Message to the Senate Transmitting a Protocol to the China-United States Agreement on Taxation and Fiscal Evasion

To the Senate of the United States:

I transmit herewith, for Senate advice and consent to ratification, the May 10, 1986, Protocol Concerning the Interpretation of Paragraph 7 of the 1984 Protocol to the Agreement Between the Government of the United States of America and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income, signed at Beijing on April 30, 1984. I also transmit the report of the Department of State on the new Protocol.

Senate consideration of the Agreement, which was transmitted for advice and consent to ratification by letter dated August 10, 1984, has been delayed in light of the concern expressed that it lacked strong "anti-treaty shopping" provisions. The 1986 Protocol remedies the situation by providing rules designed to prevent residents of third countries from investing through China in order to get the benefits of the income tax treaty.

It is most desirable that this Protocol, together with the Agreement, the 1984 Protocol thereto, and the related exchange of notes, be considered by the Senate as soon as possible and that the Senate give advice and consent to ratification of these instruments.

RONALD REAGAN

The White House,

June 5, 1986.