Posted on March, 25, 2025 at 10:07 am
The Office of the U.S. Trade Representative is holding public hearings this week on March 24 and March 26, 2025, regarding proposed actions in the Section 301 investigation into China’s targeting of the maritime, logistics and shipbuilding sectors for dominance, according to a news release.
Section 301(b) of the Trade Act is designed to address unfair foreign practices affecting U.S. commerce. Section 301(b) may be used to respond to unreasonable or discriminatory foreign government acts, policies and practices that burden or restrict U.S. commerce. Section 301(c) of the Trade Act authorizes USTR to take certain actions for the purposes of carrying out the provisions of Section 301(b), such as imposing duties, fees or import restrictions on the goods and services of the foreign country concerned.
On March 12, 2024, five national labor unions filed a petition requesting an investigation into the acts, policies and practices of China targeting the maritime, logistics and shipbuilding sectors for dominance. USTR reviewed the allegations in the petition and determined to initiate an investigation regarding the issues raised in the petition. On April 17, 2024, USTR requested consultations with the government of China.
In light of the information obtained during the investigation and taking into account public comments and the advice of the interagency Section 301 Committee and advisory committees, USTR determined that China’s targeting of the maritime, logistics and shipbuilding sectors for dominance is actionable under Sections 301(b) and 304(a) of the Trade Act, is unreasonable and burdens or restricts U.S. commerce.
Specifically, USTR found China’s targeting for dominance unreasonable because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities and lessens competition and creates dependencies on China, increasing risk and reducing supply chain resilience, and because of the government’s extraordinary control over its economic actors and these sectors, USTR explained.
USTR further found that China’s targeting for dominance burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics and shipbuilding sectors; restricting competition and choice; creating economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy, and undermining supply chain resilience.
In response, USTR proposed to take action against certain services of China and also action on a nondiscriminatory basis on certain services, including those supplied using Chinese goods. On Feb. 21, 2025, USTR invited public comment and scheduled a public hearing.
Among the actions USTR proposed is imposing a service fee on Chinese maritime transport operators. According to the Federal Register notice, a vessel operator would be charged a fee on the international maritime transport at either a rate of up to $1 million per entrance of any vessel of the operator or up to $1,000 per net ton of the vessel’s capacity per entrance to a U.S. port. USTR also proposed a service fee on maritime transport operators with fleets comprised of Chinese-built vessels of as much as $1.5 billion, dependent on the percentage of Chinese-built vessels in the fleet.
The American Farm Bureau Federation noted that bulk agricultural exports, particularly grains and oilseeds, are especially vulnerable to any USTR actions. In 2024, the U.S. exported over 106 million metric tons of bulk agricultural products.
In comments submitted to USTR on March 24 in response to the Section 301 investigation, the National Grain & Feed Association (NGFA) opposed the government’s proposal to levy steep fines and restrictions on exporters that use Chinese-made ships. It encouraged the USTR to seek alternative methods to boost U.S. shipbuilding.
“Though well intentioned, this proposal threatens to impose significant costs on U.S. grain and oilseed exporters and erode America’s competitiveness in the international market,” explained NGFA president and chief executive officer Mike Seyfert.
The comments were filed jointly with the North American Export Grain Association (NAEGA) and the National Oilseed Processors Association (NOPA).
Proposed penalties include fines of up to $1.5 million for each Chinese-made ship that enters a U.S. port, up to $1 million per port call for Chinese operators, and up to $1 million for operators with orders from Chinese shipyards. USTR’s plan would also set minimum amounts that carriers must export on U.S.-built, U.S.-flagged vessels.
“If enacted, this proposal would effectively eliminate half of the global bulk fleet that we need to export almost one-third of grains and oilseeds that are produced in America,” Seyfert explained. “That puts U.S. agriculture at a considerable competitive disadvantage in global markets. We are already seeing disruptions in the marketplace since the proposal was put forward, including lost sales and difficulty contracting ships.”
There are approximately 21,000 vessels in the world’s bulk shipping fleet, nearly 50% of which were made in China. Only five ships currently operating in the global fleet were built in America, or 0.2%.
Container vessels, which were used to export about $9 billion of grain and oilseeds in 2024, are also important to agricultural shippers and would be severely affected by the proposal, Seyfert said.
NGFA is asking the administration to consider other ways to promote the U.S. maritime industry, such as shipbuilding grants, tax credits and reduced regulations. However, if USTR moves forward with proposed penalties, NGFA wants agricultural commodities exempted.
“Without an exemption, we could see a significant drop in corn, soybean and wheat exports,” Seyfert warned. “That jeopardizes the $65 billion trade surplus America enjoys on U.S. grains and oilseeds and hurts all of U.S. agriculture, from the exporters to the farmers.”
The groups estimate that an additional $1 million fee on vessels carrying agricultural exports would increase costs of most shipments between $15 and $40 per metric ton, which equates to about 50 cents to $1.25/bu.
“U.S. exports of grains, oilseeds and their co- and by-products support more than 450,000 American jobs, add $174 billion to the U.S. economy every year and create a $65 billion annual U.S. trade surplus in grains and oilseeds,” said Alejandra Castillo, NAEGA president and CEO. “These markets are both highly competitive, low margin and price sensitive. We are concerned that implementation of the proposed actions would present irreversible harm to our bulk agricultural exports and erode the strong trade surplus we now enjoy. We strongly encourage the administration to continue to explore alternative responses to China’s targeting of maritime, logistics and shipbuilding sectors in ways that promote U.S. industry and avoid harm to U.S. farmers, producers, exporters and American families.”
Devin Mogler, NOPA president and CEO, added, “At a time when global markets are increasingly competitive, it is crucial that U.S. policies increase – not restrict – the trade of U.S. agricultural commodities. While we support efforts to promote U.S. shipbuilding, the proposed penalties would place a disproportionate burden on American farmers, processors and exporters, limiting access to essential shipping capacity and driving up costs ultimately to be shouldered by hard-working American farmers. … NOPA urges the administration to explore alternative solutions, such as targeted incentives for domestic shipbuilding, rather than imposing penalties that could disrupt supply chains and harm the entire agricultural sector.”
Source: Feedstuffs