S. 2 - Fair Trade with China Enforcement Act

116TH CONGRESS
1ST SESSION

S. 2

To safeguard certain technology and intellectual property
in the United States from export to or influence
by the People's Republic of China and to protect
United States industry from unfair competition by the
People's Republic of China, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 3, 2019

Mr. RUBIO (for himself and Ms. BALDWIN) introduced
the following bill; which was read twice and referred
to the Committee on Finance

A BILL

To safeguard certain technology and intellectual property in the United States from export to or influence by the People's Republic of China and to protect United States industry from unfair competition by the People's Republic of China, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE. — This Act may be cited as the "Fair Trade with China Enforcement Act".

* * *

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"; and

(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.