TRADE ACT OF 2002

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August 14, 2003

On August 1, 2002, the United States Senate voted to approve the Trade Act of 2002. The Senate's action follows the favorable vote of the House in July. The President is expected to sign the bill soon. Central provisions of the bill include granting the President Trade Promotion Authority ("TPA") (formerly known as "Fast Track" authority) for negotiating international trade agreements and the expansion of the Trade Adjustment Assistance Program to aid American workers affected by increased globalization. The Trade Act of 2002 also extends the Andean Trade Preference program and the Generalized System of Preferences, adopts new textile transshipment provisions and re-authorizes the United States Customs Service.

Trade Promotion Authority

By passing this legislation, Congress extended Trade Promotion Authority to the President. Under this provision Congress agreed not to modify agreements negotiated by the President, while retaining its authority to approve or reject the final agreement. The Act states several objectives for trade negotiations, including: the reduction of trade barriers, strengthening dispute settlement procedures, improving adherence to international labor and environmental standards and protecting U.S. trade remedy laws. The Act provides for TPA to be effect until June 2005, with the possibility of extension to 2007.

Trade Adjustment Assistance

The legislation expands programs to assist American workers impacted by international trade agreements. Key provisions expand eligibility to farmers, ranchers and secondary workers, extend income support payments and provide health insurance to displaced workers. The Act also increases funding for retraining programs by over fifty percent.

Customs Service

The Customs Reauthorization provisions include several studies of the Customs Service's operations. These include a study whether Customs Service employees are receiving appropriate training for auditing of importers and the extent to which the Customs Service has improved the speed with which it issues prospective rulings.

The Act amends the Customs Act of 1930 to allow the Secretary of the Treasury to require the electronic submission of certain information to the Customs Service.

The Act also amends Customs Service audit procedures under Tariff Act of 1930. The amendment provides that the Customs Service, during the course of audits concluded under 19 U.S.C. 1509(b), will treat overpayments of duties or fees or over-declarations of quantities on finally liquidated entries as offsets to any underpayments or under-declarations if such overpayments or over-declarations were not made by the person being audited for the purpose of violating provision of law.

Textile Transshipment

The Act directs the GAO to audit the Customs Service's system for monitoring textile transshipment and provide to Congress a report and any applicable recommendations for improving the system. The Act also appropriates $9.5 million for textile transshipment enforcement operations.

Andean Trade Pact & Preferential Trade Treatment

The Trade Act of 2002 extends the Andean Trade Preferences (ATPA) through December 31, 2006, retroactive to December 4, 2001. The retroactivity provision requires the refund of any duty paid on any articles to which duty-free or preferential treatment would have applied since the expiration of the provision last year. Requests for liquidation or re-liquidation must be made to the Customs Services with 180 days of the signing of the Trade Act of 2002. The ATPA provides low tariffs for selected products from the Andean nations of Colombia, Peru, Ecuador and Bolivia. The Act also extends duty-free treatment to products previously excluded from the preference program, including textile and apparel products.

Generalized System of Preferences

The Act also extends through the end of 2006 the Generalized System of Preferences (GSP) that gives the President the authority to give preferential duty treatment to goods from developing countries. GSP may also be applied retroactively to goods that would have been eligible for preferential treatment except for the expiration of the GSP provisions. Requests for liquidation or re-liquidation must be made to the Customs Services with 180 days of the signing of the Trade Act of 2002.