New proposal from U.S. trade Representative – important for ships calling at U.S. ports

Brief summary of changes in the revised proposal:

• The revised proposal’s fee structure is drastically different from the first proposal, by introducing a tonnage-based service fee, instead of a fixed fee for each port call, and presents several important clarifications and exemptions. Furthermore the previous suggestion that fees should be paid based on percentage of vessels in an operator’s fleet has been omitted.
• The most notable exemption for many Norwegian owners or operators of Chinese-built vessels, is the carve-out for “smaller” vessels, defined as “vessels with a capacity of equal to or less than: 4,000 Twenty-Foot Equivalent Units, 55,000 deadweight tons, or an individual bulk capacity of 80,000 deadweight tons”. It is unclear whether the term “individual bulk capacity” only refers to dry cargo vessels or also includes tankers.
• An exemption has also been made for “specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms”, meaning that the large fleet of chemical carriers are exempted irrespective of its size.
• The revised proposal also introduces new service fees for all non-U.S.-built vehicle carriers, as well as 20 – 100% tariffs on ship-to-shore cranes and other cargo-handling equipment linked to Chinese production or ownership.

The proposal’s annexes I–IV outline the main elements of the revised proposal, which we break down in the sections below:

Service fees on “Chinese Vessel Operators” and “Vessel Owner of China” (Annex I)

Annex I introduces Service Fees per net ton of the vessel’s capacity, first set at zero for an initial period of 180 days, then gradually escalating from USD 50 per net ton up to USD 140 over a three-year period.

The scope includes Chinese (including Hong Kong and Macau) “vessel operators”, and “vessel owners” meaning “the entity which is identified as the operator/owner of the vessel and whose name would appear on the Vessel Entrance or Clearance Statement (U.S. Customs and Border Protection (CBP) Form 1300) or its electronic equivalent”. Hence it is important to note the enhanced significance of the CBP Form 1300.

The instructions to the CBP Form state that the named “operator” shall be the party listed on the Certificate of Financial Responsibility (Water Pollution) (“COFR”) unless other verifiable charter or lease arrangement indicates otherwise. Unless further clarification is given subsequently, this may cause uncertainty if a third party is designated as holder of the COFR.

The form does not include guidance as to who is the “owner”, but in general it is assumed that this refers to the registered owner of the vessel, but again charter or lease arrangement may document otherwise. These designations will be of importance in connection with the appropriate designation of the “operator” responsible for payment of any fees, or which entities may or may not be considered a “vessel owner of China” and fall within the scope of the rule. Owners considering new tax lease arrangements with Chinese financiers should therefore be very cautious as this may lead to service fee under the present proposal.

Service fee on Vessel Operators of Chinese-Built Vessels (Annex II)

Annex II introduces a service fee payable by Vessel Operators (same definition as above), operating vessels that have been constructed in China. The fee is calculated based on the net tonnage of the vessel and will be set at zero for an initial period of 180 days and increases incrementally over the next three years up to USD 33 per net ton.

The revised proposal now includes several exemptions to this fee, including:

• U.S. owned or flagged vessel,
• vessels arriving empty or in ballast,
• for “smaller vessels” (see comment above),
• for vessel entering from a voyage of less than 2 000 nautical miles,
• for U.S. owned vessels, where the entity owning the vessel is controlled by U.S. persons and is at least 75 percent beneficially owned by U.S. persons,
• specialized or special purpose-built vessels for the transport of chemical substances in bulk liquid forms, and
• vessels principally identified as “Lakers Vessels” on CBP Form 1300, or its electronic equivalent.

A vessel operator will be eligible for a fee remission for up to three years if it orders and takes delivery of a U.S.-built vessel of equivalent size.

Service fee on vessel operators of all foreign-built car carriers (Annex III)

A service fee is introduced for vessel operators of all foreign-built car carriers (not just Chinese). The fee is proposed to be set at zero for an initial period of 180 days and increase to USD 150 per car equivalent unit (“CEU”) thereafter.

A suspension of the fee is available for up to three years if the vessel owner orders and takes delivery of a U.S.-built vessel of equivalent or greater net tonnage as provided in the rule. However, as of today, this seems fairly unrealistic in the near future, as there is currently limited expertise and capacity available in the U.S. shipyard industry to build car carriers that meet modern commercial standards.

Restriction on Certain Maritime Transport Services (Annex IV)

Annex IV provides that exports of liquefied natural gas (“LNG”) shall be transported on vessels that receive a license consistent with this Annex. However, these provisions will not come into force before April 2028 and is aimed at ensuring that LNG must be exported by a U.S.-built vessel starting with 1% from April 2028 until the goal of 15% is reached in 2047. It is at least questionable whether this is a realistic achievement as of today.

Tariffs on Ship-to-Shore Cranes and Cargo Handling Equipment of China (Annex V)

Annex V proposes tariffs on Ship-to-Shore (“STS”) Cranes and Cargo Handling Equipment of China of between 20 and 100%.

These changes to the original proposal from March 2025 are a result of the comments which USTR received and further considerations made for the U.S. economy. Further comments are expected, and these rules may be further changed before entering into force.

It is however important both to note the proposal, and the further development. Our readers can rest assured; Further changes will most likely come so what the end result will be still remains to be seen.

BAHR continues to monitor the situation and keep our many shipping clients informed.