'Fee could fuel stronger China trade in region'

Tropical Shipping President and CEO Tim Martin believes proposed fees on Chinese-built vessels that call on US ports would have the unintended consequence of America’s third border, the Caribbean Basin, becoming China’s new Red River — a trading route dominated by Chinese carriers and vessels transporting goods from China and other supply sources outside the United States.

Martin made the prediction during his testimony on Monday before the US Trade Representative (USTR) in Washington, DC, where he argued the fees would severely affect American-owned shipping companies as well as US exporters and Caribbean businesses that ship with Tropical.

The proposed tariffs include a flat $1 million port fee on Chinese-built vessels entering US ports.

Martin expanded on the point when he spoke with The Nassau Guardian on Tuesday.

“My whole thought of that comment, and I put it in there for the testimony, was basically saying that if these fees go into place, people are going to stop buying from the US and that China will grow its business in the Caribbean Basin because countries will have no other option but to buy goods from somewhere else, and I believe China will try to do some type of subsidies to fill that void,” he said.

Martin said it would obviously not be practical for China to provide perishable items to the region like fresh eggs, beef and produce.

But he said the fees could encourage a significant increase in trade between China and the region for many other goods.

The House Foreign Affairs Committee of the US Congress notes that while the Caribbean’s trade with China has grown at a slower pace than overall trade with the region, it increased from $1 billion in 2002 to $8 billion in 2019, with an estimated $6.1 billion in Chinese exports and $1.9 billion in imports.

Martin said the fees could lead to the Caribbean region shifting $92 billion in trade away from the United States.

He believes China’s dominance in regional trade could become another significant issue for the United States if the tariffs are imposed.

“The president, he talks about his three pillars, which [are] trade, economy and security,” Martin said.

“These are like the three pillars and when you talk about trade, this is one of the three pillars. You can’t upset trade. You want trade to grow, not trade to decline, and plus, the Caribbean is the third border to the United States. It is there to help and support and be part of. They’re friendly. They care about us. We care about the Caribbean nations. Let’s do the right thing here.”

After an investigation into China’s dominance in shipbuilding, maritime and logistics, the USTR proposed to impose certain fees and restrictions on international maritime transport services related to Chinese ship operators and Chinese-built ships, as well as to promote the transport of US goods on US vessels.

The high fees being proposed are seen as a way to channel more shipbuilding back to the United States.

But Martin told the hearing the tariffs would have a catastrophic impact on the American shipping industry and economy.

“The US shipping industry serving the Caribbean cannot absorb the additional costs of the proposed port fees, which would have significant economic consequences,” he testified.

“Instead of strengthening American competitiveness, these port fees would push American-owned carriers like Tropical out of business.”

Tropical Shipping operates out of the Port of Palm Beach, Florida, and nine of its 19 vessels were built in China up to 25 years ago.

Martin asked the USTR to exempt American-owned and headquartered vessel operators from proposed fees and to apply the tariffs on future ships built in China, but not on fleets that are already in service.

“I urge this committee to consider exemptions or policy adjustments that ensure American-owned shipping companies are not unfairly penalized for decisions made years before these tariffs, thereby ensuring a fair and equitable policy,” Martin testified.

Tropical transports about half of all goods imported to the Caribbean, and Central and South America – poultry, agriculture products, groceries, building materials, medicine, and hurricane relief supplies.

Martin said the proposed fees would force Tropical Shipping to double its freight rates, causing its Caribbean customers to buy from outside the United States at a higher cost.