Title II — Fair trade enforcement actions with respect to the People’s Republic of China

H.R. 704 · 116th Congress · Jan 22, 2019 · Lineage

II Fair trade enforcement actions with respect to the People’s Republic of China

Sec. 201 Countervailing duties with respect to certain industries in the People's Republic of China

(a)

Policy— It is the policy of the United States—

(1)

to reduce the import of finished goods from the People’s Republic of China relating to the Made in China 2025 plan set forth by the Government of the People’s Republic of China; and

(2)

to encourage allies of the United States to reduce the import of finished goods from the People’s Republic of China relating to the Made in China 2025 plan.

(b)

Inclusion of Made in China 2025 products in definition of countervailable subsidy— Paragraph (5) of section 771 of the Tariff Act of 1930 (19 U.S.C. 1677) is amended by adding at the end the following:

“(G) Treatment of certain Chinese merchandise—Notwithstanding any other provision of this title, if a person presents evidence in a petition filed under section 702(b) that merchandise covered by the petition is manufactured or produced in, or exported from, the People’s Republic of China and included in the most recent list required under section 183 of the Trade Act of 1974, determined in consultation with the United States Trade Representative, the administrating authority shall determine that a countervailable subsidy is being provided with respect to that merchandise.”

(c)

Inclusion of Made in China 2025 products in definition of material injury— Paragraph (7)(F) of such section is amended by adding at the end the following:

“(iv) Treatment of certain Chinese merchandise—Notwithstanding any other provision of this title, if a petition filed under section 702(b) alleges that an industry in the United States is materially injured or threatened with material injury or that the establishment of an industry in the United States is materially retarded by reason of imports of merchandise manufactured or produced in, or exported from, the People’s Republic of China and included in the most recent list required under section 183 of the Trade Act of 1974, determined in consultation with the United States Trade Representative, the Commission shall determine that material injury or such a threat exists.”

Sec. 202 Repeal of reduced withholding rates for residents of China

(a)

In general— Section 894 of the Internal Revenue Code of 1986 is amended—

(1)

by striking “The provisions of” in subsection (a) and inserting “Except as otherwise provided in this section, the provisions of”, and

(2)

by adding at the end the following new subsection:

“(d) Exception for People’s Republic of China

“(1) In general—The rates of tax imposed under sections 871 and 881, and the rates of withholding tax imposed under chapter 3, with respect to any resident of the People’s Republic of China shall be determined without regard to any provision of the Agreement between the Government of the United States of America and the Government of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, signed at Beijing on April 30, 1984.

“(2) Regulations—The Secretary shall promulgate regulations to prevent the avoidance of the purposes of this subsection through the use of foreign entities.”

(b)

Effective date— The amendments made by this section shall apply to income received after the date of the enactment of this Act.

Sec. 203 Taxation of obligations of the United States held by the Government of the People’s Republic of China

(a)

In general— Section 892 of the Internal Revenue Code of 1986 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:

“(c) Exception—This section shall not apply to the Government of the People’s Republic of China.”

(b)

Central bank— Section 895 of the Internal Revenue Code of 1986 is amended—

(1)

by striking “Income” and inserting the following:

“(a) In general—Income”

(2)

by adding at the end the following new subsection:

“(b) Exception—This section shall not apply to the any central bank of the People's Republic of China.”

(c)

Effective date— The amendments made by this section shall apply to income received or derived after the date of the enactment of this Act.

Sec. 204 Surtax on certain income derived from China

(a)

In general— Subpart D of part II of subchapter N of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

“899. Imposition of surtax on certain income from China

“(a) In general—In addition to other taxes, there is imposed on the China source income of any applicable United States person a tax equal to 2 percent of such income.

“(b) Applicable United States person—For purposes of this subsection, the term applicable United States person means any United States person who—

“(1) holds an investment through a partnership with a resident of the People’s Republic of China, or

“(2) participates in a joint shareholding venture with a resident of the People’s Republic of China.

“(c) China source income—For purposes of this section, the term China source income means any amount received from sources within the People’s Republic of China which is attributable to an investment described in subsection (b)(1) or a venture described in subsection (b)(2). Such amount shall be reduced so as to take into account deductions (including taxes) properly allocable to such income under rules similar to the rules of section 954(b)(5).”

(b)

Tax not treated as part of regular tax liability— Section 26(b)(2) of such Code is amended by striking “and” at the end of subparagraph (X), by striking the period at the end of subparagraph (Y) and inserting “, and”, and by adding at the end the following new subparagraph:

“(Z) section 899 (relating to surtax on certain income from China).”

(c)

Clerical amendment— The table of sections for subpart D of part II of subchapter N of chapter 1 of such Code is amended by adding at the end the following new item:

(d)