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
‘‘(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
‘‘(B) mere dilution with water or with an-
other substance that does not materially alter
the characteristics of the article or material.
‘‘(2) REQUIREMENTS FOR NEW OR DIFFERENT
ARTICLE
OF
COMMERCE.—For purposes of sub-
section (a)(1), an article is a ‘new or different article
of commerce’ if it is substantially transformed into
an article having a new name, character, or use.
‘‘(3) COST OR VALUE OF MATERIALS.—(A) For
purposes of this section, the cost or value of mate-
rials produced in the West Bank, the Gaza Strip, or
a qualifying industrial zone includes—
‘‘(i) the manufacturer’s actual cost for the
materials;
‘‘(ii) when not included in the manufactur-
er’s actual cost for the materials, the freight,
insurance, packing, and all other costs incurred
in transporting the materials to the manufac-
turer’s plant;
‘‘(iii) the actual cost of waste or spoilage,
less the value of recoverable scrap; and
‘‘(iv) taxes or duties imposed on the mate-
rials by the West Bank, the Gaza Strip, or a
qualifying industrial zone, if such taxes or du-
ties are not remitted on exportation.
‘‘(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
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-
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—