The authors previously reported that on or about February 27, 2019, the Ministry of Transport (“MOT”), PRC dropped formal application approval procedures and insurance (in the U.S., the China bond) requirements for all NVOCCs, including U.S. NVOCCs. While the MOT dropped the tedious application requirements and insurance (and bond) requirements for NVOCC registration, it still maintained a mandatory, much simplified, registration procedure. One misconception lingers in the U.S., which could become a major problem if not dealt with promptly. U.S. NVOCCs which previously were approved under the old system are no longer registered, and must re-register under the new registration system. This has been verified by the authors, not only from reviewing the new regulations, but also by checking the list of registered NVOCCs on MOT’s website. NVOCCS that we have been assisting to get China NVOCC certificates, which were previously approved, and had active U.S. China bond riders, were no longer listed on the MOT web-site.
The other fallacy maintained by U.S. NVOCCs is that the China bond rider filed with the FMC has some magical quality. It does not. There is no reason to continue renewing that bond. First, it is not required by MOT regulations, and, secondly, the bond requirement is not a Federal Maritime Commission (“FMC”) requirement. The FMC, in accepting the filing of the so-called China bond rider, was merely an accommodation obtained by the FMC as a result of agreements between the FMC and the MOT. This allowed U.S. NVOCCs to increase their FMC bond by a China rider amount to raise the U.S. bond to the MOT requisite levels. This accommodation was entered into so that U.S. NVOCCs would not need to maintain cash deposits or insurance in China for this purpose. Since the cash deposits and insurance are no longer required by MOT, these U.S. China bond riders are also no longer required.
We are aware that several of the surety companies which provide the China bond riders have been formally requesting the FMC to provide guidance that these bonds are no longer required. There has been a deafening silence in that regard in that the FMC has provided no commentary at all on this topic. The authors, as attorneys in this industry, and by reviewing the pertinent MOT regulations, have determined that the China bond, cash deposits, and insurance are no longer requirements for NVOCCs participating in the China trade lanes. The U.S. China bond rider has no purpose at all in the FMC regulatory scheme. Our sense (not based on any factual knowledge other than reasonable speculation) is that the FMC is not getting much input from appropriate Department of State China desks to officially reach these same conclusions. Therefore, there is an official U.S. government silence on the topic.
The authors, who have been involved with MOT registration matters since their inception, make the following two suggestions:
- a) If you are a U.S. NVOCC and were registered with the MOT pursuant to the old system of registration, immediately take steps to re-register, if you have not already done so; and
- b) There is no current need to obtain or renew a China bond rider to file with the FMC to meet MOT requirements or for any other reason.
Lastly, if your company is going to re-register or register initially with MOT, we suggest that your China agent consult the following web site: http://wtis.mot.gov.cn/syportalapply/login.
