U.S.-China economic ties have expanded substantially over the past several years. China is now the third largest U.S. trading partner, its second largest source of imports, and its fourth largest export market. However, U.S.-China commercial ties have been strained by a number of issues, including a surging U.S. trade deficit with China, China's refusal to float its currency, and failure to fully comply with its World Trade Organization (WTO) commitments, especially its failure to provide protection for U.S. intellectual property rights (IPR). This report explores these issues in detail, especially concerning the lack of protection for U.S. IPR.

China’s economy continues to be a concern to U.S. policymakers. On the one hand, China’s economic growth presents huge opportunities for U.S. exporters. On the other hand, the surge in Chinese exports to the United States has put competitive pressures on many U.S. industries. Many U.S. policymakers have argued that greater efforts should be made to pressure China to fully implement its WTO commitments and to change various economic policies deemed harmful to U.S. economic interests, such as its currency peg and its use of subsidies to support its SOEs. In addition, recent bids by Chinese state-owned firms to purchase various U.S. firms have raised concerns among Members over the impact such acquisitions could have on U.S. national and economic security.

China has sought over the past several years to become a member of the World Trade Organization (WTO), the international agency that administers multilateral trade rules. China’s WTO membership (as well as that of Taiwan’s) was formally approved at the WTO Ministerial Conference in Doha, Qatar in November 2001. On December 11, 2001, China officially became a WTO member. WTO membership will require China to significantly liberalize its trade and investment regimes, which could produce significant new commercial opportunities for U.S. businesses. A main concern for Congress is to ensure that China fully complies with its WTO commitments.

Since 1990, Congress has faced an annual, contentious decision on whether, and under what conditions, to renew normal trade relations (NTR) status with China for another year. This annual exercise occurred because under U.S. law, China's NTR status is temporary, and the President has to recommend its renewal each year by June 3. In 2000, the 106th Congress considered and passed H.R. 4444, which would eliminate the annual NTR renewal process and grant permanent NTR to China. The President signed the bill into law on October 10, 2000, as P.L. 106-286. But this Act only grants permanent NTR to China once it joins the World Trade Organization. Although this was expected to occur by late 2000, it has not yet happened and is now unlikely to occur until the end of 2001. Consequently, the President again this year will be compelled to recommend another temporary extension of China's NTR status for one year if this status is to continue uninterrupted. The NTR renewal is subject to enactment of a joint resolution of disapproval by Congress.

This Law is formulated for the purpose of preventing and controlling atmospheric pollution, protecting and improving the environment for a healthy society and ecology, and promoting the development of a sustainable economy and society.