U.S. INTERMEDIARIES ASK CHINA TO SUSPEND NEW LICENSING RULES

U.S. INTERMEDIARIES ASK CHINA TO SUSPEND NEW LICENSING RULES    The National Customs Brokers And Forwarders Association Of America and the International Association Of Non-Vessel Operating Common Carriers have asked Chinese authorities to suspend the new registration and bonding requirements applicable to intermediaries in China
   The Ministry of Communications is due to close today the period when industry and interested parties can submit comments on China’s controversial “Implementing Rules for the Regulations of the People’s Republic of China on International Maritime Transportation.”
   In a joint comment submitted to China’s Ministry of Communications, the two U.S. associations of intermediaries said: “Alone, among the international transportation businesses, the NVOCC community both in the United States and the PRC will be — unless changes are made — substantially and unnecessarily subjected to heavy burdens that work to the detriment of both the NVOCC community and their shippers.”
   The NCBFAA and IANVOCC urged the Chinese authorities to address the issues, and made recommendations in their submission.
   They said registration and financial guarantee requirements in both the United States and China are redundant and onerous for NVOCCs that operate in both countries. “The NCBFAA and the IANVOCC see no reason why the governments should not be able in a relatively short period of time to implement a workable, efficient and fair system of reciprocal recognition of NVOCCs,” they said.
   If a company is licensed and has provided evidence of financial responsibility in the United States, the Chinese and American governments should establish a system of reciprocity by which the NVOCC can operate in both countries, they argued. The same could apply for a Chinese-based NVOCC that is registered and has made the necessary security deposit in that country.
   The NCBFAA and IANVOCC urged the Chinese government to “suspend the enforcement of the registration and bonding requirements on non-PRC-based NVOCCs until such time as representatives of both governments can negotiate a workable systems of reciprocal regulation of NVOCCs.”
   The implementing rules of China’s new maritime law have been criticized in the United States for their cost, added regulatory burden, and the requirement of the Chinese authorities for large bank deposits as financial guarantees rather than cheaper surety bonds, as required in the United States.
   The financial security requirement of about $96,000 for the main office and $24,000 for branch offices is higher, and applicants are required to post the security in cash in a bank in the PRC, the NCBFAA and IANVOCC said. “At the same time, the process for … becoming registered in the PRC appears to be somewhat more complicated and difficult in the PRC than is the case in the United States,” they said.
   The two intermediaries associations, which represent most of the NVOCCs and forwarders based in the United States, said they would also ask the U.S. Federal Maritime Commission to consider a system of reciprocity of registration and bonding.
   In a lengthy, detailed submission to the Chinese government, the NCBFAA and IANVOCC also listed numerous areas of the proposed implementing rules that, they said, require clarification.
   The U.S. National Transportation League reportedly has also submitted its comments to the Chinese, saying that certain rules are ambiguous and contain undefined terms.
   The NCBFAA and IANVOCC said that article 44 of the Chinese implementing rules “indicates that a company cannot act as both an NVOCC and an international freight forwarder on the same shipment.” There is no comparable restriction in the United States, although rules issued by the FMC prohibit a forwarder from receiving “compensation” (or brokerage payments) from the vessel operators on shipments in which its affiliate has acted as an NVOCC. The associations of intermediaries asked the Chinese Ministry of Communications to reconsider this limitation.