[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1421 Introduced in Senate (IS)]








109th CONGRESS
  1st Session
                                S. 1421

      To enhance resources to enforce United States trade rights.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 19, 2005

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

_______________________________________________________________________

                                 A BILL


 
      To enhance resources to enforce United States trade rights.

    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 ``United States Trade Rights 
Enforcement Act''.

SEC. 2. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1) United States producers that believe they are injured 
        by subsidized imports from nonmarket economy countries have not 
        been able to obtain relief through countervailing duty actions 
        because the Department of Commerce has declined to make 
        countervailing duty determinations for nonmarket economy 
        countries in part because it lacks explicit legal authority to 
        do so;
            (2) explicitly making the countervailing duty law under 
        subtitle A of title VII of the Tariff Act of 1930 (19 U.S.C. 
        1671 et seq.) applicable to actions by nonmarket economy 
        countries would give United States producers access to import 
        relief measures that directly target government subsidies;
            (3) the Bureau of Customs and Border Protection of the 
        Department of Homeland Security has encountered particular 
        problems in collecting countervailing and antidumping duties 
        from new shippers who default on their bonding obligations;
            (4) this behavior may detract from the ability of United 
        States companies to recover from competition found to be unfair 
        under international trade laws;
            (5) accordingly, it is appropriate, for a test period, to 
        suspend the availability of bonds for new shippers and instead 
        require cash deposits;
            (6) more analysis and assessment is needed to determine the 
        appropriate policy to respond to this and other problems 
        experienced in the collection of duties and the impact that 
        policy changes could have on legitimate United States trade and 
        United States trade obligations;
            (7) given the developments in the ongoing World Trade 
        Organization (WTO) negotiations relating to trade remedies, 
        Congress reiterates its resolve as expressed in House 
        Concurrent Resolution 262 (107th Congress), which was 
        overwhelmingly approved by the House of Representatives on 
        November 7, 2001, by a vote of 410 to 4;
            (8) the United States Trade Representative should monitor 
        compliance by United States trading partners with their trade 
        obligations and systematically identify areas of noncompliance;
            (9) the United States Trade Representative should then 
        aggressively resolve noncompliance through consultations with 
        United States trading partners;
            (10) however, should efforts to resolve disputes through 
        consultation fail, the United States Trade Representative 
        should vigorously pursue United States rights through dispute 
        settlement in every available forum;
            (11) given the huge growth in trade with the People's 
        Republic of China, its impact on the United States economy, and 
        the complaints voiced by many United States interests that 
        China is not complying with its international trade 
        obligations, the United States Trade Representative should 
        place particular emphasis on identifying and resolving disputes 
        with China that limit United States exports, particularly 
        concerning compliance with obligations relating to intellectual 
        property rights and enforcement, tariff and nontariff barriers, 
        subsidies, technical barriers to trade, sanitary and 
        phytosanitary issues, nonmarket-based industrial policies, 
        distribution rights, and regulatory transparency;
            (12) in addition, the United States Trade Representative 
        should place particular emphasis on trade barriers imposed by 
        Japan, specifically the Japanese trade ban on United States 
        beef without scientific justification, the Japanese sanitary 
        and phytosanitary restrictions on United States agricultural 
        products, Japanese policies on pharmaceutical and medical 
        device reference pricing, insurance cross-subsidization, and 
        privatization in a variety of sectors that discriminate against 
        United States companies;
            (13) the fixed exchange rate that the People's Republic of 
        China currently maintains is a substantial distortion to world 
        markets, blocking the price mechanism and impeding adjustment 
        of international imbalances, and it is also a source of large 
        and increasing risk to the Chinese economy;
            (14) the People's Republic of China has completed 
        significant preparations over the last two years for adoption 
        of a more flexible, market-oriented exchange rate;
            (15) the People's Republic of China is now ready to move to 
        a more flexible exchange rate and it should move to such an 
        exchange rate as soon as possible;
            (16) the Secretary of the Treasury, in the annual report 
        reviewing developments in international economic policy, 
        including exchange rate policy, under the Omnibus Trade and 
        Competitiveness Act of 1988, appropriately concluded that 
        ``current Chinese policies are highly distortionary and pose a 
        risk to China's economy, its trading partners, and global 
        economic growth'';
            (17) moreover, the rapid growth of credit and very high 
        rate of investment risk undermine the progress that the 
        People's Republic of China has made in reforming its banking 
        system by creating new flows of non-performing loans;
            (18) such behavior effectively prevents market forces from 
        operating efficiently in the People's Republic of China, which 
        distorts world trade;
            (19) furthermore, based on the fact that the Secretary of 
        the Treasury has determined the currency policy of the People's 
        Republic of China to be ``distortionary'', the United States 
        Trade Representative and the Secretary of the Treasury should 
        place particular emphasis on determining whether China is 
        violating its international obligations and identify to 
        Congress the actions it is taking to address distortions to 
        world trade;
            (20) in addition, Japan's policy of intervening to 
        influence the value of its currency and its prolific barriers 
        to trade create distortions that disadvantage United States 
        exporters;
            (21) this adverse impact is magnified by Japan's role in 
        the global marketplace, combined with its chronic surplus, weak 
        economy, deflationary economy, low growth rate, and lack of 
        consumer spending; and
            (22) accordingly, the United States Trade Representative 
        should have additional resources in the Office of the General 
        Counsel, the Office of Monitoring and Enforcement, the Office 
        of China Affairs, and the Office of Japan, Korea, and APEC 
        Affairs to address a variety of needs that will best enable 
        United States companies, farmers, and workers to benefits from 
        the trade agreements to which the United States has around the 
        world.

SEC. 3. APPLICATION OF COUNTERVAILING DUTIES TO NONMARKET ECONOMY 
              COUNTRIES.

    (a) Amendments.--
            (1) Countervailing duties imposed.--Section 701(a)(1) of 
        the Tariff Act of 1930 (19 U.S.C. 1671(a)(1)) is amended by 
        inserting ``(including a nonmarket economy country)'' after 
        ``country'' each place it appears.
            (2) Definition of countervailable subsidy.--Section 
        771(5)(E) of such Act (19 U.S.C. 1677(5)(E)) is amended by 
        adding at the end the following new sentences: ``With respect 
        to the People's Republic of China, if the administering 
        authority encounters special difficulties in calculating the 
        amount of a benefit under clause (i), (ii), (iii), or (iv) of 
        this subparagraph, the administering authority may use 
        methodologies for identifying and measuring the subsidy benefit 
        which take into account the possibility that prevailing terms 
        and conditions in China may not always be available as 
        appropriate benchmarks. When applying such methodologies, the 
        administering authority should adjust such prevailing terms and 
        conditions before considering the use of terms and conditions 
        prevailing outside China.''.
    (b) Prohibition on Double Counting.--In applying section 701(a)(1) 
of the Tariff Act of 1930, as amended by subsection (a), to a class or 
kind of merchandise of a nonmarket economy country, the administering 
authority shall ensure that--
            (1) any countervailable subsidy is not double counted in an 
        antidumping order under section 731 of such Act (19 U.S.C. 
        1673) on the same class or kind of merchandise of the country; 
        and
            (2) the application of section 701(a)(1) of such Act is 
        consistent with the international obligations of the United 
        States.
    (c) Effective Date.--The amendments made by subsection (a) apply to 
any petition filed under section 702 of the Tariff Act of 1930 (19 
U.S.C. 1671a) on or after 30 days after the date of the enactment of 
this Act, and the provisions contained in subsection (b) apply to any 
subsequent determination made under section 733, 735, or 751 of such 
Act (19 U.S.C. 1673b, 1673d, or 1675).

SEC. 4. NEW SHIPPER REVIEW AMENDMENT.

    (a) Suspension of the Availability of Bonds to New Shippers.--
Clause (iii) of section 751(a)(2)(B) of the Tariff Act of 1930 (19 
U.S.C. 1675(a)(2)(B)(iii)) shall not be effective during the 3-year 
period beginning on the date of the enactment of this Act.
    (b) Report on the Impact of the Suspension.--Not later than 2 years 
after the date of the enactment of this Act, the Secretary of the 
Treasury, in consultation with the Secretary of Commerce, the United 
States Trade Representative, and the Secretary of Homeland Security, 
shall submit to the Committee on Finance of the Senate and the 
Committee on Ways and Means of the House of Representatives a report 
containing--
            (1) recommendations on whether the suspension of the 
        effectiveness of section 751(a)(2)(B)(iii) of the Tariff Act of 
        1930 should be extended beyond the date provided in subsection 
        (a) of this section; and
            (2) assessments of the effectiveness of any administrative 
        measures that have been implemented to address the difficulties 
        giving rise to the suspension under subsection (a) of this 
        section, including--
                    (A) problems in assuring the collection of 
                antidumping duties on imports from new shippers; and
                    (B) burdens imposed on legitimate trade and 
                commerce by the suspension of availability of bonds to 
                new shippers by reason of the suspension under 
                subsection (a).
    (c) Report on Collection Problems and Analysis of Proposed 
Solutions.--
            (1) Report.--Not later than 90 days after the date of the 
        enactment of this Act, the Secretary of the Treasury, in 
        consultation with the Commissioner of the Bureau of Customs and 
        Border Protection and the Secretary of Commerce, shall submit 
        to the Committee on Ways and Means of the House of 
        Representatives and the Committee on Finance of the Senate a 
        report describing the major problems experienced in the 
        collection of duties, including fraudulent activities intended 
        to avoid payment of duties, with an estimate of the total 
        amount of uncollected duties for the previous fiscal year and a 
        breakdown across product lines describing the reasons duties 
        were uncollected.
            (2) Recommendations.--The report shall make recommendations 
        on additional actions to address remaining problems related to 
        duty collections and, for each recommendation, provide an 
        analysis of how the recommendation would address the specific 
        problem or problems cited and the impact that implementing the 
        recommendation would have on international trade and commerce 
        (including any additional costs imposed on United States 
        businesses and whether the implementation of the revision is 
        likely to violate any international trade laws).

SEC. 5. COMPREHENSIVE MONITORING OF COMPLIANCE BY THE PEOPLE'S REPUBLIC 
              OF CHINA WITH ITS INTERNATIONAL TRADE OBLIGATIONS.

    (a) Intellectual Property Rights Compliance.--
            (1) In general.--In accordance with the terms of the 
        Agreement of WTO Accession for the People's Republic of China, 
        subsequent agreements by Chinese authorities through the U.S.-
        China Joint Commission on Commerce and Trade (JCCT), and other 
        obligations by Chinese officials related to its trade 
        obligations, the United States Trade Representative and the 
        Secretary of Commerce shall undertake to ensure that the 
        Government of the People's Republic China has taken the 
        following steps:
                    (A) The Chinese Government has increased the number 
                of civil and criminal prosecutions of intellectual 
                property rights violators by the end of 2005 to a level 
                that significantly decreases the current amount of 
                infringing products for sale within China.
                    (B) China's Supreme People's Court, Supreme 
                People's Procuratorate, and Ministry of Public Security 
                have issued draft guidelines for public comment to 
                ensure the timely referral of intellectual property 
                rights violations from administrative bodies to 
                criminal prosecution.
                    (C) The Chinese Ministry of Public Security and the 
                General Administration of Customs have issued 
                regulations to ensure the timely transfer of 
                intellectual property rights cases for criminal 
                investigation.
                    (D) The Chinese Ministry of Public Security has 
                established a leading group responsible for overall 
                research, planning, and coordination of all 
                intellectual property rights criminal enforcement to 
                ensure a focused and coordinated nationwide enforcement 
                effort.
                    (E) The Chinese Government has established a 
                bilateral intellectual property rights law enforcement 
                working group in cooperation with the United States 
                whose members will cooperate on enforcement activities 
                to reduce cross-border infringing activities.
                    (F) The Chinese Government has aggressively 
                countered movie piracy by dedicating enforcement teams 
                to pursue enforcement actions against pirates and has 
                regularly instructed enforcement authorities nationwide 
                that copies of films and audio-visual products still in 
                censorship or import review or otherwise not yet 
                authorized for distribution are deemed pirated and 
                subject to enhanced enforcement.
                    (G) By the end of 2005, the Chinese Government has 
                completed its legalization program to ensure that all 
                central, provincial, and local government offices are 
                using only licensed software and by the end of 2006 has 
                extended the program to enterprises (including state-
                owned enterprises).
                    (H) The Chinese Government, having declared that 
                software end-user piracy is considered to constitute 
                ``harm to the public interest'' and as such will be 
                subject to administrative penalties nationwide, has 
                initiated civil and criminal prosecutions of software 
                end-user violators.
                    (I) The Chinese Government has appointed an 
                Intellectual Property Rights Ombudsman at the Chinese 
                Embassy in Washington, D.C., to serve as the point of 
                contact for United States companies, particularly 
                small- and medium-sized businesses, seeking to secure 
                and enforce their intellectual property rights in China 
                or experiencing intellectual property rights problems 
                in China.
                    (J) The relevant Chinese agencies, including the 
                Ministry of Commerce, the China Trademark Office, the 
                State Intellectual Property Office, and the National 
                Copyright Administration of China have significantly 
                improved intellectual property rights enforcement at 
                trade shows and issued new regulations to achieve this 
                goal.
                    (K) Not later than June 30, 2006, the Chinese State 
                Council has submitted to the National People's Congress 
                the legislative package needed for China to accede to 
                the World Intellectual Property Organization (WIPO) 
                Internet treaties.
                    (L) The Chinese Government has taken steps to 
                enforce intellectual property right laws against 
                Internet piracy, including through enforcement at 
                Internet cafes.
                    (M) The Chinese Government, having confirmed that 
                the criminal penalty thresholds in the 2004 Judicial 
                Interpretation are applicable to sound recordings, has 
                instituted civil and criminal prosecutions against such 
                violators.
                    (N) The Chinese Government has initiated civil and 
                criminal prosecutions against exporters of infringing 
                recordings.
            (2) Dispute settlement proceedings in wto.--If the 
        President determines that the People's Republic of China has 
        not met each of the obligations described in subparagraphs (A) 
        through (N) of paragraph (1) or taken steps that result in 
        significant improvements in protection of intellectual property 
        rights in accordance with its trade obligations, then the 
        President shall assign such resources as are necessary to 
        collect evidence of such trade agreement violations for use in 
        dispute settlement proceedings against China in the World Trade 
        Organization.
    (b) Access for Exports of United States Goods.--In accordance with 
the terms of the Agreement of WTO Accession for the People's Republic 
of China, subsequent agreements by Chinese authorities through the 
U.S.-China Joint Commission on Commerce and Trade (JCCT), and other 
obligations by Chinese officials related to its trade obligations, the 
United States Trade Representative and the Secretary of Commerce shall 
undertake to ensure that the Government of the People's Republic of 
China has taken the following steps:
            (1) China has taken steps to ensure that United States 
        products can be freely distributed in China, including by 
        approving a significant backlog of distribution license 
        applications and by preparing a regulatory guide for businesses 
        seeking to acquire distribution rights that expands on the 
        guidelines announced in April 2005.
            (2) Chinese officials have permitted all enterprises in 
        China, including those located in bonded zones, to acquire 
        licenses to distribute goods throughout China.
            (3) The Chinese Government has submitted regulations on 
        management of direct selling to the Chinese State Council for 
        review and taken any additional steps necessary to provide a 
        legal basis for United States direct sales firms to sell United 
        States goods directly to households in China.
            (4) The Chinese Government has issued final regulations on 
        direct selling, including with respect to distribution of 
        imported goods and fixed location requirements.
    (c) Access for Exports of United States Services.--In accordance 
with the terms of the Agreement of WTO Accession for the People's 
Republic of China, subsequent agreements by Chinese authorities through 
the U.S.-China Joint Commission on Commerce and Trade (JCCT), and other 
obligations by Chinese officials related to its trade obligations, the 
United States Trade Representative and the Secretary of Commerce shall 
undertake to ensure that the Government of the People's Republic of 
China has taken the following steps:
            (1) The Chinese Government has convened a meeting of the 
        U.S.-China Insurance Dialogue before the end of 2005 to discuss 
        regulatory concerns and barriers to further liberalization of 
        the sector.
            (2) The Chinese Government has made senior level officials 
        available to meet under the JCCT Information Technology Working 
        Group to discuss capitalization requirements, resale services, 
        and other issues as agreed to by the two sides.
    (d) Access for United States Agriculture.--In accordance with the 
terms of the Agreement of WTO Accession for the People's Republic of 
China, subsequent agreements by Chinese authorities through the U.S.-
China Joint Commission on Commerce and Trade (JCCT), and other 
obligations by Chinese officials related to its trade obligations, the 
United States Trade Representative and the Secretary of Agriculture 
shall undertake to ensure that the Government of the People's Republic 
of China has taken the following steps:
            (1) China has completed the regulatory approval process for 
        a United States-produced corn biotech variety.
            (2) China's Administration of Quality Supervision, 
        Inspection and Quarantine has implemented the 2005 Memorandum 
        of Understanding between the United States and China designed 
        to facilitate cooperation on animal and plant health safety 
        issues and improve efforts to expand United States access to 
        China's markets for agricultural commodities.
    (e) Accounting of Chinese Subsidies.--In accordance with the terms 
of the Agreement of WTO Accession for the People's Republic of China, 
subsequent agreements by Chinese authorities through the U.S.-China 
Joint Commission on Commerce and Trade (JCCT), and other obligations by 
Chinese officials related to its trade obligations, the United States 
Trade Representative and the Secretary of Commerce shall undertake to 
ensure that the Government of the People's Republic of China has 
provided a detailed accounting of its subsidies to the World Trade 
Organization by the end of 2005.
    (f) Reports.--
            (1) Biannual report.--Not later than six months after the 
        date of the enactment of this Act, and every six months 
        thereafter, the President should transmit to the Committee on 
        Ways and Means of the House of Representatives and the 
        Committee on Finance of the Senate a report that contains--
                    (A) a description of the specific steps taken by 
                the Government of the People's Republic of China to 
                meet its obligations described in subsections (a) 
                through (e) of this section (other than obligations 
                described in subsections (a)(1)(A) and (G), (b)(1), 
                (c)(1), and (e));
                    (B) an analysis of the extent to which Chinese 
                officials are attempting in good faith to meet such 
                obligations; and
                    (C) a description of the actions, if any, the 
                President will take to obtain compliance by China if 
                the President determines that the Chinese Government is 
                failing to meet such obligations, including pursuing 
                United States rights under the dispute settlement 
                provisions of the World Trade Organization, as 
                appropriate.
            (2) Monthly report.--Not later than 30 days after the date 
        of the enactment of this Act, and every 30 days thereafter, the 
        President should transmit to the Committee on Ways and Means of 
        the House of Representatives and the Committee on Finance of 
        the Senate a report that contains--
                    (A) a description of the specific steps taken by 
                the Government of the People's Republic of China to 
                meet its obligations described in subsections (a)(1)(A) 
                and (G), (b)(1), (c)(1), and (e);
                    (B) an analysis of the extent to which Chinese 
                officials are attempting in good faith to meet such 
                obligations; and
                    (C) a description of the actions, if any, the 
                President will take to obtain compliance by China if 
                the President determines that the Chinese Government is 
                failing to meet such obligations, including pursuing 
                United States rights under the dispute settlement 
                provisions of the World Trade Organization, as 
                appropriate.

SEC. 6. REPORT ON CURRENCY MANIPULATION BY FOREIGN COUNTRIES.

    Not later than 60 days after the date of the enactment of this Act, 
the Secretary of the Treasury shall submit to the Committee on Ways and 
Means of the House of Representatives and the Committee on Finance of 
the Senate a report that--
            (1) defines currency manipulation;
            (2) describes actions of foreign countries that will be 
        considered to be currency manipulation; and
            (3) describes how statutory provisions addressing currency 
        manipulation by trading partners of the United States contained 
        in, and relating to, section 40 of the Bretton Woods Agreements 
        Act (22 U.S.C. 286y) and sections 3004 and 3005 of the Exchange 
        Rates and International Economic Policy Coordination Act of 
        1988 (22 U.S.C. 5304 and 5305) can be better clarified 
        administratively to provide for improved and more predictable 
        evaluation.

SEC. 7. AUTHORIZATION OF APPROPRIATIONS FOR THE OFFICE OF THE UNITED 
              STATES TRADE REPRESENTATIVE.

    (a) Authorization of Appropriations.--
            (1) In general.--Section 141(g)(1)(A) of the Trade Act of 
        1974 (19 U.S.C. 2171(g)(1)(A)) is amended by striking clauses 
        (i) and (ii) and inserting the following:
            ``(i) $44,779,000 for fiscal year 2006.
            ``(ii) $47,018,000 for fiscal year 2007.''.
            (2) Rule of construction.--The amendment made by paragraph 
        (1) shall not be construed to affect the availability of funds 
        appropriated pursuant to section 141(g)(1)(A) of the Trade Act 
        of 1974 before the date of the enactment of this Act.
    (b) Authorization of Appropriations for the Office of the General 
Counsel and Certain Other Offices.--There are authorized to be 
appropriated to the Office of the United States Trade Representative 
for the appointment of additional staff in or enhanced activities by 
the Office of the General Counsel, the Office of Monitoring and 
Enforcement, the Office of China Affairs, and the Office of Japan, 
Korea, and APEC Affairs--
            (1) $4,000,000 for fiscal year 2006; and
            (2) $4,000,000 for fiscal year 2007.

SEC. 8. AUTHORIZATION OF APPROPRIATIONS FOR THE UNITED STATES 
              INTERNATIONAL TRADE COMMISSION.

    (a) Authorization of Appropriations.--Section 330(e)(2)(A) of the 
Tariff Act of 1930 (19 U.S.C. 1330(e)(2)(A)) is amended by striking 
clauses (i) and (ii) and inserting the following:
            ``(i) $62,752,000 for fiscal year 2006.
            ``(ii) $65,890,000 for fiscal year 2007.''.
    (b) Rule of Construction.--The amendment made by subsection (a) 
shall not be construed to affect the availability of funds appropriated 
pursuant to section section 330(e)(2)(A) of the Tariff Act of 1930 
before the date of the enactment of this Act.
    (c) Study and Report on Trade and Economic Relations With China.--
            (1) Study.--
                    (A) In general.--The United States International 
                Trade Commission shall carry out a comprehensive study 
                on trade and economic relations between the United 
                States and the People's Republic of China which focuses 
                on China's macroeconomic policy, including its fixed 
                exchange rate policy, the competitiveness of its 
                industries, the composition and nature of its trade 
                patterns, and the impact of these elements on the 
                United States trade account, industry, competitiveness, 
                and employment.
                    (B) Requirements.--In carrying out the study under 
                subparagraph (A), the United States International Trade 
                Commission shall undertake the following:
                            (i) An analysis of the United States trade 
                        and investment relationship with China, with a 
                        focus on the United States-China trade balance 
                        and trends affecting particular industries, 
                        products, and sectors in agriculture, 
                        manufacturing, and services. The analysis shall 
                        provide context for understanding the U.S.-
                        China trade and investment relationship, by 
                        including information regarding China's 
                        economic relationships with third countries and 
                        China's changing policy regime and business 
                        environment. The analysis shall include a focus 
                        on United States-China trade in goods and 
                        services, United States direct investment in 
                        China, China's foreign direct investment in the 
                        United States, and the relationship between 
                        trade and investment. The analysis shall make 
                        adjustments, where possible, for merchandise 
                        passed through Hong Kong.
                            (ii) An analysis of the competitive 
                        conditions in China affecting United States 
                        exports and United States direct investment. 
                        The analysis shall take into account, to the 
                        extent feasible, significant factors including 
                        tariffs and non-tariff measures, competition 
                        from Chinese domestic firms and foreign-based 
                        companies operating in China, the Chinese 
                        regulatory environment, including specific 
                        regulations and overall regulatory 
                        transparency, and other Chinese industrial and 
                        financial policies. In addition, the analysis 
                        shall examine the specific competitive 
                        conditions facing United States producers in 
                        key industries, products, and sectors, 
                        potentially including computer and 
                        telecommunications hardware, textiles, grains, 
                        cotton, and financial services.
                            (iii) An examination of the role and 
                        importance of intellectual property rights 
                        issues, such as patents, copyrights, and 
                        licensing, in specific industries in China, 
                        including the pharmaceutical industry, the 
                        software industry, and the entertainment 
                        industry.
                            (iv) An analysis of the effects on global 
                        commodity markets of China's growing demand for 
                        energy and raw materials.
                            (v) An examination of whether or not 
                        increased United States imports from China 
                        reflect displacement of United States imports 
                        from third countries or United States domestic 
                        production, and the role of intermediate and 
                        value-added goods processing in China's pattern 
                        of trade.
            (2) Report.--Not later than one year after the date of the 
        enactment of this Act, the United States International Trade 
        Commission shall submit to the Committee on Ways and Means of 
        the House of Representatives and the Committee on Finance of 
        the Senate a report that contains the results of the study 
        carried out under paragraph (1).

SEC. 9. SENSE OF CONGRESS REGARDING EXPANSION OF MEMBERSHIP IN THE 
              AGREEMENT ON GOVERNMENT PROCUREMENT OF THE WTO.

    (a) Findings.--Congress finds the following:
            (1) Nondiscriminatory, procompetitive, merit-based, and 
        technology-neutral procurement of goods and services is 
        essential so that governments can acquire the best goods to 
        meet their needs for the best value.
            (2) The Agreement on Government Procurement (GPA) of the 
        World Trade Organization (WTO) provides a multilateral 
        framework of rights and obligations founded on such principles.
            (3) The United States is a member of the GPA, along with 
        Canada, the European Union (including its 25 member States: 
        Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, 
        Finland, France, Germany, Greece, Hungary, Ireland, Italy, 
        Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, 
        Portugal, Slovak Republic, Slovenia, Spain, Sweden, and the 
        United Kingdom), Hong Kong, Iceland, Israel, Japan, Korea, 
        Liechtenstein, the Netherlands with respect to Aruba, Norway, 
        Singapore, and Switzerland.
            (4) Albania, Bulgaria, Georgia, Jordan, the Kyrgyz 
        Republic, Moldova, Oman, Panama, and Taiwan are currently 
        negotiating to accede to the GPA.
            (5) The People's Republic of China joined the WTO in 
        December 2001, signaling to the international community its 
        commitment to greater openness.
            (6) When China joined the WTO, it committed, in its 
        protocol of accession, to negotiate entry into the GPA ``as 
        soon as possible''.
            (7) More than 3 years after its entry into the WTO, China 
        has not commenced negotiations to join the GPA.
            (8) Recent legal developments in China illustrate the 
        importance and urgency of expanding membership in the GPA.
            (9) In 2002, China enacted a law on government procurement 
        that incorporates preferences for domestic goods and services.
            (10) The first sector for which the Chinese Government has 
        sought to implement the new government procurement law is 
        computer software.
            (11) In March 2005 the Chinese Government released draft 
        regulations governing the procurement of computer software.
            (12) The draft regulations require that non-Chinese 
        software companies meet conditions relating to outsourcing of 
        software development work to China, technology transfer, and 
        similar requirements, in order to be eligible to participate in 
        the Chinese Government market.
            (13) As a result of the proposed regulations, it appears 
        likely that a very substantial amount of American software will 
        be excluded from the government procurement process in China. 
        The draft software regulations threatened to close off a market 
        with a potential value of more than $8 billion to United States 
        firms.
            (14) United States software companies have made a 
        substantial commitment to the Chinese market and have made a 
        substantial contribution to the development of China's software 
        industry.
            (15) The outright exclusion of substantial amounts of 
        software not of Chinese origin that is apparently contemplated 
        in the regulations is out of step with domestic preferences 
        that exist in the procurement laws and practices of other WTO 
        member countries, including the United States.
            (16) The draft regulations do not adhere to the principles 
        of nondiscriminatory, procompetitive, merit-based, and 
        technology-neutral procurement embodied in the GPA.
            (17) The software piracy rate in China has never fallen 
        below 90 percent over the past 10 years.
            (18) Chinese Government entities represent a very 
        significant portion of the software market in China that is not 
        dominated by piracy.
            (19) The combined effect of rampant software piracy and the 
        proposed discriminatory government procurement regulations will 
        be a nearly impenetrable barrier to market access for the 
        United States software industry in China.
            (20) The United States trade deficit with China in 2004 was 
        $162,000,000,000, the highest with any economy in the world, 
        and a 12.4 percent increase over 2003.
            (21) China's Premier, Wen Jiabao, has committed to rectify 
        this serious imbalance by increasing China's imports of goods 
        and services from the United States.
            (22) The proposed software procurement regulations that 
        were described by the Chinese Government in November 2004 
        incorporate policies that are fully at odds with Premier Wen's 
        commitment to increase China's imports from the United States, 
        and will add significantly to the trade imbalance between the 
        United States and China.
            (23) Once it is fully implemented, the discriminatory 
        aspects of China's government procurement law will apply to all 
        goods and services that the government procures.
            (24) Other developing countries may follow the lead of 
        China.
            (25) In July 2005, senior officials of the Chinese 
        Government announced at the U.S.-China Joint Committee on 
        Commerce and Trade that China would accelerate its efforts to 
        join the GPA and toward this end will initiate technical 
        consultations with other WTO member countries and accordingly 
        delay issuing draft regulations on software procurement, as it 
        further considers public comments and makes revisions in light 
        of WTO rules.
    (b) Sense of Congress.--It is the sense of Congress that--
            (1) the Government of the United States should strive to 
        expand membership in the Agreement on Government Procurement of 
        the World Trade Organization (WTO);
            (2) the Government of the United States should ensure that 
        the Government of the People's Republic of China meets its WTO 
        obligations as recently affirmed through its commitment in July 
        2005 through the U.S.-China Joint Committee on Commerce and 
        Trade, to join the WTO Agreement on Government Procurement;
            (3) the Government of the United States should seek a 
        commitment from the Government of the People's Republic of 
        China to maintain its suspension of the implementation of its 
        law on government procurement, pending the conclusion of 
        negotiations to accede to the Agreement on Government 
        Procurement of the WTO;
            (4) the Government of the United States should seek 
        commitments from the Government of the People's Republic of 
        China and other countries that are not yet members of the 
        Agreement on Government Procurement of the WTO to implement the 
        principles of openness, transparency, fair competition based on 
        merit, nondiscrimination, and accountability in their 
        government procurement as embodied in that agreement; and
            (5) the President should direct all appropriate officials 
        of the United States to raise these concerns with appropriate 
        officials of the People's Republic of China and other trading 
        partners.
                                 <all>