Application of foreign pollution fee in partnerships

(a) In general In accordance with section 4695 of the Internal Revenue Code of 1986, as added by title I, a reduced fee shall be applied under section 4692 of such Code with respect to a covered product imported from a country that is a party to an international partnership agreement entered into under this title. (b) Failure To meet requirements If a covered product is produced in a country that is a party to an international partnership agreement entered into under this title but does not meet the requirement described in subsection (a), the fee applied under section 4692 of the Internal Revenue Code of 1986, as added by title I, with respect to the covered product shall be calculated based on the variable charge determined under section 4693(a) of the Internal Revenue Code of 1986, as added by title I. (c) Treatment of low-Income and lower-Middle income countries (1) In general During the 5-year period following the entry into force of an international partnership agreement under this title between the United States and a low-income country or lower-middle-income country— (A) the pollution intensity requirement described in subsection (a) shall be considered to be met with respect to covered products produced in the country; and (B) no fee shall be applied to covered products imported from that country. (2) Modifications to requirements (A) In general During the 10-year period beginning after the completion of the 5-year period described in paragraph (1), the pollution intensity requirement described in subsection (a) shall be considered to be met with respect to a covered product produced in a country described in paragraph (1) if new capacity in that country for the production of the covered product developed during the 10-year period described in paragraph (1) is not more than 50 percent more pollution intense than the baseline pollution intensity at the time of the entry into force of the international partnership agreement. (B) Future development For the 10-year period beginning after the completion of the 10-year period described in subparagraph (A), and each 10-year period thereafter, the pollution intensity requirement described in subsection (a) shall be considered to be met with respect to a covered product produced in a country described in paragraph (1) if new capacity in that country for the production of the covered product developed during the preceding 10-year period is not more than 25 percent more pollution intense than the baseline pollution intensity at the beginning of such preceding 10-year period. (3) Application of fee If the requirements described in paragraph (1) or (2), as applicable, are not met with respect to a covered product, the fee specified in subsection (b) shall apply. (d) Treatment of evasion of fee Nothing in this section shall supersede section 4694(g) of the Internal Revenue Code of 1986, as added by title I, with respect to potential evasion of the fee assessed under section 4692 of such Code if— (1) a determination is made under such section 4694(g) with respect to a producer; and (2) the producer is owned, operated, or financed in or by a country that is not a party to an international partnership agreement entered into under this title.