[Senate Report 112-222]
[From the U.S. Government Publishing Office]
Calendar No. 189
112th Congress Report
SENATE
2d Session 112-222
======================================================================
UNITED STATES-COLOMBIA TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT
_______
September 20, 2012.--Ordered to be printed
_______
Mr. Baucus, from the Committee on Finance,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 1641]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, to which was referred the bill
(S. 1641) to implement the United States-Colombia Trade
Promotion Agreement, having considered the same, reports
favorably thereon without amendment and recommends that the
bill do pass.
CONTENTS
Page
I. Report and Other Materials of the Committee......................2
A. Report of the Committee on Finance...................... 2
B. Summary of Congressional Consideration of the Agreement. 2
1. Background.......................................... 2
2. Trade Promotion Authority Procedures in General..... 3
3. Notification Prior to Negotiations.................. 3
4. Notification of Intent To Enter Into an Agreement... 4
5. Development of the Implementing Legislation......... 4
6. Formal Submission of the Agreement and Implementing
Legislation........................................ 5
7. Committee and Floor Consideration................... 6
C. Trade Relations with Colombia........................... 6
1. United States-Colombia Trade........................ 6
2. Tariffs and Trade Agreements........................ 7
3. U.S. International Trade Commission Study........... 8
D. Overview of the Agreement............................... 8
1. Background.......................................... 8
2. Office of the U.S. Trade Representative Summary of
the Agreement...................................... 9
E. General Description of the Bill To Implement the
Agreement.............................................. 36
Title I--Approval of, and General Provisions Relating
to, the Agreement.................................. 36
Title II--Customs Provisions........................... 38
Title III--Relief from Imports......................... 41
Title IV--Procurement.................................. 46
Title V--Extension of Andean Trade Preference Act...... 46
Title VI--Offsets...................................... 47
F. Vote of the Committee in Reporting the Bill............. 47
II. Budgetary Impact of the Bill....................................47
III. Regulatory Impact of the Bill and Other Matters.................54
IV. Additional Views................................................55
V. Changes in Existing Law Made by the Bill, as Reported...........58
I. REPORT AND OTHER MATERIALS OF THE COMMITTEE
A. Report of the Committee on Finance
The Committee on Finance, to which was referred the bill
(S. 1641) to implement the United States-Colombia Trade
Promotion Agreement (``Agreement''), having considered the
same, reports favorably thereon without amendment and
recommends that the bill do pass.
B. Summary of Congressional Consideration of the Agreement
1. Background
On November 18, 2003, U.S. Trade Representative Robert B.
Zoellick notified Congress of the Administration's intent to
negotiate a free trade agreement (``FTA'') with the Republic of
Colombia (``Colombia''), Peru, Ecuador, and Bolivia. Ambassador
Zoellick consulted with the relevant congressional committees,
including the Senate Committee on Finance, with respect to the
initiation of negotiations. He also attended meetings of the
Congressional Oversight Group on November 6, 2003, and May 6,
2004, to discuss the initiation of negotiations.
Negotiations with Colombia, Peru, and Ecuador were launched
on May 18, 2004, with Bolivia participating as an observer. The
United States and Colombia subsequently decided to pursue a
separate agreement, and U.S. Trade Representative Rob Portman
announced that the United States and Colombia had successfully
concluded those negotiations on February 27, 2006.
The President notified Congress of his intent to enter into
the Agreement with Colombia on August 24, 2006, and published
notice of his intent in the Federal Register on August 28,
2006. On September 20, 2006, the U.S. Trade Representative
submitted to Congress and the President the reports from 27
trade advisory groups commenting on the final text of the
Agreement. The Office of the U.S. Trade Representative also
made the reports publicly available on its website. On November
22, 2006, the Agreement was signed by Deputy U.S. Trade
Representative John Veroneau and Colombian Minister of Trade,
Industry, and Tourism Jorge Humberto Botero.
On May 10, 2007, the Bush Administration and the bipartisan
leadership of the U.S. Senate Committee on Finance and the U.S.
House of Representatives Committee on Ways and Means reached an
agreement on trade policy. As discussed further below in
Section I.D., the May 10 bipartisan trade deal required
groundbreaking changes to the labor, environmental,
intellectual property, government procurement, services, and
investment provisions of the Agreement. The United States and
Colombia signed amendments to the Agreement to reflect those
changes on June 28, 2007.
2. Trade promotion authority procedures in general
Article I, section 8 of the Constitution of the United
States vests Congress with the authority to regulate
international trade. Congress has periodically delegated a
portion of this authority to the President in order to advance
the economic interests of the United States. This delegation
represents a compact between Congress and the Administration,
by which Congress guarantees it will vote on a trade agreement
entered into by the Administration without amendment and the
Administration guarantees close consultation with Congress
during the negotiation of the trade agreement in order to
achieve the objectives that Congress identifies. Thorough and
timely consultation by the Administration with Congress is the
essential bedrock upon which Congress's delegation of
constitutional authority rests. This longstanding compact,
spanning decades, has resulted in the successful negotiation
and implementation of numerous trade agreements that have
contributed significantly to increased economic growth and
prosperity in the United States.
The most recent incarnation of this compact is found in the
Bipartisan Trade Promotion Authority Act of 2002 (``the Act''),
which was included in the Trade Act of 2002 (Pub. L. 107-210).
The Act includes prerequisites for congressional consideration
of a trade agreement under expedited procedures (known as Trade
Promotion Authority (``TPA'') procedures), which are found in
sections 2103 through 2106 of the Act (19 U.S.C.
Sec. Sec. 3803-3806) and section 151 of the Trade Act of 1974
(19 U.S.C. Sec. 2191). Section 2103 of the Act authorizes the
President to enter into reciprocal trade agreements with
foreign countries to reduce or eliminate tariff or nontariff
barriers and other trade-distorting measures. Section 2102 of
the Act outlines the negotiating objectives that the President
must achieve if the President intends to use TPA procedures to
implement a trade agreement. And section 151 of the Trade Act
of 1974 sets forth expedited procedures for congressional
consideration of a trade agreement without amendment. The
President's authority under section 2103 extends to trade
agreements entered into on or before June 30, 2007.
3. Notification prior to negotiations
Under section 2104(a)(1) of the Act, the President must
provide written notice to Congress at least 90 calendar days
before initiating negotiations. On November 18, 2003, the U.S.
Trade Representative notified Congress of the President's
intent to initiate negotiations with Colombia. The negotiations
were initiated on May 18, 2004. Section 2104(a)(2) requires the
President, before and after submission of the notice, to
consult regarding the negotiations with the relevant
congressional committees and the Congressional Oversight Group
established under section 2107 of the Act. The Administration
engaged in the requisite consultations with respect to this
Agreement, including an appearance by the U.S. Trade
Representative at meetings of the Congressional Oversight Group
on November 6, 2003, and May 6, 2004.
4. Notification of intent to enter into an agreement
Under section 2105(a)(1)(A) of the Act, the President must
notify Congress at least 90 calendar days before entering into
an agreement of his intent to enter into the agreement. On
August 24, 2006, the President notified Congress of his intent
to enter into the United States-Colombia Trade Promotion
Agreement. The Agreement was signed on November 22, 2006.
5. Development of the implementing legislation
Under TPA procedures, Congress and the Administration work
together to produce legislation that implements a free trade
agreement. Draft legislation is developed in close consultation
between the Administration and the committees with jurisdiction
over the laws that must be enacted or amended to implement the
agreement. The committees may hold informal meetings to
consider the draft legislation and to make non-binding
recommendations to the Administration. The Administration then
finalizes the implementing legislation for formal submission to
Congress and referral to the committees of jurisdiction. These
procedures are meant to ensure close cooperation between the
executive and legislative branches of government to develop
legislation that faithfully implements the agreement. Under TPA
and predecessor legislation, trade agreement implementing bills
may include only those provisions that are necessary or
appropriate to implement the agreement.
The Senate Committee on Finance met in open executive
session on July 7, 2011, to consider informally the draft
implementing legislation for the Agreement and the draft
Statement of Administrative Action (``SAA''). The draft
implementing legislation included provisions to extend the
Generalized System of Preferences (``GSP'') and the Andean
Trade Preference Act (``ATPA''). These provisions are
``necessary or appropriate'' to implement the Agreement, as
required by TPA and predecessor legislation. The ``necessary or
appropriate'' standard has applied to virtually every trade
agreement considered by Congress since 1974, creating an
extensive history of legislative practice. That practice
clearly supports the inclusion of the GSP and ATPA extensions
in the draft legislation implementing this Agreement.
Specifically, the Uruguay Round Agreements Act of 1994 included
provisions to extend GSP that were very similar to the
provisions included in this draft legislation.
The Committee did, however, consider three other amendments
to the draft implementing legislation. First, Senator Cardin
offered an amendment to include the Colombian Action Plan
Related to Labor Rights (``Labor Action Plan'') in the draft
implementing legislation. Second, Senator Menendez offered an
amendment to require the Administration to report to Congress
on the enforcement and implementation of the Labor Action Plan.
Third, Senator Enzi offered an amendment to ensure that
Colombia and the United States are subject to equivalent labor
law requirements. All three amendments failed by voice vote.
The Committee approved the draft legislation and draft SAA
without amendment by a roll call vote of 18 ayes, 6 nays. Ayes:
Baucus, Conrad, Bingaman, Kerry (proxy), Wyden, Cantwell,
Nelson, Carper, Hatch, Grassley (proxy), Kyl (proxy), Crapo,
Roberts, Enzi, Cornyn (proxy), Coburn (proxy), Thune, and Burr
(proxy). Nays: Rockefeller (proxy), Schumer, Stabenow,
Menendez, Cardin, and Snowe (proxy). Separately, the Committee
on Ways and Means in the House of Representatives approved the
draft implementing legislation and draft SAA, as amended, on
July 7, 2011, by a roll call vote of 22 ayes, 14 nays.
6. Formal submission of the agreement and implementing legislation
When the President formally submits a trade agreement to
Congress under section 2105 of the Act, the President must
include in the submission the final legal text of the
agreement, together with implementing legislation, an SAA
describing regulatory and other changes to implement the
agreement, a statement setting forth the reasons of the
President regarding how and to what extent the agreement makes
progress in achieving the applicable purposes, policies,
priorities, and objectives set forth in the Act, and a
statement setting forth the reasons of the President regarding
how the agreement serves the interests of U.S. commerce. The
implementing legislation is introduced in both Houses of
Congress on the day it is submitted by the President and is
referred to committees with jurisdiction over its provisions.
On April 8, 2008, President Bush transmitted to Congress
the final text of the Agreement, the implementing legislation,
the SAA and other supporting information under section 2105 of
the Act. The bill was introduced that same day by Mr. Reid, for
himself, Mr. Grassley and Mr. McConnell. That bill was not
considered by the Senate.
On October 3, 2011, President Obama transmitted to Congress
the final text of this Agreement, the implementing legislation,
the SAA, and the other supporting information required under
section 2105 of the Act. That same day, Mr. Baucus, for
himself, Mr. Hatch and Mr. McConnell introduced the bill as S.
1641. The legislation was also introduced that same day in the
House of Representatives (H.R. 3078).
S. 1641 is substantially the same as the draft legislation
considered by the Committee during the open executive session
on July 7, 2011. S. 1641, however, does not contain the
provisions of the draft legislation extending the GSP program.
Those provisions were included in separate legislation, H.R.
2832, which the House and Senate approved and the President
signed into law on October 21, 2011.
To qualify for TPA procedures, the implementing legislation
itself must contain provisions formally approving the agreement
and the SAA. And, as noted above, the implementing legislation
must contain only those provisions necessary or appropriate to
implement the Agreement. The implementing bill reported here--
which approves the Agreement and the accompanying SAA and
contains provisions necessary or appropriate to implement the
Agreement into U.S. law--was referred to the Senate Committee
on Finance.
7. Committee and floor consideration
When the requirements of the Act are satisfied,
implementing revenue bills, such as the United States-Colombia
Trade Promotion Agreement Implementation Act, are subject to
the legislative procedures of section 151 of the Trade Act of
1974. The following schedule for congressional consideration
applies under these procedures:
(i) House committees have up to 45 calendar days in session
in which to report the bill; any committee which does not do so
in that period will be automatically discharged from further
consideration.
(ii) A vote on final passage by the House must occur on or
before the 15th calendar day in session after the committees
report the bill or are discharged from further consideration.
(iii) Senate committees must act within 15 calendar days in
session of receiving the implementing revenue bill from the
House or within 45 calendar days in session of Senate
introduction of the implementing bill, whichever is later, or
they will be discharged automatically.
(iv) The full Senate then must vote within 15 calendar days
in session on the implementing bill.
Once the implementing bill has been formally submitted by
the President and introduced, no amendments to the bill are in
order in either House of Congress. Floor debate in each House
is limited to no more than 20 hours, to be equally divided
between those favoring the bill and those opposing the bill.
The Committee on Finance met in open executive session on
October 11, 2011, to consider favorably reporting S. 1641. At
the meeting, the Committee favorably reported S. 1641 without
amendment by roll call vote of 18 ayes, 6 nays. Ayes: Baucus,
Conrad (proxy), Bingaman, Kerry, Wyden, Cantwell, Nelson,
Carper, Hatch, Grassley (proxy), Kyl (proxy), Crapo, Roberts,
Enzi, Cornyn (proxy), Coburn (proxy), Thune, and Burr (proxy).
Nays: Rockefeller (proxy), Schumer (proxy), Stabenow, Menendez,
Cardin, and Snowe (proxy). The Committee on Ways and Means in
the House of Representatives favorably reported the House
version of the legislation, H.R. 3078, on October 5, 2011, by a
roll call vote of 24 ayes, 12 nays.
The House passed H.R. 3078 on October 12, 2011, by a roll
call vote of 262 ayes, 167 nays. On the same day, the Senate
passed H.R. 3078 by a roll call vote of 66 ayes, 33 nays.
President Barack H. Obama signed H.R. 3078 into law on October
21, 2011 (Pub. L. 112-42).
C. Trade Relations With Colombia
1. United States-Colombia trade
Colombia ranks 20th among U.S. export markets and 25th
among foreign exporters to the United States. U.S. exports to
Colombia totaled $12 billion in 2010, while U.S. imports
totaled $15.7 billion. Major U.S. exports to Colombia include
petroleum and coal products; agriculture and construction
machinery; basic chemicals, resin, synthetic rubber and
products; and general purpose machinery. Major U.S. imports
from Colombia include oil and gas; nonferrous metal; fruits and
tree nuts; petroleum and coal products; and coal and petroleum
gases.
2010 U.S. EXPORTS TO COLOMBIA
------------------------------------------------------------------------
HTS Code Product Value in USD
------------------------------------------------------------------------
84--NUCLEAR REACTORS, BOILERS, MACHINERY ETC.; PARTS. 2,775,095,093
27--MINERAL FUEL, OIL ETC.; BITUMIN SUBST; MINERAL 2,248,909,618
WAX.................................................
85--ELECTRIC MACHINERY ETC; SOUND EQUIP; TV EQUIP; 941,762,933
PTS.................................................
29--ORGANIC CHEMICALS................................ 815,928,838
39--PLASTICS AND ARTICLES THEREOF.................... 615,912,331
90--OPTIC, PHOTO ETC, MEDIC OR SURGICAL INSTRMENTS 601,321,642
ETC.................................................
87--VEHICLES, EXCEPT RAILWAY OR TRAMWAY, AND PARTS 487,850,013
ETC.................................................
98--SPECIAL CLASSIFICATION PROVISIONS, NESOI......... 338,682,586
10--CEREALS.......................................... 291,709,526
88--AIRCRAFT, SPACECRAFT, AND PARTS THEREOF.......... 265,596,538
OTHER................................................ 2,686,521,586
------------------
TOTAL............................................ 12,069,290,704
------------------------------------------------------------------------
(Source: U.S. Department of Commerce, International Trade
Administration)
2010 U.S. IMPORTS FROM COLOMBIA
------------------------------------------------------------------------
HTS Code Product Value in USD
------------------------------------------------------------------------
27--MINERAL FUEL, OIL ETC.; BITUMIN SUBST; MINERAL 10,486,082,491
WAX.................................................
71--NAT ETC PEARLS, PREC ETC STONES, PR MET ETC; COIN 1,646,574,854
09--COFFEE, TEA, MATE & SPICES....................... 817,229,965
06--LIVE TREES, PLANTS, BULBS ETC.; CUT FLOWERS ETC.. 561,772,687
08--EDIBLE FRUIT & NUTS; CITRUS FRUIT OR MELON PEEL.. 268,996,013
99--SPECIAL IMPORT PROVISIONS, NESOI................. 211,862,018
39--PLASTICS AND ARTICLES THEREOF.................... 154,885,668
62--APPAREL ARTICLES AND ACCESSORIES, NOT KNIT ETC... 139,536,356
21--MISCELLANEOUS EDIBLE PREPARATIONS................ 126,133,674
61--APPAREL ARTICLES AND ACCESSORIES, KNIT OR CROCHET 120,464,249
OTHER................................................ 11,611,819,555
------------------
TOTAL............................................ 15,659,275,039
------------------------------------------------------------------------
(Source: U.S. Department of Commerce, International Trade
Administration)
2. Tariffs and trade agreements
Colombia acceded to the World Trade Organization (``WTO'')
in 1995, with an average bound tariff rate of 42.8 percent for
all goods (91.4 percent for agricultural goods and 35.4 percent
for nonagricultural goods). In 2010, Colombia maintained an
average applied tariff rate of more than 12.5 percent for all
goods (17.2 percent for agricultural goods and 11.8 percent for
nonagricultural goods). The United States, by contrast,
provides duty-free treatment to most products from Colombia. In
2010, more than 90 percent of imports from Colombia entered the
United States duty free under our most-favored nation tariff
rates and U.S. trade preference programs. Given that the
Agreement will greatly reduce this existing tariff asymmetry,
the U.S. International Trade Commission (``Commission'') found
that the Agreement likely will result in a larger increase in
U.S. exports to Colombia than in U.S. imports from Colombia.
Colombia has FTAs in place with Canada, the Mercosur
countries (including Brazil and Argentina), Mexico, Guatemala,
El Salvador, Honduras, and Chile. It has signed FTAs with the
European Union and the European Free Trade Association
countries (Norway, Liechtenstein, Iceland, and Switzerland). It
has also initiated FTA negotiations with South Korea, Japan,
and Panama. Colombia has entered into bilateral investment
agreements with Japan, Peru, Spain, and Switzerland.
3. U.S. International Trade Commission study
In December 2006, the Commission released the results of
its investigation (Investigation No. TA-2104-023) into the
probable economic effect of the Agreement (USITC Pub. 3896).
The Commission found that the expected growth in U.S. trade
with Colombia under the Agreement would likely have a small but
positive impact on the U.S. economy, predicting a $2.5 billion
increase in U.S. gross domestic product. The Commission
indicated, however, that these benefits may be tempered by the
relatively small size of Colombia's economy, its small share of
total U.S. trade, and its existing duty-free access to the U.S.
market under ATPA.
As noted above, the Commission also concluded that the
Agreement likely will result in a much larger increase in U.S.
exports to Colombia than in U.S. imports from Colombia. More
specifically, it estimated that annual U.S. exports to Colombia
will increase by $1.1 billion while annual U.S. imports from
Colombia will increase by $487 million. It further estimated
that the Agreement will increase U.S. exports of meat (beef and
pork), grains, soybeans, soybean products, animal feeds,
chemical, rubber, plastic products, machinery, electronics, and
transportation equipment. It also estimated that the Agreement
will result in a small increase of U.S. imports from Colombia
of textiles and apparel, sugar, and cut flowers.
With respect to services, the Commission concluded that
U.S. service firms will benefit from improved market access,
national treatment, and regulatory transparency under the
Agreement. The Commission noted, however, that these benefits
will be moderated by the relatively small size of Colombia's
economy and the relatively small and domestically-focused
nature of its service sector.
D. Overview of the Agreement
1. Background
The Agreement establishes a bilateral free trade area that
eliminates tariffs on trade between the United States and
Colombia for all qualifying goods except sugar. The Agreement
also liberalizes trade in services and contains provisions that
address telecommunications, electronic commerce, intellectual
property rights, labor, environment, government procurement,
and investment issues. In addition, the Agreement contains
provisions that promote bilateral consultation and cooperation,
procedural and substantive due process, administrative and
judicial review, transparency, and the rule of law. It also
contains a mechanism for settling disputes that arise under the
Agreement.
As noted above, the Bush Administration and the bipartisan
leadership of the U.S. Senate Committee on Finance and the U.S.
House of Representatives Committee on Ways and Means reached an
agreement on trade policy on May 10, 2007. The United States-
Colombia Trade Promotion Agreement incorporates the provisions
of the May 10 agreement. This Agreement therefore includes the
following provisions: (1) fully enforceable commitments by the
Parties to adopt, maintain, and enforce the 5 core
international labor standards incorporated in the 1988
International Labor Organization Declaration on Fundamental
Principles and Rights at Work; (2) fully enforceable
commitments by the Parties to adopt, maintain, and enforce
their obligations under certain common multilateral
environmental agreements; (3) modifications to the intellectual
property chapter that balance the need for access to medicines
with patent protections for pharmaceutical products; (4)
modifications to the government procurement chapter that allow
the Parties to condition government contracts on adherence to
core labor standards; (5) confirmation that the United States
can prevent foreign companies from supplying services at U.S.
ports if the United States deems such action necessary to
protect our national security; and (6) confirmation that the
Agreement accords foreign investors in the United States no
greater substantive rights with regard to investor protections
than U.S. investors in the United States.
2. Office of the U.S. Trade Representative summary of the agreement
The Office of the U.S. Trade Representative prepared a
summary of the Agreement that was included among the documents
that the President transmitted to Congress on October 3, 2011.
This summary was distributed to Members of the Committee to aid
in their consideration of the implementing legislation, and it
is reprinted below:
THE UNITED STATES-COLOMBIA TRADE PROMOTION AGREEMENT
Summary of the Agreement
This summary briefly describes key provisions of the United
States-Colombia Trade Promotion Agreement (``Agreement'') that
the United States has concluded with Colombia and represents an
authoritative expression of Administration views regarding the
interpretation of the Agreement both for purposes of U.S.
international obligations and domestic law.
PREAMBLE
The Preamble to the Agreement provides the Parties'
underlying objectives in entering into the Agreement and
provides context for the provisions that follow. It includes
the following statement:
``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 statement clarifies that, as stated in the Bipartisan
Trade Promotion Authority Act of 2002, under the Agreement
foreign investors in the United States are not to be accorded
greater substantive rights with respect to investment
protections than United States investors in the United States.
CHAPTER ONE: INITIAL PROVISIONS AND GENERAL DEFINITIONS
Section A of Chapter One sets out provisions establishing a
free trade area and affirming the Parties' existing rights and
obligations with respect to each other under the Marrakesh
Agreement Establishing the World Trade Organization (WTO) and
other agreements to which they are party.
Section B defines certain terms that recur in various
chapters of the Agreement.
CHAPTER TWO: NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS
Chapter Two and its relevant annexes and appendices set out
the Agreement's principal rules governing trade in goods. Each
Party must treat products from the other Party in a non-
discriminatory manner, provide for the phase-out and
elimination of tariffs on ``originating'' goods (as defined in
Chapter Four) traded between the Parties, and eliminate a wide
variety of non-tariff trade barriers that restrict or distort
trade flows.
Tariff Elimination. Chapter Two provides for the
elimination of customs duties on originating goods traded
between the Parties. Duties on most tariff lines covering
industrial and consumer goods will be eliminated as soon as the
Agreement enters into force. Duties on other goods, including
all industrial goods, will be phased out over periods of up to
10 years. Some agricultural goods will have longer periods for
elimination of duties or be subject to other provisions,
including, in some cases, the application of preferential
tariff-rate quotas (TRQs). The General Notes to the U.S. and
Colombia Schedules to Annex 2.3 include detailed provisions on
staging of tariff reductions and application of TRQs for
certain agricultural goods. The Chapter provides that the
Parties may agree to speed up tariff phase-outs on a product-
by-product basis after the Agreement takes effect.
Waiver of Customs Duties. The Parties may not adopt new
duty waivers or expand existing duty waivers conditioned on the
fulfillment of a performance requirement. Chapter Two defines
the term ``performance requirements'' so as not to restrict a
Party's ability to provide duty drawback on goods imported from
the other Party.
Temporary Admission. The Parties will provide duty-free
temporary admission for certain products. Such items include
professional equipment, goods for display or demonstration, and
commercial samples. The Chapter also includes specific
provisions on transit of vehicles and containers used in
international traffic.
Import/Export Restrictions, Fees, and Formalities. The
Agreement clarifies that restrictions prohibited under the
General Agreement on Tariffs and Trade (GATT) 1994 and this
Agreement include export and import price requirements (except
under antidumping and countervailing duty orders and
undertakings) and import licensing conditioned on the
fulfillment of a performance requirement. In addition, a Party
must limit all fees and charges imposed on or in connection
with importation or exportation to the approximate cost of
services rendered. The United States will not apply its
merchandise processing fee on imports of originating goods.
Colombia will not require a person of the United States to have
or maintain a relationship with a ``distributor'' as a
condition for allowing the importation of a good.
Distinctive Products. Colombia will recognize Bourbon
Whiskey and Tennessee Whiskey as ``distinctive products'' of
the United States, meaning Colombia will not permit the sale of
any product as Bourbon Whiskey or Tennessee Whiskey unless it
was manufactured in the United States in accordance with
applicable laws and regulations.
Committee on Trade in Goods. The Parties establish a
Committee on Trade in Goods to consider matters arising under
Chapters Two, Four (Rules of Origin and Origin Procedures), and
Five (Customs Administration and Trade Facilitation). The
functions of the Committee are to promote trade in goods
between the Parties and address barriers to trade in goods and
to provide advice and recommendations on trade capacity
building with respect to matters those chapters cover.
Agriculture
TRQs. Under Chapter Two, each government must administer
TRQs in a manner that is transparent, non-discriminatory,
responsive to market conditions, and minimally burdensome on
trade. In addition, the Parties will make every effort to
administer TRQs in a manner that allows importers to fully
utilize import quotas. In addition, the Chapter provides that
Parties may not condition application for, or utilization of,
import licenses or quota allocations on the re-export of an
agricultural good.
Export Subsidies. Each Party will eliminate export
subsidies on agricultural goods destined for the other Party.
Under Article 2.16, no Party may introduce or maintain an
export subsidy on agricultural goods destined for the other
Party unless the exporting Party believes that a third country
is subsidizing its exports to that other Party. In such a case,
the exporting Party may initiate consultations with the
importing Party to develop measures the importing Party may
adopt to counteract such subsidies. If the importing Party
agrees to such measures, the exporting Party must refrain from
applying export subsidies to its exports of the good to the
importing Party.
Safeguards. Chapter Two sets out a transitional
agricultural safeguard mechanism that allows a Party to impose
a temporary additional duty on specified agricultural products
if imports exceed an established volume ``trigger.'' The
safeguard measure will remain in force until the end of the
calendar year in which the measure applies. A Party may not
apply an agricultural safeguard on a good after the date that
the good is subject to duty-free treatment under the Party's
Schedule to Annex 2.3 of the Agreement.
A Party may not apply a safeguard measure to a good that is
already the subject of a safeguard measure under either Chapter
Eight (Trade Remedies) of the Agreement or Article XIX of GATT
1994 and the WTO Agreement on Safeguards. All agricultural
safeguard measures must be applied and maintained in a
transparent manner and the Party applying such a measure must,
on request, consult with the other Party concerning the
application of the measure.
Neither Party may impose safeguard duties pursuant to the
WTO Agreement on Agriculture on originating goods.
Sugar. The Agreement contains several unique features
applicable to imports of sugar into the United States. First,
imports under the TRQs provided for in the Agreement will be
limited to the lesser of (i) the quantity established in the
TRQ, or (ii) Colombia's trade surplus in specific sugar goods.
(``Colombia's trade surplus'' is the amount by which Colombia's
exports to all destinations exceed its imports from all sources
in specified sugar and sweetener goods, except that Colombia's
exports of sugar to the United States and its imports of high
fructose corn syrup from the United States are not included in
the calculation of its trade surplus). The aggregate quantities
established for the TRQ start at 50,000 metric tons in the
first year and go up to 60,500 metric tons by year 15 of the
Agreement. After year 15, the quantities increase by 750 metric
tons per year. Second, in contrast to how it will treat other
commodities subject to TRQs, the United States will not
eliminate its over-quota duty on sugar imports under the
Agreement. Lastly, the Agreement includes a mechanism that
allows the United States, at its option, to provide some form
of alternative compensation to Colombian exporters in place of
imports of sugar in any given year.
Additional Provisions. Chapter Two provides for the
creation of a Committee on Agricultural Trade. The Committee
will be established within 180 days after the date the
Agreement enters into force and will provide a forum for
promoting cooperation in the implementation and administration
of the Agreement, as well as for consultations on matters
related to the agricultural provisions of the Agreement. In
addition, the Chapter provides that the Parties will consult on
and review the operation of the Agreement as it relates to
trade in chicken nine years after the Agreement enters into
force.
CHAPTER THREE: TEXTILES AND APPAREL
Tariff Elimination. Chapter Three provides for duties on
all originating textile or apparel goods to be eliminated on
the date the Agreement enters into force.
Safeguards. The Chapter also establishes a transitional
safeguard procedure for textile and apparel goods, under which
an importing Party may temporarily impose additional duties up
to the level of the normal trade relations (most-favored-
nation) (NTR(MFN)) duty rates on imports of textile or apparel
goods that cause, or threaten to cause, serious damage to a
domestic industry as a result of the elimination or reduction
of duties under the Agreement. An importing Party may impose a
textile safeguard measure only once on the same textile or
apparel good. The measure may not be in place for more than two
years, or three years if the measure is extended. The ability
to impose or maintain textile safeguards lapses five years
after the Agreement enters into force. A Party may not apply a
textile safeguard measure to a good while the good is subject
to a safeguard measure under (i) Chapter Eight (Trade
Remedies), or (ii) Article XIX of the GATT 1994 and the WTO
Agreement on Safeguards.
A Party imposing a safeguard measure under Chapter Three
must provide the exporting Party with mutually agreed
compensation in the form of trade concessions for textile or
apparel goods that have a value substantially equivalent to the
increased duties resulting from application of the safeguard
measure. If the Parties cannot agree on compensation, the
exporting Party may raise duties on any goods from the
importing Party in an amount that has a value substantially
equivalent to the increased duties resulting from application
of the safeguard measure.
Rules of Origin and Related Matters. A textile or apparel
good will generally qualify as an ``originating good'' eligible
to receive preferential treatment under the Agreement only if
all processing from the yarn stage to the final product (e.g.,
yarn-spinning, fabric production, cutting, and assembly) takes
place in the United States, Colombia, or both, or if there is
an applicable change in tariff classification under the
specific rules of origin contained in Annex 3-A of the
Agreement.
Chapter Three sets out special rules for determining
whether a textile or apparel good is an ``originating good,''
including a de minimis exception for non-originating yarns or
fibers, a process for designating inputs not available in
commercial quantities, a rule for treatment of sets, an
exception for use of certain nylon filament yarn, and
consultation provisions.
The de minimis rule applies to goods that ordinarily would
not be considered originating goods because certain of their
fibers or yarns do not undergo an applicable change in tariff
classification. Under the rule, the Parties will consider a
good to be ``originating'' if those fibers or yarns constitute
ten percent or less of the total weight of the component of the
good that determines origin. This special rule does not apply
to goods containing elastomeric yarns in the component of the
good that determines the classification.
Annex 3-B of the Agreement sets out a list of fabrics,
yarns, and fibers that the Parties have determined are not
available in commercial quantities in a timely manner from
producers in the United States and Colombia. A textile or
apparel good that includes the fabrics, yarns, or fibers
included in this list will be treated as if it is
``originating'' for purposes of the specific rules of origin in
Annex 3-A of the Agreement, regardless of the actual origin of
those inputs. Chapter Three establishes procedures under which
the United States will determine whether additional fabrics,
yarns, or fibers are not available in commercial quantities in
the United States and Colombia. The United States may also
remove a fabric, yarn, or fiber from the list if it determines
that the fabric, yarn, or fiber has become available in
commercial quantities.
Customs Cooperation. In Chapter Three, the Parties commit
to cooperate in enforcing their laws related to trade in
textile and apparel goods, to ensure the accuracy of claims of
origin, and to prevent circumvention of the Parties' laws or
agreements relating to trade in textile and apparel goods. The
Chapter also provides that, under certain circumstances, the
exporting Party must conduct a verification to determine that a
claim of origin is accurate, or to determine compliance with
relevant laws. A verification may include visits to the
premises of the exporter or producer of the goods in question.
If there is insufficient information to make the relevant
determination, or if an enterprise provides incorrect
information, the importing Party may take appropriate action,
which may include denying application of preferential tariff
treatment or denying entry to the goods in question. Further,
either Party may convene consultations to resolve technical or
interpretive issues arising with respect to customs cooperation
or may request technical assistance from the other Party in
implementing the Chapter's customs cooperation provisions.
Duty Free Treatment for Certain Goods. The United States
and Colombia will provide duty-free treatment for goods that
both Parties may agree qualify as handmade, hand-loomed, or
traditional folklore goods.
CHAPTER FOUR: RULES OF ORIGIN AND ORIGIN PROCEDURES
To benefit from various trade preferences provided under
the Agreement, including reduced duties, a good must qualify as
an ``originating'' good under the rules of origin set out in
Chapter Four and Annex 4.1. These rules ensure that the
preferential tariff treatment and other benefits of the
Agreement accrue primarily to firms or individuals that produce
or manufacture goods in the Parties' territories.
Key Concepts. Chapter Four provides general criteria under
which a good may qualify as ``originating:''
When the good is wholly obtained or produced
entirely in Colombia, the United States, or both
countries (e.g., crops harvested or minerals extracted
in the United States); or
When the good is produced entirely in
Colombia, the United States, or both countries and: (1)
is manufactured or assembled from non-originating
materials that undergo a specified change in tariff
classification in Colombia, the United States, or both
countries; or (2) meets any applicable ``regional value
content'' requirement (see below); and (3) satisfies
all other requirements of Chapter Four, including Annex
4.1, or Annex 3-A; or
When the good is produced entirely in
Colombia, the United States, or both countries,
exclusively from ``originating'' materials.
De Minimis. Even if a good does not undergo a specified
change in tariff classification, it will be treated as an
originating good if the value of non-originating materials that
do not undergo the required tariff shift does not exceed 10
percent of the adjusted value of the good, and the good
otherwise meets the criteria of the Chapter. This de minimis
exception does not apply to certain agricultural and textile
goods.
Regional Value Content. Some origin rules under the
Agreement require that certain goods meet a regional value
content test in order to qualify as ``originating,'' meaning
that a specified percentage of the value of the good must be
attributable to originating materials. In general, the
Agreement provides two methods for calculating that percentage:
(1) the ``build-down method'' (based on the value of non-
originating materials used); and (2) the ``build-up method''
(based on the value of originating materials used). The
regional value content of certain automotive goods, however,
must be calculated on the basis of the net cost of the good.
Finally, accessories, spare parts, and tools delivered with a
good are considered part of the material making up the good so
long as these items are not separately classified or invoiced
and their quantities and values are customary. The de minimis
rule does not apply in calculating regional value content.
Claims for Preferential Tariff Treatment. Under the
Chapter, importers who wish to claim preferential tariff
treatment for particular goods must be prepared to demonstrate,
on the request of the importing Party's customs authority, that
the goods are originating. A Party may only deny preferential
treatment through a written determination that the claim is
invalid as a matter of law or fact. The Chapter provides that,
subject to certain conditions, a Party must allow for the
filing of claims for preferential treatment and for seeking a
refund of any excess duties paid up to one year after a good is
imported. Chapter Four also provides that a Party will not
penalize an importer if the importer promptly and voluntarily
corrects an incorrect claim and pays any duties owed.
Verification. Each Party must ensure that its customs
authority is empowered to conduct verifications for purposes of
determining whether a good is an originating good. Where an
importing Party determines through a verification that an
importer, exporter, or producer has engaged in a pattern of
conduct in providing false or unsupported statements,
declarations, or certifications that a good is an originating
good, the Party may suspend preferential tariff treatment to
identical goods from that importer, exporter, or producer until
the importing Party determines that the importer, exporter, or
producer is in compliance with the rules set out in the
Chapter.
Additional Rules. Chapter Four provides specific rules with
respect to the treatment of (1) packing materials and
containers; (2) indirect materials; (3) fungible goods; and (4)
sets of goods for purposes of determining origin. The Chapter
provides that a Party may not treat a good as originating if
the good undergoes production or any operation in a third
country other than being unloaded, reloaded, or preserved in
good condition, or if it is shipped through a third country and
does not remain under the control of customs authorities there.
CHAPTER FIVE: CUSTOMS ADMINISTRATION AND TRADE FACILITATION
Chapter Five establishes rules designed to encourage
transparency, predictability, and efficiency in the operation
of each Party's customs procedures and to provide for
cooperation between the Parties on customs matters.
General Principles. In Chapter Five, each Party commits to
observe certain transparency obligations. Each Party must
promptly publish its customs measures, including on the
Internet, and, where possible, solicit public comments before
amending its customs regulations. Each Party must also provide
written advance rulings, on request, to its importers and to
exporters and producers of the other Party, regarding whether a
product qualifies as an ``originating'' good under the
Agreement, as well as on other customs matters. In addition,
each Party must guarantee importers access to both
administrative and judicial review of customs decisions. The
Parties must release goods from customs promptly and
expeditiously clear express shipments. After the Agreement
enters into force Colombia will have one year to comply with
the Chapter's rules on release of goods; two years to comply
with the Chapter's express shipments obligations and certain of
its transparency obligations; and three years to comply with
the Chapter's requirement to provide advance rulings.
Cooperation. Chapter Five also is designed to enhance
customs cooperation. The Parties are encouraged to give each
other advance notice of customs developments likely to affect
the Agreement. The Chapter calls for the Parties to cooperate
in securing compliance with each other's customs measures
related to the implementation and operation of the provisions
of the Agreement governing importations and exportations. It
includes specific provisions requiring the Parties to share
customs information where a Party has a reasonable suspicion of
unlawful activity relating to its laws and regulations
governing importations.
CHAPTER SIX: SANITARY AND PHYTOSANITARY MEASURES
Chapter Six defines the Parties' obligations to each other
regarding sanitary and phytosanitary (SPS) measures. It
reflects the Parties' understanding that implementation of
existing obligations under the WTO Agreement on the Application
of Sanitary and Phytosanitary Measures (SPS Agreement) is a
shared objective. Nothing in the Agreement imposes new
limitations on the United States in terms of maintaining high
safety and inspection standards.
Key Concepts. SPS measures are laws or regulations that
protect human, animal, or plant life or health from certain
risks, including plant- and animal-borne pests and diseases,
additives, contaminants, toxins, or disease-causing organisms
in food and beverages.
Cooperation. Under Chapter Six, the Parties will establish
an SPS Committee consisting of relevant trade and regulatory
officials. The objectives of the Committee are to (i) enhance
the implementation by each Party of the WTO SPS Agreement; (ii)
assist each Party to protect human, animal, or plant life or
health; (iii) enhance consultation and cooperation between the
Parties on SPS matters; and (iv) address SPS measures affecting
trade between the Parties. The Committee will also provide a
forum for enhancing mutual understanding of each Party's SPS
measures and the regulatory processes that relate to those
measures; consulting on SPS matters that may affect trade
between the Parties; and consulting on issues, agendas, and
positions for meetings of certain international organizations
that address SPS matters.
Dispute Settlement. No Party may invoke the Agreement's
dispute settlement procedures for a matter arising under
Chapter Six. Instead, any dispute between the Parties involving
an SPS measure must be resolved through the WTO.
CHAPTER SEVEN: TECHNICAL BARRIERS TO TRADE
Chapter Seven builds on WTO rules related to technical
barriers to trade to promote transparency, accountability, and
cooperation between the Parties on regulatory issues.
Key Concepts. The term ``technical barriers to trade''
(TBT) refers to barriers that may arise in preparing, adopting,
or applying voluntary product standards, mandatory product
standards (``technical regulations''), and procedures used to
determine whether a particular good meets such standards, i.e.,
``conformity assessment'' procedures.
International Standards. The principles articulated in the
WTO TBT Committee's Decision on Principles for the Development
of International Standards, Guides and Recommendations
emphasize the need for openness and consensus in the
development of international standards. Under Chapter Seven,
the Parties will apply these principles when determining
whether an international standard exists and consult on
pertinent matters under consideration by relevant international
or regional bodies.
Cooperation. In Chapter Seven, the Parties establish a
Committee on Technical Barriers to Trade through which the
Parties will cooperate to reduce technical barriers and improve
market access. The Committee's specific functions will include:
(i) enhancing cooperation in the development and improvement of
standards, technical regulations, and conformity assessment
procedures; (ii) facilitating sectoral cooperation between
governmental and non-governmental conformity assessment bodies;
(iii) exchanging information on developments in non-
governmental, regional, and multilateral fora engaged in
activities related to standards, technical regulations, and
conformity assessment procedures; and (iv) consulting, at a
Party's request, on any matter arising under the Chapter.
Conformity Assessment. Chapter Seven provides for a
dialogue between the Parties on ways to facilitate the
acceptance of conformity assessment results. Each Party will
recognize conformity assessment bodies in the territory of the
other Party on terms no less favorable than it accords
conformity assessment bodies in its own territory.
Transparency. Chapter Seven contains various transparency
obligations, such as requiring each Party to: (i) allow persons
of the other Party to participate in the development of
technical regulations, standards, and conformity assessment
procedures on a non-discriminatory basis; (ii) transmit
regulatory proposals notified under the WTO Agreement on
Technical Barriers to Trade directly to the other Party; (iii)
describe in writing the objectives of and reasons for the
proposed technical regulations or conformity assessment
procedure; and (iv) consider comments on such proposals and
respond in writing to significant comments it receives. Each
Party must implement the Chapter's transparency provisions as
soon as practicable, and no later than three years after the
Agreement enters into force.
CHAPTER EIGHT: TRADE REMEDIES
Safeguards. Chapter Eight establishes a safeguard procedure
that will be available to aid domestic industries that sustain
or are threatened with serious injury due to increased imports
resulting from tariff reduction or elimination under the
Agreement. The Chapter does not affect the Parties' rights or
obligations under the WTO's safeguard provisions (global
safeguards) or under other WTO trade remedy rules.
In Chapter Eight, each Party is authorized to impose
temporary duties on an imported originating good if, as a
result of the reduction or elimination of a duty under the
Agreement, the good is being imported in such increased
quantities and under such conditions as to constitute a
substantial cause of serious injury, or threat of serious
injury, to a domestic industry producing a ``like'' or
``directly competitive'' good.
A safeguard measure may be applied on a good only during
the Agreement's ``transition period'' for phasing out duties. A
safeguard measure may take one of two forms--a temporary
increase in duties to NTR (MFN) levels or a temporary
suspension of duty reductions called for under the Agreement. A
Party may not impose a safeguard measure under Chapter Eight
more than once on any good. A safeguard measure may be in place
for an initial period of up to two years. A Party may extend a
measure for up to an additional two years, if it determines
that the industry is adjusting and the measure remains
necessary to facilitate adjustment and prevent or remedy
serious injury. If a measure lasts more than one year, the
Party must scale it back at regular intervals.
If a Party imposes a safeguard measure, that Party must
provide offsetting trade compensation to the other Party whose
goods are subject to the measure. If the Parties cannot agree
on the amount or nature of the compensation, the exporting
Party may unilaterally suspend ``substantially equivalent''
trade concessions that it has made to the importing Party.
Global Safeguards. Each Party maintains its right to take
action against imports from all sources under Article XIX of
GATT 1994 and the WTO Agreement on Safeguards. A Party may
exclude imports of an originating good from the other Party
from a global safeguard measure if those imports are not a
substantial cause of serious injury or do not create a threat
of serious injury. A Party may not apply a safeguard measure
under Chapter Eight at the same time that it applies a
safeguard measure on the same good under the WTO Agreement on
Safeguards.
Antidumping and Countervailing Duties. The Parties confirm
that each retains its rights and obligations under the WTO
Agreement relating to the application of antidumping and
countervailing duties. Antidumping and countervailing duty
measures may not be challenged under the Agreement's dispute
settlement procedures.
CHAPTER NINE: GOVERNMENT PROCUREMENT
Under Chapter Nine each Party must apply fair and
transparent procurement procedures and rules and each
government and its procuring entities are prohibited from
discriminating in purchasing practices against goods, services,
and suppliers from the other Party. The rules of Chapter Nine
are broadly based on the rules of the WTO Agreement on
Government Procurement.
General Principles. Chapter Nine establishes a basic rule
of ``national treatment,'' meaning that each Party's
procurement rules and the entities applying those rules must
treat goods, services, and suppliers of such goods and services
from the other Party in a manner that is ``no less favorable''
than their domestic counterparts. Parties are also barred from
discriminating against locally established suppliers on the
basis of foreign affiliation or ownership. Chapter Nine also
provides rules aimed at ensuring a fair and transparent
procurement process.
Coverage and Thresholds. Chapter Nine applies to purchases
and other means of obtaining goods and services valued above
certain dollar thresholds by those government departments,
agencies, and enterprises listed in each Party's schedule.
Specifically, the Chapter applies to procurements by listed
agencies of the ``central government,'' which for the United
States is the federal government, of goods and services valued
at $64,786 or more and construction services valued at
$7,407,000 or more. The equivalent thresholds for purchases by
listed ``sub-central'' government entities (i.e.,
``Gobernaciones'' for Colombia and U.S. state government
agencies) are $526,000 and $7,407,000, for goods and services
and construction services, respectively. The Chapter's
thresholds for other covered entities are either $250,000 or
$593,000 for goods and services, and $7,407,000 for
construction services. The thresholds (other than the $250,000
threshold for other covered entities) are subject to adjustment
every two years on January 1, with the next adjustment set for
January 1, 2012. With respect to construction services, during
the three-year period following the date of entry into force of
the Agreement, Colombia may apply a threshold of $8,000,000
with respect to all three types of entities. The Agreement also
provides that certain Colombian telecommunications and electric
utilities that would not otherwise be covered by the Agreement
must comply with the national treatment non-discrimination
obligations in making purchases.
Transparency. Chapter Nine establishes rules designed to
ensure transparency in procurement procedures. Each Party must
publish its laws, regulations, and other measures governing
procurement, along with any changes to those measures.
Procuring entities must publish notices of procurement
opportunities in advance. The Chapter also lists minimum
information that such notices must include.
Tendering Rules. Chapter Nine provides rules for setting
deadlines on ``tendering'' (bidding on government contracts).
Procuring entities must give suppliers all the information they
need to prepare tenders, including the criteria that procuring
entities will use to evaluate tenders. Entities must also,
where appropriate, base their technical specifications (i.e.,
detailed descriptions of the goods or services to be procured)
on performance-oriented criteria and international standards.
Chapter Nine provides that procuring entities may not write
technical specifications with the purpose or effect of creating
an unnecessary obstacle to trade between the Parties while
clarifying that an entity may adopt technical specifications to
promote environmental conservation. The Chapter also clarifies
that an entity may adopt technical specifications that require
suppliers to comply with generally applicable laws regarding
fundamental principles and rights at work and acceptable
conditions of work with respect to minimum wages, hours of
work, and occupational safety and health in the territory where
they make the product or perform the service that the entity
will purchase. It also sets out the circumstances under which
procuring entities are allowed to use limited tendering, i.e.,
award a contract to a supplier without opening the procurement
to all interested suppliers.
Award Rules. Chapter Nine provides that to be considered
for an award, a tender must be submitted by a qualified
supplier. The tender must meet the criteria set out in the
tender documentation, and procuring entities must base their
award of contracts on those criteria. Procuring entities must
publish information on awards, including the name of the
supplier, a description of the goods or services procured, and
the value of the contract. Chapter Nine also calls for each
Party to ensure that suppliers may bring challenges against
procurement decisions before independent reviewers.
Additional Provisions. The provisions in Chapter Nine build
on the anti-corruption provisions of Chapter Nineteen
(Transparency), including by requiring each Party to maintain
procedures to declare suppliers that have engaged in fraudulent
or other illegal actions in relation to procurement ineligible
for participation in the Party's procurement. It establishes
procedures under which a Party may modify its coverage under
the Chapter, such as when a Party privatizes an entity whose
purchases are covered under the Chapter. It also provides that
Parties may adopt or maintain measures necessary to protect:
(1) public morals, order, or safety; (2) human, animal, or
plant life or health, including environmental measures
necessary to protect human, animal, or plant life or health; or
(3) intellectual property. Parties may also adopt measures
relating to goods or services of handicapped persons,
philanthropic institutions, or prison labor.
CHAPTER TEN: INVESTMENT
Chapter Ten establishes rules to protect investors from one
Party against wrongful or discriminatory government actions
when they invest or attempt to invest in the other Party's
territory. The Chapter's provisions reflect traditional
standards incorporated in earlier U.S. bilateral investment
treaties, previous trade agreements, and customary
international law.
Key Concepts. Under Chapter Ten, the term ``investment''
covers all forms of investment, including enterprises,
securities, certain forms of debt, intellectual property
rights, licenses, and certain contracts. The Chapter covers
both investments existing when the Agreement enters into force
and future investments. The term ``investor of a Party''
encompasses U.S. and Colombian nationals as well as firms
(including branches) established in one of the Parties.
General Principles. Under the Agreement, investors enjoy
six basic protections: (1) the right to non-discriminatory
treatment relative both to domestic investors and investors of
non-Parties; (2) limits on imposition by the host Party of
``performance requirements;'' (3) the right to free transfer of
funds related to an investment; (4) protection from
expropriation except when done in conformity with customary
international law; (5) the right to the minimum standard of
treatment of aliens in accordance with customary international
law; and (6) the right to hire key managerial personnel without
regard to nationality. (As to this last protection, a Party may
require that a majority of the board of directors be of a
particular nationality, as long as this does not prevent the
investor from controlling its investment.)
Sectoral Coverage and Non-Conforming Measures. With the
exception of investments in or by regulated financial
institutions (which are treated in Chapter Twelve), Chapter Ten
generally applies to all sectors, including service sectors.
However, each Party negotiated a limited list, in in Annexes I
and II, of exemptions from the Chapter's obligations relating
to national treatment, NTR (MFN), performance requirements, or
senior management and boards of directors (``non-conforming
measures''). Annex I contains each Party's list of existing
non-conforming measures at the central and regional levels of
government. The United States has scheduled an exemption from
all of the aforementioned obligations for all existing state
measures. All existing local measures are exempted from those
obligations for both Parties without the need to be listed. If
a Party liberalizes any of these non-conforming Annex I
measures, it must thereafter maintain the measure at least at
that level of openness. In Annex II, each Party has listed
sectors or activities in which it reserves the right to adopt
or maintain future non-conforming measures. (Annexes I and II
also include exemptions from Chapter Eleven (Cross-Border Trade
in Services). See below).
Investor-State Disputes. Chapter Ten provides a mechanism
for an investor of a Party to submit to binding international
arbitration a claim for damages against the other Party. The
investor may assert that the Party has breached a substantive
obligation under the Chapter or that the Party has breached an
``investment agreement'' with, or an ``investment
authorization'' granted to, the investor or a covered
investment that the investor owns or controls. ``Investment
agreements'' and ``investment authorizations'' are arrangements
between an investor and a host government based on contracts
and authorizations, respectively. These terms are defined in
Chapter Ten.
Chapter Ten affords public access to information on
investor-State arbitrations conducted pursuant to the
Agreement. For example, Chapter Ten requires that hearings be
generally open to the public and key documents be publicly
available, with exceptions for confidential information,
including confidential business information. The Parties also
authorize tribunals to accept amicus submissions from the
public. In addition, the Chapter includes provisions similar to
those used in U.S. courts to dispose quickly of claims a
tribunal finds to be frivolous. Finally, within three years
after the Agreement enters into force the Parties will consider
whether to establish an appellate body, or similar mechanism,
to review arbitral awards rendered by tribunals under the
Chapter.
Chapter Ten provides that, ``except in rare
circumstances,'' nondiscriminatory regulatory actions designed
and applied to meet legitimate public welfare objectives, such
as public health, safety, and the environment, are not indirect
expropriations.
The Agreement does not require the United States to give
Colombian investors greater substantive rights that U.S.
companies already enjoy in the United States.
CHAPTER ELEVEN: CROSS-BORDER TRADE IN SERVICES
Chapter Eleven governs measures affecting cross-border
trade in services between the Parties. Certain provisions also
apply to measures affecting investments to supply services.
Key Concepts. Under the Agreement, cross-border trade in
services covers supply of a service:
from the territory of one Party into the
territory of the other Party (e.g., electronic delivery
of services from the United States to Colombia);
in the territory of a Party by a person of
that Party to a person of the other Party (e.g., a
Colombian company provides services to U.S. visitors in
Colombia); and
by a national of a Party in the territory of
the other Party (e.g., a U.S. lawyer provides legal
services in Colombia).
Chapter Eleven should be read together with Chapter Ten
(Investment), which establishes rules pertaining to the
treatment of service firms that choose to provide their
services through a local presence, rather than cross-border.
Chapter Eleven applies where, for example, a service supplier
is temporarily present in a territory of a Party and does not
operate through a local investment.
General Principles. Among Chapter Eleven's core obligations
are requirements to provide national treatment and NTR (MFN)
treatment to service suppliers of the other Party. Thus, each
Party must treat service suppliers of the other Party no less
favorably than its own suppliers or those of any other country.
This commitment applies to state and local governments as well
as the federal government. The Chapter's provisions apply to
existing service suppliers as well as those who seek to supply
services. The Parties are prohibited from requiring firms to
establish a local presence as a condition for supplying a
service on a cross-border basis. In addition, certain types of
market access restrictions on the supply of services (e.g.,
that limit the number of firms that may offer a particular
service or that restrict or require specific types of legal
structures or joint ventures with local companies in order to
supply a service) are also barred. The Chapter's market access
rules apply both to services supplied on a cross-border basis
and through a local investment.
Sectoral Coverage and Non-Conforming Measures. Chapter
Eleven applies across virtually all services sectors. The
Chapter excludes financial services (which are addressed in
Chapter Twelve), except that certain provisions of Chapter
Eleven apply to investments in financial services that are not
regulated as financial institutions and are covered by Chapter
Ten (Investment). In addition, Chapter Eleven does not cover
air transportation, although it does apply to specialty air
services and aircraft repair and maintenance.
Each Party has listed in Annexes I and II measures or
sectors for which it negotiated exemptions from Chapter
Eleven's core obligations (national treatment, NTR (MFN), local
presence, and market access). Annex I contains the list of
existing non-conforming measures at the central and regional
level of government. The United States has scheduled an
exemption from national treatment, NTR (MFN), and local
presence for all existing state measures. Our coverage under
the market access discipline is the same as our commitments
under the WTO General Agreement on Trade in Services, with the
right to take measures not inconsistent with those commitments.
All existing local measures are exempted for both Parties
without the need to be listed. However, once a Party
liberalizes any of these non-conforming Annex I measures, it
must thereafter maintain the measure at least at that level of
openness. Each Party has listed in Annex II sectors or
activities in which it reserves the right to adopt or maintain
future non-conforming measures.
Specific Commitments. Chapter Eleven includes a
comprehensive definition of express delivery services under
which each Party must provide national treatment, NTR (MFN)
treatment, and additional benefits to express delivery services
of the other Party. The Chapter provides that the Parties will
try to maintain the level of market openness for express
delivery services they provided on the date the Agreement was
signed, and a Party may request consultations with the other if
it believes the other Party is not maintaining that level of
access. The Chapter also addresses the issue of postal
monopolies directing revenues derived from monopoly postal
services to confer an advantage on express delivery services.
In addition, Colombia has committed to eliminate a requirement
that has prevented U.S.-owned companies in Colombia from hiring
the managers, professionals, and specialists of their choice
for their operations in Colombia.
Transparency and Domestic Regulation. Provisions on
transparency and domestic regulation complement the core rules
of Chapter Eleven. The transparency rules apply to the
development and application of regulations governing services.
The Chapter's rules on domestic regulation govern the operation
of approval and licensing systems for service suppliers. Like
the Chapter's market access rules, its provisions on
transparency and domestic regulation cover services supplied
both on a cross-border basis and through a local investment.
Exclusions. Chapter Eleven does not apply to any service
supplied ``in the exercise of governmental authority''--that
is, a service that is provided on a non-commercial and non-
competitive basis. Chapter Eleven also does not apply to
government subsidies. In addition, the Chapter makes clear that
the Agreement does not impose any obligation on a Party with
respect to its immigration measures, including admission or
conditions of admission for temporary entry.
CHAPTER TWELVE: FINANCIAL SERVICES
Chapter Twelve covers measures relating to the supply of
financial services. It provides rules governing each Party's
treatment of: (1) financial institutions of the other Party;
(2) investors of the other Party, and their investments, in
financial institutions; and (3) cross-border trade in financial
services.
Key Concepts. The Chapter defines a ``financial
institution'' as any financial intermediary or other enterprise
authorized to do business and regulated or supervised as a
financial institution under the law of the Party where it is
located. A ``financial service'' is any service of a financial
nature, including, for example, insurance, banking, securities,
asset management, financial information and data processing
services, and financial advisory services.
General Principles. Chapter Twelve's core obligations
parallel those in Chapters Ten (Investment) and Eleven (Cross-
Border Trade in Services). Specifically, Chapter Twelve imposes
rules requiring national treatment and NTR (MFN) treatment,
prohibits certain quantitative restrictions on market access of
financial institutions, and bars restrictions on the
nationality of senior management. As appropriate, these rules
apply to measures affecting financial institutions, investors
and investments in financial institutions of the other Party,
and services companies that are currently supplying and that
seek to supply financial services on a cross-border basis. The
rules do not apply to measures adopted or maintained by a Party
relating to certain specified services and activities--for
example, activities or services forming part of a public
retirement plan or statutory system of social security--unless
a Party allows its financial institutions to compete with a
public entity or a financial institution to supply such
services and activities. Provisions such as the prudential and
monetary and exchange rate exceptions ensure that governments
may continue to regulate the financial sector and to take
action to ensure the stability and integrity of the financial
system in a financial crisis.
Non-Conforming Measures. Similar to Chapters Ten
(Investment) and Eleven (Cross-Border Trade in Services), each
Party has listed in an annex (Annex III) particular measures
for which it negotiated exemptions from the Chapter's core
obligations. Existing non-conforming U.S. state and local laws
and regulations are exempted from these obligations. Once a
Party, including a state or local government, liberalizes one
of these non-conforming measures, however, it must, in most
cases, maintain the measure at least at that new level of
openness.
Other Provisions. Chapter Twelve also includes provisions
on regulatory transparency, ``new'' financial services, self-
regulatory organizations, and the expedited availability of
insurance products.
Relationship to Other Chapters. Measures that a Party
applies to financial services suppliers of the other Party,
other than regulated financial institutions, that make or
operate investments in the Party's territory are covered
principally by Chapter Ten (Investment) and certain provisions
of Chapter Eleven (Cross-Border Trade in Services). In
particular, the core obligations of Chapter Ten apply to such
measures, as do the market access, transparency, and domestic
regulation provisions of Chapter Eleven. Chapter Twelve
incorporates by reference certain provisions of Chapter Ten,
such as those relating to transfers and expropriation.
CHAPTER THIRTEEN: COMPETITION POLICY, DESIGNATED MONOPOLIES, AND STATE
ENTERPRISES
Recognizing that anticompetitive business conduct has the
potential to restrict bilateral trade and investment, Chapter
Thirteen calls for each government to proscribe such conduct.
The Chapter also sets out basic procedural safeguards and rules
ensuring against harmful conduct by government-designated
monopolies and state enterprises.
Competition Laws. Each Party must adopt or maintain laws
prohibiting anticompetitive business conduct and to take
appropriate action with respect to such conduct. Each Party
must also maintain authorities responsible for enforcing its
national competition laws. The Parties affirm that the
enforcement policy of each Party's national competition
authority is not to discriminate on the basis of nationality.
It also obligates each Party to provide certain procedural
protections for persons facing enforcement actions. Each Party
will ensure that persons subject to sanctions or remedies for
competition law violations will be provided a right to be heard
and to present evidence, and to seek review by a court or
independent tribunal.
Designated Monopolies. There are specific rules governing
instances in which a Party gives a private or national
government-owned entity a monopoly to provide or purchase a
good or service. In particular, the Party must ensure that the
entity: (1) abides by the Party's obligations under the
Agreement wherever it exercises authority delegated to it by
the government in connection with the monopoly good or service;
(2) purchases or sells the monopoly product in a manner
consistent with commercial considerations; (3) does not
discriminate against the other Party's investments, goods, or
service suppliers in the purchase or sale of the monopoly
product; and (4) does not engage in anticompetitive practices
in markets outside its monopoly mandate that harm the other
Party's investments.
State Enterprises. Chapter Thirteen sets forth obligations
regarding the Parties' responsibilities for ``state
enterprises,'' i.e., enterprises owned or controlled by a
Party. Each Party must ensure that its state enterprises accord
non-discriminatory treatment in the sale of their products to
the other Party's investments.
Cooperation and Working Group. Chapter Thirteen provides
for bilateral cooperation in relation to the enforcement of
competition laws. In addition, the Parties will establish a
working group to promote greater understanding and cooperation
between the Parties with respect to the matters covered under
the Chapter.
Dispute Settlement. Many of the Chapter's provisions are
not subject to the Agreement's dispute settlement procedures,
including the provisions requiring a Party to adopt and enforce
laws prohibiting anticompetitive business conduct and the
provisions governing cooperation and consultations. The
Chapter's rules addressing designated monopolies and state
enterprises, however, may be enforced through the Agreement's
State-to-State dispute settlement mechanism.
CHAPTER FOURTEEN: TELECOMMUNICATIONS
Chapter Fourteen includes disciplines beyond those imposed
under Chapters Ten (Investment) and Eleven (Cross-Border Trade
in Services) on regulatory measures affecting
telecommunications trade and investment between the Parties. It
is designed to ensure that service suppliers of each Party have
non-discriminatory access to public telecommunications networks
in the territory of the other Party. In addition, each Party
must regulate its major telecommunications suppliers in ways
that will ensure a level playing field for new entrants. The
Parties also seek to ensure that telecommunications regulations
are set by independent regulators applying transparent
procedures, and is designed to encourage adherence to
principles of deregulation and technological neutrality.
Key Concepts. Under Chapter Fourteen, a ``public
telecommunications service'' is any telecommunications service
that a Party requires to be offered to the public generally.
The term includes voice and data transmission services. It does
not include the offering of ``information services'' (e.g.,
services that enable users to create, store, or process
information over a network). A ``major supplier'' is a company
that, by virtue of its market position or control over certain
facilities, can materially affect the terms of participation in
the market.
Competition. Chapter Fourteen establishes rules promoting
effective competition in telecommunications services. It also
provides flexibility to account for changes that may occur
through new legislation or regulatory decisions. The Chapter
includes commitments by each Party to:
ensure that all service suppliers of the
other Party that seek to access or use a public
telecommunications network in the Party's territory can
do so on reasonable and non-discriminatory terms (e.g.,
Colombia must ensure that its public phone companies do
not provide preferential access to Colombian banks or
Internet service providers, to the detriment of U.S.
competitors);
give the other Party's telecommunications
suppliers, in particular, the right to interconnect
their networks with public networks in the Party's
territory;
ensure that telecommunications suppliers of
the other Party enjoy the right to lease lines to
supplement their own networks or, alternatively,
purchase telecommunications services from domestic
suppliers and resell them in order to build a customer
base; and
impose disciplines on the behavior of
``major suppliers.''
Regulation. The Chapter addresses key regulatory concerns
that may create barriers to trade and investment in
telecommunications services. In particular, each Party:
will adopt procedures that will help ensure
that they maintain open and transparent
telecommunications regulatory regimes, including
requirements to publish interconnection agreements and
service tariffs;
will require their telecommunications
regulators to resolve disputes between suppliers and
provide foreign suppliers the right to seek judicial
review of those decisions;
may elect to deregulate telecommunications
services when competition emerges and certain standards
are met; and
will avoid impeding telecommunications
suppliers from choosing technologies they consider
appropriate for supplying their services.
CHAPTER FIFTEEN: ELECTRONIC COMMERCE
Chapter Fifteen establishes rules designed to prohibit
discriminatory regulation of electronic trade in digitally
encoded products such as computer programs, video, images, and
sound recordings. The provisions in this and other recent U.S.
trade agreements represent a major advance over previous
international understandings on this subject.
Customs Duties. Chapter Fifteen provides that a Party may
not impose customs duties on digital products of the other
Party transmitted electronically and will determine the customs
value of an imported carrier medium bearing a digital product
based on the value of the carrier medium alone, without regard
to the value of the digital product stored on the carrier
medium.
Non-Discrimination. The Parties will apply the principles
of national treatment and NTR (MFN) treatment to trade in
electronically-transmitted digital products. Thus, a Party may
not discriminate against electronically-transmitted digital
products on the grounds that they have a nexus to another
country, either because they have undergone certain specific
activities (e.g., creation, production, first sale) there or
are associated with certain categories of persons of the other
Party or a non-Party (e.g., authors, performers, producers).
Nor may a Party provide less favorable treatment to digital
products that have a nexus to the other Party than it gives to
like products that have a nexus to a third country. The non-
discrimination rules do not apply to non-conforming measures
adopted under Chapters Ten (Investment), Eleven (Cross-Border
Trade in Services), or Twelve (Financial Services).
Additional Provisions. Chapter Fifteen contains additional
provisions relating to authentication, online consumer
protection, and paperless trade administration.
CHAPTER SIXTEEN: INTELLECTUAL PROPERTY RIGHTS
Chapter Sixteen complements and enhances existing
international standards for the protection of intellectual
property and the enforcement of intellectual property rights,
consistent with U.S. law.
General Provisions. In Chapter Sixteen the Parties commit
to ratify or accede to several agreements on intellectual
property rights, including, by the date the Agreement enters
into force, the WIPO Copyright Treaty, the Brussels Convention
Relating to the Distribution of Programme-Carrying Satellite
Signals, and the WIPO Performances and Phonograms Treaty, and,
within specified periods, the International Convention for the
Protection of New Varieties of Plants, the Trademark Law
Treaty, and the Patent Cooperation Treaty. The United States is
already a party to these Agreements. With very limited
exceptions, each Party commits to provide national treatment to
the other Party's nationals with respect to the enjoyment and
protection of the intellectual property rights covered by the
Chapter.
Trademarks and Geographical Indications. Each Party must
protect trademarks and geographical indications, including by
refusing protection or recognition of a geographical indication
that is likely to cause confusion with a preexisting trademark.
The Chapter provides that trademarks protection includes
protection for collective marks and certification marks. Each
Party must also establish an electronic system for applying
for, registering, and maintaining trademarks, as well as an
online database. (Colombia has one year from the date of entry
into force of the Agreement to give effect to this provision.)
Each Party must also provide efficient and transparent
procedures governing applications to protect trademarks and
geographical indications. Furthermore, each Party's Internet
domain name management system must include a dispute resolution
procedure to address trademark cyber-piracy.
Copyright and Related Rights. Under Chapter Sixteen, the
Parties must provide broad protection for copyright and related
rights, affirming and building on rights set out in several
international agreements. For instance, each Party must provide
copyright protection for the life of the author plus 70 years
(for works measured by a person's life). The Chapter also
provides enhancements of the rights of copyright owners over
digital copies of their works. Each Party must also provide a
right of communication to the public, including the exclusive
right to authorize making protected works available online.
Each Party must also protect the rights of performers and
producers of phonograms.
To curb copyright piracy, government agencies of the
Parties must use only legitimate computer software, setting an
example for the private sector. The Chapter also includes
provisions on anti-circumvention of effective technological
measures, under which the Parties commit to prohibit tampering
with technology used to protect copyrighted works. In addition,
Chapter Sixteen sets out obligations with respect to the
liability of Internet service providers in connection with
copyright infringements that take place over their networks.
Finally, recognizing the importance of satellite broadcasts,
Chapter Sixteen provides that each Party will protect encrypted
program-carrying satellite signals. It obligates the Parties to
extend protection to the signals themselves, as well as to the
content contained in the signals.
Patents. Chapter Sixteen also includes a variety of
provisions for the protection of patents. The Parties will make
patents available for any invention, subject to limited
exclusions. To guard against arbitrary revocation of patents,
each Party must limit the grounds for revoking a patent to the
grounds that would have justified a refusal to grant the
patent. Under Chapter Sixteen, each Party must make best
efforts to process patent applications and marketing approval
applications expeditiously. With respect to most products, a
Party must adjust the patent term to compensate for
unreasonable delays that occur while granting a patent. For
pharmaceutical products, a Party may provide for such
adjustments if there is an unreasonable delay in granting a
patent or providing marketing approval for a product.
Certain Regulated Products. Chapter Sixteen includes
additional specific provisions relating to pharmaceuticals and
agricultural chemicals. Among other things, the Chapter
provides for the protection of test data and other data
concerning safety or efficacy that a company submits in seeking
marketing approval for such products by precluding other firms
from relying on the data. It provides specific periods for such
protection--normally five years for pharmaceuticals and ten
years for agricultural chemicals. This means, for example, that
during the period of protection, information that a company
submits for approval of a new agricultural chemical product
cannot be used without that company's consent in granting
approval to market a new product. If a Party bases its decision
to approve a pharmaceutical product for marketing in its
territory on a marketing approval the other Party has granted
for that product, and it approves the product within six months
after the company applies for the approval in the Party, the
period of test data protection will be counted from the date
the other Party approved the product. The Chapter's rules
governing test data protection for pharmaceutical products are
subject to a public health exception in accordance with the
Doha Declaration on the TRIPS Agreement and Public Health. The
Parties must implement procedures for the expeditious
adjudication of disputes concerning the validity or
infringement of a patent, a transparent system to provide
notice to a patent holder that another person is seeking to
market an approved pharmaceutical product during the term of a
patent, and sufficient time and opportunity for a patent holder
to seek, prior to the marketing of an allegedly infringing
product, available remedies for an infringing product.
Public Health. Chapter Sixteen expresses the Parties'
understanding that its obligations do not and should not
prevent a Party from taking measures to protect public health,
in accordance with the Doha Declaration on the TRIPS Agreement
and Public Health, by promoting access to medicines for all.
Enforcement Provisions. In Chapter Sixteen the Parties also
assume obligations with respect to the enforcement of
intellectual property rights in administrative, civil, and
criminal proceedings, and at the border. For example, each
Party, in determining damages in civil proceedings involving
copyright infringement or trademark counterfeiting, must take
into account the value of the legitimate goods as well as the
infringer's profits, and must also provide for damages based on
a fixed range (i.e., ``pre-established damages'') as an option
that the right holder can elect instead of actual damages.
Chapter Sixteen further provides that each Party's law
enforcement agencies must have authority to seize suspected
pirated and counterfeit goods, the equipment used to make or
transmit them, and documentary evidence. Each Party must give
its courts authority to order the forfeiture and/or destruction
of such items. Chapter Sixteen also provides that each Party
must apply criminal penalties against willful counterfeiting
and piracy, including end-user piracy, on a commercial scale.
Each Party must empower its law enforcement agencies to
take ex officio enforcement action at the border against
pirated or counterfeit goods without waiting for a formal
complaint.
Transition Periods. Most obligations in the Chapter take
effect on the date the Agreement enters into force. However,
Colombia may delay giving effect to certain specified
obligations for periods ranging from one year to three years
after that date.
CHAPTER SEVENTEEN: LABOR
Chapter Seventeen sets out the Parties' commitments and
undertakings regarding trade-related labor rights.
Fundamental Labor Rights. Each Party commits to adopt and
maintain in its statutes, regulations, and practice certain
enumerated labor rights, as stated in the 1998 ILO Declaration
on Fundamental Principles and Rights at Work and Its Follow Up.
Specifically, these are (1) freedom of association; (2) the
effective recognition of the right to collective bargaining;
(3) the elimination of all forms of forced or compulsory labor;
(4) the effective abolition of child labor and, for purposes of
the Agreement, a prohibition on the worst forms of child labor;
and (5) the elimination of discrimination in respect of
employment and occupation. In order to establish a violation of
this obligation, a Party must demonstrate that the other Party
has failed to comply in a manner affecting trade or investment
between the Parties. Neither Party may waive or otherwise
derogate from its statutes or regulations implementing this
obligation in a manner affecting bilateral trade or investment
where the waiver or derogation would be inconsistent with one
of the enumerated rights. For the United States, the Chapter's
provisions regarding fundamental labor rights apply to federal
law only.
Effective Enforcement. Each Party commits not to fail to
effectively enforce its labor laws on a sustained or recurring
basis in a manner affecting trade or investment between the
Parties. The Chapter defines ``labor laws'' to include laws
directly related to the ILO fundamental labor rights, as well
as laws providing for acceptable conditions of work with
respect to minimum wages, hours of work, and occupational
safety and health, and laws providing labor protections for
children and minors, including a prohibition on the worst forms
of child labor. For the United States, ``labor laws'' includes
federal statutes and regulations addressing these areas, but it
does not cover state or local labor laws.
Procedural Guarantees. Each Party commits to afford
procedural guarantees that ensure workers and employers have
access to tribunals for the enforcement of its labor laws. To
this end, each Party must ensure that proceedings before these
tribunals are fair, equitable, and transparent and comply with
due process of law. Decisions of such tribunals must be in
writing, made publicly available, and based on information or
evidence in respect of which the parties were offered the
opportunity to be heard. In addition, hearings in such
proceedings must be open to the public, except where the
administration of justice otherwise requires. Each Party also
commits to make remedies available to ensure the enforcement of
its labor laws. Such remedies might include orders, fines,
penalties, or temporary workplace closures.
Dispute Settlement. Chapter Seventeen provides for
cooperative consultations as a first step if a Party considers
that the other Party is not complying with its obligations
under the Chapter. The complaining Party may, after an initial
60-day consultation period under Chapter Seventeen, invoke the
Agreement's general dispute settlement mechanism by requesting
additional consultations or a meeting of the Agreement's
cabinet-level Free Trade Commission under the provisions of
Chapter Twenty-One (Dispute Settlement). If the Commission is
unable to resolve the dispute, the matter may be referred to a
dispute settlement panel.
Institutional Arrangements, Cooperation and Capacity
Building. Chapter Seventeen establishes a cabinet-level Labor
Affairs Council to oversee the Chapter's implementation and to
provide a forum for consultations and cooperation on labor
matters. Each Party must designate a contact point for
communications with the other Party and the public regarding
the Chapter. Each Party's contact point must provide
transparent procedures for the submission, receipt, and
consideration of communications from persons of a Party
relating to the Chapter.
The Parties also create a labor cooperation and capacity
building mechanism through which the Parties will work together
to address labor matters of common interest. In particular, the
mechanism will assist the Parties to establish priorities for,
and carry out, cooperation and capacity building activities
relating to such topics as: the effective application of
fundamental labor rights; legislation and practice relating to
compliance with ILO Convention 182 on the worst forms of child
labor; strengthening labor inspection systems and the
institutional capacity of labor administrations and tribunals;
mechanisms for supervising compliance with laws and regulations
pertaining to working conditions; and the elimination of gender
discrimination in employment.
CHAPTER EIGHTEEN: ENVIRONMENT
Chapter Eighteen sets out the Parties' commitments and
undertakings regarding environmental protection.
General Principles. Each Party must strive to ensure that
its environmental laws provide for and encourage high levels of
environmental protection and continue to improve its respective
levels of environmental protection. Each Party also commits not
to waive or otherwise derogate from its environmental laws to
weaken or reduce the levels of environmental protection in a
manner affecting trade or investment between the Parties other
than pursuant to a provision in its environmental law providing
for waivers or derogations. Chapter Eighteen further includes
commitments to enhance cooperation between the Parties in
environmental matters and encourages the Parties to develop
voluntary, market-based mechanisms as one means for achieving
and sustaining high levels of environmental protection.
Multilateral Environmental Agreements. The Parties
recognize that certain multilateral environment agreements
(MEAs) play an important role globally and domestically in
protecting the environment. The Chapter includes a provision
requiring each Party to adopt, maintain, and implement laws,
regulations, and all other measures to fulfill its obligations
under certain MEAs to which both governments are parties
(``covered agreements''). To establish a violation of this
obligation a Party must demonstrate that the other Party has
failed to comply in a manner affecting trade or investment
between the Parties.
Chapter Eighteen provides that in the event of any
inconsistency between a Party's obligations under the Agreement
and a covered agreement, the Party must seek to balance its
obligation under both agreements, but this will not preclude a
Party from taking measures to comply with the covered agreement
as long as the measure's primary purpose is not to impose a
disguised restriction on trade.
Effective Enforcement. Each Party commits not to fail to
effectively enforce its environmental laws, and its laws,
regulations, and other measures to fulfill its obligations
under the covered agreements, on a sustained or recurring basis
in a manner affecting trade or investment between the Parties.
For the United States, ``environmental laws'' comprise federal
environmental statutes and regulations promulgated under those
statutes that are enforceable by action of the federal
government.
Procedural Matters. Each Party commits to make judicial,
quasi-judicial, or administrative proceedings available to
sanction or remedy violations of its environmental laws. Each
Party must ensure that such proceedings are fair, equitable,
and transparent, and, to this end, comply with due process of
law and are open to the public, except where the administration
of justice otherwise requires. Each Party must ensure that
interested persons may request the Party's competent
authorities to investigate alleged violations of its
environmental laws and that those authorities duly consider
such requests. Each Party must also make appropriate and
effective remedies available for violations of its
environmental laws. These remedies may include, for example,
fines, injunctions, or requirements to take remedial action or
pay for the cost of containing or cleaning up pollution.
Environmental Performance: Each Party will encourage the
development and use of flexible, voluntary, and incentive-based
mechanisms for environmental protection, and will encourage the
development and improvement of performance goals and indicators
for measuring environmental performance as well as flexible
means for achieving performance goals.
Institutional Arrangements and Cooperation. Chapter
Eighteen establishes a senior-level Environmental Affairs
Council to oversee implementation of the Chapter. The Council
will provide for the public to participate in its work,
including by affording an opportunity at each Council meeting,
unless the Parties otherwise agree, for the public to express
views on how the Chapter is being implemented. The Council must
also provide appropriate opportunities for the public to
participate in the development and implementation of joint
environmental activities, including those developed under a
separate bilateral environmental cooperation agreement that the
Parties have negotiated.
Public Participation and Submissions. Each Party must
provide for the receipt and consideration of submissions from
persons of a Party on matters related to implementation of the
Chapter. Each Party will also convene a national advisory
committee to solicit views on matters related to the
implementation of the Chapter. In addition, the Chapter
provides that any person of a Party may file a submission with
an independent secretariat asserting that a Party is failing to
effectively enforce its environmental laws. The secretariat
will review the submission according to specified criteria and
in appropriate cases recommend to the Environmental Affairs
Council that a factual record concerning the matter be
developed. The secretariat will prepare a factual record if a
member of the Environmental Affairs Council instructs it to do
so. The Council will consider the record and, where
appropriate, provide recommendations to an environmental
cooperation commission that will be created under the related
environmental cooperation agreement. U.S. persons who consider
that the United States is failing to effectively enforce its
environmental laws may invoke the comparable public submissions
process under the North American Agreement on Environmental
Cooperation. The Parties will designate the secretariat and
make related arrangements through a separate understanding.
Biological Diversity. The Chapter includes a specific
provision on biological diversity, in which the Parties
recognize the importance of biological diversity, restate their
commitment to encouraging and promoting its protection, and
agree to enhance their cooperative efforts with respect to
biological diversity.
Dispute Settlement. Chapter Eighteen provides for
cooperative consultations as a first step if a Party considers
that the other Party is not complying with its obligations
under the Chapter. The complaining Party may, after an initial
60-day consultation period, invoke the Agreement's general
dispute settlement mechanism by requesting additional
consultations or a meeting of the Agreement's cabinet-level
Free Trade Commission under Chapter Twenty-One (Dispute
Settlement). If the Commission is unable to resolve the
dispute, the matter may be referred to a dispute settlement
panel.
CHAPTER NINETEEN: TRANSPARENCY
Section A of Chapter Nineteen sets out requirements
designed to foster openness, transparency, and fairness in the
adoption and application of measures on matters covered by the
Agreement. Each Party must promptly publish all laws,
regulations, procedures, and administrative rulings of general
application concerning subjects covered by the Agreement, or
otherwise make them available. To the extent possible, the
Parties must publish proposed regulations in advance and give
interested persons a reasonable opportunity to comment.
Wherever possible, each Party must provide reasonable notice to
the other Party's nationals and enterprises that are directly
affected by an agency process, including an adjudication,
rulemaking, licensing, determination, and approval process. A
Party is to afford such persons a reasonable opportunity to
present facts and arguments prior to any final administrative
action, when time, the nature of the process, and the public
interest permit.
Chapter Nineteen also provides for independent review and
appeal of final administrative actions. Appeal rights must
include a reasonable opportunity to present arguments and to
obtain a decision based on evidence in the administrative
record.
In Section B of Chapter Nineteen, the Parties affirm their
commitment to prevent and combat corruption, including bribery
in international trade and investment. To this end, each Party
is obligated to make it a criminal offense for its public
officials to solicit or accept a bribe, and for any person
subject to its jurisdiction to bribe a public official of that
Party or a foreign public official in exchange for favorable
government action in matters affecting international trade or
investment. Each Party must also endeavor to protect persons
who, in good faith, report acts of bribery or corruption and to
work together to encourage and support initiatives in relevant
international fora to prevent bribery and corruption.
CHAPTER TWENTY: ADMINISTRATION OF THE AGREEMENT AND TRADE CAPACITY
BUILDING
In Chapter Twenty, the Parties create a Free Trade
Commission to supervise the implementation and overall
operation of the Agreement. The Commission comprises the
Parties' trade ministers and will meet annually. The Commission
will assist in the resolution of any disputes that may arise
under the Agreement. The Commission may issue interpretations
of the Agreement and agree to accelerate duty elimination on
particular products and adjust the Agreement's product-specific
rules of origin.
Each Party must designate an office to provide
administrative assistance to dispute settlement panels and
perform such other functions as the Commission may direct.
The Parties also establish a Committee on Trade Capacity
Building comprising representatives of each Party. The overall
objective of the Committee is to assist Colombia to implement
the Agreement and adjust to liberalized bilateral trade.
Particular functions of the Committee include: prioritizing
trade capacity building projects; inviting international donor
institutions, private sector entities, and non-governmental
organizations to assist in the development and implementation
of trade capacity building projects; and monitoring and
assessing progress in implementing those projects.
CHAPTER TWENTY-ONE: DISPUTE SETTLEMENT
Chapter Twenty-One sets out detailed procedures for the
resolution of disputes between the Parties over compliance with
the Agreement. Those procedures emphasize amicable settlements,
relying wherever possible on bilateral cooperation and
consultations. When disputes arise under provisions common to
the Agreement and other agreements (e.g., the WTO agreements),
the complaining government may choose a forum for resolving the
matter that is set forth in any valid agreement between the
Parties. The selected forum will be the exclusive venue for
resolving that dispute.
Consultations. A Party may request consultations with the
other Party on any actual or proposed measure that it believes
might affect the operation of the Agreement. If the Parties
cannot resolve the matter through consultations within a
specified period (normally 60 days), any consulting Party may
refer the matter to the Free Trade Commission, which will
attempt to resolve the dispute.
Panel Procedures. If the Commission cannot resolve the
dispute within a specified period (normally 30 days), any
consulting Party may refer the matter, if it involves an actual
measure, to a panel comprising independent experts that the
Parties select. The Parties will set rules to protect
confidential information, provide for open hearings and public
release of submissions, and allow an opportunity for the panel
to accept submissions from non-governmental entities in the
Parties' territories.
Unless the Parties agree otherwise, a panel is to present
its initial report within 120 days after the last panelist is
selected. Once the panel presents its initial report containing
findings of fact and a determination on whether a Party has met
its obligations, the Parties will have the opportunity to
provide written comments to the panel. When the panel receives
these comments, it may reconsider its report and make any
further examination that it considers appropriate. Within 30
days after it presents its initial report, the panel will
submit its final report. The Parties will then seek to agree on
how to resolve the dispute, normally in a way that conforms to
the panel's determinations and recommendations. Subject to
protection of confidential information, the panel's final
report will be made available to the public 15 days after the
Parties receive it.
Suspension of Benefits. If the Parties cannot resolve the
dispute after they receive the panel's final report, the
Parties will seek to agree on acceptable trade compensation. If
they cannot agree on compensation, or if the complaining Party
believes the defending Party has failed to implement an agreed
resolution, the complaining Party may provide notice that it
intends to suspend trade benefits equivalent in effect to those
it considers were impaired, or may be impaired, as a result of
the disputed measure.
If the defending Party considers that the proposed level of
benefits to be suspended is ``manifestly excessive,'' or
believes that it has modified the disputed measure to make it
conform to the Agreement, it may request the panel to reconvene
and decide the matter. The panel must issue its determination
no later than 90 days after the request is made (or 120 days if
the panel is reviewing both the level of the proposed
suspension and a modification of the measure).
The complaining Party may suspend trade benefits up to the
level that the panel sets or, if the panel has not been asked
to determine the level, up to the amount that the complaining
Party has proposed. The complaining Party cannot suspend
benefits, however, if the defending Party provides notice that
it will pay an annual monetary assessment to the other Party.
The amount of the assessment will be established by agreement
of the Parties or, failing that, will be set at 50 percent of
the level of trade concessions the complaining Party was
authorized to suspend.
Compliance Review Mechanism. If, at any time, the defending
Party believes it has made changes in its laws or regulations
sufficient to comply with its obligations under the Agreement,
it may refer the matter to the panel. If the panel agrees, the
dispute ends and the complaining Party must withdraw any
offsetting measures it has put in place. Concurrently, the
defending government will be relieved of any obligation to pay
a monetary assessment.
The Parties will review the operation of the compliance
procedures either five years after the Agreement enters into
force or within six months after benefits have been suspended
or assessments paid in five proceedings initiated under this
Agreement, whichever occurs first.
Settlement of Private Disputes. The Parties will encourage
the use of arbitration and other alternative dispute resolution
mechanisms to settle international commercial disputes between
private parties. Each Party must provide appropriate procedures
for the recognition and enforcement of arbitral awards, for
example by complying with the 1958 United Nations Convention on
the Recognition and Enforcement of Foreign Arbitral Awards or
the 1975 Inter-American Convention on International Commercial
Arbitration.
CHAPTER TWENTY-TWO: EXCEPTIONS
Chapter Twenty-Two sets out provisions that generally apply
to the entire Agreement. Article XX of the GATT 1994 and its
interpretive notes are incorporated into and made part of the
Agreement, mutatis mutandis, and apply to those Chapters
related to treatment of goods. Likewise, for the purposes of
Chapters Eleven (Cross-Border Trade in Services), Fourteen
(Telecommunications), and Fifteen (Electronic Commerce), GATS
Article XIV (including its footnotes) is incorporated into and
made part of the Agreement. For both goods and services, the
Parties understand that these exceptions include certain
environmental measures.
Essential Security. Chapter Twenty-Two makes clear that
nothing in the Agreement prevents a Party from taking actions
it considers necessary to protect its essential security
interests, and specifically provides that an arbitration panel
must apply the essential security exception if a Party invokes
it. With respect to non-conforming measures relating to port
activities listed by Colombia and the United States in Annex I
and II, respectively, each Party has clarified that the
landside aspects of port activities are subject to the
Agreement's essential security exception.
Taxation. An exception for taxation limits the field of tax
measures subject to the Agreement. For example, the exception
generally provides that the Agreement does not affect a Party's
rights or obligations under any tax convention. The exception
sets out certain circumstances under which tax measures are
subject to the Agreement's: (1) national treatment obligation
for goods; (2) national treatment and NTR (MFN) obligations for
services; (3) prohibitions on performance requirements; and (4)
expropriation rules.
Disclosure of Information. The Chapter also provides that a
Party may withhold information from the other Party where such
disclosure would impede domestic law enforcement, otherwise be
contrary to the public interest, or prejudice the legitimate
commercial interests of particular enterprises.
CHAPTER TWENTY-THREE: FINAL PROVISIONS
Chapter Twenty-Three provides that (i) the annexes,
appendices, and footnotes are part of the Agreement, (ii) the
Parties may amend the Agreement subject to the legal
requirements of each Party, and (iii) the English and Spanish
texts are both authentic. It also provides for consultations if
any provision of the WTO Agreement that the Parties have
incorporated into the Agreement is amended.
In Chapter Twenty-Three, the Parties establish the
procedures for the Agreement to enter into force and terminate.
The Chapter provides that any other country or group of
countries may accede to the Agreement on terms and conditions
that are agreed with the Parties and approved according to each
Party's legal requirements.
E. General Description of the Bill To Implement the Agreement
Sec. 1. Short title; table of contents
This section provides that the short title of the act
implementing the Agreement is the ``United States-Colombia
Trade Promotion Agreement Implementation Act''
(``Implementation Act''). Section 1 also provides the table of
contents for the Implementation Act.
Sec. 2. Purposes
This section provides that the purposes of the
Implementation Act are to approve and implement the Agreement,
to strengthen and develop economic relations between the United
States and Colombia, to establish free trade between the United
States and Colombia through the reduction and elimination of
barriers to trade in goods and services and to investment, and
to lay the foundation for further cooperation to expand and
enhance the benefits the Agreement.
Sec. 3. Definitions
This section defines the terms ``Agreement,''
``Commission,'' ``HTS,'' and ``Textile or apparel good'' for
purposes of the Implementation Act.
TITLE I--APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE AGREEMENT
Sec. 101. Approval and entry into force of the Agreement
This section provides congressional approval for the
Agreement and its accompanying SAA. Section 101 also provides
that, if the President determines that Colombia has taken
measures necessary to comply with obligations that take effect
at the time the Agreement enters into force, the President may
exchange notes with Colombia providing for the entry into force
of the Agreement with respect to the United States on or after
January 1, 2012.
Sec. 102. Relationship of the Agreement to United States and state law
This section establishes the relationship between the
Agreement and U.S. law. Section 102 clearly states that no
provision of the Agreement will be given effect if it is
inconsistent with any federal law.
Section 102 also provides that only the United States may
bring a court action to resolve a conflict between a state law
and the Agreement. And it precludes any private right of action
against the federal government, state or local governments, or
a private party based on the provisions of the Agreement.
Sec. 103. Implementing actions in anticipation of entry into force and
initial regulations
This section provides that, following the enactment of the
Act, the President may proclaim such actions, and other
appropriate officers of the federal government may issue such
regulations, as may be necessary to ensure that provisions of
the legislation that take effect on the date the Agreement
enters into force are appropriately implemented on that date.
Section 103 further provides that, with respect to any action
proclaimed by the President that is not subject to the
consultation and layover provisions contained in section 104,
such action may not take effect before the 15th day after the
date on which the text of the proclamation is published in the
Federal Register. The 15-day restriction is waived, however, to
the extent that it would prevent an action from taking effect
on the date the Agreement enters into force. Section 103 also
provides that, to the maximum extent feasible, initial
regulations necessary or appropriate to carry out the actions
required by the Implementation Act or proposed in the SAA shall
be issued within 1 year after the date on which the Agreement
enters into force. In accordance with the SAA, any agency
unable to issue a regulation within 1 year must report to the
relevant Congressional committees, at least 30 days prior to
the end of the 1-year period, the reasons for the delay and the
expected date for issuance of the regulation.
Sec. 104. Consultation and layover provisions for, and effective date
of, proclaimed actions
This section sets forth consultation and layover steps that
must precede the President's implementation of any action by
proclamation that is subject to the requirements of this
section. Under the consultation and layover provisions, the
President must obtain advice regarding the proposed action from
the Commission and from the appropriate advisory committees
established under section 135 of the Trade Act of 1974 (19
U.S.C. Sec. 2155). The President must also submit to the Senate
Committee on Finance and the House Committee on Ways and Means
a report that sets forth the action proposed, the reasons for
the proposed action, and the advice of the appropriate advisory
committees and the Commission. Section 104 sets aside a 60-day
period following the date of transmittal of the report for the
President to consult with the Senate Committee on Finance and
the House Committee on Ways and Means on the proposed action.
Sec. 105. Administration of dispute settlement proceedings
This section authorizes the President to establish or
designate within the Department of Commerce an office
responsible for providing administrative assistance to dispute
settlement panels established under Chapter 21 of the
Agreement. Section 105 also authorizes the appropriation of
funds to support this office.
Sec. 106. Arbitration of claims
This section authorizes the United States to use binding
arbitration to resolve certain claims against the United States
pursuant to the Investor-State Dispute Settlement procedures
set forth in section B of chapter 10 of the Agreement.
Sec. 107. Effective dates; effect of termination
This section provides that the provisions of the
Implementation Act and the amendments made by it take effect on
the date on which the Agreement enters into force, except for
sections 1 through 3, title I, and title V, which take effect
on the date of enactment of the Act. This section also provides
that the amendments made by section 204, 205, 207, and 401 of
the Implementation Act take effect on the date of enactment of
the Implementation Act and apply with respect to Panama on the
date on which the Agreement enters into force. Section 107 also
provides that the provisions of the Implementation Act (other
than this subsection and title V) and the amendments to other
statutes made by it (other than the amendments made by title V)
will cease to have effect on the date on which the Agreement
terminates.
TITLE II--CUSTOMS PROVISIONS
Sec. 201. Tariff modifications
Section 201(a) authorizes the President to implement by
proclamation the modification or continuation of any duty,
imposition of any additional duties, or the continuation of
duty-free or excise treatment that the President determines to
be necessary or appropriate to carry out or apply Articles 2.3,
2.5, 2.6, 3.3.13, and Annex 2.3 of the Agreement. In addition,
section 201(a) requires the President to terminate the
designation of Colombia as a beneficiary developing country for
purposes of the GSP and the ATPA program on the date the
Agreement enters into force.
Section 201(b) authorizes the President, subject to the
consultation and layover provisions of section 104, to proclaim
the modification or continuation of any duty, the modification
of the staging of any duty elimination, the imposition of
additional duties, or the continuation of duty-free or excise
treatment that the President determines to be necessary or
appropriate to maintain the general level of reciprocal and
mutually advantageous concessions with respect to Panama
provided by the Agreement.
Section 201(c) authorizes the President, with respect to
any good for which the base rate of duty in the Tariff Schedule
of the United States to Annex 2.3 of the Agreement is a
specific or compound rate of duty, to substitute for the base
rate an ad valorem rate that the President determines to be
equivalent to the base rate.
Section 201(d) authorizes the President, in implementing
the tariff rate quotas set forth in the Agreement, to take
actions necessary to ensure that imports of agricultural goods
do not disrupt the orderly marketing of commodities in the
United States.
Sec. 202. Additional duties on certain agricultural goods
Section 202 implements the agricultural safeguard
provisions of the Agreement. Section 202(a) defines the terms
``applicable NTR (MFN) rate of duty,'' ``safeguard good,''
``schedule rate of duty,'' ``trigger level,'' ``year 1 of the
agreement'' and ``years other than year 1 of the agreement''
for purposes of section 202. Section 202(b) requires the
Secretary of the Treasury (``Secretary'') to impose additional
duties on imports of certain Colombian agricultural goods if
the Secretary determines that, prior to such importation, the
total volume of the imported good in a calendar year exceeds
the volume by amounts set forth in this section and in Appendix
I of the General Notes to the Schedule of the United States to
Annex 2.3 of the Agreement. Section 202(c) provides that the
Secretary may not impose an additional duty on a good if, at
the time of entry, the good is subject to a safeguard measure
under the procedures set out in subtitle A of title III of the
Implementation Act or under the safeguard procedures set out in
chapter 1 of title II of the Trade Act of 1974. Finally,
Section 202(d) provides that the additional duties shall cease
to apply to a good on the date on which duty-free treatment
must be provided to that good under the Schedule of the United
States to Annex 2.3 of the Agreement.
Sec. 203. Rules of origin
Section 203 implements the general rules of origin set
forth in Chapter 4 of the Agreement. These rules define the
circumstances under which a good imported from Colombia
qualifies as an originating good and is thus eligible for
preferential tariff treatment under the Agreement.
Section 203(a) establishes the Harmonized Tariff Schedule
of the United States (``HTS'') as the basis of any tariff
classification. It also provides that any cost or value
referred to in section 203 shall be recorded and maintained in
accordance with the generally accepted accounting principles
applicable in the territory of the country in which the good is
produced.
Section 203(b) provides that a good is an originating good
if it falls within one of three specified categories. First, a
good qualifies as an originating good if it is wholly obtained
or produced entirely in the territory of Colombia, the United
States, or both. Second, a good qualifies as an originating
good if the good is produced in the territory of Colombia, the
United States, or both, and the 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
and to meet other requirements specified in Annex 3-A or Annex
4.1 of the Agreement. Third, and finally, a good qualifies as
an originating good if the good is produced entirely in the
territory of Colombia, the United States, or both, exclusively
from materials that fall within the first two categories.
The remainder of section 203 sets forth specific rules
related to determining whether a good meets the Agreement's
specific requirements to qualify as an originating good.
Section 203(c) implements provisions in Annex 4.1 of the
Agreement that require certain goods to have a specified
percentage of ``regional value content'' to qualify as
originating goods. It prescribes alternative methods for
calculating regional value content, as well as a specific
method that must be used in the case of certain automotive
goods. Section 203(d) addresses how materials are to be valued
for purposes of calculating the regional value content of a
good under subsection 203(c) and for purposes of applying the
de minimis rules under subsection 203(f). Section 203(e)
provides a rule of accumulation for originating materials from
the territory of Colombia or the United States that are used in
the production of a good in the territory of the other country.
Section 203(f) provides that a good is not disqualified as an
originating good if it contains de minimis quantities of non-
originating materials that do not undergo a change in tariff
classification. Section 203(g) addresses how to determine
whether fungible goods and materials qualify as originating or
non-originating under the Agreement. Section 203(h) provides
rules for the treatment of accessories, spare parts, or tools
that are delivered with a good. Sections 203(i) and (j) address
the treatment of packaging materials and containers for retail
sale and for shipment in determining whether a good qualifies
as an originating good. Section 203(k) provides that indirect
materials shall be treated as originating materials without
regard to where they are produced. Section 203(l) provides
rules for the treatment of goods that undergo further
production in a third country or that otherwise transit through
a third country. And section 203(m) provides rules for the
treatment of goods classifiable as sets.
Section 203(n) defines various terms used in section 203.
Section 203(o) authorizes the President to proclaim the
specific rules of origin set forth in Annex 3-A and Annex 4.1
of the Agreement and to modify certain rules of origin in the
Agreement by proclamation subject to the consultation and
layover provisions of section 104.
Sec. 204. Customs user fees
This section provides for the immediate elimination of the
merchandise processing fee for goods qualifying as originating
goods under the Agreement. Processing of goods qualifying as
originating goods will be financed from the General Fund of the
Treasury.
Sec. 205. Disclosure of incorrect information; false certifications of
origin; denial of preferential tariff treatment
Section 205(a) amends section 592 of the Tariff Act of 1930
(19 U.S.C. Sec. 1592) to impose penalties on an importer,
exporter, or producer that makes an invalid claim for
preferential tariff treatment under the Agreement through
negligence, gross negligence, or fraud, unless the importer,
exporter, or producer, after discovering that the claim is
invalid, promptly and voluntarily corrects the claim and pays
any customs duties owed. Section 205(b) amends section 514 of
the Tariff Act of 1930 (19 U.S.C. Sec. 1514) to provide that,
if an importer, exporter, or producer has engaged in a pattern
of conduct in providing false representations that a good
qualifies as originating, the United States may suspend
preferential tariff treatment under the Agreement to identical
goods covered by any subsequent representations that the person
may make.
Sec. 206. Reliquidation of entries
This section amends section 520(d) of the Tariff Act of
1930 (19 U.S.C. Sec. 1520(d)) to allow an importer to claim
preferential tariff treatment for an originating good within 1
year of importation, even if no such claim was made at the time
of the importation.
Sec. 207. Recordkeeping requirements
This section amends section 508 of the Tariff Act of 1930
(19 U.S.C. Sec. 1508) to establish recordkeeping requirements
for U.S. exporters and producers that issue certifications of
origin for goods exported to Colombia.
Sec. 208. Enforcement relating to trade in textile or apparel goods
This section authorizes the President to apply anti-
circumvention provisions concerning trade in textile and
apparel goods. Pursuant to article 3.2 of the Agreement, the
Secretary may request that the Government of Colombia conduct a
verification to determine the compliance of exporters and
producers with applicable customs laws, regulations, and
procedures regarding trade in textile or apparel goods, and to
determine the accuracy of a claim of origin for a textile or
apparel good. Section 208(a) provides that the President may
direct the Secretary to take ``appropriate action'' while the
verification is being conducted. Under section 208(b), such
appropriate action includes detaining, suspending preferential
tariff treatment of, or denying entry to, any textile or
apparel good that the person subject to the verification has
produced or exported or for which a claim has been made that is
the subject of the verification if the Secretary determines
there is insufficient information to support a claim for such
treatment.
Section 208(c) permits the President to direct the
Secretary to take ``appropriate action'' after a verification
has been completed. Section 208(d) defines ``appropriate
action'' to include the denial of preferential treatment or
entry to textile or apparel goods that the person subject to
the verification has exported or produced until such time as
the Secretary receives information sufficient to prove
compliance or until an earlier date as the President may
direct.
Finally, section 208(e) permits the Secretary to publish
the name of any person that the Secretary determines has
engaged in circumvention of applicable laws, regulations, or
procedures affecting trade in textile or apparel goods or has
failed to demonstrate that it produces, or is capable of
producing, textile or apparel goods.
Sec. 209. Regulations
Section 209 authorizes the Secretary to prescribe
regulations necessary to carry out the rules of origin and
customs user fee provisions in the Implementation Act and to
carry out the President's proclamation authority under section
203(o).
TITLE III--RELIEF FROM IMPORTS
Sec. 301. Definitions
This section defines the terms ``Colombian article'' and
``Colombian textile or apparel article'' for purposes of this
title. Section 301(1) defines ``Colombian article'' as an
article that qualifies as an originating good under section
203(b) of the Implementation Act. And section 301(2) defines
``Colombian textile or apparel article'' as a textile or
apparel good as defined in section 3(4) of the Implementation
Act that is a Colombian article.
Subtitle A--Relief From Imports Benefiting From the Agreement
Subtitle A of title III implements the bilateral safeguard
provisions set out in Chapter Eight of the Agreement. It
authorizes the President, after an investigation and
affirmative determination by the Commission, to suspend duty
reductions or impose duties temporarily up to NTR (MFN) rates
on a ``Colombian article'' when, as a result of the reduction
or elimination of a duty under the Agreement, the article 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 a
domestic industry that produces a like or directly competitive
good. The standards and procedures set out in this subtitle
closely parallel the procedures for global safeguards set forth
in sections 201 through 204 of the Trade Act of 1974 (19 U.S.C.
Sec. Sec. 2251-2254).
Sec. 311. Commencing of action for relief
Section 311(a) requires an entity that is representative of
an industry to file a petition with the Commission to commence
a bilateral safeguard investigation. Section 311(a) defines an
entity to include a trade association, firm, certified or
recognized union, or a group of workers.
Section 311(b) provides that, upon the filing of a
petition, the Commission shall promptly initiate an
investigation to determine whether, as a result of the
reduction or elimination of a duty provided for under the
Agreement, a Colombian article is being imported into the
United States in such increased quantities and under such
conditions that imports of the Panamanian article constitute a
substantial cause of serious injury, or threat of serious
injury, to the domestic industry producing an article that is
like, or directly competitive with, the imported article.
Section 311(c) extends certain provisions (both substantive
and procedural) contained in subsections (b), (c), and (i) of
section 202 of the Trade Act of 1974 (19 U.S.C. Sec. 2252(b),
(c), and (i)), which apply to global safeguard investigations,
to any bilateral safeguard initiated under the Agreement. These
provisions include, inter alia, the requirement that the
Commission publish notice of the commencement of an
investigation; the requirement that the Commission hold a
public hearing at which interested parties and consumers have
the right to be present and to present evidence; the factors to
be taken into account by the Commission in making its
determinations; and authorization for the Commission to
promulgate regulations providing access to confidential
business information under protective order to authorized
representatives of interested parties in an investigation.
Section 311(d) precludes the initiation of a bilateral
safeguard investigation with respect to any Colombian article
for which import relief has already been provided under
subtitle A.
Sec. 312. Commission action on petition
Section 312(a) establishes deadlines for Commission action
following the initiation of a bilateral safeguard
investigation. Section 312(b) applies certain statutory
provisions regarding an equally divided vote by the Commission
in a global safeguard investigation under section 202 of the
Trade Act of 1974 (19 U.S.C. Sec. 2252) to Commission
determinations and findings under this section. If the
Commission renders an affirmative injury determination or a
determination that the President may treat as an affirmative
determination in the event of an equally divided vote by the
Commission, section 312(c) requires the Commission to find and
recommend to the President the amount of import relief that is
necessary to remedy or prevent the injury and to facilitate the
efforts of the domestic industry to make a positive adjustment
to import competition. Section 312(d) requires the Commission
to submit a report to the President regarding its determination
and specifies the information that the Commission must include
in the report. Upon submitting the report to the President,
section 312(e) requires the Commission to promptly release the
report to the public, except for any confidential information
contained therein, and to publish a summary of the report in
the Federal Register.
Sec. 313. Provision of relief
Section 313(a) directs the President, not later than 30
days after receiving the report from the Commission, to provide
relief from imports of the article subject to an affirmative
determination by the Commission, or a determination that the
President treats as affirmative, to the extent that the
President determines is necessary to remedy or prevent the
injury and to facilitate the efforts of the domestic industry
to make a positive adjustment to import competition. Section
313(b), however, provides that the President need not provide
import relief if the President determines that the import
relief will not provide greater economic and social benefits
than costs.
Section 313(c) specifies the nature of the import relief
that the President may impose, which includes the suspension of
any further reduction in the rate of duty imposed on the
article in question under Annex 2.3 of the Agreement and an
increase in the rate of duty imposed on such article to a level
that does not exceed the lesser of (1) the NTR (MFN) duty rate
at the time the import relief is provided; or (2) the NTR (MFN)
duty rate on the day before the Agreement enters into force.
Section 313(c) also requires the President to provide for the
progressive liberalization of import relief at regular
intervals during the period of its application if that period
exceeds 1 year.
Section 313(d) limits any import relief that the President
imposes in a bilateral safeguard action to no more than 4 years
in the aggregate. The initial period of import relief that the
President imposes may not exceed 2 years. The President may
extend the relief up to an additional 2 years, however, if (1)
the Commission makes an affirmative determination, or a
determination that the President treats as affirmative, that
import relief continues to be necessary to remedy or prevent
serious injury and that there is evidence that the domestic
industry is making a positive adjustment to import competition;
and (2) the President makes a determination to the same effect.
Section 313(e) specifies the duty rate to be applied to
Colombian articles after termination of a safeguard action. On
the termination of import relief, the rate of duty for the
remainder of the calendar year shall be the rate that was
scheduled to have been in effect 1 year after the initial
provision of import relief. For the rest of the duty phase-out
period, the President may set the duty either at the rate
called for under the Schedule of the United States to Annex 2.3
of the Agreement or in a manner that eliminates the duty in
equal annual stages ending on the date set out in that
Schedule.
Section 313(f) precludes the application of import relief
pursuant to the bilateral safeguard provisions with respect to
any Colombian article that is (1) subject to import relief
under the global safeguard provisions in chapter 1 of title II
of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et seq.); (2)
subject to import relief under subtitle B of title III of the
Act; or (3) subject to an additional duty assessment under
section 202(b) of the Act.
Sec. 314. Termination of relief authority
This section provides that the President's authority to
impose import relief under the bilateral safeguard expires 10
years after the date on which the Agreement enters into force.
If, however, the period for elimination of duties on a
particular article exceeds 10 years, relief may be provided for
that article until the date on which the duty elimination
period ends.
Sec. 315. Compensation authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant new
concessions to Colombia as compensation for the imposition of
import relief pursuant to the bilateral safeguard.
Sec. 316. Confidential business information
This section applies the same procedures for the treatment
and release of confidential business information by the
Commission in a global safeguard investigation under chapter 1
of title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et
seq.) to investigations under title III of the Act.
Subtitle B--Textile and Apparel Safeguard Measures
Subtitle B of title III implements the Agreement's textile
and apparel safeguard.
Sec. 321. Commencement of action for relief
Section 321(a) requires an interested party to file a
request with the President in order to commence action for
relief under the textile and apparel safeguard. Upon the filing
of a request, the President must review the request to
determine, from information presented in the request, whether
to commence consideration of the request on its merits. Section
321(b) provides that, if the President determines that the
request contains the information necessary for the request to
be considered 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. The
notice must contain a summary of the request and the dates by
which comments and rebuttals must be received.
The Committee notes our regulatory processes should be
administered in an open and transparent manner that can serve
as a model for our trading partners. For example, the Committee
understands that, in addition to publishing a summary of a
request for safeguard relief, the President plans to make the
full text of the request available on the U.S. Department of
Commerce's International Trade Administration website, subject
to the protection of confidential business information, if any.
The Committee encourages this and similar efforts to enhance
government transparency.
Sec. 322. Determination and provision of relief
Section 322 sets out the procedures to be followed in
considering a request filed under section 321. If a positive
determination is made under section 321(b), section 322(a)
requires the President to determine whether, as a result of the
elimination of a duty under the Agreement, a Colombian textile
or apparel article is being imported into the United States in
such increased quantities and under such conditions as to cause
serious damage, or actual threat thereof, to a domestic
industry producing an article that is like, or directly
competitive with, the imported article. Section 322(a) also
provides that, in making such a determination, the President
shall examine the effect of increased imports on the domestic
industry's output, productivity, capacity utilization,
inventories, market share, exports, wages, employment, domestic
prices, profits and losses, and investment, none of which is
necessarily decisive. Finally, section 322(a) provides that the
President shall not consider changes in consumer preference or
technology as factors supporting a determination of serious
damage or actual threat thereof.
Section 322(b) authorizes the President, in the event of an
affirmative determination of serious damage or actual threat
thereof, to provide import relief to the extent that the
President determines is necessary to remedy or prevent the
serious damage and to facilitate adjustment by the domestic
industry. Section 322(b) also specifies the nature of the
import relief that the President may impose, which consists of
an increase in the rate of duty imposed on the article to a
level that does not exceed the lesser of (1) the NTR (MFN) duty
rate in place for the textile or apparel article at the time
the import relief is provided; or (2) the NTR (MFN) duty rate
for that article on the day before the Agreement enters into
force.
Sec. 323. Period of relief
Section 323(a) limits any import relief that the President
imposes under the textile and apparel safeguard to no more than
3 years in the aggregate. Section 323(b) provides that if the
initial period of import relief is less than 3 years, the
President may extend the relief (to a maximum of 3 years) if
the President determines that continuation is necessary to
remedy or prevent serious damage and to facilitate adjustment,
and that the domestic industry is, in fact, adjusting to import
competition.
Sec. 324. Articles exempt from relief
This section provides that relief may not be granted to an
article under the textile and apparel safeguard if: (i) relief
previously has been granted to that article under the textile
and apparel safeguard; or (ii) the article is subject, or
becomes subject, to a safeguard measure under (a) Chapter Eight
of the Agreement (corresponding to subtitle A of title III of
the bill), or (b) chapter 1 of title II of the Trade Act of
1974.
Sec. 325. Rate after termination of import relief
This section provides that on the date import relief
terminates, imports of the textile or apparel article that was
subject to the safeguard action will be subject to the rate of
duty that would have been in effect on that date in the absence
of the relief.
Sec. 326. Termination of relief authority
This section provides that authority to provide relief
under the textile and apparel safeguard will expire 5 years
after the date on which the Agreement enters into force.
Sec. 327. Compensation authority
This section authorizes the President, under section 123 of
the Trade Act of 1974 (19 U.S.C. Sec. 2133), to grant new
concessions to Colombia as compensation for the imposition of
import relief pursuant to the textile and apparel safeguard.
Sec. 328. Confidential business information
This section provides that confidential business
information submitted in the course of consideration of a
request for a textile or apparel safeguard may not be released
absent the consent of the party providing the information. It
also provides that a party submitting confidential business
information in a textile or apparel safeguard proceeding must
submit a non-confidential version of the information or a
summary of the information.
Subtitle C--Cases Under Title II of the Trade Act of 1974
Subtitle C of title III implements the global safeguard
provisions of the Agreement. It authorizes the President, in
granting global import relief under the global safeguard
provisions in sections 201 through 204 of the Trade Act of 1974
(19 U.S.C. Sec. Sec. 2251-2254), to exclude imports of
originating articles from the relief when certain conditions
are present.
Sec. 331. Findings and action on goods of Panama
Section 331(a) provides that, if the Commission makes an
affirmative determination, or a determination that the
President may treat as an affirmative determination, in a
global safeguard investigation initiated under chapter 1 of
title II of the Trade Act of 1974 (19 U.S.C. Sec. 2251 et
seq.), the Commission must find and report to the President
whether imports of the article from Colombia that qualify as
originating goods under section 203(b) of the Implementation
Act are a substantial cause of serious injury or threat
thereof. Section 331(b) provides that, if the Commission makes
a negative finding under section 331(a), the President may
exclude the Colombian articles from the global safeguard
action.
TITLE IV--PROCUREMENT
Sec. 401. Eligible products
This section amends section 308(4)(A) of the Trade
Agreements Act of 1979 (19 U.S.C. Sec. 2518(4)(A)) to implement
the government procurement provisions of the Agreement.
TITLE V--EXTENSION OF ANDEAN TRADE PREFERENCE ACT
Section 501. Extension of Andean Trade Preference Act
Section 501(a)(1) of the implementing bill provides for an
extension of ATPA benefits with respect to Colombia until July
31, 2013. Although Colombia's designation as a beneficiary
country under ATPA will terminate on the date the Agreement
enters into force, this extension will allow imports from
Colombia to continue to benefit under the program until the
earlier of such entry into force date or July 31, 2013.
Section 501(a)(2) provides for an extension of ATPA
benefits with respect to Ecuador until July 31, 2013.
Section 501(b) provides for consequential time period
adjustments for both Colombia and Ecuador. Section 501(c)
provides for the retroactive application of duty-free treatment
for entries from Colombia and Ecuador made after ATPA expired
on February 12, 2011, and before the 15th day after the date of
enactment of the Implementation Act (the effective date of the
extension), if those entries would have qualified for duty-free
treatment if they had been made on February 12, 2011.
TITLE VI--OFFSETS
Sec. 601. Elimination of Certain NAFTA Customs Fees Exemption
This section amends section 13031 of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (``COBRA'') to
eliminate the current exemption from customs user fees for air
and sea passengers arriving from Canada, Mexico, and the
Caribbean. The amendment leaves in place the exemption for
travelers arriving from U.S. territories and possessions.
Sec. 602. Extension of customs user fees
This section amends section 13031 of COBRA to extend from
August 3, 2021 until September 30, 2021 the merchandise
processing fees and from December 9, 2020 until August 31, 2021
the passenger and conveyance processing fees authorized under
that act.
Sec. 603. Time for payment of corporate estimated taxes
This section increases the amount of the required
installment of estimated tax otherwise due from a corporation
with at least $1 billion in assets in July, August, or
September 2016 by .50 percent. The bill reduces the next
required installment to reflect the prior increase.
F. Vote of the Committee in Reporting the Bill
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that on
October 11, 2011, S. 1641 was ordered favorably reported,
without amendment, by a roll call vote of 18 ayes, 6 nays.
Ayes: Baucus, Conrad (proxy), Bingaman, Kerry, Wyden, Cantwell,
Nelson, Carper, Hatch, Grassley (proxy), Kyl (proxy), Crapo,
Roberts, Enzi, Cornyn (proxy), Coburn (proxy), Thune, and Burr,
(proxy). Nays: Rockefeller (proxy), Schumer (proxy), Stabenow,
Menendez, Cardin, and Snowe (proxy).
II. BUDGETARY IMPACT OF THE BILL
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 12, 2011.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1641, the United
States-Colombia Trade Promotion 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,
Director.
Enclosure.
Summary: S. 1641 would approve the trade promotion
agreement between the government of the United States and the
government of Colombia that was signed on November 22, 2006. It
would provide for tariff reductions and other changes in law
related to implementation of the agreement. It also would
retroactively extend the Andean Trade Preference Act (ATPA)
from February 12, 2011, through July 31, 2013, while removing
Colombia from eligibility for trade preferences under that
program. The bill would extend user fees collected by Customs
and Border Protection (CBP) that expire under current law, and
remove an exemption from those fees for travelers to the United
States from Mexico, Canada, and certain Caribbean countries. 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 S.
1641 would reduce revenues by $139 million in 2012 and by about
$1.5 billion over the 2012-2021 period. CBO estimates that
enacting S. 1641 would decrease direct spending by $68 million
in 2012 and by about $1.5 billion over the 2012-2021 period.
The net impact of those effects is an estimated reduction in
deficits of $22 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 result in discretionary costs of $4 million over the
2012-2016 period, assuming the availability of appropriated
funds.
CBO has determined that the nontax provisions of S. 1641
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 provision of S. 1641
contains no private-sector or intergovernmental mandates as
defined in UMRA.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1641 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).
Basis of estimate: For the purposes of this estimate, CBO
assumes that S. 1641 will be enacted early in fiscal year 2012.
Revenues
Under the United States-Colombia trade promotion agreement,
tariffs on U.S. imports from Colombia 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 $9 million
in customs duties in 2010 on $16 billion of imports from
Colombia. However, since 1991, imports to the United States
from Colombia have been subject to reduced tariff rates in
accordance with the ATPA, which was expanded in legislation
enacted in 2002, and expired on February 12, 2011. The ATPA
overlaps to a large extent with the trade promotion agreement
that would be implemented by this bill. As a result, enacting
the bill would effectively extend the ATPA for Colombia, while
also lowering tariff rates not covered by the ATPA.
Based on expected imports from Colombia, CBO estimates that
implementing the tariff schedule outlined in the U.S.-Colombia
trade promotion agreement would reduce revenues by $55 million
in 2012, and by about $1.4 billion over the 2012-2021 period,
net of income and payroll tax offsets.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-2016 2012-2021
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Preferential Trade Agreement................................ -55 -100 -110 -122 -135 -148 -159 -171 -185 -199 -522 -1,384
Extend ATPA................................................. -84 -19 0 0 0 0 0 0 0 0 -103 -103
Corporate Payment Shift..................................... 0 0 0 0 344 -344 0 0 0 0 344 0
-----------------------------------------------------------------------------------------------------------------------------------
Estimated Revenues...................................... -139 -119 -110 -122 209 -492 -159 -171 -185 -199 -282 -1,488
CHANGES IN DIRECT SPENDING\a\
Extend Customs User Fees:
Estimated Budget Authority.............................. 0 0 0 0 0 0 0 0 0 -754 0 -754
Estimated Outlays....................................... 0 0 0 0 0 0 0 0 0 -754 0 -754
Eliminate COBRA Fee Exemption:
Estimated Budget Authority.............................. -83 -111 -112 -113 -114 -116 -117 -118 -35 -80 -533 -999
Estimated Outlays....................................... -83 -111 -112 -113 -114 -116 -117 -118 -35 -80 -533 -999
Exemption from Merchandise Processing Fee:
Estimated Budget Authority.............................. 15 26 28 29 30 32 34 35 10 5 128 243
Estimated Outlays....................................... 15 26 28 29 30 32 34 35 10 5 128 243
Total, Direct Spending\a\ Estimated Budget:
Authority........................................... -68 -85 -84 -84 -84 -84 -83 -83 -25 -829 -405 -1,510
Estimated Outlays................................... -68 -85 -84 -84 -84 -84 -83 -83 -25 -829 -405 -1,510
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND RECEIPTS
Impact on Deficit........................................... 71 34 26 38 -293 408 76 88 160 -630 -123 -22
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Congressional Budget Office and the staff of the Joint Committee on Taxation.
Note: Components may not sum to totals because of rounding.
ATPA = Andean Trade Preference Act; COBRA = Consolidated Omnibus Budget Reconciliation Act.
a. In addition, CBO estimates that implementing the provisions of S. 1641 would have a discretionary cost of $4 million over the 2012-2016 period, assuming appropriation of the necessary
amounts.
This estimate includes the effects of increased imports
from Colombia 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 Colombia 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 Colombia would
displace imports from other countries.
The Generalized System of Preferences, which allows duty-
free importation of a wide range of products from 129
countries, including Colombia, expired on December 31, 2010. If
those preferences were extended through July 13, 2013, in other
legislation enacted prior to S. 1641 (such as in H.R. 2832 as
passed by the Senate on September 22, 2011), then the revenue
loss from implementing the tariff reductions in S. 1641 would
be reduced by $6 million over the 2012-2021 period, to $1.378
billion instead of $1.384 billion.
Under S. 1641, the ATPA trade preferences, which expired on
February 12, 2011, would be extended, retroactively, for each
of the beneficiary countries: Colombia and Ecuador. (The free
trade agreement with Peru supersedes that country's ATPA
preferences. Bolivia, which had been a member country in
previous years, had its eligibility revoked in June 2009.) The
preferences would be extended from February 12, 2011, through
July 31, 2013, with Colombia losing its eligibility for ATPA
preferences upon enactment of the trade promotion agreement.
CBO estimates that the retroactive extension of the ATPA
preferences, including removing Colombia for eligibility, would
reduce revenues from customs duties by $84 million in 2012,
including refunds of duties paid by importers in 2011, and $19
million in 2013, net of income and payroll tax offsets.
S. 1641 also would shift payments of corporate estimated
taxes 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 of 2016. JCT estimates that this change would
increase revenues by $344 million in 2016 and decrease revenues
by $344 million in 2017.
Direct Spending
Under current law, user fees collected by CBP will expire
in January of 2020. The bill would permit CBP to collect COBRA
fees (which were established in the Consolidated Omnibus Budget
Reconciliation Act of 1985) from December 9, 2020, through
August 31, 2021, and to collect merchandise processing fees
from August 3, 2021, through September 30, 2021. CBO estimates
that those changes would increase offsetting receipts (a credit
against direct spending) by about $750 million in 2021.
Under current law, certain travelers arriving in the United
States from Mexico, Canada, and some Caribbean countries are
exempt from paying COBRA fees; the bill would remove this
exemption. CBO estimates that this would increase offsetting
receipts by about $1 billion over the 2012-2021 period.
In addition, the bill would exempt imports from Colombia
from merchandise processing fees. CBO estimates that this would
reduce offsetting receipts by about $130 million over the five-
year period and by $245 million over the 10-year period.
Spending Subject to Appropriation
Implementing provisions of S. 1641 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
Colombian 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
these activities would cost $4 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 S. 1641 AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FINANCE ON OCTOBER 11, 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.............................. 71 34 26 38 -293 408 76 88 160 -630 -123 -22
Memorandum:
Changes in Revenues..................................... -139 -119 -110 -122 -209 -492 -159 -171 -185 -199 -282 -1,488
Changes in Outlays...................................... -68 -85 -84 -84 -84 -84 -83 -83 -25 -829 -405 -1,510
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated impact on state, local, and tribal governments:
CBO has determined that the nontax provisions of S. 1641
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 provision of the bill contains
no intergovernmental mandates as defined in UMRA.
Estimated impact on the private sector: CBO has determined
that the nontax provisions of S. 1641 would impose private-
sector mandates, as defined in UMRA, by extending the customs
user fees, increasing merchandise processing fees, and by
enforcing new record-keeping 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 provision of S. 1641 contains no
private-sector mandates as defined in UMRA.
Previous CBO estimate: On October 5, 2011, CBO transmitted
a cost estimate for H.R. 3078, the United States-Colombia Trade
Promotion Agreement Implementation Act, as ordered reported by
the House Committee on Ways and Means on October 5, 2011. S.
1641 and H.R. 3078 are similar, and the CBO cost estimates are
the same.
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: Lisa Ramirez-Branum; 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.
III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS
Pursuant to the requirements of paragraph 11(b) of Rule
XXVI of the Standing Rules of the Senate, the Committee states
that the bill will not significantly regulate any individuals
or businesses, will not affect the personal privacy of
individuals, and will result in no significant additional
paperwork.
The following information is provided in accordance with
the Unfunded Mandates Reform Act of 1995 (``UMRA'') (Pub. L.
No. 104-04). The Committee has reviewed the provisions of S.
1641 as approved by the Committee on October 11, 2011. In
accordance with the requirements of UMRA, the Committee has
determined that the bill contains no intergovernmental
mandates, as defined in the UMRA, and will not affect the
budgets of State, local, or tribal governments. The Committee
has determined that S. 1641 would impose private-sector
mandates, as defined in UMRA, by extending customs user fees,
increasing merchandise processing fees, and enforcing new
record-keeping 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).
IV. ADDITIONAL VIEWS OF RANKING MEMBER ORRIN G. HATCH AND SENATOR JON
KYL
Several elements of this report deserve significant
elaboration. The May 10, 2007 agreement (May 10th Agreement)
negotiated by some in Congress and the Bush Administration was
intended to secure votes for the four free trade agreements
(FTAs) with Colombia, Panama, Peru, and South Korea, but it did
not reflect an agreement on a new trade policy as the Majority
contends. We were not part of the negotiations of these new
provisions. We continue to harbor misgivings over several
aspects of these changes, including in the areas of labor, the
environment, and intellectual property. The May 10th Agreement,
however, failed--as only a vote on Peru was allowed by Democrat
congressional leaders during the 110th Congress--and the other
three FTAs had to wait for more than four years before a vote
was secured. The Bush administration and the governments of
Colombia, Panama, Peru, and South Korea upheld their ends of
the bargain by incorporating the May 10th Agreement changes
into each FTA, but the Democrat leadership of Congress refused
to honor its part of the May 10th Agreement and allow a vote on
any of the three remaining FTAs. The Obama administration
continued this pattern of delay for nearly three years.
In the area of labor, the revised Colombia FTA incorporates
binding labor obligations predicated upon norms contained in
the International Labor Organization Declaration on Fundamental
Principles and Rights at Work and its Follow-up (1998) (ILO
Declaration). Over the years, we have expressed serious
concerns that by incorporating binding dispute resolution for
obligations which rely upon amorphous and ever-evolving
standards set by an international organization, our labor
chapters potentially expose the United States to risk of
sanction--especially if these standards were to be construed
expansively in the context of dispute resolution.
Unfortunately, we believe that recent actions by the Obama
administration are compounding this risk.
Labor provisions in our existing trade agreements are being
interpreted by the Obama administration in a manner which
appears to be increasingly divorced from any nexus to trade.
Expansive interpretations of the labor obligations contained in
trade agreements, and the blurring of their nexus to trade,
risk setting precedents which could result in unintended
consequences for the United States in the context of future
labor-related disputes.
The purpose of trade agreements is to foster increased
growth in the economy of the United States and those of our
trading partners, which in turn, helps raise the standards of
living for U.S. and foreign workers. Assessing trade sanctions
for labor violations is counterproductive as it impedes
economic growth in the United States and the partner country,
thereby punishing the very workers it purports to assist.
Rather than seeking to punish countries and their workers
for labor protections deemed to be inadequate, the United
States should be encouraging the development of capacity-
building and technical assistance programs that more
effectively improve labor conditions on the ground in poor
developing countries. We should work to ensure that the labor
provisions in the Colombia FTA, and any substantive labor
obligations in future trade agreements: (1) are clear and
narrowly tailored so as not to expose the United States to the
risk of retaliatory sanctions; (2) are not used as a means to
change U.S. labor law indirectly by potentially binding the
United States to international standards that exceed current
U.S. law; (3) allow flexibility for the United States and our
trading partners to adopt and change labor laws as needed; (4)
are closely linked to trade; (5) actually help workers both in
the United States and abroad; and (6) do not unduly impede U.S.
businesses operating in markets abroad.
The Committee report asserts that the intellectual property
rights (IPR) provisions in the Colombia FTA were revised under
the May 10th Agreement to ``balance the need for access to
medicines with patent protections for pharmaceutical
products''. We do not believe that is what occurred. On the
contrary, these new provisions impede the development of new
treatments and cures, while putting an important, world-
leading, and job-creating U.S. industry at a disadvantage.
First, the Colombia FTA makes patent linkage optional.
Linkage requires a country, before it approves a generic
medicine for sale, to ensure that the brand-name medicine is no
longer under patent. Without linkage, governments can help
facilitate patent infringement. Linkage doesn't hinder access
to medicines and is simply about protecting basic patent
rights. The changes to the Colombia FTA replace this simple
enforcement procedure with a complex one.
Second, in certain circumstances, the changes shorten the
period of data exclusivity for innovative medicines,
authorizing a shorter period than we require here in the United
States. This change is not only unfair to U.S. innovators but
devalues the incentive for launching new drugs in developing
countries. In developing countries, it is often difficult to
enforce patent rights. But data protection is effective and
relatively easy to administer. It often provides the only real
protection biopharmaceutical companies have when they invest
significant resources to launch new products. You take away the
protection and you take away the incentive to launch.
Finally, the template no longer requires countries to add
time to patent terms for pharmaceuticals to make up for undue
delays in marketing approval or patent grant. The United States
requires patent restoration, so why not require the same
abroad? Critics argue that patent terms are long enough as they
are. But without patent term restoration, we actually move IPR
protection in the other direction. Without patent term
restoration, the effective patent term could actually shrink
significantly.
Some argue that strong intellectual property rights
protection result in some countries having poor health care. We
strongly disagree. In many of these poor countries, IPR
protection for pharmaceuticals and medical devices is weak at
best. On top of that, the vast majority of drugs on the World
Health Organization's (WHO) essential medicines list are not
protected by patent. The fact is that without IPR protection,
there would be few medicines for anyone to access.
Poor infrastructure, high taxes and tariffs, ineffective
health care systems, and misplaced government funding
priorities are far more acute problems when it comes to access
to medicine. To cite one example, until 2005, India did not
grant product patents for pharmaceuticals. Yet India's access
to medicines was woeful. WHO statistics indicate that only 20
percent of India's population had access to unpatented
essential medicines from 2000-2007. Access remains a challenge
in India today, despite the fact that more than 95 percent of
the medicines available in India are not covered by patents. As
we continue to strive to achieve the appropriate balance
between innovation and access to medicines, we hope that the
Obama and future administrations will take these factors into
consideration.
Finally, we would note our extreme disappointment in
President Obama's unprecedented delay in sending the Colombia
FTA to Congress for our consideration. For far too long, U.S.
workers, innovators, and farmers have been barred from taking
advantage of this trade agreement. While the United States
delayed, others countries entered into trade agreements with
Colombia that gave their workers better access to its growing
market. We hope the Finance Committee will continue working
together to ensure that future agreements are considered
expeditiously.
ADDITIONAL VIEWS OF SENATOR CHUCK GRASSLEY
The Majority has stated that, ``On May 10, 2007, the Bush
Administration and the bipartisan leadership of the U.S. Senate
Committee on Finance and the U.S. House of Representatives
Committee on Ways and Means reached an agreement on trade
policy.'' However, as Ranking Member of the Finance Committee
during that time period, I strongly disagree with the
Majority's statement that the agreement was an agreement ``on
trade policy.'' The Majority's terminology implies the terms of
the agreement reached on May 10, 2007 with President Bush are
somehow now the blueprint for future trade agreements. This is
not the case. The May 10th agreement was made out of necessity
by President Bush as he attempted to gain support from the
democratically-controlled Congress for approving the South
Korea, Panama, Peru, and Colombia trade agreements. As I
expressed at the time, I have reservations about many of the
provisions included in the May 10th agreement, including the
terms regarding labor, environment, and intellectual property.
I continue to have reservations about the May 10th provisions.
Most, if not all, of the members on our side do not see the May
10th provisions as part of a blueprint for future trade
agreements. Those provisions were part of a bargain between
President Bush and Democrat leaders in Congress, for those
specific free trade agreements at the time, not an ``agreement
on trade policy'' as the Majority suggests.
V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and 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)(A) Except as provided in
subsection (a)(5)(B) of this section, no fee may be charged
under subsection (a) of this section for customs services
provided in connection with--
[(i) the arrival of any passenger whose journey--
[(I) originated in--
[(aa) Canada,
[(bb) Mexico,
[(cc) a territory or possession of
the United States, or
[(dd) any adjacent island (within the
meaning of section 101(b)(5) of the
Immigration and Nationality Act (8
U.S.C. 1101(b)(5))), or
[(II) originated in the United States and was
limited to--
[(aa) Canada,
[(bb) Mexico,
[(cc) territories and possessions of
the United States, and
[[dd) such adjacent islands;]
(i) the arrival of any passenger whose journey--
(I) originated in a territory or possession
of the United States; or
(II) originated in the United States and was
limited to territories and possessions of the
United States;
* * * * * * *
(20) No fee may be charged under subsection (a) (9) or (10)
with respect to goods that qualify as originating goods under
section 203 of the United States-Colombia Trade Promotion
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) * * *
* * * * * * *
(C)(i) Notwithstanding subparagraph (A), fees
may be charged under paragraphs (9) and (10) of
subsection (a) during the period beginning on
August 3, 2021, and ending on September 30,
2021.
(ii) Notwithstanding subparagraph (B)(i),
fees may be charged under paragraphs (1)
through (8) of subsection (a) during the period
beginning on December 9, 2020, and ending on
August 31, 2021.
* * * * * * *
TARIFF ACT OF 1930
* * * * * * *
TITLE IV-- ADMINISTRATIVE PROVISIONS
* * * * * * *
Part III--Ascertainment, Collection, and Recovery of Duties
* * * * * * *
SEC. 508. RECORDKEEPING.
(a) * * *
* * * * * * *
(j) Certification of Origin for Goods Exported Under the
United States-Colombia Trade Promotion 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) CTPA certification of origin.--The term
``CTPA certification of origin'' means the
certification established under article 4.15 of
the United States-Colombia Trade Promotion
Agreement that a good qualifies as an
originating good under such Agreement.
(2) Exports to colombia.--Any person who completes
and issues a CTPA 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 CTPA
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.
* * * * * * *
SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE.
(a) * * *
* * * * * * *
(k) Denial of Preferential Tariff Treatment Under The
United States-Colombia Trade Promotion 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 203
of the United States-Colombia Trade Promotion 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-Colombia Trade Promotion Agreement 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 203.
* * * * * * *
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 203 of the United
States-Colombia Trade Promotion 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) * * *
* * * * * * *
(12) Prior disclosure regarding claims under the
united states-colombia trade promotion 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 203
of the United States-Colombia Trade Promotion 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.
* * * * * * *
(k) False Certifications of Origin Under the United States-
Colombia Trade Promotion 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 CTPA
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 203 of the United
States-Colombia Trade Promotion 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 CTPA 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 CTPA 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 RCOMMENDATIONS 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-
Colombia Trade Promotion 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) * * *
* * * * * * *
* * * * * * *
(ix) a party to the United States-
Colombia Trade Promotion Agreement, a
product or service of that country or
instrumentality which is covered under
that agreement for procurement by the
United States.
* * * * * * *
ANDEAN TRADE PREFERENCE ACT
TITLE II--TRADE PREFERENCE FOR THE ANDEAN REGION
* * * * * * *
SEC. 204. ELIGIBLE ARTICLES.
(a) * * *
(b) Exceptions and Special Rules.--
(1) * * *
* * * * * * *
(3) Apparel articles and certain textile articles.--
(A) * * *
(B) Covered articles.--The apparel articles
referred to in subparagraph (A) are the
following:
(i) * * *
* * * * * * *
(iii) Apparel articles assembled in 1
or more atpdea beneficiary countries
from regional fabrics or regional
components.--(I) * * *
(II) The preferential treatment
referred to in subclause (I) shall be
extended in the 1-year period beginning
October 1, 2002, and in each of the [8
succeeding 1-year periods] 10
succeeding 1-year periods, to imports
of apparel articles in an amount not to
exceed the applicable percentage of the
aggregate square meter equivalents of
all apparel articles imported into the
United States in the preceding 12-month
period for which data are available.
(III) For purposes of subclause (II),
the term ``applicable percentage''
means--
(aa) * * *
(bb) for the 1-year period
beginning October 1, 2007 [and
for the succeeding 3-year
period] and for the succeeding
5-year period, the percentage
determined under item (aa) for
the 1-year period beginning
October 1, 2006.
* * * * * * *
(v) Certain other apparel articles.--
(I) * * *
(II) Limitation.--During the
1-year period beginning on
October 1, 2003, and during
each of the [7 succeeding 1-
year periods] 9 succeeding 1-
year periods, apparel articles
described in subclause (I) of a
producer or an entity
controlling production shall be
eligible for preferential
treatment under this paragraph
only if the aggregate cost of
fabrics (exclusive of all
findings and trimmings) formed
in the United States that are
used in the production of all
such articles of that producer
or entity that are entered and
eligible under this clause
during the preceding 1-year
period is at least 75 percent
of the aggregate declared
customs value of the fabric
(exclusive of all findings and
trimmings) contained in all
such articles of that producer
or entity that are entered and
eligible under this clause
during the preceding 1-year
period.
* * * * * * *
(E) Bilateral emergency actions.--
(i) * * *
(ii) Rules relating to bilateral
emergency action.--For purposes of
applying bilateral emergency action
under this subparagraph--
(I) * * *
(II) the term ``transition
period'' in section 4 of the
Annex shall mean the period
ending [February 12, 2011] July
31, 2013; and
* * * * * * *
SEC. 208. TERMINATION OF PREFERENTIAL TREATMENT.
(a) In General.--No duty-free treatment or other
preferential treatment extended to beneficiary countries under
this title shall--
(1) remain in effect--
(A) with respect to Colombia after [February
12, 2011] July 31, 2013; and
* * * * * * *
(2) remain in effect with respect to Ecuador after
June 30, 2009, except that duty-free treatment and
other preferential treatment under this title shall
remain in effect with respect to Ecuador during the
period beginning on July 1, 2009, and ending on
[February 12, 2011] July 31, 2013, unless the President
reviews the criteria set forth in section 203, and on
or before June 30, 2009, reports to the Committee on
Finance of the Senate and the Committee on Ways and
Means of the House of Representatives pursuant to
subsection (b) that--
(A) * * *
* * * * * * *