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May 12, 2014

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GOVERNMENT WATCH www.joc.com THE JOURNAL OF COMMERCE 17 By Mark Szakonyi WILL CONGRESS REFORM the nation's corpo- rate tax system by the end of the year, giving President Barack Obama the $150 billion he needs for his four-year, $302 billion transportation plan? U.S. Transportation Secretary Anthony Foxx says it's plausible. But that's not much of a guarantee, par- ticularly considering Senate leaders Harry Reid, D-Nev., and Mitch McConnell, R-Ky., have said they see little chance of tax reform this year. Asked during an April 29 call with reporters whether the Obama administra- tion had a Plan B, Foxx stuck to his talking points regarding the administration's plan, which was sent to Congress in bill form the same day. But Obama's plan — which is at best pos- sible in 2015 following November's midterm elections and at worst dead-on-arrival this year — does signal a dramatic shift in how the White House views transportation funding. Under the plan, known as Grow America, states could choose whether to toll existing interstates. States currently can toll only new lanes and highways, although a few exceptions have been made. To no one's surprise, the trucking indus- try isn't happy with a proposal that could force drivers to dig deep in their seats for change. The plan is a "tremendous missed opportunity" because it's based on the "unlikely passage of corporate tax reform and increased use of inefficient tolling and private finance options," Bill Graves, presi- dent and CEO of the American Trucking Associations, said in a statement. The policy change, which Foxx described as an attempt to "open the aperture" on state tolling, speaks to just how dire the situation of federal surface infrastructure funding has become. The move is the latest sign that fuel taxes can't be relied on to fund the nation's transportation infrastructure. Much like most of Congress, Obama has rejected calls from many business lobbyists, including the U.S. Chamber of Congress, to increase the fuel taxes in order to save TOLLING AMERICA Obama's $302 billion transportation plan would give states the choice of tolling existing interstates Several shipper groups, including some in China, have expressed concern about the market power the three carriers would wield in the market. The P3 would con- trol 42 percent of Asia-Europe capacity, 24 percent of trans-Pacific capacity, and 40 to 42 percent of trans-Atlantic capacity, accord- ing to the U.S. Federal Maritime Commission. "Members of the P3 said they will com- pete and will not be a monopoly, but in our experience this is not the story," said Jiax- iang Cai, vice president of China Shippers' Association. "They might lower freight rates when they are forming the alliance, but when they have taken market share and forced smaller players to get out of the mar- ket, they will raise the freight rates again." Not everyone in China opposes the P3. Zhang Shouguo, executive vice chairman and secretary general of the China Shipown- ers' Association, said his group's attitude was neutral. "The shipping market should have different players, big and small. Com- petition is a must," he said. "However, we also need to think of the needs of small and medium-sized carriers, shippers, (less-than- containerload) shippers, as well as the ports. The industry needs to develop together and in a sustainable way." The Asian Shippers' Council opposes the alliance. "As the ball is now in the court of the regulators, we urge them to think long and hard before giving their approval for P3, for it may well be a game changer we do not need," it said in a statement. P3 sources said the process of obtaining China's approval has not been straightfor- ward. There would be meetings with one official where it seemed they were making progress, but then a meeting weeks later with a different individual with whom they seemed to have to start all over again. The lack of a response from Beijing also has meant that plans for the joint operat- ing center, the vessel operations center that will be independent of the three carriers, has only been able to progress so far. JOC Contact Greg Knowler at gknowler@joc.com and follow him on Twitter: @greg_knowler. Contact Annie Zhu at azhu@joc.com.

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