[Congressional Record Volume 141, Number 37 (Tuesday, February 28, 1995)]
[Extensions of Remarks]
[Page E459]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E459]]
                   OCEAN SHIPPING REFORM ACT OF 1995

                                 ______


                         HON. JAMES L. OBERSTAR

                              of minnesota

                    in the house of representatives

                       Tuesday, February 28, 1995
  Mr. OBERSTAR. Mr. Speaker, today, I am introducing the Ocean Shipping 
Reform Act of 1995. There has been a great deal of discussion lately 
about the future of the Federal Maritime Commission and the Shipping 
Act of 1984. Some are suggesting that both the Federal Maritime 
Commission and the Shipping Act of 1984 be scrapped. I do not agree 
with that approach, but I do recognize that significant changes are 
needed at the Commission and in the Shipping Act of 1984. The bill I am 
introducing today accomplishes those changes.
  The Shipping Act of 1984 sets out the legal framework that governs 
ocean liner cargo transportation. With a broad grant of antitrust 
immunity, conferences of oceanliner companies meet to establish common 
rates for the shipment of freight across the oceans. These rates are 
filed with the Federal Maritime Commission and made public. While broad 
grants of antitrust immunity are usually antithetical to the way the 
United States expects business to operate, I see no consensus within 
our ocean carrier and shipping industries, nor internationally, that 
immediate wholesale removal of antitrust immunity will bring the 
competitive benefits some expect. In fact, there was considerable 
testimony at the hearing held in the Subcommittee on Coast Guard and 
Maritime Transportation on February 2 that U.S. commercial interests 
could be harmed in doing so.
  My approach is straightforward. Continue the present system of ocean 
carrier conferences with immunization from the antitrust laws. Within 
that framework, give shippers and conference carriers increased 
flexibility to enter into certain business arrangements not encumbered 
by conference agreements, procedures, or vetos of other conference 
carriers.
  Within the ocean shipping industry there is the concept of service 
contract which is a contract between a shipper and a carrier or a 
conference of carriers in which a minimum quantity of cargo over a 
fixed period of time is shipped at a certain rate and level of service. 
Typically, this translates into a large volume/long-term arrangement at 
a reduced rate below the filed tariff. These sorts of contracts are 
permitted and recognized in the law, but the carrier conferences are 
permitted and recognized in the law, but the carrier conferences are 
allowed to restrict and even prohibit their use. This bill would 
prohibit a conference or a conference carrier from limiting the ability 
of another member of the conference from entering into or performing 
under a service contract. This will provide shippers and conference 
carriers, that elect to, the opportunity to enter into arrangements 
outside of the conference.
  Also in the carrier conference system, there is the concept of 
independent action. Under the Shipping Act of 1984, carriers can charge 
a rate different than the conference filed tariff, if notice
 is given to the conference and filed with the Federal Maritime 
Commission 10 days in advance of that independent action for a 
different rate. The bill would shorten that 10-day notice to 2 days. 
Again, this would provide shippers and carriers with a great deal more 
flexibility to enter into arrangements with much reduced interference 
by other conference members. By shortening the notice period, a rate 
different than the conference rate can be made effective before the 
other conference members have a lengthy period in which they could 
convince and pursuade the independent action taker to not take the 
independent action.

  The bill also provides a new declaration of policy. Section 2 of the 
Shipping Act of 1984 sets out the purposes of the act. Among the 
purposes are establishment of a nondiscriminatory regulatory process; 
provision of an efficient and economic ocean transportation system; and 
encouragement of the development of an economically sound and efficient 
U.S.-flag liner fleet. This bill would add a new declaration of 
policy--promotion of the growth and development of United States 
exports through competitive, nondiscriminatory, and efficient ocean 
transportation. There are some who believe that the Shipping Act of 
1984 is too oriented toward the interests of the carriers at the 
expense of the shippers. This provision in the bill would give strong 
policy guidance to the Federal Maritime Commission that in 
administering the act that the interests of U.S. exporters should be 
just as paramount in its mind as the interests of the carriers.
  The bill also directs the Secretary of Transportation to develop and 
implement a negotiation strategy to persuade foreign governments to 
divest themselves of ownership and control of ocean common carriers. 
Government ownership and control of oceanliner companies puts our 
carriers at a tremendous disadvantage in the international marketplace. 
While there is little we can do to force foreign governments to get out 
of the business of oceanliner shipping, it certainly should be the U.S. 
Government policy to bring that issue to the negotiating table when it 
is engaged in trade and commercial discussions with our trading 
partners. Over time, I am confident that progress can be made in this 
area to the benefit of U.S. carriers and the shipping public.
  These changes to the Shipping Act of 1984 represent significant steps 
toward a more competitive and deregulated environment in the ocean 
transportation business, and I urge people to consider them in that 
regard.
  Finally, the bill would make some significant reforms at the Federal 
Maritime Commission itself. Government agencies are downsizing and 
rightsizing across the board in the effort to reduce Government 
spending. The Federal Maritime Commission needs to contribute to this 
effort just as all other Government agencies are doing. There has been 
discussion of outright eliminating the Commission all together. This 
would be unwise since it provides important benefits to the public. 
This bill would direct the Commission to reduce its employees by 15 
percent over the next 2 fiscal
 years. The Commission is a relatively small agency with a relatively 
small budget--$19 million, much of it offset with the collection of 
fees and fines. Despite its small size, it still needs to be a part of 
the overall effort to reinvent and streamline Government. Simply 
abolishing the Commission so that an agency's skin can be hung on the 
wall is not a proper way to carry out the public's need to have a 
smaller government. Steps need to be taken, but they need to make good 
public policy sense.

  The bill also directs the Federal Maritime Commission to devote a 
greater proportion of its resources to protecting U.S. shippers and 
carriers against restrictive and unfair practices of foreign 
governments and foreign-flag carriers. U.S. interests are under a 
constant barrage by foreign interests trying to hinder their ability to 
do business. The Commission has done a good job of policing these 
practices, but I believe that the waterfront of abuses is so vast that 
if more resources were directed to this area, further progress could be 
realized in leveling the trade playing field. The bill directs that the 
Commission submit a plan to Congress to reorient its resources in this 
regard within 90 days of enactment of this legislation.
  This proposed bill is just that--a proposal. There are issues that 
are not addressed in this bill, that may well need to be addressed. 
There are issues even within the context of the specific proposals upon 
which the bill is silent or needs further thought and deliberation 
before a more refined position is developed. An example would be in the 
service contract area. Should the terms of service contracts continue 
to be made public? In my bill as drafted they would be, but this is not 
a closed issue in my mind. Similarly, is there a need for phase-in of 
changes to the Shipping Act? Also, I do not address tariff filing in 
the bill, so as drafted, the current system would continue. But again, 
I believe there may well be ways that the public can learn about what 
is happening in the marketplace without a government based tariff 
filing system. I am open on this issue and others. There may also be 
other ways to craft the legislative language to accomplish the purposes 
of this bill, and I am open to suggestions here as well.
  I very much look forward to working with Transportation and 
Infrastructure Committee Chairman Shuster and Coast Guard and Maritime 
Transportation Subcommittee Chairman Coble, ranking Democratic Members 
Norman Y. Mineta and James A. Traficant, and other members of the 
committee to develop legislation on the Shipping Act and the Federal 
Maritime Commission.




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