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[(E) Subdivision deleted.]
(F) No quantity of an agricultural product that is subject to a tariff-rate quota that exceeds the in-quota quantity shall be eligible for duty-free treatment under this paragraph.
(v) Products of the West Bank, the Gaza Strip or a qualifying industrial zone.
(A) Subject to the provisions of this paragraph, articles which are imported directly from the West Bank, the Gaza Strip, a qualifying industrial zone as defined in subdivision (G) of this subparagraph or Israel and are--
(1) wholly the growth, product or manufacture of the West Bank, the Gaza Strip or a qualifying industrial zone; or
(2) new or different articles of commerce that have been grown, produced or manufactured in the West Bank, the Gaza Strip or a qualifying industrial zone, and the sum of--
(I) the cost or value of the materials produced in the West Bank, the Gaza Strip, a qualifying industrial zone or Israel, plus
(II) the direct costs of processing operations (not including simple combining or packaging operations, and not including mere dilution with water or with another substance that does not materially alter the characteristics of such articles) performed in the West Bank, the Gaza Strip, a qualifying industrial zone or Israel,
is not less than 35 percent of the appraised value of such articles;
shall be eligible for duty-free entry into the customs territory of the United States. For purposes of subdivision (A)(2), materials which are used in the production of articles in the West Bank, the Gaza Strip or a qualifying industrial zone, and which are the product of the United States, may be counted in an amount up to 15 percent of the appraised value of such articles.
(B) Articles are "imported directly" for the purposes of this paragraph if--
(1) they 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
(2) they are shipped through the territory of an intermediate country, and 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
(3) they are shipped through an intermediate country and the invoices and other documents do not specify the United States as the final destination, and the articles--
(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 articles in good condition.
(C) The term "new or different articles of commerce" means that articles must have been substantially transformed in the West Bank, the Gaza Strip or a qualifying industrial zone into articles with a new name, character or use.
(D) (1) For the purposes of subdivision (A)(2)(I), 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;
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(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 are not remitted on exportation.
(2) 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 manufacturer 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.
(3) 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.
(E) (1) For purposes of this paragraph, the "direct costs of processing operations performed in the West Bank, the 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 such articles;
(III) Research, development, design, engineering and blueprint costs insofar as they are allocable to such articles; and
(IV) Costs of inspecting and testing such articles.
(2) 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.
(F) Whenever articles are entered with a claim for the duty exemption provided in this paragraph--
(1) the importer shall be deemed to certify that such articles meet all of the conditions for duty exemption; and
(2) when requested by the Customs Service, the importer, manufacturer or exporter submits a declaration setting forth all pertinent information with respect to such articles, including the following:
(I) A description of such articles, quantities, numbers and marks of packages, invoice numbers and bills of lading;
(II) A description of the operations performed in the production of such articles in the West Bank, the Gaza Strip, a qualifying industrial zone or Israel and an identification of the direct costs of processing operations;
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(III) A description of the materials used in the production of such articles which are wholly the growth, product or manufacture of the West Bank, the Gaza Strip, a qualifying industrial zone, Israel or the 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 such articles 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; and
(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.
(G) For the purposes of this paragraph, 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 designated by the United States Trade Representative in a notice published in the Federal Register as a qualifying industrial zone.
(b) Rate of Duty Column 2. Notwithstanding any of the foregoing provisions of this note, the rates of duty shown in column 2 shall apply to products, whether imported directly or indirectly, of the following countries and areas pursuant to section 401 of the Tariff Classification Act of 1962, to section 231 or 257(e)(2) of the Trade Expansion Act of 1962, to section 404(a) of the Trade Act of 1974 or to any other applicable section of law, or to action taken by the President thereunder: 1/
Republic of Belarus North Korea Cuba Russian Federation
(c) Products Eligible for Special Tariff Treatment.
(i) Programs under which special tariff treatment may be provided, and the corresponding symbols for such programs as they are indicated in the "Special" subcolumn, are as follows:
Generalized System of Preferences.........................................................................................A, A* or A+ United States-Australia Free Trade Agreement........................................................................AU Automotive Products Trade Act................................................................................................B United States-Bahrain Free Trade Agreement Implementation Act..........................................BH Agreement on Trade in Civil Aircraft.........................................................................................C United States-Chile Free Trade Agreement..............................................................................CL African Growth and Opportunity Act........................................................................................D Caribbean Basin Economic Recovery Act...............................................................................E or E* United States-Israel Free Trade Area.......................................................................................IL United States-Jordan Free Trade Area Implementation Act.....................................................JO Trade Agreement Between the United States and Japan .......................................................JP Agreement on Trade in Pharmaceutical Products....................................................................K Dominican Republic-Central America-United States Free Trade Agreement Implementation Act..........................................................................................................................................P or P+ Uruguay Round Concessions on Intermediate Chemicals for Dyes........................................L United States-Caribbean Basin Trade Partnership Act............................................................R United States-Morocco Free Trade Agreement Implementation Act........................................MA United States-Singapore Free Trade Agreement.....................................................................SG United States-Oman Free Trade Agreement Implementation Act............................................OM United States-Peru Trade Promotion Agreement Implementation Act.....................................PE United States-Korea Free Trade Agreement Implementation Act.............................................KR United States-Colombia Trade Promotion Agreement Implementation Act..............................CO United States-Panama Trade Promotion Agreement Implementation Act................................PA
1/ See U.S. note 30, subchapter III, chapter 99 and heading 9903.90.08 for additional duty treatment.
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Nepal Preference Program ......................................................................................................NP United States-Mexico-Canada Agreement...............................................................................S or S+
(ii) Articles which are eligible for the special tariff treatment provided for in general notes 4 through 14 and which are subject to temporary modification under any provision of subchapters I, II and VII of chapter 99 shall be subject, for the period indicated in the "Effective Period" column in chapter 99, to rates of duty as follows:
(A) if a rate of duty for which the article may be eligible is set forth in the "Special" subcolumn in chapter 99 followed by one or more symbols described above, such rate shall apply in lieu of the rate followed by the corresponding symbol(s) set forth for such article in the "Special" subcolumn in chapters 1 to 98; or
(B) if "No change" appears in the "Special" subcolumn in chapter 99 and subdivision (c)(ii)(A) above does not apply, the rate of duty in the "General" subcolumn in chapter 99 or the applicable rate(s) of duty set forth in the "Special" subcolumn in chapters 1 to 98, whichever is lower, shall apply.
(iii) Unless the context requires otherwise, articles which are eligible for the special tariff treatment provided for in general notes 4 through 14 and which are subject to temporary modification under any provision of subchapters III or IV of chapter 99 shall be subject, for the period indicated in chapter 99, to the rates of duty in the "General" subcolumn in such chapter.
(iv) Whenever any rate of duty set forth in the "Special" subcolumn in chapters 1 to 98 is equal to or higher than, the corresponding rate of duty provided in the "General" subcolumn in such chapters, such rate of duty in the "Special" subcolumn shall be deleted; except that, if the rate of duty in the "Special" subcolumn is an intermediate stage in a series of staged rate reductions for that provision, such rate shall be treated as a suspended rate and shall be set forth in the "Special" subcolumn, followed by one or more symbols described above, and followed by an "s" in parentheses. If no rate of duty for which the article may be eligible is provided in the "Special" subcolumn for a particular provision in chapters 1 to 98, the rate of duty provided in the "General" subcolumn shall apply.
(d) Certain Motor Vehicles Manufactured in Foreign Trade Zones.
(i) Duty imposed. Notwithstanding any other provision of law, the duty imposed on a qualified article shall be the amount determined by multiplying the applicable foreign value content of such article by the applicable rate of duty for such article.
(ii) Qualified article. For purposes of this subdivision, the term "qualified article" means an article that is--
(A) classifiable under any of subheadings 8702.10 through 8704.90 of the Harmonized Tariff Schedule of the United States,
(B) produced or manufactured in a foreign trade zone before January 1, 1996,
(C) [Subdivision deleted.]
(D) [Subdivision deleted.]
[(I)] [Subdivision deleted.]
[(II)] [Subdivision deleted.]
(iii) Applicable foreign value content.
(A) Applicable foreign value content. For purposes of this subdivision, the term "applicable foreign value content" means the amount determined by multiplying the value of a qualified article by the applicable percentage.
(B) Applicable percentage. The term "applicable percentage" means the FTZ percentage for the article plus 5 percentage points.
(iv) Other definitions and special rules. For purposes of this subdivision--
(A) FTZ percentage. The FTZ percentage for a qualified article shall be the percentage determined in accordance with subparagraph (I), (II), or (III) of this paragraph, whichever is applicable.
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(I) Report for year published. If, at the time a qualified article is entered, the FTZ Annual Report for the year in which the article was manufactured has been published, the FTZ percentage for the article shall be the percentage of foreign status merchandise set forth in that report for the subzone in which the qualified article was manufactured, or if not manufactured in a subzone, the foreign trade zone in which the qualified article was manufactured.
(II) Report for year not published. If, at the time a qualified article is entered, the FTZ Annual Report for the year in which the article was manufactured has not been published, the FTZ percentage for the article shall be the percentage of foreign status merchandise set forth in the most recently published FTZ Annual Report for the subzone in which the article was manufactured, or if not manufactured in a subzone, the foreign trade zone in which the qualified article was manufactured.
(B) Applicable rate of duty. The term "applicable duty rate" means the rate of duty set forth in any of subheadings 8702.10 through 8704.90 of the Harmonized Tariff Schedule of the United States that is applicable to the qualified article and which would apply to that article if the article were directly entered for consumption into the United States from the foreign trade zone with non-privileged foreign status having been claimed for all foreign merchandise used in the manufacture or production of the qualified article.
(C) Foreign trade zone; subzone. The terms "foreign trade zone" and "subzone" mean a zone or subzone established pursuant to the Act of June 18, 1934, commonly known as the Foreign Trade Zones Act (19 U.S.C. 81a et seq.).
(D) FTZ annual report. The term "FTZ Annual Report" means the Annual Report to the Congress published in accordance with section 16 of the Foreign Trade Zones Act (19 U.S.C. 81p(c)).
(E) Non-privileged foreign status. The term "non-privileged foreign status" means that privilege has not been requested with respect to an article pursuant to section 3 of the Foreign Trade Zones Act.
(e) Exemptions. For the purposes of general note 1--
(i) corpses, together with their coffins and accompanying flowers,
(ii) telecommunications transmissions,
(iii) records, diagrams and other data with regard to any business, engineering or exploration operation whether on paper, cards, photographs, blueprints, tapes or other media,
(iv) articles returned from space within the purview of section 484a of the Tariff Act of 1930,
(v) articles exported from the United States which are returned within 45 days after such exportation from the United States as undeliverable and which have not left the custody of the carrier or foreign customs service,
(vi) any aircraft part or equipment that was removed from a United States-registered aircraft while being used abroad in international traffic because of accident, breakdown, or emergency, that was returned to the United States within 45 days after removal, and that did not leave the custody of the carrier or foreign customs service while abroad, and
(vii) residue of bulk cargo contained in instruments of international traffic previously exported from the United States,
are not goods subject to the provisions of the tariff schedule. No exportation referred to in subdivision (e) may be treated as satisfying any requirement for exportation in order to receive a benefit from, or meet an obligation to, the United States as a result of such exportation. For purposes of subparagraph (vii) of this paragraph: The term 'residue' means material of bulk cargo that remains in an instrument of international traffic after the bulk cargo is removed, with a quantity, by weight or volume, not exceeding 7 percent of the bulk cargo, and with no or de minimis value. The term 'bulk cargo' means cargo that is unpackaged and is in either solid, liquid, or gaseous form. The term 'instruments of international traffic' means containers or holders, capable of and suitable for repeated use, such as lift vans, cargo vans, shipping tanks, skids, pallets, caul boards, and cores for textile fabrics, arriving (whether loaded or empty) in use or to be used in the shipment of merchandise in international traffic, and any additional articles or classes of articles that the Commissioner of U.S. Customs and Border Protection designates as instruments of international traffic.
(f) Commingling of Goods.