[Congressional Record Volume 145, Number 13 (Monday, January 25, 1999)]
[Senate]
[Pages S987-S988]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                INCREASING U.S. MARITIME COMPETITIVENESS

 Mr. LOTT. Mr. President, Congressional and Administrative 
action is needed to strengthen the U.S. maritime industry and level the 
playing field in the international shipping arena.
  This vital industry serves our nation's security by providing 
essential elements of our sealift capability--loyal crews and 
commercial ships. This sealift capability is required to project and 
sustain power abroad and preserve U.S. access to world trade. Two 
hundred years ago, protecting the U.S. merchant marine was one of the 
Navy's important missions. Today, the threat to the U.S. maritime 
industry is just as real. It may not come not from Barbary pirates, but 
the competitive disadvantages imposed by both this country and other 
countries are just as dangerous.
  Mr. President, the U.S. maritime industry has been the world leader 
in innovation over the last 30 years. It had to be, because it competes 
in the world arena with one hand tied behind its back. International 
maritime trade has become increasingly dominated by foreign flags-of-
convenience. A number of small countries have decided to generate 
revenue by creating ship registries and tax havens that impose few 
responsibilities or costs on their users. Unfortunately, this has also 
resulted in poor compliance with international safety standards and 
evasion of pollution liability.
  America's fleet meets the most stringent safety standards and 
operates in a higher tax environment, and has steadily lost ground to 
these flag-convenience fleets. This situation is reaching the point 
where the U.S. commercial fleet's ability to meet our national security 
requirements may soon be in jeopardy.
  Mr. President, the solution to this problem has two parts. First, we 
must hold other countries accountable for providing reciprocity in 
access to maritime trade and meeting international standards for vessel 
safety, crew training, and preventing pollution. The

[[Page S988]]

United States places very few restrictions on the use of our ports to 
facilitate international trade. Some countries, such as China, however, 
have imposed unfair burdens on United States and other foreign vessels 
conducting business there in an effort to protect their own businesses. 
The FMC, under Chairman Hal Creel's leadership, appropriately moved to 
head off problems in Japan's ports during the 105th Congress and is 
increasingly concerned about the situations in China and Brazil.
  While our Nation encourages open competition in the commercial 
maritime sector, America only demands that it be fair and meet minimum 
standards for protecting our environment and our citizens. However, as 
a January 3, 1999, New York Times article reported, flag-of-convenience 
ship are using their foreign status and the lax oversight of their flag 
states to escape punishment for their intentional dumping of oil in the 
ocean not far from our coast. America should not allow the unscrupulous 
operation of unsafe ships with ill-trained crews to threaten the 
oceans, our coastlines, or our citizens.
  I challenge the Administration to aggressively combat these actions 
to the fullest extent of U.S. law. Under the leadership of Senators Kay 
Bailey Hutchison and John McCain, the 105th Congress provided the FMC 
with increased authority to address unfair foreign shipping practices. 
I invited the Administration to work with the 106th Congress to provide 
increased legislative authority to counter attempts by foreign-flag 
ships to escape punishment for such unconscionable behavior.
  Second, we must level the playing field for U.S. companies competing 
in the commercial maritime arena. On the financial side, U.S. shipping 
companies provide equal or higher quality service than their foreign 
competitors at a similar cost, yet foreign shipping companies are 
growing and U.S. shipping companies are shrinking. This happens 
because, unlike U.S. shipping companies, most foreign shipping 
companies pay little or no income taxes. In this capital intensive 
business, investments are flowing to those companies which provide a 
better return on investment, and the tax differential tilts this flow 
toward foreign shipping companies. This is why foreign shipping 
companies are buying their U.S. counterparts instead of the other way 
around. This Nation's tax policies should promote business growth, not 
stifle it. We need to level the playing field for U.S. shipping 
companies in the international marketplace. I look forward to working 
with Senator John Breaux to develop specific provisions. My colleague 
and friend shares an interest in maritime policy, and together we serve 
on both the Commerce Finance Committees. This provides us with an 
ability to shape maritime policy in the regulatory, tax, and trade 
environments.
  Mr. President, U.S. shipping companies can compete and succeed in the 
world's international trade marketplace when competition is 
fair.

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