Bill Would Charge Fees to Chinese Ships, Require Use of and Subsidize US Ships
A bipartisan, bicameral bill would create a Maritime Security Trust Fund, into which revenues would come from tonnage fees on Chinese-owned and Chinese-flagged ships visiting U.S. ports, special tonnage taxes, light money, and tariffs and duties, including Section 301 tariffs.
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The Ships for America Act, introduced last week by Sens. Mark Kelly, D-Ariz., and Todd Young, R-Ind., and Reps. John Garamendi, D-Calif., and Trent Kelly, R-Miss., would dedicate that money to maritime workforce and education, loan guarantees and other shipbuilding subsidies, and subsidies to agricultural exporters who would have to pay more to export their goods because of the bill's requirements.
The legislation would require that all goods funded by the U.S. be sent on U.S.- built and -flagged vessels -- currently, it's 50% -- and, starting in 2029, would require that a percentage of goods imported from China be transported on U.S. vessels. In 15 years, that percentage would have to be 10%.
The measure's full name is the Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act.
Currently, CBP does not collect tonnage taxes or light money for any ships whose home countries do not charge those fees for U.S. ships.
The bill also would make it so that U.S. flagged vessels would get priority at U.S. ports ahead of other waiting ships.
This measure follows a Section 301 investigation into the reasons for China's rise in shipbuilding and America's decline (see 2404170029). That investigation, proposed by unions that would benefit from more shipbuilding, proposed a remedy of fees on Chinese ships when they call on U.S. ports.
"By supporting shipbuilding, shipping, and workforce development, it will strengthen supply chains, reduce our reliance on foreign vessels, put Americans to work in good-paying jobs, and support the Navy and Coast Guard’s shipbuilding needs," said Arizona's Kelly, a Navy veteran and the first U.S. Merchant Marine Academy graduate to serve in Congress. "I’m excited to introduce this comprehensive, fully paid for legislation today alongside my Republican and Democratic colleagues and our partners representing all parts of the industry, and together we’re going to work to get this effort across the finish line."
A bill summary said it requires the president, in consultation with the maritime security adviser, transportation and commerce secretaries, the Federal Maritime Commission, and the U.S. trade representative, to identify ways to lower import duties or provide other tax benefits and maritime privileges "to companies that chose to move commercial cargo aboard vessels of the United States."
The bill also recognizes that using U.S. vessels will be more expensive for exporters, and requires that the U.S. Agency for International Development, the agriculture secretary and the Commodity Credit Corporation receive compensation from the Maritime Security Trust Fund for transportation costs "that exceeded market rates."
It also adds to the Federal Maritime Commission's authority "to prevent foreign countries and foreign flag operators from carrying out unfair trade practices for both cargo and cruise vessels."
The bill's supporters include shipyards, unions that represent shipbuilders and steelworkers, and carriers that operate U.S. vessels, such as Farrell Lines, Matson, Overseas Shipholding Group, Inc., Waterman Logistics, Hapag-Lloyd USA and Maersk Line Limited.
The CEO of Denmark-based Vespucci Maritime raised alarms. The fees on Chinese-operated vessels won't just affect Chinese carriers, Lars Jensen wrote on LinkedIn, "but also carriers who are in alliance or VSA with Chinese carriers such as CMA CGM and Evergreen on Ocean Alliance. But also ONE and HMM on the Atlantic now operating together with Ocean Alliance. Presumably will also impact other carriers chartering Chinese-owned vessels."
He also noted that the legislation doesn't define market rates to set the subsidy for agricultural exports.
"In short, if this is applied as proposed, it will increase shipping costs for US importers and exporters -- except those exporters who are slated for government subsidies," he wrote.
"More importantly, it will create significant supply chain headaches for individual US shippers needing to clearly measure the share of cargo moved on US ships -- especially if much of their cargo is from origins not necessarily served by such US vessels."
The preference for "US flagged ships in ports could result in worsening congestion problems rather than alleviating them in times of tight port capacity," Jensen wrote.