[Congressional Record Volume 140, Number 104 (Tuesday, August 2, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 2, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
       MARITIME ADMINISTRATION AND PROMOTIONAL REFORM ACT OF 1994

  The SPEAKER pro tempore. Pursuant to House Resolution 500 and rule 
XXIII, the Chair declares the House in the Committee of the Whole House 
on the State of the Union for the consideration of the bill, H.R. 4003.

                              {time}  1407


                     in the committee of the whole

                              {time}  1410

  Accordingly the House resolved itself into the Committee of the Whole 
House on the State of the Union for the consideration of the bill (H.R. 
4003) to authorize appropriations for fiscal year 1995 for certain 
maritime programs of the Department of Transportation, to amend the 
Merchant Marine Act, 1936, as amended, to revitalize the United States-
flag merchant marine, and for other purposes, with Mr. Wise in the 
chair.
  The Clerk read the title of the bill.
  Mr. WISE. Pursuant to the rule, the bill is considered as having been 
read the first time.
  Under the rule, the gentleman from Massachusetts [Mr. Studds] will be 
recognized for 15 minutes, the gentleman from Texas [Mr. Fields] will 
be recognized for 15 minutes, the gentleman from Florida [Mr. Gibbons] 
will be recognized for 15 minutes, and the gentleman from Texas [Mr. 
Archer] will be recognized for 15 minutes.
  The Chair recognizes the gentleman from Massachusetts [Mr. Studds].
  Mr. STUDDS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, last November, the Merchant Marine and Fisheries 
Committee brought before the House H.R. 2151, the Maritime 
Competitiveness and Security Act of 1993. This bill authorized two new 
programs to help revitalize our U.S.-flag fleet and U.S. shipyards.
  On that day last November, this House voted overwhelmingly, by a 
margin of 347 to 65, to support our American maritime industries. 
Today, we ask for your vote to ensure that the will of the House 
becomes a reality: that American flags continue to fly from vessels 
carrying this Nation's commerce; that American shipyards will someday 
soon build another commercial vessel; that when American servicemen and 
servicewomen are sent to distant corners of the globe they will have 
the certainty they need that ammunition, medical supplies, and food 
will be there; that the skills of the working men and women of this 
Nation who build ships, and who are trained to run them, will not be 
lost; and finally, Mr. Chairman, to ensure that this Nation, the only 
remaining superpower on the planet, will never dangerously rely on the 
kindness of foreign nations to move our goods to market.
  When we brought H.R. 2151 to the floor, we recognized that the 
programs we were authorizing were subject to the pay-go requirements of 
the budget act. We committed then to return to the House with a revenue 
measure to offset the cost of these programs. H.R. 4003 is the 
fulfillment of that promise.
  Like the administration, the Merchant Marine and Fisheries Committee 
ultimately decided--after examining many other options that did not 
meet our pay-go obligations, would not raise the needed revenues, or 
were unfair to certain segments of the maritime industry--that 
increasing tonnage duties is the best and fairest way to raise revenues 
to offset the costs of maritime reform.
  Tonnage duties have been around since Congress first passed the Act 
Imposing Duties on Tonnage of July 20, 1789. Interestingly, the 
Congress of 1789 had the same purposes for creating these duties that 
we have in raising them today--to encourage American shipping and 
shipbuilding, and to support lighthouses and other navigational aids.
  Tonnage duties are collected by Customs Service on the cargo-carrying 
capacity of all vessels entering U.S. ports. Most of these ships, those 
moving 96 percent of our trade, are foreign built, foreign owned, and 
foreign crewed.
  The administration's maritime reform proposal announced last March, 
would have raised approximately $1 billion by increasing the present 
tonnage duty to 24 cents per ton for vessels entering from ports in the 
Western Hemisphere, and 71 cents per ton for other vessels.
  In May, the Merchant Marine and Fisheries Committee approved a plan 
to generate approximately $1.7 billion by raising the tonnage duties to 
a flat 53 cents per ton. This was, admittedly, an ambitious proposal, 
but one we believed was necessary to fully fund all maritime programs, 
both operating and shipbuilding.
  The Ways and Means Committee, which share jurisdiction over tonnage 
duties, last week reported provisions that would raise only $1 billion 
through a combination of revenue sources and directed that money not be 
expended on a shipbuilding program.
  At the appropriate time, I intend to offer an amendment on behalf of 
my committee that we feel is a workable compromise between the 
positions of the two committees. My amendment would raise approximately 
$1.3 billion, a $400 million decrease from our original proposal. We 
are confident that this amendment provides adequate funds for the 
maritime industry, and meets the pay-go requirements of the Budget Act.
  Mr. Chairman, increasing tonnage duties on vessels entering U.S. 
ports is consistent with all of our international obligations. It is 
also fully justified to help offset a small fraction of the value of 
services that the Coast Guard provides to all commercial vessels.
  Every year the Coast Guard spends nearly a half billion dollars to 
operate modern navigational services, such as loran, Omega, the 
differential global positioning system [DGSP], and over 46,000 
lighthouses, buoys, daybeacons, fog signals, radar reflectors, and 
vessel traffic service [VTS] systems.
  In all, it costs the Coast Guard $868 million annually, excluding 
capital costs, to provide services that benefit U.S.- and foreign-flag 
vessels. If we raised the entire amount that our proposal calls for 
from tonnage duties exclusively, it would amount to only $130 million, 
a very small portion of what the Coast Guard actually spends.
  While maritime programs of the past have been less than perfect, it 
is perfectly clear that we need a strong maritime industry and that we 
have found the best, fairest, and least painful way to ensure that the 
security and economic interests of our nation are protected today and 
in the future.
  We must not repeat the experience of the Persian Gulf war when we had 
to charter foreign-flag ships to carry military supplies to our troops 
and when we lacked the trained personnel to operate the ships we had.
  With the end of the cold war, we must not forget that America's 
battles will be fought more and more on the economic bottom line, not 
just on the front line. Without American ships to move American goods 
to foreign markets, those goods may never leave our shores.
  We must not lose the ability to build ships. Encouraging our yards to 
be competitive commercial shipbuilders will ensure that we always 
retain the skills and industrial base we need to build naval vessels.
  We must not forget gas lines. As an oil consuming nation, the United 
States must not be without the wherewithal to bring petroleum--or any 
critical product--to our consumers. With the U.S. flag flying from U.S. 
commercial ships, this will never happen.
  The legislation we bring you today--legislation that is the product 
of the bipartisan cooperation that we unfailingly enjoy on our 
committee--will ensure that we can turn our existing maritime programs 
around, make them more cost-effective, and give our Nation the American 
ships and shipbuilding capacity that we must--I repeat, that we must--
retain.
  Mr. Chairman, the Merchant Marine and Fisheries Committee has labored 
long and hard to bring before the House a bill that not only pays for 
important maritime programs, but, along with H.R. 2151, will restore 
confidence in our maritime industry.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FIELDS of Texas. Mr. Chairman, I yield myself 5 minutes.
  (Mr. FIELDS of Texas asked and was given permission to revise and 
extend his remarks.)
  Mr. FIELDS of Texas. Mr. Chairman, I want to first of all begin by 
commending our distinguished chairman, the gentleman from Massachusetts 
[Mr. Studds], the subcommittee chairman, the gentleman from Illinois 
[Mr. Lipinski], and our ranking minority member, the gentleman from 
Virginia [Mr. Bateman], for the long hours they put in on this 
particular subject.
  Mr. Chairman, I also want to compliment the staffs in dealing with a 
very delicate yet very important piece of legislation.
  Mr. Chairman, I rise in support of H.R. 4003, the Maritime 
Administration and Promotional Reform Act of 1994, a bill to provide 
revenues for a new maritime reform program.
  Last fall, the House of Representatives passed H.R. 2151, the most 
sweeping maritime reform bill in several decades--by the overwhelming 
vote of 347 to 65. That bill was a compromise--no one was completely 
satisfied with it. Although it is not perfect, it will go a long way 
toward solving the major problems confronting our maritime industries.
  H.R. 2151 is a new maritime reform program with two parts:
  First, a maritime support program for American vessel operators to 
assure the continued existence of U.S.-flag ships for both 
international trade and national defense sealift; and
  Second, a short-term ship construction assistance program to enable 
American shipyards to convert from Navy construction work to building 
ships for international commercial use.
  Now, to ensure the success of this maritime reform program we must 
establish a mechanism to finance it. H.R. 4003, as approved by our 
Committee on Merchant Marine and Fisheries, would accomplish that 
purpose by increasing the existing tonnage fees on the cargo carrying 
capacity of all vessels entering the United States from foreign ports.
  Since 96 percent of our international oceanborne trade is carried by 
foreign-flag vessels, it is these vessels that will be paying the 
overwhelming majority of the increased tonnage duties.
  The fee is structured so that all vessels engaged in international 
trade, including the foreign-flag vessels that enjoy the use of our 
ports and the luxury of our cargo, pay for some of the navigation and 
safety benefits they receive. It has also been designed to ensure that 
it does not violate any international trade agreement including article 
VIII of the General Agreement on Tariffs and Trade [GATT].
  Our committee has repeatedly demonstrated just how strongly we 
believe in the three components of the merchant marine: vessel 
operations, manning, and shipbuilding. Each of these elements of the 
maritime industry has a proud history and there is no question that an 
appropriately funded maritime reform program is critical for their 
survival.
  H.R. 4003 will provide the necessary new revenues to support the 
American maritime industry. We are talking about supporting our 
national defense sealift needs with fully crewed U.S.-flag ships; 
preserving the capability to be able to build, and repair, both 
warships for the Navy and commercial ships for domestic and 
international trade; and assuring that our Nation's international trade 
will not become captive to foreign shipping interests who do not care 
about American businesses.
  Operating a U.S.-flag ship is expensive. American shipowners pay 
considerably higher costs for their ship mortgages and insurance. They 
have to meet all sorts of health, labor, and environmental costs that 
are not levied by other nations in the world. They also pay income 
taxes that their foreign counterparts, in most cases, do not pay at 
all.
  Our standard of living is also higher than the rest of the world. On 
average, a U.S.-flag containership with a crew of 21 costs about $9,500 
per day just for the crewing costs. These costs include wages, vacation 
allowances benefits, overtime pay, and other costs such as payroll 
taxes. An identical foreign-owned containership, with a crew of the 
same size, costs about $1,500 per day for these same expenses.
  One simple example will demonstrate the radically different costs 
that shipowners face. The Taiwan shipping company, Orient Overseas 
Container Line, provides $5 per day for all three meals for each of its 
crewmen. Nowhere in America can people eat three meals for just $5. 
However, this is just one way that foreign shipowners keep their costs 
down.
  We are also talking about protecting American workers with this 
legislation. In both the merchant marine and shipbuilding industries as 
many as 250,000 American jobs are at stake.
  The Committee on Ways and Means considered H.R. 4003 after we 
approved it, and decided to modify our tonnage fee proposal. They 
adopted a three-part proposal that would raise $1.0 billion over 10 
years from an additional $2 per passenger excise tax on departing 
passengers; a one-cent-per-gallon fuel excise tax on ships departing 
U.S. ports for foreign destinations; and a tonnage fee on all vessels 
arriving in the United States from foreign ports.
  I join with our distinguished chairman, Gerry Studds, and our 
Merchant Marine Subcommittee chairman and ranking member, Bill Lipinski 
and Herb Bateman, in offering an alternative to the text of H.R. 4003, 
as approved by the Committee on Ways and Means.
  Specifically, I suggest that we can accommodate most of the differing 
views on how to fund maritime reform with a modified tonnage fee. 
Recognizing the concerns of many Members that our original tonnage fee 
proposal may cause some hardships to various maritime sectors, our 
committee's alternative would establish a flat tonnage fee of 38 cents 
per net registered ton.
  Furthermore, it would increase from 5 to 25 the number of transits, 
or calls, to the U.S. ports when the fees would be collected. Our 
amendment would raise approximately $1.3 billion over 10 years, which 
is $400 million less than our original measure.
  Contrary to statements made by some cargo shippers and port 
interests, according to the Department of Transportation, the increased 
tonnage fees would not result in any diversion of American-bound 
cargoes to either Mexico or Canada. The on time delivery schedules in 
international trade do not allow for time consuming transhipments 
through either country.
  Mr. Chairman, let there be no mistake, unless we approve H.R. 4003, 
there will be no U.S.-flag containerships and U.S. shipyards will 
continue to close. We are at a critical juncture and the jobs of 
thousands of our constituents are in serious jeopardy. By enacting H.R. 
4003--to pay for the maritime reform program we authorized in H.R. 2151 
last fall--we can prevent this catastrophe. We will ensure that 
essential military equipment is carried on U.S.-flag vessels, and we 
will retain a shipbuilding capability to build, and repair, large 
ocean-going ships in the future.
  I would like to comment briefly on the remarks made by several 
Members of the Committee on Ways and Means in their dissenting views on 
H.R. 4003. A point was made that in Operation Desert Shield/Desert 
Storm we did not use all available U.S.-flag ships and, furthermore, 
since the Government maintains a ready reserve force of standby ships, 
we don't need to support the private, commercial U.S.-flag fleet.
  Operation Desert Shield/Desert Storm was unlike any military 
engagement this Nation has ever embarked on in two key ways. First, the 
entire world--except Saddam Hussein--was on our side. We had sealift 
help from virtually every seagoing Nation in the world. Second, there 
was no hostile action at sea against any of the supply ships. We cannot 
be assured that either of these conditions will apply in any future 
military action, and we must be prepared to operate alone.
  It is also important to recognize that the Government's ready reserve 
force fleet of standby sealift ships will be of limited value if there 
are not sufficient people available to run the ships. The manpower pool 
for these ships will come from the private sector crews of the U.S.-
flag ships. If we lose our merchant fleet, we lose the crews. Creating 
a merchant marine manpower reserve force will be extremely expensive 
when you add all the costs related to salaries, benefits, and other 
costs related to drilling and supporting a reserve force.
  During World War II and in every conflict since then--Korea, Vietnam, 
and Operation Desert Shield/Desert Storm--American merchant mariners 
have played critical roles. If we do not act now to pass H.R. 4003 to 
fund maritime reform, our own Government will do what our wartime 
enemies have never been able to do--sink the U.S.-flag merchant marine, 
and remove the American flag from the world's oceans.
  I urge my colleagues to join the bipartisan effort of the Committee 
on Merchant Marine and Fisheries to revitalize America's once proud 
maritime industry.

                              {time}  1420

  Mr. Chairman, I reserve the balance of my time.
  Mr. STUDDS. Mr. Chairman, I yield 5 minutes to the gentleman from 
Illinois [Mr. Lipinski], the distinguished chairman of the Subcommittee 
on Merchant Marine.
  Mr. PICKETT. Mr. Chairman, will the gentleman yield?
  Mr. LIPINSKI. I yield to the gentleman from Virginia.
  (Mr. PICKETT asked and was given permission to revise and extend his 
remarks.)
  Mr. PICKETT. Mr. Chairman, I rise in support of H.R. 4003.
  Mr. Chairman, U.S. maritime policy, as defined by title I of the 
Merchant Marine Act of 1936, establishes the necessity for a strong 
merchant marine capable of handling a substantial portion of the 
Nation's commerce and serving as a naval and military auxiliary in time 
of war or national emergency. U.S. maritime policy further provides 
that the merchant marine shall be supplemented by efficient facilities 
for shipbuilding and ship repair.
  The deteriorating condition of America's maritime industries, 
including the ship repair industry, presents a clear and growing danger 
to U.S. economic and military security. Both our strategic sealift 
capability and our shipyard mobilization base are at risk and will be 
increasingly at risk without decisive action by this Congress and this 
President to enact appropriate remedial legislation.
  H.R. 4003 provides a practical, balanced, and cost-effective plan for 
action to promote and facilitate immediate implementation by the 
administration, the Congress, and the private sector of an integrated 
and plausible maritime policy. Taken as a whole, this legislation will 
begin the process to help our Nation restore and enhance its maritime 
industrial base.
  This legislative initiative is founded upon 2 years of cumulative 
effort by the members of the Merchant Marine Committee. The committee 
leadership has taken a ``hands on'' approach in dealing with the 
sharply divergent interests that exist within the maritime industries. 
H.R. 4003 represents a major breakthrough in defining and funding a 
plan to deal fairly and responsibly with the problem. It reflects 
considerable compromise and substantial agreement among the members of 
the committee.
  H.R. 4003 does carry a cost. The rapidly deteriorating situation 
cannot be remedied without expending a meaningful amount of national 
resources. Any course of action will have costs to our nation. The 
challenge is to develop and implement policies that meet the 
requirements in the most cost-effective manner possible. The Merchant 
Marine Committee bill meets this test. It provides a funding source to 
pay for the program that is set out in the bill and meets the ``pay 
go'' requirement of the Budget Enforcement Act.
  Mr. Chairman, H.R. 4003 will be vitally important in enabling our 
Nation to maintain and sustain a viable ship repair industry. The 
United States and foreignflag ships trading in and out of U.S. ports 
need this important industry. For economic and environmental reasons, a 
viable full service U.S. ship repair industry is a must. H.R. 4003 will 
help private ship repair yards modernize with advanced ship repair 
technologies and processes. These investments will enable U.S. ship 
repair yards to perform more efficiently and be more competitive with 
foreign ship repair yards.
  What we have before us is the very minimum that must be done to begin 
the job of revitalizing our merchant fleet and ensuring the future of 
our shipbuilding and ship repair yards. I urge my colleagues to pass 
this legislation.
  Mr. LIPINSKI. Mr. Chairman last year, I joined Chairman Studds and 
ranking minority Members Fields and Bateman to introduce H.R. 2151, the 
Maritime Security and Competitiveness Act of 1993. In November, with 
strong support from the committee members, the bill passed the House by 
an overwhelming 347 to 65 margin. At that time, the bill did not have a 
funding source.
  Today, the bipartisan leadership of our committee presents a funding 
mechanism in H.R. 4003 to pay for the reform program. Over the past 6 
months, the committee has worked diligently to formulate a delicately 
balanced funding plan similar to the administration's tonnage fee 
proposal introduced earlier this year. This revised tonnage fee will 
raise enough revenue to support both the operating and shipbuilding 
elements of the House-passed bill.
  We considered several different funding options and believe a tonnage 
tax is the best revenue source for maritime reform. The Coast Guard 
provides over $1 billion a year for a multitude of navigational and 
search-and-rescue services to U.S. and foreign vessels using our ports. 
The total revenues collected by this tax represent only a small portion 
of the cost of these services. The committee also made every effort to 
ensure that the bill does not violate GATT or any other international 
trade agreement.
  If Congress does not pass H.R. 4003 this year, the U.S. merchant 
marine and shipbuilding industry will disappear. Without this 
legislation, thousands of U.S. jobs will be lost forever. We must vote 
for H.R. 4003 to prevent this national catastrophe. Passage of this 
bill will ensure that essential military equipment is carried on U.S.-
flag vessels and commercial vessels will be built in this country. I 
strongly urge you to join us to save the U.S. merchant marine.
  In closing, I would like to once again thank the gentleman from 
Virginia [Mr. Bateman] for the outstanding cooperation and work that he 
has done on this bill. Without his interest in this bill, we would not 
be standing here on this floor today hoping to pass this bill. Also I 
would like to thank the acting chairman of the Committee on Ways and 
Means, the gentleman from Florida [Mr. Gibbons] for the outstanding 
cooperation that he gave to us in developing this legislation. We stand 
here today unfortunately with a difference of opinion on how to fund 
this particular piece of legislation, but I want to say that the 
gentleman from Florida [Mr. Gibbons] gave us on the Committee on 
Merchant Marine and Fisheries an excellent opportunity to try to get 
our point of view across to his committee membership, and I thank him 
sincerely for that.
  Mr. GIBBONS. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I support H.R. 4003 as it is presently before the 
House, but if it is amended as is proposed here today, I would not be 
able to vote for it.
  The bill was sequentially referred from the Committee on Merchant 
Marine and Fisheries to the Committee on Ways and Means because of the 
revenue provisions of the bill. The Committee on Ways and Means 
carefully considered this bill. We heard from the members of the 
Committee on Merchant Marine and Fisheries about what they wanted to do 
and how they proposed to finance it. We also received input from the 
public and the administration about the revenue provisions of the bill. 
So after due deliberation, we came up with a program to finance the 
amount of money that had been requested by the administration for the 
funding of this program. That sum was roughly $1 billion over the 10-
year period. The dispute between the two committees here today is about 
the difference in the amount of money and the difference in the way in 
which the money will be collected.
  Mr. Chairman, one of the reasons the Committee on Ways and Means 
limited its funding of this bill to about $1 billion is because the 
United States just entered into an agreement with all of the other 
shipbuilding nations of the world. This agreement was reached after the 
Committee on Merchant Marine and Fisheries reported their bill. In this 
agreement, the United States and the rest of the shipbuilding nations 
have agreed to forgo any additional subsidies to ships commencing in 
1996, with the understanding that those ships that had been subsidized 
by that time can be completed but that no subsidies for those types of 
ships would be available to the construction of those ships for 
delivery after 1999.
  That agreement in itself is a historic agreement. Ships have been 
subsidized ever since the Phoenicians built their first ships about 
4,000 years ago. This is the first time the shipbuilding nations of the 
world have ever come together and agreed to put an end to the 
subsidies. Shipbuilding subsidies are a bad thing as far as the U.S. 
merchant marine is concerned and as far as the construction of ships is 
concerned. The United States eliminated its subsidies unilaterally here 
in an amendment known as Gramm-Latta in 1981, and in 1981 we put an end 
to all shipbuilding subsidies in the United States.

                              {time}  1430

  So in the years following Gramm-Latta, the U.S. shipbuilders have 
been at a disadvantage, but the shipbuilders are now enthused, I think 
by the fact that an international agreement has been reached which 
comes into effect January 1, 1996. In that agreement, we agreed 
solemnly with all of the rest of the shipbuilding nations that entered 
into this agreement that we would not create any additional or new 
subsidies. Yet we are faced here with a request by the Committee on 
Merchant Marine and Fisheries to create and to fund some additional 
subsidies in the shipbuilding area. So as a matter of principle for the 
United States, and as a matter of international law, I do not believe 
we should start any new subsidies. We have agreed not to, and we have 
told the rest of the world we should not. We do not want to be the 
first to renege on that.
  The tonnage fee is an old, old tax. It goes back to the 1700's, and 
has been changed many times. But the change proposed by the Merchant 
Marine Committee is a rather dramatic change. The tonnage tax would be 
increased under the merchant marine proposal that will be put forward 
and debated here in a few minutes by many times its current level. 
Under the merchant marine amendment, all of the money would be raised 
by increasing the tonnage tax.
  In fact, it is not only the amount of money that is involved but the 
way in which it is raised that is at issue. The Merchant Marine and 
Fisheries Committee would rather raise all the financing through the 
tonnage tax. The Ways and Means Committee had a lot of objections from 
the public on that. We came up with a different way of raising the 
money. About half of it would be raised by the tonnage tax, and the 
other half would be raised by an international shipping fuels tax and 
by a ticket tax on cruises that cost more than $150.
  Our fuels tax would not be levied on any trade exclusively in the 
Great Lakes, and would not be levied on any fishing vessels leaving the 
United States and landing back here. It would only be levied on ships 
engaged in international trade in the saltwater areas of the United 
States. So we think our method of raising the money and the amount of 
money raised is superior to that put forward by the Merchant Marine and 
Fisheries Committee. For that reason we would have to oppose the bill 
if it is amended as the Committee on Merchant Marine and Fisheries 
suggests.
  Mr. Chairman, I reserve the balance of my time.
  Mr. ARCHER. Mr. Chairman, I yield such time as he may consume to the 
gentleman from Iowa [Mr. Grandy].
  (Mr. GRANDY asked and was given permission to revise and extend his 
remarks.)
  Mr. GRANDY. Mr. Chairman, I thank the gentleman for yielding me the 
time.
  Mr. Chairman, I rise in opposition to H.R. 4003, unfortunately for 
the same reasons that I have opposed cargo preference initiatives on 
this floor, because this bill, like its predecessors in the cargo 
preference, will severely damage agricultural exports because it will 
raise their costs and make them less competitive in world markets.
  H.R. 4003, as modified by the Committee on Ways and Means, not only 
mandates a new uniform rate of 22 cents per net registered ton for all 
vessels, but also assesses an excise tax of 1 cent per gallon on all 
diesel fuel sold for use in commercial vessels departing the United 
States for foreign ports.
  These taxes particularly hurt agricultural farmers, but these taxes 
also hit bulk commodities particularly extra hard. Bulk commodities, 
such as grain, fertilizers, and coal are extremely price-sensitive in 
the present competitive world market, and a few cents a ton in price 
can make the difference on whether a foreign purchaser decides to buy a 
U.S. commodity.
  It is also important to point out that increasing the tonnage tax 
will damage United States exports to Mexico. A significant amount of 
grain exports from the United States to Mexico, probably in the area of 
50 percent, still move by ocean vessel as well.
  As a case in point, a typical gulf vessel would make approximately 10 
to 12 calls on a U.S. port per year, and would have a net registered 
tonnage of 11,000 tons, and carry approximately 25,000 tons of corn. 
Under the tax provisions in H.R. 4003, this means an increase of 
$19,250 or 389 percent.
  In the final analysis, Mr. Speaker, farmers, grain elevators, and 
barge companies which use the river system to move grain to ocean 
export points will be hurt at the expense of questionable subsidies for 
the maritime industry. I ask Members to vote ``no'' both on H.R. 4003 
and on the amendment offered by the gentleman from Massachusetts [Mr. 
Studds].
  Mr. FIELDS of Texas. Mr. Chairman, I yield 2 minutes to the 
distinguished gentleman from Alaska [Mr. Young].
  (Mr. YOUNG of Alaska asked and was given permission to revise and 
extend his remarks.)
  Mr. YOUNG of Alaska. Mr. Chairman, I rise in strong support of H.R. 
4003. I want to compliment the gentleman from Massachusetts [Mr. 
Studds], chairman of the committee, and the gentleman from Texas [Mr. 
Fields], the ranking member on this work in this endeavor.
  I hope Members listening to this debate understand one thing. We went 
from 1945 being the greatest maritime nation in the world, better than 
Britain which was the big one of all times until right now we are 16 in 
the total maritime fleets. We have 394 vessels left to ply the great 
seas of this world, 394 vessels. Panama has 3,040, Liberia has 1,550, 
China has 1,359, Cyprus has 1,210, and I can go on down the line. The 
largest importer in the world, the United States, the largest exporter 
in the world, the United States, and we are the least in the maritime 
industry in the whole world today. This is the last chance to retain 
and improve and to grow in the maritime industry.
  We ought to have cargo preference, with all due respect to my good 
friend who just spoke. We ought to be shipping our goods abroad on 
American-crewed and American-built ships, and we ought to be bringing 
some of it into our shores as all other countries do today, and we do 
not.
  Last year we started building new ships, two new ships being built 
for the maritime industry, two being built. In 1979 at least we had 
about 89 ships being built. In a short period of time we have gone to 
very nearly zero.
  So I ask my colleagues to support the Merchant Marine and Fisheries 
Committee substitute. We are paying our share. It is in fact an ability 
to raise the money to pay for this program to the industry itself so 
that we can reinstate our greatness on the seas that we had in the 
past. If we do not do that today, we will never have the merchant 
marine fleet we should have for this great Nation.
  Mr. ARCHER. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, my objection to H.R. 4003 in its current form is 
twofold. First of all, I oppose the more than $1 billion in new taxes 
that it contains. Make no mistake about it, this is an increase in 
taxes of over $1 billion. To me, that is a significant amount of money 
serving on the Ways and Means Committee that has to raise taxes.
  Second, I question the maritime subsidy program for which those new 
taxes would be levied on American commerce. Again, make no mistake 
about it, it is a new entitlement program, an entitlement spending 
program that will not be subject to the budget spending caps.

                              {time}  1440

  The tonnage tax increase will fall hardest on trade with our Western 
Hemisphere neighbors, particularly Mexico. These export taxes will only 
serve to make America less competitive and essentially make 
inconsistent our policies under NAFTA and GATT.
  Relative to current law, the tonnage tax is reduced for trade with 
Europe and the Far East under the Ways and Means title. There is a 
little deception at work here. Upon closer examination, the Ways and 
Means Committee negates the benefits of the tonnage tax reduction by 
increasing fuel costs for vessels traveling on our international 
seaways. This give with one hand and take away with another provision 
is a new and permanent 1-cent-a-gallon diesel tax on diesel, actually 
diesel and residual fuel tax, used in international shipping.
  At first blush, a penny tax may not sound very harsh, but when you 
take into consideration that large ships carry 1 million gallons of 
fuel, then the penny tax grows to $10,000 per fill-up.
  It has been estimated the fuel tax, when coupled with the tonnage tax 
increases, will significantly increase the cost of grain exports to 
this country. The remainder of the financing comes from an increase in 
the passenger excise tax on ship departures. This comes as an addition 
to the $6.50 customs fee that was put into the law just last year.
  Second, the amendment would finance a new direct spending program, as 
I mentioned, ostensibly to ensure an American flag fleet on the high 
seas which would also be available in time of war and emergency. The 
Merchant Marine and Fisheries Committee has proposed a program which is 
called the Maritime Security Fleet which would provide an annual 
payment of over $2 million per vessel over the next 10 years. In 
exchange, vessels would have to fly the U.S. flag in theory and make 
their ships and crews available in time of war. The U.S. flag part 
would be a requirement.
  The theory is that the ships would be available in time of war. The 
current operating subsidy program contains a similar requirement for 
U.S. flag vessels, and it was put to the test during the Persian Gulf 
war. Without going into great detail, we learned several things from 
our experiences. First, by war's end, the Pentagon chartered 51 foreign 
roll-on-roll-off vessels and 7 American ships in order to be able to 
carry the tanks and the heavy equipment. So only seven ships even under 
a subsidy program that required the availability of American ships were 
American. Fifty-one were foreign.
  Since then, the Pentagon has launched a multibillion-dollar 
acquisition and conversion plan. That is already out there independent 
of this bill.
  Second, of the total of 77 of all types of subsidized American ships, 
only 22 were actually chartered by the Pentagon.
  Finally, of the 365 commercial vessels chartered during the gulf 
conflict, less than one-half flew the Stars and Stripes. The deployment 
of troops and equipment in the gulf war was accomplished with a ready 
availability of foreign flag vessels, and most importantly, the United 
States did not force a single U.S. subsidized ship to carry any cargo 
during the conflict.
  It is worth noting that an early draft of Vice President Gore's 
Reinvent Government recommended deregulation of the maritime industry. 
On this recommendation, the administration should have stayed the 
course. Instead, the Merchant Marine Committee program employs an old 
compass which has steered our maritime industry away from healthy 
competition. And even with the massive subsidy programs under current 
law, it has witnessed a rapid decline of American vessels.
  Unfortunately, the Committee on Ways and Means provides a financial 
engine for a program which is not seaworthy as it is currently drafted. 
Worse, the engine is fueled by $1 billion of new and increased taxes on 
American trade.
  I urge my colleagues to reject this bill.
  Mr. Chairman, I reserve the balance of my time.
  Mr. FIELDS of Texas. Mr. Chairman, I yield 2\1/2\ minutes to the 
gentlewoman from Florida [Mrs. Fowler].
  (Mrs. FOWLER asked and was given permission to revise and extend her 
remarks.)
  Mrs. FOWLER. Mr. Chairman, I rise in strong support of the substitute 
amendment and passage of this bill as amended. Our Nation has an 
established history of a strong merchant marine. Unfortunately, that 
history has been changing and is about to end altogether. Shortly after 
World War II, the U.S. shipbuilding industry became the world's leading 
builder of military and commercial ships. Just a few decades later, 
that same industry is struggling to survive. The impacts of this 
decline are devastating.
  Not only are there the obvious impacts in lost jobs, wages, and tax 
revenues but there are the impacts of our national defense 
capabilities. If this decline continues unabated, our military will not 
have U.S.-flag vessels necessary for sealift capabilities; our reserve 
fleet will be inoperable due to a lack of trained merchant seamen; and, 
foreign shipowners will control the price and availability of ships.
  Our military forces today must be prepared to fight with less notice, 
and must be able to win in shorter order than ever before. These 
requirements mean that first, our force structure must allow us to 
respond quickly to contingencies, no matter how suddenly they arise or 
how far away they are, and second, we must have an increasingly capable 
industrial base to support the needs of our forces.
  With the proliferation of highly lethal weapons, warning times for an 
attack are greatly reduced. We no longer have the luxury of being able 
to ``tool up'' for conflicts. These military requirements become 
impossible to achieve if we lose our ability to manufacture and repair 
defense capable ships.
  Given these national defense needs, it is imperative that we pass 
this necessary legislation with the funding levels provided for in the 
merchant marine amendment. This amendment provides not only ship 
operating subsidies but also shipbuilding subsidies. It does so at a 
level of $1.3 billion raised over 10 years without the imposition of 
new taxes. This is a full $300 million above the Ways and Means 
Committee proposal. While I respect and admire the leadership provided 
by the Ways and Means Committee on this issue, I must urge my 
colleagues to support the merchant marine funding proposal. As the 
committee with jurisdiction over the merchant marine and maritime 
industry, it is the Merchant Marine and Fisheries Committee proposal 
which best reflects the needs of that industry and which best provides 
for its recovery and long-term health.
  Mr. Chairman, I strongly urge my colleagues to support the Merchant 
Marine Committee amendment providing for an alternative funding 
mechanism and an adequate funding level. Thank you. I yield back the 
balance of my time.
  The CHAIRMAN. The Chair would inform the committee that the gentleman 
from Massachusetts [Mr. Studds] has 5 minutes remaining in general 
debate; the gentleman from Texas [Mr. Fields] has 5\1/2\ minutes; the 
gentleman from Florida [Mr. Gibbons] has 9 minutes remaining; and the 
gentleman from Texas [Mr. Archer] has 7 minutes remaining.
  The Chair would also inform Members that the order of closing for 
general debate is as follows: The gentleman from Texas [Mr. Archer] 
would be the first to speak, the gentleman from Florida [Mr. Gibbons] 
would be the second, the gentleman from Texas [Mr. Fields] would be the 
third, and the gentleman to close debate would be the gentleman from 
Massachusetts [Mr. Studds].
  Mr. ARCHER. Mr. Chairman, I yield 4 minutes to the gentleman from 
California [Mr. Thomas].
  (Mr. THOMAS of California asked and was given permission to revise 
and extend his remarks.)
  Mr. THOMAS of California. Mr. Chairman, let us make sure we 
understand what this debate is not about. It is not about national 
defense. It is not about the security of the United States. And it is 
not about making sure that we simply tip the balance in the difference 
between survival in the area of maritime.
  Most of you have watched a railroad car go by, trains go by at 
railroad crossings nowadays, and there are no cabooses on those 
railroads. The reason there are not any cabooses is because we decided 
to get rid of featherbedding in railroads, and the cabooses were the 
primary example of featherbedding. We had folks who were not really 
working on those trains riding in the cabooses. We simply decided to 
get rid of the featherbedding, so you could get rid of the cabooses.
  What we have in front of us today is a proposition that we take 50 
ships, 21 sailors a ship, 2 crews a year, 42 sailors a year, for 50 
ships. Divide that into the amount of money that they are asking for, 
and it comes out to $50,000 a sailor, a small price to pay for national 
security. The only trouble is these folks are not ready, are not used, 
and are not needed. They do not offer the kind of ship that the 
military needed in our most recent military engagement in the Middle 
East. We charter those ships.
  If you want to do something about national security, take this money 
and set it aside so that when we need it we can charter those ships 
with a trust fund available for the chartering of the ships, if you are 
concerned about national security.

                              {time}  1450

  If you are concerned about the role of the United States maritime in 
the world today, take a look at the fundamental laws of economics under 
which we operate. If you want to repeal some of those, we can go back 
in time and be a major maritime country. What we are doing here is 
asking for a small subsidy relative to the bigger picture for a small 
group of folk who do not want to change.
  Do not believe this vote has anything to do with national security. 
It has to do with an attempt to perpetuate a way of life that ought to 
go the way of the caboose.
  If you let economics determine, you will not do this; if you let 
sentiment and inside politics prevail, then you are going to vote this 
little subsidy to keep the hope and the promise alive under the false 
presumption you are doing something in the name of national security.
  This is how you wind up, bit by bit, piece by piece, with a $200 
billion-per-year deficit. Do not do it.
  Vote no.
  Mr. FIELDS of Texas. Mr. Chairman, I yield 2 minutes to the 
gentlewoman from Maryland [Mrs. Bentley].
  Mrs. BENTLEY. I thank the gentleman for yielding this time to me.
  Mr. Chairman, I ask our esteemed colleague, Mr. Thomas of California, 
a rhetorical question:
  How can you charter something that doesn't exist?
  A few minutes ago, the esteemed chairman of the Ways and Means 
Committee talked about the new agreement negotiated within the OEECD as 
a reason why the Congress should not vote in the amendment whose 
purpose is to enable building of those merchant vessels we need to help 
the flow of commerce to and from the United States.
  I would like to point out here that the negotiations within the OEECD 
have been ongoing for some 6 years under pressure from the United 
States. The only reason they have reached the point as announced was 
because of the overwhelming passage of H.R. 2151 last year and the 
progress of H.R. 4003 in recent days.
  In that so-called agreement, any ship contract negotiated before the 
signing can continue up until 1999. This means that the $8 billion 
subsidy now being paid to the shipyards within the OEECD can continue 
up until 1999. And there is no limitation on the capacity or expansion. 
And the agreement is nowhere near finished. In fact, we understand 
France is endeavoring to be allowed to set its own terms for its yards 
and ships.
  And Belgium, Spain, Portugal, and Korea are asking to have their 
yards grandfathered so they can continue as they have in the past. And 
Spain is seeking to establish a new $1.4 billion program.
  So I question how real the OEECD agreement is and want to point out 
that the congressional committees have not been able to obtain a copy 
of that agreement. How real is it?
  Mr. Chairman, on June 6 of this year, we all watched in awe the 
replay of the D-day landing at Normandy 50 years earlier which was the 
turning point of World War II.
  Mr. Chairman, all segments of the Armed Forces were praised and their 
exploits recounted time and again on this anniversary occasion--that 
is, all sectors except one even though that one was most often in view 
on those 50-year-old films.
  That segment of course, was the merchant marine. There were 2,700 
U.S. built and U.S. manned merchant ships providing the supplies needed 
by our brave men and women for that historic invasion to liberate 
mainland Europe. Our country was able to provide not only those 2,700 
vessels--but double that number--in 4 short years because the United 
States had an industrial base from which to begin that vast 
shipbuilding program.
  The United States led the free world to victory because its skilled 
men and women worked round the clock and because it had the machine 
shops, the machine tool companies, and the shipyards to send the ships 
down the ways.
  That type of industrial strength enables the United States of America 
not only to lead but to become a true power in the industrial world 
because of the far-reaching ramifications of these many segments that 
made America a strong industrial nation.
  We will retain a small part of that vital industry if today this 
House votes in favor of the merchant marine and fisheries amendment to 
title II of H.R. 4003. And we will have a nucleus merchant fleet flying 
the Stars and Stripes proudly on the fantails of the ships, ready to 
provide the kind of protection and competition to American shippers who 
otherwise would be at the mercy of foreign-flag fleets. History has 
proven that our shoreside shippers truly are taken over the coals when 
American vessels disappear from the horizon.
  With this bill, our Nation will have a fleet on which it can count 
and it will have a maritime manpower base and intermodal cargo carrying 
capability essential to strong sealift under our own control.
  Mr. Speaker, I endorse H.R. 4003 and urge strong support for its 
final passage today as well as for the Merchant Marine and Fisheries 
Committee's amendment.
  The CHAIRMAN. The Committee will rise informally in order that the 
House may receive a message.

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