39–008

109TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 109–187

PROVIDING FOR CONSIDERATION OF H.R. 3283, UNITED 

STATES TRADE RIGHTS ENFORCEMENT ACT 

JULY 26, 2005.—Referred to the House Calendar and ordered to be printed 

Mr. PUTNAM, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 387]

The Committee on Rules, having had under consideration House 

Resolution 387, by a record vote of 9 to 4, report the same to the 

House with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for the consideration of H.R. 3283, the 

United States Trade Rights Enforcement Act, under a closed rule. 

The rule provides one hour of debate in the House equally divided 

and controlled by the chairman and ranking minority member of 

the Committee on Ways and Means. The rule waives all points of 

order against consideration of the bill. The rule provides that the 

amendment in the nature of a substitute printed in this report 

shall be considered as adopted. 

Finally, the rule provides one motion to recommit with or without instructions. 

EXPLANATION OF WAIVERS

The Rules Committee is not aware of any points of order against 

consideration of the bill. The waiver of all points of order against 

consideration of the bill is prophylactic in nature. 

COMMITTEE VOTES

Pursuant to clause 3(b) of House rule XIII the results of each 

record vote on an amendment or motion to report, together with 

the names of those voting for and against, are printed below: 

Rules Committee record vote No. 112 

Date: July 26, 2005. 

2

Measure: H.R. 3283, United States Trade Rights Enforcement 

Act. 

Motion by: Mrs. Slaughter. 

Summary of motion: To report an open rule. 

Results: Defeated 4 to 9. 

Vote by Members: Diaz-Balart—Nay; Hastings (WA)—Nay; Sessions—Nay; Putnam—Nay; Capito—Nay; Cole—Nay; Bishop—Nay; 

Gingrey—Nay; Slaughter—Yea; McGovern—Yea; Hastings (FL)—

Yea; Matsui—Yea; Dreier—Nay. 

Rules Committee record vote No. 113 

Date: July 26, 2005. 

Measure: H.R. 3283, United States Trade Rights Enforcement 

Act. 

Motion by: Mr. McGovern. 

Summary of motion: To make in order and provide the appropriate waivers for the amendment offered by Mr. Ryan of Ohio, 

which provides U.S. domestic industries with the option of pursuing relief from foreign government manipulation of currency values and other subsidies. Injured industries could seek relief under 

the U.S. countervailing-duty statute or the China-specific marketdisruption statute. Each of these alternatives is meant to address 

as quickly and as effectively as possible the harm to U.S. manufacturers and producers of agricultural goods and is intended to do so 

in a manner that is consistent with the international legal obligations of the United States at the WTO and the IMF. 

Results: Defeated 4 to 9. 

Vote by Members: Diaz-Balart—Nay; Hastings (WA)—Nay; Sessions—Nay; Putnam—Nay; Capito—Nay; Cole—Nay; Bishop—Nay; 

Gingrey—Nay; Slaughter—Yea; McGovern—Yea; Hastings (FL)—

Yea; Matsui—Yea; Dreier—Nay.

Rules Committee record vote No. 114 

Date: July 26, 2005. 

Measure: H.R. 3283, United States Trade Rights Enforcement 

Act. 

Motion by: Mr. Hastings of Florida. 

Summary of motion: To make in order and provide the appropriate waivers for the amendment offered by Mr. Cardin, which 

clarifies current U.S. law to ensure that the countervailing duty 

law can be applied to non-market economics to provide a remedy 

for U.S. workers, farmers, and businesses injured by subsidized exports from China. 

Results: Defeated 4 to 9. 

Vote by Members: Diaz-Balart—Nay; Hastings (WA)—Nay; Sessions—Nay; Putnam—Nay; Capito—Nay; Cole—Nay; Bishop—Nay; 

Gingrey—Nay; Slaughter—Yea; McGovern—Yea; Hastings (FL)—

Yea; Matsui—Yea; Dreier—Nay. 

Rules Committee record vote No. 115 

Date: July 26, 2005. 

Measure: H.R. 3283, United States Trade Rights Enforcement 

Act. 

Motion by: Mr. Lincoln Diaz-Balart. 

Summary of motion: To report the rule. 

3

Results: Agreed to 9 to 4. 

Vote by Members: Diaz-Balart—Yea; Hastings (WA)—Yea; Sessions—Yea; Putnam—Yea; Capito—Yea; Cole—Yea; Bishop—Yea; 

Gingrey—Yea; Slaughter—Nay; McGovern—Nay; Hastings (FL)—

Nay; Matsui—Nay; Dreier—Yea. 

SUMMARY OF AMENDMENT IN THE NATURE OF A SUBSTITUTE TO BE

CONSIDERED AS ADOPTED

(Summary provided by the amendment sponsor.) 

Thomas: Makes the following changes to the underlying bill: Section 2, updates resolution language to include reference to the new 

exchange rate mechanism recently adopted by Chinese government; 

Section 3, makes technical correction to add ‘‘where practicable,’’ to 

language regarding third country information in conformance with 

China’s WTO accession protocol; Section 4, makes technical correction to change reporting reference to international trade ‘‘obligations’’ rather than ‘‘laws’’; Section 6, adds House Financial Services 

and Senate Banking Committees as recipients of the supplemental 

currency report and adds a requirement for Secretary of the Treasury to analyze in the report the new exchange rate mechanism recently adopted by Chinese government; Section 7, adds sense of the 

Congress language that the USTR should identify a Chief Enforcement Officer; Section 8, makes a technical correction to change reference to ITC’s report of China’s ‘‘macroeconomic’’ policies to simply 

‘‘economic’’ policies, and to add reference to the ‘‘service’’ industry 

in the ITC analysis. 

TEXT OF AMENDMENT IN THE NATURE OF A SUBSTITUTE TO BE

CONSIDERED AS ADOPTED

Strike all after the enacting clause and insert the following: 

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; 

4

(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 

5

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. 

6

(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 SHIP- PERS.—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 PRO- POSED 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). 

7

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 

8

in Washington, D.C., to serve as the point of contact for 

United States companies, particularly small- and mediumsized 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. 

9

(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 

10

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 

11

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 

12

appropriated pursuant to section section 330(e)(2)(A) of the Tariff 

Act of 1930 before the date of the enactment of this Act. 

(c) STUDY AND REPORT ON TRADE AND ECONOMIC RELATIONS

WITH CHINA.—

(1) STUDY.—

(A) IN GENERAL.—The United States International Trade 

Commission shall carry out a comprehensive study on 

trade and economic relations between the United States 

and the People’s Republic of China which 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. 

13

(iv) An analysis of the effects on global commodity 

markets of China’s growing demand for energy and 

raw materials. 

(v) An examination of whether or not increased 

United States imports from China reflect displacement 

of United States imports from third countries or 

United States domestic production, and the role of intermediate and value-added goods processing in China’s pattern of trade. 

(2) REPORT.—Not later than one year after the date of the 

enactment of this Act, the United States International Trade 

Commission shall submit to the Committee on Ways and 

Means of the House of Representatives and the Committee on 

Finance of the Senate a report that contains the results of the 

study carried out under paragraph (1). 

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

(a) FINDINGS.—Congress finds the following: 

(1) Nondiscriminatory, procompetitive, merit-based, and 

technology-neutral procurement of goods and services is essential so that governments can acquire the best goods to meet 

their needs for the best value. 

(2) The Agreement on Government Procurement (GPA) of the 

World Trade Organization (WTO) provides a multilateral 

framework of rights and obligations founded on such principles. 

(3) The United States is a member of the GPA, along with 

Canada, the European Union (including its 25 member States: 

Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, 

Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, 

Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, 

and the United Kingdom), Hong Kong, Iceland, Israel, Japan, 

Korea, Liechtenstein, the Netherlands with respect to Aruba, 

Norway, Singapore, and Switzerland. 

(4) Albania, Bulgaria, Georgia, Jordan, the Kyrgyz Republic, 

Moldova, Oman, Panama, and Taiwan are currently negotiating to accede to the GPA. 

(5) The People’s Republic of China joined the WTO in December 2001, signaling to the international community its commitment to greater openness. 

(6) When China joined the WTO, it committed, in its protocol 

of accession, to negotiate entry into the GPA ‘‘as soon as possible’’. 

(7) More than 3 years after its entry into the WTO, China 

has not commenced negotiations to join the GPA. 

(8) Recent legal developments in China illustrate the importance and urgency of expanding membership in the GPA. 

(9) In 2002, China enacted a law on government procurement that incorporates preferences for domestic goods and 

services. 

(10) The first sector for which the Chinese Government has 

sought to implement the new government procurement law is 

computer software. 

14

(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 

15

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.

Æ