[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.

                          ____________________