RESTRICTED
WORLD TRADE S/NGMTS/W/2/Add.11
31January 1995
ORGANIZATION(95-0193)
Original: English Negotiating Group onMaritime Transport Services
COMMUNICATION FROM THE UNITED STATES OFAMERICA
Response toQuestionnaire onMaritime Transport Services
Thefollowing communication iscirculated attherequest oftheUnited States toMembers of
theNegotiating Group onMaritime Transport Services.
_______________
I. Market Structure
Vessels
STRUCTURE OFNATIONALLY-OWNED OROPERATED FLEET
Type ofVessel Number ofVessels Deadweight
Tonnage ('000)
asof7-1-94 asof1-1-94 asof7-1-94 asof1-1-94
National Flag Foreign Flag National Flag Foreign Flag
OilTankers 153 176 10014 20857
Liquified GasCarriers 14 6 905 204
Chemical Tankers 16 10 474 195
Combination Carriers 2 6 14 529
Ore/Bulk Carriers 20 33 917 2019
General Cargo 29 4 455 45
Container Ships 99 15 4121 201
Refrigerated Carriers 18 134
Specialized Cargo 2 11 45 208
Ro-Ro 32 7 608 35
Ferries andPassengers 3 18
Other
AllVessels 367 289 17,553 24,445
Vessels of1,000 gross tonsandabove.S/NGMTS/W/2/Add.11
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Trade
2. Theestimated share (1993) oftotalUnited States international trade carried byseais85%in
terms ofquantity and48%interms ofvalue.
3. Theshare (1993) ofthetotalUnited States international tradecarried byseainterms ofquantity
is60%forimports (40percentforexports) andinterms ofvalue is65%forimports (35per
centforexports).
4. Theestimated share (1993) oftotalUnited States oceanborne international trade interms of
quantity carried bynational-flag, partner-flag andthirdflagisasfollows:
USFlag Partner Flag Third Flag
Liner Trade 15.3% 8.8% 75.9%
BulkTrade 2.6% 8.0% 89.4%
5. Information oncross-trading carriage byU.S.flagvessels isnotavailable.
Organization ofCargo
6. Theshare (1993) ofU.S.international oceanborne trade byservice typeis:
Quantity Value
Liner Service 12.6% 73.5%
DryBulk 38.9% 15.5%
Liquid Bulk 48.4% 11.0%
7. Noinformation available.
8. TheUnited States isnotaparty totheCode ofConduct forLiner Conferences.
9. Theshare oftotalUnited States oceanborne international tradesubject tobilateral cargo sharing
agreements, interms ofquantity, islessthan1percentforthenational-flag, lessthan1per
centforpartner-flag andabout 2percentforthird-flag.
10. Theestimated share (1993) ofUnited States linerservice oceanborne international trade, by
value, thatiscontainerized is80%.
11. Liner cargo carried bymeans ofmultimodal arrangements isanincreasingly important part
oflinervessel operations intheU.S., although nospecific dataisavailable.S/NGMTS/W/2/Add.11
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Ports andAuxiliary Services
12.
Total PortTraffic
(vessel entrance)PortTraffic Based on90%ofcargo tons
moved
TOTAL (1993) 59,882 38,036 (63%)
Bulk 35,172 20,144 (57%)
Liner 24,710 20,274 (82%)
13. TheU.S. maintains nodataonthenationality ofproviders ofsuchservices. There areno
measures preventing foreign suppliers oftheabove services from establishing operations in
theUnited States. However, persons transacting customs business onbehalf ofothers must
havealicense from theU.S.Customs Service. Individuals applying foralicense must bea
U.S.citizen. Apartnership, association orcorporation transacting customs business musthave
atleastoneofficer orpartner whoisalicensed broker.
14. Wholly-ownedforeignsubsidiariesarepermittedtooperateintheU.S.marketgenerallywithout
restriction intheinland movement ofinternational trade cargoes forthethree modes of
transportation. Thestructure oftheinland freight market forinternational tradecargoes favors
truck andrailtransport modes. Cabotage restrictions apply tocargoes transported bywater
inthecoastwise trades.
II. Regulatory Structure
General
1. Thefollowing United States Government agencies administer programs relating tothe
international maritime transport sector:
- United States Department ofTransportation; Horizontal application
- Maritime Administration; Specific application
- Coast Guard; Specific application
- Federal Maritime Commission; Specific application
- United States Department ofState ;Horizontal application
2. Other thanforsafety andenvironmental purposes, bulkshipping (dryandliquid) isnotregulated
intheUnited States.
3. Seeanswer toQuestion 29.
4. With onelimited exception, there arenorestrictions ontheability ofmultimodal transport
operators, general andbulkshipping lines, shippers andintermediaries torentorleasetrucks,
railway carriages, orbarges andrelated equipment forthepurpose ofinland forwarding ofS/NGMTS/W/2/Add.11
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cargoes intheUnited States ortohavereasonable andnon-discriminatory access to,anduse
of,theseformsofmultimodalactivities.Thesingleexceptionisthatnon-citizensmaynotdemise
(orbareboat) charter vessels forthetransportation ofcargoes inUnited States domestic
commerce.
5. TheU.S.portsystemconsistsoftwobasiccomponents,harborworksandportfacilities.Harbor
works, including deepening, jetties, andconnecting andaccess channels, arerequired forthe
portfacilities tofunction efficiently. Theresponsibility forproviding U.S. harbor works is
splitbetweentheFederalgovernmentandthelocalport.Theresponsibilityforprovidinglandside
portfacilities isentirely non-Federal.
TheUnited States hasnocentral portplanning body. There arenorestrictions ontheability
oftransport service providers toownorleaseterminals; however, terminal agreements between
terminal operators andtransport operators areregulated bytheFederal government. Seaports
areprimarily owned orleased bytheprivate sector (64percent) andarepredominantly dry
andliquid bulkfacilities. General cargo facilities atseaports aregenerally leased forthepurpose
ofinland forwarding ofcargoes intheUnited States.
Allocation ofscarce resources, suchaswaterfront space, isdetermined bymarket forces. Port
entities often havethepower ofeminent domain andmaycondemn (so-called "payforand
take") landnecessary forportoperations. Theonlyregulatory form ofspace allocation for
ports andauxiliary services isthrough localzoning, usually adopted inconcert withFederally
approved Coastal Zone Management Programs. Such regulations areapplied ona
non-discriminatory basis.
Theprovision ofauxiliary services activities byprivate persons iscontrolled bymarket forces.
Nomeasures existlimiting thenumber ofmaritime transport service suppliers intheformof
numericalquotas,monopolies,economicneedstests,etc..AlthoughtheStateorlocalgovernment
donotgenerally exercise control overauxiliary service providers, theyhavethepower to
promulgate regulations protecting property andensuring public health andsafety. Such
regulations mayprovide fortheanchorage ormooring ofvessels soastoprevent collisions,
maydesignate thewharves atwhich passengers orcargo maybedischarged andreceived, and
mayrequire vessels toberemoved fromthewharves when notsoengaged. Butsuchregulations
areapplied onanon-discriminatory basis.
Federal regulations mayalsogovern aspects ofsecurity, safety, customs duties andother areas
ofportoperations. Again, suchregulations aregenerally applied onanon-discriminatory basis.
6. "International maritime transport" isnotatermdefined inUnited States laworregulation.
Bycommon understanding, itcanbesaidtomean transportation bywater ofcommodities or
passengers, forhire,between theUnited States (theStates oftheUnited States, Guam, Puerto
Rico, theVirgin Islands, American Samoa, theDistrict ofColumbia, theCommonwealth of
theNorthern Mariana Islands, andanyother territory andpossession oftheUnited States) and
anyforeign country orcountries. Cabotage isnotcovered bythisdefinition.
7. "National shipping enterprise" isnotatermdefined inUnited States laworregulation. Various
requirements ofUnited States citizen share-holding andmanagement participation existfor
various types ofvessel operators. Seeanswers toQuestions numbered 8(d),9,10and11below.S/NGMTS/W/2/Add.11
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Market Access
8.(a) Nomeasures existlimiting thenumber ofmaritime transport service suppliers intheformof
numerical quotas, monopolies, exclusive service suppliers, etc.
8.(b) Nomeasures existlimiting thetotalvalue ofmaritime transport service transactions, thetotal
number ofmaritime transport service operations orthetotalquantity ofmaritime transport
service output, except those mentioned intheanswer toQuestion 27below.
8.(c) WiththeexceptionofcertainU.S.-flagreservationsforU.S.Governmentcargoesandforvessels
transporting cargoes ontheGreat Lakes intradewithCanada, which mustbequalified tooperate
intheU.S.coastwise trade, theUnited States hasnoother institutional arrangements forcargo
allocation. Seeanswer toQuestion 27below.
8.(d) There aretwomeasures thatlimit thetotalnumber offoreign natural persons thatmaybe
employed inthemaritime transport service sector:
(i) abusiness entity thatowns avessel orvessels operating inthedomestic trade
oftheUnited States oravessel orvessels which were builtwiththeaidof
construction subsidies, financed withtheaidofshipfinancing guarantees,
operated withtheassistance ofoperating subsidies oraretherecipient ofcertain
taxdeferred benefits musthaveaUnited States citizen asitspresident orother
chiefexecutive officer, thechairman ofitsboard ofdirectors, andamajority
ofthemembers ofitsboard ofdirectors; and
(ii) onvessels documented under United States law,notmore than25percent
ofthetotalnumber ofunlicensed seamen maybealiens lawfully admitted to
theUnited States forpermanent residence. Thelicensed portion ofthecrew,
including officers, must beU.S.citizens.
There aregenerally norestrictions onforeign natural persons providing auxiliary services only
(seePorts andAuxiliary Services, answer toQuestion 13andAccess toandUseofPort
Facilities, answer toQuestion 18).
9.(a) Theonlymeasures which restrict orrequire specific types oflegal entity through which a
maritime transport service supplier maysupply service relate totheownership andmanagement
ofvessels operated inUnited States domestic trade andvessels receiving oneoftheforms of
United States government benefits enumerated in(8)(d)(i) above.
9.(b) No.There arenorestrictions onthetypeoflegalentity supplying theabove services.
10. There arecertain restrictions ontheownership ofUnited States registered vessels iftheyreceive
oneoftheforms ofUnited States Government benefits enumerated in(8)(d)(i) above, aswell
asthose described intheanswer toQuestion 11below.
11. Avessel ofatleastfive(5)nettonsthatisnotregistered under thelawsofaforeign country
iseligible fordocumentation intheUnited States ifthevessel isowned by:
(1) anindividual whoisacitizen oftheUnited States;
(2) anassociation, trust, jointventure, orother entityS/NGMTS/W/2/Add.11
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(a) allofwhose members arecitizens oftheUnited States, and
(b) thatiscapable ofholding titletoavessel under thelawsoftheUnited States
orofaState.
(3) apartnership whose general partners arecitizens oftheUnited States, andthe
controlling interest inthepartnership isowned bycitizens oftheUnited States; or
(4) acorporation established under thelawsoftheUnited States orofaState, whose
president orother chief executive officer andchairman ofitsboard ofdirectors are
citizens oftheUnited States andnomoreofitsdirectors arenon-citizens thanaminority
ofthenumber necessary toconstitute aquorum. Seealsotheanswer toQuestion 8(d)(i).
National Treatment
12(a) Operating Differential Subsidy (ODS) isgranted tosome U.S.-flag vessels (approximately 20
percentoftheprivately owned fleet) operating intheinternational trades toplace U.S.-flag
vessels 'operating costsonaparity withthose offoreign competitors. Subsidy ispaidpursuant
to20-year ODScontracts between theU.S.Government andtheoperators, whoagree toequip
theirvessels withdefense-related features andalsotomake theirvessels available intimeof
national emergency.
Vessel operators holding ODScontracts mustbeU.S.citizens andmustpossess certain other
qualifications. Inorder togrant subsidy theSecretary ofTransportation mustdetermine that
theoperation ofsuchvessels isinanessential foreign trade area, necessary topromote the
foreign commerce oftheUnited States andwhich require subsidy tomeet foreign-flag
competition.
12(b) Fortaxpurposes, shipping istreated similarly toother industries, except thatU.S. citizens
owning orleasing eligible vessels mayobtain taxbenefits through themaintenance ofCapital
Construction Funds andConstruction Reserve Funds toconstruct qualified vessels.
TheCapital Construction Fund (CCF) program isamethod ofaiding U.S.-vessel operators
inaccumulating capital necessary fortheconstruction, reconstruction, andacquisition ofvessels
ofU.S.registry constructed intheUnited States. Thepurpose oftheprogram istoremove
competitive disadvantages thatU.S.operators haverelative toforeign-flag operators. TheCCF
extends tax-deferral privileges tovessel operators inU.S.-foreign commerce, Great Lakes,
[noncontiguous]-domestic trade, andthefisheries oftheUnited States.
Alsopermitted isthedeferment ofincome taxes ondeposits ofmoney orother property by
anyU.S.company thatmeets applicable statutory andregulatory requirements, ifthefunds
areusedtoconstruct vessels inU.S.shipyards.
TheConstruction Reserve Fund (CRF) isalsoafinancial-assistance program thatprovides tax-
deferral benefits toU.S.shipowners. Through theCRF, shipowners 'operating vessels inthe
foreign ordomestic commerce oftheUnited States candefer thegainattributable tothesale
orlossofavessel. Theproceeds deposited mustbeusedtoconstruct, reconstruct, oracquire
vessels ofU.S. registry constructed intheUnited States. Although anygains onsuch
transactions arenotrecognized forincome taxpurposes ifthedeposits areproperly expended
foravessel, thebasisfordetermining depreciation ofsuchavessel isreduced bytheamount
ofanysuchgains.S/NGMTS/W/2/Add.11
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Theabove measures arecovered bytheAgreement Respecting Normal Competitive Conditions
intheCommercial Shipbuilding andRepair Industry andtheRelated Understanding onExport
Credits forShips (collectively, the"OECD Shipbuilding Agreement") which istargeted to
become effective onJanuary 1,1996.
Access toandUseofPortFacilities
13. Alloftheabove services arefreely available onanon-discriminatory basis totheuseratthe
port.
14. Pilotage andtowing andtugassistance services maybemandatory insome ports.
15. Alloftheabove services areavailable onanon-discriminatory basis.
16. Yes.Based onnational security considerations, theUnited States applies portaccess restrictions
(including theU.S. territorial sea,andinternal waters ingeneral) tovessels from certain
countries. Therestricted countries include: Armenia, Azerbaijan, Georgia, Kazakhastan,
Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, andthePeoples
Republic ofChina. Access tovessels from thePRC isgoverned bythebilateral Maritime
Transport Agreement ofDecember 15,1988. Under theagreement, commercial cargo, fishing,
fisheries support vessels, vessels engaged inhydrographic, oceanographic, meteorological
research, andprivate yachts mustsubmit a4-day request forentry intocontrolled ports which
contain naval installations. Allother PRC vessels must obtain permission from theU.S.
Department ofStateforentry toU.S.ports. Vessels fromallother restricted countries must
submit either specified advance notice orrequest based onwhich controlled portthevessel
isplanning toenter.
Vessels from thefollowing countries areprohibited from entering U.S.ports, including the
territorial sea:Cambodia, Cuba, Iran,Iraq,Libya, Peoples Republic ofKorea (North Korea),
Syria, andVietnam (under review).
17. No.However, under U.S. law,theFederal Maritime Commission (FMC) hastheright to
investigate andtakeaction against foreign carriers toaddress adverse orunfavorable conditions
affecting U.S. shipping orU.S. carriers intheU.S. oceanborne commerce. Forexample,
theFMC isauthorized tosuspend preferential terminal leases offoreign carriers. These actions
canbeapplied tocarriers andother suppliers ofmaritime-related services, inorder tooffset
adverse conditions affecting U.S.carriers thatdonotexistforforeign carriers ofthatcountry.
Seealsoanswer toQuestion 16above andQuestions 25and26below.
18. Yes. Under U.S.law,there arereciprocity restrictions onvessels ofcountries thatprohibit
longshore work (stevedoring) bycrewmembers aboard U.S.-flag vessels inthose countries.
These measures areapplied onthebasis ofvessel ownership andregistry.
19. Yes.Insome ports, pilotage andharbor assistance (towing) requirements maybeimposed.
Most-favored-nation treatment
20. TheUnited States hasabilateral maritime agreement withthePeoples Republic ofChina that
provides forparity inbilateral liner-cargo carriage, bothexport andimport commercial cargoes,
andensures vessels ofeachnation atleastone-third share ofsuchcargoes. Thepurpose of
thisprovision oftheagreement istogrant U.S.carriers access tobilateral tradecargoes under
thecontrol ofChinese government entities.S/NGMTS/W/2/Add.11
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21. Seeanswer toQuestion 20,above.
22. TheUnited States isnotaparty totheCode ofConduct forLiner Conferences.
23. TheU.S.maintains adifferential vessel tonnage taxcollected onentry toU.S.portsandbased
ongross registered tonnage. Vessels entering U.S. ports from North or(parts of)South
America, irrespective ofthevessels 'country ofownership orregistry, areassessed alower
dutythanvessels entering U.S.portsfromother foreign ports. TheU.S.alsogrants equivalent
exemptions toshipowners from over40foreign countries forincome from theoperation of
ships ininternational trade. Theexemption isgranted either based onreciprocal treatment,
through domestic laworpractice, ofthecountry where thecompany resides orflagofregistry,
oritisprovided forbybilateral taxtreaty withtheU.S. Finally, theU.S.mayalsowaive
lighthouse feesandageneral classoftonnage feestovessels ofcountries which donotlevy
similar feesonU.S.-flag vessels.
24. Ingeneral theU.S.doesnotgrant preferential treatment toanycountries withrespect tothe
useofportandharbor facilities. Limited restrictions areapplied generally fornational security
purposes. Seeanswers 13-23.
25. TheFederal Maritime Commission ("FMC" or"Commission") isstatutorily authorized toact
unilaterally toaddress restrictive foreign shipping practices. TheForeign Shipping Practices
Actof1988, 46U.S.C. app§1710a ("FSPA"), authorizes theCommission tomake rulesand
regulations governing shipping intheforeign trade toaddress adverse conditions thataffect
U.S.-flag carriers intheforeign trade, butdonotexistforforeign carriers intheUnited States.
Section 19(1)(b) oftheMerchant Marine Act,1920, 46U.S.C. app.§876(1)(b) ("Section 19"),
empowers theCommission totakeaction toremedy conditions unfavourable toshipping in
theU.S.foreign trade, when suchconditions ariseoutoforresult from foreign laws, rules,
orregulations,orfromthepracticesofforeignvesselownersoroperators.Also,Section13(b)(5)
oftheShipping Actof1984, 46U.S.C. app.§1712(b)(5) ("Section 13(b)(5)"), directs the
Commission totakeaction upon afinding thatacarrier oraforeign government hasunduly
impaired access ofaU.S.-flag vessel toocean trade between foreign ports.
Section13(b)(5)andtheFSPAaretargetedonlyatrestrictionsaffectingU.S.-flagoceancommon
carriers. However, under Section 19,theCommission maytakeaction toaddress restrictions
affecting non-liner vessels (e.g., tankers, tramps, orbulkvessels), orthoseaffecting foreign-flag
vessels, ifsuchrestrictions arefound tobeunfavourable toshipping intheU.S.foreign trades.
Section 19andtheFSPA maybeusedtoaddress fees,charges, requirements, orrestrictions
imposed uponU.S.vessels intheforeign tradeoftheUnited States different fromthose imposed
onother vessels competing inthetrade. TheCommission mayalsoacttoremedy restrictions
oncarriers'foreignintermodalmovementsorshore-basedmaritimeactivities,includingterminal
operationsandcargosolicitation,forwardingandagencyservices,non-vessel-operatingcommon
carrier operations, orother activities andservices integral totransportation systems.
26. Asdescribed intheresponse toQuestion 25,above, theCommission isauthorized tomake
rules andregulations governing shipping intheforeign trade toadjust ormeet conditions
unfavourable toshipping, andtoaddress adverse conditions thataffect U.S. carriers inthe
foreign trade which donotexistforforeign carriers intheUnited States. Remedial actions
availabletotheCommissionincludetheimpositionofequalizingfeesorcharges;limitingsailings
toandfrom United States ports; limiting theamount ortypeofcargo carried; suspension of
tariffs; suspension ofacarrier 'sright tooperate under anagreement; imposition ofafee,S/NGMTS/W/2/Add.11
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nottoexceed US$1,000,000 pervoyage; denial ofentry ofspecified vessels toU.S. ports
orwaters, ordetention ofsuchvessels.
Government Procurement
27. Only vessels ofUnited States registry orvessels belonging totheUnited States maybeused
inthetransportation byseaofsupplies bought forUnited States military agencies. Fiftyper
centofnon-military government cargoes (seventy-five percentinthecaseofcertain agricultural
commodities) arereserved forprivately-owned United States registered vessels ifsuchvessels
areavailable atfairandreasonable rates. Examples ofsuchnon-commercial cargoes would
beUnited States foreign aidintheformoffoodcargoes forneedy peoples anddisaster relief
cargoes. Inaddition, cargoes generated inconnection withloans made byinstrumentalities
oftheUnitedStatesGovernmenttofostertheexportingofUnitedStatesproductsshallbecarried
invessels oftheUnited States ifsuchvessels areavailable atfairandreasonable rates. The
Secretary ofTransportation maypermit uptofiftypercentofsuchcargoes tobecarried in
vessels oftherecipient country ifthatcountry doesnotdiscriminate against vessels oftheUnited
States. Examples ofsuchcargoes would beproject cargoes resulting fromloans made bythe
Export-Import Bank oftheUnited States.
28. There arenoU.S.measures relating totheprocurement ofmaritime transport auxiliary services.
SeePartIIRegulatory Structure, answer toQuestion 5.
Competition Law
29. TheShipping Actof1984 ("1984 Act"), 46U.S.C. app.§1701 et.seq.,applies tocommon
carriers,marineterminaloperators,oceanfreightforwarders,andvariousotherpersonsinvolved
withthetransportation ofgoods byseaintheU.S.foreign commerce. The1984Act,interalia,
provides forthefiling andeffectiveness ofvarious maritime agreements; exempts agreements
andactivities subject totheActfromtheotherwise applicable antitrust laws; requires thefiling
oftariffs showing ratesandcharges andservice contract essential terms; setsforth alistof
"prohibited acts"administered bytheCommission; andspecifies certain licensing andbonding
requirements fortransportation intermediaries.
29.(a) The1984Actapplies totraditional conference agreements -thatis,agreements tofixorregulate
transportation rates -andalsonon-conference cooperative arrangements. Among thenon-
conference agreements subject tothe1984 Actareagreements todiscuss rates, cargo space
accommodations, andotherconditions ofservice; poolorapportion traffic, revenues, earnings,
orlosses; regulate sailings orvolume ofcargo tobecarried; engage inexclusive, preferential,
orcooperative working arrangements; andregulate orprohibit theiruseofservice contracts.
Every agreement subject tothe1984 Actisrequired tobefiled withtheCommission.
Agreements generally become effective onthe45thdayafterfiling, unless theCommission
seeks additional information from thefiling parties. Section 7ofthe1984 Actprovides an
exemption fromantitrust lawsforagreements filedandeffective under the1984 Act,andfor
anyactivity within thescope oftheActundertaken withareasonable basis toconclude that
itwaspursuant toafiledagreement. Thefiling requirement andtheantitrust exemption apply
without regard towhether theagreement isaconference agreement, atraditional consortia/joint
service arrangement, oranyother vessel, equipment, terminal ortechnical rationalization
agreement.
The1984Actdoesinclude, however, several special requirements forconference agreements
-thatis,agreements withratemaking authority -setforthinSection 5(b). Conferences must,S/NGMTS/W/2/Add.11
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interalia,allow openadmission andwithdrawal without penalty, andallow anymember to
takeindependent action onanytariffrateorservice itemuponnotmore than10calendar days'
notice totheconference -thatis,individual members mayadopt rates different from the
conference rates.
29.(b) Pursuant toSection 4ofthe1984 Act,ocean common carriers mayenter intoagreements to
"discuss, fix,orregulate transportation rates, including through rates." Such through rates
must bepublished intheapplicable tariffs. Multimodal agreements areroutinely filedwith
theFMC andareallowed tobecome effective.
Conferences andgroups ofocean carriers areprohibited from collectively negotiating with
surface carriers (i.e., railandtruck operators) regarding theinland haulage ratesorservices
provided totheocean carriers intheUnited States. Instead, "inland divisions" -thatis,the
amounts paidbyocean carriers toinland carriers fortheinland portion ofathrough rate-
must benegotiated byocean carriers onanindividual basis.
29.(c) While there isnospecific prohibition ofcarrier agreements with"substantial market power"
or"dominant position," theCommission may seek theinjunction of"substantially
anti-competitive agreements" under Section 6(g)ofthe1984 Act. Thatsection states that:
"[i]f, atanytimeafterthefiling oreffective dateofanagreement, theCommission
determines thattheagreement islikely, byareduction incompetition, toproduce an
unreasonable reduction intransportation service oranunreasonable increase in
transportation cost, itmay, after notice totheperson filing theagreement, seek
appropriate injunctive relief under subsection (h)ofthissection."
Section 6(h)authorizes theCommission tobring suitintheUnited States District Court for
theDistrict ofColumbia toenjoin operation oftheagreement. TheSection 6(g)standard is
applicable tobothconference andnon-conference agreements. Inasuitunder thissubsection,
theburden ofproof isontheCommission.
The1984Actalsoincludes alistof"prohibited acts"administered bytheCommission. Included
inthislistarevarious anti-competitive activities, including boycotts, predatory practices,
unreasonable refusals todeal, retaliation, unfair orunjust discrimination, andallocation of
shippersamongspecificcarriers.Alsoproscribedareobtainingorprovidingoceantransportation
forproperty atlessthantheapplicable tarifforcontract rates, granting rebates, operating under
anunfiled agreement, andrefusing tonegotiate withashippers 'association. Anyperson may
fileacomplaint withtheCommission alleging aviolation oftheAct(other thansection 6(g)),
andmayseekreparations. Inaddition tothisprivate rightofaction, theCommission may
investigate anyconduct oragreement thatitbelieves maybeinviolation oftheAct. The
Commissionmaybyorderdisapprove,cancel,ormodifyanyagreementthatoperatesinviolation
oftheAct,anditmayalsoassess penalties, pursuant toSection 13oftheAct.
29.(d) Shippers 'councils arenotrecognized asaspecial classoflegal entity intheUnited States,
andarenotafforded antitrust immunity. Under the1984Act,shippers mayenterinto"shippers '
associations," defined inSection 3(24) asa"group ofshippers thatconsolidates ordistributes
freight onanonprofit basisforthemembers ofthegroup inorder tosecure carload, truckload,
orother volume ratesorservice contracts." While shippers 'associations donothaveantitrust
immunity, theyenjoy certain collective bargaining rights withcarriers; Section 10ofthe1984
Actprohibits carriers from refusing tonegotiate withashippers 'association.S/NGMTS/W/2/Add.11
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Shipping Conferences
30. No.There arenomeasures restricting theadmission oflinervessel operators toshipping
conferences.Section5(b)ofthe1984Actrequiresthateachconferenceagreementmust"provide
reasonable andequal terms andconditions foradmission andreadmission toconference
membership foranyocean common carrier willing toserve theparticular trade orroute."
With respect totheQuestion ofmember withdrawal, conferences must"permit anymember
towithdraw from conference membership upon reasonable notice without penalty."
31. Allagreements subject tothe1984 Actarerequired tobefiledwiththeFederal Maritime
Commission.TheCommissiondoesnot,however,"approve"agreementspriortotheireffective
dates. Under Section 6(c)ofthe1984Act,agreements generally become effective automatically
afterfiling.
Ifitappears thatanagreement isoperating inviolation oftheapplicable provisions ofthe1984
Act,theCommission mayinstitute aninvestigation oftheagreement anditsmember lines.
(Seeresponse toQuestion 29(c) above fordetails ofthe1984Act's"prohibited acts"). Ifthe
Commission should findthatviolations ofthe1984Actinfactoccurred, itmay"disapprove,
cancel ormodify" theagreement, orassess finesagainst theagreement member lines. The
Commission hasnoauthority, however, towithdraw antitrust immunity fromaproperly filed
agreement.
Theother procedure provided bythe1984 Actbywhich theCommission canprevent an
agreement from going intoeffect, orprevent further operation ofanexisting agreement, is
setforth inSections 6(g)and(h).These provisions authorize theCommission toseekan
injunction intheU.S.District Court fortheDistrict ofColumbia against anagreement that
is"likely, byareduction incompetition, toproduce anunreasonable reduction intransportation
service oranunreasonable increase intransportation cost."
32. Pursuant toSection 8ofthe1984 Act,every common carrier andconference isrequired to
filewiththeCommission, andkeepopen topublic inspection, tariffs showing allitsrates,
charges, classifications, rules, andpractices between allpoints orports onitsownroute and
onanythrough transportation route thathasbeenestablished, except withregard tobulkcargo,
forest products, recycled metal scrap, waste paper, andpaper waste. TheCommission is
currentlyinthefinalstagesofconvertingitstarifffilingandretrievalsystemtoelectronicformat.
TheFMC enforces compliance withthefiledtariff rates, inaccordance withSection 10of
the1984Act. Thatsection prohibits carriers fromcharging ratesdifferent fromthose shown
intheapplicable tariffs orservice contracts, andbarsshippers from knowingly obtaining or
attempting toobtain ocean transportation atlessthantheratesorcharges thatwould otherwise
beapplicable.
33. Every conference agreement filedwiththeFMC isrequired, bySection 5(b)ofthe1984Act,
toprovide thatanymember oftheconference maytakeindependent action onanytariff rate
orservice itemuponnotmore than10calendar days'notice totheconference. Theconference
mustinclude thenewrateorservice iteminitstariffforusebythatmember, andbyanyother
member thatnotifies theconference thatitelects toadopt theindependent rateorservice item.
Thisstatutory rightofindependent action doesnotextend toservice contracts, theuseofwhich
mayberegulated orprohibited bytheconference.
34.(a) Carriers andconferences areprohibited from using loyalty contracts, except inconformity
withtheantitrust laws, bySection 10(b)(9) ofthe1984 Act.S/NGMTS/W/2/Add.11
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34.(b) The1984Actdoesnotbarconferences fromentering intoagreements withother conferences,
orwithnon-conference carriers. These types ofagreements must befiledwiththeFMC.
34.(c) Section 8(c)ofthe1984Actallows ocean common carriers andconferences toenterintoservice
contracts withshippers orshippers 'associations. Aservice contract isacontract between a
shipper andanocean common carrier orconference inwhich theshipper makes acommitment
toprovide acertain minimum quantity ofcargo overafixedtimeperiod, andtheocean common
carrier orconference commits toacertain rateandservice level. Except forservice contracts
dealing withbulkcargo, forest products, recycled metal scrap, waste paper, orpaper waste,
eachservice contract must befiledconfidentially withtheCommission.
When aservice contract isfiled, aconcise statement ofitsessential terms isrequired tobe
filedwiththeCommission andmade available tothegeneral public intariff format. Carriers
arerequired tomake these essential terms available toallshippers similarly situated. The
essential terms include theorigin anddestination portranges orgeographic areas, the
commodities involved, minimum volume, line-haul rate,duration, service commitments, and
anyliquidated damages fornonperformance.
35. Seeanswers toQuestions 34and36.
36. Ashipper maynegotiate aservice contract directly withacarrier orconference, oritmay
enter intoashippers 'association forthepurposes ofsuchnegotiations. Under Section 10of
the1984Act,carriers maynotsubject anyperson toanunreasonable refusal todeal,andmay
notrefuse tonegotiate withashippers 'association. Parties alleging suchunlawful refusals
todealmayfileacomplaint withtheFMC.
The1984Actdoesnotmandatetheestablishmentofanyjointshipper/carrierconsultativegroups
ordisputeresolutionbodies.However,Section5(b)ofthe1984Actrequiresthateachconference
agreementfiledwiththeFMCprovideforaconsultationprocessdesignedtopromotecommercial
resolutionofdisputes,andcooperationwithshippersinpreventingandeliminatingmalpractices.
Theexclusive remedy forabreach ofaservice contract isanaction inanappropriate court,
unlessthepartiesotherwiseagree.TheFederalMaritimeCommissiondoesnothavejurisdiction
overactions forbreach ofservice contracts.