News / US trade report on subsidised Chinese shipbuilding due this week

ID 40740759 © Helenamiler86 | Dreamstime.com

According to a Reuters report this week, the office of the US Trade Representative (USTR) is to release a report into China’s shipbuilding industry that concludes its recent rise as a shipbuilding superpower was the result of “unfair policies and practices” and state subsidies.

Last April, USTR Katherine Tai launched an investigation into China’s shipbuilding industry following a petition from five US labour unions – including the United Steelworkers and the Machinists and Aerospace Workers – that Chinese policies were in contravention of Section 301 of the Trade Act.

This would allow the US government to apply penalties, which could include further tariffs or increased port fees on China-built vessels calling at US gateways – which the unions’ petition explicitly calls for.

It was under section 301 that Donald Trump introduced tariffs on Chinese goods in his first term as president, and clearly the USTR report is likely give him ammunition to introduce more tariffs.

“Section 301 provides an appropriate mechanism for addressing China’s policies in the maritime, logistics, and shipbuilding sector,” the petition says.

“First, traditional trade remedies are not available to address China’s unfair trade practices in this area, as the vast majority of ships produced in China are used in international commerce, and never imported into the United States.

“Second, the statute gives the USTR the power not only to impose tariffs, but also to impose fees and other restrictions, as well as take all other appropriate and feasible action within the power of the president.

“Third, Congress explicitly recognised that, by definition, support for the construction of foreign vessels used in international trade burdens or restricts US commerce, and thus is a proper target for action under Section 301,” it added.

The USTR report on China’s shipbuilding industry is expected this week, but according to Reuters, it is likely to resemble the bi-partisan SHIPS for America Act, introduced in mid-December, which represents the mounting opposition to China’s growing maritime power in the US.

This was also marked by state-owned shipping line Cosco being designated “a Chinese military asset” by the US Department of Defense.