A bill to apply duty-free treatment under certain circumstances to articles produced in the insular possessions of the United States.

(Reported to House from the Committee on Ways and Means with amendment, H. Rept. 95-1670)

Amends the Tariff Schedules of the United States to exempt from customs duties products other than watches or watch movements, of the insular possessions of the United States if not more than 50 percent of the product's value is attributable to foreign materials. Permits watches and watch movements of the insular possessions of the United States to be exempt from custom duties if not more than 70 percent of the product's value is attributable to foreign materials. Subjects any watch or watch movement containing any material which is the product of a Communist country to the rate of duty applicable to Communist countries.

Increases temporarily (from 1979 through 1981) to 70 percent the foreign material limitation on products other than watches or watch movements of the insular possessions of the United States for purposes of qualifying for duty-free treatment. Limits this provision to articles (1) not designated as "import-sensitive" and (2) with a total value not greater than $25,000,000 (adjusted annually).

Directs the President and the Secretaries of Treasury, Commerce, and Interior to submit a report to Congress on the effects of these amendments with particular regard to the economic development of the insular possessions.