On 26 September Donald Trump signed his name to a promise that no country may charge a toll to cross an international waterway, and Xi Jinping signed his beside it. Ten weeks earlier Trump tried to charge exactly that kind of toll himself, a 20 percent fee on every ship crossing the Strait of Hormuz, the narrow sea lane between Iran and Oman that carries about a fifth of the world’s shipped oil. He dropped the fee inside a day, once no ally agreed to pay it.
In April 1921 diplomats from states across Europe, Asia and the Americas met in Barcelona under the League of Nations, the body the war’s winners built to keep the peace they had just won, and signed a treaty banning any government from charging a toll to cross a river, canal or strait that touched more than one country’s water. Article 7 of that treaty carved out a single exception.
A government could still charge a ship for keeping the waterway in working order: a lighthouse kept lit, a channel kept dredged, a wreck cleared from the lane. The charge paid for upkeep. Passage itself stayed free.
That distinction is a hundred and five years old, and it is still the only door a toll can walk through.
The declaration Trump and Xi signed keeps the Barcelona shape without naming it. It bans the toll and leaves the exception standing.
Iran and Oman are already using that exception to write a fee for the strait the declaration never names.
Their fee runs close to 3 to 7 percent of a cargo’s declared value, priced as dues for security and marine-environmental protection rather than a straight cut. Trump’s abandoned toll asked for 20 percent, with no service attached to it at all.
The White House fact sheet paired the tolls line with one more: that Iran must never have a nuclear weapon. Both promises name a country without naming it, and neither commits either signer to anything he was not already doing.
Most readers will take the declaration as Washington and Beijing finally agreeing on something about Iran. That gets the incentive backwards. A joint statement between two rivals is cheapest to write exactly when it costs neither signer anything today, and this one cost nothing to either: Washington had already abandoned the one toll it might have used, and Beijing never needed one it could use the same way.
A rule that costs nothing to write is rarely a rule either author plans to enforce.
A rule that costs nothing to write is rarely a rule either author plans to enforce.
Run the two sides of the fee itself. Iran cannot afford to lose its one paying customer: China buys more than 80 percent of the oil Iran ships out of the country, at a discount that runs past US$10 a barrel below the world price. Beijing has already shown how far it will protect that discount: in May it issued a prohibition order shielding five refineries from American sanctions for buying that exact crude.
Washington is out of standing to complain: its own toll, withdrawn in July, makes any American objection to a smaller cousin look like sour grapes. Beijing is out of appetite to spend a US$10-a-barrel discount on a fee that never touches a Chinese port.
Oman, the government actually writing the fee, answers to neither man’s declaration.
Singapore’s own answer to a strait it cannot defend has always been to stockpile fuel and diversify its suppliers, arranging never to be the one stuck paying whatever a chokepoint’s owner decides to charge. That doctrine has nothing to say about a fee its own ships pay quietly and never contest, which is exactly the outcome this essay expects.
This column bet in August that the Iran-Oman fee would survive as dues for a service rather than die as a toll. The September declaration is the first real test of whether either government treats that fee as the kind of toll it just signed away.
A Hormuz toll dying a second time is almost routine by now. What is worth watching is that two governments still spent a signature on it.
That test starts now.
The bet: once the Iran-Oman fee starts collecting, Beijing will not cite the 26 September declaration against it, in public or in private, and Chinese-linked tankers will keep transiting and paying it without a single reported protest. Expect that silence to hold through two full customs cycles after collection starts, call it 30 June 2027, by when China’s own trade data will show whether the discounted flow held or moved elsewhere.
Watch for the opposite tell sooner: any statement from China’s commerce ministry on Hormuz passage costs before that date would be the surprise, not the confirmation.
A century after Barcelona, the door the treaty left open is still open, and the only question was always who was cheap enough, and hungry enough, to walk through it first.
The call rests on one thing: that Beijing’s discount on Iranian crude stays worth more to it than the declaration it signed for free. A century after Barcelona, the door the treaty left open is still open, and the only question was always who was cheap enough, and hungry enough, to walk through it first.