I
111th CONGRESS
1st Session
H. R. 1318
IN THE HOUSE OF REPRESENTATIVES
March 4, 2009
Mr. Van Hollen (for himself, Mr. Hoekstra, Mr. Levin, Mr. Kirk, Mr. Burton of Indiana, Mr. Smith of Washington, Mr. Crowley, Mr. Moran of Virginia, Mr. Ackerman, Mr. Welch, and Ms. Jackson-Lee of Texas) introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To provide duty-free treatment for certain goods from designated Reconstruction Opportunity Zones in Afghanistan and Pakistan, and for other purposes.
Short title
This Act may be cited as the
Afghanistan-Pakistan Security and
Prosperity Enhancement Act
.
Definitions; purposes
Definitions
In this Act:
Agreement on Textiles and Clothing
The term Agreement on Textiles and Clothing means the Agreement on Textiles and Clothing referred to in section 101(d)(4) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(4)).
Category; textile and apparel category number
The terms category and textile and apparel category number mean the number assigned under the U.S. Textile and Apparel Category System of the Office of Textiles and Apparel of the Department of Commerce, as listed in the HTS under the applicable heading or subheading (as in effect on September 1, 2007).
Core labor standards
The term core labor standards means—
freedom of association;
the effective recognition of the right to bargain collectively;
the elimination of all forms of compulsory or forced labor;
the effective abolition of child labor and a prohibition on the worst forms of child labor; and
the elimination of discrimination in respect of employment and occupation.
Entered
The term entered means entered, or withdrawn from warehouse for consumption, in the customs territory of the United States.
Entity
The term entity means—
a natural person, corporation, company, business association, partnership, society, trust, any other nongovernmental entity, organization, or group, whether or not for profit;
any governmental entity or instrumentality of a government; and
any successor, subunit, or subsidiary of any entity described in subparagraph (A) or (B).
HTS
The term HTS means the Harmonized Tariff Schedule of the United States.
NAFTA
The term NAFTA means the North American Free Trade Agreement concluded between the United States, Mexico, and Canada on December 17, 1992.
Reconstruction Opportunity Zone
The term Reconstruction Opportunity Zone means any area that—
solely encompasses portions of the territory of—
Afghanistan; or
1 or more of the following areas of Pakistan:
the Federally Administered Tribal Areas;
areas of Pakistan-administered Kashmir that the President determines were harmed by the earthquake of October 8, 2005;
areas of Baluchistan that are within 100 miles of Pakistan’s border with Afghanistan; and
the North West Frontier Province;
has been designated by the competent authorities in Afghanistan or Pakistan, as the case may be, as an area in which merchandise may be introduced without payment of duty or excise tax; and
has been designated by the President as a Reconstruction Opportunity Zone pursuant to section 3(a).
Purposes
The purposes of this Act are—
to stimulate economic activity and development in Afghanistan and the border region of Pakistan, critical fronts in the struggle against violent extremism;
to reflect the strong support that the United States has pledged to Afghanistan and Pakistan for their sustained commitment in the global war on terrorism;
to support the 3-pronged United States strategy in Afghanistan and the border region of Pakistan that leverages political, military, and economic tools, with Reconstruction Opportunity Zones as a critical part of the economic component of that strategy; and
to offer a vital opportunity to improve livelihoods of indigenous populations of Reconstruction Opportunity Zones, promote good governance, improve economic and commercial ties between the people of Afghanistan and Pakistan, and extend and strengthen the Governments of Afghanistan and Pakistan.
Designation of Reconstruction Opportunity Zones
Authority To designate
The President is authorized to designate an area within Afghanistan or Pakistan described in section 2(a)(8) (A) and (B) as a Reconstruction Opportunity Zone if the President determines that—
Afghanistan or Pakistan, as the case may be, meets the eligibility criteria set forth in subsection (b);
Afghanistan or Pakistan, as the case may be, meets the eligibility criteria set forth in subsection (c) of section 502 of the Trade Act of 1974 (19 U.S.C. 2462(c)) for designation as a beneficiary developing country under that section and is not ineligible under subsection (b) of such section; and
designation of the area as a Reconstruction Opportunity Zone is appropriate taking into account the factors listed in subsection (c).
Eligibility criteria
Afghanistan or Pakistan, as the case may be, meets the eligibility criteria set forth in this subsection if that country—
has established, or is making continual progress toward establishing—
a market-based economy that protects private property rights, incorporates an open rules-based trading system, and minimizes government interference in the economy through measures such as price controls, subsidies, and government ownership of economic assets;
the rule of law, political pluralism, and the right to due process, a fair trial, and equal protection under the law;
economic policies to—
reduce poverty;
increase the availability of health care and educational opportunities;
expand physical infrastructure;
promote the development of private enterprise; and
encourage the formation of capital markets through microcredit or other programs;
a system to combat corruption and bribery, such as ratifying and implementing the United Nations Convention Against Corruption; and
protection of core labor standards;
is eliminating or has eliminated barriers to trade and investment, including by—
providing national treatment and measures to create an environment conducive to domestic and foreign investment;
protecting intellectual property; and
resolving bilateral trade and investment disputes;
does not engage in activities that undermine United States national security or foreign policy interests;
does not engage in gross violations of internationally recognized human rights;
does not provide support for acts of international terrorism; and
cooperates in international efforts to eliminate human rights violations and terrorist activities.
Additional factors
In determining whether to designate an area in Afghanistan or Pakistan as a Reconstruction Opportunity Zone, the President shall take into account—
an expression by the government of the country of its desire to have a particular area designated as a Reconstruction Opportunity Zone under this Act;
whether the government of the country has provided the United States with a monitoring and enforcement plan outlining specific steps the country will take to cooperate with the United States to—
facilitate legitimate cross-border commerce;
ensure that articles for which duty-free treatment is sought pursuant to this Act satisfy the applicable rules of origin described in section 4 (c) and (d) or section 5 (c) and (d), whichever is applicable; and
prevent unlawful transshipment, as described in section 6(b)(4).
the potential for such designation to create local employment and to promote local and regional economic development;
the physical security of the proposed Reconstruction Opportunity Zone;
the economic viability of the proposed Reconstruction Opportunity Zone, including—
whether there are commitments to finance economic activity proposed for the Reconstruction Opportunity Zone; and
whether there is existing or planned infrastructure for power, water, transportation, and communications in the area;
whether such designation would be compatible with and contribute to the foreign policy and national security objectives of the United States, taking into account the information provided under subsection (d); and
the views of interested persons submitted pursuant to subsection (e).
Information relating to compatibility with and contribution to foreign policy and national security objectives of the United States
In determining whether designation of a Reconstruction Opportunity Zone would be compatible with and contribute to the foreign policy and national security objectives of the United States in accordance with subsection (c)(6), the President shall take into account whether Afghanistan or Pakistan, as the case may be, has provided the United States with a plan outlining specific steps it will take to verify the ownership and nature of the activities of entities to be located in the proposed Reconstruction Opportunity Zone. The specific steps outlined in a country’s plan shall include a mechanism to annually register each entity by a competent authority of the country and—
to collect from each entity operating in, or proposing to operate in, a Reconstruction Opportunity Zone, information including—
the name and address of the entity;
the name and location of all facilities owned or operated by the entity that are operating in or proposed to be operating in a Reconstruction Opportunity Zone;
the name, nationality, date and place of birth, and position title of each person who is an owner, director, or officer of the entity; and
the nature of the activities of each entity;
to update the information required under paragraph (1) as changes occur; and
to provide such information promptly to the Secretary of State.
Opportunity for public comment
Before the President designates an area as a Reconstruction Opportunity Zone pursuant to subsection (a), the President shall afford an opportunity for interested persons to submit their views concerning the designation.
Notification to Congress
Before the President designates an area as a Reconstruction Opportunity Zone pursuant to subsection (a), the President shall notify Congress of the President’s intention to make the designation, together with the reasons for making the designation.
Duty-free treatment for certain nontextile and nonapparel articles
In general
The President is authorized to proclaim duty-free treatment for—
any article from a Reconstruction Opportunity Zone that the President has designated as an eligible article under section 503(a)(1)(A) of the Trade Act of 1974 (19 U.S.C. 2463(a)(1)(A));
any article from a Reconstruction Opportunity Zone located in Afghanistan that the President has designated as an eligible article under section 503(a)(1)(B) of the Trade Act of 1974 (19 U.S.C. 2463(a)(1)(B)); or
any article from a Reconstruction Opportunity Zone that is not a textile or apparel article, regardless of whether the article has been designated as an eligible article under section 503(a)(1)(A) or (B) of the Trade Act of 1974 (19 U.S.C. 2463(a)(1) (A) or (B)), if, after receiving the advice of the International Trade Commission pursuant to subsection (b), the President determines that such article is not import-sensitive in the context of imports from a Reconstruction Opportunity Zone.
Advice concerning certain eligible articles
Before proclaiming duty-free treatment for an article pursuant to subsection (a)(3), the President shall publish in the Federal Register and provide the International Trade Commission a list of articles which may be considered for such treatment. The provisions of sections 131 through 134 of the Trade Act of 1974 (19 U.S.C. 2151 through 2154) shall apply to any designation under subsection (a)(3) in the same manner as such sections apply to action taken under section 123 of the Trade Act of 1974 (19 U.S.C. 2133) regarding a proposed trade agreement.
General rules of origin
In general
The duty-free treatment proclaimed with respect to an article described in paragraph (1) or (3) of subsection (a) shall apply to any article subject to such proclamation which is the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones if—
that article is imported directly from a Reconstruction Opportunity Zone into the customs territory of the United States; and
with respect to an article that is an article of a Reconstruction Opportunity Zone in Pakistan, the sum of—
the cost or value of the materials produced in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan,
the direct costs of processing operations performed in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan, and
the cost or value of materials produced in the United States, determined in accordance with paragraph (2),
with respect to an article that is an article of a Reconstruction Opportunity Zone in Afghanistan, the sum of—
the cost or value of the materials produced in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan,
the cost or value of the materials produced in 1 or more countries that are members of the South Asian Association for Regional Cooperation,
the direct costs of processing operations performed in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan, and
the cost or value of materials produced in the United States, determined in accordance with paragraph (2),
Determination of 35 percent for articles from reconstruction opportunity zones in Pakistan and Afghanistan
If the cost or value of materials produced in the customs territory of the United States is included with respect to an article described in paragraph (1)(B), for purposes of determining the 35-percent appraised value requirement under clause (i) or (ii) of paragraph (1)(B), not more than 15 percent of the appraised value of the article at the time the article is entered into the United States may be attributable to the cost or value of such United States materials.
Rules of origin for certain articles of Reconstruction Opportunity Zones in afghanistan
In general
The duty-free treatment proclaimed with respect to an article described in paragraph (2) of subsection (a) shall apply to any article subject to such proclamation which is the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones in Afghanistan if—
that article is imported directly from a Reconstruction Opportunity Zone in Afghanistan into the customs territory of the United States; and
with respect to that article, the sum of—
the cost or value of the materials produced in 1 or more Reconstruction Opportunity Zones in Afghanistan,
the cost or value of the materials produced in 1 or more countries that are members of the South Asian Association for Regional Cooperation,
the direct costs of processing operations performed in 1 or more Reconstruction Opportunity Zones in Afghanistan, and
the cost or value of materials produced in the United States, determined in accordance with paragraph (2),
Determination of 35 percent for articles from reconstruction opportunity zones in pakistan and afghanistan
If the cost or value of materials produced in the customs territory of the United States is included with respect to an article described in paragraph (1)(B), for purposes of determining the 35-percent appraised value requirement under paragraph (1)(B), not more than 15 percent of the appraised value of the article at the time the article is entered into the United States may be attributable to the cost or value of such United States materials.
Exclusions
An article shall not be treated as the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones, and no material shall be included for purposes of determining the 35-percent appraised value requirement under subsection (c)(1) or (d)(1), by virtue of having merely undergone—
simple combining or packaging operations; or
mere dilution with water or with another substance that does not materially alter the characteristics of the article or material.
Direct costs of processing operations
In general
As used in subsections (c)(1)(B)(i)(II), (c)(1)(B)(ii)(III), and (d)(1)(B)(iii), the term direct costs of processing operations includes, but is not limited to—
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; and
dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the article.
Excluded costs
As used in subsections (c)(1)(B)(i)(II), (c)(1)(B)(ii)(III), and (d)(1)(B)(iii), the term direct costs of processing operations does not include costs which are not directly attributable to the article or are not costs of manufacturing the article, such as—
profit; and
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.
Regulations
The Secretary of the Treasury, after consultation with the United States Trade Representative, shall prescribe such regulations as may be necessary to carry out this section. The regulations may provide that, in order for an article to be eligible for duty-free treatment under this section, the article—
shall be wholly the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones; or
shall be a new or different article of commerce which has been grown, produced, or manufactured in 1 or more Reconstruction Opportunity Zones.
Duty-free treatment for certain textile and apparel articles
Duty-free treatment
The President is authorized to proclaim duty-free treatment for any textile or apparel article described in subsection (b), if—
the article is a covered article described in subsection (b); and
the President determines that the country in which the Reconstruction Opportunity Zone is located has satisfied the requirements set forth in section 6.
Covered articles
A covered article described in this subsection is an article in 1 of the following categories:
Articles of Reconstruction Opportunity Zones
An article that is the product of 1 or more Reconstruction Opportunity Zones and falls within the scope of 1 of the following textile and apparel category numbers, as set forth in the HTS (as in effect on September 1, 2007):
| 237 | 641 | 751 |
| 330 | 642 | 752 |
| 331 | 643 | 758 |
| 333 | 644 | 759 |
| 334 | 650 | 831 |
| 335 | 651 | 832 |
| 336 | 653 | 833 |
| 341 | 654 | 834 |
| 342 | 665 | 835 |
| 350 | 669 | 836 |
| 351 | 733 | 838 |
| 353 | 734 | 839 |
| 354 | 735 | 840 |
| 360 | 736 | 842 |
| 361 | 738 | 843 |
| 362 | 739 | 844 |
| 363 | 740 | 845 |
| 369 | 741 | 846 |
| 465 | 742 | 850 |
| 469 | 743 | 851 |
| 630 | 744 | 852 |
| 631 | 745 | 858 |
| 633 | 746 | 859 |
| 634 | 747 | 863 |
| 635 | 748 | 899 |
| 636 | 750 |
Articles of Reconstruction Opportunity Zones in Afghanistan
The article is the product of 1 or more Reconstruction Opportunity Zones in Afghanistan and falls within the scope of 1 of the following textile and apparel category numbers, as set forth in the HTS (as in effect on September 1, 2007):
| 201 | 439 | 459 |
| 414 | 440 | 464 |
| 431 | 442 | 670 |
| 433 | 444 | 800 |
| 434 | 445 | 810 |
| 435 | 446 | 870 |
| 436 | 448 | 871 |
| 438 |
Certain other textile and apparel articles
The article is the product of 1 or more Reconstruction Opportunity Zones and falls within the scope of 1 of the following textile and apparel category numbers as set forth in the HTS (as in effect on September 1, 2007) and is covered by the corresponding description for such category:
Category 239
An article in category 239 (relating to cotton and man-made fiber babies’ garments) except for baby socks and baby booties described in subheading 6111.20.6050, 6111.30.5050, or 6111.90.5050 of the HTS.
Category 338
An article in category 338 (relating to men’s and boys’ cotton knit shirts) if the article is a certain knit-to-shape garment that meets the definition included in Statistical Note 6 to Chapter 61 of the HTS, and is provided for in subheading 6110.20.1026, 6110.20.2067 or 6110.90.9067 of the HTS.
Category 339
An article in category 339 (relating to women’s and girls’ cotton knit shirts and blouses) if the article is a knit-to-shape garment that meets the definition included in Statistical Note 6 to Chapter 61 of the HTS, and is provided for in subheading 6110.20.1031, 6110.20.2077, or 6110.90.9071 of the HTS.
Category 359
An article in category 359 (relating to other cotton apparel) except swimwear provided for in subheading 6112.39.0010, 6112.49.0010, 6211.11.8010, 6211.11.8020, 6211.12.8010, or 6211.12.8020 of the HTS.
Category 632
An article in category 632 (relating to man-made fiber hosiery) if the article is panty hose provided for in subheading 6115.21.0020 of the HTS.
Category 638
An article in category 638 (relating to men’s and boys’ man-made fiber knit shirts) if the article is a knit-to-shape garment that meets the definition included in Statistical Note 6 to Chapter 61 of the HTS, and is provided for in subheading 6110.30.2051, 6110.30.3051, or 6110.90.9079 of the HTS.
Category 639
An article in category 639 (relating to women’s and girls’ man-made fiber knit shirts and blouses) if the article is a knit-to-shape garment that meets the definition included in Statistical Note 6 to Chapter 61 of the HTS, and is provided for in subheading 6110.30.2061, 6110.30.3057, or 6110.90.9081 of the HTS.
Category 647
An article in category 647 (relating to men’s and boys’ man-made fiber trousers) if the article is ski/snowboard pants that meets the definition included in Statistical Note 4 to Chapter 62 of the HTS, and is provided for in subheading 6203.43.3510, 6210.40.5031, or 6211.20.1525 of the HTS.
Category 648
An article in category 648 (relating to women’s and girls’ man-made fiber trousers) if the article is ski/snowboard pants that meets the definition included in Statistical Note 4 to Chapter 62 of the HTS, and is provided for in subheading 6204.63.3010, 6210.50.5031, or 6211.20.1555 of the HTS.
Category 659
An article in category 659 (relating to other man-made fiber apparel) except for swimwear provided for in subheading 6112.31.0010, 6112.31.0020, 6112.41.0010, 6112.41.0020, 6112.41.0030, 6112.41.0040, 6211.11.1010, 6211.11.1020, 6211.12.1010, or 6211.12.1020 of the HTS.
Category 666
An article in category 666 (relating to other man-made fiber furnishings) except for window shades and window blinds provided for in subheading 6303.12.0010 or 6303.92.2030 of the HTS.
Certain other articles
The article is the product of 1 or more Reconstruction Opportunity Zones and falls within the scope of 1 of the following statistical reporting numbers of the HTS (as in effect on September 1, 2007):
| 4202.12.8010 | 6210.20.3000 | 6304.99.1000 |
| 4202.12.8050 | 6210.20.7000 | 6304.99.2500 |
| 4202.22.4010 | 6210.30.3000 | 6304.99.4000 |
| 4202.22.7000 | 6210.30.7000 | 6304.99.6030 |
| 4202.22.8070 | 6210.40.3000 | 6306.22.9010 |
| 4202.92.3010 | 6210.40.7000 | 6306.29.1100 |
| 4202.92.6010 | 6210.50.3000 | 6306.29.2100 |
| 4202.92.9010 | 6210.50.7000 | 6306.40.4100 |
| 4202.92.9015 | 6211.20.0810 | 6306.40.4900 |
| 5601.29.0010 | 6211.20.0820 | 6306.91.0000 |
| 5702.39.2090 | 6211.32.0003 | 6306.99.0000 |
| 5702.49.2000 | 6211.33.0003 | 6307.10.2030 |
| 5702.50.5900 | 6211.42.0003 | 6307.20.0000 |
| 5702.99.2000 | 6211.43.0003 | 6307.90.7200 |
| 5703.90.0000 | 6212.10.3000 | 6307.90.7500 |
| 5705.00.2090 | 6212.10.7000 | 6307.90.8500 |
| 6108.22.1000 | 6212.90.0050 | 6307.90.8950 |
| 6111.90.7000 | 6213.90.0500 | 6307.90.8985 |
| 6113.00.1005 | 6214.10.1000 | 6310.90.1000 |
| 6113.00.1010 | 6216.00.0800 | 6406.99.1580 |
| 6113.00.1012 | 6216.00.1300 | 6501.00.6000 |
| 6115.29.4000 | 6216.00.1900 | 6502.00.2000 |
| 6115.30.1000 | 6216.00.2600 | 6502.00.4000 |
| 6115.99.4000 | 6216.00.3100 | 6502.00.9060 |
| 6116.10.0800 | 6216.00.3500 | 6504.00.3000 |
| 6116.10.1300 | 6216.00.4600 | 6504.00.6000 |
| 6116.10.4400 | 6217.10.1010 | 6504.00.9045 |
| 6116.10.6500 | 6217.10.8500 | 6504.00.9075 |
| 6116.10.9500 | 6301.90.0020 | 6505.10.0000 |
| 6116.92.0800 | 6302.29.0010 | 6505.90.8015 |
| 6116.93.0800 | 6302.39.0020 | 6505.90.9050 |
| 6116.99.3500 | 6302.59.3010 | 6505.90.9076 |
| 6117.10.4000 | 6302.99.1000 | 9404.90.2000 |
| 6117.80.3010 | 6303.99.0030 | 9404.90.8523 |
| 6117.80.8500 | 6304.19.3030 | 9404.90.9523 |
| 6210.10.2000 | 6304.91.0060 | 9404.90.9570 |
| 6210.10.7000 |
Rules of origin for certain covered articles
General rules
Except with respect to an article listed in paragraph (2) of subsection (b), duty-free treatment may be proclaimed for an article listed in subsection (b) only if the article is imported directly into the customs territory of the United States from a Reconstruction Opportunity Zone and—
the article is wholly the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones;
the article is a yarn, thread, twine, cordage, rope, cable, or braiding, and—
the constituent staple fibers are spun in, or
the continuous filament fiber is extruded in,
the article is a fabric, including a fabric classifiable under chapter 59 of the HTS, and the constituent fibers, filaments, or yarns are woven, knitted, needled, tufted, felted, entangled, or transformed by any other fabric-making process in 1 or more Reconstruction Opportunity Zones; or
the article is any other textile or apparel article that is cut (or knit-to-shape) and sewn or otherwise assembled in 1 or more Reconstruction Opportunity Zones from its component pieces.
Special rules
Certain made-up articles, textile articles in the piece, and certain other textiles and textile articles
Notwithstanding paragraph (1)(D) and except as provided in subparagraphs (C) and (D) of this paragraph, subparagraph (A), (B), or (C) of paragraph (1), as appropriate, shall determine whether a good that is classifiable under 1 of the following headings or subheadings of the HTS shall be considered to meet the rules of origin of this subsection: 5609, 5807, 5811, 6209.20.50.40, 6213, 6214, 6301, 6302, 6303, 6304, 6305, 6306, 6307.10, 6307.90, 6308, and 9404.90.
Certain knit-to-shape textiles and textile articles
Notwithstanding paragraph (1)(D) and except as provided in subparagraphs (C) and (D) of this paragraph, a textile or apparel article that is wholly formed on seamless knitting machines or by hand-knitting in 1 or more Reconstruction Opportunity Zones shall be considered to meet the rules of origin of this subsection.
Certain dyed and printed textiles and textile articles
Notwithstanding paragraph (1)(D), an article classifiable under subheading 6117.10, 6213.00, 6214.00, 6302.22, 6302.29, 6302.52, 6302.53, 6302.59, 6302.92, 6302.93, 6302.99, 6303.92, 6303.99, 6304.19, 6304.93, 6304.99, 9404.90.85, or 9404.90.95 of the HTS, except for an article classifiable under 1 of such subheadings as of cotton or of wool or consisting of fiber blends containing 16 percent or more by weight of cotton, shall be considered to meet the rules of origin of this subsection if the fabric in the article is both dyed and printed in 1 or more Reconstruction Opportunity Zones, and such dyeing and printing is accompanied by 2 or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing.
Fabrics of silk, cotton, man-made fiber, or vegetable fiber
Notwithstanding paragraph (1)(C), a fabric classifiable under the HTS as of silk, cotton, man-made fiber, or vegetable fiber shall be considered to meet the rules of origin of this subsection if the fabric is both dyed and printed in 1 or more Reconstruction Opportunity Zones, and such dyeing and printing is accompanied by 2 or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing.
Rules of origin for covered articles that are products of 1 or more Reconstruction Opportunity Zones in afghanistan
General rules
Duty-free treatment may be proclaimed for an article listed in paragraph (2) of subsection (b) only if the article is imported directly into the customs territory of the United States from a Reconstruction Opportunity Zone in Afghanistan and—
the article is wholly the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones in Afghanistan,
the article is a yarn, thread, twine, cordage, rope, cable, or braiding, and—
the constituent staple fibers are spun in, or
the continuous filament fiber is extruded in,
the article is a fabric, including a fabric classifiable under chapter 59 of the HTS, and the constituent fibers, filaments, or yarns are woven, knitted, needled, tufted, felted, entangled, or transformed by any other fabric-making process in 1 or more Reconstruction Opportunity Zones in Afghanistan; or
the article is any other textile or apparel article that is cut (or knit-to-shape) and sewn or otherwise assembled in 1 or more Reconstruction Opportunity Zones in Afghanistan from its component pieces.
Special rules
Certain made-up articles, textile articles in the piece, and certain other textiles and textile articles
Notwithstanding paragraph (1)(D) and except as provided in subparagraphs (C) and (D) of this paragraph, subparagraph (A), (B), or (C) of paragraph (1), as appropriate, shall determine whether a good that is classifiable under 1 of the following headings or subheadings of the HTS shall be considered to meet the rules of origin of this subsection: 5609, 5807, 5811, 6209.20.50.40, 6213, 6214, 6301, 6302, 6303, 6304, 6305, 6306, 6307.10, 6307.90, 6308, and 9404.90.
Certain knit-to-shape textiles and textile articles
Notwithstanding paragraph (1)(D) and except as provided in subparagraphs (C) and (D) of this paragraph, a textile or apparel article that is wholly formed on seamless knitting machines or by hand-knitting in 1 or more Reconstruction Opportunity Zones in Afghanistan shall be considered to meet the rules of origin of this subsection.
Certain dyed and printed textiles and textile articles
Notwithstanding paragraph (1)(D), an article classifiable under subheading 6117.10, 6213.00, 6214.00, 6302.22, 6302.29, 6302.52, 6302.53, 6302.59, 6302.92, 6302.93, 6302.99, 6303.92, 6303.99, 6304.19, 6304.93, 6304.99, 9404.90.85, or 9404.90.95 of the HTS, except for an article classifiable under 1 of such subheadings as of cotton or of wool or consisting of fiber blends containing 16 percent or more by weight of cotton, shall be considered to meet the rules of origin of this subsection if the fabric in the article is both dyed and printed in 1 or more Reconstruction Opportunity Zones in Afghanistan, and such dyeing and printing is accompanied by 2 or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing.
Fabrics of silk, cotton, man-made fiber or vegetable fiber
Notwithstanding paragraph (1)(C), a fabric classifiable under the HTS as of silk, cotton, man-made fiber, or vegetable fiber shall be considered to meet the rules of origin of this subsection if the fabric is both dyed and printed in 1 or more Reconstruction Opportunity Zones in Afghanistan, and such dyeing and printing is accompanied by 2 or more of the following finishing operations: bleaching, shrinking, fulling, napping, decating, permanent stiffening, weighting, permanent embossing, or moireing.
Regulations
The Secretary of the Treasury, after consultation with the United States Trade Representative, shall prescribe such regulations as may be necessary to carry out this section.
Protections against unlawful transshipment
Duty-free treatment conditioned on enforcement measures
In general
The duty-free treatment described in section 5 shall not be provided to covered articles that are imported from a Reconstruction Opportunity Zone in a country unless the President determines that country meets the following criteria:
The country has adopted an effective visa or electronic certification system, domestic laws, and enforcement procedures applicable to covered articles to prevent unlawful transshipment of the articles and the use of false documents relating to the importation of the articles into the United States.
The country has enacted legislation or promulgated regulations that would permit U.S. Customs and Border Protection verification teams to have the access necessary to investigate thoroughly allegations of unlawful transshipment through such country.
The country agrees to provide U.S. Customs and Border Protection with a monthly report on shipments of covered articles from each facility engaged in the production of those articles in a Reconstruction Opportunity Zone in that country.
The country will cooperate fully with the United States to address and take action necessary to prevent circumvention, as described in article 5 of the Agreement on Textiles and Clothing.
The country agrees to require each entity engaged in the production or manufacture of a covered article in a Reconstruction Opportunity Zone in that country to register with the competent government authority, to provide that authority with the following information, and to update that information as changes occur:
The name and address of the entity, including the location of all textile or apparel facilities owned or operated by that entity in Afghanistan or Pakistan.
The telephone number, facsimile number, and electronic mail address of the entity.
The names and nationalities of the owners, directors, and corporate officers, and their positions within the entity.
The number of employees the entity employs and their occupations.
A general description of the covered articles the entity produces and the entity's production capacity.
The number and type of machines the entity uses to produce textile or apparel articles at each facility.
The approximate number of hours the machines operate per week.
The identity of any supplier to the entity of textile or apparel goods, or fabrics, yarns, or fibers used in the production of textile or apparel goods.
The name of, and contact information for, each of the entity’s customers in the United States.
The country agrees to provide to U.S. Customs and Border Protection on a timely basis all of the information received by the competent government authority in accordance with subparagraph (E) and to provide U.S. Customs and Border Protection with an annual update of that information.
The country agrees to require that all producers and exporters of covered articles in a Reconstruction Opportunity Zone in that country maintain complete records of the production and the export of covered articles, including materials used in the production, for at least 5 years after the production or export (as the case may be).
The country agrees to provide, on a timely basis, at the request of U.S. Customs and Border Protection, documentation establishing the eligibility of covered articles for duty-free treatment under section 5.
Documentation establishing eligibility of articles for duty-free treatment
For purposes of paragraph (1)(H), documentation establishing the eligibility of a covered article for duty-free treatment under section 5 includes documentation such as production records, information relating to the place of production, the number and identification of the types of machinery used in production, the number of workers employed in production, and certification from both the manufacturer and the exporter.
Customs procedures and enforcement
In general
Regulations
The Secretary of the Treasury, after consultation with the United States Trade Representative, shall promulgate regulations setting forth customs procedures similar in all material respects to the requirements of article 502(1) of the NAFTA as implemented pursuant to United States law, which shall apply to any importer that claims duty-free treatment for an article under section 5.
Determination
In order for articles produced in a Reconstruction Opportunity Zone to qualify for the duty-free treatment under section 5, there shall be in effect a determination by the President that Afghanistan or Pakistan, as the case may be—
has implemented and follows, or
is making substantial progress toward implementing and following,
Certificate of origin
A certificate of origin that otherwise would be required pursuant to the provisions of paragraph (1) shall not be required in the case of an article imported under section 5 if such certificate of origin would not be required under article 503 of the NAFTA, as implemented pursuant to United States law, if the article were imported from Mexico.
Penalties
If the President determines, based on sufficient evidence, that an entity has engaged in unlawful transshipment described in paragraph (4), the President shall deny for a period of 5 years beginning on the date of the determination all benefits under section 5 to the entity, any successor of the entity, and any other entity owned, operated, or controlled by the principals of the entity.
Unlawful transshipment described
For purposes of this section, unlawful transshipment occurs when duty-free treatment for a covered article has been claimed on the basis of material false information concerning the country of origin, manufacture, processing, or assembly of the article or any of its components. For purposes of the preceding sentence, false information is material if disclosure of the true information would mean or would have meant that the article is or was ineligible for duty-free treatment under section 5.
Monitoring and reports to congress
U.S. Customs and Border Protection shall monitor and the Commissioner responsible for U.S. Customs and Border Protection shall submit to Congress, not later than March 31 of each year, a report on the effectiveness of the visa or electronic certification systems and the implementation of legislation and regulations described in subsection (a) and on measures taken by Afghanistan and Pakistan to prevent circumvention as described in article 5 of the Agreement on Textile and Clothing.
Additional customs enforcement
U.S. Customs and Border Protection shall—
make available technical assistance to Afghanistan and Pakistan—
in the development and implementation of visa or electronic certification systems, legislation, and regulations described in subsection (a)(1)(A) and (B); and
to train their officials in anti-transshipment enforcement;
send production verification teams to Afghanistan and Pakistan as necessary; and
to the extent feasible, place Afghanistan and Pakistan on the Electronic Visa (ELVIS) program or relevant e-certification program.
Authorization of appropriations
To carry out subsection (c), there are authorized to be appropriated to U.S. Customs and Border Protection $10,000,000 for each of the fiscal years 2010 through 2023.
Technical assistance, capacity building, compliance assessment, and remediation program
Definitions
In this section:
Appropriate congressional committees
The term appropriate congressional committees means the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives.
Textile or apparel exporting enterprise
The term textile or apparel exporting enterprise means a producer of textile or apparel articles that is located in a Reconstruction Opportunity Zone and is seeking or receiving any benefits under section 5.
Eligibility
Presidential certification of compliance by Afghanistan or Pakistan with requirements
Upon the expiration of the 16-month period beginning on the date on which the President notifies Congress of the President’s intention to designate an area within Afghanistan or Pakistan, as the case may be, as a Reconstruction Opportunity Zone under section 3, each Reconstruction Opportunity Zone in Afghanistan or Pakistan, as the case may be, shall continue to receive duty-free treatment under this Act only if the President determines and certifies to Congress that Afghanistan or Pakistan, as the case may be—
has implemented the requirements set forth in subsections (c) and (d); and
has agreed to require textile or apparel exporting enterprises to participate in the program described in subsection (d) and has developed a system to ensure participation in such program by such enterprises, including by developing and maintaining the registry described in subsection (c)(2)(A).
Extension
The President may extend the period for compliance by Afghanistan or Pakistan under paragraph (1) if the President—
determines that Afghanistan or Pakistan, as the case may be, has made a good faith effort toward such compliance and has agreed to take additional steps to come into full compliance that are satisfactory to the President; and
provides to the appropriate congressional committees, not later than 6 months after the last day of the 16-month period specified in paragraph (1), and every 6 months thereafter, a report identifying the steps that Afghanistan or Pakistan, as the case may be, has agreed to take to come into full compliance and the progress made over the preceding 6-month period in implementing such steps.
Continuing compliance
Termination of preferential treatment
If, after making a certification under paragraph (1), the President determines that Afghanistan or Pakistan is no longer meeting the requirements set forth in paragraph (1), the President shall terminate the eligibility of Afghanistan or Pakistan, as the case may be, provided under section 3(b), unless the President determines, after consulting with the appropriate congressional committees, that meeting such requirements is not practicable because of extraordinary circumstances existing in Afghanistan or Pakistan, as the case may be, when the determination is made.
Subsequent compliance
If the President, after terminating eligibility of Afghanistan or Pakistan, as the case may be, under subparagraph (A), determines that Afghanistan or Pakistan, as the case may be, is meeting the requirements set forth in paragraph (1), the President shall reinstate the eligibility of Afghanistan or Pakistan, as the case may be, under section 3(b).
Labor official
In general
The requirement under this subsection is that Afghanistan or Pakistan, as the case may be, has designated a labor official within the national government that—
reports directly to the President of Afghanistan or Pakistan, as the case may be;
is chosen by the President of Afghanistan or Pakistan, as the case may be, in consultation with labor unions and industry associations; and
is vested with the authority to perform the functions described in paragraph (2).
Functions
The functions of the labor official shall include—
developing and maintaining a registry of textile or apparel exporting enterprises, and developing, in consultation and coordination with any other appropriate officials of the Government of Afghanistan or Pakistan, as the case may be, a system to ensure participation by such enterprises in the program described in subsection (d);
overseeing the implementation of the program described in subsection (d);
receiving and investigating comments from any interested party regarding the conditions described in subsection (d)(2) in facilities of textile or apparel exporting enterprises listed in the registry described in subparagraph (A) and, where appropriate, referring such comments or the result of such investigations to the appropriate authorities of Afghanistan or Pakistan, as the case may be, or to the entity operating the program described in subsection (d);
assisting, in consultation and coordination with any other appropriate authorities Afghanistan or Pakistan, as the case may be, textile or apparel exporting enterprises listed in the registry described in subparagraph (A) in meeting the conditions set forth in subsection (d)(2); and
coordinating, with the assistance of the entity operating the program described in subsection (d), a tripartite committee comprised of appropriate representatives of government agencies, employers, and workers, as well as other relevant interested parties, for the purposes of evaluating progress in implementing the program described in subsection (d), and consulting on improving core labor standards and working conditions in the textile and apparel sector in Afghanistan or Pakistan, as the case may be, and on other matters of common concern relating to such core labor standards and working conditions.
Technical assistance, capacity building, compliance assessment, and remediation program
In general
The requirement under this subsection is that Afghanistan or Pakistan, as the case may be, in cooperation with the International Labor Organization, has established a program meeting the requirements under paragraph (3)—
to assess compliance by textile or apparel exporting enterprises listed in the registry described in subsection (c)(2)(A) with the conditions set forth in paragraph (2) and to assist such enterprises in meeting such conditions; and
to provide assistance to improve the capacity of the Government of Afghanistan or Pakistan, as the case may be—
to inspect facilities of textile or apparel exporting enterprises listed in the registry described in subsection (c)(2)(A); and
to enforce national labor laws and resolve labor disputes, including through measures described in paragraph (5).
Conditions described
The conditions referred to in paragraph (1) are—
compliance with core labor standards; and
compliance with the labor laws of Afghanistan or Pakistan, as the case may be, that relate directly to core labor standards and to ensuring acceptable conditions of work with respect to minimum wages, hours of work, and occupational health and safety.
Requirements
The requirements for the program are that the program—
be operated by the International Labor Organization (or any subdivision, instrumentality, or designee thereof), which prepares the annual reports described in paragraph (4);
be developed through a participatory process that includes the labor official described in subsection (c) of Afghanistan or Pakistan, as the case may be, and appropriate representatives of government agencies, employers, and workers;
assess compliance by each textile or apparel exporting enterprise listed in the registry described in subsection (c)(2)(A) with the conditions set forth in paragraph (2) and identify any deficiencies by such enterprise with respect to meeting such conditions, including by—
conducting site visits to facilities of the enterprise;
conducting confidential interviews with workers and management of the facilities of the enterprise; and
providing to management and workers, and where applicable, worker organizations in the enterprise, on a confidential basis—
the results of the assessment carried out under this subparagraph; and
specific suggestions for remediating any such deficiencies;
assist the textile or apparel exporting enterprise in remediating any deficiencies identified under subparagraph (C);
conduct prompt follow-up site visits to the facilities of the textile or apparel exporting enterprise to assess progress on remediation of any deficiencies identified under subparagraph (C); and
provide training to workers and management of the textile or apparel exporting enterprise, and where appropriate, to other persons or entities, to promote compliance with paragraph (2).
Annual report
The annual reports referred to in paragraph (3)(A) are a report, by the entity operating the program, that is published (and available to the public in a readily accessible manner) on an annual basis, beginning 1 year after Afghanistan or Pakistan, as the case may be, has implemented the program under this subsection, covering the preceding 1-year period, and that includes the following:
The name of each textile or apparel exporting enterprise listed in the registry described in subsection (c)(2)(A) that has been identified as having met the conditions under paragraph (2).
The name of each textile or apparel exporting enterprise listed in the registry described in subsection (c)(2)(A) that has been identified as having deficiencies with respect to the conditions under paragraph (2), and has failed to remedy such deficiencies.
For each textile or apparel exporting enterprise listed under subparagraph (B)—
a description of the deficiencies found to exist and the specific suggestions for remediating such deficiencies made by the entity operating the program;
a description of the efforts by the enterprise to remediate the deficiencies, including a description of assistance provided by any entity to assist in such remediation; and
with respect to deficiencies that have not been remediated, the amount of time that has elapsed since the deficiencies were first identified in a report under this subparagraph.
For each textile or apparel exporting enterprise identified as having deficiencies with respect to the conditions described under paragraph (2) in a prior report under this paragraph, a description of the progress made in remediating such deficiencies since the submission of the prior report, and an assessment of whether any aspect of such deficiencies persists.
Capacity building
The assistance to the Government of Afghanistan or Pakistan referred to in paragraph (1)(B) shall include programs—
to review the labor laws and regulations of Afghanistan or Pakistan, as the case may be, and to develop and implement strategies for improving labor laws and regulations;
to develop additional strategies for facilitating protection of core labor standards and providing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health, including through legal, regulatory, and institutional reform;
to increase awareness of core labor standards and national labor laws;
to promote consultation and cooperation between government representatives, employers, worker representatives, and United States importers on matters relating to core labor standards and national labor laws;
to assist the labor official of Afghanistan or Pakistan, as the case may be, designated pursuant to subsection (c) in establishing and coordinating operation of the committee described in subsection (c)(2)(E);
to assist worker representatives in more fully and effectively advocating on behalf of their members; and
to provide on-the-job training and technical assistance to labor inspectors, judicial officers, and other relevant personnel to build their capacity to enforce national labor laws and resolve labor disputes.
Compliance with eligibility criteria
Country compliance with core labor standards eligibility criteria
In making a determination of whether Afghanistan or Pakistan is meeting the requirement set forth in section 3(b)(1)(E) relating to core labor standards, the President shall consider the reports produced under subsection (d)(4).
Enterprise eligibility
Identification of producers
Beginning 2 years after the President makes the certification under subsection (b)(1), the President shall identify on a biennial basis whether a textile or apparel exporting enterprise listed in the registry described in subsection (c)(2)(A) has failed to comply with core labor standards and with the labor laws of Afghanistan or Pakistan, as the case may be, that directly relate to and are consistent with core labor standards.
Assistance to enterprises; withdrawal, etc., of preferential treatment
For each textile or apparel exporting enterprise that the President identifies under subparagraph (A), the President shall seek to assist such enterprise in coming into compliance with core labor standards and with the labor laws of Afghanistan or Pakistan, as the case may be, that directly relate to and are consistent with core labor standards. If such efforts fail, the President shall withdraw, suspend, or limit the application of preferential treatment under section 5 to articles of such enterprise.
Reinstating preferential treatment
If the President, after withdrawing, suspending, or limiting the application of preferential treatment under subparagraph (B) to articles of a textile or apparel exporting enterprise, determines that such enterprise is complying with core labor standards and with the labor laws of Afghanistan or Pakistan, as the case may be, that directly relate to and are consistent with core labor standards, the President shall reinstate the application of preferential treatment under section 5 to the articles of the enterprise.
Consideration of reports
In making the identification under subparagraph (A) and the determination under subparagraph (C), the President shall consider the reports made available under subsection (d)(4).
Reports by the president
In general
Not later than one year after the date of the enactment of this Act, and annually thereafter, the President shall transmit to the appropriate congressional committees a report on the implementation of this section during the preceding 1-year period.
Matters to be included
Each report required by paragraph (1) shall include the following:
An explanation of the efforts of Afghanistan and Pakistan, the President, and the International Labor Organization to carry out this section.
A summary of each report produced under subsection (d)(4) during the preceding 1-year period and a summary of the findings contained in such report.
Identifications made under subsection (e)(2)(A) and determinations made under subsection (e)(2)(C).
Authorization of appropriations
There is authorized to be appropriated to carry out this section $20,000,000 for the period beginning on October 1, 2009, and ending on September 30, 2014.
Petition process
Any interested party may file a request to have the status of Afghanistan or Pakistan reviewed with respect to the eligibility requirements listed in this Act, and the President shall provide for this purpose the same procedures as those that are provided for reviewing the status of eligible beneficiary developing countries with respect to the designation criteria listed in subsections (b) and (c) of section 502 of the Trade Act of 1974 (19 U.S.C. 2642 (b) and (c)).
Limitations on providing duty-free treatment
In general
Proclamation
Except as provided in paragraph (2), and subject to subsection (b) and the conditions described in sections 3 through 7, the President shall exercise the President’s authority under this Act, and the President shall proclaim any duty-free treatment pursuant to that authority.
Waiver
The President may waive the application of duty-free treatment under this Act with respect to Reconstruction Opportunity Zones in Afghanistan and Pakistan or enterprises receiving benefits under section 4 or 5 if the President determines that providing such treatment is inconsistent with the national interests of the United States. In making such determination, the President shall consider—
obligations of the United States under international agreements;
the national economic interests of the United States; and
the foreign policy interests of the United States, including the economic development of Afghanistan and the border region of Pakistan.
Withdrawal, suspension, or limitation of duty-free treatment
The President may withdraw, suspend, or limit the application of the duty-free treatment proclaimed under this Act. In taking any action to withdraw, suspend, or limit duty-free treatment with respect to Reconstruction Opportunity Zones in Afghanistan and Pakistan or enterprises receiving benefits under section 4 or 5, the President shall consider the factors set forth in section 3 (b) and (c) of this Act, and section 502 (b) and (c) of the Trade Act of 1974 (19 U.S.C. 2462 (b) and (c)). In taking any action to withdraw, suspend, or limit duty-free treatment with respect to enterprises receiving benefits under section 4 or 5, the President shall consider the information described in section 3(d) relating to verification of the ownership and nature of the activities of such enterprises and any other relevant information the President determines to be appropriate.
Notice to Congress
The President shall advise Congress—
of any action the President takes to withdraw, suspend, or limit the application of duty-free treatment with respect to Reconstruction Opportunity Zones in Afghanistan or Pakistan or enterprises receiving benefits under section 4 or 5; and
if either Afghanistan or Pakistan fails to adequately take the actions described in section 3 (b) and (c) of this Act or section 502 (b) and (c) of the Trade Act of 1974.
Termination of benefits
Duty-free treatment provided under this Act shall remain in effect through September 30, 2024.