[Congressional Record Volume 144, Number 79 (Wednesday, June 17, 1998)]
[Senate]
[Pages S6499-S6500]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

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                       CHINA'S MARITIME PRACTICES

 Mr. HOLLINGS. Mr. President, our country's relationship with 
the People's Republic of China is currently receiving a great deal of 
attention. One aspect of that relationship which is not getting enough 
attention is shipping.
  The United States has an open door to Chinese shipping. Chinese 
companies can call at any U.S. port. They do not need any government 
agency to approve their schedule, their ships, or changes to those 
deployments. They can open branch offices anywhere in the U.S. that 
they wish. They can provide vessel agency services to their own 
vessels. This U.S. policy has allowed Chinese shipping companies to be 
quite free and successful. COSCO, for example, which is owned by the 
People's Republic of China, is by far the largest ocean carrier in the 
U.S.-China trade and is a major carrier in other U.S. trades. The 
Chinese government wants the most favorable treatment for COSCO here in 
the U.S.; yet it continues to deny U.S. carriers operating in China the 
opportunities and privileges Chinese carriers receive here.
  Not only does Chinese shipping policy seek to control the trade 
rather than allow market forces to operate, but restrictions are 
becoming increasingly problematic. This lack of reciprocity is unfair.
  For example, access to ostensibly open ports in China is now solely 
at the discretion of the Chinese Ministry of Communications. While 
American carriers must endure long waits for an uncertain approval of 
whether and where they can operate, Chinese carriers are free to call 
at U.S. ports without having to face such conditions. Recent Chinese 
regulations make this process even more burdensome and contain the 
potential for huge penalties.
  U.S. carriers face restrictions on a host of normal commercial 
activities in China that Chinese carriers don't face here. For example, 
branch offices are restricted or prohibited. U.S. carriers cannot even 
provide normal vessel agency services to their own ships. This results 
in a considerably higher cost base for U.S. carriers versus their 
Chinese competitors.
  The Federal Maritime Commission and the Administration have been 
working on and encouraging a resolution of these problems, but 
insufficient progress has been made. Therefore, I have written to the 
FMC to encourage it to use the full range of its authority to 
investigate these matters.
  What is additionally very troubling to me--and what should be very 
troubling to the Chinese government if they value the government-to-
government negotiation process as a way to resolve differences--is the 
recent turn of events in the maritime bilateral negotiations between 
our governments. In December of last year some progress was made. An 
agreement was reached on some of the outstanding issues. The U.S. 
government has fulfilled its promises by the FMC giving COSCO an 
exemption from some of the Controlled Carrier Act restrictions. But the 
Chinese government has not yet honored its commitments, even though it 
had agreed to act simultaneously with the U.S. government. The 
Administration recognizes this. The FMC recognizes this. The Congress 
recognizes this.
  China's relationship with the U.S. is undermined when it fails to 
fulfill its promises. Our willingness to treat China favorably is 
undermined if the Chinese government's promises are illusory.
  Not only do I urge the FMC to investigate and take appropriate action 
in these maritime issues, but I urge the State Department to convey to 
the Chinese government the damaging effect of its current maritime 
posture on improved trade relations.
  Both our countries' trade relations are benefited by a liberalized 
shipping environment. An unbalanced lack of reciprocity cannot be 
sustained.
  Mr. President, I ask that my letters to Secretary Slater at the 
Department of Transportation and Chairman Creel at the Federal Maritime 
Commission be printed in the Record.
  The letters follow:
         U.S. Senate, Committee on Commerce, Science, and 
           Transportation,
                                    Washington, DC, June 16, 1998.
     Hon. Rodney E. Slater,
     Secretary, U.S. Department of Transportation, Washington, DC.
       Dear Mr. Secretary: I am writing with regard to the recent 
     trend toward maritime protectionism in the People's Republic 
     of China. Your Department, particularly the Maritime 
     Administration, has been actively engaged in negotiations 
     with the Chinese to eliminate many of the restrictions faced 
     by U.S. carriers in China. It is my understanding that, 
     unfortunately, progress has been slow. I find particularly 
     troubling the fact that the Chinese have failed to implement 
     a gentlemen's agreement arrived at last December with your 
     acting Maritime Administrator, John Graykowski.
       I am attaching a letter which I have sent to Harold Creel, 
     Chairman of the Federal Maritime Commission (FMC), asking the 
     FMC to investigate this matter. I am certain you will agree 
     that if the Chinese restrictions enumerated in this letter 
     are not addressed through bilateral consultation, the FMC 
     should act to impose countervailing sanctions on Chinese 
     carriers doing business in the United States. Hopefully, a 
     resolution can be reached before such steps are necessary.
       I trust that resolving these China maritime issues will be 
     among the Maritime Administration's highest priorities. The 
     Department and the Maritime Administration have my full 
     support in your continuing efforts to eliminate restrictions 
     which hinder the competitiveness of U.S. carriers in China.
       With kindest regards, I am
           Sincerely,
                                               Ernest F. Hollings,
                                                 Ranking Democrat.

[[Page S6500]]

     
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         U.S. Senate, Committee on Commerce, Science, and 
           Transportation,
                                    Washington, DC, June 16, 1998.
     Hon. Harold J. Creel, Jr.,
     Chairman, Federal Maritime Commission, Washington, DC.
       Dear Mr. Chairman: Unfortunately over the past year, the 
     maritime relationship between the United States and the 
     People's Republic of China has deteriorated dramatically. 
     This has resulted from a series of restrictive measures taken 
     by the Chinese Ministry of Communications (MOC) aimed at 
     limiting the activities of foreign shipping lines in China. 
     At the same time, China's state-owned line, China Ocean 
     Shipping Company (COSCO), has grown to become one of the 
     largest, most successful carriers serving U.S. liner trades.
       COSCO operates and competes freely and openly in the United 
     States while our carriers face costly, anticompetitive 
     restrictions in China. These restrictions include: (1) a 
     cumbersome and lengthy approval process for vessel or 
     itinerary changes; (2) limits on the number and location of 
     branch offices for U.S. carriers in China; (3) limits on U.S. 
     carriers ability to provide intermodal transport to inland 
     customers; and (4) a prohibition barring U.S. carriers 
     provision of vessel agency services. All of these costly 
     restrictions make it extremely difficult for U.S. carriers to 
     effectively compete in the Chinese market. Conversely, COSCO 
     faces no similar restrictions in the United States.
       U.S. negotiators from the Departments of Transportation and 
     State have worked to bring reciprocity and fairness to our 
     bilateral maritime relationship with China. To date these 
     efforts have been for the most part unsuccessful. One glimmer 
     of hope was December's ``gentlemen's'' agreement struck 
     between our acting Maritime Administrator and the Chinese 
     Director General for Water Transport from MOC to remove some 
     of the roadblocks to an improved relationship.
       On the United States side, MarAd and the U.S. carriers 
     supported a petition by COSCO to your Commission for partial 
     relief from the Controlled Carrier Act. The FMC fully granted 
     that petition in March. However, the Chinese side has yet to 
     keep their part of the agreement: to approve U.S. carrier 
     port access and vessel registration applications and to grant 
     a joint venture port operating license to a U.S. carrier. As 
     a result of this breach, talks aimed at finalizing a new 
     bilateral maritime agreement have broken down and U.S. 
     carriers continue to face costly, burdensome restrictions to 
     their operations in China.
       Mr. Chairman, as you know, I have long been an advocate for 
     fairness and reciprocity in our maritime relationships. I 
     find the situation with China unacceptable. I urge you to 
     act, as you have so effectively in the past, to investigate 
     these matters and encourage China to remove these 
     restrictions so that U.S. carriers can compete as freely and 
     openly in China as COSCO competes here. I am confident that, 
     as in the past, you can count on the full support of the 
     Senate.
       With kindest regards, I am
           Sincerely,
                                               Ernest F. Hollings,
     Ranking Democrat.

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