PUBLIC LAW 104–234—OCT. 2, 1996

WEST BANK AND GAZA STRIP FREE TRADE

BENEFITS
110 STAT. 3058 PUBLIC LAW 104–234—OCT. 2, 1996

Public Law 104–234

104th Congress

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 deterOct. 2, 1996

[H.R. 3074]
PUBLIC LAW 104–234—OCT. 2, 1996 110 STAT. 3059

mining 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.
110 STAT. 3060 PUBLIC LAW 104–234—OCT. 2, 1996

‘‘(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.
PUBLIC LAW 104–234—OCT. 2, 1996 110 STAT. 3061

‘‘(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.
110 STAT. 3062 PUBLIC LAW 104–234—OCT. 2, 1996

LEGISLATIVE HISTORY—H.R. 3074:

HOUSE REPORTS: No. 104–495 (Comm. on Ways and Means).

SENATE REPORTS: No. 104–270 (Comm. on Finance).

CONGRESSIONAL RECORD, Vol. 142 (1996):

Apr. 16, considered and passed House.

Sept. 27, considered and passed Senate.

Æ

‘‘(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.’’.

Approved October 2, 1996.