H. R. 3450—10
‘‘(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 construed 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 following findings:
(A) Efforts by the United States to obtain greater mar-
ket opening through multilateral negotiations have not pro-
duced agreements that fully satisfy the trade negotiating
objectives of the United States.
(B) United States trade policy should provide for addi-
tional 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 opportunities 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 OPENING.—No later
than May 1, 1994, and May 1, 1997, the Trade Representative
shall submit to the President, and to the Committee on Finance
of the Senate and the Committee on Ways and Means of the
House of Representatives (hereafter in this section referred
to as the ‘‘appropriate Congressional committees’’), a report
which lists those foreign countries—
(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
existing multilateral trade agreements or obligations;
or
(ii) have made significant progress in opening their
markets to United States exports of goods and services
and export-related investment by United States per-
sons; and
(B) the further opening of whose markets has the great-
est potential to increase United States exports of goods
and services and export-related investment by United
States persons, either 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 coun-
try or countries, if any, the United States should seek to nego-
tiate a free trade area agreement or agreements.
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H. R. 3450—11
(4) RECOMMENDATIONS ON FUTURE FREE TRADE AREA NEGO-
TIATIONS.—No later than July 1, 1994, and July 1, 1997, the
President shall submit to the appropriate Congressional
committees a written 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 necessary to meet the objec-
tives of the United States under this section; and
(C) legislative proposals to ensure adequate consulta-
tion with the Congress and the private sector during the
negotiations, advance Congressional approval of the nego-
tiations recommended by the President, and Congressional
approval of any trade agreement entered into by the Presi-
dent as a result of the negotiations.
(5) GENERAL NEGOTIATING OBJECTIVES.—The general nego-
tiating objectives of the United States under this section are
to obtain—
(A) preferential treatment for United States goods;
(B) national treatment and, where appropriate, equiva-
lent competitive opportunity for United States services and
foreign direct investment by United States persons;
(C) the elimination of barriers to trade in goods and
services by United States persons through standards, test-
ing, labeling, and certification requirements;
(D) nondiscriminatory government procurement poli-
cies 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 foreign direct investment by United States
persons;
(F) the elimination of acts, policies, and practices which
deny fair and equitable market opportunities, including
foreign government toleration of anticompetitive business
practices by private firms or among private firms that
have the effect of restricting, on a basis that is inconsistent
with commercial considerations, purchasing by such firms
of United States goods and services;
(G) adequate and effective protection of intellectual
property rights of United States persons, and fair and
equitable market access for United States persons that
rely upon intellectual property protection;
(H) the elimination of foreign export and domestic sub-
sidies that distort international trade in United States
goods and services or cause material injury to United States
industries;
(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 settlement mecha-
nisms 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.—
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H. R. 3450—12
(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 amendment 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 
President 
may
proclaim—
(A) such modifications or continuation of any duty,
(B) such continuation of duty-free or excise treatment,
or
(C) such additional duties,
as the President determines to be necessary or appropriate
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 Agreement.
(2) EFFECT ON MEXICAN GSP STATUS.—Notwithstanding sec-
tion 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 consulta-
tion 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 regarding 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 appropriate
to maintain the general level of reciprocal and mutually advan-
tageous concessions with respect to Canada or Mexico provided
for by the Agreement.
(2) SPECIAL
RULE
FOR
ARTICLES
WITH
TARIFF
PHASEOUT
PERIODS
OF
MORE
THAN
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 preceding 3 calendar
years.
(c) CONVERSION
TO AD VALOREM RATES
FOR CERTAIN TEX-
TILES.—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
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H. R. 3450—13
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 implementing the tariff
treatment and quantitative restrictions provided for under the
Agreement, except as otherwise provided in this section, a
good originates in the territory of a NAFTA country if—
(A) the good is wholly obtained or produced entirely
in the territory of one or more of the NAFTA countries;
(B)(i) each nonoriginating material used in the produc-
tion of the good—
(I) undergoes an applicable change in tariff classi-
fication 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 classification is
required, the good otherwise satisfies 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 countries exclusively from origi-
nating materials; or
(D) except for a good provided for in chapters 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 territory of
a NAFTA country in an unassembled or a disassembled
form but was classified as an assembled good pursuant
to General Rule of Interpretation 2(a) of the HTS;
or
(ii)(I) the heading for the good provides 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 provides for and
specifically describes both the good itself and its parts.
(2) SPECIAL RULES.—
(A) FOREIGN-TRADE ZONES.—Subparagraph (B) of para-
graph (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 Foreign Trade
Zones Act) that is entered for consumption in the customs
territory of the United States.
(B) REGIONAL VALUE-CONTENT REQUIREMENT.—For pur-
poses of subparagraph (D) of paragraph (1), a good shall
be treated as originating 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
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H. R. 3450—14
50 percent where the net cost method is used, and the
good satisfies all other applicable requirements of this sec-
tion.
(b) REGIONAL VALUE-CONTENT.—
(1) IN GENERAL.—Except as provided in paragraph (5), the
regional value-content of a good shall be calculated, at the
choice of the exporter or producer of the good, on the basis
of—
(A) the transaction value method described in para-
graph (2); or
(B) the net cost method described in paragraph (3).
(2) TRANSACTION VALUE METHOD.—
(A) IN GENERAL.—An exporter or producer may cal-
culate the regional value-content of a good on the basis
of the following transaction value method:
RVC
=
TV–VNM
×
100
TV
(B) DEFINITIONS.—For purposes of subparagraph (A):
(i) The term ‘‘RVC’’ means the regional value-con-
tent, expressed as a percentage.
(ii) The term ‘‘TV’’ means the transaction 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 producer may cal-
culate the regional value-content of a good on the basis
of the following net cost method:
RVC
=
NC–VNM
×
100
NC
(B) DEFINITIONS.—For purposes of subparagraph (A):
(i) The term ‘‘RVC’’ means the regional value-con-
tent, expressed as a percentage.
(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 ORIGI-
NATING MATERIALS.—Except as provided in subsection (c)(1),
and for a motor vehicle identified in subsection (c)(2) or a
component identified 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 calculating 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.
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