[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2609 Introduced in House (IH)]

  1st Session
                                H. R. 2609

 To promote product development and testing in the United States, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 26, 1999

  Mr. Camp (for himself and Mr. Levin) introduced the following bill; 
         which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To promote product development and testing in the United States, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Product Development and Testing Act 
of 1999''.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--The Congress finds the following:
            (1)(A) A substantial amount of development and testing 
        occurs in the United States incident to the introduction and 
        manufacture of new products for both domestic consumption and 
        export overseas.
            (B) Testing also occurs with respect to merchandise that 
        has already been introduced into commerce to insure that it 
        continues to meet specifications and performs as designed.
            (2) The development and testing that occurs in the United 
        States incident to the introduction and manufacture of new 
        products, and with respect to products which have already been 
        introduced into commerce, represents a significant industrial 
        activity employing highly-skilled workers in the United States.
            (3)(A) Under the current laws affecting the importation of 
        merchandise, such as the provisions of part I of title IV of 
        the Tariff Act of 1930 (19 U.S.C. 1401 et seq.), goods commonly 
        referred to as ``prototypes'', used for product development 
        testing and product evaluation purposes, are subject to customs 
        duty upon their importation into the United States unless the 
        prototypes qualify for duty-free treatment under special trade 
        programs or unless the prototypes are entered under a temporary 
        importation bond.
            (B) In addition, the United States Customs Service has 
        determined that the value of prototypes is to be included in 
        the value of production articles if the prototypes are the 
        result of the same design and development effort as the 
        articles.
            (4)(A) Assessing duty on prototypes twice, once when the 
        prototypes are imported and a second time thereafter as part of 
        the cost of imported production merchandise, discourages 
        development and testing in the United States, and thus 
        encourages development and testing to occur overseas, since, in 
        that case, duty will only be assessed once, upon the 
        importation of production merchandise.
            (B) Assessing duty on these prototypes twice unnecessarily 
        inflates the cost to businesses, thus reducing their 
        competitiveness.
            (5) Current methods for avoiding the excessive assessment 
        of customs duties on the importation of prototypes, including 
        the use of temporary importation entries and obtaining 
        drawback, are unwieldy, ineffective, and difficult for both 
        importers and the United States Customs Service to administer.
    (b) Purpose.--The purpose of this Act is to promote product 
development and testing in the United States by permitting the 
importation of prototypes on a duty-free basis.

 SEC. 3. AMENDMENTS TO HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES.

    (a) Heading.--Subchapter XVII of Chapter 98 of the Harmonized 
Tariff Schedule of the United States is amended by inserting in 
numerical sequence the following new heading:

      

``       9817.85.01       Prototypes to be     Free                 ...................  The rate applicable
                           used exclusively                                               in the absence of   ''
                           for development,                                               this heading         .
                           testing, product
                           evaluation or
                           quality control
                           purposes..........

    (b) U.S. Note.--The U.S. Notes to subchapter XVII of chapter 98 of 
the Harmonized Tariff Schedule of the United States are amended by 
adding at the end the following:
``6. The following provisions apply to heading 9817.85.01:
``(a) The term `prototypes' means originals or models of articles 
        that--
``(i) are either in the preproduction, production, or postproduction 
        stage and are to be used exclusively for development, testing, 
        product evaluation, or quality control purposes; and
``(ii) in the case of originals or models of articles that are either 
        in the production or postproduction stage, are associated with 
        a design change from current production (including a 
        refinement, advancement, improvement, development, or quality 
        control in either the product itself or the means for producing 
        the product).
For purposes of clause (i), automobile racing shall not be considered 
        to be ``development, testing, product evaluation, or quality 
        control.''.
``(b)(i) Prototypes (as defined in paragraph (a)) may only be imported 
        in limited noncommercial quantities in accordance with industry 
        practice.
``(ii) Prototypes (as defined in paragraph (a)), or parts of 
        prototypes, may not be sold (including sale for scrap purposes) 
        after importation into the United States.
``(c) Articles subject to quantitative restrictions, antidumping 
        orders, or countervailing duty orders, may not be classified as 
        prototypes under this note. Articles subject to licensing 
        requirements, or which must comply with laws, rules, or 
        regulations administered by agencies other than the United 
        States Customs Service before being imported, may be classified 
        as prototypes, provided that they comply with all applicable 
        provisions of law and otherwise meet the definition of 
        `prototypes' under paragraph (a).''.

 SEC. 4. ENTRY PROCEDURES.

    The Secretary of the Treasury shall establish regulations for the 
identification of prototypes at the time of importation into the United 
States in accordance with the provisions of this Act and the amendments 
made by this Act.

SEC. 5. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall apply with 
respect to--
            (1) an entry of a prototype under heading 9817.85.01 of the 
        Harmonized Tariff Schedule of the United States, as added by 
        section 3(a) of this Act, on or after the date of the enactment 
        of this Act; and
            (2) an entry of a prototype (as defined in U.S. Note 6(a) 
        to subchapter XVII of chapter 98 of the Harmonized Tariff 
        Schedule of the United States, as added by section 3(b) of this 
        Act) under heading 9813.00.30 of the Harmonized Tariff Schedule 
        of the United States for which liquidation has not become final 
        as of the date of enactment of this Act.
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