To extend certain trade preferences to certain least-developed countries, and for other purposes.

January 26, 2005

Mr. SMITH (for himself, Mrs. FEINSTEIN, Mr. BAUCUS, and Mr. SANTORUM) introduced the following bill; which was read twice and referred to the Committee on Finance

To extend certain trade preferences to certain least-developed countries, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Tariff Relief Assistance for Developing Economies Act of 2005' or as the `TRADE Act of 2005'.

SEC. 2. FINDINGS.

Congress finds the following:

(1) It is in the mutual interest of the United States and the least-developed countries to promote stable and sustainable economic growth and development.

(2) Trade and investment are powerful economic tools and a country may use trade and investment to reduce poverty and raise the standard of living in that country.

(3) A country that is open to trade may increase its economic growth.

(4) Twenty-five percent of the world's population survives on less than one dollar per day.

(5) Unemployment rates in least-developed countries are extremely high, including unemployment rates in some countries of up to 70 percent.

(6) Trade and investment often lead to employment opportunities and often help alleviate poverty.

(7) Least-developed countries have a particular challenge in meeting the economic requirements and competitiveness of globalization and international markets.

(8) The United States has recognized the benefits of trade to least-developed countries by enacting the Generalized System of Preferences and trade benefits for developing countries in the Caribbean, Andean, and sub-Saharan African regions of the world.

(9) The challenges of the global trading environment for least-developed countries are even greater given the end of the Multi-Fiber Arrangement in 2005, and certain least-developed countries, including Bangladesh, Cambodia, and Nepal, are particularly vulnerable to the changes that will result from the end of that Arrangement.

(10) Responding to the needs of least-developed countries would be consistent with other United States trade objectives, including encouraging forward progress on the WTO Doha Development Round.

(11) Enhanced trade with the Muslim least-developed countries, including Yemen, Afghanistan, and Bangladesh, is consistent with other United States objectives of encouraging a strong private sector and individual economic empowerment in those countries.

(12) Offering least-developed countries enhanced trade preferences will encourage both higher levels of trade and direct investment in support of positive economic and political developments throughout the region and the world.

(13) Encouraging the reciprocal reduction of trade and investment barriers will enhance the benefits of trade and investment as well as enhance commercial and political ties between the United States and the beneficiary countries.

(14) Economic opportunity and engagement in the global trading system together with support for democratic institutions and a respect for human rights are mutually-reinforcing objectives and key elements of a policy to confront and defeat global terrorism.

(15) A powerful earthquake and tsunami struck in the Indian Ocean on December 26, 2004.

(16) The destruction caused by the tsunami in Sri Lanka was devastating and included the loss of an estimated 30,000 people and physical damage that will cost an amount equal to 6.5 percent of annual economy of Sri Lanka to repair.

(17) The effects of lost businesses and reconstruction costs caused by the tsunami damage will result in a drop in the economic growth of Sri Lanka.

(18) Senate Resolution 4, 109th Congress, agreed to January 4, 2005, expressed the support of the Senate for the long-term commitment and engagement of the United States to provide financial aid and other forms of direct and indirect assistance to the countries and peoples of the region impacted by the earthquake and the tsunami.

(19) Duty preferences that assist Sri Lanka in the United States market will help Sri Lanka rebuild and overcome the economic destruction caused by the tsunami.

SEC. 3. AUTHORITY TO DESIGNATE; ELIGIBILITY REQUIREMENTS.

(a) AUTHORITY TO DESIGNATE-

(1) In general- Notwithstanding any other provision of law, the President is authorized to designate a TRADE ACT of 2005 country as a beneficiary TRADE Act of 2005 country eligible for benefits described in section 4--

(A) if the President determines that the country meets the requirements set forth in section 104 of the African Growth and Opportunity Act (19 U.S.C. 3703); and

(B) subject to the authority granted to the President under subsections (a), (d), and (e) of section 502 of the Trade Act of 1974 (19 U.S. C. 2462 (a), (d), and (e)), if the country otherwise meets the eligibility criteria set forth in such section 502.

(2) APPLICATION OF SECTION 104- Section 104 of the African Growth and Opportunity Act shall be applied for purposes of paragraph (1) by substituting `TRADE Act of 2005 country' for `sub-Saharan African country' each place it appears.

(b) COUNTRIES ELIGIBLE FOR DESIGNATION- For purposes of this Act, the term `TRADE Act of 2005 country' refers to the following or their successor political entities:

(1) Afghanistan.

(2) Bangladesh.

(3) Bhutan.

(4) Cambodia.

(5) Kiribati.

(6) Lao People's Democratic Republic.

(7) Maldives.

(8) Nepal.

(9) Samoa.

(10) Solomon Islands.

(11) Timor-Leste (East Timor).

(12) Tuvalu.

(13) Vanuatu.

(14) Yemen.

(c) Sri Lanka Economic Emergency Support- For purposes of this Act, the President may also designate Sri Lanka as beneficiary TRADE Act of 2005 country eligible for benefits described in section 4.

SEC. 4. TRADE ENHANCEMENT.

(a) BENEFITS DESCRIBED- The benefits described in this section are as follows:

(1) PREFERENTIAL TARIFF TREATMENT FOR CERTAIN ARTICLES-

(A) IN GENERAL- The President may provide duty-free treatment for any article described in section 503(b)(1) (B) through (G) of the Trade Act of 1974 (19 U.S.C.2463(b)(1) (B) through (G)) that is the growth, product, or manufacture of a beneficiary TRADE Act of 2005 country described, if, after receiving the advice of the International Trade Commission in accordance with section 503(e) of the Trade Act of 1974, the President determines that such article is not import-sensitive in the context of imports from beneficiary TRADE Act of 2005 countries.

(B) RULES OF ORIGIN- The duty-free treatment provided under subparagraph (A) shall apply to any article described in that paragraph that meets the requirements of section 503(a)(2) of the Trade Act of 1974, except that--

(i) if the cost or value of materials produced in the customs territory of the United States is included with respect to that article, an amount not to exceed 15 percent of the appraised value of the article at the time it is entered that is attributed to such United States cost or value may be applied toward determining the percentage referred to in subparagraph (A) of section 503(a)(2) of the Trade Act of 1974; and

(ii) the cost or value of the materials included with respect to that article that are produced in one or more beneficiary TRADE Act of 2005 countries or former beneficiary TRADE Act of 2005 countries shall be applied in determining such percentage.

(2) Textile and apparel articles-

(A) IN GENERAL- The preferential treatment relating to textile and apparel articles described in section 112 (a) and (b) (1) and (2) of the African Growth and Opportunity Act (19 U.S.C. 3721 (a) and (b) (1) and (2)) shall apply to textile and apparel articles imported directly into the customs territory of the United States from a beneficiary TRADE Act of 2005 country and such section shall be applied for purposes of this subparagraph by substituting `TRADE Act of 2005 country' and `TRADE Act of 2005 countries' for `sub-Saharan African country' and `sub-Saharan African countries', respectively, each place such terms appear.

(B) Apparel articles assembled from regional and other fabric- In applying such section 112, apparel articles wholly assembled in one or more beneficiary TRADE Act of 2005 countries or former beneficiary TRADE Act of 2005 countries, or both, from fabric wholly formed in one or more beneficiary TRADE Act of 2005 countries or former beneficiary TRADE Act of 2005 countries, or both, from yarn originating either in the United States or one or more beneficiary TRADE Act of 2005 countries or former beneficiary TRADE Act of 2005 countries, or both (including fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the Harmonized Tariff Schedule of the United States and are wholly formed and cut in the United States, one or more beneficiary TRADE Act of 2005 countries or former beneficiary TRADE Act of 2005 countries, or any combination thereof), whether or not the apparel articles are also made from any of the fabrics, fabric components formed, or components knit-to-shape described in section 112(b) (1) or (2) of the African Growth and Opportunity Act (unless the apparel articles are made exclusively from any of the fabrics, fabric components formed, or components knit-to-shape described in such section 112(b) (1) or (2) subject to the following:

(i) LIMITATIONS ON BENEFITS-

(I) IN GENERAL- Preferential treatment under this subparagraph shall be extended in the 1-year period beginning January 1, 2005, and in each of the succeeding 10 1-year periods, to imports of apparel articles described in this subparagraph in an

amount not to exceed the applicable percentage of the aggregate square meter equivalents of all apparel articles imported into the United States in the preceding 12-month period for which data are available.

(II) APPLICABLE PERCENTAGE- For purposes of this clause, the term `applicable percentage' means 11 percent for the 1-year period beginning January 1, 2005, increased in each of the 10 succeeding 1-year period by equal increments, so that for the period beginning January 1, 2014, the applicable percentage does not exceed 14 percent.

(ii) SPECIAL RULE-

(I) IN GENERAL- Subject to clause (i), preferential treatment described in this subparagraph shall be extended through December 31, 2011, for apparel articles wholly assembled in one or more beneficiary TRADE Act of 2005 countries or former beneficiary TRADE Act of 2005 countries, or both, regardless of the country of origin of the yarn or fabric used to make such articles.

(II) COUNTRY LIMITATIONS-

(aa) SMALL SUPPLIERS- If during the preceding 1-year period beginning on January 1 for which data are available, imports from a beneficiary TRADE Act of 2005 country are less than 1 percent of the aggregate square meter equivalents of all apparel articles imported into the United States during such period, such imports may increase to an amount that is equal to not more than 1.5 percent of the aggregate square meter equivalents of all apparel articles imported into the United States during such period.

(bb) OTHER SUPPLIERS- If during the preceding 1-year period beginning on January 1 for which data are available, imports from a beneficiary TRADE Act of 2005 country are at least 1 percent of the aggregate square meter equivalents of all apparel articles imported into the United States during such period, such imports may increase, during each subsequent 12-month period, by an amount that is equal to not more than one-third of 1 percent of the aggregate square meter equivalents of all apparel articles imported into the United States.

(cc) AGGREGATE COUNTRY LIMIT- In no case may the aggregate quantity of textile and apparel articles imported into the United States under this subparagraph exceed the applicable percentage set forth in clause (i).

(C) OTHER RESTRICTIONS- The provisions of section 112(b) (3)(C), (4), (5), (6), and (7), and (d), and section 113 of the African Growth and Opportunity Act (19 U.S.3721(b) (3)(C), (4), (5), (6), and (7), and (d), and 3722) shall apply with respect to the preferential treatment extended under this Act to a beneficiary TRADE Act of 2005 country by substituting `TRADE Act of 2005 country' for `sub-Saharan African country' and `TRADE Act of 2005 countries' and `former TRADE Act of 2005 countries' for `sub-Saharan African countries' wherever appropriate.

SEC. 5. REPORTING REQUIREMENT.

The President shall monitor, review, and report to Congress, not later than 1 year after the date of enactment of this Act, and annually thereafter, on the implementation of this Act and on the trade and investment policy of the United States with respect to the TRADE Act of 2005 countries.

SEC. 6. DEFINITIONS.

In this Act:

(1) BENEFICIARY TRADE ACT OF 2005 COUNTRY- The term `beneficiary TRADE Act of 2005 country' means a country listed in subsection (b) or (c) of section 3 that the President has determined is eligible for preferential treatment under this Act.

(2) FORMER TRADE ACT OF 2005 COUNTRY- The term `former TRADE Act of 2005 country' means a country that, after being designated as a beneficiary TRADE Act of 2005 country under this Act, ceased to be designated as such a country by reason of its entering into a free trade agreement with the United States.

SEC. 7. TERMINATION OF PREFERENTIAL TREATMENT.

No duty-free treatment or other preferential treatment extended to a beneficiary TRADE Act of 2005 country under this Act shall remain in effect after December 31, 2014.

SEC. 8. EFFECTIVE DATE.

The provisions of this Act shall take effect on January 1, 2005.

END