Levying Fees Won't Address U.S. Shipbuilding Woes

The U.S. is planning to charge fees on Chinese-built or flagged ships docking at U.S. ports and has called on its allies to enact similar measures or risk retaliation, according to a draft executive order reported by Reuters in early March. However, the unilateral move, as part of efforts to curb China's economic advance, is ineffective in helping U.S. ambition to retake its position of top shipbuilder in the world from China.

The plan is sure to fuel global inflation, and ultimately backfire on the U.S. Reuters said the plan could inflict significant costs on major container carriers as well as on operators of ships that carry bulk food, fuel and autos. The rising cost of shipping goods will then be transferred to local consumers, thus lowering demand and potentially slowing the U.S. economy.

In recent years, the U.S. has been trying to reform its shipbuilding industry and partly blaming China's global dominance for its own failures. But the U.S. should face the reality that its shipbuilding industry has been on the decline for a decade, a view that is repeatedly accepted by international analysts and media. For example, Bloomberg said the real culprit in the decline is the abominable Jones Act, which since 1920 has limited domestic shipping to vessels built, crewed and registered by Americans.

According to the Financial Times, shrinkage in the U.S. shipbuilding industry is the result of several factors including the cancellation of most government subsidies starting in the 1980s, and reducing investment in technology, factory equipment and training for U.S. workers. This caused an overall decline in the competitiveness and capacity of U.S. shipbuilding, resulting in it falling behind the emerging Asian players, including China, Japan and South Korea.

It is clear that the reasons behind the U.S. shipbuilding industry's decline have nothing to do with China. So then, why has China become the scapegoat? Peter Sand, chief analyst at Copenhagen-based shipping analytics firm Xeneta, told DW, a German international broadcaster, that the plan "does align with the Trump administration's target to limit Chinese dominance here, there and everywhere, especially where it relates to American business."

Protectionist policies won't make American shipbuilding great again. But, as an ancient Navajo proverb says, "You can't wake a person who is pretending to be asleep." If the U.S. government refuses to accept its errant ways, the people will no doubt become victims of a trade conflict.

Rather than reviving defunct colonial tactics, the U.S. should heed its own corporations and dockworkers protesting this self-inflicted wound. Only cooperation, not coercion, can steady the ship of global prosperity.

Source: Science and Technology Daily