November 15, 2000

CONTENTS

• SUMMARY
• MOST RECENT DEVELOPMENTS
• BACKGROUND AND ANALYSIS
• What is Normal-Trade-Relations (Most-Favored-Nation) Treatment?
• U.S. Most-Favored-Nation Policy
• Developments during the 106^th Congress
• Present Status
• LEGISLATION
• CHRONOLOGY
• CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
• FOR ADDITIONAL READING

SUMMARY

Legislation was enacted in 1998 to replace in U.S. statutes the misleading term "most-favored-nation" (MFN) with "normal trade relations" (NTR) or another appropriate term, but the former is still in general international use. The United States accords general MFN (nondiscriminatory) treatment as a matter of statutory policy to all trading partners except those whose MFN tariff status has been suspended by specific legislation. Virtually all such suspensions have been carried out under the mandate of the Trade Agreements Extension Act of 1951.

MFN tariff status can be restored to and retained temporarily by most of these countries under Title IV of the Trade Act of 1974 if they conclude with the United States a trade agreement containing a reciprocal MFN clause, and if they are (and remain) in compliance with the requirements of the Act's Jackson-Vanik (J-V) provision.

The trade agreement must be approved by a joint resolution, and the required presidential semiannual reports confirming full compliance with the J-V free-emigration provision, or annual recommendations for extensions of the authority to waive it, are annually subject to possible disapproval by joint resolution. Trade agreements are triennially self- renewable, but their renewal is also subject to presidential confirmation.

MFN status of a country can also be changed by specific legislation. In 19 instances, MFN status has been restored under the waiver provisions of Title IV; in 17 of these cases, restoration under the waiver was changed to one subject to determination of full compliance and, in seven cases, such restoration was later made permanent. Permanent MFN status was restored directly to four former non-MFN countries, while six countries are still denied it altogether.

Permanent NTR status was extended to Mongolia in July 1999 and to Albania and Kyrgyzstan in June 2000. Legislation to grant permanent NTR status to Georgia has been enacted but not yet implemented, and measures to restore it to Cuba have been introduced.

A Jackson-Vanik waiver has been in effect for Vietnam since 1998 and a trade agreement with Vietnam, delayed since early 1999, has recently been signed (but still requires approval by Congress). Vietnam's and Belarus' waivers were renewed in mid-2000, and action to disapprove the former by joint resolution has failed. Also repeated in mid-2000 was the President's report of full compliance with the Jackson-Vanik requirements by 10 former Soviet republics.

Impairment or denial of MFN status is provided as a measure in bills to reform unilateral economic sanctions legislation. The sanction of withdrawing the MFN status would also be applied to Lebanon and Syria.

(China's MFN status is not dealt with in this issue brief but separately in CRS Report RL30225, Most-Favored-Nation Status of the People's Republic of China.)

MOST RECENT DEVELOPMENTS

On June 2, 2000, the President renewed the Jackson-Vanik waivers for Belarus and Vietnam, and joint resolutions to disapprove the latter were introduced in both houses on June 6, 2000 (H.J.Res. 99; S.J.Res. 47); disapproval action failed in the House. Also in June 2000, the President reported to Congress continued full compliance with the requirements of the Jackson-Vanik amendment by 10 former Soviet republics.

Permanent NTR status was extended by specific law to Albania and Kyrgyzstan effective June 29, 2000, and legislation to grant permanent NTR status to Georgia has been enacted but as yet not implemented. Measures to restore it to Cuba have been introduced. Also being considered is the withdrawal (as a sanction) of NTR status of Lebanon and Syria. A trade agreement with Vietnam, signed on July 13, 2000, must still be approved by Congress, but has as yet not been submitted to it by the President.

Bills, introduced to reform unilateral economic sanctions legislation against any country, provide for impairment or denial of nondiscriminatory treatment as a sanction measure.

BACKGROUND AND ANALYSIS

What is Normal-Trade-Relations (Most-Favored-Nation) Treatment?

Although legislation has been enacted to replace the term "most-favored-nation" treatment in existing and future legislation with the term "normal trade relations" or another appropriate expression, the former term is still used in this issue brief for reasons of historical continuity and because of its continued universal use in international trade relations as well as in several U.S. bilateral trade treaties and agreements at present in force.

In international trade, the expression "most-favored-nation," usually abbreviated "MFN," status (or treatment) has a specific meaning quite at variance with what it appears to mean. While suggesting special and exclusive privileges granted to one country, it means in reality equal treatment of all countries. More specifically, it denotes the extension by a country of any concessions, privileges, or immunities granted, or yet to be granted, in a trade agreement to one country that is, or would be, the "most favored" in this respect, to all countries to which it accords MFN treatment. As a consequence, all countries to which a country extends MFN treatment are, or would be, treated equally by the extending country. Most-favored-nation treatment in fact means equal treatment, and the terms "most-favored-nation" and "nondiscriminatory" are often used interchangeably.

In practice, the principal benefit a country gains from being accorded MFN status by another country is that the latter's imports from the former are dutied at concessional (often referred to as "MFN", and listed in the tariff schedules as "General") rather than full rates. Thus, the extension of MFN treatment to a country can often mean a significantly lower cost and, hence, greater competitiveness of its products in the extending country's markets.

U.S. Most-Favored-Nation Policy

There are three basic, often overlapping, ways in which the United States accords general MFN treatment to its trading partners. One is by means of a bilateral compact (e.g., a "friendship, commerce, and navigation" or similar treaty, or an executive trade agreement) in which MFN status is accorded reciprocally. Another, much broader in its reach, is through being a member of the World Trade Organization (WTO), which, as a rule, carries with it the obligation of according MFN treatment to all other members.

In addition, the United States specifically accords to all foreign countries any concession on tariffs or other import restrictions agreed to in reciprocal negotiations with any trading partner by its own law, first enacted in 1934 and now contained in Section 126 of the Trade Act of 1974 (19 U.S.C. 2136). U.S. legislation provides no specific procedure for extending MFN status to a country (except in the case of restoration of the status mentioned below) nor is there an official list of countries with MFN status. All countries other than those to which MFN treatment is specifically denied by law have MFN status.

The policy of general application of MFN treatment was modified when the President, as required by Section 5, Trade Agreements Extension Act of 1951 (65 Stat. 73), suspended, in 1951 and 1952, the application of MFN tariff rates to the Soviet Union and to all countries or areas under the control of international communism (in practice, the suspension applied to all countries of the then Sino-Soviet bloc but not to Yugoslavia). This action resulted in the increase of customs duties assessed on the U.S. imports from the countries involved from the concessional levels resulting from trade agreements with third countries to considerably higher levels as enacted by the highly protectionist Tariff Act of 1930.

The countries and areas initially denied MFN tariff treatment under Section 5 were: Albania, Bulgaria, China (any part under Communist domination or control), Czechoslovakia, Estonia, Germany (Soviet Zone and Soviet Sector of Berlin), Hungary, Indochina (any part of Cambodia, Laos, or Vietnam under Communist domination or control), Korea (any part under Communist domination or control), Kurile Islands, Latvia, Lithuania, Outer Mongolia, Poland and areas under Polish domination or control, Rumania, Southern Sakhalin Island, Soviet Union, Tanna Tuva, and Tibet.

Subsequently, Poland's MFN tariff status was restored in December 1960, while Cuba's was suspended in May 1962. Also in 1962, a list of "Communist countries" (all "Section 5" countries except Poland), to which MFN tariff status was being currently denied, was included in the newly revised Tariff Schedules of the United States, enacted by the Tariff Classification Act of 1962.

Section 231 of the Trade Expansion Act of 1962 (P.L. 87-794; 76 Stat. 876) applied the Section 5 suspension to "any country or area dominated by Communism" and thereby placed in jeopardy MFN status of Yugoslavia as well as Poland. The implementation of this directive was delayed and the law was later amended by allowing any country with MFN status at the time of its enactment (December 16, 1963) to retain it if the President determines it to be in the national interest. Such determination was made on March 26, 1964, for both countries.

The Trade Expansion Act of 1962 also made impossible the restoration of MFN status to a country subject to Section 5 suspension except by legislation. Such a law was enacted as part of the Trade Act of 1974, which in its Section 401 requires the continuation in force of the then existing suspensions of MFN tariff status, but also, in the remainder of its Title IV, authorizes the President to restore MFN status to a "nonmarket economy" (NME) country and maintain it in effect. The restoration may take place if (1) the President determines and reports initially and then semiannually to Congress that such country is not in violation of the requirements of the freedom-of-emigration ("Jackson-Vanik") amendment, or if he waives full compliance with such requirements under specified conditions, and his waiver authority and the existing waivers are renewed annually in mid-year; and (2) the country has concluded with the United States a trade agreement providing for reciprocal MFN treatment and containing other provisions as required by law, and the agreement is approved by a joint resolution enacted under a specific fast-track procedure.

The President's initial and any year-end report of full compliance with (no violation of) the free-emigration requirements or his annual mid-year recommendation of renewal of the waiver authority can be disapproved by a fast-track enactment of a joint resolution. A trade agreement with an NME country remains in effect for 3-year periods and is extended automatically under its own terms unless denounced; each such extension also requires a presidential determination of satisfactory reciprocation of the benefits extended by the United States under its MFN policy to the NME country. Triennial extensions do not require congressional approving action.

Poland's MFN tariff status was suspended again in October 1982 after the Polish martial-law government increased its repressive measures, but was restored in February 1987, after most such measures had been repealed. In January 1986, Afghanistan's MFN status was suspended by specific law; it can be restored, under specified conditions, by executive action without congressional involvement. In 1989 the designation "Communist countries" was omitted from the title of the list of countries denied MFN tariff treatment in the newly enacted Harmonized Tariff Schedule of the United States and the designation of the countries themselves was streamlined to reflect the actual World War II border changes, except for Estonia, Latvia, and Lithuania, which remained listed individually, since their incorporation into the USSR had not been recognized by the United States. The suspension of East Germany's MFN tariff status automatically ended with the unification of the two Germanies on October 3, 1990. By the end of 1990, MFN status had been restored under the waiver provisions of Title IV to Romania (1975), Hungary (1978), China (including Tibet) (1980), and Czechoslovakia (1990). Romania, however, in 1988, renounced the continuation of its MFN tariff status subject to the conditions of Title IV.

Much activity related to MFN tariff status of U.S. trading partners took place during the 102nd through 105th Congresses (1991-1998).

The status was restored temporarily under the waiver provision of Title IV to Bulgaria and Mongolia in November 1991, and permanently by law in December 1991 to previously non-MFN countries Estonia, Latvia, and Lithuania, after they declared their independence from the Soviet Union, and, in April 1992, to Czechoslovakia (later split into the Czech Republic and Slovakia) and Hungary (both of which already had MFN status under Title IV). After the dissolution of the Soviet Union in late December 1991, the suspension of MFN tariff status continued in force individually with respect to its other 12 former constituent republics. Most of these had their MFN status restored within the next two years under the waiver provision of Title IV and by acceding to the U.S.-Soviet Union trade agreement of June 1, 1990, modified to apply to each individual republic. Thus MFN status was restored to Armenia in April 1992, Russia and Ukraine in June 1992, Moldova in July 1992, Kyrgyzstan in August 1992, Belarus and Kazakhstan in February 1993, Georgia in August 1993, Turkmenistan in October 1993, Tajikistan in November 1993, and Uzbekistan in January 1994. Azerbaijan was the only former Soviet republic whose restoration of MFN status under Title IV was still awaiting at the end of 1994 (since April 1993) the approval of that country's parliament.

During the same period, MFN tariff status also was regained under Title IV waiver provision by Albania (November 1992) and Romania (November 1993, following the September 1992 refusal of the House to restore it). MFN status of Bulgaria and the Russian Federation, restored earlier under the waiver provision, was continued in force by presidential determinations of full compliance with the freedom-of-emigration requirements (made, respectively, in June 1993 and September 1994).

Although President Bush issued in October 1992 a notice of intention to restore MFN status to Afghanistan, no action to that effect has as yet been taken.

Also in October 1992, legislation was enacted to withdraw MFN tariff status from Serbia and Montenegro (constituent republics of Yugoslavia in its reduced size). The status may be restored by the President to either republic 30 days after he certifies to the Congress that it had ceased its warlike activities in the former Yugoslavia.

In April 1995, MFN tariff status was extended to Azerbaijan under the Jackson-Vanik waiver provision, and permanent and unconditional MFN tariff status was restored in late 1996 by specific law to three countries: Bulgaria, and Romania (both of which at the time already had MFN status under the full-compliance provision of the Jackson-Vanik amendment), respectively in October and November, and Cambodia (then a non-MFN country) in October.

Measures introduced to restore MFN tariff status, either temporarily or permanently, to a number of other countries were not given further consideration, nor were measures denying or restricting MFN status of certain countries in a variety of circumstances. The Senate did approve, however, a bill to substitute in all U.S. statutes the often misunderstood term "most favored nation treatment" with "normal trade relations;" a similar House bill, using the term "standard trade relations," remained pending. (Also suggested during the consideration of this change were other replacement terms, among them the actually more accurate terms "standard tariff relations" and "standard tariff treatment.")

In 1996, the President renewed his determinations of full compliance with the Jackson-Vanik amendment requirements for Bulgaria, Romania (both since granted permanent MFN status), and Russia, and made the initial determination for Mongolia. The President also confirmed 3-year extensions of trade agreements with 10 NME countries.

During the 105th Congress, several bills affecting the MFN status of U.S. trading partners were introduced, but none enacted. Most legislative action involved bills permanently restoring MFN tariff status to Mongolia (passed by the House and favorably reported in the Senate) and Laos (favorably reported in the Senate). Introduced but not further considered was a bill granting permanent nondiscriminatory status to Kyrgyzstan and one that would grant, under certain conditions, permanent MFN status to any country still without it. On the other hand, bills also were introduced which would withdraw MFN tariff treatment from certain countries.

The President, at the appropriate times, extended all the existing Jackson-Vanik waivers, determined full compliance with the free emigration requirements by all but two (Belarus, and China) countries then still subject to the waiver, and subsequently reconfirmed such compliance. The President also issued, in April 1998, the initial Jackson-Vanik waiver for Vietnam. Joint resolutions to disapprove this waiver were introduced in both houses and reported unfavorably, whereupon the House resolution was defeated, allowing Vietnam's waiver to remain in force.

During the entire period since mid-1989, the most controversial issue of the U.S. MFN policy has been the MFN status of China. Yet, despite strong opposition in Congress to the President's annual renewals of China's Jackson-Vanik waiver and MFN status, joint resolutions introduced every year in the aftermath of the June 1989 Tiananmen Square events to disapprove such renewals have not been adopted. Two bills to subject China's MFN status to additional restrictions, passed during the 2nd session of the 102nd Congress, were vetoed by the President and in both cases the veto was upheld by the Senate. Similar legislation as well as joint resolutions disapproving China's waiver in subsequent Congresses have not reached enactment. (For detail, see CRS Report RL30225, Most-Favored-Nation Status of the People's Republic of China.)

Without actually affecting the practical application of MFN tariff treatment, legislation was enacted in 1998 (Section 5003 of the Internal Revenue Service Restructuring and Reform Act of 1998) to replace the term " most-favored-nation" in seven specific statutes with "normal trade relations" or another appropriate term. The term "most-favored-nation" continues to be used in international practice and in U.S. trade agreements with other countries.

In view of the, then prospective, accession of the Kyrgyz Republic (Kyrgyzstan) to the World Trade Organization (which eventually took effect on December 20, 1998) and the obligation of a WTO member to accord permanent and unconditional most-favored-nation treatment to all WTO members, the United States on October 12, 1998, invoked Article XIII of the WTO Agreement. The article allows the nonapplication of the entire WTO Agreement (and not merely of one part of it) between any current WTO member and the acceding member, upon written notice to the WTO by either, before the latter's accession. Without invoking Article XIII, the United States would be in violation of its WTO obligation toward the Kyrgyz Republic because of the latter's MFN status being subject to the Jackson-Vanik amendment. (Identical action had been taken in similar circumstances on July 11, 1996, with respect to Mongolia, then a candidate for WTO membership. After Mongolia's accession to the WTO (January 29, 1997) and the extension of permanent MFN status to Mongolia by the United States (see next page), U.S. recourse to Article XIII was rescinded by the United States with respect to Mongolia on July 7, 1999).

Developments during the 106^th Congress

Legislation to extend permanent MFN status to Mongolia, Albania, and Kyrgyzstan has been enacted and implemented; also a report of full compliance with the requirements of the Jackson-Vanik provision by ten countries was made by the President in mid-2000, as was the renewal of Jackson-Vanik waivers for Belarus and Vietnam; joint resolutions to disapprove the latter extension, introduced in both houses, failed in the House. A trade agreement with Vietnam was signed. Also introduced was legislation to grant permanent nondiscriminatory status to Georgia and to Cuba. Several measures to reform unilateral economic sanctions legislation (including MFN policy) are being considered.

Extension of permanent MFN tariff status to Mongolia was the subject of several legislative measures, identical in their operative provisions: Section 2424 of the Miscellaneous Trade and Technical Corrections Act of 1999 (H.R. 326, H.R. 435, and S. 262); and S. 354); of these, S. 262 has been reported favorably in the Senate, and H.R. 435 has been enacted (P.L. 106-36) and MFN tariff status extended to Mongolia by Presidential Proclamation 7207 (July 1, 1999).

S. 332 and H.R. 1318, authorizing the extension of permanent MFN tariff status to Kyrgyzstan, were introduced, respectively, January 28 and May 25, 1999, and referred, respectively, to the Senate Finance, and the House Ways and Means Committees. The extension of permanent MFN status to Kyrgyzstan, eventually authorized by Section 302 of H.R. 434, signed into law (P.L. 106-200) May 18, 2000, was implemented by Presidential Proclamation 7326, effective June 29, 2000 (63 FR 41547).

Authorization for extending permanent MFN status to Albania was contained in H.R. 2746, introduced on August 5, 1999, and referred to the Committee on Ways and Means, and in S. 1957, introduced September 29, 1999, and referred to the Committee on Finance. The extension of permanent MFN status to Albania, eventually authorized by Section 301 of H.R. 434, signed into law (P.L. 106-200) May 18, 2000, was implemented by Presidential Proclamation 7326, effective June 29, 2000 (63 FR 41547).

In view of Georgia's recent accession to the WTO (see next page), legislation to extend to it permanent nondiscriminatory treatment was introduced (H.R. 4782) June 29, 2000; its provisions were included as Title III in H.R. 4868 (Miscellaneous Trade and Technical Corrections Act of 2000), enacted November 9, 2000, but not yet implemented.

H.R. 4856 and S. 2896, introduced respectively July 13 and July 20, 2000, and referred to the Committees of Ways and Means, and on Finance, would extend permanent NTR treatment to Cuba as part of a broader action to lift the restrictions on U.S. trade with Cuba.

Three bills to reform unilateral economic sanctions legislation (H.R. 1244, S. 757, and S. 927), introduced, respectively, March 24, March 25, and April 29, 1999, provide for impairment or denial of nondiscriminatory treatment as a sanction measure; referred, respectively, to the House Committees on International Relations, Ways and Means, and Banking and Financial Services, and to the Senate Finance Committee.

H.R. 2056, introduced June 8, 1999, and referred to the Committees on International Relations, Ways and Means, and Banking and Financial Services, would, among other sanctions aimed at Lebanon and Syria, withdraw their nondiscriminatory treatment.

On February 2, 1999, the President determined and transmitted to Congress the 1998 year-end report (H.Doc. 106-16) that Albania continues to be in full compliance with the free-emigration requirements of the Jackson-Vanik amendment and, on February 11, 1999, transmitted a similar report on Mongolia (H.Doc. 106-19). (The year-end 1998 report on 11 former Soviet republics (H.Doc.106-5) had been transmitted already on December 29, 1998.) The mid-1999 full-compliance report on the 11 former Soviet republics was transmitted on July 2, 1999, and on Albania on July 19, 1999 (H.Doc. 106-98). The 1999 year-end report on the 11 former Soviet republics was transmitted on January 7, 2000; and on Albania on February 9, 2000 (H.Doc. 106-195). (Mongolia had meanwhile been granted permanent nondiscriminatory status.) Since Albania and Kyrgyzstan also had in the meantime been granted permanent NTR status (see preceding page), the President made his mid-2000 (June 30) report on full compliance with the Jackson-Vanik requirements only for 10 former Soviet republics.

On June 3, 1999, the President recommended a one-year extensions of Jackson-Vanik waivers for Belarus, China, and Vietnam, triggering the introduction of joint resolutions disapproving the extension for China (H.J.Res. 57 and S.J.Res. 27) and Vietnam (H.J.Res. 58 and S.J.Res. 28). A hearing on H.J.Res. 58 was held by the Ways and Means Trade Subcommittee; H.J.Res. 58 was reported adversely August 2, 1999 (H.Rept. 106-282), and failed to pass the House August 3, 1999 (130 - 297). Presidential mid-2000 (June 2) recommendations (Presidential Determinations Nos. 2000-21, -22, and -23) to extend the waivers for Vietnam, Belarus (and China; see CRS Report RL30225) were followed by the introduction of H.J.Res. 99 and S.J.Res. 47 to disapprove the extension of Vietnam's waiver. A hearing by the Ways and Means Trade Subcommittee on U.S.-Vietnam relations, including the renewal of Vietnam's waiver, took place June 15, 2000. H.J.Res. 99 was reported adversely (H.Rept. 106-794) and defeated (91 - 332) July 26, 2000.

A comprehensive bilateral trade agreement was signed with Vietnam on July 13, 2000. It still requires approval by joint resolution of Congress (to which it has not yet been submitted by the President) and by Vietnam's National Assembly.

Apparently in preparation for the introduction of legislation for this purpose, the Trade Subcommittee of the House Ways and Means Committee solicited, on July 29, 1999, public comments on granting permanent nondiscriminatory status to Laos with September 10, 1999, as the deadline, but no further action has been taken.

The United States, on September 30, 1999, invoked the nonapplication provision (Article XIII) of the WTO Agreement with respect to Georgia, whose accession to the WTO was subsequently approved and took effect on June 14, 2000. Upon the implementation of PNTR for Georgia, this recourse to Article XIII is likely to be rescinded.

Present Status

In view of the statutory general applicability of MFN status to U.S. trading partners under Section 126 of the Trade Act of 1974, there is no official specific list of countries with MFN status; all countries other than those to which MFN tariff status has been specifically denied by law or extended conditionally under Title IV of the Trade Act of 1974, have permanent and unconditional MFN status.

Countries to which, at present, MFN tariff status is denied are Afghanistan, Cuba, Laos, North Korea, Vietnam, and Yugoslavia (Serbia and Montenegro).

Countries to which MFN tariff status is at present being extended after having been conditionally restored temporarily under the provisions of Title IV of the Trade Act of 1974 are:

(1) under the presidential waiver of Jackson-Vanik amendment requirements, which must be renewed annually and is subject to disapproval by joint resolution of Congress: Belarus, and China (with Tibet). (A waiver is also in effect for Vietnam, but the restoration of its MFN tariff status is still contingent on congressional approval by joint resolution of the bilateral trade agreement signed, after much delaying on the part of Vietnam, on July 13, 2000, and on its ratification by Vietnam's National Assembly.)

(2) under the presidential determination of full compliance with the Jackson-Vanik amendment requirements, which, after the initial one, must be renewed semiannually and is subject to disapproval by joint resolution of Congress at the time of year-end renewal: Armenia, Azerbaijan, Georgia, Kazakhstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.

Restoration of permanent NTR status to Mongolia has been enacted and implemented by Presidential Proclamation 7207, effective July 1, 1999, and permanent nondiscriminatory treatment was restored to Albania and Kyrgyzstan by Sections 301 and 302 of P.L. 106-200, signed May 18, 2000, and implemented by Presidential Proclamation 7326, effective June 29, 2000. Subsequently, the invocation of Article XIII of the WTO Agreement (see p. 5) with respect to Kyrgyzstan was rescinded on July 20, 2000. Legislation to grant PNTR to Georgia (Title III, H.R. 4868)was signed on November 9, 2000, but not yet implemented.

MFN status can be restored to Afghanistan and Yugoslavia -- countries not subject to the Jackson-Vanik amendment -- by executive action under conditions specified in the legislation suspending the status.

Presidential determinations of satisfactory reciprocity, which the law requires for extending the triennial terms of bilateral trade agreements with NME countries, have in recent years been published with delays or, in one instance, not at all. The only published determination still in effect is the one for China; there are no extant published determinations extending the agreements with the rest of NME countries, whose terms have all expired (10 recently, 1 several years ago). This omission apparently does not in practice affect the NTR status of the latter countries, since they are all still treated as having NTR status.

Legislation, enacted in 1998, requires that the term "most-favored-nation" in existing and future legislation be replaced with "normal trade relations" or another appropriate term. The MFN term, however, is still being used in practice internationally and in U.S. trade agreements.

LEGISLATION

(For legislative activity with respect to China's most-favored-nation status, please see CRS Report RL30225, Most-Favored-Nation Status of the People's Republic of China.)

H.J.Res. 58 (Rohrabacher)/S.J.Res. 28 (Bob Smith)
Disapproves the extension of the Jackson-Vanik waiver for Vietnam. H.J.Res. 58 introduced June 9, 1999, referred to Committee on Ways and Means; a hearing by Ways and Means Trade Subcommittee on U.S.-Vietnam trade relations, including Jackson-Vanik waiver, held June 17, 1999. S.J.Res. 28 introduced June 7, 1999, referred to Committee on Finance. H.J.Res. 58 reported adversely June 30, 1999 (H.Rept. 106-282); failed of passage (130 - 297) August 3, 1999. Motion to discharge S.J.Res. 28 rejected (5 - 94) July 20, 1999.

H.J.Res. 99 (Rohrabacher)/S.J.Res. 47 (Bob Smith)
Disapproves the extension of the Jackson-Vanik waiver for Vietnam. Both introduced June 6, 2000, and referred, respectively, to Committees on Ways and Means, and on Finance.

A hearing on U.S. relations with Vietnam, including Vietnam's waiver, was held by Ways and Means Trade Subcommittee on June 15, 2000. H.J.Res. 99 reported adversely (H.Rept. 106-794) and failed of passage (91 - 332) July 26, 2000.

Section 2424 of H.R. 326 (Archer), H.R. 435 (Archer), S. 262 (Roth), and S. 354 (Thomas)
Authorizes the President to extend permanent nondiscriminatory treatment to Mongolia. H.R. 326 introduced Jan. 19, 1999, H.R. 435 introduced Feb. 2, 1999, both referred to Committee on Ways and Means; S. 262 introduced Jan. 20, 1999, S. 354 introduced Feb. 3, 1999, both referred to Committee on Finance; S. 262 favorably reported Feb. 3, 1999 (S.Rept. 106-2). H.R. 435 passed the House (414-1) Feb. 9, 1999, and Senate (by unanimous consent, amended) May 27, 1999; Senate amendments agreed to by the House (375 - 1) June 17, 1999; signed into law June 25, 1999 (P.L. 106-36). Permanent nondiscriminatory treatment extended to Mongolia by Pres. Proclamation 7207 of July 1, 1999 (64 F.R. 36549).

H.R. 1244 (Crane); S. 757 (Lugar); S. 927 (Dodd)
Includes among the authorized sanction measures "the imposition of increased tariffs on, or other restrictions on imports of, products of a foreign country or entity, including the denial, revocation, or conditioning of nondiscriminatory (most-favored-nation) trade treatment." H.R. 1244 introduced Mar. 24, 1999; referred to the Committees on International Relations, Ways and Means, and Banking and Financial Services; S. 757 introduced Mar. 25, 1999, S. 927 introduced Apr. 29, 1999, both referred to the Committee on Foreign Relations.

H.R. 1318 (Dunn)/S. 332 (Brownback)/Sec. 702/302, H.R. 434 (as amended; Roth/Moynihan)
Authorizes the President to extend permanent nondiscriminatory treatment to Kyrgyzstan. S. 332 introduced Jan. 28, 1999; referred to Committee on Finance; H.R. 1318 introduced Mar. 25, 1999; referred to Committee on Ways and Means; Sec. 702, proposed as Senate amendment SP2325 to H.R. 434 Oct. 27, 1999, passed Nov. 3, 1999; provision was retained as Sec. 302 in the conference report on H.R. 434 (H.Rept. 106-606), filed May 4, 2000, passed by the House on the same day (309-110) and by the Senate (77-19) May 11, 2000. Signed into law (P.L. 106-200) May 18, 2000; implemented by Pres. Proclamation 7326, effective June 29, 2000 (65 FR41547).

H.R. 2056 (Forbes)
Lebanon Independence Restoration Act of 1999. Along with the imposition of other sanctions, withdraws nondiscriminatory treatment from products of Lebanon and Syria until Syria withdraws all of its and its proxies' forces from Lebanon and full democracy and stability is restored in Lebanon, as certified by the President to the Congress. Introduced June 8, 1999; referred to the Committees on International Relations, Ways and Means, and Banking and Financial Services.

H.R. 2746 (Engel)/Sec. 701/301, H.R. 434 (as amended; Roth/Moynihan)
Trade and Development Act of 1999. Authorizes the President to extend permanent nondiscriminatory treatment to Albania. H.R. 2746 Introduced Aug. 5, 1999; referred to the Committee on Ways and Means; Sec. 701, proposed as Senate amendment SP2325 to H.R. 434 Oct. 27, 1999, passed Nov. 3, 1999; provision was retained as Sec. 301 in the conference report on H.R. 434 (H.Rept. 106-606), filed May 4, 2000, agreed to by the House on the same day (309-110) and by the Senate (77-19) May 11, 2000. Signed into law (P.L. 106-200) May 18, 2000; implemented by Pres. Proclamation 7326, effective June 29, 2000 (65 FR 41547).

H.R. 4782 (Crane)
Authorizes the President to extend permanent nondiscriminatory treatment to Georgia. Introduced June 29, 2000; referred to Committee on Ways and Means. (Language subsequently included in H.R. 4868.)

H.R. 4856 (Rangel)/S. 2896 (Baucus)

Extend nondiscriminatory treatment to Cuba, and require the President to submit to Congress a report on U.S.-Cuba trade relations within 18 months after enactment. Introduced, respectively, July 13 and July 20, 2000; referred to Committees on Ways and Means, and on Finance.

H.R. 4868 (Crane), Title III
Language of H.R. 4782, granting PNTR to Georgia, included in Senate version October 13, 2000; passed House October 25, and Senate October 26, 2000; signed by the President November 9, 2000.

CHRONOLOGY

11/09/00 -- H.R. 4868 (Miscellaneous Trade and Technical Corrections Act of 2000) including permanent NTR status to Georgia, signed by the President.

10/26/00 -- H.R. 4868 (as amended by the House) passed by the Senate.

10/25/00 -- H.R. 4868 passed by the House with an amendment.

10/13/00 -- Senate version of H.R. 4868, with language of H.R. 4782 added, passed.

07/26/00 -- H.J.Res. 99, to disapprove the extension of the Jackson-Vanik waiver for Vietnam, reported adversely (H.Rept. 106-704) and defeated (91 - 331) in the House, permitting the waiver to remain in force for another year.

07/20/00 -- S. 2896 introduced to extend permanent nondiscriminatory treatment to Cuba.

07/13/00 -- A comprehensive trade agreement between the United States and Vietnam, including reciprocal extension of NTR, was signed. Agreement must still be approved by a joint resolution of Congress and by Vietnam's National Assembly.

• H.R. 4856 introduced to extend permanent nondiscriminatory treatment to Cuba.

06/30/00 -- The President determined and reported to Congress that 10 former Soviet Republics (all except Belarus) continue to be in full compliance with the Jackson-Vanik requirements.

.

06/29/00 -- Permanent nondiscriminatory treatment extended to Albania and Kyrgyzstan by Pres. Proclamation 7326 (63 FR 41547).

• H.R. 4782 introduced to extend permanent nondiscriminatory treatment to Georgia.

06/15/00 -- House Ways and Means Trade Subcommittee held a hearing on U.S.-Vietnam relations, including Vietnam's Jackson-Vanik waiver.

06/06/00 -- H.J.Res. 99 and S.J.Res. 47 introduced to disapprove the President's extension of the Jackson-Vanik waiver for Vietnam.

06/02/00 -- The President issued Presidential Determinations 2000-21 and 2000-22, extending for one year Jackson-Vanik waivers, respectively, for Vietnam and Belarus.

05/18/00 -- The President signed H.R. 434 (P.L. 106-200), containing provisions (Secs. 301 and 302) authorizing the President to extend nondiscriminatory treatment to Albania and Kyrgyzstan.

05/11/00 -- The Senate agreed (77-19) to the conference report on H.R. 434.

05/04/00 -- Conference report on H.R. 434 (Trade and Development Act of 2000) (H.Rept. 106-606) filed, including the authority for extending unconditional nondiscriminatory treatment to Albania and Kyrgyzstan in Secs. 301 and 302, respectively.

• Conference version of H.R. 434 passed by the House (309 - 110).

02/09/00 -- The President determined and reported to Congress (H.Doc. 106-195) that Albania continues to be in full compliance with the Jackson-Vanik requirements.

01/07/00 -- The President determined and reported to Congress that 11 former Soviet Republics (all except Belarus) continue to be in full compliance with the Jackson-Vanik requirements (Weekly Compilation of Presidential Documents, v. 36, No. 2, Jan. 17, 2000, p. 29.

11/03/99 -- H.R. 434 (amended and renamed "Trade and Development Act of 1999"), in added Secs. 701 and 702 authorizing the extension of unconditional normal trade relations (MFN status), respectively, to Albania and Kyrgyzstan, passed by the Senate (76 yeas - 19 nays).

10/27/99 -- Substitute amendment SP2325 to H.R. 434, authorizing unconditional normal trade relations (MFN status) with Albania and Kyrgyzstan, proposed.

09/30/99 -- The United States invoked the nonapplication provision (Article XIII) of the WTO Agreement with respect to Georgia.

09/29/99 -- S. 1657 to extend permanent nondiscriminatory treatment to Albania introduced.

08/05/99 -- H.R. 2746 to extend permanent nondiscriminatory treatment to Albania introduced.

08/03/99 -- H.J.Res. 58, disapproving the extension of Vietnam's waiver, failed of passage (130 - 29), thereby continuing in force Vietnam's waiver.

08/02/99 -- H.J.Res. 58 reported adversely (H.Rept. 106-282).

07/29/99 -- Presaging legislative action on the subject, the Trade Subcommittee of the House Ways and Means Committee solicits public comments on the extension of permanent nondiscriminatory treatment to Laos.

07/20/99 -- Motion to discharge Senate Finance Committee from further consideration of S.J.Res. 28 rejected (5-94).

07/19/99 -- President determined and reported to Congress that Albania continues to be in full compliance with the Jackson-Vanik requirements (H.Doc. 106-98).

07/07/99 -- United States rescinded the invocation (July 11, 1996) of the nonapplication provision (Article XIII) of the WTO Agreement with respect to Mongolia.

07/02/99 -- The President determined and reported to Congress that 11 former Soviet Republics (all except Belarus) continue to be in full compliance with the Jackson-Vanik requirements (Weekly Compilation of Presidential Documents, v. 35, No. 27, p. 1281).

07/01/99 -- Permanent nondiscriminatory status extended to Mongolia by Presidential Proclamation 7027 (64 F.R. 36549) (see preceding entry).

06/25/99 -- The President signed H.R. 435, containing the authority to extend by proclamation permanent nondiscriminatory treatment (NTR) to the products of Mongolia.

06/17/99 -- Hearing on U.S.-Vietnam trade relations, including Jackson-Vanik waiver for Vietnam, held by Ways and Means Subcommittee on Trade.

06/09/99 -- H.J.Res. 58 to disapprove the extension of the Jackson-Vanik waiver for Vietnam introduced.

06/08/99 -- H.R. 2056 (Lebanon Independence Restoration Act of 1999) introduced, among other sanctions, withdrawing Lebanon's and Syria's MFN treatment.

06/07/99 -- The House agreed (375-1) to H.R. 435, as amended by the Senate, approving the extension of permanent MFN tariff status to Mongolia.

-- S.J.Res. 28 to disapprove the extension of the Jackson-Vanik waiver for Vietnam introduced.

06/03/99 -- The President issued Presidential Determinations 99-26 and 99-27, extending for one year Jackson-Vanik waivers, respectively, for Belarus and Vietnam (H.Docs. 106-76 and 106-78).

05/27/99 -- The Senate amended and passed H.R. 435 by unanimous consent.

04/29/99 -- S. 927 (Sanctions Rationalization Act of 1999) introduced; provides for denial or restriction of MFN status as an economic sanction.

03/25/99 -- H.R. 1318 to extend permanent nondiscriminatory treatment to Kyrgyzstan introduced.

-- S. 757 (Sanctions Policy Reform Act) introduced; provides for denial or restriction of MFN treatment as an economic sanction.

03/24/99 -- H.R. 1244 (Enhancement of Trade, Security, and Human Rights through Sanctions Reform Act) introduced; provides for denial or restriction of MFN status as an economic sanction.

02/11/99 -- The President determined and reported to Congress that Mongolia continues to be in full compliance with the Jackson-Vanik requirements (H.Doc. 106-19).

02/09/99 -- The House passed H.R. 435 (Miscellaneous Trade and Technical Corrections Act of 1999) on a roll-call vote (414 - 1); Section 2424 authorizes the President to extend permanent nondiscriminatory treatment to Mongolia.

02/03/99 -- S. 262, in Section 2424 authorizing the extension of permanent nondiscriminatory treatment to Mongolia, reported favorably (S.Rept. 106-2).

-- S. 354 to extend permanent nondiscriminatory treatment to Mongolia, introduced.

02/02/99 -- H.R. 435 (Miscellaneous Trade and Technical Corrections Act of 1999) introduced; Section 2424 authorizes the President to extend permanent nondiscriminatory status to Mongolia.

-- The President determined and reported to Congress that Albania continues to be in full compliance with the Jackson-Vanik requirements (H.Doc. 106-16).

01/28/99 -- S. 332 to extend permanent nondiscriminatory treatment to Kyrgyzstan introduced.

01/20/99 -- S. 262 (Miscellaneous Trade and Technical Corrections Act of 1999) introduced as an original Committee bill; Section 2424 authorizes the President to extend permanent nondiscriminatory treatment to Mongolia.

01/19/99 -- H.R. 326 (Miscellaneous Trade and Technical Corrections Act of 1999) introduced; Section 2424 authorizes the President to extend permanent nondiscriminatory status to Mongolia.

Chronology for some earlier years can be obtained from the author of the Issue Brief (phone 7-7747).

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

NOTE: For hearings, reports, and documents relating to MFN status of China, see CRS Report RL30225.

U.S. Congress. Conference Committees. Trade and Development Act of 2000; conference report (to accompany H.R. 434). Washington, U.S. Govt. Print. Off., May 4, 2000. 146 p. At head of title: 106^th Congress, 2d Session. H.Rept. 106-606.

U.S. Congress. House. Committee on Ways and Means. Disapproval of normal trade relations treatment to the products of Vietnam; adverse report (to accompany H.J.Res. 58). Washington, U.S. Govt. Print. Off., August 2, 1999. 8 p. At head of title: 106^th Congress, 1st Session. H.Rept. 106-282.

---- Disapproving the extension of waiver authority contained in Section 402(c) of the Trade Act of 1974 with respect to Vietnam; adverse report (to accompany H.J.Res. 99). Washington, U.S. Govt. Print. Off., July 26, 2000. 8 p. At head of title: 106^th Congress, 2d Session. H.Rept. 106-794.

---- Subcommittee on Trade. Written comments on the extension of normal trade relations to the Kyrgyz Republic. Washington, U.S. Govt. Print. Off., February 10, 1999. 6 p. At head of title: 105^th Congress, 2^nd session. Committee print WMCP: 105-12.

---- Subcommittee on Trade. Written comments on the extension of unconditional normal trade relations to the Kyrgyz Republic. Washington, U.S. Govt. Print. Off., November 4, 1999. 11 p. At head of title: 106th Congress, 1st session. Committee print WMCP: 106-5.

---- Subcommittee on Trade. Written comments on the extension of normal trade relations to the Lao People's Democratic Republic. Washington, U.S. Govt. Print. Off., November 4, 1999. 44 p. At head of title: 106^th Congress, 1st session. Committee print WMCP:106-6.

U.S. Congress. Senate. Committee on Finance. Miscellaneous Trade and Technical Corrections Act of 1999; report (to accompany S. 262). Washington, U.S. Govt. Print. Off., February 3, 1999. 81 p. [p. 73]. At head of title: 106^th Congress, 1^st session. S.Rept. 106-2.

U.S. President, 1993- (Clinton). An update on the emigration laws and policies of Albania; communication from the President of the United States... Washington, U.S. Govt. Print Off., 1999. 3 p. (106^th Congress, 1^st session. H.Doc. 106-16). Communication dated February 2, 1999.

----Emigration laws and policies of Albania; message from the President of the United States... Washington, U.S. Govt. Print. Off., 1999. 3 p. (106^th Congress, 1st session. H.Doc. 106-98). Message dated July 19, 1999.

----Emigration laws and policies of Mongolia; communication from the President of the United States... Washington, U.S. Govt. Print Off., 1999. 3 p. (106th Congress, 1st session. H.Doc. 106-19). Communication dated February 11, 1999.

---- Report concerning emigration laws and policies of Albania; message from the President of the United States... Washington, U.S. Govt. Print. Off., 2000. 5 p. (106^th Congress, 2d Session. H.Doc. 106-195). Message dated Feb. 9, 2000.

----A report to Congress concerning the extension of waiver authority for Belarus; communication from the President of the United States... Washington, U.S. Govt Print. Off., 1999. 4 p. (106^th Congress, 1^st session. H.Doc. 106-76). Communication dated June 3, 1999.

----A report to the Congress concerning the extension of waiver authority for Vietnam; communication from the President of the United States... Washington, U.S. Govt. Print. Off., 1999. 6 p. (106^th Congress, 1^st session. H.Doc. 106-78). Communication dated June 3, 1999.

FOR ADDITIONAL READING

CRS Reports

CRS Report 96-463. Country Applicability of the U.S. Most-favored-nation Status, by Vladimir N. Pregelj.

CRS Report 96-317. Extension, Renewal, or Denial of Most-favored-nation Status to Nonmarket Economy Countries, by Vladimir N. Pregelj.

CRS Report 98-545 (pdf). The Jackson-Vanik Amendment: A Survey, by Vladimir N. Pregelj.

CRS Report RS20717 (pdf). Vietnam Trade Agreement: Approval and Implementing Procedure, by Vladimir N. Pregelj.

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