Growth Energy Urges USTR to Change Course on Proposed Shipping Rules

(Growth Energy/Ethanol Producer Magazine) Growth Energy, the nation’s largest biofuel trade association, submitted comments to the U.S. Trade Representative (USTR) today, urging the agency to change course and either revise or remove new recently-proposed rules aimed at combating China’s efforts to dominate global shipping.

In April 2024, USTR began a Section 301 investigation into China’s practices that target the maritime, logistics, and shipbuilding sectors for dominance. USTR ultimately found that China’s efforts to maintain a competitive advantage in these three sectors were “unreasonable” and that they “burden or restrict U.S. commerce.” In response to this finding, USTR proposed new fees that would increase the cost of shipping U.S. goods using Chinese vessels, and impose new restrictions on shipping that would effectively mandate that all U.S. goods be exported on U.S.-flagged, U.S. built vessels, with only limited exceptions.

“The noted fees and costs of compliance with the proposed requirements to use U.S.-flagged and operated vessels will be significant and result in higher, less-competitive prices and decreased demand for U.S. exports while also increasing the price of imported inputs for ethanol’s production. This will upend domestic supply chains while increasing port consolidation, port congestion, costs, other compliance requirements, and clearance time by customs that will add to the burden and cost of producing and exporting U.S. ethanol,” said Growth Energy Senior Vice President of Regulatory Affairs Chris Bliley in submitted comments.

"Some of our members are already experiencing reluctance from shippers to enter future transactions without shouldering the risk associated with this proposal. At the same time, other countries are taking actions to ease the cost of trade and expand their ethanol exports—most notably, Brazil is currently seeking a trade agreement with the European Union (EU) that would give their ethanol industry greater, easier access to that market.”

“As a result of the potential harm to the U.S. ethanol industry, we ask for you to remove the proposed fees and restrictions on services,” the comments concluded. “These new requirements would cause a significant upheaval that American producers can ill afford.”

Growth Energy has also signed onto other comments urging USTR to change course, including a coalition letter signed by 317 trade associations submitted by the National Retail Federation (NRF) outlining the damage the proposed fees and restrictions would do to American commerce.

Exports of U.S. ethanol set a record in 2024, shipping 1.9 billion gallons worth $4.3 billion. During the same period the American ethanol industry maintained a $3.9 billion trade surplus.

Excerpt from Energy.AgWired.com: The United States Trade Representative‘s office is holding public hearings this week on proposed actions in the Section 301 investigation of China’s targeting of the maritime, logistics, and shipbuilding sectors for dominance that would result in new fees being imposed on Chinese vessels. The first hearing was held on Monday, March 24 and the second will be on Wednesday, March 26.

More than 100 agricultural and biofuels organizations sent comments in a letter to USTR seeking an exemption for agricultural exports from both newly proposed fees on Chinese vessels and graduated sourcing requirements for U.S. built and flagged vessels “until such time as our nation’s ship production can meet the requirements needed to keep U.S. agriculture competitive in the global market.”

“While we support President Trump’s effort to rebuild the United States position and power in global shipping, we are worried the current fees and timelines cannot be achieved without substantial economic harm on the farm and in rural America,” the letter stated. “These are not idle concerns. U.S. commodity prices and agriculture exports have already been negatively impacted due to uncertainty regarding when trade actions would become effective. Vessel operators have told U.S. exporters they intend to pass on 100 percent of the cost of the port fees.”

The Renewable Fuels Association was one of the groups signing the letter and president and CEO Geoff Cooper says shipping transportation is vital to ethanol exports, which hit record levels last year. “Efficient, reliable, and timely export transportation service is critical to the viability of our industry, and the imposition of these fees would be devastating to our marketplace. We urge the U.S. Trade Representative to recognize the vital importance of American agriculture products to the world economy, and grant the requested exemptions.” READ MORE

Excerpt from Brownfield Ag News: Several ag groups are seeking an exemption for ag products from proposed fees on Chinese vessels as the U.S. tries to level the playing field for shipbuilders.

“We could potentially lose markets (if fees go into effect),” says Richard Gupton with the Ag Retailers Association. “The costs could be passed on to farmers in the ag sector from these shipping companies they’re targeting. We think there should be a more balanced, long-term approach.”

Gupton tells Brownfield a waiver shouldn’t be too difficult from a logistics stand-point.

The ARA, National Corn Growers Association, Renewable Fuels Association and others made the request in a letter to the Office of the U.S. Trade Representative. The groups also asked for graduated sourcing requirements for U.S. built and flagged vessels until U.S. ship production can meet the requirements to keep ag competitive globally.

RFA CEO Geoff Cooper says U.S. ethanol exports would be affected by the fees and NCGA President Kenny Hartman says corn would be, too. Hartman says the exemptions for bulk grain shipments would allow the U.S. to address problems caused by the Chinese government without hurting American farmers.

A proposal the Trump administration under Section 301 would impose a fine of up to $1.5 million for each port call by a ship that was built in China or just owned by a Chinese company. NCGA says the restrictions address a report showing China has given shipbuilding and maritime industry an unfair advantage through financial support, barriers for foreign firms and more.

The USTR held a public hearing this week on the proposed actions on Section 301 investigation on China’s targeting of maritime, logistics and shipbuilding sectors. Gupton says it will take some time for USTR to review the feedback and in the short-term, he says Congress could take a different approach.

“We’ve proposed getting rid of an outdated law called the Jones Act,” says Gupton. “Where you have to be a U.S. built, U.S. owned and crewed vessel to go from U.S. port to U.S. port. They don’t have many of those vessels and it makes it expensive to try and find those ships to move them port to port. That’s another way to solve some of these issues on the shipping side.”

The groups say there is support for the President’s effort to rebuild the global shipping industry in the U.S., but there are concerns the current fees and timelines can’t be met without significant economic harm to America’s farmers and ranchers. READ MORE