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US faces grilling over Jones Act exemption
[December 20, 2007]

US faces grilling over Jones Act exemption

(Lloyds List Via Thomson Dialog NewsEdge) MAJOR maritime nations have drilled the United States at a World Trade Organisation forum over the continued exemption of the US Jones Act from global rules.

The Japanese delegation told a session of the WTO's ruling General Council that the exemption 'is a serious deviation' from the fundamental principle of the global trade oversight body.

'The exemption was established by one member and has been maintained for years. We have concerns that the continuation of this exemption undermines the credibility of the WTO rules as a whole,' Japan's deputy WTO representative Kuni Sato told delegates.

The Norwegian delegation also expressed frustration.

'This is an important issue for Norway as the waiver in essence makes it impossible to sell ships to the United States,' it said. The Act, which affects both shipbuilding and maritime services, stipulates that the transport of cargo between US ports must be carried out by ships that are US-built, registered, owned and crewed largely by US nationals.

Hong Kong delegates said the continuation of the exemption more than 10 years after the establishment of the WTO 'remains a systemic concern'.

The European Union delegation also registered its strong objection to the exemption of the Jones Act.

'The prevailing situation has negative economic consequences for the EU's shipbuilding industry by closing the US market for ships, certain segments of which, for example passenger ferries, are of interest to EU shipbuilders.'

In response to the barrage of criticisms, the US delegation countered that the provisions being questioned are an integral part of the global rules.

It said that as long as the legislation has not been modified to reduce its conformity with the WTO norms, 'the US legislation remains exempt'.

'That is the situation with respect to the US legislation today. It remains in force, and its conformity with Part II of the GATT 1994 has not decreased. This provision was agreed to by all members and is a central part of the Uruguay Round results,' the US said.

The US also responded to written questions on a host of issues submitted by Japan ahead of the proceedings.

One raised by Japan was that the US did not have a specific quantitative threshold or criteria for shipbuilding, or maintenance capacity, for national security.

Japan expressed its concerns that the absence of such criteria may allow the US 'to make arbitrary decisions and that the exemption would be permitted forever'. However, the US emphasised these are 'qualitative and not quantitative assessments' made by the US Department of Defence, in conjunction with the Department of Homeland Security, and other relevant security agencies.

'As the nature of the threats has changed over the years, the assessment of the level of security needed is constantly being examined and refined,' the US delegation said.

UK debate Pages 8-9

Copyright 2007 Informa Maritime Trade and Transport , Source: The Financial Times Limited

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