To provide that most-favored-nation trading status for the People's Republic of China may continue provided that Taiwan is admitted to the World Trade Organization by March 1, 1997.

SECTION 1. FINDINGS.

    The Congress finds that--
            (1) the purpose of the World Trade Organization (hereafter 
        in this Act referred to as the ``WTO'') is to enable member 
        countries to conduct trade based upon free market principles, 
        by limiting government intervention in the form of state 
        subsidies, by limiting nontariff barriers, and by encouraging 
        reciprocal reductions in tariffs among members;
            (2) the WTO is based on the assumption that the import and 
        export of goods are conducted by independent enterprises 
        responding to profit incentives and market forces;
            (3) the WTO requires that countries with nonmarket 
        economies implement significant reforms to change centralized 
        and planned economic systems before they may be considered for 
        WTO membership, and the existence of a decentralized and a free 
        market economy is considered a precondition to fair trade among 
        WTO members;
            (4) pursuant to its charter and rules, membership in the 
        WTO is not limited to nations nor indicative of sovereignty, a 
        policy illustrated by the fact that Hong Kong will remain a 
        full member of the WTO as a separate customs territory after 
        becoming part of the People's Republic of China on July 1, 
        1997;
            (5) the Republic of China on Taiwan (hereafter in this Act 
        referred to as ``Taiwan'') has applied for membership in the 
        WTO as the separate customs territory of Taiwan, Penghu, 
        Kinmen, and Matsu, and its application is under review by a 
        Working Party appointed under Article XXXIII of the GATT 1994 
        (as defined in section 2 of the Uruguay Round Agreements Act 
        (19 U.S.C. 3501));
            (6) Taiwan has a free market economy that has existed for 
        more than 3 decades, and is currently the 14th largest trading 
        nation in the world;
            (7) Taiwan has a gross national product that is the world's 
        20th largest, its foreign exchange reserves are among the 
        largest in the world, and it has become the world's 7th largest 
        foreign investor;
            (8) Taiwan is the 7th largest trading partner of the United 
        States and its purchases of United States exports are more than 
        50 percent greater than those of the People's Republic of 
        China;
            (9) Taiwan has already agreed to reduce the tariff level of 
        many products, and to eliminate other nontariff barriers;
            (10) the United States and Taiwan have enjoyed a 
        longstanding and uninterrupted friendship, which has only 
        increased in light of the remarkable economic development and 
        political liberalization in Taiwan in recent years;
            (11) Taiwan reached an historic turning point in the 
        development of Chinese democracy on March 23, 1996, when it 
        conducted the first competitive, free, fair, direct, and 
        popular election of a head of state in over 4,000 years of 
        recorded Chinese history, leading to Lee Teng-hui's 
        inauguration as President on May 20, 1996;
            (12) for the past century the United States has promoted 
        democracy and economic freedom throughout the world, and the 
        evolution of Taiwan is an outstanding example of the success of 
        that policy;
            (13) Taiwan's accession to the WTO is important to the 
        United States because it is the largest importer of United 
        States goods that is not already a member of the WTO, and 
        because Taiwan's entry into the WTO would promote significant 
        new market opportunities for United States exporters and 
        investors;
            (14) notwithstanding these circumstances, the People's 
        Republic of China has sought to block the admission of Taiwan 
        to the WTO until its own accession to membership;
            (15) notwithstanding this opposition, Taiwan is ready for, 
        and meets the criteria for, admission to the WTO;
            (16) the People's Republic of China, in contrast to Taiwan, 
        has applied for membership in the WTO not as a developed 
        nation, but rather as a developing nation, so that it would be 
        relieved of the obligations to reduce its tariffs and eliminate 
        its subsidies for government-controlled industries, even after 
        its admission to the WTO;
            (17) in contrast to Taiwan, the Communist government of the 
        People's Republic of China maintains strict government controls 
        over most trade within its territory, restricts and often 
        outlaws free market competition, and denies legal and 
        regulatory protections for property rights, all in ways that 
        are incompatible with WTO principles;
            (18) the Communist government of the People's Republic of 
        China maintains an intricate system of restrictive and punitive 
        tariff and nontariff administrative controls to implement its 
        centrally-planned industrial and trade policies, with tariffs 
        on foreign goods, such as automobiles, as high as 150 percent, 
        even though the People's Republic of China has made commitments 
        in the Memorandum of Understanding on market access it signed 
        with the United States on October 10, 1992, and reaffirmed in 
        March of 1995, to reform significant parts of its import 
        regime;
            (19) the People's Republic of China's failure to implement 
        its March 11, 1995, agreement with the United States to curtail 
        piracy of products protected by intellectual property rights, 
        including music, videos, books, software, has prompted a United 
        States threat to impose trade sanctions proportionate to an 
        estimated loss of $2,300,000,000 to the United States economy 
        in 1995 that the piracy has caused;
            (20) representatives of the People's Republic of China's 
        two leading state-owned arms exporting companies, Poly 
        Technologies and Norinco, were arrested by Federal law 
        enforcement officers for smuggling into the United States 2,000 
        AK-47 rifles intended for sale to gangs;
            (21) illegal activities such as these should be taken into 
        account in formulating trade policy with respect to any 
        country;
            (22) the Communist government of the People's Republic of 
        China continues to use direct and indirect government subsidies 
        to unfairly advantage its own exports in contravention of 
        market principles;
            (23) as a consequence of these practices, the People's 
        Republic China is not ready for, and does not meet the criteria 
        for, admission to the WTO either as a developed nation or a 
        developing nation; and
            (24) inasmuch as Taiwan can easily meet and exceed all of 
        the requirements for admission to the WTO, while the People's 
        Republic of China has long enjoyed most-favored-nation trading 
        status with the United States notwithstanding its failure to 
        meet the criteria for WTO membership, the People's Republic of 
        China should continue to enjoy most-favored-nation trading 
        status with the United States only if Taiwan is admitted to the 
        WTO at the earliest practicable date.

SEC. 2. CONTINGENT EXTENSION OF NONDISCRIMINATORY TRADE TREATMENT TO 
              THE PEOPLE'S REPUBLIC OF CHINA.

    Notwithstanding any other provision of law, nondiscriminatory 
treatment (most-favored-nation treatment) may apply to the products of 
the People's Republic of China after March 1, 1997, if and only if, as 
of that date, Taiwan has been admitted to the WTO as a separate customs 
territory and the People's Republic of China has not been admitted to 
the WTO, whether as a developing or a developed nation.

Summary: Extends nondiscriminatory treatment (most-favored-nation treatment) to China's products if, and only if, after March 1, 1997, Taiwan has been admitted to the World Trade Organization (WTO) and China has not been so admitted, whether as a developing or a developed nation.