I
103D CONGRESS
1ST SESSION
H. R. 3450
To implement the North American Free Trade Agreement.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 4, 1993
Mr. ROSTENKOWSKI (as designee of the Majority Leader) (for himself and Mr.
ARCHER) (as designee of the Minority Leader) (by request) introduced
the following bill; which was referred jointly to the following committees
for a period ending not later than November 15, 1993: Ways and Means,
Agriculture, Banking, Finance and Urban Affairs, Energy and Com-
merce, Foreign Affairs, Government Operations, the Judiciary, and Pub-
lic Works and Transportation
A BILL
To implement the North American Free Trade Agreement.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘North American Free Trade Agreement Implementation
Act’’.
(b) TABLE OF CONTENTS.—
Sec. 1. Short title and table of contents.
Sec. 2. Definitions.
TITLE I—APPROVAL OF, AND GENERAL PROVISIONS RELATING
TO, THE NORTH AMERICAN FREE TRADE AGREEMENT
Sec. 101. Approval and entry into force of the North American Free Trade
Agreement.
Sec. 102. Relationship of the Agreement to United States and State law.
Sec. 103. Consultation and layover requirements for, and effective date of, pro-
claimed actions.
Sec. 104. Implementing actions in anticipation of entry into force and initial
regulations.
Sec. 105. United States section of the NAFTA secretariat.
Sec. 106. Appointments to chapter 20 panel proceedings.
Sec. 107. Termination or suspension of United States-Canada Free-Trade
Agreement.
Sec. 108. Congressional intent regarding future accessions.
Sec. 109. Effective dates; effect of termination of NAFTA status.
TITLE II—CUSTOMS PROVISIONS
Sec. 201. Tariff modifications.
Sec. 202. Rules of origin.
Sec. 203. Drawback.
Sec. 204. Customs user fees.
Sec. 205. Enforcement.
Sec. 206. Reliquidation of entries for NAFTA-origin goods.
Sec. 207. Country of origin marking of NAFTA goods.
Sec. 208. Protests against adverse origin determinations.
Sec. 209. Exchange of information.
Sec. 210. Prohibition on drawback for television picture tubes.
Sec. 211. Monitoring of television and picture tube imports.
Sec. 212. Title VI amendments.
Sec. 213. Effective dates.
TITLE III—APPLICATION OF AGREEMENT TO SECTORS AND
SERVICES
Subtitle A—Safeguards
PART 1—RELIEF FROM IMPORTS BENEFITING FROM THE AGREEMENT
Sec. 301. Definitions.
Sec. 302. Commencing of action for relief.
Sec. 303. International Trade Commission action on petition.
Sec. 304. Provision of relief.
Sec. 305. Termination of relief authority.
Sec. 306. Compensation authority.
Sec. 307. Submission of petitions.
Sec. 308. Special tariff provisions for Canadian fresh fruits and vegetables.
Sec. 309. Price-based snapback for frozen concentrated orange juice.
PART 2—RELIEF FROM IMPORTS FROM ALL COUNTRIES
Sec. 311. NAFTA article impact in import relief cases under the Trade Act of
1974.
Sec. 312. Presidential action regarding NAFTA imports.
PART 3—GENERAL PROVISIONS
Sec. 315. Provisional relief.
Sec. 316. Monitoring.
Sec. 317. Procedures concerning the conduct of International Trade Commis-
sion investigations.
Sec. 318. Effective date.
Subtitle B—Agriculture
Sec. 321. Agriculture.
Subtitle C—Intellectual Property
Sec. 331. Treatment of inventive activity.
Sec. 332. Rental rights in sound recordings.
Sec. 333. Nonregistrability of misleading geographic indications.
Sec. 334. Motion pictures in the public domain.
Sec. 335. Effective dates.
Subtitle D—Temporary Entry of Business Persons
Sec. 341. Temporary entry.
Sec. 342. Effective date.
Subtitle E—Standards
PART 1—STANDARDS AND MEASURES
Sec. 351. Standards and sanitary and phytosanitary measures.
Sec. 352. Transportation.
PART 2—AGRICULTURAL STANDARDS
Sec. 361. Agricultural technical and conforming amendments.
Subtitle F—Corporate Average Fuel Economy
Sec. 371. Corporate average fuel economy.
Subtitle G—Government Procurement
Sec. 381. Government procurement.
TITLE IV—DISPUTE SETTLEMENT IN ANTIDUMPING AND
COUNTERVAILING DUTY CASES
Subtitle A—Organizational, Administrative, and Procedural Provisions
Regarding the Implementation of Chapter 19 of the Agreement
Sec. 401. References in subtitle.
Sec. 402. Organizational and administrative provisions.
Sec. 403. Testimony and production of papers in extraordinary challenges.
Sec. 404. Requests for review of determinations by competent investigating au-
thorities of NAFTA countries.
Sec. 405. Rules of procedure for panels and committees.
Sec. 406. Subsidy negotiations.
Sec. 407. Identification of industries facing subsidized imports.
Sec. 408. Treatment of amendments to antidumping and countervailing duty
law.
Subtitle B—Conforming Amendments and Provisions
Sec. 411. Judicial review in antidumping duty and countervailing duty cases.
Sec. 412. Conforming amendments to other provisions of the Tariff Act of
1930.
Sec. 413. Consequential amendment to Free-Trade Agreement Act of 1988.
Sec. 414. Conforming amendments to title 28, United States Code.
Sec. 415. Effect of termination of NAFTA country status.
Sec. 416. Effective date.
TITLE V—NAFTA TRANSITIONAL ADJUSTMENT ASSISTANCE AND
OTHER PROVISIONS
Subtitle A—NAFTA Transitional Adjustment Assistance Program
Sec. 501. Short title.
Sec. 502. Establishment of NAFTA transitional adjustment assistance pro-
gram.
Sec. 503. Conforming amendments.
Sec. 504. Authorization of appropriations.
Sec. 505. Termination of transition program.
Sec. 506. Effective date.
Sec. 507. Treatment of self-employment assistance programs.
Subtitle B—Provisions Relating to Performance Under the Agreement
Sec. 511. Discriminatory taxes.
Sec. 512. Review of the operation and effects of the agreement.
Sec. 513. Actions affecting United States cultural industries.
Sec. 514. Report on impact of NAFTA on motor vehicle exports to Mexico.
Sec. 515. Center for the study of western hemispheric trade.
Sec. 516. Effective date.
Subtitle C—Funding
PART 1—CUSTOMS USER FEES
Sec. 521. Fees for certain customs services.
PART 2—INTERNAL REVENUE CODE AMENDMENTS
Sec. 522. Authority to disclose certain tax information to the United States
customs service.
Sec. 523. Use of electronic fund transfer system for collection of certain taxes.
Subtitle D—Implementation of NAFTA Supplemental Agreements
PART 1—AGREEMENTS RELATING TO LABOR AND ENVIRONMENT
Sec. 531. Agreement on labor cooperation.
Sec. 532. Agreement on environmental cooperation.
Sec. 533. Agreement on Border Environment Cooperation Commission.
PART 2—NORTH AMERICAN DEVELOPMENT BANK AND RELATED
PROVISIONS.
Sec. 541. North American Development Bank.
Sec. 542. Status, immunities, and privileges.
Sec. 543. Community adjustment and investment program.
Sec. 544. Definition.
TITLE VI—CUSTOMS MODERNIZATION
Sec. 601. Reference.
Subtitle A—Improvements in Customs Enforcement
Sec. 611. Penalties for violations of arrival, reporting, entry, and clearance re-
quirements.
Sec. 612. Failure to declare.
Sec. 613. Customs testing laboratories; detention of merchandise.
Sec. 614. Recordkeeping.
Sec. 615. Examination of books and witnesses.
Sec. 616. Judicial enforcement.
Sec. 617. Review of protests.
Sec. 618. Repeal of provision relating to reliquidation on account of fraud.
Sec. 619. Penalties relating to manifests.
Sec. 620. Unlawful unlading or transshipment.
Sec. 621. Penalties for fraud, gross negligence, and negligence; prior disclosure.
Sec. 622. Penalties for false drawback claims.
Sec. 623. Interpretive rulings and decisions; public information.
Sec. 624. Seizure authority.
Subtitle B—National Customs Automation Program
Sec. 631. National Customs Automation Program.
Sec. 632. Drawback and refunds.
Sec. 633. Effective date of rates of duty.
Sec. 634. Definitions.
Sec. 635. Manifests.
Sec. 636. Invoice contents.
Sec. 637. Entry of merchandise.
Sec. 638. Appraisement and other procedures.
Sec. 639. Voluntary reliquidations.
Sec. 640. Appraisement regulations.
Sec. 641. Limitation on liquidation.
Sec. 642. Payment of duties and fees.
Sec. 643. Abandonment and damage.
Sec. 644. Customs officer’s immunity.
Sec. 645. Protests.
Sec. 646. Refunds and errors.
Sec. 647. Bonds and other security.
Sec. 648. Customhouse brokers.
Sec. 649. Conforming amendments.
Subtitle C—Miscellaneous Amendments to the Tariff Act of 1930
Sec. 651. Administrative exemptions.
Sec. 652. Report of arrival.
Sec. 653. Entry of vessels.
Sec. 654. Unlawful return of foreign vessel papers.
Sec. 655. Vessels not required to enter.
Sec. 656. Unlading.
Sec. 657. Declarations.
Sec. 658. General orders.
Sec. 659. Unclaimed merchandise.
Sec. 660. Destruction of merchandise.
Sec. 661. Proceeds of sale.
Sec. 662. Entry under regulations.
Sec. 663. American trademarks.
Sec. 664. Simplified recordkeeping for merchandise transported by pipeline.
Sec. 665. Entry for warehouse.
Sec. 666. Cartage.
Sec. 667. Seizure.
Sec. 668. Limitation on actions.
Sec. 669. Collection of fees on behalf of other agencies.
Sec. 670. Authority to settle claims.
Sec. 671. Use of private collection agencies.
Subtitle D—Miscellaneous Provisions and Consequential and Conforming
Amendments to Other Laws
Sec. 681. Amendments to the Harmonized Tariff Schedule.
Sec. 682. Customs personnel airport work shift regulation.
Sec. 683. Use of harbor maintenance trust fund amounts for administrative ex-
penses.
Sec. 684. Amendments to title 28, United States Code.
Sec. 685. Treasury forfeiture fund.
Sec. 686. Amendments to the Revised Statutes of the United States.
Sec. 687. Amendments to title 18, United States Code.
Sec. 688. Amendment to the Act to Prevent Pollution from Ships.
Sec. 689. Miscellaneous technical amendments.
Sec. 690. Repeal of obsolete provisions of law.
Sec. 691. Reports to Congress.
Sec. 692. Effective date.
SEC. 2. DEFINITIONS.
For purposes of this Act:
(1) 
AGREEMENT.—The 
term 
‘‘Agreement’’
means the North American Free Trade Agreement
approved by the Congress under section 101(a).
(2) HTS.—The term ‘‘HTS’’ means the Har-
monized Tariff Schedule of the United States.
(3) MEXICO.—Any reference to Mexico shall be
considered to be a reference to the United Mexican
States.
(4) NAFTA COUNTRY.—Except as provided in
section 202, the term ‘‘NAFTA country’’ means—
(A) Canada for such time as the Agree-
ment is in force with respect to, and the United
States applies the Agreement to, Canada; and
(B) Mexico for such time as the Agreement
is in force with respect to, and the United
States applies the Agreement to, Mexico.
(5) INTERNATIONAL TRADE COMMISSION.—The
term ‘‘International Trade Commission’’ means the
United States International Trade Commission.
(6) 
TRADE
REPRESENTATIVE.—The 
term
‘‘Trade Representative’’ means the United States
Trade Representative.
TITLE 
I—APPROVAL 
OF, 
AND
GENERAL 
PROVISIONS 
RE-
LATING 
TO, 
THE 
NORTH
AMERICAN 
FREE 
TRADE
AGREEMENT
SEC. 101. APPROVAL AND ENTRY INTO FORCE OF THE
NORTH AMERICAN FREE TRADE AGREEMENT.
(a) APPROVAL OF AGREEMENT AND STATEMENT OF
ADMINISTRATIVE ACTION.—Pursuant to section 1103 of
the Omnibus Trade and Competitiveness Act of 1988 (19
U.S.C. 2903) and section 151 of the Trade Act of 1974
(19 U.S.C. 2191), the Congress approves—
(1) the North American Free Trade Agreement
entered into on December 17, 1992, with the Gov-
ernments of Canada and Mexico and submitted to
the Congress on November 4, 1993; and
(2) the statement of administrative action pro-
posed to implement the Agreement that was submit-
ted to the Congress on November 4, 1993.
(b) CONDITIONS FOR ENTRY INTO FORCE OF THE
AGREEMENT.—The President is authorized to exchange
notes with the Government of Canada or Mexico providing
for the entry into force, on or after January 1, 1994, of
the Agreement for the United States with respect to such
country at such time as—
(1) the President—
(A) determines that such country has im-
plemented the statutory changes necessary to
bring that country into compliance with its obli-
gations under the Agreement and has made
provision to implement the Uniform Regula-
tions provided for under article 511 of the
Agreement regarding the interpretation, appli-
cation, and administration of the rules of ori-
gin, and
(B) transmits a report to the House of
Representatives and the Senate setting forth
the determination under subparagraph (A) and
including, in the case of Mexico, a description
of the specific measures taken by that country
to—
(i) bring its laws into conformity with
the requirements of the Schedule of Mexico
in Annex 1904.15 of the Agreement, and
(ii) otherwise ensure the effective im-
plementation of the binational panel review
process under chapter 19 of the Agreement
regarding final antidumping and counter-
vailing duty determinations; and
(2) the Government of such country exchanges
notes with the United States providing for the entry
into force of the North American Agreement on En-
vironmental Cooperation and the North American
Agreement on Labor Cooperation for that country
and the United States.
SEC. 102. RELATIONSHIP OF THE AGREEMENT TO UNITED
STATES AND STATE LAW.
(a) RELATIONSHIP
OF AGREEMENT
TO UNITED
STATES LAW.—
(1) UNITED STATES LAW TO PREVAIL IN CON-
FLICT.—No provision of the Agreement, nor the ap-
plication of any such provision to any person or cir-
cumstance, which is inconsistent with any law of the
United States shall have effect.
(2) CONSTRUCTION.—Nothing in this Act shall
be construed—
(A) to amend or modify any law of the
United States, including any law regarding—
(i) the protection of human, animal,
or plant life or health,
(ii) the protection of the environment,
or
(iii) motor carrier or worker safety; or
(B) to limit any authority conferred under
any law of the United States, including section
301 of the Trade Act of 1974;
unless specifically provided for in this Act.
(b) RELATIONSHIP
OF
AGREEMENT
TO
STATE
LAW.—
(1) FEDERAL-STATE CONSULTATION.—
(A) IN GENERAL.—Upon the enactment of
this Act, the President shall, through the inter-
governmental policy advisory committees on
trade established under section 306(c)(2)(A) of
the Trade and Tariff Act of 1984, consult with
the States for the purpose of achieving con-
formity of State laws and practices with the
Agreement.
(B) 
FEDERAL-STATE
CONSULTATION
PROCESS.—The Trade Representative shall es-
tablish within the Office of the United States
Trade Representative a Federal-State consulta-
tion process for addressing issues relating to
the Agreement that directly relate to, or will po-
tentially have a direct impact on, the States.
The Federal-State consultation process shall in-
clude procedures under which—
(i) the Trade Representative will as-
sist the States in identifying those State
laws that may not conform with the Agree-
ment but may be maintained under the
Agreement by reason of being in effect be-
fore the Agreement entered into force;
(ii) the States will be informed on a
continuing basis of matters under the
Agreement that directly relate to, or will
potentially have a direct impact on, the
States;
(iii) the States will be provided oppor-
tunity to submit, on a continuing basis, to
the Trade Representative information and
advice with respect to matters referred to
in clause (ii);
(iv) the Trade Representative will
take into account the information and ad-
vice received from the States under clause
(iii) when formulating United States posi-
tions regarding matters referred to in
clause (ii); and
(v) the States will be involved (includ-
ing involvement through the inclusion of
appropriate representatives of the States)
to the greatest extent practicable at each
stage of the development of United States
positions regarding matters referred to in
clause (ii) that will be addressed by com-
mittees, subcommittees, or working groups
established 
under 
the 
Agreement 
or
through dispute settlement processes pro-
vided for under the Agreement.
The Federal Advisory Committee Act (5 U.S.C.
App.) shall not apply to the Federal-State consulta-
tion process established by this paragraph.
(2) LEGAL CHALLENGE.—No State law, or the
application thereof, may be declared invalid as to
any person or circumstance on the ground that the
provision or application is inconsistent with the
Agreement, except in an action brought by the Unit-
ed States for the purpose of declaring such law or
application invalid.
(3) 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—
(A) the Agreement or by virtue of Congres-
sional approval thereof, or
(B) the North American Agreement on
Environmental Cooperation or the North Amer-
ican Agreement on Labor Cooperation; 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 inaction
is inconsistent with the Agreement, the North Amer-
ican Agreement on Environmental Cooperation, or
the North American Agreement on Labor Coopera-
tion.
SEC. 103. CONSULTATION AND LAYOVER REQUIREMENTS
FOR, AND EFFECTIVE DATE OF, PROCLAIMED
ACTIONS.
(a) 
CONSULTATION
AND
LAYOVER
REQUIRE-
MENTS.—If a provision of this Act provides that the imple-
mentation 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—
(A) the appropriate advisory committees
established under section 135 of the Trade Act
of 1974, and
(B) the International Trade Commission;
(2) the President has submitted a report to the
Committee on Ways and Means of the House of
Representatives and the Committee on Finance of
the Senate 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
with the first day on which the President has met
the requirements of paragraphs (1) and (2) with re-
spect to such action, has expired; and
(4) the President has consulted with such Com-
mittees regarding the proposed action during the pe-
riod referred to in paragraph (3).
(b) EFFECTIVE DATE OF CERTAIN PROCLAIMED AC-
TIONS.—Any action proclaimed by the President under the
authority of this Act that is not subject to the consultation
and layover requirements under subsection (a) may not
take effect before the 15th day after the date on which
the text of the proclamation is published in the Federal
Register.
SEC. 104. IMPLEMENTING ACTIONS IN ANTICIPATION OF
ENTRY INTO FORCE AND INITIAL REGULA-
TIONS.
(a) IMPLEMENTING ACTIONS.—After the date of the
enactment of this Act—
(1) the President may proclaim such actions;
and
(2) other appropriate officers of the United
States Government may issue such regulations;
as may be necessary to ensure that any provision of this
Act, or amendment made by this Act, that takes effect
on the date the Agreement enters into force is appro-
priately implemented on such date, but no such proclama-
tion or regulation may have an effective date earlier than
the date of entry into force. The 15-day restriction in sec-
tion 103(b) on the taking effect of proclaimed actions is
waived to the extent that the application of such restric-
tion would prevent the taking effect on the date the Agree-
ment enters into force of any action proclaimed under this
section.
(b) INITIAL REGULATIONS.—Initial regulations nec-
essary or appropriate to carry out the actions proposed
in the statement of administrative action submitted under
section 101(a)(2) to implement the Agreement shall, to
the maximum extent feasible, be issued within 1 year after
the date of entry into force of the Agreement; except that
interim or initial regulations to implement those Uniform
Regulations regarding rules of origin provided for under
article 511 of the Agreement shall be issued no later than
the date of entry into force of the Agreement. In the case
of any implementing action that takes effect on a date
after the date of entry into force of the Agreement, initial
regulations to carry out that action shall, to the maximum
extent feasible, be issued within 1 year after such effective
date.
SEC. 105. UNITED STATES SECTION OF THE NAFTA SEC-
RETARIAT.
(a) ESTABLISHMENT OF THE UNITED STATES SEC-
TION.—The President is authorized to establish within
any department or agency of the United States Govern-
ment a United States Section of the Secretariat estab-
lished under chapter 20 of the Agreement. The United
States Section, subject to the oversight of the interagency
group established under section 402, shall carry out its
functions within the Secretariat to facilitate the operation
of the Agreement, including the operation of chapters 19
and 20 of the Agreement and the work of the panels, ex-
traordinary challenge committees, special committees, and
scientific review boards convened under those chapters.
The United States Section may 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 1993 to the department or agency within which
the United States Section is established the lesser of—
(1) such sums as may be necessary; or
(2) $2,000,000;
for the establishment and operations of the United States
Section and for the payment of the United States share
of the expenses of binational panels and extraordinary
challenge committees convened under chapter 19, and of
the expenses incurred in dispute settlement proceedings
under chapter 20, of the Agreement.
(c) REIMBURSEMENT OF CERTAIN EXPENSES.—If,
in accordance with Annex 2002.2 of the Agreement, the
Canadian Section or the Mexican Section of the Secretar-
iat provides funds to the United States Section during any
fiscal year, as reimbursement for expenses by the Cana-
dian Section or the Mexican Section in connection with
settlement proceedings under chapter 19 or 20 of the
Agreement, the United States Section may retain and use
such funds to carry out the functions described in sub-
section (a).
SEC. 106. APPOINTMENTS TO CHAPTER 20 PANEL PRO-
CEEDINGS.
(a) CONSULTATION.—The Trade Representative shall
consult with the Committee on Ways and Means of the
House of Representatives and the Committee on Finance
of the Senate regarding the selection and appointment of
candidates for the rosters described in article 2009 of the
Agreement.
(b) SELECTION OF INDIVIDUALS WITH ENVIRON-
MENTAL EXPERTISE.—The United States shall, to the
maximum extent practicable, encourage the selection of in-
dividuals who have expertise and experience in environ-
mental issues for service in panel proceedings under chap-
ter 20 of the Agreement to hear any challenge to a United
States or State environmental law.
SEC. 107. TERMINATION OR SUSPENSION OF UNITED
STATES-CANADA FREE-TRADE AGREEMENT.
Section 501(c) of the United States-Canada Free-
Trade Implementation Act of 1988 (19 U.S.C. 2112 note)
is amended to read as follows:
‘‘(c) TERMINATION
OR SUSPENSION
OF AGREE-
MENT.—
‘‘(1) TERMINATION OF AGREEMENT.—On the
date the Agreement ceases to be in force, the provi-
sions of this Act (other than this paragraph and sec-
tion 410(b)), and the amendments made by this Act,
shall cease to have effect.
‘‘(2) EFFECT OF AGREEMENT SUSPENSION.—
An agreement by the United States and Canada to
suspend the operation of the Agreement shall not be
deemed to cause the Agreement to cease to be in
force within the meaning of paragraph (1).
‘‘(3) SUSPENSION RESULTING FROM NAFTA.—
On the date the United States and Canada agree to
suspend the operation of the Agreement by reason of
the entry into force between them of the North
American Free Trade Agreement, the following pro-
visions of this Act are suspended and shall remain
suspended until such time as the suspension of the
Agreement may be terminated:
‘‘(A) Sections 204(a) and (b) and 205(a).
‘‘(B) Sections 302 and 304(f).
‘‘(C) Sections 404, 409, and 410(b).’’.
SEC. 108. CONGRESSIONAL INTENT REGARDING FUTURE
ACCESSIONS.
(a) IN GENERAL.—Section 101(a) may not be con-
strued as conferring Congressional approval of the entry
into force of the Agreement for the United States with
respect to countries other than Canada and Mexico.
(b) FUTURE FREE TRADE AREA NEGOTIATIONS.—
(1) FINDINGS.—The Congress makes the fol-
lowing findings:
(A) Efforts by the United States to obtain
greater market opening through multilateral ne-
gotiations have not produced agreements that
fully satisfy the trade negotiating objectives of
the United States.
(B) United States trade policy should pro-
vide for additional mechanisms with which to
pursue greater market access for United States
exports of goods and services and opportunities
for export-related investment by United States
persons.
(C) Among the additional mechanisms
should be a system of bilateral and multilateral
trade agreements that provide greater market
access for United States exports and opportuni-
ties for export-related investment by United
States persons.
(D) The system of trade agreements can
and should be structured to be consistent with,
and complementary to, existing international
obligations of the United States and ongoing
multilateral efforts to open markets.
(2) REPORT ON SIGNIFICANT MARKET OPEN-
ING.—No later than May 1, 1994, and May 1, 1997,
the Trade Representative shall submit to the Presi-
dent, and to the Committee on Finance of the Sen-
ate and the Committee on Ways and Means of the
House of Representatives (hereafter in this section
referred to as the ‘‘appropriate Congressional com-
mittees’’), a report which lists those foreign coun-
tries—
(A) that—
(i) currently provide fair and equitable
market access for United States exports of
goods and services and opportunities for
export-related investment by United States
persons, beyond what is required by exist-
ing multilateral trade agreements or obli-
gations; or
(ii) have made significant progress in
opening their markets to United States ex-
ports of goods and services and export-re-
lated investment by United States persons;
and
(B) the further opening of whose markets
has the greatest potential to increase United
States exports of goods and services and export-
related investment by United States persons, ei-
ther directly or through the establishment of a
beneficial precedent.
(3) 
PRESIDENTIAL
DETERMINATION.—The
President, on the basis of the report submitted by
the Trade Representative under paragraph (2), shall
determine with which foreign country or countries, if
any, the United States should seek to negotiate a
free trade area agreement or agreements.
(4) RECOMMENDATIONS
ON
FUTURE
FREE
TRADE AREA NEGOTIATIONS.—No later than July 1,
1994, and July 1, 1997, the President shall submit
to the appropriate Congressional committees a writ-
ten report that contains—
(A) recommendations for free trade area
negotiations with each foreign country selected
under paragraph (3);
(B) with respect to each country selected,
the specific negotiating objectives that are nec-
essary to meet the objectives of the United
States under this section; and
(C) legislative proposals to ensure ade-
quate consultation with the Congress and the
private sector during the negotiations, advance
Congressional approval of the negotiations rec-
ommended by the President, and Congressional
approval of any trade agreement entered into
by the President as a result of the negotiations.
(5) GENERAL NEGOTIATING OBJECTIVES.—The
general negotiating objectives of the United States
under this section are to obtain—
(A) preferential treatment for United
States goods;
(B) national treatment and, where appro-
priate, equivalent competitive opportunity for
United States services and foreign direct invest-
ment by United States persons;
(C) the elimination of barriers to trade in
goods and services by United States persons
through standards, testing, labeling, and certifi-
cation requirements;
(D) nondiscriminatory government pro-
curement policies and practices with respect to
United States goods and services;
(E) the elimination of other barriers to
market access for United States goods and
services, and the elimination of barriers to for-
eign direct investment by United States per-
sons;
(F) the elimination of acts, policies, and
practices which deny fair and equitable market
opportunities, including foreign government tol-
eration of anticompetitive business practices by
private firms or among private firms that have
the effect of restricting, on a basis that is in-
consistent with commercial considerations, pur-
chasing by such firms of United States goods
and services;
(G) adequate and effective protection of in-
tellectual property rights of United States per-
sons, and fair and equitable market access for
United States persons that rely upon intellec-
tual property protection;
(H) the elimination of foreign export and
domestic subsidies that distort international
trade in United States goods and services or
cause material injury to United States indus-
tries;
(I) the elimination of all export taxes;
(J) the elimination of acts, policies, and
practices which constitute export targeting; and
(K) monitoring and effective dispute settle-
ment mechanisms to facilitate compliance with
the matters described in subparagraphs (A)
through (J).
SEC. 109. EFFECTIVE DATES; EFFECT OF TERMINATION OF
NAFTA STATUS.
(a) EFFECTIVE DATES.—
(1) IN GENERAL.—This title (other than the
amendment made by section 107) takes effect on the
date of the enactment of this Act.
(2) SECTION
107
AMENDMENT.—The amend-
ment made by section 107 takes effect on the date
the Agreement enters into force between the United
States and Canada.
(b) TERMINATION OF NAFTA STATUS.—During any
period in which a country ceases to be a NAFTA country,
sections 101 through 106 shall cease to have effect with
respect to such country.
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,
as the President determines to be necessary or ap-
propriate to carry out or apply articles 302, 305,
307, 308, and 703 and Annexes 302.2, 307.1,
308.1, 308.2, 300-B, 703.2, and 703.3 of the Agree-
ment.
(2) EFFECT ON MEXICAN GSP STATUS.—Not-
withstanding section 502(a)(2) of the Trade Act of
1974 (19 U.S.C. 2462(a)(2)), the President shall
terminate the designation of Mexico as a beneficiary
developing country for purposes of title V of the
Trade Act of 1974 on the date of entry into force
of the Agreement between the United States and
Mexico.
(b) OTHER TARIFF MODIFICATIONS.—
(1) IN
GENERAL.—Subject to paragraph (2)
and the consultation and layover requirements of
section 103(a), the President may proclaim—
(A) such modifications or continuation of
any duty,
(B) such modifications as the United
States may agree to with Mexico or Canada re-
garding the staging of any duty treatment set
forth in Annex 302.2 of the Agreement,
(C) such continuation of duty-free or excise
treatment, or
(D) such additional duties,
as the President determines to be necessary or ap-
propriate to maintain the general level of reciprocal
and mutually advantageous concessions with respect
to Canada or Mexico provided for by the Agreement.
(2) SPECIAL RULE FOR ARTICLES WITH TARIFF
PHASEOUT PERIODS OF MORE THAN 10 YEARS.—The
President may not consider a request to accelerate
the staging of duty reductions for an article for
which the United States tariff phaseout period is
more than 10 years if a request for acceleration with
respect to such article has been denied in the preced-
ing 3 calendar years.
(c) CONVERSION TO AD VALOREM RATES FOR CER-
TAIN TEXTILES.—For purposes of subsections (a) and
(b), with respect to an article covered by Annex 300–B
of the Agreement imported from Mexico for which the base
rate in the Schedule of the United States in Annex 300–
B is a specific or compound rate of duty, the President
may substitute for the base rate an ad valorem rate that
the President determines to be equivalent to the base rate.
SEC. 202. RULES OF ORIGIN.
(a) ORIGINATING GOODS.—
(1) IN GENERAL.—For purposes of implement-
ing the tariff treatment and quantitative restrictions
provided for under the Agreement, except as other-
wise provided in this section, a good originates in
the territory of a NAFTA country if—
(A) the good is wholly obtained or pro-
duced entirely in the territory of one or more of
the NAFTA countries;
(B)(i) each nonoriginating material used in
the production of the good—
(I) undergoes an applicable change in
tariff classification set out in Annex 401 of
the Agreement as a result of production
occurring entirely in the territory of one or
more of the NAFTA countries; or
(II) where no change in tariff classi-
fication is required, the good otherwise sat-
isfies the applicable requirements of such
Annex; and
(ii) the good satisfies all other applicable
requirements of this section;
(C) the good is produced entirely in the
territory of one or more of the NAFTA coun-
tries exclusively from originating materials; or
(D) except for a good provided for in chap-
ters 61 through 63 of the HTS, the good is
produced entirely in the territory of one or
more of the NAFTA countries, but one or more
of the nonoriginating materials, that are pro-
vided for as parts under the HTS and are used
in the production of the good, does not undergo
a change in tariff classification because—
(i) the good was imported into the ter-
ritory of a NAFTA country in an unassem-
bled or a disassembled form but was classi-
fied as an assembled good pursuant to
General Rule of Interpretation 2(a) of the
HTS; or
(ii)(I) the heading for the good pro-
vides for and specifically describes both the
good itself and its parts and is not further
subdivided into subheadings; or
(II) the subheading for the good pro-
vides for and specifically describes both the
good itself and its parts.
(2) SPECIAL RULES.—
(A) FOREIGN-TRADE
ZONES.—Subpara-
graph (B) of paragraph (1) shall not apply to
a good produced in a foreign-trade zone or
subzone (established pursuant to the Act of
June 18, 1934, commonly known as the For-
eign Trade Zones Act) that is entered for con-
sumption in the customs territory of the United
States.
(B) REGIONAL VALUE-CONTENT REQUIRE-
MENT.—For purposes of subparagraph (D) of
paragraph (1), a good shall be treated as origi-
nating in a NAFTA country if the regional
value-content of the good, determined in accord-
ance with subsection (b), is not less than 60
percent where the transaction value method is
used, or not less than 50 percent where the net
cost method is used, and the good satisfies all
other applicable requirements of this section.
(b) REGIONAL VALUE-CONTENT.—
(1) IN GENERAL.—Except as provided in para-
graph (5), the regional value-content of a good shall
be calculated, at the choice of the exporter or pro-
ducer of the good, on the basis of—
(A) the transaction value method described
in paragraph (2); or
(B) the net cost method described in para-
graph (3).
(2) TRANSACTION VALUE METHOD.—
(A) IN
GENERAL.—An exporter or pro-
ducer may calculate the regional value-content
of a good on the basis of the following trans-
action value method:
TV–VNM
RVC = ———— × 100
TV
(B) DEFINITIONS.—For purposes of sub-
paragraph (A):
(i) The term ‘‘RVC’’ means the re-
gional value-content, expressed as a per-
centage.
(ii) The term ‘‘TV’’ means the trans-
action value of the good adjusted to a
F.O.B. basis.
(iii) The term ‘‘VNM’’ means the
value of nonoriginating materials used by
the producer in the production of the good.
(3) NET COST METHOD.—
(A) IN
GENERAL.—An exporter or pro-
ducer may calculate the regional value-content
of a good on the basis of the following net cost
method:
NC–VNM
RVC = ———— × 100
NC
(B) DEFINITIONS.—For purposes of sub-
paragraph (A):
(i) The term ‘‘RVC’’ means the re-
gional value-content, expressed as a per-
centage.
(ii) The term ‘‘NC’’ means the net
cost of the good.
(iii) The term ‘‘VNM’’ means the
value of nonoriginating materials used by
the producer in the production of the good.
(4) VALUE
OF
NONORIGINATING
MATERIALS
USED IN ORIGINATING MATERIALS.—Except as pro-
vided in subsection (c)(1), and for a motor vehicle
identified in subsection (c)(2) or a component identi-
fied in Annex 403.2 of the Agreement, the value of
nonoriginating materials used by the producer in the
production of a good shall not, for purposes of cal-
culating the regional value-content of the good under
paragraph (2) or (3), include the value of
nonoriginating materials used to produce originating
materials that are subsequently used in the produc-
tion of the good.
(5) NET COST METHOD MUST BE USED IN CER-
TAIN
CASES.—An exporter or producer shall cal-
culate the regional value-content of a good solely on
the basis of the net cost method described in para-
graph (3), if—
(A) there is no transaction value for the
good;
(B) the transaction value of the good is
unacceptable under Article 1 of the Customs
Valuation Code;
(C) the good is sold by the producer to a
related person and the volume, by units of
quantity, of sales of identical or similar goods
to related persons during the six-month period
immediately preceding the month in which the
good is sold exceeds 85 percent of the produc-
er’s total sales of such goods during that pe-
riod;
(D) the good is—
(i) a motor vehicle provided for in
heading 
8701 
or 
8702, 
subheadings
8703.21 through 8703.90, or heading
8704, 8705, or 8706;
(ii) identified in Annex 403.1 or 403.2
of the Agreement and is for use in a motor
vehicle provided for in heading 8701 or
8702, 
subheadings 
8703.21 
through
8703.90, or heading 8704, 8705, or 8706;
(iii) provided for in subheadings
6401.10 through 6406.10; or
(iv) a word processing machine pro-
vided for in subheading 8469.10.00;
(E) the exporter or producer chooses to ac-
cumulate the regional value-content of the good
in accordance with subsection (d); or
(F) the good is designated as an intermedi-
ate material under paragraph (10) and is sub-
ject to a regional value-content requirement.
(6) NET COST METHOD ALLOWED FOR ADJUST-
MENTS.—If an exporter or producer of a good cal-
culates the regional value-content of the good on the
basis of the transaction value method and a NAFTA
country subsequently notifies the exporter or pro-
ducer, during the course of a verification conducted
in accordance with chapter 5 of the Agreement, that
the transaction value of the good or the value of any
material used in the production of the good must be
adjusted or is unacceptable under Article 1 of the
Customs Valuation Code, the exporter or producer
may calculate the regional value-content of the good
on the basis of the net cost method.
(7) REVIEW
OF
ADJUSTMENT.—Nothing in
paragraph (6) shall be construed to prevent any re-
view or appeal available in accordance with article
510 of the Agreement with respect to an adjustment
to or a rejection of—
(A) the transaction value of a good; or
(B) the value of any material used in the
production of a good.
(8) CALCULATING
NET
COST.—The producer
may, consistent with regulations implementing this
section, calculate the net cost of a good under para-
graph (3), by—
(A) calculating the total cost incurred with
respect to all goods produced by that producer,
subtracting any sales promotion, marketing and
after-sales service costs, royalties, shipping and
packing costs, and nonallowable interest costs
that are included in the total cost of all such
goods, and reasonably allocating the resulting
net cost of those goods to the good;
(B) calculating the total cost incurred with
respect to all goods produced by that producer,
reasonably allocating the total cost to the good,
and subtracting any sales promotion, marketing
and after-sales service costs, royalties, shipping
and packing costs, and nonallowable interest
costs that are included in the portion of the
total cost allocated to the good; or
(C) reasonably allocating each cost that is
part of the total cost incurred with respect to
the good so that the aggregate of these costs
does not include any sales promotion, market-
ing and after-sales service costs, royalties, ship-
ping and packing costs, or nonallowable interest
costs.
(9) VALUE
OF
MATERIAL
USED
IN
PRODUC-
TION.—Except as provided in paragraph (11), the
value of a material used in the production of a
good—
(A) shall—
(i) be the transaction value of the ma-
terial determined in accordance with Arti-
cle 1 of the Customs Valuation Code; or
(ii) in the event that there is no trans-
action value or the transaction value of the
material is unacceptable under Article 1 of
the Customs Valuation Code, be deter-
mined in accordance with Articles 2
through 7 of the Customs Valuation Code;
and
(B) if not included under clause (i) or (ii)
of subparagraph (A), shall include—
(i) freight, insurance, packing, and all
other costs incurred in transporting the
material to the location of the producer;
(ii) duties, taxes, and customs broker-
age fees paid on the material in the terri-
tory of one or more of the NAFTA coun-
tries; and
(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 by-product.
(10) INTERMEDIATE
MATERIAL.—Except for
goods described in subsection (c)(1), any self-pro-
duced material, other than a component identified in
Annex 403.2 of the Agreement, that is used in the
production of a good may be designated by the pro-
ducer of the good as an intermediate material for
the purpose of calculating the regional value-content
of the good under paragraph (2) or (3); provided
that if the intermediate material is subject to a re-
gional value-content requirement, no other self-pro-
duced material that is subject to a regional value-
content requirement and is used in the production of
the intermediate material may be designated by the
producer as an intermediate material.
(11) VALUE
OF
INTERMEDIATE
MATERIAL.—
The value of an intermediate material shall be—
(A) the total cost incurred with respect to
all goods produced by the producer of the good
that can be reasonably allocated to the inter-
mediate material; or
(B) the aggregate of each cost that is part
of the total cost incurred with respect to the in-
termediate material that can be reasonably allo-
cated to that intermediate material.
(12) INDIRECT MATERIAL.—The value of an in-
direct material shall be based on the Generally Ac-
cepted Accounting Principles applicable in the terri-
tory of the NAFTA country in which the good is
produced.
(c) AUTOMOTIVE GOODS.—
(1) PASSENGER VEHICLES AND LIGHT TRUCKS,
AND THEIR AUTOMOTIVE PARTS.—For purposes of
calculating the regional value-content under the net
cost method for—
(A) a good that is a motor vehicle for the
transport of 15 or fewer persons provided for in
subheading 8702.10.00 or 8702.90.00, or a
motor vehicle provided for in subheadings
8703.21 
through 
8703.90, 
or 
subheading
8704.21 or 8704.31, or
(B) a good provided for in the tariff provi-
sions listed in Annex 403.1 of the Agreement,
that is subject to a regional value-content re-
quirement and is for use as original equipment
in the production of a motor vehicle for the
transport of 15 or fewer persons provided for in
subheading 8702.10.00 or 8702.90.00, or a
motor vehicle provided for in subheadings
8703.21 
through 
8703.90, 
or 
subheading
8704.21 or 8704.31,
the value of nonoriginating materials used by the
producer in the production of the good shall be the
sum of the values of all nonoriginating materials, de-
termined in accordance with subsection (b)(9) at the
time the nonoriginating materials are received by the
first person in the territory of a NAFTA country
who takes title to them, that are imported from out-
side the territories of the NAFTA countries under
the tariff provisions listed in Annex 403.1 of the
Agreement and are used in the production of the
good or that are used in the production of any mate-
rial used in the production of the good.
(2) OTHER VEHICLES AND THEIR AUTOMOTIVE
PARTS.—For purposes of calculating the regional
value-content under the net cost method for a good
that is a motor vehicle provided for in heading 8701,
subheading 8704.10, 8704.22, 8704.23, 8704.32, or
8704.90, or heading 8705 or 8706, a motor vehicle
for the transport of 16 or more persons provided for
in subheading 8702.10.00 or 8702.90.00, or a com-
ponent identified in Annex 403.2 of the Agreement
for use as original equipment in the production of
the motor vehicle, the value of nonoriginating mate-
rials used by the producer in the production of the
good shall be the sum of—
(A) for each material used by the producer
listed in Annex 403.2 of the Agreement, wheth-
er or not produced by the producer, at the
choice of the producer and determined in ac-
cordance with subsection (b), either—
(i) the value of such material that is
nonoriginating, or
(ii) the value of nonoriginating mate-
rials used in the production of such mate-
rial; and
(B) the value of any other nonoriginating
material used by the producer that is not listed
in Annex 403.2 of the Agreement determined in
accordance with subsection (b).
(3) AVERAGING PERMITTED.—
(A) IN
GENERAL.—For purposes of cal-
culating the regional value-content of a motor
vehicle described in paragraph (1) or (2), the
producer may average its calculation over its
fiscal year, using any of the categories de-
scribed in subparagraph (B), on the basis of ei-
ther all motor vehicles in the category or on the
basis of only the motor vehicles in the category
that are exported to the territory of one or
more of the other NAFTA countries.
(B) CATEGORY DESCRIBED.—A category is
described in this subparagraph if it is—
(i) the same model line of motor vehi-
cles in the same class of vehicles produced
in the same plant in the territory of a
NAFTA country;
(ii) the same class of motor vehicles
produced in the same plant in the territory
of a NAFTA country;
(iii) the same model line of motor ve-
hicles produced in the territory of a
NAFTA country; or
(iv) if applicable, the basis set out in
Annex 403.3 of the Agreement.
(4) ANNEX 403.1 AND ANNEX 403.2.—For pur-
poses of calculating the regional value-content for
any or all goods provided for in a tariff provision
listed in Annex 403.1 of the Agreement, or a compo-
nent or material identified in Annex 403.2 of the
Agreement, produced in the same plant, the pro-
ducer of the good may—
(A) average its calculation—
(i) over the fiscal year of the motor
vehicle producer to whom the good is sold;
(ii) over any quarter or month; or
(iii) over its fiscal year, if the good is
sold as an aftermarket part;
(B) calculate the average referred to in
subparagraph (A) separately for any or all
goods sold to one or more motor vehicle produc-
ers; or
(C) with respect to any calculation under
this paragraph, make a separate calculation for
goods that are exported to the territory of one
or more NAFTA countries.
(5) PHASE-IN
OF
REGIONAL
VALUE-CONTENT
REQUIREMENT.—Notwithstanding Annex 401 of the
Agreement, and except as provided in paragraph (6),
the regional value-content requirement shall be—
(A) for a producer’s fiscal year beginning
on the day closest to January 1, 1998, and
thereafter, 56 percent calculated under the net
cost method, and for a producer’s fiscal year
beginning on the day closest to January 1,
2002, and thereafter, 62.5 percent calculated
under the net cost method, for—
(i) a good that is a motor vehicle for
the transport of 15 or fewer persons pro-
vided for in subheading 8702.10.00 or
8702.90.00, or a motor vehicle provided
for 
in 
subheadings 
8703.21 
through
8703.90, 
or 
subheading 
8704.21 
or
8704.31; and
(ii) a good provided for in heading
8407 or 8408, or subheading 8708.40,
that is for use in a motor vehicle identified
in clause (i); and
(B) for a producer’s fiscal year beginning
on the day closest to January 1, 1998, and
thereafter, 55 percent calculated under the net
cost method, and for a producer’s fiscal year
beginning on the day closest to January 1,
2002, and thereafter, 60 percent calculated
under the net cost method, for—
(i) a good that is a motor vehicle pro-
vided for in heading 8701, subheading
8704.10, 8704.22, 8704.23, 8704.32, or
8704.90, or heading 8705 or 8706, or a
motor vehicle for the transport of 16 or
more persons provided for in subheading
8702.10.00 or 8702.90.00;
(ii) a good provided for in heading
8407 or 8408, or subheading 8708.40 that
is for use in a motor vehicle identified in
clause (i); and
(iii) except for a good identified in
subparagraph (A)(ii) or a good provided
for 
in 
subheadings 
8482.10 
through
8482.80, 
or 
subheading 
8483.20 
or
8483.30, a good identified in Annex 403.1
of the Agreement that is subject to a re-
gional value-content requirement and is for
use in a motor vehicle identified in sub-
paragraph (A)(i) or (B)(i).
(6) NEW
AND
REFITTED
PLANTS.—The re-
gional value-content requirement for a motor vehicle
identified in paragraph (1) or (2) shall be—
(A) 50 percent for 5 years after the date
on which the first motor vehicle prototype is
produced in a plant by a motor vehicle assem-
bler, if—
(i) it is a motor vehicle of a class, or
marque, or, except for a motor vehicle
identified in paragraph (2), size category
and underbody, not previously produced by
the motor vehicle assembler in the territory
of any of the NAFTA countries;
(ii) the plant consists of a new build-
ing in which the motor vehicle is assem-
bled; and
(iii) the plant contains substantially
all new machinery that is used in the as-
sembly of the motor vehicle; or
(B) 50 percent for 2 years after the date
on which the first motor vehicle prototype is
produced at a plant following a refit, if it is a
motor vehicle of a class, or marque, or, except
for a motor vehicle identified in paragraph (2),
size category and underbody, different from
that assembled by the motor vehicle assembler
in the plant before the refit.
(7) ELECTION FOR CERTAIN VEHICLES FROM
CANADA.—In the case of goods provided for in sub-
headings 8703.21 through 8703.90, or subheading
8704.21 or 8704.31, exported from Canada directly
to the United States, and entered on or after Janu-
ary 1, 1989, and before the date of entry into force
of the Agreement between the United States and
Canada, an importer may elect to use the rules of
origin set out in this section in lieu of the rules of
origin contained in section 202 of the United States-
Canada Free-Trade Agreement Implementation Act
of 1988 (19 U.S.C. 2112 note) and may elect to use
the 
method 
for 
calculating 
the 
value 
of
nonoriginating 
materials 
established 
in 
article
403(2) of the Agreement in lieu of the method es-
tablished in article 403(1) of the Agreement for pur-
poses of determining eligibility for preferential duty
treatment under the United States-Canada Free-
Trade Agreement. Any election under this paragraph
shall be made in writing to the Customs Service not
later than the date that is 180 days after the date
of entry into force of the Agreement between the
United States and Canada. Any such election may
be made only if the liquidation of such entry has not
become final. For purposes of averaging the calcula-
tion of regional value-content for the goods covered
by such entry, where the producer’s 1989–1990 fis-
cal year began after January 1, 1989, the producer
may include the period between January 1, 1989,
and the beginning of its first fiscal year after Janu-
ary 1, 1989, as part of fiscal year 1989–1990.
(d) ACCUMULATION.—
(1) DETERMINATION OF ORIGINATING GOOD.—
For purposes of determining whether a good is an
originating good, the production of the good in the
territory of one or more of the NAFTA countries by
one or more producers shall, at the choice of the ex-
porter or producer of the good, be considered to
have been performed in the territory of any of the
NAFTA countries by that exporter or producer, if—
(A) all nonoriginating materials used in
the production of the good undergo an applica-
ble tariff classification change set out in Annex
401 of the Agreement;
(B) the good satisfies any applicable re-
gional value-content requirement; and
(C) the good satisfies all other applicable
requirements of this section.
The requirements of subparagraphs (A) and (B)
must be satisfied entirely in the territory of one or
more of the NAFTA countries.
(2) TREATMENT AS SINGLE PRODUCER.—For
purposes of subsection (b)(10), the production of a
producer that chooses to accumulate its production
with that of other producers under paragraph (1)
shall be treated as the production of a single pro-
ducer.
(e) DE MINIMIS AMOUNTS OF NONORIGINATING MA-
TERIALS.—
(1) IN GENERAL.—Except as provided in para-
graphs (3), (4), (5), and (6), a good shall be consid-
ered to be an originating good if—
(A) the value of all nonoriginating mate-
rials used in the production of the good that do
not undergo an applicable change in tariff clas-
sification (set out in Annex 401 of the Agree-
ment) is not more than 7 percent of the trans-
action value of the good, adjusted to a F.O.B.
basis, or
(B) where the transaction value of the
good is unacceptable under Article 1 of the
Customs Valuation Code, the value of all such
nonoriginating materials is not more than 7
percent of the total cost of the good,
provided that the good satisfies all other applicable
requirements of this section and, if the good is sub-
ject to a regional value-content requirement, the
value of such nonoriginating materials is taken into
account in calculating the regional value-content of
the good.
(2) GOODS NOT SUBJECT TO REGIONAL VALUE-
CONTENT REQUIREMENT.—A good that is otherwise
subject to a regional value-content requirement shall
not be required to satisfy such requirement if—
(A)(i) the value of all nonoriginating mate-
rials used in the production of the good is not
more than 7 percent of the transaction value of
the good, adjusted to a F.O.B. basis; or
(ii) where the transaction value of the good
is unacceptable under Article 1 of the Customs
Valuation Code, the value of all nonoriginating
materials is not more than 7 percent of the
total cost of the good; and
(B) the good satisfies all other applicable
requirements of this section.
(3) DAIRY
PRODUCTS, ETC.—Paragraph (1)
does not apply to—
(A) a nonoriginating material provided for
in chapter 4 of the HTS or a dairy preparation
containing over 10 percent by weight of milk
solids provided for in subheading 1901.90.30,
1901.90.40, or 1901.90.80 that is used in the
production of a good provided for in chapter 4
of the HTS;
(B) a nonoriginating material provided for
in chapter 4 of the HTS or a dairy preparation
containing over 10 percent by weight of milk
solids provided for in subheading 1901.90.30,
1901.90.40, or 1901.90.80 that is used in the
production of—
(i) preparations for infants containing
over 10 percent by weight of milk solids
provided for in subheading 1901.10.00;
(ii) mixes and doughs, containing over
25 percent by weight of butterfat, not put
up for retail sale, provided for in sub-
heading 1901.20.00;
(iii) a dairy preparation containing
over 10 percent by weight of milk solids
provided for in subheading 1901.90.30,
1901.90.40, or 1901.90.80;
(iv) a good provided for in heading
2105 or subheading 2106.90.05, or prep-
arations containing over 10 percent by
weight of milk solids provided for in sub-
heading 
2106.90.15, 
2106.90.40,
2106.90.50, or 2106.90.65;
(v) a good provided for in subheading
2202.90.10 or 2202.90.20; or
(vi) animal feeds containing over 10
percent by weight of milk solids provided
for in subheading 2309.90.30;
(C) a nonoriginating material provided for
in heading 0805 or subheadings 2009.11
through 2009.30 that is used in the production
of—
(i) a good provided for in subheadings
2009.11 through 2009.30, or subheading
2106.90.16, or concentrated fruit or vege-
table juice of any single fruit or vegetable,
fortified with minerals or vitamins, pro-
vided for in subheading 2106.90.19; or
(ii) a good provided for in subheading
2202.90.30 or 2202.90.35, or fruit or veg-
etable juice of any single fruit or vegetable,
fortified with minerals or vitamins, pro-
vided for in subheading 2202.90.36;
(D) a nonoriginating material provided for
in chapter 9 of the HTS that is used in the
production of instant coffee, not flavored, pro-
vided for in subheading 2101.10.20;
(E) a nonoriginating material provided for
in chapter 15 of the HTS that is used in the
production of a good provided for in headings
1501 through 1508, or heading 1512, 1514, or
1515;
(F) a nonoriginating material provided for
in heading 1701 that is used in the production
of a good provided for in headings 1701
through 1703;
(G) a nonoriginating material provided for
in chapter 17 of the HTS or heading 1805 that
is used in the production of a good provided for
in subheading 1806.10;
(H) a nonoriginating material provided for
in headings 2203 through 2208 that is used in
the production of a good provided for in head-
ings 2207 through 2208;
(I) a nonoriginating material used in the
production of—
(i) a good provided for in subheading
7321.11.30;
(ii) a good provided for in subheading
8415.10, subheadings 8415.81 through
8415.83, subheadings 8418.10 through
8418.21, subheadings 8418.29 through
8418.40, subheading 8421.12 or 8422.11,
subheadings 8450.11 through 8450.20, or
subheadings 8451.21 through 8451.29;
(iii) trash compactors provided for in
subheading 8479.89.60; or
(iv) a good provided for in subheading
8516.60.40; and
(J) a printed circuit assembly that is a
nonoriginating material used in the production
of a good where the applicable change in tariff
classification for the good, as set out in Annex
401 of the Agreement, places restrictions on the
use of such nonoriginating material.
(4) CERTAIN
FRUIT
JUICES.—Paragraph (1)
does not apply to a nonoriginating single juice ingre-
dient provided for in heading 2009 that is used in
the production of—
(A) a good provided for in subheading
2009.90, or concentrated mixtures of fruit or
vegetable juice, fortified with minerals or vita-
mins, provided for in subheading 2106.90.19;
or
(B) mixtures of fruit or vegetable juices,
fortified with minerals or vitamins, provided for
in subheading 2202.90.39.
(5) GOODS
PROVIDED
FOR
IN
CHAPTERS
THROUGH 27 OF THE HTS.—Paragraph (1) does not
apply to a nonoriginating material used in the pro-
duction of a good provided for in chapters 1 through
27 of the HTS unless the nonoriginating material is
provided for in a different subheading than the good
for which origin is being determined under this sec-
tion.
(6) GOODS
PROVIDED
FOR
IN
CHAPTERS
THROUGH 63 OF THE HTS.—A good provided for in
chapters 50 through 63 of the HTS, that does not
originate because certain fibers or yarns used in the
production of the component of the good that deter-
mines the tariff classification of the good do not un-
dergo an applicable change in tariff classification set
out in Annex 401 of the Agreement, shall be consid-
ered to be a good that originates if the total weight
of all such fibers or yarns in that component is not
more than 7 percent of the total weight of that com-
ponent.
(f) FUNGIBLE GOODS AND MATERIALS.—For pur-
poses of determining whether a good is an originating
good—
(1) if originating and nonoriginating fungible
materials are used in the production of the good, the