- Lawmakers Propose Foreign Ally Shipping Registry.
- U.S. Bill Seeks to Curb China’s Role in Domestic Shipping.
- LNG Retrofits in China Raise Security Concerns.
Legislation put forth by U.S. Representatives Ed Case (D-Hawaii) and James Moylan (R-Guam) aims to curb Chinese involvement in U.S. domestic shipping while welcoming foreign operators from allied nations. The Merchant Marine Allies Partnership Act tackles loopholes in existing maritime law that permit U.S. vessels to undergo significant repairs and modifications in China, reports Freight Waves.
Loopholes in the Jones Act Under Scrutiny
The lawmakers contend that the Jones Act, which requires domestic shipping to be carried out by vessels that are U.S.-built, U.S.-crewed, and U.S.-flagged, has some unintended consequences.
“Under long-standing loopholes in maritime law, Jones Act shippers can and do outsource major vessel parts fabrications and modifications to foreign shipyards, primarily those in the PRC,” Case said. “These modifications are not minor, and often include full engine replacements, liquefied natural gas conversions and other critical overhauls. Through further loopholes, these modifications largely avoid the 50% import duty imposed on foreign ship repair.”
Example: LNG Conversions in Chinese Shipyards
Case cited Matson Inc.’s (NYSE: MATX) container ship retrofits at Cosco’s Nantong facility in China, calling attention to national security risks. He said the facility “has known ties to the Chinese government and military-industrial complex.”
Proposed Solution: Foreign Ally Shipping Registry
The bill suggests setting up a Foreign Ally Shipping Registry that would include countries recognised as U.S. allies. If significant modifications are made to vessels in these allied shipyards, U.S. companies could avoid the 50% tax on foreign ship repairs.
“By closing loopholes that benefit the People’s Republic of China and instead partnering with trusted allies like Japan and South Korea, we can grow our shipbuilding capacity, support good-paying jobs, and deliver real relief for families and businesses,” Moylan said.
Allowing Foreign Vessels in U.S. Coastal Trade
The bill would also allow foreign-built, foreign-crewed vessels from allied nations to operate in U.S. domestic shipping, under regulatory oversight.
According to Case, U.S. companies could use such vessels “under appropriate regulatory conditions, in recognition of the global nature of modern shipping.” The Secretary of Transportation would be empowered to grant renewable five-year authorisations for such vessels to operate between U.S. ports.
Preserving the Jones Act’s Core Intent
Case emphasised that the legislation does not repeal the Jones Act, but rather aligns it with modern needs. “It restores the law to its intended purpose – to serve as a foundation for national resilience, industrial strength and strategic security, rather than being hijacked by the hypocritical umbrella of national defence at the expense of increased costs of consumer goods across the country,” he said.
Global Alignment Based on Trust and Security
“It recognises that modern maritime commerce is global, but that global alignment must be rooted in trust, shared values and common defence,” Case concluded.
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Source: Freight Waves
