China

Ahead of the public hearings being staged in Washington March 24 and March 26, the Canadian government, along with Canadian Great Lakes carriers, have filed statements to the U.S. Trade Representative (USTR) strongly critical of the Trump administration’s proposed fees of up to $1.5 million per port call of Chinese-built ships. Among the biggest issues raised: the potential devastating impact on shipping costs,  supply chains and Canada-U.S. trade.

The USTR invited written comments from industry stakeholders globally concerning what was described as a Proposed Action Pursuant to the Section 301 Investigation of China’s Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance. This procedure was launched in response to a petition by five US labour unions.

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Great Lakes shipping officials are pushing back on the Trump administration’s proposed port fee on Chinese-built ships, arguing the move could lead to less cargo moving through U.S. ports and threaten domestic port jobs.

The Office of the United States Trade Representative last month proposed charging stacking fees of up to $3 million every time a Chinese-built ship stops at a U.S. port, regardless of what country’s flag it sails under or where the cargo originated or is destined.

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How many of the thousands of ships docking every day at U.S. ports were built in the United States?

The answer may be surprising: U.S. shipyards manufacture fewer than 1 percent of the cargo vessels that ply the global seas. In March, U.S. labor unions decided that Washington had to take bold measures to support domestic shipbuilding and filed a petition to the U.S. trade representative, arguing that the industry’s poor state mostly reflects unfair Chinese practices, including massive subsidies. The unions have a simple proposal: Global shipping firms should pay a fee to dock at U.S. ports if they use Chinese-made vessels. On Wednesday, the Biden administration responded by launching an investigation into Chinese practices in the shipbuilding and maritime logistics sectors.

With around 80 percent of global trade carried by sea and U.S. politicians sensing an opportunity to court blue-collar workers ahead of this year’s elections, an investigation into Chinese shipbuilding practices could well reignite global trade tensions. Yet a closer look at China’s shipyards may also prove to be a useful exercise for Western policymakers: Beijing’s shipbuilding strategy has long been a perfect illustration of China’s playbook for the sectors that it has identified as critical in its Made In China 2025 industrial blueprint, including semiconductors, clean technology, and electric vehicles.

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Prime Minister Justin Trudeau is distancing the Liberal government from a $100-million contract under which a Chinese state-owned shipyard will build a passenger ferry for a federal Crown corporation, a deal the Conservative Party vows to cancel if elected. 

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A huge state-owned shipyard in China is building a 1,000-passenger ferry for use by a federal Crown corporation over the objections of Canada’s shipbuilding industry and at a time when two Canadians have spent 989 days in Chinese prisons as victims of what Ottawa has called “hostage diplomacy.” 

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