VZCZCXRO8722
RR RUEHCN RUEHGH
DE RUEHGH #0762/01 3331113
ZNR UUUUU ZZH
R 291113Z NOV 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6478
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
INFO RUEHBJ/AMEMBASSY BEIJING 1546
RUEHSH/AMCONSUL SHENYANG 0974
RUEHCN/AMCONSUL CHENGDU 0974
RUEHIN/AIT TAIPEI 0793
RUEHHK/AMCONSUL HONG KONG 1099
RUEHKO/AMEMBASSY TOKYO 0228
RUEHUL/AMEMBASSY SEOUL 0139
RUEHGP/AMEMBASSY SINGAPORE 0092
RHEHAAA/NSC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6993
UNCLAS SECTION 01 OF 07 SHANGHAI 000762
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EAP/CM, EB AND E
DOT FOR MARAD
TREASURY FOR AMB. HOLMER, WRIGHT, TSMITH
USDOC FOR ITA MAC DAS KASOFF, MELCHER, MCQUEEN
NSC FOR HUBBARD AND TONG
E.O. 12958: N/A
TAGS: EWWT ELTN CVIS EINV ETRD OVIP CH
SUBJECT: 2ND CHINA-U.S. MARITIME CONSULTATIVE MEETING
This cable is Sensitive But Unclassified (SBU) and for official
use only. Not for transmission outside USG channels.
1. (SBU) Summary: On November 28 and 29, members of the U.S.
Maritime Administration delegation led by Maritime Administrator
Sean Connaughton met with the Chinese Ministry of Communications
delegation led by Vice Minister Xu Zuyuan in Shanghai. The two
sides discussed a wide range of bilateral maritime issues,
including the implementation of the bilateral maritime
agreement. The U.S. side raised the issue of a pending wholly
foreign-owned enterprise (WFOE) application of Matson
Navigation, tonnage dues on U.S.-owned foreign registered
vessels, and the U.S.-China Maritime Agreement treatment of
non-vessel operating common carriers (NVOCCs). The Chinese side
raised visa issues regarding Chinese seafarers, U.S. Customs
regulations on the transmission of manifest information,
regulations at U.S. ports regarding environmental protection,
financial responsibility of U.S. NVOCCs doing business in China,
and inland transportation efficiency in the U.S. Both sides
exchanged views on container shipping of bulk grains and
competition policy for ocean carriers. The two sides agreed on
the minutes of the meeting and signed the following text. End
Summary
Begin Text
----------
AGREED MINUTES OF THE 2ND CHINA-U.S. MARITIME CONSULTATIVE
MEETING
1. Delegations from the People's Republic of China, led by the
Ministry of Communications, and the United States, led by the
Maritime Administration met in Shanghai on November 28th and
29th, 2007, to discuss the implementation of the bilateral
maritime agreement and other related matters in the maritime
service sector. The consultative meeting was held in a friendly
atmosphere and was pragmatic, frank and fruitful. The Chinese
delegation was led by Vice Minister Xu Zuyuan, and the United
States' delegation was led by Maritime Administrator Sean T.
Connaughton. Full delegation lists are attached.
2. Vice Minister Xu and Maritime Administrator Connaughton
placed a high value on the role played by the bilateral maritime
agreement in strengthening bilateral maritime cooperation and
promoting bilateral trade. Both sides expressed satisfaction on
the implementation of the bilateral maritime agreement. They
expressed the view that China and the U.S. are not only two
important trade partners, but also big shipping countries. Since
both countries are Category A members of the IMO Council, both
sides have the responsibility to strengthen cooperation in
maintaining safety, increasing efficiency of maritime services
and protecting the environment. Both sides agreed to maintain
the annual consultation mechanism with a positive and
cooperative attitude, to further promote bilateral maritime
relations.
3. Both sides introduced current developments in their shipping
policies and other information on maritime-related fields. The
Chinese side explained the measures they are adopting for energy
saving and environmental protection, and gave an introduction to
their port development plan, inland shipping development,
endeavors for promoting the development of private shipping
enterprises, and measures to strengthen port and shipping safety
and security. The U.S. side explained their goals for
infrastructure investment and congestion mitigation. The U.S.
side also expressed their interests in new Arctic shipping
routes, the expansion of the Panama Canal, the shortage of
seafarers and protection of the environment. The U.S. side
explained new legislation for container security. Both sides
expressed the view that there are many issues and concerns in
the maritime field which merit further communication between the
two sides.
SHANGHAI 00000762 002 OF 007
4. The U.S. side expressed their strong interests in obtaining
WFOE status for Matson Navigation, a new entrant in the trade
between China and the U.S. In view of the cooperative spirit of
U.S./China maritime relations and obligations of the bilateral
maritime agreement, the U.S. side requested the Chinese side to
approve the application before December 31, 2007. The Chinese
side replied that they recognized the importance of this matter
to the bilateral relationship and stated that they would take
positive steps to process the application.
5. The Chinese side held the view that the visa system in the
U.S. creates many difficulties and inconveniences for Chinese
seafarers to enter U.S. ports and asked the U.S. side to take
into consideration the special nature of the shipping business
and seafarers and to extend the validity of the seafarers' visas
to five years on a reciprocal basis. The U.S. side explained
U.S. visa policy and agreed to contact the competent U.S.
authority about measures to address these concerns as part of a
resolution of broader visa issues between the two countries. The
Chinese side holds the view that this issue should not be linked
with broader visa issues and should be resolved on a reciprocal
basis.
6. In accordance with Article 1 paragraph 2 and Article 6
paragraph 2 of the bilateral maritime agreement, the U.S. side
asked the Chinese side to charge the same tonnage dues on U.S.
owned foreign registered vessels as on vessels registered in the
U.S. The Chinese side explained that they had fully implemented
the provisions of paragraph 2 of Article 6 of the bilateral
maritime agreement. The Chinese side gave further explanation on
their tonnage dues policy which allowed favorable treatment
relating to levying of tonnage dues on a vessel at Chinese ports
if the vessel flies the flag of a country whose government had
entered into a bilateral maritime agreement or other related
agreement on favorable taxation. The Chinese side further
explained that vessels flying the flag of third countries and
owned or operated by U.S. shipping companies enjoy the same
treatment relating to levying of tonnage dues as those of
Chinese shipping companies flying the flag of third countries.
The U.S. side requested further information from the Chinese
side on this matter. The Chinese side agreed to provide the
relevant information.
7. The Chinese side pointed out that in accordance with U.S.
regulations, when a vessel carries cargo loaded in U.S. ports
and bound for China, complete manifest information and shipper's
declaration must be submitted to U.S. Customs and Border
Protection before the vessel's departure. The Chinese side noted
that China is on a list of countries subject to this
differentiated treatment and asked the U.S. side to eliminate
the differentiated treatment. The Chinese side asked the U.S.
side to eliminate this differentiated treatment problem in order
to provide more convenient, fair maritime transport for the
bilateral trade. The U.S. side expressed their willingness to
provide further information on the legislative background and
implementation status of this measure and would give the Chinese
side further explanation on this regulation.
8. Both sides exchanged viewpoints on the transportation of bulk
grains in containers in the China-U.S. trade and expressed their
willingness to communicate with their respective competent
authorities to explore ways to increase container transport
efficiency and alleviate container imbalance. Both sides
exchanged views on alleviating congestion in U.S. inland
transport networks.
9. The Chinese side raised the issue of inconsistency of
environmental protection standards in different states of the
U.S., which was inconvenient and increased operating costs for
carriers. The U.S. side explained that U.S. law gives states
considerable authority to set their own environmental standards.
In order to avoid unilateral action and to implement uniform
international standards, both sides recognize the importance of
close cooperation in the IMO framework.
SHANGHAI 00000762 003 OF 007
10. The U.S side raised the issue of problems U.S. NVOCCs are
experiencing in China. The U.S. side proposed that the bond
required by the FMC should extend to China cross trades as well
as the bilateral trade. The Chinese side held the view that this
issue involves an adjustment of the arrangement between the two
sides reached in 2003. The Chinese side indicated that they had
fully implemented the Memorandum of Consultations signed on
December 8th, 2003 by providing facilitation to qualified U.S.
NVOCCs to conduct their business in China. The Chinese side also
pointed out that due to the change of the exchange rate between
the Chinese Yuan to U.S. dollar, the amount of financial
responsibility in U.S. dollars (which used to be equivalent to
800 thousand RMB) should also be adjusted accordingly. The U.S.
side stated that they would provide a written proposal to
address these issues. Both sides agreed to further exchange
ideas on the above mentioned issues.
11. Both sides exchanged views on the competition policy for
ocean carriers. Both sides emphasized the importance of
consistency in international competition policy in order to
avoid any negative effects on the shipping industry due to
conflicts of law. Both sides noted that at present there are no
plans to change the competition laws in either country which
grant anti-trust immunity for ocean carriers.
12. Both sides listened to the views of shipping company
representatives of both countries, and both sides expressed
their willingness to keep open communication with the industry.
13. Both sides agreed to hold the 3rd bilateral Maritime
Consultative Meeting in the U.S. in 2008.
DONE on November 29th, 2007 in Shanghai, in the Chinese and
English languages.
Xu Zuyuan
For the Ministry of Communications
People's Republic of China
Sean T. Connaughton
For the Department of Transportation
United States of America
End text.
In the above text, the acronym "IMO" refers to International
Maritime Organization; and "FMC" refers to Federal Maritime
Commission.
LIST OF CHINESE MARITIME DELEGATION
-----------------------------------
Xu Zuyuan Vice Minister,
Ministry of Communications
Song Dexing Director General
Department of Water Transport
Ministry of Communications
SHANGHAI 00000762 004 OF 007
Zhang Shouguo Deputy Director General
Department of Water Transport
Ministry of Communications
Xiong Wei Director
Department of Water Transport
Ministry of Communications
Gao Haiyun Deputy Director
Department of Water Transport
Ministry of Communications
Li Juguang Officer
Foreign Affairs Office
Ministry of Communications
Wang Lu Deputy Director
Maritime Administration Bureau
Ministry of Communications
Teng Chen Attache
Department of America and Oceanic Affairs
Ministry of Foreign Affairs
OBSERVERS
---------
Xu Guibin Executive Vice Chairman
China Shipowners' Association
Wang Mingsheng Deputy Director
International Affairs Division
China Shipowners' Association
Yang Ting Deputy General Manager
SHANGHAI 00000762 005 OF 007
Transportation Management Department
China Ocean Shipping (Group) Co.
Chen Bin Deputy Manager
Transportation Management Department
China Ocean Shipping (Group) Co.
Zhu Tao Deputy Manager
COSCO Container Lines Co.
Zhao Yingtao General Manager
Transportation Management Department
China Shipping (Group) Co.
Zhao Hongzhou Deputy General Manager
China Shipping Container Lines Co.
Gu Jinsong General Manager
Commercial Department
China Shipping Container Lines Co.
Cai Ying Deputy General Manager
Transportation Management Department
Sinotrans (Group) Co.
LIST OF U.S. MARITIME DELEGATION
--------------------------------
Sean Connaughton Maritime Administrator
Maritime Administration
Department of Transportation
Bruce Carlton Assistant Maritime Administrator
Maritime Administration
Department of Transportation
Greg Hall Director
SHANGHAI 00000762 006 OF 007
Office of International Activities
Maritime Administration
Department of Transportation
Brian Varney International Economist
Maritime Administration
Department of Transportation
Christopher Moore Special Assistant
Maritime Administration
Department of Transportation
Stephen Miller Team Leader
Office of Transportation Policy
Bureau of Economic and Business Affairs
Department of State
Michael Layne Economic Officer
U.S. Consulate General Shanghai
Department of State
Kamal Latham Economic Officer
U.S. Embassy Beijing
Department of State
OBSERVERS
---------
Kevin O'Rourke Senior Vice President and General Counsel
Matson Navigation Company
David Hoppes Senior Vice President-Ocean Services
Matson Navigation Company
Qiang Gao Managing Director Asia
China Chief Representative
Matson Navigation Company
SHANGHAI 00000762 007 OF 007
William Chan Vice President & Managing Director North
China
American President Lines
Dan Ryan President, Greater China
American President Lines
Charles Wellins Maersk Lines
Vice President - Sales
Greater China Area
Maersk Hong Kong Ltd
Gareth Luk Maersk Lines
Deputy General Manager for Import
Greater China
Maersk Beijing
JARRETT