Korea pushes for exemption from US fee on foreign-built vehicle carriers
South Korea has officially asked the United States for an exemption from the implementation of a fee on non-US-built vehicle carriers, as the former continues to search for ways to protect its export-heavy economy.
According to online documentation related to the Office of the US Trade Representative on Monday, Korea's Ministry of Trade, Industry and Energy and Ministry of Oceans and Fisheries submitted an official proposal last week to urge the US government to reconsider the imposition of port entry fees on vehicle carriers, which are set to take effect on Oct. 14.
'Korea's shipping and automotive industries have played a central role in stabilizing and strengthening the Korea-US manufacturing, logistics and distribution value chain,' the Korean government states in the submitted document.
'In this context, contrary to its intended purpose, the imposition of port entry fees on vehicle carriers will place significant burdens on the relevant industries of both countries and run counter to the reciprocal and mutually beneficial trade relationship between Korea and the United States.'
In an attempt to curb China's maritime shipping dominance, the USTR announced a series of measures in April that include a fee of $50 per net ton on the entry of Chinese-owned or operated vessels into US ports, a fee of $18 per net ton on the entry of Chinese-built vessels into US ports and a fee of $150 per car equivalent unit on the entry of non-US-built vehicle carrier vessels into US ports.
Non-US-built vehicle carriers being assessed entry fees at US ports is what the Korean government took issue with, as the country's automotive industry recorded approximately $34.7 billion last year, accounting for about 27.1 percent of its total annual exports to the US.
Noting that the USTR's investigation on China's dominance of the maritime, logistics and shipbuilding sectors was carried out to address unfair foreign practices affecting US commerce, the Korean government pointed out the Annex III, which designates non-US-built vehicle carriers as subject to the port entry fee, expands the scope of the measure 'beyond what appears necessary to achieve the stated purpose of the investigation.'
'Such expansion may in turn adversely impact the contributions that Korean firms are making to US commerce,' it added. 'Furthermore, the automotive sector is already subject to tariffs on vehicles and parts. Imposing a port entry fee on vehicle carriers would introduce an additional layer of regulation, effectively creating a dual burden on parties involved in non-US automotive shipments.'
The Korean government also requested the US to impose a maximum of five port entry fees per non-US-built vehicle carriers per year as the USTR's notice did not set a limit on the number of times for fees to be collected from non-US-built vehicle carriers.
The Korean government highlighted its automakers, Hyundai Motor and Kia in particular, have fulfilled their investment commitments that were pledged during the first Donald Trump administration, also referring to Hyundai Motor Group's additional $21 billion investment announcement in March this year.
If the fee on non-US-built vehicle carriers goes into effect unchanged, Hyundai Glovis, the logistics affiliate of Hyundai Motor Group, would face a significant burden as it delivers Hyundai Motor and Kia cars from Korea to the US.
'(For Hyundai Glovis,) the port entry fee is something that did not exist before so it's going to harm their business,' said a shipping industry official.
'The number of entries to US ports by Hyundai Glovis was about 160 or 170 last year, which means that the port entry fee would not be a small blow for them.'
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