NCBFAA Pressure Leads to Relaxation of Chinese Government

Washington, DC: In its final implementing rules for maritime transportation, the People's Republic of China (PRC) has endorsed reciprocity recommendations offered by the National Customs Brokers & Forwarders Association of America, Inc. (NCBFAA) earlier this year. The original package of PRC regulations, issued last year to regulate - for the first time - maritime transportation, has been controversial from inception.
        Once the law was enacted, the NCBFAA quickly moved to meet with various US governmental agencies, as well as the then responsible Chinese agency, the Ministry of Communication (MOC), to both understand the new requirements and attempt to mitigate its worst effects on NVOCCs. Among other things, the NCBFAA challenged the PRC regulations that had required NVOCCs to post the security deposits in Chinese banks, both by filing comments with the PRC Ministry of Communication and by having the FMC re-open the investigation that was looking into the fairness of Chinese restrictions on shipping practices.
        For NVOCCs, there were several requirements that seemed particularly burdensome. But the biggest problem related to the need for NVOCCs to post $96,000 security deposits, plus $24,000 for each branch office, with PRC banks. Lack of U.S. government response led the NCBFAA to recommend - in filings before the FMC and MOC - that the agencies agree to some system of reciprocity. The recommendation asked the Chinese to accept the financial security of any NVOCC already licensed or registered with the FMC as acceptable under the new Chinese regulations, and that the FMC should do likewise for Chinese NVOCCs who were registered with MOC and had paid the necessary security deposit into a Chinese bank.
        In the MOC's final implementing rules, effective on March 1, 2003, Article 12 proposes to exempt foreign NVOCCs from posting a performance bond if the FMC has executed an agreement with MOC that would somehow work to guarantee the company's performance under its existing US bond. The Maritime Administration and the FMC are exploring how US bonds can be modified for this purpose and discussions of this and other issues will take place with a Chinese delegation in Washington during the week of April 7.
        With headquarters in Washington, DC, the NCBFAA (members.ncbfaa.org) represents nearly 700 member companies - the nation's leading freight forwarders, customs brokers, ocean transportation intermediaries (OTIs) and air cargo agents. Established in 1897 in New York, NCBFAA is the strong, effective national voice of the industry. Through its various committees, counsel and representatives, the Association maintains a close watch over legislative and regulatory issues that affect its members. It keeps them informed of these and other related issues through its weekly Monday Morning eBriefing, Quarterly NCBFAA Bulletin, and various meetings and conferences throughout the year.