[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.''.

[[Page S3066]]

  


     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.
                                 ______