EU concerned about US port fees for Chinese ships; seeks measures against unfair competition

The EU has warned of potential disruptions to global supply chains due to the US' proposed port fees on Chinese ships while calling for joint measures against "unfair competition" within the shipbuilding industry.

The US Trade Representative on March 24 and 26 held public hearings over its proposal of charging up to $1.5 million per entrance to US ports on ships built by Chinese yards or operated by Chinese firms.

In a written submission to the USTR, the EU said the measures are expected to lead to "logistical disruptions, inflated costs, and prolonged delivery times" even as the bloc shared some of Washington's concerns over unfair competition.

The fees "could have substantial and unjustified extraterritorial repercussions," the EU wrote. "While it is not yet possible to fully quantify the exact impact of these measures, the list of potential unintended consequences and costs is long and substantial."

Shipping companies, oil producers, farmers and retailers, among others, have said the proposal would lead to significantly higher freight costs for US importers and exporters and altered cargo flows, with Chinese ships accounting for a high proportion in global maritime trades.

Chinese-built ships make up just below 30% of the world's containership fleet, over 45% of dry bulk fleet, nearly 24% of tanker fleet, and almost 10% of gas fleet, according to S&P Global Energy analysts.

The EU's stance comes as Brussels prepares to unveil several policy packages aimed at enhancing the competitiveness of European shipping companies, shipyards and marine equipment makers later this year, with industry challenges arising from decarbonization requirements and rising geopolitical tensions.

Trade dynamics

European shipowners are some of the largest clients of shipyards in China, which has grown to become the world's largest shipbuilding nation following years of state support. China is one of the largest markets for European marine equipment manufacturers.

At the same time, the EU and the US are each other's largest trading partners by far when goods, services and investment are taken into account.

"The global shipbuilding sector is characterized by unfair competition such as predatory pricing behavior by firms located in jurisdictions that provide ample non-market-oriented subsidization," the EU said.

However, Brussels urged the US to engage in "cooperative engagement" with like-minded partners to address challenges in the strategic maritime sector "without undermining transatlantic trade ties" instead of unilateral measures.

The EU emphasized its readiness to collaborate with the US on "mutually beneficial solutions" ensuring resilience and security in civil and naval shipbuilding, ship repairing and maintenance, and logistics sectors.

"We believe that it is possible to address shared challenges effectively and tackle concerns over unfair practices, without such actions being to the detriment of transatlantic trade ties or of EU and US business and consumer interests," it said.