6. Products of U.S. Insular Possessions

General Note 3(a)(iv)

Products of Insular Possessions

(A) Except as provided in additional U.S. note 5 of chapter 91 and except as provided in additional U.S. note 2 of chapter 96, and except as provided in section 423 of the Tax Reform Act of 1986, and additional U.S. note 3(e) of chapter 71, goods imported from insular possessions of the United States which are outside the customs territory of the United States are subject to the rates of duty set forth in column 1 of the tariff schedule, except that all such goods the growth or product of any such possession, or manufactured or produced in any such possession from materials the growth, product or manufacture of any such possession or of the customs territory of the United States, or of both, which do not contain foreign materials to the value of more than 70 percent of their total value (or more than 50 percent of their total value with respect to goods described in section 213(b) of the Caribbean Basin Economic Recovery Act), coming to the customs territory of the United States directly from any such possession, and all goods previously imported into the customs territory of the United States with payment of all applicable duties and taxes imposed upon or by reason of importation which were shipped from the United States, without remission, refund or drawback of such duties or taxes, directly to the possession from which they are being returned by direct shipment, are exempt from duty.

(B) In determining whether goods produced or manufactured in any such insular possession contain foreign materials to the value of more than 70 percent, no material shall be considered foreign which either

(1) at the time such goods are entered, or

(2) at the time such material is imported into the insular possession, may be imported into the customs territory from a foreign country, and entered free of duty; except that no goods containing material to which (2) of this subparagraph applies shall be exempt from duty under subparagraph (A) unless adequate documentation is supplied to show that the material has been incorporated into such goods during the 18-month period after the date on which such material is imported into the insular possession.

(C) Subject to the limitations imposed under sections 503(a)(2), 503(a)(3) and 503(c) of the Trade Act of 1974, goods designated as eligible under section 503 of such Act which are imported from an insular possession of the United States shall receive duty treatment no less favorable than the treatment afforded such goods imported from a beneficiary developing country under title V of such Act.

(D) Subject to the provisions in section 213 of the Caribbean Basin Economic Recovery Act, goods which are imported from insular possessions of the United States shall receive duty treatment no less favorable than the treatment afforded

such goods when they are imported from a beneficiary country under such Act. (E) Subject to the provisions in section 204 of the Andean Trade Preference Act, goods which are imported from insular possessions of the United States shall receive duty treatment no less favorable than the treatment afforded such goods when they are imported from a beneficiary country under such Act.

(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.

Additional U.S. Note 3(a) to Chapter 71

(a) Notwithstanding any provision in additional U.S. note 5 to chapter 91, any article of jewelry provided for in heading 7113 which is the product of the Virgin Islands, Guam, or American Samoa (including any such article which contains any foreign component) shall be eligible for the benefits provided in paragraph (h) of additional U.S. note 5 to chapter 91, subject to the provisions and limitations of that note and of paragraphs (b), (c), and (d) of this note.

(b) Notwithstanding additional U.S. Note 5(h)(ii)(B) to chapter 91, articles of jewelry subject to this note shall be subject to a limitation of 10,000,000 units.

(c) Nothing in this note shall result in an increase or a decrease in the aggregate amount referred to in paragraph (b)(iii) of, or the quantitative limitation otherwise established pursuant to the requirements of, additional U.S. note 5 to chapter 91.

(d) Nothing in this note shall be construed to permit a reduction in the amount available to watch producers under paragraph (h)(iv) of additional U.S. note 5 to chapter 91.

(e) The Secretary of Commerce and the Secretary of the Interior shall issue such regulations, not inconsistent with the provisions of this note and additional U.S. note 5 to chapter 91, as the Secretaries determine necessary to carry out their respective duties under this note. Such regulations shall not be inconsistent with substantial transformation requirements but may define the circumstances under which articles of jewelry shall be deemed to be 'units' for purposes of the benefits, provisions, and limitations of additional U.S. note 5 to Chapter 91.

(f) Notwithstanding any other provision of law any article of jewelry provided for in heading 7113 that is assembled in the Virgin Islands, Guam, or American Samoa by a jewelry manufacturer or jewelry assembler that commenced jewelry manufacturing or jewelry assembly operations in the Virgin Islands, Guam, or American Samoa after August 9, 2001, shall be treated as a product of the Virgin Islands, Guam, or American Samoa for purposes of this note and General Note 3(a)(iv) of this Schedule if such article is entered no later than 18 months after such

jewelry manufacturer or jewelry assembler commenced jewelry manufacturing or jewelry assembly operations in the Virgin Islands, Guam, or American Samoa.

7. Rates of Duty on Certain Motor Vehicles

General Note 3(d)

(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) exported therefrom to a NAFTA country (as defined in section 2(4) of the North American Free Trade Agreement Implementation Act (19) U.S.C. 3301(4)), and

(D) subsequently imported from that NAFTA country into the customs territory of the United States

(I) on or after the effective date of this subdivision, or

(II) on or after January 1, 1994, and before such effective date, if the entry of such article is unliquidated, under protest, or in litigation, or liquidation is otherwise not final on such effective date.

(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.

(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.

C. GENERALIZED SYSTEM OF PREFERENCES

Title V of the Trade Act of 1974, as amended

[19 U.S.C. 2461 et seq.; Public Law 93-618, as amended by Public Law 94-455, Public Law 96-39, Public Law 98-573, Public Law 99-47, Public Law 99-514, Public Law 99-570, Public Law 100-418, Public Law 101-179, Public Law 101-382, Public Law 103-66, Public Law 103-465, Public Law 104188, Public Law 104-295, Public Law 106-36, Public Law 106-170, Public Law 106-200, Public Law 107-210, and Public Law 108-429]

SEC. 501. AUTHORITY TO EXTEND PREFERENCES.

The President may provide duty-free treatment for any eligible article from any beneficiary developing country in accordance with the provisions of this title. In

taking any such action, the President shall have due regard for

(1) the effect such action will have on furthering the economic development of developing countries through the expansion of their exports;

(2) the extent to which other major developed countries are undertaking a comparable effort to assist developing countries by granting generalized preferences with respect to imports of products of such countries;

(3) the anticipated impact of such action on U.S. producers of like or directly competitive products; and

(4) the extent of the beneficiary developing country's competitiveness with respect to eligible articles.

SEC. 502. DESIGNATION OF BENEFICIARY DEVELOPING COUNTRIES. (a) AUTHORITY TO DESIGNATE COUNTRIES.—

(1) BENEFICIARY DEVELOPING COUNTRIES.-The President is authorized to designate countries as beneficiary developing countries for purposes of this title

(2) LEAST-DEVELOPED BENEFICIARY DEVELOPING COUNTRIES.-The President is authorized to designate any beneficiary developing country as a least-developed beneficiary developing country for purposes of this title, based on the considerations in section 501 and subsection (c) of this section. (b) COUNTRIES INELIGIBLE FOR DESIGNATION.—

(1) SPECIFIC COUNTRIES.-The following countries may not be designated as beneficiary developing countries for purposes of this title:

(A) Australia.

(B) Canada.

(C) European Union member states.

(D) Iceland.

(E) Japan.

(F) Monaco.

(G) New Zealand.

(H) Norway.

(I) Switzerland.

(2) OTHER BASES FOR INELIGIBILITY.-The President shall not designate any country a beneficiary developing country under this title if any of the following applies:

(A) Such country is a Communist country, unless

(i) the products of such country receive nondiscriminatory treatment,

(ii) such country is a WTO Member (as such term is defined in section 2(10) of the Uruguay Round Agreements Act) (19 U.S.C. 3501(10)) and a member of the International Monetary Fund, and

(iii) such country is not dominated or controlled by international communism.

(B) Such country is a party to an arrangement of countries and