02-16760. Shipping Restrictions, Requirements and Practices of the People's Republic of China

AGENCY:

Federal Maritime Commission.

ACTION:

Further notice of inquiry.

SUMMARY:

In connection with an ongoing inquiry, the Federal Maritime Commission (“FMC” or “Commission”) is seeking comments from the shipping public specifically with regards to recently proposed implementing rules of the Government of the People's Republic of China which may have an adverse impact on U.S. shipping, and which may merit Commission attention under section 19 of the Merchant Marine Act, 1920 or the Foreign Shipping Practices Act of 1988.

DATE:

Comments due on or before August 5, 2002.

ADDRESS:

Send comments (original and 15 copies) to: Bryant L. VanBrakle, Secretary, Federal Maritime Commission, 800 North Capitol Street, NW., Washington, DC 20573-0001, [phone], e-mail: [e-mail].

FOR FURTHER INFORMATION, CONTACT:

David R. Miles, Acting General Counsel, Federal Maritime Commission, 800 North Capitol Street, NW., Washington, DC 20573-0001 [phone].

SUPPLEMENTARY INFORMATION:

Background

This proceeding was initiated on August 12, 1998, to gather information regarding certain apparently restrictive laws, rules and regulations of the People's Republic of China (“PRC” or “China”) with the issuance of Information Demand Orders and a Notice of Inquiry. The Commission is attempting to compile a record in order to determine if further Commission action under section 19 of the Merchant Marine Act, 1920 or the Foreign Shipping Practices Act of 1988 is warranted.^[1] The Commission issued a Notice of Inquiry seeking information regarding the Regulations of the PRC on International Maritime Transportation (Regulations), promulgated on December 21, 2001 and effective January 1, 2002. 67 Fed. Reg. 11695-11696 (March 15, 2002). The Commission, in its effort to continue to monitor the issues identified in this proceeding, is now issuing this Further Notice of Inquiry.

Recently, the Ministry of Communications (“MOC”) issued a “Notice on Inviting Comments on the Implementing Rules for the Regulations of the People's Republic of China on International Maritime Transportation” (“Notice”) on June 21, 2002. This Notice, published on the MOC website (http://www.moc.gov.cn), together with the text of the proposed “Implementing Rules,” both in English, solicits comments in writing (via fax or email) by July 15, 2002.

The Commission is concerned that the proposed Implementing Rules may have significant effects on the companies currently operating in the U.S.-China trade, as well as the Commission's continuing review of potentially restrictive practices of the PRC. Therefore, the Commission is now issuing this Further Notice of Inquiry. The Commission may also formulate further Information Demand Orders, as appropriate, to ensure it has the most accurate information with regard to these issues, and so that it may in turn determine whether any current Chinese laws, rules, regulations or practices merit the initiation of a proceeding under section 19 of the Merchant Marine Act, 1920, or the Foreign Shipping Practices Act.

Discussion and Request for Comments

It appears that U.S. ocean transportation intermediaries, carriers and other transportation operators may face serious restrictions in obtaining the necessary licenses and permissions to do business in China. Indeed, it appears that wholly foreign-owned NVOCCs continue to be completely barred from engaging in a number of commercial activities, such as offering through transportation as an NVOCC. Other types of services may be permitted, but only if a foreign firm enters into a joint venture with a Chinese entity. It appears that these enterprises must be structured in such a way that the Chinese partner controls the majority of the joint venture and that Chinese nationals must control the highest levels of management. The Commission is also interested in hearing about any other impacts of the Implementing Rules on companies serving the U.S.-China trade.

The Commission is particularly seeking to establish a clear record of the likely or anticipated impact of these rules on the services U.S. NVOCCs are now permitted to perform in China, what activities are prohibited, what requirements or prerequisites are imposed and what, if any, detrimental effects these requirements and prohibitions have on U.S. companies doing business or seeking to do business in China. It would also be helpful to learn whether compliance with the Implementing Rules by ocean common carriers, agents or other entities has affected or is likely to affect the ability of U.S. NVOCCs to do business and serve customers in China and the U.S.

In light of the publication of the Notice and Implementing Rules by the Government of the People's Republic of China, the Commission encourages companies affected by the Regulations and the Implementing Rules to submit comments to MOC. The Commission would also welcome comments from any carrier, shipper, intermediary or any other party directly or indirectly affected by the Implementing Rules. Providing such comments will assist the Commission in measuring the effects of the Implementing Rules. Specifically, the Commission is seeking information with regard to how companies serving the U.S.-China trade will be affected by the Implementing Rules. Any supporting documentation would be especially welcome. Upon request, the Commission may hold information submitted in response to this Further Notice of Inquiry confidential, pursuant to 46 U.S.C. 876(h) and 46 U.S.C. 1710a(d)(3). The Commission cannot, however, ensure the confidentiality of documents submitted via e-mail due to the nature of such transmissions.

Persons who have commented on the Commission's prior NOI may wish to take this opportunity to supplement their comments, if necessary, in light of these new implementing rules.

Now therefore, it is ordered, that this Further Notice of Inquiry be published in the Federal Register.

By the Commission.

Bryant L. VanBrakle,

Secretary.

Footnotes

1.  Section 19 of the Merchant Marine Act, 1920, 46 U.S.C. app. § 876, authorizes and directs the Commission, inter alia, to “make rules and regulations affecting shipping in the foreign trade not in conflict with law in order to adjust or meet general or special conditions unfavorable to shipping in the foreign trade * * * which arise out of or result from foreign laws, rules, or regulations or from competitive methods or practices employed by owners, operators, agents, or masters of vessels of a foreign country* * * .” The Foreign Shipping Practices Act of 1988, 46 U.S.C. app. § 1710a, authorizes the Commission to investigate whether any laws, rules, regulations, policies, or practices of foreign governments, or any practices of foreign carriers or other persons providing maritime or maritime related services in a foreign country result in the existence of conditions that (1) adversely affect the operations of United States carriers in the United States oceanborne trade; and (2) do not exist for foreign carriers of that country in the United States under the laws of the United States or as a result of acts of United States carriers or other persons providing maritime or maritime-related services in the United States. If the Commission determines that such adverse conditions exist, it may take actions including limitations on sailings, suspension of tariffs, suspension of agreements, or fees not to exceed $1,000,000 per voyage.