EXPLANATION OF H.J. RES. 50
DISAPPROVING THE EXTENSION OF THE WAIVER AUTHORITY
CONTAINED IN SECTION 402(c) OF THE TRADE ACT OF 1974 WITH
RESPECT TO THE PEOPLE'S REPUBLIC OF CHINA

Present Law

Title IV of the Trade Act of 1974, the so-called Jackson-Vanik amendment, governs U.S. trade relations with nonmarket economy (NME) countries, including China. Title IV sets forth freedom-of-emigration criteria that must be met, or waived by the President, as well as minimum provisions that must be included in a bilateral trade agreement, in order for the President to grant normal trade relations (NTR) status to a NME country.

NTR status was first granted to the People's Republic of China on February 1, 1980, and has been renewed annually since then on the basis of a Presidential waiver of the freedom of emigration requirements. (A valid trade agreement, as required by the Jackson-Vanik amendment, has remained in force during that time.) The President's waiver of the Jackson-Vanik freedom of emigration requirements, and therefore, China's NTR status, expire at midnight on July 2 each year. On June 1, 2001, the President recommended an extension of his waiver authority for China for the period beginning July 3, 2001, thru July 2, 2002 (H.R. Doc. No. 107-82).

In 1998, legislation to replace the term "most-favored-nation" (MFN) in U.S. 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.

Procedures

• If the President determines that waiver extension will substantially promote freedom-of-emigration objectives, he must submit to Congress a recommendation for a twelve-month extension no later than thirty days prior to the waiver's expiration (June 3).
• A Jackson-Vanik waiver continues in effect unless disapproved by the Congress within 60 calendar days after the expiration of the existing waiver.
• Disapproval takes the form of a joint resolution disapproving extension of the Presidential waiver. The text of the disapproval resolution is set forth in the statute and must be voted on in that form. It is not amendable except to add or subtract country names.
• House action: The Committee on Ways and Means must report a resolution of disapproval within thirty calendar days after its introduction or be subject to discharge after that period. On the floor, a motion to proceed to the consideration of the resolution is highly privileged and is not debatable. Amendments to the motion are not in order, except to change country names. Floor debate is limited to twenty hours.
• Senate action: The Finance Committee must report a disapproval resolution within thirty calendar days after its introduction. Floor procedures are identical to the House.
• If the Senate resolution is introduced before receipt of the House resolution, the House resolution will be placed on the calendar when received.
• If the Senate passes a resolution before receiving an identical House resolution, it will be held at the desk. The House resolution will be deemed passed as soon as it is received.
• If the Senate and House resolutions are not identical, the Senate will vote on its version and request a conference.
• If the President vetoes the joint resolution, Congress may still disapprove the waiver if both the House and the Senate vote to override the veto on or before the later of: the last day of the sixty day period (September 1); or the last day of a fifteen day period beginning on the date Congress receives the veto message.

Explanation of the Resolution

House Joint Resolution 50, introduced on June 5, 2001, by Rep. Rohrabacher

(R-CA), states that the Congress does not approve the extension of the waiver authority contained in section 402 (c) of the Trade Act of 1974, recommended by the President to the Congress on June 1, 2001, with respect to the People's Republic of China, for the period beginning July 3, 2001, through July 2, 2002.

Related Developments

In 2000, in response to significant progress in China's negotiations to accede to the World Trade Organization (WTO), the Congress passed and the President signed P.L. 106-286, which authorized the extension of nondiscriminatory treatment (normal trade relations treatment) to the People's Republic of China when China becomes a member of the WTO. P.L. 106-286 also established a framework for relations between the United States and the People's Republic of China.

Specifically, P.L. 106-286 amended Title IV of the Trade Act of 1974 to remove China from the list of countries subject to this provision upon the accession of China to the WTO, and upon certification by the President that the final terms of the accession are at least equivalent to the terms of the November 15, 1999 United States-China bilateral agreement. P.L. 106-286 also: (1) established a Congressional-Executive Commission to monitor China's progress on human rights, worker rights, and enforcement of its WTO agreements; (2) contained trade enhancement provisions, including a safeguard mechanism to protect U.S. industries and workers from unexpected import surges; (3) authorized additional funds to monitor China's adherence to its WTO commitments; (4) provided technical assistance in developing the rule of law and democracy-building in China; (5) established a task force on prison labor imports; and (6) expressed a sense of the Congress that Taiwan should enter the WTO at the same General Council session as China.

Although P.L. 106-286 was enacted on October 10, 2000, work remains to be done concerning the protocol of China's accession. During the June 4 - 8, 2001 bilateral talks in Shanghai, the United States and China reached agreement on some of the major outstanding issues.

Several important steps remain ahead in China's WTO accession process. The bilateral agreement between the United States and China will be considered at the next China Working Party meeting in Geneva, beginning June 28, 2001. The WTO's General Council must then adopt China's accession package, after which China will have to complete its domestic ratification procedures. China will become a WTO member 30 days after filing its notice of acceptance with the WTO.

P.L. 106-286 will remove China from Title IV of the Trade Act of 1974 when China becomes a member of the WTO. Once China becomes a WTO member, the annual review of China's NTR status will no longer be necessary. However, until that time, it remains necessary for the Committee to consider the annual disapproval resolution (if such a resolution is introduced) according to the privileged procedures set out in Title IV of the Trade Act of 1974.