US to levy fees on China-linked ships, draft executive order says

LONDON – The US is planning to charge fees for docking at US ports for any ship that is part of a fleet that includes Chinese-built or Chinese-flagged vessels, a draft executive order stated.

It will also push allies to act similarly or face retaliation.

The administration of President Donald Trump is drafting the executive order in

a bid to resuscitate domestic shipbuilding

and weaken China’s grip on the global maritime industry.

Addressing China’s growing dominance of the seas and America’s diminishing naval readiness is a rare point of consensus between US Republican and Democratic lawmakers.

Chinese shipbuilders account for more than 50 per cent of all merchant vessel cargo capacity produced globally each year, up from just 5 per cent in 1999, according to the Centre for Strategic and International Studies.

That gain came at the expense of shipbuilders in Japan and South Korea. US shipbuilding peaked in the 1970s and now accounts for a sliver of the industry output.

The draft executive order, dated Feb 27 and reviewed by Reuters on March 6, proposes fees should be imposed on any vessel that enters a US port, “regardless of where it was built or flagged, if that vessel is part of a fleet that includes vessels built or flagged in the PRC (People’s Republic of China)”.

The document draws from a US Trade Representative’s office proposal in February to levy fees of up to US$1.5 million (S$2 million) on Chinese-built vessels entering US ports, after a probe into China’s growing domination of global shipbuilding, maritime and logistics.

That proposal caused a sell-off last week of shares in

Singapore-listed Yangzijiang Shipbuilding

, which runs four shipyards in China’s Jiangsu province. The stock closed 0.4 per cent lower at $2.39 on March 7.

The draft executive order’s key difference with the earlier proposal is that it appears to have removed language stating that port fees on fleets would be imposed when those ships account for 25 per cent or more of ships that are operating, slated for delivery or on order.

It also did not put a dollar value on those fees or say how they would be calculated.

The plan could inflict significant costs on major container carriers including Switzerland’s MSC, Denmark’s Maersk, Germany’s Hapag-Lloyd and Taiwan’s Evergreen Marine as well as operators of ships that carry food, fuel and autos.

Retaliation threat

The draft executive order also calls on US officials to engage allies and partners to enact similar measures or risk retaliation.

The US would also impose tariffs on Chinese cargo-handling equipment, according to the draft order.

“The national security and economic prosperity of the United States is further endangered by the People’s Republic of China’s unfair trade practices in the maritime, logistics and shipbuilding sectors,” the draft order said.

Reuters reported on March 5 on plans to impose fees on imports arriving on Chinese-made ships from a draft fact sheet of the 18-point executive order.

French carrier CMA CGM said on March 6 it would spend the next four years expanding its US-flagged American President Lines fleet to 30 from 10 currently.

CMA CGM is the world’s third-largest container shipping line and is part of a vessel-sharing alliance with companies including China’s Cosco. It counts global retailer Walmart as a top customer and has said the proposed US port fees on China-built ships would affect all shipping firms. REUTERS