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Commissioner Antony M. Merck Addresses The South Carolina International Trade Conference

May 24, 2001



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FMC COMMISSIONER ANTONY M. MERCK ADDRESSES OSRA, UNFAIR SHIPPING PRACTICES AT THE SOUTH CAROLINA INTERNATIONAL TRADE CONFERENCE

NR 01- 06

Washington, D.C. 20573

CONTACT LUCILLE L. MARVIN AT (202) 523-5712

FOR RELEASE: MAY 24, 2001

Charleston, S.C. - Commissioner Antony Merck of the Federal Maritime Commission expressed his view on May 24 that the Ocean Shipping Reform Act, or "OSRA", seems to be working well for the maritime shipping industry. Merck explained that according to comments solicited by industry participants, most appear satisfied by the reforms brought about by the law. Commissioner Merck spoke at the South Carolina International Trade Conference on May 24, 2001. The Conference's attendees were comprised of manufacturers, shippers, importers, land- and ocean-based carriers, as well as Customs brokers, and freight forwarders.

The Ocean Shipping Reform Act, or "OSRA", became effective two years ago as an amendment to the Shipping Act of 1984. The purpose of OSRA is to promote the growth and development of the United States ocean shipping trade through more reliance on competition in the marketplace. The Federal Maritime Commission is charged with implementing and enforcing the Act. Among some of the reforms featured in the law, OSRA eliminated the need for tariff filing with the Federal Maritime Commission. Tariffs must now be published privately and made electronically accessible. Limited antitrust immunity was retained in the statute for ocean carriers, but expected to be used to achieve beneficial purposes-- "not to be abused unreasonably to enhance carrier profits or reduce transportation options for the shipping public," Commissioner Merck explained.

The FMC is compiling an OSRA impact study, due out this summer. Commissioner Merck stated that the final OSRA report is not intended to resolve all issues regarding OSRA, but to identify the issues and evaluate them against the goals set forth by Congress. Last June, the FMC released an interim report showing that 80-90% of cargo is now carried under service contracts negotiated one on one between the shipper and carrier rather than under a published tariff. The report also concluded that most shipping conferences are disappearing.

Commissioner Merck also informed the SCITC attendees that U.S.- Chinese maritime relations are an important topic on the FMC agenda. Since 1998, the FMC has been engaged in an on-going proceeding involving Chinese shipping practices that may have an adverse impact on shipping in the foreign trade. The Federal Maritime Commission is empowered to initiate such proceedings in order to combat restrictive foreign shipping laws that result in unfavorable conditions for U.S. shipping lines and trade interests. Merck stated that, in his view, it appears that such restrictive or unfavorable conditions do exist. For example, in contrast to U.S. shipping policy which allows Chinese carriers to use their own subsidiaries for vessel agency services in American ports, the Chinese government requires carriers to use services provided by state-owned enterprises.

Commissioner Merck stated that the FMC would like to see competition on equal footing between all players in the U.S.-China ocean shipping trades, however, the task is proving to be difficult. U.S.-China shipping matters are governed by bilateral treaties, but the last one expired in 1998. Since then, informal talks between the Chinese and the Maritime Administration have been unsuccessful, leaving maritime relations at a standstill."The FMC's mandate is to foster competition in ocean shipping in the U.S. trades, not to perpetuate market distortions. If we are successful, it is not just carriers that are affected, but U.S. shippers who will enjoy choices in ocean transport," Commissioner Merck concluded.