I
106TH CONGRESS
1ST SESSION
H. R. 2609
To promote product development and testing in the United States, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 26, 1999
Mr. CAMP (for himself and Mr. LEVIN) introduced the following bill; which
was referred to the Committee on Ways and Means
A BILL
To promote product development and testing in the United
States, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Product Development
and Testing Act of 1999’’.
SEC. 2. FINDINGS; PURPOSE.
(a) FINDINGS.—The Congress finds the following:
(1)(A) A substantial amount of development
and testing occurs in the United States incident to
the introduction and manufacture of new products
for both domestic consumption and export overseas.
(B) Testing also occurs with respect to mer-
chandise that has already been introduced into com-
merce to insure that it continues to meet specifica-
tions and performs as designed.
(2) The development and testing that occurs in
the United States incident to the introduction and
manufacture of new products, and with respect to
products which have already been introduced into
commerce, represents a significant industrial activity
employing highly-skilled workers in the United
States.
(3)(A) Under the current laws affecting the im-
portation of merchandise, such as the provisions of
part I of title IV of the Tariff Act of 1930 (19
U.S.C. 1401 et seq.), goods commonly referred to as
‘‘prototypes’’, used for product development testing
and product evaluation purposes, are subject to cus-
toms duty upon their importation into the United
States unless the prototypes qualify for duty-free
treatment under special trade programs or unless
the prototypes are entered under a temporary impor-
tation bond.
(B) In addition, the United States Customs
Service has determined that the value of prototypes
is to be included in the value of production articles
if the prototypes are the result of the same design
and development effort as the articles.
(4)(A) Assessing duty on prototypes twice, once
when the prototypes are imported and a second time
thereafter as part of the cost of imported production
merchandise, discourages development and testing in
the United States, and thus encourages development
and testing to occur overseas, since, in that case,
duty will only be assessed once, upon the importa-
tion of production merchandise.
(B) Assessing duty on these prototypes twice
unnecessarily inflates the cost to businesses, thus re-
ducing their competitiveness.
(5) Current methods for avoiding the excessive
assessment of customs duties on the importation of
prototypes, including the use of temporary importa-
tion entries and obtaining drawback, are unwieldy,
ineffective, and difficult for both importers and the
United States Customs Service to administer.
(b) PURPOSE.—The purpose of this Act is to promote
product development and testing in the United States by
permitting the importation of prototypes on a duty-free
basis.
SEC. 3. AMENDMENTS TO HARMONIZED TARIFF SCHEDULE
OF THE UNITED STATES.
(a) HEADING.—Subchapter XVII of Chapter 98 of
the Harmonized Tariff Schedule of the United States is
amended by inserting in numerical sequence the following
new heading:
‘‘
9817.85.01
Prototypes to be used exclusively
for development, testing, product
evaluation or quality control pur-
poses ...............................................
Free
The rate appli-
cable in the ab-
sence of this
heading
’’.
(b) U.S. NOTE.—The U.S. Notes to subchapter XVII
of chapter 98 of the Harmonized Tariff Schedule of the
United States are amended by adding at the end the fol-
lowing:
‘‘6. The following provisions apply to heading 9817.85.01:
‘‘(a) The term ‘prototypes’ means originals or models of
articles that—
‘‘(i) are either in the preproduction, production, or
postproduction stage and are to be used exclusively
for development, testing, product evaluation, or qual-
ity control purposes; and
‘‘(ii) in the case of originals or models of articles that are
either in the production or postproduction stage, are
associated with a design change from current produc-
tion (including a refinement, advancement, improve-
ment, development, or quality control in either the
product itself or the means for producing the prod-
uct).
For purposes of clause (i), automobile racing shall not be
considered to be ‘‘development, testing, product eval-
uation, or quality control.’’.
‘‘(b)(i) Prototypes (as defined in paragraph (a)) may only
be imported in limited noncommercial quantities in ac-
cordance with industry practice.
‘‘(ii) Prototypes (as defined in paragraph (a)), or parts
of prototypes, may not be sold (including sale for
scrap purposes) after importation into the United
States.
‘‘(c) Articles subject to quantitative restrictions, anti-
dumping orders, or countervailing duty orders, may
not be classified as prototypes under this note. Arti-
cles subject to licensing requirements, or which must
comply with laws, rules, or regulations administered
by agencies other than the United States Customs
Service before being imported, may be classified as
prototypes, provided that they comply with all applica-
ble provisions of law and otherwise meet the definition
of ‘prototypes’ under paragraph (a).’’.
SEC. 4. ENTRY PROCEDURES.
The Secretary of the Treasury shall establish regula-
tions for the identification of prototypes at the time of
importation into the United States in accordance with the
provisions of this Act and the amendments made by this
Act.
SEC. 5. EFFECTIVE DATE.
This Act, and the amendments made by this Act,
shall apply with respect to—
(1) an entry of a prototype under heading
9817.85.01 of the Harmonized Tariff Schedule of
the United States, as added by section 3(a) of this
Act, on or after the date of the enactment of this
Act; and
(2) an entry of a prototype (as defined in U.S.
Note 6(a) to subchapter XVII of chapter 98 of the
Harmonized Tariff Schedule of the United States, as
added by section 3(b) of this Act) under heading
9813.00.30 of the Harmonized Tariff Schedule of
the United States for which liquidation has not be-
come final as of the date of enactment of this Act.
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