[Senate Report 108-316]
[From the U.S. Government Publishing Office]
Calendar No. 630
108th Congress Report
SENATE
2d Session 108-316
======================================================================
UNITED STATES-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION ACT
_______
August 25, 2004.--Ordered to be printed
Filed under authority of the order of the Senate of July 22, 2004
_______
Mr. Grassley, from the Committee on Finance, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 2610]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, to which was referred the bill
(S. 2610) to implement the United States-Australia Free Trade
Agreement, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
CONTENTS
Page
I. Report and Other Committee Material...............................2
A. Report of the Committee on Finance.................... 2
B. Summary of Congressional Consideration of the United
States-Australia Free Trade Agreement................ 2
1. Background........................................ 2
2. Trade Promotion Authority Procedures in General... 2
3. Notification Prior to Negotiations................ 3
4. Notification of Intent To Enter Into an Agreement. 3
5. Development of the Implementing Legislation....... 3
6. Formal Submission of the Agreement and
Implementing Legislation......................... 4
7. Committee and Floor Consideration................. 5
C. Trade Relations With Australia........................ 5
1. United States-Australia Trade and Investment...... 5
2. Tariffs and Trade Agreements...................... 6
3. U.S. International Trade Commission Study......... 7
D. Overview of the United States-Australia Free Trade
Agreement............................................ 8
1. Overview of the Agreement......................... 8
2. Chapter Summaries................................. 8
E. General Description of the Bill To Implement the
United States-Australia Free Trade Agreement......... 27
Title I--Approval of, and General Provisions Relating to, the
Agreement........................................................28
Title II--Customs Provisions.....................................29
Title III--Relief From Imports...................................32
Title IV--Procurement............................................39
F. Vote of the Committee in Reporting the Bill........... 39
II. Budgetary Impact of the Bill.....................................39
III.Regulatory Impact of the Bill and Other Matters..................41
IV. Additional Views.................................................42
V. Changes in Existing Law Made by the Bill, as Reported............51
I. REPORT AND OTHER COMMITTEE MATERIAL
A. Report of the Committee on Finance
The Committee on Finance, to which was referred the bill
(S. 2610) to implement the United States-Australia Free Trade
Agreement, having considered the same, reports favorably
thereon without amendment and recommends that the bill do pass.
B. Summary of Congressional Consideration of the United States-
Australia Free Trade Agreement
1. Background
In an address to a joint meeting of the United States
Congress on June 12, 2002, Australian Prime Minister John
Howard announced a proposal to negotiate a free trade agreement
between Australia and the United States. On June 13, 2002,
Prime Minister Howard met with President George W. Bush at the
White House, where President Bush expressed willingness to
negotiate such an agreement as soon as Congress granted him the
authority. On August 6, 2002, President Bush signed the Trade
Act of 2002 (Pub. L. 107-210), which grants the President the
authority to enter into trade agreements and provides expedited
procedures for consideration of legislation implementing trade
agreements that meet certain objectives providedfor under the
Act. On November 13, 2002, President Bush authorized and directed
Ambassador Robert B. Zoellick, U.S. Trade Representative, to notify the
Congress of the President's intention to enter into negotiations for a
free trade agreement with Australia. In letters dated November 13,
2002, to the Honorable Robert C. Byrd, President Pro Tempore, U.S.
Senate, and to the Honorable J. Dennis Hastert, Speaker, U.S. House of
Representatives, Ambassador Zoellick notified Congress of the
President's intention to negotiate a trade agreement with Australia. On
February 13, 2004, President Bush notified Congress of his intention to
enter into the United States-Australia Free Trade Agreement. U.S. Trade
Representative Robert B. Zoellick and Australian Minister of Trade Mark
Vaile signed the Agreement in Washington, D.C. on May 18, 2004.
2. Trade Promotion Authority Procedures in General
The requirements for Congressional consideration of the
United States-Australia Free Trade Agreement (the Agreement)
under expedited procedures (known as Trade Promotion Authority
(TPA) procedures) are set forth in sections 2103 through 2106
of the Bipartisan Trade Promotion Authority Act of 2002 (the
Act) (19 U.S.C. Sec. Sec. 3803-3806) and section 151 of the
Trade Act of 1974 (19 U.S.C. Sec. 2191).
Section 2103 of the Act authorizes the President, prior to
June 1, 2005 (or prior to June 1, 2007, if trade authority
procedures are extended under section 2103(c) of the Act), to
enter into reciprocal trade agreements with foreign countries
to reduce or eliminate tariff or nontariff barriers and other
trade-distorting measures. The purpose of section 2103
procedures is to provide the means to achieve U.S. negotiating
objectives set forth under section 2102 of the Act in
international trade negotiations.
3. Notification Prior to Negotiations
Under section 2104(a)(1) of the Act, the President must
provide written notice to the Congress at least 90 calendar
days before initiating negotiations. In Presidential Memorandum
of November 13, 2002, President Bush authorized and directed
Ambassador Robert B. Zoellick, U.S. Trade Representative, to
notify the Congress, consistent with section 2104(a)(1) of the
Act, of the President's intention to enter into negotiations
for a free trade agreement with Australia. Section 2104(a)(2)
requires the President, before and after submission of the
notice, to consult regarding the negotiations with the relevant
Committees of Congress and the Congressional Oversight Group
established under section 2107 of the Act. The Administration
engaged in the requisite consultations, including appearances
by Ambassador Zoellick at meetings of the Congressional
Oversight Group on January 7, 2003, April 11, 2003, July 24,
2003, and May 6, 2004.
4. Notification of Intent To Enter Into an Agreement
Under section 2105(a)(1)(A) of the Act, the President is
required, at least 90 days before entering into an agreement,
to notify Congress of his intent to enter into the Agreement.
On February 13, 2004, President George W. Bush notified
Congress of his intention to enter into the United States-
Australia Free Trade Agreement. The Agreement was signed on May
18, 2004.
Section 2105(a)(1)(B) of the Act also requires the
President, within 60 days of signing an agreement, to submit to
Congress a description of changes to existing laws that the
President considers would be required to bring the United
States into compliance with such agreement. On July 6, 2004,
the President transmitted to Congress a description of changes
to existing laws required to comply with the Agreement.
5. Development of the Implementing Legislation
Under TPA procedures, the Congress and the Administration
work together to produce the legislation to implement a free
trade agreement. Draft legislation is developed in close
consultation between the Administration and the Committees with
jurisdiction over the laws that must be enacted or amended to
implement the Agreement. The Committees then hold informal
meetings to consider the draft legislation and make
recommendations to the Administration, if any. The
Administration then finalizes implementing legislation for
formal submission to the Congress and referral to the
Committees of jurisdiction. These procedures are meant to
ensure that the final legislation reflects only those
provisions that are necessary or appropriate to faithfully
implement the agreement.
The Senate Committee on Finance met in open executive
session on June 23, 2004, to informally consider draft
implementing legislation for the Agreement. At that meeting, an
amendment was offered by Senator Conrad to require approval by
the Senate Committee on Finance and the House Ways and Means
Committee before the U.S. Trade Representative could exercise
waiver authority with respect to two beef safeguard mechanisms
provided for in the Agreement and included in the draft
implementing legislation. The amendment was approved by roll
call vote, a quorum being present, 11 Ayes (6 by proxy), 10
Nays (6 by proxy). The Committee meeting recessed without final
consideration of the draft implementing legislation, as
amended. The Chairman reconvened the meeting on June 24, 2004.
On approval of the draft implementing legislation, as amended,
the Committee disapproved the amended draft by roll call vote,
a quorum being present, 7 Ayes (1 by proxy), 14 Nays (none by
proxy). As a result, the Committee did not provide an informal
recommendation of implementing legislation to the
Administration.
6. Formal Submission of the Agreement and Implementing Legislation
When the President formally submits a trade agreement to
Congress under section 2105 of the Act, the President must
include in the submission the final legal text of the
agreement, together with implementing legislation, a statement
of administrative action (describing regulatory and other
changes that are necessary or appropriate to implement the
agreement), a statement setting forth the reasons of the
President regarding how and to what extent theagreement makes
progress in achieving the applicable policies, purposes, priorities,
and objectives set forth in the Act, and a statement setting forth the
reasons of the President regarding how the agreement serves the
interests of U.S. commerce.
The implementing legislation is introduced in both Houses
of Congress on the day it is submitted by the President and is
referred to Committees with jurisdiction over its provisions.
President George W. Bush transmitted the final text of the
United States-Australia Free Trade Agreement, along with
implementing legislation, a Statement of Administrative Action,
and other supporting information, as required under section
2105 of the Trade Act of 2002, to the Congress on July 6, 2004.
The legislation was introduced that same day in both the House
and the Senate.
To qualify for TPA procedures, the implementing bill itself
must contain provisions formally approving the agreement and
the statement of administrative action. Further, the
implementing bill must contain only those provisions necessary
or appropriate to implement the Agreement. The implementing
bill reported here--which approves the United States-Australia
Free Trade Agreement and the Statement of Administrative Action
and contains provisions necessary or appropriate to implement
the Agreement into U.S. law--was referred to the Senate
Committee on Finance.
7. Committee and Floor Consideration
When the requirements of the Act are satisfied,
implementing revenue bills, such as the United States-Australia
Free Trade Agreement Implementation Act (Implementation Act),
are subject to the legislative procedures of section 151 of the
Trade Act of 1974. The following schedule for Congressional
consideration applies under these procedures:
(i) House Committees have up to 45 days in session in which
to report the bill; any Committee which does not do so in that
period will be automatically discharged from further
consideration.
(ii) A vote on final passage by the House must occur on or
before the 15th day in session after the Committees report the
bill or are discharged from further consideration.
(iii) Senate Committees must act within 15 days in session
of receiving the implementing revenue bill from the House or
within 45 days in session of Senate introduction of the
implementing bill, whichever is later, or they will be
discharged automatically.
(iv) The full Senate then must vote within 15 days in
session and without amendment on the implementing bill.
Thus, the Congress has a maximum of 90 days in session to
complete action on the bill, although the time period can be
shortened.
Once the implementing bill has been formally submitted by
the President and introduced, no amendments to the bill are in
order in either House of Congress. Floor debate in each House
is limited to no more than 20 hours, to be equally divided
between those favoring the bill and those opposing the bill.
C. Trade Relations With Australia
1. United States-Australia Trade and Investment
The United States is the top foreign supplier of goods and
services to Australia, and the largest foreign investor in
Australia. According to the World Bank, Australia is the fourth
largest economy in the Asia-Pacific region and the 14th largest
in the world, with a gross national income (GNI) of $430.5
billion and a per capita GNI of $21,650 in 2003. In recent
years, Australia has pursued a policy of market reform and
liberalization, and it has ranked as one of the fastest growing
developed economies.
Australia is the 21st largest trading partner of the United
States with two-way merchandise trade of $18.9 billion in 2003.
Australia is the 13th largest export market for the United
States, accounting for $12.5 billion in merchandise exports in
2003. It is the 30th largest source of merchandise imports,
valued at $6.5 billion in 2003. The United States has had a
merchandise trade surplus with Australia in recent years: $3.9
billion in 2001; $5.9 billion in 2002; and $6 billion in 2003.
Principal U.S. merchandise exports in 2003 included transport
equipment (mainly aircraft and parts), road vehicles,
specialized machinery, industrial machinery, equipment and
parts, and miscellaneous manufactured articles. Principal U.S.
merchandise imports from Australia in 2003 included meat and
meat preparations, beverages, metal ores and scrap, road
vehicles, and petroleum and related products.
Bilateral private services trade between the United States
and Australia was $8.1 billion in 2002, and the United States
has had a surplus in services trade with Australia in recent
years. Australia was the 13th largest market for private U.S.
services exports, valued at $5.2 billion in 2002. The United
States imported private services valued at $2.9 billion from
Australia, yielding a $2.3 billion surplus in cross-border
services trade for U.S. service providers. Principal U.S.
cross-border services exports in 2002 included travel and
transportation services; business, professional and technical
services; and financial (non-insurance) services. Principal
U.S. cross-border services imports in 2002 included travel and
transportation services, and business, professional and
technical services.
The United States is the leading foreign investor in
Australia with total U.S. investments valued at $36.3 billion
in 2002. In 2003, U.S. residents received $6.3 billion in
income from U.S. investments in Australia, while Australian
residents received $2.1 billion in income from investments in
the United States. Australia is the third largest destination
for U.S. investment in the Asia-Pacific region, and the 12th
largest in the world. U.S. investment in Australia is broadly
based, with principal sectors including manufacturing, mining,
finance, and insurance. Australia is the 8th largest foreign
direct investor in the United States with $24.5 billion in U.S.
investments, concentrated in manufacturing, real estate, rental
and leasing, and finance and insurance.
2. Tariffs and Trade Agreements
Australia's strong economic performance over the past
decade has resulted from sound macroeconomic policies, far-
reaching structural reforms and past unilateral trade
liberalization. Australia's gradual reduction of tariffs, prior
to the initiation of negotiations of a free trade agreement
with the United States, has brought 86 percent of its tariffs
to between zero and 5 percent, with more than 99 percent of its
tariffs applied on an ad valorem basis and more than 96 percent
of its tariff lines being bound in the World Trade Organization
(WTO). Australia's average bound normal trade relation/most-
favored-nation (NTR/MFN) tariff rate is 10.5 percent, and its
average applied NTR/MFN tariff is 4.3 percent. The average
applied NTR/MFN tariff for industrial products is 4.7 percent,
with bound rates generally ranging between zero and 55 percent.
The average applied NTR/MFN tariff for agricultural products is
1.2 percent, with bound rates generally ranging between zero
and 29 percent.
Australia is a member of the World Trade Organization
(WTO), the Organization for Economic Cooperation and
Development (OECD), and the Asia-Pacific Economic Cooperation
(APEC) forum. Australia has been a leader in the so-called
Cairns Group, which has pressed for agricultural trade reform
in the WTO. Australia has reached free trade agreements with
Singapore (effective July 2003) and with Thailand (signed
October 2003).
U.S. EXPORTS TO AUSTRALIA, 1998-2003
[In millions of U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Top 15 products, by HTS chapter 1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------------------
84 Machinery................................. 2,883.9 2,952.3 2,879.1 2,657.6 2,431.2 2,498.9
88 Aircraft.................................. 860.9 1,192.2 1,075.8 895.8 2,980.2 2,161.6
87 Vehicles.................................. 1,054.4 873.2 1,060.8 939.6 1,083.2 1,245.3
85 Electrical machinery...................... 901.6 969.1 1,236.2 846.7 907.2 944.9
90 Optical, medical equipment................ 751.4 777.8 779.4 795.2 783.0 845.6
98 Special classifications................... 631.0 611.8 597.2 533.3 552.4 633.4
30 Pharmaceutical products................... 220.1 221.1 279.1 274.3 361.8 432.1
39 Plastics.................................. 375.3 383.2 393.4 354.7 361.9 346.3
29 Organic chemicals......................... 400.9 353.1 367.9 345.1 215.7 250.5
38 Miscellaneous chemicals................... 219.2 207.5 213.1 217.1 223.0 216.6
01 Live animals.............................. 10.4 15.1 7.8 7.0 6.7 202.6
48 Paper and paperboard...................... 214.1 192.2 186.9 172.9 172.7 176.0
49 Printed matter............................ 219.7 202.1 180.7 151.9 156.8 165.7
31 Fertilizers............................... 276.9 220.4 170.9 179.6 150.2 164.5
33 Essential oils............................ 110.2 116.1 117.5 158.3 125.1 161.2
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Subtotal for top 15 products.......... 9,130.2 9,287.5 9,545.8 8,529.1 10,511.2 10,445.3
Subtotal for all other U.S. exports... 2,420.4 2,106.4 2,138.1 1,696.7 1,782.6 2,004.3
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Total U.S. exports to Australia....... 11,550.6 11,393.9 11,683.9 10,225.8 12,293.8 12,449.6
----------------------------------------------------------------------------------------------------------------
Note.--HTS is the Harmonized Tariff Schedule of the United States.
Source: U.S. International Trade Commission Dataweb.
U.S. IMPORTS FROM AUSTRALIA, 1998-2003
[In millions of U.S. dollars]
----------------------------------------------------------------------------------------------------------------
Top 15 products, by HTS chapter 1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------------------
02 Meat...................................... 572.7 621.7 819.5 1,023.5 1,071.4 1,148.8
22 Beverages................................. 151.6 204.7 282.2 346.7 459.2 626.7
98 Special classifications................... 408.5 437.3 427.3 475.3 462.6 591.6
87 Vehicles.................................. 264.6 326.4 422.0 434.2 507.0 368.1
27 Fuels..................................... 266.7 254.7 449.5 367.0 495.9 366.9
84 Machinery................................. 304.6 333.7 331.7 307.2 295.8 327.9
28 Inorganic chemicals....................... 607.0 544.5 600.9 388.7 348.2 322.6
90 Optical, medical equipment................ 160.3 231.3 311.7 337.9 306.9 276.8
26 Ores, slag and ash........................ 144.4 142.5 244.2 230.1 244.0 214.0
61 Knit apparel.............................. 66.2 126.2 168.2 209.1 232.7 198.0
85 Electrical machinery...................... 137.4 142.3 212.8 193.1 170.3 181.2
72 Iron and steel............................ 264.8 198.6 224.0 162.2 167.8 174.3
30 Pharmaceutical products................... 35.0 63.8 58.2 161.7 135.7 143.5
88 Aircraft.................................. 152.2 137.5 104.9 131.6 111.3 111.2
75 Nickel.................................... 92.2 77.7 136.6 121.4 78.5 100.8
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Subtotal for top 15 products............ 3,628.2 3,842.9 4,792.8 4,889.9 5,087.4 5,152.6
Subtotal for all other U.S. imports..... 1,649.5 1,351.1 1,420.3 1,443.2 1,311.0 1,315.5
-----------------------------------------------------------------
Total U.S. imports from Australia....... 5,277.7 5,194.1 6,213.1 6,333.1 6,398.4 6,468.1
----------------------------------------------------------------------------------------------------------------
Note.--HTS is the Harmonized Tariff Schedule of the United States.
Source: U.S. International Trade Commission Dataweb.
3. U.S. International Trade Commission Study
In May 2004, the U.S. International Trade Commission (ITC)
released the results of its investigation (Investigation No.
TA-2104-11) into the probable economic effects of a United
States-Australia Free Trade Agreement. The ITC concluded that
the economy-wide effects of the Agreement's tariff reductions
alone are likely to result in an increase in overall U.S.
welfare in the range of $434.8 million to $639.4 million. The
ITC projected that U.S. exports to Australia would increase by
about $1.5 billion, and U.S. imports from Australia would
increase by about $1.2 billion.
At the sectoral level, the ITC report concluded that some
sectors of the U.S. economy likely would experience increased
import competition from Australia, while other sectors likely
would experience increased export opportunities with respect to
Australia. When the Agreement is fully implemented and the
tariff reductions are fully phased in, the ITC estimated the
effects to be greater for U.S. exports of: coal; oil and gas;
certain processed foods; textile, apparel and leather products;
motor vehicles and parts; ferrous metals; and wood products.
For U.S. imports, the likely effects would be greater for: meat
products; certain processed foods; textiles and apparel;
chemicals, rubber and plastic; and motor vehicles and parts.
D. Overview of the United States-Australia Free Trade Agreement
1. Overview of the Agreement
The United States-Australia Free Trade Agreement
establishes a bilateral free trade area that eliminates tariffs
on most bilateral merchandise trade. The Agreement liberalizes
trade in services, and contains provisions that cover
investment, intellectual property, environment, labor,
government procurement, and competition policy. The Agreement
also contains a mechanism for settling disputes that arise
under the Agreement. Throughout the Agreement there are
important provisions that promote bilateral consultation and
cooperation, procedural and substantive due process,
administrative and judicial review, transparency, and the rule
of law.
Manufactured goods account for 93 percent of U.S. exports
to Australia, and the import duties applicable under 99 percent
of Australia's tariff categories for industrial and consumer
goods will be eliminated on the first day that the Agreement
enters into force. Australian import duties on the remaining
manufactured goods will be phased out over the next 10 years.
Australian import duties on all U.S. agricultural products that
are currently exported to Australia, valued at nearly $700
million in 2003, will be eliminated as soon as the Agreement
enters into force. The Agreement is expected to enter into
force on January 1, 2005.
2. Chapter Summaries
Establishment of a Free Trade Area and Definitions. Chapter
1 provides that the Agreement establishes a free trade area in
accordance with the provisions of the Agreement, and consistent
with Article XXIV of the General Agreement on Tariffs and Trade
1994 (GATT 1994) and Article V of the General Agreement on
Trade in Services (GATS). In Article 1.1, the Parties affirm
their rights and obligations under existing bilateral and
multilateral agreements, including the Marrakesh Agreement
Establishing the World Trade Organization (WTO). The chapter
also includes a number of general definitions that apply
throughout the Agreement, unless otherwise specified.
National Treatment and Market Access for Goods. Chapter 2
sets forth the core obligations under the Agreement with
respect to two-way trade in goods. Article 2.2 provides that
each Party shall accord national treatment to the goods of the
other Party in accordance with Article III of GATT 1994.
Article 2.3 provides that each Party shall progressively
eliminate its customs duties on originating goods of the other
Party in accordance with its schedule provided for in Annex 2-B
(Tariff Elimination) of the Agreement. The term ``originating
good'' is defined in Article 5.1 of the Agreement.
Article 2.5 provides that each Party shall grant duty-free
temporary admission for certain types of goods, regardless of
origin. Such types of goods include goods intended for display
or demonstration, commercial samples and advertising films and
recordings, and goods imported for sports purposes. Article 2.6
provides duty-free treatment for goods that are imported after
having been exported temporarily to the other Party for repair
or alteration, and for goods that are imported temporarily for
repair or alteration. Article 2.12 provides that neither Party
may adopt or maintain a merchandise processing fee on an
originating good.
Annex 2-B to the Agreement contains the general staging
categories for tariff elimination, and a specific, item-by-item
schedule of tariff elimination for each Party. Under the
general staging categories, originating goods will either: (1)
remain duty-free, if they are currently duty-free; (2) become
duty-free on the date that the Agreement enters into force; or
(3) become duty-free after equal annual reductions over periods
of 4 years, 8 years or 10 years. In addition, there are some
special staging categories for certain products that are set
forth in the general notes that accompany each Party's Schedule
in Annex 2-B. For certain U.S. imports from Australia, the
import duties will be reduced over 18 years. U.S. import duties
on sugar are not reduced under the Agreement.
A number of product-specific preferential tariff-rate
quotas (TRQs) for certain sensitive products are included in an
annex to the general notes accompanying the Schedule of the
United States in Annex 2-B. Products covered by preferential
TRQs include beef, cotton, dairy, peanuts,tobacco and wine.
Separately, in Annex 2-A of the Agreement, each Party exempts certain
measures from the national treatment obligation of the Agreement and
the prohibition on import or export restrictions. The United States
exempts its controls on the export of U.S. logs and certain measures
under the Merchant Marine Act of 1920 and the Passenger Vessel Act.
Australia's exemptions include certain agricultural marketing
arrangements and controls on the importation of used motor vehicles.
Annex 2-C to the Agreement sets forth certain agreed
principles with respect to pharmaceuticals and public health
care; these include: the important role played by innovative
pharmaceuticals in delivering high quality health care; the
importance of research and development in the pharmaceutical
industry and of appropriate government support, including
through intellectual property protection and other policies;
the need to promote timely and affordable access to innovative
pharmaceuticals through transparent, expeditious, and
accountable procedures, without impeding a Party's ability to
apply appropriate standards of quality, safety, and efficacy;
and, the need to recognize the value of innovative
pharmaceuticals through the operation of competitive markets or
by adopting or maintaining procedures that appropriately value
the objectively demonstrated therapeutic significance of a
pharmaceutical.
Annex 2-C does not require any changes to how U.S. programs
operate with respect to pharmaceuticals. Pharmaceutical
formulary development and management by federal healthcare
agencies are expressly recognized as aspects of government
procurement that are covered by Chapter 15 of the Agreement
(Government Procurement) and not Annex 2-C. Chapter 15 contains
obligations that the United States has already assumed as a
signatory to the WTO Agreement on Government Procurement.
Annex 2-C establishes a Medicines Working Group to promote
discussion and mutual understanding of issues relating to Annex
2-C, including the importance of pharmaceutical research and
development to continued improvement of healthcare outcomes.
The Parties also commit to advancing the existing dialogue
between the Australian Therapeutic Goods Administration and the
U.S. Food and Drug Administration to make innovative medical
products more quickly available to their nationals. In
addition, each Party commits to allowing pharmaceutical
manufacturers to disseminate truthful and not misleading
information to health professionals and consumers through a
manufacturer's Internet site registered in the territory of the
Party and other Internet sites registered in the territory of
the Party and linked to the manufacturer's site.
Agriculture. Chapter 3 establishes a Committee on
Agriculture in order to provide a forum for: promoting trade in
agricultural goods between the Parties; addressing barriers to
trade in agricultural goods; conducting consultations between
the Parties on agricultural export competition issues; and,
considering any matters arising under Chapter 3. In addition,
Chapter 3 provides for three agricultural safeguard mechanisms.
Section A of Annex 3-A provides for a price-based safeguard
for a specified list of horticulture goods, under which the
United States shall assess a duty on imports of certain
Australian horticulture goods if import prices for specific
shipments fall below specified levels. The rate of additional
duty under the safeguard increases as the difference increases
between the unit import price of a shipment and the trigger
price. The trigger price reflects historic unit import values
for the relevant horticulture good. The assessment of
additional duty under this provision terminates on the date on
which duty-free treatment must be provided to that good under
the Schedule of the United States to Annex 2-B of the
Agreement. Specific horticulture goods listed in Section A of
Annex 3-A of the Agreement include: dried onions and garlic;
processed tomato products; canned asparagus; canned pears,
apricots, peaches, and fruit mixtures; and orange and grape
juices.
Section B of Annex 3-A provides for a transitional
quantity-based beef safeguard, which is available during the
phase-out of over-quota tariffs on certain beef products (i.e.,
years 9 through 18 of the Agreement). The safeguard applies
when the volume of covered imports exceeds 110 percent of the
preferential in-quota volume for the specific year. The added
duty under this safeguard is equal to 75 percent of the
difference between the normal trade relation/most-favored-
nation (NTR/MFN) duty rate and the applied over-quota duty rate
for that year. Any additional safeguard duty remains in effect
until the end of the calendar year. The United States shall
have the discretion not to apply an agricultural safeguard
measure under Section B of Annex 3-A.
Section C of Annex 3-A provides for a permanent price-based
beef safeguard, which is available after the over-quota tariff
has been phased out (i.e., beginning in year 19 of the
Agreement). When the price of beef in the United States falls
below a calculated trigger price, imports of beef products from
Australia in excess of specified quota levels are subject to
additional duties under this safeguard. The safeguard trigger
is based on a 24-month rolling average index price. For each of
the first three-quarters of the year, the safeguard is
triggered when the average index price for any 2 months in a
given quarter falls below 6.5 percent of the 24-month average
index price. The safeguard is also triggered if the average
index beef price falls 6.5 percent below the 24-month rolling
average in the months of September, October, or November. If
the safeguard is triggered during the first three-quarters of
the year, the additional duty is applied in the following
quarter. If the safeguard is triggered in September, October,
or November, the additional duty is applied for the remainder
of the year. The additional duty to be applied is equal to 65
percent of the applied NTR/MFN tariff rate. This price-based
safeguard can only be imposed on imports of Australian beef
that exceed the Agreement's quota amount (i.e., 70,000 metric
tons in the 19th year, an amount that will grow annually at 0.6
percent) plus Australia's country-specific quota established
under the World Trade Organization (currently set at 378,214
metric tons). The United States shall have the discretion not
to apply an agricultural safeguard measure under Section C of
Annex 3-A.
Article 3.6 provides that upon request after year 20 of the
Agreement, the Parties shall consult on, and consider the
possibility of, modifying market access commitments for the
dairy goods listed in each Party's Schedule to Annex 2-B.
Unless both Parties agree, however, nochange will occur in U.S.
commitments on dairy products. The dairy provisions in the Agreement
are not expected to affect the operation of the Commodity Credit
Corporation's dairy price support programs. Under the Agreement, the
United States will create preferential TRQs for certain dairy products
currently covered by TRQs that are maintained in accordance with WTO
rules. The in-quota tariff rates for these preferential TRQs will be
eliminated immediately. However, there will be no change in the normal
trade relation/most-favored nation (NTR/MFN) rate of duty applied to
over-quota imports for these products. Initial increases in imports
from Australia under the preferential TRQs will amount to about 0.17
percent of the value of annual U.S. dairy production. Increased market
access will be provided for such products through the expansion of
quantities eligible for duty-free access under the preferential TRQs.
These TRQs will expand by rates ranging from 3 percent to 6 percent
annually, depending on product, with lower growth (i.e., 3 percent) for
sensitive commodities directly related to the U.S. dairy price support
program and higher growth (i.e., 4 to 6 percent) for other commodities,
some of which are not produced in significant amounts in the United
States. In most cases, tariffs on dairy items not covered by the
preferential TRQs will be phased out over 18 years. Under the rules of
origin provided for in the Agreement, dairy products from other
countries that are transshipped through Australia to the United States
will not benefit from the preferential TRQs. The Government of
Australia will administer export certificates for dairy products; this
will ensure that in-quota preferential TRQ levels are not exceeded and
that any transshipped third-country dairy products do not benefit from
the Agreement.
Textiles and Apparel. Chapter 4 lowers barriers to
bilateral trade in textile and apparel goods, and establishes
the rules that govern such trade under the Agreement. Some U.S.
duties on textiles and apparel articles that qualify for
preferential treatment under the Agreement will be phased out
by 2010, but most duties on such products will be phased out by
2015.
The Agreement contains a specific safeguard mechanism for
textiles and apparel, and specific rules of origin for textile
and apparel goods. The rules of origin include a ``fiber
forward'' rule of origin for yarns and knit fabrics, and a
``yarn forward'' rule of origin for woven fabrics and apparel.
Under a ``fiber forward'' rule, the fiber must come from one of
the Parties in order for the finished product to qualify for
preferential treatment under the Agreement. Under a ``yarn
forward'' rule, the fiber may be imported but the yarn must be
produced in one of the Parties in order for the finished
product to qualify for preferential treatment under the
Agreement. For apparel, the rule of origin applies only to the
component that determines the tariff classification of the
apparel (i.e., the component that determines the ``essential
character'' of the apparel). Visible lining fabrics are subject
to a ``yarn forward'' rule.
The Agreement contains a ``de minimis'' rule, which
provides that a good that does not meet the rule of origin may
nonetheless qualify for preferential treatment under the
Agreement as long as no more than 7 percent of the total weight
of the component that determines the tariff classification is
from a third country. The Agreement provides for consultations,
and the possibility of modifying the rules of origin, to
address the availability of fibers, yarns or fabrics, and
whether any given input is produced in sufficient commercial
quantities in a timely manner. The Agreement preserves the
Berry Amendment for U.S. military procurement, which provides
that textiles and apparel for the military must be made in the
United States from U.S. inputs. No tariff preference levels
(which allow some foreign inputs to be used) are provided for
in the Agreement.
The Agreement contains a provision on customs cooperation.
Article 4.3 provides that the Parties shall cooperate: (1) to
enforce measures affecting trade in textile and apparel goods;
(2) to ensure accuracy of claims of origin; (3) to enforce
measures implementing international agreements affecting trade
in textile and apparel goods; and (4) to prevent circumvention
of such international agreements. Article 4.3 provides for
facility inspections, examinations of records, and other forms
of verification, to determine the accuracy of claims of origin
for textile and apparel goods and to determine that exporters
and producers are complying with applicable laws, regulations,
and procedures regarding trade in textile and apparel goods.
Under Articles 4.3.2 and 4.3.3, the United States may
request that Australia, the United States, or both, conduct a
verification with respect to an Australian exporter or
producer. The object of a verification under Article 4.3.2 is
to determine that a claim of origin for a textile or apparel
good is accurate. The object of a verification under Article
4.3.3 is to determine that an exporter or producer is complying
with applicable customs laws, regulations, and procedures and
that claims of origin for textile or apparel goods exported or
produced by that person are accurate.
Under Article 4.3.7 of the Agreement, the United States may
take appropriate action during a verification, including
suspending the application of preferential treatment to textile
or apparel goods that are subject to verification or that are
exported or produced by a person subject to verification. Under
Article 4.3.8, if within 12 months after requesting a
verification, the United States is unable to make a
determination, or the United States makes a negative
determination, the United States may then deny preferential
tariff treatment to the textile or apparel good that is subject
to verification or is produced or exported by the person
subject to verification.
Rules of Origin. Rules of origin are used to determine
whether a good is an originating good for purposes of the
Agreement. A good must be an originating good in order to
qualify for preferential treatment under the Agreement. Chapter
5 provides the general rules of origin for goods under the
Agreement. Chapter 5 rules of origin apply to textile and
apparel goods, in addition to the rules of origin provided in
Chapter 4, unless otherwise provided.
Under Article 5.1, there are several ways for a good to
qualify as an ``originating good'' and thus be eligible for
preferential treatment under the Agreement. First, under
Article 5.1(a), a good is an originating good if it is ``wholly
obtained or produced entirely in the territory of one or both
of the Parties.'' The concept of ``wholly obtained or
produced'' is defined in Article 5.18.5, and includes, for
example, minerals extracted in the territory of either Party,
live animals born and raised in the territory of either Party,
and vegetables harvested in the territory of either Party.
Second, under Article 5.1(b), a good is an originating good
if it is ``produced entirely in the territory of one or both of
the Parties'' and ``each of the non-originating materials used
in the production of the good undergoes an applicable change in
tariff classification * * *, or the good otherwise satisfies
any applicable regional value content (requirement); or the
good meets any other requirements specified'' in the Agreement.
Non-originating material is defined in Article 5.18.13 as
material that does not qualify for preferential treatment under
the Agreement because it has not satisfied the requirements of
Chapter 5. The specific changes in tariff classification that
are required in order for a good to qualify for preferential
treatment under the Agreement are set forth in Annex 5-A of the
Agreement.
Third, a good is an originating good if the good is
``produced entirely in the territory of one or both Parties
exclusively from originating materials.'' Originating materials
are materials that satisfy a rule of origin and are used in the
production of another good.
Fourth, under Article 5.1(d), a good can qualify as an
originating good if the good otherwise satisfies any of the
specific requirements in Chapter 4 or Chapter 5 of the
Agreement.
Article 5.2 provides for a de minimis exception to the
rules of origin, which applies to goods other than certain
specified goods such as textile and apparel goods. Under the
exception, a good that does not undergo a change in tariff
classification pursuant to Annex 5-A of the Agreement is
nonetheless an originating good if the value of all non-
originating materials used in the production of the good does
not exceed 10 percent of the adjusted value of the good.
Article 5.3 addresses cumulation, while Article 5.4 provides
several rules for determining regional value content, including
a specific rule for automotive products.
The Agreement provides that an importer may make a claim
for preferential treatment based on the importer's knowledge or
on information in the importer's possession. A Party may
require a statement from the importer that includes relevant
cost and manufacturing information, but the statement, which
may be submitted electronically, need not be in a prescribed
format. If preferential treatment under the Agreement is
denied, a written determination must be issued that contains
findings of fact and the legal basis for the denial. The
Parties shall consult and cooperate to ensure the effective and
uniform application of the rules of origin. The Parties shall
also consult regularly to discuss necessary amendments to the
rules of origin, taking into account developments in
technology, production processes, and other related matters.
Customs Administration. Chapter 6 contains standard customs
provisions that provide for transparency, due process, and the
rule of law. These provisions concern: the prompt publication
of laws, regulations, guidelines, procedures, and
administrative rulings on the Internet and in print form; the
designation of one or more official contacts for information
requests; a notice and comment process prior to any regulatory
changes; the opportunity to obtain advance written rulings
regarding tariff classification, valuation, origin and whether
a product qualifies for preferential treatment under the
Agreement; and, an opportunity for administrative and judicial
review of administrative decisions. The Agreement provides for
mutual cooperation in implementing the Agreement and prior
notice of any significant modification of administrative
policy. The Agreement includes provisions calling for the
release of goods within 48 hours of arrival (to the extent
possible), risk assessment procedures to focus inspection
activities on high-risk goods, and expedited procedures for
express shipments (i.e., under normal circumstances, release of
an express shipment no later than 6 hours after the required
information has been submitted).
Sanitary and Phytosanitary Measures. Chapter 7 affirms the
existing rights and obligations of the Parties under the WTO
Agreement on the Application of Sanitary and Phytosanitary
Measures (SPS Agreement). The objectives of the chapter are: to
protect human, animal, or plant life or health in the Parties'
territories; to enhance the Parties' implementation of the SPS
Agreement; to provide a forum for addressing bilateral sanitary
and phytosanitary matters; and, to resolve trade issues,
thereby expanding trade opportunities. The chapter applies to
all SPS measures that may, directly or indirectly, affect trade
between the Parties. Neither Party may have recourse to the
dispute settlement provisions of the Agreement for a matter
arising under Chapter 7.
Article 7.4 of the Agreement establishes a bilateral
Committee on SPS Matters. The Committee's objectives are: to
enhance each Party's implementation of the SPS Agreement; to
protect human, animal or plant life or health; to enhance
consultation and cooperation between the Parties on SPS
matters; and, to facilitate trade between the Parties. In
addition, Article 7.4.9 establishes a Standing Technical
Working Group on Animal and Plant Health Measures. The Working
Group's mission, as set out in Annex 7-A, is to facilitate
``trade between the Parties to the greatest extent possible
while preserving each Party's right to protect animal or plant
life or health in its territory and respecting each Party's
regulatory systems and risk assessment and policy development
processes.''
Technical Barriers to Trade. Chapter 8 applies to all
standards, technical regulations and conformity assessment
procedures of the central level of government that may,
directly or indirectly, affect trade in any product between the
Parties. The Agreement provides for enhanced cooperation and
consultation with respect to technical barriers to trade. In
Article 8.2, the Parties affirm their existing rights and
obligations under the WTO Agreement on Technical Barriers to
Trade (TBT Agreement). Article 8.5 provides that each Party
``shall give positive consideration to accepting as equivalent
technical regulations of the other Party, even if these
regulations differ from its own, provided it is satisfied that
these regulations adequately fulfill the objectives of its
regulations.'' If a Party does not accept a technical
regulation of the other Party as equivalent to its own, it
shall, on request, explain its reasons for not accepting the
regulation. Neither Party may have recourse to the dispute
settlement provisions of the Agreement for a matter arising
under Article 8.5.
Article 8.6 provides that the Parties shall exchange
information on a broad range of mechanisms that may be used to
facilitate the acceptance in a Party's territory of the results
of conformity assessment procedures conducted in the other
Party's territory. Either Party may haverecourse to the dispute
settlement provisions of the Agreement for a matter arising under
Article 8.6. With respect to transparency, Article 8.7 provides that
``each Party shall allow persons of the other Party to participate in
the development of standards, technical regulations, and conformity
assessment procedures on terms no less favorable than those accorded to
its own persons.''
Safeguards. Chapter 9 provides for a transitional bilateral
safeguard mechanism. If, as a result of the reduction or
elimination of a customs duty according to the terms of the
Agreement, an originating good of the other Party is being
imported into the territory of a Party in such increased
quantities, in absolute terms or relative to domestic
production, and under such conditions that the imports of such
originating good constitute a substantial cause of serious
injury, or threat thereof, to a domestic industry producing a
like or directly competitive good, that Party may: (1) suspend
the further reduction of any rate of customs duty on the good
provided for under the Agreement; (2) increase the rate of
customs duty on the good, to a level not to exceed the lesser
of the NTR/MFN rate of duty on the good in effect at the time
the action is taken and the NTR/MFN rate of duty on the good in
effect on the day before the Agreement enters into force; or
(3) in the case of a customs duty applied to a good on a
seasonal basis, increase the rate of customs duty on the good
to a level not to exceed the lesser of the NTR/MFN rate of duty
on the good in effect for the immediately preceding
corresponding season and the NTR/MFN rate of duty on the good
in effect on the day before the Agreement enters into force.
A Party may impose a bilateral safeguard measure only after
conducting an investigation in accordance with Articles 3 and
4.2(a) and (c) of the WTO Agreement on Safeguards, which are
incorporated by reference into the Agreement. A bilateral
safeguard measure can be imposed for an initial period no
longer than 2 years, and for safeguards applied for more than 1
year the Party must progressively liberalize the safeguard
measure at regular intervals. A bilateral safeguard measure may
be extended for up to 2 additional years if the Party
determines that the measure continues to be necessary to
prevent or remedy serious injury and to facilitate adjustment
and that there is evidence that the domestic industry is
adjusting to import competition. A bilateral safeguard measure
may not be imposed on the same good more than once.
Upon termination of a safeguard measure, the rate of duty
on the good shall be no higher than the rate that would have
been in effect 1 year after the safeguard measure was imposed,
as set forth in the Party's Schedule to Annex 2-B to the
Agreement. Beginning on January 1 of the year following the
termination of the safeguard measure, the Party shall either
apply the rate of duty set forth in the Party's Schedule to
Annex 2-B to the Agreement as if the safeguard measure had
never been applied, or the Party shall eliminate the duty
applied in equal annual stages ending on the date set forth in
the Party's Schedule to Annex 2-B to the Agreement for
elimination of the duty on that good.
The Party imposing a bilateral safeguard measure shall
provide mutually agreed-upon trade liberalizing compensation in
the form of concessions having substantially equivalent trade
effects, or equivalent value, compared to the additional duties
resulting from the safeguard measure. If the Parties are unable
to reach an agreement on compensation, the exporting Party may
suspend the application of substantially equivalent concessions
to the other Party. A Party may not impose a bilateral
safeguard measure after the expiration of the 10-year
transition period defined in Article 9.6.7, unless the other
Party consents.
Each Party retains its rights and obligations under Article
XIX of GATT 1994 and the WTO Agreement on Safeguards. The
Agreement does not confer any additional rights or obligations
on the Parties with respect to actions taken in accordance with
the WTO Agreement on Safeguards, except that a Party imposing a
global safeguard measure may exclude imports of an originating
good from the other Party if such imports are not a substantial
cause of serious injury or threat thereof.
Cross-Border Trade in Services. Chapter 10 applies to
measures that affect cross-border trade in services by service
suppliers of the other Party, including, inter alia, measures
that affect the production, distribution, marketing, sale and
delivery of a service, and the purchase or use of, or payment
for, a service. The measures covered by the Agreement include
measures adopted by central, regional, or local governments and
authorities, and non-governmental authorities exercising
governmental powers by delegation. Chapter 10 does not apply to
several service sectors, including: financial services (which
are covered in Chapter 13 of the Agreement) other than
financial services relating to the supply of a service by a
covered investment (as defined in Chapter 1 of the Agreement);
government procurement (which is covered in Chapter 15 of the
Agreement), air services other than aircraft repair and
maintenance and specialty air services; subsidies or grants
provided by a Party; and services supplied in the exercise of
governmental authority. While telecommunications services are
not excluded from the application of Chapter 10, additional
specific commitments relating to telecommunications services
are contained in Chapter 12 of the Agreement.
Chapter 10 further provides that each Party shall accord
national treatment and most-favored-nation treatment to all
service suppliers of the other Party. Article 10.6 excludes
specified non-conforming measures and any measure that a Party
adopts or maintains with respect to specified sectors, sub-
sectors, or activities, from certain of the obligations in
Chapter 10. Existing non-conforming measures that are excluded
from coverage are listed for each Party in their respective
Schedule to Annex I of the Agreement. Non-conforming measures
adopted or maintained with respect to specified sectors, sub-
sectors or activities that are excluded from coverage are
listed for each Party in their respective Schedule to Annex II
of the Agreement. Any existing non-conforming measure
maintained by a Party at a local level of government is
similarly excluded from coverage under Article 10.6.
Except for measures, sectors, sub-sectors, and activities
listed on a Party's Schedules to Annex I or Annex II of the
Agreement, neither Party may impose limitations on: the number
of service suppliers; the total value of service transactions
or assets; the total number of service operations or the total
quantity of services output; or the total number of natural
persons that may be employed in a particular service sector or
that a service supplier may employ; nor may eitherParty
restrict or require a specific type of legal entity or joint venture
through which a service supplier may supply a service. Similarly,
unless a measure is listed on a Party's Schedules to Annex I or Annex
II of the Agreement, ``neither Party may require a service supplier of
the other Party to establish or maintain a representative office or any
form of enterprise, or to be resident, in its territory as a condition
for the cross-border supply of a service.''
The Agreement provides for services liberalization beyond
Australia's current commitments under the WTO General Agreement
on Trade in Services (GATS). The Agreement will provide
increased market access for U.S. service providers in areas
such as advertising, asset management, audio/visual, computer
and related services, education and training, energy, express
delivery, professional services, and tourism.
Investment. Chapter 11 applies to measures adopted or
maintained by a Party relating to investors of the other Party
and covered investments. Investment is defined to mean every
asset that an investor owns or controls, directly or
indirectly, that has the characteristics of an investment,
including such characteristics as the commitment of capital or
other resources, the expectation of gain or profit, or the
assumption of risk. Forms that an investment may take include,
inter alia: an enterprise; shares, stock, and other forms of
equity participation in an enterprise; bonds, debentures, other
debt instruments, and loans; futures, options, and other
derivatives; intellectual property rights; licenses, permits,
and similar rights conferred pursuant to domestic law; and
other tangible or intangible property and related property
rights, such as leases, mortgages, liens, and pledges.
Each Party shall accord national treatment and most-
favored-nation treatment to investors of the other Party and to
covered investments with respect to the establishment,
acquisition, expansion, management, conduct, operation, and
sale or other disposition of investments. Each party shall
permit all transfers relating to a covered investment to be
made freely and without delay into or out of its territory.
Such transfers include, inter alia: contributions to capital,
including the initial contribution; profits, dividends, capital
gains, and proceeds from the sale or liquidation of some or all
of the covered investment; interest, royalty payments,
management fees, and technical assistance and other fees;
payments made under a contract, including a loan agreement; and
payments arising out of a dispute. Neither Party may impose or
enforce any performance requirement in connection with the
establishment, acquisition, expansion, management, conduct,
operation, or sale or other disposition of an investment of an
investor, including, inter alia: requiring an investment to
export a given level or percentage of goods or services;
requiring an investment to achieve a given level or percentage
of domestic content; or requiring an investment to transfer a
particular technology or other proprietary knowledge to a
person in the Party's territory.
Article 11.13 excludes specified non-conforming measures
and any measure that a Party adopts or maintains with respect
to specified sectors, sub-sectors, or activities, from certain
of the obligations in Chapter 11. Existing non-conforming
measures that are excluded from coverage are listed for each
Party in their respective Schedule to Annex I of the Agreement.
Non-conforming measures adopted or maintained with respect to
specified sectors, sub-sectors or activities that are excluded
from coverage are listed for each Party in their respective
Schedule to Annex II of the Agreement. Any existing non-
conforming measure maintained by a Party at a local level of
government is similarly excluded from coverage under Article
11.13.
Current Australian law limits foreign investments in
certain sectors, and subjects other proposed foreign
investments to review if the value of the total assets involved
in the investment exceeds $A50 million. Under Annex I of the
Agreement, Australia will retain its foreign investment
screening regime, but will increase the threshold for review to
$A800 million for U.S. investors in most existing Australian
businesses. The Agreement exempts U.S. investment in new
business ventures in Australia from screening altogether. The
Agreement does not provide a mechanism whereby an investor of a
Party may submit an investment claim involving the other Party
to arbitration. The Agreement does provide that, if a Party
considers that there has been a change of circumstances
affecting the settlement of investment disputes, the Party may
request consultations with a view toward establishing
appropriate investor-state arbitration procedures.
Telecommunications. Chapter 12 of the Agreement applies to
measures affecting trade in telecommunication services. In
general, Chapter 12 does not apply to any measure relating to
broadcast or cable distribution of radio or television
programming. Article 12.25 defines the term ``public
telecommunications service'' as any telecommunications service
that a Party requires, explicitly or in effect, to be offered
to the public generally. Such services may include, inter alia,
telephone and data transmission typically involving customer-
supplied information between two or more points without any
end-to-end change in the form or content of the customer's
information. The United States does not classify an
``information service'' as a public telecommunications service;
accordingly, ``information services'' are not considered public
communications services for purposes of the Agreement.\1\
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\1\ The term ``information service'' is defined at 47 U.S.C.
Sec. 153(2) to mean the offering of a capability for generating,
acquiring, storing, transforming, processing, retrieving, utilizing, or
making available information via telecommunications, including
electronic publishing, but not to include any use of any such
capability for the management, control, or operation of a
telecommunications system or the management of a telecommunications
service.
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Article 12.2 stipulates that each Party shall ensure that
enterprises of the other Party have access to and use of any
public telecommunications service, including leased circuits,
offered in its territory or across its borders, on reasonable
and non-discriminatory terms and conditions. Each Party shall
also ensure that enterprises of the other Party may use public
telecommunications services for the movement of information in
its territory or across its borders and for access to
information contained in databases or otherwise stored in
machine-readable form in the territory of either Party or any
WTO Member. Appropriate measures shall be maintained by each
Party to prevent suppliers that, alone or together, are a major
supplier, from engaging in anti-competitive practices.
Section C of Chapter 12 details additional obligations
relating to major suppliers of public telecommunication
services. A major supplier is defined as being a supplier of a
public telecommunications service that has the ability to
materially affect the terms of participation in the relevant
market (with respect to price and supply) as a result of
control over essential facilities or use of its position in the
market. Major suppliers must accord suppliers of public
telecommunications services of the other Party treatment no
less favorable than such major suppliers accord in like
circumstances to their subsidiaries, their affiliates, or non-
affiliated service suppliers, regarding the availability,
provisioning, rates, or quality of like public
telecommunications services, as well as the availability of
technical interfaces necessary for interconnection. Additional
provisions call for major suppliers to provide, on a reasonable
and non-discriminatory basis: interconnection for the
facilities and equipment of suppliers of public
telecommunications services of the other Party; provisioning
and pricing of leased circuit services for suppliers of the
other Party; physical co-location of equipment necessary for
interconnection for suppliers of the other Party; and access to
rights-of-way for suppliers of the other Party. Significantly,
neither Party may prevent suppliers of public
telecommunications services from choosing the technologies that
they wish to use to supply their services, including packet-
based services and commercial mobile wireless services, subject
to requirements necessary to satisfy legitimate public policy
interests.
Financial Services. Chapter 13 applies to measures adopted
or maintained by a Party relating to: financial institutions of
the other Party; investors and investments of such investors in
financial institutions within the Party's territory; and cross-
border trade in financial services. Financial services are
defined to include any service of a financial nature, including
insurance and insurance-related services, banking and other
financial services, as well as services incidental or auxiliary
to a service of a financial nature. The provisions of Chapter
10 (Cross-Border Trade in Services) and Chapter 11 (Investment)
apply to financial services only to the extent that such
provisions are incorporated into Chapter 13.
The Agreement provides that each Party shall accord
national treatment to investors and financial institutions of
the other Party, as well as to investments of investors of the
other Party in financial institutions, with respect to the
establishment, acquisition, expansion, management, conduct,
operation, and sale or other disposition of financial
institutions and investments. It also provides that each Party
shall accord most-favored-nation treatment to investors of the
other Party, financial institutions of the other Party,
investments of investors in financial institutions, and cross-
border financial service suppliers of the other Party.
Article 13.9 excludes specified non-conforming measures and
any measure that a Party adopts or maintains with respect to
specified sectors, sub-sectors, or activities, from certain of
the obligations in Chapter 13. Existing non-conforming measures
that are excluded from coverage are listed for each Party in
Section A of their respective Schedule to Annex III of the
Agreement. Non-conforming measures approved or maintained with
respect to specified sectors, sub-sectors, or activities that
are excluded from coverage are listed for each Party in Section
B of their respective Schedule to Annex III of the Agreement.
Any existing non-conforming measure maintained by a Party at a
local level of government is similarly excluded from coverage
under Article 13.9. To the extent any non-conforming measure
listed on a Party's Schedules to Annex I or Annex II of the
Agreement is also covered by Chapter 13, such measure is also
excluded from coverage under Article 13.9.
Except for measures, sectors, sub-sectors, and activities
listed in Section A or Section B of a Party's Schedule to Annex
III of the Agreement, a Party shall not impose limitations on,
inter alia: the number of financial institutions; the total
value of financial service transactions or assets; the total
number of financial service operations or the total quantity of
financial services output; or, the total number of natural
persons that may be employed in a particular financial service
sector. Similarly, a Party shall not restrict or require
specific types of legal entity or joint venture through which a
financial institution may supply a service.
Each Party shall permit, under terms and conditions that
accord national treatment, cross-border financial service
suppliers of the other Party to supply the services specified
in Annex 13-A of the Agreement. With respect to the cross-
border supply of insurance and insurance-related services,
Australia listed a number of sectors under Annex 13-A,
including, inter alia: maritime shipping and commercial
aviation; goods in international transit; and reinsurance. With
respect to the cross-border supply of banking and other
financial services (excluding insurance), Australia listed a
number of sectors under Annex 13-A, including, inter alia: the
provision and transfer of financial information and financial
data processing.
Competition-Related Matters. Chapter 14 deals with
anticompetitive business conduct and competition law. The
Agreement provides that each Party shall adopt or maintain
measures to proscribe anticompetitive business conduct, and
shall maintain an authority or authorities to enforce its
national competition laws. Each Party shall ensure that any
designated privately-owned monopoly and any designated
government monopoly: acts in a manner that is not inconsistent
with the Party's obligations under the Agreement; acts solely
in accordance with commercial considerations in its purchase or
sale of the monopoly good or service in the relevant market;
provides non-discriminatory treatment to covered investments,
to goods of the other Party, and to service suppliers of the
other Party in its purchase or sale of the monopoly good or
service in the relevant market; and does not use its monopoly
position to engage in anticompetitive practices in a non-
monopolized market in its territory. Similarly, the Agreement
provides that state enterprises should not operate in a manner
that creates obstacles to trade and investment. The Parties
shall cooperate in the enforcement of competition laws and
policy, including through mutual assistance, notification,
consultation, and exchange of information. In addition, the
Parties shall cooperate to promote policies related to matters
covered by Chapter 14 that foster free trade and investment and
competitive markets.
Government Procurement. Australia is not a party to the WTO
Agreement on Government Procurement. Thus, by including strong
provisions on government procurement, the Agreement
significantly opens Australia's government procurement market
to U.S. suppliers of goods and services. Chapter 15 applies to
``covered procurement,'' which is defined as theprocurement of
goods and services by any contractual means, above a specified
threshold in value, by a specified procuring entity, and not otherwise
excluded. Each Party and its procuring entities shall accord national
treatment to the goods and services of the other Party and to the
suppliers of the other Party offering goods and services. A procuring
entity may not discriminate against a locally established supplier
based upon that supplier's degree of foreign ownership or based upon
the fact that goods or services offered by that supplier are goods or
services of the other Party. The Agreement prohibits the use of offsets
in any stage of a covered procurement. Offsets are defined as any
conditions or undertakings that require use of domestic content,
domestic suppliers, the licensing of technology, technology transfer,
investment, counter-trade, or similar actions to encourage local
development or to improve a Party's balance-of-payments accounts.
The Agreement requires each Party to promptly publish all
laws, regulations, procedures and policy guidelines, as well as
judicial decisions and administrative rulings of general
application, related to covered procurement. Each Party shall
ensure that suppliers may challenge and appeal procurement
decisions before an impartial body. Each Party shall also
ensure that criminal or administrative penalties exist to
sanction bribery.
Electronic Commerce. In Chapter 16 the Parties acknowledge
the value of electronic commerce, the importance of avoiding
barriers to its use and development, and the applicability of
WTO rules to measures affecting electronic commerce. Neither
Party may impose customs duties, fees, or other charges on, or
in connection with, the importation or exportation of digital
products. Digital products are defined as the digitally encoded
form of computer programs, text, video, images, sound
recordings, and other products, regardless of whether they are
fixed on a carrier medium or transmitted electronically.
Digital products must receive national treatment and most-
favored-nation treatment under the Agreement, except with
respect to: a Party's non-conforming measures that are
identified in accordance with Articles 10.6, 11.13, or 13.9;
subsidies or grants that a Party provides to a service or
service supplier; services supplied in the exercise of
governmental authority; and, except to the extent that the
national treatment and most-favored nation obligations in
Chapter 16 are inconsistent with Chapter 17 of the Agreement.
Intellectual Property Rights. Chapter 17 governs the
protection of intellectual property rights, including, inter
alia, patents, copyrights, and trademarks. The Agreement builds
on the common standards that are already codified in numerous
international agreements, including the WTO Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS).
Importantly, the provisions in the Agreement reflect the
significant technological and commercial developments that have
occurred since TRIPS was negotiated, particularly with respect
to the new and rapidly-evolving digital environment in which
music, videos, software and text can be readily copied and
transmitted over the Internet.
Article 17.1 provides that each Party shall have ratified
or acceded to a number of international agreements by the time
the Agreement enters into force, including the World
Intellectual Property Organization (WIPO) Copyright Treaty
(1996) and the WIPO Performances and Phonograms Treaty (1996),
which provide the essential legal framework for digital
products, e-commerce, and the transmission of protected
material over the Internet. The United States and Australia
have each ratified or acceded to each of the agreements
identified in Article 17.1.2. With respect to Article 17.1.4,
the United States has acceded to the two WIPO treaties, while
Australia has not. Article 17.1.5 provides that each Party
shall make its best efforts to comply with the provisions of
the Patent Law Treaty (2000) and the Hague Agreement Concerning
the International Registration of Industrial Designs (1999),
subject to the enactment of laws necessary to apply those
provisions in its territory. Neither the United States nor
Australia has yet completed its respective process for
ratifying those two international agreements.
The Agreement provides that each Party shall make available
to right holders civil judicial procedures concerning the
enforcement of any intellectual property right, and that
judicial authorities shall have the authority to order, inter
alia, the infringer to pay the right holder damages adequate to
compensate for the injury the right holder has suffered as a
result of the infringement. The Agreement further provides that
judicial authorities shall have the authority to order the
seizure of suspected infringing goods and any related materials
and implements.
Each Party shall provide that in civil judicial
proceedings, at the right holder's request, goods that have
been found to be pirated or counterfeit shall be destroyed,
except in exceptional circumstances. In addition, judicial
authorities shall have the authority to order that materials
and implements that were used to manufacture the pirated or
counterfeit goods be destroyed without compensation. Judicial
authorities shall also have the authority to order the
infringer to disclose information about other persons involved
in any aspect of the infringement and regarding the means of
production or distribution. Each Party shall further provide
that its judicial authorities have the authority to fine or
imprison a party to a litigation who fails to abide by valid
orders issued by such authorities, and to impose sanctions on
parties to litigation, their counsel, experts, or other persons
who violate a judicial order for the protection of confidential
business information produced or exchanged in a judicial
proceeding.
In addition to civil proceedings, the Agreement provides
that each Party shall provide for criminal procedures and
penalties to be applied at least in cases of willful trademark
counterfeiting or copyright piracy on a commercial scale. In
such cases, each Party shall provide penalties that include
imprisonment as well as monetary fines sufficient to provide a
deterrent to future infringements, consistent with a policy of
removing the monetary incentive to the infringer. Judicial
authorities shall have the authority to order the seizure,
forfeiture, and destruction of counterfeit goods and the
materials and equipment used to produce counterfeit goods. Each
Party shall provide that its authorities may self-initiate
criminal legal action without the need for a formal complaint
from a private party or right holder. Similarly, each Party
shall provide that its customs authorities may self-initiate
border measures against imported merchandise suspected of
infringing an intellectual property right, without the need for
a specific formal complaint.
Labor. In Chapter 18 of the Agreement, the Parties reaffirm
their obligations as members of the International Labor
Organization (ILO) and their commitments under the ILO
Declaration on Fundamental Principles and Rights at Work and
its Follow-up (1998) (ILO Declaration). Under the Agreement,
each Party must strive to ensure that such labor principles and
the internationally recognized labor principles and rights set
forth in article 18.7 of the Agreement are recognized and
protected by its domestic law. Article 18.7 defines
``internationally recognized labor principles and rights'' to
mean: ``the right of association; the right to organize and
bargain collectively; a prohibition on the use of any form of
forced or compulsory labor; labor protections for children and
young people, including a minimum age for the employment of
children and the prohibition and elimination of the worst forms
of child labor; and acceptable conditions of work with respect
to minimum wages, hours of work, and occupational safety and
health.'' The Agreement recognizes the right of each Party to
establish its own domestic labor standards, and to adopt or
modify its domestic labor laws.
Under the Agreement, ``a Party shall not fail to
effectively enforce its labor laws, through a sustained or
recurring course of action or inaction, in a manner affecting
trade between the Parties.'' The Agreement recognizes that each
Party retains the right to exercise discretion with respect to
investigatory, prosecutorial, regulatory, and compliance
matters. Also, each Party recognizes that it is inappropriate
to encourage trade or investment by weakening or reducing the
protections afforded in domestic labor laws. Accordingly, each
Party shall strive to ensure that it does not waive or
otherwise derogate from, or offer to waive or derogate from,
such laws in a manner that weakens or reduces adherence to
internationally recognized labor principles and rights. Each
Party shall ensure that interested persons have access to
administrative, quasi-judicial, judicial, or labor tribunals
for the enforcement of its domestic labor laws, and that such
proceedings be fair, equitable, and transparent.
Article 18.4 provides that the Joint Committee (established
under Chapter 21 of the Agreement to supervise the overall
implementation of the Agreement) shall consider matters related
to the operation of the labor provisions of Chapter 18, and may
establish a Subcommittee on Labor Affairs to meet and discuss
the operation of Chapter 18. The Agreement also establishes a
consultative mechanism whereby the Parties may cooperate on
labor matters and explore ways to further advance labor
standards on a bilateral, regional and multilateral basis. In
addition, the Agreement provides for consultations on any
matter arising under Chapter 18 of the Agreement. If bilateral
consultations do not resolve the matter, then the Subcommittee
on Labor Affairs shall be convened to endeavor to resolve the
matter. If a Party considers that the other Party is not
effectively enforcing its domestic labor laws, through a
sustained or recurring course of action or inaction, in a
manner that affects trade between the Parties, then that Party
may initiate dispute settlement procedures under Chapter 21 of
the Agreement.
If pursuant to the dispute settlement procedures of Chapter
21, a panel determines that a Party has not conformed with its
obligations to effectively enforce its domestic labor laws, and
the Parties are unable to agree on a resolution, or there is an
agreed resolution but the complaining Party considers that the
other Party has failed to observe the terms of that agreement,
then the complaining Party may suspend the application to the
other Party of benefits of equivalent effect. The Party
complained against may choose to pay an annual monetary
assessment in lieu of the suspension of benefits. If the Party
complained against fails to pay the monetary assessment, the
complaining Party may then suspend the application to the other
Party of benefits of equivalent effect.
Environment. Chapter 19 of the Agreement provides that each
Party shall ensure that its domestic laws provide for and
encourage high levels of environmental protection, while
recognizing the right of each Party to establish its own levels
of environmental protection and to adopt or modify its domestic
environmental laws and policies accordingly. Article 19.9
defines ``environmental law'' to mean any statute or regulation
of a Party, the primary purpose of which is the protection of
the environment, or the prevention of a danger to human,
animal, or plant life or health, through: the prevention,
abatement, or control of the release of pollutants or
environmental contaminants; the control of environmentally
hazardous or toxic chemicals, substances, materials, and
wastes; or, the protection or conservation of wild flora or
fauna, including endangered species, their habitat, and
specially-protected natural areas.
Under the Agreement, ``a Party shall not fail to
effectively enforce its environmental laws, through a sustained
or recurring course of action or inaction, in a manner
affecting trade between the Parties.'' The Agreement recognizes
that ``each Party retains the right to exercise discretion with
respect to investigatory, prosecutorial, regulatory, and
compliance matters.'' Also, each Party recognizes that it is
inappropriate to encourage trade or investment by weakening or
reducing the protections afforded in their domestic
environmental laws. Accordingly, each Party shall strive to
ensure that it does not waive or otherwise derogate from, or
offer to waive or derogate from, such laws in a manner that
weakens or reduces the protections afforded in those laws as an
encouragement for trade with the other Party. Each Party shall
ensure that interested persons have access to judicial, quasi-
judicial, or administrative proceedings for the enforcement of
its domestic environmental laws, and that such proceedings are
fair, equitable, and transparent.
Article 19.5 provides that the Joint Committee (established
under Chapter 21 of the Agreement to supervise the overall
implementation of the Agreement) shall consider matters related
to the operation of the environmental provisions of Chapter 19,
and may establish a Subcommittee on Environmental Affairs to
meet and discuss the operation of the Chapter. In the
Agreement, the Parties ``recognize the importance of
strengthening capacity to protect the environment and to
promote sustainable development in concert with strengthening
bilateral trade and investment relations.'' The Parties
acknowledge the importance of ongoing joint bilateral,
regional, and multilateral environmental activities, and agree
to negotiate a United States-Australia Joint Statement on
Environmental Cooperation to explore ways to support these
ongoing activities.
In addition, the Agreement provides for consultations on
any matter arising under Chapter 19 of the Agreement. If
bilateral consultations do not resolve the matter, then a
Subcommittee on Environmental Affairs shall be convened under
Chapter 21 to endeavor to resolve the matter.If a Party
considers that the other Party is not effectively enforcing its
domestic labor laws, through a sustained or recurring course of action
or inaction, in a manner that affects trade between the Parties, then
that Party may initiate dispute settlement procedures under Chapter 21
of the Agreement.
If, pursuant to the dispute settlement procedures of
Chapter 21, a panel determines that a Party has not conformed
with its obligations to effectively enforce its domestic
environmental laws, and the Parties are unable to agree on a
resolution, or there is an agreed resolution but the
complaining Party considers that the other Party has failed to
observe the terms of that agreement, then the complaining Party
may suspend the application to the other Party of benefits of
equivalent effect. The Party complained against may choose to
pay an annual monetary assessment in lieu of the suspension of
benefits. If the Party complained against fails to pay the
monetary assessment, the complaining Party may then suspend the
application to the other Party of benefits of equivalent
effect.
Transparency. Chapter 20 provides that each Party shall
ensure that its laws, regulations, procedures, and
administrative rulings of general application regarding any
matter covered by the Agreement are promptly published or
otherwise made available so as to enable interested persons and
the other Party to become acquainted with them. To the extent
possible, each Party shall publish in advance any such laws,
regulations, procedures, and administrative rulings that it
proposes to adopt, and provide interested persons and the other
Party a reasonable opportunity to comment on such proposed
measures. To the maximum extent possible, each Party shall
notify the other Party of any proposed or actual measure that
might materially affect the operation of the Agreement, and on
request of the other Party, a Party shall promptly provide
information and respond to questions pertaining to any actual
or proposed measure that the other Party considers might affect
the operation of the Agreement. Wherever possible, each Party
shall ensure that persons of the other Party directly affected
by a proceeding are provided reasonable notice when a
proceeding is initiated, and afforded a reasonable opportunity
to present facts and arguments in support of their positions
prior to any final administrative action. Moreover, each Party
shall maintain impartial and independent judicial, quasi-
judicial, or administrative tribunals or procedures to promptly
review and, where warranted, correct final administrative
actions regarding matters covered by the Agreement.
Institutional Arrangements and Dispute Settlement. Chapter
21 establishes a Joint Committee to supervise the
implementation of the Agreement, as well as a dispute
settlement mechanism to address disputes between the Parties.
The responsibilities of the Joint Committee include, inter
alia: to review the general functioning of the Agreement; to
facilitate the avoidance and settlement of disputes arising
under the Agreement; to consider and adopt any amendment to the
Agreement, subject to the completion of necessary domestic
legal procedures by each Party; to issue interpretations of the
Agreement, as appropriate; and to take such other action as the
Parties may agree.
The dispute settlement provisions apply with respect to the
avoidance or settlement of all disputes over the consistency of
a measure with the Agreement or the fulfillment of a Party's
obligation under the Agreement, unless otherwise provided in
the Agreement. Article 21.5 provides that either Party may
request consultations with respect to any matter under the
Agreement. If consultations fail to resolve the matter within
60 days (or 20 days if the matter concerns perishable goods),
then either Party may refer the matter to the Joint Committee
for resolution. If the Joint Committee is unable to resolve the
matter within 60 days (or 30 days if the matter concerns
perishable goods), then the complaining Party may refer the
matter to a dispute settlement panel. If a dispute settlement
panel issues a report finding that a Party has not conformed
with its obligations or has nullified or impaired a benefit to
the other Party under the Agreement, the Parties shall try to
agree on a resolution of the dispute. Whenever possible, the
resolution shall be to eliminate the non-conformity or the
nullification or impairment; however, if the parties are unable
to agree on such elimination, resolution of the dispute may
include mutually acceptable compensation, the suspension of
benefits of equivalent effect, or an annual monetary
assessment.
General Provisions and Exceptions. For the purposes of
Chapters 2 through 8 (i.e., National Treatment and Market
Access for Goods, Agriculture, Textiles and Apparel, Rules of
Origin, Customs Administration, Sanitary and Phytosanitary
Measures, and Technical Barriers to Trade), the Agreement
incorporates by reference the general exceptions contained in
Article XX of GATT 1994 and its interpretive notes. The Parties
understand that the measures referred to in Article XX(b)
include environmental measures necessary to protect human,
animal, or plant life or health, and that Article XX(g) applies
to measures relating to the conservation of living and non-
living exhaustible natural resources.
For the purposes of Chapters 10, 12, and 16 (i.e., Cross-
Border Trade in Services, Telecommunications, and Electronic
Commerce), the Agreement incorporates by reference the general
exceptions contained in GATS Article XIV, including its
footnotes. The Parties understand that the measures referred to
in Article XIV(b) include environmental measures necessary to
protect human, animal, or plant life or health. The Agreement
also includes reservations regarding: essential security
interests; taxation; and disclosure of confidential
information. The Parties also commit to cooperate in seeking to
eliminate bribery and corruption and to promote transparency in
international trade.
Final Provisions. The Agreement provides for the accession
of third countries to the Agreement, an amendment process, and
entry into force and termination of the Agreement. Article 23.4
provides that the Agreement will enter into force 60 days after
the United States and Australia exchange written notifications
certifying that they have completed their respective necessary
internal requirements (or on such other date as the Parties may
agree). The exchange of notifications is a necessary
precondition for the Agreement's entry into force. The
Agreement's entry into force is thus conditioned on a
determination by the President that Australia has taken
measures necessary to comply with those of its obligations that
are to take effect at the time the Agreement enters into force.
A Party may terminate the Agreement by written notification to
the other Party. Such termination shall take effect 6 months
after the dateof the notification.
E. General Description of the Bill To Implement the United States-
Australia Free Trade Agreement
Sec. 1. Short Title; Table of Contents
This section provides that the short title of the
legislation implementing the United States-Australia Free Trade
Agreement (the Agreement) is the ``United States-Australia Free
Trade Agreement Implementation Act.'' Section 1 also provides
the table of contents for the implementing legislation.
Sec. 2. Purposes
This section provides that the purposes of the implementing
legislation are: to approve and implement the Agreement; to
strengthen and develop economic relations between the United
States and Australia; to establish free trade between the
United States and Australia through the reduction and
elimination of barriers to trade in goods and services and to
investment; and to lay the foundation for further cooperation
to expand and enhance the benefits of the Agreement.
Sec. 3. Definitions
This section defines the terms ``Agreement,'' ``HTS,'' and
``Textile or Apparel Good,'' for purposes of the implementing
legislation.
TITLE I--APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE AGREEMENT
Sec. 101. Approval and Entry Into Force of the Agreement
This section provides Congressional approval for the
Agreement and its accompanying Statement of Administrative
Action. Section 101 also authorizes the President to exchange
notes with the Government of Australia to provide for entry
into force of the Agreement on or after January 1, 2005. The
exchange of notes is conditioned on a determination by the
President that Australia has taken measures necessary to comply
with those of its obligations that take effect at the time the
Agreement enters into force.
Sec. 102. Relationship of the Agreement to United States and State Law
This section establishes the relationship between the
Agreement and U.S. law. It clarifies that no provision of the
Agreement will be given effect under domestic law if
inconsistent with Federal law; this would include provisions of
Federal law enacted or amended by the Act.
Section 102 also provides that no State law may be declared
invalid on the ground that the law is inconsistent with the
Agreement, except in an action brought by the United States for
the purpose of declaring such law invalid. This section
precludes any private right of action or remedy against the
Federal Government, or a State government, based on the
provisions of the Agreement.
Sec. 103. Implementing Actions in Anticipation of Entry Into Force and
Initial Regulations
This section authorizes the President to proclaim such
actions, and other appropriate officers of the United States
Government to issue such regulations, as may be necessary to
ensure that provisions of the implementing legislation are
appropriately implemented by the date the Agreement enters into
force if such provisions are required to be implemented by that
date. Section 103 also provides that, with respect to any
action proclaimed by the President that is not subject to the
consultation and layover provisions contained in section 104,
such action may not take effect before the 15th day after the
date on which the text of the proclamation is published in the
Federal Register. The 15-day restriction is waived, however, to
the extent it would prevent an action from taking effect on the
date the Agreement enters into force. Section 103 also
specifies that initial regulations necessary or appropriate to
carry out the provisions of the implementing legislation shall,
to the maximum extent feasible, be issued within 1 year after
the date on which the Agreement enters into force.
Sec. 104. Consultation and Layover Provisions for, and Effective Date
of, Proclaimed Actions
This section sets forth consultation and layover steps that
must precede the President's implementation of any tariff
modification, continuation, or additional duty, by
proclamation. Under the consultation and layover provisions,
the President must obtain the advice of the relevant private
sector advisory committees and the U.S. International Trade
Commission (ITC) on a proposed action. The President must
submit a report to the Senate Committee on Finance and the
House Committee on Ways and Means setting forth the action
proposed to be proclaimed, the reasons therefore, and the
advice of the private sector advisors and the ITC. The Act sets
aside a 60-day period following the date of transmittal of the
report for the Committees to consult with the President on the
proposed action.
Sec. 105. Administration of Dispute Settlement Proceedings
This section authorizes the President to establish or
designate within the Department of Commerce an office
responsible for providing administrative assistance to dispute
settlement panels established under Chapter 21 of the
Agreement. This section also authorizes the appropriation of
funds to support this office.
Sec. 106. Effective Dates; Effect of Termination
This section provides the dates that certain provisions of
the implementing legislationwill go into effect. This section
also provides that the provisions of the implementing legislation will
no longer be in effect on the date on which the Agreement ceases to be
in force.
TITLE II--CUSTOMS PROVISIONS
Sec. 201. Tariff Modifications
Section 201(a) authorizes the President to implement by
proclamation the continuation, modification, or addition of
tariffs, or the continuation of duty-free or excise treatment,
as the President determines to be necessary or appropriate, to
carry out Articles 2.3, 2.5, and 2.6, and Annex 2-B, of the
Agreement.
Section 201(b) authorizes the President, subject to the
consultation and layover provisions of section 104 of the bill,
to proclaim any continuation, modification, or addition of
tariffs, or the continuation of duty-free or excise treatment,
as the President determines to be necessary or appropriate, to
maintain the general level of reciprocal and mutually
advantageous concessions with respect to Australia provided by
the Agreement.
Sec. 202. Additional Duties on Certain Agricultural Goods
Section 202 implements three separate safeguard mechanisms
for agricultural goods; specifically: (1) a price-based
horticultural safeguard; (2) a quantity-based beef safeguard;
and (3) a price-based beef safeguard. Section 202(a) contains
general provisions applicable to each of the safeguards.
Section 202(b) implements the price-based horticulture
safeguard, under which the United States shall assess a duty on
imports of certain Australian horticulture goods if import
prices for specific shipments fall below specified levels. The
rate of additional duty under the safeguard increases as the
difference increases between the unit import price of a
shipment and the trigger price. The trigger price reflects
historic unit import values for the relevant horticulture good.
The assessment of additional duty under this provision
terminates on the date on which duty-free treatment must be
provided to that good under the Schedule of the United States
to Annex 2-B of the Agreement. Products listed in Annex 3-A of
the Agreement are covered by the horticulture safeguard
provision, including: dried onions and garlic; processed tomato
products; canned asparagus; canned pears, apricots, peaches,
and fruit mixtures; and orange and grape juices.
Section 202(c) implements the transitional quantity-based
beef safeguard, which is available during the phase-out of
over-quota tariffs on certain beef products (i.e., years 9
through 18 of the Agreement). The safeguard applies when the
volume of covered imports exceeds 110 percent of the
preferential tariff-rate quota (TRQ) volume for the specific
year. The added duty under this safeguard is equal to 75
percent of the difference between the normal trade relation/
most-favored-nation (NTR/MFN) duty rate and the applied over-
quota duty rate for that year. The safeguard duty remains in
effect until the end of the calendar year. The U.S. Trade
Representative (USTR) may waive application of the transitional
quantity-based safeguard only if the USTR determines that
extraordinary market conditions demonstrate that the waiver
would be in the national interest of the United States. It is
anticipated that such exceptional circumstances will rarely, if
ever, materialize. The USTR is required to notify the Senate
Finance and House Ways and Means Committees promptly after
receipt of a request for a waiver from an agency, Member of
Congress or interested person, and to consult with the
appropriate private sector advisory committees and the Senate
Finance and House Ways and Means Committees regarding the
reasons supporting a determination to grant a waiver and the
proposed scope and duration of any waiver prior to making a
determination under this subsection.
Section 202(d) implements the permanent price-based beef
safeguard, which is available after the over-quota tariff has
been phased out (i.e., beginning in year 19 of the Agreement).
When the price of beef in the United States falls below a
calculated trigger price, imports of beef products from
Australia in excess of specified quota levels are subject to
additional duties under this safeguard. The safeguard trigger
is based on a 24-month rolling average of the U.S. Wholesale
Select Box Beef index price. For each of the first three
quarters of the year, the safeguard is triggered when the
average index price for any 2 months in a given quarter falls
below 6.5 percent of the 24-month average index price. The
safeguard is also triggered if the average index beef price
falls 6.5 percent below the 24-month rolling average in the
months of September, October, or November. If the safeguard is
triggered during the first three-quarters of the year, the
additional duty is applied in the following quarter. If the
safeguard is triggered in September, October, or November, the
additional duty is applied for the remainder of the year. The
additional duty to be applied is equal to 65 percent of the
applied NTR/MFN tariff rate. This price-based safeguard can
only be imposed on imports of Australian beef that exceed the
Agreement's quota amount (i.e., 70,000 metric tons in the 19th
year, an amount that will grow annually at 0.6 percent) plus
Australia's country-specific quota established under the World
Trade Organization (currently set at 378,214 metric tons). The
USTR may waive application of the permanent price-based
safeguard only if the USTR determines that extraordinary market
conditions demonstrate that the waiver would be in the national
interest of the United States. It is anticipated that such
exceptional circumstances will rarely, if ever, materialize.
The USTR is required to notify the Senate Finance and House
Ways and Means Committees promptly after receipt of a request
for a waiver from an agency, Member of Congress or interested
person, and to consult with the appropriate private sector
advisory committees and the Senate Finance and House Ways and
Means Committees regarding the reasons supporting a
determination to grant a waiver and the proposed scope and
duration of any waiver prior to making a determination under
this subsection.
Sec. 203. Rules of Origin
This section implements the general rules of origin set
forth in Chapter 5 of the Agreement. Under these rules, there
are several ways for a good imported from Australia to qualify
as an originating good and therefore be eligible for
preferential tariff treatment, accordingto the terms of the
Agreement, when the good is imported into the United States.
First, a good is an originating good if it is wholly
obtained or produced entirely in the territory of Australia,
the United States, or both. Second, a good is an originating
good if those materials used to produce the good that are not
themselves originating goods are transformed in such a way as
to cause their tariff classification to change or meet other
requirements, as specified in Annex 4-A or Annex 5-A of the
Agreement.
Third, a good is an originating good if it is produced
entirely in the territory of Australia, the United States, or
both, exclusively from materials that satisfy the first two
rules of origin above. Finally, the remainder of section 203
sets forth specific rules for determining whether a good
qualifies as an originating good under the Agreement. Section
203(c) provides that, with certain exceptions, a good is not
disqualified as an originating good if it contains de minimis
quantities of non-originating materials that do not undergo a
tariff transformation. Section 203(e) implements provisions in
Annex 5-A of the Agreement that require certain goods to have
at least a specified percentage of regional value content to
qualify as originating goods, including a special rule for
certain automotive goods. Section 203(f) addresses the
valuation of materials, while section 203(g) addresses the
treatment of accessories, spare parts, or tools. Section 203(h)
addresses claims for preferential treatment of fungible goods
and materials, while section 203(i) addresses the treatment of
packaging materials and containers for retail sale.
Additional provisions in section 203 address the treatment
of: packing materials and containers for shipment; indirect
materials; third country operations; and textile and apparel
goods classifiable as goods put up in sets. Section 203(n)
provides definitions of terms applicable to the rules of
origin, while section 203(o) authorizes the President to modify
certain of the Agreement's specific rules of origin by
proclamation, subject to the consultation and layover
provisions of section 104 of the implementing legislation.
Sec. 204. Customs User Fees
This section amends Section 13031(b) of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(b)) to
provide for the immediate elimination of the merchandise
processing fee for goods qualifying for preferential treatment
under the terms of the United States-Australia Free Trade
Agreement. Processing of goods under the Agreement will be
financed by money from the General Fund of the Treasury.
Sec. 205. Disclosure of Incorrect Information
This section provides that the United States may not impose
a penalty on an importer who makes an invalid claim for
preferential tariff treatment under the Agreement if, after
discovering that the claim is invalid, the importer promptly
and voluntarily corrects the claim and pays any duty owing, in
accordance with regulations issued by the Secretary of the
Treasury. Such regulations shall afford at least 1 year within
which an importer may correct an invalid claim for preferential
tariff treatment.
Sec. 206. Enforcement Relating to Trade in Textile and Apparel Goods
This section authorizes the President to apply anti-
circumvention provisions concerning trade in textile and
apparel goods. The Secretary of the Treasury may request that
the Government of Australia conduct a verification to determine
that an exporter or producer in Australia is complying with
applicable customs laws, regulations, procedures, requirements,
or practices affecting trade in textile or apparel goods, or to
determine that a claim for preferential treatment of textile or
apparel goods is consistent with the terms of the Agreement.
Section 206 authorizes the President to order the suspension of
liquidation of entries from exporters or producers in Australia
that are subject to a verification, and the suspension of
liquidation of any entry that is subject to verification. If
the Secretary of the Treasury determines that information
obtained within 12 months of a request for verification is
insufficient to make a determination, section 206 authorizes
the President to direct the Secretary to: publish the name and
address of the person subject to verification; deny
preferential tariff treatment under the Agreement to any
textile or apparel good exported or produced by the person
subject to verification; deny preferential tariff treatment
under the Agreement to the entry subject to verification; deny
entry into the United States of any textile or apparel good
exported or produced by the person subject to verification; or
deny entry into the United States of the entry subject to
verification.
Sec. 207. Regulations
This section requires the Secretary of the Treasury to
prescribe such regulations as may be necessary to carry out the
provisions dealing with rules of origin, customs user fees, and
the President's proclamation authority to amend certain of the
Agreement's specific rules of origin.
TITLE III--RELIEF FROM IMPORTS
Sec. 301. Definitions
This section defines the terms ``Australian article'' and
``Australian textile or apparel article'' for purposes of the
general bilateral safeguard provision contained in Chapter 9 of
the Agreement and the textile and apparel bilateral safeguard
provision contained in Chapter 4 of the Agreement. The term
``Australian article'' is defined as an article that qualifies
as an originating good under section 203(b) of the implementing
legislation. The term ``Australian textile or apparel article''
is defined as an Australian article that is listed in the Annex
to the Agreement on Textiles and Clothing referred to in
section 101(d)(4) of the Uruguay Round Agreements Act (19
U.S.C. Sec. 3511(d)(4)). Section 301 also defines the term
``Commission'' as the U.S. International Trade Commission.
Subtitle A. Relief From Imports Benefiting From the Agreement
Sec. 311. Commencing of Action for Relief
This section requires the filing of a petition with the
Commission by an entity that is representative of an industry
in order to commence a bilateral safeguard investigation.
Section 311(a) permits a petitioning entity to request
provisional relief as if the petition had been filed under
section 202(a) of the Trade Act of 1974 (19 U.S.C.
Sec. 2252(a)). Any request for provisional relief shall include
an allegation of ``critical circumstances'' in the petition.
Section 311(b) provides that, upon the filing of a
petition, the Commission shall promptly initiate an
investigation to determine whether, as a result of the
reduction or elimination of a duty provided for under the
Agreement, an Australian article is being imported into the
United States in such increased quantities, and under such
conditions, that imports of the Australian article constitute a
substantial cause of serious injury, or threat of serious
injury, to the domestic industry producing an article that is
like, or directly competitive with, the imported article.
Section 311(c) applies to any bilateral safeguard initiated
under the Agreement certain provisions, both substantive and
procedural, contained in subsections (b), (c), (d), and (i) of
section 202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252(b),
(c), (d), and (i)) that apply to global safeguard
investigations. These provisions include, inter alia, the
requirement that the Commission publish notice of the
commencement of an investigation; the requirement that the
Commission hold a public hearing at which interested parties
and consumers have the right to be present, to present
evidence, and to respond to the presentations of other parties
and consumers; the factors to be taken into account by the
Commission in making its determinations; and authorization for
the Commission to promulgate regulations to provide access to
confidential business information under protective order to
authorized representatives of interested parties in an
investigation.
Section 311(d) precludes the initiation of an investigation
with respect to any Australian article for which import relief
has already been provided under this bilateral safeguard
provision.
Sec. 312. Commission Action on Petition
This section establishes deadlines for Commission
determinations following the initiation of a bilateral
safeguard investigation. Section 312(b) applies certain
statutory provisions that address an equally divided vote by
the Commission in a global safeguard investigation under
section 202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252) to
Commission determinations under this section. If the Commission
renders an affirmative injury determination, or a determination
that the President may consider to be an affirmative
determination in the event of a divided vote by the Commission,
section 312(c) requires that the Commission also find and
recommend to the President the amount of import relief that is
necessary to remedy or prevent the injury found by the
Commission and to facilitate the efforts of the domestic
industry to make a positive adjustment to import competition.
Section 312(d) specifies the information to be included by the
Commission in a report to the President regarding its
determination. Upon submitting the requisite report to the
President, section 312(e) requires the Commission to promptly
make public such report, except for confidential information
contained in the report.
Sec. 313. Provision of Relief
This section directs the President, not later than 30 days
after receiving the report from the Commission, to provide
relief from imports of the article subject to an affirmative
determination by the Commission, or a determination that the
President considers to be an affirmative determination in the
event of a divided vote by the Commission, to the extent that
the President determines necessary to remedy or prevent the
injury and to facilitate the efforts of the domestic industry
to make a positive adjustment to import competition. Under
section 313(b), the President is not required to provide import
relief if the President determines that the provision of the
import relief will not provide greater economic and social
benefits than costs.
Section 313(c) specifies the nature of the import relief
that the President may impose, to include: the suspension of
any further reduction in duty provided for under Annex 2-B of
the Agreement; and an increase in the rate of duty imposed on
such article to a level that does not exceed the lesser of (1)
the normal trade relation/most-favored-nation (NTR/MFN) duty
rate imposed on like articles at the time the import relief is
provided, or (2) the NTR/MFN duty rate imposed on like articles
on the day before the date on which the Agreement enters into
force. In the case of a duty applied on a seasonal basis to an
article, the President may increase the rate of duty imposed on
such article to a level that does not exceed the lesser of (1)
the NTR/MFN duty rate imposed on like articles for the
immediately preceding corresponding season, or (2) the NTR/MFN
duty rate imposed on like articles on the day before the date
on which the Agreement enters into force. Section 313(c) also
requires that, if the period for which import relief is
provided exceeds 1 year, the President shall provide for the
progressive liberalization of such relief at regular intervals
during the period of its application.
Section 313(d) provides that the initial period for import
relief in a bilateral safeguard action shall not exceed 2
years. The President is authorized to extend the effective
period of such relief under section 313(d) if the President
determines that import relief continues to be necessary to
remedy or prevent serious injury and to facilitate adjustment
to import competition, and that there is evidence that the
domestic industry is making a positive adjustment to import
competition. Before the President can extend the period of
import relief, the President must first receive a report from
the Commission under section 313(d)(2)(B) containing an
affirmative determination, or a determination that the
President may consider to be an affirmative determination in
the event of a divided vote by the Commission, that import
relief continues to be necessary to remedy or prevent serious
injury and that the domestic industry is making a positive
adjustment to import competition. Section 313(d) also provides
that the total period for import relief in a bilateral
safeguard action, including any extension of such import
relief, shall not exceed 4 years.
Section 313(e) provides that upon termination of import
relief under the bilateralsafeguard provision, the rate of duty
to be applied in the calendar year of termination is the rate of duty
that would have been in effect 1 year after the provision of import
relief according to the Schedule of the United States to Annex 2-B of
the Agreement. The rate of duty to be applied thereafter shall be, at
the discretion of the President, either (1) the applicable NTR/MFN duty
rate for that article set out in the Schedule of the United States to
Annex 2-B of the Agreement, or (2) the rate of duty resulting from the
elimination of the tariff in equal annual stages ending on the date set
out in the Schedule of the United States to Annex 2-B of the Agreement
for the elimination of the tariff.
Section 313(f) provides that no import relief may be
provided under the bilateral safeguard mechanism on any article
that previously has been subject to import relief under the
bilateral safeguard, or is subject to relief under the textile
and apparel safeguard under subtitle B of title III of the
implementing legislation, or is subject to either the
horticulture safeguard, the transitional quantity-based beef
safeguard, or the permanent price-based beef safeguard under
subsections (b), (c), and (d) of section 202 of the
implementing legislation.
Sec. 314. Termination of Relief Authority
This section provides that the President's authority to
impose import relief under the bilateral safeguard mechanism
ends after the date that is 10 years after the date on which
the Agreement enters into force, or if the period for tariff
elimination for an article subject to import relief is greater
than 10 years, after the date on which such period ends.
Section 314(c) provides that the President may provide import
relief under the bilateral safeguard mechanism after the
foregoing termination dates if the President determines that
the Government of Australia has consented to the imposition of
such import relief.
Sec. 315. Compensation Authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Australia
new concessions as compensation for the imposition of import
relief in a bilateral safeguard investigation, in order to
maintain the general level of reciprocal concessions.
Sec. 316. Confidential Business Information
This section applies the same procedures for the treatment
and release of confidential business information by the
Commission in a global safeguard investigation under Chapter 1
of Title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et
seq.) to bilateral safeguard investigations under subtitle A of
Title III of the implementing legislation.
Subtitle B. Textile and Apparel Safeguard Measures
Sec. 321. Commencement of Action for Relief
This section requires the filing of a request with the
President by an interested party in order to commence action
for relief under the textile and apparel safeguard provision.
Upon the filing of a request, the President shall review the
request to determine, from the information presented in the
request, whether to commence consideration of the request.
Section 321(b) provides that an interested party may seek
provisional relief by including in its request an allegation
that critical circumstances exist such that delay in the
provision of relief would cause damage that would be difficult
to repair. Section 321(c) provides that, if the President
determines that the request provides the information necessary
for the request to be considered, the President shall cause to
be published in the Federal Register a notice of commencement
of consideration of the request, and notice seeking public
comments regarding the request. The notice shall include a
summary of the request and the dates by which comments and
rebuttals must be received.
The Committee notes that our regulatory process should be
administered in an open and transparent manner that can serve
as a model for our trading partners. For example, in addition
to publishing a summary of a request for safeguard relief, the
Committee notes that the President plans to make available the
full text of the request on the website of the International
Trade Administration of the U.S. Department of Commerce,
subject to the protection of business confidential information.
The Committee encourages this and similar efforts to enhance
government transparency. In particular, the Committee
encourages the President to issue regulations on procedures
for: requesting a textile and apparel safeguard measure; making
a determination under section 322(a) of the implementing
legislation; providing safeguard relief under section 322(b)
and (c) of the implementing legislation; and extending
safeguard relief under section 323(b) of the implementing
legislation.
Sec. 322. Determination and Provision of Relief
This section provides that following the President's
commencement of consideration of a request, the President shall
determine whether, as a result of the reduction or elimination
of a duty under the Agreement, an Australian textile or apparel
article is being imported into the United States in such
increased quantities and under such conditions as to cause
serious damage, or actual threat thereof, to a domestic
industry producing an article that is like, or directly
competitive with, the imported article.
Section 322(a) identifies certain economic factors that the
President shall examine in making a determination, including
changes in the domestic industry's output, productivity,
capacity utilization, inventories, market share, exports,
wages, employment, domestic prices, profits, and investment,
none of which is necessarily decisive. Section 322(a) also
provides that the President shall not consider changes in
technology or consumer preference as factors supporting a
determination of serious damage or actual threat thereof.
Section 322(b) authorizes the President, in the event of an
affirmative determination of serious damage or actual threat
thereof, to provide import relief to the extent that the
Presidentdetermines necessary to remedy or prevent the serious
damage and to facilitate adjustment by the domestic industry to import
competition. Section 322(b) also specifies the nature of the import
relief that the President may impose, to consist of an increase in the
rate of duty imposed on the article to a level that does not exceed the
lesser of (1) the NTR/MFN duty rate imposed on like articles at the
time the import relief is provided, or (2) the NTR/MFN duty rate
imposed on like articles on the day before the date on which the
Agreement enters into force.
Section 322(c) identifies the basis and procedures by which
the President may impose provisional import relief under the
textile and apparel safeguard mechanism. Within 60 days of
receiving a request for provisional import relief based upon an
allegation of critical circumstances, the President shall
determine, on the basis of available information, whether there
is clear evidence that imports from Australia have increased as
the result of the reduction or elimination of a customs duty
under the Agreement, and whether such imports are causing
serious damage, or actual threat thereof, to the domestic
industry producing an article like or directly competitive with
the imported article, and whether delay in providing import
relief under the textile and apparel safeguard mechanism would
cause damage to the domestic industry that would be difficult
to repair. If the President's determinations regarding
provisional relief are affirmative, the President shall within
30 days determine the extent of provisional relief that is
necessary to remedy or prevent the serious damage. Provisional
relief shall not be provided for more than 200 days, and shall
be comprised of an increase in the rate of duty imposed on the
article to a level that does not exceed the lesser of (1) the
NTR/MFN duty rate imposed on like articles at the time the
import relief is provided, or (2) the NTR/MFN duty rate imposed
on like articles on the day before the date on which the
Agreement enters into force. The President shall also order the
suspension of liquidation of all imports subject to the
provisional relief. Any provisional relief shall terminate on
the day on which the President makes a negative final
determination regarding serious damage or actual threat thereof
by reason of imports of such article, or the President imposes
final import relief under the textile and apparel safeguard
mechanism, or a decision by the President not to take any
action under the textile and apparel safeguard becomes final,
or the President determines that, because of changed
circumstances, such relief is no longer warranted. Any
suspension of liquidation also terminates on the day on which
provisional relief is terminated. If there is a difference
between the level of provisional import relief and the final
import relief imposed by the President, entries subject to the
provisional import relief shall be liquidated at whichever of
such rates of duty is lower. If the President does not provide
final import relief, imported articles that were subject to
provisional relief shall be liquidated at the rate of duty that
applied before the provisional relief was imposed.
Sec. 323. Period of Relief
This section provides that the initial period for import
relief in a textile and apparel safeguard action, including any
provisional relief, shall not exceed 2 years. The President is
authorized to extend the effective period of such relief under
section 323(b) if the President determines that import relief
continues to be necessary to remedy or prevent serious damage
and to facilitate adjustment by the domestic industry to import
competition, and that there is evidence that the domestic
industry is making a positive adjustment to import competition.
Section 323(b) also provides that the total period for import
relief in a textile and apparel safeguard action, including any
extension of such import relief, may not exceed 4 years.
Sec. 324. Articles Exempt From Relief
This section precludes the President from providing import
relief under the textile and apparel safeguard mechanism with
respect to any article to which import relief has already been
provided under subtitle B of Title III of the implementing
legislation, or any article that is subject to import relief
under either the bilateral safeguard mechanism under subtitle A
of Title III of the implementing legislation or the global
safeguard mechanism set forth in Chapter 1 of Title II of the
Trade Act of 1974 (19 U.S.C. Sec. 2251 et seq.).
Sec. 325. Rate After Termination of Import Relief
This section provides that the duty rate applicable to a
textile or apparel article after termination of the import
relief shall be the duty rate that would have been in effect,
but for the provision of such import relief, on the date the
relief terminates.
Sec. 326. Termination of Relief Authority
This section provides that the President's authority to
provide import relief under the textile and apparel safeguard
mechanism terminates after the date that is 10 years after the
date on which duties on the article are eliminated pursuant to
the Agreement.
Sec. 327. Compensation Authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Australia
new concessions as compensation for the imposition of import
relief in a textile and apparel safeguard proceeding, in order
to maintain the general level of reciprocal concessions.
Sec. 328. Business Confidential Information
This section precludes the President from releasing
information that the President considers to be confidential
business information unless the party submitting the
confidential business information had notice, at the time of
submission, that such information would be released by the
President, or such party subsequently consents to the release
of the information. This section also provides that, to the
extent business confidential information is provided, a
nonconfidential version of the information shall also be
provided in which the business confidential information is
summarized or, if necessary, deleted.
Subtitle C. Cases Under Title II of the Trade Act of 1974
Sec. 331. Findings and Action on Goods From Australia
This section authorizes the President, in granting global
import relief under Chapter 1 of Title II of the Trade Act of
1974 (19 U.S.C. Sec. 2251 et seq.), to exercise the discretion
to exclude imports from Australia from such global import
relief when certain conditions are present.
TITLE IV--PROCUREMENT
Sec. 401. Eligible Products
This section amends section 308(4)(A) of the Trade
Agreements Act of 1979 (19 U.S.C. Sec. 2518(4)(A)) to implement
the government procurement provisions of the Agreement.
F. 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
14, 2004, S. 2610 was ordered favorably reported, without
amendment, by a recorded vote of 17 ayes and 4 nays, a quorum
being present. Ayes: Grassley, Hatch, Nickles, Lott, Kyl,
Thomas, Santorum, Frist, Smith, Bunning, Baucus (proxy),
Breaux, Graham, Jeffords, Bingaman, Kerry (proxy), Lincoln.
Nays: Snowe, Rockefeller, Daschle, Conrad (proxy).
II. BUDGETARY IMPACT OF THE BILL
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 30, 2004.
Hon. Charles E. Grassley,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 2610, a bill to
implement the United States-Australia Free Trade Agreement.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Annabelle
Bartsch.
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
S. 2610--A bill to implement the United States-Australia Free Trade
Agreement
Summary: S. 2610 would approve the free trade agreement
(FTA) between the government of the United States and the
government of Australia that was entered into on May 18, 2004.
It would provide for tariff reductions and other changes in law
related to implementation of the agreement.
The Congressional Budget Office estimates that enacting the
bill would reduce revenues by $29 million in 2005, by $293
million over the 2005-2009 period, and by $884 million over the
2005-2014 period, net of income and payroll tax offsets. The
bill also would increase direct spending by less than $500,000
in 2005. Implementing the bill would cost less than $500,000 in
each year, subject to appropriation of the necessary amounts.
CBO has determined that S. 2610 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act (UMRA) and would not affect the
budgets of state, local, or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 2610 over the 2005-2014 period is shown
in the following table.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------------------------------
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Estimated revenues................................................. -29 -47 -58 -71 -89 -101 -109 -118 -127 -137
CHANGES IN DIRECT SPENDING \1\
Estimated budget authority......................................... * 0 0 0 0 0 0 0 0 0
Estimated outlays.................................................. * 0 0 0 0 0 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ S. 2610 also would affect spending subject to appropriation, but the amounts of those changes would be less than $500,000 a year.
Note.--* = increase of less than $500,000.
Basis of estimate
Revenues
Under the United States-Australia agreement, all tariffs on
U.S. imports from Australia would be phased out over time.
Beginning on January 1, 2005, the tariffs would be phased out
for individual products at varying rates according to one of
several different timetables ranging from immediate elimination
to gradual elimination over 18 years. According to the U.S.
International Trade Commission, the United States collected
$109 million in customs duties in 2003 on about $6.5 billion of
imports from Australia. Those imports consist mostly of chilled
and frozen meat, wine, certain motor vehicles and motor vehicle
components, and various products made of metal. Based on these
data, CBO estimates that phasing out tariff rates as outlined
in the U.S.-Australia agreement would reduce revenues by $29
million in 2005, by $293 million over the 2005-2009 period, and
by $884 million over the 2005-2014 period, net of income and
payroll tax offsets.
This estimate includes the effects of increased imports
from Australia that would result from the reduced prices of
imported products in the United States, reflecting the lower
tariff rates. It is likely that some of the increase in U.S.
imports from Australia would displace imports from other
countries. In the absence of specific data on the extent of
this substitution effect, CBO assumes that an amount equal to
one-half of the increase in U.S. imports from Australia would
displace imports from other countries.
Direct spending
S. 2610 would exempt certain Australian imported goods from
the merchandise processing fee collected by the Bureau of
Customs and Border Protection (CBP). Under current law, those
fees will expire after March 1, 2005. Based on information from
the CBP, we estimate that enacting the bill would decrease fee
collections by less than $500,000 in fiscal year 2005.
Spending subject to appropriation
Section 104 of S. 2610 would authorize the appropriation of
whatever sums are necessary to the Department of Commerce (DoC)
for administrative support for Chapter 21 of the agreement.
Based on information from DoC regarding its experience with
similar requirements in recent free trade agreements, CBO
estimates that implementing section 104 would cost about
$100,000 per year, assuming appropriation of the necessary
amounts.
Intergovernmental and private-sector impact: The bill
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Previous CBO estimate: On July 12, 2004, CBO transmitted a
cost estimate for H.R. 4759, as ordered reported by the House
Committee on Ways and Means on July 8, 2004. CBO also
transmitted an estimate on July 30, 2004, for H.R. 4759, as
cleared by the Congress on July 15, 2004. Those versions of
H.R. 4759 were identical to S. 2610, as are CBO's cost
estimates for the three pieces of legislation.
Estimate prepared by: Federal Revenues: Annabelle Bartsch;
Federal Costs: Mark Grabowicz and Melissa Zimmerman; Impact on
State, Local, and Tribal Governments: Melissa Merrell; and
Impact on the Private Sector: Crystal Taylor.
Estimate approved by: Roberton C. Williams, Deputy
Assistant Director for Tax Analysis; and Peter H. Fontaine,
Deputy Assistant Director for Budget 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 bill 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. 2610 as approved by the Committee on July 14, 2004. In
accordance with the requirement of Pub. L. No. 104-04, the
Committee has determined that the bill contains no
intergovernmental mandates, as defined in the UMRA, and would
not affect the budgets of State, local, or tribal governments.
IV. ADDITIONAL VIEWS
----------
ADDITIONAL VIEWS OF CHAIRMAN GRASSLEY
The Committee's informal consideration of draft legislation
to implement the United States-Australia Free Trade Agreement
(the Agreement) culminated with a lopsided vote against
approving an amended recommendation to the President for an
implementing bill. Though the outcome of the Committee's
informal consideration was unusual, the process followed by the
Committee in reaching that outcome was fully consistent with
the procedures set forth in the Bipartisan Trade Promotion
Authority Act of 2002 (TPA) and prior practice. Moreover, that
process completely satisfied the Committee's jurisdictional
oversight responsibility with respect to the constitutional
prerogative of the Congress over international trade. Yet the
circumstances that led to the Committee's vote against approval
merit additional comment. To start, I sincerely hope that such
circumstances can be avoided entirely in the future. The
Committee's informal consideration of implementing legislation
for a trade agreement should result in a recommendation to the
President, and I stand ready to work with my colleagues to
ensure that outcome when it comes time to implement new
agreements under TPA.
In this case, the Committee met in open executive session
on June 23, 2004, to informally consider draft implementing
legislation for the Agreement. In the days leading up to that
meeting, some Members had expressed concerns over two
provisions in the draft implementing bill that would allow the
United States Trade Representative (USTR) to waive the
application of two different safeguard mechanisms that would
apply to imports of beef from Australia. Those safeguards can
be waived only if the USTR determines that extraordinary market
conditions demonstrate that the waiver would be in the national
interest of the United States. I worked with the Ranking
Member, Senator Baucus, and the Administration to develop an
additional measure of Congressional oversight before the
application of either safeguard could be waived. Specifically,
the Administration added a provision to the draft Statement of
Administrative Action (SAA) that accompanied the draft
implementing legislation. The added provision specifies that
the Administration will consult with the Senate Committee on
Finance and the House Committee on Ways and Means no less than
5 business days before a beef safeguard may be waived. The
inclusion of this additional provision clearly demonstrates
that Congress was not a ``rubber stamp'' for the U.S.-Australia
FTA.
That is how the process should work, with Members working
together in a bipartisan fashion with the Administration to
refine draft implementing legislation in a manner that advances
the objectives identified under TPA while remaining consistent
with the underlying trade agreement and with the U.S.
Constitution. And it is that principle of consistency which is
so critically important. TPA procedures do not require the
President to accept any recommended changes made by the
Committee in its informal consideration of draft legislation.
Thus, if the Committee were to recommend a provision that is
inconsistent with either the underlying trade agreement or with
the U.S. Constitution, the President would necessarily have to
reject the Committee's recommendation when formally submitting
implementing legislation to the Congress. Opponents of a trade
agreement could thus engage in political gamesmanship and
subvert the process by recommending an inconsistent provision
in order to embarrass the President and tarnish TPA procedures
with allegations of a failure in the mechanism for
Congressional oversight under TPA.
During the Committee meeting on June 23rd, Senator Conrad
proposed an amendment described as follows:
The amendment enhances the consultation requirement in
the waiver provisions by adding a requirement in
paragraphs 202(c)(4) and 203(d)(5) that the Finance and
the Ways and Means Committees must both affirmatively
approve a proposed waiver before the USTR can waive the
application of a safeguard.
At that time, I provided to Committee Members an independent
analysis of the Conrad amendment prepared by the Congressional
Research Service (CRS), a copy of which is attached at the end
of these additional views. CRS identified ``a constitutional
difficulty with the committee approval device, which flows from
the decision in INS v. Chadha, 462 U.S. 919 (1983).'' In the
end, the Conrad amendment passed narrowly on a vote of 11 ayes,
10 nays. Not having a quorum present, I recessed the meeting
before calling a final vote to approve the amended draft
implementing legislation as the Committee's recommendation to
the President.
I reconvened the meeting the next day, on June 24th, for a
vote on final approval of the amended draft legislation. By a
vote of 7 ayes, 14 nays, the Committee voted against approving
the amended draft legislation as the Committee's recommendation
to the President. That vote left the Committee without a
recommendation to the President.
Some argue that the process was somehow shortchanged
because the Committee did not, at that point, proceed to an
informal conference with the House Committee on Ways and Means.
That argument ignores one dispositive fact--i.e. a majority of
the Committee never approved a recommendation to the President
for implementing legislation. Absent a Committee-approved
recommendation, there was simply nothing to conference with
Ways and Means. Consider for a moment a scenario in which
Committee Members are unanimous in their opposition to a
particular free trade agreement negotiated under TPA
procedures. During informal consideration of proposed
implementing legislation for the agreement, the Committee
unanimously votes against approval. No recommendation is made
to the President, for no bill would be acceptable to the
Committee. Yet TPA does not require a Committee recommendation,
it merely affords an opportunity for one. The process moves
forward, with formal submission of an implementing bill by the
President to the Congress. Approval of the agreement then
stands or falls on the vote on final passage in each House.
This case is no different. A large majority of the Committee
voted against final approval, and so no recommendation was
made. I certainly agree that if the Finance Committee had
approved a final recommendation that differed from the
recommendation approved by the Ways and Means Committee, an
informal conference would have been warranted to reconcile the
differences between the two recommendations. But that is not
the situation that confronted the Finance Committee in this
case. Instead, the Committee's final decision not to approve
the amended draft legislation was respected and the integrity
of TPA procedures was maintained.
The Senate took up formal implementing legislation for the
Agreement on July 15, 2004. I am submitting the Committee
report on August 25, 2004, and so I have the benefit of
hindsight in preparing these additional views. I find it
noteworthy that when it came to a vote on final passage of the
United States-Australia Free Trade Agreement Implementation Act
on the floor of the Senate, the bill passed overwhelmingly on a
vote of 80 ayes, 16 nays, 4 not voting. Any member who felt
that consultations during consideration of the bill or that the
TPA process itself was inadequate was certainly free to vote
against the final implementing bill. Further, final passage
included approval of the SAA containing the compromise
provision I had negotiated with Senator Baucus and the
Administration. Thus, any claim that the Committee did not
exercise its constitutional responsibility is simply erroneous.
The process followed by the Committee in its informal
consideration of the draft implementing legislation was open,
transparent, and entirely consistent with TPA procedures. And,
as Chairman, I am satisfied that the Committee fully discharged
its responsibility to ensure meaningful oversight of the
development of implementing legislation for our free trade
agreement with Australia and did so in a manner fully
consistent with the U.S. Constitution.
Chuck Grassley.
------
Congressional Research Service,
June 22, 2004.
Memorandum
To: Senate Committee on Finance, Attention: Stephen Schaefer.
From: Johnny H. Killian, Senior Specialist, American Constitutional
Law, American Law Division.
Subject: Validity of Provision Conditioning Executive Action on
Congressional Committee Approval.
This memorandum is in response to your request to review a
provision proposed to be added to the Australian FTA. The
particular sections authorize quantity and price-based
safeguards on beef whenever certain conditions apply. The
sections provide for USTR waivers of application of the
safeguards ``if the Trade Representative determines that
extraordinary market conditions demonstrate that a waiver would
be in the national interest of the United States'' and USTR
consults with private sector advisors and the Finance and Ways
and Means Committees. The proposed amendment would add a
requirement that the Senate Finance Committee and the House
Ways and Means Committee both affirmatively approve a proposed
waiver before USTR can waive the application of the safeguards.
There is a constitutional difficulty with the committee
approval device, which flows from the decision in INS v.
Chadha, 462 U.S. 919 (1983). In that case, the Court held
unconstitutional a provision of the immigration laws that
authorized either the Senate or the House of Representatives,
by simple resolution, to disapprove the decision of the
Attorney General to allow a particular deportable alien to
remain in the country. The infirmity of the provision,
according to the Court, was that ``the exercise[s] of
legislative power'' by Congress or by one House had to comply
with the Constitution's lawmaking prescription under Article I,
Sec. 1 and Article I, Sec. 7, that is, passage by both Houses
and presentment to the President for his approval or veto. In
order to determine whether a congressional action is an
exercise of legislative power, one must look to see if ``it
ha[s] the purpose and effect of altering the legal rights,
duties and relations of persons, including [in this case] the
Attorney General, Executive Branch officials and Chadha, all
outside the legislative branch.'' Id., 952.
Although Chadha concerned a one-House simply resolution,
the analysis of the Court made clear that two-House vetoes,
with regard to presentment, and committee veto devices suffered
from the same constitutional difficulty. (Needless to say, no
constitutional significance attaches to whether the device is
cast as a veto or a necessary approval). And, indeed, the Court
shortly thereafter summarily affirmed two decisions by the
District of Columbia Circuit, which had acted pre-Chadha,
striking down two-House vetoes. Process Gas Consumers Group v.
Consumer Energy Council, 463 U.S. 1215 (1983), summarily affg.
691 F.2d 575 (D.C.Cir., 1982) (en banc), and 673 F.2d 425
(D.C.Cir). 1982. Although the Supreme Court has not passed on a
provision giving congressional committees veto power or
necessary approval like that contained in the proposed
amendment, the D.C. Circuit, contemporaneously with the two
cited cases, invalidated a section of an appropriations law
largely identical to the proposal. AFGE v. Pierce, 697 F.2d 303
(D.C.Cir., 1982) (panel composed of now-Justice Ginsburg and
Judges Bork and Bazelon).
In Pierce, the court had before it a limitation on the use
of funds in an HUD Appropriations Act to implement a RIF
``without the prior approval of the Committees on
Appropriations.'' According to the court, the provision could
be interpreted in one or another of two ways. First, it could
be read to empower either Appropriations Committee to prevent
otherwise authorized expenditures of funds. Second, it could be
read as prohibiting the agency from using appropriated funds
for certain purposes but empowering both Committees, acting
together, to lift the prohibition and to authorize the agency
to make such use of the funds. Under either construction, the
court stated, the provision was unconstitutional. If the first
reading was correct, the section conferred a one-House veto on
the Committees; if the second reading prevailed, the directive
was a grant of legislative power to the two Committees.
Legislative power, either way, had to be exercised bicamerally
and through presidential presentment.
Little doubt exists that Chadha confirms the D.C. Circuit's
analysis of such committee provisions of law.
Now, it is true that Congress has not foresworn use of
legislative veto devices in the aftermath of Chadha. By one
authoritative but now dated count, ``Congress [has] enacted
more than two hundred new legislative vetoes.'' Fisher, The
Legislative Veto: Invalidated, It Survives, 56 L. & Contemp.
Prob. 273, 288 (1993). Most of these provisions of law are
authorizations to committees, often the Appropriations
Committees, to approve certain executive expenditures before
they can take place. Id., 288, n. 83. Because of the comity the
agencies must display to the Appropriations Committees, these
provisions are rarely challenged, certainly not in court.
However, Presidents in signing statements have typically
complained about the measures and announced their intentions to
ignore them. The format of these presidential statements
usually follow one highlighted by Dr. Fisher of President
George H.W. Bush. The President protested that the sections
``constitute legislative vetoes similar to those declared
unconstitutional by the Supreme Court in INS v. Chadha.
Accordingly, I will treat them as having no legal force or
effect in this or any other legislation in which they appear.''
27 Weekly Comp. Pres. Docs. (Oct. 28, 1991).
In most instances, disputes between Congress and Executive
over the use of such devices may fail to give rise to
litigation, or, at least, litigation that enables court to
reach the merits, because of the absence of Member standing,
cf. Raines v. Byrd, 521 U.S. 811 (1997), and the lack of
standing by private parties, and there will be political
accommodation. But regardless of the justifiability of the
question in any particular case, the amendment before us now
certainly appears to meet the judicial definition of an
impermissible exercise of legislative power and to be subject
to invalidation in the event of a suit in which the merits are
reached.
ADDITIONAL VIEWS OF SENATORS BAUCUS, ROCKEFELLER, DASCHLE, CONRAD,
JEFFORDS, BINGAMAN AND LINCOLN
We are very disappointed with the process used to move the
U.S.-Australia Free Trade Agreement Implementation Act through
the Finance Committee and the Senate.
We support trade agreements that open markets and level the
playing field for American workers, farmers, and businesses.
Although we disagree on whether the U.S.-Australia Free Trade
Agreement is such an agreement and merits Congressional
approval, we strongly believe a good agreement is no excuse for
bad process. And the ill-advised process permitted in this
instance bodes poorly for the Congressional prospects of future
trade agreements.
Congress should never be a rubber stamp for trade
agreements proposed by the administration. Indeed, the United
States Constitution gives Congress primary responsibility for
trade. Article I, section 8, clause 3 says that: ``The Congress
shall have the power * * * to regulate Commerce with foreign
Nations.''
Because it is not practical for members of Congress to
negotiate trade agreements, our predecessors saw the wisdom in
delegating the power to conduct negotiations to the executive
branch. But that does not mean that Congress has delegated its
Constitutional responsibilities. To the contrary, under United
states law no trade agreement is self-executing. It has no
effect on domestic law until Congress passes implementing
legislation.
A system where one branch of Government negotiates trade
agreements and another must accept them and turn them into
domestic law presented challenges. We meet those challenges
through the fast-track process first adopted in the Trade Act
of 1974 and most recently extended in the Trade Act of 2002.
Fast-track gives the Executive express authority to
negotiate tariff and non-tariff agreements, so long as our
trade representatives meet general negotiating objectives set
out by Congress. It guarantees our trade partners that any
agreement will receive an up-or-down vote by a date certain.
That way, when they negotiate with the United States, they know
that Congress cannot later amend the agreement or kill it with
a filibuster. Most importantly, fast-track preserves Congress's
Constitutional primacy on trade. No agreement gets implemented
unless a majority of Congress approves.
Fast-track procedures require close collaboration between
the Executive and Congress at every stage. The President must
notify committees of jurisdiction and consult with them before
a negotiation begins and regularly throughout the negotiations.
Once talks are complete, the President must notify Congress 90
days before signing the agreement, to permit Congress time to
review the terms of the deal.
Once the agreement is signed, the President must submit it
to Congress, along with a draft implementing bill, for
approval. Congress has no more than 90 days during which the
Congress is in session to act. Amendments are not in order.
But the time when close coordination between the Executive
and Congress is most critical is the period between when the
agreement is signed and when the President submits the
agreement to Congress. This is the time when the administration
and the trade committees sit down together to craft an
implementing bill.
The law requires the Executive to consult with the
committees of jurisdiction. But because the details of this
consultative process are not spelled out by law, some call this
the ``informal process'' or the ``mock process.''
No one should be fooled by these titles. This cooperative
drafting ventue--while not spelled out in the law--is the
centerpiece of the first track process. It is at this stage--
before the implementing bill becomes unamendable--that the
trade committees can and do shape the final legislation.
Congress and the President first used the procedures
adopted in the Trade Act of 1974 to implement the GATT Tokyo
Round agreements in 1979. The Government has since used these
procedures to implement the WTO Uruguay Round Agreements, as
well as free trade agreements with Israel, Canada, Mexico,
Singapore, and Chile.
From the beginning, the Finance Committee has strived to
make the informal process operate as much as possible like the
normal legislative process. For that reason, the Finance
Committee always holds a mock markup of the draft implementing
bill. The Committee always gives its members an opportunity to
review the draft legislation and has frequently modified the
draft bill before proceeding to the mock markup. Like any
markup, a mock markup is open to the public. Members are free
to offer amendments to the draft bill that has been developed
by the administration and Committee staff. The Committee holds
a recorded vote on each amendment offered. It then votes on
whether to approve the draft bill, as amended, in a recorded
vote.
Amendments are common events at mock markups.
When the Committee considered the U.S.-Israel Free
Trade Agreement in 1984, Committee Members offered 13
amendments, and the Committee adopted 3.
In 1988, when the Committee considered the Canada-
United states Free Trade Agreement, Members offered 9
amendments, all of which were adopted.
When the Finance Committee considered draft
implementing legislation for the North American Free Trade
Agreement in 1993, members offered at least 15 amendments, of
which 14 were adopted. There were more than thirty differences
between the Senate and House versions of the bill at the end of
the mock markups.
By contrast, no amendments were offered last year
when the Committee considered the Singapore and Chile
implementing bills. That was unusual.
In each of these cases, consideration of amendments was
followed by a Committee vote to approve the draft bill, as
amended.
In every case except Singapore and Chile, amendments added
in the mock markup led to differences between the versions of
the draft bill approved by the Finance Committee and the bill
approved by the Ways and Means Committee. Consistent with
normal legislative practice, the two Committees resolved these
differences in an informal or ``mock'' conference, with each
House appointing conferees to participate.
This time-tested process works. It allows Congress to
exercise its Constitutional prerogatives, while still
guaranteeing the President and our trading partners a timely
vote on trade agreements. That is why we firmly believe that
Congress should continue to insist on a meaningful and robust
informal process that is as nearly identical as possible to the
normal legislative process.
Measured by past experience, the process for considering
the U.S.-Australia Free Trade Agreement falls short.
At the informal markup of this bill, Senator Conrad offered
an amendment. The administration expressed opposition to the
amendment. The amendment was nevertheless adopted in a roll
call vote by a majority of Committee members.
The appropriate next step would have been to proceed to an
informal conference with the House. A conference would have
afforded the opportunity to address any concerns raised by the
amendment. The conference could have approved the amendment
over the Administration's objection--something that has
happened before. It could have rewritten the amendment to make
it acceptable to the Administration. Or it could have debated
the matter and resolved, by majority vote, to reject the
amendment.
We will never know how the conference process might have
turned out, because, for the first time since fast-track was
adopted in 1974, the informal process was not followed. The
conference was simply bypassed in favor of permitting the
administration to submit its original bill, ignoring the
clearly expressed concerns of a majority of the Committee.
In the long run, we do ourselves a disservice by derailing
the informal process when the Administration's legislation is
altered in a way not to its liking. At most, we may have saved
ourselves a few days or weeks getting this bill to a vote. But
we are concerned that shortchanging the process sets a
dangerous precedent that could lead to the administration
ignoring Committee recommendations in the future and unravel
the consultation and cooperation that are central to the
Congress's grant on fast track authority to the administration.
In addition, more complex agreements may be ahead. CAFTA
involves six countries and could raise controversial new
issues. Any agreements that come out of the WTO Doha Round or
the FTAA talks could require extensive new implementing
legislation. There will surely be amendments offered during the
informal process on each of these agreements, and some may win
Committee approval. In sum, we would be foolish to assume the
process of developing implementing bills will always be as easy
in the future as our recent experiences with Singapore and
Chile.
When we shortchange the process, we shortchange the
Constitution. When we start cutting corners on process, we
begin to abdicate Congress's constitutional role in making
trade law. Short term expediency is no excuse for Congress to
surrender its Constitutional role. The ends do not justify the
means.
Max Baucus.
Jay Rockefeller.
Jeff Bingaman.
Tom Daschle.
Kent Conrad.
Blanche L. Lincoln.
Jim Jeffords.
V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
Pursuant to the requirements of 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):
CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985
* * * * * * *
SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) * * *
* * * * * * *
(b) Limitations on Fees.--(1)(A) Except as provided in
subsection (a)(5)(B) of this section, no fee may be charged
under subsection (a) of this section for customs services
provided in connection with--
* * * * * * *
(14) No fee may be charged under subsection (a) (9)
or (10) with respect to goods that qualify as
originating goods under section 203 of the United
States-Australia Free Trade Agreement Implementation
Act. Any service for which an exemption from such fee
is provided by reason of this paragraph may not be
funded with money contained in the Customs User Fee
Account.
* * * * * * *
----------
TARIFF ACT OF 1930
* * * * * * *
SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.
(a) * * *
* * * * * * *
(c) Maximum Penalties.--
(1) * * *
* * * * * * *
(8) Prior disclosure regarding claims under the
united states-australia free trade agreement.--
(A) In general.--An importer shall not be
subject to penalties under subsection (a) for
making an incorrect claim that a good qualifies
as an originating good under section 203 of the
United States-Australia Free Trade Agreement
Implementation Act if the importer, in
accordance with regulations issued by the
Secretary of the Treasury, voluntarily and
promptly makes a corrected declaration and pays
any duties owing.
(B) Time periods for making corrections.--In
the regulations referred to in subparagraph
(A), the Secretary of the Treasury is
authorized to prescribe time periods for making
a corrected declaration and paying duties owing
under subparagraph (A), if such periods are not
shorter than 1 year following the date on which
the importer makes the incorrect claim.
[(8)] (9) Seizure.--If the Secretary has reasonable
cause to believe that a person has violated the
provisions of subsection (a) and that such person is
insolvent or beyond the jurisdiction of the United
States or that seizure is otherwise essential to
protect the revenue of the United States or to prevent
the introduction of prohibited or restricted
merchandise into the customs territory of the United
States, then such merchandise may be seized and, upon
assessment of a monetary penalty, forfeited unless the
monetary penalty is paid within the time specified by
law. Within a reasonable time after any such seizure is
made, the Secretary shall issue to the person concerned
a written statement containing the reasons for the
seizure. After seizure of merchandise under this
subsection, the Secretary may, in the case of
restricted merchandise, and shall, in the case of any
other merchandise (other than prohibited merchandise),
return such merchandise upon the deposit of security
not to exceed the maximum monetary penalty which may be
assessed under subsection (c).
* * * * * * *
----------
TRADE ACT OF 1974
* * * * * * *
SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY
COMMISSION.
(a) Petitions and Adjustment Plans.--
(1) * * *
* * * * * * *
(8) The procedures concerning the release of
confidential business information set forth in section
332(g) of the Tariff Act of 1930 shall apply with
respect to information received by the Commission in
the course of investigations conducted under this
chapter, part 1 of title III of the North American Free
Trade Agreement Implementation Act, title II of the
United States-Jordan Free Trade Area Implementation
Act, title III of the United States-Chile Free Trade
Agreement Implementation Act, [and] title III of the
United States-Singapore Free Trade Agreement
Implementation Act, and title III of the United States-
Australia Free Trade Agreement Implementation Act. The
Commission may request that parties providing
confidential business information furnish
nonconfidential summaries thereof or, if such parties
indicate that the information in the submission cannot
be summarized, the reasons why a summary cannot be
provided. If the Commission finds that a request for
confidentiality is not warranted and if the party
concerned is either unwilling to make the information
public or to authorize its disclosure in generalized or
summarized form, the Commission may disregard the
submission.
* * * * * * *
----------
TRADE AGREEMENTS ACT OF 1979
* * * * * * *
SEC. 308. DEFINITIONS.
As used in this title--
(1) * * *
* * * * * * *
(4) Eligible products.--
(A) In general.--The term ``eligible
product'' means, with respect to any foreign
country or instrumentality that is--
(i) a party to the Agreement, a
product or service of that country or
instrumentality which is covered under
the Agreement for procurement by the
United States; [or]
(ii) a party to the North American
Free Trade Agreement, a product or
service of that country or
instrumentality which is covered under
the North American Free Trade Agreement
for procurement by the United
States[.]; or
(iii) a party to a free trade
agreement that entered into force with
respect to the United States after
December 31, 2003, and before January
2, 2005, a product or service of that
country or instrumentality which is
covered under the free trade agreement
for procurement by the United States.
* * * * * * *