Last week, the U.S. Trade Representative announced the launch of a Section 301 investigation into China in key maritime, logistics and shipbuilding sectors. This is the first time since the Biden administration took office that a Section 301 investigation has been imposed on China, and intriguingly, this comes at a time when current President Joe Biden and former President Trump are in a stalemate in the swing state elections in the US election. What is the purpose of the 301 investigation, new tariffs, and all kinds of pressure suddenly coming in one after another?
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On April 17, U.S. time, the Office of the U.S. Trade Representative announced that it had launched a Section 301 investigation into China's maritime, logistics and shipbuilding industries. Earlier, on March 12, five major labor union organizations, including the United Steelworkers, submitted a petition formally asking the Biden administration to launch a trade investigation into China's "unreasonable and discriminatory" practices in the maritime, logistics and shipbuilding industries. Just 36 days later, U.S. Trade Representative Katherine Tai announced the launch of a Section 301 investigation into China, and she pledged to conduct a full and thorough investigation into the unions' concerns. This is also the first time since the Biden administration took office in 2021 that a Section 301 investigation has been conducted on a specific industry in China.
Shi Yinhong, Director of the Center for American Studies at Renmin University of Chinese:
"The Trade Representative Office adheres to President Biden's basic position, proceeds from the interests of American workers who talk about it every day, from the perspective of domestic partisan politics, from the perspective of American understanding of international trade and Sino-US trade, and from the perspective of the overall strategy of the United States to suppress China's economy in order to serve the goal of pre-positioning and containing China's development, to seek maximum pressure on China. ”
Qian Feng, senior researcher at Taihe Think Tank:
"From the supply side, companies upstream of the supply chain are closely related to the entire shipping industry, and if the trade office adopts so-called 'trade remedy measures', it may lead to a decrease in demand for Chinese-made ships, and will also squeeze some of the living space of China's local upstream suppliers. These include steel producers, suppliers of engines, marine equipment and components, and companies that provide services to ships. If you look at demand, it will also lead to an increase in the transportation costs of export companies that rely on Chinese-made ships for international trade, affecting the competitiveness of products in the international market, especially in the US market. ”
The so-called "Section 301 investigation" derives from Section 301 of the U.S. Trade Act of 1974, which authorizes the U.S. Trade Representative to initiate an investigation into "unreasonable or unfair trade practices" of other countries, and to recommend that the U.S. president impose unilateral sanctions, including the revocation of trade preferences and the imposition of retaliatory tariffs, to reduce harm to U.S. consumers, businesses and workers. Section 301 investigations can be initiated by the USTR itself or may be requested by a business or industry organization.
Gao Zhikai, Deputy Director of the Think Tank for Globalization:
"Section 301 is to use the domestic laws of the United States to judge whether a country's trade behavior infringes on the interests of the United States and affects the development of the United States. And then the U.S. government has imposed sanctions on these so-called 'violations', which is a typical long-arm jurisdiction. ”
According to the petition disclosed on its website, the five U.S. unions believe that the Chinese government has adopted a number of supportive policies to achieve the goals set out in the shipbuilding program. These policies have led to a sharp increase in China's share of the global shipbuilding market and have driven down the global price of commercial vessels, making it impossible for American shipbuilders to invest and expand in the world market.
Gao Zhikai, Deputy Director of the Think Tank for Globalization:
"The labor structure in the United States itself is not good, and labor costs cannot be controlled. In addition, union problems prevented its shipbuilding industry from thriving. The comprehensive cost simply cannot afford the development of its shipbuilding industry and the matching steel industry, and many other electronic industries. ”
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The petition also mentions that the number of commercial shipyards in the United States has declined dramatically for nearly half a century, with more than 70% of shipyards closed, resulting in a massive loss of jobs and worker unemployment. According to the Financial Times, the U.S. shipbuilding industry has been in decline over the past few decades. In 1975, the U.S. shipbuilding industry ranked first in the world in terms of production capacity. Today, nearly 50 years later, the United States produces less than 1% of the world's commercial vessels, while China has produced three times as many ocean-going vessels as the United States over the past 20 years. In 2023, China produced more than 1,000 ocean-going vessels, while the United States produced only 10.
Qian Feng, senior researcher at Taihe Think Tank:
"China's industrial success stems from technological innovation and market competition, and external demand also brings opportunities for us to increase shipbuilding capacity, especially from the huge demand from traditional European manufacturers, in full competition, China's strong shipbuilding and the entire industrialization capacity has been produced. ”
In a recent speech, David McCaul, president of the United Steelworkers, reread the new version of the "China threat theory" that has been hyped in the US media for some time in the past, saying that rebuilding the US shipbuilding industry is not only essential to improving maritime capacity, but also helping to consolidate key supply chains shared by the military and commercial shipbuilding industries, making the United States "safer and more resilient."
Qian Feng, senior researcher at Taihe Think Tank:
"Its fundamental purpose is not entirely to crack down on China's shipbuilding industry, but rather to find an excuse for politically correct hype of the 'China threat theory' and urge the U.S. government to establish a shipbuilding industry recovery fund to support U.S. shipyards and shipowners, activate the U.S. government's existing domestic shipbuilding programs, and force the U.S. government to agree to the demands of the workers' unions." This is the core purpose of the five trade unions this time, which is to provide financial support. ”
In addition to listing evidence of alleged "unfair" support for the shipbuilding industry by the Chinese government, the petition calls for a Section 301 investigation into maritime and logistics, in which five unions say China's increased control over maritime and logistics infrastructure could pose a threat to U.S. national security and economic security. More than 60 percent of the world's major container ports are now linked to a Chinese company or its financing, while another Chinese company provides 70 percent of the world's cargo cranes, and these logistics facilities allow the Chinese government to obtain a wealth of sensitive data on vessel movements, container contents, freight rates, and more, the petition says. LOGINK, A CHINESE LOGISTICS PLATFORM, IS BELIEVED TO HAVE COLLECTED VESSEL CHARACTERISTICS AND INFORMATION TO POSE A THREAT TO THE SECURITY OF OTHER COUNTRIES.
Qian Feng, senior researcher at Taihe Think Tank:
"Their assertion that China's possession of vessel characteristics and information poses a threat to U.S. national security is clearly conjecture, and the core purpose is to demand that the Biden administration increase support for policy subsidies for the domestic shipping and shipbuilding industries." ”
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In terms of direct trade measures, they demanded a port fee on Chinese-made ships, which will be determined according to the tonnage of the ship, and the cost of new ships will be higher than that of old ships, Clarkson Research counted all ships calling at U.S. ports in 2023, of which the number of ships built in China ranks fourth, and once port fees are levied on Chinese-made ships, the additional costs will also be passed on.
Qian Feng, senior researcher at Taihe Think Tank:
"The imposition of port fees and tariffs may increase transportation costs, and in the short term, it may increase the export cost of Chinese goods, which will weaken export competitiveness. In the long run, it will theoretically affect the shipowner's decision to invest in newbuilding, and the associated surcharge costs will be calculated into the cost of newbuilding. However, judging from the current comprehensive situation, the additional surcharge brought by only calling at a US port will not have a direct impact on the actual choice of the shipowner to order a new ship. ”
In terms of security measures, the five unions called for a response to the threat from LOGINK, a public information platform for transportation and logistics from China, and recommended that the U.S. government work with allies to limit the use of LOGINK and develop a logistics system independent of China, while also calling for an assessment of the national and economic security risks that continue to use port infrastructure and to take measures to mitigate and eliminate the risks.
In terms of supply chain measures, the five unions emphasized the importance of strengthening cooperation with other countries, recommending that the U.S. government build alliances with major shipbuilding nations such as Japan and South Korea to jointly address the challenges and opportunities of the global shipbuilding industry.
Shi Yinhong, Director of the Center for American Studies at Renmin University of Chinese:
"In Japan and South Korea, the United States is not without controversy, and when it is implemented, it will definitely involve a lot of undisclosed trade disputes and disputes. The Biden administration's platform must have been considered to strengthen the combined maritime and shipbuilding capabilities of the United States and its allies, without causing too much of an impact on the shipbuilding industry in the United States. ”
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Interestingly, the proposals for tariffs on China almost always took place in the year of the US election. The United Steelworkers, which is applying to lead the petition for a Section 301 investigation, represents more than 1 million North American steel industry workers. In recent times, Biden and Republican presidential candidate Donald Trump have been busy courting union leaders and blue-collar workers in industrial centers, respectively, who make up significant voters in swing states like Pennsylvania, Michigan and Nevada.
Qian Feng, senior researcher at Taihe Think Tank:
On the one hand, Biden wants to avoid a backlash from relevant domestic industries and wants to consolidate the support of voters. On the other hand, a growing number of the Biden administration's inner decision-making circles believe that the continuation of import tariffs on China is, to some extent, a leveraged strategic tool that can be an expensive bargaining chip with China. It has distorted its potentially backward and uncompetitive manufacturing industries as the result of China's unfair competition with the United States. ”
That is, on April 17, the day when the Office of the U.S. Trade Representative announced the launch of a Section 301 investigation against China, Biden was in Pittsburgh, Pennsylvania, speaking to steelworkers, in addition to announcing the restart of the 301 investigation in China's maritime, logistics and shipbuilding industries, he also focused on raising import tariffs on steel and aluminum products to China, which is considered by the outside world to be a continuation of the last time the United States launched a Section 301 investigation.
In 2017, after the Trump administration launched the Section 301 investigation into China, it imposed tariffs on Chinese exports in many sectors, and after the tariffs were imposed, the average tariff on Chinese steel and aluminum exports to the United States was 7.5%, and now Biden is demanding that the tariffs on Chinese steel and aluminum products be increased to 25%.
Shi Yinhong, Director of the Center for American Studies at Renmin University of Chinese:
"In addition to importing Chinese steel and aluminum, the United States also imports steel and aluminum from certain other countries, and if China's cost in the U.S. market rises sharply, it will certainly be conducive to the domestic sales of U.S.-made steel and aluminum. ”
As for the reason for raising tariffs, Biden said that because China's steel far exceeds its domestic demand, China ended up dumping excess steel into the global market at unfairly low prices.
Gao Zhikai, Deputy Director of the Think Tank for Globalization:
"The development of China's overall economy has made the demand for steel in China's domestic market rank first in the world. China's steel production jumped to more than 1 billion tons, part of which exports are logical, and the quality of steel products produced in each country is different, the products are not the same, China has a large number of export products that are precisely the United States, Japan and some other developed countries themselves do not produce, so he can not say that China dumps. ”
This is the sixth time that the United States has restarted the Section 301 investigation against China, exposing that the issue of Sino-US trade friction cannot be ignored, and the previous US administration launched the China Section 301 investigation in 2017 and imposed tariffs on China, which has been ruled by the WTO to violate WTO rules. Will the launch of the new Section 301 investigation escalate the trade tensions between China and the United States, and how will China respond?
Shi Yinhong, Director of the Center for American Studies at Renmin University of Chinese:
"301 as a big stick may produce a variety of results in the end, but it is very obvious to China, the United States will use various means to crack down on China's related exports, and hit the development of China's related industries. There will not be much suspense about the increasingly broad and deeper confrontation between China and the United States. ”
Recently, many senior U.S. officials lined up to visit China, and the economic and trade interaction between China and the United States has just been overlooked, but the Biden administration has suddenly offered a series of economic and trade pressure measures against China, which has made American companies and many parties feel uncomfortable. How can we balance policies to win domestic votes and maintain healthy economic and trade exchanges with China? A temporary expedient measure, after all, will affect the long-term substantive relations between China and the United States.
Producer: He Jining
Choreographer: Zhang Meng
Editor: Wang Jinjie