79–006

106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 106–632

PERMANENT NORMAL TRADE RELATIONS WITH THE

PEOPLE’S REPUBLIC OF CHINA

MAY 22, 2000.—Committed to the Committee of the Whole House on the State of

the Union and ordered to be printed

Mr. ARCHER, from the Committee on Ways and Means,

submitted the following

R E P O R T

together with

ADDITIONAL VIEWS

[To accompany H.R. 4444]

[Including cost estimate of the Congressional Budget Office]

The Committee on Ways and Means, to whom was referred the

bill (H.R. 4444) to authorize extension of nondiscriminatory treatment (normal trade relations treatment) to the People’s Republic of

China, having considered the same, report favorably thereon with

an amendment and recommend that the bill as amended do pass.

CONTENTS

Page

I. Introduction .................................................................................................... 8

A. Purpose and Summary ......................................................................... 8

B. Background ........................................................................................... 9

C. Legislative History ............................................................................... 12

II. Explanation of the Resolution ...................................................................... 13

III. Votes of the Committee ................................................................................. 19

IV. Budget Effect .................................................................................................. 21

A. Committee Estimate of Budgetary Effects ......................................... 21

B. Statement Regarding New Budget Authority and Tax Expenditures .................................................................................................... 21

C. Cost Estimate Prepared by the Congressional Budget Office ........... 21

V. Other Matters to be Discussed Under the Rules of the House .................. 23

A. Committee Oversight Findings and Recommendations .................... 23

B. Summary of Findings and Recommendations of the Committee

on Government Reform and Oversight ............................................. 23

C. Constitutional Authority Statement ................................................... 24

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VI. Change in Existing Laws .............................................................................. 24

VII. Additional Views ............................................................................................ 35

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:

SECTION 1. TERMINATION OF APPLICATION OF CHAPTER 1 OF TITLE IV OF THE TRADE ACT

OF 1974 TO THE PEOPLE’S REPUBLIC OF CHINA.

(a) PRESIDENTIAL DETERMINATIONS AND EXTENSION OF NONDISCRIMINATORY

TREATMENT.—Notwithstanding any provision of chapter 1 of title IV of the Trade

Act of 1974 (19 U.S.C. 2431 et seq.), as designated by section 3(a)(2) of this Act,

the President may—

(1) determine that such chapter should no longer apply to the People’s Republic of China; and

(2) after making a determination under paragraph (1) with respect to the People’s Republic of China, proclaim the extension of nondiscriminatory treatment

(normal trade relations treatment) to the products of that country.

(b) ACCESSION OF THE PEOPLE’S REPUBLIC OF CHINA TO THE WORLD TRADE ORGANIZATION.—Prior to making the determination provided for in subsection (a)(1) and

pursuant to the provisions of section 122 of the Uruguay Round Agreements Act (19

U.S.C. 3532), the President shall transmit a report to Congress certifying that the

terms and conditions for the accession of the People’s Republic of China to the

World Trade Organization are at least equivalent to those agreed between the

United States and the People’s Republic of China on November 15, 1999.

SEC. 2. EFFECTIVE DATE.

(a) EFFECTIVE DATE OF NONDISCRIMINATORY TREATMENT.—The extension of nondiscriminatory treatment pursuant to section 1(a)(1) shall be effective no earlier

than the effective date of the accession of the People’s Republic of China to the

World Trade Organization.

(b) TERMINATION OF APPLICABILITY OF TITLE IV.—On and after the effective date

under subsection (a) of the extension of nondiscriminatory treatment to the products

of the People’s Republic of China, chapter 1 of title IV of the Trade Act of 1974 (as

designated by section 3(a)(2) of this Act) shall cease to apply to that country.

SEC. 3. RELIEF FROM MARKET DISRUPTION.

(a) IN GENERAL.—Title IV of the Trade Act of 1974 (19 U.S.C. 2431 et seq.) is

amended—

(1) in the title heading, by striking ‘‘CURRENTLY’’;

(2) by inserting before section 401 the following:

‘‘CHAPTER 1—TRADE RELATIONS WITH CERTAIN

COUNTRIES’’; and

(3) by adding at the end the following new chapter:

‘‘CHAPTER 2—RELIEF FROM MARKET DISRUPTION TO

INDUSTRIES AND DIVERSION OF TRADE TO THE

UNITED STATES MARKET

‘‘SEC. 421. ACTION TO ADDRESS MARKET DISRUPTION.

‘‘(a) PRESIDENTIAL ACTION.—If a product of the People’s Republic of China is being

imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers

of a like or directly competitive product, the President shall, in accordance with the

provisions of this section, proclaim increased duties or other import restrictions with

respect to such product, to the extent and for such period as the President considers

necessary to prevent or remedy the market disruption.

‘‘(b) INITIATION OF AN INVESTIGATION.—(1) Upon the filing of a petition by an entity described in section 202(a) of the Trade Act of 1974 (19 U.S.C. 2252(a)), upon the

request of the President or the United States Trade Representative (in this subtitle

referred to as the ‘Trade Representative’), upon resolution of either the Committee

on Ways and Means of the House of Representatives, or the Committee on Finance

of the Senate (in this subtitle referred to as the ‘Committees’) or on its own motion,

the United States International Trade Commission (in this subtitle referred to as

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the ‘Commission’) shall promptly make an investigation to determine whether products of the People’s Republic of China are being imported into the United States in

such increased quantities or under such conditions as to cause or threaten to cause

market disruption to the domestic producers of like or directly competitive products.

‘‘(2) The limitations on investigations set forth in section 202(h)(1) of the Trade

Act of 1974 (19 U.S.C. 2252(h)(1)) shall apply to investigations conducted under this

section.

‘‘(3) The provisions of subsections (a)(8) and (i) of section 202 of the Trade Act of

1974 (19 U.S.C. 2252(a)(8) and (i)), relating to treatment of confidential business information, shall apply to investigations conducted under this section.

‘‘(4) Whenever a petition is filed, or a request or resolution is received, under this

subsection, the Commission shall transmit a copy thereof to the President, the

Trade Representative, the Committee on Ways and Means of the House of Representatives, and the Committee of Finance of the Senate, except that in the case

of confidential business information, the copy may include only nonconfidential summaries of such information.

‘‘(5) The Commission shall publish notice of the commencement of any proceeding

under this subsection in the Federal Register and shall, within a reasonable time

thereafter, hold public hearings at which the Commission shall afford interested

parties an opportunity to be present, to present evidence, to respond to the presentations of other parties, and otherwise to be heard.

‘‘(c) MARKET DISRUPTION.—(1) For purposes of this section, market disruption exists whenever imports of an article like or directly competitive with an article produced by a domestic industry are increasing rapidly, either absolutely or relatively,

so as to be a significant cause of material injury, or threat of material injury, to

the domestic industry.

‘‘(2) For purposes of paragraph (1), the term ‘significant cause’ refers to a cause

which contributes significantly to the material injury of the domestic industry, but

need not be equal to or greater than any other cause.

‘‘(d) FACTORS IN DETERMINATION.—In determining whether market disruption exists, the Commission shall consider objective factors, including—

‘‘(1) the volume of imports of the product which is the subject of the investigation;

‘‘(2) the effect of imports of such product on prices in the United States for

like or directly competitive articles; and

‘‘(3) the effect of imports of such product on the domestic industry producing

like or directly competitive articles.

The presence or absence of any factor under paragraph (1), (2), or (3) is not necessarily dispositive of whether market disruption exists.

‘‘(e) TIME FOR COMMISSION DETERMINATIONS.—The Commission shall make and

transmit to the President and the Trade Representative its determination under

subsection (b)(1) at the earliest practicable time, but in no case later than 60 days

(or 90 days in the case of a petition requesting relief under subsection (i)) after the

date on which the petition is filed, the request or resolution is received, or the motion is adopted, under subsection (b). If the Commissioners voting are equally divided with respect to its determination, then the determination agreed upon by either group of Commissioners may be considered by the President and the Trade

Representative as the determination of the Commission.

‘‘(f) RECOMMENDATIONS OF COMMISSION ON PROPOSED REMEDIES.—If the Commission makes an affirmative determination under subsection (b), or a determination

which the President or the Trade Representative may consider as affirmative under

subsection (e), the Commission shall propose the amount of increase in, or imposition of, any duty or other import restrictions necessary to prevent or remedy the

market disruption. Only those members of the Commission who agreed to the affirmative determination under subsection (b) are eligible to vote on the proposed action to prevent or remedy market disruption. Members of the Commission who did

not agree to the affirmative determination may submit, in the report required under

subsection (g), separate views regarding what action, if any, should be taken to prevent or remedy market disruption.

‘‘(g) REPORT BY COMMISSION.—(1) Not later than 20 days after a determination

under subsection (b) is made, the Commission shall submit a report to the President

and the Trade Representative.

‘‘(2) The Commission shall include in the report required under paragraph (1) the

following:

‘‘(A) The determination made under subsection (b) and an explanation of the

basis for the determination.

‘‘(B) If the determination under subsection (b) is affirmative, or may be considered by the President or the Trade Representative as affirmative under subVerDate 11-MAY-2000 06:41 May 23, 2000 Jkt 079006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6621 E:\HR\OC\HR632.XXX pfrm11 PsN: HR632
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section (e), the recommendations of the Commission on proposed remedies

under subsection (f) and an explanation of the basis for each recommendation.

‘‘(C) Any dissenting or separate views by members of the Commission regarding the determination and any recommendation referred to in subparagraphs

(A) and (B).

‘‘(D) A description of—

‘‘(i) the short- and long-term effects that implementation of the action recommended under subsection (f) is likely to have on the petitioning domestic

industry, on other domestic industries, and on consumers; and

‘‘(ii) the short- and long-term effects of not taking the recommended action on the petitioning domestic industry, its workers, and the communities

where production facilities of such industry are located, and on other domestic industries.

‘‘(3) The Commission, after submitting a report to the President under paragraph

(1), shall promptly make it available to the public (but shall not include confidential

business information) and cause a summary thereof to be published in the Federal

Register.

‘‘(h) OPPORTUNITY TO PRESENT VIEWS AND EVIDENCE ON PROPOSED MEASURE AND

RECOMMENDATION TO THE PRESIDENT.—(1) Within 20 days after receipt of the Commission’s report under subsection (g) (or 15 days in the case of an affirmative preliminary determination under subsection (i)(1)(B)), the Trade Representative shall

publish in the Federal Register notice of any measure proposed by the Trade Representative to be taken pursuant to subsection (a) and of the opportunity, including

a public hearing, if requested, for importers, exporters, and other interested parties

to submit their views and evidence on the appropriateness of the proposed measure

and whether it would be in the public interest.

‘‘(2) Within 55 days after receipt of the report under subsection (g) (or 35 days

in the case of an affirmative preliminary determination under subsection (i)(1)(B)),

the Trade Representative, taking into account the views and evidence received

under paragraph (1) on the measure proposed by the Trade Representative, shall

make a recommendation to the President concerning what action, if any, to take to

prevent or remedy the market disruption.

‘‘(i) CRITICAL CIRCUMSTANCES.—(1) When a petition filed under subsection (b) alleges that critical circumstances exist and requests that provisional relief be provided under this subsection with respect to the product identified in the petition,

the Commission shall, not later than 45 days after the petition containing the request is filed—

‘‘(A) determine whether delay in taking action under this section would cause

damage to the relevant domestic industry which would be difficult to repair;

and

‘‘(B) if the determination under subparagraph (A) is affirmative, make a preliminary determination of whether imports of the product which is the subject

of the investigation have caused or threatened to cause market disruption.

If the Commissioners voting are equally divided with respect to either of its determinations, then the determination agreed upon by either group of Commissioners

may be considered by the President and the Trade Representative as the determination of the Commission.

‘‘(2) On the date on which the Commission completes its determinations under

paragraph (1), the Commission shall transmit a report on the determinations to the

President and the Trade Representative, including the reasons for its determinations. If the determinations under paragraph (1) are affirmative, or may be considered by the President or the Trade Representative as affirmative under paragraph

(1), the Commission shall include in its report its recommendations on proposed provisional measures to be taken to prevent or remedy the market disruption. Only

those members of the Commission who agreed to the affirmative determinations

under paragraph (1) are eligible to vote on the proposed provisional measures to

prevent or remedy market disruption. Members of the Commission who did not

agree to the affirmative determinations may submit, in the report, dissenting or separate views regarding the determination and any recommendation of provisional

measures referred to in this paragraph.

‘‘(3) If the determinations under paragraph (1) are affirmative, or may be considered by the President or the Trade Representative as affirmative under paragraph

(1), the Trade Representative shall, within 10 days after receipt of the Commission’s

report, determine the amount or extent of provisional relief that is necessary to prevent or remedy the market disruption and shall provide a recommendation to the

President on what provisional measures, if any, to take.

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‘‘(4)(A) The President shall determine whether to provide provisional relief and

proclaim such relief, if any, within 10 days after receipt of the recommendation from

the Trade Representative.

‘‘(B) Such relief may take the form of—

‘‘(i) the imposition of or increase in any duty;

‘‘(ii) any modification, or imposition of any quantitative restriction on the importation of an article into the United States; or

‘‘(iii) any combination of actions under clauses (i) and (ii).

‘‘(C) Any provisional action proclaimed by the President pursuant to a determination of critical circumstances shall remain in effect not more than 200 days.

‘‘(D) Provisional relief shall cease to apply upon the effective date of relief proclaimed under subsection (a), upon a decision by the President not to provide such

relief, or upon a negative determination by the Commission under subsection (b).

‘‘(j) AGREEMENTS WITH THE PEOPLE’S REPUBLIC OF CHINA.—(1) The Trade Representative is authorized to enter into agreements for the People’s Republic of China

to take such action as necessary to prevent or remedy market disruption, and

should seek to conclude such agreements before the expiration of the 60-day consultation period provided for under the product-specific safeguard provision of the

Protocol of Accession of the People’s Republic of China to the WTO, which shall commence not later than 5 days after the Trade Representative receives an affirmative

determination provided for in subsection (e) or a determination which the Trade

Representative considers to be an affirmative determination pursuant to subsection

(e).

‘‘(2) If no agreement is reached with the People’s Republic of China pursuant to

consultations under paragraph (1), or if the President determines than an agreement reached pursuant to such consultations is not preventing or remedying the

market disruption at issue, the President shall provide import relief in accordance

with subsection (a).

‘‘(k) STANDARD FOR PRESIDENTIAL ACTION.—(1) Within 15 days after receipt of a

recommendation from the Trade Representative under subsection (h) on the appropriate action, if any, to take to prevent or remedy the market disruption, the President shall provide import relief for such industry pursuant to subsection (a), unless

the President determines that provision of such relief is not in the national economic interest of the United States or, in extraordinary cases, that the taking of

action pursuant to subsection (a) would cause serious harm to the national security

of the United States.

‘‘(2) The President may determine under paragraph (1) that providing import relief is not in the national economic interest of the United States only if the President finds that the taking of such action would have an adverse impact on the

United States economy clearly greater than the benefits of such action.

‘‘(l) PUBLICATION OF DECISION AND REPORTS.—(1) The President’s decision, including the reasons therefor and the scope and duration of any action taken, shall be

published in the Federal Register.

‘‘(2) The Commission shall promptly make public any report transmitted under

this section, but shall not make public any information which the Commission determines to be confidential, and shall publish notice of such report in the Federal Register.

‘‘(m) EFFECTIVE DATE OF RELIEF.—Import relief under this section shall take effect not later than 15 days after the President’s determination to provide such relief.

‘‘(n) MODIFICATIONS OF RELIEF.—(1) At any time after the end of the 6-month period beginning on the date on which relief under subsection (m) first takes effect,

the President may request that the Commission provide a report on the probable

effect of the modification, reduction, or termination of the relief provided on the relevant industry. The Commission shall transmit such report to the President within

60 days of the request.

‘‘(2) The President may, after receiving a report from the Commission under paragraph (1), take such action to modify, reduce, or terminate relief that the President

determines is necessary to continue to prevent or remedy the market disruption at

issue.

‘‘(3) Upon the granting of relief under subsection (k), the Commission shall collect

such data as is necessary to allow it to respond rapidly to a request by the President

under paragraph (1).

‘‘(o) EXTENSION OF ACTION.—(1) Upon request of the President, or upon petition

on behalf of the industry concerned filed with the Commission not earlier than the

date which is 9 months, and not later than the date which is 6 months, before the

date any relief provided under subsection (k) is to terminate, the Commission shall

investigate to determine whether action under this section continues to be necessary

to prevent or remedy market disruption.

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‘‘(2) The Commission shall publish notice of the commencement of any proceeding

under this subsection in the Federal Register and shall, within a reasonable time

thereafter, hold a public hearing at which the Commission shall afford interested

parties and consumers an opportunity to be present, to present evidence, and to respond to the presentations of other parties and consumers, and otherwise to be

heard.

‘‘(3) The Commission shall transmit to the President a report on its investigation

and determination under this subsection not later than 60 days before the action

under subsection (m) is to terminate.

‘‘(4) The President, after receiving an affirmative determination from the Commission under paragraph (3), may extend the effective period of any action under this

section if the President determines that the action continues to be necessary to prevent or remedy the market disruption.

‘‘SEC. 422. ACTION IN RESPONSE TO TRADE DIVERSION.

‘‘(a) MONITORING BY CUSTOMS SERVICE.—In any case in which a WTO member

other than the United States requests consultations with the People’s Republic of

China under the product-specific safeguard provision of the Protocol of Accession of

the People’s Republic of China to the World Trade Organization, the Trade Representative shall inform the United States Customs Service, which shall monitor imports into the United States of those products of Chinese origin that are the subject

of the consultation request. Data from such monitoring shall promptly be made

available to the Commission upon request by the Commission.

‘‘(b) INITIATION OF INVESTIGATION.—(1) Upon the filing of a petition by an entity

described in section 202(a) of the Trade Act of 1974, upon the request of the President or the Trade Representative, upon resolution of either of the Committees, or

on its own motion, the Commission shall promptly make an investigation to determine whether an action described in subsection (c) has caused, or threatens to

cause, a significant diversion of trade into the domestic market of the United States.

‘‘(2) The Commission shall publish notice of the commencement of any proceeding

under this subsection in the Federal Register and shall, within a reasonable time

thereafter, hold public hearings at which the Commission shall afford interested

parties an opportunity to be present, to present evidence, to respond to the presentations of other parties, and otherwise to be heard.

‘‘(3) The provisions of subsections (a)(8) and (i) of section 202 of the Trade Act of

1974 (19 U.S.C. 2252(a)(8) and (i)), relating to treatment of confidential business information, shall apply to investigations conducted under this section.

‘‘(c) ACTIONS DESCRIBED.—An action is described in this subsection if it is an

action—

‘‘(1) by the People’s Republic of China to prevent or remedy market disruption

in a WTO member other than the United States;

‘‘(2) by a WTO member other than the United States to withdraw concessions

under the WTO Agreement or otherwise to limit imports to prevent or remedy

market disruption;

‘‘(3) by a WTO member other than the United States to apply a provisional

safeguard within the meaning of the product-specific safeguard provision of the

Protocol of Accession of the People’s Republic of China to the WTO; or

‘‘(4) any combination of actions described in paragraphs (1) through (3).

‘‘(d) BASIS FOR DETERMINATION OF SIGNIFICANT DIVERSION.—(1) In determining

whether significant diversion or the threat thereof exists for purposes of this section,

the Commission shall take into account, to the extent such evidence is reasonably

available—

‘‘(A) the monitoring conducted under subsection (a);

‘‘(B) the actual or imminent increase in United States market share held by

such imports from the People’s Republic of China;

‘‘(C) the actual or imminent increase in volume of such imports into the

United States;

‘‘(D) the nature and extent of the action taken or proposed by the WTO member concerned;

‘‘(E) the extent of exports from the People’s Republic of China to that WTO

member and to the United States;

‘‘(F) the actual or imminent changes in exports to that WTO member due to

the action taken or proposed;

‘‘(G) the actual or imminent diversion of exports from the People’s Republic

of China to countries other than the United States;

‘‘(H) cyclical or seasonal trends in import volumes into the United States of

the products at issue; and

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‘‘(I) conditions of demand and supply in the United States market for the

products at issue.

The presence or absence of any factor under any of subparagraphs (A) through (I)

is not necessarily dispositive of whether a significant diversion of trade or the threat

thereof exists.

‘‘(2) For purposes of making its determination, the Commission shall examine

changes in imports into the United States from the People’s Republic of China since

the time that the WTO member commenced the investigation that led to a request

for consultations described in subsection (a).

‘‘(3) If more than 1 action by a WTO member or WTO members against a particular product is identified in the petition, request, or resolution under subsection

(b) or during the investigation, the Commission may cumulatively assess the actual

or likely effects of such actions jointly in determining whether a significant diversion of trade or threat thereof exists.

‘‘(e) COMMISSION DETERMINATION; AGREEMENT AUTHORITY.—(1) The Commission

shall make and transmit to the President and the Trade Representative its determination under subsection (b) at the earliest practicable time, but in no case later

than 45 days after the date on which the petition is filed, the request or resolution

is received, or the motion is adopted, under subsection (b). If the Commissioners voting are equally divided with respect to its determination, then the determination

agreed upon by either group of Commissioners may be considered by the President

and the Trade Representative as the determination of the Commission.

‘‘(2) The Trade Representative is authorized to enter into agreements with the

People’s Republic of China or the other WTO members concerned to take such action

as necessary to prevent or remedy significant trade diversion or threat thereof into

the domestic market of the United States, and should seek to conclude such agreements before the expiration of the 60-day consultation period provided for under the

product-specific safeguard provision of the Protocol of Accession of the People’s Republic of China to the WTO, which shall commence not later than 5 days after the

Trade Representative receives an affirmative determination provided for in paragraph (1) or a determination which the Trade Representative considers to be an affirmative determination pursuant to paragraph (1).

‘‘(3) REPORT BY COMMISSION.— ‘‘(A) Not later than 10 days after a determination under subsection (b), is

made, the Commission shall transmit a report to the President and the Trade

Representative.

‘‘(B) The Commission shall include in the report required under subparagraph

(A) the following:

‘‘(i) The determination made under subsection (b) and an explanation of

the basis for the determination.

‘‘(ii) If the determination under subsection (b) is affirmative, or may be

considered by the President or the Trade Representative as affirmative

under subsection (e)(1), the recommendations of the Commission on increased tariffs or other import restrictions to be imposed to prevent or remedy the trade diversion or threat thereof, and explanations of the bases for

such recommendations. Only those members of the Commission who agreed

to the affirmative determination under subsection (b) are eligible to vote on

the proposed action to prevent or remedy the trade diversion or threat

thereof.

‘‘(iii) Any dissenting or separate views by members of the Commission regarding the determination and any recommendation referred to in clauses

(i) and (ii).

‘‘(iv) A description of—

‘‘(I) the short- and long-term effects that implementation of the action

recommended under clause (ii) is likely to have on the petitioning domestic industry, on other domestic industries, and on consumers; and

‘‘(II) the short- and long-term effects of not taking the recommended

action on the petitioning domestic industry, its workers and the communities where production facilities of such industry are located, and

on other domestic industries.

‘‘(C) The Commission, after submitting a report to the President under subparagraph (A), shall promptly make it available to the public (with the exception of confidential business information) and cause a summary thereof to be

published in the Federal Register.

‘‘(f) PUBLIC COMMENT.—If consultations fail to lead to an agreement with the People’s Republic of China or the WTO member concerned within 60 days, the Trade

Representative shall promptly publish notice in the Federal Register of any proposed action to prevent or remedy the trade diversion, and provide an opportunity

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for interested persons to present views and evidence on whether the proposed action

is in the public interest.

‘‘(g) RECOMMENDATION TO THE PRESIDENT.—Within 20 days after the end of consultations pursuant to subsection (e), the Trade Representative shall make a recommendation to the President on what action, if any, should be taken to prevent

or remedy the trade diversion or threat thereof.

‘‘(h) PRESIDENTIAL ACTION.—Within 20 days after receipt of the recommendation

from the Trade Representative, the President shall determine what action to take

to prevent or remedy the trade diversion or threat thereof.

‘‘(i) DURATION OF ACTION.—Action taken under subsection (h) shall be terminated

not later than 30 days after expiration of the action taken by the WTO member or

members involved against imports from the People’s Republic of China.

‘‘(j) REVIEW OF CIRCUMSTANCES.—(1) The Commission shall review the continued

need for action taken under subsection (h) if the WTO member or members involved

notify the Committee on Safeguards of the WTO of any modification in the action

taken by them against the People’s Republic of China pursuant to consultation referred to in subsection (a). The Commission shall, not later than 60 days after such

notification, determine whether a significant diversion of trade continues to exist

and report its determination to the President. The President shall determine, within

15 days after receiving the Commission’s report, whether to modify, withdraw, or

keep in place the action taken under subsection (h).

‘‘SEC. 423. REGULATIONS; TERMINATION OF PROVISION.

‘‘(a) TO CARRY OUT RESTRICTIONS AND MONITORING.—The President shall by regulation provide for the efficient and fair administration of any restriction proclaimed

pursuant to the subtitle and to provide for effective monitoring of imports under section 422(a).

‘‘(b) TO CARRY OUT AGREEMENTS.—To carry out an agreement concluded pursuant

to consultations under section 421(j) or 422(e)(2), the President is authorized to prescribe regulations governing the entry or withdrawal from warehouse of articles covered by such agreement.

‘‘(c) TERMINATION DATE.—This subtitle and any regulations issued under this subtitle shall cease to be effective 12 years after the date of entry into force of the Protocol of Accession of the People’s Republic of China to the WTO.’’.

(b) CONFORMING AMENDMENT.—The table of contents of the Trade Act of 1974 is

amended—

(1) in the item relating to title IV, by striking ‘‘CURRENTLY’’;

(2) by inserting before the item relating to section 401 the following:

‘‘CHAPTER 1—TRADE RELATIONS WITH CERTAIN COUNTRIES’’; and

(3) by adding after the item relating to section 409 the following:

‘‘CHAPTER 2—RELIEF FROM MARKET DISRUPTION TO INDUSTRIES AND DIVERSION OF TRADE TO THE UNITED

STATES MARKET

‘‘Sec. 421. Action to address market disruption.

‘‘Sec. 422. Action in response to trade diversion.

‘‘Sec. 423. Regulations; termination of provision.’’.

SEC. 4. AMENDMENT TO SECTION 123 OF THE TRADE ACT OF 1974—COMPENSATION

AUTHORITY.

Section 123(a)(1) of the Trade Act of 1974 (19 U.S.C. 2133(a)(1)) is amended by

inserting after ‘‘title III’’ the following; ‘‘, or under chapter 2 of title IV of the Trade

Act of 1974’’.

I. INTRODUCTION

A. PURPOSE AND SUMMARY

H.R. 4444 amends Title IV of the Trade Act of 1974 to remove

the People’s Republic of China (China) from the list of countries

subject to this provision upon the accession of China to the World

Trade Organization and upon certification by the President that

the final terms of accession are at least equivalent to the terms of

the November 15, 1999 bilateral agreement between the United

States and the People’s Republic of China.

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1Legislation to replace the term ‘‘most-favored-nation’’ (MFN) in United States statutes with

the term ‘‘normal trade relations’’ (NTR) was enacted into law as part of the Internal Revenue

Service Restructuring and Reform Act of 1998, P.L. 105–206.

B. BACKGROUND

The Jackson-Vanik amendment

At present, China’s trade status is subject to the Jackson-Vanik

amendment to Title IV of the Trade Act of 1974, the provisions of

law governing the most-favored-nation (MFN) trade status, now referred to as normal trade relations (NTR),1 of nonmarket economy

countries ineligible for MFN treatment as of the enactment of the

Trade Act.

Prior to 1951, the United States extended nondiscriminatory, or

unconditional NTR treatment to all of its trading partners in accordance with obligations undertaken when the United States

joined the General Agreement on Tariffs and Trade (GATT) in

1948. However, the Trade Agreements Extension Act of 1951 directed the President to withdraw or suspend the NTR status of the

Soviet Union and all countries under the domination of Communism. As implemented, this directive was applied to all then-existing communist countries except Yugoslavia. Poland’s NTR status

was restored by Presidential directive in 1960.

Title IV of the Trade Act of 1974, which includes the so-called

‘‘Jackson-Vanik amendment,’’ represented a liberalization of the

1951 law. Title IV authorizes the extension of normal trade relations treatment to nonmarket economies which both meet freedomof-emigration requirements and conclude a commercial agreement

with the United States. Title IV also authorizes the President to

waive the freedom-of-emigration requirements of that title and to

extend NTR status to a nonmarket economy country if he determines that doing so will substantially promote the freedom-of-emigration objectives. The President’s waiver authority for China

under Title IV expires at midnight on July 2 of each year. It may

be extended on an annual basis upon a Presidential determination

and report to Congress that such extension will substantially promote the freedom-of-emigration objectives of the 1974 Trade Act.

In the case of China, a bilateral commercial agreement, as required by the Jackson-Vanik amendment, was concluded on July 7,

1979, entered into force February 1, 1980, and has remained in

force since that time. The President first proclaimed NTR treatment for Chinese products in 1980, and that treatment has been

renewed annually since then on the basis of Presidential waivers.

Most recently, on June 3, 1999, the President formally transmitted

to the Congress his recommendation to waive the 1974 Trade Act’s

freedom-of-emigration requirements and to thereby extend China’s

NTR status for an additional year, during the period of July 3,

1999, through July 2, 2000.

Under the Jackson-Vanik amendment, the President’s waiver authority continues in effect unless disapproved by the Congress—either generally or with respect to a specific country—within 60 calendar days of the expiration of the existing authority. (Absent a

change in law, the President’s waiver for the period July 3, 2000,

through July 2, 2001, is due on June 3, 2000.) Under Title IV

amendments adopted as part of the Customs and Trade Act of

10

1990, disapproval takes the form of a joint resolution disapproving

the extension of Presidential authority to waive the 1974 Trade

Act’s freedom-of-emigration requirements. Under the 1990 amendments, Congress may consider any veto message before the later of

the end of the 60-day period or within 15 legislative days. The disapproval resolution is highly privileged, thus generally guaranteeing a vote in the House if it is introduced.

If both chambers of Congress do not pass a resolution of disapproval within 60 calendar days following the expiration of the existing waiver authority, China’s NTR status is automatically renewed.

In the years since 1980, when China conditionally regained its

NTR status, all legislative attempts at revoking it or subjecting it

to additional conditions have been unsuccessful. For example, in

1995, during the first session of the 104th Congress, H.J. Res. 96,

a joint resolution to disapprove renewal of China’s waiver, was tabled in the House, thereby precluding any further disapproval action. During the next four years resolutions of disapproval failed in

the House. In 1996, H.J. Res. 182 was defeated by a vote of (141–

286). In 1997, H.J. Res. 79 was defeated by a vote of (173–259). In

1998, H.J. Res. 121 was defeated by a vote of (166–264). In 1999,

H.J. Res. 57 was defeated by a vote of (170–260).

China’s negotiations to join the World Trade Organization

China applied for accession to the General Agreement on Tariffs

and Trade (GATT) in July 1986, and work has proceeded in the

China Working Party since that time to negotiate the conditions

upon which China will enter the GATT, and since January 1, 1995,

the World Trade Organization (WTO).

Article XII of the Agreement Establishing the WTO states that

any State or separate customs territory may accede to the WTO ‘‘on

terms to be agreed between it and the WTO.’’ In practice, any WTO

applicant must negotiate terms for membership in the WTO in the

form of a Protocol of Accession. Through the operation of a Working

Party, the United States and other WTO members have an opportunity to review the trade regimes of applicants to ensure that they

are capable of implementing WTO obligations. In parallel with the

Working Party’s efforts, the United States and other interested

member governments conduct separate negotiations with the applicant. These bilateral negotiations are aimed at achieving specific

concessions and commitments on tariff levels, agricultural market

access, and trade in services.

On April 8, 1999, following the summit meeting between Chinese

Premier Zhu Rongji and President Clinton, Ambassador Barshefsky

announced that U.S. and Chinese negotiators secured ‘‘broad

progress toward an expansive bilateral market access agreement,’’

which would provide extensive market openings for U.S. agriculture, manufactured products, and services along with Chinese

commitments to adopt WTO rules relating to such issues as technology transfer and offsets, subsidies, product safeguards, and

State enterprises. The Administration, however, declined to sign

the agreement at that time.

11

The U.S.-China WTO Agreement

The United States-China Bilateral Trade Agreement was eventually finalized on November 15, 1999, in Beijing. In this historic

agreement China committed upon accession to:

• Phase-in of full trading and distribution rights (including the

ability to provide services auxiliary to distribution) for almost all

products for U.S. firms throughout China.

• Cut average tariffs for U.S. priority agricultural products (e.g.,

beef, grapes, wine, cheese, poultry, and pork) from 31.5% to 14.5%

by 2004. Overall industrial tariffs would fall from an average of

24.6% to 9.4% by 2005 (tariffs on U.S. ‘‘priority products,’’ such as

wood, paper, chemicals, and capital and medical equipment would

fall even further). Tariffs on information technology products, such

as computers, semiconductors, and telecommunications equipment,

would be cut from an average level of 13.3% to zero by 2005.

• Establish a tariff-rate quota system for imports of agricultural

bulk commodities (such as wheat, corn, cotton, barley, and rice),

i.e., imports up to a specified quota level would be assessed a much

higher tariff rate. Private trade in agricultural products will be

permitted for the first time.

• Phase out quotas and other quantitative restrictions (some

upon accession, many within two years, and most within five

years). Quota levels for many products would expand by 15% each

year until the elimination of the quota.

• Eliminate export subsidies on agricultural products and SPS

restrictions that are not scientifically-based.

• Provide access to service sectors (many of which are currently

closed to foreign firms), including distribution, telecommunications,

insurance, banking, securities, and professional services (including

legal, accountancy, taxation, management consultancy, architecture, engineering, urban planning, medical and dental, and computer-related services). China would expand (over various transitional periods) the scope of allowed services and gradually remove

geographical restrictions on foreign service providers. The amount

of permitted foreign ownership in service industries would vary

(and in some cases expand over time) from sector to sector.

• Reduce restrictions on auto trade. Tariffs on autos would fall

from 80–100% to 25% (tariffs on auto parts reduced to an average

rate of 10%) by 2006. Auto quotas would be eliminated by 2005.

U.S. financial firms would be allowed to provide financing for the

purchase of cars in China.

• Provide fair treatment for foreign firms operating in China by

removing government rules requiring technology transfer, local

content, and export performance conditions.

• Provide that Chinese state-owned and state-invested firms

make purchases and sales based on commercial considerations and

give U.S. firms the opportunity to compete for sales on a non-discriminatory basis.

• Accept the use by the United States of certain antidumping

provisions (over a transitory period) and to permit the use of certain safeguard measures to respond to possible surges in imports

from China that might cause or threaten to cause market disruption to a U.S. industry (over transitory periods).

12

2 CRS memo, U.S. Interests in China’s Accession to the World Trade Organization: Arguments

in Favor of Accession, May 2, 2000.

U.S. firms would also benefit from China’s trade agreements

with the other WTO countries that have concluded bilateral agreements with China and those six WTO members that are still negotiating with China if they have obtained or are able to obtain benefits beyond what the United States was able to achieve. In addition, the WTO working party is expected to set additional requirements on China’s WTO accession (such as rules on subsidies) that

would also benefit U.S. firms.2

In response to progress achieved in China’s WTO commitments

represented by the bilateral agreement with the United States,

President Clinton announced that he would work with other WTO

member countries to gain China’s entry in the WTO as soon as possible, and on March 8, 2000, he transmitted to Congress a request

for legislation to terminate the application of Title IV of the Trade

Act of 1974 to China and to extend Normal Trade Relations (NTR)

treatment to products from China.

The Agreement represents a crucial step in China’s WTO accession process. Another significant step occurred on May 19, 2000,

when the European Union also completed an agreement with

China on terms of accession. Other steps that remain ahead include the conclusion of bilateral negotiations with a handful of

other WTO members, such as Mexico, as well as the multilateral

negotiations on China’s accession protocol. China then must complete its domestic process for implementing the country’s WTO

commitments. Accession takes effect thirty days after China deposits its instruments of ratification.

C. LEGISLATIVE HISTORY

Committee action

H.R. 4444 was introduced on May 15, 2000, by request, by Representatives Archer, Crane, Matsui and Tanner and was referred

to the Committee on Ways and Means. On May 17, 2000, the Committee ordered favorably reported H.R. 4444 to the House of Representatives, with an amendment in the nature of a substitute, by

a recorded vote of 34–4. The substitute contained the provision

granting the President the authority to proclaim permanent Normal Trade Relations to China at the time of its accession to the

WTO, as noted above, and codifying the special import surge mechanism.

Legislative hearing

On February 16, 2000, the Committee on Ways and Means held

a hearing on the bilateral trade agreement between the United

States and China and on the pending accessions of China and Taiwan to the World Trade Organization (WTO). The Committee held

a hearing devoted in part to China’s WTO accession on April 12,

2000. On May 3, 2000, the Ways and Means Committee held a

hearing on China’s accession to the WTO. At these hearings, Members of Congress, a governor, and representatives from business,

labor, human rights and religious groups expressed their views regarding U.S.-China trade relations. At the May 3 hearing, four cabVerDate 11-MAY-2000 06:41 May 23, 2000 Jkt 079006 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR632.XXX pfrm11 PsN: HR632
13

inet members appeared in favor of legislation to normalize trade

relations with China.

II. EXPLANATION OF THE BILL

SECTIONS 1 AND 2

Present law

Title IV of the Trade Act of 1974, as amended by the Customs

and Trade Act of 1990 (Public Law 101–382), sets forth three requirements relating to freedom of emigration which must be met,

or waived by the President, in order for a nonmarket economy

country to be granted NTR. Title IV also requires that a bilateral

commercial agreement that provides for nondiscriminatory, NTR

status remain in force between the United States and the nonmarket economy country receiving NTR status. Finally, Title IV

sets forth minimum provisions that must be included in such an

agreement.

As described above, an annual Presidential recommendation

under section 402(d) for a 12–month extension of authority to

waive the Jackson-Vanik freedom-of-emigration requirements—either generally or for specific countries—may be disapproved

through passage by Congress of a joint resolution of disapproval

within 60 calendar days after the expiration of the previous waiver

authority. Congress may override a Presidential veto within the

later of the end of the 60 calendar day period for initial passage

or 15 legislative days after the veto.

Before China joins the WTO, section 1106 of the Omnibus Trade

and Competitiveness Act of 1988 (P.L. 103–465) requires the President to make certain determinations about China’s state trading

enterprises. Specifically, the President must decide: (1) whether

China’s state trading enterprises account for a significant share of

either China’s exports or China’s goods that are subject to competition from goods imported into China; and (2) whether these enterprises adversely affect U.S. foreign trade or the U.S. economy. If

both determinations are affirmative, the WTO agreement cannot

apply between the United States and China until either China enters into an agreement that addresses the operations of state trading enterprises, or legislation is enacted approving application of

the WTO agreement to China.

Explanation of the provision

The provision grants the President the authority to determine

that newly designated Chapter I of Title IV of the Trade Act of

1974 no longer applies to China after he makes a determination

and transmits a report to Congress certifying that the terms and

conditions for accession of China to the WTO are at least equivalent to those agreed to between the United States and China on

November 15, 1999, in the bilateral market access agreement.

The Administration has stated that it believes that the terms of

China’s accession to the WTO, and in particular the November

1999 bilateral trade agreement, will adequately address China’s

state trading enterprises, and the Committee expects the President

to certify this as part of the report required under section (1)(b).

14

Reasons for change

The Committee has long supported a policy of engagement with

China and has consistently rejected annual legislation to revoke

normal trade relations, or nondiscriminatory trade treatment,

which it sees as the cornerstone of that policy. Members believe

that normalizing trade relations with China by graduating it from

the annual review process established under the Jackson-Vanik

amendment, a Cold War trade statute, is appropriate. Specifically,

the Committee believes that increased trade, together with other

tools of active engagement, enables the United States to influence

the growth of democratic and market-oriented policies in China in

a manner which will improve respect for fundamental human

rights and encourage political reform.

The Committee continues to view with deep concern widespread

human rights abuses carried out by the Government of China

against Catholic priests and bishops, Protestant pastors, Tibetan

Buddhist clergy, and pro-democracy activists. Nevertheless, the

Committee is concerned that rejecting the President’s recommendation to graduate China from the Jackson-Vanik amendment may be

interpreted by the Chinese as an antagonistic act that would undermine U.S. leverage to bring about change in China, while at the

same time sacrificing the interests of U.S. exporters, workers, and

consumers.

Rejecting the President’s proposal would also have a serious adverse effect on Hong Kong and Taiwan due to the high levels of

trade and investment between Hong Kong and China and between

Taiwan and China. By severely disrupting trade in the region, terminating NTR would harm U.S. efforts to address economic instability in Asia and risk prompting currency devaluations, similar to

those that occurred in 1997 and 1998. Failing to grant NTR treatment at this time would forfeit the market access concessions made

by the Chinese in the Bilateral Trade Agreement and those that

will be included in China’s pending accession to the World Trade

Organization. If fully implemented, these commitments would represent substantial new opportunities for United States exports to,

and investment in China. Finally, the Committee believes that revoking China’s NTR, or failing to renew China’s annual NTR status as of July 3 of this year, would constitute a dangerously blunt

sanction that would work against U.S. Government efforts to bring

China into the global community of civilized nations. While the

United States has many serious problems with China, the Committee believes areas of U.S.-Sino disagreement are best addressed

through expanding U.S. contact with China and maintaining strong

and effective mechanisms to press China to continue to reform.

The Committee recognizes that Congressional approval of permanent normal trade relations (NTR) pursuant to H.R. 4444 is not

necessary for China to accede to the WTO. However, in order for

American businesses, farmers, and workers to be guaranteed an

opportunity to benefit from the trade concessions and better compete in China’s markets, China’s name must be removed from Title

IV of the Trade Act of 1974, the so-called Jackson-Vanik amendment, which provides for an annual review of China’s trade status

based on freedom of emigration.

15

Otherwise, the United States would be in violation of Article I of

the GATT, which requires the extension of ‘‘unconditional’’ most favored nation (or NTR) status, and subject to trade sanctions. If the

United States does not remove the conditions imposed by JacksonVanik, the United States would have to invoke the non-application

clause of the GATT, meaning that China would be able to withhold

benefits of the 1999 bilateral agreement from the United States. At

the same time the Committee recognizes that the Bilateral Trade

Agreement involves one-way trade concessions on the part of China

and requires no reductions in U.S. tariffs on U.S. imports of Chinese products.

The Committee agrees with Ambassador Barshefsky that the argument, put forward by some opponents of H.R. 4444, that the

1979 U.S.-China Trade Agreement, combined with commitments to

other WTO Members, would provide the United States with benefits similar to what will be available to the United States under the

1999 Bilateral Trade Agreement is ‘‘legally unsustainable.’’ In a letter to Ranking Member Rangel dated March 8, 2000, she wrote,

‘‘While the 1979 Agreement may provide the basis for the United

States to claim certain limited benefits, relying on the 1979 Agreement would deprive the United States of virtually all market access negotiated for services, critical elements necessary for meaningful market access for goods, key provisions negotiated to safeguard against injurious imports, as well as other special rules, commitments and vital enforcement rights. The rights conferred by the

1979 Agreement would leave U.S. interests across all sectors at a

substantial competitive disadvantage with foreign interests that

would enjoy the full benefits of China’s WTO membership.’’ Concurring with this analysis, the Committee strongly believes that if the

United States was forced to invoke the WTO’s non-application

clause (in the event Congress fails to pass H.R. 4444) China would

have no obligation to grant the United States all the same trade

benefits it will grant to other WTO members. Finally, the Committee also notes that absent passage of H.R. 4444, the United

States would be forced to address Chinese trade barriers without

recourse to the WTO’s binding dispute settlement mechanism.

In evaluating whether the substantial market access concessions

represented by the bilateral trade agreement met U.S. trade negotiating objectives, the Committee relied on a comprehensive hearing record, extensive consultations with the Administration, as well

as the results of a classified report by the General Accounting Office (GAO) that was requested by Trade Subcommittee Chairman

Crane on May 5, 1997.

In a derestricted report released in May 2000, the GAO determined that China has agreed to ‘‘take most of the specific actions

originally considered necessary to achieve United States objectives.’’ The GAO report supports the Committee’s conclusion that

the bilateral trade agreement, combined with substantial progress

in the multilateral negotiations, will greatly benefit the commercial

interests of United States firms, workers, and farmers in the new

century.

16

SECTION 3

Present law

Section 406 of the Trade Act of 1974 authorizes the President to

provide temporary import relief in the form of increased tariffs or

quotas if imports from Communist countries are causing market

disruption. Market disruption exists when imports of an article,

like or directly competitive with an article produced by a domestic

industry, are increasing, either relatively or absolutely, so as to be

a significant cause of material injury, or threat thereof, to such domestic industry.

A petition for relief may be filed with the ITC by workers or

firms in the domestic industry. The ITC must determine, within

three months, whether imports of an article produced in a Communist country are causing market disruption. If the ITC finds

that market disruption exists, it must also recommend to the President relief in the form of tariffs or quantitative restrictions to prevent or remedy such market disruption.

Upon receiving the ITC report containing its findings and recommendations, the President has 60 days to take action. The President must provide import relief unless he determines that such relief is not in the national economic interest of the United States.

Section 406(c) authorizes the President, prior to an ITC determination, to take temporary emergency action with respect to imports from a Communist country whenever he finds that there are

reasonable grounds to believe there is market disruption. When

taking such action, the President must also request the Commission to conduct an investigation under section 406(a). Any emergency relief ceases to apply on the day the Commission makes a

negative finding or on the effective date of action by the President

following an affirmative ITC finding.

On November 15, 1999, Ambassador Barshefsky announced the

successful completion of bilateral talks on China’s accession to the

World Trade Organization (WTO). Along with market access commitments that will provide market openings for U.S. exports to

China, the Chinese government agreed to WTO Protocol language

outlining a product-specific safeguard that is available to WTO

members.

Explanation of the provision

Section 3 created a new chapter of Title IV which implements the

anti-surge mechanism established under the U.S.-China Bilateral

Trade Agreement. This is intended to replace section 406 of the

Trade Act of 1974, which would no longer apply to China as the

result of section 1 of this Act.

The safeguard would permit the United States to provide relief

to domestic industries and workers where products of Chinese origin are being imported in such increased quantities and under such

conditions as to cause or threaten to cause market disruption to the

domestic producers as a whole of like or directly competitive products. The relief is to be imposed only to the extent and for such period as the President considers necessary to prevent or remedy the

market disruption. Procedures are modeled after Section 406, with

certain modifications to conform to language of the bilateral trade

17

agreement. U.S. industries or workers claiming injury due to import surges from China would file a petition with the U.S. International Trade Commission (ITC) or the ITC would initiate an investigation at the request of the President or on motion of the

House Ways and Means Committee or the Senate Finance Committee. According to the U.S.-China Agreement and under the bill,

market disruption occurs when subject imports ‘‘are increasing rapidly, either absolutely or relatively, so as to be a significant cause

of material injury or threat of material injury to the domestic industry.’’

In determining whether market disruption exists the Commission shall consider objective factors, including: (1) the volume of imports of the product which is subject to the investigation; (2) the

effect of imports of such product on prices in the United States of

like or directly competitive article, and (3) the effect of imports of

such product on the domestic industry producing like or directly

competitive articles. The presence or absence of any factor listed in

paragraph (1), (2), and (3) is not necessarily dispositive of whether

market disruption exists. In addition, the Committee intends that

the Commission, in determining whether imports from China contribute significantly to the material injury to the domestic industry,

shall examine factors other than such imports which may be a

cause of the material injury.

Within 60 days after receipt of the petition, request or motion (90

days, where the petitioner alleges critical circumstances), the ITC

would make a determination as to whether the subject imports are

causing or threatening market disruption.

Twenty days after the ITC makes an affirmative determination

with respect to market disruption, the ITC would issue a report to

the President and to the United States Trade Representative

(USTR) setting forth the reasons for its determination and recommendation(s) of actions necessary to prevent or remedy market

disruption. Twenty days later the USTR would publish a notice of

proposed action, seeking views and evidence on the appropriateness

of the proposed action and whether it would be in the public interest. The bill also requires that the USTR hold a hearing on the proposed action.

If the ITC determination is affirmative with respect to market

disruption, the President would be required to request consultations with the People’s Republic of China to remedy the market disruption. If the United States and China are unable to reach agreement within the sixty day consultation period established in the bilateral agreement and the bill, then the President would be required to decide what action, if any, to take within 25 days after

the end of consultations. Any relief proclaimed would become effective in 15 days. If the President determines that an agreement

with China concluded under this section is not preventing or remedying the market disruption at issue, then the President is to initiate new consultations and proceedings under this section. However, if China is not complying with the terms of the agreement entered into under the November 15 Bilateral Agreement, then the

President shall promptly provide relief consistent with the terms of

that Bilateral Agreement.

18

The entire period from petition to proclamation of relief would be

150 days, which is identical to the duration under section 406 of

the Trade Act.

The bill establishes clear standards for the application of Presidential discretion in providing relief to injured industries and

workers. If the ITC makes an affirmative determination on market

disruption, there would be a presumption in favor of providing relief. That presumption can be overcome only if the President finds

that providing relief would have an adverse impact on the United

States economy clearly greater than the benefits of such action, or,

in extraordinary cases, that such action would cause serious harm

to the national security of the United States.

The provision also sets forth authority to the President to modify,

reduce or terminate relief, as well as monitoring of relief by the

Commission and an opportunity for the President to request a report from the Commission on the probable effects of such modification, termination, or reduction. Finally, the provision allows for extension of relief under certain circumstances.

The bill would also authorize the President to provide a provisional safeguard in cases where ‘‘delay would cause damage which

it would be difficult to repair,’’ as permitted under the U.S.-China

Agreement. If such circumstances are alleged, the ITC would be required to make a determination on critical circumstances and a

preliminary determination on market disruption within 45 days of

receipt of the petition, request, or motion. If those determinations

are affirmative, President would be required to determine whether

to provide such provisional relief within 20 days.

Finally, the bill would implement a provision in the U.S.-China

Agreement concerning trade diversion. That provision addresses

circumstances in which a safeguard applied by a third country with

respect to Chinese goods ‘‘causes or threatens to cause significant

diversions of trade’’ into the United States. If, on the basis of the

monitoring results provided by the Customs Service and other reasonably available relevant evidence, the ITC determines that an action by another WTO Member threatens or causes significant trade

diversion, the USTR would request consultations with China and/

or the Member imposing the safeguard. If, as provided in the

Agreement, consultations fail to lead to an agreement to address

the trade diversion within 60 days, the President shall determine,

within 40 days after consultations end, what action, if any, to take

to prevent or remedy the trade diversion. The total time from petition to relief under the trade diversion provision would be 150

days.

Section 442(d)(2) as added by this Act would require the Commission to examine changes in imports into the United States from the

People’s Republic of China since the time that the WTO Member

commenced the investigation that led to a request for consultations. The Committee recognizes that there may be instances in

which a WTO Member may not announce an investigation prior to

requesting consultations with China. In such instances, the Commission should examine data from the time of the WTO Member’s

notification to the WTO of a request for consultations with China.

The product-specific safeguard is available for 12 years after China’s accession to the WTO.

19

Reasons for change

The Committee intends administration of the product specific

safeguard to be consistent with the U.S.-China Bilateral Trade

Agreement and with U.S. obligations under the WTO. This is a

temporary, extraordinary trade remedy specifically designed to address concerns about potential increased import competition from

China in the future.

Effective date

The extension of non-discriminatory treatment to the products of

China shall be effective no earlier than the effective date of the accession of this country to the World Trade Organization.

III. VOTES OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of the

House of Representatives, the following statements are made concerning the votes of the Committee on Ways and Means in its consideration of the bill, H.R. 4444.

MOTION TO REPORT THE BILL

The bill, H.R. 4444, as amended, was ordered favorably reported

by a rollcall vote of 34 yeas to 4 nays (with a quorum being

present). The vote was as follows:

Representatives Yea Nay Present Representatives Yea Nay Present

Mr. Archer ............................. X ........... ............. Mr. Rangel ........................... X ........... .............

Mr. Crane .............................. X ........... ............. Mr. Stark .............................. ........... X .............

Mr. Thomas ........................... X ........... ............. Mr. Matsui ............................ X ........... .............

Mr. Shaw ............................... X ........... ............. Mr. Coyne ............................. ........... X .............

Mrs. Johnson ......................... X ........... ............. Mr. Levin .............................. X ........... .............

Mr. Houghton ........................ X ........... ............. Mr. Cardin ............................ X ........... .............

Mr. Herger ............................. X ........... ............. Mr. McDermott ..................... X ........... .............

Mr. McCrery ........................... X ........... ............. Mr. Kleczka ........................... ........... X .............

Mr. Camp .............................. X ........... ............. Mr. Lewis (GA) ..................... ........... X .............

Mr. Ramstad ......................... X ........... ............. Mr. Neal ............................... X ........... .............

Mr. Nussle ............................. X ........... ............. Mr. McNulty .......................... ........... ........... .............

Mr. Johnson ........................... X ........... ............. Mr. Jefferson ........................ X ........... .............

Ms. Dunn .............................. X ........... ............. Mr. Tanner ............................ X ........... .............

Mr. Collins ............................ X ........... ............. Mr. Becerra .......................... X ........... .............

Mr. Portman .......................... X ........... ............. Mrs. Thurman ....................... X ........... .............

Mr. English ........................... X ........... ............. Mr. Doggett .......................... X ........... .............

Mr. Watkins ........................... X ........... .............

Mr. Hayworth ......................... X ........... .............

Mr. Weller .............................. X ........... .............

Mr. Hulshof ........................... X ........... .............

Mr. McInnis ........................... X ........... .............

Mr. Lewis (KY) ...................... X ........... .............

Mr. Foley ............................... X ........... .............

VOTES ON AMENDMENTS

Rollcall votes were conducted on the following amendments to

the Chairman’s amendment in the nature of a substitute.

An amendment by Mr. Stark, providing that the extension of

nondiscriminatory treatment pursuant to section 1(a)(1) would not

become effective unless Taiwan accedes to the World Trade Organization on the same day as, or before, the effective date of the accession of the People’s Republic of China to the World Trade OrganiVerDate 11-MAY-2000 06:41 May 23, 2000 Jkt 079006 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\HR632.XXX pfrm11 PsN: HR632
20

zation, was defeated by a rollcall vote of 10 yeas to 28 nays. The

vote was as follows:

Representatives Yea Nay Present Representatives Yea Nay Present

Mr. Archer ............................. ........... X ............. Mr. Rangel ........................... ........... X .............

Mr. Crane .............................. ........... X ............. Mr. Stark .............................. X ........... .............

Mr. Thomas ........................... ........... X ............. Mr. Matsui ............................ ........... X .............

Mr. Shaw ............................... ........... X ............. Mr. Coyne ............................. X ........... .............

Mrs. Johnson ......................... ........... X ............. Mr. Levin .............................. ........... X .............

Mr. Houghton ........................ ........... X ............. Mr. Cardin ............................ X ........... .............

Mr. Herger ............................. ........... ........... ............. Mr. McDermott ..................... ........... X .............

Mr. McCrery ........................... ........... X ............. Mr. Kleczka ........................... X ........... .............

Mr. Camp .............................. ........... X ............. Mr. Lewis (GA) ..................... X ........... .............

Mr. Ramstad ......................... ........... X ............. Mr. Neal ............................... ........... X .............

Mr. Nussle ............................. ........... X ............. Mr. McNulty .......................... X ........... .............

Mr. Johnson ........................... ........... X ............. Mr. Jefferson ........................ X ........... .............

Ms. Dunn .............................. ........... X ............. Mr. Tanner ............................ ........... X .............

Mr. Collins ............................ ........... X ............. Mr. Becerra .......................... X ........... .............

Mr. Portman .......................... ........... X ............. Mrs. Thurman ....................... X ........... .............

Mr. English ........................... ........... X ............. Mr. Doggett .......................... X ........... .............

Mr. Watkins ........................... ........... X .............

Mr. Hayworth ......................... ........... X .............

Mr. Weller .............................. ........... X .............

Mr. Hulshof ........................... ........... X .............

Mr. McInnis ........................... ........... X .............

Mr. Lewis (KY) ...................... ........... X .............

Mr. Foley ............................... ........... X .............

An amendment by Mr. Stark, providing that the extension of

nondiscriminatory treatment would not become effective until the

United States and the People’s Republic of China have signed an

agreement providing for the exemption of a Presidential order banning the importation of munitions, principally guns and ammunition from China, was defeated by a rollcall vote of 6 yeas to 16

nays.

The vote was as follows:

Representatives Yea Nay Present Representatives Yea Nay Present

Mr. Archer ............................. ........... X ............. Mr. Rangel ........................... ........... X .............

Mr. Crane .............................. ........... ........... ............. Mr. Stark .............................. X ........... .............

Mr. Thomas ........................... ........... X ............. Mr. Matsui ............................ ........... X .............

Mr. Shaw ............................... ........... X ............. Mr. Coyne ............................. ........... ........... .............

Mrs. Johnson ......................... ........... X ............. Mr. Levin .............................. ........... X .............

Mr. Houghton ........................ ........... ........... ............. Mr. Cardin ............................ X ........... .............

Mr. Herger ............................. ........... X ............. Mr. McDermott ..................... X ........... .............

Mr. McCrery ........................... ........... ........... ............. Mr. Kleczka ........................... X ........... .............

Mr. Camp .............................. ........... ........... ............. Mr. Lewis (GA) ..................... X ........... .............

Mr. Ramstad ......................... ........... ........... ............. Mr. Neal ............................... ........... ........... .............

Mr. Nussle ............................. ........... ........... ............. Mr. McNulty .......................... ........... ........... .............

Mr. Johnson ........................... ........... X ............. Mr. Jefferson ........................ X ........... .............

Ms. Dunn .............................. ........... X ............. Mr. Tanner ............................ ........... ........... .............

Mr. Collins ............................ ........... ........... ............. Mr. Becerra .......................... ........... ........... .............

Mr. Portman .......................... ........... ........... ............. Mrs. Thurman ....................... ........... ........... .............

Mr. English ........................... ........... X ............. Mr. Doggett .......................... ........... ........... .............

Mr. Watkins ........................... ........... ........... .............

Mr. Hayworth ......................... ........... X .............

Mr. Weller .............................. ........... ........... .............

Mr. Hulshof ........................... ........... X .............

Mr. McInnis ........................... ........... X .............

Mr. Lewis (KY) ...................... ........... X .............

Mr. Foley ............................... ........... X .............

21

IV. BUDGET EFFECTS

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d)(2) of rule XIII of the Rules of the

House of Representatives, the following statement is made concerning the effects on the budget of this resolution, H.R. 4444 as

reported: The Committee agrees with the estimate prepared by

CBO which is included below.

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the

House of Representatives, the Committee states that enactment of

H.R. 4444 would affect revenues, but CBO has no basis for estimating the magnitude of this effect.

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the

House of Representatives, requiring a cost estimate prepared by

the Congressional Budget Office, the following report prepared by

CBO is provided.

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, May 22, 2000.

Hon. BILL ARCHER,

Chairman, Committee on Ways and Means,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4444, a bill to authorize

the extension of nondiscriminatory treatment (normal trade relations treatment) to the People’s Republic of China.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contacts are Hester Grippando (for

revenues), and Sunita D’Monte (for spending subject to appropriation).

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

H.R. 4444—A bill to authorize the extension of nondiscriminatory

treatment (normal trade relations treatment) to the People’s Republic of China

Summary: H.R. 4444 would allow the President to grant permanent Normal Trade Relations (PNTR) status to the People’s Republic of China (China). H.R. 4444 would become effective no earlier

than the date of the accession of the People’s Republic of China to

the World Trade Organization (WTO). CBO concludes that enactment of the bill would likely increase revenues, but CBO has no

basis for estimating the revenue impact of granting the President

22

such authority. CBO estimates that implementing H.R. 4444 would

cost $1 million a year, subject to the availability of appropriate

funds. Since enacting H.R. 4444 would affect revenues, pay-as-yougo procedures would apply.

H.R. 4444 contains no intergovernmental mandates as defined in

the Unfunded Mandates Reform Act (UMRA) and would not affect

the budgets of state, local, or tribal governments. By broadening

the conditions under which the U.S. government could impose

trade restrictions on Chinese goods, the bill could impose a privatesector mandate on importers of Chinese goods if those conditions

are met. However, CBO has no basis for estimating the cost of this

mandate.

Estimated cost to the Federal Government

Revenues

H.R. 4444 would remove China from the list of countries under

Title IV of the Trade Act of 1974 (the Jackson-Vanik amendment).

The Jackson-Vanik amendment sets forth freedom-of-emigration

criteria which must be met or waived by the President and a bilateral trade agreement must be in place in order for a non-market

economy to be granted normal trade relations (NTR) status. A

waiver of the Jackson-Vanik amendment by the President is subject to disapproval by the United States Congress. Removing China

from the Jackson-Vanik amendment would allow the President to

grant PNTR to China.

CBO estimates that in itself, granting PNTR treatment to China

would have no impact on receipts relative to its revenue baseline.

The People’s Republic of China has received NTR, renewed annually on the basis of a Presidential waiver of the Jackson-Vanik

amendment, since February 1, 1980. CBO’s revenue baseline assumes that the People’s Republic of China will continue to receive

NTR status.

Granting China PNTR status could have an effect on receipts by

allowing the United States to trade with China under the WTO, if

and when China should enter the WTO. On November 15, 1999,

the President negotiated a bilateral trade agreement with China

intended to govern the conditions under which the United States

and China would trade once China enters the WTO. H.R. 4444

would require that the President certify that the final terms of China’s accession into the WTO are equivalent to that agreement.

Without legislation enabling the President to grant PNTR to

China, the United States would not be able to trade with China

under the WTO.

Imports of textile and apparel products from China are currently

subject to quotas. If the United States were to trade with China

under the WTO, these quotas would be liberalized. Imports of textile and apparel products from China would likely increase. CBO

expects that increased imports from China would be partly offset

by decreased imports from other countries. The increase in imports

could also be offset by a provision in H.R. 4444 that would allow

the President to place increased duties or other restrictions on Chinese imports if it is determined that such imports cause or threaten to cause market disruption to domestic producers. The result of

23

these changes would be an increase in collections of tariff revenues.

However, because of the complexity of the world market, undetermined issues facing if, how, and when China would join the WTO,

and administrative mechanisms that could potentially be employed

to alter the China’s quota under the WTO, CBO has no basis to determine what the magnitude of such an effect would be.

Spending subject to appropriation

H.R. 4444 would require the International Trade Commission

(ITC) to investigate and report on petitions filed with it alleging

that China has engaged in either market disruption or trade diversion. Based on information from ITC, CBO estimates that this bill

would increase spending subject to appropriation by $1 million a

year.

Estimated impact on state, local, and tribal governments: H.R.

4444 contains no intergovernmental mandates as defined in UMRA

and would not affect the budgets of state, local, or tribal governments.

Estimated impact on the private sector: The bill would broaden

the conditions under which the U.S. government could impose

trade restrictions on imports of Chinese goods that are found to seriously harm or threaten domestic production of competing or similar goods. Certain trade restrictions that could result from this

bill—such as increased duties, or quota limits more restrictive than

under current law—would impose mandates on importers of affected items. Those restrictions would impose costs on the private

sector, but CBO cannot predict whether such market conditions

would be found or, if found, the incidence of trade restrictions resulting from the new conditions defined in this bill. Thus, CBO has

no basis for estimating the direct costs of the mandate.

Estimate prepared by: Federal revenues: Hester Grippando; Federal spending: Sunita D’Monte; and impact on the private sector:

Patrice Gordon.

Estimated approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. G. Thomas Woodward, Assistant Director for Tax Analysis.

V. OTHER MATTERS TO BE DISCUSSED UNDER THE

RULES OF THE HOUSE

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the

House of Representatives (relating to oversight findings), the Committee, based on public hearing testimony and information from

the Administration, concluded that it is appropriate and timely to

enact the provisions included in the bill as reported.

B. SUMMARY OF FINDINGS AND RECOMMENDATIONS OF THE

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

With respect to clause 3(c)(4) of rule XIII of the Rules of the

House of Representatives, no oversight findings or recommendations have been submitted to the Committee by the Committee on

24

Government Reform and Oversight with respect to the subject matter contained in H.R. 4444.

C. CONSTITUTIONAL AUTHORITY STATEMENT

With respect to clause 3(d)(1) of rule XIII of the Rules of the

House of Representatives, relating to Constitutional Authority, the

Committee states that the Committee’s action in reporting the bill

is derived from Article 1 of the Constitution, Section 8 (‘‘The Congress shall have power to lay and collect taxes, duties, imposts and

excises, to pay the debts and to provide for * * * the general Welfare of the United States.’’)

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS

REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic,

existing law in which no change is proposed is shown in roman):

TRADE ACT OF 1974

* * * * * * *

TABLE OF CONTENTS

TITLE I—NEGOTIATING AND OTHER AUTHORITY

* * * * * * *

TITLE IV—TRADE RELATIONS WITH COUNTRIES NOT øCURRENTLY¿

RECEIVING NONDISCRIMINATORY TREATMENT

CHAPTER 1—TRADE RELATIONS WITH CERTAIN COUNTRIES

Sec. 401. Exception of the products of certain countries or areas.

* * * * * * *

CHAPTER 2—RELIEF FROM MARKET DISRUPTION TO INDUSTRIES AND DIVERSION OF

TRADE TO THE UNITED STATES MARKET

Sec. 421. Action to address market disruption.

Sec. 422. Action in response to trade diversion.

Sec. 423. Regulations; termination of provision.

* * * * * * *

TITLE I—NEGOTIATING AND OTHER

AUTHORITY

* * * * * * *

CHAPTER 2—OTHER AUTHORITY

* * * * * * *

SEC. 123. COMPENSATION AUTHORITY.

(a) Whenever—

25

(1) any action taken under chapter 1 of title II or chapter 1

of title III, or under chapter 2 of title IV of the Trade Act of

1974; or

* * * * * * *

TITLE IV—TRADE RELATIONS WITH

COUNTRIES NOT øCURRENTLY¿ RECEIVING NONDISCRIMINATORY

TREATMENT

CHAPTER 1—TRADE RELATIONS WITH

CERTAIN COUNTRIES

SEC. 401. EXCEPTION OF THE PRODUCTS OF CERTAIN COUNTRIES OR

AREAS.

Except as otherwise provided in this title, the President shall

continue to deny nondiscriminatory treatment to the products of

any country, the products of which were not eligible for the rates

set forth in rate column numbered 1 of the Tariff Schedules of the

United States on the date of the enactment of this Act.

* * * * * * *

CHAPTER 2—RELIEF FROM MARKET DISRUPTION TO INDUSTRIES AND DIVERSION OF

TRADE TO THE UNITED STATES MARKET

SEC. 421. ACTION TO ADDRESS MARKET DISRUPTION.

(a) PRESIDENTIAL ACTION.—If a product of the People’s Republic

of China is being imported into the United States in such increased

quantities or under such conditions as to cause or threaten to cause

market disruption to the domestic producers of a like or directly

competitive product, the President shall, in accordance with the provisions of this section, proclaim increased duties or other import restrictions with respect to such product, to the extent and for such

period as the President considers necessary to prevent or remedy the

market disruption.

(b) INITIATION OF AN INVESTIGATION.—(1) Upon the filing of a petition by an entity described in section 202(a) of the Trade Act of

1974 (19 U.S.C. 2252(a)), upon the request of the President or the

United States Trade Representative (in this subtitle referred to as

the ‘‘Trade Representative’’), upon resolution of either the Committee

on Ways and Means of the House of Representatives, or the Committee on Finance of the Senate (in this subtitle referred to as the

‘‘Committees’’) or on its own motion, the United States International

Trade Commission (in this subtitle referred to as the ‘‘Commission’’)

shall promptly make an investigation to determine whether products

of the People’s Republic of China are being imported into the United

States in such increased quantities or under such conditions as to

cause or threaten to cause market disruption to the domestic producers of like or directly competitive products.

26

(2) The limitations on investigations set forth in section 202(h)(1)

of the Trade Act of 1974 (19 U.S.C. 2252(h)(1)) shall apply to investigations conducted under this section.

(3) The provisions of subsections (a)(8) and (i) of section 202 of

the Trade Act of 1974 (19 U.S.C. 2252(a)(8) and (i)), relating to

treatment of confidential business information, shall apply to investigations conducted under this section.

(4) Whenever a petition is filed, or a request or resolution is received, under this subsection, the Commission shall transmit a copy

thereof to the President, the Trade Representative, the Committee on

Ways and Means of the House of Representatives, and the Committee of Finance of the Senate, except that in the case of confidential business information, the copy may include only nonconfidential

summaries of such information.

(5) The Commission shall publish notice of the commencement of

any proceeding under this subsection in the Federal Register and

shall, within a reasonable time thereafter, hold public hearings at

which the Commission shall afford interested parties an opportunity

to be present, to present evidence, to respond to the presentations of

other parties, and otherwise to be heard.

(c) MARKET DISRUPTION.—(1) For purposes of this section, market

disruption exists whenever imports of an article like or directly competitive with an article produced by a domestic industry are increasing rapidly, either absolutely or relatively, so as to be a significant

cause of material injury, or threat of material injury, to the domestic industry.

(2) For purposes of paragraph (1), the term ‘‘significant cause’’ refers to a cause which contributes significantly to the material injury

of the domestic industry, but need not be equal to or greater than

any other cause.

(d) FACTORS IN DETERMINATION.—In determining whether market

disruption exists, the Commission shall consider objective factors,

including—

(1) the volume of imports of the product which is the subject

of the investigation;

(2) the effect of imports of such product on prices in the

United States for like or directly competitive articles; and

(3) the effect of imports of such product on the domestic industry producing like or directly competitive articles.

The presence or absence of any factor under paragraph (1), (2), or

(3) is not necessarily dispositive of whether market disruption exists.

(e) TIME FOR COMMISSION DETERMINATIONS.—The Commission

shall make and transmit to the President and the Trade Representative its determination under subsection (b)(1) at the earliest practicable time, but in no case later than 60 days (or 90 days in the

case of a petition requesting relief under subsection (i)) after the

date on which the petition is filed, the request or resolution is received, or the motion is adopted, under subsection (b). If the Commissioners voting are equally divided with respect to its determination, then the determination agreed upon by either group of Commissioners may be considered by the President and the Trade Representative as the determination of the Commission.

(f) RECOMMENDATIONS OF COMMISSION ON PROPOSED REMEDIES.—If the Commission makes an affirmative determination

27

under subsection (b), or a determination which the President or the

Trade Representative may consider as affirmative under subsection

(e), the Commission shall propose the amount of increase in, or imposition of, any duty or other import restrictions necessary to prevent or remedy the market disruption. Only those members of the

Commission who agreed to the affirmative determination under subsection (b) are eligible to vote on the proposed action to prevent or

remedy market disruption. Members of the Commission who did not

agree to the affirmative determination may submit, in the report required under subsection (g), separate views regarding what action,

if any, should be taken to prevent or remedy market disruption.

(g) REPORT BY COMMISSION.—(1) Not later than 20 days after a

determination under subsection (b) is made, the Commission shall

submit a report to the President and the Trade Representative.

(2) The Commission shall include in the report required under

paragraph (1) the following:

(A) The determination made under subsection (b) and an explanation of the basis for the determination.

(B) If the determination under subsection (b) is affirmative,

or may be considered by the President or the Trade Representative as affirmative under subsection (e), the recommendations of

the Commission on proposed remedies under subsection (f) and

an explanation of the basis for each recommendation.

(C) Any dissenting or separate views by members of the Commission regarding the determination and any recommendation

referred to in subparagraphs (A) and (B).

(D) A description of—

(i) the short- and long-term effects that implementation of

the action recommended under subsection (f) is likely to

have on the petitioning domestic industry, on other domestic industries, and on consumers; and

(ii) the short- and long-term effects of not taking the recommended action on the petitioning domestic industry, its

workers, and the communities where production facilities of

such industry are located, and on other domestic industries.

(3) The Commission, after submitting a report to the President

under paragraph (1), shall promptly make it available to the public

(but shall not include confidential business information) and cause

a summary thereof to be published in the Federal Register.

(h) OPPORTUNITY TO PRESENT VIEWS AND EVIDENCE ON PROPOSED MEASURE AND RECOMMENDATION TO THE PRESIDENT.—(1)

Within 20 days after receipt of the Commission’s report under subsection (g) (or 15 days in the case of an affirmative preliminary determination under subsection (i)(1)(B)), the Trade Representative

shall publish in the Federal Register notice of any measure proposed

by the Trade Representative to be taken pursuant to subsection (a)

and of the opportunity, including a public hearing, if requested, for

importers, exporters, and other interested parties to submit their

views and evidence on the appropriateness of the proposed measure

and whether it would be in the public interest.

(2) Within 55 days after receipt of the report under subsection (g)

(or 35 days in the case of an affirmative preliminary determination

under subsection (i)(1)(B)), the Trade Representative, taking into acVerDate 11-MAY-2000 06:41 May 23, 2000 Jkt 079006 PO 00000 Frm 00027 Fmt 6659 Sfmt 6603 E:\HR\OC\HR632.XXX pfrm11 PsN: HR632
28

count the views and evidence received under paragraph (1) on the

measure proposed by the Trade Representative, shall make a recommendation to the President concerning what action, if any, to

take to prevent or remedy the market disruption.

(i) CRITICAL CIRCUMSTANCES.—(1) When a petition filed under

subsection (b) alleges that critical circumstances exist and requests

that provisional relief be provided under this subsection with respect to the product identified in the petition, the Commission shall,

not later than 45 days after the petition containing the request is

filed—

(A) determine whether delay in taking action under this section would cause damage to the relevant domestic industry

which would be difficult to repair; and

(B) if the determination under subparagraph (A) is affirmative, make a preliminary determination of whether imports of

the product which is the subject of the investigation have

caused or threatened to cause market disruption.

If the Commissioners voting are equally divided with respect to either of its determinations, then the determination agreed upon by

either group of Commissioners may be considered by the President

and the Trade Representative as the determination of the Commission.

(2) On the date on which the Commission completes its determinations under paragraph (1), the Commission shall transmit a

report on the determinations to the President and the Trade Representative, including the reasons for its determinations. If the determinations under paragraph (1) are affirmative, or may be considered by the President or the Trade Representative as affirmative

under paragraph (1), the Commission shall include in its report its

recommendations on proposed provisional measures to be taken to

prevent or remedy the market disruption. Only those members of the

Commission who agreed to the affirmative determinations under

paragraph (1) are eligible to vote on the proposed provisional measures to prevent or remedy market disruption. Members of the Commission who did not agree to the affirmative determinations may

submit, in the report, dissenting or separate views regarding the determination and any recommendation of provisional measures referred to in this paragraph.

(3) If the determinations under paragraph (1) are affirmative, or

may be considered by the President or the Trade Representative as

affirmative under paragraph (1), the Trade Representative shall,

within 10 days after receipt of the Commission’s report, determine

the amount or extent of provisional relief that is necessary to prevent

or remedy the market disruption and shall provide a recommendation to the President on what provisional measures, if any, to take.

(4)(A) The President shall determine whether to provide provisional relief and proclaim such relief, if any, within 10 days after

receipt of the recommendation from the Trade Representative.

(B) Such relief may take the form of—

(i) the imposition of or increase in any duty;

(ii) any modification, or imposition of any quantitative restriction on the importation of an article into the United States;

or

(iii) any combination of actions under clauses (i) and (ii).

29

(C) Any provisional action proclaimed by the President pursuant

to a determination of critical circumstances shall remain in effect

not more than 200 days.

(D) Provisional relief shall cease to apply upon the effective date

of relief proclaimed under subsection (a), upon a decision by the

President not to provide such relief, or upon a negative determination by the Commission under subsection (b).

(j) AGREEMENTS WITH THE PEOPLE’S REPUBLIC OF CHINA.—(1)

The Trade Representative is authorized to enter into agreements for

the People’s Republic of China to take such action as necessary to

prevent or remedy market disruption, and should seek to conclude

such agreements before the expiration of the 60-day consultation period provided for under the product-specific safeguard provision of

the Protocol of Accession of the People’s Republic of China to the

WTO, which shall commence not later than 5 days after the Trade

Representative receives an affirmative determination provided for in

subsection (e) or a determination which the Trade Representative

considers to be an affirmative determination pursuant to subsection

(e).

(2) If no agreement is reached with the People’s Republic of China

pursuant to consultations under paragraph (1), or if the President

determines than an agreement reached pursuant to such consultations is not preventing or remedying the market disruption at issue,

the President shall provide import relief in accordance with subsection (a).

(k) STANDARD FOR PRESIDENTIAL ACTION.—(1) Within 15 days

after receipt of a recommendation from the Trade Representative

under subsection (h) on the appropriate action, if any, to take to prevent or remedy the market disruption, the President shall provide

import relief for such industry pursuant to subsection (a), unless the

President determines that provision of such relief is not in the national economic interest of the United States or, in extraordinary

cases, that the taking of action pursuant to subsection (a) would

cause serious harm to the national security of the United States.

(2) The President may determine under paragraph (1) that providing import relief is not in the national economic interest of the

United States only if the President finds that the taking of such action would have an adverse impact on the United States economy

clearly greater than the benefits of such action.

(l) PUBLICATION OF DECISION AND REPORTS.—(1) The President’s

decision, including the reasons therefor and the scope and duration

of any action taken, shall be published in the Federal Register.

(2) The Commission shall promptly make public any report transmitted under this section, but shall not make public any information which the Commission determines to be confidential, and shall

publish notice of such report in the Federal Register.

(m) EFFECTIVE DATE OF RELIEF.—Import relief under this section

shall take effect not later than 15 days after the President’s determination to provide such relief.

(n) MODIFICATIONS OF RELIEF.—(1) At any time after the end of

the 6-month period beginning on the date on which relief under subsection (m) first takes effect, the President may request that the

Commission provide a report on the probable effect of the modification, reduction, or termination of the relief provided on the relevant

30

industry. The Commission shall transmit such report to the President within 60 days of the request.

(2) The President may, after receiving a report from the Commission under paragraph (1), take such action to modify, reduce, or terminate relief that the President determines is necessary to continue

to prevent or remedy the market disruption at issue.

(3) Upon the granting of relief under subsection (k), the Commission shall collect such data as is necessary to allow it to respond

rapidly to a request by the President under paragraph (1).

(o) EXTENSION OF ACTION.—(1) Upon request of the President, or

upon petition on behalf of the industry concerned filed with the

Commission not earlier than the date which is 9 months, and not

later than the date which is 6 months, before the date any relief provided under subsection (k) is to terminate, the Commission shall investigate to determine whether action under this section continues

to be necessary to prevent or remedy market disruption.

(2) The Commission shall publish notice of the commencement of

any proceeding under this subsection in the Federal Register and

shall, within a reasonable time thereafter, hold a public hearing at

which the Commission shall afford interested parties and consumers an opportunity to be present, to present evidence, and to respond to the presentations of other parties and consumers, and otherwise to be heard.

(3) The Commission shall transmit to the President a report on

its investigation and determination under this subsection not later

than 60 days before the action under subsection (m) is to terminate.

(4) The President, after receiving an affirmative determination

from the Commission under paragraph (3), may extend the effective

period of any action under this section if the President determines

that the action continues to be necessary to prevent or remedy the

market disruption.

SEC. 422. ACTION IN RESPONSE TO TRADE DIVERSION.

(a) MONITORING BY CUSTOMS SERVICE.—In any case in which a

WTO member other than the United States requests consultations

with the People’s Republic of China under the product-specific safeguard provision of the Protocol of Accession of the People’s Republic

of China to the World Trade Organization, the Trade Representative

shall inform the United States Customs Service, which shall monitor imports into the United States of those products of Chinese origin that are the subject of the consultation request. Data from such

monitoring shall promptly be made available to the Commission

upon request by the Commission.

(b) INITIATION OF INVESTIGATION.—(1) Upon the filing of a petition by an entity described in section 202(a) of the Trade Act of

1974, upon the request of the President or the Trade Representative,

upon resolution of either of the Committees, or on its own motion,

the Commission shall promptly make an investigation to determine

whether an action described in subsection (c) has caused, or threatens to cause, a significant diversion of trade into the domestic market of the United States.

(2) The Commission shall publish notice of the commencement of

any proceeding under this subsection in the Federal Register and

shall, within a reasonable time thereafter, hold public hearings at

which the Commission shall afford interested parties an opportunity

31

to be present, to present evidence, to respond to the presentations of

other parties, and otherwise to be heard.

(3) The provisions of subsections (a)(8) and (i) of section 202 of

the Trade Act of 1974 (19 U.S.C. 2252(a)(8) and (i)), relating to

treatment of confidential business information, shall apply to investigations conducted under this section.

(c) ACTIONS DESCRIBED.—An action is described in this subsection if it is an action—

(1) by the People’s Republic of China to prevent or remedy

market disruption in a WTO member other than the United

States;

(2) by a WTO member other than the United States to withdraw concessions under the WTO Agreement or otherwise to

limit imports to prevent or remedy market disruption;

(3) by a WTO member other than the United States to apply

a provisional safeguard within the meaning of the product-specific safeguard provision of the Protocol of Accession of the People’s Republic of China to the WTO; or

(4) any combination of actions described in paragraphs (1)

through (3).

(d) BASIS FOR DETERMINATION OF SIGNIFICANT DIVERSION.—(1)

In determining whether significant diversion or the threat thereof

exists for purposes of this section, the Commission shall take into

account, to the extent such evidence is reasonably available—

(A) the monitoring conducted under subsection (a);

(B) the actual or imminent increase in United States market

share held by such imports from the People’s Republic of China;

(C) the actual or imminent increase in volume of such imports into the United States;

(D) the nature and extent of the action taken or proposed by

the WTO member concerned;

(E) the extent of exports from the People’s Republic of China

to that WTO member and to the United States;

(F) the actual or imminent changes in exports to that WTO

member due to the action taken or proposed;

(G) the actual or imminent diversion of exports from the People’s Republic of China to countries other than the United

States;

(H) cyclical or seasonal trends in import volumes into the

United States of the products at issue; and

(I) conditions of demand and supply in the United States

market for the products at issue.

The presence or absence of any factor under any of subparagraphs

(A) through (I) is not necessarily dispositive of whether a significant

diversion of trade or the threat thereof exists.

(2) For purposes of making its determination, the Commission

shall examine changes in imports into the United States from the

People’s Republic of China since the time that the WTO member

commenced the investigation that led to a request for consultations

described in subsection (a).

(3) If more than 1 action by a WTO member or WTO members

against a particular product is identified in the petition, request, or

resolution under subsection (b) or during the investigation, the Commission may cumulatively assess the actual or likely effects of such

32

actions jointly in determining whether a significant diversion of

trade or threat thereof exists.

(e) COMMISSION DETERMINATION; AGREEMENT AUTHORITY.—(1)

The Commission shall make and transmit to the President and the

Trade Representative its determination under subsection (b) at the

earliest practicable time, but in no case later than 45 days after the

date on which the petition is filed, the request or resolution is received, or the motion is adopted, under subsection (b). If the Commissioners voting are equally divided with respect to its determination, then the determination agreed upon by either group of Commissioners may be considered by the President and the Trade Representative as the determination of the Commission.

(2) The Trade Representative is authorized to enter into agreements with the People’s Republic of China or the other WTO members concerned to take such action as necessary to prevent or remedy

significant trade diversion or threat thereof into the domestic market of the United States, and should seek to conclude such agreements before the expiration of the 60-day consultation period provided for under the product-specific safeguard provision of the Protocol of Accession of the People’s Republic of China to the WTO,

which shall commence not later than 5 days after the Trade Representative receives an affirmative determination provided for in

paragraph (1) or a determination which the Trade Representative

considers to be an affirmative determination pursuant to paragraph

(1).

(3) REPORT BY COMMISSION.— (A) Not later than 10 days after a determination under subsection (b), is made, the Commission shall transmit a report to

the President and the Trade Representative.

(B) The Commission shall include in the report required

under subparagraph (A) the following:

(i) The determination made under subsection (b) and an

explanation of the basis for the determination.

(ii) If the determination under subsection (b) is affirmative, or may be considered by the President or the Trade

Representative as affirmative under subsection (e)(1), the

recommendations of the Commission on increased tariffs or

other import restrictions to be imposed to prevent or remedy

the trade diversion or threat thereof, and explanations of

the bases for such recommendations. Only those members of

the Commission who agreed to the affirmative determination under subsection (b) are eligible to vote on the proposed action to prevent or remedy the trade diversion or

threat thereof.

(iii) Any dissenting or separate views by members of the

Commission regarding the determination and any recommendation referred to in clauses (i) and (ii).

(iv) A description of—

(I) the short- and long-term effects that implementation of the action recommended under clause (ii) is

likely to have on the petitioning domestic industry, on

other domestic industries, and on consumers; and

(II) the short- and long-term effects of not taking the

recommended action on the petitioning domestic indusVerDate 11-MAY-2000 06:41 May 23, 2000 Jkt 079006 PO 00000 Frm 00032 Fmt 6659 Sfmt 6603 E:\HR\OC\HR632.XXX pfrm11 PsN: HR632
33

try, its workers and the communities where production

facilities of such industry are located, and on other domestic industries.

(C) The Commission, after submitting a report to the President under subparagraph (A), shall promptly make it available

to the public (with the exception of confidential business information) and cause a summary thereof to be published in the

Federal Register.

(f) PUBLIC COMMENT.—If consultations fail to lead to an agreement with the People’s Republic of China or the WTO member concerned within 60 days, the Trade Representative shall promptly

publish notice in the Federal Register of any proposed action to prevent or remedy the trade diversion, and provide an opportunity for

interested persons to present views and evidence on whether the proposed action is in the public interest.

(g) RECOMMENDATION TO THE PRESIDENT.—Within 20 days after

the end of consultations pursuant to subsection (e), the Trade Representative shall make a recommendation to the President on what

action, if any, should be taken to prevent or remedy the trade diversion or threat thereof.

(h) PRESIDENTIAL ACTION.—Within 20 days after receipt of the

recommendation from the Trade Representative, the President shall

determine what action to take to prevent or remedy the trade diversion or threat thereof.

(i) DURATION OF ACTION.—Action taken under subsection (h) shall

be terminated not later than 30 days after expiration of the action

taken by the WTO member or members involved against imports

from the People’s Republic of China.

(j) REVIEW OF CIRCUMSTANCES.—(1) The Commission shall review

the continued need for action taken under subsection (h) if the WTO

member or members involved notify the Committee on Safeguards

of the WTO of any modification in the action taken by them against

the People’s Republic of China pursuant to consultation referred to

in subsection (a). The Commission shall, not later than 60 days

after such notification, determine whether a significant diversion of

trade continues to exist and report its determination to the President. The President shall determine, within 15 days after receiving

the Commission’s report, whether to modify, withdraw, or keep in

place the action taken under subsection (h).

SEC. 423. REGULATIONS; TERMINATION OF PROVISION.

(a) TO CARRY OUT RESTRICTIONS AND MONITORING.—The President shall by regulation provide for the efficient and fair administration of any restriction proclaimed pursuant to the subtitle and to

provide for effective monitoring of imports under section 422(a).

(b) TO CARRY OUT AGREEMENTS.—To carry out an agreement concluded pursuant to consultations under section 421(j) or 422(e)(2),

the President is authorized to prescribe regulations governing the

entry or withdrawal from warehouse of articles covered by such

agreement.

(c) TERMINATION DATE.—This subtitle and any regulations issued

under this subtitle shall cease to be effective 12 years after the date

34

of entry into force of the Protocol of Accession of the People’s Republic of China to the WTO.

* * * * * * *

(35)

VII. ADDITIONAL VIEWS OF CONGRESSMAN PETE STARK

Mr. Chairman, as one of four Members of the Ways and Means

Committee to vote against extending permanent most favored nation status to China, I feel compelled to explain the reasons for my

vote.

First, the Administration missed several opportunities to incorporate the concerns of many Members of Congress in the bilateral

trade agreement it reached with China last November. Second,

Congressman Levin attempted to address the concerns raised by

many Members of this Committee with legislation that falls short

of providing any real protection for labor. And then, many Members were told that the human rights and rule-of-law provisions

would be inserted in the bill that reaches the House floor. Before

voting on final passage, the Committee had yet one last opportunity to address concerns I raised at the markup regarding Taiwan’s accession to the WTO as well as President Clinton’s 1994

order to ban assault weapon imports from China. To no avail, the

Committee ignored the very real concerns facing our nation in the

name of corporate interests and free trade. Because the markup

bill failed to address all of these concerns, I voted not to extend

permanent most favored nation trade status to China.

I commend Rep. Levin for attempting to bring the interests of

labor and trade to common ground. Unfortunately, the import

surge proposal is essentially a new form of existing authorities the

Administration currently has, but never fully utilizes. The result is

a toothless proposal that leaves action up to the discretion of the

Administration—no change from current law. The surge import

proposal conditions any action on the part of the President to correct a surge in imports from China on consultations with China.

The PRC has broken every bilateral agreement it has with the U.S.

and ignored numerous memorandums of understanding. The People’s Republic of China has done nothing to make me believe that

it will work with the U.S. to correct any import surge or unfair

trade practices after it accedes to the WTO. After the U.S. consults

with China, final action on the part of the President is discretionary under the Levin proposal. If the President believes that action might somehow jeopardize U.S.-Sino relations, then the surge

will be ignored. This does nothing to help the U.S. workers who

will face lay-offs due to product-specific surges from China. The

only way for Congress to have any type of oversight of our trade

laws, and then to enforce domestic statute, is to prohibit extension

of MFN trade status to China.

Once China enters the WTO, it will actively spearhead efforts to

block Taiwan’s entry in the WTO. I offered an amendment that

conditions permanent MFN status to China on Taiwan’s accession

to the WTO prior to, or on the same day as China. Proponents of

permanent MFN claim that this is a false fear on the part of

36

PMFN opponents. The Administration assured me that China has

already verbally agreed to allow Taiwan to enter the WTO

unimpeded. If they’ve already agreed, there should have been no

opposition to putting that agreement in statute. However, on May

16, 2000, the very same day I offered my amendment, China

proved that it will in fact try to block Taiwan’s entry into the WTO.

The PRC lead the charge against Taiwan’s fourth bid for observer

status in the World Health Organization (WHO). If China is willing

to go to great lengths to block Taiwan from the WHO, it is certain

to lead a full campaign against Taiwan’s application for WTO membership. Unfortunately, the Ways & Means Committee defeated

this amendment.

I also offered an amendment that conditions extension of permanent MFN on an additional agreement between the U.S. and China

on President Clinton’s 1994 embargo on arms and ammunition imports.

In 1994, as a condition of granting China annual MFN status,

President Clinton issued an order that bans the imports of assault

weapons from China. Under World Trade Organization (WTO)

rules, the U.S. is required to treat foreign and domestic goods identically. The U.S. continues to manufacture and sell assault weapons. Clearly, by banning China from selling to the U.S. market, but

allowing domestic manufacturers to continue with business as

usual, the U.S. does not treat foreign and domestic goods identically.

This means that once China accedes to the WTO, they will have

every right as a member to dispute the U.S. ban. And since the

order does violate WTO rules, the WTO will most likely find the

U.S. in violation of treating China’s assault weapons differently

from those in the U.S. This would mean that the U.S. would have

to lift the import ban on China, or ban the sale and manufacture

of its own assault weapons as well as the imports from other countries.

China accounted for forty-two percent of all rifles imported into

the U.S. civilian market between 1987 and 1994, the year in which

President Clinton finally blocked the Chinese gun dumping. This

flood of Chinese weapons was so great that it strongly boosted the

overall import of guns to the U.S. Chinese rifles and handguns accounted for 15 percent of all firearms imported for the civilian market in six of the eight years between 1987 and 1994. The import

of Chinese guns was effectively stopped in 1994 when President

Clinton imposed a ban as a condition of renewing China’s most favored nation status.

If we grant China permanent most favored nation trade status,

China, not the Members of the 106th Congress, will dictate U.S.

gun import policy.

The issues I have mentioned are just a few, of a much greater

list, of the problems I have with granting China permanent MFN

status. Until trade agreements incorporate the needs of labor, the

environment and human rights I will have to oppose their cause.

The U.S. cannot continue to promote the interests of multinational

corporations while ignoring the real problems faced by the exploited. Labor, the environment and human rights are inherent

functions of trade. If we don’t begin to include them in our trade

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negotiations today, they will continue to splinter the U.S. Congress

and its desire to achieve real global progress.

PETE STARK.

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