[Congressional Record Volume 142, Number 48 (Tuesday, April 16, 1996)]
[House]
[Pages H3412-H3414]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EXTENSION OF FREE TRADE BENEFITS TO WEST BANK AND GAZA STRIP
Mr. SHAW. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 3074) 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.
The Clerk read as follows:
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
determining 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.
``(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.
``(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.
[[Page H3413]]
``(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.
``(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.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Florida [Mr. Shaw] and the gentleman from New York [Mr. Rangel] each
will be recognized for 20 minutes.
The Chair recognizes the gentleman from Florida [Mr. Shaw].
general leave
Mr. SHAW. Mr. Speaker, I ask unanimous consent that all Members have
5 legislative days in which to revise and extend their remarks and
include therein extraneous material on the bill, H.R. 3074.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am pleased to introduce, along with the gentleman from
Illinois [Mr. Crane], the Gaza Strip-West Bank bill. This is a
noncontroversial bill that received great bipartisan support when we
marked it up previously in the Ways and Means Committee. It is also
supported by the administration. The provisions of this bill will
permit the President to eliminate or modify any existing duty on
products that are produced in the Gaza Strip-West Bank area.
In light of the recent occurrences in Israel, this bill is most
timely and will aid in the peace process. Since February 25, suicide
bombers have killed five innocent civilians. The Israelis and
Palestinians want peace for their people, security for every citizen
and hope that they can peacefully coexist. It is very important for the
United States and this Congress to show their collective will that they
will do all they can do to further the peace process. The passage of
this bill will send a very clear signal to the international community
that we support normalized relations between the Israelis and the
Palestinians.
The provisions of this bill will strengthen the Israeli and
Palestinian relation by providing economic and employment relief to
that area and it will help the establishment of a Palestinian State. I
urge all of my colleagues to support this most important piece of
legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise as an original cosponsor in strong support of
H.R. 3074. This legislation would authorize the President to proclaim
duty-free treatment for products of the West Bank, the Gaza Strip, and
industrial zones that may be created in the region. Similar treatment
is granted products of Israel under the United States-Israel free-trade
agreement implemented in 1985. In return, the Palestinians have agreed
to provide duty-free access to United States products, to prevent
illegal transshipments, and to support an end to the Arab boycott of
Israel.
This legislation is supported by the Israeli Government. The
administration supports extension of duty-free treatment as part of the
Mideast peace process to promote investment and economic development in
the region.
I am not aware of any opposition to this bill, and urge its passage.
Mr. Speaker, I yield 5 minutes to the gentleman from New York [Mr.
Engel].
Mr. ENGEL. Mr. Speaker, I thank my good friend from New York for
yielding time to me.
Mr. Speaker, I support this legislation and will support this
legislation, but I really feel that this ought to be used as an
explanation to what has been happening in the Middle East. Everyone
supports investment and economic development in the West Bank and Gaza
Strip. We know ultimately that that is really the only way that peace
is going to survive in the Middle East.
However, Chairman Yasser Arafat and the PLO have promised repeatedly
to amend the covenants of the PLO charter which call for the
destruction of Israel. And in the recently concluded agreement to which
they signed, they agreed that 2 months after the Palestinian elections
were held that the Palestine National Council would meet and would
amend the covenants, would take out the part that calls for Israel's
destruction. That date is fast approaching. That date will come on May
7, and, much to my chagrin, I have not yet heard the positive signs
that I would like to hear that that May 7 deadline will be kept.
Several weeks ago, Mr. Speaker, I circulated a letter along with my
colleague, the gentleman from New Jersey [Mr. Saxton], which was signed
by over 100 Members of the House, bipartisan Members of the House. It
was a letter to Yasser Arafat telling him that according to the law of
which we provide aid to the Palestinian entity that all aid must cease
unless those covenants are amended and that the May 7 deadline is fast
approaching.
We implored, we pleaded with Chairman Arafat to give us a commitment
that that deadline would be met. Last week, I received a replay from
Chairman Arafat and, much to my chagrin, he did not even mention the
covenants in his reply to our letter, although our letter specifically
was about amending those covenants. He talked about the peace process.
he talked about normalization, but he did not address the issue of the
covenants.
Now, the gentleman from New Jersey [Mr. Saxton] and I are sending
another letter to him, asking him to please address the issue of the
covenants and to please give us assurances that he will keep his word.
I must say, Mr. Speaker, that, if May 7 comes and goes and those
covenants are not amended, it will be very difficult for me to continue
to support continued aid to the Palestinian entity, to the Palestinian
authority.
I believe that peace agreements are good, but I believe that both
sides must keep their agreement. And as cochair of the peace monitoring
accord group along with the gentleman from New Jersey [Mr. Saxton], we
intend to make sure that all parties comply with the agreement that
they signed.
We are not telling the parties what to sign. We are not telling the
parties what to do. All we are saying is that the parties need to keep
their word. They need to adhere to the agreement that they signed. And
I think the issue of the covenants are a very, very important issue.
Mr. Speaker, it is very, very difficult to believe that somebody
really wants peace if they habitually refuse or ignore calls to amend
the covenant calling for the destruction of one side, in this case the
destruction of the State of Israel. So I think the time has long past.
It has now been several years. And those covenants really, really need
to be amended. And again according to United States law, no aid can
continue to the Palestinians unless those covenants are changed.
Let me finally say about this that it is not enough, I think, to just
pass something and say well, this supersedes. We want those covenants
abrogated. We want them eliminated. We do not want some whitewashing of
them and somehow trying to fudge the issue or to allow Mr. Arafat to
speak out of both sides of their mouth.
[[Page H3414]]
Mr. Speaker, I support the peace process fully. I think the suicide
bombings have brought a sense of reality to the peace process, but
peace must continue and must go on. I think what is going on in Lebanon
today and for the past several days also is a sobering realization that
there are many, many people that want to destroy the peace process. The
Hezbollah are guerrillas, the so-called Party of God, the people who
are rejecting it on the Palestinian side.
We need to persevere. But in order to have a real peace, Mr. Speaker,
I believe that both sides must keep their agreement. And I say it again
and I say it for all to hear, to Mr. Arafat, you must abrogate those
covenants calling for Israel's destruction or American aid will cease.
Now, I support this because again I think free-trade benefits to the
West Bank and Gaza Strip are important. But again, these benefits and
all benefits will stop if those covenants are not abrogated.
Mr. SHAW. Mr. Speaker, I yield such time as he may consume to the
gentleman from Illinois [Mr. Crane], chairman of the Subcommittee on
Trade of the Committee on Ways and Means.
Mr. CRANE. Mr. Speaker, I am pleased to rise today in support of H.R.
3074, legislation that would provide the President proclamation
authority to modify tariffs on products from the West Bank, Gaza Strip,
and qualifying industrial zones. I introduced this bill, together with
my colleagues Mr. Shaw and Mr. Rangel, because I believe it will go a
long way to improve the tense situation in the Middle East. This
bipartisan bill was reported favorably out of the Ways and Means
Committee by voice vote without amendment on March 14 and enjoys the
full support of the administration.
Specifically, the effect of the provision is to offer to goods from
the West Bank, Gaza Strip, and qualifying industrial zones the same
tariff treatment as is offered to Israel under the United States-Israel
Free-Trade Agreement. In exchange for this preferential tariff
treatment, the Palestinian Authority has agreed to accord United States
products duty-free access to the West Bank and Gaza Strip, to prevent
illegal transshipment of goods not qualifying for duty-free access, and
to support all efforts to end the Arab economic boycott of Israel.
I believe that granting duty-free treatment for goods produced in
these zones in exchange for the commitment by the Palestinian Authority
is important to the Middle East peace process. In addition, it will
increase employment and will stimulate the economy of the region.
Therefore, I encourage my colleagues to give their full support to this
bill.
Mr. RANGEL. Mr. Speaker, I just want to urge the adoption of this
legislation. As I said earlier, it is supported by both sides of the
aisle and the President.
Mr. Speaker, I yield back the balance of my time.
Mr. ARCHER. Mr. Speaker, I am very pleased today to support H.R.
3074. I congratulate my colleagues, Chairman Crane and Mr. Shaw, in
working hard to bring this important piece of legislation before the
House today. This bill enjoys bipartisan support and is
noncontroversial.
H.R. 3074 would permit the expansion of preferential tariff treatment
in the Middle East, specifically to goods from the West Bank, Gaza
Strip, and qualifying industrial zones in the area. This provision
would implement an agreement with the Palestinian authority that would
benefit United States interests because United States products would
also be accorded duty free access to these areas and steps would be
taken to end illegal transshipment of goods not qualifying for such
treatment. In addition, the Palentinian authority has agreed to support
all efforts to end the Arab economic boycott of Israel.
Although the impact of this legislation will not cover a large dollar
amount of trade, I believe that it sends an important signal to
encourage the Middle East peace process. I have always said that free
trade is the most effective public policy tool that we possess to
increase peace and prosperity in our society. This legislation is part
of that process. I urge my colleagues to vote for H.R. 3074.
Mr. SHAW. Mr. Speaker, I join with my colleague and good friend, the
gentleman from New York [Mr. Rangel], and ask for a ``yes'' vote on
this important piece of legislation.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Florida [Mr. Shaw] that the House suspend the rules and
pass the bill, H.R. 3074.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
____________________