Shipping and Maritime Interests Pan USTR's Section 301 Determination on Ship Building
Several trade groups representing shippers, the maritime industry and U.S. ports criticized the Office of the U.S. Trade Representative's Section 301 determination last week calling for a phased-in approach to levy fees on foreign-built vessels and car-carrying vessels docking at U.S. ports as part of a broader push to build and bolster an American shipbuilding industry (see 2504180018).
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The determination also had called for possible tariffs on containers and cargo handling equipment at U.S. ports.
"The fee regime announced by USTR is a step in the wrong direction as it will raise prices for consumers, weaken U.S. trade and do little to revitalize the U.S. maritime industry,” Joe Kramek, president and CEO of the World Shipping Council, said in a release.
The World Shipping Council listed several concerns about the determination, including assessing penalties on foreign-built vessels despite plans to issue those fees over time, creating a fee structure based on ship size and net tonnage, which the council says would disproportionately penalize larger vessels, and establishing a new and "previously unannounced fee" based on car equivalent unit capacity of foreign-built, roll-on, roll-off vessels known as Ro-Ro ships.
The council also said the proposed fees "appear to extend beyond the authority granted under U.S. trade law."
Instead of following through with the determination, the U.S. government should instead opt for "constructive pathways -- such as targeted investment incentives, infrastructure improvements, and streamlined regulatory processes -- [that] can deliver lasting benefits without disrupting U.S. trade or raising costs for American producers and consumers," the group said. It also noted that the U.S. shipbuilding sector "already faces significant constraints, including a backlog of military orders and ongoing labor shortages. Similarly, a shortage of trained and certified U.S. mariners limits the potential to expand U.S.-flag shipping, even if the regulatory environment was improved."
Meanwhile, the nonprofit U.S.-China Business Council, a group representing around 270 American companies doing business in China, said the newly announced fees would raise prices for consumers and significantly impact American businesses.
“Nearly half of imported goods to the United States are inputs for goods produced here, so USTR’s action will increase US production costs compared to other nations, hurting US competitiveness," USCBC President Sean Stein said in a release.
The American Association of Port Authorities, in addition to also being critical of the assessment of fees on foreign-built vessels docking at U.S. ports, also raised concerns about how the USTR could impose new tariffs on cargo-handling equipment.
“The Administration must remember that there are currently no domestic manufacturers of ship-to-shore cranes. Without action from the Administration to create an incentive for their production, there won’t be for several years," said Cary Davis, AAPA president and CEO. AAPA says the tariffs would equal a 100% tax on cargo handling equipment and a maximum 270% tax on ship-to-shore cranes.
"High tariffs on ship-to-shore cranes, without affordable alternatives from either domestic or allied sources, function as a crippling tax on port development and seriously threaten our nation’s ability to expand cargo movement," Davis said.
AAPA also criticized the fee on foreign-built carriers of $150 for every car, saying, "This poses new and unique burdens on many ports specializing in roll-on-roll off trade business. If a typical ro-ro vessel can transport 6,000 cars, the total fee could reach almost $1 million per vessel."
The trade group said ports need to reach out to congressional members to support legislation to create a production tax credit for domestically produced cargo handling equipment.