China Could Weaponize Shipping Dominance: Former Chairman Heeds Warning

Peter DeFazio, a former chairman of the House Transportation Committee, has raised concerns about China’s growing influence in the shipping industry, saying that the Asian giant could “weaponize” its dominance to exert political pressure on the United States.

There are currently more ships and shipping equipment under Chinese control than American.

During a speech at a Hudson Institute event in Washington, D.C., DeFazio said it was a “mistake” to give China exclusive trade rights at the close of the 20th century.

At that time, the United States signed several free trade accords, including the North American Free Trade Agreement (NAFTA), significantly reducing U.S. tariffs on commodities made in Canada and Mexico.

According to DeFazio, the interests of other countries benefited greatly more from NAFTA and similar agreements than those of the United States. According to DeFazio, Mexico’s GDP was smaller than New Jersey’s when NAFTA was signed.

DeFazio said the United States’ choice to offer China full commercial rights was a more pressing issue than NAFTA.

After being frozen since the communist takeover of China in 1949, diplomatic and trade contacts between the United States and China were reestablished in 1979. The result was a dramatic increase in business between the two countries, which was a stepping stone on China’s route to becoming the worldwide giant it is today.

The United States economy is still the largest globally, but China’s is expanding faster. In tandem with the growth of its economy, China’s control over shipping has developed; meanwhile, the United States has allegedly shirked its responsibility to ensure the safety of its maritime transportation, according to Representative DeFazio.

He highlighted that three shipping giants control 95% of the business between the United States and Asia. The United States, with its several trillion-dollar economies, owns and operates about eighty-five percent of the world’s roughly fifty thousand commercial vessels.

There may be dire repercussions because of this lack of management. DeFazio cited the need to borrow foreign ships from the United States during the Gulf War as an example of such consequences.

Due to its hegemonic position in the maritime industry, DeFazio claims that China can monitor all U.S. cargo, including military load.

DeFazio expressed concern that the Chinese Communist Party (CCP) could snoop on U.S. goods through software put on cranes, of which China is a significant maker.

While urging Congress to reevaluate its economic relations with China, DeFazio pointed out that the average U.S. tariff rate is “the lowest in the world,” at 3.4%.

A bill with bipartisan support is currently making its way through the GOP-controlled House and would force Congress to reevaluate the trade relationship between the United States and China.

Freezing trade with China has been criticized by those who warn that restricting exchange between the two economies, which have become intertwined, might have catastrophic implications for consumers.

China’s low labor costs resulting from the country’s permissiveness of sweatshop conditions and other forms of child labor. If workers can be had at a lesser charge, then businesses may do the same, lowering consumer prices.

Any significant shift in trade policy between the United States and China would lead to more considerable consumer costs, all while China’s soft power continues to grow.

In response to a question on how to strike a balance between the government’s obvious security concerns and the requirements of consumers, DeFazio said that the best-case scenario would be for the United States to develop a strategy to reduce its dependency on China gradually.

China’s control of the shipping industry is already a significant concern. Still, with tensions between the U.S. and China at an all-time high, DeFazio’s warning couldn’t come at a more opportune time. Both trade and national security may be threatened if China were to weaponize its dominance over the shipping industry.

So, DeFazio added, the United States must take measures to improve its control over the shipping industry to prevent such a scenario.