< Back to S. 496 (111th Congress, 2009–2010)

Text of the Afghanistan and Pakistan Reconstruction Opportunity Zones Act of 2009

This bill was introduced on February 26, 2009, in a previous session of Congress, but was not enacted. The text of the bill below is as of Feb 26, 2009 (Introduced).

Source: GPO

II

111th CONGRESS

1st Session

S. 496

IN THE SENATE OF THE UNITED STATES

February 26, 2009

(for herself, Mr. Hatch, and Mr. Casey) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To provide duty-free treatment for certain goods from designated Reconstruction Opportunity Zones in Afghanistan and Pakistan, and for other purposes.

1.

Short title

This Act may be cited as the Afghanistan and Pakistan Reconstruction Opportunity Zones Act of 2009.

2.

Definitions; purposes

(a)

Definitions

In this Act:

(1)

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)).

(2)

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).

(3)

Entered

The term entered means entered, or withdrawn from warehouse for consumption, in the customs territory of the United States.

(4)

Entity

The term entity means—

(A)

a natural person, corporation, company, business association, partnership, society, trust, any other nongovernmental entity, organization, or group, whether or not for profit;

(B)

any governmental entity or instrumentality of a government; and

(C)

any successor, subunit, or subsidiary of any entity described in subparagraph (A) or (B).

(5)

HTS

The term HTS means the Harmonized Tariff Schedule of the United States.

(6)

NAFTA

The term NAFTA means the North American Free Trade Agreement concluded between the United States, Mexico, and Canada on December 17, 1992.

(7)

Reconstruction Opportunity Zone

The term Reconstruction Opportunity Zone means any area that—

(A)

encompasses portions of the territory of—

(i)

Afghanistan; or

(ii)

1 or more of the following areas of Pakistan:

(I)

the Federally Administered Tribal Areas;

(II)

areas of Pakistan-administered Kashmir that the President determines were harmed by the earthquake of October 8, 2005;

(III)

areas of Baluchistan that are within 100 miles of Pakistan’s border with Afghanistan; and

(IV)

the North West Frontier Province;

(B)

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

(C)

has been designated by the President as a Reconstruction Opportunity Zone pursuant to section 3(a).

(b)

Purposes

The purposes of this Act are—

(1)

to stimulate economic activity and development in Afghanistan and the border region of Pakistan, critical fronts in the struggle against violent extremism;

(2)

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;

(3)

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

(4)

to offer a vital opportunity to improve livelihoods, promote good governance, and extend and strengthen the Governments of Afghanistan and Pakistan.

3.

Designation of Reconstruction Opportunity Zones

(a)

Authority To designate

The President is authorized to designate an area within Afghanistan or Pakistan described in section 2(a)(7) (A) and (B) as a Reconstruction Opportunity Zone if the President determines that—

(1)

Afghanistan or Pakistan, as the case may be, meets the eligibility criteria set forth in subsection (b);

(2)

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

(3)

designation of the area as a Reconstruction Opportunity Zone is appropriate taking into account the factors listed in subsection (c).

(b)

Eligibility criteria

Afghanistan or Pakistan, as the case may be, meets the eligibility criteria set forth in this subsection if that country—

(1)

has established, or is making continual progress toward establishing—

(A)

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;

(B)

the rule of law, political pluralism, and the right to due process, a fair trial, and equal protection under the law;

(C)

economic policies to—

(i)

reduce poverty;

(ii)

increase the availability of health care and educational opportunities;

(iii)

expand physical infrastructure;

(iv)

promote the development of private enterprise; and

(v)

encourage the formation of capital markets through microcredit or other programs;

(D)

a system to combat corruption and bribery, such as ratifying and implementing the United Nations Convention Against Corruption; and

(E)

protection of internationally recognized worker rights, as defined in section 507(4) of the Trade Act of 1974 (19 U.S.C. 2467(4));

(2)

is eliminating or has eliminated barriers to trade and investment, including by—

(A)

providing national treatment and measures to create an environment conducive to domestic and foreign investment;

(B)

protecting intellectual property; and

(C)

resolving bilateral trade and investment disputes;

(3)

does not engage in activities that undermine United States national security or foreign policy interests;

(4)

does not engage in gross violations of internationally recognized human rights;

(5)

does not provide support for acts of international terrorism; and

(6)

cooperates in international efforts to eliminate human rights violations and terrorist activities.

(c)

Additional factors

In determining whether to designate an area in Afghanistan or Pakistan as a Reconstruction Opportunity Zone, the President shall take into account—

(1)

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;

(2)

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—

(A)

facilitate legitimate cross-border commerce;

(B)

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;

(C)

prevent unlawful transshipment, as described in section 6(b)(3); and

(D)

protect internationally recognized worker rights, as defined in section 507(4) of the Trade Act of 1974 (19 U.S.C. 2467(4));

(3)

the potential for such designation to create local employment and to promote local and regional economic development;

(4)

the physical security of the proposed Reconstruction Opportunity Zone;

(5)

the economic viability of the proposed Reconstruction Opportunity Zone, including—

(A)

whether there are commitments to finance economic activity proposed for the Reconstruction Opportunity Zone; and

(B)

whether there is existing or planned infrastructure for power, water, transportation, and communications in the area;

(6)

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

(7)

the views of interested persons submitted pursuant to subsection (e).

(d)

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 by which a competent authority of the country—

(1)

collects from each entity operating in, or proposing to operate in, a Reconstruction Opportunity Zone, information including—

(A)

the name and address of the entity;

(B)

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;

(C)

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

(D)

the nature of the activities of each entity;

(2)

updates the information required under paragraph (1) as changes occur; and

(3)

provides such information promptly to the Secretary of State.

(e)

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.

(f)

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.

4.

Duty-free treatment for certain nontextile and nonapparel articles

(a)

In general

The President is authorized to proclaim duty-free treatment for—

(1)

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));

(2)

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

(3)

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.

(b)

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.

(c)

General rules of origin

(1)

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—

(A)

that article is imported directly from a Reconstruction Opportunity Zone into the customs territory of the United States; and

(B)
(i)

with respect to an article that is an article of a Reconstruction Opportunity Zone in Pakistan, the sum of—

(I)

the cost or value of the materials produced in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan,

(II)

the direct costs of processing operations performed in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan, and

(III)

the cost or value of materials produced in the United States, determined in accordance with paragraph (2),

is not less than 35 percent of the appraised value of the article at the time it is entered into the United States; or
(ii)

with respect to an article that is an article of a Reconstruction Opportunity Zone in Afghanistan, the sum of—

(I)

the cost or value of the materials produced in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan,

(II)

the cost or value of the materials produced in 1 or more countries that are members of the South Asian Association for Regional Cooperation,

(III)

the direct costs of processing operations performed in 1 or more Reconstruction Opportunity Zones in Pakistan or Afghanistan, and

(IV)

the cost or value of materials produced in the United States, determined in accordance with paragraph (2),

is not less than 35 percent of the appraised value of the article at the time it is entered into the United States.
(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.

(d)

Rules of origin for certain articles of Reconstruction Opportunity Zones in afghanistan

(1)

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—

(A)

that article is imported directly from a Reconstruction Opportunity Zone in Afghanistan into the customs territory of the United States; and

(B)

with respect to that article, the sum of—

(i)

the cost or value of the materials produced in 1 or more Reconstruction Opportunity Zones in Afghanistan,

(ii)

the cost or value of the materials produced in 1 or more countries that are members of the South Asian Association for Regional Cooperation,

(iii)

the direct costs of processing operations performed in 1 or more Reconstruction Opportunity Zones in Afghanistan, and

(iv)

the cost or value of materials produced in the United States, determined in accordance with paragraph (2),

is not less than 35 percent of the appraised value of the product at the time it is entered into the United States.
(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.

(e)

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—

(1)

simple combining or packaging operations; or

(2)

mere dilution with water or with another substance that does not materially alter the characteristics of the article or material.

(f)

Direct costs of processing operations

(1)

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—

(A)

all actual labor costs involved in the growth, production, manufacture, or assembly of the article, including—

(i)

fringe benefits;

(ii)

on-the-job training; and

(iii)

costs of engineering, supervisory, quality control, and similar personnel; and

(B)

dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the article.

(2)

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—

(A)

profit; and

(B)

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.

(g)

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—

(1)

shall be wholly the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones; or

(2)

shall be a new or different article of commerce which has been grown, produced, or manufactured in 1 or more Reconstruction Opportunity Zones.

5.

Duty-free treatment for certain textile and apparel articles

(a)

Duty-free treatment

The President is authorized to proclaim duty-free treatment for any textile or apparel article described in subsection (b), if—

(1)

the article is a covered article described in subsection (b); and

(2)

the President determines that the country in which the Reconstruction Opportunity Zone is located has satisfied the requirements set forth in section 6.

(b)

Covered articles

A covered article described in this subsection is an article in 1 of the following categories:

(1)

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):

237641751
330642752
331643758
333644759
334650831
335 651832
336653833
341654834
342665835
350669836
351733838
353734839
354735840
360736842
361738843
362739844
363740845
369741846
465742850
469743851
630744852
631745858
633746859
634747863
635748899
636750
(2)

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):

201439459
414440464
431442670
433444800
434445810
435446870
436448871
438
(3)

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:

(A)

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.

(B)

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.

(C)

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.

(D)

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.

(E)

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.

(F)

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.

(G)

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.

(H)

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.

(I)

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.

(J)

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.

(K)

Category 666

An article in category 666 (relating to other man-made fiber furnishings) if the article is window shades and window blinds provided for in subheading 6303.12.0010 or 6303.92.2030 of the HTS.

(4)

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):

4202.12.80106210.20.30006304.99.1000
4202.12.80506210.20.70006304.99.2500
4202.22.40106210.30.30006304.99.4000
4202.22.70006210.30.70006304.99.6030
4202.22.80706210.40.30006306.22.9010
4202.92.30106210.40.70006306.29.1100
4202.92.60106210.50.30006306.29.2100
4202.92.90106210.50.70006306.40.4100
4202.92.90156211.20.08106306.40.4900
5601.29.00106211.20.08206306.91.0000
5702.39.20906211.32.00036306.99.0000
5702.49.20006211.33.00036307.10.2030
5702.50.59006211.42.00036307.20.0000
5702.99.20006211.43.00036307.90.7200
5703.90.00006212.10.30006307.90.7500
5705.00.2090 6212.10.70006307.90.8500
6108.22.10006212.90.00506307.90.8950
6111.90.70006213.90.05006307.90.8985
6113.00.10056214.10.10006310.90.1000
6113.00.10106216.00.08006406.99.1580
6113.00.10126216.00.13006501.00.6000
6115.29.40006216.00.19006502.00.2000
6115.30.10006216.00.26006502.00.4000
6115.99.40006216.00.31006502.00.9060
6116.10.08006216.00.35006504.00.3000
6116.10.13006216.00.46006504.00.6000
6116.10.44006217.10.10106504.00.9045
6116.10.65006217.10.85006504.00.9075
6116.10.95006301.90.00206505.10.0000
6116.92.08006302.29.00106505.90.8015
6116.93.08006302.39.00206505.90.9050
6116.99.35006302.59.30106505.90.9076
6117.10.40006302.99.10009404.90.2000
6117.80.30106303.99.00309404.90.8523
6117.80.85006304.19.30309404.90.9523
6210.10.20006304.91.00609404.90.9570
6210.10.7000
(c)

Rules of origin for certain covered articles

(1)

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—

(A)

the article is wholly the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones;

(B)

the article is a yarn, thread, twine, cordage, rope, cable, or braiding, and—

(i)

the constituent staple fibers are spun in, or

(ii)

the continuous filament fiber is extruded in,

1 or more Reconstruction Opportunity Zones;
(C)

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

(D)

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.

(2)

Special rules

(A)

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.

(B)

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.

(C)

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.

(D)

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.

(d)

Rules of origin for covered articles that are products of 1 or more Reconstruction Opportunity Zones in afghanistan

(1)

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—

(A)

the article is wholly the growth, product, or manufacture of 1 or more Reconstruction Opportunity Zones in Afghanistan,

(B)

the article is a yarn, thread, twine, cordage, rope, cable, or braiding, and—

(i)

the constituent staple fibers are spun in, or

(ii)

the continuous filament fiber is extruded in,

1 or more Reconstruction Opportunity Zones in Afghanistan;
(C)

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

(D)

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.

(2)

Special rules

(A)

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.

(B)

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.

(C)

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.

(D)

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.

(e)

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.

6.

Protections against unlawful transshipment

(a)

Duty-free treatment conditioned on enforcement measures

(1)

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:

(A)

The country has adopted effective domestic law 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.

(B)

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.

(C)

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.

(D)

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.

(E)

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:

(i)

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.

(ii)

The telephone number, facsimile number, and electronic mail address of the entity.

(iii)

The names and nationalities of the owners, directors, and corporate officers, and their positions within the entity.

(iv)

The number of employees the entity employs and their occupations.

(v)

A general description of the covered articles the entity produces and the entity's production capacity.

(vi)

The number and type of machines the entity uses to produce textile or apparel articles at each facility.

(vii)

The approximate number of hours the machines operate per week.

(viii)

The identity of any supplier to the entity of textile or apparel goods, or fabrics, yarns, or fibers used in the production of those goods.

(ix)

The name of, and contact information for, each of the entity’s customers in the United States.

(F)

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.

(G)

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).

(H)

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.

(2)

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, and the number of workers employed in production.

(b)

Customs procedures and enforcement

(1)

In general

(A)

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.

(B)

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—

(i)

has implemented and follows, or

(ii)

is making substantial progress toward implementing and following,

procedures and requirements similar in all material respects to the relevant procedures and requirements under chapter 5 of the NAFTA.
(2)

Penalties

If the President determines, based on sufficient evidence, that an entity has engaged in unlawful transshipment described in paragraph (3), 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 or operated by the principals of the entity.

(3)

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.

7.

Limitations on providing duty-free treatment

(a)

In general

(1)

Proclamation

Except as provided in paragraph (2), and subject to subsection (b) and the conditions described in sections 3 through 6, the President shall exercise the President's authority under this Act, and the President shall proclaim any duty-free treatment pursuant to that authority.

(2)

Waiver

The President may waive the application of duty-free treatment under this Act 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—

(A)

obligations of the United States under international agreements;

(B)

the national economic interests of the United States; and

(C)

the foreign policy interests of the United States, including the economic development of Afghanistan and the border region of Pakistan.

(b)

Withdrawal, suspension, or limitation of duty-free treatment

(1)

In general

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, 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)).

(2)

Notice to Congress

The President shall advise Congress—

(A)

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; and

(B)

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.

8.

Termination of benefits

Duty-free treatment provided under this Act shall remain in effect through September 30, 2023.