To extend certain trade benefits to countries of the greater Middle East.

June 12, 2003

Mr. SMITH of Washington (for himself and Mr. DOOLEY of California) introduced the following bill; which was referred to the Committee on Ways and Means

To extend certain trade benefits to countries of the greater Middle East.

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 `Middle East Trade and Engagement Act of 2003'.

SEC. 2. FINDINGS.

Congress finds that--

(1) it is in the mutual interest of the United States and the countries of the greater Middle East to promote stable and sustainable growth and development throughout the greater Middle East;

(2) Congress views democratization and economic progress in the countries of the greater Middle East as important elements of a policy to address terrorism and endemic instability;

(3) free trade relationships are not a substitute for, but a complement to, necessary political and economic reforms that lead to political liberalization and economic freedom;

(4) the countries of the greater Middle East have enormous economic potential and are of enduring political significance to the United States;

(5) despite their economic potential, the countries of the greater Middle East are experiencing deepening poverty, slow job creation, and a declining share of world trade and investment, while at the same time experiencing population growth rates among the highest in the world;

(6) these economic conditions are in part the result of barriers to trade and investment, a failure to engage fully in the global trading system, lack of participation in the World Trade Organization, and, often, a lack of economic diversification and over-reliance on the energy sector;

(7) offering the countries of the greater Middle East enhanced trade preferences will encourage higher levels of trade and direct investment and help bring those countries more fully into the global trading system;

(8) higher levels of trade and investment and greater involvement in the global trading system can lead to increased economic development, which can in turn lead to more jobs for people in the countries of the greater Middle East; and

(9) encouraging the reciprocal reduction of trade and investment barriers in the greater Middle East will enhance the benefits of trade and investment for all the countries in the greater Middle East as well as enhance commercial and political ties between the United States and the greater Middle East.

SEC. 3. STATEMENT OF POLICY.

Congress supports--

(1) encouraging increased trade and investment between the United States and the countries of the greater Middle East and among the countries of the greater Middle East;

(2) reducing tariff and nontariff barriers and other obstacles to trade between the United States and the countries of the greater Middle East and among the countries of the greater Middle East;

(3) strengthening and expanding the private sector and accelerating the rate of job creation in the countries of the greater Middle East;

(4) focusing on countries committed to the rule of law, economic reform, political liberalization, respect for human rights, and the eradication of poverty;

(5) facilitating the development of civil societies and political freedom in the countries of the greater Middle East;

(6) promoting sustainable development, and protecting and preserving the environment in a manner consistent with economic development; and

(7) encouraging the countries of the greater Middle East to diversify their economies, implement domestic economic reforms, open to trade, and adopt anticorruption measures, including through accession to the Organization for Economic Cooperation and Development (OECD) Convention on Combating

Bribery of Foreign Public Officials in International Business Transactions.

SEC. 4. DESIGNATION OF ELIGIBLE COUNTRIES.

(a) IN GENERAL- The President is authorized to designate any country listed in subsection (c) as a beneficiary country if the President determines that the country--

(1) has established, or is making continual progress toward establishing--

(A) a market-based economy that protects private property rights, incorporates an open rules-based trading system, and minimizes government interference in the economy through measures such as price controls, subsidies, and government ownership of economic assets;

(B) the rule of law and the right to due process, a fair trial, and equal protection under the law;

(C) political pluralism, a climate free of political intimidation and restrictions on peaceful political activity, and democratic elections that meet international standards of fairness, transparency, and participation;

(D) the elimination of barriers to United States trade and investment, including by--

(i) providing national treatment and measures to create an environment conducive to domestic and foreign investment;

(ii) protecting intellectual property; and

(iii) resolving bilateral trade and investment disputes;

(E) economic policies that reduce poverty, increase the availability of health care and educational opportunities, expand physical infrastructure, promote the development of private enterprise, and encourage the formation of capital markets through micro-credit or other programs;

(F) a system to combat corruption and bribery, such as signing and implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions;

(G) protection of internationally recognized worker rights, including the right of association, the right to organize and bargain collectively, a prohibition on the use of any form of forced or compulsory labor, a minimum age for the employment of children, and acceptable conditions of work; and

(H) policies that provide a high level of environmental protection;

(2) does not engage in activities that undermine United States national security or foreign policy interests, and supports a peaceful resolution of the Israeli-Palestinian conflict;

(3) is a signatory of the United Nations Declaration of Human Rights, does not engage in gross violations of internationally recognized human rights, and is making continuing and verifiable progress on the protection of internationally recognized human rights, including freedom of speech and press, freedom of peaceful assembly and association, and freedom of religion;

(4) is not listed by the United States Department of State as a state sponsor of terrorism and cooperates fully in international efforts to combat terrorism;

(5) does not participate in the primary, secondary, or tertiary economic boycott of Israel; and

(6) otherwise meets the eligibility criteria set forth in section 502(b)(2) of the Trade Act of 1974 (19 U.S.C. 2462(b)(2)), other than section 502(b)(2)(B).

(b) CONTINUING COMPLIANCE- If the President determines that a designated beneficiary country no longer meets the requirements described in subsection (a), the President shall terminate the designation of the country made pursuant to subsection (a) and inform Congress of the President's determination and the reasons therefor.

(c) COUNTRIES ELIGIBLE FOR DESIGNATION- In designating countries as beneficiary countries under this Act, the President shall consider only the following countries of the greater Middle East or their successor political entities:

(1) Afghanistan.

(2) Algeria.

(3) Armenia.

(4) Azerbaijan.

(5) Bahrain.

(6) Bangladesh.

(7) Egypt.

(8) Georgia.

(9) Iraq.

(10) Kuwait.

(11) Lebanon.

(12) Morocco.

(13) Oman.

(14) Pakistan.

(15) Qatar.

(16) Saudi Arabia.

(17) Tunisia.

(18) Turkey.

(19) United Arab Emirates.

(20) Yemen.

(d) THE PALESTINIAN AUTHORITY- The President is also authorized to designate the Palestinian Authority or its successor political entity as a beneficiary political entity which, if so designated, shall be accorded benefits under this Act as if it were a beneficiary country, if the President determines that the Palestinian Authority--

(1) satisfies the conditions of subsection (a) (1) and (2);

(2) does not participate in acts of terrorism, and takes active measures to combat terrorism;

(3) cooperates fully in international efforts to combat terrorism;

(4) does not engage in gross violations of internationally recognized human rights, and is making continuing and verifiable progress on the protection of internationally recognized human rights, including freedom of speech and the press, freedom of peaceful

assembly and association, and freedom of religion; and

(5) accepts Israel's right to exist in peace within secure borders.

SEC. 5. DESIGNATION OF ELIGIBLE ARTICLES.

(a) ELIGIBLE ARTICLES- Except as provided in sections 503(b)(2) and (3) of the Trade Act of 1974 (19 U.S.C. 2463(b)(2) and (3)), the President is authorized to designate articles as eligible for duty-free treatment from all beneficiary countries for purposes of this Act by Executive order or Presidential proclamation after receiving the advice of the International Trade Commission in accordance with subsection (c).

(b) RULES OF ORIGIN-

(1) GENERAL RULE- The duty-free treatment provided under this Act shall apply to any eligible article which is the growth, product, or manufacture of 1 or more beneficiary countries if--

(A) that article is imported directly from a beneficiary country into the customs territory of the United States; and

(B) the sum of--

(i) the cost or value of the materials produced in 1 or more beneficiary countries, plus

(ii) the direct cost of processing operations performed in such beneficiary country or countries,

is not less than 35 percent of the appraised value of such article at the time it is entered.

(2) ADDITIONAL COUNTRIES- For purposes of the rules of origin in paragraph (1) and the regulations prescribed pursuant to paragraph (4), the term `beneficiary country' includes Israel and Jordan.

(3) EXCLUSIONS- An article shall not be treated as the growth, product, or manufacture of a beneficiary country by virtue of having merely undergone--

(A) simple combining or packaging operations; or

(B) mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article.

(4) REGULATIONS- The Secretary of the Treasury, after consulting with the United States Trade Representative, shall prescribe such regulations as may be necessary to carry out this subsection, including, but not limited to, regulations providing that, in order to be eligible for duty-free treatment under this Act, an article--

(A) must be wholly the growth, product, or manufacture of 1 or more beneficiary countries, including Israel and Jordan; or

(B) must be a new or different article of commerce which has been grown, produced, or manufactured in 1 or more beneficiary countries, including Israel and Jordan.

(c) INTERNATIONAL TRADE COMMISSION ADVICE- Before designating an article as an eligible article under subsection (a), the President shall publish in the Federal Register and furnish the International Trade Commission with a list of articles that may be considered for designation as eligible articles for purposes of this Act. The President shall comply with the provisions of sections 131, 132, 133, and 134 of the Trade Act of 1974 as if an action under this Act were an action taken under section 123 of the Trade Act of 1974 to carry out a trade agreement entered into under section 123.

SEC. 6. UNITED STATES-MIDDLE EAST TRADE AND ECONOMIC COOPERATION FORUM.

(a) DECLARATION OF POLICY- The President shall convene annual high-level meetings among appropriate officials of the United States Government, officials of the governments of eligible beneficiary countries, and officials of the Governments of Israel and Jordan in order to foster close economic ties between the United States and the countries of the greater Middle East.

(b) ESTABLISHMENT- Not later than 12 months after the date of enactment of this Act, the President, after consulting with Congress and the governments concerned, shall establish a United States-Middle East Trade and Economic Cooperation Forum (in this section referred to as the `Forum').

(c) REQUIREMENTS- In creating the Forum, the President shall meet the following requirements:

(1) The President shall direct the Secretary of Commerce, the Secretary of the Treasury, the Secretary of State, and the United States Trade Representative to host the first annual meeting with their counterparts from the governments of designated beneficiary countries, and those countries and political entities listed in section 4 (c) and (d) that the President determines are taking substantial positive steps toward meeting the eligibility requirements in section 4. The purpose of the meeting shall be to discuss expanding trade and investment relations between the United States and the countries of the greater Middle East and the implementation of this Act including encouraging joint ventures between small and large businesses. The President shall also direct the Secretaries and the United States Trade Representative to invite to the meeting representatives from appropriate organizations and government officials from countries and political entities in the greater Middle East.

(2)(A) The President, in consultation with Congress, shall encourage United States nongovernmental organizations to host annual meetings with nongovernmental organizations from the countries and political entities of the greater Middle East in conjunction with the annual meetings of the Forum for the purpose of discussing the issues described in paragraph (1).

(B) The President, in consultation with Congress, shall encourage United States representatives of the private sector to host annual meetings with representatives of the private sector from the countries and political entities of the greater Middle East in conjunction with the annual meetings of the Forum for the purpose of discussing the issues described in paragraph (1).

(3) The President shall, to the extent practicable, meet with the heads of governments of designated beneficiary countries, and those countries and political entities listed in section 4 (c) and (d)

that the President determines are taking substantial positive steps toward meeting the eligibility requirements in section 4, not less than once every 2 years for the purpose of discussing the issues described in paragraph (1). The first such meeting should take place not later than 12 months after the date of enactment of this Act.

(d) DISSEMINATION OF INFORMATION BY USIS- In order to assist in carrying out the purposes of the Forum, the United States Information Service shall disseminate regularly, through multiple media, economic information in support of the free market economic reforms described in this Act.

SEC. 7. FREE TRADE AGREEMENTS WITH COUNTRIES OR POLITICAL ENTITIES IN THE GREATER MIDDLE EAST.

(a) DECLARATION OF POLICY- Congress declares that bilateral free trade agreements should be negotiated, where feasible, with interested countries or political entities in the greater Middle East, in order to serve as the catalyst for increasing trade between the United States and the greater Middle East and increasing private sector investment in the greater Middle East.

(b) ELIGIBILITY- Any country or political entity that desires to negotiate a bilateral free trade agreement with the United States shall be a member of the World Trade Organization or be working diligently toward membership and shall satisfy the criteria in section 4(a) of this Act.

(c) PLAN REQUIREMENT-

(1) IN GENERAL- The President, taking into account the willingness of the governments of the beneficiary countries to engage in negotiations to enter into free trade agreements, shall develop a plan for the purpose of negotiating and entering into 1 or more trade agreements with interested beneficiary countries.

(2) ELEMENTS OF PLAN- The plan shall include the following:

(A) The specific objectives of the United States with respect to negotiations described in paragraph (1) and a suggested timetable for achieving those objectives.

(B) The benefits to both the United States and the relevant beneficiary countries with respect to the applicable free trade agreement or agreements.

(C) A mutually agreed-upon timetable for the negotiations.

(D) Subject matter anticipated to be covered by the negotiations and United States laws, programs, and policies, as well as the laws of participating eligible countries of the greater Middle East and existing bilateral and multilateral and economic cooperation and trade agreements, that may be affected by the agreement or agreements.

(E) Procedures to ensure the following:

(i) Adequate consultation with Congress and the private sector during the negotiations.

(ii) Consultation with Congress regarding all matters relating to implementation of the agreement or agreements.

(iii) Approval by Congress of the agreement or agreements.

(iv) Adequate consultations with the relevant governments of the greater Middle East during the negotiation of the agreement or agreements.

(d) REPORTING REQUIREMENT- Not later than 12 months after the date of enactment of this Act, the President shall prepare and transmit to Congress a report containing the plan developed pursuant to subsection (c).

SEC. 8. REPORTING REQUIREMENT.

(a) IN GENERAL- The President shall monitor, review, and prepare a report annually on the progress of each country and political entity listed in section 4 (c) and (d) in meeting the requirements described in section 4(a) in order to determine the current or potential eligibility of each country or political entity to be designated as a beneficiary country under this Act. The report shall also include a comprehensive discussion of the implementation of this Act and an analysis of the trade and investment policy of the United States with respect to the countries and political entities listed in section 4 (c) and (d). To the extent that any subject matter required by the report is included in another report submitted by the President, the report required by this section may reference the other report.

(b) TIME FOR SUBMITTING REPORT- The President shall submit the report described in subsection (a) to Congress not later than 1 year after the date of enactment of this Act, and annually thereafter through 2011.

SEC. 9. PRESERVATION OF BENEFITS OF UNITED STATES-ISRAEL AND UNITED STATES-JORDAN FREE TRADE AGREEMENTS.

Nothing in this Act shall be deemed to nullify or impair any right or benefit accorded either to Israel or to Jordan under the existing trade agreements with the United States.

SEC. 10. TERMINATION OF PREFERENTIAL TREATMENT.

No duty-free treatment or other preferential treatment extended to beneficiary countries under this Act shall remain in effect after December 31, 2011.

END