DRAWBACK.

SEC. 203. DRAWBACK. (a) Definition of a Good Subject to NAFTA Drawback.— For purposes of this Act and the amendments made by subsection (b), the term “good subject to NAFTA drawback” means any imported good other than the following: (1) A good entered under bond for transportation and exportation to a NAFTA country. (2) A good exported to a NAFTA country in the same condition as when imported into the United States. For purposes of this paragraph— (A) processes such as testing, cleaning, repacking, or inspecting a good, or preserving it in its same condition, shall not be considered to change the condition of the good, and 107 STAT. 2087 (B) except for a good referred to in paragraph 12 of section A of Annex 703.2 of the Agreement that is exported to Mexico, if a good described in the first sentence of this paragraph is commingled with fungible goods and exported m the same condition, the origin of the good may be determined on the basis of the inventory methods provided for in the regulations implementing this title. (3) A good— (A) that is— (i) deemed to be exported from the United States, (ii) used as a material in the production of another good that is deemed to be exported to a NAFTA country, or (iii) substituted for by a good of the same kind and quality that is used as a material in the production of another good that is deemed to be exported to a NAFTA country, and (B) that is delivered— (i) to a duty-free shop, (ii) for ship’s stores or supplies for ships or aircraft, or (iii) for use in a project undertaken jointly by the United States and a NAFTA country and destined to become the property of the United States. (4) A good exported to a NAFTA country for which a refund of customs duties is granted by reason of— (A) the failure of the good to conform to sample or specification, or (B) the shipment of the good without the consent of the consignee. (5) A good that qualifies under the rules of origin set out in section 202 that is— (A) exported to a NAFTA country, (B) used as a material in the production of another good that is exported to a NAFTA country, or (C) substituted for by a good of the same kind and quality that is used as a material in the production of another good that is exported to a NAFTA country. (6) A good provided for in subheading 1701.11.02 of the HTS that is— (A) used as a material, or (B) substituted for by a good of the same kind and quality that is used as a material, in the production of a good provided for in existing Canadian tariff item 1701.99.00 or existing Mexican tariff item 1701.99.01 or 1701.99.99 (relating to refined sugar). (7) A citrus product that is exported to Canada. (8) A good used as a material, or substituted for by a good of the same kind and quality that is used as a material, in the production of— (A) apparel, or (B) a good provided for in subheading 6307.90.99 (insofar as it relates to furniture moving pads), 5811.00.20, or 5811.00.30 of the HTS, that is exported to Canada and that is subject to Canada’s most-favored-nation rate of duty upon importation into Canada. 107 STAT. 2088Where in paragraph (6) a good referred to by an item is described in parentheses following the item, the description is provided for purposes of reference only. (b) Consequential Amendments With Delayed Effect.— (1) Bonded manufacturing warehouses.— The last paragraph of section 311 of the Tariff Act of 1930 (19 U.S.C. 1311) is amended to read as follows: “No article manufactured in a bonded warehouse from materials that are goods subject to NAFTA drawback, as defined in section 203(a) of the North American Free Trade Agreement Implementation Act, may be withdrawn from warehouse for exportation to a NAFTA country, as defined in section 2(4) of that Act, without assessment of a duty on the materials in their condition and quantity, and at their weight, at the time of importation into the United States. The duty shall be paid before the 61st day after the date of exportation, except that upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the NAFTA country on the article, the customs duty may be waived or reduced (subject to section 508(b)(2)(B)) in an amount that does not exceed the lesser of— “(1) the total amount of customs duties paid or owed on the materials on importation into the United States, or “(2) the total amount of customs duties paid on the article to the NAFTA country. If Canada ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates, no article manufactured in a bonded warehouse, except to the extent that such article is made from an article that is a drawback eligible good under section 204(a) of the United States-Canada Free-Trade Agreement Implementation Act of 1988, may be withdrawn from such warehouse for exportation to Canada during the period such Agreement is in operation without payment of a duty on such imported merchandise in its condition, and at the rate of duty in effect, at the time of importation.”. (2) Bonded smelting and refining warehouses.— Section 312 of the Tariff Act of 1930 (19 U.S.C. 1312) is amended— (A) in paragraphs (1) and (4) of subsection (b), by striking out the parenthetical matter and the final “, or” and by adding at the end the following: “; except that in the case of a withdrawal for exportation of such a product to a NAFTA country, as defined in section 2(4) of the North American Free Trade Agreement Implementation Act, if any of the imported metal-bearing materials are goods subject to NAFTA drawback, as defined in section 203(a) of that Act, the duties on the materials shall be paid, and the charges against the bond canceled, before the 61st day after the date of exportation; but upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the NAFTA country on the product, the duties on the materials may be waived or reduced (subject to section 508(b)(2)(B)) in an amount that does not exceed the lesser of— “(A) the total amount of customs duties owed on the materials on importation into the United States, or “(B) the total amount of customs duties paid to the NAFTA country on the product, or”; 107 STAT. 2089 (B) by adding at the end of subsection (b) the following new flush sentence. “If Canada ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates, no charges against such bond may be canceled in whole or part upon an exportation to Canada under paragraph (1) or (4) during the period such Agreement is in operation except to the extent that the metal-bearing materials were of Canadian origin as determined in accordance with section 202 of the United States-Canada Free-Trade Agreement Implementation Act of 1988.”; and (C) in subsection (d) by striking out the parenthetical matter and by inserting before the period the following: “; except that in the case of a withdrawal for exportation to a NAFTA country, as defined in section 2(4) of the North American Free Trade Agreement Implementation Act, if any of the imported metal-bearing materials are goods subject to NAFTA drawback, as defined in section 203(a) of that Act, charges against the bond shall be paid before the 61st day after the date of exportation; but upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the NAFTA country on the product, the bond shall be credited (subject to section 508(b)(2)(B)) in an amount not to exceed the lesser of— “(1) the total amount of customs duties paid or owed on the materials on importation into the United States, or “(2) the total amount of customs duties paid to the NAFTA country on the product. If Canada ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates, no bond shall be credited under this subsection with respect to an exportation of a product to Canada during the period such Agreement is in operation except to the extent that the product is a drawback eligible good under section 204(a) of the United States-Canada Free-Trade Agreement Implementation Act of 1988”. (3) Drawback.— Subsections (n) and (o) of section 313 of the Tariff Act of 1930 (19 U.S.C. 1313 (n) and (o)) are amended to read as follows: “(n) (1) For purposes of this subsection and subsection (o)— “(A) the term ‘NAFTA Act’ means the North American Free Trade Agreement Implementation Act; “(B) the terms ‘NAFTA country’ and ‘good subject to NAFTA drawback’ have the same respective meanings that are given such terms in sections 2(4) and 203(a) of the NAFTA Act; and “(C) a refund, waiver, or reduction of duty under paragraph (2) of this subsection or paragraph (1) of subsection (o) is subject to section 508(b)(2)(B). “(2) For purposes of subsections (a), (b), (f), (h), (p), and (q), if an article that is exported to a NAFTA country is a good subject to NAFTA drawback, no customs duties on the good may be refunded, waived, or reduced in an amount that exceeds the lesser of— “(A) the total amount of customs duties paid or owed on the good on importation into the United States, or “(B) the total amount of customs duties paid on the good to the NAFTA country. 107 STAT. 2090 “(3) If Canada ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates, then for purposes of subsections (a), (b), (f), (h), (j)(2), and (q), the shipment to Canada during the period such Agreement is in operation of an article made from or substituted for, as appropriate, a drawback eligible good under section 204(a) of the United States-Canada Free-Trade Implementation Act of 1988 does not constitute an exportation. “(o) (1) For purposes of subsection (g), if— “(A) a vessel is built for the account and ownership of a resident of a NAFTA country or the government of a NAFTA country, and “(B) imported materials that are used in the construction and equipment of the vessel are goods subject to NAFTA drawback, the amount of customs duties refunded, waived, or reduced on such materials may not exceed the lesser of the total amount of customs duties paid or owed on the materials on importation into the United States or the total amount of customs duties paid on the vessel to the NAFTA country. “(2) If Canada ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates, then for purposes of subsection (g), vessels built for Canadian account and ownership, or for the Government of Canada, may not be considered to be built for any foreign account and ownership, or for the government of any foreign country, except to the extent that the materials in such vessels are drawback eligible goods under section 204(a) of the United States-Canada Free-Trade Implementation Act of 1988.”. (4) Manipulation in warehouse.— Section 562 of the Tariff Act of 1930 (19 U.S.C. 1562) is amended— (A) in the second sentence by striking out “without payment of duties—” and inserting a dash; (B) by striking out paragraphs (1), (2), and (3) and inserting the following: “(1) without payment of duties for exportation to a NAFTA country, as defined in section 2(4) of the North American Free Trade Agreement Implementation Act, if the merchandise is of a kind described in any of paragraphs (1) through (8) of section 203(a) of that Act; “(2) for exportation to a NAFTA country if the merchandise consists of goods subject to NAFTA drawback, as defined in section 203(a) of that Act, except that— “(A) the merchandise may not be withdrawn from warehouse without assessment of a duty on the merchandise in its condition and quantity, and at its weight, at the time of withdrawal from the warehouse with such additions to or deductions from the final appraised value as may be necessary by reason of change in condition, and “(B) duty shall be paid on the merchandise before the 61st day after the date of exportation, but upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid to the NAFTA country on the merchandise, the customs duty may be waived or reduced (subject to section 508(b)(2)(B)) in an amount that does not exceed the lesser of— 107 STAT. 2091 “(i) the total amount of customs duties paid or owed on the merchandise on importation into the United States, or “(ii) the total amount of customs duties paid on the merchandise to the NAFTA country; “(3) without payment of duties for exportation to any foreign country other than to a NAFTA country or to Canada when exports to that country are subject to paragraph (4); “(4) without payment of duties for exportation to Canada (if that country ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates), but the exemption from the payment of duties under this paragraph applies only in the case of an exportation during the period such Agreement is in operation of merchandise that— “(A) is only cleaned, sorted, or repacked in a bonded warehouse, or “(B) is a drawback eligible good under section 204(a) of the United States-Canada Free-Trade Agreement Implementation Act of 1988; and “(5) without payment of duties for shipment to the Virgin Islands, American Samoa, Wake Island, Midway Island, Kingman Reef, Johnston Island or the island of Guam.”; and (B) in the third sentence by striking out “paragraph (1) of the preceding sentence” and inserting “paragraph (4) of the preceding sentence”. (5) Foreign trade zones.— Section 3(a) of the Act of June 18, 1934 (commonly known as the “Foreign Trade Zones Act”; 19 U.S.C. 81c(a)) is amended— (A) in the last proviso— (i) by inserting after “That” the following: “, if Canada ceases to be a NAFTA country and the suspension of the operation of the United States-Canada Free-Trade Agreement thereafter terminates,”; and (ii) by striking out “on or after January 1, 1994, or such later date as may be proclaimed by the President under section 204(b)(2)(B) of such Act of 1988,” and inserting “during the period such Agreement is in operation”; and (B) by inserting before such last proviso the following new proviso: “: Provided, further, That no merchandise that consists of goods subject to NAFTA drawback, as defined in section 203(a) of the North American Free Trade Agreement Implementation Act, that is manufactured or otherwise changed in condition shall be exported to a NAFTA country, as defined in section 2(4) of that Act, without an assessment of a duty on the merchandise in its condition and quantity, and at its weight, at the time of its exportation (or if the privilege in the first proviso to this subsection was requested, an assessment of a duty on the merchandise in its condition and quantity, and at its weight, at the time of its admission into the zone) and the payment of the assessed duty before the 61st day after the date of exportation of the article, except that upon the presentation, before such 61st day, of satisfactory evidence of the amount of any customs duties paid or owed to the NAFTA country on the article, the customs 107 STAT. 2092duty may be waived or reduced (subject to section 508(b)(2)(B) of the Tariff Act of 1930) in an amount that does not exceed the lesser of (1) the total amount of customs duties paid or owed on the merchandise on importation into the United States, or (2) the total amount of customs duties paid on the article to the NAFTA country:”. (c) Consequential Amendment With Immediate Effect.— Section 313(j) of the Tariff Act of 1930 (19 U.S.C. 1313(j)) is amended— (1) by striking out “If” in paragraph (2) and inserting “Subject to paragraph (4), if”; and (2) by adding at the end the following new paragraph: “(4) Effective upon the entry into force of the North American Free Trade Agreement, the exportation to a NAFTA country, as defined in section 2(4) of the North American Free Trade Agreement Implementation Act, of merchandise that is fungible with and substituted for imported merchandise, other than merchandise described in paragraphs (1) through (8) of section 203(a) of that Act, shall not constitute an exportation for purposes of paragraph (2).”. (d) Elimination of Drawback for Section 22 Fees.— Notwithstanding any other provision of law, the Secretary of the Treasury may not, on condition of export, refund or reduce a fee applied pursuant to section 22 of the Agricultural Adjustment Act (7 U.S.C. 624) with respect to goods included under subsection (a) that are exported to— (1) Canada after December 31, 1995, for so long as it is a NAFTA country; or (2) Mexico after December 31, 2000, for so long as it is a NAFTA country. (e) Inapplicability to Countervailing and Antidumping Duties.— Nothing in this section or the amendments made by it shall be considered to authorize the refund, waiver, or reduction of countervailing duties or antidumping duties imposed on an imported good.