[Congressional Record Volume 143, Number 6 (Thursday, January 23, 1997)]
[Senate]
[Pages S682-S683]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 SENATE RESOLUTION 24--RELATIVE TO THE CARGO PREFERENCE POLICY OF THE 
                             UNITED STATES

  Mr. INOUYE submitted the following resolution; which was referred to 
the Committee on Commerce, Science, and Transportation:

                               S. Res. 24

       Whereas the maritime policy of the United States expressly 
     provides that the United States have a Merchant Marine 
     sufficient to carry a substantial portion of the 
     international waterborne commerce of the United States;
       Whereas the maritime policy of the United States expressly 
     provides that the United States have a Merchant Marine 
     sufficient to serve as a fourth arm of defense in time of war 
     and national emergency;
       Whereas the Federal Government has expressly recognized the 
     vital role of the United States Merchant Marine during 
     Operation Desert Shield and Operation Desert Storm;
       Whereas cargo reservation programs of Federal agencies are 
     intended to support the privately owned and operated United 
     States-flag Merchant Marine by requiring a certain percentage 
     of government-impelled cargo to be carried on United States-
     flag vessels;
       Whereas when Congress enacted Federal cargo reservation 
     laws Congress contemplated that Federal agencies would incur 
     higher program costs to use the United States-flag vessels 
     required under such laws;
       Whereas section 2631 of title 10, United States Code, 
     requires that all United States military cargo be carried on 
     United States-flag vessels; Whereas Federal law requires that 
     cargo purchased with loan funds and guarantees from the 
     Export-Import Bank of the United States established under 
     section 635 of title 12, United States Code, be carried on 
     United States-flag vessels;
       Whereas section 901b of the Merchant Marine Act, 1936 (46 
     U.S.C. App. 1241f) requires that 75 percent of the gross 
     tonnage of certain agricultural exports that are the subject 
     of an export activity of the Commodity Credit Corporation or 
     the Secretary of Agriculture be carried on United States-flag 
     vessels;
       Whereas section 901(b) of such Act (46 U.S.C. App. 1241(b)) 
     requires that at least 50 percent of the gross tonnage of 
     other ocean borne cargo generated directly or indirectly by 
     the Federal Government be carried on United States-flag 
     vessels;
       Whereas cargo reservation programs are very important for 
     the shipowners of the United States who require compensation 
     for maintaining a United States-flag fleet;

[[Page S683]]

       Whereas the United States-flag vessels that carry reserved 
     cargo provide quality jobs for seafarers of the United 
     States; Whereas, according to the most recent statistics from 
     the Maritime Administration, in 1990, cargo reservation 
     programs generated $2,400,000,000 in revenue to the United 
     States fleet and accounted for one-third of all revenue from 
     United States-flag foreign trade cargo;
       Whereas the Maritime Administration has indicated that the 
     total volume of cargoes moving under the programs subject to 
     Federal cargo reservation laws is declining and will continue 
     to decline;
       Whereas, in 1970, Congress found that the degree of 
     compliance by Federal agencies with the requirements of the 
     cargo reservation laws was chaotic, uneven, and varied from 
     agency to agency;
       Whereas, to ensure maximum compliance by all agencies with 
     Federal cargo reservation laws, Congress enacted the Merchant 
     Marine Act of 1970 (Public Law 91-469) to centralize 
     monitoring and compliance authority for all cargo reservation 
     programs in the Maritime Administration;
       Whereas, notwithstanding section 901(b) of the Merchant 
     Marine Act, 1936 (46 U.S.C. App. 1241(b)), and the purpose 
     and policy of the Federal cargo reservation programs, 
     compliance by Federal agencies with Federal cargo reservation 
     laws continues to be uneven;
       Whereas the Maritime Administrator cited the limited 
     enforcement powers of the Maritime Administration with 
     respect to Federal agencies that fail to comply with section 
     901(b) of the Merchant Marine Act, 1936 (46 U.S.C. App. 
     1241(b)) and other Federal cargo reservation laws; and
       Whereas the Maritime Administrator recommended that 
     Congress grant the maritime Administration the authority to 
     settle any cargo reservation disputes that may arise between 
     a ship operator and a Federal agency: Now, therefore be it
       Resolved, That it is the sense of the Senate that--
       (1) each Federal agency should administer programs of the 
     Federal agency that are subject to Federal cargo reservation 
     laws (including regulations of the Maritime Administration) 
     to ensure that such programs are, to the maximum extent 
     practicable, in compliance with the intent and purpose of 
     such cargo reservation laws; and
       (2) the Maritime Administration should closely and strictly 
     monitor any cargo that is subject to such cargo reservation 
     laws.

  Mr. INOUYE. Mr. President, the law of the land, specifically section 
(1) of the Merchant Marine Act of 1936, declares that the United States 
shall have a merchant marine sufficient, among other things, to:

       Carry a substantial portion of our international waterborne 
     Commerce; and to serve as a fourth arm of defense in time of 
     war and national emergency.

  The importance of these requirements has been dramatically 
illustrated by the vital role of our merchant marine in World War II, 
Korea, Vietnam, during operations Desert Shield and Desert Storm, and 
most recently in Haiti, Somalia, and Bosnia.
  While the privately owned and operated U.S. flag merchant marine has 
performed so magnificently and effectively in times of crisis, it has 
also made extraordinary efforts to ensure that a substantial portion of 
commercial cargo bound to and from the United States moves on U.S. 
bottoms. Given the chronic overtonnaging in international shipping, 
cut-throat competition, and the competitive edge our trading partners 
give their national flags, this has not been easy. In addition to 
competition with subsidized foreign carriers, U.S.-flag carriers are 
forced to compete with flag of convenience carriers. Over two-thirds of 
the international vessels operating in commerce are operating under 
flags of convenience. Flag of convenience registries include such major 
maritime powers as Panama, Liberia, the Marshall Islands, and Vanuatu. 
These registries only require their vessel owners to pay registration 
fees, and shipowners are not required to pay tax on revenues earned, 
nor do employees have to pay income tax, and the shipowner has little 
or no obligation to comply with the nation's law.
  Nevertheless, if our commercial fleet is to continue to be an 
effective auxiliary in times of war or national emergency, it must 
first be commercially viable in times of peace. Otherwise, there will 
be no merchant fleet when the need arises.
  I think we all would agree that there is a substantial national 
interest in promoting our merchant fleet. I think, also, that we would 
all agree that U.S. national security and economic security interests 
should not be held hostage for lack of U.S.-controlled sealift assets. 
Given the increasing diminution of the flag fleets of our NATO allies 
it will be more important in the future to sustain a viable U.S.-flag 
presence. Indeed, several laws of our land recognize that national 
interest and spell out specifically how the U.S. Government is to go 
about promoting it. Federal laws require that all U.S. military cargo, 
cargo purchased with all loan funds and guarantees from the Eximbank, 
75 percent of concessionary agricultural, and at least 50 percent of 
all other international ocean borne cargo generated directly or 
indirectly by the Federal Government, be carried on U.S. flag vessels. 
The alarming news is that according to Maritime Administration [MarAd] 
the total volume of cargo moving under these programs is declining and 
will continue to do so.
  According to a report by Nathan Associates, Inc., the 1992 economic 
impact of cargo preference for the United States is 40,000 direct, 
indirect, and induced jobs, $2.2 billion in direct, indirect, and 
induced household earnings, $354 million in direct, indirect, and 
induced Federal personal and business income tax revenues--$1.20 for 
every dollar of Government outlay on cargo preference, and $1.2 billion 
in foreign exchange.
  It is, therefore, imperative that U.S. flag vessels carry every ton 
of cargo which these programs and the law intend them to carry. This 
brings me to the reason for the resolution I am introducing today. 
There are two substantial problems which threaten the viability of 
these programs and, therefore, the viability of our merchant fleet.
  Several agencies administering cargo reservation programs continue to 
do their almighty best to evade the spirit and letter of the 
reservation laws, that is, find the law inapplicable to a particular 
program, or employ other loopholes.
  Because of this problem of evasion and uneven confidence, the 
Congress amended the Merchant Marine Act of 1970 to centralize 
monitoring and compliance authority for all cargo reservation programs 
in MarAd. Nevertheless, the problem remains. Critics of MarAd maintain 
the agency is too timid, and does not discharge its obligation 
aggressively. MarAd, on the other hand, says it has limited enforcement 
powers over those Government agencies which are not in compliance.
  In light of recent proposals to consolidate the Department of 
Transportation's operating divisions, I believe it is more important 
than ever for the Congress to reiterate its support for our cargo 
reservation laws, so that their administration and enforcement will not 
suffer from any departmental reorganization.
  Mr. President, the resolution I am submitting today merely expresses 
the sense of the Senate that all of these Federal agencies do what they 
are supposed to be doing now, under existing law.

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