Text: H.R.1233 — 101st Congress (1989-1990)All Information (Except Text)

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Union Calendar No. 93
101st CONGRESS
1st Session
H. R. 1233
[Report No. 101-136]
A BILL
To improve the operation of the Caribbean Basin Economic Recovery Act,
and for other purposes.
July 12, 1989
Reported with an amendment, committed to the Committee of the Whole House
on the State of the Union, and ordered to be printed
HR 1233 RH
Union Calendar No. 93
101st CONGRESS
1st Session
 H. R. 1233
[Report No. 101-136]
To improve the operation of the Caribbean Basin Economic Recovery Act,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
March 2, 1989
Mr. GIBBONS (for himself, Mr. PICKLE, Mr. RANGEL, Mr. GUARINI, Mr. FORD
of Tennessee, Mr. DOWNEY, Mr. MATSUI, Mr. ANTHONY, Mr. LEVIN of Michigan,
Mr. MOODY, Mrs. JOHNSON of Connecticut, Mr. ARCHER, Mr. VANDER JAGT, Mr. CRANE,
Mr. FRENZEL, Mr. SCHULZE, Mr. FASCELL, Mr. FAUNTROY, Mr. TOWNS, Mr. CROCKETT,
Mr. DYMALLY, Mr. PURSELL, Mr. GILMAN, Mr. GARCIA, Mrs. BENTLEY, Mr. ESPY,
Mr. LAGOMARSINO, Mr. DE LUGO, Mrs. BOGGS, Mr. WEISS, Mr. LELAND, Mr. SKELTON,
Mr. OWENS of New York, Mr. ROE, Mr. DORNAN of California, Mr. GRAY, Mr. HAYES
of Illinois, Mr. NIELSON of Utah, Mr. HAMILTON, Mr. SHUMWAY, Mr. GEJDENSON,
Mr. PICKETT, Mr. MCMILLEN of Maryland, Mr. MILLER of Washington, Mr. SMITH
of Florida, Mr. ATKINS, and Mr. FROST) introduced the following bill; which
was referred to the Committee on Ways and Means
May 24, 1989
Additional sponsors: Mr. WALSH, Mr. TORRES, Mr. ANDREWS, Mr. WATKINS,
Mr. WHEAT, Mr. DIXON, Mr. FLAKE, Mrs. KENNELLY, Mr. PAYNE of New Jersey,
Mr. LEWIS of Georgia, Mr. LEVINE of California, Mr. HUNTER, Mr. HUCKABY,
Mr. PEPPER, and Mr. Green
Deleted sponsor: Mrs. BENTLEY (added March 2, 1989; deleted April 26, 1989)
July 12, 1989
Reported with an amendment, committed to the Committee of the Whole House
on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on March 2, 1989]
A BILL
To improve the operation of the Caribbean Basin Economic Recovery Act,
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 `Caribbean Basin Economic Recovery Expansion
  Act of 1989'.
SEC. 2. CONGRESSIONAL FINDINGS.
  The Congress finds that--
  (1) a stable political and economic climate in the Caribbean region is
  necessary for the development of the countries in that region and for the
  security and economic interests of the United States;
  (2) the Caribbean Basin Economic Recovery Act was enacted in 1983 to assist
  in the achievement of such a climate by stimulating the development of
  the export potential of the region; and
  (3) the commitment of the United States to the successful development of
  the region, as evidenced by the enactment of the Caribbean Basin Economic
  Recovery Act, should be reaffirmed, and further strengthened, by amending
  that Act to improve its operation.
TITLE I--AMENDMENTS TO THE CARIBBEAN BASIN ECONOMIC RECOVERY ACT AND RELATED
PROVISIONS
Subtitle A--Amendments to Caribbean Basin Economic Recovery Act
SEC. 101. REPEAL OF TERMINATION DATE ON DUTY-FREE TREATMENT UNDER THE ACT.
  Section 218 of the Caribbean Basin Economic Recovery Act (19 U.S.C. 2706(b))
  is repealed.
SEC. 102. EXCEPTIONS TO GENERAL DUTY-FREE TREATMENT.
  (a) EXCEPTIONS- The Caribbean Basin Economic Recovery Act is amended by
  inserting after section 213 the following new section:
`SEC. 213A. ARTICLES ELIGIBLE FOR LIMITED DUTY-FREE TREATMENT OR DUTY
REDUCTION.
  `(a) TEXTILE PRODUCTS SUBJECT TO GUARANTEED ACCESS LEVELS-
  `(1) DEFINITIONS- As used in this subsection--
  `(A) The term `qualifying fabric' means--
  `(i) fabric that is formed and cut in the United States; and
  `(ii) foreign fabric that is cut in the United States.
  `(B) The term `foreign fabric' means the following articles provided for
  under the headings or subheadings (as appropriate) of the HTS specified
  parenthetically:
  `(i) Broadwoven fabrics containing 85 percent or more by weight of silk,
  weighing more than 100 grams per square meter (5007.10.30, 5007.20.00,
  and 5007.90.30).
  `(ii) Velveteen fabric, 85 percent or more by weight of cotton (5801.23.00).
  `(iii) Corduroy fabric, 85 percent or more by weight of cotton, containing
  more than 7.5 wales per centimeter (5801.22.00).
  `(iv) Broadwoven fabrics of cotton of average yarn number greater than 135
  metric count (5208.21.60, 5208.22.80, 5208.29.80, 5208.3l.80, 5208,32.50,
  5208.39.80, 5208.41.80, 5208.42.50, 5208.49.80, 5208.51.80, 5208.52.50,
  and 5208.59.80).
  `(v) Circular knit fabrics of cotton of average yarn number greater than
  100 metric count (6002.92.00).
  `(vi) Broadwoven fabric, 85 percent or more by weight of wool, certified
  as being genuine Harris Tweed (5111.19.20 and 5111.19.60).
  `(vii) Broadwoven fabric 85 percent or more by weight of continuous
  synthetic yarn of polyester, weighing not more than 100 grams per square
  meter, containing more than 145 threads per square centimeter (5407.71.00,
  5407.72.00, 5407.73.20, and 5407.74.00).
  `(viii) Broadwoven fabric of combed wool or fine combed animal hair, of
  wool and not less than 20 percent combed fine animal hair, mixed mainly or
  solely with man-made fibers, weighing not more than 340 grams per square
  meter (5112.30.00).
  `(2) GUARANTEED MARKET ACCESS AND DUTY-FREE TREATMENT FOR CERTAIN TEXTILE
  PRODUCTS-
  `(A) The United States Trade Representative--
  `(i) shall establish with each beneficiary country guaranteed access levels
  for textile products assembled in that country from qualifying fabrics; and
  `(ii) is authorized to negotiate and conclude a bilateral agreement with
  each such country regarding the guaranteed access levels established under
  clause (i).
  `(B) Textile products entered pursuant to a bilateral agreement provided
  for under subparagraph (A) shall be accorded duty-free treatment.
  `(3) PERMISSIBLE FOREIGN CONTENT- A textile product that is assembled in
  a beneficiary country from qualifying fabric and incorporates findings and
  trimmings of foreign origin is eligible for guaranteed access and duty-free
  treatment under an agreement entered into under paragraph (2)(A) if such
  foreign findings and trimmings do not exceed 25 percent of the cost of
  the components of the assembled product.
  `(4) REQUIREMENTS AND PROCEDURES- The Committee for Implementation of
  Textile Agreements established under Executive Order No. 11651, dated
  March 3, 1972, shall establish such requirements and procedures as may be
  necessary or appropriate to implement the obligations of the United States
  under agreements entered into under paragraph (2)(A).
  `(5) EXISTING AGREEMENTS- Any bilateral agreement that--
  `(A) was entered into between the United States and a beneficiary country
  under the Special Access Program, announced on February 20, 1986, for
  textile products under the aegis of the Caribbean Basin Initiative; and
  `(B) is in effect on the date of the enactment of this section;
shall be treated as being a valid agreement that was entered into under
paragraph (2)(A).
  `(6) SENSE OF CONGRESS- It is the sense of Congress that--
  `(A) the benefits granted through the establishment of guaranteed access
  levels in bilateral textile agreements should not result in any disadvantage
  to United States firms that seek export certificates or export visas which
  authorize shipments under specific limits; and
  `(B) the United States Trade Representative should obtain assurances from
  beneficiary countries which have been granted guaranteed access levels
  that such countries will administer export certificates or export visas
  in such a manner as to ensure fairness and nondiscriminatory treatment
  to United States firms that seek allocations under specific limits rather
  than guaranteed access levels.
  `(b) TEXTILE AND APPAREL ARTICLES SUBJECT TO SPECIFIC LIMITS AND DESIGNATED
  CONSULTATION LEVELS-
  `(1) DEFINITIONS- As used in this subsection--
  `(A) The term `quota article' means any textile or apparel article that
  may be imported into the United States under either a specific limit or a
  designated consultation level established in a bilateral textile agreement
  between the United States and a beneficiary country that is in force and
  effect on, or enters into force and effect after, the date of the enactment
  of this section.
  `(B) The term `textile category' means any category established in the
  publication entitled `Correlation: Textile and Apparel Categories with
  the Harmonized Tariff Schedule of the United States Annotated, 1989',
  prepared by the Department of Commerce.
  `(C) The term `trade-weighted average duty rate' means the rate of duty
  determined by the Secretary under paragraph (3).
  `(2) DUTY ON QUOTA ARTICLES-
  `(A) Except as provided in subparagraph (B), each quota article that is
  entered shall be dutiable at a rate equal to 50 percent of the trade-weighted
  average duty rate for the textile category under which the quota article
  is classified.
  `(B) The rate of duty provided for under subparagraph (A) for any article
  that is a quota article shall not apply if that rate is higher than the
  rate of duty provided for that article in general column 1 of the HTS.
  `(3) TRADE-WEIGHTED AVERAGE DUTY RATE DETERMINATIONS- For each textile
  category under which one or more kinds of quota articles are classified, the
  Secretary shall determine the trade-weighted average of the general column
  1 rates of duty under the HTS for all classes or kinds of goods included
  within that category. The Secretary shall calculate the trade-weighted
  average duty rate under this paragraph for each textile category on the
  basis of the best information available for the most recent 12-month period
  occurring before the date of the enactment of this section.
  `(c) FOOTWEAR AND LEATHER-RELATED PRODUCTS- The rate of duty on any footwear
  (other than leather footwear), handbag, luggage, flat good, work glove,
  or leather wearing apparel that--
  `(1) is a product of a beneficiary country; and
  `(2) was not designated on August 5, 1983, as an eligible article for
  the purpose of the generalized system of preferences under title V of the
  Trade Act of 1974;
is a rate equal to 50 percent of the general column 1 rate of duty under
the HTS that would apply to such article but for this subsection.
  `(d) ADMINISTRATION-
  `(1) PROCLAIMING OF RATES- The President shall proclaim the rates of duty
  imposed under subsection (b)(2)(A) and subsection (c).
  `(2) CONSTRUCTION- The duty applied under subsection (b)(2)(A) or subsection
  (c) to an article is in lieu of the duty provided for that article under
  general column 1 of the HTS.
  `(3) DEFINITION OF SECRETARY- For purposes of this section, the term
  `Secretary' means the Secretary of Commerce.'.
  (b) CONFORMING AMENDMENT- Section 213(b) of the Caribbean Basin Economic
  Recovery Act (19 U.S.C. 2703(b)) is amended to read as follows:
  `(b) The duty-free treatment provided under this subtitle does not apply to--
  `(1) textile and apparel articles which are subject to textile agreements,
  except to the extent provided for in section 213A(a);
  `(2) articles to which reduced duties apply under section 213A(b) and (c);
  `(3) leather footwear not designated on August 5, 1983, as eligible articles
  for purposes of the generalized system of preferences under title V of
  the Trade Act of 1974;
  `(4) tuna, prepared or preserved in any manner, in airtight containers;
  `(5) petroleum, or any product derived from petroleum, provided for in
  headings 2709 and 2710 of the HTS; and
  `(6) watches and watch parts (including cases, bracelets, and straps), of
  whatever type including, but not limited to, mechanical, quartz digital or
  quartz analog, if such watches or watch parts contain any material which
  is the product of any country with respect to which column 2 rates of duty
  under the HTS apply.'.
  (c) EFFECTIVE DATE- Section 213A(b) of the Caribbean Basin Economic
  Recovery Act (as added by subsection (a) of this section) applies with
  respect to goods entered, or withdrawn from warehouse for consumption,
  on or after the 30th day after the date of the enactment of this Act.
SEC. 103. WORKER RIGHTS.
  Section 212 of the Caribbean Basin Economic Recovery Act (19 U.S.C. 2702)
  is amended--
  (1) by striking out `and' after the semicolon at the end of subsection
  (b)(5);
  (2) by striking out the period at the end of subsection (b)(6) and inserting
  `; and';
  (3) by adding at the end of subsection (b) the following new paragraph:
  `(7) if such country has not or is not taking steps to afford internationally
  recognized worker rights (as defined in section 502(a)(4) of the Trade
  Act of 1974) to workers in the country (including any designated zone in
  that country).';
  (4) by amending the last sentence in subsection (b) by striking out `and
  (5)' and inserting `(5), and (7)';
  (5) by amending subsection (c)(8) to read as follows:
  `(8) whether or not such country has taken or is taking steps to afford
  to workers in that country (including any designated zone in that country)
  internationally recognized worker rights.'; and
  (6) by adding the following new subparagraph at the end of subsection (e):
  `(3) Not later than January 4, 1991 and biennially thereafter, the
  President shall conduct a general review of eligible countries based on
  the considerations described in subsections (b) and (c).'.
SEC. 104. REPORTS.
  Section 212 of the Caribbean Basin Economic Recovery Act (19 U.S.C. 2702)
  is amended by adding at the end thereof the following new subsection:
  `(f) On or before October 1, 1992, and the close of each 3-year period
  thereafter, the President shall submit to the Congress a complete report
  regarding the operation of this title.'.
SEC. 105. APPLICATION OF ACT IN EASTERN CARIBBEAN AREA.
  It is the sense of the Congress that there should be undertaken special
  efforts in order to improve the ability of the Organization of Eastern
  Caribbean States countries and Belize to benefit from the Caribbean Basin
  Economic Recovery Act.
Subtitle B--Amendments to the Harmonized Tariff Schedule and Other Provisions
Affecting CBI Beneficiary Countries
SEC. 111. SUGAR IMPORTS FROM BENEFICIARY COUNTRIES.
  (a) ALLOCATIONS TO BENEFICIARY COUNTRIES- Paragraph (c) of additional
  U.S. note 3 of chapter 17 of the Harmonized Tariff Schedule of the United
  States is amended--
  (1) by inserting after note 2 of subparagraph (i) the following:
  `NOTE 3: The Secretary shall determine whether any country is not utilizing
  fully the base quota amount allocated to it for a quota year and any
  amount determined to be unused during such year shall be reallocated
  on a pro rata basis among the countries listed in general note 3(c)(v)
  (hereinafter in this paragraph referred to as the `CBI countries') receiving
  base quota allocations for such year. The unused quota amount reallocated
  to any CBI country under this note for any quota year is in addition to
  any reallocation made under subparagraph (iv) to that country for such
  year. No portion of any reallocation made to a CBI country for a quota
  year under this note or subparagraph (iv) that is unused at the close of
  such year is available for use in any other quota year.';
  (2) by amending subparagraph (iii) to read as follows:
  `(iii) Notwithstanding any authority given to the United States Trade
  Representative under paragraphs (e) and (g) of this note, in allocating
  any limitation imposed under any paragraph of this note on the quantity
  of sugars, syrups, and molasses described in the subheadings cited under
  paragraph (a) of this note which may be entered--
  `(A) the percentage allocation made to the Philippines under this paragraph
  may not be reduced,
  `(B) no allocation may be made to the Republic of South Africa, and
  `(C) the aggregate of the amounts of the base quota allocations to the
  CBI countries for any quota year beginning after December 31, 1988, may
  not be less than 371,449 metric tons, raw value.';
and
  (3) by adding at the end thereof the following new subparagraphs:
  `(iv) If under law authorizing such an action for purposes of dealing with
  a threat to the national security or foreign policy of the United States,
  the allocation under subparagraph (i) for any quota year is suspended
  or terminated with respect to any country, the amount of the suspended
  or terminated allocation shall be reallocated on a pro-rata basis among
  the CBI countries receiving allocations for that year. Any quota amount
  reallocated to any CBI country under this subparagraph for any quota year
  is in addition to any reallocation made under note 3 of subparagraph (i)
  to that country for such year.
  `(v) The President may enter into trade agreements with foreign governments
  for purposes of granting appropriate compensation, and may proclaim such
  compensation, if any action taken by the United States under the authority
  of note 3 of subparagraph (i), subparagraph (iii)(C), or subparagraph
  (iv) is found to be inconsistent with the international obligations of the
  United States (including the General Agreement on Tariffs and Trade). Before
  offering compensation under this subparagraph, the President shall consult
  with the Committee on Ways and Means of the House of Representatives and
  the Committee on Finance of the Senate regarding the reasons for taking
  the action concerned and the compensation proposed to be offered.'.
  (b) EFFECTIVE DATE- The amendments made by subsection (a) apply with
  respect to the quota year in effect on the date of the enactment of this
  Act and to quota years thereafter.
SEC. 112. INCREASE IN DUTY-FREE TOURIST ALLOWANCES.
  (a) DUTY-FREE ALLOWANCE FOR RETURNING RESIDENTS- Subchapter IV of chapter
  98 of the Harmonized Tariff Schedule of the United States is amended--
  (1) by inserting the following new note at the end of the notes to such
  subchapter:
  `4. As used in subheadings 9804.00.70 and 9804.00.72, the term `beneficiary
  country' means a country listed in general note 3(c)(v)(A).';
  (2) by striking out `subheading 9804.00.65 or 9804.00.70' and all that
  follows thereafter in the superior article description to subheadings
  9804.00.65 and 9804.00.70 and inserting `subheadings 9804.00.65, 9804.00.70,
  and 9804.00.72 within 30 days preceding his arrival, and claims exemption
  under only one of such items on his arrival.';
  (3) by striking out `$800' in subheading 9804.00.70 and inserting `$1,200';
  (4) by inserting `or up to $600 of which have been acquired in one or
  more beneficiary countries' before the parenthetical matter in subheading
  9804.00.70; and
  (5) by inserting after subheading 9804.00.70 the following new subheading
  with the article description for the new subheading having the same degree
  of indentation as subheading 9804.00.70:
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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  ` 9804.00.72 Articles whether or not accompanying a person, not over $600
  in aggregate fair market value in the country of acquisition, including--
               (a) but only in the case of an individual who has attained
               the age of 21, not more than 1 liter of alcoholic beverages
               or not more than 2 liters if at least one liter is the product
               of one or more beneficiary countries, and
               (b) not more than 200 cigarettes, and not more than 100 cigars,
               if such person arrives directly from a beneficiary country,
               not more than $400 of which shall have been acquired elsewhere
               than in beneficiary countries (but this item does not permit
               the entry of articles not accompanying a person which were
               acquired elsewhere than in beneficiary countries) Free  Free '.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  (b) EFFECTIVE DATE- The amendments made by subsection (a) apply with respect
  to residents of the United States who depart from the United States on or
  after the 15th day after the date of the enactment of this Act.
SEC. 113. DUTY-FREE TREATMENT FOR ARTICLES ASSEMBLED IN BENEFICIARY COUNTRIES
FROM COMPONENTS PRODUCED IN THE UNITED STATES.
  (a) IN GENERAL- U.S. Note 2 of subchapter II of chapter 98 of the Harmonized
  Tariff Schedule of the United States is amended--
  (1) by striking out `2. Any' and inserting `2. (a) Except as provided in
  paragraph (b), any'; and
  (2) by adding at the end thereof the following new paragraph:
  `(b) No article (except a textile or apparel article) may be treated for
  purposes of this Act as a foreign article, or as subject to duty, if--
  `(i) the article is--
  `(A) assembled in whole of fabricated components that are a product of
  the United States, or
  `(B) processed in whole of ingredients (other than water) that are a
  product of the United States,
in a beneficiary country; and
  `(ii) neither the fabricated components or ingredients, after exportation
  from the United States, nor the article itself, before importation into
  the United States, enters the commerce of any foreign country other than
  a beneficiary country.
As used in this paragraph, the term `beneficiary country' means a country
listed in general note 3(c)(V)(A).'.
  (b) EFFECTIVE DATE- The amendments made by subsection (a) applies with
  respect to goods assembled or processed abroad that are entered on or
  after the 15th day after the date of the enactment of this Act.
SEC. 114. RULES OF ORIGIN FOR BENEFICIARY COUNTRY PRODUCTS.
  (a) IN GENERAL--For purposes of administering the Caribbean Basin Economic
  Recovery Act and subject to subsection (b), the President may proclaim new
  rules, to take effect on January 1, 1991, for determining whether articles
  originate in beneficiary countries.
  (b) CONSULTATION AND LAY-OVER REQUIREMENTS- Rules of origin may not be
  proclaimed under subsection (a) unless--
  (1) the President has obtained advice regarding the proposed rules pursuant
  to consultation with--
  (A) the appropriate advisory committees established under section 135 of
  the Trade Act of 1974,
  (B) the governments of the beneficiary countries,
  (C) the Committee on Ways and Means of the House of Representatives and
  the Committee on Finance of the Senate, and
  (D) other interested parties;
  (2) the President has submitted a report to such Committees that sets
  forth the rules proposed to be proclaimed and the reasons therefor;
  (3) a period of at least 90 calendar days that begins on the first day
  on which the President has met the requirements of paragraphs (1) and (2)
  with respect to such action has expired; and
  (4) the President has further consulted with such Committees regarding
  the proposed action during the period referred to in paragraph (3).
SEC. 115. CUMULATION INVOLVING BENEFICIARY COUNTRY PRODUCTS UNDER THE
COUNTERVAILING AND ANTIDUMPING DUTY LAWS.
  (a) MATERIAL INJURY- Section 771(7)(C)(iv) of the Tariff Act of 1930
  (19 U.S.C. 1677(7)(c)(iv)) is amended to read as follows:
  `(iv) CUMULATION-
  `(I) IN GENERAL- For purposes of clauses (i) and (ii) and subject to
  subclause (II), the Commission shall cumulatively assess the volume and
  effect of imports from two or more countries of like products subject
  to investigation if such imports compete with each other and with like
  products of the domestic industry in the United States market.
  `(II) CBI EXCEPTION- When the imports subject to investigation are products
  of a country designated as a beneficiary country under the Caribbean Basin
  Economic Recovery Act (19 U.S.C. 2701 et seq.), the volume and effect of
  imports from such country may only be cumulatively assessed with imports
  of like products from one or more other countries designated as beneficiary
  countries.'.
  (b) THREAT OF MATERIAL INJURY- Section 771(7)(F)(iv) of the Tariff Act
  of 1930 (19 U.S.C. 1677(7)(F)(iv)) is amended by striking out `(C)(v),'
  and inserting `(C)(iv)(II) and (v),'.
  (c) EFFECTIVE DATE- The amendments made by subsections (a) and (b) apply
  with respect to investigations initiated under section 702 or 732 of the
  Tariff Act of 1930 on or after the date of the enactment of this Act.
SEC. 116. ETHYL ALCOHOL AND MIXTURES THEREOF FOR FUEL USE.
  (a) DETERMINATION OF INDIGENOUS PRODUCTS- Section 423(c) of the Tax Reform
  Act of 1986 (19 U.S.C. 2703 note) is amended--
  (1) by redesignating paragraphs (3), (4), and (5) as paragraphs (4),
  (5), and (6), respectively; and
  (2) by striking out paragraph (2) and inserting the following:
  `(2) Ethyl alcohol or a mixture thereof that is produced by a process of
  full fermentation in an insular possession or beneficiary country shall
  be treated as being an indigenous product of that possession or country.
  `(3)(A) Ethyl alcohol and mixtures thereof that are only dehydrated within
  an insular possession or beneficiary country (hereinafter in this paragraph
  referred to as `dehydrated alcohol and mixtures') shall be treated as being
  indigenous products of that possession or country only if the alcohol or
  mixture, when entered, meets the applicable local feedstock requirement.
  `(B) The local feedstock requirement with respect to any calendar year is--
  `(i) 0 percent with respect to the base quantity of dehydrated alcohol
  and mixtures that is entered;
  `(ii) 30 percent with respect to the 35,000,000 gallons of dehydrated
  alcohol and mixtures next entered after the base quantity; and
  `(iii) 50 percent with respect to all dehydrated alcohol and mixtures
  entered after the amount specified in clause (ii) is entered.
  `(C) For purposes of this paragraph:
  `(i) The term `base quantity' means, with respect to dehydrated alcohol
  and mixtures entered during any calendar year, the greater of--
  `(I) 60,000,000 gallons; or
  `(II) an amount (expressed in gallons) equal to 7 percent of the United
  States domestic market for ethyl alcohol, as determined by the United
  States International Trade Commission, during the 12-month period ending
  on the preceding September 30;
that is first entered during that calendar year.
  `(ii) The term `local feedstock' means hydrous ethyl alcohol which is wholly
  produced or manufactured in any insular possession or beneficiary country.
  `(iii) The term `local feedstock requirement' means the minimum percent,
  by volume, of local feedstock that must be included in dehydrated alcohol
  and mixtures.'.
  (b) EFFECTIVE DATE- The amendments made by subsection (a) apply with
  respect to calendar years after 1989.
SEC. 117. CONFORMING AMENDMENT.
  Section 503(b) of the Trade Act of 1974 (19 U.S.C. 2463(b)) is amended to
  read as follows:
  `(b)(1) The duty free treatment provided under section 501 shall apply
  to any eligible article which is the growth, product, or manufacture of
  a beneficiary developing country if--
  `(A) that article is imported directly from a beneficiary developing
  country into the customs territory of the United States; and
  `(B) the sum of (i) the cost or value of the materials produced in the
  beneficiary developing country or any 2 or more countries which are members
  of the same association of countries which is treated as one country under
  section 502(a)(3), plus (ii) the direct costs of processing operations
  performed in such beneficiary developing country or such member countries
  is not less than 35 percent of the appraised value of such article at the
  time of its entry into the customs territory of the United States.
  `(2) 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
  title, an article must be wholly the growth, product, or manufacture of a
  beneficiary developing country, or must be a new or different article of
  commerce which has been grown, produced, or manufactured in the beneficiary
  developing country; but no article or material of a beneficiary developing
  country shall be eligible for such treatment 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.'.
TITLE II--SCHOLARSHIP ASSISTANCE AND TOURISM PROMOTION
SEC. 201. CARIBBEAN-CENTRAL AMERICAN SCHOLARSHIP PARTNERSHIP.
  (a) ESTABLISHMENT OF SCHOLARSHIP PROGRAM- The Administrator of the Agency
  for International Development shall establish and administer a program of
  scholarship assistance, in cooperation with State governments, universities,
  community colleges, and businesses, to provide scholarships to enable
  students from eligible countries in the Caribbean and Central America to
  study in the United States.
  (b) GRANTS TO STATES- In carrying out this section, the Administrator may
  make grants to States to provide scholarship assistance for undergraduate
  degree programs and for training programs of one year or longer in
  study areas related to the critical development needs of the students'
  respective countries.
  (c) CONSULTATION WITH STATES- The Administrator shall consult with the
  participating States with regard to the educational opportunities available
  within each State and on the assignment of scholarship recipients.
  (d) FEDERAL SHARE- The Federal share for each year for which a State
  receives payments under this section shall be not less than 50 percent.
  (e) NON-FEDERAL SHARE- The non-Federal share of payments under this section
  may be in cash, including the waiver of tuition or the offering of in-State
  tuition or housing waivers or subsidies, or in-kind fairly evaluated,
  including the provision of books or supplies.
  (f) FORGIVENESS OF SCHOLARSHIP ASSISTANCE- The obligation of any recipient
  to reimburse any entity for any or all scholarship assistance provided under
  this section shall be forgiven upon the recipient's prompt return to his or
  her country of domicile for a period which is at least one year longer than
  the period spent studying in the United States with scholarship assistance.
  (g) PRIVATE SECTOR PARTICIPATION- To the maximum extent practicable, each
  participating State shall enlist the assistance of the private sector
  to enable the State to meet the non-Federal share of payments under this
  section. Wherever appropriate, each participating State shall encourage
  the private sector to offer internships or other opportunities consistent
  with the purposes of this section to students receiving scholarships under
  this section.
  (h) FUNDING- Any funds used in carrying out this section shall be derived
  from funds allocated for Latin American and Caribbean regional programs
  under chapter 4 of part II of the Foreign Assistance Act of 1961 (22
  U.S.C. 2346 and following; relating to the economic support fund).
  (i) DEFINITIONS- As used in this section--
  (1) The term `eligible country' means any country--
  (A) which is receiving assistance under chapter 1 of part I of the
  Foreign Assistance Act of 1961 (22 U.S.C. 2151 and following; relating to
  development assistance) or chapter 4 of part II of that Act (22 U.S.C. 2346
  and following; relating to the economic support fund); and
  (B) which is designated by the President as a beneficiary country pursuant
  to the Caribbean Basin Economic Recovery Act.
  (2) The term `State' means each of the several States, the District of
  Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin
  Islands, the Trust Territory of the Pacific Islands, and the Commonwealth
  of the Northern Mariana Islands.
SEC. 202. PROMOTION OF TOURISM.
  (a) CONGRESSIONAL FINDING- The Congress finds that the tourism industry
  must be recognized as a central element in the economic development and
  political stability of the Caribbean Basin region because of the potential
  that the industry has for increasing employment and foreign exchange
  earnings, establishing important linkages with other related sectors,
  and having a positive complementary effect on trade with the United States.
  (b) FEDERAL AGENCY PRIORITY- It is the sense of the Congress that increased
  tourism and related activities should be developed in the Caribbean Basin
  region as a central part of the Caribbean Basin Initiative program and, to
  that end, the appropriate agencies of the United States Government should
  assign a high priority to projects that promote the tourism industry in
  the Caribbean Basin.
  (c) STUDY- The Secretary of Commerce shall complete the study begun in
  1986 regarding tourism development strategies for the Caribbean Basin
  region. The study shall include--
  (1) information on the mutual benefits received by the United States and the
  Caribbean Basin economies as a result of tourist activity in the area; and
  (2) proposals for developing increased linkages between the tourism industry
  and local industries in the region such as the agro-business.
SEC. 203. PILOT PRECLEARANCE PROGRAM.
  (a) ESTABLISHMENT OF PROGRAM- Subject to subsection (b), the Commissioner
  of Customs shall carry out, during fiscal years 1990 and 1991, preclearance
  operations at a facility of the United States Customs Service in a country
  within the Caribbean Basin which the Commissioner of Customs considers
  appropriate for testing the extent to which the availability of preclearance
  operations can assist in the development of tourism.
  (b) RESTRICTIONS REGARDING PROGRAM-
  (1) The Commissioner of Customs may not consider a country within the
  Caribbean Basin to be appropriate for the testing referred to in subsection
  (a)--
  (A) if preclearance operations are currently carried out by the United
  States Customs Service in that country; or
  (B) unless immigration preinspection operations are currently carried out
  in that country with respect to individuals traveling to the United States.
  (2) Preclearance operations may not be commenced in the country selected
  for testing under subsection (a) unless the Commissioner of Customs and
  the Commissioner of Immigration and Naturalization jointly certify that--
  (A) there exists a bilateral agreement between the United States Government
  and the government of such country which protects the interests of the
  United States and affords diplomatic protection to United States employees
  working at the preclearance location;
  (B) the facilities at the preclearance location conform to Federal Inspection
  Services standards and are suitable for the duties to be performed therein;
  (C) there is adequate security around the structure used for the reception
  of international arrivals;
  (D) the government of such country grants the United States Customs Service
  and the United States Immigration and Naturalization Service appropriate
  search, seizure, and arrest authority; and
  (E) United States employees and their families will not be subject to fear
  of reprisal, acts of terrorism, and threats of intimidation.
  (c) REPORT- As soon as practicable after September 30, 1991, the Commissioner
  of Customs shall submit to the Congress a report regarding the preclearance
  operations program carried out under subsection (a). The report shall
  include--
  (1) a summary of the preclearance operations, including the number of
  individuals processed, any administrative problems encountered, and cost
  of the operations;
  (2) an evaluation of the extent to which the preclearance operations
  contributed to--
  (A) the stimulation of the tourism industry of the country concerned, and
  (B) expedited customs processing at United States ports of entry;
  (3) the opinion of the Commissioner of Customs regarding the efficacy of
  extending preclearance operations to other countries within the Caribbean
  Basin that are developing tourism industries, and if the opinion is
  affirmative, the identity of those countries to which such operations should
  be extended and the estimated costs and results of such extensions; and
  (4) such other matters that the Commissioner of Customs considers relevant.
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  (A) there exists a bilateral agreement between the United States Government
  and the government of