Served February 8, 2000

FEDERAL MARITIME COMMISSION

DOCKET NO. 98-14

SHIPPING RESTRICTIONS, REQUIREMENTS AND PRACTICES
OF THE PEOPLE'S REPUBLIC OF CHINA

INFORMATION DEMAND ORDER

This proceeding was initiated on August 12, 1998, by issuance of orders to Chinese and U.S.-flag shipping lines, requiring production of information regarding a broad range of apparent Chinese restrictions on U.S. ocean shipping. The Federal Maritime Commission ("Commission") is compiling a record on these matters in order to determine if further Commission action under section 19 of the Merchant Marine Act, 1920, or the Foreign Shipping Practices Act of 1988 is warranted.⁽¹⁾

The responses to the August 1998 information demand orders revealed serious restrictions on non-Chinese carriers' ability to operate subsidiary or branch offices, including agency and transportation intermediary operations. Moreover, the Chinese rules for licensing of liner services, as well as proposed regulations covering multimodal services and tariff and service contract filing, continue to raise concerns about non-Chinese carriers' ability to compete in the U.S.-China trade.

Since the last round of responses was received, the international liner business of one of the U.S.-flag respondents, Sea-Land Service Inc. was acquired by the A.P. Moller-Maersk group, which provides liner shipping and related services worldwide, including in the U.S.-China trade. In order to ensure a fully accurate and complete record in this docket, the Commission has determined to collect information from this group, which provides liner services as A.P. Moller-Maersk Sealand, and continues to operate a number of U.S.-flag vessels in the trade. Such update is necessary to determine the scope of the merged entity's operations in the U.S.-China trade, the degree to which it faces restrictive or unfair governmental practices in China, and the extent to which such restrictions may create unfavorable conditions for U.S. shipping.

THEREFORE, IT IS ORDERED, that A.P. Moller-Maersk Sealand submit to the Commission responses to the following requests for information and documents, on or before March 24, 2000:⁽²⁾

Changes in port calls/access to ports

1. Describe any applications Maersk Line, Sea-Land Service, or Maersk Sealand have brought within the past 12 months seeking approval from Chinese authorities for new or changed vessel calls or liner services involving U.S.-flag vessels or the U.S.-China trade. Describe the request and any response or decision provided by Chinese authorities, and note where there has been no response.

2. Identify the representative, subsidiary, and branch offices that your corporate group operates in China in the business of ocean shipping and related activities. Describe these offices' activities. If there are geographic limits on these offices (e.g., they can only serve customers or provide services in a particular region), describe those restrictions.

3. Describe any changes in your arrangements for vessel agency services since the response of Sea-Land Service, Inc. in this proceeding.

4. Describe any new, modified, or reduced restrictions or requirements (beyond those described in the response of Sea-Land Service in this proceeding) encountered by your company for establishing new representative offices, subsidiaries, or branch offices. Describe the effects of such restrictions or requirements on your business plans or operations.

5. Describe any new, modified, or reduced restrictions (beyond those already described in the response of Sea-Land Service, Inc. in this proceeding) on your company's ability to provide intermodal transportation services in China (e.g., arranging or providing inland transportation, preparing documentation and issuing bills of lading, providing logistics services, managing and providing equipment, etc.). Describe any resultant effects on your business plans or operations.

6. Describe any new, modified, or reduced restrictions (beyond those already described in the response of Sea-Land Service, Inc. in this proceeding) on your company's ability to perform vessel agency services (e.g., arranging for entry and departure with port authorities, berthing, piloting, loading and unloading, bunkering, arranging for customs entry and clearance, handling crew administration matters). Describe any resultant effects on your business plans or operations.

IT IS FURTHER ORDERED, That each of the questions listed above calling for the submission of information must be answered separately and fully, in writing and under oath, and signed by the corporate official providing the answer.

By the Commission.

Bryant L. VanBrakle
Secretary

ENDNOTES

1. Section 19 of the Merchant Marine Act, 1920, 46 U.S.C. app. § 876, authorizes the Commission, inter alia, to "make rules and regulations affecting shipping in the foreign trade not in conflict with law in order to adjust or meet general or special conditions unfavorable to shipping in the foreign trade . . . which arise out of or result from foreign laws, rules, or regulations or from competitive methods or practices employed by owners, operators, agents, or masters of vessels of a foreign country;. . . ." The Foreign Shipping Practices Act of 1988, 46 U.S.C. app. § 1710a, authorizes the Commission to investigate whether any laws, rules, regulations, policies, or practices of foreign governments, or any practices of foreign carriers or other persons providing maritime or maritime related services in a foreign country result in the existence of conditions that (1) adversely affect the operations of United States carriers in the United States oceanborne trade; and (2) do not exist for foreign carriers of that country in the United States under the laws of the United States or as a result of acts of United States carriers or other persons providing maritime or maritime-related services in the United States. If the Commission determines that such adverse conditions exist, it may take actions including limitations on sailings, suspension of tariffs, suspension of agreements, or fees not to exceed [$1.1 million] per voyage.

2. Section 19(6) of the Merchant Marine Act, 1920, states:

(a) the Commission may, by order, require any person . . . to file with the Commission a report, answers to questions, documentary material, or other information which the Commission considers necessary or appropriate;

(b) the Commission may require a report or answers to questions be made under oath;

* * *

(d) a person who fails to file . . . information required to be filed under this paragraph shall be liable to the United States Government for a civil penalty of not more than $5000 for each day that the information is not provided.

The Foreign Shipping Practices Act of 1988 authorizes the Commission to require any person "to file with the Commission any periodic or special report, answers to questions, documentary material, or other information which the Commission considers necessary or appropriate" to further the purposes of that statute.