Proposed US sanctions can hit global trade - BIMCO

The shipping body Baltic and International Maritime Council (BIMCO) has said that US LNG exports will be particularly impacted. 

PHOTO: Container ships in commercial harbour in Poland's Gdynia port. Getty Images

In February, the US Trade Representative (USTR) proposed sanctions against vessels constructed in China as well as those owned by Chinese shipping firms calling at US ports. 

The proposed sanctions also call for a certain percentage of US exports to be transported using US-flagged vessels, in a bid to boost the construction and operation of US-built vessels. This is likely to impact US energy exports, particularly LNG, according to BIMCO, as there currently are no US-built or US-flagged LNG carriers in operation, or on order. 

BIMCO notes that US' import and export constitutes around 12% of global seaborne trade. The new sanctions are likely to have a bigger impact on US imports and exports.

BIMCO also pointed out that the proposed measures will prove to be counterintuitive to the US economy, “...the proposed actions will impose much increased transport costs on US imports and exports and have negative effects on the wider US economy; their impact on Chinese dominance is much less certain,” BIMCO’s letter states. 

Over the last decade, the share of China-built tonnage has increased in international shipping fleets. Since shipowners will continue deploying these vessels, they are likely to resort to “avoidance strategies” to avoid paying the fines and avoid US port calls, BIMCO argues.  

Moreover, charging fees on vessels of Chinese origin calling at US ports will also increase the cost of seaborne transport to and from the US, BIMCO said. 

The USTR has invited public feedback on the proposed sanctions until March 24.

By Manjula Nair

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