of this Act (other than this subsection) and the amend-
ments made by this Act shall cease to be effective. 
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 2.3, 2.5, 2.6, 
3.2.8, and 3.2.9, and Annex 2–B of the Agreement. 
(2) EFFECT ON BAHRAINI GSP STATUS.—Not-
withstanding section 502(a)(1) of the Trade Act of 
1974 (19 U.S.C. 2462(a)(1)), the President shall, on 
the date on which the Agreement enters into force, 
terminate the designation of Bahrain as a bene-
ficiary developing country for purposes of title V of 
the Trade Act of 1974 (19 U.S.C. 2461 et seq.).
(b) OTHER TARIFF MODIFICATIONS.—Subject to the 
consultation and layover provisions of section 104, the 
President may proclaim— 
(1) such modifications or continuation of any 
duty, 
(2) such modifications as the United States 
may agree to with Bahrain regarding the staging of 
any duty treatment set forth in Annex 2–B of the 
Agreement, 
(3) such continuation of duty-free or excise 
treatment, or 
(4) such additional duties, 
as the President determines to be necessary or appropriate 
to maintain the general level of reciprocal and mutually 
advantageous concessions with respect to Bahrain pro-
vided for by the Agreement. 
(c) CONVERSION TO AD VALOREM RATES.—For pur-
poses of subsections (a) and (b), with respect to any good 
for which the base rate in the Tariff Schedule of the 
United States to Annex 2–B of the Agreement 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) APPLICATION
AND INTERPRETATION.—In this 
section: 
(1) TARIFF
CLASSIFICATION.—The basis for 
any tariff classification is the HTS. 
(2) REFERENCE
TO
HTS.—Whenever in this 
section there is a reference to a heading or sub-
heading, such reference shall be a reference to a 
heading or subheading of the HTS. 
(b) ORIGINATING GOODS.— 
(1) IN
GENERAL.—For purposes of this Act 
and for purposes of implementing the preferential 
tariff treatment provided for under the Agreement, 
a good is an originating good if— 
(A) the good is imported directly— 
(i) from the territory of Bahrain into 
the territory of the United States; or 
(ii) from the territory of the United 
States into the territory of Bahrain; and 
(B)(i) the good is a good wholly the 
growth, product, or manufacture of Bahrain or 
the United States, or both; 
(ii) the good (other than a good to which 
clause (iii) applies) is a new or different article 
of commerce that has been grown, produced, or 
manufactured in Bahrain or the United States,
or both, and meets the requirements of para-
graph (2); or 
(iii)(I) the good is a good covered by 
Annex 3–A or 4–A of the Agreement; 
(II)(aa) each of the nonoriginating mate-
rials used in the production of the good under-
goes an applicable change in tariff classification 
specified in such Annex as a result of produc-
tion occurring entirely in the territory of Bah-
rain or the United States, or both; or 
(bb) the good otherwise satisfies the re-
quirements specified in such Annex; and 
(III) the good satisfies all other applicable 
requirements of this section. 
(2) REQUIREMENTS.—A good described in 
paragraph (1)(B)(ii) is an originating good only if 
the sum of— 
(A) the value of each material produced in 
the territory of Bahrain or the United States, 
or both, and 
(B) the direct costs of processing oper-
ations performed in the territory of Bahrain or 
the United States, or both,
is not less than 35 percent of the appraised value of 
the good at the time the good is entered into the ter-
ritory of the United States. 
(c) CUMULATION.— 
(1) ORIGINATING GOOD OR MATERIAL INCOR-
PORATED
INTO
GOODS
OF
OTHER
COUNTRY.—An 
originating good, or a material produced in the terri-
tory of Bahrain or the United States, or both, that 
is incorporated into a good in the territory of the 
other country shall be considered to originate in the 
territory of the other country. 
(2) MULTIPLE
PRODUCERS.—A good that is 
grown, produced, or manufactured in the territory of 
Bahrain or the United States, or both, by 1 or more 
producers, is an originating good if the good satis-
fies the requirements of subsection (b) and all other 
applicable requirements of this section. 
(d) VALUE OF MATERIALS.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the value of a material produced in the 
territory of Bahrain or the United States, or both, 
includes the following: 
(A) The price actually paid or payable for 
the material by the producer of the good.
(B) The freight, insurance, packing, and 
all other costs incurred in transporting the ma-
terial to the producer’s plant, if such costs are 
not included in the price referred to in subpara-
graph (A). 
(C) The cost of waste or spoilage resulting 
from the use of the material in the growth, pro-
duction, or manufacture of the good, less the 
value of recoverable scrap. 
(D) Taxes or customs duties imposed on 
the material by Bahrain or the United States, 
or both, if the taxes or customs duties are not 
remitted upon exportation from the territory of 
Bahrain or the United States, as the case may 
be. 
(2) EXCEPTION.—If the relationship between 
the producer of a good and the seller of a material 
influenced the price actually paid or payable for the 
material, or if there is no price actually paid or pay-
able by the producer for the material, the value of 
the material produced in the territory of Bahrain or 
the United States, or both, includes the following: 
(A) All expenses incurred in the growth, 
production, or manufacture of the material, in-
cluding general expenses.
(B) A reasonable amount for profit. 
(C) Freight, insurance, packing, and all 
other costs incurred in transporting the mate-
rial to the producer’s plant. 
(e) PACKAGING AND PACKING MATERIALS AND CON-
TAINERS FOR RETAIL SALE AND FOR SHIPMENT.—Pack-
aging and packing materials and containers for retail sale 
and shipment shall be disregarded in determining whether 
a good qualifies as an originating good, except to the ex-
tent that the value of such packaging and packing mate-
rials and containers has been included in meeting the re-
quirements set forth in subsection (b)(2). 
(f) INDIRECT MATERIALS.—Indirect materials shall 
be disregarded in determining whether a good qualifies as 
an originating good, except that the cost of such indirect 
materials may be included in meeting the requirements set 
forth in subsection (b)(2). 
(g) TRANSIT AND TRANSSHIPMENT.—A good shall 
not be considered to meet the requirement of subsection 
(b)(1)(A) if, after exportation from the territory of Bah-
rain or the United States, the good undergoes production, 
manufacturing, or any other operation outside the terri-
tory of Bahrain or the United States, other than unload-
ing, reloading, or any other operation necessary to pre-
serve the good in good condition or to transport the good 
to the territory of Bahrain or the United States. 
(h) TEXTILE AND APPAREL GOODS.— 
(1) DE MINIMIS AMOUNTS OF NONORIGINATING 
MATERIALS.— 
(A) IN GENERAL.—Except as provided in 
subparagraph (B), a textile or apparel good 
that is not an originating good because certain 
fibers or yarns used in the production of the 
component of the good that determines the tar-
iff classification of the good do not undergo an 
applicable change in tariff classification set out 
in Annex 3–A of the Agreement shall be consid-
ered to be an originating good if the total 
weight of all such fibers or yarns in that com-
ponent is not more than 7 percent of the total 
weight of that component. 
(B) 
CERTAIN
TEXTILE
OR
APPAREL 
GOODS.—A textile or apparel good containing 
elastomeric yarns in the component of the good 
that determines the tariff classification of the 
good shall be considered to be an originating 
good only if such yarns are wholly formed in 
the territory of Bahrain or the United States.
(C) YARN, FABRIC, OR
GROUP
OF
FI-
BERS.—For purposes of this paragraph, in the 
case of a textile or apparel good that is a yarn, 
fabric, or group of fibers, the term ‘‘component 
of the good that determines the tariff classifica-
tion of the good’’ means all of the fibers in the 
yarn, fabric, or group of fibers. 
(2) GOODS
PUT
UP
IN
SETS
FOR
RETAIL 
SALE.—Notwithstanding the rules set forth in Annex 
3–A of the Agreement, textile or apparel goods clas-
sifiable as goods put up in sets for retail sale as pro-
vided for in General Rule of Interpretation 3 of the 
HTS shall not be considered to be originating goods 
unless each of the goods in the set is an originating 
good or the total value of the nonoriginating goods 
in the set does not exceed 10 percent of the value 
of the set determined for purposes of assessing cus-
toms duties. 
(i) DEFINITIONS.—In this section: 
(1) DIRECT
COSTS
OF
PROCESSING
OPER-
ATIONS.— 
(A) IN GENERAL.—The term ‘‘direct costs 
of processing operations’’, with respect to a 
good, includes, to the extent they are includable 
in the appraised value of the good when im-
ported into Bahrain or the United States, as 
the case may be, the following: 
(i) All actual labor costs involved in 
the growth, production, or manufacture of 
the good, including fringe benefits, on-the-
job training, and the cost of engineering, 
supervisory, quality control, and similar 
personnel. 
(ii) Tools, dies, molds, and other indi-
rect materials, and depreciation on ma-
chinery and equipment that are allocable 
to the good. 
(iii) Research, development, design, 
engineering, and blueprint costs, to the ex-
tent that they are allocable to the good. 
(iv) Costs of inspecting and testing 
the good. 
(v) Costs of packaging the good for 
export to the territory of the other country. 
(B) EXCEPTIONS.—The term ‘‘direct costs 
of processing operations’’ does not include costs 
that are not directly attributable to a good or 
are not costs of growth, production, or manu-
facture of the good, such as— 
(i) profit; and