IB 
Union Calendar No. 157 
112TH CONGRESS 
1ST SESSION H. R. 3079 
[Report No. 112–238] 
To implement the United States–Panama Trade Promotion Agreement. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 3, 2011 
Mr. CANTOR (for himself and Mr. MCDERMOTT) (both by request) introduced 
the following bill; which was referred to the Committee on Ways and Means 
OCTOBER 6, 2011 
Committed to the Committee of the Whole House on the State of the Union 
and ordered to be printed 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6652
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
A BILL 
To implement the United States–Panama Trade Promotion 
Agreement. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6652
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘United States–Panama Trade Promotion Agreement Im-
plementation Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Purposes. 
Sec. 3. Definitions. 
TITLE I—APPROVAL OF, AND GENERAL PROVISIONS RELATING 
TO, THE AGREEMENT 
Sec. 101. Approval and entry into force of the Agreement. 
Sec. 102. Relationship of the Agreement to United States and State law. 
Sec. 103. Implementing actions in anticipation of entry into force and initial 
regulations. 
Sec. 104. Consultation and layover provisions for, and effective date of, pro-
claimed actions. 
Sec. 105. Administration of dispute settlement proceedings. 
Sec. 106. Arbitration of claims. 
Sec. 107. Effective dates; effect of termination. 
TITLE II—CUSTOMS PROVISIONS 
Sec. 201. Tariff modifications. 
Sec. 202. Additional duties on certain agricultural goods. 
Sec. 203. Rules of origin. 
Sec. 204. Customs user fees. 
Sec. 205. Disclosure of incorrect information; false certifications of origin; de-
nial of preferential tariff treatment. 
Sec. 206. Reliquidation of entries. 
Sec. 207. Recordkeeping requirements. 
Sec. 208. Enforcement relating to trade in textile or apparel goods. 
Sec. 209. Regulations. 
TITLE III—RELIEF FROM IMPORTS 
Sec. 301. Definitions. 
Subtitle A—Relief From Imports Benefitting From the Agreement 
Sec. 311. Commencing of action for relief. 
Sec. 312. Commission action on petition. 
Sec. 313. Provision of relief. 
Sec. 314. Termination of relief authority. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6211
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
Sec. 315. Compensation authority. 
Sec. 316. Confidential business information. 
Subtitle B—Textile and Apparel Safeguard Measures 
Sec. 321. Commencement of action for relief. 
Sec. 322. Determination and provision of relief. 
Sec. 323. Period of relief. 
Sec. 324. Articles exempt from relief. 
Sec. 325. Rate after termination of import relief. 
Sec. 326. Termination of relief authority. 
Sec. 327. Compensation authority. 
Sec. 328. Confidential business information. 
Subtitle C—Cases Under Title II of the Trade Act of 1974 
Sec. 331. Findings and action on Panamanian articles. 
TITLE IV—MISCELLANEOUS 
Sec. 401. Eligible products. 
Sec. 402. Modification to the Caribbean Basin Economic Recovery Act. 
TITLE V—OFFSETS 
Sec. 501. Extension of customs user fees. 
Sec. 502. Time for payment of corporate estimated taxes. 
SEC. 2. PURPOSES. 
The purposes of this Act are— 
(1) to approve and implement the free trade 
agreement between the United States and Panama 
entered into under the authority of section 2103(b) 
of the Bipartisan Trade Promotion Authority Act of 
2002 (19 U.S.C. 3803(b)); 
(2) to strengthen and develop economic rela-
tions between the United States and Panama for 
their mutual benefit; 
(3) to establish free trade between the United 
States and Panama through the reduction and elimi-
nation of barriers to trade in goods and services and 
to investment; and 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(4) to lay the foundation for further coopera-
tion to expand and enhance the benefits of the 
Agreement. 
SEC. 3. DEFINITIONS. 
In this Act: 
(1) 
AGREEMENT.—The 
term 
‘‘Agreement’’ 
means the United States–Panama Trade Promotion 
Agreement approved by Congress under section 
101(a)(1). 
(2) COMMISSION.—The term ‘‘Commission’’ 
means the United States International Trade Com-
mission. 
(3) HTS.—The term ‘‘HTS’’ means the Har-
monized Tariff Schedule of the United States. 
(4) TEXTILE
OR
APPAREL
GOOD.—The term 
‘‘textile or apparel good’’ means a good listed in the 
Annex to the Agreement on Textiles and Clothing 
referred to in section 101(d)(4) of the Uruguay 
Round Agreements Act (19 U.S.C. 3511(d)(4)), 
other than a good listed in Annex 3.30 of the Agree-
ment. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
TITLE 
I—APPROVAL 
OF, 
AND 
GENERAL 
PROVISIONS 
RE-
LATING TO, THE AGREEMENT 
SEC. 101. APPROVAL AND ENTRY INTO FORCE OF THE 
AGREEMENT. 
(a) APPROVAL OF AGREEMENT AND STATEMENT OF 
ADMINISTRATIVE ACTION.—Pursuant to section 2105 of 
the Bipartisan Trade Promotion Authority Act of 2002 
(19 U.S.C. 3805) and section 151 of the Trade Act of 
1974 (19 U.S.C. 2191), Congress approves— 
(1) the United States–Panama Trade Pro-
motion Agreement entered into on June 28, 2007, 
with the Government of Panama and submitted to 
Congress on October 3, 2011; and 
(2) the statement of administrative action pro-
posed to implement the Agreement that was sub-
mitted to Congress on October 3, 2011. 
(b) CONDITIONS FOR ENTRY INTO FORCE OF THE 
AGREEMENT.—At such time as the President determines 
that Panama has taken measures necessary to comply 
with those provisions of the Agreement that are to take 
effect on the date on which the Agreement enters into 
force, the President is authorized to exchange notes with 
the Government of Panama providing for the entry into 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
United States for the purpose of declaring such law 
or application invalid. 
(2) DEFINITION OF STATE LAW.—For purposes 
of this subsection, the term ‘‘State law’’ includes— 
(A) any law of a political subdivision of a 
State; and 
(B) any State law regulating or taxing the 
business of insurance. 
(c) EFFECT OF AGREEMENT WITH RESPECT TO PRI-
VATE REMEDIES.—No person other than the United 
States— 
(1) shall have any cause of action or defense 
under the Agreement or by virtue of congressional 
approval thereof; or 
(2) may challenge, in any action brought under 
any provision of law, any action or inaction by any 
department, agency, or other instrumentality of the 
United States, any State, or any political subdivision 
of a State, on the ground that such action or inac-
tion is inconsistent with the Agreement. 
SEC. 103. IMPLEMENTING ACTIONS IN ANTICIPATION OF 
ENTRY INTO FORCE AND INITIAL REGULA-
TIONS. 
(a) IMPLEMENTING ACTIONS.— 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(1) PROCLAMATION
AUTHORITY.—After the 
date of the enactment of this Act— 
(A) the President may proclaim such ac-
tions, and 
(B) other appropriate officers of the 
United States Government may issue such reg-
ulations, 
as may be necessary to ensure that any provision of 
this Act, or amendment made by this Act, that takes 
effect on the date on which the Agreement enters 
into force is appropriately implemented on such 
date, but no such proclamation or regulation may 
have an effective date earlier than the date on which 
the Agreement enters into force. 
(2) EFFECTIVE DATE OF CERTAIN PROCLAIMED 
ACTIONS.—Any action proclaimed by the President 
under the authority of this Act that is not subject 
to the consultation and layover provisions under sec-
tion 104 may not take effect before the 15th day 
after the date on which the text of the proclamation 
is published in the Federal Register. 
(3) WAIVER OF 15-DAY RESTRICTION.—The 15- 
day restriction contained in paragraph (2) on the 
taking effect of proclaimed actions is waived to the 
extent that the application of such restriction would 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
prevent the taking effect on the date the Agreement 
enters into force of any action proclaimed under this 
section. 
(b) INITIAL REGULATIONS.—Initial regulations nec-
essary or appropriate to carry out the actions required by 
or authorized under this Act or proposed in the statement 
of 
administrative 
action 
submitted 
under 
section 
101(a)(2) to implement the Agreement shall, to the max-
imum extent feasible, be issued within 1 year after the 
date on which the Agreement enters into force. In the case 
of any implementing action that takes effect on a date 
after the date on which the Agreement enters into force, 
initial regulations to carry out that action shall, to the 
maximum extent feasible, be issued within 1 year after 
such effective date. 
SEC. 104. CONSULTATION AND LAYOVER PROVISIONS FOR, 
AND EFFECTIVE DATE OF, PROCLAIMED AC-
TIONS. 
If a provision of this Act provides that the implemen-
tation of an action by the President by proclamation is 
subject to the consultation and layover requirements of 
this section, such action may be proclaimed only if— 
(1) the President has obtained advice regarding 
the proposed action from— 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(A) the appropriate advisory committees 
established under section 135 of the Trade Act 
of 1974 (19 U.S.C. 2155); and 
(B) the Commission; 
(2) the President has submitted to the Com-
mittee on Finance of the Senate and the Committee 
on Ways and Means of the House of Representatives 
a report that sets forth— 
(A) the action proposed to be proclaimed 
and the reasons therefor; and 
(B) the advice obtained under paragraph 
(1); 
(3) a period of 60 calendar days, beginning on 
the first day on which the requirements set forth in 
paragraphs (1) and (2) have been met, has expired; 
and 
(4) the President has consulted with the com-
mittees referred to in paragraph (2) regarding the 
proposed action during the period referred to in 
paragraph (3). 
SEC. 105. ADMINISTRATION OF DISPUTE SETTLEMENT PRO-
CEEDINGS. 
(a) ESTABLISHMENT OR DESIGNATION OF OFFICE.— 
The President is authorized to establish or designate with-
in the Department of Commerce an office that shall be 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
responsible for providing administrative assistance to pan-
els established under chapter 20 of the Agreement. The 
office shall not be considered to be an agency for purposes 
of section 552 of title 5, United States Code. 
(b) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated for each fiscal year after 
fiscal year 2011 to the Department of Commerce up to 
$150,000 for the establishment and operations of the of-
fice established or designated under subsection (a) and for 
the payment of the United States share of the expenses 
of panels established under chapter 20 of the Agreement. 
SEC. 106. ARBITRATION OF CLAIMS. 
The United States is authorized to resolve any claim 
against 
the 
United 
States 
covered 
by 
article 
10.16.1(a)(i)(C) or article 10.16.1(b)(i)(C) of the Agree-
ment, pursuant to the Investor-State Dispute Settlement 
procedures set forth in section B of chapter 10 of the 
Agreement. 
SEC. 107. EFFECTIVE DATES; EFFECT OF TERMINATION. 
(a) EFFECTIVE DATES.—Except as provided in sub-
section (b), this Act and the amendments made by this 
Act take effect on the date on which the Agreement enters 
into force. 
(b) EXCEPTIONS.— 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(1) IN GENERAL.—Sections 1 through 3, this 
title, and title V take effect on the date of the enact-
ment of this Act. 
(2) CERTAIN AMENDATORY PROVISIONS.—The 
amendments made by sections 204, 205, 207, and 
401 of this Act take effect on the date of the enact-
ment of this Act and apply with respect to Panama 
on the date on which the Agreement enters into 
force. 
(c) TERMINATION
OF
THE AGREEMENT.—On the 
date on which the Agreement terminates, this Act (other 
than this subsection and title V) and the amendments 
made by this Act (other than the amendments made by 
title V) shall cease to have effect. 
TITLE II—CUSTOMS PROVISIONS 
SEC. 201. TARIFF MODIFICATIONS. 
(a) TARIFF MODIFICATIONS PROVIDED FOR IN THE 
AGREEMENT.— 
(1) PROCLAMATION
AUTHORITY.—The Presi-
dent may proclaim— 
(A) such modifications or continuation of 
any duty, 
(B) such continuation of duty-free or ex-
cise treatment, or 
(C) such additional duties, 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
as the President determines to be necessary or ap-
propriate to carry out or apply articles 3.3, 3.5, 3.6, 
3.26, 3.27, 3.28, and 3.29, and Annex 3.3, of the 
Agreement. 
(2) EFFECT ON GSP STATUS.—Notwithstanding 
section 502(a)(1) of the Trade Act of 1974 (19 
U.S.C. 2462(a)(1)), the President shall, on the date 
on which the Agreement enters into force, terminate 
the designation of Panama as a beneficiary devel-
oping country for purposes of title V of the Trade 
Act of 1974 (19 U.S.C. 2461 et seq.). 
(3) EFFECT ON CBERA STATUS.— 
(A) IN
GENERAL.—Notwithstanding sec-
tion 212(a) of the Caribbean Basin Economic 
Recovery Act (19 U.S.C. 2702(a)), the Presi-
dent shall, on the date on which the Agreement 
enters into force, terminate the designation of 
Panama as a beneficiary country for purposes 
of that Act. 
(B) EXCEPTION.—Notwithstanding sub-
paragraph (A), Panama shall be considered a 
beneficiary country under section 212(a) of the 
Caribbean Basin Economic Recovery Act, for 
purposes of— 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(i) sections 771(7)(G)(ii)(III) and 
771(7)(H) of the Tariff Act of 1930 (19 
U.S.C. 
1677(7)(G)(ii)(III) 
and 
1677(7)(H)); 
(ii) the duty-free treatment provided 
under paragraph 4 of the General Notes to 
the Schedule of the United States to 
Annex 3.3 of the Agreement; and 
(iii) section 274(h)(6)(B) of the Inter-
nal Revenue Code of 1986. 
(b) OTHER TARIFF MODIFICATIONS.—Subject to the 
consultation and layover provisions of section 104, the 
President may proclaim— 
(1) such modifications or continuation of any 
duty, 
(2) such modifications as the United States 
may agree to with Panama regarding the staging of 
any duty treatment set forth in Annex 3.3 of the 
Agreement, 
(3) such continuation of duty-free or excise 
treatment, or 
(4) such additional duties, 
as the President determines to be necessary or appropriate 
to maintain the general level of reciprocal and mutually 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
advantageous concessions with respect to Panama pro-
vided for by the Agreement. 
(c) CONVERSION TO AD VALOREM RATES.—For pur-
poses of subsections (a) and (b), with respect to any good 
for which the base rate in the Schedule of the United 
States to Annex 3.3 of the Agreement is a specific or com-
pound rate of duty, the President may substitute for the 
base rate an ad valorem rate that the President deter-
mines to be equivalent to the base rate. 
(d) TARIFF RATE QUOTAS.—In implementing the 
tariff rate quotas set forth in Appendix I to the General 
Notes to the Schedule of the United States to Annex 3.3 
of the Agreement, the President shall take such action as 
may be necessary to ensure that imports of agricultural 
goods do not disrupt the orderly marketing of commodities 
in the United States. 
SEC. 202. ADDITIONAL DUTIES ON CERTAIN AGRICUL-
TURAL GOODS. 
(a) DEFINITIONS.—In this section: 
(1) APPLICABLE NTR (MFN) RATE OF DUTY.— 
The term ‘‘applicable NTR (MFN) rate of duty’’ 
means, with respect to a safeguard good, a rate of 
duty equal to the lowest of— 
(A) the base rate in the Schedule of the 
United States to Annex 3.3 of the Agreement; 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(B) the column 1 general rate of duty that 
would, on the day before the date on which the 
Agreement enters into force, apply to a good 
classifiable in the same 8-digit subheading of 
the HTS as the safeguard good; or 
(C) the column 1 general rate of duty that 
would, at the time the additional duty is im-
posed under subsection (b), apply to a good 
classifiable in the same 8-digit subheading of 
the HTS as the safeguard good. 
(2) SAFEGUARD GOOD.—The term ‘‘safeguard 
good’’ means a good— 
(A) that is included in the Schedule of the 
United States to Annex 3.17 of the Agreement; 
(B) that qualifies as an originating good 
under section 203; and 
(C) for which a claim for preferential tariff 
treatment under the Agreement has been made. 
(3) SCHEDULE
RATE
OF
DUTY.—The term 
‘‘schedule rate of duty’’ means, with respect to a 
safeguard good, the rate of duty for that good that 
is set forth in the Schedule of the United States to 
Annex 3.3 of the Agreement. 
(4) TRIGGER LEVEL.— 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(A) IN
GENERAL.—The term ‘‘trigger 
level’’ means— 
(i) in the case of a safeguard good 
classified under subheading 0201.10.50, 
0201.20.80, 
0201.30.80, 
0202.10.50, 
0202.20.80, or 0202.30.80 of the HTS— 
(I) in year 1 of the Agreement, 
330 metric tons; and 
(II) in year 2 of the Agreement 
through year 14 of the Agreement, a 
quantity equal to 110 percent of the 
trigger level for that safeguard good 
for the preceding calendar year; and 
(ii) in the case of any other safeguard 
good, 115 percent of the quantity that is 
provided for that safeguard good in the 
corresponding calendar year in the applica-
ble table contained in Appendix I to the 
General Notes to the Schedule of the 
United States to Annex 3.3 of the Agree-
ment. 
(B) RELATIONSHIP TO TABLE.—For pur-
poses of subparagraph (A)(ii), year 1 in the ap-
plicable table contained in Appendix I to the 
General Notes to the Schedule of the United 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
States to Annex 3.3 of the Agreement cor-
responds to year 1 of the Agreement. 
(5) YEAR 1 OF THE AGREEMENT.—The term 
‘‘year 1 of the Agreement’’ means the period begin-
ning on the date, in a calendar year, on which the 
Agreement enters into force and ending on Decem-
ber 31 of that calendar year. 
(6) YEARS
OTHER
THAN
YEAR
OF
THE 
AGREEMENT.—Any reference to a year of the Agree-
ment subsequent to year 1 of the Agreement shall 
be deemed to be a reference to the corresponding 
calendar year in which the Agreement is in force. 
(b) ADDITIONAL DUTIES ON SAFEGUARD GOODS.— 
(1) IN GENERAL.—In addition to any duty pro-
claimed under subsection (a) or (b) of section 201, 
the Secretary of the Treasury shall assess a duty, in 
the amount determined under paragraph (2), on a 
safeguard good imported into the United States in 
a calendar year if the Secretary determines that, 
prior to such importation, the total volume of that 
safeguard good that is imported into the United 
States in that calendar year exceeds the trigger level 
for that good for that calendar year. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(2) CALCULATION OF ADDITIONAL DUTY.—The 
additional duty on a safeguard good under this sub-
section shall be— 
(A) in the case of a good classified under 
subheading 
0201.10.50, 
0201.20.80, 
0201.30.80, 
0202.10.50, 
0202.20.80, 
or 
0202.30.80 of the HTS— 
(i) in year 1 of the Agreement 
through year 6 of the Agreement, an 
amount equal to 100 percent of the excess 
of the applicable NTR (MFN) rate of duty 
over the schedule rate of duty; and 
(ii) in year 7 of the Agreement 
through year 14 of the Agreement, an 
amount equal to 50 percent of the excess 
of the applicable NTR (MFN) rate of duty 
over the schedule rate of duty; 
(B) in the case of a good classified under 
subheading 
0406.10.08, 
0406.10.88, 
0406.20.91, 
0406.30.91, 
0406.90.97, 
or 
2105.00.20 of the HTS— 
(i) in year 1 of the Agreement 
through year 11 of the Agreement, an 
amount equal to 100 percent of the excess 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
of the applicable NTR (MFN) rate of duty 
over the schedule rate of duty; and 
(ii) in year 12 of the Agreement 
through year 14 of the Agreement, an 
amount equal to 50 percent of the excess 
of the applicable NTR (MFN) rate of duty 
over the schedule rate of duty; and 
(C) in the case of any other safeguard 
good— 
(i) in year 1 of the Agreement 
through year 13 of the Agreement, an 
amount equal to 100 percent of the excess 
of the applicable NTR (MFN) rate of duty 
over the schedule rate of duty; and 
(ii) in year 14 of the Agreement 
through year 16 of the Agreement, an 
amount equal to 50 percent of the excess 
of the applicable NTR (MFN) rate of duty 
over the schedule rate of duty. 
(3) NOTICE.—Not later than 60 days after the 
date on which the Secretary of the Treasury first as-
sesses an additional duty in a calendar year on a 
good under this subsection, the Secretary shall no-
tify the Government of Panama in writing of such 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
action and shall provide to that Government data 
supporting the assessment of the additional duty. 
(c) EXCEPTIONS.—No additional duty shall be as-
sessed on a good under subsection (b) if, at the time of 
entry, the good is subject to import relief under— 
(1) subtitle A of title III of this Act; or 
(2) chapter 1 of title II of the Trade Act of 
1974 (19 U.S.C. 2251 et seq.). 
(d) TERMINATION.—The assessment of an additional 
duty on a good under subsection (b) shall cease to apply 
to that good on the date on which duty-free treatment 
must be provided to that good under the Schedule of the 
United States to Annex 3.3 of the Agreement. 
SEC. 203. RULES OF ORIGIN. 
(a) APPLICATION
AND INTERPRETATION.—In this 
section: 
(1) TARIFF
CLASSIFICATION.—The basis for 
any tariff classification is the HTS. 
(2) REFERENCE
TO
HTS.—Whenever in this 
section there is a reference to a chapter, heading, or 
subheading, such reference shall be a reference to a 
chapter, heading, or subheading of the HTS. 
(3) COST OR VALUE.—Any cost or value re-
ferred to in this section shall be recorded and main-
tained in accordance with the generally accepted ac-
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
counting principles applicable in the territory of the 
country in which the good is produced (whether 
Panama or the United States). 
(b) ORIGINATING GOODS.—For purposes of this Act 
and for purposes of implementing the preferential tariff 
treatment provided for under the Agreement, except as 
otherwise provided in this section, a good is an originating 
good if— 
(1) the good is a good wholly obtained or pro-
duced entirely in the territory of Panama, the 
United States, or both; 
(2) the good— 
(A) is produced entirely in the territory of 
Panama, the United States, or both, and— 
(i) each of the nonoriginating mate-
rials used in the production of the good 
undergoes an applicable change in tariff 
classification specified in Annex 4.1 of the 
Agreement; or 
(ii) the good otherwise satisfies any 
applicable regional value-content or other 
requirements specified in Annex 4.1 of the 
Agreement; and 
(B) satisfies all other applicable require-
ments of this section; or 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(3) the good is produced entirely in the terri-
tory of Panama, the United States, or both, exclu-
sively from materials described in paragraph (1) or 
(2). 
(c) REGIONAL VALUE-CONTENT.— 
(1) IN GENERAL.—For purposes of subsection 
(b)(2), the regional value-content of a good referred 
to in Annex 4.1 of the Agreement, except for goods 
to which paragraph (4) applies, shall be calculated 
by the importer, exporter, or producer of the good, 
on the basis of the build-down method described in 
paragraph (2) or the build-up method described in 
paragraph (3). 
(2) BUILD-DOWN METHOD.— 
(A) IN GENERAL.—The regional value-con-
tent of a good may be calculated on the basis 
of the following build-down method: 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(iii) VOM.—The term ‘‘VOM’’ means 
the value of originating materials that are 
acquired or self-produced, and used by the 
producer in the production of the good. 
(4) SPECIAL RULE FOR CERTAIN AUTOMOTIVE 
GOODS.— 
(A) IN GENERAL.—For purposes of sub-
section (b)(2), the regional value-content of an 
automotive good referred to in Annex 4.1 of the 
Agreement may be calculated by the importer, 
exporter, or producer of the good on the basis 
of the build-down method described in para-
graph (2), the build-up method described in 
paragraph (3), or the following net cost method: 
NC¥VNM 
RVC = ————— × 100 
NC 
(B) DEFINITIONS.—In subparagraph (A): 
(i) AUTOMOTIVE
GOOD.—The term 
‘‘automotive good’’ means a good provided 
for in any of subheadings 8407.31 through 
8407.34, subheading 8408.20, heading 
8409, or any of headings 8701 through 
8708. 
(ii) RVC.—The term ‘‘RVC’’ means 
the regional value-content of the auto-
motive good, expressed as a percentage. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(iii) NC.—The term ‘‘NC’’ means the 
net cost of the automotive good. 
(iv) VNM.—The term ‘‘VNM’’ means 
the value of nonoriginating materials that 
are acquired and used by the producer in 
the production of the automotive good, but 
does not include the value of a material 
that is self-produced. 
(C) MOTOR VEHICLES.— 
(i) BASIS
OF
CALCULATION.—For 
purposes of determining the regional value- 
content under subparagraph (A) for an 
automotive good that is a motor vehicle 
provided for in any of headings 8701 
through 8705, an importer, exporter, or 
producer may average the amounts cal-
culated under the net cost formula con-
tained in subparagraph (A), over the pro-
ducer’s fiscal year— 
(I) with respect to all motor vehi-
cles in any one of the categories de-
scribed in clause (ii); or 
(II) with respect to all motor ve-
hicles in any such category that are 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
exported to the territory of Panama 
or the United States. 
(ii) CATEGORIES.—A category is de-
scribed in this clause if it— 
(I) is the same model line of 
motor vehicles, is in the same class of 
motor vehicles, and is produced in the 
same plant in the territory of Panama 
or the United States, as the good de-
scribed in clause (i) for which regional 
value-content is being calculated; 
(II) is the same class of motor 
vehicles, and is produced in the same 
plant in the territory of Panama or 
the United States, as the good de-
scribed in clause (i) for which regional 
value-content is being calculated; or 
(III) is the same model line of 
motor vehicles produced in the terri-
tory of Panama or the United States 
as the good described in clause (i) for 
which regional value-content is being 
calculated. 
(D) OTHER
AUTOMOTIVE
GOODS.—For 
purposes of determining the regional value-con-
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
tent under subparagraph (A) for automotive 
materials provided for in any of subheadings 
8407.31 
through 
8407.34, 
in 
subheading 
8408.20, or in heading 8409, 8706, 8707, or 
8708, that are produced in the same plant, an 
importer, exporter, or producer may— 
(i) average the amounts calculated 
under the net cost formula contained in 
subparagraph (A) over— 
(I) the fiscal year of the motor 
vehicle producer to whom the auto-
motive goods are sold, 
(II) any quarter or month, or 
(III) the fiscal year of the pro-
ducer of such goods, 
if the goods were produced during the fis-
cal year, quarter, or month that is the 
basis for the calculation; 
(ii) determine the average referred to 
in clause (i) separately for such goods sold 
to 1 or more motor vehicle producers; or 
(iii) make a separate determination 
under clause (i) or (ii) for such goods that 
are exported to the territory of Panama or 
the United States. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(E) CALCULATING
NET
COST.—The im-
porter, exporter, or producer of an automotive 
good shall, consistent with the provisions re-
garding allocation of costs provided for in gen-
erally accepted accounting principles, determine 
the net cost of the automotive good under sub-
paragraph (B) by— 
(i) calculating the total cost incurred 
with respect to all goods produced by the 
producer of the automotive good, sub-
tracting any sales promotion, marketing, 
and after-sales service costs, royalties, 
shipping and packing costs, and nonallow-
able interest costs that are included in the 
total cost of all such goods, and then rea-
sonably allocating the resulting net cost of 
those goods to the automotive good; 
(ii) calculating the total cost incurred 
with respect to all goods produced by that 
producer, reasonably allocating the total 
cost to the automotive good, and then sub-
tracting any sales promotion, marketing, 
and after-sales service costs, royalties, 
shipping and packing costs, and nonallow-
able interest costs that are included in the 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00030
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
portion of the total cost allocated to the 
automotive good; or 
(iii) reasonably allocating each cost 
that forms part of the total cost incurred 
with respect to the automotive good so that 
the aggregate of these costs does not in-
clude any sales promotion, marketing, and 
after-sales service costs, royalties, shipping 
and packing costs, or nonallowable interest 
costs. 
(d) VALUE OF MATERIALS.— 
(1) IN GENERAL.—For the purpose of calcu-
lating the regional value-content of a good under 
subsection (c), and for purposes of applying the de 
minimis rules under subsection (f), the value of a 
material is— 
(A) in the case of a material that is im-
ported by the producer of the good, the ad-
justed value of the material; 
(B) in the case of a material acquired in 
the territory in which the good is produced, the 
value, determined in accordance with Articles 1 
through 8, Article 15, and the corresponding in-
terpretive notes, of the Agreement on Imple-
mentation of Article VII of the General Agree-
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
ment on Tariffs and Trade 1994 referred to in 
section 101(d)(8) of the Uruguay Round Agree-
ments Act (19 U.S.C. 3511(d)(8)), as set forth 
in regulations promulgated by the Secretary of 
the Treasury providing for the application of 
such Articles in the absence of an importation 
by the producer; or 
(C) in the case of a material that is self- 
produced, the sum of— 
(i) all expenses incurred in the pro-
duction of the material, including general 
expenses; and 
(ii) an amount for profit equivalent to 
the profit added in the normal course of 
trade. 
(2) FURTHER ADJUSTMENTS TO THE VALUE OF 
MATERIALS.— 
(A) ORIGINATING
MATERIAL.—The fol-
lowing expenses, if not included in the value of 
an originating material calculated under para-
graph (1), may be added to the value of the 
originating material: 
(i) The costs of freight, insurance, 
packing, and all other costs incurred in 
transporting the material within or be-
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
tween the territory of Panama, the United 
States, or both, to the location of the pro-
ducer. 
(ii) Duties, taxes, and customs broker-
age fees on the material paid in the terri-
tory of Panama, the United States, or 
both, other than duties or taxes that are 
waived, refunded, refundable, or otherwise 
recoverable, including credit against duty 
or tax paid or payable. 
(iii) The cost of waste and spoilage re-
sulting from the use of the material in the 
production of the good, less the value of 
renewable scrap or byproducts. 
(B) 
NONORIGINATING
MATERIAL.—The 
following expenses, if included in the value of a 
nonoriginating material calculated under para-
graph (1), may be deducted from the value of 
the nonoriginating material: 
(i) The costs of freight, insurance, 
packing, and all other costs incurred in 
transporting the material within or be-
tween the territory of Panama, the United 
States, or both, to the location of the pro-
ducer. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(ii) Duties, taxes, and customs broker-
age fees on the material paid in the terri-
tory of Panama, the United States, or 
both, other than duties or taxes that are 
waived, refunded, refundable, or otherwise 
recoverable, including credit against duty 
or tax paid or payable. 
(iii) The cost of waste and spoilage re-
sulting from the use of the material in the 
production of the good, less the value of 
renewable scrap or byproducts. 
(iv) The cost of originating materials 
used in the production of the nonorigi-
nating material in the territory of Panama, 
the United States, or both. 
(e) ACCUMULATION.— 
(1) ORIGINATING MATERIALS USED IN PRODUC-
TION OF GOODS OF THE OTHER COUNTRY.—Origi-
nating materials from the territory of Panama or 
the United States that are used in the production of 
a good in the territory of the other country shall be 
considered to originate in the territory of such other 
country. 
(2) MULTIPLE
PRODUCERS.—A good that is 
produced in the territory of Panama, the United 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
States, or both, by 1 or more producers, is an origi-
nating good if the good satisfies the requirements of 
subsection (b) and all other applicable requirements 
of this section. 
(f) DE MINIMIS AMOUNTS OF NONORIGINATING MA-
TERIALS.— 
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), a good that does not undergo a 
change in tariff classification pursuant to Annex 4.1 
of the Agreement is an originating good if— 
(A) the value of all nonoriginating mate-
rials that— 
(i) are used in the production of the 
good, and 
(ii) do not undergo the applicable 
change in tariff classification (set forth in 
Annex 4.1 of the Agreement), 
does not exceed 10 percent of the adjusted 
value of the good; 
(B) the good meets all other applicable re-
quirements of this section; and 
(C) the value of such nonoriginating mate-
rials is included in the value of nonoriginating 
materials for any applicable regional value-con-
tent requirement for the good. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(2) EXCEPTIONS.—Paragraph (1) does not 
apply to the following: 
(A) A nonoriginating material provided for 
in chapter 4, or a nonoriginating dairy prepara-
tion containing over 10 percent by weight of 
milk solids provided for in subheading 1901.90 
or 2106.90, that is used in the production of a 
good provided for in chapter 4. 
(B) A nonoriginating material provided for 
in chapter 4, or a nonoriginating dairy prepara-
tion containing over 10 percent by weight of 
milk solids provided for in subheading 1901.90, 
that is used in the production of the following 
goods: 
(i) Infant preparations containing 
over 10 percent by weight of milk solids 
provided for in subheading 1901.10. 
(ii) Mixes and doughs, containing over 
25 percent by weight of butterfat, not put 
up for retail sale, provided for in sub-
heading 1901.20. 
(iii) Dairy preparations containing 
over 10 percent by weight of milk solids 
provided for in subheading 1901.90 or 
2106.90. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(iv) Goods provided for in heading 
2105. 
(v) Beverages containing milk pro-
vided for in subheading 2202.90. 
(vi) Animal feeds containing over 10 
percent by weight of milk solids provided 
for in subheading 2309.90. 
(C) A nonoriginating material provided for 
in heading 0805, or any of subheadings 
2009.11 through 2009.39, that is used in the 
production of a good provided for in any of sub-
headings 2009.11 through 2009.39, or in fruit 
or vegetable juice of any single fruit or vege-
table, fortified with minerals or vitamins, con-
centrated or unconcentrated, provided for in 
subheading 2106.90 or 2202.90. 
(D) A nonoriginating material provided for 
in heading 0901 or 2101 that is used in the 
production of a good provided for in heading 
0901 or 2101. 
(E) A nonoriginating material provided for 
in heading 1006 that is used in the production 
of a good provided for in heading 1102 or 1103 
or subheading 1904.90. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(F) A nonoriginating material provided for 
in chapter 15 that is used in the production of 
a good provided for in chapter 15. 
(G) A nonoriginating material provided for 
in heading 1701 that is used in the production 
of a good provided for in any of headings 1701 
through 1703. 
(H) A nonoriginating material provided for 
in chapter 17 that is used in the production of 
a good provided for in subheading 1806.10. 
(I) Except as provided in subparagraphs 
(A) through (H) and Annex 4.1 of the Agree-
ment, a nonoriginating material used in the 
production of a good provided for in any of 
chapters 1 through 24, unless the nonorigi-
nating material is provided for in a different 
subheading than the good for which origin is 
being determined under this section. 
(3) TEXTILE OR APPAREL GOODS.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), a textile or apparel good 
that is not an originating good because certain 
fibers or yarns used in the production of the 
component of the good that determines the tar-
iff classification of the good do not undergo an 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
applicable change in tariff classification, set 
forth in Annex 4.1 of the Agreement, shall be 
considered to be an originating good if— 
(i) the total weight of all such fibers 
or yarns in that component is not more 
than 10 percent of the total weight of that 
component; or 
(ii) the yarns are those described in 
section 204(b)(3)(B)(vi)(IV) of the Andean 
Trade 
Preference 
Act 
(19 
U.S.C. 
3203(b)(3)(B)(vi)(IV)) (as in effect on 
February 12, 2011). 
(B) 
CERTAIN
TEXTILE
OR
APPAREL 
GOODS.—A textile or apparel good containing 
elastomeric yarns in the component of the good 
that determines the tariff classification of the 
good shall be considered to be an originating 
good only if such yarns are wholly formed and 
finished in the territory of Panama, the United 
States, or both. 
(C) FABRIC, YARN, OR FIBER.—For pur-
poses of this paragraph, in the case of a good 
that is a fabric, yarn, or fiber, the term ‘‘com-
ponent of the good that determines the tariff 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
classification of the good’’ means all of the fi-
bers in the good. 
(g) FUNGIBLE GOODS AND MATERIALS.— 
(1) IN GENERAL.— 
(A) CLAIM
FOR
PREFERENTIAL
TARIFF 
TREATMENT.—A person claiming that a fun-
gible good or fungible material is an originating 
good may base the claim either on the physical 
segregation of the fungible good or fungible ma-
terial or by using an inventory management 
method with respect to the fungible good or 
fungible material. 
(B) INVENTORY MANAGEMENT METHOD.— 
In this subsection, the term ‘‘inventory manage-
ment method’’ means— 
(i) averaging; 
(ii) ‘‘last-in, first-out’’; 
(iii) ‘‘first-in, first-out’’; or 
(iv) any other method— 
(I) recognized in the generally 
accepted accounting principles of the 
country in which the production is 
performed (whether Panama or the 
United States); or 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(II) otherwise accepted by that 
country. 
(2) ELECTION
OF
INVENTORY
METHOD.—A 
person selecting an inventory management method 
under paragraph (1) for a particular fungible good 
or fungible material shall continue to use that meth-
od for that fungible good or fungible material 
throughout the fiscal year of such person. 
(h) ACCESSORIES, SPARE PARTS, OR TOOLS.— 
(1) IN GENERAL.—Subject to paragraphs (2) 
and (3), accessories, spare parts, or tools delivered 
with a good that form part of the good’s standard 
accessories, spare parts, or tools shall— 
(A) be treated as originating goods if the 
good is an originating good; and 
(B) be disregarded in determining whether 
all the nonoriginating materials used in the pro-
duction of the good undergo the applicable 
change in tariff classification set forth in Annex 
4.1 of the Agreement. 
(2) CONDITIONS.—Paragraph (1) shall apply 
only if— 
(A) the accessories, spare parts, or tools 
are classified with and not invoiced separately 
from the good, regardless of whether such ac-
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00041
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
cessories, spare parts, or tools are specified or 
are separately identified in the invoice for the 
good; and 
(B) the quantities and value of the acces-
sories, spare parts, or tools are customary for 
the good. 
(3) REGIONAL VALUE-CONTENT.—If the good is 
subject to a regional value-content requirement, the 
value of the accessories, spare parts, or tools shall 
be taken into account as originating or nonorigi-
nating materials, as the case may be, in calculating 
the regional value-content of the good. 
(i) PACKAGING MATERIALS AND CONTAINERS FOR 
RETAIL SALE.—Packaging materials and containers in 
which a good is packaged for retail sale, if classified with 
the good, shall be disregarded in determining whether all 
the nonoriginating materials used in the production of the 
good undergo the applicable change in tariff classification 
set forth in Annex 4.1 of the Agreement, and, if the good 
is subject to a regional value-content requirement, the 
value of such packaging materials and containers shall be 
taken into account as originating or nonoriginating mate-
rials, as the case may be, in calculating the regional value- 
content of the good. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(j) PACKING MATERIALS
AND CONTAINERS
FOR 
SHIPMENT.—Packing materials and containers for ship-
ment shall be disregarded in determining whether a good 
is an originating good. 
(k) INDIRECT MATERIALS.—An indirect material 
shall be treated as an originating material without regard 
to where it is produced. 
(l) TRANSIT AND TRANSHIPMENT.—A good that has 
undergone production necessary to qualify as an origi-
nating good under subsection (b) shall not be considered 
to be an originating good if, subsequent to that produc-
tion, the good— 
(1) undergoes further production or any other 
operation outside the territory of Panama or the 
United States, other than unloading, reloading, or 
any other operation necessary to preserve the good 
in good condition or to transport the good to the ter-
ritory of Panama or the United States; or 
(2) does not remain under the control of cus-
toms authorities in the territory of a country other 
than Panama or the United States. 
(m) GOODS CLASSIFIABLE AS GOODS PUT UP IN 
SETS.—Notwithstanding the rules set forth in Annex 4.1 
of the Agreement, goods classifiable as goods put up in 
sets for retail sale as provided for in General Rule of Inter-
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
pretation 3 of the HTS shall not be considered to be origi-
nating goods unless— 
(1) each of the goods in the set is an origi-
nating good; or 
(2) the total value of the nonoriginating goods 
in the set does not exceed— 
(A) in the case of textile or apparel goods, 
10 percent of the adjusted value of the set; or 
(B) in the case of goods, other than textile 
or apparel goods, 15 percent of the adjusted 
value of the set. 
(n) DEFINITIONS.—In this section: 
(1) ADJUSTED
VALUE.—The term ‘‘adjusted 
value’’ means the value determined in accordance 
with Articles 1 through 8, Article 15, and the cor-
responding interpretive notes, of the Agreement on 
Implementation of Article VII of the General Agree-
ment on Tariffs and Trade 1994 referred to in sec-
tion 101(d)(8) of the Uruguay Round Agreements 
Act (19 U.S.C. 3511(d)(8)), adjusted, if necessary, 
to exclude any costs, charges, or expenses incurred 
for transportation, insurance, and related services 
incident to the international shipment of the mer-
chandise from the country of exportation to the 
place of importation. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(2) CLASS
OF
MOTOR
VEHICLES.—The term 
‘‘class of motor vehicles’’ means any one of the fol-
lowing categories of motor vehicles: 
(A) Motor vehicles provided for in sub-
heading 8701.20, 8704.10, 8704.22, 8704.23, 
8704.32, or 8704.90, or heading 8705 or 8706, 
or motor vehicles for the transport of 16 or 
more persons provided for in subheading 
8702.10 or 8702.90. 
(B) Motor vehicles provided for in sub-
heading 
8701.10 
or 
any 
of 
subheadings 
8701.30 through 8701.90. 
(C) Motor vehicles for the transport of 15 
or fewer persons provided for in subheading 
8702.10 or 8702.90, or motor vehicles provided 
for in subheading 8704.21 or 8704.31. 
(D) Motor vehicles provided for in any of 
subheadings 8703.21 through 8703.90. 
(3) FUNGIBLE
GOOD
OR
FUNGIBLE
MATE-
RIAL.—The term ‘‘fungible good’’ or ‘‘fungible mate-
rial’’ means a good or material, as the case may be, 
that is interchangeable with another good or mate-
rial for commercial purposes and the properties of 
which are essentially identical to such other good or 
material. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(4) GENERALLY ACCEPTED ACCOUNTING PRIN-
CIPLES.—The term ‘‘generally accepted accounting 
principles’’— 
(A) means the recognized consensus or 
substantial authoritative support given in the 
territory of Panama or the United States, as 
the case may be, with respect to the recording 
of revenues, expenses, costs, assets, and liabil-
ities, the disclosure of information, and the 
preparation of financial statements; and 
(B) may encompass broad guidelines for 
general application as well as detailed stand-
ards, practices, and procedures. 
(5) GOOD WHOLLY OBTAINED OR PRODUCED 
ENTIRELY
IN
THE
TERRITORY
OF
PANAMA, THE 
UNITED STATES, OR BOTH.—The term ‘‘good wholly 
obtained or produced entirely in the territory of 
Panama, the United States, or both’’ means any of 
the following: 
(A) Plants and plant products harvested or 
gathered in the territory of Panama, the United 
States, or both. 
(B) Live animals born and raised in the 
territory of Panama, the United States, or 
both. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(C) Goods obtained in the territory of Pan-
ama, the United States, or both from live ani-
mals. 
(D) Goods obtained from hunting, trap-
ping, fishing, or aquaculture conducted in the 
territory of Panama, the United States, or 
both. 
(E) Minerals and other natural resources 
not included in subparagraphs (A) through (D) 
that are extracted or taken from the territory 
of Panama, the United States, or both. 
(F) Fish, shellfish, and other marine life 
taken from the sea, seabed, or subsoil outside 
the territory of Panama or the United States 
by— 
(i) a vessel that is registered or re-
corded with Panama and flying the flag of 
Panama; or 
(ii) a vessel that is documented under 
the laws of the United States. 
(G) Goods produced on board a factory 
ship from goods referred to in subparagraph 
(F), if such factory ship— 
(i) is registered or recorded with Pan-
ama and flies the flag of Panama; or 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(ii) is a vessel that is documented 
under the laws of the United States. 
(H)(i) Goods taken by Panama or a person 
of Panama from the seabed or subsoil outside 
the territorial waters of Panama, if Panama 
has rights to exploit such seabed or subsoil. 
(ii) Goods taken by the United States or a 
person of the United States from the seabed or 
subsoil outside the territorial waters of the 
United States, if the United States has rights 
to exploit such seabed or subsoil. 
(I) Goods taken from outer space, if the 
goods are obtained by Panama or the United 
States or a person of Panama or the United 
States and not processed in the territory of a 
country other than Panama or the United 
States. 
(J) Waste and scrap derived from— 
(i) manufacturing or processing oper-
ations in the territory of Panama, the 
United States, or both; or 
(ii) used goods collected in the terri-
tory of Panama, the United States, or 
both, if such goods are fit only for the re-
covery of raw materials. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00048
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(K) Recovered goods derived in the terri-
tory of Panama, the United States, or both 
from used goods, and used in the territory of 
Panama, the United States, or both, in the pro-
duction of remanufactured goods. 
(L) Goods, at any stage of production, pro-
duced in the territory of Panama, the United 
States, or both, exclusively from— 
(i) goods referred to in any of sub-
paragraphs (A) through (J), or 
(ii) the derivatives of goods referred 
to in clause (i). 
(6) IDENTICAL
GOODS.—The term ‘‘identical 
goods’’ means goods that are the same in all re-
spects relevant to the rule of origin that qualifies the 
goods as originating goods. 
(7) INDIRECT MATERIAL.—The term ‘‘indirect 
material’’ means a good used in the production, test-
ing, or inspection of another good but not physically 
incorporated into that other good, or a good used in 
the maintenance of buildings or the operation of 
equipment associated with the production of another 
good, including— 
(A) fuel and energy; 
(B) tools, dies, and molds; 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00049
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(C) spare parts and materials used in the 
maintenance of equipment or buildings; 
(D) lubricants, greases, compounding ma-
terials, and other materials used in production 
or used to operate equipment or buildings; 
(E) gloves, glasses, footwear, clothing, 
safety equipment, and supplies; 
(F) equipment, devices, and supplies used 
for testing or inspecting the good; 
(G) catalysts and solvents; and 
(H) any other good that is not incor-
porated into the other good but the use of 
which in the production of the other good can 
reasonably be demonstrated to be a part of that 
production. 
(8) MATERIAL.—The term ‘‘material’’ means a 
good that is used in the production of another good, 
including a part or an ingredient. 
(9) MATERIAL THAT IS SELF-PRODUCED.—The 
term ‘‘material that is self-produced’’ means an orig-
inating material that is produced by a producer of 
a good and used in the production of that good. 
(10) MODEL LINE OF MOTOR VEHICLES.—The 
term ‘‘model line of motor vehicles’’ means a group 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00050
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
of motor vehicles having the same platform or model 
name. 
(11) NET COST.—The term ‘‘net cost’’ means 
total cost minus sales promotion, marketing, and 
after-sales service costs, royalties, shipping and 
packing costs, and nonallowable interest costs that 
are included in the total cost. 
(12) NONALLOWABLE INTEREST COSTS.—The 
term ‘‘nonallowable interest costs’’ means interest 
costs incurred by a producer that exceed 700 basis 
points above the applicable official interest rate for 
comparable maturities of the country in which the 
producer is located. 
(13) NONORIGINATING
GOOD
OR
NONORIGI-
NATING
MATERIAL.—The 
term 
‘‘nonoriginating 
good’’ or ‘‘nonoriginating material’’ means a good or 
material, as the case may be, that does not qualify 
as originating under this section. 
(14) PACKING
MATERIALS
AND
CONTAINERS 
FOR SHIPMENT.—The term ‘‘packing materials and 
containers for shipment’’ means goods used to pro-
tect another good during its transportation and does 
not include the packaging materials and containers 
in which the other good is packaged for retail sale. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00051
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(15) PREFERENTIAL
TARIFF
TREATMENT.— 
The term ‘‘preferential tariff treatment’’ means the 
customs duty rate, and the treatment under article 
3.10.4 of the Agreement, that are applicable to an 
originating good pursuant to the Agreement. 
(16) PRODUCER.—The term ‘‘producer’’ means 
a person who engages in the production of a good 
in the territory of Panama or the United States. 
(17) PRODUCTION.—The term ‘‘production’’ 
means growing, mining, harvesting, fishing, raising, 
trapping, hunting, manufacturing, processing, as-
sembling, or disassembling a good. 
(18) REASONABLY ALLOCATE.—The term ‘‘rea-
sonably allocate’’ means to apportion in a manner 
that would be appropriate under generally accepted 
accounting principles. 
(19) RECOVERED
GOODS.—The term ‘‘recov-
ered goods’’ means materials in the form of indi-
vidual parts that are the result of— 
(A) the disassembly of used goods into in-
dividual parts; and 
(B) the cleaning, inspecting, testing, or 
other processing that is necessary for improve-
ment to sound working condition of such indi-
vidual parts. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00052
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(20) REMANUFACTURED GOOD.—The term ‘‘re-
manufactured good’’ means a good that is classified 
under chapter 84, 85, 87, or 90, or heading 9402, 
other than a good classified under heading 8418 or 
8516, and that— 
(A) is entirely or partially comprised of re-
covered goods; and 
(B) has a similar life expectancy and en-
joys a factory warranty similar to such a good 
that is new. 
(21) TOTAL
COST.—The term ‘‘total cost’’ 
means all product costs, period costs, and other 
costs for a good incurred in the territory of Panama, 
the United States, or both. 
(22) USED.—The term ‘‘used’’ means utilized 
or consumed in the production of goods. 
(o) PRESIDENTIAL PROCLAMATION AUTHORITY.— 
(1) IN GENERAL.—The President is authorized 
to proclaim, as part of the HTS— 
(A) the provisions set forth in Annex 4.1 
of the Agreement; and 
(B) any additional subordinate category 
that is necessary to carry out this title con-
sistent with the Agreement. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00053
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(2) FABRICS, YARNS, OR FIBERS NOT AVAIL-
ABLE IN COMMERCIAL QUANTITIES IN THE UNITED 
STATES.—The President is authorized to proclaim 
that a fabric, yarn, or fiber is added to the list in 
Annex 3.25 of the Agreement in an unrestricted 
quantity, as provided in article 3.25.4(e) of the 
Agreement. 
(3) MODIFICATIONS.— 
(A) IN GENERAL.—Subject to the consulta-
tion and layover provisions of section 104, the 
President may proclaim modifications to the 
provisions proclaimed under the authority of 
paragraph (1)(A), other than provisions of 
chapters 50 through 63 (as included in Annex 
4.1 of the Agreement). 
(B) ADDITIONAL
PROCLAMATIONS.—Not-
withstanding subparagraph (A), and subject to 
the consultation and layover provisions of sec-
tion 104, the President may proclaim before the 
end of the 1-year period beginning on the date 
on which the Agreement enters into force, 
modifications to correct any typographical, cler-
ical, or other nonsubstantive technical error re-
garding the provisions of chapters 50 through 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00054
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
63 (as included in Annex 4.1 of the Agree-
ment). 
(4) FABRICS, YARNS, OR FIBERS NOT AVAIL-
ABLE IN COMMERCIAL QUANTITIES IN PANAMA AND 
THE UNITED STATES.— 
(A) IN GENERAL.—Notwithstanding para-
graph (3)(A), the list of fabrics, yarns, and fi-
bers set forth in Annex 3.25 of the Agreement 
may be modified as provided for in this para-
graph. 
(B) DEFINITIONS.—In this paragraph: 
(i) INTERESTED ENTITY.—The term 
‘‘interested entity’’ means the Government 
of Panama, a potential or actual purchaser 
of a textile or apparel good, or a potential 
or actual supplier of a textile or apparel 
good. 
(ii) DAY; DAYS.—All references to 
‘‘day’’ and ‘‘days’’ exclude Saturdays, Sun-
days, and legal holidays observed by the 
Government of the United States. 
(C) REQUESTS TO ADD FABRICS, YARNS, 
OR FIBERS.— 
(i) IN GENERAL.—An interested entity 
may request the President to determine 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00055
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
that a fabric, yarn, or fiber is not available 
in commercial quantities in a timely man-
ner in Panama and the United States and 
to add that fabric, yarn, or fiber to the list 
in Annex 3.25 of the Agreement in a re-
stricted or unrestricted quantity. 
(ii) DETERMINATIONS.—After receiv-
ing a request under clause (i), the Presi-
dent may determine whether— 
(I) the fabric, yarn, or fiber is 
available in commercial quantities in a 
timely manner in Panama or the 
United States; or 
(II) any interested entity objects 
to the request. 
(iii) PROCLAMATION
AUTHORITY.— 
The President may, within the time peri-
ods specified in clause (iv), proclaim that 
the fabric, yarn, or fiber that is the subject 
of the request is added to the list in Annex 
3.25 of the Agreement in an unrestricted 
quantity, or in any restricted quantity that 
the President may establish, if the Presi-
dent has determined under clause (ii) 
that— 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00056
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(I) the fabric, yarn, or fiber is 
not available in commercial quantities 
in a timely manner in Panama and 
the United States; or 
(II) no interested entity has ob-
jected to the request. 
(iv) TIME PERIODS.—The time peri-
ods within which the President may issue 
a proclamation under clause (iii) are— 
(I) not later than 30 days after 
the date on which a request is sub-
mitted under clause (i); or 
(II) not later than 44 days after 
the request is submitted, if the Presi-
dent determines, within 30 days after 
the date on which the request is sub-
mitted, that the President does not 
have sufficient information to make a 
determination under clause (ii). 
(v) 
EFFECTIVE
DATE.—Notwith-
standing section 103(a)(2), a proclamation 
made under clause (iii) shall take effect on 
the date on which the text of the proclama-
tion is published in the Federal Register. 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00057
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS
(vi) ELIMINATION OF RESTRICTION.— 
Not later than 6 months after proclaiming 
under clause (iii) that a fabric, yarn, or 
fiber is added to the list in Annex 3.25 of 
the Agreement in a restricted quantity, the 
President may eliminate the restriction if 
the President determines that the fabric, 
yarn, or fiber is not available in commer-
cial quantities in a timely manner in Pan-
ama and the United States. 
(D) DEEMED APPROVAL OF REQUEST.—If, 
after an interested entity submits a request 
under subparagraph (C)(i), the President does 
not, within the applicable time period specified 
in subparagraph (C)(iv), make a determination 
under subparagraph (C)(ii) regarding the re-
quest, the fabric, yarn, or fiber that is the sub-
ject of the request shall be considered to be 
added, in an unrestricted quantity, to the list in 
Annex 3.25 of the Agreement beginning— 
(i) 45 days after the date on which 
the request is submitted; or 
(ii) 60 days after the date on which 
the request is submitted, if the President 
VerDate Mar 15 2010 
20:29 Oct 06, 2011
Jkt 019200
PO 00000
Frm 00058
Fmt 6652
Sfmt 6201
E:\BILLS\H3079.RH
H3079
jlentini on DSK4TPTVN1PROD with BILLS