[House Report 106-519]
[From the U.S. Government Publishing Office]
106th Congress Rept. 106-519
HOUSE OF REPRESENTATIVES
2d Session Part 1
=======================================================================
CARIBBEAN AND CENTRAL AMERICA RELIEF AND ECONOMIC STABILIZATION ACT
_______
March 13, 2000.--Ordered to be printed
_______
Mr. Archer, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
ADDITIONAL AND DISSENTING VIEWS
[To accompany H.R. 984]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 984) to provide additional trade benefits to certain
beneficiary countries in the Caribbean, to provide assistance
to the countries in Central America and the Caribbean affected
by Hurricane Mitch and Hurricane Georges, and for other
purposes, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
CONTENTS
Page
I. Introduction................................................ 17
A. Purpose and Summary................................... 17
B. Background and Need for Legislation................... 18
C. Legislative History................................... 19
II. Explanation of the Bill..................................... 20
A. Short Title........................................... 20
B. Findings and Policy................................... 20
C. Definitions........................................... 23
D. Temporary Provisions to Provide NAFTA Parity to
Beneficiary Countries................................ 23
1. Rules of Origin................................... 23
2. Effective Date and Termination of Temporary
Treatment........................................ 24
3. Designation Criteria.............................. 24
4. General Review of Countries....................... 25
5. Safeguards........................................ 26
6. Termination or Withdrawal of Benefits............. 27
7. Treatment of Textile and Apparel Imports from
Caribbean Countries and Mexico................... 27
a. GAL Program and ``807'' Tariff Treatment...... 27
b. Originating Textile and Apparel Goods......... 28
c. Trade Preference Levels....................... 29
d. Customs Procedures and Penalties for
Transshipment................................ 29
E. Effect of NAFTA on Sugar Imports from Beneficiary
Countries............................................ 30
F. Duty-Free Treatment for Certain Beverages made with
Caribbean Rum........................................ 31
G. Meeting of Caribbean Trade Ministers and USTR......... 31
H. Report on Economic Development and Market Oriented
Reforms in the Caribbean............................. 32
I. Parity Review In Event New Country Accedes to NAFTA... 32
III. Vote of the Committee....................................... 33
IV. Budget Effects of the Bill.................................. 33
A. Committee Estimates of Budgetary Effects.............. 33
B. Budget Authority and Tax Expenditures................. 33
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 33
V. Other Matters To Be Discussed Under the Rules of the House.. 37
A. Subcommittee Oversight Findings and Recommendations... 37
B. Summary of Findings and Recommendations of the
Subcommittee on Government Reform and Oversight...... 37
C. Constitutional Authority Statement.................... 37
D. Information Relating to Unfunded Mandates............. 37
E. Applicability of House Rule XXI5(c)................... 38
VI. Changes in Existing Law Made by the Bill.................... 38
VII. Dissenting Views............................................ 50
VIII.Additional Views............................................ 52
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Caribbean and Central
America Relief and Economic Stabilization Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.
TITLE I--UNITED STATES-CARIBBEAN TRADE PARTNERSHIP
Subtitle A--Trade Provisions
Sec. 101. Short title.
Sec. 102. Policy.
Sec. 103. Definitions.
Sec. 104. Temporary provisions to provide NAFTA parity to partnership
countries.
Sec. 105. Effect of NAFTA on sugar imports from beneficiary countries.
Sec. 106. Duty-free treatment for certain beverages made with Caribbean
rum.
Sec. 107. Meetings of trade ministers and USTR.
Sec. 108. Report on economic development and market oriented reforms in
the Caribbean.
Subtitle B--Revenue Offset
Sec. 111. Limitations on welfare benefit funds of 10 or more employer
plans.
Subtitle C--Suspension of Limitation on Cover Over of Tax on Distilled
Spirits
Sec. 121. Suspension of limitation on cover over of tax on distilled
spirits.
TITLE II--FOREIGN ASSISTANCE FOR CENTRAL AMERICA AND THE CARIBBEAN
Subtitle A--Microcredit and Agricultural Assistance
Sec. 201. Declaration of policy.
Sec. 202. Microenterprise assistance.
Sec. 203. Support for producer-owned cooperative marketing
associations.
Sec. 204. Agricultural research and extension activities.
Sec. 205. Nonemergency food assistance programs.
Subtitle B--Overseas Private Investment Corporation
Sec. 211. Private sector development activities of OPIC.
Subtitle C--Economic Support Fund Assistance
Sec. 221. Economic support fund assistance.
Sec. 222. Reimbursement of international disaster account.
Sec. 223. Rule of construction; availability of amounts.
TITLE III--DEPARTMENT OF DEFENSE
Sec. 301. Replacement of funds used for disaster relief and
reconstruction.
TITLE IV--IMMIGRATION AND NATURALIZATION SERVICE
Sec. 401. Detention facilities.
TITLE V--DEBT RESCHEDULING AND REDUCTION FOR HONDURAS AND NICARAGUA;
FUNDING FOR THE CENTRAL AMERICAN EMERGENCY TRUST FUND OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
Subtitle A--Debt Rescheduling and Reduction for Honduras and Nicaragua
Sec. 501. Rescheduling of interest payments owed by Honduras and
Nicaragua.
Sec. 502. Reduction of debt owed by Honduras.
Subtitle B--Authorization of Funding for the Central American Emergency
Trust Fund of the International Bank for Reconstruction and Development
Sec. 511. Authorization of funding.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) In October of 1998, Hurricane Mitch devastated areas of
the Caribbean and Central America. The National Hurricane
Center has called this storm ``the most deadly hurricane in the
Atlantic in over 200 years''. Hurricane Mitch killed 9,860
people and left approximately 3,000,000 people homeless in the
region.
(2) Hurricane Georges hit the Florida Keys, the islands of
the Caribbean, and the Gulf coast of the United States in
September of 1998, causing more than $1,000,000,000 in damage.
The storm killed 250 people.
(3) The total direct economic impact of Hurricane Mitch and
Hurricane Georges on Honduras, Nicaragua, the Dominican
Republic, El Salvador and Guatemala amounts to $4,200,000,000.
Honduras' losses represent more than 50 percent of its gross
domestic product and Nicaragua lost a quarter of its gross
domestic product.
(4) The United States must continue to play a leading role in
responding to the disaster and encourage others to contribute
to the recovery effort. For example, Taiwan has contributed
$50,800,000 in assistance for the construction of roads and
housing, the rehabilitation of agricultural production, and the
distribution of supplies. Sweden, Spain, and France have sent
engineering teams to the region to assess damage to roads, and
Japan and the European Union have pledged millions of dollars
in assistance. The United States praises the efforts of these
and other nations in assisting with the rehabilitation of the
region.
(5) Approximately 356 bridges were destroyed in the region,
and 57 percent of the region's roads were impacted. The United
States equivalent of this would be the destruction of 3,900,000
miles of highway. These roads must be reconstructed quickly so
that farmers can transport their goods to market and much-
needed medical supplies can reach rural areas.
(6) Hurricane Mitch devastated the agricultural sector in the
affected areas of Central America andthe Caribbean,
particularly the countries of Honduras and Guatemala. An estimated 70
percent of Honduras' crops were destroyed by Hurricane Mitch, including
90 percent of the country's banana and grain crops.In Guatemala, an
estimated 95 percent of the nation's banana crop was damaged, 25-60
percent of the corn, bean, coffee, and sugar crops were destroyed, and
30 percent of the cattle was lost.
(7) Approximately 50 percent of Central America and the
Caribbean's workforce is employed in agriculture. The
devastation to the agriculture sector by Hurricane Mitch has
resulted in a widespread shortage of food which is likely to
continue in the long term unless the region's agricultural
sector is rehabilitated.
(8) Significant numbers of displaced Central Americans are
moving north to the United States in the wake of Hurricane
Mitch's devastation. Border Patrol agents in Brownsville,
Texas, report that apprehensions of Hondurans alone increased
by 61 percent in the last three months of 1998. The massive
influx of immigrants places severe pressures upon the ability
of the Immigration and Naturalization Service (INS) to detain
and remove non-criminal illegal immigrants. At current funding
levels, the INS does not have the resources to detain illegal
non-criminal border crossers from Central America. If this
situation continues, the INS is concerned that many more people
will attempt to illegally cross the border.
(9) Partially in an effort to alleviate these pressures, the
Attorney General provided temporary protected status to aliens
from Honduras and Nicaragua on December 30, 1998 for a period
of 18 months. No such status was provided to immigrants from El
Salvador and Guatemala.
(10) Agricultural assistance and training and microcredit
assistance will provide much needed aid to the affected areas
of Central America and the Caribbean as the areas rebuild their
agriculture sectors. The immediate distribution of food aid is
important in the short term, but it is essential that the
region be able to return to self-sufficiency in food production
so the citizens of Central America and the Caribbean will be
able to feed themselves once again.
(11) The goal of United States assistance to the region
should focus on, in addition to the short-term disaster
assistance, long-term solutions for a successful economic
recovery of Central America and the Caribbean. Successful
economic recovery lies in the region's ability to expand its
international trade with important trading partners such as the
United States.
(12) Since 1983, the Caribbean Basin Economic Recovery Act
has represented a permanent and successful commitment by the
United States to encourage the development of strong democratic
governments and revitalized economies in neighboring countries
in the Caribbean Basin.
(13) Thirty-four democratically elected leaders agreed at the
1994 Summit of the Americas to conclude negotiation of a Free
Trade Area of the Americas (referred to in this Act as
``FTAA'') by the year 2005.
(14) The economic security of the countries in the Caribbean
Basin will be enhanced by the completion of the FTAA.
(15) Offering temporary benefits to Caribbean Basin countries
on the 30 percent of imports from the region that are not
currently duty-free under the Caribbean Basin Economic Recovery
Act and other trade programs, will promote the growth of free
enterprise and economic opportunity in these neighboring
countries and thereby enhance the national security interests
of the United States.
(16) Given the greater propensity of countries located in the
Western Hemisphere to use United States components and to
purchase United States products compared to other countries,
increased trade and economic activity between the United States
and countries in the Western Hemisphere will create new jobs in
the United States as a result of expanding export
opportunities.
SEC. 3. DEFINITIONS.
In this Act:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the United States Agency for International
Development.
(2) Affected areas of central america and the caribbean.--The
term ``affected areas of Central America and the Caribbean''
means areas in the Central American countries and the Caribbean
countries that incurred damage from Hurricane Georges in
September of 1998 and Hurricane Mitch in October of 1998.
(3) Caribbean countries.--The term ``Caribbean countries''
means any country listed in section 212(b) of the Caribbean
Basin Economic Recovery Act (19 U.S.C. 2702(b)) (other than
Central American countries).
(4) Central american countries.--The term ``Central American
countries'' means Belize, Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua, and Panama.
(5) OPIC.--The term ``OPIC'' means the Overseas Private
Investment Corporation.
TITLE I--UNITED STATES-CARIBBEAN TRADE PARTNERSHIP
Subtitle A--Trade Provisions
SEC. 101. SHORT TITLE.
This title may be cited as the ``United States-Caribbean Trade
Partnership Act''.
SEC. 102. POLICY.
It is the policy of the United States to offer to the products of
Caribbean Basin partnership countries tariffs and quota treatment
equivalent to that accorded to certain products of countries that are
parties to the NAFTA, and to seek the accession of these partnership
countries to the NAFTA or a free trade agreement comparable to the
NAFTA at the earliest possible date, with the goal of achieving full
participation in the NAFTA or in a free trade agreement comparable to
the NAFTA by all partnership countries by not later than January 1,
2005.
SEC. 103. DEFINITIONS.
As used in this title:
(1) Partnership country.--The term ``partnership country''
means a beneficiary country as defined in section 212(a)(1)(A)
of the Caribbean Basin Economic Recovery Act (19 U.S.C.
2702(a)(1)(A)).
(2) NAFTA.--The term ``NAFTA'' means the North American Free
Trade Agreement entered into between the United States, Mexico,
and Canada on December 17, 1992.
(3) Trade representative.--The term ``Trade Representative''
means the United States Trade Representative.
(4) WTO and wto member.--The terms ``WTO'' and ``WTO member''
have the meanings given those terms in section 2 of the Uruguay
Round Agreements Act (19 U.S.C. 3501).
SEC. 104. TEMPORARY PROVISIONS TO PROVIDE NAFTA PARITY TO PARTNERSHIP
COUNTRIES.
(a) Temporary Provisions.--Section 213(b) of the Caribbean Basin
Economic Recovery Act (19 U.S.C. 2703(b)) is amended to read as
follows:
``(b) Import-Sensitive Articles.--
``(1) In general.--Subject to paragraphs (2) through (5), the
duty-free treatment provided under this title does not apply
to--
``(A) textile and apparel articles which were not
eligible articles for purposes of this title on January
1, 1994, as this title was in effect on that date;
``(B) footwear not designated at the time of the
effective date of this title as eligible articles for
the purpose of the generalized system of preferences
under title V of the Trade Act of 1974;
``(C) tuna, prepared or preserved in any manner, in
airtight containers;
``(D) petroleum, or any product derived from
petroleum, provided for in headings 2709 and 2710 of
the HTS;
``(E) watches and watch parts (including cases,
bracelets and straps), of whatever type including, but
not limited to, mechanical, quartz digital, or quartz
analog, if such watches or watch parts contain any
material which is the product of any country with
respect to which HTS column 2 rates of duty apply; or
``(F) articles to which reduced rates of duty apply
under subsection (h).
``(2) Transition period treatment of certain textile and
apparel articles.--
``(A) Equivalent tariff and quota treatment.--During
the transition period--
``(i) the tariff treatment accorded at any
time to any textile or apparel article that
originates in the territory of a partnership
country shall be identical to the tariff
treatment that is accorded at such timeunder
section 2 of the Annex to an article described in the same 8-digit
subheading of the HTS that is a good of Mexico and is imported into the
United States;
``(ii) duty-free treatment under this title
shall apply to any textile or apparel article
that is imported into the United States from a
partnership country and that--
``(I) is assembled in a partnership
country, from fabrics wholly formed and
cut in the United States from yarns
formed in the United States, and is
entered--
``(aa) under subheading
9802.00.80 of the HTS; or
``(bb) under chapter 61, 62,
or 63 of the HTS if, after such
assembly, the article would
have qualified for treatment
under subheading 9802.00.80 of
the HTS, but for the fact the
article was subjected to
bleaching, garments dyeing,
stone-washing, enzyme-washing,
acid-washing, perma-pressing,
oven-baking, or embroidery;
``(II) is knit-to-shape in a
partnership country from yarns wholly
formed in the United States;
``(III) is made in a partnership
country from fabric knit in a
partnership country from yarns wholly
formed in the United States;
``(IV) is cut and assembled in a
partnership country from fabrics wholly
formed in the United States from yarns
wholly formed in the United States; or
``(V) is identified under
subparagraph (C) as a handloomed,
handmade, or folklore article of a
partnership country and is certified as
suchby the competent authority of such
country; and
``(iii) no quantitative restriction or
consultation level may be applied to the
importation into the United States of any
textile or apparel article that--
``(I) originates in the territory of
a partnership country, or
``(II) qualifies for duty-free
treatment under subclause (I), (II),
(III), (IV), or (V) of clause (ii).
``(B) Transition period treatment of other
nonoriginating textile and apparel articles.--
``(i) Preferential tariff treatment.--Subject
to clause (ii), the President may place in
effect at any time during the transition period
with respect to any textile or apparel article
that--
``(I) is a product of a partnership
country, but
``(II) does not qualify as a good
that originates in the territory of a
partnership country or is eligible for
benefits under subparagraph (A)(ii),
tariff treatment that is identical to the in-
preference-level tariff treatment accorded at
such time under Appendix 6.B of the Annex to an
article described in the same 8-digit
subheading of the HTS that is a product of
Mexico and is imported into the United States.
For purposes of this clause, the `in-
preference-level tariff treatment' accorded to
an article that is a product of Mexico is the
rate of duty applied to that article when
imported in quantities less than or equal to
the quantities specified in Schedule 6.B.1,
6.B.2., or 6.B.3. of the Annex for imports of
that article from Mexico into the United
States.
``(ii) Limitations on all articles.--(I)
Tariff treatment under clause (i) may be
extended, during any calendar year, to not more
than 45,000,000 square meter equivalents of
cotton or man-made fiber apparel, to not more
than 1,500,000 square meter equivalents of wool
apparel, and to not more than 25,000,000 square
meter equivalents of goods entered under
subheading 9802.00.80 of the HTS.
``(II) Except as provided in subclause (III),
the amounts set forth in subclause (I) shall be
allocated among the 7 partnership countries
with the largest volume of exports to the
United States of textile and apparel goods in
calendar year 1997, based upon a pro rata share
of the volume of textile and apparel goods of
each of those 7 countries that entered the
United States under subheading 9802.00.80 of
the HTS during the first 12 months of the 14-
month period ending on the date of the
enactment of the United States-Caribbean Trade
Partnership Act.
``(III) Five percent of the amounts set forth
in subclause (I) shall be allocated among the
partnership countries, other than those to
which subclause (II) applies, based upon a pro
rata share of the exports to the United States
of textile and apparel goods of each of those
countries during the first 12 months of the 14-
month period ending on the date of the
enactment of the United States-Caribbean Trade
Partnership Act.
``(iii) Prior consultation.--The President
may implement the preferential tariff treatment
described in clause (i) only after consultation
with representatives of the United States
textile and apparel industry and other
interested parties regarding--
``(I) the specific articles to which
such treatment will be extended,
``(II) the annual quantities of such
articles that may be imported at the
preferential duty rates described in
clause (i), and
``(III) the allocation of such annual
quantities among partnership countries.
``(C) Handloomed, handmade, and folklore articles.--
For purposes of subparagraph (A)(ii)(V), the Trade
Representative shall consult with representatives of a
partnership country for the purpose of identifying
particular textile and apparel goods that are mutually
agreed upon as being handloomed, handmade, or folklore
goods of a kind described insection 2.3 (a), (b), or
(c) or Appendix 3.1.B.11 of the Annex.
``(D) Bilateral emergency actions.--(i) The President
may take--
``(I) bilateral emergency tariff actions of a
kind described in section 4 of the Annex with
respect to any textile or apparel article
imported from a partnership country if the
application of tariff treatment under
subparagraph (A) to such article results in
conditions that would be cause for the taking
of such actions under such section 4 with
respect to an article described in the same 8-
digit subheading of the HTS that is imported
from Mexico; or
``(II) bilateral emergency quantitative
restriction actions of a kind described in
section 5 of the Annex with respect to imports
of any textile or apparel article described in
subparagraphs (B)(i) (I) and (II) if the
importation of such article into the United
States results in conditions that would be
cause for the taking of such actions under such
section 5 with respect to a like article that
is a product of Mexico.
``(ii) The requirement in paragraph (5) of section 4
of the Annex (relating to providing compensation) shall
not be deemed to apply to a bilateral emergency action
taken under this subparagraph.
``(iii) For purposes of applying bilateral emergency
action under this subparagraph--
``(I) the term `transition period' in
sections 4 and 5 of the Annex shall be deemed
to be the period defined in paragraph (5)(E);
and
``(II) any requirements to consult specified
in section 4 or 5 of the Annex are deemed to be
satisfied if the President requests
consultations with the partnership country in
question and the country does not agree to
consult within the time period specified under
such section 4 or 5, whichever is applicable.
``(3) NAFTA transition period treatment of certain other
articles originating in beneficiary countries.--
``(A) Equivalent tariff treatment.--
``(i) In general.--Subject to clause (ii),
the tariff treatment accorded at any time
during the transition period to any article
referred to in any of subparagraphs (B) through
(F) of paragraph (1) that originates in the
territory of a partnership country shall be
identical to the tariff treatment that is
accorded at such time under Annex 302.2 of the
NAFTA to an article described in the same 8-
digit subheading of the HTS that is a good of
Mexico and is imported into the United States.
``(ii) Exception.--Clause (i) does not apply
to any article accorded duty-free treatment
under U.S. Note 2(b) to subchapter II of
chapter 98 of the HTS.
``(B) Relationship to subsection (h) duty
reductions.--If at any time during the transition
period the rate of duty that would (but for action
taken under subparagraph (A)(i) in regard to such
period) apply with respect to any article under
subsection (h) is a rate of duty that is lower than the
rate of duty resulting from such action, then such
lower rate of duty shall be applied for the purposes of
implementing such action.
``(4) Customs procedures.--
``(A) In general.--
``(i) Regulations.--Any importer that claims
preferential tariff treatment under paragraph
(2) or (3) shall comply with customs procedures
similar in all material respects to the
requirements of Article 502(1) of the NAFTA as
implemented pursuant to United States law, in
accordance with regulations promulgated by the
Secretary of the Treasury.
``(ii) Determination.--In order to qualify
for such preferential tariff treatment and for
a Certificate of Origin to be valid with
respect to any article for which such treatment
is claimed, there shall be in effect a
determination by the President that--
``(I) the partnership country from
which the article is exported, and
``(II) each partnership country in
which materials used in the production
of the article originate or undergo
production that contributes to a claim
that the article qualifies for such
preferential tariff treatment,
has implemented and follows, or is making
substantial progress toward implementing and
following, procedures and requirements similar
in all material respects to the relevant
procedures and requirements under chapter 5 of
the NAFTA.
``(B) Certificate of origin.--The Certificate of
Origin that otherwise would be required pursuant to the
provisions of subparagraph (A) shall not be required in
the case of an article imported under paragraph (2) or
(3) if such Certificate of Origin would not be required
under Article 503 of the NAFTA (as implemented pursuant
to United States law), if the article were imported
from Mexico.
``(C) Penalties for transshipments.--If the President
determines, based on sufficient evidence, that an
exporter has engaged in willful illegal transshipment
or willful customs fraud with respect to textile or
apparel articles for which preferential tariff
treatment undersubparagraph (A) or (B) of paragraph (2)
is claimed, then the President shall deny all benefits under this title
to such exporter, and any successors of such exporter, for a period of
2 years.
``(D) Report by ustr on cooperation of other
countries concerning circumvention.--The United States
Commissioner of Customs shall conduct a study analyzing
the extent to which each partnership country--
``(i) has cooperated fully with the United
States, consistent with its domestic laws and
procedures, in instances of circumvention or
alleged circumvention of existing quotas on
imports of textile and apparel goods, to
establish necessary relevant facts in the
places of import, export, and, where
applicable, transshipment, including
investigation of circumvention practices,
exchanges of documents, correspondence,
reports, and other relevant information, to the
extent such information is available;
``(ii) has taken appropriate measures,
consistent with its domestic laws and
procedures, against exporters and importers
involved in instances of false declaration
concerning fiber content, quantities,
description, classification, or origin of
textile and apparel goods; and
``(iii) has penalized the individuals and
entities involved in any such circumvention,
consistent with its domestic laws and
procedures, and has worked closely to seek the
cooperation of any third country to prevent
such circumvention from taking place in that
third country.
The Trade Representative shall submit to the Congress,
not later than October 1, 1999, a report on the study
conducted under this subparagraph.
``(5) Definitions.--For purposes of this subsection--
``(A) The term `the Annex' means Annex 300-B of the
NAFTA.
``(B) The term `NAFTA' means the North American Free
Trade Agreement entered into between the United States,
Mexico, and Canada on December 17, 1992.
``(C) The term `partnership country' means a
beneficiary country.
``(D) The term `textile or apparel article' means any
article referred to in paragraph (1)(A) that is a good
listed in Appendix 1.1 of the Annex.
``(E) The term `transition period' means, with
respect to a partnership country, the period that
begins on July 1, 2000, and ends on the earlier of--
``(i) August 1, 2002; or
``(ii) the date on which--
``(I) the United States first applies
the NAFTA to the partnership country
upon its accession to the NAFTA, or
``(II) there enters into force with
respect to the United States and the
partnership country a free trade
agreement comparable to the NAFTA that
makes substantial progress in achieving
the negotiating objectives set forth in
section 108(b)(5) of the North American
Free Trade Agreement Implementation Act
(19 U.S.C. 3317(b)(5)).
``(F) An article shall be deemed as originating in
the territory of a partnership country if the article
meets the rules of origin for a good set forth in
chapter 4 of the NAFTA, and, in the case of an article
described in Appendix 6.A of the Annex, the
requirements stated in such Appendix 6.A for such
article to be treated as if it were an originating
good. In applying such chapter 4 or Appendix 6.A with
respect to a partnership country for purposes of this
subsection--
``(i) no countries other than the United
States and partnership countries may be treated
as being Parties to the NAFTA,
``(ii) references to trade between the United
States and Mexico shall be deemed to refer to
trade between the United States and partnership
countries, and
``(iii) references to a Party shall be deemed
to refer to the United States or a partnership
country, and references to the Parties shall be
deemed to refer to any combination of
partnership countries and the United States.''.
(b) Determination Regarding Retention of Designation.--Section
212(e)(1) of the Caribbean Basin Economic Recovery Act (19 U.S.C.
2702(e)) is amended--
(1) by inserting ``(A)'' after ``(1)'';
(2) by redesignating subparagraphs (A) and (B) as clauses (i)
and (ii), respectively;
(3) by adding at the end the following:
``(B)(i) Based on the President's review and analysis
described in subsection (f), the President may determine if the
preferential treatment under section 213(b)(2) and (3) should
be withdrawn, suspended, or limited with respect to any article
of a partnership country. Such determination shall be included
in the report required by subsection (f).
``(ii) Withdrawal, suspension, or limitation of the
preferential treatment under section 213(b)(2) and (3) with
respect to a partnership country shall be taken only after the
requirements of subsection (a)(2) and paragraph (2) of this
subsection have been met.''.
(c) Reporting Requirements.--Section 212(f) of the Caribbean Basin
Economic Recovery Act (19 U.S.C. 2702(f)) is amended to read as
follows:
``(f) Reporting Requirements.--Not later than 1 year after the date
of the enactment of the United States-Caribbean Trade Partnership Act
and at the close of each 3-year period thereafter, the President shall
submit to the Congress a complete report regarding the operation of
this title, including--
``(1) with respect to subsections (b) and (c) of this
section, the results of a general review of beneficiary
countries based on the considerations described in such
subsections;
``(2) with respect to subsection (c)(4), the degree to which
a country follows accepted rules of international trade
provided for under the WTO Agreement and the multilateral trade
agreements (as such terms are defined in paragraphs (9) and
(4), respectively, of section 2 of the Uruguay Round Agreements
Act);
``(3) with respect to subsection (c)(9), the extent to which
beneficiary countries are providing or taking steps to provide
protection of intellectual property rights comparable to the
protection provided to the United States in bilateral
intellectual property rights agreements;
``(4) with respect to subsection (b)(2) and subsection
(c)(5), the extent that beneficiary countries are providing or
taking steps to provide protection of investment and investors
comparable to the protection provided to the United States in
bilateral investment treaties;
``(5) with respect to subsection (c)(3), the extent that
beneficiary countries are providing the United States and other
WTO members (as such term is defined in section 2(10) of the
Uruguay Round Agreements Act (19 U.S.C. 3501(10)) with
equitable and reasonable market access in the product sectors
for which benefits are provided under this title;
``(6) with respect to subsection (c)(11), the extent that
beneficiary countries are cooperating with the United States in
administering the provisions of section 213(b); and
``(7) with respect to subsection (c)(8), the extent that
beneficiary countries are meeting the internationally
recognized worker rights criteria under such subsection.
In the first report under this subsection, the President shall include
a review of the implementation of section 213(b), and his analysis of
whether the benefits under paragraphs (2) and (3) of such section
further the objectives of this title.''.
(d) Conforming Amendment.--Section 213(a)(1) of the Caribbean Basin
Economic Recovery Act is amended by inserting ``and except as provided
in section 213(b) (2) and (3),'' after ``Tax Reform Act of 1986,''.
SEC. 105. EFFECT OF NAFTA ON SUGAR IMPORTS FROM BENEFICIARY COUNTRIES.
The President shall monitor the effects, if any, that the
implementation of the NAFTA has on the access of beneficiary countries
under the Caribbean Basin Economic Recovery Act to the United States
market for sugars, syrups, and molasses. If the President considers
that the implementation of the NAFTA is affecting, or will likely
affect, in an adverse manner the access of such countries to the United
States market, the President shall promptly--
(1) take such actions, after consulting with interested
parties and with the appropriate committees of the House of
Representatives and the Senate, or
(2) propose to the Congress such legislative actions,
as may be necessary or appropriate to ameliorate such adverse effect.
SEC. 106. DUTY-FREE TREATMENT FOR CERTAIN BEVERAGES MADE WITH CARIBBEAN
RUM.
Section 213(a) of the Caribbean Basin Economic Recovery Act (19
U.S.C. 2703(a)) is amended--
(1) in paragraph (5), by striking ``chapter'' and inserting
``title''; and
(2) by adding at the end the following new paragraph:
``(6) Notwithstanding paragraph (1), the duty-free treatment provided
under this title shall apply to liqueurs and spirituous beverages
produced in the territory of Canada from rum if--
``(A) such rum is the growth, product, or manufacture of a
beneficiary country or of the Virgin Islands of the United
States;
``(B) such rum is imported directly from a beneficiary
country or the Virgin Islands of the United States into the
territory of Canada, and such liqueurs and spirituous beverages
are imported directly from the territory of Canada into the
customs territory of the United States;
``(C) when imported into the customs territory of the United
States, such liqueurs and spirituous beverages are classified
in subheading 2208.90 or 2208.40 of the HTS; and
``(D) such rum accounts for at least 90 percent by volume of
the alcoholic content of such liqueurs and spiritous
beverages.''.
SEC. 107. MEETINGS OF TRADE MINISTERS AND USTR.
(a) Schedule of Meetings.--The President shall take the necessary
steps to convene a meeting with the trade ministers of the partnership
countries in order to establish a schedule of regular meetings, to
commence as soon as is practicable, of the trade ministers and the
Trade Representative, for the purpose set forth in subsection (b).
(b) Purpose.--The purpose of the meetings scheduled under subsection
(a) is to reach agreement between the United States and partnership
countries on the likely timing and procedures for initiating
negotiations for partnership countries to accede to the NAFTA, or to
enter into mutually advantageous free trade agreements with the United
States that contain provisions comparable to those in the NAFTA and
would make substantial progress in achieving the negotiating objectives
set forth in section 108(b)(5) of the North American Free Trade
Agreement Implementation Act (19 U.S.C. 3317(b)(5)).
SEC. 108. REPORT ON ECONOMIC DEVELOPMENT AND MARKET ORIENTED REFORMS IN
THE CARIBBEAN.
(a) In General.--The Trade Representative shall make an assessment of
the economic development efforts and market oriented reforms in each
partnership country and the ability of each such country, on the basis
of such efforts and reforms, to undertake the obligations of the NAFTA.
The Trade Representative shall, not later than 2 years after the date
of the enactment of this Act, submit to the President and to the
Committee on Finance of the Senate and the Committee on Ways and Means
of the House of Representatives a report on that assessment.
(b) Accession to NAFTA.--
(1) Ability of countries to implement nafta.--The Trade
Representative shall include in the report under subsection (a)
a discussion of possible timetables and procedures pursuant to
which partnership countries can complete the economic reforms
necessary to enable them to negotiate accession to the NAFTA.
The Trade Representative shall also include an assessment of
the potential phase-in periods that may be necessary for those
partnership countries with less developed economies to
implement the obligations of the NAFTA.
(2) Factors in assessing ability to implement nafta.--In
assessing the ability of each partnership country to undertake
the obligations of the NAFTA, the Trade Representative should
consider, among other factors--
(A) whether the country has joined the WTO;
(B) the extent to which the country provides
equitable access to the markets of that country;
(C) the degree to which the country uses export
subsidies or imposes export performance requirements or
local content requirements;
(D) macroeconomic reforms in the country such as the
abolition of price controls on traded goods and fiscal
discipline;
(E) progress the country has made in the protection
of intellectual property rights;
(F) progress the country has made in the elimination
of barriers to trade in services;
(G) whether the country provides national treatment
to foreign direct investment;
(H) the level of tariffs bound by the country under
the WTO (if the country is a WTO member);
(I) the extent to which the country has taken other
trade liberalization measures; and
(J) the extent which the country works to accommodate
market access objectives of the United States.
(c) Parity Review in the Event a New Country Accedes to NAFTA.--If--
(1) a country or group of countries accedes to the NAFTA, or
(2) the United States negotiates a comparable free trade
agreement with another country or group of countries,
the Trade Representative shall provide to the committees referred to in
subsection (a) a separate report on the economic impact of the new
trade relationship on partnership countries. The report shall include
any measures the Trade Representative proposes to minimize the
potential for the diversion of investment from partnership countries to
the new NAFTA member or free trade agreement partner.
Subtitle B--Revenue Offset
SEC. 111. LIMITATIONS ON WELFARE BENEFIT FUNDS OF 10 OR MORE EMPLOYER
PLANS.
(a) Benefits to Which Exception Applies.--Section 419A(f)(6)(A) of
the Internal Revenue Code of 1986 (relating to exception for 10 or more
employer plans) is amended to read as follows:
``(A) In general.--This subpart shall not apply to a
welfare benefit fund which is part of a 10 or more
employer plan if the only benefits provided through the
fund are 1 or more of the following:
``(i) Medical benefits.
``(ii) Disability benefits.
``(iii) Group term life insurance benefits
which do not provide for any cash surrender
value or other money that can be paid,
assigned, borrowed, or pledged for collateral
for a loan.
The preceding sentence shall not apply to any plan
which maintains experience-rating arrangements with
respect to individual employers.''
(b) Limitation on Use of Amounts for Other Purposes.--Section 4976(b)
of such Code (defining disqualified benefit) is amended by adding at
the end the following new paragraph:
``(5) Special rule for 10 or more employer plans exempted
from prefunding limits.--For purposes of paragraph (1)(C), if--
``(A) subpart D of part I of subchapter D of chapter
1 does not apply by reason of section 419A(f)(6) to
contributions to provide 1 or more welfare benefits
through a welfare benefit fund under a 10 or more
employer plan, and
``(B) any portion of the welfare benefit fund
attributable to such contributions is used for a
purpose other than that for which the contributions
were made,then such portion shall be treated as
reverting to the benefit of the employers maintaining the fund.''
(c) Effective Date.--The amendments made by this section shall apply
to contributions paid or accrued after June 8, 1999, in taxable years
ending after such date.
Subtitle C--Suspension of Limitation on Cover Over of Tax on Distilled
Spirits
SEC. 121. SUSPENSION OF LIMITATION ON COVER OVER OF TAX ON DISTILLED
SPIRITS.
(a) In General.--Section 7652(f) of the Internal Revenue Code of 1986
(relating to limitation on cover over of tax on distilled spirits) is
amended by adding at the end the following new sentence:
``The preceding sentence shall not apply to articles that are tax-
determined after June 30, 1999, and before October 1, 1999.''
(b) Effective Date.--
(1) In general.--The amendment made by this section shall
apply to articles that are tax-determined after June 30, 1999.
(2) Special rule.--
(A) In general.--The treasury of Puerto Rico shall
make a Conservation Trust Fund transfer within 30 days
after the date of each cover over payment (made to such
treasury under section 7652(e) of the Internal Revenue
Code of 1986) to which section 7652(f) of such Code
does not apply by reason of the last sentence thereof.
(B) Conservation trust fund transfer.--
(i) In general.--For purposes of this
paragraph, the term ``Conservation Trust Fund
transfer'' means a transfer to the Puerto Rico
Conservation Trust Fund of an amount equal to
50 cents per proof gallon of the taxes imposed
under section 5001 or section 7652 of such Code
on distilled spirits that are covered over to
the treasury of Puerto Rico under section
7652(e) of such Code.
(ii) Treatment of transfer.--Each
Conservation Trust Fund transfer shall be
treated as principal for an endowment, the
income from which to be available for use by
the Puerto Rico Conservation Trust Fund for the
purposes for which the Trust Fund was
established.
(ii) Result of nontransfer.--
(I) In general.--Upon notification by
the Secretary of the Interior that a
Conservation Trust Fund transfer has
not been made by the treasury of Puerto
Rico as required by subparagraph (A),
the Secretary of the Treasury shall,
except as provided in subclause (II),
deduct and withhold from the next cover
over payment to be made to the treasury
of Puerto Rico under section 7652(e) of
such Code an amount equal to the
appropriate Conservation Trust Fund
transfer and interest thereon at the
underpayment rate established under
section 6621 of such Code as of the due
date of such transfer. The Secretary of
the Treasury shall transfer such amount
deducted and withheld, and the interest
thereon, directly to the Puerto Rico
Conservation Trust Fund.
(II) Good cause exception.--If the
Secretary of the Interior finds, after
consultation with the Governor of
Puerto Rico, that the failure by the
treasury of Puerto Rico to make a
required transfer was for good cause,
and notifies the Secretary of the
Treasury of the finding of such good
cause before the due date of the next
cover over payment following the
notification of nontransfer, then the
Secretary of the Treasury shall not
deduct the amount of such nontransfer
from any cover over payment.
(C) Puerto rico conservation trust fund.--For
purposes of this paragraph, the term ``Puerto Rico
Conservation Trust Fund'' means the fund established
pursuant to a Memorandum of Understanding between the
United States Department of the Interior and the
Commonwealth of Puerto Rico, dated December 24, 1968.
TITLE II--FOREIGN ASSISTANCE FOR CENTRAL AMERICA AND THE CARIBBEAN
Subtitle A--Microcredit and Agricultural Assistance
SEC. 201. DECLARATION OF POLICY.
It is the policy of the United States, consistent with title XII of
chapter 2 of part I of the Foreign Assistance Act of 1961 (22 U.S.C.
2220a), to support the governments of Central American countries and
Caribbean countries, United States and nongovernmental organizations,
universities, businesses, and international organizations, to help
ensure the availability of basic nutrition and economic opportunities
for individuals in the affected areas of Central America and the
Caribbean, through sustainable agriculture and rural development.
SEC. 202. MICROENTERPRISE ASSISTANCE.
(a) Bilateral Assistance.--In providing disaster assistance in the
aftermath of Hurricane Georges and Hurricane Mitch, the Administrator
of the United States Agency for International Development shall, to the
extent practicable, use credit and microcredit assistance to
rehabilitate agriculture production in the affected areas of Central
America and the Caribbean. In providing such assistance, the
Administrator should use the applied research and technical assistance
capabilities of United States land-grant universities.
(b) Multilateral Assistance.--The Administrator shall continue to
work with other countries, international organizations (including
multilateral development institutions), and entities assisting
microenterprises and shall develop a comprehensive and coordinated
strategy for providing microenterprise assistance for Central America
and the Caribbean.
SEC. 203. SUPPORT FOR PRODUCER-OWNED COOPERATIVE MARKETING
ASSOCIATIONS.
(a) Purposes.--The purposes of this section are--
(1) to support producer-owned cooperative purchasing and
marketing associations in Central America and the Caribbean;
(2) to strengthen the capacity of farmers in Central America
and the Caribbean to participate in national and international
private markets and to promote rural development in the region;
(3) to encourage the efforts of farmers in Central America
and the Caribbean to increase their productivity and income
through improved access to farm supplies, seasonal credit,
technical expertise; and
(4) to support small businesses in Central America and the
Caribbean as such businesses grow beyond microenterprises.
(b) Support for Producer-Owned Cooperative Marketing Associations.--
(1) Activities.--The Administrator of the United States
Agency for International Development is authorized to utilize
relevant foreign assistance programs and initiatives for the
Central America and the Caribbean region to support private
producer-owned cooperative marketing associations in the
region, including rural business associations that are owned
and controlled by farmer shareholders.
(2) Other activities.--In addition to carrying out paragraph
(1), the Administrator is encouraged--
(A) to cooperate with governments of foreign
countries, including governments of political
subdivisions of such countries, their agricultural
research universities, and particularly with United
States nongovernmental organizations and United States
land-grant universities, that have demonstrated
expertise in the development and promotion of
successful private producer-owned cooperative marketing
associations; and
(B) to facilitate partnerships between United States
and Central America and the Caribbean cooperatives and
private businesses to enhance the capacity and
technical and marketing expertise of business
associations in the Central America and the Caribbean
region.
SEC. 204. AGRICULTURAL RESEARCH AND EXTENSION ACTIVITIES.
(a) Development of Plan.--The Administrator of the United States
Agency for International Development, in consultation with the
Secretary of Agriculture and appropriate other officials in the
Department of Agriculture, especially the head of the Cooperative
State, Research, Education and Extension Service (CSREES), shalldevelop
a comprehensive plan to coordinate and build on the research and
extension activities of United States land-grant universities,
international agricultural research centers, and national agricultural
research and extension centers in Central America and the Caribbean.
(b) Additional Requirements.--The plan described in subsection (a)
shall seek to ensure that--
(1) research and extension activities respond to the needs of
the agriculture sectors devastated by Hurricane Georges and
Hurricane Mitch while developing the potential and skills of
researchers, extension agents, farmers, and agribusiness
persons in the region; and
(2) sustainable agricultural methods of farming will be
considered together with new technologies in rehabilitating
agricultural production in the region.
SEC. 205. NONEMERGENCY FOOD ASSISTANCE PROGRAMS.
(a) In General.--In providing nonemergency assistance under title II
of the Agricultural Trade Development and Assistance Act of 1954 (7
U.S.C. 1721 et seq.), the Administrator of the United States Agency for
International Development shall ensure that--
(1) in planning, decisionmaking, and providing assistance,
the Administrator takes into consideration local input and
participation directly and through United States and indigenous
private and voluntary organizations;
(2) each of the nonemergency activities described in
paragraphs (2) through (6) of section 201 of such Act (7 U.S.C.
1721), including programs that provide assistance to people of
any age group who are otherwise unable to meet their basic food
needs (including feeding programs for the disabled, orphaned,
elderly, sick and dying), are carried out; and
(3) greater flexibility is provided for program and
evaluation plans so that such assistance may be developed to
meet local needs, as provided for in section 202(f) of such Act
(7 U.S.C. 1722(f)).
(b) Other Requirements.--In providing assistance under the
Agriculture Trade Development and Assistance Act of 1954, the Secretary
of Agriculture and the Administrator shall ensure that commodities are
provided in a manner that is consistent with subsections (a) and (b) of
section 403 of such Act (7 U.S.C. 1733(a) and (b)).
Subtitle B--Overseas Private Investment Corporation
SEC. 211. PRIVATE SECTOR DEVELOPMENT ACTIVITIES OF OPIC.
(a) Purpose.--The purpose of this section is to commend OPIC for its
recent initiative to provide financing and insurance to an investment
facility in partnership with Citibank and to encourage OPIC to continue
to work with United States businesses and other United States entities
to invest in the affected areas of Central America and the Caribbean,
particularly in ways that will help promote sustainable development.
(b) Sense of Congress.--It is the sense of the Congress that OPIC
should, in accordance with its mandate to foster private investment and
enhance the ability of private enterprise to make its full contribution
to the development process, exercise the authorities it has to further
increase efforts to promote and support United States sponsored private
investment in the affected areas of Central America and the Caribbean,
including--
(1) issuing loans, guaranties, and insurance, to support
infrastructure, agriculture, small business, tourism, and other
projects as appropriate; and
(2) undertaking a special initiative that includes--
(A) sending a needs assessment team to the affected
areas of Central America and the Caribbean to determine
ways in which OPIC can best support the essential
investment required to restore infrastructure and other
critical services in those affected areas;
(B) engaging in an exhaustive outreach program to
involve United States companies in the recovery process
and exploring potential new projects which will assist
those affected areas;
(C) consulting and coordinating with host country
governments to promote private investment in priority
sectors; and
(D) utilizing existing equity funds to support
developmental private sector projects.
(c) Technical Amendments.--Section 234 of the Foreign Assistance Act
of 1961 (22 U.S.C. 2194) is amended--
(1) by redesignating subsection (c) (the second place it
appears) as paragraph (5);
(2) by amending the heading of paragraph (5), as redesignated
by paragraph (1) of this subsection, to read as follows:
``(5) Creation of fund for acquisition of equity.--''; and
(3) by indenting paragraph (5), as redesignated by paragraph
(1) of this subsection, one full measure.
Subtitle C--Economic Support Fund Assistance
SEC. 221. ECONOMIC SUPPORT FUND ASSISTANCE.
(a) Authorization of Appropriations.--There is authorized to be
appropriated to the President for fiscal year 1999 $611,000,000 to
carry out chapter 4 of part II of the Foreign Assistance Act of 1961
(22 U.S.C. 2346 et seq.) for reconstruction and disaster mitigation
assistance for affected areas of Central America and the Caribbean.
(b) Use of Amounts.--Of the amount appropriated under subsection (a),
the President shall reserve the following amounts for the following
purposes:
(1) Agriculture and rural reconstruction.--$283,000,000 for
the construction and repair of rural roads, the provision of
micro-enterprise loans, the provision of tools, seed, and
fertilizer, and for assistance for rural farmers to adopt
sustainable production techniques.
(2) Disease control, surveillance, and prevention.--
$136,000,000 for the reconstruction and rehabilitation of
health posts and clinics, the provision of water and sanitation
services, and disease control, surveillance, and prevention.
(3) Education and housing.--$55,000,000 for construction,
repair, and re-equipment of educational facilities, including
the provision of school supplies, and the re-equipment of new
housing units.
(4) Environmental management and disaster mitigation.--
$64,000,000 for environmental management and disaster
mitigation, including land use planning and resources
management.
(5) Anti-corruption activities.--$22,000,000 for the
efficient management of local reconstruction assistance,
including anti-corruption training for municipal governments,
nongovernmental organizations, and law enforcement.
(6) Assistance for the dominican republic and other caribbean
countries affected by hurricane georges.--$42,000,000 for
reconstruction assistance related to health, economic
revitalization, and housing for the Dominican Republic and
other Caribbean countries affected by Hurricane Georges.
(c) Administrative Expenses.--Of the amount authorized to be
appropriated under subsection (a), the President shall reserve
$6,000,000 for the operating expenses of the United States Agency for
International Development incurred in connection with assistance
provided under this Act.
SEC. 222. REIMBURSEMENT OF INTERNATIONAL DISASTER ACCOUNT.
There is authorized to be appropriated to the President for fiscal
year 1999 $25,000,000 to reimburse the international disaster
assistance account for expenses incurred with respect to international
disaster assistance provided for affected areas of Central America and
the Caribbean under chapter 9 of part I of the Foreign Assistance Act
of 1961 (22 U.S.C. 2292 et seq.) for recovery from Hurricane Georges
and Hurricane Mitch.
SEC. 223. RULE OF CONSTRUCTION; AVAILABILITY OF AMOUNTS.
(a) Rule of Construction.--Amounts authorized to be appropriated
under this subtitle are in addition to amounts otherwise available for
the purposes described in the section of this subtitle involved.
(b) Availability of Amounts.--Amounts authorized to be appropriated
under this subtitle are authorized to remain available until expended.
TITLE III--DEPARTMENT OF DEFENSE
SEC. 301. REPLACEMENT OF FUNDS USED FOR DISASTER RELIEF AND
RECONSTRUCTION.
In addition to amounts authorized to be appropriated under any other
law for the Department of Defense for fiscal year 1999, funds are
hereby authorized to be appropriated for the use of the Armed Forces
and other activities and agencies of the Department of Defense for
expenses, not otherwise provided for, for operation and maintenance, in
amounts as follows:
(1) For replenishment of Department of Defense accounts used
in providing disaster relief and reconstruction to affected
areas of Central America and the Caribbean, $135,200,000, of
which--
(A) $75,000,000 may be used for replenishment of
operation and maintenance and military personal
accounts;
(B) $37,500,000 may be used for replenishment of the
Overseas Humanitarian Disaster and Civic Aid account
(including demining initiatives); and
(C) $20,000,000 may be used for replenishment of the
Commanders in Chief (CINC) Initiative Fund.
(2) For the New Horizons Program, $56,000,000 for expanded
National Guard and Reserve exercises in Central American
countries and the Dominican Republic.
TITLE IV--IMMIGRATION AND NATURALIZATION SERVICE
SEC. 401. DETENTION FACILITIES.
There is authorized to be appropriated to the President $80,000,000
to be used for Enforcement and Border Affairs within the Immigration
and Naturalization Service (INS) to support increased detention
requirements for Central American criminal aliens held in detention by
the Immigration and Naturalization Service and to address an expected
influx of illegal immigrants from Central America.
TITLE V--DEBT RESCHEDULING AND REDUCTION FOR HONDURAS AND NICARAGUA;
FUNDING FOR THE CENTRAL AMERICAN EMERGENCY TRUST FUND OF THE
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
Subtitle A--Debt Rescheduling and Reduction for Honduras and Nicaragua
SEC. 501. RESCHEDULING OF INTEREST PAYMENTS OWED BY HONDURAS AND
NICARAGUA.
The President is authorized to reschedule the repayment of interest
owed to the United States (or any agency of the United States) in
fiscal years 1999 and 2000 by the Governments of Honduras and Nicaragua
on debt owed by such Governments to the United States that is
outstanding as of October 1, 1998.
SEC. 502. REDUCTION OF DEBT OWED BY HONDURAS.
(a) Authority.--
(1) In general.--The President shall reduce the amount owed
to the United States (or any agency of the United States) by
the Government of Honduras that is outstanding as of October 1,
1998, as a result of concessional loans made to Honduras by the
United States under part I or chapter 4 of part II of the
Foreign Assistance Act of 1961, or predecessor foreign economic
assistance legislation.
(2) Appropriations requirement.--The authority provided by
this section may be exercised only in such amounts or to such
extent as is provided in advance by appropriations Acts.
(3) Certain prohibitions inapplicable.--(A) A reduction of
debt pursuant to this section shall not be considered
assistance for purposes of any provision of law limiting
assistance to a country.
(B) The authority of this section may be exercised
notwithstanding section 620(r) of the Foreign Assistance Act of
1961 or section 321 of the International Development and Food
Assistance Act of 1975.
(b) Implementation of Debt Reduction.--
(1) In general.--The debt reduction pursuant to subsection
(a) shall be accomplished by the exchange of a new obligation
for obligations outstanding as of the date specified in
subsection (a)(1).
(2) Exchange of obligations.--The President shall notify the
agency primarily responsible for administering part I of the
Foreign Assistance Act of 1961 of the agreement with Honduras
to exchange a new obligation for outstanding obligations
pursuant to this subsection. At the direction of the President,
the old obligations shall be canceled and a new debt obligation
for the country shall be established, and such agency shall
make an adjustment in its accounts to reflect the debt
reduction.
(c) Currency of Payment.--The principal amount of each new obligation
issued pursuant to subsection (b) shall be repaid in United States
dollars.
(d) Deposit of Payments.--Principal repayments of new obligations
shall be deposited in the United States Government account established
for principal repayments of the obligations for which those obligations
were exchanged.
(e) Rate of Interest.--New obligations issued by a beneficiary
country pursuant to subsection (b) shall bear interest at concessional
rates.
(f) Authorization of Appropriations.--
(1) In general.--There is authorized to be appropriated for
fiscal year 2000 $16,000,000 to carry out this section.
(2) Availability.--Amounts authorized to be appropriated
under paragraph (1) are authorized to remain available until
expended.
Subtitle B--Authorization of Funding for the Central American Emergency
Trust Fund of the International Bank for Reconstruction and Development
SEC. 511. AUTHORIZATION OF FUNDING.
The Bretton Woods Agreements Act (22 U.S.C. 286-286nn) is amended by
adding at the end the following:
``SEC. 62. SUPPLEMENTAL FUNDING FOR THE CENTRAL AMERICAN EMERGENCY
TRUST FUND OF THE INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT.
``(a) Contribution Authority.--
``(1) In general.--The United States Governor of the Bank
may, on behalf of the United States, contribute $25,000,000 to
the Central American Emergency Trust Fund of the Bank.
``(2) Subject to appropriations.--The authority provided by
paragraph (1) shall be effective only to such extent or in such
amounts as are provided in advance in appropriations Acts.
``(b) Limitations on Authorization of Appropriations.--
``(1) In general.--For the contribution provided for in
subsection (a), there are authorized to be appropriated not
more than $25,000,000 for fiscal year 1999, for payment by the
President of the United States.
``(2) Rule of construction.--The authority provided by
paragraph (1) is in addition to any appropriations authority
otherwise provided by law.
``(c) Availability.--Amounts appropriated under subsection (b) are
authorized to remain available until expended.''.
I. INTRODUCTION
A. Purpose and Summary
H.R. 984, the ``Caribbean and Central America Relief and
Economic Stabilization Act,'' responds to the needs of the
Caribbean and Central American nations affected by the
devastation caused by Hurricanes Georges and Mitch, which hit
the region in September and October of 1998, respectively.
Currently, about 70 percent of imports from countries in
the Caribbean Basin region enter duty-free under the Caribbean
Basin Economic Recovery and Security Act (CBERA) and other
preferential trade programs. However, a number of products,
mainly textiles and apparel, are excluded from CBI duty-free
treatment. H.R. 984 amends the CBERA to provide tariff and
quota treatment on imports of excluded articles that is similar
to the tariff and quota treatment that is accorded like
articles from Mexico under the North American Free Trade
Agreement (NAFTA).
The bill preserves authority in current law for the
President to withdraw, suspend, or limit benefits if countries
fail to meet designation criteria. In addition, H.R. 984 also
authorizes such actions with respect to new parity benefits,
based on a review of designation criteria as further
interpreted by the bill.
The purpose of H.R. 984 is to provide a mechanism to
promote long-term economic recovery in Central American and the
Caribbean by enhancing the region's opportunities to expand
trade with the United States. Based on the success of the CBI
program, the Committee expects that the bill also will also
promote the growth of U.S. exports, help decrease pressures for
illegal immigration, and improve regional cooperation in
efforts to fight drug trafficking.
B. Background and Need for Legislation
In February 1982, President Reagan announced that he would
seek legislation to establish the Caribbean Basin Initiative
(CBI), a program to further the economic development and
political stability of Caribbean countries. The CBI was a
package of economic assistance, trade benefits, and other
incentives. The Caribbean Basin Economic Recovery Act (CBERA)
was enacted in 1983, with an effective date of January 1, 1984.
Under the CBI, the President is authorized to grant, to
countries in the Caribbean and Central America, duty-free
access to the U.S. market under certain conditions. CBI trade
benefits were made permanent in 1990. Products which are
excluded from duty-free treatment under CBI include: textile
and apparel articles, canned tuna, petroleum and petroleum
products, footwear, handbags, luggage, flat goods, work gloves,
leather-wearing apparel, and certain watches.
In 1993, total U.S. imports from CBI beneficiaries under
the CBERA amounted to $10.1 billion. During the early years the
CBERA was in effect, the United States ran a significant trade
deficit with the region. In the fourth year of the program, the
trade balance shifted in favor of the United States and has
remained in surplus since that time. U.S. exports to CBI
beneficiary countries amounted to $19.2 billion in 1998, and
the U.S. surplus amounted to about $2 billion in that year,
making the region one of the few in the world with which the
United States has enjoyed a sustained favorable balance of
trade.
In October of 1998, Hurricane Mitch devastated areas of the
Caribbean and Central America. The National Hurricane Center
called this storm ``the most deadly hurricane in the Atlantic
in over 200 years.'' Hurricane Mitch killed 9,860 people and
left approximately 3 million people homeless in the region.
Hurricane Georges hit the Florida Keys, the islands of the
Caribbean, and the Gulf Coast of the United States in September
1998, causing more than $1 billion in damage. The storm killed
250 people.
The total direct economic impact of Hurricane Mitch and
Hurricane Georges on Honduras, Nicaragua, the Dominican
Republic, El Salvador, and Guatemala amounts to $4.2 billion.
Honduras' losses represent more than 50 percent of its gross
domestic product, and Nicaragua lost a quarter of its gross
domestic product. Approximately 356 bridges were destroyed in
the region, and 57 percent of the region's roads were impacted.
The United States equivalent of this would be the destruction
of 3.9 million miles of highway.
Significant numbers of displaced Central Americans are
moving north to the United States in the wake of Hurricane
Mitch's devastation. Border Patrol agents in Brownsville,
Texas, report that apprehensions of Hondurans alone increased
by 61 percent in the last three months of 1998. The massive
influx of immigrants places severe pressures upon the ability
of the Immigration and Naturalization Service (INS) to detain
and remove non-criminal illegal immigrants. If this situation
continues, the INS is concerned that many more people will
attempt to illegally cross the border.
Since 1983, the Caribbean Basin Economic Recovery Act has
represented a permanent and successful commitment by the United
States to encourage the development of strong democratic
governments and revitalized economies in neighboring countries
in the Caribbean Basin. Offering temporary benefits to
Caribbean Basin countries on the 30 percent of imports from the
region that are not currently duty-free under the CBERA and
other trade programs will promote the growth of free enterprise
and economic opportunity in these neighboring countries and
thereby enhance the national security interests of the United
States.
The Subcommittee believes that the goal of U.S. assistance
to the region should focus on, in addition to the short-term
disaster assistance, long-term solutions for a successful
economic recovery of Central America and the Caribbean.
Successful economic recovery lies in the region's ability to
expand its international trade with important trading partners
such as the United States.
C. Legislative History
H.R. 553, The Caribbean Basin Trade Security Act, was
introduced on January 18, 1995, by Messrs. Crane, Gibbons,
Rangel, and Shaw.
On February 10, 1995, the Subcommittee on Trade held a
public hearing on H.R. 553. On March 29, 1995, the Subcommittee
on Trade considered H.R. 553 and ordered the bill favorably
reported to the full Committee on Ways and Means by a recorded
vote of 11-3, with an amendment in the nature of a substitute.
The Administration testified in support of the bill, as
amended.
On June 23, 1997, the Committee on Ways and Means approved
the ``United States-Caribbean Basin Trade Partnership Act'' as
Section 9, Subtitle H of H.R. 2014, the Taxpayer Relief Act of
1997. These provisions as passed by the House were not included
in the final Conference agreement.
On October 8, 1997, H.R. 2644, the ``United States-
Caribbean Basin Trade Partnership Act,'' was introduced by
Chairman Archer, containing provisions identical to those
included in Subtitle H of H.R. 2014. On October 9, 1997, the
Committee on Ways and Means ordered H.R. 2644 favorably
reported by voice vote. On November 4, 1997, H.R. 2644 failed
to pass the House under suspension of the rules by a vote of
182-234.
H.R. 984, the Caribbean and Central America Relief and
Economic Stabilization Act, was introduced on March 4, 1999, by
Messrs. Crane, Kolbe, Rangel, Matsui, and Jefferson. On March
23, 1999, the Trade Subcommittee held a public hearing on H.R.
984. On May 18, 1999, the Trade Subcommittee considered H.R.
984 and ordered the bill favorably reported by voice vote to
the full Committee on Ways and Means. Then, on June 10, 1999,
the Ways and Means Committee considered the bill and ordered it
favorably reported by voice vote to the Committee of the Whole
House on the State of the Union.
II. EXPLANATION OF THE BILL
A. Short Title
The short title of the bill is the ``Caribbean and Central
America Relief and Economic Stabilization Act.''
B. Findings and Policy
Present law
The Caribbean Basin Initiative (CBI) program was
established by the Caribbean Basin Economic Recovery Act
(CBERA), which was enacted on August 5, 1983. This legislation
authorized the President to grant duty-free treatment to
imports of eligible articles from designated Caribbean
countries. The basic purpose of the CBI program, as originally
proposed by President Ronald Reagan, was to respond to an
economic crisis in the Caribbean by encouraging industrial
development primarily through preferential access to the U.S.
market. The goal was to promote political and social stability
in a strategically important region. CBI trade benefits were
made permanent in 1990.
Explanation of provision
Section 2 contains the findings of Congress that:
(1) In October of 1998, Hurricane Mitch devastated areas of
the Caribbean and Central America. The National Hurricane
Center called this storm ``the most deadly hurricane in the
Atlantic in over 200 years.'' Hurricane Mitch killed 9,860
people and left approximately 3,000,000 people homeless in the
region.
(2) Hurricane Georges hit the Florida Keys, the islands of
the Caribbean, and the Gulf Coast of the United States in
September 1998, causing more than $1,000,000,000 in damage. The
storm killed 250 people.
(3) The total direct economic impact of Hurricane Mitch and
Hurricane Georges on Honduras, Nicaragua, the Dominican
Republic, El Salvador, and Guatemala amounts to $4,200,000,000.
Honduras' losses represent more than 50 percent of its gross
domestic product, and Nicaragua lost a quarter of its gross
domestic product.
(4) The United States must continue to play a leading role
in responding to the disaster and encourage others to
contribute to the recovery effort. For example, Taiwan has
contributed $50,800,000 in assistance for the construction of
roads and housing, the rehabilitation of agricultural
production, and the distribution of supplies. Sweden, Spain,
and France have sent engineering teams to the region to assess
damage to roads, and Japan and the European Union have pledged
millions of dollars in assistance. The United States praises
the efforts of these and othernations in assisting with the
rehabilitation of the region.
(5) Approximately 356 bridges were destroyed in the region,
and 57 percent of the region's roads were impacted. The United
States equivalent of this would be the destruction of 3,900,000
miles of highway. These roads must be reconstructed quickly so
that farmers can transport their goods to market and much-
needed medical supplies can reach rural areas.
(6) Hurricane Mitch devastated the agricultural sector in
the affected areas of Central America and the Caribbean,
particularly the countries of Honduras and Guatemala. An
estimated 70 percent of Honduras' crops were destroyed by
Hurricane Mitch, including 90 percent of the country's banana
and grain crops. In Guatemala, an estimated 95 percent of the
nation's banana crop was damaged, 25-60 percent of the corn,
bean, coffee, and sugar crops were destroyed, and 30 percent of
the cattle was lost.
(7) Approximately 50 percent of Central America and the
Caribbean's workforce is employed in agriculture. The
devastation to the agriculture sector by Hurricane Mitch has
resulted in a widespread shortage of food which is likely to
continue in the long term unless the region's agricultural
sector is rehabilitated.
(8) Significant numbers of displaced Central Americans are
moving north to the United States in the wake of Hurricane
Mitch's devastation. Border Patrol agents in Brownsville,
Texas, report that apprehensions of Hondurans alone increased
by 61 percent in the last three months of 1998. The massive
influx of immigrants places severe pressures upon the ability
of the Immigration and Naturalization Service (INS) to detain
and remove non-criminal illegal immigrants. At current funding
levels, the INS does not have the resources to detain illegal
non-criminal border crossers from Central America. If this
situation continues, the INS is concerned that many more people
will attempt to illegally cross the border.
(9) Partially in an effort to alleviate these pressures,
the Attorney General provided temporary protected status to
aliens from Honduras and Nicaragua on December 30, 1998, for a
period of 18 months. No such status was provided to immigrants
from El Salvador and Guatemala.
(10) Agricultural assistance and training and microcredit
assistance will provide much needed aid to the affected areas
of Central America and the Caribbean as the areas rebuild their
agriculture sectors. The immediate distribution of food aid is
important in the short term, but it is essential that the
region be able to return to self-sufficiency in food production
so the citizens of Central America and the Caribbean will be
able to feed themselves once again.
(11) The goal of United States assistance to the region
should focus on, in addition to the short-term disaster
assistance, long-term solutions for a successful economic
recovery of Central America and the Caribbean. Successful
economic recovery lies in the region's ability to expand its
international trade with important trading partners such as the
United States.
(12) Since 1983, the Caribbean Basin Economic Recovery Act
has represented a permanent and successful commitment by the
United States to encourage the development of strong democratic
governments and revitalized economies in neighboring countries
in the Caribbean Basin.
(13) Thirty-four democratically elected leaders agreed at
the 1994 Summit of the Americas to conclude negotiation of a
Free Trade Area of the Americas (referred to in this Act as
``FTAA'') by the year 2005.
(14) The economic security of the countries in the
Caribbean Basin will be enhanced by the completion of the FTAA.
(15) Offering temporary benefits to Caribbean Basin
countries on the 30 percent of imports from the region that are
not currently duty-free under the Caribbean Basin Economic
Recovery Act and other trade programs will promote the growth
of free enterprise and economic opportunity in these
neighboring countries and thereby enhance the national security
interests of the United States.
(16) Given the greater propensity of countries located in
the Western Hemisphere to use United States components and to
purchase United States products compared to other countries,
increased trade and economic activity between the United States
and countries in the Western Hemisphere will create new jobs in
the United States as a result of expanding export
opportunities.
Section 102 states that it is, therefore, the policy of the
United States to: (1) offer Caribbean Basin partnership
countries tariff and quota treatment equivalent to that
accorded to products of NAFTA countries, and to seek the
accession of these partnership countries to NAFTA or a free
trade agreement comparable to NAFTA at the earliest possible
date, with the goal of achieving full NAFTA participation by
all Caribbean countries by January 1, 2005; and (2) assure that
the domestic textile and apparel industry remain competitive in
the global marketplace by encouraging the formation and
expansion of ``partnerships'' between the textile and apparel
industry of the United States and the textile and apparel
industry of various countries located in the Western
Hemisphere.
Reason for change
This section outlines the Committee's view that the U.S.
response to the devastation caused by Hurricanes Mitch and
Georges should include, in addition to short-term disaster
assistance, a long-term mechanism to promote economic recovery
in Central America andthe Caribbean. Based on the successful
record of the Caribbean Basin Initiative, the Committee believes that
economic recovery will be achieved most effectively by enhancing the
region's opportunities to expand its international trade with important
trading partners such as the United States. The success of the CBI
program indicates that increasing international trade with the CBI
region will also promote the growth of United States exports, decrease
illegal immigration, and improve regional cooperation in efforts to
fight drug trafficking. Finally, the Committee intends that this bill
foster increased opportunities for U.S. companies in the textile and
apparel sector to expand coproduction arrangements with countries in
the CBI region, thereby sustaining and preserving manufacturing
operations in the United States that would otherwise be relocated to
the Far East.
C. Definitions
Explanation of provision
Section 3 defines several terms used in the bill.
D. Temporary Provisions To Provide NAFTA Parity to Partnership
Countries
Present law
Under the CBERA, imports from CBI beneficiary countries,
except for certain products that are statutorily excluded, are
granted duty-free treatment, subject to specific eligibility
requirements. Statutorily excluded articles are ineligible for
duty-free treatment under the CBI. These excluded products are:
textile and apparel articles that are subject to textile
agreements, canned tuna, petroleum and petroleum products,
footwear, handbags, luggage, flat goods, work gloves, and
leather-wearing apparel. Also excluded are certain watches and
watch products.
Under NAFTA, imports of these products from Mexico
(excluded from CBI and listed above) receive either declining
tariff or duty-free and quota-free treatment.
Explanation of provision
Section 104 of the bill amends section 213(b) of the CBERA
to provide tariff and quota treatment on imports from CBI
beneficiary countries of excluded articles that is identical to
tariff and quota treatment accorded like articles imported from
Mexico under NAFTA during a temporary period ending on the date
that either NAFTA accession or a reciprocal free trade
agreement enters into force with the partnership country, or on
the fifth anniversary of the temporary treatment, whichever is
earlier.
Reason for change
The Committee believes that expanding the benefits of the
Caribbean Basin Initiative on a temporary basis, by offering
tariff and quota treatment similar to NAFTA, will promote
economic recovery in the region, while encouraging the
countries to make necessary economic reforms.
1. Rules of Origin
Present law
Chapter Four of NAFTA establishes rules of origin for
identifying goods that are to be treated as ``originating in
the territories of NAFTA parties'' and are therefore eligible
for preferential treatment accorded to originating goods under
NAFTA, including reduced duties and duty-free and quota-free
treatment.
Explanation of provision
Section 104 of the bill provides that NAFTA tariff and
quota treatment would apply to CBI articles which meet NAFTA
rules of origin (treating the United States and CBI beneficiary
countries as ``parties'' under the agreement for this purpose).
Customs procedures applicable to exporters under NAFTA also
must be met for partnership countries to qualify for parity
treatment. Imports of articles currently excluded under CBI,
which do not meet the conditions of NAFTA parity, would
continue to be excluded from the CBI program.
Reason for change
This section establishes ``NAFTA Parity'' for imports from
partnership countries and ensures that Customs procedures
required of Mexico under NAFTA would also be required of
partnership countries receiving benefits under the bill.
2. Effective Date and Termination of Temporary Treatment
Present law
CBI trade benefits were made permanent in 1990.
Explanation of provision
Under section 104 a temporary transitional period would
begin upon date of enactment and end on the date that either
NAFTA accession or a reciprocal free trade agreement enters
into force with the partnership country, or on the fifth
anniversary of the temporary treatment, whichever is earlier.
Reason for change
As discussed above, the Subcommittee believes that offering
temporary NAFTA benefits to CBI countries is in the national
economic and security interest of the United States.
3. Designation Criteria
Present law
In determining whether to designate any country as a CBI
beneficiary country, the President must take into account 7
mandatory and 11 discretionary criteria, which are listed in
section 212 of the CBERA:
(1) whether the country is a Communist country;
(2) whether the country has nationalized,
expropriated, or otherwise seized ownership or control
of U.S. property (including intellectual property),
unless he determines that prompt, adequate, and
effective compensation has been or is being made, or
good faith negotiations to provide such compensation
are in progress, or the country is otherwise taking
steps to discharge its international obligations, or a
dispute over compensation has been submitted to
arbitration;
(3) whether the country fails to act in good faith in
recognizing as binding or in enforcing arbitral awards
in favor of U.S. citizens;
(4) whether the country affords ``reverse''
preferences to developed countries and whether such
treatment has or is likely to have a significant
adverse effect on U.S. commerce;
(5) whether a government-owned entity in the country
engages in the broadcast of copyrighted material
belonging to U.S. copyright owners without their
express consent or the country fails to work toward the
provision of adequate and effective intellectual
property rights;
(6) whether the country is a signatory to an
agreement regarding the extradition of U.S. citizens;
(7) whether the country has or is taking steps to
afford internationally recognized worker rights to
workers in the country;
(8) an expression by the country of its desire to be
designated;
(9) the economic conditions in the country, its
living standards, and any other appropriate economic
factors;
(10) the extent to which the country has assured the
United States it will provide equitable and reasonable
access to its markets and basic commodity resources;
(11) the degree to which the country follows accepted
rules of international trade under the World Trade
Organization;
(12) the degree to which the country uses export
subsidies or imposes export performance or local
content requirements which distort international trade;
(13) the degree to which the trade policies of the
country are contributing to the revitalization of the
region;
(14) the degree to which the country is undertaking
self-help measures to protect its own economic
development;
(15) the extent to which the country provides under
its law adequate and effective means for foreign
nationals to secure, exercise, and enforce exclusive
intellectual property rights;
(16) the extent to which the country prohibits its
nationals from engaging in the broadcast of copyrighted
material belonging to U.S. copyright owners without
their express consent; and
(17) the extent to which the country is prepared to
cooperate with the United States in the administration
of the Act.
Under the CBERA, the President is prohibited from designating a
country a beneficiary country if any of criteria (1)-(7) apply
to that country, subject to waiver if the President determines
that country designation will be in the U.S. national economic
or security interest. The waiver does not apply to (4) and (6).
Criteria (8)-(18) are discretionary. Under the CBERA, criteria
(7) is included as both mandatory and discretionary.
Explanation of provision
The bill makes no change in country designation criteria
established in the CBERA.
4. General Review of Countries
Present law
Section 212(f) of the CBERA requires the President, every
three years, to submit to the Congress a complete report
regarding the operation of the CBI program, including the
results of a general review of beneficiary countries.
Explanation of provision
Section 104 of the bill amends section 212(f) of the CBERA
to provide that the next review take place one year after the
effective date of H.R. 984 and subsequent reviews occur at
three year intervals thereafter. The bill requires the
President to conduct and report to Congress on triennial
reviews of the benefits accorded under H.R. 984. The review
will be based on the 18 eligibility criteria listed in section
212 of the CBERA, as further interpreted by the bill. These
criteria include intellectual property protection, investment
protection, market access, worker rights, cooperation in
administering the program, and the degree to which the country
follows accepted rules of international trade provided for
under the World Trade Organization. The President may
determine, based on the review, whether to withdraw, suspend,
or limit new parity benefits. Existing authority in the CBERA
would continue to withdraw, suspend, or limit current benefits
at any time based on present criteria.
Reason for change
The Caribbean Basin Initiative is a conditional trade
program because, under Section 212 of the CBERA, the President
must take into account seven mandatory and eleven discretionary
criteria when determining whether to designate a country as a
beneficiary country.
The Committee is aware that questions periodically arise
regarding beneficiary countries' adherence to the eligibility
criteria. As part of the implementation of this legislation,
the Committee expects the President to offer adequate
opportunities for interested parties to present information
concerning CBERA beneficiaries' adherence to the eligibility
criteria.
The Committee intends that the triennial review of
countries based on eligibility criteria in current law, as
further interpreted by the bill, will reinforce the conditional
nature of benefits accorded under the Caribbean and Central
America Relief and Economic Stabilization Act.
5. safeguards
Present law
The import relief procedures and authorities under section
201-204 of the Trade Act of 1974 apply to imports from CBI
beneficiary countries, as they do to imports from other
countries. If CBI imports cause serious injury, or threat of
such injury, to the domestic industry producing a like or
directly competitive article, section 213(e) of the CBERA
authorizes the President to suspend CBI duty-free treatment and
proclaim a rate of duty or other relief measures.
Under NAFTA, the United States may invoke a special
safeguard provision at any time during the tariff phase-out
period if a NAFTA-origin textile or apparel good is being
imported in such increased quantities and under such conditions
as to cause ``serious damage, or actual threat thereof,'' to a
domestic industry producing a like or directly competitive
good. The President is authorized to either suspend further
duty reductions or increase the rate of duty to the normal-
trade-relation rate for up to three years. The NAFTA also
provides for a ``quantitative restriction'' safeguard, which
the United States or Mexico may invoke against ``non-
originating'' textile or apparel goods, using the standard of
``serious damage, or actual threat thereof.''
Explanation of provision
Normal safeguard authorities under CBERA would apply to
imports of all products except textiles and apparel. The NAFTA
equivalent safeguard authorities would apply to imports of
textile and apparel products from CBI countries, except that,
under the bill, the President would not be obligated to provide
equivalent trade liberalizing compensation to the exporting
country.
Reason for change
The Committee believes that the NAFTA equivalent safeguard
authority is appropriate in order to ensure that the domestic
textile and apparel industry is not damaged by increased
imports from the Caribbean Basin region.
6. termination or withdrawal of benefits
Present law
The President may withdraw or suspend designation of any
beneficiary country or withdraw, suspend, or limit the
application of duty-free treatment to any article from any
country if he determines that, as a result of changed
circumstances, the country is not meeting criteria set forth in
the statute for beneficiary country designation. The President
must publish at least 30-days advance notice of the proposed
action. The U.S. Trade Representative shall accept written
public comments and hold a public hearing on the proposed
action.
Explanation of the provision
All country designation criteria apply as under the CBERA.
The President may withdraw, suspend, or limit the application
of duty-free or preferential quota treatment to any article if
he determines the country or the product, based on changed
circumstances, should be barred from eligibility. The bill
makes no change in the President's authority to withdraw,
suspend, or limit current benefits under the CBERA at any time.
Reason for change
The Committee believes it is appropriate to retain broad
authority for the President to withdraw, suspend, or limit
benefits under the CBERA and to provide similar authority for
the President with respect to the new trade benefits under H.R.
984.
7. treatment of textile and apparel imports from caribbean countries
and mexico
a. GAL Program and ``807'' tariff treatment
Present law
The ``Special Access Program for Textiles,'' established by
regulation in February 1986, provides flexible Guaranteed
Access Levels (GALs) to the United States market for textile or
apparel and ``made up'' textile product categories (not fabric,
yarn, or other textile products) assembled in CBI countries
from fabrics wholly formed and cut in the United States, under
bilateral agreements negotiated at the request of each
Caribbean government. GALs (also know as ``807A'') are separate
limits from (and usually significantly higher than) standard
quota levels, and are generally increased upon request of the
exporting country.
Imports under item 9802.00.80 of the U.S. Harmonized Tariff
Schedule (previously item 807) which are assembled abroad from
U.S.-fabricated components, including apparel assembled in
Caribbean countries from fabric cut in the United States, are
assessed duty only on the value-added abroad. Under NAFTA,
Mexico receives duty-free and quota-free treatment on articles
assembled from U.S.-formed and cut fabric.
Explanation of provision
Section 104 of the bill eliminates import restraint levels
and duties on textile and apparel articles: (1) assembled from
fabrics wholly formed and cut in the United States from yarns
formed in the United States; (2) cut and sewn in a partnership
country from fabrics wholly formed in the United States, from
yarns wholly formed in the United States; (3) knit-to-shape in
partnership country from yarns wholly formed in the United
States; or (4) made in a partnership country from fabric knit
in a partnership country from yarn wholly formed in the United
States. Hand-made, hand-loomed and folklore articles of the
region also qualify for duty-free and quota-free treatment.
Reason for change
The Committee believes that offering trade benefits to CBI
countries in the textile and apparel area would be a valuable
mechanism to promote long-term economic recovery by enhancing
the region's opportunities to expand trade with the United
States. At the same time, the Committee believes these
provisions would promote growth of U.S. exports and the use of
U.S. fabric and yarn.
b. Originating textile and apparel goods
Present law
Certain textile and apparel articles from major supplying
CBI countries are subject to import quotas under bilateral
agreements negotiated on a product-category basis under
authority of Section 204 of the Agricultural Act of 1956 and in
accordance with the Uruguay Round Agreement on Textiles and
Clothing. Articles under quota may be assembled from U.S. and/
or foreign components.
Explanation of provision
Under section 104 imports of textile and apparel articles
from CBI partnership countries that meet NAFTA rules of origin
would receive tariff treatment equivalent to such goods
originating in Mexico and would enter quota-free. There would
be no change in the treatment of non-originating textile
products currently subject to import quotas under bilateral and
multilateral textile agreements.
Reason for change
This provision furthers the general purposes of the bill
described above.
c. Trade Preference Levels (TPLs)
Present law
Appendix 6(B) of NAFTA provides a limited exception to
NAFTA rules of origin for textile and apparel goods. The
exception takes the form of Tariff Preference Levels (TPLs),
under which specific quantities of goods from each NAFTA
country that do not meet NAFTA ``yarn-forward'' rules of origin
will nonetheless be accorded NAFTA preferential tariff rates.
Imports of such goods that exceed these quantities will be
subject to NTR duty rates. Under NAFTA, TPLs are available for
three broad categories of products: (1) cotton or man-made
apparel; (2) wool apparel; and, (3) goods entered under
subheading 9802.00.80 of the HTS.
Explanation of provision
Section 104(2)(B)(i) authorizes USTR to establish TPLs for
Caribbean textile and apparel products which are similar to
those established for Mexican textile and apparel products in
NAFTA. After consulting with the domestic industry and other
interested parties, USTR is authorized to establish TPLs in the
following categories at specified levels: not more than
45,000,000 square meter equivalents of cotton or man-made fiber
apparel; not more than 1,500,000 square meter equivalents of
wool apparel; and, not more than 25,000,000 square meter
equivalents of goods entered under subheading 9802.00.80 of the
HTS.
The bill requires that these amounts be allocated among the
seven partnership countries which have the largest volume of
textile and apparel exports to the United States, based on a
pro rata share of the volume of their textile and apparel
exports.
Reason for change
This provision furthers the general purposes of the bill
described above.
d. Customs procedures and penalties for transshipment
Present law
Under the NAFTA, Parties to the Agreement must observe
Customs procedures and documentation requirements which are
established in Chapter 5 of NAFTA. Requirements regarding
Certificates of Origin for imports receiving preferential
tariffs are detailed in Article 502.1 of NAFTA.
Explanation of provision
The bill directs the Secretary of the Treasury to prescribe
regulations that require, as a condition of entry, that any
importer of record claiming preferential tariff treatment for
textile and apparel products under the bill must comply with
requirements similar in all material respects to the
requirements regarding Certificates of Origin contained in
Article 502.1 of NAFTA, for a similar importation from Mexico.
In addition, if an exporter is determined under the laws of the
United States to have engaged in illegal transshipment of
textile or apparel products from a partnership country, then
the President shall deny all benefits under the bill to such
exporter, and to any successors of such exporter, for a period
of 2 years.
Finally, the bill requires the Commissioner of Customs to
conduct a study analyzing the extent to which each partnership
country has: (1) cooperated with the United States in instances
of circumvention or alleged circumvention of existing quotas on
imports of textile and apparel products; and (2) has taken
appropriate measures consistent with its laws and domestic
procedures to prevent transshipment and circumvention from
taking place.
Reasons for change
The Committee believes these hard-hitting transshipment
provisions will address concerns raised by the textile and
apparel industry that increasing trade with the Caribbean Basin
region could result in illegal transshipments of textile and
apparel products through the region.
E. Effect of NAFTA on Sugar Imports From Beneficiary Countries
Present law
Under the tariff-rate quota system for sugar, which was
proclaimed by the President on December 23, 1994, the Secretary
of Agriculture establishes the quota quantity that can be
entered at the lower tier import duty-rates. USTR allocates
quantities to CBI countries that receive duty-free treatment.
Imports above the in-quota amount from CBI countries are
subject to tariffs at the higher over-quota rates.
The quantity of sugar which may be imported duty-free from
Mexico is governed by Section A of Annex 703.2 of NAFTA. Under
NAFTA, access grows over time to unlimited duty-free access for
exports of sugar from Mexico beginning in the year 2009.
Explanation of provision
Section 105 requires the President to monitor the effects,
if any, of NAFTA on access to the U.S. sugar market by CBI
beneficiary countries. If the President considers that
implementation of NAFTA is affecting or likely will affect
market access adversely, the President shall: (1) take action
by Executive authority after consulting with interested parties
and appropriate committees; or (2) propose legislation
necessary or appropriate to ameliorate such effects.
Reasons for change
Section 105 responds to concerns raised by CBI beneficiary
governments that additional access to the U.S. sugar market for
Mexico under NAFTA could potentially result in a decrease in
access for exports of sugar from the Carribean and thereby
reduce employment in the region.
F. Duty-Free Treatment For Certain Beverages Made With Caribbean Rum
Present law
Rum and beverages made with rum are eligible for duty-free
entry into the United States both under the CBI program and
NAFTA, provided they meet the CBI or NAFTA rules of origin and
other requirements. When Caribbean rum is processed in Canada
into a rum beverage and the beverage is exported from Canada
into the United States, it is not eligible for duty-free
treatment under either the CBI or NAFTA. Specifically, the
beverage is ineligible for duty-free treatment under CBI
because it is not shipped directly from a beneficiary country
to the United States as the CBI rules require. The beverage
does not qualify for NAFTA duty-free treatment because the
processing in Canada is not sufficient to qualify it as a NAFTA
``originating good.''
Explanation of provision
Section 106 amends the CBERA to accord duty-free treatment
to certain beverages imported from Canada if: (1) the rum is
the growth, product, or manufacture of a beneficiary country or
the U.S. Virgin Islands; (2) the rum is imported directly into
Canada, and the beverages made from it are imported directly
from Canada into the United States; and (3) the rum accounts
for at least 90 percent by volume of the alcoholic content of
the beverages.
Reason for change
This provision would ensure that certain rum beverages that
originate in the CBI, but which are processed in Canada, are
not denied duty-free treatment under the CBERA.
G. Meeting of Caribbean Trade Ministers and USTR
Present law
No provision.
Explanation of provision
Section 107 directs the President to convene a meeting with
the trade ministers of CBI partnership countries in order to
establish a schedule of regular meetings, to commence as soon
as practicable, of the trade ministers and USTR. The purpose of
the meetings shall be to further consultations between the
United States and partnership countries concerning the likely
timing and procedures for initiating negotiations for
partnership countries to: (1) accede to NAFTA; or (2) enter
into comprehensive, mutually advantageous trade agreements with
the United States that contain comparable provisions to NAFTA,
and would make substantial progress in achieving the
negotiation objectives listed in Section 108(b)(5) of Public
Law 103-182. (These are general trade negotiating objectives
for future free trade agreements which were included in NAFTA
implementing bill.)
Reason for change
This provision is intended to encourage the United States
Trade Representative to expand efforts to increase trade with
countries in the Caribbean Basin region.
H. Report on Economic Development and Market Oriented Reforms in the
Caribbean
Present law
Under the CBERA, the President must submit a complete
report to the Congress every 3 years on the operation of the
program, including the results of a general review of
beneficiary countries.
Explanation of provision
Section 108 requires USTR to make an assessment of the
economic development efforts and market oriented reforms in
each partnership country, as well as the ability of each such
country, on the basis of such efforts and reforms, to undertake
the obligations of NAFTA. Not later than July 1, 1998, USTR
shall submit a report on this assessment to the President, the
Committee on Finance, and the Committee on Ways and Means.
USTR shall include in this report a discussion of possible
timetables and procedures pursuant to which partnership
countries can complete the economic reforms necessary to enable
them to negotiate accession to NAFTA. USTR shall also include
an assessment of the potential phase-in periods for
implementing NAFTA obligations that may be necessary to
successfully integrate the lesser developed economies of the
Caribbean into NAFTA.
Section 108 lists factors USTR should consider in assessing
the ability of Caribbean countries to accede to NAFTA.
Reason for change
The report required in this section will provide important
information regarding the progress that partnership countries
are making with respect to making the economic reforms
necessary to accede to NAFTA or to enter into a free trade
agreement containing obligations similar to those contained in
NAFTA.
I. Parity Review in Event New Country Accedes to NAFTA
Present law
No provision.
Explanation of provision
If a new country or group of countries accedes to NAFTA, or
the U.S. negotiates a comparable free trade agreement with
another country, Section 108(c) requires the USTR to report on
the impact of the new trade relationship on beneficiary
countries. The reportshall include any measures the USTR
proposes to minimize the potential for the diversion of investment from
beneficiary countries to the new NAFTA member or free trade agreement
partner.
Reason for change
The report required in this section will provide important
information regarding the progress that partnership countries
are making with respect to implementing the economic reforms
necessary to accede to NAFTA or to enter into a free trade
agreement containing obligations similar to those contained in
NAFTA.
III. VOTE OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of the bill, H.R. 984.
Motion to report the bill
The bill H.R. 984 was ordered favorably reported, by voice
vote on June, 10 1999, with a quorum present.
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the Committee agrees with cost
estimates furnished by the Congressional Budget Office (CBO) on
H.R. 984, set forth below.
B. Budget Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that H.R.
984 does not include any new budget authority and reduces tax
expenditures by an amount equal to the revenue raised by the
provision clarifying the deduction for deferred severance pay.
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 reguiring a cost estimate
prepared by the congressional Budget Office (CBO), in the
following report prepared by CBO is provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 6, 2000.
Hon. Bill Archer,
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. 984, the Caribbean
and Central America Relief and Economic Stabilization Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Hester
Grippando (for revenues) and John Righter (for spending).
Sincerely,
Dan L. Crippen, Director.
Enclosure.
H.R. 984--Caribbean and Central American Relief and Economic
Stabilization Act
Summary: H.R. 984 would provide tariff and quota treatment
similar to that accorded to products under the North American
Free Trade Agreement (NAFTA) to products of countries that are
beneficiaries under the Caribbean Basin Economic Recovery Act.
In addition, the legislation would amend the Internal Revenue
Code to limit pre-funding of certain employee benefits. The
bill would also increase by $0.25 the share of the exercise tax
on rum that is distributed to Puerto Rico and the Virgin
Islands. The higher share would apply only to assessments made
between July 1, 1999, and September 30, 1999, but because of a
provision in Public Law 106-170, the government would not pay
the higher share to the two territories until 2001.
CBO and the Joint Committee on Taxation (JCT) estimate that
enacting H.R. 984 would increase governmental receipts by $34
million over the 2000-2004 period. In addition, CBO estimates
that direct spending would increase by $1.5 million in fiscal
year 2001. Because the bill would affect receipts and direct
spending, pay-as-you-go procedures would apply. CBO estimates
that implementing the bill's provisions would not significantly
affect spending subject to appropriation.
The bill contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA). H.R. 984 contains
one private-sector mandate that would limit the pre-funding of
certain employee benefits. JCT estimates that the cost of the
mandate would exceed the threshold for private-sector mandates
established in UMRA ($100 million in 1996, adjusted annually
for inflation) in each of fiscal years 2000 through 2004.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 984 is shown in the following table.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Estimated Revenues:
Carribean Basin Initiative....... -76 -311 -271 0 0 0 0 0 0 0
Limitation of pre-funding of 115 141 147 149 140 129 118 105 90 74
certain benefits................
--------------------------------------------------------------------------
Total Revenues................. 39 -170 -124 149 140 129 118 105 90 74
==========================================================================
CHANGES IN DIRECT SPENDING
Spending Under Current Law \1\:
Estimated Budget Authority....... 275 389 272 255 255 255 255 255 255 255
Estimated Outlays................ 275 389 272 255 255 255 255 255 255 255
Proposed Changes:
Estimated Budget Authority....... 0 2 0 0 0 0 0 0 0 0
Estimated Outlays................ 0 2 0 0 0 0 0 0 0 0
Spending Under H.R. 984:
Estimated Budget Authority....... 275 391 272 255 255 255 255 255 255 255
Estimated Outlays................ 275 391 272 255 255 255 255 255 255 255
----------------------------------------------------------------------------------------------------------------
\1\ a. The amounts shown are estimated payments to Puerto Rico and the Virgin Islands for their share of excise
taxes collected on rum produced in or brought into the United States.
Note.--Implementing the bill would also increase spending subject to appropriation, but CBO estimates that such
costs would not be significant.
Basis of estimates: CBO's estimate of H.R. 984 assumes an
effective date of July 1, 2000.
Revenues
The bill would offer immediate duty-free and quota-free
treatment to certain articles of apparel assembled in a
beneficiary country. Products covered under this provision
include articles assembled from fabric formed in the United
States from yarn made in the United States (including fabrics
that have undergone certain additional processing in a
beneficiarycountry), articles cut in a beneficiary country from
fabric formed of U.S. yarn and assembled with U.S. thread, and handmade
or folklore articles from beneficiary countries. Based on collections
data for 1998, CBO estimates that about $6 billion in goods would enter
the United States under this provision in fiscal year 2001. (Under
current law, most of the products covered by this provision enter under
a special subheading in the Harmonized Tariff Schedule that allows for
duties to be paid only on the value added to the product in the
beneficiary country.) CBO estimates that this provision would reduce
receipts by $62 million in fiscal year 2000 and by $545 million over
the 2000-2002 period.
H.R. 984 would also offer special duty-treatment,
equivalent to the staged tariff reductions in NAFTA, to other
textile and apparel articles. This treatment would be granted
to goods that are considered to have originated in beneficiary
counties. Based on information from trade experts and
collections data for 1998, CBO estimates that the total value
of imports of textile and apparel articles that originate in
beneficiary countries in fiscal year 2001 will be approximately
$155 million. H.R. 984 also would authorize the President to
grant ``in-preference level tariff treatment'' identical to
that of NAFTA to other apparel products from beneficiary
countries that would not otherwise be eligible for benefits
under the bill. Special treatment of these products would be
limited to no more than 71.5 million square meters of apparel
in any given calendar year. CBO estimates that these provisions
that would grant NAFTA parity treatment to certain textile and
apparel articles would reduce receipts by $11 million in fiscal
year 2000 and by $98 million over the 2000-2002 period.
In addition, H.R. 984 would grant NAFTA parity to other
articles imported into the U.S. from beneficiary countries,
including luggage and handbags, certain leather goods,
footwear, tuna, petroleum, watches, and watch parts. Based on
recent collections data, CBO estimates that this provision
would reduce receipts by 42 million in fiscal year 2000 and by
$15 million over fiscal years 2000-2002.
The bill would also limit the tax deductions that certain
employers may take for contributions to welfare benefit funds.
The limits would apply to participant in plans that provide
supplemental unemployment compensation, severance pay, and life
insurance (other than group-term life) benefits and involve 10-
or-more employer plans. The estimated budgetary impact of this
provision--an increase in revenues totaling $692 million from
2000 through 2004--was provided by JCT.
Direct spending
Under current law, a tax of $13.50 per proof gallon is
assessed on distilled spirits produced in or brought into the
United States. Under Public Law 106-170, the treasuries of
Puerto Rico and the Virgin Islands will receive $13.25 of the
tax assessed on rum manufactured in either territory between
July 1, 1999, and December 31, 2001. (Beginning January 1,
2002, the amount of the federal excise tax the government
shares with the territories falls to $10.50.) In addition, the
territories receive payments, at a similar rate, on all rum
imported into the United States from any foreign country. Those
payments to Puerto Rico and the Virgin Islands are recorded as
outlays in the budget.
Under H.R. 984, the governments of Puerto Rico and the
Virgin Islands would receive the full $13.50 per proof gallon
for assessments made between July 1, 1999, and September 30,
1999. Based on assessments collected during the three-month
period, CBO estimates that retroactively increasing the
territories' share of the excise tax would increase direct
spending by $1.5 million in fiscal year 2001. The additional
payments to the two territories would not occur until 2001
because Public Law 106-170 limits the amount of additional
payments (from a rate that is higher than $10.50 per proof
gallon) the government can transfer in 2000. As a result, CBO
estimates that the $1.5 million in additional payments from
enacting H.R. 984 would be differed until fiscal year 2001.
Titles II though V would authorize programs to help
countries in Central America and the Caribbean recover from the
destruction caused by Hurricanes Georges and Mitch. Enacting
the title would have no budgetary impact because the authorized
programs were funded in the 1999 Emergency Supplemental
Appropriations Act, Public Law 106-31.
Spending subject to appropriation
The bill would require the Administration to determine
whether Caribbean Basin countries are eligible to benefit from
the bill's preferential trade provisions and to monitor their
compliance with certain requirements. The Administration
already performs similar responsibilities under the Caribbean
Basin Economic Recovery Act. Based on information from the
Office of the United States Trade Representative and other
affected agencies, CBO estimates that implementing these
provisions would not significantly increase those agencies'
costs.
The legislation would also amend several existing reporting
requirements of the Office of the United States Trade
Representative and the International Trade Commission. The
amendments would primarily change when and how often the
reports are due. CBO estimates that those changes would cost
less than $200,000 annually.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays and governmental receipts that are subject
to pay-as-you-go are shown in the following table. For the
proposes of enforcing pay-as-you-go procedures, only the
effects in the current year, the budget year, and the
succeeding four years are counted.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
Changes in receipts........... 39 -170 -124 149 140 129 118 105 90 74
Changes in outlays............ 0 2 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
Estimted impact on state, local, and tribal governments:
The bill contains no intergovernmental mandates as defined in
UMRA. The bill would provide an additional $1.5 million to the
governments of Puerto Rico and the Virgin Islands by increasing
the portion of revenues those governments receive from excise
taxes.
Estimated impact on the private sector: The legislation
contains one private-sector mandate that would limit pre-
funding of certain employee benefits. JCT estimates that the
cost of the mandate would exceed the threshold for private-
sector mandates established in UMRA ($100 million in 1996,
adjusted annually for inflation) in each of fiscal years 2000
through 2004.
Estimate prepared by: Federal Revenues: Hester Grippando;
Federal Spending: John Righter; Impact on State, Local, and
Tribal Governments: Leo H. Rex.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis. Thomas G. Woodward, Assistant
Director for Tax Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Subcommittee Oversight Findings and Recommendations
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Subcommittee concludes
that the actions taken in this legislation are appropriate
given its oversight of international trade and tax matters.
B. Summary of Findings and Recommendations of the Committee on
Government Reform and Oversight
In compliance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
oversight findings or recommendations have been submitted to
the Committee by the Subcommittee on Government Reform and
Oversight with respect to the provisions in H.R. 984.
C. Constitutional Authority Statement
With respect to clause 3(d)(1) of rule XIII of the Rules of
the House of Representatives, relating to Constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article 1 of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and to provide for * * * the general Welfare of the
United States * * *).
D. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
The Committee has determined that the provision of the bill
relating to the repeal of the 14-day rule on rental of vacation
property will impose a Federal mandate on the private sector in
the amount shown in the CBO estimate, above. This revenue is
needed to offset the budget cost of the Trade Adjustment
Assistance provision. This provision of the bill will not
impose a Federal intergovernmental mandate on State, local, or
tribal governments.
E. Applicability of House Rule XXI5(c)
Rule XXI5(b) of the Rules of the House of Representatives
provides, in part, that ``No bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase shall be considered as passed or agreed to unless
so determined by a vote of not less than three-fifths of the
Members.'' The Committee has carefully reviewed the provisions
of the bill, and states that the provisions of the bill do not
involve any Federal income tax rate increase within the meaning
of the rule.
VI. CHANGES IN EXISTING LAWS 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):
CARIBBEAN BASIN ECONOMIC RECOVERY ACT
* * * * * * *
TITLE II--CARIBBEAN BASIN INITIATIVE
* * * * * * *
SEC. 212. BENEFICIARY COUNTRY.
(a) * * *
* * * * * * *
(e)(1)(A) The President may, after the requirements of
subsection (a)(2) and paragraph (2) have been met--
[(A)] (i) withdraw or suspend the designation of any
country as a beneficiary country, or
[(B)] (ii) withdraw, suspend, or limit the
application of duty-free treatment under this subtitle
to any article of any country,
if, after such designation, the President determines that as a
result of changed circumstances such country would be barred
from designation as a beneficiary country under subsection (b).
(B)(i) Based on the President's review and analysis
described in subsection (f), the President may
determine if the preferential treatment under section
213(b)(2) and (3) should be withdrawn, suspended, or
limited with respect to any article of a partnership
country. Such determination shall be included in the
report required by subsection (f).
(ii) Withdrawal, suspension, or limitation of the
preferential treatment under section 213(b)(2) and (3)
with respect to a partnership country shall be taken
only after the requirements of subsection (a)(2) and
paragraph (2) of this subsection have been met.
* * * * * * *
[(f) On or before October 1, 1993, and the close of each 3-
year period thereafter, the President shall submit to the
Congress a complete report regarding the operation of this
title, including the results of a general review of beneficiary
countries based on the considerations described in subsections
(b) and (c).]
(f) Reporting Requirements.--Not later than 1 year after the
date of the enactment of the United States-Caribbean Trade
Partnership Act and at the close of each 3-year period
thereafter, the President shall submit to the Congress a
complete report regarding the operation of this title,
including--
(1) with respect to subsections (b) and (c) of this
section, the results of a general review of beneficiary
countries based on the considerations described in such
subsections;
(2) with respect to subsection (c)(4), the degree to
which a country follows accepted rules of international
trade provided for under the WTO Agreement and the
multilateral trade agreements (as such terms are
defined in paragraphs (9) and (4), respectively, of
section 2 of the Uruguay Round Agreements Act);
(3) with respect to subsection (c)(9), the extent to
which beneficiary countries are providing or taking
steps to provide protection of intellectual property
rights comparable to the protection provided to the
United States in bilateral intellectual property rights
agreements;
(4) with respect to subsection (b)(2) and subsection
(c)(5), the extent that beneficiary countries are
providing or taking steps to provide protection of
investment and investors comparable to the protection
provided to the United States in bilateral investment
treaties;
(5) with respect to subsection (c)(3), the extent
that beneficiary countries are providing the United
States and other WTO members (as such term is defined
in section 2(10) of the Uruguay Round Agreements Act
(19 U.S.C. 3501(10)) with equitable and reasonable
market access in the product sectors for which benefits
are provided under this title;
(6) with respect to subsection (c)(11), the extent
that beneficiary countries are cooperating with the
United States in administering the provisions of
section 213(b); and
(7) with respect to subsection (c)(8), the extent
that beneficiary countries are meeting the
internationally recognized worker rights criteria under
such subsection.
In the first report under this subsection, the President shall
include a review of the implementation of section 213(b), and
his analysis of whether the benefits under paragraphs (2) and
(3) of such section further the objectives of this title.
SEC. 213. ELIGIBLE ARTICLES.
(a)(1) Unless otherwise excluded from eligibility by this
title, and subject to section 423 of the Tax Reform Act of
1986, and except as provided in section 213(b)(2) and (3), the
duty-free treatment provided under this title shall apply to
any article which is the growth, product, or manufacture of a
beneficiary country if--
(A) * * *
* * * * * * *
(5) The duty-free treatment provided under this [chapter]
title shall apply to an article (other than an article listed
in subsection (b)) which is the growth, product, or manufacture
of the Commonwealth of Puerto Rico if--
(A) * * *
* * * * * * *
(6) Notwithstanding paragraph (1), the duty-free treatment
provided under this title shall apply to liqueurs and
spirituous beverages produced in the territory of Canada from
rum if--
(A) such rum is the growth, product, or manufacture
of a beneficiary country or of the Virgin Islands of
the United States;
(B) such rum is imported directly from a beneficiary
country or the Virgin Islands of the United States into
the territory of Canada, and such liqueurs and
spirituous beverages are imported directly from the
territory of Canada into the customs territory of the
United States;
(C) when imported into the customs territory of the
United States, such liqueurs and spirituous beverages
are classified in subheading 2208.90 or 2208.40 of the
HTS; and
(D) such rum accounts for at least 90 percent by
volume of the alcoholic content of such liqueurs and
spiritous beverages.
[(b) The duty-free treatment provided under this chapter
shall not apply to--
[(1) textile and apparel articles which are subject
to textile agreements;
[(2) footwear not designated at the time of the
effective date of this chapter as eligible articles for
the purpose of the generalized system of preferences
under title V of the Trade Act of 1974;
[(3) tuna, prepared or preserved in any manner, in
airtight containers;
[(4) petroleum, or any product derived from
petroleum, provided for in headings 2709 and 2710 of
the Harmonized Tariff Schedule of the United States;
[(5) watches and watch parts (including cases,
bracelets and straps), of whatever type including, but
not limited to, mechanical, quartz digital or quartz
analog, if such watches or watch parts contain any
material which is the product of any country with
respect to which HTS column 2 rates of duty apply; or
[(6) articles to which reduced rates of duty apply
under subsection (h) of this section.]
(b) Import-Sensitive Articles.--
(1) In general.--Subject to paragraphs (2) through
(5), the duty-free treatment provided under this title
does not apply to--
(A) textile and apparel articles which were
not eligible articles for purposes of this
title on January 1, 1994, as this title was in
effect on that date;
(B) footwear not designated at the time of
the effective date of this title as eligible
articles for the purpose of the generalized
system of preferences under title V of the
Trade Act of 1974;
(C) tuna, prepared or preserved in any
manner, in airtight containers;
(D) petroleum, or any product derived from
petroleum, provided for in headings 2709 and
2710 of the HTS;
(E) watches and watch parts (including cases,
bracelets and straps), of whatever type
including, but not limited to, mechanical,
quartz digital, or quartz analog, if such
watches or watch parts contain any material
which is the product of any country with
respect to which HTS column 2 rates of duty
apply; or
(F) articles to which reduced rates of duty
apply under subsection (h).
(2) Transition period treatment of certain textile
and apparel articles.--
(A) Equivalent tariff and quota treatment.--
During the transition period--
(i) the tariff treatment accorded at
any time to any textile or apparel
article that originates in the
territory of a partnership country
shall be identical to the tariff
treatment that is accorded at such time
under section 2 of the Annex to an
article described in the same 8-digit
subheading of the HTS that is a good of
Mexico and is imported into the United
States;
(ii) duty-free treatment under this
title shall apply to any textile or
apparel article that is imported into
the United States from a partnership
country and that--
(I) is assembled in a
partnership country, from
fabrics wholly formed and cut
in the United States from yarns
formed in the United States,
and is entered--
(aa) under subheading
9802.00.80 of the HTS;
or
(bb) under chapter
61, 62, or 63 of the
HTS if, after such
assembly, the article
would have qualified
for treatment under
subheading 9802.00.80
of the HTS, but for the
fact the article was
subjected to bleaching,
garments dyeing, stone-
washing, enzyme-
washing, acid-washing,
perma-pressing, oven-
baking, or embroidery;
(II) is knit-to-shape in a
partnership country from yarns
wholly formed in the United
States;
(III) is made in a
partnership country from fabric
knit in a partnership country
from yarns wholly formed in the
United States;
(IV) is cut and assembled in
a partnership country from
fabrics wholly formed in the
United States from yarns wholly
formed in the United States; or
(V) is identified under
subparagraph (C) as a
handloomed, handmade, or
folklore article of a
partnership country and is
certified as such by the
competent authority of such
country; and
(iii) no quantitative restriction or
consultation level may be applied to
the importation into the United States
of any textile or apparel article
that--
(I) originates in the
territory of a partnership
country, or
(II) qualifies for duty-free
treatment under subclause (I),
(II), (III), (IV), or (V) of
clause (ii).
(B) Transition period treatment of other
nonoriginating textile and apparel articles.--
(i) Preferential tariff treatment.--
Subject to clause (ii), the President
may place in effect at any time during
the transition period with respect to
any textile or apparel article that--
(I) is a product of a
partnership country, but
(II) does not qualify as a
good that originates in the
territory of a partnership
country or is eligible for
benefits under subparagraph
(A)(ii),
tariff treatment that is identical to
the in-preference-level tariff
treatment accorded at such time under
Appendix 6.B of the Annex to an article
described in the same 8-digit
subheading of the HTS that is a product
of Mexico and is imported into the
United States. For purposes of this
clause, the `in-preference-level tariff
treatment' accorded to an article that
is a product of Mexico is the rate of
duty applied to that article when
imported in quantities less than or
equal to the quantities specified in
Schedule 6.B.1, 6.B.2., or 6.B.3. of
the Annex for imports of that article
from Mexico into the United States.
(ii) Limitations on all articles.--
(I) Tariff treatment under clause (i)
may be extended, during any calendar
year, to not more than 45,000,000
square meter equivalents of cotton or
man-made fiber apparel, to not more
than 1,500,000 square meter equivalents
of wool apparel, and to not more than
25,000,000 square meter equivalents of
goods entered under subheading
9802.00.80 of the HTS.
(II) Except as provided in subclause
(III), the amounts set forth in
subclause (I) shall be allocated among
the 7 partnership countries with the
largest volume of exports to the United
States of textile and apparel goods in
calendar year 1997, based upon a pro
rata share of the volume of textile and
apparel goods of each of those 7
countries that entered the United
States under subheading 9802.00.80 of
the HTS during the first 12 months of
the 14-month period ending on the date
of the enactment of the United States-
Caribbean Trade Partnership Act.
(III) Five percent of the amounts set
forth in subclause (I) shall be
allocated among the partnership
countries, other than those to which
subclause (II) applies, based upon a
pro rata share of the exports to the
United States of textile and apparel
goods of each of those countries during
the first 12 months of the 14-month
period ending on the date of the
enactment of the United States-
Caribbean Trade Partnership Act.
(iii) Prior consultation.--The
President may implement the
preferential tariff treatment described
in clause (i) only after consultation
with representatives of the United
States textile and apparel industry and
other interested parties regarding--
(I) the specific articles to
which such treatment will be
extended,
(II) the annual quantities of
such articles that may be
imported at the preferential
duty rates described in clause
(i), and
(III) the allocation of such
annual quantities among
partnership countries.
(C) Handloomed, handmade, and folklore
articles.--For purposes of subparagraph
(A)(ii)(V), the Trade Representative shall
consult with representatives of a partnership
country for the purpose of identifying
particular textile and apparel goods that are
mutually agreed upon as being handloomed,
handmade, or folklore goods of a kind described
in section 2.3 (a), (b), or (c) or Appendix
3.1.B.11 of the Annex.
(D) Bilateral emergency actions.--(i) The
President may take--
(I) bilateral emergency tariff
actions of a kind described in section
4 of the Annex with respect to any
textile or apparel article imported
from a partnership country if the
application of tariff treatment under
subparagraph (A) to such article
results in conditions that would be
cause for the taking of such actions
under such section 4 with respect to an
article described in the same 8-digit
subheading of the HTS that is imported
from Mexico; or
(II) bilateral emergency quantitative
restriction actions of a kind described
in section 5 of the Annex with respect
to imports of any textile or apparel
article described in subparagraphs
(B)(i) (I) and (II) if the importation
of such article into the United States
results in conditions that would be
cause for the taking of such actions
under such section 5 with respect to a
like article that is a product of
Mexico.
(ii) The requirement in paragraph (5) of
section 4 of the Annex (relating to providing
compensation) shall not be deemed to apply to a
bilateral emergency action taken under this
subparagraph.
(iii) For purposes of applying bilateral
emergency action under this subparagraph--
(I) the term ``transition period'' in
sections 4 and 5 of the Annex shall be
deemed to be the period defined in
paragraph (5)(E); and
(II) any requirements to consult
specified in section 4 or 5 of the
Annex are deemed to be satisfied if the
President requests consultations with
the partnership country in question and
the country does not agree to consult
within the time period specified under
such section 4 or 5, whichever is
applicable.
(3) NAFTA transition period treatment of certain
other articles originating in beneficiary countries.--
(A) Equivalent tariff treatment.--
(i) In general.--Subject to clause
(ii), the tariff treatment accorded at
any time during the transition period
to any article referred to in any of
subparagraphs (B) through (F) of
paragraph (1) that originates in the
territory of a partnership country
shall be identical to the tariff
treatment that is accorded at such time
under Annex 302.2 of the NAFTA to an
article described in the same 8-digit
subheading of the HTS that is a good of
Mexico and is imported into the United
States.
(ii) Exception.--Clause (i) does not
apply to any article accorded duty-free
treatment under U.S. Note 2(b) to
subchapter II of chapter 98 of the HTS.
(B) Relationship to subsection (h) duty
reductions.--If at any time during the
transition period the rate of duty that would
(but for action taken under subparagraph (A)(i)
in regard to such period) apply with respect to
any article under subsection (h) is a rate of
duty that is lower than the rate of duty
resulting from such action, then such lower
rate of duty shall be applied for the purposes
of implementing such action.
(4) Customs procedures.--
(A) In general.--
(i) Regulations.--Any importer that
claims preferential tariff treatment
under paragraph (2) or (3) shall comply
with customs procedures similar in all
material respects to the requirements
of Article 502(1) of the NAFTA as
implemented pursuant to United States
law, in accordance with regulations
promulgated by the Secretary of the
Treasury.
(ii) Determination.--In order to
qualify for such preferential tariff
treatment and for a Certificate of
Origin to be valid with respect to any
article for which such treatment is
claimed, there shall be in effect a
determination by the President that--
(I) the partnership country
from which the article is
exported, and
(II) each partnership country
in which materials used in the
production of the article
originate or undergo production
that contributes to a claim
that the article qualifies for
such preferential tariff
treatment,
has implemented and follows, or is
making substantial progress toward
implementing and following, procedures
and requirements similar in all
material respects to the relevant
procedures and requirements under
chapter 5 of the NAFTA.
(B) Certificate of origin.--The Certificate
of Origin that otherwise would be required
pursuant to the provisions of subparagraph (A)
shall not be required in the case of an article
imported under paragraph (2) or (3) if such
Certificate of Origin would not be required
under Article 503 of the NAFTA (as implemented
pursuant to United States law), if the article
were imported from Mexico.
(C) Penalties for transshipments.--If the
President determines, based on sufficient
evidence, that an exporter has engaged in
willful illegal transshipment or willful
customs fraud with respect to textile or
apparel articles forwhich preferential tariff
treatment under subparagraph (A) or (B) of paragraph (2) is claimed,
then the President shall deny all benefits under this title to such
exporter, and any successors of such exporter, for a period of 2 years.
(D) Report by ustr on cooperation of other
countries concerning circumvention.--The United
States Commissioner of Customs shall conduct a
study analyzing the extent to which each
partnership country--
(i) has cooperated fully with the
United States, consistent with its
domestic laws and procedures, in
instances of circumvention or alleged
circumvention of existing quotas on
imports of textile and apparel goods,
to establish necessary relevant facts
in the places of import, export, and,
where applicable, transshipment,
including investigation of
circumvention practices, exchanges of
documents, correspondence, reports, and
other relevant information, to the
extent such information is available;
(ii) has taken appropriate measures,
consistent with its domestic laws and
procedures, against exporters and
importers involved in instances of
false declaration concerning fiber
content, quantities, description,
classification, or origin of textile
and apparel goods; and
(iii) has penalized the individuals
and entities involved in any such
circumvention, consistent with its
domestic laws and procedures, and has
worked closely to seek the cooperation
of any third country to prevent such
circumvention from taking place in that
third country.
The Trade Representative shall submit to the
Congress, not later than October 1, 1999, a
report on the study conducted under this
subparagraph.
(5) Definitions.--For purposes of this subsection--
(A) The term ``the Annex'' means Annex 300-B
of the NAFTA.
(B) The term ``NAFTA'' means the North
American Free Trade Agreement entered into
between the United States, Mexico, and Canada
on December 17, 1992.
(C) The term ``partnership country'' means a
beneficiary country.
(D) The term ``textile or apparel article''
means any article referred to in paragraph
(1)(A) that is a good listed in Appendix 1.1 of
the Annex.
(E) The term ``transition period'' means,
with respect to a partnership country, the
period that begins on July 1, 2000, and ends on
the earlier of--
(i) August 1, 2002; or
(ii) the date on which--
(I) the United States first
applies the NAFTA to the
partnership country upon its
accession to the NAFTA, or
(II) there enters into force
with respect to the United
States and the partnership
country a free trade agreement
comparable to the NAFTA that
makes substantial progress in
achieving the negotiating
objectives set forth in section
108(b)(5) of the North American
Free Trade Agreement
Implementation Act (19 U.S.C.
3317(b)(5)).
(F) An article shall be deemed as originating
in the territory of a partnership country if
the article meets the rules of origin for a
good set forth in chapter 4 of the NAFTA, and,
in the case of an article described in Appendix
6.A of the Annex, the requirements stated in
such Appendix 6.A for such article to be
treated as if it were an originating good. In
applying such chapter 4 or Appendix 6.A with
respect to a partnership country for purposes
of this subsection--
(i) no countries other than the
United States and partnership countries
may be treated as being Parties to the
NAFTA,
(ii) references to trade between the
United States and Mexico shall be
deemed to refer to trade between the
United States and partnership
countries, and
(iii) references to a Party shall be
deemed to refer to the United States or
a partnership country, and references
to the Parties shall be deemed to refer
to any combination of partnership
countries and the United States.
* * * * * * *
----------
INTERNAL REVENUE CODE OF 1986
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter D--Deferred Compensation, Etc.
* * * * * * *
PART I--PENSION, PROFIT-SHARING, STOCK BONUS PLANS, ETC.
* * * * * * *
Subpart D--treatment of Welfare Benefit Funds
* * * * * * *
SEC. 419A. QUALIFIED ASSET ACCOUNT; LIMITATION ON ADDITIONS TO ACCOUNT.
(a) * * *
* * * * * * *
(f) Definitions and Other Special Rules.--For purposes of
this section--
(1) * * *
* * * * * * *
(6) Exception for 10-or-more employer plans.--
[(A) In general.--This subpart shall not
apply in the case of any welfare benefit fund
which is part of a 10 or more employer plan.
The preceding sentence shall not apply to any
plan which maintains experience-rating
arrangements with respect to individual
employers.]
(A) In general.--This subpart shall not apply
to a welfare benefit fund which is part of a 10
or more employer plan if the only benefits
provided through the fund are 1 or more of the
following:
(i) Medical benefits.
(ii) Disability benefits.
(iii) Group term life insurance
benefits which do not provide for any
cash surrender value or other money
that can be paid, assigned, borrowed,
or pledged for collateral for a loan.
The preceding sentence shall not apply to any
plan which maintains experience-rating
arrangements with respect to individual
employers.
* * * * * * *
Subtitle D--Miscellaneous Excise Taxes
* * * * * * *
CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
* * * * * * *
SEC. 4976. TAXES WITH RESPECT TO FUNDED WELFARE BENEFIT PLANS.
(a) * * *
* * * * * * *
(b) Disqualified Benefit.--For purposes of subsection (a)--
(1) * * *
* * * * * * *
(5) Special rule for 10 or more employer plans
exempted from prefunding limits.--For purposes of
paragraph (1)(C), if--
(A) subpart D of part I of subchapter D of
chapter 1 does not apply by reason of section
419A(f)(6) to contributions to provide 1 or
more welfare benefits through a welfare benefit
fund under a 10 or more employer plan, and
(B) any portion of the welfare benefit fund
attributable to such contributions is used for
a purpose other than that for which the
contributions were made,
then such portion shall be treated as reverting to the
benefit of the employers maintaining the fund.
* * * * * * *
Subtitle D--Procedure and Administration
* * * * * * *
CHAPTER 78--DISCOVERY OF LIABILITY AND ENFORCEMENT OF TITLE
* * * * * * *
Subchapter D--Possessions
* * * * * * *
SEC. 7652. SHIPMENTS TO THE UNITED STATES
(a) * * *
* * * * * * *
(f) Limitation on Cover Over of Tax on Distilled Spirits.--
For purposes of this section, with respect to taxes imposed
under section 5001 or this section on distilled spirits, the
amount covered into the treasuries of Puerto Rico and the
Virgin Islands shall not exceed the lesser of the rate of--
(1) $10.50 ($11.30 in the case of distilled spirits
brought into the United States during the 5-year period
beginning on October 1, 1993), or
(2) the tax imposed under section 5001(a)(1), on each
proof gallon.
The preceding sentence shall not apply to articles that are
tax-determined after June 30, 1999, and before October 1, 1999.
* * * * * * *
----------
SECTION 234 OF THE FOREIGN ASSISTANCE ACT OF 1961
Sec. 234. Investment Insurance and Other Programs.--The
Corporation is hereby authorized to do the following:
(a) * * *
* * * * * * *
(g) Pilot Equity Finance Program.--
(1) * * *
* * * * * * *
[(c) Creation of Fund for Acquisition of Equity.--]
(5) Creation of fund for acquisition of equity.--The
Corporation is authorized to establish a revolving fund
to be available solely for the purposes specified in
this subsection and to make transfers to the fund of a
total of $10,000,000 (less amounts transferred to the
fund before the date of the enactment of the Jobs
Through Exports Act of 1992) from its noncredit account
revolving fund. The Corporation shall transfer to the
fund in each fiscal year all amounts received by the
Corporation during the preceding fiscal year as income
on securities acquired under this subsection, and from
the proceeds on the disposition of such securities.
Purchases of, investments in, and other acquisitions of
equity from the fund are authorized for any fiscal year
only to the extent or in such amounts as are provided
in advance in appropriations Acts or are transferred to
the Corporation pursuant to section 632(a) of this Act.
* * * * * * *
----------
SECTION 62 OF THE BRETTON WOODS AGREEMENTS ACT
SEC. 62. SUPPLEMENTAL FUNDING FOR THE CENTRAL AMERICAN EMERGENCY TRUST
FUND OF THE INTERNATIONAL BANK FOR RECONSTRUCTION
AND DEVELOPMENT.
(a) Contribution Authority.--
(1) In general.--The United States Governor of the
Bank may, on behalf of the United States, contribute
$25,000,000 to the Central American Emergency Trust
Fund of the Bank.
(2) Subject to appropriations.--The authority
provided by paragraph (1) shall be effective only to
such extent or in such amounts as are provided in
advance in appropriations Acts.
(b) Limitations on Authorization of Appropriations.--
(1) In general.--For the contribution provided for in
subsection (a), there are authorized to be appropriated
not more than $25,000,000 for fiscal year 1999, for
payment by the President of the United States.
(2) Rule of construction.--The authority provided by
paragraph (1) is in addition to any appropriations
authority otherwise provided by law.
(c) Availability.--Amounts appropriated under subsection (b)
are authorized to remain available until expended.
VII. DISSENTING VIEWS ON H.R. 984
We support enhancing the Caribbean Basin Initiative and
believe it can and should be done in a way that helps the U.S.
economy as well as the economies of our CBI partners. H.R. 984
does not do that. It is lacking in two important respects:
First, the duty preferences it would give to non-U.S. fabric
are too open-ended. Second, the bill's treatment of compliance
with worker rights standards as a condition for receipt of
enhanced benefits is too cursory.
The sectors that will be affected the most by CBI
enhancement legislation are the textile and apparel sectors.
CBI enhancement legislation should be a mechanism for
developing complementary aspects of these sectors in the U.S.
and CBI economies, as well as taking into account the increased
competition of CBI nations with the American textile and
apparel industries resulting from CBI enhancement.
The development of apparel manufacturing in the CBI region
could help the U.S. economy by providing a significant source
of demand for U.S. fabric and yarn. Such demand would be lost
in the event of a wholesale movement of the textile and apparel
industries to Asia. Unfortunately, provisions of H.R. 984 would
impede the development of complementary aspects of the U.S. and
CBI economies. Under section 104(a) of the bill, the United
States would provide duty preferences to apparel and textile
articles made from non-U.S., non-CBI region fabric. This
treatment would cause unnecessary hardship to U.S. textile,
apparel and yarn manufacturers. Fabric from outside the United
States and outside the Caribbean and Central America simply has
no place in a CBI enhancement bill.
Further, the absence in H.R. 984 of any limitation on duty-
free benefits for textiles and apparel made from fabric knit in
the CBI region is another source of unnecessary harm to
businesses and workers in the U.S. textile and apparel
industries. In fact, providing duty-free treatment to unlimited
quantities of textile and apparel made from CBI knit fabric
goes beyond the tariff preferences in effect under NAFTA for
textiles and apparel made in Mexico or Canada from fabric knit
in those countries. The NAFTA tariffs on textiles and apparel
made from Mexican or Canadian fabric are scheduled to be
eliminated over time; H.R. 984 would immediately remove all
tariffs on textiles and apparel made from CBI knit fabric.
Rather than effecting an integration between U.S. textile
manufacturing and Caribbean and Central American apparel
manufacturing, the bill would force the closure of U.S. textile
companies. A more balanced approach is needed--one that accords
some preferential treatment to textiles and apparel made from
CBI fabric to the extent that there is knitting capacity
already in place in the region, but that is not open-ended.
Our second major concern about H.R. 984 has to do with
labor market issues. Labor market conditions in the Caribbean
and Central America have an impact on competition between goods
from those regions and U.S. goods. These conditions are part of
the structure and terms of trade. Any CBI enhancement
legislation will grant certain benefits to the CBI countries,
thus stimulating greater competition with the United States.
The issue is not whether wage and other compensation should be
comparable, because there clearly are and will continue to be
differences between the United States and the CBI and Central
American countries. The question is whether the latter
countries have or will take steps to adopt core labor rights
and standards to allow their workers' standard of living to be
set and to rise under a free labor market.
The only mention of labor markets in H.R. 984 is in its
requirement that the President report every three years on
``the extent that beneficiary countries are meeting
internationally recognized worker rights criteria.'' The bill
does nothing to assure application or enforcement of
internationally recognized standards.
CBI benefits should not be conferred without any regard to
whether a country is making real progress towards compliance
with internationally recognized worker rights standards.
Current law, under the Generalized System of Preferences (GSP),
contains a mechanism for reviewing compliance with core worker
rights standards, but that mechanism has not worked in the CBI
region. Currently, countries' protection of intellectual
property rights as a condition for receipt of CBI benefits is
scrutinized more closely than countries' compliance with core
worker rights standards. The level of scrutiny applied to the
latter condition should be at least as great as the level of
scrutiny applied to the former.
We support an enhancement of the Caribbean Basin
Initiative, but not an unbalanced enhancement that fails to
tackle the foregoing fabric and labor market issues.
Accordingly, we oppose passage of H.R. 984 in its current form.
Sander M. Levin.
Xavier Becerra.
Ben Cardin.
Karen L. Thurman.
Michael R. McNulty.
Pete Stark.
VIII. ADDITIONAL VIEW
In the main, I agree with the concerns expressed in the
Dissenting Views on H.R. 984. However, as I stated at the mark
up on June 10, 1999: while I recognize that the legislation as
passed by the committee is imperfect, the time has come to move
a Caribbean Basin Initiative enhancement bill forward. This is
especially true in light of the devastation wrought by
Hurricane Mitch, as it has become all the more important to
reconcile our differences and pass legislation which can help
the region rebuild. For that reason I am compelled to support
the bill as reported out of Committee, in hope that what comes
before us for final vote will take into account the concerns
raised in the Dissenting Views.
Xavier Becerra.