International Trade Law News

Published by Jacobson Burton Kelley PLLC

By Holly Rich*

President Bush today signed the Tax Relief and Health Care Act of 2006 (H.R. 6111), the massive 274 page bill that Congress passed on the final day of the 109th Congress. H.R. 6111 contains a number of important trade-related provisions, which are included in "Division D" of the bill. (Because H.R. 6111 was cobbled together from a number of separate bills, the final legislation is divided into four "Divisions", each having their own title numbers.)

Of significant note to many U.S. importers, Title VIII of Division D of the bill extends the expiring General System of Preferences (GSP) program until December 31, 2008. In addition, the bill tightens rules on competitive need limit (CNL) waivers by eliminating waivers on any product category when a country exports more than $1.5 billion of that product in the prior year. It also eliminates CNL waivers for countries with per capita income more than $3,400.

The bill also contains three regional-specific provisions. Title VI of Division D extends certain provisions of the African Growth and Opportunity Act (AGOA) and provides a tax credit for new U.S. labor and capital investments in AGOA-eligible countries. It also extends fabric benefits for the investment in fabric production in Africa. Division D, Title V creates the Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE), that applies to Haiti the same political, economic and labor criteria and the same textile and apparel transshipment requirements that AGOA does to Africa. In addition to current Caribbean Basin Initiative (CBI) benefits, HOPE provides new rules of origin for apparel which would apply on an annual, aggregated basis over five years. Third, Title VII of Division D, includes the Andean Bridge to a Reciprocal Trade Partnership Act, which grants to Peru, Colombia, Ecuador and Bolivia a straightforward six-month GSP extension, followed by an additional six-month extension for an eligible country if the U.S. and that country both complete their legislative process to approve a trade promotion agreement.

Division D, Title IV grants permanent normal trade relations to Vietnam and establishes a subsidies enforcement mechanism if Vietnam grants any prohibited subsidies to its textile and apparel industry in violation of the terms of its WTO accession.

Finally, Division D, Titles I through III include a number of miscellaneous duty suspensions and reductions as well as several technical correction to U.S. trade laws. For example, the bill suspends or reduces the duty rate on more than 500 products, many of which are chemicals not available in the U.S.

The complete text of H.R. 6111 can be found here (this is a large PDF file).

*Ms. Rich is a 2005 graduate of the Hofstra University School of Law and was recently admitted to the New York Bar. Ms. Rich can be reached at hollyrich@gmail.com.

[Editor's Note: The United States Trade Representative (USTR) today announced that it expects to issue a Federal Register notice in late February 2007 that will identify the GSP CNL waivers that meet either of the new thresholds and thus subject to potential revocation. The USTR also stated that based on January through October 2006 import data, a preliminary assessment of the CNL waivers meeting the new statutory thresholds are: Brazil - brakes and brake parts ($242 million) and ferrozirconium ($ 0.7 million); Cote d’Ivoire-kola nuts ($4 million); India-gold jewelry ($1.6 billion) and brass lamps ($20 million); Philippines-wiring harnesses ($329 million); Thailand-gold jewelry ($611 million); and Venezuela-methanol ($242 million)].

Labels: Customs