[Congressional Record Volume 149, Number 136 (Tuesday, September 30, 2003)]
[Senate]
[Pages S12197-S12203]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER:
  S. 1688. A bill to amend the Internal Revenue Code of 1986 to repeal 
the exclusion for extraterritorial income and provide for a deduction 
relating to income attributable to United States production activities, 
and for other purposes; to the Committee on Finance.

[[Page S12200]]

  Mr. ROCKEFELLER. Mr. President, I would like to draw your attention 
to a few very troubling statistics. Manufacturing employment in the 
United States has now fallen to its lowest level in 41 years. In the 
last five years, we have lost 16 percent of all our factory jobs. In 
the last 2 years alone we have lost approximately 2.5 million 
manufacturing jobs.
  These are frightening statistics. They ought to jolt every Member of 
the Senate and prompt an urgent call for action. A vibrant 
manufacturing base is essential to our standard of living. For 
generations, factory jobs have been the path to the middle class, 
providing good wages, health insurance, and pension benefits. Advances 
in manufacturing technology accounts for most of our economy's 
increased productivity. And every dollar spent on finished manufactured 
goods is estimated to produce $2.43 of economic activity. Simply put, 
we cannot become a service-only economy and expect to maintain our high 
standard of living. We ought to act swiftly to ensure that Americans 
still produce steel and computers and cars and pharmaceuticals.
  We ought not be timid in the face of the devastating statistics I 
cited. Piecemeal efforts will not revitalize our industrial base. 
Therefore, today I am introducing the Securing America's Factory 
Employment (SAFE) Act. This bill will offer relief to American 
manufacturers on several fronts. First, my legislation would provide a 
tax deduction to any company that offers manufacturing jobs in the 
United States. Second, this bill helps companies cover the cost of 
providing health care for retirees, a crippling obligation for many of 
our once proud industries. And third, I propose that we strengthen our 
trade laws to ensure that they offer the protections that our domestic 
industries deserve from unfair and illegal trade practices.
  Let me take a moment to explain in greater detail how these proposals 
can help our domestic manufacturing base. This Congress is compelled to 
repeal the Foreign Sales Corporation/Extraterritorial Income provisions 
of the U.S. Tax Code in order to avoid $4 billion in trade sanctions 
authorized by the World Trade Organization. Regardless of my opinion of 
the WTO's decision in this matter, I recognize that it may be that to 
protect our economy from a trade war we must update our Tax Code. We 
can do so and still encourage manufacturing by reducing the overall 
effective corporate income tax rate on domestic manufacturing.
  The SAFE Act provides a 9-percent deduction for profits derived from 
manufacturing activities in the United States; this is the equivalent 
of lowering the corporate income tax rate from 35 percent to 32 percent 
for the portion of profits that can be directly linked to U.S. 
factories, mining operations, and the like. This straightforward tax 
break will lower the cost of doing business in the United States and 
will help companies that employ Americans compete in the global 
marketplace.
  In addition, this bill includes a tax credit to employers to 
encourage them to retain their retiree health insurance coverage. As 
you know, employers and other health plan sponsors continue to 
restructure how they provide health care benefits for both workers and 
retirees. The percent of employers offering retiree health benefits has 
declined substantially over the past 15 years. Two-thirds of all firms 
with 200 or more workers sponsored retiree coverage 15 years ago. 
According to the most recent data, only 38 percent of such employers 
provide retiree benefits today. Despite these reductions, the employer-
sponsored health care system is the largest source of health care 
coverage in this country today. The SAFE Act would provide employers 
with a tax credit to cover 75 percent of the costs associated with 
providing health care coverage to their retirees in order to protect 
existing coverage and reverse the current trend.
  Finally, my legislation would strengthen our trade protections. Our 
antidumping and countervailing duty (AD/CVD) trade law are often the 
first and last time of defense for U.S. industries injured by unfairly 
or illegally traded imports. These laws are absolutely essential to the 
survival of our manufacturing sector in an increasingly global market--
but some of their provisions have become antiquated by recent changes 
in our global economy and the new structure of international trade. The 
Americans steel crisis has made it clear that these trade laws need to 
be strengthened. Companies, workers, families and communities rely 
heavily on these laws to prevent the ill-effects of unfair trade. Our 
antidumping and countervailing duty laws need to be updated and amended 
so they work as intended, and as permitted, under the rules of 
international trade.
  For example, the SAFE Act includes a provision that allows us to 
consider whether or not an industry is vulnerable to the effects of 
imports in making antidumping and countervailing duty determinations. 
Another provision in this bill will make it tougher for our trading 
partners to circumvent antidumping or countervailing duty orders by 
clarifying that AD/CVD orders include products that have been changed 
in only very minor respects. This will help prevent foreign nations 
from making slight alterations to products that they are exporting to 
us to in order to skirt existing AD/CVD orders.
  Another clear problem under our current trade laws is that foreign 
producers and exporters of subject merchandise may avoid AD/CVD duties 
by using complex schemes that mask payment of countervailing duties 
resulting in the understatement of duty rates. My legislation would 
restrict such practices by requiring the importer, if affiliated with 
the foreign producers or exporters, to demonstrate that the importer 
was in no way reimbursed for any AD/CVD duties paid. There are 
certainly other changes we should consider to update our trade remedy 
laws. These provisions are by no means an exhaustive list of needed 
reforms. But we do need to get the debate started, and I offer this 
bill as a way to re-energize the debate.
  The SAFE Act addresses several of the most dire needs of our 
manufacturing companies. It improves our trade laws, helps with the 
burden of retiree health care costs, and effectively lowers the 
corporate tax rate on manufacturing activities. This package of reforms 
is an effective plan to stem the flow of good manufacturing jobs 
overseas. If we are serious about revitalizing our economy and 
maintaining our standard of living, we must act quickly to shore up our 
manufacturing base. I hope that my colleagues will join me in this 
effort.
  I ask that the text of my legislation be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1688

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Securing 
     American Factory Employment (SAFE) Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

        TITLE I--PROVISIONS RELATING TO REPEAL OF EXCLUSION FOR 
                        EXTRATERRITORIAL INCOME

     SEC. 101. REPEAL OF EXCLUSION FOR EXTRATERRITORIAL INCOME.

       (a) In General.--Section 114 is hereby repealed.
       (b) Conforming Amendments.--
       (1)(A) Subpart E of part III of subchapter N of chapter 1 
     (relating to qualifying foreign trade income) is hereby 
     repealed.
       (B) The table of subparts for such part III is amended by 
     striking the item relating to subpart E.
       (2) The table of sections for part III of subchapter B of 
     chapter 1 is amended by striking the item relating to section 
     114.
       (3) The second sentence of section 56(g)(4)(B)(i) is 
     amended by striking ``or under section 114''.
       (4) Section 275(a) is amended--
       (A) by inserting ``or'' at the end of paragraph (4)(A), by 
     striking ``or'' at the end of paragraph (4)(B) and inserting 
     a period, and by striking subparagraph (C), and
       (B) by striking the last sentence.
       (5) Paragraph (3) of section 864(e) is amended--
       (A) by striking:
       ``(3) Tax-exempt assets not taken into account.--
       ``(A) In general.--For purposes of''; and inserting:
       ``(3) Tax-exempt assets not taken into account.--For 
     purposes of'', and
       (B) by striking subparagraph (B).

[[Page S12201]]

       (6) Section 903 is amended by striking ``114, 164(a),'' and 
     inserting ``164(a)''.
       (7) Section 999(c)(1) is amended by striking 
     ``941(a)(5),''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to transactions occurring after the date of the 
     enactment of this Act.
       (2) Binding contracts.--The amendments made by this section 
     shall not apply to any transaction in the ordinary course of 
     a trade or business which occurs pursuant to a binding 
     contract--
       (A) which is between the taxpayer and a person who is not a 
     related person (as defined in section 943(b)(3) of such Code, 
     as in effect on the day before the date of the enactment of 
     this Act), and
       (B) which is in effect on September 17, 2003, and at all 
     times thereafter.
       (d) Revocation of Section 943(e) Elections.--
       (1) In general.--In the case of a corporation that elected 
     to be treated as a domestic corporation under section 943(e) 
     of the Internal Revenue Code of 1986 (as in effect on the day 
     before the date of the enactment of this Act)--
       (A) the corporation may, during the 1-year period beginning 
     on the date of the enactment of this Act, revoke such 
     election, effective as of such date of enactment, and
       (B) if the corporation does revoke such election--
       (i) such corporation shall be treated as a domestic 
     corporation transferring (as of such date of enactment) all 
     of its property to a foreign corporation in connection with 
     an exchange described in section 354 of such Code, and
       (ii) no gain or loss shall be recognized on such transfer.
       (2) Exception.--Subparagraph (B)(ii) of paragraph (1) shall 
     not apply to gain on any asset held by the revoking 
     corporation if--
       (A) the basis of such asset is determined in whole or in 
     part by reference to the basis of such asset in the hands of 
     the person from whom the revoking corporation acquired such 
     asset,
       (B) the asset was acquired by transfer (not as a result of 
     the election under section 943(e) of such Code) occurring on 
     or after the 1st day on which its election under section 
     943(e) of such Code was effective, and
       (C) a principal purpose of the acquisition was the 
     reduction or avoidance of tax (other than a reduction in tax 
     under section 114 of such Code, as in effect on the day 
     before the date of the enactment of this Act).
       (e) General Transition.--
       (1) In general.--In the case of a taxable year ending after 
     the date of the enactment of this Act and beginning before 
     January 1, 2007, for purposes of chapter 1 of such Code, a 
     current FSC/ETI beneficiary shall be allowed a deduction 
     equal to the transition amount determined under this 
     subsection with respect to such beneficiary for such year.
       (2) Current fsc/eti beneficiary.--The term ``current FSC/
     ETI beneficiary'' means any corporation which entered into 
     one or more transactions during its taxable year beginning in 
     calendar year 2002 with respect to which FSC/ETI benefits 
     were allowable.
       (3) Transition amount.--For purposes of this subsection--
       (A) In general.--The transition amount applicable to any 
     current FSC/ETI beneficiary for any taxable year is the 
     phaseout percentage of the base period amount.
       (B) Phaseout percentage.--
       (i) In general.--In the case of a taxpayer using the 
     calendar year as its taxable year, the phaseout percentage 
     shall be determined under the following table:

                                                           The phaseout
Years:                                                   percentage is:
2004................................................................80 
2005................................................................80 
2006................................................................60.

       (ii) Special rule for 2003.--The phaseout percentage for 
     2003 shall be the amount that bears the same ratio to 100 
     percent as the number of days after the date of the enactment 
     of this Act bears to 365.

       (iii) Special rule for fiscal year taxpayers.--In the case 
     of a taxpayer not using the calendar year as its taxable 
     year, the phaseout percentage is the weighted average of the 
     phaseout percentages determined under the preceding 
     provisions of this paragraph with respect to calendar years 
     any portion of which is included in the taxpayer's taxable 
     year. The weighted average shall be determined on the basis 
     of the respective portions of the taxable year in each 
     calendar year.

       (4) Base period amount.--For purposes of this subsection, 
     the base period amount is the aggregate FSC/ETI benefits for 
     the taxpayer's taxable year beginning in calendar year 2002.

       (5) FSC/ETI benefit.--For purposes of this subsection, the 
     term ``FSC/ETI benefit'' means--

       (A) amounts excludable from gross income under section 114 
     of such Code, and
       (B) the exempt foreign trade income of related foreign 
     sales corporations from property acquired from the taxpayer 
     (determined without regard to section 923(a)(5) of such Code 
     (relating to special rule for military property), as in 
     effect on the day before the date of the enactment of the FSC 
     Repeal and Extraterritorial Income Exclusion Act of 2000).

     In determining the FSC/ETI benefit there shall be excluded 
     any amount attributable to a transaction with respect to 
     which the taxpayer is the lessor unless the leased property 
     was manufactured or produced in whole or in part by the 
     taxpayer.
       (6) Special rule for farm cooperatives.--Determinations 
     under this subsection with respect to an organization 
     described in section 943(g)(1) of such Code, as in effect on 
     the day before the date of the enactment of this Act, shall 
     be made at the cooperative level and the purposes of this 
     subsection shall be carried out in a manner similar to 
     section 250(h) of such Code, as added by this Act. Such 
     determinations shall be in accordance with such requirements 
     and procedures as the Secretary may prescribe.
       (7) Certain rules to apply.--Rules similar to the rules of 
     section 41(f) of such Code shall apply for purposes of this 
     subsection.
       (8) Coordination with binding contract rule.--The deduction 
     determined under paragraph (1) for any taxable year shall be 
     reduced by the phaseout percentage of any FSC/ETI benefit 
     realized for the taxable year by reason of subsection (c)(2), 
     except that for purposes of this paragraph the phaseout 
     percentage for 2003 shall be treated as being equal to 100 
     percent.
       (9) Special rule for taxable year which includes date of 
     enactment.--In the case of a taxable year which includes the 
     date of the enactment of this Act, the deduction allowed 
     under this subsection to any current FSC/ETI beneficiary 
     shall in no event exceed--
       (A) 100 percent of such beneficiary's base period amount 
     for calendar year 2003, reduced by
       (B) the aggregate FSC/ETI benefits of such beneficiary with 
     respect to transactions occurring during the portion of the 
     taxable year ending on the date of the enactment of this Act.

     SEC. 102. DEDUCTION RELATING TO INCOME ATTRIBUTABLE TO UNITED 
                   STATES PRODUCTION ACTIVITIES.

       (a) In General.--Part VI of subchapter B of chapter 1 
     (relating to itemized deductions for individuals and 
     corporations) is amended by adding at the end the following 
     new section:

     ``SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION 
                   ACTIVITIES.

       ``(a) In General.--There shall be allowed as a deduction an 
     amount equal to 9 percent of the qualified production 
     activities income of the taxpayer for the taxable year.
       ``(b) Phasein.--In the case of taxable years beginning in 
     2004, 2005, 2006, 2007, or 2008, subsection (a) shall be 
     applied by substituting for the `9 percent' the transition 
     percentage determined under the following table:

``Taxable years                                          The transition
beginning in:                                            percentage is:

2004................................................................ 1 
2005................................................................ 2 
2006................................................................ 3 
2007 or 2008........................................................ 6.

       ``(c) Qualified Production Activities Income.--For purposes 
     of this section, the term `qualified production activities 
     income' means an amount equal to the portion of the modified 
     taxable income of the taxpayer which is attributable to 
     domestic production activities.
       ``(d) Determination of Income Attributable to Domestic 
     Production Activities.--For purposes of this section--
       ``(1) In general.--The portion of the modified taxable 
     income which is attributable to domestic production 
     activities is so much of the modified taxable income for the 
     taxable year as does not exceed--
       ``(A) the taxpayer's domestic production gross receipts for 
     such taxable year, reduced by
       ``(B) the sum of--
       ``(i) the costs of goods sold that are allocable to such 
     receipts,
       ``(ii) other deductions, expenses, or losses directly 
     allocable to such receipts, and
       ``(iii) a proper share of other deductions, expenses, and 
     losses that are not directly allocable to such receipts or 
     another class of income.
       ``(2) Allocation method.--The Secretary shall prescribe 
     rules for the proper allocation of items of income, 
     deduction, expense, and loss for purposes of determining 
     income attributable to domestic production activities.
       ``(3) Special rules for determining costs.--
       ``(A) In general.--For purposes of determining costs under 
     clause (i) of paragraph (1)(B), any item or service brought 
     into the United States without a transfer price meeting the 
     requirements of section 482 shall be treated as acquired by 
     purchase, and its cost shall be treated as not less than its 
     value when it entered the United States. A similar rule shall 
     apply in determining the adjusted basis of leased or rented 
     property where the lease or rental gives rise to domestic 
     production gross receipts.
       ``(B) Exports for further manufacture.--In the case of any 
     property described in subparagraph (A) that had been exported 
     by the taxpayer for further manufacture, the increase in cost 
     or adjusted basis under subparagraph (A) shall not exceed the 
     difference between the value of the property when exported 
     and the value of the property when brought back into the 
     United States after the further manufacture.
       ``(4) Modified taxable income.--The term `modified taxable 
     income' means taxable income computed without regard to the 
     deduction allowable under this section.
       ``(e) Domestic Production Gross Receipts.--For purposes of 
     this section, the

[[Page S12202]]

     term `domestic production gross receipts' means the gross 
     receipts of the taxpayer which are derived from--
       ``(1) any sale, exchange, or other disposition of, or
       ``(2) any lease, rental, or license of,

     qualifying production property which was manufactured, 
     produced, grown, or extracted in whole or in significant part 
     by the taxpayer within the United States.
       ``(f) Qualifying Production Property.--For purposes of this 
     section--
       ``(1) In general.--Except as otherwise provided in this 
     paragraph, the term `qualifying production property' means--
       ``(A) any tangible personal property,
       ``(B) any computer software, and
       ``(C) any property described in section 168(f) (3) or (4).
       ``(2) Exclusions from qualifying production property.--The 
     term `qualifying production property' shall not include--
       ``(A) consumable property that is sold, leased, or licensed 
     by the taxpayer as an integral part of the provision of 
     services,
       ``(B) electricity,
       ``(C) water supplied by pipeline to the consumer,
       ``(D) utility services, or
       ``(E) any property (not described in paragraph (1)(B)) 
     which is a film, tape, recording, book, magazine, newspaper, 
     or similar property the market for which is primarily topical 
     or otherwise essentially transitory in nature.
       ``(g) Definitions and Special Rules.--
       ``(1) Treatment of pass-thru entities.--The Secretary shall 
     prescribe rules for the proper application of this section in 
     the case of pass-thru entities other than cooperatives to 
     which paragraph (2) applies and subchapter S corporations.
       ``(2) Exclusion for patrons of cooperatives.--
       ``(A) In general.--If any amount described in paragraph (1) 
     or (3) of section 1385 (a)--
       ``(i) is received by a person from an organization to which 
     part I of subchapter T applies, and
       ``(ii) is allocable to the portion of the qualified 
     production activities income of the organization which is 
     deductible under subsection (a) and designated as such by the 
     organization in a written notice mailed to its patrons during 
     the payment period described in section 1382(a),

     then such person shall be allowed an exclusion from gross 
     income with respect to such amount. The taxable income of the 
     organization shall not be reduced under section 1382 by the 
     portion of any such amount with respect to which an exclusion 
     is allowable to a person by reason of this paragraph.
       ``(B) Special rules.--For purposes of applying subparagraph 
     (A), in determining the qualified production activities 
     income of the organization under this section--
       ``(i) there shall not be taken into account in computing 
     the organization's modified taxable income any deduction 
     allowable under subsection (b) or (c) of section 1382 
     (relating to patronage dividends, per-unit retain 
     allocations, and nonpatronage distributions), and
       ``(ii) the organization shall be treated as having 
     manufactured, produced, grown, or extracted in whole or 
     significant part any qualifying production property marketed 
     by the organization which its patrons have so manufactured, 
     produced, grown, or extracted.
       ``(3) Coordination with minimum tax.--The deduction under 
     this section shall be allowed for purposes of the tax imposed 
     by section 55; except that for purposes of section 55, 
     alternative minimum taxable income shall be taken into 
     account in determining the deduction under this section.
       ``(4) Ordering rule.--The amount of any other deduction 
     allowable under this chapter shall be determined as if this 
     section had not been enacted.
       ``(5) Coordination with transition rules.--For purposes of 
     this section--
       ``(A) domestic production gross receipts shall not include 
     gross receipts from any transaction if the binding contract 
     transition relief of section 101(c)(2) of the Securing 
     American Factory Employment (SAFE) Act applies to such 
     transaction, and
       ``(B) any deduction allowed under section 101(e) of such 
     Act shall be disregarded in determining the portion of the 
     taxable income which is attributable to domestic production 
     gross receipts.''.
       (b) Deduction Allowed to Shareholders of S Corporations.--
       (1) In general.--Section 1363(b) (relating to computation 
     of S corporation's taxable income) is amended by striking 
     ``and'' at the end of paragraph (3), by striking the period 
     at the end of paragraph (4) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(5) the deduction under section 199 shall be allowed to 
     the S corporation.''
       (2) Increase in basis.--Section 1367(a)(1) (relating to 
     increases in basis) is amended by striking ``and'' at the end 
     of subparagraph (B), by striking the period at the end of 
     subparagraph (C) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(D) any deduction allowed under section 199.''
       (c) Minimum Tax.--Section 56(g)(4)(C) (relating to 
     disallowance of items not deductible in computing earnings 
     and profits) is amended by adding at the end the following 
     new clause:
       ``(v) Deduction for domestic production.--Clause (i) shall 
     not apply to any amount allowable as a deduction under 
     section 199.''
       (d) Clerical Amendment.--The table of sections for part VI 
     of subchapter B of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 199. Income attributable to domestic production activities.''

       (e) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act.
       (2) Application of section 15.--Section 15 of the Internal 
     Revenue Code of 1986 shall apply to the amendments made by 
     this section as if they were changes in a rate of tax.

  TITLE II--EMPLOYER-PROVIDED RETIRED EMPLOYEE HEALTH CARE TAX CREDIT

     SEC. 201. TAX CREDIT FOR 75 PERCENT OF EMPLOYER-PROVIDED 
                   RETIRED EMPLOYEE HEALTH PREMIUMS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business-related credits) is amended 
     by adding at the end the following:

     ``SEC. 45G. RETIRED EMPLOYEE HEALTH INSURANCE EXPENSES.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of a qualified employer, the retired employee health 
     insurance expenses credit determined under this section is an 
     amount equal to 75 percent of the amount paid by the taxpayer 
     during the taxable year for qualified retired employee health 
     insurance expenses.
       ``(b) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified employer.--The term `qualified employer' 
     means any employer which is eligible for the deduction 
     allowable under section 199 for the taxable year.
       ``(2) Qualified retired employee health insurance 
     expenses.--
       ``(A) In general.--The term `qualified retired employee 
     health insurance expenses' means any amount paid by an 
     employer for health insurance coverage to the extent such 
     amount is attributable to coverage provided to any retired 
     employee and such retired employee's spouse and dependents.
       ``(B) Exception for amounts paid under salary reduction 
     arrangements.--No amount paid or incurred for health 
     insurance coverage pursuant to a salary reduction arrangement 
     shall be taken into account under subparagraph (A).
       ``(C) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning given such term by 
     paragraph (1) of section 9832(b) (determined by disregarding 
     the last sentence of paragraph (2) of such section).
       ``(3) Retired employee--The term `retired employee' means 
     an individual who has met any years of service or disability 
     requirements under an employee benefit plan of the employer.
       ``(c) Certain Rules Made Applicable.--For purposes of this 
     section, rules similar to the rules of section 52 shall 
     apply.
       ``(d) Denial of Double Benefit.--No deduction or credit 
     under any other provision of this chapter shall be allowed 
     with respect to qualified retired employee health insurance 
     expenses taken into account under subsection (a).
       ``(e) Termination.--This section shall not apply to taxable 
     years beginning after December 31, 2003.''.
       (b) Credit To Be Part of General Business Credit.--Section 
     38(b) (relating to current year business credit) is amended 
     by striking ``plus'' at the end of paragraph (14), by 
     striking the period at the end of paragraph (15) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(16) the retired employee health insurance expenses 
     credit determined under section 45G.''.
       (c) No Carrybacks.--Subsection (d) of section 39 (relating 
     to carryback and carryforward of unused credits) is amended 
     by adding at the end the following:
       ``(11) No carryback of section 45g credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the retired employee 
     health insurance expenses credit determined under section 45G 
     may be carried back to a taxable year ending before the date 
     of the enactment of section 45G.''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following:

``Sec. 45G. Retired employee health insurance expenses.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2003.

      TITLE III--AMENDMENTS TO TITLE VII OF THE TARIFF ACT OF 1930

     SEC. 301. CAPTIVE PRODUCTION.

       Section 771(7)(C)(iv) of the Tariff Act of 1930 (19 U.S.C. 
     1677(7)(C)(iv)) is amended to read as follows:
       ``(iv) Captive production.--If domestic producers transfer 
     internally, including to affiliated persons as defined in 
     paragraph (33), significant production of the domestic like 
     product for the production of a downstream article and sell 
     significant production of the domestic like product in the 
     merchant market, then the Commission, in determining market 
     share and the factors affecting financial performance set 
     forth in

[[Page S12203]]

     clause (iii), shall focus primarily on the merchant market 
     for the domestic like product.''.

     SEC. 302. PRICE.

       Section 771(7)(C)(ii) of the Tariff Act of 1930 (19 U.S.C. 
     1677(7)(C)(ii)) is amended by adding at the end the following 
     flush sentence:
  ``Imports of the subject merchandise may have a significant effect on 
prices irrespective of whether the magnitude of, or change in the 
volume of, imports of the subject merchandise is significant.''.

     SEC. 303. VULNERABILITY OF INDUSTRY.

       Section 771(7)(C)(iii) of the Tariff Act of 1930 (19 U.S.C. 
     1677(7)(C)(iii)) is amended in the last sentence by striking 
     the period at the end and inserting ``, including whether the 
     industry is vulnerable to the effects of imports of the 
     subject merchandise.''.

     SEC. 304. CAUSAL RELATIONSHIP BETWEEN IMPORTS AND INJURY.

       Section 771(7)(E)(ii) of the Tariff Act of 1930 (19 U.S.C. 
     1677(7)(E)(ii)) is amended by adding at the end the 
     following: ``The Commission need not determine the 
     significance of imports of the subject merchandise relative 
     to other economic factors.''.

     SEC. 305. PREVENTION OF CIRCUMVENTION.

       Section 781(c) of the Tariff Act of 1930 (19 U.S.C. 
     1677j(c)) is amended by adding at the end the following new 
     paragraph:
       ``(3) Special rule.--The administering authority shall 
     apply paragraph (1) with respect to altered merchandise 
     excluded from, or not specifically included in, the 
     merchandise description used in an outstanding order or 
     finding, if such application is not inconsistent with the 
     affirmative determination of the Commission on which the 
     order or finding is based.''.

     SEC. 306. FULL RECOGNITION OF SUBSIDY CONFERRED THROUGH 
                   PROVISION OF GOODS AND SERVICES AND PURCHASE OF 
                   GOODS.

       Section 771(5)(E) of the Tariff Act of 1930 (19 U.S.C. 
     1677(5)(E)) is amended by adding at the end the following: 
     ``If transactions in the country which is the subject of the 
     investigation or review do not reflect market conditions due 
     to government action associated with provision of the good or 
     service or purchase of the goods, determination of the 
     adequacy of remuneration shall be through comparison with the 
     most comparable market price elsewhere in the world.''.

     SEC. 307. PROHIBITION ON MASKING REIMBURSEMENT OF DUTIES.

       Section 772(d) of the Tariff Act of 1930 (19 U.S.C. 
     1677a(d)) is amended--
       (1) by striking ``and'' at the end of paragraph (2);
       (2) by striking the period at the end of paragraph (3) and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraphs:
       ``(4) if the importer is the producer or exporter, or the 
     importer and the producer or exporter are affiliated persons, 
     an amount equal to the dumping margin calculated under 
     section 771(35)(A), unless the producer or exporter is able 
     to demonstrate that the importer was in no way reimbursed for 
     any antidumping duties paid; and
       ``(5) if the importer is the producer or exporter, or the 
     importer and the producer or exporter are affiliated persons, 
     an amount equal to the net countervailable subsidy calculated 
     under section 771(6), unless the producer or exporter is able 
     to demonstrate that the importer was in no way reimbursed for 
     any countervailing duties paid.''.

     SEC. 308. EXPORT PRICE AND CONSTRUCTED EXPORT PRICE.

       Section 772(c)(2)(A) of the Tariff Act of 1930 (19 U.S.C. 
     1677a(c)(2)(A)) is amended by inserting ``(including 
     countervailing duties imposed under this title)'' after 
     ``duties''.

     SEC. 309. APPLICATION TO CANADA AND MEXICO.

       Pursuant to article 1902 of the North American Free Trade 
     Agreement and section 408 of the North American Free Trade 
     Agreement Implementation Act, the amendments made by this 
     title shall apply with respect to goods from Canada and 
     Mexico.

     SEC. 310. EFFECTIVE DATE.

       The amendments made by this title shall apply with respect 
     to determinations made under title VII of the Tariff Act of 
     1930 that--
       (1) are made with respect to investigations initiated or 
     petitions filed after the date of enactment of this Act; or
       (2) have not become final as of such date of enactment.

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