Unions Call On Biden to Probe Chinese Shipbuilding

The Lede: Several U.S. unions called on the Biden administration on Tuesday to launch a formal trade investigation into alleged unfair practices in the Chinese shipbuilding and maritime logistic sectors. This is the latest in a growing series of efforts on the part of the U.S. and its Western allies to implement probes into China’s competitiveness across several key industries. 

What We Know:

• The United Steelworkers, the International Association of Machinists and Aerospace Workers, and the International Brotherhood of Boilermakers were among the unions that sent the petition to the U.S. Trade Representaitve (USTR) to counter the ‘unreasonable and discriminatory’ practicies that China has been implementing to the detriment of U.S. industries and commerce. 
• The petition notes that China has been unfairly keeping prices low while creating an infrastructure network that aims to discriminate against U.S. ships and shipping companies. It warns that Beijing’s policies threaten to disrupt supply chains as well as vital national security interests.
• Concerns have also been raised about Logink, a Chinese software platform that works with data on global supply chain logistics, which observers worry could compromise locations and destinations of commercial and military shipping. 
• The unions point to Section 301 of the Trade Act of 1974 as a suitable mechanism for addressing China’s policies. The USTR has 45 days to decide whether to begin conducting an investigation.

The Background: Section 301 allows the U.S. government to respond to unreasonable or discriminatory practices by foreign governments that weigh on U.S. commerce. Former President Donald Trump used the section to justify the tariffs his administration imposed on Chinese imports during the U.S.-China trade war started in 2018. The tariffs are currently under a four-year review by U.S. officials. This request to intervene in the shipbuilding sector comes on the heels of legislation last week that would ban TikTok unless the Chinese company ByteDance divests from the app. The Biden administration also began an investigation recently into imported smart and electric vehicles from China. 

Likely Outcomes:

• The U.S. side of these industries have an uphill battle in competiting with the Chinese counterparts. In the past two decades China has gone from producing around 12 percent of global commercial ships to more than 50 percent last year according to maritime consultancy Clarksons Research. Tariffs and port fees can only go so far and will likely not be a panacea to revive the U.S. shipmaking industry. The industry has been in decline for longer than China entered the stage as a formidable competitor due to obstacles related to costs and supply of American ship-building as well as the requirement for the use of exclusively American-made ships in coastal trade between U.S. ports. 
• The implementation of Chinese software in global shipping logistics at ports is also an area that will be difficult to extricate from the overall supply chain infrastructure. The U.S. may want other countries to reject software like Logink, but where China owns, constructed, or operates major ports, it may be unfeasible to sever this component. 
• Despite the difficulty in actually accomplishing the wishes of the unions, the Biden administration will likely play into the narrative as the presidential election approaches. Pushing against China in the name of U.S. economic and national security interests is a strategy that both major candidates want to use to score easy political points.

Quotables:

“We have seen the [People’s Republic of China] create dependencies and vulnerabilities in multiple sectors, like steel, aluminum, solar, batteries and critical minerals, harming American workers and businesses and creating real risks for our supply chains.” - Katherine Tai, U.S. Trade Representative

“The United States was once a leader in the commercial shipbuilding industry, but over the past two decades, the Chinese Communist party enacted a comprehensive strategy to dominate the full spectrum of global trade, making massive investments in shipbuilding and engaging in predatory trade practices”. - David, McCall, USW President

Good Reads:

North American unions ask Biden administration to probe Chinese shipbuilding, impose port fees (SCMP)

US steel unions urge Joe Biden to open probe into Chinese shipbuilding (FT)

US Unions Urge For Probe On Chinese Shipbuilding Sector (Barrons)