LIMITATION OF CREDIT TO DOMESTIC PRODUCTS.

SEC. 103. LIMITATION OF CREDIT TO DOMESTIC PRODUCTS.Section 48(a) (relating to definition of section 38 property) is amended by adding after paragraph (6) the following new paragraph: “(7) Property completed abroad or predominantly of foreign origin.— “(A) In general—Property (other than pre-termination property) shall not be treated as section 38 property if— “(i) such property was completed outside the United States, or “(ii) less than 50 percent of the basis of such property is attributable to value added within the United States. For purposes of this subparagraph, the term ‘United States’ includes the Commonwealth of Puerto Rico and the possessions of the United States. “(B) Period of application of paragraph—Except as provided in subparagraph (D), subparagraph (A) shall apply only with respect to property described m section 50— “(i) the construction, reconstruction, or erection of which by the taxpayer is begun after August 15, 1971, and on or before the date of termination of Proclamation 4074, or “(ii) which is acquired pursuant to an order placed on or before the date of termination of Proclamation 4074, unless acquired pursuant to an order which the taxpayer establishes was placed before August 16, 1971. “(C) President may exempt articles—If the President of the United States shall at any time determine that the application of subparagraph (A) to any article or class of articles is not in the public interest, he may by Executive order specify that subparagraph (A) shall not apply to such article or class of articles. Subparagraph (A) shall not apply to an article or class of articles for the period specified in such Executive order. Any period specified under the preceding sentence shall not apply to property ordered before (or to property the construction, reconstruction, or erection of which began before) the date of the Executive order specifying such period, except that, if the President determines it to be in the public interest, such period shall apply to property ordered (or property the construction, reconstruction, or erection of which began) after a date (before the date of the Executive order) specified in the Executive order. 85 Stat. 501 “(D) Countries maintaining trade restrictions or engaging in discriminatory acts—If, on or after the date of the termination of Proclamation 4074, the President determines that a foreign country— “(i) maintains nontariff trade restrictions, including variable import fees, which substantially burden United States commerce in a manner inconsistent with provisions of trade agreements, or “(ii) engages in discriminatory or other acts (including tolerance of international cartels) or policies unjustifiably restricting United States commerce, he may provide by Executive order for the application of subparagraph (A) to any article or class of articles manufactured or produced in such foreign country for such period as may be provided by Executive order.”