[Federal Register Volume 62, Number 73 (Wednesday, April 16, 1997)]
[Rules and Regulations]
[Pages 18533-18535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9903]
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FEDERAL MARITIME COMMISSION
46 CFR Part 586
[Docket No. 96-20]
Port Restrictions and Requirements in the United States/Japan
Trade
AGENCY: Federal Maritime Commission.
ACTION: Final rule; delay of effective date, requirement for reporting,
and request for comments.
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SUMMARY: The Federal Maritime Commission is delaying the effective date
of its final rule assessing fees on liner vessels operated by Japanese
carriers, in light of recent commitments made by the Government of
Japan addressing restrictive and unfavorable conditions for the use of
Japanese ports.
DATES: Effective April 13, 1997, delay until September 4, 1997, the
effective date of the rules published March 4, 1997 (62 FR 9696), as
amended by the Commission April 11, 1997 in a rule to be published
April 16, l997. Status reports and comments are due July 1, 1997, and
August 5, 1997.
ADDRESSES: Filings and requests for publicly available information
should be addressed to:
Joseph C. Polking, Secretary, Federal Maritime Commission, 800
North Capitol Street, N.W., Washington, D.C. 20573 (202)523-5725.
FOR FURTHER INFORMATION CONTACT: Thomas Panebianco, General Counsel,
Federal Maritime Commission, 800 North Capitol Street, N.W.,
Washington, D.C. 20573, (202)523-5740.
SUPPLEMENTARY INFORMATION: On March 4, 1997, the Commission
published a final rule pursuant to section 19(1)(b) of the Merchant
Marine Act, 1920, 46 U.S.C. app. 876(1)(b), to assess per-voyage
fees on Japanese liner carriers, effective April 14, 1997, in
response to restrictive and unfavorable requirements for the use of
Japanese ports. An amendment to the final rule was issued by the
Commission on April 11, 1997, providing that fees would not be
assessed twice in a seven day period (or, for port calls in Hawaii,
in a 40 day period). In light of commitments made by the Government
of Japan in recent bilateral talks with the United States
Government addressing the unfavorable conditions identified in the
final rule, the Commission has decided to suspend the effective
date of the rule.
The Commission issued its final rule after a comprehensive inquiry
into restrictions and requirements facing U.S. carriers and U.S.
commerce in Japanese ports. The fees were deemed necessary in light of
the Commission's identification of a number of conditions unfavorable
to shipping warranting action under section 19:
Shipping lines in the Japan-U.S. trades are not allowed to
make operational changes, major or minor, without the permission of the
Japan Harbor Transportation Association (``JHTA''), an association of
Japanese waterfront employers operating with the permission of, and
under the regulatory authority and ministerial guidance of, the Japan
Ministry of Transport (``MOT'').
JHTA has absolute and unappealable discretion to withhold
permission for proposed operational changes by refusing to accept such
proposals for ``prior consultation,'' a mandatory process of
negotiations and pre-approvals involving carriers, JHTA, and waterfront
unions.
There are no written criteria for JHTA's decisions whether
to permit or disallow carrier requests for operational changes, nor are
there written explanations given for the decisions.
JHTA uses and has threatened to use its prior consultation
authority to punish and disrupt the business operations of its
detractors.
JHTA uses its authority over carrier operations through
prior consultation as leverage to extract fees and impose operational
restrictions, such as Sunday work limits.
JHTA uses its prior consultation authority to allocate
work among its member companies, by barring carriers and consortia from
freely choosing operators and by compelling shipping
[[Page 18534]]
lines to hire additional, unneeded stevedore companies or contractors.
MOT administers a licensing standard which blocks new
entrants from the stevedoring industry in Japan, protecting JHTA's
dominant position, and ensuring that the stevedoring market remains
entirely Japanese.
Because of the restrictive licensing requirement, U.S.
carriers cannot perform stevedoring or terminal operating services for
themselves or third parties in Japan, as Japanese carriers do in the
United States.
In the rule, the Commission observed that these conditions were
matters of longstanding concern to the United States Government, and
that repeated diplomatic efforts to resolve them had been unsuccessful.
Since the rule was issued, the United States Government has undertaken
a number of discussions, diplomatic approaches, and consultations to
persuade the Government of Japan to remedy the conditions identified in
the rule. The most recent and most intensive of these efforts was a
series of consultations, commencing April 2, 1997, and concluding
Friday, April 11, 1997. At that time, the two sides signed a Memorandum
of Consultation containing a series of statements and agreements
concerning Japanese port practices, licensing, and prior consultation.
With regard to licensing, the Japanese side confirmed that license
applications meeting the standards stipulated in the Port
Transportation Business Law will be approved by MOT within
approximately four months of receipt when such applications meet the
following criteria:
1. They are submitted by foreign carriers and their subsidiaries;
2. They are for General Port Transportation Business Licenses as
set forth in Article 3, Section 1 of the Port Transportation Business
Law and/or Port Stevedoring Business Licenses as set forth in Section 2
of the same article; and
3. They are for operations to be conducted for the applicant's (or
the applicant's parent's) own account and/or for its consortia partners
and third parties at berths leased in a containership port by the
applicant (or the applicant's parent).
The Japanese side stated that MOT is knowledgeable regarding the
operations of U.S. carriers and their consortia partners in Japan's
ports and that, based on this knowledge, completed applications by
these companies for operations at berths leased by the applicant (or
the applicant's parent) would be in compliance with the law and,
accordingly, will be approved.
With regard to prior consultation, the Japanese Government
explained that, under the leadership of MOT, concerned parties have
endorsed an agreement that provides a framework for reforming the prior
consultation system by July 31, 1997. MOT stated that it will continue
to use its ``maximum effort,'' and clarified a number of other points,
including: prior consultation will not be used to allocate work among
operators; all carriers have freedom to contract with any operator; all
requests for prior consultation will be considered; the so-called
``pre-pre-prior consultation'' will not be required. The U.S. side
stressed four important goals to be achieved by July 31, 1997, relating
to the elimination of minor matter consultations, the process of major
matter consultations, the definition of ``major'' and ``minor''
matters, and the implementation of a transparent appeals process under
MOT direction.
As was agreed in the talks, at the conclusion of the consultations
a letter was sent by the head of the U.S. delegation, Maritime
Administrator A.J. Herberger, to FMC Chairman Harold J. Creel, Jr.,
stating that the discussions were conducted in good faith and represent
a reasonable basis for the Commission not to impose the proposed
sanctions on April 14, 1997.
In the wake of the signing of the Memorandum of Consultation,
comments were submitted by the U.S. carriers, American President Lines,
Ltd. and Sea-Land Service, Inc., and a response was filed by Japanese
carriers Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines, Ltd., and
Nippon Yusen Kaisha.
The U.S. carriers call MOT's commitments on licensing
``meaningful'' and ``excellent progress.'' With regard to the approach
on prior consultation, the U.S. carriers state that, since the process
has been dominated by JHTA, they see ``obvious risks.'' However, they
state that MOT has shown new leadership in convening this process and
has undertaken to use its best efforts to reach a conclusion
satisfactory to all parties. Expressing the belief that MOT guidance is
significant and holds promise for reform in the near term, the U.S.
carriers state that it would be appropriate to give this process time
to work without the distraction of imposed sanctions.
The Commission agrees. The Government of Japan's commitments on
licensing are highly laudable, and, once implemented, will go far
toward providing the type of reciprocal treatment in Japan that
Japanese carriers enjoy in this country. The approach agreed on will
benefit not just the carriers involved, but also all oceanborne trade
and commerce between the U.S. and Japan.
The Commission remains concerned about the prior consultation
system, and the attendant market power enjoyed by JHTA. However, in
light of the fact that the approach described in the Memorandum of
Consultation has been agreed to by the parties, we find that it would
be appropriate to allow that process an opportunity to achieve results
without the imposition of sanctions. MOT's recently demonstrated
commitment to action and oversight in this area has renewed our
optimism that the necessary reforms will be implemented in a timely
manner.
The U.S. carriers recommend deferring the effectiveness of the
final rule until August 30, 1997. The Japanese carriers, however,
suggest that the effectiveness of the final rule be suspended
indefinitely. The Commission has elected to adopt the U.S. carriers'
suggestion and defer the rule's effectiveness until a date certain. The
Commission appreciates the commendable efforts made thus far by the
Government of Japan, both in making the above-described commitments and
clarifications in the consultations, and also in convening and leading
the ongoing discussions in Japan. The Commission has accordingly
determined that the imposition of fees is not warranted at this time.
Moreover, the Commission has the highest respect for, and confidence
in, MOT officials. However, the basis of the Commission's rule is the
unfavorable conditions which exist in Japanese ports. Until such
conditions are substantially remedied, in a concrete and identifiable
way, the Commission cannot permanently suspend or withdraw the rule.
Therefore, the effectiveness of the rule is suspended until September
4, 1997.1 The Commission has elected to require the carriers to
file status reports describing developments relevant to this
proceeding.2 If warranted, the
[[Page 18535]]
Commission will reassess the suspension of the rule based on the
information submitted.
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\1\ The date suggested by the U.S. carriers would meet our
objectives of affording the parties an opportunity to conclude the
consultative process and submit reports, and giving the Commission
the opportunity to further evaluate the results. However, the
proposed date falls during a holiday weekend.
\2\ Section 19(6) of the Merchant Marine Act, 1920, 46 U.S.C.
app. Sec. 876(6), states:
(a) the Commission may, by order, require any person * * * to
file with the Commission a report, answers to questions, documentary
material, or other information which the Commission considers
necessary or appropriate; (b) the Commission may require a report or
answers to questions to be made under oath;
* * * * *
(d) a person who fails to file * * * information required to be
filed under this paragraph shall be liable to the United States
Government for a civil penalty of not more than $5000 for each day
that the information is not provided.
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Therefore, it is ordered That the effective date of the rules
published March 4, 1997 (62 FR 9696), as amended by the Commission
April 11, 1997 (in a rule to be published April 16, 1997), amending
Part 586 of Title 46 of the Code of Federal Regulations, is hereby
suspended until September 4, 1997.
It is further ordered, That the following parties are ordered to
file reports with the Commission on July 1, 1997, and August 5, 1997:
American President Lines, Ltd.; Sea-Land Service, Inc.; Kawasaki Kisen
Kaisha, Ltd.; Mitsui O.S.K. Lines, Ltd.; and Nippon Yusen Kaisha. These
reports should describe, in detail:
the status of the consultative process to reform the prior
consultation system;
any planned or implemented changes to the prior
consultation system, and the observed or expected effects of these
changes;
the role of the Government of Japan in any future prior
consultation system or related review or appeals process;
the extent to which carriers in Japan have freedom to
contract with any port transportation business operator;
the status of any efforts by U.S. carriers to secure
licenses to operate port transportation businesses or to establish such
businesses;
any other information relevant to this proceeding that
parties wish to bring to the attention of the Commission.
It is further ordered, That any other persons with information
relevant to this proceeding may submit comments for the Commission's
consideration, due on July 1, 1997, and August 5, 1997.
By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 97-9903 Filed 4-14-97; 1:15 pm]
BILLING CODE 6730-01-W
