- Proposed Fee Set at $50 Per Net Ton for Chinese Ships.
- Fee to be Charged Per Voyage Rather Than Per Port Call.
- Exemptions for Empty Ships and Certain Ports.
The US Trade Representative suggested an assessment on Chinese-owned and -constructed ships calling at US ports, which would impact worldwide shipping lanes and the trade relationship between China and the US. The suggestion stems from a months-long probe into possible national security threats created by Chinese shipbuilding, reports Yahoo Finance.
Details of the Suggested Levy
The proposed plan is that all Chinese-built and owned vessels arriving in the US will pay a fee as a percentage of the volume of cargo carried, and the charge will be $50 per net ton. The charge will escalate annually over three years. This plan will also impact non-Chinese shipbuilders by imposing a charge on foreign-built car carriers.
Plan Implementation and Future Phases
The tax will be implemented in six months, to be followed by a second phase after three years, when it will target foreign-built ships that transport liquefied natural gas (LNG). The charge will be on a voyage basis instead of a port call basis, to prevent congestion at large US ports. The ships coming in empty or going to Caribbean or Great Lakes ports will be exempt from charges.
Support for the Proposal
US labour unions, such as those representing steelworkers and shipbuilders, have been supportive of the proposal, expecting it to rejuvenate the domestic shipping industry. Asian shipping stocks, apart from Chinese companies, experienced a rise, while Chinese shipping stocks experienced a minor decline.
Concerns and Challenges Raised by Opponents
The critics, such as lawmakers and US importers, caution that the higher fees would harm American farmers, increase the cost of living for consumers, and disturb global trade. Minnesota Representative Angie Craig was concerned that the fees would disadvantage US farmers who depend on shipping for exports. Critics point out that the decades-long domination of shipping by China makes it difficult for the US to escape reliance.
Phase Two: Liquefied Natural Gas Shipments Focus
Within three years, phase two of the plan will prohibit LNG shipments aboard foreign vessels, with limitations progressively becoming more severe during the next 22 years. The US, the globe’s greatest exporter of LNG, is set to implement these reforms to diversify away from foreign carriers.
Fees on Non-US-Built Car Carriers
The government intends to impose a $150 per CEU charge on foreign-built car carriers for 180 days. The extra charge will be imposed on non-US-built vehicle carriers coming into the US and impacts global shipping of automobiles.
Industry Responses to the Proposed Modifications
Adam Shaffer of the Recycled Materials Association was pleased that the empty ships coming in will not be charged a fee. The organisation will still review the effect of these suggested fees on members compared to other shipping expenses.
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Source: Yahoo Finance
