[House Report 118-293]
[From the U.S. Government Publishing Office]


118th Congress   }                                      {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                      {      118-293

======================================================================



 
                 TAIWAN NON-DISCRIMINATION ACT OF 2023

                                _______
                                

December 1, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 540]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 540) to require the Secretary of the Treasury to 
pursue more equitable treatment of Taiwan at the international 
financial institutions, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Taiwan Non-Discrimination Act of 
2023''.

SEC. 2. FINDINGS.

  Congress finds as follows:
          (1) As enshrined in its Articles of Agreement, the 
        International Monetary Fund (IMF) is devoted to promoting 
        international monetary cooperation, facilitating the expansion 
        and balanced growth of international trade, encouraging 
        exchange stability, and avoiding competitive exchange 
        depreciation.
          (2) Taiwan is the 21st largest economy in the world and the 
        10th largest goods trading partner of the United States.
          (3) Although Taiwan is not an IMF member, it is a member of 
        the World Trade Organization, the Asian Development Bank, and 
        the Asia-Pacific Economic Cooperation forum.
          (4) According to the January 2020 Report on Macroeconomic and 
        Foreign Exchange Policies of Major Trading Partners of the 
        United States, published by the Department of the Treasury, 
        Taiwan held $471,900,000,000 in foreign exchange reserves, more 
        than major economies such as India, South Korea, and Brazil.
          (5) According to section 4(d) of the Taiwan Relations Act 
        (Public Law 96-8), enacted on April 10, 1979, ``Nothing in this 
        Act may be construed as a basis for supporting the exclusion or 
        expulsion of Taiwan from continued membership in any 
        international financial institution or any other international 
        organization.''.
          (6) Taiwan held membership in the IMF for 9 years following 
        the recognition of the People's Republic of China (PRC) by the 
        United Nations, and 16 Taiwan staff members at the Fund were 
        allowed to continue their employment after the PRC was seated 
        at the IMF in 1980. As James M. Boughton has noted in his 
        Silent Revolution: The International Monetary Fund 1979-1989, 
        even as the PRC was seated, the United States Executive 
        Director to the IMF, Sam Y. Cross, expressed support on behalf 
        of the United States Government for ``some kind of association 
        between Taiwan and the Fund''.
          (7) On September 27, 1994, in testimony before the Senate 
        Committee on Foreign Relations regarding the 1994 Taiwan Policy 
        Review, then-Assistant Secretary of State for East Asian and 
        Pacific Affairs Winston Lord stated: ``Recognizing Taiwan's 
        important role in transnational issues, we will support its 
        membership in organizations where statehood is not a 
        prerequisite, and we will support opportunities for Taiwan's 
        voice to be heard in organizations where its membership is not 
        possible.''.
          (8) The Congress has repeatedly reaffirmed support for this 
        policy, including in Public Laws 107-10, 107-158, 108-28, 108-
        235, 113-17, and 114-139, and the unanimous House and Senate 
        passage of the Taiwan Allies International Protection and 
        Enhancement Initiative (TAIPEI) Act of 2019.
          (9) In its fact sheet, entitled ``U.S. Relations with 
        Taiwan'', published on August 31, 2018, the Department of State 
        asserts: ``The United States supports Taiwan's membership in 
        international organizations that do not require statehood as a 
        condition of membership and encourages Taiwan's meaningful 
        participation in international organizations where its 
        membership is not possible.''.
          (10) According to the Articles of Agreement of the IMF, 
        ``membership shall be open to other countries'', subject to 
        conditions prescribed by the Board of Governors of the IMF.
          (11) In the IMF publication ``Membership and Nonmembership in 
        the International Monetary Fund: A Study in International Law 
        and Organization'', Joseph Gold, the then-General Counsel and 
        Director of the Legal Department of the IMF, elaborated on the 
        differences between the terms ``countries'' and ``states'', 
        noting that ``the word `country' may have been adopted because 
        of the absence of agreement on the definition of a `state''' 
        and, with respect to the use of ``countries'' and applications 
        for IMF membership, ``the absence of any adjective in the 
        Articles emphasizes the breadth of the discretion that the Fund 
        may exercise in admitting countries to membership''. According 
        to Mr. Gold, ``the desire to give the Fund flexibility in 
        dealing with applications may explain not only the absence of 
        any adjective that qualifies `countries' but also the choice of 
        that word itself''.
          (12) In his IMF study, Mr. Gold further observes, ``in the 
        practice of the Fund the concepts of independence and 
        sovereignty have been avoided on the whole as a mode of 
        expressing a criterion for membership in the Fund''. He 
        continues, ``Although the Fund usually takes into account the 
        recognition or nonrecognition of an entity as a state, there 
        are no rules or even informal understandings on the extent to 
        which an applicant must have been recognized by members or 
        other international organizations before the Fund will regard 
        it as eligible for membership.''. In fact, when considering an 
        application for membership where the status of an applicant may 
        not be resolved, Mr. Gold writes ``there have been occasions on 
        which the Fund has made a finding before decisions had been 
        taken by the United Nations or by most members or by members 
        with a majority of the total voting power.'' Mr. Gold 
        concludes, ``the Fund makes its own findings on whether an 
        applicant is a `country', and makes them solely for its own 
        purposes.''.
          (13) Although not a member state of the United Nations, the 
        Republic of Kosovo is a member of both the IMF and the World 
        Bank, having joined both organizations on June 29, 2009.
          (14) On October 26, 2021, Secretary of State Antony Blinken 
        issued a statement in support of Taiwan's ``robust, meaningful 
        participation'' in the United Nations system, which includes 
        the IMF, the World Bank, and other specialized United Nations 
        agencies. Secretary of State Blinken noted, ``As the 
        international community faces an unprecedented number of 
        complex and global issues, it is critical for all stakeholders 
        to help address these problems. This includes the 24 million 
        people who live in Taiwan. Taiwan's meaningful participation in 
        the UN system is not a political issue, but a pragmatic one.''. 
        He continued, ``Taiwan's exclusion undermines the important 
        work of the UN and its related bodies, all of which stand to 
        benefit greatly from its contributions.''.

SEC. 3. SENSE OF THE CONGRESS.

  It is the sense of the Congress that--
          (1) the size, significance, and connectedness of the 
        Taiwanese economy highlight the importance of greater 
        participation by Taiwan in the International Monetary Fund, 
        given the purposes of the Fund articulated in its Articles of 
        Agreement; and
          (2) the experience of Taiwan in developing a vibrant and 
        advanced economy under democratic governance and the rule of 
        law should inform the work of the international financial 
        institutions, including through increased participation by 
        Taiwan in the institutions.

SEC. 4. SUPPORT FOR TAIWAN ADMISSION TO THE IMF.

  (a) In General.--The United States Governor of the International 
Monetary Fund (in this section referred to as the ``Fund'') shall use 
the voice and vote of the United States to vigorously support--
          (1) the admission of Taiwan as a member of the Fund, to the 
        extent that admission is sought by Taiwan;
          (2) participation by Taiwan in regular surveillance 
        activities of the Fund with respect to the economic and 
        financial policies of Taiwan, consistent with Article IV 
        consultation procedures of the Fund;
          (3) employment opportunities for Taiwan nationals, without 
        regard to any consideration that, in the determination of the 
        United States Governor, does not generally restrict the 
        employment of nationals of member countries of the Fund; and
          (4) the ability of Taiwan to receive appropriate technical 
        assistance and training by the Fund.
  (b) United States Policy.--It is the policy of the United States not 
to discourage or otherwise deter Taiwan from seeking admission as a 
member of the Fund.
  (c) Waiver.--The Secretary of the Treasury may waive any requirement 
of subsection (a) for up to 1 year at a time on reporting to Congress 
that providing the waiver will substantially promote the objective of 
securing the meaningful participation of Taiwan at each international 
financial institution (as defined in section 1701(c)(2) of the 
International Financial Institutions Act).
  (d) Sunset.--This section shall have no force or effect on the 
earlier of--
          (1) the date of approval by the Board of Governors of the 
        Fund for the admission of Taiwan as a member of the Fund; or
          (2) the date that is 10 years after the date of the enactment 
        of this Act.

SEC. 5. TESTIMONY REQUIREMENT.

  In each of the next 7 years in which the Secretary of the Treasury is 
required by section 1705(b) of the International Financial Institutions 
Act to present testimony, the Secretary shall include in the testimony 
a description of the efforts of the United States to support the 
greatest participation practicable by Taiwan at each international 
financial institution (as defined in section 1701(c)(2) of such Act).

                          PURPOSE AND SUMMARY

    Introduced on January 26, 2023, by Representative Young 
Kim, H.R. 540, the Taiwan Non-Discrimination Act of 2023, 
requires the U.S. to advocate for Taiwan's membership and 
meaningful participation at the International Monetary Fund 
(IMF) and is essential for Department of the Treasury 
(Treasury) to implement U.S. policy towards Taiwan at the IMF. 
Under current practice, the IMF would only engage Taiwan 
through the consent of the People's Republic of China, an 
unacceptable arrangement that Treasury does not appear to be 
challenging. Given how clear U.S. policy has been on Taiwan's 
participation in institutions like the IMF, it is vital for 
Treasury to support Taiwan's involvement without deferring to 
Beijing for authorization. IMF membership for Taiwan would also 
unlock the potential for membership in other international 
financial institutions, such as the World Bank and Inter-
American Development Bank. (Taiwan is already a member of the 
Asian Development Bank.)

                  BACKGROUND AND NEED FOR LEGISLATION

    United States policy towards Taiwan, as repeatedly 
reaffirmed in law, supports the island's membership in 
international organizations where statehood is not a 
prerequisite, as well as Taiwan's meaningful participation in 
organizations where membership is not possible. Under its rules 
and precedents, the IMF is open to membership by ``countries,'' 
not ``states.'' As the former General Counsel of the IMF, 
Joseph Gold, wrote in Membership and Nonmembership in the 
International Monetary Fund: A Study in International Law and 
Organization, ``[. . .] in the practice of the Fund, the 
concepts of independence and sovereignty have been avoided on 
the whole as a mode of expressing a criterion for membership in 
the Fund.'' The IMF determines whether an applicant is a 
``country'' for its own membership purposes. For example, 
Kosovo joined the IMF as a member country in 2009, despite not 
being a member state of the United Nations.
    Although Taiwan is a major advanced economy, it neither 
enjoys membership in the IMF nor participates in any meaningful 
way in the Fund's activities. Given how clear U.S. policy has 
been on Taiwan's participation in institutions like the IMF, it 
is vital for Treasury to support Taiwan's involvement without 
deferring to Beijing for authorization. IMF membership for 
Taiwan would also unlock the potential for membership in other 
international financial institutions, such as the World Bank 
and Inter-American Development Bank (Taiwan is already a member 
of the Asian Development Bank).

                                HEARING

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 540: The Committee on 
Financial Services held a hearing February 7, 2023, titled 
``Combatting the Economic Threat from China.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
February 28, 2023, and ordered H.R. 540 to be reported 
favorably to the House as amended by a recorded vote of 38 ayes 
to 0 nays (Record vote no. FC-18), a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Mrs. Kim by voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.R. 
540 was ordered reported favorably to the House as amended by a 
recorded vote of 38 ayes to 0 nays (Record vote no. FC-18), a 
quorum being present.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      COMMITTEE OVERISGHT FINDINGS

    Pursuant to clause 3(c) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee, based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 540 is to further 
the United States' policy on Taiwan by advocating for the 
country's inclusion in the IMF.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee adopts as its own the 
estimate of new budget authority, entitlement authority, or tax 
expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1973.

                       FEDERAL MANDATES STATEMENT

    Pursuant to section 423 of the Unfunded Mandates Reform 
Act, the Committee adopts as its own the estimate of the 
Federal mandates prepared by the Director of the Congressional 
Budget Office.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    Pursuant to clause 9 of rule XXI of the Rules of the House 
of Representatives, the Committee has carefully reviewed the 
provisions of the bill and states that the provisions of the 
bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1: Short title

    This Act may be cited as the ``Taiwan Non-Discrimination 
Act of 2023.''

Sec. 2: Findings

    This section sets out several findings regarding Taiwan 
including but not limited to their global economic ranking, 
their current participation in international organizations such 
as the World Trade Organization, and their past participation 
in the IMF.

Sec. 3: Sense of Congress

    This section establishes a sense of Congress that the size, 
significance and connectedness of Taiwan and its experience as 
an advanced economy all support its participation.

Sec. 4: Support for Taiwan admission to the IMF

    The bill instructs the U.S. Governor of the IMF to use the 
voice and vote of the U.S. to vigorously support the following: 
Taiwan's admission to the IMF and participation in the IMF's 
activities; employment opportunities for Taiwan nationals; and 
provision of technical assistance and training for Taiwan by 
the IMF. The policies set forth in the bill sunset after 10 
years or the date U.S. Governor approves Taiwan's admission to 
the IMF.

Sec. 5: Testimony requirement

    This bill requires the Secretary of the Treasury to testify 
each year, for the next 7 years, on efforts to support the 
participation of Taiwan at each international financial 
institution.

                                  [all]