[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5571 Introduced in Senate (IS)]
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118th CONGRESS
2d Session
S. 5571
To impose sanctions with respect to foreign persons that knowingly
engage in significant operations in the defense and related materiel
sector or the surveillance technology sector of the economy of the
People's Republic of China, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 17 (legislative day, December 16), 2024
Mr. Scott of Florida introduced the following bill; which was read
twice and referred to the Committee on Banking, Housing, and Urban
Affairs
_______________________________________________________________________
A BILL
To impose sanctions with respect to foreign persons that knowingly
engage in significant operations in the defense and related materiel
sector or the surveillance technology sector of the economy of 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.
This Act may be cited as the ``Chinese Military and Surveillance
Company Sanctions Act of 2024''.
SEC. 2. FINDINGS AND SENSE OF CONGRESS.
(a) Findings.--Congress finds the following:
(1) Under Executive Order 13959 of November 17, 2020, the
President found that the People's Republic of China ``increases
the size of the country's military-industrial complex by
compelling civilian Chinese companies to support its military
and intelligence activities. Those companies, though remaining
ostensibly private and civilian, directly support the PRC's
military, intelligence, and security apparatuses and aid in
their development and modernization.''. The President further
determined that ``the PRC exploits United States investors to
finance the development and modernization of its military.''.
As a result, Executive Order 13959 restricted transactions in
publicly traded securities of Communist Chinese military
companies listed pursuant to section 1237 of the Strom Thurmond
National Defense Authorization Act for Fiscal Year 1999 (Public
Law 105-261; 50 U.S.C. 1701 note).
(2) Although Executive Order 13959 targets transactions in
some public securities, it does not fully address all public
securities of concern or address financing options for
Communist Chinese military companies through other forms of
equity financing or debt financing, nor does it limit
transactions with United States persons that may generate
earnings in a manner that facilitates company growth.
(3) The Office of Foreign Assets Control of the Department
of the Treasury, by blocking the assets of certain entities
pursuant to certain specific delegated authorities and
including those entities on the list of specially designated
nationals and blocked persons (commonly referred to as the
``SDN list''), is able to forbid virtually any transaction
between United States persons and such entities, including debt
and equity financing and the exchange of goods and services.
Conversely, restrictions limited to publicly traded securities
are less comprehensive, and in the case of certain Chinese
companies of concern, may be of limited impact if the companies
do not issue such securities or the full corporate family is
not adequately covered.
(4) While Executive Order 13959 applies only to the
purchase or sale of certain publicly traded securities by
United States persons, the Office of Foreign Assets Control's
inclusion of a foreign entity on the SDN list imposes a broader
sanction by blocking the property and interest in property of
the entity, which may further deter third-country persons from
dealing with it, amplifying the effects of United States
sanctions globally.
(5) The Office of Foreign Assets Control has long devoted
significant resources to compiling evidence in support of its
sanctions, which enhances the effectiveness of United States
sanctions, encourages allies to consider comparable measures,
and strengthens national security.
(6) On June 3, 2021, the President issued Executive Order
14032, which amended Executive Order 13959 by exclusively
delegating authority for naming Chinese military companies
subject to investment restrictions to the Secretary of the
Treasury, in consultation with the Secretary of State and, as
appropriate, the Secretary of Defense, and expanded
restrictions to entities that operate or have operated in the
surveillance technology sector of the Chinese economy.
(b) Sense of Congress.--It is the sense of Congress that--
(1) it is in the national interest of the United States to
more fully address the economic threat that the Chinese
Communist Party poses to United States freedom and prosperity;
(2) the United States must adopt policies that declare and
defend the interests of the United States and deter the
aggression of the Chinese Communist Party; and
(3) the national emergency declared under Executive Order
13959 calls for the United States--
(A) to more fully cut off financing avenues for
Communist Chinese military and surveillance companies;
(B) to prevent adaptation by a company to partial
restrictions that are limited to publicly traded
securities;
(C) to ensure that the United States assembles an
appropriate evidentiary basis to support the
effectiveness of sanctions;
(D) to enhance the impact of economic sanctions by
deterring third-country persons from dealing with the
companies; and
(E) to link the imposition of sanctions to clear
objectives that serve to resolve the national
emergency.
SEC. 3. SANCTIONS WITH RESPECT TO COMMUNIST CHINESE MILITARY AND
SURVEILLANCE COMPANIES.
(a) In General.--On and after the date that is 180 days after the
date of the enactment of this Act, the President shall impose the
sanction described in subsection (c) with respect to any foreign person
described in subsection (b).
(b) Foreign Person Described.--A foreign person described in this
subsection is any foreign person the President determines is knowingly
operating in the defense sector, military-civil fusion operations
sector, or surveillance technology sector of the economy of the
People's Republic of China.
(c) Sanction Described.--The President shall prohibit any
transactions in foreign exchange that are subject to the jurisdiction
of the United States and in which the foreign person described in
subsection (b) has any interest.
(d) Additional Measure Relating to Facilitation of Certain
Transactions.--The President shall prohibit or impose strict conditions
on the opening or maintaining in the United States of a correspondent
account or payable-through account by a foreign financial institution
that the President determines has, on or after the date that is 180
days after the date of the enactment of this Act, knowingly conducted
or facilitated a significant transaction or transactions on behalf of a
foreign person described in subsection (b).
(e) Congressional Requests.--Not later than 30 days after receiving
a request from the chairman or ranking member of one of the appropriate
congressional committees with respect to whether a person meets the
criteria for the imposition of sanctions under subsection (c) or (d),
the President shall--
(1) determine if the person meets such criteria; and
(2) submit a report to the chairman or ranking member, as
the case may be, who submitted the request with respect to that
determination that includes a statement of whether or not the
President imposed or intends to impose sanctions with respect
to the person.
(f) Determinations and Reports.--
(1) In general.--Not later than one year after the date of
the enactment of this Act, and annually thereafter, the
Secretary of the Treasury, in consultation with the Secretary
of State, the Secretary of Commerce, and the Secretary of
Defense, shall--
(A) determine whether each foreign person on a list
specified in paragraph (2), and each entity described
in paragraph (3), meets the criteria for the imposition
of sanctions under subsection (c) or (d); and
(B) submit to the appropriate congressional
committees a report explaining the results of each such
determination.
(2) Lists specified.--The lists specified in this paragraph
are the following:
(A) The Consolidated Screening List of the Federal
Government.
(B) The list of Chinese military companies
operating directly or indirectly in the United States
maintained by the Secretary of Defense under section
1260H(b) of the William M. (Mac) Thornberry National
Defense Authorization Act for Fiscal Year 2021 (Public
Law 116-283; 10 U.S.C. 113 note).
(C) A list maintained under clause (i), (ii), (iv),
or (v) of section 2(d)(2)(B) of the Act entitled ``An
Act to ensure that goods made with forced labor in the
Xinjiang Autonomous Region of the People's Republic of
China do not enter the United States market, and for
other purposes'', approved December 23, 2021 (Public
Law 117-78; 22 U.S.C. 6901 note) (commonly referred to
as the ``Uyghur Forced Labor Prevention Act'').
(3) Entities described.--An entity is described in this
paragraph if the entity produces equipment or services on the
list of communications equipment and services that pose an
unacceptable risk to the national security of the United States
or the security and safety of United States persons maintained
by the Federal Communications Commission under section 2 of the
Secure and Trusted Communications Networks Act of 2019 (47
U.S.C. 1601).
(g) Consideration of Certain Activities.--In making determinations
with respect to the imposition of sanctions under subsection (c) or
(d), the Secretary of the Treasury may, if practicable, focus
particular attention on foreign persons engaged in any of the
following:
(1) Artificial intelligence, machine learning, autonomy,
and related advances.
(2) High-performance computing, semiconductors, and
advanced computer hardware and software.
(3) Quantum information science and technology.
(4) Robotics, automation, and advanced manufacturing.
(5) Advanced communications technology and immersive
technology.
(6) Biotechnology, medical technology, genomics, and
synthetic biology.
(7) Data storage, data management, and cybersecurity,
including biometrics.
(8) Advanced materials science, including composites and 2
dimensional materials.
(9) Hypersonic flight technologies for glide or any other
purposes.
(10) Space-related technologies, including satellite
communications.
(11) Aviation and aerospace technologies.
(12) Any other area on the Critical and Emerging
Technologies List of the National Science and Technology
Council.
(h) Implementation; Penalties.--
(1) Implementation.--The President may exercise the
authorities provided under sections 203 and 205 of the
International Emergency Economic Powers Act (50 U.S.C. 1702 and
1704) to the extent necessary to carry out this section.
(2) Penalties.--A person that violates, attempts to
violate, conspires to violate, or causes a violation of this
section or any regulation, license, or order issued to carry
out this section shall be subject to the penalties set forth in
subsections (b) and (c) of section 206 of the International
Emergency Economic Powers Act (50 U.S.C. 1705) to the same
extent as a person that commits an unlawful act described in
subsection (a) of that section.
(i) Waiver.--
(1) In general.--The President may, for renewable periods
of not to exceed 180 days, waive the application of this
section with respect to a foreign person if the President
certifies to the appropriate congressional committees that such
a waiver is in the national security interests of the United
States.
(2) Briefing.--Not later than 90 days after the issuance of
a waiver under paragraph (1), and every 180 days thereafter
while the waiver remains in effect, the President shall brief
the appropriate congressional committees on the reasons for the
waiver.
(j) Exceptions.--
(1) Intelligence and law enforcement activities.--Sanctions
under this section shall not apply with respect to--
(A) any activity subject to the reporting
requirements under title V of the National Security Act
of 1947 (50 U.S.C. 3091 et seq.); or
(B) any authorized intelligence or law enforcement
activities of the United States.
(2) Humanitarian activities.--The President may not impose
sanctions under this section with respect to any person for
conducting or facilitating a transaction for the sale of
agricultural commodities, food, medicine, or medical devices or
for the provision of humanitarian assistance.
(k) Regulatory Requirements.--
(1) In general.--The President shall, not later than 180
days after the date of the enactment of this Act, prescribe
such regulations as are necessary for the implementation of
this section.
(2) Notification to congress.--Not later than 10 days
before prescribing regulations under paragraph (1), the
President shall notify the appropriate congressional committees
regarding the proposed regulations and the provisions of this
section that the regulations are implementing.
(l) Sunset.--The authority to impose sanctions under this section
shall terminate on the date that is 7 years after the date of the
enactment of this Act.
(m) Definitions.--In this section:
(1) Account; correspondent account; payable-through
account.--The terms ``account'', ``correspondent account'', and
``payable-through account'' have the meanings given those terms
in section 5318A of title 31, United States Code.
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Armed Services, the Committee
on Banking, Housing, and Urban Affairs, the Committee
on Foreign Relations, and the Committee on Homeland
Security and Governmental Affairs; and
(B) the Committee on Armed Services, the Committee
on Financial Services, the Committee on Foreign
Affairs, and the Committee on Homeland Security of the
House of Representatives.
(3) Executive order 13959.--The term ``Executive Order
13959'' means Executive Order 13959 (50 U.S.C. 1701 note;
relating to addressing the threat from securities investments
that finance Communist Chinese military companies), as in
effect on the date of the enactment of this Act, including as
most recently amended before such date of enactment by
Executive Order 14032 (86 Fed. Reg. 30145).
(4) Foreign person.--The term ``foreign person'' means an
individual or entity that is not a United States person.
(5) Knowingly.--The term ``knowingly'' with respect to
conduct, a circumstance, or a result, means that a person has
actual knowledge, or should have known, of the conduct, the
circumstance, or the result.
(6) United states person.--The term ``United States
person'' means--
(A) a United States citizen or an alien lawfully
admitted for permanent residence to the United States;
(B) an entity organized under the laws of the
United States or of any jurisdiction within the United
States, including a foreign branch of such an entity;
or
(C) a person in the United States.
SEC. 4. CODIFICATION OF EXECUTIVE ORDER 13959.
(a) In General.--Executive Order 13959 (50 U.S.C. 1701 note;
relating to addressing the threat from securities investments that
finance Communist Chinese military companies), as in effect on the date
of the enactment of this Act, and sanctions imposed pursuant to that
Executive Order, shall remain in effect until terminated by an Act of
Congress.
(b) Annex.--Not less frequently than annually, the President
shall--
(1) update the Annex to Executive Order 13959; and
(2) include, with respect to each entity included in that
Annex, any subsidiary or affiliate of the entity that engages
in activities relating to the reason the entity is included in
the Annex.
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