US proposals to tax Chinese ships face growing opposition

 THE US government is facing growing opposition over its plans to introduce steep fees targeting Chinese-linked ships entering American ports, with global shipping bodies and industry experts slamming the proposals as "disruptive" and counterproductive.

The comments came as the Office of the United States Trade Representative (USTR) held two days of public hearings in Washington over the policy, which will impose charges of up to US$1.5 million per port call for any shipping operator with Chinese-made vessels in their fleets or newbuilding orders with Chinese shipyards, reports Hong Kong's South China Morning Post.

USTR has claimed the port fees, which it first proposed last month, are necessary to protect America's national security and combat the dominance of China's shipbuilding industry, which the USTR judges to be built on unfair government subsidies.

But the idea has sparked intense criticism from within the shipping industry, with insiders arguing the fees will harm the competitiveness of America's own maritime sector while failing to curtail China's lead.

"If implemented as proposed, it will be an extremely large disruptive event for shipments to and from the US, and with ripple effects which will subsequently be felt also in non-US trades," said Lars Jensen, CEO of industry consultancy Vespucci Maritime, in a social media post.

During the first day of the hearings on Monday, representatives from several maritime groups - including two Chinese industry associations - urged policymakers to rethink the proposal and pursue a more effective approach to reviving America's shipping industry, according to testimonies and comments posted on the USTR website.

Secretary General of the China Association of the National Shipbuilding Industry (CANSI), Li Yanqing, described the proposed port fees as "erroneous and inoperative" in his testimony.

The China Shipowners' Association (CSA), which had four representatives at Monday's hearing, said the proposed actions targeting Chinese-built vessels and Chinese shipping companies directly infringed upon China's status as a "most-favoured nation" under World Trade Organization rules.

The CSA also alleged the proposal was in direct contravention of the 2003 Sino-US Maritime Agreement, particularly Article 6, which stipulates that vessels from the two countries shall receive fair and non-discriminatory treatment regarding port access, services and fees when calling at each other's ports.

Joe Kramek, president of the World Shipping Council (WSC), stated at Monday's hearing that the WSC "strongly opposes" the USTR's port-fee plan.

Though a revitalisation of the US maritime sector would be very positive, the introduction of "backward-looking, retroactive fees on shipping companies" would be unlikely to achieve this, Mr Kramek said, adding that USTR should work with stakeholders of all types to develop "practical and thoughtful ways" to achieve its goals.

The proposed fees would raise costs for shipping companies by millions of dollars per voyage, as container vessels serving the US market typically call at three to four ports in the country per trip, according to Mr Kramek.

About 98 per cent of all US port calls could be subject to the charges, which would amount to an additional tax on American consumers of up to $30 billion annually, according to WSC estimates.

The damage to US imports and exports would be significant, and jobs and businesses that rely on ports would also be affected, he added.

The Baltic and International Maritime Council (BIMCO), another leading global shipping association, warned of the risk of a segregated US market, as operators may reallocate their fleets to avoid the port fees.