[House Report 108-224]
[From the U.S. Government Publishing Office]
108th Congress Rept. 108-224
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
UNITED STATES-CHILE FREE TRADE AGREEMENT IMPLEMENTATION ACT
_______
July 21, 2003.--Ordered to be printed
_______
Mr. Thomas, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
DISSENTING AND ADDITIONAL VIEWS
[To accompany H.R. 2738]
[Including cost estimates of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 2738) to implement the United States-Chile Free
Trade Agreement, having considered the same, report favorably
thereon without amendment and recommend that the bill do pass.
Contents
Page
I. Introduction.....................................................2
A. Purpose and Summary................................. 2
B. Background.......................................... 2
C. Legislative History................................. 4
II. Section-by-Section Summary.......................................4
A. Title I: Approval and General Provisions............ 4
B. Title II: Customs Provisions........................ 7
C. Title III: Relief from Imports...................... 12
III. Vote of the Committee...........................................14
IV. Budget Effects of the Bill......................................15
A. Committee Estimates and Budgetary Effects........... 15
B. Budget Authority and Tax Expenditures............... 15
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 15
V. Other Matters To Be Discussed Under the Rules of the House......18
A. Committee Oversight Findings and Recommendations.... 18
B. Statement of General Performance Goals and
Objectives......................................... 18
C. Constitutional Authority Statement.................. 18
VI. Changes in Existing Law Made by the Bill, as Reported...........18
VII. Executive Correspondence........................................44
VIII.Views...........................................................46
I. INTRODUCTION
A. Purpose and Summary
H.R. 2738 would implement the June 6, 2003 Agreement
establishing a free trade area between the United States and
Chile.
B. Background
The United States-Chile Free Trade Agreement (FTA), signed
June 6, 2003, is one of the first trade agreements, together
with the United States-Singapore FTA, to be considered by the
Congress under the ``fast-track'' procedures outlined in the
Bipartisan Trade Promotion Authority Act (TPA), which was
approved by the 107th Congress and signed into law in August
2002 as part of the Trade Act of 2002 (P.L. 107-210).
The U.S.-Chile FTA represents an important advance for U.S.
interests in South America. It is the first such agreement with
a South American country. The Agreement establishes closer
economic ties to one of the most open and reformed economies in
South America and one of the fastest-growing economies in the
world. Over the last two decades, Chile has established a
vigorous democracy, a thriving and open economy built on trade,
and a free market society. The U.S.-Chile FTA will help Chile
continue its impressive record of growth, development, and
poverty alleviation. It will help spur progress in the Free
Trade Area of the Americas and will send a positive message
throughout the world by demonstrating that the United States
will work in partnership with those who are committed to free
markets. Currently, U.S. companies are at a competitive
disadvantage in Chile because other countries, including
Canada, Mexico, and the European Union, already have FTAs with
Chile. The U.S.-Chile FTA takes away the advantage that these
countries have and should expand U.S. gross domestic product by
over $4 billion per year.
The possibility of a U.S.-Chile FTA has been discussed for
many years. In December 1994, the leaders of the United States,
Canada, and Mexico announced their intention to negotiate
Chile's accession to the North American Free Trade Agreement
(NAFTA). Talks on possible accession for Chile to the NAFTA
formally began in June 1995. However, ``fast track'' authority
had lapsed, and the talks stalled. Since that time, Mexico,
Canada, and the European Union have concluded bilateral FTAs
with Chile, and U.S. exporters have lost business in Chile as a
result to competitors from these countries.
Negotiations for a U.S.-Chile FTA began in December 2000.
After two years and fourteen rounds of negotiations, the two
countries announced on December 11, 2002 that an agreement had
been reached between the United States and Chile. Pursuant to
requirements established under TPA, President Bush formally
notified the Congress on January 30, 2003, of his intention to
sign the Agreement. On June 6, 2003, United States Trade
Representative Robert Zoellick and Chilean Foreign Minister
Soledad Alvear signed the FTA at a ceremony in Miami.
The Committee believes that the Agreement meets the
objectives and priorities set forth in the Trade Act of 2002.
Specifically, the Agreement benefits key U.S. export sectors
including agriculture and construction equipment, autos and
auto parts, computers and other information technology
products, medical equipment, and paper products. More than 85
percent of bilateral trade in industrial and consumer products
areas will become tariff free immediately, with most remaining
tariffs being phased out over four years. As for agricultural
products, 75 percent of U.S. farm exports will enter Chile duty
free within four years, and all duties and quotas on U.S.
agricultural products will be phased out within 12 years after
the implementation of the Agreement. Originating textiles and
apparel goods will also be duty free immediately.
The FTA is a state of the art agreement in many areas. In
the area of services, the Agreement contains groundbreaking
transparency rules and utilizes a trade-enhancing ``negative
list'' approach to ensure maximum market access for services
providers. The Agreement also provides protections and non-
discriminatory treatment for digital products such as U.S.
software, music, text, and videos, and also provides
protections for U.S. patents, trademarks, and trade secrets
that go beyond past trade agreements. The investment section
provides strong protections for U.S. investors in Chile; they
will be treated fairly and equitably and will have access to
meaningful dispute settlement. These protections cover key
sectors such as agriculture, manufacturing, and services. In
addition, the Agreement makes improvements to the NAFTA
investor-state dispute settlement (``Chapter 11'') model called
for in TPA by providing more transparency, public input into
the dispute settlement, mechanisms to improve the investor-
state process by eliminating frivolous claims, and a place
marker for a future appellate body or similar review mechanism.
The Financial Services chapter provides strong protections for
existing and future U.S. investors and investments in Chile.
The Agreement also contains obligations under which each
government commits to enforce its domestic labor and
environmental laws.
As noted above, this legislation is being considered under
the Bipartisan Trade Promotion Authority Act of 2002. Under
TPA, new trade pacts that the President negotiates in close
consultation with Congress can be approved and implemented
through legislation that Congress considers using streamlined
procedures. Pursuant to TPA requirements, the President is
required to provide written notice to Congress of the
President's intention to enter into the negotiations.
Throughout the negotiating process, and prior to entering into
an agreement, the President is required to consult with
Congress regarding the ongoing negotiations.
The President must notify the Congress of his intent to
enter into a trade agreement at least 90 calendar days before
the agreement is signed. Within 60 days after entering in the
Agreement, the President must submit to the Congress a
description of those changes to existing laws that the
President considers would be required in order to bring the
United States into compliance with the Agreement. After
entering into the Agreement, the President must also submit to
the Congress the formal legal text of the agreement, draft
implementing legislation, astatement of administrative action
proposed to implement the Agreement, and other related supporting
information as required under section 2105(a) of TPA. Following
submission of these documents, the implementing bill is introduced, by
request, by the Majority Leader in each chamber. The House then has up
to 60 days to consider implementing legislation for the Agreement (the
Senate has up to an additional 30 days). No amendments to the
legislation are allowed under TPA requirements.
C. Legislative History
On November 29, 2000, the President first notified Congress
of his intent to negotiate an FTA with Chile. The President
provided formal notification to Congress of the negotiations
with Chile as required under TPA (which was enacted subsequent
to the start of the U.S.-Chile FTA negotiations) on August 22,
2002. During and after the negotiations, the President
continued his consultations with Congress pursuant to the
letter and spirit of the TPA requirements.
Following the June 6, 2003 signing of the U.S.-Chile FTA,
in accordance with TPA requirements, President Bush submitted
to Congress on July 3, 2003 a description of the changes to
existing U.S. laws that would be required to bring the United
States into compliance with the agreement.
On June 10, 2003, the Subcommittee on Trade of the
Committee on Ways and Means held a hearing on the United
States-Chile and United States-Singapore FTAs. The Subcommittee
received testimony supporting these Agreements from the
Administration and Members of Congress. The Subcommittee also
heard testimony from numerous U.S. private sector companies and
organizations.
On July 10, 2003, the Committee on Ways and Means
considered in an informal markup session draft implementing
legislation for the Singapore and Chile FTAs concerning matters
within the jurisdiction of the Committee.
On July 15, 2003, President Bush formally transmitted to
Congress the formal legal text of the U.S.-Chile FTA, draft
implementing legislation, a statement of administrative action
proposed to implement the Agreement, and other related
supporting information as required under section 2105(a) of
TPA. Following this transmittal, on July 15, 2003, Majority
Leader DeLay, along with Congressman Rangel, introduced, by
request, H.R. 2738 to implement the U.S.-Chile FTA. The bill
was referred to the Committee on Ways and Means and the
Committee on the Judiciary.
On July 17, 2003, the Committee on Ways and Means formally
met to consider H.R. 2738. The Committee ordered H.R. 2738
favorably reported to the House of Representatives by a roll
call vote of 33-5. Under the requirements of TPA, amendments
were not permitted.
II. SECTION-BY-SECTION SUMMARY
TITLE I: APPROVAL AND GENERAL PROVISIONS
Section 101: Approval and entry into force
Current law
No provision.
Explanation of provision
Section 101 states that Congress approves the U.S.-Chile
Free Trade Agreement and the Statement of Administrative Action
and provides that the Agreement enters into force when the
President determines that Chile is in compliance with its
agreement obligations and has exchanged notes with the United
States. Section 101 provides that the date of entry into force
will be no sooner than January 1, 2004.
Reason for change
Approval of the Agreement and the Statement of
Administrative Action is required under the procedures of
section 2103(b)(3) of the Bipartisan Trade Promotion Authority
Act of 2002. The remainder of section 101 provides for entry
into force of the Agreement.
Section 102: Relationship of the agreement to U.S. and state law
Current law
No provision.
Explanation of provision
Section 102 provides that U.S. law is to prevail in a
conflict between the Agreement and such law. It also states
that the Agreement does not preempt state law that may conflict
with the Agreement. Only the United States is entitled to bring
a court action to resolve a conflict between a state law and
the Agreement.
Reason for change
Section 102 is necessary to make clear the relationship
between the Agreement and federal and state law, respectively.
Section 103: Consultation and layover for proclaimed actions
Current law
No provision.
Explanation of provision
Section 103 provides that where the President is given
proclamation authority subject to consultation and layover, he
may proclaim action only after he has: obtained advice from the
International Trade Commission and the appropriate private
sector advisory committees; submitted a report to the House
Ways & Means and Senate Finance Committees concerning the
reasons for the action; and consulted with the Committees. The
President may proclaim the proposed action after 60 days have
elapsed.
Reason for change
The bill gives the President certain proclamation authority
but requires extensive consultation with Congress before such
authority may be exercised. The Committee believes that such
consultation is an essential component of the delegation of
authority to the President and expects that such consultations
will be conducted in a thorough manner.
Section 104: Implementing actions in anticipation of entry into force
and initial regulations
Current law
No provision.
Explanation of provision
Section 104(a) provides that after the date of enactment,
the President may proclaim actions and agencies may issue
regulations as necessary to ensure that any provision of this
Act that takes effect on the date that the Agreement enters
into force is appropriately implemented, but not before the
effective date.
Section 104(b) establishes that regulations necessary or
appropriate to carrying out the actions proposed in the
Statement of Administrative Action shall, to the maximum extent
feasible, be issued within one year of entry into force of the
agreement or the effective date of the provision, as the case
may be.
Reason for change
Section 104 provides for the issuance of regulations. The
Committee strongly believes that regulations should be issued
in a timely manner in order to provide maximum clarity to
parties claiming benefits under the Agreement. As noted in the
Statement of Administrative Action, the regulation-issuing
agency will provide a report to Congress not later than thirty
days before one year elapses on any regulation that is going to
be issued later than one year.
Section 105: Administration of dispute settlement proceedings
Current law
No provision.
Explanation of provision
Section 105 authorizes the President to establish an office
within the Commerce Department responsible for providing
administrative assistance to any state-to-state dispute
settlement panels that may be established under the Agreement
and authorizes appropriations for the office and for payment of
the U.S. share of expenses.
Reason for change
The Committee believes that the Commerce Department is the
appropriate agency to provide administrative assistance to
panels.
Section 106: Arbitration of claims
Current law
No provision.
Explanation of provision
Section 106 authorizes the United States to resolve certain
claims covered by the investor-state dispute settlement
procedures set forth in the Agreements and specifies that all
U.S. government contracts are to contain a choice of law
provision for resolving any breach of contract claim.
Reason for change
This provision is necessary to meet U.S. obligations under
Article 10.21 of the Agreement.
Section 107: Effective dates; effect of termination
Current law
No provision.
Explanation of provision
The effective date of this Act is the date of entry into
force of the Agreement. However, sections 1-3 and Title I take
effect upon enactment. The Act shall cease to be effective on
the date on which the Agreement ceases to be in effect.
Reason for change
Section 107 implements U.S. obligations under the
Agreement.
TITLE II: CUSTOMS PROVISIONS
Section 201: Tariff modifications
Current law
No provision.
Explanation of provision
Section 201(a) provides the President with the authority to
proclaim tariff modifications to carry out the Agreement.
Section 201(b) gives the President the authority, subject
to consultation and layover procedures, to proclaim further
tariff modifications as the President determines to be
necessary or appropriate to maintain the general level of
reciprocal and mutually advantageous concessions with respect
to Chile provided for by the Agreement.
Section 201(c) allows, in addition to any duty ordinarily
collected on Chilean imports, the assessment of a duty on an
``agricultural safeguard good'' if the unit import price of the
good when it enters the United States is less than the trigger
price for that good in the Agreement. However, no additional
duty may be assessed if the good is subject to a safeguard
measure under the Agreement or under Title II of the Trade Act
of 1974. The authority to apply such an agriculture safeguard
to a good terminates on the earlier of the date on which that
good first receives duty-free treatment under the Agreement or
twelve years after the Agreement's entry into force.
Reason for change
Section 201(a) is necessary to put the United States in
compliance with the market access provisions of the Agreement.
Section 201(b) gives the President flexibility to maintain the
trade liberalizing nature of the Agreement. The Committee
expects the President to comply with the letter and spirit of
the consultation and layover provisions of this Act in carrying
out this subsection.
Section 201(c) implements the agriculture safeguard
provisions of article 3.18 of the Agreement and provides
important security to U.S. farmers.
Section 202: Rules of origin
Current law
No provision.
Explanation of provision
Section 202 codifies the rules of origin set out in Chapter
4 of the Agreement. Under the general rules, there are three
basic ways for a good of Chile to qualify as an ``originating
good,'' and therefore be eligible for preferential tariff
treatment when it is imported into the United States. A good is
an originating good if: (1) it is ``wholly obtained or produced
entirely in the territory of Chile, the United States or
both''; (2) those materials used to produce the good that are
not themselves originating goods are transformed in such a way
as to cause their tariff classification to change or meet other
requirements, as specified in Annex 4.1 of the Agreement; or
(3) it is produced entirely in the territory of Chile, the
United States, or both exclusively from originating materials.
Under Chapter 4 rules, an apparel product must generally
meet a tariff shift rule that implicitly imposes a ``yarn
forward'' requirement. Thus, to qualify as an originating good
imported into the United States from Chile, an apparel product
must have been cut (or knit to shape) and sewn or otherwise
assembled in Chile from yarn, or fabric made from yarn, that
originates in Chile or the United States. There is a limited
amount of apparel that may enter the United States duty free,
subject to tariff preference level (TPL) caps if it does not
meet the rule of origin.
The remainder of section 202 of the implementing bill sets
forth more detailed rules for determining whether a good meets
the Agreement's requirements under the second method for
qualifying as an originating good. These provisions include
rules pertaining to de minimis quantities of non-originating
materials that do not undergo a tariff transformation, and the
alternative methods for calculating regional value content.
Other provisions in section 202 address valuation of materials
and determination of the originating or non-originating status
of fungible goods and materials.
Reason for change
Rules of origin are needed in order to confine Agreement
benefits, such as tariff cuts, to Chilean goods to prevent
third-country goods from being transshipped through Chile and
claiming benefits under the Agreement. Section 202 puts the
United States in compliance with the rules of origin provisions
of the agreement.
Section 203: Drawback
Current law
Current law under several sections of the Tariff Act of
1930 and the Foreign Trade Zones Act provides for the
availability of duty drawback and other duty refund or deferral
mechanisms.
Explanation of provision
Section 203 of the bill implements Article 3.8 of the
Agreement, which begins a 3-year, phased elimination of duty
drawback and duty deferral programs between the United States
and Chile eight years after the entry into force of the
Agreement. Specifically, eight years after the Agreement enters
into force, the United States will reduce the refund, waiver,
or remission of duties subject to duty drawback or duty
deferral programs by the following formula: 75 percent during
the first year period; 50 percent in the following year; and 25
percent during the final year. The formula will be applied to
drawback claims for duties paid on imported goods that are
subsequently exported, as well as duties for which the payment
has been deferred because of their introduction into a foreign-
trade zone or other duty deferral program.
Section 203(c) of the bill makes clear that no amendment
contained in section 203 authorizes the refund, waiver, or
reduction of countervailing or antidumping duties imposed on a
good imported into the United States. This provision is
consistent with Article 3.8(2)(a) of the Agreement and current
U.S. law.
Reason for change
The Administration maintains that some free trade
agreements should include the elimination of duty drawback to
ensure that neither country becomes an ``export platform'' for
materials produced in other regions of the world. Accordingly,
the Agreement phases out drawback rights, and section 203 is
necessary to put the United States in compliance with those
provisions of the agreement. Committee Members, however, have
expressed concern about this strategy and note approvingly that
the Administration has recently requested public comment on the
subject and will seek comments from formal trade advisory
committees.
Section 204: Customs user fees
Current law
Section 58c of the Title 19 lays out various user fees
applied by customs officials to imports, including the
Merchandise Processing Fee, which is applied on an ad valorem
basis subject to a cap.
Explanation of provision
Section 204 of the bill implements U.S. commitments under
Article 3.12(4) of the Agreement, regarding the exemption of
the merchandise processing fee for originating goods. This
provision is similar to the one in the implementing legislation
for the North American Free Trade Agreement (NAFTA). The
provision also prohibits use of funds in the Customs User Fee
Account to provide services related to entry of originating
goods in accordance with U.S. obligations under the General
Agreement on Tariffs and Trade 1994.
Reason for change
As with other free trade agreements, the Agreement
eliminates the merchandise processing fee on qualifying goods
from Chile. Other customs user fees remain in place. Section
204 is necessary to put the United States in compliance with
the user fee elimination provisions of the Agreement. The
Committee expects that the President, in his yearly budget
request, will take into account the need for funds to pay
expenses for entries under the Agreement given that MPF funds
will not be available.
Section 205: Disclosure of incorrect information
Current law
No provision.
Explanation of provision
Section 205 of the bill implements Articles 4.16(4) and
4.16(5) of the Agreement. The provision prohibits the
imposition of a penalty upon an importer who makes an invalid
claim for preferential tariff treatment under the Agreement if
the importer acts promptly and voluntarily to disclose the
error. If an importer so acts more than once, falsely or
without substantiation, U.S. authorities may suspend
preferential treatment with respect to identical goods imported
by that importer.
Reason for change
Section 205 is necessary to put the United States into
compliance with Articles 4.16(4) and 4.16(5) of the Agreement.
Section 206: Reliquidation of entries
Current law
No provision.
Explanation of provision
Section 206, in accordance with Article 4.12 of the
Agreement, provides authority for customs officials to
reliquidate an entry to refund any excess duties (including any
merchandise processing fees) paid on a good qualifying under
the rules of origin for which no claim for preferential tariff
treatment was made at the time of importation if the importer
so requests within one year of the date of importation. Current
law provides similar authority for NAFTA entries.
Reason for change
Article 4.12 of the Agreement anticipates that private
parties may err in claiming preferential benefits under the
Agreement and provides a one-year period for parties to make
such claims for preferential tariff treatment even if the entry
of the goods at issue has already been liquidated, i.e.,
legally finalized by customs officials. Section 206 is
necessary to put the United States into compliance with Article
4.12 of the Agreement.
Section 207: Recordkeeping requirements
Current law
No provision.
Explanation of provision
Section 207 of the bill, in accordance with Article 4.14 of
the Agreement, provides that an exporter or producer claiming
that a good is an originating good for the purposes of the
Agreement shall maintain, for a period of five years after the
date of issuance of a certificate of origin, a copy of the
certificate and other information demonstrating that the good
qualifies as originating.
Reason for change
Section 207 is necessary to put the United States in
compliance with the recordkeeping requirement provisions of the
Agreement at Article 4.14.
Section 208: Enforcement of textile and apparel rules of origin
Current law
No provision.
Explanation of provision
Section 208 of the bill implements the verification
provisions of the Agreement at Article 3.21 and authorizes the
President to take appropriate action while the verification is
being conducted, including suspending the application of
preferential tariff treatment to the textile or apparel good
for which a claim of origin has been made or for textile or
apparel goods exported or produced by the person subject to a
verification. If the President is unable to make a
determination within 12 months of the date of the request, the
President may take appropriate action, including denial of
entry to the textile or apparel goods subject to the
verification, to similar goods exported or produced by the
person that exported or produced the good, or to any textile or
apparel goods exported or produced by the person subject to the
verification.
Reason for change
In order to avoid textile transshipment, special textile
enforcement provisions were included in the Agreement. Section
208 is necessary to authorize these enforcement mechanisms for
use by U.S. authorities.
Section 209: Conforming amendments
Current law
No provision.
Explanation of provision
Section 209 makes conforming technical amendments to the
Tariff Act of 1930 related to the changes in the drawback
statute in section 203.
Reason for change
Section 203 makes various changes to the duty drawback
statutes that require conforming technical amendments to
existing law. Like section 203, section 209 is thus necessary
to put the United States in compliance with the drawback
provisions of the Agreement.
Section 210: Regulations
Current law
No provision.
Explanation of provision
Section 210 provides that the Secretary of the Treasury
shall issue regulations to carry out provisions of this bill
related to duty drawback, rules of origin, and Customs user
fees.
Reason for change
Because the implementing bill involves lengthy and complex
implementation procedures by customs officials, section 210 is
necessary in order to authorize the Secretary of the Treasury
to carry out provisions of the implementing bill through
regulations.
TITLE III: RELIEF FROM IMPORTS
Subtitle A: Relief From Imports Benefiting From the Agreement (Sections
311-316)
Current law
No provision.
Explanation of provision
Sections 311-316 authorize the President, after an
investigation and affirmative determination by the U.S.
International Trade Commission, to impose specified import
relief when, as a result of the reduction or elimination of a
duty under the Agreement, a Chilean product is being imported
into the United States in such increased quantities and under
such conditions as to be a substantial cause of serious injury
or threat of serious injury to the domestic industry.
Section 311(c) defines ``substantial cause'' in the same
manner as Section 201 of the Trade Act of 1974.
Section 311(d) exempts from investigation under this
section Chilean articles that have previously received relief
since entry into force under this safeguard or if, at the time
the petition is filed, the article is subject to import relief
under the global safeguard provisions in section 201 of the
Trade Act of 1974.
Under section 312(b), if the ITC makes an affirmative
determination, it must find and recommend to the President the
amount of import relief that is necessary to remedy or prevent
serious injury and to facilitate the efforts of the domestic
industry to make a positive adjustment to import competition.
Under section 313(a), the President must provide import
relief to the extent that the President determines is necessary
to remedy or prevent the injury found by the ITC and to
facilitate the efforts of the domestic industry to make a
positive adjustment to import competition. Under section
313(b), the President is not required to provide import relief
if the President determines that the relief will not provide
greater economic or social benefits than costs. Section 313(c)
sets forth the nature of the relief that the President may
provide as: a suspension of further tariff reductions for the
article; or an increase of tariffs to a level that does not
exceed the lesser of the existing most favored nation (MFN)/
normal trade relation (NTR) rate or the MFN/NTR rate in effect
when the Agreement entered into force. The provision further
states that if the President provides relief for greater than
one year, the relief must be subject to progressive
liberalization at regular intervals over the course of its
application.
Section 313(d) states that the import relief that the
President is authorized to provide may not exceed three years.
If the President provided an initial period of relief of less
than three years, the President may extend the relief under
certain circumstances, but the aggregate period of relief,
including extensions, may not exceed three years.
Section 314 provides that no relief may be provided under
this subtitle after ten years from the Agreement's entry into
force, unless the tariff elimination for the article under the
Agreement is twelve years, in which case relief may not be
provided for that article after twelve years from entry into
force.
Section 315 authorizes the President to provide
compensation to Chile consistent with Article 7.4 of the
Agreement.
Section 316 provides for the treatment of confidential
business information.
Reason for change
The Committee believes that it is important to have in
place a temporary, extraordinary mechanism if a U.S. industry
experiences injury by reason of increased import competition
from Chile in the future, with the understanding that the
President is not required to provide relief if the relief will
not provide greater economic or social benefits than costs. The
Committee intends that administration of this safeguard be
consistent with U.S. obligations under Chapter 8 of the
Agreement.
Subtitle B: Textile and Apparel Safeguard (Sections 321-328)
Current law
No provision.
Explanation of provision
Section 321 provides that a request for safeguard relief
under this subtitle may be filed with the President by an
interested party. The President is to review the request and
determine whether to commence consideration of the request. If
the President determines to commence consideration of the
request, he is to publish a notice commencing consideration and
seeking comments. The notice is to include the request itself.
Section 322(a) of the Act provides for the President to
determine, pursuant to a request by an interested party,
whether, as a result of the elimination of a duty provided
under the Agreement, a Chilean textile or apparel article is
being imported into the United States in such increased
quantities, in absolute terms or relative to the domestic
market for that article, and under such conditions as to cause
serious damage or actual threat thereof, to a domestic industry
producing an article that is like, or directly competitive
with, the imported article. Section 322(a) defines ``serious
damage,'' directing the President to examine the effect of
increased imports on the domestic industry producing the
article that is like, or directly competitive with, the
imported article.
Section 322(b) identifies the relief that the President may
provide, which generally will be an increase in tariffs to the
MFN/NTR duty rate for the article at the time relief is
granted. Section 323 of the bill provides that the initial
period of relief will be no longer than three years, although
if the initial period for any import relief is less than three
years, the President may extend the total relief for a period
of up to three years under certain circumstances. Section 324
provides that relief may not be granted to an article under the
textile safeguard if relief has previously been granted under
Subtitle A of this title safeguard. Under section 325, after
the safeguard expires, the article that had been subject to
such action shall be subject to duty-free treatment.
Section 326 of the bill states that the authority to
provide this safeguard relief expires eight years after the
textile and apparel provisions of the Agreement take effect.
Section 327 of the Act gives authority to the President to
provide compensation to Chile if he orders relief. Section 328
provides for the treatment of business confidential
information.
Reason for change
The Committee intends that the provisions of subtitle B be
administered in a manner that is in compliance with U.S.
obligations under Article 3.19 of the Agreement. In particular,
the Committee expects that the President will implement a
transparent process that will serve as an example to our
trading partners.
III. VOTE OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the vote of the Committee on Ways and Means in its
consideration of the bill, H.R. 2738.
MOTION TO REPORT THE BILL
The bill, H.R. 2738, was ordered favorably reported by a
roll call vote of 33 yeas to 5 nays (with a quorum being
present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas..................... X ........ ......... Mr. Rangel....... X ........ .........
Mr. Crane...................... X ........ ......... Mr. Stark........ ........ X .........
Mr. Shaw....................... X ........ ......... Mr. Matsui....... X ........ .........
Mrs. Johnson................... X ........ ......... Mr. Levin........ X ........ .........
Mr. Houghton................... X ........ ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... X ........ ......... Mr. McDermott.... X ........ .........
Mr. McCrery.................... X ........ ......... Mr. Kleczka...... ........ X .........
Mr. Camp....................... X ........ ......... Mr. Lewis (GA)... ........ X .........
Mr. Ramstad.................... X ........ ......... Mr. Neal......... X ........ .........
Mr. Nussle..................... X ........ ......... Mr. McNulty...... ........ X .........
Mr. Johnson.................... X ........ ......... Mr. Jefferson.... ........ ........ .........
Ms. Dunn....................... X ........ ......... Mr. Tanner....... X ........ .........
Mr. Collins.................... X ........ ......... Mr. Becerra...... X ........ .........
Mr. Portman.................... X ........ ......... Mr. Doggett...... ........ ........ .........
Mr. English.................... X ........ ......... Mr. Pomeroy...... X ........ .........
Mr. Hayworth................... X ........ ......... Mr. Sandlin...... X ........ .........
Mr. Weller..................... X ........ ......... Ms. Tubbs Jones.. ........ ........ .........
Mr. Hulshof.................... X ........ .........
Mr. McInnis.................... X ........ .........
Mr. Lewis (KY)................. X ........ .........
Mr. Foley...................... X ........ .........
Mr. Brady...................... ........ ........ .........
Mr. Ryan....................... X ........ .........
Mr. Cantor..................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made concerning the effects on the budget of this bill, H.R.
3009 as reported: The Committee agrees with the estimate
prepared by CBO which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that
enactment of H.R. 3009 would reduce customs duty receipts due
to lower tariffs imposed on goods from Chile.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the Congressional Budget Office, the following
report prepared by CBO is provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 21, 2003.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2738, a bill to
implement the United States-Chile Free Trade Agreement.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Annabelle
Bartsch.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 2738--A bill to implement the United States-Chile Free Trade
Agreement
Summary: H.R. 2738 would approve the free agreement (FTA)
between the government of the United States and the government
of Chile that was entered into on June 6, 2003. It would
provide the tariff reductions and other changes in law related
to implementation of the agreement, such as provisions dealing
with dispute settlement, rules of origin, and safeguard
measures for textile and apparel industries. The bill also
would allow the temporary entry of certain business persons
into the United States.
The Congressional Budget Office estimates that enacting the
bill would reduce revenues by $5 million in 2004, by $38
million over the 2004-2008 period, and by $109 million over the
2004-2013 period, net of income and payroll tax offsets. The
bill would not have a significant effect on direct spending or
spending subject to appropriation. CBO has determined that H.R.
2738 contains no intergovernmental or private-sector mandates
as defined in the Unfunded Mandates Reform Act (UMRA) and would
not affect the budgets of state, local, or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 2738 is shown in the following table.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2004 2005 2006 2007 2008
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES \1\
Reductions in Tariff Rates......................................... -5 -7 -8 -9 -10
Civil Penalties for Attestation Violations......................... * * * * *
--------------------------------------------
Total........................................................ -5 -7 -8 -9 -10
----------------------------------------------------------------------------------------------------------------
\1\ H.R. 2738 also would affect direct spending and spending subject to appropriation, but the amounts of those
changes would be less than $500,000 a year.
* = Less than $500,000.
Basis of estimate
Revenues
Under the United States-Chile agreement, all tariffs on
U.S. imports from Chile would be phased out over time. The
tariffs would be phased out for individual products at varying
rates according to one of several different timetables ranging
from immediate elimination to partial elimination over 10
years. According to the U.S. International Trade Commission
(USITC), the U.S. collected $24 million in customs duties in
2002 on about $3.6 billion of imports from Chile. These imports
consist mostly of edible fruits and nuts, articles of wood or
copper, fish and crustaceans, and certain organic chemicals.
Based on these data, CBO estimates that phasing out tariff
rates as outlined in the U.S.-Chile agreement would reduce
revenues by $5 million in 2004, by $38 million over the 2004-
2008 period, and by $109 million over the 2004-2013 period, net
of income and payroll tax offsets.
This estimate includes the effects of increased imports
from Chile that would result from the reduced prices of
imported products in the United States, reflecting the lower
tariff rates. It is likely that some of the increase in U.S.
imports from Chile would displace imports from other countries.
In the absence of specific data on the extent of this
substitution effect, CBO assumes that an amount equal to one-
half of the increase in U.S. imports from Chile would displace
imports from other countries.
H.R. 2738 would also allow the Secretary of Labor to assess
civil monetary penalties on employers for violations of the
labor attestation process with respect to certain workers
fromChile. CBO expects that any additional revenues collected as a
result would amount to less than $500,000 in any year.
Direct spending
Title IV of the bill would establish a new nonimmigrant
category for certain professional workers from Chile. The
legislation would limit the number of annual entries under this
category to 1,400, plus spouses and children. The Bureau of
Citizenship and Immigration Services (BCIS) would charge fees
of about $100 to provide nonimmigrant visas, so CBO estimates
that the agency would collect less than $1 million annually in
offsetting receipts (a credit against direct spending). The
agency is authorized to spend such fees without further
appropriation, so the new impact on BCIS spending would not be
significant.
Under current law, the Department of State also collects
$100 application fee for nonimmigrant visas. These collections
are spent on border security and consular functions. CBO
estimates that the net budgetary impact would be less than
$500,000 a year.
Spending subject to appropriation
Title I of H.R. 2738 would authorize the appropriation the
necessary funds for the Department of Commerce to pay the
United States' share of the costs of the dispute settlement
procedures established by the agreement. Based on information
from the agency, CBO estimates that implementing this provision
would cost $100,000 in 2004, and $250,000 in each of the
following years, subject to the availability of appropriated
funds.
Title III would require the International Trade Commission
(ITC) to investigate claims of injury to domestic industries as
a result of the FTA. The ITC would have 120 days to determine
whether a domestic industry has been injured, and if so, would
recommend the necessary amount of import relief. The ITC would
also submit a report on its determination to the President.
According to the ITC, similar FTAs have resulted in only a
handful of cases each year, at an average cost of about $200,00
per investigation. Based on this information, CBO estimates the
bill would have no significant effect on spending subject to
appropriation.
Summary of effect on revenues and direct spending: The
overall effects of H.R. 2738 on revenues and direct spending
are shown in the following table.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts.................................. 0 -5 -7 -8 -9 -10 -11 -13 -14 -16 -18
Changes in outlays................................... * * * * * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = Less than $500,000.
Intergovernmental and private-sector impact: The bill
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Revenues: Annabelle Bartsch.
Federal Spending: Dispute Settlements--Melissa Zimmerman;
Immigration--Mark Grabowicz, Christi Hawley-Sadoti, and Sunita
D'Monte. Impact on State, Local, and Tribal Governments:
Melissa Merrell. Impact on the Private Sector: Paige Piper/
Bach.
Estimate approved by: G. Thomas Woodward, Assistant
Director for Tax Analysis and Peter H. Fontaine, Deputy
Assistant Director for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee, based on public hearing testimony and
information from the Administration, concluded that it is
appropriate and timely to consider the bill as reported. In
addition, the legislation is governed by procedures of the
Trade Agreements Act of 2002.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Constitutional Authority Statement
With respect to clause 3(d)(1) of rule XIII of the Rules of
the House of Representatives, relating to Constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article 1 of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and to provide for * * * the general Welfare of the
United States.'')
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TARIFF ACT OF 1930
* * * * * * *
TITLE III--SPECIAL PROVISIONS
Part I--Miscellaneous
* * * * * * *
SEC. 311. BONDED MANUFACTURING WAREHOUSES.
All articles manufactured in whole or in part of imported
materials, or of materials subject to internal-revenue tax, and
intended for exportation without being charged with duty, and
without having an internal-revenue stamp affixed thereto,
shall, under such regulations as the Secretary of the Treasury
may prescribe, in order to be so manufactured and exported, be
made and manufactured in bonded warehouses similar to those
known and designated in Treasury Regulations as bonded
warehouses, class six: Provided, That the manufacturer of such
articles shall first give satisfactory bonds for the faithful
observance of all the provisions of law and of such regulations
as shall be prescribed by the Secretary of the Treasury:
Provided further, That the manufacture of distilled spirits
from grain, starch, molasses, or sugar, including all dilutions
or mixtures of them or either of them, shall not be permitted
in such manufacturing warehouses.
Whenever goods manufactured in any bonded warehouse
established under the provisions of the preceding paragraph
shall be exported directly therefrom or shall be duly laden for
transportation and immediate exportation under the supervision
of the proper officer who shall be duly designated for that
purpose, such goods shall be exempt from duty and from the
requirements relating to revenue stamps.
No flour, manufactured in a bonded manufacturing warehouse
from wheat imported from ninety days after the date of the
enactment of this Act, shall be withdrawn from such warehouse
for exportation without payment of a duty on such imported
wheat equal to any reduction in duty which by treaty will apply
in respect of such flour in the country to which it is to be
exported.
Any materials used in the manufacture of such goods, and any
packages, coverings, vessels, brands, and labels used in
putting up the same may, under the regulations of the Secretary
of the Treasury, be conveyed without the payment of revenue tax
or duty into any bonded manufacturing warehouse, and imported
goods may, under the aforesaid regulations, be transferred
without the exaction of duty from any bonded warehouse into any
bonded manufacturing warehouse; but this privilege shall not be
held to apply to implements, machinery, or apparatus to be used
in the construction or repair of any bonded manufacturing
warehouse or for the prosecution of the business carried on
therein.
Articles or materials received into such bonded manufacturing
warehouse or articles manufactured therefrom may be withdrawn
or removed therefrom for direct shipment and exportation or for
transportation and immediate exportation in bond to foreign
countries or to the Philippine Islands under the supervision of
the officer duly designated therefor by the appropriate customs
officer of the port, who shall certify to such shipment and
exportation, or ladening for transportation, as the case may
be, describing the articles by their mark or otherwise, the
quantity, the date of exportation, and the name of the vessel:
Provided, That the by-products incident to the processes of
manufacture, including waste derived from cleaning rice in
bonded warehouse under the Act of March 24, 1874, in said
bonded warehouses may be withdrawn for domestic consumption on
the payment of duty equal to the duty which would be assessed
and collected by law if such waste or by-products were imported
from a foreign country: Provided, That all waste material may
be destroyed under Government supervision. All labor performed
and services rendered under these provisions shall be under the
supervision of a duly designated officer of the customs and at
the expense of the manufacturer.
A careful account shall be kept by the appropriate custom
officer of all merchandise delivered by him to any bonded
manufacturing warehouse, and a sworn monthly return, verified
by the customs officers in charge, shall be made by the
manufacturer containing a detailed statement of all imported
merchandise used by him in the manufacture of exported
articles.
Before commencing business the proprietor of any
manufacturing warehouse shall file with the Secretary of the
Treasury a list of all the articles intended to be manufactured
in such warehouse, and state the formula of manufacture and the
names and quantities of the ingredients to be used therein.
Articles manufactured under these provisions may be withdrawn
under such regulations as the Secretary of the Treasury may
prescribe for transportation and delivery into any bonded
warehouse for the sole purpose of export therefrom: Provided,
That cigars manufactured in whole of tobacco imported from any
one country, made and manufactured in such bonded manufacturing
warehouses, may be withdrawn for home consumption upon the
payment of the duties on such tobacco in its condition as
imported under such regulations as the Secretary of the
Treasury may prescribe, and the payment of the internal-revenue
tax accruing on such cigars in their condition as withdrawn,
and the boxes or packages containing such cigars shall be
stamped to indicate their character, origin of tobacco from
which made, and place of manufacture.
The provisions of section 3433 of the Revised Statutes shall,
so far as may be practicable, apply to any bonded manufacturing
warehouse established under this Act and to the merchandise
conveyed therein.
Distilled spirits and wines which are rectified in bonded
manufacturing warehouse, class six, and distilled spirits which
are reduced in proof and bottled in such warehouses, shall be
deemed to have been manufactured within the meaning of this
section, and may be withdrawn as hereinbefore provided, and
likewise for shipment in bond to Puerto Rico, subject to the
provisions of this section, and under such regulations as the
Secretary of the Treasury may prescribe, there to be withdrawn
for consumption or be rewarehoused and subsequently withdrawn
for consumption: Provided, That upon withdrawal in Puerto Rico
for consumption, the duties imposed by the customs laws of the
United States shall be collected on all imported merchandise
(in its condition as imported) and imported containers used in
the manufacture and putting up of such spirits and wines in
such warehouses: Provided further, That no internal-revenue tax
shall be imposed on distilled spirits and wines rectified in
class six warehouses if such distilled spirits and wines are
exported or shipped in accordance with the provisions of this
section, and that no person rectifying distilled spirits or
wines in such warehouses shall be subject by reason of such
rectification to the payment of special tax as a rectifier.
No article manufactured in a bonded warehouse from
materials that are goods subject to NAFTA drawback, as defined
in section 203(a) of the North American Free Trade Agreement
Implementation Act, may be withdrawn from warehouse for
exportation to a NAFTA country, as defined in section 2(4) of
that Act, without assessment of a duty on the materials in
their condition and quantity, and at their weight, at the time
of importation into the United States. The duty shall be paid
before the 61st day after the date of exportation, except that
upon the presentation, before such 61st day, of satisfactory
evidence of the amount of any customs duties paid to the NAFTA
country on the article, the customs duty may be waived or
reduced (subject to section 508(b)(2)(B)) in an amount that
does not exceed the lesser of--
(1) the total amount of customs duties paid or owed
on the materials on importation into the United States,
or
(2) the total amount of customs duties paid on the
materials to the NAFTA country.
If Canada ceases to be a NAFTA country and the suspension
of the operation of the United States-Canada Free-Trade
Agreement thereafter terminates, no article manufactured in a
bonded warehouse, except to the extent that such article is
made from an article that is a drawback eligible good under
section 204(a) of the United States-Canada Free-Trade Agreement
Implementation Act of 1988, may be withdrawn from such
warehouse for exportation to Canada during the period such
Agreement is in operation without payment of a duty on such
imported merchandise in its condition, and at the rate of duty
in effect, at the time of importation.
No article manufactured in a bonded warehouse from
materials that are goods subject to Chile FTA drawback, as
defined in section 203(a) of the United States-Chile Free Trade
Agreement Implementation Act, may be withdrawn from warehouse
for exportation to Chile without assessment of a duty on the
materials in their condition and quantity, and at their weight,
at the time of importation into the United States. The duty
shall be paid before the 61st day after the date of
exportation, except that the duty may be waived or reduced by--
(1) 100 percent during the 8-year period beginning on
January 1, 2004;
(2) 75 percent during the 1-year period beginning on
January 1, 2012;
(3) 50 percent during the 1-year period beginning on
January 1, 2013; and
(4) 25 percent during the 1-year period beginning on
January 1, 2014.
SEC. 312. BONDED SMELTING AND REFINING WAREHOUSES.
(a) * * *
(b) The several charges against such bond may be canceled
in whole or in part--
(1) upon the exportation from the bonded warehouses
which treated the metal-bearing materials, or from any
other bonded smelting or refining warehouse, of a
quantity of the same kind of metal contained in any
product of smelting or refining of metal-bearing
materials equal to the dutiable quantity contained in
the imported metal-bearing materials less wastage
provided for in subsection (c); [except that in the
case of a withdrawal for exportation of such a product
to a NAFTA country, as defined in section 2(4) of the
North American Free Trade Agreement Implementation Act,
if any of the imported metal-bearing materials are
goods subject to NAFTA drawback, as defined in section
203(a) of that Act, the duties on the materials shall
be paid, and the charges against the bond canceled,
before the 61st day after the date of exportation; but
upon the presentation, before such 61st day, of
satisfactory evidence of the amount of any customs
duties paid to the NAFTA country on the product, the
duties on the materials may be waived or reduced
(subject to section 508(b)(2)(B)) in an amount that
does not exceed the lesser of--
[(A) the total amount of customs duties owed
on the materials on importation into the United
States, or
[(B) the total amount of customs duties paid
to the NAFTA country on the product, or] except
that--
(A) in the case of a withdrawal for
exportation of such a product to a NAFTA
country, as defined in section 2(4) of the
North American Free Trade Agreement
Implementation Act, if any of the imported
metal-bearing materials are goods subject to
NAFTA drawback, as defined in section 203(a) of
that Act, the duties on the materials shall be
paid, and the charges against the bond
canceled, before the 61st day after the date of
exportation; but upon the presentation, before
such 61st day, of satisfactory evidence of the
amount of any customs duties paid to the NAFTA
country on the product, the duties on the
materials may be waived or reduced (subject to
section 508(b)(2)(B)) in an amount that does
not exceed the lesser of--
(i) the total amount of customs
duties owed on the materials on
importation into the United States, or
(ii) the total amount of customs
duties paid to the NAFTA country on the
product, and
(B) in the case of a withdrawal for
exportation of such a product to Chile, if any
of the imported metal-bearing materials are
goods subject to Chile FTA drawback, as defined
in section 203(a) of the United States-Chile
Free Trade Agreement Implementation Act, the
duties on the materials shall be paid, and the
charges against the bond canceled, before the
61st day after the date of exportation, except
that the duties may be waived or reduced by--
(i) 100 percent during the 8-year
period beginning on January 1, 2004,
(ii) 75 percent during the 1-year
period beginning on January 1, 2012,
(iii) 50 percent during the 1-year
period beginning on January 1, 2013,
and
(iv) 25 percent during the 1-year
period beginning on January 1, 2014, or
* * * * * * *
(4) upon the transfer of the bond charges to a bonded
customs warehouse other than a bonded smelting or
refining warehouse by physical shipment of a quantity
of the same kind of metal contained in any product of
smelting or refining equal to the dutiable quantity
contained in the imported metal-bearing materials less
wastage provided for in subsection (c), and upon
withdrawal from such other warehouse for exportation or
domestic consumption the provisions of this section
shall apply; [except that in the case of a withdrawal
for exportation of such a product to a NAFTA country,
as defined in section 2(4) of the North American Free
Trade Agreement Implementation Act, if any of the
imported metal-bearing materials are goods subject to
NAFTA drawback, as defined in section 203(a) of that
Act, the duties on the materials shall be paid, and the
charges against the bond canceled, before the 61st day
after the date of exportation; but upon the
presentation, before such 61st day, of satisfactory
evidence of the amount of any customs duties paid to
the NAFTA country on the product, the duties on the
materials may be waived or reduced (subject to section
508(b)(2)(B)) in an amount that does not exceed the
lesser of--
[(A) the total amount of customs duties owed
on the materials on importation into the United
States, or
[(B) the total amount of customs duties paid
to the NAFTA country on the product, or] except
that--
(A) in the case of a withdrawal for
exportation of such a product to a NAFTA
country, as defined in section 2(4) of the
North American Free Trade Agreement
Implementation Act, if any of the imported
metal-bearing materials are goods subject to
NAFTA drawback, as defined in section 203(a) of
that Act, the duties on the materials shall be
paid, and the charges against the bond
canceled, before the 61st day after the date of
exportation; but upon the presentation, before
such 61st day, of satisfactory evidence of the
amount of any customs duties paid to the NAFTA
country on the product, the duties on the
materials may be waived or reduced (subject to
section 508(b)(2)(B)) in an amount that does
not exceed the lesser of--
(i) the total amount of customs
duties owed on the materials on
importation into the United States, or
(ii) the total amount of customs
duties paid to the NAFTA country on the
product, and
(B) in the case of a withdrawal for
exportation of such a product to Chile, if any
of the imported metal-bearing materials are
goods subject to Chile FTA drawback, as defined
in section 203(a) of the United States-Chile
Free Trade Agreement Implementation Act, the
duties on the materials shall be paid, and the
charges against the bond canceled, before the
61st day after the date of exportation, except
that the duties may be waived or reduced by--
(i) 100 percent during the 8-year
period beginning on January 1, 2004,
(ii) 75 percent during the 1-year
period beginning on January 1, 2012,
(iii) 50 percent during the 1-year
period beginning on January 1, 2013,
and
(iv) 25 percent during the 1-year
period beginning on January 1, 2014, or
* * * * * * *
(d) Upon the exportation of a product of smelting or refining
other than refined metal the bond shall be credited with a
quantity of metal equivalent to the quantity of metal contained
in the product exported less the proportionate part of the
deductions allowed for losses in determination of the bond
charge being cancelled that would not ordinarily be sustained
in production of the specific product exported as ascertained
from time to time by the Secretary of the Treasury; [except
that in the case of a withdrawal for exportation to a NAFTA
country, as defined in section 2(4) of the North American Free
Trade Agreement Implementation Act, if any of the imported
metal-bearing materials are goods subject to NAFTA drawback, as
defined in section 203(a) of that Act, charges against the bond
shall be paid before the 61st day after the date of
exportation; but upon the presentation, before such 61st day,
of satisfactory evidence of the amount of any customs duties
paid to the NAFTA country on the product, the bond shall be
credited (subject to section 508(b)(2)(B)) in an amount not to
exceed the lesser of--
[(1) the total amount of customs duties paid or owed
on the materials on importation into the United States,
or
[(2) the total amount of customs duties paid to the
NAFTA country on the product.] except that--
(1) in the case of a withdrawal for exportation to a
NAFTA country, as defined in section 2(4) of the North
American Free Trade Agreement Implementation Act, if
any of the imported metal-bearing materials are goods
subject to NAFTA drawback, as defined in section 203(a)
of that Act, charges against the bond shall be paid
before the 61st day after the date of exportation; but
upon the presentation, before such 61st day, of
satisfactory evidence of the amount of any customs
duties paid to the NAFTA country on the product, the
bond shall be credited (subject to section
508(b)(2)(B)) in an amount not to exceed the lesser
of--
(A) the total amount of customs duties paid
or owed on the materials on importation into
the United States, or
(B) the total amount of customs duties paid
to the NAFTA country on the product; and
(2) in the case of a withdrawal for exportation to
Chile, if any of the imported metal-bearing materials
are goods subject to Chile FTA drawback, as defined in
section 203(a) of the United States-Chile Free Trade
Agreement Implementation Act, charges against the bond
shall be paid before the 61st day after the date of
exportation, and the bond shall be credited in an
amount equal to--
(A) 100 percent of the total amount of
customs duties paid or owed on the materials on
importation into the United States during the
8-year period beginning on January 1, 2004,
(B) 75 percent of the total amount of customs
duties paid or owed on the materials on
importation into the United States during the
1-year period beginning on January 1, 2012,
(C) 50 percent of the total amount of customs
duties paid or owed on the materials on
importation into the United States during the
1-year period beginning on January 1, 2013, and
(D) 25 percent of the total amount of customs
duties paid or owed on the materials on
importation into the United States during the
1-year period beginning on January 1, 2014.
* * * * * * *
SEC. 313. DRAWBACK AND REFUNDS.
(a) * * *
* * * * * * *
(j) Unused Merchandise Drawback.--
(1) * * *
* * * * * * *
(4)(A) Effective upon the entry into force of the
North American Free Trade Agreement, the exportation to
a NAFTA country, as defined in section 2(4) of the
North American Free Trade Agreement Implementation Act,
of merchandise that is fungible with and substituted
for imported merchandise, other than merchandise
described in paragraphs (1) through (8) of section
203(a) of that Act, shall not constitute an exportation
for purposes of paragraph (2).
(B) Beginning on January 1, 2015, the exportation to
Chile of merchandise that is fungible with and
substituted for imported merchandise, other than
merchandise described in paragraphs (1) through (5) of
section 203(a) of the United States-Chile Free Trade
Agreement Implementation Act, shall not constitute an
exportation for purposes of paragraph (2). The
preceding sentence shall not be construed to permit the
substitution of unused drawback under paragraph (2) of
this subsection with respect to merchandise described
in paragraph (2) of section 203(a) of the United
States-Chile Free Trade Agreement Implementation Act.
* * * * * * *
[(n)] (n) Refunds, Waivers, or Reductions Under Certain
Free Trade Agreements.--(1) For purposes of this subsection and
subsection (o)--
(A) * * *
(B) the terms ``NAFTA country'' and ``good subject to
NAFTA drawback'' have the same respective meanings that
are given such terms in sections 2(4) and 203(a) of the
NAFTA Act; [and]
(C) a refund, waiver, or reduction of duty under
paragraph (2) of this subsection or paragraph (1) of
subsection (o) is subject to section 508(b)(2)(B)[.];
and
(D) the term ``good subject to Chile FTA drawback''
has the meaning given that term in section 203(a) of
the United States-Chile Free Trade Agreement
Implementation Act.
* * * * * * *
(4)(A) For purposes of subsections (a), (b), (f), (h),
(j)(2), (p), and (q), if an article that is exported to Chile
is a good subject to Chile FTA drawback, no customs duties on
the good may be refunded, waived, or reduced, except as
provided in subparagraph (B).
(B) The customs duties referred to in subparagraph (A) may
be refunded, waived, or reduced by--
(i) 100 percent during the 8-year period beginning on
January 1, 2004;
(ii) 75 percent during the 1-year period beginning on
January 1, 2012;
(iii) 50 percent during the 1-year period beginning
on January 1, 2013; and
(iv) 25 percent during the 1-year period beginning on
January 1, 2014.
[(o)] (o) Special Rules for Certain Vessels and Imported
Materials.--(1) For purposes of subsection (g), if--
(A) * * *
* * * * * * *
(3) For purposes of subsection (g), if--
(A) a vessel is built for the account and ownership
of a resident of Chile or the Government of Chile, and
(B) imported materials that are used in the
construction and equipment of the vessel are goods
subject to Chile FTA drawback, as defined in section
203(a) of the United States-Chile Free Trade Agreement
Implementation Act,
no customs duties on such materials may be refunded, waived, or
reduced, except as provided in paragraph (4).
(4) The customs duties referred to in paragraph (3) may be
refunded, waived or reduced by--
(A) 100 percent during the 8-year period beginning on
January 1, 2004;
(B) 75 percent during the 1-year period beginning on
January 1, 2012;
(C) 50 percent during the 1-year period beginning on
January 1, 2013; and
(D) 25 percent during the 1-year period beginning on
January 1, 2014.
* * * * * * *
SEC. 508. RECORDKEEPING.
(a) * * *
(b) [Exportations to Free Trade Countries.--] Exportations
to NAFTA Countries.--
(1) * * *
(2) Exports to nafta countries.--
(A) * * *
(B) Claims for certain waivers, reductions,
or refunds of duties or for credit against
bonds.--
(i) In general.--Any person that
claims with respect to an article--
(I) a waiver or reduction of
duty under [the last paragraph
of section 311] the eleventh
paragraph of section 311,
section 312(b)(1) or (4),
section 562(2), or [the last
proviso to section 3(a)] the
proviso preceding the last
proviso to section 3(a) of the
Foreign Trade Zones Act;
* * * * * * *
(f) Certificates of Origin for Goods Exported Under the
United States-Chile Free Trade Agreement.--
(1) Definitions.--In this subsection:
(A) Records and supporting documents.--The
term ``records and supporting documents''
means, with respect to an exported good under
paragraph (2), records and documents related to
the origin of the good, including--
(i) the purchase, cost, and value of,
and payment for, the good;
(ii) if applicable, the purchase,
cost, and value of, and payment for,
all materials, including recovered
goods, used in the production of the
good; and
(iii) if applicable, the production
of the good in the form in which it was
exported.
(B) Chile fta certificate of origin.--The
term ``Chile FTA Certificate of Origin'' means
the certification, established under article
4.13 of the United States-Chile Free Trade
Agreement, that a good qualifies as an
originating good under such Agreement.
(2) Exports to chile.--Any person who completes and
issues a Chile FTA Certificate of Origin for a good
exported from the United States shall make, keep, and,
pursuant to rules and regulations promulgated by the
Secretary of the Treasury, render for examination and
inspection all records and supporting documents related
to the origin of the good (including the Certificate or
copies thereof).
(3) Retention period.--Records and supporting
documents shall be kept by the person who issued a
Chile FTA Certificate of Origin for at least 5 years
after the date on which the certificate was issued.
(g) Penalties.--Any person who fails to retain records and
supporting documents required by subsection (f) or the
regulations issued to implement that subsection shall be liable
for the greater of--
(1) a civil penalty not to exceed $10,000; or
(2) the general record keeping penalty that applies
under the customs laws of the United States.
* * * * * * *
SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.
(a) * * *
* * * * * * *
(g) Denial of Preferential Tariff Treatment Under United
States-Chile Free Trade Agreement.--If the Bureau of Customs
and Border Protection or the Bureau of Immigration and Customs
Enforcement finds indications of a pattern of conduct by an
importer of false or unsupported representations that goods
qualify under the rules of origin set out in section 202 of the
United States-Chile Free Trade Agreement Implementation Act,
the Bureau of Customs and Border Protection, in accordance with
regulations issued by the Secretary of the Treasury, may deny
preferential tariff treatment under the United States-Chile
Free Trade Agreement to entries of identical goods imported by
that person until the person establishes to the satisfaction of
the Bureau of Customs and Border Protection that
representations of that person are in conformity with such
section 202.
* * * * * * *
SEC. 520. REFUNDS AND ERRORS.
(a) * * *
* * * * * * *
[(d)] (d) Goods Qualifying Under Free Trade Agreement Rules
of Origin.--Notwithstanding the fact that a valid protest was
not filed, the Customs Service may, in accordance with
regulations prescribed by the Secretary, reliquidate an entry
to refund any excess duties (including any merchandise
processing fees) paid on a good qualifying under the rules of
origin set out in section 202 of the North American Free Trade
Agreement Implementation Act or section 202 of the United
States-Chile Free Trade Agreement Implementation Act for which
no claim for preferential tariff treatment was made at the time
of importation if the importer, within 1 year after the date of
importation, files, in accordance with those regulations, a
claim that includes--
(1) a written declaration that the good qualified
under [those] the applicable rules at the time of
importation;
(2) copies of all applicable NAFTA Certificates of
Origin (as defined in section 508(b)(1)), or other
certificates of origin, as the case may be; and
* * * * * * *
SEC. 562. MANIPULATION IN WAREHOUSE.
Unless by special authority of the Secretary of the
Treasury, no merchandise shall be withdrawn from bonded
warehouse in lessquantity than an entire bale, cask, box, or
other package; or, if in bulk, in the entire quantity imported or in a
quantity not less than one ton weight. All merchandise so withdrawn
shall be withdrawn in the original packages in which imported unless,
upon the application of the importer, it appears to the appropriate
customs officer that it is necessary to the safety or preservation of
the merchandise to repack or transfer the same; except that upon
permission therefor being granted by the Secretary of the Treasury, and
under customs supervision, at the expense of the proprietor,
merchandise may be cleaned, sorted, repacked, or otherwise changed in
condition, but not manufactured, in bonded warehouses established for
that purpose and be withdrawn therefrom--
(1) * * *
* * * * * * *
(3) without payment of duties for exportation to any
foreign country other than [to a NAFTA country] to
Chile, to a NAFTA country, or to Canada when exports to
that country are subject to paragraph (4);
(4) without payment of duties for exportation to
Canada (if that country ceases to be a NAFTA country
and the suspension of the operation of the United
States-Canada Free-Trade Agreement thereafter
terminates), but the exemption from the payment of
duties under this paragraph applies only in the case of
an exportation during the period such Agreement is in
operation of merchandise that--
(A) * * *
(B) is a drawback eligible good under section
204(a) of the United States-Canada Free-Trade
Agreement Implementation Act of 1988[; and]
(5) without payment of duties for shipment to the
Virgin Islands, American Samoa, Wake Island, Midway
Island, Kingman Reef, Johnston Island or the island of
Guam[.]; and
(6)(A) without payment of duties for exportation to
Chile, if the merchandise is of a kind described in any
of paragraphs (1) through (5) of section 203(a) of the
United States-Chile Free Trade Agreement Implementation
Act; and
(B) for exportation to Chile if the merchandise
consists of goods subject to Chile FTA drawback, as
defined in section 203(a) of the United States-Chile
Free Trade Agreement Implementation Act, except that--
(i) the merchandise may not be withdrawn from
warehouse without assessment of a duty on the
merchandise in its condition and quantity, and
at its weight, at the time of withdrawal from
the warehouse with such additions to, or
deductions from, the final appraised value as
may be necessary by reason of a change in
condition, and
(ii) duty shall be paid on the merchandise
before the 61st day after the date of
exportation, except that such duties may be
waived or reduced by--
(I) 100 percent during the 8-year
period beginning on January 1, 2004,
(II) 75 percent during the 1-year
period beginning on January 1, 2012,
(III) 50 percent during the 1-year
period beginning on January 1, 2013,
and
(IV) 25 percent during the 1-year
period beginning on January 1, 2014.
* * * * * * *
SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.
(a) * * *
* * * * * * *
(c) Maximum Penalties.--
(1) * * *
* * * * * * *
(6) Prior disclosure regarding claims under the
united states-chile free trade agreement.--An importer
shall not be subject to penalties under subsection (a)
for making an incorrect claim that a good qualifies as
an originating good under section 202 of the United
States-Chile Free Trade Agreement Implementation Act if
the importer, in accordance with regulations issued by
the Secretary of the Treasury, voluntarily makes a
corrected declaration and pays any duties owing.
[(6)] (7) Seizure.--If the Secretary has reasonable
cause to believe that a person has violated the
provisions of subsection (a) and that such person is
insolvent or beyond the jurisdiction of the United
States or that seizure is otherwise essential to
protect the revenue of the United States or to prevent
the introduction of prohibited or restricted
merchandise into the customs territory of the United
States, then such merchandise may be seized and, upon
assessment of a monetary penalty, forfeited unless the
monetary penalty is paid within the time specified by
law. Within a reasonable time after any such seizure is
made, the Secretary shall issue to the person concerned
a written statement containing the reasons for the
seizure. After seizure of merchandise under this
subsection, the Secretary may, in the case of
restricted merchandise, and shall, in the case of any
other merchandise (other than prohibited merchandise),
return such merchandise upon the deposit of security
not to exceed the maximum monetary penalty which may be
assessed under subsection (c).
* * * * * * *
(g) False Certifications of Origin Under the United States-
Chile Free Trade Agreement.--
(1) In general.--Subject to paragraph (2), it is
unlawful for any person to certify falsely, by fraud,
gross negligence, or negligence, in a Chile FTA
Certificate of Origin (as defined in section
508(f)(1)(B) of this Act that a good exported from the
United States qualifies as an originating good under
the rules of origin set out in section 202 of the
United States-Chile Free Trade Agreement Implementation
Act. The procedures and penalties of this section that
apply to a violation of subsection (a) also apply to a
violation of this subsection.
(2) Immediate and voluntary disclosure of incorrect
information.--No penalty shall be imposed under this
subsection if, immediately after an exporter or
producer that issued a Chile FTA Certificate of Origin
has reason to believe that such certificate contains or
is based on incorrect information, the exporter or
producer voluntarily provides written notice of such
incorrect information to every person to whom the
certificate was issued.
(3) Exception.--A person may not be considered to
have violated paragraph (1) if--
(A) the information was correct at the time
it was provided in a Chile FTA Certificate of
Origin but was later rendered incorrect due to
a change in circumstances; and
(B) the person immediately and voluntarily
provides written notice of the change in
circumstances to all persons to whom the person
provided the certificate.
* * * * * * *
----------
SECTION 3 OF THE ACT OF JUNE 18, 1934
(Commonly known as the ``Foreign Trade Zones Act'')
Sec. 3. (a) Foreign and domestic merchandise of every
description, except such as is prohibited by law, may, without
being subject to the customs laws of the United States, except
as otherwise provided in this Act, be brought into a zone and
may be stored, sold, exhibited, broken up, repacked, assembled,
distributed, sorted, graded, cleaned, mixed with foreign or
domestic merchandise, or otherwise manipulated, or be
manufactured except as otherwise provided in this Act, and be
exported, destroyed, or sent into customs territory of the
United States therefrom, in the original package or otherwise;
but when foreign merchandise is so sent from a zone into
customs territory of the United States it shall be subject to
the laws and regulations of the United States affecting
imported merchandise: Provided, That whenever the privilege
shall be requested and there has been no manipulation or
manufacture effecting a change in tariff classification, the
appropriate customs officer shall take under supervision any
lot or part of a lot of foreign merchandise in a zone, cause it
to be appraised and taxes determined and duties liquidated
thereon. Merchandise so taken under supervision may be stored,
manipulated, or manufactured under the supervision and
regulations prescribed by the Secretary of the Treasury, and
whether mixed or manufactured with domestic merchandise or not
may, under regulations prescribed by the Secretary of the
Treasury, be exported or destroyed, or may be sent into customs
territory upon the payment of such liquidated duties and
determined taxes thereon. If merchandise so taken under
supervision has been manipulated or manufactured, such duties
and taxes shall be payable on the quantity of such foreign
merchandise used in the manipulation or manufacture of the
entered article. Allowance shall be made for recoverable and
irrecoverable waste; and if recoverable waste is sent into
customs territory, it shall be dutiable and taxable in its
condition and quantity and at its weight at the time of entry.
Where two or more products result from the manipulation or
manufacture of merchandise in a zone the liquidated duties and
determined taxes shall be distributed to the several products
in accordance with their relative value at the time of
separation with due allowance for waste as provided for above:
Provided further, That subject to such regulations respecting
identity and the safeguarding of the revenue as the Secretary
of the Treasury may deem necessary, articles, the growth,
product, or manufacture of the United States, on which all
internal-revenue taxes have been paid, if subject thereto, and
articles previously imported on which duty and/or tax has been
paid, or which have been admitted free of duty and tax, may be
taken into a zone from the customs territory of the United
States, placed under the supervision of the appropriate customs
officer, and whether or not they have been combined with or
made part, while in such zone, of other articles, may be
brought back thereto free of quotas, duty, or tax: Provided
further, That if in the opinion of the Secretary of the
Treasury their identity has been lost, such articles not
entitled to free entry by reason of noncompliance with the
requirements made hereunder by the Secretary of the Treasury
shall be treated when they reenter customs territory of the
United States as foreign merchandise under the provisions of
the tariff and internal-revenue laws in force at that time:
Provided further, That under the rules and regulations of the
controlling Federal agencies, articles which have been taken
into a zone from customs territory for the sole purpose of
exportation, destruction (except destruction of distilled
spirits, wines, and fermented malt liquors), or storage shall
be considered to be exported for the purpose of--
(1) * * *
* * * * * * *
Such a transfer may also be considered an exportation for
the purposes of other Federal laws insofar as Federal agencies
charged with the enforcement of those laws deem it advisable.
Such articles may not be returned to customs territory for
domestic consumption except where the Foreign-Trade Zones Board
deems such return to be in the public interest, in which event
the articles shall be subject to the provisions of paragraph
1615(f) of the Tariff Act of 1930, as amended: Provided
further, That no operation involving any foreign or domestic
merchandise brought into a zone which operation would be
subject to any provision or provisions of section 1807, chapter
15, chapter 16, chapter 17, chapter 21, chapter 23, chapter 24,
chapter 25, chapter 26, or chapter 32 of the Internal Revenue
Code if performed in customs territory, or involving the
manufacture of any article provided for in paragraph 367 or
paragraph 368 of the Tariff Act of 1930, shall be permitted in
a zone except those operations (other than rectification of
distilled spirits and wines, or the manufacture or production
of alcoholic products unfit for beverage purposes) which were
permissible under this Act prior to July 1, 1949: Provided
further, That articles produced or manufactured in a zone and
exported therefrom shall on subsequent importation into the
customs territory of the United States be subject to the import
laws applicable to like articles manufactured in a foreign
country, except that articles produced or manufactured in a
zone exclusively with the use of domestic merchandise, the
identity of which has been maintained in accordance with the
second proviso of this section, may, on such importation, be
entered as American goods returned: Provided further, That no
merchandise that consists of goods subject to NAFTA drawback,
as defined in section 203(a) of the North American Free Trade
Agreement Implementation Act, that is manufactured or otherwise
changed in condition shall be exported to a NAFTA country, as
defined in section 2(4) of that Act, without an assessment of a
duty on the merchandise in its condition and quantity, and at
its weight, at the time of its exportation (or if the privilege
in the first proviso to this subsection was requested, an
assessment of a duty on the merchandise in its condition and
quantity, and at its weight, at the time of its admission into
the zone) and the payment of the assessed duty before the 61st
day after the date of exportation of the article, except that
upon the presentation, before such 61st day, of satisfactory
evidence of the amount of any customs duties paid or owed to
the NAFTA country on the article, the customs duty may be
waived or reduced (subject to section 508(b)(2)(B) of the
Tariff Act of 1930) in an amount that does not exceed the
lesser of (1) the total amount of customs duties paid or owed
on the merchandise on importation into the United States, or
(2) the total amount of customs duties paid on the article to
the NAFTA country: Provided further, That if Canada ceases to
be a NAFTA country and the suspension of the operation of the
United States-Canada Free-Trade Agreement thereafter
terminates, with the exception of drawback eligible goods under
section 204(a) of the United States-Canada Free-Trade Agreement
Implementation Act of 1988, no article manufactured or
otherwise changed in condition (except a change by cleaning,
testing or repacking) shall be exported to Canada during the
period such Agreement is in operation without the payment of a
duty that shall be payable on the article in its condition and
quantity, and at its weight, at the time of its exportation to
Canada unless the privilege in the first proviso to this
subsection was requested[.]: Provided, further, That no
merchandise that consists of goods subject to Chile FTA
drawback, as defined in section 203(a) of the United States-
Chile Free Trade Agreement Implementation Act, that is
manufactured or otherwise changed in condition shall be
exported to Chile without an assessment of a duty on the
merchandise in its condition and quantity, and at its weight,
at the time of its exportation (or if the privilege in the
first proviso to this subsection was requested, an assessment
of a duty on the merchandise in its condition and quantity, and
at its weight, at the time of its admission into the zone) and
the payment of the assessed duty before the 61st day after the
date of exportation of the article, except that the customs
duty may be waived or reduced by (1) 100 percent during the 8-
year period beginning on January 1, 2004; (2) 75 percent during
the 1-year period beginning on January 1, 2012; (3) 50 percent
during the 1-year period beginning on January 1, 2013; and (4)
25 percent during the 1-year period beginning on January 1,
2014.
* * * * * * *
----------
SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF
1985
SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.
(a) * * *
(b) Limitations on Fees.--(1) * * *
* * * * * * *
(12) No fee may be charged under subsection (a) (9) or (10)
with respect to goods that qualify as originating goods under
section 202 of the United States-Chile Free Trade Agreement
Implementation Act. Any service for which an exemption from
such fee is provided by reason of this paragraph may not be
funded with money contained in the Customs User Fee Account.
* * * * * * *
----------
SECTION 202 OF THE TRADE ACT OF 1974
SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY
COMMISSION.
(a) Petitions and Adjustment Plans.--
(1) * * *
* * * * * * *
(8) The procedures concerning the release of
confidential business information set forth in section
332(g) of the Tariff Act of 1930 shall apply with
respect to information received by the Commission in
the course of investigations conducted under this
chapter, part 1 of title III of the North American Free
Trade Agreement Implementation Act, [and] title II of
the United States-Jordan Free Trade Area Implementation
Act, and title III of the United States-Chile Free
Trade Agreement Implementation Act. The Commission may
request that parties providing confidential business
information furnish nonconfidential summaries thereof
or, if such parties indicate that the information in
the submission cannot be summarized, the reasons why a
summary cannot be provided. If the Commission finds
that a request for confidentiality is not warranted and
if the party concerned is either unwilling to make the
information public or to authorize its disclosure in
generalized or summarized form, the Commission may
disregard the submission.
* * * * * * *
----------
IMMIGRATION AND NATIONALITY ACT
* * * * * * *
TITLE I--GENERAL
definitions
Section 101. (a) As used in this Act--
(1) * * *
* * * * * * *
(15) The term ``immigrant'' means every alien except
an alien who is within one of the following classes of
nonimmigrant aliens--
(A) * * *
* * * * * * *
(H) an alien (i)(b) subject to section
212(j)(2), who is coming temporarily to the
United States to perform services (other than
services described in subclause (a) during the
period in which such subclause applies and
other than services described in subclause
(ii)(a) or in subparagraph (O) or (P)) in a
specialty occupation described in section
214(i)(1) or as a fashion model, who meets the
requirements for the occupation specified in
section 214(i)(2) or, in the case of a fashion
model, is of distinguished merit and ability,
and with respect to whom the Secretary of Labor
determines and certifies to the Attorney
General that the intending employer has filed
with the Secretary an application under section
[212(n)(1), or (c)] 212(n)(1), or (b1) who is
entitled to enter the United States under and
in pursuance of the provisions of an agreement
listed in section 214(g)(8)(A), who is engaged
in a specialty occupation described in section
214(i)(3), and with respect to whom the
Secretary of Labor determines and certifies to
the Secretary of Homeland Security and the
Secretary of State that the intending employer
has filed with the Secretary of Labor an
attestation under section 212(t)(1), or (c) who
is coming temporarily to the United States to
perform services as a registered nurse, who
meets the qualifications described in section
212(m)(1), and with respect to whom the
Secretary of Labor determines and certifies to
the Attorney General that an unexpired
attestation is on file and in effect under
section 212(m)(2) for the facility (as defined
in section 212(m)(6)) for which the alien will
perform the services; or (ii)(a) having a
residence in a foreign country which he has no
intention of abandoning who is coming
temporarily to the United States to perform
agricultural labor or services, as defined by
the Secretary of Labor in regulations and
including agricultural labor defined in section
3121(g) of the Internal Revenue Code of 1954
and agriculture as defined in section 3(f) of
the Fair Labor Standards Act of 1938 (29 U.S.C.
203(f)), of a temporary or seasonal nature, or
(b) having a residence in a foreign country
which he has no intention of abandoning who is
coming temporarily to the United States to
perform other temporary service or labor if
unemployed persons capable of performing such
service or labor cannot be found in this
country, but this clause shall not apply to
graduates of medical schools coming to the
United States to perform services as members of
the medical profession; or (iii) having a
residence in a foreign country which he has no
intention of abandoning who is coming
temporarily to the United States as a trainee,
other than to receive graduate medical
education or training, in a training program
that is not designed primarily to provide
productive employment; and the alien spouse and
minor children of any such alien specified in
this paragraph if accompanying him or following
to join him;
* * * * * * *
TITLE II--IMMIGRATION
* * * * * * *
Chapter 2--Qualifications for Admission of Aliens; Travel Control of
Citizens and Aliens
* * * * * * *
GENERAL CLASSES OF ALIENS INELIGIBLE TO RECEIVE VISAS AND INELIGIBLE
FOR ADMISSION; WAIVERS OF INADMISSIBILITY
Sec. 212. (a) * * *
* * * * * * *
(p)(1) In computing the prevailing wage level for an
occupational classification in an area of employment for
purposes of subsections [(n)(1)(A)(i)(II) and (a)(5)(A)]
(a)(5)(A), (n)(1)(A)(i)(II), and (t)(1)(A)(i)(II) in the case
of an employee of--
(A) * * *
* * * * * * *
[(p)] (s) In determining whether an alien described in
subsection (a)(4)(C)(i) is inadmissible under subsection (a)(4)
or ineligible to receive an immigrant visa or otherwise to
adjust to the status of permanent resident by reason of
subsection (a)(4), the consular officer or the Attorney General
shall not consider any benefits the alien may have received
that were authorized under section 501 of the Illegal
Immigration Reform and Immigrant Responsibility Act of 1996 (8
U.S.C. 1641(c)).
(t)(1) No alien may be admitted or provided status as a
nonimmigrant under section 101(a)(15)(H)(i)(b1) in an
occupational classification unless the employer has filed with
the Secretary of Labor an attestation stating the following:
(A) The employer--
(i) is offering and will offer during the
period of authorized employment to aliens
admitted or provided status under section
101(a)(15)(H)(i)(b1) wages that are at least--
(I) the actual wage level paid by the
employer to all other individuals with
similar experience and qualifications
for the specific employment in
question; or
(II) the prevailing wage level for
the occupational classification in the
area of employment,
whichever is greater, based on the best information
available as of the time of filing the attestation; and
(ii) will provide working conditions for such
a nonimmigrant that will not adversely affect
the working conditions of workers similarly
employed.
(B) There is not a strike or lockout in the course of
a labor dispute in the occupational classification at
the place of employment.
(C) The employer, at the time of filing the
attestation--
(i) has provided notice of the filing under
this paragraph to the bargaining representative
(if any) of the employer's employees in the
occupational classification and area for which
aliens are sought; or
(ii) if there is no such bargaining
representative, has provided notice of filing
in the occupational classification through such
methods as physical posting in conspicuous
locations at the place of employment or
electronic notification to employees in the
occupational classification for which
nonimmigrants under section
101(a)(15)(H)(i)(b1) are sought.
(D) A specification of the number of workers sought,
the occupational classification in which the workers
will be employed, and wage rate and conditions under
which they will be employed.
(2)(A) The employer shall make available for public
examination, within one working day after the date on which an
attestation under this subsection is filed, at the employer's
principal place of business or worksite, a copy of each such
attestation (and such accompanying documents as are necessary).
(B)(i) The Secretary of Labor shall compile, on a current
basis, a list (by employer and by occupational classification)
of the attestations filed under this subsection. Such list
shall include, with respect to each attestation, the wage rate,
number of aliens sought, period of intended employment, and
date of need.
(ii) The Secretary of Labor shall make such list available
for public examination in Washington, D.C.
(C) The Secretary of Labor shall review an attestation filed
under this subsection only for completeness and obvious
inaccuracies. Unless the Secretary of Labor finds that an
attestation is incomplete or obviously inaccurate, the
Secretary of Labor shall provide the certification described in
section 101(a)(15)(H)(i)(b1) within 7 days of the date of the
filing of the attestation.
(3)(A) The Secretary of Labor shall establish a process for
the receipt, investigation, and disposition of complaints
respecting the failure of an employer to meet a condition
specified in an attestation submitted under this subsection or
misrepresentation by the employer of material facts in such an
attestation. Complaints may be filed by any aggrieved person or
organization (including bargaining representatives). No
investigation or hearing shall be conducted on a complaint
concerning such a failure or misrepresentation unless the
complaint was filed not later than 12 months after the date of
the failure or misrepresentation, respectively. The Secretary
of Labor shall conduct an investigation under this paragraph if
there is reasonable cause to believe that such a failure or
misrepresentation has occurred.
(B) Under the process described in subparagraph (A), the
Secretary of Labor shall provide, within 30 days after the date
a complaint is filed, for a determination as to whether or not
a reasonable basis exists to make a finding described in
subparagraph (C). If the Secretary of Labor determines that
such a reasonable basis exists, the Secretary of Labor shall
provide for notice of such determination to the interested
parties and an opportunity for a hearing on the complaint, in
accordance with section 556 of title 5, United States Code,
within 60 days after the date of the determination. If such a
hearing is requested, the Secretary of Labor shall make a
finding concerning the matter by not later than 60 days after
the date of the hearing. In the case of similar complaints
respecting the same applicant, the Secretary of Labor may
consolidate the hearings under this subparagraph on such
complaints.
(C)(i) If the Secretary of Labor finds, after notice and
opportunity for a hearing, a failure to meet a condition of
paragraph (1)(B), a substantial failure to meet a condition of
paragraph (1)(C) or (1)(D), or a misrepresentation of material
fact in an attestation--
(I) the Secretary of Labor shall notify the Secretary
of State and the Secretary of Homeland Security of such
finding and may, in addition, impose such other
administrative remedies (including civil monetary
penalties in an amount not to exceed $1,000 per
violation) as the Secretary of Labor determines to be
appropriate; and
(II) the Secretary of State or the Secretary of
Homeland Security, as appropriate, shall not approve
petitions or applications filed with respect to that
employer under section 204, 214(c), or
101(a)(15)(H)(i)(b1) during a period of at least 1 year
for aliens to be employed by the employer.
(ii) If the Secretary of Labor finds, after notice and
opportunity for a hearing, a willful failure to meet a
condition of paragraph (1), a willful misrepresentation of
material fact in an attestation, or a violation of clause
(iv)--
(I) the Secretary of Labor shall notify the Secretary
of State and the Secretary of Homeland Security of such
finding and may, in addition, impose such other
administrative remedies (including civil monetary
penalties in an amount not to exceed $5,000 per
violation) as the Secretary of Labor determines to be
appropriate; and
(II) the Secretary of State or the Secretary of
Homeland Security, as appropriate, shall not approve
petitions or applications filed with respect to that
employer under section 204, 214(c), or
101(a)(15)(H)(i)(b1) during a period of at least 2
years for aliens to be employed by the employer.
(iii) If the Secretary of Labor finds, after notice and
opportunity for a hearing, a willful failure to meet a
condition of paragraph (1) or a willful misrepresentation of
material fact in an attestation, in the course of which failure
or misrepresentation the employer displaced a United States
worker employed by the employer within the period beginning 90
days before and ending 90 days after the date of filing of any
visa petition or application supported by the attestation--
(I) the Secretary of Labor shall notify the Secretary
of State and the Secretary of Homeland Security of such
finding and may, in addition, impose such other
administrative remedies (including civil monetary
penalties in an amount not to exceed $35,000 per
violation) as the Secretary of Labor determines to be
appropriate; and
(II) the Secretary of State or the Secretary of
Homeland Security, as appropriate, shall not approve
petitions or applications filed with respect to that
employer under section 204, 214(c), or
101(a)(15)(H)(i)(b1) during a period of at least 3
years for aliens to be employed by the employer.
(iv) It is a violation of this clause for an employer who has
filed an attestation under this subsection to intimidate,
threaten, restrain, coerce, blacklist, discharge, or in any
other manner discriminate against an employee (which term, for
purposes of this clause, includes a former employee and an
applicant for employment) because the employee has disclosed
information to the employer, or to any other person, that the
employee reasonably believes evidences a violation of this
subsection, or any rule or regulation pertaining to this
subsection, or because the employee cooperates or seeks to
cooperate in an investigation or other proceeding concerning
the employer's compliance with the requirements of this
subsection or any rule or regulation pertaining to this
subsection.
(v) The Secretary of Labor and the Secretary of Homeland
Security shall devise a process under which a nonimmigrant
under section 101(a)(15)(H)(i)(b1) who files a complaint
regarding a violation of clause (iv) and is otherwise eligible
to remain and work in the United States may be allowed to seek
other appropriate employment in the United States for a period
not to exceed the maximum period of stay authorized for such
nonimmigrant classification.
(vi)(I) It is a violation of this clause for an employer who
has filed an attestation under this subsection to require a
nonimmigrant under section 101(a)(15)(H)(i)(b1) to pay a
penalty for ceasing employment with the employer prior to a
date agreed to by the nonimmigrant and the employer. The
Secretary of Labor shall determine whether a required payment
is a penalty (and not liquidated damages) pursuant to relevant
State law.
(II) If the Secretary of Labor finds, after notice and
opportunity for a hearing, that an employer has committed a
violation of this clause, the Secretary of Labor may impose a
civil monetary penalty of $1,000 for each such violation and
issue an administrative order requiring the return to the
nonimmigrant of any amount paid in violation of this clause,
or, if the nonimmigrant cannot be located, requiring payment of
any such amount to the general fund of the Treasury.
(vii)(I) It is a failure to meet a condition of paragraph
(1)(A) for an employer who has filed an attestation under this
subsection and who places a nonimmigrant under section
101(a)(15)(H)(i)(b1) designated as a full-time employee in the
attestation, after the nonimmigrant has entered into employment
with the employer, in nonproductive status due to a decision by
the employer (based on factors such as lack of work), or due to
the nonimmigrant's lack of a permit or license, to fail to pay
the nonimmigrant full-time wages in accordance with paragraph
(1)(A) for all such nonproductive time.
(II) It is a failure to meet a condition of paragraph (1)(A)
for an employer who has filed an attestation under this
subsection and who places a nonimmigrant under section
101(a)(15)(H)(i)(b1) designated as a part-time employee in the
attestation, after the nonimmigrant has entered into employment
with the employer, in nonproductive status under circumstances
described in subclause (I), to fail to pay such a nonimmigrant
for such hours as are designated on the attestation consistent
with the rate of pay identified on the attestation.
(III) In the case of a nonimmigrant under section
101(a)(15)(H)(i)(b1) who has not yet entered into employment
with an employer who has had approved an attestation under this
subsection with respect to the nonimmigrant, the provisions of
subclauses (I) and (II) shall apply to the employer beginning
30 days after the date the nonimmigrant first is admitted into
the United States, or 60 days after the date the nonimmigrant
becomes eligible to work for the employer in the case of a
nonimmigrant who is present in the United States on the date of
the approval of the attestation filed with the Secretary of
Labor.
(IV) This clause does not apply to a failure to pay wages to
a nonimmigrant under section 101(a)(15)(H)(i)(b1) for
nonproductive time due to non-work-related factors, such as the
voluntary request of the nonimmigrant for an absence or
circumstances rendering the nonimmigrant unable to work.
(V) This clause shall not be construed as prohibiting an
employer that is a school or other educational institution from
applying to a nonimmigrant under section 101(a)(15)(H)(i)(b1)
an established salary practice of the employer, under which the
employer pays to nonimmigrants under section
101(a)(15)(H)(i)(b1) and United States workers in the same
occupational classification an annual salary in disbursements
over fewer than 12 months, if--
(aa) the nonimmigrant agrees to the compressed annual
salary payments prior to the commencement of the
employment; and
(bb) the application of the salary practice to the
nonimmigrant does not otherwise cause the nonimmigrant
to violate any condition of the nonimmigrant's
authorization under this Act to remain in the United
States.
(VI) This clause shall not be construed as superseding clause
(viii).
(viii) It is a failure to meet a condition of paragraph
(1)(A) for an employer who has filed an attestation under this
subsection to fail to offer to a nonimmigrant under section
101(a)(15)(H)(i)(b1), during the nonimmigrant's period of
authorized employment, benefits and eligibility for benefits
(including the opportunity to participate in health, life,
disability, and other insurance plans; the opportunity to
participate in retirement and savings plans; and cash bonuses
and non-cash compensation, such as stock options (whether or
not based on performance)) on the same basis, and in accordance
with the same criteria, as the employer offers to United States
workers.
(D) If the Secretary of Labor finds, after notice and
opportunity for a hearing, that an employer has not paid wages
at the wage level specified in the attestation and required
under paragraph (1), the Secretary of Labor shall order the
employer to provide for payment of such amounts of back pay as
may be required to comply with the requirements of paragraph
(1), whether or not a penalty under subparagraph (C) has been
imposed.
(E) The Secretary of Labor may, on a case-by-case basis,
subject an employer to random investigations for a period of up
to 5 years, beginning on the date on which the employer is
found by the Secretary of Labor to have committed a willful
failure to meet a condition of paragraph (1) or to have made a
willful misrepresentation of material fact in an attestation.
The authority of the Secretary of Labor under this subparagraph
shall not be construed to be subject to, or limited by, the
requirements of subparagraph (A).
(F) Nothing in this subsection shall be construed as
superseding or preempting any other enforcement-related
authority under this Act (such as the authorities under section
274B), or any other Act.
(4) For purposes of this subsection:
(A) The term ``area of employment'' means the area
within normal commuting distance of the worksite or
physical location where the work of the nonimmigrant
under section 101(a)(15)(H)(i)(b1) is or will be
performed. If such worksite or location is within a
Metropolitan Statistical Area, any place within such
area is deemed to be within the area of employment.
(B) In the case of an attestation with respect to one
or more nonimmigrants under section
101(a)(15)(H)(i)(b1) by an employer, the employer is
considered to ``displace'' a United States worker from
a job if the employer lays off the worker from a job
that is essentially the equivalent of the job for which
the nonimmigrant or nonimmigrants is or are sought. A
job shall not be considered to be essentially
equivalent of another job unless it involves
essentially the same responsibilities, was held by a
United States worker with substantially equivalent
qualifications and experience, and is located in the
same area of employment as the other job.
(C)(i) The term ``lays off'', with respect to a
worker--
(I) means to cause the worker's loss of
employment, other than through a discharge for
inadequate performance, violation of workplace
rules, cause, voluntary departure, voluntary
retirement, or the expiration of a grant or
contract; but
(II) does not include any situation in which
the worker is offered, as an alternative to
such loss of employment, a similar employment
opportunity with the same employer at
equivalent or higher compensation and benefits
than the position from which the employee was
discharged, regardless of whether or not the
employee accepts the offer.
(ii) Nothing in this subparagraph is intended to
limit an employee's rights under a collective
bargaining agreement or other employment contract.
(D) The term ``United States worker'' means an
employee who--
(i) is a citizen or national of the United
States; or
(ii) is an alien who is lawfully admitted for
permanent residence, is admitted as a refugee
under section 207 of this title, is granted
asylum under section 208, or is an immigrant
otherwise authorized, by this Act or by the
Secretary of Homeland Security, to be employed.
* * * * * * *
admission of nonimmigrants
Sec. 214. (a) * * *
(b) Every alien [(other than a nonimmigrant described in
subparagraph (H)(i), (L), or (V) of section 101(a)(15))] (other
than a nonimmigrant described in subparagraph (L) or (V) of
section 101(a)(15), and other than a nonimmigrant described in
any provision of section 101(a)(15)(H)(i) except subclause (b1)
of such section) shall be presumed to be an immigrant until he
establishes to the satisfaction of the consular officer, at the
time of application for a visa, and the immigration officers,
at the time of application for admission, that he is entitled
to a nonimmigrant status under section 101(a)(15). An alien who
is an officer or employee of any foreign government or of any
international organization entitled to enjoy privileges,
exemptions, and immunities under the International
Organizations Immunities Act, or an alien who is the attendant,
servant, employee, or member of the immediate family of any
such alien shall not be entitled to apply for or receive an
immigrant visa, or to enter the United States as an immigrant
unless he executes a written waiver in the same form and
substance as is prescribed by section 247(b).
(c)(1) The question of importing any alien as a
nonimmigrant under [section 101(a)(15)(H), (L), (O), or (P)(i)]
subparagraph (H), (L), (O), or (P)(i) of section 101(a)(15)
(excluding nonimmigrants under section 101(a)(15)(H)(i)(b1)) in
any specific case or specific cases shall be determined by the
Attorney General, after consultation with appropriate agencies
of the Government, upon petition of the importing employer.
Such petition shall be made and approved before the visa is
granted. The petition shall be in such form and contain such
information as the Attorney General shall prescribe. The
approval of such a petition shall not, of itself, be construed
as establishing that the alien is a nonimmigrant. For purposes
of this subsection with respect to nonimmigrants described in
section 101(a)(15)(H)(ii)(a), the term ``appropriate agencies
of Government'' means the Department of Labor and includes the
Department of Agriculture. The provisions of section 218 shall
apply to the question of importing any alien as a nonimmigrant
under section 101(a)(15)(H)(ii)(a).
* * * * * * *
(11)(A) Subject to subparagraph (B), the Secretary of
Homeland Security or the Secretary of State, as appropriate,
shall impose a fee on an employer who has filed an attestation
described in section 212(t)--
(i) in order that an alien may be initially granted
nonimmigrant status described in section
101(a)(15)(H)(i)(b1); or
(ii) in order to satisfy the requirement of the
second sentence of subsection (g)(8)(C) for an alien
having such status to obtain certain extensions of
stay.
(B) The amount of the fee shall be the same as the amount
imposed by the Secretary of Homeland Security under paragraph
(9), except that if such paragraph does not authorize such
Secretary to impose any fee, no fee shall be imposed under this
paragraph.
(C) Fees collected under this paragraph shall be deposited
in the Treasury in accordance with section 286(s).
* * * * * * *
(g)(1) * * *
* * * * * * *
(8)(A) The agreement referred to in section
101(a)(15)(H)(i)(b1) is the United States-Chile Free Trade
Agreement.
(B)(i) The Secretary of Homeland Security shall establish
annual numerical limitations on approvals of initial
applications by aliens for admission under section
101(a)(15)(H)(i)(b1).
(ii) The annual numerical limitations described in clause
(i) shall not exceed 1,400 for nationals of Chile for any
fiscal year. For purposes of this clause, the term ``national''
has the meaning given such term in article 14.9 of the United
States-Chile Free Trade Agreement.
(iii) The annual numerical limitations described in clause
(i) shall only apply to principal aliens and not to the spouses
or children of such aliens.
(iv) The annual numerical limitation described in paragraph
(1)(A) is reduced by the amount of the annual numerical
limitations established under clause (i). However, if a
numerical limitation established under clause (i) has not been
exhausted at the end of a given fiscal year, the Secretary of
Homeland Security shall adjust upwards the numerical limitation
in paragraph (1)(A) for that fiscal year by the amount
remaining in the numerical limitation under clause (i). Visas
under section 101(a)(15)(H)(i)(b) may be issued pursuant to
such adjustment within the first 45 days of the next fiscal
year to aliens who had applied for such visas during the fiscal
year for which the adjustment was made.
(C) The period of authorized admission as a nonimmigrant
under section 101(a)(15)(H)(i)(b1) shall be 1 year, and may be
extended, but only in 1-year increments. After every second
extension, the next following extension shall not be granted
unless the Secretary of Labor had determined and certified to
the Secretary of Homeland Security and the Secretary of State
that the intending employer has filed with the Secretary of
Labor an attestation under section 212(t)(1) for the purpose of
permitting the nonimmigrant to obtain such extension.
(D) The numerical limitation described in paragraph (1)(A)
for a fiscal year shall be reduced by one for each alien
granted an extension under subparagraph (C) during such year
who has obtained 5 or more consecutive prior extensions.
(h) The fact that an alien is the beneficiary of an
application for a preference status filed under section 204 or
has otherwise sought permanent residence in the United States
shall not constitute evidence of an intention to abandon a
foreign residence for purposes of obtaining a visa as a
nonimmigrant described in subparagraph [(H)(i)] (H)(i)(b) or
(c), (L), or (V) of section 101(a)(15) or otherwise obtaining
or maintaining the status of a nonimmigrant described in such
subparagraph, if the alien had obtained a change of status
under section 248 to a classification as such a nonimmigrant
before the alien's most recent departure from the United
States.
(i)(1) [For purposes] Except as provided in paragraph (3),
for purposes of section 101(a)(15)(H)(i)(b) and paragraph (2),
the term ``specialty occupation'' means an occupation that
requires--
(A) * * *
* * * * * * *
(3) For purposes of section 101(a)(15)(H)(i)(b1), the term
``specialty occupation'' means an occupation that requires--
(A) theoretical and practical application of a body
of specialized knowledge; and
(B) attainment of a bachelor's or higher degree in
the specific specialty (or its equivalent) as a minimum
for entry into the occupation in the United States.
(j)(1) Notwithstanding any other provision of this Act, an
alien who is a citizen of Canada or Mexico who seeks to enter
the United States under and pursuant to the provisions of
Section B, Section C, or Section D of Annex 1603 of the North
American Free Trade Agreement, shall not be classified as a
nonimmigrant under such provisions if there is in progress a
strike or lockout in the course of a labor dispute in the
occupational classification at the place or intended place of
employment, unless such alien establishes, pursuant to
regulations promulgated by the Attorney General, that the
alien's entry will not affect adversely the settlement of the
strike or lockout or the employment of any person who is
involved in the strike or lockout. Notice of a determination
under this [subsection] paragraph shall be given as may be
required by paragraph 3 of article 1603 of such Agreement. For
purposes of this [subsection] paragraph, the term ``citizen of
Mexico'' means ``citizen'' as defined in Annex 1608 of such
Agreement.
(2) Notwithstanding any other provision of this Act except
section 212(t)(1), and subject to regulations promulgated by
the Secretary of Homeland Security, an alien who seeks to enter
the United States under and pursuant to the provisions of an
agreement listed in subsection (g)(8)(A), and the spouse and
children of such an alien if accompanying or following to join
the alien, may be denied admission as a nonimmigrant under
subparagraph (E), (L), or (H)(i)(b1) of section 101(a)(15) if
there is in progress a labor dispute in the occupational
classification at the place or intended place of employment,
unless such alien establishes, pursuant to regulations
promulgated by the Secretary of Homeland Security after
consultation with the Secretary of Labor, that the alien's
entry will not affect adversely the settlement of the labor
dispute or the employment of any person who is involved in the
labor dispute. Notice of a determination under this paragraph
shall be given as may be required by such agreement.
* * * * * * *
Chapter 9--Miscellaneous
* * * * * * *
disposition of moneys collected under the provisions of this title
Sec. 286. (a) * * *
* * * * * * *
(s) H-1B Nonimmigrant Petitioner Account.--
(1) In general.--There is established in the general
fund of the Treasury a separate account, which shall be
known as the ``H-1B Nonimmigrant Petitioner Account''.
Notwithstanding any other section of this title, there
shall be deposited as offsetting receipts into the
account all fees collected under [section 214(c)(9).]
paragraphs (9) and (11) of section 214(c).
* * * * * * *
VII. EXECUTIVE CORRESPONDENCE
Executive Office of the President,
The United States Trade Representative,
Washington, DC, July 18, 2003.
Hon. William M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC
Dear Mr. Chairman: I appreciate your leadership in moving
through the Ways and Means Committee legislation to implement
the United States-Singapore and United States-Chile free trade
agreements.
Because we have received inquiries about how the tariff
suspension provisions of the agreements would operate, I
thought it would be useful to provide the relevant text for the
enforcement of dispute settlement panel reports. The following
provisions are set out in articles 20.5-7 of the U.S.-Singapore
Free Trade Agreement (FTA) and articles 22.14-16 of the U.S.-
Chile FTA.
Commercial disputes
If, in its final report, the panel determines that a Party
has not conformed with its obligation under this Agreement or
that a Party's measure is causing nullification or impairment *
* *, the resolution, whenever possible, shall be eliminate the
non-conformity or the nullification or impairment * * * If * *
* the Parties are unable to reach agreement on a resolution, *
* * the Party complained against shall enter into negotiations
with the other Party with a view to developing mutually
acceptable compensation.
If the Parties * * * are unable to agree on compensation
within 30 days after the period for developing such
compensation has begun; or * * * have agreed on compensation or
on a resolution * * * and the complaining Party consider that
the other Party has failed to observe the terms of such
agreement, the complaining Party may at any time thereafter
provide written notice * * * that it intends to suspend the
application to the other Party of benefits of equivalent effect
* * *.
If the Party complained against considers that * * * the
level of benefits [that the other Party has] proposed to be
suspended is manifestly excessive; or * * * [that the defending
party] has eliminated the non-conformity or the nullification
or impairment that the panel has found, it may * * * request
that the panel be reconvened to consider the matter * * * If
the panel determines that the level of benefits proposed to be
suspended is manifestly excessive, it shall determine the level
of benefits is considers to be of equivalent effect.
The complaining Party may suspend benefits up to the level
the panel has determined of, if the panel has not determined
the level, the level the Party has proposed to suspend * * *
unless the panel has determined that the Party complained
against has eliminated the non-conformity or the nullification
or impairment.
The complaining Party may not suspend benefits if, within
30 days after is provides written notice of intent to suspend
benefits or * * * the Party complained against provides written
notice * * * that it pay an annual monetary assessment. The
Parties shall consult * * * with a view to reaching agreement
on the amount of the assessment. If the Parties are unable to
reach an agreement within 30 days after consultations begin,
the amount of the assessment shall be set at a level, in U.S.
dollars, equal to 50 percent of the level of the benefits the
panel has determined * * * to be of equivalent effect of, if
the panel has not determined the level, 50 percent of the level
of that the complaining Party has proposed to suspend * * *.
If the Party complained against fails to pay a monetary
assessment, the complaining Party may suspend the application
to the Party complained against of benefits [under the
Agreement].
Labor and environment disputes
If, in its final report, a panel determines that a party
has not conformed with its [labor or environment] obligations *
* * and the Parties * * * are unable to reach agreement on a
resolution * * *; or have agreed on a resolution * * * and the
complaining Party considers that the other Party has failed to
observe the terms of the agreement, the complaining Party may
at any time thereafter request that the panel be reconvened to
impose an annual monetary assessment on the other Party * * *.
The panel shall determine the amount of the monetary
assessment in U.S. dollars * * * In determining the amount of
the assessment, the panel shall take into account [various
factors set forth in the agreement.]
The amount of the assessment shall not exceed 15 million
U.S. dollars annually * * *. Assessments shall be * * *
expended * * * for appropriate labor or environmental
initiatives, including efforts to improve or enhance labor or
environmental law enforcement, as the case may be, in the
territory of the Party complained against, consistent with its
law.
If the Party complained against fails to pay a monetary
assessment, [or, under the U.S.-Singapore FTA, does not make
funds available through an escrow account] the complaining
Party may take other appropriate steps to collect the
assessment or otherwise secure compliance. These steps may
include suspending tariff benefits under the Agreement as
necessary to collect the assessment, while bearing in mind the
Agreement's objective of eliminating barriers to bilateral
trade and while seeking to avoid unduly affecting parties or
interests not party to the dispute.
Against, thank your for your efforts to securing passage of
this important legislation.
Sincerely,
Robert B. Zoellick.
VIII. VIEWS
DISSENTING VIEWS
If these two trade agreements were truly going to benefit
U.S. workers, as the Administration claims, then we would have
no reservations and would gladly support both agreements today.
However, the lack of strong labor enforcement language, the
addition of a new permanent work visa program, and the use of
these agreements as a template for future trade agreements is
sufficient reason to oppose both agreements and the
implementing legislation.
Our nation's unemployment rate reached 6.4 percent in
June--the highest rate in more than nine years, causing a loss
of more than one million jobs in the last three months alone.
The Bush Administration's solution is to pursue trade
agreements that depart from the standard set by the U.S.-Jordan
Free Trade Agreement and return to the failed North American
Free Trade Agreement (NAFTA) model. As of September 2000, the
U.S. lost over half a million jobs due to NAFTA. Over three-
quarters of the jobs lost due to NAFTA have been in the
manufacturing sector. These are good paying U.S. jobs that have
been shipped overseas. But rather than take the successes of
the U.S.-Jordan FTA which was heralded by the Clinton
Administration, labor and environment organizations, as the new
model for trade agreements, the Bush Administration is taking
us down the path of further job losses.
Neither trade agreement includes the International Labour
Organization's (ILO) five core labor standards. While both
countries claim to uphold the ILO's core labor standards, there
is nothing in the agreements that require either country to do
so. If these countries are truly committed to the five core
labor standards then there is no reason to exclude binding
agreement language that would have committed these countries to
adhering to them. It is time to make labor standards as serious
an issue in trade agreements as the commercial provisions--
especially when the involved parties claim to uphold ILO's
policies anyway.
Furthermore, these agreements fail to provide the same
enforcement mechanisms for labor and environmental violations
as the agreements provide for commercial violations. Once
again, the Administration chooses to relegate labor and
environment to a substandard class. Under the Chile and
Singapore agreements, once a determination that a labor
violation has been made the first course of action is a fine,
which is capped at $15 million annually. This is a mere slap on
the wrist for a country that could be found in serious
violation of the labor provisions. The negotiated course of
enforcement pales in comparison to the sanctions that are
available for commercial violations.
In addition to the failures of the labor provisions in both
trade agreements, both agreements set up a new immigration visa
program. This sets a dangerous precedent by including U.S.
immigration law in trade agreements. Nor was this provision
authorized in the Fast Tract negotiating language that narrowly
passed the House of Representatives. House Judiciary members of
both the majority and minority have expressed serious
reservations about including U.S. immigration law in trade
agreements, and usurping Congress's constitutional authority.
The current H1-B visa program is a 3-year temporary work visa,
which may be renewed one time. The new visa program negotiated
in these trade agreements will allow an indefinite renewal of
5,800 nationals from Singapore and Chile. This means that we
are earmarking ten percent of the current H1-B visa program to
nationals from these small countries in these small agreements.
Another serious concern we have is the fact that the
implementing language contradicts the trade agreement language
with respect to the new visa program. It is doublespeak. The
implementing language attempts to address the concern of
allowing new immigrant workers only upon certifying that U.S.
workers won't be displaced; the negotiated trade agreements
prohibit such certification as a condition of entry. As the
U.S. experienced with NAFTA, it is the trade agreement, and not
the domestic statute that takes precedent under global trade
rules.
Finally, these two agreements should not be used as a model
for future trade agreements. A vote in support of the
agreements signals to the Administration that the model used
for Chile and Singapore is acceptable, when it is far from
acceptable. We oppose both agreements, the implementing
legislation and urge the Administration to avoid using the
flawed Chile and Singapore model for future trade agreements.
Pete Stark.
Stephanie Tubbs Jones.
Jerry Kleczka.
Michael R. McNulty.
John Lewis.
ADDITIONAL VIEWS
The U.S.-Chile Free Trade Agreement
The U.S.-Chile Free Trade Agreement (FTA) includes strong
and comprehensive commitments by Chile to open its goods,
agricultural and services markets to U.S. producers. The
agreement includes commitments that will increase regulatory
transparency and act to the benefit of U.S. workers, investors,
intellectual property holders, businesses and consumers.
At the same time, the economic impact of the Chile
agreement is likely to be minuscule. The U.S. International
Trade Commission estimates that the Chile FTA will account for
just five one hundredths of one percent of U.S. gross domestic
product (GDP).
While some of the provisions in the FTA could serve as a
model for other agreements, a number of provisions clearly
cannot. In some instances, this is because the provision, while
workable in the Chile context, is not appropriate for FTAs with
other countries, where very different circumstances prevail. In
other cases, it is because the policy being pursued by the
Administration is just plain wrong.
In fact, one of the concerns raised in the consideration of
both the Chile and Singapore FTAs has been that the
Administration is beginning to use some of their provisions as
models for other FTAs, for example the Central America Free
Trade Agreement (CAFTA), where the conditions make it
inappropriate to do so.
We cannot change in the implementing bill major provisions
in the basic agreements specifically negotiated between the
parties. Unfortunately, the provisions relating to core labor
and environmental standards and investment issues, raise
serious concerns. For example, there are separate dispute
settlement rules that place arbitrary caps on the
enforceability of those provisions. This is a mistaken
approach, the difficulties of which would only be magnified if
used as a precedent for future FTAs involving very different
circumstances.
That is doubly true of any attempt to use as a model for
other FTAs the ``enforce your own law'' standard used in Chile
and Singapore. The laws of Chile and Singapore essentially
reflect core internationally recognized labor rights and these
countries' have a history of enforcing their laws. How they are
applied does vary in the two countries, reflecting the
different characteristics of the two nations. At the same time,
there is little practical concern that these countries will
backtrack.
Chile is very different from many other FTA negotiating
partners, including most Central American countries and many
others that would be a part of an FTAA. Use of the ``enforce
your own law'' standard is invalid as a precedent--indeed it
contradicts the purpose of promoting enforceable core labor
standards--when a country's laws clearly do not reflect
international standards and when there is a history, not only
of non-enforcement, but of a hostile environment towards the
rights of workers to organize and bargain collectively. Using
this standard in different circumstances will lead to totally
different results.
The Office of the U.S. Trade Representative (USTR) has
undertaken this misapplication of the ``enforce your own law''
standard by using it in the core labor proposal tabled in CAFTA
and Free Trade Area of the Americas (FTAA). USTR justifies this
action by arguing that the Trade Act of 2002 does not allow it
to go further. That interpretation is erroneous. Under Trade
Promotion Authority, USTR can negotiate a provision to adopt
and enforce the five core International Labor Organization
(ILO) labor standards (bans on child labor, forced labor,
discrimination, and the rights to associate and bargain
collectively).
Expanded trade is important to this country and the world.
Benefits will accrue to a broad range of persons in our nation
and other nations if trade agreements include enforceable
commitments on basic labor standards. With such a provision,
workers in developing countries, including Central America,
have the opportunity to become real partners in economic
progress and help develop the expanded middle class so vital to
those nations, and to the United States.
With regard to other provisions that the Administration has
stated it intends to use as a model, we are seriously concerned
about any such use and we will be watching carefully their
implementation. These provisions include: (1) certain
intellectual property provisions that lock in the current state
of U.S. law, thereby making it much more difficult for Congress
to change those rules in the future; (2) the investor-state
provisions and the issue of whether the USTR has adequately
ensured that foreign investors will not have greater rights
than provided under U.S. law; and (3) the provisions on capital
controls and the question of whether USTR's and Treasury's
effort to eliminate a country's flexibility to impose on an
emergency basis temporary capital controls is sound policy and
should be pursued in future FTAs. At a recent hearing, USTR
Zoellick made comments that indicated that the USTR had changed
its position on this issue.
Finally, one area where we would like to see improvements
in future FTAs is in the rules or origin. The Committee report
states that the Agreement contains ``strong, simple, and
transparent rules of origin.'' The rules of origin used for the
Agreement are different than those for the NAFTA and for other
previous FTAs. It is extremely difficult for Congress to gauge
whether the rules of origin strike the correct balance between
the dual goals of preventing transshipment/ensuring economic
activity in the FTA partners and ease of compliance
andadministration. While we trust that the USTR negotiators are seeking
the correct balance, the Committee should request the ITC to conduct a
study into the operation of various type of rules of origin and their
impact on trade.
The U.S.-Chile implementing legislation
The Committee Democrats pressed for the Committee to hold
the July 10, 2003, traditional ``mock'' mark-up. The
information legislative drafting process ensures active
congressional involvement in shaping the legislation necessary
to implement changes to U.S. law that are required by trade
agreements. This process was used in the case of implementing
legislation for the North American Free Trade Agreement
(NAFTA), the Uruguay round agreements, and prior trade
agreements dating back more than 20 years.
The mock markup reflects a broadly agree-upon and well-
established practice. Further, is enables the Members of the
Committee and the public to understand more fully and clearly
the content of the legislation, raise questions about it, and
offer ``mock amendments'' when necessary. Ensuring that the
legislative process for the implementing legislation is as open
as possible in consistent with the great importance the United
States has attached to improving the transparency of
international trade agreements and foreign government laws and
regulatory practices.
The implementing legislation only addresses those portions
of the FTA where implementation requires changes to U.S. law.
With respect to these provisions, it is important to note the
improvements that we have been successful in making to several
controversial areas.
One set of troublesome issues in both the U.S.-Chile and
U.S.-Singapore FTAs related to H1-B immigration visas. Although
non under the jurisdiction of this Committee, we worked
actively with our colleagues in both parties on the Judiciary
Committee to make meaningful changes to these provisions. The
most significant changes include: (1) inclusion of the
Singapore and Chile visas within the overall H-1B cap; (2) a
requirement that employers pay the H1-B fee (currently $1000)
for the initial visa, and for every third renewal of the visa
(these fees are used to fund training programs for workers in
the United States); (3) a requirement that employers submit
labor attestations not only for the initial visa, but also for
every third renewal; (4) a clarification in the Statement of
Administrative Action that visas issued under the Chile and
Singapore programs are temporary, and that laws governing
temporary visas, including requirements that the visa holder
show that the stay is temporary, continue to apply; and (5) a
clarification in the Statement of Administrative Action on the
scope of occupations covered.
Finally, as first drafted, the bills did not require the
Administration to consult with trade advisory committee, ITC,
or Congress when exercising discretionary authority granted by
the legislation. the bill has amended to require consultation
with each of these entities, helping to provide a greater role
for Congress and a more balanced and well-founded trade policy.
This process has worked for improving the problematic
provisions in the implementing legislation.
Additionally, we are concerned that the legislative
implementation of the rules of origin may create unnecessary
confusion. The rules of origin in the Chile and Singapore FTAs
differ in a number of ways, some substantive, but most non-
substantive. In a number of instances, the implementing
legislation mirrored the language in the agreements, despite
the fact that there were no substantive differences intended.
We are concerned that the differences in legislative language
between two contemporaneously considered bills could create
confusion for Customs and traders. Generally, Congress does not
use different language when it means the same thing.
Accordingly, we encourage Customs to issue harmonized
implementing regulations for the Singapore and Chile FTAs to
the maximum extent possible.
U.S. trade policy for economic growth and jobs
Even as we support these agreements, it is vital that
American trade policy restore a focus on opening markets that
achieve the largest gains for Americans. In particular,
numerous barriers to exports of American goods and services and
other unfair trade practices have been allowed to stand for too
long. These barriers include international piracy of the
American copyrights and other intellectual property,
discrimination by China against key American high-tech exports,
and Japan's discrimination against myriad of manufactured and
agricultural goods. A more concerted effort needs to be
undertaken to reduce these barriers that cost American jobs and
exports.
Additionallly, there is a great deal at stake in
negotiations currently ongoing under the auspices of the World
Trade Organization--the so-called Doha round. These
negotiations should be concluded carefully to achieve potential
significant benefits to both the United States as well as other
developed countries, and developing countries. Ways and Means
Democrats are monitoring these negotiations carefully and urge
a greater focus by the Administration ensuring real and
meaningful process at the upcoming Ministerial meeting in
September in Mexico.
Charles B. Rangel.
Jim McDermott.
Max Sandlin.
Robert T. Matsui.
Earl Pomeroy.
Richard E. Neal.
Ben Cardin.
Sander Levin.
Xavier Becerra.