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110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-529

======================================================================
 
             ANDEAN TRADE PREFERENCE EXTENSION ACT OF 2008

                                _______
                                

 February 25, 2008.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5264]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 5264) to extend certain trade preference programs, 
and for other purposes, having considered the same, report 
favorably thereon with amendments and recommend that the bill 
as amended do pass.
  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Andean Trade Preference Extension Act 
of 2008''.

SEC. 2. ANDEAN TRADE PREFERENCE ACT.

  (a) Extension.--Section 208 of the Andean Trade Preference Act (19 
U.S.C. 3206) is amended by striking ``February 29, 2008'' and inserting 
``December 31, 2008''.
  (b) Treatment of Certain Apparel Articles.--Section 204(b)(3) of the 
Andean Trade Preference Act (19 U.S.C. 3203(b)(3)(B)) is amended--
          (1) in subparagraph (B)--
                  (A) in clause (iii)--
                          (i) in subclause (II), by striking ``5 
                        succeeding 1-year periods'' and inserting ``6 
                        succeeding 1-year periods''; and
                          (ii) in subclause (III)(bb), by inserting 
                        ``and for the succeeding 1-year period,'' after 
                        ``for the 1-year period beginning October 1, 
                        2007,''; and
                  (B) in clause (v)(II), by striking ``4 succeeding 1-
                year periods'' and inserting ``5 succeeding 1-year 
                periods''; and
          (2) in subparagraph (E)(ii)(II), by striking ``December 31, 
        2006'' and inserting ``December 31, 2008''.

    Amend the title so as to read:

    A bill to extend the Andean Trade Preference Act.

                            I. INTRODUCTION


                         A. Purpose and Summary

    H.R. 5264, the ``Andean Trade Preference Extension Act of 
2008,'' would extend the Andean Trade Preference Act 
(``ATPA''), as extended and expanded by the Andean Trade 
Promotion and Drug Eradication Act (``ATPDEA''), through 
December 31, 2008. These programs are currently due to expire 
on February 28, 2008.

                             B. Background

    The original Andean Trade Preference Act (P. L. 102-182), 
passed in 1991, authorized the President to grant preferential 
trade benefits to Bolivia, Colombia, Ecuador and Peru in the 
form of duty-free treatment of eligible products. The purpose 
of the program was to provide the Andean countries with legal 
economic alternatives to the cultivation and production of 
illicit narcotics. The program extended duty-free treatment to 
most products not considered import sensitive in the United 
States, for a period of 10 years.
    The ATPA program was expanded and renewed by the Andean 
Trade Promotion and Drug Eradication Act (P. L. 107-210) on 
August 6, 2002. The ATPDEA expanded trade preferences for the 
Andean countries to include approximately 700 products that 
were previously excluded under ATPA, including: certain 
textiles, apparel, footwear, articles of leather and tuna in 
airtight containers. The 2002 legislation also provided that 
ATPA/ATPDEA benefits would apply until December 31, 2006. ATPA/
ATPDEA have subsequently been extended twice, and are currently 
scheduled to expire on February 29, 2008.
    According to the U.S. International Trade Commission 
(``ITC''), trade with Andean countries has grown significantly 
under both ATPA and ATPDEA. U.S. imports from the region grew 
from $4.9 billion in 1991 to $22.5 billion in 2006. U.S. 
exports to the region have also increased during that time 
frame, tripling from 1991 to 2006. According to some estimates, 
as many as 2 million jobs may be dependent on ATPA in the 
Andean region. Secretary Rice has noted that ``there is a 
strong possibility that thousands of [these] jobs will be lost 
to Asia, possibly China,'' if the programs are not renewed.
    At the same time, both Bolivia and Ecuador have taken steps 
that raise important concerns about their treatment of foreign 
investors. For example, Bolivia passed a new mining law that 
would create an additional surtax which could result in 90% of 
company profits going to the Bolivian Government. The measure 
has negatively impacted at least one U.S.-based firm, Apex 
Silver Mines Limited, which has significant investments in 
Bolivia. Similarly, the government of Ecuador has taken actions 
against a number of U.S.-owned firms (including Occidental 
Petroleum, City Oriente, and Chevron Texaco). The current 
administrations of Bolivia and Ecuador have also engaged in 
actions and rhetoric that undermine the strong relationship the 
United States has maintained--and would like to continue to 
maintain--with both countries. The Committee notes that, at 
this time, neither country has been found to be in violation of 
ATPA/ATPDEA's eligibility criteria. Nonetheless, the Committee 
urges the Administration--in particular, the U.S. Trade 
Representative, who is responsible for monitoring these 
important criteria--to ensure that each ATPA/ATPDEA beneficiary 
country is complying fully with each of the programs' criteria.

                         C. Legislative History

    H.R. 5264 was introduced on February 7, 2008, by Chairman 
Rangel. The bill was referred to the Committee on Ways and 
Means. The bill, as introduced, would have extended the three 
preference programs scheduled to expire in 2008--ATPA/ATPDEA, 
the Caribbean Basin trade preference program (``CBTPA''), and 
the Generalized System of Preferences (``GSP'')--until 
September 30, 2010. The introduced bill would also have made 
two changes to the textile provisions of the African Growth and 
Opportunity Act (AGOA) and amended the operation of certain 
``competitive need limitation'' (``CNL'') provisions under GSP.
    On February 14, 2008, the Committee on Ways and Means met 
to consider H.R. 5264. At that time, Chairman Rangel offered an 
amendment in the nature of a substitute, which was adopted by 
voice vote. The amendment was limited to a 10-month extension 
of ATPA/ATPDEA; none of the provisions on CBTPA, GSP, or AGOA 
was retained. No other amendments were offered by any Member of 
the Committee.

                     II. SECTION-BY-SECTION SUMMARY


                         SECTION 1: SHORT TITLE

Present law

    No provision.

Explanation of provision

    Section 1 of H.R. 5264 provides that the Act may be cited 
as the ``Andean Trade Preference Extension Act of 2008''.

Reason for change

    This section names the legislation for identification 
purposes.

                 SECTION 2: ANDEAN TRADE PREFERENCE ACT

Present law

    The provisions of ATPA/ATPDEA currently expire on February 
29, 2010, with the exception of the bilateral emergency action 
provisions of Section 204(b)(3)(E)(ii)(Il) (19 U.S.C. 
3203(b)(3)(B) (E)(ii)(II), which expired on December 31, 2006.

Explanation of provision

    Section 2(a) extends the ATPA, as amended and expanded by 
the ATPDEA, until December 31, 2008. Section 2(b) makes 
necessary conforming changes to the textile provisions of ATPA/
ATPDEA and to the bilateral emergency action provisions of 
Section 204(b)(3)(E)(ii)(II) (19 U.S.C. 3203(b)(3)(B) 
(E)(ii)(II).

Reason for change

    These sections of H.R. 5264 are necessary to extend the 
provisions of the ATPA/ATPDEA until December 31, 2008.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the vote of the Committee on Ways and Means in its 
consideration of the bill H.R. 5264.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 5364, was ordered favorably reported by 
voice vote (with a quorum being present).

                           IV. BUDGET EFFECTS


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of the rule XIII of the 
Rules of the House of Representatives, the following statement 
is made concerning the effects on the budget of this bill, H.R. 
5264, as reported: The Committee agrees with the estimate 
prepared by the Congressional Budget Office (``CBO'') which is 
included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with subdivision 3(c)(2) of rule XIII of the 
Rules of the House of Representatives, the Committee states 
that the provisions of H.R. 5264 would reduce customs duty 
receipts due to lower tariffs imposed on goods from the Andean 
countries (Bolivia, Colombia, Ecuador, and Peru).

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by CBO, the following report prepared by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 22, 2008.
Hon.Charles B. Rangel,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5264, a bill to 
extend the Andean Trade Preference Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Zachary 
Epstein.
            Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).
    Enclosure.

H.R. 5264--A bill to extend the Andean Trade Preference Act

    H.R. 5264 would extend the provisions of the Andean Trade 
Preference Act (ATPA). The Congressional Budget Office (CBO) 
estimates that the bill would reduce revenues from customs 
duties by $82 million in 2008 and $37 million in 2009, totaling 
$119 million over the 2008-2009 period.
    Under the bill, the ATPA trade preferences, which are 
scheduled to expire on February 29, 2008, would be extended for 
10 months, through December 31, 2008. First enacted in 1991 and 
later expanded in 2002, the ATPA provides reduced-duty or duty-
free access to certain U.S. imports from Bolivia, Colombia, 
Ecuador, and Peru. (A free trade agreement with Peru, which is 
currently being implemented, would eventually supersede that 
country's ATPA preferences). According to the United States 
Trade Representative, about 60 percent of total U.S. imports 
from the beneficiary countries were entered under the ATPA 
program, and those imports consisted primarily of petroleum-
based products and apparel.
    CBO has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO contact for this estimate is Zachary Epstein. This 
estimate was approved by G. Thomas Woodward, Assistant Director 
for Tax Analysis.

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


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(I) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee, based on past public hearings and testimony and 
information from the Administration, concluded that it is 
appropriate and timely to consider H.R. 5264 as reported.

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

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives is 
required.

                 C. Constitutional Authority Statement

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

              D. Information Relation to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P. L. 104-4) (``UMRA''). 
The Committee has determined that the non-tax provisions of the 
bill do impose federal mandates on the private sector by 
extending the customs user fees. The aggregate costs of those 
mandates the annual threshold established in UMRA for private-
sector mandates ($131 million in 2007, adjusted annually for 
inflation) in 2015.
    The Committee has determined that the bill does not impose 
a federal intergovernmental mandate on State, local, or tribal 
governments.

                        E. Limited Tax Benefits

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the Ways and Means Committee has determined 
that the bill as reported contains no congressional earmarks, 
limited tax benefits, or limited tariff benefits within the 
meaning of that Rule.

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

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

                      ANDEAN TRADE PREFERENCE ACT


TITLE II--TRADE PREFERENCE FOR THE ANDEAN REGION

           *       *       *       *       *       *       *


SEC. 204. ELIGIBLE ARTICLES.

  (a) * * *
  (b) Exceptions and Special Rules.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Apparel articles and certain textile articles.--
                  (A) * * *
                  (B) Covered articles.--The apparel articles 
                referred to in subparagraph (A) are the 
                following:
                          (i) * * *

           *       *       *       *       *       *       *

                          (iii) Apparel articles assembled in 1 
                        or more atpdea beneficiary countries 
                        from regional fabrics or regional 
                        components.--(I) * * *
                          (II) The preferential treatment 
                        referred to in subclause (I) shall be 
                        extended in the 1-year period beginning 
                        October 1, 2002, and in each of the [5 
                        succeeding 1-year periods] 6 succeeding 
                        1-year periods, to imports of apparel 
                        articles in an amount not to exceed the 
                        applicable percentage of the aggregate 
                        square meter equivalents of all apparel 
                        articles imported into the United 
                        States in the preceding 12-month period 
                        for which data are available.
                          (III) For purposes of subclause (II), 
                        the term ``applicable percentage'' 
                        means--
                                  (aa) * * *
                                  (bb) for the 1-year period 
                                beginning October 1, 2007, and 
                                for the succeeding 1-year 
                                period, the percentage 
                                determined under item (aa) for 
                                the 1-year period beginning 
                                October 1, 2006.

           *       *       *       *       *       *       *

                          (v) Certain other apparel articles.--
                                  (I) * * *
                                  (II) Limitation.--During the 
                                1-year period beginning on 
                                October 1, 2003, and during 
                                each of the [4 succeeding 1-
                                year periods] 5 succeeding 1-
                                year periods, apparel articles 
                                described in subclause (I) of a 
                                producer or an entity 
                                controlling production shall be 
                                eligible for preferential 
                                treatment under this paragraph 
                                only if the aggregate cost of 
                                fabrics (exclusive of all 
                                findings and trimmings) formed 
                                in the United States that are 
                                used in the production of all 
                                such articles of that producer 
                                or entity that are entered and 
                                eligible under this clause 
                                during the preceding 1-year 
                                period is at least 75 percent 
                                of the aggregate declared 
                                customs value of the fabric 
                                (exclusive of all findings and 
                                trimmings) contained in all 
                                such articles of that producer 
                                or entity that are entered and 
                                eligible under this clause 
                                during the preceding 1-year 
                                period.

           *       *       *       *       *       *       *

                  (E) Bilateral emergency actions.--
                          (i) * * *
                          (ii) Rules relating to bilateral 
                        emergency action.--For purposes of 
                        applying bilateral emergency action 
                        under this subparagraph--
                                  (I) * * *
                                  (II) the term ``transition 
                                period'' in section 4 of the 
                                Annex shall mean the period 
                                ending [December 31, 2006] 
                                December 31, 2008; and

           *       *       *       *       *       *       *


SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.

  No duty-free treatment or other preferential treatment 
extended to beneficiary countries under this title shall remain 
in effect after [February 29, 2008] December 31, 2008.

                               VII. VIEWS

ADDITIONAL VIEWS ON H.R. 5264, THE ``Trade Preference Extension Act of 
                                 2008''

                            I. INTRODUCTION

    We support the Chairman's mark to H.R. 5264, which would 
extend by ten months the Andean Trade Preferences and Drug 
Eradication Act (ATPA). It will provide a bridge for Peru until 
the U.S.-Peru Trade Promotion Agreement enters into force. It 
will avoid disruption in Colombia while Congress works on 
implementing the U.S.-Colombia Trade Promotion Agreement this 
year. It will provide benefits to Ecuador and Bolivia to 
maintain stability in the region, but we will be watching 
carefully to make sure that the climate for U.S. investors in 
these two countries drastically improves--extending preferences 
for these two countries should not be seen as a validation of 
the very disturbing trade and investment practices there. We 
insist on improvement.

 II. EXTENSION OF THE ANDEAN TRADE PREFERENCES AND DRUG ERADICATION ACT

    We note that if a Member of Congress is willing to open the 
U.S. market to imports, then it makes sense for that Member to 
support two-way trade that would also benefit U.S. exporters 
through the passage of reciprocal FTAs. A reciprocal FTA would 
eliminate all uncertainty that could surround the future 
expiration of the preferences and would level the playing field 
for U.S. exporters, contributing to an improvement in the U.S. 
trade balance. For example, when the United States went from 
providing one-way access to imports from Central American 
countries to a bilateral FTA in the CAFTA, our $1.3 billion 
trade deficit with those countries has changed to a trade 
surplus of $3.7 billion.
    Congress has the opportunity to replicate that CAFTA 
success by passing the U.S.-Colombia Trade Promotion Agreement. 
The Democrat Leadership's refusal to act so far on this 
Agreement means that the U.S.-Colombia trade relationship is 
one-sided to Colombia's benefit. More than 99 percent of total 
Colombian exports to the United States are already duty-free 
(measured by tariff line) because of the preferences. By 
contrast only 2.7 percent of U.S. exports to Colombia are 
currently duty-free. More than 89 percent of Colombian 
agriculture exports to the United States are already duty-free 
(measured by tariff line) because of the preferences. No U.S. 
agriculture exports to Colombia receive duty-free treatment 
today. The average U.S. tariff paid by imports from Colombia in 
2006 was only 0.1 percent because of the preferential access to 
the U.S. market. In contrast, the average tariff paid by U.S. 
exports to Colombia was 11.2 percent. The U.S.-Colombia Trade 
Promotion Agreement will reduce the average tariff faced by 
U.S. exporters by more than 68 percent, from an 11.2 percent 
average duty to 3.6 percent immediately upon implementation of 
the Agreement.
    In addition, not acting on the U.S.-Colombia Trade 
Promotion Agreement threatens to worsen further the 
competitiveness of U.S. exporters in the Colombian market. 
Canada and the EU are negotiating FTAs with Colombia right now 
and expect to finish shortly. These competitors export the same 
products to Colombia as the United States, such as wheat, 
barley, advanced electronics, aircraft, and chemicals. If 
Congress passes the U.S.-Colombia FTA now, we could give US 
companies a competitive head start against Canada and the EU. 
Any delay in passing the FTA will put U.S. companies at a 
disadvantage against their top competitors.
    Many Members of Congress have expressed concern about the 
level of violence against labor union members in Colombia. We 
believe that the Uribe Administration has made tremendous 
progress in reducing the level of violence in Colombia and has 
specifically targeted violence against labor union members. 
According to the U.S. Department of State: since 2000, the 
number of homicides declined by 39 percent, kidnappings 
declined by 83 percent, and terror attacks declined by 61 
percent. In 2006 the murder rate was the lowest in 15 years and 
is now lower than the murder rates in Washington, D.C. and 
Baltimore, MD. The number of homicides involving labor union 
members has declined from 205 in 2001 to 20 in 2007. We note 
that Amnesty International has found that some of the murders 
of labor union members were at the hands of the guerilla 
groups, e.g. FARC.
    These improvements are the direct result of many important 
policies implemented by the Colombian Government which has 
established a dedicated program with over 100 investigators and 
prosecutors to deal exclusively with cases of violence against 
labor leaders. Funding for the Prosecutor General's office has 
increased by 50 percent since 2002, and Colombia is spending 
$38 million to provide protection for labor union members. 
Carlos Rodriguez, President of the United Workers Confederation 
stated, ``Never, in the history of Colombia, have we achieved 
something so important.''
    Additionally, Colombia amended its Constitution to make 
significant reforms to its judicial system. These reforms are 
accelerating the investigation and trial process considerably. 
The Colombian Government has agreed to the creation of a 
permanent ILO representative in Colombia to monitor 
developments and provide advice. The Colombian Government has 
extended its agreement with the UN to have an office of the 
High Commissioner for Human Rights in Colombia to observe and 
advise on human rights issues. The UN High Commissioner noted 
the important contributions made by the Constitutional Court, 
Procurator General's Office, and the Ombudsman's Office in 
protecting human rights in Colombia. The UN High Commissioner 
also cited a greater commitment on the part of the Colombian 
authorities in seeking to achieve the objectives of the UN's 
recommendations.
    Many Colombian labor union leaders, representing 79,000 
Colombian workers in the productive sector, recognized the 
progress and continued effort that the Colombian Government has 
made in reducing labor violence and wholeheartedly support the 
FTA.

 III. THE NEED FOR ADDITIONAL CONGRESSIONAL ACTION ON OTHER PREFERENCE 
                                PROGRAMS

    H.R. 5264 as originally introduced made a number of changes 
to other U.S. trade preference programs, specifically the 
Generalized System of Preferences (GSP), the Caribbean Basin 
Trade Partnership Act (CBTPA/CBI), and the African Growth and 
Opportunity Act (AGOA). We support the use of trade preference 
programs to encourage economic development and engagement in 
the international economy in developing countries, especially 
the least-developed countries such as those that benefit from 
the AGOA program. However, the inclusion of these changes, a 
number of which are controversial, would unnecessarily 
complicate and delay the extension of the ATPA, which is the 
only program that is about to expire.
                                   Jim McCrery.
                                   Wally Herger.
                                   Dave Camp.
                                   Jim Ramstad.
                                   Sam Johnson.
                                   Phil English.
                                   Jerry Weller.
                                   Ron Lewis.
                                   Kevin Brady.
                                   Paul Ryan.
                                   Eric Cantor.
                                   Devin Nunes.
                                   Jon Porter.