U.S. forwarders concerned about retaliation
The National Customs Brokers and Forwarders Association of America has expressed concern to the U.S. Federal Maritime Commission about possible retaliation by foreign governments against U.S.-licensed non-vessel-operating common carriers doing business in China.
NCBFAA asked the FMC to immediately reopen the proceeding in which it created negotiated rate agreements (NRAs). New FMC rules went into effect Monday allowing licensed NVOs to enter into NRAs with customers without having to publish tariffs, but the rules exclude foreign-based registered, unlicensed NVOs.
(The FMC has published guidelines on NRAs here.
In a letter to the FMC, NCBFAA General Counsel Edward Greenberg, praised the creation of NRAs, saying they will “result in a significantly more efficient and competitive environment for NVOCCs and their customers,” but asked the FMC to immediately initiate proceedings to consider whether the exemption should be extended to foreign-based registered NVOs.
“The NCBFAA is concerned that it is just a matter of time before the PRC does react and takes actions that would create the same if not greater disadvantages for U.S.-licensed NVOCCs doing business in China as this restriction imposes on their nationals.”
The FMC approved the rule in a 3-1 vote in February with Chairman Richard A. Lidinsky Jr. and commissioners Rebecca F. Dye and Michael A. Khouri voting to issue the final rule. Commissioner Joseph E. Brennan dissented, saying the agency did not have the legal authority to make the change and it would neither promote competition or promote commerce.
Dye and Khouri were willing to extend the rule to foreign-based registered NVOs, but voted to supported the rule that went into effect April 17 that allows domestic licensed NVOs to use NRAs while the FMC further studies extending the rule to foreign unlicensed NVOs.
Lidinsky said he is “willing to begin a new notice of inquiry to examine how the exemption is working and whether or not we can fashion appropriate safeguards that allow us to extend this exemption to foreign unlicensed NVOs without harming the shipping public. I want to work with commissioners and staff and see public input on what those safeguards would look like, whether they would be sufficient to protect commerce. ' We could then make a determination with the benefit of experience under our belt dealing with the exemption for the licensed NVOCCs.”
The NCBFAA asked for that process to be commenced immediately.
Lidinsky also noted “the path to licensure is readily available to foreign-based NVOCCs to the same extent as United States-based entities. Foreign unlicensed NVOCCs may apply for and, if qualified, obtain an NVOCC license. Not only would this provide the benefit of NRAs but also reduced bond costs.” The FMC said there are more than 55 foreign-based NVOs hold FMC-issued licenses.
But NBCFAA said “the suggestion that foreign NVOCCs can open offices here to circumvent this discriminatory application of the exemption ' may not be an easy alternative for many companies because of tax and administrative issues, among others.”
Lidinsky said in February that FMC staff had “raised concerns that the difficulties facing the commission in compelling production of pertinent documentation and, what may be the inability of a private litigant to obtain documentation, could reduce the commission's ability to protect the shipping public.”
He noted that FMC decisions have noted foreign-based NVOs often ignore commission proceedings and order to furnish answers to discovery requests, and that they are not subject to a requirement that they “have the character necessary to provide NVOCC services to United States importers and exporters, as United States based companies do. The commission knows little more than the name and address of such persons and the identity of their agent for service of process in the United States.”
But Greenberg said the NCBFAA “is concerned that the passage of additional time will not provide the commission with additional information concerning the relationship between NVOCCs and other members of the shipping industry and how the exemption is working that would be necessary or helpful in addressing this unfinished work.
“It will, however, further delay the elimination of barriers to efficient operations that every commenting party, with the exception of several tariff publishers, agreed were totally unnecessary and irrelevant.” ' Chris Dupin