FMC Testifies Before Congress on NSA Final Rule, U.S.-China Bilateral Maritime Agreement, Etc

The following are "highlights" of Chairman Blust's written statement, as well as information obtained by telephone from FMC sources:

Over 250 NVOCCs are currently registered to file NSAs. According to FMC sources, over 250 non-vessel-operating common carriers (NVOCCs) are currently registered to file NVOCC Service Arrangements (NSAs) in the FMC's internet-based Service Contract Filing System (SERVCON). However, FMC sources state that the number of NSAs that have been filed is currently unavailable.

FMC is mindful of industry concerns over NSA final rule's limitations. Chairman Blust stated that to ensure that NSAs are consistent with the statutory scheme established by Congress in the Shipping Act, the final rule proscribes certain types of discriminatory conduct similar to the prohibitions applicable to service contracts in Section 10 of the Shipping Act. In addition, the final rule does not permit unrelated NVOCCs from jointly offering NSAs, nor does it allow NVOCCs or shippers associations with NVOCC members to participate in NSAs as shippers.

According to Blust, the FMC is mindful of industry concerns over these limitations. However, the FMC believes they are necessary as a result of recent judicial interpretations which construe the antitrust provisions of the Shipping Act in a manner that the FMC believes to be much broader than what was envisioned by Congress, the FMC, and even the industry. Blust noted that, as the FMC indicated when it issued the final rule, it will monitor the judicial developments and continue to work with the industry to address this issue as circumstances warrant.

See NSA final rule for a discussion on such recent judicial interpretations, including discussion of U.S. v. Tucor.

(See ITT's Online Archives or 01/21/05 news, 05012110, for BP summary of the NSA final rule's taking effect on January 19, 2005.)

FMC to soon issue decision on whether China has honored commitments made in bilateral maritime agreement.Chairman Blust reported that in April 2004, the FMC requested comment from the industry on whether the commitments made in the U.S.-China bilateral maritime agreement (also referred to as the U.S.-China bilateral Agreement on Maritime Transportation (AMT)) were being honored. According to Blust, the FMC will issue its final decision in this matter shortly.

Blust noted that many of the issues that the FMC raised have been adequately addressed, and thus far, the FMC has received positive feedback from the U.S. industry in this regard.

In particular, Blust stated that 29 U.S. NVOCCs have availed themselves of the opportunity provided for in the FMC's rules to file proof of additional financial responsibility with the FMC as an alternative to meeting China's requirements for the deposit of at least $96,000 in a Chinese bank.

(See ITT's Online Archives or 04/05/04 and 04/06/04 news, 04040505 and 04040610, for Parts I and II of BP's summary on the FMC's final rule regarding this $96,000 NVOCC financial responsibility requirement.)

The AMT, which went into effect in April 2004, was developed in order to address concerns regarding Chinese laws and regulations that might discriminate against and disadvantage U.S. vessel operators and NVOCCs with regard to a variety of maritime-related services. (See ITT's Online Archives or 04/05/04 news, 04040510, for BP summary of the FMC's notice seeking comments on the effects of the AMT.)

Chairman Blust's statement (dated 03/03/05) available at http://www.fmc.gov/Speeches/Blust/Chairman%20Blust%20Budget%20Auth%20Statement%203-3-05.htm