U.S., China Reach Accord on Shipping

Negotiators for the U.S. and China on Friday reached an agreement giving American shipping lines greater access to Chinese ports and related businesses while easing restrictions on China’s main shipping line.

The accord was reached after an all-day session between Chinese officials and representatives from the U.S. State and Transportation departments.

The pact “has something for everyone. We’re getting definitive answers from the Chinese and in a public document,” said Russ LaMantia, director of the State Department’s Office of Maritime Affairs.

The agreement follows three days of talks in Washington about U.S. concerns that China was interfering in setting rates for moving freight and stifling expansion efforts by U.S. shipping lines.

China was the fourth-largest U.S. trading partner in 1996, with $63.5 billion in total trade passing between the nations. Only Canada, Japan and Mexico had more trade with the U.S. last year.

The U.S. agreed to loosen restrictions on state-owned China Ocean Shipping Co., or Cosco, after gaining more opportunities for U.S. lines to dock at more Chinese ports. The U.S. also received assurances that American shippers will be allowed to provide delivery between their ships and freight customers.

The agreement is expected to head off a confrontation between Chinese officials and the U.S. Federal Maritime Commission, which has been examining complaints by the largest U.S. carriers, CSX Corp. subsidiary Sea-Land Service Inc. and Oakland-based American President Lines, that they face unfair restrictions in China.

Cosco must give 30 days’ notice before cutting any U.S. freight rates to prevent the government-owned line from unfairly driving out competitors.

China also promised that the U.S. lines could make inland deliveries and be allowed to make schedule changes with little delay.

Chinese officials also agreed to speed the process to allow Sea-Land to build a major freight terminal in Tianjin, China’s second-largest port, with a Chinese partner.

China’s delegation complained about the treatment Cosco received when it tried to lease a former U.S. Navy base in Long Beach as a new freight terminal this year.

After spending about $1.5 million developing a plan for the terminal, and ordering about $30 million worth of cranes to unload ships, the deal was scuttled by the Port of Long Beach.

The U.S. side said the problem arose from lawsuits filed by environmental and historic preservation groups in state courts and that the government was unable to intervene.

The U.S. carriers have expressed concern that the Chinese government was setting freight rates through the Shanghai Shipping Exchange. The Chinese replied that the U.S. lines weren’t required to obey the exchange’s rates since they weren’t members.

In the agreement, China said it was still considering how it will handle shipments between the mainland and Hong Kong. U.S. carriers that are currently serving the route were told to apply for permission to continue doing so by year-end.

The Chinese were less positive in their response to U.S. requests that its carriers be allowed to service the ocean trade between China and Taiwan. China said the matter was “an internal domestic affair,” and that the shipments were being restricted to Chinese- and Taiwanese-owned carriers.