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89-010
1st Session
107-59
UNITED STATES-JORDAN FREE TRADE AREA IMPLEMENTATION ACT
| September 4, 2001- Ordered to be printed | |
| Mr. BAUCUS, from the Committee on Finance, submittedthefollowing | |
| REPORT | |
| [To accompany S. 643] | |
| [Including cost estimate of the Congressional Budget Office] |
The Committee on Finance, having considered legislation (S. 643) to implement the agreement establishing a United States-Jordan free trade area, reports favorably thereon with an amendment and refers the bill as amended to the full Senate with a recommendation that the bill do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert the following:
6302.29, 6302.52, 6302.53, 6302.59, 6302.92, 6302.93, 6302.99, 6303.92, 6303.99, 6304.19, 6304.93, 6304.99, 9404.90.85, or 9404.90.95 of the HTS, except for a good classified under any such subheading as of cotton or of wool or consisting of fiber blends containing 16 percent or more by weight of cotton, shall be considered to meet the requirements of paragraph (1)(A) of subsection (a) if the fabric in the good is both dyed and printed in Jordan, and such dyeing and printing is accompanied by 2 or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing.
States in increased quantities as a result of the reduction or elimination of a duty provided for under the Agreement if the reduction or elimination is a cause that contributes significantly to the increase in imports. Such cause need not be equal to or greater than any other cause.
S. 643 implements the Agreement Between the United States of America and the Hashemite Kingdom of Jordan on the Establishment of a Free Trade Area (`the Agreement') in order to strengthen and develop economic relations between the United States and Jordan for their mutual benefit. The bill establishes free trade between the two countries through the removal of trade barriers.
On October 24, 2000, President Clinton and His Majesty King Abdullah II bin Al-Hussein signed an agreement to establish a free trade area between the United States and Jordan. On January 6, 2001, President Clinton transmitted the Agreement to the 107th Congress for approval, together with the necessary implementing legislation.
S. 643 approves the Agreement and makes changes to U.S. law necessary to implement the Agreement. The bill authorizes the President to proclaim reductions, and eventual elimination, of tariffs on goods imported from Jordan according to a schedule provided for in the Agreement. The bill also establishes rules of origin for determining whether goods imported from Jordan are, in fact, Jordanian goods subject to tariff treatment under the Agreement.
Additionally, consistent with the Agreement, the bill establishes a safeguard mechanism to enable the extension of relief to American industries seriously injured (or threatened with serious injury) due to increased imports resulting from tariff reductions and elimination. The bill also amends the general safeguards provision in U.S. law (chapter 1 of title II of the Trade Act of 1974), to include special rules governing the treatment of products from Jordan in any measure imposed under that provision.
The bill contains a provision to facilitate the entry of Jordanian nationals into the United States as non-immigrants. Finally, the bill authorizes certain expenditures by the U.S. Government to support operation of the Agreement's dispute settlement mechanism.
On June 6, 2000, President Clinton and King Abdullah II announced their intention to launch negotiation of an agreement to establish a free trade area between the United States and Jordan. Negotiations concluded, and the two leaders signed an agreement on October 24, 2000. President Clinton submitted the Agreement to the 107th Congress on January 6, 2001.
On March 28, 2001, Senator Max Baucus introduced legislation in the Senate (S. 643) to implement the Agreement. Congressman Sander M. Levin introduced identical legislation in the House (H.R. 1484) on April 4, 2001. Congressman William M. Thomas introduced similar legislation (H.R. 2603) on July 26, 2001.
On March 20, 2001, the Committee on Finance held a public hearing on the Agreement. Witnesses appearing before the Committee were Charlene Barshefsky (former U.S. Trade Representative); Samuel R. Berger (former National Security Advisor); Michael B. Smith (former Deputy U.S. Trade Representative); Timothy E. Deal (Senior Vice President, U.S. Council for International Business); Thomas J. Donohue (President and CEO, U.S. Chamber of Commerce); Professor Jagdish Bhagwati (Arthur Lehman Professor of Economics and Political Science, Columbia University, and Andrew Meyer Senior Fellow in International Economics, Council on Foreign Relations); Roger Schlickeisen (President, Defenders of Wildlife); and John Sweeney (President, AFL-CIO). Other persons submitted written testimony for the record.
The principal negotiator of the Agreement, former U.S. Trade Representative Charlene Barshefsky, expressed strong support for early enactment of the Agreement `as both a critical element of America's Middle East policy, and a market opening free trade agreement.' Barshefsky noted that, in negotiating the Agreement, the Clinton Administration had three specific strategic goals: first, to encourage regional economic integration in the Middle East generally; second, to support Jordan's economic reform program in particular; and third, to develop a comprehensive and innovative free trade agreement, which would set a new standard for rigorous trade liberalization and help bolster bipartisan consensus for trade policy in the United States.
On April 5, 2001, Finance Committee members met in executive session with King Abdullah II in Washington, DC to discuss the Agreement and congressional support for its implementation.
The Jordanian Parliament ratified the Agreement on May 9, 2001.
In a markup begun on July 17, 2001, the Finance Committee debated the bill implementing the Agreement and approved an amendment in the nature of a substitute. The amendment made certain technical corrections to the bill as introduced.
Separate from the Agreement itself, on July 23, 2001, the United States and Jordan exchanged letters, signed by U.S. Trade Representative Robert Zoellick and Jordanian Ambassador Marwan Muasher, respectively, clarifying each Government's understanding of the implementation of the Agreement's dispute settlement procedures. The letters state the view of both Governments that few, if any, differences will arise over interpretation or application of the Agreement. In the event that differences do arise under the Agreement, the letters state that each Government will make every effort to resolve them without resort to the dispute settlement procedures in the Agreement. The Governments also state their intention not to apply the Agreement's dispute settlement enforcement procedures in a manner that results in blocking trade. The letters further state that bilateral consultations and other procedures, particularly alternative mechanisms, would be appropriate measures to secure compliance without resort to traditional trade sanctions.
The markup of S. 643 continued on July 26, 2001, at which time the Finance Committee reported S. 643 to the full Senate without further amendment.
The United States has consistently had a merchandise trade surplus with Jordan, its 101st largest trading partner. In 2000, total bilateral trade between the United States and Jordan was valued at $386 million, with U.S. exports to Jordan totaling $312.7 million, and imports from Jordan totaling $73.2 million.
Principal U.S. exports to Jordan include wheat and grains, aircraft and helicopter parts, tobacco, and radio transceivers. Exports of durum wheat, other wheat and meslin, and barley--which comprise about 20 percent of total U.S. exports to Jordan--already enter Jordan duty-free. Tariff rates for other commodities vary from as low as 0-10 percent for aircraft turbine engines, to as high as 70 percent for tobacco.
Principal Jordanian exports to the United States include trunks and suitcases, women's and girl's clothing, men's and boy's suits, sweaters and pullovers, and jewelry. In 2000, approximately 40 percent (or $30 million) of all Jordanian exports to the United States entered the United States duty-free, because they were products of Qualifying Industrial Zones (`QIZs').
QIZs are areas along the Israel-Jordan and Israel-Egypt borders that are specially designated by the U.S. Trade Representative (`USTR'). Pursuant to the United States-Israel Free Trade Area Implementation Act of 1985 (19 U.S.C. Sec. 2112 note) as amended by Public Law No. 104-234, products originating in a QIZ receive duty-free treatment upon entry into the United States. The first QIZ in Jordan was opened in 1998. Since then, USTR has designated nine additional QIZs along the Israel-Jordan border.
In addition to imports into the United States originating from QIZs in Jordan, another 14 percent (or $10 million) of imports into the United States from Jordan in 2000 received duty-free treatment under the U.S. Generalized System of Preferences.
U.S. TOTAL EXPORTS TO JORDAN 1996-2000
[In actual dollars]
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1996 1997 1998 1999 2000
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100110--Durum wheat 3,850 444,611 3,683,790 0 44,469,720
880330--Parts of airplanes or helicopters 11,955,736 24,641,479 51,582,815 25,121,207 16,104,902
100190--Wheat (other than durum wheat) and meslin 51,871,145 56,674,184 32,536,312 26,803,267 14,154,073
240310--Smoking tobacco 2,674,625 4,945,736 11,312,858 9,308,040 14,077,933
470321--Chemical woodpulp 6,234,344 3,774,668 6,215,596 5,195,956 10,770,393
890590--Floating cranes, floating docks, fire floats, etc. 0 0 0 0 9,137,800
852520--TV and Radio Receivers 1,631,983 4,121,849 6,613,537 1,320,473 8,781,037
841112--Turbojets (thrust exceeding 25 KN) 0 0 0 0 7,098,800
988000--Low value export shipments (non-Canadian) 6,702,389 7,425,816 7,098,136 5,314,233 5,720,249
100300--Barley 7,510,327 6,825,000 0 0 5,150,000
Other 256,224,017 293,493,316 234,043,085 202,577,507 177,278,661
Total 344,808,416 402,346,659 353,086,129 275,640,683 312,743,568
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U.S. TOTAL IMPORTS FROM JORDAN 1996-2000
[In actual dollars]
---------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000
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420212--Trunks, suitcases and vanity cases 0 0 0 194,670 8,510,447
620462--Women's and girls' cotton trousers and shorts 621,308 516,151 0 97,641 6,651,841
620463--Women's and girls' trousers and shorts made from synthetic fibers 68,538 76,916 317,380 0 5,230,343
711319--Jewelry (not made from silver) 2,494,053 2,321,864 2,628,522 3,594,888 4,953,719
620311--Men's or boys' suits of wool (or other fine animal hair) 48,036 297,368 82,329 466,952 4,544,712
611020--Cotton sweaters and pullovers 3,127,162 739,214 594,509 178,137 4,407,223
620342--Men's or boys' trousers and shorts of cotton 412,016 2,140 191,472 493,108 4,388,537
711311--Silver jewelry 0 0 23,294 842,697 4,316,705
611030--Knitted or crocheted sweaters and pullovers of manmade fibers 45,108 0 0 2,305 4,107,626
980100--Imports of articles exported and returned 6,335,233 13,605,588 2,953,908 18,520,997 4,011,492
Other 11,953,617 8,074,936 9,598,964 6,603,826 21,718,925
Total 25,105,071 25,634,177 16,390,378 30,995,221 72,841,570
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The Agreement provides for a 10-year transitional period, during which duties on almost all goods (with the exception of tobacco and tobacco-related products) will be phased out, leading to duty-free trade in goods between the United States and Jordan. Duties on many goods will be phased out well before the end of the 10-year transitional period. The Agreement also provides for a liberalization of bilateral trade in services. It addresses specific market-opening commitments in various sectors, including (but not limited to) communications, construction and engineering, distribution, education, environmental services, finance, healthcare, tourism, recreation, and transportation.
A study by the U.S. International Trade Commission (Economic Impact on the United States of a U.S.-Jordan Free Trade Agreement, Inv. No. 332-418) concluded that a U.S.-Jordan free trade agreement `would have no measurable impacts on total U.S. exports, total U.S. imports, U.S. production, or U.S. employment.' As noted above, much of the trade between the United States and Jordan already is duty-free. The International Trade Commission study did conclude that a U.S.-Jordan free trade agreement could lead to a modest increase in bilateral trade. In particular, exports of Jordanian textiles and apparel to the United States, as well as U.S. exports to Jordan of commodities that face relatively high tariffs today, could expand under an agreement.
The Agreement comprises an integrated set of reciprocal obligations that will eliminate barriers to trade between Jordan and the United States in a manner that is consistent with Article XXIV of the General Agreement on Tariffs and Trade 1994 (`GATT 1994') and Article V of the General Agreement on Trade in Services (`GATS').
Trade in Goods.--The principal feature of the Agreement is the mutual elimination of tariffs within 10 years. Various provisions also limit non-tariff trade barriers and distortions of trade.
For purposes of tariff elimination, the Agreement divides products into `staging' categories. Where current tariffs are less than 5 percent, the tariffs will be eliminated in 2 years. In general, tariffs between 5 and 10 percent will be eliminated in 4 years. Tariffs between 10 and 20 percent will be eliminated in 5 years. Tariffs in excess of 20 percent will be eliminated in 10 years.
Some of the Jordanian products that will receive duty-free treatment 2 years after the Agreement comes into force are jewelry, sea bath salts, certified handloomed fabric, and a variety of chemicals and fruit. Some Jordanian exports that will be subject to tariff reductions but will not enter the United States duty-free until the end of the 10-year phase-in period are footwear, ceramics, dairy, sugar, and certain textiles and apparel currently subject to tariffs in excess of 20 percent.
Some of the U.S. products that will receive duty-free treatment 2 years after the
Agreement comes into force are certain chemicals (including plastics), machinery and parts, paper products, and agricultural items such as seed and rice. Some U.S. exports that will be subject to tariff reductions but will not enter Jordan duty-free until the end of the 10-year phase-in period are fruit juice, fruit, wood and paper, scientific equipment, and textiles.
Trade in Services- The Agreement commits the countries to provide increased market access in particular service sectors identified in schedules attached to the Agreement. For Jordan, these sectors include (but are not limited to): legal services, accounting and auditing, architectural and engineering services, computer and related services, research and development, real estate, telecommunications, and financial services. The U.S. schedule contains a similarly broad array of service sectors. The schedules set forth certain terms, limitations and conditions specific to particular sectors. Subject to these terms, limitations and conditions, each country agrees to accord services and service suppliers of the other country treatment no less favorable than it accords to its own like services and service suppliers.
Intellectual Property Rights- The Agreement contains obligations in the area of intellectual property that supplement the countries' obligations under the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property. For example, the Agreement requires the countries to give effect to provisions contained in other conventions on intellectual property, such as the World Intellectual Property Organization (`WIPO') Copyright Treaty (1996) and the WIPO Performances and Phonograms Treaty (1996). The Agreement contains a general obligation that each country accord to nationals of the other country treatment no less favorable than it accords to its own nationals with regard to the protection and enjoyment of all intellectual property rights. It also contains general obligations with respect to enforcement. Thus, for example, with respect to copyright and trademark piracy, both countries are required to provide for the initiation of criminal and seizure actions by its national authorities without advance notice to the alleged pirates. The Agreement then specifies particular obligations in the areas of trademarks and geographical indications, copyright and related rights, and patents. Most obligations concerning intellectual property rights will take effect three years after the Agreement enters into force.
Concurrent with conclusion of the Agreement, the United States and Jordan entered into a Memorandum of Understanding on Issues Related to the Protection of Intellectual Property Rights. That document identifies certain changes to Jordanian law that will be made pursuant to the intellectual property provisions in the Agreement itself.
Environment- In article 5, the Agreement states that the United States and Jordan `shall strive to ensure' that they do not `waive or otherwise derogate from, or offer to waive or otherwise derogate from,' their respective environmental laws `as an encouragement for trade' with each other. Article 5 also states that each country `shall strive to ensure' that its laws provide for `high levels of environmental protection' and `shall strive to continue to improve those laws.'
Article 5.3 of the Agreement states that each country shall not fail to effectively enforce its own environmental laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the countries. This provision is not implicated when either country undertakes a course of action or inaction which reflects a reasonable exercise of discretion or results from a bona fide decision regarding the allocation of resources.
Additionally, in a joint statement annexed to the Agreement, the United States and Jordan agreed to establish a Joint Forum on Environmental Technical Cooperation. The Joint Forum will meet on a regular basis and has a mandate to develop technical cooperation initiatives for environmental protection in Jordan.
Labor- Article 6.4 of the Agreement states that each country shall not fail to effectively enforce its own labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the countries. This provision is not implicated when either country undertakes a course of action or inaction which reflects a reasonable exercise of discretion or results from a bona fide decision regarding the allocation of resources. Each country also reaffirms its obligations as a member of the International Labor Organization (`ILO') and its commitments under the ILO Declaration of Fundamental Principles and Rights at Work and its Follow-up. The countries agree to `strive to ensure' that principles defined by the ILO as `core' are `recognized and protected by domestic law.' The five core principles, as set forth in article 6.6 of the Agreement, are: (a) right of association; (b) right to organize and bargain collectively; (c) prohibition on the use of any form of forced or compulsory labor; (d) minimum age for the employment of children; and (e) acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.
In article 6.2, the Agreement states that the United States and Jordan `shall strive to ensure' that they do not `waive or otherwise derogate from, or offer to waive or otherwise derogate from,' their respective labor laws `as an encouragement for trade' with each other.
Electronic Commerce- The United States and Jordan agree to `seek to refrain' from imposing new barriers, including both tariffs and non-tariff barriers, on electronic transmissions.
Visa Commitments- The United States and Jordan each agree to allow nationals of the other to enter and remain in their respective territories for purposes of facilitating trade and investment.
Government Procurement- The United States and Jordan agree to enter into negotiations on Jordan's accession to the World Trade Organization Agreement on Government Procurement.
Safeguard Measures- Under the Agreement, a country may put a `safeguard' measure in place if, as a result of the reduction or elimination of a duty, imports of a good from the other country are increasing in such quantities and under such conditions as to be a substantial cause of serious injury, or threat thereof, to a domestic industry producing a like or directly competitive
product. A safeguard measure may take the form of a suspension of the reduction of a duty or an increase in a duty rate. However, in the case of an increase, the duty rate may not exceed the most-favored-nation (`MFN') duty rate.
Procedural requirements for putting a safeguard measure in place under the Agreement are identical to the requirements for putting a general safeguard measure in place under WTO rules. For the United States, this means an investigation and determination by the U.S. International Trade Commission (`ITC') into whether the requirements for a safeguard have been met. If the ITC's determination is affirmative, then the President must decide, in light of that determination, whether to put a measure in place and, if so, what measure.
A safeguard measure may remain in place only for the period necessary to prevent or remedy serious injury to, and to facilitate adjustment by, the domestic industry and, in any event, not longer than 4 years. No measure may be put in place against a good as to which a safeguard measure was previously imposed under the Agreement. A country imposing a measure for longer than 1 year is required to liberalize the measure (i.e., reduce tariff rates) on a regular basis.
Upon termination of a safeguard measure, duties on the subject goods will be the rates that ordinarily would have applied 1 year after the measure was initiated. The Agreement provides for further duty reductions beginning on January 1 of the year after a measure is terminated.
A country imposing a safeguard measure is required to provide `concessions having substantially similar trade effects' to the other country. In the event that the countries are unable to agree on concessions, the other country may raise tariffs on imports from the country imposing the measure. However, in general, it may do so only after the measure has been in effect for 2 years.
The safeguard provisions under the Agreement are in addition to the general safeguard provisions under WTO rules. Thus, if the United States were to put a safeguard measure in place under Chapter 1 of Title II of the Trade Act of 1974, such measure could include imports from Jordan, along with imports from all other sources. However, under the Agreement, imports from Jordan may be excluded from a general safeguard measure if such imports, by themselves, are not a substantial cause of serious injury or threat thereof.
Balance of Payments- In taking trade-restrictive measures to safeguard their balance of payments, Jordan and the United States agree to abide by WTO balance-of-payments disciplines.
Exceptions- The Agreement sets forth three categories of exceptions to its ordinary rules. These include the general exceptions to WTO rules on trade in goods, set forth in article XX of the GATT 1994; certain measures taken for national security reasons; and, in general, measures concerning taxation.
Economic Cooperation and Technical Assistance- The Agreement commits the United States and Jordan to foster economic cooperation and, given Jordan's developing country status, commits the United States to provide Jordan economic technical assistance, as appropriate.
Rules of Origin and Cooperation in Customs Administration- Preferential tariff treatment under the Agreement is available only to goods originating in Jordan or the United States. An annex to the Agreement sets forth rules for determining the origin of goods. The Agreement states that each country `shall strive to administer such rules effectively, uniformly, and consistently with the object and purpose of [the] Agreement and the WTO Agreement.' The Agreement further provides for consultations on the operation of these rules.
Joint Committee- The Agreement establishes a joint committee to oversee implementation of the Agreement. The Joint Committee consists of the U.S. Trade Representative and the Jordanian Minister for Trade, or their respective designees. The Joint Committee will meet once a year in regular session, and in special sessions within 30 days of a request by either country. Its responsibilities will include (among other tasks) reviewing the functioning of the Agreement, avoiding trade disputes, considering amendments to the Agreement, and establishing guidelines for administering rules of origin.
Consultations- The United States and Jordan agree to consult on all matters concerning interpretation and application of the Agreement, and each commits to reply promptly to requests by the other for consultations.
Dispute Settlement- The Agreement establishes a dispute settlement mechanism to resolve disputes over interpretation of the Agreement, claims that a country has violated obligations under the Agreement, and claims that measures taken by a country `severely distort the balance of trade benefits' accorded by the Agreement or `substantially undermine fundamental objectives' of the Agreement.
When a dispute arises, the parties are required, first, to make `every attempt to arrive at a mutually agreeable resolution' through consultations. Should consultations fail, either country may refer the matter to the Joint Committee, described above. If the Joint Committee fails to resolve the matter within 90 days, then the matter may be referred to a dispute settlement panel, composed of one member chosen by each country and a chairman chosen by the first two members.
A dispute settlement panel is required to make findings of fact and a determination as to whether either country has violated an obligation under the Agreement or taken measures that severely distort the balance of trade benefits or substantially undermine the fundamental objectives of the Agreement. The panel may make recommendations concerning resolution of the dispute only if both countries ask it to do so.
A dispute settlement panel's report is non-binding. Resolution of a dispute ultimately is
in the hands of the Joint Committee, which must `endeavor to resolve the dispute, taking the report into account, as appropriate.' If the Joint Committee fails to resolve the dispute within 30 days of presentation of the panel's report, then the country affected by any measures found by the panel to be violations of the Agreement or to severely distort trade benefits or to substantially undermine the Agreement's fundamental objectives `shall be entitled to take any appropriate and commensurate measure.'
Concurrently with conclusion of the Agreement, the United States and Jordan entered into a Memorandum of Understanding on Transparency in Dispute Settlement. That document requires that, when dispute settlement is triggered, both countries `shall solicit and consider the views of members of their respective publics in order to draw upon a broad range of perspectives.' It further requires that submissions to panels be made available to the public within 10 days of filing, that oral presentations to panels be made open to the public, that amicus briefs be accepted and considered, and that panel reports be released to the public `at the earliest possible time.' The foregoing requirements do not obligate the countries to disclose confidential information.
In a Joint Statement issued concurrently with conclusion of the Agreement, the United States and Jordan agreed to support the application of similar transparency-related procedures in disputes between the two countries that may be brought before panels in the WTO.
No Private Right of Action.--Neither the United States nor Jordan may provide for a private right of action under domestic law that would allow a person to claim that a measure taken by the other country constituted a violation of the Agreement.
Entry Into Force.--The Agreement will enter into force 2 months after the United States and Jordan exchange written notifications of ratification of the Agreement by their respective legislatures.
Termination.--Either country may terminate the Agreement by providing written notice to the other. In that case, the Agreement will expire six months after the provision of such notification.
Section 1. Short title
The short title of the bill is the `United States-Jordan Free Trade Area Implementation Act.'
Section 2. Purposes
Section 2 identifies the following three purposes of the bill: (1) to implement the Agreement between the United States and Jordan establishing a free trade area, (2) to strengthen and develop the economic relations between the United States and Jordan for their mutual benefit, and (3) to establish free trade between the two nations through the removal of trade barriers.
Section 3. Definitions
Section 3 defines the terms `Agreement' and `HTS.' For the purpose of this bill, the term `Agreement' means the Agreement between the United States of America and the Hashemite Kingdom of Jordan on the Establishment of a Free Trade Area, entered into on October 24, 2000. The term `HTS' means the Harmonized Tariff Schedule of the United States.
Section 4. Approval of Agreement
Section 4 expresses congressional approval of the Agreement.
Section 101. Tariff modifications
Section 101 authorizes the President to proclaim changes to duties (or, as the case may be, continuation of duties) on goods imported from Jordan as necessary or appropriate to implement the Agreement.
Section 102. Rules of origin
Section 102 provides that in order for an article to receive duty-free or reduced tariff treatment under the Agreement, it must be imported into the United States directly from Jordan and meet one of two rules of origin. The article must be either (1) wholly the growth, product, or manufacture of Jordan, or (2) partially the growth, product, or manufacture of Jordan, provided that it meets certain criteria. The principal criterion under this second rule is that materials produced in Jordan plus the direct costs of processing operations performed in Jordan constitute not less than 35 percent of the appraised value of the article upon entry into the United States. However, if materials produced in the United States are included in the article, the value of such materials up to 15 percent of the appraised value of the article may contribute to the 35 percent requirement. Additional special rules of origin apply to textile and apparel products.
Section 201. Definitions
Section 201 defines the terms `Commission' and `Jordanian article.' The term `Commission' means the United States International Trade Commission. The term `Jordanian article' means an article that qualifies for reduction or elimination of a duty under section 102 of the bill.
Subtitle B establishes a mechanism for certain U.S. persons to petition for and receive relief from serious injury (or the threat thereof) resulting from import surges of products receiving duty-free or reduced tariff treatment under the Agreement.
Section 211. Commencing of action for relief
Parties eligible to petition for relief under this subtitle would include trade associations, firms, unions, or groups of workers representative of an industry. As under the general safeguards provisions in U.S. law (Chapter 1 of Title II of the Trade Act of 1974), parties would file their petitions with the U.S. International Trade Commission (`ITC'). The ITC then would be required to investigate and determine whether, as a result of the reduction or elimination of a duty under the Agreement, a Jordanian article is being imported into the United States in such increased quantities and under such conditions that imports of the article alone constitute a substantial cause of serious injury (or threat thereof) to the U.S. industry producing a like or directly competitive article. Procedures for investigating and making this determination would be similar to the general safeguards procedures. An investigation could not be initiated with respect to a Jordanian article if import relief under this subtitle previously had been granted with respect to that article.
Section 212. Commission action on petition
The time for the ITC to act upon a petition filed under section 211 of the bill would be identical to the time for ITC action under the general safeguard provisions of the Trade Act of 1974. Ordinarily, the ITC must make its determination within 120 days following initiation of an investigation. Where a petitioner alleges that critical circumstances exist and, therefore, seeks provisional relief, the ITC would have 180 days in which to make its final determination. (The present bill incorporates by reference (at section 211(c)(3)) the procedures for making a determination on provisional relief set forth at section 202(d) of the Trade Act of 1974.)
If the ITC determined that `a Jordanian article is being imported into the United States in such increased quantities, in absolute terms or relative to domestic production, and under such conditions that imports of the Jordanian article alone constitute a substantial cause of serious injury or threat thereof to the domestic industry producing an article that is like, or directly competitive with, the imported article,' then the ITC would be required to recommend the amount of relief necessary to remedy or prevent serious injury to the U.S. industry. Within 30 days of making its determination, the ITC would be required to submit a report to the President explaining the basis for its determination and recommended relief, along with any dissenting and separate views. The bill would require that report to be promptly made public.
Section 213. Provision of relief
Within 30 days of receipt of the ITC's report containing an affirmative determination, the President ordinarily would be required to provide relief to the U.S. industry to the extent necessary to prevent or remedy the injury identified by the ITC and to facilitate the industry's positive adjustment to import competition. The President could decline to provide such relief only if (1) he found that `taking such action would have an adverse impact on the United States economy clearly greater than the benefits of taking such action,' or (2) in `extraordinary circumstances,' he found that `the provision of such relief would cause serious harm to the national security of the United States.'
In general, the relief granted could be either a suspension of tariff reductions or a `snap-back' of tariffs to their ordinary, MFN rate. Relief could be granted for up to 4 years. Prior to December 31 in the year in which relief ended, upon the termination of relief, tariff rates would be the rates that would have applied 1 year after the initiation of the action. After December 31, tariff rates could be either (at the President's discretion) (1) the rates that ordinarily would have applied at that date, or (2) the rates resulting from the elimination of the tariff in equal annual stages ending on the scheduled date for tariff elimination.
Section 214. Termination of relief authority
Section 214 would cause the safeguard provision of subtitle B to expire 15 years after the Agreement entered into force unless, in a particular case, Jordan agreed to have a safeguard measure applied after the initial 15-year period.
Section 215. Compensation authority
Section 215 establishes that section 123 of the Trade Act of 1974, which authorizes the President to compensate another country in the event certain safeguards measures are imposed on products from that country, would apply to safeguards imposed under the Agreement.
Section 216. Submission of petitions
Section 216 would permit a petition for safeguard relief to be submitted to the ITC under either subtitle B of the present bill, section 201 of the Trade Act of 1974, or both.
This subtitle would govern the treatment of imports from Jordan in general safeguards investigations and relief determinations under section 201 of the Trade Act of 1974.
Section 221. Findings and action on Jordanian imports
When the ITC makes an affirmative determination under section 201 of the Trade Act of 1974 (i.e., that increased imports of a given product are a substantial cause of serious injury (or threat thereof) to a domestic producer of like or directly competitive products), section 221 of the present bill would require it to make a separate determination regarding imports from Jordan of the product under investigation. The ITC would have to determine whether imports from Jordan were themselves a substantial cause of serious injury (or threat thereof). The President, too, would have to make a separate determination regarding products from Jordan and, if that determination were negative, he could opt to exclude products from Jordan from the relief provided to the U.S. industry.
Section 222. Technical amendment
Section 222 would extend the general rules governing ITC treatment of confidential information to information received in connection with a safeguards investigation under the Agreement.
Section 301. Nonimmigrant traders and investors
Section 301 would implement the Agreement's requirement that each country allow nationals of the other to enter and remain in its territory for purposes of facilitating trade and investment.
Section 401. Relationship of the Agreement to United States and state law
Section 401 provides that the Agreement would not have direct effect in the United States. Rather, the Agreement would take effect through the present implementing legislation. To the extent that there may be inconsistencies between U.S. law and the Agreement, U.S. law would prevail. Further, only the U.S. Government would be authorized to sue to have a state law declared invalid due to a conflict with the Agreement. Finally, section 401 provides that the Agreement would not give rise to any private rights of action.
Section 402. Authorization of appropriations
Section 402 would authorize up to $100,000 in appropriations to the Department of Commerce for each fiscal year after fiscal year 2001 to support the United States' share of expenses incurred in dispute settlement proceedings under article 17 of the Agreement.
Section 403. Implementing regulations
Section 403 would authorize the President and Executive Branch agencies to promulgate regulations and to take such other actions as may be necessary to make the present bill effective when the Agreement enters into force.
Section 404. Effective dates; effect of termination
Section 404 would make this bill and amendments to current law made thereby effective on the date the Agreement enters into force. Certain provisions, such as congressional approval of the Agreement, would take effect upon enactment. Finally, the bill and any amendments to U.S. law made by it would cease to have effect on the date on which the Agreement ceased to be in force.
On January 6, 2001, President Clinton, in a message to Congress, transmitted the Agreement between the Hashemite Kingdom of Jordan and the United States of America on the Establishment of a Free Trade Area, signed October 24, 2000, including annexes forming an integral part of the Agreement.
On March 28, 2001, Senator Baucus (for himself and others) introduced S. 643, a bill to implement the Agreement. The bill was read twice and referred to the Committee on Finance.
On April 4, 2001, Congressman Levin (for himself and others) introduced a substantively identical bill (H.R. 1484). The bill was referred to the Committee on Ways and Means.
On July 17, 2001, the Finance Committee began debate on the bill implementing the Agreement and approved an amendment in the nature of a substitute to the bill. The amendment in the nature of a substitute added to S. 643 a provision expressing congressional approval of the Agreement and made certain technical corrections to the bill as introduced.
On July 24, 2001, Congressman Thomas introduced H.R. 2603, the United States-Jordan Free Trade Area Implementation Act, which was referred to the Committee on Ways and Means and the Committee on the Judiciary. The Committee on Ways and Means held a markup on July 26, 2001 and, upon a voice vote, ordered reported to the full House an amendment in the nature of a substitute to H.R. 2603.
On July 26, 2001, the Finance Committee completed its markup of S. 643 and ordered the bill reported to the full Senate without further amendment.
On July 31, 2001, the House of Representatives, on a motion to suspend the rules and pass the bill, agreed to H.R. 2603 by voice vote. The bill was received in the Senate that same day and referred to the Committee on Finance.
In compliance with section 133 of the Legislative Reorganization Act of 1946, the committee states that S. 643 was ordered favorably reported, with an amendment, by voice vote with a quorum present on July 26, 2001. Senators Gramm and Nickles asked to be recorded as voting nay.
Hon. MAX BAUCUS,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 643, a bill to implement the agreement establishing a United States-Jordan Free Trade Area.
If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Erin Whitaker.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S. 643--A bill to implement the agreement establishing a United States-Jordan Free Trade Area
Summary: S. 643 would approve the agreement between the government of the United States and the government of the Hashemite Kingdom of Jordan that was entered into on October 24, 2000. It would provide for tariff reductions and other changes in law related to implementation of the agreement, such as provisions dealing with dispute settlement and intellectual property rights protection. The Congressional Budget Office estimates that enacting the bill would reduce revenues by $2 million in 2002, by $15 million over the 2002-2006 period, and by $44 million over the 2002-2011 period. Because enacting S. 643 would affect receipts, pay-as-you-go procedures would apply. CBO has determined that S. 463 contains no private-sector or intergovernmental 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 S. 643 is shown in the following table.
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By fiscal year, in millions of dollars--
2002 2003 2004 2005 2006
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CHANGES IN REVENUES
Estimated revenues -2 -3 -3 -4 -4
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Basis of estimate
Revenues
Under the United States-Jordan agreement, all tariffs on U.S. imports from Jordan would be phased out for individual products at varying rates according to one of nine different timetables ranging from immediate elimination to partial elimination over 10 years. One schedule would allow goods to enter at current rates of duty until year ten of the agreement, at which time such goods would enter duty-free. Based on Census Bureau data on imports from Jordan, CBO estimates that the reduction of tariff rates would reduce revenues by about $15 million over the 2002-2006 period, net of income and payroll tax offsets. This estimate includes the effects of increased imports from Jordan that would result from the reduced prices of imported products in the U.S- reflecting the lower tariff rates--and has been estimated based on the expected substitution between U.S. products and imports from Jordan. In addition, it is likely that some of the increase in U.S. imports from Jordan 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 Jordan will displace imports from other countries.
Spending subject to appropriation
S. 643 would authorize the appropriation of $100,000 for the Department of Commerce to pay the United States' share of the costs of the dispute settlement procedures established by the agreement. CBO estimates that implementing this provision would cost the same amount, subject to the availability of appropriated funds.
Pay-as-you-go considerations: The Balanced Budget and Emergency Deficit Control Act sets up procedures for legislation affecting receipts or direct spending. The net changes in governmental receipts that are subject to pay-as-you-go procedures are shown in the following table. For the purposes of enforcing pay-as-you-go procedures, only the effects in the current year, the budget year, and the succeeding four years are counted.
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By fiscal year, in millions of dollars--
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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Changes in receipts 0 -2 -2 -3 -4 -4 -5 -5 -5 -6 -9
Changes in outlays
(10) Not applicable
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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: Erin Whitaker; Federal costs: Ken Johnson; Impact on State, local and tribal governments: Scott Marsters; Impact on the private sector: Lauren Marks.
Estimate approved by: G. Thomas Woodward, Assistant Director for Tax Analysis; Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.
In compliance with paragraph 11(b) of rule XXVI of the Standing Rules of the Senate, the committee states that the bill will not significantly regulate any individuals or businesses, will not affect the personal privacy of individuals, and will result in no significant additional paperwork.
The following information is provided in accordance with section 423 of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-4). The committee has reviewed the provisions of S. 643 as approved by the Committee on July 26, 2001. In accordance with the requirements of Pub. L. No. 104-04, the Committee has determined that the bill contains no intergovernmental mandates, as defined in the UMRA, and would not affect the budgets of State, local, or tribal governments.
Pursuant to the requirements of paragraph 12 of rule XXVI of the Standing Rules of the Senate, changes in existing law made by the bill, S. 643, 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):
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(a) PETITIONS AND ADJUSTMENT PLANS-
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[ and part 1 ][<-Struck out] , part 1 of title III of the North American Free Trade Agreement Implementation Act, and title II of the United Sates-Jordan Free Trade Area 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.* * * * * * *
