OMSA Proposes a Daily Fee on Chinese-Made Offshore Vessels in US Waters

 

America's offshore vessel operators are pleased with the White House's proposal for steep fees on Chinese ships, and they would like the administration to go one step further - with a daily tax on Chinese-built vessels operating in U.S. waters. 

Despite the protections of the Jones Act for American shipping, the offshore vessel services industry is still exposed to low-cost foreign competition for certain tasks. Depending on the specifics of the work, a foreign offshore service vessel may not be covered by the Jones Act in U.S. waters. Crane ships, offshore wind turbine installation vessels, survey ships and other specialty service vessels can often compete for work on the U.S. continental shelf, so long as they do not move cargo between U.S. points. The definitions of "move," "cargo" and "U.S. points" are often disputed, but foreign operators still regularly win charters for work in U.S. waters. 

Last month, the Office of the U.S. Trade Representative (USTR) announced a plan to impose steep multimillion-dollar charges on Chinese-owned and Chinese-built vessels for calls at American seaports - but the fees are only assessed once per visit, and only in port. Under USTR's fee structure, a Chinese-made offshore vessel could still work in U.S. waters without paying anything, so long as it avoided American port calls. 

To offset the cost advantages of these foreign-built, foreign-crewed vessels, the Offshore Marine Services Association (OMSA) has asked USTR to include offshore work in its proposed schedule of fees for Chinese-built vessels. 

"OMSA respectfully requests that the proposed actions be amended so that the service fees accrue on a daily basis for Chinese-built vessels working in U.S. sovereign waters on U.S. offshore energy projects. This clarification to the USTR proposed remedies will adequately ensure that the actions fully account for the harm that is being promulgated by Chinese-built vessels to U.S. shipyards, vessel owners, mariners, and other workers that engage or attempt to engage in U.S. offshore energy projects," said OMSA President and CEO Aaron Smith. 

Smith suggested that Chinese-built offshore vessels could easily be assessed a daily fee based on AIS data records showing their time in U.S. waters, or on their Coast Guard notice of arrival and departure paperwork. This would affect at least 10 foreign ships that have worked in the U.S. offshore wind industry, representing some the largest and most important foreign-flag competitors that U.S. service providers face in the sector. 

"These vessels are coming into U.S. waters and staying—sometimes for years at a time—all the while taking opportunities from U.S. ships and shipyards," testified Smith. 

He singled out one particular vessel as an example: Cadeler's brand new WTIV Wind Pace. The 20 MW-capable vessel formally delivered on Wednesday at COSCO Shipping Heavy Industry in Qidong, and will soon get under way for its maiden voyage to the U.S. East Coast. Wind Pace is a cutting-edge ship and is expected to outcompete previous generations of WTIVs on capacity, transit speed and efficiency, according to Cadeler. On arrival in U.S. waters, it will begin a long-term installation contract worth about $70-80 million - revenue that U.S. shipowners will not get. 

The low, subsidized price of Chinese ships hurts American domestic competitors, but the sub-$100-per-day pay scale for foreign seafarers can be even more of a challenge, Smith said. 

"U.S. offshore energy vessel owners can simply not compete with their foreign competitors because current U.S. law requires U.S.-owned companies to hire only U.S. citizens and permanent residents as mariners when its vessels work on U.S. offshore energy projects," said Smith. "Conversely, U.S. law allows foreign-owned vessels to employ foreign mariners when conducting the same work. As foreign mariners command significantly less pay than their U.S. counterparts this gives foreign-crewed vessels a significant cost advantage."