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FMC Discusses Brazilian Shipping Developments

December 2, 1998

FEDERAL MARITIME COMMISSION

FMC Discusses Brazilian Shipping Developments

NR 98-11

Washington, D.C. 20573


For Release: December 2, 1998

The Federal Maritime Commission determined today not to proceed with immediate formal action against Brazilian shipping lines at this time, to allow the Government of Brazil to remedy apparent unfavorable and discriminatory trade practices.

In its November 24th meeting, the Commission observed that Brazilian authorities had begun imposing discriminatory rules on U.S. carriers with regard to government-reserved cargoes, estimated to comprise at least 20% of the U.S.-Brazil trade. As a result of these rules, U.S. exporters were required to seek waivers from Brazilian authorities to ship a wide range of cargoes on U.S. flag vessels, and were subjected to sizable tax and duty levies if their cargo moved on U.S., rather than Brazilian, ships. The Commission tasked its staff to produce an appropriate response, which measures could include prompt imposition of sanctions pursuant to section 19 of the Merchant Marine Act, 1920, including fees on Brazilian vessels calling at U.S. ports in amounts up to one million dollars per sailing.

At today's meeting, the Commission observed that Brazilian transportation authorities in recent days have taken some steps with regard to these practices, granting U.S. carriers a temporary waiver of discriminatory cargo reservation rules. These steps, while positive, in no way resolve this matter; nevertheless, the Commission has determined to allow some opportunity for significant progress to be made toward a diplomatic resolution. Accordingly, this issue will be carried forward to the Commission's next meeting, scheduled for December 9th.

Chairman Harold J. Creel stated: "I continue to be deeply troubled by Brazil's discriminatory policies. U.S. shippers and carriers require fairness and legal certainty as they negotiate long term contracts for the bilateral trade. If we do not see a prompt and permanent resolution -- of both this matter and Brazil's other unfair and discriminatory shipping policies -- the Commission will have no choice but to go forward."