---
kind: "section"
citation: "22 U.S.C. § 5342"
title: "22"
title_heading: "Foreign Relations and Intercourse"
number: "5342"
heading: "Requirement of national treatment in underwriting government debt instruments"
release: "119-102"
url: "https://uscodex.org/usc/22/5342"
units:
  - "Chapter 62 — International Financial Policy"
  - "Subchapter III — Primary Dealers"
---

# §5342. Requirement of national treatment in underwriting government debt instruments

- (a) **Findings—** The Congress finds that—
  - (1) [United States](/usc/22/1395.md?p=a-1) companies can successfully compete in [foreign](/usc/22/3146.md?p=1) markets if they are given fair access to such markets;
  - (2) a trade surplus in services could offset the deficit in manufactured goods and help lower the overall trade deficit significantly;
  - (3) in contrast to the barriers faced by [United States](/usc/22/1395.md?p=a-1) firms in Japan, Japanese firms generally have enjoyed access to [United States](/usc/22/1395.md?p=a-1) financial markets on the same terms as [United States](/usc/22/1395.md?p=a-1) firms; and
  - (4) [United States](/usc/22/1395.md?p=a-1) firms seeking to compete in Japan face or have faced a variety of discriminatory barriers effectively precluding such firms from fairly competing for Japanese business, including—
    - (A) limitations on membership on the Tokyo Stock Exchange;
    - (B) high fixed [commission](/usc/22/277d–43.md?p=2) rates (ranging as high as 80 percent) which must be paid to members of the exchange by nonmembers for executing trades;
    - (C) unequal opportunities to participate in and act as lead manager for equity and bond underwritings;
    - (D) restrictions on access to automated teller machines;
    - (E) arbitrarily applied employment requirements for opening branch [offices](/usc/22/2214a.md?p=9);
    - (F) long delays in processing applications and granting approvals for licenses to operate; and
    - (G) restrictions on [foreign](/usc/22/3146.md?p=1) institutions’ participation in Ministry of Finance policy advisory councils.
- (b) **Designation of certain persons as primary dealers prohibited—**
  - (1) **General rule—** Neither the [Board](/usc/22/2431a.md?p=4) of Governors of the Federal Reserve System nor the Federal Reserve Bank of New York may designate, or permit the continuation of any prior designation of, any person of a [foreign country](/usc/22/2321c.md?p=2) as a primary dealer in government debt instruments if such [foreign country](/usc/22/2321c.md?p=2) does not accord to [United States](/usc/22/1395.md?p=a-1) companies the same competitive opportunities in the underwriting and distribution of government debt instruments issued by such country as such country accords to domestic companies of such country.
  - (2) **Certain prior acquisitions excepted—** [Paragraph (1)](#b-1) shall not apply to the continuation of the prior designation of a company as a primary dealer in government debt instruments if—
    - (A) such designation occurred before July 31, 1987; and
    - (B) before July 31, 1987—
      - (i) control of such company was acquired from a person (other than a person of a [foreign country](/usc/22/2321c.md?p=2)) by a person of a [foreign country](/usc/22/2321c.md?p=2); or
      - (ii) in conjunction with a person of a [foreign country](/usc/22/2321c.md?p=2), such company informed the Federal Reserve Bank of New York of the intention of such person to acquire control of such company.
- (c) **Exception for countries having or negotiating bilateral agreements with United States—** [Subsection (b)](#b) shall not apply to any person of a [foreign country](/usc/22/2321c.md?p=2) if—
  - (1) that country, as of January 1, 1987, was negotiating a bilateral [agreement](/usc/22/2431a.md?p=7) with the [United States](/usc/22/1395.md?p=a-1) under the authority of [section 2112(b)(4)(A) of title 19](/usc/19/2112.md?p=b-4-A); or
  - (2) that country has a bilateral free trade area [agreement](/usc/22/2431a.md?p=7) with the [United States](/usc/22/1395.md?p=a-1) which entered into force before January 1, 1987.
- (d) **“Person of a foreign country” defined—** For purposes of this section, a person is a “person of a [foreign country](/usc/22/2321c.md?p=2)” if that person, or any other person which directly or indirectly owns or controls that person, is a resident of that country, is organized under the laws of that country, or has its principal place of business in that country.
- (e) **Effective date—** This section shall take effect 12 months after August 23, 1988.

## Source credit

(Pub. L. 100–418, title III, § 3502, Aug. 23, 1988, 102 Stat. 1386.)