A SUCCESSFUL MARITIME POLICY UNDER ATTACK

under policy

The following quote was taken directly from a draft report on shipping, shipbuilding, and sealift and is in reference to the Merchant Marine Act of 1936, which constitutes our current domestic maritime poli cy. This report was developed by a Presidentially-appointed federal advisory committee whose responsibility is to advise the President and the Congress on issues concerning the entire maritime and marine environment. "It is increasingly clear . . . that this national policy and the package of protections derived from it—tax credits, loan guarantees, limited cargo preference, cabotage and build-U.S. requirements—have been fairly ineffective" in producing an efficient domestic Jones Act fleet.

As these observations illustrate, attention continues to be focused on the various elements of the Merchant Marine Act of 1936 and its impact and benefits to this country. Time and time again, legislators, regulators and outside parties have asserted that these protections, which have fostered the continued growth of the U.S. shipbuilding industry, should be dismantled.

This project was conceived in 1983, and its original focus was to review the status of the shipbuilding industry, which was then and still is in a severe depression. The purpose of the study was to develop recommendations to ensure that an adequate domestic shipbuilding base was preserved. Over the past two years, the study has been broadened to include shipping and sealift issues. The draft report now centers on how the U.S. can enhance its sealift capabilities. The study has drastically changed its thrust from one of seeking solutions to bolster the ailing shipbuilding industry to establishing a sealift capacity with little regard for the well being of the shipbuilding industry. This represents a profound change in the mission of the project as initially conceived. The draft report considers many options for enhancing our trans- oceanic sealift fleet. As the quoted passage indicates, the authors feel that the current programs have not been effective in carrying out the mandate of the Merchant Marine Act of 1936. The report erroneously concludes that the Jones Act fleet is a major contributor to the transoceanic fleet, and that by tampering with the Act, the nation's transoceanic sealift capabilities will be increased.

Marine transportation takes place in three basic areas: 1) on the internal waters of the nation, i.e., the rivers, lakes, bays, and sounds; 2) along the coasts; and 3) on the open oceans. Specialized vessels have been developed over the years to navigate in these three distinct areas. The first two areas are the basic concerns of the Jones Act. The vessels engaged in the domestic fleet are not designed for transoceanic use. It is a false and erroneous conclusion that by tampering with the Jones Act, transoceanic sealift capacity will be greatly enhanced.

From the founding of the nation, we have adopted a policy reserving our domestic trade for our own ships. The Jones Act, which embodies the U.S.-build requirement and other cabotage laws relating to the transportation of merchandise, has fostered the development of the entire domestic maritime industry, including the small and medium sized or second tier commercial shipyards. This Act, is the only successful portion of the U.S. maritime policy. Because of the Jones Act, this country has developed a domestic water transportation system, unrivaled in the rest of the world.

The report based many of its assumptions and recommendations on the statement that the programs embodied in the Merchant Marine Act of 1936 have been ineffective in producing technologically efficient vessels. This is not supported by the facts. These programs have created and fostered the growth of a necessary component of this nation's overall transportation system. The second tier shipyards, and the in dustries they service, provide many major benefits to this nation's economy and national defense needs.

The draft report suggests just the opposite conclusion. The authors state that " . . . no economic need for Federal protection (i.e., the Jones Act) of these (smaller) yards (exists) since rail and highway modes allow foreign construction of capital equipment, and no national defense need (exists) to protect the small yards because their role in a mobilization effort would be minimal." The second tier shipyards do provide an essent ial economic service to this country. This segment of the industry builds and repairs the tugboats, towboats, and barges necessary for the inland and coastal barge and towing industries. This industry sector serves 87 percent of the major cities, carries two-thirds of all domestic marine traffic, and carries 13 percent of the nation's commerce at 2 percent of the cost.

In 1982, the inland and coastal towing industries delivered 15 percent of the nation's export coal to ports and 46 percent of the grain. All this has been and continues to be accomplished with U.S.-built vessels which compete with foreignbuilt vehicles and the other domestic transportation modes for freight. We are a competitive factor in this nation's overall transportation system. This industry also provides the vessels for the offshore service industry such as the supply boats, crew boats, utility vessels and barges necessary to support and maintain drilling activities. We have led the world in producing technologically advanced and efficient vessels which are vitally important to the continuance of this industry sector. The second tier shipyards have played and continue to play a major role in the national defense requirement of this country. During World War II, many inland and coastal yards built sub-chasers, landing craft, mine sweepers, escort ships and other smaller vessels for the war effort. Today, we continue to supply the Navy, U.S. Coast Guard and other military branches with the smaller auxilliary craft necessary to maintain our military forces.

The authors of the report to the President feel that the current system of domestic maritime laws, including the Jones Act, is not working and are not justifed.

Yet, there is no doubt that the Jones Act is successful and should be maintained. There is a real danger that those unfamiliar with the maritime industry will attempt to correct the sealift problem by reversing an absolutely sound policy.

There are many others who wish to dilute, or even abolish, the Jones Act and all U.S.-build requirements. This would mean an end to shipbuilding in this country as we know it today.

There are ongoing attempts to weaken this important maritime legislation. The report to the President may spark hearings on the entire Jones Act issue. Hearings to discuss the merits of the Jones Act and the continuance of its programs have been suggested by several Senators on the Merchant Marine Subcommittee. There are moves afoot to introduce a generic passenger vessel bill which would allow all foreign flag passenger vessels to operate in our coastwise trades. The second tier shipyards do build passenger vessels, and that remains one of the few new construction markets available.

The Jones Act and the provisions it embodies have allowed the second tier industry to grow into an integral part of the entire domestic maritime transportation industry. Our industry provides important economic and national defense services to our country which would be lost if the Jones Act were seriously undermined. As an industry, we cannot stand by and watch while others unjustly attack the laws which form the foundation of our business. Many of us have invested a lifetime in our businesses, and have been working towards the betterment and the future of the industry and, more important, the nation.

The American Waterways Shipyard Conference (AWSC), first organized in 1976, provides the second tier shipyards with the only protection against further erosion of the Jones Act. AWSC has and will continue to monitor the developments of the draft report which could prove so detrimental. AWSC urged the u.l.isory committee to delete all references to the Jones Act from the report since it is erroneous and off-base with respect to the basic premise on the transoceanic sealift issue.

All who have a stake in this segment of the shipbuilding industry should support the position of the American Waterways Shipyard Conference. Only through a unified position can we safeguard the imperatives of the Jones Act. Supporting the position of the American Waterways Shipyard Conference today is the first step towards ensuring a future for tomorrow.

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