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Title V-TRADE RELATIONS WITH COUNTRIES NOT ENJOYING MOST-FAVORED-NATION TREATMENT

Title V provides authority to the President to extent most-favorednation treatment to imports from countries which currently receive Column 2 rates of duty, subject to a 90-day Congressional veto procedure. This treatment may be extended through bilateral commercial agreements or through multilateral trade agreements to which the United States is also a party.

The agreements must be limited to an initial period of not more than three years but may be renewed for additional three-year periods. The President may suspend or withdraw the application of most-favorednation treatment at any time, and the agreements must provide for suspension or termination at any time for national security reasons.

The Tariff Commission, upon petition or other initiation will conduct an investigation to determine whether imports from the country receiving most-favored-nation treatment under this title are causing or likely to cause material injury to a domestic industry_and_whether market disruption exists with respect to these imports. The President may apply relief measures to imports from that country without taking action on imports from other countries.

Title VI-GENERALIZED SYSTEM OF PREFERENCES

Title VI provides authority to the President for ten years to participate with other developed countries in granting generalized tariff preferences on imports of semi-manufactures, manufactures, and selected other products from developing countries.

The President may provide duty-free treatment on any eligible article from beneficiary developing countries, subject to pre-negotiation procedures. Preferential treatment is generally not to apply to imports of an article from a particular developing country which supplies more than 50 percent of the total value of United States imports or $25 million of the article to the United States during a representative annual period.

Preferential treatment will not apply to articles on which import relief measures or national security actions are in effect. Developing countries which do not undertake to eliminate preferences to other developed countries before January 1, 1976 or are not receiving mostfavored-nation treatment are not eligible as beneficiaries.

Title VII-GENERAL PROVISIONS

Title VII contains general technical provisions applicable to the entire Act, including maintenance of the Tariff Schedules of the United States, and the repeal of various sections of the Trade Expansion Act. It also repeals the Johnson Debt Default Act, and an embargo on certain furs.

SECTION-BY-SECTION ANALYSIS OF THE TRADE REFORM ACT OF 1973

SECTION 1. SHORT TITLE

Section 1 provides that this Act is to be cited as the "Trade Reform Act of 1973."

SECTION 2. STATEMENT OF PURPOSES

The purposes of this Act are to provide authority in the trade field supporting United States participation in an interrelated effort to develop an open, nondiscriminatory, and fair world economic system; to facilitate international cooperation in economic affairs; to stimulate United States economic growth and enlarge foreign markets for United States exports; to establish a program of temporary import relief and to provide trade adjustment assistance to workers; to improve the means for dealing with unfair import competition; to provide additional authority for the President to obtain fair and equitable access to foreign markets for United States exports; to provide the President more flexible authority to deal with trade matters; to enable the United States to take advantage of new trade opportunities with countries with which it has not recently had trade agreement relations; and to enable United States participation in the effort by developed countries to provide generalized preferential treatment to products of developing countries.

TITLE I-AUTHORITY FOR NEW NEGOTIATIONS

CHAPTER 1-GENERAL AUTHORITIES

SECTION 101. BASIC AUTHORITY FOR TRADE AGREEMENTS

This section contains the basic grant of authorities to the President applicable to trade agreements, to be exercised in accordance with certain conditions set out in the remainder of the title. The section calls for a determination that the use of these authorities will promote the purposes of the Act, although it is assumed that this requirement is implicit and does not contemplate a formal, published finding by the President.

1. Authority To Enter Into Trade Agreements

Paragraph (1) authorizes the President to enter into trade agreements with foreign countries during the five years following the date of enactment of this Act. This provision restores trade agreements authority similar to that provided by section 201(a)(1) of the Trade Expansion Act of 1962 which lapsed on June 30, 1967.

2. Modification of Duties

Paragraph (2) provides that in connection with trade agreements with foreign countries the President may, at any time, continue or modify any existing duty, continue existing duty-free or excise treatment, or impose additional duties as he determines to be required or appropriate to carry out trade agreements. Unlike previous legislation, this section does not contain a limit on the amount of increase or decrease in tariffs which the President may negotiate and implement under a trade agreement.

This authority may be used to raise any duty to any level or to eliminate duties on any or all products, provided such action is pursuant to an international trade agreement. It also permits a combination of actions under an agreement, which could include the elimination of some duties, reduction of others by the same or varying amounts, no reductions on some products, and increases in tariffs to achieve rate harmonization in certain product sectors. In conjunction with the authority provided under section 103, it would be possible to convert nontariff barriers to fixed duties at equivalent or higher levels and then schedule their reduction over a period of time. The authority to modify duties includes the conversion of specific to ad valorem rates, and vice versa.

SECTION 102. STAGING REQUIREMENTS AND ROUNDING AUTHORITY Section 102 incorporates the staging principles of section 253 of the Trade Expansion Act of 1962, with the principal exception that reductions of up to three percent ad valorem may be put into effect each year. The purpose of staging is to

provide time for the adjustment of United States industries and workers to the effects of the reduction or elimination of duties under a trade agreement.

1. Staging Authority

Subsection (a) requires that any reductions or eliminations of duties pursuant to trade agreements may not take place in less than five equal annual stages, or by annual reductions of a maximum of three percent ad valorem, whichever is the greater. For example, a duty scheduled to be lowered from 20 percent to 10 percent could be reduced three percent ad valorem (which is greater than onefifth of the total reduction) in each of the first three years and eliminated in the fourth. Alternatively the 20 percent duty might be reduced to 10 percent over a longer period.

This section sets forth a minimum preferred period of staging as under section 253 of the Trade Expansion Act. However, under subsection (e) it is specifically recognized that staging could be extended for as long a period as the President deems appropriate for certain products. For example, while the reduction of a duty from 30 percent to 10 percent could be staged in two percentage point annual reductions over a period of ten years, it could not be made effective more rapidly than in four percentage point reductions over five years. Under subsection (c) a total reduction which does not exceed ten percent of the duty prior to its reduction may be exempted from the staging requirements.

2. Interruption of Staging

Subsection (b) provides, as in the Trade Expansion Act, for the exceptional situation in which it might become necessary to interrupt implementation of a trade agreement concession and not complete the staging within five years. This would occur if staging began but was then suspended as an import relief measure under section 203. When implementation of staging is resumed, the duty rate last in effect must go back into effect for the period of time that stage was suspended before the next stage can be implemented. For example, if the staging is interrupted three months after the second stage begins, nine months of the second stage would go into effect when the staging resumes before implementation of the third stage could become effective.

3. Rounding Authority

The rounding authority under subsection (c) is identical to section 254 of the Trade Expansion Act of 1962. This authority permits the President, by rounding fractions or decimals, to proclaim marginally lower rates in the course of staging than the interim reductions prescribed under subsection (a) if rounding will simplify the computation of the amount of duty to be collected.

SECTION 103. NONTARIFF BARRIERS TO TRADE

This section contains a statement of Congress urging the President to negotiate with foreign countries for the reduction, elimination, or harmonization of nontariff barriers and other distortions of international trade. For the purposes of this section, the terms nontariff or trade barriers include all barriers to trade, including those which stem from methods of application of a duty other than the rate of duty itself. Negotiations could take the form of agreements on particular nontariff barriers and of general principles applicable to all nontariff barriers, which could also act as guidelines for specific agreements.

Since 1934 the Congress has periodically delegated to the President prior authority to enter into trade agreements with foreign countries and to proclaim reductions in tariffs and other import restrictions negotiated in such agreements. With respect to nontariff barriers, which are heterogeneous and usually imbedded in a variety of domestic laws, there is no commonly applicable standard that would lend itself to a general delegation of authority. Furthermore, it is not possible to foresee the types of agreements which may be negotiated or the form of legal techniques which may be necessary to implement them. Three types of procedures are contemplated under this Act which could be used by the President to negotiate and implement various types of agreements on nontariff barriers:

(1) Continuation of existing procedures, which include the constitutional authority of the President to negotiate or complete agreements when additional implementing legislation is not necessary; completion of an international agreement and submission to the Senate as a Treaty; or completion

of an international agreement on an ad referendum basis and submission to the Congress for approval through implementing legislation.

(2) Advance authority from the Congress to implement agreements on certain matters under section 103 (c).

(3) A Congressional veto procedure applicable to agreements for which the exercise of additional Congressional authority is necessary or appropriate. This procedure described under section 103 (d) and (e) is optional since the President could, for example, use his existing authorities to submit such agreements to the Congress on an ad referendum basis or for approval as a Treaty, as appropriate.

1. Congressional Mandate to Negotiate

Subsections (a) and (b) contain a statement by the Congress urging the President to negotiate agreements with foreign countries to achieve the mutual reduction, elimination, or harmonization of nontariff barriers and other distortions of international trade. This mandate is not to be construed as prior approval by the Congress of any legislation which may be necessary to implement any such agreement.

Unless specifically provided for in an agreement, the President shall determine the extent to which benefits of agreements will apply to nonsignatory countries. 2. Advance Authority for Certain Agreements

Subsection (c) grants the President advance authority to implement agreements which substantially benefit the United States with respect to methods of customs valuation, establishing the quantities on which assessments are made, and requirements for marking of country of origin. Agreements relating to American Selling Price, the "Final List", simplification of methods of valuation and the wine-gallon/proof gallon basis for assessment, for example, could be implemented under this authority.

S. Congressional Veto Procedure Option

Subsection (d) authorizes the President to implement agreements related to matters which he determines it is necessary or appropriate to seek additional action by Congress. International agreements covering these matters can be implemented subject to complying with the procedures under subsection (e): (1) only if the President has given at least 90 days' notice to both Houses of Congress and appropriate Congressional committees prior to entering into an agreement of his intention to utilize this procedure; (2) only after the expiration of 90 days from the date the President delivers a copy of the agreement and his proposed orders for implementing the agreement with respect to existing domestic law to both Houses of Congress, with a statement as to why the agreement serves the United States trade interests and why the proposed orders are necessary; and (3) only if during the 90 day period the majority of the authorized membership of neither House of Congress adopts a resolution stating its disapproval of the agreement. The purpose of the 90 days' advance notice requirement is to give the appropriate Congressional committees the opportunity to hold hearings, receive comments from the public, and make recommendations for provisions or modifications in such agreements.

This authority could apply, for example, to new agreements relating to quantitative limitations on imports of agricultural products. However, it is an optional procedure since the President can, if he believes it appropriate, use his existing authorities or other constitutional procedures with respect to import limitations or other nontariff barriers imposed pursuant to domestic laws.

CHAPTER 2-HEARINGS AND ADVICE CONCERNING NEGOTIATIONS PURSUANT TO TITLE I

Subchapter A-Title I prenegotiation requirements

This subchapter is identical in substance to sections 221 through 224 of the Trade Expansion Act, with the exception of a new provision under section 112(b). Section 225 of the Trade Expansion Act (reservation of articles from negotiation) has been included in section 406 of this Act, which relates to the reservation of articles for national security or other reasons. The prenegotiation procedures of this chapter, unless an explicit exception to the contrary is contained elsewhere in the Act, apply only to actions taken under Title I and, in some cases, only to actions under section 101.

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SECTION 111. TARIFF COMMISSION ADVICE

Section 111 is identical to section 221 of the Trade Expansion Act except that the language of section 221 relating to the 50 percent limitation on the reduction of duties under section 201 (b) of the Trade Expansion Act is omitted.

Subsection (a) provides for the publication and transmission to the Tariff Commission by the President of lists of articles which may be considered for concessions in connection with any proposed trade agreement under section 101 of this title.

Subsection (b) requires the Tariff Commission to advise the President on each article within six months of its judgment as to the probable economic effect of modifying or continuing duties on domestic industries producing like or directly competitive articles. Section 111 (c) outlines the economic factors which the Tariff Commission shall investigate and analyze, and subsection (d) requires the Tariff Commission to hold public hearings during the course of preparing this advice.

The purpose of this advice is to assist the President in making an informed judgment as to the impact of such duty modifications on domestic economic interests. It is intended, as under present procedures, that the Tariff Commission reports to the President under section 11(b) would not be made public.

SECTION 112. ADVICE FROM DEPARTMENTS

Section 112(a) is identical in substance to section 222 of the Trade Expansion Act. Subsection (b) is a new provision required in view of the enactment of the Federal Advisory Committee Act.

Subsection (a) requires the President, before entering into a trade agreement under sections 101 and 103 of this title, to seek information and advice with respect to each agreement from the Departments of Agriculture, Commerce, Defense, Interior, Labor, State, Treasury, and from the Special Representative for Trade Negotiations. He shall also seek information and advice as appropriate from other sources such as the Department of Transportation.

Subsection (b) provides that meetings of selected industry, labor, and agriculture groups advising the President or any agency on United States negotiating objectives and bargaining positions in specific product sectors prior to entry into trade agreements under this title shall be exmpt from the requirements relating to open meetings and public participation under the Federal Advisory Committee Act. Open meetings and public participation would compromise the United States negotiating posture with foreign countries and inhibit the flow of information from the advisory groups to the President.

SECTION 113. PUBLIC HEARINGS

Section 113 is identical to the provisions under section 223 of the Trade Expansion Act except that it is divided into two subsections. It applies to proposed agreements on nontariff barriers under section 103, in addition to those on tariffs as under the Trade Expansion Act.

This section requires the President to hold public hearings in connection with any proposed trade agreement under this title to enable interested persons to present their views with respect to the list of articles provided under section 111, any concessions which should be sought from foreign countries, and any other relevant matters. The President is required to designate an agency or interagency committee to hold these hearings and to provide a summary to the President.

SECTION 114. PREREQUISITE FOR OFFERS

Section 114 is identical in substance to section 224 of the Trade Expansion Act.

The President must receive the summary of public hearings under section 113 before making an offer to modify or continue any duty or to continue duty-free or excise treatment on any article in any negotiations under section 101. The President also cannot make an offer on an article in negotiations under section 101 until he receives the advice of the Tariff Commission under section 111(b) or the relevant six-month period has expired.

This section is intended to permit the President to begin the early stages of a negotiation before receiving the advice and summary, but to prevent him, until