US to levy fees on China-linked ships, push allies to do likewise: draft executive order

The United States is planning to charge fees for docking at US ports on any ship that is part of a fleet that includes Chinese-built or Chinese-flagged vessels and will push allies to act similarly or face retaliation, a draft executive order stated.

The administration of US President Donald Trump is drafting the executive order in a bid to resuscitate domestic shipbuilding and weaken China's grip on the global shipping industry.

Addressing China's growing dominance of the seas and diminishing US naval readiness is a rare point of consensus between US Republican and Democratic lawmakers.

Chinese shipbuilders account for more than 50% of all merchant vessel cargo capacity produced globally each year, up from just 5% in 1999, according to the Center for Strategic and International Studies.

That gain came at the expense of shipbuilders in Japan and South Korea. US shipbuilding peaked in the 1970s and now accounts for a sliver of the industry output.

The draft executive order, dated February 27 and reviewed by Reuters on Thursday, proposes fees should be imposed on any vessel that enters a US port, "regardless of where it was built or flagged, if that vessel is part of a fleet that includes vessels built or flagged in the PRC (People's Republic of China)."

The US administration and Chinese officials could not be immediately reached for comment.

The document draws from a US Trade Representative's office proposal last month to levy fees of up to $1.5 million on Chinese-built vessels entering US ports after a probe into China's growing domination of global shipbuilding, maritime and logistics sectors.

A key difference is that the draft executive order does not include USTR language stating that port fees on fleets would be imposed when Chinese-built ships account for 25% or more of vessels operating, slated for delivery or on order.

It also did not put a dollar value on those fees or say how they would be calculated.

The plan could inflict significant costs on major container carriers including China's COSCO, Switzerland's MSC, Denmark's Maersk and Taiwan's Evergreen Marine as well as on operators of ships that carry bulk food, fuel and autos.

MSC CEO Soren Toft said earlier this week the world's largest container carrier could visit fewer US ports to limit its exposure to the new fees.

RETALIATION THREAT

The draft executive order also calls on US officials to engage allies and partners to enact similar measures or risk retaliation.

The US would also impose tariffs on Chinese cargo-handling equipment, according to the draft order.

"The national security and economic prosperity of the United States is further endangered by the People's Republic of China's unfair trade practices in the maritime, logistics, and shipbuilding sectors," the draft order said.

Reuters had reported on Wednesday on plans to impose fees on imports arriving on Chinese-made ships from a draft fact sheet of the 18-point executive order.

French carrier CMA CGM said on Thursday it would spend the next four years expanding its US-flagged American President Lines fleet to 30 from 10 currently.

CMA CGM is the world's third-largest container shipping line and is part of a vessel-sharing alliance with companies

including COSCO. It counts global retailer Walmart as a top customer and last week said the proposed US port fees on China-built ships would affect all shipping firms.