The Andean Trade Preference Act: A Comparison of House and Senate Versions of H.R. 3009

Report for Congress
The Andean Trade Preference Act: A Comparison
of House and Senate Versions of H.R. 3009
Updated June 27, 2002
J. F. Hornbeck
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division


Congressional Research Service ˜ The Library of Congress

The Andean Trade Preference Act: A Comparison of
House and Senate Versions of H.R. 3009
Summary
In 1991, the 102nd Congress passed the Andean Trade Preference Act (ATPA),
which provided for preferential treatment of selected U.S. imports from Bolivia,
Colombia, Ecuador, and Peru as part of an incentive system to encourage legal trade
as an alternative to illicit drug production. ATPA expired in December 2001 and
reauthorization legislation is being considered in the 107th Congress. This report
compares two versions of H.R. 3009, the House-passed Andean Trade Promotion
and Drug Eradication Act and the Andean Trade Preference Expansion Act, which
was passed by the Senate as Title XXXI of the Trade Act of 2002. The Senate action
was controversial because it adopted the ATPA provisions by agreeing to S.Amdt.
3401, a substitute amendment for H.R. 3009, which also included a broader trade
legislation package covering trade promotion authority (TPA), trade adjustment
assistance (TAA), and the Generalized System of Preferences (GSP), among others.
On June 26, 2002, following a heated debate, the House voted 216 to 215 to agree
to the Senate amendment with an amendment incorporating House versions of the
broader provisions added in the Senate, and requested a conference.
Although broadly similar, Andean trade provisions of the two bills differ in how
they would amend ATPA. Proposed changes in tariff treatment address eight
categories of goods that were excepted from preferential treatment under the original
act. To summarize: 1) duty-free treatment is extended to carefully defined groups of
apparel articles in both bills; 2) footwear (not eligible under the GSP preferences) is
given duty-free treatment under the House and equal treatment under the Senate, but
with a few specific exceptions; 3) tuna shipped in airtight containers would enter duty
free under the House, but the amount would be capped under the Senate; 4)
petroleum products would enter duty free under both bills; 5) watches that do not
include material from HTS column two countries would enter duty free under both
bills; 6) selected leather goods would enter duty free under the House and given
reduced-duty treatment under the Senate; 7) sugars, syrups, and sugar products would
be excepted from preferential treatment under both bills; and 8) rum and tafia would
enter duty-free under the Senate bill, but would be excepted from duty-free treatment
under the House bill.
With the House passage of H.Res 450, the rule sending the ATPA
reauthorization legislation to conference, new language affecting textile provisions
was included. It changed the House bill to clarify that all ATPA apparel imports
using U.S. fabric should have the dyeing and finishing of all such fabric done in the
United States. At issue for the textile debate is that caps on U.S. imports of ATPA
apparel articles using regional fabrics may exceed total exports from the region,
making the provision requiring “dyeing and finishing” of U.S. fabric inoperative.
For a detailed side-by-side comparison of the Trade Promotion Authority bills,
see: CRS Report RL31445, Trade Promotion (Fast-Track)Authority: A Comparison
of Bills Approved by the House (H.R. 3005) and the Senate (Title XXI of H.R. 3009),
by Lenore Sek and William H. Cooper.



Contents
In troduction ......................................................1
Section 1. Short Title and Findings....................................2
Section 2. Import Sensitive Articles...................................3
Section 3. Textile and Apparel Articles................................4
Section 4. Other Articles............................................8
Section 5. Customs Procedures ......................................9
Section 6. Definitions and Special Rules..............................10
Section 7. Termination............................................11



The Andean Trade Preference Act: A
Comparison of House and Senate Versions
of H.R. 3009
Introduction
The Andean Trade Preference Act (ATPA), providing preferential treatment of
selected U.S. imports from Bolivia, Colombia, Ecuador, and Peru, expired in
December 2001 and reauthorization legislation is being considered in the 107th
Congress. In the House, H.R. 3009, the Andean Trade Promotion and Drug
Eradication Act (ATPDEA), was introduced on October 3, 2001. An amended
version was passed by voice vote on November 16, 2001. In the Senate, S. 525, the
Andean Trade Preference Expansion Act (ATPEA) was introduced on March 12,

2000, and its text was offered as an amendment in the nature of a substitute for H.R.


3009 during committee markup on November 29, 2001. On May 23, 2002, the
Senate agreed to a substitute amendment for H.R. 3009 (S.Amdt. 3401), which
included a broader trade legislation package with provisions covering trade
promotion authority (TPA), trade adjustment assistance (TAA), and the Generalized
System of Preferences (GSP), among others. On June 26, 2002, the House voted 216
to 215 to agree to the Senate amendment with an amendment incorporating House
versions of the broader provisions added in the Senate, and requested a conference.
New in this House amendment to the Senate amendment to H.R. 3009 related
to ATPA reauthorization is language changing the House bill to clarify that all ATPA
apparel imports using U.S. fabric should have the dyeing and finishing of all such
fabric done in the United States. At issue for the textile debate are provisions placing
caps on the use of regional fabrics. The caps on U.S. imports of ATPA apparel
articles using regional fabrics may exceed total exports from the region, making the
provision requiring “dyeing and finishing” of U.S. fabric effectively inoperative.
The following is a side-by-side comparison of the provisions reauthorizing
ATPA in the House and Senate versions of H.R. 3009 that went to conference. The
summary excludes the program’s broader policy issues, which may be found
elsewhere, but instead provides a section-by-section comparison.1 Although it is
customary to identify subsections by a new bill’s numbering, because each bill was
effectively treated as an amendment to an entire section of the original legislation,
there are few subheadings with which to refer. Therefore, for purposes of cross
referencing the summary below with the two bill texts, subsections of the amended
version of the existing law are used, as listed in each of the two bills.


1 See: CRS Report RL30790. The Andean Trade Preference Act: Background and Issues
for Reauthorization, by J. F. Hornbeck.

Section 1. Short Title and Findings
H.R. 3009 (House)H.R. 3009 (Senate)
1) Title: “Andean Trade Promotion and Drug1) Title: “The Andean Trade Preference
Eradication Act.” (ATPDEA)Expansion Act. (ATPEA)
2) Congress finds that: 1) ATPA has had a positive2) Identical provisions.


impact on trade and jobs in the U.S., Bolivia,
Colombia, Ecuador, and Peru; 2) ATPA has been
a key element in the U.S. counternarcotics strategy;
3) the Andean region remains vulnerable to
consequences of the drug war and global
competition; 4) continuing instability in the Andean
region is a threat to the United States; 5) ATPA is
a tangible commitment by the United States to
promote prosperity, stability, and democracy in the
beneficiary countries; 6) renewal of ATPA will
bolster confidence of investors in the economic
prospects of the region; 7) each of the ATPA
countries is committed to completing the Free
Trade Area of the Americas (FTAA), and; 8)
temporarily enhancing trade benefits for ATPA
countries will promote economic opportunity in
these countries.

Section 2. Import Sensitive Articles
H.R. 3009 (House)H.R. 3009 (Senate)
1) Unless defined elsewhere, the President may1) Except as defined elsewhere in this act
proclaim duty-free treatment for any article listed(see sections 2 and 3 of this report), the
below that is a product of an ATPDEA beneficiaryfollowing articles are not eligible for duty-
country and that meets the requirements of thisfree treatment provided under this title:
section, if the President determines that the articletextile and apparel articles; footwear not
is not import-sensitive. The list includes: footweardesignated eligible for preferential treatment
not designated eligible for preferential treatmentunder the GSP; tuna prepared or preserved
under the Generalized System of Preferencesin airtight containers; petroleum products,
(GSP); petroleum products; watches and parts thatwatches and parts that include materials
do not contain any material from HTS column 2from HTS column 2 countries, certain
country; and certain leather goods. Sec. 204(b)(1)leather goods; sugars, syrups, and sugar
containing products subject to tariff-rate
quotas, and rum and tafia. Sec. 204(b)(1)


2) Except as defined elsewhere in this act (see
sections 2 and 3 of this report), the following
articles are excluded from duty-free treatment:
textiles and apparel articles; sugars, syrups, and
sugar-containing products subject to over-quota
duty rates, and rum and tafia. Tuna packed in
airtight containers, previously excluded under
ATPA, would become immediately eligible for
duty-free treatment. Sec. 204(b)(2)

Section 3. Textile and Apparel Articles
H.R. 3009 (House)H.R. 3009 (Senate)
1) In general apparel articles that are imported1) Transition period treatment of certain textile
from an ATPDEA country shall enter the U.S.and apparel articles: provides duty-free
free of duty and quantitative restrictions if theytreatment for the following articles. Sec. 204(b)
meet the following criteria: Sec. 204(b)(3)(A)(2)(A) and (B)
a) Apparel articles assembled from products ofa) Identical provisions. Sec. 204(b)(2)(A)(i)
the U.S. or an ATPDEA country, or products
not available in commercial quantities – articles
sewn or otherwise assembled exclusively from
any one or any combination of the following:
Sec. 204(b)(3)(B)(i)
fabrics or components formed or knit-to- fabric or components formed or knit-to-
shape in the U.S., from yarns formed inshape in the U.S., from yarns wholly
the U.S. or an ATPDEA country,formed in the U.S. (including felt and
(including felt and nonwovens if formednonwovens if formed in the U.S.),
in the U.S.)provided, the articles are sewn or
assembled with thread formed in the U.S.
fabric components knit-to-shape in the
U.S. from yarns wholly formed in the
U.S. and components knit-to-shape in an
ATPEA country from yarns wholly
formed in the U.S.
fabrics or components formed or knit-to- Identical provision.
shape in an ATPDEA country from yarns
formed in an ATPDEA country, if such
fabrics (including felt and nonwovens if
formed in the an ATPDEA country) are
in chief weight of llama or alpaca.
fabrics or yarn that is not formed in the fabrics and yarns that are not formed in
U.S. or an ATPDEA country, to thethe U.S. or an ATPEA country, to the
extent that apparel articles of such fabricsextent such fabrics and yarns are
or yarn would be eligible for preferentialconsidered not to be widely available in
treatment, without regard to the source ofcommercial quantities for purposes of
the fabrics or yarn, under Annex 401 ofdetermining the eligibility of such apparel
NAFTA (Rules of Origin).articles for preferential treatment under
Annex 401 of NAFTA (Rules of Origin).
No similar provision. Apparel articles knit-to-shape, other than
socks provided for in heading 6115 of the
HTS (panty hose, tights, stockings, and
other hosiery), in an ATPEA country
from yarns wholly formed in the United
States. Sec. 204(b)(2)(A)(ii)
b) Additional Textiles: at the request of anyb) Identical provision. Sec. 204(b)(2)(A)(v)


party, the President may proclaim addition
fabrics and yarns eligible for preferential
treatment under a) above if: Sec. 204(b)
(3)(B)(ii)
such fabrics or yarns cannot be supplied
by the domestic industry in commercial
quantities in a timely manner;
the President has been properly advised
by a committee established under section

Section 3. Textile and Apparel Articles
H.R. 3009 (House)H.R. 3009 (Senate)
135 of the Trade Act of 1974 and the
USIT C;
within 60 days of the request, the
President has submitted a report to the
House Committee on Ways and Means
and the Senate Finance Committee stating
intent and advice from a committee in the
paragraph above, and;
the President has consulted with the
congressional committees within 60 days.
c) Regional Fabrics: apparel articles assembledc) Regional Fabrics: knit apparel articles wholly
in an ATPDEA country from regional fabrics orassembled in an ATPEA country exclusively
regional components if: Sec. 204(b)(3)(B)(iii)from fabric formed, or fabric components
they are sewn or otherwise assembled informed, or components knit-to-shape or any
an ATPDEA country from fabrics orcombination thereof, in an ATPEA country
components formed or knit-to-shape in anfrom yarns wholly formed in the U.S., in an
ATPDEA country, from yarns formed inamount limited to 70,000,000 square meter
the U.S. or an ATPDEA country,equivalents during the 1-year period beginning
including felt and nonwovens, whether orMarch 1, 2002, increased by 16 percent,
not the apparel articles are also madecompounded annually, in each succeeding 1-
from any of the fabrics or componentsyear period through February 28, 2006. Sec.
formed or knit-to-shape described in a)204(b)(2)(A)(vii)
above.
preferential treatment to begin December
1, 2001 for a limited quantity equal to 3%
(measured in square meter equivalents) of
all apparel articles imported into the
United States during the previous 12
months. This percentage increases to 6%
over the next five years in equal
increments.
d) No similar provision.d) Certain Other Apparel Articles: Any apparel
article classifiable under HTS subheading
6212.10 (brassieres), if the article is both cut
and sewn or otherwise assembled in the U.S., or
one or more of the ATPEA countries, or both.
Sec. 204(b)(2)(A)(iv)
During the 1-year period beginning
March 1, 2002, and during each of the 2
succeeding 1-year periods, such apparel
articles of a producer or entity shall be
eligible for preferential treatment only if
the aggregate cost of the fabric
components formed in the U.S. that are
used in the production of all such articles
of the producer or entity that are entered
during the preceding 1-year period is at
least 75 percent of the aggregate declared
customs value of the fabric contained in
all such articles of that producer or entity
that are entered during the preceding 1-
year period.



Section 3. Textile and Apparel Articles
H.R. 3009 (House)H.R. 3009 (Senate)
The U.S. Customs Service must develop
methods to ensure compliance with
entities found in noncompliance made
ineligible for preferential treatment until
that producer raises the aggregate cost of
fabric components formed in the U.S.
used in the production of such articles of
that producer or entity is at least 85
percent of the aggregate declared customs
values of the fabric contained in all such
articles entered.
e) Handloomed, handmade, and folklore articlese) Identical provisions. Sec. 204(b)(2)(A)(iv)
– if certified as such by the ATPDEA country inand Sec. 204(b)(2)(C)
consultation with the U.S. Sec. 204(b)(3)
(B)(iv) and Sec. 204(b)(3)(C)
f) Special Rules: Sec. 204(b)(3)(B)(v)f) Special Rules: Sec. 204(b)(2)(A)(vii)
Findings and Trimmings: an article Identical language, but adds: Elastic
otherwise eligible for preferentialstrips are considered findings or
treatment shall not be consideredtrimmings only if they are each less than
ineligible so long as findings and1 inch in width and are used in the
trimmings (buttons, zippers, lace, etc.) ofproduction of brassieres, and that sewing
foreign origin do not exceed 25% of thethreat shall not be treated as findings and
cost of the components.trimmings under this subclause.
Interlinings: identical rule as above for Identical language.
articles that contain interlinings of foreign
origin, which may be terminated if the
President determines that such
interlinings are made in commercial
quantity in the U.S.
De Minimis Rule: an article that Similar language, but applies only to
otherwise would be ineligible foryarns” and stipulates that an apparel
preferential treatment because it containsarticle containing elastomeric yarns shall
fabrics and yarns not wholly formed inbe eligible for preferential treatment
the United States or an ATPDEA countryunder this paragraph only if such yarns
shall not be ineligible if the total weightare wholly formed in the U.S.
of such fibers and yarns do not exceed
7% of the total weight of the good.
No similar provision Special Origin Rule: articles otherwise
eligible for preferential treatment shall
not be ineligible because the articles
contains nylon filament yarn (other than
elastomeric yarn) that is classifiable under
various HTS 5402 subheadings
(synthetic filament yarn) duty-free from a
country that is a party to an agreement
with the U.S. establishing a free trade
area entered into force on January 1,
1995.
No similar provision Clarification of Certain Knit Apparel:
notwithstanding any other provision of
law, an article otherwise eligible for



Section 3. Textile and Apparel Articles
H.R. 3009 (House)H.R. 3009 (Senate)
preferential treatment under the regional
fabrics general rule – clause (iii)(I), shall
not be ineligible because the article, or a
component thereof, contains fabric
formed in the U.S. from yarns wholly
formed in the U.S.
g) No similar provisiong) Textile Luggage: assembled in an ATPEA
country from fabric wholly formed and cut in
the U.S. from yarns wholly formed in the U.S.,
that is entered under Subheading 9802.80 of the
HTS (Mexico production sharing provisions or
maquiladoras) or assembled from fabric cut in
an ATPEA country from fabric wholly formed
in the U.S. from yarns wholly formed in the
U.S. Sec. 204(b)(2)(A)(viii)
2) Penalties for Transshipment: Sec. 204(b) Identical provisions. Sec. 204(b)(2)(D)
(3)(D)
Exporters found to be engaging in
transshipment of apparel articles from an
ATPDEA country will be denied benefits
of this act for 2 years.
If the ATPDEA country involved does
not take appropriate actions to halt
transshipment activities, the President
may reduce the amount of apparel
imported from that country by three times
the amount of apparel found to be
transshipped from that country.
3) Bilateral Emergency Actions: the President Identical provisions. Sec. 204(b)(2)(E)


may take bilateral emergency tariff actions
similar to those in section 4 of Annex 300-B of
NAFTA (limited safeguard actions in cases
where serious damage or threat thereof to a
domestic industry producing like or directly
competitive goods can be shown.) Sec.
204(b)(3)(E)

Section 4. Other Articles
H.R. 3009 (House)H.R. 3009 (Senate)
1) No similar language referring to transition1) Transition period treatment of certain other
period. Specific treatment of non-apparelarticles originating in beneficiary countries:
articles set forth in section 204(b)(1) and (2).Sec. 204(b)(3)
a) Footwear, petroleum, certain watches anda) Except as noted elsewhere, footwear,
parts, and certain leather goods would be givenpetroleum, certain watches and parts, certain
duty-free treatment, provided the Presidentleather goods, and rum and tafia would be given
determines that they are not import-sensitiveNAFTA-equivalent treatment (or better if
goods. The exception is rum and tafia, whichavailable under another agreement). In effect,
would not receive duty-free treatment in thethese goods would be subject to the same tariff
House bill. Sec. 204(b)(1) and Sec. 204(b)(2)phase-out schedule as defined in Annex 302.2
of NAFTA for an equivalent article entering
from Mexico, as defined by the eight-digit HTS
subheading. To the extent that the NAFTA
equivalent duty rate is zero, the Senate version
would result in identical treatment as the House.
Sec. 204(b)(3)(A)(i)
b) No similar provision.b) Exception: the above does not apply to any
article accorded duty-free treatment under U.S.
Note 2(b) to subchapter II of chapter 98 of the
HTS–referring to various constraints on articles
assembled of fabricated components or of
ingredients other than water that are of the
United States, in a beneficiary country and
neither the fabricated components, materials or
ingredients, after exportation from the U.S. nor
the article itself, before importation into the
U.S., enters the commerce of any foreign
country other than a beneficiary country. Sec.
204(b)(3)(A)(ii)
c) No similar restriction, footwear would enterc) ExceptionCertain Footwear: duties on
duty free. Sec. 204(b)(1)(A)selected footwear from ATPEA countries
identified by eight-digit HTS subheading shall
be reduced by 1/15 a year beginning on the date
of enactment of this Act. Sec. 204(b)(3)(A)(iii)
d) Special Rule for Sugars: duty-free treatmentd) Identical provision. Sec. 204(b)(3)(C)
shall not be extended to sugars, syrups, and
sugar-containing products subject to over-quota
duty rates under applicable tariff-rate quotas.
Sec. 204(b)(2)(C)
e) Tuna packed in airtight containers woulde) Special Rule for Certain Tuna: the President
receive immediate duty-free treatment by virtuemay proclaim duty-free treatment for an amount
of being eliminated from the list of exceptions.of tuna harvested by U.S. or ATPEA vessels
Sec. 204(b)(1)and is preserved in airtight containers of an
amount not to exceed 20 percent of the
domestic U.S. tuna pack (production) in the
preceding calendar year. Sec. 204(b)(3)(D)



Section 5. Customs Procedures
H.R. 3009 (House)H.R. 3009 (Senate)
1) Importers claiming ATPEA preferential1) Identical language. Sec. 3102(b)(4)(A)(i)
treatment must comply with customs procedures
similar to those required in Article 502(1) of
NAFTA (certificate of origin). Sec. 204(b)(4)
2) For a country to qualify as an ATPEA2) Identical language for ATPEA beneficiary
beneficiary country, the President must certifycountries. Sec. 3102(b) (4)(A)(ii)
that it has implemented or is making substantial
progress toward implementing specific customs
requirements as defined under Chapter 5 of
NAFTA.
3) The Certificate of Origin that otherwise3) Identical language. Sec. 3102(b)(4)(B)
would be required, shall not be required if such
certificate of origin would not be required under
Article 503 of NAFTA, if the article were
imported from Mexico.
4) No similar requirement.4) The U.S. Commissioner of Customs shall
conduct a study analyzing the extent to which
each ATPEA beneficiary country: 1) has
cooperated fully with the United States in
instances of circumvention of existing quotas of
imports of textile and apparel articles related to
transshipment of these articles; 2) has taken
appropriate measures against exporters and
importers involved in false declaration related
to content of textile and apparel goods; 3) has
penalized those involved in any circumvention
and worked with third party countries to prevent
any future circumvention from reoccurring.
Sec. 3102(b)(4)(C)



Section 6. Definitions and Special Rules
H.R. 3009 (House)H.R. 3009 (Senate)
1) The termthe Annex means Annex 300-B of NAFTA1) Identical language. Sec.
(Textile and Apparel Goods). Sec. 204(b)(5)(A) and (B)204(b)(5)(A)
2) The termATPDEA beneficiary country means a2) Identical language used to
beneficiary country that is certified by the President as meetingdefine “ATPEA beneficiary
ATPA criteria and in addition demonstrates a commitment to:country.” Sec. 204(b)(5)(B)
1) undertake its obligations under the WTO; 2) participate in
negotiations toward completion of the FTAA or another free
trade agreement; 3) meet intellectual property rights
requirements in the Uruguay Round Agreements Act; 4) meet
internationally recognized worker rights including the right of
association, the right to organize and bargain collectively, a
prohibition on the use of any form of forced or compulsory
labor, the setting of a minimum age for employment of
children, and ensuring acceptable conditions for work with
respect to minimum wages, hours of work and occupation
safety and health; 5) implement its commitments to eliminate
the worst forms of child labor as defined in section 507(6) of
the Trade Act of 1974; 6) meet counternarcotics certification
criteria; 7) to become a party to and implement the Inter-
American Convention Against Corruption; 8) to apply
transparent, nondiscriminatory, and competitive procedures in
government procures equivalent to section 101(d)(17) of the
Uruguay Round Agreements Act; and 9) contribute to efforts
in international fora to develop and implement international
rules in transparency in government procurement. Sec.
204(b)(5)(B)
3) No similar section.3) “ATPEA originating good”
means a beneficiary country
good that meets NAFTA
Chapter 4 rules of origin. Sec.
204(b)(5)(C)
4) No similar wording, but makes clear that the legislation is in4)Transition period means the
effect through December 31, 2006.period that begins on the date of
enactment and ends on the
earlier of either February 28,
2006 or the date on which the
FTAA or a similar free trade
agreement enters into force.
Sec. 204(b)(5)(D)
5) ATPDEA means the Andean Trade Preference and Drug5) ATPEA means the Andean
Eradication Act. Sec. 204(b)(5)(B)Trade Preference Expansion
Act. Sec. 204(b)(5)(E)
6) Additions to retention of designation: the President may6) Identical. Sec. 203(e)(1)
withdraw or suspend the designation of an ATPEA country or
withdraw, suspend or limit application of preferential treatment
to any article if the President determines the performance of
such country is not satisfactory. Sec. 203(e)(1)
7) No similar provision.7) Requires USTR report be
done on a biennial basis.



Section 7. Termination
H.R. 3009 (House)H.R. 3009 (Senate)
1) No duty-free treatment or other preferential1) No preferential duty treatment extended to
treatment extended to beneficiary countriesbeneficiary countries under this Act shall
under this title shall remain in effect afterremain in effect after February 28, 2006. Sec.
December 31, 2006. Sec. 208.208(b)
2) No similar language.2) Makes retroactive duty-free treatment of any
ATPA-eligible article that entered the United
States between the expiration of ATPA on
December 4, 2001 and the enactment of this act,
requiring any duties paid to be refunded.