[Congressional Record Volume 169, Number 123 (Tuesday, July 18, 2023)]
[Senate]
[Pages S3063-S3066]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 888. Mr. RUBIO submitted an amendment intended to be proposed by
him to the bill S. 2226, to authorize appropriations for fiscal year
2024 for military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:
At the end, add the following:
[[Page S3064]]
DIVISION E--FAIR TRADE WITH CHINA ENFORCEMENT ACT
SEC. 6001. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This division may be cited as the ``Fair
Trade with China Enforcement Act''.
(b) Table of Contents.--The table of contents for this
division is as follows:
Sec. 6001. Short title; table of contents.
Sec. 6002. Sense of Congress.
Sec. 6003. Statement of policy.
TITLE I--SAFEGUARDS AGAINST FOREIGN INFLUENCE IN UNITED STATES NATIONAL
AND ECONOMIC SECURITY BY THE PEOPLE'S REPUBLIC OF CHINA
Sec. 6011. Establishment of list of certain products receiving support
from Government of People's Republic of China pursuant to
Made in China 2025 policy.
Sec. 6012. Prohibition on export to People's Republic of China of
national security sensitive technology and intellectual
property.
Sec. 6013. Imposition of shareholder cap on Chinese investors in United
States entities.
Sec. 6014. Prohibition on use of certain telecommunications services or
equipment.
TITLE II--FAIR TRADE ENFORCEMENT ACTIONS WITH RESPECT TO THE PEOPLE'S
REPUBLIC OF CHINA
Sec. 6021. Countervailing duties with respect to certain industries in
the People's Republic of China.
Sec. 6022. Repeal of reduced withholding rates for residents of China.
Sec. 6023. Taxation of obligations of the United States held by the
Government of the People's Republic of China.
SEC. 6002. SENSE OF CONGRESS.
It is the sense of Congress that--
(1) since joining the World Trade Organization in 2001, the
People's Republic of China has offered the United States a
contradictory bargain, which promised openness in the global
trade order, but through state mercantilism delivered a
severely imbalanced trading relationship;
(2) it was erroneous for the United States Government to
have ignored the contradictions and risks of free trade with
the People's Republic of China on the assumption that the
People's Republic of China would liberalize economically and
politically;
(3) benefiting enormously from a more open global economy
to drive its own industries, the Government of the People's
Republic of China and the Communist Party of the People's
Republic of China have only tightened their grip on power,
brutally suppressing dissent at home and pursuing policies
abroad that are a far cry from being a responsible global
stakeholder;
(4) malevolent economic behavior by persons in the People's
Republic of China is made clear by the theft of intellectual
property from the United States, as Chinese theft of United
States intellectual property alone costs the United States
nearly $600,000,000,000 annually, according to the United
States Trade Representative;
(5) stealing United States intellectual property advances
the Made in China 2025 initiative of the Government of the
People's Republic of China to eventually dominate global
exports in 10 critical sectors, namely artificial
intelligence and next-generation information technology,
robotics, new-energy vehicles, biotechnology, energy and
power generation, aerospace, high-tech shipping, advanced
railway, new materials, and agricultural machinery, among
others;
(6) the targets of the Made in China 2025 initiative reveal
the goal of the People's Republic of China for the near-total
displacement of advanced manufacturing in the United States;
and
(7) the United States Government should act to strengthen
the position of the United States in its policy toward the
People's Republic of China in order to create a more balanced
economic relationship by safeguarding strategic assets from
Chinese influence, reducing Chinese involvement in the United
States economy, and encouraging United States companies to
produce domestically, instead of in the People's Republic of
China.
SEC. 6003. STATEMENT OF POLICY.
It is the policy of the United States--
(1) to impose restrictions on Chinese investment in the
United States in strategic industries targeted by the Made in
China 2025 initiative set forth by the Government of the
People's Republic of China;
(2) to tax Chinese investment in the United States due to
its negative effect on the United States trade deficit and
wages of workers in the United States;
(3) to increase the cost of transnational production
operations in the People's Republic of China in a manner
consistent with the economic cost of the risk of loss of
unique access by the United States to intellectual property,
technology, and industrial base; and
(4) to support democratization in and the human rights of
the people of Hong Kong, including the findings and
declarations set forth under section 2 of the United States-
Hong Kong Policy Act of 1992 (22 U.S.C. 5701).
TITLE I--SAFEGUARDS AGAINST FOREIGN INFLUENCE IN UNITED STATES NATIONAL
AND ECONOMIC SECURITY BY THE PEOPLE'S REPUBLIC OF CHINA
SEC. 6011. ESTABLISHMENT OF LIST OF CERTAIN PRODUCTS
RECEIVING SUPPORT FROM GOVERNMENT OF PEOPLE'S
REPUBLIC OF CHINA PURSUANT TO MADE IN CHINA
2025 POLICY.
(a) In General.--Chapter 8 of title I of the Trade Act of
1974 (19 U.S.C. 2241 et seq.) is amended by adding at the end
the following:
``SEC. 183. LIST OF CERTAIN PRODUCTS RECEIVING SUPPORT FROM
GOVERNMENT OF PEOPLE'S REPUBLIC OF CHINA.
``(a) In General.--Not later than 120 days after the date
of the enactment of the Fair Trade with China Enforcement
Act, and every year thereafter, the United States Trade
Representative shall set forth a list of products
manufactured or produced in, or exported from, the People's
Republic of China that are determined by the Trade
Representative to receive support from the Government of the
People's Republic of China pursuant to the Made in China 2025
industrial policy of that Government.
``(b) Criteria for List.--
``(1) In general.--The Trade Representative shall include
in the list required by subsection (a) the following
products:
``(A) Any product specified in the following documents set
forth by the Government of the People's Republic of China:
``(i) Notice on Issuing Made in China 2025.
``(ii) China Manufacturing 2025.
``(iii) Notice on Issuing the 13th Five-year National
Strategic Emerging Industries Development Plan.
``(iv) Guiding Opinion on Promoting International
Industrial Capacity and Equipment Manufacturing Cooperation.
``(v) Any other document that expresses a national strategy
or stated goal in connection with the Made in China 2025
industrial policy set forth by the Government of the People's
Republic of China, the Communist Party of China, or another
entity or individual capable of impacting the national
strategy of the People's Republic of China.
``(B) Any product receiving support from the Government of
the People's Republic of China that has or will in the future
displace net exports of like products by the United States,
as determined by the Trade Representative.
``(2) Included products.--In addition to such products as
the Trade Representative shall include pursuant to paragraph
(1) in the list required by subsection (a), the Trade
Representative shall include products in the following
industries:
``(A) Civil aircraft.
``(B) Motor car and vehicle.
``(C) Advanced medical equipment.
``(D) Advanced construction equipment.
``(E) Agricultural machinery.
``(F) Railway equipment.
``(G) Diesel locomotive.
``(H) Moving freight.
``(I) Semiconductor.
``(J) Lithium battery manufacturing.
``(K) Artificial intelligence.
``(L) High-capacity computing.
``(M) Quantum computing.
``(N) Robotics.
``(O) Biotechnology.''.
(b) Clerical Amendment.--The table of contents for the
Trade Act of 1974 is amended by inserting after the item
relating to section 182 the following:
``Sec. 183. List of certain products receiving support from Government
of People's Republic of China.''.
SEC. 6012. PROHIBITION ON EXPORT TO PEOPLE'S REPUBLIC OF
CHINA OF NATIONAL SECURITY SENSITIVE TECHNOLOGY
AND INTELLECTUAL PROPERTY.
(a) In General.--The Secretary of Commerce shall prohibit
the export to the People's Republic of China of any national
security sensitive technology or intellectual property
subject to the jurisdiction of the United States or exported
by any person subject to the jurisdiction of the United
States.
(b) Definitions.--In this section:
(1) Intellectual property.--The term ``intellectual
property'' includes patents, copyrights, trademarks, or trade
secrets.
(2) National security sensitive technology or intellectual
property.--The term ``national security sensitive technology
or intellectual property'' includes the following:
(A) Technology or intellectual property that would make a
significant contribution to the military potential of the
People's Republic of China that would prove detrimental to
the national security of the United States.
(B) Technology or intellectual property necessary to
protect the economy of the United States from the excessive
drain of scarce materials and to reduce the serious
inflationary impact of demand from the People's Republic of
China.
(C) Technology or intellectual property that is a component
of the production of products included in the most recent
list required under section 183 of the Trade Act of 1974, as
added by section 6011(a), determined in consultation with the
United States Trade Representative.
(3) Technology.--The term ``technology'' includes goods or
services relating to information systems, internet-based
services, production-enhancing logistics, robotics,
artificial intelligence, biotechnology, or computing.
SEC. 6013. IMPOSITION OF SHAREHOLDER CAP ON CHINESE INVESTORS
IN UNITED STATES ENTITIES.
Section 13(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(d)) is amended by adding at the end the following:
``(7)(A) In this paragraph, the term `covered issuer' means
any issuer--
``(i) that produces components that--
[[Page S3065]]
``(I) may be used in the production of goods manufactured
or produced in, or exported from, the People's Republic of
China; and
``(II) are included in the most recent list required under
section 183 of the Trade Act of 1974, determined in
consultation with the United States Trade Representative; and
``(ii)(I) that is incorporated under the laws of a State;
or
``(II) the principal place of business of which is in a
State.
``(B) Notwithstanding any other provision of this
subsection, no person, the principal place of business of
which is in the People's Republic of China, may be the
beneficial owner, directly or indirectly, of more than 50 per
centum of any class of equity security of a covered issuer
that is registered pursuant to section 12.
``(C) The prohibition in subparagraph (B) shall apply to
any acquisition on or after the date of enactment of this
paragraph.''.
SEC. 6014. PROHIBITION ON USE OF CERTAIN TELECOMMUNICATIONS
SERVICES OR EQUIPMENT.
(a) Findings.--Congress makes the following findings:
(1) In its 2011 ``Annual Report to Congress on Military and
Security Developments Involving the People's Republic of
China'', the Department of Defense stated, ``China's defense
industry has benefited from integration with a rapidly
expanding civilian economy and science and technology sector,
particularly elements that have access to foreign technology.
Progress within individual defense sectors appears linked to
the relative integration of each, through China's civilian
economy, into the global production and R&D chain . . .
Information technology companies in particular, including
Huawei, Datang, and Zhongxing, maintain close ties to the
PLA.''.
(2) In a 2011 report titled ``The National Security
Implications of Investments and Products from the People's
Republic of China in the Telecommunications Sector'', the
United States China Economic and Security Review Commission
stated that ``[n]ational security concerns have accompanied
the dramatic growth of China's telecom sector. . . .
Additionally, large Chinese companies--particularly those
`national champions' prominent in China's `going out'
strategy of overseas expansion--are directly subject to
direction by the Chinese Communist Party, to include support
for PRC state policies and goals.''.
(3) The Commission further stated in its report that
``[f]rom this point of view, the clear economic benefits of
foreign investment in the U.S. must be weighed against the
potential security concerns related to infrastructure
components coming under the control of foreign entities. This
seems particularly applicable in the telecommunications
industry, as Chinese companies continue systematically to
acquire significant holdings in prominent global and U.S.
telecommunications and information technology companies.''.
(4) In its 2011 Annual Report to Congress, the United
States China Economic and Security Review Commission stated
that ``[t]he extent of the state's control of the Chinese
economy is difficult to quantify. . . . There is also a
category of companies that, though claiming to be private,
are subject to state influence. Such companies are often in
new markets with no established SOE leaders and enjoy
favorable government policies that support their development
while posing obstacles to foreign competition. Examples
include Chinese telecoms giant Huawei and such automotive
companies as battery maker BYD and vehicle manufacturers
Geely and Chery.''.
(5) In the bipartisan ``Investigative Report on the United
States National Security Issues Posed by Chinese
Telecommunication Companies Huawei and ZTE'' released in 2012
by the Permanent Select Committee on Intelligence of the
House of Representatives, it was recommended that ``U.S.
government systems, particularly sensitive systems, should
not include Huawei or ZTE equipment, including in component
parts. Similarly, government contractors--particularly those
working on contracts for sensitive U.S. programs--should
exclude ZTE or Huawei equipment in their systems.''.
(6) General Michael Hayden, who served as Director of the
Central Intelligence Agency and Director of the National
Security Agency, stated in July 2013 that Huawei had ``shared
with the Chinese state intimate and extensive knowledge of
foreign telecommunications systems it is involved with''.
(7) The Federal Bureau of Investigation, in a February 2015
Counterintelligence Strategy Partnership Intelligence Note,
stated that, ``[w]ith the expanded use of Huawei Technologies
Inc. equipment and services in U.S. telecommunications
service provider networks, the Chinese Government's potential
access to U.S. business communications is dramatically
increasing. Chinese Government-supported telecommunications
equipment on U.S. networks may be exploited through Chinese
cyber activity, with China's intelligence services operating
as an advanced persistent threat to U.S. networks.''.
(8) The Federal Bureau of Investigation further stated in
its February 2015 counterintelligence note that ``China makes
no secret that its cyber warfare strategy is predicated on
controlling global communications network infrastructure''.
(9) At a hearing before the Committee on Armed Services of
the House of Representatives on September 30, 2015, Deputy
Secretary of Defense Robert Work, responding to a question
about the use of Huawei telecommunications equipment, stated,
``In the Office of the Secretary of Defense, absolutely not.
And I know of no other--I don't believe we operate in the
Pentagon, any [Huawei] systems in the Pentagon.''.
(10) At that hearing, the Commander of the United States
Cyber Command, Admiral Mike Rogers, responding to a question
about why such Huawei telecommunications equipment is not
used, stated, ``As we look at supply chain and we look at
potential vulnerabilities within the system, that it is a
risk we felt was unacceptable.''.
(11) In March 2017, ZTE Corporation pled guilty to
conspiring to violate the International Emergency Economic
Powers Act by illegally shipping United States-origin items
to Iran, paying the United States Government a penalty of
$892,360,064 for activity between January 2010 and January
2016.
(12) The Office of Foreign Assets Control of the Department
of the Treasury issued a subpoena to Huawei as part of a
Federal investigation of alleged violations of trade
restrictions on Cuba, Iran, and Sudan.
(b) Prohibition on Agency Use or Procurement.--The head of
an agency may not procure or obtain, may not extend or renew
a contract to procure or obtain, and may not enter into a
contract (or extend or renew a contract) with an entity that
uses, or contracts with any other entity that uses, any
equipment, system, or service that uses covered
telecommunications equipment or services as a substantial or
essential component of any system, or as critical technology
as part of any system.
(c) Report.--Not later than one year after the date of the
enactment of this Act, and annually thereafter, the Secretary
of Commerce, in consultation with the Secretary of Defense
and the United States Trade Representative, shall submit to
Congress a report on sales by the Government of the People's
Republic of China of covered telecommunications equipment or
services through partial ownership or any other methods.
(d) Definitions.--In this section:
(1) Agency.--The term ``agency'' has the meaning given that
term in section 551 of title 5, United States Code.
(2) Covered telecommunications equipment or services.--The
term ``covered telecommunications equipment or services''
means any of the following:
(A) Telecommunications equipment produced by Huawei
Technologies Company, ZTE Corporation, or any other Chinese
telecom entity identified by the Director of National
Intelligence, the Secretary of Defense, or the Director of
the Federal Bureau of Investigation as a security concern (or
any subsidiary or affiliate of any such entity).
(B) Telecommunications services provided by such entities
or using such equipment.
(C) Telecommunications equipment or services produced or
provided by an entity that the head of the relevant agency
reasonably believes to be an entity owned or controlled by,
or otherwise connected to, the Government of the People's
Republic of China.
TITLE II--FAIR TRADE ENFORCEMENT ACTIONS WITH RESPECT TO THE PEOPLE'S
REPUBLIC OF CHINA
SEC. 6021. COUNTERVAILING DUTIES WITH RESPECT TO CERTAIN
INDUSTRIES IN THE PEOPLE'S REPUBLIC OF CHINA.
(a) Policy.--It is the policy of the United States--
(1) to reduce the import of finished goods from the
People's Republic of China relating to the Made in China 2025
plan set forth by the Government of the People's Republic of
China; and
(2) to encourage allies of the United States to reduce the
import of finished goods from the People's Republic of China
relating to the Made in China 2025 plan.
(b) Inclusion of Made in China 2025 Products in Definition
of Countervailable Subsidy.--Paragraph (5) of section 771 of
the Tariff Act of 1930 (19 U.S.C. 1677) is amended by adding
at the end the following:
``(G) Treatment of certain chinese merchandise.--
Notwithstanding any other provision of this title, if a
person presents evidence in a petition filed under section
702(b) that merchandise covered by the petition is
manufactured or produced in, or exported from, the People's
Republic of China and included in the most recent list
required under section 183 of the Trade Act of 1974,
determined in consultation with the United States Trade
Representative, the administrating authority shall determine
that a countervailable subsidy is being provided with respect
to that merchandise.''.
(c) Inclusion of Made in China 2025 Products in Definition
of Material Injury.--Paragraph (7)(F) of such section is
amended by adding at the end the following:
``(iv) Treatment of certain chinese merchandise.--
Notwithstanding any other provision of this title, if a
petition filed under section 702(b) alleges that an industry
in the United States is materially injured or threatened with
material injury or that the establishment of an industry in
the United States is materially retarded by reason of imports
of merchandise manufactured or produced in, or exported from,
the People's Republic of China and included in the most
recent list required under section 183 of the Trade Act of
1974, determined in consultation with the United States Trade
Representative, the Commission shall determine that material
injury or such a threat exists.''.
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SEC. 6022. REPEAL OF REDUCED WITHHOLDING RATES FOR RESIDENTS
OF CHINA.
(a) In General.--Section 894 of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``The provisions of'' in subsection (a)(1)
and inserting ``Except as otherwise provided in this section,
the provisions of''; and
(2) by adding at the end the following new subsection:
``(d) Exception for People's Republic of China.--
``(1) In general.--The rates of tax imposed under sections
871 and 881, and the rates of withholding tax imposed under
chapter 3, with respect to any resident of the People's
Republic of China shall be determined without regard to any
provision of the Agreement between the Government of the
United States of America and the Government of the People's
Republic of China for the Avoidance of Double Taxation and
the Prevention of Tax Evasion with Respect to Taxes on
Income, signed at Beijing on April 30, 1984.
``(2) Regulations.--The Secretary shall promulgate
regulations to prevent the avoidance of the purposes of this
subsection through the use of foreign entities.''.
(b) Effective Date.--The amendments made by this section
shall apply to income received after the date of the
enactment of this Act.
SEC. 6023. TAXATION OF OBLIGATIONS OF THE UNITED STATES HELD
BY THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF
CHINA.
(a) In General.--Section 892 of the Internal Revenue Code
of 1986 is amended by redesignating subsection (c) as
subsection (d) and by inserting after subsection (b) the
following new subsection:
``(c) Exception.--This section shall not apply to the
Government of the People's Republic of China.''.
(b) Central Bank.--Section 895 of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``Income'' and inserting the following:
``(a) In General.--Income''; and
(2) by adding at the end the following new subsection:
``(b) Exception.--This section shall not apply to the any
central bank of the People's Republic of China.''.
(c) Effective Date.--The amendments made by this section
shall apply to income received or derived after the date of
the enactment of this Act.
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