THOMPSON COBURN TRADE ALERT
HEADLINE	Notice of Proposed Action in Section 301 Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance
DATE	February 21 2025
AGENCY	United States Trade Representative
EFFECTIVE DATES	February 21 2025: Comment Period Opens March 10 2025: Deadline to Request to Participate in Hearing March 24 2025: Deadline for Written Comments Seven Calendar Days After Last Day of Public Hearing: Deadline to submit Post-Hearing Rebuttal Comments
BACKGROUND	On March 12, 2024, a group of petitioners filed a Section 301 petition against China’s acts, policies, and practices aimed at dominating the maritime, logistics, and shipbuilding sectors. The USTR initiated an investigation, issuing a report dated January 16 finding that China’s actions are unreasonable and restrictive to U.S. commerce, undercutting competition and increasing dependencies on China. The implementation of the proposed remedies will likely impact shipping costs between the U.S. and its trading partners.
DETAILS	In the February 21 Notice, the USTR proposed several possible actions, including:   Service Fees on: • Chinese Maritime Transport Operators (MTOs) – up to $1 million per U.S. port entrance of any vessel; OR – up to $1,000 per net ton of the vessel’s capacity per entrance. • MTOs with Fleets Composed of Chinese-Built Vessels – up to $1.5 million per vessel entrance; – up to $1 million per entrance (>50 percent Chinese-built vessel fleet composition), $750,000 per entrance (25-50 percent Chinese-built vessel fleet composition), and $500,000 per entrance (>0-25 percent Chinese-built vessel fleet composition); OR – up to $1 million per entrance if the percentage of Chinese-built vessels in the operator’s fleet is equal to or greater than 25 percent. • MTOs with Prospective Orders for Chinese Vessels (based on the percentage of vessels ordered or expected to be delivered from Chinese shipyards within the next 24 months, applied per vessel entry) – Up to $1 million per vessel entry for vessel orders or deliveries in Chinese shipyards ≥ 50%, up to $750,000 per vessel entry for vessel orders or deliveries in Chinese shipyards between 25-50 percent, and up to $500,000 per vessel entry for vessel orders or deliveries in Chinese shipyards between >0-25 percent; OR – Up to $1,000,000 per vessel entry (flat fee) triggered by a 25 percent threshold based on an operator’s total vessel orders (or expected deliveries) come from Chinese shipyards. Operators may receive a refund of up to $1 million per vessel entry into a U.S. port for U.S.-built vessels used in international maritime transport. Refunds are issued annually and apply to fees charged under this section. The proposal would also add restrictions on services to promote the transport of U.S. exports on U.S. vessels: • Immediate effect: At least 1 percent of U.S. exports must be transported on U.S.-flagged vessels. • After two years: At least 3 percent of U.S. exports must be transported on U.S.-flagged vessels. • After three years: At least 5 percent of U.S. exports must be transported on U.S.-flagged vessels, with 3 percent specifically on U.S.-built vessels. • After seven years: At least 15 percent of U.S. exports must be transported on U.S.-flagged vessels, with 5 percent specifically on U.S.-built vessels. The notice also proposes a restriction that U.S. goods must be exported on U.S.-flagged, U.S.-built vessels, with exceptions granted if the operator proves that at least 20 percent of the U.S. products they transport annually will be carried on U.S.-flagged, U.S.-built ships. The USTR proposes taking other actions, such as restricting access to China’s National Transportation and Logistics Public Information Platform (LOGINK) and entering into negotiations with allies and trade partners to counteract China’s acts, policies, and practices to reduce dependency on China in maritime, logistics, and shipbuilding sectors. The USTR seeks public comments and rebuttal comments regarding the above specified issues, and will hold a hearing on March 24, 2025, to discuss these proposals. Interested parties can submit comments (docket number USTR–2025–0002) by March 24, 2025, and request to participate in the hearing by March 10, 2025 (docket number USTR–2025–0003), as specified in the notice.
BASIS	Trade Act of 1974, 19 U.S.C. § 2411(a)-(c) (Section 301(a)-(c)) and 19 U.S.C. § 2414 (Section 304)
CITE	Ships Proposed Action FRN.pdf Report on China’s Targeting of Maritime, Logistics, and Shipbuilding Sectors for Dominance Federal Register :: Proposed Action in Section 301 Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance

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