[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2235 Introduced in Senate (IS)]







108th CONGRESS
  2d Session
                                S. 2235

  To rename the Department of Commerce as the Department of Trade and 
      Commerce and transfer the Office of the United States Trade 
    Representative into the Department, to consolidate and enhance 
statutory authority to protect American jobs from unfair international 
                  competition, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 25, 2004

 Mr. Hollings introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To rename the Department of Commerce as the Department of Trade and 
      Commerce and transfer the Office of the United States Trade 
    Representative into the Department, to consolidate and enhance 
statutory authority to protect American jobs from unfair international 
                  competition, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Domestic Workforce Protection Act''.

SEC. 2. COMMERCE DEPARTMENT RENAMED AS DEPARTMENT OF TRADE AND 
              COMMERCE.

    (a) In General.--The Department of Commerce is hereby redesignated 
the Department of Trade and Commerce, and the Secretary of Commerce or 
any other official of the Department of Commerce is hereby redesignated 
the Secretary or official, as appropriate, of Trade and Commerce.
    (b) Reference to Department, Secretary, etc. of Commerce Deemed 
Reference to Department, Secretary, etc. of Trade and Commerce.--Any 
reference to the Department of Commerce, the Secretary of Commerce, or 
any other official of the Department of Commerce in any law, rule, 
regulation, certificate, directive, instruction, or other official 
paper in force on the effective date of this Act shall be deemed to 
refer and apply to the Department of Trade and Commerce or the 
Secretary of Trade and Commerce, respectively.

SEC. 3. TRANSFER OF THE OFFICE OF THE UNITED STATES TRADE 
              REPRESENTATIVE TO WITHIN THE DEPARTMENT OF COMMERCE AND 
              TRADE.

    Section 141(a) of the Trade Act of 1974 (19 U.S.C. 2171(a)) is 
amended by striking ``Executive Office of the President'' and inserting 
``Department of Trade and Commerce''.

SEC. 4. TERMINATION OF DEFERRAL TO ELIMINATE TAX BENEFITS FOR OFFSHORE 
              PRODUCTION.

    (a) General Rule.--Paragraph (1) of section 951(a) of the Internal 
Revenue Code of 1986 (relating to amounts included in gross income of 
United States shareholders) is amended--
            (1) by striking ``and'' after the semicolon in subparagraph 
        (A)(iii);
            (2) by striking ``959(a)(2).'' in subparagraph (B) and 
        inserting ``959(a)(2); and''; and
            (3) by adding at the end thereof the following:
            ``(C) the amount determined under section 956A with respect 
        to such shareholder for such year (but only to the extent not 
        excluded from gross income under section 959(a)(3)).''.
    (b) Amount of Inclusion.--Subpart F of part III of subchapter N of 
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting 
after section 956 the following new section:

``SEC. 956A. EARNINGS OF CONTROLLED FOREIGN CORPORATIONS.

    ``(a) General Rule.--In the case of any controlled foreign 
corporation, the amount determined under this section with respect to 
any United States shareholder for any taxable year is the lesser of--
            ``(1) the excess (if any) of--
                    ``(A) such shareholder's pro rata share of the 
                amount of the controlled foreign corporation's assets 
                for such taxable year, over
                    ``(B) the amount of earnings and profits described 
                in section 959(c)(1)(B) with respect to such 
                shareholder, or
            ``(2) such shareholder's pro rata share of the applicable 
        earnings of such controlled foreign corporation determined 
        after the application of section 951(a)(1)(B).
    ``(b) Applicable Earnings.--For purposes of this section, the term 
`applicable earnings' means, with respect to any controlled foreign 
corporation, the sum of--
            ``(1) the amount referred to in section 316(a)(1) to the 
        extent such amount was accumulated in taxable years beginning 
        after February 29, 2004, and
            ``(2) the amount referred to in section 316(a)(2),
reduced by distributions made during the taxable year and reduced by 
the earnings and profits described in section 959(c)(1) to the extent 
that the earnings and profits so described were accumulated in taxable 
years beginning after February 29, 2004.
    ``(c) Special Rule Where Corporation Ceases To Be Controlled 
Foreign Corporation During Taxable Year-.--If any foreign corporation 
ceases to be a controlled foreign corporation during any taxable year--
            ``(1) the determination of any United States shareholder's 
        pro rata share shall be made on the basis of stock owned 
        (within the meaning of section 958(a)) by such shareholder on 
        the last day during the taxable year on which the foreign 
        corporation is a controlled foreign corporation,
            ``(2) the amount of such corporation's assets for such 
        taxable year shall be determined by only taking into account 
        quarters ending on or before such last day, and
            ``(3) in determining applicable earnings, the amount taken 
        into account by reason of being described in paragraph (2) of 
        section 316(a) shall be the portion of the amount so described 
        which is allocable (on a pro rata basis) to the part of such 
        year during which the corporation is a controlled foreign 
        corporation.
    ``(d) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section, 
including regulations to prevent the avoidance of the provisions of 
this section through reorganizations or otherwise.''.
    (c) Previously Taxed Income Rules.--
            (1) In general.--Subsection (a) of section 959 of the 
        Internal Revenue Code of 1986 (relating to exclusion from gross 
        income of previously taxed earnings and profits) is amended by 
        striking ``or'' at the end of paragraph (1), by adding ``or'' 
        at the end of paragraph (2), and by inserting after paragraph 
        (2) the following:
            ``(3) such amounts would, but for this subsection, be 
        included under section 951(a)(1)(C) in the gross income of,''.
            (2) Allocation rules.--
                    (A) Subsection (a) of section 959 of the Internal 
                Revenue Code of 1986 is amended by striking ``paragraph 
                (2)'' in the last sentence and inserting ``paragraphs 
                (2) and (3)''.
                    (B) Section 959(f) of the Internal Revenue Code of 
                1986 is amended--
                            (i) by striking paragraph (1) and inserting 
                        the following:
            ``(1) In general.--For purposes of this section--
                    ``(A) amounts that would be included under 
                subparagraph (B) of section 951(a)(1) (determined 
                without regard to this section) shall be treated as 
                attributable first to earnings described in subsection 
                (c)(2), and then to earnings described in subsection 
                (c)(3), and
                    ``(B) amounts that would be included under 
                subparagraph (C) of section 951(a)(1) (determined 
                without regard to this section) shall be treated as 
                attributable first to earnings described in subsection 
                (c)(2) to the extent the earnings so described were 
                accumulated in taxable years beginning after February 
                29, 2004, and then to earnings described in subsection 
                (c)(3).''; and
                            (ii) by striking ``section 951(a)(1)(B)'' 
                        in paragraph (2) and inserting ``subparagraphs 
                        (B) and (C) of section 951(a)(1)''.
            (3) Conforming amendment.--Subsection (b) of section 989 of 
        the Internal Revenue Code of 1986 is amended by striking 
        ``section 951(a)(1)(B)'' and inserting ``subparagraph (B) or 
        (C) of section 951(a)(1)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years of foreign corporations beginning after February 
29, 2004, and to taxable years of United States shareholders in which 
or with which such taxable years of foreign corporations end.
    (e) Technical and Conforming Changes.--The Secretary of the 
Treasury shall, within 90 days after the date of enactment of this Act, 
submit to the Committee on Ways and Means of the House of 
Representatives and to the Committee on Finance of the Senate, a draft 
of any technical and conforming changes in the Internal Revenue Code of 
1986 that are necessary to reflect throughout such Code the changes in 
the substantive provisions of law made by this section.

SEC. 5. DISALLOWANCE OF DEDUCTIONS FOR CERTAIN OFFSHORE ROYALTY 
              PAYMENTS.

    (a) In General.--Part IX of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following:

``SEC. 280I. CERTAIN OFFSHORE ROYALTY PAYMENTS.

    ``(a) In General.--In the case of a corporation, no deduction shall 
be allowed for the payment of a royalty to an affiliated entity 
organized and operated outside the United States in exchange for the 
use of rights to a copyrighted or trademarked product if those rights 
were transferred by the corporation or a related party to that entity.
    ``(b) Exception.--Subsection (a) does not apply to the payment of a 
royalty if the taxpayer establishes, to the satisfaction of the 
Secretary, that--
            ``(1) the transfer of the rights to the entity was for a 
        sound business reason (other than the reduction of liability 
        for tax under this chapter); and
            ``(2) the amounts paid or incurred for such royalty 
        payments are reasonable under the circumstances.''.
    (b) Clerical Amendment.--The part analysis for such part is amended 
by adding at the end the following:

``280I. Certain offshore royalty payments.''.
    (c) Effective Date.--The amendments made by this section apply to 
taxable years beginning after December 31, 2003.

SEC. 6. INCREASE IN AUTHORITY OF THE INTERNAL REVENUE SERVICE TO THWART 
              USE OF TAX HAVENS BY CORPORATIONS.

    (a) In General.--Subchapter B of chapter 78 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following:

``SEC. 7625. AUTHORITY TO FRUSTRATE USE OF CORPORATE TAX HAVENS.

    ``(a) In General.--The Secretary is authorized--
            ``(1) to deny any otherwise allowable deduction or credit 
        under chapter 1,
            ``(2) to recharacterize, reallocate, and resource income,
            ``(3) to recharacterize transactions, and
            ``(4) to disregard any transaction, trust, or other legal 
        entity,
determined by the Secretary to be necessary to prevent the use by a 
corporation of a tax haven to avoid liability for tax under this 
chapter.
    ``(b) Tax Haven Defined.--In this section, the term `tax haven' 
means any country that meets the tax haven criteria established by the 
Organization for Economic Co-operation and Development.''.
    (b) Conforming Amendment.--The subchapter analysis for subchapter B 
of chapter 78 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following:

``6725. Authority to frustrate use of corporate tax havens.''.

SEC. 7. ASSISTANT ATTORNEY GENERAL FOR TRADE.

    (a) Position Established.--The Attorney General shall appoint an 
Assistant Attorney General for Trade.
    (b) Duties.--The Assistant Attorney General for Trade shall--
            (1) investigate anticompetitive conduct by foreign 
        companies that has an adverse impact on the economy of the 
        United States (including manufacturing, agriculture, and 
        employment) or the global competitiveness of United States 
        companies;
            (2) investigate violations of international trade 
        agreements to which the United States is a party that have an 
        adverse impact on the economy of the United States (including 
        manufacturing, agriculture, and employment) or the global 
        competitiveness of United States companies and take appropriate 
        action to seek redress or punishment for those violations; and
            (3) investigate and initiate appropriate action against 
        other activities throughout the world that have an adverse 
        impact on the economy of the United States (including 
        manufacturing, agriculture, and employment) or the global 
        competitiveness of United States companies.
    (c) Authority Is in Addition to Other Authorities.--The authority 
granted to the Assistant Attorney General for Trade by this section is 
in addition to, and not in derogation or in lieu of, any authority 
provided by law to any other officer or agency of the United States 
charged with enforcement of the trade laws of the United States or of 
international agreements to which the United States is a party.
    (d) Compensation.--Section 5315 of title 5, United States Code, is 
amended by striking ``(10)'' in the item relating to Assistant Attorney 
General and inserting ``(11)''.

SEC. 8. EMPLOYMENT OF ADDITIONAL CUSTOMS INSPECTORS FOR ILLEGAL 
              TRANSSHIPMENTS OF TEXTILES.

    The Secretary of Homeland Security shall hire, train, and deploy 
1,000 customs agents in addition to the number of customs agents 
otherwise authorized by law or otherwise employed by the Department of 
Homeland Security for the purpose of detecting and preventing illegal 
transshipments of textiles to avoid textile import quotas and in 
violation of trade agreements to which the United States is a party.

SEC. 9. INCREASED DOMESTIC PRODUCTION OF NATIONAL DEFENSE CRITICAL 
              GOODS.

    (a) In General.--The Secretary of Commerce, in consultation with 
the Secretary of Defense, the Director of the Central Intelligence 
Agency, the Secretary of State, the Secretary of Homeland Security, and 
the Administrator of the Small Business Administration shall develop a 
program to encourage and support increased domestic production of goods 
and products that are essential or critical to national security in 
order to decrease the United States' dependence upon imports of such 
goods and products.
    (b) Support Program.--The Secretary of Commerce shall implement the 
program developed under subsection (a) to the maximum extent feasible 
through existing programs, including programs administered by the Small 
Business Administration. The Secretary shall transmit to the Congress a 
report, within 18 months after the date of enactment of this Act, 
describing the program and making such recommendations, including 
legislative recommendations, as the Secretary deems necessary for 
expanding the scope or improving the efficacy of the program. The 
Secretary may submit the report in both classified and redacted form.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary of Commerce such sums as may be necessary 
to carry out the program.

SEC. 10. SENSE OF THE SENATE CONCERNING APPROPRIATIONS FOR CERTAIN 
              PROGRAMS.

    It is the sense of the Senate that the Congress should appropriate 
the full amount authorized by law to carry out the Regional Centers for 
the Transfer of Manufacturing Technology program under section 25 of 
the National Institute of Standards and Technology Act (15 U.S.C. 278k) 
and the Advanced Technology Program authorized by section 28 of that 
Act (15 U.S.C. 278n).

SEC. 11. TRANSFER OF INTERNATIONAL TRADE COMMISSION FUNCTIONS.

    (a) Abolishment of ITC.--Effective on the first day of the seventh 
month beginning after the date of enactment of this Act, the United 
States International Trade Commission established by section 330 of the 
Tariff Act of 1930 (19 U.S.C. 1330) as in effect on the last day of the 
sixth month beginning after the date of enactment of this Act is 
abolished.
    (b) Transfer of Functions.--Except as otherwise provided in this 
Act, all functions that on the last day of the sixth month beginning 
after the date of enactment of this Act are authorized to be performed 
by the United States International Trade Commission are transferred to 
the Department of Commerce effective on the first day of the seventh 
month beginning after the date of enactment of this Act and shall be 
performed by the Assistant Secretary of Commerce for Import 
Administration.
    (c) Determination of Certain Functions.--If necessary, the Office 
of Management and Budget shall make any determination of the functions 
that are transferred under this section.

SEC. 12. INCIDENTAL TRANSFERS.

    The Director of the Office of Management and Budget, in 
consultation with the Secretary of Commerce, shall make such 
determinations as may be necessary with regard to the functions, 
offices, or portions thereof transferred by this Act, and make such 
additional incidental dispositions of personnel, assets, liabilities, 
grants, contracts, property, records, and unexpended balances of 
appropriations, authorizations, allocations, and other funds held, 
used, arising from, available to, or to be made available in connection 
with such functions, offices, or portions thereof, as may be necessary 
to carry out this Act. The Director shall provide for the termination 
of the affairs of all entities terminated by this Act and, in 
consultation with the Administrator, for such further measures and 
dispositions as may be necessary to effectuate the purposes of this 
Act.
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