USTR reveals fee scales, timing for Section 301 action on China

U.S. Trade Representative Ambassador Jamieson Greer. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

In a long-expected move, the U.S. Trade Representative (USTR) on April 17 took Section 301 “targeted action to restore American shipbuilding and address China’s unreasonable acts, policies, and practices to dominate the maritime, logistics, and shipbuilding sectors.”

The Section 301 provisions of the Trade Act provide a domestic procedure through which interested persons may petition the U.S. Trade Representative to investigate a foreign government act, policy, or practice and take appropriate action. 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.

“Ships and shipping are vital to American economic security and the free flow of commerce,” said U.S. Trade Representative Ambassador Jamieson Greer. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

The actions, which are somewhat less severe than those initially proposed in February, were applauded by U.S. Senator Tammy Baldwin (D.-Wis.) who was an early supporter of the Section 301 petition filed by a coalition of U.S. labor organizations, led by the United Steelworkers union (USW), that led to the just-announced targeted action.

“As I have been saying for years, China has gotten away with cheating the system and undermining our workers – and it’s long overdue we stand up to them,” said Senator Baldwin. “I was proud to stand with workers to launch this investigation and am proud to have now pushed two presidents to do right by these workers. This is a big step forward in cracking down on China’s unfair trade practices, supporting American workers and building more ships here at home, and keeping our country safe.”

So, what actually are the actions USTR is taking?

Intended to balance the need for action and the importance of limiting disruption for U.S. exporters, they will occur in two phases:

For the first 180 days the applicable fees will be set at $0.

In the first phase, after 180 days:

• Fees will be imposed on China-based vessel owners and operators based on net tonnage per U.S. voyage, increasing incrementally over the following years;
• Fees will be imposed on operators of Chinese-built ships based on net tonnage or containers, increasing incrementally over the following years; and
• To incentivize U.S.-built car carrier vessels, fees will be imposed on foreign-built car carrier vessels based on their capacity.

The second phase actions will not take place for three years:

• To incentivize U.S.-built liquefied natural gas (LNG) vessels, limited restrictions will be imposed on transporting LNG via foreign vessels. These restrictions will increase incrementally over 22 years.
• In addition, USTR is seeking public comments on the proposed tariffs on ship-to-shore cranes and other cargo handling equipment, in line with President Trump’s Maritime Executive Order.

The full details on the size of the fees and the timing are set out in a Federal Register Notice that you can download HERE