H. R. 3450—29
(D) Recruiting and training of sales promotion, market-
ing, and after-sales service personnel, and after-sales train-
ing of customers’ employees, where such costs are identified
separately for sales promotion, marketing, and after-sales
service of goods on the financial statements or cost accounts
of the producer.
(E) Product liability insurance.
(F) Office supplies for sales promotion, marketing, and
after-sales service of goods, where such costs are identified
separately for sales promotion, marketing, and after-sales
service of goods on the financial statements or cost accounts
of the producer.
(G) Telephone, mail, and other communications, where
such costs are identified separately for sales promotion,
marketing, and after-sales service of goods on the financial
statements or cost accounts of the producer.
(H) Rent and depreciation of sales promotion, market-
ing, and after-sales service offices and distribution centers.
(I) Property insurance, taxes, utilities, and repair and
maintenance of sales promotion, marketing, and after-sales
service offices and distribution centers, where such costs
are identified separately for sales promotion, marketing,
and after-sales service of goods on the financial statements
or cost accounts of the producer.
(J) Payments by the producer to other persons for
warranty repairs.
(28) SELF-PRODUCED MATERIAL.—The term ‘‘self-produced
material’’ means a material that is produced by the producer
of a good and used in the production of that good.
(29) SHIPPING AND PACKING COSTS.—The term ‘‘shipping
and packing costs’’ means the costs incurred in packing a
good for shipment and shipping the good from the point of
direct shipment to the buyer, but does not include the costs
of preparing and packaging the good for retail sale.
(30) SIZE CATEGORY.—The term ‘‘size category’’ means with
respect to a motor vehicle identified in subsection (c)(1)(A)—
(A) 85 cubic feet or less of passenger and luggage
interior volume;
(B) more than 85 cubic feet, but less than 100 cubic
feet, of passenger and luggage interior volume;
(C) at least 100 cubic feet, but not more than 110
cubic feet, of passenger and luggage interior volume;
(D) more than 110 cubic feet, but less than 120 cubic
feet, of passenger and luggage interior volume; and
(E) 120 cubic feet or more of passenger and luggage
interior volume.
(31) TERRITORY.—The term ‘‘territory’’ means a territory
described in Annex 201.1 of the Agreement.
(32) TOTAL COST.—The term ‘‘total cost’’ means all product
costs, period costs, and other costs incurred in the territory
of one or more of the NAFTA countries.
(33) TRANSACTION
VALUE.—Except as provided in sub-
section (c)(1) or (c)(2)(A), the term ‘‘transaction value’’ means
the price actually paid or payable for a good or material with
respect to a transaction of the producer of the good, adjusted
in accordance with the principles of paragraphs 1, 3, and 4
of Article 8 of the Customs Valuation Code and determined
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H. R. 3450—30
without regard to whether the good or material is sold for
export.
(34) UNDERBODY.—The term ‘‘underbody’’ means the floor
pan of a motor vehicle.
(35) USED.—The term ‘‘used’’ means used or consumed
in the production of goods.
(q) PRESIDENTIAL PROCLAMATION AUTHORITY.—
(1) IN GENERAL.—The President is authorized to proclaim,
as a part of the HTS—
(A) the provisions set out in Appendix 6.A of Annex
300–B, Annex 401, Annex 403.1, Annex 403.2, and Annex
403.3, of the Agreement, and
(B) any additional subordinate category necessary to
carry out this title consistent with the Agreement.
(2) MODIFICATIONS.—Subject to the consultation and lay-
over requirements of section 103, the President may proclaim—
(A) modifications to the provisions proclaimed under
the authority of paragraph (1)(A), other than the provisions
of paragraph A of Appendix 6 of Annex 300–B and section
XI of part B of Annex 401 of the Agreement; and
(B) a modified version of the definition of any term
set out in subsection (p) (and such modified version of
the definition shall supersede the version in subsection
(p)), but only if the modified version reflects solely those
modifications to the same term in article 415 of the Agree-
ment that are agreed to by the NAFTA countries before
the 1st anniversary of the date of the enactment of this
Act.
(3) SPECIAL
RULES
FOR
TEXTILES.—Notwithstanding the
provisions of paragraph (2)(A), and subject to the consultation
and layover requirements of section 103, the President may
proclaim—
(A) modifications to the provisions proclaimed under
the authority of paragraph (1)(A) as are necessary to imple-
ment an agreement with one or more of the NAFTA coun-
tries pursuant to paragraph 2 of section 7 of Annex 300–
B of the Agreement, and
(B) before the 1st anniversary of the date of the enact-
ment of this Act, modifications to correct any typographical,
clerical, or other nonsubstantive technical error regarding
the provisions of Appendix 6.A of Annex 300–B and section
XI of part B of Annex 401 of the Agreement.
SEC. 203. DRAWBACK.
(a) DEFINITION OF A GOOD SUBJECT TO NAFTA DRAWBACK.—
For purposes of this Act and the amendments made by subsection
(b), the term ‘‘good subject to NAFTA drawback’’ means any
imported good other than the following:
(1) A good entered under bond for transportation and expor-
tation to a NAFTA country.
(2) A good exported to a NAFTA country in the same
condition as when imported into the United States. For pur-
poses of this paragraph—
(A) processes such as testing, cleaning, repacking, or
inspecting a good, or preserving it in its same condition,
shall not be considered to change the condition of the
good, and
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H. R. 3450—31
(B) except for a good referred to in paragraph 12 of
section A of Annex 703.2 of the Agreement that is exported
to Mexico, if a good described in the first sentence of
this paragraph is commingled with fungible goods and
exported in the same condition, the origin of the good
may be determined on the basis of the inventory methods
provided for in the regulations implementing this title.
(3) A good—
(A) that is—
(i) deemed to be exported from the United States,
(ii) used as a material in the production of another
good that is deemed to be exported to a NAFTA coun-
try, or
(iii) substituted for by a good of the same kind
and quality that is used as a material in the production
of another good that is deemed to be exported to a
NAFTA country, and
(B) that is delivered—
(i) to a duty-free shop,
(ii) for ship’s stores or supplies for ships or aircraft,
or
(iii) for use in a project undertaken jointly by
the United States and a NAFTA country and destined
to become the property of the United States.
(4) A good exported to a NAFTA country for which a
refund of customs duties is granted by reason of—
(A) the failure of the good to conform to sample or
specification, or
(B) the shipment of the good without the consent of
the consignee.
(5) A good that qualifies under the rules of origin set
out in section 202 that is—
(A) exported to a NAFTA country,
(B) used as a material in the production of another
good that is exported to a NAFTA country, or
(C) substituted for by a good of the same kind and
quality that is used as a material in the production of
another good that is exported to a NAFTA country.
(6) A good provided for in subheading 1701.11.02 of the
HTS that is—
(A) used as a material, or
(B) substituted for by a good of the same kind and
quality that is used as a material,
in the production of a good provided for in existing Canadian
tariff item 1701.99.00 or existing Mexican tariff item 1701.99.01
or 1701.99.99 (relating to refined sugar).
(7) A citrus product that is exported to Canada.
(8) A good used as a material, or substituted for by a
good of the same kind and quality that is used as a material,
in the production of—
(A) apparel, or
(B) a good provided for in subheading 6307.90.99
(insofar as it relates to furniture moving pads), 5811.00.20,
or 5811.00.30 of the HTS,
that is exported to Canada and that is subject to Canada’s
most-favored-nation rate of duty upon importation into Canada.
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H. R. 3450—32
Where in paragraph (6) a good referred to by an item is described
in parentheses following the item, the description is provided for
purposes of reference only.
(b) CONSEQUENTIAL AMENDMENTS WITH DELAYED EFFECT.—
(1) BONDED MANUFACTURING WAREHOUSES.—The last para-
graph of section 311 of the Tariff Act of 1930 (19 U.S.C. 1311)
is amended to read as follows:
‘‘No article manufactured in a bonded warehouse from materials
that are goods subject to NAFTA drawback, as defined in section
203(a) of the North American Free Trade Agreement Implementa-
tion Act, may be withdrawn from warehouse for exportation to
a NAFTA country, as defined in section 2(4) of that Act, without
assessment of a duty on the materials in their condition and quan-
tity, and at their weight, at the time of importation into the United
States. The duty shall be paid before the 61st day after the date
of exportation, except that upon the presentation, before such 61st
day, of satisfactory evidence of the amount of any customs duties
paid to the NAFTA country on the article, the customs duty may
be waived or reduced (subject to section 508(b)(2)(B)) in an amount
that does not exceed the lesser of—
‘‘(1) the total amount of customs duties paid or owed on
the materials on importation into the United States, or
‘‘(2) the total amount of customs duties paid on the article
to the NAFTA country.
If Canada ceases to be a NAFTA country and the suspension
of the operation of the United States-Canada Free-Trade Agreement
thereafter terminates, no article manufactured in a bonded ware-
house, except to the extent that such article is made from an
article that is a drawback eligible good under section 204(a) of
the United States-Canada Free-Trade Agreement Implementation
Act of 1988, may be withdrawn from such warehouse for exportation
to Canada during the period such Agreement is in operation without
payment of a duty on such imported merchandise in its condition,
and at the rate of duty in effect, at the time of importation.’’.
(2) BONDED SMELTING AND REFINING WAREHOUSES.—Section
312 of the Tariff Act of 1930 (19 U.S.C. 1312) is amended—
(A) in paragraphs (1) and (4) of subsection (b), by
striking out the parenthetical matter and the final ‘‘, or’’
and by adding at the end the following:
‘‘; except that in the case of a withdrawal for exportation
of such a product to a NAFTA country, as defined in section
2(4) of the North American Free Trade Agreement Implementa-
tion Act, if any of the imported metal-bearing materials are
goods subject to NAFTA drawback, as defined in section 203(a)
of that Act, the duties on the materials shall be paid, and
the charges against the bond canceled, before the 61st day
after the date of exportation; but upon the presentation, before
such 61st day, of satisfactory evidence of the amount of any
customs duties paid to the NAFTA country on the product,
the duties on the materials may be waived or reduced (subject
to section 508(b)(2)(B)) in an amount that does not exceed
the lesser of—
‘‘(A) the total amount of customs duties owed on the
materials on importation into the United States, or
‘‘(B) the total amount of customs duties paid to the
NAFTA country on the product, or’’;
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H. R. 3450—33
(B) by adding at the end of subsection (b) the following
new flush sentence.
‘‘If Canada ceases to be a NAFTA country and the suspension
of the operation of the United States-Canada Free-Trade Agreement
thereafter terminates, no charges against such bond may be can-
celed in whole or part upon an exportation to Canada under para-
graph (1) or (4) during the period such Agreement is in operation
except to the extent that the metal-bearing materials were of
Canadian origin as determined in accordance with section 202 of
the United States-Canada Free-Trade Agreement Implementation
Act of 1988.’’; and
(C) in subsection (d) by striking out the parenthetical
matter and by inserting before the period the following:
‘‘; except that in the case of a withdrawal for exportation to a
NAFTA country, as defined in section 2(4) of the North American
Free Trade Agreement Implementation Act, if any of the imported
metal-bearing materials are goods subject to NAFTA drawback,
as defined in section 203(a) of that Act, charges against the bond
shall be paid before the 61st day after the date of exportation;
but upon the presentation, before such 61st day, of satisfactory
evidence of the amount of any customs duties paid to the NAFTA
country on the product, the bond shall be credited (subject to
section 508(b)(2)(B)) in an amount not to exceed the lesser of—
‘‘(1) the total amount of customs duties paid or owed on
the materials on importation into the United States, or
‘‘(2) the total amount of customs duties paid to the NAFTA
country on the product.
If Canada ceases to be a NAFTA country and the suspension
of the operation of the United States-Canada Free-Trade Agreement
thereafter terminates, no bond shall be credited under this sub-
section with respect to an exportation of a product to Canada
during the period such Agreement is in operation except to the
extent that the product is a drawback eligible good under section
204(a) of the United States-Canada Free-Trade Agreement
Implementation Act of 1988’’.
(3) DRAWBACK.—Subsections (n) and (o) of section 313 of
the Tariff Act of 1930 (19 U.S.C. 1313 (n) and (o)) are amended
to read as follows:
‘‘(n)(1) For purposes of this subsection and subsection (o)—
‘‘(A) the term ‘NAFTA Act’ means the North American
Free Trade Agreement Implementation Act;
‘‘(B) the terms ‘NAFTA country’ and ‘good subject to NAFTA
drawback’ have the same respective meanings that are given
such terms in sections 2(4) and 203(a) of the NAFTA Act;
and
‘‘(C) a refund, waiver, or reduction of duty under paragraph
(2) of this subsection or paragraph (1) of subsection (o) is
subject to section 508(b)(2)(B).
‘‘(2) For purposes of subsections (a), (b), (f), (h), (p), and (q),
if an article that is exported to a NAFTA country is a good subject
to NAFTA drawback, no customs duties on the good may be
refunded, waived, or reduced in an amount that exceeds the lesser
of—
‘‘(A) the total amount of customs duties paid or owed on
the good on importation into the United States, or
‘‘(B) the total amount of customs duties paid on the good
to the NAFTA country.
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