NVOCCs request new FMC rule on Chinese bond
The National Customs Brokers and Forwarders Association of America has petitioned the U.S. Federal Maritime Commission to issue an amended rule to allow non-vessel operating common carriers already licensed with the U.S. agency to use their bond as an alternative to a cash deposit in China — the Chinese equivalent of the FMC bond.
China’s new Regulations on International Maritime Transportation, and the associated Implementing Rules, require non-Chinese NVOCCs to make cash deposits in banks located in the People’s Republic of China.
With its petition, the NCBFAA is trying to get the FMC to act on an expected loosening of Chinese rules on NVOCCs, following the recent U.S./China bilateral maritime agreement. As part of the agreement, the Chinese government has made it known that it intends to exempt U.S. NVOCCs from the obligation to make a cash deposit in a Chinese bank. The Chinese authorities will, instead, accept an FMC license showing the eligibility of the NVOCC, and accept a certificate of bond as an alternative to a cash deposit.
“The NCBFAA believes that the proposed rulemaking would be an appropriate way of implementing recently negotiated provisions of the Agreement on Maritime Transport and Memorandum on Consultations between the U.S. and People’s Republic of China governments, both of which were signed on Dec. 8,” the FMC said in a statement concerning the NCBFAA petition.
Specifically, the NCBFAA proposes that the FMC allow NVOCCs to amend their existing bonds by adding a “rider,” which would comply with the Chinese requirement that all NVOCCs operating in the U.S.-China trades provide evidence of financial responsibility in the total amount of RMB800,000 (about $96,000). The NCBFAA asserts that the rider is necessary because the FMC’s regulations generally only require a bond in the amount of $75,000 (not including an additional $10,000 for branch offices) for licensed NVOCCs.
This rider would increase the base amount of the bond by $21,000, and provide that the bond “would also be available for the payment of fines or reparation awards that might be imposed by the Chinese authorities due to the NVOCC’s violation of the Regulations on International Maritime Transportation,” the FMC said.
To make a thorough evaluation of the petition, the FMC has invited the industry to submit views or arguments in reply to the petition by Jan. 12. Interested parties may also make oral presentations in this proceeding.