“(a)(1) The reduction or elimination of any duty imposed on any article by the United States provided for in a trade agreement entered into with Israel under section 102(b)(1) of the Trade Act of 1974 [19 U.S.C. 2112(b)(1)] shall apply only if—“(A) that article is the growth, product, or manufacture of Israel or is a new or different article of commerce that has been grown, produced, or manufactured in Israel;
“(B) that article is imported directly from Israel into the customs territory of the United States; and
“(C) the sum of—“(i) the cost of value of the materials produced in Israel, plus
“(ii) the direct costs of processing operations performed in Israel,
is not less than 35 percent of the appraised value of such article at the time it is entered.
If the cost or value of materials produced in the customs territory of the United States is included with respect to an article to which this subsection applies, an amount not to exceed 15 percent of the appraised value of the article at the time it is entered that is attributable to such United States cost or value may be applied toward determining the percentage referred to in subparagraph (C).
“(2) No article may be considered to meet the requirements of paragraph (1)(A) by virtue of having merely undergone—“(A) simple combining or packaging operations; or
“(B) mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article.
“(b) As used in this section, the phrase ‘direct costs of processing operations’ includes, but is not limited to—“(1) all actual labor costs involved in the growth, production, manufacture, or assembly of the specific merchandise, including fringe benefits, on-the-job training and the cost of engineering, supervisory, quality control, and similar personnel; and
“(2) dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the specific merchandise.
Such phrase does not include costs which are not directly attributable to the merchandise concerned, or are not costs of manufacturing the product, such as (A) profit, and (B) general expenses of doing business which are either not allocable to the specific merchandise or are not related to the growth, production, manufacture, or assembly of the merchandise, such as administrative salaries, casualty and liability insurance, advertising, and salesmen’s salaries, commissions or expenses.
“(c) 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.