USTR Says Chinese Shipbuilding Should Be Countered
The Office of the U.S. Trade Representative concluded that China's intervention in its shipbuilding and logistics sectors -- and its plans for dominance in shipbuilding -- unreasonably burden and restrict U.S. commerce.
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The Section 301 investigation, which took nearly nine months to complete, didn't make any recommendations on what economic leverage should be brought to bear to convince China to change its practices, though it said a response is appropriate. A news release accompanying the report said, "Any determination on responsive actions would be considered in the next stage of the investigation."
The top Democrat on the House Ways and Means Committee, and the ranking member of the Trade Subcommittee, issued a statement Jan. 17, reacting to the report's conclusions. "Today’s report by the Biden Administration confirms an unquestionable truth: China’s unfair trade practices continue to threaten our supply chains, workers’ rights, and international competition and cooperation. It also amplifies the importance of a national shipbuilding strategy that will bolster our national security and bring good-paying union jobs back to our shores to strengthen our economy," they said.
Rep. Jared Golden, D-Maine, along with the Congressional Labor Caucus, asked the next administration to act on the investigation's conclusions. "The results of the Biden Administration’s shipbuilding investigation confirm that, for too long, China has been using tactics like state-sponsored subsidies and anti-competitive practices to cheat and undercut American shipbuilding. It’s time for bold action to address China’s unfair practices and rebuild our shipbuilding industry -- not only to create good-paying jobs, but also to bolster our national security and supply chains. We urge the incoming Administration to heed the results of this investigation and to implement the strongest possible measures to level the playing field for American shipbuilding workers," they said in a news release.
The investigation found that China's economic planning in the maritime, logistics and shipbuilding sectors "displaces foreign firms, deprives market-oriented businesses and their workers of commercial opportunities, and lessens competition."
As a result, other economies are dependent on China, which increases risk, the report said.
The investigation said the Chinese government directs and influences companies in these sectors "in pursuit of its targeted dominance, in ways that run counter to fair competition and market-oriented principles."
As a result, U.S. firms are undercut, U.S. importers have less choice in carriers, and the U.S. as a whole faces "economic security risks from dependence and vulnerabilities in sectors critical to the functioning of the U.S. economy."
The investigation noted that the U.S. "produces only a fraction of one percent of the world’s commercial vessels, falling to 16th place globally," since there is no longer government support for commercial shipbuilding.
"China’s industrial capacity and production in the maritime, logistics, and shipbuilding sectors is now so large that it vastly exceeds the capacity of not just the United States, but the combined output of our Asian and European allies as well. This undermines the viability of investments by market-oriented industries in the United States and other like-minded partners," the report said.