Introduction of the "Plan Colombia Trade Act," Senators Robert Graham (D-Florida) and Charles Grassley (R-Iowa), June 29, 2000

Introduction of the "Plan Colombia Trade Act," Senators Robert Graham (D-Florida) and Charles Grassley (R-Iowa), June 29, 2000
By Mr. GRAHAM (for himself, Mr. DeWine, Mr. Moynihan, Mr. Grassley, Mr. Dodd, Mr. Coverdell, and Mr. Biden):

S. 2823. A bill to amend the Andean Trade Preference Act to grant certain benefits with respect to textile and apparel, and for other purposes; to the Committee on Finance.

THE PLAN COLOMBIA TRADE ACT

[Begin insert]
Mr. GRAHAM. Mr. President, I rise today, joined by Senators DeWine, Moynihan, Grassley, Dodd, Coverdell, and Biden, to introduce the Plan Colombia Trade Act, a bill that would provide additional trade benefits to the nations of the Andean Trade Pact, which includes Bolivia, Colombia, Ecuador and Peru.
This bill is an important component of Plan Colombia, which seeks to address not only the nation's crisis with respect to massive narcotrafficking and insurgent and paramilitary forces, but also focuses on Colombia's deep economic recession. The bill is consistent with U.S. policy of promoting trade and combating drugs on a regional basis, thereby ensuring that U.S. benefits and assistance provided to one nation do not adversely affect other nations in the immediate region. Such a strategy is the only way to avoid what is often described as the `balloon effect,' which has meant that the drug problem, at best, is displaced from one location to another. Finally, the bill would re-assert our commitment to promote economic growth and regional stability throughout the Andean region, and to provide alternatives to the cultivation and exportation of illegal narcotics.

Passage of this legislation by the Senate will signal the United States' support of the Andean Trade Pact's economic reform efforts, and will boost the confidence of both domestic and international investors in pursuing business opportunities that create jobs and enhance international trade in the Andean region, particularly in Colombia. In addition, this bill would ensure that U.S. trade with these important nations is not adversely affected by the recent passage of the `Trade and Development Act of 2000,' which provided significant trade benefits to the Caribbean Basin.

To briefly summarize, the `Plan Colombia Trade Act,' would extend, for approximately one year, additional trade benefits to Bolivia, Colombia, Ecuador, and Peru-nations that currently benefit from the Andean Trade Preferences Act of 1991 (commonly known as the ATPA). New trade benefits would include some--but not all--trade benefits extended to the nations of the Caribbean Basin under the `Trade and Development Act of 2000,' which was signed by the President on May 18, 2000. Specifically, the bill would extend duty-free, quota-free treatment to apparel articles assembled or cut in ATPA beneficiary nations using yarns and fabric wholly formed in the United States, thereby achieving a measure of parity with the CBI nations, as well as expanding an important source of economic and employment growth for the U.S. textile and apparel industry.

In its March 2000 interim report, `First Steps Toward a Constructive U.S. Policy in Colombia,' a Council on Foreign Relations/Inter-American Dialogue Independent Task Force--which I co-chair with Brent Scowcroft--recommended the extension of the ATPA, to include the same benefits as those contained under the Caribbean Basin Initiative. Specifically, we recommended the following:

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Indeed, Colombia's economic well-being is absolutely critical, and in this area the United States can be more helpful. Perhaps even more important than providing increased assistance to the Colombian government to support employment programs is assuring Colombia greater access to U.S. markets for its products. Extending trade-related benefits to Colombia would have a positive impact on the country's prospects for higher growth and employment levels.

Although the bill provides benefits to all ATPA beneficiaries, it is particularly critical to Colombia, which in 1998 exported 59 percent of all textiles and apparel from the Andean region to the U.S., two-thirds of which were assembled and/or cut from U.S. yarns and fabric.

This legislation addresses an important, albeit unintentional, contradiction in U.S. policy towards Colombia. With the recent passage of enhanced trade benefits to the countries of Caribbean Basin Initiative, Colombia stands to lose up to 150,000 jobs in the apparel industry. At least ten (10) U.S.-based companies that purchase apparel from Colombian garment manufacturers have already indicated their near-term intentions to shift production to CBI countries due to the significant cost savings associated with the new trade benefits afforded to the Caribbean basin. Some of these U.S. companies have utilized Colombia as a manufacturing base for over ten (10) years, providing desperately needed legitimate employment in the Colombian economy.

In summary, the immediate reaction of these companies to enhanced Caribbean trade benefits clearly demonstrates the negative effects of the CBI legislation on Colombia. It would be foolish for the Congress to approve a comprehensive aid package for Colombia, while simultaneously implementing legislation that puts tens of thousands of Colombians out of work. This bill will address that critical, unintended contradiction.

On a more comprehensive scale, passage of this legislation is critical to ensure that all nations in the Western Hemisphere can maintain their long-term competitiveness with Asian nations, particularly in the textile industry. At present, the textile products of most Asian nations are subject to quotas imposed by the Multi-Fiber Agreement, now known as the Agreement on Textiles and Clothing. This restriction on Asian textiles has enabled the nations of the Western Hemisphere to remain competitive, and further, the Andean region--specifically Colombia--has become a significant market for fabric woven in U.S. mills from yarn spun in the U.S., originating from U.S. cotton growers.

However, in 2005, these Asian import quotas will be phased out. At that time, textile production in both the Andean region and the Caribbean basin will be placed at a distinct and growing disadvantage. Disinvestment in the region will occur, reducing the incentive to use any material from U.S. textile mills or cotton grown in the United States.

BACKGROUND
Seventeen years ago, the U.S. Congress passed the first legislation to provide trade preferences to the twenty-seven countries of the Caribbean Basin. In 1983, the Caribbean Basin was a region inflamed with violent conflict and rampant drug trafficking that threatened the political and

economic stability of our closest neighbors, as well as our own national security. The primary goal of the Caribbean Basin Initiative (CBI) was to stabilize the region by building stronger and more diverse economies, encouraging growth in international trade, developing a strong economic relationship between the U.S. and the region, and creating employment opportunities in the legitimate economy as an alternative to drug trafficking.

Following enactment of CBI, the U.S. trade position with the region improved from a deficit of $3 billion in 1983, to a surplus of nearly $3.5 billion in 1998. Between 1983 and 1998, U.S. exports to the region increased fourfold, while total imports from the region grew by less than 20 percent. On a per capita basis, the U.S. trade surplus with the region has consistently outpaced the U.S. trade surplus with any other region of the world--in fact, since 1995, U.S. exports to the CBI region have increased by almost 32 percent.

In 1991, after 8 years of resounding success in the CBI region, Congress passed the ATPA, providing CBI-like trade benefits to the countries of Bolivia, Colombia, Ecuador and Peru. In the nine years following enactment of ATPA, U.S. exports to the Andean region have more than doubled--from $3.8 billion in 1991 to over $8.6 billion in 1998. U.S. exports to Colombia account for over half of this increase, growing from $2 billion in 1991 to $4.8 billion in 1998. During the same time period, Andean exports to the U.S. increased by almost 80 percent. In addition, in 1998, the U.S. achieved a $309 million trade surplus with the ATPA nations. Under ATPA, Bolivia, Colombia, Ecuador, and Peru enjoyed the same trade benefits that we had extended to the CBI region. However, on May 18, 2000, the President signed the `Trade and Development Act of 2000,' which extended additional trade benefits--particularly with respect to textiles and apparel--to the nations of the CBI region. Therefore, our Andean trading partners are now likely to lose significant trade and investment opportunities that will shift to the CBI, given the additional trade benefits included in the `Trade and Development Act of 2000.'

NEED FOR THE `PLAN COLOMBIA TRADE ACT'
The United States is at now a critical juncture with its neighbors in the Andean region. As was demonstrated by the recent passage of the `Trade and Development Act of 2000.' it is clear that we must continue enhance our trading relationship with our partners in the Caribbean and the Andean region.

In particular, these additional trade benefits should be extended to Colombia, which is currently fighting a war for the survival of its democratic institutions, its free market economy and for the future of its people. Those challenging Colombia's future include drug traffickers, guerilla groups (the FARC and the ELN) and other elements of society who seek to foster instability and fear. A comprehensive strategy in response to the crisis in essential for Colombia.

The government of Colombia, therefore, has formulated Plan Colombia. The United States government, in turn, has responded generously to Columbia's needs by considering a supplemental appropriations package of more than $1.6 billion to help the country in this time of crisis. This will supplement over $4.0 billion being spent by Colombia itself.

Fundamental to Plan Colombia (and to the government's ability to succeed in its efforts to safeguard the country) will be efforts to encourage economic growth and provide jobs to the Colombian people. Today in Colombia more than one million people are displaced, the unemployment rate is nearly 20 percent and Colombia is experiencing the worst recession in 70 years. Without new economic opportunities, more and more Colombians will turn to illicit activities to support their families or seek to join the growing numbers of people who are leaving the country to find a better, safer future for their families.

Measuring both imports and exports, Colombia is by far the most important U.S. trade partner in the ATPA region. In 1998, over 53 percent of U.S. exports to the Andean region went to Colombia, and over 53 percent of U.S. imports from the Andean region originated from Colombia.

Mr. President, to promote economic growth and regional stability, the Congress must consider additional trade measures that benefit the entire Andean region. Therefore, Congress should grant CBI parity to the ATPA beneficiaries, specifically with respect to textiles and apparel. During 1999, Colombia and its Andean neighbors exported approximately $562 million in textiles and apparel to the United States. While insignificant in comparison to the $8.4 billion in textile and apparel exports originating in the CBI region, Andean textile and apparel production sustains more than 200,000 jobs in Colombia alone--valuable jobs in the legitimate economy. Absent CBI parity, the Andean region will find itself at a significant competitive disadvantage with the 27 countries of the CBI region.

Mr. President, upon final passage of CBI enhancement legislation, I stated that we had initiated the process of establishing true `partnership for success' with some of our most important neighbors. Although that legislation was a good start, it was only the beginning. I urge my colleagues to look towards the future by supporting the `Plan Colombia Trade Act,' and by taking advantage of the real economic benefits that can be achieved by further enhancing our relationship with all of the nations of the Western Hemisphere.

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

There being no objection, the bill was ordered to be printed in the Record, as follows:

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S. 2823

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Plan Colombia Trade Act'.

SEC. 2. TEMPORARY EXTENSION OF ADDITIONAL TRADE BENEFITS TO CERTAIN ANDEAN COUNTRIES.
(a) In General: Section 204(b) of the Andean Trade Preference Act (19 U.S.C. 3203(b)) is amended to read as follows:
`(b) Exceptions to Duty-Free Treatment:

`(1) In General: Subject to paragraphs (2), the duty-free treatment provided under this title shall not apply to--

`(A) textile and apparel articles which are subject to textile agreements;

`(B) footwear not designated at the time of the effective date of this Act as eligible for the purpose of the generalized system of preferences under title V of the Trade Act of 1974;

`(C) tuna, prepared or preserved in any manner, in airtight containers;

`(D) petroleum, or any product derived from petroleum, provided for in headings 2709 and 2710 of the HTS;

`(E) watches and watch parts (including cases, bracelets and straps), of whatever type including, but not limited to, mechanical, quartz digital or quartz analog, if such watches or watch parts contain any material which is the product of any country with respect to which HTS column 2 rates of duty apply;

`(F) articles to which reduced rates of duty apply under subsection (c);

`(G) sugars, syrups, and molasses classified in subheadings 1701.11.03, 1701.12.02, 1701.99.02, 1702.90.32, 1806.10.42, and 2106.90.12 of the HTS; or

`(H) rum and tafia classified in subheading 2208.40.00 of the HTS.

`(2) Transition period treatment of certain textile and apparel articles:

`(A) Articles covered: During the transition period, the preferential treatment described in subparagraph (B) shall apply to the following articles:

`(i) Apparel articles assembled in one or more beneficiary countries: Apparel articles assembled in one or more beneficiary countries from fabrics wholly formed and cut in the United States, from yarns wholly formed in the United States, that are--

`(I) entered under subheading 9802.00.80 of the HTS; or

`(II) entered under chapter 61 or 62 of the HTS, if, after such assembly, the articles would have qualified for entry under subheading 9802.00.80 of the HTS but for the fact that the articles were embroidered or subjected to stone-washing, enzyme-washing, acid washing, perma-pressing, oven-baking, bleaching, garment-dyeing, screen printing, or other similar processes.

`(ii) Apparel articles cut and assembled in one or more beneficiary countries: Apparel articles cut in one or more beneficiary countries from fabric wholly formed in the United States from yarns wholly formed in the United States, if such articles are assembled in one or more such countries with thread formed in the United States.

`(iii) Special rules:

`(I) Exception for findings and trimmings: (aa) An article otherwise eligible for preferential treatment under this paragraph shall not be ineligible for such treatment because the article contains findings or trimmings of foreign origin, if such findings and trimmings do not exceed 25 percent of the cost of the components of the assembled product. Examples of findings and trimmings are sewing thread, hooks and eyes, snaps, buttons, `bow buds', decorative lace, trim, elastic strips, zippers, including zipper tapes and labels, and other similar products. Elastic strips are considered findings or trimmings only if they are each less than 1 inch in width and are used in the production of brassieres.

`(bb) In the case of an article described in clause (ii) of this subparagraph, sewing thread shall not be treated as findings or trimmings under this subclause.

`(II) Certain interlining: (aa) An article otherwise eligible for preferential treatment under this paragraph shall not be ineligible for such treatment because the article contains certain interlinings of foreign origin, if the value of such interlinings (and any findings and trimmings) does not exceed 25 percent of the cost of the components of the assembled article.

`(bb) Interlinings eligible for the treatment described in division (aa) include only a chest type plate, `hymo' piece, or `sleeve header', of woven or weft-inserted warp knit construction and of coarse animal hair or man-made filaments.

`(cc) The treatment described in this subclause shall terminate if the President makes a determination that United States manufacturers are producing such interlinings in the United States in commercial quantities.

`(III) De minimis rule: An article that would otherwise be ineligible for preferential treatment under this paragraph because the article contains fibers or yarns not wholly formed in the United States or in one or more beneficiary countries shall not be ineligible for such treatment if the total weight of all such fibers or yarns is not more than 7 percent of the total weight of the good. Notwithstanding the preceding sentence, an apparel article containing elastomeric yarns shall be eligible for preferential treatment under this paragraph only if such yarns are wholly formed in the United States.

`(IV) Special origin rule: An article otherwise eligible for preferential treatment under clause (i) or (ii) of this subparagraph shall not be ineligible for such treatment because the article contains nylon filament yarn (other than elastomeric yarn) that is classifiable under subheading 5402.10.30, 5402.10.60, 5402.31.30, 5402.31.60, 5402.32.30, 5402.32.60, 5402.41.10, 5402.41.90, 5402.51.00, or 5402.61.00 of the HTS duty-free from a country that is a party to an agreement with the United States establishing a free trade area, which entered into force before January 1, 1995.

`(iv) Special rule for fabrics not formed from yarns:

`(I) Application to clause (i): An article otherwise eligible for preferential treatment under clause (i) of this subparagraph shall not be ineligible for such treatment because the article is assembled in one or more beneficiary countries from fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and are wholly formed and cut in the United States.

`(II) Application to clause (ii): An article otherwise eligible for preferential treatment under clause (ii) of this subparagraph shall not be ineligible for such treatment because the article is assembled in one or more beneficiary countries from fabrics not formed from yarns, if such fabrics are classifiable under heading 5602 or 5603 of the HTS and are wholly formed in the United States.

`(B) Preferential treatment: During the transition period, the articles to which this paragraph applies shall enter the United States free of duty and free of any quantitative restrictions, limitations, or consultation levels.

`(C) Transition period: In this paragraph, the term `transition period' means, with respect to a beneficiary country, the period that begins on the date of enactment of the Plan Colombia Trade Act or October 1, 2000, whichever is later, and ends on the date that duty-free treatment ends under this title.'.
(b) Factors Affecting Designation:

(1) In general: Section 203(d) of the Andean Trade Preference Act (19 U.S.C. 3202(d)) is amended--

(A) by striking `and' at the end of paragraph (11);

(B) by striking the period at the end of paragraph (12) and inserting `; and'; and

`(13) the extent to which such country adheres to democratic principles and the rule of law.'.

(2) Effective date: The amendments made by this subsection take effect on the earlier of--

(A) October 1, 2000; or

(B) the date of enactment of the Plan Colombia Trade Act.

[End insert]

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Mr. GRASSLEY. Mr. President, I rise today to co-sponsor the Plan Colombia Trade Act along with my colleague, Senator Bob Graham. This important bill will supplement Plan Colombia by expanding trade benefits to the countries of Colombia, Bolivia, Ecuador and Peru.

Plan Colombia is an important package that provides about a billion dollars to the government of Colombia, and other countries in that region. These funds will go to fight drugs, eradicate the crops which create them, and provide for alternative development. Unfortunately, Plan Colombia does not provide for an important measure that we can do to help these countries, that is to stimulate their economy. We can achieve this by passing the Plan Colombia Trade Act, which will provide assistance to develop their textile and apparel industries.

Developing the apparel industry of these countries will encourage global trade, and offer the good people of that region a future filled with prosperity. Additionally, the trade benefits outlined in this bill will enhance peace, stability, and prosperity in that region, which will ultimately yield a better quality of life for all involved. This bill will not only benefit the struggling economies of Colombia, Bolivia, Ecuador, and Peru, but will advance the economy of the United States as well.

As important as the assistance package to Colombia is, most of the money we provide will not reach ordinary Colombians. They also are engaged in the effort to combat illegal drugs. We need to ensure that they are not penalized for doing so. The current bill helps us help Colombians not with cash but with opportunity. It preserves legitimate jobs in a country sorely beset with problems.

Most garments that are produced in Colombia are subject to a 20-30% duty rate upon importation into the U.S. As an example, swimsuits are subject to a duty rate of 33%. By granting duty-free and quota-free benefits to apparel assembled in these countries from U.S. made yarn, and U.S. made fabric, these countries will now be able to compete with other developing countries that currently enjoy duty-free and quota-free benefits. It will also afford them the opportunity to participate in the global economy. This will encourage additional export of U.S. made cotton and yarn, stimulate U.S. investment in the region and create needed jobs as well.

This bill is an opportunity to help rebuild a region which has been plagued by the drug trade. We can assist these countries, not by giving them more money, but by providing these enhanced trade opportunities. By helping our neighbors in the south to maintain political and economic stability, we will in effect be securing the National Security of the United States. This legislation will provide these countries with the opportunity build their industry and their struggling economies and will improve the quality of their everyday lives.

I urge my colleagues to support this important bill which will have a positive effect on the prosperity of our neighbors in Colombia, Ecuador, Bolivia, and Peru.

As of July 18, 2000, this document was also available online at http://thomas.loc.gov/cgi-bin/query/z?r106:S29JN0-861: