Blog

The subsequent USTR notices and guidance have attempted to clarify some of the open questions regarding the port fees. However, several questions remain.

1. For purposes of Annex I port fees on vessels owned by a Chinese entity in the case of a Chinese lease financing, is the ‘owner’ the registered owner/lessor or the disponent owner/lessee?

While the USTR notices have provided no further guidance as to the identity of the ‘owner’, guidance released by the US Customs and Border Protection (“CBP”) port operators for the ports of New Orleans and Houston state that “[t]he vessel owner(s) will be determined by the vessel’s Registry (REG).” While this guidance applies only to the ports of New Orleans and Houston and not other ports, the guidance suggests that in the case of a sale-leaseback financing with a Chinese lessor, the port fees would be imposed, notwithstanding that the beneficial owner of the vessel may have no Chinese nexus. The guidance further suggests that in the reverse case, where the registered owner is not a Chinese entity but the beneficial owner is a Chinese company, the port fees on Chinese owners would not apply (although the fees may still be owed if the Chinese company is the ‘operator’). 

2. For purposes of Annex II port fees on Chinese-built vessels, does the small vessel exception apply to tankers?

The April Notice exempted small vessels from the port fees on Chinese-built ships. For this purpose, a small vessel was defined as a “vessel with a capacity of equal to or less than: 4,000 Twenty-Foot Equivalent Units, 55,000 deadweight tons, or an individual bulk capacity of 80,000 deadweight tons.” This led to some uncertainty, since the meaning of “individual bulk capacity” is unclear. The reference to ‘bulk’ may have suggested dry bulk vessels, although tankers carry liquid cargo in ‘bulk’.