Proof of NVOCC Financial Responsibility for Trade with the People’s Republic of China – Revised Optional Bond Rider Forms
Guidance for NVOCCs on Revised Optional Bond Riders
On August 22, 2012, the FMC served notice that effective November 23, 2012, it would amend its rules regarding the amount of bond coverage used to evidence additional Non-Vessel-Operating Common Carrier (NVOCC) financial responsibility when operating in the trade with the People’s Republic of China (PRC). The final rule revises the optional China Bond Rider Forms to recognize fluctuations in the exchange rate between the U.S. Dollar and the Chinese Renminbi since the regulation was first adopted in 2004, and to give NVOCCs more flexibility to demonstrate their financial responsibility by aggregating their total bond coverage, including bond coverage that they maintain for their branch offices, so long as their total coverage equals $125,000.
To help NVOCCs secure the appropriate amount of financial coverage and help surety companies prepare the appropriate documentation, the FMC is making the revised forms available in advance of the November 23rd effective date. These forms may be submitted in advance of the noted effective date.
- Optional Rider for Additional NVOCC Financial Responsibility (Revised FMC-48A)
- Optional Rider for Additional NVOCC Financial Responsibility for Group Bonds (Revised FMC-69A)
Under an agreement between the United States and the People’s Republic of China, the PRC does not require U.S. NVOCCs to make a cash deposit in a Chinese bank that would otherwise be required by PRC regulations, so long as the NVOCC:
- is a legal person registered by U.S. authorities;
- obtains an FMC license as an NVOCC; and
- provides evidence of financial responsibility in the total amount of Chinese Renminbi (RMB) 800,000 or U.S. $96,000
An FMC-licensed U.S. NVOCC that voluntarily provides an additional surety bond (denominated in U.S. Dollars or Chinese Renminbi), which by its conditions is available to pay fines and penalties for activities in the U.S.-China trades, may register in the PRC without paying the cash deposit otherwise required by Chinese law and regulation.
It is important to note that the optional China Bond Rider is not an FMC-required bond; rather it is an alternative instrument crafted by the United States and China to relieve U.S. NVOCCs from the PRC’s cash deposit requirement.
How Do I File the New Rider with the FMC?
The process for filing the new riders with the FMC has NOT changed. All bonds and bond riders are still filed with the FMC’s Bureau of Certification and Licensing.
Where Do I Find More Information?
A link to the full text of the Commission’s Final Rule, effective November 23, 2012 is provided below.
46 C.F.R. Part 515 – Adjustment to the Amount for the Optional Bond Rider for Proof of NVOCC Financial Responsibility for Trade with the People’s Republic of China
If after consulting the rule, you have additional questions, please contact: