Imposition by Trade Representative of remedial measures in case of evasion of duties by certain entities of nonmarket economy countries

(a)

In general

Title III of the Trade Act of 1974 (19 U.S.C. 2411 et seq.) is amended by adding at the end the following:

311.

Remedial measures regarding evasion of duties by certain entities in nonmarket economy countries

(a)

Inquiry

The Trade Representative may initiate an inquiry into whether a covered entity is establishing, planning to establish, or has established an investment in a third country that would avoid duties imposed under section 301 with respect to a nonmarket economy country.(b)

Remedial measures

(1)

In general

If the Trade Representative makes an affirmative determination under subsection (a) with respect to a covered entity and the investment of that covered entity in a third country, the Trade Representative, subject to the specific direction, if any, of the President, may impose a remedial measure with respect to goods produced in the third country by a covered entity, which may include the imposition of a duty equal to not less than the value of the duty placed on the relevant product of the nonmarket economy country under section 301. (2)

Timing

An action under paragraph (1) may be taken with respect to a covered entity—(A)at any point during an investigation under section 301 if the third-country investment of the covered entity has begun production; and(B)prospectively, if the covered entity has plans to establish production in the third country.(c)

Matters relating to inquiries

(1)

In general

An inquiry under subsection (a) may be self-initiated by the Trade Representative or may be requested by interested persons (as defined in section 301(d)(9)) or Congress.(2)

Initiation

(A)

In general

If an inquiry is requested under paragraph (1) and the Trade Representative determines there is a reasonable indication that a covered entity is establishing, planning to establish, or has already established an investment in a third country that would avoid duties imposed under section 301 with respect to a nonmarket economy country, the Trade Representative may initiate an inquiry under subsection (a).(B)

Information from other agencies

Upon request of the Trade Representative, the head of a Federal agency shall submit to the Trade Representative any relevant information of the agency that is necessary for the Trade Representative to carry out an inquiry under subsection (a).(3)

Determination To initiate inquiry

Not later than 45 days after receipt of a request under paragraph (1), the Trade Representative shall determine whether an inquiry under subsection (a) is warranted.(4)

Determination of evasion

Not later than 180 days after a determination under paragraph (3) that an inquiry under subsection (a) is warranted with respect to a covered entity, the Trade Representative shall make an affirmative determination of duty evasion if it is found that the third-country investment—(A)is being established or acquired, or has been established or acquired, by the covered entity; and(B)is producing or planning to produce a good subject to a duty under section 301.(d)

Additional measures

(1)

In general

Based on the findings of an inquiry under subsection (a) with respect to a covered entity, the Trade Representative may, at the specific direction, if any, of the President, unilaterally impose a measure—(A)with respect to the covered entity; and(B)with respect to goods produced in a third country pursuant to the investment of that covered entity in the third country.(2)

Timing

A measure may be imposed under paragraph (1) with respect to a covered entity—(A)if the covered entity has begun production; or(B)prospectively, if the covered entity has immediate plans to establish production in the third country.(3)

Decision not to impose a measure

If the Trade Representative does not impose a measure under paragraph (1) with respect to a covered entity, the Trade Representative shall submit to Congress a justification as to why such a measure was not imposed, which shall include a description of the social and economic impacts of not imposing the measure.(4)

Duration of measure

If a measure is imposed by the Trade Representative under paragraph (1) with respect to a covered entity, the measure shall last as long as the remedial action with respect to the relevant nonmarket economy country imposed under section 301 remains in effect, or as long as the relevant nonmarket economy country has a controlling interest in the third-country investment of the covered entity, whichever terminates sooner.(e)

Definitions

In this section:(1)

Control

The term control has the meaning given that term in section 800.208 of title 31, Code of Federal Regulations (as in effect on the date of the enactment of this section).(2)

Covered entity

The term covered entity—(A)means an entity owned, controlled, subject to the jurisdiction or direction of, or operated by a nonmarket economy country; and(B)includes any entity for which, on any date during the most recent 12-month period, not less than 25 percent of the equity interests in that entity are held directly or indirectly by one or more entities organized under the laws of a nonmarket economy country, including through—(i)interests in co-investment vehicles, joint ventures, or similar arrangements; or(ii)a derivative financial instrument or contractual arrangement between the entity and a nonmarket economy country, including any such instrument or contract that seeks to replicate any financial return with respect to such entity or interest in such entity.(3)

Nonmarket economy country

The term nonmarket economy country means any country that is both—(A)determined to be a nonmarket economy country under section 771(18) of the Tariff Act of 1930 (19 U.S.C. 1677(18)); and(B)included on the priority watch list, as defined in section 182(g)(3) (commonly known as the Special 301 Priority Watch List).(4)

Trade Representative

The term Trade Representative means the United States Trade Representative.

(b)

Clerical amendment

The table of contents for the Trade Act of 1974 is amended by inserting after the item relating to section 310 the following:

Sec. 311. Remedial measures regarding evasion of duties by certain entities in nonmarket economy countries.