IN THE SENATE OF THE UNITED STATES
February 16, 2023
Mr. Scott of Florida (for himself and Mr. Cramer) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To impose sanctions to deter aggression by the People’s Republic of China against Taiwan, and for other purposes.
This Act may be cited as the
Deterring Communist Chinese Aggression against Taiwan through Financial Sanctions Act of 2023.
Congress makes the following findings:
Taiwan is a self-governing polity with all the attributes of a constitutional democratic republic and consistently achieves exceedingly high scores from Freedom House’s Freedom in the World Index.
Taiwan practices and enshrines in law a free market and entrepreneurial economy and consistently achieves exceedingly high scores in the Heritage Foundation's Index of Economic Freedom.
Taiwan’s government and political culture cherish individual rights and the protection of ethnic minorities, and do so through respect for the rule of law.
Taiwan’s democracy, free market economy, and cultural, industrial, and scientific achievements have made it a model for the world as it contributes greatly to the peace, prosperity, and well-being of the United States and all other countries that trade and cooperate with Taiwan despite the constraints on trade and cooperation resulting from the threats and intimidation by the Communist Party of China against countries that seek relations with Taiwan.
Section 2(b) of the Taiwan Relations Act (22 U.S.C. 3301(b)) asserts that it is the policy of the United States—
to declare that peace and stability in the area are in the political, security, and economic interests of the United States, and are matters of international concern;
to make clear that the United States decision to establish diplomatic relations with the People's Republic of China rests upon the expectation that the future of Taiwan will be determined by peaceful means;
to consider any effort to determine the future of Taiwan by other than peaceful means, including by boycotts or embargoes, a threat to the peace and security of the Western Pacific area and of grave concern to the United States; and
to maintain the capacity of the United States to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan.
The Chinese Communist Party, especially under the leadership of General Secretary Xi Jinping, threatens Taiwan in terms of national security, trade, and its relationships with countries and international organizations.
Such threats are designed to intimidate Taiwan into submission to Communist Party rule and to cause other countries and international organizations to shun Taiwan and cut off relations with it.
General Secretary Xi and the Communist Party have made clear their intention to take Taiwan by force if they so choose, and they demonstrate that intention with increased provocative and dangerous actions threatening the peace against Taiwan in the Taiwan Straits.
Supporting Taiwan’s defense against such increasingly imminent threats is a vital interest of the United States for the sake of the national security of the United States and allies of the United States in the region, and the preservation of democracy, free market economics, and the rules and norms of the international order.
The peace and stability of the entire Pacific region and the countries in that region require that Taiwan not be subjected to the rule of the Communist Party of China.
The credibility of the avowal of the United States to defend the principles of the United States and the principles the international order is built upon require a policy that can and will deter and thwart any attempt by the Communist Party of China to dominate Taiwan by coercion.
Statement of policy
It is the policy of the United States to sever all financial transactions between the United States and the People's Republic of China, including any and all public or private entities in the People's Republic of China, if the Government of the People's Republic of China or any forces subject to the control of that Government—
engage in armed aggression against Taiwan;
invade the territory of Taiwan, including the mainland of Taiwan and any territories under its control, without regard to whether those territories are inhabited or not;
blockade by sea or air the mainland of Taiwan or territories under its control; or
attempt to change the status of Taiwan or its government by force or coercive actions.
In this Act:
Appropriate congressional committees
The term appropriate congressional committees means—
the Committee on Banking, Housing, and Urban Affairs and the Committee on Finance of the Senate; and
the Committee on Financial Services and the Committee on Ways and Means of the House of Representatives.
Chinese military company
The term Chinese military company means an entity on the most recent list required to be submitted under section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 10 U.S.C. 113 note).
The term Chinese person means—
an individual who is a citizen or national of the People's Republic of China; or
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.
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.
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).
The terms issuer and security have the meanings given those terms in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c).
National securities exchange
The term national securities exchange means an exchange registered as a national securities exchange in accordance with section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f).
The term triggering event means any attempt by the Government of the People's Republic of China or any forces subject to the control of that Government to subject Taiwan to the control of the People's Republic of China, including though any of the following acts:
Engaging in armed aggression against Taiwan.
Invading the territory of Taiwan, including the mainland of Taiwan and any territories under its control, without regard to whether those territories are inhabited or not.
Blockading by sea or air the mainland of Taiwan or territories under its control.
Attempting to change the status of Taiwan or its government by force or coercive actions.
United states person
The term United States person means—
a United States citizen or an alien lawfully admitted for permanent residence to the United States;
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
any person in the United States.
Imposition of sanctions with respect to Chinese persons responsible for aggression against Taiwan
Initial imposition of sanctions
On and after the date that is 30 days after a triggering event, the President shall 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 participates in a triggering event.
The sanctions to be imposed with respect to a person described in subsection (a) are the following:
Blocking of property
The President shall exercise all of the powers granted by the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) to 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 come within the possession or control of a United States person.
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 subparagraph (A).
Ineligibility for visas, admission, or parole
Visas, admission, or parole
In the case of an alien, the alien shall be—
inadmissible to the United States;
ineligible to receive a visa or other documentation to enter the United States; and
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.).
Current visas revoked
An alien described in subparagraph (A) shall be subject to revocation of any visa or other entry documentation regardless of when the visa or other entry documentation is or was issued.
A revocation under clause (i) shall—
take effect immediately; and
cancel any other valid visa or entry documentation that is in the alien’s possession.
Exclusion of corporate officers
The President shall 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.
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—
the Export Control Reform Act of 2018 (50 U.S.C. 4801 et seq.); or
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.
Inclusion on entity list
The President shall 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.
Ban on investment in equity or debt of sanctioned person
The President shall, 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.
The President shall, 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.
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.
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.
Compliance with united nations headquarters agreement
Paragraphs (2) and (3) of subsection (b) shall not apply with respect to the admission of an alien to the United States if such admission 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.
In this section:
Account; correspondent account; payable-through account
correspondent account, and
payable-through account have the meanings given those terms in section 5318A of title 31, United States Code.
Admission; admitted; alien
alien have the meanings given those terms in section 101 of the Immigration and Nationality Act (8 U.S.C. 1101).
Prohibition on listing of Chinese entities on United States securities exchanges
The Securities and Exchange Commission shall prohibit the securities of an issuer described in subsection (b) from being traded on a national securities exchange on or after the date that is 60 days after a triggering event.
An issuer described in this subsection is an issuer that is—
a Chinese person;
owned or controlled by a Chinese person; or
a successor entity to a person described in paragraph (1) or (2).
Prohibition on transactions in securities of Chinese military companies
Beginning on the date that is 60 days after a triggering event, any transaction by any United States person or within the United States in any security of an issuer described in subsection (b), or any instrument that is derivative of or designed to provide investment exposure to any such security, is prohibited.
An issuer described in this subsection (b) is an issuer that is—
a Chinese military company;
owned or controlled by a Chinese military company; or
a successor entity to a Chinese military company.
Prohibition on transactions with certain Chinese software companies
Beginning on the date that is 30 days after a triggering event, any transaction by a United States person or within the United States with any person described in subsection (b) is prohibited.
A person described in this subsection is a person that—
the Secretary of Commerce determines develops or controls a software application described in subsection (c); or
is owned or controlled by a person described in paragraph (1).
Software applications specified
A software application described in this subsection is any of the following:
Any other connected software application—
providing digital e-wallet platforms or digital financial messaging systems;
developed or operated by a Chinese person; and
determined by the Secretary of Commerce to pose an unacceptable risk to the national security, foreign policy, or economy of the United States.
Connected software application defined
In this section, the term connected software application means software, a software program, or group of software programs, designed—
to be used by an end user on an end-point computing device and to collect, process, or transmit data via the internet as an integral part of its functionality; or
to facilitate international financial transactions, digital e-wallet services, digital currency transactions, mobile payments, or international financial messaging services.
Imposition of sanctions with respect to international financial messaging systems
If, on or after the date that is 60 days after the triggering action, a global financial communications services provider has not terminated the provision of financial communications services to, and the enabling and facilitation of access to such services for, the Central Bank of China and any foreign financial institution subject to sanctions under this Act, the President shall impose sanctions pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) with respect to the financial communications services provider and the directors of, and shareholders with a significant interest in, the provider.
Prohibition on transactions relating to digital currency issued by the People's Republic of China
Any transaction by a United States person or within the United States related to, providing financing for, and otherwise dealing in, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of the People's Republic of China on or after the date that is 30 days after a triggering event, is prohibited.
The President shall exercise all authorities provided to the President under sections 203 and 205 of the International Emergency Economic Powers Act (50 U.S.C. 1702 and 1704) to carry out this Act.
A person that violates, attempts to violate, conspires to violate, or causes a violation of this Act or any regulation, license, or order issued to carry out this Act 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.
Exception relating to importation of goods
The authority or a requirement to impose sanctions or a prohibition under this Act shall not include the authority or a requirement to impose sanctions or a prohibition on the importation of goods.
In this section, the term good means any article, natural or manmade substance, material, supply, or manufactured product, including inspection and test equipment, and excluding technical data.