WSC CEO requests to testify on US Trade Representative Proposals

As stated, WSC supports the goal of building a strong and vibrant U.S. shipbuilding and maritime sector. However, WSC opposes the flawed remedial actions proposed by the Office of the United States Trade Representative in this proceeding, which will result in increased costs for U.S consumers and exporters as well as supply chain inefficiencies while failing to provide China with effective incentives to alter its acts, policies, and practices.

Joe Kramek explained in his request that he will address why the U.S. Trade Representative should not impose port fees or requirements to use U.S.-flagged or U.S.-built vessels.

In particular, Kramek intends to highlight the following:

• The proposed fees would adversely affect Americans. When incurred by liner carriers, these fees would raise the cost of imported items – both those destined for consumers and those used as inputs to produce goods in the United States. These fees would be passed along to U.S. consumers at a time when they already face the squeeze of inflation.
• The proposed fees would be detrimental to U.S. businesses and workers. When incurred by liner carriers, the fees would raise shipping costs for U.S. exporters, decreasing the competitiveness of American products in overseas markets and decreasing employment opportunities for Americans who make those products. Additionally, the fees would reduce competition for ocean cargo transportation to and from the United States and could shift port business to ports in Canada and Mexico. The fees would generate congestion at larger ports as operators of vessels subject to fees seek to minimize the number of U.S. port calls those vessels make on each route. Economic impacts of congestion and reduced U.S. port traffic would reverberate throughout the economy, adversely impacting businesses, consumers, and especially farmers.
• Requiring set percentages of U.S. exports to be shipped on U.S.-flagged or U.S.-built vessels would further undermine the competitiveness of U.S. exports by driving up shipping costs. Moreover, given the small number of existing U.S.-built vessels and the lack of existing U.S. shipyard capacity, the proposed requirements for exportation on U.S.-built vessels would not be realistic for many years into the future.
• Finally, the proposed fees and the proposed requirements for use of U.S.-built or flagged vessels are disconnected from the goal of section 301 actions: inducing elimination of the foreign acts, policies, and practices at issue. It is inconceivable how levying a port fee on, or based on ownership of, vessels already constructed would impact China’s incentives going forward. The same point applies with respect to vessel orders already placed at Chinese shipyards. Further, because vessel routes can be reshuffled and corporate structures can be re-aligned, even fees on, or based on operation of, Chinese vessels built or ordered in the future will not serve as an effective limitation on the market for Chinese vessels and thus as an incentive to China to alter any practices. Likewise, while fee remissions for use of U.S.-built or flagged vessels, and requirements to export on these vessels, may serve to create a market for these vessels, they do not serve to meaningfully shrink the market for Chinese-built vessels. These actions, too, are disconnected from the statutory goal of eliminating the foreign act, policy, or practice at issue, and therefore should not be imposed.

To remind, the U.S. government, under the Biden administration, has begun investigating China’s dominance in the shipbuilding industry, where it manufactures up to 75%-80% of global fleets. As part of an effort to bring more ship manufacturing back to the U.S., steep levies of up to $1.5 million have been proposed on Chinese-made ships arriving at U.S. ports.

This policy has gained bipartisan support as a means to boost domestic shipbuilding and reduce reliance on foreign manufacturers.