U.S. Trade Leadership in the Indo-Pacific and China Act

To promote United States trade leadership in the Indo-Pacific region and to require a report on the long-term economic and trade relationship between the United States and the People’s Republic of China. 1. Short title This Act may be cited as the U.S. Trade Leadership in the Indo-Pacific and China Act I United States trade leadership in the Indo-Pacific region 101. Findings Congress makes the following findings: (1) Rising authoritarian powers that adhere to non-market principles for managing their economies are challenging the United States strategic influence in the Indo-Pacific region. These mercantilist policies, which include predatory industrial planning to subsidize exports and support national champions at the expense of foreign competitors, conditioning market access on both forced and voluntary technology transfers, and intellectual property theft, among other unfair policies, are contrary to the interests and values of the United States and its Indo-Pacific allies and directly challenge the United States economic and trade interests in the region. (2) The United States was a leader during negotiations for the Trans Pacific Partnership Agreement (TPP) and joined eleven other nations in the Asia-Pacific in signing the agreement on February 4, 2016. (3) In January 2017, the United States notified the other 11 signatories to the TPP that it did not intend to become a party to the Agreement. The notification letter to the 11 other TPP signatories affirmed that “[t]he United States remains committed to taking measures designed to promote more efficient markets and higher levels of economic growth, both in our country and around the world.”. (4) Following the United States formal withdrawal from the TPP, the 11 remaining signatories (Australia; Brunei; Canada; Chile; Japan; Malaysia; Mexico; New Zealand; Peru; Singapore; and Vietnam) renegotiated and signed a new Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) on March 8, 2018. Like the TPP, the CPTPP includes high-standard provisions to eliminate tariff and non-tariff barriers in key sectors such as agriculture, autos, currency, e-commerce/digital trade, government procurement, goods tariffs, intellectual property rights (IPR), investment, worker rights, environment, rules of origin (ROO), services, and state-owned enterprises (SOEs). However, the CPTPP suspended certain high-standard provisions which the United States had proposed or supported. United States engagement in TPP negotiations helped shape many of the provisions of the existing CPTPP. Similar, and updated versions of many of these provisions are included in the United States-Mexico-Canada Agreement (USMCA), including in the chapter on technical barriers to trade (TBT). (5) United States withdrawal from the TPP has undermined its ability to promote United States-led rules, norms, and standards, and has paved the way for increased non-democratic state-driven economic and political presence in the Indo-Pacific region. 102. Statement of policy (a) In general It is the policy of the United States, in pursuing trade leadership in the Indo-Pacific region, to proactively promote and defend fair and open trade practices and to counter the use of mercantilist, distorting, and coercive trade measures by actors in the region, including by pursuing objectives described in subsection (b). (b) Objectives described The objectives described in this subsection are the following: (1) The United States will play a sustained and long-term leadership role in establishing and ensuring an open, rules-based trading system in the Indo-Pacific region, including through the following: (A) The United States should urgently consider the merits of negotiating entry into the CPTPP with improved standards or a similar plurilateral trade agreement. (B) The United States should urgently consider the merits of negotiating new, high-standard bilateral trade agreements in the region. (C) The United States should urgently consider modernizing and updating existing trade agreements in the region. (2) The United States and its allies should utilize new or updated, high-standard trade agreements to maintain rules-based and market-based policies in the Indo-Pacific region to ensure, among other areas— (A) free flow of commerce; (B) enhanced market access; (C) elimination of tariff and non-tariff barriers on goods, services, agriculture, and energy; (D) high-standard provisions to protect intellectual property, investment, worker rights, the environment, e-commerce and digital trade, and autos; and (E) transparency on rules of origin, state-owned enterprises, and government procurement. (3) The United States membership and leadership in negotiating new or updated, high-standard trade agreements will ensure its economic, technological, scientific, and regulatory leadership in the Indo-Pacific region and ensure a comprehensive, rules-based platform throughout the region well into the 21st century. (4) The United States membership and leadership in new or updated, high-standard trade agreements will foster free and reciprocal trade and open and integrated markets in the Indo-Pacific region, including— (A) strengthening, protecting, and diversifying critical supply chains for batteries, critical minerals, medicines, next-generation semiconductors, telecommunications, artificial intelligence, quantum computing, and biotechnology and medical supplies; and (B) supporting the development and maintenance of advanced manufacturing capacity among key regional allies to maximize trade efficiency and supply chain security. (5) The United States leadership in new or updated, high-standard trade agreements will inspire next-generation rules and best practices for emerging and high-growth Indo-Pacific countries that may not be members of the CPTPP. 103. Sense of Congress It is the sense of Congress that the implementation of the policy described in section 102 requires the following actions: (1) Long-term competition and strategic engagement in the Indo-Pacific region will require the United States to deeply engage with allies and partners on trade policy in the region, including the consideration of joining new or updated, high-standard trade agreements, to establish trade and economic stability in the most vibrant economic region in the world. A sense of urgency by the Administration, bipartisanship in Congress, and whole-of-government approach will be required to achieve this significant pivot in United States trade policy. Immediate, intensive bipartisan engagement between the Administration and Congress to develop and swiftly reauthorize and update the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 is a critical step to provide the Administration with tools to negotiate ambitious new trade agreements. (2) The United States, through the leadership of the Office of the United States Trade Representative, must urgently coordinate closely with like-minded countries throughout the Indo-Pacific region to express immediate interest in new or updated, high-standard trade agreements, including by hosting a series of summits held throughout the region to discuss outlaying issues that are reflective of a post-pandemic global economy. (3) The President must lead and direct the entire executive branch, specifically the Office of the United States Trade Representative, to make membership and leadership in new or updated, high-standard trade agreements a priority and assure the allocation of appropriate resources adequate to address market-access barriers and trade distortions in the Indo-Pacific region. (4) The United States must ensure that key Federal agencies, led by the Office of the United States Trade Representative, advance accelerated, bipartisan, frequent, sustained, and meaningful collaboration and consultation with Congress regarding a robust United States trade strategy in the Indo-Pacific region. (5) The United States must ensure that key Federal agencies, led by the Office of the United States Trade Representative, conduct close and accelerated Indo-Pacific trade strategy consultations with Congress, the private sector, civil society, universities, and academic institutions, and other relevant stakeholders. (6) The President should direct the Office of the United States Trade Representative, the White House National Security Council, and all relevant Federal agencies to meet upon request with any Member of Congress regarding the components of its Indo-Pacific trade strategy, including the President’s intention to begin negotiations to implement that strategy, the objectives for such negotiations, and any changes in the laws of the United States or the administration of those laws that may be recommended to Congress to implement that strategy. The President should also direct the Office of the United States Trade Representative, the White House National Security Council, and all relevant Federal agencies to provide access to pertinent documents relating to any such negotiation, including classified materials. II Report on the long-term economic and trade relationship between the United States and the People’s Republic of China 201. Findings Congress makes the following findings: (1) On January 15, 2020, the United States and the People’s Republic of China (PRC) signed a historic and enforceable agreement, the Economic and Trade Agreement Between the United States of America and the People’s Republic of China, or the “Phase One” trade agreement. The Phase One trade agreement went into effect on February 14, 2020, and requires the PRC to undertake a wide range of reforms to facilitate a more transparent and equal bilateral trading relationship in areas such intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. (2) The Phase One trade agreement includes a chapter on “Expanding Trade”, in which the PRC made specific commitments to import a wide range of United States goods and services, including manufactured goods, food and seafood, agriculture, energy products, and services in a total amount that exceeds the PRC’s annual level of imports for those goods and services in 2017 by no less than $200 billion for a two-year period from January 1, 2020, through December 31, 2021. The United States and the PRC also stated a shared expectation that “the trajectory of increases” in China’s purchases of United States goods in each of these categories would continue in calendar years 2022 through 2025. (3) Publicly available trade data show that the PRC has made significant progress in purchasing United States products within the agriculture sector, but is far behind its agreed upon year-end purchasing targets in energy, manufacturing, and services. (4) The Phase One trade agreement features a chapter on “Bilateral Evaluation and Dispute Resolution” that establishes a process to resolve disputes in a fair and prompt manner and creates an avenue to conduct regular bilateral meetings at the principal and working levels. (5) The Phase One trade agreement represents an important and concrete step toward a more balanced economic relationship between the United States and the PRC but substantially more is needed to address systemic problems in our bilateral trading relationship. Important remaining issues include the PRC’s persistent theft of United States intellectual property rights, its market access policies that depend on forced technology transfers and discriminatory licensing practices, and its support for state-owned enterprises with market-distorting and World Trade Organization (WTO)-inconsistent subsidies. 202. Sense of Congress It is the sense of Congress that— (1) the United States should successfully and fully implement the Phase One trade agreement, ensuring that the PRC fully complies with its stated commitments both to make legal and regulatory changes in various sectors and to purchase additional United States goods and services; (2) the Office of the United States Trade Representative should take expedited and concrete steps toward thorough consultation and coordination with Congress and key United States private sector stakeholders wholly consistent with the spirit and letter of the law as prescribed under the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 regarding implementation of the Phase One trade agreement and any further trade negotiations with China; (3) the United States Government should analyze all positive and negative effects on the United States economy of the current tariffs in place against the PRC under section 301 of the Trade Act of 1974, including the effects on United States workers, businesses, and consumers and an analysis of the benefits of such tariffs providing sufficient trade leverage on the PRC, in comparison to these tariffs’ harm to the United States economy; (4) consistent with such analysis, the United States Government should immediately modify such tariffs to ensure that they meet the intent of the statute and provide leverage on China without harming the United States economy; (5) the Office of the United States Trade Representative should articulate a long-term trade and economic plan with the PRC, which may include proposed new enforcement tools to address the PRC’s ongoing economic and structural challenges, including the PRC’s use of massive industrial subsidies that are inconsistent with WTO norms and rules and create global price distortions in critical supply chains, bilateral engagement with the PRC to obtain changes to the PRC’s policies, and working with allies to pressure the PRC on these same issues; (6) the Office of the United States Trade Representative should take expedited and concrete steps toward better consultation and coordination with Congress and key United States private sector actors regarding the drafting of its comprehensive report on the long-term economic and trade relationship between the United States and the PRC; and (7) efforts to enforce the Phase One trade agreement should not delay initiatives to address other issues in the trade relationship, especially longstanding, systemic issues that disadvantage United States companies or injure United States interests, that have been identified for negotiation by previous administrations, but that were not addressed in the Phase One trade agreement. 203. Report (a) In general Not later than 60 days after the date of the enactment of this Act, and annually thereafter, the United States Trade Representative, in coordination with the heads of other relevant Federal agencies, shall submit to Congress a report that— (1) describes progress toward addressing the issues identified in Trade Representative’s report titled, “Findings of the Investigations into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974”, dated March 22, 2018; (2) comprehensively reviews current tariffs in place against the PRC under section 301 of the Trade Act of 1974— (A) to assess whether such tariffs continue to meet the requirements of such section and provide leverage to encourage the PRC to change its unfair practices without undue harm to the United States economy; and (B) to recommend removal of such tariffs that harm United States industry competitiveness in which data does not clearly demonstrate that the tariffs have substantially and directly alleviated discriminatory, restrictive, or burdensome PRC trade practices, or where any benefits that can be clearly linked to the tariffs are less substantial than the costs the tariffs have imposed on United States entities; (3) evaluates the PRC’s compliance with its Phase One trade agreement commitments and identifies those provisions in the agreement that have yet to be implemented; (4) lists and explains proposed new enforcement tools that will address and compel the PRC to complete structural reforms to its economic and trade regimes; (5) articulates new market access objectives with respect to the PRC; (6) identifies key United States goods and services that have the ability to provide long-term benefits to the PRC’s economic growth, including energy, carbon capture, agricultural goods and services among other sectors, without impeding United States national security interests; and (7) identifies key PRC goods and services that have the ability to provide long-term benefits to the United States economic growth, including tourism and education goods and services among other sectors. (b) Form The report required by subsection (a) shall be submitted in unclassified form but may include a classified annex.

Summary: U.S. Trade Leadership in the Indo-Pacific and China Act This bill requires the U.S. Trade Representative to annually report on the economic and trade relationship between the United States and China, including a comprehensive review of the current tariffs in place against China.