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[Federal Register Volume 90, Number 14 (Thursday, January 23, 2025)]
[Notices]
[Pages 8089-8090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-01540]

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

Notice of Determination Pursuant to Section 301: China's 
Targeting of the Maritime, Logistics, and Shipbuilding Sectors for 
Dominance

AGENCY: Office of the United States Trade Representative (USTR).

ACTION: Notice of determination.

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SUMMARY: The U.S. Trade Representative has determined that China's 
targeting of the maritime, logistics, and shipbuilding sectors for 
dominance is actionable under section 301.

FOR FURTHER INFORMATION CONTACT: Megan Grimball and Philip Butler, 
Chairs of the Section 301 Committee, Associate General Counsel Thomas 
Au or Assistant General Counsel Henry Smith, 202.395.5725.

SUPPLEMENTARY INFORMATION:

I. Summary of the Petition

    On March 12, 2024, five labor unions \1\ filed a section 301 
petition regarding the acts, policies, and practices of China to 
dominate the maritime, logistics, and shipbuilding sector.\2\ The 
petition was filed pursuant to section 302(a)(1) of the Trade Act of 
1974, as amended (Trade Act) (19 U.S.C. 2412(a)(1)), requesting action 
pursuant to section 301(b) (19 U.S.C. 2411(b)).
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    \1\ The five petitioners are the United Steel, Paper and 
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and 
Service Workers International Union, AFL-CIO CLC (USW), the 
International Brotherhood of Electrical Workers (IBEW), the 
International Brotherhood of Boilermakers, Iron Ship Builders, 
Blacksmiths, Forgers and Helpers, AFL-CIO/CLC (IBB), the 
International Association of Machinists and Aerospace Workers (IAM), 
and the Maritime Trades Department of the AFL-CIO (MTD).
    \2\ For additional information, the full text of the petition 
and accompanying exhibits are available at: https://ustr.gov/issue-areas/enforcement/section-301-investigations/section-301-petition-china-maritime-logistics-and-shipbuilding-sector.
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    Petitioners allege that China targets the maritime, logistics, and 
shipbuilding sector for dominance and engages in a wide range of 
unreasonable or discriminatory acts, policies, and practices that 
provide unfair advantages across maritime industries, such as 
shipbuilding, shipping, and maritime equipment. The petitioners also 
aver that China threatens to discriminate against U.S. commerce and 
disrupt supply chains. Petitioners allege that China's acts, policies, 
and practices burden or restrict U.S. commerce in various manners. See 
89 FR 29424 (April 22, 2024).

II. Proceedings in the Investigation

    On April 17, 2024, after consultation with the appropriate advisory 
committees and the Section 301 Committee, USTR initiated an 
investigation regarding the issues raised in the petition pursuant to 
section 302(a)(2) of the Trade Act (19 U.S.C. 2412(a)(2)). The notice 
of initiation solicited written comments on, inter alia: China's acts, 
policies, and practices targeting the maritime, logistics, and 
shipbuilding sectors for dominance; whether China's acts, policies, and 
practices targeting the maritime, logistics, and shipbuilding sectors 
for dominance are unreasonable or discriminatory; China's efforts to 
dominate the global maritime, logistics, and shipbuilding sectors, 
including the upstream and downstream supply chain, as well as shipping 
services; information on other acts, policies, and practices of China 
relating to the maritime, logistics and shipbuilding sectors; whether 
China's acts, policies, and practices burden or restrict U.S. commerce, 
and if so, the nature and level of the burden or restriction.
    Interested persons filed over 40 written comments. USTR and the 
Section 301 Committee convened a public hearing on May 29, 2024, during 
which witnesses provided testimony and responded to questions. The 
public submissions are available at https://comments.ustr.gov/s/ in 
docket number USTR-2024-0005, and a transcript of the hearing is 
available on the USTR website.
    On April 17, 2024, the U.S. Trade Representative requested 
consultations with the government of China pursuant to section 303 of 
the Trade Act (19 U.S.C. 2413). The government of China has declined to 
hold consultations under the statutory framework regarding the 
investigation.
    Based on information obtained during the investigation, including 
the public submissions and the public hearing, USTR and the Section 301 
Committee have prepared a report on the acts, policies, and practices 
under investigation. The report supports a determination that China's 
targeting of the maritime, logistics, and shipbuilding sectors for 
dominance is unreasonable and burdens or restricts U.S. commerce and 
thus is actionable. The report is available to the public on the USTR' 
website.

III. China's Targeting of the Maritime, Logistics, and Shipbuilding 
Sectors for Dominance

    For nearly three decades, China has targeted the maritime, 
logistics, and shipbuilding sectors for dominance and has employed 
increasingly aggressive and specific targets in pursuing dominance. 
China has largely achieved its dominance goals, severely disadvantaging 
U.S. companies, workers, and the U.S. economy generally through 
lessened competition and commercial opportunities and through the 
creation of economic security risks from dependencies and 
vulnerabilities.
    Top-down industrial planning and targeting is a critical feature of 
China's state-led, non-market economic system. China organizes the 
development of its economy at a high level through broad national-level 
five-year economic and social development plans. It then employs 
industry-specific plans that typically align chronologically with the 
national five-year plans. These plans often contain detailed 
quantitative and qualitative targets, including for production, 
domestic content, and domestic and international market shares, and 
outline the non-market policies and practices China should use to 
achieve these targets. China's plans reveal its targeting of the 
maritime, logistics, and shipbuilding sectors for dominance.
    Market share targets necessitate substitution by Chinese companies 
at the expense of foreign competitors--for Chinese companies to gain 
market share, they must displace foreign companies in existing markets 
and take new markets as they develop in the future. China's industrial 
targets have become more aggressive and sophisticated over the years.
    China's targeting of these sectors for dominance has undercut 
competition and taken market share with dramatic

[[Page 8090]]

effect: raising China's shipbuilding market share from less than 5 
percent of global tonnage in 1999, to over 50 percent in 2023; 
increasing China's ownership of the commercial world fleet to over 19 
percent as of January 2024; and controlling production of 95 percent of 
shipping containers and 86 percent of the world's supply of intermodal 
chassis, among other components and products.

IV. Determination on the Acts, Policies, or Practices Under 
Investigation

    Based on the information obtained during the investigation, as 
reflected in the public report on the investigation, and taking account 
of public comments, as well as the advice of the Section 301 Committee 
and advisory committees, the U.S. Trade Representative has made the 
following determination under sections 301(b) and 304(a) of the Trade 
Act (19 U.S.C. 2411(b) and 2414(a)): China's targeting of the maritime, 
logistics, and shipbuilding sectors for dominance is unreasonable and 
burdens or restricts U.S. commerce, and thus is actionable under 
section 301(b) of the Trade Act.
    In particular, China's targeting of the maritime, logistics, and 
shipbuilding sectors for dominance is unreasonable because: it 
displaces foreign firms, deprives market-oriented businesses and their 
workers of commercial opportunities, and lessens competition; and it 
creates dependencies on China, increasing risk and reducing supply 
chain resilience. China's targeting for dominance also is unreasonable 
because of China's extraordinary control over its economic actors and 
these sectors.
    Furthermore, China's targeting of the maritime, logistics, and 
shipbuilding sectors for dominance burdens or restricts U.S. commerce 
by: undercutting business opportunities for and investments in the U.S. 
maritime, logistics, and shipbuilding sectors; restricting competition 
and choice; creating economic security risks from dependence and 
vulnerabilities in sectors critical to the functioning of the U.S. 
economy; and undermining supply chain resilience.
    These findings provide a basis for finding that responsive action 
is appropriate to obtain the elimination of the acts, policies, or 
practices covered in the investigation.

V. Further Proceedings

    Sections 301(b) and 304(a)(1)(B) of the Trade Act provide that if 
the U.S. Trade Representative determines that an act, policy, or 
practice of a foreign country is unreasonable or discriminatory and 
burdens or restricts United States commerce, the U.S. Trade 
Representative shall determine what action, if any, to take under 
section 301(b). These matters will be addressed in subsequent 
proceedings.

Juan Millan,
Acting General Counsel, Office of the United States Trade 
Representative.
[FR Doc. 2025-01540 Filed 1-22-25; 8:45 am]
BILLING CODE 3290-F4-P
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