[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