S. 3843 - AGOA Extension Act of 2006

109th CONGRESS
2d Session

S. 3843

To amend the African Growth and Opportunity Act to extend certain trade benefits to eligible sub-Saharan African countries, and for other purposes.

IN THE SENATE OF THE UNITED STATES

September 5, 2006

Mr. LUGAR introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the African Growth and Opportunity Act to extend certain trade benefits to eligible sub-Saharan African 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 `AGOA Extension Act of 2006'.

SEC. 2. FINDINGS.

Congress finds that--

(1) the African Growth and Opportunity Act (19 U.S.C. 3701 et seq.) has helped to spur economic growth and bolster economic reforms in the countries in sub-Saharan Africa and fostered stronger economic ties between the countries in sub-Saharan Africa and the United States;

(2) the African Growth and Opportunity Act has helped to promote investment in sub-Saharan Africa, especially in the textile and apparel sectors;

(3) the major challenges facing the often nascent textile and apparel sector in sub-Saharan Africa are--

(A) unrestrained competition from well-established, and in some cases, subsidized, producers, particularly following the January 1, 2005, elimination of quotas previously maintained by members of the World Trade Organization (WTO); and

(B) inadequate infrastructure and access to capital and other supply-side constraints;

(4) during the first year since the elimination of quotas, United States imports of apparel from sub-Saharan Africa declined by 16 percent, contributing to the closing of dozens of factories and the loss of an estimated 100,000 jobs in the region;

(5) the rules of origin under the African Growth and Opportunity Act do not reflect the current market reality, which is that African textile mills cannot in general produce yarns or fabric in sufficient variety and quantity to meet the needs of African apparel producers or market demand in the United States and other countries;

(6) to increase the ability of African apparel manufacturers to meet market demands, the rules of origin under the African Growth and Opportunity Act should be replaced by a simple value-added rule of origin, as advocated by the Commission for Africa and recognized by the World Bank;

(7) sustainable development and economic growth in sub-Saharan Africa require the diversification of the economies of countries in sub-Saharan Africa, utilizing the countries' vast agricultural, natural, and human resources in a just and sustainable manner; and

(8) to assist countries in sub-Saharan Africa in developing and diversifying their economies, the United States should continue to pursue trade liberalization bilaterally and multilaterally, and in addition, the United States should provide the technical assistance needed and identified in the AGOA Competitiveness Report, published by the United States Trade Representative in 2005, and establish programs to provide sustainable technical assistance to small- and medium-sized African enterprises.

TITLE I--DESIGNATIONS AND CONSULTATIONS

SEC. 101. DESIGNATION OF ELIGIBLE COUNTRIES.

Section 104 of the African Growth and Opportunity Act (19 U.S.C. 3703) is amended by striking subsection (b) and inserting the following:

`(b) Continuing Compliance- If the President determines that an eligible sub-Saharan African country no longer meets the criteria set forth in subsection (a), including by failing to maintain the institutions described in subparagraphs (A) through (F) of subsection (a)(1), the President may terminate the designation of the country made pursuant to subsection (a) if--

`(1) the President transmits to Congress notice of the proposed termination; and

`(2) the Congress, within 90 days after receiving such notice, does not enact a law prohibiting such termination.'.

SEC. 102. UNITED STATES-SUB-SAHARAN AFRICA TRADE AND ECONOMIC COOPERATION FORUM.

(a) Grants- In order to ensure that nongovernmental organizations and the private sector continue to host the annual meetings described in section 105(c)(2) of the African Growth and Opportunity Act (19 U.S.C. 3704(c)(2)), the United States Trade Representative, in coordination with the heads of other appropriate Federal departments and agencies, is authorized to provide grants to United States nongovernmental organizations referred to in section 105(c)(2) of that Act and to United States representatives of the private sector referred to in section 105(c)(2)(B) of that Act, for the purpose of hosting such meetings.

(b) Authorization of Appropriations- There is authorized to be appropriated to the United States Trade Representative such sums as may be necessary to carry out this section.

SEC. 103. SENSE OF CONGRESS REGARDING LIBERIA.

It is the sense of Congress that--

(1) the October 2005 presidential elections in Liberia represented a key step in building peace in Liberia, following nearly two decades of civil war;

(2) the election of Ms. Ellen Johnson Sirleaf as President of Liberia marks an important milestone for Africa, as President Johnson Sirleaf is the first elected female president in African history;

(3) in her inaugural address, President Johnson Sirleaf laid out a detailed, multifaceted governance agenda emphasizing security, public- and private-sector led economic revitalization, good governance and anticorruption efforts, regional and international cooperation, and political reconciliation and inclusiveness; and

(4) in light of the recent progress in Liberia, the President should make a determination as soon as possible, pursuant to section 104(a) of the African Growth and Opportunity Act (19 U.S.C. 3703(a)), regarding whether to designate Liberia as eligible for trade benefits under the African Growth and Opportunity Act.

TITLE II--TREATMENT OF CERTAIN TEXTILES AND APPAREL

SEC. 201. TREATMENT OF CERTAIN TEXTILES.

(a) Certain Other Apparel Articles That Are Both Cut (or Knit-to-Shape) and Sewn or Otherwise Assembled in One or More Beneficiary Sub-Saharan African Countries-

(1) AMENDMENTS- Section 112(b)(3) of the African Growth and Opportunity Act (19 U.S.C. 3721(b)(3)) is amended--

(A) by amending the heading to read as follows: `CERTAIN OTHER APPAREL ARTICLES THAT ARE BOTH CUT (OR KNIT-TO-SHAPE) AND SEWN OR OTHERWISE ASSEMBLED IN ONE OR MORE BENEFICIARY SUB-SAHARAN AFRICAN COUNTRIES- ';

(B) by redesignating subparagraphs (A) through (C) as subparagraphs (B) through (D), respectively; and

`(A) CERTAIN OTHER APPAREL ARTICLES-

`(i) IN GENERAL- Apparel articles that are both cut (or knit-to-shape) and sewn or otherwise assembled in one or more beneficiary sub-Saharan African countries if--

`(I) the articles are imported directly from a beneficiary sub-Saharan African country into the customs territory of the United States; and

`(II) the sum of--

`(aa) the cost or value of the materials of the articles produced in the beneficiary sub-Saharan African country or any two or more of such beneficiary sub-Saharan African countries or the United States; plus

`(bb) the direct costs of processing operations performed in such beneficiary country or such beneficiary countries or the United States, is not less than the applicable percentage of the appraised value of the articles at the time the articles are imported into the customs territory of the United States.

`(ii) APPLICABLE PERCENTAGE- For purposes of clause (i), the term `applicable percentage' means--

`(I) 20 percent for the 10-year period beginning October 1, 2006, or the date of the enactment of the AGOA Extension Act of 2006, whichever occurs later; and

`(II) 35 percent thereafter.'.

(2) EFFECTIVE DATE; APPLICABILITY- The amendments made by paragraph (1) shall take effect on October 1, 2006, or the date of the enactment of this Act, whichever occurs later. The preferential treatment described in subsection (a) of section 112 of the African Growth and Opportunity Act shall apply to apparel articles described in subparagraph (A) of section 112(b)(3) of such Act (as added by paragraph (1)) that are imported directly into the customs territory of the United States on or after such date.

(3) TRANSITION RULE- The preferential treatment described in subsection (a) of section 112 of the African Growth and Opportunity Act shall continue to apply to apparel articles described in the matter preceding subparagraph (A) of section 112(b)(3) of such Act (as such section is in effect on the day before the date of the enactment of this Act) that are imported directly into the customs territory of the United States for--

(A) the period beginning on the date of the enactment of this Act and ending on March 31, 2007; or

(B) the 180-day period beginning on the date of the enactment of this Act, whichever occurs later.

(b) Special Rule for Lesser Developed Countries-

(1) APPLICABLE PERCENTAGE- Clause (ii) of section 112(b)(3)(C) of the African Growth and Opportunity Act (as redesignated by subsection (a)(1)(B) of this section) is amended--

(A) in subclause (II), by adding `and' at the end;

(B) in subclause (III)--

(i) by striking `1-year period' and inserting `2-year period'; and

(ii) by striking `; and' and inserting a period; and

(2) SEPARATE LIMITATION FOR MAURITIUS-

(A) AMENDMENT- Clause (iv) of section 112(b)(3)(C) of the African Growth and Opportunity Act (as redesignated by subsection (a)(1)(B) of this section) is amended to read as follows:

`(iv) SEPARATE LIMITATION FOR MAURITIUS- For the 1-year period beginning October 1, 2005, and the 1-year period beginning October 1, 2006, the term `lesser developed beneficiary sub-Saharan African country' includes Mauritius.'.

(B) RETROACTIVE APPLICATION FOR CERTAIN LIQUIDATIONS AND RELIQUIDATIONS-

(i) IN GENERAL- Notwithstanding section 514 of the Tariff Act of 1930 (19 U.S.C. 1514) or any other provision of law, and subject to clause (ii), the entry of any article--

(I) that was made on or after October 1, 2005, and before the date of the enactment of this Act; and

(II) with respect to which preferential treatment under section 112(b)(3) of the African Growth and Opportunity Act would have applied if the amendment made by subparagraph (A) applied with respect to the entry of such article, shall be liquidated or reliquidated as if such amendment applied to the entry of such article.

(ii) REQUESTS- Liquidation or reliquidation may be made under clause (i) with respect to the entry of an article only if proper request therefor is filed with the Bureau of Customs and Border Protection of the Department of Homeland Security within 90 days after the date of the enactment of this Act.

(iii) PAYMENT OF AMOUNTS OWED- Any amounts owed by the United States pursuant to the liquidation or reliquidation made under clause (i) with respect to the entry of an article shall be paid not later than 180 days after the date of such liquidation or reliquidation.

(iv) DEFINITION- As used in this subparagraph, the term `entry' includes a withdrawal from warehouse for consumption.

(1) AMENDMENT- Section 112(b) of the African Growth and Opportunity Act (19 U.S.C. 3721(b)) is amended by adding at the end the following new paragraph:

`(8) CERTAIN TEXTILE FABRICS AND OTHER MADE-UP TEXTILE ARTICLES-

`(A) IN GENERAL- Notwithstanding section 503 of the Trade Act of 1974 (19 U.S.C. 2463) or any other provision of law, textile fabrics and other made-up textile articles classifiable under any heading of chapters 50 through 60 and chapter 63 of the Harmonized Tariff Schedule of the United States (other than headings 5101 through 5105 and headings 5201 through 5203 of such Schedule) that are wholly the product of one or more beneficiary sub-Saharan African countries.

`(B) SURGE MECHANISM- The requirements of subparagraph (D) of paragraph (3) shall apply with respect to imports of textile fabrics and other made-up textile articles described in this paragraph to the same extent and in the same manner as such requirements apply with respect to imports of articles described in paragraph (3).'.

(2) EFFECTIVE DATE; APPLICABILITY- The amendment made by paragraph (1) shall take effect on October 1, 2006, or the date of the enactment of this Act, whichever occurs later. The preferential treatment described in subsection (a) of section 112 of the African Growth and Opportunity Act shall apply to textile fabrics and other made-up textile articles described in paragraph (8) of section 112(b) of such Act (as added by paragraph (1)) that are imported directly into the customs territory of the United States on or after such date.

TITLE III--INITIATIVES ON AGRICULTURE

SEC. 301. INCREASED ACCESS.

Section 122(b)(3) of the African Growth and Opportunity Act (19 U.S.C. 3732(b)(3)) is amended to read as follows:

`(3) addressing critical agricultural policy issues, in part, by developing a comprehensive plan, which shall be submitted to Congress, and shall take into consideration the October 2005 report of the International Trade Commission on Export Opportunities and Barriers in African Growth and Opportunity Act Eligible Countries and the July 2005 African Growth and Opportunity Act Competitiveness Report prepared by the Office of the United States Trade Representative, to--

`(A) increase market liberalization;

`(B) develop agricultural exports;

`(C) remove barriers and constraints to United States-Africa agricultural trade;

`(D) increase investment in processing and transporting commodities;

`(E) develop and increase capacity by working with farmers and farmer groups, especially small farmers, in order to improve productivity and ability to access local and international markets, as well as address other supply-side constraints;

`(F) increase access to vital market information, including prices, product quality and demand, inputs quality and costs, and customs rules and regulations, for farmers and farmer groups and cooperatives and for relevant government ministries; and

`(G) enable public-private partnerships in eligible sub-Saharan African countries to promote trade in agricultural products between the United States and eligible sub-Saharan African countries;'.

SEC. 302. ENHANCED TRADE.

(a) Enhanced Trade in Agriculture-

(1) DUTY-FREE ACCESS- In order to enhance the opportunities for increased agricultural trade, the President shall establish additional duty-free access for countries designated as beneficiary sub-Saharan African countries under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) for agricultural products governed by tariff-rate quotas as of the date of the enactment of this Act. The expanded access for countries described in the preceding sentence shall be subject to a safeguard mechanism to prevent market disruption or the threat of market disruption.

(2) AMOUNT- The amount of additional duty-free access for agricultural products restrained by tariff rate quotas that is established pursuant to paragraph (1) shall be set at a level equal to actual imports of such products from beneficiary sub-Saharan African countries during the 12-month period ending September 30, 2005. If an agricultural product that is restrained by tariff rate quotas was not imported from any beneficiary sub-Saharan African country during the 12-month period ending September 30, 2005, the amount of additional duty-free access shall be set at a level equal to that portion of the applicable tariff rate quota that was reserved for `all other countries' for the quota period ending September 30, 2005.

(3) ADDITIONAL DUTY-FREE ACCESS- The President shall annually allocate such additional duty-free access among beneficiary sub-Saharan African countries--

(A) that were net surplus producers of the agricultural product in question during the preceding year; and

(B) on the basis of traditional market shares and such other criteria as the President shall consider appropriate, such as the level of economic development of the beneficiary countries, and that are consistent with United States obligations under Article XIII of GATT 1994, provided that reasonable access is allocated to new entrants.

(4) DEFINITION- As used in paragraph (3), the term `GATT 1994' means the General Agreement on Tariffs and Trade annexed to the Agreement Establishing the World Trade Organization entered into on April 15, 1994.

(b) Assistance to Agribusiness- The Administrator of the United States Agency for International Development is authorized to provide grants in each of the fiscal years 2007 through 2020 to governmental and nongovernmental entities that are located in countries designated as beneficiary sub-Saharan African countries under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) and can provide assistance, consultation, and equipment to agribusinesses, particularly small- and medium-sized, locally-owned enterprises, located in those countries in order to enable agricultural products of those businesses to meet the requirements under United States law when imported into the United States. Such funds may be used for grants to national plant protection organizations for the purpose of obtaining equipment to achieve the purposes of this subsection.

(c) Foreign Agriculture Service- The Secretary of Agriculture shall direct the Foreign Agriculture Service (FAS) to work with national African agricultural organizations to identify agricultural equipment and supply needs and implement programs that strengthen the ability of members of African agricultural organizations to fulfill these needs in conjunction with export credit guarantee programs.

TITLE IV--INCREASED INVESTMENT

SEC. 401. INCENTIVES THROUGH EXPORT-IMPORT BANK.

(a) Export-Import Bank of the United States- Section 2(b)(1)(B) of the Export-Import Bank Act of 1945 (12 U.S.C. 635(b)(1)(B) is amended--

(1) by inserting `(i)' after `(B)'; and

(2) by adding at the end the following:

`(ii) The Bank shall implement such regulations and procedures as may be appropriate to ensure that full consideration is given to the extent to which any loan, guarantee, insurance, extension of credit, or participation in an extension of credit is likely to have a positive effect on industries, including the textile and apparel industry and agricultural production, in countries designated as beneficiary sub-Saharan African countries under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)). To carry out the purposes of this clause, the Bank shall work with the Administrator of the United States Agency for International Development, the United States Trade Representative, and the Secretary of Commerce in identifying opportunities to use the resources of the Bank to encourage industrial and agricultural development in such beneficiary sub-Saharan African countries.'.

TITLE V--TAX AND INVESTMENT POLICY

SEC. 501. TAX REVENUES.

(a) Development of Domestic Tax Policies To Replace Lost Trade Tax Revenues-

(1) FINDINGS- Congress finds that--

(A) trade tax revenues remain important in many countries designated as beneficiary sub-Saharan African countries under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1));

(B) studies conducted by the International Monetary Fund show that the revenue losses a developing country experiences due to trade liberalization can be recovered by improving the domestic tax system in the affected country; and

(C) technical assistance provided by the United States to such beneficiary countries in fiscal or economic policy programs has focused on tax system enhancement or development that has been helpful in moving tax regimes away from trade-related tax revenue toward other tax revenue sources.

SEC. 502. TECHNICAL ASSISTANCE.

It is the sense of Congress that--

(1) the United States Agency for International Development, in cooperation with the Department of the Treasury, the International Monetary Fund, the International Bank for Reconstruction and Development, and the African Development Bank, should exercise the authorities it has to continue to provide technical assistance to countries designated as beneficiary sub-Saharan African countries under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) in tax policy, revenue administration, and anti-corruption efforts; and

(2) particular focus should be given to projects that assist such beneficiary countries in developing domestic policies and measures to replace lost trade tax revenues resulting from trade liberalization.

SEC. 503. TAXATION TREATIES.

In order to encourage investment in and certainty in the movement of capital, the Secretary of the Treasury shall seek negotiations with those countries designated as beneficiary sub-Saharan African countries under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) which the Secretary determines will benefit most from an income tax treaty with the United States.

SEC. 504. BILATERAL INVESTMENT TREATIES.

In order to encourage investment in countries designated as beneficiary sub-Saharan African countries under section 506A(a)(1) of the Trade Act of 1974 (19 U.S.C. 2466a(a)(1)) and reduce the uncertainties that arise from investing in developing countries, the Secretary of State shall seek to negotiate, with interested eligible sub-Saharan African countries, bilateral investment treaties. Any such agreement shall comply with section 2102(b)(3) of the Trade Act of 2002 (19 U.S.C. 3802(b)(3)).

TITLE VI--DEVELOPMENT AND TRADE CAPACITY BUILDING

SEC. 601. SUB-SAHARAN AFRICAN ECONOMIC GROWTH.

It is the sense of Congress that--

(1) sub-Saharan Africa faces critical challenges to economic growth and progress toward the United Nations Millennium Development Goals (as contained in United Nations General Assembly Resolution 55/2 (September 2000));

(2) the January 1, 2005, elimination of textile and apparel quotas previously maintained by members of the World Trade Organization (WTO) and competition from subsidized producers in countries such as the People's Republic of China continue to reverse the economic gains in sub-Saharan Africa that resulted from implementation of the African Growth and Opportunity Act (19 U.S.C. 3701 et seq.); and

(3) the United States should play a leadership role in expanding trade benefits to sub-Saharan Africa and providing a substantial increase in development and trade capacity assistance for sub-Saharan Africa.

SEC. 602. ASSISTANCE.

(a) Assistance- In order to give sub-Saharan Africa the necessary infrastructure and industry-building assistance needed for sustainable economic development, the President shall--

(1) provide targeted capacity building assistance through bilateral assistance and seek to establish a multilateral capacity-building fund or facility for Africa, potentially within the World Bank, in a gender-sensitive manner, aimed at--

(A) diversifying the economies of sub-Saharan Africa, in part by promoting the growth of sub-Saharan Africa's agricultural sector;

(B) increasing the production of value-added agriculture and food products;

(D) increasing food storage capacity;

(E) improving dissemination of market information for farmers and farmer groups;

(F) providing technical assistance to small- and medium-sized enterprises;

(G) providing technical assistance to local retail banks to provide loans to small- and medium-sized enterprises;

(H) facilitating the transfer of manufacturing and food production technology;

(I) raising labor standards and productivity; and

(J) promoting the rule of law, contract enforcement, and government transparency in the administration of trade and economic policy;

(2) provide targeted assistance to sub-Saharan Africa to ensure the formal recognition of land and property rights in urban and rural settings to increase access to capital and thereby promote economic growth and investment, including training and capacity building programs, as well as multilateral aid, aimed at local legal officials, policymakers, and nongovernmental organizations regarding property law, surveying, land registration, and land use planning;

(3) coordinate efforts under paragraph (2) with multinational organizations such as the World Bank, the African Development Bank, and the High Level Commission on Legal Empowerment of the Poor; and

(4) establish a Legal Aid Corps, comprised of legally-trained volunteers from the United States, to provide technical advice to countries of sub-Saharan Africa regarding property law, surveying, land registration, and land use planning.

(b) Authorization of Appropriations- There is authorized to be appropriated to the President to carry out this section such sums as may be necessary.

END