period, to $1.378
billion instead of $1.384 billion.
Under H.R. 3078, the ATPA trade preferences, which expired
on February 12, 2011, would be extended, retroactively, for
each of the beneficiary countries: Colombia and Ecuador. (The
free trade agreement with Peru supersedes that country's ATPA
preferences. Bolivia, which had been a member country in
previous years, had its eligibility revoked in June 2009.) The
preferences would be extended from February 12, 2011, through
July 31, 2013, with Colombia losing its eligibility for ATPA
preferences upon enactment of the trade promotion agreement.
CBO estimates that the retroactive extension of the ATPA
preferences, including removing Colombia for eligibility, would
reduce revenues from customs duties by $84 million in 2012,
including refunds of duties paid by importers in 2011, and $19
million in 2013, net of income and payroll tax offsets.
H.R. 3078 also would shift payments of corporate estimated
taxes between fiscal years 2016 and 2017. For corporations with
at least $1 billion in assets, the bill would increase the
portion of corporate estimated payments due from July through
September of 2016. JCT estimates that this change would
increase revenues by $344 million in 2016 and decrease revenues
by $344 million in 2017.
DIRECT SPENDING
Under current law, user fees collected by CBP will expire
in January of 2020.The bill would permit CBP to collect COBRA
fees (which were established in the Consolidated Omnibus Budget
reconciliation Act of 1985) from December 9, 2020, through
August 31, 2021, and to collect merchandise processing fees
from August 3, 2021, through September 30, 2021. CBO estimates
that those changes would increase offsetting receipts (a credit
against direct spending) by about $750 million in 2021.
Under current law, certain travelers arriving in the United
States from Mexico, Canada, and some Caribbean countries are
exempt from paying COBRA fees; the bill would remove this
exemption. CBO estimates that this would increase offsetting
receipts by about $1 billion over the 2012-2021 period.
In addition, the bill would exempt imports from Colombia
from merchandise processing fees. CBO estimates that this would
reduce offsetting receipts by about $130 million over the five-
year period and by $245 million over the 10-year period.
SPENDING SUBJECT TO APPROPRIATION
Implementing provisions of H.R. 3078 would increase the
costs of several agencies affected by the bill including:
The Department of Commerce to provide
administrative support for dispute-settlement panels
established in the agreement,
The International Trade Commission to conduct
investigations, if petitioned, into whether Colombian
imports might threaten or cause serious injury to
domestic competitors, and
The Department of Treasury and the United
States Trade Representative to establish regulations to
carry out provisions of the agreement.
Based on information from the agencies, CBO estimates that
these activities would cost $4 million over the 2012-2016
period, assuming appropriation of the necessary amounts.
Pay-as-you-go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3078 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON OCTOBER 5, 2011
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-2016 2012-2021
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact.............................. 71 34 26 38 -293 408 76 88 160 -630 -123 -22
Memorandum:
Changes in Revenues..................................... -139 -119 -110 -122 209 -492 -159 -171 -185 -199 -282 -1,488
Changes in Outlays...................................... -68 -85 -84 -84 -84 -84 -83 -83 -25 -829 -405 -1,510
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated impact on State, Local, and Tribal Governments:
CBO has determined that the nontax provisions of H.R. 3078
contain no intergovernmental mandates as defined in UMRA, and
would impose no costs on state, local, or tribal governments.
JCT has determined that the tax provision of the bill contains
no intergovernmental mandates as defined in UMRA.
Estimated impact on the private sector: CBO has determined
that the nontax provisions of H.R. 3078 would impose private-
sector mandates, as defined in UMRA, by extending the customs
user fees, increasing merchandise processing fees, and by
enforcing new record-keeping requirements. CBO estimates that
the aggregate costs of those mandates would exceed the annual
threshold established in UMRA for private-sector mandates ($142
million in 2011, adjusted annually for inflation). JCT has
determined that the tax provision of H.R. 3078 contains no
private-sector mandates as defined in UMRA.
Estimate prepared by: Federal Revenues: Kalyani
Parthasarathy; Federal Spending: Sunita D'Monte, Mark
Grabowicz, Matthew Pickford, and Susan Willie; Impact on State,
Local, and Tribal Governments: Lisa Ramirez-Branum; Impact on
the Private Sector: Marin Randall.
Estimate approved by: Peter H. Fontaine, Assistant Director
for Budget Analysis; and Frank Sammartino, Assistant Director
for Tax Analysis.
D. Macroeconomic Impact Analysis
In compliance with clause 3(h)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made by the Joint Committee on Taxation with respect to the
provisions of the bill amending the Internal Revenue Code of
1986: the effects of the tax provisions of the bill on economic
activity are so small as to be incalculable within the context
of a model of the aggregate economy.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE OF
REPRESENTATIVES
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee concluded that it is appropriate and timely to
consider H.R. 3078, as reported.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the performance goals and
objectives of the part of this legislation that authorizes
funding are for (a) the payment of the U.S. share of the
expenses incurred in dispute settlement proceedings established
under Chapter 21 of the U.S.-Colombia Trade Promotion Agreement
and (b) the establishment and operation of an office within the
Department of Commerce responsible for providing assistance to
the panels in such proceedings.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (P.L. 104-4). The
Committee has determined that the revenue provisions of the
bill do not impose a Federal mandate on the private sector. The
Committee has determined that the revenue provisions of the
bill do not impose a Federal intergovernmental mandate on
State, local, or tribal governments.
D. Applicability of House Rule XXI 5(b)
Clause 5(b) of rule XXI of the Rules of the House of
Representatives provides, in part, ``A bill or joint
resolution, amendment, or conference report carrying a Federal
income tax increase may not be considered as passed or agreed
to unless so determined by a vote of not less than three-fifths
of the Members voting, a quorum being present.'' The Committee
has carefully reviewed the sections of the bill and states that
the bill does not involve any Federal income tax rate increases
within the meaning of the rule.
E. Tax Complexity Analysis
The Joint Committee on Taxation, in consultation with the
Internal Revenue Service and the Department of the Treasury,
will provide a tax complexity analysis to Members of the
Committee as soon as practicable after the report is filed.
F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL,
AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF
1985
SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) * * *
(b) Limitations on Fees.--(1)(A) Except as provided in
subsection (a)(5)(B) of this section, no fee may be charged
under subsection (a) of this section for customs services
provided in connection with--
[(i) the arrival of any passenger whose journey--
[(I) originated in--
[(aa) Canada,
[(bb) Mexico,
[(cc) a territory or possession of
the United States, or
[(dd) any adjacent island (within the
meaning of section 101(b)(5) of the
Immigration and Nationality Act (8
U.S.C. 1101(b)(5))), or
[(II) originated in the United States and was
limited to--
[(aa) Canada,
[(bb) Mexico,
[(cc) territories and possessions of
the United States, and
[(dd) such adjacent islands;]
(i) the arrival of any passenger whose journey--
(I) originated in a territory or possession
of the United States; or
(II) originated in the United States and was
limited to territories and possessions of the
United States;
* * * * * * *
(20) No fee may be charged under subsection (a) (9) or (10)
with respect to goods that qualify as originating goods under
section 203 of the United States-Colombia Trade Promotion
Agreement Implementation Act. Any service for which an
exemption from such fee is provided by reason of this paragraph
may not be funded with money contained in the Customs User Fee
Account.
* * * * * * *
(j) Effective Dates.--(1) * * *
* * * * * * *
(3)(A) * * *
* * * * * * *
(C)(i) Notwithstanding subparagraph (A), fees may be charged
under paragraphs (9) and (10) of subsection (a) during the
period beginning on August 3, 2021, and ending on September 30,
2021.
(ii) Notwithstanding subparagraph (B)(i), fees may be charged
under paragraphs (1) through (8) of subsection (a) during the
period beginning on December 9, 2020, and ending on August 31,
2021.
* * * * * * *
----------
TARIFF ACT OF 1930
* * * * * * *
TITLE IV--ADMINISTRATIVE PROVISIONS
* * * * * * *
Part III--Ascertainment, Collection, and Recovery of Duties
* * * * * * *
SEC. 508. RECORDKEEPING.
(a) * * *
* * * * * * *
(j) Certifications of Origin for Goods Exported Under the
United States-Colombia Trade Promotion Agreement.--
(1) Definitions.--In this subsection:
(A) Records and supporting documents.--The
term ``records and supporting documents''
means, with respect to an exported good under
paragraph (2), records and documents related to
the origin of the good, including--
(i) the purchase, cost, and value of,
and payment for, the good;
(ii) the purchase, cost, and value
of, and payment for, all materials,
including indirect materials, used in
the production of the good; and
(iii) the production of the good in
the form in which it was exported.
(B) CTPA certification of origin.--The term
``CTPA certification of origin'' means the
certification established under article 4.15 of
the United States-Colombia Trade Promotion
Agreement that a good qualifies as an
originating good under such Agreement.
(2) Exports to colombia.--Any person who completes
and issues a CTPA certification of origin for a good
exported from the United States shall make, keep, and,
pursuant to rules and regulations promulgated by the
Secretary of the Treasury, render for examination and
inspection all records and supporting documents related
to the origin of the good (including the certification
or copies thereof).
(3) Retention period.--The person who issues a CTPA
certification of origin shall keep the records and
supporting documents relating to that certification of
origin for a period of at least 5 years after the date
on which the certification is issued.
* * * * * * *
SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.
(a) * * *
* * * * * * *
(k) Denial of Preferential Tariff Treatment Under the United
States-Colombia Trade Promotion Agreement.--If U.S. Customs and
Border Protection or U.S. Immigration and Customs Enforcement
of the Department of Homeland Security finds indications of a
pattern of conduct by an importer, exporter, or producer of
false or unsupported representations that goods qualify under
the rules of origin provided for in section 203 of the United
States-Colombia Trade Promotion Agreement Implementation Act,
U.S. Customs and Border Protection, in accordance with
regulations issued by the Secretary of the Treasury, may
suspend preferential tariff treatment under the United States-
Colombia Trade Promotion Agreement to entries of identical
goods covered by subsequent representations by that importer,
exporter, or producer until U.S. Customs and Border Protection
determines that representations of that person are in
conformity with such section 203.
* * * * * * *
SEC. 520. REFUNDS AND ERRORS.
(a) * * *
* * * * * * *
(d) Goods Qualifying Under Free Trade Agreement Rules of
Origin.--Notwithstanding the fact that a valid protest was not
filed, the Customs Service may, in accordance with regulations
prescribed by the Secretary, reliquidate an entry to refund any
excess duties (including any merchandise processing fees) paid
on a good qualifying under the rules of origin set out in
section 202 of the North American Free Trade Agreement
Implementation Act, section 202 of the United States-Chile Free
Trade Agreement Implementation Act, section 203 of the
Dominican Republic-Central America-United States Free Trade
Agreement Implementation Act, section 202 of the United States-
Oman Free Trade Agreement Implementation Act, [or] section
203 of the United States-Peru Trade Promotion Agreement
Implementation Act [for which], or section 203 of the United
States-Colombia Trade Promotion Agreement Implementation Act
for which no claim for preferential tariff treatment was made
at the time of importation if the importer, within 1 year after
the date of importation, files, in accordance with those
regulations, a claim that includes--
(1) * * *
* * * * * * *
Part V--Enforcement Provisions
* * * * * * *
SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.
(a) * * *
* * * * * * *
(c) Maximum Penalties.--
(1) * * *
* * * * * * *
(12) Prior disclosure regarding claims under the
united states-colombia trade promotion agreement.--An
importer shall not be subject to penalties under
subsection (a) for making an incorrect claim that a
good qualifies as an originating good under section 203
of the United States-Colombia Trade Promotion Agreement
Implementation Act if the importer, in accordance with
regulations issued by the Secretary of the Treasury,
promptly and voluntarily makes a corrected declaration
and pays any duties owing with respect to that good.
* * * * * * *
(k) False Certifications of Origin Under the United States-
Colombia Trade Promotion Agreement.--
(1) In general.--Subject to paragraph (2), it is
unlawful for any person to certify falsely, by fraud,
gross negligence, or negligence, in a CTPA
certification of origin (as defined in section 508 of
this Act) that a good exported from the United States
qualifies as an originating good under the rules of
origin provided for in section 203 of the United
States-Colombia Trade Promotion Agreement
Implementation Act. The procedures and penalties of
this section that apply to a violation of subsection
(a) also apply to a violation of this subsection.
(2) Prompt and voluntary disclosure of incorrect
information.--No penalty shall be imposed under this
subsection if, promptly after an exporter or producer
that issued a CTPA certification of origin has reason
to believe that such certification contains or is based
on incorrect information, the exporter or producer
voluntarily provides written notice of such incorrect
information to every person to whom the certification
was issued.
(3) Exception.--A person shall not be considered to
have violated paragraph (1) if--
(A) the information was correct at the time
it was provided in a CTPA certification of
origin but was later rendered incorrect due to
a change in circumstances; and
(B) the person promptly and voluntarily
provides written notice of the change in
circumstances to all persons to whom the person
provided the certification.
* * * * * * *
----------
TRADE ACT OF 1974
* * * * * * *
TITLE II--RELIEF FROM INJURY CAUSED BY IMPORT COMPETITION
CHAPTER 1--POSITIVE ADJUSTMENT BY INDUSTRIES INJURED BY IMPORTS
* * * * * * *
SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY
COMMISSION.
(a) Petitions and Adjustment Plans.--
(1) * * *
* * * * * * *
(8) The procedures concerning the release of
confidential business information set forth in section
332(g) of the Tariff Act of 1930 shall apply with
respect to information received by the Commission in
the course of investigations conducted under this
chapter, part 1 of title III of the North American Free
Trade Agreement Implementation Act, title II of the
United States-Jordan Free Trade Area Implementation
Act, title III of the United States-Chile Free Trade
Agreement Implementation Act, title III of the United
States-Singapore Free Trade Agreement Implementation
Act, title III of the United States-Australia Free
Trade Agreement Implementation Act, title III of the
United States-Morocco Free Trade Agreement
Implementation Act, title III of the Dominican
Republic-Central America-United States Free Trade
Agreement Implementation Act, title III of the United
States-Bahrain Free Trade Agreement Implementation Act,
title III of the United States-Oman Free Trade
Agreement Implementation Act, [and] title III of the
United States-Peru Trade Promotion Agreement
Implementation Act, and title III of the United States-
Colombia Trade Promotion Agreement Implementation Act.
The Commission may request that parties providing
confidential business information furnish
nonconfidential summaries thereof or, if such parties
indicate that the information in the submission cannot
be summarized, the reasons why a summary cannot be
provided. If the Commission finds that a request for
confidentiality is not warranted and if the party
concerned is either unwilling to make the information
public or to authorize its disclosure in generalized or
summarized form, the Commission may disregard the
submission.
* * * * * * *
----------
TRADE AGREEMENTS ACT OF 1979
* * * * * * *
TITLE III--GOVERNMENT PROCUREMENT
* * * * * * *
SEC. 308. DEFINITIONS.
As used in this title--
(1) * * *
* * * * * * *
(4) Eligible products.--
(A) In general.--The term ``eligible
product'' means, with respect to any foreign
country or instrumentality that is--
(i) * * *
* * * * * * *
(vii) a party to the United States-
Peru Trade Promotion Agreement, a
product or service of that country or
instrumentality which is covered under
that agreement for procurement by the
United States.
* * * * * * *
(ix) a party to the United States-
Colombia Trade Promotion Agreement, a
product or service of that country or
instrumentality which is covered under
that agreement for procurement by the
United States.
* * * * * * *
----------
ANDEAN TRADE PREFERENCE ACT
TITLE II--TRADE PREFERENCE FOR THE ANDEAN REGION
* * * * * * *
SEC. 204. ELIGIBLE ARTICLES.
(a) * * *
(b) Exceptions and Special Rules.--
(1) * * *
* * * * * * *
(3) Apparel articles and certain textile articles.--
(A) * * *
(B) Covered articles.--The apparel articles
referred to in subparagraph (A) are the
following:
(i) * * *
* * * * * * *
(iii) Apparel articles assembled in 1
or more atpdea beneficiary countries
from regional fabrics or regional
components.--(I) * * *
(II) The preferential treatment
referred to in subclause (I) shall be
extended in the 1-year period beginning
October 1, 2002, and in each of the [8
succeeding 1-year periods] 10
succeeding 1-year periods, to imports
of apparel articles in an amount not to
exceed the applicable percentage of the
aggregate square meter equivalents of
all apparel articles imported into the
United States in the preceding 12-month
period for which data are available.
(III) For purposes of subclause (II),
the term ``applicable percentage''
means--
(aa) * * *
(bb) for the 1-year period
beginning October 1, 2007, [and
for the succeeding 3-year
period] and for the succeeding
5-year period, the percentage
determined under item (aa) for
the 1-year period beginning
October 1, 2006.
* * * * * * *
(v) Certain other apparel articles.--
(I) * * *
(II) Limitation.--During the
1-year period beginning on
October 1, 2003, and during
each of the [7 succeeding 1-
year periods] 9 succeeding 1-
year periods, apparel articles
described in subclause (I) of a
producer or an entity
controlling production shall be
eligible for preferential
treatment under this paragraph
only if the aggregate cost of
fabrics (exclusive of all
findings and trimmings) formed
in the United States that are
used in the production of all
such articles of that producer
or entity that are entered and
eligible under this clause
during the preceding 1-year
period is at least 75 percent
of the aggregate declared
customs value of the fabric
(exclusive of all findings and
trimmings) contained in all
such articles of that producer
or entity that are entered and
eligible under this clause
during the preceding 1-year
period.
* * * * * * *
(E) Bilateral emergency actions.--
(i) * * *
(ii) Rules relating to bilateral
emergency action.--For purposes of
applying bilateral emergency action
under this subparagraph--
(I) * * *
(II) the term ``transition
period'' in section 4 of the
Annex shall mean the period
ending [February 12, 2011] July
31, 2013; and
* * * * * * *
SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.
(a) In General.--No duty-free treatment or other preferential
treatment extended to beneficiary countries under this title
shall--
(1) remain in effect--
(A) with respect to Colombia after [February
12, 2011] July 31, 2013; and
* * * * * * *
(2) remain in effect with respect to Ecuador after
June 30, 2009, except that duty-free treatment and
other preferential treatment under this title shall
remain in effect with respect to Ecuador during the
period beginning on July 1, 2009, and ending on
[February 12, 2011] July 31, 2013, unless the President
reviews the criteria set forth in section 203, and on
or before June 30, 2009, reports to the Committee on
Finance of the Senate and the Committee on Ways and
Means of the House of Representatives pursuant to
subsection (b) that--
(A) * * *
* * * * * * *
VII. DISSENTING VIEWS
Summary
Colombia is an important ally in a vital region of the
world. Congressional Democrats have worked to change the
Colombia free trade agree (FTA) because we believed there was a
course that could strengthen our economic ties and address
persistent and pervasive violence against labor and other
activists in Colombia, impunity for such acts, and extensive
deficiencies in Colombia's labor laws.
Congressional Democrats believe workers in Colombia need
basic labor rights to improve their financial standing and
climb the economic ladder. This is critical to increasing U.S.
exports and jobs. The development of a middle class creates
consumers and robust markets for our products and services. It
is also vitally important to U.S. workers who are correct in
asserting they should not unfairly compete with workers whose
rights are suppressed.
There are longstanding Democratic concerns regarding anti-
union violence, impunity, and deficient labor laws in Colombia:
Pervasive Violence: The International Trade
Union Confederation reported that in 2010, Colombia had more
union worker assassinations--49--than the rest of the world
combined.
Impunity: In February 2011, the International
Labor Organization (ILO) reported that ``the majority of the
cases [of violence against workers] have not yet been
investigated nor have the perpetrators, including the
intellectual authors of these crimes, been brought to
justice''.
Serious Labor Law Deficiencies: The ILO has had
long-standing concerns about the failure of Colombian laws to
provide basic internationally-recognized worker rights. These
include laws that: (1) let employers force workers into
``cooperatives'' and other sham entities to avoid unions, (2)
let employers by-pass unions and negotiate ``collective pacts''
directly with workers, and (3) impose broad restrictions on the
right to strike.
These serious concerns about worker rights have prevented
consideration of the Colombia FTA.
The Obama Administration negotiated a Labor ``Action Plan''
with the Colombian Government, but Republicans have refused to
even reference this Action Plan in the implementing
legislation. Given the lack of full implementation of the
Action Plan to date, and without a provision explicitly linking
implementation of the FTA to Colombia addressing anti-union
violence, impunity and fundamentally deficient labor laws under
the Action Plan, the legislation is fundamentally flawed.
Background
A. CONCERNS ABOUT ANTI-UNION VIOLENCE, IMPUNITY, AND DEFICIENT LABOR
LAWS
Concerns about violence against workers and their leaders,
impunity for such violence, and labor law deficiencies have
been at the heart of the debate regarding the Colombia FTA from
the start. These concerns remain today.
In terms of violence, the data show that, although union
worker violence has trended downward since 2002, the number of
murders remains extraordinarily high. See chart below. Indeed,
according to the recently-released International Trade Union
Confederation's Annual Survey of Violations of Trade Union
Rights, in 2010 Colombia had more union worker assassinations
than the rest of the world combined.
------------------------------------------------------------------------
ENS (Colombian Government of
Year Think Tank) Murder Colombia Murder
Count Count
------------------------------------------------------------------------
2000............................ 134 105
2001............................ 194 205
2002............................ 183 196
2003............................ 92 94
2004............................ 96 89
2005............................ 70 40
2006............................ 72 60
2007............................ 39 31
2008............................ 49 42
2009............................ 40 25
2010............................ 51 36
------------------------------------------------------------------------
Moreover, the perpetrators of such violence in Colombia
enjoy near-universal impunity. As noted by Human Rights Watch,
the Colombian Attorney General's office charged with
prosecuting these crimes has obtained just six convictions from
195 union murders that occurred between January 2007 and May
2011. Roughly nine in 10 of the subunit's cases from that
period of time are still in the preliminary stage with no
suspect formally identified.
We recognize that Colombia has undergone a significant
period of overall violence. However, systemic unaddressed
violence against workers and individuals associated with unions
has fundamental implications for worker rights in Colombia. The
ILO has long recognized that ``a climate of violence in which
the murder . . . of trade union leaders go unpunished
constitutes a serious obstacle to the exercise of trade union
rights . . .''\1\
---------------------------------------------------------------------------
\1\ILO General Survey on Freedom of Association and Collective
Bargaining, 1994, paras. 26-29. See also Digest of Decisions and
Principles of the Freedom of Association Committee of the Governing
Body of the ILO, Fifth (revised) edition, 2006, paras. 42-6.
---------------------------------------------------------------------------
Serious deficiencies in Colombia's labor laws--and in their
enforcement--further contribute to the suppression of worker
rights. For example, both the ILO and the U.S. State Department
detail extensive concerns about laws that: (1) let employers
force workers into ``cooperatives'' and other sham entities to
avoid unions, (2) let employers by-pass unions and negotiate
``collective pacts'' directly with workers, and (3) impose
broad restrictions on the right to strike. Moreover, a high-
level ILO mission to Colombia in February 2011 noted, with
``deep concern,'' the ``repeated and detailed information it
received concerning acts of anti-union discrimination at the
enterprise level and in the public sector as well as the
failure to take effective action to stop it.''
B. Renegotiation to Include Fundamental Labor Standards and the
Agreement on the ``Action Plan'' Were Critical Steps Forward
From the start of FTA negotiations with Colombia, Democrats
have insisted that the problems of violence, impunity, and
labor law deficiencies would have to be effectively addressed
and that the flawed ``enforce-your-own-laws'' approach of
earlier trade agreements could not simply be imported. In 2007,
with new majorities in Congress, Democrats were able to move in
this direction. Pursuant to the ``May 10'' agreement, House
Democrats pushed President Bush to re-open the Colombia FTA (as
well as the Peru, Panama, and Korea FTAs) to include critical
new text. This new text included a fully enforceable commitment
that FTA countries adopt, maintain, and enforce in their laws
and practice the five basic international labor standards,
including freedom of association and the right to collective
bargaining.
The incorporation of these fundamental labor standards was
a significant step forward. At the same time, reflecting the
unique challenges presented in Colombia's case, the May 10
agreement referred to, and included, a letter from Ways and
Means Democratic leaders stating that:
Colombia has special problems and considerations . .
. including the systemic, persistent violence against
trade unionists and other human rights defenders, the
related problem of impunity . . . Congress and the
Administration must work with the Government of
Colombia on these serious problems to determine what
additional steps can be taken to allow for
consideration of the FTA.
Under the new Administration led by President Obama, U.S.
Trade Representative Ronald Kirk echoed the same concerns. In
February 9, 2011 testimony before the Ways and Means Committee,
Ambassador Kirk stated that:
There remain serious issues to be resolved before the
Colombia [FTA] . . . can be submitted for Congressional
consideration. . . . [I]t will be imperative to resolve
issues regarding laws and practices impacting the
protection of internationally-recognized labor rights,
as well as issues concerning violence against labor
leaders and the prosecution of the perpetrators.
Picking up on years of detailed discussions between Ways
and Means Democrats and the Colombian Administration led by
then-President Alvaro Uribe--which unfortunately yielded few
results--the Obama Administration began intensive discussions
with the new Colombian Administration of President Santos.
President Santos had signaled a serious intent to address the
issues of labor rights and violence and impunity. And, on April
7, 2011, the discussions between the U.S. and Colombian
Administrations resulted in the negotiation of an additional
agreement--the labor ``Action Plan''--prescribing specific
steps to address the problems of violence, impunity, and labor
law deficiencies in Colombia and establishing deadlines for
completion of the steps.
The Obama Administration made clear that the Action Plan
was an agreement between Colombia and the United States entered
into to clear the way for movement on the FTA. For example, in
comments dated April 28, 2011, U.S. Trade Representative Kirk
stated that ``[l]ast month, President Obama and President
Santos agreed to an Action Plan Related to Labor Rights that
will allow us to move forward with the U.S. Colombia trade
agreement.'' (emphasis added). Similarly, in a June 13, 2011
press release, USTR explained that ``The Obama Administration
negotiated the Action Plan to address concerns related to the
U.S.-Colombia trade agreement.''
The May 10 agreement, together with effective
implementation of the specific commitments under the Action
Plan held the promise of addressing the issues of violence,
impunity, and labor law deficiencies that had held up
Congressional consideration of the Colombia FTA. The critical
question, however, was whether Colombia could effectively
implement the Action Plan, or whether the vested interests that
had successfully thwarted reform in Colombia in the past would
do so again.
C. FAILURE TO ESTABLISH A LINK BETWEEN THE FTA AND THE ACTION PLAN IS A
FUNDAMENTAL MISTAKE AND A STEP BACKWARDS FROM PAST PRECEDENT
Given the central relevance of the Action Plan commitments
to moving forward with the Colombia FTA, and the importance of
Colombia effectively meeting those commitments, Democrats
proposed at the informal markup of the Colombia FTA
implementing bill that a link be established between the FTA
and the Action Plan. The amendment offered by Ranking Member
Levin would have including a provision in the FTA implementing
bill conditioning the FTA's entry into force on Colombia's
meaningful implementation of Action Plan commitments (as of the
time Colombia was otherwise ready for entry into force).
The proposed amendment received the unanimous support of
Ways and Means Democrats (and an identical amendment was
proposed in the Senate Finance Committee). Unfortunately, due
apparently to rigid ideological opposition, our Republican
colleagues blocked the amendment. Indeed, they have rejected
including even any mention of the Action Plan in the Colombia
FTA implementing legislation.
This is a fundamental mistake. The proposed amendment
served a number of important objectives. First, it would
provide additional leverage--including to reformers in
Colombia--to ensure meaningful compliance with the Action Plan
commitments. Second, it would create additional time for
monitoring Colombia's implementation, addressing the concerns
of many Members that the vote on the FTA was happening
prematurely. Third, it would have helped flesh out the worker
rights commitments in the Labor Chapter of the FTA, providing
valuable context in the event of future labor disputes under
the FTA. At the same time, the proposed amendment would have
done nothing to slow down passage of the FTA or its
implementation--meeting the interests of those in Congress
primarily concerned with quick action.
Moreover, the proposed amendment is fully consistent with
past precedent. For example, in the NAFTA implementing bill,
President Clinton included a provision explicitly linking
``entry into force'' of NAFTA to implementation of separate
labor and environmental side agreements, to help ensure that
Mexico and Canada followed through in adopting the (deficient)
side agreements. This situation is analogous--indeed, the case
is substantially stronger here because the Colombia FTA
actually includes meaningful labor obligations whereas NAFTA
did not.\2\ Failure to include the proposed amendment in the
Colombia FTA implementing bill, therefore, is not only a
mistake, it is a significant step backwards from past
precedent.
---------------------------------------------------------------------------
\2\There is also another analogous precedent with more recent trade
agreements. For example, the Bush Administration, in the CAFTA
implementing bill, included extensive labor reporting requirements
related to the CAFTA and a separate ``White Paper'' on labor.
---------------------------------------------------------------------------
D. LACK OF MEANINGFUL IMPLEMENTATION TO DATE CONFIRMS THE NEED FOR A
LINK BETWEEN THE ACTION PLAN COMMITMENTS AND FTA IMPLEMENTATION
The need for including a mechanism to link implementation
of the FTA to Colombia meaningfully meeting its commitments
under the Action Plan is becoming all the more apparent given
the increasing evidence of weak implementation over the last
five months. The following examples demonstrate precisely the
need to link the Action Plan to implementation of the FTA:
Abuse of Cooperatives and Other Contractual
Employment Relationships. The ILO has long identified,
as one of the most serious problems facing Colombian
workers, the use of sham ``cooperatives'' and other
such contract forms to camouflage true employment
relationships and thwart workers' efforts to organize.
(In Colombia, only workers who are directly employed
can form a union and collectively bargain.) Colombia
initially committed to stop such abuses, passing far-
reaching legislation and proposing effective
regulations. In recent months, however, Colombia has
backed away, reading the new law and regulations as
applying solely to one of these contract forms
(cooperatives), and thus creating massive loopholes.
Immediately, Colombian employers, including a major
beverage company and palm oil producers, began
converting cooperatives to other contract forms to
continue denying workers their basic rights. Although
there was private pressure for months by the U.S.
government on Colombia to clarify the law, to try to
stem this problematic shift, it was not until midnight
on October 4--hours before a Ways and Means Committee
markup and once a significant public spotlight was
shone on the matter--that Colombia issued a
``clarification.'' And this clarification fails to
restore the scope of the laws and regulations, leaving
major loopholes.
Union-Related Violence and Impunity.
President Santos' commitment to ending impunity has not
translated into results. According to Human Rights
Watch, Colombian authorities have obtained just six
convictions for 195 union murders that occurred between
January 2007 and May 2011. Roughly 9 in 10 of the cases
from that period are still in the preliminary stage
with no suspect formally identified. Notwithstanding
clear commitments under the Action Plan to improve this
situation through reforms in investigative policies and
methods, Colombia did not take the first step to do
this--publication of an analysis of closed union murder
cases--until October 3, the eve of the Ways and Means
markup, even though the Action Plan called for its
completion on July 15. And even with this, it is clear
that additional leverage is necessary. Interviews by
Human Rights Watch with Colombian prosecutors reveal
that there has been no clear direction to implement new
policies and methods, as committed to under the Action
Plan.
Threats Against Teachers. Teachers are an
especially vulnerable population in Colombia. To
address violence and threats against this population,
Colombia committed to strengthen the teacher protection
program to ``ensure that meritorious requests [for
protection] are granted'', which entails relocating the
teachers. But, five months after the announcement of
the Action Plan, Colombia is far from meeting the
commitment. Indeed, a recent report shows that 224 of
648 teachers found by the government to be
``threatened''--more than one-third of the most
vulnerable members of this population--have yet to be
relocated.
Bypassing Restrictions on Collective Pacts.
Colombian employers can bypass unions whenever unions
are small (one-third of workers or less), and can
negotiate wages and benefits--``collective pacts''--
directly with non-union workers. The ILO has found that
this severely undermines unions and called on Colombia
to bar collective pacts in unionized workplaces. While
the Action Plan did not adopt this recommendation, it
did require Colombia to criminalize the offering of
better terms under a collective pact than under a union
agreement. But even that minimal requirement is not
being meaningfully implemented. Colombian employers are
being allowed to circumvent the law simply by renaming
the pacts (e.g., as ``voluntary benefit agreements'').
Overbroad Restrictions on Strike. Colombia
prohibits strikes in an over-broad range of sectors
designated ``essential'' by law, including its oil
sector. While the ILO has called on Colombia to narrow
its list, the Action Plan did not require it to do so.
Instead, it simply required Colombia to publish a
summary of the relevant court decisions. Unfortunately,
that summary reveals that Colombian courts have broad
latitude to add sectors to the list, and that they have
done exactly that, rendering Colombian law even more
inconsistent with international norms.
Lack of Enforcement of Penal Sanctions for
Anti-Union Conduct. In June 2011, pursuant to the
Action Plan, Colombia passed legislation attaching
prison sentences to acts to impede or disrupt the
exercise of labor rights. Earlier Colombian laws
criminalized the same acts but applied only fines, and
these fines were rarely imposed. Whether the new law
will deter anti-union conduct hinges on whether
Colombia's Prosecutor General is active in prosecuting
cases and seeking jail time for employer offenders. To
date, no such cases have been reported.
Lack of Meaningful Consultation with
Stakeholders. Colombia has engaged in only cursory
efforts to engage stakeholders in implementation and
enforcement, even when the Action Plan contemplates
meaningful engagement. For example, notwithstanding a
commitment to meet ``periodically'' with ENS--the
leading Colombian labor think tank--to reconcile
differing union homicide lists, the Colombian
government has only held one such meeting, in which it
demanded that ENS accept the government list.
Similarly, Colombia has not consulted unions in
developing a request for expanded ILO presence, making
it more likely that the mission will be unsuccessful in
bringing Colombian labor law and practice into
compliance with ILO norms.
Sander Levin.
Jim McDermott.
John Lewis.
Pete Stark.
Shelley Berkley.
Xavier Becerra.
John B. Larson.
Richard E. Neal.
Bill Pascrell, Jr.
Charles B. Rangel.
Earl Blumenauer.