Foreign Pollution Fee Act of 2023

This bill amends the Internal Revenue Code to impose a fee on certain imported products based on their pollution intensity, and establishes a framework for international partnership agreements to reduce global pollution. The fee applies to covered products imported by covered entities after a date 36 months from enactment, with possible postponement for low-income countries. The fee amount is the product of the imported quantity and a variable charge determined by pollution intensity difference tiers. The bill also creates a National Laboratory Advisory Board and defines key terms.

Sec. 3, Rules of construction: The bill cannot be used to create a carbon tax or fee on domestically produced covered products sold or used in the U.S. or exported. It cannot authorize new environmental standards or impact calculations under the Clean Air Act or other laws. It does not authorize additional pollution data collection from domestic producers beyond what is expressly allowed.

Title I, Foreign Pollution Fee: This title adds a new subchapter to the Internal Revenue Code imposing a fee on imported covered products. The fee is calculated by multiplying the imported amount by a variable charge. The variable charge is an ad valorem fee based on tiers determined by the pollution intensity difference between the foreign product and the U.S. baseline. Tiers are set at 5-percentage-point increments for differences up to 50%, 10-percentage-point increments for differences up to 200%, and 20-percentage-point increments for larger differences.

Sec. 201, International partnership agreements: The U.S. Trade Representative, at the President's direction, may negotiate and establish international partnership agreements with one or more countries or groups like the OECD or G7. These agreements must create compatible methods to assess pollution intensity differences, maintain each country's ability to determine its own pollution reduction methods, eliminate fees between parties, and reduce other trade barriers. Congress must be consulted and briefed during negotiations.

Sec. 202, Application of foreign pollution fee in partnerships: No fee applies to covered products from a partner country if the pollution intensity difference is 50% or less. If the difference exceeds 50%, the fee is based on the tier associated with the difference reduced by 50 percentage points. Low-income and lower-middle-income countries receive special treatment: no fee for the first 5 years, then phased-in requirements over subsequent 10-year periods.

Sec. 203, Support for low-income and lower-middle-income countries: The U.S. Trade Representative may include provisions in partnership agreements with these countries for aid, lower initial monitoring requirements, and technical assistance. Benchmarks must be established to assess progress, including monitoring improvements and treatment of new capacity owned by non-partner countries. The U.S. may terminate these provisions if benchmarks are not met.

Sec. 204, Facility-specific agreements: The U.S. Trade Representative may negotiate agreements with individual foreign facilities to treat their products at the facility's specific pollution intensity. To qualify, the facility must operate according to U.S. environmental standards, deploy real-time pollution monitoring, allow inspections, and meet pollution reduction benchmarks over 10 and 20 years. Congress must be consulted before concluding such agreements.

Sec. 205, Definitions: This title uses the definitions set forth in section 4697 of the Internal Revenue Code as added by title I.