FEDERAL MARITIME COMMISSION

FMC Launches Inquiry into Chineese Shipping Policies

NR 98-03

Washington, D.C. 20573

FOR RELEASE: August 12, 1998

The Federal Maritime Commission today launched a broad inquiry into the maritime policies and practices of the People's Republic of China. The Commission recently has received reports regarding potentially unfair or restrictive Chinese maritime policies from a number of sources, including the U.S. Departments of Transportation, State, and Commerce, U.S. Senator Ernest F. Hollings, and U.S. shipping lines and non-vessel-operating common carriers. In light of these reports and other concerns, the Commission has initiated a formal proceeding to gather more information on the restrictions facing the U.S. maritime industry and U.S. oceanborne trade in China, and to determine the full scope of Chinese maritime companies' operations in the United States.

The Commission is collecting information from U.S. and Chinese shipping lines through the issuance of mandatory information demand orders, and also is issuing a notice of inquiry requesting comments from shippers, transportation intermediaries, and other parties, on several issues. The first is the limits on U.S. carriers' ability to operate branch offices in China and offer intermodal transportation services with the same freedom that Chinese carriers enjoy in the United States. Another area of inquiry is the administration of a Chinese system requiring foreign shipping lines to obtain governmental licenses or permissions for new liner shipping routes. Also, the Commission is investigating reported Chinese prohibitions on U.S. carriers performing vessel agency services (i.e., providing services and provisions to vessels when in port) in China. The Commission is gathering more information on an apparently stalled effort by a U.S. shipping line, Sea-Land Service, Inc., to enter into a joint venture with the port of Tianjin to operate a marine terminal. Lastly, the Commission is asking for comments from all interested parties regarding the barriers or restrictions faced by U.S. freight forwarding companies, non-vessel-operating common carriers, and other transportation intermediaries seeking to do business in China.

FMC Chairman Harold J. Creel, Jr. stated: "I have not been encouraged by government and industry sources regarding China's willingness to open up its shipping sector. It is now time for the Commission to get a fuller report on the record from carriers, shippers, NVOs and others affected by these restrictions in the U.S. China trade, so that we can determine whether further action is required."

Responses to the Commission orders are due October 2, 1998. Copies of the orders in Docket No. 98-14, Shipping Restrictions, Requirements, and Practices of the People's Republic of China, will be made available through the public document section of the Commission's web site, at www.fmc.gov.

Under Section 19 of the Merchant Marine Act, 1920, the Commission is empowered to take countervailing action if it finds that foreign laws, rules, or regulations create "conditions unfavorable to shipping in the foreign trade." Under the Foreign Shipping Practices Act of 1988, the Commission may investigate whether any laws, rules, regulations, policies, or practices of foreign governments or carriers lead to conditions that (1) adversely affect the operations of United States carriers in the United States oceanborne trade; and (2) do not exist for foreign carriers of that country in the United States. Under these laws, if the Commission determines that such adverse conditions exist, it may take actions including limitations on sailings, suspension of tariffs, suspension of regulated agreements, or fees not to exceed $1,000,000 per voyage. No such sanctions were levied or proposed today; rather, today's action is an effort to collect information to help determine whether any future action might be warranted.