On April 17, 2024, the United States Trade Representative (“USTR”) initiated an investigation pursuant to Section 301 of the Trade Act of 1974 (“Section 301”) regarding China’s acts, policies, and practices to dominate the maritime, logistics, and shipbuilding sector. The investigation was initiated following the filing of a petition (“Petition”) by several domestic labor unions (“Petitioners”) representing these industries. The USTR encourages interested parties to submit comments on any issue covered by the investigation. Comments are due by May 22, 2024.
If the investigation finds that China’s acts, policies, and practices are unreasonable or discriminatory and burden U.S. commerce, the USTR will determine if action is appropriate, and if so, what action to take. Section 301 authorizes the USTR to institute retaliatory actions, including the imposition of duties or other import restrictions, withdrawing or suspending trade agreement concessions, and entering an agreement with the foreign government to eliminate the conduct subject to the investigation.
Petition
The Petition alleges that China engages in unreasonable or discriminatory conduct, providing unfair advantages across several maritime industries, including shipbuilding, shipping, and maritime equipment. Examples of the alleged conduct include:
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Implementing industrial planning and policies that are designed to unfairly capture market share, distort global markets, and advantage Chinese enterprises;
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Directing mergers and anticompetitive activities;
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Providing non-market advantages to Chinese firms to dominate key upstream inputs and technologies;
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Providing advanced financing mechanisms advantaging Chinese industry;
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Creating a Chinese network of upstream suppliers, foreign ports and terminals, shippers, and equipment and logistics software that allow advantageous use of information;
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Tolerating intellectual property theft and industrial espionage; and
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Controlling shipping freight rates and capacity allocations.
According to the Petition, the above acts have contributed to the decline of U.S. shipbuilding capacity, production, and market share; artificially depressed U.S. prices; impeded U.S. investment, production, and employment; reduced the number of U.S.-produced ships in domestic and global merchant fleets; and provided unfair advantages to China that burden or restrict trade in inputs and opportunities for upstream inputs and downstream industries. The Petition also alleges that China’s actions threaten to undermine U.S. national and economic security.
Petitioners acknowledge that traditional trade remedies do not address unfair practices in this area because commercial ships are not generally imported into the United States but are instead used in international commerce. Petitioners therefore request the following remedies:
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Assessment of a port fee on Chinese-built ships that dock at U.S. ports;
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Creation of a shipbuilding revitalization fund to help domestic industry;
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Actions to increase demand for U.S.-built vessels, including strengthening enforcement of the Jones Act among several other remedies;
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Actions related to China’s port and logistics infrastructure platforms and equipment, including restriction of further deployment or ending use of Chinese port infrastructure equipment in U.S. ports; and
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Negotiating with other major shipbuilding countries to address concerns related to China’s unfair practices.
Important Dates
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April 17, 2024 – USTR initiates investigations;
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May 22, 2024 – Deadline to submit written comments and requests to appear at public hearing, along with summary of testimony; and
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May 29, 2024 – Public hearing convened by Section 301 Committee (if necessary, the hearing may continue on May 31, 2024).
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The USTR’s investigation into China’s practices related to maritime industries may lead to actions affecting multiple sectors of the U.S. economy, including logistics, shipping, shipbuilding, and maritime equipment.
