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China advances major changes in liner shipping regulations

The People's Republic of China (PRC) has promulgated new maritime regulations governing the movement of freight into and out of mainland China including the special administrative regions (SARs) of Hong Kong and Macao. These regulations were adopted by the PRC State Council on December 5, 2001 and took effect on January 1, 2002.

They appear to be more comprehensive and wide ranging than the Shanghai Shipping Exchange that was unveiled several years ago, according to the US National Industrial Transportation League's online newsletter, NOTICE (NOTICE@nitl.org).

According to US Government officials, reported the NITL, the English version of the new regulations is unofficial and many questions are unanswered how the new rules will be applied. Government sources also told the League that while the rules were effective on January 1, a second set of implementing regulations is expected to be released within the next 60 days.

The new requirements would require that ocean freight rates charged by all international liner carriers and non-vessel operating common carriers (NVOCCS) doing business with China be filed with an appropriate government agency. Such rates would include both published rates and service contract rates. Published freight rates will be effective 30 days after filing, while service contract rates will be effective 24 hours after filing.

To start or terminate liner service, change sailing vessels, or adjust schedules of the service, an operator, "should make an announcement of its intent 15 days in advance, and apply for a filing with competent (appropriate) departments of communication under State Council within 15 days upon which the above behaviors are conducted."

Liner carriers are also required to file their conference agreements, freight rate agreements, and operational agreements within 15 days of the agreement itself. According to the regulations, carriers and NVOCCS are "forbidden (in) providing services with freight rates below normal and reasonable levels handicapping fair competition; accepting cargo bookings with a discount to consignors that is not indicated in the accounting books; abusing privilege to damage trade counterparts with discriminatory pricing and restrictive conditions; and other behavior harmful to trade counterparts or to order in the international maritime transportation market."

There is also a special section in the new regulations that places requirements on foreign-invested international transportation businesses.

In order to operate international shipping enterprises; agencies; shipping management concerns; stevedoring; sea-freight warehousing; container yards; or freight stations - capital must be invested in a Chinese-foreign joint venture. In these ventures, a foreign company is not allowed to exceed 49% of the total registered capital for a Chinese-foreign joint venture in international shipping and/or shipping agency.

The latest translation of the rules may be found on the US National Industrial Transportation League's website: www.nitl.org. NOTICE (NOTICE@nitl.org.)