Highlights
- The U.S. Trade Representative (USTR) recently initiated a public comment process to review proposed modifications to actions in the Trade Act of 1974 Section 301 investigation into China's targeting of the maritime, logistics and shipbuilding sectors for dominance.
- Stakeholders with equities in the proposed changes – particularly those in the liquefied natural gas and vehicle carrier sectors – should strongly consider participating in the process by submitting comments to USTR by the July 7, 2025, deadline.
- This Holland & Knight alert reviews the Section 301 investigation, proposed USTR actions and other areas for interested parties to consider.
The U.S. Trade Representative (USTR) on June 6, 2025, initiated a public comment process to review proposed modifications to actions in the Trade Act of 1974 (Trade Act) Section 301 Investigation of China's Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance. The proposed modifications relate to 1) the application of fees to vehicle carriers in the Maritime Security Program, 2) changing the basis of fees applied to vehicle carriers to net tonnage and 3) certain changes specific to liquified natural gas (LNG) carriers, including eliminating of the threat of export license suspension. Public comments on the proposed changes – which will be of particular interest to stakeholders in the LNG and vehicle carrier sectors – are due by July 7, 2025.
Background on the Investigation
On April 17, 2024, USTR initiated an investigation of China's acts, policies and practices targeting the maritime, logistics and shipbuilding sectors for dominance. In January 2025, USTR released its report on the investigation, in which it found that "for nearly three decades, China has targeted the maritime, logistics, and shipbuilding sectors for dominance and has employed increasingly aggressive and specific targets in pursuing dominance." Based on these findings, USTR found China's practices actionable under Section 301. After an extensive public comment process regarding the appropriate action to be taken, on April 17, 2025, USTR imposed certain fees on Chinese-owned, Chinese-operated and Chinese-built ships, as well as restrictions on the maritime transport of LNG (the April 17 Determination). (See Holland & Knight's previous alert, "USTR Announces Streamlined Notice of Action to Counter Chinese Dominance in the Maritime Sector," April 21, 2025.)
Proposed Changes to Trade Actions
On June 6, 2025, USTR announced that it is considering changes to its April 17 Determination. USTR has requested public comments on those proposed changes, specifically:
- Targeted Coverage for Maritime Security Program Vessels. Annex III of the April 17 Determination called for a service fee of non-U.S.-built vehicle carriers. On June 6, USTR requested comments on the inclusion of a "targeted coverage provision" for vehicle carriers in the Maritime Security Program (a U.S. Department of Transportation program that maintains a fleet of commercially viable, militarily useful merchant ships).
- Fees to Be Based on Net Tonnage. Annex III of the April 17 Determination specified that the fee on non-U.S.-built vehicle carriers would be based on the Car Equivalent Unit (CEU) capacity of the carrier. On June 6, USTR requested comments regarding changing the basis of this fee from CEU capacity to net tonnage.
- Changes to LNG-Related Provisions. Annex IV of the April 17 Determination provided for the suspension of LNG export licenses unless certain escalating requirements for the percentage of LNG that must be transported by U.S.-built, U.S.-flagged and U.S.-operated vessels are met. On June 6, USTR requested comments on 1) eliminating the provision allowing for the suspension of export licenses, 2) applying certain data reporting requirements related to LNG shipments to owners and operators, and 3) whether the LNG-related restrictions in Annex IV should apply to vessel owners or vessel operators.
According to this request for comments, USTR is initiating this new round of comments under Section 307 of the Trade Act. This section specifies that "[t]he Trade Representative may modify or terminate any action, subject to the specific direction, if any, of the President with respect to such action, that is being taken under [Section 301] if ... such action is being taken under section 301(b) of this title and is no longer appropriate." Actions taken under Section 301(b) may be deemed inappropriate if they result in impairments to other significant U.S. interests, fail to reduce dependencies on China in the maritime, logistics and shipbuilding sectors, or present concerns related to administrability.
For Annex III, USTR has proposed modifications that support specific programs aimed at reducing dependence on China. Additionally, USTR proposes altering the fee basis described in that annex from CEUs to net tonnage. USTR deems this change suitable to enhance administrability and mitigate potential fee evasion. Regarding Annex IV, USTR proposes the elimination of the term concerning the suspension of certain export licenses to address concerns about that provision's negative impact on the U.S. LNG sector.
Key Takeaways
USTR has invited comments from interested parties regarding the above-described changes. USTR relies on public comments to ensure that its actions adequately address stakeholder interests, do not cause unintended consequences and further the security interests underlying the Section 301 process. Stakeholders with equities in the proposed changes should therefore closely consider participating in this process by submitting comments to USTR. The deadline for submission is July 7, 2025.
USTR's willingness to reopen the notice of action for public comment to potentially modify its services fees framework is a positive development that indicates that USTR is considering input from industry and customs officials. Although the current comment period relates only to Annexes III and IV, USTR's openness to further input indicates that stakeholders affected by Annexes I and II may benefit from direct dialogue with USTR regarding the interpretation of key provisions in those annexes.
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