[104th Congress Public Law 234]
[From the U.S. Government Printing Office]
<DOC>
[DOCID: f:publ234.104]
[[Page 3057]]
WEST BANK AND GAZA STRIP FREE TRADE BENEFITS
[[Page 110 STAT. 3058]]
Public Law 104-234
104th Congress
An Act
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. <<NOTE: Oct. 2, 1996 - [H.R. 3074]>>
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
manufacture 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
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 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 Agreement.--
``(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
[[Page 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
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 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
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
allocated 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 imported 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, supervisory, quality control, and
similar personnel.
``(ii) Dies, molds, tooling, and depreciation on
machinery 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.
[[Page 110 STAT. 3060]]
``(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 liability insurance, 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 territory of
an intermediate country, the articles in the
shipment do not enter into the commerce of any
intermediate country and the invoices, bills of
lading, and other shipping documents specify the
United States as the final destination; 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
intermediate 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 producer'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.
[[Page 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 operations.
``(iii) A description of any materials used in
production of the article which are wholly the
growth, product, or manufacture of the West Bank,
the Gaza Strip, a qualifying industrial zone,
Israel or United States, and a statement as to the
cost or value of such materials.
``(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 materials used in the article
which have not been substantially transformed in
the West Bank, the Gaza 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 articles 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.
[[Page 110 STAT. 3062]]
``(d) Treatment of Cost or Value of Materials.--The President is
authorized to proclaim that the cost or value of materials produced in
the West Bank, the Gaza Strip, or a qualifying industrial zone may be
included in the cost or value of materials produced in Israel under
section 1(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 1(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:
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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.
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