U.S. NVOs ask China to delay registration enforcement
Representatives for the non-vessel-operating common carrier industry asked U.S. regulators within the Federal Maritime Commission, Maritime Administration and State Department this week to encourage China to delay its enforcement of a registration policy for at least 60 days.
In June, China’s Ministry of Communications twice warned liner carriers involved in the U.S.-China trade not to enter into rate agreements or accept cargoes from NVOs who had not registered. The ministry has threatened to follow through with significant penalties against liner carrier operators who fail to comply.
The regulation is part of China’s Implementing Regulations that govern international maritime transportation with the United States, effective March 1, 2003, but it has not been enforced by the Chinese government until recently.
NVOs in the U.S.-China trades complain that the registration process is cumbersome and confusing. To apply, the U.S. NVO must first appoint a liaison entity that will represent its administrative and legal requirements before the Chinese government. The liaison may be a subsidiary or representative office of the U.S. NVO in China or a Chinese entity.
Numerous documents are also required to fulfill the registration process. They include:
* Application form (available through Chinese Ministry of Communications).
* Feasibility study report, which includes a general introduction and basic business analysis.
* Notarized certificate of incorporation and U.S. Federal Maritime License number.
* Sample bill of lading form.
* Introduction of the Chinese liaison.
* Power of attorney for designating the Chinese liaison.
* Contract between the Chinese liaison and the applicant.
* Business license of the Chinese liaison.
* Evidence of financial responsibility in the total amount of RMB 800,000 ($96,000), and RMB 200,000 for each branch office operated in China.
“The process usually takes about two months including both the initial review at the provincial level and the registration with MOC,” said Carlos Rodriguez, a partner with Washington-based law firm Rodriguez O’Donnell Ross Gonzalez & William, which represents numerous NVOs on regulatory matters.
Some U.S. NVOs had obtained Optional PRC Riders, which increased the $75,000 bond to $96,000, through the FMC said that the Ministry of Communications previously agreed would satisfy the regulatory requirement. In July, the FMC advised that only 68 NVOs have the appropriate bond riders (FMC Docket 02-04). But there’s considerable question within the industry whether the Chinese government will continue to accept the FMC bond rider, Rodriguez said.
“In view of the newness of the procedure, an indefinite moratorium should be requested for those NVOCCs that have commenced the registration process by giving official notice that they have commenced the process,” Rodriguez wrote to the FMC on Monday.
“This request should be given high priority in view of the fact that ocean carriers are already enforcing the Chinese regulations per the notices given by MOC in June 2007,” he added. “Perhaps the MOC can give a list to carriers that have commenced the procedures and exempt these from enforcement while their applications are in good standing.”
Rodriguez said the registration process should become quicker and easier once law firms develop document templates and become more familiar with the process.
“Based on our understanding of the registration process and the document requirements, I would estimate a 30- to 40-hour workload for us to process the NVOCC registration application,” he said.