To amend the Harmonized Tariff Schedule of the United States with respect to the production incentive certificate program for watch and jewelry producers in possessions of the United States, including the Virgin Islands, Guam, and American Samoa.

SECTION 1. AMENDMENTS TO UNITED STATES INSULAR POSSESSION PROGRAM.

    (a) Production Certificates.--Additional U.S. Note 5(h) to chapter 
91 of the Harmonized Tariff Schedule of the United States is amended--
            (1) by amending subparagraphs (i) and (ii) to read as 
        follows:
``(i) In the case of each of calendar years 2002 through 2015, the 
        Secretaries jointly, shall--
        ``(A) verify--
                ``(1) the wages paid in the preceding calendar year by 
                        each producer (including the value of usual and 
                        customary fringe benefits)--
                        ``(I) to permanent residents of the insular 
                                possessions; and
                        ``(II) to workers providing training in the 
                                insular possessions in the production 
                                or manufacture of watch movements and 
                                watches or engaging in such other 
                                activities in the insular possessions 
                                relating to such production or 
                                manufacture as are approved by the 
                                Secretaries; and
                ``(2) the total quantity and value of watches produced 
                        in the insular possessions by that producer and 
                        imported into the customs territory of the 
                        United States; and
        ``(B) issue to each producer (not later than 60 days after the 
                end of the preceding calendar year) a certificate for 
                the applicable amount.
``(ii) For purposes of subparagraph (i), except as provided in 
        subparagraphs (iii) and (iv), the term `applicable amount' 
        means an amount equal to the sum of--
        ``(A) 90 percent of the producer's creditable wages (including 
                the value of any usual and customary fringe benefits) 
                on the assembly during the preceding calendar year of 
                the first 300,000 units; plus
        ``(B) the applicable graduated declining percentage (determined 
                each year by the Secretaries) of the producer's 
                creditable wages (including the value of any usual and 
                customary fringe benefits) on the assembly during the 
                preceding calendar year of units in excess of 300,000 
                but not in excess of 750,000; plus
        ``(C) the difference between the duties that would have been 
                due on the producer's watches (excluding digital 
                watches) imported into the customs territory of the 
                United States during the preceding calendar year if the 
                watches had been subject to duty at the rates set forth 
                in column 1 under this chapter that were in effect on 
                January 1, 2001, and the duties that would have been 
                due on the watches if the watches had been subject to 
                duty at the rates set forth in column 1 under this 
                chapter that were in effect for such preceding calendar 
                year.''; and
            (2) by amending subparagraph (v) to read as follows:
``(v)(A) Any certificate issued under subparagraph (i) shall entitle 
        the certificate holder to secure a refund of duties equal to 
        the face value of the certificate on watches, watch movements, 
        and articles of jewelry provided for in heading 7113 that are 
        imported into the customs territory of the United States by the 
        certificate holder. Such refunds shall be made under 
        regulations issued by the Treasury Department. Not more than 5 
        percent of such refunds may be retained as a reimbursement to 
        the Customs Service for the administrative costs of making the 
        refunds. If the Secretary of the Treasury determines that there 
        is an insufficient level of duties from watch and watch-related 
        tariffs, the Secretary may authorize refunds of duties 
        collected on jewelry under chapter 71 or any other duties that 
        the Secretary determines are appropriate.
``(B) At the election of the certificate holder and upon making the 
        certification described in this clause, the Secretary of the 
        Treasury shall pay directly to the certificate holder the face 
        value of the certificate, less the value of--
        ``(1) any duty refund previously claimed by the holder under 
                the certificate, and
        ``(2) a discount of not more than 2 percent of the face value 
                of the certificate,
    as determined by the Secretary of the Treasury.
``(C) Direct payments under clause (B) shall be made under regulations 
        issued by the Secretary of the Treasury. Such regulations shall 
        assure that a certificate holder is required to provide only 
        the minimum documentation necessary to support an application 
        for direct payment. A certificate holder shall not be eligible 
        for direct payment under clause (B) unless the certificate 
        holder certifies to the Secretaries that the funds received 
        will be reinvested or utilized to support and continue 
        employment in the Virgin Islands.
``(D) The Secretary of the Treasury is authorized to make the payments 
        provided for in clause (B) from duties collected on watches, 
        watch movements, and parts therefor. If such duties are 
        insufficient, the Secretary of the Treasury is authorized to 
        make the payments from duties collected on jewelry under 
        chapter 71 or any other duties that the Secretary determines 
        are appropriate.''.
    (b) Jewelry.--Additional U.S. Note 3 to chapter 71 of the 
Harmonized Tariff Schedule of the United States is amended--
            (1) by redesignating paragraphs (b), (c), (d), and (e) as 
        paragraphs (c), (d), (e), and (f), respectively;
            (2) by inserting after paragraph (a) the following new 
        paragraph:
``(b) The 750,000 unit limitation in additional U.S. Note 5(h)(ii)(B) 
        to chapter 91 shall not apply to articles of jewelry subject to 
        this note.''; and
            (3) by striking paragraph (f), as so redesignated, and 
        inserting the following:
``(f) Notwithstanding any other provision of law, any article of 
        jewelry provided for in heading 7113 that is assembled in the 
        Virgin Islands, Guam, or American Samoa by a jewelry 
        manufacturer or jewelry assembler that commenced jewelry 
        manufacturing or jewelry assembly operations in the Virgin 
        Islands, Guam, or American Samoa after August 9, 2001, shall be 
        treated as a product of the Virgin Islands, Guam, or American 
        Samoa for purposes of this note and General Note 3(a)(iv) of 
        this Schedule if such article is entered no later than 18 
        months after such jewelry manufacturer or jewelry assembler 
        commenced jewelry manufacturing or jewelry assembly operations 
        in the Virgin Islands, Guam, or American Samoa.''.

SEC. 2. EFFECTIVE DATE.

    The amendments made by this Act shall apply with respect to goods 
imported into the customs territory of the United States on or after 
January 1, 2002.

Summary: Amends the Harmonized Tariff Schedule of the United States concerning clocks, watches, and parts thereof that are products of US insular possessions. Extends and revises the incentive certificate program through calendar year 2015. Authorizes the refund of duties collected on jewelry if the Secretary of the Treasury determines there is an insufficient level of duties from watch and watch-related tariffs. Treats jewelry assembled in the Virgin Islands, Guam, or American Samoa as a product of such possessions, as specified.