To express the sense of Congress that the President should take immediate steps to establish a plan to implement the recommendations of the 2004 Report to Congress of the United States-China Economic and Security Review Commission.

1. Adds SEC. 1205. THE UNITED STATES-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION at the end of title XII

   Adds a section

   In S. 1042 · Placed on Calendar Senate

   (c) Effective Date.--The amendments made by this section shall take effect on October, 1, 2005.

   Inserted: SEC. 1205. THE UNITED STATES-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION.

   Inserted: (a) Findings.--Congress finds the following:

   Inserted: (1) The 2004 Report to Congress of the United States-China Economic and Security Review Commission states that--

   Inserted: (A) China's State-Owned Enterprises (SOEs) lack adequate disclosure standards, which creates the potential for United States investors to unwittingly contribute to enterprises that are involved in activities harmful to United States security interests;

   Inserted: (B) United States influence and vital long-term interests in Asia are being challenged by China's robust regional economic engagement and diplomacy;

   Inserted: (C) the assistance of China and North Korea to global ballistic missile proliferation is extensive and ongoing;

   Inserted: (D) China's transfers of technology and components for weapons of mass destruction (WMD) and their delivery systems to countries of concern, including countries that support acts of international terrorism, has helped create a new tier of countries with the capability to produce WMD and ballistic missiles;

   Inserted: (E) the removal of the European Union arms embargo against China that is currently under consideration in the European Union would accelerate weapons modernization and dramatically enhance Chinese military capabilities;

   Inserted: (F) China's recent actions toward Taiwan call into question China's commitments to a peaceful resolution;

   Inserted: (G) China is developing a leading-edge military with the objective of intimidating Taiwan and deterring United States involvement in the Strait, and China's qualitative and quantitative military advancements have already resulted in a dramatic shift in the cross-Strait military balance toward China; and

   Inserted: (H) China's growing energy needs are driving China into bilateral arrangements that undermine multilateral efforts to stabilize oil supplies and prices, and in some cases may involve dangerous weapons transfers.

   Inserted: (2) On March 14, 2005, the National People's Congress approved a law that would authorize the use of force if Taiwan formally declares independence.

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   Inserted: (b) Sense of Congress.--

   Inserted: (1) Plan.--The President is strongly urged to take immediate steps to establish a plan to implement the recommendations contained in the 2004 Report to Congress of the United States-China Economic and Security Review Commission in order to correct the negative implications that a number of current trends in United States-China relations have for United States long-term economic and national security interests.

   Inserted: (2) Contents.--Such a plan should contain the following:

   Inserted: (A) Actions to address China's policy of undervaluing its currency, including--

   Inserted: (i) encouraging China to provide for a substantial upward revaluation of the Chinese yuan against the United States dollar;

   Inserted: (ii) allowing the yuan to float against a trade-weighted basket of currencies; and

   Inserted: (iii) concurrently encouraging United States trading partners with similar interests to join in these efforts.

   Inserted: (B) Actions to make better use of the World Trade Organization (WTO) dispute settlement mechanism and applicable United States trade laws to redress China's unfair trade practices, including China's exchange rate manipulation, denial of trading and distribution rights, lack of intellectual property rights protection, objectionable labor standards, subsidization of exports, and forced technology transfers as a condition of doing business. The United States Trade Representative should consult with our trading partners regarding any trade dispute with China.

   Inserted: (C) Actions to encourage United States diplomatic efforts to identify and pursue initiatives to revitalize United States engagement with China's Asian neighbors. The initiatives should have a regional focus and complement bilateral efforts. The Asia-Pacific Economic Cooperation forum (APEC) offers a ready mechanism for pursuit of such initiatives.

   Inserted: (D) Actions by the administration to hold China accountable for proliferation of prohibited technologies and to secure China's agreement to renew efforts to curtail North Korea's commercial export of ballistic missiles.

   Inserted: (E) Actions by the Secretaries of State and Energy to consult with the International Energy Agency with the objective of upgrading the current loose experience-sharing arrangement, whereby China engages in some limited exchanges with the organization, to a more structured arrangement whereby China would be obligated to develop a meaningful strategic oil reserve, and coordinate release of stocks in supply-disruption crises or speculator-driven price spikes.

   Inserted: (F) Actions by the administration to develop a coordinated, comprehensive national policy and strategy designed to meet China's challenge to maintaining United States scientific and technological leadership and competitiveness in the same way the administration is presently required to develop and publish a national security strategy.

   Inserted: (G) Actions to review laws and regulations governing the Committee on Foreign Investment in the United States (CFIUS), including exploring whether the definition of national security should include the potential impact on national economic security as a criterion to be reviewed, and whether the chairmanship of CFIUS should be transferred from the Secretary of the Treasury to a more appropriate executive branch agency.

   Inserted: (H) Actions by the President and the Secretaries of State and Defense to press strongly their European Union counterparts to maintain the EU arms embargo on China.

   Inserted: (I) Actions by the administration to discourage foreign defense contractors from selling sensitive military use technology or weapons systems to China. The administration should provide a comprehensive annual report to the appropriate committees of Congress on the nature and scope of foreign military sales to China, particularly sales by Russia and Israel.

   Inserted: (J) Any additional actions outlined in the 2004 Report to Congress of the United States-China Economic and Security Review Commission that affect the economic or national security of the United States.

   Original wording

   At the end of title XII, insert the following:

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As printed