H. R. 2738
One Hundred Eighth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday,
the seventh day of January, two thousand and three
An Act
To implement the United States-Chile Free Trade Agreement.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the ‘‘United States-
Chile Free Trade Agreement Implementation Act’’.
(b) TABLE OF CONTENTS.—The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.
TITLE I—APPROVAL OF, AND GENERAL PROVISIONS RELATING TO, THE
AGREEMENT
Sec. 101. Approval and entry into force of the Agreement.
Sec. 102. Relationship of the agreement to United States and State law.
Sec. 103. Consultation and layover provisions for, and effective date of, proclaimed
actions.
Sec. 104. Implementing actions in anticipation of entry into force and initial regula-
tions.
Sec. 105. Administration of dispute settlement proceedings.
Sec. 106. Arbitration of claims.
Sec. 107. Effective dates; effect of termination.
TITLE II—CUSTOMS PROVISIONS
Sec. 201. Tariff modifications.
Sec. 202. Rules of origin.
Sec. 203. Drawback.
Sec. 204. Customs user fees.
Sec. 205. Disclosure of incorrect information; denial of preferential tariff treatment;
false certificates of origin.
Sec. 206. Reliquidation of entries.
Sec. 207. Recordkeeping requirements.
Sec. 208. Enforcement of textile and apparel rules of origin.
Sec. 209. Conforming amendments.
Sec. 210. Regulations.
TITLE III—RELIEF FROM IMPORTS
Sec. 301. Definitions.
Subtitle A—Relief From Imports Benefiting From the Agreement
Sec. 311. Commencing of action for relief.
Sec. 312. Commission action on petition.
Sec. 313. Provision of relief.
Sec. 314. Termination of relief authority.
Sec. 315. Compensation authority.
Sec. 316. Confidential business information.
Subtitle B—Textile and Apparel Safeguard Measures
Sec. 321. Commencement of action for relief.
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Sec. 322. Determination and provision of relief.
Sec. 323. Period of relief.
Sec. 324. Articles exempt from relief.
Sec. 325. Rate after termination of import relief.
Sec. 326. Termination of relief authority.
Sec. 327. Compensation authority.
Sec. 328. Business confidential information.
TITLE IV—TEMPORARY ENTRY OF BUSINESS PERSONS
Sec. 401. Nonimmigrant traders and investors.
Sec. 402. Nonimmigrant professionals; labor attestation.
Sec. 403. Labor disputes.
Sec. 404. Conforming amendments.
SEC. 2. PURPOSES.
The purposes of this Act are—
(1) to approve and implement the Free Trade Agreement
between the United States and the Republic of Chile entered
into under the authority of section 2103(b) of the Bipartisan
Trade Promotion Authority Act of 2002;
(2) to strengthen and develop economic relations between
the United States and Chile for their mutual benefit;
(3) to establish free trade between the 2 nations through
the reduction and elimination of barriers to trade in goods
and services and to investment; and
(4) to lay the foundation for further cooperation to expand
and enhance the benefits of such Agreement.
SEC. 3. DEFINITIONS.
In this Act:
(1) AGREEMENT.—The term ‘‘Agreement’’ means the United
States-Chile Free Trade Agreement approved by the Congress
under section 101(a)(1).
(2) HTS.—The term ‘‘HTS’’ means the Harmonized Tariff
Schedule of the United States.
(3) TEXTILE
OR
APPAREL
GOOD.—The term ‘‘textile or
apparel good’’ means a good listed in the Annex to the Agree-
ment on Textiles and Clothing referred to in section 101(d)(4)
of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(4)).
TITLE I—APPROVAL OF, AND GENERAL
PROVISIONS 
RELATING 
TO, 
THE
AGREEMENT
SEC. 101. APPROVAL AND ENTRY INTO FORCE OF THE AGREEMENT.
(a) APPROVAL OF AGREEMENT AND STATEMENT OF ADMINISTRA-
TIVE ACTION.—Pursuant to section 2105 of the Bipartisan Trade
Promotion Authority Act of 2002 (19 U.S.C. 3805) and section
151 of the Trade Act of 1974 (19 U.S.C. 2191), the Congress
approves—
(1) the United States-Chile Free Trade Agreement entered
into on June 6, 2003, with the Government of Chile and sub-
mitted to the Congress on July 15, 2003; and
(2) the statement of administrative action proposed to
implement the Agreement that was submitted to the Congress
on July 15, 2003.
(b) CONDITIONS FOR ENTRY INTO FORCE OF THE AGREEMENT.—
At such time as the President determines that Chile has taken
H. R. 2738—3
measures necessary to bring it into compliance with the provisions
of the Agreement that take effect on the date on which the Agree-
ment enters into force, the President is authorized to exchange
notes with the Government of Chile providing for the entry into
force, on or after January 1, 2004, of the Agreement for the United
States.
SEC. 102. RELATIONSHIP OF THE AGREEMENT TO UNITED STATES
AND STATE LAW.
(a) RELATIONSHIP TO UNITED STATES LAW.—
(1) UNITED STATES LAW TO PREVAIL IN CONFLICT.—No provi-
sion of the Agreement, nor the application of any such provision
to any person or circumstance, which is inconsistent with any
law of the United States shall have effect.
(2) 
CONSTRUCTION.—Nothing 
in 
this 
Act 
shall 
be
construed—
(A) to amend or modify any law of the United States,
or
(B) to limit any authority conferred under any law
of the United States,
unless specifically provided for in this Act.
(b) RELATIONSHIP OF AGREEMENT TO STATE LAW.—
(1) LEGAL CHALLENGE.—No State law, or the application
thereof, may be declared invalid as to any person or cir-
cumstance on the ground that the provision or application
is inconsistent with the Agreement, except in an action brought
by the United States for the purpose of declaring such law
or application invalid.
(2) DEFINITION OF STATE LAW.—For purposes of this sub-
section, the term ‘‘State law’’ includes—
(A) any law of a political subdivision of a State; and
(B) any State law regulating or taxing the business
of insurance.
(c) EFFECT OF AGREEMENT WITH RESPECT TO PRIVATE REM-
EDIES.—No person other than the United States—
(1) shall have any cause of action or defense under the
Agreement or by virtue of Congressional approval thereof; or
(2) may challenge, in any action brought under any provi-
sion of law, any action or inaction by any department, agency,
or other instrumentality of the United States, any State, or
any political subdivision of a State on the ground that such
action or inaction is inconsistent with the Agreement.
SEC. 103. CONSULTATION AND LAYOVER PROVISIONS FOR, AND EFFEC-
TIVE DATE OF, PROCLAIMED ACTIONS.
(a) CONSULTATION AND LAYOVER REQUIREMENTS.—If a provision
of this Act provides that the implementation of an action by the
President by proclamation is subject to the consultation and layover
requirements of this section, such action may be proclaimed only
if—
(1) the President has obtained advice regarding the pro-
posed action from—
(A) the appropriate advisory committees established
under section 135 of the Trade Act of 1974 (19 U.S.C.
2155); and
(B) the United States International Trade Commission;
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(2) the President has submitted a report to the Committee
on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate that sets forth—
(A) the action proposed to be proclaimed and the rea-
sons therefor; and
(B) the advice obtained under paragraph (1);
(3) a period of 60 calendar days, beginning on the first
day on which the requirements set forth in paragraphs (1)
and (2) have been met has expired; and
(4) the President has consulted with such Committees
regarding the proposed action during the period referred to
in paragraph (3).
(b) EFFECTIVE DATE OF CERTAIN PROCLAIMED ACTIONS.—Any
action proclaimed by the President under the authority of this
Act that is not subject to the consultation and layover provisions
under subsection (a) may not take effect before the 15th day after
the date on which the text of the proclamation is published in
the Federal Register.
SEC. 104. IMPLEMENTING ACTIONS IN ANTICIPATION OF ENTRY INTO
FORCE AND INITIAL REGULATIONS.
(a) IMPLEMENTING ACTIONS.—
(1) PROCLAMATION AUTHORITY.—After the date of enact-
ment of this Act—
(A) the President may proclaim such actions, and
(B) other appropriate officers of the United States
Government may issue such regulations,
as may be necessary to ensure that any provision of this Act,
or amendment made by this Act, that takes effect on the
date the Agreement enters into force is appropriately imple-
mented on such date, but no such proclamation or regulation
may have an effective date earlier than the date of entry
into force.
(2) WAIVER OF 15-DAY RESTRICTION.—The 15-day restriction
contained in section 103(b) on the taking effect of proclaimed
actions is waived to the extent that the application of such
restriction would prevent the taking effect on the date the
Agreement enters into force of any action proclaimed under
this section.
(b) INITIAL
REGULATIONS.—Initial regulations necessary or
appropriate to carry out the actions required by or authorized
under this Act or proposed in the statement of administrative
action referred to in section 101(a)(2) to implement the Agreement
shall, to the maximum extent feasible, be issued within 1 year
after the date of entry into force of the Agreement. In the case
of any implementing action that takes effect on a date after the
date of entry into force of the Agreement, initial regulations to
carry out that action shall, to the maximum extent feasible, be
issued within 1 year after such effective date.
SEC. 105. ADMINISTRATION OF DISPUTE SETTLEMENT PROCEEDINGS.
(a) ESTABLISHMENT OR DESIGNATION OF OFFICE.—The President
is authorized to establish or designate within the Department of
Commerce an office that shall be responsible for providing adminis-
trative assistance to panels established under chapter 22 of the
Agreement. The office may not be considered to be an agency
for purposes of section 552 of title 5, United States Code.
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(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized
to be appropriated for each fiscal year after fiscal year 2003 to
the Department of Commerce such sums as may be necessary
for the establishment and operations of the office under subsection
(a) and for the payment of the United States share of the expenses
of panels established under chapter 22 of the Agreement.
SEC. 106. ARBITRATION OF CLAIMS.
(a) SUBMISSION
OF CERTAIN CLAIMS.—The United States is
authorized to resolve any claim against the United States covered
by article 10.15(1)(a)(i)(C) or 10.15(1)(b)(i)(C) of the Agreement,
pursuant to the Investor-State Dispute Settlement procedures set
forth in section B of chapter 10 of the Agreement.
(b) CONTRACT CLAUSES.—All contracts executed by any agency
of the United States on or after the date of entry into force of
the Agreement shall contain a clause specifying the law that will
apply to resolve any breach of contract claim.
SEC. 107. EFFECTIVE DATES; EFFECT OF TERMINATION.
(a) EFFECTIVE DATES.—Except as provided in subsection (b),
the provisions of this Act and the amendments made by this Act
take effect on the date the Agreement enters into force.
(b) EXCEPTIONS.—Sections 1 through 3 and this title take effect
on the date of the enactment of this Act.
(c) TERMINATION OF THE AGREEMENT.—On the date on which
the Agreement ceases to be in force, the provisions of this Act
(other than this subsection) and the amendments 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 
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 3.3, 3.7, 3.9, article 3.20 (8),
(9), (10), and (11), and Annex 3.3 of the Agreement.
(2) EFFECT ON CHILEAN GSP STATUS.—Notwithstanding sec-
tion 502(a)(1) of the Trade Act of 1974 (19 U.S.C. 2462(a)(1)),
the President shall terminate the designation of Chile 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 Agree-
ment.
(b) OTHER TARIFF MODIFICATIONS.—Subject to the consultation
and layover provisions of section 103(a), the President may
proclaim—
(1) such modifications or continuation of any duty,
(2) such modifications as the United States may agree
to with Chile regarding the staging of any duty treatment
set forth in Annex 3.3 of the Agreement,
(3) such continuation of duty-free or excise treatment, or
(4) such additional duties,
H. R. 2738—6
as the President determines to be necessary or appropriate to
maintain the general level of reciprocal and mutually advantageous
concessions with respect to Chile provided for by the Agreement.
(c) 
ADDITIONAL
TARIFFS
ON
AGRICULTURAL
SAFEGUARD
GOODS.—
(1) IN GENERAL.—In addition to any duty proclaimed under
subsection (a) or (b), and subject to paragraphs (3) through
(5), the Secretary of the Treasury shall assess a duty, in the
amount prescribed under paragraph (2), on an agricultural
safeguard good if the Secretary of the Treasury determines
that the unit import price of the good when it enters the
United States, determined on an F.O.B. basis, is less than
the trigger price indicated for that good in Annex 3.18 of
the Agreement or any amendment thereto.
(2) CALCULATION
OF
ADDITIONAL
DUTY.—The amount of
the additional duty assessed under this subsection shall be
determined as follows:
(A) If the difference between the unit import price
and the trigger price is less than, or equal to, 10 percent
of the trigger price, no additional duty shall be imposed.
(B) If the difference between the unit import price
and the trigger price is greater than 10 percent, but less
than or equal to 40 percent, of the trigger price, the addi-
tional duty shall be equal to 30 percent of the difference
between the preferential tariff rate and the column 1 gen-
eral rate of duty imposed under the HTS on like articles
at the time the additional duty is imposed.
(C) If the difference between the unit import price
and the trigger price is greater than 40 percent, but less
than or equal to 60 percent, of the trigger price, the addi-
tional duty shall be equal to 50 percent of the difference
between the preferential tariff rate and the column 1 gen-
eral rate of duty imposed under the HTS on like articles
at the time the additional duty is imposed.
(D) If the difference between the unit import price
and the trigger price is greater than 60 percent, but less
than or equal to 75 percent, of the trigger price, the addi-
tional duty shall be equal to 70 percent of the difference
between the preferential tariff rate and the column 1 gen-
eral rate of duty imposed under the HTS on like articles
at the time the additional duty is imposed.
(E) If the difference between the unit import price
and the trigger price is greater than 75 percent of the
trigger price, the additional duty shall be equal to 100
percent of the difference between the preferential tariff
rate and the column 1 general rate of duty imposed under
the HTS on like articles at the time the additional duty
is imposed.
(3) EXCEPTIONS.—No additional duty under this subsection
shall be assessed on an agricultural safeguard good if, at the
time of entry, the good is subject to import relief under—
(A) subtitle A of title III of this Act; or
(B) chapter 1 of title II of the Trade Act of 1974
(19 U.S.C. 2251 et seq.).
(4) TERMINATION.—This subsection shall cease to apply
on the date that is 12 years after the date on which the
Agreement enters into force.
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(5) TARIFF-RATE QUOTAS.—If an agricultural safeguard good
is subject to a tariff-rate quota, and the in-quota duty rate
for the good proclaimed pursuant to subsection (a) or (b) is
zero, any additional duty assessed under this subsection shall
be applied only to over-quota imports of the good.
(6) NOTICE.—Not later than 60 days after the Secretary
of the Treasury first assesses additional duties on an agricul-
tural safeguard good under this subsection, the Secretary shall
notify the Government of Chile in writing of such action and
shall provide to the Government of Chile data supporting the
assessment of additional duties.
(7) MODIFICATION OF TRIGGER PRICES.—Not later than 60
calendar days before agreeing with the Government of Chile
pursuant to article 3.18(2)(b) of the Agreement on a modification
to a trigger price for a good listed in Annex 3.18 of the Agree-
ment, the President shall notify the Committees on Ways and
Means and Agriculture of the House of Representatives and
the Committees on Finance and Agriculture of the Senate of
the proposed modification and the reasons therefor.
(8) DEFINITIONS.—In this subsection:
(A) AGRICULTURAL SAFEGUARD GOOD.—The term ‘‘agri-
cultural safeguard good’’ means a good—
(i) that qualifies as an originating good under sec-
tion 202;
(ii) that is included in the United States Agricul-
tural Safeguard Product List set forth in Annex 3.18
of the Agreement; and
(iii) for which a claim for preferential tariff treat-
ment under the Agreement has been made.
(B) 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.
(C) UNIT IMPORT PRICE.—The term ‘‘unit import price’’
means the price expressed in dollars per kilogram.
(d) CONVERSION TO AD VALOREM RATES.—For purposes of sub-
sections (a) and (b), with respect to any good for which the base
rate in the Schedule of the United States to Annex 3.3 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) ORIGINATING GOODS.—
(1) IN GENERAL.—For purposes of this Act and for purposes
of implementing the tariff treatment provided for under the
Agreement, except as otherwise provided in this section, a
good is an originating good if—
(A) the good is wholly obtained or produced entirely
in the territory of Chile, the United States, or both;
(B) the good—
(i) is produced entirely in the territory of Chile,
the United States, or both, and
(I) each of the nonoriginating materials used
in the production of the good undergoes an
applicable change in tariff classification specified
in Annex 4.1 of the Agreement, or
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(II) the good otherwise satisfies any applicable
regional value-content or other requirements speci-
fied in Annex 4.1 of the Agreement; and
(ii) satisfies all other applicable requirements of
this section; or
(C) the good is produced entirely in the territory of
Chile, the United States, or both, exclusively from materials
described in subparagraph (A) or (B).
(2) SIMPLE COMBINATION OR MERE DILUTION.—A good shall
not be considered to be an originating good and a material
shall not be considered to be an originating material by virtue
of having undergone—
(A) simple combining or packaging operations; or
(B) mere dilution with water or another substance
that does not materially alter the characteristics of the
good or material.
(b) DE MINIMIS AMOUNTS OF NONORIGINATING MATERIALS.—
(1) IN
GENERAL.—Except as provided in paragraphs (2)
and (3), a good that does not undergo a change in tariff classi-
fication pursuant to Annex 4.1 of the Agreement is an origi-
nating good if—
(A) the value of all nonoriginating materials that are
used in the production of the good and do not undergo
the applicable change in tariff classification does not exceed
10 percent of the adjusted value of the good;
(B) the value of such nonoriginating materials is
included in the value of nonoriginating materials for any
applicable regional value-content requirement; and
(C) the good meets all other applicable requirements
of this section.
(2) EXCEPTIONS.—Paragraph (1) does not apply to the fol-
lowing:
(A) A nonoriginating material provided for in chapter
4 of the HTS, or a nonoriginating dairy preparation con-
taining over 10 percent by weight of milk solids provided
for in subheading 1901.90 or 2106.90 of the HTS, 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 nonoriginating dairy preparations con-
taining over 10 percent by weight of milk solids provided
for in subheading 1901.90 of the HTS, that are used in
the production of the following goods:
(i) Infant preparations containing over 10 percent
in weight of milk solids provided for in subheading
1901.10 of the HTS.
(ii) Mixes and doughs, containing over 25 percent
by weight of butterfat, not put up for retail sale, pro-
vided for in subheading 1901.20 of the HTS.
(iii) Dairy preparations containing over 10 percent
by weight of milk solids provided for in subheading
1901.90 or 2106.90 of the HTS.
(iv) Goods provided for in heading 2105 of the
HTS.
(v) Beverages containing milk provided for in sub-
heading 2202.90 of the HTS.
H. R. 2738—9
(vi) Animal feeds containing over 10 percent by
weight of milk solids provided for in subheading
2309.90 of the HTS.
(C) A nonoriginating material provided for in heading
0805 of the HTS, or any of subheadings 2009.11.00 through
2009.39 of the HTS, that is used in the production of
a good provided for in any of subheadings 2009.11.00
through 2009.39 of the HTS, or in fruit or vegetable juice
of any single fruit or vegetable, fortified with minerals
or vitamins, concentrated or unconcentrated, provided for
in subheading 2106.90 or 2202.90 of the HTS.
(D) A nonoriginating material provided for in chapter
15 of the HTS that is used in the production of a good
provided for in any of headings 1501.00.00 through 1508,
1512, 1514, and 1515 of the HTS.
(E) A nonoriginating material provided for in heading
1701 of the HTS that is used in the production of a good
provided for in any of headings 1701 through 1703 of
the HTS.
(F) A nonoriginating material provided for in chapter
17 of the HTS or in heading 1805.00.00 of the HTS that
is used in the production of a good provided for in sub-
heading 1806.10 of the HTS.
(G) A nonoriginating material provided for in any of
headings 2203 through 2208 of the HTS that is used in
the production of a good provided for in heading 2207
or 2208 of the HTS.
(H) A nonoriginating material used in the production
of a good provided for in any of chapters 1 through 21
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 section.
(3) GOODS PROVIDED FOR IN CHAPTERS 50 THROUGH 63 OF
THE HTS.—
(A) IN GENERAL.—Except as provided in subparagraph
(B), a good provided for in any of chapters 50 through
63 of the HTS that is not an originating good because
certain fibers or yarns used in the production of the compo-
nent of the good that determines the tariff classification
of the good do not undergo an applicable change in tariff
classification set out in Annex 4.1 of the Agreement, shall
be considered to be an originating good 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 component.
(B) CERTAIN TEXTILE OR APPAREL GOODS.—A textile
or apparel good containing elastomeric yarns in the compo-
nent 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
Chile or the United States.
(c) ACCUMULATION.—
(1) ORIGINATING GOODS INCORPORATED IN GOODS OF OTHER
COUNTRY.—Originating goods or materials of Chile or the
United States that are incorporated into a good in the territory
of the other country shall be considered to originate in the
territory of the other country.
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(2) MULTIPLE PROCEDURES.—A good that is produced in
the territory of Chile, the United States, or both, by 1 or
more producers, is an originating good if the good satisfies
the requirements of subsection (a) and all other applicable
requirements of this section.
(d) REGIONAL VALUE-CONTENT.—
(1) IN
GENERAL.—For purposes of subsection (a)(2), the
regional value-content of a good referred to in Annex 4.1 of
the Agreement shall be calculated, at the choice of the person
claiming preferential tariff treatment for the good, on the basis
of the build-down method described in paragraph (2) or the
build-up method described in paragraph (3), unless otherwise
provided in Annex 4.1 of the Agreement.
(2) BUILD-DOWN METHOD.—
(A) IN GENERAL.—The regional value-content of a good
may be calculated on the basis of the following build-
down method:
RVC =
AV - VNM
× 100
AV
(B) DEFINITIONS.—For purposes of subparagraph (A):
(i) The term ‘‘RVC’’ means the regional value-con-
tent, expressed as a percentage.
(ii) The term ‘‘AV’’ means the adjusted value.
(iii) The term ‘‘VNM’’ means the value of nonorigi-
nating materials used by the producer in the produc-
tion of the good.
(3) BUILD-UP METHOD.—
(A) IN GENERAL.—The regional value-content of a good
may be calculated on the basis of the following build-
up method:
RVC =
VOM
× 100
AV
(B) DEFINITIONS.—For purposes of subparagraph (A):
(i) The term ‘‘RVC’’ means the regional value-con-
tent, expressed as a percentage.
(ii) The term ‘‘AV’’ means the adjusted value.
(iii) The term ‘‘VOM’’ means the value of origi-
nating materials used by the producer in the produc-
tion of the good.
(e) VALUE OF MATERIALS.—
(1) IN GENERAL.—For purposes of calculating the regional
value-content of a good under subsection (d), and for purposes
of applying the de minimis rules under subsection (b), the
value of a material is—
(A) in the case of a material that is imported by the
producer of the good, the adjusted value of the material
with respect to that importation;
(B) in the case of a material acquired in the territory
in which the good is produced, except for a material to
which subparagraph (C) applies, the producer’s price actu-
ally paid or payable for the material;
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(C) in the case of a material provided to the producer
without charge, or at a price reflecting a discount or similar
reduction, the sum of—
(i) all expenses incurred in the growth, production,
or manufacture of the material, including general
expenses; and
(ii) an amount for profit; or
(D) in the case of a material that is self-produced,
the sum of—
(i) all expenses incurred in the production of the
material, including general expenses; and
(ii) an amount for profit.
(2) FURTHER ADJUSTMENTS TO THE VALUE OF MATERIALS.—
(A) ORIGINATING MATERIALS.—The following expenses,
if not included in the value of an originating material
calculated under paragraph (1), may be added to the value
of the originating material:
(i) The costs of freight, insurance, packing, and
all other costs incurred in transporting the material
to the location of the producer.
(ii) Duties, taxes, and customs brokerage fees on
the material paid in the territory of Chile, the United
States, or both, other than duties and taxes that are
waived, refunded, refundable, or otherwise recoverable,
including credit against duty or tax paid or payable.
(iii) The cost of waste and spoilage resulting from
the use of the material in the production of the good,
less the value of renewable scrap or byproduct.
(B) 
NONORIGINATING
MATERIALS.—The 
following
expenses, if included in the value of a nonoriginating mate-
rial calculated under paragraph (1), may be deducted from
the value of the nonoriginating material:
(i) The costs of freight, insurance, packing, and
all other costs incurred in transporting the material
to the location of the producer.
(ii) Duties, taxes, and customs brokerage fees on
the material paid in the territory of Chile, the United
States, or both, other than duties and taxes that are
waived, refunded, refundable, or otherwise recoverable,
including credit against duty or tax paid or payable.
(iii) The cost of waste and spoilage resulting from
the use of the material in the production of the good,
less the value of renewable scrap or byproducts.
(iv) The cost of originating materials used in the
production of the nonoriginating material in the terri-
tory of Chile or the United States.
(f) ACCESSORIES, SPARE PARTS, OR TOOLS.—Accessories, spare
parts, or tools delivered with a good that form part of the good’s
standard accessories, spare parts, or tools shall be regarded as
a material used in the production of the good, if—
(1) the accessories, spare parts, or tools are classified with
and not invoiced separately from the good; and
(2) the quantities and value of the accessories, spare parts,
or tools are customary for the good.
(g) FUNGIBLE GOODS AND MATERIALS.—
(1) IN GENERAL.—
H. R. 2738—12
(A) CLAIM FOR PREFERENTIAL TREATMENT.—A person
claiming preferential tariff treatment for a good may claim
that a fungible good or material is originating either based
on the physical segregation of each fungible good or mate-
rial or by using an inventory management method.
(B) INVENTORY
MANAGEMENT
METHOD.—In this sub-
section, the term ‘‘inventory management method’’ means—
(i) averaging;
(ii) ‘‘last-in, first-out’’;
(iii) ‘‘first-in, first-out’’; or
(iv) any other method—
(I) recognized in the generally accepted
accounting principles of the country in which the
production is performed (whether Chile or the
United States); or
(II) otherwise accepted by that country.
(2) ELECTION OF INVENTORY METHOD.—A person selecting
an inventory management method under paragraph (1) for
particular fungible goods or materials shall continue to use
that method for those goods or materials throughout the fiscal
year of that person.
(h) 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 nonoriginating materials used in the
production of the good undergo the applicable change in tariff
classification set out in Annex 4.1 of the Agreement, and, 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.
(i) PACKING MATERIALS
AND CONTAINERS
FOR SHIPMENT.—
Packing materials and containers for shipment shall be disregarded
in determining whether—
(1) the nonoriginating materials used in the production
of the good undergo an applicable change in tariff classification
set out in Annex 4.1 of the Agreement; and
(2) the good satisfies a regional value-content requirement.
(j) INDIRECT MATERIALS.—An indirect material shall be consid-
ered to be an originating material without regard to where it
is produced.
(k) TRANSIT AND TRANSSHIPMENT.—A good that has undergone
production necessary to qualify as an originating good under sub-
section (a) shall not be considered to be an originating good if,
subsequent to that production, the good undergoes further produc-
tion or any other operation outside the territory of Chile or the
United States, other than unloading, reloading, or any other process
necessary to preserve the good in good condition or to transport
the good to the territory of Chile or the United States.
(l) TEXTILE AND APPAREL GOODS CLASSIFIABLE AS GOODS PUT
UP IN SETS.—Notwithstanding the rules set forth in Annex 4.1
of the Agreement, textile and apparel goods classifiable as goods
put up in sets for retail sale as provided for in General Rule
of Interpretation 3 of the Harmonized System shall not be consid-
ered to be originating goods unless each of the goods in the set
is an originating good or the total value of the nonoriginating