[Senate Report 114-45]
[From the U.S. Government Publishing Office]
Calendar No. 76
114th Congress } { Report
SENATE
1st Session } { 114-45
======================================================================
TRADE FACILITATION AND TRADE ENFORCEMENT ACT OF 2015
_______
May 13, 2015.--Ordered to be printed
_______
Mr. Hatch, from the Committee on Finance,
submitted the following
R E P O R T
[To accompany S. 1269]
Including cost estimate of the Congressional Budget Office
The Committee on Finance, having considered an original
bill (S. 1269) to reauthorize trade facilitation and trade
enforcement functions and activities, and for other purposes,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
I. REPORT AND OTHER MATERIALS OF THE COMMITTEE......................2
A. Report of the Committee on Finance.................. 2
B. Summary of Congressional Consideration of the Bill.. 2
C. Background.......................................... 2
1. U.S. Customs and Border Protection (CBP)........ 2
2. De minimis...................................... 4
3. Anti-dumping and countervailing duties (level
the playing field legislation)................. 4
4. Automated Commercial Environment (ACE).......... 6
5. International Trade Data system (ITDS).......... 6
6. Advisory Committee on Commercial Operations of
U.S. Customs and Border Protection (COAC)...... 7
7. Centers of Excellence and Expertise (CEEs)...... 7
8. Commercial Targeting and National Targeting
Analysis Groups (NTAGs)........................ 8
9. Import Health and Safety........................ 8
10. Intellectual property rights enforcement at the
border......................................... 10
11. Bulk residue controversy....................... 10
12. Currency Manipulation.......................... 10
13. Drawback simplification........................ 12
14. Enforce Act.................................... 12
15. Section 301 of the Trade Act of 1974 (as
Amended)....................................... 13
16. Interagency Trade Enforcement Center........... 14
17. Trade Enforcement.............................. 14
18. Miscellaneous Tariff bill...................... 14
19. Consumptive Demand............................. 15
II. GENERAL DESCRIPTION OF THE BILL.................................15
SECTION 1--SHORT TITLE; TABLE OF CONTENTS.............. 15
SECTION 2--DEFINITIONS................................. 15
TITLE I--TRADE FACILITATION AND TRADE ENFORCEMENT...... 16
TITLE II--IMPORT HEALTH AND SAFETY..................... 28
TITLE III--IMPORT-RELATED PROTECTION OF INTELLECTUAL
PROPERTY RIGHTS.................................... 29
TITLE IV--EVASION OF ANTIDUMPING AND COUNTERVAILING
DUTY ORDERS........................................ 34
TITLE V--AMENDMENTS TO ANTIDUMPING AND COUNTERVAILING
DUTY LAWS.......................................... 37
TITLE VI--ADDITIONAL TRADE ENFORCEMENT AND INTELLECTUAL
PROPERTY RIGHTS PROTECTION......................... 38
Subtitle A--Trade Enforcement...................... 38
Subtitle B--Intellectual Property Rights Protection 43
TITLE VII--CURRENCY MANIPULATION....................... 45
Subtitle A--Investigation of Currency
Undervaluation................................. 45
Subtitle B--Engagement on Currency Exchange Rate
and Economic Policies.......................... 46
TITLE VIII--PROCESS FOR CONSIDERATION OF TEMPORARY DUTY
SUSPENSIONS AND REDUCTIONS......................... 47
TITLE IX--MISCELLANEOUS PROVISIONS..................... 49
TITLE X--OFFSETS....................................... 56
III. BUDGETARY IMPACT OF THE BILL....................................58
IV. VOTES OF THE COMMITTEE..........................................69
V. REGULATORY IMPACT OF THE BILL...................................70
VI. ADDITIONAL VIEWS................................................71
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........72
I. REPORT AND OTHER MATERIALS OF THE COMMITTEE
A. Report of the Committee on Finance
The Committee on Finance, having considered an original
bill (S. 1269) 107 to reauthorize trade facilitation and trade
enforcement functions and activities, and for other purposes,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
B. Summary of Congressional Consideration of the Bill
On April 20, 2015 Senator Hatch introduced S. 1015 on
behalf of himself and Senator Wyden.
The Senate Committee on Finance met in open executive
session on April 22, 2015 to consider the Chairman's Mark to
reauthorize trade facilitation and trade enforcement functions
and activities, and for other purposes. The proposal the
Committee considered was based upon S. 1015. During the
Committee's consideration of the proposal, 7 amendments were
approved. The Committee approved the amended proposal by voice
vote; and ordered the amended proposal reported as an original
bill (S. 1269).
C. Background
1. U.S. Customs and Border Protection (CBP)
International trade is a critical component of the U.S.
economy, with U.S. goods trade amounting to about $4 trillion
in 2014, with merchandise imports of $2.4 trillion and exports
of $1.6 trillion. U.S. Customs and Border Protection (CBP), the
agency charged with managing the import process at the border,
admitted about 30.4 million import entries per year through
over 300 U.S. ports of entry (POEs) in fiscal year (FY) 2013.
The largest volume of imports comes through land (truck and
rail) and maritime flows, which together account for over 25
million shipping containers per year.
The efficient flow of legally traded goods in and out of
the United States is thus a vital element of the country's
economic security. While U.S. trade in imports depends on the
smooth flow of legal cargo through POEs, the goal of trade
facilitation often competes with two additional goals: (1) the
enforcement of U.S. trade laws designed to protect U.S.
consumers and business against illegal imports and to collect
customs revenue; and (2) import security, or preventing the
entry of chemical, biological, radiological, and nuclear (CBRN)
weapons and related material; illegal drugs; and other
contraband.
SELECTED LEGISLATIVE HISTORY
The United States Customs Service (USCS) was established by
an act of Congress on July 1, 1789. In September 2, 1789, the
USCS was placed under the Secretary of the Treasury. Other key
laws establishing and authorizing the trade functions of the
USCS included provisions in the Tariff Act of 1930, the Customs
Simplification Act of 1953, and the Reorganization Plan of
1965.
The last time that USCS's trade functions were
fundamentally reorganized was in 1993, in Title VI of the North
American Free Trade Agreement Implementation Act (P.L. 103-
182), also known as the Customs Modernization and Informed
Compliance Act, or ``Mod Act.'' The Mod Act placed a greater
administrative burden on the importer, and shifted USCS's focus
to the collection of data and post-entry enforcement (i.e.,
audits) to ensure that all legal requirements have been met. By
reducing USCS's role in duty determination, the act freed up
agency assets to modernize the import process and improve post-
entry enforcement. Although private industry stakeholders faced
increased responsibilities, the law also provided for a quicker
and more transparent import process through streamlined and
automated customs operations.
Following the 9/11 terrorist attacks, the Homeland Security
Act (P.L. 107-296) placed all or some part of 22 different
federal departments and agencies, including the USCS, into the
newly created Department of Homeland Security (DHS). The USCS
became DHS' bureau of Customs and Border Protection (CBP) and
has been the lead agency on import policy since 2003.
The customs reauthorization legislation in the Trade Act of
2002 (Title III of P.L. 107-210, the Customs Border Security
Act of 2002) authorized appropriations for a number of
noncommercial and commercial CBP programs. Sec. 338 of the Act
amended the Tariff Act of 1930 to authorize the Secretary of
the Treasury to require, by regulation, the electronic
submission of this information to CBP. Sec. 343(a) required the
Secretary, in consultation with a broad range of stakeholders,
to promulgate regulations for advanced cargo information based
on the Secretary's determination of what is ``reasonably
necessary to ensure aviation, maritime, and surface
transportation safety and security.'' Sec. 343(b) required
shippers of cargo loading in a U.S. port (including an ocean
transportation intermediary that is a non-vessel-operating
common carrier) to submit a complete set of shipping documents
within 24 hours after the cargo is delivered to the marine
terminal operator, and under no circumstances later than 24
hours prior to departure of the vessel.
The Maritime Transportation Security Act of 2002 (MTSA,
P.L. 107-295) amended DHS authority under the Trade Act of 2002
to collect advanced cargo data from importers and exporters and
permitted CBP to share the information with other federal
agencies.
2. De minimis
The de minimis level, currently $200, refers to the value
threshold below which unaccompanied shipments can enter U.S.
commerce without the need for formal entry procedures or
payment of customs duties. The de minimis level was provided
for in P.L. 103-182, and in section 321(a)(2)(c) of the Tariff
Act of 1930 (19 U.S.C. 1321(a)(2)(C), as amended).
The exemption is intended to ``avoid expense and
inconvenience to the Government disproportionate to the amount
of revenue that would otherwise be collected.'' Thus, a goal of
the de minimis threshold is to balance the collection of tariff
revenue with the administrative costs (to the government) of
customs duty collection. The statute also gives the Secretary
of the Treasury the ability to raise the de minimis level by
regulation.
3. Anti-dumping and countervailing duties (level the playing field
legislation)
ANTIDUMPING AND COUNTERVAILING DUTIES
Two major U.S. trade remedies are the antidumping (AD) law,
which combats the sale of imported products at less than fair
market value, and the countervailing duty (CVD) law, which aims
to offset foreign government subsidization of imported goods.
The AD law (19 U.S.C. 1673 et seq.) provides relief to U.S.
industries and workers that are ``materially injured, or . . .
threatened with material injury, or the establishment of an
industry in the United States is materially retarded'' due to
imports sold in the U.S. market at prices that are less than
fair market value. The CVD law (19 U.S.C. 1671 et seq.)
provides relief to domestic industries that are ``materially
injured, or . . . threatened with material injury, or the
establishment of an industry in the United States is materially
retarded'' due to imported goods that have been subsidized by a
foreign government or public entity, and can therefore be sold
at lower prices than similar goods produced in the U.S.
SUBSIDIES AND COUNTERVAILING DUTIES
The first CVD statute was passed as part of the Tariff Act
of 1890, but was limited to the protection of American sugar
producers. The first general CVD provision appeared in the
Tariff Act of 1897 (also known as the Dingley Tariff; Section
7, 55th Congress, Session I, Ch. 11. 1897). This provision
authorized the Secretary of the Treasury to investigate and
impose duties ``whenever any country, dependency, or colony
shall pay or bestow, directly or indirectly, a bounty or grant
upon the exportation of any article or merchandise from such
country, dependency, or colony . . .''.
Prior to 1995, there were two countervailing duty law in
force. Section 303 of the Tariff Act of 1930, the earlier of
the two laws, applied to countries that were not ``under the
agreement,'' or members of the General Agreement on Tariffs and
Trade (GATT). This statute was subsequently repealed in section
261(a) of the Uruguay Round Agreements Act (URAA, P.L. 103-465)
with the advent of the WTO.
Title VII of the Tariff Act of 1930 (19 U.S.C. 1671ff)
describes the CVD law, which applies to all U.S. trading
partners. In the statute, a countervailable subsidy is defined
as a case in which a government of a country or any public
entity within the territory of the country: (1) provides a
financial contribution; (2) provides any form of income or
price support within the meaning of Article XVI of the GATT
1994; or (3) makes a payment or funding mechanism to provide a
financial contribution, or entrusts or directs a private entity
to make a financial contribution, if providing the contribution
would normally be vested in the government and the practice
does not differ in substance from practices normally followed
by governments; to a manufacturer, producer, or exporter of
merchandise. When a commodity exported into the U.S. is
subsidized in this manner and a U.S. industry is ``materially
injured,'' ``threatened with material injury,'' or ``the
establishment . . . is materially retarded,'' a countervailing
duty is imposed ``equal to the amount of the net
countervailable subsidy'' (19 U.S.C. 1671(a)). The relief
provided in each case is an additional import duty equal to the
subsidy (countervailing duty).
ANTIDUMPING
In the case of dumping, the unfair trade practice consists
of ``the sale or likely sale of goods at less than fair value''
(19 U.S.C. 1677(34)). The relief provided is an additional duty
based on the amount of dumping (as calculated, a weighted
average dumping margin) placed on the subject imports.
The U.S. AD statute originated in the Emergency Tariff Act
of 1921, which allowed for a special ``antidumping duty'' to be
assessed when a foreign producer sold ``a class or kind of
foreign merchandise'' for importation into the U.S. at ``less
than its fair value.'' Another AD provision, the Antidumping
Act of 1916, imposed criminal penalties for dumping and
although there were cases brought under the Act, its provisions
were never carried out. The 1916 Act was repealed in December
2004 in response to a WTO dispute settlement determination that
the law was in violation of U.S.WTO obligations. The current AD
statute, as substantially amended, currently appears in Title
VII of the Tariff Act of 1930 (19 U.S.C. 1673ff).
INVESTIGATIONS
Although AD and CVD investigations involve fundamentally
different types of unfair trade behavior, the remedies provided
(an additional duty offsetting the ``dumping margin'' in AD
cases, or the amount of subsidy in CVD cases) and investigative
procedures are similar.
AD and CVD investigations involve a complex, quasi-judicial
process conducted by two U.S. agencies:
The U.S. International Trade Commission
(USITC) determines whether or not a U.S. industry has
suffered material injury, or the threat thereof; and
The Office of Enforcement and Compliance at
the International Trade Administration of the U.S.
Department of Commerce (called the ``administering
authority'' in the statute) determines the existence
and amount of dumping or subsidy.
Both agencies conduct investigations on the basis of U.S.
statutory authority, agency regulations, precedence established
in prior investigations, and case law established in the Court
of International Trade (CIT) and other judicial bodies.
4. Automated Commercial Environment (ACE)
General authority for the Automated Commercial Environment
(ACE) and the International Trade Data System (below) were
provided for in Title VI of the North American Free Trade
Agreement Implementation Act (P.L. 103-182), which established
the National Customs Automation Program, an automated
electronic system for the processing of commercial imports.
Expenditures for ACE were first provided in the then-U.S.
Customs Service FY2001 appropriations (the Consolidated
Appropriations Act, 2001, Public Law 106-554). Subsequently,
Section 13031(f) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (19 U.S.C. 58c(f)(4)) created a
separate account within the general fund of the Treasury known
as the ``Customs Commercial and Homeland Security Automation
Account,'' which also provided that $350 million would be
deposited into the account (from custom merchandise processing
fees) in fiscal years 2003-2005.
ACE is designed to replace the obsolete, mainframe-based
Automated Commercial System (ACS) that began operations in
1984, and is still in use for some trade functions. CBP has
designated ACE as the automated system that will become the
platform for a future ``single window'' through which importers
and exporters will be able to transmit data and coordinate with
other Federal trade-participating government agencies regarding
shipments of merchandise in an efficient and cost-effective
manner.
5. International Trade Data system (ITDS)
Section 411(d) of the Tariff Act of 1930 (19 U.S.C.
1411(d)) provides that the Secretary of Treasury shall oversee
the establishment of an electronic system to be known as the
``International Trade Data System'' (ITDS). The ITDS, along
with ACE, is a tool for improving CBP's interagency
coordination with its 47 partner government agencies (PGAs).
ITDS is an intergovernmental project to coordinate and
standardize the collection of trade enforcement data by all
federal government agencies that play a role in trade
enforcement. The goal is to build a ``single window'' for the
electronic collection and distribution of standard government-
wide import and export data for the use of government agencies
with a role in trade enforcement, in order to eliminate
redundant information requirements. Under section 405 of the
Security and Accountability for Every (SAFE) Port Act of 2005
(P.L. 109-347), federal agencies that require documentation
related to the importation or exportation of cargo are required
to participate in ACE once the ITDS is fully operational. On
February 14, 2014, President Obama issued Executive Order 13659
(``Streamlining the Export/Import Process for America's
Businesses''), mandating development and completion of the ITDS
by December 31, 2016.
6. Advisory Committee on Commercial Operations of U.S. Customs and
Border Protection (COAC)
The Advisory Committee on Commercial Operations of U.S.
Customs and Border Protection (COAC) was established by the
Omnibus Budget Reconciliation Act of 1987 (Pub. L. No. 100-203;
19 U.S.C. 2071 note). The COAC is administered jointly by the
Departments of the Treasury and Homeland Security, and operates
under the provisions of the Federal Advisory Committee Act
(FACA) (5 U.S.C. App). The COAC is comprised of private sector
representatives that advise the Secretaries of the Department
of Treasury and DHS on the commercial operations of CBP and
related DHS functions. COAC meetings consider issues including
global supply chain security and facilitation, CBP
modernization and automation, air cargo security, customs
broker regulations, trade enforcement, agricultural inspection,
and protection of intellectual property rights.
7. Centers of Excellence and Expertise (CEEs)
In August 2012, CBP initiated a test of four Centers of
Excellence and Expertise (CEEs or Centers) to serve as
industry-specific single points of post-entry processing for
certain businesses enrolled in the C-TPAT and ISA trusted
trader programs (77 Federal Register 50248, August 28, 2012; 78
Federal Register 20345, April 4, 2013; 79 Federal Register
13322, March 10, 2014). The Centers are staffed with CBP
employees who facilitate trade by providing account management
functions, and are designed as ``one-stop-shops'' to align
customs practices with the demands of modern business and to
facilitate trade in the targeted industries. CBP's integrated
staff in the Centers process entry summaries, post-entry
amendment and correction reviews, protests, and other
administrative work. The Centers were designed so that the
industries would receive fewer cargo delays, reduce costs, and
enjoy greater predictability, while CBP would be able to shift
its emphasis at the POEs to address higher-risk shipments and
focus on trade enforcement issues. The Centers also support
improved information sharing between industry representatives
and CBP staff to lead to more focused trade enforcement
efforts.
The 10 CEEs currently operating are:
Electronics in Los Angeles;
Pharmaceuticals, Health and Chemicals in New
York;
Automotive and Aerospace in Detroit;
Petroleum, Natural Gas, and Minerals in
Houston;
Apparel, Footwear, and Textiles in San
Francisco;
Agriculture and Prepared Products in Miami;
Consumer Products and Mass Merchandising in
Atlanta;
Industrial and Manufacturing Materials in
Buffalo;
Base Metals in Chicago; and
Machinery in Laredo.
8. Commercial Targeting and National Targeting Analysis Groups (NTAGs)
The National Targeting and Analysis Groups (NTAGs) are the
primary national trade targeting assets for CBP. NTAGs provide
in-depth risk analysis for CBP's Priority Trade Issues (PTIs),
including Intellectual Property Rights (IPR) and Antidumping
and Countervailing Duty (AD/CVD). The NTAGs work in concert
with the Centers of Excellence and Expertise (CEE), and the
Cargo National Targeting Center (NTC-C) Tactical Trade
Targeting Unit (T3U), to enhance trade targeting expertise.
These entities work with the entire cycle of trade fraud
enforcement, from information intake, analysis, targeting,
investigative case support, and operational assessments.
9. Import Health and Safety
IMPORT HEALTH AND SAFETY
CBP collaborates at U.S. POEs with many federal agencies to
enforce health and safety laws that prevent unsafe products
from entering the United States. CBP is provided this authority
through the Tariff Act of 1930, the Trade Act of 2002, and the
Security and Accountability for Every (SAFE) Port Act of 2006,
and corresponding CBP regulations.
CBP exercises its regulatory authority to require detailed
advance electronic cargo information on arriving goods. 19
U.S.C. 1484 gives CBP the authority to enforce the legal
requirements for the entry of merchandise into the United
States, and 19 U.S.C. 1499 and other statutes provide general
inspection and examination authorities. CBP samples and holds
merchandise on behalf of other PGAs (for example, the Food &
Drug Administration and the Consumer Product Safety Commission)
that have specific authority to determine the admissibility of
these products. CBP exercises enforcement authority using
bonding procedures as permitted by the general authority under
19 U.S.C. 1623. CBP also has authority under the Tariff Act of
1930, particularly 19 U.S.C. 1595a(c) to seize merchandise that
is imported in violation of any health, safety or conservation
prohibition.
CBP actively engages in interagency import safety efforts
by promoting risk management strategies and developing uniform
enforcement strategies, such as detention, seizure, and
destruction policies. However, there is no statutory mechanism
for agencies of the Federal government to coordinate, as a
whole, on ensuring the safety of merchandise imported into the
United States and focus on shipments that are higher risk.
10. Intellectual property rights enforcement at the border
OVERVIEW
The protection and enforcement of intellectual property
rights (IPR)--such as patents, copyrights, trademarks, and
trade secrets--is an important component of U.S. trade policy,
due to the significant role of IPR in the U.S. economy and the
potentially negative commercial, health, safety, and security
consequences of counterfeiting and piracy. Multiple federal
agencies and interagency coordinating bodies are involved in
U.S. efforts to protect and enforce IPR. Congress has an
interest in the effectiveness of U.S. IPR enforcement efforts,
including with respect to the level and allocation of federal
resources, authorities of agencies, and the coordination of
activities.
IPR is enforced at U.S. borders through seizures of
counterfeit and pirated goods, investigations, and
prosecutions. DHS, through seizures of counterfeit and pirated
goods by CBP and investigations by ICE of suspected IP
infringement, plays a key role in such efforts. In FY2014, the
number of IPR seizures at the U.S. border totaled 23,140 of
commodities valued at $1.2 billion, with China and Hong Kong
ranking as the two largest source economies for seizures by
value.
IPR infringement in the past primarily constituted of
counterfeiting and piracy of physical goods, but in recent
years, according to many sources, including the Federal Bureau
of Investigation and USTR's Special 301 Report, there has been
a growing amount of piracy taking place through digital trade.
Digital trade presents new challenges and opportunities in
terms of IPR protection and enforcement.
RESOURCES
CBP's Office of International Trade is responsible for the
IPR enforcement program. According to DHS' 2016 budget
justification, ``CBP's strategy to enforce IPR is based on the
pillars of facilitation, enforcement, and deterrence.'' CBP
partners with the private sector in an effort to transform IPR
risk assessment by identifying low-risk shipments. CBP
conducted 81 IPR ``Field Training'' sessions for their
personnel in FY2014.
In FY2014, CBP had 19,580 full-time equivalent CBP officers
assigned to its POEs. For FY2016, the agency is requesting a
total of 20,656 full-time equivalent CBP officers, with 2,371
of that total assigned to ``Trade and Revenue'' positions.
COORDINATION
DHS houses the National Intellectual Property Rights
Coordination Center (IPR Center), a task force for optimizing
the roles and law enforcement activities of member agencies and
enhancing government-industry partnerships to support IPR
enforcement initiatives. The IPR Center's mission is ``to
ensure national security by protecting the public's health and
safety, the U.S. economy, and our war fighters, and to stop
predatory and unfair trade practices that threaten the global
economy.'' Established by ICE in 2002, the IPR Center's role is
to improve and coordinate federal intellectual property
functions to more effectively combat IPR-infringing products.
The IPR Center arose out of efforts by the National Security
Council's Special Coordination Group on Intellectual Property
Rights and Trade Related Crime to implement Presidential
Decision Directive 42, issued in 1995, concerning international
crime. The IPR Center brings together, in a task force setting,
23 partner agencies, consisting of 19 federal agencies,
Interpol, Europol, and the governments of Canada and Mexico. It
is led by the ICE Homeland Security Investigations (HSI)
Director, with Deputy Directors from HSI and CBP. The IPR
Center's approach focuses on investigations, interdiction, and
outreach and training to address counterfeiting and piracy. In
FY2014, appropriations for ICE provided that not less than $10
million would be available for investigations of IPR
violations, including for the operations of the IPR Center. In
FY2014, IPR Center-led interagency collaboration resulted in
683 arrests, with 454 indictments and 461 convictions.
11. Bulk residue controversy
When instruments of international traffic (e.g., cargo
container) return to the United States, they sometimes hold
residue from their exported product. Prior to 2009, instruments
of international traffic (IIT) containing residue could return
to the United States under the IIT exemption of the Tariff Act
of 1930 (i.e., are exempt from manifested and entry
requirements). In 2009 CBP issued HQ ruling H026715 that
requires IITs containing residue to be manifested and entered.
This ruling was significantly problematic for private sector
stakeholders due to the difficulty and potential expense that
would be incurred in adhering to manifest and entry
requirements for residue.
In response to private sector concerns, CBP created a
working group with private sector stakeholders in 2010 to
identify the least disruptive methods to enforce HQ ruling
H026715. In November, 2013 CBP announced the launch of the
Residue Cargo Pilot program, but it and its start date has been
pushed back indefinitely.
12. Currency Manipulation
The Committee is concerned that foreign countries, have
been using policies to undervalue their currencies in order to
gain unfair trade advantages over the United States or prevent
effective balance of payments adjustments. In the view of the
Committee, the currently tools available to the United States
to address the challenges posed by currency manipulation could
be enhanced.
Surveillance of foreign exchange rate policies of major
U.S. trading partners is undertaken by the Department of the
Treasury, as required by law; by multilateral institutions like
the International Monetary Fund (IMF) and the WTO; and in
various international fora such as G-20 meetings of finance
ministers and central bank governors, the G-7, and the U.S.-
China Strategic and Economic Dialogue (S&ED).
The Omnibus Trade and Competitiveness Act of 1988 (the
``Act'') requires that the Secretary of the Treasury report, on
a semiannual basis, on international economic and exchange rate
policies of our major trading partners. According to Section
3004 of the Act, the report must consider ``whether countries
manipulate the rate of exchange between their currency and the
United States dollar for purposes of preventing effective
balance of payments adjustment or gaining unfair advantage in
international trade.'' The Treasury Department most recently
cited China, in 1994, as a country for currency manipulation
under the terms of the Act. Successive Administrations have
stressed that they address the issue in bilateral and
multilateral discussions, including the S&ED with China, the G-
7, and the G-20.
Article IV (``Obligations Regarding Exchange
Arrangements'') of the IMF's Articles of Agreement identifies
that ``each member shall avoid manipulating exchange rates or
the international monetary system in order to prevent effective
balance of payments adjustment or to gain an unfair competitive
advantage over other members.'' The IMF regularly monitors
bilateral and multilateral exchange rate measures, and counsels
member countries when evidence is suggestive of misalignments
with fundamentals, though tying exchange rates to macroeconomic
fundamentals has proven to be a notoriously difficult
undertaking. Such difficulty is one of the reasons why
detection of misalignments is quantitatively challenging.
Moreover, deviations between a country's foreign exchange rate
policies and a hypothetically pure ``freely floating exchange
rate'' regime depend, in addition to central bank actions and
macroeconomic fundamentals, on the extent to which a country
controls and restricts capital outflows and inflows--a
consideration often overlooked in ``currency manipulation''
discussions.
The World Trade Organization can levy trade sanctions or
pursue resolution of trade disputes between WTO member
countries through WTO dispute settlement mechanisms. Trade
sanctions based on ``currency manipulation'' through WTO
processes would be cumbersome, however, given measurement and
exchange-rate modeling difficulties.
In its most recent (October 15, 2014) Report to Congress on
International Economic and Exchange Rate Policies, issued by
the U.S. Department of the Treasury's Office of International
Affairs, Treasury concluded that no major trading partner of
the United States met the standard of manipulating the rate of
exchange between their currency and the United States dollar
for purposes of preventing effective balance of payments
adjustments or gaining unfair competitive advantage in
international trade as identified in Section 3004 of the Act
during the period covered in the Report.
Nonetheless, Treasury continues to closely monitor
developments in economies where exchange rate adjustment is
incomplete and push for comprehensive adherence to all G7 and
G20 commitments. According to the Treasury Report: ``These
include the recent G-7 commitments to orient fiscal and
monetary policies towards domestic objectives using domestic
instruments and to not target exchange rates. They also include
the G-20 commitments to move more rapidly toward market-
determined exchange rate systems and exchange rate flexibility,
to avoid persistent exchange rate misalignments, to refrain
from competitive devaluation, and to not target exchange rates
for competitive purposes. Treasury will continue to monitor
closely exchange rate developments in all the economies covered
in this report, and press for further policy changes that yield
greater exchange rate flexibility, greater transparency on
intervention, a more level playing field, and support for
strong, sustainable and balanced global growth.''
CONGRESSIONAL ACTION
In recent Congresses, Senators and Members of the House of
Representative introduced legislation intended to address
instances of ``currency manipulation'' undertaken for purposes
of unfair trade advantage or prevention of balance of payments
adjustment. Examples include: The Currency Reform for Fair
Trade Act (H.R. 2378), which passed in the House in the 11th
Congress; and The Currency Exchange Rate Oversight Reform Act
of 2011 (S. 1619), which passed in the Senate in the 112th
Congress. Neither bill became law. Those bills, among other
provisions, would have specified the definition of a
countervailable subsidy (a subsidy eligible to be offset
through higher import duties) to include some measure of the
benefit conferred on imports into the United States from
countries with undervalued currencies.
13. Drawback simplification
Drawback is defined in the U.S. Code of Federal Regulations
as ``the refund or remission, in whole or in part, of a customs
duty, fee, or internal revenue tax which was imposed on
imported merchandise under Federal law because of its
importation, and the refund of internal revenue taxes paid on
domestic alcohol as prescribed in 19 U.S.C. 1313(d).'' The
purpose of customs duty drawback is to permit U.S.-made
products to compete more effectively in world markets by
enabling U.S. manufacturers and importers to select the most
advantageous sources for raw materials and components without
regard to duties in order to save production costs. Thus,
drawback also encourages domestic production.
Generally speaking, the term refers to a refund of 99
percent of duties and/or Internal Revenue taxes paid on certain
imported merchandise (excluding antidumping or countervailing
duties, harbor maintenance fees, and merchandise processing
fees) entering the United States, provided the article is
exported or destroyed under CBP supervision. Drawback of duty
and some taxes is provided in U.S. law by 19 U.S.C. 1313, while
refunds of certain excise taxes also administered by CBP are
covered by 26 U.S.C. 5062.
14. Enforce Act
CBP has not adequately investigated allegations of AD/CVD
orders and has had considerable difficulty collecting the
actual amount of duties owed on merchandise subject to AD and
CVD action. This issue has been the focus of several
congressional hearings.
Potential duty shortfalls are important to U.S. producers
benefiting from AD or CVD orders in two ways. First, if an AD
investigation was completed before the repeal of the Continued
Dumping and Subsidy Offset Act (CDSOA) in 2005-2007, producers
of U.S. import-competing merchandise may be eligible for CDSOA
disbursements of duties under certain conditions. Second,
shortfalls in duty collections diminish the effect of an AD or
CVD order because the adversely affected U.S. industry involved
does not receive the full protection of the additional duty. As
a result, the domestic industry may continue to be injured by
the anti-competitive practices of the foreign supplier even
after an order has been imposed.
Shortfalls in AD/CV duty collection have also significantly
impacted U.S. revenue. In 2011 testimony before the
Subcommittee on the Department of Homeland Security of the
Senate Committee on Appropriations, the U.S. Government
Accountability Office (GAO) estimated that from FY 2001 to FY
2010 over $1 billion in AD/CV duties were uncollected.
According to CBP data from FY 2011 to FY 2013, the amount of
uncollected revenue has increased by an additional $177.6
million.
15. Section 301 of the Trade Act of 1974 (as Amended)
Chapter 1 of title III (sections 301-310) of the Trade Act
of 1974 (P.L. 93-618; referred to collectively as ``Section
301''), as amended, provides the authority and procedures to
enforce U.S. rights under international trade agreements and to
respond to certain unfair foreign practices. Section 301 is the
principal statutory authority under which the United States may
impose trade sanctions on foreign countries that either violate
trade agreements or otherwise maintain laws or practices that
are unjustifiable and restrict U.S. commerce. When a Section
301 investigation involves an alleged violation of a trade
agreement, such as agreements under the WTO or the North
American Free Trade Agreement (NAFTA), the USTR must follow the
consultation and dispute settlement procedures set out in that
agreement. The 1988 Omnibus Trade and Competitiveness Act (P.L.
100-418) strengthened Section 301 by creating ``Special 301''
provisions, which require the USTR to conduct an annual review
of foreign countries' intellectual property rights (IPR)
protection policies and practices. Special 301 directs USTR to
identify countries that deny adequate protection of IPR, or
restrict IPR-related products, and to initiate Section 301
procedures against countries whose practices are considered to
be the most serious or harmful--``priority foreign countries.''
If an agreement is not reached within a certain timeframe, the
USTR must determine if trade sanctions should be imposed. As
part of the Special 301 Report, USTR has created a Priority
Watch List and Watch List to identify countries with particular
problems with respect to IPR protection, enforcement, or market
access for persons relying on IPR. Countries placed on the
Priority Watch List have more significant problems in these
areas.
Section 301 provides the domestic counterpart to the WTO
consultation and dispute settlement procedures. It authorizes
the USTR to impose retaliatory measures to remedy an
uncorrected foreign practice, some of which may involve
suspending an obligation under a trade agreement--for example,
imposing a tariff increase on a product in excess of the rate
negotiated in the WTO or the ``bound'' rate. The USTR may
terminate a Section 301 case if the dispute is settled, but,
under section 306 of the act, the USTR must monitor foreign
compliance and may take further retaliatory action if
compliance measures are unsatisfactory. While Section 301 also
permits the USTR to initiate an investigation on its own
motion, it is not necessary for the USTR to invoke Section 301
in order to initiate a dispute. Nevertheless, the authorities
in Section 301 are available to the USTR if it decides to
impose sanctions in a trade dispute that it initiated earlier.
The USTR administers the statutory procedures through an
interagency committee.
Under Section 301, if the USTR determines that a foreign
government's act, policy or practice violates or is
inconsistent with a trade agreement, or is unjustifiable and
burdens or restricts U.S. commerce, then action by the USTR is
mandatory, subject to the specific direction, if any, of the
President to enforce the trade agreement rights or to obtain
the elimination of the act, policy, or practice. If the USTR
determines that the act, policy, or practice is unreasonable or
discriminatory and burdens or restricts U.S. commerce and
actions by the United States is appropriate, then the USTR has
discretionary authority to take appropriate and feasible
action, subject to the specific direction, if any, of the
President, to obtain the elimination of the act, policy, or
practice.
16. Interagency Trade Enforcement Center
The enforcement of U.S. trade rights under international
trade agreements and enforcement of U.S. trade laws has been
one of the key issues in the development of trade policy in
recent years. On February 28, 2012, President Barack Obama
signed Executive Order 13601 establishing the Interagency Trade
Enforcement Center (ITEC) to advance U.S. foreign trade policy
through strengthened and coordinated enforcement of U.S. trade
rights. The goal was to take an interagency approach to
monitoring and enforcing U.S. trade rights around the world by
using expertise from across the federal government. The ITEC is
led by a Director designated by the U.S. Trade Representative
and a Deputy Director designated by the Secretary of Commerce.
The ITEC coordinates interagency trade enforcement matters
among USTR and the Departments of Commerce, State, Treasury,
Justice, Agriculture, and Homeland Security, as well as the
Office of the Director of National Intelligence, and other
agencies that the President or USTR may designate. Funding for
the ITEC is appropriated through the International Trade
Administration under the Commerce, Justice, Science, and
Related Agencies appropriations accounts. ITA works closely
with the ITEC to identify issues and develop information in
areas of economic importance to U.S. industries.
17. Trade Enforcement
The Office of the U.S. Trade Representative (USTR), in
coordination with other federal agencies, enforces U.S. trade
rights and benefits under international agreements through
consultations, negotiations, and litigation in formal dispute
settlement proceedings. USTR coordinates the Federal
government's activities in identifying, monitoring, enforcing,
and resolving the full range of international trade issues to
assure that American workers, farmers, ranchers, and businesses
receive the maximum benefit under international trade
agreements of the United States. Those agreements include
multilateral agreements such as those adopted at the creation
of the WTO, regional agreements such as the North American Free
Trade Agreement (NAFTA), and bilateral agreements such as the
various free trade agreements (FTAs).
18. Miscellaneous Tariff bill
U.S. importers often request that Members of Congress
introduce bills seeking to temporarily suspend or reduce
tariffs on certain imports. The rationale for these requests,
in general, is that they help domestic producers of downstream
goods reduce costs, thus making their products more
competitive. In turn, these cost reductions may be passed on to
the consumer.
In recent congressional practice, the Senate Finance and
House Ways and Means Committees have combined individual duty
suspension bills and other technical trade provisions into
larger pieces of legislation known as miscellaneous tariff
bills (MTBs). Before inclusion in an MTB, the individual bills
are reviewed by the trade subcommittees of the relevant
committees, the U.S. International Trade Commission (USITC),
and executive branch agencies to ensure that they are
noncontroversial (generally, that no domestic producer, Member,
or government agency objects), relatively revenue-neutral
(revenue loss due to the duty suspension of no more than
$500,000 per product), and are able to be administered CBP.
In the past, duty suspensions in MTBs have only been
available for a limited time (generally three years from the
date of enactment), and if no subsequent MTB legislation is
passed, the duty-free or reduced duty status of the products
expires. Expired duty suspensions must be re-introduced to be
included in new MTB legislation, and in most cases, the
favorable duty status is not retroactively renewed.
The last enacted MTB expired on December 31, 2012. This
MTB, the United States Manufacturing Enhancement Act of 2010
(P.L. 111-227) suspended entirely or reduced duties on over 600
products. Since legislative attempts to pass an additional MTB
were not successful, duties must be paid on these products,
most of which are inputs in various U.S. manufactured products.
19. Consumptive Demand
Prohibition of goods made with forced labor has a long
history in the United States. Congress first prohibited
importation of goods made with prison labor under the McKinley
Tariff Act of 1890 (Chapter 1244, 26 Stat. 567, Sec. 51).
Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) expanded
the categories of prohibited labor to include convict labor,
forced labor, and indentured labor under penal sanctions. It
also added an exception that permitted the importation of goods
made with forced labor when domestic production of those goods
was not sufficient to meet the consumptive demand requirements
of the United States.
Section 307 defines ``forced labor'' as having two key
components: (a) it is involuntary; and (b) it carries a threat
of penalty for its nonperformance. It also provides that the
term ``forced labor and/or indentured labor'' includes forced
or indentured child labor. The provision does not specify a
minimum content requirement, and therefore encompasses goods
with even minimal amounts of content produced with forced or
indentured labor. The Secretary of the Treasury is authorized
and directed by the statute to prescribe such regulations as
may be necessary for the enforcement of the provision, and
under those regulations CBP is the lead agency responsible for
enforcement of Section 307.
II. GENERAL DESCRIPTION OF THE BILL
Section 1--Short Title; Table of Contents
This section sets forth the short title of this Act as the
Trade Facilitation and Trade Enforcement Act of 2015. Section 1
also provides the table of contents.
Section 2--Definitions
This section defines the terms ``Automated Commercial
Environment,'' ``Commissioner,'' ``customs and trade laws of
the United States,'' ``private sector entity,'' ``trade
enforcement,'' and ``trade facilitation.''
TITLE I--TRADE FACILITATION AND TRADE ENFORCEMENT
Section 101--Improving Partnership Programs
Section 101(a) requires the Commissioner to ensure that all
Agency partnership programs provide trade benefits to
participants.
Section 101(b) requires the Commissioner in developing and
operating all partnership programs to (1) consult with the
private sector, the public, and other Federal agencies, when
appropriate, to ensure that participants in those programs
receive commercially significant and measurable trade benefits
in all such programs, including providing pre-clearance of
merchandise for qualified persons that demonstrate the highest
levels of compliance with customs and trade laws of the United
States, regulations of CBP, and other requirements the
Commissioner determines to be necessary; (2) ensure an
integrated and transparent system of trade benefits and
compliance requirements for all CBP partnership programs; (3)
consider consolidating Agency partnership programs to support
the objectives of such programs, increase participation, and
enhance the benefits provided to participants; and (4)
coordinate with the Director of ICE and other Federal agencies
with authority to detain and release merchandise entering the
United States to (A) ensure coordination in the release of such
merchandise through the Automated Commercial Environment (ACE)
and the International Trade Data System (ITDS), (B) ensure that
partnership programs of those agencies are compatible with
CBP's partnership programs, (C) develop criteria for
authorizing the release, on an expedited basis, of merchandise
for which documentation is required from one or more of those
agencies to clear or license the merchandise for entry into the
United States, and (D) to create pathways, within and among the
appropriate Federal Agencies, for qualified persons that
demonstrate the highest levels of compliance to receive
immediate clearance absent information that a transaction may
pose a national security or compliance threat; and (5) ensure
that trade benefits are provided to participants in partnership
programs.
Section 101(c) requires the Commissioner to submit a report
to the Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives, no later than
180 days after enactment and on December 31 of each year
thereafter, containing (1) an identification of each
partnership program; (2) for each such program (A)
participation requirements, (B) the commercially significant
and measurable trade benefits provided to participants in the
program, (C) the number of participants in the program, and (D)
for programs that have multiple tiers of participation, the
number of participants in each tier; (3) the number of
participants enrolled in more than one program; (4) an
assessment of the effectiveness of each program in advancing
the security, trade enforcement, and trade facilitation
missions of CBP; (5) a summary of CBP's efforts to coordinate
with other federal agencies with authority to detain and
release merchandise entering the United States to ensure that
partnership programs of those agencies are compatible with
CBP's partnership programs; (6) a summary of the criteria
developed with these agencies for authorizing the release, on
an expedited basis, of merchandise for which documentation is
required for one or more of those agencies to clear or license
the merchandise for entry into the United States; (7) a summary
of CBP's efforts to work with private sector entities and the
public to develop and improve partnership programs; (8) a
description of efforts taken by CBP to make private sector
entities aware of partnership programs; and (9) a summary of
plans, targets, and goals of CBP with respect to such programs
over the two years following the submission of the report.
Current law provides for voluntary government-private
sector programs, such as the Customs-Trade Partnership Against
Terrorism (C-TPAT) and Importer Self-Assessment (ISA) programs,
to strengthen and improve the overall security of the
international supply chain and protect the revenue of the
United States. It is the view of this Committee that CBP has
not adequately worked with the private sector and other
government agencies to provide commercially significant and
measurable trade benefits for private sector entities
participating in government-private sector partnership
programs. This section is intended to rectify these
deficiencies by requiring CBP to ensure such programs provide
benefits and to more effectively work with the private sector
and other Federal agencies.
Section 102--Report on effectiveness of trade enforcement activities
This section requires the Comptroller General of the United
States to submit to the Committee on Finance of the Senate and
the Committee on Ways and Means of the House of Representatives
not later than one year after the enactment of this Act a
report on the effectiveness of trade enforcement activities of
CBP that shall include (1) a description of the use of
resources; results of audits and verification; targeting; and
training of CBP personnel; (2) a description of trade
enforcement activities to address undervaluation;
transshipment; legitimacy of entries making entry; protection
of revenues, fraud prevention and detection, and penalties,
including international misclassification, inadequate bonding,
and other misrepresentations, and (3) a description of trade
enforcement activities with respect to the priority trade
issues, including methodologies used in such enforcement of
activities, recommendations for improving such enforcement
activities, and a description of the implementation of previous
recommendations for improving such enforcement activities.
It is the view of this Committee that the report required
under this section should provide Congress with sufficient
information to determine the effectiveness of resources used to
enforce the customs and trade laws of the United States.
Furthermore, the information reported should be in sufficient
detail to allow Congress, at its discretion, to reallocate
agency resources to the most effective means of enforcing the
customs and trade laws of the United States.
Section 103--Priorities and performance standards for customs
modernization, trade facilitation, and trade enforcement
functions and programs
Section 103(a) requires the Commissioner, in consultation
with the Committee on Finance of the Senate and the Committee
on Ways and Means of the House of Representatives to establish
priorities and performance standards to measure the development
and levels of achievement of customs modernization, trade
facilitation and trade enforcement functions and programs
described in subsection (b). Such priorities and performance
standards, shall, at a minimum, include priorities and
standards relating to efficiency, outcome, output, and other
types of applicable measures.
Section 103(b) provides that the functions and programs
referred to in subsection (a) are: (1) the Automated Commercial
Environment (ACE); (2) each priority trade issue described in
section 111(a) of this Act: agricultural programs, antidumping
and countervailing duties, import safety, intellectual property
rights, revenue, textiles and wearing apparel, and trade
agreements and preference programs; (3) the Centers of
Excellence and Expertise described in section 110 of this Act;
(4) Drawback for exported merchandise under section 313 of the
Tariff Act of 1930 (19 U.S.C. 1313), as amended by section 906
of this Act; (5) transactions relating to imported merchandise
in bond; (6) collection of countervailing duties; (7) the
expedited clearance of cargo; (8) the issuance of regulations
and rulings; and (9) the issuance of Regulatory Audit Reports.
Section 103(c) requires consultations and notification to
Congress. It provides that consultations required under (a)(1)
shall occur, at a minimum, on an annual basis. This section
provides that the Commissioner shall notify the Committee on
Finance of the Senate and the Committee on Ways and Means of
the House of Representatives of any changes to the priorities
referred to in subsection (a) not later than 30 days before
such changes are to take effect.
Past efforts by CBP to modernize and to improve trade
facilitation and enforcement and other functions have not been
conducted in a consistent or efficient manner. Recent efforts
by CBP have improved. However, it is the view of this Committee
that these efforts could be further improved and sustained by
the requirements of this section. This section requires the
Commissioner, in consultation with the relevant committees, to
establish priorities and performance standards to measure the
development and levels of achievement of customs modernization,
trade facilitation, trade enforcement functions and programs
specified in this section. In addition to consultations, the
Commissioner shall notify the relevant committees of any
changes in the aforementioned priorities not later than 30 days
before such changes are to take effect. The consultations
required in this section shall occur, at a minimum, on an
annual basis.
Section 104--Educational seminars to improve efforts to classify and
appraise imported articles, to improve trade enforcement
efforts, and to otherwise facilitate legitimate international
trade
Section 104(a) requires the Commissioner and Director, on a
fiscal year basis, to carry out educational seminars to (1)
improve the ability of CBP to classify and appraise articles
imported into the United States; (2) improve the trade
enforcement efforts of CBP and ICE personnel; and (3) otherwise
improve the ability and effectiveness of CBP and ICE personnel
to facilitate legitimate international trade.
Section 104(b) provides that the Commissioner, the
Director, and interested private sector parties, selected under
subsection (c), shall provide instruction and related
instructional materials at each educational seminar to CBP and,
as appropriate, ICE personnel on the following: (1) conducting
physical inspection of an article imported into the United
States; (2) reviewing the manifest and other accompanying
documentation of an article imported into the United States to
determine if the country of origin of the article is accurate;
(3) customs valuation; and (4) industry supply chains. The
Commissioner, the Director, and interested private sector
parties, selected under subsection (c), shall provide
opportunities to enhance enforcement of (1) collection of
countervailing and antidumping duties; (2) evasion of duties on
imports of textiles; (3) protection of intellectual property
rights; and (4) enforcement of child labor laws.
Section 104(c) provides that the Commissioner shall
establish a process to solicit, evaluate, and select interested
parties in the private sector for purposes of assisting in
providing instruction and related instructional materials
described in subsection (b) at each educational seminar under
this section. Selection criteria shall include: (1)
availability and usefulness; (2) the volume, value and
incidence of mislabeling or misidentification of origin of
imported articles; and (3) other appropriate criteria
established by the Commissioner.
Section 104(d) provides that the Commissioner shall give
due consideration to carrying out an educational seminar under
this section to improve the ability of CBP personnel to enforce
a countervailing or antidumping duty order upon the request of
a petitioner in an action underlying a countervailing or
antidumping duty order.
Section 104(e) provides that the Commissioner and the
Director shall establish performance standards to measure the
development of achievement of educational seminars under this
section.
Section 104(f) provides that beginning September 30, 2016,
the Commissioner and the Director shall submit to the Committee
on Finance of the Senate and the Committee on Ways and Means of
the House of Representatives an annual report on the
effectiveness of educational seminars under this section.
Section 104(g) defines key terms.
Section 105--Joint strategic plan
Section 105(a) requires the Commissioner and Director to
create and submit to the Committees a biennial joint strategic
plan.
Section 105(b) requires the joint strategic plan to contain
a comprehensive multi-year plan for trade enforcement and trade
facilitation that includes: (1) a summary of action taken to
improve trade enforcement and trade facilitation, including
specific performance metrics to evaluate progress over a 2-year
period; (2) a statement of the objectives and plans to further
improve trade enforcement and trade facilitation; (3) a
specific identification of priority trade issues described in
section 111(a) of this Act that can be addressed in order to
enhance trade enforcement and trade facilitation and a
description of strategies and plans for addressing each issue;
(4) a description of efforts made to improve consultation and
coordination among and within Federal agencies regarding trade
enforcement and trade facilitation; (5) a description of
training that has occurred to date within CBP and ICE to
improve trade enforcement and trade facilitation; (6) a
description of efforts to work with international organizations
to enhance trade facilitation and trade enforcement; (7) a
description of organizational benchmarks for optimizing
staffing and wait times at ports of entry; (8) a specific
identification of any domestic or international best practices
that may further improve trade enforcement and trade
facilitation; (9) any legislative recommendations to further
improve trade enforcement and trade facilitation; and (10) a
description of efforts made to improve consultation and
coordination with the private sector to enhance trade
enforcement and trade facilitation.
Section 105(c) requires the Commissioner and the Director
to consult with relevant Federal agencies, including: the
Department of Treasury, Department of Agriculture, Department
of Commerce, Department of Justice, Department of the Interior,
Department of Health and Human Services, Food and Drug
Administration, Consumer Product Safety Commission, Office of
the United States Trade Representative, as well as the Customs
Operations Advisory Committee (COAC) when developing the joint
strategic plan.
Section 105(d) requires the joint strategic plan to be
submitted in unclassified form, but may include a classified
annex.
It is the view of the Committee that CBP and ICE do not
adequately set strategic plans and measure their progress in
adhering to goals that have been set. This section will address
this problem by requiring both agencies to work together in
order to address this identified deficiency in both agencies.
It is the sense of this Committee that the agencies should not
only focus on short-term goals that are easily attainable, but
should also focus on goals that may only be achievable over the
long-term. In both cases, the agencies must determine ways to
measure their progress in meeting these goals and articulate
their progress.
When providing a description of organizational benchmarks
for optimizing staffing and wait times at ports of entry, it is
the view of the Committee that CBP should also provide a
description of progress made to standardize, automate, and
publically report wait times and wait time collection practices
at ports of entry. Additionally, when providing legislative
recommendations to further improve trade enforcement and trade
facilitation, it is the view of the Committee that CBP should
submit the projected future funding needs for Federal land
border ports of entry projects, as required by Division D of
the Consolidated Appropriations Act, 2012 (PL 112-74).
Section 106--Automated commercial environment
Section 106(a) amends section 13031(f)(4) of the
Consolidated Omnibus Budget Reconciliation Act of 1985 by
directing authorized appropriations of $153,736,000 for each of
fiscal years 2016 and 2018 to complete the development and
implementation of ACE.
Section 106(b) amends section 311(b)(3) of the Customs
Border Security Act of 2002 to require the Commissioner to
submit to the Senate Finance and Appropriations Committees, and
House Ways and Means and Appropriations Committees, a report by
December 31, 2016 detailing (1) CBP's incorporation of all core
trade processing capabilities into ACT; (2) CBP's remaining
priorities for processing entry summary data elements, cargo
manifest data elements, cargo financial data elements, and
exports elements in the ACE computer system and plans for
implementing these remaining priorities; (4) the components of
the National Customs Automation Program (NCAP) that have not
been implemented; and (5) any additional components of NCAP
initiated by the Commissioner to complete the development,
establishment, and implementation of the ACE computer system.
The Commissioner must also provide an updated report on
September 30, 2017 which also evaluates the effectiveness of
the implementation of the ACE computer system and details the
percentage of trade processed in the ACE every month since
September 30, 2016.
Section 106(c) requires the Government Accountability
Office to provide to the Senate Finance and Appropriations
Committees, and House Ways and Means and Appropriations
Committees, not later than December 31, 2017, a report
assessing the progress of other Federal agencies in accessing
and utilizing ACE and assessing the potential cost savings to
the United States Government and importers and exporters and
the potential benefits to the enforcement of the customs and
trade laws of the United States if elements in section 106(b)
are implemented.
The Committee recognizes the dramatic improvement in the
development of ACE once the agile development methodology was
initiated. The Committee continues to support the development
of ACE and the use of ACE by other Federal agencies.
Section 107--International Trade Data System
This section amends section 411(d) of the Tariff Act of
1930 by inserting a new paragraph that requires the Secretary
of the Treasury to work with the heads of Federal agencies
participating in the International Trade Data System (ITDS) to
ensure the agencies (1) develop and maintain the necessary
information technology to support ITDS and submit all data to
the ITDS electronically; (2) enter into a memorandum of
understanding to provide for the information sharing between
the agency and CBP necessary for the operation and maintenance
of the ITDS; (3) no later than June 30, 2016, identify and
transmit to the Commissioner the admissibility criteria and
data elements required by the agency to authorize the release
of cargo by CBP for incorporation into ACE; and (4) not later
than December 31, 2016, utilize the ITDS as the primary means
of receiving from users the standard set of data and other
relevant documentation, exclusive of applications for permits,
licenses, or certification required for the release of imported
cargo and clearance of cargo for export.
The Committee appreciates the on-going efforts to
effectively implement ITDS and supports the completion of ITDS
not later than December 31, 2016 in order to improve trade
facilitation and enforcement via the ``single window'' concept.
The completion of ITDS is necessary in order to initiate the
``single window'' concept that will allow for the electronic
collection and distribution of standard government-wide import
and export data for the use of government agencies with a role
in trade enforcement, in order to eliminate redundant
information requirements.
Section 108--Consultations with respect to mutual recognition
arrangements
This section requires as a negotiating objective for any
mutual recognition arrangement with a foreign country regarding
partnership programs to ensure compatibility with CBP
partnership programs and to enhance trade facilitation and
trade enforcement. It also requires the Secretary of Homeland
Security to consult with the relevant committees not later than
30 days before initiating negotiations to enter into any such
arrangement and not later than 30 days before entering into any
such arrangement.
The Committee recognizes the importance of trusted
partnership programs in differentiating between imports that
require additional inspections because they pose a high-risk to
the economic or physical security of the United States and
those that do not in order to facilitate the efficient movement
of trade. The Committee finds, however, that too often
companies enrolled in a CBP trusted partnership program have to
needlessly expend additional resources to comply with foreign
nations' partnership program requirements that do not greatly
differ from partnership program requirements administered by
CBP. Accordingly, the Committee included a negotiating
objective for any mutual recognition arrangement with a foreign
country regarding partnership programs to ensure compatibility
with CBP partnership programs in order to enhance trade
facilitation and trade enforcement while reducing the needless
expense of CBP trusted partners in joining foreign partnership
programs.
Section 109--Commercial Customs Operations Advisory Committee
Section 109(a) requires the Secretaries of Treasury and
Homeland Security to jointly establish the COAC by no later
than 60 days after the enactment of this Act.
Section 109(b) requires that the COAC be comprised of (1)
20 appointed individuals from the private sector; (2) the
Commissioner and the Assistant Secretary of Treasury for Tax
Policy, who shall co-chair meetings; and (3) the Assistant
Secretary for Policy of the Department of Homeland Security and
ICE Director, who shall serve as deputy co-chairs of meetings.
Private sector individuals are representative of individuals
and firms affected by the commercial operations of CBP, without
regard to political affiliation, and may be appointed to
multiple terms of three years, but may not serve more than two
terms sequentially.
Section 109(c) requires the COAC to (1) advise the
Secretaries of Treasury and Homeland Security on all matters
involving the commercial operations of CBP; (2) provide
recommendations to the Secretaries on improvements to CBP's
commercial operations; and (3) collaborate in developing the
agenda for COAC meetings; and (4) perform other functions
relating to the commercial operations of CBP as prescribed by
law or as directed by the Secretaries.
Section 109(d) provides that the COAC shall meet at the
call of the Secretaries of Treasury and Homeland Security or at
the call of at least two-thirds of the COAC. membership. The
COAC must meet at least four times each year, and the meetings
must be open unless the Secretaries determine that a meeting
will include matters that cannot be disclosed without seriously
damaging policies or other matters affecting the commercial
operations of CBP and the investigations of ICE.
Section 109(e) requires the COAC to submit annual reports
to the Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives that describe
the COAC's activities and provide recommendations regarding the
commercial operations of CBP.
Section 109(f) subjects the COAC to the provisions of the
Federal Advisory Committee Act, except section 14(a)(2) (5
U.S.C. App.; relating to the termination of advisory
committees).
Section 109(g) makes a conforming amendment to repeal
section 9503(c) of the Omnibus Budget Reconciliation Act of
1987 (19 U.S.C. 2071 note). Additionally, any reference in law
to the Advisory Committee on Commercial Operations of the
United States Customs Services shall be deemed in referenced to
COAC.
Section 110--Centers of Excellence and Expertise
Section 110(a) requires the Commissioner, in consultation
with the Committee on Finance of the Senate, the Committee on
Ways and Means of the House of Representatives, and the COAC to
develop and implement Centers of Excellence and Expertise
(CEEs) throughout CBP that (1) enhance the economic
competiveness of the United States by consistently enforcing
the laws and regulations of the United States at all ports of
entry and facilitating the flow of legitimate trade through
increasing industry-based knowledge; (2) improve enforcement
efforts, including priority trade issues described in 111(a) of
this Act; (3) build upon the expertise of CBP in particular
industry operations, supply chains, and compliance
requirements; (4) promote the uniform implementation at each
port of entry policies and regulations relating to imports; (5)
centralize the trade enforcement and trace facilitations
efforts of CBP; (6) formalize an account-based approach to
apply, as the Commissioner determines appropriate, to the
importation of merchandise; (7) foster partnerships through the
expansion of trade programs and other trusted partner programs;
(8) develop applicable performance measurements to meet
internal efficiency and effectiveness goals; and (9) whenever
feasible, facilitate a more efficient flow of information
between Federal agencies.
Section 110(b) requires that not later than December 31,
2016, the Commissioner submit to the Committee on Finance of
the Senate and the Committee on Ways and Means of the House of
Representatives a report detailing: (1) the scope, function,
and structure of each CEE; (2) the effectiveness of each CEE in
improving enforcement efforts; (3) the quantitative and
qualitative benefits of each CEE; (4) all applicable
performance measurements with respect to each CEE; (5) the
performance of each CEE in increasing the accuracy and
completeness of data with respect to international trade and
facilitating a more efficient flow of information between
Federal agencies; and (6) any planned changes in the number,
scope, functions or any other aspect of the CEEs.
The Committee recognizes CBP's efforts to address many
concerns the private sector has regarding the agency's
management of the importation process. With the establishment
of the CEEs, CBP has reorganized in order to focus on industry-
specific issues and provide tailored support to unique trading
environments. It is the view of the Committee that the CEEs
should be statutorily established in order to ensure that CBP
continues to unify trade facilitation and trade enforcement
across all ports of entry, facilitate the timely resolution of
trade compliance issues nationwide, and further strengthen
CBP's knowledge of key industry practices. Specifically, the
CEEs will (1) enhance economic competiveness of the United
States by consistently enforcing the laws and regulations of
the United States at all ports of entry and facilitating the
flow of legitimate trade through increasing industry-based
knowledge; (2) improve enforcement efforts, including priority
trade issues described in 111(a) of this Act; (3) build upon
the expertise of CBP in particular industry operations, supply
chains, and compliance requirements; (4) promote the uniform
implementation at each port of entry policies and regulations
relating to imports; (5) centralize the trade enforcement and
trace facilitations efforts of CBP; (6) formalize an account-
based approach to apply, as the Commissioner determines
appropriate, to the importation of merchandise; (7) foster
partnerships through the expansion of trade programs and other
trusted partner programs; (8) develop applicable performance
measurements to meet internal efficiency and effectiveness
goals; and (9) whenever feasible, facilitate a more efficient
flow of information between Federal agencies.
Section 111--Commercial Targeting Division and National Targeting and
Analysis Groups
Section 111(a) amends section 2(d) of the Act of March 3,
1927 (19 U.S.C. 2072(d)) to add at the end, a new paragraph
(3), entitled ``Commercial Targeting Division and National
Targeting Analysis Groups''. New subparagraph 2(d)(3)(A)
requires the Secretary of Homeland Security to establish and
maintain a Commercial Targeting Division (CTD) within CBP's
Office of International Trade. The CTD shall be comprised of
headquarters staff led by an Executive Director, and individual
National Targeting and Analysis Groups (NTAGs) led by Directors
reporting to the Executive Director. The CTD shall develop and
conduct commercial targeting with respect to cargo destined for
the United States.
Subparagraph 2(d)(3)(B) requires the establishment of an
NTAG for each, at a minimum, of the following priority trade
issues (PTIs): (1) agricultural programs; (2) antidumping and
countervailing duties; (3) import safety; (4) intellectual
property rights; (5) revenue; (6) textiles and wearing apparel;
and (7) trade agreements and preference programs. This
subparagraph allows the Commissioner to alter the
aforementioned PTIs in consultation with the Committee on
Finance of the Senate and the Committee on Ways and Means of
the House of Representatives.
The duties of each NTAG include (1) directing the trade
enforcement and compliance assessment activities of U.S.
Customs and Border Protection that relate to the Group's PTI;
(2) facilitating, promoting, and coordinating cooperation and
the exchange of information between CBP, ICE, and other
relevant Federal departments and agencies regarding the Group's
PTI; and (3) serving as the primary liaison between CBP and the
public regarding United States Government activities regarding
the Group's priority trade issue.
Subparagraph 2(d)(3)(C) requires the CTD to establish
methodologies for assessing the risk that cargo destined for
the United States may violate U.S. customs and trade laws and
for issuing Trade Alerts. The CTD should assess the risk of
cargo based on all information available to CBP through the
Automated Targeting System, ACE, the Automated Commercial
System, the Automated Export System, ITDS, and TECS (formerly
known as the ``Treasury Enforcement Communications System''),
the case management system of ICE or any successor systems and
publicly available information. The CTD should also use
information provided by private sector entities and coordinate
targeting efforts with other Federal agencies.
Subparagraph 2(d)(3)(D) authorizes the Executive Director
of the CTD and NTAG Directors to issue Trade Alerts to port
directors when such person determines cargo may violate U.S.
customs and trade laws. The Trade Alert may direct further
inspection or physical examination or testing of merchandise by
the port personnel if certain risk-assessment thresholds are
met. A port director may determine not to carry out the
direction of the Trade Alerts if the port director finds such
determination is justified by security interests and the port
director notifies the Assistant Commissioners of the Office of
Field Operations and the Office of International Trade of such
determination. The Division must compile an annual report of
all determinations by port directors to override Trade Alerts
and include an evaluation of the utilization of Trade Alerts,
and that report must be submitted to the Committee on Finance
of the Senate and the Committee on Ways and Means of the House
of Representatives not later than December 31 each year.
Section 111(b) amends section 343(a)(3)(F) of the Trade Act
of 2002 (19 U.S.C. 2071 note), to indicate that information
collected pursuant to the regulations shall be used exclusively
for ensuring cargo safety and security, preventing smuggling,
and commercial risk assessment targeting, and shall not be used
for any commercial enforcement purposes, including for
determining merchandise entry.
The Committee recognizes the importance of the NTAGs in
providing a national strategic perspective on trade through
risk analysis and multi-disciplined trade strategies while also
developing and applying advanced risk management techniques to
support trade facilitation and enforcement. It is the view of
the Committee that the NTAGs should be statutorily established
and elevated in the hierarchy of the agency through the
establishment of the CTD. Upon the enactment of this Act, the
mission of the NTAGs will be expanded to include: (1) directing
the trade enforcement and compliance assessment activities of
CBP that relate to the Group's priority trade issue; (2)
facilitating, promoting, and coordinating cooperation and the
exchange of information between CBP, ICE, and other relevant
Federal departments and agencies regarding the Group's priority
trade issue; and (3) serving as the primary liaison between CBP
and the public regarding United States Government activities
regarding the Group's priority trade issue.
This section requires the NTAGs to target imports that may
violate customs and trade laws, with particular focus on laws
and regulations related to the following priority trade issues:
(1) agriculture programs; (2) antidumping and countervailing
duties; (3) import safety; (4) intellectual property rights;
(5) revenue; (6) textiles and wearing apparel; and (7) trade
agreements and preference programs. The NTAGs will issue trade
alters that may direct further inspection or physical
examination or testing of merchandise by the port personnel if
certain risk-assessment thresholds are met.
Section 112--Report on oversight of revenue protection and enforcement
measures
The section requires the Inspector General of Department of
Treasury to submit a report to the Committee on Finance of the
Senate and the Committee on Ways and Means of the House of
Representatives that assesses: (1) CBP's effectiveness with
respect to revenue protection; (2) CBP's effectiveness with
respect to measuring accountability and performance related to
revenue protection; (3) the number and outcome of
investigations with respect to the underpayment of duties; and
(4) the effectiveness of CBP's training efforts with respect to
duty collection.
The Inspector General of the Department of Treasury shall
submit this report by March 31, 2016, and no later than March
31 of each second year thereafter.
It is the Committee's view that the report should provide
Congress with sufficient information to determine the
effectiveness of resources used to protect the revenue of the
United States. The information contained in this report should
be in sufficient detail to allow Congress to identify
deficiencies in the protection of revenue and address these
issues through further legislation.
Section 113--Report on security and revenue measures with respect to
merchandise transported in bond
This section requires the Secretaries of Treasury and
Homeland Security to jointly submit to the relevant committees
a report on: (1) the total entries shipped in bond; (2) the
ports of entry (POE) merchandise arrives in for transportation
in bond; (3) the average time taken to reconcile records of
merchandise transported in bond; (4) the average time
merchandise is transported in bond; (5) the total revenue owed
and collected for merchandise transported in bond; (6) the
total number of instances the destination changes for
merchandise transported in bond; and (7) the number of entries
that have not been reconciled for merchandise transported in
bond. The Secretaries of the Department of Treasury and
Department of Homeland Security shall submit this report by
December 31 of 2016, 2017, and 2018.
It is the view of this Committee that the report required
under this section should provide Congress with sufficient
information to determine the effectiveness of resources used to
protect the revenue and security of the United States for
merchandise shipped in bond. The information contained in this
report should be in sufficient detail to allow Congress to
identify deficiencies in the protection of the revenue and
security of the United States and address these issues through
further legislation.
Section 114--Importer of record program
Section 114(a) requires the Secretary of Homeland Security
to establish an importer of record program within 180 days of
enactment of this Act.
Section 114(b) requires CBP to: (1) develop criteria that
an importer must meet in order to obtain an importer of record
number; (2) provide a process by which importers are assigned
importer of record numbers; (3) maintain a centralized database
of importer of record numbers; (4) evaluate and maintain the
accuracy of the database if information changes; and (5) take
measures to ensure that duplicate importer of record numbers
are not issued
Section 114(c) requires the Secretary to submit to the
Committee on Finance of the Senate and the Committee on Ways
and Means of the House of Representatives a report on the
importer of record program within one year of the date of
enactment of this Act.
Section 114(d) defines the term ``number'' as used in this
section.
It is the view of the Committee that CBP does not currently
collect enough information from prospective importers in order
to adequately identify them and is not fully capable of
inspecting current importer of record numbers to identify the
individual or company associated with an importer of record
number. This section addressed these deficiencies by requiring
CBP to: (1) develop criteria that an importer must meet in
order to obtain an importer of record number; (2) provide a
process by which importers are assigned importer of record
numbers; (3) maintain a centralized database of importer of
record numbers; (4) evaluate and maintain the accuracy of the
database if information changes; and (5) take measures to
ensure that duplicate importer of record numbers are not
issued. When developing the criteria to obtain an importer of
record number, it is the view of Committee that CBP should
request information on the industry that an importer is
classified under. This information should be obtained by
requesting the 6-digit North American Industry Classification
System (NAICS) code, or successor classification system.
When developing the centralized database of importer of
record numbers required under this section, CBP shall ensure
that it can identify every importer of record number associated
with an entity. This includes importer of record numbers that
an entity may acquire when purchasing another entity.
Section 115--Establishment of new importer program
Section 115(a) requires the Commissioner to establish a new
importer program no later than 180 days after the enactment of
this Act that requires CBP to adjust bond amounts for new
importers based on the level of risk posed to the revenue of
the Federal Government.
Section 115(b) requires the Commissioner to ensure that
CBP: (1) develops risk-based criteria for determining which
importers are considered new importers; (2) develops risk
assessment guidelines for new importers to adjust bond amounts
and increase screening of imported products; (3) develops
procedures to ensure increased oversight of imported products
of new importers related to enforcement of priority trade
issues created by section 111(a); (4) develops procedures to
ensure increased oversight of imported products of new
importers by the Centers of Excellence and Expertise
established by section 110; and (5) establishes a centralized
database of new importers to ensure accuracy of information
that is required to be provided by new importers.
It is the view of the Committee that CBP has not fully
addressed the risk that new importers pose to the revenue of
the United States and the harm that they may pose to the
economic or physical security of the United States. This
section addresses these concerns by requiring that CBP (1)
develops risk-based criteria for determining which importers
are considered new importers; (2) develops risk assessment
guidelines for new importers to adjust bond amounts and
increase screening of imported products; (3) develops
procedures to ensure increased oversight of imported products
of new importers related to enforcement of priority trade
issues created by section 111(a); (4) develops procedures to
ensure increased oversight of imported products of new
importers by the Centers of Excellence and Expertise
established by section 110; and (5) establishes a centralized
database of new importers to ensure accuracy of information
that is required to be provided by new importers.
TITLE II--IMPORT HEALTH AND SAFETY
Section 201--Interagency Import Safety Working Group
Section 201(a) establishes an interagency Import Safety
Working Group.
Section 201(b) sets forth the membership of the Working
Group and designates the Secretary of Homeland Security as the
Chair and the Secretary of Health and Human Services as the
Vice Chair. The membership of the Working Group also shall
include the Secretaries of Treasury, Commerce and Agriculture;
the United States Trade Representative; the Director of the
Office of Management and Budget; the Commissioners of CBP and
the Food and Drugs; the Chairman of the Consumer Product Safety
Commission; the Director of ICE; and the head of any other
Federal agency designated by the President to participate.
Section 201(c) requires the Working Group to (1) consult on
the development of a joint import safety rapid response plan
required under section 202; (2) evaluate federal government and
agency resources, plans, and practices to ensure the safety of
U.S. imports and the expeditious entry of such merchandise; (3)
review the engagement and cooperation of foreign governments
and foreign manufacturers; (4) identify best practices, in
consultation with the private sector, to assist U.S. importers
in ensuring import health and safety of imported merchandise;
(5) identify best practices to improve Federal, state, and
local coordination in responding to import health and safety
threats; and (6) identify appropriate steps to improve domestic
accountability and foreign government engagement with respect
to imports.
Section 202--Joint import safety rapid response plan
Section 202(a) requires the Secretary of Homeland Security,
in consultation with the interagency Import Safety Working
Group, to develop a joint import safety rapid response plan
(Plan) that establishes protocols and practices CBP should use
when responding to cargo that poses a threat to the health or
safety of U.S. consumers and in recovering from or mitigating
the effects of actions and responses to such an incident.
Section 202(b) sets forth the contents of the report, which
must address (1) the responsibilities of CBP and other Federal
agencies in responding to an import health and safety threat;
(2) the protocols and practices used in responding to such
threats; (3) the mitigation measures CBP must take when
responding to such threats after the incident to ensure the
resumption of the entry of merchandise into the United States;
and (4) exercises CBP should take with Federal, State, and
local agencies as well as the private sector to simulate
responses to such threats.
Section 202(c) requires the Secretary of Homeland Security
to review and update the joint import safety rapid response
plan, as appropriate, after conducting exercises under
subsection (d)
Section 202(d) requires the Commissioner, in conjunction
with Federal, state, and local agencies, to conduct exercises
to test the Plan. When conducting exercises, the Commissioner
must make allowances for the specific needs of the port where
the exercise is occurring, base evaluations on current import
risk assessments, and ensure that the exercises are conducted
consistent with other national preparedness plans. The
Secretary of Homeland Security and Commissioner must ensure
that the testing and evaluations use performance measures in
order to identify best practices and recommendations in
responding to import health and safety threats and develop
metrics with respect to the resumption of the entry of
merchandise into the United States. Best practices and
recommendations should then be shared among relevant
stakeholders and incorporated into the Plan.
Section 203--Training
This section requires the Commissioner to ensure that CBP
port personnel are trained to effectively enforce U.S. import
health and safety laws.
It is the view of this Committee that Federal agencies can
improve their ability to respond to imports that pose a threat
to the health or safety of U.S. consumers. This title supports
on-going efforts by requiring appropriate Federal agencies to
coordinate in the development of a response plan that will (1)
establish protocols and define practices for CBP to use in
taking action in response to, and coordinating federal
responses to, an incident in which cargo destined for, or
merchandise entering, the United States poses a threat to the
health or safety of consumers in the United States and (2)
include guidance on recovering from or mitigating the effects
of actions and responses to an import safety incident.
TITLE III--IMPORT-RELATED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
Title III provides Customs and Border Protection (CBP) and
U.S. Immigration and Customs Enforcement (ICE) with addition
tools to protect and enforce intellectual property rights
(IPR). Strong IPR protection is vitally important to the
economy of the United States and the health and safety of the
American people. It is therefore critical that our border
enforcement agencies protect our borders from pirated,
counterfeit, and other goods that infringe IPR.
Section 301--Definition of intellectual property rights
This section defines the term ``intellectual property
rights'' as used in this title to include copyrights,
trademarks, and other forms of intellectual property rights
that are enforced by U.S. Customs and Border Protection (CBP)
or U.S. Immigration and Customs Enforcement (ICE).
Section 302--Exchange of information related to trade enforcement
Section 302 requires CBP to share unredacted images and
authorizes CBP to share unredacted samples prior to seizure of
merchandise suspected of violating certain intellectual
property rights (IPR) if CBP determines that examination or
testing of the merchandise by the right holder would assist in
determining if there is a violation, except in such cases as
would compromise an ongoing law enforcement investigation or
national security.
This section supersedes section 818(g) of the 2012 National
Defense Authorization Act (NDAA), Public Law 112-81 (125 Stat.
1496), which authorized, but did not require, CBP to share
unredacted images and samples with right holders for violations
of trademark rights. In addition to violations of trademark
rights, this section also applies to violations of copyright
law, including certain violations of the Digital Millennium
Copyright Act (DMCA) prohibiting the importation of unlawful
circumvention devices.
This section identifies persons with whom the images and
samples should be shared. For trademark violations, CBP should
share with the owner of the trademark, and for copyright
violations, CBP should share with the owner of the copyright.
For violations of the DMCA, CBP should share with the owner of
the copyright protected by a technological measure that the
merchandise is suspected of being primarily designed or
produced for the purpose of circumventing. A producer of a
hardware device that includes the technological means of
protection that the merchandise is designed to circumvent, the
publisher of copyrighted material that is designed for use on
the same device, or both, or others may be the owner of the
copyright.
Effective border enforcement of IPR is critical to the
United States economy and the health and safety of the people
of the United States. The Committee believes that CBP's
implementation of section 818(g) of the 2012 NDAA has resulted
in a process that does not provide effective enforcement for
trademark holders, and the Committee intends for CBP to
implement this section in a manner that ensures effective
border enforcement of IPR.
Section 303--Seizure of circumvention devices
Section 303 provides CBP with explicit authority to seize
and forfeit circumvention devices, the importation of which is
unlawful under 17 U.S.C. 1201(a)(2) or (b)(1). While CBP
already has authority to seize and forfeit illegal merchandise,
including unlawful circumvention devices, the Committee is
providing CBP with explicit authority to seize and forfeit
unlawful circumvention devices because the unlawful trade in
circumvention devices has helped to facilitate the market for
pirated goods, especially on the Internet, which has caused
significant harm to United States creators and consumers. It is
the Committee's intent that unlawful circumvention devices
should be seized and forfeited pursuant to the authority
provided by this section, and CBP should dedicate adequate
resources to target merchandise for seizure and forfeiture
pursuant to this authority.
This section also requires CBP to disclose certain
information within 30 business days after seizure of an
unlawful circumvention device to any person injured by a
violation of (a)(2) or (b)(1) of section 1201 of title 17 that
is included on a list maintained by the Commissioner. The
information provided by CBP must be equivalent to the
information CBP provides to copyright owners pursuant to 19 CFR
133.42.
This section requires the Commissioner to maintain a list
of persons who may be potentially injured by an unlawful
circumvention device by publishing a notice in the Federal
Register requesting such persons to notify CBP that they wish
to be included on the list. The Commissioner shall update this
list annually through publication in the Federal Register, and
CBP should have the flexibility to revise the list to
accommodate changes in corporate structure, as through a merger
or acquisition or new entrant into the market.
Persons injured by the importation of an unlawful
circumvention device may potentially include, but are not
limited to, the producer of a hardware device that includes the
technological means of protection that the seized merchandise
is designed to circumvent, the publisher of copyrighted
material that is designed for use on the same device, or both.
This section also requires CBP to prescribe regulations
within one year of enactment of this Act establishing
procedures that implement the process required by this section
for CBP to disclose certain information to persons injured by
an unlawful circumvention device.
Section 304--Enforcement by U.S. Customs and Border Protection of works
for which copyright registration is pending
Section 304 directs the Secretary of Homeland Security to
establish a process for the enforcement of copyrights for which
the owner has submitted an application for registration with
the U.S. Copyright Office to the same extent and in the same
manner as if the copyright were registered with the Copyright
Office, including the sharing of information as described in
Section 302 above.
Under current CBP regulations, a copyright owner must wait
until the copyright is registered with the U.S. Copyright
Office before recording the copyright with CBP for effective
border enforcement. During the time for processing an
application at the U.S. Copyright Office, many right holders
may suffer significant damage due to a lack of border
enforcement. The purpose of this section is to rectify this
problem for right holders.
Section 305--National Intellectual Property Rights Coordination Center
Infringement of intellectual property rights (IPR) causes
significant harm to the U.S. economy, hurts American workers,
and negatively impacts the health and safety of the American
people. It is critical that U.S. law enforcement agencies
provide effective enforcement of intellectual property rights,
especially to stop the flow of infringing goods crossing United
States borders. Effective border enforcement requires
investigating the sources of IPR infringement. To do this
effectively, federal law enforcement agencies must coordinate
with each other, with state, local, and international law
enforcement agencies, and with the private sector.
To enhance intellectual property rights enforcement,
Section 305 establishes within ICE the National Intellectual
Property Rights Coordination Center (IPR Center), which shall
be headed by an Assistant Director.
This section assigns the Assistant Director certain duties,
including (1) coordinating the investigation of sources of
merchandise that infringes intellectual property rights (IPR);
(2) conducting and coordinating training with other domestic
and international law enforcement agencies to improve IPR
enforcement; (3) coordinating, with the U.S. Customs and Border
Protection, U.S. activities to prevent the importation or
exportation of IPR infringing merchandise; (4) supporting the
international interdiction of merchandise destined for the U.S.
that infringe IPR; (5) collecting and integrating information
regarding infringements; (6) developing a means to receive and
organize information regarding infringement of IPR; (7)
disseminating information regarding infringement of IPR to
other Federal agencies; (8) developing risk-based alert systems
in coordination with CBP to improve the targeting of persons
that repeatedly infringe intellectual property rights; (9)
coordinating with U.S. Attorneys' offices to investigate and
prosecute IPR crime; and (10) carrying out other duties
assigned by the Secretary of Homeland Security.
In developing and implementing the risk-based alert system
to improve the targeting of persons that repeatedly infringe
intellectual property rights, the Assistant Director shall
focus on the propensity to commit violations of other U.S.
customs and trade laws, including the evasion of duties, taxes,
and fees, especially by the fraudulent declaration of
commercial merchandise as gifts.
This section also requires the Assistant Director to
coordinate with federal, state, local and international law
enforcement, intellectual property, and trade agencies, as
appropriate, in carrying out the IPR Center's duties.
This section requires the Assistant Director to (1) conduct
outreach to the private sector to determine trends in and
methods of infringing IPR; and (2) coordinate public and
private-sector efforts to combat the infringement of IPR.
Section 306--Joint strategic plan for the enforcement of Intellectual
Property Rights
Section 306 requires the Commissioner and Director to
include in the joint strategic plan on trade facilitation and
enforcement required under section 105 of the Act the
following: (1) a description of DHS's IPR enforcement efforts;
(2) a list of the top 10 ports, by volume and value, where CBP
seized IPR infringing goods in the preceding two years; and (3)
a recommendation of the optimal allocation of personnel to
ensure CBP and ICE are effectively enforcing IPR.
Section 307--Personnel dedicated to the enforcement of Intellectual
Property Rights
CBP should dedicate adequate personnel to stop the flow of
IPR infringing merchandise across U.S. borders. Section 307
requires the Commissioner to ensure sufficient personnel are
assigned throughout CBP with responsibility to enforce IPR with
respect to U.S. imports. This section also requires the
Commissioner to assign at least three full-time CBP employees
to the IPR Center established under Section 305, and to ensure
that sufficient personnel are assigned to U.S. ports of entry
to carry out IPR Center directives.
Section 308--Training with respect to the enforcement of Intellectual
Property Rights
CBP should ensure that its personnel are adequately
trained. Section 308 requires the Commissioner to effectively
train CBP port personnel to detect and identify IPR infringing
imported goods; to work with the private sector to identify
opportunities for collaboration with respect to training for
officers of the agency to enforce IPR; and to consult with
private sector entities to identify technologies which can
cost-effectively identify infringing merchandise and to provide
for cost-effective training for CBP officers with regard to the
use of such technologies. This section also permits CBP to
receive donations of technology to improve IPR enforcement.
Section 309--International cooperation and information sharing
For effective border enforcement of IPR, United States
border enforcement agencies should coordinate with competent
foreign law enforcement agencies. Section 309 requires the
Secretary of Homeland Security to coordinate with competent
foreign law enforcement agencies to enhance IPR enforcement,
including by information sharing and technical assistance. This
section also requires the Commissioner and the ICE Director to
lead interagency efforts to collaborate with law enforcement
and customs authorities of foreign countries.
Section 310--Report on Intellectual Property Rights enforcement
Section 310 requires the Commissioner and the ICE Director
to jointly submit a report on efforts to combat IPR
infringement to this Committee and the Committee on Ways and
Means of the House of Representatives. The report should
include: (1) information regarding the number, and a
description of, certain efforts to investigate and prosecute
IPR infringements; (2) an estimate of the average time required
by the Office of Trade of CBP to respond to a request from port
personnel for advice with respect to whether merchandise
detained by CBP infringed IPR, distinguished by types of IPR
infringed; (3) a summary of the outreach efforts of the CBP and
ICE with respect to interdiction, investigation and information
sharing between certain agencies related to the infringement of
IPR, collaboration with the private sector, and coordination
with foreign governments; (4) a summary of the efforts of CBP
and ICE to address the challenges with respect to the
enforcement of intellectual property rights presented by
Internet commerce and the transit of small packages and an
identification of the volume, value, and type of merchandise
seized for infringing intellectual property rights as a result
of such efforts; and (5) a summary of training relating to the
enforcement of intellectual property rights conducted under
Section 308 and expenditures for such training.
This report enhances accountability for United States
border enforcement agencies regarding IPR enforcement. In
addition, the information contained in the report will inform
Congress and help to determine additional actions to take to
enhance IPR enforcement at U.S. borders.
Section 311--Information for travelers regarding violations of
Intellectual Property Rights
Many U.S. citizens are unaware of the dangers presented by
trade in IPR infringing goods. Some may unwittingly facilitate
this trade by acquiring these illicit goods abroad. Section 311
requires the Secretary of Homeland Security to develop and
implement an educational campaign for travelers entering or
departing the United States on the legal, economic, and public
health and safety implications of importing IPR infringing
goods into the United States. This section further requires the
Commissioner to ensure that all versions, including the
electronic versions, of CBP Form 6059B (customs declaration),
or a successor form, include a written warning to inform
travelers arriving in the United States that importation of
merchandise that infringes IPR may subject travelers to civil
or criminal penalties and may pose serious risks to health and
safety.
TITLE IV--EVASION OF ANTIDUMPING AND COUNTERVAILING DUTY ORDERS
Section 401--Short title
This section sets forth the short title of this title as
the Enforcing Orders and Reducing Customs Evasion Act of 2015.
Section 402--Procedures for investigating claims of evasion of
antidumping and countervailing duty orders
Section 402(a) amends the Tariff Act of 1930 by creating a
set of procedures for investigating allegations of evasion of
antidumping and countervailing duty orders and provides tools
for enforcing the orders, under newly created section 517,
entitled ``Procedures for Investigating Claims of Evasion of
Antidumping and Countervailing Duty Orders.''
Section 517(a) lists the definitions for the section,
including for the Administering Authority, Commissioner of U.S.
Customs and Border Protection, covered merchandise, entry,
evasion which excepts clerical errors, and interested party.
Section 517(b) requires the Commissioner to initiate an
investigation within 10 business days of receipt of an
allegation filed by an interested party and accompanied by
information reasonably available to that party or referral by a
Federal Agency that reasonably suggests that merchandise
covered by an AD/CVD order has been entered into the United
States through evasion. Upon request, the Commissioner may
provide technical assistance and advice to eligible small
businesses to enable such businesses to prepare and submit
allegations of evasion. The Commissioner may consolidate
multiple allegations and referrals. If during the course of
conducting an investigation the Commissioner has reason to
suspect that covered merchandise may pose a health or safety
risk, the Commissioner is required to provide appropriate
information to other Federal agencies.
Section 517(c) requires the Commissioner to make a
determination not later than 270 calendar days after the date
of initiation of an evasion investigation with respect to
whether there is substantial evidence that the merchandise
under investigation was entered into the United States through
evasion. The section authorizes the Commissioner to request
information from the interested party making the allegation, as
well as the importer, foreign producer, and foreign exporter of
the alleged covered merchandise. The Commissioner may also
request information from the government of the foreign country
from which the alleged covered merchandise was exported. The
bill provides that the Commissioner may make an adverse
inference if the importer, exporter, or producer of the
merchandise under investigation, or the interested party making
the allegation, did not act to the best of its ability to
provide information requested by the Commissioner. The bill
further requires the Commissioner, no later than five business
days after making a determination, to notify the interested
party or parties who made an allegation that resulted in the
initiation of an evasion investigation of the determination.
Further, the Commissioner may provide importers information
discovered in the investigation which would help educate
importers regarding the lawful importation of merchandise into
the United States.
Section 517(d) requires that if the Commissioner makes an
affirmative determination of evasion, the Commissioner shall
(1) suspend the liquidation of any unliquidated entries of the
covered merchandise that is the subject of the allegation
entered between the date of initiation and the date of the
determination; (2) extend the period for liquidating any
unliquidated entries of merchandise that entered before the
initiation of the investigation; (3) notify Commerce of the
determination and request that Commerce determine the
appropriate duty rates for such covered merchandise; (4)
require importers of such covered merchandise to post cash
deposits and assess duties on the covered merchandise as
directed by Commerce; and (5) take such additional enforcement
measures as the Commissioner deems appropriate, including
initiating proceedings for related violations of law, modifying
CBP's procedures for identifying future evasion, requiring a
deposit of estimated duties on future entries, and referring
the matter to ICE for civil or criminal investigation. The
section also requires the Department of Commerce to promptly
provide the Commissioner with cash deposit rates and
antidumping and countervailing duty rates, and establishes a
special rule for cases in which the producer or exporter is
unknown.
Section 517(e) requires the Commissioner to determine
within 90 calendar days of initiation of an evasion
investigation whether there is a reasonable suspicion that
entries of covered merchandise that are the subject of the
allegation were entered through evasion. If the Commissioner
decides there is a reasonable suspicion, the Commissioner shall
(1) suspend the liquidation of any unliquidated entries of the
covered merchandise entered after the date of initiation; (2)
extend the period for liquidating any unliquidated entries of
merchandise that entered before the initiation of the
investigation; and (3) take any additional measures necessary
to protect the ability to collect appropriate duties, which may
include requiring a single transaction bond or posting cash
deposits with respect to entries of covered merchandise.
Section 517(f) provides a period of 30 business days for
interested party who made the allegation of evasion or the
importer of the covered merchandise alleged to have entered the
merchandise subject to the evasion determination to request de
novo administrative review by the Commissioner after
notification of a determination.
Section 517(g) establishes that judicial review shall be
available to the interested party alleging evasion or the party
found to have entered merchandise subject to the investigation
through evasion of any administrative review of the evasion
determination by CBP.
Section 517(h) sets out a rule of construction with respect
to other civil and criminal proceedings so that no
determination under subsection (c) or action taken by the
Commissioner pursuant to the section shall be construed to
limit the authority to carry out, or the scope of, any other
proceeding or investigation pursuant to any other provision of
Federal or State law.
Section 402(b) makes a conforming amendment.
Section 402(c) provides the effective date of the section
is 180 days after the date of enactment.
Section 402(d) provides that the Secretary of the Treasury
shall prescribe such regulations as may be necessary to
implement the bill within 180 days of enactment.
Section 402(e) establishes the application of the section
to Canada and Mexico.
Section 403--Annual report on prevention and investigation of evasion
of antidumping and countervailing duty orders
Section 403(a) requires the Commissioner to submit to the
Committees an annual report on the Commissioner's efforts to
prevent and investigate the evasion of antidumping and
countervailing duty orders.
Section 403(b) provides the contents of the report which
shall include, for the preceding calendar year, a summary of
CBP's efforts to prevent and investigate antidumping and
countervailing duty evasion, the number of allegations received
and the number resulting in investigations, a summary of
investigations initiated under the new procedures, the number
of investigations not completed during the specified time
period, the amount of additional duties determined to be owed,
the penalties imposed for each investigation, an identification
of the countries of origin of covered merchandise entered
through evasion, the amount of duties collected as a result of
investigations, a description of the allocation of personnel
and other resources to prevent and investigate evasion, a
description of relevant training. The report shall also include
a description of processes and procedures of CBP to prevent and
investigate evasion.
Section 403(c) requires the Commissioner to make available
a public summary of the report required in subsection (a) which
includes, at a minimum, a description of the type of
merchandise at issue in the investigations, the amount of
additional duties found to be owed, the countries of origin of
merchandise entered through evasion, and a description of the
type of measures used to prevent and investigate evasion.
Section 403(d) includes additional definitions.
This title creates procedures that require CBP to
investigation allegations of evasion of antidumping and
countervailing duty orders and provides tools to counteract the
detrimental effect of those practices. This title addresses the
concerns of the Committee that CBP does not currently
adequately protect the United States from evasion of AD/CVD
orders.
TITLE V--AMENDMENTS TO ANTIDUMPING AND COUNTERVAILING DUTY LAWS
Section 501--Consequences of failure to cooperate with a request for
information in a proceeding
Section 501 amends Section 776(b) and 776(c) of the of the
Tariff Act of 1930 to provide the U.S. Department of Commerce
flexibility to select appropriate facts available or adverse
facts available when a foreign party fails to cooperate with
the agency's request for information in a proceeding.
Section 502--Definition of material injury
Section 502(a) adds a new section 771(7)(J) of the Act
which clarifies that, when considering whether a domestic
industry suffered material injury, the International Trade
Commission shall not make a negative determination merely
because the domestic industry is profitable or because its
performance has improved.
Section 502(b) modifies section 771(7)(C)(iii) of the Act
to direct the Commission to consider certain additional injury
factors such as the ability of domestic producers to service
debt, as well as the return such producers receive on their
assets. The amendment also makes clear that the term
``profits'' includes gross profits, operating profits, and net
profits.
Section 502(c) modifies section 771(7)(C)(iv) of the Act to
simplify the ``captive production'' test. In particular, this
amendment eliminates the third part of the captive production
test--that the production of the domestic like product sold in
the merchant market is not generally used in the production of
that downstream article.
Section 503--Particular market situation
Section 503 amends section 771(15), section
773(a)(1)(B)(ii)(III), and section 773(e) the definitions of
``ordinary course of trade,'' ``normal value'' and
``constructed value.'' These modifications provide that where a
particular market situation exists that distorts pricing or
cost in a foreign producer's home market, the Department of
Commerce has flexibility in calculating a duty that is not
based on distorted pricing or costs.
Section 504--Distortion of prices or costs
Section 504(a) amends section 773(b)(2) of the Act by
removing the requirement that a party allege that a foreign
producer has made sales below its costs before Commerce
initiates an investigation.
Section 504(b) modifies section 773(c) of the Act to
clarify that Commerce can disregard prices or costs of inputs
that foreign producers purchase if Commerce has reason to
believe or suspect that the inputs in question have been
subsidized or dumped.
Section 505--Reduction in burden on Department of Commerce by reducing
the number of voluntary respondents
Section 505 amends Section 782(a) of the Act to clarify
Commerce's authority to select and limit voluntary respondents.
Section 506--Application to Canada and Mexico
Section 506 clarifies that the legislation applies to goods
from Canada and Mexico pursuant to the North American Free
Trade Agreement (NAFTA).
This title amends U.S. antidumping and countervailing duty
laws relating to the investigations by the Department of
Commerce and International Trade Commission. The changes in
Section 501 clarify statutory requirements for the use of facts
available. The changes in Section 502 respond to concerns that
the Commission may in some cases not examine all data relevant
to analyzing the effects of dumped and subsidized imports on
the domestic industry, and concerns regarding the Commission's
ability to accurately assess captive production issues. The
changes in Sections 503 and 504 provide clarifications
regarding home market distortion and cost and price distortion.
Section 505 clarifies the treatment of voluntary respondents in
light of certain recent court decisions.
TITLE VI--ADDITIONAL TRADE ENFORCEMENT AND INTELLECTUAL PROPERTY RIGHTS
PROTECTION
SUBTITLE A--TRADE ENFORCEMENT
Section 601--Trade Enforcement Priorities
Section 601 amends section 310 of the Trade Act of 1974 to
set out in section 310(a) a process for USTR to identify trade
enforcement priorities, consult with Congress on the
establishment of those priorities, and report on the actions
taken to address those priorities. Section 310(a)(1) provides
that USTR must consult with the Committee on Finance and the
Committee on Ways and Means no later than May 31 each year
regarding the prioritization of acts, policies, or practices of
foreign governments that raise concerns under a U.S. trade
agreement, or otherwise pose a barrier to U.S. exports. The
section also provides that USTR shall focus on eliminating
acts, policies, and practices that are likely to have the most
impact on economic growth, and take into account relevant
factors, including the trade barrier's economic significance
and effect on U.S. jobs, and whether it was identified in the
National Trade Estimate Report or by a Federal agency or
congressional committee. Section 601(a) further requires the
USTR to report on the identified trade enforcement priorities
no later than July 31 of each year. The report must also
include a description of actions taken to address trade
enforcement priorities identified in prior years.
Section 310(b), as amended by section 601, requires USTR to
undertake semi-annual enforcement consultations with the Senate
Finance Committee and House Ways and Means Committee, which
occurs at the same time as the reporting established under
310(a), and not later than January 31 of each year. The semi-
annual consultations shall address the identification,
prioritization, investigation, and resolution of acts,
policies, or practices of foreign government of concern under
U.S. trade agreements; active enforcement investigations;
ongoing enforcement actions; and enforcement resources.
Section 310(c), as amended by section 601, requires the
USTR to take appropriate action, as defined in this section, to
address an identified trade enforcement priority by the first
semi-annual enforcement consultations after identification of
the priority.
Section 310(d) requires the USTR to notify and consult with
the Senate Finance Committee and House Ways and Means Committee
in advance of initiation of any formal trade dispute brought by
the United States, and as soon as practicable after initiation
of trade disputes against the United States. It also requires
notification and consultation in advance of the circulation of
dispute settlement reports.
Section 602--Exercise of WTO authorization to suspend concessions or
other obligations under trade agreements
Section 602(a) amends section 306 of the Trade Act of 1974
to establishes that, if an action to suspend concessions under
the WTO Agreement has been terminated, and a petitioner or any
representative of domestic industry which would benefit from
reinstatement of action has submitted to the USTR a written
request for reinstatement, and the USTR has completed the
requirements of sections 306(d) and 307(c)(3) of the Trade Act
of 1974, then the Trade Representative may at any time
determine to take action to exercise an authorization by the
WTO to suspend concessions or other obligations.
Section 602(b) contains conforming amendments.
Section 603--Trade monitoring
Section 603 amends chapter 1 of title II of the Trade Act
of 1974 by adding a new section 205 that requires the U.S.
International Trade Commission, within 180 days of enactment,
to make available on a website of the Commission an import
monitoring tool to allow the public access to data on the
volume and value of goods imported into the United States for
the purpose of assessing whether such data has changed with
respect to such goods over a period of time. Not later than 270
days after the date of the enactment of this section, and not
less frequently than quarterly thereafter, the Secretary of
Commerce shall publish on a website of the Department of
Commerce, and notify the appropriate Committees of the
availability of, a monitoring report on changes in the volume
and value of trade with respect to imports and exports of goods
categorized based on the 6-digit HTS during the most recent
quarter for which such data are available and previous quarters
as the Secretary considers practicable.
Section 604--Establishment of Interagency Trade Enforcement Center
Section 604(a) amends chapter 4 of title I of the Trade Act
of 1974 (19 U.S.C. 2171) by adding at the end section 142,
entitled ``Interagency Trade Enforcement Center'' that does the
following:
Section 142(a) establishes an Interagency Trade Enforcement
Center (Center) in the Office of the United States Trade
Representative (USTR).
Section 142(b) provides that the main functions of the
Center are to: (1) serve as the primary forum within the
Federal government for the USTR and other agencies to
coordinate the enforcement of United States trade rights under
international trade agreements and enforcement of United States
trade remedy laws; (2) coordinate the exchange of information
related to potential violations of international trade
agreements; and (3) conduct outreach to United States workers,
businesses, and other interested persons.
Section 142(c) requires the head of the Center to be a
Director who shall be appointed from among full-time senior-
level officials of USTR. The Center shall also have a Deputy
Directory appointed by the Secretary of Commerce from among
full-time, senior-level officials of Commerce. Other Federal
government agencies that the Center coordinates with may detail
or assign employees to the Center.
Section 142(d) requires funding and administrative support
for the Center to be provided by the USTR.
Section 142(e) requires the Director to submit an annual
report to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives on
the actions taken by the Center with respect to the enforcement
of U.S. trade rights under trade agreements in the preceding
year.
Section 142(f) defines key terms.
Section 604(b) makes a clerical amendment.
Section 605--Establishment of Chief Manufacturing Negotiator
This section establishes a Chief Manufacturing Negotiator
at the Office of the United States Trade Representative (USTR)
with the rank of Ambassador appointed by the President, by and
with the advice and consent of the Senate, to conduct trade
negotiations and to enforce trade agreements relating to U.S.
manufacturing products and services. The Chief Manufacturing
Negotiator will vigorously advocate on behalf of U.S.
manufacturing interests and perform other functions directed by
the USTR. Not later than 1 year after the date of the enactment
of this Act, and annually thereafter, the Chief Manufacturing
Negotiator must submit to this Committee and the Committee on
Ways and Means of the House of Representatives a report on the
actions taken by the Chief Manufacturing Negotiator in the
preceding year.
This section also amends Section 5314 of title 5, United
States Code, to set the pay for this position at Level III of
the Executive Schedule. This section also amends Section 5314
of title 5 to correct the title of the Chief Agricultural
Negotiator. This section also includes technical amendments
relating to compensation rates for officers and employees of
USTR, as well as experts and consultants employed by USTR.
Section 606--Enforcement under Title III of the Trade Act of 1974 with
respect to unreasonable acts, policies, and practices relating
to the environment
This section amends section 301(d)(3)(B) of the Trade Act
of 1974 to include, among the conduct that is unreasonable for
purposes of taking discretionary action under 301(b), a
persistent pattern of conduct by a foreign country that: (1)
fails to effectively enforce the environmental laws of the
foreign country; (2) waives or otherwise derogates from the
environmental laws of the foreign country or weakens the
protections afforded by such laws; (3) fails to provide for the
judicial or administrative proceedings giving access to
remedies for violations of the environmental laws of the
foreign country; (4) fails to provide appropriate and effective
sanctions or remedies for violations of the environmental laws
of the foreign country; or (5) fails to effectively enforce
environmental commitments under agreements to which the foreign
country and the United States are a part.
It is the view of the Committee that the United States
should have this tool to address trade related environmental
issues enumerated above.
Section 607--Trade Enforcement Trust Fund
Section 607(a) establishes a Trade Enforcement Trust Fund
(Trust Fund) in the Treasury of the United States.
Section 607(b) requires the Treasury to transfer $15
million each fiscal year to the Trust Fund. The aggregate money
held in the Trust Fund may not exceed $30 million at any time.
Section 607(c) requires the Treasury to invest Trust Fund
money that is not required to meet current withdrawals.
Section 607(d) allows the United States Trade
Representative (USTR) to use amounts in the Trust Fund to: (1)
enforce the provisions of and commitments and obligations under
WTO Agreements and free trade agreements to which the United
States is a party to and resolve any actions by foreign
countries that are inconsistent with those provisions,
commitments, and obligations; (2) monitor the implementation by
foreign countries of the provisions and commitments and
obligations under free trade agreements which the United States
is a party to; and (3) thoroughly investigate and respond to
petitions under section 302 of the Trade Act of 1974 (19 U.S.C.
2412) requesting that action be taken under section 301 of such
Act (19 U.S.C. 2411). In addition, identified Federal agencies
may also use amounts in the Trust Fund to ensure capacity
building efforts undertaken by the United States (1) prioritize
and give special attention to the implementation of
intellectual property, labor, and environmental commitments;
(2) are self-sustaining and promote local ownership; (3)
include performance indicators against which the progress and
obstacles for the implementation of commitments and obligations
described in (1) can be identified and assessed within a
meaningful time frame; and (4) monitor and evaluate capacity
building efforts of the United States under (1), (2), and (3).
Section 607(e) requires that, not later than 18 months
after the entry into force of any free trade agreements entered
into after the date of enactment of this Act, any Federal
agency that has used amounts in the Trust Fund in connection
with that agreement to submit to Congress a report on the
actions taken by that agency in connection with that agreement.
Section 607(f) requires the Comptroller General of the
United States to submit to Congress not later than one year
after the date of enactment of this Act a report that contains
(1) a comprehensive analysis of the trade enforcement
expenditures of each Federal agency with responsibilities
relating to trade that specifies, with respect to each agency,
the amounts appropriated for trade enforcement and the number
of full-time employees carrying out activities related to trade
enforcement and (2) recommendations on the additional employees
and resources that each Federal agency may need to effectively
enforce free trade agreements the United States is a party to.
Section 607(g) defines key terms.
Section 608--Honey transshipment
Section 608(a) requires the Commissioner to direct
appropriate personnel and resources to address concerns that
honey is being imported into the United States in violation of
U.S. customs and trade laws.
Section 608(b) requires CBP to compile a database of the
individual characteristics of foreign honey to facilitate the
verification of country of origin markings, and seek to work
with foreign governments, industry and the Food and Drug
Administration in compiling the database.
Section 608(c) requires the Commissioner to submit a report
to Congress within 180 days after enactment of the Act that (1)
describes and assesses the limitations in existing analysis
capabilities of laboratories with respect to determining the
country of origin of honey, and (2) includes any recommendation
of the Commissioner for improving such capabilities.
Section 608(d) expresses the sense of Congress that the
Commissioner of Food and Drugs should promptly establish a
honey national identification standard to ensure that honey
imports (1) are classified appropriately for duty assessment;
and (2) are denied entry to the United States if such imports
pose a threat to the health or safety of consumers.
Section 609--Inclusion of interest in certain distributions of
antidumping duties and countervailing duties
Section 609(a) provides that the Secretary of Homeland
Security shall deposit all interest in subsection (c) into the
special account established under section 754(e) of the Tariff
Act of 1930 for inclusion in distributions described in
subsection (b) made on or after the date of the enactment of
this Act.
Section 609(b) defines distributions as those made under
section 754 of the Tariff Act of 1930 (19 U.S.C. 1675c)
(repealed by subtitle F of title VII of the Deficit Reduction
Act of 2005 (Public Law 109-171; 120 Stat. 154)) with respect
to entries of merchandise made on or before September 30, 2007
and that were unliquidated, not in litigation, and not under an
order of liquidation on December 8, 2010.
Section 609(c) defines interest as an amount earned on
antidumping duties or countervailing duties distributed in
subsection (b) that is realized through application of a
payment received on or after October 1, 2014 by CBP or in
connection with a customs bond pursuant to a court order or a
settlement for any such bond. It further provides that the
types of interest include interest accrued under section 778 or
505(d) of the Trade Act of 1930, or equitable interest under
common law, or interest under section 963 of the Revised
Statutes awarded by a court against a surety under its bond for
late payment of antidumping duties, countervailing duties, or
other interest.
Section 609(d) defines key terms.
Section 610--Illicitly imported, exported, or trafficked cultural
property, archaeological or ethnological materials, and fish,
wildlife, and plants
Section 610(a) requires the Commissioner and ICE Director
to ensure that appropriate personnel are trained in the
detection, identification, detention, seizure, and forfeiture
of cultural property and archaeological or ethnological
materials, and fish, wildlife and plants, the importation,
exportation, or trafficking of which violates the laws of the
United States.
Section 610(b) permits the Commissioner and the Director to
accept training and other support services from experts outside
of the Federal Government with respect to the detection,
identification, detention, seizure, and forfeiture of cultural
property and archaeological or ethnological materials, or fish,
wildlife, and plants described in this section.
Enforcement of U.S. trade agreements and U.S. trade laws is
critical to ensuring that the U.S. manufacturers, workers and
farmers are not harmed by discriminatory and other harmful
trade practices of our trading partners. It is the Committee's
view that the new tools provided in this subtitle are necessary
to further this goal and strengthen the enforcement function of
the United States.
SUBTITLE B--INTELLECTUAL PROPERTY RIGHTS PROTECTION
Section 611--Establishment of Chief Innovation and Intellectual
Property Negotiator
Protection of intellectual property rights is critical to
the U.S. economy, jobs, national security, and the health and
safety of the American people. Nearly the entire U.S. economy
relies on some form of intellectual property rights because
virtually every industry either produces or uses it. IPR
infringement causes significant financial losses for U.S. right
holders and businesses around the world. It also undermines
U.S. innovation and creativity, hurting U.S. economic
competitiveness to the detriment of American businesses and
workers. IPR infringement also endangers the public and harms
national security, as counterfeit products may pose significant
risks to consumer health and safety.
Section 611 amends section 141 of the Trade Act of 1974 (19
U.S.C. 2171) to establish a Chief Innovation and Intellectual
Property Negotiator at the Office of the United States Trade
Representative (USTR), who shall be appointed by the President,
by and with the advice and consent of the Senate, to conduct
trade negotiations and to enforce trade agreements relating to
United States intellectual property, and to take appropriate
actions to address acts, policies, and practices of foreign
governments that have a significant adverse impact on the value
of United States innovation. The Chief Innovation and
Intellectual Property Negotiator shall have the rank of
Ambassador.
To ensure the rate of pay for the Chief Innovation and
Intellectual Property Negotiator is equivalent to other Deputy
USTR positions, this section amends section 5314 of title 5,
United States Code, to set the pay for this position at Level
III of the Executive Schedule.
This section also requires the USTR to submit an annual
report to this Committee and to the Committee on Ways and Means
of the House of Representatives detailing the enforcement
actions taken by USTR to ensure the protection of United States
innovation and intellectual property interests, and other
actions taken to advance United States innovation and
intellectual property interests.
The establishment of a Chief Innovation and Intellectual
Property Negotiator with the rank of Ambassador reflects the
critical importance of intellectual property to the U.S.
economy. The establishment of this position, which will be
appointed by the President, by and with the advice and consent
of the Senate, and the additional requirement for USTR to
submit an annual report to Congress enhances USTR's
accountability to Congress and the American people regarding
its efforts to protect intellectual property and innovation.
Section 612--Measures relating to countries that deny adequate
protection for Intellectual Property Rights
The Committee supports USTR's use of the Special 301
Report, which is an important tool to encourage and maintain
adequate and effective intellectual property rights protection
and enforcement worldwide. The purpose of section 612 is to
enhance the effectiveness of the Special 301 Report by ensuring
that it addresses inadequate protections for trade secrets, and
by providing USTR with tools to ensure countries listed in the
report that have consistently failed to adequately protect
intellectual property rights make progress in achieving
effective protection of intellectual property rights and
equitable market access for U.S. persons that rely upon
intellectual property protections.
Inadequate protection for trade secrets and trade secret
theft are increasing problems around the world. A trade secret
is often among a business's core business assets, and
protection of its trade secret is essential for that business's
ability to compete. Trade secret theft, including industrial
and economic espionage, imposes significant costs on the U.S.
economy, weakens U.S. competitiveness, puts U.S. jobs at risk,
and threatens national security. For these reasons, this
Committee is concerned about inadequate protection for trade
secrets, and the rise in trade secret theft. To reflect the
seriousness of this threat to the U.S. economy and to U.S.
national security, this section requires USTR to identify
foreign countries that deny adequate and effective protection
of trade secrets as part of the Special 301 Report.
To assist USTR in encouraging foreign countries placed on
the Priority Watch List to address deficiencies with respect to
IPR protection, enforcement, or market access for persons
relying on IPR, this section requires USTR, within 90 days
after submitting the annual National Trade Estimate, to develop
an action plan for foreign countries that have spent at least
one year on the Priority Watch List. The action plan calls for
such countries to meet benchmarks designed to assist them to
achieve effective protection of intellectual property rights,
and equitable market access for U.S. persons that rely upon
intellectual property protections.
This section also authorizes the President to take
appropriate action with respect to foreign countries that fail
to meet action plan benchmarks and requires USTR to transmit to
this Committee and to the Committee on Ways and Means of the
House of Representatives a report on the action plans and the
progress in achieving the action plan benchmarks.
TITLE VII--CURRENCY MANIPULATION
SUBTITLE A--INVESTIGATION OF CURRENCY UNDERVALUATION
Section 701--Short title
Section 701 sets forth the short title of this title as the
Currency Undervaluation Investigation Act.
Section 702--Investigation or review of currency undervaluation under
countervailing duty law
Section 702 amends subsection (c) of section 702 of the
Tariff Act of 1930 (19 U.S.C. 1671a(c)) by requiring the
administering authority to initiate an investigation to
determine whether currency undervaluation by the government of
a country or any public entity within the territory of a
country is providing, directly or indirectly, a countervailable
subsidy.
Section 703--Benefit calculation methodology with respect to currency
undervaluation
Section 703 amends section 771 of the Tariff Act of 1930
(19 U.S.C. 1677) by requiring the administering authoring to
determine whether there is a benefit to the recipient of a
countervailable subsidy and measure such benefit by comparing
the simple average of the real exchange rates derived from
application of the macroeconomic-balance approach and the
equilibrium-exchange-rate approach to the official daily
exchange rate identified by the administering authority. This
section also defines key terms.
Section 704--Modification of definition of specificity with respect to
export subsidy
Section 704 amends section 771(5A)(B) of the Tariff Act of
1930 (19 U.S.C. 1677(5A)(B)) by adding at the end the following
sentence: ``The fact that a subsidy may also be provided in
circumstances that do not involve export shall not, for that
reason alone, mean that the subsidy cannot be considered
contingent upon export performance.''.
Section 705--Application to Canada and Mexico
Section 705 provides that the amendments made by this title
shall apply with respect to goods from Canada and Mexico.
Section 706--Effective date
Section 706 provides that the amendments made by this title
apply to countervailing duty investigations initiated under
subtitle A of title VII of the Tariff Act of 1930 (19 U.S.C.
1671 et seq.) and reviews initiated under subtitle C of title
VII of such Act (19 U.S.C. 1675 et seq.) (1) before the date of
the enactment of this bill, if the investigation or review is
pending a final determination as of such date of enactment; and
(2) on or after such date of enactment.
SUBTITLE B--ENGAGEMENT ON CURRENCY EXCHANGE RATE AND ECONOMIC POLICIES
Section 711--Enhancement of Engagement on Currency Exchange Rate and
Economic Policies with Certain Major Trading Partners of the
United States
Section 711(a) requires that, not later than 180 days after
the enactment of this Act and not less than every 180 days
thereafter, the Secretary shall submit to Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on
the macroeconomic and currency exchange rate policies of each
country that is a major trading partner of the United States
which includes an enhanced analysis with respect to certain
major trading partners of the United States the currency of
which is persistently and substantially undervalued.
Section 711(b) directs the Secretary to conduct enhanced
bilateral engagement with each country for which an enhanced
analysis of macroeconomic and currency exchange rate policies
is included in the report submitted. The Secretary may
determine not to enhance bilateral engagement with a country if
the Secretary submits to the relevant Committees a report that
describes how the currency and other macroeconomic policies of
that country are addressing the undervaluation and surpluses
identified with respect to that country.
Section 711(c) authorizes the President to take the
following remedial actions for a country that fails to adopt
appropriate policies to address and correct persistent
imbalances: (1) prohibiting the Overseas Private Investment
Corporation from approving any new financing with respect to a
project located in that country; (2) restricting Federal
government procurement from that country, consistent with our
international obligations; (3) engaging in additional efforts
through the International Monetary Fund on rigorous
surveillance of the macroeconomic and exchange rate policies of
that country; and (4) considering the failure of the country to
take remedial action when assessing the country as a potential
trade agreement.
Section 711(d) defines key terms.
Section 712--Advisory Committee on International Exchange Rate Policy
Section 712(a) establishes the Advisory Committee on
International Exchange Rate Policy (Committee). The Committee
shall be responsible for advising the Secretary of the Treasury
with respect to the impact of international exchange rates and
financial policies on the economy of the United States.
Section 712(b) requires the Committee to be comprised of 9
members, none of whom shall be employees of the Federal
government, provides that three members shall be appointed by
each chamber of Congress and the President, and defines the
qualifications for membership on the Committee.
Section 712(c) requires the Committee to be terminated two
years after the enactment of this Act unless renewed by the
President for a subsequent two-year period. The President may
continue to renew the Committee in two-year periods.
Section 712(d) requires the Committee to meet not less than
two times each calendar year.
Section 712(e) provides procedures for establishing a
Committee chairperson.
Section 712(f) requires the Secretary of the Treasury to
make available to the Committee such staff, information,
personnel, administrative services, and assistance as the
Committee may reasonably require.
Section 712(g) defines the application of the Federal
Advisory Committee Act.
Section 712(h) authorizes the appropriations of $1,000,000
each fiscal year for the Committee.
In the view of the Committee, the tools currently available
to the Federal government to address currency manipulation are
inadequate. The provisions in this title enhance the ability of
the United States to deal with and counteract the effects of
currency manipulation.
TITLE VIII--PROCESS FOR CONSIDERATION OF TEMPORARY DUTY SUSPENSIONS AND
REDUCTIONS
Section 801--Short title
This section sets forth the short title of this title as
the American Manufacturing Competiveness Act of 2015.
Section 802--Sense of Congress on the need for a miscellaneous tariff
bill
Section 802(a) lists the following Congressional findings:
(1) as of the enactment of this bill, the Harmonized Tariff
Schedule of the United States (HTSUS) imposes duties on
imported goods for which there is no domestic availability or
insufficient domestic availability; (2) the imposition of
duties on such goods creates artificial distortions in the
economy of the United States that negatively affect United
States manufacturers and consumers; (3) it is in the interests
of the United States to update the HTSUS every 3 years to
eliminate such artificial distortions by suspending or reducing
duties on such goods; (4) the manufacturing competitiveness of
the United States around the world will be enhanced if Congress
regularly and predictably updates the HTSUS to suspend or
reduce duties on such goods.
Section 802(b) describes the sense of Congress that
Congress should consider a miscellaneous tariff bill not later
than 180 days after the United States International Trade
Commission (USITC) and the Department of Commerce issue reports
on proposed duty suspensions and reductions under this title in
order to remove a comparative disadvantage to United States
manufacturers and consumers.
Section 803--Process for consideration of duty suspensions and
reductions
Section 803(a) defines the purpose of this section as a
process by which the appropriate congressional committees, in
conjunction with the Commission pursuant to its authorities
under 332 of the Tariff Act of 1930 (19 U.S.C. 1332), for the
submission and consideration of proposed duty suspensions and
reductions.
Section 803(b) requires that not later than October 15,
2015, and October 15, 2018, the appropriate congressional
committees shall establish and, on the same day, publish on
their respective publically available Internet websites a
process that (1) provides for the submission and consideration
of legislation containing proposed duty suspensions and
reductions in a manner that, to the maximum extent practicable,
is consistent with the requirements described in subsection (c)
and (2) includes in a miscellaneous tariff bill those duty
suspensions and reductions that meet the requirements of this
title.
Section 803(c) requires that, not later than October 15,
2015 and October 15 2018, the USITC to publish a notice (in the
Federal Register and on the Internet) announcing a 60-day
period during which the public could, following agency-
specified requirements, submit proposed duty suspensions and
reductions and required disclosure forms directly to the USITC.
No later than 15 days after the expiration of the 60-day
period, the USITC is required to provide to the appropriate
congressional committees and publish on a publicly available
website the proposed duty suspensions and reductions and the
required disclosure forms. Further, not later than 90 days
after publishing the proposed duty suspensions and reductions,
the USITC shall submit to the appropriate congressional
committees a report on each duty suspension and reduction
submitted specifying: (1) whether or not domestic production of
the product exists, and if so, whether the domestic producer
objects to the duty suspension; (2) any technical changes
necessary to the article description necessary for
administration of the suspension; (3) the amount of foregone
tariff revenue if the suspension is enacted; and (4) whether or
not the duty suspension or reduction would be available to any
person that imports the product.
Section 803(d) requires that not later than the end of the
90-day period beginning on the date of the publication of the
proposed duty suspensions and reductions on the USITC's
website, the Secretary of Commerce, in consultation with CBP
and other relevant Federal agencies, shall submit a report on
each proposed duty suspension and reduction, submitted by
either the appropriate congressional committees or the
responses from the public pursuant to the notice in the Federal
Register, to the appropriate congressional committees that
includes (1) a determination of whether or not domestic
production of the article that is the subject of the proposed
duty suspension or reduction exists and, if such production
exists, whether or not a domestic producer of the article
objects to the proposed duty suspension or reduction and (2)
any technical changes to the article description that are
necessary for purposes of administration when articles are
presented for importation.
Section 803(e) sets out a rule of construction that
requires a proposed duty suspension or reduction submitted
under this title by a Member of Congress shall receive
treatment no more favorable than the treatment received by a
proposed duty suspension or reduction submitted under this
title by a member of the public.
Section 804--Report on effects of duty suspensions and reductions on
United States economy
Section 804(a) requires that not later than May 1, 2018 and
May 1, 2022, the USITC shall submit to the appropriate
congressional committees a report on the effects on the United
States economy on temporary duty suspensions and reductions
pursuant to this title.
Section 804(b) requires the Commission to solicit and
append to the report required under section 804(a)
recommendations with respect to those domestic industry sectors
or specific domestic industries that might benefit from
permanent duty suspensions and reductions or elimination of
duties.
Section 804(c) requires that each report be submitted in
unclassified form, but may include a classified annex.
Section 805--Judicial review precluded
Section 805 prescribes that the exercise of functions under
this title shall not be subject to judicial review.
Section 806--Definitions
Section 806 defines key terms.
TITLE IX--MISCELLANEOUS PROVISIONS
Section 901--De minimis value
Section 901(a) sets out the findings of Congress that
modernizing international customs is critical for United States
businesses of all sizes, as well as consumers and the economic
growth of the United States and that higher thresholds for the
value of articles that may be entered informally and free of
duty provide significant economic benefits to the United
States.
Section 901(b) sets out a sense of Congress that the United
States Trade Representative should encourage other countries to
establish commercially meaningful de minimis values for express
and postal shipments that are exempt from customs duties and
taxes and from certain entry document requirements.
Section 901(c) amends section 321(a)(2)(C) of the Tariff
Act of 1930 to raise the de minimis threshold for the Secretary
of the Treasury to permit the admission of articles duty free
from $200 to $800.
Section 901(d) provides that the amendments shall apply
with respect to articles entered, or withdrawn from warehouse
for consumption, on or after the 15th day after the enactment
of this Act.
The changes made in section 901 reflect the view of the
Committee that U.S. custom rules should not impose an undue
burden on small businesses, including those operating in the
digital economy.
Section 902--Consultation on trade and customs revenue functions
Section 902 amends section 401(c) of the SAFE Port Act to
require the Secretary to consult with the business community at
least 30 days after proposing and 30 days before finalizing any
policies, initiatives, or actions that will have an impact on
CBP's trade and customs revenue functions. The Commissioner
must also notify Committees at least 60 days before proposing
and 60 days before finalizing any policies, initiatives,
negotiating positions, or actions that will have an impact on
CBP's trade and customs revenue functions or negotiating
positions.
Section 903--Penalties for customs brokers
Section 903(a) amends section 641 of the Tariff Act of 1930
to add a new section that allows the Secretary of Homeland
Security to impose fines, or revoke or suspend a customs broker
license, if a broker has been convicted of committing or
conspiring to commit an act of terrorism.
Section 903(b) makes technical and conforming amendments to
section 641 of the Tariff Act of 1930.
Section 904--Amendments to Chapter 98 of the Harmonized Tariff Schedule
of the United States
Section 904(a) amends subchapter II of chapter 98 of the
Harmonized Tariff Schedule of the United States by adding at
the end of U.S. Note 3 (relating to articles repaired, altered,
processed or otherwise changed in condition abroad) that for
the purposes of 9802.00.40 and 9802.00.50, fungible articles
exported from the United States may be commingled, and the
origin, value and classification of such articles may be
accounted for using an inventory management method. The section
also defines fungible and inventory management method for
purposes of the section.
Section 904(b) amends the article description for
subheading 9801.00.10 of the Harmonized Tariff Schedule of the
United States relating to products of the United States
returned after having been exported by inserting after the term
``exported'' the following, ``, or any other products when
returned within 3 years after having been exported''.
Section 904(c) amends subchapter I of chapter 98 of the
Harmonized Tariff Schedule of the United States by inserting a
new subheading and providing duty-free treatment for certain
U.S. government property returned to the United States.
Section 905--Exemption from duty of residue of bulk cargo contained in
instruments of international traffic previously exported from
the United States
Section 905(a) amends General Note 3(e) of the Harmonized
Tariff Schedule of the United States by adding a new
subparagraph (vii) that adds ``residue of bulk cargo contained
in instruments of international traffic previously exported
from the United States'' to the list of items exempt from duty
payment. It also adds to language defining residue as not
exceeding seven percent by weight of the bulk cargo and with no
or de minimis value and defines other key terms.
Section 905(b) provides that the amendments in this section
shall take effect on the date of enactment of this Act with
respect to residue of bulk cargo instruments of international
traffic that are imported on or after the date of enactment of
this Act and that were previously exported from the United
States.
This section reflects the view of the Committee that
residue of bulk cargo contained in instruments of international
traffic previously exported from the United States should be
exempt from duty payment.
Section 906--Drawback and refunds
Section 906(a) amends section 313(a) of the Tariff Act of
1930 (19 U.S.C. 1313(a)) to provide that the amount of drawback
claimed must be calculated pursuant to subsection (l).
Section 906(b) amends section 313(b) of the Tariff Act of
1930 (19 U.S.C. 1313(b)) by allowing substitution drawback for
imported merchandise or merchandise classifiable under the same
8-digit HTS used in the manufacture or production of articles.
This section also prescribes the amount of drawback claimed
must be calculated pursuant to subsection (l) and such claim
must be filed within 5 years of the importation of the
merchandise. This section also sets out requirements related to
the transfer of merchandise subject to a claim of drawback, and
allows records kept in the normal course of business to be used
to demonstrate the transfer of merchandise. Lastly, this
section also requires a drawback claimant to submit a bill of
materials to demonstrate the merchandise was incorporated into
an article and provides a special rule for sought chemical
elements.
Section 906(c) amends section 313(c) of the Tariff Act of
1930 (19 U.S.C. 1313(c)) by extending the filing deadline for
drawback claims to 5 years from the date of importation. This
section also prescribes the amount of drawback claimed must be
calculated pursuant to subsection (l). Lastly this paragraph is
amended to allow records kept in the normal course of business
to be used to demonstrate the transfer of merchandise.
Section 906(d) strikes section 313(i) of the Tariff Act of
1930 (19 U.S.C. 1313(i)) and replaces it with new subsection
entitled ``Proof of Exportation.'' This subsection provides
that the proof of exportation shall establish fully the date
and fact of exportation and the identity of the exporter. This
may be demonstrated either by records kept in the normal course
of business or through the Automated Export System (AES) after
CBP has certified AES to be a system of records.
Section 906(e) amends section 313(j) of the Tariff Act of
1930 (19 U.S.C. 1313(j)) to allow unused drawback claims for
merchandise that are exported or destroyed and are classifiable
under the same 8-digit HTS subheading number as such imported
merchandise. Merchandise may not be substituted for imported
merchandise for drawback purposes based on the 8-digit HTS if
the article description for the 8-digit HTS begins with the
term ``other.'' In those instances, merchandise may be
substituted for imported merchandise if such imported
merchandise are classifiable under the same 10-digit HTS. If
the 10-digit HTS begins with the term ``other,'' then
substitution drawback is not permissible. Additionally, for the
purposes unused merchandise that is either exported or
destroyed, the 10-digit Department of Commerce Schedule B
number may be used to demonstrate that an article and
merchandise are classifiable under the same 8-digit HTS without
regard to whether or not the Schedule B number corresponds to
more than one 8-digit HTS number. Furthermore, this section
also amends the filing deadline for drawback claims to be 5
years from the date of importation and prescribes the amount of
drawback claimed must be calculated pursuant to section (l).
Section 906(f) amends section 313(k) of the Tariff Act of
1930 (19 U.S.C. 1313(k)) by providing that any person making a
drawback claim is liable for the full amount of the drawback
claimed and providing for the liability of importers with
respect to claims made by another person. Any person claiming
drawback and importers shall be jointly and severally liable
with the importer for the lesser of the amount of drawback
claimed or the amount the importer authorized the other person
to claim.
Section 906(g) amends section 313(l) of the Tariff Act of
1930 (19 U.S.C. 1313(l)) to require the Secretary of the
Treasury to prescribe regulations for the calculation of
drawback that cannot exceed 99 percent of the lesser of the
amount of duties, taxes, and fees paid with respect to the
imported merchandise or the amount of duties, taxes, and fees
that would apply to the exported article if the exported
article were imported. This section requires the promulgation
of the necessary regulations within 2 years. Additionally, one
year after the enactment of this Act, and annually thereafter
until the regulations required under this subsection are
promulgated, the Secretary shall submit to Congress a report on
the status of the regulations.
Section 906(h) amends section 313(p) of the Tariff Act of
1930 (19 U.S.C. 1313(p)) to require evidence of transfer to be
demonstrated with records kept in the normal course of
business.
Section 906(i) amends section 313(q) of the Tariff Act of
1930 (19 U.S.C. 1313(q)) to require the amount of drawback
shall be calculated pursuant to section (j).
Section 906(j) amends section 313(r) of the Tariff Act of
1930 (19 U.S.C. 1313(r)) to require the filing of drawback
claims to 5 years from the date of importation. This section
also requires drawback claims to be filed electronically 2
years after the date of the enactment of this Act or later if
the Automated Commercial Environment (ACE) is not ready.
Section 906(k) amends section 313(s) of the Tariff Act of
1930 (19 U.S.C. 1313(s)) to allow a drawback successor to,
subject to the requirements set out in section 313(j), as
amended designate unused imported merchandise, other
merchandise classifiable under the same 8-digit HTS subheading
number as such imported merchandise, or any combination of such
imported merchandise and such other merchandise, that the
predecessor received, before the date of succession, from the
person who imported and paid any duties, taxes, and fees due on
the imported merchandise, as the basis for drawback on
merchandise possessed by the drawback successor after the date
of succession.
Section 906(l) strikes section 313(t) of the Tariff Act of
1930 (19 U.S.C. 1313(t)).
Section 906(m) amends section 313(x) of the Tariff Act of
1930 (19 U.S.C. 1313(x)) to require the amount of drawback
claimed pursuant to subsection (j) to be reduced by the value
of any materials reclaimed from the destruction of unused
merchandise.
Section 906(n) amends Section 313(z) to define key terms.
Section 906(o) amends section 508(c)(3) of the Tariff Act
of 1930 (19 U.S.C. 1508(c)(3)) to require records for drawback
claims to be maintained for 5 years after the date of
liquidation.
Section 906(p) requires the Government Accountability
Office (GAO) to provide the Senate Finance and House Ways and
Means Committees with a report not later than one year after
the issuance of regulations provided for in subsection
313(l)(2), as amended, that consists of: (1) an assessment of
the modernization of drawback and refunds; (2) a description of
drawback claims that were permissible before the effective date
of these amendments, and are not after, and an identification
of industries most affected; and (3) a description of drawback
claims that were not permissible before the effective date of
these amendments, and are after, and an identification of
industries most affected.
Section 906(q) provides that the amendments made by this
section shall generally take effect on the enactment of this
Act. This section also provides for a one year transition for
filing drawback claims once CBP promulgates regulations and
requires a report on the operability of ACE with respect to
processing drawback claims.
Drawback is currently a paper-based labor intensive process
for both the government and private sector. This section
reflects the view of this Committee that drawback needs to be
simplified and automated by (1) allowing drawback claimants to
generally use the 8-digit Harmonized Tariff Schedule of the
United States number in lieu of obtaining a ruling prior to
submitting a drawback claim with CBP; (2) allowing claims to be
submitted in the Automated Commercial Environment (ACE); and
(3) standardizing the timeframe to file a drawback claim to 5
years after the date of importation.
Section 907--Inclusion of certain information in submission of
nomination for appointment as Deputy United States Trade
Representative
This section requires that, when the President submits to
the Senate for its advice and consent a nomination of an
individual for appointment as a Deputy United States Trade
Representative, the President shall include in that submission
information on the country, regional offices, and functions of
the Office of the United States Trade Representative with
respect to which that individual will have responsibility.
The Office of U.S. Trade Representative has failed in the
past to fully inform the Committee about the duties and
functions of the nominee under consideration for a position as
a Deputy U.S. Trade Representative prior to confirmation. This
section is intended to ensure that such information is
forthcoming prior to consideration of any future nominee.
Section 908--Biennial reports regarding competitiveness issues facing
the United States economy and competitive conditions for
certain key United States industries
Section 908(a) requires the United States International
Trade Commission to conduct a series of investigations, and
submit a report on each such investigation, regarding the
competiveness issues facing the economy of the United States
and competitive conditions for certain key United States
industries.
Section 908(b) provides that the content of the reports
that shall include (1) a detailed assessment of competiveness
issues facing the economy of the United States over the 10-year
period beginning on the date on which the report is submitted
and (2) a detailed assessment of a key United States industry
or industries. In selecting key United States industries, the
Commission shall consult with the Committee on Finance of the
Senate and the Committee on Ways and Means of the House of
Representatives. Furthermore, to the extent possible, the same
key United States industry or industries should not analyzed in
multiple reports.
Section 908(c) requires the reports to be submitted to the
Committee on Finance of the Senate and the Committee on Ways
and Means of the House of Representatives no later than May 15,
2017 and every 2 years thereafter.
Section 908(d) defines ``key United States industry''.
The Committee believes that a forward-looking analysis of
the competitive challenges and opportunities faced by the U.S.
economy and key industries will better enable the Committee and
Federal government agencies to more effectively plan and
allocate resources devoted to trade negotiations and trade
enforcement.
Section 909--Report on certain U.S. Customs and Border Protection
Agreements
Section 909(a) The Act requires the Commissioner to submit
to the Committee on Finance of the Senate and the Committee on
Ways and Means of the House of Representatives a detailed
annual report on each reimbursable agreement and public-private
partnership agreement CBP enters into. Each report must
include: (1) A description of the development of the program;
(2) A description of the type of entity with which CBP entered
into the agreement and the amount that entity reimbursed CBP
under the agreement; (3) An identification of the type of port
of entry to which the agreement relates and an assessment of
how the agreement provides economic benefits at the port of
entry; (4) A description of the services provided CBP under the
agreement during the year preceding the submission of the
report; (5) The amount of fees collected under the agreement
during that year; (6) A detailed accounting of how the fees
collected under the agreement have been spent during that year;
(7) A summary of any complaints or criticism received by CBP
during that year regarding the agreement; (8) An assessment of
the compliance with the terms of the agreement of the entity
that entered into an agreement with CBP; (9) Recommendations
with respect to how activities conducted pursuant to the
agreement could function more effectively or better produce
economic benefits; (10) A summary of the benefits to and
challenges faced by CBP and the entity that entered into an
agreement with CBP.
Section 909(b) specifies that the programs that CBP must
produce a detailed assessment of include programs under Section
560 of the department of Homeland Security Appropriations, 2013
(division D of Public Law 113-6; 127 Stat. 378) and Section 559
of the Department of Homeland Security Appropriations Act, 2014
(division F of Public Law 113-76; 6 U.S.C. 211 Note).
The Committee is concerned that CBP is not fully informing
appropriate committees of jurisdiction on revenue and outlays
associated with section 560 and section 559 programs. It is the
view of this Committee that the reports required under this
section will provide Congress with sufficient information to
determine if the revenue raised under these programs is being
spent in accordance with the program requirements in the most
efficient manner.
Section 910--Charter flights
This section amends current law to permit CBP employees to
provide customs services for passengers and baggage on charter
flights that arrive at U.S. ports of entry after normal
operating hours, if the air carrier specifically requests the
services at least four hours before the flight arrives and pays
any overtime fees.
Section 911--Amendment to Tariff Act of 1930 to require country of
origin marking of certain castings
Section 911(a) amends section 304(e) of the Tariff Act of
1930 (19 U.S.C. 1304(e)) to include inlet frames, tree and
trench grates, lampposts, lamppost bases, cast utility poles,
bollards, hydrants, and utility boxes in the list of products
which must always have a country of origin marking. This
section also amends current law by requiring the aforementioned
marking to be in a location such that it will remain visible
after installation.
Section 911(b) prescribes that the amendments made by this
section shall apply with respect to the importation of castings
on or after the date that is 180 days after the enactment of
this Act.
Section 912--Elimination of consumptive demand exception to prohibition
on importation of goods made with convict labor, forced labor,
or indentured labor; Report
Section 912(a) eliminates the consumptive demand exemption
by striking ``The provisions of this section'' and all that
follows through ``of the United States'' in section 307 of the
Tariff Act of 1930 (19 U.S.C. 1307). The effective date of this
subsection is 15 days after the enactment of this Act.
Section 912(b) requires the Commissioner to submit not
later than 180 after the enactment of this Act, and annually
thereafter, to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives a
report on compliance with section 307 of the Tariff Act of 1930
(19 U.S.C. 1307), as amended by this bill, that includes (1)
the number of instances in which merchandise was denied entry
pursuant to that section during the 1-year period preceding the
submission of the report; (2) a description of the merchandise
denied entry pursuant to section 307; and (3) such other
information as the Commissioner considers appropriate with
respect to monitoring and enforcing compliance with section
307.
Section 913--Collection of occupational data in employer filings for
unemployment insurance
Section 913 amends section 1137 of the Social Security Act
(42 U.S.C. 1320b-7) by expanding the nationwide collection of
labor statistics by (1) requiring each quarterly wage report
required to be filed after January 1, 2016 to include
occupational information with respect to each employee of the
employer that permits the classification of such employees into
occupational categories found in the Standard Occupational
Classification (SOC) system; (2) requiring the state agency
receiving the aforementioned information shall make it
available to the Secretary of Labor; and (3) requiring the
Secretary of Labor to make occupational information submitted
available to other State and Federal agencies.
Section 914--Statements of policy with respect to Israel
Section 914 states that Congress (1) supports the
strengthening of United States-Israel economic cooperation and
recognizes the tremendous strategic, economic, and
technological value of cooperation with Israel; (2) recognizes
the benefit of cooperation with Israel to United States
companies, including by improving American competitiveness in
global markets; (3) recognizes the importance of trade and
commercial relations to the pursuit and sustainability of
peace, and supports efforts to bring together the United
States, Israel, the Palestinian territories, and others in
enhanced commerce; (4) opposes politically motivated actions
that penalize or otherwise limit commercial relations
specifically with Israel such as boycotts, divestment or
sanctions; (5) notes that the boycott, divestment, and
sanctioning of Israel by governments, governmental bodies,
quasi-governmental bodies, international organizations, and
other such entities is contrary to the General Agreement on
Tariffs and Trade (GATT) principle of non-discrimination; (6)
encourages the inclusion of politically motivated actions that
penalize or otherwise limit commercial relations specifically
with Israel such as boycotts, divestment from, or sanctions
against Israel as a topic of discussion at the U.S.-Israel
Joint Economic Development Group (JEDG) and other areas to
support the strengthening of the United States-Israel
commercial relationship and combat any commercial
discrimination against Israel; (7) supports efforts to prevent
investigations or prosecutions by governments or international
organizations of United States persons on the sole basis of
such persons doing business with Israel, with Israeli entities,
or in Israeli-controlled territories; and (8) supports American
States examining a company's promotion or compliance with
unsanctioned boycotts, divestment from, or sanctions against
Israel as part of its consideration in awarding grants and
contracts and supports the divestment of State assets from
companies that support or promote actions to boycott, divest
from, or sanction Israel.
The Committee included section 914 as an expression of the
Committee's continued support for the nation of Israel, which
was our first bilateral free trade partner and one of our
strongest allies in the Middle East. The Committee believes it
is important to demonstrate our steadfast commitment so that
Israel can continue to thrive through international trade.
Inclusion of these provisions will help fight efforts by other
nations to discriminate against Israel.
TITLE X--OFFSETS
Section 1001--Revocation or denial of passport in case of certain
unpaid taxes
PRESENT LAW
The administration of passports is the responsibility of
the Department of State. The Secretary of State may refuse to
issue or renew a passport if the applicant owes child support
in excess of $2,500 or owes certain types of Federal debts,
such as expenses incurred in providing assistance to an
applicant to return to the United States. The scope of this
authority does not extend to rejection or revocation of a
passport on the basis of delinquent Federal taxes. Although
issuance of a passport does not require a social security
number or taxpayer identification number (``TIN''), the
applicant is required to provide such number. Failure to
provide a TIN is reported by the State Department to the IRS
and may result in a $500 fine.
Returns and return information are confidential and may not
be disclosed by the IRS, other Federal employees, State
employees, and certain others having access to such information
except as provided in the Internal Revenue Code. There are a
number of exceptions to the general rule of nondisclosure that
authorize disclosure in specifically identified circumstances,
including disclosure of information about federal tax debts for
purposes of reviewing an application for a Federal loan and for
purposes of enhancing the integrity of the Medicare program.
REASONS FOR CHANGE
The Committee is aware that the amount of unpaid Federal
tax debts continues to present a challenge to the IRS. The
Committee is also aware that a significant amount of unpaid
Federal tax debt is owed by persons to whom passports have been
issued. In 2011, for example, the Government Accountability
Office reported that approximately 224,000 persons issued U.S.
passports in 2008 owed in aggregate $5.8 billion. Federal law
currently permits the Department of State to refuse an
application for a passport or revoke a passport based on the
existence of certain debts, including delinquent child support,
but does not have authority to consider the existence of tax
debt. In addition, the IRS is not authorized to provide
information to the Department of State about persons who owe
tax debts. The Committee believes that tax compliance will
increase if issuance of a passport is linked to payment of
one's tax debts.
EXPLANATION OF PROVISION
Under this provision, the Secretary of State is required to
deny a passport (or renewal of a passport) to a seriously
delinquent taxpayer and is permitted to revoke any passport
previously issued to such person. In addition to the revocation
or denial of passports to delinquent taxpayers, the Secretary
of State is authorized to deny an application for a passport if
the applicant fails to provide a social security number or
provides an incorrect or invalid social security number. With
respect to an incorrect or invalid number, the inclusion of an
erroneous number is a basis for rejection of the application
only if the erroneous number was provided willfully,
intentionally, recklessly or negligently. Exceptions to these
rules are permitted for emergency or humanitarian
circumstances, including issuance of a passport for short-term
use to return travel to the United States by the delinquent
taxpayer.
The provision authorizes limited sharing of information
between the Secretary of State and Secretary of Treasury. If
the Commissioner of Internal Revenue certifies to the Secretary
of the Treasury the identity of persons who have seriously
delinquent Federal taxes as defined in this provision, the
Secretary of Treasury or his delegate is authorized to transmit
such certification to the Secretary of State for use in
determining whether to issue, renew, or revoke a passport.
Applicants whose names are included on the certifications
provided to the Secretary of State are ineligible for a
passport. The Secretary of State and Secretary of Treasury are
held harmless with respect to any certification issued pursuant
to this provision.
A seriously delinquent tax debt generally includes any
outstanding debt for Federal tax in excess of $50,000,
including interest and any penalties, for which a notice of
lien or a notice of levy has been filed. This amount is to be
adjusted for inflation annually, using calendar year 2013, and
a cost-of-living adjustment. Even if a tax debt otherwise meets
the statutory threshold, it may not be considered seriously
delinquent if (1) the debt is being paid in a timely manner
pursuant to an installment agreement or offer-in-compromise, or
(2) collection action with respect to the debt is suspended
because a collection due process hearing or innocent spouse
relief has been requested or is pending.
EFFECTIVE DATE
The provision is effective on January 1, 2016.
Section 1002--Customs user fees
Section 601(a) amends Section 13031(j)(3)(A) of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (19
U.S.C. 58c(j)(3)) to extend the period that the Secretary of
the Treasury may charge for certain customs services for
imported goods from July 8, 2025 to July 28, 2025.
Section 601(b) extends the ad valorem rate for the
Merchandise Processing Fee collected by Customs and Border
Protection that offsets the costs incurred in processing and
inspecting imports, from July 1, 2025 to July 14, 2025.
III. BUDGETARY IMPACT OF THE BILL
May 12, 2015.
Hon. Orrin G. Hatch,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for the Trade Facilitation
and Trade Enforcement Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark
Grabowicz.
Sincerely,
Keith Hall.
Enclosure.
S. 1269--Trade Facilitation and Trade Enforcement Act of 2015
Summary: The Trade Facilitation and Trade Enforcement Act
of 2015 would amend various trade statutes with the goal of
strengthening agency enforcement efforts and improving the
efficiency of the regulatory process. The bill would:
Establish the Trade Enforcement Trust Fund
to, among other things, support countries that are
parties to a free trade agreement with the United
States in implementing commitments under those
agreements;
Increase the funds available for
distribution to eligible parties under the Continued
Dumping and Subsidy Offset Act (CDSOA);
Extend the authority to collect and increase
the rate of certain customs user fees;
Improve the claims process for refunds on
duties paid for certain imported merchandise and
increase the minimum value of goods for which duties
must be paid;
Deny passport applications, and allow
existing passports to be revoked, for individuals with
certain tax debt;
Authorize the appropriation of $154 million
annually over the 2016-2018 period for the Automated
Commercial Environment program in Customs and Border
Protection (CBP);
Require CBP to improve and expand several
trade regulation programs; and
Require employers to report on the
occupational classification of employees on a quarterly
basis and require the Department of Labor to make that
information available to state and federal agencies.
CBO and the staff of the Joint Committee on Taxation (JCT)
estimate that enacting the bill would increase direct spending
by $146 million over the 2015-2025 period and increase revenues
by $193 million over the same period, resulting in a net
decrease in deficits over the 11-year period of $48 million.
Pay-as-you-go procedures apply because enacting the
legislation would affect direct spending and revenues. In
addition, assuming appropriation of the necessary amounts, CBO
estimates that implementing the bill would cost about $1.2
billion over the 2016-2020 period.
CBO has determined that the nontax provisions of the bill
would impose a mandate, as defined in the Unfunded Mandates
Reform Act (UMRA), on public and private-sector employers by
requiring those entities, when submitting quarterly wage
reports to state agencies, to include additional occupational
information that permits classification of their employees. The
bill also would impose mandates on users of customs services
and on importers.
CBO estimates that the cost of the mandate on state, local,
and tribal governments would fall below the intergovernmental
threshold established in UMRA ($77 million in 2015, adjusted
annually for inflation). CBO estimates that the aggregate cost
of the mandates on private entities would exceed the private-
sector threshold ($154 million in 2015, adjusted annually for
inflation).
JCT has determined that the tax provisions of the bill
contain no intergovernmental or private-sector mandates as
defined in UMRA.
Estimated cost to the Federal Government: The estimated
budgetary effect of the bill is shown in the following table.
The costs of this legislation fall within budget functions 370
(advancement of commerce), 500 (education, training,
employment, and social services), 750 (administration of
justice), and 800 (general government).
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted by July 1, 2015.
Direct spending
CBO estimates that enacting the bill would increase direct
spending by $146 million over the 2015-2025 period.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015-2020 2015-2025
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDINGa
Trade Enforcement Trust Fund:
Estimated Budget Authority.............................. 0 15 15 15 15 15 15 15 15 15 15 75 150
Estimated Outlays....................................... 0 15 15 15 15 15 15 15 15 15 15 75 150
Payment of Interest on Certain Distributions Under CDSOA:
Estimated Budget Authority.............................. 0 20 21 22 23 25 27 21 17 13 11 111 200
Estimated Outlays....................................... 0 20 21 22 23 25 27 21 17 13 11 111 200
Customs User Fees:
Estimated Budget Authority.............................. 0 0 0 0 0 0 0 0 0 0 -204 0 -204
Estimated Outlays....................................... 0 0 0 0 0 0 0 0 0 0 -204 0 -204
Total Changes:
Estimated Budget Authority.......................... 0 35 36 37 38 40 42 36 32 28 -178 186 146
Estimated Outlays................................... 0 35 36 37 38 40 42 36 32 28 -178 186 146
CHANGES IN REVENUES
Change in De Minimis Value.................................. -3 -14 -15 -15 -16 -17 -17 -18 -19 -20 -22 -80 -179
Revocation of Passports..................................... 0 24 60 62 46 39 34 32 33 34 35 231 398
Drawback Procedures......................................... 0 0 -2 -3 -3 -3 -3 -3 -3 -3 -4 -11 -7
Total Changes........................................... -3 10 43 44 27 19 14 11 11 11 9 140 193
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
Impact on Deficit........................................... 3 25 -7 -7 11 21 28 25 21 17 -187 46 -48
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Automated Commercial Environment:
Authorization Level..................................... 0 154 154 154 0 0 0 0 0 0 0 461 461
Estimated Outlays....................................... 0 108 154 154 46 0 0 0 0 0 0 461 461
CBP Trade Programs:
Estimated Authorization Level........................... 0 48 95 98 101 104 107 110 113 116 120 445 1,010
Estimated Outlays....................................... 0 43 90 97 100 103 106 109 113 116 119 435 998
Department of Labor:
Estimated Authorization Level........................... 0 100 56 58 59 61 62 64 65 67 68 334 660
Estimated Outlays....................................... 0 20 72 66 58 59 61 62 64 65 67 274 594
Other Programs:
Estimated Authorization Level........................... 0 13 9 9 14 9 10 10 10 10 10 54 104
Estimated Outlays....................................... 0 11 9 9 14 10 10 10 10 10 10 52 102
Total Changes:
Estimated Authorization Level....................... 0 314 314 319 174 174 178 184 188 193 198 1,294 2,235
Estimated Outlays................................... 0 182 325 326 218 172 177 181 186 191 196 1,222 2,154
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Notes: This estimate assumes the bill is enacted by July 1, 2015; * = between zero and $500,000. For direct spending, negative numbers indicate a decrease in outlays; for revenues, negative
numbers indicate a reduction in revenues. Components may not sum to totals because of rounding.
CDSOA = Continued Dumping and Subsidy Offset Act; CBP = Customs and Border Protection.
aOn April 22, 2015, the Senate Committee on Finance approved multiple trade bills: Each of those bills would extend the authority to collect merchandise processing fees for a specific period
of time. Because of interactions among the provisions in those bills, and for the purposes of this estimate, CBO assumes that the three bills will be enacted in the order that would extend
those fees chronologically. If the bills are enacted in a different order, the estimated costs would be different.
Trade Enforcement Trust Fund. Section 607 would establish
the Trade Enforcement Trust Fund to provide funding to several
agencies, including the Office of the United States Trade
Representative and the Departments of State and Labor, to
enhance the capabilities of foreign countries' efforts to
enforce the conditions of trade agreements with the United
States. The bill would appropriate $15 million per year to,
among other things, support self-sustaining activities in
eligible countries to prioritize implementation of intellectual
property, labor, and environmental commitments and to promote
locally-owned businesses. CBO estimates that enacting this
provision would increase direct spending by $150 million over
the 2015-2025 period.
Payment of Interest on Certain Distributions Under the
Continued Dumping and Subsidy Offset Act. Section 609 would
increase the amount available for distribution to eligible
parties under CDSOA. Under current law, CBP distributes
antidumping and countervailing (ADCV) duties that were assessed
on or after October 1, 2000, on goods that entered the United
States before October 1, 2007, to domestic parties that meet
the program's eligibility requirements. Based on information
from CBP, CBO estimates that enacting this provision would
increase direct spending by $200 million over the 2015-2025
period.
This section would direct CBP to include in the amount
distributed to eligible parties interest earned on certain
delinquent accounts. Specifically, in cases where CBP pursues
payment of ADCV duties through litigation with sureties that
provided customs bonds to guarantee payment, court-ordered
interest received above the bond amount would be added to the
distribution. This additional amount would apply only to cases
where distributions are made on or after enactment of the bill,
from court-ordered payments received from sureties after
October 1, 2014.
Under current law, upon receipt of a court-ordered
settlement in CDSOA cases, CBP first deposits into the Treasury
any interest that accrued during the period of delinquency and
litigation; the remaining amounts are available for
distribution to eligible parties. Under the bill, those
interest amounts currently deposited in the Treasury would
instead be spent.
The CBP has 30 cases currently in litigation for delinquent
ADCV duties due from sureties, dating as far back as 2009;
based on the agency's experience with similar litigation, we
expect it will take about six years for all of those cases to
conclude. Further, we expect that CBP will bring an additional
15 cases against sureties for payment of delinquent duties over
the next five years and that CBP will receive payment for those
additional cases by the end of 2025.
Based on the average amount of delinquent ADCV duties and
the average amount of bond coverage associated with those 30
cases, CBO estimates that CBP will collect about $250 million
from sureties over the 2015-2025 period from court-ordered
awards. Further, based on the length of time that typically
elapses between the point when duties become delinquent until
completion of the judicial proceedings, we estimate that about
80 percent of that amount, $200 million, will represent accrued
interest that will be deposited into the Treasury. By making
interest collections payable to entities that are eligible to
receive distributions, CBO estimates that enacting the bill
would increase direct spending by that amount.
Customs User Fees. Under current law, the authority to
charge merchandise processing fees collected by CBP will expire
after September 30, 2024. The bill would permit those fees to
be collected during the period beginning July 8, 2025, and
ending July 28, 2025. The bill also would raise the rate of the
merchandise processing fee from 0.21 percent to 0.3464 percent
of the value of goods entering the U.S. for the period
beginning July 1, 2025, and ending July 14, 2025. CBO estimates
those actions would increase offsetting receipts (certain
collections that are treated as reductions in direct spending)
by $204 million in fiscal year 2025. To project collections of
merchandise processing fees, CBO assumes that the fees
collected in future years will grow at the same rate seen in
recent years' about 5 percent. In 2014 collections from the
merchandise processing fee totaled $2.3 billion. By 2024 CBO
estimates those collections will total about $2.7 billion under
current law. CBO expects that the proposed increase in the fee
rate would have a very minor effect on the value of goods
entering the U.S.
Revenues
CBO and staff of JCT estimate that enacting the bill would
increase revenues by $140 million over the 2015-2020 period and
by $193 million over the 2015-2025 period.
Change in De Minimis Value. Under current law, importers
are not required to pay duties on shipments with a total value
of $200 or less. The bill would increase that de minimis value
to $800. According to the U.S. Customs and Border Patrol, in
recent years duties collected on goods where each shipment was
valued between $200 and $800, averaged $17 million a year.
Considering that history and including anticipated growth in
the value of imported goods, CBO estimates that raising the de
minimis level to $800 would result in a revenue loss of $179
million over the 2015-2025 period, net of income and payroll
tax offsets.
Revocation of Passport. Under Section 1001, the Secretary
of State would be required to deny a passport application, with
certain exceptions, from an individual with seriously
delinquent tax debt in excess of $50,000 (indexed for
inflation). Among other changes, the Secretary would also be
permitted to revoke passports previously issued for such
individuals. JCT estimates that the provisions would increase
revenues by about $400 million over the 2016-2025 period.
Drawback Procedures. When goods imported into the country
are later exported or destroyed, the import duties originally
paid for those goods may be refunded. In addition, the
exporting or destroying of substitute goods--goods that are
comparable to such importsmay also qualify for such refunds.
The bill would modify the claims process for such refunds--
which are known as ``drawbacks''--with the goal of simplifying
the process. The most notable changes to the claims process
include the following:
Requiring the use of existing category codes
to identify which goods may qualify as substitutes for
the purposes of drawbacks,
Standardizing and, in some cases, extending
the period during which drawback claims may be filed,
and
Eliminating the requirement for paper
documentation in certain drawback claims.
In 2014, roughly $470 million in duties on imported
merchandise were refunded in cases where substitutable goods
were later exported. Based on information from CBP, and
allowing for an initial period to write new regulations, CBO
estimates that enacting the bill would increase refunds, and
therefore decrease revenues, by $27 million over the 2015-2025
period.
Penalties. The bill would require customs brokers to
maintain records of the identity of their clients. It would
also require non-resident importers to designate an agent in
the United States with the power of attorney. The bill would
prescribe monetary penalties for violations of those
requirements. Under current law, CBP has broad authority to
regulate the activities of customs brokers and importers, as
well as assess monetary penalties for statutory or regulatory
violations. Based on information from CBP, CBO expects that any
additional monetary penalties resulting from enforcement of the
new requirements would be insignificant. Similarly, CBO
estimates that any change in customs duties that could result
from those requirements would also be insignificant.
Prohibition on Imports of Certain Goods. Section 912 would
prohibit the import of all goods manufactured by forced or
indentured labor. Currently, such goods are prohibited from
entering the U.S., with certain exceptions. This section would
eliminate those exceptions, thereby resulting in fewer imported
goods and a loss of tariff revenue, CBO estimates. According to
CBP, most of the prohibited items came from China, a country
with which we do not have a trade agreement. Based on this
information, CBO believes there would be an additional loss of
revenue as some goods that are currently imported from high-
tariff countries like China, would instead be imported from
countries subject to lower duty rates. On net, CBO estimates
this provision would lead to a loss of revenue; however,
because there is limited information available, we are unable
to provide an estimate of the revenue effect at this time.
Spending subject to appropriation
For this estimate, CBO assumes that the necessary
appropriations will be provided each year and that spending
will follow historical patterns for these programs. Under those
assumptions we estimate that implementing the bill would cost
about $1.2 billion over the 2015-2020 period.
Automated Commercial Environment. The bill would authorize
the appropriation of $154 million annually over the 2016-2018
period for the Automated Commercial Environment (ACE), a trade
management system operated by CBP. For fiscal year 2014, $141
million was appropriated for ACE. CBO estimates that
implementing this provision would cost $461 million over the
2016-2019 period.
CBP Trade Programs. The bill would direct CBP to improve
and expand several trade enforcement and facilitation programs,
including validation of new importers, protection of copyrights
and intellectual property rights, and investigation of
allegations of antidumping and countervailing duty evasion.
Based on preliminary information from CBP, we estimate that the
additional programs would cost $435 million over the 2015-2020
period, mostly to hire new employees.
Department of Labor. The bill would require employers to
report on the occupational classification of employees when
filing quarterly wage reports. Assuming appropriation of the
necessary amounts, CBO estimates that in total, this provision
would cost $274 million over the 2016-2020 period. Because
those data are not currently collected, employers, states, and
DOL would need to develop systems for reporting and collecting
that information. Based on preliminary information from the
Bureau of Labor Statistics, developing those federal systems
would cost $208 million over the 2016-2020 period, CBO
estimates.
In addition, states would incur costs to adapt their wage
reporting systems to comply with the bill's requirements. Under
the Federal-State unemployment compensation system, states
receive federal grants for their administrative costs. CBO
estimates that additional federal grants to states would cost
$66 million over the 2016-2020 period, to offset the cost of
state compliance with the new requirements.
Other Programs. CBO estimates that implementing the bill
would cost about $50 million over the 2016-2020 period for
additional activities by the International Trade
Administration, the U.S. International Trade Commission, the
Office of the United States Trade Representative, and for
additional reports to the Congress.
International Trade Administration (ITA). Section 702 would
broaden the authority of the ITA to investigate allegations
that foreign governments are unfairly subsidizing their
producers and exporters. The legislation would direct the ITA
to investigate undervalued currency as a possible
countervailable subsidy, if an allegation is made by a domestic
party and is supported by evidence. (A countervailable subsidy
is financial assistance foreign governments provide to their
domestic industries to benefit production, manufacture, or
exportation of goods.)
Based on information from the agency, CBO estimates that
implementing this provision would cost $22 million over the
2016-2020 period, assuming appropriation of the necessary
amounts. That cost would cover salaries, benefits, and overhead
for 19 additional staff positions (a one percent increase over
fiscal year 2014 staffing levels) to handle the additional
caseloads that would arise under the bill.
U.S. International Trade Commission (USITC). Title VIII
would establish a process for the Congress to consider
miscellaneous tarriff bills (MTBs) and would require USITC to
review each bill and report to the Congress. Based on
information from the USITC about the increase in their workload
for previous MTBs, CBO estimates that this provision would cost
$10 million over the 2016-2020 period.
Office of the United States Trade Representative (USTR).
The bill would require new activities and reports, as well as
establish new positions at USTR and would direct that office to
establish a program to improve the enforcement of intellectual
property rights in certain countries. Many of the requirements
would codify existing policies and practices of the USTR.
However, based on information from USTR and the cost of similar
activities and programs, we estimate that implementing the
legislation would cost about $10 million over the 2016-2020
period.
Reports. The bill also would require about a dozen new
reports from agencies relating to trade issues, mostly from CBP
and the Government Accountability Office. Based on the costs of
similar activities, CBO estimates that it would cost about $10
million over the 2016-2020 period to complete the reports
required by the bill.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR THE TRADE FACILITATION AND TRADE ENFORCEMENT ACT OF 2015, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FINANCE ON APRIL 22, 2015
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015-2020 2015-2025
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact.............................. 3 25 -7 -7 11 21 28 25 21 17 -187 46 -48
Memorandum:
Changes in Outlays...................................... 0 35 36 37 38 40 42 36 32 28 -178 186 146
Changes in Revenues..................................... -3 10 43 44 27 19 14 11 11 11 9 140 193
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: CBO has
determined that the nontax provisions of the bill would impose
a mandate, as defined in UMRA, on public and private-sector
employers by requiring them to include information related to
the occupational classifications of their employees when
submitting quarterly wage reports to state agencies. The bill
also would impose private-sector mandates on users of customs
services and on importers. CBO estimates that the cost of the
mandate on state, local, and tribal governments would fall
below the intergovernmental threshold established in UMRA ($77
million in 2015, adjusted annually for inflation). CBO
estimates that the aggregate cost of the mandates on private
entities would exceed the private-sector threshold ($154
million in 2015, adjusted annually for inflation).
JCT has determined that the tax provisions of the bill
contain no intergovernmental or private-sector mandates as
defined in UMRA.
Mandate that applies to both public and private entities
The bill would require public and private-sector employers,
when submitting quarterly wage reports to state agencies, to
include additional occupational information that permits
classification of their employees. Employers would incur new
administrative costs to add the information to wage reports
submitted on paper or electronically. Based on information on
the cost to employers of complying with current wage reporting
requirements and feedback from public employers about the
marginal cost of including occupational information, CBO
estimates that the aggregate cost of the mandates on public
employers would fall below the annual threshold established in
UMRA for intergovernmental mandates. According to Department of
Labor data, the new reporting requirement could apply to more
than 5.5 million employers in the private sector. Because of
the large number of private employers affected by the
requirement, CBO estimates that the cost of the mandate could
amount to hundreds of millions of dollars in the first year the
mandate is in effect. The total cost would depend on the type
of additional information employers would be required to
provide.
Mandates affecting only private-sector entities
The bill also would impose private-sector mandates, as
defined in UMRA, on entities required to pay merchandise
processing fees. The bill would extend those fees for the July
8, 2025, through July 28, 2025 period, and raise the fee rate
beginning July 1, 2025, and ending July 14, 2025. CBO estimates
that the incremental cost of the fees would amount to $204
million in 2025.
Finally, the bill would impose mandates on importers by
requiring imported castings of such items as lampposts and
utility poles to have the country-of-origin markings visible
after installation and by prohibiting any imports of goods
determined to be made with forced or indentured labor. Based on
information from U.S. Customs and Border Protection regarding
the value of such goods currently received by importers, CBO
estimates that the cost for importers to comply with those
mandates would be small.
Effect on State agencies administering unemployment insurance programs
The bill also would result in significant new
administrative costs to state agencies administering
unemployment insurance (UI) compensation programs because those
agencies would need to increase administrative staff to
collect, code, maintain, and report on new occupational data,
as well as to educate affected employers about the changes.
Many state agencies, especially those using older UI systems,
would likely need to invest in new software systems or
undertake major redesigns, as well as invest in additional data
storage capacity. Depending on the extent to which state
agencies would need to undertake those activities, CBO
estimates that the new administrative costs to states could
exceed $50 million over the 2016-2025 period, with most of
those costs in the early years as systems are adapted. Those
costs, however, would result from participation in a voluntary
federal program and thus would not be an intergovernmental
mandate as defined in UMRA. In addition, states receive federal
funding for administrative costs relating to the UI system, and
the net costs to states from complying with these provisions
would be reduced if those grants to states were to increase.
Previous CBO estimate: On May 4, 2015, CBO transmitted a
cost estimate for H.R. 1907, the Trade Facilitation and Trade
Enforcement Act of 2015, as ordered reported by the House
Committee on Ways and Means on April 23, 2015. CBO estimates
that enacting H.R. 1907 would reduce revenues by $203 million
over the 2015-2015 period and reduce direct spending by $4
million over the same period, resulting in a net increase in
deficits over the 11-year period of $199 million. We also
estimate that implementing H.R. 1907 would increase spending
subject to appropriation by $944 million over the 2016-2020
period.
Estimate prepared by: Federal Costs: Mark Grabowicz, Susan
Willie, and Christi Hawley Anthony; Federal Revenues: Ann
Futrell, Nathaniel Frentz, and staff of the Joint Committee on
Taxation; Impact on State, Local, and Tribal Governments: Jon
Sperl; Impact on the Private Sector: Paige Piper/Bach.
Estimate approved by: Theresa Gullo; Assistant Director for
Budget Analysis.
IV. VOTES OF THE COMMITTEE
In compliance with paragraph 7(c) of rule XXVI of the
Standing Rules of the Senate, the following statements are made
concerning the roll call votes in the Committee's consideration
of S. 1269.
A. MOTION TO REPORT THE BILL
S. 1269 as amended by the Chairman's modified mark and as
further amended was ordered favorably reported by voice vote
with a quorum present on April 22, 2015.
B. VOTES ON AMENDMENTS
(1) An amendment to include the Currency Undervaluation Act
in the bill was agreed to by roll call vote. The vote was
reported as--
Ayes: Grassley, Crapo, Roberts, Burr, Isakson, Portman,
Scott, Wyden, Schumer, Stabenow, Nelson, Menendez, Carper
(proxy), Cardin, Browm, Bennet, Casey, Warner (proxy)
Nays: Hatch, Enzi, Cornyn, Thune (proxy), Toomey, Coats,
Heller, Cantwell
(2) An amendment to enhance engagement on currency exchange
rate policies and other economic policies of certain major
trading partners of the United States, to improve trade
enforcement measures and priorities, and for other purposes was
agreed to by roll call vote.
Ayes: Hatch, Grassley, Crapo, Roberts, Enzi, Cornyn, Thune
(proxy), Burr, Isakson, Portman, Toomey, Coats, Heller, Scott,
Wyden, Schumer, Stabenow, Cantwell, Nelson, Menendez, Carper,
Cardin, Brown, Bennet, Casey, Warner
(3) An amendment to end the importation of goods made with
forced labor was agreed to by roll call vote.
Ayes: Grassley, Crapo (proxy), Roberts, Cornyn, Thune
(proxy), Portman, Toomey, Coats, Heller, Wyden, Schumer
(proxy), Stabenow, Cantwell, Nelson, Menendez, Carper, Cardin,
Brown, Bennet, Casey, Warner
Nays: Hatch, Enzi, Burr (proxy), Isakson, Scott
(4) An amendment to establish an Interagency Enforcement
Center in the Office of the United States Trade Representative
was agreed to by voice vote.
(5) An amendment to include the American Manufacturing
Competitiveness Act was agreed to by voice vote.
(6) An amendment for the purposes of establishing a Trade
Enforcement Trust Fund was agreed to by voice vote.
(7) An amendment to authorize discretionary action against
a foreign country engaging in unreasonable acts, policies, or
practices relating to the environment was agreed to by voice
vote.
V. REGULATORY IMPACT OF THE BILL
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee states
that the resolution will not significantly regulate any
individuals or businesses, will not affect the personal privacy
of individuals, and will result in no significant additional
paperwork.
VI. ADDITIONAL VIEWS
ADDITIONAL VIEWS OF SENATOR TIM SCOTT
I would like to thank Chairman Hatch, Ranking Member Wyden,
and the committee staff for their extraordinary efforts in
crafting the Trade Facilitation and Trade Enforcement Act of
2015, for their consideration of numerous amendments offered by
Members of the Finance committee, and, particularly, for their
acceptance and inclusion of my amendments in the final bill
relating to Customs and Border Protections' (CBP) enforcement
activities.
CBP is responsible for enforcement of eligibility
requirements for imports of goods, including those claiming
preferential duties under U.S. free trade agreements and
preference programs. Compliance with these requirements, and
with other U.S. laws, such as those involving consumer safety
and intellectual property, is imperative to ensure a level
playing field for U.S. businesses, including those in my home
state of South Carolina. Responsible U.S. importers often bear
higher costs to ensure their compliance with U.S. law. A lack
of effective enforcement would only hurt American companies
that play by the rules, and benefit companies that don't. My
amendments expand the annual reporting requirements to include
reviewers' recommendations for improvements to CBP's
enforcement activities and methodologies, and the status of
implementation of past recommendations. Increasing
opportunities for U.S. businesses that benefit from trade helps
to strengthen and grow our economy, but effective enforcement
by CBP reinforces the rules we establish to ensure that our
businesses aren't disadvantaged.
VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In the opinion of the Committee, it is necessary in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported to the Committee).
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