THE FMC QUESTION

THE FMC QUESTION

The spotlight will be on Chinese shipping issues this month, and the Federal Maritime Commission will be in the thick of the policy fray. There's just one potential problem: The sale of a major American ocean carrier to a Danish company raises a fundamental question about the agency's role.

It's a question the FMC ought to answer thoroughly and quickly before things go any further.The commission has broad legal authority to retaliate against shipping interests from countries that discriminate against American shipping companies. It put the authority to dramatic use two years ago against restrictive practices in Japan. A decision now appears near on whether it will use the authority in a dispute with China.

The commission has conducted a year-long probe of barriers to operations in China by non-Chinese maritime companies. In late June, it said the results indicated that Bejing's policies indeed discriminate against U.S. and other non-Chinese carriers, putting them at a competitive disadvantage.

It noted there has been some progress in recent years. But it said the investigation showed that non-Chinese shipping lines must rely on Chinese agents - subsidiaries of state-owned Chinese shipping companies - to handle a variety of critical tasks, in effect subsidizing (and feeding information to) their competition; Chinese carriers, on the other hand, face no similar restrictions in the United States.

The probe also underlined restrictions imposed by Beijing on U.S. carriers' port access, branch offices, and truck and barge operations.

The FMC ordered its attorneys to prepare a formal proposal for retaliatory sanctions against Chinese maritime firms. It set no schedule for action, but clearly wanted to be ready to use them.

And it left no question about its basic position in the matter. A press release from the commission said it ordered the proposed sanctions drawn up ''to address apparent restrictions faced by U.S. shipping companies.'' It referred to barriers that ''handicap U.S. carriers' ability'' to serve China. It said ''U.S. carriers' intermodal networks'' must be allowed to develop on both sides of the ocean.

The as-yet unspecified sanctions still hang over the issue. Meanwhile, top-level negotiations between China and the U.S. Maritime Administration are expected later this month. And, in a related issue, this week the public-comment period closes on a request by the China Ocean Shipping Co. for a waiver of a U.S. requirement that limits its ability to respond to rate changes by competitors.

But there's been a major change in the scene since June 24, when the FMC ordered the sanctions prepared. On July 22, CSX Corp. agreed to sell the deep-sea shipping operations of Sea-Land Service to A.P. Moller Group, the Danish company that owns Maersk Line, a major global carrier. Sea-Land was the last American company to serve China. The next-to-last, APL, was sold to Neptune Orient Lines, a Singaporean company, in November of 1997.

To be sure, ships of APL continue to fly the U.S. flag, as will Sea-Land vessels when the Maersk deal is completed. Both are sure to continue serving China. But they're no longer American shipping companies.

And that, given the degree to which the agency has focused on protecting American shipping companies in its explanation of the China investigation, catches the FMC a bit short. Is the FMC going to take on a major international power on behalf of a Danish shipping line and a Singaporean shipping line?

This is not to suggest that China's hands are clean; arguably they're not, and Beijing has even more Draconian measures on tap. Nor is this to suggest what the FMC should or should not do about these specific issues, or, on a broader level, similar issues in the future. Its mission includes protecting shippers, too. But with the diminution of the American merchant marine to a scant handful of lines, a major part of its raison d'etre is withering away.

The question of how the lack of American carriers serving China fits into the FMC's consideration of China's shipping policies is a valid one. It deserves a detailed answer.

FMC Chairman Harold Creel Jr. to date has dealt with the issue by brushing it aside and saying that the agency exists to protect ''against unfavorable conditions for shipping in U.S. trades generally.'' He and the other commissioners ought to give the matter more thought and offer the shipping public a more comprehensive answer.

If the FMC is going to take punitive action against a major trading partner, what it is fighting for should be enunciated very clearly.