USTR Initiates Section 301 Investigation on China’s Maritime, Logistics and Shipbuilding Practices

On April 17, 2024, the Office of the U.S. Trade Representative (USTR) initiated a Section 301 investigation of China's acts, policies, and practices targeting the maritime, logistics, and shipbuilding sectors for dominance.

The petition was filed by five labor unions, alleging that China targets the maritime, logistics, and shipbuilding sector for dominance and engages in a wide range of unreasonable or discriminatory acts, policies, and practices that provide unfair advantages, including:

• Implementing industrial planning and policies that are designed to unfairly capture market share, distort global markets, and advantage Chinese enterprises;
• Directing mergers and anticompetitive activities;
• Providing non-market advantages to Chinese firms to dominate key upstream inputs and technologies;
• Providing advanced financing mechanisms advantaging Chinese industry;
• Creating a Chinese network of upstream suppliers, foreign ports and terminals, shippers, and equipment and logistics software that allow advantageous use of information;
• Tolerating intellectual property theft and industrial espionage; and
• Controlling shipping freight rates and capacity allocations.

The petitioners also aver that China threatens to discriminate against U.S. commerce and disrupt supply chains.

Petitioners allege that China's acts, policies, and practices burden or restrict U.S. commerce by:

• Dramatically increasing China's shipbuilding excess capacity and global market share, contributing to declines in U.S. shipbuilding capacity, production, and market share;
• Artificially depressing prices, which makes it more difficult for U.S. companies to compete for sales;
• Impeding U.S. investment, production, and employment;
• Reducing the number of U.S.-produced ships in the domestic and global merchant fleets; and
• Providing unfair advantages and preferences that burden or restrict trade in inputs, and burden or restrict trade opportunities for upstream inputs and downstream industries.

In addition, the petitioners assert that China threatens to undermine U.S. national and economic security.

The five elements as requested in the petition include:

• a fee on vessels built in China that dock at U.S. ports to offset China’s unfair practices and create an incentive to eliminate those practices;
• the establishment of a shipbuilding revitalization fund with proceeds from the fee to support investments in the domestic shipbuilding industry’s capacity, supply chains, and 112 workforce;
• actions to support stronger demand for U.S.-built vessels in light of unfair competition from China;
• actions to address China’s drive to dominate port and logistics infrastructure platforms and equipment; and
negotiations with other major shipbuilding countries to address any concerns about their own government support programs and coordinate measures to address China’s unfair practices

Stakeholders may submit written comments related to China’s acts, policies and practices targeting the maritime, logistics and shipbuilding sectors for dominance. Comments are due by May 22, 2024 and can be filed via https://comments.ustr.gov/s/ under docket USTR-2024-0004.

If you have any questions or input on this issue, please reach out to Angela Chiang at angela.chiang@autocare.org.

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