[Senate Report 112-225]
[From the U.S. Government Publishing Office]
112th Congress Report
SENATE
2d Session 112-225
======================================================================
AMENDING THE AFRICAN GROWTH AND OPPORTUNITY ACT TO EXTEND THE THIRD-
COUNTRY FABRIC PROGRAM AND TO ADD SOUTH SUDAN TO THE LIST OF COUNTRIES
ELIGIBLE FOR DESIGNATION UNDER THE ACT, TO MAKE TECHNICAL CORRECTIONS
TO THE HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES RELATING TO THE
TEXTILE AND APPAREL RULES OF ORIGIN FOR THE DOMINICAN REPUBLIC-CENTRAL
AMERICA-UNITED STATES FREE TRADE AGREEMENT, TO APPROVE THE RENEWAL OF
IMPORT RESTRICTIONS CONTAINED IN THE BURMESE FREEDOM AND DEMOCRACY ACT
OF 2003, AND FOR OTHER PURPOSES
_______
September 20, 2012.--Ordered to be printed
_______
Mr. Baucus, from the Committee on Finance,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 3326]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, to which was referred the bill
(S. 3326) to amend the African Growth and Opportunity Act to
extend the third-country fabric program and to add South Sudan
to the list of countries eligible for designation under that
Act, to make technical corrections to the Harmonized Tariff
Schedule of the United States relating to the textile and
apparel rules of origin for the Dominican Republic-Central
America-United States Free Trade Agreement, and to approve the
renewal of import restrictions contained in the Burmese Freedom
and Democracy Act of 2003, and for other purposes, having
considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
I. Report and Other Materials of the Committee......................2
A. Report of the Committee on Finance...................... 2
B. Summary of Congressional Consideration of the Bill...... 2
1. Background.......................................... 2
2. Committee and Floor Consideration................... 3
C. Trade Relations with Sub-Saharan Africa................. 3
1. United States-Sub-Saharan Africa Trade.............. 3
2. Third-Country Fabric Textiles and Apparel........... 4
3. Republic of South Sudan............................. 5
D. CAFTA-DR................................................ 5
1. The Free Trade Agreement............................ 5
2. United States-CAFTA-DR Trade........................ 6
3. Textiles and Apparel Rules of Origin Modifications.. 7
E. Burma Sanctions......................................... 7
1. The Government of Burma............................. 7
2. The Burmese Freedom and Democracy Act of 2003....... 8
3. Report of the U.S. Department of State on the Trade
Sanctions Against Burma............................ 9
F. General Description of the Bill......................... 14
Section 1--Amendments to African Growth and Opportunity
Act................................................ 14
Section 2--Modifications to Textile and Apparel Rules
of Origin for Dominican Republic-Central America-
United States Free Trade Agreement................. 15
Section 3--Extension and Renewal of Import Restrictions
Under Burmese Freedom and Democracy Act of 2003.... 15
Section 4--Time for Payment of Corporate Estimated
Taxes.............................................. 15
Section 5--Extension of Customs User Fees.............. 15
G. Vote of the Committee in Reporting the Bill............. 15
II. Budgetary Impact of the Bill....................................16
III. Regulatory Impact of the Bill and Other Matters.................21
IV. Additional Views of Senator Tom A. Coburn.......................22
V. Changes in Existing Law Made by the Bill, as Reported...........24
I. REPORT AND OTHER MATERIALS OF THE COMMITTEE
A. Report of the Committee on Finance
The Committee on Finance, to which was referred the bill
(S. 3326) to amend AGOA, to make technical changes to the
CAFTA-DR, and to renew the BFDA, having considered the same,
reports favorably thereon without amendment and recommends that
the bill do pass.
B. Summary of Congressional Consideration of the Bill
1. Background
African Growth and Opportunity Act: On June 21, 2012,
Senator Baucus introduced S. 3326 on behalf of himself and
Senators Hatch, Coons, McConnell, Blunt, Isakson, Brown of
Massachusetts, and Thune. Since then, Senators Kerry, Wicker,
Feinstein, Durbin, and Cochran have also joined as cosponsors.
Also on June 21, 2012, Congressmen Camp, Rangel, Brady, and
McDermott introduced companion legislation (H.R. 5986) in the
House of Representatives.
Dominican Republic-Central America-United States Free Trade
Agreement: On August 5, 2004, the United States entered into
the Dominican Republic-Central America-United States Free Trade
Agreement. On July 28, 2005, the House of Representatives
approved it (217 to 215), followed by passage in the Senate
(55-45), clearing the measure for presidential signature on
August 2, 2005 (Pub. L. 109-53). CAFTA-DR entered into force
with El Salvador, Guatemala, Honduras, and Nicaragua during
2006; the Dominican Republic in 2007; and Costa Rica in 2009.
Burmese Freedom and Democracy Act: On June 4, 2003, the
BFDA of 2003 was introduced in the U.S. House of
Representatives (H.R. 2330) and the U.S. Senate (S. 1182). A
revised version of the legislation was introduced in the Senate
(S. 1215) on June 9, 2003. That latter version, S. 1215, passed
the Senate with an amendment on June 11, 2003, by a recorded
vote of 97-1. In the House, H.R. 2330 passed with an amendment
on July 15, 2003, by a recorded vote of 418-2, 1 present. The
Senate then passed the House-passed version of H.R. 2330
without amendment on July 16, 2003, by a recorded vote of 94-1.
The legislation was presented to the President on July 22,
2003, and signed into law by the President on July 28, 2003
(Pub. L. 108-61).
2. Committee and floor consideration
The Senate Committee on Finance met in open executive
session on July 18, 2012 to consider four legislative
proposals, including the Chairman's Mark to amend provisions of
the AGOA and the CAFTA-DR and to reauthorize and renew the
import ban in the BFDA. The proposal the Committee considered
was based upon S. 3326. During the Committee's consideration of
the proposal, no amendments were offered. The Committee
approved the proposal by voice vote.
On August 2, 2012, the House of Representatives passed H.R.
5986, the identical bill text as S. 3326, by voice vote. On the
same day, the Senate voted on an amendment to S. 3326 by
Senator Coburn that would have substituted a different offset
to pay for the AGOA portion of the bill pursuant to a unanimous
consent agreement. The amendment was not agreed to by a vote of
40-58. Following the vote, and in accordance with the unanimous
consent agreement, S. 3326 was read a third time and passed by
the Senate. Later that day, the House of Representatives sent
over H.R. 5986, the Senate read H.R. 5986 a third time, and it
was passed by the Senate pursuant to the unanimous consent
agreement.
C. Trade Relations With Sub-Saharan Africa
1. United States-Sub-Saharan Africa trade
In 2000, Congress amended the Trade Act of 1974 to
establish U.S. trade and investment preferences for sub-Saharan
Africa through the creation of a new trade preference program
called AGOA. AGOA offers trade preferences and other economic
benefits to sub-Saharan African countries that meet certain
criteria, including progress towards a market economy, respect
for the rule of law, elimination of barriers to U.S. trade and
investment, and protection of worker rights. AGOA builds on
existing U.S. trade programs by including additional products
eligible for duty-free treatment beyond those previously
available under the Generalized System of Preferences (GSP).
Duty-free access to the U.S. market under the combined AGOA/GSP
program now stands at approximately 7,000 product tariff lines,
including the roughly 1,800 product tariff lines that were
added to GSP by the AGOA legislation.
AGOA has been amended several times since its initial
enactment. In 2002, Congress amended AGOA to further increase
market access for products from sub-Saharan Africa. In 2004,
Congress passed legislation further amending AGOA, extending
its benefits beyond the original deadline and clarifying
certain provisions. This legislation also included directives
to the President on investment initiatives and technical
assistance. Congress passed legislation in 2006 that further
amended AGOA and extended certain provisions concerning textile
and apparel imports to 2012. AGOA itself expires on September
30, 2015.
In 2011, the United States imported $70.6 billion worth of
goods from sub-Saharan African countries and exported $19.2
billion worth of goods to sub-Saharan African countries,
producing a U.S. trade deficit of $51.4 billion. Major U.S.
imports from AGOA countries include natural resources such as
oil, precious metals, iron, steel, ores, slag, ash, as well as
manufactured products such as vehicles, machinery, mechanical
appliances, and articles of apparel. Major U.S. exports to AGOA
countries include manufactured products such as nuclear
reactors, machinery, mechanical appliances, vehicles, and
aircraft, as well as cereals and oils.
TOP TEN U.S. IMPORTS FROM SUB-SAHARAN AFRICA, 2010 AND 2011
[In $ billions]
------------------------------------------------------------------------
Percent
HTS Number 2010 2011 change 2010-
2011
------------------------------------------------------------------------
27--Mineral fuels and oil..... 51.38 58.97 14.80
71--Pearls, Precious Stones, 3.95 4.33 9.80
Precious Metals, etc., Coin..
87--Vehicles, Except Railway 1.61 2.16 34.10
Or Tramway, And Parts........
18--Cocoa and cocoa 1.04 1.27 22.60
preparations.................
29--Organic chemicals......... 1.22 1.16 -4.70
72--Iron and steel............ 0.76 0.89 16.70
26--Ores, slag, and ash....... 0.67 0.79 17.70
62--Articles of apparel and 0.40 0.46 14.70
clothing accessories, not
knitted or crocheted.........
84--Nuclear Reactors, Boilers, 0.36 0.46 26.30
Machinery and Parts..........
61--Articles of apparel and 0.39 0.44 14.30
clothing accessories, knitted
or crocheted.................
-----------------------------------------
Subtotal.................. 61.77 70.94 14.80
All Other..................... 2.58 3.08 19.40
-----------------------------------------
Total................. 64.35 74.02 15.00
------------------------------------------------------------------------
Source: U.S. International Trade Commission Trade Dataweb, http://
www.usitc.gov.
Note: U.S. Imports for Consumption.
TOP TEN U.S. EXPORTS TO SUB-SAHARAN AFRICA
[In $ billions]
------------------------------------------------------------------------
Percent
HTS Number 2010 2011 change
------------------------------------------------------------------------
84--Nuclear Reactors, Boilers, 3.43 3.93 14.30
Machinery and Parts..........
87--Vehicles, Except Railway 2.40 3.45 43.60
Or Tramway, And Parts........
27--Mineral Fuels and Oil..... 1.41 1.84 30.30
10--Cereals................... 1.36 1.79 31.60
88--Aircraft, Spacecraft, and 1.11 1.51 35.70
Parts........................
85--Electric Machinery; Sound 0.81 0.75 -7.70
and TV Equipment and Parts...
98--Special Classification 0.60 0.72 18.50
Provisions...................
71--Pearls, Precious Stones, 0.42 0.62 44.90
Precious Metals, etc., Coin..
90--Optical, Photography, 0.60 0.58 -3.50
Medical or Surgical
Instruments..................
39--Plastics and Articles 0.47 0.56 20.40
Thereof......................
-----------------------------------------
Subtotal.................. 12.63 15.73 24.60
All Other..................... 3.81 4.57 19.80
-----------------------------------------
Total................. 16.44 20.30 23.50
------------------------------------------------------------------------
Source: U.S. International Trade Commission Trade Dataweb, http://
www.usitc.gov.
2. Third-country fabric textiles and apparel provisions
The ``third-country fabric'' provision in AGOA allows duty-
free treatment of apparel assembled in one or more lesser-
developed AGOA beneficiary countries regardless of the country
of origin of the fabric, subject to a cap of 3.5 percent (by
quantity) of all U.S. apparel imports. The provision expires on
September 30, 2012. S. 3326 extends the provision through
September 30, 2015.
Lesser-developed countries are defined in AGOA as those
with a per capita gross national product of less than $1,500
per year as measured by the World Bank. In subsequent
amendments of AGOA, Botswana, Namibia, and Mauritius were also
added to the list of lesser-developed countries. At present, 27
AGOA-eligible countries qualify for the third-country fabric
provision. Several sub-Saharan African countries, including
Lesotho, Kenya, Mauritius, Swaziland, and Botswana, have
exported a significant amount (both by quantity and value) of
apparel under the provision, and exports of apparel to the
United States present the major portion of their benefits under
AGOA.
BENEFICIARY COUNTRIES UNDER THE AFRICAN GROWTH AND OPPORTUNITY ACT
[As of May 2012]
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Republic of Angola Republic of Ghana * * Democratic Republic of Sao Tome and
Principe
Republic of Benin * * Republic of Guinea Republic of Senegal * *
Republic of Botswana * * Republic of Guinea-Bissau Republic of Seychelles
Burkina Faso * * Republic of Kenya * * Republic of Sierra Leone * *
Republic of Burundi Kingdom of Lesotho * * Republic of South Africa
Republic of Cameroon * * Republic of Liberia * * Kingdom of Swaziland * *
Republic of Cape Verde * * Republic of Malawi * * United Republic of Tanzania * *
Republic of Chad * * Republic of Mali * * Republic of Togo
Union of the Comoros Islamic Republic of Mauritania Republic of Uganda * *
Republic of Congo Republic of Mauritius * * Republic of Zambia * *
Republic of Cote d'Ivoire Republic of Mozambique * *
Republic of Djibouti Republic of Namibia* *
Ethiopia * * Republic of Niger * *
Gabonese Republic Federal Republic of Nigeria * *
Republic of the Gambia * * Republic of Rwanda * *
----------------------------------------------------------------------------------------------------------------
Source: Harmonized Tariff Schedule of the United States, Revision 2, May 2012.
Notes: Countries in SSA region not currently AGOA-eligible: Democratic Republic of Congo, Eritrea, Equatorial
Guinea, Madagascar, Somalia, Sudan, and Zimbabwe.
* * Beneficiary country is eligible for the lesser-developed country special rule for apparel (third-country
fabric provision).
3. Republic of South Sudan
The Republic of South Sudan became an independent country
on July 9, 2011. In section 107 of AGOA (19 U.S.C. 3706), the
term ``sub-Saharan Africa'' is defined to include a list of
countries that may receive AGOA benefits if they meet certain
eligibility criteria. This bill adds the Republic of South
Sudan to that list. As with all countries on that list, prior
to granting AGOA benefits to the Republic of South Sudan, the
President must determine that it meets the eligibility criteria
set forth in section 104 of AGOA (19 U.S.C. 3703), as well as
the eligibility criteria set forth in section 502 of the 1974
Act (19 U.S.C. 2462).
D. CAFTA-DR
1. The free trade agreement
The CAFTA-DR is a permanent, comprehensive, and reciprocal
trade agreement that eliminates tariff and non-tariff barriers
to two-way trade and establishes rules and other standards for
services, intellectual property rights, government procurement,
investment, textiles, and other disciplines. The United States
has seen strong growth in exports of mineral fuels, machinery,
cereals, yarns, and fabrics to the CAFTA-DR countries.
CAFTA-DR provides that each country must accord national
and most favored nation treatment (non-discrimination) to all
parties. The agreement also replaced the unilateral trade
preferences that the region received under GSP, the Caribbean
Basin Economic Recovery Act, and the Caribbean Basin Trade
Partnership Act with permanent bilateral market-opening
commitments.
2. United States-CAFTA-DR trade
Some of the fastest growing U.S. exports to the CAFTA-DR
region include petroleum products, machinery, electrical/
electronic products, textile fabrics, cotton yarns, cereals
(wheat, corn, and rice), plastics, motor vehicles, paper
products, and medical instruments. According to the U.S.
Department of Commerce, the CAFTA-DR region was the 15th
largest U.S. export market in the world in 2010 and the third
largest in Latin America behind Mexico and Brazil.
The United States exported $24.2 billion in goods to the
five Central American countries and the Dominican Republic in
2010, which represents an increase of 21 percent over 2009.
From 2006 through 2010, since CAFTA-DR entered into force, U.S.
exports have expanded by 43 percent. U.S. exports to each
CAFTA-DR country have grown significantly during the first five
years of the agreement, led by Guatemala and Nicaragua (both up
57 percent), followed by Costa Rica (44 percent), Honduras (42
percent), the Dominican Republic (39 percent), and El Salvador
(32 percent).
TOP TEN U.S. IMPORTS TO CAFTA-DR COUNTRIES, 2010 AND 2011 ($)
----------------------------------------------------------------------------------------------------------------
Percent
HTS Number & item 2010 2011 change
2010-2011
----------------------------------------------------------------------------------------------------------------
324--Petroleum & Coal Products................................... 3,644,728,914 6,383,119,529 75
313--Textiles & Fabrics.......................................... 2,363,552,729 3,147,521,353 33
334--Computer And Electronic Products............................ 2,671,428,736 2,797,227,961 5
325--Chemicals................................................... 2,195,597,030 2,481,168,171 13
111--Agricultural Products....................................... 1,685,067,127 2,301,866,395 37
990--Special Classification Provisions, Nesoi.................... 1,737,420,129 2,026,228,715 17
311--Food Manufactures........................................... 1,660,444,641 1,936,558,626 17
333--Machinery, Except Electrical................................ 1,328,205,398 1,437,620,052 8
336--Transportation Equipment.................................... 1,283,270,903 1,245,075,122 -3
335--Electrical Equipment, Appliances & Components............... 826,060,401 948,021,582 15
----------------------------------------------------------------------------------------------------------------
Source: U.S. International Trade Commission Trade Dataweb, http://www.usitc.gov.
Note: U.S. Imports for Consumption.
TOP TEN U.S. IMPORTS FROM CAFTA-DR COUNTRIES, 2010 AND 2011 ($)
----------------------------------------------------------------------------------------------------------------
Percent
HTS Number & item 2010 2011 change
2010-2011
----------------------------------------------------------------------------------------------------------------
315--Apparel Manufacturing Products.............................. 7,106,963,291 7,967,234,072 12
334--Computer And Electronic Products............................ 5,799,828,996 6,849,915,571 18
111--Agricultural Products....................................... 2,809,681,764 3,797,032,742 35
339--Miscellaneous Manufactured Commodities...................... 1,762,361,369 1,805,090,915 2
331--Primary Metal Mfg........................................... 427,971,896 1,340,933,490 213
311--Food Manufactures........................................... 1,225,595,748 1,279,197,659 4
336--Transportation Equipment.................................... 732,642,196 908,184,684 24
910--Waste And Scrap............................................. 558,146,026 703,007,401 26
312--Beverages & Tobacco Products................................ 537,924,388 606,883,465 13
335--Electrical Equipment, Appliances & Components............... 428,644,049 522,096,391 22
----------------------------------------------------------------------------------------------------------------
Source: U.S. International Trade Commission Trade Dataweb, http://www.usitc.gov.
Note: U.S. Imports for Consumption.
3. Textiles and Apparel Rules of Origin modifications
At the February 2011 CAFTA-DR Free Trade Commission
meeting, CAFTA-DR trade officials signed an agreement to make a
series of changes to Annex 4.1 (Specific Rules of Origin) of
the CAFTA-DR pursuant to Articles 3.25.3 and 19.1.3(b)(ii) of
the CAFTA-DR agreement, which provides the authority to make
such changes. All six of the CAFTA-DR countries have made the
necessary reforms to their laws or regulations to effectuate
these changes, and only the United States has yet to take
action. The CAFTA-DR bill provisions will codify the necessary
changes under U.S. law. These modifications will not go into
effect until all the CAFTA-DR countries have adopted the
necessary laws or regulations to implement the modifications.
E. Burma Sanctions
1. The Government of Burma
In September 1988, a military junta known as the State
Peace and Development Council (SPDC) took power in Burma. As
discussed below, the SPDC maintained its hold on power through
brutal means until March 2011, when it dissolved itself and
turned over authority to a nominally civilian government. While
that government has since allowed some significant political
and economic progress in Burma, serious challenges remain.
During its years in power, the SPDC violently suppressed
pro-democracy movements. International human rights
organizations and the U.S. Department of State reported a
pattern of SPDC policies that included the suppression of
political and civil liberties, jailing of political prisoners,
widespread physical abuses, forced relocation of civilians,
conscription of civilians--including children--into military
services, and conscription of thousands of civilians for work
on economic projects.
In May 2003, a pro-government group of several hundred
people assaulted Burmese Nobel Prize winner Aung San Suu Kyi,
the leader of the opposition National League for Democracy
(NLD), near Mandalay, Burma's second-largest city. The
attackers were members of the United Solidarity Development
Association (USDA), an organization affiliated with the SDPC.
Some NLD supporters were killed, and others were taken into
custody. Aung San Suu Kyi was imprisoned, and four months later
released under house arrest.
In September 2007, the Burmese government engaged in a
violent crackdown against Buddhist monks and other Burmese
citizens who were demonstrating peacefully against the poor
economic conditions in Burma and the repressive policies of the
SPDC. In May 2008, the Burmese government also failed to
provide adequate humanitarian assistance or allow speedy entry
of international aid in response to Cyclone Nargis.
In August 2009, the regime convicted Aung San Suu Kyi of
spurious charges of violating the terms of her house arrest,
and sentenced her to three years in prison with hard labor,
commuting that sentence to 29 months of house arrest.
In November 2010, the SPDC allowed the first parliamentary
election in Burma in over twenty years. The election was widely
seen as government-rigged. Nonetheless, the SPDC announced that
the election had paved the way for the transfer of power to
civilian rule. In March 2011, former general Thein Sein was
sworn in as president of Burma.
Since March 2011, the government of President Thein Sein
has taken some important steps towards political and economic
reform. Aung San Suu Kyi was freed from house arrest, and the
NLD was reinstated as a political party. On April 1, 2012, in a
parliamentary by-election, the NLD won 43 of the 44
parliamentary seats at stake. The government has signed
ceasefire agreements with most armed ethnic groups, which were
associated with some of the worse human rights abuses of the
previous two decades. The government also allowed a more open
public dialogue, through the relaxation of some media
restrictions, the tolerance of peaceful protests, and the
creation of a more meaningful parliamentary process. Hundreds
of political prisoners have been gradually released.
Nonetheless, as the U.S. State Department has reported to
the Senate Finance Committee, significant challenges remain.
The Burmese government has limited humanitarian access to areas
of Burma where conflict with armed ethnic groups has increased.
There are credible reports of human rights violations by the
Burmese Army, including rape and forced labor. The Burmese
constitution continues to provide the military an effective
veto over broad political reform. Hundreds of political
prisoners remain incarcerated, and the government has imposed
restrictions on recently-released prisoners. There are also
indications that Burma continues to engage in military trade
with North Korea.
2. The Burmese Freedom and Democracy Act of 2003
On June 4, 2003, the BFDA banned the importation of any
article that is a product of Burma. The BFDA allows the
President to lift these import restrictions if he certifies to
Congress that (1) the SPDC has made substantial progress to end
human rights violations, including rapes, and no longer
systematically violates workers' rights, including forced and
child labor, and conscription of child soldiers; (2) the SPDC
has made substantial progress toward implementing a democratic
government, including by releasing political prisoners, by
allowing freedom of speech, press, association, and religion,
and by reaching agreement with the NLD for a democratically
elected civilian government; and (3) Burma has not been
designated as a country that has failed to abide by its
obligations under international counternarcotics agreements and
failed to take other enumerated effective counternarcotics
measures. In addition to the import ban, the BFDA also freezes
the assets of the Burmese regime and its officials held by U.S.
financial institutions, directs the Secretary of the Treasury
to instruct the U.S. representatives to international financial
institutions to oppose loans or other assistance to Burma, and
authorizes the President to deny visas to the leaders of the
Burmese regime.
In July 2008, Congress amended the BFDA when it passed the
Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts)
Act of 2008 (JADE Act). The JADE Act was introduced in the
House on October 18, 2007 and passed by voice vote on December
11, 2007. The Senate passed an amended version of the bill on
December 19, 2007. After resolving the differences between the
two bills, the revised legislation was passed by the House on
July 15, 2008 by voice vote and by the Senate on July 22, 2008
by Unanimous Consent. The President signed the legislation into
law on July 29, 2008. The JADE Act amended the import
restrictions of the BFDA by prohibiting the importation into
the United States of jewelry from any country that contains
jadeite or rubies mined in Burma. The JADE Act also imposed
additional financial and visa sanctions on members of the SPDC
or USDA and their immediate family members.
Pursuant to section 9(b) of the BFDA, the import ban
expires after one year unless a new joint resolution approving
a one-year renewal of the import ban is enacted into law prior
to the anniversary of the date of enactment of the BFDA. The
current import ban remains in effect through July 26, 2012.
As originally enacted in 2003, section 9(b)(3) also limited
the imposition of import restrictions to a maximum of three
years from the date of enactment, or until 2006. In 2006, a
joint resolution was introduced to extend this period to a
maximum of six years from the date of enactment, or until 2009.
Specifically, H.J. Res. 86 was introduced in the House on May
19, 2006, and S.J. Res. 38 was introduced in the Senate on May
26, 2006. The House passed H.J. Res. 86 on July 11, 2006 by
voice vote. H.J. Res. 86 was placed on the Senate calendar on
July 26, 2006 and passed without amendment by voice vote. The
President signed the joint resolution on August 1, 2006 (Pub.
L. 109-251).
In 2009, S.J. Res. 17 was introduced to extend the
limitation on the import restrictions for an additional three
years, to a maximum of nine years from the date of enactment,
or until 2012. A similar resolution (H.J. Res. 56) was passed
by the House on July 21, 2009 by voice vote. H.J. Res. 56 was
received by the Senate on July 22, 2009 and passed by Unanimous
Consent on July 23, 2009. The resolution was signed by the
President on July 28, 2009 (Pub. L. 111-42).
On June 21, 2012, S. 3326 was introduced to, among other
things, extend the import restrictions set forth in section
9(b)(3) of the BFDA for an additional three years, to a maximum
period of twelve years from the date of enactment, or until
2015. Further, S. 3326, approves the renewal of those
restrictions for another year, in accordance with section 9(b)
of the BFDA. An identical companion bill, H.R. 5896, was
introduced in the House of Representatives on June 21, 2012.
3. Report of the U.S. Department of State on the trade sanctions
against Burma
On June 20, 2012, the U.S. Department of State submitted to
Congress a report regarding the trade sanctions against Burma,
as required by section 8(b)(3) of the BFDA. At the request of
the Chairman, that report was made a part of the record of the
Committee's consideration of S. 3326. The State Department
report is reprinted below:
U.S. Department of State,
Washington, DC, June 20, 2012.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The enclosed report reviews measures to
promote human rights and democracy in Burma and assesses the
effectiveness of the trade provisions in the Burmese Freedom
and Democracy Act of 2003 (P.L. 108-61) (BFDA) to improve
conditions in Burma and to advance U.S. policy objectives. This
year's report highlights the important reforms that have taken
place in Burma and outlines the U.S. government's response to
recognize and encourage progress on our core concerns.
Our approach has been calibrated by announcing an easing
rather than lifting of financial services and investment
restrictions against Burma and maintaining all sanctions
authorities in place. Consistent with this approach, we
recommend Congressional renewal of the BFDA import ban as
amended by the Junta's Anti-Democratic Efforts Act, while
noting that if reforms continue in Burma, the Secretary of
State may consider using executive authority to ease the import
ban. As always, we will continue to consult closely with
Congress regarding any updates to our Burma policy.
We hope this information is useful to you. Please do not
hesitate to contact us if we may be of further assistance in
this matter.
Sincerely,
David S. Adams,
Assistant Secretary, Legislative Affairs.
Enclosure: As stated.
Report on U.S. Economic Sanctions Against Burma
INTRODUCTION AND SUMMARY
(U) Pursuant to Section 8(b)(3) of the Burmese Freedom and
Democracy Act of 2003 (Pub. L. 108-61) (the BFDA), and in view
of the impending expiration of the import ban contained in the
BFDA, as amended by the Tom Lantos Block Burmese Junta's Anti-
Democratic Efforts (JADE) Act of 2008 (Pub. L. 110-286) (the
JADE Act), this report reviews bilateral and multilateral
measures to promote human rights and democracy in Burma and
assesses the effectiveness and impact of the BFDA's trade
provisions and the furtherance of U.S. policy objectives.
(U) The United States has been a leading advocate of human
rights and democracy in Burma for more than two decades. During
this reporting period, and for the first time since the
enactment of the BFDA, there has been a significant political
and economic opening in Burma. Burma's former autocratic
military leader, Senior General Than Shwe, officially retired.
President Thein Sein, a former regime member who assumed office
through a flawed electoral process, initiated an important
reform process shortly after taking office in March 2011.
(SBU) The Burmese government's reform process included
steps to address several core concerns of the United States and
the international community. In October 2011 and January 2012,
authorities released over 500 political prisoners. After the
Burmese government initiated a substantive dialogue with Aung
San Suu Kyi (ASSK) and amended electoral laws, the National
League for Democracy (NLD)--the leading, previously banned,
pro-democracy opposition party--registered and was reinstated
as a political party in December 2011. On April 1, ASSK and the
NLD won 43 of the 44 parliamentary seats they contested in by-
elections. Authorities signed preliminary ceasefire agreements
with armed ethnic groups including the Chin National Front, the
Karenni National Progressive Party, the New Mon State Party,
the Shan State Army-South, Shan State Army-North, and, for the
first time in 63 years, the Karen National Union. The Burmese
government has also taken other steps toward civic openness,
relaxing media restrictions, approving legislation to allow
citizens to form labor unions and protest peacefully,
criminalizing forced labor, and creating a more open and
substantive parliamentary process.
(SBU) Serious challenges and concerns remain. A 17-year
ceasefire in Burma's northern Kachin State broke down in June
2011 and confiict ensued, despite sporadic ceasefire talks.
Humanitarian access to conflict zones, including to an
estimated 60,000 persons displaced as a result of the fighting
in Kachin State, has been limited.
Credible reports of serious human rights violations by the
Burmese Army, including rape and forced labor, continue.
Burma's constitution remains flawed, in particular by granting
the armed forces excessive authorities. Though the precise
figure is unclear, hundreds of political prisoners reportedly
remain in detention, and the Burmese government imposed
conditions on many of the prisoners released in October and
January. Despite official assurances to the contrary, there are
indications that Burma's military trade with North Korea
continues.
(SBU) In response to Government of Burma action on core
concerns, the United States decided in May to ease certain
financial and investment sanctions, while maintaining all
sanctions authorities in place. This calibrated approach
recognizes and encourages the reform effort, while preserving
the flexibility to tighten sanctions if warranted by conditions
on the ground. Consistent with this approach, the State
Department supports a Congressional resolution to maintain the
BFDA import ban, as amended by the JADE Act. If positive
reforms in Burma continue, the Secretary of State may elect to
waive all or part of the ban on Burmese imports. As the
Department proceeds with this approach, the Department intends
to work closely with the Congress.
BILATERAL MEASURES
(SBU) The United States significantly enhanced engagement
with the Burmese government during the reporting period. To
assess early signs of progress, President Obama requested
Secretary Clinton to visit Burma from November 30 to December
2, 2011, marking the first visit by a Secretary of State since
1955. During her trip, Secretary Clinton announced an ``action-
for-action'' strategy to encourage further reforms. As part of
this strategy, the United States has announced several measures
such as resumption of World War II remains recovery operations,
support for assessment missions by international financial
institutions (via a partial and time-limited waiver of
Trafficking Victims Protection Act sanctions), support for a
normal UN Development Programme program in the country, an
intention to re-establish a USAID mission, and an upgrade of
diplomatic ties to exchange ambassadors. After Burma's credible
parliamentary by-elections and other progress, the United
States announced May 17 it would ease bans on the exportation
of U.S. financial services and new investment across sectors of
the Burmese economy. These steps reflect an ``easing'' (as
opposed to a ``lifting'') of sanctions as all sanction
authorities remain in place. In this regard, on May 17
President Obama renewed the national emergency with respect to
Burma declared pursuant to the International Emergency Economic
Powers Act.
(SBU) Since September 2011, U.S. Special Representative and
Policy Coordinator for Burma Derek Mitchell and other key U.S.
government officials, including Members of Congress, travelled
to Burma to promote our human rights, democracy, and
nonproliferation goals. On the margins of the UNGA in September
2011, the State Department initiated a dialogue on political
prisoners with Burmese officials and invited the Burmese
foreign minister to the State Department. In every interaction
with Burmese officials, the United States advocated for greater
respect for human rights and encouraged political reform.
Senior-level U.S. visitors to Burma consulted with ASSK, the
NLD, civil society representatives, and ethnic minority
leaders. Embassy Rangoon maintained regular contact with a
broad spectrum of society, including ASSK, former political
prisoners, and ethnic minority and civil society leaders. This
outreach enabled more accurate assessments on the ground and
calibration of U.S. actions and responses accordingly.
MULTILATERAL MEASURES
(SBU) The United States pursued multilateral measures to
advance our human rights and democracy goals. The United States
has consistently urged the UN--including the UN Security
Council, UN Human Rights Council (UNHRC), and the UN Secretary-
General's Good Offices Mission--to maintain focus on shared,
international core concerns. The United States successfully co-
sponsored the annual resolution on the human rights situation
in Burma in the UNGA's Third Committee and in the UNHRC. The
2011 UNGA Resolution on Burma passed the Third Committee by a
98 (yes)--25 (no)--63 (abstain) margin. The U.S. government
supported the findings of UN Special Rapporteur on the
Situation of Human Rights Thomas Ojea Quintana, based on his
assessments during the reporting period. The United States
urged respect for labor rights in statements at the
International Labor Organization in November 2011.
(SBU) Increasing its strategic engagement with ASEAN, the
United States conveyed the importance of human rights and
democracy progress in Burma at every level and opportunity.
Secretary Clinton directly addressed our concerns with Burma
during the ASEAN Regional Forum in July 2011 in Indonesia and
President Obama highlighted U.S. core concerns and our desire
to support hopeful, early signs of reforms in Burma on the
margins of the East Asia Summit in November 2011, also in
Indonesia. The State Department engages with ASEAN leaders on a
routine basis and has ensured intensive engagement with key
regional partners on Burma policy including with Japan,
Australia, South Korea, and China.
(SBU) Following Burma's April 1 parliamentary by-elections,
the EU suspended its sanctions against Burma, with the
exception of the embargo on arms. Australia, Canada, Norway,
and Switzerland also eased their respective sanctions. The
State Department coordinated closely with these like-minded
partners and will be collaborating closely to ensure the
Burmese government makes further progress on our shared
concerns, particularly political prisoners, violence in ethnic
minority areas, greater civic openness for the country's
democratization process, and transparency on nonproliferation
issues and military ties to North Korea.
EFFECTS OF SANCTIONS ON SITUATION IN BURMA
(SBU) U.S. economic sanctions have been an important tool
in pressuring the Burmese government to improve respect for
human rights and democratic reform. Senior Burmese officials
repeatedly requested that sanctions be lifted, while
highlighting completed steps to address U.S. concerns.
Businessmen in Rangoon complained about the detrimental effects
sanctions have had on their business operations and personal
lives. Between March 25, 2011, and March 28, 2012, 107
transactions totaling approximately $4.3 million involving
Burmese individuals or entities were reported to the Treasury
Department as blocked. Over the same period, the Treasury
Department issued 22 licenses authorizing the release of
blocked funds or otherwise prohibited transactions. These
authorizations allowed, for example, NGOs to conduct
assistance-related transactions to promote agricultural
development, micro-finance, and education projects. To date,
the United States has designated 42 individuals and 58 entities
as subject to U.S. sanctions, including two individuals and 19
companies identified as subject to the JADE Act blocking and
financial sanctions.
(SBU) Burma's trade with neighboring countries and its
regional partners continues to increase. Although trade with
the United States is historically insignificant, even prior to
the imposition of sanctions, the prospect of increased commerce
and investment from the United States and other trading
partners may contribute to the Burmese government's calculation
to embark on political reform.
EFFECTS OF SANCTIONS ON BROADER U.S. INTERESTS
(SBU) Our goal in easing certain financial and investment
sanctions is to recognize the reforms that have taken place and
to encourage further reforms to address our longstanding human
rights, democracy, and nonproliferation interests. U.S.
sanctions heretofore have imposed broad restrictions to
prohibit dollar-based transactions with Burma and all new
investment. The State Department assesses that given the
current reforms underway, shifting from broad sanctions to more
targeted restrictions and pursuing further engagement are the
most effective means to advance our core interests. Some
elements of the human rights and Burmese exile communities do
not support lifting trade or other sanctions absent further
progress on human rights and ethnic minority issues or legally
binding requirements for U.S. businesses seeking to operate in
Burma. During the reporting period, many opposition groups and
ethnic minority parties inside Burma supported or called for
the lifting of, or modification to, extant sanctions.
(SBU) The trade-related and financial sanctions implemented
pursuant to the BFDA and Executive Orders 13047, 13310, 13448,
and 13464 have had a limited impact on U.S. relations with
other nations. Following announcements of our intent to ease
financial and investment-related sanctions, the State
Department and other U.S. agencies received a dramatic increase
in the number of commercial inquiries from U.S. businesses
interested in investing in Burma. The United States has
conveyed to regional and like-minded partners as well as U.S.
companies that even as we ease sanctions we must remain
coordinated in urging the release of all political prisoners
unconditionally, an end to violence in ethnic minority areas, a
dialogue toward genuine national reconciliation, and a
cessation of Burma's military relationship with North Korea.
CONCLUSION
(SBU) The political and economic opening in Burma has
resulted in concrete steps to improve the human rights and
political environments. A genuine reform process, however, will
require significant time and effort to reach fruition and
important, immediate concerns and challenges remain. The
principled U.S. engagement and action-for-action approach have
resulted in increasingly substantive interactions with Burmese
officials. U.S. support for Burma's democracy movement remains
strong and steadfast. The Department is committed to supporting
reformers both inside and outside the government. The United
States continues to work within the UN and with countries in
Southeast Asia and beyond to effectively coordinate and promote
Burma's peaceful transition to democracy.
At this time, the Department of State supports
Congressional renewal of the import ban in the Burmese Freedom
and Democracy Act, as amended by the JADE Act, in line with our
approach of ``easing'' and not ``lifting'' sanctions. If reform
continues in Burma, the Secretary of State may decide to
exercise her authority to ease the import ban as noted above
using waiver authority to facilitate trade in Burmese-origin
products in ways that support and encourage further reform and
benefit the Burmese population. The State Department will
continue to work closely with Congress as events unfold.
F. General Description of the Bill
Section 1--Amendments to African Growth and Opportunity Act
Section 1 amends section 112(c)(1) of AGOA to extend the
third-country fabric provision through September 30, 2015. It
also adds the ``Republic of South Sudan (South Sudan)'' to the
list of AGOA-eligible beneficiary countries and makes a
conforming amendment to strike ``48'' in section 102(2) of the
Act. The effective date of this section is the date of
enactment of the Act.
Section 2--Modifications to Textile and Apparel Rules of Origin for
Dominican Republic-Central America-United States Free Trade
Agreement
Section 2 amends the Harmonized Tariff Schedule by
implementing the technical corrections and modifications agreed
to by the CAFTA-DR trade officials in February 2011. These
corrections include a change clarifying that certain
monofilament sewing thread is required to be produced in the
United States or the CAFTA-DR region in order for goods to
qualify for preferential tariff treatment. The other
modifications clarify or correct the language used in the text
of the CAFTA-DR, which include the treatment of certain
nightwear, as well as the treatment of several products under
the ``short supply'' list in the CAFTA-DR. These products
include elastomeric yarns, knit waistbands, and knit-to-shape
components. The amendments made by this section apply to goods
of a CAFTA-DR country that are entered, or withdrawn from
warehouse for consumption, on or after the date that the U.S.
Trade Representative determines is the first date on which the
equivalent amendments to the rules of origin of CAFTA-DR have
entered into force in all CAFTA-DR countries.
Section 3--Extension and renewal of import restrictions under Burmese
Freedom and Democracy Act of 2003
Section 3 reauthorizes the import sanctions in the BFDA for
an additional three years, through July 2015. In addition, the
amendment provides annual renewal for the import sanctions,
such that the sanction authority will remain in place until at
least July 2013. The effective date of this section is the date
of enactment or July 26, 2012, whichever comes first.
Section 4--Time for payment of corporate estimated taxes
Section 4 increases the amount of the required installment
of estimated tax otherwise due from a corporation with at least
$1 billion in assets in July, August, or September, 2017 by
0.25 percent. The bill reduces the next required installment to
reflect the prior increase. The effective date of this section
is the date of enactment of the Act.
Section 5--Extension of customs user fees
Section 5 extends the passenger and conveyance processing
fees authorized under section 13031(j)(3)(B)(i) of Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA) from
September 30, 2021 through October 22, 2021. The section also
extends the merchandise processing fees authorized under
section 13031(j)(3)(A) of COBRA from September 30, 2021 through
October 29, 2021. The effective date of this section is the
date of enactment of the Act.
G. Vote of the Committee in Reporting the Bill
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that on July
18, 2011, S. 3326 was ordered favorably reported, without
amendment, by voice vote.
II. BUDGETARY IMPACT OF THE BILL
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 20, 2012.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3326, a bill to
amend the African Growth and Opportunity Act to extend the
third country fabric program and to add South Sudan to the list
of countries eligible for designation under that Act, to make
technical corrections to the Harmonized Tariff Schedule of the
United States relating to the textile and apparel rules of
origin for the Dominican Republic-Central America-United States
Free Trade Agreement, to approve the renewal of import
restrictions contained in the Burmese Freedom and Democracy Act
of 2003, and for other purposes.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kalyani
Parthasarathy.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 3326--A bill to amend the African Growth and Opportunity Act to
extend the third country fabric program and to add South Sudan
to the list of countries eligible for designation under that
Act, to make technical corrections to the Harmonized Tariff
Schedule of the United States relating to the textile and
apparel rules of origin for the Dominican Republic-Central
America-United States Free Trade Agreement, to approve the
renewal of import restrictions contained in the Burmese Freedom
and Democracy Act of 2003, and for other purposes
Summary: S. 3326 would extend for three years the
preferential tariff treatment currently accorded to certain
textile products from lesser-developed countries (LDCs) in the
African Growth Opportunity Act (AGOA) program, modify the rules
of origin for products imported from countries who are members
of the Dominican Republic and Central America Free Trade
Agreement (DR-CAFTA), and renew import restrictions enacted in
the Burmese Freedom and Democracy Act of 2003. The bill also
would shift some corporate income tax payments between fiscal
years and extend user fees collected by Customs and Border
Protection (CBP) that expire under current law.
CBO and the staff of the Joint Committee on Taxation (JCT)
estimate that enacting S. 3326 would reduce revenues by $59
million in 2013, increase revenues by $4 million over the 2013-
2017 period, and reduce revenues by $192 million over the 2013-
2022 period. Enacting S. 3326 also would reduce direct spending
by $197 million over the 2013-2022 period. Thus, the net impact
of those effects is an estimated reduction in deficits of $5
million over the 2013-2022 period. Pay-as-you-go procedures
apply because enacting the legislation would affect direct
spending and revenues.
CBO has determined that the nontax provisions of the bill
contain no intergovernmental mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would impose no costs
on state, local, or tribal governments. JCT has determined that
the tax provision of the bill contains no intergovernmental or
private-sector mandates.
CBO has determined that the nontax provisions of S. 3326
would impose private-sector mandates as defined in UMRA by
extending the authorization to collect customs user fees, and
by renewing the ban on all imports from Burma. CBO estimates
that the aggregate cost of those mandates would exceed the
annual threshold established in UMRA for private-sector
mandates ($146 million in 2012, adjusted annually for
inflation).
Estimated Cost to the Federal Government: The estimated
budgetary impact of S. 3326 is shown in the following table.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------------------------------------------
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2017 2013-2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Extension of AGOA LDC Preferences\a\......... -59 -63 -70 0 0 0 0 0 0 0 -192 -192
Rules of Origin Changes for DR-CAFTA......... * * * * * * * * * * * *
Extension of Import Restrictions in the * 0 0 0 0 0 0 0 0 0 * *
Burmese Freedom and Democracy Act of 2003...
Corporate Payments Shift..................... 0 0 0 0 196 -196 0 0 0 0 196 0
----------------------------------------------------------------------------------------------------------
Total Changes in Revenues................ -59 -63 -70 * 196 -196 * * * * 4 -192
CHANGES IN DIRECT SPENDING
Customs User Fees:
Estimated Budget Authority............... 0 0 0 0 0 0 0 0 0 -197 0 -197
Estimated Outlays........................ 0 0 0 0 0 0 0 0 0 -197 0 -197
NET INCREASE OR DECREASE(-) IN THE DEFICIT
Net Change in Deficit........................ 59 63 70 * -196 196 * * * -197 -4 -5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: CBO and the staff of the Joint Committee on Taxation.
Notes: Components may not sum to totals because of rounding.
* indicates amounts that are between -$500,000 and $500,000.
\a\This estimate assumes enactment before October 1, 2012. If enactment were delayed, the estimate would be adjusted to account for the intervening
expiration of the AGOA LDC preference program.
Basis of Estimate: For the purposes of this estimate, CBO
assumes that S. 3326 will be enacted by the start of fiscal
year 2013.
Revenues
S. 3326 would extend the special treatment that certain
lesser-developed sub-Saharan countries receive under AGOA.
Under AGOA, which is scheduled to expire on September 30, 2015,
about 40 African countries receive preferential duty treatment
for apparel goods that are assembled within the country, using
fabric and yarn originating in the United States or the AGOA
region. In addition, through September 30, 2012, countries
designated ``lesser-developed'' within AGOA may export duty-
free to the United States apparel goods that are assembled
within the country regardless of the origin of the fabric or
yarn. Most of the AGOA countries currently have LDC status. The
bill would allow the LDCs to receive such special treatment for
an additional three years, through September 30, 2015, until
the scheduled expiration of the overall AGOA program. CBO
estimates that the extension would result in $192 million in
forgone revenues over the 2013-2022 period, net of income and
payroll tax offsets.
S. 3326 also would include South Sudan in the list of
countries eligible for AGOA preferences. South Sudan became an
independent nation, separate from Sudan, in July 2011. Based on
the negligible amount of customs duties paid on imports from
South Sudan since its independence, and from Sudan prior to
independence, CBO estimates that the inclusion of South Sudan
in the AGOA preference program would have a negligible effect
on revenues over the 2013-2022 period.
The bill also would modify the rules of origin established
in the DR-CAFTA for certain apparel and textile goods. Goods
imported from the DR-CAFTA region are eligible for duty-free
treatment based on the nature and sources of their component
fabrics and yarns. The bill would adjust such eligibility for
goods to prevent the use of some components from outside the
DR-CAFTA region and permit the use of certain others. Based on
information from the Department of Commerce, CBO estimates that
the net revenue effect of these changes would be insignificant
in any year and over the 2013-2022 period.
S. 3326 would extend for one year, through July 26, 2013,
the ban on all imports from Burma that was enacted in the
Burmese Freedom and Democracy Act of 2003. It also would extend
the ban on imports of certain gemstones originating from Burma
that was added by the Tom Lantos Block Burmese Junta's Anti-
Democratic Efforts Act of 2008. The original ban was set to
expire on July 28, 2004, and since then enacted legislation has
renewed it annually, most recently through July 26, 2012. An
executive order implementing the import ban, citing authority
under the Burmese Freedom and Democracy Act of 2003 as well as
other laws, was recently extended into May 2013. CBO estimates
that the revenue effect of extending the import ban for roughly
two months beyond the executive order would be insignificant in
2013 and over the 2013-2022 period.
The bill also would shift payments of corporate estimated
taxes between fiscal years 2017 and 2018. For corporations with
at least $1 billion in assets, the bill would increase the
portion of corporate estimated payments due from July through
September in 2017. JCT estimates that those changes would
increase revenues by $196 million in 2017 and decrease them by
$196 million in 2018.
Direct spending
Under current law, customs user fees will expire after
September 30, 2021. The bill would permit CBP to collect these
fees through October 22, 2021 (for merchandise processing fees)
and through October 29, 2021 (for COBRA fees, which were
established in the Consolidated Omnibus Budget Reconciliation
Act of 1985). CBO estimates that these changes would increase
offsetting receipts (a credit against direct spending) by $197
million in fiscal year 2022.
Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in revenues that are subject to those
pay-as-you-go procedures are shown in the following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS OF S. 3326, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FINANCE ON JULY 18, 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-2017 2012-2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Impact................... 0 59 63 70 0 196 -196 0 0 0 -197 -4 -5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Impact on State, Local, and Tribal Governments:
CBO has determined that the nontax provisions of the bill
contain no intergovernmental mandates as defined in UMRA and
would impose no costs on state, local, or tribal governments.
JCT has determined that the tax provision of the bill contains
no intergovernmental mandates.
Estimated Impact on the Private Sector: CBO has determined
that the nontax provisions of S. 3326 would impose private-
sector mandates as defined in UMRA on entities required to pay
customs user fees and on certain importers. CBO estimates that
the aggregate cost of those mandates would exceed the annual
threshold established in UMRA for private-sector mandates ($146
million in 2012, adjusted annually for inflation.) JCT has
determined that the tax provision of the bill contains no
private-sector mandates.
By extending the authorization for the CBP to collect
customs user fees (merchandise processing fees and COBRA fees)
the bill would impose mandates on entities required to pay
those fees. CBO estimates the cost to private entities would
amount to $197 million paid in fees in 2022.
The bill also would extend for roughly two months the ban
on all imports from Burma (and jewelry that contains gems mined
in Burma) that is scheduled to expire in May 2013. The cost of
the mandate for importers would be the net value of forgone
profits from banned Burmese products. Based on information from
the U.S. International Trade Commission CBO estimates the cost
of the ban for importers would be small.
Estimate prepared by: Federal Costs: Kalyani Parthasarathy
and Mark Grabowicz; Impact on State, Local, and Tribal
Governments: J'nell L. Blanco; Impact on the Private Sector:
Marin Randall.
Estimate approved by: Peter H. Fontaine, Assistant Director
for Budget Analysis; Frank Sammartino, Assistant Director for
Tax Analysis.
III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee states
that the resolution will not significantly regulate any
individuals or businesses, will not affect the personal privacy
of individuals, and will result in no significant additional
paperwork. The following information is provided in accordance
with section 423 of the Unfunded Mandates Reform Act of 1995
(UMRA) (Pub. L. No. 104-04). The Committee has reviewed the
provisions of S. 3326 as approved by the Committee on July 18,
2012. In accordance with the requirement of Pub. L. No. 104-04,
the Committee has determined that the bill contains no
intergovernment mandates, as defined in the UMRA, and would not
affect the budgets of state, local, or tribal governments.
IV. ADDITIONAL VIEWS OF SENATOR TOM A. COBURN
On July 23, 2012, Senator Coburn of Oklahoma objected to
CAL. #459, a unanimous consent agreement to allow the Senate to
approve S. 3326 without floor debate or opportunity for
consideration of amendments. Senator Coburn's objection to Cal.
#459 was based solely on the basis of the offset included in S.
3326, and not due to the underlying polices related to amending
of the African Growth and Opportunity Act (AGOA), technical
changes to the Dominican Republic-Central America-United States
Free Trade Agreement (CAFTA-DR), or the renewal of the Burmese
Freedom and Democracy Act (BFDA).
Senator Coburn previously made his objection to the
proposal known during executive session held on July 18, 2012.
During this executive session, Senator Coburn voiced concern
that the proposal's offset does not pay for costs incurred in
the first three years of the scoring window until 2022, and for
the package's reliance on what he contends is a budget gimmick
intended to circumvent PAYGO. The Senate pay-as-you-go, or
PAYGO, rule generally requires that any legislation projected
to increase direct spending or reduce revenues must also
include equivalent amounts of direct spending cuts, revenue
increases, or a combination of the two, so that the legislation
does not increase the on-budget deficit over a six-year period
and an 11-year period.
To comply with PAYGO, the underlying package relies on what
Senator Coburn contended to be a budget gimmick, a provision
(termed a ``corporate payment shift'') requiring corporations
with assets over $1 billion to be taxed more than they owe in
year 2017, only to have such excess amounts paid refunded in
2018. Senator Coburn contends this administrative burden for
affected corporations serves no purpose other than ensuring
PAYGO compliance since the legislative proposal does not offset
costs of the package until year ten of the scoring window.
During floor debate held on the morning of July 26, 2012,
Senator Baucus confirmed\1\ that Senator Coburn filed an
amendment proposing an alternative offset during the Finance
Committee executive session held on July 18, 2012. The Coburn
amendment filed during executive session proposed paying for
costs of the bill by reducing spending by at least $200 million
annually by eliminating, rescinding, consolidating, or
streamlining government trade programs, tax benefits and
agencies starting Fiscal Year 2013. Senator Coburn noted during
his opening statement of executive session that he would not
offer his alternative pay-for amendment because he was informed
such amendment would be ruled out of order, and noted his
opposition to the package on the basis of the offset.\2\ During
floor debate held on the morning of July 26, 2012, Senator
Baucus confirmed\3\ that he planned to rule the amendment filed
by Senator Coburn during executive session as non-germane.
---------------------------------------------------------------------------
\1\July 26, 2012 Senate floor proceeding, 1:28 mark, http://
www.senate.gov/floor/index.htm, accessed August 8, 2012.
\2\Senate Committee on Finance, July 18, 2012 Executive Session to
consider the Enforcing Orders and Reducing Customs Evasion (ENFORCE)
Act; Citrus, Cotton, and Wool Trust Funds; African Growth and
Opportunity Act (AGOA) Amendments, Dominican Republic-Central America-
United States Free Trade Agreement (CAFTA-DR) Technical Corrections,
Burma Sanctions; and Russia Permanent Normal Trade Relations (PNTR) and
Moldova PNTR, http://www.finance.senate.gov/hearings/hearing/
?id=12437dde095056-a032-5227-cd85d08834ed, 75:00 minute mark, accessed
August 8, 2012.
\3\July 26, 2012 Senate floor proceeding, 1:28 mark, http://
www.senate.gov/floor/index.htm, accessed August 8, 2012.
---------------------------------------------------------------------------
On July 26, 2012, Senator Coburn asked for Unanimous
Consent agreement that the Senate proceed to the immediate
consideration of S. 3326, with an amendment to immediately pass
the BFDA and CAFTA-DR. Senator Coburn asked for Unanimous
Consent to pass BFDA and CAFTA-DR because neither piece of the
underlying package result in costs needing to be offset, so as
to avoid the expiration of BFDA on July 26, 2012, and to allow
time for further negotiations on an alternative pay-for to the
AGOA package prior to its expiration on September 30, 2012, or
for an agreement to be reached resulting in floor time allowing
for a vote on an amendment to provide for an alternative pay-
for. Senator Baucus objected to such Unanimous Consent
agreement.
Senator Coburn also spoke in favor of a Unanimous Consent
agreement subsequently offered on the floor on July 26, 2012,
by Minority Leader McConnell to immediately approve the annual
Burma Sanctions bill prior to its expiration. Senator Baucus
objected to such Unanimous Consent agreement.
On August 2, 2012, pursuant to a unanimous consent
agreement, the Senate voted on a Coburn amendment to S. 3326
that would have substituted a different offset to pay for the
AGOA portion of the bill. The Coburn amendment sought to offset
the bill's $192 million costs in fiscal years (FYs 2012 and
2013) by instructing OMB to produce such savings by
eliminating, consolidating or streamlining federal programs and
agencies with duplicative or overlapping missions related to
trade. The Coburn amendment sought to achieve such savings
through a combination of reduced spending as a result of
streamlining of federal trade agencies and programs, and a
rescission of unobligated FY 2012 funds from trade programs of
the Department of Commerce, Small Business Administration,
Export-Import Bank, Overseas Private Investment Corporation and
the Trade Development Agency. The amendment was not agreed to
by a vote of 40-58.
V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, 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):
THE AFRICAN GROWTH AND OPPORTUNITY ACT
* * * * * * *
SEC. 112. TREATMENT OF CERTAIN TEXTILES AND APPAREL.
* * * * * * *
(c) Lesser Developed Countries.--
(1) Preferential treatment of products through
September 30, [2012] 2015
(A) Products covered.--In addition to the
products described in subsection (b) of this
section the preferential treatment described in
subsection (a) of this section shall apply
through September 30, [2012] 2015, to apparel
articles wholly assembled, or knit-to-shape and
wholly assembled, or both, in one or more
lesser developed beneficiary sub-Saharan
African countries, regardless of the country of
origin of the fabric or the yarn used to make
such articles, in an amount not to exceed the
applicable percentage of the aggregate square
meter equivalents of all apparel articles
imported into the United States in the
preceding 12-month period for which data are
available.
(B) Applicable percentage.--
* * * * * * *
iii. 3.5 percent for the 1-year
period beginning on October 1, 2006,
and each 1-year period thereafter
through September 30, [2012] 2015.
* * * * * * *
SEC. 107. SUB-SAHARAN AFRICA DEFINED.
For purposes of this chapter, the terms ``sub-Saharan
Africa'', ``sub-Saharan African country'', ``country in sub-
Saharan Africa'', and ``countries in sub-Saharan Africa'' refer
to the following or any successor political entities:
* * * * * * *
Republic of South Africa (South Africa).
Republic of South Sudan (South Sudan).
* * * * * * *
SEC. 102. FINDINGS.
Congress finds that--
* * * * * * *
(2) the [48] countries of sub-Saharan Africa form a
region richly endowed with both natural and human
resources;
* * * * * * *
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES
* * * * * * *
General Rules of Interpretation.--
* * * * * * *
29. Dominican Republic-Central America-United States Free
Trade Agreement Implementation Act
* * * * * * *
(m) * * *
* * * * * * *
(viii) * * *
(A) * * *
* * * * * * *
(2) a combination of the fibers and
yarns listed in U.S. note 20 to such
subchapter XXII and one or more fibers
and yarns that originate under the
terms of this note.
The originating fibers and yarns referred to in
subdivision (A)(2) may contain up to 10 percent
by weight of fibers or yarns that do not
undergo an applicable change in tariff
classification set out in subdivision (n) of
this note. [Any elastomeric yarn contained in a
textile good of chapters 50 through 60 of the
tariff schedule must be formed in the territory
of one or more of the parties to the
Agreement.] Any elastomeric yarn (except latex)
contained in the originating yarns referred to
in subdivision (A)(2) must be formed in the
territory of one or more of the parties to the
Agreement.
(B) An apparel good of chapter 61 or 62 of
the tariff schedule and imported under heading
9822.05.01 of the tariff schedule shall be
considered originating if it is cut or knit to
shape, or both, and sewn or otherwise assembled
in the territory of one or more of the parties
to the Agreement, and if the fabric of the
outer shell, [exclusive of collars and cuffs
where applicable] exclusive of collars, cuffs
and ribbed waistbands (only if the ribbed
waistband is present in combination with cuffs
and identical in fabric construction to the
cuffs), is wholly of--
(1) one or more fabrics listed in
U.S. note 20 to subchapter XXII of
chapter 98; or
(2) one or more fabrics or knit to
shape components formed in the
territory of one or more of the parties
to the Agreement from one or more of
the yarns listed in U.S. note 20 to
such subchapter XXII; or
(3) any combination of the fabrics
referred to in subdivision (B)(1), the
fabrics or knit to shape components
referred to in subdivision (B)(2), or
one or more fabrics or knit to shape
components originating under this note.
The originating fabrics referred to in
subdivision (B)(3) may contain up to 10 percent
by weight of fibers or yarns that do not
undergo an applicable change in tariff
classification set out in subdivision (n) of
this note. [Any elastomeric yarn contained in a
fabric referred to in subdivision (B)(1),
(B)(2) or (B)(3) must be formed in the
territory of one or more of the parties to the
Agreement.] Any elastomeric yarn (except latex)
contained in an originating fabric or knit to
shape component referred to in subdivision
(B)(3) must be formed in the territory of one
or more of the parties to the Agreement.
(C) A textile good of chapter 63 or 94 of the
tariff schedule and imported under heading
9822.05.01 of the tariff schedule shall be
considered originating if it is cut or knit to
shape, or both, and sewn or otherwise assembled
in the territory of one or more of the parties
to the Agreement, and if the component that
determines the tariff classification of the
good is wholly of--
(1) one or more fabrics listed in
U.S. note 20 to subchapter XXII of
chapter 98; or
(2) one or more fabrics or knit to
shape components formed in the
territory of one or more of the parties
to the Agreement from one or more of
the yarns listed in U.S. note 20 to
such subchapter XXII; or
(3) any combination of the fabrics
referred to in subdivision (C)(1), the
fabrics or knit to shape components
referred to in subdivision (C)(2) or
one or more fabrics or knit to shape
components originating under this note.
The originating fabrics referred to in
subdivision (C)(3) may contain up to 10 percent
by weight of fibers or yarns that do not
undergo an applicable change in tariff
classification set out in subdivision (n) of
this note. [Any elastomeric yarn contained in a
fabric referred to in subdivision (C)(1),
(C)(2) or (C)(3) must be formed in the
territory of one or more of the parties to the
Agreement.] Any elastomeric yarn (except latex)
contained in an originating fabric or knit to
shape component referred to in subdivision
(C)(3) must be formed in the territory of one
or more of the parties to the Agreement.
* * * * * * *
(n) * * *
* * * * * * *
Chapter 61.
* * * * * * *
Chapter rule 4. Notwithstanding chapter rule 2 to this
chapter, a good of this chapter, other than a good of
subheading 6102.20, tariff item 6102.90.90 (for goods subject
to cotton restraints), 6104.12.00 (for jackets imported as
parts of suits), 6104.13.20, 6104.19.15, 6104.19.80 (for
jackets imported as parts of suits and subject to cotton
restraints or for goods subject to man-made fiber restraints),
6104.22.00 (for garments described in heading 6102 or jackets
and blazers described in heading 6104), 6104.29.20 (for
garments described in heading 6102 or jackets and blazers
described in heading 6104, the foregoing subject to cotton
restraints), subheading 6104.32, tariff item 6104.39.20 (for
goods subject to cotton restraints), 6112.11.00 (for women's or
girls' garments described in headings 6101 or 6102), 6113.00.90
(for coats and jackets of cotton, for women or girls) or
6117.90.90 (for coats and jackets of cotton), containing sewing
thread of heading 5204, [5401 or 5508] 5401, or 5508 or yarn of
heading 5402 used as sewing thread shall be considered
originating only if such sewing thread or yarn is both formed
and finished in the territory of one or more of the parties to
the Agreement.
* * * * * * *
Chapter rule 6: Notwithstanding chapter rules 1, 3, 4 or 5
to this chapter, an apparel good of chapter 61 shall be
considered originating regardless of the origin of any visible
lining fabric described in chapter rule 1 to this chapter,
narrow elastic fabrics as described in chapter rule 3 to this
chapter, sewing thread or yarn of heading 5402 used as sewing
thread described in chapter rule 4 to this chapter or pocket
bag fabric described in chapter rule 5 to this chapter,
provided such material is listed in U.S. note 20 to subchapter
XXII of chapter 98 and the good meets all other applicable
requirements for preferential tariff treatment under this note.
Chapter 62.
* * * * * * *
Chapter rule 3. Notwithstanding chapter rule 2 to this
chapter, a good of this chapter, other than--
(a) a good of headings 6207 through 6208 (for boxers,
pajamas, and [nightwear] sleepwear only),
* * * * * * *
Chapter rule 4. Notwithstanding chapter rule 2, a good of
this chapter, other than--
(a) a good of headings 6207 through 6208 (for boxers,
pajamas, and [nightwear] sleepwear only), subheading 6204.23,
6204.29, 6204.32, 6212.10, tariff item 6202.12.20, 6202.19.90
(for goods subject to cotton restraints), 6202.91.20 (for goods
for women), 6202.92.15, 6202.92.20 (other than padded,
sleeveless jackets without attachments for sleeves),
6202.93.45, 6202.99.90 (for goods subject to cotton
restraints), 6203.39.90 (for goods subject to wool restraints),
6204.12.00 (for jackets imported as parts of suits),
6204.13.20, 6204.19.20, 6204.19.80 (for jackets imported as
parts of suits and subject to cotton restraints, or for goods
subject to man-made fiber restraints), 6204.22.30 (for garments
described in heading 6202, or for jackets and blazers described
in heading 6204), 6204.33.20, 6204.39.80, 6204.42.30 (for
garments for girls, other than of corduroy), 6204.43.40 (for
garments for girls), 6204.44.40 (for garments for girls),
6205.20.20 (for dress shirts for men, with two or more colors
in the warp and/or the filling, each with collar and sleeve
size stated in inches, without dual collar sizing, the
foregoing individually packaged with chipboards, pins, jett
clips, individual polybags and hang tags ready for retail
sale), 6205.30.20 (for dress shirts for men, with two or more
colors in the warp and/or the filling, each with collar and
sleeve size stated in inches, without dual collar sizing, the
foregoing individually packaged with chipboards, pins, jett
clips, individual polybags and hang tags each for retail sale),
6209.20.10, 6210.30.90 (for garments other than of linen),
6210.50.90 (for anoraks), 6211.20.15 (for anoraks (including
ski-jackets), windbreakers, and similar articles (including
padded, sleeveless jackets), for women or girls, of cotton,
imported as parts of ski suits), 6211.20.58 (for goods of
cotton), 6211.41.00 (for jackets and jacket type garments
excluded from heading 6202), 6211.42.00 (for track suits, other
than trousers, or for jackets and jacket-type garments excluded
from heading 6202) or 6217.90.90 (for coats and jackets, of
cotton); or
(b) men's and boys' and women's and girls' suits, trousers,
suit-type jackets and blazers, vests and women's and girls'
skirts of wool fabric, of subheadings 6203.11, 6203.31,
6203.41, 6204.11, 6204.31, 6204.51, 6204.61, 6211.39 or
6211.41, provided that such goods are not made of carded wool
fabric or made from wool yarn having an average fiber diameter
of less than or equal to 18.5 microns,
containing sewing thread of heading 5204, [5401 or 5508] 5401,
or 5508 or yarn of heading 5402 used as sewing thread shall be
considered originating only if such sewing thread or yarn is
both formed and finished in the territory of one or more of the
parties to the Agreement.
Chapter rule 5. Notwithstanding chapter rule 2, a good of
this chapter, other than--
(a) a good of headings 6207 through 6208 (for boxers,
pajamas, and [nightwear] sleepwear only),
* * * * * * *
Chapter rule 6: Notwithstanding chapter rules 1, 3, 4 or 5
to this chapter, an apparel good of chapter 62 shall be
considered originating regardless of the origin of any visible
lining fabric described in chapter rule 1 to this chapter,
narrow elastic fabrics as described in chapter rule 3 to this
chapter, sewing thread or yarn of heading 5402 used as sewing
thread described in chapter rule 4 to this chapter or pocket
bag fabric described in chapter rule 5, provided such material
is listed in U.S. note 20 to subchapter XXII of chapter 98 and
the good meets all other applicable requirements for
preferential tariff treatment under this note.
* * * * * * *
33. [A change to pajamas and nightwear of subheadings
6207.21 or 6207.22, tariff items 6207.91.30 or 6207.92.40 or
subheadings 6208.21 or 6208.22 from any other chapter, provided
that the good is cut or knit to shape, or both, and sewn or
otherwise assembled in the territory of one or more of the
parties to the Agreement.] A change to pajamas and sleepwear of
subheadings 6207.21 or 6207.22, tariff items 6207.91.30 or
6207.92.40, subheadings 6208.21 or 6208.22 or tariff items
6208.91.30, 6208.92.00 or 6208.99.20 from any other chapter,
provided that the good is cut or knit to shape, or both, and
sewn or otherwise assembled in the territory of one or more of
the parties to the Agreement.
* * * * * * *
Chapter 63.
* * * * * * *
Chapter rule 2: Notwithstanding chapter rule 1 to this
chapter, a good of this chapter containing sewing thread of
headings 5204, [5401 or 5508] 5401, or 5508 or yarn of heading
5402 used as sewing thread shall be considered originating only
if such sewing thread or yarn is wholly formed in the territory
of one or more of the parties to the Agreement.
Chapter rule 3: Notwithstanding chapter rule 2 to this
chapter, a good of this chapter shall be considered originating
regardless of the origin of sewing thread or yarn of heading
5402 used as sewing thread described in chapter rule 2 to this
chapter, provided the thread or yarn is listed in U.S. note 20
to subchapter XXII of chapter 98 and the good meets all other
applicable requirements for preferential tariff treatment under
this note.
BURMESE FREEDOM AND DEMOCRACY ACT OF 2003
* * * * * * *
SEC. 9. DURATION OF SANCTIONS.
* * * * * * *
(3) Limitation.--The import restrictions contained in
section 3(a)(1) may be renewed for a maximum of [nine
years] twelve years from the date of the enactment of
this Act.
* * * * * * *
CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985
* * * * * * *
TITLE 19--CUSTOMS DUTIES
CHAPTER 1--COLLECTION DISTRICTS, PORTS, AND OFFICERS
* * * * * * *
SEC. 58C. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) Schedule of Fees.--
* * * * * * *
(j) Effective Dates.--
(1) * * *
(2) * * *
(3)(A) Fees may not be charged under paragraphs (9)
and (10) of subsection (a) of this section after
[August 2, 2021] October 22, 2021.
(B)(i) Subject to clause (ii), Fees may not be
charged under paragraphs (1) through (8) of subsection
(a) of this section after [December 8, 2020] October
29, 2021.
* * * * * * *
[(C)(i) Notwithstanding subparagraph (A), fees may be
charged under paragraphs (9) and (10) of subsection (a)
during the period beginning on August 3, 2021, and
ending on September 30, 2021.]
[(ii) Notwithstanding subparagraph (B)(i), fees may
be charged under paragraphs (1) through (8) of
subsection (a) during the period beginning on December
9, 2020, and ending on August 31, 2021.]
[(D) Notwithstanding subparagraph (B)(i), fees may be
charged under paragraphs (1) through (8) of subsection
(a) during the period beginning on September 1, 2021,
and ending on September 30, 2021.]