IIA
104TH CONGRESS
2D SESSION
H. R. 3074
IN THE SENATE OF THE UNITED STATES
APRIL 17, 1996
Received; read twice and referred to the Committee on Finance
AN ACT
To amend the United States-Israel Free Trade Area Imple-
mentation Act of 1985 to provide the President with
additional proclamation authority with respect to articles
of the West Bank or Gaza Strip or a qualifying indus-
trial zone.
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. ADDITIONAL PROCLAMATION AUTHORITY.
The United States-Israel Free Trade Area Implemen-
tation Act of 1985 (19 U.S.C. 2112 note) is amended by
adding at the end the following new section:
‘‘SEC. 9. ADDITIONAL PROCLAMATION AUTHORITY.
‘‘(a) ELIMINATION OR MODIFICATIONS OF DUTIES.—
The President is authorized to proclaim elimination or
modification of any existing duty as the President deter-
mines is necessary to exempt any article from duty if—
‘‘(1) that article is wholly the growth, product,
or manufacture of the West Bank, the Gaza Strip,
or a qualifying industrial zone or is a new or dif-
ferent article of commerce that has been grown, pro-
duced, or manufactured in the West Bank, the Gaza
Strip, or a qualifying industrial zone;
‘‘(2) that article is imported directly from the
West Bank, the Gaza Strip, Israel, or a qualifying
industrial zone; and
‘‘(3) the sum of—
‘‘(A) the cost or value of the materials pro-
duced in the West Bank, the Gaza Strip, Israel,
or a qualifying industrial zone, plus
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‘‘(B) the direct costs of processing oper-
ations performed in the West Bank, the Gaza
Strip, Israel, or a qualifying industrial zone,
is not less than 35 percent of the appraised value of
the product at the time it is entered into the United
States.
For purposes of determining the 35 percent content re-
quirement contained in paragraph (3), the cost or value
of materials which are used in the production of an article
in the West Bank, the Gaza Strip, or a qualifying indus-
trial zone, and are the products of the United States, may
be counted in an amount up to 15 percent of the appraised
value of the article.
‘‘(b) APPLICABILITY
OF CERTAIN PROVISIONS
OF
THE AGREEMENT.—
‘‘(1) NONQUALIFYING OPERATIONS.—No article
shall be considered a new or different article of com-
merce under this section, and no material shall be
included for purposes of determining the 35 percent
requirement of subsection (a)(3), by virtue of having
merely undergone—
‘‘(A) simple combining or packaging oper-
ations, or
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‘‘(B) If a material is provided to the manufac-
turer without charge, or at less than fair market
value, its cost or value shall be determined by com-
puting the sum of—
‘‘(i) all expenses incurred in the growth,
production, or manufacture of the material, in-
cluding general expenses;
‘‘(ii) an amount for profit; and
‘‘(iii) freight, insurance, packing, and all
other costs incurred in transporting the mate-
rial to the manufacturer’s plant.
If the information necessary to compute the cost or
value of a material is not available, the Customs
Service may ascertain or estimate the value thereof
using all reasonable methods.
‘‘(4) DIRECT
COSTS
OF
PROCESSING
OPER-
ATIONS.—(A) For purposes of this section, the ‘di-
rect costs of processing operations performed in the
West Bank, Gaza Strip, or a qualifying industrial
zone’ with respect to an article are those costs either
directly incurred in, or which can be reasonably allo-
cated to, the growth, production, manufacture, or
assembly, of that article. Such costs include, but are
not limited to, the following to the extent that they
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are includible in the appraised value of articles im-
ported into the United States:
‘‘(i) All actual labor costs involved in the
growth, production, manufacture, or assembly
of the article, including fringe benefits, on-the-
job training, and costs of engineering, super-
visory, quality control, and similar personnel.
‘‘(ii) Dies, molds, tooling, and depreciation
on machinery and equipment which are alloca-
ble to the article.
‘‘(iii) Research, development, design, engi-
neering, and blueprint costs insofar as they are
allocable to the article.
‘‘(iv) Costs of inspecting and testing the
article.
‘‘(B) Those items that are not included as di-
rect costs of processing operations with respect to an
article are those which are not directly attributable
to the article or are not costs of manufacturing the
article. Such items include, but are not limited to—
‘‘(i) profit; and
‘‘(ii) general expenses of doing business
which are either not allocable to the article or
are not related to the growth, production, man-
ufacture, or assembly of the article, such as ad-
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ministrative salaries, casualty and liability in-
surance, advertising, and salesmen’s salaries,
commissions, or expenses.
‘‘(5) IMPORTED
DIRECTLY.—For purposes of
this section—
‘‘(A) articles are ‘imported directly’ if—
‘‘(i) the articles are shipped directly
from the West Bank, the Gaza Strip, a
qualifying industrial zone, or Israel into
the United States without passing through
the territory of any intermediate country;
or
‘‘(ii) if shipment is through the terri-
tory of an intermediate country, the arti-
cles in the shipment do not enter into the
commerce of any intermediate country and
the invoices, bills of lading, and other ship-
ping documents specify the United States
as the final destination; or
‘‘(B) if articles are shipped through an in-
termediate country and the invoices and other
documents do not specify the United States as
the final destination, then the articles in the
shipment, upon arrival in the United States, are
imported directly only if they—
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‘‘(i) remain under the control of the
customs authority in an intermediate coun-
try;
‘‘(ii) do not enter into the commerce
of an intermediate country except for the
purpose of a sale other than at retail, but
only if the articles are imported as a result
of the original commercial transactions be-
tween the importer and the producer or
the producer’s sales agent; and
‘‘(iii) have not been subjected to oper-
ations other than loading, unloading, or
other activities necessary to preserve the
article in good condition.
‘‘(6) DOCUMENTATION REQUIRED.—An article
is eligible for the duty exemption under this section
only if—
‘‘(A) the importer certifies that the article
meets the conditions for the duty exemption;
and
‘‘(B) when requested by the Customs Serv-
ice, the importer, manufacturer, or exporter
submits a declaration setting forth all pertinent
information with respect to the article, includ-
ing the following:
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‘‘(i) A description of the article, quan-
tity, numbers, and marks of packages, in-
voice numbers, and bills of lading.
‘‘(ii) A description of the operations
performed in the production of the article
in the West Bank, the Gaza Strip, a quali-
fying industrial zone, or Israel and identi-
fication of the direct costs of processing
operations.
‘‘(iii) A description of any materials
used in production of the article which are
wholly the growth, product, or manufac-
ture of the West Bank, the Gaza Strip, a
qualifying industrial zone, Israel or United
States, and a statement as to the cost or
value of such materials.
‘‘(iv) A description of the operations
performed on, and a statement as to the
origin and cost or value of, any foreign
materials used in the article which are
claimed to have been sufficiently processed
in the West Bank, the Gaza Strip, a quali-
fying industrial zone, or Israel so as to be
materials produced in the West Bank, the
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Gaza Strip, a qualifying industrial zone, or
Israel.
‘‘(v) A description of the origin and
cost or value of any foreign materials used
in the article which have not been substan-
tially transformed in the West Bank, the
Gaza Strip, or a qualifying industrial zone.
‘‘(c) SHIPMENT OF ARTICLES OF ISRAEL THROUGH
WEST BANK OR GAZA STRIP.—The President is author-
ized to proclaim that articles of Israel may be treated as
though they were articles directly shipped from Israel for
the purposes of the Agreement even if shipped to the Unit-
ed States from the West Bank, the Gaza Strip, or a quali-
fying industrial zone, if the articles otherwise meet the re-
quirements of the Agreement.
‘‘(d) TREATMENT OF COST OR VALUE OF MATE-
RIALS.—The President is authorized to proclaim that the
cost or value of materials produced in the West Bank, the
Gaza Strip, or a qualifying industrial zone may be in-
cluded in the cost or value of materials produced in Israel
under section 1(c)(i) of Annex 3 of the Agreement, and
the direct costs of processing operations performed in the
West Bank, the Gaza Strip, or a qualifying industrial zone
may be included in the direct costs of processing oper-
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ations performed in Israel under section 1(c)(ii) of Annex
3 of the Agreement.
‘‘(e) QUALIFYING INDUSTRIAL ZONE DEFINED.—
For purposes of this section, a ‘qualifying industrial zone’
means any area that—
‘‘(1) encompasses portions of the territory of Is-
rael and Jordan or Israel and Egypt;
‘‘(2) has been designated by local authorities as
an enclave where merchandise may enter without
payment of duty or excise taxes; and
‘‘(3) has been specified by the President as a
qualifying industrial zone.’’.
Passed the House of Representatives April 16, 1996.
Attest:
ROBIN H. CARLE,
Clerk.