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SEC. 2418. CUSTOMS USER FEES.
(a) ADDITIONAL PRECLEARANCE ACTIVITIES.—Sec-
tion 13031(f)(3)(A)(iii) of the Consolidated Omnibus Budg-
et Reconciliation Act of 1985 (19 U.S.C. 58c(f)(3)(A)(iii))
is amended to read as follows:
‘‘(iii) to the extent funds remain available after
making reimbursements under clause (ii), in pro-
viding salaries for up to 50 full-time equivalent
inspectional positions to provide preclearance serv-
ices.’’.
(b) COLLECTION OF FEES FOR PASSENGERS ABOARD
COMMERCIAL VESSELS.—Section 13031 of the Consolidated
Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.
58c) is amended—
(1) in subsection (a), by amending paragraph
(5) to read as follows:
‘‘(5)(A) Subject to subparagraph (B), for the ar-
rival of each passenger aboard a commercial vessel or
commercial aircraft from a place outside the United
States (other than a place referred to in subsection
(b)(1)(A)(i) of this section), $5.
‘‘(B) For the arrival of each passenger aboard a
commercial vessel from a place referred to in sub-
section (b)(1)(A)(i) of this section, $1.75’’; and
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(2) in subsection (b)(1)(A), by striking ‘‘(A) No
fee’’ and inserting ‘‘(A) Except as provided in sub-
section (a)(5)(B) of this section, no fee’’.
(c) USE OF MERCHANDISE PROCESSING FEES FOR
AUTOMATED COMMERCIAL SYSTEMS.—Section 13031(f) of
the Consolidated Omnibus Budget Reconciliation Act of
1985 (19 U.S.C. 58c(f)) is amended by adding at the end
the following:
‘‘(6) Of the amounts collected in fiscal year 1999 under
paragraphs (9) and (10) of subsection (a), $50,000,000 shall
be available to the Customs Service, subject to appropria-
tions Acts, for automated commercial systems. Amounts
made available under this paragraph shall remain avail-
able until expended.’’.
(d) ADVISORY COMMITTEE.—Section 13031 of the Con-
solidated Omnibus Budget Reconciliation Act of 1985 (19
U.S.C. 58c) is amended by adding at the end the following:
‘‘(k) ADVISORY COMMITTEE.—The Commissioner of
Customs shall establish an advisory committee whose mem-
bership shall consist of representatives from the airline,
cruise ship, and other transportation industries who may
be subject to fees under subsection (a). The advisory com-
mittee shall not be subject to termination under section 14
of the Federal Advisory Committee Act. The advisory com-
mittee shall meet on a periodic basis and shall advise the
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Commissioner on issues related to the performance of the
inspectional services of the United States Customs Service.
Such advice shall include, but not be limited to, such issues
as the time periods during which such services should be
performed, the proper number and deployment of inspection
officers, the level of fees, and the appropriateness of any pro-
posed fee. The Commissioner shall give consideration to the
views of the advisory committee in the exercise of his or
her duties.’’.
(e) NATIONAL CUSTOMS AUTOMATION TEST REGARD-
ING RECONCILIATION.—Section 505(c) of the Tariff Act of
1930 (19 U.S.C. 1505(c)) is amended by adding at the end
the following: ‘‘For the period beginning on October 1, 1998,
and ending on the date on which the ‘Revised National Cus-
toms Automation Test Regarding Reconciliation’ of the
Customs Service is terminated, or October 1, 2000, which-
ever occurs earlier, the Secretary may prescribe an alter-
native mid-point interest accounting methodology, which
may be employed by the importer, based upon aggregate
data in lieu of accounting for such interest from each de-
posit data provided in this subsection.’’.
(f) EFFECTIVE DATE.—The amendments made by this
section shall take effect 30 days after the date of enactment
of this Act.
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SEC. 2419. DUTY DRAWBACK FOR METHYL TERTIARY-BUTYL
ETHER (‘‘MTBE’’).
(a) IN GENERAL.—Section 313(p)(3)(A)(i)(I) of the
Tariff Act of 1930 (19 U.S.C. 1313(p)(3)(A)(i)(I)) is
amended by striking ‘‘and 2902’’ and inserting ‘‘2902, and
2909.19.14’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of enactment of this Act,
and shall apply to drawback claims filed on and after such
date.
SEC. 2420. SUBSTITUTION OF FINISHED PETROLEUM DE-
RIVATIVES.
(a) IN GENERAL.—Section 313(p)(1) of the Tariff Act
of 1930 (19 U.S.C. 1313(p)(1)) is amended in the matter
following subparagraph (C) by striking ‘‘the amount of the
duties paid on, or attributable to, such qualified article
shall be refunded as drawback to the drawback claimant.’’
and inserting ‘‘drawback shall be allowed as described in
paragraph (4).’’.
(b) REQUIREMENTS.—Section 313(p)(2) of such Act
(19 U.S.C. 1313(p)(2)) is amended—
(1) in subparagraph (A)—
(A) in clauses (i), (ii), and (iii), by striking
‘‘the qualified article’’ each place it appears and
inserting ‘‘a qualified article’’; and
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(B) in clause (iv), by striking ‘‘an im-
ported’ and inserting ‘‘a’’; and
(2) in subparagraph (G), by inserting ‘‘trans-
feror,’’ after ‘‘importer,’’.
(c) QUALIFIED ARTICLE DEFINED, ETC.—Section
313(p)(3) of such Act (19 U.S.C. 1313(p)(3)) is amended—
(1) in subparagraph (A)—
(A) in clause (i)(II), by striking ‘‘liquids,
pastes, powders, granules, and flakes’’ and in-
serting ‘‘the primary forms provided under Note
6 to chapter 39 of the Harmonized Tariff Sched-
ule of the United States’’; and
(B) in clause (ii)—
(i) in subclause (I) by striking ‘‘or’’ at
the end;
(ii) in subclause (II) by striking the
period and inserting ‘‘, or’’; and
(iii) by adding after subclause (II) the
following:
‘‘(III) an article of the same kind
and quality as described in subpara-
graph (B), or any combination thereof,
that is transferred, as so certified in a
certificate of delivery or certificate of
manufacture and delivery in a quan-
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tity not greater than the quantity of
articles purchased or exchanged.
The transferred merchandise described in
subclause (III), regardless of its origin, so
designated on the certificate of delivery or
certificate of manufacture and delivery shall
be the qualified article for purposes of this
section. A party who issues a certificate of
delivery, or certificate of manufacture and
delivery, shall also certify to the Commis-
sioner of Customs that it has not, and will
not, issue such certificates for a quantity
greater than the amount eligible for draw-
back and that appropriate records will be
maintained to demonstrate that fact.’’;
(2) in subparagraph (B), by striking ‘‘exported
article’’ and inserting ‘‘article, including an im-
ported, manufactured, substituted, or exported arti-
cle,’’; and
(3) in the first sentence of subparagraph (C), by
striking ‘‘such article.’’ and inserting ‘‘either the
qualified article or the exported article.’’.
(d) 
LIMITATION
ON
DRAWBACK.—Section
313(p)(4)(B) of such Act (19 U.S.C. 1313(p)(4)(B)) is
amended by inserting before the period at the end the fol-
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lowing: ‘‘had the claim qualified for drawback under sub-
section (j)’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the amendment
made by section 632(a)(6) of the North American Free
Trade Agreement Implementation Act. For purposes of sec-
tion 632(b) of that Act, the 3-year requirement set forth in
section 313(r) of the Tariff Act of 1930 shall not apply to
any drawback claim filed within 6 months after the date
of enactment of this Act for which that 3-year period would
have expired.
SEC. 2421. DUTY ON CERTAIN IMPORTATIONS OF MUESLIX
CEREALS.
(a) BEFORE JANUARY 1, 1996.—Notwithstanding sec-
tion 514 of the Tariff Act of 1930 (19 U.S.C. 1514) or any
other provision of law, upon proper request filed with the
Customs Service before the 90th day after the date of the
enactment of this Act, any entry or withdrawal from ware-
house for consumption made after December 31, 1991, and
before January 1, 1996, of mueslix cereal, which was classi-
fied in subheading 2008.92.10 of the Harmonized Tariff
Schedule of the United States and to which the column 1
special rate of duty applicable for goods of Canada
applied—
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(2) any excess duties paid as a result of such liq-
uidation or reliquidation shall be refunded, including
interest at the appropriate applicable rate.
SEC. 2422. EXPANSION OF FOREIGN TRADE ZONE NO. 143.
(a) EXPANSION OF FOREIGN TRADE ZONE.—The For-
eign Trade Zones Board shall expand Foreign Trade Zone
No. 143 to include areas in the vicinity of the Chico Munic-
ipal Airport in accordance with the application submitted
by the Sacramento-Yolo Port District of Sacramento, Cali-
fornia, to the Board on March 11, 1997.
(b) OTHER REQUIREMENTS NOT AFFECTED.—The ex-
pansion of Foreign Trade Zone No. 143 under subsection
(a) shall not relieve the Port of Sacramento of any require-
ment under the Foreign Trade Zones Act, or under regula-
tions of the Foreign Trade Zones Board, relating to such
expansion.
SEC. 2423. MARKING OF CERTAIN SILK PRODUCTS AND
CONTAINERS.
(a) IN GENERAL.—Section 304 of the Tariff Act of
1930 (19 U.S.C. 1304) is amended—
(1) by redesignating subsections (h), (i), (j), and
(k) as subsections (i), (j), (k), and (l), respectively;
and
(2) by inserting after subsection (g) the following
new subsection:
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‘‘(h) MARKING OF CERTAIN SILK PRODUCTS.—The
marking requirements of subsections (a) and (b) shall not
apply either to—
‘‘(1) 
articles 
provided 
for 
in 
subheading
6214.10.10 of the Harmonized Tariff Schedule of the
United States, as in effect on January 1, 1997; or
‘‘(2) articles provided for in heading 5007 of the
Harmonized Tariff Schedule of the United States as
in effect on January 1, 1997.’’.
(b) CONFORMING AMENDMENT.—Section 304(j) of such
Act, as redesignated by subsection (a)(1) of this section, is
amended by striking ‘‘subsection (h)’’ and inserting ‘‘sub-
section (i)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section apply to goods entered, or withdrawn from ware-
house for consumption, on or after the date of enactment
of this Act.
SEC. 2424. EXTENSION OF NONDISCRIMINATORY TREAT-
MENT (NORMAL TRADE RELATIONS TREAT-
MENT) TO THE PRODUCTS OF MONGOLIA.
(a) FINDINGS.—The Congress finds that Mongolia—
(1) has received normal trade relations treatment
since 1991 and has been found to be in full compli-
ance with the freedom of emigration requirements
under title IV of the Trade Act of 1974;
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(2) has emerged from nearly 70 years of com-
munism and dependence on the former Soviet Union,
approving a new constitution in 1992 which has es-
tablished a modern parliamentary democracy charged
with guaranteeing fundamental human rights, free-
dom of expression, and an independent judiciary;
(3) has held 4 national elections under the new
constitution, 2 presidential and 2 parliamentary,
thereby solidifying the nation’s transition to democ-
racy;
(4) has undertaken significant market-based eco-
nomic reforms, including privatization, the reduction
of government subsidies, the elimination of most price
controls and virtually all import tariffs, and the clos-
ing of insolvent banks;
(5) has concluded a bilateral trade treaty with
the United States in 1991, and a bilateral investment
treaty in 1994;
(6) has acceded to the Agreement Establishing
the World Trade Organization, and extension of un-
conditional normal trade relations treatment to the
products of Mongolia would enable the United States
to avail itself of all rights under the World Trade Or-
ganization with respect to Mongolia; and
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(7) has demonstrated a strong desire to build
friendly relationships and to cooperate fully with the
United States on trade matters.
(b) TERMINATION OF APPLICATION OF TITLE IV OF
THE TRADE ACT OF 1974 TO MONGOLIA.—
(1) PRESIDENTIAL
DETERMINATIONS
AND
EX-
TENSIONS
OF
NONDISCRIMINATORY
TREATMENT.—
Notwithstanding any provision of title IV of the
Trade Act of 1974 (19 U.S.C. 2431 et seq.), the Presi-
dent may—
(A) determine that such title should no
longer apply to Mongolia; and
(B) after making a determination under
subparagraph (A) with respect to Mongolia, pro-
claim the extension of nondiscriminatory treat-
ment (normal trade relations treatment) to the
products of that country.
(2) TERMINATION
OF
APPLICATION
OF
TITLE
IV.—On or after the effective date of the extension
under paragraph (1)(B) of nondiscriminatory treat-
ment to the products of Mongolia, title IV of the
Trade Act of 1974 shall cease to apply to that coun-
try.
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SEC. 2425. ENHANCED CARGO INSPECTION PILOT PRO-
GRAM.
(a) IN GENERAL.—The Commissioner of Customs is
authorized to establish a pilot program for fiscal year 1999
to provide 24-hour cargo inspection service on a fee-for-serv-
ice basis at an international airport described in subsection
(b). The Commissioner may extend the pilot program for
fiscal years after fiscal year 1999 if the Commissioner deter-
mines that the extension is warranted.
(b) AIRPORT DESCRIBED.—The international airport
described in this subsection is a multi-modal international
airport that—
(1) is located near a seaport; and
(2) serviced more than 185,000 tons of air cargo
in 1997.
SEC. 2426. PAYMENT OF EDUCATION COSTS OF DEPEND-
ENTS OF CERTAIN CUSTOMS SERVICE PER-
SONNEL.
Notwithstanding section 2164 of title 10, United States
Code, the Department of Defense shall permit the dependent
children of deceased United States Customs Aviation Group
Supervisor Pedro J. Rodriquez attending the Antilles Con-
solidated School System in Puerto Rico, to complete their
primary and secondary education within this school system
without cost to such children or any parent, relative, or
guardian of such children. The United States Customs Serv-
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ice shall reimburse the Department of Defense for reasonable
education expenses to cover these costs.
TITLE III—AMENDMENTS TO IN-
TERNAL REVENUE CODE OF
1986
SEC. 3001. PROPERTY SUBJECT TO A LIABILITY TREATED IN
SAME MANNER AS ASSUMPTION OF LIABIL-
ITY.
(a) REPEAL OF PROPERTY SUBJECT TO A LIABILITY
TEST.—
(1) SECTION 357.—Section 357(a)(2) of the Inter-
nal Revenue Code of 1986 (relating to assumption of
liability) is amended by striking ‘‘, or acquires from
the taxpayer property subject to a liability’’.
(2) SECTION
358.—Section 358(d)(1) of such
Code (relating to assumption of liability) is amended
by striking ‘‘or acquired from the taxpayer property
subject to a liability’’.
(3) SECTION 368.—
(A) Section 368(a)(1)(C) of such Code is
amended by striking ‘‘, or the fact that property
acquired is subject to a liability,’’.
(B) 
The 
last 
sentence 
of 
section
368(a)(2)(B) of such Code is amended by strik-
ing ‘‘, and the amount of any liability to which
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any property acquired from the acquiring cor-
poration is subject,’’.
(b) CLARIFICATION OF ASSUMPTION OF LIABILITY.—
(1) IN GENERAL.—Section 357 of the Internal
Revenue Code of 1986 is amended by adding at the
end the following new subsection:
‘‘(d) DETERMINATION OF AMOUNT OF LIABILITY AS-
SUMED.—
‘‘(1) IN GENERAL.—For purposes of this section,
section 358(d), section 362(d), section 368(a)(1)(C),
and section 368(a)(2)(B), except as provided in
regulations—
‘‘(A) a recourse liability (or portion thereof)
shall be treated as having been assumed if, as de-
termined on the basis of all facts and cir-
cumstances, the transferee has agreed to, and is
expected to, satisfy such liability (or portion),
whether or not the transferor has been relieved of
such liability; and
‘‘(B) except to the extent provided in para-
graph (2), a nonrecourse liability shall be treated
as having been assumed by the transferee of any
asset subject to such liability.
‘‘(2) EXCEPTION
FOR
NONRECOURSE
LIABIL-
ITY.—The amount of the nonrecourse liability treated
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as described in paragraph (1)(B) shall be reduced by
the lesser of—
‘‘(A) the amount of such liability which an
owner of other assets not transferred to the trans-
feree and also subject to such liability has agreed
with the transferee to, and is expected to, satisfy;
or
‘‘(B) the fair market value of such other as-
sets (determined without regard to section
7701(g)).
‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection and section 362(d).
The Secretary may also prescribe regulations which
provide that the manner in which a liability is treat-
ed as assumed under this subsection is applied, where
appropriate, elsewhere in this title.’’.
(2) LIMITATION
ON
BASIS
INCREASE
ATTRIB-
UTABLE TO ASSUMPTION OF LIABILITY.—Section 362
of such Code is amended by adding at the end the fol-
lowing new subsection:
‘‘(d) LIMITATION ON BASIS INCREASE ATTRIBUTABLE
TO ASSUMPTION OF LIABILITY.—
‘‘(1) IN GENERAL.—In no event shall the basis of
any property be increased under subsection (a) or (b)
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above the fair market value of such property (deter-
mined without regard to section 7701(g)) by reason of
any gain recognized to the transferor as a result of
the assumption of a liability.
‘‘(2) TREATMENT
OF
GAIN
NOT
SUBJECT
TO
TAX.—Except as provided in regulations, if—
‘‘(A) gain is recognized to the transferor as
a result of an assumption of a nonrecourse li-
ability by a transferee which is also secured by
assets not transferred to such transferee; and
‘‘(B) no person is subject to tax under this
title on such gain,
then, for purposes of determining basis under sub-
sections (a) and (b), the amount of gain recognized by
the transferor as a result of the assumption of the li-
ability shall be determined as if the liability assumed
by the transferee equaled such transferee’s ratable por-
tion of such liability determined on the basis of the
relative fair market values (determined without re-
gard to section 7701(g)) of all of the assets subject to
such liability.’’.
(c) APPLICATION TO PROVISIONS OTHER THAN SUB-
CHAPTER C.—
(1) SECTION 584.—Section 584(h)(3) of the Inter-
nal Revenue Code of 1986 is amended—
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(A) by striking ‘‘, and the fact that any
property transferred by the common trust fund is
subject to a liability,’’ in subparagraph (A); and
(B) by striking clause (ii) of subparagraph
(B) and inserting:
‘‘(ii) ASSUMED LIABILITIES.—For pur-
poses of clause (i), the term ‘assumed liabil-
ities’ means any liability of the common
trust fund assumed by any regulated invest-
ment company in connection with the
transfer referred to in paragraph (1)(A).
‘‘(C) ASSUMPTION.—For purposes of this
paragraph, in determining the amount of any li-
ability assumed, the rules of section 357(d) shall
apply.’’.
(2) SECTION 1031.—The last sentence of section
1031(d) of such Code is amended—
(A) by striking ‘‘assumed a liability of the
taxpayer or acquired from the taxpayer property
subject to a liability’’ and inserting ‘‘assumed
(as determined under section 357(d)) a liability
of the taxpayer’’; and
(B) by striking ‘‘or acquisition (in the
amount of the liability)’’.
(d) CONFORMING AMENDMENTS.—
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(1) Section 351(h)(1) of the Internal Revenue
Code of 1986 is amended by striking ‘‘, or acquires
property subject to a liability,’’.
(2) Section 357 of such Code is amended by
striking ‘‘or acquisition’’ each place it appears in
subsection (a) or (b).
(3) Section 357(b)(1) of such Code is amended by
striking ‘‘or acquired’’.
(4) Section 357(c)(1) of such Code is amended by
striking ‘‘, plus the amount of the liabilities to which
the property is subject,’’.
(5) Section 357(c)(3) of such Code is amended by
striking ‘‘or to which the property transferred is sub-
ject’’.
(6) Section 358(d)(1) of such Code is amended
by striking ‘‘or acquisition (in the amount of the li-
ability)’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to transfers after October 18, 1998.
Attest:
Secretary.