To amend the United States-Israel Free Trade Area Implementation Act of 1985 to provide the President with additional proclamation authority with respect to articles of the West Bank or Gaza Strip or a qualifying industrial zone.
PL 104-234 (H.R.3074), enacted 10/02/1996

110 STAT. 3058 
PUBLIC LAW 104-234—OCT. 2, 1996 
Public Law 104-234 
104th Congress 
An Act 
O t 9 IQQfi 
'^° amend the United States-Israel Free Trade Area Implementation Act of 1985 
-^—:—: 
to provide the President with additional proclamation authority with respect 
[H.R. 3074] 
to articles of the West Bank or Gaza Strip or a qualifying industrial zone. 
Be it enacted by the Senate and House of Representatives 
of 
the United States of America in Congress assembled, 
SECTION 1. ADDITIONAL PROCLAMATION AUTHORITY. 
The United States-Israel Free Trade Area Implementation 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 determines is necessary to exempt any article 
from duty if— 
"(1) that article is wholly the growth, product, or manufac-
ture of the West Bank, the Gaza Strip, or a qualifying industrial 
zone or is a new or different article of commerce that has 
been grown, produced, 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 produced in 
the West Bank, the Gaza Strip, Israel, or a qualifying 
industrial zone, plus 
"(B) the direct costs of processing operations performed 
in the West Bank, the Gaza Strip, Israel, or a qualifjdng 
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 requirement 
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 industrial 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 AGREE-
MENT.— 
"(1) NONQUALIFYING OPERATIONS.—^No article shall be 
considered a new or different article of commerce under this 
section, and no material shall be included for purposes of deter-
PUBLIC LAW 104-234—OCT. 2, 1996 
110 STAT. 3059 
mining the 35 percent requirement of subsection (a)(3), by 
virtue of having merely undergone— 
"(A) simple combining or packaging operations, or 
"(B) mere dilution with water or with another sub-
stance that does not materially alter the characteristics 
of the article or material. 
"(2) REQUIREMENTS FOR NEW OR DIFFERENT ARTICLE OF 
COMMERCE,—For purposes of subsection (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 materials 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 manufacturer's actual 
cost for the materials, the freight, insurance, packing, and 
all other costs incurred in transporting the materials to 
the manufacturer's plant; 
"(iii) the actual cost of waste or spoilage, less the 
value of recoverable scrap; and 
"(iv) taxes or duties imposed on the materials by the 
West Bank, the Gaza Strip, or a qualifying industrial zone, 
if such taxes or duties are not remitted on exportation. 
"(B) If a material is provided to the manufacturer without 
charge, or at less than fair market value, its cost or value 
shall be determined by computing the sum of— 
"(i) all expenses incurred in the growth, production, 
or manufacture of the material, including general expenses; 
"(ii) an amount for profit; and 
"(iii) freight, insurance, packing, and all other costs 
incurred in transporting the material 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 OPERATIONS.—(A) 
For 
purposes of this section, the 'direct costs of processing oper-
ations 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 allocated to, 
the growth, production, manufacture, or assembly, of that arti-
cle. Such costs include, but are not limited to, the following 
to the extent that they are includible in the appraised value 
of articles imported into the United States: 
"(i) All actual labor costs involved in the growth, 
production, manufacture, or assembly of the article, includ-
ing fringe benefits, on-the-job training, and costs of 
engineering, supervisory, quality control, and 
similar 
personnel. 
"(ii) Dies, molds, tooling, and depreciation on machin-
ery and equipment which are allocable to the article. 
"(iii) Research, development, design, engineering, and 
blueprint costs insofar as they are allocable to the article, 
"(iv) Costs of inspecting and testing the article. 
110 STAT. 3060 
PUBLIC LAW 104-234—OCT. 2, 1996 
"(B) Those items that are not included as direct 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, manufacture, or assembly of the 
article, such as administrative salaries, casualty and liabil-
ity insurance, advertising, and salesmen's salaries, commis-
sions, 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 territory of an 
intermediate country, the articles in the shipment do 
not enter into the commerce of any intermediate coun-
try and the invoices, bills of lading, and other shipping 
documents specify the United States as the final des-
tination; or 
"(B) if articles are shipped through an intermediate 
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— 
"(i) remain under the control of the customs 
authority in an intermediate country; 
"(ii) do not enter into the commerce of an inter-
mediate country except for the purpose of a sale other 
than at retail, but only if the articles are imported 
as a result of the original commercial transactions 
between the importer and the producer or the produc-
er's sales agent; and 
"(iii) have not been subjected to operations other 
than loading, unloading, or other activities necessary 
to preserve the article in good condition. 
PUBLIC LAW 104-234—OCT. 2, 1996 
110 STAT. 3061 
"(6) DOCUMENTATION REQUIRED.—An article is eligible for 
the duty exemption under this section only if— 
"(A) the importer certifies that the article meets the 
conditions for the duty exemption; and 
"(B) when requested by the Customs Service, the 
importer, manufacturer, or exporter submits a declaration 
setting forth all pertinent information with respect to the 
article, including the following: 
"(i) A description of the article, quantity, numbers, 
and marks of packages, invoice numbers, and bills 
of lading. 
"(ii) A description of the operations performed in 
the production of the article in the West Bank, the 
Gaza Strip, a qualifying industrial zone, or Israel and 
identification of the direct costs of processing oper-
ations. 
"(iii) A description of Einy materials used in produc-
tion of the article which are wholly the growth, product, 
or manufacture of the West Bank, the Gaza Strip, 
a qualifjdng industrial zone, Israel or United States, 
and a statement as to the cost or value of such mate-
rials. 
"(iv) A description of the operations performed on, 
and a statement as to the origin and cost or value 
of, any foreign materials used in the article which 
are claimed to have been sufficiently processed in the 
West Bank, the Gaza Strip, a qualifying industrial 
zone, or Israel so as to be materials produced in the 
West Bank, the Gaza Strip, a qualifying industrial 
zone, or Israel. 
"(v) A description of the origin and cost or value 
of any foreign materigds used in the article which have 
not been substantially transformed in the West Bank, 
the Gazia Strip, or a qualifying industrial zone. 
"(c) SHIPMENT OF ARTICLES OF ISRAEL THROUGH WEST BANK 
OR GAZA STRIP.—^The President is authorized to proclaim that arti-
cles of Israel may be treated as though they were articles directly 
shipped from Israel for the purposes of the Agreement even if 
shipped to the United States from the West Bank, the Gaza Strip, 
or a qualifying industrial zone, if the articles otherwise meet the 
requirements of the Agreement. 
110 STAT. 3062 
PUBLIC LAW 104-234—OCT. 2, 1996 
"(d) TREATMENT OF COST OR VALUE OF MATERIALS.—The Presi-
dent is authorized to proclaim that the cost or value of materials 
produced in the West Bank, the Gaza Strip, or a qualifying indus-
trial zone may be included in the cost or value of materials produced 
in Israel under section l(c)(i) of Annex 3 of the Agreement, and 
the direct costs of processing operations performed in the West 
Bank, the Gaza Strip, or a qualifying industrial zone may be 
included in the direct costs of processing operations performed 
in Israel under section l(c)(ii) of Annex 3 of the Agreement. 
"(e) QUALIFYING INDUSTRIAL ZONE DEFINED.—^For purposes of 
this section, a 'qualifying industrial zone' means any area that— 
"(1) encompasses portions of the territory of Israel and 
Jordan or Israel and Egypt; 
"(2) has been designated by local authorities as an enclave 
where merchandise may enter without payment of duty or 
excise taxes; and 
"(3) has been specified by the President as a qualifying 
industrial zone.". 
Approved October 2, 1996. 
LEGISLATIVE HISTORY—H.R. 3074: 
HOUSE REPORTS: No. 104-495 (Comm. on Ways and Means). 
SENATE REPORTS: No. 104-270 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 142 (1996): 
Apr. 16, considered and passed House. 
Sept. 27, considered and passed Senate.