Trade could be about to hit the proverbial political fan as US election pressure is being brought to bear on institutions that regulate, including those that regulate commerce, by boosting shipping lines’ ability to challenge rules.
In his latest statement on the issue of the refusal to carry rules, Federal Maritime Commissioner Carl Bentzel reiterated that clarity was needed for those in the industry to understand that the FMC is distinguishing between the different phases of an agreement between the shipper and carrier, with the negotiation element separate, and non-binding, from the execution stage, when an agreement is then in place.
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Bentzel warned: “The FMC will be vigilant in assessing all relevant factors in determining whether a violation has occurred.”
He went on to explain: “The pandemic illustrated how important shipping is to our nation and our economy. Just as apparent is the guiding principle that global trade must flow both ways. This means that our US exports must have shipping accommodations and access to global markets.”
The timing of the commissioner’s statement is crucial here, and perhaps a clue to the reasoning can be found in a document drafted by the right wing thinktank the Heritage Foundation called “Mandate for Leadership The Conservative Promise,” also known as Project 2025.
Sources close to the FMC are known to be studying this policy document, understood to be the Trump playbook for a second term in office, and comes with a warning for beneficial cargo owners as regulators attempt to understand the wholesale changes that could be coming shipping’s way after the election.
The Heritage Foundation writes that Project 2025 “is the opening salvo of the 2025 Presidential Transition Project,”
The project is essentially founded on four broad ‘promises’ to restore the family as the centrepiece of American life and protect our children; dismantle the administrative state and return self-governance to the American people; defend our nation’s sovereignty, borders, and bounty against global threats; and to secure our god-given individual rights to live freely—what our constitution calls ‘the blessings of liberty’.”
Promise number two is critical here, with a plan to “dismantle the administrative state”, a concern voiced by a Washington insider who cited the Chevron Deference case: “No longer is the industry, and the agency [the FMC] going to get any kind of deference, you know, they shouldn’t be relied upon, for ruling on policy or cases. So, how’s that going to impact shipping? I don’t know.”
The Chevron Deference case is a Reagan era understanding that federal agencies, like the FMC and Environmental Protection Agency among others, have the ability to interpret laws passed by congress, where the statute is ambiguous. To fill in the legal gaps essentially, without fear of a legal challenge.
In June this year, the Supreme Court, which is weighted in favour of conservatives, effectively overturned the Chevron Deference ruling, with the help of commercial fishing companies supported by conservative corporates, including billionaire Charles Koch.
“Looking to the future, corporations and others wanting to challenge agency rules will be heading to court and we can expect to see judges around the country now weighing in on what the federal government – and its bureaucracy – does,” said a BBC analysis.
It will not have escaped the FMC’s notice that powerful foreign shipping lines will now have the ability to challenge the regulator, and that may be why Bentzel decided to emphasise the agency’s position in regulating the industry.
He said: “The global shipping services our country relies on are predominantly foreign owned and operated, and while I believe they have operated in good faith and responsibly, their actions in denial of service could have severe repercussions on US business interests.”
Meanwhile, a shipping source believes that the effects of Project 2025 and the recent Supreme Court ruling on the ability of federal agencies to interpret the law remain uncertain.
The BBC, however, concluded a kind of paralysis could come over US legal institutions as a result: “Rules, requirements and penalties could all be stopped before they are implemented or overturned.”
On Monday, president Biden warned: “The court is mired in a crisis of ethics, the court’s being used to weaponise an extreme and unchecked agenda.”
If that is the case, then shippers had better hope that Kamala Harris wins the election, or it won’t just be trade regulations that are shredded in the fan.
Mary Ann Evans
Correspodent at Large
