China May Challenge US Proposed Vessel Fees at WTO

The USTR has proposed service fees of up to $1.5 million on vessels of Chinese origin calling at US ports. File Image / Pixabay

With the US seeking to impose fees on ships of Chinese origin calling at its ports, a legal battle between the two nations could be on the horizon, with China potentially challenging the measure at the World Trade Organization (WTO).

The US Trade Representative (USTR) has proposed service fees of up to $1.5 million on vessels of Chinese origin calling at US ports.

The fees could apply to both Chinese vessel operators and operators with Chinese-built ships.

Chinese maritime operators face up to $1 million per vessel entrance or $1,000 per net ton.

Meanwhile, operators of Chinese-built vessels will face charges ranging from $500,000 to $1 million per vessel entry into US ports, depending on the proportion of Chinese-built ships in their fleet.

The proposal could be considered discriminatory under the World Trade Organization rules, Amine Acar, managing partner at Sodac Acar Law, said in a LinkedIn post.

"China may challenge this measure under the Trade-Relates Investment Measures (TRIMs) agreement," Acar noted.

The 1982 United Nations Convention on the Law of the Sea (UNCLOS) upholds the principles of freedom of navigation and non-discrimination in international waters.

"Although the US is not a signatory to UNCLOS, such a policy shift could spark legal disputes over international trade balances," Acar added.

The USTR proposal stems from an investigation into China's growing influence in global shipbuilding, which was launched during President Joe Biden's term.

The investigation found that Chinese state subsidies have benefited its shipbuilding industry in gaining global domination.

If this proposal is enacted into law, it could make imports via Chinese-built vessels more expensive and potentially increase shipbuilding demand in Japan and South Korea.

Some argue that China could also potentially retaliate with similar actions, imposing charges on US-flagged or operated ships.

The USTR is now inviting public comments on its proposed measures targeting Chinese-built vessels and maritime operators. As part of the review process, the USTR will also hold a public hearing on March 24 to discuss the proposed actions.