[104th Congress Public Law 234]
[From the U.S. Government Printing Office]


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[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:
---------------------------------------------------------------------------

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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