II

103D CONGRESS

2D SESSION S. 2260

To provide conditions for renewing nondiscriminatory (most-favored-nation)

treatment for the People’s Republic of China.

IN THE SENATE OF THE UNITED STATES

JULY 1 (legislative day, JUNE 7), 1994

Mr. MITCHELL (for himself, Mr. LEAHY, Mr. WELLSTONE, Mr. FEINGOLD,

Mr. KENNEDY, Mr. DECONCINI, Mr. METZENBAUM, Mr. SARBANES, Mr.

MACK, Mr. LEVIN, and Mr. HELMS) introduced the following bill; which

was read twice and referred to the Committee on Finance

A BILL

To provide conditions for renewing nondiscriminatory (mostfavored-nation) treatment for the People’s Republic of China.

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-China

5 Act of 1994’’.

6 SEC. 2. FINDINGS AND POLICY.

7 (a) FINDINGS.—The Congress makes the following

8 findings:
2

•S 2260 IS

1 (1) In Executive Order 12850, dated May 28,

2 1993, the President established conditions for re3 newing most-favored-nation treatment for the Peo4 ple’s Republic of China in 1994.

5 (2) The Executive order requires that in rec6 ommending the extension of most-favored-nation

7 trade status to the People’s Republic of China for

8 the 12-month period beginning July 3, 1994, the

9 Secretary of State shall not recommend extension

10 unless the Secretary determines that such extension

11 substantially promotes the freedom of emigration ob12 jectives contained in section 402 of the Trade Act of

13 1974 (19 U.S.C. 2432) and that China is complying

14 with the 1992 bilateral agreement between the

15 United States and China concerning export to the

16 United States of products made with prison labor.

17 (3) The Executive order further requires that in

18 making the recommendation, the Secretary of State

19 shall determine if China has made overall significant

20 progress with respect to—

21 (A) taking steps to begin adhering to the

22 Universal Declaration of Human Rights;

23 (B) releasing and providing an acceptable

24 accounting for Chinese citizens imprisoned or

25 detained for the nonviolent expression of their
3

•S 2260 IS

1 political and religious beliefs, including such ex2 pressions of beliefs in connection with the De3 mocracy Wall and Tiananmen Square move4 ments;

5 (C) ensuring humane treatment of pris6 oners, and allowing access to prisons by inter7 national humanitarian and human rights orga8 nizations;

9 (D protecting Tibet’s distinctive religious

10 and cultural heritage; and

11 (E) permitting international radio and tele12 vision broadcasts into China.

13 (4) The Executive order requires the executive

14 branch to resolutely pursue all legislative and execu15 tive actions to ensure that China abides by its com16 mitments to follow fair, nondiscriminatory trade

17 practices in dealing with United States businesses

18 and adheres to the Nuclear Nonproliferation Treaty,

19 the Missile Technology Control Regime guidelines

20 and parameters, and other nonproliferation commit21 ments.

22 (5) The Government of the People’s Republic of

23 China, a member of the United Nations Security

24 Council obligated to respect and uphold the United

25 Nations charter and Universal Declaration of
4

•S 2260 IS

1 Human Rights, has over the past year made less

2 than significant progress on human rights. The Peo3 ple’s Republic of China has released only a few

4 prominent political prisoners and continues to violate

5 internationally recognized standards of human rights

6 by arbitrary arrests and detention of persons for the

7 nonviolent expression of their political and religious

8 beliefs.

9 (6) The Government of the People’s Republic of

10 China has not allowed humanitarian and human

11 rights organizations access to prisons.

12 (7) The Government of the People’s Republic of

13 China has refused to meet with the Dalai Lama, or

14 his representative, to discuss the protection of Ti15 bet’s distinctive religious and cultural heritage.

16 (8) It continues to be the policy and practice of

17 the Government of the People’s Republic of China to

18 control all trade unions and suppress and harass

19 members of the independent labor union movement.

20 (9) The Government of the People’s Republic of

21 China continues to restrict the activities of accred22 ited journalists and Voice of America broadcasts.

23 (10) The People’s Republic of China’s defense

24 industrial trading companies and the People’s Lib25 eration Army engage in lucrative trade relations
5

•S 2260 IS

1 with the United States and operate lucrative com2 mercial businesses within the United States. Trade

3 with and investments in the defense industrial trad4 ing companies and the People’s Liberation Army are

5 contrary to the national security interests of the

6 United States.

7 (11) The President has conducted an intensive

8 high-level dialogue with the Government of the Peo9 ple’s Republic of China, including meeting with the

10 President of China, in an effort to encourage that

11 government to make significant progress toward

12 meeting the standards contained in the Executive

13 order for continuation of most-favored-nation treat14 ment.

15 (12) The Government of the People’s Republic

16 of China has not made overall significant progress

17 with respect to the standards contained in the Presi18 dent’s Executive Order 12850, dated May 28, 1993.

19 (b) POLICY.—It is the policy of the Congress that,

20 since the President has recommended the continuation of

21 the waiver under section 402(d) of the Trade Act of 1974

22 for the People’s Republic of China for the 12-month period

23 beginning July 3, 1994, such waiver shall not provide for

24 extension of nondiscriminatory trade treatment to goods

25 that are produced, manufactured, or exported by the Peo-
6

•S 2260 IS

1 ple’s Liberation Army or Chinese defense industrial trad2 ing companies or to nonqualified goods that are produced,

3 manufactured, or exported by state-owned enterprises of

4 the People’s Republic of China.

5 SEC. 3. LIMITATIONS ON EXTENSION OF NONDISCRIM6 INATORY TREATMENT.

7 (a) IN GENERAL.—Notwithstanding any other provi8 sion of law—

9 (1) if nondiscriminatory treatment is not grant10 ed to the People’s Republic of China by reason of

11 the enactment into law of a disapproval resolution

12 described in subsection (b)(1), nondiscriminatory

13 treatment shall—

14 (A) continue to apply to any good that is

15 produced or manufactured by a person that is

16 not a state-owned enterprise of the People’s Re17 public of China, but

18 (B) not apply to any good that is pro19 duced, manufactured, or exported by a state20 owned enterprise of the People’s Republic of

21 China,

22 (2) if nondiscriminatory treatment is granted to

23 the People’s Republic of China for the 12-month pe24 riod beginning on July 3, 1994, such nondiscrim25 inatory treatment shall not apply to—
7

•S 2260 IS

1 (A) any good that is produced, manufac2 tured, or exported by the People’s Liberation

3 Army or a Chinese defense industrial trading

4 company, or

5 (B) any nonqualified good that is pro6 duced, manufactured, or exported by a state7 owned enterprise of the People’s Republic of

8 China, and

9 (3) if nondiscriminatory treatment is or is not

10 granted to the People’s Republic of China, the Sec11 retary of the Treasury should consult with leaders of

12 American businesses having significant trade with or

13 investment in the People’s Republic of China, to en14 courage them to adopt a voluntary code of conduct

15 that—

16 (A) follows internationally recognized

17 human rights principles,

18 (B) ensures that the employment of Chi19 nese citizens is not discriminatory in terms of

20 sex, ethnic origin, or political belief,

21 (C) ensures that no convict, forced, or in22 dentured labor is knowingly used,

23 (D) recognizes the rights of workers to

24 freely organize and bargain collectively, and
8

•S 2260 IS

1 (E) discourages mandatory political indoc2 trination on business premises.

3 (b) DISAPPROVAL RESOLUTION.—

4 (1) IN GENERAL.—For purposes of this section,

5 the term ‘‘resolution’’ means only a joint resolution

6 of the two Houses of Congress, the matter after the

7 resolving clause of which is as follows: ‘‘That the

8 Congress does not approve the extension of the au9 thority contained in section 402(c) of the Trade Act

10 of 1974 recommended by the President to the Con11 gress on lllllllllll with respect to

12 the People’s Republic of China because the Congress

13 does not agree that the People’s Republic of China

14 has met the standards described in the President’s

15 Executive Order 12850, dated May 28, 1993.’’, with

16 the blank space being filled with the appropriate

17 date.

18 (2) APPLICABLE RULES.—The provisions of

19 sections 153 (other than paragraphs (3) and (4) of

20 subsection (b)) and 402(d)(2) (as modified by this

21 subsection) of the Trade Act of 1974 shall apply to

22 a resolution described in paragraph (1).

23 (c) DETERMINATION OF STATE-OWNED ENTER24 PRISES AND CHINESE DEFENSE INDUSTRIAL TRADING

25 COMPANIES.—
9

•S 2260 IS

1 (1) IN GENERAL.—Subject to paragraphs (2)

2 and (3), not later than 90 days after the date of the

3 enactment of this Act, the Secretary of the Treasury

4 shall determine which persons are state-owned enter5 prises of the People’s Republic of China and which

6 persons are Chinese defense industrial trading com7 panies for purposes of this Act. The Secretary shall

8 publish a list of such persons in the Federal Reg9 ister.

10 (2) PUBLIC HEARING.—

11 (A) GENERAL RULE.—Before making the

12 determination and publishing the list required

13 by paragraph (1), the Secretary of the Treasury

14 shall hold a public hearing for the purpose of

15 receiving oral and written testimony regarding

16 the persons to be included on the list.

17 (B) ADDITIONS AND DELETIONS.—The

18 Secretary of the Treasury may add or delete

19 persons from the list based on information

20 available to the Secretary or upon receipt of a

21 request containing sufficient information to

22 take such action.

23 (3) DEFINITIONS AND SPECIAL RULES.—For

24 purposes of making the determination required by

25 paragraph (1), the following definitions apply:
10

•S 2260 IS

1 (A) CHINESE DEFENSE INDUSTRIAL TRAD2 ING COMPANY.—The term ‘‘Chinese defense in3 dustrial trading company’’—

4 (i) means a person that is—

5 (I) engaged in manufacturing,

6 producing, or exporting, and

7 (II) affiliated with or owned, con8 trolled, or subsidized by the People’s

9 Liberation Army, and

10 (ii) includes any person identified in

11 the United States Defense Intelligence

12 Agency publication numbered VP–1920–

13 271–90, dated September 1990.

14 (B) PEOPLE’S LIBERATION ARMY.—The

15 term ‘‘People’s Liberation Army’’ means any

16 branch or division of the land, naval, or air

17 military service or the police of the Government

18 of the People’s Republic of China.

19 (C) STATE-OWNED ENTERPRISE OF THE

20 PEOPLE’S REPUBLIC OF CHINA.—(i) The term

21 ‘‘state-owned enterprise of the People’s Repub22 lic of China’’ means a person who is affiliated

23 with or wholly owned, controlled, or subsidized

24 by the Government of the People’s Republic of

25 China and whose means of production, prod-
11

•S 2260 IS

1 ucts, and revenues are owned or controlled by

2 a central or provincial government authority. A

3 person shall be considered to be state-owned

4 if—

5 (I) the person’s assets are primarily

6 owned by a central or provincial govern7 ment authority;

8 (II) a substantial proportion of the

9 person’s profits are required to be submit10 ted to a central or provincial government

11 authority;

12 (III) the person’s production, pur13 chases of inputs, and sales of output, in

14 whole or in part, are subject to state, sec15 toral, or regional plans; or

16 (IV) a license issued by a government

17 authority classifies the person as state18 owned.

19 (ii) Any person that—

20 (I) is a qualified foreign joint venture

21 or is licensed by a governmental authority

22 as a collective, cooperative, or private en23 terprise; or

24 (II) is wholly owned by a foreign per25 son,
12

•S 2260 IS

1 shall not be considered to be state-owned.

2 (D) QUALIFIED FOREIGN JOINT VEN3 TURE.—The term ‘‘qualified foreign joint ven4 ture’’ means any person—

5 (i) which is registered and licensed in

6 the agency or department of the Govern7 ment of the People’s Republic of China

8 concerned with foreign economic relations

9 and trade as an equity, cooperative, con10 tractual joint venture, or joint stock com11 pany with foreign investment;

12 (ii) in which the foreign investor part13 ner and a person of the People’s Republic

14 of China share profits and losses and joint15 ly manage the venture;

16 (iii) in which the foreign investor

17 partner holds or controls at least 25 per18 cent of the investment and the foreign in19 vestor partner is not substantially owned

20 or controlled by a state-owned enterprise of

21 the People’s Republic of China;

22 (iv) in which the foreign investor part23 ner is not a person of a country the gov24 ernment of which the Secretary of State

25 has determined under section 6(j) of the
13

•S 2260 IS

1 Export Administration Act of 1979 (50

2 U.S.C. App. 2405(j)) to have repeatedly

3 provided support for acts of international

4 terrorism; and

5 (v) which does not use state-owned

6 enterprises of the People’s Republic of

7 China to export its goods or services.

8 (E) PERSON.—The term ‘‘person’’ means

9 a natural person, corporation, partnership, en10 terprise, instrumentality, agency, or other en11 tity.

12 (F) FOREIGN INVESTOR PARTNER.—The

13 term ‘‘foreign investor partner’’ means—

14 (i) a natural person who is not a citi15 zen of the People’s Republic of China; and

16 (ii) a corporation, partnership, instru17 mentality, enterprise, agency, or other en18 tity that is organized under the laws of a

19 country other than the People’s Republic

20 of China and 50 percent or more of the

21 outstanding capital stock or beneficial in22 terest of such entity is owned (directly or

23 indirectly) by natural persons who are not

24 citizens of the People’s Republic of China.
14

•S 2260 IS

1 (G) NONQUALIFIED GOOD.—The term

2 ‘‘nonqualified good’’ means a good to which

3 chapter 39, 44, 48, 61, 62, 64, 70, 73, 84, 93,

4 or 94 of the Harmonized Tariff Schedule of the

5 United States applies.

6 (H) CONVICT, FORCED, OR INDENTURED

7 LABOR.—The term ‘‘convict, forced, or inden8 tured labor’’ has the meaning given such term

9 by section 307 of the Tariff Act of 1930 (19

10 U.S.C. 1307).

11 (I) VIOLATIONS OF INTERNATIONALLY

12 RECOGNIZED STANDARDS OF HUMAN RIGHTS.—

13 The term ‘‘violations of internationally recog14 nized standards of human rights’’ includes but

15 is not limited to, torture, cruel, inhuman, or de16 grading treatment or punishment, prolonged de17 tention without charges and trial, causing the

18 disappearance of persons by abduction and

19 clandestine detention of those persons, secret

20 judicial proceedings, and other flagrant denial

21 of the right to life, liberty, or the security of

22 any person.

23 (J) MISSILE TECHNOLOGY CONTROL RE24 GIME.—The term ‘‘Missile Technology Control

25 Regime’’ means the agreement, as amended, be-
15

•S 2260 IS

1 tween the United States, the United Kingdom,

2 the Federal Republic of Germany, France,

3 Italy, Canada, and Japan, announced on April

4 16, 1987, to restrict sensitive missile-relevant

5 transfers based on an annex of missile equip6 ment and technology.

7 (d) SEMIANNUAL REPORTS.—The Secretary of the

8 Treasury shall, not later than 6 months after the date of

9 the enactment of this Act, and the end of each 6-month

10 period occurring thereafter, report to the Congress on the

11 efforts of the executive branch to carry out subsection (c).

12 The Secretary may include in the report a request for ad13 ditional authority, if necessary, to carry out subsection (c).

14 In addition, the report shall include information regarding

15 the efforts of the executive branch to carry out subsection

16 (a)(3).

17 SEC. 4. PRESIDENTIAL WAIVER.

18 The President may waive the application of any con19 dition or prohibition imposed on any person pursuant to

20 this Act, if the President determines and reports to the

21 Congress that the continued imposition of the condition

22 or prohibition would have a serious adverse effect on the

23 vital national security interests of the United States.
16

•S 2260 IS

1 SEC. 5. REPORT BY THE PRESIDENT.

2 If the President recommends in 1995 that the waiver

3 referred to in section 2 be continued for the People’s Re4 public of China, the President shall state in the document

5 required to be submitted to the Congress by section 402(d)

6 of the Trade Act of 1974, the extent to which the Govern7 ment of the People’s Republic of China has made progress

8 during the period covered by the document, with respect

9 to—

10 (1) adhering to the provisions of the Universal

11 Declaration of Human Rights,

12 (2) ceasing the exportation to the United States

13 of products made with convict, force, or indentured

14 labor,

15 (3) ceasing unfair and discriminatory trade

16 practices which restrict and unreasonably burden

17 American business, and

18 (4) adhering to the guidelines and parameters

19 of the Missile Technology Control Regime, the con20 trols adopted by the Nuclear Suppliers Group, and

21 the controls adopted by the Australia Group.

22 SEC. 6. SANCTIONS BY OTHER COUNTRIES.

23 If the President decides not to seek a continuation

24 of a waiver in 1995 for the People’s Republic of China

25 under section 402(d) of the Trade Act of 1974, the Presi26 dent shall, during the 30-day period beginning on the date
17

•S 2260 IS

1 that the President would have recommended to the Con2 gress that such a waiver be continued, undertake efforts

3 to ensure that members of the General Agreement on Tar4 iffs and Trade take a similar action with respect to the

5 People’s Republic of China.

Æ

S 2260 IS——2