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S. 1657: South China Sea and East China Sea Sanctions Act of 2021


The text of the bill below is as of Oct 28, 2021 (Reported by Senate Committee).


II

Calendar No. 158

117th CONGRESS

1st Session

S. 1657

IN THE SENATE OF THE UNITED STATES

May 17, 2021

(for himself, Mr. Cardin, and Mr. Barrasso) introduced the following bill; which was read twice and referred to the Committee on Foreign Relations

October 28, 2021

Reported by , with an amendment

Strike out all after the enacting clause and insert the part printed in italic

A BILL

To impose sanctions with respect to the People's Republic of China in relation to activities in the South China Sea and the East China Sea, and for other purposes.

1.

Short title

This Act may be cited as the South China Sea and East China Sea Sanctions Act of 2021.

2.

Definitions

In this Act:

(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)

Alien

The term alien has the meaning given that term in section 101(a) of the Immigration and Nationality Act (8 U.S.C. 1101(a)).

(3)

Appropriate committees of Congress

The term appropriate committees of Congress means—

(A)

the Committee on Foreign Relations, the Committee on Armed Services, the Committee on Banking, Housing, and Urban Affairs, and the Select Committee on Intelligence of the Senate; and

(B)

the Committee on Foreign Affairs, the Committee on Armed Services, the Committee on Financial Services, and the Permanent Select Committee on Intelligence of the House of Representatives.

(4)

Chinese person

The term Chinese person means—

(A)

an individual who is a citizen or national of the People's Republic of China; or

(B)

an entity organized under the laws of the People's Republic of China or otherwise subject to the jurisdiction of the Government of the People's Republic of China.

(5)

Financial institution

The term financial institution means a financial institution specified in subparagraph (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K), (M), (N), (P), (R), (T), (Y), or (Z) of section 5312(a)(2) of title 31, United States Code.

(6)

Foreign financial institution

The term foreign financial institution has the meaning given that term in section 1010.605 of title 31, Code of Federal Regulations (or any corresponding similar regulation or ruling).

(7)

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.

(8)

Person

The term person means any individual or entity.

(9)

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; or

(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.

3.

Sanctions with respect to Chinese persons responsible for China’s activities in the South China Sea and the East China Sea

(a)

Initial imposition of sanctions

On and after the date that is 60 days after the date of the enactment of this Act, the President shall impose the sanctions described in subsection (b) with respect to—

(1)

any Chinese person that contributes to construction or development projects, including land reclamation, island-making, lighthouse construction, building of base stations for mobile communications services, building of electricity and fuel supply facilities, or civil infrastructure projects, or contributes to the ongoing supply of new settlements resulting from such development projects, in areas of the South China Sea contested by one or more members of the Association of Southeast Asian Nations;

(2)

any Chinese person that is responsible for or complicit in, or has engaged in, directly or indirectly, actions or policies that threaten the peace, security, or stability of areas of the South China Sea contested by one or more members of the Association of Southeast Asian Nations or areas of the East China Sea administered by Japan or the Republic of Korea, including through the use of vessels and aircraft to impose the sovereignty of the People’s Republic of China in those areas;

(3)

any Chinese person that engages, or attempts to engage, in an activity or transaction that materially contributes to, or poses a risk of materially contributing to, an activity described in paragraph (1) or (2); and

(4)

any person that—

(A)

is owned or controlled by a person described in paragraph (1), (2), or (3);

(B)

is acting for or on behalf of such a person; or

(C)

provides, or attempts to provide—

(i)

financial, material, technological, or other support to a person described in paragraph (1), (2), or (3); or

(ii)

goods or services in support of an activity described in paragraph (1), (2), or (3).

(b)

Sanctions described

(1)

Blocking of property

The President shall block and prohibit, in accordance with the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), all transactions in all property and interests in property of any person subject to subsection (a) if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person.

(2)

Exclusion from united states

The Secretary of State shall deny a visa to, and the Secretary of Homeland Security shall exclude from the United States, any person subject to subsection (a) that is an alien.

(3)

Current visa revoked

The issuing consular officer, the Secretary of State, or the Secretary of Homeland Security (or a designee of one of such Secretaries) shall revoke any visa or other entry documentation issued to any person subject to subsection (a) that is an alien, regardless of when issued. The revocation shall take effect immediately and shall automatically cancel any other valid visa or entry documentation that is in the alien’s possession.

(c)

Exceptions; penalties

(1)

Inapplicability of national emergency requirement

The requirements of section 202 of the International Emergency Economic Powers Act (50 U.S.C. 1701) shall not apply for purposes of subsection (b)(1).

(2)

Compliance with united nations headquarters agreement

Paragraphs (2) and (3) of subsection (b) shall not apply if admission of an alien to the United States is necessary to permit the United States to comply with the Agreement regarding the Headquarters of the United Nations, signed at Lake Success, June 26, 1947, and entered into force, November 21, 1947, between the United Nations and the United States.

(3)

Penalties

The penalties provided for in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) shall apply to a person that violates, attempts to violate, conspires to violate, or causes a violation of regulations prescribed under subsection (b)(1) to the same extent that such penalties apply to a person that commits an unlawful act described in subsection (a) of such section 206.

(d)

Additional imposition of sanctions

(1)

In general

The President shall prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by a foreign financial institution that the President determines knowingly, on or after the date that is 60 days after the date of the enactment of this Act, conducts or facilitates a significant financial transaction for a person subject to subsection (a) if the Director of National Intelligence determines that the Government of the People’s Republic of China has—

(A)

declared an air defense identification zone over any part of the South China Sea;

(B)

initiated reclamation work at another disputed location in the South China Sea, such as at Scarborough Shoal;

(C)

seized control of Second Thomas Shoal;

(D)

deployed surface-to-air missiles to any of the artificial islands the People’s Republic of China has built in the Spratly Island chain, including Fiery Cross, Mischief, or Subi Reefs;

(E)

established territorial baselines around the Spratly Island chain;

(F)

repeated harassment of Philippine vessels; or

(G)

repeated provocative actions against the Japanese Coast Guard or Maritime Self-Defense Force or United States forces in the East China Sea.

(2)

Report

(A)

In general

The determination of the Director of National Intelligence referred to in paragraph (1) shall be submitted in a report to the President and the appropriate committees of Congress.

(B)

Form of report

The report required by subparagraph (A) shall be submitted in unclassified form, but may include a classified annex.

4.

Determinations and report on Chinese companies active in the South China Sea and the East China Sea

(a)

In general

The Secretary of State shall submit to the appropriate committees of Congress a report that identifies each Chinese person the Secretary determines is engaged in the activities described in section 3(a).

(b)

Consideration

In preparing the report required under subsection (a), the Secretary shall make specific findings with respect to whether each of the following persons is involved in the activities described in section 3(a):

(1)

CCCC Tianjin Dredging Co., Ltd.

(2)

CCCC Dredging (Group) Company, Ltd.

(3)

China Communications Construction Company (CCCC), Ltd.

(4)

China Petroleum Corporation (Sinopec Group).

(5)

China Mobile.

(6)

China Telecom.

(7)

China Southern Power Grid.

(8)

CNFC Guangzhou Harbor Engineering Company.

(9)

Zhanjiang South Project Construction Bureau.

(10)

Hubei Jiangtian Construction Group.

(11)

China Harbour Engineering Company (CHEC).

(12)

Guangdong Navigation Group (GNG) Ocean Shipping.

(13)

Shanghai Leading Energy Shipping.

(14)

China National Offshore Oil Corporation (CNOOC).

(15)

China Oilfield Services Limited (COSL).

(16)

China Precision Machinery Import/Export Corporation (CPMIEC).

(17)

China Aerospace Science and Industry Corporation (CASIC).

(18)

Aviation Industry Corporation of China (AVIC).

(19)

Shenyang Aircraft Corporation.

(20)

Shaanxi Aircraft Corporation.

(21)

China Ocean Shipping (Group) Company (COSCO).

(22)

China Southern Airlines.

(23)

Zhan Chaoying.

(24)

Sany Group.

(25)

Chinese persons affiliated with any of the entities specified in paragraphs (1) through (24).

(c)

Submission and form

(1)

Submission

The report required by subsection (a) shall be submitted not later than 60 days after the date of the enactment of this Act and every 180 days thereafter until the date that is 3 years after such date of enactment.

(2)

Form

The report required by subsection (a) shall be submitted in unclassified form, but may include a classified annex if the Secretary determines it is necessary for the national security interests of the United States to do so.

(3)

Public availability

The Secretary shall publish the unclassified part of the report required by subsection (a) on a publicly available website of the Department of State.

5.

Prohibition against documents portraying the South China Sea or the East China Sea as part of China

The Government Publishing Office may not publish any map, document, record, electronic resource, or other paper of the United States (other than materials relating to hearings held by committees of Congress or internal work product of a Federal agency) portraying or otherwise indicating that it is the position of the United States that the territory or airspace in the South China Sea contested by one or more members of the Association of Southeast Asian Nations or the territory or airspace of areas of the East China Sea administered by Japan or the Republic of Korea is part of the territory or airspace of the People’s Republic of China.

6.

Prohibition on facilitating certain investments in the South China Sea or the East China Sea

(a)

In general

No United States person may take any action to approve, facilitate, finance, or guarantee any investment, provide insurance, or underwriting in the South China Sea or the East China Sea that involves any person with respect to which sanctions are imposed under section 3(a).

(b)

Enforcement

The Secretary of the Treasury, in consultation with the Secretary of State, is authorized to take such actions, including the promulgation of such rules and regulations, as may be necessary to carry out the purposes of this section.

(c)

Penalties

The penalties provided for in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) shall apply to a person that violates, attempts to violate, conspires to violate, or causes a violation of regulations prescribed under this section to the same extent that such penalties apply to a person that commits an unlawful act described in subsection (a) of such section 206.

(d)

Exception

Subsection (a) shall not apply with respect to humanitarian assistance, disaster assistance, or emergency food assistance.

7.

Department of Justice affirmation of non-recognition of annexation

In any matter before any United States court, upon request of the court or any party to the matter, the Attorney General shall affirm the United States policy of not recognizing the de jure or de facto sovereignty of the People’s Republic of China over territory or airspace contested by one or more members of the Association of Southeast Asian Nations in the South China Sea or the territory or airspace of areas of the East China Sea administered by Japan or the Republic of Korea.

8.

Non-recognition of Chinese sovereignty over the South China Sea or the East China Sea

(a)

United states armed forces

The Secretary of Defense may not take any action, including any movement of aircraft or vessels that implies recognition of the sovereignty of the People’s Republic of China over territory or airspace contested by one or more members of the Association of Southeast Asian Nations in the South China Sea or the territory or airspace of areas of the East China Sea administered by Japan or the Republic of Korea.

(b)

United states flagged vessels

No vessel that is issued a certificate of documentation under chapter 121 of title 46, United States Code, may take any action that implies recognition of the sovereignty of the People’s Republic of China over territory or airspace contested by one or more members of the Association of Southeast Asian Nations in the South China Sea or the territory or airspace of areas of the East China Sea administered by Japan or the Republic of Korea.

(c)

United states aircraft

No aircraft operated by an air carrier that holds an air carrier certificate issued under chapter 411 of title 49, United States Code, may take any action that implies recognition of the sovereignty of the People’s Republic of China over territory or airspace contested by one or more members of the Association of Southeast Asian Nations in the South China Sea or the territory or airspace of areas of the East China Sea administered by Japan or the Republic of Korea.

9.

Prohibition on certain assistance to countries that recognize Chinese sovereignty over the South China Sea or the East China Sea

(a)

Prohibition

Except as provided by subsection (c) or (d), no amounts may be obligated or expended to provide foreign assistance to the government of any country identified in a report required by subsection (b).

(b)

Report required

(1)

In general

Not later than 60 days after the date of the enactment of this Act, and every 180 days thereafter until the date that is 3 years after such date of enactment, the Secretary of State shall submit to the appropriate committees of Congress a report identifying each country that the Secretary determines recognizes, after such date of enactment, the sovereignty of the People’s Republic of China over territory or airspace contested by one or more members of the Association of Southeast Asian Nations in the South China Sea or the territory or airspace of areas of the East China Sea administered by Japan or the Republic of Korea.

(2)

Form

The report required by paragraph (1) shall be submitted in unclassified form, but may include a classified annex if the Secretary of State determines it is necessary for the national security interests of the United States to do so.

(3)

Public availability

The Secretary of State shall publish the unclassified part of the report required by paragraph (1) on a publicly available website of the Department of State.

(c)

Exception

This section shall not apply with respect to Taiwan, humanitarian assistance, disaster assistance, emergency food assistance, or the Peace Corps.

(d)

Waiver

The President may waive the application of subsection (a) with respect to the government of a country if the President determines that the waiver is in the national interests of the United States.

1.

Short title

This Act may be cited as the South China Sea and East China Sea Sanctions Act of 2021.

2.

Sanctions with respect to Chinese persons responsible for China’s activities in the South China Sea and the East China Sea

(a)

Initial imposition of sanctions

On and after the date that is 120 days after the date of the enactment of this Act, the President may impose the sanctions described in subsection (b) with respect to any Chinese person, including any senior official of the Government of the People's Republic of China, that the President determines—

(1)

is responsible for or significantly contributes to large-scale reclamation, construction, militarization, or ongoing supply of outposts in disputed areas of the South China Sea;

(2)

is responsible for or significantly contributes to, or has engaged in, directly or indirectly, actions, including the use of coercion, to inhibit another country from protecting its sovereign rights to access offshore resources in the South China Sea, including in such country’s exclusive economic zone, consistent with such country’s rights and obligations under international law;

(3)

is responsible for or complicit in, or has engaged in, directly or indirectly, actions that significantly threaten the peace, security, or stability of disputed areas of the South China Sea or areas of the East China Sea administered by Japan or the Republic of Korea, including through the use of vessels and aircraft by the People’s Republic of China to occupy or conduct extensive research or drilling activity in those areas;

(4)

has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to, or in support of, any person subject to sanctions pursuant to paragraph (1), (2), or (3); or

(5)

is owned or controlled by, or has acted for or on behalf of, directly or indirectly, any person subject to sanctions pursuant to paragraph (1), (2), or (3).

(b)

Sanctions described

The sanctions that may be imposed with respect to a person described in subsection (a) are the following:

(1)

Blocking of property

The President may, in accordance with the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), block and prohibit all transactions in all property and interests in property of the person if such property and interests in property are in the United States, come within the United States, or are or come within the possession or control of a United States person.

(2)

Ineligibility for visas, admission, or parole

(A)

Visas, admission, or parole

In the case of an alien, the alien may be—

(i)

inadmissible to the United States;

(ii)

ineligible to receive a visa or other documentation to enter the United States; and

(iii)

otherwise ineligible to be admitted or paroled into the United States or to receive any other benefit under the Immigration and Nationality Act (8 U.S.C. 1101 et seq.).

(B)

Current visas revoked

(i)

In general

An alien described in subparagraph (A) may be subject to revocation of any visa or other entry documentation regardless of when the visa or other entry documentation is or was issued.

(ii)

Immediate effect

A revocation under clause (i) may—

(I)

take effect immediately; and

(II)

cancel any other valid visa or entry documentation that is in the alien’s possession.

(3)

Exclusion of corporate officers

The President may direct the Secretary of State to deny a visa to, and the Secretary of Homeland Security to exclude from the United States, any alien that the President determines is a corporate officer or principal of, or a shareholder with a controlling interest in, the person.

(4)

Export sanction

The President may order the United States Government not to issue any specific license and not to grant any other specific permission or authority to export any goods or technology to the person under—

(A)

the Export Control Reform Act of 2018 (50 U.S.C. 4801 et seq.); or

(B)

any other statute that requires the prior review and approval of the United States Government as a condition for the export or reexport of goods or services.

(5)

Inclusion on entity list

The President may include the entity on the entity list maintained by the Bureau of Industry and Security of the Department of Commerce and set forth in Supplement No. 4 to part 744 of the Export Administration Regulations, for activities contrary to the national security or foreign policy interests of the United States.

(6)

Ban on investment in equity or debt of sanctioned person

The President may, pursuant to such regulations or guidelines as the President may prescribe, prohibit any United States person from investing in or purchasing equity or debt instruments of the person.

(7)

Banking transactions

The President may, pursuant to such regulations as the President may prescribe, prohibit any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the person.

(8)

Correspondent and payable-through accounts

In the case of a foreign financial institution, the President may prohibit the opening, and prohibit or impose strict conditions on the maintaining, in the United States of a correspondent account or a payable-through account by the foreign financial institution.

(c)

Exceptions

(1)

Inapplicability of national emergency requirement

The requirements of section 202 of the International Emergency Economic Powers Act (50 U.S.C. 1701) shall not apply for purposes of subsection (b)(1).

(2)

Exception for intelligence, law enforcement, and national security activities

Sanctions under this section shall not apply to any authorized intelligence, law enforcement, or national security activities of the United States.

(3)

Compliance with united nations headquarters agreement

Paragraphs (2) and (3) of subsection (b) shall not apply if admission of an alien to the United States is necessary to permit the United States to comply with the Agreement regarding the Headquarters of the United Nations, signed at Lake Success, June 26, 1947, and entered into force, November 21, 1947, between the United Nations and the United States.

(4)

Exception relating to importation of goods

(A)

In general

The authority or a requirement to impose sanctions under this section shall not include the authority or a requirement to impose sanctions on the importation of goods.

(B)

Good defined

In this paragraph, the term good means any article, natural or manmade substance, material, supply, or manufactured product, including inspection and test equipment, and excluding technical data.

(d)

Implementation; penalties

(1)

Implementation

The President may exercise all authorities provided under sections 203 and 205 of the International Emergency Economic Powers Act (50 U.S.C. 1702 and 1704) to carry out this section.

(2)

Penalties

The penalties provided for in subsections (b) and (c) of section 206 of the International Emergency Economic Powers Act (50 U.S.C. 1705) shall apply to a person that violates, attempts to violate, conspires to violate, or causes a violation of regulations prescribed under subsection (b)(1) to the same extent that such penalties apply to a person that commits an unlawful act described in subsection (a) of such section 206.

(e)

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)

Alien

The term alien has the meaning given that term in section 101(a) of the Immigration and Nationality Act (8 U.S.C. 1101(a)).

(3)

Chinese person

The term Chinese person means—

(A)

an individual who is a citizen or national of the People's Republic of China; or

(B)

an entity organized under the laws of the People's Republic of China or otherwise subject to the jurisdiction of the Government of the People's Republic of China.

(4)

Financial institution

The term financial institution means a financial institution specified in subparagraph (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K), (M), (N), (P), (R), (T), (Y), or (Z) of section 5312(a)(2) of title 31, United States Code.

(5)

Foreign financial institution

The term foreign financial institution has the meaning given that term in section 1010.605 of title 31, Code of Federal Regulations (or any corresponding similar regulation or ruling).

(6)

Person

The term person means any individual or entity.

(7)

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)

any person in the United States.

3.

Sense of Congress regarding portrayals of the South China Sea or the East China Sea as part of China

It is the sense of Congress that the Government Publishing Office should not publish any map, document, record, electronic resource, or other paper of the United States (other than materials relating to hearings held by committees of Congress or internal work product of a Federal agency) portraying or otherwise indicating that it is the position of the United States that the territory or airspace in the South China Sea that is disputed among two or more parties or the territory or airspace of areas administered by Japan or the Republic of Korea, including in the East China Sea, is part of the territory or airspace of the People’s Republic of China.

4.

Sense of Congress on 2016 Permanent Court of Arbitration’s tribunal ruling on arbitration case between Philippines and People's Republic of China

(a)

Finding

Congress finds that on July 12, 2016, a tribunal of the Permanent Court of Arbitration found in the arbitration case between the Philippines and the People's Republic of China under the United Nations Convention on the Law of the Sea that the People’s Republic of China’s claims, including those to offshore resources and historic rights, were unlawful, and that the tribunal’s ruling is final and legally binding on both parties.

(b)

Sense of Congress

It is the sense of Congress that—

(1)

the United States and the international community should reject the unlawful claims of the People's Republic of China within the exclusive economic zone or on the continental shelf of the Philippines, as well as the maritime claims of the People's Republic of China beyond a 12-nautical-mile territorial sea from the islands it claims in the South China Sea;

(2)

the provocative behavior of the People's Republic of China, including coercing other countries with claims in the South China Sea and preventing those countries from accessing offshore resources, undermines peace and stability in the South China Sea;

(3)

the international community should—

(A)

support and adhere to the ruling described in subsection (a) in compliance with international law; and

(B)

take all necessary steps to support the rules-based international order in the South China Sea; and

(4)

all claimants in the South China Sea should—

(A)

refrain from engaging in destabilizing activities, including illegal occupation or efforts to unlawfully assert control over disputed claims;

(B)

ensure that disputes are managed without intimidation, coercion, or force;

(C)

clarify or adjust claims in accordance with international law; and

(D)

uphold the principle that territorial and maritime claims, including over territorial waters or territorial seas, must be derived from land features and otherwise comport with international law.

5.

Report on countries that recognize Chinese sovereignty over the South China Sea or the East China Sea

(a)

In general

Not later than 60 days after the date of the enactment of this Act, and annually thereafter until the date that is 3 years after such date of enactment, the Secretary of State shall submit to the Committee on Foreign Relations of the Senate and the Committee on Foreign Affairs of the House of Representatives a report identifying each country that the Secretary determines has taken an official and stated position to recognize, after such date of enactment, the sovereignty of the People’s Republic of China over territory or airspace disputed by one or more countries in the South China Sea or the territory or airspace of areas of the East China Sea administered by Japan or the Republic of Korea.

(b)

Form

The report required by subsection (a) shall be submitted in unclassified form, but may include a classified annex if the Secretary of State determines it is necessary for the national security interests of the United States to do so.

(c)

Public availability

The Secretary of State shall publish the unclassified part of the report required by subsection (a) on a publicly available website of the Department of State.

October 28, 2021

Reported with an amendment