Stop Funding the PLA Act

I 116TH CONGRESS 2D SESSION H. R. 7064 To prohibit financial investment by a United States person in foreign indus- trial defense corporations with substantial contracts with, ties to, or support from, the Chinese military and affiliated entities, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 1, 2020 Mr. BANKS (for himself, Mr. GALLAGHER, and Mr. LAMALFA) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Foreign Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee con- cerned A BILL To prohibit financial investment by a United States person in foreign industrial defense corporations with substantial contracts with, ties to, or support from, the Chinese military and affiliated entities, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Stop Funding the PLA 4 Act’’. 5 VerDate Sep 11 2014 20:03 Jun 20, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7064.IH H7064 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 7064 IH SEC. 2. SPECIFICATION OF PROHIBITED FOREIGN INDUS- 1 TRIAL DEFENSE CORPORATIONS. 2 (a) SPECIFICATION REQUIRED.—Not later than 90 3 days after the date of the enactment of this section, and 4 annually thereafter, the Secretary, in consultation with the 5 Secretary of State, the Secretary of Defense, and the do- 6 mestic intelligence community, shall submit to the Com- 7 mittee on Banking, Housing, and Urban Affairs of the 8 Senate and the Committee on Financial Services of the 9 House of Representatives a report that specifies each for- 10 eign industrial defense corporation with substantial con- 11 tracts with, ties to, or support from, a PLA entity. 12 (b) EFFECT OF SPECIFICATION.— 13 (1) PURCHASE OF SECURITIES PROHIBITED.— 14 Beginning on the date that is 180 days after a re- 15 port is submitted under subsection (a), a United 16 States person may not purchase securities of a for- 17 eign industrial defense corporation specified in such 18 report. 19 (2) DIVESTMENT REQUIRED.— 20 (A) IN GENERAL.—Except as provided in 21 subparagraph (B), not later than 180 days 22 after a report is submitted under subsection 23 (a), a United States person that owns a secu- 24 rity of a foreign industrial defense corporation 25 VerDate Sep 11 2014 20:03 Jun 20, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7064.IH H7064 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 7064 IH specified in such report shall divest themselves 1 of such security. 2 (B) EXTENDED WIND-DOWN IN CASE OF 3 FINANCIAL HARDSHIP.—The Secretary may 4 allow a United States person a 270-day exten- 5 sion to the 180-day period for compliance under 6 subparagraph (A) if the Secretary determines 7 that such entity— 8 (i) owns a security of a foreign indus- 9 trial defense corporation specified in a re- 10 port submitted under subsection (a); and 11 (ii) would experience extreme financial 12 hardship to comply within the 180-day pe- 13 riod under subparagraph (A). 14 (c) ASSIGNMENT OF AUTHORITY.— 15 (1) ENFORCEMENT.—The Secretary shall en- 16 force the provisions of this section. 17 (2) REGULATIONS.—Not later than 90 days 18 after the date of the enactment of this section, the 19 Secretary shall issue such regulations and guidance 20 as necessary to implement and enforce this section. 21 (d) REPORT.—Not later than 360 days after the date 22 of the enactment of this section, the Secretary shall sub- 23 mit to the Committee on Banking, Housing, and Urban 24 Affairs of the Senate and the Committee on Financial 25 VerDate Sep 11 2014 20:03 Jun 20, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7064.IH H7064 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 7064 IH Services of the House of Representatives a report on the 1 progress of the divestments required under subsection 2 (b)(2). 3 (e) PETITION FOR REMOVAL FROM DESIGNATION.— 4 (1) IN GENERAL.—A foreign industrial defense 5 corporation may petition the Secretary to not be in- 6 cluded or removed from a report under subsection 7 (a). 8 (2) REQUIREMENTS.—A petition under para- 9 graph (1) shall include such documentation of the 10 assets and liabilities, company financial records, 11 ownership and investor records, and past and cur- 12 rent business contracts of the foreign industrial de- 13 fense corporation submitting such petition that the 14 Secretary determines necessary. 15 (f) FINAL REPORT.—Not later than 8 years after the 16 date of the enactment of this section, the Secretary shall 17 submit to the Committee on Banking, Housing, and 18 Urban Affairs of the Senate and the Committee on Finan- 19 cial Services of the House of Representatives a final report 20 on the implementation of this section, including— 21 (1) an analysis of the effectiveness of this sec- 22 tion; 23 (2) the development and maintenance of the re- 24 ports required under subsection (a); and 25 VerDate Sep 11 2014 20:03 Jun 20, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7064.IH H7064 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 7064 IH (3) a description of completed and ongoing civil 1 and criminal cases related to securities of foreign in- 2 dustrial defense corporations. 3 (g) SUNSET.—This section and the authority under 4 this section shall expire on the date that is 10 years after 5 the date of the enactment of this section. 6 (h) DEFINITIONS.—In this section: 7 (1) PLA ENTITY.—The term ‘‘PLA entity’’ 8 means any entity of the Chinese military, including 9 the People’s Liberation Army, Navy, Air Force, 10 Rocket Force, Strategic Support Force, and Joint 11 Logistics Force, and the Chinese intelligence com- 12 munity. 13 (2) FOREIGN INDUSTRIAL DEFENSE CORPORA- 14 TION.—The term ‘‘foreign industrial defense cor- 15 poration’’ means any corporation based— 16 (A) outside of the United States; and 17 (B) in a country that the Secretary, in 18 consultation with the Secretary of Defense, the 19 Secretary of State, and the domestic intel- 20 ligence community, determines does not possess 21 positive economic and military relations with 22 the United States. 23 (3) SECRETARY.—The term ‘‘Secretary’’ means 24 the Secretary of the Treasury. 25 VerDate Sep 11 2014 20:03 Jun 20, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7064.IH H7064 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 7064 IH (4) SUBSTANTIAL.—The term ‘‘substantial’’ 1 shall, with respect to contracts with, ties to, or sup- 2 port from, a PLA entity, have the meaning deter- 3 mined by the Secretary, in consultation with the 4 Secretary of State, the Secretary of Defense, and 5 the domestic intelligence community. 6 Æ VerDate Sep 11 2014 20:03 Jun 20, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H7064.IH H7064 pamtmann on DSKBC07HB2PROD with BILLS