House Report 106-632 - PERMANENT NORMAL TRADE RELATIONS WITH THE PEOPLE'S REPUBLIC OF CHINA

[House Report 106-632]
[From the U.S. Government Publishing Office]

106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-632

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PERMANENT NORMAL TRADE RELATIONS WITH THE PEOPLE'S REPUBLIC OF CHINA

_______

May 22, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Archer, from the Committee on Ways and Means, submitted the
following

R E P O R T

together with

ADDITIONAL VIEWS

[To accompany H.R. 4444]

[Including cost estimate of the Congressional Budget Office]

The Committee on Ways and Means, to whom was referred the
bill (H.R. 4444) to authorize extension of nondiscriminatory
treatment (normal trade relations treatment) to the People's
Republic of China, having considered the same, report favorably
thereon with an amendment and recommend that the bill as
amended do pass.

CONTENTS

Page
I. Introduction.....................................................8
A. Purpose and Summary................................... 8
B. Background............................................ 9
C. Legislative History................................... 12
II. Explanation of the Resolution...................................13
III. Votes of the Committee..........................................19
IV. Budget Effect...................................................21
A. Committee Estimate of Budgetary Effects............... 21
B. Statement Regarding New Budget Authority and Tax
Expenditures......................................... 21
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 21
V. Other Matters to be Discussed Under the Rules of the House......23
A. Committee Oversight Findings and Recommendations...... 23
B. Summary of Findings and Recommendations of the
Committee on Government Reform and Oversight......... 23
C. Constitutional Authority Statement.................... 24
VI. Change in Existing Laws.........................................24
VII. Additional Views................................................35

The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:

SECTION 1. TERMINATION OF APPLICATION OF CHAPTER 1 OF TITLE IV OF THE
TRADE ACT OF 1974 TO THE PEOPLE'S REPUBLIC OF
CHINA.

(a) Presidential Determinations and Extension of Nondiscriminatory
Treatment.--Notwithstanding any provision of chapter 1 of title IV of
the Trade Act of 1974 (19 U.S.C. 2431 et seq.), as designated by
section 3(a)(2) of this Act, the President may--
(1) determine that such chapter should no longer apply to the
People's Republic of China; and
(2) after making a determination under paragraph (1) with
respect to the People's Republic of China, proclaim the
extension of nondiscriminatory treatment (normal trade
relations treatment) to the products of that country.
(b) Accession of the People's Republic of China to the World Trade
Organization.--Prior to making the determination provided for in
subsection (a)(1) and pursuant to the provisions of section 122 of the
Uruguay Round Agreements Act (19 U.S.C. 3532), the President shall
transmit a report to Congress certifying that the terms and conditions
for the accession of the People's Republic of China to the World Trade
Organization are at least equivalent to those agreed between the United
States and the People's Republic of China on November 15, 1999.

SEC. 2. EFFECTIVE DATE.

(a) Effective Date of Nondiscriminatory Treatment.--The extension of
nondiscriminatory treatment pursuant to section 1(a)(1) shall be
effective no earlier than the effective date of the accession of the
People's Republic of China to the World Trade Organization.
(b) Termination of Applicability of Title IV.--On and after the
effective date under subsection (a) of the extension of
nondiscriminatory treatment to the products of the People's Republic of
China, chapter 1 of title IV of the Trade Act of 1974 (as designated by
section 3(a)(2) of this Act) shall cease to apply to that country.

SEC. 3. RELIEF FROM MARKET DISRUPTION.

(a) In General.--Title IV of the Trade Act of 1974 (19 U.S.C. 2431 et
seq.) is amended--
(1) in the title heading, by striking ``CURRENTLY'';
(2) by inserting before section 401 the following:

``CHAPTER 1--TRADE RELATIONS WITH CERTAIN COUNTRIES''; and

(3) by adding at the end the following new chapter:

``CHAPTER 2--RELIEF FROM MARKET DISRUPTION TO INDUSTRIES AND DIVERSION
OF TRADE TO THE UNITED STATES MARKET

``SEC. 421. ACTION TO ADDRESS MARKET DISRUPTION.

``(a) Presidential Action.--If a product of the People's Republic of
China is being imported into the United States in such increased
quantities or under such conditions as to cause or threaten to cause
market disruption to the domestic producers of a like or directly
competitive product, the President shall, in accordance with the
provisions of this section, proclaim increased duties or other import
restrictions with respect to such product, to the extent and for such
period as the President considers necessary to prevent or remedy the
market disruption.
``(b) Initiation of an Investigation.--(1) Upon the filing of a
petition by an entity described in section 202(a) of the Trade Act of
1974 (19 U.S.C. 2252(a)), upon the request of the President or the
United States Trade Representative (in this subtitle referred to as the
`Trade Representative'), upon resolution of either the Committee on
Ways and Means of the House of Representatives, or the Committee on
Finance of the Senate (in this subtitle referred to as the
`Committees') or on its own motion, the United States International
Trade Commission (in this subtitle referred to as the `Commission')
shall promptly make an investigation to determine whether products of
the People's Republic of China are being imported into the United
States in such increased quantities or under such conditions as to
cause or threaten to cause market disruption to the domestic producers
of like or directly competitive products.
``(2) The limitations on investigations set forth in section
202(h)(1) of the Trade Act of 1974 (19 U.S.C. 2252(h)(1)) shall apply
to investigations conducted under this section.
``(3) The provisions of subsections (a)(8) and (i) of section 202 of
the Trade Act of 1974 (19 U.S.C. 2252(a)(8) and (i)), relating to
treatment of confidential business information, shall apply to
investigations conducted under this section.
``(4) Whenever a petition is filed, or a request or resolution is
received, under this subsection, the Commission shall transmit a copy
thereof to the President, the Trade Representative, the Committee on
Ways and Means of the House of Representatives, and the Committee of
Finance of the Senate, except that in the case of confidential business
information, the copy may include only nonconfidential summaries of
such information.
``(5) The Commission shall publish notice of the commencement of any
proceeding under this subsection in the Federal Register and shall,
within a reasonable time thereafter, hold public hearings at which the
Commission shall afford interested parties an opportunity to be
present, to present evidence, to respond to the presentations of other
parties, and otherwise to be heard.
``(c) Market Disruption.--(1) For purposes of this section, market
disruption exists whenever imports of an article like or directly
competitive with an article produced by a domestic industry are
increasing rapidly, either absolutely or relatively, so as to be a
significant cause of material injury, or threat of material injury, to
the domestic industry.
``(2) For purposes of paragraph (1), the term `significant cause'
refers to a cause which contributes significantly to the material
injury of the domestic industry, but need not be equal to or greater
than any other cause.
``(d) Factors in Determination.--In determining whether market
disruption exists, the Commission shall consider objective factors,
including--
``(1) the volume of imports of the product which is the
subject of the investigation;
``(2) the effect of imports of such product on prices in the
United States for like or directly competitive articles; and
``(3) the effect of imports of such product on the domestic
industry producing like or directly competitive articles.
The presence or absence of any factor under paragraph (1), (2), or (3)
is not necessarily dispositive of whether market disruption exists.
``(e) Time for Commission Determinations.--The Commission shall make
and transmit to the President and the Trade Representative its
determination under subsection (b)(1) at the earliest practicable time,
but in no case later than 60 days (or 90 days in the case of a petition
requesting relief under subsection (i)) after the date on which the
petition is filed, the request or resolution is received, or the motion
is adopted, under subsection (b). If the Commissioners voting are
equally divided with respect to its determination, then the
determination agreed upon by either group of Commissioners may be
considered by the President and the Trade Representative as the
determination of the Commission.
``(f) Recommendations of Commission on Proposed Remedies.--If the
Commission makes an affirmative determination under subsection (b), or
a determination which the President or the Trade Representative may
consider as affirmative under subsection (e), the Commission shall
propose the amount of increase in, or imposition of, any duty or other
import restrictions necessary to prevent or remedy the market
disruption. Only those members of the Commission who agreed to the
affirmative determination under subsection (b) are eligible to vote on
the proposed action to prevent or remedy market disruption. Members of
the Commission who did not agree to the affirmative determination may
submit, in the report required under subsection (g), separate views
regarding what action, if any, should be taken to prevent or remedy
market disruption.
``(g) Report by Commission.--(1) Not later than 20 days after a
determination under subsection (b) is made, the Commission shall submit
a report to the President and the Trade Representative.
``(2) The Commission shall include in the report required under
paragraph (1) the following:
``(A) The determination made under subsection (b) and an
explanation of the basis for the determination.
``(B) If the determination under subsection (b) is
affirmative, or may be considered by the President or the Trade
Representative as affirmative under subsection (e), the
recommendations of the Commission on proposed remedies under
subsection (f) and an explanation of the basis for each
recommendation.
``(C) Any dissenting or separate views by members of the
Commission regarding the determination and any recommendation
referred to in subparagraphs (A) and (B).
``(D) A description of--
``(i) the short- and long-term effects that
implementation of the action recommended under
subsection (f) is likely to have on the petitioning
domestic industry, on other domestic industries, and on
consumers; and
``(ii) the short- and long-term effects of not taking
the recommended action on the petitioning domestic
industry, its workers, and the communities where
production facilities of such industry are located, and
on other domestic industries.
``(3) The Commission, after submitting a report to the President
under paragraph (1), shall promptly make it available to the public
(but shall not include confidential business information) and cause a
summary thereof to be published in the Federal Register.
``(h) Opportunity To Present Views and Evidence on Proposed Measure
and Recommendation to the President.--(1) Within 20 days after receipt
of the Commission's report under subsection (g) (or 15 days in the case
of an affirmative preliminary determination under subsection
(i)(1)(B)), the Trade Representative shall publish in the Federal
Register notice of any measure proposed by the Trade Representative to
be taken pursuant to subsection (a) and of the opportunity, including a
public hearing, if requested, for importers, exporters, and other
interested parties to submit their views and evidence on the
appropriateness of the proposed measure and whether it would be in the
public interest.
``(2) Within 55 days after receipt of the report under subsection (g)
(or 35 days in the case of an affirmative preliminary determination
under subsection (i)(1)(B)), the Trade Representative, taking into
account the views and evidence received under paragraph (1) on the
measure proposed by the Trade Representative, shall make a
recommendation to the President concerning what action, if any, to take
to prevent or remedy the market disruption.
``(i) Critical Circumstances.--(1) When a petition filed under
subsection (b) alleges that critical circumstances exist and requests
that provisional relief be provided under this subsection with respect
to the product identified in the petition, the Commission shall, not
later than 45 days after the petition containing the request is filed--
``(A) determine whether delay in taking action under this
section would cause damage to the relevant domestic industry
which would be difficult to repair; and
``(B) if the determination under subparagraph (A) is
affirmative, make a preliminary determination of whether
imports of the product which is the subject of the
investigation have caused or threatened to cause market
disruption.
If the Commissioners voting are equally divided with respect to either
of its determinations, then the determination agreed upon by either
group of Commissioners may be considered by the President and the Trade
Representative as the determination of the Commission.
``(2) On the date on which the Commission completes its
determinations under paragraph (1), the Commission shall transmit a
report on the determinations to the President and the Trade
Representative, including the reasons for its determinations. If the
determinations under paragraph (1) are affirmative, or may be
considered by the President or the Trade Representative as affirmative
under paragraph (1), the Commission shall include in its report its
recommendations on proposed provisional measures to be taken to prevent
or remedy the market disruption. Only those members of the Commission
who agreed to the affirmative determinations under paragraph (1) are
eligible to vote on the proposed provisional measures to prevent or
remedy market disruption. Members of the Commission who did not agree
to the affirmative determinations may submit, in the report, dissenting
or separate views regarding the determination and any recommendation of
provisional measures referred to in this paragraph.
``(3) If the determinations under paragraph (1) are affirmative, or
may be considered by the President or the Trade Representative as
affirmative under paragraph (1), the Trade Representative shall, within
10 days after receipt of the Commission's report, determine the amount
or extent of provisional relief that is necessary to prevent or remedy
the market disruption and shall provide a recommendation to the
President on what provisional measures, if any, to take.
``(4)(A) The President shall determine whether to provide provisional
relief and proclaim such relief, if any, within 10 days after receipt
of the recommendation from the Trade Representative.
``(B) Such relief may take the form of--
``(i) the imposition of or increase in any duty;
``(ii) any modification, or imposition of any quantitative
restriction on the importation of an article into the United
States; or
``(iii) any combination of actions under clauses (i) and
(ii).
``(C) Any provisional action proclaimed by the President pursuant to
a determination of critical circumstances shall remain in effect not
more than 200 days.
``(D) Provisional relief shall cease to apply upon the effective date
of relief proclaimed under subsection (a), upon a decision by the
President not to provide such relief, or upon a negative determination
by the Commission under subsection (b).
``(j) Agreements With the People's Republic of China.--(1) The Trade
Representative is authorized to enter into agreements for the People's
Republic of China to take such action as necessary to prevent or remedy
market disruption, and should seek to conclude such agreements before
the expiration of the 60-dayconsultation period provided for under the
product-specific safeguard provision of the Protocol of Accession of
the People's Republic of China to the WTO, which shall commence not
later than 5 days after the Trade Representative receives an
affirmative determination provided for in subsection (e) or a
determination which the Trade Representative considers to be an
affirmative determination pursuant to subsection (e).
``(2) If no agreement is reached with the People's Republic of China
pursuant to consultations under paragraph (1), or if the President
determines than an agreement reached pursuant to such consultations is
not preventing or remedying the market disruption at issue, the
President shall provide import relief in accordance with subsection
(a).
``(k) Standard for Presidential Action.--(1) Within 15 days after
receipt of a recommendation from the Trade Representative under
subsection (h) on the appropriate action, if any, to take to prevent or
remedy the market disruption, the President shall provide import relief
for such industry pursuant to subsection (a), unless the President
determines that provision of such relief is not in the national
economic interest of the United States or, in extraordinary cases, that
the taking of action pursuant to subsection (a) would cause serious
harm to the national security of the United States.
``(2) The President may determine under paragraph (1) that providing
import relief is not in the national economic interest of the United
States only if the President finds that the taking of such action would
have an adverse impact on the United States economy clearly greater
than the benefits of such action.
``(l) Publication of Decision and Reports.--(1) The President's
decision, including the reasons therefor and the scope and duration of
any action taken, shall be published in the Federal Register.
``(2) The Commission shall promptly make public any report
transmitted under this section, but shall not make public any
information which the Commission determines to be confidential, and
shall publish notice of such report in the Federal Register.
``(m) Effective Date of Relief.--Import relief under this section
shall take effect not later than 15 days after the President's
determination to provide such relief.
``(n) Modifications of Relief.--(1) At any time after the end of the
6-month period beginning on the date on which relief under subsection
(m) first takes effect, the President may request that the Commission
provide a report on the probable effect of the modification, reduction,
or termination of the relief provided on the relevant industry. The
Commission shall transmit such report to the President within 60 days
of the request.
``(2) The President may, after receiving a report from the Commission
under paragraph (1), take such action to modify, reduce, or terminate
relief that the President determines is necessary to continue to
prevent or remedy the market disruption at issue.
``(3) Upon the granting of relief under subsection (k), the
Commission shall collect such data as is necessary to allow it to
respond rapidly to a request by the President under paragraph (1).
``(o) Extension of Action.--(1) Upon request of the President, or
upon petition on behalf of the industry concerned filed with the
Commission not earlier than the date which is 9 months, and not later
than the date which is 6 months, before the date any relief provided
under subsection (k) is to terminate, the Commission shall investigate
to determine whether action under this section continues to be
necessary to prevent or remedy market disruption.
``(2) The Commission shall publish notice of the commencement of any
proceeding under this subsection in the Federal Register and shall,
within a reasonable time thereafter, hold a public hearing at which the
Commission shall afford interested parties and consumers an opportunity
to be present, to present evidence, and to respond to the presentations
of other parties and consumers, and otherwise to be heard.
``(3) The Commission shall transmit to the President a report on its
investigation and determination under this subsection not later than 60
days before the action under subsection (m) is to terminate.
``(4) The President, after receiving an affirmative determination
from the Commission under paragraph (3), may extend the effective
period of any action under this section if the President determines
that the action continues to be necessary to prevent or remedy the
market disruption.

``SEC. 422. ACTION IN RESPONSE TO TRADE DIVERSION.

``(a) Monitoring by Customs Service.--In any case in which a WTO
member other than the United States requests consultations with the
People's Republic of China under the product-specific safeguard
provision of the Protocol of Accession of the People's Republic of
China to the World Trade Organization, the Trade Representative shall
inform the United States Customs Service, which shall monitor imports
into the United States of those products of Chinese origin that are the
subject of the consultation request. Data from such monitoring shall
promptly be made available to the Commission upon request by the
Commission.
``(b) Initiation of Investigation.--(1) Upon the filing of a petition
by an entity described in section 202(a) of the Trade Act of 1974, upon
the request of the President or the Trade Representative, upon
resolution of either of the Committees, or on its own motion, the
Commission shall promptly make an investigation to determine whether an
action described in subsection (c) has caused, or threatens to cause, a
significant diversion of trade into the domestic market of the United
States.
``(2) The Commission shall publish notice of the commencement of any
proceeding under this subsection in the Federal Register and shall,
within a reasonable time thereafter, hold public hearings at which the
Commission shall afford interested parties an opportunity to be
present, to present evidence, to respond to the presentations of other
parties, and otherwise to be heard.
``(3) The provisions of subsections (a)(8) and (i) of section 202 of
the Trade Act of 1974 (19 U.S.C. 2252(a)(8) and (i)), relating to
treatment of confidential business information, shall apply to
investigations conducted under this section.
``(c) Actions Described.--An action is described in this subsection
if it is an action--
``(1) by the People's Republic of China to prevent or remedy
market disruption in a WTO member other than the United States;
``(2) by a WTO member other than the United States to
withdraw concessions under the WTO Agreement or otherwise to
limit imports to prevent or remedy market disruption;
``(3) by a WTO member other than the United States to apply a
provisional safeguard within the meaning of the product-
specific safeguard provision of the Protocol of Accession of
the People's Republic of China to the WTO; or
``(4) any combination of actions described in paragraphs (1)
through (3).
``(d) Basis for Determination of Significant Diversion.--(1) In
determining whether significant diversion or the threat thereof exists
for purposes of this section, the Commission shall take into account,
to the extent such evidence is reasonably available--
``(A) the monitoring conducted under subsection (a);
``(B) the actual or imminent increase in United States market
share held by such imports from the People's Republic of China;
``(C) the actual or imminent increase in volume of such
imports into the United States;
``(D) the nature and extent of the action taken or proposed
by the WTO member concerned;
``(E) the extent of exports from the People's Republic of
China to that WTO member and to the United States;
``(F) the actual or imminent changes in exports to that WTO
member due to the action taken or proposed;
``(G) the actual or imminent diversion of exports from the
People's Republic of China to countries other than the United
States;
``(H) cyclical or seasonal trends in import volumes into the
United States of the products at issue; and
``(I) conditions of demand and supply in the United States
market for the products at issue.
The presence or absence of any factor under any of subparagraphs (A)
through (I) is not necessarily dispositive of whether a significant
diversion of trade or the threat thereof exists.
``(2) For purposes of making its determination, the Commission shall
examine changes in imports into the United States from the People's
Republic of China since the time that the WTO member commenced the
investigation that led to a request for consultations described in
subsection (a).
``(3) If more than 1 action by a WTO member or WTO members against a
particular product is identified in the petition, request, or
resolution under subsection (b) or during the investigation, the
Commission may cumulatively assess the actual or likely effects of such
actions jointly in determining whether a significant diversion of trade
or threat thereof exists.
``(e) Commission Determination; Agreement Authority.--(1) The
Commission shall make and transmit to the President and the Trade
Representative its determination under subsection (b) at the earliest
practicable time, but in no case later than 45 days after the date on
which the petition is filed, the request orresolution is received, or
the motion is adopted, under subsection (b). If the Commissioners
voting are equally divided with respect to its determination, then the
determination agreed upon by either group of Commissioners may be
considered by the President and the Trade Representative as the
determination of the Commission.
``(2) The Trade Representative is authorized to enter into agreements
with the People's Republic of China or the other WTO members concerned
to take such action as necessary to prevent or remedy significant trade
diversion or threat thereof into the domestic market of the United
States, and should seek to conclude such agreements before the
expiration of the 60-day consultation period provided for under the
product-specific safeguard provision of the Protocol of Accession of
the People's Republic of China to the WTO, which shall commence not
later than 5 days after the Trade Representative receives an
affirmative determination provided for in paragraph (1) or a
determination which the Trade Representative considers to be an
affirmative determination pursuant to paragraph (1).
``(3) Report by Commission.--
``(A) Not later than 10 days after a determination under
subsection (b), is made, the Commission shall transmit a report
to the President and the Trade Representative.
``(B) The Commission shall include in the report required
under subparagraph (A) the following:
``(i) The determination made under subsection (b) and
an explanation of the basis for the determination.
``(ii) If the determination under subsection (b) is
affirmative, or may be considered by the President or
the Trade Representative as affirmative under
subsection (e)(1), the recommendations of the
Commission on increased tariffs or other import
restrictions to be imposed to prevent or remedy the
trade diversion or threat thereof, and explanations of
the bases for such recommendations. Only those members
of the Commission who agreed to the affirmative
determination under subsection (b) are eligible to vote
on the proposed action to prevent or remedy the trade
diversion or threat thereof.
``(iii) Any dissenting or separate views by members
of the Commission regarding the determination and any
recommendation referred to in clauses (i) and (ii).
``(iv) A description of--
``(I) the short- and long-term effects that
implementation of the action recommended under
clause (ii) is likely to have on the
petitioning domestic industry, on other
domestic industries, and on consumers; and
``(II) the short- and long-term effects of
not taking the recommended action on the
petitioning domestic industry, its workers and
the communities where production facilities of
such industry are located, and on other
domestic industries.
``(C) The Commission, after submitting a report to the
President under subparagraph (A), shall promptly make it
available to the public (with the exception of confidential
business information) and cause a summary thereof to be
published in the Federal Register.
``(f) Public Comment.--If consultations fail to lead to an agreement
with the People's Republic of China or the WTO member concerned within
60 days, the Trade Representative shall promptly publish notice in the
Federal Register of any proposed action to prevent or remedy the trade
diversion, and provide an opportunity for interested persons to present
views and evidence on whether the proposed action is in the public
interest.
``(g) Recommendation to the President.--Within 20 days after the end
of consultations pursuant to subsection (e), the Trade Representative
shall make a recommendation to the President on what action, if any,
should be taken to prevent or remedy the trade diversion or threat
thereof.
``(h) Presidential Action.--Within 20 days after receipt of the
recommendation from the Trade Representative, the President shall
determine what action to take to prevent or remedy the trade diversion
or threat thereof.
``(i) Duration of Action.--Action taken under subsection (h) shall be
terminated not later than 30 days after expiration of the action taken
by the WTO member or members involved against imports from the People's
Republic of China.
``(j) Review of Circumstances.--(1) The Commission shall review the
continued need for action taken under subsection (h) if the WTO member
or members involved notify the Committee on Safeguards of the WTO of
any modification in the action taken by them against the People's
Republic of China pursuant to consultation referred to in subsection
(a). The Commission shall, not later than 60 days after such
notification, determine whether a significant diversion of trade
continues to exist and report its determination to the President. The
President shall determine, within 15 days after receiving the
Commission's report, whether to modify, withdraw, or keep in place the
action taken under subsection (h).

``SEC. 423. REGULATIONS; TERMINATION OF PROVISION.

``(a) To Carry Out Restrictions and Monitoring.--The President shall
by regulation provide for the efficient and fair administration of any
restriction proclaimed pursuant to the subtitle and to provide for
effective monitoring of imports under section 422(a).
``(b) To Carry Out Agreements.--To carry out an agreement concluded
pursuant to consultations under section 421(j) or 422(e)(2), the
President is authorized to prescribe regulations governing the entry or
withdrawal from warehouse of articles covered by such agreement.
``(c) Termination Date.--This subtitle and any regulations issued
under this subtitle shall cease to be effective 12 years after the date
of entry into force of the Protocol of Accession of the People's
Republic of China to the WTO.''.
(b) Conforming Amendment.--The table of contents of the Trade Act of
1974 is amended--
(1) in the item relating to title IV, by striking
``CURRENTLY'';
(2) by inserting before the item relating to section 401 the
following:

``Chapter 1--Trade Relations With Certain Countries''; and

(3) by adding after the item relating to section 409 the
following:

``Chapter 2--Relief From Market Disruption to Industries and Diversion
of Trade to the United States Market

``Sec. 421. Action to address market disruption.
``Sec. 422. Action in response to trade diversion.
``Sec. 423. Regulations; termination of provision.''.

SEC. 4. AMENDMENT TO SECTION 123 OF THE TRADE ACT OF 1974--COMPENSATION

AUTHORITY.

Section 123(a)(1) of the Trade Act of 1974 (19 U.S.C. 2133(a)(1)) is
amended by inserting after ``title III'' the following; ``, or under
chapter 2 of title IV of the Trade Act of 1974''.

I. INTRODUCTION

A. Purpose and Summary

H.R. 4444 amends Title IV of the Trade Act of 1974 to
remove the People's Republic of China (China) from the list of
countries subject to this provision upon the accession of China
to the World Trade Organization and upon certification by the
President that the final terms of accession are at least
equivalent to the terms of the November 15, 1999 bilateral
agreement between the United States and the People's Republic
of China.

B. Background

The Jackson-Vanik amendment

At present, China's trade status is subject to the Jackson-
Vanik amendment to Title IV of the Trade Act of 1974, the
provisions of law governing the most-favored-nation (MFN) trade
status, now referred to as normal trade relations
(NTR),¹ of nonmarket economy countries ineligible
for MFN treatment as of the enactment of the Trade Act.
---------------------------------------------------------------------------
\1\ Legislation to replace the term ``most-favored-nation'' (MFN)
in United States statutes with the term ``normal trade relations''
(NTR) was enacted into law as part of the Internal Revenue Service
Restructuring and Reform Act of 1998, P.L. 105-206.
---------------------------------------------------------------------------
Prior to 1951, the United States extended
nondiscriminatory, or unconditional NTR treatment to all of its
trading partners in accordance with obligations undertaken when
the United States joined the General Agreement on Tariffs and
Trade (GATT) in 1948. However, the Trade Agreements Extension
Act of 1951 directed the President to withdraw or suspend the
NTR status of the Soviet Union and all countries under the
domination of Communism. As implemented, this directive was
applied to all then-existing communist countries except
Yugoslavia. Poland's NTR status was restored by Presidential
directive in 1960.
Title IV of the Trade Act of 1974, which includes the so-
called ``Jackson-Vanik amendment,'' represented a
liberalization of the 1951 law. Title IV authorizes the
extension of normal trade relations treatment to nonmarket
economies which both meet freedom-of-emigration requirements
and conclude a commercial agreement with the United States.
Title IV also authorizes the President to waive the freedom-of-
emigration requirements of that title and to extend NTR status
to a nonmarket economy country if he determines that doing so
will substantially promote the freedom-of-emigration
objectives. The President's waiver authority for China under
Title IV expires at midnight on July 2 of each year. It may be
extended on an annual basis upon a Presidential determination
and report to Congress that such extension will substantially
promote the freedom-of-emigration objectives of the 1974 Trade
Act.
In the case of China, a bilateral commercial agreement, as
required by the Jackson-Vanik amendment, was concluded on July
7, 1979, entered into force February 1, 1980, and has remained
in force since that time. The President first proclaimed NTR
treatment for Chinese products in 1980, and that treatment has
been renewed annually since then on the basis of Presidential
waivers. Most recently, on June 3, 1999, the President formally
transmitted to the Congress his recommendation to waive the
1974 Trade Act's freedom-of-emigration requirements and to
thereby extend China's NTR status for an additional year,
during the period of July 3, 1999, through July 2, 2000.
Under the Jackson-Vanik amendment, the President's waiver
authority continues in effect unless disapproved by the
Congress--either generally or with respect to a specific
country--within 60 calendar days of the expiration of the
existing authority. (Absent a change in law, the President's
waiver for the period July 3, 2000, through July 2, 2001, is
due on June 3, 2000.) Under Title IV amendments adopted as part
of the Customs and Trade Act of 1990, disapproval takes the
form of a joint resolution disapproving the extension of
Presidential authority to waive the 1974 Trade Act's freedom-
of-emigration requirements. Under the 1990 amendments, Congress
may consider any veto message before the later of the end of
the 60-day period or within 15 legislative days. The
disapproval resolution is highly privileged, thus generally
guaranteeing a vote in the House if it is introduced.
If both chambers of Congress do not pass a resolution of
disapproval within 60 calendar days following the expiration of
the existing waiver authority, China's NTR status is
automatically renewed.
In the years since 1980, when China conditionally regained
its NTR status, all legislative attempts at revoking it or
subjecting it to additional conditions have been unsuccessful.
For example, in 1995, during the first session of the 104th
Congress, H.J. Res. 96, a joint resolution to disapprove
renewal of China's waiver, was tabled in the House, thereby
precluding any further disapproval action. During the next four
years resolutions of disapproval failed in the House. In 1996,
H.J. Res. 182 was defeated by a vote of (141-286). In 1997,
H.J. Res. 79 was defeated by a vote of (173-259). In 1998, H.J.
Res. 121 was defeated by a vote of (166-264). In 1999, H.J.
Res. 57 was defeated by a vote of (170-260).

China's negotiations to join the World Trade Organization

China applied for accession to the General Agreement on
Tariffs and Trade (GATT) in July 1986, and work has proceeded
in the China Working Party since that time to negotiate the
conditions upon which China will enter the GATT, and since
January 1, 1995, the World Trade Organization (WTO).
Article XII of the Agreement Establishing the WTO states
that any State or separate customs territory may accede to the
WTO ``on terms to be agreed between it and the WTO.'' In
practice, any WTO applicant must negotiate terms for membership
in the WTO in the form of a Protocol of Accession. Through the
operation of a Working Party, the United States and other WTO
membershave an opportunity to review the trade regimes of
applicants to ensure that they are capable of implementing WTO
obligations. In parallel with the Working Party's efforts, the United
States and other interested member governments conduct separate
negotiations with the applicant. These bilateral negotiations are aimed
at achieving specific concessions and commitments on tariff levels,
agricultural market access, and trade in services.
On April 8, 1999, following the summit meeting between
Chinese Premier Zhu Rongji and President Clinton, Ambassador
Barshefsky announced that U.S. and Chinese negotiators secured
``broad progress toward an expansive bilateral market access
agreement,'' which would provide extensive market openings for
U.S. agriculture, manufactured products, and services along
with Chinese commitments to adopt WTO rules relating to such
issues as technology transfer and offsets, subsidies, product
safeguards, and State enterprises. The Administration, however,
declined to sign the agreement at that time.

The U.S.-China WTO Agreement

The United States-China Bilateral Trade Agreement was
eventually finalized on November 15, 1999, in Beijing. In this
historic agreement China committed upon accession to:
Phase-in of full trading and distribution rights
(including the ability to provide services auxiliary to
distribution) for almost all products for U.S. firms throughout
China.
Cut average tariffs for U.S. priority agricultural
products (e.g., beef, grapes, wine, cheese, poultry, and pork)
from 31.5% to 14.5% by 2004. Overall industrial tariffs would
fall from an average of 24.6% to 9.4% by 2005 (tariffs on U.S.
``priority products,'' such as wood, paper, chemicals, and
capital and medical equipment would fall even further). Tariffs
on information technology products, such as computers,
semiconductors, and telecommunications equipment, would be cut
from an average level of 13.3% to zero by 2005.
Establish a tariff-rate quota system for imports
of agricultural bulk commodities (such as wheat, corn, cotton,
barley, and rice), i.e., imports up to a specified quota level
would be assessed a much higher tariff rate. Private trade in
agricultural products will be permitted for the first time.
Phase out quotas and other quantitative
restrictions (some upon accession, many within two years, and
most within five years). Quota levels for many products would
expand by 15% each year until the elimination of the quota.
Eliminate export subsidies on agricultural
products and SPS restrictions that are not scientifically-
based.
Provide access to service sectors (many of which
are currently closed to foreign firms), including distribution,
telecommunications, insurance, banking, securities, and
professional services (including legal, accountancy, taxation,
management consultancy, architecture, engineering, urban
planning, medical and dental, and computer-related services).
China would expand (over various transitional periods) the
scope of allowed services and gradually remove geographical
restrictions on foreign service providers. The amount of
permitted foreign ownership in service industries would vary
(and in some cases expand over time) from sector to sector.
Reduce restrictions on auto trade. Tariffs on
autos would fall from 80-100% to 25% (tariffs on auto parts
reduced to an average rate of 10%) by 2006. Auto quotas would
be eliminated by 2005. U.S. financial firms would be allowed to
provide financing for the purchase of cars in China.
Provide fair treatment for foreign firms operating
in China by removing government rules requiring technology
transfer, local content, and export performance conditions.
Provide that Chinese state-owned and state-
invested firms make purchases and sales based on commercial
considerations and give U.S. firms the opportunity to compete
for sales on a non-discriminatory basis.
Accept the use by the United States of certain
antidumping provisions (over a transitory period) and to permit
the use of certain safeguard measures to respond to possible
surges in imports from China that might cause or threaten to
cause market disruption to a U.S. industry (over transitory
periods).
U.S. firms would also benefit from China's trade agreements
with the other WTO countries that have concluded bilateral
agreements with China and those six WTO members that are still
negotiating with China if they have obtained or are able to
obtain benefits beyond what the United States was able to
achieve. In addition, the WTO working party is expected to set
additional requirements on China's WTO accession (such as rules
on subsidies) that would also benefit U.S. firms.²
---------------------------------------------------------------------------
\2\ CRS memo, U.S. Interests in China's Accession to the World
Trade Organization: Arguments in Favor of Accession, May 2, 2000.
---------------------------------------------------------------------------
In response to progress achieved in China's WTO commitments
represented by the bilateral agreement with the United States,
President Clinton announced that he would work with other WTO
member countries to gain China's entry in the WTO as soon as
possible, and on March 8, 2000, he transmitted to Congress a
request for legislation to terminate the application of Title
IV of the Trade Act of 1974 to China and to extend Normal Trade
Relations (NTR) treatment to products from China.
The Agreement represents a crucial step in China's WTO
accession process. Another significant step occurred on May 19,
2000, when the European Union also completed an agreement with
China on terms of accession. Other steps that remain ahead
include the conclusion of bilateral negotiations with a handful
of other WTO members, such as Mexico, as well as the
multilateral negotiations on China's accession protocol. China
then must complete its domestic process for implementing the
country's WTO commitments. Accession takes effect thirty days
after China deposits its instruments of ratification.

C. Legislative History

Committee action

H.R. 4444 was introduced on May 15, 2000, by request, by
Representatives Archer, Crane, Matsui and Tanner and was
referred to the Committee on Ways and Means. On May 17, 2000,
the Committee ordered favorably reported H.R. 4444 to the House
of Representatives, with an amendment in the nature of a
substitute, by a recorded vote of 34-4. The substitute
contained the provision granting the President the authority to
proclaim permanent Normal Trade Relations to China at the time
of its accession to the WTO, as noted above, and codifying the
special import surge mechanism.

Legislative hearing

On February 16, 2000, the Committee on Ways and Means held
a hearing on the bilateral trade agreement between the United
States and China and on the pending accessions of China and
Taiwan to the World Trade Organization (WTO). The Committee
held a hearing devoted in part to China's WTO accession on
April 12, 2000. On May 3, 2000, the Ways and Means Committee
held a hearing on China's accession to the WTO. At these
hearings, Members of Congress, a governor, and representatives
from business, labor, human rights and religious groups
expressed their views regarding U.S.-China trade relations. At
the May 3 hearing, four cabinet members appeared in favor of
legislation to normalize trade relations with China.

II. EXPLANATION OF THE BILL

Sections 1 and 2

Present law

Title IV of the Trade Act of 1974, as amended by the
Customs and Trade Act of 1990 (Public Law 101-382), sets forth
three requirements relating to freedom of emigration which must
be met, or waived by the President, in order for a nonmarket
economy country to be granted NTR. Title IV also requires that
a bilateral commercial agreement that provides for
nondiscriminatory, NTR status remain in force between the
United States and the nonmarket economy country receiving NTR
status. Finally, Title IV sets forth minimum provisions that
must be included in such an agreement.
As described above, an annual Presidential recommendation
under section 402(d) for a 12-month extension of authority to
waive the Jackson-Vanik freedom-of-emigration requirements--
either generally or for specific countries--may be disapproved
through passage by Congress of a joint resolution of
disapproval within 60 calendar days after the expiration of the
previous waiver authority. Congress may override a Presidential
veto within the later of the end of the 60 calendar day period
for initial passage or 15 legislative days after the veto.
Before China joins the WTO, section 1106 of the Omnibus
Trade and Competitiveness Act of 1988 (P.L. 103-465) requires
the President to make certain determinations about China's
state trading enterprises. Specifically, the President must
decide: (1) whether China's state trading enterprises account
for a significant share of either China's exports or China's
goods that are subject to competition from goods imported into
China; and (2) whether these enterprises adversely affect U.S.
foreign trade or the U.S. economy. If both determinations are
affirmative, the WTO agreement cannot apply between the United
States and China until either China enters into an agreement
that addresses the operations of state trading enterprises, or
legislation is enacted approving application of the WTO
agreement to China.

Explanation of the provision

The provision grants the President the authority to
determine that newly designated Chapter I of Title IV of the
Trade Act of 1974 no longer applies to China after he makes a
determination and transmits a report to Congress certifying
that the terms and conditions for accession of China to the WTO
are at least equivalent to those agreed to between the United
States and China on November 15, 1999, in the bilateral market
access agreement.
The Administration has stated that it believes that the
terms of China's accession to the WTO, and in particular the
November 1999 bilateral trade agreement, will adequately
address China's state trading enterprises, and the Committee
expects the President to certify this as part of the report
required under section (1)(b).

Reasons for change

The Committee has long supported a policy of engagement
with China and has consistently rejected annual legislation to
revoke normal trade relations, or nondiscriminatory trade
treatment, which it sees as the cornerstone of that policy.
Members believe that normalizing trade relations with China by
graduating it from the annual review process established under
the Jackson-Vanik amendment, a Cold War trade statute, is
appropriate. Specifically, the Committee believes that
increased trade, together with other tools of active
engagement, enables the United States to influence the growth
ofdemocratic and market-oriented policies in China in a manner
which will improve respect for fundamental human rights and encourage
political reform.
The Committee continues to view with deep concern
widespread human rights abuses carried out by the Government of
China against Catholic priests and bishops, Protestant pastors,
Tibetan Buddhist clergy, and pro-democracy activists.
Nevertheless, the Committee is concerned that rejecting the
President's recommendation to graduate China from the Jackson-
Vanik amendment may be interpreted by the Chinese as an
antagonistic act that would undermine U.S. leverage to bring
about change in China, while at the same time sacrificing the
interests of U.S. exporters, workers, and consumers.
Rejecting the President's proposal would also have a
serious adverse effect on Hong Kong and Taiwan due to the high
levels of trade and investment between Hong Kong and China and
between Taiwan and China. By severely disrupting trade in the
region, terminating NTR would harm U.S. efforts to address
economic instability in Asia and risk prompting currency
devaluations, similar to those that occurred in 1997 and 1998.
Failing to grant NTR treatment at this time would forfeit the
market access concessions made by the Chinese in the Bilateral
Trade Agreement and those that will be included in China's
pending accession to the World Trade Organization. If fully
implemented, these commitments would represent substantial new
opportunities for United States exports to, and investment in
China. Finally, the Committee believes that revoking China's
NTR, or failing to renew China's annual NTR status as of July 3
of this year, would constitute a dangerously blunt sanction
that would work against U.S. Government efforts to bring China
into the global community of civilized nations. While the
United States has many serious problems with China, the
Committee believes areas of U.S.-Sino disagreement are best
addressed through expanding U.S. contact with China and
maintaining strong and effective mechanisms to press China to
continue to reform.
The Committee recognizes that Congressional approval of
permanent normal trade relations (NTR) pursuant to H.R. 4444 is
not necessary for China to accede to the WTO. However, in order
for American businesses, farmers, and workers to be guaranteed
an opportunity to benefit from the trade concessions and better
compete in China's markets, China's name must be removed from
Title IV of the Trade Act of 1974, the so-called Jackson-Vanik
amendment, which provides for an annual review of China's trade
status based on freedom of emigration.
Otherwise, the United States would be in violation of
Article I of the GATT, which requires the extension of
``unconditional'' most favored nation (or NTR) status, and
subject to trade sanctions. If the United States does not
remove the conditions imposed by Jackson-Vanik, the United
States would have to invoke the non-application clause of the
GATT, meaning that China would be able to withhold benefits of
the 1999 bilateral agreement from the United States. At the
same time the Committee recognizes that the Bilateral Trade
Agreement involves one-way trade concessions on the part of
China and requires no reductions in U.S. tariffs on U.S.
imports of Chinese products.
The Committee agrees with Ambassador Barshefsky that the
argument, put forward by some opponents of H.R. 4444, that the
1979 U.S.-China Trade Agreement, combined with commitments to
other WTO Members, would provide the United States with
benefits similar to what will be available to the United States
under the 1999 Bilateral Trade Agreement is ``legally
unsustainable.'' In a letter to Ranking Member Rangel dated
March 8, 2000, she wrote, ``While the 1979 Agreement may
provide the basis for the United States to claim certain
limited benefits, relying on the 1979 Agreement would deprive
the United States of virtually all market access negotiated for
services, critical elements necessary for meaningful market
access for goods, key provisions negotiated to safeguard
against injurious imports, as well as other special rules,
commitments and vital enforcement rights. The rights conferred
by the 1979 Agreement would leave U.S. interests across all
sectors at a substantial competitive disadvantage with foreign
interests that would enjoy the full benefits of China's WTO
membership.'' Concurring with this analysis, the Committee
strongly believes that if the United States was forced to
invoke the WTO's non-application clause (in the event Congress
fails to pass H.R. 4444) China would have no obligation to
grant the United States all the same trade benefits it will
grant to other WTO members. Finally, the Committee also notes
that absent passage of H.R. 4444, the United States would be
forced to address Chinese trade barriers without recourse to
the WTO's binding dispute settlement mechanism.
In evaluating whether the substantial market access
concessions represented by the bilateral trade agreement met
U.S. trade negotiating objectives, the Committee relied on a
comprehensive hearing record, extensive consultations with the
Administration, as well as the results of a classified report
by the General Accounting Office (GAO) that was requested by
Trade Subcommittee Chairman Crane on May 5, 1997.
In a derestricted report released in May 2000, the GAO
determined that China has agreed to ``take most of the specific
actions originally considered necessary to achieve United
States objectives.'' The GAO report supports the Committee's
conclusion that the bilateral trade agreement, combined with
substantial progress in the multilateral negotiations, will
greatly benefit the commercial interests of United States
firms, workers, and farmers in the new century.

Section 3

Present law

Section 406 of the Trade Act of 1974 authorizes the
President to provide temporary import relief in the form of
increased tariffs or quotas if imports from Communist countries
are causing market disruption. Market disruption exists when
imports of an article, like or directly competitive with an
article produced by a domestic industry, are increasing, either
relatively or absolutely, so as to be a significant cause of
material injury, or threat thereof, to such domestic industry.
A petition for relief may be filed with the ITC by workers
or firms in the domestic industry. The ITC must determine,
within three months, whether imports of an article produced in
a Communistcountry are causing market disruption. If the ITC
finds that market disruption exists, it must also recommend to the
President relief in the form of tariffs or quantitative restrictions to
prevent or remedy such market disruption.
Upon receiving the ITC report containing its findings and
recommendations, the President has 60 days to take action. The
President must provide import relief unless he determines that
such relief is not in the national economic interest of the
United States.
Section 406(c) authorizes the President, prior to an ITC
determination, to take temporary emergency action with respect
to imports from a Communist country whenever he finds that
there are reasonable grounds to believe there is market
disruption. When taking such action, the President must also
request the Commission to conduct an investigation under
section 406(a). Any emergency relief ceases to apply on the day
the Commission makes a negative finding or on the effective
date of action by the President following an affirmative ITC
finding.
On November 15, 1999, Ambassador Barshefsky announced the
successful completion of bilateral talks on China's accession
to the World Trade Organization (WTO). Along with market access
commitments that will provide market openings for U.S. exports
to China, the Chinese government agreed to WTO Protocol
language outlining a product-specific safeguard that is
available to WTO members.

Explanation of the provision

Section 3 created a new chapter of Title IV which
implements the anti-surge mechanism established under the U.S.-
China Bilateral Trade Agreement. This is intended to replace
section 406 of the Trade Act of 1974, which would no longer
apply to China as the result of section 1 of this Act.
The safeguard would permit the United States to provide
relief to domestic industries and workers where products of
Chinese origin are being imported in such increased quantities
and under such conditions as to cause or threaten to cause
market disruption to the domestic producers as a whole of like
or directly competitive products. The relief is to be imposed
only to the extent and for such period as the President
considers necessary to prevent or remedy the market disruption.
Procedures are modeled after Section 406, with certain
modifications to conform to language of the bilateral trade
agreement. U.S. industries or workers claiming injury due to
import surges from China would file a petition with the U.S.
International Trade Commission (ITC) or the ITC would initiate
an investigation at the request of the President or on motion
of the House Ways and Means Committee or the Senate Finance
Committee. According to the U.S.-China Agreement and under the
bill, market disruption occurs when subject imports ``are
increasing rapidly, either absolutely or relatively, so as to
be a significant cause of material injury or threat of material
injury to the domestic industry.''
In determining whether market disruption exists the
Commission shall consider objective factors, including: (1) the
volume of imports of the product which is subject to the
investigation; (2) the effect of imports of such product on
prices in the United States of like or directly competitive
article, and (3) the effect of imports of such product on the
domestic industry producing like or directly competitive
articles. The presence or absence of any factor listed in
paragraph (1), (2), and (3) is not necessarily dispositive of
whether market disruption exists. In addition, the Committee
intends that the Commission, in determining whether imports
from China contribute significantly to the material injury to
the domestic industry, shall examine factors other than such
imports which may be a cause of the material injury.
Within 60 days after receipt of the petition, request or
motion (90 days, where the petitioner alleges critical
circumstances), the ITC would make a determination as to
whether the subject imports are causing or threatening market
disruption.
Twenty days after the ITC makes an affirmative
determination with respect to market disruption, the ITC would
issue a report to the President and to the United States Trade
Representative (USTR) setting forth the reasons for its
determination and recommendation(s) of actions necessary to
prevent or remedy market disruption. Twenty days later the USTR
would publish a notice of proposed action, seeking views and
evidence on the appropriateness of the proposed action and
whether it would be in the public interest. The bill also
requires that the USTR hold a hearing on the proposed action.
If the ITC determination is affirmative with respect to
market disruption, the President would be required to request
consultations with the People's Republic of China to remedy the
market disruption. If the United States and China are unable to
reach agreement within the sixty day consultation period
established in the bilateral agreement and the bill, then the
President would be required to decide what action, if any, to
take within 25 days after the end of consultations. Any relief
proclaimed would become effective in 15 days. If the President
determines that an agreement with China concluded under this
section is not preventing or remedying the market disruption at
issue, then the President is to initiate new consultations and
proceedings under this section. However, if China is not
complying with the terms of the agreement entered into under
the November 15 Bilateral Agreement, then the President shall
promptly provide relief consistent with the terms of that
Bilateral Agreement.
The entire period from petition to proclamation of relief
would be 150 days, which is identical to the duration under
section 406 of the Trade Act.
The bill establishes clear standards for the application of
Presidential discretion in providing relief to injured
industries and workers. If the ITC makes an affirmative
determination on market disruption, there would be a
presumption in favor of providing relief. That presumption can
be overcome only if the President finds that providing relief
would have an adverse impact on the United States economy
clearly greater than the benefits of such action, or, in
extraordinary cases, that such action would cause serious harm
to the national security of the United States.
The provision also sets forth authority to the President to
modify, reduce or terminate relief, as well as monitoring of
relief by the Commission and an opportunity for the President
to request a reportfrom the Commission on the probable effects
of such modification, termination, or reduction. Finally, the provision
allows for extension of relief under certain circumstances.
The bill would also authorize the President to provide a
provisional safeguard in cases where ``delay would cause damage
which it would be difficult to repair,'' as permitted under the
U.S.-China Agreement. If such circumstances are alleged, the
ITC would be required to make a determination on critical
circumstances and a preliminary determination on market
disruption within 45 days of receipt of the petition, request,
or motion. If those determinations are affirmative, President
would be required to determine whether to provide such
provisional relief within 20 days.
Finally, the bill would implement a provision in the U.S.-
China Agreement concerning trade diversion. That provision
addresses circumstances in which a safeguard applied by a third
country with respect to Chinese goods ``causes or threatens to
cause significant diversions of trade'' into the United States.
If, on the basis of the monitoring results provided by the
Customs Service and other reasonably available relevant
evidence, the ITC determines that an action by another WTO
Member threatens or causes significant trade diversion, the
USTR would request consultations with China and/or the Member
imposing the safeguard. If, as provided in the Agreement,
consultations fail to lead to an agreement to address the trade
diversion within 60 days, the President shall determine, within
40 days after consultations end, what action, if any, to take
to prevent or remedy the trade diversion. The total time from
petition to relief under the trade diversion provision would be
150 days.
Section 442(d)(2) as added by this Act would require the
Commission to examine changes in imports into the United States
from the People's Republic of China since the time that the WTO
Member commenced the investigation that led to a request for
consultations. The Committee recognizes that there may be
instances in which a WTO Member may not announce an
investigation prior to requesting consultations with China. In
such instances, the Commission should examine data from the
time of the WTO Member's notification to the WTO of a request
for consultations with China.
The product-specific safeguard is available for 12 years
after China's accession to the WTO.

Reasons for change

The Committee intends administration of the product
specific safeguard to be consistent with the U.S.-China
Bilateral Trade Agreement and with U.S. obligations under the
WTO. This is a temporary, extraordinary trade remedy
specifically designed to address concerns about potential
increased import competition from China in the future.

Effective date

The extension of non-discriminatory treatment to the
products of China shall be effective no earlier than the
effective date of the accession of this country to the World
Trade Organization.

III. VOTES OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the votes of the Committee on Ways and Means in its
consideration of the bill, H.R. 4444.

MOTION TO REPORT THE BILL

The bill, H.R. 4444, as amended, was ordered favorably
reported by a rollcall vote of 34 yeas to 4 nays (with a quorum
being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer..................... X ........ ......... Mr. Rangel....... X ........ .........
Mr. Crane...................... X ........ ......... Mr. Stark........ ........ X .........
Mr. Thomas..................... X ........ ......... Mr. Matsui....... X ........ .........
Mr. Shaw....................... X ........ ......... Mr. Coyne........ ........ X .........
Mrs. Johnson................... X ........ ......... Mr. Levin........ X ........ .........
Mr. Houghton................... X ........ ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... X ........ ......... Mr. McDermott.... X ........ .........
Mr. McCrery.................... X ........ ......... Mr. Kleczka...... ........ X .........
Mr. Camp....................... X ........ ......... Mr. Lewis (GA)... ........ X .........
Mr. Ramstad.................... X ........ ......... Mr. Neal......... X ........ .........
Mr. Nussle..................... X ........ ......... Mr. McNulty...... ........ ........ .........
Mr. Johnson.................... X ........ ......... Mr. Jefferson.... X ........ .........
Ms. Dunn....................... X ........ ......... Mr. Tanner....... X ........ .........
Mr. Collins.................... X ........ ......... Mr. Becerra...... X ........ .........
Mr. Portman.................... X ........ ......... Mrs. Thurman..... X ........ .........
Mr. English.................... X ........ ......... Mr. Doggett...... X ........ .........
Mr. Watkins.................... X ........ .........
Mr. Hayworth................... X ........ .........
Mr. Weller..................... X ........ .........
Mr. Hulshof.................... X ........ .........
Mr. McInnis.................... X ........ .........
Mr. Lewis (KY)................. X ........ .........
Mr. Foley...................... X ........ .........
----------------------------------------------------------------------------------------------------------------

votes on amendments

Rollcall votes were conducted on the following amendments
to the Chairman's amendment in the nature of a substitute.
An amendment by Mr. Stark, providing that the extension of
nondiscriminatory treatment pursuant to section 1(a)(1) would
not become effective unless Taiwan accedes to the World Trade
Organization on the same day as, or before, the effective date
of the accession of the People's Republic of China to the World
Trade Organization, was defeated by a rollcall vote of 10 yeas
to 28 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer..................... ........ X ......... Mr. Rangel....... ........ X .........
Mr. Crane...................... ........ X ......... Mr. Stark........ X ........ .........
Mr. Thomas..................... ........ X ......... Mr. Matsui....... ........ X .........
Mr. Shaw....................... ........ X ......... Mr. Coyne........ X ........ .........
Mrs. Johnson................... ........ X ......... Mr. Levin........ ........ X .........
Mr. Houghton................... ........ X ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... ........ ........ ......... Mr. McDermott.... ........ X .........
Mr. McCrery.................... ........ X ......... Mr. Kleczka...... X ........ .........
Mr. Camp....................... ........ X ......... Mr. Lewis (GA)... X ........ .........
Mr. Ramstad.................... ........ X ......... Mr. Neal......... ........ X .........
Mr. Nussle..................... ........ X ......... Mr. McNulty...... X ........ .........
Mr. Johnson.................... ........ X ......... Mr. Jefferson.... X ........ .........
Ms. Dunn....................... ........ X ......... Mr. Tanner....... ........ X .........
Mr. Collins.................... ........ X ......... Mr. Becerra...... X ........ .........
Mr. Portman.................... ........ X ......... Mrs. Thurman..... X ........ .........
Mr. English.................... ........ X ......... Mr. Doggett...... X ........ .........
Mr. Watkins.................... ........ X .........
Mr. Hayworth................... ........ X .........
Mr. Weller..................... ........ X .........
Mr. Hulshof.................... ........ X .........
Mr. McInnis.................... ........ X .........
Mr. Lewis (KY)................. ........ X .........
Mr. Foley...................... ........ X .........
----------------------------------------------------------------------------------------------------------------

An amendment by Mr. Stark, providing that the extension of
nondiscriminatory treatment would not become effective until
the United States and the People's Republic of China have
signed an agreement providing for the exemption of a
Presidential order banning the importation of munitions,
principally guns and ammunition from China, was defeated by a
rollcall vote of 6 yeas to 16 nays.
The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representatives Yea Nay Present Representatives Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer..................... ........ X ......... Mr. Rangel....... ........ X .........
Mr. Crane...................... ........ ........ ......... Mr. Stark........ X ........ .........
Mr. Thomas..................... ........ X ......... Mr. Matsui....... ........ X .........
Mr. Shaw....................... ........ X ......... Mr. Coyne........ ........ ........ .........
Mrs. Johnson................... ........ X ......... Mr. Levin........ ........ X .........
Mr. Houghton................... ........ ........ ......... Mr. Cardin....... X ........ .........
Mr. Herger..................... ........ X ......... Mr. McDermott.... X ........ .........
Mr. McCrery.................... ........ ........ ......... Mr. Kleczka...... X ........ .........
Mr. Camp....................... ........ ........ ......... Mr. Lewis (GA)... X ........ .........
Mr. Ramstad.................... ........ ........ ......... Mr. Neal......... ........ ........ .........
Mr. Nussle..................... ........ ........ ......... Mr. McNulty...... ........ ........ .........
Mr. Johnson.................... ........ X ......... Mr. Jefferson.... X ........ .........
Ms. Dunn....................... ........ X ......... Mr. Tanner....... ........ ........ .........
Mr. Collins.................... ........ ........ ......... Mr. Becerra...... ........ ........ .........
Mr. Portman.................... ........ ........ ......... Mrs. Thurman..... ........ ........ .........
Mr. English.................... ........ X ......... Mr. Doggett...... ........ ........ .........
Mr. Watkins.................... ........ ........ .........
Mr. Hayworth................... ........ X .........
Mr. Weller..................... ........ ........ .........
Mr. Hulshof.................... ........ X .........
Mr. McInnis.................... ........ X .........
Mr. Lewis (KY)................. ........ X .........
Mr. Foley...................... ........ X .........
----------------------------------------------------------------------------------------------------------------

IV. BUDGET EFFECTS

A. Committee Estimate of Budgetary Effects

In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made concerning the effects on the budget of this resolution,
H.R. 4444 as reported: The Committee agrees with the estimate
prepared by CBO which is included below.

B. Statement Regarding New Budget Authority and Tax Expenditures

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that
enactment of H.R. 4444 would affect revenues, but CBO has no
basis for estimating the magnitude of this effect.

C. Cost Estimate Prepared by the Congressional Budget Office

In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the Congressional Budget Office, the following
report prepared by CBO is provided.

U.S. Congress,
Congressional Budget Office,
Washington, DC, May 22, 2000.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4444, a bill to
authorize the extension of nondiscriminatory treatment (normal
trade relations treatment) to the People's Republic of China.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Hester
Grippando (for revenues), and Sunita D'Monte (for spending
subject to appropriation).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.

H.R. 4444--A bill to authorize the extension of nondiscriminatory
treatment (normal trade relations treatment) to the People's
Republic of China

Summary: H.R. 4444 would allow the President to grant
permanent Normal Trade Relations (PNTR) status to the People's
Republic of China (China). H.R. 4444 would become effective no
earlier than the date of the accession of the People's Republic
of China to the World Trade Organization (WTO). CBO concludes
that enactment of the bill would likely increase revenues, but
CBO has no basis for estimating the revenue impact of granting
the President such authority. CBO estimates that implementing
H.R. 4444 would cost $1 million a year, subject to the
availability of appropriate funds. Since enacting H.R. 4444
would affect revenues, pay-as-you-go procedures would apply.
H.R. 4444 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments. By
broadening the conditions under which the U.S. government could
impose trade restrictions on Chinese goods, the bill could
impose a private-sector mandate on importers of Chinese goods
if those conditions are met. However, CBO has no basis for
estimating the cost of this mandate.

Estimated cost to the Federal Government

Revenues
H.R. 4444 would remove China from the list of countries
under Title IV of the Trade Act of 1974 (the Jackson-Vanik
amendment). The Jackson-Vanik amendment sets forth freedom-of-
emigration criteria which must be met or waived by the
President and a bilateral trade agreement must be in place in
order for a non-market economy to be granted normal trade
relations (NTR) status. A waiver of the Jackson-Vanik amendment
by the Presidentis subject to disapproval by the United States
Congress. Removing China from the Jackson-Vanik amendment would allow
the President to grant PNTR to China.
CBO estimates that in itself, granting PNTR treatment to
China would have no impact on receipts relative to its revenue
baseline. The People's Republic of China has received NTR,
renewed annually on the basis of a Presidential waiver of the
Jackson-Vanik amendment, since February 1, 1980. CBO's revenue
baseline assumes that the People's Republic of China will
continue to receive NTR status.
Granting China PNTR status could have an effect on receipts
by allowing the United States to trade with China under the
WTO, if and when China should enter the WTO. On November 15,
1999, the President negotiated a bilateral trade agreement with
China intended to govern the conditions under which the United
States and China would trade once China enters the WTO. H.R.
4444 would require that the President certify that the final
terms of China's accession into the WTO are equivalent to that
agreement. Without legislation enabling the President to grant
PNTR to China, the United States would not be able to trade
with China under the WTO.
Imports of textile and apparel products from China are
currently subject to quotas. If the United States were to trade
with China under the WTO, these quotas would be liberalized.
Imports of textile and apparel products from China would likely
increase. CBO expects that increased imports from China would
be partly offset by decreased imports from other countries. The
increase in imports could also be offset by a provision in H.R.
4444 that would allow the President to place increased duties
or other restrictions on Chinese imports if it is determined
that such imports cause or threaten to cause market disruption
to domestic producers. The result of these changes would be an
increase in collections of tariff revenues. However, because of
the complexity of the world market, undetermined issues facing
if, how, and when China would join the WTO, and administrative
mechanisms that could potentially be employed to alter the
China's quota under the WTO, CBO has no basis to determine what
the magnitude of such an effect would be.
Spending subject to appropriation
H.R. 4444 would require the International Trade Commission
(ITC) to investigate and report on petitions filed with it
alleging that China has engaged in either market disruption or
trade diversion. Based on information from ITC, CBO estimates
that this bill would increase spending subject to appropriation
by $1 million a year.
Estimated impact on state, local, and tribal governments:
H.R. 4444 contains no intergovernmental mandates as defined in
UMRA and would not affect the budgets of state, local, or
tribal governments.
Estimated impact on the private sector: The bill would
broaden the conditions under which the U.S. government could
impose trade restrictions on imports of Chinese goods that are
found to seriously harm or threaten domestic production of
competing or similar goods. Certain trade restrictions that
could result from this bill--such as increased duties, or quota
limits more restrictive than under current law--would impose
mandates on importers of affected items. Those restrictions
would impose costs on the private sector, but CBO cannot
predict whether such market conditions would be found or, if
found, the incidence of trade restrictions resulting from the
new conditions defined in this bill. Thus, CBO has no basis for
estimating the direct costs of the mandate.
Estimate prepared by: Federal revenues: Hester Grippando;
Federal spending: Sunita D'Monte; and impact on the private
sector: Patrice Gordon.
Estimated approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis. G. Thomas Woodward, Assistant
Director for Tax Analysis.

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

A. Committee Oversight Findings and Recommendations

With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee, based on public hearing testimony and
information from the Administration, concluded that it is
appropriate and timely to enact the provisions included in the
bill as reported.

B. Summary of Findings and Recommendations of the Committee on
Government Reform and Oversight

With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, no oversight findings or
recommendations have been submitted to the Committee by the
Committee on Government Reform and Oversight with respect to
the subject matter contained in H.R. 4444.

C. Constitutional Authority Statement

With respect to clause 3(d)(1) of rule XIII of the Rules of
the House of Representatives, relating to Constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article 1 of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and to provide for * * * the general Welfare of the
United States.'')

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):

TRADE ACT OF 1974

* * * * * * *

TABLE OF CONTENTS

TITLE I--NEGOTIATING AND OTHER AUTHORITY

* * * * * * *

TITLE IV--TRADE RELATIONS WITH COUNTRIES NOT [CURRENTLY] RECEIVING
NONDISCRIMINATORY TREATMENT

Chapter 1--Trade Relations With Certain Countries

Sec. 401. Exception of the products of certain countries or areas.
* * * * * * *

Chapter 2--Relief From Market Disruption to Industries and Diversion of
Trade to the United States Market

Sec. 421. Action to address market disruption.
Sec. 422. Action in response to trade diversion.
Sec. 423. Regulations; termination of provision.

* * * * * * *

TITLE I--NEGOTIATING AND OTHER AUTHORITY

* * * * * * *

CHAPTER 2--OTHER AUTHORITY

* * * * * * *

SEC. 123. COMPENSATION AUTHORITY.

(a) Whenever--
(1) any action taken under chapter 1 of title II or
chapter 1 of title III, or under chapter 2 of title IV
of the Trade Act of 1974; or

* * * * * * *

TITLE IV--TRADE RELATIONS WITH COUNTRIES NOT [CURRENTLY] RECEIVING
NONDISCRIMINATORY TREATMENT

CHAPTER 1--TRADE RELATIONS WITH CERTAIN COUNTRIES

SEC. 401. EXCEPTION OF THE PRODUCTS OF CERTAIN COUNTRIES OR AREAS.

Except as otherwise provided in this title, the President
shall continue to deny nondiscriminatory treatment to the
products of any country, the products of which were not
eligible for the rates set forth in rate column numbered 1 of
the Tariff Schedules of the United States on the date of the
enactment of this Act.

* * * * * * *

CHAPTER 2--RELIEF FROM MARKET DISRUPTION TO INDUSTRIES AND DIVERSION OF
TRADE TO THE UNITED STATES MARKET

SEC. 421. ACTION TO ADDRESS MARKET DISRUPTION.

(a) Presidential Action.--If a product of the People's
Republic of China is being imported into the United States in
such increased quantities or under such conditions as to cause
or threaten to cause market disruption to the domestic
producers of a like or directly competitive product, the
President shall, in accordance with the provisions of this
section, proclaim increased duties or other import restrictions
with respect to such product, to the extent and for such period
as the President considers necessary to prevent or remedy the
market disruption.
(b) Initiation of an Investigation.--(1) Upon the filing of a
petition by an entity described in section 202(a) of the Trade
Act of 1974 (19 U.S.C. 2252(a)), upon the request of the
President or the United States Trade Representative (in this
subtitle referred to as the ``Trade Representative''), upon
resolution of either the Committee on Ways and Means of the
House of Representatives, or the Committee on Finance of the
Senate (in this subtitle referred to as the ``Committees'') or
on its own motion, the United States International Trade
Commission (in this subtitle referred to as the ``Commission'')
shall promptly make an investigation to determine whether
products of the People's Republic of China are being imported
into the United States in such increased quantities or under
such conditions as to cause or threaten to cause market
disruption to the domestic producers of like or directly
competitive products.
(2) The limitations on investigations set forth in section
202(h)(1) of the Trade Act of 1974 (19 U.S.C. 2252(h)(1)) shall
apply to investigations conducted under this section.
(3) The provisions of subsections (a)(8) and (i) of section
202 of the Trade Act of 1974 (19 U.S.C. 2252(a)(8) and (i)),
relating totreatment of confidential business information,
shall apply to investigations conducted under this section.
(4) Whenever a petition is filed, or a request or resolution
is received, under this subsection, the Commission shall
transmit a copy thereof to the President, the Trade
Representative, the Committee on Ways and Means of the House of
Representatives, and the Committee of Finance of the Senate,
except that in the case of confidential business information,
the copy may include only nonconfidential summaries of such
information.
(5) The Commission shall publish notice of the commencement
of any proceeding under this subsection in the Federal Register
and shall, within a reasonable time thereafter, hold public
hearings at which the Commission shall afford interested
parties an opportunity to be present, to present evidence, to
respond to the presentations of other parties, and otherwise to
be heard.
(c) Market Disruption.--(1) For purposes of this section,
market disruption exists whenever imports of an article like or
directly competitive with an article produced by a domestic
industry are increasing rapidly, either absolutely or
relatively, so as to be a significant cause of material injury,
or threat of material injury, to the domestic industry.
(2) For purposes of paragraph (1), the term ``significant
cause'' refers to a cause which contributes significantly to
the material injury of the domestic industry, but need not be
equal to or greater than any other cause.
(d) Factors in Determination.--In determining whether market
disruption exists, the Commission shall consider objective
factors, including--
(1) the volume of imports of the product which is the
subject of the investigation;
(2) the effect of imports of such product on prices
in the United States for like or directly competitive
articles; and
(3) the effect of imports of such product on the
domestic industry producing like or directly
competitive articles.
The presence or absence of any factor under paragraph (1), (2),
or (3) is not necessarily dispositive of whether market
disruption exists.
(e) Time for Commission Determinations.--The Commission shall
make and transmit to the President and the Trade Representative
its determination under subsection (b)(1) at the earliest
practicable time, but in no case later than 60 days (or 90 days
in the case of a petition requesting relief under subsection
(i)) after the date on which the petition is filed, the request
or resolution is received, or the motion is adopted, under
subsection (b). If the Commissioners voting are equally divided
with respect to its determination, then the determination
agreed upon by either group of Commissioners may be considered
by the President and the Trade Representative as the
determination of the Commission.
(f) Recommendations of Commission on Proposed Remedies.--If
the Commission makes an affirmative determination under
subsection (b), or a determination which the President or the
Trade Representative may consider as affirmative under
subsection (e), the Commission shall propose the amount of
increase in, or imposition of, any duty or other import
restrictions necessary to prevent or remedy the market
disruption. Only those members of the Commission who agreed to
the affirmative determination under subsection (b) are eligible
to vote on the proposed action to prevent or remedy market
disruption. Members of the Commission who did not agree to the
affirmative determination may submit, in the report required
under subsection (g), separate views regarding what action, if
any, should be taken to prevent or remedy market disruption.
(g) Report by Commission.--(1) Not later than 20 days after a
determination under subsection (b) is made, the Commission
shall submit a report to the President and the Trade
Representative.
(2) The Commission shall include in the report required under
paragraph (1) the following:
(A) The determination made under subsection (b) and
an explanation of the basis for the determination.
(B) If the determination under subsection (b) is
affirmative, or may be considered by the President or
the Trade Representative as affirmative under
subsection (e), the recommendations of the Commission
on proposed remedies under subsection (f) and an
explanation of the basis for each recommendation.
(C) Any dissenting or separate views by members of
the Commission regarding the determination and any
recommendation referred to in subparagraphs (A) and
(B).
(D) A description of--
(i) the short- and long-term effects that
implementation of the action recommended under
subsection (f) is likely to have on the
petitioning domestic industry, on other
domestic industries, and on consumers; and
(ii) the short- and long-term effects of not
taking the recommended action on the
petitioning domestic industry, its workers, and
the communities where production facilities of
such industry are located, and on other
domestic industries.
(3) The Commission, after submitting a report to the
President under paragraph (1), shall promptly make it available
to the public (but shall not include confidential business
information) and cause a summary thereof to be published in the
Federal Register.
(h) Opportunity To Present Views and Evidence on Proposed
Measure and Recommendation to the President.--(1) Within 20
days after receipt of the Commission's report under subsection
(g) (or 15 days in the case of an affirmative preliminary
determination under subsection (i)(1)(B)), the Trade
Representative shall publish in the Federal Register notice of
any measure proposed by the Trade Representative to be taken
pursuant to subsection (a) and of the opportunity, including a
public hearing, if requested, for importers, exporters, and
other interested parties to submit their views and evidence on
the appropriateness of the proposed measure and whether it
would be in the public interest.
(2) Within 55 days after receipt of the report under
subsection (g) (or 35 days in the case of an affirmative
preliminary determination under subsection (i)(1)(B)), the
Trade Representative, taking into account the views and
evidence received under paragraph (1) on the measure proposed
by the Trade Representative, shall make a recommendation to the
President concerning what action, if any, to take to prevent or
remedy the market disruption.
(i) Critical Circumstances.--(1) When a petition filed under
subsection (b) alleges that critical circumstances exist and
requests that provisional relief be provided under this
subsection with respect to the product identified in the
petition, the Commission shall, not later than 45 days after
the petition containing the request is filed--
(A) determine whether delay in taking action under
this section would cause damage to the relevant
domestic industry which would be difficult to repair;
and
(B) if the determination under subparagraph (A) is
affirmative, make a preliminary determination of
whether imports of the product which is the subject of
the investigation have caused or threatened to cause
market disruption.
If the Commissioners voting are equally divided with respect to
either of its determinations, then the determination agreed
upon by either group of Commissioners may be considered by the
President and the Trade Representative as the determination of
the Commission.
(2) On the date on which the Commission completes its
determinations under paragraph (1), the Commission shall
transmit a report on the determinations to the President and
the Trade Representative, including the reasons for its
determinations. If the determinations under paragraph (1) are
affirmative, or may be considered by the President or the Trade
Representative as affirmative under paragraph (1), the
Commission shall include in its report its recommendations on
proposed provisional measures to be taken to prevent or remedy
the market disruption. Only those members of the Commission who
agreed to the affirmative determinations under paragraph (1)
are eligible to vote on the proposed provisional measures to
prevent or remedy market disruption. Members of the Commission
who did not agree to the affirmative determinations may submit,
in the report, dissenting or separate views regarding the
determination and any recommendation of provisional measures
referred to in this paragraph.
(3) If the determinations under paragraph (1) are
affirmative, or may be considered by the President or the Trade
Representative as affirmative under paragraph (1), the Trade
Representative shall, within 10 days after receipt of the
Commission's report, determine the amount or extent of
provisional relief that is necessary to prevent or remedy the
market disruption and shall provide a recommendation to the
President on what provisional measures, if any, to take.
(4)(A) The President shall determine whether to provide
provisional relief and proclaim such relief, if any, within 10
days after receipt of the recommendation from the Trade
Representative.
(B) Such relief may take the form of--
(i) the imposition of or increase in any duty;
(ii) any modification, or imposition of any
quantitative restriction on the importation of an
article into the United States; or
(iii) any combination of actions under clauses (i)
and (ii).
(C) Any provisional action proclaimed by the President
pursuant to a determination of critical circumstances shall
remain in effect not more than 200 days.
(D) Provisional relief shall cease to apply upon the
effective date of relief proclaimed under subsection (a), upon
a decision by the President not to provide such relief, or upon
a negative determination by the Commission under subsection
(b).
(j) Agreements With the People's Republic of China.--(1) The
Trade Representative is authorized to enter into agreements for
the People's Republic of China to take such action as necessary
to prevent or remedy market disruption, and should seek to
conclude such agreements before the expiration of the 60-day
consultation period provided for under the product-specific
safeguard provision of the Protocol of Accession of the
People's Republic of China to the WTO, which shall commence not
1later than 5 days after the Trade Representative receives an
affirmative determination provided for in subsection (e) or a
determination which the Trade Representative considers to be an
affirmative determination pursuant to subsection (e).
(2) If no agreement is reached with the People's Republic of
China pursuant to consultations under paragraph (1), or if the
President determines than an agreement reached pursuant to such
consultations is not preventing or remedying the market
disruption at issue, the President shall provide import relief
in accordance with subsection (a).
(k) Standard for Presidential Action.--(1) Within 15 days
after receipt of a recommendation from the Trade Representative
under subsection (h) on the appropriate action, if any, to take
to prevent or remedy the market disruption, the President shall
provide import relief for such industry pursuant to subsection
(a), unless the President determines that provision of such
relief is not in the national economic interest of the United
States or, in extraordinary cases, that the taking of action
pursuant to subsection (a) would cause serious harm to the
national security of the United States.
(2) The President may determine under paragraph (1) that
providing import relief is not in the national economic
interest of the United States only if the President finds that
the taking of such action would have an adverse impact on the
United States economy clearly greater than the benefits of such
action.
(l) Publication of Decision and Reports.--(1) The President's
decision, including the reasons therefor and the scope and
duration of any action taken, shall be published in the Federal
Register.
(2) The Commission shall promptly make public any report
transmitted under this section, but shall not make public any
information which the Commission determines to be confidential,
and shall publish notice of such report in the Federal
Register.
(m) Effective Date of Relief.--Import relief under this
section shall take effect not later than 15 days after the
President's determination to provide such relief.
(n) Modifications of Relief.--(1) At any time after the end
of the 6-month period beginning on the date on which relief
under subsection (m) first takes effect, the President may
request that the Commission provide a report on the probable
effect of the modification, reduction, or termination of the
relief provided on the relevant industry. The Commission shall
transmit such report to the President within 60 days of the
request.
(2) The President may, after receiving a report from the
Commission under paragraph (1), take such action to modify,
reduce, or terminate relief that the President determines is
necessary to continue to prevent or remedy the market
disruption at issue.
(3) Upon the granting of relief under subsection (k), the
Commission shall collect such data as is necessary to allow it
to respond rapidly to a request by the President under
paragraph (1).
(o) Extension of Action.--(1) Upon request of the President,
or upon petition on behalf of the industry concerned filed with
the Commission not earlier than the date which is 9 months, and
not later than the date which is 6 months, before the date any
relief provided under subsection (k) is to terminate, the
Commission shall investigate to determine whether action under
this section continues to be necessary to prevent or remedy
market disruption.
(2) The Commission shall publish notice of the commencement
of any proceeding under this subsection in the Federal Register
and shall, within a reasonable time thereafter, hold a public
hearing at which the Commission shall afford interested parties
and consumers an opportunity to be present, to present
evidence, and to respond to the presentations of other parties
and consumers, and otherwise to be heard.
(3) The Commission shall transmit to the President a report
on its investigation and determination under this subsection
not later than 60 days before the action under subsection (m)
is to terminate.
(4) The President, after receiving an affirmative
determination from the Commission under paragraph (3), may
extend the effective period of any action under this section if
the President determines that the action continues to be
necessary to prevent or remedy the market disruption.

SEC. 422. ACTION IN RESPONSE TO TRADE DIVERSION.

(a) Monitoring by Customs Service.--In any case in which a
WTO member other than the United States requests consultations
with the People's Republic of China under the product-specific
safeguard provision of the Protocol of Accession of the
People's Republic of China to the World Trade Organization, the
Trade Representative shall inform the United States Customs
Service, which shall monitor imports into the United States of
those products of Chinese origin that are the subject of the
consultation request. Data from such monitoring shall promptly
be made available to the Commission upon request by the
Commission.
(b) Initiation of Investigation.--(1) Upon the filing of a
petition by an entity described in section 202(a) of the Trade
Act of 1974, upon the request of the President or the Trade
Representative, upon resolution of either of the Committees, or
on its own motion, the Commission shall promptly make an
investigation to determine whether an action described in
subsection (c) has caused, or threatens to cause, a significant
diversion of trade into the domestic market of the United
States.
(2) The Commission shall publish notice of the commencement
of any proceeding under this subsection in the Federal Register
and shall, within a reasonable time thereafter, hold public
hearings at which the Commission shall afford interested
parties an opportunity to be present, to present evidence, to
respond to the presentations of other parties, and otherwise to
be heard.
(3) The provisions of subsections (a)(8) and (i) of section
202 of the Trade Act of 1974 (19 U.S.C. 2252(a)(8) and (i)),
relating to treatment of confidential business information,
shall apply to investigations conducted under this section.
(c) Actions Described.--An action is described in this
subsection if it is an action--
(1) by the People's Republic of China to prevent or
remedy market disruption in a WTO member other than the
United States;
(2) by a WTO member other than the United States to
withdraw concessions under the WTO Agreement or
otherwise to limit imports to prevent or remedy market
disruption;
(3) by a WTO member other than the United States to
apply a provisional safeguard within the meaning of the
product-specific safeguard provision of the Protocol of
Accession of the People's Republic of China to the WTO;
or
(4) any combination of actions described in
paragraphs (1) through (3).
(d) Basis for Determination of Significant Diversion.--(1) In
determining whether significant diversion or the threat thereof
exists for purposes of this section, the Commission shall take
into account, to the extent such evidence is reasonably
available--
(A) the monitoring conducted under subsection (a);
(B) the actual or imminent increase in United States
market share held by such imports from the People's
Republic of China;
(C) the actual or imminent increase in volume of such
imports into the United States;
(D) the nature and extent of the action taken or
proposed by the WTO member concerned;
(E) the extent of exports from the People's Republic
of China to that WTO member and to the United States;
(F) the actual or imminent changes in exports to that
WTO member due to the action taken or proposed;
(G) the actual or imminent diversion of exports from
the People's Republic of China to countries other than
the United States;
(H) cyclical or seasonal trends in import volumes
into the United States of the products at issue; and
(I) conditions of demand and supply in the United
States market for the products at issue.
The presence or absence of any factor under any of
subparagraphs (A) through (I) is not necessarily dispositive of
whether a significant diversion of trade or the threat thereof
exists.
(2) For purposes of making its determination, the Commission
shall examine changes in imports into the United States from
the People's Republic of China since the time that the WTO
member commenced the investigation that led to a request for
consultations described in subsection (a).
(3) If more than 1 action by a WTO member or WTO members
against a particular product is identified in the petition,
request, or resolution under subsection (b) or during the
investigation, the Commission may cumulatively assess the
actual or likely effects of suchactions jointly in determining
whether a significant diversion of trade or threat thereof exists.
(e) Commission Determination; Agreement Authority.--(1) The
Commission shall make and transmit to the President and the
Trade Representative its determination under subsection (b) at
the earliest practicable time, but in no case later than 45
days after the date on which the petition is filed, the request
or resolution is received, or the motion is adopted, under
subsection (b). If the Commissioners voting are equally divided
with respect to its determination, then the determination
agreed upon by either group of Commissioners may be considered
by the President and the Trade Representative as the
determination of the Commission.
(2) The Trade Representative is authorized to enter into
agreements with the People's Republic of China or the other WTO
members concerned to take such action as necessary to prevent
or remedy significant trade diversion or threat thereof into
the domestic market of the United States, and should seek to
conclude such agreements before the expiration of the 60-day
consultation period provided for under the product-specific
safeguard provision of the Protocol of Accession of the
People's Republic of China to the WTO, which shall commence not
later than 5 days after the Trade Representative receives an
affirmative determination provided for in paragraph (1) or a
determination which the Trade Representative considers to be an
affirmative determination pursuant to paragraph (1).
(3) Report by Commission.--
(A) Not later than 10 days after a determination
under subsection (b), is made, the Commission shall
transmit a report to the President and the Trade
Representative.
(B) The Commission shall include in the report
required under subparagraph (A) the following:
(i) The determination made under subsection
(b) and an explanation of the basis for the
determination.
(ii) If the determination under subsection
(b) is affirmative, or may be considered by the
President or the Trade Representative as
affirmative under subsection (e)(1), the
recommendations of the Commission on increased
tariffs or other import restrictions to be
imposed to prevent or remedy the trade
diversion or threat thereof, and explanations
of the bases for such recommendations. Only
those members of the Commission who agreed to
the affirmative determination under subsection
(b) are eligible to vote on the proposed action
to prevent or remedy the trade diversion or
threat thereof.
(iii) Any dissenting or separate views by
members of the Commission regarding the
determination and any recommendation referred
to in clauses (i) and (ii).
(iv) A description of--
(I) the short- and long-term effects
that implementation of the action
recommended under clause (ii) is likely
to have on the petitioning domestic
industry, on other domestic industries,
and on consumers; and
(II) the short- and long-term effects
of not taking the recommended action on
the petitioning domestic industry, its
workers and the communities where
production facilities of such industry
are located, and on other domestic
industries.
(C) The Commission, after submitting a report to the
President under subparagraph (A), shall promptly make
it available to the public (with the exception of
confidential business information) and cause a summary
thereof to be published in the Federal Register.
(f) Public Comment.--If consultations fail to lead to an
agreement with the People's Republic of China or the WTO member
concerned within 60 days, the Trade Representative shall
promptly publish notice in the Federal Register of any proposed
action to prevent or remedy the trade diversion, and provide an
opportunity for interested persons to present views and
evidence on whether the proposed action is in the public
interest.
(g) Recommendation to the President.--Within 20 days after
the end of consultations pursuant to subsection (e), the Trade
Representative shall make a recommendation to the President on
what action, if any, should be taken to prevent or remedy the
trade diversion or threat thereof.
(h) Presidential Action.--Within 20 days after receipt of the
recommendation from the Trade Representative, the President
shall determine what action to take to prevent or remedy the
trade diversion or threat thereof.
(i) Duration of Action.--Action taken under subsection (h)
shall be terminated not later than 30 days after expiration of
the action taken by the WTO member or members involved against
imports from the People's Republic of China.
(j) Review of Circumstances.--(1) The Commission shall review
the continued need for action taken under subsection (h) if the
WTO member or members involved notify the Committee on
Safeguards of the WTO of any modification in the action taken
by them against the People's Republic of China pursuant to
consultation referred to in subsection (a). The Commission
shall, not later than 60 days after such notification,
determine whether a significant diversion of trade continues to
exist and report its determination to the President. The
President shall determine, within 15 days after receiving the
Commission's report, whether to modify, withdraw, or keep in
place the action taken under subsection (h).

SEC. 423. REGULATIONS; TERMINATION OF PROVISION.

(a) To Carry Out Restrictions and Monitoring.--The President
shall by regulation provide for the efficient and fair
administration of any restriction proclaimed pursuant to the
subtitle and to provide for effective monitoring of imports
under section 422(a).
(b) To Carry Out Agreements.--To carry out an agreement
concluded pursuant to consultations under section 421(j) or
422(e)(2), the President is authorized to prescribe regulations
governing the entry or withdrawal from warehouse of articles
covered by such agreement.
(c) Termination Date.--This subtitle and any regulations
issued under this subtitle shall cease to be effective 12 years
after the date of entry into force of the Protocol of Accession
of the People's Republic of China to the WTO.

* * * * * * *

VII. ADDITIONAL VIEWS OF CONGRESSMAN PETE STARK

Mr. Chairman, as one of four Members of the Ways and Means
Committee to vote against extending permanent most favored
nation status to China, I feel compelled to explain the reasons
for my vote.
First, the Administration missed several opportunities to
incorporate the concerns of many Members of Congress in the
bilateral trade agreement it reached with China last November.
Second, Congressman Levin attempted to address the concerns
raised by many Members of this Committee with legislation that
falls short of providing any real protection for labor. And
then, many Members were told that the human rights and rule-of-
law provisions would be inserted in the bill that reaches the
House floor. Before voting on final passage, the Committee had
yet one last opportunity to address concerns I raised at the
markup regarding Taiwan's accession to the WTO as well as
President Clinton's 1994 order to ban assault weapon imports
from China. To no avail, the Committee ignored the very real
concerns facing our nation in the name of corporate interests
and free trade. Because the markup bill failed to address all
of these concerns, I voted not to extend permanent most favored
nation trade status to China.
I commend Rep. Levin for attempting to bring the interests
of labor and trade to common ground. Unfortunately, the import
surge proposal is essentially a new form of existing
authorities the Administration currently has, but never fully
utilizes. The result is a toothless proposal that leaves action
up to the discretion of the Administration--no change from
current law. The surge import proposal conditions any action on
the part of the President to correct a surge in imports from
China on consultations with China. The PRC has broken every
bilateral agreement it has with the U.S. and ignored numerous
memorandums of understanding. The People's Republic of China
has done nothing to make me believe that it will work with the
U.S. to correct any import surge or unfair trade practices
after it accedes to the WTO. After the U.S. consults with
China, final action on the part of the President is
discretionary under the Levin proposal. If the President
believes that action might somehow jeopardize U.S.-Sino
relations, then the surge will be ignored. This does nothing to
help the U.S. workers who will face lay-offs due to product-
specific surges from China. The only way for Congress to have
any type of oversight of our trade laws, and then to enforce
domestic statute, is to prohibit extension of MFN trade status
to China.
Once China enters the WTO, it will actively spearhead
efforts to block Taiwan's entry in the WTO. I offered an
amendment that conditions permanent MFN status to China on
Taiwan's accession to the WTO prior to, or on the same day as
China. Proponents of permanent MFN claim that this is a false
fear on the part of PMFN opponents. The Administration assured
me that China has already verbally agreed to allow Taiwan to
enter the WTO unimpeded. If they've already agreed, there
should have been no opposition to putting that agreement in
statute. However, on May 16, 2000, the very same day I offered
my amendment, China proved that it will in fact try to block
Taiwan's entry into the WTO. The PRC lead the charge against
Taiwan's fourth bid for observer status in the World Health
Organization (WHO). If China is willing to go to great lengths
to block Taiwan from the WHO, it is certain to lead a full
campaign against Taiwan's application for WTO membership.
Unfortunately, the Ways & Means Committee defeated this
amendment.
I also offered an amendment that conditions extension of
permanent MFN on an additional agreement between the U.S. and
China on President Clinton's 1994 embargo on arms and
ammunition imports.
In 1994, as a condition of granting China annual MFN
status, President Clinton issued an order that bans the imports
of assault weapons from China. Under World Trade Organization
(WTO) rules, the U.S. is required to treat foreign and domestic
goods identically. The U.S. continues to manufacture and sell
assault weapons. Clearly, by banning China from selling to the
U.S. market, but allowing domestic manufacturers to continue
with business as usual, the U.S. does not treat foreign and
domestic goods identically.
This means that once China accedes to the WTO, they will
have every right as a member to dispute the U.S. ban. And since
the order does violate WTO rules, the WTO will most likely find
the U.S. in violation of treating China's assault weapons
differently from those in the U.S. This would mean that the
U.S. would have to lift the import ban on China, or ban the
sale and manufacture of its own assault weapons as well as the
imports from other countries.
China accounted for forty-two percent of all rifles
imported into the U.S. civilian market between 1987 and 1994,
the year in which President Clinton finally blocked the Chinese
gun dumping. This flood of Chinese weapons was so great that it
strongly boosted the overall import of guns to the U.S. Chinese
rifles and handguns accounted for 15 percent of all firearms
imported for the civilian market in six of the eight years
between 1987 and 1994. The import of Chinese guns was
effectively stopped in 1994 when President Clinton imposed a
ban as a condition of renewing China's most favored nation
status.
If we grant China permanent most favored nation trade
status, China, not the Members of the 106th Congress, will
dictate U.S. gun import policy.
The issues I have mentioned are just a few, of a much
greater list, of the problems I have with granting China
permanent MFN status. Until trade agreements incorporate the
needs of labor, the environment and human rights I will have to
oppose their cause. The U.S. cannot continue to promote the
interests of multinational corporations while ignoring the real
problems faced by the exploited. Labor, the environment and
human rights are inherent functions of trade. If we don't begin
to include them in our trade negotiations today, they will
continue to splinter the U.S. Congress and its desire to
achieve real global progress.

Pete Stark.