Washington, DC – The U.S. Trade Representative has issued findings in the Section 301 investigation of the People’s Republic of China’s (PRC) targeting the maritime, logistics, and shipbuilding sectors for dominance, concluding that the PRC’s targeted dominance in these sectors is unreasonable and burdens or restricts U.S. commerce, and is therefore “actionable” under Section 301.
“Today, the U.S. ranks 19th in the world in commercial shipbuilding, and we build less than 5 ships each year, while the PRC is building more than 1,700 ships. In 1975, the United States ranked number one, and we were building more than 70 ships a year,” Ambassador Katherine Tai said. “Beijing’s targeted dominance of these sectors undermines fair, market-oriented competition, increases economic security risks, and is the greatest barrier to revitalization of U.S. industries, as well as the communities that rely on them. These findings under Section 301 set the stage for urgent action to invest in America and strengthen our supply chains.”
The determination is supported by a comprehensive report, which is available here.
USTR’s investigation found the PRC’s targeting for dominance unreasonable because it displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition and creates dependencies on the PRC, increasing risk and reducing supply chain resilience. The PRC’s targeting for dominance is also unreasonable because of Beijing’s extraordinary control over its economic actors and these sectors.
USTR further found that PRC targeting for dominance burdens or restricts U.S. commerce by undercutting business opportunities for and investments in the U.S. maritime, logistics, and shipbuilding sectors; restricting competition and choice; creating economic security risks from
dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy; and undermining supply chain resilience.
As the petitioner U.S. unions have highlighted, the entrenchment of the PRC’s dominance means that U.S. international trade is “carried out on vessels made in China, financed by state-owned Chinese institutions, owned by Chinese shipping companies, and reliant on a global maritime and logistics infrastructure increasingly dominated by China.”
The Federal Register notice summarizing the determinations is available at the following link.
The results of this investigation provide a basis for finding that responsive action is appropriate. Any determination on responsive actions would be considered in the next stage of the investigation.
Background
Section 301 of the Trade Act of 1974, as amended, (Trade Act) is designed to address unfair foreign practices affecting U.S. commerce. Section 301 may be used to respond to unjustifiable, unreasonable, or discriminatory foreign government acts, policies, and practices that burden or restrict U.S. commerce. The Section 301 provisions of the Trade Act provide a domestic procedure through which interested persons may petition the U.S. Trade Representative to investigate a foreign government act, policy, or practice and take appropriate action.
On March 12, 2024, five national labor unions filed a petition requesting an investigation into the acts, policies, and practices of China targeting the maritime, logistics, and shipbuilding sectors for dominance. The five petitioner unions are:
• the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO CLC (“USW”);
• the International Association of Machinists and Aerospace Workers (“IAM”);
• the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO/CLC (“IBB”);
• the International Brotherhood of Electrical Workers (“IBEW”); and
• the Maritime Trades Department, AFL-CIO (“MTD”).
The petition was filed pursuant to Section 302(a)(1) of the Trade Act (19 U.S.C. § 2412(a)(1)), requesting action pursuant to Section 301(b) (19 U.S.C. § 2411(b)).
Pursuant to Section 302(a)(2) of the Trade Act (19 U.S.C. § 2412(a)(2)), the U.S. Trade Representative reviewed the allegations in the petition and determined to initiate an investigation regarding the issues raised in the petition. On April 17, 2024, the U.S. Trade Representative requested consultations with the government of China pursuant to Section 303 of the Trade Act, (19 U.S.C. § 2413).
Upon finding that the act, policy, or practice is actionable under section 301 of the Trade Act, the U.S. Trade Representative must determine what action, if any, to take in order to obtain the elimination of that act, policy, or practice. The determination on any responsive actions would be considered at a later date in the next stage of the investigation.
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