[DOCID: f:hr529.110]
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110th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 110-529
======================================================================
ANDEAN TRADE PREFERENCE EXTENSION ACT OF 2008
_______
February 25, 2008.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Rangel, from the Committee on Ways and Means, submitted the
following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 5264]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 5264) to extend certain trade preference programs,
and for other purposes, having considered the same, report
favorably thereon with amendments and recommend that the bill
as amended do pass.
The amendments are as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Andean Trade Preference Extension Act
of 2008''.
SEC. 2. ANDEAN TRADE PREFERENCE ACT.
(a) Extension.--Section 208 of the Andean Trade Preference Act (19
U.S.C. 3206) is amended by striking ``February 29, 2008'' and inserting
``December 31, 2008''.
(b) Treatment of Certain Apparel Articles.--Section 204(b)(3) of the
Andean Trade Preference Act (19 U.S.C. 3203(b)(3)(B)) is amended--
(1) in subparagraph (B)--
(A) in clause (iii)--
(i) in subclause (II), by striking ``5
succeeding 1-year periods'' and inserting ``6
succeeding 1-year periods''; and
(ii) in subclause (III)(bb), by inserting
``and for the succeeding 1-year period,'' after
``for the 1-year period beginning October 1,
2007,''; and
(B) in clause (v)(II), by striking ``4 succeeding 1-
year periods'' and inserting ``5 succeeding 1-year
periods''; and
(2) in subparagraph (E)(ii)(II), by striking ``December 31,
2006'' and inserting ``December 31, 2008''.
Amend the title so as to read:
A bill to extend the Andean Trade Preference Act.
I. INTRODUCTION
A. Purpose and Summary
H.R. 5264, the ``Andean Trade Preference Extension Act of
2008,'' would extend the Andean Trade Preference Act
(``ATPA''), as extended and expanded by the Andean Trade
Promotion and Drug Eradication Act (``ATPDEA''), through
December 31, 2008. These programs are currently due to expire
on February 28, 2008.
B. Background
The original Andean Trade Preference Act (P. L. 102-182),
passed in 1991, authorized the President to grant preferential
trade benefits to Bolivia, Colombia, Ecuador and Peru in the
form of duty-free treatment of eligible products. The purpose
of the program was to provide the Andean countries with legal
economic alternatives to the cultivation and production of
illicit narcotics. The program extended duty-free treatment to
most products not considered import sensitive in the United
States, for a period of 10 years.
The ATPA program was expanded and renewed by the Andean
Trade Promotion and Drug Eradication Act (P. L. 107-210) on
August 6, 2002. The ATPDEA expanded trade preferences for the
Andean countries to include approximately 700 products that
were previously excluded under ATPA, including: certain
textiles, apparel, footwear, articles of leather and tuna in
airtight containers. The 2002 legislation also provided that
ATPA/ATPDEA benefits would apply until December 31, 2006. ATPA/
ATPDEA have subsequently been extended twice, and are currently
scheduled to expire on February 29, 2008.
According to the U.S. International Trade Commission
(``ITC''), trade with Andean countries has grown significantly
under both ATPA and ATPDEA. U.S. imports from the region grew
from $4.9 billion in 1991 to $22.5 billion in 2006. U.S.
exports to the region have also increased during that time
frame, tripling from 1991 to 2006. According to some estimates,
as many as 2 million jobs may be dependent on ATPA in the
Andean region. Secretary Rice has noted that ``there is a
strong possibility that thousands of [these] jobs will be lost
to Asia, possibly China,'' if the programs are not renewed.
At the same time, both Bolivia and Ecuador have taken steps
that raise important concerns about their treatment of foreign
investors. For example, Bolivia passed a new mining law that
would create an additional surtax which could result in 90% of
company profits going to the Bolivian Government. The measure
has negatively impacted at least one U.S.-based firm, Apex
Silver Mines Limited, which has significant investments in
Bolivia. Similarly, the government of Ecuador has taken actions
against a number of U.S.-owned firms (including Occidental
Petroleum, City Oriente, and Chevron Texaco). The current
administrations of Bolivia and Ecuador have also engaged in
actions and rhetoric that undermine the strong relationship the
United States has maintained--and would like to continue to
maintain--with both countries. The Committee notes that, at
this time, neither country has been found to be in violation of
ATPA/ATPDEA's eligibility criteria. Nonetheless, the Committee
urges the Administration--in particular, the U.S. Trade
Representative, who is responsible for monitoring these
important criteria--to ensure that each ATPA/ATPDEA beneficiary
country is complying fully with each of the programs' criteria.
C. Legislative History
H.R. 5264 was introduced on February 7, 2008, by Chairman
Rangel. The bill was referred to the Committee on Ways and
Means. The bill, as introduced, would have extended the three
preference programs scheduled to expire in 2008--ATPA/ATPDEA,
the Caribbean Basin trade preference program (``CBTPA''), and
the Generalized System of Preferences (``GSP'')--until
September 30, 2010. The introduced bill would also have made
two changes to the textile provisions of the African Growth and
Opportunity Act (AGOA) and amended the operation of certain
``competitive need limitation'' (``CNL'') provisions under GSP.
On February 14, 2008, the Committee on Ways and Means met
to consider H.R. 5264. At that time, Chairman Rangel offered an
amendment in the nature of a substitute, which was adopted by
voice vote. The amendment was limited to a 10-month extension
of ATPA/ATPDEA; none of the provisions on CBTPA, GSP, or AGOA
was retained. No other amendments were offered by any Member of
the Committee.
II. SECTION-BY-SECTION SUMMARY
SECTION 1: SHORT TITLE
Present law
No provision.
Explanation of provision
Section 1 of H.R. 5264 provides that the Act may be cited
as the ``Andean Trade Preference Extension Act of 2008''.
Reason for change
This section names the legislation for identification
purposes.
SECTION 2: ANDEAN TRADE PREFERENCE ACT
Present law
The provisions of ATPA/ATPDEA currently expire on February
29, 2010, with the exception of the bilateral emergency action
provisions of Section 204(b)(3)(E)(ii)(Il) (19 U.S.C.
3203(b)(3)(B) (E)(ii)(II), which expired on December 31, 2006.
Explanation of provision
Section 2(a) extends the ATPA, as amended and expanded by
the ATPDEA, until December 31, 2008. Section 2(b) makes
necessary conforming changes to the textile provisions of ATPA/
ATPDEA and to the bilateral emergency action provisions of
Section 204(b)(3)(E)(ii)(II) (19 U.S.C. 3203(b)(3)(B)
(E)(ii)(II).
Reason for change
These sections of H.R. 5264 are necessary to extend the
provisions of the ATPA/ATPDEA until December 31, 2008.
III. VOTES 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. 5264.
MOTION TO REPORT THE BILL
The bill, H.R. 5364, was ordered favorably reported by
voice vote (with a quorum being present).
IV. BUDGET EFFECTS
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of the 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.
5264, as reported: The Committee agrees with the estimate
prepared by the Congressional Budget Office (``CBO'') which is
included below.
B. Statement Regarding New Budget Authority and Tax Expenditures
In compliance with subdivision 3(c)(2) of rule XIII of the
Rules of the House of Representatives, the Committee states
that the provisions of H.R. 5264 would reduce customs duty
receipts due to lower tariffs imposed on goods from the Andean
countries (Bolivia, Colombia, Ecuador, and Peru).
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 CBO, the following report prepared by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, February 22, 2008.
Hon.Charles B. Rangel,
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. 5264, a bill to
extend the Andean Trade Preference Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Zachary
Epstein.
Sincerely,
Robert A. Sunshine
(For Peter R. Orszag, Director).
Enclosure.
H.R. 5264--A bill to extend the Andean Trade Preference Act
H.R. 5264 would extend the provisions of the Andean Trade
Preference Act (ATPA). The Congressional Budget Office (CBO)
estimates that the bill would reduce revenues from customs
duties by $82 million in 2008 and $37 million in 2009, totaling
$119 million over the 2008-2009 period.
Under the bill, the ATPA trade preferences, which are
scheduled to expire on February 29, 2008, would be extended for
10 months, through December 31, 2008. First enacted in 1991 and
later expanded in 2002, the ATPA provides reduced-duty or duty-
free access to certain U.S. imports from Bolivia, Colombia,
Ecuador, and Peru. (A free trade agreement with Peru, which is
currently being implemented, would eventually supersede that
country's ATPA preferences). According to the United States
Trade Representative, about 60 percent of total U.S. imports
from the beneficiary countries were entered under the ATPA
program, and those imports consisted primarily of petroleum-
based products and apparel.
CBO has determined that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
The CBO contact for this estimate is Zachary Epstein. This
estimate was approved by G. Thomas Woodward, Assistant Director
for Tax 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)(I) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee, based on past public hearings and testimony and
information from the Administration, concluded that it is
appropriate and timely to consider H.R. 5264 as reported.
B. Summary of Findings and Recommendations of the Government Reform and
Oversight Committee
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 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.'')
D. Information Relation to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Act of 1995 (P. L. 104-4) (``UMRA'').
The Committee has determined that the non-tax provisions of the
bill do impose federal mandates on the private sector by
extending the customs user fees. The aggregate costs of those
mandates the annual threshold established in UMRA for private-
sector mandates ($131 million in 2007, adjusted annually for
inflation) in 2015.
The Committee has determined that the bill does not impose
a federal intergovernmental mandate on State, local, or tribal
governments.
E. Limited Tax Benefits
Pursuant to clause 9 of rule XXI of the Rules of the House
of Representatives, the Ways and Means Committee has determined
that the bill as reported contains no congressional earmarks,
limited tax benefits, or limited tariff benefits within the
meaning of that Rule.
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):
ANDEAN TRADE PREFERENCE ACT
TITLE II--TRADE PREFERENCE FOR THE ANDEAN REGION
* * * * * * *
SEC. 204. ELIGIBLE ARTICLES.
(a) * * *
(b) Exceptions and Special Rules.--
(1) * * *
* * * * * * *
(3) Apparel articles and certain textile articles.--
(A) * * *
(B) Covered articles.--The apparel articles
referred to in subparagraph (A) are the
following:
(i) * * *
* * * * * * *
(iii) Apparel articles assembled in 1
or more atpdea beneficiary countries
from regional fabrics or regional
components.--(I) * * *
(II) The preferential treatment
referred to in subclause (I) shall be
extended in the 1-year period beginning
October 1, 2002, and in each of the [5
succeeding 1-year periods] 6 succeeding
1-year periods, to imports of apparel
articles 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.
(III) For purposes of subclause (II),
the term ``applicable percentage''
means--
(aa) * * *
(bb) for the 1-year period
beginning October 1, 2007, and
for the succeeding 1-year
period, the percentage
determined under item (aa) for
the 1-year period beginning
October 1, 2006.
* * * * * * *
(v) Certain other apparel articles.--
(I) * * *
(II) Limitation.--During the
1-year period beginning on
October 1, 2003, and during
each of the [4 succeeding 1-
year periods] 5 succeeding 1-
year periods, apparel articles
described in subclause (I) of a
producer or an entity
controlling production shall be
eligible for preferential
treatment under this paragraph
only if the aggregate cost of
fabrics (exclusive of all
findings and trimmings) formed
in the United States that are
used in the production of all
such articles of that producer
or entity that are entered and
eligible under this clause
during the preceding 1-year
period is at least 75 percent
of the aggregate declared
customs value of the fabric
(exclusive of all findings and
trimmings) contained in all
such articles of that producer
or entity that are entered and
eligible under this clause
during the preceding 1-year
period.
* * * * * * *
(E) Bilateral emergency actions.--
(i) * * *
(ii) Rules relating to bilateral
emergency action.--For purposes of
applying bilateral emergency action
under this subparagraph--
(I) * * *
(II) the term ``transition
period'' in section 4 of the
Annex shall mean the period
ending [December 31, 2006]
December 31, 2008; and
* * * * * * *
SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.
No duty-free treatment or other preferential treatment
extended to beneficiary countries under this title shall remain
in effect after [February 29, 2008] December 31, 2008.
VII. VIEWS
ADDITIONAL VIEWS ON H.R. 5264, THE ``Trade Preference Extension Act of
2008''
I. INTRODUCTION
We support the Chairman's mark to H.R. 5264, which would
extend by ten months the Andean Trade Preferences and Drug
Eradication Act (ATPA). It will provide a bridge for Peru until
the U.S.-Peru Trade Promotion Agreement enters into force. It
will avoid disruption in Colombia while Congress works on
implementing the U.S.-Colombia Trade Promotion Agreement this
year. It will provide benefits to Ecuador and Bolivia to
maintain stability in the region, but we will be watching
carefully to make sure that the climate for U.S. investors in
these two countries drastically improves--extending preferences
for these two countries should not be seen as a validation of
the very disturbing trade and investment practices there. We
insist on improvement.
II. EXTENSION OF THE ANDEAN TRADE PREFERENCES AND DRUG ERADICATION ACT
We note that if a Member of Congress is willing to open the
U.S. market to imports, then it makes sense for that Member to
support two-way trade that would also benefit U.S. exporters
through the passage of reciprocal FTAs. A reciprocal FTA would
eliminate all uncertainty that could surround the future
expiration of the preferences and would level the playing field
for U.S. exporters, contributing to an improvement in the U.S.
trade balance. For example, when the United States went from
providing one-way access to imports from Central American
countries to a bilateral FTA in the CAFTA, our $1.3 billion
trade deficit with those countries has changed to a trade
surplus of $3.7 billion.
Congress has the opportunity to replicate that CAFTA
success by passing the U.S.-Colombia Trade Promotion Agreement.
The Democrat Leadership's refusal to act so far on this
Agreement means that the U.S.-Colombia trade relationship is
one-sided to Colombia's benefit. More than 99 percent of total
Colombian exports to the United States are already duty-free
(measured by tariff line) because of the preferences. By
contrast only 2.7 percent of U.S. exports to Colombia are
currently duty-free. More than 89 percent of Colombian
agriculture exports to the United States are already duty-free
(measured by tariff line) because of the preferences. No U.S.
agriculture exports to Colombia receive duty-free treatment
today. The average U.S. tariff paid by imports from Colombia in
2006 was only 0.1 percent because of the preferential access to
the U.S. market. In contrast, the average tariff paid by U.S.
exports to Colombia was 11.2 percent. The U.S.-Colombia Trade
Promotion Agreement will reduce the average tariff faced by
U.S. exporters by more than 68 percent, from an 11.2 percent
average duty to 3.6 percent immediately upon implementation of
the Agreement.
In addition, not acting on the U.S.-Colombia Trade
Promotion Agreement threatens to worsen further the
competitiveness of U.S. exporters in the Colombian market.
Canada and the EU are negotiating FTAs with Colombia right now
and expect to finish shortly. These competitors export the same
products to Colombia as the United States, such as wheat,
barley, advanced electronics, aircraft, and chemicals. If
Congress passes the U.S.-Colombia FTA now, we could give US
companies a competitive head start against Canada and the EU.
Any delay in passing the FTA will put U.S. companies at a
disadvantage against their top competitors.
Many Members of Congress have expressed concern about the
level of violence against labor union members in Colombia. We
believe that the Uribe Administration has made tremendous
progress in reducing the level of violence in Colombia and has
specifically targeted violence against labor union members.
According to the U.S. Department of State: since 2000, the
number of homicides declined by 39 percent, kidnappings
declined by 83 percent, and terror attacks declined by 61
percent. In 2006 the murder rate was the lowest in 15 years and
is now lower than the murder rates in Washington, D.C. and
Baltimore, MD. The number of homicides involving labor union
members has declined from 205 in 2001 to 20 in 2007. We note
that Amnesty International has found that some of the murders
of labor union members were at the hands of the guerilla
groups, e.g. FARC.
These improvements are the direct result of many important
policies implemented by the Colombian Government which has
established a dedicated program with over 100 investigators and
prosecutors to deal exclusively with cases of violence against
labor leaders. Funding for the Prosecutor General's office has
increased by 50 percent since 2002, and Colombia is spending
$38 million to provide protection for labor union members.
Carlos Rodriguez, President of the United Workers Confederation
stated, ``Never, in the history of Colombia, have we achieved
something so important.''
Additionally, Colombia amended its Constitution to make
significant reforms to its judicial system. These reforms are
accelerating the investigation and trial process considerably.
The Colombian Government has agreed to the creation of a
permanent ILO representative in Colombia to monitor
developments and provide advice. The Colombian Government has
extended its agreement with the UN to have an office of the
High Commissioner for Human Rights in Colombia to observe and
advise on human rights issues. The UN High Commissioner noted
the important contributions made by the Constitutional Court,
Procurator General's Office, and the Ombudsman's Office in
protecting human rights in Colombia. The UN High Commissioner
also cited a greater commitment on the part of the Colombian
authorities in seeking to achieve the objectives of the UN's
recommendations.
Many Colombian labor union leaders, representing 79,000
Colombian workers in the productive sector, recognized the
progress and continued effort that the Colombian Government has
made in reducing labor violence and wholeheartedly support the
FTA.
III. THE NEED FOR ADDITIONAL CONGRESSIONAL ACTION ON OTHER PREFERENCE
PROGRAMS
H.R. 5264 as originally introduced made a number of changes
to other U.S. trade preference programs, specifically the
Generalized System of Preferences (GSP), the Caribbean Basin
Trade Partnership Act (CBTPA/CBI), and the African Growth and
Opportunity Act (AGOA). We support the use of trade preference
programs to encourage economic development and engagement in
the international economy in developing countries, especially
the least-developed countries such as those that benefit from
the AGOA program. However, the inclusion of these changes, a
number of which are controversial, would unnecessarily
complicate and delay the extension of the ATPA, which is the
only program that is about to expire.
Jim McCrery.
Wally Herger.
Dave Camp.
Jim Ramstad.
Sam Johnson.
Phil English.
Jerry Weller.
Ron Lewis.
Kevin Brady.
Paul Ryan.
Eric Cantor.
Devin Nunes.
Jon Porter.
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