Exclusive-US probe finds China unfairly dominates shipbuilding

U.S. President Joe Biden's administration has concluded that China uses unfair policies and practices to dominate the global maritime, logistics and shipbuilding sectors, three sources familiar with the results of a months-long trade investigation told Reuters, News.az reports citing Reuters.

U.S. Trade Representative (USTR) Katherine Tai launched the probe in April 2024 at the request of the United Steelworkers and four other U.S. unions under Section 301 of the Trade Act of 1974, which allows the U.S. to penalize foreign countries that engage in acts that are "unjustifiable" or "unreasonable," or burden U.S. commerce.

Investigators concluded that China targeted the shipbuilding and maritime industry for dominance, using financial support, barriers for foreign firms, forced technology transfer and intellectual property theft and procurement policies to give its shipbuilding and maritime industry an advantage, said one of the sources who was not authorized to speak publicly.

Beijing also "severely and artificially suppressed China's labor costs in the maritime, shipbuilding and logistics sectors," that person added, citing excerpts of the report.

No immediate comment was available from USTR, the White House or the transition team of President-elect Donald Trump.

The Chinese embassy in Washington had no immediate comment.

The probe cites data showing that China's share of the $150 billion global shipbuilding industry has expanded to over 50% in 2023 from around 5% in 2000, largely aided by government subsidies, while once dominant U.S. shipbuilders have seen their share dwindle below 1%. South Korea and Japan are the next biggest shipbuilders.

The report provides a fresh cudgel for the incoming administration to hammer China, and could pave the way for tariffs or port fees on Chinese-built vessels, as proposed by the unions. Such a move would likely come after a public comment period, they said.

Trump used the same Section 301 statute to impose tariffs on hundreds of billions of dollars of Chinese imports during his first term after a USTR investigation found China was misappropriating U.S. intellectual property and coercing the transfer of U.S. technology to Chinese firms.

USTR will release its findings later this week, days before Biden, a Democrat, leaves office on Jan. 20, said the sources.

The U.S. and other Western powers have sharply criticized China's aggressive industrial policies and over-production of commodities like steel, reflecting a rare bipartisan agreement about the need to fix U.S. shipbuilding. China denies any wrongdoing.

The report follows four years of efforts by the Biden administration to reduce China's dominance by continuing Trump-era tariffs, adding new ones, including on electric vehicles, and imposing a range of export controls.

Tai's office last month announced a last-minute trade investigation into older Chinese-made "legacy" semiconductors that could heap more U.S. tariffs on chips from China that power everyday goods from autos to washing machines to telecoms gear.

Experts agree that rebuilding the once vibrant U.S. maritime industry will take decades and investments of tens of billions of dollars. Tariffs alone will not suffice, they said.

"China's targeting of the maritime, logistics and shipbuilding sectors for dominance is the greatest barrier to the revitalization of U.S. industries in these sectors," the report concludes, according to an excerpt shared with Reuters.

News.Az