[Federal Register Volume 62, Number 42 (Tuesday, March 4, 1997)]
[Rules and Regulations]
[Pages 9696-9704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5233]
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FEDERAL MARITIME COMMISSION
46 CFR Part 586
[Docket No. 96-20]
Port Restrictions and Requirements in the United States/Japan
Trade
AGENCY: Federal Maritime Commission.
ACTION: Final rule.
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SUMMARY: The Federal Maritime Commission, in response to unfavorable
conditions in the foreign oceanborne trade between the United States
and Japan, is imposing $100,000 per-voyage fees on liner vessels
operated by Japanese carriers calling at United States ports. The
unfavorable conditions identified by the Commission involve
restrictions on and requirements for use of Japanese ports. These
conditions arise out of or result from laws, rules, and regulations of
the Government of Japan.
DATES: Effective Date: April 14, 1997.
ADDRESSES: Requests for publicly available information or additional
filings should be addressed to: Joseph C. Polking, Secretary, Federal
Maritime Commission, 800 North Capitol Street, N.W., Washington, D.C.
20573, (202) 523-5725.
FOR FURTHER INFORMATION CONTACT: Thomas Panebianco, General
Counsel, Federal Maritime Commission, 800 North Capitol Street, N.W.,
Washington, D.C. 20573, (202) 523-5740.
SUPPLEMENTARY INFORMATION:
Background
On November 6, 1996, the Commission proposed a rule, pursuant to
section 19(1)(b) of the Merchant Marine Act, 1920, 46 U.S.C. app.
876(1)(b) (``Section 19'') to assess fees on Japanese liner operators
in response to requirements and restrictions on the use of Japanese
ports.1 In the Notice of Proposed Rulemaking, 61 FR 58160, Nov.
13, 1996, (``Notice'') the Commission stated that the Government of
Japan appeared to discriminate against U.S. carriers by not licensing
non-Japanese companies to perform stevedoring or terminal operating
services. The Commission further found that the Government of Japan,
through its licensing practices and other support, appeared to protect
the dominant position of the Japan Harbor Transportation Association
(``JHTA''), the trade organization that wields broad control over the
Japanese harbor services industry. The Commission explained that JHTA's
authority over Japanese harbor services stemmed from its administration
of the prior consultation system, a process of mandatory discussions
and pre-approvals for ocean carrier operational plans. In response to
these conditions, the Commission proposed to levy a per-voyage fee of
$100,000 each time a liner vessel owned or operated by one of the three
Japanese liner operators serving U.S. trades (Kawasaki Kisen Kaisha,
Nippon Yusen Kaisha, and Mitsui O.S.K. Lines) enters a U.S. port from
abroad.
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\1\ Section 19 authorizes and directs the Commission to ``make
rules and regulations affecting shipping in the foreign trade not in
conflict with law in order to adjust or meet general or special
conditions unfavorable to shipping in the foreign trade, whether in
any particular trade or upon any particular route or in commerce
generally, including . . . terminal operations . . . which arise out
of or result from foreign laws, rules, or regulations or from
competitive methods or practices employed by owners, operators,
agents, or masters of vessels of a foreign country . . . .''
The rules and regulations the Commission is authorized to make
include limitation of sailings, suspension of carriers' tariffs or
rights to use conference tariffs, suspension of carriers' rights to
operate under FMC-filed terminal and other agreements, fees of up to
$1,000,000 per voyage, or any other action deemed necessary and
appropriate to adjust or meet the unfavorable condition. 46 U.S.C.
app. 876(9).
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The closing date for comments, originally set for January 13, 1997,
was extended to January 20, 1997, to allow parties to address the
outcome of maritime consultations held between the United States
Government and the Government of Japan on January 6-7, 1997.
Comments
American President Lines and Sea-Land Service
Joint comments strongly supporting the proposed rule were filed by
American President Lines, Ltd. (``APL''), and Sea-Land Service, Inc.
(``Sea-Land''), the two U.S. carriers operating in the Japan trade.
Those lines stated:
The premise on which [the proposed rule] rests is indisputable,
namely, that the government of Japan has, through its discriminatory
licensing system in the harbor services industry, created conditions
unfavorable to shipping in the U.S.-Japan trade. As accurately
recounted in the Supplementary Information to the Notice, the
stevedoring and terminal services providers in Japan are licensed by
the Ministry of Transport (``MOT'') in a largely discretionary
process and are exclusively Japanese entities. Also, [JHTA]
functions as a trade association of such providers with the approval
of MOT. The activities of the JHTA, in which MOT have long
acquiesced, are characterized by blatant anti-competitive practices
including those at issue in this and prior proceedings of the
Commission.
APL/Sea-Land Comments at 1-2.
The U.S. carriers explained that the need for changes in Japanese
port practices is becoming more urgent:
In years past, when carriers performed their individual vessel
and terminal operations, JHTA-imposed inefficiencies were merely an
unwelcome set of phenomena. However, difficult market conditions in
the trans-Pacific trade in general and in the U.S.-Japan trade in
particular have forced carriers to enter into reciprocal slot
charter and terminal rationalization arrangements in order to
increase service competitiveness while lowering costs. Thus, when an
economically-driven redeployment of the assets of several carriers
operating under a strategic alliance is frustrated or delayed by the
absolute control and abuse of power of the JHTA in Japan over
[[Page 9697]]
every operational aspect of the alliance, the need for reform
becomes acute.
APL/Sea-Land Comments at 4.
APL and Sea-Land also pointed out that other foreign carriers
serving Japan are being adversely affected as well. They noted that the
European Commission, at the behest of European carriers, has urged the
Government of Japan for years to secure the elimination of port
restrictions. It was also pointed out that in October of last year, the
European Commission filed a formal complaint with the World Trade
Organization regarding the prior consultation process and JHTA's ``de
facto monopoly on stevedoring in Japan.''
The U.S. carriers opined that the amount of the sanction proposed
by the Commission, $100,000 per voyage, is reasonable under the present
circumstances. According to those lines, the sanction ``is an
assessment which is far less than the economic impact on the U.S.
Carriers of the cumulative adverse effects of the prior consultation
system, that is, the abuse of unbridled market power by the harbor
services industry in Japan.'' APL/Sea-Land Comments at 3. However, the
U.S. carriers suggested that, if JHTA were to retaliate against U.S.
carriers in response to the actions taken by the Commission, either
directly or through labor disturbances, the severity of sanctions
should be increased substantially. Similarly, they urged that if the
Government of Japan or its instrumentalities take any retaliatory
action against the U.S. carriers in response to actions taken by the
Commission, the severity of sanctions should also be increased.
The sanctions should be continued until U.S. carriers are licensed
to perform stevedoring and terminal operating services co-extensive
with those performed by licensed entities in Japan and by Japanese
carriers and their affiliates in U.S. ports, the U.S. carriers
recommended. Moreover, they argued that they must be free to operate
as, or contract for the operation of, stevedores and terminal operators
independent of JHTA's system of prior consultation. They also
maintained that any remaining conspiracy by the Japan harbor services
monopoly to injure or eliminate competition from the new licensees, or
to deprive new licensees of a supply of skilled labor, would merit
continuing sanctions.
APL and Sea-Land also reported on consultations between the
Government of Japan and the United States in Washington on January 6-7,
1997, concerning prior consultation, licensing, and other Japanese port
practices. According to the U.S. lines, the Japanese delegation to
these talks recited the view that the practices in question were purely
commercial matters, and the talks adjourned without an agreement of any
kind having been reached.
International Chamber of Commerce
Comments in support of the proposed rule were submitted by the
Commission on Maritime Transport of the International Chamber of
Commerce (``ICC-CMT''). The comments indicated that the ICC-CMT is made
up of representatives of all segments of the maritime sector, including
carriers, shippers, forwarders and port interests from around the
world.
The ICC-CMT raised the following concerns: (1) Limited competition
in Japan's harbor services creates port costs which are arguably among
the highest in the world; (2) carriers are subjected to a system of
prior consultation with the JHTA which makes it difficult to
effectively improve service or reduce costs; and (3) shippers are
forced to absorb some of the very high costs which result from these
restrictions. The comments expressed hope that the Government of Japan
will see to it that port services are opened to competition, and
indicated support for all governmental efforts to remove restrictions
and assure free and fair trade in maritime transport services.
Japan Foreign Steamship Association
The Japan Foreign Steamship Association (``JFSA''), the
organization of non-Japanese shipping lines in Japan, submitted a copy
of a position paper urging specific and detailed changes in Japanese
port policies and practices.
JFSA represents the interests of the foreign carriers (including
the U.S. lines) in prior consultation and other dealings with JHTA.
According to a cover letter included in its submission, JFSA's position
paper was provided to the Director General of the Maritime Transport
Bureau, Ministry of Transport (``MOT''), for consideration at a MOT-
chaired meeting between JFSA, the Japanese Shipowners' Association, and
JHTA, held January 29, 1997.
JFSA in its position paper proposed a number of changes to the
prior consultation system. Under the JFSA plan, shipping lines would be
permitted to consult or negotiate directly with their stevedoring
companies, rather than be required to submit their operational plans to
JHTA for approval. Stevedore companies would then consult (either on
their own or, if they choose, through JHTA), with labor. JFSA also
urged that the requirement for prior consultation be limited to ``major
issues,'' defined as arrangements for rationalization requiring changes
in ports, terminals, or berths, that may seriously affect the
employment of port laborers, rather than all operational changes, as is
currently the case.
In addition, JFSA requested a commitment from MOT, JHTA and its
member companies that prior consultations will not be used as a tool
for allocating business among member companies, and that prior
consultation will never be required for individual business
transactions between carriers and stevedoring companies. JFSA proposed
procedural rules for prior consultation, including time limits and
requirements that decisions be explained in writing. According to JFSA,
MOT should be responsible for implementation and enforcement of the
revised process, and disputes over operation of the process should be
referred to a standing arbitration body nominated by all parties and
supervised by MOT.
JFSA urged that, within a reasonable time period, carriers be
allowed to freely select stevedore and terminal service companies, and
be allowed to obtain unrestricted general stevedore licenses at any or
all Japanese ports. The present system of regulated rates, according to
JFSA, should be abolished to allow for competitive bidding for port
services. In addition, JFSA proposed the implementation of permanent
Sunday work, including terminal and gate services, and 24-hour port
operations.
According to JFSA, the proposed changes would ``insure fair and
equitable commercial operating conditions comparable to those now
enjoyed in U.S. and European international trades by Japanese shipping
companies.'' The changes were said to be necessary to secure fair and
reasonable business practices, protect the significant investment of
shipping lines, ascertain a satisfactory service environment for
Japanese export and import industry, and maintain and assure sufficient
work volume to satisfy labor requirements.
American Association of Exporters and Importers
The American Association of Exporters and Importers (``AAEI'')
stated that ``the port practices in question supported by Japanese
government regulations are trade restrictive practices working against
the interests of U.S. (and all other) shippers.'' AAEI also
acknowledged that the practices in question fall within the
Commission's jurisdiction.
However, AAEI stated that it believes the practices at issue place
Japan in
[[Page 9698]]
violation of World Trade Organization (``WTO'') rules, and followed
that ``the United States has both the obligation and the long term need
to settle its trade disputes, in areas covered by WTO rules, through
WTO dispute settlement channels.'' Accordingly, AAEI proposed a
procedure whereby the Commission, before taking any action, would join
with the Office of the United States Trade Representative to ``satisfy
themselves that these . . . port practices . . . are in violation of
WTO rules.'' If so satisfied, AAEI would have the Commission take no
action while the U.S. sought to resolve these matters through the WTO;
otherwise, the agencies would jointly issue an explanation of why WTO
rules did not apply, ``in order to justify'' FMC action.
AAEI also asked that the Commission perform an impact study of the
costs to the U.S. business community of cargo diversion to Canadian
ports which, according to AAEI, might occur as a result of the
Commission's action.
Port of Portland
The Port of Portland, located in Portland, Oregon, raised three
points concerning the proposed rule. First, it suggested that the
Commission should clarify whether the $100,000 fee would be assessed on
a ``per port call'' basis, or on a ``per voyage'' basis. Second, it
suggested that the Commission consider and publish additional steps the
Government of Japan might take to avert the imposition of sanctions.
Finally, the Port of Portland expressed concern that the proposed
sanctions could lead to the diversion of vessel calls to non-U.S. ports
in Mexico and Canada. The Port of Portland urged the Commission to
consider and publish alternative sanctions that would not create such a
risk.
Japanese Shipowners' Association
The Japanese Shipowners' Association (``JSA'') stated that it is an
association domiciled in Japan of 147 shipping companies doing business
both in the ocean worldwide trades and in Japan's domestic trades. The
JSA indicated that it is ``curious to know why our leading members are
to be penalized where they are not accused of any misconduct and where
the allegations in the Notice are as vague as they are groundless.''
JSA went on to state:
Our understanding is that the Japanese Ministry of Transport has
never received an application from a U.S. carrier, that the
licensing law has not been administered to discriminate against the
nationality of an applicant, that no MOT official was authorized to
advise any U.S. carriers not to apply for a license and that,
according to the Association's inquiry, no such advice was ever
given by a responsible MOT official.
Unilateral sanctions proposed against entities having no
responsibility could lead to only confusion, as well as to a
precedent detrimental to the future of U.S./Japan trade
relationships.
Mitsui O.S.K. Lines, Kawasaki Kisen Kaisha, and Nippon Yusen Kaisha
Opposition to Sanctions
Comments and a memorandum opposing the proposed rule were jointly
filed by Mitsui O.S.K. Lines, Ltd. (``MOL''), Kawasaki Kisen Kaisha,
Ltd. (``K-Line''), and Nippon Yusen Kaisha (``NYK''), the three
Japanese liner carriers operating in the U.S. trades. Those lines, as
an initial matter, stated that they are private companies, that they
are not in a position to direct or control the policies and actions of
the Ministry of Transport, and that they ``deplore a statutory
application which would punish us irrespective of the lawful character
of our carrier operations in the Japan/U.S. oceanborne trades.'' MOL/K-
Line/NYK Comments at 4.
The Japanese carriers indicated that they will be severely injured
by the threatened sanctions. Based on 1996 vessel operations, during
which sailings were said to have averaged 34 per month, imposition of
the proposed $100,000 fee reportedly would cost the Japanese lines 3.5
to 4 million dollars per month in 1997, approximately 42 to 45 million
dollars per year.
Licensing
The Japanese carriers challenged the Commission's proposed finding
that the Ministry of Transport uses its licensing authority to restrict
entry and to shield JHTA and its members from foreign competition. They
asserted that the Government of Japan has never discriminated against
U.S. carriers with regard to the issuance of licenses, and that MOT has
never advised U.S. carriers on the matter of licensing or received an
application from a U.S. carrier.
The Japanese carriers stated that there is no ownership restriction
in the Port Transportation Business Law which would bar a U.S. carrier
applicant based on nationality. According to MOL, NYK and K-Line, the
supply-demand requirement in the law was enacted as an internal measure
to promote tranquility at the waterfront; ``while this restriction
inherently serves to place a limit at some point on the number of
licenses the ministry can grant, it is a limit when reached that would
apply to any applicant regardless of its nationality.'' MOL/K-Line/NYK
Memorandum at 2-3. They asserted that MOT has offered written assurance
that a U.S. carrier's application ``would be fairly and evenly adjudged
under the same standards as Japanese applications. . . .'' Id. at 2.
The Japanese carriers argued that the ``basis'' and ``linchpin'' of
the Commission's proposed action is the ``single undocumented
assertion'' that U.S. carriers have been shut out of the Japanese
stevedoring market and advised not to bother to apply, and contended
that no legal or factual support is presented to substantiate these
findings. Id. at 2; MOL/K-Line/NYK Comments at 5. They urged the
Commission to discontinue the proceeding on the basis that ``sanctions
under section 19 simply cannot be applied absent a demonstration by
substantial evidence of discrimination against U.S. carriers.'' MOL/K-
Line/NYK Memorandum at 4. They further asserted that the Commission
violated section 553(b)(3)(c) of the Administrative Procedure Act, 5
U.S.C. 553(b)(3)(c), and contravened the carriers' protections of the
Due Process Clause of the Fifth Amendment, by failing to disclose
factual information such as the timing and circumstances under which
inquiries regarding licenses were made, the names of relevant carrier
and MOT officials, and accounts of the exchanges. The Japanese carriers
urged the Commission to release any such details and to allow an
opportunity for comment on them.
The Japanese carriers suggested that the Government of Japan is
taking steps to address the licensing-related concerns raised by the
Commission. They indicated that in December, 1996, MOT announced a
proposal to abolish the licensing system over a three-to-five year
period. Attached to the comments was a newspaper article outlining
MOT's plan, indicating that prior to any action the proposal would be
deliberated at the administrative reform committee and studied at the
Council for Transport Policy. Furthermore, the article stated that, as
a precondition for such a move, ``measures for ensuring the stable
management of ports are necessary.'' MOL/K-Line/NYK Comments,
Attachment 3. However, the Japanese lines pointed out that MOT's
announcement was met with opposition by waterfront labor unions,
suggesting need for a period of time before the intended changes can be
made.
Prior Consultation
The Japanese carriers read the Notice to propose that only the
Government of Japan's licensing practices, and not
[[Page 9699]]
prior consultation, contravene the standards set forth in section 19:
[T]he Commission's Notice observes that it is the Ministry of
Transport's discriminatory and restrictive licensing which would
``appear'' to constitute conditions unfavorable to shipping. Though
critical of the procedural aspects of the Prior Consultation system
and MOT's alleged exercise of authority as to permit JHTA to wield
``unchecked authority'' through the Prior Consultation process, we
read the Notice as not concluding that the system itself is a
condition which is unfavorable to shipping.
MOL/K-Line/NYK Comments at 10. Nevertheless, they maintained that
the Commission has inaccurately characterized the prior consultation
system.
MOL, NYK and K-Line suggested that the Commission failed to
distinguish between the system of prior consultation itself, which they
asserted enjoys the support of both Japanese and non-Japanese carriers,
and the way it is administered, which they conceded is in need of
reform. They reviewed the procedures for prior consultation:
[M]atters related to innovated services which affect port
laborers are negotiated first between the shipping company (or JSPC
or JFSA) and JHTA and then JHTA and the harbor workers' Unions.
Under the procedures followed since 1986, matters are proposed for
prior consultation through the submission of a written application
by the shipping company. * * * The initiation of this process is
known as ``pre-prior consultation'' under which the matter proposed
is considered at a meeting attended by JHTA's Chairman and some of
its prior consultation committee members and the shipping company
applicant.
Once a matter passes pre-prior consultation and has been
accepted by JHTA for Prior Consultation, it is deliberated between
JHTA and the Unions, first, at the ``Central'' or national level and
then at the local level. Under these procedures, therefore, there
are no direct negotiations between shipping companies and the harbor
worker unions, thus reducing the prospect of labor conflicts and
confrontations.
MOL/K-Line/NYK Comments at 11-12.2
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\2\ ``JSPC'' refers to the Japanese Shipowners Ports Council,
the component of the Japanese Shipowners' Association that deals
directly with harbor service-related matters. JSPC often serves as
the voice of the Japanese lines in prior consultation and other
dealings with JHTA.
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The Japanese lines suggested that the prior consultation system was
developed to resolve the conflicting objectives of shipping companies
and shoreside laborers and to avoid the debilitating confrontations of
the past. They asserted that they are aware of no other system that
offers a better prospect for labor peace. Pointing to the 1986 boycott
of YS Line vessels described in the Notice, they claimed that
waterfront unions support prior consultation and are willing to take
whatever steps are necessary to defend it.
MOL, NYK and K-Line stated that over the past year parties began to
address the flaws in the current system. They described negotiations
between shipping lines and JHTA regarding transparency and
simplification of procedures, and pointed to an agreement signed in
August, 1996, confirming the necessity of prior consultation and
establishing new procedures and time limits to accelerate the process.
The Japanese carriers also stated that the Commission did not
properly characterize the role of MOT with regard to the prior
consultation system. They contended that prior consultation is a
private sector business practice, and that MOT has no interest in its
continuation, other than labor peace and the smooth running of Japan's
ports. According to the Japanese carriers, MOT's only involvement with
the system has come when carriers have asked it to bring about the
restoration, continuance, and improvement of the system. They
maintained that MOT treats prior consultation negotiations as matters
for the private sector, except when they break down, at which point MOT
may become involved as a catalyst. This is because, according to MOL,
NYK and K-Line, under Japanese labor laws, there is a policy of non-
interference in employer-union bargaining.
The Japanese lines stated that the 1992 Ministerial View referred
to in the Notice was not an endorsement of JHTA's activities; rather,
it ``merely called for respect for the existing system regarding the
operations of existing container terminals which procedures had been
privately negotiated by the parties.'' MOL/K-Line/NYK Comments at 19.
The Japanese carriers also pointed out that MOT has endeavored to
arrange meetings of interested carrier parties and JHTA with the aim of
improving the prior consultation process.
Port and Terminal Interests
After the comment period closed, the Commission received a number
of closely similar or identical comments from various port and terminal
interests, including H&M International Transportation, Inc.; the Port
of Seattle; the Port Authority of New York and New Jersey; the
Jacksonville Port Authority; Cronos Containers Inc.; Ceres Terminals
Inc.; Georgia Ports Authority; and the Port of Oakland.3 These
comments urged that the Commission stay final action, or reduce or
revise the proposed sanctions. The commenters raised the concerns that
the Japanese carriers would divert sailings to non-U.S. ports or ``load
center'' operations at a single U.S. port. Several of these commenters
suggested that it is unfair to penalize Japanese carriers for Japanese
port conditions, when the carriers have invested millions of dollars in
U.S. terminals, inland facilities, equipment, and ships. Jacksonville
Port Authority expressed concerns that the rule would negatively affect
the Japanese-flag auto carriers that call there.
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\3\ The Commission has determined to accept these comments into
the record.
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Discussion
Licensing
The Japanese carriers appear to have taken the position, first,
that the sole basis for the Commission's proposed finding of conditions
unfavorable to shipping is the Government of Japan's reportedly
restrictive and discriminatory licensing practices, and second, that
MOT has never actually acted discriminatorily in issuing licenses.
Therefore, they concluded, the proposed rule should be withdrawn.
However, both aspects of the Japanese lines' argument are without
foundation or merit.
It is clear from the Notice that the administration of the
restrictive licensing requirement is not the sole unfavorable condition
at issue in this proceeding. Rather, the Commission listed in section
586.2(a)(1-4) of the proposed rule, and explained in detail in the
Supplementary Information, an extensive series of apparent unfavorable
conditions. These conditions included MOT's refusal to grant U.S.
carriers licenses, with the result that U.S. carriers have no choice
but to submit their shoreside planning and operations to JHTA control;
however, several other conditions were set forth as well, including
JHTA's use of the prior consultation system to control competition in
the harbor services market, impose restrictions on carrier operations,
and force carriers to take on unnecessary stevedoring companies.
There is also little apparent basis for the Japanese carriers'
challenges to the Commission's proposed finding that the Government of
Japan's licensing processes are discriminatory and restrictive. The
Japanese lines asserted that MOT, to their knowledge, never advised
U.S. carriers on the matter of licensing or received an application
from a U.S. carrier, that there are no
[[Page 9700]]
nationality-based restrictions in the Port Transportation Business Law,
and that MOT would review any new application without regard to
nationality. However, these arguments focus entirely on purported
procedures for obtaining a license, ignoring the practical bars to
obtaining such a license that stem from well-known official Japanese
policies. By emphasizing the form and substance of the licensing
system, the Japanese lines disregard its discriminatory and restrictive
effects and results, which are of primary concern to the Commission.
These official barriers to licensing U.S. carriers and other
potential entrants to the stevedoring market, and their practical
effects, were confirmed most recently in the U.S.-Japan maritime
consultations on January 6-7, 1997. During these meetings, officials
from the Departments of State and Transportation reportedly inquired as
to how MOT would apply its supply and demand test to a stevedoring
application filed by a large organization such as APL or Sea-Land.
4 After reviewing supply and demand factors to be considered, the
delegation of the Government of Japan reportedly stated that, in
general, Japanese ports are either balanced or supply is slightly
larger than demand, that there is already too much competition, and
that there are too many service providers already. The Japanese
delegation was said then to have suggested that U.S. carriers buy an
interest in an existing stevedore company or form a joint venture with
such a company, so that the supply-demand balance could be maintained.
Given the mandatory nature of the supply-demand test, the position
articulated by the Government of Japan leads inescapably to the
conclusion that licenses will not be issued to U.S. carriers. Under
such circumstances, it would seem futile for U.S. carriers to go to the
considerable time and expense of preparing and submitting formal
applications, absent a clear shift in policy by the Government of
Japan.
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\4\ Section 19(12) of the Merchant Marine Act, 1920, states:
``the Commission may consult with, seek the cooperation of, or make
recommendations to other appropriate agencies prior to taking any
action under this section.''
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Given these conditions, even if the Government of Japan's licensing
standard is administered in a nationality-neutral manner, it is still
discriminatory and protectionist in effect. By barring new entrants,
the licensing system protects existing operators, all of whom are
Japanese firms, from competition from U.S. or other foreign companies.
It also shields JHTA from competition from new non-JHTA entrants,
thereby protecting that group's dominant position.
The Japanese carriers invite the Commission to be sidetracked on an
evidentiary dispute regarding whether MOT officials told U.S. carriers
that licenses would not be granted, or told them not to apply, or
whether involved officials were properly authorized. Such a diversion
is unwarranted, however. First, statements by MOT officials that
licenses would not be granted are entirely consistent with the position
recently articulated by the Government of Japan that supply currently
balances or exceeds demand in Japanese ports. More importantly,
however, the Commission's concerns regarding licensing are based on the
system's restrictive and protectionist effects, rather than the timing
or details of any particular bureaucratic exchange. 5
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\5\ Moreover, we are skeptical that the Japanese carriers,
which in response to the Commission's 1995 Information Demand Orders
pled unawareness of virtually all matters concerning MOT's licensing
practices, can now credibly attest to the details of MOT officials'
past conversations regarding licensing.
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MOT's recently announced proposal to abolish its current licensing
system does not warrant deferral of further Commission action. MOT
proposed that the change be made in three to five years, that it be
subject to review and consultation by a number of governmental bodies,
and that other unspecified measures would be enacted to ensure the
``stable management'' of ports. While elimination of the licensing
requirement would address a number of the Commission's concerns, the
conditions attaching to the MOT proposal and its over-the-horizon
timetable call into question whether, and under what conditions, such
reforms might actually be made. If MOT is indeed of the opinion that
more entrants and increased competition would be appropriate in the
port services sector, its broad administrative discretion could be used
to issue new stevedoring licenses to U.S. carriers and other qualified
applicants; any action or plan substantially short of that would appear
to be an inadequate resolution of these issues.
Prior Consultation
There is no support for the Japanese carriers' broad assertion that
the Commission ``fails accurately to describe or comprehend the prior
consultation system.'' MOL/K-Line/NYK Comments at 10. The Japanese
lines failed to identify any specific factual errors in the
Commission's account and, in fact, their description of prior
consultation is consistent with that of the Notice, differing only in
focus and emphasis on historical context. The U.S. carriers, in
contrast, ardently supported the proposed findings in the Notice
regarding prior consultation.
As the Japanese carriers explained, the prior consultation system
involves ``two party/two party'' negotiations for all planned changes
in shipping line operations involving Japanese ports. The first ``two
party'' negotiation is between a shipping line and JHTA, while the
second is between JHTA and the waterfront unions. As was described in
the Notice, virtually all carrier operational changes must be submitted
for prior consultation. 6 If a carrier wishes to make such a
change and it is deemed important by JHTA, a representative of the
line, often accompanied by an official of the stevedoring company it
uses, must explain its request to the JHTA Chairman. At this stage
(sometimes referred to as ``pre-pre-prior consultation''), the JHTA
Chairman may refuse to accept the request, or require changes or impose
conditions for acceptance.
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\6\ As noted in the proposed rule, these include: changes in
berth, route, or port calls; inauguration of new services or new
vessels; calls by non-container ships at container berths; changes
in vessel size or technology which affect stevedoring or terminal
operations; temporary assignment of vessels as substitutes or the
renaming of vessels; rationalization agreements between carriers
involving vessel sharing or berthing changes; the assignment of a
stevedoring contractor or terminal operator to a carrier and any
subsequent change in assignment; requests for Sunday work; changes
in mandatory weighing and measuring arrangements; or any other
changes which affect stevedoring or terminal operations.
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If the carrier's request is acceptable to the JHTA Chairman, it is
taken up at a formal ``pre-prior consultation'' meeting between the
carrier and its stevedore, on the one hand, and JHTA on the other. If
the request is accepted at this stage, the matter is deliberated at
formal prior consultation meetings between JHTA and union officials,
both in Tokyo and at the local level. It appears that the formal pre-
prior consultation and prior consultation meetings are merely
formalities; if a carrier's request is unacceptable to JHTA, it simply
is not accepted for consideration at the formal prior consultation
meetings. In contrast, if a request is accepted at the initial stage by
the JHTA Chairman, it is almost assured to be approved at the formal
meetings.
JHTA's processes are characterized by a total lack of transparency.
There are almost no written rules, either substantive or procedural,
nor are there written reasons for decisions or an appeal process. JHTA
appears to have
[[Page 9701]]
absolute discretion over the terms and conditions imposed in the prior
consultation process.
This arrangement, whereby JHTA can arbitrarily permit or deny
carriers access to the prior consultation process, gives JHTA
extraordinary leverage. If JHTA refuses to accept a proposed matter for
prior consultation, any attempt by the carrier or its stevedore to
implement the plan is likely to be met with work stoppages or other
labor disruptions. Carriers are left with no choice but to acquiesce to
any conditions imposed by JHTA. In a recent conversation with a U.S.
Government official, the JHTA Chairman gave a clue as to the extent of
his influence and discretion, reportedly stating that he enjoys
``absolute power'' to influence harbor-related matters in Japan.
It is uncontroverted that JHTA uses this leverage (that is, its
unchecked authority to accept or reject carrier plans for pre-prior
consultation) to prevent competition and maintain an agreed upon
allocation of work among JHTA member companies. This conclusion is
well-established in the responses of several lines to the Information
Demand Orders, and was further supported in the U.S. lines' comments.
For example, JHTA has prevented carriers and consortia from freely
switching terminals or stevedores, and from consolidating and
rationalizing operations. Also, it has refused to grant prior
consultation requests unless carriers agreed to employ additional
unnecessary stevedoring companies or contractors. Such practices
prevent any real competition and undermine attempts to increase the
efficiency of port operations, with the result that Japan has port
costs that far exceed those of its Asian neighbors and other major
trading nations.
The Japanese carriers raised several arguments in defense of the
prior consultation system. First, they asserted that the system itself
enjoys universal support among carriers. This, however, is clearly
incorrect, as JFSA and the U.S. carriers advocate substantial revisions
in the current system. Their proposed changes would go to the heart of
the Commission's concerns, removing JHTA's free hand to approve or deny
carrier requests, restrict competition, and allocate stevedoring work.
The improvements advanced by the non-Japanese lines would, among other
things, allow carriers to arrange their operations normally with their
chosen stevedoring and terminal companies, as is the case in other
major maritime nations. Under the JFSA proposal, JHTA could still
maintain a legitimate collective bargaining role in negotiations
between employers and labor unions, but would no longer be a ``black
box'' issuing unappealable directions as to how carriers' shoreside
operations should be conducted.
The Japanese carriers stated that the system was created to
maintain labor stability and avoid the need for face to face
confrontations between carriers and unions over the inauguration of
``innovated vessels.'' They pointed out that the inauguration of
container service, which occurred in the 1960's and 70's, raised
serious issues and led to disruption in waterfront labor relations in
many maritime nations, including the U.S. They suggested that prior
consultation is still necessary to avoid the disruptions of the past,
and stated that they know of no other system that would better
guarantee labor stability.
These reasons, however, do not justify the anticompetitive
practices currently engaged in by JHTA. At no point has the Commission
ever questioned the appropriateness of JHTA's role as an intermediary
between employers and unions, or the practice of collective bargaining
for waterfront labor, nor has it challenged any employer's right to
designate JHTA as its representative in such negotiations. The
Commission's concern lies with JHTA's autocratic control of carrier
operations, suppression of competition, allocation of work among
members, extraction of fees and other concessions, and retaliation
against its detractors. None of these factors is a necessary or logical
precondition to JHTA's collective bargaining or labor relations role,
and none merits a policy of labor-related ``non-interference'' by the
Government of Japan. Rather, these measures only serve to consolidate
JHTA's power and shield its member companies from market forces.
While JHTA itself is an organization of harbor service providers,
its abuses are not purely private sector matters. As explained in
detail in the Notice and Information Demand Orders, in accordance with
Japanese laws and regulations, JHTA operates with the permission of,
and under the supervision of, MOT, which can annul JHTA's incorporation
if it acts contrary to the public interest. MOT is authorized to give
oversight or guidance relating to the prior consultation system, and
has in fact intervened repeatedly, as confirmed by the Japanese
carriers, to bring about the ``restoration, improvement, and
continuance'' of the system. Moreover, MOT is vested with broad
regulatory authority over JHTA member companies, including licensing
authority and the right to review and disapprove rates and business
plans. The Japanese lines' protestations that MOT generally takes no
role in the day-to-day operations of prior consultation, and that it
has no vested interest in its continuation, are immaterial. Given the
Government of Japan's regulatory and oversight authority, JHTA and its
member firms could not continue to operate in the current manner
without the Government of Japan's ongoing support and approval.
The Japanese lines suggested that recent changes in prior
consultation have eliminated the U.S. carriers' concerns. While any
improvements are praiseworthy, these recent changes have been aimed
only at adding transparency and speed to the process. They have done
nothing to address the core problems of the system, such as JHTA's
absolute authority to block carrier plans at the pre-pre-prior
consultation stage, and its use of this authority to eliminate
competition and extract other concessions.
Procedural Issues
The Japanese carriers argued that this proceeding is procedurally
defective, and that their due process rights have been violated,
because they have not had an opportunity to review the responses
submitted by other carriers to the Commission's 1995 Information Demand
Orders. They asserted that it was improper for the Commission to rely
on these materials to reach the proposed findings set forth in the
Notice without making them available to the Japanese carriers.
These procedural challenges are without basis. Confidentiality of
submissions is explicitly provided for in the statute; section 19(8)
states: ``Notwithstanding any other law, the Commission may refuse to
disclose to the public a response or other information provided under
the terms of this section.'' The confidentiality provided by this
section is necessary to ensure that the Commission receives the most
complete and accurate information possible. Disclosure in some cases
could lead to retribution against respondents, seriously discouraging
candid submissions. These points apparently were not lost on the
Japanese carriers, as they requested confidential treatment for their
entire Information Demand Order submissions.7
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\7\ The ``[n]otwithstanding any other law . . .'' language in
the statute undermines the Japanese carriers'' argument that full
disclosure is required by the Administrative Procedure Act. It would
defy logic and common tenets of statutory construction to suggest
that Congress added the non-disclosure provision in 1990 with the
intention that it be vitiated by the general provisions of the pre-
existing APA. In addition, we would point out that the section cited
by the Japanese lines includes an exception ``to the extent there is
involved . . . [a] foreign affairs function of the United States.''
46 U.S.C. Sec. 553(a)(1); see American Association of Exporters and
Importers v. U.S., 751 F.2d 1239 (Fed. Cir. 1985).
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[[Page 9702]]
The Japanese carriers' assertion that their due process rights have
been violated also lacks merit. In American Association of Exporters
and Importers v. U.S., the Court of Appeals for the Federal Circuit
rejected statutory and constitutional challenges raised by an
importers'' and exporters'' group to actions of the Committee for the
Implementation of Trade Agreements, a federal agency, regulating and
imposing quotas on trade in textiles. The court found no merit in
appellant's claim that the agency violated importers' due process
rights by denying them the opportunity to be heard prior to the
imposition of quotas. In reasoning applicable to this proceeding, the
court held that ``a prerequisite for due process protection is some
interest worthy of protecting; `We must look to see if the interest is
within the [Constitution's] protection of liberty and property.' '' 751
F.2d at 1250, quoting Board of Regents v. Roth, 408 U.S. 564, 571
(1972). The court reasoned that a protectable interest must be more
than a unilateral expectation; rather, those seeking constitutional
protection under the due process clause must point to a ``legitimate
claim of entitlement'' prior to any consideration of the government's
constitutional obligations. The court held that the mere subjective
expectation of a future business transaction does not rise to the level
of an interest worthy of protection, and that ``[n]o one has a
protectable interest in international trade.'' Id., citing Arnett v.
Kennedy, 416 U.S. 134, 167 (1974); Perry v. Sinderman, 408 U.S. 593,
603 (1972); Norwegian Nitrogen Co. v. United States, 288 U.S. 294
(1933).
The Japanese carriers' expectation to be permitted, in the future,
to operate in the U.S. foreign trades free of fees or charges therefore
does not rise to the level of an interest in property worthy of
constitutional protection. Accordingly, there can be no finding that
the Japanese carriers' due process rights were violated.
There also is no merit to the Japanese carriers' argument that the
instant proceeding is an ``adjudication'' and that as such they are
entitled to additional procedural protections. The Commission's notice
did not propose findings of unlawful conduct on the part of these three
individual companies. Rather, it proposed findings that there exist
conditions unfavorable to shipping in the U.S.-Japan trade, arising out
of Japanese laws, rules, and regulations. In response, it proposed an
across-the-board fee of $100,000, prospectively establishing the terms
and conditions by which all Japanese carriers may operate liner vessels
in the U.S. trades. The character of the proceeding is not transformed
by the fact that the Commission, drawing on its trade monitoring
resources, preliminarily identified in the Notice those carriers that
appeared to fall into the subject class. Indeed, should it come to the
Commission's attention that other Japanese carriers are operating liner
services in the U.S. trades, the final rule will be amended to include
them. See Docket No. 91-24, Actions to Adjust or Meet Conditions
Unfavorable to Shipping in the United States/Korea Trade--Amendment to
Final Rule, 58 FR 7988 (1993) (adding a Korean carrier that had newly
entered the trade to a list of lines subject to sanctions).
Port and Terminal Concerns
The Port of Portland asked that the Commission clarify whether the
$100,000 fee would be levied ``per-voyage'' or ``per-port call.'' As
set forth in the proposed rule, the fee would be assessed on a per-
voyage basis; that is, after a line first calls in the U.S. from abroad
and is assessed the $100,000 fee, it would not be subject to additional
fees for each successive U.S. port call on that voyage. This treatment
would seem to eliminate the concern that the fee could lead to Japanese
lines dropping or consolidating port calls in the U.S. Also, in
response to Jacksonville Port Authority's concerns, we would point out
that the rule applies only to container-carrying liner vessels, not
dedicated car-carriers.
A number of commenters requested that the Commission address the
possibility that Japanese carriers will cancel sailings or shift
services to Canadian or Mexican ports in response to the fee. Such
actions would appear improbable, and have not, in any event, been
suggested by the Japanese carriers thus far in this proceeding. The
$100,000 fee represents only a small percentage of the Japanese
carriers' gross per-voyage revenues in the U.S. trades. 8 Given
carriers' high fixed costs, it is unlikely that they would cancel
services, foregoing multi-million dollar revenues, in order to avoid
paying the fee. Similarly, it does not appear that the level of the fee
would justify the high costs of shifting vessel calls to foreign ports.
Such moves would require lines to make costly changes in contracts and
arrangements for, among other things, terminal facilities, stevedoring,
warehousing and storage, inland transportation, sailing schedules, and
foreign and U.S. customs clearance. Nevertheless, the Commission will
closely monitor and evaluate cost, revenue, and service level data to
guard against adverse effects on U.S. ports, terminals, and shippers.
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\8\ For example, for an average-sized vessel in the Asia-U.S.
trades (i.e., a vessel with 3000 20-foot container capacity
operating three-quarters full) the FMC fee would cost a carrier
about $45 per container. In contrast, a carrier collects freight
charges averaging $1,836 per container in the Japan-U.S. trades, and
$2,250 from the China, Hong Kong, and Taiwan regions, according to
FMC rate indices. A carrier will collect freight of over $4 million
for one sailing of one average-sized vessel from Japan to the U.S.,
and over $5 million from the China range to the U.S., not including
revenues from the return or onward voyage.
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The Commission is not swayed by the argument, raised by a number of
port commenters, that it would be unfair to impose fees on Japanese
carriers when they are not responsible for Japanese port conditions and
have invested millions of dollars in U.S. port facilities. Indeed, this
argument highlights the inequity in treatment afforded U.S. lines in
Japan versus that afforded Japanese carriers in this country, as U.S.
carriers have had no opportunity to make similar investments in owning
and operating Japanese terminal facilities. Japanese carriers have
enjoyed continued success in the American market, enjoying high
revenues and substantial growth in liner services and terminal
operations, in large part due to the favorable and open business
climate created by the laws, rules, and regulations of the United
States. However, Japanese firms cannot expect to continue to reap the
benefits of favorable U.S. transportation policies if such treatment is
not reciprocated by the Government of Japan.
Recent Developments
As noted in the comments, a meeting reportedly was held on January
29, 1997, involving JHTA, non-Japanese carriers (represented by JFSA),
and Japanese carriers (represented by JSPC). The meeting was arranged
and chaired by MOT for the purpose of discussing possible reforms to
the prior consultation system. Apparently, at the meeting JFSA
presented a proposal based on the position paper submitted to the
Commission. No proposals were submitted by JSPC or JHTA. MOT did not
take a position on the JFSA proposal. We understand that another such
meeting was held February 18,
[[Page 9703]]
1997; however, by all accounts, no progress was made.
It appears that the Government of Japan has modified its stance
somewhat with regard to JHTA and prior consultation. Rather than
insisting that these are purely private matters outside of its control,
it now appears to be acknowledging that the system has serious problems
and indicating that it will endeavor to bring about a solution.
However, thus far MOT's only action has been to arrange meetings, in
the hopes that JHTA and the carriers will find a solution among
themselves. The Government of Japan has suggested to U.S. officials
that more time to reach a solution is needed.
MOT, however, has had ample time to address the restrictive
conditions that exist in its ports. The instant controversy did not
begin with the issuance of the Commission's Information Demand Orders
or proposed rule. The U.S. Government and other major trading nations
have been informing the Government of Japan repeatedly and strenuously
for several years that its port policies and practices are
unacceptable. In October of 1995, the Commission clearly indicated that
these problems may be serious enough to warrant sanctions under Section
19. However, the Government of Japan simply maintained that the
disputed practices were a matter for the private sector. While it is
encouraging that the Government of Japan has finally begun
acknowledging the seriousness of these matters, and meeting with
involved parties, these steps do not go far enough now to warrant a
stay of Commission action.
It appears unlikely, moreover, that a resolution to the current
problems involving prior consultation will be reached through
commercial negotiations limited to carriers and JHTA. At issue in this
proceeding are, among other things, JHTA's dominance of the stevedoring
industry, its control of the prior consultation system, and its use of
that system to force changes and extract concessions from carriers. It
appears, in sum, that JHTA has boundless negotiating leverage, and the
carriers, especially foreign carriers, have none. Under such
conditions, it is improbable that JHTA will simply volunteer to
relinquish its overarching control over port services. Rather, it
appears that only decisive measures by the Government of Japan can
bring about meaningful reforms.
Demonstrating this point, JHTA recently threatened U.S. Government
officials with massive retaliation against U.S. carriers if the
Commission does not withdraw its proposed rule. Earlier this month, the
JHTA Chairman reportedly told U.S. officials that, unless the threat of
FMC sanctions against Japanese carriers is removed, he ``will not let
any U.S. ships come into Japanese ports.'' Stating that it would be
impossible to resolve issues with sanctions looming, he announced that
he intends to suspend prior consultations for U.S. shipping firms, and
possibly European firms as well, if the proposed rule is not withdrawn.
Such threats were reportedly repeated at the February 18, 1997, meeting
between JHTA and the carrier groups.
The JHTA Chairman's threats confirm and validate the need for
immediate action in this area. That JHTA could recklessly threaten to
disrupt the U.S.-Japan oceanborne trade, causing severe commercial harm
to U.S. carriers, shippers, and international commerce, and that it has
the apparent will and means to carry out such threats, strongly
supports and justifies a finding of conditions unfavorable to shipping.
These are clearly not private sector matters; the responsibility lies
with the Government of Japan to eliminate the conditions which have
left international trade so vulnerable to JHTA's self-serving caprice.
Final Rule
Based on the foregoing, the Commission concludes that a finding of
conditions unfavorable to shipping in the U.S.-Japan trade is
warranted. Accordingly, the Commission is issuing a final rule levying
a fee of $100,000 each time a container-carrying liner vessel owned or
operated by a Japanese carrier enters a U.S. port from abroad, assessed
in the manner set forth in the proposed rule. This final rule will
become effective April 14, 1997.9
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\9\ Accordingly, the Motion to Withdraw Proposed Rule and
Discontinue the Proceeding, filed February 12, 1997, by MOL, NYK,
and K-Line, is denied.
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The Commission is authorized to assess a per-voyage fee of up to
one million dollars to adjust or meet conditions unfavorable to
shipping in the foreign trade. At this time, a $100,000 fee is an
appropriate and measured response to the conditions identified herein.
However, if these issues are not addressed in a timely fashion, the
level of this fee will be increased.
In addition, the Commission is gravely concerned about the
possibility of retaliation against U.S. carriers for the actions and
positions taken by the Commission and the United States Government. The
validity of these concerns, voiced as well by the U.S. carriers in
their comments, was confirmed by the repeated threats of JHTA
officials. Therefore, as indicated in the final rule, the Commission
has determined that the level of the fee will be increased upon a
finding that the Government of Japan, JHTA, or related bodies have
retaliated against U.S. carriers. Such a finding may be made
expeditiously upon review by the Commission of information collected
from carriers, U.S. Government agencies, or other sources, without the
need for additional notice and comment. The level of the fee increase
will be commensurate with the economic harm to U.S. carriers as a
result of the retaliation. Similarly, should a finding of retaliation
be made prior to the effective date of the final rule, the rule will be
amended to become effective immediately.
List of Subjects in 46 CFR Part 586
Cargo vessels, Exports, Foreign relations, Imports, Maritime
carriers, Penalties, Rates and fares, Tariffs.
Therefore, pursuant to section 19(1)(b) of the Merchant Marine Act,
1920, 46 U.S.C. app. 876(1)(b), as amended, Reorganization Plan No. 7
of 1961, 75 Stat. 840, and 46 CFR Part 585, Part 586 of Title 46 of the
Code of Federal Regulations is amended as follows:
1. The authority section for Part 586 continues to read as follows:
Authority: 46 U.S.C. app. 876(1)(b); 46 U.S.C. app. 876(5)
through (12); 46 CFR Part 585; Reorganization Plan No. 7 of 1961, 26
FR 7315 (August 12, 1961).
2. Section 586.2 is added to read as follows:
Sec. 586.2 Conditions unfavorable to shipping in the United States/
Japan trade.
(a) Conditions unfavorable to shipping in the trade. The Federal
Maritime Commission (``Commission'') has identified the following
conditions unfavorable to shipping in the U.S.-Japan trade, arising out
of or resulting from laws, rules, or regulations of the Government of
Japan:
(1) Shipping lines in the Japan-U.S. trades are not allowed to make
operational changes, major or minor, without the permission of the
Japan Harbor Transportation Association (``JHTA''), an association of
Japanese waterfront employers operating with the permission of, and
under the regulatory authority and ministerial guidance of, the Japan
Ministry of Transport (``MOT'').
(2) JHTA has absolute and unappealable discretion to withhold
permission for proposed operational changes by refusing to accept such
[[Page 9704]]
proposals for ``prior consultation,'' a mandatory process of
negotiations and pre-approvals involving carriers, JHTA, and waterfront
unions.
(3) There are no written criteria for JHTA's decisions whether to
permit or disallow carrier requests for operational changes, nor are
there written explanations given for the decisions.
(4) JHTA uses and has threatened to use its prior consultation
authority to punish and disrupt the business operations of its
detractors.
(5) JHTA uses its authority over carrier operations through prior
consultation as leverage to extract fees and impose operational
restrictions, such as Sunday work limits.
(6) JHTA uses its prior consultation authority to allocate work
among its member companies (whose rates and business plans are subject
to MOT approval), by barring carriers and consortia from freely
choosing or switching operators and by compelling shipping lines to
hire additional, unneeded stevedore companies or contractors.
(7) The Government of Japan administers a restrictive licensing
standard which blocks new entrants from entering into the stevedoring
industry in Japan. Given that all currently licensed stevedores are
Japanese companies, and all are JHTA members, this blocking of new
entrants by the Government of Japan shields existing operators from
competition, protects JHTA's dominant position, and ensures that the
stevedoring market remains entirely Japanese.
(8) Because of the restrictive licensing requirement, U.S. carriers
cannot perform stevedoring or terminal operating services for
themselves or third parties in Japan. In contrast, Japanese carriers
(or their related companies or subsidiaries) currently perform
stevedoring and terminal operating services in Japan and the United
States.
(b) Definitions--(1) Japanese carrier means Kawasaki Kisen Kaisha,
Ltd., Mitsui O.S.K. Lines, Ltd, and Nippon Yusen Kaisha.
(2) Designated vessel means any container-carrying liner vessel
owned or operated by a Japanese carrier (or any subsidiary, related
company, or parent company thereof).
(c) Assessment of fees. A fee of one hundred thousand dollars is
assessed each time a designated vessel is entered in any port of the
United States from any foreign port or place.
(d) Report and payment. Each Japanese carrier, on the fifteenth day
of each month, shall file with the Secretary of the Federal Maritime
Commission a report listing each vessel for which fees were assessed
under paragraph (c) during the preceding calendar month, and the date
of each vessel's entry. Each report shall be accompanied by a cashier's
check or certified check, payable to the Federal Maritime Commission,
for the full amount of the fees owed for the month covered by the
report. Each report shall be sworn to be true and complete, under oath,
by the carrier official responsible for its execution.
(e) Refusal of clearance by the collector of customs. If any
Japanese carrier subject to this section shall fail to pay any fee or
to file any report required by paragraph (d) of this section within the
prescribed period, the Commission may request the Chief, Carrier
Rulings Branch of the U.S. Customs Service to direct the collectors of
customs at U.S. ports to refuse the clearance required by 46 U.S.C.
app. 91 to any designated vessel owned or operated by that carrier.
(f) Denial of entry to or detention at United States ports by the
Secretary of Transportation. If any Japanese carrier subject to this
section shall fail to pay any fee or to file any report required by
paragraph (d) of this section within the prescribed period, the
Commission may request the Secretary of Transportation to direct the
Coast Guard to:
(1) Deny entry for purpose of oceanborne trade, of any designated
vessel owned or operated by that carrier to any port or place in the
United States or the navigable waters of the United States; or
(2) Detain that vessel at the port or place in the United States
from which it is about to depart for another port or place in the
United States.
(g) Adjustment in fees to meet retaliatory measures. Upon a finding
by the Commission that U.S. carriers have been subject to
discriminatory fees, restrictions, service disruptions, or other
retaliatory measures by JHTA, the Government of Japan, or any agency,
organization, or person under the authority or control thereof, the
level of the fee set forth in paragraph (c) shall be increased. The
level of the increase shall be equal to the economic harm to U.S.
carriers on a per-voyage basis as a result of such retaliatory actions,
provided that the total fee assessed under this section shall not
exceed one million dollars per voyage.
By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 97-5233 Filed 3-3-97; 8:45 am]
BILLING CODE 6730-01-P