China ships tax risks ‘trade apocalypse’

US move could disrupt global trade

- LAURA CURTIS WEILUN SOON JAMES ATTWOOD

For a symbol of the chaos engulfing world trade since the Trump administration took over the White House, look no further than a pile of 16,000 metric tonnes of steel pipes. Stevedores in Germany should be preparing to load the first batch on a container ship bound for a massive energy project in Louisiana.

Instead the cargo is sitting in a German warehouse after Washington proposed putting million-dollar levies on Chinese ships docking in the US.

Talks over the terms for shipping the pipes were put on hold until there’s more clarity, said Jose Severin, a business development manager for Mercury Group, the logistics provider for the deal. For that particular route across the Atlantic, 80% of the ship owner's vessels were built in China, meaning a shipment would be subject to a surcharge of between $1 million and $3 million. Depending on how the measure is applied, that could amount to double or triple the current cost of shipping the steel pipes from Germany.

It's one of countless deals caught in the crossfire sparked by a proposal from the Office of the US Trade Representative aimed at curbing China's dominance of the shipbuilding, logistics and maritime industry. China now produces more than half of the world’s cargo ships by tonnage, up from just 5% in 1999, according to the USTR, with Japan and South Korea the other shipbuilding powers. Last year US shipyards built just 0.01%, and the USTR has an eye on reviving the fortunes of the long-dormant US merchant shipbuilding industry.

China's dominance gives it “market power over global supply, pricing, and access,’ the USTR said on Feb 21 when it unveiled the proposal. In response, the China State Shipbuilding Corp, which has the largest order book of any shipbuilding group in the world, described the measures as a breach of World Trade Organization rules.