Ag Shippers: New Shipbuilding Rules Would Make U.S. Exports ‘Unaffordable’

U.S. agriculture shippers are warning that a proposal to boost domestic shipbuilding could cripple the country’s exports of agricultural and other products.

“Agriculture is high volume and low margin,” Agriculture Transportation Coalition (AgTC) executive director Peter Friedman said in a February 26 release. “The dramatic costs that this proposal would impose on U.S. ag exports would simply make our U.S. ag unaffordable and noncompetitive in the global markets.”

In the first two years of a plan put forth by the U.S. Trade Representatives, 1% of U.S. exports would have to be shipped using U.S.-flagged vessels, before increasing to 3% after two years, 5% after three years, and 15% after seven years. A similar seven-year ramp-up period would also eventually require 5% of all U.S. exports to be moved on U.S.-built vessels. 

The proposal includes U.S. port entry fees for companies operating Chinese-built ships as well. Under that plan, Chinese-owned companies would have to pay up to $1 million per port entry depending on vessel capacity, while non-Chinese shipping companies operating Chinese-built ships would be charged up to $1.5 million, depending on the percentage of Chinese-built ships in each fleet. Lawmakers in Congress and President Trump have also voiced concerns over the national security risks posed by China’s status as the world’s biggest shipbuilder. 

Read More: Congress Looks to Boost U.S. Shipbuilding Industry

Despite those concerns, Friedmann asserted that the USTR’s proposal would make it more expensive for U.S. agricultural exports — as well as all exports — to reach large overseas markets, by forcing U.S. companies to shoulder added costs not shared by foreign competitors trading with other countries.

Given that “a very high percentage” of the world’s shipping fleets were built in Chinese shipyards, Friedmann noted, the USTR’s proposal would also subject the ships of virtually every ocean carrier moving U.S. products to “substantial” taxes that would eventually get passed down to shippers. And if U.S. agriculture shippers aren’t able to deliver to overseas customers affordably and dependably, “they will find alternative sources, and U.S. ag loses that market,” he added. 

The USTR will accept written comments on its proposal through March 10, with a public hearing scheduled for March 24.