The Office of the U.S. Trade Representative’s (USTR) Office has announced revisions to the Section 301 fees on Chinese-owned or -operated vessels. The original proposal would have resulted in millions of dollars of fees per vessel, thus lowering commodity prices. The revisions, however, have some key exemptions that are net positive for U.S. agriculture.
Mike Steenhoek, executive director of the Soy Transportation Coalition, says one of the key amendments exempts ocean vessels that come to the U.S. empty, or just in ballast, and are then loaded with bulk commodities.
“We were very happy to see these bulk exports being exempt from that because a lot of the exports of soybeans, of grain and of other bulk commodities leaving the United States are serviced by ships that will come to this country empty. You don’t usually have a full front half and a full back half,” he says.
This means U.S. soybeans exported to China won’t be subject to the fees and neither will shorter routes.
According to Steenhoek, the original proposal also stipulated a fee of $500,000 up to $1.5 million on each port of call in the U.S. This was also eliminated.
“The significant impunitive fee would only compound and make sure the whole supply chain would really be rendered null and void,” he explains.
U.S. red meat exporters agree the revised plan is a big improvement, especially with fees based on a per voyage basis and vessel capacity.
“There will be a fee assessment schedule based on net tonnage versus charging a flat fee for every port of call,” says Dan Halstrom, president and CEO, U.S. Meat Export Federation.
This structure will also make it less burdensome for smaller ships used on shorter routes to key destinations.
“For Central America, Colombia, for example, on U.S. beef and pork, the schedule is much more attractive in terms of fees and a lower per-pound basis impact. We’re very encouraged that USTR has made these adjustments,” Halstrom says.
The original proposal was designed to shift shipmaking back to the U.S., but farmers say the infrastructure isn’t in place to support that.
“It sounds great in theory, and we can support domestic trade, internal growth, but realistically, we don’t have the ability to start making all these ships in the U.S. A good theory but poor practice,” says Tanner Hento, a Avon, S.D., farmer who also serves on the South Dakota Soybean Association.
The fees won’t be implemented for 180 days and are open for comment, which leaves time for further adjustment.
Unfortunately, according to Steenhoek, this won’t offset the escalation of the Chinese trade war on U.S. goods — which has essentially put a stop to trade.
