SECTION 1. AMENDMENTS TO UNITED STATES INSULAR POSSESSION PROGRAM.

    (a) Production Certificates.--Additional U.S. Note 5(h) to chapter 
91 of the Harmonized Tariff Schedule of the United States is amended--
            (1) by amending subparagraphs (i) and (ii) to read as 
        follows:
``(i) In the case of each of calendar years 2002 through 2015, the 
Secretaries jointly, shall--
        ``(A) verify--
                ``(1) the wages paid in the preceding calendar year by 
                each producer (including the value of usual and 
                customary fringe benefits)--
                        ``(I) to permanent residents of the insular 
                        possessions; and
                        ``(II) to workers providing training in the 
                        insular possessions in the production or 
                        manufacture of watch movements and watches or 
                        engaging in such other activities in the 
                        insular possessions relating to such production 
                        or manufacture as are approved by the 
                        Secretaries; and
                ``(2) the total quantity and value of watches produced 
                in the insular possessions by that producer and 
                imported into the customs territory of the United 
                States; and
        ``(B) issue to each producer (not later than 60 days after the 
        end of the preceding calendar year) a certificate for the 
        applicable amount.
``(ii) For purposes of subparagraph (i), except as provided in 
subparagraphs (iii) and (iv), the term `applicable amount' means an 
amount equal to the sum of--
        ``(A) 90 percent of the producer's creditable wages (including 
        the value of any usual and customary fringe benefits) on the 
        assembly during the preceding calendar year of the first 
        300,000 units; plus
        ``(B) the applicable graduated declining percentage (determined 
        each year by the Secretaries) of the producer's creditable 
        wages (including the value of any usual and customary fringe 
        benefits) on the assembly during the preceding calendar year of 
        units in excess of 300,000 but not in excess of 750,000; plus
        ``(C) the difference between the duties that would have been 
        due on the producer's watches (excluding digital watches) 
        imported into the customs territory of the United States during 
        the preceding calendar year if the watches had been subject to 
        duty at the rates set forth in column 1 under this chapter that 
        were in effect on January 1, 2001, and the duties that would 
        have been due on the watches if the watches had been subject to 
        duty at the rates set forth in column 1 under this chapter that 
        were in effect for such preceding calendar year.''; and
            (2) by amending subparagraph (v) to read as follows:
``(v)(A) Any certificate issued under subparagraph (i) shall entitle 
the certificate holder to secure a refund of duties equal to the face 
value of the certificate on watches, watch movements, and articles of 
jewelry provided for in heading 7113 that are imported into the customs 
territory of the United States by the certificate holder. Such refunds 
shall be made under regulations issued by the Treasury Department. Not 
more than 5 percent of such refunds may be retained as a reimbursement 
to the Customs Service for the administrative costs of making the 
refunds. If the Secretary of the Treasury determines that there is an 
insufficient level of duties from watch and watch-related tariffs, the 
Secretary may authorize refunds of duties collected on jewelry under 
chapter 71 or any other duties that the Secretary determines are 
appropriate.
``(B) At the election of the certificate holder and upon making the 
certification described in this clause, the Secretary of the Treasury 
shall pay directly to the certificate holder the face value of the 
certificate, less the value of--
        ``(1) any duty refund previously claimed by the holder under 
        the certificate, and
        ``(2) a discount of not more than 2 percent of the face value 
        of the certificate,
as determined by the Secretary of the Treasury.
``(C) Direct payments under clause (B) shall be made under regulations 
issued by the Secretary of the Treasury. Such regulations shall assure 
that a certificate holder is required to provide only the minimum 
documentation necessary to support an application for direct payment. A 
certificate holder shall not be eligible for direct payment under 
clause (B) unless the certificate holder certifies to the Secretaries 
that the funds received will be reinvested or utilized to support and 
continue employment in the Virgin Islands.
``(D) The Secretary of the Treasury is authorized to make the payments 
provided for in clause (B) from duties collected on watches, watch 
movements, and parts therefor. If such duties are insufficient, the 
Secretary of the Treasury is authorized to make the payments from 
duties collected on jewelry under chapter 71 or any other duties that 
the Secretary determines are appropriate.''.
    (b) Jewelry.--Additional U.S. Note 3 to chapter 71 of the 
Harmonized Tariff Schedule of the United States is amended--
            (1) by redesignating paragraphs (b), (c), (d), and (e) as 
        paragraphs (c), (d), (e), and (f), respectively;
            (2) by inserting after paragraph (a) the following new 
        paragraph:
``(b) The 750,000 unit limitation in additional U.S. Note 5(h)(ii)(B) 
to chapter 91 shall not apply to articles of jewelry subject to this 
note.''; and
            (3) by striking paragraph (f), as so redesignated, and 
        inserting the following:
``(f) Notwithstanding any other provision of law, any article of 
jewelry provided for in heading 7113 that is assembled in the Virgin 
Islands, Guam, or American Samoa by a jewelry manufacturer or jewelry 
assembler that commenced jewelry manufacturing or jewelry assembly 
operations in the Virgin Islands, Guam, or American Samoa after August 
9, 2001, shall be treated as a product of the Virgin Islands, Guam, or 
American Samoa for purposes of this note and General Note 3(a)(iv) of 
this Schedule if such article is entered no later than 18 months after 
such jewelry manufacturer or jewelry assembler commenced jewelry 
manufacturing or jewelry assembly operations in the Virgin Islands, 
Guam, or American Samoa.''.

SEC. 2. EFFECTIVE DATE.

    The amendments made by this Act shall apply with respect to goods 
imported into the customs territory of the United States on or after 
January 1, 2002.
Amends the Harmonized Tariff Schedule of the United States to extend through 2015 the Production Incentive Certificate program (PIC), which reimburses watch and jewelry producers in the U.S. Virgin Islands, Guam, and American Samoa ("insular possessions") for import duties. Includes fringe benefits in determining verified creditable wages, which are used for calculations to determine refund totals.Includes in the reimbursement to producers of watches in the insular possessions, the difference between the amount that would have been due on a producer's non-digital watches during the preceding year under duty rates existing on January 1, 2001, and the amount due under the actual duty rates of that preceding calendar year.Authorizes the Secretary of the Treasury to: (1) make PIC payments from duties on jewelry or other products as needed (presently PIC payments are funded by watch duties); and (2) directly reimburse all producers. Eliminates the 750,000 unit per producer limit for jewelry products of the insular possessions, while retaining the overall unit and dollar value limits for the PIC program.Revises certain requirements for duty-free treatment of articles of jewelry as products of the insular possessions. Requires treatment as such a product if the article of jewelry is: (1) assembled in an insular possession by a jewelry manufacturer or jewelry assembler that commenced manufacturing or assembly in such territory after August 9, 2001; and (2) entered into the United States within 18 months after the manufacturer or assembler commenced operations.
A bill entitled "The Production Incentive Certificate Program Revision Act".