US Regulator Scrutinizes IMO Climate Rule for Trade Impacts
The U.S. Federal Maritime Commission chair has raised the possibility of investigating the IMO's proposed shipping decarbonization framework if its costs harm U.S. foreign commerce.
The International Maritime Organization's (IMO) proposed Net-Zero Framework (NZF), which aims to decarbonize global shipping through emissions limits and carbon pricing, is facing scrutiny from the U.S. Federal Maritime Commission (FMC). The framework could significantly increase shipping costs for U.S. importers and exporters via fuel mandates and financial penalties for non-compliance, such as a proposed $380 per tonne of CO2 equivalent. These costs, if passed on by carriers, could be deemed unjust practices under the U.S. Shipping Act. FMC Chair Ann-Dora DiBella has publicly stated the framework could trigger an investigation under the FMC's seldom-used Section 19 authority, which addresses foreign laws or practices unfavorable to U.S. trade. Such a finding could lead to significant remedies, including per-voyage fees up to $1 million or denial of U.S. port entry. Counsel for carriers and shippers should monitor upcoming IMO negotiations and the FMC's posture, as what began as a global climate initiative could become a contentious U.S. trade policy dispute requiring contractual risk allocation for new environmental surcharges.