Notice2025-03134
Proposed Action in Section 301 Investigation of China's Targeting of the Maritime, Logistics, and Shipbuilding Sectors for Dominance
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Published
February 27, 2025
Issuing agencies
Trade Representative, Office of United States
Abstract
USTR requests written comments regarding potential trade action in connection with the Section 301 investigation of China's targeting of the maritime, logistics, and shipbuilding sectors for dominance. USTR also will convene a public hearing and accept rebuttal comments in relation to the potential action.
Full Text
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<title>Federal Register, Volume 90 Issue 38 (Thursday, February 27, 2025)</title>
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[Federal Register Volume 90, Number 38 (Thursday, February 27, 2025)]
[Notices]
[Pages 10843-10846]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-03134]
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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Proposed Action in Section 301 Investigation of China's Targeting
of the Maritime, Logistics, and Shipbuilding Sectors for Dominance
AGENCY: Office of the United States Trade Representative (USTR).
ACTION: Request for comments and notice of public hearing.
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SUMMARY: USTR requests written comments regarding potential trade
action in connection with the Section 301 investigation of China's
targeting of the maritime, logistics, and shipbuilding sectors for
dominance. USTR also will convene a public hearing and accept rebuttal
comments in relation to the potential action.
DATES:
February 21, 2025: Comment period opens.
March 10, 2025: To be assured of consideration, submit requests to
appear at a hearing, along with a summary of the testimony, by this
date.
March 24, 2025: To be assured of consideration, submit written
comments by this date. USTR will hold a public hearing on proposed
action in this investigation in the main hearing room of the U.S.
International Trade Commission, 500 E Street SW, Washington, DC 20436,
beginning at 10 a.m.
Seven calendar days after the last day of the public hearing:
Submit post-hearing rebuttal comments.
ADDRESSES: Submit documents in response to this notice, including
written comments, rebuttal comments, and requests to appear through
USTR's electronic portal: <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>. The docket
number for written comments and rebuttal comments is USTR-2025-0002.
The docket number for requests to appear is USTR-2025-0003.
FOR FURTHER INFORMATION CONTACT: For questions concerning the
investigation or issues with online submissions, please contact Chairs
of the Section 301 Committee Megan Grimball and Philip Butler,
Associate General Counsels Thomas Au and Amanda Lee, or Assistant
General Counsels Henry Smith, Anjani Nadadur, or David Salkeld at
202.395.5725.
SUPPLEMENTARY INFORMATION:
I. Background
On March 12, 2024, petitioners \1\ filed a Section 301 petition
regarding the acts, policies, and practices of China to dominate the
maritime, logistics, and shipbuilding sector. The petition was filed
pursuant to Section 302(a) of the Trade Act of 1974, as amended (Trade
Act) (19 U.S.C. 2412(a)), requesting action pursuant to Section 301(b)
(19 U.S.C. 2411(b)). See 89 FR 29424 (April 22, 2024). For additional
information, the full text of the petition and accompanying exhibits
are available at: <a href="https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-china-targeting-maritime-logistics-and-shipbuilding-sectors-dominance">https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-china-targeting-maritime-logistics-and-shipbuilding-sectors-dominance</a>.
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\1\ The five labor union petitioners are: the United Steel,
Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial
and Service Workers International Union, AFL-CIO CLC (USW), the
International Brotherhood of Electrical Workers (IBEW), the
International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers, AFL-CIO/CLC (IBB), the
International Association of Machinists and Aerospace Workers (IAM),
and the Maritime Trades Department of the AFL-CIO (MTD).
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On April 17, 2024, after USTR consulted with the appropriate
advisory committees and the interagency Section 301 Committee, the U.S.
Trade Representative initiated an investigation of China's targeting
the maritime, logistics, and shipbuilding sectors for dominance. See 89
FR 29424 (April 22, 2024). The U.S. Trade Representative also requested
consultations with the government of China pursuant to Section 303 of
the Trade Act (19 U.S.C. 2413). The government of China declined to
hold consultations regarding the investigation under this statutory
framework.
The notice of initiation solicited written comments on, inter alia:
<bullet> China's acts, policies, and practices targeting the
maritime, logistics, and shipbuilding sectors for dominance.
<bullet> Whether China's acts, policies, and practices targeting
the maritime, logistics, and shipbuilding sectors for dominance are
unreasonable or discriminatory.
<bullet> China's efforts to dominate the global maritime,
logistics, and shipbuilding sectors, including the upstream and
downstream supply chain, as well as shipping services.
<bullet> Information on other acts, policies, and practices of
China relating to the maritime, logistics and shipbuilding sectors.
[[Page 10844]]
<bullet> Whether China's acts, policies, and practices burden or
restrict U.S. commerce, and if so, the nature and level of the burden
or restriction.
The public submissions are available at: <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>, docket number USTR-2024-0005. USTR and the Section 301 Committee
convened a public hearing on May 29, 2024, during which witnesses
provided testimony. A transcript of the hearing is available on the
USTR website at: <a href="https://ustr.gov/sites/default/files/Hearing%2005292024.pdf">https://ustr.gov/sites/default/files/Hearing%2005292024.pdf</a>.
Based on the information obtained during the investigation, USTR
released a public report on the investigation. The report supports the
determination that China's targeting of the maritime, logistics, and
shipbuilding sectors for dominance is unreasonable and burdens or
restricts U.S. commerce and thus is actionable. The report is available
on USTR's website at: <a href="https://ustr.gov/sites/default/files/enforcement/301Investigations/USTRReportChinaTargetingMaritime.pdf">https://ustr.gov/sites/default/files/enforcement/301Investigations/USTRReportChinaTargetingMaritime.pdf</a>.
As detailed in the report, for nearly three decades, China has
targeted the maritime, logistics, and shipbuilding sectors for
dominance and has employed increasingly aggressive and specific targets
in pursuing dominance. China has largely achieved its dominance goals,
severely disadvantaging U.S. companies, workers, and the U.S. economy
generally through lessened competition and commercial opportunities and
through the creation of economic security risks from dependencies and
vulnerabilities.
Top-down industrial planning and targeting is a critical feature of
China's state-led, non-market economic system. China organizes the
development of its economy at a high level through broad national-level
five-year economic and social development plans. It then employs
industry-specific plans that typically align chronologically with the
national five-year plans. These plans often contain detailed
quantitative and qualitative targets, including for production,
domestic content, and domestic and international market shares, and
outline the non-market policies and practices China should use to
achieve these targets. China's plans reveal its targeting of the
maritime, logistics, and shipbuilding sectors for dominance.
Market share targets necessitate substitution by Chinese companies
at the expense of foreign competitors--for Chinese companies to gain
market share, they must displace foreign companies in existing markets
and take new markets as they develop in the future. China's industrial
targets have become more aggressive and sophisticated over the years.
China's targeting of these sectors for dominance has undercut
competition and taken market share with dramatic effect: raising
China's shipbuilding market share from less than 5 percent of global
tonnage in 1999, to over 50 percent in 2023; increasing China's
ownership of the commercial world fleet to over 19 percent as of
January 2024; and controlling production of 95 percent of shipping
containers and 86 percent of the world's supply of intermodal chassis,
among other components and products.
Based on the information obtained during the investigation, as
reflected in the public report on the investigation, and taking account
of public comments, as well as the advice of the interagency Section
301 Committee and advisory committees, the U.S. Trade Representative
determined that China's targeting of the maritime, logistics, and
shipbuilding sectors for dominance is unreasonable and burdens or
restricts U.S. commerce, and thus is actionable under Sections 301(b)
and 304(a) of the Trade Act (19 U.S.C. 2411(b) and 2414(a)). See 90 FR
8089 (January 23, 2025).
In particular, the U.S. Trade Representative determined that
China's targeting of the maritime, logistics, and shipbuilding sectors
for dominance is unreasonable because it displaces foreign firms,
deprives market-oriented businesses and their workers of commercial
opportunities, and lessens competition, and creates dependencies on
China, increasing risk and reducing supply chain resilience. China's
targeting for dominance also is unreasonable because of China's
extraordinary control over its economic actors and these sectors.
Furthermore, the U.S. Trade Representative determined that China's
targeting of the maritime, logistics, and shipbuilding sectors for
dominance burdens or restricts U.S. commerce by undercutting business
opportunities for and investments in the U.S. maritime, logistics, and
shipbuilding sectors; restricting competition and choice; creating
economic security risks from dependence and vulnerabilities in sectors
critical to the functioning of the U.S. economy; and undermining supply
chain resilience.
The dominant positions China seeks and increasingly achieves in
each sector, give it market power over global supply, pricing, and
access. In order to create leverage to obtain the elimination of
China's targeting of these sectors for dominance, USTR proposes to take
action against certain services of China and also action on a
nondiscriminatory basis on certain services, including those supplied
using Chinese goods.
II. Proposed Action
Section 301(b) provides that upon determining that the acts,
policies, and practices under investigation are actionable and that
action is appropriate, the U.S. Trade Representative shall take all
appropriate and feasible action authorized under Section 301(c),
subject to the specific direction, if any, of the President regarding
such action, and all other appropriate and feasible action within the
power of the President that the President may direct the U.S. Trade
Representative to take under Section 301(b), to obtain the elimination
of that act, policy, or practice.
Section 301(c) of the Trade Act authorizes the U.S. Trade
Representative to take certain actions for purposes of carrying out the
provisions of Section 301(b). For example, Section 301(c)(1)(B)
authorizes the U.S. Trade Representative to ``impose duties or other
import restrictions on the goods of [the foreign country subject to the
investigation] and, notwithstanding any other provision of law, fees or
restrictions on the services of, such foreign country for such time as
the Trade Representative determines appropriate''. Section 301(c)(3)(A)
provides that actions that the U.S. Trade Representative is authorized
to take may be taken against any good or economic sector on a non-
discriminatory basis or solely against the foreign country concerned.
Pursuant to Sections 301(b) and (c), the U.S. Trade Representative
proposes that action is appropriate and that appropriate and feasible
action may include one or more of the following options. Any fees,
charges, or restrictions that may be imposed would be cumulative and
additional to other existing or proposed fees, charges, or
restrictions.
Fees on Services
<bullet> Service Fee on Chinese Maritime Transport Operators:
[cir] A vessel operator of China to be charged a fee on the
international maritime transport being provided (a) at a rate of up to
$1,000,000 per entrance of any vessel of that operator to a U.S. port;
or (b) per entrance of any vessel of that operator to a U.S. port, at a
rate of up to $1,000 per net ton of the vessel's capacity.
<bullet> Service Fee on Maritime Transport Operators with Fleets
Comprised of Chinese-Built Vessels:
[[Page 10845]]
[cir] Upon the entrance of a Chinese-built vessel to a U.S. port, a
fee to be charged to that vessel's operator on the international
maritime transport provided via that vessel (a) at a rate of up to
$1,500,000; (b) based on the percentage of Chinese-built vessels in
that operator's fleet: for operators with 50 percent or greater of
their fleet comprised of Chinese-built vessels, the operator will be
charged up to $1,000,000 per vessel entrance to a U.S. port; for
operators with greater than 25 percent and less than 50 percent of
their fleet comprised of Chinese-built vessels, the operator will be
charged a fee up to $750,000 per vessel entrance to a U.S. port; for
operators with greater than 0 percent and less than 25 percent of their
fleet comprised of Chinese-built vessels, the operator will be charged
a fee up to $500,000 per vessel entrance to a U.S. port; or (c) based
on the percentage of Chinese-built vessels in an operator's fleet: an
additional fee of up to $1,000,000 will be charged to a vessel operator
per vessel entrance to a U.S. port if the number of Chinese-built
vessels in the operator's fleet is equal to or greater than 25 percent.
<bullet> Service Fee on Maritime Transport Operators with
Prospective Orders for Chinese Vessels:
[cir] An additional fee based on the percentage of vessels ordered
from Chinese shipyards: (a) for operators with 50 percent or greater of
their vessel orders in Chinese shipyards or vessels expected to be
delivered by Chinese shipyards over the next 24 months, the operator
will be charged up to $1,000,000 per vessel entrance to a U.S. port;
for operators with greater than 25 percent and less than 50 percent of
their vessel orders in Chinese shipyards or expected to be delivered by
Chinese shipyards over the next 24 months, the operator will be charged
up to $750,000 per vessel entrance to a U.S. port; for operators with
greater than 0 percent and less than 25 percent of their vessel orders
in Chinese shipyards or expected to be delivered by Chinese shipyards
over the next 24 months, the operator will be charged up to $500,000
per vessel entrance to a U.S. port; or (b) a fee of up to $1,000,000
per vessel entrance to a U.S. port will be charged to a vessel operator
if 25 percent or more of the total number of vessels ordered by that
operator, or expected to be delivered to that operator, are ordered or
expected to be delivered by Chinese shipyards over the next 24 months.
<bullet> Service Fee Remission for Maritime Transport via U.S.-
built Vessels:
[cir] Additional fees on the maritime transport services charged to
an operator addressed in this section, may be refunded, on a calendar
year basis, in an amount up to $1,000,000 per entry into a U.S. port of
a U.S.-built vessel through which the operator is providing
international maritime transport services.
Restrictions on Services To Promote the Transport of U.S. Goods on U.S.
Vessels
<bullet> The international maritime transport of all U.S. goods,
such as capital goods, consumer goods, agricultural products, and
chemical, petroleum, or gas products, must comply with the following
schedule:
[cir] Effective as of the date of action, the international
maritime transport of at least 1 percent of U.S. products, per calendar
year, that is exported by vessel, is restricted to export on U.S.-
flagged vessels by U.S. operators.
[cir] Effective as of 2 years following the date of action, the
international maritime transport of at least 3 percent of U.S.
products, per calendar year, that is exported by vessel, is restricted
to export on U.S.-flagged vessels by U.S. operators.
[cir] Effective as of 3 years following the date of action, the
international maritime transport of at least 5 percent of U.S. goods,
per calendar year, that is exported by vessel, is restricted to export
on U.S.-flagged vessels by U.S. operators, of which 3 percent must be
U.S.-flagged, U.S.-built vessels, by U.S. operators.
[cir] Effective as of 7 years following the date of action, the
international maritime transport of at least 15 percent of U.S. goods,
per calendar year, is restricted to export on U.S.-flagged vessels by
U.S. operators, of which 5 percent must be U.S.-flagged, U.S.-built
vessels, by U.S. operators.
<bullet> The international maritime transport of U.S. goods must
comply with the following restriction:
[cir] U.S. goods are to be exported on U.S.-flagged, U.S.-built
vessels, but may be approved for export on a non-U.S.-built vessel
provided the operator providing international maritime transport
services demonstrates that at least 20 percent of U.S. products, per
calendar year, that the operator will transport by vessel, will be
transported on U.S.-flagged, U.S.-built ships.
Other Actions
<bullet> Actions to reduce exposure to and risks from China's
promotion of the National Transportation and Logistics Public
Information Platform (LOGINK) or other similar platforms, such as
recommending that relevant U.S. agencies investigate alleged
anticompetitive practices from Chinese shipping companies, restricting
LOGINK access to U.S. shipping data, or banning or continuing to ban
terminals at U.S. ports and U.S. ports from using LOGINK software.
In addition to the proposed actions, the U.S. Trade Representative
also may consider entering into negotiations with allies and partners
in order to counteract China's acts, policies, and practices and to
reduce dependencies on China in the maritime, logistics, and
shipbuilding sectors.
III. Request for Public Comments
In accordance with Section 304(b) of the Trade Act (19 U.S.C.
2414(b)), USTR invites comments from interested persons with respect to
the proposed action to be taken in response to the acts, policies, and
practices of China determined to be unreasonable or discriminatory, and
to burden or restrict U.S. commerce. USTR requests comments with
respect to the following considerations in the relation proposed
actions:
<bullet> The level of the burden or restriction on U.S. commerce
arising from China's targeting of the maritime, logistics, and
shipbuilding sectors for dominance.
<bullet> The appropriate trade to be covered by responsive actions,
including the type and level.
<bullet> Whether the proposed fees or restrictions on services are
appropriate, including the type of services to be subject to fees or
restrictions, the level of fees or restrictions, the structure of any
fees, restrictions, or reimbursement of fees on services.
In commenting on proposed actions, USTR requests that commenters
specifically address whether a proposed action would be practicable or
effective to obtain the elimination of China's acts, policies, and
practices.
To be assured of consideration, you must submit written comments on
the proposed action by March 24, 2025, and post-hearing rebuttal
comments seven calendar days after the last day of the public hearing.
IV. Hearing Participation
The Section 301 Committee will convene a public hearing in the main
hearing room of the U.S. International Trade Commission, 500 E Street
SW, Washington, DC 20436, beginning at 10 a.m. on March 24, 2025. You
must submit requests to appear at the hearing by March 10, 2025. The
request to appear should include a summary of the testimony, and may be
accompanied by a pre-hearing submission. Remarks at the hearing may be
no longer than five
[[Page 10846]]
minutes to allow time for questions from the Section 301 Committee.
To participate in the hearing, you must submit a request to appear
at the hearing using the appropriate docket on the electronic portal at
<a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>. You will be able to view docket number
USTR-2025-0003 entitled `Request to Appear Concerning Proposed Action
Pursuant to the Section 301 Investigation of China's Targeting of the
Maritime, Logistics, and Shipbuilding Sectors for Dominance'. Requests
to appear must include a summary of testimony, and may be accompanied
by a pre-hearing submission. Remarks at the hearing are limited to five
minutes to allow for possible questions from the Section 301 Committee.
All submissions must be in English. To be assured of consideration,
USTR must receive your request to appear by March 10, 2025.
V. Procedure for Written Submissions
You must submit written comments and rebuttal comments using docket
number USTR-2025-0002 on the electronic portal at <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>. To submit written comments, use the docket on the
portal entitled `Request for Comments Concerning Proposed Action
Pursuant to the Section 301 Investigation of China's Targeting of the
Maritime, Logistics, and Shipbuilding Sectors for Dominance.'
You do not need to establish an account to submit comments. The
first screen of each docket allows you to enter identification and
contact information. Third party organizations such as law firms, trade
associations, or customs brokers, should identify the full legal name
of the organization they represent, and identify the primary point of
contact for the submission. Information fields are optional; however,
your comment or request may not be considered if insufficient
information is provided.
Fields with a gray Business Confidential Information (BCI) notation
are for BCI information which will not be made publicly available.
Fields with a green (Public) notation will be viewable by the public.
After entering the identification and contact information, you can
complete the remainder of the comment, or any portion of it by clicking
``Next.'' You may upload documents at the end of the form and indicate
whether USTR should treat the documents as business confidential or
public information.
Any page containing BCI must be clearly marked `BUSINESS
CONFIDENTIAL' on the top of that page and the submission should clearly
indicate, via brackets, highlighting, or other means, the specific
information that is BCI. If you request business confidential
treatment, you must certify in writing that disclosure of the
information would endanger trade secrets or profitability, and that the
information would not customarily be released to the public.
Parties uploading attachments containing BCI also must submit a
public version of their comments. If these procedures are not
sufficient to protect BCI or otherwise protect business interests,
please contact the USTR Section 301 support line at 202.395.5725 to
discuss whether alternative arrangements are possible.
USTR will post attachments uploaded to the docket for public
inspection, except for properly designated BCI. You can view
submissions on USTR's electronic portal at <a href="https://comments.ustr.gov/s/">https://comments.ustr.gov/s/</a>
by entering docket numbers USTR-2025-0002 and USTR-2025-0003 in the
search field on the home page.
Juan Millan,
Acting U.S. Trade Representative, Office of the United States Trade
Representative.
[FR Doc. 2025-03134 Filed 2-26-25; 8:45 am]
BILLING CODE 3390-F4-P
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