I transmit herewith, for Senate advice and consent to ratification, an Agreement between the Government of the United States of America and the Government of the People's Republic of China with respect to mutual exemption from taxation of transportation income of shipping and air transport enterprises, signed at Beijing on March 5, 1982. I also transmit the report of the Department of State on the Agreement.

Under the Agreement, United States enterprises will be exempt from Chinese income taxes and Chinese enterprises will be exempt from United States Federal income tax on income derived from the operation of ships and aircraft in international traffic. The exempt income includes income from the leasing of ships, aircraft and containers used in international traffic.

As with other treaties of this kind, the provisions of the Agreement do not affect the United States taxation of residents and citizens of the United States, or China's taxation of its residents and citizens.

I recommend that the Senate give early and favorable consideration to the Agreement and give advice and consent to its ratification.

Ronald Reagan

The White House,

June 16, 1982.