I

104TH CONGRESS

2D SESSION H. R. 3569

To provide that most-favored-nation trading status for the People’s Republic

of China may continue provided that Taiwan is admitted to the World

Trade Organization by March 1, 1997.

IN THE HOUSE OF REPRESENTATIVES

JUNE 4, 1996

Mr. COX of California (for himself, Mr. GILMAN, Mr. SOLOMON, Mr.

TORRICELLI, Mr. LANTOS, Mr. SMITH of New Jersey, Mr. ROYCE, Mr.

BURTON of Indiana, Mr. SCARBOROUGH, Mr. FUNDERBURK, Mr. BROWN

of Ohio, Mr. DORNAN, Mr. ROHRABACHER, and Mr. BONO) introduced

the following bill; which was referred to the Committee on Ways and

Means

A BILL

To provide that most-favored-nation trading status for the

People’s Republic of China may continue provided that

Taiwan is admitted to the World Trade Organization

by March 1, 1997.

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

3 SECTION 1. FINDINGS.

4 The Congress finds that—

5 (1) the purpose of the World Trade Organiza6 tion (hereafter in this Act referred to as the
2

•HR 3569 IH

1 ‘‘WTO’’) is to enable member countries to conduct

2 trade based upon free market principles, by limiting

3 government intervention in the form of state sub4 sidies, by limiting nontariff barriers, and by encour5 aging reciprocal reductions in tariffs among mem6 bers;

7 (2) the WTO is based on the assumption that

8 the import and export of goods are conducted by

9 independent enterprises responding to profit incen10 tives and market forces;

11 (3) the WTO requires that countries with non12 market economies implement significant reforms to

13 change centralized and planned economic systems

14 before they may be considered for WTO member15 ship, and the existence of a decentralized and a free

16 market economy is considered a precondition to fair

17 trade among WTO members;

18 (4) pursuant to its charter and rules, member19 ship in the WTO is not limited to nations nor indic20 ative of sovereignty, a policy illustrated by the fact

21 that Hong Kong will remain a full member of the

22 WTO as a separate customs territory after becoming

23 part of the People’s Republic of China on July 1,

24 1997;
3

•HR 3569 IH

1 (5) the Republic of China on Taiwan (hereafter

2 in this Act referred to as ‘‘Taiwan’’) has applied for

3 membership in the WTO as the separate customs

4 territory of Taiwan, Penghu, Kinmen, and Matsu,

5 and its application is under review by a Working

6 Party appointed under Article XXXIII of the GATT

7 1994 (as defined in section 2 of the Uruguay Round

8 Agreements Act (19 U.S.C. 3501));

9 (6) Taiwan has a free market economy that has

10 existed for more than 3 decades, and is currently the

11 14th largest trading nation in the world;

12 (7) Taiwan has a gross national product that is

13 the world’s 20th largest, its foreign exchange re14 serves are among the largest in the world, and it has

15 become the world’s 7th largest foreign investor;

16 (8) Taiwan is the 7th largest trading partner of

17 the United States and its purchases of United States

18 exports are more than 50 percent greater than those

19 of the People’s Republic of China;

20 (9) Taiwan has already agreed to reduce the

21 tariff level of many products, and to eliminate other

22 nontariff barriers;

23 (10) the United States and Taiwan have en24 joyed a longstanding and uninterrupted friendship,

25 which has only increased in light of the remarkable
4

•HR 3569 IH

1 economic development and political liberalization in

2 Taiwan in recent years;

3 (11) Taiwan reached an historic turning point

4 in the development of Chinese democracy on March

5 23, 1996, when it conducted the first competitive,

6 free, fair, direct, and popular election of a head of

7 state in over 4,000 years of recorded Chinese his8 tory, leading to Lee Teng-hui’s inauguration as

9 President on May 20, 1996;

10 (12) for the past century the United States has

11 promoted democracy and economic freedom through12 out the world, and the evolution of Taiwan is an

13 outstanding example of the success of that policy;

14 (13) Taiwan’s accession to the WTO is impor15 tant to the United States because it is the largest

16 importer of United States goods that is not already

17 a member of the WTO, and because Taiwan’s entry

18 into the WTO would promote significant new market

19 opportunities for United States exporters and inves20 tors;

21 (14) notwithstanding these circumstances, the

22 People’s Republic of China has sought to block the

23 admission of Taiwan to the WTO until its own ac24 cession to membership;
5

•HR 3569 IH

1 (15) notwithstanding this opposition, Taiwan is

2 ready for, and meets the criteria for, admission to

3 the WTO;

4 (16) the People’s Republic of China, in contrast

5 to Taiwan, has applied for membership in the WTO

6 not as a developed nation, but rather as a developing

7 nation, so that it would be relieved of the obligations

8 to reduce its tariffs and eliminate its subsidies for

9 government-controlled industries, even after its ad10 mission to the WTO;

11 (17) in contrast to Taiwan, the Communist gov12 ernment of the People’s Republic of China maintains

13 strict government controls over most trade within its

14 territory, restricts and often outlaws free market

15 competition, and denies legal and regulatory protec16 tions for property rights, all in ways that are incom17 patible with WTO principles;

18 (18) the Communist government of the People’s

19 Republic of China maintains an intricate system of

20 restrictive and punitive tariff and nontariff adminis21 trative controls to implement its centrally-planned

22 industrial and trade policies, with tariffs on foreign

23 goods, such as automobiles, as high as 150 percent,

24 even though the People’s Republic of China has

25 made commitments in the Memorandum of Under-
6

•HR 3569 IH

1 standing on market access it signed with the United

2 States on October 10, 1992, and reaffirmed in

3 March of 1995, to reform significant parts of its im4 port regime;

5 (19) the People’s Republic of China’s failure to

6 implement its March 11, 1995, agreement with the

7 United States to curtail piracy of products protected

8 by intellectual property rights, including music, vid9 eos, books, software, has prompted a United States

10 threat to impose trade sanctions proportionate to an

11 estimated loss of $2,300,000,000 to the United

12 States economy in 1995 that the piracy has caused;

13 (20) representatives of the People’s Republic of

14 China’s two leading state-owned arms exporting

15 companies, Poly Technologies and Norinco, were ar16 rested by Federal law enforcement officers for smug17 gling into the United States 2,000 AK–47 rifles in18 tended for sale to gangs;

19 (21) illegal activities such as these should be

20 taken into account in formulating trade policy with

21 respect to any country;

22 (22) the Communist government of the People’s

23 Republic of China continues to use direct and indi24 rect government subsidies to unfairly advantage its

25 own exports in contravention of market principles;
7

•HR 3569 IH

1 (23) as a consequence of these practices, the

2 People’s Republic China is not ready for, and does

3 not meet the criteria for, admission to the WTO ei4 ther as a developed nation or a developing nation;

5 and

6 (24) inasmuch as Taiwan can easily meet and

7 exceed all of the requirements for admission to the

8 WTO, while the People’s Republic of China has long

9 enjoyed most-favored-nation trading status with the

10 United States notwithstanding its failure to meet the

11 criteria for WTO membership, the People’s Republic

12 of China should continue to enjoy most-favored-na13 tion trading status with the United States only if

14 Taiwan is admitted to the WTO at the earliest prac15 ticable date.

16 SEC. 2. CONTINGENT EXTENSION OF NONDISCRIMINATORY

17 TRADE TREATMENT TO THE PEOPLE’S RE18 PUBLIC OF CHINA.

19 Notwithstanding any other provision of law, non20 discriminatory treatment (most-favored-nation treatment)

21 may apply to the products of the People’s Republic of

22 China after March 1, 1997, if and only if, as of that date,

23 Taiwan has been admitted to the WTO as a separate cus24 toms territory and the People’s Republic of China has not
8

•HR 3569 IH

1 been admitted to the WTO, whether as a developing or

2 a developed nation.

Æ