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106th Congress                                            Rept. 106-519
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

=======================================================================



 
  CARIBBEAN AND CENTRAL AMERICA RELIEF AND ECONOMIC STABILIZATION ACT

                                _______
                                

                 March 13, 2000.--Ordered to be printed

                                _______
                                

    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 984]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 984) to provide additional trade benefits to certain 
beneficiary countries in the Caribbean, to provide assistance 
to the countries in Central America and the Caribbean affected 
by Hurricane Mitch and Hurricane Georges, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
  I. Introduction................................................    17
        A. Purpose and Summary...................................    17
        B. Background and Need for Legislation...................    18
        C. Legislative History...................................    19
 II. Explanation of the Bill.....................................    20
        A. Short Title...........................................    20
        B. Findings and Policy...................................    20
        C. Definitions...........................................    23
        D. Temporary Provisions to Provide NAFTA Parity to 
            Beneficiary Countries................................    23
            1. Rules of Origin...................................    23
            2. Effective Date and Termination of Temporary 
                Treatment........................................    24
            3. Designation Criteria..............................    24
            4. General Review of Countries.......................    25
            5. Safeguards........................................    26
            6. Termination or Withdrawal of Benefits.............    27
            7. Treatment of Textile and Apparel Imports from 
                Caribbean Countries and Mexico...................    27
                a. GAL Program and ``807'' Tariff Treatment......    27
                b. Originating Textile and Apparel Goods.........    28
                c. Trade Preference Levels.......................    29
                d. Customs Procedures and Penalties for 
                    Transshipment................................    29
        E. Effect of NAFTA on Sugar Imports from Beneficiary 
            Countries............................................    30
        F. Duty-Free Treatment for Certain Beverages made with 
            Caribbean Rum........................................    31
        G. Meeting of Caribbean Trade Ministers and USTR.........    31
        H. Report on Economic Development and Market Oriented 
            Reforms in the Caribbean.............................    32
        I. Parity Review In Event New Country Accedes to NAFTA...    32
III. Vote of the Committee.......................................    33
 IV. Budget Effects of the Bill..................................    33
        A. Committee Estimates of Budgetary Effects..............    33
        B. Budget Authority and Tax Expenditures.................    33
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................    33
 V.  Other Matters To Be Discussed Under the Rules of the House..    37
        A. Subcommittee Oversight Findings and Recommendations...    37
        B. Summary of Findings and Recommendations of the 
            Subcommittee on Government Reform and Oversight......    37
        C. Constitutional Authority Statement....................    37
        D. Information Relating to Unfunded Mandates.............    37
        E. Applicability of House Rule XXI5(c)...................    38
 VI. Changes in Existing Law Made by the Bill....................    38
VII. Dissenting Views............................................    50
VIII.Additional Views............................................    52


    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

 (a) Short Title.--This Act may be cited as the ``Caribbean and Central 
America Relief and Economic Stabilization Act''.
 (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.

           TITLE I--UNITED STATES-CARIBBEAN TRADE PARTNERSHIP

                      Subtitle A--Trade Provisions

Sec. 101. Short title.
Sec. 102. Policy.
Sec. 103. Definitions.
Sec. 104. Temporary provisions to provide NAFTA parity to partnership 
countries.
Sec. 105. Effect of NAFTA on sugar imports from beneficiary countries.
Sec. 106. Duty-free treatment for certain beverages made with Caribbean 
rum.
Sec. 107. Meetings of trade ministers and USTR.
Sec. 108. Report on economic development and market oriented reforms in 
the Caribbean.

                       Subtitle B--Revenue Offset

Sec. 111. Limitations on welfare benefit funds of 10 or more employer 
plans.

Subtitle C--Suspension of Limitation on Cover Over of Tax on Distilled 
                                Spirits

Sec. 121. Suspension of limitation on cover over of tax on distilled 
spirits.

   TITLE II--FOREIGN ASSISTANCE FOR CENTRAL AMERICA AND THE CARIBBEAN

          Subtitle A--Microcredit and Agricultural Assistance

Sec. 201. Declaration of policy.
Sec. 202. Microenterprise assistance.
Sec. 203. Support for producer-owned cooperative marketing 
associations.
Sec. 204. Agricultural research and extension activities.
Sec. 205. Nonemergency food assistance programs.

          Subtitle B--Overseas Private Investment Corporation

Sec. 211. Private sector development activities of OPIC.

              Subtitle C--Economic Support Fund Assistance

Sec. 221. Economic support fund assistance.
Sec. 222. Reimbursement of international disaster account.
Sec. 223. Rule of construction; availability of amounts.

                    TITLE III--DEPARTMENT OF DEFENSE

Sec. 301. Replacement of funds used for disaster relief and 
reconstruction.

            TITLE IV--IMMIGRATION AND NATURALIZATION SERVICE

Sec. 401. Detention facilities.

 TITLE V--DEBT RESCHEDULING AND REDUCTION FOR HONDURAS AND NICARAGUA; 
     FUNDING FOR THE CENTRAL AMERICAN EMERGENCY TRUST FUND OF THE 
         INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

 Subtitle A--Debt Rescheduling and Reduction for Honduras and Nicaragua

Sec. 501. Rescheduling of interest payments owed by Honduras and 
Nicaragua.
Sec. 502. Reduction of debt owed by Honduras.

Subtitle B--Authorization of Funding for the Central American Emergency 
Trust Fund of the International Bank for Reconstruction and Development

Sec. 511. Authorization of funding.

SEC. 2. FINDINGS.

  Congress makes the following findings:
          (1) In October of 1998, Hurricane Mitch devastated areas of 
        the Caribbean and Central America. The National Hurricane 
        Center has called this storm ``the most deadly hurricane in the 
        Atlantic in over 200 years''. Hurricane Mitch killed 9,860 
        people and left approximately 3,000,000 people homeless in the 
        region.
          (2) Hurricane Georges hit the Florida Keys, the islands of 
        the Caribbean, and the Gulf coast of the United States in 
        September of 1998, causing more than $1,000,000,000 in damage. 
        The storm killed 250 people.
          (3) The total direct economic impact of Hurricane Mitch and 
        Hurricane Georges on Honduras, Nicaragua, the Dominican 
        Republic, El Salvador and Guatemala amounts to $4,200,000,000. 
        Honduras' losses represent more than 50 percent of its gross 
        domestic product and Nicaragua lost a quarter of its gross 
        domestic product.
          (4) The United States must continue to play a leading role in 
        responding to the disaster and encourage others to contribute 
        to the recovery effort. For example, Taiwan has contributed 
        $50,800,000 in assistance for the construction of roads and 
        housing, the rehabilitation of agricultural production, and the 
        distribution of supplies. Sweden, Spain, and France have sent 
        engineering teams to the region to assess damage to roads, and 
        Japan and the European Union have pledged millions of dollars 
        in assistance. The United States praises the efforts of these 
        and other nations in assisting with the rehabilitation of the 
        region.
          (5) Approximately 356 bridges were destroyed in the region, 
        and 57 percent of the region's roads were impacted. The United 
        States equivalent of this would be the destruction of 3,900,000 
        miles of highway. These roads must be reconstructed quickly so 
        that farmers can transport their goods to market and much-
        needed medical supplies can reach rural areas.
          (6) Hurricane Mitch devastated the agricultural sector in the 
        affected areas of Central America andthe Caribbean, 
particularly the countries of Honduras and Guatemala. An estimated 70 
percent of Honduras' crops were destroyed by Hurricane Mitch, including 
90 percent of the country's banana and grain crops.In Guatemala, an 
estimated 95 percent of the nation's banana crop was damaged, 25-60 
percent of the corn, bean, coffee, and sugar crops were destroyed, and 
30 percent of the cattle was lost.
          (7) Approximately 50 percent of Central America and the 
        Caribbean's workforce is employed in agriculture. The 
        devastation to the agriculture sector by Hurricane Mitch has 
        resulted in a widespread shortage of food which is likely to 
        continue in the long term unless the region's agricultural 
        sector is rehabilitated.
          (8) Significant numbers of displaced Central Americans are 
        moving north to the United States in the wake of Hurricane 
        Mitch's devastation. Border Patrol agents in Brownsville, 
        Texas, report that apprehensions of Hondurans alone increased 
        by 61 percent in the last three months of 1998. The massive 
        influx of immigrants places severe pressures upon the ability 
        of the Immigration and Naturalization Service (INS) to detain 
        and remove non-criminal illegal immigrants. At current funding 
        levels, the INS does not have the resources to detain illegal 
        non-criminal border crossers from Central America. If this 
        situation continues, the INS is concerned that many more people 
        will attempt to illegally cross the border.
          (9) Partially in an effort to alleviate these pressures, the 
        Attorney General provided temporary protected status to aliens 
        from Honduras and Nicaragua on December 30, 1998 for a period 
        of 18 months. No such status was provided to immigrants from El 
        Salvador and Guatemala.
          (10) Agricultural assistance and training and microcredit 
        assistance will provide much needed aid to the affected areas 
        of Central America and the Caribbean as the areas rebuild their 
        agriculture sectors. The immediate distribution of food aid is 
        important in the short term, but it is essential that the 
        region be able to return to self-sufficiency in food production 
        so the citizens of Central America and the Caribbean will be 
        able to feed themselves once again.
          (11) The goal of United States assistance to the region 
        should focus on, in addition to the short-term disaster 
        assistance, long-term solutions for a successful economic 
        recovery of Central America and the Caribbean. Successful 
        economic recovery lies in the region's ability to expand its 
        international trade with important trading partners such as the 
        United States.
          (12) Since 1983, the Caribbean Basin Economic Recovery Act 
        has represented a permanent and successful commitment by the 
        United States to encourage the development of strong democratic 
        governments and revitalized economies in neighboring countries 
        in the Caribbean Basin.
          (13) Thirty-four democratically elected leaders agreed at the 
        1994 Summit of the Americas to conclude negotiation of a Free 
        Trade Area of the Americas (referred to in this Act as 
        ``FTAA'') by the year 2005.
          (14) The economic security of the countries in the Caribbean 
        Basin will be enhanced by the completion of the FTAA.
          (15) Offering temporary benefits to Caribbean Basin countries 
        on the 30 percent of imports from the region that are not 
        currently duty-free under the Caribbean Basin Economic Recovery 
        Act and other trade programs, will promote the growth of free 
        enterprise and economic opportunity in these neighboring 
        countries and thereby enhance the national security interests 
        of the United States.
          (16) Given the greater propensity of countries located in the 
        Western Hemisphere to use United States components and to 
        purchase United States products compared to other countries, 
        increased trade and economic activity between the United States 
        and countries in the Western Hemisphere will create new jobs in 
        the United States as a result of expanding export 
        opportunities.

 SEC. 3. DEFINITIONS.

  In this Act:
          (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the United States Agency for International 
        Development.
          (2) Affected areas of central america and the caribbean.--The 
        term ``affected areas of Central America and the Caribbean'' 
        means areas in the Central American countries and the Caribbean 
        countries that incurred damage from Hurricane Georges in 
        September of 1998 and Hurricane Mitch in October of 1998.
          (3) Caribbean countries.--The term ``Caribbean countries'' 
        means any country listed in section 212(b) of the Caribbean 
        Basin Economic Recovery Act (19 U.S.C. 2702(b)) (other than 
        Central American countries).
          (4) Central american countries.--The term ``Central American 
        countries'' means Belize, Costa Rica, El Salvador, Guatemala, 
        Honduras, Nicaragua, and Panama.
          (5) OPIC.--The term ``OPIC'' means the Overseas Private 
        Investment Corporation.

           TITLE I--UNITED STATES-CARIBBEAN TRADE PARTNERSHIP

                      Subtitle A--Trade Provisions

SEC. 101. SHORT TITLE.

  This title may be cited as the ``United States-Caribbean Trade 
Partnership Act''.

SEC. 102. POLICY.

  It is the policy of the United States to offer to the products of 
Caribbean Basin partnership countries tariffs and quota treatment 
equivalent to that accorded to certain products of countries that are 
parties to the NAFTA, and to seek the accession of these partnership 
countries to the NAFTA or a free trade agreement comparable to the 
NAFTA at the earliest possible date, with the goal of achieving full 
participation in the NAFTA or in a free trade agreement comparable to 
the NAFTA by all partnership countries by not later than January 1, 
2005.

SEC. 103. DEFINITIONS.

  As used in this title:
          (1) Partnership country.--The term ``partnership country'' 
        means a beneficiary country as defined in section 212(a)(1)(A) 
        of the Caribbean Basin Economic Recovery Act (19 U.S.C. 
        2702(a)(1)(A)).
          (2) NAFTA.--The term ``NAFTA'' means the North American Free 
        Trade Agreement entered into between the United States, Mexico, 
        and Canada on December 17, 1992.
          (3) Trade representative.--The term ``Trade Representative'' 
        means the United States Trade Representative.
          (4) WTO and wto member.--The terms ``WTO'' and ``WTO member'' 
        have the meanings given those terms in section 2 of the Uruguay 
        Round Agreements Act (19 U.S.C. 3501).

SEC. 104. TEMPORARY PROVISIONS TO PROVIDE NAFTA PARITY TO PARTNERSHIP 
                    COUNTRIES.

  (a) Temporary Provisions.--Section 213(b) of the Caribbean Basin 
Economic Recovery Act (19 U.S.C. 2703(b)) is amended to read as 
follows:
  ``(b) Import-Sensitive Articles.--
          ``(1) In general.--Subject to paragraphs (2) through (5), the 
        duty-free treatment provided under this title does not apply 
        to--
                  ``(A) textile and apparel articles which were not 
                eligible articles for purposes of this title on January 
                1, 1994, as this title was in effect on that date;
                  ``(B) footwear not designated at the time of the 
                effective date of this title as eligible articles for 
                the purpose of the generalized system of preferences 
                under title V of the Trade Act of 1974;
                  ``(C) tuna, prepared or preserved in any manner, in 
                airtight containers;
                  ``(D) petroleum, or any product derived from 
                petroleum, provided for in headings 2709 and 2710 of 
                the HTS;
                  ``(E) watches and watch parts (including cases, 
                bracelets and straps), of whatever type including, but 
                not limited to, mechanical, quartz digital, or quartz 
                analog, if such watches or watch parts contain any 
                material which is the product of any country with 
                respect to which HTS column 2 rates of duty apply; or
                  ``(F) articles to which reduced rates of duty apply 
                under subsection (h).
          ``(2) Transition period treatment of certain textile and 
        apparel articles.--
                  ``(A) Equivalent tariff and quota treatment.--During 
                the transition period--
                          ``(i) the tariff treatment accorded at any 
                        time to any textile or apparel article that 
                        originates in the territory of a partnership 
                        country shall be identical to the tariff 
                        treatment that is accorded at such timeunder 
section 2 of the Annex to an article described in the same 8-digit 
subheading of the HTS that is a good of Mexico and is imported into the 
United States;
                          ``(ii) duty-free treatment under this title 
                        shall apply to any textile or apparel article 
                        that is imported into the United States from a 
                        partnership country and that--
                                  ``(I) is assembled in a partnership 
                                country, from fabrics wholly formed and 
                                cut in the United States from yarns 
                                formed in the United States, and is 
                                entered--
                                          ``(aa) under subheading 
                                        9802.00.80 of the HTS; or
                                          ``(bb) under chapter 61, 62, 
                                        or 63 of the HTS if, after such 
                                        assembly, the article would 
                                        have qualified for treatment 
                                        under subheading 9802.00.80 of 
                                        the HTS, but for the fact the 
                                        article was subjected to 
                                        bleaching, garments dyeing, 
                                        stone-washing, enzyme-washing, 
                                        acid-washing, perma-pressing, 
                                        oven-baking, or embroidery;
                                  ``(II) is knit-to-shape in a 
                                partnership country from yarns wholly 
                                formed in the United States;
                                  ``(III) is made in a partnership 
                                country from fabric knit in a 
                                partnership country from yarns wholly 
                                formed in the United States;
                                  ``(IV) is cut and assembled in a 
                                partnership country from fabrics wholly 
                                formed in the United States from yarns 
                                wholly formed in the United States; or
                                  ``(V) is identified under 
                                subparagraph (C) as a handloomed, 
                                handmade, or folklore article of a 
                                partnership country and is certified as 
                                suchby the competent authority of such 
country; and
                          ``(iii) no quantitative restriction or 
                        consultation level may be applied to the 
                        importation into the United States of any 
                        textile or apparel article that--
                                  ``(I) originates in the territory of 
                                a partnership country, or
                                  ``(II) qualifies for duty-free 
                                treatment under subclause (I), (II), 
                                (III), (IV), or (V) of clause (ii).
                  ``(B) Transition period treatment of other 
                nonoriginating textile and apparel articles.--
                          ``(i) Preferential tariff treatment.--Subject 
                        to clause (ii), the President may place in 
                        effect at any time during the transition period 
                        with respect to any textile or apparel article 
                        that--
                                  ``(I) is a product of a partnership 
                                country, but
                                  ``(II) does not qualify as a good 
                                that originates in the territory of a 
                                partnership country or is eligible for 
                                benefits under subparagraph (A)(ii),
                        tariff treatment that is identical to the in-
                        preference-level tariff treatment accorded at 
                        such time under Appendix 6.B of the Annex to an 
                        article described in the same 8-digit 
                        subheading of the HTS that is a product of 
                        Mexico and is imported into the United States. 
                        For purposes of this clause, the `in-
                        preference-level tariff treatment' accorded to 
                        an article that is a product of Mexico is the 
                        rate of duty applied to that article when 
                        imported in quantities less than or equal to 
                        the quantities specified in Schedule 6.B.1, 
                        6.B.2., or 6.B.3. of the Annex for imports of 
                        that article from Mexico into the United 
                        States.
                          ``(ii) Limitations on all articles.--(I) 
                        Tariff treatment under clause (i) may be 
                        extended, during any calendar year, to not more 
                        than 45,000,000 square meter equivalents of 
                        cotton or man-made fiber apparel, to not more 
                        than 1,500,000 square meter equivalents of wool 
                        apparel, and to not more than 25,000,000 square 
                        meter equivalents of goods entered under 
                        subheading 9802.00.80 of the HTS.
                          ``(II) Except as provided in subclause (III), 
                        the amounts set forth in subclause (I) shall be 
                        allocated among the 7 partnership countries 
                        with the largest volume of exports to the 
                        United States of textile and apparel goods in 
                        calendar year 1997, based upon a pro rata share 
                        of the volume of textile and apparel goods of 
                        each of those 7 countries that entered the 
                        United States under subheading 9802.00.80 of 
                        the HTS during the first 12 months of the 14-
                        month period ending on the date of the 
                        enactment of the United States-Caribbean Trade 
                        Partnership Act.
                          ``(III) Five percent of the amounts set forth 
                        in subclause (I) shall be allocated among the 
                        partnership countries, other than those to 
                        which subclause (II) applies, based upon a pro 
                        rata share of the exports to the United States 
                        of textile and apparel goods of each of those 
                        countries during the first 12 months of the 14-
                        month period ending on the date of the 
                        enactment of the United States-Caribbean Trade 
                        Partnership Act.
                          ``(iii) Prior consultation.--The President 
                        may implement the preferential tariff treatment 
                        described in clause (i) only after consultation 
                        with representatives of the United States 
                        textile and apparel industry and other 
                        interested parties regarding--
                                  ``(I) the specific articles to which 
                                such treatment will be extended,
                                  ``(II) the annual quantities of such 
                                articles that may be imported at the 
                                preferential duty rates described in 
                                clause (i), and
                                  ``(III) the allocation of such annual 
                                quantities among partnership countries.
                  ``(C) Handloomed, handmade, and folklore articles.--
                For purposes of subparagraph (A)(ii)(V), the Trade 
                Representative shall consult with representatives of a 
                partnership country for the purpose of identifying 
                particular textile and apparel goods that are mutually 
                agreed upon as being handloomed, handmade, or folklore 
                goods of a kind described insection 2.3 (a), (b), or 
(c) or Appendix 3.1.B.11 of the Annex.
                  ``(D) Bilateral emergency actions.--(i) The President 
                may take--
                          ``(I) bilateral emergency tariff actions of a 
                        kind described in section 4 of the Annex with 
                        respect to any textile or apparel article 
                        imported from a partnership country if the 
                        application of tariff treatment under 
                        subparagraph (A) to such article results in 
                        conditions that would be cause for the taking 
                        of such actions under such section 4 with 
                        respect to an article described in the same 8-
                        digit subheading of the HTS that is imported 
                        from Mexico; or
                          ``(II) bilateral emergency quantitative 
                        restriction actions of a kind described in 
                        section 5 of the Annex with respect to imports 
                        of any textile or apparel article described in 
                        subparagraphs (B)(i) (I) and (II) if the 
                        importation of such article into the United 
                        States results in conditions that would be 
                        cause for the taking of such actions under such 
                        section 5 with respect to a like article that 
                        is a product of Mexico.
                  ``(ii) The requirement in paragraph (5) of section 4 
                of the Annex (relating to providing compensation) shall 
                not be deemed to apply to a bilateral emergency action 
                taken under this subparagraph.
                  ``(iii) For purposes of applying bilateral emergency 
                action under this subparagraph--
                          ``(I) the term `transition period' in 
                        sections 4 and 5 of the Annex shall be deemed 
                        to be the period defined in paragraph (5)(E); 
                        and
                          ``(II) any requirements to consult specified 
                        in section 4 or 5 of the Annex are deemed to be 
                        satisfied if the President requests 
                        consultations with the partnership country in 
                        question and the country does not agree to 
                        consult within the time period specified under 
                        such section 4 or 5, whichever is applicable.
          ``(3) NAFTA transition period treatment of certain other 
        articles originating in beneficiary countries.--
                  ``(A) Equivalent tariff treatment.--
                          ``(i) In general.--Subject to clause (ii), 
                        the tariff treatment accorded at any time 
                        during the transition period to any article 
                        referred to in any of subparagraphs (B) through 
                        (F) of paragraph (1) that originates in the 
                        territory of a partnership country shall be 
                        identical to the tariff treatment that is 
                        accorded at such time under Annex 302.2 of the 
                        NAFTA to an article described in the same 8-
                        digit subheading of the HTS that is a good of 
                        Mexico and is imported into the United States.
                          ``(ii) Exception.--Clause (i) does not apply 
                        to any article accorded duty-free treatment 
                        under U.S. Note 2(b) to subchapter II of 
                        chapter 98 of the HTS.
                  ``(B) Relationship to subsection (h) duty 
                reductions.--If at any time during the transition 
                period the rate of duty that would (but for action 
                taken under subparagraph (A)(i) in regard to such 
                period) apply with respect to any article under 
                subsection (h) is a rate of duty that is lower than the 
                rate of duty resulting from such action, then such 
                lower rate of duty shall be applied for the purposes of 
                implementing such action.
          ``(4) Customs procedures.--
                  ``(A) In general.--
                          ``(i) Regulations.--Any importer that claims 
                        preferential tariff treatment under paragraph 
                        (2) or (3) shall comply with customs procedures 
                        similar in all material respects to the 
                        requirements of Article 502(1) of the NAFTA as 
                        implemented pursuant to United States law, in 
                        accordance with regulations promulgated by the 
                        Secretary of the Treasury.
                          ``(ii) Determination.--In order to qualify 
                        for such preferential tariff treatment and for 
                        a Certificate of Origin to be valid with 
                        respect to any article for which such treatment 
                        is claimed, there shall be in effect a 
                        determination by the President that--
                                  ``(I) the partnership country from 
                                which the article is exported, and
                                  ``(II) each partnership country in 
                                which materials used in the production 
                                of the article originate or undergo 
                                production that contributes to a claim 
                                that the article qualifies for such 
                                preferential tariff treatment,
                        has implemented and follows, or is making 
                        substantial progress toward implementing and 
                        following, procedures and requirements similar 
                        in all material respects to the relevant 
                        procedures and requirements under chapter 5 of 
                        the NAFTA.
                  ``(B) Certificate of origin.--The Certificate of 
                Origin that otherwise would be required pursuant to the 
                provisions of subparagraph (A) shall not be required in 
                the case of an article imported under paragraph (2) or 
                (3) if such Certificate of Origin would not be required 
                under Article 503 of the NAFTA (as implemented pursuant 
                to United States law), if the article were imported 
                from Mexico.
                  ``(C) Penalties for transshipments.--If the President 
                determines, based on sufficient evidence, that an 
                exporter has engaged in willful illegal transshipment 
                or willful customs fraud with respect to textile or 
                apparel articles for which preferential tariff 
                treatment undersubparagraph (A) or (B) of paragraph (2) 
is claimed, then the President shall deny all benefits under this title 
to such exporter, and any successors of such exporter, for a period of 
2 years.
                  ``(D) Report by ustr on cooperation of other 
                countries concerning circumvention.--The United States 
                Commissioner of Customs shall conduct a study analyzing 
                the extent to which each partnership country--
                          ``(i) has cooperated fully with the United 
                        States, consistent with its domestic laws and 
                        procedures, in instances of circumvention or 
                        alleged circumvention of existing quotas on 
                        imports of textile and apparel goods, to 
                        establish necessary relevant facts in the 
                        places of import, export, and, where 
                        applicable, transshipment, including 
                        investigation of circumvention practices, 
                        exchanges of documents, correspondence, 
                        reports, and other relevant information, to the 
                        extent such information is available;
                          ``(ii) has taken appropriate measures, 
                        consistent with its domestic laws and 
                        procedures, against exporters and importers 
                        involved in instances of false declaration 
                        concerning fiber content, quantities, 
                        description, classification, or origin of 
                        textile and apparel goods; and
                          ``(iii) has penalized the individuals and 
                        entities involved in any such circumvention, 
                        consistent with its domestic laws and 
                        procedures, and has worked closely to seek the 
                        cooperation of any third country to prevent 
                        such circumvention from taking place in that 
                        third country.
                The Trade Representative shall submit to the Congress, 
                not later than October 1, 1999, a report on the study 
                conducted under this subparagraph.
          ``(5) Definitions.--For purposes of this subsection--
                  ``(A) The term `the Annex' means Annex 300-B of the 
                NAFTA.
                  ``(B) The term `NAFTA' means the North American Free 
                Trade Agreement entered into between the United States, 
                Mexico, and Canada on December 17, 1992.
                  ``(C) The term `partnership country' means a 
                beneficiary country.
                  ``(D) The term `textile or apparel article' means any 
                article referred to in paragraph (1)(A) that is a good 
                listed in Appendix 1.1 of the Annex.
                  ``(E) The term `transition period' means, with 
                respect to a partnership country, the period that 
                begins on July 1, 2000, and ends on the earlier of--
                          ``(i) August 1, 2002; or
                          ``(ii) the date on which--
                                  ``(I) the United States first applies 
                                the NAFTA to the partnership country 
                                upon its accession to the NAFTA, or
                                  ``(II) there enters into force with 
                                respect to the United States and the 
                                partnership country a free trade 
                                agreement comparable to the NAFTA that 
                                makes substantial progress in achieving 
                                the negotiating objectives set forth in 
                                section 108(b)(5) of the North American 
                                Free Trade Agreement Implementation Act 
                                (19 U.S.C. 3317(b)(5)).
                  ``(F) An article shall be deemed as originating in 
                the territory of a partnership country if the article 
                meets the rules of origin for a good set forth in 
                chapter 4 of the NAFTA, and, in the case of an article 
                described in Appendix 6.A of the Annex, the 
                requirements stated in such Appendix 6.A for such 
                article to be treated as if it were an originating 
                good. In applying such chapter 4 or Appendix 6.A with 
                respect to a partnership country for purposes of this 
                subsection--
                          ``(i) no countries other than the United 
                        States and partnership countries may be treated 
                        as being Parties to the NAFTA,
                          ``(ii) references to trade between the United 
                        States and Mexico shall be deemed to refer to 
                        trade between the United States and partnership 
                        countries, and
                          ``(iii) references to a Party shall be deemed 
                        to refer to the United States or a partnership 
                        country, and references to the Parties shall be 
                        deemed to refer to any combination of 
                        partnership countries and the United States.''.
  (b) Determination Regarding Retention of Designation.--Section 
212(e)(1) of the Caribbean Basin Economic Recovery Act (19 U.S.C. 
2702(e)) is amended--
          (1) by inserting ``(A)'' after ``(1)'';
          (2) by redesignating subparagraphs (A) and (B) as clauses (i) 
        and (ii), respectively;
          (3) by adding at the end the following:
          ``(B)(i) Based on the President's review and analysis 
        described in subsection (f), the President may determine if the 
        preferential treatment under section 213(b)(2) and (3) should 
        be withdrawn, suspended, or limited with respect to any article 
        of a partnership country. Such determination shall be included 
        in the report required by subsection (f).
          ``(ii) Withdrawal, suspension, or limitation of the 
        preferential treatment under section 213(b)(2) and (3) with 
        respect to a partnership country shall be taken only after the 
        requirements of subsection (a)(2) and paragraph (2) of this 
        subsection have been met.''.
  (c) Reporting Requirements.--Section 212(f) of the Caribbean Basin 
Economic Recovery Act (19 U.S.C. 2702(f)) is amended to read as 
follows:
  ``(f) Reporting Requirements.--Not later than 1 year after the date 
of the enactment of the United States-Caribbean Trade Partnership Act 
and at the close of each 3-year period thereafter, the President shall 
submit to the Congress a complete report regarding the operation of 
this title, including--
          ``(1) with respect to subsections (b) and (c) of this 
        section, the results of a general review of beneficiary 
        countries based on the considerations described in such 
        subsections;
          ``(2) with respect to subsection (c)(4), the degree to which 
        a country follows accepted rules of international trade 
        provided for under the WTO Agreement and the multilateral trade 
        agreements (as such terms are defined in paragraphs (9) and 
        (4), respectively, of section 2 of the Uruguay Round Agreements 
        Act);
          ``(3) with respect to subsection (c)(9), the extent to which 
        beneficiary countries are providing or taking steps to provide 
        protection of intellectual property rights comparable to the 
        protection provided to the United States in bilateral 
        intellectual property rights agreements;
          ``(4) with respect to subsection (b)(2) and subsection 
        (c)(5), the extent that beneficiary countries are providing or 
        taking steps to provide protection of investment and investors 
        comparable to the protection provided to the United States in 
        bilateral investment treaties;
          ``(5) with respect to subsection (c)(3), the extent that 
        beneficiary countries are providing the United States and other 
        WTO members (as such term is defined in section 2(10) of the 
        Uruguay Round Agreements Act (19 U.S.C. 3501(10)) with 
        equitable and reasonable market access in the product sectors 
        for which benefits are provided under this title;
          ``(6) with respect to subsection (c)(11), the extent that 
        beneficiary countries are cooperating with the United States in 
        administering the provisions of section 213(b); and
          ``(7) with respect to subsection (c)(8), the extent that 
        beneficiary countries are meeting the internationally 
        recognized worker rights criteria under such subsection.
In the first report under this subsection, the President shall include 
a review of the implementation of section 213(b), and his analysis of 
whether the benefits under paragraphs (2) and (3) of such section 
further the objectives of this title.''.
  (d) Conforming Amendment.--Section 213(a)(1) of the Caribbean Basin 
Economic Recovery Act is amended by inserting ``and except as provided 
in section 213(b) (2) and (3),'' after ``Tax Reform Act of 1986,''.

SEC. 105. EFFECT OF NAFTA ON SUGAR IMPORTS FROM BENEFICIARY COUNTRIES.

  The President shall monitor the effects, if any, that the 
implementation of the NAFTA has on the access of beneficiary countries 
under the Caribbean Basin Economic Recovery Act to the United States 
market for sugars, syrups, and molasses. If the President considers 
that the implementation of the NAFTA is affecting, or will likely 
affect, in an adverse manner the access of such countries to the United 
States market, the President shall promptly--
          (1) take such actions, after consulting with interested 
        parties and with the appropriate committees of the House of 
        Representatives and the Senate, or
          (2) propose to the Congress such legislative actions,
as may be necessary or appropriate to ameliorate such adverse effect.

SEC. 106. DUTY-FREE TREATMENT FOR CERTAIN BEVERAGES MADE WITH CARIBBEAN 
                    RUM.

  Section 213(a) of the Caribbean Basin Economic Recovery Act (19 
U.S.C. 2703(a)) is amended--
          (1) in paragraph (5), by striking ``chapter'' and inserting 
        ``title''; and
          (2) by adding at the end the following new paragraph:
  ``(6) Notwithstanding paragraph (1), the duty-free treatment provided 
under this title shall apply to liqueurs and spirituous beverages 
produced in the territory of Canada from rum if--
          ``(A) such rum is the growth, product, or manufacture of a 
        beneficiary country or of the Virgin Islands of the United 
        States;
          ``(B) such rum is imported directly from a beneficiary 
        country or the Virgin Islands of the United States into the 
        territory of Canada, and such liqueurs and spirituous beverages 
        are imported directly from the territory of Canada into the 
        customs territory of the United States;
          ``(C) when imported into the customs territory of the United 
        States, such liqueurs and spirituous beverages are classified 
        in subheading 2208.90 or 2208.40 of the HTS; and
          ``(D) such rum accounts for at least 90 percent by volume of 
        the alcoholic content of such liqueurs and spiritous 
        beverages.''.

SEC. 107. MEETINGS OF TRADE MINISTERS AND USTR.

  (a) Schedule of Meetings.--The President shall take the necessary 
steps to convene a meeting with the trade ministers of the partnership 
countries in order to establish a schedule of regular meetings, to 
commence as soon as is practicable, of the trade ministers and the 
Trade Representative, for the purpose set forth in subsection (b).
  (b) Purpose.--The purpose of the meetings scheduled under subsection 
(a) is to reach agreement between the United States and partnership 
countries on the likely timing and procedures for initiating 
negotiations for partnership countries to accede to the NAFTA, or to 
enter into mutually advantageous free trade agreements with the United 
States that contain provisions comparable to those in the NAFTA and 
would make substantial progress in achieving the negotiating objectives 
set forth in section 108(b)(5) of the North American Free Trade 
Agreement Implementation Act (19 U.S.C. 3317(b)(5)).

SEC. 108. REPORT ON ECONOMIC DEVELOPMENT AND MARKET ORIENTED REFORMS IN 
                    THE CARIBBEAN.

  (a) In General.--The Trade Representative shall make an assessment of 
the economic development efforts and market oriented reforms in each 
partnership country and the ability of each such country, on the basis 
of such efforts and reforms, to undertake the obligations of the NAFTA. 
The Trade Representative shall, not later than 2 years after the date 
of the enactment of this Act, submit to the President and to the 
Committee on Finance of the Senate and the Committee on Ways and Means 
of the House of Representatives a report on that assessment.
  (b) Accession to NAFTA.--
          (1) Ability of countries to implement nafta.--The Trade 
        Representative shall include in the report under subsection (a) 
        a discussion of possible timetables and procedures pursuant to 
        which partnership countries can complete the economic reforms 
        necessary to enable them to negotiate accession to the NAFTA. 
        The Trade Representative shall also include an assessment of 
        the potential phase-in periods that may be necessary for those 
        partnership countries with less developed economies to 
        implement the obligations of the NAFTA.
          (2) Factors in assessing ability to implement nafta.--In 
        assessing the ability of each partnership country to undertake 
        the obligations of the NAFTA, the Trade Representative should 
        consider, among other factors--
                  (A) whether the country has joined the WTO;
                  (B) the extent to which the country provides 
                equitable access to the markets of that country;
                  (C) the degree to which the country uses export 
                subsidies or imposes export performance requirements or 
                local content requirements;
                  (D) macroeconomic reforms in the country such as the 
                abolition of price controls on traded goods and fiscal 
                discipline;
                  (E) progress the country has made in the protection 
                of intellectual property rights;
                  (F) progress the country has made in the elimination 
                of barriers to trade in services;
                  (G) whether the country provides national treatment 
                to foreign direct investment;
                  (H) the level of tariffs bound by the country under 
                the WTO (if the country is a WTO member);
                  (I) the extent to which the country has taken other 
                trade liberalization measures; and
                  (J) the extent which the country works to accommodate 
                market access objectives of the United States.
  (c) Parity Review in the Event a New Country Accedes to NAFTA.--If--
          (1) a country or group of countries accedes to the NAFTA, or
          (2) the United States negotiates a comparable free trade 
        agreement with another country or group of countries,
the Trade Representative shall provide to the committees referred to in 
subsection (a) a separate report on the economic impact of the new 
trade relationship on partnership countries. The report shall include 
any measures the Trade Representative proposes to minimize the 
potential for the diversion of investment from partnership countries to 
the new NAFTA member or free trade agreement partner.

                       Subtitle B--Revenue Offset

SEC. 111. LIMITATIONS ON WELFARE BENEFIT FUNDS OF 10 OR MORE EMPLOYER 
                    PLANS.

  (a) Benefits to Which Exception Applies.--Section 419A(f)(6)(A) of 
the Internal Revenue Code of 1986 (relating to exception for 10 or more 
employer plans) is amended to read as follows:
                  ``(A) In general.--This subpart shall not apply to a 
                welfare benefit fund which is part of a 10 or more 
                employer plan if the only benefits provided through the 
                fund are 1 or more of the following:
                          ``(i) Medical benefits.
                          ``(ii) Disability benefits.
                          ``(iii) Group term life insurance benefits 
                        which do not provide for any cash surrender 
                        value or other money that can be paid, 
                        assigned, borrowed, or pledged for collateral 
                        for a loan.
                The preceding sentence shall not apply to any plan 
                which maintains experience-rating arrangements with 
                respect to individual employers.''
  (b) Limitation on Use of Amounts for Other Purposes.--Section 4976(b) 
of such Code (defining disqualified benefit) is amended by adding at 
the end the following new paragraph:
          ``(5) Special rule for 10 or more employer plans exempted 
        from prefunding limits.--For purposes of paragraph (1)(C), if--
                  ``(A) subpart D of part I of subchapter D of chapter 
                1 does not apply by reason of section 419A(f)(6) to 
                contributions to provide 1 or more welfare benefits 
                through a welfare benefit fund under a 10 or more 
                employer plan, and
                  ``(B) any portion of the welfare benefit fund 
                attributable to such contributions is used for a 
                purpose other than that for which the contributions 
                were made,then such portion shall be treated as 
reverting to the benefit of the employers maintaining the fund.''
  (c) Effective Date.--The amendments made by this section shall apply 
to contributions paid or accrued after June 8, 1999, in taxable years 
ending after such date.

Subtitle C--Suspension of Limitation on Cover Over of Tax on Distilled 
                                Spirits

SEC. 121. SUSPENSION OF LIMITATION ON COVER OVER OF TAX ON DISTILLED 
                    SPIRITS.

  (a) In General.--Section 7652(f) of the Internal Revenue Code of 1986 
(relating to limitation on cover over of tax on distilled spirits) is 
amended by adding at the end the following new sentence:
``The preceding sentence shall not apply to articles that are tax-
determined after June 30, 1999, and before October 1, 1999.''
  (b) Effective Date.--
          (1) In general.--The amendment made by this section shall 
        apply to articles that are tax-determined after June 30, 1999.
          (2) Special rule.--
                  (A) In general.--The treasury of Puerto Rico shall 
                make a Conservation Trust Fund transfer within 30 days 
                after the date of each cover over payment (made to such 
                treasury under section 7652(e) of the Internal Revenue 
                Code of 1986) to which section 7652(f) of such Code 
                does not apply by reason of the last sentence thereof.
                  (B) Conservation trust fund transfer.--
                          (i) In general.--For purposes of this 
                        paragraph, the term ``Conservation Trust Fund 
                        transfer'' means a transfer to the Puerto Rico 
                        Conservation Trust Fund of an amount equal to 
                        50 cents per proof gallon of the taxes imposed 
                        under section 5001 or section 7652 of such Code 
                        on distilled spirits that are covered over to 
                        the treasury of Puerto Rico under section 
                        7652(e) of such Code.
                          (ii) Treatment of transfer.--Each 
                        Conservation Trust Fund transfer shall be 
                        treated as principal for an endowment, the 
                        income from which to be available for use by 
                        the Puerto Rico Conservation Trust Fund for the 
                        purposes for which the Trust Fund was 
                        established.
                          (ii) Result of nontransfer.--
                                  (I) In general.--Upon notification by 
                                the Secretary of the Interior that a 
                                Conservation Trust Fund transfer has 
                                not been made by the treasury of Puerto 
                                Rico as required by subparagraph (A), 
                                the Secretary of the Treasury shall, 
                                except as provided in subclause (II), 
                                deduct and withhold from the next cover 
                                over payment to be made to the treasury 
                                of Puerto Rico under section 7652(e) of 
                                such Code an amount equal to the 
                                appropriate Conservation Trust Fund 
                                transfer and interest thereon at the 
                                underpayment rate established under 
                                section 6621 of such Code as of the due 
                                date of such transfer. The Secretary of 
                                the Treasury shall transfer such amount 
                                deducted and withheld, and the interest 
                                thereon, directly to the Puerto Rico 
                                Conservation Trust Fund.
                                  (II) Good cause exception.--If the 
                                Secretary of the Interior finds, after 
                                consultation with the Governor of 
                                Puerto Rico, that the failure by the 
                                treasury of Puerto Rico to make a 
                                required transfer was for good cause, 
                                and notifies the Secretary of the 
                                Treasury of the finding of such good 
                                cause before the due date of the next 
                                cover over payment following the 
                                notification of nontransfer, then the 
                                Secretary of the Treasury shall not 
                                deduct the amount of such nontransfer 
                                from any cover over payment.
                  (C) Puerto rico conservation trust fund.--For 
                purposes of this paragraph, the term ``Puerto Rico 
                Conservation Trust Fund'' means the fund established 
                pursuant to a Memorandum of Understanding between the 
                United States Department of the Interior and the 
                Commonwealth of Puerto Rico, dated December 24, 1968.

   TITLE II--FOREIGN ASSISTANCE FOR CENTRAL AMERICA AND THE CARIBBEAN

          Subtitle A--Microcredit and Agricultural Assistance

SEC. 201. DECLARATION OF POLICY.

  It is the policy of the United States, consistent with title XII of 
chapter 2 of part I of the Foreign Assistance Act of 1961 (22 U.S.C. 
2220a), to support the governments of Central American countries and 
Caribbean countries, United States and nongovernmental organizations, 
universities, businesses, and international organizations, to help 
ensure the availability of basic nutrition and economic opportunities 
for individuals in the affected areas of Central America and the 
Caribbean, through sustainable agriculture and rural development.

SEC. 202. MICROENTERPRISE ASSISTANCE.

  (a) Bilateral Assistance.--In providing disaster assistance in the 
aftermath of Hurricane Georges and Hurricane Mitch, the Administrator 
of the United States Agency for International Development shall, to the 
extent practicable, use credit and microcredit assistance to 
rehabilitate agriculture production in the affected areas of Central 
America and the Caribbean. In providing such assistance, the 
Administrator should use the applied research and technical assistance 
capabilities of United States land-grant universities.
  (b) Multilateral Assistance.--The Administrator shall continue to 
work with other countries, international organizations (including 
multilateral development institutions), and entities assisting 
microenterprises and shall develop a comprehensive and coordinated 
strategy for providing microenterprise assistance for Central America 
and the Caribbean.

SEC. 203. SUPPORT FOR PRODUCER-OWNED COOPERATIVE MARKETING 
                    ASSOCIATIONS.

  (a) Purposes.--The purposes of this section are--
          (1) to support producer-owned cooperative purchasing and 
        marketing associations in Central America and the Caribbean;
          (2) to strengthen the capacity of farmers in Central America 
        and the Caribbean to participate in national and international 
        private markets and to promote rural development in the region;
          (3) to encourage the efforts of farmers in Central America 
        and the Caribbean to increase their productivity and income 
        through improved access to farm supplies, seasonal credit, 
        technical expertise; and
          (4) to support small businesses in Central America and the 
        Caribbean as such businesses grow beyond microenterprises.
  (b) Support for Producer-Owned Cooperative Marketing Associations.--
          (1) Activities.--The Administrator of the United States 
        Agency for International Development is authorized to utilize 
        relevant foreign assistance programs and initiatives for the 
        Central America and the Caribbean region to support private 
        producer-owned cooperative marketing associations in the 
        region, including rural business associations that are owned 
        and controlled by farmer shareholders.
          (2) Other activities.--In addition to carrying out paragraph 
        (1), the Administrator is encouraged--
                  (A) to cooperate with governments of foreign 
                countries, including governments of political 
                subdivisions of such countries, their agricultural 
                research universities, and particularly with United 
                States nongovernmental organizations and United States 
                land-grant universities, that have demonstrated 
                expertise in the development and promotion of 
                successful private producer-owned cooperative marketing 
                associations; and
                  (B) to facilitate partnerships between United States 
                and Central America and the Caribbean cooperatives and 
                private businesses to enhance the capacity and 
                technical and marketing expertise of business 
                associations in the Central America and the Caribbean 
                region.

SEC. 204. AGRICULTURAL RESEARCH AND EXTENSION ACTIVITIES.

  (a) Development of Plan.--The Administrator of the United States 
Agency for International Development, in consultation with the 
Secretary of Agriculture and appropriate other officials in the 
Department of Agriculture, especially the head of the Cooperative 
State, Research, Education and Extension Service (CSREES), shalldevelop 
a comprehensive plan to coordinate and build on the research and 
extension activities of United States land-grant universities, 
international agricultural research centers, and national agricultural 
research and extension centers in Central America and the Caribbean.
  (b) Additional Requirements.--The plan described in subsection (a) 
shall seek to ensure that--
          (1) research and extension activities respond to the needs of 
        the agriculture sectors devastated by Hurricane Georges and 
        Hurricane Mitch while developing the potential and skills of 
        researchers, extension agents, farmers, and agribusiness 
        persons in the region; and
          (2) sustainable agricultural methods of farming will be 
        considered together with new technologies in rehabilitating 
        agricultural production in the region.

SEC. 205. NONEMERGENCY FOOD ASSISTANCE PROGRAMS.

  (a) In General.--In providing nonemergency assistance under title II 
of the Agricultural Trade Development and Assistance Act of 1954 (7 
U.S.C. 1721 et seq.), the Administrator of the United States Agency for 
International Development shall ensure that--
          (1) in planning, decisionmaking, and providing assistance, 
        the Administrator takes into consideration local input and 
        participation directly and through United States and indigenous 
        private and voluntary organizations;
          (2) each of the nonemergency activities described in 
        paragraphs (2) through (6) of section 201 of such Act (7 U.S.C. 
        1721), including programs that provide assistance to people of 
        any age group who are otherwise unable to meet their basic food 
        needs (including feeding programs for the disabled, orphaned, 
        elderly, sick and dying), are carried out; and
          (3) greater flexibility is provided for program and 
        evaluation plans so that such assistance may be developed to 
        meet local needs, as provided for in section 202(f) of such Act 
        (7 U.S.C. 1722(f)).
  (b) Other Requirements.--In providing assistance under the 
Agriculture Trade Development and Assistance Act of 1954, the Secretary 
of Agriculture and the Administrator shall ensure that commodities are 
provided in a manner that is consistent with subsections (a) and (b) of 
section 403 of such Act (7 U.S.C. 1733(a) and (b)).

          Subtitle B--Overseas Private Investment Corporation

SEC. 211. PRIVATE SECTOR DEVELOPMENT ACTIVITIES OF OPIC.

  (a) Purpose.--The purpose of this section is to commend OPIC for its 
recent initiative to provide financing and insurance to an investment 
facility in partnership with Citibank and to encourage OPIC to continue 
to work with United States businesses and other United States entities 
to invest in the affected areas of Central America and the Caribbean, 
particularly in ways that will help promote sustainable development.
  (b) Sense of Congress.--It is the sense of the Congress that OPIC 
should, in accordance with its mandate to foster private investment and 
enhance the ability of private enterprise to make its full contribution 
to the development process, exercise the authorities it has to further 
increase efforts to promote and support United States sponsored private 
investment in the affected areas of Central America and the Caribbean, 
including--
          (1) issuing loans, guaranties, and insurance, to support 
        infrastructure, agriculture, small business, tourism, and other 
        projects as appropriate; and
          (2) undertaking a special initiative that includes--
                  (A) sending a needs assessment team to the affected 
                areas of Central America and the Caribbean to determine 
                ways in which OPIC can best support the essential 
                investment required to restore infrastructure and other 
                critical services in those affected areas;
                  (B) engaging in an exhaustive outreach program to 
                involve United States companies in the recovery process 
                and exploring potential new projects which will assist 
                those affected areas;
                  (C) consulting and coordinating with host country 
                governments to promote private investment in priority 
                sectors; and
                  (D) utilizing existing equity funds to support 
                developmental private sector projects.
  (c) Technical Amendments.--Section 234 of the Foreign Assistance Act 
of 1961 (22 U.S.C. 2194) is amended--
          (1) by redesignating subsection (c) (the second place it 
        appears) as paragraph (5);
          (2) by amending the heading of paragraph (5), as redesignated 
        by paragraph (1) of this subsection, to read as follows:
          ``(5) Creation of fund for acquisition of equity.--''; and
          (3) by indenting paragraph (5), as redesignated by paragraph 
        (1) of this subsection, one full measure.

              Subtitle C--Economic Support Fund Assistance

SEC. 221. ECONOMIC SUPPORT FUND ASSISTANCE.

  (a) Authorization of Appropriations.--There is authorized to be 
appropriated to the President for fiscal year 1999 $611,000,000 to 
carry out chapter 4 of part II of the Foreign Assistance Act of 1961 
(22 U.S.C. 2346 et seq.) for reconstruction and disaster mitigation 
assistance for affected areas of Central America and the Caribbean.
  (b) Use of Amounts.--Of the amount appropriated under subsection (a), 
the President shall reserve the following amounts for the following 
purposes:
          (1) Agriculture and rural reconstruction.--$283,000,000 for 
        the construction and repair of rural roads, the provision of 
        micro-enterprise loans, the provision of tools, seed, and 
        fertilizer, and for assistance for rural farmers to adopt 
        sustainable production techniques.
          (2) Disease control, surveillance, and prevention.--
        $136,000,000 for the reconstruction and rehabilitation of 
        health posts and clinics, the provision of water and sanitation 
        services, and disease control, surveillance, and prevention.
          (3) Education and housing.--$55,000,000 for construction, 
        repair, and re-equipment of educational facilities, including 
        the provision of school supplies, and the re-equipment of new 
        housing units.
          (4) Environmental management and disaster mitigation.--
        $64,000,000 for environmental management and disaster 
        mitigation, including land use planning and resources 
        management.
          (5) Anti-corruption activities.--$22,000,000 for the 
        efficient management of local reconstruction assistance, 
        including anti-corruption training for municipal governments, 
        nongovernmental organizations, and law enforcement.
          (6) Assistance for the dominican republic and other caribbean 
        countries affected by hurricane georges.--$42,000,000 for 
        reconstruction assistance related to health, economic 
        revitalization, and housing for the Dominican Republic and 
        other Caribbean countries affected by Hurricane Georges.
  (c) Administrative Expenses.--Of the amount authorized to be 
appropriated under subsection (a), the President shall reserve 
$6,000,000 for the operating expenses of the United States Agency for 
International Development incurred in connection with assistance 
provided under this Act.

SEC. 222. REIMBURSEMENT OF INTERNATIONAL DISASTER ACCOUNT.

  There is authorized to be appropriated to the President for fiscal 
year 1999 $25,000,000 to reimburse the international disaster 
assistance account for expenses incurred with respect to international 
disaster assistance provided for affected areas of Central America and 
the Caribbean under chapter 9 of part I of the Foreign Assistance Act 
of 1961 (22 U.S.C. 2292 et seq.) for recovery from Hurricane Georges 
and Hurricane Mitch.

SEC. 223. RULE OF CONSTRUCTION; AVAILABILITY OF AMOUNTS.

  (a) Rule of Construction.--Amounts authorized to be appropriated 
under this subtitle are in addition to amounts otherwise available for 
the purposes described in the section of this subtitle involved.
  (b) Availability of Amounts.--Amounts authorized to be appropriated 
under this subtitle are authorized to remain available until expended.

                    TITLE III--DEPARTMENT OF DEFENSE

SEC. 301. REPLACEMENT OF FUNDS USED FOR DISASTER RELIEF AND 
                    RECONSTRUCTION.

  In addition to amounts authorized to be appropriated under any other 
law for the Department of Defense for fiscal year 1999, funds are 
hereby authorized to be appropriated for the use of the Armed Forces 
and other activities and agencies of the Department of Defense for 
expenses, not otherwise provided for, for operation and maintenance, in 
amounts as follows:
          (1) For replenishment of Department of Defense accounts used 
        in providing disaster relief and reconstruction to affected 
        areas of Central America and the Caribbean, $135,200,000, of 
        which--
                  (A) $75,000,000 may be used for replenishment of 
                operation and maintenance and military personal 
                accounts;
                  (B) $37,500,000 may be used for replenishment of the 
                Overseas Humanitarian Disaster and Civic Aid account 
                (including demining initiatives); and
                  (C) $20,000,000 may be used for replenishment of the 
                Commanders in Chief (CINC) Initiative Fund.
          (2) For the New Horizons Program, $56,000,000 for expanded 
        National Guard and Reserve exercises in Central American 
        countries and the Dominican Republic.

            TITLE IV--IMMIGRATION AND NATURALIZATION SERVICE

SEC. 401. DETENTION FACILITIES.

  There is authorized to be appropriated to the President $80,000,000 
to be used for Enforcement and Border Affairs within the Immigration 
and Naturalization Service (INS) to support increased detention 
requirements for Central American criminal aliens held in detention by 
the Immigration and Naturalization Service and to address an expected 
influx of illegal immigrants from Central America.

 TITLE V--DEBT RESCHEDULING AND REDUCTION FOR HONDURAS AND NICARAGUA; 
     FUNDING FOR THE CENTRAL AMERICAN EMERGENCY TRUST FUND OF THE 
         INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

 Subtitle A--Debt Rescheduling and Reduction for Honduras and Nicaragua

SEC. 501. RESCHEDULING OF INTEREST PAYMENTS OWED BY HONDURAS AND 
                    NICARAGUA.

  The President is authorized to reschedule the repayment of interest 
owed to the United States (or any agency of the United States) in 
fiscal years 1999 and 2000 by the Governments of Honduras and Nicaragua 
on debt owed by such Governments to the United States that is 
outstanding as of October 1, 1998.

SEC. 502. REDUCTION OF DEBT OWED BY HONDURAS.

  (a) Authority.--
          (1) In general.--The President shall reduce the amount owed 
        to the United States (or any agency of the United States) by 
        the Government of Honduras that is outstanding as of October 1, 
        1998, as a result of concessional loans made to Honduras by the 
        United States under part I or chapter 4 of part II of the 
        Foreign Assistance Act of 1961, or predecessor foreign economic 
        assistance legislation.
          (2) Appropriations requirement.--The authority provided by 
        this section may be exercised only in such amounts or to such 
        extent as is provided in advance by appropriations Acts.
          (3) Certain prohibitions inapplicable.--(A) 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) The authority of this section may be exercised 
        notwithstanding section 620(r) of the Foreign Assistance Act of 
        1961 or section 321 of the International Development and Food 
        Assistance Act of 1975.
  (b) Implementation of Debt Reduction.--
          (1) In general.--The debt reduction pursuant to subsection 
        (a) shall be accomplished by the exchange of a new obligation 
        for obligations outstanding as of the date specified in 
        subsection (a)(1).
          (2) Exchange of obligations.--The President shall notify the 
        agency primarily responsible for administering part I of the 
        Foreign Assistance Act of 1961 of the agreement with Honduras 
        to exchange a new obligation for outstanding obligations 
        pursuant to this subsection. At the direction of the President, 
        the old obligations shall be canceled and a new debt obligation 
        for the country shall be established, and such agency shall 
        make an adjustment in its accounts to reflect the debt 
        reduction.
  (c) Currency of Payment.--The principal amount of each new obligation 
issued pursuant to subsection (b) shall be repaid in United States 
dollars.
  (d) Deposit of Payments.--Principal repayments of new obligations 
shall be deposited in the United States Government account established 
for principal repayments of the obligations for which those obligations 
were exchanged.
  (e) Rate of Interest.--New obligations issued by a beneficiary 
country pursuant to subsection (b) shall bear interest at concessional 
rates.
  (f) Authorization of Appropriations.--
          (1) In general.--There is authorized to be appropriated for 
        fiscal year 2000 $16,000,000 to carry out this section.
          (2) Availability.--Amounts authorized to be appropriated 
        under paragraph (1) are authorized to remain available until 
        expended.

Subtitle B--Authorization of Funding for the Central American Emergency 
Trust Fund of the International Bank for Reconstruction and Development

SEC. 511. AUTHORIZATION OF FUNDING.

  The Bretton Woods Agreements Act (22 U.S.C. 286-286nn) is amended by 
adding at the end the following:

``SEC. 62. SUPPLEMENTAL FUNDING FOR THE CENTRAL AMERICAN EMERGENCY 
                    TRUST FUND OF THE INTERNATIONAL BANK FOR 
                    RECONSTRUCTION AND DEVELOPMENT.

  ``(a) Contribution Authority.--
          ``(1) In general.--The United States Governor of the Bank 
        may, on behalf of the United States, contribute $25,000,000 to 
        the Central American Emergency Trust Fund of the Bank.
          ``(2) Subject to appropriations.--The authority provided by 
        paragraph (1) shall be effective only to such extent or in such 
        amounts as are provided in advance in appropriations Acts.
  ``(b) Limitations on Authorization of Appropriations.--
          ``(1) In general.--For the contribution provided for in 
        subsection (a), there are authorized to be appropriated not 
        more than $25,000,000 for fiscal year 1999, for payment by the 
        President of the United States.
          ``(2) Rule of construction.--The authority provided by 
        paragraph (1) is in addition to any appropriations authority 
        otherwise provided by law.
  ``(c) Availability.--Amounts appropriated under subsection (b) are 
authorized to remain available until expended.''.

                            I. INTRODUCTION


                         A. Purpose and Summary

    H.R. 984, the ``Caribbean and Central America Relief and 
Economic Stabilization Act,'' responds to the needs of the 
Caribbean and Central American nations affected by the 
devastation caused by Hurricanes Georges and Mitch, which hit 
the region in September and October of 1998, respectively.
    Currently, about 70 percent of imports from countries in 
the Caribbean Basin region enter duty-free under the Caribbean 
Basin Economic Recovery and Security Act (CBERA) and other 
preferential trade programs. However, a number of products, 
mainly textiles and apparel, are excluded from CBI duty-free 
treatment. H.R. 984 amends the CBERA to provide tariff and 
quota treatment on imports of excluded articles that is similar 
to the tariff and quota treatment that is accorded like 
articles from Mexico under the North American Free Trade 
Agreement (NAFTA).
    The bill preserves authority in current law for the 
President to withdraw, suspend, or limit benefits if countries 
fail to meet designation criteria. In addition, H.R. 984 also 
authorizes such actions with respect to new parity benefits, 
based on a review of designation criteria as further 
interpreted by the bill.
    The purpose of H.R. 984 is to provide a mechanism to 
promote long-term economic recovery in Central American and the 
Caribbean by enhancing the region's opportunities to expand 
trade with the United States. Based on the success of the CBI 
program, the Committee expects that the bill also will also 
promote the growth of U.S. exports, help decrease pressures for 
illegal immigration, and improve regional cooperation in 
efforts to fight drug trafficking.

                 B. Background and Need for Legislation

    In February 1982, President Reagan announced that he would 
seek legislation to establish the Caribbean Basin Initiative 
(CBI), a program to further the economic development and 
political stability of Caribbean countries. The CBI was a 
package of economic assistance, trade benefits, and other 
incentives. The Caribbean Basin Economic Recovery Act (CBERA) 
was enacted in 1983, with an effective date of January 1, 1984. 
Under the CBI, the President is authorized to grant, to 
countries in the Caribbean and Central America, duty-free 
access to the U.S. market under certain conditions. CBI trade 
benefits were made permanent in 1990. Products which are 
excluded from duty-free treatment under CBI include: textile 
and apparel articles, canned tuna, petroleum and petroleum 
products, footwear, handbags, luggage, flat goods, work gloves, 
leather-wearing apparel, and certain watches.
    In 1993, total U.S. imports from CBI beneficiaries under 
the CBERA amounted to $10.1 billion. During the early years the 
CBERA was in effect, the United States ran a significant trade 
deficit with the region. In the fourth year of the program, the 
trade balance shifted in favor of the United States and has 
remained in surplus since that time. U.S. exports to CBI 
beneficiary countries amounted to $19.2 billion in 1998, and 
the U.S. surplus amounted to about $2 billion in that year, 
making the region one of the few in the world with which the 
United States has enjoyed a sustained favorable balance of 
trade.
    In October of 1998, Hurricane Mitch devastated areas of the 
Caribbean and Central America. The National Hurricane Center 
called this storm ``the most deadly hurricane in the Atlantic 
in over 200 years.'' Hurricane Mitch killed 9,860 people and 
left approximately 3 million people homeless in the region. 
Hurricane Georges hit the Florida Keys, the islands of the 
Caribbean, and the Gulf Coast of the United States in September 
1998, causing more than $1 billion in damage. The storm killed 
250 people.
    The total direct economic impact of Hurricane Mitch and 
Hurricane Georges on Honduras, Nicaragua, the Dominican 
Republic, El Salvador, and Guatemala amounts to $4.2 billion. 
Honduras' losses represent more than 50 percent of its gross 
domestic product, and Nicaragua lost a quarter of its gross 
domestic product. Approximately 356 bridges were destroyed in 
the region, and 57 percent of the region's roads were impacted. 
The United States equivalent of this would be the destruction 
of 3.9 million miles of highway.
    Significant numbers of displaced Central Americans are 
moving north to the United States in the wake of Hurricane 
Mitch's devastation. Border Patrol agents in Brownsville, 
Texas, report that apprehensions of Hondurans alone increased 
by 61 percent in the last three months of 1998. The massive 
influx of immigrants places severe pressures upon the ability 
of the Immigration and Naturalization Service (INS) to detain 
and remove non-criminal illegal immigrants. If this situation 
continues, the INS is concerned that many more people will 
attempt to illegally cross the border.
    Since 1983, the Caribbean Basin Economic Recovery Act has 
represented a permanent and successful commitment by the United 
States to encourage the development of strong democratic 
governments and revitalized economies in neighboring countries 
in the Caribbean Basin. Offering temporary benefits to 
Caribbean Basin countries on the 30 percent of imports from the 
region that are not currently duty-free under the CBERA and 
other trade programs will promote the growth of free enterprise 
and economic opportunity in these neighboring countries and 
thereby enhance the national security interests of the United 
States.
    The Subcommittee believes that the goal of U.S. assistance 
to the region should focus on, in addition to the short-term 
disaster assistance, long-term solutions for a successful 
economic recovery of Central America and the Caribbean. 
Successful economic recovery lies in the region's ability to 
expand its international trade with important trading partners 
such as the United States.

                         C. Legislative History

    H.R. 553, The Caribbean Basin Trade Security Act, was 
introduced on January 18, 1995, by Messrs. Crane, Gibbons, 
Rangel, and Shaw.
    On February 10, 1995, the Subcommittee on Trade held a 
public hearing on H.R. 553. On March 29, 1995, the Subcommittee 
on Trade considered H.R. 553 and ordered the bill favorably 
reported to the full Committee on Ways and Means by a recorded 
vote of 11-3, with an amendment in the nature of a substitute. 
The Administration testified in support of the bill, as 
amended.
    On June 23, 1997, the Committee on Ways and Means approved 
the ``United States-Caribbean Basin Trade Partnership Act'' as 
Section 9, Subtitle H of H.R. 2014, the Taxpayer Relief Act of 
1997. These provisions as passed by the House were not included 
in the final Conference agreement.
    On October 8, 1997, H.R. 2644, the ``United States-
Caribbean Basin Trade Partnership Act,'' was introduced by 
Chairman Archer, containing provisions identical to those 
included in Subtitle H of H.R. 2014. On October 9, 1997, the 
Committee on Ways and Means ordered H.R. 2644 favorably 
reported by voice vote. On November 4, 1997, H.R. 2644 failed 
to pass the House under suspension of the rules by a vote of 
182-234.
    H.R. 984, the Caribbean and Central America Relief and 
Economic Stabilization Act, was introduced on March 4, 1999, by 
Messrs. Crane, Kolbe, Rangel, Matsui, and Jefferson. On March 
23, 1999, the Trade Subcommittee held a public hearing on H.R. 
984. On May 18, 1999, the Trade Subcommittee considered H.R. 
984 and ordered the bill favorably reported by voice vote to 
the full Committee on Ways and Means. Then, on June 10, 1999, 
the Ways and Means Committee considered the bill and ordered it 
favorably reported by voice vote to the Committee of the Whole 
House on the State of the Union.

                      II. EXPLANATION OF THE BILL


                             A. Short Title

    The short title of the bill is the ``Caribbean and Central 
America Relief and Economic Stabilization Act.''

                         B. Findings and Policy


Present law

    The Caribbean Basin Initiative (CBI) program was 
established by the Caribbean Basin Economic Recovery Act 
(CBERA), which was enacted on August 5, 1983. This legislation 
authorized the President to grant duty-free treatment to 
imports of eligible articles from designated Caribbean 
countries. The basic purpose of the CBI program, as originally 
proposed by President Ronald Reagan, was to respond to an 
economic crisis in the Caribbean by encouraging industrial 
development primarily through preferential access to the U.S. 
market. The goal was to promote political and social stability 
in a strategically important region. CBI trade benefits were 
made permanent in 1990.

Explanation of provision

    Section 2 contains the findings of Congress that:
    (1) In October of 1998, Hurricane Mitch devastated areas of 
the Caribbean and Central America. The National Hurricane 
Center called this storm ``the most deadly hurricane in the 
Atlantic in over 200 years.'' Hurricane Mitch killed 9,860 
people and left approximately 3,000,000 people homeless in the 
region.
    (2) Hurricane Georges hit the Florida Keys, the islands of 
the Caribbean, and the Gulf Coast of the United States in 
September 1998, causing more than $1,000,000,000 in damage. The 
storm killed 250 people.
    (3) The total direct economic impact of Hurricane Mitch and 
Hurricane Georges on Honduras, Nicaragua, the Dominican 
Republic, El Salvador, and Guatemala amounts to $4,200,000,000. 
Honduras' losses represent more than 50 percent of its gross 
domestic product, and Nicaragua lost a quarter of its gross 
domestic product.
    (4) The United States must continue to play a leading role 
in responding to the disaster and encourage others to 
contribute to the recovery effort. For example, Taiwan has 
contributed $50,800,000 in assistance for the construction of 
roads and housing, the rehabilitation of agricultural 
production, and the distribution of supplies. Sweden, Spain, 
and France have sent engineering teams to the region to assess 
damage to roads, and Japan and the European Union have pledged 
millions of dollars in assistance. The United States praises 
the efforts of these and othernations in assisting with the 
rehabilitation of the region.
    (5) Approximately 356 bridges were destroyed in the region, 
and 57 percent of the region's roads were impacted. The United 
States equivalent of this would be the destruction of 3,900,000 
miles of highway. These roads must be reconstructed quickly so 
that farmers can transport their goods to market and much-
needed medical supplies can reach rural areas.
    (6) Hurricane Mitch devastated the agricultural sector in 
the affected areas of Central America and the Caribbean, 
particularly the countries of Honduras and Guatemala. An 
estimated 70 percent of Honduras' crops were destroyed by 
Hurricane Mitch, including 90 percent of the country's banana 
and grain crops. In Guatemala, an estimated 95 percent of the 
nation's banana crop was damaged, 25-60 percent of the corn, 
bean, coffee, and sugar crops were destroyed, and 30 percent of 
the cattle was lost.
    (7) Approximately 50 percent of Central America and the 
Caribbean's workforce is employed in agriculture. The 
devastation to the agriculture sector by Hurricane Mitch has 
resulted in a widespread shortage of food which is likely to 
continue in the long term unless the region's agricultural 
sector is rehabilitated.
    (8) Significant numbers of displaced Central Americans are 
moving north to the United States in the wake of Hurricane 
Mitch's devastation. Border Patrol agents in Brownsville, 
Texas, report that apprehensions of Hondurans alone increased 
by 61 percent in the last three months of 1998. The massive 
influx of immigrants places severe pressures upon the ability 
of the Immigration and Naturalization Service (INS) to detain 
and remove non-criminal illegal immigrants. At current funding 
levels, the INS does not have the resources to detain illegal 
non-criminal border crossers from Central America. If this 
situation continues, the INS is concerned that many more people 
will attempt to illegally cross the border.
    (9) Partially in an effort to alleviate these pressures, 
the Attorney General provided temporary protected status to 
aliens from Honduras and Nicaragua on December 30, 1998, for a 
period of 18 months. No such status was provided to immigrants 
from El Salvador and Guatemala.
    (10) Agricultural assistance and training and microcredit 
assistance will provide much needed aid to the affected areas 
of Central America and the Caribbean as the areas rebuild their 
agriculture sectors. The immediate distribution of food aid is 
important in the short term, but it is essential that the 
region be able to return to self-sufficiency in food production 
so the citizens of Central America and the Caribbean will be 
able to feed themselves once again.
    (11) The goal of United States assistance to the region 
should focus on, in addition to the short-term disaster 
assistance, long-term solutions for a successful economic 
recovery of Central America and the Caribbean. Successful 
economic recovery lies in the region's ability to expand its 
international trade with important trading partners such as the 
United States.
    (12) Since 1983, the Caribbean Basin Economic Recovery Act 
has represented a permanent and successful commitment by the 
United States to encourage the development of strong democratic 
governments and revitalized economies in neighboring countries 
in the Caribbean Basin.
    (13) Thirty-four democratically elected leaders agreed at 
the 1994 Summit of the Americas to conclude negotiation of a 
Free Trade Area of the Americas (referred to in this Act as 
``FTAA'') by the year 2005.
    (14) The economic security of the countries in the 
Caribbean Basin will be enhanced by the completion of the FTAA.
    (15) Offering temporary benefits to Caribbean Basin 
countries on the 30 percent of imports from the region that are 
not currently duty-free under the Caribbean Basin Economic 
Recovery Act and other trade programs will promote the growth 
of free enterprise and economic opportunity in these 
neighboring countries and thereby enhance the national security 
interests of the United States.
    (16) Given the greater propensity of countries located in 
the Western Hemisphere to use United States components and to 
purchase United States products compared to other countries, 
increased trade and economic activity between the United States 
and countries in the Western Hemisphere will create new jobs in 
the United States as a result of expanding export 
opportunities.
    Section 102 states that it is, therefore, the policy of the 
United States to: (1) offer Caribbean Basin partnership 
countries tariff and quota treatment equivalent to that 
accorded to products of NAFTA countries, and to seek the 
accession of these partnership countries to NAFTA or a free 
trade agreement comparable to NAFTA at the earliest possible 
date, with the goal of achieving full NAFTA participation by 
all Caribbean countries by January 1, 2005; and (2) assure that 
the domestic textile and apparel industry remain competitive in 
the global marketplace by encouraging the formation and 
expansion of ``partnerships'' between the textile and apparel 
industry of the United States and the textile and apparel 
industry of various countries located in the Western 
Hemisphere.

Reason for change

    This section outlines the Committee's view that the U.S. 
response to the devastation caused by Hurricanes Mitch and 
Georges should include, in addition to short-term disaster 
assistance, a long-term mechanism to promote economic recovery 
in Central America andthe Caribbean. Based on the successful 
record of the Caribbean Basin Initiative, the Committee believes that 
economic recovery will be achieved most effectively by enhancing the 
region's opportunities to expand its international trade with important 
trading partners such as the United States. The success of the CBI 
program indicates that increasing international trade with the CBI 
region will also promote the growth of United States exports, decrease 
illegal immigration, and improve regional cooperation in efforts to 
fight drug trafficking. Finally, the Committee intends that this bill 
foster increased opportunities for U.S. companies in the textile and 
apparel sector to expand coproduction arrangements with countries in 
the CBI region, thereby sustaining and preserving manufacturing 
operations in the United States that would otherwise be relocated to 
the Far East.

                             C. Definitions


Explanation of provision

    Section 3 defines several terms used in the bill.

    D. Temporary Provisions To Provide NAFTA Parity to Partnership 
                               Countries


Present law

    Under the CBERA, imports from CBI beneficiary countries, 
except for certain products that are statutorily excluded, are 
granted duty-free treatment, subject to specific eligibility 
requirements. Statutorily excluded articles are ineligible for 
duty-free treatment under the CBI. These excluded products are: 
textile and apparel articles that are subject to textile 
agreements, canned tuna, petroleum and petroleum products, 
footwear, handbags, luggage, flat goods, work gloves, and 
leather-wearing apparel. Also excluded are certain watches and 
watch products.
    Under NAFTA, imports of these products from Mexico 
(excluded from CBI and listed above) receive either declining 
tariff or duty-free and quota-free treatment.

Explanation of provision

    Section 104 of the bill amends section 213(b) of the CBERA 
to provide tariff and quota treatment on imports from CBI 
beneficiary countries of excluded articles that is identical to 
tariff and quota treatment accorded like articles imported from 
Mexico under NAFTA during a temporary period ending on the date 
that either NAFTA accession or a reciprocal free trade 
agreement enters into force with the partnership country, or on 
the fifth anniversary of the temporary treatment, whichever is 
earlier.

Reason for change

    The Committee believes that expanding the benefits of the 
Caribbean Basin Initiative on a temporary basis, by offering 
tariff and quota treatment similar to NAFTA, will promote 
economic recovery in the region, while encouraging the 
countries to make necessary economic reforms.

                           1. Rules of Origin

Present law

    Chapter Four of NAFTA establishes rules of origin for 
identifying goods that are to be treated as ``originating in 
the territories of NAFTA parties'' and are therefore eligible 
for preferential treatment accorded to originating goods under 
NAFTA, including reduced duties and duty-free and quota-free 
treatment.

Explanation of provision

    Section 104 of the bill provides that NAFTA tariff and 
quota treatment would apply to CBI articles which meet NAFTA 
rules of origin (treating the United States and CBI beneficiary 
countries as ``parties'' under the agreement for this purpose). 
Customs procedures applicable to exporters under NAFTA also 
must be met for partnership countries to qualify for parity 
treatment. Imports of articles currently excluded under CBI, 
which do not meet the conditions of NAFTA parity, would 
continue to be excluded from the CBI program.

Reason for change

    This section establishes ``NAFTA Parity'' for imports from 
partnership countries and ensures that Customs procedures 
required of Mexico under NAFTA would also be required of 
partnership countries receiving benefits under the bill.

        2. Effective Date and Termination of Temporary Treatment

Present law

    CBI trade benefits were made permanent in 1990.

Explanation of provision

    Under section 104 a temporary transitional period would 
begin upon date of enactment and end on the date that either 
NAFTA accession or a reciprocal free trade agreement enters 
into force with the partnership country, or on the fifth 
anniversary of the temporary treatment, whichever is earlier.

Reason for change

    As discussed above, the Subcommittee believes that offering 
temporary NAFTA benefits to CBI countries is in the national 
economic and security interest of the United States.

                        3. Designation Criteria

Present law

    In determining whether to designate any country as a CBI 
beneficiary country, the President must take into account 7 
mandatory and 11 discretionary criteria, which are listed in 
section 212 of the CBERA:
          (1) whether the country is a Communist country;
          (2) whether the country has nationalized, 
        expropriated, or otherwise seized ownership or control 
        of U.S. property (including intellectual property), 
        unless he determines that prompt, adequate, and 
        effective compensation has been or is being made, or 
        good faith negotiations to provide such compensation 
        are in progress, or the country is otherwise taking 
        steps to discharge its international obligations, or a 
        dispute over compensation has been submitted to 
        arbitration;
          (3) whether the country fails to act in good faith in 
        recognizing as binding or in enforcing arbitral awards 
        in favor of U.S. citizens;
          (4) whether the country affords ``reverse'' 
        preferences to developed countries and whether such 
        treatment has or is likely to have a significant 
        adverse effect on U.S. commerce;
          (5) whether a government-owned entity in the country 
        engages in the broadcast of copyrighted material 
        belonging to U.S. copyright owners without their 
        express consent or the country fails to work toward the 
        provision of adequate and effective intellectual 
        property rights;
          (6) whether the country is a signatory to an 
        agreement regarding the extradition of U.S. citizens;
          (7) whether the country has or is taking steps to 
        afford internationally recognized worker rights to 
        workers in the country;
          (8) an expression by the country of its desire to be 
        designated;
          (9) the economic conditions in the country, its 
        living standards, and any other appropriate economic 
        factors;
          (10) the extent to which the country has assured the 
        United States it will provide equitable and reasonable 
        access to its markets and basic commodity resources;
          (11) the degree to which the country follows accepted 
        rules of international trade under the World Trade 
        Organization;
          (12) the degree to which the country uses export 
        subsidies or imposes export performance or local 
        content requirements which distort international trade;
          (13) the degree to which the trade policies of the 
        country are contributing to the revitalization of the 
        region;
          (14) the degree to which the country is undertaking 
        self-help measures to protect its own economic 
        development;
          (15) the extent to which the country provides under 
        its law adequate and effective means for foreign 
        nationals to secure, exercise, and enforce exclusive 
        intellectual property rights;
          (16) the extent to which the country prohibits its 
        nationals from engaging in the broadcast of copyrighted 
        material belonging to U.S. copyright owners without 
        their express consent; and
          (17) the extent to which the country is prepared to 
        cooperate with the United States in the administration 
        of the Act.
Under the CBERA, the President is prohibited from designating a 
country a beneficiary country if any of criteria (1)-(7) apply 
to that country, subject to waiver if the President determines 
that country designation will be in the U.S. national economic 
or security interest. The waiver does not apply to (4) and (6). 
Criteria (8)-(18) are discretionary. Under the CBERA, criteria 
(7) is included as both mandatory and discretionary.

Explanation of provision

    The bill makes no change in country designation criteria 
established in the CBERA.

                     4. General Review of Countries

Present law

    Section 212(f) of the CBERA requires the President, every 
three years, to submit to the Congress a complete report 
regarding the operation of the CBI program, including the 
results of a general review of beneficiary countries.

Explanation of provision

    Section 104 of the bill amends section 212(f) of the CBERA 
to provide that the next review take place one year after the 
effective date of H.R. 984 and subsequent reviews occur at 
three year intervals thereafter. The bill requires the 
President to conduct and report to Congress on triennial 
reviews of the benefits accorded under H.R. 984. The review 
will be based on the 18 eligibility criteria listed in section 
212 of the CBERA, as further interpreted by the bill. These 
criteria include intellectual property protection, investment 
protection, market access, worker rights, cooperation in 
administering the program, and the degree to which the country 
follows accepted rules of international trade provided for 
under the World Trade Organization. The President may 
determine, based on the review, whether to withdraw, suspend, 
or limit new parity benefits. Existing authority in the CBERA 
would continue to withdraw, suspend, or limit current benefits 
at any time based on present criteria.

Reason for change

    The Caribbean Basin Initiative is a conditional trade 
program because, under Section 212 of the CBERA, the President 
must take into account seven mandatory and eleven discretionary 
criteria when determining whether to designate a country as a 
beneficiary country.
    The Committee is aware that questions periodically arise 
regarding beneficiary countries' adherence to the eligibility 
criteria. As part of the implementation of this legislation, 
the Committee expects the President to offer adequate 
opportunities for interested parties to present information 
concerning CBERA beneficiaries' adherence to the eligibility 
criteria.
    The Committee intends that the triennial review of 
countries based on eligibility criteria in current law, as 
further interpreted by the bill, will reinforce the conditional 
nature of benefits accorded under the Caribbean and Central 
America Relief and Economic Stabilization Act.

                             5. safeguards

Present law

    The import relief procedures and authorities under section 
201-204 of the Trade Act of 1974 apply to imports from CBI 
beneficiary countries, as they do to imports from other 
countries. If CBI imports cause serious injury, or threat of 
such injury, to the domestic industry producing a like or 
directly competitive article, section 213(e) of the CBERA 
authorizes the President to suspend CBI duty-free treatment and 
proclaim a rate of duty or other relief measures.
    Under NAFTA, the United States may invoke a special 
safeguard provision at any time during the tariff phase-out 
period if a NAFTA-origin textile or apparel good is being 
imported in such increased quantities and under such conditions 
as to cause ``serious damage, or actual threat thereof,'' to a 
domestic industry producing a like or directly competitive 
good. The President is authorized to either suspend further 
duty reductions or increase the rate of duty to the normal-
trade-relation rate for up to three years. The NAFTA also 
provides for a ``quantitative restriction'' safeguard, which 
the United States or Mexico may invoke against ``non-
originating'' textile or apparel goods, using the standard of 
``serious damage, or actual threat thereof.''

Explanation of provision

    Normal safeguard authorities under CBERA would apply to 
imports of all products except textiles and apparel. The NAFTA 
equivalent safeguard authorities would apply to imports of 
textile and apparel products from CBI countries, except that, 
under the bill, the President would not be obligated to provide 
equivalent trade liberalizing compensation to the exporting 
country.

Reason for change

    The Committee believes that the NAFTA equivalent safeguard 
authority is appropriate in order to ensure that the domestic 
textile and apparel industry is not damaged by increased 
imports from the Caribbean Basin region.

                6. termination or withdrawal of benefits

Present law

    The President may withdraw or suspend designation of any 
beneficiary country or withdraw, suspend, or limit the 
application of duty-free treatment to any article from any 
country if he determines that, as a result of changed 
circumstances, the country is not meeting criteria set forth in 
the statute for beneficiary country designation. The President 
must publish at least 30-days advance notice of the proposed 
action. The U.S. Trade Representative shall accept written 
public comments and hold a public hearing on the proposed 
action.

Explanation of the provision

    All country designation criteria apply as under the CBERA. 
The President may withdraw, suspend, or limit the application 
of duty-free or preferential quota treatment to any article if 
he determines the country or the product, based on changed 
circumstances, should be barred from eligibility. The bill 
makes no change in the President's authority to withdraw, 
suspend, or limit current benefits under the CBERA at any time.

Reason for change

    The Committee believes it is appropriate to retain broad 
authority for the President to withdraw, suspend, or limit 
benefits under the CBERA and to provide similar authority for 
the President with respect to the new trade benefits under H.R. 
984.

 7. treatment of textile and apparel imports from caribbean countries 
                               and mexico

a. GAL Program and ``807'' tariff treatment

            Present law
    The ``Special Access Program for Textiles,'' established by 
regulation in February 1986, provides flexible Guaranteed 
Access Levels (GALs) to the United States market for textile or 
apparel and ``made up'' textile product categories (not fabric, 
yarn, or other textile products) assembled in CBI countries 
from fabrics wholly formed and cut in the United States, under 
bilateral agreements negotiated at the request of each 
Caribbean government. GALs (also know as ``807A'') are separate 
limits from (and usually significantly higher than) standard 
quota levels, and are generally increased upon request of the 
exporting country.
    Imports under item 9802.00.80 of the U.S. Harmonized Tariff 
Schedule (previously item 807) which are assembled abroad from 
U.S.-fabricated components, including apparel assembled in 
Caribbean countries from fabric cut in the United States, are 
assessed duty only on the value-added abroad. Under NAFTA, 
Mexico receives duty-free and quota-free treatment on articles 
assembled from U.S.-formed and cut fabric.
            Explanation of provision
    Section 104 of the bill eliminates import restraint levels 
and duties on textile and apparel articles: (1) assembled from 
fabrics wholly formed and cut in the United States from yarns 
formed in the United States; (2) cut and sewn in a partnership 
country from fabrics wholly formed in the United States, from 
yarns wholly formed in the United States; (3) knit-to-shape in 
partnership country from yarns wholly formed in the United 
States; or (4) made in a partnership country from fabric knit 
in a partnership country from yarn wholly formed in the United 
States. Hand-made, hand-loomed and folklore articles of the 
region also qualify for duty-free and quota-free treatment.
            Reason for change
    The Committee believes that offering trade benefits to CBI 
countries in the textile and apparel area would be a valuable 
mechanism to promote long-term economic recovery by enhancing 
the region's opportunities to expand trade with the United 
States. At the same time, the Committee believes these 
provisions would promote growth of U.S. exports and the use of 
U.S. fabric and yarn.

b. Originating textile and apparel goods

            Present law
    Certain textile and apparel articles from major supplying 
CBI countries are subject to import quotas under bilateral 
agreements negotiated on a product-category basis under 
authority of Section 204 of the Agricultural Act of 1956 and in 
accordance with the Uruguay Round Agreement on Textiles and 
Clothing. Articles under quota may be assembled from U.S. and/
or foreign components.
            Explanation of provision
    Under section 104 imports of textile and apparel articles 
from CBI partnership countries that meet NAFTA rules of origin 
would receive tariff treatment equivalent to such goods 
originating in Mexico and would enter quota-free. There would 
be no change in the treatment of non-originating textile 
products currently subject to import quotas under bilateral and 
multilateral textile agreements.
            Reason for change
    This provision furthers the general purposes of the bill 
described above.

c. Trade Preference Levels (TPLs)

            Present law
    Appendix 6(B) of NAFTA provides a limited exception to 
NAFTA rules of origin for textile and apparel goods. The 
exception takes the form of Tariff Preference Levels (TPLs), 
under which specific quantities of goods from each NAFTA 
country that do not meet NAFTA ``yarn-forward'' rules of origin 
will nonetheless be accorded NAFTA preferential tariff rates. 
Imports of such goods that exceed these quantities will be 
subject to NTR duty rates. Under NAFTA, TPLs are available for 
three broad categories of products: (1) cotton or man-made 
apparel; (2) wool apparel; and, (3) goods entered under 
subheading 9802.00.80 of the HTS.
            Explanation of provision
    Section 104(2)(B)(i) authorizes USTR to establish TPLs for 
Caribbean textile and apparel products which are similar to 
those established for Mexican textile and apparel products in 
NAFTA. After consulting with the domestic industry and other 
interested parties, USTR is authorized to establish TPLs in the 
following categories at specified levels: not more than 
45,000,000 square meter equivalents of cotton or man-made fiber 
apparel; not more than 1,500,000 square meter equivalents of 
wool apparel; and, not more than 25,000,000 square meter 
equivalents of goods entered under subheading 9802.00.80 of the 
HTS.
    The bill requires that these amounts be allocated among the 
seven partnership countries which have the largest volume of 
textile and apparel exports to the United States, based on a 
pro rata share of the volume of their textile and apparel 
exports.

Reason for change

    This provision furthers the general purposes of the bill 
described above.
            d. Customs procedures and penalties for transshipment

Present law

    Under the NAFTA, Parties to the Agreement must observe 
Customs procedures and documentation requirements which are 
established in Chapter 5 of NAFTA. Requirements regarding 
Certificates of Origin for imports receiving preferential 
tariffs are detailed in Article 502.1 of NAFTA.

Explanation of provision

    The bill directs the Secretary of the Treasury to prescribe 
regulations that require, as a condition of entry, that any 
importer of record claiming preferential tariff treatment for 
textile and apparel products under the bill must comply with 
requirements similar in all material respects to the 
requirements regarding Certificates of Origin contained in 
Article 502.1 of NAFTA, for a similar importation from Mexico. 
In addition, if an exporter is determined under the laws of the 
United States to have engaged in illegal transshipment of 
textile or apparel products from a partnership country, then 
the President shall deny all benefits under the bill to such 
exporter, and to any successors of such exporter, for a period 
of 2 years.
    Finally, the bill requires the Commissioner of Customs to 
conduct a study analyzing the extent to which each partnership 
country has: (1) cooperated with the United States in instances 
of circumvention or alleged circumvention of existing quotas on 
imports of textile and apparel products; and (2) has taken 
appropriate measures consistent with its laws and domestic 
procedures to prevent transshipment and circumvention from 
taking place.

Reasons for change

    The Committee believes these hard-hitting transshipment 
provisions will address concerns raised by the textile and 
apparel industry that increasing trade with the Caribbean Basin 
region could result in illegal transshipments of textile and 
apparel products through the region.

     E. Effect of NAFTA on Sugar Imports From Beneficiary Countries


Present law

    Under the tariff-rate quota system for sugar, which was 
proclaimed by the President on December 23, 1994, the Secretary 
of Agriculture establishes the quota quantity that can be 
entered at the lower tier import duty-rates. USTR allocates 
quantities to CBI countries that receive duty-free treatment. 
Imports above the in-quota amount from CBI countries are 
subject to tariffs at the higher over-quota rates.
    The quantity of sugar which may be imported duty-free from 
Mexico is governed by Section A of Annex 703.2 of NAFTA. Under 
NAFTA, access grows over time to unlimited duty-free access for 
exports of sugar from Mexico beginning in the year 2009.

Explanation of provision

    Section 105 requires the President to monitor the effects, 
if any, of NAFTA on access to the U.S. sugar market by CBI 
beneficiary countries. If the President considers that 
implementation of NAFTA is affecting or likely will affect 
market access adversely, the President shall: (1) take action 
by Executive authority after consulting with interested parties 
and appropriate committees; or (2) propose legislation 
necessary or appropriate to ameliorate such effects.

Reasons for change

    Section 105 responds to concerns raised by CBI beneficiary 
governments that additional access to the U.S. sugar market for 
Mexico under NAFTA could potentially result in a decrease in 
access for exports of sugar from the Carribean and thereby 
reduce employment in the region.

  F. Duty-Free Treatment For Certain Beverages Made With Caribbean Rum


Present law

    Rum and beverages made with rum are eligible for duty-free 
entry into the United States both under the CBI program and 
NAFTA, provided they meet the CBI or NAFTA rules of origin and 
other requirements. When Caribbean rum is processed in Canada 
into a rum beverage and the beverage is exported from Canada 
into the United States, it is not eligible for duty-free 
treatment under either the CBI or NAFTA. Specifically, the 
beverage is ineligible for duty-free treatment under CBI 
because it is not shipped directly from a beneficiary country 
to the United States as the CBI rules require. The beverage 
does not qualify for NAFTA duty-free treatment because the 
processing in Canada is not sufficient to qualify it as a NAFTA 
``originating good.''

Explanation of provision

    Section 106 amends the CBERA to accord duty-free treatment 
to certain beverages imported from Canada if: (1) the rum is 
the growth, product, or manufacture of a beneficiary country or 
the U.S. Virgin Islands; (2) the rum is imported directly into 
Canada, and the beverages made from it are imported directly 
from Canada into the United States; and (3) the rum accounts 
for at least 90 percent by volume of the alcoholic content of 
the beverages.

Reason for change

    This provision would ensure that certain rum beverages that 
originate in the CBI, but which are processed in Canada, are 
not denied duty-free treatment under the CBERA.

            G. Meeting of Caribbean Trade Ministers and USTR


Present law

    No provision.

Explanation of provision

    Section 107 directs the President to convene a meeting with 
the trade ministers of CBI partnership countries in order to 
establish a schedule of regular meetings, to commence as soon 
as practicable, of the trade ministers and USTR. The purpose of 
the meetings shall be to further consultations between the 
United States and partnership countries concerning the likely 
timing and procedures for initiating negotiations for 
partnership countries to: (1) accede to NAFTA; or (2) enter 
into comprehensive, mutually advantageous trade agreements with 
the United States that contain comparable provisions to NAFTA, 
and would make substantial progress in achieving the 
negotiation objectives listed in Section 108(b)(5) of Public 
Law 103-182. (These are general trade negotiating objectives 
for future free trade agreements which were included in NAFTA 
implementing bill.)

Reason for change

    This provision is intended to encourage the United States 
Trade Representative to expand efforts to increase trade with 
countries in the Caribbean Basin region.

 H. Report on Economic Development and Market Oriented Reforms in the 
                               Caribbean


Present law

    Under the CBERA, the President must submit a complete 
report to the Congress every 3 years on the operation of the 
program, including the results of a general review of 
beneficiary countries.

Explanation of provision

    Section 108 requires USTR to make an assessment of the 
economic development efforts and market oriented reforms in 
each partnership country, as well as the ability of each such 
country, on the basis of such efforts and reforms, to undertake 
the obligations of NAFTA. Not later than July 1, 1998, USTR 
shall submit a report on this assessment to the President, the 
Committee on Finance, and the Committee on Ways and Means.
    USTR shall include in this report a discussion of possible 
timetables and procedures pursuant to which partnership 
countries can complete the economic reforms necessary to enable 
them to negotiate accession to NAFTA. USTR shall also include 
an assessment of the potential phase-in periods for 
implementing NAFTA obligations that may be necessary to 
successfully integrate the lesser developed economies of the 
Caribbean into NAFTA.
    Section 108 lists factors USTR should consider in assessing 
the ability of Caribbean countries to accede to NAFTA.

Reason for change

    The report required in this section will provide important 
information regarding the progress that partnership countries 
are making with respect to making the economic reforms 
necessary to accede to NAFTA or to enter into a free trade 
agreement containing obligations similar to those contained in 
NAFTA.

         I. Parity Review in Event New Country Accedes to NAFTA


Present law

    No provision.

Explanation of provision

    If a new country or group of countries accedes to NAFTA, or 
the U.S. negotiates a comparable free trade agreement with 
another country, Section 108(c) requires the USTR to report on 
the impact of the new trade relationship on beneficiary 
countries. The reportshall include any measures the USTR 
proposes to minimize the potential for the diversion of investment from 
beneficiary countries to the new NAFTA member or free trade agreement 
partner.

Reason for change

    The report required in this section will provide important 
information regarding the progress that partnership countries 
are making with respect to implementing the economic reforms 
necessary to accede to NAFTA or to enter into a free trade 
agreement containing obligations similar to those contained in 
NAFTA.

                       III. VOTE OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of the bill, H.R. 984.

Motion to report the bill

    The bill H.R. 984 was ordered favorably reported, by voice 
vote on June, 10 1999, with a quorum present.

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee agrees with cost 
estimates furnished by the Congressional Budget Office (CBO) on 
H.R. 984, set forth below.

                B. Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that H.R. 
984 does not include any new budget authority and reduces tax 
expenditures by an amount equal to the revenue raised by the 
provision clarifying the deduction for deferred severance pay.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives reguiring a cost estimate 
prepared by the congressional Budget Office (CBO), in the 
following report prepared by CBO is provided.
                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, January 6, 2000.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 984, the Caribbean 
and Central America Relief and Economic Stabilization Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Hester 
Grippando (for revenues) and John Righter (for spending).
            Sincerely,
                                          Dan L. Crippen, Director.
    Enclosure.

H.R. 984--Caribbean and Central American Relief and Economic 
        Stabilization Act

    Summary: H.R. 984 would provide tariff and quota treatment 
similar to that accorded to products under the North American 
Free Trade Agreement (NAFTA) to products of countries that are 
beneficiaries under the Caribbean Basin Economic Recovery Act. 
In addition, the legislation would amend the Internal Revenue 
Code to limit pre-funding of certain employee benefits. The 
bill would also increase by $0.25 the share of the exercise tax 
on rum that is distributed to Puerto Rico and the Virgin 
Islands. The higher share would apply only to assessments made 
between July 1, 1999, and September 30, 1999, but because of a 
provision in Public Law 106-170, the government would not pay 
the higher share to the two territories until 2001.
    CBO and the Joint Committee on Taxation (JCT) estimate that 
enacting H.R. 984 would increase governmental receipts by $34 
million over the 2000-2004 period. In addition, CBO estimates 
that direct spending would increase by $1.5 million in fiscal 
year 2001. Because the bill would affect receipts and direct 
spending, pay-as-you-go procedures would apply. CBO estimates 
that implementing the bill's provisions would not significantly 
affect spending subject to appropriation.
    The bill contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA). H.R. 984 contains 
one private-sector mandate that would limit the pre-funding of 
certain employee benefits. JCT estimates that the cost of the 
mandate would exceed the threshold for private-sector mandates 
established in UMRA ($100 million in 1996, adjusted annually 
for inflation) in each of fiscal years 2000 through 2004.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 984 is shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                        By fiscal year, in millions of dollars--
                                      --------------------------------------------------------------------------
                                        2000     2001     2002    2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES

Estimated Revenues:
    Carribean Basin Initiative.......     -76     -311     -271      0      0      0      0      0      0      0
    Limitation of pre-funding of          115      141      147    149    140    129    118    105     90     74
     certain benefits................
                                      --------------------------------------------------------------------------
      Total Revenues.................      39     -170     -124    149    140    129    118    105     90     74
                                      ==========================================================================
                                           CHANGES IN DIRECT SPENDING

Spending Under Current Law \1\:
    Estimated Budget Authority.......     275      389      272    255    255    255    255    255    255    255
    Estimated Outlays................     275      389      272    255    255    255    255    255    255    255
Proposed Changes:
    Estimated Budget Authority.......       0        2        0      0      0      0      0      0      0      0
    Estimated Outlays................       0        2        0      0      0      0      0      0      0      0
Spending Under H.R. 984:
    Estimated Budget Authority.......     275      391      272    255    255    255    255    255    255    255
    Estimated Outlays................     275      391      272    255    255    255    255    255    255    255
----------------------------------------------------------------------------------------------------------------
\1\ a. The amounts shown are estimated payments to Puerto Rico and the Virgin Islands for their share of excise
  taxes collected on rum produced in or brought into the United States.

Note.--Implementing the bill would also increase spending subject to appropriation, but CBO estimates that such
  costs would not be significant.

    Basis of estimates: CBO's estimate of H.R. 984 assumes an 
effective date of July 1, 2000.

Revenues

    The bill would offer immediate duty-free and quota-free 
treatment to certain articles of apparel assembled in a 
beneficiary country. Products covered under this provision 
include articles assembled from fabric formed in the United 
States from yarn made in the United States (including fabrics 
that have undergone certain additional processing in a 
beneficiarycountry), articles cut in a beneficiary country from 
fabric formed of U.S. yarn and assembled with U.S. thread, and handmade 
or folklore articles from beneficiary countries. Based on collections 
data for 1998, CBO estimates that about $6 billion in goods would enter 
the United States under this provision in fiscal year 2001. (Under 
current law, most of the products covered by this provision enter under 
a special subheading in the Harmonized Tariff Schedule that allows for 
duties to be paid only on the value added to the product in the 
beneficiary country.) CBO estimates that this provision would reduce 
receipts by $62 million in fiscal year 2000 and by $545 million over 
the 2000-2002 period.
    H.R. 984 would also offer special duty-treatment, 
equivalent to the staged tariff reductions in NAFTA, to other 
textile and apparel articles. This treatment would be granted 
to goods that are considered to have originated in beneficiary 
counties. Based on information from trade experts and 
collections data for 1998, CBO estimates that the total value 
of imports of textile and apparel articles that originate in 
beneficiary countries in fiscal year 2001 will be approximately 
$155 million. H.R. 984 also would authorize the President to 
grant ``in-preference level tariff treatment'' identical to 
that of NAFTA to other apparel products from beneficiary 
countries that would not otherwise be eligible for benefits 
under the bill. Special treatment of these products would be 
limited to no more than 71.5 million square meters of apparel 
in any given calendar year. CBO estimates that these provisions 
that would grant NAFTA parity treatment to certain textile and 
apparel articles would reduce receipts by $11 million in fiscal 
year 2000 and by $98 million over the 2000-2002 period.
    In addition, H.R. 984 would grant NAFTA parity to other 
articles imported into the U.S. from beneficiary countries, 
including luggage and handbags, certain leather goods, 
footwear, tuna, petroleum, watches, and watch parts. Based on 
recent collections data, CBO estimates that this provision 
would reduce receipts by 42 million in fiscal year 2000 and by 
$15 million over fiscal years 2000-2002.
    The bill would also limit the tax deductions that certain 
employers may take for contributions to welfare benefit funds. 
The limits would apply to participant in plans that provide 
supplemental unemployment compensation, severance pay, and life 
insurance (other than group-term life) benefits and involve 10-
or-more employer plans. The estimated budgetary impact of this 
provision--an increase in revenues totaling $692 million from 
2000 through 2004--was provided by JCT.

Direct spending

    Under current law, a tax of $13.50 per proof gallon is 
assessed on distilled spirits produced in or brought into the 
United States. Under Public Law 106-170, the treasuries of 
Puerto Rico and the Virgin Islands will receive $13.25 of the 
tax assessed on rum manufactured in either territory between 
July 1, 1999, and December 31, 2001. (Beginning January 1, 
2002, the amount of the federal excise tax the government 
shares with the territories falls to $10.50.) In addition, the 
territories receive payments, at a similar rate, on all rum 
imported into the United States from any foreign country. Those 
payments to Puerto Rico and the Virgin Islands are recorded as 
outlays in the budget.
    Under H.R. 984, the governments of Puerto Rico and the 
Virgin Islands would receive the full $13.50 per proof gallon 
for assessments made between July 1, 1999, and September 30, 
1999. Based on assessments collected during the three-month 
period, CBO estimates that retroactively increasing the 
territories' share of the excise tax would increase direct 
spending by $1.5 million in fiscal year 2001. The additional 
payments to the two territories would not occur until 2001 
because Public Law 106-170 limits the amount of additional 
payments (from a rate that is higher than $10.50 per proof 
gallon) the government can transfer in 2000. As a result, CBO 
estimates that the $1.5 million in additional payments from 
enacting H.R. 984 would be differed until fiscal year 2001.
    Titles II though V would authorize programs to help 
countries in Central America and the Caribbean recover from the 
destruction caused by Hurricanes Georges and Mitch. Enacting 
the title would have no budgetary impact because the authorized 
programs were funded in the 1999 Emergency Supplemental 
Appropriations Act, Public Law 106-31.

Spending subject to appropriation

    The bill would require the Administration to determine 
whether Caribbean Basin countries are eligible to benefit from 
the bill's preferential trade provisions and to monitor their 
compliance with certain requirements. The Administration 
already performs similar responsibilities under the Caribbean 
Basin Economic Recovery Act. Based on information from the 
Office of the United States Trade Representative and other 
affected agencies, CBO estimates that implementing these 
provisions would not significantly increase those agencies' 
costs.
    The legislation would also amend several existing reporting 
requirements of the Office of the United States Trade 
Representative and the International Trade Commission. The 
amendments would primarily change when and how often the 
reports are due. CBO estimates that those changes would cost 
less than $200,000 annually.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go are shown in the following table. For the 
proposes of enforcing pay-as-you-go procedures, only the 
effects in the current year, the budget year, and the 
succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                    By fiscal year, in millions of dollars--
                               ---------------------------------------------------------------------------------
                                 2000     2001     2002    2003    2004    2005    2006    2007    2008    2009
----------------------------------------------------------------------------------------------------------------
Changes in receipts...........      39     -170     -124     149     140     129     118     105      90      74
Changes in outlays............       0        2        0       0       0       0       0       0       0       0
----------------------------------------------------------------------------------------------------------------

    Estimted impact on state, local, and tribal governments: 
The bill contains no intergovernmental mandates as defined in 
UMRA. The bill would provide an additional $1.5 million to the 
governments of Puerto Rico and the Virgin Islands by increasing 
the portion of revenues those governments receive from excise 
taxes.
    Estimated impact on the private sector: The legislation 
contains one private-sector mandate that would limit pre-
funding of certain employee benefits. JCT estimates that the 
cost of the mandate would exceed the threshold for private-
sector mandates established in UMRA ($100 million in 1996, 
adjusted annually for inflation) in each of fiscal years 2000 
through 2004.
    Estimate prepared by: Federal Revenues: Hester Grippando; 
Federal Spending: John Righter; Impact on State, Local, and 
Tribal Governments: Leo H. Rex.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis. Thomas G. Woodward, Assistant 
Director for Tax Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


         A. Subcommittee Oversight Findings and Recommendations

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Subcommittee concludes 
that the actions taken in this legislation are appropriate 
given its oversight of international trade and tax matters.

    B. Summary of Findings and Recommendations of the Committee on 
                    Government Reform and Oversight

    In compliance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
oversight findings or recommendations have been submitted to 
the Committee by the Subcommittee on Government Reform and 
Oversight with respect to the provisions in H.R. 984.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives, relating to Constitutional 
Authority, the Committee states that the Committee's action in 
reporting the bill is derived from Article 1 of the 
Constitution, Section 8 (``The Congress shall have power to lay 
and collect taxes, duties, imposts and excises, to pay the 
debts and to provide for * * * the general Welfare of the 
United States * * *).

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has determined that the provision of the bill 
relating to the repeal of the 14-day rule on rental of vacation 
property will impose a Federal mandate on the private sector in 
the amount shown in the CBO estimate, above. This revenue is 
needed to offset the budget cost of the Trade Adjustment 
Assistance provision. This provision of the bill will not 
impose a Federal intergovernmental mandate on State, local, or 
tribal governments.

                 E. Applicability of House Rule XXI5(c)

    Rule XXI5(b) of the Rules of the House of Representatives 
provides, in part, that ``No bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase shall be considered as passed or agreed to unless 
so determined by a vote of not less than three-fifths of the 
Members.'' The Committee has carefully reviewed the provisions 
of the bill, and states that the provisions of the bill do not 
involve any Federal income tax rate increase within the meaning 
of the rule.

       VI. CHANGES IN EXISTING LAWS MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

CARIBBEAN BASIN ECONOMIC RECOVERY ACT

           *       *       *       *       *       *       *


TITLE II--CARIBBEAN BASIN INITIATIVE

           *       *       *       *       *       *       *


SEC. 212. BENEFICIARY COUNTRY.

  (a) * * *

           *       *       *       *       *       *       *

  (e)(1)(A) The President may, after the requirements of 
subsection (a)(2) and paragraph (2) have been met--
          [(A)] (i) withdraw or suspend the designation of any 
        country as a beneficiary country, or
          [(B)] (ii) withdraw, suspend, or limit the 
        application of duty-free treatment under this subtitle 
        to any article of any country,
if, after such designation, the President determines that as a 
result of changed circumstances such country would be barred 
from designation as a beneficiary country under subsection (b).
          (B)(i) Based on the President's review and analysis 
        described in subsection (f), the President may 
        determine if the preferential treatment under section 
        213(b)(2) and (3) should be withdrawn, suspended, or 
        limited with respect to any article of a partnership 
        country. Such determination shall be included in the 
        report required by subsection (f).
          (ii) Withdrawal, suspension, or limitation of the 
        preferential treatment under section 213(b)(2) and (3) 
        with respect to a partnership country shall be taken 
        only after the requirements of subsection (a)(2) and 
        paragraph (2) of this subsection have been met.

           *       *       *       *       *       *       *

  [(f) On or before October 1, 1993, and the close of each 3-
year period thereafter, the President shall submit to the 
Congress a complete report regarding the operation of this 
title, including the results of a general review of beneficiary 
countries based on the considerations described in subsections 
(b) and (c).]
  (f) Reporting Requirements.--Not later than 1 year after the 
date of the enactment of the United States-Caribbean Trade 
Partnership Act and at the close of each 3-year period 
thereafter, the President shall submit to the Congress a 
complete report regarding the operation of this title, 
including--
          (1) with respect to subsections (b) and (c) of this 
        section, the results of a general review of beneficiary 
        countries based on the considerations described in such 
        subsections;
          (2) with respect to subsection (c)(4), the degree to 
        which a country follows accepted rules of international 
        trade provided for under the WTO Agreement and the 
        multilateral trade agreements (as such terms are 
        defined in paragraphs (9) and (4), respectively, of 
        section 2 of the Uruguay Round Agreements Act);
          (3) with respect to subsection (c)(9), the extent to 
        which beneficiary countries are providing or taking 
        steps to provide protection of intellectual property 
        rights comparable to the protection provided to the 
        United States in bilateral intellectual property rights 
        agreements;
          (4) with respect to subsection (b)(2) and subsection 
        (c)(5), the extent that beneficiary countries are 
        providing or taking steps to provide protection of 
        investment and investors comparable to the protection 
        provided to the United States in bilateral investment 
        treaties;
          (5) with respect to subsection (c)(3), the extent 
        that beneficiary countries are providing the United 
        States and other WTO members (as such term is defined 
        in section 2(10) of the Uruguay Round Agreements Act 
        (19 U.S.C. 3501(10)) with equitable and reasonable 
        market access in the product sectors for which benefits 
        are provided under this title;
          (6) with respect to subsection (c)(11), the extent 
        that beneficiary countries are cooperating with the 
        United States in administering the provisions of 
        section 213(b); and
          (7) with respect to subsection (c)(8), the extent 
        that beneficiary countries are meeting the 
        internationally recognized worker rights criteria under 
        such subsection.
In the first report under this subsection, the President shall 
include a review of the implementation of section 213(b), and 
his analysis of whether the benefits under paragraphs (2) and 
(3) of such section further the objectives of this title.

SEC. 213. ELIGIBLE ARTICLES.

  (a)(1) Unless otherwise excluded from eligibility by this 
title, and subject to section 423 of the Tax Reform Act of 
1986, and except as provided in section 213(b)(2) and (3), the 
duty-free treatment provided under this title shall apply to 
any article which is the growth, product, or manufacture of a 
beneficiary country if--
          (A) * * *

           *       *       *       *       *       *       *

  (5) The duty-free treatment provided under this [chapter] 
title shall apply to an article (other than an article listed 
in subsection (b)) which is the growth, product, or manufacture 
of the Commonwealth of Puerto Rico if--
                  (A)  * * *

           *       *       *       *       *       *       *

  (6) Notwithstanding paragraph (1), the duty-free treatment 
provided under this title shall apply to liqueurs and 
spirituous beverages produced in the territory of Canada from 
rum if--
          (A) such rum is the growth, product, or manufacture 
        of a beneficiary country or of the Virgin Islands of 
        the United States;
          (B) such rum is imported directly from a beneficiary 
        country or the Virgin Islands of the United States into 
        the territory of Canada, and such liqueurs and 
        spirituous beverages are imported directly from the 
        territory of Canada into the customs territory of the 
        United States;
          (C) when imported into the customs territory of the 
        United States, such liqueurs and spirituous beverages 
        are classified in subheading 2208.90 or 2208.40 of the 
        HTS; and
          (D) such rum accounts for at least 90 percent by 
        volume of the alcoholic content of such liqueurs and 
        spiritous beverages.
  [(b) The duty-free treatment provided under this chapter 
shall not apply to--
          [(1) textile and apparel articles which are subject 
        to textile agreements;
          [(2) footwear not designated at the time of the 
        effective date of this chapter as eligible articles for 
        the purpose of the generalized system of preferences 
        under title V of the Trade Act of 1974;
          [(3) tuna, prepared or preserved in any manner, in 
        airtight containers;
          [(4) petroleum, or any product derived from 
        petroleum, provided for in headings 2709 and 2710 of 
        the Harmonized Tariff Schedule of the United States;
          [(5) watches and watch parts (including cases, 
        bracelets and straps), of whatever type including, but 
        not limited to, mechanical, quartz digital or quartz 
        analog, if such watches or watch parts contain any 
        material which is the product of any country with 
        respect to which HTS column 2 rates of duty apply; or
          [(6) articles to which reduced rates of duty apply 
        under subsection (h) of this section.]
  (b) Import-Sensitive Articles.--
          (1) In general.--Subject to paragraphs (2) through 
        (5), the duty-free treatment provided under this title 
        does not apply to--
                  (A) textile and apparel articles which were 
                not eligible articles for purposes of this 
                title on January 1, 1994, as this title was in 
                effect on that date;
                  (B) footwear not designated at the time of 
                the effective date of this title as eligible 
                articles for the purpose of the generalized 
                system of preferences under title V of the 
                Trade Act of 1974;
                  (C) tuna, prepared or preserved in any 
                manner, in airtight containers;
                  (D) petroleum, or any product derived from 
                petroleum, provided for in headings 2709 and 
                2710 of the HTS;
                  (E) watches and watch parts (including cases, 
                bracelets and straps), of whatever type 
                including, but not limited to, mechanical, 
                quartz digital, or quartz analog, if such 
                watches or watch parts contain any material 
                which is the product of any country with 
                respect to which HTS column 2 rates of duty 
                apply; or
                  (F) articles to which reduced rates of duty 
                apply under subsection (h).
          (2) Transition period treatment of certain textile 
        and apparel articles.--
                  (A) Equivalent tariff and quota treatment.--
                During the transition period--
                          (i) the tariff treatment accorded at 
                        any time to any textile or apparel 
                        article that originates in the 
                        territory of a partnership country 
                        shall be identical to the tariff 
                        treatment that is accorded at such time 
                        under section 2 of the Annex to an 
                        article described in the same 8-digit 
                        subheading of the HTS that is a good of 
                        Mexico and is imported into the United 
                        States;
                          (ii) duty-free treatment under this 
                        title shall apply to any textile or 
                        apparel article that is imported into 
                        the United States from a partnership 
                        country and that--
                                  (I) is assembled in a 
                                partnership country, from 
                                fabrics wholly formed and cut 
                                in the United States from yarns 
                                formed in the United States, 
                                and is entered--
                                          (aa) under subheading 
                                        9802.00.80 of the HTS; 
                                        or
                                          (bb) under chapter 
                                        61, 62, or 63 of the 
                                        HTS if, after such 
                                        assembly, the article 
                                        would have qualified 
                                        for treatment under 
                                        subheading 9802.00.80 
                                        of the HTS, but for the 
                                        fact the article was 
                                        subjected to bleaching, 
                                        garments dyeing, stone-
                                        washing, enzyme-
                                        washing, acid-washing, 
                                        perma-pressing, oven-
                                        baking, or embroidery;
                                  (II) is knit-to-shape in a 
                                partnership country from yarns 
                                wholly formed in the United 
                                States;
                                  (III) is made in a 
                                partnership country from fabric 
                                knit in a partnership country 
                                from yarns wholly formed in the 
                                United States;
                                  (IV) is cut and assembled in 
                                a partnership country from 
                                fabrics wholly formed in the 
                                United States from yarns wholly 
                                formed in the United States; or
                                  (V) is identified under 
                                subparagraph (C) as a 
                                handloomed, handmade, or 
                                folklore article of a 
                                partnership country and is 
                                certified as such by the 
                                competent authority of such 
                                country; and
                          (iii) no quantitative restriction or 
                        consultation level may be applied to 
                        the importation into the United States 
                        of any textile or apparel article 
                        that--
                                  (I) originates in the 
                                territory of a partnership 
                                country, or
                                  (II) qualifies for duty-free 
                                treatment under subclause (I), 
                                (II), (III), (IV), or (V) of 
                                clause (ii).
                  (B) Transition period treatment of other 
                nonoriginating textile and apparel articles.--
                          (i) Preferential tariff treatment.--
                        Subject to clause (ii), the President 
                        may place in effect at any time during 
                        the transition period with respect to 
                        any textile or apparel article that--
                                  (I) is a product of a 
                                partnership country, but
                                  (II) does not qualify as a 
                                good that originates in the 
                                territory of a partnership 
                                country or is eligible for 
                                benefits under subparagraph 
                                (A)(ii),
                        tariff treatment that is identical to 
                        the in-preference-level tariff 
                        treatment accorded at such time under 
                        Appendix 6.B of the Annex to an article 
                        described in the same 8-digit 
                        subheading of the HTS that is a product 
                        of Mexico and is imported into the 
                        United States. For purposes of this 
                        clause, the `in-preference-level tariff 
                        treatment' accorded to an article that 
                        is a product of Mexico is the rate of 
                        duty applied to that article when 
                        imported in quantities less than or 
                        equal to the quantities specified in 
                        Schedule 6.B.1, 6.B.2., or 6.B.3. of 
                        the Annex for imports of that article 
                        from Mexico into the United States.
                          (ii) Limitations on all articles.--
                        (I) Tariff treatment under clause (i) 
                        may be extended, during any calendar 
                        year, to not more than 45,000,000 
                        square meter equivalents of cotton or 
                        man-made fiber apparel, to not more 
                        than 1,500,000 square meter equivalents 
                        of wool apparel, and to not more than 
                        25,000,000 square meter equivalents of 
                        goods entered under subheading 
                        9802.00.80 of the HTS.
                          (II) Except as provided in subclause 
                        (III), the amounts set forth in 
                        subclause (I) shall be allocated among 
                        the 7 partnership countries with the 
                        largest volume of exports to the United 
                        States of textile and apparel goods in 
                        calendar year 1997, based upon a pro 
                        rata share of the volume of textile and 
                        apparel goods of each of those 7 
                        countries that entered the United 
                        States under subheading 9802.00.80 of 
                        the HTS during the first 12 months of 
                        the 14-month period ending on the date 
                        of the enactment of the United States-
                        Caribbean Trade Partnership Act.
                          (III) Five percent of the amounts set 
                        forth in subclause (I) shall be 
                        allocated among the partnership 
                        countries, other than those to which 
                        subclause (II) applies, based upon a 
                        pro rata share of the exports to the 
                        United States of textile and apparel 
                        goods of each of those countries during 
                        the first 12 months of the 14-month 
                        period ending on the date of the 
                        enactment of the United States-
                        Caribbean Trade Partnership Act.
                          (iii) Prior consultation.--The 
                        President may implement the 
                        preferential tariff treatment described 
                        in clause (i) only after consultation 
                        with representatives of the United 
                        States textile and apparel industry and 
                        other interested parties regarding--
                                  (I) the specific articles to 
                                which such treatment will be 
                                extended,
                                  (II) the annual quantities of 
                                such articles that may be 
                                imported at the preferential 
                                duty rates described in clause 
                                (i), and
                                  (III) the allocation of such 
                                annual quantities among 
                                partnership countries.
                  (C) Handloomed, handmade, and folklore 
                articles.--For purposes of subparagraph 
                (A)(ii)(V), the Trade Representative shall 
                consult with representatives of a partnership 
                country for the purpose of identifying 
                particular textile and apparel goods that are 
                mutually agreed upon as being handloomed, 
                handmade, or folklore goods of a kind described 
                in section 2.3 (a), (b), or (c) or Appendix 
                3.1.B.11 of the Annex.
                  (D) Bilateral emergency actions.--(i) The 
                President may take--
                          (I) bilateral emergency tariff 
                        actions of a kind described in section 
                        4 of the Annex with respect to any 
                        textile or apparel article imported 
                        from a partnership country if the 
                        application of tariff treatment under 
                        subparagraph (A) to such article 
                        results in conditions that would be 
                        cause for the taking of such actions 
                        under such section 4 with respect to an 
                        article described in the same 8-digit 
                        subheading of the HTS that is imported 
                        from Mexico; or
                          (II) bilateral emergency quantitative 
                        restriction actions of a kind described 
                        in section 5 of the Annex with respect 
                        to imports of any textile or apparel 
                        article described in subparagraphs 
                        (B)(i) (I) and (II) if the importation 
                        of such article into the United States 
                        results in conditions that would be 
                        cause for the taking of such actions 
                        under such section 5 with respect to a 
                        like article that is a product of 
                        Mexico.
                  (ii) The requirement in paragraph (5) of 
                section 4 of the Annex (relating to providing 
                compensation) shall not be deemed to apply to a 
                bilateral emergency action taken under this 
                subparagraph.
                  (iii) For purposes of applying bilateral 
                emergency action under this subparagraph--
                          (I) the term ``transition period'' in 
                        sections 4 and 5 of the Annex shall be 
                        deemed to be the period defined in 
                        paragraph (5)(E); and
                          (II) any requirements to consult 
                        specified in section 4 or 5 of the 
                        Annex are deemed to be satisfied if the 
                        President requests consultations with 
                        the partnership country in question and 
                        the country does not agree to consult 
                        within the time period specified under 
                        such section 4 or 5, whichever is 
                        applicable.
          (3) NAFTA transition period treatment of certain 
        other articles originating in beneficiary countries.--
                  (A) Equivalent tariff treatment.--
                          (i) In general.--Subject to clause 
                        (ii), the tariff treatment accorded at 
                        any time during the transition period 
                        to any article referred to in any of 
                        subparagraphs (B) through (F) of 
                        paragraph (1) that originates in the 
                        territory of a partnership country 
                        shall be identical to the tariff 
                        treatment that is accorded at such time 
                        under Annex 302.2 of the NAFTA to an 
                        article described in the same 8-digit 
                        subheading of the HTS that is a good of 
                        Mexico and is imported into the United 
                        States.
                          (ii) Exception.--Clause (i) does not 
                        apply to any article accorded duty-free 
                        treatment under U.S. Note 2(b) to 
                        subchapter II of chapter 98 of the HTS.
                  (B) Relationship to subsection (h) duty 
                reductions.--If at any time during the 
                transition period the rate of duty that would 
                (but for action taken under subparagraph (A)(i) 
                in regard to such period) apply with respect to 
                any article under subsection (h) is a rate of 
                duty that is lower than the rate of duty 
                resulting from such action, then such lower 
                rate of duty shall be applied for the purposes 
                of implementing such action.
          (4) Customs procedures.--
                  (A) In general.--
                          (i) Regulations.--Any importer that 
                        claims preferential tariff treatment 
                        under paragraph (2) or (3) shall comply 
                        with customs procedures similar in all 
                        material respects to the requirements 
                        of Article 502(1) of the NAFTA as 
                        implemented pursuant to United States 
                        law, in accordance with regulations 
                        promulgated by the Secretary of the 
                        Treasury.
                          (ii) Determination.--In order to 
                        qualify for such preferential tariff 
                        treatment and for a Certificate of 
                        Origin to be valid with respect to any 
                        article for which such treatment is 
                        claimed, there shall be in effect a 
                        determination by the President that--
                                  (I) the partnership country 
                                from which the article is 
                                exported, and
                                  (II) each partnership country 
                                in which materials used in the 
                                production of the article 
                                originate or undergo production 
                                that contributes to a claim 
                                that the article qualifies for 
                                such preferential tariff 
                                treatment,
                        has implemented and follows, or is 
                        making substantial progress toward 
                        implementing and following, procedures 
                        and requirements similar in all 
                        material respects to the relevant 
                        procedures and requirements under 
                        chapter 5 of the NAFTA.
                  (B) Certificate of origin.--The Certificate 
                of Origin that otherwise would be required 
                pursuant to the provisions of subparagraph (A) 
                shall not be required in the case of an article 
                imported under paragraph (2) or (3) if such 
                Certificate of Origin would not be required 
                under Article 503 of the NAFTA (as implemented 
                pursuant to United States law), if the article 
                were imported from Mexico.
                  (C) Penalties for transshipments.--If the 
                President determines, based on sufficient 
                evidence, that an exporter has engaged in 
                willful illegal transshipment or willful 
                customs fraud with respect to textile or 
                apparel articles forwhich preferential tariff 
treatment under subparagraph (A) or (B) of paragraph (2) is claimed, 
then the President shall deny all benefits under this title to such 
exporter, and any successors of such exporter, for a period of 2 years.
                  (D) Report by ustr on cooperation of other 
                countries concerning circumvention.--The United 
                States Commissioner of Customs shall conduct a 
                study analyzing the extent to which each 
                partnership country--
                          (i) has cooperated fully with the 
                        United States, consistent with its 
                        domestic laws and procedures, in 
                        instances of circumvention or alleged 
                        circumvention of existing quotas on 
                        imports of textile and apparel goods, 
                        to establish necessary relevant facts 
                        in the places of import, export, and, 
                        where applicable, transshipment, 
                        including investigation of 
                        circumvention practices, exchanges of 
                        documents, correspondence, reports, and 
                        other relevant information, to the 
                        extent such information is available;
                          (ii) has taken appropriate measures, 
                        consistent with its domestic laws and 
                        procedures, against exporters and 
                        importers involved in instances of 
                        false declaration concerning fiber 
                        content, quantities, description, 
                        classification, or origin of textile 
                        and apparel goods; and
                          (iii) has penalized the individuals 
                        and entities involved in any such 
                        circumvention, consistent with its 
                        domestic laws and procedures, and has 
                        worked closely to seek the cooperation 
                        of any third country to prevent such 
                        circumvention from taking place in that 
                        third country.
                The Trade Representative shall submit to the 
                Congress, not later than October 1, 1999, a 
                report on the study conducted under this 
                subparagraph.
          (5) Definitions.--For purposes of this subsection--
                  (A) The term ``the Annex'' means Annex 300-B 
                of the NAFTA.
                  (B) The term ``NAFTA'' means the North 
                American Free Trade Agreement entered into 
                between the United States, Mexico, and Canada 
                on December 17, 1992.
                  (C) The term ``partnership country'' means a 
                beneficiary country.
                  (D) The term ``textile or apparel article'' 
                means any article referred to in paragraph 
                (1)(A) that is a good listed in Appendix 1.1 of 
                the Annex.
                  (E) The term ``transition period'' means, 
                with respect to a partnership country, the 
                period that begins on July 1, 2000, and ends on 
                the earlier of--
                          (i) August 1, 2002; or
                          (ii) the date on which--
                                  (I) the United States first 
                                applies the NAFTA to the 
                                partnership country upon its 
                                accession to the NAFTA, or
                                  (II) there enters into force 
                                with respect to the United 
                                States and the partnership 
                                country a free trade agreement 
                                comparable to the NAFTA that 
                                makes substantial progress in 
                                achieving the negotiating 
                                objectives set forth in section 
                                108(b)(5) of the North American 
                                Free Trade Agreement 
                                Implementation Act (19 U.S.C. 
                                3317(b)(5)).
                  (F) An article shall be deemed as originating 
                in the territory of a partnership country if 
                the article meets the rules of origin for a 
                good set forth in chapter 4 of the NAFTA, and, 
                in the case of an article described in Appendix 
                6.A of the Annex, the requirements stated in 
                such Appendix 6.A for such article to be 
                treated as if it were an originating good. In 
                applying such chapter 4 or Appendix 6.A with 
                respect to a partnership country for purposes 
                of this subsection--
                          (i) no countries other than the 
                        United States and partnership countries 
                        may be treated as being Parties to the 
                        NAFTA,
                          (ii) references to trade between the 
                        United States and Mexico shall be 
                        deemed to refer to trade between the 
                        United States and partnership 
                        countries, and
                          (iii) references to a Party shall be 
                        deemed to refer to the United States or 
                        a partnership country, and references 
                        to the Parties shall be deemed to refer 
                        to any combination of partnership 
                        countries and the United States.

           *       *       *       *       *       *       *

                              ----------                              


                     INTERNAL REVENUE CODE OF 1986

Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter D--Deferred Compensation, Etc.

           *       *       *       *       *       *       *


PART I--PENSION, PROFIT-SHARING, STOCK BONUS PLANS, ETC.

           *       *       *       *       *       *       *


Subpart D--treatment of Welfare Benefit Funds

           *       *       *       *       *       *       *


SEC. 419A. QUALIFIED ASSET ACCOUNT; LIMITATION ON ADDITIONS TO ACCOUNT.

  (a) * * *

           *       *       *       *       *       *       *

  (f) Definitions and Other Special Rules.--For purposes of 
this section--
          (1) * * *

           *       *       *       *       *       *       *

          (6) Exception for 10-or-more employer plans.--
                  [(A) In general.--This subpart shall not 
                apply in the case of any welfare benefit fund 
                which is part of a 10 or more employer plan. 
                The preceding sentence shall not apply to any 
                plan which maintains experience-rating 
                arrangements with respect to individual 
                employers.]
                  (A) In general.--This subpart shall not apply 
                to a welfare benefit fund which is part of a 10 
                or more employer plan if the only benefits 
                provided through the fund are 1 or more of the 
                following:
                          (i) Medical benefits.
                          (ii) Disability benefits.
                          (iii) Group term life insurance 
                        benefits which do not provide for any 
                        cash surrender value or other money 
                        that can be paid, assigned, borrowed, 
                        or pledged for collateral for a loan.
                The preceding sentence shall not apply to any 
                plan which maintains experience-rating 
                arrangements with respect to individual 
                employers.

           *       *       *       *       *       *       *


Subtitle D--Miscellaneous Excise Taxes

           *       *       *       *       *       *       *


CHAPTER 43--QUALIFIED PENSION, ETC., PLANS

           *       *       *       *       *       *       *


SEC. 4976. TAXES WITH RESPECT TO FUNDED WELFARE BENEFIT PLANS.

  (a) * * *

           *       *       *       *       *       *       *

  (b) Disqualified Benefit.--For purposes of subsection (a)--
          (1) * * *

           *       *       *       *       *       *       *

          (5) Special rule for 10 or more employer plans 
        exempted from prefunding limits.--For purposes of 
        paragraph (1)(C), if--
                  (A) subpart D of part I of subchapter D of 
                chapter 1 does not apply by reason of section 
                419A(f)(6) to contributions to provide 1 or 
                more welfare benefits through a welfare benefit 
                fund under a 10 or more employer plan, and
                  (B) any portion of the welfare benefit fund 
                attributable to such contributions is used for 
                a purpose other than that for which the 
                contributions were made,
        then such portion shall be treated as reverting to the 
        benefit of the employers maintaining the fund.

           *       *       *       *       *       *       *


Subtitle D--Procedure and Administration

           *       *       *       *       *       *       *


CHAPTER 78--DISCOVERY OF LIABILITY AND ENFORCEMENT OF TITLE

           *       *       *       *       *       *       *


Subchapter D--Possessions

           *       *       *       *       *       *       *


SEC. 7652. SHIPMENTS TO THE UNITED STATES

  (a) * * *

           *       *       *       *       *       *       *

  (f) Limitation on Cover Over of Tax on Distilled Spirits.--
For purposes of this section, with respect to taxes imposed 
under section 5001 or this section on distilled spirits, the 
amount covered into the treasuries of Puerto Rico and the 
Virgin Islands shall not exceed the lesser of the rate of--
          (1) $10.50 ($11.30 in the case of distilled spirits 
        brought into the United States during the 5-year period 
        beginning on October 1, 1993), or
          (2) the tax imposed under section 5001(a)(1), on each 
        proof gallon.
The preceding sentence shall not apply to articles that are 
tax-determined after June 30, 1999, and before October 1, 1999.

           *       *       *       *       *       *       *

                              ----------                              


           SECTION 234 OF THE FOREIGN ASSISTANCE ACT OF 1961

  Sec. 234. Investment Insurance and Other Programs.--The 
Corporation is hereby authorized to do the following:
  (a) * * *

           *       *       *       *       *       *       *

  (g) Pilot Equity Finance Program.--
          (1) * * *

           *       *       *       *       *       *       *

          [(c) Creation of Fund for Acquisition of Equity.--] 
        (5)  Creation of fund for acquisition of equity.--The 
        Corporation is authorized to establish a revolving fund 
        to be available solely for the purposes specified in 
        this subsection and to make transfers to the fund of a 
        total of $10,000,000 (less amounts transferred to the 
        fund before the date of the enactment of the Jobs 
        Through Exports Act of 1992) from its noncredit account 
        revolving fund. The Corporation shall transfer to the 
        fund in each fiscal year all amounts received by the 
        Corporation during the preceding fiscal year as income 
        on securities acquired under this subsection, and from 
        the proceeds on the disposition of such securities. 
        Purchases of, investments in, and other acquisitions of 
        equity from the fund are authorized for any fiscal year 
        only to the extent or in such amounts as are provided 
        in advance in appropriations Acts or are transferred to 
        the Corporation pursuant to section 632(a) of this Act.

           *       *       *       *       *       *       *

                              ----------                              


             SECTION 62 OF THE BRETTON WOODS AGREEMENTS ACT

SEC. 62. SUPPLEMENTAL FUNDING FOR THE CENTRAL AMERICAN EMERGENCY TRUST 
                    FUND OF THE INTERNATIONAL BANK FOR RECONSTRUCTION 
                    AND DEVELOPMENT.

  (a) Contribution Authority.--
          (1) In general.--The United States Governor of the 
        Bank may, on behalf of the United States, contribute 
        $25,000,000 to the Central American Emergency Trust 
        Fund of the Bank.
          (2) Subject to appropriations.--The authority 
        provided by paragraph (1) shall be effective only to 
        such extent or in such amounts as are provided in 
        advance in appropriations Acts.
  (b) Limitations on Authorization of Appropriations.--
          (1) In general.--For the contribution provided for in 
        subsection (a), there are authorized to be appropriated 
        not more than $25,000,000 for fiscal year 1999, for 
        payment by the President of the United States.
          (2) Rule of construction.--The authority provided by 
        paragraph (1) is in addition to any appropriations 
        authority otherwise provided by law.
  (c) Availability.--Amounts appropriated under subsection (b) 
are authorized to remain available until expended.

                   VII. DISSENTING VIEWS ON H.R. 984

    We support enhancing the Caribbean Basin Initiative and 
believe it can and should be done in a way that helps the U.S. 
economy as well as the economies of our CBI partners. H.R. 984 
does not do that. It is lacking in two important respects: 
First, the duty preferences it would give to non-U.S. fabric 
are too open-ended. Second, the bill's treatment of compliance 
with worker rights standards as a condition for receipt of 
enhanced benefits is too cursory.
    The sectors that will be affected the most by CBI 
enhancement legislation are the textile and apparel sectors. 
CBI enhancement legislation should be a mechanism for 
developing complementary aspects of these sectors in the U.S. 
and CBI economies, as well as taking into account the increased 
competition of CBI nations with the American textile and 
apparel industries resulting from CBI enhancement.
    The development of apparel manufacturing in the CBI region 
could help the U.S. economy by providing a significant source 
of demand for U.S. fabric and yarn. Such demand would be lost 
in the event of a wholesale movement of the textile and apparel 
industries to Asia. Unfortunately, provisions of H.R. 984 would 
impede the development of complementary aspects of the U.S. and 
CBI economies. Under section 104(a) of the bill, the United 
States would provide duty preferences to apparel and textile 
articles made from non-U.S., non-CBI region fabric. This 
treatment would cause unnecessary hardship to U.S. textile, 
apparel and yarn manufacturers. Fabric from outside the United 
States and outside the Caribbean and Central America simply has 
no place in a CBI enhancement bill.
    Further, the absence in H.R. 984 of any limitation on duty-
free benefits for textiles and apparel made from fabric knit in 
the CBI region is another source of unnecessary harm to 
businesses and workers in the U.S. textile and apparel 
industries. In fact, providing duty-free treatment to unlimited 
quantities of textile and apparel made from CBI knit fabric 
goes beyond the tariff preferences in effect under NAFTA for 
textiles and apparel made in Mexico or Canada from fabric knit 
in those countries. The NAFTA tariffs on textiles and apparel 
made from Mexican or Canadian fabric are scheduled to be 
eliminated over time; H.R. 984 would immediately remove all 
tariffs on textiles and apparel made from CBI knit fabric. 
Rather than effecting an integration between U.S. textile 
manufacturing and Caribbean and Central American apparel 
manufacturing, the bill would force the closure of U.S. textile 
companies. A more balanced approach is needed--one that accords 
some preferential treatment to textiles and apparel made from 
CBI fabric to the extent that there is knitting capacity 
already in place in the region, but that is not open-ended.
    Our second major concern about H.R. 984 has to do with 
labor market issues. Labor market conditions in the Caribbean 
and Central America have an impact on competition between goods 
from those regions and U.S. goods. These conditions are part of 
the structure and terms of trade. Any CBI enhancement 
legislation will grant certain benefits to the CBI countries, 
thus stimulating greater competition with the United States. 
The issue is not whether wage and other compensation should be 
comparable, because there clearly are and will continue to be 
differences between the United States and the CBI and Central 
American countries. The question is whether the latter 
countries have or will take steps to adopt core labor rights 
and standards to allow their workers' standard of living to be 
set and to rise under a free labor market.
    The only mention of labor markets in H.R. 984 is in its 
requirement that the President report every three years on 
``the extent that beneficiary countries are meeting 
internationally recognized worker rights criteria.'' The bill 
does nothing to assure application or enforcement of 
internationally recognized standards.
    CBI benefits should not be conferred without any regard to 
whether a country is making real progress towards compliance 
with internationally recognized worker rights standards. 
Current law, under the Generalized System of Preferences (GSP), 
contains a mechanism for reviewing compliance with core worker 
rights standards, but that mechanism has not worked in the CBI 
region. Currently, countries' protection of intellectual 
property rights as a condition for receipt of CBI benefits is 
scrutinized more closely than countries' compliance with core 
worker rights standards. The level of scrutiny applied to the 
latter condition should be at least as great as the level of 
scrutiny applied to the former.
    We support an enhancement of the Caribbean Basin 
Initiative, but not an unbalanced enhancement that fails to 
tackle the foregoing fabric and labor market issues. 
Accordingly, we oppose passage of H.R. 984 in its current form.

                                   Sander M. Levin.
                                   Xavier Becerra.
                                   Ben Cardin.
                                   Karen L. Thurman.
                                   Michael R. McNulty.
                                   Pete Stark.

                         VIII. ADDITIONAL VIEW

    In the main, I agree with the concerns expressed in the 
Dissenting Views on H.R. 984. However, as I stated at the mark 
up on June 10, 1999: while I recognize that the legislation as 
passed by the committee is imperfect, the time has come to move 
a Caribbean Basin Initiative enhancement bill forward. This is 
especially true in light of the devastation wrought by 
Hurricane Mitch, as it has become all the more important to 
reconcile our differences and pass legislation which can help 
the region rebuild. For that reason I am compelled to support 
the bill as reported out of Committee, in hope that what comes 
before us for final vote will take into account the concerns 
raised in the Dissenting Views.

                                                    Xavier Becerra.