American Governments in return for commitments to the environment of endowments created and managed by international boards. Under the EAI, Presidents Bush and Clinton forgave over $600 million in debt, most of which would not have been repaid, in return for $154 million paid by host governments to endowments dedicated to supporting conservation. The program has been described as the best kept secret in Washington.

This bill before us would write chapter two of this program. We would expand the debt eligible and expand the countries eligible beyond the Latin American focus of the prior program. The bill has 39 cosponsors, including 11 cosponsors from this Committee, Messrs. Brown, Faleomavaega, Wexler, Gallegly, Luther, McHugh, Ballenger, Chabot, Sherman, Lantos and Campbell.

I would also note that Mr. Gejdenson wrote the original Enterprise for Americas Bill at the request of President Bush.

One week ago we heard from the Administration a wide variety of environmental groups endorse the bill, including the World Wildlife Fund, the Nature Conservancy, and Conservation International. While the Administration did not endorse the bill, it has expressed support for the measure's purpose and offered detailed changes to the legislation in a letter received by our Committee just yesterday.

To accommodate the changes suggested, I have been working with the Administration with Mr. Hamilton and Mr. Portman to refine the bill. In the interest of time, and working in a completely bipartisan fashion, we have incorporated most of the changes requested by the Administration into a joint Gilman-Hamilton substitute that is now before our Committee.

I would like to take a minute to describe the changes made from the bill that we introduced.

First, at the suggestion of the Administration, we have deleted debts owed to the Export-Import Bank from the bill. The substitute now before the Committee cuts $75 million from the bill from $400 million down to $325 million.

Next, we replaced the phrase "open investment regime" that some of the Sierra Club had been concerned with, and I understand the Sierra Club now supports the text of our substitute.

Next, we deleted the specific identification of 11 nations contained in the original bill, giving flexibility to the Administration to protect critical habitats or to take advantage of unique opportunities to relieve debt to protect the environment.

I will note that Bangladesh was not on the original list and with the flexibility offered by the substitute, Bangladesh would be able to participate in the early transactions under the bill.

And finally, we included authority to do debt buybacks in the bill, as carried out recently by the U.S. Government and the Government of Peru, these buybacks are not scored against the budget because the purchaser pays the full market value of the debt owed. These transactions offer exciting opportunities for middle income countries to reduce their face value debt and protect the environment.

We have made other modifications that were requested by the Congressional Budget Office to tighten the budget impact of the bill

to require appropriations and to clearly reference the Credit Reform Act.

I would like to consider one further modification of the bill, to be considered on the floor, subjecting each transaction to the notification provisions of the Foreign Assistance Act. We will discuss this with Mr. Hamilton and the Administration before offering such a change on the floor.

With that, I would urge our Members to support the substitute and I am pleased to recognize Mr. Hamilton.

Mr. HAMILTON. Mr. Chairman, thank you very much. I will be quite brief.

I want to commend you and, of course, Mr. Portman for bringing this bill forward. I support it very strongly and I will not repeat my statement that I made before the Committee the other day.

I do think the Administration requests have been accommodated in the substitute bill. That includes authority in the bill to allow additional countries to be added to the program, deletes the authority for the sale, reduction or cancellation of Export-Import Bank loans. I understand that lowers the bill's scoring, so far as budget is concerned, from $400 to $325 million. And it allows, with the new amendments, the President to participate in no-cost debt swaps and buybacks.

It also avoids duplication of administrative structures by granting the EAI board additional responsibilities for administering H.R. 2870.

I am informed, I think accurately, that the so-called open investment regime eligibility requirement has been worked out. Is that correct, Mr. Chairman?

Chairman GILMAN. Yes, I believe that is correct.

Mr. HAMILTON. The Administration, I think, supports the bill at least in concept. Although, as they made clear the other day, they certainly have concerns about some of the financing and we will have to keep working on that, of course, as we move it through.

I strongly urge my colleagues to support this bill. I think it is an excellent piece of legislation and I thank you for bringing it up. Chairman GILMAN. Thank you, Mr. Hamilton.

Are other Members seeking recognition? Mr. Bereuter.
Mr. BEREUTER. Thank you, Mr. Chairman.

I would like to thank you for expediting the movement of this legislation. I thank the gentleman and commend him, the gentleman from Ohio, for introducing this important piece of legislation and for his kind remarks regarding my early involvement in the subject.

The world's tropical forests, which are biodiverse, economically crucial, and ecologically irreplaceable, are now disappearing faster than any other natural commodity. H.R. 2870 enacts measures to protect this fragile and complex ecosystem type from further exploitation.

Mr. Chairman, I would like to make sure that Bangladesh be designated as eligible for debt relief under the terms of this legislation. It is my understanding that the Treasury, the State Department, and USAID officials have looked at Bangladesh and have made an initial determination that Bangladesh qualifies under the environmental standards of H.R. 2870.

In other words, that within its borders, Bangladesh contains a tropical forest that is globally outstanding in terms of its biological diversity. The region in Bangladesh known as Chihagong and the Chihagong Hills tracts contains much of Bangladesh's tropical rain forest.

Over the years, however, this area has suffered greatly from the effects of constant soil erosion and deforestation due to Bangladesh's ever expanding human population, as well as the effects of natural disaster.

It remains, however, the home of biodiversity as well as a variety of wild animals, to include the world-famous and endangered royal Bengal tiger.

As of the 31st of January, 1998, Bangladesh's P.L. 480 debt amounted to $501.7 million. The interest on that debt is impossible for them to pay and still provide for other necessary activities. I have looked at this situation for several years now, looking for a solution. This legislation can be part of it.

This debt accumulated over more than a decade and now requires substantial payments from Bangladesh, one of the world's poorest nations, and one it can ill afford.

My colleagues may recall that an oversight prevented this matter from being addressed in 1993 when debt forgiveness legislation was approved for many other significant debtor countries. Any financial assistance given to Bangladesh is negated by the payments it is now required to make on its P.L. 480 debt rather than being directed toward worthwhile projects designed to stabilize population growth, establish health programs, and build democracy.

Despite these difficulties, Bangladesh is making progress on structural reforms within its economy. According to a recent edition of "Trends in Developing Countries" published by the World Bank, these reforms include governmental efforts to open new sectors to private entry, deregulate private investment, relax exchange controls, reform business law, and downsize the state-owned enterprises.

I understand that private investment is now being encouraged in the energy, telecommunications and domestic air transport services within Bangladesh. I bring this up to show you the efforts they are making.

Mr. Chairman, I have a couple of very brief, direct questions to put to the Treasury and the State Department representatives here today, if I could ask them to be brought to the table.

Chairman GILMAN. Without objection.

Mr. BEREUTER. I need to establish a legislative record here. Perhaps you could, for the record, introduce yourself if you have not already done so.

Mr. KLOSSON. Yes, sir. My name is Michael Klosson. I am a Deputy Assistant Secretary of State in the Bureau of Legislative Affairs.

Ms. CHAVES. My name is Mary Chaves. I am the Director of International Debt Policy at the U.S. Treasury Department. Mr. BEREUTER. Thank you very much.

Under the environmental standards established in H.R. 2870 as you read them, do your respective agencies believe Bangladesh eligible for debt relief? I would ask each of you.

Ms. CHAVES. There are two basic questions here. One is whether this country has tropical forests and that is an issue I will leave to USAID or the State Department to respond to.

With regard to the economic and political criteria for debt reduction, that is a process which we go through interagency. There is an interagency committee that meets and reviews the specific criteria. We do not have a decision at this point because we have not reviewed Bangladesh on that criteria. But we will go through the specific criteria in the legislation.

Mr. BEREUTER. Ms. Chaves, that is not very satisfying to a Member who has this opportunity to ask for definitive answers.

Ms. CHAVES. I am sorry that I cannot give you a definitive answer at this point. We are required to go through the interagency process in determining eligibility.

Mr. BEREUTER. I would not have asked you this question if I did not have different assurances about your response.

Ms. CHAVES. Perhaps we can address the tropical forest issue. That may help you and you may find that a more attractive response.

Mr. BEREUTER. It is only part of the response, and having relied to some extent on the cooperation and goodwill and good judgment of Treasury from time to time in the Banking Committee, I have been disappointed from time to time, so I am not complacent with your answer.

Would the gentleman from the State Department respond to that part of the question that he feels his agency can respond to?

Mr. KLOSSON. Mr. Bereuter, let me ask a member of USAID to come to the table, since he is specifically working on this issue.

Chairman GILMAN. Would the gentleman please identify himself? Mr. HESTER. My name is James Hester. I am the Agency Environmental Coordinator for the U.S. Agency for International Development.

With regard to the forest resources of Bangladesh, Bangladesh was once 95 percent forested. Now it is 93 percent deforested. Of the 7 percent that is left, about half of it is degraded scrub forest.

However, there are three large areas of forest still, even within that small amount left, that are important biologically, and that are important economically to the country. One is in the southwest called the Sundarbans. This is a mangrove forest maintaining about 350 to 600 Bengal tigers. In addition to this area which is about 2,000 square miles-we have forest in the Chihagong Hills area which is in the southeast of the country. That is about 1,600 square miles of important forest with the largest population of elephants left in the country.

We feel these forests are important and they do need assistance. The Chihagong Hills Forest might be difficult at this point in time to do much in because this is the area where there is a certain amount of insurgency. But certainly we feel that there is enough there to make this an important site.

On a technical basis, concerning the criterion of having valuable tropical forests, we feel that this country is one that would qualify under the terms of this particular bill.

Mr. BEREUTER. Thank you. As you know, this is the country that perhaps other than a city state, has the largest population density

in the world: 120 million people in a country the size of Wisconsin. So the pressure on the forests there, it seems to me, ought to be a factor in giving favorable consideration to it.

I am told that there are about 1.9 million acres. Does that roughly match your understanding?

Mr. HESTER. That depends what numbers one uses and what year. The most reliable numbers we have are about 5 years old. These numbers show approximately 3,600 square miles of forest left in the country, of which about half is degraded. But again that was 5 years ago.

As you say, the population is enormous which means the pressure is enormous. Of that land, perhaps only one-third, maybe slightly less, is actually in a protected status. And of that protected status, not all of it is real protected status. It may just be on a piece of paper.

So we feel the urgency to protect what is left is extremely high. There is not much time left to save what they do have.

Mr. BEREUTER. I would ask Ms. Chaves, I will try another chance with you. Do you know anything in the legislation which would lead you to believe at this point that Bangladesh does not qualify as an eligible recipient?

Ms. CHAVES. No, I have nothing in particular that would lead me to believe that Bangladesh would not qualify. In fact, based on USAID's testimony here we would look at Bangladesh as one of the countries that would be reviewed for specific action under this legislation in reviewing the eligibility criteria of the legislation.

Mr. BEREUTER. Thank you. I would ask the State Department representative if he believes that Bangladesh is eligible under the requirements, under the criteria of this legislation?

Mr. KLOSSON. Mr. Bereuter, my understanding of the facts, based on our State Department experts, is along the lines of what the representative from USAID testified to with regard to the tropical forest. Let me check on one additional point, if I might, sir. Chairman GILMAN. Will the gentleman yield?

Mr. BEREUTER. I would be pleased to yield to the gentleman. Chairman GILMAN. When we report out this bill, the report language will strongly reflect our interest in doing something about Bangladesh.

Mr. BEREUTER. Thank you very much, Mr. Chairman. I might say, while they are conferring, to you and Mr. Hamilton, I am told that there may be a problem. That when we give debt forgiveness, the following year a country is not eligible for P.L. 480. If that is the case, I believe that we will need to consider amendatory language on the floor. Otherwise, for the countries that need assistance the most, those that have received and continue necessarily, like Bangladesh, to receive P.L. 480 funds, there would be a disincentive for them to accept debt relief.

Chairman GILMAN. That gentleman is correct. If the gentleman will yield?

Mr. BEREUTER. I would be pleased to yield.

Chairman GILMAN. The gentleman is correct. We will be seeking an open rule so the gentleman would then have an opportunity to present the appropriate amendment.