H. Rept. 112-239 - 112th Congress (2011-2012)
October 06, 2011, As Reported by the Ways and Means Committee

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House Report 112-239 - UNITED STATES-KOREA FREE TRADE AGREEMENT IMPLEMENTATION ACT




[House Report 112-239]
[From the U.S. Government Printing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    112-239

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



 
      UNITED STATES-KOREA FREE TRADE AGREEMENT IMPLEMENTATION ACT

                                _______
                                

October 6, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3080]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3080) to implement the United States-Korea Free 
Trade Agreement, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Summary and Background...........................................2
          A. Purpose and Summary.................................     2
          B. Background..........................................     2
          C. Legislative History.................................     6
 II. Section-by-Section Summary.......................................7
          A. Title I: Approval and General Provisions............     7
          B. Title II: Customs Provisions........................    10
          C. Title III: Relief from Imports......................    15
          D. Title IV: Procurement...............................    20
          E. Title V: Offsets....................................    20
III. Votes of the Committee..........................................23
 IV. Budget Effects of the Bill......................................23
          A. Committee Estimate of Budgetary Effects.............    23
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................    23
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    24
          D. Macroeconomic Impact Analysis.......................    30
  V. Other Matters to be Discussed Under the Rules of the House of 
     Representatives.................................................30
          A. Committee Oversight Findings and Recommendations....    30
          B. Statement of General Performance Goals and 
              Objectives.........................................    30
          C. Information Relating to Unfunded Mandates...........    31
          D. Applicability of House Rule XXI 5(b)................    31
          E. Tax Complexity Analysis.............................    31
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    31
 VI. Changes in Existing Law Made by the Bill, as Reported...........31
VII. Additional Views................................................39

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    H.R. 3080 would implement the agreement establishing a free 
trade area between the United States and Korea.

                             B. Background


The United States-Korea Free Trade Agreement

    The United States-Korea Free Trade Agreement (hereinafter 
the ``Agreement'') was signed on June 30, 2007. The Agreement 
covers all agricultural and industrial sectors, provides for 
greatly expanded market access for U.S. services, contains 
robust protections for U.S. intellectual property rights 
holders, and includes strong labor and environment provisions. 
The Committee believes that the Agreement meets the objectives 
and priorities set forth in the Bipartisan Trade Promotion 
Authority Act of 2002 (``TPA''). Moreover, the agreement 
reflects the benefits of an exchange of letters between the 
United States and Korea on February 10, 2011 and the May 10, 
2007 agreement between Congressional leaders and the last 
Administration regarding labor, environment, intellectual 
property, investment, government procurement, and port security 
(``May 10 agreement'').
    U.S. industrial goods currently face an average tariff of 
6.2 percent in Korea, paying over $1.3 billion a year. 
Conversely, Korean exports enter the United States at an 
average tariff of only 2.8 percent--less than half the Korean 
rate. The Agreement will significantly open up the Korean 
market, helping U.S. exporters gain greater access. The 
International Trade Commission (``ITC'') estimates that U.S. 
exports to Korea would increase by $9.7-10.9 billion as a 
result of tariff reductions alone.
    The following are key sectoral benefits and aspects of the 
Agreement:
    Agriculture: U.S. agriculture exports to Korea currently 
face an average tariff of 54 percent, whereas Korean 
agricultural exports to the United States face average tariffs 
of just 9 percent. The Agreement would remedy this by making 
more than half of current U.S. farm exports to Korea by value 
duty-free immediately upon implementation, including U.S. 
exports of wheat, corn for feed, soybeans for crushing, whey 
for feed use, hides and skins, cotton, cherries, pistachios, 
almonds, grape juice, and wine. The Agreement would also 
address key non-tariff barriers. For example, Korea would 
recognize the equivalence of the U.S. food safety system for 
meat, poultry, and processed foods.
    Manufacturing: The Agreement would significantly lower both 
tariff and non-tariff barriers to U.S. exports of manufactured 
goods. Upon implementation, over 80 percent of U.S. exports of 
consumer and industrial products to Korea would immediately 
become duty-free, with virtually all tariffs phased out over 
ten years. Key U.S. export sectors that would receive immediate 
duty-free treatment include aircraft, electrical equipment, and 
medical and scientific equipment. As a result, ITC estimates 
significant gains in U.S. exports in key sectors and products. 
For example, the ITC estimates that exports of passenger 
vehicles would increase by 54 percent as a result of tariff 
cuts alone. Exports of motor vehicles and parts would increase 
an additional 41-56 percent as a result of the removal of non-
tariff barriers. Similarly, exports of machinery and equipment 
would increase by more than 30 percent. Per the Agreement, 
Korea has also reaffirmed its commitment to fulfill its 
obligations under the WTO Information Technology Agreement and 
made commitments to further open Korea's market to U.S. high-
tech exports by immediately eliminating tariffs on information 
and communications technologies not covered by the ITA. The 
Agreement would provide U.S. firms with lower tariff barriers 
than major competitors from countries that do not have trade 
agreements with Korea in effect.
    Services: Korea is the eighth largest importer of services, 
with a domestic market worth $580 billion, making improved 
market access for U.S. services critical. The Agreement would 
provide U.S. service firms with market access, national 
treatment, and regulatory transparency exceeding that afforded 
by the WTO General Agreement on Services. Through the removal 
of existing barriers, the Agreement would facilitate entry for 
U.S. firms into Korea's financial, insurance, telecom, 
audiovisual, express delivery, and professional services 
markets, among others. For example, the agreement would end 
many current Korean restrictions that allow only Korean 
nationals to provide professional services. Similarly, the ITC 
estimates, based on tariff equivalents, that the Agreement 
would reduce barriers in the banking sector by 62%. U.S. 
service providers that establish a local presence in Korea 
would benefit from strong investor protections included in the 
Agreement. In addition, the Agreement would provide improved 
access for international delivery services and establish a set 
course for future reform of Korea's postal system with respect 
to delivery services.
    Government Procurement: The protections found in the 
Agreement go above and beyond Korea's commitments as a member 
of the WTO Government Procurement Agreement and would expand 
market access for U.S. companies. The procurement provisions 
would grant U.S. entities greater access and protection than 
they currently have to Korea's $100 billion government 
procurement market. The Agreement would expand coverage to 
include nine additional key central government agencies. It 
would also reduce the threshold of coverage from $200,000 to 
$100,000 for procurement of goods and services.
    Intellectual Property Rights: Under the Agreement, Korea 
would adopt higher and extended standards for the protection of 
intellectual property rights, such as copyrights, patents, 
trademarks, and trade secrets. The Agreement also provides 
enhanced means for enforcing those rights. Under the Agreement, 
each partner country would be required to grant national 
treatment to nationals of the other, and all laws, regulations, 
procedures and final judicial decisions would need to be in 
writing and published or made publicly available. The Agreement 
would lengthen terms for copyright protection, cover electronic 
and digital media, and increase enforcement to go beyond the 
WTO Agreement on Trade-Related Aspects of Intellectual Property 
Rights. Both parties would be obliged to provide appropriate 
civil and criminal remedies for willful violators of 
intellectual property rights.
    Motor Vehicles and Parts: Under the Agreement, Korea will 
reduce its tariffs on U.S. motor vehicles and parts and 
eliminate non-tariff barriers. Korea will immediately cut its 
tariff on U.S. autos in half and fully eliminate those tariffs 
after five years. Korea will also immediately cut its tariffs 
on U.S. electric cars in half and phase out those tariffs over 
five years. The exchange of letters on February 10, 2011 
specifically addresses safety and environmental standards and 
other non-tariff barriers to U.S. exports. Korea has committed 
to strengthen transparency commitments, which will help to 
prevent the emergence of new non-tariff barriers and 
discriminatory taxes. The exchange of letters also strengthens 
other enforcement mechanisms and creates a special motor 
vehicle safeguard. The ITC estimates that removal of non-tariff 
barriers will add an additional $48-66 million in new exports. 
This opportunity is in addition to the $194 million in expected 
new exports from lower Korean tariffs on U.S. autos.
    Textile and Apparel: Many U.S. textiles and apparel 
products meeting the Agreement's rules of origin would 
immediately become duty-free and quota-free when exported to 
Korea. The Agreement's rules of origin are generally based on 
the ``yarn forward'' standard. A ``de minimis'' provision would 
allow limited amounts of specified third-country content to go 
into U.S. and Korean apparel, giving producers in both 
countries needed flexibility. The Agreement would allow the use 
of ``short supply'' fabrics (that is, fabrics not made in Korea 
or the United States that have been determined not to be 
commercially available in either country) as inputs. The 
Parties agreed to a list of short supply fabrics, and the 
Agreement includes a process for adding more.
    Customs cooperation commitments between the United States 
and Korea would allow for verification of claims of origin or 
preferential treatment, and denial of preferential treatment or 
entry if claims cannot be verified. A special textile safeguard 
would provide for temporary tariff relief if imports under the 
Agreement prove to cause or threaten serious damage to U.S. 
producers.
    Investment: The Agreement would ensure a stable legal 
framework for U.S. investors operating in Korea. All forms of 
investment would be protected under the Agreement, including 
enterprises, debt, concessions and similar contracts, and 
intellectual property. With very few exceptions, U.S. investors 
would be treated as well as Korean investors in the 
establishment, acquisition, and operation of investments in 
Korea.
    The Agreement draws from U.S. legal principles and 
practices to provide U.S. investors in Korea with a basic set 
of substantive and procedural protections that Korean investors 
currently enjoy under the U.S. legal system. These include due 
process protections and the right to receive fair market value 
for property in the event of an expropriation. The Agreement 
includes recourse to an investor-state dispute settlement 
mechanism for certain types of claims.
    In the preamble, the Parties agree that ``foreign investors 
are not hereby accorded greater substantive rights with respect 
to investment protections than domestic investors under 
domestic law where, as in the United States, protections of 
investor rights under domestic law equal or exceed those set 
forth in this Agreement.'' This provision reflects one of the 
negotiating objectives of TPA to ensure ``that foreign 
investors in the United States are not accorded greater 
substantive rights with respect to investment protections than 
United States investors in the United States.''
    Labor: The labor chapter of the Agreement includes the 
obligation that the Parties adopt and effectively enforce the 
five core international labor rights as stated in the 1998 
International Labor Organization Declaration on Fundamental 
Principles and Rights at Work. The Agreement would also require 
each country to enforce its own existing laws concerning 
acceptable conditions of work with respect to minimum wages, 
hours of work, and occupational safety and health. The 
obligations under the labor chapter are subject to the same 
dispute settlement mechanisms and enforcement mechanisms as 
obligations in other chapters of the Agreement. Neither Party 
would be permitted to waive or otherwise derogate from its laws 
that implement this obligation in a manner affecting trade or 
investment between the Parties. Procedural guarantees in the 
Agreement would ensure that workers and employers have fair, 
equitable, and transparent access to labor tribunals or courts. 
The Committee notes that Korea has shown a strong commitment to 
the protection of labor rights for Korean workers.
    Environment: The Agreement would commit the Parties to 
effectively enforce their own domestic environmental laws and 
adopt, maintain, and implement laws and all other measures to 
fulfill obligations under covered multilateral environmental 
agreements. The Agreement also includes a fully enforceable, 
binding commitment that would prohibit the Parties from 
lowering environmental standards in the future in a manner 
affecting trade or investment. The Agreement would promote a 
comprehensive approach to environmental protection by 
encouraging voluntary, market-based mechanisms to protect the 
environment and by providing procedural guarantees that ensure 
fair, equitable, and transparent proceedings for the 
administration and enforcement of environmental laws. The 
Agreement would call for a public submissions process with an 
independent secretariat for environmental matters to ensure 
that views of civil society are appropriately considered. All 
obligations in the environment chapter would be subject to the 
same dispute settlement procedures and enforcement mechanisms 
as obligations in other chapters of the Agreement.

Procedures of the Trade Act of 2002

    H.R. 3080 is being considered by Congress under the 
procedures of the Bipartisan Trade Promotion Authority Act of 
2002, included in the Trade Act of 2002. Pursuant to these 
requirements, the President is required to provide written 
notice to Congress of the President's intention to enter into 
the negotiations. Throughout the negotiating process, and prior 
to entering into an agreement, the President is required to 
consult with Congress regarding the ongoing negotiations.
    The President must notify Congress of his intent to enter 
into a trade agreement at least 90 calendar days before the 
agreement is signed. Within 60 days after entering in the 
Agreement, the President must submit to Congress a description 
of those changes to existing laws that the President considers 
would be required to bring the United States into compliance 
with the Agreement. After entering into the Agreement, the 
President must also submit to Congress the formal legal text of 
the agreement, draft implementing legislation, a statement of 
administrative action proposed to implement the Agreement, and 
other related supporting information as required under section 
2105(a) of the Trade Act of 2002.
    Following submission of these documents, the implementing 
bill is introduced, by request, by the Majority Leader and the 
Minority Leader in each chamber. The House then has up to 60 
legislative days to consider implementing legislation for the 
Agreement, and the Senate has up to an additional 30 
legislative days. No amendments to the legislation are allowed 
under TPA requirements.

                         C. Legislative History

    On February 2, 2006, the United States Trade Representative 
(``USTR'') formally notified the Congress of its intention to 
initiate negotiation of a trade agreement with Korea. 
Negotiations on a trade agreement between the United States and 
Korea began in June 2006. On April 1, 2007, the President 
notified the Congress of his intention to enter into a trade 
agreement with Korea. The Agreement was signed on June 30, 
2007.
    On August 27, 2007, the USTR transmitted to Congress a 
description of the changes to existing U.S. laws required to 
comply with the Agreement.
    On February 10, 2011, the United States and Korea exchanged 
letters regarding additional commitments, particularly related 
to motor vehicles and parts. The benefits of that exchange of 
letters are secured through the implementing bill.

Legislative hearings

    On January 25, 2011, the Committee on Ways and Means held a 
hearing on the Korea trade agreement, as well as the U.S.-
Colombia Trade Promotion Agreement and the U.S.-Panama Trade 
Promotion Agreement. The Trade Subcommittee of the Committee on 
Ways and Means then held a hearing on the Korea trade agreement 
on April 7, 2011.

Committee action

    On July 7, 2011, the Committee on Ways and Means considered 
in an informal mark-up session draft legislation to implement 
the Agreement and a statement of administrative action. The 
Committee approved the draft legislation by a vote of 22-15, 
after agreeing to an amendment in the nature of a substitute 
offered by Chairman Camp.
    On October 3, 2011, President Obama transmitted the United 
States-Korea Free Trade Agreement, a legislative proposal to 
implement the agreement, a Statement of Administrative Action 
and supporting documents to Congress. On the same day, H.R. 
3080, a bill to implement the United States-Korea Free Trade 
Agreement, was introduced by Majority Leader Eric Cantor (R-
VA), by request, for himself and Rep. Sandy Levin (D-MI). H.R. 
3080 was then referred to the Committee on Ways and Means.
    On October 5, 2011, Committee on Ways and Means formally 
met to consider H.R. 3080. The Committee ordered H.R. 3080 
favorably reported to the House of Representatives by a vote of 
31-5, without amendment. Under the procedures of TPA, no 
amendments are permitted after introduction.

                     II. SECTION-BY-SECTION SUMMARY


                TITLE I: APPROVAL AND GENERAL PROVISIONS


SECTIONS 1-3: SHORT TITLE, TABLE OF CONTENTS, PURPOSES, AND DEFINITIONS

Present law

    No provision.

Explanation of provision

    Section 2 sets forth the purposes of the implementing act 
(``Act''), which include approving and implementing the 
Agreement and securing the benefits of the agreement entered 
into pursuant to an exchange of letters between the United 
States and the Government of Korea on February 10, 2011.

Reason for change

    The provision makes clear that the bill implements and 
approves the Agreement, as well as secures the benefits of the 
agreement entered into pursuant to an exchange of letters on 
February 10, 2011, relating to trade in motor vehicles.

               SECTION 101: APPROVAL AND ENTRY INTO FORCE

Present law

    No provision.

Explanation of provision

    Section 101 states that Congress approves the United 
States-Korea Free Trade Agreement (``Agreement'') and the 
Statement of Administrative Action. The Agreement enters into 
force when the President determines that Korea is in compliance 
with all provisions that take effect on the date of entry into 
force of the Agreement and exchanges notes with the Government 
of Korea providing for entry into force on or after January 1, 
2012.

Reason for change

    Approval of the Agreement and the Statement of 
Administrative Action is required under the procedures of 
section 2103(b)(3) of Trade Act of 2002.

 SECTION 102: RELATIONSHIP OF THE AGREEMENT TO UNITED STATES AND STATE 
                                  LAW

Present law

    No provision.

Explanation of provision

    Section 102(a) provides that U.S. law prevails in the case 
of a conflict with the Agreement. Section 102(b) provides that 
only the United States is entitled to bring a court action 
challenging a state law as being invalid on grounds of 
inconsistency with the Agreement. Section 102(c) states that 
there is no private cause of action or defense under the 
Agreement and no person other than the United States may 
challenge a federal or state law in court as being inconsistent 
with the Agreement.

Reason for change

    The provision addresses the operation of the Agreement 
relative to federal and state law, as well as private remedies. 
Section 102 is necessary to make clear that no provision of the 
Agreement will be given effect if it is inconsistent with 
federal law and that entry into force of the Agreement creates 
no new private remedy.

 SECTION 103: IMPLEMENTING ACTIONS IN ANTICIPATION OF ENTRY INTO FORCE 
                        AND INITIAL REGULATIONS

Present law

    No provision.

Explanation of provision

    Section 103(a) provides that, after the date of enactment, 
the President may proclaim such actions, and other U.S. 
government officers may issue such regulations, as are 
necessary to ensure the appropriate implementation of any 
provision of the Act that is to take effect on the date of 
entry into force of the Agreement. The effective date of such 
actions and regulations may not be earlier than the date of 
entry into force of the Agreement. Where proclaimed actions are 
not subject to consultation and layover requirements under the 
Act, proclamations generally may not take effect earlier than 
15 days after their publication.
    Section 103(b) establishes that regulations necessary or 
appropriate to carry out actions under the Act and Statement of 
Administrative Action must, to the maximum extent feasible, be 
issued within one year of entry into force of the Agreement or, 
where a provision takes effect on a later date, within one year 
of the effective date of the provision.

Reason for change

    Section 103 provides for the issuance of regulations. The 
Committee strongly believes that regulations should be issued 
in a timely manner to provide maximum clarity to parties 
claiming benefits under the Agreement. The Committee notes, 
further, that the Statement of Administrative Action commits 
each agency that will be issuing regulations to provide a 
report to Congress if it cannot issue regulations within one 
year of the Agreement's entry into force and that such report 
must be submitted at least 30 days prior to the end of the one-
year period.

      SECTION 104: CONSULTATION AND LAYOVER FOR PROCLAIMED ACTIONS

Present law

    No provision.

Explanation of provision

    Section 104 establishes requirements for proclamation of 
actions that are subject to consultation and layover provisions 
under the Act. The President may proclaim such action only 
after: (1) obtaining advice from the International Trade 
Commission and the appropriate private sector advisory 
committees; (2) submitting a report to the Ways and Means and 
Finance Committees concerning the reasons for the action; and 
(3) providing for a 60-day layover period (starting after the 
President has both obtained the required advice and provided 
the required report). The proposed action cannot take effect 
until after the expiration of the 60-day period and after the 
President has consulted with the Ways and Means and Finance 
Committees regarding the proposed action.

Reason for change

    The bill gives the President certain proclamation authority 
but requires extensive consultation with Congress before such 
authority may be exercised. The Committee believes that such 
consultation is an essential component of the delegation of 
authority to the President and expects that such consultations 
will be conducted in a thorough and timely manner.

     SECTION 105: ADMINISTRATION OF DISPUTE SETTLEMENT PROCEEDINGS

Present law

    No provision.

Explanation of provision

    Section 105 authorizes the President to establish an office 
within the Department of Commerce responsible for providing 
administrative assistance to dispute settlement panels that are 
established under the Agreement. The section also authorizes 
appropriations of up to $750,000 for the establishment and 
operation of the office and to pay the U.S. share of expenses 
of the panels.

Reason for change

    Dispute settlement procedures and panels are necessary to 
ensure that disputes over compliance with Agreement provisions 
can be resolved effectively. The authorization is necessary for 
the Commerce Department to provide administrative assistance to 
panels.

                   SECTION 106: ARBITRATION OF CLAIMS

Present law

    No provision.

Explanation of provision

    Section 106 authorizes the United States to resolve certain 
claims covered by the Investor-State Dispute Settlement 
Procedures set forth in the Agreement.

Reason for change

    This provision is necessary to meet U.S. obligations under 
Section B of Chapter 10 of the Agreement.

          SECTION 107: EFFECTIVE DATES; EFFECT OF TERMINATION

Present law

    No provision.

Explanation of provision

    Section 107 provides that, with the exception of Sections 1 
through 3, Section 207(g), and Titles I and V of the Act, which 
take effect on the date of enactment of the Act, the effective 
date of the Act is the date the Agreement enters into force 
with respect to the United States. Amendments made to U.S. law 
by Sections 203, 204, 206, and 401 of the Act take effect on 
the date of enactment of the Act but apply with respect to 
Korea on the date on which the Agreement enters into force. 
Other than Title V, the provisions of the Act terminate on the 
date on which the Agreement terminates.

Reason for change

    Section 107 implements provisions of the Agreement relating 
to the effective date and date of termination of the Act.

                      TITLE II: CUSTOMS PROVISIONS


                   SECTION 201: TARIFF MODIFICATIONS

Present law

    No provision.

Explanation of provision

    Section 201(a) provides the President with the authority to 
proclaim tariff modifications necessary or appropriate to carry 
out the Agreement.
    Section 201(b) gives the President the authority, subject 
to consultation and layover, to proclaim further tariff 
modifications necessary or appropriate to maintain the general 
level of reciprocal and mutually advantageous concessions with 
respect to Korea provided for by the Agreement.
    Section 201(c) allows the President, for any goods for 
which the base rate under the Agreement is a specific or 
compound rate of duty, to substitute for the base rate an 
equivalent ad valorem rate to carry out the tariff 
modifications in subsections (a) and (b) of Section 201.
    Section 201(d) provides the President with the authority to 
proclaim tariff modifications with respect to motor vehicles of 
Korea, consistent with the agreement entered into pursuant to 
an exchange of letters between the United States and the 
Government of Korea on February 10, 2011.

Reason for change

    The provision is necessary to ensure United States 
compliance with the market access provisions of the Agreement 
and the exchange of letters. The Committee expects the 
President to comply with the letter and spirit of the 
consultation and layover provisions of this Act in carrying out 
section 201(b).

                      SECTION 202: RULES OF ORIGIN

Present law

    No provision.

Explanation of provision

    Section 202 codifies the rules of origin set out in Article 
4.2 and Chapter 6 of the Agreement. Section 202(b) establishes 
three basic ways for a Korean good to qualify as an 
``originating good'' and therefore to be eligible for 
preferential tariff treatment when it is imported into the 
United States. A good is an originating good if: (1) it is 
``wholly obtained or produced entirely in the territory of 
Korea, the United States, or both''; (2) it is produced 
entirely in the United States, Korea, or both and any materials 
used to produce the good that are not themselves originating 
goods are transformed in such a way as to cause their tariff 
classification to change or the good otherwise meets regional 
content and other requirements, as specified in Annex 4-A or 
Annex 6-A of the Agreement; or (3) it is produced entirely in 
the territory of Korea, the United States, or both exclusively 
from originating materials.
    Under the rules in Chapter 4 and Annex 4-A of the 
Agreement, an apparel product must generally meet a tariff 
shift rule that effectively imposes a ``yarn forward'' 
requirement. Thus, to qualify as an originating good imported 
into the United States from Korea, an apparel product must have 
been cut (or knit to shape) and sewn or otherwise assembled in 
Korea, the United States, or both from yarn, or fabric made 
from yarn that originates in Korea, the United States, or both.
    Section 202(o)(3) provides authority for the President to 
add fibers, yarns, or fabrics to a list of products that are 
unavailable in commercial quantities in a timely manner, and 
such products are treated as if they originate in Korea, 
regardless of their actual origin, when used as inputs in the 
production of textile or apparel goods. The President may 
modify the list of fibers, yarns, or fabrics that are 
unavailable in commercial quantities at the request of 
interested entities, defined as Korea and potential and actual 
suppliers and purchasers of textile or apparel goods.
    The remainder of Section 202 sets forth more detailed rules 
for determining whether a good meets the Agreement's 
requirements under the second method of qualifying as an 
originating good. These include rules pertaining to de minimis 
quantities of non-originating materials that do not undergo a 
tariff transformation, transformation by regional content, and 
alternative methods for calculating regional value-content. 
Other provisions in section 202 address valuation of materials, 
determination of the originating or non-originating status of 
fungible goods and materials, and treatment of accessories, 
spare parts and tools, packaging materials, indirect materials, 
and goods put up in sets. Section 202(l) specifies that goods 
that undergo further production or other operations outside 
Korea or the United States (with certain exceptions) or do not 
remain under the control of the customs authorities of such 
other countries do not qualify as originating goods.

Reason for change

    This provision implements the commitments made in the 
Agreement with respect to rules of origin applying to imports 
from Korea. Rules of origin are needed to confine Agreement 
benefits, such as tariff cuts, to Korean goods and to prevent 
third-country goods from being transshipped through Korea and 
claiming benefits under the Agreement.

                     SECTION 203: CUSTOMS USER FEES

Present law

    Section 13031(a) of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (``COBRA''), at 19 U.S.C. 58c(a), 
authorizes the Secretary of the Treasury to collect a 
merchandise processing fee for formal and informal entries of 
merchandise into the United States (``Merchandise Processing 
Fee''). Section 13031(b) of COBRA exempts from the Merchandise 
Processing Fee all originating goods under each of the trade 
agreements currently in force between the United States and 
other countries.

Explanation of provision

    Section 203 implements the U.S. commitments under Article 
2.10.4 of the Agreement to eliminate the Merchandise Processing 
Fee on originating goods under the Agreement. In accordance 
with U.S. obligations under the General Agreement on Tariffs 
and Trade 1994, the provision also prohibits use of funds in 
the Customs User Fee Account to provide services related to 
entry of originating goods.

Reason for change

    As with other trade agreements, the Agreement eliminates 
the Merchandise Processing Fee on qualifying goods from Korea. 
Other customs user fees remain in place. Section 204 is 
necessary to ensure United States compliance with the user fee 
elimination provisions of the Agreement. The Committee expects 
that the President, in his yearly budget request, will take 
into account the need for funds to pay expenses for entries 
under the Agreement given that Merchandise Processing Fee funds 
will not be available.

SECTION 204: DISCLOSURE OF INCORRECT INFORMATION; FALSE CERTIFICATIONS 
           OF ORIGIN; DENIAL OF PREFERENTIAL TARIFF TREATMENT

Present law

    No provision.

Explanation of provision

    Section 204 implements Articles 6.19.3 and 6.18.6 of the 
Agreement. Section 204(a) prohibits the imposition of a penalty 
upon importers who make an invalid claim for preferential 
tariff treatment under the Agreement if the importer acts 
promptly and voluntarily to correct the error and pays any 
duties owed on the good in question. The provision also makes 
it unlawful for a person to falsely certify, by fraud, gross 
negligence, or negligence, that a good exported from the United 
States is an originating good. However, the provision prohibits 
the imposition of a penalty if the exporter or producer 
promptly and voluntarily provides notice of the incorrect 
information to every person to whom a certification was issued.
    Section 204(b) provides that if U.S. authorities find that 
an importer, exporter or producer has engaged in a pattern of 
conduct of providing false or unsupported representations, the 
authorities may suspend preferential treatment with respect to 
identical goods covered by subsequent representations made by 
that importer, exporter or producer, until U.S. authorities 
have determined that its representations are accurate.

Reason for change

    This provision is necessary to implement commitments in the 
Agreement relating to application of penalties for submission 
of false information or certifications by importers, exporters, 
and producers.

                 SECTION 205: RELIQUIDATION OF ENTRIES

Present law

    No provision.

Explanation of provision

    Section 205 implements Article 6.19.5 of the Agreement and 
provides authority for U.S. Customs and Border Protection 
(``CBP'') to reliquidate an entry to refund any excess duties 
(including any Merchandise Processing Fees) paid on a good 
qualifying under the rules of origin for which no claim for 
preferential tariff treatment was made at the time of 
importation if the importer so requests, within one year after 
the date of importation.

Reason for change

    Article 6.19.5 of the Agreement anticipates that private 
parties may err in claiming preferential benefits under the 
Agreement and provides a one-year period for parties to make 
such claims for preferential tariff treatment even if the entry 
of the goods at issue has already been liquidated, i.e., 
legally finalized by customs officials. Section 205 is 
necessary to ensure United States compliance with Article 
6.19.5.

                SECTION 206: RECORDKEEPING REQUIREMENTS

Present law

    No provision.

Explanation of provision

    Section 206 implements Article 6.17 of the Agreement. The 
provision requires any person who completes and issues a 
certificate of origin under Article 6.15 of the Agreement for a 
good exported from the United States to maintain, for a period 
of five years after the date of certification, specified 
documents demonstrating that the good qualifies as originating.

Reason for change

    Section 207 is necessary to ensure United States compliance 
with the recordkeeping requirement provisions in Article 6.17 
of the Agreement.

 SECTION 207: ENFORCEMENT RELATING TO TRADE IN TEXTILE OR APPAREL GOODS

Present law

    No provision.

Explanation of provision

    Section 207 implements the customs cooperation and 
verification of origin provisions in Article 4.3 of the 
Agreement. Under Article 4.3, the United States may request the 
Government of Korea to conduct a verification of whether a 
claim of origin for a textile or apparel good is accurate or a 
particular exporter or producer is complying with applicable 
customs laws, regulations, and procedures regarding trade in 
textile or apparel goods. Section 207(a) provides that the 
President may direct the Secretary to take ``appropriate 
action'' while such a verification is being conducted. 
``Appropriate action'' may include (i) suspending preferential 
tariff treatment for textile or apparel goods that the person 
subject to the verification has produced or exported if the 
verification was based on a reasonable suspicion of unlawful 
activity related to such goods; and (ii) suspension of 
liquidation of the entry of a textile or apparel good that is 
the subject of a verification.
    Under Section 207(c), the President may also direct the 
Secretary to take ``appropriate action'' after a verification 
has been completed. Such action may include (i) denying 
preferential tariff treatment to textile or apparel goods that 
the person subject to the verification has exported or 
produced; and (ii) denying entry to such goods.
    Under Section 207(e), the Secretary may publish the name of 
a person that the Secretary has determined: (i) is engaged in 
circumvention of applicable laws, regulations, or procedures 
affecting trade in textile or apparel goods; or (ii) has failed 
to demonstrate that it produces, or is capable of producing, 
textile or apparel goods.
    Under Section 207(f), the Commissioner of Customs may 
require an importer to submit a certificate of eligibility, 
which must be signed by an authorized official of the 
Government of Korea, to receive preferential tariff treatment 
under Article 4-B of the Agreement.
    Under Section 207(g), the Secretary may request a 
verification of the production of any textile or apparel good 
if requested by a party to a free trade agreement. This 
provision applies to all trade agreement partners.

Reason for change

    To avoid textile transshipment, special textile enforcement 
provisions have been included in the Agreement. Section 207 is 
necessary to authorize these enforcement mechanisms for use by 
U.S. authorities.

                        SECTION 208: REGULATIONS

Present law

    No provision.

Explanation of provision

    Section 208 directs the Secretary to prescribe regulations 
necessary to carry out the tariff-related provisions of the 
Act, including the rules of origin and customs user fee 
provisions.

Reason for change

    Because the Act involves lengthy and complex implementation 
procedures by customs officials, this provision is necessary to 
authorize the Secretary of Treasury to carry out provisions of 
the Act through regulations. No such regulations may take 
effect before the Agreement enters into force.

                     TITLE III: RELIEF FROM IMPORTS


                        SECTION 301: DEFINITIONS

Present law

    No provision.

Explanation of provision

    Section 301 defines ``Korean article,'' ``Korean textile or 
apparel article,'' and ``Korean motor vehicle article,'' which 
are key terms for Title III of the Act.

Reason for change

    This provision clarifies the scope of the provisions in 
Title III.

     Subtitle A: Relief From Imports Benefiting From the Agreement


                            SECTIONS 311-316

Present law

    No provision.

Explanation of provisions

    Subtitle A to Title III of the Act (Sections 311 to 316) 
authorizes the President, after an investigation and 
affirmative determination by the ITC, to impose certain import 
relief measures when, as a result of the reduction or 
elimination of a duty under the Agreement, a Korean product is 
being imported into the United States in such increased 
quantities and under such conditions as to be a substantial 
cause of serious injury or threat of serious injury to the 
domestic industry.
    Section 311 provides for the filing of petitions with the 
ITC and for the ITC to conduct safeguard investigations under 
Subtitle A. Section 311(a)(1) provides that a petition 
requesting a safeguard action may be filed by an entity that is 
``representative of an industry.'' As under Section 202(a)(1) 
of the Trade Act of 1974, a trade association, firm, certified 
or recognized union, or a group of workers can be considered 
such an entity. Section 311(b) sets out the standard to be used 
by the ITC in undertaking an investigation and making a 
determination in safeguard proceedings under Subtitle A of 
Title III of the Act.
    Section 311(c) provides that certain provisions of Section 
202 of the Trade Act of 1974 also apply with respect to 
investigations initiated under Section 311(b), including 
provisions defining ``substantial cause'' and listing factors 
to be taken into account in making safeguard determinations.
    Section 311(d) exempts from investigation Korean articles, 
except for Korean motor vehicle articles (per Section 321), 
with respect to which relief has previously been provided under 
Subtitle A of Title III of the Act.
    Section 312 requires the ITC to make a determination not 
later than 120 days (180 days if critical circumstances have 
been alleged) after the date on which the Section 311 
investigation is initiated. Under Sections 312(b) and (c), if 
the ITC makes an affirmative determination, it must find and 
recommend to the President the amount of import relief that is 
necessary to remedy or prevent serious injury and to facilitate 
the efforts of the domestic industry to make a positive 
adjustment to import competition.
    Section 312(d) directs the ITC to submit a report to the 
President regarding the determination no later than 30 days 
after the determination is made. Section 312(e) requires the 
ITC to make this report public and to publish a summary of it 
in the Federal Register.
    Section 313(a) provides that the President, within 30 days 
of receiving a report from the ITC under Section 312, must 
provide import relief to the extent that the President 
determines is necessary to remedy or prevent the injury found 
by the ITC 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 relief will not provide greater economic 
and social benefits than costs.
    Section 313(c) sets forth the nature of the relief that the 
President may provide. The President may take action in the 
form of a suspension of further reductions in the rate of duty 
to be applied to the articles in question, or in the form of an 
increase in the rate of duty on the articles in question to a 
level that does not exceed the lesser of the existing NTR (MFN) 
rate or the NTR (MFN) rate of duty that was imposed on the day 
before the Agreement entered into force. In the case of a duty 
applied on a seasonal basis, the President may increase the 
rate of duty on the articles in question to a level that does 
not exceed the lesser of the NTR (MFN) rate for the 
corresponding season immediately preceding the date the import 
relief is provided or the NTR (MFN) rate of duty that was 
imposed for the corresponding season immediately preceding the 
date on which the Agreement enters into force. Under Section 
313(c)(3), if the relief the President provides has duration 
greater than one year, the relief must be subject to 
progressive liberalization at regular intervals over the course 
of its application, except with respect to a Korean motor 
vehicle article (per Section 321).
    Section 313(d) provides that the President may initially 
provide import relief for up to two years. This period may be 
extended by up to one year for a Korean article and by up to 
two years for a Korean motor vehicle article (per Section 321) 
if, after an investigation by the ITC and receipt of an ITC 
report, the President determines that import relief continues 
to be necessary and there is evidence that the industry is 
making a positive adjustment to import competition. The ITC 
must conduct an investigation on these issues if, within a 
specified period before the relief terminates, a concerned 
industry files a petition requesting an investigation. The ITC 
must issue a report on its investigation to the President no 
later than 60 days before the termination of the import relief.
    Section 313(e) specifies that upon the termination of 
import relief, the rate of duty shall be the rate that would 
have been in effect but for the provision of relief.
    Section 313(f) exempts from relief any article that is: (i) 
subject to import relief under the global safeguard provisions 
in U.S. law (Chapter 1 of Title II of the Trade Act of 1974); 
or (ii) subject to import relief under Subtitle C to Title III 
of the Act.
    Section 314 provides that no relief may be provided under 
Subtitle A of Title III of this Act after ten years from the 
date the Agreement enters into force, unless (i) the scheduled 
tariff phase-out period for the article under the Agreement is 
greater than ten years, in which case relief may not be 
provided for that article after the scheduled phase-out period 
ends; or (ii) the President determines that Korea has consented 
to such relief. In addition, per Section 321, relief for a 
Korean motor vehicle article may be provided during any period 
before the date that is ten years after the date on which 
duties on the article are eliminated.
    Section 315 authorizes the President to provide 
compensation to Korea consistent with Article 10.4 of the 
Agreement if relief is ordered.
    Section 316 provides for the treatment of confidential 
business information submitted to the ITC in the course of 
investigations conducted under Title III of the Act.

Reason for change

    Sections 311 to 316 establish a mechanism for providing 
temporary import relief where a U.S. industry experiences 
serious injury or threat of serious injury by reason of 
increased import competition from Korea resulting from 
reduction or elimination of a duty under the Agreement. The 
Committee notes that the President is not required to provide 
relief if the relief will not provide greater economic and 
social benefits than costs. The Committee intends that 
administration of this safeguard be consistent with U.S. 
obligations under Section A of Chapter Eight (Trade Remedies) 
of the Agreement.

              Subtitle B: Motor Vehicle Safeguard Measures


                              SECTION 321

Present law

    No provision.

Explanation of provision

    Subtitle B of the Act (Section 321) implements the motor 
vehicle safeguard established by the exchange of letters 
between the United States and the Government of Korea on 
February 10, 2011 related to trade in motor vehicles. Section 
321(1) provides that the same product can be the basis for 
according relief more than once and that progressive 
liberalization is not required while relief is being provided. 
Section 321(2) provides that relief may be extended for up to 
two years. Section 321(3) provides that relief may be provided 
for a total of up to four years. Section 321(4) provides that 
Subtitle B exceptions shall not apply to any relief action 
brought under Subtitle A. Section 321(5) provides that import 
relief may be provided with respect to a Korean motor vehicle 
article up to ten years after the date on which duties on the 
article are eliminated.

Reason for change

    This provision implements U.S. rights and Korean 
commitments under the exchange of letters on February 10, 2011 
relating to treatment of Korean motor vehicle imports in 
safeguard procedures.

           Subtitle C: Textile and Apparel Safeguard Measures


                           (SECTIONS 331-338)

Present law

    No provision.

Explanation of provisions

    Subtitle C of Title III of the Act (Sections 331 to 338) 
authorizes the President to impose certain import relief 
measures when he determines that, as a result of the 
elimination or reduction of a duty provided under the 
Agreement, a Korean textile or apparel article is being 
imported into the United States in such increased quantities, 
in absolute terms or relative to the domestic market for that 
article, and under such conditions as to cause serious damage, 
or actual threat thereof, to the domestic industry.
    Section 331 provides that an interested party may file a 
request with the President for safeguard relief under Subtitle 
C to Title III of the Act (Sections 331-338) . The President 
must review the request and determine whether to commence 
consideration of the request. Under Section 331(b), if the 
President determines that the request contains information 
necessary to warrant consideration on the merits, the President 
must publish notice in the Federal Register stating that the 
request will be considered and seeking public comments on the 
request.
    Section 332(a) provides that the President shall determine, 
pursuant to a request by an interested party, whether, as a 
result of the elimination or reduction of a duty provided under 
the Agreement, a Korean textile or apparel article is being 
imported into the United States in such increased quantities, 
in absolute terms or relative to the domestic market for that 
article, 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 332(b) sets forth the relief that the President may 
provide, which is a suspension of any further reduction 
provided for under Annex 2-B of the Agreement, or an increase 
in the rate of duty on the articles in question to a level that 
does not exceed the lesser of the existing NTR (MFN) rate or 
the NTR (MFN) rate of duty that was imposed on the day before 
the Agreement entered into force.
    Section 333 provides that the period of relief shall be no 
longer than two years. The period may be extended for an 
additional period of not more than two years if the President 
determines that continuation is necessary to remedy or prevent 
serious damage and to facilitate adjustment by the domestic 
industry to import competition and there is evidence the 
industry is making a positive adjustment. The aggregate period 
of relief, including any extension, may not exceed four years.
    Section 334 provides that relief may not be granted to an 
article under this subtitle if relief has previously been 
granted under this subtitle for that article, or the article is 
subject to import relief under Subtitle A of Title III of the 
Act or under Chapter 1 of Title II of the Trade Act of 1974.
    Under Section 335, after a safeguard expires, the rate of 
duty on the article that had been subject to the safeguard 
shall be the rate that would have been in effect at that time, 
but for the safeguard action.
    Section 336 provides that the authority to provide 
safeguard relief under Subtitle C to Title III of the Act 
expires ten years after the date on which duties on the 
articles are eliminated pursuant to the Agreement.
    Section 337 authorizes the President to provide 
compensation to Korea if relief is ordered.
    Section 338 provides for the treatment of confidential 
business information received by the President in connection 
with an investigation or determination under Subtitle C to 
Title III of the Act.

Reason for change

    Sections 321 to 328 implement the commitments under the 
Agreement relating to textile and apparel safeguard measures. 
The Committee intends that the provisions of Subtitle C of 
Title III of the Act be administered in a manner that is 
transparent and that will serve as an example to our trading 
partners. For example, in addition to publishing a summary of 
the request for safeguard relief, the Committee notes that the 
President plans to make available the full text of the request, 
subject to the protection of business confidential data, on the 
website of the Department of Commerce, International Trade 
Administration. In addition, the Committee encourages the 
President promptly to issue regulations on procedures for 
requesting such safeguard measures, for making determinations 
under Section 332(a), and for providing relief under Section 
332(b).

       Subtitle D: Cases Under Title II of the Trade Act of 1974


          SECTION 341: FINDINGS AND ACTION ON GOODS FROM KOREA

Present law

    No provision.

Explanation of provision

    Section 341(a) provides that if the ITC makes an 
affirmative determination, or a determination that the 
President may consider to be an affirmative determination, in a 
global safeguard investigation under Section 202(b) of the 
Trade Act of 1974, the ITC must find and report to the 
President whether Korean imports of the article that qualify as 
originating goods under the Agreement are a substantial cause 
of serious injury or threat thereof. Under Section 341(b), if 
the ITC makes a negative finding under Section 341(a), the 
President may exclude any imports that are covered by the ITC's 
finding from the global safeguard action.

Reason for change

    This provision implements commitments under the Agreement 
relating to treatment of Korean imports in global safeguard 
investigations under Section 202(b) of the Trade Act of 1974.

                         TITLE IV: PROCUREMENT


                     SECTION 401: ELIGIBLE PRODUCTS

Present law

    U.S. procurement law (such as the Buy American Act of 1933 
and the Buy American Act of 1988) limits procurement from 
certain foreign suppliers of goods and services in favor of 
U.S. providers of goods and services. Most discriminatory 
purchasing provisions are waived if the United States is a 
party to a bilateral or multilateral procurement agreement, 
such as the WTO Agreement on Government Procurement, or a 
bilateral or multilateral trade agreement that includes 
provisions on procurement.

Explanation of provision

    Section 401 implements Chapter 17 of the Agreement and 
amends the definition of ``eligible product'' in Section 
308(4)(A) of the Trade Agreements Act of 1979. As amended, 
Section 308(4)(A) provides that an ``eligible product'' means a 
product or service of Korea that is covered under the Agreement 
for procurement by the United States.

Reason for change

    This provision implements U.S. commitments under Chapter 17 
of the Agreement (Government Procurement).

                            TITLE V: OFFSETS


 SECTION 501: INCREASE IN PENALTY ON PAID PREPARERS WHO FAIL TO COMPLY 
        WITH EARNED INCOME TAX CREDIT DUE DILIGENCE REQUIREMENTS

Present law

    Under Section 6695(g) of the Internal Revenue Code of 1986, 
paid preparers who fail to comply with earned income tax credit 
due diligence requirements are fined $100 per return.

Explanation of provision

    Section 501 increases the penalty for paid preparers who 
fail to comply with earned income tax credit due diligence 
requirements from $100 to $500 per return. The increased 
penalty applies to returns required to be filed after December 
31, 2011.

Reason for change

    The Committee believes it is appropriate to increase the 
penalty for paid preparers who fail to comply with earned 
income tax credit due diligence requirements to deter non-
compliance and for budgetary offset purposes.

 SECTION 502: REQUIREMENT FOR PRISONS LOCATED IN THE UNITED STATES TO 
               PROVIDE INFORMATION FOR TAX ADMINISTRATION

Present law

    No provision.

Explanation of provision

    Section 502 requires the head of the Federal Bureau of 
Prisons and the head of any State agency that administers 
prisons to provide certain information regarding inmates 
incarcerated, in electronic format, to the Secretary of the 
Treasury. The information must be filed no later than September 
15, 2012, and annually thereafter.

Reason for change

    The information provided will assist in detecting and 
deterring fraudulent tax return filings from inmates. The 
Committee believes it is appropriate to identify inmates who 
are filing fraudulent tax returns and for budgetary offset 
purposes.

                SECTION 503: MERCHANDISE PROCESSING FEE

Present law

    Section 8101 of the Omnibus Budget Reconciliation Act of 
1986 (``OBRA'') authorizes the Secretary of the Treasury to 
collect a merchandise processing fee for formal and informal 
entries in order to offset the salaries and expenses that will 
likely be incurred by the Customs Service in the processing of 
entries and releases. This authority has been consistently 
extended. Provided for under 19 U.S.C. 58c(a)(9)-(10), the 
merchandise processing fee is assessed on all goods entered or 
released from non-trade agreement partner countries. Presently, 
an ad valorem fee of 0.21 percent is mandated for merchandise 
that is entered formally. The fee is assessed on the value of 
the merchandise being imported, not including duty, freight, 
and insurance charges. The current minimum fee is $21, and the 
maximum fee is $485. Goods that are entered informally are 
charged a fee pursuant to a three-tiered flat rate fee table, 
depending on whether the fee is filed manually or 
electronically. The fee for informal entries ranges from $2.00 
to $9.00 per shipment. The present fee level has been in place 
since 1995.

Explanation of provision

    Section 503 increases the ad valorem fee collected by 
Customs and Border Protection that offsets the costs incurred 
in processing and inspecting imports from 0.21 percent to 
0.3464 percent. This is the first increase in this fee since 
1995.

Reason for change

    The Committee believes it is appropriate to increase the 
merchandise processing fees to address increased costs Customs 
and Border Protection has incurred as a result of the increased 
volume of trade and additional operational initiatives since 
the last legislative change to the merchandise processing fee 
in 1995.

                     SECTION 504: CUSTOMS USER FEES

Present law

    Section 13031 of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 (``COBRA'') authorizes the Secretary 
of the Treasury to collect passenger and conveyance processing 
fees and the merchandise processing fees. Section 412 of the 
Homeland Security Act of 2002 authorized the Secretary of the 
Treasury to delegate such authority to the Secretary of 
Homeland Security. COBRA has been amended on several occasions. 
The current authorization for the collection of the passenger 
and conveyance processing fees is through January 14, 2020. The 
current authorization for the collection of the Merchandise 
Processing Fee is through January 7, 2020.

Explanation of provision

    Section 504 extends the passenger and conveyance processing 
fees and the merchandise processing fees authorized under 
Section 13031 of the Consolidated Omnibus Budget Reconciliation 
Act of 1985 (``COBRA'') through December 8, 2020 and August 2, 
2021, respectively.

Reason for change

    The Committee believes it is appropriate to extend the 
passenger and conveyance processing fees authorized under COBRA 
for budgetary offset purposes.

       SECTION 505: TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES

Present law

    In general, corporations are required to make quarterly 
estimated tax payments of their income tax liability. For a 
corporation whose taxable year is a calendar year, these 
estimated tax payments must be made by April 15, June 15, 
September 15, and December 15.

Explanation of provision

    For corporations with assets of at least $1 billion, 
Section 505(a) increases the amount of the required installment 
of estimated tax otherwise due in July, August, or September of 
2012 by 0.25 percent of such amount and Section 505(b) 
increases the amount of the required installment of estimated 
tax otherwise due in July, August, or September of 2016 by 2.75 
percent of such amount (determined without regard to any 
increase in such amount not contained in the Internal Revenue 
Code). The next required installment is reduced to reflect the 
prior increase.

Reason for change

    The Committee believes it is appropriate to adjust the 
corporate estimated tax payments for budgetary offset purposes.

                      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. 3080.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 3080, was ordered favorably reported by a 
rollcall vote of 30 yeas to 5 nays (with a quorum being 
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................        X   ........  .........  Mr. Levin........        X   ........  .........
Mr. Herger.....................        X   ........  .........  Mr. Rangel.......        X   ........  .........
Mr. Johnson....................        X   ........  .........  Mr. Stark........  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....        X   ........  .........
Mr. Ryan.......................        X   ........  .........  Mr. Lewis........  ........        X   .........
Mr. Nunes......................        X   ........  .........  Mr. Neal.........        X   ........  .........
Mr. Tiberi.....................        X   ........  .........  Mr. Becerra......        X   ........  .........
Mr. Davis......................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Reichert...................        X   ........  .........  Mr. Thompson.....        X   ........  .........
Mr. Boustany...................        X   ........  .........  Mr. Larson.......  ........  ........  .........
Mr. Roskam.....................        X   ........  .........  Mr. Blumenauer...        X   ........  .........
Mr. Gerlach....................        X   ........  .........  Mr. Kind.........        X   ........  .........
Mr. Price......................        X   ........  .........  Mr. Pascrell.....  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Ms. Berkley......  ........        X   .........
Mr. Smith......................        X   ........  .........  Mr. Crowley......        X   ........  .........
Mr. Schock.....................        X
Ms. Jenkins....................        X
Mr. Paulsen....................        X
Mr. Berg.......................        X
Ms. Black......................        X
Mr. Reed.......................        X
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of 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. X, 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 Budget 
                               Authority

    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. 3080 would reduce customs duty 
receipts due to lower tariffs imposed on goods from Korea.

      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 the CBO, the following report prepared by CBO is 
provided:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 5, 2011.
Hon. Dave Camp,
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. 3080, the United 
States-Korea Free Trade Agreement Implementation Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kalyani 
Parthasarathy.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 3080--United States-Korea Free Trade Agreement Implementation Act

    Summary: H.R. 3080 would approve the free trade agreement 
between the government of the United States and the government 
of the Republic of Korea (Korea) that was signed on June 30, 
2007, and modified by a later agreement on December 3, 2010. It 
would provide for tariff reductions and other changes in law 
related to implementation of the agreement. The bill would 
extend user fees collected by Customs and Border Protection 
(CBP) that expire under current law and would increase those 
fees. In addition, it would establish a reporting requirement 
for federal and state prisons for tax administration purposes 
and increase the penalties on tax preparers who did not comply 
with due-diligence requirements for the earned income tax 
credit. It also would shift some corporate income tax payments 
between fiscal years.
    The Congressional Budget Office (CBO) and the staff of the 
Joint Committee on Taxation (JCT) estimate that enacting H.R. 
3080 would reduce revenues by $31 million in 2012 and by about 
$7.0 billion over the 2012-2021 period. CBO estimates that 
enacting H.R. 3080 would increase direct spending by $53 
million in 2012 but would decrease direct spending by about 
$7.0 billion over the 2012-2021 period. The net impact of those 
effects is an estimated reduction in deficits of $16 million 
over the 2012-2021 period. Pay-as-you-go procedures apply 
because enacting the legislation would affect direct spending 
and revenues.
    Further, CBO estimates that implementing the legislation 
would cost $7 million over the 2012-2016 period, assuming the 
availability of appropriated funds.
    CBO has determined that the nontax provisions of H.R. 3080 
contain no intergovernmental mandates as defined in the 
Unfunded Mandates Reform Act (UMRA), and would impose no costs 
on state, local, or tribal governments.
    CBO has determined that the nontax provisions of the bill 
contain private-sector mandates with costs that would exceed 
the annual threshold established in UMRA for private-sector 
mandates ($142 million in 2011, adjusted annually for 
inflation).
    JCT has determined that the tax provisions of H.R. 3080 
contain no intergovernmental or private-sector mandates as 
defined in UMRA.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3080 is shown in the following table. 
The costs of this legislation fall within budget functions 150 
(international affairs), 370 (commerce and housing credit), 750 
(administration of justice), and 800 (general government).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        By fiscal year, in millions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2012      2013      2014      2015      2016      2017      2018      2019      2020      2021    2012-2016  2012-2021
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   CHANGES IN REVENUES

Free Trade Agreement..........      -158      -312      -381      -462      -726      -873      -954    -1,043    -1,146    -1,254     -2,040     -7,310
Prison Reporting Requirement..         0         6        13        13        14        14        15        15        16        16         46        122
EITC Preparer Penalty.........         9        19        19        20        20        21        21        22        23        23         87        197
Corporate Payment Shift.......       118      -118         0         0     1,894    -1,894         0         0         0         0      1,894          0
    Estimated Revenues........       -31      -405      -349      -429     1,202    -2,732      -918    -1,006    -1,107    -1,215        -13     -6,991

                                                               CHANGES IN DIRECT SPENDINGa
Extend Customs User Fees:
    Estimated Budget Authority         0         0         0         0         0         0         0         0    -1,957    -2,186          0     -4,143
    Estimated Outlays.........         0         0         0         0         0         0         0         0    -1,957    -2,186          0     -4,143
Exemption from Merchandise
 Processing Fee:
    Estimated Budget Authority        53        95        99       104       161       180       189       198       208       184        511      1,470
    Estimated Outlays.........        53        95        99       104       161       180       189       198       208       184        511      1,470
Increase the Merchandise
 Processing Fee Rates:
    Estimated Budget Authority         0         0         0         0      -572      -720      -756      -794      -835      -657       -572     -4,334
    Estimated Outlays.........         0         0         0         0      -572      -720      -756      -794      -835      -657       -572     -4,334
    Total Direct Spendinga
        Estimated Budget              53        95        99       104      -411      -540      -567      -596    -2,584    -2,659        -61     -7,007
         Authority............

        Estimated Outlays.....        53        95        99       104      -411      -540      -567      -596    -2,584    -2,659        -61     -7,007

                                NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES

Impact on the Deficit.........        84       500       448       533    -1,613     2,192       351       410    -1,477    -1,444        -48        -16
--------------------------------------------------------------------------------------------------------------------------------------------------------
a.In addition, CBO estimates that implementing the provisions of H.R. 3080 would have a discretionary cost of $7 million over the 2012-2016 period,
  assuming appropriation of the necessary amounts.
Sources: Congressional Budget Office and the staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding; EITC = Earned Income Tax Credit.

    Basis of estimate: For the purposes of this estimate, CBO 
assumes that H.R. 3079 will be enacted early in fiscal year 
2012.

Revenues

    Under the United States-Korea free trade agreement, tariffs 
on U.S. imports from Korea would be phased out over time. The 
tariffs would be phased out for individual products at varying 
rates, ranging from immediate elimination on the date the 
agreement enters into force to gradual elimination over 10 or 
more years. According to the U.S. International Trade 
Commission, the United States collected about $660 million in 
customs duties in 2010 on $48 billion of imports from Korea. 
Based on expected imports from Korea, CBO estimates that 
implementing the tariff schedule outlined in the U.S.-Korea 
free trade agreement would reduce revenues by $158 million in 
2012, and by about $7 billion over the 2012-2021 period, net of 
income and payroll tax offsets.
    This estimate includes the effects of increased imports 
from Korea 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 Korea 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 Korea would displace 
imports from other countries.
    H.R. 3080 would increase the penalties imposed on paid tax 
return preparers who do not comply with due-diligence 
requirements for determining their clients' allowable earned 
income tax credits (EITC), from $100 under current law to $500 
for each failure. JCT estimates that this change would increase 
revenues by $197 million over the 2012-2021 period.
    H.R. 3080 also would require prisons located in the United 
States to provide the names and Social Security Numbers of all 
inmates serving sentences longer than one year to the Internal 
Revenue Service for tax administration purposes. JCT estimates 
that this change would increase revenues by $122 million over 
the 2012-2021 period.
    H.R. 3080 also would shift payments of corporate estimated 
taxes between fiscal years 2012 and 2013 and between fiscal 
years 2016 and 2017. For corporations with at least $1 billion 
in assets, the bill would increase the portion of corporate 
estimated payments due from July through September in both 2012 
and 2016. JCT estimates that those changes would increase 
revenues by $118 million in 2012 and decrease them by $118 
million in 2013, and would increase revenues by about $1.9 
billion in 2016 and decrease them by about $1.9 billion in 
2017.

Direct spending

    Under current law, certain fees collected by CBP will 
expire in January of 2020. The bill would extend COBRA fees 
(which were established in the Consolidated Omnibus Budget 
Reconciliation Act of 1985) from January 14, 2020, through 
December 8, 2020, and would extend merchandise processing fees 
from January 7, 2020, through August 2, 2021. CBO estimates 
that those changes would increase offsetting receipts (a credit 
against direct spending) by about $4.1 billion over the 2020-
2021 period. For merchandise entered from December 1, 2015, 
through June 30, 2021, the bill would raise the merchandise 
processing fee from 0.21 percent to 0.3464 percent of the value 
of goods entered. CBO estimates that this would increase 
offsetting receipts by about $4.3 billion over the 2012-2021 
period.
    In addition, the bill would exempt imports from Korea from 
merchandise processing fees. CBO estimates that this would 
reduce offsetting receipts by about $1.5 billion over the 2012-
2021 period.

Spending subject to appropriation

    Implementing provisions of H.R. 3080 would increase the 
costs of several agencies affected by the bill including:
    
 The Department of Commerce to provide 
administrative support for dispute-settlement panels 
established in the agreement;
    
 The International Trade Commission to conduct 
investigations, if petitioned, into whether Korean imports 
might threaten or cause serious injury to domestic competitors; 
and
    
 The Department of the Treasury and the United 
States Trade Representative to establish regulations to carry 
out provisions of the agreement.
    Based on information from the agencies, CBO estimates that 
those activities would cost $7 million over the 2012-2016 
period, assuming appropriation of the necessary amounts.
    Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

                               CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3080 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON OCTOBER 5, 2011
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            By fiscal year, in millions of dollars,
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                                                                 2012       2013       2014       2015       2016       2017       2018       2019       2020       2021    2012-2016  2012-2021
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact..............................         84        500        448        533      1,613      2,192        351        410     -1,477     -1,444        -48        -16
Memorandum:
    Changes in Revenues.....................................        -31       -405       -349       -429      1,202     -2,732       -918     -1,006     -1,107     -1,215        -13     -6,991
    Changes in Outlays......................................         53         95         99        104       -411       -540       -567       -596     -2,584     -2,659        -61     -7,007
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
CBO has determined that the nontax provisions of H.R. 3080 
contain no intergovernmental mandates as defined in UMRA and 
would impose no costs on state, local, or tribal governments. 
JCT has determined that the tax provisions of H.R. 3080 contain 
no intergovernmental mandates as defined in UMRA.
    Estimated impact on the private sector: CBO has determined 
that the nontax provisions of H.R. 3080 would impose private-
sector mandates, as defined in UMRA, by extending the customs 
user fees, by increasing merchandise processing fees and by 
enforcing new recordkeeping requirements. CBO estimates that 
the aggregate costs of those mandates would exceed the annual 
threshold established in UMRA for private-sector mandates ($142 
million in 2011, adjusted annually for inflation). JCT has 
determined that the tax provisions of H.R. 3080 contain no 
private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Revenues: Kalyani 
Parthasarathy; Federal Spending: Sunita D'Monte, Mark 
Grabowicz, Matthew Pickford, and Susan Willie Impact on State, 
Local, and Tribal Governments: J'nell L. Blanco; Impact on the 
Private Sector: Marin Randall.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis; Frank Sammartino, Assistant Director for 
Tax Analysis.

                    D. Macroeconomic Impact Analysis

    In compliance with clause 3(h)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made by the Joint Committee on Taxation with respect to the 
provisions of the bill amending the Internal Revenue Code of 
1986: the effects of the tax provisions of the bill on economic 
activity are so small as to be incalculable within the context 
of a model of the aggregate economy.

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


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee concluded that it is appropriate and timely to 
consider H.R. 3080, as reported. In addition, the legislation 
is governed by procedures of the Bipartisan Trade Promotion 
Authority Act of 2002.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the performance goals and 
objectives of the part of this legislation that authorizes 
funding are for (a) the payment of the U.S. share of the 
expenses incurred in dispute settlement proceedings established 
under Chapter 20 of the U.S.-Korea Free Trade Agreement and (b) 
the establishment and operation of an office within the 
Department of Commerce responsible for providing assistance to 
the panels in such proceedings.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (P.L. 104-4). The 
Committee has determined that the revenue provisions of the 
bill do not impose a Federal mandate on the private sector. The 
Committee has determined that the revenue provisions of the 
bill do not impose a Federal intergovernmental mandate on 
State, local, or tribal governments.

                D. Applicability of House Rule XXI 5(b)

    Clause 5(b) of rule XXI of the Rules of the House of 
Representatives provides, in part, that ``A bill or joint 
resolution, amendment, or conference report carrying a Federal 
income tax increase may not be considered as passed or agreed 
to unless so determined by a vote of not less than three-fifths 
of the Members voting, a quorum being present.'' The Committee 
has carefully reviewed the sections of the bill and states that 
the bill does not involve any Federal income tax rate increases 
within the meaning of the rule.

                       E. Tax Complexity Analysis

    The Joint Committee on Taxation, in consultation with the 
Internal Revenue Service and the Department of the Treasury, 
will provide a tax complexity analysis to Members of the 
Committee as soon as practicable after the report is filed.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

         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):

SECTION 13031 OF THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 
                                  1985

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES.

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

           *       *       *       *       *       *       *

  (19) 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-Korea 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.

           *       *       *       *       *       *       *

  (j) Effective Dates.--(1) * * *

           *       *       *       *       *       *       *

  (3)(A) Fees may not be charged under paragraphs (9) and (10) 
of subsection (a) after [January 7, 2020] August 2, 2021.
  (B)(i) Subject to clause (ii), Fees may not be charged under 
paragraphs (1) through (8) of subsection (a) after [January 14, 
2020] December 8, 2020.

           *       *       *       *       *       *       *

                              ----------                              


TARIFF ACT OF 1930

           *       *       *       *       *       *       *


TITLE IV--ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


Part III--Ascertainment, Collection, and Recovery of Duties

           *       *       *       *       *       *       *


SEC. 508.   RECORDKEEPING.

  (a) * * *

           *       *       *       *       *       *       *

  (i) Certifications of Origin for Goods Exported Under the 
United States-Korea 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) the purchase, cost, and value 
                        of, and payment for, all materials, 
                        including indirect materials, used in 
                        the production of the good; and
                          (iii) the production of the good in 
                        the form in which it was exported.
                  (B) KFTA certification of origin.--The term 
                ``KFTA certification of origin'' means the 
                certification established under article 6.15 of 
                the United States-Korea Free Trade Agreement 
                that a good qualifies as an originating good 
                under such Agreement.
          (2) Exports to korea.--Any person who completes and 
        issues a KFTA certification 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 certification 
        or copies thereof).
          (3) Retention period.--The person who issues a KFTA 
        certification of origin shall keep the records and 
        supporting documents relating to that certification of 
        origin for a period of at least 5 years after the date 
        on which the certification is issued.
  [(i)] (j) Penalties.--Any person who fails to retain records 
and supporting documents required by subsection (f), [(g), or 
(h)] (g), (h), or (i) or the regulations issued to implement 
any such subsection shall be liable for the greater of--
          (1) * * *

           *       *       *       *       *       *       *


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

  (a) * * *

           *       *       *       *       *       *       *

  (j) Denial of Preferential Tariff Treatment Under the United 
States-Korea Free Trade Agreement.--If U.S. Customs and Border 
Protection or U.S. Immigration and Customs Enforcement of the 
Department of Homeland Security finds indications of a pattern 
of conduct by an importer, exporter, or producer of false or 
unsupported representations that goods qualify under the rules 
of origin provided for in section 202 of the United States-
Korea Free Trade Agreement Implementation Act, U.S. Customs and 
Border Protection, in accordance with regulations issued by the 
Secretary of the Treasury, may suspend preferential tariff 
treatment under the United States-Korea Free Trade Agreement 
Implementation Act to entries of identical goods covered by 
subsequent representations by that importer, exporter, or 
producer until U.S. Customs and Border Protection determines 
that representations of that person are in conformity with such 
section 202.

           *       *       *       *       *       *       *


SEC. 520. REFUNDS AND ERRORS.

  (a) * * *

           *       *       *       *       *       *       *

  (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, section 202 of the United States-Chile Free 
Trade Agreement Implementation Act, section 203 of the 
Dominican Republic-Central America-United States Free Trade 
Agreement Implementation Act, section 202 of the United States-
Oman Free Trade Agreement Implementation Act, [or]   section 
203 of the United States-Peru Trade Promotion Agreement 
Implementation Act [for which], or section 202 of the United 
States-Korea 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) * * *

           *       *       *       *       *       *       *


Part V--Enforcement Provisions

           *       *       *       *       *       *       *


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

  (a) * * *

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *

          (11) Prior disclosure regarding claims under the 
        united states-korea 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-Korea Free Trade Agreement Implementation Act if 
        the importer, in accordance with regulations issued by 
        the Secretary of the Treasury, promptly and voluntarily 
        makes a corrected declaration and pays any duties owing 
        with respect to that good.
          [(11)] (12) 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).

           *       *       *       *       *       *       *

  (j) False Certifications of Origin Under the United States-
Korea 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 KFTA 
        certification of origin (as defined in section 508 of 
        this Act) that a good exported from the United States 
        qualifies as an originating good under the rules of 
        origin provided for in section 202 of the United 
        States-Korea 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) Prompt and voluntary disclosure of incorrect 
        information.--No penalty shall be imposed under this 
        subsection if, promptly after an exporter or producer 
        that issued a KFTA certification of origin has reason 
        to believe that such certification 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 certification 
        was issued.
          (3) Exception.--A person shall not be considered to 
        have violated paragraph (1) if--
                  (A) the information was correct at the time 
                it was provided in a KFTA certification of 
                origin but was later rendered incorrect due to 
                a change in circumstances; and
                  (B) the person promptly and voluntarily 
                provides written notice of the change in 
                circumstances to all persons to whom the person 
                provided the certification.

           *       *       *       *       *       *       *

                              ----------                              


TRADE ACT OF 1974

           *       *       *       *       *       *       *


       TITLE II--RELIEF FROM INJURY CAUSED BY IMPORT COMPETITION

CHAPTER 1--POSITIVE ADJUSTMENT BY INDUSTRIES INJURED BY IMPORTS

           *       *       *       *       *       *       *


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, title II of the 
        United States-Jordan Free Trade Area Implementation 
        Act, title III of the United States-Chile Free Trade 
        Agreement Implementation Act, title III of the United 
        States-Singapore Free Trade Agreement Implementation 
        Act, title III of the United States-Australia Free 
        Trade Agreement Implementation Act, title III of the 
        United States-Morocco Free Trade Agreement 
        Implementation Act, title III of the Dominican 
        Republic-Central America-United States Free Trade 
        Agreement Implementation Act, title III of the United 
        States-Bahrain Free Trade Agreement Implementation Act, 
        title III of the United States-Oman Free Trade 
        Agreement Implementation Act, [and] title III of the 
        United States-Peru Trade Promotion Agreement 
        Implementation Act, and title III of the United States-
        Korea 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.

           *       *       *       *       *       *       *

                              ----------                              


TRADE AGREEMENTS ACT OF 1979

           *       *       *       *       *       *       *


TITLE III--GOVERNMENT PROCUREMENT

           *       *       *       *       *       *       *


SEC. 308. DEFINITIONS.

   As used in this title--
          (1) * * *

           *       *       *       *       *       *       *

          (4) Eligible products.--
                  (A) In general.--The term ``eligible 
                product'' means, with respect to any foreign 
                country or instrumentality that is--
                          (i) * * *

           *       *       *       *       *       *       *

                          (vi) a party to the United States-
                        Oman Free Trade Agreement, a product or 
                        service of that country or 
                        instrumentality which is covered under 
                        that Agreement for procurement by the 
                        United States; [or]
                          (vii) a party to the United States-
                        Peru Trade Promotion Agreement, a 
                        product or service of that country or 
                        instrumentality which is covered under 
                        that agreement for procurement by the 
                        United States[.]; or
                          (viii) a party to the United States-
                        Korea Free Trade Agreement, a product 
                        or service of that country or 
                        instrumentality which is covered under 
                        that agreement for procurement by the 
                        United States.

           *       *       *       *       *       *       *

                              ----------                              


INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *


Subtitle F--Procedure and Administration

           *       *       *       *       *       *       *


CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *


Subchapter B--Miscellaneous Provisions

           *       *       *       *       *       *       *


[Sec. 6116. Cross reference.]
Sec. 6116. Requirement for prisons located in United States to provide 
          information for tax administration.
Sec. 6117. Cross reference.

           *       *       *       *       *       *       *


SEC. 6116. REQUIREMENT FOR PRISONS LOCATED IN UNITED STATES TO PROVIDE 
                    INFORMATION FOR TAX ADMINISTRATION.

  (a) In general.--Not later than September 15, 2012, and 
annually thereafter, the head of the Federal Bureau of Prisons 
and the head of any State agency charged with the 
responsibility for administration of prisons shall provide to 
the Secretary in electronic format a list with the information 
described in subsection (b) of all the inmates incarcerated 
within the prison system for any part of the prior 2 calendar 
years or the current calendar year through August 31.
  (b) Information.--The information with respect to each inmate 
is--
          (1) first, middle, and last name,
          (2) date of birth,
          (3) institution of current incarceration or, for 
        released inmates, most recent incarceration,
          (4) prison assigned inmate number,
          (5) the date of incarceration,
          (6) the date of release or anticipated date of 
        release,
          (7) the date of work release,
          (8) taxpayer identification number and whether the 
        prison has verified such number,
          (9) last known address, and
          (10) any additional information as the Secretary may 
        request.
  (c) Format.--The Secretary shall determine the electronic 
format of the information described in subsection (b).

SEC. [6116.]  6117. CROSS REFERENCE.

  For inspection of records, returns, etc., concerning gasoline 
or lubricating oils, see section 4102.

           *       *       *       *       *       *       *


 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *


Subchapter B--Assessable Penalties

           *       *       *       *       *       *       *


PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 6695. OTHER ASSESSABLE PENALTIES WITH RESPECT TO THE PREPARATION 
                    OF TAX RETURNS FOR OTHER PERSONS.

  (a)  * * *

           *       *       *       *       *       *       *

  (g) Failure to be diligent in determining eligibility for 
earned income credit.--Any person who is a tax return preparer 
with respect to any return or claim for refund who fails to 
comply with due diligence requirements imposed by the Secretary 
by regulations with respect to determining eligibility for, or 
the amount of, the credit allowable by section 32 shall pay a 
penalty of [$100] $500 for each such failure.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    We support the United States-Korea Free Trade Agreement 
(FTA). The Agreement is the product of our work over many years 
to better ensure that U.S. trade policy reflects American 
values and shapes globalization to spread its benefits more 
broadly. We write these additional views to describe how this 
Agreement achieves those objectives and to put this Agreement 
in its broader context.

                  The U.S.-Korea Free Trade Agreement

    On May 10, 2007, we won a major breakthrough to change U.S. 
trade policy. We insisted that this FTA, and others like it, be 
renegotiated to: (1) require Korea to comply with international 
labor standards, fully enforceable through the agreement's 
normal dispute settlement mechanism; (2) require Korea to 
comply with key, mutually accepted international environmental 
agreements, again fully enforceable through dispute settlement; 
(3) clarify that the chapter on intellectual property rights 
does not and should not prevent either country from taking 
steps to protect public health by promoting access to medicines 
for all;\1\ (4) allow U.S. government agencies to base 
government procurement decisions on compliance with core labor 
standards; (5) make clear that nothing in the agreement should 
be interpreted to provide foreign investors greater rights than 
U.S. investors have under U.S. law; and (6) affirm that the 
United States has non-challengeable authority to prevent 
foreign companies from operating in U.S. ports, based on 
national security concerns.
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    \1\Pending FTAs with developing countries (i.e., Peru, Panama and 
Colombia) were also modified to ensure that poor patients in those 
countries have access to affordable medicines. Those changes were not 
included in the Korea FTA, reflecting our views that more flexible 
patent rules (e.g., related to test data protection) appropriate for a 
developing country are not appropriate for a country at Korea's level 
of development.
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    At that time, we also made clear to the previous 
Administration that another major issue had to be addressed--
ensuring that the FTA meaningfully opened Korea's historically 
closed auto market. For decades, Korea has employed a unique 
and ever changing regulatory regime to discriminate against 
auto imports, while the U.S. market has been open to their 
goods. As a result, U.S. automakers exported less than 14,000 
cars to Korea in 2010. In contrast, Korean automakers have been 
able to use their historically closed market to finance an 
aggressive push into the U.S. market, through both exports 
(515,000 cars in 2010) and transplant production. In 2010, 
automotive trade accounted for more than 75 percent of the U.S. 
trade deficit with Korea.
    Unfortunately, the Bush Administration ignored these 
concerns and negotiated an agreement which would have locked in 
one-way trade in autos in Korea's favor. As a result, the 2007 
FTA failed to garner significant support in Congress.
    On December 3, 2010, with the support of key Members, the 
Obama Administration negotiated an accompanying agreement to 
the FTA that will end one-way trade in autos and provide U.S. 
automakers with a real opportunity to compete and succeed in 
the Korean market. An exchange of letters between the United 
States and Korea on February 10, 2011 (``February 10, 2011 
Exchange of Letters'') reflects the agreement that was reached. 
With the changes achieved through the accompanying agreement, 
all of the U.S. auto industry (Ford, Chrysler, GM and the UAW) 
are supporting the U.S.-Korea FTA.
    Key elements of the February 10, 2011 Exchange of Letters 
include:
    
 Rescheduling of the Phase out of Car and Truck 
Tariffs. Critical changes made to the car and truck tariff 
phase out schedule will give U.S. automakers the opportunity to 
reverse decades of Korean protectionism, important time to 
establish a brand and distribution presence and leverage to 
evaluate Korea's compliance with the FTA and the February 10, 
2011 Exchange of Letters.
          Car Tariffs: Under the FTA as negotiated by the Bush 
        Administration (``the 2007 agreement''), U.S. tariffs 
        on 90 percent of South Korean auto imports would have 
        been eliminated immediately, with tariffs on the 
        remaining 10 percent phased out by the third year of 
        implementation. Under the February 10, 2011 Exchange of 
        Letters, the 2.5 percent U.S. tariff will remain in 
        place until the fifth year. At the same time, South 
        Korea will immediately cut its tariff on U.S. auto 
        imports in half (from 8 percent to 4 percent), and 
        fully eliminate the Korean tariff in year five.
          Truck Tariff Elimination: Under the 2007 agreement, 
        phase out of the 25 percent U.S. tariff on South Korean 
        trucks would have begun immediately, with the phase out 
        completed in the agreement's tenth year. Under the 
        February 10, 2011 Exchange of Letters, the United 
        States will maintain its 25 percent truck tariff until 
        the eighth year and then phase it out in the tenth 
        year. However, South Korea must eliminate its 10 
        percent tariff on U.S. trucks immediately (its original 
        commitment).
          Tariffs on Electric Cars: Under the 2007 agreement, 
        the United States and South Korea would have eliminated 
        tariffs on electric car and plug-in hybrid imports in 
        year 10. Under the February 10, 2011 Exchange of 
        Letters, South Korea will immediately reduce these 
        tariffs from 8 percent to 4 percent, and both countries 
        will then phase out their tariffs in year five.
    
 Creation of a Special Autos Safeguard. The 
February 10, 2011 Exchange of Letters includes a first-ever 
auto-specific safeguard designed to protect against potential 
surges of Korean cars and trucks. This special safeguard 
contains several unique provisions not available under the 
FTA's general safeguard, such as being available for 10 years 
after the applicable U.S. tariff fully phases out, and it can 
be applied more than once.
    
 Safety and Environmental Standards. The February 
10, 2011 Exchange of Letters levels the playing field and 
prevents Korea from relying on discriminatory, rotating safety 
and environmental regulations--as it has in the past--to shut 
out U.S. auto imports.
          Automotive Safety Standards: The February 10, 2011 
        Exchange of Letters allows U.S. automakers to import up 
        to 25,000 cars and trucks into South Korea that meet 
        U.S. federal safety standards, as opposed to complying 
        with unique Korean standards.
          Automotive Environmental Standards: Korea's trade 
        policies have precluded U.S. automakers (and other 
        foreign manufacturers) from selling a mixed fleet into 
        that market, thereby making it impossible for U.S. 
        producers to meet Korea's proposed fuel economy and 
        greenhouse gas emissions regulations. To address the 
        ``overhang'' effect of past discriminatory trade 
        policies, under the February 10, 2011 Exchange of 
        Letters, U.S. autos will be considered compliant with 
        the new South Korean environmental emissions rules if 
        they achieve targets within 19 percent of those in the 
        new regulations.
    
 Taxes: Historically, Korea's tax system has 
imposed higher fees on larger vehicles with larger engines (the 
tax structure does not have an environmental justification). As 
a result, U.S. producers, who primarily export larger cars with 
larger engines (because Korean non-tariff barriers make it 
uneconomical to import smaller cars), have borne the brunt of 
these taxes. In the 2007 agreement, South Korea committed to 
make changes to its engine size-based tax regime to limit its 
discriminatory nature. Under the February 10, 2011 Exchange of 
Letters, South Korea has additionally committed that, in the 
event it proposes taxes based on fuel economy or greenhouse gas 
emissions, the taxes will be governed by the FTA's transparency 
provisions, helping to ensure that they are not implemented in 
a way that discriminates against U.S. automakers.
    
 Transparency: The February 10, 2011 Exchange of 
Letters builds on the provisions designed to promote regulatory 
transparency and the avoidance of non-tariff barriers included 
in the 2007 FTA, e.g., the Automotive Working Group. First, 
under the February 10, 2011 Exchange of Letters, Korea must 
provide a twelve month period between the time a final 
regulation is issued concerning significant regulations (e.g., 
regulations requiring a substantial change in motor vehicle 
design or technology) and the time that automakers must comply 
with it. Second, within 24 months of entry into force, Korea 
must develop a new review system to evaluate whether its auto 
regulations achieve their aim in the least burdensome manner 
possible.
    We in the U.S. House have been working to change U.S. trade 
policy for over a decade. In the era of increasing 
globalization, trade policy must be a tool to shape the rules 
of competition and spread the benefits of globalization. The 
question raised by the U.S.--Korea FTA was: Would we stand up 
for U.S. businesses and workers and insist on two-way trade? 
With the changes achieved last fall eliminating non-tariff 
barriers and adjusting the tariff provisions, the answer is 
``yes'' and thus, this is an FTA worth supporting.
    This process has taken too long. The Bush administration 
should not have ignored Congressional and stakeholder demands 
concerning the auto market access issue and taken action to 
address them. And this FTA should have been submitted for 
consideration as soon as the February 10, 2011 Exchange of 
Letters occurred, along with the reauthorization of the 
historically bipartisan Trade Adjustment Assistance (TAA) 
program, which the Majority allowed to lapse.

                  The Agreement in Its Broader Context

    The May 10 components that are included in the Korea FTA 
are, without question, some of the most forward-looking 
provisions in U.S. trade agreements. While more work can be 
done to ensure that our trade agreements reflect our values and 
interests, those components are a critical basis to the 
successful conclusion of any future bilateral or regional trade 
agreement. New agreements also should address new challenges, 
such as unfair competition from, and distortions caused by, 
state-owned and state-supported enterprises.
    Moreover, it is important to recognize that the May 10 
Changes were just one part of our vision for a ``new trade 
policy for America.'' In March 2007, House Democrats coalesced 
around a number of initiatives to improve U.S. trade policy, 
including in areas that eventually were reflected in the May 10 
Changes. Beyond those changes, initiatives included the need 
to: (1) strengthen the enforcement of trade agreements and U.S. 
trade laws (in particular, by addressing massive Chinese 
subsidies and violations of intellectual property rights; 
eliminating currency manipulation; and by addressing non-tariff 
barriers that limit U.S. exports); (2) strengthen American 
competitiveness, including through worker retraining, education 
and health care improvements, and community revitalization 
programs; and (3) foster development in the poorest countries 
of the world.
    Some progress has been made on these initiatives. For 
example, the 2009 reforms to Trade Adjustment Assistance (TAA) 
dramatically improved the program, including by covering 
service workers and many more manufacturing workers, increasing 
training funding and mandating counseling to ensure appropriate 
training, promoting on-the-job, part-time and longer-term 
training, and by increasing the TAA health coverage tax credit. 
We now have agreement to extend the program, which the Majority 
allowed to expire in February. And while modifications have 
been made, both the integrity of the program and the major 2009 
improvements are preserved. And the Affordable Care Act of 2010 
will make the United States more competitive by reining in 
health care costs.
    But much more needs to be done, particularly with respect 
to enforcement and global trade imbalances. For example, Fred 
Bergsten, the Director of the Peterson Institute for 
International Economics recently described China's currency 
manipulation as ``by far the largest protectionist measure 
adopted by any country since the Second World War--and probably 
in all of history.'' Eliminating currency misalignments (caused 
in large part by China's currency manipulation) is expected to 
improve the U.S. current account position by $200 billion to 
$250 billion annually and produce at least a million good jobs, 
mainly in manufacturing. Years of ``quiet diplomacy'' to 
address this issue have produced only meager results. And more 
tools and resources are needed to address the many trade-
distorting policies of our trading partners, including China's 
massive subsidies and other industrial policies in key sectors 
such as clean energy. Those policies have been allowed to 
persist even as important incentives for our companies like the 
Section 48C Advanced Manufacturing Credit have lapsed due to 
Republican opposition.
    In addition to leveling the playing field, more must be 
done to invest in American competitiveness and to create 
American jobs. For example, last month, the President submitted 
the American Jobs Act to Congress. Among other things, the bill 
would help to rebuild and modernize American schools and put 
teachers laid off by State budget cuts back to work. It would 
make needed investments in our nation's infrastructure to 
create jobs today and lay the foundation for future growth. 
Enactment of the President's American Jobs Act will help to 
promote American competitiveness in the global economy.

                                   Sander M. Levin.
                                   Jim McDermott.
                                   Xavier Becerra.
                                   John B. Larson.
                                   Richard E. Neal.
                                   Mike Thompson.
                                   Earl Blumenauer.
                                   Charles B. Rangel.