Hanwha, Cooperation with the US in Shipbuilding... "Support for US Port Fees on Chinese Ships"

Testimony at USTR Hearing on the 26th

Hanwha Group has announced its support for and willingness to assist the United States' policy to curb China's shipbuilding and shipping industries.

On the 21st (local time), the United States Trade Representative (USTR) announced that it will hold public hearings on the 24th and 26th to gather opinions on USTR's policy proposals targeting China's maritime, logistics, and shipbuilding sectors.

A cargo ship filled with shipping containers at the Port of Oakland, California, USA. Photo by Reuters and Yonhap News.

According to USTR, Ryan Lynch, Vice President of Hanwha Shipping, will participate as a panelist in the hearing on the 26th. Hanwha Shipping is a U.S. subsidiary headquartered in Texas and a subsidiary of Hanwha Group.

In a prior statement, Hanwha Shipping expressed support for USTR's proposals. Hanwha Shipping stated that it is committed to supporting the construction and operation of commercial fleets such as liquefied natural gas (LNG) and crude oil carriers in the United States, and argued that without the policies proposed by USTR, it would likely be difficult to secure the economic feasibility necessary for shipbuilding in the U.S. Furthermore, Hanwha Group has shipyards in both the U.S. and South Korea, placing it in a position to comment on the impact of USTR's proposals on both the U.S. and international markets, and it pledged to provide opinions on the best ways to achieve USTR's policy objectives.

In April last year, USTR launched an investigation under Section 301 of the Trade Act into China's maritime, logistics, and shipbuilding industries following a petition from five U.S. labor unions. In January, it concluded that China was unfairly competing to dominate these industries, causing harm to the United States.

Subsequently, in February, USTR proposed imposing fees on Chinese shipping companies entering U.S. ports and on shipping companies using Chinese-built vessels to enter the U.S. The plan would require higher fees the larger the proportion of Chinese-built ships in a shipping company's fleet and the more vessels ordered from Chinese shipyards. There is also a proposal to mandate that a certain percentage of all U.S. exports transported by sea be carried on U.S.-flagged vessels operated by U.S. shipping companies.

If these policies are implemented, global shipping companies are expected to be reluctant to purchase Chinese-built vessels, which is anticipated to provide a windfall benefit to the South Korean shipbuilding industry.

The United States is wary of China's increasing dominance in shipbuilding and shipping and is fostering its domestic industries. Hanwha Group views the U.S. efforts to rebuild its shipbuilding and shipping industries as an opportunity, having acquired the U.S. shipyard Philly Shipyard and secured contracts for maintenance, repair, and overhaul (MRO) of U.S. Navy vessels.