Welcome, (neo)protectionism: US may target Chinese ships with up to $1.5M port fee

The Office of the United States Trade Representative (USTR) has proposed a measure to charge a fee of up to $1.5 million for Chinese-built vessels entering US ports in an attempt to curb China’s dominance in shipping, shipbuilding and logistics sectors.

The proposal is part of an investigation in which USTR found China’s targeting for dominance ‘unreasonable’ because it lessens competition and creates dependencies on the country while restricting US commerce. Namely, the US is building less than five ships each year while China is constructing more than 1,700 vessels annually, according to Ambassador Katherine Tai, the principal trade advisor, negotiator, and spokesperson on U.S. trade policy.

As per USTR, China’s shipbuilding market share rose from less than 5 percent of global tonnage in 1999 to over 50 percent in 2023, while the East Asian country’s ownership of the commercial fleet increased to over 19 percent as of January 2024.

“USTR proposes to impose certain fees and restrictions on international maritime transport services related to Chinese ship operators and Chinese-built ships, as well as to promote the transport of U.S. goods on U.S. vessels,” the office said on February 21, seeking public comment on proposed actions.

The following fees have been put forward:

• Service fee on Chinese maritime transport operators;
• Service fee on maritime transport operators with fleets comprised of Chinese-built vessels;
• Service fee on maritime transport operators with prospective orders for Chinese vessels;

Specifically, the measures include port entrance fees of up to $1 million per ship owned by a Chinese vessel operator or of up to $1,000 per net ton of a vessel’s capacity.

For international maritime transport operators whose fleets are comprised of Chinese ships, the port entrance fee would amount to $1.5 million, USTR said. For operators with fleets comprised of 50 percent or more Chinese-built vessels, the charge will be up to $1 million per vessel entrance to a US port. The fee would be reduced if the percentage is below 50.

New fees could also target maritime operators with orderbooks filled with vessels being built in China.

USTR suggests that the abovementioned fees may be refunded on a calendar year basis, in an amount of up to $1 million per entry into a US port by a US-built vessel engaged in international trade.

What is more, USTR seeks to introduce restrictions on services to promote the transport of US goods on US vessels. Additionally, it recommended actions to ‘reduce exposure to and risks’ from China’s promotion of the National Transportation and Logistics Public Information Platform (LOGINK) or other similar platforms by restricting their access to US shipping data.

To remind, China’s state-owned COSCO Shipping Holdings was placed on the US Department of Defense’s (DoD) sanctions list last month, together with 130 other Chinese companies, for its alleged ties to the country’s military. The list aims to restrict the entities’ economic and technological interactions with the US and curb China’s military modernization efforts.

Last year, US lawmakers introduced a new act to bolster America’s commercial maritime industry and enhance its competitiveness amid China’s growing influence in this domain.

Currently, about 80 US-flagged ships are engaged in international commerce compared to over 5,500 China-flagged vessels. Given that US shipyards’ growing industrial base cannot produce oceangoing vessels at scale, ‘The SHIPS for America Act’ addresses these critical disparities by seeking to ensure funding for the maritime industry, enhance the competitiveness of domestic vessels, rebuild the national shipyard base, and expand efforts to recruit, train, and retain skilled mariners and shipyard workers.

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