[Congressional Bills 118th Congress] [From the U.S. Government Publishing Office] [S. 5264 Introduced in Senate (IS)] <DOC> 118th CONGRESS 2d Session S. 5264 To suspend normal trade relations with the People's Republic of China and to increase the rates of duty applicable with respect to articles imported from the People's Republic of China, and for other purposes. _______________________________________________________________________ IN THE SENATE OF THE UNITED STATES September 25, 2024 Mr. Thune (for Mr. Cotton (for himself, Mr. Rubio, and Mr. Hawley)) introduced the following bill; which was read twice and referred to the Committee on Finance _______________________________________________________________________ A BILL To suspend normal trade relations with the People's Republic of China and to increase the rates of duty applicable with respect to articles imported from the People's Republic of China, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ``Neither Permanent Nor Normal Trade Relations Act''. SEC. 2. FINDINGS; SENSE OF CONGRESS. (a) Findings.--Congress makes the following findings: (1) The United States grants normal trade relations status to every country in the world except for Belarus, Cuba, North Korea, and the Russian Federation. (2) Merchandise originating from a country that is a beneficiary of normal trade relations status is subject to duties at the rates set forth in column 1 of the Harmonized Tariff Schedule of the United States (in this Act referred to as the ``HTS''). (3) Merchandise originating from a country that is not a beneficiary of normal trade relations status is subject to duties at the rates set forth in column 2 of the HTS. (4) The United States Schedule of Concessions on goods to the World Trade Organization lists rates of duty the United States is expected to extend to all other members of the World Trade Organization. (5) As of the date of the enactment of this Act, the rates of duty under the United States Schedule of Concessions on goods, on a simple average basis, are the lowest among all members of the World Trade Organization, at 3.4 percent. The duty concessions in the United States Schedule of Concessions align with the duties set forth in column 1 of the HTS. (6) The People's Republic of China was granted normal trade relations status in February 1980, pursuant to title IV of the Trade Act of 1974 (19 U.S.C. 2431 et seq.), making merchandise from the People's Republic of China eligible for the duties set forth in column 1 of the HTS. (7) From 1980 until 2001, the People's Republic of China's normal trade relations status was subject to compliance with freedom-of-emigration requirements under section 402 of the Trade Act of 1974 (19 U.S.C. 2432) (commonly referred to as the ``Jackson-Vanik amendment''). (8) In 2001, Public Law 106-286 (114 Stat. 880) was passed to make permanent the People's Republic of China's normal trade relations status. (9) Entries under section 321 of the Tariff Act of 1930 (19 U.S.C. 1321) became an avenue of commerce by way of regulation, when in 1994 the Department of the Treasury and the Customs Service issued an interim rule expanding the class of persons deemed eligible to make informal entries under that section, and exempted shipments by those persons from the requirement to file an entry summary. In both litigation challenging the interim rule and comments on the final rule published the following year, customs brokers warned that the Customs Service was abrogating its responsibility to enforce laws, but their warnings were not heeded. (10) In 2018, following an investigation under title III of the Trade Act of 1974 (19 U.S.C. 2411 et seq.) into the theft of intellectual property by the People's Republic of China, additional duties affecting approximately one-third of exports from the People's Republic of China to the United States were imposed. On January 15, 2020, the United States and the People's Republic of China signed the Economic and Trade Agreement Between the Government of the United States of America and the Government of the People's Republic Of China, which required structural reforms and other changes to the economic and trade regime of the People's Republic of China. The People's Republic of China, however, did not comply with the agreement. (11) In December 2022, the United States-China Economic and Security Review Commission's 2022 Annual Report asserted as follows: ``After many years of attempting to engage China and persuade it to abandon its distortive trade practices, it is clear this approach has not been successful. The United States has an opportunity to develop a new strategy based on building resilience against China's state capitalism and blunting its harmful effects rather than seeking to change it. With the WTO unable to introduce meaningful new rules and procedures, the United States can pursue approaches that advance its own national interests as well as cooperate with like-minded partners.''. (12) The Commission's 2022 Annual Report recommended that the Administration prepare a report to ``assess China's compliance with the terms and conditions of the 1999 Agreement on Market Access between the People's Republic of China and the United States of America''. The Commission recommended that ``[i]f the report concludes that China has failed to comply with the provisions agreed to for its accession to the WTO, Congress should consider legislation to immediately suspend China's Permanent Normal Trade Relations (PNTR) treatment''. (13) In February 2023, the Office of the United States Trade Representative released a report entitled ``2022 Report to Congress on China's WTO Compliance''. In releasing that report, United States Trade Representative Katherine Tai noted, ``More than 20 years after it acceded to the WTO, China still embraces a state-led economic and trade approach that runs counter to the open, market-oriented principles endorsed by all members of the organization. China's approach makes it an outlier and continues to cause serious harm to workers and businesses in the United States and around the world.''. (14) Since the entry of the People's Republic of China into the WTO, the United States has lost tens of thousands of factories, millions of manufacturing jobs, and trillions of dollars of intellectual property. The United States now suffers chronic annual trade deficits that exceed $1,000,000,000,000, primarily driven by the predatory trade practices of the People's Republic of China. (15) There is no mechanism in the Agreement establishing the World Trade Organization, nor any of the annexed agreements, to suspend or expel a member government that has flouted the principles and norms underpinning the Agreement. (16) The accession of advanced economies governed by autocratic, anti-American governments to the World Trade Organization has enriched those governments while destabilizing international relations. (17) The ability of the United States to act in concert with allies and partners to strengthen resilient supply chains free of reliance on or interference from adversarial, autocratic governments is hampered by the United States Schedule of Concessions on goods as currently expressed. (b) Sense of Congress.--It is the sense of Congress that-- (1) continued treatment of the People's Republic of China as a beneficiary of normal trade relations status poses an unacceptable threat to national security and undermines efforts to promote resilient supply chains and economic integration with allies of the United States; and (2) the United States Schedule of Concessions on goods to the World Trade Organization should be modified to accommodate the duty rates set forth in column 2 of the HTS, so that the United States may deny normal trade relations status to another member of the World Trade Organization as warranted without breaching the duty concessions enumerated in the United States Schedule of Concessions. SEC. 3. SUSPENSION OF NORMAL TRADE RELATIONS WITH THE PEOPLE'S REPUBLIC OF CHINA. Notwithstanding the provisions of title I of Public Law 106-286 (114 Stat. 880) or any other provision of law, beginning on the day after the date of the enactment of this Act, normal trade relations treatment shall not apply pursuant to section 101(a) of that Act to the products of the People's Republic of China. SEC. 4. MODIFICATIONS TO RATES OF DUTY TO ADDRESS TRADE WITH THE PEOPLE'S REPUBLIC OF CHINA. (a) Establishment of Rates of Duty With Respect to Articles of the People's Republic of China.-- (1) In general.--The President, by proclamation, shall revise the Harmonized Tariff Schedule of the United States (in this Act referred to as the ``HTS'') to include rates of duty applicable only with respect to articles of the People's Republic of China. (2) Rates.--The rates of duty proclaimed under paragraph (1) shall be, except as provided by subsection (h), the rates of duty set forth in the column 2 rate of duty column of the HTS on the day before the date of the enactment of this Act, modified as required by subsection (b) and, if applicable, adjusted for inflation under subsection (c). (b) Modifications to Rates of Duty With Respect to Articles of the People's Republic of China.-- (1) Ad valorem duties and free rates of duty.-- (A) In general.--A rate of duty set forth in the column 2 rate of duty column of the HTS that is expressed as a percentage, or that is free, shall, except as provided by subparagraph (B) or (C), continue to apply to articles of the People's Republic of China. (B) Minimum rate of 35 percent ad valorem.--A rate of duty described in subparagraph (A) that is less than 35 percent ad valorem as of the day before the date of the enactment of this Act shall, except as provided by subparagraph (C), be increased to 35 percent ad valorem. (C) Minimum rate of 100 percent for certain articles.--In the case of an article specified in section 10, a rate of duty described in subparagraph (A) that is less than 100 percent ad valorem as of the day before the date of the enactment of this Act shall be increased to 100 percent ad valorem. (2) Specific and compound rates of duty.-- (A) In general.--A rate of duty set forth in the column 2 rate of duty column of the HTS that is expressed as a specific or compound rate of duty shall, except as provided by subparagraphs (B) and (C), continue to apply to articles of the People's Republic of China, subject to adjustment for inflation under subsection (c). (B) Minimum rate equivalent to 35 percent ad valorem.--A rate of duty described in subparagraph (A) that is less than the equivalent of 35 percent ad valorem, after adjustment for inflation under subsection (c), shall be increased to be equivalent to 35 percent ad valorem. (C) Minimum rate equivalent to 100 percent ad valorem for certain articles.--In the case of an article specified in section 10, a rate of duty described in subparagraph (A) that is less than the equivalent of 100 percent ad valorem, after adjustment for inflation under subsection (c), shall be increased to be equivalent to 100 percent ad valorem. (c) Adjustment of Duties for Inflation.-- (1) In general.--As soon as practicable after the date of the enactment of this Act, and on November 1 of each year thereafter, the President shall proclaim modifications to adjust the specific and compound rates of duty described in subsection (b)(2), as modified under that subsection, to reflect the increase in the average of the Consumer Price Index for the most recent full calendar year for which data are available compared to the Consumer Price Index for calendar year 1930. (2) Effective date of inflation adjustments.-- (A) First adjustment.-- (i) In general.--The first adjustment required by paragraph (1) shall apply with respect to articles entered, or withdrawn from warehouse for consumption, on or after January 1, 2024. (ii) Rules for retroactive collection.--Not later than 180 days after the date of the enactment of this Act, the Commissioner of U.S. Customs and Border Protection shall issue rules for the retroactive collection of duties under clause (i). (B) Subsequent adjustments.--Each adjustment required by paragraph (1) after the first such adjustment shall apply with respect to articles entered, or withdrawn from warehouse for consumption, on or after January 1 of the year beginning after the issuance of the proclamation. (3) Base rate.--For purposes of the adjustment required by paragraph (1), the President shall use the rate of duty applicable under the column 2 general rate of duty column of the HTS, as modified under subsection (b), as the base rate. (4) Special rules for calculation of adjustment.--In adjusting under paragraph (1) the specific and compound rates of duty described in subsection (b)(2), as modified under that subsection, the President shall ignore any duty rate increase of less than 1 percent compared to the previous year. (5) Consumer price index defined.--For purposes of this subsection, the term ``Consumer Price Index'' means the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor. (d) Phase-In of Duty Increases.--The President shall, by proclamation, phase-in the application of the duty increases required by subsection (a), as modified under subsection (b) and, if applicable, adjusted for inflation under subsection (c), as follows: (1) On and after the date that is 180 days after the date of the enactment of this Act, 10 percent of the total duty increase with respect to an article shall apply. (2) On and after the date that is 2 years after such date of enactment, 25 percent of the total duty increase with respect to an article shall apply. (3) On and after the date that is 4 years after such date of enactment, 50 percent of the total duty increase with respect to an article shall apply. (4) On and after the date that is 5 years after such date of enactment, 100 percent of the total duty increase with respect to an article shall apply. (e) Information From International Trade Commission.--Not later than July 1 of each year, the United States International Trade Commission (in this Act referred to as the ``Commission'') shall submit to the President the following information with respect to articles that are subject to a specific or compound rate of duty under the column 2 rate of duty column of the HTS and for which sufficient data are available to calculate the ad valorem equivalent of those rates of duty: (1) An identification of which such articles (other than articles specified in section 10) have an ad valorem equivalent rate of duty of less than 35 percent after adjustment for inflation under subsection (c) and, for each such article, a calculation of the specific or compound rate of duty that would increase the rate of duty to be equivalent to 35 percent ad valorem. (2) An identification of which articles specified in section 10 have an ad valorem equivalent rate of duty of less than 100 percent after adjustment for inflation under subsection (c) and, for each such article, a calculation of the specific or compound rate of duty that would increase the rate of duty to be equivalent to 100 percent ad valorem. (f) Treatment of Articles Imported Only From the People's Republic of China.-- (1) Tariff-rate quotas.-- (A) Annual adjustments.-- (i) In general.--Notwithstanding any other provision of law, the President shall, by proclamation, establish a tariff-rate quota that shall-- (I) apply to each article imported only from the People's Republic of China; and (II) be set for each calendar year at an amount that is equal to the amount, if any, by which consumption of the article in the United States in the most recent calendar year for which data are available exceeds production of the article in the United States during that calendar year. (ii) Determination of the people's republic of china as only source.--For purposes of subparagraph (A)(i)(I), the President shall determine that an article is imported only from the People's Republic of China if official