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Labor Unions Propose Fees on Chinese-Built Ships Calling at U.S. Ports

Mike Schuler
Total Views: 3557
March 13, 2024

US Labor unions are calling for a fee to be imposed on vessels constructed in China that dock at US ports in response to what they perceive as unfair shipbuilding practices by the People’s Republic of China (PRC).

According to the proposal, funds generated from these fees would be used to establish a shipbuilding revitalization fund to support investments in the domestic shipbuilding industry, including its capacity, supply chains, and workforce.

The proposal is included in a petition filed on Tuesday by the United Steelworkers (USW), along with other unions and support from Senators Tammy Baldwin (D-WI) and Bob Casey (D-PA), under Section 301 of the Trade Act of 1974. The petition urges United States Trade Representative (USTR) Katherine Tai to launch a comprehensive investigation into the PRC’s trade unfair practices in the shipbuilding sector. The unions argue that these anti-competitve practices undermine American workers and pose a threat to national security.

Biden Eyes Chinese Shipbuilding Subsidies as Tensions Simmer

The petition proposes a handful of remedies, including a fee on vessels constructed in China that dock at US ports, as a means to both level the playing field from China’s unfair practices and incentivize their elimination.

Section 301 of the Trade Act of 1974 allows the USTR to respond to foreign government acts, policies, or practices that are deemed unreasonable or discriminatory and which burden or restrict US commerce. The USTR has a range of actions at its disposal, including the imposition of duties or other import restrictions and fees.

The petition suggests that the USTR should impose a fee on every Chinese-built vessel that docks at a US port. The proposal states the fee should be based on the tonnage of the Chinese vessel docking in the US, with larger and heavier ships bearing a greater cost. To incentivize China to eliminate its unfair practices, the fee should take into account the age of the vessel, with higher fees for newer vessels.

The unions also propose the creation of a “US Commercial Shipbuilding Revitalization Fund”, funded by the fees collected from Chinese-built ships. This fund would be used to support the Construction Differential Subsidy (CDS) program, which played a crucial role in maintaining the domestic commercial shipbuilding industry for nearly 50 years amid unfair foreign competition. The CDS program was defunded in 1982, precipitating the decline in the US commercial shipbuilding industry.

Under the program, the U.S. government paid U.S. shipyards and shipowners up to 50 percent of the difference between cost of building a vessel in the United States and the cost of construction outside of the United States.

The 125-page Section 301 petition can be found here.

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