[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