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                                                       Calendar No. 222
108th Congress                                          
                                 SENATE
 1st Session                                           Report 108-116
======================================================================
 
      UNITED STATES-CHILE FREE TRADE AGREEMENT IMPLEMENTATION ACT

                                _______
                                

    July 29 (legislative day, July 21), 2003.--Ordered to be printed

                                _______
                                

   Mr. Grassley, from the Committee on Finance, and on behalf of Mr. 
    Hatch, from the Committee on the Judiciary; filed the following

                              JOINT REPORT

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 1416]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, and the Committee on the 
Judiciary, to which was jointly referred the bill (S. 1416) to 
implement the United States-Chile Free Trade Agreement, having 
considered the same, reports thereon and recommends that the 
bill do pass.

                                CONTENTS

                                                                   Page
 I. Reports and Other Materials of the Committees.....................2
    Part I. Report of the Committee on Finance........................2
        A. Summary of Congressional Consideration of the United 
            States-Chile Free Trade Agreement....................     2
        B. General Background....................................     5
        C. Overview of the United States-Chile Free Trade 
            Agreement............................................     7
        D. General Description of the Bill.......................    22
            Title I--Approval of, and General Provisions Relating 
                to, the Agreement................................    22
            Title II--Customs Provisions.........................    24
            Title III--Relief From Imports.......................    27
            Title IV--Temporary Entry of Business Persons........    32
        E. Congressional Action..................................    32
        F. Vote of the Committee in Reporting the Bill...........    34
        G. Regulatory Impact and Other Matters...................    34
    Part II. Report of the Committee on the Judiciary................34
        A. Background............................................    34
        B. Implementing Legislation on Temporary Professional 
            Workers..............................................    36
        C. Judiciary Committee Action............................    37
II. Budgetary Impact of the Bill.....................................37
III.Additional Views.................................................41

IV. Changes in Existing Law..........................................53

            I. REPORTS AND OTHER MATERIALS OF THE COMMITTEES

    This joint report compiles the reports and other materials 
of the Committees to which S. 1416, the bill to approve and 
implement the United States-Chile Free Trade Agreement, was 
jointly referred.

               Part I. Report of the Committee on Finance

    The Committee on Finance, to which was referred the bill 
(S. 1416) to approve and implement the United States-Chile Free 
Trade Agreement, having considered the same, reports favorably 
thereon and recommends that the bill do pass.

 A. SUMMARY OF CONGRESSIONAL CONSIDERATION OF THE UNITED STATES-CHILE 
                          FREE TRADE AGREEMENT

1. Background

    At the first Summit of the Americas in December 1994, 
President William J. Clinton pledged that Chile would become 
the fourth member of the North American Free Trade Agreement. 
In April 1998, during President Clinton's state visit to Chile, 
efforts to expand the North American Free Trade Agreement were 
halted in favor of the establishment of a United States-Chile 
Joint Commission on Trade and Investment. In November 2000, 
President Clinton and President Ricardo Lagos of Chile agreed 
to launch bilateral negotiations for a United States-Chile Free 
Trade Agreement. The United States and Chile initiated 
negotiations on a Free Trade Agreement on December 6, 2000. On 
August 6, 2002, President George W. Bush signed the Trade Act 
of 2002, which provides expedited procedures for the 
consideration of legislation implementing trade agreements that 
meet objectives under the Act. After 14 negotiating rounds, the 
United States and Chile concluded negotiations in December 
2002. On January 29, 2003, President Bush notified Congress of 
his intention to sign the Agreement. On June 6, 2003, the 
Agreement was signed in Miami, Florida, by U.S. Trade 
Representative Robert B. Zoellick and Chilean Foreign Minister 
Soledad Alvear.

2. Trade Promotion Authority Procedures In General

    The requirements for congressional consideration of the 
United States-Chile Free Trade Agreement (the Agreement) under 
expedited procedures (known as Trade Promotion Authority (TPA) 
Procedures) are set forth in sections 2103 through 2106 of the 
Bipartisan Trade Promotion Authority Act (the Act) of 2002 and 
section 151 of the Trade Act of 1974.
    Section 2103 of the Act authorizes the President, prior to 
June 1, 2005 (or prior to June 1, 2007, if trade authority 
procedures are extended under section 2103(c) of the Act), to 
enter into reciprocal trade agreements with foreign countries 
to reduce or eliminate tariff or nontariff barriers and other 
trade-distorting measures. The purpose of section 2103 
procedures is to provide the means to achieve U.S. negotiating 
objectives set forth under section 2102 of the Act in 
international trade negotiations.

3. Notification Prior to Negotiations

    Under section 2104(a)(1) of the Trade Act of 2002, the 
President must provide written notice to the Congress at least 
90 calendar days before initiating negotiations. Section 
2104(a)(2) requires the President, before and after submission 
of the notice, to consult regarding the negotiations with the 
relevant Committees of Congress and the Congressional Oversight 
Group established under section 2107 of the Act. Section 2106 
exempts Chile from the prenegotiation notification and 
consultation requirements of section 2014(a) only. Section 
2106(b)(2), however, requires the President, as soon as 
feasible after the enactment of the Trade Act of 2002, to 
notify Congress of, and consult with Congress about, the 
negotiations. On October 1, 2002, President George W. Bush 
notified the Congress of the United States ongoing negotiations 
with Chile on a free trade agreement.

4. Notification of Intent To Enter Into an Agreement

    Under section 2105(a)(1)(A) of the Act, the President is 
required, at least 90 days before entering into an agreement, 
to notify Congress of his intent to enter into an agreement. On 
January 29, 2003, President George W. Bush notified Congress of 
his intention to enter into the United States-Chile Free Trade 
Agreement.
    Section 2105(a)(1)(B) requires the President, within 60 
days of signing an agreement, to submit to Congress a 
preliminary list of existing laws that the President considers 
would be required to bring the United States into compliance 
with the agreement. On June 6, 2003, the United States Trade 
Representative signed the Agreement. On July 3, 2003, the 
President transmitted to Congress a description of changes in 
existing law required to comply with the Agreement.

5. Development of the Implementing Legislation

    Under TPA Procedures, the Congress and the Administration 
traditionally work together to produce the legislation to 
implement the agreement. The drafting occurs in informal 
meetings of the Committees with jurisdiction over the laws that 
must be amended to implement the agreement. At times this 
process may also include one or more House-Senate conference 
meetings. The objective is to produce one bill to be 
transmitted by the House and Senate Leadership to the President 
as the recommended legislation to implement the trade 
agreement. The drafting is done in close consultation with the 
Administration in an effort to ensure that the legislation 
faithfully implements the agreement and that the 
Administration's subsequent formal submission is, to the 
greatest degree possible, consistent with the legislation 
recommended by the Congress.
    In meetings in June and July 2003, the Senate Committee on 
Finance and the House Committee on Ways and Means considered 
and made recommendations for the implementing bills. Other 
Committees of the Senate and House also considered provisions 
of the implementinglegislation within their respective 
jurisdictions.

6. Formal Submission of the Agreement and Legislation

    When the President formally submits a trade agreement to 
the Congress under section 2105 of the Act, the President must 
include in the submission the final legal text of the 
agreement, together with implementing legislation, a statement 
of administrative action (describing regulatory and other 
changes that are necessary or appropriate to implement the 
agreement), a statement setting forth the reasons of the 
President regarding how and to what extent the agreement makes 
progress in achieving the applicable policies, purposes, 
priorities, and objectives set forth in the Act, and a 
statement setting forth the reasons of the President regarding 
how the agreement serves the interests of U.S. commerce.
    The implementing legislation is introduced in both Houses 
of Congress on the day it is submitted by the President and is 
referred to Committees with jurisdiction over its provisions. 
President George W. Bush transmitted the final text of the 
United States-Chile Free Trade Agreement, along with 
implementing legislation, a Statement of Administrative Action, 
and other supporting information, as required under section 
2105 of the Trade Act of 2002, to the Congress on July 15, 
2003. The legislation was introduced that same day in both the 
House and the Senate.
    To qualify for TPA Procedures, the implementing bill itself 
must contain provisions formally approving the agreement and 
the statement of administrative action. Further, the 
implementing bill must contain only those provisions necessary 
or appropriate to implement the agreement. The implementing 
bill reported here--which approves the United States-Chile Free 
Trade Agreement and the Statement of Administrative Action and 
contains a number of additional provisions necessary or 
appropriate to implement the United States-Chile Free Trade 
Agreement into U.S. law--was referred to the Senate Committee 
on Finance and the Senate Committee on the Judiciary.

7. Committee and Floor Consideration

    When the requirements of the Act are satisfied, 
implementing revenue bills, such as the United States-Chile 
Free Trade Agreement Implementation Act (Implementation Act), 
are subject to the legislative procedures of section 151 of the 
Trade Act of 1974. The following schedule for Congressional 
consideration applies under these procedures:
          (i) House Committees have up to 45 days in which to 
        report the bill; any Committee which does not do so in 
        that period will be automatically discharged from 
        further consideration.
          (ii) A vote on final passage by the House must occur 
        on or before the 15th day after the Committees report 
        or are discharged.
          (iii) Senate Committees must act within 15 days of 
        receiving the implementing revenue bill from the House 
        or within 45 days of Senate introduction of the 
        implementing bill, whichever is longer, or they will be 
        discharged automatically.
          (iv) The full Senate then must vote within 15 days.
    Thus, the Congress has a maximum of 90 days to complete 
action on the bill, although the time period can be shortened.
    Once the implementing bill has been formally submitted by 
the President and introduced, no amendments to the bill are in 
order in either House of Congress. Floor debate is limited in 
each House to no more than 20 hours.
    The Senate Committee on Finance and the Senate Committee on 
the Judiciary ordered S. 1416, the United States-Chile Free 
Trade Agreement Implementation Act, favorably reported on July 
17, 2003.

                         B. GENERAL BACKGROUND

    The United States and Chile initiated negotiations on a 
free trade agreement on December 6, 2000. After 14 negotiating 
rounds, negotiations were concluded in December 2002. On 
January 29, 2003, President Bush notified Congress of his 
intention to sign the Agreement. The Agreement was signed on 
June 6, 2003 in Miami, Florida, by United States Trade 
Representative Robert B. Zoellick and Chilean Foreign Minister 
Soledad Alvear. The United States-Chile Free Trade Agreement, 
along with the United States-Singapore Free Trade Agreement, is 
the first agreement to be submitted under TPA Procedures 
established by the Act.

1. United States-Chile Trade

    In 2002, Chile was the United States' 34th largest export 
destination and 36th largest import contributor. By contrast, 
the United States is Chile's largest single-country trading 
partner, accounting for 20 percent of Chilean exports and 15 
percent of its imports in 2002. The United States has 
experienced a merchandise trade deficit with Chile in recent 
years, after running merchandise trade surpluses from 1988 to 
1999. In 2002, total bilateral merchandise trade was valued at 
$5.9 billion, with U.S. exports to Chile totaling $2.3 billion 
and U.S. imports from Chile totaling $3.6 billion. Two-way 
trade in agricultural, food, and fishery products between the 
United States and Chile in fiscal year 2002 totaled nearly $2.3 
billion.
    U.S. products exported to Chile are comprised predominantly 
of capital goods. These include: machinery (32 percent), 
particularly computers, office machinery, and industrial 
equipment such as gas turbines and bulldozers; electrical 
machinery (12 percent) including television and radio 
transmission apparatuses, telephone equipment, spare parts, 
integrated circuits, sound recording equipment and media; 
vehicles (8 percent) mostly trucks and passenger cars; and 
optical/medical instruments (5 percent). In recent years, U.S. 
export trends have exhibited a slowing in heavy transportation 
equipment and in computer and electronicequipment, but vehicle 
parts exports to Chile have increased.
    The largest category of U.S. imports from Chile in 2002 
consisted of agricultural products. This category accounts for 
more a large portion of imports followed by minerals and 
metals. Major imports from Chile included: copper articles (13 
percent), mostly refined alloys; wood (16 percent), including 
various types of lumber; and beverages (4 percent), virtually 
all wine. Recent trends have seen an increase in imports of 
grapes, fish, wood products, apricots, peaches, plums, and with 
a steady level or slight decline in demand for copper and wine 
products relative to other goods.

2. Tariffs and Trade Agreements

    Chile has bound most of its industrial tariffs at the World 
Trade Organization (WTO) at a maximum of 25 percent ad valorem. 
Some agricultural tariffs are bound at 31.5 percent ad valorem, 
and some commodities, including wheat, flour, vegetable oils, 
and sugar are subject to an additional variable rate, under a 
price band system. Most actual applied tariff rates are much 
lower; a uniform ad valorem rate of 6 percent has been applied 
on nearly all non-agricultural goods from January 1, 2003. In 
addition, Chile has negotiated free or preferential trade 
agreements with Canada, Mexico, the European Union, the Central 
American Common Market (Costa Rica, El Salvador, Guatemala, 
Honduras and Nicaragua), and as an associate member 
participates in the free trade area of Mercosur (Argentina, 
Brazil, Paraguay, and Uruguay. Bolivia is an associate member). 
Chile completed negotiations in March 2003 with the European 
Free Trade Area, which includes Iceland, Liechtenstein, Norway 
and Sweden.

                                    LEADING U.S. EXPORTS TO CHILE, 1998-2002
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
             HTS 4-digit classification                  1998        1999        2000        2001        2002
----------------------------------------------------------------------------------------------------------------
8471--Computers, data processing equipment..........     160,778     161,539     168,562     138,367     128,860
8431--Parts for heavy equipment and machinery.......     173,592      30,684     167,559     154,877     128,286
9880--Low value shipments...........................     136,350     113,350     121,649     109,662      93,155
8473--Parts for computers and other office equipment     105,713     117,568     135,548     117,846      92,868
8525--Television and radio transmission and              128,923     215,607     181,444      99,142      69,682
 recording equipment................................
8704--Trucks, dump trucks...........................     122,297      41,445     125,985      70,477      65,189
8411--Gas turbines, turbojets turbo-propellers and        18,383      50,370      39,208      36,017      62,635
 parts..............................................
8708--Motor vehicle parts...........................      48,734      35,387      37,901      43,936      56,972
8703--Motor cars....................................      64,758      31,979      46,761      41,982      45,039
2710--Petroleum oils................................      39,910      43,675      66,023      54,586      39,540
All other...........................................   2,742,320   1,939,014   2,091,967   1,956,222   1,561,832
                                                     -----------------------------------------------------------
      Total.........................................   3,741,759   2,880,436   3,182,608    2,823,11  2,344,059
----------------------------------------------------------------------------------------------------------------
Note.--HTS=harmonized tariff schedule number
Source: U.S. International Trade Commission Dataweb.


                                   LEADING U.S. IMPORTS FROM CHILE, 1998-2002
                                            [in thousands of dollars]
----------------------------------------------------------------------------------------------------------------
             HTS 4-digit classification                  1998        1999        2000        2001        2002
----------------------------------------------------------------------------------------------------------------
0806--Grapes, raisins...............................     280,404     312,784     396,012     383,378     464,077
0304--Fish fillets and fish meat (fresh, chilled or      247,082     263,524     377,051     395,736     422,853
 frozen)............................................
7403--Unwrought refined copper and copper alloys....     131,236     229,986     443,138     292,255     375,857
4409--Wood, continuously shaped (tongued, grooved,       116,745     157,727     140,485     175,723     192,625
 molded)............................................
4407--Wood sawn or chipped lengthwise, sliced or          96,881     150,505     144,098     133,066     170,940
 peeled, more than 6mm thick........................
2204--Wine of fresh grapes, including fortified wine     116,241     116,546     134,294     137,379     136,890
2905--Acyclic alcohol and derivatives...............      34,239      45,737      65,647     123,793     135,654
9801--Exports of articles imported for repair or          62,640      80,513      79,802      96,125     127,737
 returned...........................................
0809--Apricots, peaches, plums, nectarines, cherries      51,421      75,872      69,810      91,827     108,787
1005--Corn..........................................      54,499      58,566      81,901      84,530      82,245
All other...........................................   1,149,852   1,331,562   1,325,284   1,365,213   1,339,325
                                                     -----------------------------------------------------------
      Total.........................................   2,341,240   2,823,322   3,257,520   3,279,027  3,556,991
----------------------------------------------------------------------------------------------------------------
Note.--HTS=harmonized tariff schedule number
Source: U.S. International Trade Commission Dataweb.

3. International Trade Commission Study

    As part of the Congressional consultation process, the 
United States International TradeCommission (ITC) released a 
comprehensive study in June 2003 assessing the probable economic 
effects of the Agreement on the U.S. economy, providing both 
quantitative and qualitative estimates of the Agreement's probable 
effects. The study projected that by 2016, when the full effect of the 
tariff eliminations would be felt, U.S. exports to Chile would increase 
in a range between 18 percent and 52 percent; and U.S. imports would 
rise between 6 percent and 14 percent. The study notes that this would 
be very small relative to total U.S. trade and that the economy-wide 
effects on trade, production, and overall economic welfare would be 
small to negligible, although the impact would be significant in 
sectors with high initial trade barriers. This outcome was expected due 
to the fact that Chile is already a relatively open economy with a 
relatively small trade position with the United States. The ITC 
finding, however, serves as an estimate of confirmation, focusing 
largely on the implications of tariff reduction, which may be 
quantified, unlike changes in many non-tariff barriers.
    The ITC investigation found that the FTA would have 
implications for most sectors of the U.S. economy, either with 
increased import competition from Chile, or increased export 
opportunities. Imports to the United States from Chile are 
likely to increase in textiles, apparel and leather goods, 
dairy, tobacco products and other crops. A general expansion in 
U.S. exports to Chile is expected, with the greatest increase 
in electronic and transportation equipment. Sectors with the 
highest initial trade barriers would see the largest impact.

      C. OVERVIEW OF THE UNITED STATES-CHILE FREE TRADE AGREEMENT

1. The Agreement

    The Agreement comprises an integrated set of reciprocal 
obligations that will eliminate barriers to trade between Chile 
and the United States in a manner that is consistent with 
Article XXIV of the General Agreements on Tariffs and Trade 
1994 (GATT 1994) and Article V of the General Agreement on 
Trade in Services (GATS).

2. Chapters

    Market Access.--The Agreement calls for the mutual 
elimination of all tariffs between the two countries within 12 
years. More than 85 percent of bilateral trade in industrial 
and consumer products will become duty-free immediately upon 
the entry into force of the Agreement. The majority of 
remaining industrial and consumer products will become duty-
free within 4 years, and all tariffs on these products will be 
phased out within 10 years. With regard to agriculture, tariffs 
on more than 75 percent of agricultural products will be 
eliminated within 4 years, and all tariffs on these products 
will be phased out over 12 years. Most basic textile products 
would be accorded immediate duty-free treatment by both 
Parties, with a few products given staged reductions and with 
shipments of some apparel goods, notably those of cotton or of 
man-made fibers, controlled by tariff preference levels. The 
Parties may consult to accelerate tariff elimination on goods. 
Chile agrees to eliminate its 50 percent surcharge on the 
importation of originating used goods. The Agreement also 
provides for the duty-free entry of commercial samples of 
negligible value, printed advertising materials, and goods 
reentered following repair or alteration. The Agreement 
provides for a phase-out of duty drawback and duty deferral 
programs over a 3 year period commencing 8 years after the 
Agreement enters into force.
    The Agreement reaffirms and qualifies GATT commitments on 
import and export restrictions and allows either Party to 
ensure that a ban on trade with a non-Agreement party is not 
circumvented by the Agreement. Each Party is to ensure that 
administrative fees associated with imports and exports are 
commensurate with the service rendered, and that a current list 
of such fees is published. The United States agrees to 
eliminate the merchandise processing fee for originating goods 
from Chile. Export taxes are prohibited, except when the tax is 
also applied to domestic goods, and Chile agrees to phase out 
its luxury tax on automobiles in 4 years. The Parties agree to 
respect certain geographic indications on U.S. whiskey and 
certain Chilean alcoholic beverage products. A Committee on 
Trade in Goods is also established to promote trade in goods 
between the Parties, including through consultations on 
accelerating tariff elimination under the Agreement and other 
issues, as appropriate.
    Agricultural Trade.--The Agreement's tariff schedules 
provide tariff-free treatment for about 75 percent of the 
agricultural products traded between the United States and 
Chile within 4 years. Tariffs and quotas on remaining products 
will be phased out over periods of up to 12 years with a 
special rule applying to trade in specified sugar products. 
With regard to these specified sugar products, each Party 
agrees that its access to the other's market under the 
Agreement is limited to the amount of its net trade surplus in 
these products. Protection for certain import-sensitive 
agricultural products will be provided using tariff-rate quotas 
(TRQs), tariff phase-outs, and agricultural safeguards. The 
special safeguards are price-based and will be implemented 
automatically using specified trigger prices.
    The U.S. Schedule details the TRQ provisions (initial quota 
amount, annual rate of quota increase, tariff reduction 
schedule for over-quota quantities) that will apply to imports 
from Chile of beef, poultry, cheese, milk powder, butter, 
condensed milk, other dairy products, sugar, tobacco, avocados, 
and processed artichokes. The U.S. Schedule provides tariff 
phase-outs for the relevant agricultural products. Chilean 
products covered by the U.S. price-based agricultural safeguard 
include specified vegetables and fruit, various canned fruits, 
frozen concentrated orange juice, tomato products, and 
avocados.
    The Agreement commits Chile to eliminate its price band 
mechanism as it relates to imports of wheat, wheat flour, 
vegetable oils, and sugar from the United States over a 12 year 
period. U.S. products subject to Chile's agricultural safeguard 
include certain meat products; broken, brown, and partially-
milled rice; rice flour; and certain wheat products.
    The Agreement eliminates the use of export subsidies on 
agricultural trade between both countries, but allows each 
country to respond if third countries use such subsidies to 
displace its sales in the other country's market. It commits 
each Party to recognize the other's beef grading systems. An 
exchange of letters, dated June 6, 2003, pledges both countries 
to urge theirregulatory agencies to implement technical and 
scientific work dedicated to achieving market access to make the 
bilateral trade of poultry products of mutual benefit for both Parties.
    Textiles and Apparel.--Chapter 3 of the Agreement 
establishes a specific bilateral safeguard mechanism for 
textiles and apparel goods. A Party may take emergency action 
with respect to a textile or apparel good benefiting from 
preferential tariff treatment under the Agreement if that 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. The emergency action 
authorized in the Agreement consists of an increase in the rate 
of duty on the good, to a level not to exceed the lesser of: 
the normal trade relations/most-favored-nation (NTR/MFN) 
applied rate of duty in effect at the time the action is taken; 
or, the NTR/MFN applied rate of duty in effect on the date of 
entry into force of the Agreement.
    The importing Party may take an emergency action under 
Chapter 3 of the Agreement only following an investigation by 
its competent authorities. No emergency action may be 
maintained under this safeguard for a period exceeding 3 years, 
and no emergency action may be taken or maintained beyond the 
period ending 8 years after duties on a good have been 
eliminated pursuant to the Agreement. In addition, no emergency 
action may be taken by an importing Party against a particular 
textile or apparel good of the other Party more than once, and 
upon termination of an emergency action, the good will return 
to duty-free status.
    The Party taking an emergency action must provide mutually 
agreed-upon trade liberalizing compensation in the form of 
concessions having substantially equivalent trade effects, or 
equivalent value, compared to the additional duties resulting 
from the emergency action. Such concessions shall be limited to 
textile and apparel goods, unless the Parties agree otherwise. 
If the Parties are unable to reach an agreement on 
compensation, the exporting Party may take tariff action having 
trade effects substantially equivalent to the trade effects of 
the emergency action taken under Chapter 3 of the Agreement. 
Such tariff action may be taken against any goods of the Party 
taking the emergency action. The Party taking the tariff action 
shall apply such action only for the minimum period necessary 
to achieve substantially equivalent trade effects. The 
importing Party's obligation to provide trade compensation and 
the exporting Party's right to take tariff action shall 
terminate when the emergency action terminates.
    Nothing in Chapter 3 of the Agreement shall be construed to 
limit a Party's right to restrain imports of textile and 
apparel goods in a manner consistent with the WTO Agreement on 
Textiles and Clothing or the WTO Agreement on Safeguards. 
However, a Party may not take or maintain an emergency action 
against a textile or apparel good that is subject, or becomes 
subject, to a safeguard measure that a Party imposes pursuant 
to domestic law in accordance with either such WTO agreement.
    Rules of Origin.--This section provides the criteria for 
determining whether a good is an originating goods for purposes 
of the Agreement. Originating status is conferred: (1) when a 
good is wholly obtained or produced entirely in the territory 
of one or both of the Parties; (2) when a good is produced 
entirely in the territory of one or both Parties and each of 
the non-originating materials used in the production of the 
good undergoes an applicable change in tariff classification, 
and the good satisfies all other applicable requirements of 
Chapter 4; (3) when a good is produced entirely in the 
territory of one or both Parties and the good otherwise 
satisfies any applicable regional value content, and the good 
satisfies all other applicable requirements of Chapter 4; or 
(4) when the good is produced entirely in the territory of one 
or both Parties exclusively from originating materials. 
Product-specific rules of origin are set forth in an Annex. 
This section also covers certain rules of origin topics such 
as: the treatment of accessories; spare parts and tools shipped 
with a good; fungible goods; accumulation; a de minimis rule; 
indirect materials; and packaging. The Agreement provides for 
the use of certificates of origin and establishes verification 
and documentation obligations on importers and exporters.
    Customs Administration.--The Agreement commits the Parties 
to transparency in regard to their customs laws, regulations, 
and administrative procedures. Each Party is obligated to 
establish customs procedures for the prompt release of goods, 
to promote the use of automation, to protect confidential 
information, to promulgate procedures for express shipments, to 
issue advanced rulings, to endeavor to adopt or maintain risk 
management systems with a concentration on high-risk goods, and 
to ensure that importers have access to administrative and 
judicial review of customs determinations.
    Sanitary and Phytosanitary Measures.--Under the Agreement, 
the Parties affirm their existing rights and obligations with 
respect to one another under the WTO Agreement on the 
Application of Sanitary and Phytosanitary Measures (SPS 
Agreement). The Parties agree that they may not have recourse 
to dispute settlement under the Agreement for disputes 
involving sanitary and phytosanitary (SPS) measures.
    The Parties commit to establish a Committee on Sanitary and 
Phytosanitary Matters. The objectives of this Committee will 
include enhancing the implementation by each Party of the SPS 
Agreement, enhancing cooperation on SPS matters, and 
facilitating trade between the Parties. The Committee will 
provide a forum in which to consult on the development and 
application of SPS measures that affect, or may affect, trade 
between the Parties.
    Technical Barriers to Trade.--This chapter refers to 
standards, technical regulations, and conformity assessment 
procedures that may affect trade in goods between the Parties. 
The Parties affirm their existing commitments under the WTO 
Agreement on Technical Barriers to Trade and endeavor to 
promote bilateral cooperation in the field of standards, 
regulations, and procedures. The Agreement provides for 
transparency and for the participation of the other Party in 
the development of such standards, regulations, and procedures. 
The Agreement encourages acceptance of the equivalence of 
foreign technical regulations by requiring that a Party not 
recognizing the technical standards of the other Party explain 
the reasons for non-acceptance of such regulations. The 
Agreement provides a range of mechanisms to facilitate the 
acceptance of conformity assessment results. A Committee on 
Technical Barriers to Trade is established to monitor the 
implementation of the Agreement, facilitate bilateral 
cooperation, exchangeinformation, and to provide a venue for 
consultation.
    Trade Remedies.--The Agreement establishes a bilateral 
safeguard mechanism that allows a Party to impose a temporary 
safeguard on a good of the other Party if, as a result of the 
reduction or elimination of a duty pursuant to the Agreement, 
that good is being imported in such increased quantities and 
under such conditions as to constitute a substantial cause of 
serious injury, or threat of serious injury, to a domestic 
industry.
    If serious injury to a domestic industry, or threat 
thereof, is found under procedural and investigative 
requirements pursuant to domestic law and in accordance with 
the WTO Agreement on Safeguards, the importing Party may 
suspend any further staged reductions in duty on the good, or 
may increase the duty rate to a level not greater than a 
specified normal trade relations/most-favored nation (NTR/MFN) 
rate. A bilateral safeguard measure can be imposed for no 
longer than 3 years; for safeguards applied for more than 1 
year, the Party must progressively liberalize the safeguard 
measure at regular intervals. In general, upon termination of 
the safeguard measure, the rate of duty on the good must return 
to the applicable level of duty as if the safeguard measure had 
never been applied, or, alternatively, the tariff must be 
eliminated in equal annual stages ending on the date the tariff 
is scheduled to be eliminated in the Agreement.
    The Party imposing a safeguard measure must provide 
mutually agreed-upon trade liberalizing compensation in the 
form of concessions having substantially equivalent trade 
effects, or equivalent value, compared to the additional duties 
resulting from the safeguard measure. If the Parties are unable 
to reach an agreement on compensation, the exporting Party 
shall be free to suspend the application of substantially 
equivalent concessions to the other Party. Under Chapter 8 of 
the Agreement, a bilateral safeguard measure cannot be applied 
more than once to a good, nor may a bilateral safeguard be 
applied or maintained to a good that is subject to a global 
safeguard measure imposed pursuant to domestic law and in 
accordance with the WTO Agreement on Safeguards. Chapter 8 of 
the Agreement permits the imposition of a bilateral safeguard 
measure only during the 10-12 year transition period identified 
in the Agreement.
    Each Party retains its rights and obligations under the WTO 
Agreement on Safeguards, and the Agreement does not confer any 
additional rights or obligations on the Parties with respect to 
actions taken in accordance with the WTO Agreement on 
Safeguards. The Agreement reaffirms the rights of each Party 
under the WTO regarding the application of antidumping (AD) or 
countervailing duty (CVD) measures, and provides that the 
application of AD or CVD measures by each Party is not subject 
to dispute settlement procedures under Chapter 22 of the 
Agreement.
    Government Procurement.--The Agreement obligates each Party 
to accord national treatment to the procurement of goods, 
services, and suppliers of the other Party. The section 
provides transparency in the procurement process by requiring 
publication of advanced notice of intended procurement; 
provision of time frames in which to tender a procurement bid; 
publication of procurement specifications; limitations on 
restrictions on tender participation; and provision of open 
tendering procedures. It provides for domestic review of 
supplier challenges, including the establishment of an 
impartial review authority. Each Party is also required to 
establish or maintain bribery as a criminal offense.
    Above certain monetary thresholds, the Agreement applies to 
procurement by 20 Chilean central government and 13 Chilean 
regional government entities, and by 79 entities of the United 
States Government-including the General Services 
Administration, departments of the Federal Government, and 
independent agencies, boards, and commissions. The 
applicability of the Agreement to certain goods procured for 
national security purposes is restricted. The Agreement also 
covers procurement by 341 Chilean municipalities and 37 U.S. 
States, above certain monetary thresholds and subject to 
specified conditions. In addition, the Agreement applies to 
certain port authorities in each country and to U.S. power 
authorities such as the Tennessee Valley Authority.
    Investment.--The investment chapter has three sections. 
Section A lays out general rules on the treatment of 
investment. Each Party agrees to accord national treatment and 
normal trade relation/most-favored-nation (NTR/MFN) treatment 
to investors of the other Party and to their investments. Each 
Party commits to minimum standards of treatment for the other 
Party's investors and investments according to customary 
international law, including: (1) the obligation to not deny 
justice under the legal system; (2) police protection; (3) 
nondiscriminatory treatment for losses from armed conflict or 
civil strife; and (4) compensation for loss in the other 
Party's territory from requisition or destruction of the 
investment by the other Party's forces. The Parties agree not 
to impose mandatory performance requirements on an investment, 
whether the investor is from the other Party or from a non-
Agreement party. Parties may not make an advantage conditional 
on meeting certain performance requirements. Performance 
requirements would be allowed, however, in some situations, 
such as to protect human, animal, or plant life or health. 
Neither Party may impose a nationality requirement on a senior 
manager of a company that is owned by an investor in the other 
Party; however, a Party may require that a majority of the 
company's board of directors be of a particular nationality, as 
long as the requirement does not impair the investor's control 
over the investment. The preceding rules in this paragraph do 
not apply to existing non-conforming measures at the central or 
regional level, as identified by the Parties, or to measures at 
the local level. Some of the rules do not apply to government 
procurement or government subsidies or grants.
    Parties agree to permit transfers such as profits or 
proceeds from a sale to be made freely and without delay except 
in certain cases such as bankruptcy. Neither Party may require 
its investors to transfer, or penalize its investors that fail 
to transfer, amounts from investments in the other Party. 
Neither Party may expropriate a covered investment unless 
prompt and adequate compensation is paid or other conditions 
are met. The Agreement allows a Party to require information 
concerning an investment solely for informational or 
statistical purposes. It recognizes situations where a Party 
may deny benefits under the investment Chapter to an investor 
in one of the Parties that is owned or controlled by an 
investor in a non-Agreementparty. It does not prevent a Party 
from taking measures to ensure that investments are sensitive to 
environmental concerns.
    Section B sets out rules for investor-State disputes. 
Parties to an investor-State dispute should try to resolve the 
dispute through consultation and negotiation. If a dispute 
cannot be settled in that manner, the claimant may submit a 
claim to arbitration, but must notify the respondent at least 
90 days before submitting a claim. Some 6 months must pass 
since events giving rise to the claim before a claimant may 
submit a claim to an arbitration tribunal. The Agreement has 
provisions on the consent of each Party, including a rule that 
no claim may be submitted to arbitration if more than 3 years 
have elapsed from when the claimant first acquired knowledge of 
the breach and damage. The Agreement describes the number of 
arbitrators and how they are appointed. It has rules for the 
conduct of the arbitration, including the place of arbitration, 
submissions by non-disputing Parties, objections by the 
respondent, interim measures of protection, and awards. Several 
provisions pertain to transparency of arbitral proceedings; for 
example, the tribunal must conduct hearings open to the public. 
Some provisions pertain to protection of confidential business 
information. The Agreement has provisions on governing law when 
a claim is submitted and the appointment of experts to report 
to the tribunal on scientific matters. It covers consolidation 
of two or more claims that arise from the same events. Rules on 
awards: state that a tribunal may award only monetary damages 
and restitution of property and may not award punitive damages; 
require each Party to provide for the enforcement of an award 
in its territory; and, present guidelines when a respondent 
fails to abide by or comply with a final award. Section C 
contains applicable definitions.
    Cross-Border Trade in Services.--Chapter 11 of the 
Agreement applies to measures of central, regional, or local 
governments, and to certain measures by non-governmental 
bodies. It does not apply to financial services, most air 
services, government procurement, or public subsidies or 
grants. It requires that each Party provide national treatment 
and normal trade relation/most-favored-nation treatment (NTR/
MFN) to service suppliers of the other Party and prohibits 
limitations on the number of service providers, the value of 
service transactions, the number of operations or output, or 
the number of persons employed in a sector. The Agreement would 
not apply these obligations to non-conforming measures 
identified by the Parties, such as cultural industries in Chile 
and social services and maritime transportation in both 
countries. It commits the Parties to respond to inquiries 
regarding regulations and to address in writing comments 
received from interested persons regarding proposed 
regulations. It calls for national authorities to respond 
promptly to service providers applying for authorization to 
supply a service, and emphasizes that measures on qualification 
requirements should not constitute unnecessary barriers to 
trade in services. The Agreement allows mutual recognition of 
qualifications met in another country as long as such 
recognition is in a non-discriminatory manner.
    The Chapter on trade in services has two Annexes. One Annex 
states that express delivery services are subject to the 
Agreement. The other Annex covers professional services. It 
states that Parties shall encourage relevant national bodies to 
develop mutually acceptable standards for licensing and 
certification and to provide recommendations to the Free Trade 
Commission established under the Agreement. The Free Trade 
Commission shall review the recommendations, and based on this 
review, the Parties shall encourage their respective 
authorities to implement the recommendation. The Annex includes 
provisions on licensing standards specific to foreign legal 
consultants and engineers.
    Financial Services.--This section accords to each Party 
national treatment and normal trade relation/most-favored-
nation (NTR/MFN) treatment to the other Party's financial 
institutions, investments in financial institutions, and cross-
border financial service suppliers. It grants market access to 
each Party's financial institutions by barring restrictions on 
the number of financial institutions, or restrictions based on 
the value of financial transactions, the number of service 
operations, or the number of persons employed. The Agreement 
commits each Party to permit a financial institution of the 
other Party to introduce new financial services that are 
permissible under the laws and regulations of the Party. The 
Agreement contains confidentiality provisions which place no 
obligation on either Party to disclose account information on 
individual customers or information that would impede law 
enforcement, the public interest, or legitimate commercial 
interests. The imposition of nationality or residency 
requirements on senior management or essential personnel is 
prohibited, and a Party may not require that more than a 
minority of the board of directors in a financial institution 
in the other Party be composed of nationals or residents of the 
Party.
    A Committee on Financial Services is established to 
implement the Agreement, and to provide a venue for 
consultations. If a measure is deemed inconsistent with the 
Agreement, certain suspension of benefits is authorized. Each 
Party commits to the transparency of regulations and policies, 
including the advance publication of regulations, reasonable 
opportunities for comment on proposed regulations, and 
procedural openness in the application process. The Agreement 
allows for provisions excepting certain measures necessary to 
the safety, soundness, integrity, or financial responsibility 
of financial institutions and cross-border service providers. 
The Agreement contains an Annex listing existing non-conforming 
measures to remain in effect after the Agreement enters into 
force. It also contains an Annex comprised of specific 
commitments in the areas of right of establishment for banking 
and other financial services, portfolio management, and 
insurance.
    Telecommunications.--The Agreement ensures access on 
reasonable and non-discriminatory terms to each Party's public 
telecommunications network service by enterprises of the other 
Party. Each Party is obligated to allow such enterprises to 
attach interface equipment to the public communications 
network, to offer services to individual or multiple users, to 
connect owned or leased circuits to the network, to perform 
signaling, switching, processing and conversion functions, and 
to use the operating protocols of their choice. The Parties 
also agree to obligations on maintaining competitive 
safeguards, unbundling of network elements consistent with 
national laws and regulations, physical co-location of 
telecommunications equipment, resale of telecommunications 
services, provision of dialing parity and number portability, 
and interconnection. The Agreement obligates each Party to 
ensure the independence of itstelecommunications regulatory 
body and to provide transparency in licensing procedures and licensing 
criteria. The Parties agree to provide procedures to resolve domestic 
telecommunications disputes including recourse to telecommunications 
regulatory bodies, reconsideration of an adverse decision by a 
regulatory body, and judicial review of that decision.
    Temporary Entry for Business Persons.--Chapter 14 of the 
Agreement sets forth general principles and obligations with 
respect to providing for the temporary entry of business 
persons. These provisions are more fully addressed in Part II, 
Report of the Committee on the Judiciary.
    Electronic Commerce.--The Agreement commits the Parties to 
accord non-discriminatory treatment to a digital product from 
the other Party, and to accord a digital product from the other 
Party no less favorable treatment than from third countries. 
Under the Agreement, neither Party may apply customs duties on 
digital products of the other Party. In addition, the Agreement 
stipulates that the supply of a service using electronic means 
must be provided in accordance with the Chapters on Cross-
Border Trade in Services and Financial Services.
    Competition.--The Parties agree to adopt or maintain 
competition laws to proscribe anticompetitive business 
behavior, and each Party shall maintain an authority to enforce 
national competition laws. This authority shall establish 
certain procedural safeguards for firms alleged to be in 
violation, and decisions of this body are subject to review by 
an independent tribunal. The Parties also agree to cooperate on 
competition law enforcement. While specifically permitting the 
designation of privately-owned monopolies or state enterprises, 
the Agreement obligates each Party to ensure that such a 
monopoly or state enterprise acts in a manner not inconsistent 
with the Agreement in terms of the exercise of administrative, 
regulatory, or governmental authority, and the non-
discriminatory provision of goods and services to covered 
investments. The Agreement also provides for transparency 
measures concerning each Party's enforcement activities and 
each Party's designated monopolies and state enterprises.
    Intellectual Property Rights.--The intellectual property 
rights (IPR) provisions of the Agreement base IPR protection on 
principles of national treatment and transparency. Each Party 
agrees to ratify or accede to several IPR related treaties.
    The Agreement specifies particular obligations of the 
Parties regarding protections of trademarks, geographical 
indications, copyrights, and patents. Each Party is to provide 
the means for persons of the other Party to apply for 
protection or petition for recognition of geographical 
indications. Each Party agrees to provide criminal penalties 
for certain copyright violations.
    The Agreement provides that each country shall make patents 
available for any invention whether a product or a process. 
Each Party is to develop a patent protection for plants. It 
provides that a patent may only be revoked if grounds exist 
that would have justified an initial refusal to grant the 
patent. It also provides for adjustment of a patent term if a 
patent application is subject to unreasonable administrative 
delays. The Agreement also protects the confidentiality of 
information submitted for marketing approval or sanitary 
permits for pharmaceuticals and agricultural chemicals. The 
Agreement contains provisions to prevent the marketing approval 
of a pharmaceutical product subject to a patent prior to 
expiration of the patent term.
    The Agreement provides transparency obligations for the 
Parties with regard to the enforcement of intellectual property 
rights. The Agreement provides for damages payable to rights-
holders in civil cases. It provides authority to initiate 
actions to destroy infringing goods and the material and 
implements used to manufacture them, and it mandates that each 
Party provide criminal penalties for willful counterfeiting or 
piracy on a commercial scale. Certain provisions of the Chapter 
will take effect over periods of up to 2 to 5 years.
    Labor.--In Chapter 18 of the Agreement, the Parties 
reaffirm their obligations as members of the International 
Labor Organization (ILO) and under the 1998 ILO Declaration on 
Fundamental Principles and Rights at Work and its Follow-up 
(ILO Declaration). Each Party must strive to ensure that its 
domestic labor laws recognize and protect the fundamental labor 
principles spelled out in the ILO declaration and listed in 
Chapter 18. The Agreement defines labor laws to mean those 
statutes or regulations directly related to: the right of 
association; the right to organize and bargain collectively; a 
prohibition of forced or compulsory labor; a minimum age for 
the employment of children and elimination of the worst forms 
of child labor; and acceptable conditions of work with respect 
to minimum wages, hours of work, and occupational safety and 
health. Under the Agreement, each Party recognizes that it is 
inappropriate to encourage trade or investment by weakening or 
reducing the protections afforded in domestic labor laws. 
Accordingly, each Party shall strive to ensure that it does not 
waive or otherwise derogate from, or offer to waive or derogate 
from such laws in a manner that weakens or reduces adherence to 
the internationally recognized labor rights referred to in 
Article 18.1 of the Agreement.
    The Agreement recognizes the right of each Party to 
establish its own domestic labor standards, and to adopt or 
modify its labor laws. The Agreement provides that each Party 
shall not fail to effectively enforce its labor laws, through a 
sustained or recurring course of action or inaction, in a 
manner affecting trade between the Parties. The Agreement 
recognizes that each Party retains the right to exercise 
discretion with respect to investigatory, prosecutorial, 
regulatory, and compliance matters and to make decisions 
regarding the allocation of resources to enforcement with 
respect to other labor matters determined to have higher 
priorities. Each Party is obliged to provide fair, equitable, 
and transparent proceedings for the enforcement of labor laws 
to persons with a legally recognized interest in a particular 
matter, and each Party guarantees that parties to such 
proceedings may seek remedies to ensure the enforcement of 
their rights under domestic labor laws. Decisions by each 
Party's judicial tribunals are not subject to revision under 
the provisions of Chapter 18 of the Agreement.
    The Agreement creates a United States-Chile Labor Affairs 
Council (LAC) to provide a forum for consultation on the 
Agreement and its implementation. A separate Labor Cooperation 
Mechanism is also established to: promote respect for ILO labor 
principles and other common commitments; establish priorities 
for cooperative activities on labor matters; develop 
specificcooperative activities; exchange information; promote the 
collection and publication of comparable labor data and enforcement 
activity; arrange periodic labor cooperation review sessions at the 
request of either Party; and develop recommendations for the respective 
Parties for their consideration.
    A Party can request consultations with the other Party 
regarding any matter arising under Chapter 18 of the Agreement. 
If the Parties fail to resolve the matter through 
consultations, either Party may then request that the LAC be 
convened to address the matter. Dispute settlement procedures 
are available only when a Party asserts under Article 
18.2(1)(a) that the other Party has failed to effectively 
enforce its labor laws, through a sustained or recurring course 
of action or inaction, in a manner affecting trade between the 
Parties. In that instance, the complaining Party may request 
dispute settlement proceedings under Chapter 22 of the 
Agreement, after an initial 60-day consultation period, by 
requesting a meeting of the Agreement's Free Trade Commission 
(FTC). The Parties commit to establishing a roster of up to 12 
individuals having expertise in labor law who may serve as 
panelists in any dispute settlement proceedings arising under 
Chapter 18 of the Agreement.
    If a panel determines that a Party has not conformed with 
its obligations under Article 18.2(1)(a) and the Parties are 
unable to reach agreement on a resolution, the complaining 
Party may request that the panel reconvene to impose an annual 
monetary assessment on the other Party not to exceed $15 
million, adjusted for inflation pursuant to Annex 22.16 of the 
Agreement. Any assessments will be paid into a fund established 
by the FTC and utilized for labor initiatives. Suspension of 
tariff benefits of an equivalent dollar value may result from a 
Party's failure to pay the monetary assessment.
    Environment.--Chapter 19 of the Agreement recognizes the 
right of each Party to establish its own levels of domestic 
environmental protection and environmental development policies 
and priorities, and to adopt or modify its environmental laws. 
Each Party is obliged to provide fair, equitable, and open 
proceedings for the enforcement of its environmental laws, as 
well as appropriate and effective remedies for violation of its 
environmental laws.
    Under the Agreement, a Party shall not fail to effectively 
enforce its environmental laws, through a sustained or 
recurring course of action or inaction, in a manner affecting 
trade between the Parties. The Agreement recognizes that each 
Party retains the right to exercise discretion with respect to 
investigatory, prosecutorial, regulatory, and compliance 
matters and to make decisions regarding the allocation of 
resources to enforcement with respect to other environment 
matters determined to have higher priorities.
    The Parties commit to ensure that domestic laws provide for 
high levels of environmental protection, and to strive to 
continue to improve those laws. Each Party also recognizes that 
it is inappropriate to encourage trade or investment by 
weakening or reducing the protections afforded in domestic 
environmental laws. Thus, each Party under the Agreement shall 
strive to ensure that it does not waive or otherwise derogate 
from, or offer to waive or derogate from, such laws in a manner 
that weakens or reduces protections afforded in those laws as 
an encouragement for trade with the other Party.
    Chapter 19 of the Agreement defines an environmental law as 
any statute or regulation of a Party, or provision thereof, the 
primary purpose of which is to protect the environment or 
prevent a danger to human life or health, through: the 
prevention, abatement, or control of the release or emission of 
pollutants or environmental contaminants; the control of 
environmentally hazardous or toxic chemicals, substances, 
materials, and wastes; or, the protection or conservation of 
wild flora and fauna, including endangered species, their 
habitat, and specially protected natural areas. The Agreement 
excludes from the definition of environmental law any statute 
or regulation, or provision thereof, directly related to worker 
safety or health. The Agreement also excludes from the 
definition of environmental law any statute or regulation, or 
provision thereof, the primary purpose of which is managing the 
commercial harvest or exploitation, or subsistence or 
aboriginal harvesting, of natural resources. The Agreement 
states that for purposes of the definition of environmental 
law, the primary purpose of a particular statutory or 
regulatory provision shall be determined by reference to its 
primary purpose, rather than to the primary purpose of the 
statute or regulation of which it is a part.
    The Agreement creates an Environment Affairs Council (EAC) 
to provide a forum for consultation on the Agreement and its 
implementation. The EAC is obliged to ensure a process for 
promoting public participation in its work, including by 
seeking advice from the public in developing agendas for 
council meetings and by engaging in a dialogue with the public 
on those issues. Separately, each Party commits to provide for 
the receipt and consideration of public communications on 
matters related to Chapter 19 of the Agreement. The Parties 
also commit to pursue a number of cooperative projects 
specified in Annex 19.3 of the Agreement, and to promptly 
negotiate a United States-Chile Environmental Cooperation 
Agreement that will establish priorities for further 
cooperative environmental activities, as elaborated in Annex 
19.3.
    A Party can request consultations with the other Party 
regarding any matter arising under Chapter 19 of the Agreement. 
If the Parties fail to resolve the matter through 
consultations, either Party may then request that the EAC be 
convened to address the matter. Dispute settlement procedures 
are available only when a Party asserts under Article 
19.2(1)(a) that the other Party has failed to effectively 
enforce its environmental laws, through a sustained or 
recurring course of action or inaction, in a manner affecting 
trade between the Parties. In that instance, the complaining 
Party may request dispute settlement proceedings under Chapter 
22 of the Agreement, after an initial 60-day consultation 
period, by requesting a meeting of the Agreement's Free Trade 
Commission (FTC). The Parties commit to establishing a roster 
consisting of at least 12 individuals having expertise in 
environmental law who may serve as panelists in any dispute 
settlement proceedings arising under Chapter 19 of the 
Agreement.
    If a panel determines that a Party has not conformed with 
its obligations under Article 19.2(1)(a) and the Parties are 
unable to reach agreement on a resolution, the complaining 
Party may request that the panel reconvene to impose an annual 
monetary assessment on the otherParty not to exceed $15 
million, adjusted for inflation pursuant to Annex 22.16 of the 
Agreement. Any assessments will be paid into a fund established by the 
FTC and utilized for environmental initiatives. Suspension of tariff 
benefits of an equivalent dollar value may result from a Party's 
failure to pay the monetary assessment.
    The Parties recognize the importance of multilateral 
environmental agreements (MEAs) and agree to consult on the 
extent to which the outcome of ongoing WTO negotiations, 
regarding the relationship between WTO rules and trade 
obligations specified in MEAs, applies to the Agreement. The 
Parties also agree to encourage businesses to voluntarily 
incorporate sound principles of corporate stewardship into 
their internal policies.
    Transparency.--In this Chapter, the Parties commit to 
several requirements to foster openness, transparency, and 
fairness in administrative procedures covered by the Agreement. 
Each Party is required to designate a point of contact for 
Agreement-related communication between the Parties. In 
addition, the Parties commit to publish legal material relating 
to the Agreement, to notify of proposed or actual measures that 
potentially affect the operation of the Agreement, to accord 
persons reasonable notice of administrative proceedings and an 
opportunity to provide evidence, and to provide the opportunity 
of judicial review and appeal of final administrative actions.
    Administration.--The Agreement establishes a joint Free 
Trade Commission (FTC) which is composed of cabinet-level 
representatives or their designees from each Party. The FTC is 
to supervise the implementation of the Agreement, to oversee 
the work of committees established under the Agreement, and to 
assist in the resolution of disputes. The FTC may also 
establish and delegate authority to committees and working 
groups and may approve certain modifications to the Agreement, 
such as the acceleration of tariff elimination and the 
modification of the rules of origin.
    Dispute Settlement.--Chapter 22 of the Agreement 
establishes a dispute settlement mechanism applicable to the 
avoidance or settlement of all disputes between the Parties 
regarding: the interpretation or application of the Agreement; 
claims that a measure of a Party is inconsistent with the 
Agreement or that a Party has otherwise failed to carry out its 
obligations under the Agreement; or, claims that a measure of 
one Party causes nullification or impairment of benefits to the 
other Party. The Agreement specifies the chapters under which a 
claim of nullification or impairment may be made as being: 
Chapter 3 (National Treatment and Market Access for Goods; 
Chapter 4 (Rules of Origin and Origin Procedures); Chapter 5 
(Customs Administration); Chapter 7 (Technical Barriers to 
Trade); Chapter 9 (Government Procurement); Chapter 11 (Cross 
Border Trade in Services), subject to minor exceptions 
contained in Article 23.1 pursuant to Annex 22.2(2) of the 
Agreement; and Chapter 17 (Intellectual Property Rights), 
subject to minor exceptions contained in Article 23.1 pursuant 
to Annex 22.2(2) of the Agreement. For disputes arising under 
Chapter 18 (Labor) or Chapter 19 (Environment), dispute 
settlement procedures under Chapter 22 of the Agreement may be 
invoked only with respect to a Party's obligation to not fail 
to effectively enforce its labor or environmental laws, as the 
case may be, through a sustained or recurring course of action 
or inaction, in a manner affecting trade between the Parties.
    A Party must first make a written request for consultations 
and deliver the request to the other Party. If the Parties fail 
to resolve the matter within 60 days of delivery of the request 
(15 days for disputes involving perishable goods), or within a 
period agreed upon by the Parties, a Party may request a 
meeting of the Free Trade Commission (FTC). The FTC should 
ordinarily convene within 10 days. If the Parties fail to 
resolve a matter within: 30 days after the FTC convenes; 75 
days after a request for consultations, if the FTC has not 
convened; 30 days after a request involving perishable goods, 
if the FTC has not convened; or within another period agreed 
upon by the Parties, either Party may request that a 3-member 
panel be established. The Parties are obliged to establish a 
roster of at least 20 individuals who can serve as panelists, 6 
of whom are to be non-Agreement party nationals unless the 
Parties agree otherwise. Procedures for panel selection are set 
forth in the Agreement. The Agreement commits the FTC to 
establish rules of procedure for panels; these rules shall 
include the right to at least one public hearing before the 
panel, subject to the protection of confidential information.
    A panel is to present its initial report within 120 days 
after the last panelist is selected. The initial report shall 
contain: findings of fact; a determination as to whether a 
Party has not conformed with its obligations under the 
Agreement or that a measure is causing nullification or 
impairment of benefits to the other Party; any other 
determination requested in the terms of reference; and, the 
panel's recommendations, if the Parties have requested them, 
for resolving the dispute. After Party comment, the panel is to 
issue a final report to the Parties within 30 days of the 
initial report, unless the Parties agree otherwise. Public 
release of the final report is to occur within 15 days 
thereafter, subject to the protection of confidential 
information. Upon receiving the final report, the Parties are 
to agree on a resolution of the dispute and, in instances of 
non-conformance with obligations under the Agreement or 
nullification or impairment of benefits as defined under the 
Agreement, such resolution, wherever possible, should be the 
elimination of the nonconformity or the nullification or 
impairment. Where appropriate, the Parties may agree on an 
action plan to resolve the dispute; if the Parties agree on 
such an action plan, additional measures under Chapter 22 of 
the Agreement may be pursued only for failure to carry out the 
action plan.
    If the panel has found nonconformance with obligations 
under the Agreement or nullification or impairment of benefits 
as defined under the Agreement, and the Parties cannot resolve 
their dispute generally within 45 days of receiving the panel's 
final report, the Parties must enter into compensation 
negotiations. If the Parties cannot agree on compensation 
within 30 days, or the Parties agree on compensation or some 
other resolution of the dispute and the complaining Party 
believes that the other Party has failed to observe the terms 
of such resolution, the complaining Party may propose a 
suspension of trade benefits of equivalent effect. In general, 
the complaining Party may begin suspending trade benefits 30 
days after providing notice of its intent to do so. If the 
other Party believes that either the proposed suspension of 
benefits is manifestly excessive, or that it has eliminated the 
nonconformity or nullification orimpairment identified by the 
panel and therefore suspension of benefits is not warranted, the Party 
may request that the panel be reconvened in order to consider the 
matter. In that instance, the complaining Party may not begin 
suspending benefits until 30 days after receiving the determination of 
the reconvened panel; if the panel determines that the proposed level 
of benefits to be suspended is manifestly excessive, it shall determine 
the level of benefits it considers to be of equivalent effect.
    The complaining Party may not suspend benefits if the 
reconvened panel determines that the other Party has eliminated 
the nonconformity or nullification or impairment. Similarly, 
the complaining Party may not suspend benefits if the other 
Party chooses to pay an annual monetary assessment; if the 
Parties cannot agree on an amount of monetary assessment, the 
amount will be set at a level equal to 50 percent of the level 
determined by the reconvened panel or, if the panel has not 
reconvened, 50 percent of the amount proposed by the 
complaining Party. The monetary assessment is to be paid to the 
complaining Party, or, if the FTC so decides, into a fund 
established by the FTC. Monies paid into such a fund shall be 
expended at the direction of the FTC for appropriate 
initiatives to facilitate trade between the Parties. Suspension 
of the full amount of benefits previously identified pursuant 
to the Agreement may result from a Party's failure to pay a 
monetary assessment.
    Where a dispute involves Article 18.2(1)(a) (Enforcement of 
Labor Laws) or Article 19.2(1)(a) (Enforcement of Environmental 
Laws), however, and the Parties either: are unable to reach 
agreement on a resolution within 45 days of receiving the 
panel's final report; or the Parties agree on a resolution of 
the dispute and the complaining Party considers that the other 
Party has failed to observe the terms of such resolution, the 
complaining Party may at any time thereafter request that the 
panel be reconvened to impose an annual monetary assessment on 
the other Party. The panel is to take certain enumerated 
factors into account in setting the level of monetary 
assessment; the amount of the assessment shall not exceed $15 
million annually, adjusted for inflation pursuant to Annex 
22.16 of the Agreement. The amount is to be paid into a fund 
established by the FTC and is to be expended at the direction 
of FTC for appropriate labor or environmental initiatives, as 
the case may be, in the territory of the Party complained 
against. If the assessment is not paid, the complaining Party 
may take other appropriate steps to collect the assessment, 
including suspending tariff benefits under the Agreement.
    The Agreement also establishes a compliance review 
procedure available in all disputes, under which the Party 
complained against may request that the panel determine whether 
a previously identified nonconformity or nullification or 
impairment has been eliminated. The panel must report within 90 
days, and if it decides that the Party is in compliance, the 
complaining Party must promptly reinstate any benefits that it 
has suspended and the other Party will no longer be required to 
pay any monetary assessment.
    Not later than 5 years after the Agreement enters into 
force, the FTC is required to review the operation and 
effectiveness of the provisions in Chapter 22 of the Agreement 
that address non-implementation of the final report (i.e. the 
provisions allowing for suspension of benefits or imposition of 
monetary assessments). In the event five proceedings initiated 
under Chapter 22 of the Agreement result in either the 
suspension of benefits or the imposition of monetary 
assessments, the FTC shall complete its review within 6 months 
of the fifth such occurrence, if sooner than 5 years after the 
Agreement enters into force.
    General Exceptions.--This Chapter identifies general 
exceptions applicable to the Agreement. This Chapter also 
addresses essential security interests, taxation, balance of 
payment measures, and the disclosure of information.
    Final Provisions.--The Agreement is subject to amendment by 
mutual consent of the Parties. The Agreement enters into force 
60 days after the Parties exchange written notification that 
necessary domestic legal procedures by each Party have been 
completed. Either Party may withdraw from the Agreement, 
effective 180 days after notification to the other Party.

                   D. GENERAL DESCRIPTION OF THE BILL

TITLE I. APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE AGREEMENT


Sec. 101. Approval and Entry Into Force of the Agreement

    This section provides Congressional approval for the 
Agreement and its accompanying Statement of Administrative 
Action. Section 101 also authorizes the President to exchange 
notes with Chile to provide for entry into force of the 
Agreement on or after January 1, 2004. The exchange of notes is 
conditioned on a determination by the President that Chile has 
taken measures necessary to comply with those of its 
obligations that take effect at the time the Agreement enters 
into force.

Sec. 102. Relationship of the Agreement to United States and State Law

    This section establishes the relationship between the 
Agreement and U.S. law. It clarifies that no provision of the 
Agreement will be given effect under domestic law if 
inconsistent with Federal law; this would include provisions of 
Federal law enacted or amended by the Act.
    Section 102 also provides that no State law may be declared 
invalid on the ground that the law is inconsistent with the 
Agreement, except in an action brought by the United States for 
the purpose of declaring such law invalid.
    This section precludes any private right of action or 
remedy against the Federal Government, or a State, based on the 
provisions of the Agreement.

Sec. 103. Consultation and Layover Provisions for, and Effective Date 
        of, Proclaimed Actions

    This section sets forth consultation and layover steps that 
must precede the President's implementation of any tariff 
modification by proclamation. Under the consultation and 
layover provisions, the President must obtain the advice of the 
relevant private sector advisory committees and the U.S. 
International Trade Commission (ITC) on a proposed action. The 
President must submit a report to the Senate Committee on 
Finance and the House Committee on Ways and Means setting forth 
the action proposed, the reasons therefor, and the advice of 
the private sector advisors and the ITC. The Act sets aside a 
60 day period following the date of transmittal of the report 
for the Committees to consult with the President on the action.

Sec. 104. Implementing Actions in Anticipation of Entry Into Force and 
        Initial Regulations

    This section provides the authority for new or amended 
regulations to be issued, and for the President to proclaim 
actions implementing the provisions of the Agreement, on the 
date the Agreement enters into force. This section also 
requires that, whenever possible, all Federal regulations 
required or authorized under the Implementation Act are to be 
developed and promulgated within 1 year of the Agreement's 
entry into force.

Sec. 105. Administration of Dispute Settlement Proceedings

    This section authorizes the President to establish or 
designate within the Department of Commerce an office 
responsible for providing administrative assistance to dispute 
settlement panels established under Chapter 22 of the 
Agreement. This section also authorizes the appropriation of 
funds to support this office.

Sec. 106. Arbitration of Certain Claims

    This section authorizes the United States to use binding 
arbitration to resolve claims covered by two provisions of the 
Agreement that concern government contracts. This section also 
provides that contracts executed by an agency of the United 
States on or after the entry into force of the Agreement shall 
contain a clause specifying the law that will apply to resolve 
any breach of contract claim.

Sec. 107. Effective Dates; Effect of Termination

    This section provides the dates that certain provisions of 
the Act will go into effect. Section 107 also provides that the 
provisions of the Implementation Act will no longer be in 
effect on the date on which the Agreement ceases to be in 
force.

                      TITLE II. CUSTOMS PROVISIONS


Sec. 201. Tariff Modifications

    Section 201(a) of the bill grants the President the 
authority to implement by proclamation the continuation, 
modification or elimination of tariffs as the President 
determines to be necessary or appropriate to carry out the 
terms of the Agreement.
    Section 201(a)(2) requires the President to withdraw 
Chile's beneficiary status under the Generalized System of 
Preferences program once the Agreement takes effect. Section 
201(b) authorizes the President, subject to the consultation 
and layover provisions of section 103(a) of the bill, to: 
modify or continue any duty; modify the staging of duty 
elimination pursuant to an agreement with Chile under Article 
3.3(4) of the Agreement; keep in place duty-free or excise 
treatment; or impose any duty by proclamation whenever the 
President determines it to be necessary or appropriate to 
maintain the general level of reciprocal and mutually 
advantageous concessions with respect to Chile provided by the 
Agreement.
    Section 201(c) authorizes the Secretary of the Treasury to 
implement the agricultural safeguard provisions of Article 3.18 
of the Agreement. Article 3.18 permits the United States to 
impose an agricultural safeguard measure--in the form of 
additional duties--on imports from Chile of an agricultural 
good listed in Annex 3.18 of the Agreement. The United States 
may apply the additional duties to shipments of any such good 
whose price is below the threshold (``trigger price'') for the 
good set out in Annex 3.18.
    The agricultural safeguard may not be imposed on a product 
already subject to a measure under the bilateral safeguard 
provisions of Chapter 8 of the Agreement or under a global 
safeguard imposed pursuant to domestic law and in accordance 
with the WTO Agreement on Safeguards. Once a product has 
achieved duty-free status under the Agreement, the agricultural 
safeguard may not be imposed upon the product. The agricultural 
safeguard may not be applied to increase a zero in-quota duty 
on a good subject to a tariff-rate quota. Moreover, the sum of 
additional duties imposed under the agricultural safeguard 
cannot exceed the lesser of the prevailing normal trade 
relation/most-favored-nation (NTR/MFN) applied rate or the NTR/
MFN applied rate in effect prior to the entry into force of the 
Agreement.
    The agricultural safeguard is applicable only during the 12 
year implementation period of the Agreement. Some of the 
products for which the United States may impose an agricultural 
safeguard are: apricots, artichokes, asparagus, avocados, 
broccoli, brussels sprouts, carrots, celery, cherries, garlic 
products, grapefruit, melons, mushrooms, onion products, 
oranges, orange juice, orange pulp, peaches, pears, spinach, 
sweet corn, tomato products, and water chestnuts. Chile may 
impose an agricultural safeguard to imports of various forms of 
the following products from the United States: bird eggs; meat 
and edible offals; rice; rice flour; wheat starch; wheat 
gluten; and groats and meals of wheat.

Sec. 202. Rules of Origin

    This section implements the general rules of origin of the 
Agreement. Under the general rules, there are different ways 
for a good of Chile to qualify as an originating good, and 
thereforebe eligible for preferential tariff treatment when the 
good is imported into the United States. For example, as provided in 
this section, a good is an originating good if it is ``wholly obtained 
or produced entirely in the territory of Chile, the United States, or 
both.'' As another example, the general rules of origin provide that a 
good is an ``originating good'' if those materials used to produce the 
good, that are not themselves originating goods, are transformed in 
such a way that they meet or satisfy a required change in tariff 
classification. This section sets forth other specific rules related to 
determining whether a good meets the Agreement's requirements for 
qualifying as an originating good.
    This section authorizes the President to modify certain of 
the Agreement's specific rules of origin by proclamation, 
subject to the consultation and layover provisions of section 
103 of the Implementation Act. Various provisions of the 
Agreement expressly contemplate modifications to the rules of 
origin. For example, Article 3.20(5) contemplates that the 
United States and Chile may agree to revise the Agreement's 
rules of origin for particular textile and apparel goods in 
light of the availability of fibers, yarns, or fabrics in their 
respective territories. Section 202 expressly limits the 
President's authority to modify specific rules of origin 
pertaining to textile and apparel goods.
    The remainder of section 202 sets forth specific rules 
related to determining whether a good meets the Agreement's 
other requirements for qualifying as an originating good. For 
example, section 202(b) provides that a good is not 
disqualified as an originating good if it contains de minimis 
quantities of non-originating materials that do not undergo a 
tariff transformation. Section 202(d) implements provisions of 
the Agreement that require certain goods to have at least a 
specified percentage of regional value content to qualify as 
originating goods. Section 202(d) prescribes alternative 
methods for calculating regional value content. Other 
provisions in section 202 address valuation of materials and 
the determination of originating or non-originating status for 
fungible goods and materials.

Sec. 203. Drawback

    This section implements Article 3.8 of the Agreement, which 
phases out duty drawback and duty deferral programs between the 
United States and Chile over 3 years, beginning 8 years after 
the Agreement enters into force. The bill sets forth a formula 
which will be used to calculate the amount of the refund, 
waiver, or remission that will be allowed for duties owed or 
paid during the 3 year period that drawback is phased out. The 
formula, which is drawn from Article 3.8(5) of the Agreement, 
limits the amount of duty paid or owed that may be refunded, 
waived or reduced to no more than: 75 percent during 2012; 50 
percent during 2013; and 25 percent during 2014.
    The formula will be applied to drawback claims for duties 
paid on imported goods that are subsequently exported, as well 
as duties that are deferred because the imported goods fall 
under provisions for foreign trade zones or another duty 
deferral program. Beginning January 1, 2015, with limited 
exceptions, no drawback will be available for imports from and 
exports to Chile.

Sec. 204. Customs User Fees

    This section amends section 13031(b) of the Consolidated 
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c) to 
provide for the immediate elimination of the merchandise 
processing fee for goods qualifying for preferential treatment 
under the terms of the United States-Chile Free Trade 
Agreement. Processing of goods under the Agreement will be 
financed by money from the General Fund of the Treasury.

Sec. 205. Disclosure of Incorrect Information; Denial of Preferential 
        Tariff Treatment; False Certificates of Origin

    Under this section, the United States may not impose a 
penalty on an importer who makes an invalid claim for 
preferential tariff treatment under the Agreement if, after 
discovering that the claim is invalid, the importer voluntarily 
corrects the claim and pays any duty owing. If it is determined 
that an importer has certified more than once, falsely or 
without substantiation, that a good qualifies as originating, 
the United States may suspend preferential tariff treatment 
under the Agreement for identical goods imported by that 
person. The suspension may continue until the importer proves 
that it has complied with the laws and regulations governing 
claims for preferential tariff treatment.

Sec. 206. Reliquidation of Entries

    Article 4.12(3) of the Agreement provides that an importer 
may claim preferential tariff treatment for an originating good 
within 1 year of importation, even if no such claim was made at 
the time of importation. In seeking a refund for excess duties 
paid, the importer must provide the customs authorities 
information substantiating that the good was in fact an 
originating good at the time of importation.
    Section 206 of the bill implements U.S. obligations under 
Article 4.12(3) of the Agreement by amending section 520(d) of 
the Tariff Act of 1930 (19 U.S.C. 1520(d)) to allow an importer 
to claim preferential tariff treatment for originating goods 
within 1 year of their importation.

Sec. 207. Recordkeeping Requirements

    This section establishes recordkeeping requirements which 
are necessary or appropriate to carry out the terms of the 
Agreement, including the requirement that any person who 
completes and issues a Chile FTA Certificate of Origin keep a 
copy of the Certificate for a period of at least 5 years from 
the date of issuance of the Certificate.

Sec. 208. Enforcement of Textile and Apparel Rules of Origin

    Under section 208, U.S. customs officials may request that 
Chile initiate verifications and work with Chilean officials in 
conducting them. Following a U.S. request for a verification, 
the Committee for the Implementation of Textile Agreements 
(CITA), by delegation of authority from the President, may 
direct the Secretary of the Treasury to take appropriate action 
described in section 208(b) while the verification is being 
conducted. U.S. customs officials will determine whether the 
exporter or producer that is subject to the verification is 
complying with applicable customs rules, and whether statements 
regarding the origin of textile or apparel goods exported or 
produced by that firm are accurate. If U.S. customs officials 
determine that an exporter or producer is not complying with 
applicable customs rules or that it is making false statements 
regarding the origin of textile or apparel goods, they will 
report their findings to CITA. Similarly, if U.S. customs 
officials are unable to make the necessary determination (e.g., 
due to lack of cooperation by the exporter or producer), they 
will report that fact to CITA. For its part, CITA may direct 
the Secretary to take appropriate action described in section 
208(d) in the case of an adverse determination or a report that 
customs officials are unable to make the necessary 
determination. Such appropriate action includes suspending the 
liquidation of entries of textile and apparel goods, publishing 
the identity of the person subject to the verification, and, in 
certain circumstances, denying the entry of goods into the 
United States.

Sec. 209. Conforming Amendments

    This section makes conforming amendments to the Tariff Act 
of 1930 to reflect changes in paragraph numbering as a result 
of amendments resulting from the Agreement.

Sec. 210. Regulations

    This section requires the Secretary of the Treasury to 
prescribe such regulations as may be necessary to carry out 
provisions of the Agreement concerning rules of origin, 
drawback, and customs user fees.

                     TITLE III. RELIEF FROM IMPORTS


Sec. 301. Definitions

    This section defines the terms ``Commission'' and ``Chilean 
Article'' for purposes of the bilateral safeguard provision 
contained in Chapter 8 of the United States-Chile Free Trade 
Agreement. The term ``Commission'' is defined as the United 
States International Trade Commission, and the term ``Chilean 
Article'' is defined as an article that qualifies as an 
originating good under section 202(a) of the United States-
Chile Free Trade Agreement Implementation Act. This section 
also defines the term ``Chilean Textile or Apparel Article'' 
for purposes of the textile and apparel safeguard provision 
contained in Chapter 3 of the United States-Chile Free Trade 
Agreement. The term ``Chilean Textile or Apparel Article'' is 
defined as an article that is listed in the Annex to the 
Agreement on Textiles and Clothing referred to in section 
101(d)(4) of the Uruguay Round Agreements Act (19 U.S.C. 
Sec. 3511(d)(4)), and that satisfies the definition of a 
Chilean article as provided for in this section.

     Subtitle A. Relief From Imports Benefiting From the Agreement


Sec. 311. Commencing of Action for Relief

    This section requires the filing of a petition with the 
Commission by an entity that is representative of an industry 
in order to commence a bilateral safeguard investigation. 
Section 311(b) provides that, upon the filing of a petition, 
the Commission shall promptly initiate an investigation to 
determine whether, as a result of the reduction or elimination 
of a duty provided for under the United States-Chile Free Trade 
Agreement, a Chilean article is being imported into the United 
States in such increased quantities, and under such conditions, 
that imports of the Chilean article constitute a substantial 
cause of serious injury, or threat of serious injury, to the 
domestic industry producing an article that is like, or 
directly competitive with, the imported article.
    Section 311(c) applies to any bilateral safeguard initiated 
under the Agreement pursuant to certain provisions, both 
substantive and procedural, contained in section 202 of the 
Trade Act of 1974 (19 U.S.C. Sec. 2252) that apply to global 
safeguard investigations. These provisions include, inter alia, 
the requirement that the Commission publish notice of the 
commencement of an investigation; the requirement that the 
Commission hold a public hearing at which interested parties 
and consumers have the right to be present, to present 
evidence, and to respond to the presentations of other parties 
and consumers; the factors to be taken into account by the 
Commission in making its determinations; and authorization for 
the Commission to promulgate regulations to provide access to 
confidential business information under protective order to 
authorized representatives of interested parties in an 
investigation.
    Section 311(d) precludes the initiation of an investigation 
with respect to any Chilean article to which import relief has 
already been provided under this section, or any Chilean 
article that is subject, at the time the petition is filed, to 
global safeguard relief pursuant to Chapter 1 of title II of 
the Trade Act of 1974 (19 U.S.C. Sec. 2251 et seq.).

Sec. 312. Commission Action on Petition

    This section establishes deadlines for Commission 
determinations following the initiation of a bilateral 
safeguard investigation. Section 312(b) applies certain 
statutory provisions that address a divided vote by the 
Commission in a global safeguard investigation under section 
202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252) to 
Commission determinations under this section. If the Commission 
renders an affirmative injury determination, or a determination 
that the President may consider to be an affirmative 
determination in the event of a divided vote by the Commission, 
section 312(c) requires that the Commission also find and 
recommend to the President the amount of import relief that is 
necessary to remedy or prevent the injury found bythe 
Commission and to facilitate the efforts of the domestic industry to 
make a positive adjustment to import competition. Section 312(d) 
specifies the information to be included by the Commission in a report 
to the President regarding its determination. Upon submitting the 
requisite report to the President, section 312(e) requires the 
Commission to promptly make public such report, except for confidential 
information contained in the report.

Sec. 313. Provision of Relief

    This section directs the President, not later than 30 days 
after receiving the report from the Commission, to provide 
relief from imports of the article subject to an affirmative 
determination by the Commission, or a determination that the 
President considers to be an affirmative determination in the 
event of a divided vote by the Commission, to the extent that 
the President determines necessary to remedy or prevent the 
injury and to facilitate the efforts of the domestic industry 
to make a positive adjustment to import competition. Under 
section 313(b), the President is not required to provide import 
relief if the President determines that the provision of the 
import relief will not provide greater economic and social 
benefits than costs.
    Section 313(c) specifies the nature of the import relief 
that the President may impose, to include: the suspension of 
any further reduction in duty provided under Annex 3.3. of the 
United States-Chile Free Trade Agreement; and an increase in 
the rate of duty imposed on such article to a level that does 
not exceed the lesser of (1) the normal trade relation/most-
favored-nation (NTR/MFN) duty rate imposed on like articles at 
the time the import relief is provided, or (2) the NTR/MFN duty 
rate imposed on like articles on the day before the date on 
which the United States-Chile Free Trade Agreement enters into 
force. Section 313(c) also requires that if the period for 
which import relief is provided exceeds 1 year, the President 
shall provide for the progressive liberalization (described in 
article 8.2(2) of the United States-Chile Free Trade Agreement) 
of such relief at regular intervals during the period of its 
application.
    Section 313(d) provides that the period for import relief 
in a bilateral safeguard action, including any extension of 
such import relief, shall not exceed 3 years. If the initial 
period for import relief is less than 3 years, the President 
may extend the effective period of such relief under section 
313(d) if the President determines that import relief continues 
to be necessary to remedy or prevent serious injury and to 
facilitate adjustment to import competition, and that there is 
evidence that the domestic industry is making a positive 
adjustment to import competition. Before the President can 
extend the period of import relief, the President must first 
receive a report from the Commission under section 313(d)(2)(B) 
containing an affirmative determination, or a determination 
that the President may consider to be an affirmative 
determination in the event of a divided vote by the Commission, 
that import relief continues to be necessary to remedy or 
prevent serious injury and that the domestic industry is making 
a positive adjustment to import competition.
    Section 313(e) provides that upon termination of import 
relief under the bilateral safeguard provision, the rate of 
duty to be applied through December 31 of the year in which 
such termination occurred shall be the rate of duty that would 
have been in effect 1 year after the provision of import 
relief, as specified in the Schedule of the United States 
contained in Annex 3.3 of the United States-Chile Free Trade 
Agreement. Thereafter, the President is afforded the discretion 
to set the rate of duty applied to the article formerly subject 
to import relief as either: the applicable rate of duty for 
such article as specified in the Schedule of the United States 
contained in Annex 3.3 of the United States-Chile Free Trade 
Agreement, or the rate of duty resulting from the elimination 
of the tariff in equal annual stages ending on the date set out 
in Annex 3.3 of the United States-Chile Free Trade Agreement 
for elimination of the tariff.
    Section 313(f) provides that no import relief may be 
provided under the bilateral safeguard provision on any article 
that is subject to global safeguard relief pursuant to Chapter 
1 of title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et 
seq.). This section is necessary to implement article 8.2(4) of 
the United States-Chile Free Trade Agreement, in the event that 
an article subject to import relief under the bilateral 
safeguard subsequently becomes subject to global safeguard 
relief pursuant to Chapter 1 of title II of the Trade Act of 
1974 (19 U.S.C. Sec. 2251 et seq.).

Sec. 314. Termination of Relief Authority

    This section provides that the President's authority to 
impose import relief under the bilateral safeguard provision 
ends after the date that is 10 years after the date on which 
the United States-Chile Free Trade Agreement enters into force 
or, if an article is subject to a 12 year period for tariff 
elimination pursuant to the Schedule of the United States 
contained in Annex 3.3 of the United States-Chile Free Trade 
Agreement, the President's authority to impose import relief 
terminates after the date that is 12 years after the date on 
which the United States-Chile Free Trade Agreement enters into 
force.

Sec. 315. Compensation Authority

    This section authorizes the President, under section 123 of 
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Chile new 
concessions as compensation for the imposition of import relief 
in a bilateral safeguard investigation, in order to maintain 
the general level of reciprocal concessions.

Sec. 316. Confidential Business Information

    This section applies the same procedures for the treatment 
and release of confidential business information by the 
Commission in a global safeguard investigation under Chapter 1 
of title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et 
seq.) to bilateral safeguard investigations under this 
provision.

           Subtitle B. Textile and Apparel Safeguard Measures


Sec. 321. Commencement of Action for Relief

    This section requires the filing of a request with the 
President by an interested party in order to commence action 
for relief under the textile and apparel safeguard provision. 
Upon the filing of a request, the President shall review the 
request to determine, from the information presented in the 
request, whether to commence consideration of the request. 
Section 321(b) provides that, if the President determines that 
the request provides the information necessary for the request 
to be considered, the President shall cause to be published in 
the Federal Register a notice of commencement of consideration 
of the request, and notice seeking public comments regarding 
the request. The notice shall include the request and the dates 
by which comments and rebuttals must be received.

Sec. 322. Determination and Provision of Relief

    This section provides that following the President's 
commencement of consideration of the request, the President 
shall determine whether, as a result of the elimination of a 
duty under the United States-Chile Free Trade Agreement, a 
Chilean textile or apparel article is being imported into the 
United States in such increased quantities and under such 
conditions as to cause serious damage, or actual threat 
thereof, to a domestic industry producing an article that is 
like, or directly competitive with, the imported article.
    Section 322(a) identifies certain economic factors that the 
President shall examine in making a determination, including 
changes in the domestic industry's output, productivity, 
capacity utilization, inventories, market share, exports, 
wages, employment, domestic prices, profits, and investment, 
none of which is necessarily decisive. Section 322(a) also 
provides that the President shall not consider changes in 
technology or consumer preference as factors supporting a 
determination of serious damage or actual threat thereof.
    Section 322(b) authorizes the President, in the event of an 
affirmative determination of serious damage or actual threat 
thereof, to provide import relief to the extent that the 
President determines necessary to remedy or prevent the serious 
damage and to facilitate adjustment by the domestic industry to 
import competition. Section 322(b) also specifies the nature of 
the import relief that the President may impose, to consist of 
an increase in the rate of duty imposed on the textile or 
apparel article to a level that does not exceed the lesser of: 
the normal trade relation/most-favored-nation (NTR/MFN) duty 
rate in place for like articles at the time the import relief 
is provided, or, the NTR/MFN duty rate for like articles on the 
day before the date on which the United States-Chile Free Trade 
Agreement enters into force.

Sec. 323. Period of Relief

    This section provides that the period for import relief in 
a textile and apparel safeguard action, including any extension 
of such import relief, shall not exceed 3 years. If the initial 
period for import relief is less than 3 years, the President 
may extend the effective period of such relief if the President 
determines that the import relief continues to be necessary to 
remedy or prevent serious damage and to facilitate adjustment 
to import competition, and that there is evidence that the 
domestic industry is making a positive adjustment to import 
competition.

Sec. 324. Articles Exempt From Relief

    This section precludes the President from providing import 
relief under the textile and apparel safeguard provision with 
respect to any article to which import relief has already been 
provided under the textile and apparel safeguard provision.

Sec. 325. Rate After Termination of Import Relief

    This section provides that upon termination of import 
relief under the textile and apparel safeguard, the rate of 
duty on such article shall be duty-free.

Sec. 326. Termination of Relief Authority

    This section provides that the President's authority to 
provide relief under the textile and apparel safeguard 
provision terminates after the date that is 8 years after the 
date on which duties on the article are eliminated pursuant to 
the United States-Chile Free Trade Agreement.

Sec. 327. Compensation Authority

    This section authorizes the President, under section 123 of 
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant Chile new 
concessions as compensation for the imposition of import relief 
in a textile and apparel safeguard proceeding, in order to 
maintain the general level of reciprocal concessions.

Sec. 328. Business Confidential Information

    This section precludes the President from releasing 
information that the President considers to be confidential 
business information unless the party submitting the 
confidential business information had notice, at the time of 
submission, that such information would be released by the 
President, or such party subsequently consents to the release 
of the information. This section also provides that, to the 
extent business confidential information is provided, a 
nonconfidential version of the information shall also be 
provided in which the business confidential information is 
summarized or, if necessary, deleted.

             TITLE IV. TEMPORARY ENTRY OF BUSINESS PERSONS

    Sections 401 through 404 implement Chapter 14 of the 
Agreement with respect to providing for the temporary entry of 
business persons. These provisions are more fully addressed in 
Part II, Report of the Committee on the Judiciary.

                        E. CONGRESSIONAL ACTION

    On November 29, 2000, President William J. Clinton 
announced that the United States and Chile had agreed to 
negotiate a bilateral free trade agreement. On December 6, 
2000, the two countries commenced negotiations. On October 1, 
2002, President George W. Bush notified the Congress of ongoing 
negotiations with Chile on a free trade agreement. On December 
11, 2002, the United States Trade Representative (USTR) 
announced that the United States and Chile had successfully 
concluded negotiations for the United States-Chile Free Trade 
Agreement. On January 29, 2003, President Bush notified 
Congress of his intention to enter into the Agreement. The 
Agreement was signed on June 6, 2003, by USTR Robert B. 
Zoellick and Chilean Foreign Minister Soledad Alvear. The 
Administration informally submitted draft implementing 
legislation to the 108th Congress in June 2003.
    On June 10, 2003, the House Ways and Means Committee, 
Subcommittee on Trade, held a hearing on the implementation of 
the bilateral Free Trade Agreements with Chile and Singapore. 
The Subcommittee received testimony from the Hon. Earl 
Blumenauer (Representative in Congress from the State of 
Oregon); the Hon. Pete Sessions (Representative in Congress 
from the State of Texas); the Hon. Judy Biggert (Representative 
in Congress from the State of Illinois); the Hon. Peter F. 
Allgeier (Deputy United States Trade Representative); E. Leon 
Trammell (founder and chief executive officer, Tramco, 
Incorporated, on behalf of the U.S. Chamber of Commerce); Jeff 
Jacobs (president, Global Business Development, QUALCOMM, 
Incorporated); Keith Gottfried (senior vice president and 
general counsel, Borland Software Corporation, on behalf of the 
Business Software Alliance); Bob Haines (manager, International 
Relations, Exxon Mobil Corporation, and co-chair, U.S.-
Singapore Free Trade Agreement Business Coalition); Joseph 
Papovich (senior vice president, international, Recording 
Industry Association of America, on behalf of the Entertainment 
Industry Coalition for Free Trade); David Spence (managing 
director, regulatory and industry affairs, Legal Department, 
Federal Express, and chairman, Trade Committee, Air Courier 
Conference of America); Gawain Kripke (senior policy advisor, 
Oxfam America); Thea M. Lee (chief international economist, 
American Federation of Labor and Congress of Industrial 
Organizations); John Audley (senior associate and director, 
Project on Trade, Equity, and Development, Carnegie Endowment 
for International Peace).
    On June 17, 2003, the Senate Committee on Finance held a 
public hearing on the implementation of the bilateral Free 
Trade Agreements with Chile and Singapore. The Committee 
received testimony from the Hon. Peter Allgeier (Deputy United 
States Trade Representative); Norman Sorensen (president, 
Principal International Incorporated, on behalf of the 
Coalition of Service Industries); James Jarrett (vice president 
for worldwide government affairs, Intel Corporation, on behalf 
of the Business Software Alliance and the High Tech Trade 
Coalition); Jeffrey Shafer (managing director, Citigroup, on 
behalf of the U.S.-Singapore Free Trade Agreement Business 
Coalition); Sandra Polaski (senior associate, Carnegie 
Endowment for International Peace); Larry Liebenow (president 
and chief executive officer, Quaker Fabric Corporation, and 
chairman of the executive committee of the U.S. Chamber of 
Commerce); Jon Caspers (Pleasant Valley Pork Corporation, and 
president of the National Pork Producers Council); Keith Schott 
(Bar Four F Ranch Incorporated, and treasurer, Montana Grain 
Growers Association); David Johnson (executive vice president 
and general counsel, Warner Music Group, on behalf of the 
Entertainment Industry Coalition for Free Trade); and Paul 
Joffe (senior director for international affairs, National 
Wildlife Federation).
    On July 10, 2003, the Senate Committee on Finance conducted 
an informal consideration of the implementing language 
submitted by the Administration. During the informal 
consideration, Senators Thomas and Conrad sought clarification 
on the sugar provisions of the Agreement. In subsequent 
correspondence, Ambassador Zoellick clarified that each Party 
agreed that its access to the other's market under the 
Agreement will be limited to the amount of its net trade 
surplus in specified sugar products. The House Ways and Means 
Committee and the House Judiciary Committee conducted their 
informal considerations of the implementing language on July 
10, 2003, respectively. On July 14, 2003, the Senate Judiciary 
Committee notified an informal consideration of the 
Administration's implementing language.
    On July 15, 2003, the Administration formally transmitted 
to Congress the implementing legislation for the United States-
Chile Free Trade Agreement. On July 15, 2003, Senator Charles 
E. Grassley introduced legislation in the Senate (S. 1416), 
with Senators Max Baucus and William Frist as cosponsors, to 
implement the Agreement. Congressman Tom DeLay, with 
Congressman Charles Rangel as a cosponsor, both by request, 
introduced the identical legislation in the House (H.R. 2738), 
on July 15, 2003.
    On July 14, 2003, the Senate Judiciary Committee held a 
public hearing on draft implementing legislation for the 
proposed United States-Chile Free Trade Agreement. The 
Committee received testimony from Regina Vargo (Assistant 
United States Trade Representative for the Americas), and Ralph 
Ives (Assistant United States Trade Representative for 
Southeast Asia, Pacific, and APEC Affairs).
    On July 17, 2003, the Senate Committee on Finance 
unanimously reported out S. 1416, a bill to implement the 
United States-Chile FTA by a vote of 21-0. The House Ways and 
Means Committee also favorably reported out H.R. 2738 on July 
17, 2003, by a vote of 33-5. On the same day, the Senate 
Judiciary Committee also favorably reported out the measure by 
a vote of 11-4. The House Judiciary Committee favorably voted 
out the measure on July 16, 2003, with a voice vote.

             F. VOTE OF THE COMMITTEE IN REPORTING THE BILL

    In compliance with section 133 of the Legislative 
Reorganization Act of 1946, the Committee states that S. 1416 
was ordered favorably reported, without amendment, by a 
unanimous recorded vote with a quorum present on July 17, 2003.

                 G. REGULATORY IMPACT AND OTHER MATTERS

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill will not significantly regulate any individuals or 
businesses, willnot affect the personal privacy of individuals, 
and will result in no significant additional paperwork.
    The following information is provided in accordance with 
section 423 of the Unfunded Mandates Reform Act of 1995 (Pub. 
L. No. 104-4). The committee has reviewed the provisions of S. 
1416 as approved by the Committee on July 17, 2003. In 
accordance with the requirement of Pub. L. No. 104-4, the 
Committee has determined that the bill contains no 
intergovernmental mandates, as defined in the UMRA, and would 
not affect the budgets of State, local, or tribal governments.

           Part II. Report of the Committee on the Judiciary


                             A. BACKGROUND

    As provided in Article 14.1 et seq. and Annex 14.3, the 
United States-Chile Free Trade Agreement (FTA) creates separate 
categories of entry for citizens of each country to engage in a 
wide range of business and investment activities on a temporary 
basis. The FTA addresses four specific categories of temporary 
nonimmigrant admissions currently governed by U.S. immigration 
law. They are: business visitors, treaty traders and investors, 
intra-company transfers, and professional workers. These 
categories parallel the visa categories commonly referred to by 
the letter and numeral that denotes their subsection in 
Sec. 101(a)(15) of the Immigration and Nationality Act: B-1 
visitors, E treaty traders and investors, L-1 intra-company 
transferees, and H-1B professional workers.
    B-1 nonimmigrants are visitors for business purposes and 
are required to be seeking admission for activities other than 
purely employment or hire. The difference between a business 
visitor and a temporary worker depends also on the source of 
the alien's salary. To be classified as a visitor for business, 
an alien must receive his or her salary from abroad and must 
not receive any remuneration from a U.S. source other than an 
expense allowance and reimbursement for other expenses 
incidental to temporary stay.
    Foreign nationals who are treaty traders enter on the E-1 
visa, while those who are treaty investors use the E-2 visa. 
Treaty trader is defined as one who seeks temporary admission 
to the United States solely to carry on substantial trade, 
including trade in services or trade in technology, principally 
between the United States and the foreign state of which he/she 
is a national. Treaty investor is defined as one who seeks 
temporary admission to the United States solely to develop and 
direct the operations of an enterprise in which he/she has 
invested, or of an enterprise in which he/she is actively in 
the process of investing a substantial amount of capital.
    Intracompany transferees who work for an international firm 
or corporation in executive and managerial positions or have 
specialized product knowledge are admitted on L-1 visas. The 
prospective L-1 nonimmigrant must demonstrate that he or she 
meets the qualifications for the particular job as well as the 
visa category. The alien must have been employed by the firm 
for at least 6 months in the preceding 3 years in the capacity 
for which the transfer is sought.
    Foreign nationals seeking H-1B visas for professional 
specialty workers go through a 2-step admissions process. Using 
a streamlined form of the Labor Condition Application (LCA) 
known as labor attestation, employers wishing to bring in an H-
1B professional foreign worker first must attest in an 
application to the U.S. Department of Labor (DOL) that the 
employer will pay the nonimmigrant the greater of the actual 
wages paid other employees in the same job or the prevailing 
wages for that occupation; the employer will provide working 
conditions for the nonimmigrant that do not cause the working 
conditions of the other employees to be adversely affected; 
and, there is no strike or lockout. Firms categorized as H-1B 
dependent (generally if at least 15 percent of the workforce 
are H-1B workers) must also attest that they have attempted to 
recruit U.S. workers and that they have not laid off U.S. 
workers 90 days prior to or after hiring any H-1B 
nonimmigrants. The prospective H-1B nonimmigrants then must 
demonstrate that they have the requisite education and work 
experience for the posted positions as well as a baccalaureate 
degree (or equivalent experience) necessary to be considered a 
professional specialty worker. The admission of H-1B 
nonimmigrants is numerically limited, with a statutory cap of 
65,000 that is temporarily increased to 195,000 through FY2003.

     B. IMPLEMENTING LEGISLATION ON TEMPORARY PROFESSIONAL WORKERS

    The USTR's legislation that would implement the Chile 
agreement was introduced July 15, 2003, as S. 1416. Title IV of 
this bill would amend several sections of the Immigration and 
Nationality Act. Foremost, the bills would amend 
Sec. 101(a)(15)(H) of INA to carve out a portion of the H-1B 
visas--to be designated the H-1B-1 visa--for professional 
workers entering through the FTAs. In many ways the proposed 
FTA professional worker visa requirements parallel the H-1B 
visa requirements, notably having similar educational 
requirements. Although the implementing language, for the 
purpose of consistency with the actual FTA, requires 
``specialized knowledge'' instead of ``highly specialized 
knowledge'' as stated in the current H-1B statute, the 
Administration's Statement of Administrative Action (SAA) 
clearly instructs that specialized knowledge and highly 
specialized knowledge are to be treated similarly. The bill 
also amends Sec. 212 of INA to add a labor attestation 
requirement for employers bringing in potential FTA 
professional workers that is similar to the H-1B labor 
attestation statutory requirements. The additional attestation 
requirements for ``H-1B dependent employers'' currently 
specified in Sec. 212 are not included in the labor attestation 
requirements for employers of the proposed FTA professional 
workers. The Administration omitted some of the requirements 
that are due to ``sunset'' at the end of FY 2003 because it did 
not know whether the provisions will continue after the current 
fiscal year, and did not wish to impose harsher conditions on 
trade partners than the United States currently imposes on 
other nations. However, nothing in the implementing language 
precludes application of future restrictions on these FTA visas 
so long as the restrictions do not conflict with the underlying 
terms of the FTA.
    S. 1416 contains numerical limits of 1,400 new entries 
under the proposed FTA professional worker visa from Chile. The 
bill does not limit the number of times that an alien may renew 
the FTA professional worker visa on an annual basis, unlike H-
1B workers who are limited to a total of 6 years. However, the 
bar on immigrant intent under INA Sec. 214(b) applies here, 
whereas such ban does not apply to H-1B visa holders. This 
means that a holder of theFTA visa must show that he or she 
intends to return to Chile and has maintained substantial ties to 
Chile. Otherwise, the United States government may deny the renewal 
request. H-1B visa holders may intend to remain permanently in the 
United States.
    There is also a numerical limitation on the entry of 
professional workers. The legislation limits the number of 
Chilean professional workers coming into the United States to 
1,400 annually. Further, the Secretary of Homeland Security may 
set a cap lower than the 1,400 limit for any given year. Each 
FTA professional worker visa granted is charged against the 
total H-1B cap, whether it remains at 195,000, goes down to 
65,000, or if a new cap is set after the current law sunsets. 
Moreover, after the fifth year, a number is charged against the 
overall H1-B cap for each year that the FTA professional worker 
visa is extended.
    There is little debate on the investor (E) and business 
visitor (B-1) visa provisions of the FTA. Some members of the 
Committee have criticized that the intra-company transferee (L-
1) provisions of the FTA do not permit labor certification or 
numerical limitations to be placed on these visas. However, 
neither the FTA nor S. 1416 precludes imposition of conditions 
that would be intended to thwart fraud or to punish fraudulent 
use of this visa category.

                     C. JUDICIARY COMMITTEE ACTION

    On July 14, 2003, the Judiciary Committee held a hearing on 
the temporary entry provisions of the FTAs with Chile and 
Singapore. The USTR provided two witnesses, Regina Vargo and 
Ralph Ives, who were the lead negotiators with Chile and 
Singapore, respectively.
    At the hearing, members of this Committee expressed serious 
concerns about the propriety of using trade agreements as the 
vehicle to enter into immigration agreements with foreign 
countries. The concerns were shared by Republican as well as 
Democrat senators.
    On July 15, 2003, the Administration transmitted the entire 
implementing language for the two trade agreements, including 
the provisions for temporary entry of professional workers, 
business visitors, intra-company transferees, and investors.
    On July 17, 2003, at an Executive Business Meeting of the 
Judiciary Committee, the members discussed the temporary entry 
provisions of both trade agreements. There was a bipartisan 
sentiment the trade agreements were not the appropriate vehicle 
to negotiate immigration provisions, and that such agreements 
usurped the prerogative of Congress to legislate immigration 
law. Despite the general displeasure, the Committee voted in 
favor of the temporary entry provisions.
    The Committee voted in the following manner for both the 
Chile and the Singapore agreements:


                   YES                                   NO                                   PASS

Mr. Hatch                             Mr. Sessions                         Mr. Leahy
Mr. Grassley                          Mr. Kohl                             Mr. Biden
Mr. Specter                           Mrs. Feinstein                       Mr. Durbin
Mr. Kyl                               Mr. Feingold                         Mr. Edwards
Mr. DeWine
Mr. Graham
Mr. Craig
Mr. Cornyn
Mr. Chambliss
Mr. Kennedy
Mr. Schumer


                    II. BUDGETARY IMPACT OF THE BILL


               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

S. 1416--A bill to implement the United States-Chile Free Trade 
        Agreement

    Summary: S. 1416 would approve the free trade agreement 
(FTA) between the government of the United States and the 
government of Chile that was entered into on June 6, 2003. It 
would provide for tariff reductions and other changes in law 
related to implementation of the agreement, such as provisions 
dealing with dispute settlement, rules of origin, and safeguard 
measures for textile and apparel industries. The bill also 
would allow the temporary entry of certain business persons 
into the United States.
    The Congressional Budget Office estimates that enacting the 
bill would reduce revenues by $5 million in 2004, by $38 
million over the 2004-2008 period, and by $109 million over the 
2004-2013 period, net of income and payroll tax offsets. The 
bill would not have a significant effect on direct spending or 
spending subject to appropriation. CBO has determined that S. 
1416 contains no intergovernmental or private-sector mandates 
as defined in the Unfunded Mandates Reform Act (UMRA) and would 
not affect the budgets of state, local, or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1416 is shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2004     2005     2006     2007     2008
----------------------------------------------------------------------------------------------------------------
                                             CHANGES IN REVENUES \1\

Reductions in tariff rates.........................................       -5       -7       -8       -9      -10
Civil penalties for attestation violations.........................        *        *        *        *        *
                                                                    --------------------------------------------
      Total........................................................       -5       -7       -8       -9      -10
----------------------------------------------------------------------------------------------------------------
\1\ S. 1416 also would affect direct spending and spending subject to appropriation, but the amounts of those
  changes would be less than $500,000 a year.

 Note.--*=Less than $500,000.

Basis of estimate

                                REVENUES

    Under the United States-Chile agreement, all tariffs on 
U.S. imports from Chile would be phased out over time. The 
Tariffs would be phased out for individual products at varying 
rates according to one of the several different timetables 
ranging from immediate elimination to partial elimination over 
10 years. According to the U.S. International Trade Commission 
(USITC), the U.S. collected $24 million in customs duties in 
2002 on about $3.6 billion of imports from Chile. These imports 
consist mostly of edible fruits and nuts, articles of wood or 
copper, fish and crustaceans, and certain organic chemicals. 
Based on these data, CBO estimates that phasing out tariffs 
rates as outlined in the U.S.-Chile agreement would reduce 
revenues by $5 million in 2004, by $38 million over the 2004-
2008 period, and by $109 million over the 2004-2013 period, net 
of income and payroll tax offsets.
    This estimate includes the effects of increased imports 
from Chile that would result from the reduced prices of 
imported products in the United States, reflecting the lower 
tariff rates. It is likely that some of the increase in U.S. 
imports from Chile would displace imports from other countries. 
In the absence of specific data on the extent of this 
substitution effect, CBO assumes that an amount equal to one-
half of the increase in U.S. imports from Chile would displace 
imports from other countries.
    S. 1416 would also allow the Secretary of Labor to assess 
civil monetary penalties on employers for violations of the 
labor attestation process with respect to certain workers from 
Chile. CBO expects that any additional revenues collected as a 
result would amount to less than $500,000 in any year.
            Direct spending
    Title IV of the bill would establish a new nonimmigrant 
category for certain professional workers from Chile. The 
legislation would limit the number of annual entries under this 
category to 1,400, plus spouses and children. The Bureau of 
Citizenship and Immigration Services (BCIS) would charge fees 
of about $100 to provide nonimmigrant visas, so CBO estimates 
that the agency would collect less than $1 million annually in 
offsetting receipts (a credit against direct spending). The 
agency is authorized to spend such fees without further 
appropriation, so the net impact on BCIS spending would not be 
significant.
    Under current law, the Department of State also collects 
$100 application fee for nonimmigrant visas. These collections 
are spent on border security and consular functions. CBO 
estimates that the net budgetary impact would be less than 
$500,000 a year.
            Spending subject to appropriation
    Title I of S. 1416 would authorize the appropriation the 
necessary funds for the Department of Commerce to pay the 
United States' share of the costs of the dispute settlement 
procedures established by the agreement. Based on information 
from the agency, CBO estimates that implementing this provision 
would cost $100,000 in 2004, and $250,000 in each of the 
following years, subject to the availability of appropriated 
funds.
    Title III would require the International Trade Commission 
(ITC) to investigate claims of injury to domestic industries as 
a result of the FTA. The ITC would have 120 days to determine 
whether a domestic industry has been injured, and if so, would 
recommend the necessary amount of import relief. The ITC would 
also submit a report on its determination to the President. 
According to the ITC, similar FTAs have resulted in only a 
handful of cases each year, at an average cost of about 
$200,000 per investigation. Based on this information, CBO 
estimates the bill would have no significant effect on spending 
subject to appropriation.
    Summary of effect on revenues and direct spending: The 
overall effects of S. 1416 on revenues and direct spending are 
shown in the following table.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          By fiscal year, in millions of dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   2003    2004    2005    2006    2007    2008    2009    2010    2011    2012    2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts.............................................       0      -5      -7      -8      -9     -10     -11     -13     -14     -16     -18
Changes in outlays..............................................       *       *       *       *       *       *       *       *       *       *      *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--*=Less than $500,000.

    Intergovernmental and private-sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Revenues: Annabelle Bartsch. 
Federal spending: Dispute Settlements--Melissa Zimmerman; 
Immigration--Mark Grabowicz, Christi Hawley-Sadoti, and Sunita 
D'Monte. Impact on State, Local, and Tribal Governments: 
Melissa Merrell. Impact on the Private Sector: Paige Piper/
Bach.
    Estimate approved by: G. Thomas Woodward, Assistant 
Director for Tax Analysis; and Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                         III. ADDITIONAL VIEWS

                              ----------                              


            ADDITIONAL VIEWS OF SENATORS FEINSTEIN AND LEAHY

    Article 14.1 et seq. and Annex 14.3 of the United States-
Chile Free Trade Agreement (FTA) contains provisions governing 
the temporary entry of foreign nationals from Chile. 
Specifically, the agreement would require the United States to 
grant temporary entry to business persons under categories that 
parallel four nonimmigrant visa categories: the B-1 business 
visitor visa, E-1 treaty trader or investor visa, the L-1 
intra-company transfer visa, and the H-1b professional visa. 
With the exception of the H-1b visa equivalent, the trade 
agreement does not impose numerical limits on the number of 
nonimmigrant visas that may be issued in a given year. In fact, 
the trade agreement expressly prohibits numerical limits on the 
visa categories. In addition, neither party to the agreement 
would be permitted to impose labor certification tests or other 
similar conditions of entry upon foreign nationals of Chile.
    On July 15, 2003, despite concerns expressed by members of 
Congress over the immigration provisions, the President 
transmitted to Congress legislation to implement the U.S.-Chile 
agreement. The legislation was subsequently introduced in the 
Senate as S.1416. Title IV of the legislation establishes a new 
H-1B(1) category for the temporary entry of foreign 
professionals from Chile.

  BINDING IMMIGRATION POLICY SHOULD NOT BE ENACTED IN TRADE AGREEMENTS

    Trade agreements are not the appropriate vehicle for 
broadening or constraining immigration policy. Such agreements 
are meant to have a permanent impact. They cannot be amended or 
modified by subsequent legislation, should Congress choose for 
other compelling reasons to alter those provisions. The end 
result would be a patchwork of inconsistent immigration laws 
that may not serve our national interest.
    The authority to establish immigration laws and policies 
has historically rested with Congress. Article I, section 8, 
clause 4 of the Constitution provides that Congress shall have 
power to ``establish a uniform Rule of Naturalization.'' The 
Supreme Court has long interpreted this provision of the 
Constitution to grant Congress plenary power over immigration 
policy.
    As the Court found in Galvan v. Press, 347 U.S. 522, 531 
(1954), ``that the formulation of policies [pertaining to the 
entry of aliens and their right to remain here] is entrusted 
exclusively to Congress has become about as firmly imbedded in 
the legislative and judicial tissues of our body politic as any 
aspect of our government.'' And, as the Court found in 
Kleindienst v. Mandel, 408 U.S. 753, 766 (1972) (quoting 
Boutilier v. INS, 387 U.S. 118, 123 (1967)), ``[t]he Court 
without exception has sustained Congress' `plenary power to 
make rules for the admission of aliens and to exclude those who 
possess those characteristics which Congress has forbidden.' ''
    The practice of trading immigration visas for business 
opportunities restricts the ability of Congress to legislate 
and the Executive Branch to administer U.S. immigration law and 
protect the interests of American and immigrant workers. 
Moreover, such agreements usually involve negotiating legally 
binding provisions that limit the ability of policymakers to 
correct abuses or deficiencies in our immigration system.
    Because the Office of the United States Trade 
Representative has agreed to binding commitments on the 
movement of people, congressional measures to correct abuses in 
a given visa program could be deemed inconsistent with the 
U.S.'s obligations under the agreement, and thus, subject to 
penalty. Without express authority from Congress, the U.S. 
Trade Representative should not be permitted to negotiate new 
visa categories and impose new obligations on our temporary 
entry system in the trade agreements.

THE UNITED STATES TRADE REPRESENTATIVE HAS NOT DEMONSTRATED A NEED FOR 
                 ADDITIONAL TEMPORARY ENTRY PROVISIONS

    Our current immigration laws accommodate the entry of 
foreign workers, providing employers access to a broad range of 
temporary professionals. Each year, hundreds of thousands of 
visas are issued to temporary workers and their family members. 
The growth in the number of foreign professionals admitted for 
temporary stays reflects global economic trends.
    Not only has the U.S. Trade Representative not demonstrated 
a need for negotiating the temporary entry provisions, the 
Office did not provide any evidence that current immigration 
law would be a barrier to meeting the U.S. obligation to 
further trade in goods and services. In fact, current law is 
sufficient to accommodate these obligations as evidenced by the 
millions of temporary workers that enter the United States each 
year.
    The principal nonimmigrant visa categories under which 
temporary business professionals enter are the B-1 visa for 
business visitors, the E visa for traders and investors 
entering under bilateral treaties, the H-1b for professionals 
working in specialty occupations and the L visa for 
intracompany transfers. These categories parallel the 
categories of temporary admissions under the U.S.-Chile Free 
Trade Agreement.
    In Fiscal Year 2002, 4,376,935 foreign nationals entered 
under the B-1 temporary business visitor visa; 171,368 entered 
under the E treaty-trader visa; another 313,699 entered under 
the L intracompany transfer visa; and an additional 370,490 
entered the U.S. under the H-1b professional visa. In all, the 
United States admitted a total of 5,232,492 foreign nationals 
under the current temporary visa categories.
    While the Free Trade Agreement with Chile specifically 
expresses the desire to facilitate the temporary entry of 
persons fitting these categories, only the E visa category 
would need to be modified in order to meet the obligations of 
the U.S. and Chile. Thus, with the possible exception of the E 
visa, no evidence has been presented to substantiate the need 
to include the temporary entry provisions in the trade 
agreement.
    Members of the Judiciary committee asked why the U.S. Trade 
Representative believed it necessary to include immigration 
provisions in a fast-tracked agreement. The Office of the 
United States Trade Representative offered the following 
response: ``The international mobility of business persons, 
whether in their personal capacity or as employees providing 
services, hasbecome an increasingly important component of 
competitive markets for suppliers and consumers alike.''
    The assertion that there is a direct link between the 
temporary entry of ``professionals'' and increased market 
access for corporations involved in foreign direct investment 
or trade in services, as the U.S. Trade Representative claims, 
is questionable. Companies that use the new professional visa 
programs would not have to be involved in international trade 
and investment in any way. They can be domestic companies, 
providing goods or services to domestic consumers. The only 
global feature about these companies is their workforce. 
Bringing in additional professionals outside of our traditional 
H-1b framework has little to do with eliminating barriers to 
services trade and foreign direct investment, and thus cannot 
be justified as a logical extension of the limited authority 
granted to the U.S. Trade Representative by the Trade Promotion 
Authority Act.

         FREE TRADE VISAS SHOULD NOT BE INDEFINITELY RENEWABLE

    Under the trade agreement, the visas for temporary business 
persons entering under all the categories in the agreement are 
indefinitely renewable. This, in effect, transforms what on 
paper is a temporary entry visa program into a permanent visa 
program.
    While the trade agreement requires professionals who enter 
under its terms count against the overall cap imposed on H-1b 
visas, each visa holder would be permitted to remain in the 
United States for an indefinite period of time. Thus, employers 
could renew their employees' visas each and every year under 
the agreements, with no limits, while also bringing in new 
entrants to fill up the annual numerical limits for new visas. 
This effectively would prevent Congress from limiting the 
duration of such visas when it is in the national interest to 
do so.

    INSUFFICIENT PROTECTIONS FOR WORKERS--BOTH DOMESTIC AND FOREIGN 
                               TEMPORARY

    Today 15.3 million people are unemployed, underemployed, or 
have given up looking for work. Of that number, 9.4 million are 
considered officially unemployed. These unemployment figures 
are the highest in almost a decade. The average person has been 
out of work nearly 20 weeks, one of the longest periods since 
1948.
    While employers are generally good actors, the provisions 
as drafted in the trade agreement would increase the number of 
temporary foreign workers exposed to exploitation and leave 
more to face an uncertain future. By making the visas 
indefinitely extendable these workers will remain in limbo with 
year-to-year extensions of their stay.
    Despite these concerns, the U.S. Trade Representative has 
seen fit to push through a free trade agreement with 
immigration provisions that significantly weaken the worker 
protections under current immigration law. The provisions would 
expand the types of occupation currently covered under H-1B to 
include: management consultants, disaster relief claims 
adjusters, physical therapists, and agricultural managers--
professions that do not require a bachelor's degree. (U.S.-
Chile Free Trade Agreement, Appendix 14.3(D)(2), p. 14-12.) Nor 
would employers be required to demonstrate a shortage of 
workers in these professions before hiring foreign nationals 
under the agreement.
    Essentially, these provisions would open the door to the 
inclusion of new occupations in the trade agreement that are 
not currently included in the H-1b program. The definition of 
``specialty occupation'' in the H-1b program is specifically 
designed to ensure that employers do not abuse the H-1b program 
to undercut American workers in occupations where there is no 
skill shortage. The H-1b program defines a ``specialty 
occupation'' as one that requires the application of a ``body 
of highly specialized knowledge.'' The free trade agreement 
with Chile and implementing legislation, on the other hand, 
broadens the definition of ``specialty occupation'' to include 
any job that requires the application ``of a body of 
specialized knowledge.'' Thus, the agreement omits the 
important qualifier that the intending foreign professional's 
knowledge be highly specialized, thus lowering the standard for 
admission. This is unacceptable.
    Moreover, unlike the provisions in the agreement, current 
law requires ``H-1b dependent'' employers seeking temporary 
workers to attest that they are actively trying to recruit U.S. 
workers for the positions filled by the foreign workers. They 
must also attest that they have not laid off U.S. workers 90 
days prior to or after hiring H-1b nonimmigrants. These 
additional requirements are not included in the agreement with 
Chile.
    Neither the free trade agreement nor the implementing 
legislation require the employer to attest and the Department 
of Labor to certify that employer has not laid off a U.S. 
worker either 90 days before or after hiring the foreign worker 
before the foreign national is permitted to enter the U.S. A 
labor certification would require the Department of Labor to 
undertake an investigation to verify that the employer's 
attestation is accurate and truthful before permitting the 
entry of the foreign national. Labor certifications are 
expressly prohibited under the trade agreement. Under the 
implementing provisions, the Labor Department may review 
attestations only for completeness and obvious inaccuracies and 
must provide the certification within seven days.
    Neither the trade agreement nor the implementing language 
provide the Department of Labor the authority to initiate 
investigations or conduct spot checks at work sites to uncover 
instances of U.S. worker displacement and other labor 
violations pertaining to the entry of foreign workers. This is 
particularly troublesome, given that in the last two fiscal 
years, the Department of Labor investigated 166 businesses with 
H-1b violations. As a result of those investigations, H-1b 
employers were required to pay more than $5 million in back pay 
awards to 678 H-1b workers. This suggests a compelling need to 
exercise greater oversight over employers reliant upon foreign 
labor.

                NO LIMITATIONS ON OTHER VISA CATEGORIES

    While the Administration has included a cap of 1,400 on the 
foreign professional visa category, there are other categories 
under which an unlimited number of foreign nationals from Chile 
could enter: the B-1 visitor visa; the E-treaty/investor visas; 
and L-1 intracompany visas (which have recently been the 
subject of investigations). None of these categories are 
numerically limited under the agreement, and once enacted, 
Congress may not subsequently impose caps on these categories 
for nationals entering pursuant to this agreement.
    Moreover, the agreement expressly prohibits the imposition 
of labor certification tests or other similar conditions on 
temporary entries under the B-1, E-1 and L-1 visa categories. 
While Congress could certainly correct some aspects of the law 
implementing the trade agreements, it would be limited in what 
it could do by the underlying trade agreement itself.
    For example, if Congress decided to better protect U.S. 
businesses and workers by amending the laws governing the L-1 
visa category to require a labor certification or a numerical 
limit before a foreign worker from Chile could enter the U.S., 
it would not be able to do so. Both are plausible options for 
dealing with perceived abuses in the visa category. The trade 
agreement with Chile states: ``Neither party may:
          (a) As a condition for temporary entry under 
        paragraph 1, require labor certifications, or other 
        procedures of similar effect; or
          (b) Impose or maintain any numerical restriction 
        relating to temporary entry under paragraph 1.'' [U.S.-
        Chile Free Trade Agreement, Chapter 14, Annex 14.3, 
        section 3, p. 14-6.]
    These provisions under the trade agreements would 
significantly limit Congress' authority to: (a) establish more 
stringent labor protections when warranted; and (b) limit the 
number of visas that could be issued to nationals of Chile, 
should it deem that it is in the national interest.
    The negotiation of temporary entry provisions demands 
Congressional oversight and input and public scrutiny, 
especially during a time when national security issues are of 
such paramount concern to us all. Congress should not 
relinquish its traditional authority over immigration power to 
any administration, to other countries or to a panel of 
international arbiters.
    Behind the abstraction, the theories, and the statistics of 
the Free Trade Agreement and its implementing provisions, there 
is one inescapable factor: the real faces of the working men 
and women of this country, and what will happen to them. For 
this reason, we dissent from the Committee's majority views on 
the temporary entry provisions of the U.S.-Chile Free Trade 
Agreement.

                                   Dianne Feinstein.
                                   Patrick J. Leahy.

                  ADDITIONAL VIEWS OF SENATOR KENNEDY

    I voted in favor of the temporary entry provisions of the 
Singapore and Chile Free Trade Agreements, but I have serious 
concerns about the inclusion of immigration provisions in trade 
agreements.
    The implementing legislation submitted to the Committee 
reflects a substantial improvement over the provisions 
originally shown to the Committee. Many of us had major 
concerns about the lack of worker protections in these 
agreements, but in the several days before S. 1416 and S. 1417 
were transmitted to Congress, bipartisan members of the House 
and Senate Judiciary Committees succeeded in making 
improvements in this legislation to strengthen these 
protections.
    The Constitution clearly gives Congress authority over 
immigration issues and trade agreements should not change 
immigration law without House and Senate approval. The Trade 
Promotion Authority process used to implement free trade 
agreements requires consultations with Congress, but not the 
approval of Congress, amendments to implementing legislation 
are prohibited after the legislation is transmitted to 
Congress.
    Although the number of workers who come to the United 
States from Chile and Singapore under these agreements will be 
relatively low, the Administration intends to negotiate similar 
agreements with Morocco, Central American nations, South 
Africa, Australia and other countries. These agreements with 
Singapore and Chile should not be allowed to become a precedent 
for the Administration to bypass Congress on immigration 
issues.
    Trade agreements are not an acceptable venue for changing 
immigration law unless appropriate approval by Congress has 
been obtained to make such changes.

                                                 Edward M. Kennedy.

                    ADDITIONAL VIEWS OF SENATOR KYL

    I voted for the entry provisions of the U.S.-Chile and 
U.S.-Singapore Free Trade Agreements because I understand the 
importance of passing the legislation to implement these 
underlying trade agreements. They would both be jeopardized if 
forced to be renegotiated. I would like to point out, however, 
that I am troubled that the U.S. Trade Representative 
negotiated the immigration provisions, and proposed substantive 
changes to immigration law, without any real input from the 
Congress.
    Broadly speaking, I am concerned that such U.S. immigration 
law was changed not just by an executive branch of the United 
States, but by other countries. It is also troubling that such 
changes were negotiated by the United States Trade 
Representative (USTR), and not by the U.S. Congress, even 
though Congress is solely responsible for regulating the 
nation's immigration policy, including the admission of foreign 
nationals. Finally, as we prepare to reauthorize the INA's 
expiring H1-B law, changes to the H1-B law included in these 
agreements could serve as an unwelcome precedent for future 
congressional negotiations on the H1-B visa policy.
    I would note on the positive side, that within the 
immigration requirements included in the treaties with Chile 
and Singapore, numerous improvements to the implementing 
legislation have been made. The agreements allow for the entry 
of 5,400 Singapore nationals and 1,400 Chile nationals to enter 
the United States under the H1-B visa. The fact that the 
proposed visa carve-outs are included in the existing H1-B 
category, and that the Chile and Singapore numbers must be 
included in the overall H1-B limit, are welcome improvements 
over the original legislation's draft. In the original 
implementing legislation draft, a separate visa category (an 
H1-B(1)) was created that would have prevented any future 
changes in our H1-B laws from affecting the proposed new visas 
for Chile and Singapore nationals. It is also good that any 
future improvements to the H1-B law will also be applicable to 
these visas. I am also pleased that the legislation requires 
that H1-B visas granted to Chile and Singapore nationals be 
included in the nation's overall H1-B cap.
    Other improvements from the original draft include a ban on 
dual intent, in that a potential employee must be able to prove 
that he intends to return home. Current H1-B visa holders do 
not have to prove that they ever intend to return home. Another 
improvement is the requirement that an attestation be completed 
by the sponsoring employer that he sought out available U.S. 
workers before offering the job to the person from Chile or 
Singapore, just as current H1-B laws require. Moreover, an 
additional attestation must be completed after the worker has 
been working here for three years, which strengthens current 
law. The legislation, unlike the original draft, also requires 
that, as does current H1-B law, a fee to be paid by the 
sponsoring employer. Other labor assurances were also included 
in the final bill.
    I am concerned, however, that the implementing legislation 
still strays from our current H1-B law in numerous ways. First, 
under current H1-B policy, workers can only adjust status twice 
and then must adjust status or depart. Workers from Chile and 
Singapore, however, will adjust annually--and, they can adjust 
annually forever. Admittedly, such workers will be required to 
prove that they intend to eventually return to home country but 
a worker could conceivably prove that every year for the next 
25 years. Such workers who seek renewal will also not be 
included in the H1-B cap until the fifth year they apply for a 
renewal of their visa.
    There is also no requirement in the implementing 
legislation that H1-B-dependent employers (15 percent or more 
H1-B workers) in the United States undergo additional 
attestational requirements before being allowed to bring in 
Chilean or Singaporian workers. Current H1-B law requires that 
H1-B-dependent employers show that they are ``actively trying 
to recruit U.S. workers and that they have not laid off workers 
in the last 90 days'' but there is no such requirement included 
for H1-B-dependent employers in the U.S.
    Immigration law is complicated, not only from a legal 
perspective, but from a social and economic perspective. The 
implementing legislation was improved a good deal before it was 
sent to us. But, changes to the immigration policies 
established by Congress should not have been a part of the 
underlying trade negotiations. I would hope that the USTR would 
commit that any future trade agreements negotiated and 
completed under its watch include minimal, and acceptable to 
Congress, changes to our immigration laws. In order to move 
these agreements forward and hopefully complete action on them 
before the August recess, I have voted them out of committee. I 
would urge, again, that in future trade negotiations that we 
concentrate on the issue of trade and leave changes to 
immigration law to the Congress to work on for the good of 
country. Thank you.

                                                           Jon Kyl.

                  ADDITIONAL VIEWS OF SENATOR SESSIONS

    The legislation that we have before use is deeply 
troubling. The U.S. Trade Representative, by implementing new 
immigration provisions in treaty negotiations, has usurped the 
role of the legislative branch, without any consent from this 
Congress.
    The inclusion of immigration provisions in the Free Trade 
Agreements with Chile and Singapore interferes with Congress' 
plenary power to regulate the nation's immigration policy. This 
power belongs to Congress alone and includes both the temporary 
and permanent admissions of foreign nationals into the United 
States.
    Article I, section 8, clause 4 of the Constitution provides 
that Congress shall have power to ``establish a uniform Rule of 
Naturalization.'' The Supreme Court has long interpreted this 
provision of the Constitution to grant Congress plenary power 
over immigration policy. As the Court found in Galvan v. Press, 
347 U.S. 522, 531 (1954), ``the formulation of policies 
[pertaining to the entry of aliens and their right to remain 
here] is entrusted exclusively to Congress has become about as 
firmly embedded in the legislative and judicial tissues of our 
body politic as any aspect of our government.'' And, as the 
Court held in Kleindienst v. Mandel, 408 U.S. 753, 766 (1972) 
(quoting Boutilier v. INS, 386 U.S. 123 (1967)), ``[t]he Court 
without exception has sustained Congress' `plenary power to 
make rules for the admission of aliens and to exclude those who 
possess those characteristics which Congress has forbidden.' ''
    As a Senator of the Committee, which has jurisdiction over 
immigration policy, it is my duty to preserve the plenary power 
of Congress to make immigration policy--I am dedicated to 
opposing any erosions of that power.
    At the hearing on Monday, the witness for the U.S. Trade 
Representative, Mrs. Regina Vargo, was asked what legal 
authority that USTR was relying on as a basis for including 
immigration law negotiations in trade treaties. The USTR 
witness responded by differentiating between temporary and 
permanent entries into the United States, stating that because 
the Chile and Singapore Free Trade Agreements only contained 
provisions regarding temporary entries of foreign persons, the 
USTR was acting within the bounds of its negotiating authority. 
This is not the case.
    By negotiating and including immigration law provisions in 
a binding bilateral treaty that Congress does not have the 
power to amend, the USTR has established a dangerous precedent 
that will not be tolerated in future trade agreements.
    It would have been especially appropriate for the USTR to 
ensure that employers who repeatedly use the visa programs 
established under the trade agreements abide by all laws 
governing the entry of the foreign workers.
    The legislation before use today makes the H-1B 
requirements under the Chile and Singapore agreements weaker 
than the requirements for other H-1B workers and may restrict 
Congress' ability to reform the L-1 visa program. Specifically, 
the legislation--
           Permits the admission of up to 5,400 
        professionals from Singapore and up to 1,400 
        professionals from Chile each year;
           Permits the almost unlimited renewal of 
        these visas each year, which could have the effect of 
        turning a temporary entry visa program into a permanent 
        visa program; and
           Permits the entry of dependent spouses and 
        children to join these professionals without their 
        entry into the U.S. being subject to a numerical cap.
    If the U.S. Trade Representative continues to negotiate 
treaty terms such as the ones before us today, I will be unable 
to support them.
    I am concerned with the current unemployment rate among 
U.S. workers and I am dedicated to preserving their jobs. The 
abuse surrounding some immigration visas is contributing to a 
record level of unemployment for U.S. high-tech workers.I 
welcome, when appropriate, foreign industries within our borders, and, 
when appropriate, I fully support foreign workers coming here to work. 
I believe the only way to protect the job market for American workers 
is to preserve Congress' plenary power to make laws that affect the 
ability of foreign workers to displace American workers from their 
jobs.
    Any provision of a future trade agreement that restricts 
the ability of this Congress to protect U.S. jobs will not be 
looked upon favorably.
    I have great respect and appreciation for both Chile and 
Singapore. They are great allies of this country and I want, 
very much, to support the Free Trade Agreements that have been 
negotiated with them. In this single instance, however, my 
support of the trade provisions of the underlying treaty 
agreements should not be read as support of the immigration 
policies included therein or included in the implementing 
legislation.
    We have seen some improvement from the provisions included 
in the initial draft, and I though the administration had heard 
our message loud and clear. The answers to written follow up 
questions, however, do not indicate that the message was clear 
enough. My support for the trade agreements should not be 
questioned, but the assertion that the USSR now has the 
authority to effectively legislate in the area of immigration 
was detrimental to my support of the immigration provisions 
included therein. I deeply desire to support Chile and 
Singapore and had fully planned on voting for the Free Trade 
Agreements at every turn. However, in light of the answers that 
we received this morning from the USTR--answers to the written 
questions submitted by Senators Feinstein, Kennedy and Graham 
after Monday's hearing--I cannot support the committee vote 
concerning the immigration provisions.
    I continue to rely fully on the verbal guarantees we have 
received that this process will not happen again in treaty 
negotiations. I look forward to working with colleagues from 
each nation, but in particular, the businessmen and women who 
are engaged in the expansion of trade between our respective 
business communities. In Alabama we are indeed fortunate that 
several company's from Singapore found opportunities which they 
developed into thriving businesses. One such business is 
located in my home town of Mobile, Alabama. Mobile Aerospace 
Engineering (MAE) is Singapore-owned, but more importantly it 
is a vibrant business employing over 1,000 local workers. MAE 
is a community leader not just in the number of its employees, 
but in its community outlook and community involvement. My 
visits have revealed that Singapore is indeed a valued economic 
partner and trusted ally.
    I believe the Governments of Singapore and Chile clearly 
understand the message my colleagues and I communicated to the 
USTR. Our commitment to trade is not diminished; our message 
however is quite clear.

                                                     Jeff Sessions.

                 ADDITIONAL VIEWS OF SENATOR CHAMBLISS

    [Excerpted from page 36 of the transcript of the hearing 
held on July 14, 2003, by the Committee on the Judiciary 
regarding the temporary entry provisions of the Free Trade 
Agreements with Chile and Singapore.]
    Senator Chambliss. Mr. Chairman, as Chairman of the 
Immigration Subcommittee, Senator Kennedy and I have a hearing 
set next week to discuss H1-B and L-1 visa programs. There is 
the potential that after that hearing and subsequent thereto 
and other hearings or whatever, we may be talking about 
reducing the numbers available under those programs, for 
various reasons.
    I think for USTR to come in and to, in effect, legislate 
immigration policy, as Senator Feinstein has said, is wrong. I 
am going to vote for it to get it out of Committee. I am not 
committed to voting for it on the floor.
    It may be that we need USTR to go back--if they are 
planning on, as this article indicates, bringing this type of 
legislation forward in every agreement they negotiate under 
Fast Track, then we have got a problem. And I think it needs to 
be addressed now with the first agreements, and USTR needs to 
know that this Subcommittee has jurisdiction over immigration 
and we intend to assert it.

                                                   Saxby Chambliss.

       IV. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  Pursuant to the requirements of paragraph 12 of rule XXVI of 
the Standing Rules of the Senate, changes in existing law made 
by the bill, 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):

TARIFF ACT OF 1930

           *       *       *       *       *       *       *


                     TITLE III--SPECIAL PROVISIONS

Part I--Miscellaneous

           *       *       *       *       *       *       *


SEC. 311. BONDED MANUFACTURING WAREHOUSES.

  All articles manufactured in whole or in part of imported 
materials, or of materials subject to internal-revenue tax, and 
intended for exportation without being charged with duty, and 
without having an internal-revenue stamp affixed thereto, 
shall, under such regulations as the Secretary of the Treasury 
may prescribe, in order to be so manufactured and exported, be 
made and manufactured in bonded warehouses similar to those 
known and designated in Treasury Regulations as bonded 
warehouses, class six: Provided, That the manufacturer of such 
articles shall first give satisfactory bonds for the faithful 
observance of all the provisions of law and of such regulations 
as shall be prescribed by the Secretary of the Treasury: 
Provided further, That the manufacture of distilled spirits 
from grain, starch, molasses, or sugar, including all dilutions 
or mixtures of them or either of them, shall not be permitted 
in such manufacturing warehouses.
  Whenever goods manufactured in any bonded warehouse 
established under the provisions of the preceding paragraph 
shall be exported directly therefrom or shall be duly laden for 
transportation and immediate exportation under the supervision 
of the proper officer who shall be duly designated for that 
purpose, such goods shall be exempt from duty and from the 
requirements relating to revenue stamps.
  No flour, manufactured in a bonded manufacturing warehouse 
from wheat imported from ninety days after the date of the 
enactment of this Act, shall be withdrawn from such warehouse 
for exportation without payment of a duty on such imported 
wheat equal to any reduction in duty which by treaty will apply 
in respect of such flour in the country to which it is to be 
exported.
  Any materials used in the manufacture of such goods, and any 
packages, coverings, vessels, brands, and labels used in 
putting up the same may, under the regulations of the Secretary 
of the Treasury, be conveyed without the payment of revenue tax 
or duty into any bonded manufacturing warehouse, and imported 
goods may, under the aforesaid regulations, be transferred 
without the exaction of duty from any bonded warehouse into any 
bonded manufacturing warehouse; but this privilege shall not be 
held to apply to implements, machinery, or apparatus to be used 
in the construction or repair of any bonded manufacturing 
warehouse or for the prosecution of the business carried on 
therein.
  Articles or materials received into such bonded manufacturing 
warehouse or articles manufactured therefrom may be withdrawn 
or removed therefrom for direct shipment and exportation or for 
transportation and immediate exportation in bond to foreign 
countries or to the Philippine Islands under the supervision of 
the officer duly designated therefor by the appropriate customs 
officer of the port, who shall certify to such shipment and 
exportation, or ladening for transportation, as the case may 
be, describing the articles by their mark or otherwise, the 
quantity, the date of exportation, and the name of the vessel: 
Provided, That the by-products incident to the processes of 
manufacture, including waste derived from cleaning rice in 
bonded warehouse under the Act of March 24, 1874, in said 
bonded warehouses may be withdrawn for domestic consumption on 
the payment of duty equal to the duty which would be assessed 
and collected by law if such waste or by-products were imported 
from a foreign country: Provided, That all waste material may 
be destroyed under Government supervision. All labor performed 
and services rendered under these provisions shall be under the 
supervision of a duly designated officer of the customs and at 
the expense of the manufacturer.
  A careful account shall be kept by the appropriate custom 
officer of all merchandise delivered by him to any bonded 
manufacturing warehouse, and a sworn monthly return, verified 
by the customs officers in charge, shall be made by the 
manufacturer containing a detailed statement of all imported 
merchandise used by him in the manufacture of exported 
articles.
  Before commencing business the proprietor of any 
manufacturing warehouse shall file with the Secretary of the 
Treasury a list of all the articles intended to be manufactured 
in such warehouse, and state the formula of manufacture and the 
names and quantities of the ingredients to be used therein.
  Articles manufactured under these provisions may be withdrawn 
under such regulations as the Secretary of the Treasury may 
prescribe for transportation and delivery into any bonded 
warehouse for the sole purpose of export therefrom: Provided, 
That cigars manufactured in whole of tobacco imported from any 
one country, made and manufactured in such bonded manufacturing 
warehouses, may be withdrawn for home consumption upon the 
payment of the duties on such tobacco in its condition as 
imported under such regulations as the Secretary of the 
Treasury may prescribe, and the payment of the internal-revenue 
tax accruing on such cigars in their condition as withdrawn, 
and the boxes or packages containing such cigars shall be 
stamped to indicate their character, origin of tobacco from 
which made, and place of manufacture.
  The provisions of section 3433 of the Revised Statutes shall, 
so far as may be practicable, apply to any bonded manufacturing 
warehouse established under this Act and to the merchandise 
conveyed therein.
  Distilled spirits and wines which are rectified in bonded 
manufacturing warehouse, class six, and distilled spirits which 
are reduced in proof and bottled in such warehouses, shall be 
deemed to have been manufactured within the meaning of this 
section, and may be withdrawn as hereinbefore provided, and 
likewise for shipment in bond to Puerto Rico, subject to the 
provisions of this section, and under such regulations as the 
Secretary of the Treasury may prescribe, there to be withdrawn 
for consumption or be rewarehoused and subsequently withdrawn 
for consumption: Provided, That upon withdrawal in Puerto Rico 
for consumption, the duties imposed by the customs laws of the 
United States shall be collected on all imported merchandise 
(in its condition as imported) and imported containers used in 
the manufacture and putting up of such spirits and wines in 
such warehouses: Provided further, That no internal-revenue tax 
shall be imposed on distilled spirits and wines rectified in 
class six warehouses if such distilled spirits and wines are 
exported or shipped in accordance with the provisions of this 
section, and that no person rectifying distilled spirits or 
wines in such warehouses shall be subject by reason of such 
rectification to the payment of special tax as a rectifier.
  No article manufactured in a bonded warehouse from materials 
that are goods subject to NAFTA drawback, as defined in section 
203(a) of the North American Free Trade Agreement 
Implementation Act, may be withdrawn from warehouse for 
exportation to a NAFTA country, as defined in section 2(4) of 
that Act, without assessment of a duty on the materials in 
their condition and quantity, and at their weight, at the time 
of importation into the United States. The duty shall be paid 
before the 61st day after the date of exportation, except that 
upon the presentation, before such 61st day, of satisfactory 
evidence of the amount of any customs duties paid to the NAFTA 
country on the article, the customs duty may be waived or 
reduced (subject to section 508(b)(2)(B)) in an amount that 
does not exceed the lesser of--
          (1) the total amount of customs duties paid or owed 
        on the materials on importation into the United States, 
        or
          (2) the total amount of customs duties paid on the 
        materials to the NAFTA country.
If Canada ceases to be a NAFTA country and the suspension of 
the operation of the United States-Canada Free-Trade Agreement 
thereafter terminates, no article manufactured in a bonded 
warehouse, except to the extent that such article is made from 
an article that is a drawback eligible good under section 
204(a) of the United States-Canada Free-Trade Agreement 
Implementation Act of 1988, may be withdrawn from such 
warehouse for exportation to Canada during the period such 
Agreement is in operation without payment of a duty on such 
imported merchandise in its condition, and at the rate of duty 
in effect, at the time of importation.
  No article manufactured in a bonded warehouse from materials 
that are goods subject to Chile FTA drawback, as defined in 
section 203(a) of the United States-Chile Free Trade Agreement 
Implementation Act, may be withdrawn from warehouse for 
exportation to Chile without assessment of a duty on the 
materials in their condition and quantity, and at their weight, 
at the time of importation into the United States. The duty 
shall be paid before the 61st day after the date of 
exportation, except that the duty may be waived or reduced by--
          (1) 100 percent during the 8-year period beginning on 
        January 1, 2004;
          (2) 75 percent during the 1-year period beginning on 
        January 1, 2012;
          (3) 50 percent during the 1-year period beginning on 
        January 1, 2013; and
          (4) 25 percent during the 1-year period beginning on 
        January 1, 2014.

SEC. 312. BONDED SMELTING AND REFINING WAREHOUSES.

  (a) * * *
  (b) The several charges against such bond may be canceled in 
whole or in part--
          (1) upon the exportation from the bonded warehouses 
        which treated the metal-bearing materials, or from any 
        other bonded smelting or refining warehouse, of a 
        quantity of the same kind of metal contained in any 
        product of smelting or refining of metal-bearing 
        materials equal to the dutiable quantity contained in 
        the imported metal-bearing materials less wastage 
        provided for in subsection (c); [except that in the 
        case of a withdrawal for exportation of such a product 
        to a NAFTA country, as defined in section 2(4) of the 
        North American Free Trade Agreement Implementation Act, 
        if any of the imported metal-bearing materials are 
        goods subject to NAFTA drawback, as defined in section 
        203(a) of that Act, the duties on the materials shall 
        be paid, and the charges against the bond canceled, 
        before the 61st day after the date of exportation; but 
        upon the presentation, before such 61st day, of 
        satisfactory evidence of the amount of any customs 
        duties paid to the NAFTA country on the product, the 
        duties on the materials may be waived or reduced 
        (subject to section 508(b)(2)(B)) in an amount that 
        does not exceed the lesser of--
                  [(A) the total amount of customs duties owed 
                on the materials on importation into the United 
                States, or
                  [(B) the total amount of customs duties paid 
                to the NAFTA country on the product, or] except 
                that--
                  (A) in the case of a withdrawal for 
                exportation of such a product to a NAFTA 
                country, as defined in section 2(4) of the 
                North American Free Trade Agreement 
                Implementation Act, if any of the imported 
                metal-bearing materials are goods subject to 
                NAFTA drawback, as defined in section 203(a) of 
                that Act, the duties on the materials shall be 
                paid, and the charges against the bond 
                canceled, before the 61st day after the date of 
                exportation; but upon the presentation, before 
                such 61st day, of satisfactory evidence of the 
                amount of any customs duties paid to the NAFTA 
                country on the product, the duties on the 
                materials may be waived or reduced (subject to 
                section 508(b)(2)(B)) in an amount that does 
                not exceed the lesser of--
                          (i) the total amount of customs 
                        duties owed on the materials on 
                        importation into the United States, or
                          (ii) the total amount of customs 
                        duties paid to the NAFTA country on the 
                        product, and
                  (B) in the case of a withdrawal for 
                exportation of such a product to Chile, if any 
                of the imported metal-bearing materials are 
                goods subject to Chile FTA drawback, as defined 
                in section 203(a) of the United States-Chile 
                Free Trade Agreement Implementation Act, the 
                duties on the materials shall be paid, and the 
                charges against the bond canceled, before the 
                61st day after the date of exportation, except 
                that the duties may be waived or reduced by--
                          (i) 100 percent during the 8-year 
                        period beginning on January 1, 2004,
                          (ii) 75 percent during the 1-year 
                        period beginning on January 1, 2012,
                          (iii) 50 percent during the 1-year 
                        period beginning on January 1, 2013, 
                        and
                          (iv) 25 percent during the 1-year 
                        period beginning on January 1, 2014, or

           *       *       *       *       *       *       *

          (4) upon the transfer of the bond charges to a bonded 
        customs warehouse other than a bonded smelting or 
        refining warehouse by physical shipment of a quantity 
        of the same kind of metal contained in any product of 
        smelting or refining equal to the dutiable quantity 
        contained in the imported metal-bearing materials less 
        wastage provided for in subsection (c), and upon 
        withdrawal from such other warehouse for exportation or 
        domestic consumption the provisions of this section 
        shall apply; [except that in the case of a withdrawal 
        for exportation of such a product to a NAFTA country, 
        as defined in section 2(4) of the North American Free 
        Trade Agreement Implementation Act, if any of the 
        imported metal-bearing materials are goods subject to 
        NAFTA drawback, as defined in section 203(a) of that 
        Act, the duties on the materials shall be paid, and the 
        charges against the bond canceled, before the 61st day 
        after the date of exportation; but upon the 
        presentation, before such 61st day, of satisfactory 
        evidence of the amount of any customs duties paid to 
        the NAFTA country on the product, the duties on the 
        materials may be waived or reduced (subject to section 
        508(b)(2)(B)) in an amount that does not exceed the 
        lesser of--
                  [(A) the total amount of customs duties owed 
                on the materials on importation into the United 
                States, or
                  [(B) the total amount of customs duties paid 
                to the NAFTA country on the product, or] except 
                that--
                  (A) in the case of a withdrawal for 
                exportation of such a product to a NAFTA 
                country, as defined in section 2(4) of the 
                North American Free Trade Agreement 
                Implementation Act, if any of the imported 
                metal-bearing materials are goods subject to 
                NAFTA drawback, as defined in section 203(a) of 
                that Act, the duties on the materials shall be 
                paid, and the charges against the bond 
                canceled, before the 61st day after the date of 
                exportation; but upon the presentation, before 
                such 61st day, of satisfactory evidence of the 
                amount of any customs duties paid to the NAFTA 
                country on the product, the duties on the 
                materials may be waived or reduced (subject to 
                section 508(b)(2)(B)) in an amount that does 
                not exceed the lesser of--
                          (i) the total amount of customs 
                        duties owed on the materials on 
                        importation into the United States, or
                          (ii) the total amount of customs 
                        duties paid to the NAFTA country on the 
                        product, and
                  (B) in the case of a withdrawal for 
                exportation of such a product to Chile, if any 
                of the imported metal-bearing materials are 
                goods subject to Chile FTA drawback, as defined 
                in section 203(a) of the United States-Chile 
                Free Trade Agreement Implementation Act, the 
                duties on the materials shall be paid, and the 
                charges against the bond canceled, before the 
                61st day after the date of exportation, except 
                that the duties may be waived or reduced by--
                          (i) 100 percent during the 8-year 
                        period beginning on January 1, 2004,
                          (ii) 75 percent during the 1-year 
                        period beginning on January 1, 2012,
                          (iii) 50 percent during the 1-year 
                        period beginning on January 1, 2013, 
                        and
                          (iv) 25 percent during the 1-year 
                        period beginning on January 1, 2014, or

           *       *       *       *       *       *       *

  (d) Upon the exportation of a product of smelting or refining 
other than refined metal the bond shall be credited with a 
quantity of metal equivalent to the quantity of metal contained 
in the product exported less the proportionate part of the 
deductions allowed for losses in determination of the bond 
charge being cancelled that would not ordinarily be sustained 
in production of the specific product exported as ascertained 
from time to time by the Secretary of the Treasury; [except 
that in the case of a withdrawal for exportation to a NAFTA 
country, as defined in section 2(4) of the North American Free 
Trade Agreement Implementation Act, if any of the imported 
metal-bearing materials are goods subject to NAFTA drawback, as 
defined in section 203(a) of that Act, charges against the bond 
shall be paid before the 61st day after the date of 
exportation; but upon the presentation, before such 61st day, 
of satisfactory evidence of the amount of any customs duties 
paid to the NAFTA country on the product, the bond shall be 
credited (subject to section 508(b)(2)(B)) in an amount not to 
exceed the lesser of--
          [(1) the total amount of customs duties paid or owed 
        on the materials on importation into the United States, 
        or
          [(2) the total amount of customs duties paid to the 
        NAFTA country on the product.] except that--
          (1) in the case of a withdrawal for exportation to a 
        NAFTA country, as defined in section 2(4) of the North 
        American Free Trade Agreement Implementation Act, if 
        any of the imported metal-bearing materials are goods 
        subject to NAFTA drawback, as defined in section 203(a) 
        of that Act, charges against the bond shall be paid 
        before the 61st day after the date of exportation; but 
        upon the presentation, before such 61st day, of 
        satisfactory evidence of the amount of any customs 
        duties paid to the NAFTA country on the product, the 
        bond shall be credited (subject to section 
        508(b)(2)(B)) in an amount not to exceed the lesser 
        of--
                  (A) the total amount of customs duties paid 
                or owed on the materials on importation into 
                the United States, or
                  (B) the total amount of customs duties paid 
                to the NAFTA country on the product; and
          (2) in the case of a withdrawal for exportation to 
        Chile, if any of the imported metal-bearing materials 
        are goods subject to Chile FTA drawback, as defined in 
        section 203(a) of the United States-Chile Free Trade 
        Agreement Implementation Act, charges against the bond 
        shall be paid before the 61st day after the date of 
        exportation, and the bond shall be credited in an 
        amount equal to--
                  (A) 100 percent of the total amount of 
                customs duties paid or owed on the materials on 
                importation into the United States during the 
                8-year period beginning on January 1, 2004,
                  (B) 75 percent of the total amount of customs 
                duties paid or owed on the materials on 
                importation into the United States during the 
                1-year period beginning on January 1, 2012,
                  (C) 50 percent of the total amount of customs 
                duties paid or owed on the materials on 
                importation into the United States during the 
                1-year period beginning on January 1, 2013, and
                  (D) 25 percent of the total amount of customs 
                duties paid or owed on the materials on 
                importation into the United States during the 
                1-year period beginning on January 1, 2014.

           *       *       *       *       *       *       *


SEC. 313. DRAWBACK AND REFUNDS.

  (a) * * *

           *       *       *       *       *       *       *

  (j) Unused Merchandise Drawback.--
          (1) * * *

           *       *       *       *       *       *       *

          (4)(A) Effective upon the entry into force of the 
        North American Free Trade Agreement, the exportation to 
        a NAFTA country, as defined in section 2(4) of the 
        North American Free Trade Agreement Implementation Act, 
        of merchandise that is fungible with and substituted 
        for imported merchandise, other than merchandise 
        described in paragraphs (1) through (8) of section 
        203(a) of that Act, shall not constitute an exportation 
        for purposes of paragraph (2).
          (B) Beginning on January 1, 2015, the exportation to 
        Chile of merchandise that is fungible with and 
        substituted for imported merchandise, other than 
        merchandise described in paragraphs (1) through (5) of 
        section 203(a) of the United States-Chile Free Trade 
        Agreement Implementation Act, shall not constitute an 
        exportation for purposes of paragraph (2). The 
        preceding sentence shall not be construed to permit the 
        substitution of unused drawback under paragraph (2) of 
        this subsection with respect to merchandise described 
        in paragraph (2) of section 203(a) of the United 
        States-Chile Free Trade Agreement Implementation Act.

           *       *       *       *       *       *       *

  [(n)] (n) Refunds, Waivers, or Reductions Under Certain Free 
Trade Agreements.--(1) For purposes of this subsection and 
subsection (o)--
          (A) * * *
          (B) the terms ``NAFTA country'' and ``good subject to 
        NAFTA drawback'' have the same respective meanings that 
        are given such terms in sections 2(4) and 203(a) of the 
        NAFTA Act; [and]
          (C) a refund, waiver, or reduction of duty under 
        paragraph (2) of this subsection or paragraph (1) of 
        subsection (o) is subject to section 508(b)(2)(B)[.]; 
        and
          (D) the term ``good subject to Chile FTA drawback'' 
        has the meaning given that term in section 203(a) of 
        the United States-Chile Free Trade Agreement 
        Implementation Act.

           *       *       *       *       *       *       *

  (4)(A) For purposes of subsections (a), (b), (f), (h), 
(j)(2), (p), and (q), if an article that is exported to Chile 
is a good subject to Chile FTA drawback, no customs duties on 
the good may be refunded, waived, or reduced, except as 
provided in subparagraph (B).
  (B) The customs duties referred to in subparagraph (A) may be 
refunded, waived, or reduced by--
          (i) 100 percent during the 8-year period beginning on 
        January 1, 2004;
          (ii) 75 percent during the 1-year period beginning on 
        January 1, 2012;
          (iii) 50 percent during the 1-year period beginning 
        on January 1, 2013; and
          (iv) 25 percent during the 1-year period beginning on 
        January 1, 2014.
  [(o)] (o) Special Rules for Certain Vessels and Imported 
Materials.--(1) For purposes of subsection (g), if--
          (A) * * *

           *       *       *       *       *       *       *

  (3) For purposes of subsection (g), if--
          (A) a vessel is built for the account and ownership 
        of a resident of Chile or the Government of Chile, and
          (B) imported materials that are used in the 
        construction and equipment of the vessel are goods 
        subject to Chile FTA drawback, as defined in section 
        203(a) of the United States-Chile Free Trade Agreement 
        Implementation Act,
no customs duties on such materials may be refunded, waived, or 
reduced, except as provided in paragraph (4).
  (4) The customs duties referred to in paragraph (3) may be 
refunded, waived or reduced by--
          (A) 100 percent during the 8-year period beginning on 
        January 1, 2004;
          (B) 75 percent during the 1-year period beginning on 
        January 1, 2012;
          (C) 50 percent during the 1-year period beginning on 
        January 1, 2013; and
          (D) 25 percent during the 1-year period beginning on 
        January 1, 2014.

           *       *       *       *       *       *       *


SEC. 508. RECORDKEEPING.

  (a) * * *
  (b) [Exportations to Free Trade Countries.--] Exportations to 
NAFTA Countries.--
          (1) * * *
          (2) Exports to nafta countries.--
                  (A) * * *
                  (B) Claims for certain waivers, reductions, 
                or refunds of duties or for credit against 
                bonds.--
                          (i) In general.--Any person that 
                        claims with respect to an article--
                                  (I) a waiver or reduction of 
                                duty under [the last paragraph 
                                of section 311] the eleventh 
                                paragraph of section 311, 
                                section 312(b)(1) or (4), 
                                section 562(2), or [the last 
                                proviso to section 3(a)] the 
                                proviso preceding the last 
                                proviso to section 3(a) of the 
                                Foreign Trade Zones Act;

           *       *       *       *       *       *       *

  (f) Certificates of Origin for Goods Exported Under the 
United States-Chile Free Trade Agreement.--
          (1) Definitions.--In this subsection:
                  (A) Records and supporting documents.--The 
                term ``records and supporting documents'' 
                means, with respect to an exported good under 
                paragraph (2), records and documents related to 
                the origin of the good, including--
                          (i) the purchase, cost, and value of, 
                        and payment for, the good;
                          (ii) if applicable, the purchase, 
                        cost, and value of, and payment for, 
                        all materials, including recovered 
                        goods, used in the production of the 
                        good; and
                          (iii) if applicable, the production 
                        of the good in the form in which it was 
                        exported.
                  (B) Chile fta certificate of origin.--The 
                term ``Chile FTA Certificate of Origin'' means 
                the certification, established under article 
                4.13 of the United States-Chile Free Trade 
                Agreement, that a good qualifies as an 
                originating good under such Agreement.
          (2) Exports to chile.--Any person who completes and 
        issues a Chile FTA Certificate of Origin for a good 
        exported from the United States shall make, keep, and, 
        pursuant to rules and regulations promulgated by the 
        Secretary of the Treasury, render for examination and 
        inspection all records and supporting documents related 
        to the origin of the good (including the Certificate or 
        copies thereof).
          (3) Retention period.--Records and supporting 
        documents shall be kept by the person who issued a 
        Chile FTA Certificate of Origin for at least 5 years 
        after the date on which the certificate was issued.
  (g) Penalties.--Any person who fails to retain records and 
supporting documents required by subsection (f) or the 
regulations issued to implement that subsection shall be liable 
for the greater of--
          (1) a civil penalty not to exceed $10,000; or
          (2) the general record keeping penalty that applies 
        under the customs laws of the United States.

           *       *       *       *       *       *       *


SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.

  (a) * * *

           *       *       *       *       *       *       *

  (g) Denial of Preferential Tariff Treatment Under United 
States-Chile Free Trade Agreement.--If the Bureau of Customs 
and Border Protection or the Bureau of Immigration and Customs 
Enforcement finds indications of a pattern of conduct by an 
importer of false or unsupported representations that goods 
qualify under the rules of origin set out in section 202 of the 
United States-Chile Free Trade Agreement Implementation Act, 
the Bureau of Customs and Border Protection, in accordance with 
regulations issued by the Secretary of the Treasury, may deny 
preferential tariff treatment under the United States-Chile 
Free Trade Agreement to entries of identical goods imported by 
that person until the person establishes to the satisfaction of 
the Bureau of Customs and Border Protection that 
representations of that person are in conformity with such 
section 202.

           *       *       *       *       *       *       *


SEC. 520. REFUNDS AND ERRORS.

  (a) * * *

           *       *       *       *       *       *       *

  [(d)] (d) Goods Qualifying Under Free Trade Agreement Rules 
of Origin.--Notwithstanding the fact that a valid protest was 
not filed, the Customs Service may, in accordance with 
regulations prescribed by the Secretary, reliquidate an entry 
to refund any excess duties (including any merchandise 
processing fees) paid on a good qualifying under the rules of 
origin set out in section 202 of the North American Free Trade 
Agreement Implementation Act or section 202 of the United 
States-Chile Free Trade Agreement Implementation Act for which 
no claim for preferential tariff treatment was made at the time 
of importation if the importer, within 1 year after the date of 
importation, files, in accordance with those regulations, a 
claim that includes--
          (1) a written declaration that the good qualified 
        under [those] the applicable rules at the time of 
        importation;
          (2) copies of all applicable NAFTA Certificates of 
        Origin (as defined in section 508(b)(1)), or other 
        certificates of origin, as the case may be; and

           *       *       *       *       *       *       *


SEC. 562. MANIPULATION IN WAREHOUSE.

  Unless by special authority of the Secretary of the Treasury, 
no merchandise shall be withdrawn from bonded warehouse in less 
quantity than an entire bale, cask, box, or other package; or, 
if in bulk, in the entire quantity imported or in a quantity 
not less than one ton weight. All merchandise so withdrawn 
shall be withdrawn in the original packages in which imported 
unless, upon the application of the importer, it appears to the 
appropriate customs officer that it is necessary to the safety 
or preservation of the merchandise to repack or transfer the 
same; except that upon permission therefor being granted by the 
Secretary of the Treasury, and under customs supervision, at 
the expense of the proprietor, merchandise may be cleaned, 
sorted, repacked, or otherwise changed in condition, but not 
manufactured, in bonded warehouses established for that purpose 
and be withdrawn therefrom--
          (1) * * *

           *       *       *       *       *       *       *

          (3) without payment of duties for exportation to any 
        foreign country other than [to a NAFTA country] to 
        Chile, to a NAFTA country, or to Canada when exports to 
        that country are subject to paragraph (4);
          (4) without payment of duties for exportation to 
        Canada (if that country ceases to be a NAFTA country 
        and the suspension of the operation of the United 
        States-Canada Free-Trade Agreement thereafter 
        terminates), but the exemption from the payment of 
        duties under this paragraph applies only in the case of 
        an exportation during the period such Agreement is in 
        operation of merchandise that--
                  (A) * * *
                  (B) is a drawback eligible good under section 
                204(a) of the United States-Canada Free-Trade 
                Agreement Implementation Act of 1988[; and]
          (5) without payment of duties for shipment to the 
        Virgin Islands, American Samoa, Wake Island, Midway 
        Island, Kingman Reef, Johnston Island or the island of 
        Guam[.]; and
          (6)(A) without payment of duties for exportation to 
        Chile, if the merchandise is of a kind described in any 
        of paragraphs (1) through (5) of section 203(a) of the 
        United States-Chile Free Trade Agreement Implementation 
        Act; and
          (B) for exportation to Chile if the merchandise 
        consists of goods subject to Chile FTA drawback, as 
        defined in section 203(a) of the United States-Chile 
        Free Trade Agreement Implementation Act, except that--
                  (i) the merchandise may not be withdrawn from 
                warehouse without assessment of a duty on the 
                merchandise in its condition and quantity, and 
                at its weight, at the time of withdrawal from 
                the warehouse with such additions to, or 
                deductions from, the final appraised value as 
                may be necessary by reason of a change in 
                condition, and
                  (ii) duty shall be paid on the merchandise 
                before the 61st day after the date of 
                exportation, except that such duties may be 
                waived or reduced by--
                          (I) 100 percent during the 8-year 
                        period beginning on January 1, 2004,
                          (II) 75 percent during the 1-year 
                        period beginning on January 1, 2012,
                          (III) 50 percent during the 1-year 
                        period beginning on January 1, 2013, 
                        and
                          (IV) 25 percent during the 1-year 
                        period beginning on January 1, 2014.

           *       *       *       *       *       *       *


SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Maximum Penalties.--
          (1) * * *

           *       *       *       *       *       *       *

          (6) Prior disclosure regarding claims under the 
        united states-chile free trade agreement.--An importer 
        shall not be subject to penalties under subsection (a) 
        for making an incorrect claim that a good qualifies as 
        an originating good under section 202 of the United 
        States-Chile Free Trade Agreement Implementation Act if 
        the importer, in accordance with regulations issued by 
        the Secretary of the Treasury, voluntarily makes a 
        corrected declaration and pays any duties owing.
          [(6)] (7) Seizure.--If the Secretary has reasonable 
        cause to believe that a person has violated the 
        provisions of subsection (a) and that such person is 
        insolvent or beyond the jurisdiction of the United 
        States or that seizure is otherwise essential to 
        protect the revenue of the United States or to prevent 
        the introduction of prohibited or restricted 
        merchandise into the customs territory of the United 
        States, then such merchandise may be seized and, upon 
        assessment of a monetary penalty, forfeited unless the 
        monetary penalty is paid within the time specified by 
        law. Within a reasonable time after any such seizure is 
        made, the Secretary shall issue to the person concerned 
        a written statement containing the reasons for the 
        seizure. After seizure of merchandise under this 
        subsection, the Secretary may, in the case of 
        restricted merchandise, and shall, in the case of any 
        other merchandise (other than prohibited merchandise), 
        return such merchandise upon the deposit of security 
        not to exceed the maximum monetary penalty which may be 
        assessed under subsection (c).

           *       *       *       *       *       *       *

  (g) False Certifications of Origin Under the United States-
Chile Free Trade Agreement.--
          (1) In general.--Subject to paragraph (2), it is 
        unlawful for any person to certify falsely, by fraud, 
        gross negligence, or negligence, in a Chile FTA 
        Certificate of Origin (as defined in section 
        508(f)(1)(B) of this Act that a good exported from the 
        United States qualifies as an originating good under 
        the rules of origin set out in section 202 of the 
        United States-Chile Free Trade Agreement Implementation 
        Act. The procedures and penalties of this section that 
        apply to a violation of subsection (a) also apply to a 
        violation of this subsection.
          (2) Immediate and voluntary disclosure of incorrect 
        information.--No penalty shall be imposed under this 
        subsection if, immediately after an exporter or 
        producer that issued a Chile FTA Certificate of Origin 
        has reason to believe that such certificate contains or 
        is based on incorrect information, the exporter or 
        producer voluntarily provides written notice of such 
        incorrect information to every person to whom the 
        certificate was issued.
          (3) Exception.--A person may not be considered to 
        have violated paragraph (1) if--
                  (A) the information was correct at the time 
                it was provided in a Chile FTA Certificate of 
                Origin but was later rendered incorrect due to 
                a change in circumstances; and
                  (B) the person immediately and voluntarily 
                provides written notice of the change in 
                circumstances to all persons to whom the person 
                provided the certificate.

           *       *       *       *       *       *       *

                              ----------                              


                 SECTION 3 OF THE ACT OF JUNE 18, 1934

          (Commonly known as the ``Foreign Trade Zones Act'')

  Sec. 3. (a) Foreign and domestic merchandise of every 
description, except such as is prohibited by law, may, without 
being subject to the customs laws of the United States, except 
as otherwise provided in this Act, be brought into a zone and 
may be stored, sold, exhibited, broken up, repacked, assembled, 
distributed, sorted, graded, cleaned, mixed with foreign or 
domestic merchandise, or otherwise manipulated, or be 
manufactured except as otherwise provided in this Act, and be 
exported, destroyed, or sent into customs territory of the 
United States therefrom, in the original package or otherwise; 
but when foreign merchandise is so sent from a zone into 
customs territory of the United States it shall be subject to 
the laws and regulations of the United States affecting 
imported merchandise: Provided, That whenever the privilege 
shall be requested and there has been no manipulation or 
manufacture effecting a change in tariff classification, the 
appropriate customs officer shall take under supervision any 
lot or part of a lot of foreign merchandise in a zone, cause it 
to be appraised and taxes determined and duties liquidated 
thereon. Merchandise so taken under supervision may be stored, 
manipulated, or manufactured under the supervision and 
regulations prescribed by the Secretary of the Treasury, and 
whether mixed or manufactured with domestic merchandise or not 
may, under regulations prescribed by the Secretary of the 
Treasury, be exported or destroyed, or may be sent into customs 
territory upon the payment of such liquidated duties and 
determined taxes thereon. If merchandise so taken under 
supervision has been manipulated or manufactured, such duties 
and taxes shall be payable on the quantity of such foreign 
merchandise used in the manipulation or manufacture of the 
entered article. Allowance shall be made for recoverable and 
irrecoverable waste; and if recoverable waste is sent into 
customs territory, it shall be dutiable and taxable in its 
condition and quantity and at its weight at the time of entry. 
Where two or more products result from the manipulation or 
manufacture of merchandise in a zone the liquidated duties and 
determined taxes shall be distributed to the several products 
in accordance with their relative value at the time of 
separation with due allowance for waste as provided for above: 
Provided further, That subject to such regulations respecting 
identity and the safeguarding of the revenue as the Secretary 
of the Treasury may deem necessary, articles, the growth, 
product, or manufacture of the United States, on which all 
internal-revenue taxes have been paid, if subject thereto, and 
articles previously imported on which duty and/or tax has been 
paid, or which have been admitted free of duty and tax, may be 
taken into a zone from the customs territory of the United 
States, placed under the supervision of the appropriate customs 
officer, and whether or not they have been combined with or 
made part, while in such zone, of other articles, may be 
brought back thereto free of quotas, duty, or tax: Provided 
further, That if in the opinion of the Secretary of the 
Treasury their identity has been lost, such articles not 
entitled to free entry by reason of noncompliance with the 
requirements made hereunder by the Secretary of the Treasury 
shall be treated when they reenter customs territory of the 
United States as foreign merchandise under the provisions of 
the tariff and internal-revenue laws in force at that time: 
Provided further, That under the rules and regulations of the 
controlling Federal agencies, articles which have been taken 
into a zone from customs territory for the sole purpose of 
exportation, destruction (except destruction of distilled 
spirits, wines, and fermented malt liquors), or storage shall 
be considered to be exported for the purpose of--
          (1) * * *

           *       *       *       *       *       *       *

Such a transfer may also be considered an exportation for the 
purposes of other Federal laws insofar as Federal agencies 
charged with the enforcement of those laws deem it advisable. 
Such articles may not be returned to customs territory for 
domestic consumption except where the Foreign-Trade Zones Board 
deems such return to be in the public interest, in which event 
the articles shall be subject to the provisions of paragraph 
1615(f) of the Tariff Act of 1930, as amended: Provided 
further, That no operation involving any foreign or domestic 
merchandise brought into a zone which operation would be 
subject to any provision or provisions of section 1807, chapter 
15, chapter 16, chapter 17, chapter 21, chapter 23, chapter 24, 
chapter 25, chapter 26, or chapter 32 of the Internal Revenue 
Code if performed in customs territory, or involving the 
manufacture of any article provided for in paragraph 367 or 
paragraph 368 of the Tariff Act of 1930, shall be permitted in 
a zone except those operations (other than rectification of 
distilled spirits and wines, or the manufacture or production 
of alcoholic products unfit for beverage purposes) which were 
permissible under this Act prior to July 1, 1949: Provided 
further, That articles produced or manufactured in a zone and 
exported therefrom shall on subsequent importation into the 
customs territory of the United States be subject to the import 
laws applicable to like articles manufactured in a foreign 
country, except that articles produced or manufactured in a 
zone exclusively with the use of domestic merchandise, the 
identity of which has been maintained in accordance with the 
second proviso of this section, may, on such importation, be 
entered as American goods returned: Provided further, That no 
merchandise that consists of goods subject to NAFTA drawback, 
as defined in section 203(a) of the North American Free Trade 
Agreement Implementation Act, that is manufactured or otherwise 
changed in condition shall be exported to a NAFTA country, as 
defined in section 2(4) of that Act, without an assessment of a 
duty on the merchandise in its condition and quantity, and at 
its weight, at the time of its exportation (or if the privilege 
in the first proviso to this subsection was requested, an 
assessment of a duty on the merchandise in its condition and 
quantity, and at its weight, at the time of its admission into 
the zone) and the payment of the assessed duty before the 61st 
day after the date of exportation of the article, except that 
upon the presentation, before such 61st day, of satisfactory 
evidence of the amount of any customs duties paid or owed to 
the NAFTA country on the article, the customs duty may be 
waived or reduced (subject to section 508(b)(2)(B) of the 
Tariff Act of 1930) in an amount that does not exceed the 
lesser of (1) the total amount of customs duties paid or owed 
on the merchandise on importation into the United States, or 
(2) the total amount of customs duties paid on the article to 
the NAFTA country: Provided further, That if Canada ceases to 
be a NAFTA country and the suspension of the operation of the 
United States-Canada Free-Trade Agreement thereafter 
terminates, with the exception of drawback eligible goods under 
section 204(a) of the United States-Canada Free-Trade Agreement 
Implementation Act of 1988, no article manufactured or 
otherwise changed in condition (except a change by cleaning, 
testing or repacking) shall be exported to Canada during the 
period such Agreement is in operation without the payment of a 
duty that shall be payable on the article in its condition and 
quantity, and at its weight, at the time of its exportation to 
Canada unless the privilege in the first proviso to this 
subsection was requested[.]: Provided, further, That no 
merchandise that consists of goods subject to Chile FTA 
drawback, as defined in section 203(a) of the United States-
Chile Free Trade Agreement Implementation Act, that is 
manufactured or otherwise changed in condition shall be 
exported to Chile without an assessment of a duty on the 
merchandise in its condition and quantity, and at its weight, 
at the time of its exportation (or if the privilege in the 
first proviso to this subsection was requested, an assessment 
of a duty on the merchandise in its condition and quantity, and 
at its weight, at the time of its admission into the zone) and 
the payment of the assessed duty before the 61st day after the 
date of exportation of the article, except that the customs 
duty may be waived or reduced by (1) 100 percent during the 8-
year period beginning on January 1, 2004; (2) 75 percent during 
the 1-year period beginning on January 1, 2012; (3) 50 percent 
during the 1-year period beginning on January 1, 2013; and (4) 
25 percent during the 1-year period beginning on January 1, 
2014.

           *       *       *       *       *       *       *

                              ----------                              


SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.

  (a) * * *
  (b) Limitations on Fees.--(1) * * *

           *       *       *       *       *       *       *

  (12) No fee may be charged under subsection (a) (9) or (10) 
with respect to goods that qualify as originating goods under 
section 202 of the United States-Chile Free Trade Agreement 
Implementation Act. Any service for which an exemption from 
such fee is provided by reason of this paragraph may not be 
funded with money contained in the Customs User Fee Account.

           *       *       *       *       *       *       *

                              ----------                              


                  SECTION 202 OF THE TRADE ACT OF 1974

SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY 
                    COMMISSION.

  (a) Petitions and Adjustment Plans.--
          (1) * * *

           *       *       *       *       *       *       *

          (8) The procedures concerning the release of 
        confidential business information set forth in section 
        332(g) of the Tariff Act of 1930 shall apply with 
        respect to information received by the Commission in 
        the course of investigations conducted under this 
        chapter, part 1 of title III of the North American Free 
        Trade Agreement Implementation Act, [and] title II of 
        the United States-Jordan Free Trade Area Implementation 
        Act, and title III of the United States-Chile Free 
        Trade Agreement Implementation Act. The Commission may 
        request that parties providing confidential business 
        information furnish nonconfidential summaries thereof 
        or, if such parties indicate that the information in 
        the submission cannot be summarized, the reasons why a 
        summary cannot be provided. If the Commission finds 
        that a request for confidentiality is not warranted and 
        if the party concerned is either unwilling to make the 
        information public or to authorize its disclosure in 
        generalized or summarized form, the Commission may 
        disregard the submission.

           *       *       *       *       *       *       *

                              ----------                              


IMMIGRATION AND NATIONALITY ACT

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                            TITLE I--GENERAL

                              definitions

  Section 101. (a) As used in this Act--
  (1) * * *

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  (15) The term ``immigrant'' means every alien except an alien 
who is within one of the following classes of nonimmigrant 
aliens--
          (A) * * *

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          (H) an alien (i)(b) subject to section 212(j)(2), who 
        is coming temporarily to the United States to perform 
        services (other than services described in subclause 
        (a) during the period in which such subclause applies 
        and other than services described in subclause (ii)(a) 
        or in subparagraph (O) or (P)) in a specialty 
        occupation described in section 214(i)(1) or as a 
        fashion model, who meets the requirements for the 
        occupation specified in section 214(i)(2) or, in the 
        case of a fashion model, is of distinguished merit and 
        ability, and with respect to whom the Secretary of 
        Labor determines and certifies to the Attorney General 
        that the intending employer has filed with the 
        Secretary an application under section [212(n)(1), or 
        (c)] 212(n)(1), or (b1) who is entitled to enter the 
        United States under and in pursuance of the provisions 
        of an agreement listed in section 214(g)(8)(A), who is 
        engaged in a specialty occupation described in section 
        214(i)(3), and with respect to whom the Secretary of 
        Labor determines and certifies to the Secretary of 
        Homeland Security and the Secretary of State that the 
        intending employer has filed with the Secretary of 
        Labor an attestation under section 212(t)(1), or (c) 
        who is coming temporarily to the United States to 
        perform services as a registered nurse, who meets the 
        qualifications described in section 212(m)(1), and with 
        respect to whom the Secretary of Labor determines and 
        certifies to the Attorney General that an unexpired 
        attestation is on file and in effect under section 
        212(m)(2) for the facility (as defined in section 
        212(m)(6)) for which the alien will perform the 
        services; or (ii)(a) having a residence in a foreign 
        country which he has no intention of abandoning who is 
        coming temporarily to the United States to perform 
        agricultural labor or services, as defined by the 
        Secretary of Labor in regulations and including 
        agricultural labor defined in section 3121(g) of the 
        Internal Revenue Code of 1954 and agriculture as 
        defined in section 3(f) of the Fair Labor Standards Act 
        of 1938 (29 U.S.C. 203(f)), of a temporary or seasonal 
        nature, or (b) having a residence in a foreign country 
        which he has no intention of abandoning who is coming 
        temporarily to the United States to perform other 
        temporary service or labor if unemployed persons 
        capable of performing such service or labor cannot be 
        found in this country, but this clause shall not apply 
        to graduates of medical schools coming to the United 
        States to perform services as members of the medical 
        profession; or (iii) having a residence in a foreign 
        country which he has no intention of abandoning who is 
        coming temporarily to the United States as a trainee, 
        other than to receive graduate medical education or 
        training, in a training program that is not designed 
        primarily to provide productive employment; and the 
        alien spouse and minor children of any such alien 
        specified in this paragraph if accompanying him or 
        following to join him;

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TITLE II--IMMIGRATION

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 Chapter 2--Qualifications for Admission of Aliens; Travel Control of 
Citizens and Aliens

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 GENERAL CLASSES OF ALIENS INELIGIBLE TO RECEIVE VISAS AND INELIGIBLE 
               FOR ADMISSION; WAIVERS OF INADMISSIBILITY

      Sec. 212. (a) * * *

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  (p)(1) In computing the prevailing wage level for an 
occupational classification in an area of employment for 
purposes of subsections [(n)(1)(A)(i)(II) and (a)(5)(A)] 
(a)(5)(A), (n)(1)(A)(i)(II), and (t)(1)(A)(i)(II) in the case 
of an employee of--
          (A) * * *

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  [(p)] (s) In determining whether an alien described in 
subsection (a)(4)(C)(i) is inadmissible under subsection (a)(4) 
or ineligible to receive an immigrant visa or otherwise to 
adjust to the status of permanent resident by reason of 
subsection (a)(4), the consular officer or the Attorney General 
shall not consider any benefits the alien may have received 
that were authorized under section 501 of the Illegal 
Immigration Reform and Immigrant Responsibility Act of 1996 (8 
U.S.C. 1641(c)).
  (t)(1) No alien may be admitted or provided status as a 
nonimmigrant under section 101(a)(15)(H)(i)(b1) in an 
occupational classification unless the employer has filed with 
the Secretary of Labor an attestation stating the following:
          (A) The employer--
                  (i) is offering and will offer during the 
                period of authorized employment to aliens 
                admitted or provided status under section 
                101(a)(15)(H)(i)(b1) wages that are at least--
                          (I) the actual wage level paid by the 
                        employer to all other individuals with 
                        similar experience and qualifications 
                        for the specific employment in 
                        question; or
                          (II) the prevailing wage level for 
                        the occupational classification in the 
                        area of employment,
                whichever is greater, based on the best 
                information available as of the time of filing 
                the attestation; and
                  (ii) will provide working conditions for such 
                a nonimmigrant that will not adversely affect 
                the working conditions of workers similarly 
                employed.
          (B) There is not a strike or lockout in the course of 
        a labor dispute in the occupational classification at 
        the place of employment.
          (C) The employer, at the time of filing the 
        attestation--
                  (i) has provided notice of the filing under 
                this paragraph to the bargaining representative 
                (if any) of the employer's employees in the 
                occupational classification and area for which 
                aliens are sought; or
                  (ii) if there is no such bargaining 
                representative, has provided notice of filing 
                in the occupational classification through such 
                methods as physical posting in conspicuous 
                locations at the place of employment or 
                electronic notification to employees in the 
                occupational classification for which 
                nonimmigrants under section 
                101(a)(15)(H)(i)(b1) are sought.
          (D) A specification of the number of workers sought, 
        the occupational classification in which the workers 
        will be employed, and wage rate and conditions under 
        which they will be employed.
  (2)(A) The employer shall make available for public 
examination, within one working day after the date on which an 
attestation under this subsection is filed, at the employer's 
principal place of business or worksite, a copy of each such 
attestation (and such accompanying documents as are necessary).
  (B)(i) The Secretary of Labor shall compile, on a current 
basis, a list (by employer and by occupational classification) 
of the attestations filed under this subsection. Such list 
shall include, with respect to each attestation, the wage rate, 
number of aliens sought, period of intended employment, and 
date of need.
  (ii) The Secretary of Labor shall make such list available 
for public examination in Washington, D.C.
  (C) The Secretary of Labor shall review an attestation filed 
under this subsection only for completeness and obvious 
inaccuracies. Unless the Secretary of Labor finds that an 
attestation is incomplete or obviously inaccurate, the 
Secretary of Labor shall provide the certification described in 
section 101(a)(15)(H)(i)(b1) within 7 days of the date of the 
filing of the attestation.
  (3)(A) The Secretary of Labor shall establish a process for 
the receipt, investigation, and disposition of complaints 
respecting the failure of an employer to meet a condition 
specified in an attestation submitted under this subsection or 
misrepresentation by the employer of material facts in such an 
attestation. Complaints may be filed by any aggrieved person or 
organization (including bargaining representatives). No 
investigation or hearing shall be conducted on a complaint 
concerning such a failure or misrepresentation unless the 
complaint was filed not later than 12 months after the date of 
the failure or misrepresentation, respectively. The Secretary 
of Labor shall conduct an investigation under this paragraph if 
there is reasonable cause to believe that such a failure or 
misrepresentation has occurred.
  (B) Under the process described in subparagraph (A), the 
Secretary of Labor shall provide, within 30 days after the date 
a complaint is filed, for a determination as to whether or not 
a reasonable basis exists to make a finding described in 
subparagraph (C). If the Secretary of Labor determines that 
such a reasonable basis exists, the Secretary of Labor shall 
provide for notice of such determination to the interested 
parties and an opportunity for a hearing on the complaint, in 
accordance with section 556 of title 5, United States Code, 
within 60 days after the date of the determination. If such a 
hearing is requested, the Secretary of Labor shall make a 
finding concerning the matter by not later than 60 days after 
the date of the hearing. In the case of similar complaints 
respecting the same applicant, the Secretary of Labor may 
consolidate the hearings under this subparagraph on such 
complaints.
  (C)(i) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, a failure to meet a condition of 
paragraph (1)(B), a substantial failure to meet a condition of 
paragraph (1)(C) or (1)(D), or a misrepresentation of material 
fact in an attestation--
          (I) the Secretary of Labor shall notify the Secretary 
        of State and the Secretary of Homeland Security of such 
        finding and may, in addition, impose such other 
        administrative remedies (including civil monetary 
        penalties in an amount not to exceed $1,000 per 
        violation) as the Secretary of Labor determines to be 
        appropriate; and
          (II) the Secretary of State or the Secretary of 
        Homeland Security, as appropriate, shall not approve 
        petitions or applications filed with respect to that 
        employer under section 204, 214(c), or 
        101(a)(15)(H)(i)(b1) during a period of at least 1 year 
        for aliens to be employed by the employer.
  (ii) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, a willful failure to meet a 
condition of paragraph (1), a willful misrepresentation of 
material fact in an attestation, or a violation of clause 
(iv)--
          (I) the Secretary of Labor shall notify the Secretary 
        of State and the Secretary of Homeland Security of such 
        finding and may, in addition, impose such other 
        administrative remedies (including civil monetary 
        penalties in an amount not to exceed $5,000 per 
        violation) as the Secretary of Labor determines to be 
        appropriate; and
          (II) the Secretary of State or the Secretary of 
        Homeland Security, as appropriate, shall not approve 
        petitions or applications filed with respect to that 
        employer under section 204, 214(c), or 
        101(a)(15)(H)(i)(b1) during a period of at least 2 
        years for aliens to be employed by the employer.
  (iii) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, a willful failure to meet a 
condition of paragraph (1) or a willful misrepresentation of 
material fact in an attestation, in the course of which failure 
or misrepresentation the employer displaced a United States 
worker employed by the employer within the period beginning 90 
days before and ending 90 days after the date of filing of any 
visa petition or application supported by the attestation--
          (I) the Secretary of Labor shall notify the Secretary 
        of State and the Secretary of Homeland Security of such 
        finding and may, in addition, impose such other 
        administrative remedies (including civil monetary 
        penalties in an amount not to exceed $35,000 per 
        violation) as the Secretary of Labor determines to be 
        appropriate; and
          (II) the Secretary of State or the Secretary of 
        Homeland Security, as appropriate, shall not approve 
        petitions or applications filed with respect to that 
        employer under section 204, 214(c), or 
        101(a)(15)(H)(i)(b1) during a period of at least 3 
        years for aliens to be employed by the employer.
  (iv) It is a violation of this clause for an employer who has 
filed an attestation under this subsection to intimidate, 
threaten, restrain, coerce, blacklist, discharge, or in any 
other manner discriminate against an employee (which term, for 
purposes of this clause, includes a former employee and an 
applicant for employment) because the employee has disclosed 
information to the employer, or to any other person, that the 
employee reasonably believes evidences a violation of this 
subsection, or any rule or regulation pertaining to this 
subsection, or because the employee cooperates or seeks to 
cooperate in an investigation or other proceeding concerning 
the employer's compliance with the requirements of this 
subsection or any rule or regulation pertaining to this 
subsection.
  (v) The Secretary of Labor and the Secretary of Homeland 
Security shall devise a process under which a nonimmigrant 
under section 101(a)(15)(H)(i)(b1) who files a complaint 
regarding a violation of clause (iv) and is otherwise eligible 
to remain and work in the United States may be allowed to seek 
other appropriate employment in the United States for a period 
not to exceed the maximum period of stay authorized for such 
nonimmigrant classification.
  (vi)(I) It is a violation of this clause for an employer who 
has filed an attestation under this subsection to require a 
nonimmigrant under section 101(a)(15)(H)(i)(b1) to pay a 
penalty for ceasing employment with the employer prior to a 
date agreed to by the nonimmigrant and the employer. The 
Secretary of Labor shall determine whether a required payment 
is a penalty (and not liquidated damages) pursuant to relevant 
State law.
  (II) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, that an employer has committed a 
violation of this clause, the Secretary of Labor may impose a 
civil monetary penalty of $1,000 for each such violation and 
issue an administrative order requiring the return to the 
nonimmigrant of any amount paid in violation of this clause, 
or, if the nonimmigrant cannot be located, requiring payment of 
any such amount to the general fund of the Treasury.
  (vii)(I) It is a failure to meet a condition of paragraph 
(1)(A) for an employer who has filed an attestation under this 
subsection and who places a nonimmigrant under section 
101(a)(15)(H)(i)(b1) designated as a full-time employee in the 
attestation, after the nonimmigrant has entered into employment 
with the employer, in nonproductive status due to a decision by 
the employer (based on factors such as lack of work), or due to 
the nonimmigrant's lack of a permit or license, to fail to pay 
the nonimmigrant full-time wages in accordance with paragraph 
(1)(A) for all such nonproductive time.
  (II) It is a failure to meet a condition of paragraph (1)(A) 
for an employer who has filed an attestation under this 
subsection and who places a nonimmigrant under section 
101(a)(15)(H)(i)(b1) designated as a part-time employee in the 
attestation, after the nonimmigrant has entered into employment 
with the employer, in nonproductive status under circumstances 
described in subclause (I), to fail to pay such a nonimmigrant 
for such hours as are designated on the attestation consistent 
with the rate of pay identified on the attestation.
  (III) In the case of a nonimmigrant under section 
101(a)(15)(H)(i)(b1) who has not yet entered into employment 
with an employer who has had approved an attestation under this 
subsection with respect to the nonimmigrant, the provisions of 
subclauses (I) and (II) shall apply to the employer beginning 
30 days after the date the nonimmigrant first is admitted into 
the United States, or 60 days after the date the nonimmigrant 
becomes eligible to work for the employer in the case of a 
nonimmigrant who is present in the United States on the date of 
the approval of the attestation filed with the Secretary of 
Labor.
  (IV) This clause does not apply to a failure to pay wages to 
a nonimmigrant under section 101(a)(15)(H)(i)(b1) for 
nonproductive time due to non-work-related factors, such as the 
voluntary request of the nonimmigrant for an absence or 
circumstances rendering the nonimmigrant unable to work.
  (V) This clause shall not be construed as prohibiting an 
employer that is a school or other educational institution from 
applying to a nonimmigrant under section 101(a)(15)(H)(i)(b1) 
an established salary practice of the employer, under which the 
employer pays to nonimmigrants under section 
101(a)(15)(H)(i)(b1) and United States workers in the same 
occupational classification an annual salary in disbursements 
over fewer than 12 months, if--
          (aa) the nonimmigrant agrees to the compressed annual 
        salary payments prior to the commencement of the 
        employment; and
          (bb) the application of the salary practice to the 
        nonimmigrant does not otherwise cause the nonimmigrant 
        to violate any condition of the nonimmigrant's 
        authorization under this Act to remain in the United 
        States.
  (VI) This clause shall not be construed as superseding clause 
(viii).
  (viii) It is a failure to meet a condition of paragraph 
(1)(A) for an employer who has filed an attestation under this 
subsection to fail to offer to a nonimmigrant under section 
101(a)(15)(H)(i)(b1), during the nonimmigrant's period of 
authorized employment, benefits and eligibility for benefits 
(including the opportunity to participate in health, life, 
disability, and other insurance plans; the opportunity to 
participate in retirement and savings plans; and cash bonuses 
and non-cash compensation, such as stock options (whether or 
not based on performance)) on the same basis, and in accordance 
with the same criteria, as the employer offers to United States 
workers.
  (D) If the Secretary of Labor finds, after notice and 
opportunity for a hearing, that an employer has not paid wages 
at the wage level specified in the attestation and required 
under paragraph (1), the Secretary of Labor shall order the 
employer to provide for payment of such amounts of back pay as 
may be required to comply with the requirements of paragraph 
(1), whether or not a penalty under subparagraph (C) has been 
imposed.
  (E) The Secretary of Labor may, on a case-by-case basis, 
subject an employer to random investigations for a period of up 
to 5 years, beginning on the date on which the employer is 
found by the Secretary of Labor to have committed a willful 
failure to meet a condition of paragraph (1) or to have made a 
willful misrepresentation of material fact in an attestation. 
The authority of the Secretary of Labor under this subparagraph 
shall not be construed to be subject to, or limited by, the 
requirements of subparagraph (A).
  (F) Nothing in this subsection shall be construed as 
superseding or preempting any other enforcement-related 
authority under this Act (such as the authorities under section 
274B), or any other Act.
  (4) For purposes of this subsection:
          (A) The term ``area of employment'' means the area 
        within normal commuting distance of the worksite or 
        physical location where the work of the nonimmigrant 
        under section 101(a)(15)(H)(i)(b1) is or will be 
        performed. If such worksite or location is within a 
        Metropolitan Statistical Area, any place within such 
        area is deemed to be within the area of employment.
          (B) In the case of an attestation with respect to one 
        or more nonimmigrants under section 
        101(a)(15)(H)(i)(b1) by an employer, the employer is 
        considered to ``displace'' a United States worker from 
        a job if the employer lays off the worker from a job 
        that is essentially the equivalent of the job for which 
        the nonimmigrant or nonimmigrants is or are sought. A 
        job shall not be considered to be essentially 
        equivalent of another job unless it involves 
        essentially the same responsibilities, was held by a 
        United States worker with substantially equivalent 
        qualifications and experience, and is located in the 
        same area of employment as the other job.
          (C)(i) The term ``lays off'', with respect to a 
        worker--
                  (I) means to cause the worker's loss of 
                employment, other than through a discharge for 
                inadequate performance, violation of workplace 
                rules, cause, voluntary departure, voluntary 
                retirement, or the expiration of a grant or 
                contract; but
                  (II) does not include any situation in which 
                the worker is offered, as an alternative to 
                such loss of employment, a similar employment 
                opportunity with the same employer at 
                equivalent or higher compensation and benefits 
                than the position from which the employee was 
                discharged, regardless of whether or not the 
                employee accepts the offer.
          (ii) Nothing in this subparagraph is intended to 
        limit an employee's rights under a collective 
        bargaining agreement or other employment contract.
          (D) The term ``United States worker'' means an 
        employee who--
                  (i) is a citizen or national of the United 
                States; or
                  (ii) is an alien who is lawfully admitted for 
                permanent residence, is admitted as a refugee 
                under section 207 of this title, is granted 
                asylum under section 208, or is an immigrant 
                otherwise authorized, by this Act or by the 
                Secretary of Homeland Security, to be employed.

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                       admission of nonimmigrants

    Sec. 214. (a) * * *
    (b) Every alien [(other than a nonimmigrant described in 
subparagraph (H)(i), (L), or (V) of section 101(a)(15))] (other 
than a nonimmigrant described in subparagraph (L) or (V) of 
section 101(a)(15), and other than a nonimmigrant described in 
any provision of section 101(a)(15)(H)(i) except subclause (b1) 
of such section) shall be presumed to be an immigrant until he 
establishes to the satisfaction of the consular officer, at the 
time of application for a visa, and the immigration officers, 
at the time of application for admission, that he is entitled 
to a nonimmigrant status under section 101(a)(15). An alien who 
is an officer or employee of any foreign government or of any 
international organization entitled to enjoy privileges, 
exemptions, and immunities under the International 
Organizations Immunities Act, or an alien who is the attendant, 
servant, employee, or member of the immediate family of any 
such alien shall not be entitled to apply for or receive an 
immigrant visa, or to enter the United States as an immigrant 
unless he executes a written waiver in the same form and 
substance as is prescribed by section 247(b).
    (c)(1) The question of importing any alien as a 
nonimmigrant under [section 101(a)(15)(H), (L), (O), or (P)(i)] 
subparagraph (H), (L), (O), or (P)(i) of section 101(a)(15) 
(excluding nonimmigrants under section 101(a)(15)(H)(i)(b1)) in 
any specific case or specific cases shall be determined by the 
Attorney General, after consultation with appropriate agencies 
of the Government, upon petition of the importing employer. 
Such petition shall be made and approved before the visa is 
granted. The petition shall be in such form and contain such 
information as the Attorney General shall prescribe. The 
approval of such a petition shall not, of itself, be construed 
as establishing that the alien is a nonimmigrant. For purposes 
of this subsection with respect to nonimmigrants described in 
section 101(a)(15)(H)(ii)(a), the term ``appropriate agencies 
of Government'' means the Department of Labor and includes the 
Department of Agriculture. The provisions of section 218 shall 
apply to the question of importing any alien as a nonimmigrant 
under section 101(a)(15)(H)(ii)(a).

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  (11)(A) Subject to subparagraph (B), the Secretary of 
Homeland Security or the Secretary of State, as appropriate, 
shall impose a fee on an employer who has filed an attestation 
described in section 212(t)--
          (i) in order that an alien may be initially granted 
        nonimmigrant status described in section 
        101(a)(15)(H)(i)(b1); or
          (ii) in order to satisfy the requirement of the 
        second sentence of subsection (g)(8)(C) for an alien 
        having such status to obtain certain extensions of 
        stay.
  (B) The amount of the fee shall be the same as the amount 
imposed by the Secretary of Homeland Security under paragraph 
(9), except that if such paragraph does not authorize such 
Secretary to impose any fee, no fee shall be imposed under this 
paragraph.
  (C) Fees collected under this paragraph shall be deposited in 
the Treasury in accordance with section 286(s).

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    (g)(1) * * *

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  (8)(A) The agreement referred to in section 
101(a)(15)(H)(i)(b1) is the United States-Chile Free Trade 
Agreement.
  (B)(i) The Secretary of Homeland Security shall establish 
annual numerical limitations on approvals of initial 
applications by aliens for admission under section 
101(a)(15)(H)(i)(b1).
  (ii) The annual numerical limitations described in clause (i) 
shall not exceed 1,400 for nationals of Chile for any fiscal 
year. For purposes of this clause, the term ``national'' has 
the meaning given such term in article 14.9 of the United 
States-Chile Free Trade Agreement.
  (iii) The annual numerical limitations described in clause 
(i) shall only apply to principal aliens and not to the spouses 
or children of such aliens.
  (iv) The annual numerical limitation described in paragraph 
(1)(A) is reduced by the amount of the annual numerical 
limitations established under clause (i). However, if a 
numerical limitation established under clause (i) has not been 
exhausted at the end of a given fiscal year, the Secretary of 
Homeland Security shall adjust upwards the numerical limitation 
in paragraph (1)(A) for that fiscal year by the amount 
remaining in the numerical limitation under clause (i). Visas 
under section 101(a)(15)(H)(i)(b) may be issued pursuant to 
such adjustment within the first 45 days of the next fiscal 
year to aliens who had applied for such visas during the fiscal 
year for which the adjustment was made.
  (C) The period of authorized admission as a nonimmigrant 
under section 101(a)(15)(H)(i)(b1) shall be 1 year, and may be 
extended, but only in 1-year increments. After every second 
extension, the next following extension shall not be granted 
unless the Secretary of Labor had determined and certified to 
the Secretary of Homeland Security and the Secretary of State 
that the intending employer has filed with the Secretary of 
Labor an attestation under section 212(t)(1) for the purpose of 
permitting the nonimmigrant to obtain such extension.
  (D) The numerical limitation described in paragraph (1)(A) 
for a fiscal year shall be reduced by one for each alien 
granted an extension under subparagraph (C) during such year 
who has obtained 5 or more consecutive prior extensions.
    (h) The fact that an alien is the beneficiary of an 
application for a preference status filed under section 204 or 
has otherwise sought permanent residence in the United States 
shall not constitute evidence of an intention to abandon a 
foreign residence for purposes of obtaining a visa as a 
nonimmigrant described in subparagraph [(H)(i)] (H)(i)(b) or 
(c), (L), or (V) of section 101(a)(15) or otherwise obtaining 
or maintaining the status of a nonimmigrant described in such 
subparagraph, if the alien had obtained a change of status 
under section 248 to a classification as such a nonimmigrant 
before the alien's most recent departure from the United 
States.
    (i)(1) [For purposes] Except as provided in paragraph (3), 
for purposes of section 101(a)(15)(H)(i)(b) and paragraph (2), 
the term ``specialty occupation'' means an occupation that 
requires--
          (A) * * *

           *       *       *       *       *       *       *

  (3) For purposes of section 101(a)(15)(H)(i)(b1), the term 
``specialty occupation'' means an occupation that requires--
          (A) theoretical and practical application of a body 
        of specialized knowledge; and
          (B) attainment of a bachelor's or higher degree in 
        the specific specialty (or its equivalent) as a minimum 
        for entry into the occupation in the United States.
  (j)(1) Notwithstanding any other provision of this Act, an 
alien who is a citizen of Canada or Mexico who seeks to enter 
the United States under and pursuant to the provisions of 
Section B, Section C, or Section D of Annex 1603 of the North 
American Free Trade Agreement, shall not be classified as a 
nonimmigrant under such provisions if there is in progress a 
strike or lockout in the course of a labor dispute in the 
occupational classification at the place or intended place of 
employment, unless such alien establishes, pursuant to 
regulations promulgated by the Attorney General, that the 
alien's entry will not affect adversely the settlement of the 
strike or lockout or the employment of any person who is 
involved in the strike or lockout. Notice of a determination 
under this [subsection] paragraph shall be given as may be 
required by paragraph 3 of article 1603 of such Agreement. For 
purposes of this [subsection] paragraph, the term ``citizen of 
Mexico'' means ``citizen'' as defined in Annex 1608 of such 
Agreement.
  (2) Notwithstanding any other provision of this Act except 
section 212(t)(1), and subject to regulations promulgated by 
the Secretary of Homeland Security, an alien who seeks to enter 
the United States under and pursuant to the provisions of an 
agreement listed in subsection (g)(8)(A), and the spouse and 
children of such an alien if accompanying or following to join 
the alien, may be denied admission as a nonimmigrant under 
subparagraph (E), (L), or (H)(i)(b1) of section 101(a)(15) if 
there is in progress a labor dispute in the occupational 
classification at the place or intended place of employment, 
unless such alien establishes, pursuant to regulations 
promulgated by the Secretary of Homeland Security after 
consultation with the Secretary of Labor, that the alien's 
entry will not affect adversely the settlement of the labor 
dispute or the employment of any person who is involved in the 
labor dispute. Notice of a determination under this paragraph 
shall be given as may be required by such agreement.

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Chapter 9--Miscellaneous

           *       *       *       *       *       *       *


   disposition of moneys collected under the provisions of this title

  Sec. 286. (a) * * *

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  (s) H-1B Nonimmigrant Petitioner Account.--
          (1) In general.--There is established in the general 
        fund of the Treasury a separate account, which shall be 
        known as the ``H-1B Nonimmigrant Petitioner Account''. 
        Notwithstanding any other section of this title, there 
        shall be deposited as offsetting receipts into the 
        account all fees collected under [section 214(c)(9).] 
        paragraphs (9) and (11) of section 214(c).

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