America’s Offshore Vessel Operators Seek Daily Tax on Chinese-Built Vessels

America’s offshore vessel operators are applauding the White House’s proposal for significant fees on Chinese ships operating in U.S. waters. However, they are pushing for an additional measure – a daily tax on Chinese-built vessels working in American waters.

Despite the protections offered by the Jones Act for American shipping, the offshore vessel services industry still faces competition from low-cost foreign vessels for certain specialized tasks. Foreign offshore service vessels, such as crane ships, offshore wind turbine installation vessels, and survey ships, can often secure contracts for work on the U.S. continental shelf, as long as they do not transport cargo between U.S. points. This loophole allows foreign operators to frequently win contracts for projects in U.S. waters.

Last month, the Office of the U.S. Trade Representative (USTR) announced plans to impose significant charges on Chinese-owned and Chinese-built vessels for calls at American ports. However, these fees are only levied once per port visit, leaving foreign-built vessels free to operate in U.S. waters without incurring any additional costs as long as they avoid American port calls.

To level the playing field and counter the cost advantages of foreign-built vessels, the Offshore Marine Services Association (OMSA) has urged USTR to include offshore work in the proposed fee schedule for Chinese-built vessels.

OMSA President and CEO Aaron Smith stated, “OMSA respectfully requests that the proposed actions be amended so that the service fees accrue on a daily basis for Chinese-built vessels working in U.S. sovereign waters on U.S. offshore energy projects. This clarification will ensure that the actions fully address the harm caused by Chinese-built vessels to U.S. shipyards, vessel owners, mariners, and other workers involved in U.S. offshore energy projects.”

Smith proposed assessing a daily fee on Chinese-built offshore vessels based on AIS data records or Coast Guard paperwork showing their time in U.S. waters. This measure would impact several foreign vessels, including those operating in the U.S. offshore wind industry, posing a significant challenge to U.S. service providers.

Highlighting the impact of foreign competition, Smith pointed to Cadeler’s new WTIV Wind Pace as an example. The vessel, equipped for 20 MW capacity, is set to commence a long-term installation contract in U.S. waters, worth millions of dollars, depriving U.S. shipowners of revenue opportunities.

Furthermore, Smith emphasized the disparity in wages between U.S. and foreign seafarers, with foreign crew members earning significantly lower wages than their American counterparts. This wage gap gives foreign-crewed vessels a significant cost advantage over U.S. competitors.

As the offshore vessel operators advocate for a daily tax on Chinese-built vessels operating in U.S. waters, the industry awaits further developments to address the challenges posed by foreign competition in American waters.