VZCZCXRO8722
RR RUEHCN RUEHGH
DE RUEHGH #0762/01 3331113
ZNR UUUUU ZZH
R 291113Z NOV 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 6478
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
INFO RUEHBJ/AMEMBASSY BEIJING 1546
RUEHSH/AMCONSUL SHENYANG 0974
RUEHCN/AMCONSUL CHENGDU 0974
RUEHIN/AIT TAIPEI 0793
RUEHHK/AMCONSUL HONG KONG 1099
RUEHKO/AMEMBASSY TOKYO 0228
RUEHUL/AMEMBASSY SEOUL 0139
RUEHGP/AMEMBASSY SINGAPORE 0092
RHEHAAA/NSC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 6993

UNCLAS SECTION 01 OF 07 SHANGHAI 000762 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM, EB AND E 
DOT FOR MARAD 
TREASURY FOR AMB. HOLMER, WRIGHT, TSMITH 
USDOC FOR ITA MAC DAS KASOFF, MELCHER, MCQUEEN 
NSC FOR HUBBARD AND TONG 
 
E.O. 12958: N/A 
TAGS: EWWT ELTN CVIS EINV ETRD OVIP CH
SUBJECT: 2ND CHINA-U.S. MARITIME CONSULTATIVE MEETING 
 
This cable is Sensitive But Unclassified (SBU) and for official 
use only.  Not for transmission outside USG channels. 
 
¶1.  (SBU) Summary:  On November 28 and 29, members of the U.S. 
Maritime Administration delegation led by Maritime Administrator 
Sean Connaughton met with the Chinese Ministry of Communications 
delegation led by Vice Minister Xu Zuyuan in Shanghai.  The two 
sides discussed a wide range of bilateral maritime issues, 
including the implementation of the bilateral maritime 
agreement.  The U.S. side raised the issue of a pending wholly 
foreign-owned enterprise (WFOE) application of Matson 
Navigation, tonnage dues on U.S.-owned foreign registered 
vessels, and the U.S.-China Maritime Agreement treatment of 
non-vessel operating common carriers (NVOCCs).  The Chinese side 
raised visa issues regarding Chinese seafarers, U.S. Customs 
regulations on the transmission of manifest information, 
regulations at U.S. ports regarding environmental protection, 
financial responsibility of U.S. NVOCCs doing business in China, 
and inland transportation efficiency in the U.S.  Both sides 
exchanged views on container shipping of bulk grains and 
competition policy for ocean carriers.  The two sides agreed on 
the minutes of the meeting and signed the following text.  End 
Summary 
 
Begin Text 
 
---------- 
 
AGREED MINUTES OF THE 2ND CHINA-U.S. MARITIME CONSULTATIVE 
MEETING 
 
¶1. Delegations from the People's Republic of China, led by the 
Ministry of Communications, and the United States, led by the 
Maritime Administration met in Shanghai on November 28th and 
29th, 2007, to discuss the implementation of the bilateral 
maritime agreement and other related matters in the maritime 
service sector. The consultative meeting was held in a friendly 
atmosphere and was pragmatic, frank and fruitful. The Chinese 
delegation was led by Vice Minister Xu Zuyuan, and the United 
States' delegation was led by Maritime Administrator Sean T. 
Connaughton. Full delegation lists are attached. 
 
¶2. Vice Minister Xu and Maritime Administrator Connaughton 
placed a high value on the role played by the bilateral maritime 
agreement in strengthening bilateral maritime cooperation and 
promoting bilateral trade. Both sides expressed satisfaction on 
the implementation of the bilateral maritime agreement. They 
expressed the view that China and the U.S. are not only two 
important trade partners, but also big shipping countries. Since 
both countries are Category A members of the IMO Council, both 
sides have the responsibility to strengthen cooperation in 
maintaining safety, increasing efficiency of maritime services 
and protecting the environment. Both sides agreed to maintain 
the annual consultation mechanism with a positive and 
cooperative attitude, to further promote bilateral maritime 
relations. 
 
¶3. Both sides introduced current developments in their shipping 
policies and other information on maritime-related fields. The 
Chinese side explained the measures they are adopting for energy 
saving and environmental protection, and gave an introduction to 
their port development plan, inland shipping development, 
endeavors for promoting the development of private shipping 
enterprises, and measures to strengthen port and shipping safety 
and security. The U.S. side explained their goals for 
infrastructure investment and congestion mitigation. The U.S. 
side also expressed their interests in new Arctic shipping 
routes, the expansion of the Panama Canal, the shortage of 
seafarers and protection of the environment. The U.S. side 
explained new legislation for container security. Both sides 
expressed the view that there are many issues and concerns in 
the maritime field which merit further communication between the 
two sides. 
 
 
SHANGHAI 00000762  002 OF 007 
 
 
¶4. The U.S. side expressed their strong interests in obtaining 
WFOE status for Matson Navigation, a new entrant in the trade 
between China and the U.S. In view of the cooperative spirit of 
U.S./China maritime relations and obligations of the bilateral 
maritime agreement, the U.S. side requested the Chinese side to 
approve the application before December 31, 2007. The Chinese 
side replied that they recognized the importance of this matter 
to the bilateral relationship and stated that they would take 
positive steps to process the application. 
 
¶5. The Chinese side held the view that the visa system in the 
U.S. creates many difficulties and inconveniences for Chinese 
seafarers to enter U.S. ports and asked the U.S. side to take 
into consideration the special nature of the shipping business 
and seafarers and to extend the validity of the seafarers' visas 
to five years on a reciprocal basis. The U.S. side explained 
U.S. visa policy and agreed to contact the competent U.S. 
authority about measures to address these concerns as part of a 
resolution of broader visa issues between the two countries. The 
Chinese side holds the view that this issue should not be linked 
with broader visa issues and should be resolved on a reciprocal 
basis. 
 
¶6. In accordance with Article 1 paragraph 2 and Article 6 
paragraph 2 of the bilateral maritime agreement, the U.S. side 
asked the Chinese side to charge the same tonnage dues on U.S. 
owned foreign registered vessels as on vessels registered in the 
U.S. The Chinese side explained that they had fully implemented 
the provisions of paragraph 2 of Article 6 of the bilateral 
maritime agreement. The Chinese side gave further explanation on 
their tonnage dues policy which allowed favorable treatment 
relating to levying of tonnage dues on a vessel at Chinese ports 
if the vessel flies the flag of a country whose government had 
entered into a bilateral maritime agreement or other related 
agreement on favorable taxation. The Chinese side further 
explained that vessels flying the flag of third countries and 
owned or operated by U.S. shipping companies enjoy the same 
treatment relating to levying of tonnage dues as those of 
Chinese shipping companies flying the flag of third countries. 
The U.S. side requested further information from the Chinese 
side on this matter. The Chinese side agreed to provide the 
relevant information. 
 
¶7. The Chinese side pointed out that in accordance with U.S. 
regulations, when a vessel carries cargo loaded in U.S. ports 
and bound for China, complete manifest information and shipper's 
declaration must be submitted to U.S. Customs and Border 
Protection before the vessel's departure. The Chinese side noted 
that China is on a list of countries subject to this 
differentiated treatment and asked the U.S. side to eliminate 
the differentiated treatment. The Chinese side asked the U.S. 
side to eliminate this differentiated treatment problem in order 
to provide more convenient, fair maritime transport for the 
bilateral trade. The U.S. side expressed their willingness to 
provide further information on the legislative background and 
implementation status of this measure and would give the Chinese 
side further explanation on this regulation. 
 
¶8. Both sides exchanged viewpoints on the transportation of bulk 
grains in containers in the China-U.S. trade and expressed their 
willingness to communicate with their respective competent 
authorities to explore ways to increase container transport 
efficiency and alleviate container imbalance. Both sides 
exchanged views on alleviating congestion in U.S. inland 
transport networks. 
 
¶9. The Chinese side raised the issue of inconsistency of 
environmental protection standards in different states of the 
U.S., which was inconvenient and increased operating costs for 
carriers. The U.S. side explained that U.S. law gives states 
considerable authority to set their own environmental standards. 
In order to avoid unilateral action and to implement uniform 
international standards, both sides recognize the importance of 
close cooperation in the IMO framework. 
 
SHANGHAI 00000762  003 OF 007 
 
 
 
¶10. The U.S side raised the issue of problems U.S. NVOCCs are 
experiencing in China. The U.S. side proposed that the bond 
required by the FMC should extend to China cross trades as well 
as the bilateral trade. The Chinese side held the view that this 
issue involves an adjustment of the arrangement between the two 
sides reached in 2003. The Chinese side indicated that they had 
fully implemented the Memorandum of Consultations signed on 
December 8th, 2003 by providing facilitation to qualified U.S. 
NVOCCs to conduct their business in China. The Chinese side also 
pointed out that due to the change of the exchange rate between 
the Chinese Yuan to U.S. dollar, the amount of financial 
responsibility in U.S. dollars (which used to be equivalent to 
800 thousand RMB) should also be adjusted accordingly. The U.S. 
side stated that they would provide a written proposal to 
address these issues. Both sides agreed to further exchange 
ideas on the above mentioned issues. 
 
¶11. Both sides exchanged views on the competition policy for 
ocean carriers. Both sides emphasized the importance of 
consistency in international competition policy in order to 
avoid any negative effects on the shipping industry due to 
conflicts of law. Both sides noted that at present there are no 
plans to change the competition laws in either country which 
grant anti-trust immunity for ocean carriers. 
 
¶12. Both sides listened to the views of shipping company 
representatives of both countries, and both sides expressed 
their willingness to keep open communication with the industry. 
 
¶13. Both sides agreed to hold the 3rd bilateral Maritime 
Consultative Meeting in the U.S. in 2008. 
 
DONE on November 29th, 2007 in Shanghai, in the Chinese and 
English languages. 
 
 
 
Xu Zuyuan 
 
For the Ministry of Communications 
 
People's Republic of China 
 
 
 
Sean T. Connaughton 
 
For the Department of Transportation 
 
United States of America 
 
End text. 
 
In the above text, the acronym "IMO" refers to International 
Maritime Organization; and "FMC" refers to Federal Maritime 
Commission. 
 
LIST OF CHINESE MARITIME DELEGATION 
 
----------------------------------- 
 
Xu Zuyuan           Vice Minister, 
 
                    Ministry of Communications 
 
 
 
Song Dexing         Director General 
 
                    Department of Water Transport 
 
                    Ministry of Communications 
 
 
SHANGHAI 00000762  004 OF 007 
 
 
 
 
Zhang Shouguo       Deputy Director General 
 
                    Department of Water Transport 
 
                    Ministry of Communications 
 
 
 
Xiong Wei           Director 
 
                    Department of Water Transport 
 
                    Ministry of Communications 
 
 
 
Gao Haiyun          Deputy Director 
 
                    Department of Water Transport 
 
                    Ministry of Communications 
 
 
 
Li Juguang          Officer 
 
                    Foreign Affairs Office 
 
                    Ministry of Communications 
 
 
 
Wang Lu             Deputy Director 
 
                    Maritime Administration Bureau 
 
                    Ministry of Communications 
 
 
 
Teng Chen           Attache 
 
                    Department of America and Oceanic Affairs 
 
                    Ministry of Foreign Affairs 
 
 
OBSERVERS 
 
 
--------- 
 
 
 
 
 
Xu Guibin            Executive Vice Chairman 
 
                     China Shipowners' Association 
 
 
 
Wang Mingsheng       Deputy Director 
 
                     International Affairs Division 
 
                     China Shipowners' Association 
 
 
 
Yang Ting            Deputy General Manager 
 
 
SHANGHAI 00000762  005 OF 007 
 
 
                     Transportation Management Department 
 
                     China Ocean Shipping (Group) Co. 
 
 
 
Chen Bin             Deputy Manager 
 
                     Transportation Management Department 
 
                     China Ocean Shipping (Group) Co. 
 
 
 
Zhu Tao              Deputy Manager 
 
                     COSCO Container Lines Co. 
 
 
 
Zhao Yingtao         General Manager 
 
                     Transportation Management Department 
 
                     China Shipping (Group) Co. 
 
 
 
Zhao Hongzhou        Deputy General Manager 
 
                     China Shipping Container Lines Co. 
 
 
 
Gu Jinsong           General Manager 
 
                     Commercial Department 
 
                     China Shipping Container Lines Co. 
 
 
 
Cai Ying             Deputy General Manager 
 
                     Transportation Management Department 
 
                     Sinotrans (Group) Co. 
 
 
 
 
LIST OF U.S. MARITIME DELEGATION 
 
-------------------------------- 
 
 
 
Sean Connaughton    Maritime Administrator 
 
                    Maritime Administration 
 
                    Department of Transportation 
 
 
 
Bruce Carlton       Assistant Maritime Administrator 
 
                    Maritime Administration 
 
                    Department of Transportation 
 
 
 
Greg Hall           Director 
 
SHANGHAI 00000762  006 OF 007 
 
 
 
                    Office of International Activities 
 
                    Maritime Administration 
 
                    Department of Transportation 
 
 
 
Brian Varney        International Economist 
 
                    Maritime Administration 
 
                    Department of Transportation 
 
 
 
Christopher Moore   Special Assistant 
 
                    Maritime Administration 
 
                    Department of Transportation 
 
 
 
Stephen Miller      Team Leader 
 
                    Office of Transportation Policy 
 
                    Bureau of Economic and Business Affairs 
 
                    Department of State 
 
 
 
Michael Layne       Economic Officer 
 
                    U.S. Consulate General Shanghai 
 
                    Department of State 
 
 
 
Kamal Latham        Economic Officer 
 
                    U.S. Embassy Beijing 
 
                    Department of State 
 
 
 
OBSERVERS 
 
--------- 
 
 
 
Kevin O'Rourke      Senior Vice President and General Counsel 
 
                    Matson Navigation Company 
 
 
 
David Hoppes        Senior Vice President-Ocean Services 
 
                    Matson Navigation Company 
 
 
 
Qiang Gao           Managing Director Asia 
 
                    China Chief Representative 
 
                    Matson Navigation Company 
 
SHANGHAI 00000762  007 OF 007 
 
 
 
 
 
William Chan        Vice President & Managing Director North 
China 
 
                    American President Lines 
 
 
 
Dan Ryan            President, Greater China 
 
                    American President Lines 
 
 
 
Charles Wellins     Maersk Lines 
 
Vice President - Sales 
 
Greater China Area 
 
Maersk Hong Kong Ltd 
 
 
 
Gareth Luk          Maersk Lines 
 
Deputy General Manager for Import 
 
Greater China 
 
Maersk Beijing 
JARRETT