II 

109TH CONGRESS 

1ST SESSION S. 1421 

To enhance resources to enforce United States trade rights. 

IN THE SENATE OF THE UNITED STATES 

JULY 19, 2005 

Ms. COLLINS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To enhance resources to enforce United States trade rights. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘United States Trade 

5 Rights Enforcement Act’’. 

6 SEC. 2. SENSE OF CONGRESS. 

7 It is the sense of Congress that— 

8 (1) United States producers that believe they 

9 are injured by subsidized imports from nonmarket 

10 economy countries have not been able to obtain relief 

11 through countervailing duty actions because the De12 partment of Commerce has declined to make coun-
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1 tervailing duty determinations for nonmarket econ2 omy countries in part because it lacks explicit legal 

3 authority to do so; 

4 (2) explicitly making the countervailing duty 

5 law under subtitle A of title VII of the Tariff Act 

6 of 1930 (19 U.S.C. 1671 et seq.) applicable to ac7 tions by nonmarket economy countries would give 

8 United States producers access to import relief 

9 measures that directly target government subsidies; 

10 (3) the Bureau of Customs and Border Protec11 tion of the Department of Homeland Security has 

12 encountered particular problems in collecting coun13 tervailing and antidumping duties from new shippers 

14 who default on their bonding obligations; 

15 (4) this behavior may detract from the ability 

16 of United States companies to recover from competi17 tion found to be unfair under international trade 

18 laws; 

19 (5) accordingly, it is appropriate, for a test pe20 riod, to suspend the availability of bonds for new 

21 shippers and instead require cash deposits; 

22 (6) more analysis and assessment is needed to 

23 determine the appropriate policy to respond to this 

24 and other problems experienced in the collection of 

25 duties and the impact that policy changes could have 
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1 on legitimate United States trade and United States 

2 trade obligations; 

3 (7) given the developments in the ongoing 

4 World Trade Organization (WTO) negotiations re5 lating to trade remedies, Congress reiterates its re6 solve as expressed in House Concurrent Resolution 

7 262 (107th Congress), which was overwhelmingly 

8 approved by the House of Representatives on No9 vember 7, 2001, by a vote of 410 to 4; 

10 (8) the United States Trade Representative 

11 should monitor compliance by United States trading 

12 partners with their trade obligations and systemati13 cally identify areas of noncompliance; 

14 (9) the United States Trade Representative 

15 should then aggressively resolve noncompliance 

16 through consultations with United States trading 

17 partners; 

18 (10) however, should efforts to resolve disputes 

19 through consultation fail, the United States Trade 

20 Representative should vigorously pursue United 

21 States rights through dispute settlement in every 

22 available forum; 

23 (11) given the huge growth in trade with the 

24 People’s Republic of China, its impact on the United 

25 States economy, and the complaints voiced by many 
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1 United States interests that China is not complying 

2 with its international trade obligations, the United 

3 States Trade Representative should place particular 

4 emphasis on identifying and resolving disputes with 

5 China that limit United States exports, particularly 

6 concerning compliance with obligations relating to 

7 intellectual property rights and enforcement, tariff 

8 and nontariff barriers, subsidies, technical barriers 

9 to trade, sanitary and phytosanitary issues, non10 market-based industrial policies, distribution rights, 

11 and regulatory transparency; 

12 (12) in addition, the United States Trade Rep13 resentative should place particular emphasis on 

14 trade barriers imposed by Japan, specifically the 

15 Japanese trade ban on United States beef without 

16 scientific justification, the Japanese sanitary and 

17 phytosanitary restrictions on United States agricul18 tural products, Japanese policies on pharmaceutical 

19 and medical device reference pricing, insurance 

20 cross-subsidization, and privatization in a variety of 

21 sectors that discriminate against United States com22 panies; 

23 (13) the fixed exchange rate that the People’s 

24 Republic of China currently maintains is a substan25 tial distortion to world markets, blocking the price 
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1 mechanism and impeding adjustment of inter2 national imbalances, and it is also a source of large 

3 and increasing risk to the Chinese economy; 

4 (14) the People’s Republic of China has com5 pleted significant preparations over the last two 

6 years for adoption of a more flexible, market-ori7 ented exchange rate; 

8 (15) the People’s Republic of China is now 

9 ready to move to a more flexible exchange rate and 

10 it should move to such an exchange rate as soon as 

11 possible; 

12 (16) the Secretary of the Treasury, in the an13 nual report reviewing developments in international 

14 economic policy, including exchange rate policy, 

15 under the Omnibus Trade and Competitiveness Act 

16 of 1988, appropriately concluded that ‘‘current Chi17 nese policies are highly distortionary and pose a risk 

18 to China’s economy, its trading partners, and global 

19 economic growth’’; 

20 (17) moreover, the rapid growth of credit and 

21 very high rate of investment risk undermine the 

22 progress that the People’s Republic of China has 

23 made in reforming its banking system by creating 

24 new flows of non-performing loans; 
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1 (18) such behavior effectively prevents market 

2 forces from operating efficiently in the People’s Re3 public of China, which distorts world trade; 

4 (19) furthermore, based on the fact that the 

5 Secretary of the Treasury has determined the cur6 rency policy of the People’s Republic of China to be 

7 ‘‘distortionary’’, the United States Trade Represent8 ative and the Secretary of the Treasury should place 

9 particular emphasis on determining whether China is 

10 violating its international obligations and identify to 

11 Congress the actions it is taking to address distor12 tions to world trade; 

13 (20) in addition, Japan’s policy of intervening 

14 to influence the value of its currency and its prolific 

15 barriers to trade create distortions that disadvantage 

16 United States exporters; 

17 (21) this adverse impact is magnified by Ja18 pan’s role in the global marketplace, combined with 

19 its chronic surplus, weak economy, deflationary 

20 economy, low growth rate, and lack of consumer 

21 spending; and 

22 (22) accordingly, the United States Trade Rep23 resentative should have additional resources in the 

24 Office of the General Counsel, the Office of Moni25 toring and Enforcement, the Office of China Affairs, 
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1 and the Office of Japan, Korea, and APEC Affairs 

2 to address a variety of needs that will best enable 

3 United States companies, farmers, and workers to 

4 benefits from the trade agreements to which the 

5 United States has around the world. 

6 SEC. 3. APPLICATION OF COUNTERVAILING DUTIES TO 

7 NONMARKET ECONOMY COUNTRIES. 

8 (a) AMENDMENTS.— 

9 (1) COUNTERVAILING DUTIES IMPOSED.—Sec10 tion 701(a)(1) of the Tariff Act of 1930 (19 U.S.C. 

11 1671(a)(1)) is amended by inserting ‘‘(including a 

12 nonmarket economy country)’’ after ‘‘country’’ each 

13 place it appears. 

14 (2) DEFINITION OF COUNTERVAILABLE SUB15 SIDY.—Section 771(5)(E) of such Act (19 U.S.C. 

16 1677(5)(E)) is amended by adding at the end the 

17 following new sentences: ‘‘With respect to the Peo18 ple’s Republic of China, if the administering author19 ity encounters special difficulties in calculating the 

20 amount of a benefit under clause (i), (ii), (iii), or 

21 (iv) of this subparagraph, the administering author22 ity may use methodologies for identifying and meas23 uring the subsidy benefit which take into account 

24 the possibility that prevailing terms and conditions 

25 in China may not always be available as appropriate 
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1 benchmarks. When applying such methodologies, the 

2 administering authority should adjust such pre3 vailing terms and conditions before considering the 

4 use of terms and conditions prevailing outside 

5 China.’’. 

6 (b) PROHIBITION ON DOUBLE COUNTING.—In apply7 ing section 701(a)(1) of the Tariff Act of 1930, as amend8 ed by subsection (a), to a class or kind of merchandise 

9 of a nonmarket economy country, the administering au10 thority shall ensure that— 

11 (1) any countervailable subsidy is not double 

12 counted in an antidumping order under section 731 

13 of such Act (19 U.S.C. 1673) on the same class or 

14 kind of merchandise of the country; and 

15 (2) the application of section 701(a)(1) of such 

16 Act is consistent with the international obligations of 

17 the United States. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 subsection (a) apply to any petition filed under section 702 

20 of the Tariff Act of 1930 (19 U.S.C. 1671a) on or after 

21 30 days after the date of the enactment of this Act, and 

22 the provisions contained in subsection (b) apply to any 

23 subsequent determination made under section 733, 735, 

24 or 751 of such Act (19 U.S.C. 1673b, 1673d, or 1675). 
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1 SEC. 4. NEW SHIPPER REVIEW AMENDMENT. 

2 (a) SUSPENSION OF THE AVAILABILITY OF BONDS

3 TO NEW SHIPPERS.—Clause (iii) of section 751(a)(2)(B) 

4 of the Tariff Act of 1930 (19 U.S.C. 1675(a)(2)(B)(iii)) 

5 shall not be effective during the 3-year period beginning 

6 on the date of the enactment of this Act. 

7 (b) REPORT ON THE IMPACT OF THE SUSPENSION.— 

8 Not later than 2 years after the date of the enactment 

9 of this Act, the Secretary of the Treasury, in consultation 

10 with the Secretary of Commerce, the United States Trade 

11 Representative, and the Secretary of Homeland Security, 

12 shall submit to the Committee on Finance of the Senate 

13 and the Committee on Ways and Means of the House of 

14 Representatives a report containing— 

15 (1) recommendations on whether the suspension 

16 of the effectiveness of section 751(a)(2)(B)(iii) of 

17 the Tariff Act of 1930 should be extended beyond 

18 the date provided in subsection (a) of this section; 

19 and 

20 (2) assessments of the effectiveness of any ad21 ministrative measures that have been implemented 

22 to address the difficulties giving rise to the suspen23 sion under subsection (a) of this section, including— 

24 (A) problems in assuring the collection of 

25 antidumping duties on imports from new ship26 pers; and 
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1 (B) burdens imposed on legitimate trade 

2 and commerce by the suspension of availability 

3 of bonds to new shippers by reason of the sus4 pension under subsection (a). 

5 (c) REPORT ON COLLECTION PROBLEMS AND ANAL6 YSIS OF PROPOSED SOLUTIONS.— 

7 (1) REPORT.—Not later than 90 days after the 

8 date of the enactment of this Act, the Secretary of 

9 the Treasury, in consultation with the Commissioner 

10 of the Bureau of Customs and Border Protection 

11 and the Secretary of Commerce, shall submit to the 

12 Committee on Ways and Means of the House of 

13 Representatives and the Committee on Finance of 

14 the Senate a report describing the major problems 

15 experienced in the collection of duties, including 

16 fraudulent activities intended to avoid payment of 

17 duties, with an estimate of the total amount of un18 collected duties for the previous fiscal year and a 

19 breakdown across product lines describing the rea20 sons duties were uncollected. 

21 (2) RECOMMENDATIONS.—The report shall 

22 make recommendations on additional actions to ad23 dress remaining problems related to duty collections 

24 and, for each recommendation, provide an analysis 

25 of how the recommendation would address the spe-
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1 cific problem or problems cited and the impact that 

2 implementing the recommendation would have on 

3 international trade and commerce (including any ad4 ditional costs imposed on United States businesses 

5 and whether the implementation of the revision is 

6 likely to violate any international trade laws). 

7 SEC. 5. COMPREHENSIVE MONITORING OF COMPLIANCE BY 

8 THE PEOPLE’S REPUBLIC OF CHINA WITH ITS 

9 INTERNATIONAL TRADE OBLIGATIONS. 

10 (a) INTELLECTUAL PROPERTY RIGHTS COMPLI11 ANCE.— 

12 (1) IN GENERAL.—In accordance with the 

13 terms of the Agreement of WTO Accession for the 

14 People’s Republic of China, subsequent agreements 

15 by Chinese authorities through the U.S.-China Joint 

16 Commission on Commerce and Trade (JCCT), and 

17 other obligations by Chinese officials related to its 

18 trade obligations, the United States Trade Rep19 resentative and the Secretary of Commerce shall un20 dertake to ensure that the Government of the Peo21 ple’s Republic China has taken the following steps: 

22 (A) The Chinese Government has increased 

23 the number of civil and criminal prosecutions of 

24 intellectual property rights violators by the end 

25 of 2005 to a level that significantly decreases 
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1 the current amount of infringing products for 

2 sale within China. 

3 (B) China’s Supreme People’s Court, Su4 preme People’s Procuratorate, and Ministry of 

5 Public Security have issued draft guidelines for 

6 public comment to ensure the timely referral of 

7 intellectual property rights violations from ad8 ministrative bodies to criminal prosecution. 

9 (C) The Chinese Ministry of Public Secu10 rity and the General Administration of Customs 

11 have issued regulations to ensure the timely 

12 transfer of intellectual property rights cases for 

13 criminal investigation. 

14 (D) The Chinese Ministry of Public Secu15 rity has established a leading group responsible 

16 for overall research, planning, and coordination 

17 of all intellectual property rights criminal en18 forcement to ensure a focused and coordinated 

19 nationwide enforcement effort. 

20 (E) The Chinese Government has estab21 lished a bilateral intellectual property rights law 

22 enforcement working group in cooperation with 

23 the United States whose members will cooper24 ate on enforcement activities to reduce cross25 border infringing activities. 
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1 (F) The Chinese Government has aggres2 sively countered movie piracy by dedicating en3 forcement teams to pursue enforcement actions 

4 against pirates and has regularly instructed en5 forcement authorities nationwide that copies of 

6 films and audio-visual products still in censor7 ship or import review or otherwise not yet au8 thorized for distribution are deemed pirated and 

9 subject to enhanced enforcement. 

10 (G) By the end of 2005, the Chinese Gov11 ernment has completed its legalization program 

12 to ensure that all central, provincial, and local 

13 government offices are using only licensed soft14 ware and by the end of 2006 has extended the 

15 program to enterprises (including state-owned 

16 enterprises). 

17 (H) The Chinese Government, having de18 clared that software end-user piracy is consid19 ered to constitute ‘‘harm to the public interest’’ 

20 and as such will be subject to administrative 

21 penalties nationwide, has initiated civil and 

22 criminal prosecutions of software end-user vio23 lators. 

24 (I) The Chinese Government has appointed 

25 an Intellectual Property Rights Ombudsman at 
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1 the Chinese Embassy in Washington, D.C., to 

2 serve as the point of contact for United States 

3 companies, particularly small- and medium4 sized businesses, seeking to secure and enforce 

5 their intellectual property rights in China or ex6 periencing intellectual property rights problems 

7 in China. 

8 (J) The relevant Chinese agencies, includ9 ing the Ministry of Commerce, the China 

10 Trademark Office, the State Intellectual Prop11 erty Office, and the National Copyright Admin12 istration of China have significantly improved 

13 intellectual property rights enforcement at trade 

14 shows and issued new regulations to achieve 

15 this goal. 

16 (K) Not later than June 30, 2006, the 

17 Chinese State Council has submitted to the Na18 tional People’s Congress the legislative package 

19 needed for China to accede to the World Intel20 lectual Property Organization (WIPO) Internet 

21 treaties. 

22 (L) The Chinese Government has taken 

23 steps to enforce intellectual property right laws 

24 against Internet piracy, including through en25 forcement at Internet cafes. 
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1 (M) The Chinese Government, having con2 firmed that the criminal penalty thresholds in 

3 the 2004 Judicial Interpretation are applicable 

4 to sound recordings, has instituted civil and 

5 criminal prosecutions against such violators. 

6 (N) The Chinese Government has initiated 

7 civil and criminal prosecutions against exporters 

8 of infringing recordings. 

9 (2) DISPUTE SETTLEMENT PROCEEDINGS IN

10 WTO.—If the President determines that the People’s 

11 Republic of China has not met each of the obliga12 tions described in subparagraphs (A) through (N) of 

13 paragraph (1) or taken steps that result in signifi14 cant improvements in protection of intellectual prop15 erty rights in accordance with its trade obligations, 

16 then the President shall assign such resources as are 

17 necessary to collect evidence of such trade agreement 

18 violations for use in dispute settlement proceedings 

19 against China in the World Trade Organization. 

20 (b) ACCESS FOR EXPORTS OF UNITED STATES

21 GOODS.—In accordance with the terms of the Agreement 

22 of WTO Accession for the People’s Republic of China, sub23 sequent agreements by Chinese authorities through the 

24 U.S.-China Joint Commission on Commerce and Trade 

25 (JCCT), and other obligations by Chinese officials related 
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1 to its trade obligations, the United States Trade Rep2 resentative and the Secretary of Commerce shall under3 take to ensure that the Government of the People’s Re4 public of China has taken the following steps: 

5 (1) China has taken steps to ensure that United 

6 States products can be freely distributed in China, 

7 including by approving a significant backlog of dis8 tribution license applications and by preparing a reg9 ulatory guide for businesses seeking to acquire dis10 tribution rights that expands on the guidelines an11 nounced in April 2005. 

12 (2) Chinese officials have permitted all enter13 prises in China, including those located in bonded 

14 zones, to acquire licenses to distribute goods 

15 throughout China. 

16 (3) The Chinese Government has submitted 

17 regulations on management of direct selling to the 

18 Chinese State Council for review and taken any ad19 ditional steps necessary to provide a legal basis for 

20 United States direct sales firms to sell United States 

21 goods directly to households in China. 

22 (4) The Chinese Government has issued final 

23 regulations on direct selling, including with respect 

24 to distribution of imported goods and fixed location 

25 requirements. 
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1 (c) ACCESS FOR EXPORTS OF UNITED STATES SERV2 ICES.—In accordance with the terms of the Agreement of 

3 WTO Accession for the People’s Republic of China, subse4 quent agreements by Chinese authorities through the 

5 U.S.-China Joint Commission on Commerce and Trade 

6 (JCCT), and other obligations by Chinese officials related 

7 to its trade obligations, the United States Trade Rep8 resentative and the Secretary of Commerce shall under9 take to ensure that the Government of the People’s Re10 public of China has taken the following steps: 

11 (1) The Chinese Government has convened a 

12 meeting of the U.S.-China Insurance Dialogue be13 fore the end of 2005 to discuss regulatory concerns 

14 and barriers to further liberalization of the sector. 

15 (2) The Chinese Government has made senior 

16 level officials available to meet under the JCCT In17 formation Technology Working Group to discuss 

18 capitalization requirements, resale services, and 

19 other issues as agreed to by the two sides. 

20 (d) ACCESS FOR UNITED STATES AGRICULTURE.— 

21 In accordance with the terms of the Agreement of WTO 

22 Accession for the People’s Republic of China, subsequent 

23 agreements by Chinese authorities through the U.S.-China 

24 Joint Commission on Commerce and Trade (JCCT), and 

25 other obligations by Chinese officials related to its trade 
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1 obligations, the United States Trade Representative and 

2 the Secretary of Agriculture shall undertake to ensure that 

3 the Government of the People’s Republic of China has 

4 taken the following steps: 

5 (1) China has completed the regulatory ap6 proval process for a United States-produced corn 

7 biotech variety. 

8 (2) China’s Administration of Quality Super9 vision, Inspection and Quarantine has implemented 

10 the 2005 Memorandum of Understanding between 

11 the United States and China designed to facilitate 

12 cooperation on animal and plant health safety issues 

13 and improve efforts to expand United States access 

14 to China’s markets for agricultural commodities. 

15 (e) ACCOUNTING OF CHINESE SUBSIDIES.—In ac16 cordance with the terms of the Agreement of WTO Acces17 sion for the People’s Republic of China, subsequent agree18 ments by Chinese authorities through the U.S.-China 

19 Joint Commission on Commerce and Trade (JCCT), and 

20 other obligations by Chinese officials related to its trade 

21 obligations, the United States Trade Representative and 

22 the Secretary of Commerce shall undertake to ensure that 

23 the Government of the People’s Republic of China has pro24 vided a detailed accounting of its subsidies to the World 

25 Trade Organization by the end of 2005. 
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1 (f) REPORTS.— 

2 (1) BIANNUAL REPORT.—Not later than six 

3 months after the date of the enactment of this Act, 

4 and every six months thereafter, the President 

5 should transmit to the Committee on Ways and 

6 Means of the House of Representatives and the 

7 Committee on Finance of the Senate a report that 

8 contains— 

9 (A) a description of the specific steps 

10 taken by the Government of the People’s Re11 public of China to meet its obligations described 

12 in subsections (a) through (e) of this section 

13 (other than obligations described in subsections 

14 (a)(1)(A) and (G), (b)(1), (c)(1), and (e)); 

15 (B) an analysis of the extent to which Chi16 nese officials are attempting in good faith to 

17 meet such obligations; and 

18 (C) a description of the actions, if any, the 

19 President will take to obtain compliance by 

20 China if the President determines that the Chi21 nese Government is failing to meet such obliga22 tions, including pursuing United States rights 

23 under the dispute settlement provisions of the 

24 World Trade Organization, as appropriate. 
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1 (2) MONTHLY REPORT.—Not later than 30 

2 days after the date of the enactment of this Act, and 

3 every 30 days thereafter, the President should trans4 mit to the Committee on Ways and Means of the 

5 House of Representatives and the Committee on Fi6 nance of the Senate a report that contains— 

7 (A) a description of the specific steps 

8 taken by the Government of the People’s Re9 public of China to meet its obligations described 

10 in subsections (a)(1)(A) and (G), (b)(1), (c)(1), 

11 and (e); 

12 (B) an analysis of the extent to which Chi13 nese officials are attempting in good faith to 

14 meet such obligations; and 

15 (C) a description of the actions, if any, the 

16 President will take to obtain compliance by 

17 China if the President determines that the Chi18 nese Government is failing to meet such obliga19 tions, including pursuing United States rights 

20 under the dispute settlement provisions of the 

21 World Trade Organization, as appropriate. 

22 SEC. 6. REPORT ON CURRENCY MANIPULATION BY FOR23 EIGN COUNTRIES. 

24 Not later than 60 days after the date of the enact25 ment of this Act, the Secretary of the Treasury shall sub-
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1 mit to the Committee on Ways and Means of the House 

2 of Representatives and the Committee on Finance of the 

3 Senate a report that— 

4 (1) defines currency manipulation; 

5 (2) describes actions of foreign countries that 

6 will be considered to be currency manipulation; and 

7 (3) describes how statutory provisions address8 ing currency manipulation by trading partners of the 

9 United States contained in, and relating to, section 

10 40 of the Bretton Woods Agreements Act (22 

11 U.S.C. 286y) and sections 3004 and 3005 of the Ex12 change Rates and International Economic Policy Co13 ordination Act of 1988 (22 U.S.C. 5304 and 5305) 

14 can be better clarified administratively to provide for 

15 improved and more predictable evaluation. 

16 SEC. 7. AUTHORIZATION OF APPROPRIATIONS FOR THE OF17 FICE OF THE UNITED STATES TRADE REP18 RESENTATIVE. 

19 (a) AUTHORIZATION OF APPROPRIATIONS.— 

20 (1) IN GENERAL.—Section 141(g)(1)(A) of the 

21 Trade Act of 1974 (19 U.S.C. 2171(g)(1)(A)) is 

22 amended by striking clauses (i) and (ii) and insert23 ing the following: 

24 ‘‘(i) $44,779,000 for fiscal year 2006. 

25 ‘‘(ii) $47,018,000 for fiscal year 2007.’’. 
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1 (2) RULE OF CONSTRUCTION.—The amendment 

2 made by paragraph (1) shall not be construed to af3 fect the availability of funds appropriated pursuant 

4 to section 141(g)(1)(A) of the Trade Act of 1974 be5 fore the date of the enactment of this Act. 

6 (b) AUTHORIZATION OF APPROPRIATIONS FOR THE

7 OFFICE OF THE GENERAL COUNSEL AND CERTAIN

8 OTHER OFFICES.—There are authorized to be appro9 priated to the Office of the United States Trade Rep10 resentative for the appointment of additional staff in or 

11 enhanced activities by the Office of the General Counsel, 

12 the Office of Monitoring and Enforcement, the Office of 

13 China Affairs, and the Office of Japan, Korea, and APEC 

14 Affairs— 

15 (1) $4,000,000 for fiscal year 2006; and 

16 (2) $4,000,000 for fiscal year 2007. 

17 SEC. 8. AUTHORIZATION OF APPROPRIATIONS FOR THE 

18 UNITED STATES INTERNATIONAL TRADE 

19 COMMISSION. 

20 (a) AUTHORIZATION OF APPROPRIATIONS.—Section 

21 330(e)(2)(A) of the Tariff Act of 1930 (19 U.S.C. 

22 1330(e)(2)(A)) is amended by striking clauses (i) and (ii) 

23 and inserting the following: 

24 ‘‘(i) $62,752,000 for fiscal year 2006. 

25 ‘‘(ii) $65,890,000 for fiscal year 2007.’’. 
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1 (b) RULE OF CONSTRUCTION.—The amendment 

2 made by subsection (a) shall not be construed to affect 

3 the availability of funds appropriated pursuant to section 

4 section 330(e)(2)(A) of the Tariff Act of 1930 before the 

5 date of the enactment of this Act. 

6 (c) STUDY AND REPORT ON TRADE AND ECONOMIC

7 RELATIONS WITH CHINA.— 

8 (1) STUDY.— 

9 (A) IN GENERAL.—The United States 

10 International Trade Commission shall carry out 

11 a comprehensive study on trade and economic 

12 relations between the United States and the 

13 People’s Republic of China which focuses on 

14 China’s macroeconomic policy, including its 

15 fixed exchange rate policy, the competitiveness 

16 of its industries, the composition and nature of 

17 its trade patterns, and the impact of these ele18 ments on the United States trade account, in19 dustry, competitiveness, and employment. 

20 (B) REQUIREMENTS.—In carrying out the 

21 study under subparagraph (A), the United 

22 States International Trade Commission shall 

23 undertake the following: 

24 (i) An analysis of the United States 

25 trade and investment relationship with 
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1 China, with a focus on the United States2 China trade balance and trends affecting 

3 particular industries, products, and sectors 

4 in agriculture, manufacturing, and serv5 ices. The analysis shall provide context for 

6 understanding the U.S.-China trade and 

7 investment relationship, by including infor8 mation regarding China’s economic rela9 tionships with third countries and China’s 

10 changing policy regime and business envi11 ronment. The analysis shall include a focus 

12 on United States-China trade in goods and 

13 services, United States direct investment in 

14 China, China’s foreign direct investment in 

15 the United States, and the relationship be16 tween trade and investment. The analysis 

17 shall make adjustments, where possible, for 

18 merchandise passed through Hong Kong. 

19 (ii) An analysis of the competitive 

20 conditions in China affecting United States 

21 exports and United States direct invest22 ment. The analysis shall take into account, 

23 to the extent feasible, significant factors 

24 including tariffs and non-tariff measures, 

25 competition from Chinese domestic firms 
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1 and foreign-based companies operating in 

2 China, the Chinese regulatory environ3 ment, including specific regulations and 

4 overall regulatory transparency, and other 

5 Chinese industrial and financial policies. In 

6 addition, the analysis shall examine the 

7 specific competitive conditions facing 

8 United States producers in key industries, 

9 products, and sectors, potentially including 

10 computer and telecommunications hard11 ware, textiles, grains, cotton, and financial 

12 services. 

13 (iii) An examination of the role and 

14 importance of intellectual property rights 

15 issues, such as patents, copyrights, and li16 censing, in specific industries in China, in17 cluding the pharmaceutical industry, the 

18 software industry, and the entertainment 

19 industry. 

20 (iv) An analysis of the effects on glob21 al commodity markets of China’s growing 

22 demand for energy and raw materials. 

23 (v) An examination of whether or not 

24 increased United States imports from 

25 China reflect displacement of United 
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1 States imports from third countries or 

2 United States domestic production, and 

3 the role of intermediate and value-added 

4 goods processing in China’s pattern of 

5 trade. 

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

7 date of the enactment of this Act, the United States 

8 International Trade Commission shall submit to the 

9 Committee on Ways and Means of the House of 

10 Representatives and the Committee on Finance of 

11 the Senate a report that contains the results of the 

12 study carried out under paragraph (1). 

13 SEC. 9. SENSE OF CONGRESS REGARDING EXPANSION OF 

14 MEMBERSHIP IN THE AGREEMENT ON GOV15 ERNMENT PROCUREMENT OF THE WTO. 

16 (a) FINDINGS.—Congress finds the following: 

17 (1) Nondiscriminatory, procompetitive, merit18 based, and technology-neutral procurement of goods 

19 and services is essential so that governments can ac20 quire the best goods to meet their needs for the best 

21 value. 

22 (2) The Agreement on Government Procure23 ment (GPA) of the World Trade Organization 

24 (WTO) provides a multilateral framework of rights 

25 and obligations founded on such principles. 
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1 (3) The United States is a member of the GPA, 

2 along with Canada, the European Union (including 

3 its 25 member States: Austria, Belgium, Cyprus, the 

4 Czech Republic, Denmark, Estonia, Finland, 

5 France, Germany, Greece, Hungary, Ireland, Italy, 

6 Latvia, Lithuania, Luxemburg, Malta, the Nether7 lands, Poland, Portugal, Slovak Republic, Slovenia, 

8 Spain, Sweden, and the United Kingdom), Hong 

9 Kong, Iceland, Israel, Japan, Korea, Liechtenstein, 

10 the Netherlands with respect to Aruba, Norway, 

11 Singapore, and Switzerland. 

12 (4) Albania, Bulgaria, Georgia, Jordan, the 

13 Kyrgyz Republic, Moldova, Oman, Panama, and Tai14 wan are currently negotiating to accede to the GPA. 

15 (5) The People’s Republic of China joined the 

16 WTO in December 2001, signaling to the inter17 national community its commitment to greater open18 ness. 

19 (6) When China joined the WTO, it committed, 

20 in its protocol of accession, to negotiate entry into 

21 the GPA ‘‘as soon as possible’’. 

22 (7) More than 3 years after its entry into the 

23 WTO, China has not commenced negotiations to join 

24 the GPA. 
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1 (8) Recent legal developments in China illus2 trate the importance and urgency of expanding 

3 membership in the GPA. 

4 (9) In 2002, China enacted a law on govern5 ment procurement that incorporates preferences for 

6 domestic goods and services. 

7 (10) The first sector for which the Chinese 

8 Government has sought to implement the new gov9 ernment procurement law is computer software. 

10 (11) In March 2005 the Chinese Government 

11 released draft regulations governing the procurement 

12 of computer software. 

13 (12) The draft regulations require that non14 Chinese software companies meet conditions relating 

15 to outsourcing of software development work to 

16 China, technology transfer, and similar require17 ments, in order to be eligible to participate in the 

18 Chinese Government market. 

19 (13) As a result of the proposed regulations, it 

20 appears likely that a very substantial amount of 

21 American software will be excluded from the govern22 ment procurement process in China. The draft soft23 ware regulations threatened to close off a market 

24 with a potential value of more than $8 billion to 

25 United States firms. 
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1 (14) United States software companies have 

2 made a substantial commitment to the Chinese mar3 ket and have made a substantial contribution to the 

4 development of China’s software industry. 

5 (15) The outright exclusion of substantial 

6 amounts of software not of Chinese origin that is 

7 apparently contemplated in the regulations is out of 

8 step with domestic preferences that exist in the pro9 curement laws and practices of other WTO member 

10 countries, including the United States. 

11 (16) The draft regulations do not adhere to the 

12 principles of nondiscriminatory, procompetitive, 

13 merit-based, and technology-neutral procurement 

14 embodied in the GPA. 

15 (17) The software piracy rate in China has 

16 never fallen below 90 percent over the past 10 years. 

17 (18) Chinese Government entities represent a 

18 very significant portion of the software market in 

19 China that is not dominated by piracy. 

20 (19) The combined effect of rampant software 

21 piracy and the proposed discriminatory government 

22 procurement regulations will be a nearly impen23 etrable barrier to market access for the United 

24 States software industry in China. 
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1 (20) The United States trade deficit with China 

2 in 2004 was $162,000,000,000, the highest with any 

3 economy in the world, and a 12.4 percent increase 

4 over 2003. 

5 (21) China’s Premier, Wen Jiabao, has com6 mitted to rectify this serious imbalance by increasing 

7 China’s imports of goods and services from the 

8 United States. 

9 (22) The proposed software procurement regu10 lations that were described by the Chinese Govern11 ment in November 2004 incorporate policies that are 

12 fully at odds with Premier Wen’s commitment to in13 crease China’s imports from the United States, and 

14 will add significantly to the trade imbalance between 

15 the United States and China. 

16 (23) Once it is fully implemented, the discrimi17 natory aspects of China’s government procurement 

18 law will apply to all goods and services that the gov19 ernment procures. 

20 (24) Other developing countries may follow the 

21 lead of China. 

22 (25) In July 2005, senior officials of the Chi23 nese Government announced at the U.S.-China Joint 

24 Committee on Commerce and Trade that China 

25 would accelerate its efforts to join the GPA and to-
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1 ward this end will initiate technical consultations 

2 with other WTO member countries and accordingly 

3 delay issuing draft regulations on software procure4 ment, as it further considers public comments and 

5 makes revisions in light of WTO rules. 

6 (b) SENSE OF CONGRESS.—It is the sense of Con7 gress that— 

8 (1) the Government of the United States should 

9 strive to expand membership in the Agreement on 

10 Government Procurement of the World Trade Orga11 nization (WTO); 

12 (2) the Government of the United States should 

13 ensure that the Government of the People’s Republic 

14 of China meets its WTO obligations as recently af15 firmed through its commitment in July 2005 

16 through the U.S.-China Joint Committee on Com17 merce and Trade, to join the WTO Agreement on 

18 Government Procurement; 

19 (3) the Government of the United States should 

20 seek a commitment from the Government of the 

21 People’s Republic of China to maintain its suspen22 sion of the implementation of its law on government 

23 procurement, pending the conclusion of negotiations 

24 to accede to the Agreement on Government Procure25 ment of the WTO; 
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1 (4) the Government of the United States should 

2 seek commitments from the Government of the Peo3 ple’s Republic of China and other countries that are 

4 not yet members of the Agreement on Government 

5 Procurement of the WTO to implement the prin6 ciples of openness, transparency, fair competition 

7 based on merit, nondiscrimination, and account8 ability in their government procurement as embodied 

9 in that agreement; and 

10 (5) the President should direct all appropriate 

11 officials of the United States to raise these concerns 

12 with appropriate officials of the People’s Republic of 

13 China and other trading partners. 

Æ