U.S. NVOS CONCERNED ABOUT CHINAÆS NEW ‘BONDING’ REQUIREMENT
U.S. non-vessel-operating common carriers are eager to enter China's ocean freight consolidation market, but that country's new “bonding” requirements threaten to shut out these operators.
Representatives from the NVO-Government Affairs Conference and the New York-New Jersey Foreign Freight Forwarders and Brokers Association met with Chinese government officials in Washington last week to express their concerns about the bonding requirements of China's new international maritime regulations.
Under the new maritime rules, China will require all non-Chinese NVOs to deposit more than $100,000 in hard currency into a special bank account in China.
“This is very cost prohibitive to our small and medium-sized NVOCC members and would result in possible exclusion from the U.S.-PRC (People's Republic of China) trades,” said Gary Klestadt, secretary for the New York forwarder group.
“While we acknowledge that China is permitted to regulate its foreign trade, we are hopeful that the Chinese delegation now recognizes the potentially harmful impact that the regulations might have on smaller NVOCC businesses,” Klestadt added.
The Chinese delegation told the U.S. NVO representatives that China's insurance industry is not ready to issue the types of bonds that are issued in the United States to comply with the 1998 Ocean Shipping Reform Act. For now, the bank deposit requirement is the best way to start a surety bond-type system in China, the Chinese delegation said.
The U.S. NVO representatives also asked the Chinese delegation to clarify the requirement to provide the Ministry of Communications with copies of their house bills of lading as part of the registration to operate consolidation services in China.
The Chinese delegation eased some concerns when it told the U.S. NVO representatives that it would “temporarily” suspend its tariff-filing requirement until further review by the Ministry of Communications.
In addition, the Chinese delegation said there would be a “notice and comment” period for certain aspects of China's new international maritime regulations, specifically in the areas of NVO bonding, tariff filing and enforcement.
The NVO-GAC and New York forwarder group said they would closely monitor the implementation of China's new international maritime regulations and asked the Ministry of Communications to continue to dialogue with the NVO industry associations.
“Our meeting with the Chinese state delegation provided us with the unique opportunity to establish a meaningful and professional dialogue with key policy and decision makers,” said Alan E. Baer, chairman and president of the NVO-GAC. “We attempted to bring to the forefront industry-wide issues and questions regarding the new law and China's implementing regulations.”