(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
determination of whether the materials are originat-
ing need not be made through the identification of
any specific fungible material, but may be deter-
mined on the basis of any of the inventory manage-
ment methods set out in regulations implementing
this section; and
(2) if originating and nonoriginating fungible
goods are commingled and exported in the same
form, the determination may be made on the basis
of any of the inventory management methods set out
in regulations implementing this section.
(g) ACCESSORIES, SPARE PARTS, OR TOOLS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), accessories, spare parts, or tools delivered
with the good that form part of the good’s standard
accessories, spare parts, or tools shall—
(A) be considered as originating goods if
the good is an originating good, and
(B) be disregarded in determining whether
all the nonoriginating materials used in the pro-
duction of the good undergo an applicable
change in tariff classification set out in Annex
401 of the Agreement.
(2) CONDITIONS.—Paragraph (1) shall apply
only if—
(A) the accessories, spare parts, or tools
are not invoiced separately from the good;
(B) the quantities and value of the acces-
sories, spare parts, or tools are customary for
the good; and
(C) in any case in which the good is sub-
ject to a regional value-content requirement, the
value of the accessories, spare parts, or tools
are taken into account as originating or
nonoriginating materials, as the case may be, in
calculating the regional value-content of the
good.
(h) INDIRECT MATERIALS.—An indirect material
shall be considered to be an originating material without
regard to where it is produced.
(i) PACKAGING MATERIALS AND CONTAINERS FOR
RETAIL SALE.—Packaging materials and containers in
which a good is packaged for retail sale, if classified with
the good, shall be disregarded in determining whether all
the nonoriginating materials used in the production of the
good undergo an applicable change in tariff classification
set out in Annex 401 of the Agreement. If the good is
subject to a regional value-content requirement, the value
of such packaging materials and containers shall be taken
into account as originating or nonoriginating materials, as
the case may be, in calculating the regional value-content
of the good.
(j) PACKING MATERIALS
AND CONTAINERS
FOR
SHIPMENT.—Packing materials and containers in which
a good is packed for shipment shall be disregarded—
(1) in determining whether the nonoriginating
materials used in the production of the good under-
go an applicable change in tariff classification set
out in Annex 401 of the Agreement; and
(2) in determining whether the good satisfies a
regional value-content requirement.
(k) TRANSSHIPMENT.—A good shall not be consid-
ered to be an originating good by reason of having under-
gone production that satisfies the requirements of sub-
section (a) if, subsequent to that production, the good un-
dergoes further production or any other operation outside
the territories of the NAFTA countries, other than un-
loading, reloading, or any other operation necessary to
preserve it in good condition or to transport the good to
the territory of a NAFTA country.
(l) NONQUALIFYING OPERATIONS.—A good shall not
be considered to be an originating good merely by reason
of—
(1) mere dilution with water or another sub-
stance that does not materially alter the characteris-
tics of the good; or
(2) any production or pricing practice with re-
spect to which it may be demonstrated, by a prepon-
derance of evidence, that the object was to cir-
cumvent this section.
(m) INTERPRETATION AND APPLICATION.—For pur-
poses of this section:
(1) The basis for any tariff classification is the
HTS.
(2) Except as otherwise expressly provided,
whenever in this section there is a reference to a
heading or subheading such reference shall be a ref-
erence to a heading or subheading of the HTS.
(3) In applying subsection (a)(4), the deter-
mination of whether a heading or subheading under
the HTS provides for and specifically describes both
a good and its parts shall be made on the basis of
the nomenclature of the heading or subheading, the
rules of interpretation, or notes of the HTS.
(4) In applying the Customs Valuation Code—
(A) the principles of the Customs Valu-
ation Code shall apply to domestic transactions,
with such modifications as may be required by
the circumstances, as would apply to inter-
national transactions;
(B) the provisions of this section shall take
precedence over the Customs Valuation Code to
the extent of any difference; and
(C) the definitions in subsection (o) shall
take precedence over the definitions in the Cus-
toms Valuation Code to the extent of any dif-
ference.
(5) All costs referred to in this section shall be
recorded and maintained in accordance with the
Generally Accepted Accounting Principles applicable
in the territory of the NAFTA country in which the
good is produced.
(n) ORIGIN
OF
AUTOMATIC
DATA
PROCESSING
GOODS.—Notwithstanding any other provision of this sec-
tion, when the NAFTA countries apply the most-favored-
nation rate of duty described in paragraph 1 of section
A of Annex 308.1 of the Agreement to a good provided
for under the tariff provisions set out in Table 308.1.1
of such Annex, the good shall, upon importation from a
NAFTA country, be deemed to originate in the territory
of a NAFTA country for purposes of this section.
(o) SPECIAL RULE
FOR CERTAIN AGRICULTURAL
PRODUCTS.—Notwithstanding any other provision of this
section, for purposes of applying a rate of duty to a good
provided for in—
(1) heading 1202 that is exported from the ter-
ritory of Mexico, if the good is not wholly obtained
in the territory of Mexico,
(2) subheading 2008.11 that is exported from
the territory of Mexico, if any material provided for
in heading 1202 used in the production of that good
is not wholly obtained in the territory of Mexico, or
(3) subheading 1806.10.42 or 2106.90.12 that
is exported from the territory of Mexico, if any ma-
terial provided for in subheading 1701.99 used in
the production of that good is not a qualifying good,
such good shall be treated as a nonoriginating good and,
for purposes of this subsection, the terms ‘‘qualifying
good’’ and ‘‘wholly obtained in the territory of’’ have the
meaning given such terms in paragraph 26 of section A
of Annex 703.2 of the Agreement.
(p) DEFINITIONS.—For purposes of this section—
(1) CLASS
OF
MOTOR
VEHICLES.—The term
‘‘class of motor vehicles’’ means any one of the fol-
lowing categories of motor vehicles:
(A) Motor vehicles provided for in sub-
heading 
8701.20, 
subheading 
8704.10,
8704.22, 8704.23, 8704.32, or 8704.90, or
heading 8705 or 8706, or motor vehicles de-
signed for the transport of 16 or more persons
provided for in subheading 8702.10.00 or
8702.90.00.
(B) Motor vehicles provided for in sub-
heading 8701.10, or subheadings 8701.30
through 8701.90.
(C) Motor vehicles for the transport of 15
or fewer persons provided for in subheading
8702.10.00 or 8702.90.00, or motor vehicles
provided for in subheading 8704.21 or 8704.31.
(D) Motor vehicles provided for in sub-
headings 8703.21 through 8703.90.
(2) CUSTOMS
VALUATION
CODE.—The term
‘‘Customs Valuation Code’’ means the Agreement on
Implementation of Article VII of the General Agree-
ment on Tariffs and Trade, including its interpreta-
tive notes.
(3) F.O.B.—The term ‘‘F.O.B.’’ means free on
board, regardless of the mode of transportation, at
the point of direct shipment by the seller to the
buyer.
(4) FUNGIBLE
GOODS
AND
FUNGIBLE
MATE-
RIALS.—The terms ‘‘fungible goods’’ and ‘‘fungible
materials’’ mean goods or materials that are inter-
changeable for commercial purposes and whose prop-
erties are essentially identical.
(5) GENERALLY ACCEPTED ACCOUNTING PRIN-
CIPLES.—The term ‘‘Generally Accepted Accounting
Principles’’ means the recognized consensus or sub-
stantial authoritative support in the territory of a
NAFTA country with respect to the recording of
revenues, expenses, costs, assets and liabilities, dis-
closure of information, and preparation of financial
statements. These standards may be broad guide-
lines of general application as well as detailed stand-
ards, practices, or procedures.
(6) GOODS WHOLLY OBTAINED OR PRODUCED
ENTIRELY IN THE TERRITORY OF ONE OR MORE OF
THE NAFTA COUNTRIES.—The term ‘‘goods wholly
obtained or produced entirely in the territory of one
or more of the NAFTA countries’’ means—
(A) mineral goods extracted in the terri-
tory of one or more of the NAFTA countries;
(B) vegetable goods harvested in the terri-
tory of one or more of the NAFTA countries;
(C) live animals born and raised in the ter-
ritory of one or more of the NAFTA countries;
(D) goods obtained from hunting, trap-
ping, or fishing in the territory of one or more
of the NAFTA countries;
(E) goods (such as fish, shellfish, and
other marine life) taken from the sea by vessels
registered or recorded with a NAFTA country
and flying its flag;
(F) goods produced on board factory ships
from the goods referred to in subparagraph
(E), if such factory ships are registered or re-
corded with that NAFTA country and fly its
flag;
(G) goods taken by a NAFTA country or
a person of a NAFTA country from the seabed
or beneath the seabed outside territorial waters,
provided that a NAFTA country has rights to
exploit such seabed;
(H) goods taken from outer space, if the
goods are obtained by a NAFTA country or a
person of a NAFTA country and not processed
in a country other than a NAFTA country;
(I) waste and scrap derived from—
(i) production in the territory of one
or more of the NAFTA countries; or
(ii) used goods collected in the terri-
tory of one or more of the NAFTA coun-
tries, if such goods are fit only for the re-
covery of raw materials; and
(J) goods produced in the territory of one
or more of the NAFTA countries exclusively
from goods referred to in subparagraphs (A)
through (I), or from their derivatives, at any
stage of production.
(7) IDENTICAL OR SIMILAR GOODS.—The term
‘‘identical or similar goods’’ means ‘‘identical goods’’
and ‘‘similar goods’’, respectively, as defined in the
Customs Valuation Code.
(8) INDIRECT MATERIAL.—
(A) The term ‘‘indirect material’’ means a
good—
(i) used in the production, testing, or
inspection of a good but not physically in-
corporated into the good, or
(ii) used in the maintenance of build-
ings or the operation of equipment associ-
ated with the production of a good,
in the territory of one or more of the NAFTA
countries.
(B) When used for a purpose described in
subparagraph (A), the following materials are
among those considered to be indirect mate-
rials:
(i) Fuel and energy.
(ii) Tools, dies, and molds.
(iii) Spare parts and materials used in
the maintenance of equipment and build-
ings.
(iv) Lubricants, greases, compounding
materials, and other materials used in pro-
duction or used to operate equipment and
buildings.
(v) Gloves, glasses, footwear, clothing,
safety equipment, and supplies.
(vi) Equipment, devices, and supplies
used for testing or inspecting the goods.
(vii) Catalysts and solvents.
(viii) Any other goods that are not in-
corporated into the good, if the use of such
goods in the production of the good can
reasonably be demonstrated to be a part of
that production.
(9) INTERMEDIATE MATERIAL.—The term ‘‘in-
termediate material’’ means a material that is self-
produced, used in the production of a good, and des-
ignated pursuant to subsection (b)(10).
(10) MARQUE.—The term ‘‘marque’’ means the
trade name used by a separate marketing division of
a motor vehicle assembler.
(11) MATERIAL.—The term ‘‘material’’ means
a good that is used in the production of another
good and includes a part or an ingredient.
(12) MODEL
LINE.—The term ‘‘model line’’
means a group of motor vehicles having the same
platform or model name.
(13) MOTOR VEHICLE ASSEMBLER.—The term
‘‘motor vehicle assembler’’ means a producer of
motor vehicles and any related persons or joint ven-
tures in which the producer participates.
(14) NAFTA COUNTRY.—The term ‘‘NAFTA
country’’ means the United States, Canada or Mex-
ico for such time as the Agreement is in force with
respect to Canada or Mexico, and the United States
applies the Agreement to Canada or Mexico.
(15) NEW BUILDING.—The term ‘‘new build-
ing’’ means a new construction, including at least
the pouring or construction of new foundation and
floor, the erection of a new structure and roof, and
installation of new plumbing, electrical, and other
utilities to house a complete vehicle assembly proc-
ess.
(16) NET COST.—The term ‘‘net cost’’ means
total cost less sales promotion, marketing and after-
sales service costs, royalties, shipping and packing
costs, and nonallowable interest costs that are in-
cluded in the total cost.
(17) NET COST OF A GOOD.—The term ‘‘net
cost of a good’’ means the net cost that can be rea-
sonably allocated to a good using one of the methods
set out in subsection (b)(8).
(18) NONALLOWABLE INTEREST COSTS.—The
term ‘‘nonallowable interest costs’’ means interest
costs incurred by a producer as a result of an inter-
est rate that exceeds the applicable federal govern-
ment interest rate for comparable maturities by
more than 700 basis points, determined pursuant to
regulations implementing this section.
(19) NONORIGINATING GOOD; NONORIGINATING
MATERIAL.—The term ‘‘nonoriginating good’’ or
‘‘nonoriginating material’’ means a good or material
that does not qualify as an originating good or mate-
rial under the rules of origin set out in this section.
(20) ORIGINATING.—The term ‘‘originating’’
means qualifying under the rules of origin set out in
this section.
(21) PRODUCER.—The term ‘‘producer’’ means
a person who grows, mines, harvests, fishes, traps,
hunts, manufactures, processes, or assembles a good.
(22) PRODUCTION.—The term ‘‘production’’
means growing, mining, harvesting, fishing, trap-
ping, hunting, manufacturing, processing, or assem-
bling a good.
(23) REASONABLY ALLOCATE.—The term ‘‘rea-
sonably allocate’’ means to apportion in a manner
appropriate to the circumstances.
(24) REFIT.—The term ‘‘refit’’ means a plant
closure, for purposes of plant conversion or retool-
ing, that lasts at least 3 months.
(25) RELATED PERSONS.—The term ‘‘related
persons’’ means persons specified in any of the fol-
lowing subparagraphs:
(A) Persons who are officers or directors
of one another’s businesses.
(B) Persons who are legally recognized
partners in business.
(C) Persons who are employer and em-
ployee.
(D) Persons one of whom owns, controls,
or holds 25 percent or more of the outstanding
voting stock or shares of the other.
(E) Persons if 25 percent or more of the
outstanding voting stock or shares of each of
them is directly or indirectly owned, controlled,
or held by a third person.
(F) Persons one of whom is directly or in-
directly controlled by the other.
(G) Persons who are directly or indirectly
controlled by a third person.
(H) Persons who are members of the same
family.
For purposes of this paragraph, the term ‘‘members
of the same family’’ means natural or adoptive chil-
dren, brothers, sisters, parents, grandparents, or
spouses.
(26) ROYALTIES.—The term ‘‘royalties’’ means
payments of any kind, including payments under
technical assistance or similar agreements, made as
consideration for the use or right to use any copy-
right, literary, artistic, or scientific work, patent,
trademark, design, model, plan, secret formula, or
process. It does not include payments under tech-
nical assistance or similar agreements that can be
related to specific services such as—
(A) personnel training, without regard to
where performed; and
(B) if performed in the territory of one or
more of the NAFTA countries, engineering,
tooling, die-setting, software design and similar
computer services, or other services.
(27) SALES
PROMOTION, 
MARKETING, 
AND
AFTER-SALES
SERVICE
COSTS.—The term ‘‘sales
promotion, marketing, and after-sales service costs’’
means the costs related to sales promotion, market-
ing, and after-sales service for the following:
(A) Sales and marketing promotion, media
advertising, advertising and market research,
promotional and demonstration materials, ex-
hibits, sales conferences, trade shows, conven-
tions, banners, marketing displays, free sam-
ples, sales, marketing and after-sales service lit-
erature (product brochures, catalogs, technical
literature, price lists, service manuals, sales aid
information), establishment and protection of
logos and trademarks, sponsorships, wholesale
and retail restocking charges, and entertain-
ment.
(B) 
Sales 
and 
marketing 
incentives,
consumer, retailer, or wholesaler rebates, and
merchandise incentives.
(C) Salaries and wages, sales commissions,
bonuses, benefits (such as medical, insurance,
and pension), traveling and living expenses, and
membership and professional fees for sales pro-
motion, marketing, and after-sales service per-
sonnel.
(D) Recruiting and training of sales pro-
motion, marketing, and after-sales service per-
sonnel, and after-sales training of customers’
employees, where such costs are identified sepa-
rately for sales promotion, marketing, and
after-sales service of goods on the financial
statements or cost accounts of the producer.
(E) Product liability insurance.
(F) Office supplies for sales promotion,
marketing, and after-sales service of goods,
where such costs are identified separately for
sales promotion, marketing, and after-sales
service of goods on the financial statements or
cost accounts of the producer.
(G) Telephone, mail, and other commu-
nications, where such costs are identified sepa-
rately for sales promotion, marketing, and
after-sales service of goods on the financial
statements or cost accounts of the producer.
(H) Rent and depreciation of sales pro-
motion, marketing, and after-sales service of-
fices and distribution centers.
(I) Property insurance, taxes, utilities, and
repair and maintenance of sales promotion,
marketing, and after-sales service offices and
distribution centers, where such costs are iden-
tified separately for sales promotion, marketing,
and after-sales service of goods on the financial
statements or cost accounts of the producer.
(J) Payments by the producer to other
persons for warranty repairs.
(28) SELF-PRODUCED
MATERIAL.—The term
‘‘self-produced material’’ means a material that is
produced by the producer of a good and used in the
production of that good.
(29) SHIPPING
AND
PACKING
COSTS.—The
term ‘‘shipping and packing costs’’ means the costs
incurred in packing a good for shipment and ship-
ping the good from the point of direct shipment to
the buyer, but does not include the costs of prepar-
ing and packaging the good for retail sale.
(30) SIZE
CATEGORY.—The term ‘‘size cat-
egory’’ means with respect to a motor vehicle identi-
fied in subsection (c)(1)(A)—
(A) 85 cubic feet or less of passenger and
luggage interior volume;
(B) more than 85 cubic feet, but less than
100 cubic feet, of passenger and luggage inte-
rior volume;
(C) at least 100 cubic feet, but not more
than 110 cubic feet, of passenger and luggage
interior volume;
(D) more than 110 cubic feet, but less
than 120 cubic feet, of passenger and luggage
interior volume; and
(E) 120 cubic feet or more of passenger
and luggage interior volume.
(31) TERRITORY.—The term ‘‘territory’’ means
a territory described in Annex 201.1 of the Agree-
ment.
(32) TOTAL
COST.—The term ‘‘total cost’’
means all product costs, period costs, and other
costs incurred in the territory of one or more of the
NAFTA countries.
(33) TRANSACTION
VALUE.—Except as pro-
vided in subsection (c)(1) or (c)(2)(A), the term
‘‘transaction value’’ means the price actually paid or
payable for a good or material with respect to a
transaction of the producer of the good, adjusted in
accordance with the principles of paragraphs 1, 3,
and 4 of Article 8 of the Customs Valuation Code
and determined without regard to whether the good
or material is sold for export.
(34) UNDERBODY.—The term ‘‘underbody’’
means the floor pan of a motor vehicle.
(35) USED.—The term ‘‘used’’ means used or
consumed in the production of goods.
(q) PRESIDENTIAL PROCLAMATION AUTHORITY.—
(1) IN GENERAL.—The President is authorized
to proclaim, as a part of the HTS—
(A) the provisions set out in Appendix 6.A
of Annex 300–B, Annex 401, Annex 403.1,
Annex 403.2, and Annex 403.3, of the Agree-
ment, and
(B) any additional subordinate category
necessary to carry out this title consistent with
the Agreement.
(2) MODIFICATIONS.—Subject to the consulta-
tion and layover requirements of section 103, the
President may proclaim—
(A) modifications to the provisions pro-
claimed under the authority of paragraph
(1)(A), other than the provisions of paragraph
A of Appendix 6 of Annex 300–B and section
XI of part B of Annex 401 of the Agreement;
and
(B) a modified version of the definition of
any term set out in subsection (p) (and such
modified version of the definition shall super-
sede the version in subsection (p)), but only if
the modified version reflects solely those modi-
fications to the same term in article 415 of the
Agreement that are agreed to by the NAFTA
countries before the 1st anniversary of the date
of the enactment of this Act.
(3) SPECIAL RULES FOR TEXTILES.—Notwith-
standing the provisions of paragraph (2)(A), and
subject to the consultation and layover requirements
of section 103, the President may proclaim—
(A) modifications to the provisions pro-
claimed under the authority of paragraph
(1)(A) as are necessary to implement an agree-
ment with one or more of the NAFTA countries
pursuant to paragraph 2 of section 7 of Annex
300–B of the Agreement, and
(B) before the 1st anniversary of the date
of the enactment of this Act, modifications to
correct any typographical, clerical, or other
nonsubstantive technical error regarding the
provisions of Appendix 6.A of Annex 300–B
and section XI of part B of Annex 401 of the
Agreement.
SEC. 203. DRAWBACK.
(a) DEFINITION OF A GOOD SUBJECT TO NAFTA
DRAWBACK.—For purposes of this Act and the amend-
ments made by subsection (b), the term ‘‘good subject to
NAFTA drawback’’ means any imported good other than
the following:
(1) A good entered under bond for transpor-
tation and exportation to a NAFTA country.
(2) A good exported to a NAFTA country in
the same condition as when imported into the Unit-
ed States. For purposes of this paragraph—
(A) processes such as testing, cleaning, re-
packing, or inspecting a good, or preserving it
in its same condition, shall not be considered to
change the condition of the good, and
(B) except for a good referred to in para-
graph 12 of section A of Annex 703.2 of the
Agreement that is exported to Mexico, if a good
described in the first sentence of this paragraph
is commingled with fungible goods and exported
in the same condition, the origin of the good
may be determined on the basis of the inventory
methods provided for in the regulations imple-
menting this title.
(3) A good—
(A) that is—
(i) deemed to be exported from the
United States,
(ii) used as a material in the produc-
tion of another good that is deemed to be
exported to a NAFTA country, or
(iii) substituted for by a good of the
same kind and quality that is used as a
material in the production of another good
that is deemed to be exported to a NAFTA
country, and
(B) that is delivered—
(i) to a duty-free shop,
(ii) for ship’s stores or supplies for
ships or aircraft, or
(iii) for use in a project undertaken
jointly by the United States and a NAFTA
country and destined to become the prop-
erty of the United States.
(4) A good exported to a NAFTA country for
which a refund of customs duties is granted by rea-
son of—
(A) the failure of the good to conform to
sample or specification, or
(B) the shipment of the good without the
consent of the consignee.
(5) A good that qualifies under the rules of ori-
gin set out in section 202 that is—
(A) exported to a NAFTA country,
(B) used as a material in the production of
another good that is exported to a NAFTA
country, or
(C) substituted for by a good of the same
kind and quality that is used as a material in
the production of another good that is exported
to a NAFTA country.
(6) A good provided for in subheading
1701.11.02 of the HTS that is—
(A) used as a material, or
(B) substituted for by a good of the same
kind and quality that is used as a material,
in the production of a good provided for in existing
Canadian tariff item 1701.99.00 or existing Mexican
tariff item 1701.99.01 or 1701.99.99 (relating to re-
fined sugar).
(7) A citrus product that is exported to Can-
ada.
(8) A good used as a material, or substituted
for by a good of the same kind and quality that is
used as a material, in the production of—
(A) apparel, or
(B) a good provided for in subheading
6307.90.99 (insofar as it relates to furniture
moving pads), 5811.00.20, or 5811.00.30 of the
HTS,
that is exported to Canada and that is subject to
Canada’s most-favored-nation rate of duty upon im-
portation into Canada.
Where in paragraph (6) a good referred to by an item
is described in parentheses following the item, the descrip-
tion is provided for purposes of reference only.
(b) CONSEQUENTIAL AMENDMENTS WITH DELAYED
EFFECT.—
(1) BONDED MANUFACTURING WAREHOUSES.—
The last paragraph of section 311 of the Tariff Act
of 1930 (19 U.S.C. 1311) is amended to read as fol-
lows:
‘‘No article manufactured in a bonded warehouse
from materials that are goods subject to NAFTA draw-
back, as defined in section 203(a) of the North American
Free Trade Agreement Implementation Act, may be with-
drawn from warehouse for exportation to a NAFTA coun-
try, as defined in section 2(4) of that Act, without assess-
ment of a duty on the materials in their condition and
quantity, and at their weight, at the time of importation
into the United States. The duty shall be paid before the
61st day after the date of exportation, except that upon
the presentation, before such 61st day, of satisfactory evi-
dence of the amount of any customs duties paid to the
NAFTA country on the article, the customs duty may be
waived or reduced (subject to section 508(b)(2)(B)) in an
amount that does not exceed the lesser of—
‘‘(1) the total amount of customs duties paid or
owed on the materials on importation into the Unit-
ed States, or
‘‘(2) the total amount of customs duties paid on
the article to the NAFTA country.
If Canada ceases to be a NAFTA country and the suspen-
sion of the operation of the United States-Canada Free-
Trade Agreement thereafter terminates, no article manu-
factured in a bonded warehouse, except to the extent that
such article is made from an article that is a drawback
eligible good under section 204(a) of the United States-
Canada Free-Trade Agreement Implementation Act of
1988, may be withdrawn from such warehouse for expor-
tation to Canada during the period such Agreement is in
operation without payment of a duty on such imported
merchandise in its condition, and at the rate of duty in
effect, at the time of importation.’’.
(2) BONDED SMELTING AND REFINING WARE-
HOUSES.—Section 312 of the Tariff Act of 1930 (19
U.S.C. 1312) is amended—
(A) in paragraphs (1) and (4) of sub-
section (b), by striking out the parenthetical
matter and the final ‘‘, or’’ and by adding at
the end the following:
‘‘; except that in the case of a withdrawal for expor-
tation of such a product to a NAFTA country, as
defined in section 2(4) of the North American Free
Trade Agreement Implementation Act, if any of the
imported metal-bearing materials are goods subject
to NAFTA drawback, as defined in section 203(a)
of that Act, the duties on the materials shall be
paid, and the charges against the bond canceled, be-
fore the 61st day after the date of exportation; but
upon the presentation, before such 61st day, of sat-
isfactory evidence of the amount of any customs du-
ties paid to the NAFTA country on the product, the
duties on the materials may be waived or reduced
(subject to section 508(b)(2)(B)) in an amount that
does not exceed the lesser of—
‘‘(A) the total amount of customs duties
owed on the materials on importation into the
United States, or
‘‘(B) the total amount of customs duties
paid to the NAFTA country on the product,
or’’;
(B) by adding at the end of subsection (b)
the following new flush sentence.
‘‘If Canada ceases to be a NAFTA country and the sus-
pension of the operation of the United States-Canada
Free-Trade Agreement thereafter terminates, no charges
against such bond may be canceled in whole or part upon
an exportation to Canada under paragraph (1) or (4) dur-
ing the period such Agreement is in operation except to
the extent that the metal-bearing materials were of Cana-
dian origin as determined in accordance with section 202
of the United States-Canada Free-Trade Agreement Im-
plementation Act of 1988.’’; and
(C) in subsection (d) by striking out the
parenthetical matter and by inserting before the
period the following:
‘‘; except that in the case of a withdrawal for exportation
to a NAFTA country, as defined in section 2(4) of the
North American Free Trade Agreement Implementation
Act, if any of the imported metal-bearing materials are
goods subject to NAFTA drawback, as defined in section
203(a) of that Act, charges against the bond shall be paid
before the 61st day after the date of exportation; but upon
the presentation, before such 61st day, of satisfactory evi-
dence of the amount of any customs duties paid to the
NAFTA country on the product, the bond shall be credited
(subject to section 508(b)(2)(B)) in an amount not to ex-
ceed the lesser of—
‘‘(1) the total amount of customs duties paid or
owed on the materials on importation into the Unit-
ed States, or
‘‘(2) the total amount of customs duties paid to
the NAFTA country on the product.
If Canada ceases to be a NAFTA country and the suspen-
sion of the operation of the United States-Canada Free-
Trade Agreement thereafter terminates, no bond shall be
credited under this subsection with respect to an expor-
tation of a product to Canada during the period such
Agreement is in operation except to the extent that the
product is a drawback eligible good under section 204(a)
of the United States-Canada Free Trade Agreement Im-
plementation Act of 1988’’.
(3) DRAWBACK.—Subsections (n) and (o) of
section 313 of the Tariff Act of 1930 (19 U.S.C.
1313(n) and (o)) are amended to read as follows:
‘‘(n)(1) For purposes of this subsection and sub-
section (o)—
‘‘(A) the term ‘NAFTA Act’ means the North
American Free Trade Agreement Implementation
Act;
‘‘(B) the terms ‘NAFTA country’ and ‘good
subject to NAFTA drawback’ have the same respec-
tive meanings that are given such terms in sections
2(4) and 203(a) of the NAFTA Act; and
‘‘(C) a refund, waiver, or reduction of duty
under paragraph (2) of this subsection or paragraph
(1) 
of 
subsection 
(o) 
is 
subject 
to 
section
508(b)(2)(B).
‘‘(2) For purposes of subsections (a), (b), (f), (h), (p),
and (q), if an article that is exported to a NAFTA country
is a good subject to NAFTA drawback, no customs duties
on the good may be refunded, waived, or reduced in an
amount that exceeds the lesser of—
‘‘(A) the total amount of customs duties paid or
owed on the good on importation into the United
States, or
‘‘(B) the total amount of customs duties paid
on the good to the NAFTA country.
‘‘(3) If Canada ceases to be a NAFTA country and
the suspension of the operation of the United States-Can-
ada Free-Trade Agreement thereafter terminates, then for
purposes of subsections (a), (b), (f), (h), (j)(2), and (q),
the shipment to Canada during the period such Agreement
is in operation of an article made from or substituted for,
as appropriate, a drawback eligible good under section
204(a) of the United States-Canada Free-Trade Imple-
mentation Act of 1988 does not constitute an exportation.
‘‘(o)(1) For purposes of subsection (g), if—
‘‘(A) a vessel is built for the account and own-
ership of a resident of a NAFTA country or the gov-
ernment of a NAFTA country, and
‘‘(B) imported materials that are used in the
construction and equipment of the vessel are goods
subject to NAFTA drawback,
the amount of customs duties refunded, waived, or re-
duced on such materials may not exceed the lesser of the
total amount of customs duties paid or owed on the mate-
rials on importation into the United States or the total
amount of customs duties paid on the vessel to the
NAFTA country.
‘‘(2) If Canada ceases to be a NAFTA country and
the suspension of the operation of the United States-Can-
ada Free-Trade Agreement thereafter terminates, then for
purposes of subsection (g), vessels built for Canadian ac-
count and ownership, or for the Government of Canada,
may not be considered to be built for any foreign account
and ownership, or for the government of any foreign coun-
try, except to the extent that the materials in such vessels
are drawback eligible goods under section 204(a) of the
120
SEC. 304. PROVISION OF RELIEF.
(a) IN GENERAL.—No later than the date that is 30
days after the date on which the President receives the
report of the International Trade Commission containing
an affirmative determination of the International Trade
Commission under section 303(a), the President, subject
to subsection (b), shall provide relief from imports of the
article that is the subject of such determination to the ex-
tent that the President determines necessary to remedy
or, except in the case of imports of a Canadian article,
prevent the injury found by the International Trade
Commission.
(b) EXCEPTION.—The President is not required to
provide import relief under this section if the President
determines that the provision of the import relief will not
provide greater economic and social benefits than costs.
(c) NATURE OF RELIEF.—The import relief (includ-
ing provisional relief) that the President is authorized to
provide under this part is as follows:
(1) In the case of imports of a Canadian arti-
cle—
(A) the suspension of any further reduc-
tion provided for under Annex 401.2 of the
United States-Canada Free-Trade Agreement
in the duty imposed on such article;
127
tion of Canadian fresh fruits and vegetables,
and
‘‘(B) importers shall report such informa-
tion relating to Canadian fresh fruits and vege-
tables to the Commissioner of Customs at such
time and in such manner as the Commissioner
requires.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) take effect on the date of the enactment
of this Act.
SEC. 309. PRICE-BASED SNAPBACK FOR FROZEN CON-
CENTRATED ORANGE JUICE.
(a) TRIGGER PRICE DETERMINATION.—
(1) IN GENERAL.—The Secretary shall deter-
mine—
(A) each period of 5 consecutive business
days in which the daily price for frozen con-
centrated orange juice is less than the trigger
price; and
(B) for each period determined under sub-
paragraph (A), the first period occurring there-
after of 5 consecutive business days in which
the daily price for frozen concentrated orange
juice is greater than the trigger price.