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105th Congress                                                   Report
 2d Session             HOUSE OF REPRESENTATIVES                105-443
_______________________________________________________________________


 
                TROPICAL FOREST CONSERVATION ACT OF 1998
                                _______
                                

 March 13, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Gilman, from the Committee on International Relations, submitted 
                             the following

                              R E P O R T

                        [To accompany H.R. 2870]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on International Relations, to whom was 
referred the bill (H.R. 2870) to amend the Foreign Assistance 
Act of 1961 to facilitate protection of tropical forests 
through debt reduction with developing countries with tropical 
forests, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. DEBT REDUCTION FOR DEVELOPING COUNTRIES WITH TROPICAL 
                    FORESTS.

  The Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.) is 
amended by adding at the end the following:

``PART V--DEBT REDUCTION FOR DEVELOPING COUNTRIES WITH TROPICAL FORESTS

``SEC. 801. SHORT TITLE.

  ``This part may be cited as the `Tropical Forest Conservation Act of 
1998'.

``SEC. 802. FINDINGS AND PURPOSES.

  ``(a) Findings.--The Congress finds the following:
          ``(1) It is the established policy of the United States to 
        support and seek protection of tropical forests around the 
        world.
          ``(2) Tropical forests provide a wide range of benefits to 
        humankind by--
                  ``(A) harboring a major share of the Earth's 
                biological and terrestrial resources, which are the 
                basis for developing pharmaceutical products and 
                revitalizing agricultural crops;
                  ``(B) playing a critical role as carbon sinks in 
                reducing greenhouse gases in the atmosphere, thus 
                moderating potential global climate change; and
                  ``(C) regulating hydrological cycles on which far-
                flung agricultural and coastal resources depend.
          ``(3) International negotiations and assistance programs to 
        conserve forest resources have proliferated over the past 
        decade, but the rapid rate of tropical deforestation continues 
        unabated.
          ``(4) Developing countries with urgent needs for investment 
        and capital for development have allocated a significant amount 
        of their forests to logging concessions.
          ``(5) Poverty and economic pressures on the populations of 
        developing countries have, over time, resulted in clearing of 
        vast areas of forest for conversion to agriculture, which is 
        often unsustainable in the poor soils underlying tropical 
        forests.
          ``(6) Debt reduction can reduce economic pressures on 
        developing countries and result in increased protection for 
        tropical forests.
  ``(b) Purposes.--The purposes of this part are--
          ``(1) to recognize the values received by United States 
        citizens from protection of tropical forests;
          ``(2) to facilitate greater protection of tropical forests 
        (and to give priority to protecting tropical forests with the 
        highest levels of biodiversity and under the most severe 
        threat) by providing for the alleviation of debt in countries 
        where tropical forests are located, thus allowing the use of 
        additional resources to protect these critical resources and 
        reduce economic pressures that have led to deforestation;
          ``(3) to ensure that resources freed from debt in such 
        countries are targeted to protection of tropical forests and 
        their associated values; and
          ``(4) to rechannel existing resources to facilitate the 
        protection of tropical forests.

``SEC. 803. DEFINITIONS.

  ``As used in this part:
          ``(1) Administering body.--The term `administering body' 
        means the entity provided for in section 809(c).
          ``(2) Appropriate congressional committees.--The term 
        `appropriate congressional committees' means--
                  ``(A) the Committee on International Relations and 
                the Committee on Appropriations of the House of 
                Representatives; and
                  ``(B) the Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate.
          ``(3) Beneficiary country.--The term `beneficiary country' 
        means an eligible country with respect to which the authority 
        of section 806(a)(1), section 807(a)(1), or paragraph (1) or 
        (2) of section 808(a) is exercised.
          ``(4) Board.--The term `Board' means the board referred to in 
        section 811.
          ``(5) Developing country with a tropical forest.--The term 
        `developing country with a tropical forest' means--
                  ``(A)(i) a country that has a per capita income of 
                $725 or less in 1994 United States dollars (commonly 
                referred to as `low-income country'), as determined and 
                adjusted on an annual basis by the International Bank 
                for Reconstruction and Development in its World 
                Development Report; or
                  ``(ii) a country that has a per capita income of more 
                than $725 but less than $8,956 in 1994 United States 
                dollars (commonly referred to as `middle-income 
                country'), as determined and adjusted on an annual 
                basis by the International Bank for Reconstruction and 
                Development in its World Development Report; and
                  ``(B) a country that contains at least one tropical 
                forest that is globally outstanding in terms of its 
                biological diversity or represents one of the larger 
                intact blocks of tropical forests left, on a regional, 
                continental, or global scale.
          ``(6) Eligible country.--The term `eligible country' means a 
        country designated by the President in accordance with section 
        805.
          ``(7) Tropical forest agreement.--The term `Tropical Forest 
        Agreement' or `Agreement' means a Tropical Forest Agreement 
        provided for in section 809.
          ``(8) Tropical forest facility.--The term `Tropical Forest 
        Facility' or `Facility' means the Tropical Forest Facility 
        established in the Department of the Treasury by section 804.
          ``(9) Tropical forest fund.--The term `Tropical Forest Fund' 
        or `Fund' means a Tropical Forest Fund provided for in section 
        810.

``SEC. 804. ESTABLISHMENT OF THE FACILITY.

  ``There is established in the Department of the Treasury an entity to 
be known as the `Tropical Forest Facility' for the purpose of providing 
for the administration of debt reduction in accordance with this part.

``SEC. 805. ELIGIBILITY FOR BENEFITS.

  ``(a) In General.--To be eligible for benefits from the Facility 
under this part, a country shall be a developing country with a 
tropical forest--
          ``(1) whose government meets the requirements applicable to 
        Latin American or Caribbean countries under paragraphs (1) 
        through (5) and (7) of section 703(a) of this Act;
          ``(2) that has put in place major investment reforms, as 
        evidenced by the conclusion of a bilateral investment treaty 
        with the United States, implementation of an investment sector 
        loan with the Inter-American Development Bank, World Bank-
        supported investment reforms, or other measures, as 
        appropriate; and
          ``(3) whose government meets other requirements related to 
        its environmental policies and practices, as determined by the 
        President.
  ``(b) Eligibility Determinations.--
          ``(1) In general.--Consistent with subsection (a), the 
        President shall determine whether a country is eligible to 
        receive benefits under this part.
          ``(2) Congressional notification.--The President shall notify 
        the appropriate congressional committees of his intention to 
        designate a country as an eligible country at least 15 days in 
        advance of any formal determination.

``SEC. 806. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
                    CONCESSIONAL LOANS UNDER THE FOREIGN ASSISTANCE ACT 
                    OF 1961.

  ``(a) Authority To Reduce Debt.--
          ``(1) Authority.--The President may reduce the amount owed to 
        the United States (or any agency of the United States) that is 
        outstanding as of January 1, 1997, as a result of concessional 
        loans made to an eligible country by the United States under 
        part I of this Act, chapter 4 of part II of this Act, or 
        predecessor foreign economic assistance legislation.
          ``(2) Authorization of appropriations.--For the cost (as 
        defined in section 502(5) of the Federal Credit Reform Act of 
        1990) for the reduction of any debt pursuant to this section, 
        there are authorized to be appropriated to the President--
                  ``(A) $25,000,000 for fiscal year 1999;
                  ``(B) $75,000,000 for fiscal year 2000; and
                  ``(C) $100,000,000 for fiscal year 2001.
          ``(3) Certain prohibitions inapplicable.--
                  ``(A) In general.--A reduction of debt pursuant to 
                this section shall not be considered assistance for 
                purposes of any provision of law limiting assistance to 
                a country.
                  ``(B) Additional requirement.--The authority of this 
                section may be exercised notwithstanding section 620(r) 
                of this Act or section 321 of the International 
                Development and Food Assistance Act of 1975.
  ``(b) Implementation of Debt Reduction.--
          ``(1) In general.--Any debt reduction pursuant to subsection 
        (a) shall be accomplished at the direction of the Facility by 
        the exchange of a new obligation for obligations of the type 
        referred to in subsection (a) outstanding as of the date 
        specified in subsection (a)(1).
          ``(2) Exchange of obligations.--
                  ``(A) In general.--The Facility shall notify the 
                agency primarily responsible for administering part I 
                of this Act of an agreement entered into under 
                paragraph (1) with an eligible country to exchange a 
                new obligation for outstanding obligations.
                  ``(B) Additional requirement.--At the direction of 
                the Facility, the old obligations that are the subject 
                of the agreement shall be canceled and a new debt 
                obligation for the country shall be established 
                relating to the agreement, and the agency primarily 
                responsible for administering part I of this Act shall 
                make an adjustment in its accounts to reflect the debt 
                reduction.
  ``(c) Additional Terms and Conditions.--The following additional 
terms and conditions shall apply to the reduction of debt under 
subsection (a)(1) in the same manner as such terms and conditions apply 
to the reduction of debt under section 704(a)(1) of this Act:
          ``(1) The provisions relating to repayment of principal under 
        section 705 of this Act.
          ``(2) The provisions relating to interest on new obligations 
        under section 706 of this Act.

``SEC. 807. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
                    CREDITS EXTENDED UNDER TITLE I OF THE AGRICULTURAL 
                    TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954.

  ``(a) Authority To Reduce Debt.--
          ``(1) Authority.--Notwithstanding any other provision of law, 
        the President may reduce the amount owed to the United States 
        (or any agency of the United States) that is outstanding as of 
        January 1, 1997, as a result of any credits extended under 
        title I of the Agricultural Trade Development and Assistance 
        Act of 1954 (7 U.S.C. 1701 et seq.) to a country eligible for 
        benefits from the Facility.
          ``(2) Authorization of appropriations.--For the cost (as 
        defined in section 502(5) of the Federal Credit Reform Act of 
        1990) for the reduction of any debt pursuant to this section, 
        there are authorized to be appropriated to the President--
                  ``(A) $25,000,000 for fiscal year 1999;
                  ``(B) $50,000,000 for fiscal year 2000; and
                  ``(C) $50,000,000 for fiscal year 2001.
  ``(b) Implementation of Debt Reduction.--
          ``(1) In general.--Any debt reduction pursuant to subsection 
        (a) shall be accomplished at the direction of the Facility by 
        the exchange of a new obligation for obligations of the type 
        referred to in subsection (a) outstanding as of the date 
        specified in subsection (a)(1).
          ``(2) Exchange of obligations.--
                  ``(A) In general.--The Facility shall notify the 
                Commodity Credit Corporation of an agreement entered 
                into under paragraph (1) with an eligible country to 
                exchange a new obligation for outstanding obligations.
                  ``(B) Additional requirement.--At the direction of 
                the Facility, the old obligations that are the subject 
                of the agreement shall be canceled and a new debt 
                obligation shall be established for the country 
                relating to the agreement, and the Commodity Credit 
                Corporation shall make an adjustment in its accounts to 
                reflect the debt reduction.
  ``(c) Additional Terms and Conditions.--The following additional 
terms and conditions shall apply to the reduction of debt under 
subsection (a)(1) in the same manner as such terms and conditions apply 
to the reduction of debt under section 604(a)(1) of the Agricultural 
Trade Development and Assistance Act of 1954 (7 U.S.C. 1738c):
          ``(1) The provisions relating to repayment of principal under 
        section 605 of such Act.
          ``(2) The provisions relating to interest on new obligations 
        under section 606 of such Act.

``SEC. 808. AUTHORITY TO ENGAGE IN DEBT-FOR-NATURE SWAPS AND DEBT 
                    BUYBACKS.

  ``(a) Loans and Credits Eligible for Sale, Reduction, or 
Cancellation.--
          ``(1) Debt-for-nature swaps.--
                  ``(A) In general.--Notwithstanding any other 
                provision of law, the President may, in accordance with 
                this section, sell to any eligible purchaser described 
                in subparagraph (B) any concessional loans described in 
                section 806(a)(1) or any credits described in section 
                807(a)(1), or on receipt of payment from an eligible 
                purchaser described in subparagraph (B), reduce or 
                cancel such loans (or credits) or portion thereof, only 
                for the purpose of facilitating a debt-for-nature swap 
                to support eligible activities described in section 
                809(d).
                  ``(B) Eligible purchaser described.--A loan or credit 
                may be sold, reduced, or canceled under subparagraph 
                (A) only to a purchaser who presents plans satisfactory 
                to the President for using the loan or credit for the 
                purpose of engaging in debt-for-nature swaps to support 
                eligible activities described in section 809(d).
                  ``(C) Consultation requirement.--Before the sale 
                under subparagraph (A) to any eligible purchaser 
                described in subparagraph (B), or any reduction or 
                cancellation under such subparagraph (A), of any loan 
                or credit made to an eligible country, the President 
                shall consult with the country concerning the amount of 
                loans or credits to be sold, reduced, or canceled and 
                their uses for debt-for-nature swaps to support 
                eligible activities described in section 809(d).
                  ``(D) Authorization of appropriations.--For the cost 
                (as defined in section 502(5) of the Federal Credit 
                Reform Act of 1990) for the reduction of any debt 
                pursuant to subparagraph (A), amounts authorized to 
                appropriated under sections 806(a)(2) and 807(a)(2) 
                shall be made available for such reduction of debt 
                pursuant to subparagraph (A).
          ``(2) Debt buybacks.--Notwithstanding any other provision of 
        law, the President may, in accordance with this section, sell 
        to any eligible country any concessional loans described in 
        section 806(a)(1) or any credits described in section 
        807(a)(1), or on receipt of payment from an eligible country, 
        reduce or cancel such loans (or credits) or portion thereof, 
        only for the purpose of facilitating a debt buyback by an 
        eligible country of its own qualified debt, only if the 
        eligible country uses an additional amount of the local 
        currency of the eligible country, equal to not less than the 
        lesser of 40 percent of the price paid for such debt by such 
        eligible country, or the difference between the price paid for 
        such debt and the face value of such debt, to support eligible 
        activities described in section 809(d).
          ``(3) Terms and conditions.--Notwithstanding any other 
        provision of law, the President shall, in accordance with this 
        section, establish the terms and conditions under which loans 
        and credits may be sold, reduced, or canceled pursuant to this 
        section.
          ``(4) Administration.--
                  ``(A) In general.--The Facility shall notify the 
                administrator of the agency primarily responsible for 
                administering part I of this Act or the Commodity 
                Credit Corporation, as the case may be, of eligible 
                purchasers described in paragraph (1)(B) that the 
                President has determined to be eligible under paragraph 
                (1), and shall direct such agency or Corporation, as 
                the case may be, to carry out the sale, reduction, or 
                cancellation of a loan pursuant to such paragraph.
                  ``(B) Additional requirement.--Such agency or 
                Corporation, as the case may be, shall make an 
                adjustment in its accounts to reflect the sale, 
                reduction, or cancellation.
  ``(b) Deposit of Proceeds.--The proceeds from the sale, reduction, or 
cancellation of any loan sold, reduced, or canceled pursuant to this 
section shall be deposited in the United States Government account or 
accounts established for the repayment of such loan.

``SEC. 809. TROPICAL FOREST AGREEMENT.

  ``(a) Authority.--
          ``(1) In general.--The Secretary of State is authorized, in 
        consultation with other appropriate officials of the Federal 
        Government, to enter into a Tropical Forest Agreement with any 
        eligible country concerning the operation and use of the Fund 
        for that country.
          ``(2) Consultation.--In the negotiation of such an Agreement, 
        the Secretary shall consult with the Board in accordance with 
        section 811.
  ``(b) Contents of Agreement.--The requirements contained in section 
708(b) of this Act (relating to contents of an agreement) shall apply 
to a Agreement in the same manner as such requirements apply to an 
Americas Framework Agreement.
  ``(c) Administering Body.--
          ``(1) In general.--Amounts disbursed from the Fund in each 
        beneficiary country shall be administered by a body constituted 
        under the laws of that country.
          ``(2) Composition.--
                  ``(A) In general.--The administering body shall 
                consist of--
                          ``(i) one or more individuals appointed by 
                        the United States Government;
                          ``(ii) one or more individuals appointed by 
                        the government of the beneficiary country; and
                          ``(iii) individuals who represent a broad 
                        range of--
                                  ``(I) environmental nongovernmental 
                                organizations of, or active in, the 
                                beneficiary country;
                                  ``(II) local community development 
                                nongovernmental organizations of the 
                                beneficiary country; and
                                  ``(III) scientific or academic 
                                organizations or institutions of the 
                                beneficiary country.
                  ``(B) Additional requirement.--A majority of the 
                members of the administering body shall be individuals 
                described in subparagraph (A)(iii).
          ``(3) Responsibilities.--The requirements contained in 
        section 708(c)(3) of this Act (relating to responsibilities of 
        the administering body) shall apply to an administering body 
        described in paragraph (1) in the same manner as such 
        requirements apply to an administering body described in 
        section 708(c)(1) of this Act.
  ``(d) Eligible Activities.--Amounts deposited in a Fund shall be used 
to provide grants to preserve, maintain, and restore the tropical 
forests in the beneficiary country, including one or more of the 
following activities:
          ``(1) Establishment, restoration, protection, and maintenance 
        of parks, protected areas, and reserves.
          ``(2) Development and implementation of scientifically sound 
        systems of natural resource management, including land and 
        ecosystem management practices.
          ``(3) Training programs to strengthen conservation 
        institutions and increase scientific, technical, and managerial 
        capacities of individuals and organizations involved in 
        conservation efforts.
          ``(4) Restoration, protection, or sustainable use of diverse 
        animal and plant species.
          ``(5) Mitigation of greenhouse gases in the atmosphere.
          ``(6) Development and support of the livelihoods of 
        individuals living in or near a tropical forest, including the 
        cultures of such individuals, in a manner consistent with 
        protecting such tropical forest.
  ``(e) Grant Recipients.--
          ``(1) In general.--Grants made from a Fund shall be made to--
                  ``(A) nongovernmental environmental, conservation, 
                and indigenous people organizations of, or active in, 
                the beneficiary country;
                  ``(B) other appropriate local or regional entities 
                of, or active in, the beneficiary country; and
                  ``(C) in exceptional circumstances, the government of 
                the beneficiary country.
          ``(2) Priority.--In providing grants under paragraph (1), 
        priority shall be given to projects that are run by 
        nongovernmental organizations and other private entities and 
        that involve local communities in their planning and execution.
  ``(f) Review of Larger Grants.--Any grant of more than $100,000 from 
a Fund shall be subject to veto by the Government of the United States 
or the government of the beneficiary country.
  ``(g) Eligibility Criteria.--In the event that a country ceases to 
meet the eligibility requirements set forth in section 805(a), as 
determined by the President pursuant to section 805(b), then grants 
from the Fund for that country may only be made to nongovernmental 
organizations until such time as the President determines that such 
country meets the eligibility requirements set forth in section 805(a).

``SEC. 810. TROPICAL FOREST FUND.

  ``(a) Establishment.--Each beneficiary country that enters into a 
Tropical Forest Agreement under section 809 shall be required to 
establish a Tropical Forest Fund to receive payments of interest on new 
obligations undertaken by the beneficiary country under this part.
  ``(b) Requirements Relating to Operation of Fund.--The following 
terms and conditions shall apply to the Fund in the same manner as such 
terms and conditions apply to an Enterprise for the Americas Fund under 
section 707 of this Act:
          ``(1) The provision relating to deposits under subsection (b) 
        of such section.
          ``(2) The provision relating to investments under subsection 
        (c) of such section.
          ``(3) The provision relating to disbursements under 
        subsection (d) of such section.

``SEC. 811. BOARD.

  ``(a) Enterprise for the Americas Board.--The Enterprise for the 
Americas Board established under section 610(a) of the Agricultural 
Trade Development and Assistance Act of 1954 (7 U.S.C. 1738i(a)) shall, 
in addition to carrying out the responsibilities of the Board under 
section 610(c) of such Act, carry out the duties described in 
subsection (c) of this section for the purposes of this part.
  ``(b) Additional Membership.--
          ``(1) In general.--The Enterprise for the Americas Board 
        shall be composed of an additional four members appointed by 
        the President as follows:
                  ``(A) Two representatives from the United States 
                Government.
                  ``(B) Two representatives from private 
                nongovernmental environmental, scientific, and academic 
                organizations with experience and expertise in 
                preservation, maintenance, and restoration of tropical 
                forests.
          ``(2) Chairperson.--Notwithstanding section 610(b)(2) of the 
        Agricultural Trade Development and Assistance Act of 1954 (7 
        U.S.C. 1738i(b)(2)), the Enterprise for the Americas Board 
        shall be headed by a chairperson who shall be appointed by the 
        President from among the representatives appointed under 
        section 610(b)(1)(A) of such Act or paragraph (1)(A) of this 
        subsection.
  ``(c) Duties.--The duties described in this subsection are as 
follows:
          ``(1) Advise the Secretary of State on the negotiations of 
        Tropical Forest Agreements.
          ``(2) Ensure, in consultation with--
                  ``(A) the government of the beneficiary country,
                  ``(B) nongovernmental organizations of the 
                beneficiary country,
                  ``(C) nongovernmental organizations of the region (if 
                appropriate),
                  ``(D) environmental, scientific, and academic leaders 
                of the beneficiary country, and
                  ``(E) environmental, scientific, and academic leaders 
                of the region (as appropriate),
        that a suitable administering body is identified for each Fund.
          ``(3) Review the programs, operations, and fiscal audits of 
        each administering body.

``SEC. 812. CONSULTATIONS WITH THE CONGRESS.

  ``The President shall consult with the appropriate congressional 
committees on a periodic basis to review the operation of the Facility 
under this part and the eligibility of countries for benefits from the 
Facility under this part.

``SEC. 813. ANNUAL REPORTS TO THE CONGRESS.

  ``(a) In General.--Not later than December 31 of each fiscal year, 
the President shall prepare and transmit to the Congress an annual 
report concerning the operation of the Facility for the prior fiscal 
year. Such report shall include--
          ``(1) a description of the activities undertaken by the 
        Facility during the previous fiscal year;
          ``(2) a description of any Agreement entered into under this 
        part;
          ``(3) a report on any Funds that have been established under 
        this part and on the operations of such Funds; and
          ``(4) a description of any grants that have been provided by 
        administering bodies pursuant to Agreements under this part.
  ``(b) Supplemental Views in Annual Report.--Not later than December 
15 of each fiscal year, each member of the Board shall be entitled to 
receive a copy of the report required under subsection (a). Each member 
of the Board may prepare and submit supplemental views to the President 
on the implementation of this part by December 31 for inclusion in the 
annual report when it is transmitted to Congress pursuant to this 
section.''.

                         Background and Purpose

                               In General

    H.R. 2870, the Tropical Forest Conservation Act of 1998, 
was introduced on November 7, 1997 by Mr. Portman, Mr. Kasich 
and Mr. Hamilton. The bill amends the Foreign Assistance Act of 
1961 to facilitate the protection of tropical forests through 
debt reduction for developing countries with tropical forests.

               The Problem--Diminishing Tropical Forests

    Tropical forests are home to half of all known species of 
plants and animals. These forests, which include rain, moist 
and dry forests, absorb massive quantities of carbon dioxide, 
thereby reducing greenhouse gases. Tropical forests serve as 
the anchor of the growing eco-tourism industry. These forests 
regulate rainfall and are genetic storehouses of materials 
essential for new medicines, strains of grain and other 
products essential to boosting the health and productivity of 
the world's economy in the 21st century. Genetic diversity used 
in plant breeding accounts for about one-half of all the grains 
in agricultural yields in the U.S. between 1930 and 1980. One 
quarter of all prescription drugs in the U.S. contain compounds 
derived from wild species.
    Since 1950, half of all tropical forests have been burned 
or logged. From 1980 to 1990, tropical forest areas have been 
shrinking on an average of 30-40 million acres (15.4 million 
hectares) per year. This represents an area the size of 
Pennsylvania denuded of forest cover each year. In sum, 
approximately .8% of the world's total remaining tropical 
forest cover is lost each year. At the current rate, half of 
all tropical forests will be lost by 2030. By 2015, 6% of all 
known living species will become extinct.
    While 76 countries contain tropical forests, half of the 
remaining forest cover is located in four countries: Brazil, 
Indonesia, Peru and the Democratic Republic of the Congo 
(Zaire). These four countries plus Mexico and Bolivia account 
for over half of tropical deforestation. The loss of habitats 
is clearest on islands. When the Philippine island of Cebu was 
completely logged, nine out of the island's ten species of 
birds unique to the island became extinct.

                     Developing Country Debt Crisis

    Developing countries where most tropical forests are 
located suffer from a number of problems including massive 
debts to international creditors. Following their independence 
and growing economies during the 1950s and 1960s, many 
developing countries borrowed heavily from the private sector, 
multilateral banks and foreign governments to finance their 
development. With the recession of the 1970s following the oil 
price shocks, many developing countries were unable to repay 
their debts. Developing country debts topped $1.2 trillion in 
the late 1980s, much of which could not be repaid. While newly 
industrializing countries like Mexico eventually worked their 
way out of bankruptcy, many other developing countries 
stagnated under debts built up over years past. As a result, 
many developing country governments were unable to foster the 
conservation of unique habitats within their borders.

                     The First Debt-for-Nature Swap

    The debt crisis presented a unique opportunity for 
supporters of conservation who could help developing countries 
work their way out of debt. The world's first major debt-for-
nature swap was arranged by Conservation International (CI), a 
U.S. environmental organization, in 1987. Using $100,000 
donated by the Frank Weeden Foundation, CI purchased $650,000 
in debt owed by the Bolivian government. CI agreed to cancel 
the debt in return for the Bolivian government's promise to 
protect 3.7 million acres in what became the Beni Biosphere 
Reserve. The government of Bolivia endowed a fund with $100,000 
to help manage the reserve. The U.S. Agency for International 
Development (AID) also contributed $250,000 to the management 
fund. These funds support the Bolivian National Academy of 
Sciences to manage and conserve the reserve.

            The Enterprise for the Americas Initiative (EAI)

    President Bush accelerated such transactions under his 
Enterprise for the Americas Initiative (EAI). One main pillar 
of the EAI was debt-for-nature swaps. Under the EAI as approved 
by Congress in 1991, the United States forgave $874 million out 
of $1.6 billion in debts owed by seven Latin American 
countries. The cost of reducing such debt to the U.S. was $90 
million. In return, these countries endowed conservation funds 
with $154 million to be spent for conservation purposes. Under 
the EAI, an international board in each host country composed 
of representatives of the U.S. government, host country and 
Non-Governmental (NGO) representatives supervised the forest 
management and other projects supported by the endowments.
    Debt relief for the poorest countries remains a high 
priority for President Clinton. Under the President's Highly 
Indebted Poor Country (HIPC) program, the United States and 
other official creditors are offering increased debt relief for 
the poorest countries that continue to sink under the weight of 
old loans.
    The Committee notes that many developing countries 
participating in the Enterprise for the Americas Initiative 
(EAI) established a successful track record in making debt 
reduction proceeds available for environmental projects. The 
Environmental Fund for Jamaica, for example, has used $12 
million to provide funding for more than 200 projects in 
Jamaica, including several relating to reforestation and the 
protection of endangered species in forest habitats. El 
Salvador's national EAI fund has allocated nearly $10 million 
for a variety of environmental education projects, including 
many relating to biodiversity and reforestation. The Committee 
believes that such debt-for-nature swaps represent an important 
model for the kind of debt reduction authorized in this 
legislation, and would welcome the full participation of these 
countries in the new facility.

                   The Tropical Forest Protection Act

    H.R. 2870 follows in the legislative path of the EAI in a 
number of important aspects. It authorizes the Treasury 
Department to offer countries debt relief for commitments to 
conservation in much the same way as the EAI. It differs from 
the EAI in four key aspects:
          Programs would be focused on tropical forest 
        conservation,
          Debtors outside the Americas would be eligible for 
        relief,
          Debt beyond the stock offered under the EAI may be 
        offered for relief, and
          Cost-free debt buybacks by developing countries and 
        swaps with eligible third parties are specifically 
        permitted.
    As shown above, many key tropical forests are outside of 
the Americas. Under H.R. 2870, the U.S. government would be 
able to rechannel existing resources to use the EAI debt-relief 
mechanism to offer debt relief for the protection of these key 
habitats. The Act would also permit the Treasury Department to 
offer AID and Department of Agriculture debt beyond amounts 
authorized under the EAI for relief and permit eligible third 
parties to purchase debt for the beneficiary country in 
exchange for that country's providing substantial local 
currency for tropical forest conservation. Finally, the U.S. 
government would be authorized to offer the innovative debt 
buyback mechanism to middle income developing countries in 
transactions that do not have an impact on the U.S. budget. 
Under such transactions, a debtor country may repurchase its 
debt at a fair market value in return for commitments to 
protect tropical forests. The government of Peru recently 
carried out such a transaction with the U.S. at no net cost to 
the taxpayer. Testimony from both the private sector and the 
Administration has verified the importance of the programs 
provided for in this Act to reduce developing country debt and 
preserve tropical forests.

                            Committee Action

    On March 4, 1998, the Full Committee held a hearing on H.R. 
2870, The Tropical Forest Protection Act. Witnesses for the 
hearing included: Hon. Rob Portman, Member of Congress; Mr. 
Thomas Fox, Assistant Administrator, Policy and Planning 
Bureau, Agency for International Development; Ms. Mary Chaves, 
Director, International Debt Policy, Department of Treasury; 
Ms. Tia Nelson, Senior Policy Advisor for Latin American and 
Caribbean Programs, The Nature Conservancy; Mr. Ian Bowles, 
Vice President of Conservation Policy, Conservation 
International; and Mr. James Resor, Director of Conservation 
Finance, World Wildlife Fund.
    H.R. 2870 was introduced by Rep. Portman on November 7, 
1997. The Full Committee marked up the bill in open session, 
pursuant to notice, on March 11, 1998. During the debate, 
testimony was taken from three Administration officials, Mr. 
Michael Klosson, Deputy Assistant Secretary of State for 
Legislative Affairs; Ms. Mary Chaves, Director, International 
Debt Policy, Department of Treasury; and Mr. James Hester, 
Agency Environmental Coordinator, Agency for International 
Development.
    The Full Committee considered the bill as original text for 
the purpose of amendment and took the following preliminary 
action, by voice vote: Adopted the Gilman amendment in the 
nature of a substitute as amended by a Campbell amendment. 
After concluding consideration of the bill, with a quorum being 
present, the Committee ordered the bill favorably reported to 
the House by voice vote.

                            Roll Call Votes

    Clause (2)(l)(2)(B) of rule XI of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report legislation and amendments 
thereto. No roll call votes were held on the motion to report 
the legislation or on amendments to the legislation.

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
the findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    The Committee adopts the cost estimate of the Congressional 
Budget Office, set out below, as its submission of any required 
information on new budget authority, new spending authority, 
new credit authority, or an increase or decrease in the 
national debt required by clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives.

                       Federal Mandates Statement

    The Committee adopted as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                Applicability to the Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                   Constitutional Authority Statement

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Committee cites the 
following specific powers granted to the Congress in the 
Constitution as authority for enactment of H.R. 2870 as 
reported by the Committee: Article I, section 8, clause 3 
(relating to the regulation of commerce with foreign nations 
and among the several states); and Article I, section 8, clause 
18 (relating to making all laws necessary and proper for 
carrying into execution powers vested by the Constitution in 
the government of the United States).

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets forth 
with respect to H.R. 2870 as reported by the Committee the 
following estimate and comparison prepared by the Director of 
the Congressional Budget Office under section 403 of the Budget 
Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 13, 1998.
Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2870, the Tropical 
Forest Conservation Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Joseph C. 
Whitehill.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 2870--Tropical Forest Conservation Act of 1998

    Summary: H.R. 2870 would authorize the Secretary of State 
to negotiate agreements with eligible countries to create local 
funds administered by local boards with the authority to make 
grants to preserve, maintain, and restore tropical forests. The 
local funds would receive a stream of interest payments 
generated by modifying the terms of outstanding development 
assistance or food-aid debt owed to the United States. In 
addition, the bill would authorize the President to reduce or 
cancel such debt, to use the debt for debt-for-nature swaps, or 
to allow an eligible country to buy back its debt. The bill 
would authorize the appropriation of $325 million over the 
fiscal years 1999-2001 for the cost of modifying debt, and CBO 
estimates that outlays totaling that amount would be recorded 
over the 1999-2003 period.
    Because H.R. 2870 would not affect direct spending or 
receipts, pay-as-you-go procedures would not apply. The bill 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act of 1995 (UMRA), and 
would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2870 is shown in the following table. 
The costs of this legislation fall within budget function 150 
(international affairs).
    Basis of estimate: The estimate assumes enactment of H.R. 
2870 and subsequent appropriation of the amounts authorized by 
the bill. Outlays would be recorded at the time outstanding 
debt are modified. The estimated assumes it will take from one 
to three years to negotiate agreements with eligible countries 
and to sign bilateral agreements that cancel, reduce, sell, or 
otherwise modify outstanding debt.

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Spending under current law for debt restructuring:                                                              
    Budget authority \1\..................................       27        0        0        0        0        0
    Estimated outlays.....................................       31       15        1        0        0        0
Proposed changes:                                                                                               
    Authorization level...................................        0       50      125      150        0        0
    Estimated outlays.....................................        0       23       81      133       81        8
Spending under H.R. 2870 for debt restructuring:                                                                
    Authorization level \1\...............................       27       50      125      150        0        0
    Estimated outlays.....................................       31       38       82      133       81       8 
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    

    Pay-as-you-go considerations: None.
    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 Costs: Joseph C. Whitehill; 
Impact on State, Local, and Tribal Governments: Pepper 
Santalucia; Impact on the Private Sector: Lesley Frymier.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      Section-by-Section Analysis

                         SEC. 801. SHORT TITLE

    This section allows this section of the Foreign Assistance 
Act to be cited as the ``Tropical Forest Conservation Act of 
1998''.

                    SEC. 802. FINDINGS AND PURPOSES

    This section makes the following findings by Congress:
          (1) It is the established policy of the United States 
        to support and seek protection of tropical forests 
        around the world
          (2) Tropical forests provide a wide range of benefits 
        to humankind by--
                  (A) harboring a major share of the Earth's 
                biological and terrestrial resources, which are 
                the basis for developing pharmaceutical 
                products and revitalizing agricultural crops;
                  (B) playing a critical role as carbon sinks 
                in reducing greenhouse gases in the atmosphere, 
                thus moderating potential global climate 
                change; and
                  (C) regulating hydrological cycles on which 
                far-flung agricultural and coastal resources 
                depend.
          (3) International negotiations and assistance 
        programs to conserve forest resources have proliferated 
        over the past decade, but the rapid rate of tropical 
        deforestation continues unabated.
          (4) Developing countries with urgent needs for 
        investment and capital for development have allocated a 
        significant amount of their forests to logging 
        concessions.
          (5) Poverty and economic pressures on the populations 
        of developing countries have, over time, resulted in 
        clearing of vast areas of forest for conversion to 
        agriculture, which is often unsustainable in the poor 
        soils underlying tropical forests.
          (6) Debt reduction can reduce economic pressures on 
        developing countries and result in increased protection 
        for tropical forests.
    The section also sets out the following purposes of the 
Act:
          (1) to recognize the values received by United States 
        citizens from protection of tropical forests;
          (2) to facilitate greater protection of tropical 
        forests (and to give priority to protecting tropical 
        forests with the highest levels of biodiversity and 
        under the most severe threat) by providing for the 
        alleviation of debt in countries where tropical forests 
        are located, thus allowing the use of additional 
        resources to protect these critical resources and 
        reduce economic pressures that have led to 
        deforestation;
          (3) to ensure that resources freed from debt in such 
        countries are targeted to protection of tropical 
        forests and their associated values; and
          (4) to rechannel existing resources to facilitate the 
        protection of tropical forests.

                         SEC. 803. DEFINITIONS

    This section defines the following terms used in the Act:
          (1) Administering body.--The term ``administering 
        body'' means the entity provided for in section 809(c).
          (2) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                  (A) the Committee on International Relations 
                and the Committee on Appropriations of the 
                House of Representatives; and
                  (B) the Committee on Foreign Relations and 
                the Committee on Appropriations of the Senate.
          (3) Beneficiary country.--The term ``beneficiary 
        country'' means an eligible country with respect to 
        which the authority of section 806(a)(1), section 
        807(a)(1), or paragraph (1) or (2) of section 808(a) is 
        exercised.
          (4) Board.--The term ``Board'' means the board 
        referred to in section 811.
          (5) Developing country with a tropical forest.--The 
        term ``developing country with a tropical forest'' 
        means--
                  (A)(i) a country that has a per capita income 
                of $725 or less in 1994 United States dollars 
                (commonly referred to as ``low-income 
                country''), as determined and adjusted on an 
                annual basis by the International Bank for 
                Reconstruction and Development in its World 
                Development Report; or
                  (ii) a country that has a per capita income 
                of more than $725 but less than $8,956 in 1994 
                United States dollars (commonly referred to as 
                ``middle-income country''), as determined and 
                adjusted on an annual basis by the 
                International Bank for Reconstruction and 
                Development in its World Development Report; 
                and
                  (B) a country that contains at least one 
                tropical forest that is globally outstanding in 
                terms of its biological diversity or represents 
                one of the larger intact blocks of tropical 
                forests left, on a regional, continental, or 
                global scale.
          (6) Eligible country.--The term ``eligible country'' 
        means a country designated by the President in 
        accordance with section 805.
          (7) Tropical forest agreement.--The term ``Tropical 
        Forest Agreement'' or ``Agreement'' means a Tropical 
        Forest Agreement provided for in section 809.
          (8) Tropical forest facility.--The term ``Tropical 
        Forest Facility'' or ``Facility'' means theTropical 
Forest Facility established in the Department of the Treasury by 
section 804.
          (9) Tropical forest fund.--The term ``Tropical Forest 
        Fund'' or ``Fund'' means a Tropical Forest Fund 
        provided for in section 810.

                SEC. 804. ESTABLISHMENT OF THE FACILITY

    This section establishes the Tropical Forest Facility in 
the Department of the Treasury to provide for the 
administration of debt reduction in accordance with this part.
    The Committee encourages the Treasury Department to show 
flexibility in the administration and operation of the Tropical 
Forest Facility, Tropical Forest Funds and Tropical Forest 
Agreements to limit bureaucracy and to maximize efficiencies. 
For those beneficiary countries that are also participating in 
the Enterprise for the Americas Initiative, for example, it may 
be advisable for the local administering bodies established 
under Section 809(c) to build on, work with, or consist of the 
same organizations and individuals that are part of the 
administering bodies under the Enterprise for the Americas 
Initiative. It may also be appropriate to consolidate the work 
of, share resources with and otherwise coordinate the Tropical 
Forest Facility and the EAI Facility within the Treasury 
Department. Because the eligible activities under this 
legislation are different from the Enterprise for the Americas 
Initiative and other programs, however, it is essential that 
funds for this program remain segregated from funds for any 
other program. Tropical Forest Agreements must also be separate 
and apart from EAI Framework Agreements for the same reasons.

                   SEC. 805. ELIGIBILITY FOR BENEFITS

    This section establishes the eligibility requirements for 
benefits under the Act. Subsection (a)(1) requires the 
developing country with a tropical forest to meet the 
requirements applicable to Latin American or Caribbean 
countries under paragraphs (1) through (5) and (7) of section 
703(a) of the Foreign Assistance Act.
    These paragraphs contain several requirements. First, the 
government must be democratically elected. Second, the 
government is prohibited from: repeatedly supporting acts of 
international terrorism; failing to cooperate on international 
narcotics control matters; and engaging in violations of 
internationally recognized human rights. Finally, the 
government must receive approval for or (in exceptional cases) 
make significant progress towards an IMF standby arrangement; 
have a structural or sectoral adjustment loan of the World Bank 
in place (unless the President determines that the standby or 
adjustment requirements could reasonably be expected to have 
significant adverse social or environmental effects); and, as 
appropriate, have reached an agreement with commercial bank 
lenders on a satisfactory lending program.
    Subsection (a)(2) requires the developing country to have 
put in place major investment reforms, as evidenced by the 
conclusion of a bilateral investment treaty with the United 
States, implementation of an investment sector loan with the 
Inter-American Development Bank, World Bank-supported 
investment reforms, or other measures, as appropriate. The 
Committee intends that such reforms would be consistent with 
the goals of the Act.
    Subsection (a)(3) requires the developing country to meet 
any other requirements related to its environmental policies 
and practices, as determined by the President.
    Subsection (b)(1) governs eligibility determinations as 
required by subsection (a) and a notification to Congress under 
(b)(2) of whether a country is eligible to receive benefits 
under this part to the appropriate congressional committees of 
his intention to designate a country as an eligible country at 
least 15 days in advance of any formal determination
    The Act requires that in addition to meeting the 
eligibility criteria under EAI, a country must meet other 
requirements related to its environmental policies and 
practices. This provision recognizes the progress that has been 
made by many countries since the enactment of EAI with the 
focus more narrowly placed on the protection of tropical 
forests. It is not the intent of this provision to exclude 
countries that currently do not have environmental policies and 
practices, but only those countries who show no willingness to 
work toward implementing programs that can facilitate the 
activities contemplated under this bill.
    The Act also requires a country to have a government that 
is democratically elected. One of the purposes of this 
legislation is to promote democracy in those areas of the world 
where it has not yet taken hold. The Committee intends to give 
the Administration flexibility in interpreting this provision.
    In addition to the eligibility criteria outlined in the 
legislation, the Committee notes that to qualify under this 
program, a country must have at least one tropical forest that 
is globally outstanding in terms of its biological diversity or 
have a tropical forest that is one of the larger intact blocks 
of tropical forests left, on a regional, continental or global 
scale. The intention of this provision is to ensure that 
limited resources are used in a targeted fashion. When 
exercising the authority under this Act, the President may also 
want to consider the immediacy or severity of the threat posed 
to a tropical forest, such as the burnings that have occurred 
in various countries over the past year. The President may also 
want to consider the potential benefits from the transaction, 
such as the ability to leverage more conservation dollars in 
local currency with the reduction of U.S. debt.
    The Committee notes that there are a number of countries, 
such as Bangladesh, that have tropical forests that are 
significant on a regional scale which should qualify and would 
benefit from reforestation and other conservation efforts 
contemplated under this program. According to the Food and 
Agricultural Organization's Forest Resource Assessment for 
1990, Bangladesh has 769,000 hectares (approximately 1.9 
million acres) of natural forest cover. This habitat is 
critical to the region and is under pressure from Bangladesh's 
high population density. Given Bangladesh's high level of 
indebtedness to the U.S. government, the Committee believes 
that Bangladesh is an ideal candidate fordebt relief under this 
Act. The Committee's understanding of current law is that if debt 
relief is provided to Bangladesh or any other P.L.-480 Title I 
recipient under this Act, that the country will remain eligible for 
agricultural credits. It is the Committee's understanding that 
constraints on new lending under section 411 of the Agricultural Trade 
and Development Assistance Act of 1954 (7 U.S.C. 1701 et seq.) not 
carry over to the provisions of this Act.

 SEC. 806. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
      CONCESSIONAL LOANS UNDER THE FOREIGN ASSISTANCE ACT OF 1961

    Subsection (a) provides the President with the authority to 
reduce debt owed to the United States (or any agency of the 
United States) that is outstanding as of January 1, 1997, as a 
result of concessional loans made to an eligible country by the 
United States under development assistance (part I of the FAA) 
or the economic support fund (chapter 4 of part II), or 
predecessor foreign economic assistance legislation.
    Subsection (a)(2) authorizes appropriations for the cost 
(as defined in section 502(5) of the Federal Credit Reform Act 
of 1990) for the reduction of any debt pursuant to this section 
in the following amounts: $25,000,000 for fiscal year 1999, 
$75,000,000 for fiscal year 2000, and $100,000,000 for fiscal 
year 2001.
    Under subsection (3)(A) debt reductions under this section 
are not considered to be assistance for purposes of any 
provision of law limiting assistance to a country. Subsection 
(B) provides that this authority may be exercised 
notwithstanding requirements for the full repayment of debts to 
the U.S. under section 620(r) of the FAA or section 321 of the 
International Development and Food Assistance Act of 1975.
    Subsection (b) requires the Facility to carry out any debt 
reduction by exchanging new obligations for obligations of the 
type referred to in subsection (a) outstanding as of the date 
specified in subsection (a)(1). Subsection (2)(A) required the 
Facility to notify AID (the agency primarily responsible for 
administering part I of the FAA) of an agreement entered into 
under paragraph (1) with an eligible country to exchange a new 
obligation for outstanding obligations.
    Subsection (c) adds additional terms and conditions for 
debt reduced under subsection (a)(1). These terms must be 
provided in the same manner as such terms and conditions apply 
to the reduction of debt under the EAI (section 704(a)(1) of 
the FAA), including repayment in U.S. dollars (Section 705) and 
that interest be charged at concessional rates (section 706).

 SEC. 807. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
 CREDITS EXTENDED UNDER TITLE I OF THE AGRICULTURAL TRADE DEVELOPMENT 
                       AND ASSISTANCE ACT OF 1954

    This section follows the example of section 806 but 
concerns debt extended under Title I of the Agricultural Trade 
Act of 1954. Subsection (a)(1) provides the authority to the 
President to reduce the amount owed to the United States (or 
any agency of the United States) that is outstanding as of 
January 1, 1997, as a result of any credits extended under 
title I of the Agricultural Trade Development and Assistance 
Act of 1954 (7 U.S.C. 1701 et seq.) to a country eligible for 
benefits from the Facility.
    Subsection (a)(2) authorizes the appropriations of the 
following amounts for cost as defined under section 502(5) of 
the Federal Credit Reform Act of 1990: $25,000,000 for fiscal 
year 1999, $50,000,000 for fiscal year 2000, and $50,000,000 
for fiscal year 2001.
    Subsection (b)(2) requires the Facility to notify the 
Commodity Credit Corporation of an agreement entered into under 
paragraph (1) with an eligible country to exchange a new 
obligation for outstanding obligations.
    Subsection (c) requires the following additional terms and 
conditions shall apply to the reduction of debt under 
subsection (a)(1) in the same manner as such terms and 
conditions apply to the reduction of debt under the EAI section 
of the Agricultural Trade Development and Assistance Act of 
1954 (section 604(a)(1) or 7 U.S.C. 1738c). Other requirements 
include the repayment of principal (section 605), and 
concessional interest (section 606).

    SEC. 808. AUTHORITY TO ENGAGE IN DEBT-FOR-NATURE SWAPS AND DEBT 
                                BUYBACKS

    This section includes new language permitting debtors who 
can afford to repurchase their debts in return for commitments 
to the environment. The Committee understands that the U.S. 
government recently concluded such a transaction with the 
government of Peru.
    Under subsection (a), the President may, in accordance with 
this section, sell to any eligible purchaser described in 
subparagraph (B) any concessional development assistance loans 
described in section 806(a)(1) or any agricultural credits 
described in section 807(a)(1), or on receipt of payment from 
an eligible purchaser described in subparagraph (B), reduce or 
cancel such loans (or credits) or portion thereof, only for the 
purpose of facilitating a debt-for-nature swap to support 
eligible activities described in section 809(d).
    Under subsection (B), loans or credits may be sold, 
reduced, or canceled under subparagraph (A) only to a purchaser 
who presents plans satisfactory to the President for using the 
loan or credit for the purpose of engaging in debt-for-nature 
swaps to support eligible activities described in section 
809(d). Subsection (C) requires that before the sale, or any 
reduction or cancellation of debt, that the President consult 
with the country concerning the amount of loans or credits to 
be sold, reduced, or canceled and their uses for debt-for-
nature swaps to support eligible activities described in 
section 809(d). Subsection (D) limits the authorization of 
appropriations for such purchasers to the amounts authorizedto 
appropriated under sections 806(a)(2) and 807(a)(2).
    Under subsection (2) the President may sell to any eligible 
country any development assistance concessional loans 
(described in section 806(a)(1)) or any agricultural credits 
(described in section 807(a)(1)). On receipt of payment from an 
eligible country, the President may reduce or cancel such loans 
(or credits) or portion thereof, only for the purpose of 
facilitating a debt buyback by an eligible country of its own 
qualified debt. The President may only do this if the eligible 
country uses an additional amount of the local currency of the 
eligible country, equal to not less than the lesser of 40 
percent of the price paid for such debt by such eligible 
country, or the difference between the price paid for such debt 
and the face value of such debt, to support eligible activities 
described in section 809(d).
    For example, if Bolivia owed the U.S. government $1 million 
in development loan debt with a net present value of $600,000, 
the President could sell that debt to Peru for $600,000 only if 
Peru commited to provide the lesser of the difference from the 
purchase price from the face value ($400,000) or 40% of the 
price paid ($240,000). In sum, Peru could purchase $1 million 
of its debt if it paid the U.S. government $600,000 and 
commited $240,000 to tropical forest conservation projects 
managed under an international agreement specified under this 
Act.
    Under subsection (3), funds to carry out swaps and buybacks 
may be made available only to the extent provided in advance by 
appropriations for the cost as defined in section 502(5) of the 
Credit Reform Act of 1990 for the modification of any debt.
    Subsection (4) authorizes the President to establish the 
terms and conditions under which loans and credits may be sold, 
reduced, or canceled pursuant to this section. Subsection (5) 
requires the Facility to notify the administrator of AID or the 
Commodity Credit Corporation (CCC) of eligible purchasers 
described in paragraph (1)(B) that the President has determined 
to be eligible under paragraph (1), and shall direct AID or the 
CCC to carry out the sale, reduction, or cancellation of a 
loan. AID or the CCC would then make adjustments in its 
accounts to reflect the sale, reduction, or cancellation.
    Subsection (b) required the proceeds from the sale, 
reduction, or cancellation of any loan sold, reduced, or 
canceled pursuant to this section to be deposited in the United 
States Government account or accounts established for the 
repayment of such loan.

                  SEC. 809. TROPICAL FOREST AGREEMENT

    This section authorizes the Secretary of State to enter 
into a Tropical Forest Agreement with any eligible country 
concerning the operation and use of the Fund for that country. 
The Secretary must consult with the Board in accordance with 
section 811. These agreements must contain the requirements 
contained in section 708(b) of the FAA (relating to interest 
payments, prompt disbursements, conservation of value, purposes 
of the agreement and enforcement terms), applied in the same 
manner as such requirements apply to an EAI Americas Framework 
Agreement.
    Funds disbursed from the Fund in each beneficiary country 
must be administered by a body constituted under the laws of 
that country. The administering body must consist of one or 
more individuals appointed by the United States Government, one 
or more individuals appointed by the government of the 
beneficiary country and individuals who represent a broad range 
of environmental non-governmental organizations of, or active 
in, the beneficiary country, local community development non-
governmental organizations of the beneficiary country and 
scientific or academic organizations or institutions of the 
beneficiary country. A majority of the members of the 
administering body must be representatives of scientific or 
academic organizations or institutions of the beneficiary 
country.
    The required responsibilities of the administering bodies 
are contained in section 708(c)(3) of the FAA (relating to the 
receipt of grant proposals, program oversight, annual audits, 
access by the U.S. General Accounting Office, and annual 
reports) and apply in the same manner as such requirements 
apply to an administering body described in section 708(c)(1) 
of the FAA.
    Subsection (d) details the eligible activities that can be 
supported. The administering bodies may provide grants to 
preserve, maintain, and restore the tropical forests in the 
beneficiary country, including one or more of the following 
activities:
          (1) Establishment, restoration, protection, and 
        maintenance of parks, protected areas, and reserves,
          (2) Development and implementation of scientifically-
        sound systems of natural resource management, including 
        land and ecosystem management practices,
          (3) Training programs to strengthen conservation 
        institutions and increase scientific, technical, and 
        managerial capacities of individuals and organizations 
        involved in conservation efforts,
          (4) Restoration, protection, or sustainable use of 
        diverse animal and plant species,
          (5) Mitigation of greenhouse gases in the atmosphere, 
        and
          (6) Development and support of the livelihoods of 
        individuals living in or near a tropical forest, 
        including the cultures of such individuals, in a manner 
        consistent with protecting such tropical forest.
    In conjunction with these activities, a beneficiary country 
is encouraged to enforce its laws against illegal logging and 
illegal trade in tropical timber.
    Subsection (e) specifies eligible grant recipients who are:
          (A) nongovernmental environmental, conservation, and 
        indigenous people organizations of, or active in, the 
        beneficiary country;
          (B) other appropriate local or regional entities of, 
        or active in, the beneficiary country; and
          (C) in exceptional circumstances, the government of 
        the beneficiary country.
    The Committee stresses that governments should be truly 
rare recipients of grants made by Administering boards--less 
than 1% of the number of grants or funds made available. This 
subsection also establishes that priority must be given to 
projects that are run by nongovernmental organizations and 
other private entities and that involve local communities in 
their planning and execution. Subsection (f) provides that any 
grant of more than $100,000 from a Fund is also subject to a 
veto by the Government of the United States or the government 
of the beneficiary country.
    Subsection (g) provides that if a country ceases to meet 
the eligibility requirements set forth in section 805(a), as 
determined by the President pursuant to section 805(b), then 
grants from the Fund for that country may only be made to 
nongovernmental organizations until such time as the President 
determines that such country meets the eligibility requirements 
set forth in section 805(a).

                     SEC. 810. TROPICAL FOREST FUND

    This section requires that each beneficiary country that 
enters into a Tropical Forest Agreement under section 809 shall 
be required to establish a Tropical Forest Fund to receive 
payments of interest on new obligations undertaken by the 
beneficiary country under this part.
    Subsection (b) requires that the terms and conditions shall 
apply to the Fund in the same manner as such terms as 
conditions apply to an Enterprise for the Americas Fund under 
section 707 of the FAA (relating to the deposit of local 
currencies not considered as assistance, the investment of 
funds not expended and the requirement that funds be disbursed 
only pursuant to the agreement).

                            SEC. 811. BOARD

    This section expands the duties of the Enterprise for the 
Americas Board which in addition to carrying out the 
responsibilities of the Board under section 610(c) of the FAA, 
will carry out the duties described in subsection (c) of this 
section for the purposes of this part. The Act requires the 
addition of four members to the EAI board appointed by the 
President as follows:
          (A) Two representatives from the United States 
        Government, and
          (B) Two representatives from private nongovernmental 
        environmental, scientific, and academic organizations 
        with experience and expertise in preservation, 
        maintenance, and restoration of tropical forests.
    This section provides, notwithstanding section 610(b)(2) of 
the Agricultural Trade Development and Assistance Act of 1954 
(7 U.S.C. 1738i(b)(2)) that the the Enterprise for the Americas 
Board shall be headed by a chairperson who shall be appointed 
by the President from among the representatives appointed under 
section 610(b)(1)(A) of such Act or paragraph (1)(A) of this 
subsection. The duties of the Board are expanded to reflect the 
broader scope of this Act, including advising the Secretary of 
State on the negotiations of Tropical Forest Agreements, 
consultation with the government of the beneficiary country, 
non-governmental organizations of the beneficiary country, non-
governmental organizations of the region (if appropriate), 
environmental, scientific, and academic leaders of the 
beneficiary country, and environmental, scientific, and 
academic leaders of the region (as appropriate) to identify a 
suitable administering body; and oversight and review of the 
programs, operations, and fiscal audits of each administering 
body.
    Under the Enterprise for the Americas Initiative, 
individual Environmental Framework Agreements establishing the 
local boards limit administrative expenses to a certain 
percentage (typically 10 percent) of the total annual interest 
payments made into the account by the host country. The purpose 
of this cap was to minimize the risk that funds would be 
diverted from environmental (and child survival) projects to 
overhead. The Committee understands that six of the seven 
countries participating in Enterprise for the Americas 
Initiative have a cap on administrative expenses equal to or 
less than 10 percent of the total annual interest payments. The 
Committee also understands that this administrative cap can be 
changed only by amending the bilateral agreements through an 
exchange of notes between the U.S. Government and the 
beneficiary country.
    It is the intention of the Committee that administrative 
expenses are generally not to exceed 10 percent of the total 
annual interest payments made into a Tropical Forest Fund and 
that such cap should be referenced in all Tropical Forest 
Agreements with the beneficiary country.
    In order to avoid duplication of effort and to maximize 
efficiencies, the bill provides that the EAI Board shall have 
expanded authority and membership to oversee the operational 
implementation of the Tropical Forest Agreements and Funds.

               SEC. 812. CONSULTATIONS WITH THE CONGRESS

    This section requires the President to consult with the 
appropriate congressional committees on a periodic basis to 
review the operation of the Facility under this part and the 
eligibility of countries for benefits from the Facility under 
this part.

                SEC. 813. ANNUAL REPORTS TO THE CONGRESS

    Section (a) requires the President to transmit a report, 
not later than December 31 of each fiscal year, concerning the 
operation of the Facility for the prior fiscal year. This 
report must include a description of the activities undertaken 
by the Facility during the previous fiscal year, a description 
of any Agreement entered into under this part, a report on any 
Funds that have been established under this part and on the 
operations of such Funds and a description of any grants that 
have been provided by administering bodies pursuant to 
Agreements under this part.
    Subsection (b) requires that not later than December 15 of 
each fiscal year, each member of the Board shall be entitled to 
receive a copy of the report required in subsection (a). Each 
member of the Board may prepare and submit supplemental views 
to the President on the implementation of this part by December 
31 for inclusion in the annual report when it is transmitted to 
Congress pursuant to this section.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 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 (new matter is printed 
in italic and existing law in which no change is proposed is 
shown in roman):

                     FOREIGN ASSISTANCE ACT OF 1961

          * * * * * * *

 PART V--DEBT REDUCTION FOR DEVELOPING COUNTRIES WITH TROPICAL FORESTS

SEC. 801. SHORT TITLE.

  This part may be cited as the ``Tropical Forest Conservation 
Act of 1998''.

SEC. 802. FINDINGS AND PURPOSES.

  (a) Findings.--The Congress finds the following:
          (1) It is the established policy of the United States 
        to support and seek protection of tropical forests 
        around the world.
          (2) Tropical forests provide a wide range of benefits 
        to humankind by--
                  (A) harboring a major share of the Earth's 
                biological and terrestrial resources, which are 
                the basis for developing pharmaceutical 
                products and revitalizing agricultural crops;
                  (B) playing a critical role as carbon sinks 
                in reducing greenhouse gases in the atmosphere, 
                thus moderating potential global climate 
                change; and
                  (C) regulating hydrological cycles on which 
                far-flung agricultural and coastal resources 
                depend.
          (3) International negotiations and assistance 
        programs to conserve forest resources have proliferated 
        over the past decade, but the rapid rate of tropical 
        deforestation continues unabated.
          (4) Developing countries with urgent needs for 
        investment and capital for development have allocated a 
        significant amount of their forests to logging 
        concessions.
          (5) Poverty and economic pressures on the populations 
        of developing countries have, over time, resulted in 
        clearing of vast areas of forest for conversion to 
        agriculture, which is often unsustainable in the poor 
        soils underlying tropical forests.
          (6) Debt reduction can reduce economic pressures on 
        developing countries and result in increased protection 
        for tropical forests.
  (b) Purposes.--The purposes of this part are--
          (1) to recognize the values received by United States 
        citizens from protection of tropical forests;
          (2) to facilitate greater protection of tropical 
        forests (and to give priority to protecting tropical 
        forests with the highest levels of biodiversity and 
        under the most severe threat) by providing for the 
        alleviation of debt in countries where tropical forests 
        are located, thus allowing the use of additional 
        resources to protect these critical resources and 
        reduce economic pressures that have led to 
        deforestation;
          (3) to ensure that resources freed from debt in such 
        countries are targeted to protection of tropical 
        forests and their associated values; and
          (4) to rechannel existing resources to facilitate the 
        protection of tropical forests.

SEC. 803. DEFINITIONS.

  As used in this part:
          (1) Administering body.--The term ``administering 
        body'' means the entity provided for in section 809(c).
          (2) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                  (A) the Committee on International Relations 
                and the Committee on Appropriations of the 
                House of Representatives; and
                  (B) the Committee on Foreign Relations and 
                the Committee on Appropriations of the Senate.
          (3) Beneficiary country.--The term ``beneficiary 
        country'' means an eligible country with respect to 
        which the authority of section 806(a)(1), section 
        807(a)(1), or paragraph (1) or (2) of section 808(a) is 
        exercised.
          (4) Board.--The term ``Board'' means the board 
        referred to in section 811.
          (5) Developing country with a tropical forest.--The 
        term ``developing country with a tropical forest'' 
        means--
                  (A)(i) a country that has a per capita income 
                of $725 or less in 1994 United States dollars 
                (commonly referred to as ``low-income 
                country''), as determined and adjusted on an 
                annual basis by the International Bank for 
                Reconstruction and Development in its World 
                Development Report; or
                  (ii) a country that has a per capita income 
                of more than $725 but less than $8,956 in 1994 
                United States dollars (commonly referred to as 
                ``middle-income country''), as determined and 
                adjusted on an annual basis by the 
                International Bank for Reconstruction and 
                Development in its World Development Report; 
                and
                  (B) a country that contains at least one 
                tropical forest that is globally outstanding in 
                terms of its biological diversity or represents 
                one of the larger intact blocks of tropical 
                forests left, on a regional, continental, or 
                global scale.
          (6) Eligible country.--The term ``eligible country'' 
        means a country designated by the President in 
        accordance with section 805.
          (7) Tropical forest agreement.--The term ``Tropical 
        Forest Agreement'' or ``Agreement'' means a Tropical 
        Forest Agreement provided for in section 809.
          (8) Tropical forest facility.--The term ``Tropical 
        Forest Facility'' or ``Facility'' means the Tropical 
        Forest Facility established in the Department of the 
        Treasury by section 804.
          (9) Tropical forest fund.--The term ``Tropical Forest 
        Fund'' or ``Fund'' means a Tropical Forest Fund 
        provided for in section 810.

SEC. 804. ESTABLISHMENT OF THE FACILITY.

  There is established in the Department of the Treasury an 
entity to be known as the ``Tropical Forest Facility'' for the 
purpose of providing for the administration of debt reduction 
in accordance with this part.

SEC. 805. ELIGIBILITY FOR BENEFITS.

  (a) In General.--To be eligible for benefits from the 
Facility under this part, a country shall be a developing 
country with a tropical forest--
          (1) whose government meets the requirements 
        applicable to Latin American or Caribbean countries 
        under paragraphs (1) through (5) and (7) of section 
        703(a) of this Act;
          (2) that has put in place major investment reforms, 
        as evidenced by the conclusion of a bilateral 
        investment treaty with the United States, 
        implementation of an investment sector loan with the 
        Inter-American Development Bank, World Bank-supported 
        investment reforms, or other measures, as appropriate; 
        and
          (3) whose government meets other requirements related 
        to its environmental policies and practices, as 
        determined by the President.
  (b) Eligibility Determinations.--
          (1) In general.--Consistent with subsection (a), the 
        President shall determine whether a country is eligible 
        to receive benefits under this part.
          (2) Congressional notification.--The President shall 
        notify the appropriate congressional committees of his 
        intention to designate a country as an eligible country 
        at least 15 days in advance of any formal 
        determination.

SEC. 806. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
                    CONCESSIONAL LOANS UNDER THE FOREIGN ASSISTANCE ACT 
                    OF 1961.

  (a) Authority To Reduce Debt.--
          (1) Authority.--The President may reduce the amount 
        owed to the United States (or any agency of the United 
        States) that is outstanding as of January 1, 1997, as a 
        result of concessional loans made to an eligible 
        country by the United States under part I of this Act, 
        chapter 4 of part II of this Act, or predecessor 
        foreign economic assistance legislation.
          (2) Authorization of appropriations.--For the cost 
        (as defined in section 502(5) of the Federal Credit 
        Reform Act of 1990) for the reduction of any debt 
        pursuant to this section, there are authorized to be 
        appropriated to the President--
                  (A) $25,000,000 for fiscal year 1999;
                  (B) $75,000,000 for fiscal year 2000; and
                  (C) $100,000,000 for fiscal year 2001.
          (3) Certain prohibitions inapplicable.--
                  (A) In general.--A reduction of debt pursuant 
                to this section shall not be considered 
                assistance for purposes of any provision of law 
                limiting assistance to a country.
                  (B) Additional requirement.--The authority of 
                this section may be exercised notwithstanding 
                section 620(r) of this Act or section 321 of 
                the International Development and Food 
                Assistance Act of 1975.
  (b) Implementation of Debt Reduction.--
          (1) In general.--Any debt reduction pursuant to 
        subsection (a) shall be accomplished at the direction 
        of the Facility by the exchange of a new obligation for 
        obligations of the type referred to in subsection (a) 
        outstanding as of the date specified in subsection 
        (a)(1).
          (2) Exchange of obligations.--
                  (A) In general.--The Facility shall notify 
                the agency primarily responsible for 
                administering part I of this Act of an 
                agreement entered into under paragraph (1) with 
                an eligible country to exchange a new 
                obligation for outstanding obligations.
                  (B) Additional requirement.--At the direction 
                of the Facility, the old obligations that are 
                the subject of the agreement shall be canceled 
                and a new debt obligation for the country shall 
                be established relating to the agreement, and 
                the agency primarily responsible for 
                administering part I of this Act shall make an 
                adjustment in its accounts to reflect the debt 
                reduction.
  (c) Additional Terms and Conditions.--The following 
additional terms and conditions shall apply to the reduction of 
debt under subsection (a)(1) in the same manner as such terms 
and conditions apply to the reduction of debt under section 
704(a)(1) of this Act:
          (1) The provisions relating to repayment of principal 
        under section 705 of this Act.
          (2) The provisions relating to interest on new 
        obligations under section 706 of this Act.

SEC. 807. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
                    CREDITS EXTENDED UNDER TITLE I OF THE AGRICULTURAL 
                    TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954.

  (a) Authority To Reduce Debt.--
          (1) Authority.--Notwithstanding any other provision 
        of law, the President may reduce the amount owed to the 
        United States (or any agency of the United States) that 
        is outstanding as of January 1, 1997, as a result of 
        any credits extended under title I of the Agricultural 
        Trade Development and Assistance Act of 1954 (7 U.S.C. 
        1701 et seq.) to a country eligible for benefits from 
        the Facility.
          (2) Authorization of appropriations.--
                  (A) In general.--For the cost (as defined in 
                section 502(5) of the Federal Credit Reform Act 
                of 1990) for the reduction of any debt pursuant 
                to this section, there are authorized to be 
                appropriated to the President--
                          (i) $25,000,000 for fiscal year 1999;
                          (ii) $50,000,000 for fiscal year 
                        2000; and
                          (iii) $50,000,000 for fiscal year 
                        2001.
                  (B) Limitation.--The authority provided by 
                this section shall be available only to the 
                extent that appropriations for the cost (as 
                defined in section 502(5) of the Federal Credit 
                Reform Act of 1990) of the modification of any 
                debt pursuant to this section are made in 
                advance.
  (b) Implementation of Debt Reduction.--
          (1) In general.--Any debt reduction pursuant to 
        subsection (a) shall be accomplished at the direction 
        of the Facilityby the exchange of a new obligation for 
obligations of the type referred to in subsection (a) outstanding as of 
the date specified in subsection (a)(1).
          (2) Exchange of obligations.--
                  (A) In general.--The Facility shall notify 
                the Commodity Credit Corporation of an 
                agreement entered into under paragraph (1) with 
                an eligible country to exchange a new 
                obligation for outstanding obligations.
                  (B) Additional requirement.--At the direction 
                of the Facility, the old obligations that are 
                the subject of the agreement shall be canceled 
                and a new debt obligation shall be established 
                for the country relating to the agreement, and 
                the Commodity Credit Corporation shall make an 
                adjustment in its accounts to reflect the debt 
                reduction.
  (c) Additional Terms and Conditions.--The following 
additional terms and conditions shall apply to the reduction of 
debt under subsection (a)(1) in the same manner as such terms 
and conditions apply to the reduction of debt under section 
604(a)(1) of the Agricultural Trade Development and Assistance 
Act of 1954 (7 U.S.C. 1738c):
          (1) The provisions relating to repayment of principal 
        under section 605 of such Act.
          (2) The provisions relating to interest on new 
        obligations under section 606 of such Act.

SEC. 808. AUTHORITY TO ENGAGE IN DEBT-FOR-NATURE SWAPS AND DEBT 
                    BUYBACKS.

  (a) Loans and Credits Eligible for Sale, Reduction, or 
Cancellation.--
          (1) Debt-for-nature swaps.--
                  (A) In general.--Notwithstanding any other 
                provision of law, the President may, in 
                accordance with this section, sell to any 
                eligible purchaser described in subparagraph 
                (B) any concessional loans described in section 
                806(a)(1) or any credits described in section 
                807(a)(1), or on receipt of payment from an 
                eligible purchaser described in subparagraph 
                (B), reduce or cancel such loans (or credits) 
                or portion thereof, only for the purpose of 
                facilitating a debt-for-nature swap to support 
                eligible activities described in section 
                809(d).
                  (B) Eligible purchaser described.--A loan or 
                credit may be sold, reduced, or canceled under 
                subparagraph (A) only to a purchaser who 
                presents plans satisfactory to the President 
                for using the loan or credit for the purpose of 
                engaging in debt-for-nature swaps to support 
                eligible activities described in section 
                809(d).
                  (C) Consultation requirement.--Before the 
                sale under subparagraph (A) to any eligible 
                purchaser described in subparagraph (B), or any 
                reduction or cancellation under such 
                subparagraph (A), of any loan or credit made to 
                an eligible country, the President shall 
                consult with the country concerning the amount 
                of loans or credits to be sold, reduced, or 
                canceled and their uses for debt-for-nature 
                swaps to support eligible activities described 
                in section 809(d).
                  (D) Authorization of appropriations.--For the 
                cost (as defined in section 502(5) of the 
                Federal Credit Reform Act of 1990) for the 
                reduction of any debt pursuant to subparagraph 
                (A), amounts authorized to appropriated under 
                sections 806(a)(2) and 807(a)(2) shall be made 
                available for such reduction of debt pursuant 
                to subparagraph (A).
          (2) Debt buybacks.--Notwithstanding any other 
        provision of law, the President may, in accordance with 
        this section, sell to any eligible country any 
        concessional loans described in section 806(a)(1) or 
        any credits described in section 807(a)(1), or on 
        receipt of payment from an eligible country, reduce or 
        cancel such loans (or credits) or portion thereof, only 
        for the purpose of facilitating a debt buyback by an 
        eligible country of its own qualified debt, only if the 
        eligible country uses an additional amount of the local 
        currency of the eligible country, equal to not less 
        than the lesser of 40 percent of the price paid for 
        such debt by such eligible country, or the difference 
        between the price paid for such debt and the face value 
        of such debt, to support eligible activities described 
        in section 809(d).
          (3) Terms and conditions.--Notwithstanding any other 
        provision of law, the President shall, in accordance 
        with this section, establish the terms and conditions 
        under which loans and credits may be sold, reduced, or 
        canceled pursuant to this section.
          (4) Administration.--
                  (A) In general.--The Facility shall notify 
                the administrator of the agency primarily 
                responsible for administering part I of this 
                Act or the Commodity Credit Corporation, as the 
                case may be, of eligible purchasers described 
                in paragraph (1)(B) that the President has 
                determined to be eligible under paragraph (1), 
                and shall direct such agency or Corporation, as 
                the case may be, to carry out the sale, 
                reduction, or cancellation of a loan pursuant 
                to such paragraph.
                  (B) Additional requirement.--Such agency or 
                Corporation, as the case may be, shall make an 
                adjustment in its accounts to reflect the sale, 
                reduction, or cancellation.
  (b) Deposit of Proceeds.--The proceeds from the sale, 
reduction, or cancellation of any loan sold, reduced, or 
canceled pursuant to this section shall be deposited in the 
United States Government account or accounts established for 
the repayment of such loan.

SEC. 809. TROPICAL FOREST AGREEMENT.

  (a) Authority.--
          (1) In general.--The Secretary of State is 
        authorized, in consultation with other appropriate 
        officials of the Federal Government, to enter into a 
        Tropical Forest Agreement with any eligible country 
        concerning the operation and use of the Fund for that 
        country.
          (2) Consultation.--In the negotiation of such an 
        Agreement, the Secretary shall consult with the Board 
        in accordance with section 811.
  (b) Contents of Agreement.--The requirements contained in 
section 708(b) of this Act (relating to contents of an 
agreement) shallapply to a Agreement in the same manner as such 
requirements apply to an Americas Framework Agreement.
  (c) Administering Body.--
          (1) In general.--Amounts disbursed from the Fund in 
        each beneficiary country shall be administered by a 
        body constituted under the laws of that country.
          (2) Composition.--
                  (A) In general.--The administering body shall 
                consist of--
                          (i) one or more individuals appointed 
                        by the United States Government;
                          (ii) one or more individuals 
                        appointed by the government of the 
                        beneficiary country; and
                          (iii) individuals who represent a 
                        broad range of--
                                  (I) environmental 
                                nongovernmental organizations 
                                of, or active in, the 
                                beneficiary country;
                                  (II) local community 
                                development nongovernmental 
                                organizations of the 
                                beneficiary country; and
                                  (III) scientific or academic 
                                organizations or institutions 
                                of the beneficiary country.
                  (B) Additional requirement.--A majority of 
                the members of the administering body shall be 
                individuals described in subparagraph (A)(iii).
          (3) Responsibilities.--The requirements contained in 
        section 708(c)(3) of this Act (relating to 
        responsibilities of the administering body) shall apply 
        to an administering body described in paragraph (1) in 
        the same manner as such requirements apply to an 
        administering body described in section 708(c)(1) of 
        this Act.
  (d) Eligible Activities.--Amounts deposited in a Fund shall 
be used to provide grants to preserve, maintain, and restore 
the tropical forests in the beneficiary country, including one 
or more of the following activities:
          (1) Establishment, restoration, protection, and 
        maintenance of parks, protected areas, and reserves.
          (2) Development and implementation of scientifically 
        sound systems of natural resource management, including 
        land and ecosystem management practices.
          (3) Training programs to strengthen conservation 
        institutions and increase scientific, technical, and 
        managerial capacities of individuals and organizations 
        involved in conservation efforts.
          (4) Restoration, protection, or sustainable use of 
        diverse animal and plant species.
          (5) Mitigation of greenhouse gases in the atmosphere.
          (6) Development and support of the livelihoods of 
        individuals living in or near a tropical forest, 
        including the cultures of such individuals, in a manner 
        consistent with protecting such tropical forest.
  (e) Grant Recipients.--
          (1) In general.--Grants made from a Fund shall be 
        made to--
                  (A) nongovernmental environmental, 
                conservation, and indigenous people 
                organizations of, or active in, the beneficiary 
                country;
                  (B) other appropriate local or regional 
                entities of, or active in, the beneficiary 
                country; and
                  (C) in exceptional circumstances, the 
                government of the beneficiary country.
          (2) Priority.--In providing grants under paragraph 
        (1), priority shall be given to projects that are run 
        by nongovernmental organizations and other private 
        entities and that involve local communities in their 
        planning and execution.
  (f) Review of Larger Grants.--Any grant of more than $100,000 
from a Fund shall be subject to veto by the Government of the 
United States or the government of the beneficiary country.
  (g) Eligibility Criteria.--In the event that a country ceases 
to meet the eligibility requirements set forth in section 
805(a), as determined by the President pursuant to section 
805(b), then grants from the Fund for that country may only be 
made to nongovernmental organizations until such time as the 
President determines that such country meets the eligibility 
requirements set forth in section 805(a).

SEC. 810. TROPICAL FOREST FUND.

  (a) Establishment.--Each beneficiary country that enters into 
a Tropical Forest Agreement under section 809 shall be required 
to establish a Tropical Forest Fund to receive payments of 
interest on new obligations undertaken by the beneficiary 
country under this part.
  (b) Requirements Relating to Operation of Fund.--The 
following terms and conditions shall apply to the Fund in the 
same manner as such terms and conditions apply to an Enterprise 
for the Americas Fund under section 707 of this Act:
          (1) The provision relating to deposits under 
        subsection (b) of such section.
          (2) The provision relating to investments under 
        subsection (c) of such section.
          (3) The provision relating to disbursements under 
        subsection (d) of such section.

SEC. 811. BOARD.

  (a) Enterprise for the Americas Board.--The Enterprise for 
the Americas Board established under section 610(a) of the 
Agricultural Trade Development and Assistance Act of 1954 (7 
U.S.C. 1738i(a)) shall, in addition to carrying out the 
responsibilities of the Board under section 610(c) of such Act, 
carry out the duties described in subsection (c) of this 
section for the purposes of this part.
  (b) Additional Membership.--
          (1) In general.--The Enterprise for the Americas 
        Board shall be composed of an additional four members 
        appointed by the President as follows:
                  (A) Two representatives from the United 
                States Government.
                  (B) Two representatives from private 
                nongovernmental environmental, scientific, and 
                academic organizations with experience and 
                expertise in preservation, maintenance, and 
                restoration of tropical forests.
          (2) Chairperson.--Notwithstanding section 610(b)(2) 
        of the Agricultural Trade Development and Assistance 
        Act of 1954 (7 U.S.C. 1738i(b)(2)), the Enterprise for 
        the Americas Board shall be headed by a chairperson who 
        shall be appointed by the President from among the 
        representatives appointed under section 610(b)(1)(A) of 
        such Act or paragraph (1)(A) of this subsection.
  (c) Duties.--The duties described in this subsection are as 
follows:
          (1) Advise the Secretary of State on the negotiations 
        of Tropical Forest Agreements.
          (2) Ensure, in consultation with--
                  (A) the government of the beneficiary 
                country,
                  (B) nongovernmental organizations of the 
                beneficiary country,
                  (C) nongovernmental organizations of the 
                region (if appropriate),
                  (D) environmental, scientific, and academic 
                leaders of the beneficiary country, and
                  (E) environmental, scientific, and academic 
                leaders of the region (as appropriate),
        that a suitable administering body is identified for 
        each Fund.
          (3) Review the programs, operations, and fiscal 
        audits of each administering body.

SEC. 812. CONSULTATIONS WITH THE CONGRESS.

  The President shall consult with the appropriate 
congressional committees on a periodic basis to review the 
operation of the Facility under this part and the eligibility 
of countries for benefits from the Facility under this part.

SEC. 813. ANNUAL REPORTS TO THE CONGRESS.

  (a) In General.--Not later than December 31 of each fiscal 
year, the President shall prepare and transmit to the Congress 
an annual report concerning the operation of the Facility for 
the prior fiscal year. Such report shall include--
          (1) a description of the activities undertaken by the 
        Facility during the previous fiscal year;
          (2) a description of any Agreement entered into under 
        this part;
          (3) a report on any Funds that have been established 
        under this part and on the operations of such Funds; 
        and
          (4) a description of any grants that have been 
        provided by administering bodies pursuant to Agreements 
        under this part.
  (b) Supplemental Views in Annual Report.--Not later than 
December 15 of each fiscal year, each member of the Board shall 
be entitled to receive a copy of the report required under 
subsection (a). Each member of the Board may prepare and submit 
supplemental views to the President on the implementation of 
this part by December 31 for inclusion in the annual report 
when it is transmitted to Congress pursuant to this section.