I 

109TH CONGRESS 

1ST SESSION H. R. 3306

To amend the Tariff Act of 1930 and the Trade Act of 1974 to provide 

relief from certain practices by other countries, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 14, 2005

Mr. RANGEL (for himself, Ms. PELOSI, Mr. HOYER, Mr. MENENDEZ, Mr. 

CLYBURN, Mr. CARDIN, and Mr. LEVIN) introduced the following bill; 

which was referred to the Committee on Ways and Means, and in addition to the Committees on International Relations and Financial Services, 

for a period to be subsequently determined by the Speaker, in each case 

for consideration of such provisions as fall within the jurisdiction of the 

committee concerned 

A BILL

To amend the Tariff Act of 1930 and the Trade Act of 

1974 to provide relief from certain practices by other 

countries, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fair Trade with China 

5 Act of 2005’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 
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1 (1) The growth of the economy of the People’s 

2 Republic of China is one of the most important de3 velopments of the 21st century. 

4 (2) The bilateral trade relationship between the 

5 United States and China is heavily imbalanced and 

6 is undermining the long-term economic health of the 

7 United States. 

8 (3) The United States trade deficit with China 

9 has doubled since 2000, reaching $162,000,000,000 

10 in 2004, the largest bilateral trade deficit in the 

11 world. 

12 (4) As a consequence of the trade deficit, the 

13 United States has had to borrow massive amounts 

14 of money from foreign governments. 

15 (5) The United States has accumulated more 

16 debt to foreign countries since 2000 than in the first 

17 220 years of the country’s history. 

18 (6) China has become a major purchaser of 

19 United States Treasury bonds, and United States 

20 indebtedness to the Government of China has grown 

21 by more than $100,000,000,000 since 2000. 

22 (7) The large amounts of United States dollars 

23 accumulated by the Government of China contribute 

24 to China’s acquisitions of United States companies, 
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1 such as the proposed acquisition of Unocal Corpora2 tion by the China National Offshore Oil Corporation. 

3 (8) China continues to violate many of the com4 mitments it made when it joined the World Trade 

5 Organization in 2001. 

6 (9) China’s inadequate enforcement of intellec7 tual property rights is resulting in infringement lev8 els of 90 percent or more for nearly all forms of in9 tellectual property, and cost American companies 

10 more than $2,500,000,000 in lost sales in 2004. 

11 (10) China’s industrial policies discriminate 

12 against foreign firms and products. 

13 (11) The Government of China continues to 

14 heavily subsidize its manufacturing sector through 

15 tax incentives, preferential access to credit and cap16 ital, subsidized utilities, and other measures. 

17 (12) Since 1994, China has kept its currency 

18 pegged at approximately 8.3 renminbi to the United 

19 States dollar, which has caused the renminbi to be20 come undervalued against the dollar by as much as 

21 40 percent, harming exports of United States goods 

22 and services to China and providing an unfair ad23 vantage to Chinese exports to the United States. 

24 (13) Current policies of the United States have 

25 failed to advance and protect the interests of Amer-
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1 ican workers, farmers, and businesses in the United 

2 States-China trade relationship, failed to address ef3 fectively China’s unfair trade practices and market 

4 access barriers to goods and services and its poor 

5 record at protecting intellectual property rights, and 

6 failed to stem or reverse the unsustainable United 

7 States trade deficit with China. 

8 (14) It is critical that the United States develop 

9 and implement a comprehensive and coherent set of 

10 policies to address China’s unfair trading practices 

11 and failure to abide by its commitments as a mem12 ber of the World Trade Organization. 

13 SEC. 3. APPLICATION OF COUNTERVAILING DUTIES TO 

14 NONMARKET ECONOMY COUNTRIES. 

15 (a) IN GENERAL.—Section 701(a)(1) of the Tariff 

16 Act of 1930 (19 U.S.C. 1671(a)(1)) is amended by insert17 ing ‘‘(including a nonmarket economy country)’’ after 

18 ‘‘country’’ each place it appears. 

19 (b) EFFECTIVE DATE.—The amendments made by 

20 subsection (a) apply to petitions filed under section 702 

21 of the Tariff Act of 1930 on or after the date of the enact22 ment of this Act. 

23 (c) ANTIDUMPING PROVISIONS NOT AFFECTED.—

24 The amendments made by subsection (a) shall not affect 

25 the status of a country as a nonmarket economy country 
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1 for purposes of any matter relating to antidumping duties 

2 under the Tariff Act of 1930. 

3 SEC. 4. TREATMENT OF CURRENCY MANIPULATION. 

4 (a) DEFINITION OF UNJUSTIFIABLE ACTS, POLICIES, 

5 AND PRACTICES.—Section 301(d)(4)(B) of the Trade Act 

6 of 1974 (19 U.S.C. 2411(d)(4)(B)) is amended to read 

7 as follows: 

8 ‘‘(B)(i) Acts, policies, and practices that are un9 justifiable include, but are not limited to, any act, 

10 policy, or practice described in subparagraph (A) 

11 which involves currency manipulation, or denies na12 tional or most-favored nation treatment or the right 

13 of establishment or protection of intellectual prop14 erty rights. 

15 ‘‘(ii) In this subparagraph, the term ‘currency 

16 manipulation’ means the protracted large-scale inter17 vention by an authority to undervalue its currency in 

18 the exchange market that prevents effective balance 

19 of payments adjustment or gains an unfair competi20 tive advantage over the United States.’’. 

21 (b) INVESTIGATION INTO CURRENCY MANIPULATION

22 BY THE PEOPLE’S REPUBLIC OF CHINA.—

23 (1) INVESTIGATION, DETERMINATIONS, AC24 TIONS.—The United States Trade Representative 

25 shall—
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1 (A) conduct an investigation, under sec2 tions 302 and 303 of the Trade Act of 1974, 

3 of the currency practices of the People’s Repub4 lic of China; 

5 (B) make the applicable determinations 

6 under section 304 of that Act pursuant to that 

7 investigation; and 

8 (C) implement any action, under section 

9 305 of that Act, in accordance with such deter10 minations. 

11 (2) INITIATION OF INVESTIGATION.—The 

12 United States Trade Representative shall initiate the 

13 investigation required by paragraph (1) not later 

14 than 90 days after the date of the enactment of this 

15 Act. 

16 SEC. 5. CLARIFICATION OF STANDARD FOR PRESIDENTIAL 

17 ACTION ON ITC FINDING OF MARKET DISRUP18 TION. 

19 (a) AMENDMENTS TO STANDARD FOR TRADE REP20 RESENTATIVE’S RECOMMENDATION TO THE PRESI21 DENT.—Section 421(h)(2) of the Trade Act of 1974 (19 

22 U.S.C. 2451(h)(2)) is amended—

23 (1) by striking ‘‘(2) Within’’ and inserting 

24 ‘‘(2)(A) Within’’; and 

25 (2) by adding at the end the following: 
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1 ‘‘(B) In making a recommendation to the President 

2 under subparagraph (A), the Trade Representative shall 

3 consider the facts found, or conclusions drawn, by the 

4 Commission as they are reported to the Trade Representa5 tive, and the Trade Representative may not conduct an 

6 additional review or reconsideration of the facts found or 

7 conclusions reached by the Commission. 

8 ‘‘(C) If the Commission in its report makes an af9 firmative finding of market disruption, the Trade Rep10 resentative shall apply a presumption in favor of relief to 

11 prevent or remedy the market disruption. 

12 ‘‘(D) The following factors may not be used as the 

13 basis of a recommendation by the Trade Representative 

14 to recommend denying relief under this section: 

15 ‘‘(i) The presence or absence (whether actual or 

16 potential) of third-country imports of the product 

17 under investigation. 

18 ‘‘(ii) Any results of the econometric model 

19 known as the Commercial Policy Analysis System 

20 (COMPAS) or equivalent model.’’. 

21 (b) AMENDMENTS TO STANDARD FOR PRESIDENTIAL

22 ACTION.—Section 421(k) of the Trade Act of 1974 (19 

23 U.S.C. 2451(k)) is amended by adding at the end the fol24 lowing: 
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1 ‘‘(3) The President’s determination shall be based on 

2 the facts found, or conclusions drawn, by the Commission 

3 as they are reported to the Trade Representative under 

4 subsection (g). 

5 ‘‘(4) If the Commission in its report makes an affirm6 ative finding of market disruption, the President shall 

7 apply a presumption in favor of relief to prevent or remedy 

8 the market disruption. 

9 ‘‘(5) Any determination by the President under para10 graph (1) that providing import relief is not in the na11 tional economic interest of the United States may not be 

12 based on the following factors: 

13 ‘‘(A) The presence or absence (whether actual 

14 or potential) of third-country imports of the product 

15 under investigation. 

16 ‘‘(B) Any results of the econometric model 

17 known as the Commercial Policy Analysis System 

18 (COMPAS) or equivalent model.’’. 

19 SEC. 6. IDENTIFICATION OF TRADE EXPANSION PRIOR20 ITIES. 

21 (a) IDENTIFICATION OF TRADE EXPANSION PRIOR22 ITIES.—Section 310 of the Trade Act of 1974 is amended 

23 to read as follows: 
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1 ‘‘SEC. 310. IDENTIFICATION OF TRADE EXPANSION PRIOR2 ITIES. 

3 ‘‘(a) IDENTIFICATION.—

4 ‘‘(1) IDENTIFICATION AND REPORT.—Within 30 

5 days after the submission in each calendar year of 

6 the report required by section 181(b), the Trade 

7 Representative shall—

8 ‘‘(A) review United States trade expansion 

9 priorities; 

10 ‘‘(B) identify priority foreign country prac11 tices, the elimination of which is likely to have 

12 the most significant potential to increase 

13 United States exports, either directly or 

14 through the establishment of a beneficial prece15 dent; and 

16 ‘‘(C) submit to the Committee on Finance 

17 of the Senate and the Committee on Ways and 

18 Means of the House of Representatives and 

19 publish in the Federal Register a report on the 

20 priority foreign country practices so identified. 

21 ‘‘(2) FACTORS.—In identifying priority foreign 

22 country practices under paragraph (1), the Trade 

23 Representative shall take into account all relevant 

24 factors, including—

25 ‘‘(A) the major barriers and trade dis26 torting practices described in the National 
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1 Trade Estimate Report required under section 

2 181(b); 

3 ‘‘(B) the trade agreements to which a for4 eign country is a party and its compliance with 

5 those agreements; 

6 ‘‘(C) the medium- and long-term implica7 tions of foreign government procurement plans; 

8 and 

9 ‘‘(D) the international competitive position 

10 and export potential of United States products 

11 and services. 

12 ‘‘(3) CONTENTS OF REPORT.—The Trade Rep13 resentative may include in the report, if appro14 priate—

15 ‘‘(A) a description of foreign country prac16 tices that may in the future warrant identifica17 tion as priority foreign country practices; and 

18 ‘‘(B) a statement about other foreign coun19 try practices that were not identified because 

20 they are already being addressed by provisions 

21 of United States trade law, by existing bilateral 

22 trade agreements, or as part of trade negotia23 tions with other countries, and because progress 

24 is being made toward the elimination of such 

25 practices. 
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1 ‘‘(b) INITIATION OF CONSULTATIONS.—By no later 

2 than the date that is 21 days after the date on which a 

3 report is submitted to the appropriate congressional com4 mittees under subsection (a)(1), the Trade Representative 

5 shall seek consultations with each foreign country identi6 fied in the report as engaging in priority foreign country 

7 practices for the purpose of reaching a satisfactory resolu8 tion of such priority practices. 

9 ‘‘(c) INITIATION OF INVESTIGATION.—If a satisfac10 tory resolution of priority foreign country practices has 

11 not been reached under subsection (b) within 90 days after 

12 the date on which a report is submitted to the appropriate 

13 congressional committees under subsection (a)(1), the 

14 Trade Representative shall initiate under section 

15 302(b)(1) an investigation under this chapter with respect 

16 to such priority foreign country practices. 

17 ‘‘(d) AGREEMENTS FOR THE ELIMINATION OF BAR18 RIERS.—In the consultations with a foreign country that 

19 the Trade Representative is required to request under sec20 tion 303(a) with respect to an investigation initiated by 

21 reason of subsection (c), the Trade Representative shall 

22 seek to negotiate an agreement that provides for the elimi23 nation of the practices that are the subject of the inves24 tigation as quickly as possible or, if elimination of the 
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1 practices is not feasible, an agreement that provides for 

2 compensatory trade benefits. 

3 ‘‘(e) REPORTS.—The Trade Representative shall in4 clude in the semiannual report required by section 309 

5 a report on the status of any investigations initiated pur6 suant to subsection (c) and, where appropriate, the extent 

7 to which such investigations have led to increased opportu8 nities for the export of products and services of the United 

9 States.’’. 

10 (b) INITIAL REPORT ON CHINESE PRACTICES.—Not 

11 later than 90 days after the date of the enactment of this 

12 Act, the United States Trade Representative shall iden13 tify, and report to the Congress on, priority foreign trade 

14 practices of the People’s Republic of China, in accordance 

15 with section 310 of the Trade Act of 1974, as amended 

16 by subsection (a) of this section. 

17 (c) CONFORMING AMENDMENT.—The item relating 

18 to section 310 in the table of contents of the Trade Act 

19 of 1974 is amended to read as follows:

‘‘Sec. 310. Identification of trade expansion priorities.’’.

20 SEC. 7. REQUIREMENT OF CASH DEPOSITS. 

21 Section 751(a)(1)(B) of the Tariff Act of 1930 (19 

22 U.S.C. 1675(a)(2)(B)) is amended—

23 (1) by striking clause (iii); and 

24 (2) by redesignating clause (iv) as clause (iii). 
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1 SEC. 8. ITC INVESTIGATION. 

2 (a) INVESTIGATION.—The United States Inter3 national Trade Commission shall conduct a study, under 

4 section 332 of the Tariff Act of 1930 (19 U.S.C. 1332), 

5 regarding how the People’s Republic of China uses govern6 ment intervention to promote investment, employment, 

7 and exports. The study shall comprehensively catalog, and 

8 when possible quantify, the practices and policies that cen9 tral, provincial, and local government bodies in the Peo10 ple’s Republic of China use to support and to attempt to 

11 influence decisionmaking in China’s manufacturing enter12 prises and industries. Chapters of this study shall include, 

13 but not be limited to, the following: 

14 (1) Privatization and private ownership. 

15 (2) Price coordination. 

16 (3) Targeting of industries. 

17 (4) Banking and finance. 

18 (5) Utility rates. 

19 (6) Infrastructure development. 

20 (7) Taxation. 

21 (8) Restraints on imports and exports. 

22 (9) Research and development. 

23 (10) Worker training and retraining. 

24 (11) Rationalization and closure of uneconomic 

25 enterprises. 
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1 (b) TIMING OF REPORTS ON INVESTIGATION.—The 

2 Congress requests that—

3 (1) not later than 9 months after the date of 

4 the enactment of this Act, the International Trade 

5 Commission complete its investigation under sub6 section (a) and submit a report on the investigation 

7 to the Committee on Ways and Means of the House 

8 of Representatives and the Committee on Finance of 

9 the Senate; and 

10 (2) not later than 1 year after the report under 

11 paragraph (1) is submitted, and annually thereafter 

12 through 2016, the International Trade Commission 

13 prepare and submit to the committees referred to in 

14 paragraph (1) an update of the report. 

15 SEC. 9. AMENDMENTS RELATING TO INTERNATIONAL FI16 NANCIAL POLICY. 

17 (a) BILATERAL NEGOTIATIONS.—Section 3004(b) of 

18 the Exchange Rates and International Economic Policy 

19 Coordination Act of 1988 (22 U.S.C. 5304(b)) is amended 

20 in the second sentence by striking ‘‘(1) have material glob21 al account surpluses; and (2)’’. 

22 (b) DEFINITION OF MANIPULATION.—Section 3006 

23 of the Exchange Rates and International Economic Policy 

24 Coordination Act of 1988 (22 U.S.C. 5306) is amended 

25 by adding at the end the following: 
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1 ‘‘(3) MANIPULATION OF RATE OF EXCHANGE.—

2 A country shall be considered to be manipulating the 

3 rate of exchange between its currency and the 

4 United States dollar if there is a protracted large5 scale intervention by an authority to undervalue its 

6 currency in the exchange market that prevents effec7 tive balance of payments adjustment or gains an un8 fair competitive advantage over the United States.’’. 

9 (c) REPORT.—Section 3005(b) of the Exchange 

10 Rates and International Economic Policy Coordination 

11 Act of 1988 (22 U.S.C. 5305(b)) is amended—

12 (1) by striking ‘‘and’’ at the end of paragraph 

13 (7); 

14 (2) by striking the period at the end of para15 graph (8) and inserting ‘‘; and’’; and 

16 (3) by adding at the end the following: 

17 ‘‘(9) a detailed explanation of the test the Sec18 retary uses to determine whether or not a country 

19 is manipulating the rate of exchange between that 

20 country’s currency and the dollar for purposes of 

21 preventing effective balance of payments adjustment 

22 or gaining an unfair competitive advantage over the 

23 United States.’’.

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