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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3074 Referred in Senate (RFS)]

  2d Session
                                H. R. 3074

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 17, 1996

     Received; read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 AN ACT

 
To amend the United States-Israel Free Trade Area Implementation Act of 
 1985 to provide the President with additional proclamation authority 
with respect to articles of the West Bank or Gaza Strip or a qualifying 
                            industrial zone.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. ADDITIONAL PROCLAMATION AUTHORITY.

    The United States-Israel Free Trade Area Implementation Act of 1985 
(19 U.S.C. 2112 note) is amended by adding at the end the following new 
section:

``SEC. 9. ADDITIONAL PROCLAMATION AUTHORITY.

    ``(a) Elimination or Modifications of Duties.--The President is 
authorized to proclaim elimination or modification of any existing duty 
as the President determines is necessary to exempt any article from 
duty if--
            ``(1) that article is wholly the growth, product, or 
        manufacture of the West Bank, the Gaza Strip, or a qualifying 
        industrial zone or is a new or different article of commerce 
        that has been grown, produced, or manufactured in the West 
        Bank, the Gaza Strip, or a qualifying industrial zone;
            ``(2) that article is imported directly from the West Bank, 
        the Gaza Strip, Israel, or a qualifying industrial zone; and
            ``(3) the sum of--
                    ``(A) the cost or value of the materials produced 
                in the West Bank, the Gaza Strip, Israel, or a 
                qualifying industrial zone, plus
                    ``(B) the direct costs of processing operations 
                performed in the West Bank, the Gaza Strip, Israel, or 
                a qualifying industrial zone,
        is not less than 35 percent of the appraised value of the 
        product at the time it is entered into the United States.
For purposes of determining the 35 percent content requirement 
contained in paragraph (3), the cost or value of materials which are 
used in the production of an article in the West Bank, the Gaza Strip, 
or a qualifying industrial zone, and are the products of the United 
States, may be counted in an amount up to 15 percent of the appraised 
value of the article.
    ``(b) Applicability of Certain Provisions of the Agreement.--
            ``(1) Nonqualifying operations.--No article shall be 
        considered a new or different article of commerce under this 
        section, and no material shall be included for purposes of 
        determining the 35 percent requirement of subsection (a)(3), by 
        virtue of having merely undergone--
                    ``(A) simple combining or packaging operations, or
                    ``(B) mere dilution with water or with another 
                substance that does not materially alter the 
                characteristics of the article or material.
            ``(2) Requirements for new or different article of 
        commerce.--For purposes of subsection (a)(1), an article is a 
        `new or different article of commerce' if it is substantially 
        transformed into an article having a new name, character, or 
        use.
            ``(3) Cost or value of materials.--(A) For purposes of this 
        section, the cost or value of materials produced in the West 
        Bank, the Gaza Strip, or a qualifying industrial zone 
        includes--
                    ``(i) the manufacturer's actual cost for the 
                materials;
                    ``(ii) when not included in the manufacturer's 
                actual cost for the materials, the freight, insurance, 
                packing, and all other costs incurred in transporting 
                the materials to the manufacturer's plant;
                    ``(iii) the actual cost of waste or spoilage, less 
                the value of recoverable scrap; and
                    ``(iv) taxes or duties imposed on the materials by 
                the West Bank, the Gaza Strip, or a qualifying 
                industrial zone, if such taxes or duties are not 
                remitted on exportation.
            ``(B) If a material is provided to the manufacturer without 
        charge, or at less than fair market value, its cost or value 
        shall be determined by computing the sum of--
                    ``(i) all expenses incurred in the growth, 
                production, or manufacture of the material, including 
                general expenses;
                    ``(ii) an amount for profit; and
                    ``(iii) freight, insurance, packing, and all other 
                costs incurred in transporting the material to the 
                manufacturer's plant.
        If the information necessary to compute the cost or value of a 
        material is not available, the Customs Service may ascertain or 
        estimate the value thereof using all reasonable methods.
            ``(4) Direct costs of processing operations.--(A) For 
        purposes of this section, the `direct costs of processing 
        operations performed in the West Bank, Gaza Strip, or a 
        qualifying industrial zone' with respect to an article are 
        those costs either directly incurred in, or which can be 
        reasonably allocated to, the growth, production, manufacture, 
        or assembly, of that article. Such costs include, but are not 
        limited to, the following to the extent that they are 
        includible in the appraised value of articles imported into the 
        United States:
                    ``(i) All actual labor costs involved in the 
                growth, production, manufacture, or assembly of the 
                article, including fringe benefits, on-the-job 
                training, and costs of engineering, supervisory, 
                quality control, and similar personnel.
                    ``(ii) Dies, molds, tooling, and depreciation on 
                machinery and equipment which are allocable to the 
                article.
                    ``(iii) Research, development, design, engineering, 
                and blueprint costs insofar as they are allocable to 
                the article.
                    ``(iv) Costs of inspecting and testing the article.
            ``(B) Those items that are not included as direct costs of 
        processing operations with respect to an article are those 
        which are not directly attributable to the article or are not 
        costs of manufacturing the article. Such items include, but are 
        not limited to--
                    ``(i) profit; and
                    ``(ii) general expenses of doing business which are 
                either not allocable to the article or are not related 
                to the growth, production, manufacture, or assembly of 
                the article, such as administrative salaries, casualty 
                and liability insurance, advertising, and salesmen's 
                salaries, commissions, or expenses.
            ``(5) Imported directly.--For purposes of this section--
                    ``(A) articles are `imported directly' if--
                            ``(i) the articles are shipped directly 
                        from the West Bank, the Gaza Strip, a 
                        qualifying industrial zone, or Israel into the 
                        United States without passing through the 
                        territory of any intermediate country; or
                            ``(ii) if shipment is through the territory 
                        of an intermediate country, the articles in the 
                        shipment do not enter into the commerce of any 
                        intermediate country and the invoices, bills of 
                        lading, and other shipping documents specify 
                        the United States as the final destination; or
                    ``(B) if articles are shipped through an 
                intermediate country and the invoices and other 
                documents do not specify the United States as the final 
                destination, then the articles in the shipment, upon 
                arrival in the United States, are imported directly 
                only if they--
                            ``(i) remain under the control of the 
                        customs authority in an intermediate country;
                            ``(ii) do not enter into the commerce of an 
                        intermediate country except for the purpose of 
                        a sale other than at retail, but only if the 
                        articles are imported as a result of the 
                        original commercial transactions between the 
                        importer and the producer or the producer's 
                        sales agent; and
                            ``(iii) have not been subjected to 
                        operations other than loading, unloading, or 
                        other activities necessary to preserve the 
                        article in good condition.
            ``(6) Documentation required.--An article is eligible for 
        the duty exemption under this section only if--
                    ``(A) the importer certifies that the article meets 
                the conditions for the duty exemption; and
                    ``(B) when requested by the Customs Service, the 
                importer, manufacturer, or exporter submits a 
                declaration setting forth all pertinent information 
                with respect to the article, including the following:
                            ``(i) A description of the article, 
                        quantity, numbers, and marks of packages, 
                        invoice numbers, and bills of lading.
                            ``(ii) A description of the operations 
                        performed in the production of the article in 
the West Bank, the Gaza Strip, a qualifying industrial zone, or Israel 
and identification of the direct costs of processing operations.
                            ``(iii) A description of any materials used 
                        in production of the article which are wholly 
                        the growth, product, or manufacture of the West 
                        Bank, the Gaza Strip, a qualifying industrial 
                        zone, Israel or United States, and a statement 
                        as to the cost or value of such materials.
                            ``(iv) A description of the operations 
                        performed on, and a statement as to the origin 
                        and cost or value of, any foreign materials 
                        used in the article which are claimed to have 
                        been sufficiently processed in the West Bank, 
                        the Gaza Strip, a qualifying industrial zone, 
                        or Israel so as to be materials produced in the 
                        West Bank, the Gaza Strip, a qualifying 
                        industrial zone, or Israel.
                            ``(v) A description of the origin and cost 
                        or value of any foreign materials used in the 
                        article which have not been substantially 
                        transformed in the West Bank, the Gaza Strip, 
                        or a qualifying industrial zone.
    ``(c) Shipment of Articles of Israel Through West Bank or Gaza 
Strip.--The President is authorized to proclaim that articles of Israel 
may be treated as though they were articles directly shipped from 
Israel for the purposes of the Agreement even if shipped to the United 
States from the West Bank, the Gaza Strip, or a qualifying industrial 
zone, if the articles otherwise meet the requirements of the Agreement.
    ``(d) Treatment of Cost or Value of Materials.--The President is 
authorized to proclaim that the cost or value of materials produced in 
the West Bank, the Gaza Strip, or a qualifying industrial zone may be 
included in the cost or value of materials produced in Israel under 
section 1(c)(i) of Annex 3 of the Agreement, and the direct costs of 
processing operations performed in the West Bank, the Gaza Strip, or a 
qualifying industrial zone may be included in the direct costs of 
processing operations performed in Israel under section 1(c)(ii) of 
Annex 3 of the Agreement.
    ``(e) Qualifying Industrial Zone Defined.--For purposes of this 
section, a `qualifying industrial zone' means any area that--
            ``(1) encompasses portions of the territory of Israel and 
        Jordan or Israel and Egypt;
            ``(2) has been designated by local authorities as an 
        enclave where merchandise may enter without payment of duty or 
        excise taxes; and
            ``(3) has been specified by the President as a qualifying 
        industrial zone.''.

            Passed the House of Representatives April 16, 1996.

            Attest:

                                                ROBIN H. CARLE,

                                                                 Clerk.
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