[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3283 Engrossed in House (EH)]
109th CONGRESS
1st Session
H. R. 3283
_______________________________________________________________________
AN ACT
To enhance resources to enforce United States trade rights.
109th CONGRESS
1st Session
H. R. 3283
_______________________________________________________________________
AN ACT
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 has maintained until recently has been a substantial
distortion to world markets, blocking the price mechanism,
impeding adjustment of international imbalances, and serving as
a source of large and increasing risk to the Chinese economy;
(14) such behavior has effectively prevented market forces
from operating efficiently in the People's Republic of China,
distorting world trade;
(15) in a welcome move, the People's Republic of China has
now begun to move to a more flexible exchange rate, and it
should continue to so move to a market-based exchange rate as
soon as possible;
(16) in light of this recent positive development, the
Secretary of Treasury should provide to Congress a periodic
assessment of the mechanism adopted by the Chinese Government
to relate its currency to a basket of foreign currencies and
the degree to which the application of this mechanism moves the
currency closer to a market-based representation of its value;
(17) 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;
(18) 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
(19) 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, where
practicable, 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 obligations).
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. REPORTS ON CURRENCY MANIPULATION BY FOREIGN COUNTRIES.
(a) Report on Currency Manipulation.--Not later than 60 days after
the date of the enactment of this Act, the Secretary of the Treasury
shall submit to the appropriate congressional committees 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.
(b) Report on Actions by China.--
(1) In general.--In light of the recent positive
announcement by the Government of the People's Republic of
China with respect to increased exchange rate flexibility, the
Secretary of the Treasury shall submit to the appropriate
congressional committees a report that examines the mechanism
adopted by the Chinese Government to relate its currency to a
basket of foreign currencies and the degree to which the
application of this mechanism moves the currency closer to a
market-based representation of its value.
(2) Deadline.-- The initial report required by this
subsection shall be submitted to the appropriate congressional
committees not later than 180 days after the date of the
enactment of this Act and subsequent reports shall be included
in the report required under section 3005 of the Exchange Rates
and International Economic Policy Coordination Act of 1988 (22
U.S.C. 5305).
(c) Definition.--In this section, the term ``appropriate
congressional committees'' means--
(1) the Committee on Ways and Means and the Committee on
Financial Services of the House of Representatives; and
(2) the Committee on Finance and the Committee on Banking,
Housing, and Urban Affairs of the Senate.
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.
(c) Sense of Congress.--It is the sense of the Congress that the
enforcement of United States rights and of obligations of United States
trading partners under trade agreements has gained such significance
that the United States Trade Representative should determine which of
its current positions is most responsible for carrying out these
important enforcement duties and should assign that position, in
addition to any other title, the title of Chief Enforcement Officer.
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 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
addresses China's economic policies, including its
exchange rate policy, the competitiveness of its
industries, the composition and nature of its trade
patterns, and other elements impacting 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, services, and
sectors, potentially including computer and
telecommunications hardware, textiles, grains,
cotton, and financial services based on trade
and investment flows.
(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, Luxembourg, 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.
Passed the House of Representatives July 27, 2005.
Attest:
Clerk.