[Congressional Record Volume 145, Number 163 (Wednesday, November 17, 1999)]
[Extensions of Remarks]
[Pages E2432-E2433]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  THE ALL AMERICAN CRUISE ACT OF 1999

                                 ______
                                 

                           HON. DUNCAN HUNTER

                             of california

                    in the house of representatives

                       Tuesday, November 16, 1999

  Mr. HUNTER. Mr. Speaker, today I am introducing a bill critical to 
the future of our domestic shipbuilding industry. This bill, aptly 
named the ``All American Cruise Act of 1999,'' takes steps that are 
long overdue to promote the construction of cruise ships by U.S. 
shipbuilders. My bill is a prime example of a ``Made in the USA'' 
initiative.
  The United States is the largest cruise ship market in the world. In 
1998, 120 foreign-built, foreign-registered cruise ships serviced the 
American market, which consists of nearly seven million passengers 
annually. Experts anticipate that by 2003 there will be 10 million 
passengers and 160 foreign-built and operated ships servicing North 
America. American shipbuilding firms have been placed at a decisive 
disadvantage in the global shipbuilding market due to U.S. tax laws and 
European subsidy policies. European builders of cruise ships receive 
numerous tax incentives and other assistance from their governments to 
reduce the price of their ships. Foreign cruise companies operating 
from U.S. ports pay no U.S. income tax, an immediate price advantage 
for the foreign competitor. For example, Carnival Cruise Lines, a 
Libyan registered company, is reported to have earned $652 million in 
tax-free income during 1998, yet 90 percent of their passengers are 
Americans.
  The All American Cruise Act is designed to bring this industry back 
to our shores through tax parity desperately needed to encourage our 
domestic industry. My bill, among other recommended changes, would 
implement the following: tax credits to U.S. builders of cruise ships 
of 20,000 gross tons and greater; U.S. cruise ship owners will be 
exempt from paying U.S. corporate income tax; cruise ship owners will 
be able to depreciate their ships over a five-year period rather than 
the current 10-year period; the current $2,500 business tax deduction 
limit for a convention on a cruise ship would be repealed to give the 
same unlimited tax deductions for business conventions held at shore-
side hotels; and a 20 percent tax credit will be granted to U.S. 
companies which operate ships using environmentally clean burning 
engines manufactured in the United States.
  While some of these tax provisions may at first glance seem costly to 
the U.S. Treasury, it should be noted that, since cruise chips are not 
presently built domestically nor operated as U.S. companies, current 
tax revenues will not be impacted. In fact, when this bill is passed, 
hundreds of thousands of high technology and high skill manufacturing 
jobs will be created. Although my bill has not yet been scored by the 
Joint Tax Committee or the Congressional Budget Office, I am confident 
that it will actually contribute to the U.S. Treasury as well as to the 
U.S. manufacturing base.
  In addition, the All American Cruise Act has national security 
implications. At this time there are only six private-sector shipyards 
in the United States. These shipyards are located in California, 
Connecticut and Rhode Island, Louisiana, Maine, Mississippi, and 
Virginia. Taking legislative action to ensure a robust domestic ship 
building industry will ensure that U.S. taxpayers have access to 
competitive prices, technology, and a ready supply of ships and labor 
in time of conflict. A recent Congressional Research Service Report (RL 
30251) stated, ``. . . competition in defense acquisition can generate 
benefits for the government and taxpayers by restraining acquisition 
costs, improving product quality, encouraging adherence to scheduled 
delivery dates, and promoting innovation.'' Further, ``achieving 
effective competition in Navy ship construction has become more 
difficult in recent years due to the relatively low rate of Navy ship 
procurement . . .'' It is in our best interest as a nation to do all we 
can to ensure that there is a viable and productive United States 
shipbuilding industry that will meet our national security, cargo and 
recreational needs long into the future.
  The All American Cruise Act will also stimulate revenue for our 
nation's ports. With U.S. built and operated cruise ships in operation, 
American cruise lines will be able to dock at more than one U.S. port 
per trip. This will ultimately benefit both passengers and local ports.
  It is also important to emphasize that ships built in the United 
States and operated by Americans adhere to the highest construction, 
labor, and environmental standards, unlike ships that are neither built 
nor operated to America's high safety standards. Our citizens deserve 
better. My bill will give American tourists the safety they deserve 
when vacationing at sea.
  The All American Cruise Act is supported by both industry and labor. 
In fact, I am submitting letters in support of this legislation from 
the following organizations: the American Shipbuilding Association, the 
International Brotherhood of Boilermakers, Iron Ship Builders, 
Blacksmiths, Forgers and Helpers, the American Maritime Officers, and 
the American Maritime Officers Service.
  I urge all of my colleagues to join me in sponsoring this 
legislation. Throughout our history, seafaring vessels have played a 
critical role in our military, cargo movement and entertainment. The 
time has come to bring the cruise industry back to America's shores. 
Support the All American Cruise Act of 1999.

                             American Shipbuilding Association

                                                 November 9, 1999.
     Hon. Duncan Hunter,
     Rayburn House Office Building, Washington, DC.
       Dear Congressman Hunter: On behalf of the shipbuilding 
     industry, the American Shipbuilding Association (ASA) would 
     like to express to you its strong support of your 
     legislation, entitled the ``All American Cruise Act of 
     1999''. This bill will provide American shipbuilders, owners, 
     and crews with tax parity with foreign builders and owners of 
     cruise ships that operate almost exclusively from U.S. ports 
     and derive over 90 percent of their income from U.S. 
     citizens.
       As you have recognized, American shipbuilders, ship owners, 
     and crews have been placed at a severe competitive 
     disadvantage in the American cruise ship market because of 
     the U.S. tax code that rewards companies that build and 
     register their ships in foreign countries while penalizing 
     American companies who wish to build and register their ships 
     in the United States. For example, the 120 cruise ships that 
     serve the North American market depart U.S. ports with 
     vacation tours bought by U.S. citizens. These ships, however, 
     are built in foreign countries where governments provide tax 
     credits and other assistance that equates to as much as a 50 
     percent reduction in the price of these ships. The ships in 
     turn are operated by companies that register them in foreign 
     countries to avoid U.S. corporate income tax. By building and 
     operating these ships foreign, these companies avoid 
     America's high environmental, labor, and safety standards in 
     the construction and operation of their ships, and jeopardize 
     the lives of American tourists.
       Some in Congress would propose that the United States just 
     surrender the U.S. cruise ship market to these foreign 
     entities by repealing the American Passenger Vessel Services 
     Act, which requires ships carrying passengers between two 
     U.S. ports to be U.S.-built, owned, and crewed. Our industry 
     believes there is a better way--your way--which would create 
     an All American industry built by Americans for Americans. 
     Your legislation would retain U.S. high safety standards in 
     the construction and operation of cruise ships, while 
     providing American builders and owners tax parity with 
     foreign builders and owners of cruise ships that operate from 
     U.S. shores.
       Your bill would create hundreds of thousands of high 
     technology, high skilled manufacturing and seagoing jobs for 
     Americans; strengthen the American defense shipbuilding 
     industrial base; and ignite a powerful engine that would 
     propel all segments of the U.S. economy toward strong growth 
     and prosperity into the 21st Century. Furthermore, American 
     tourists would be assured

[[Page E2433]]

     that they would be vacationing on the safest constructed and 
     operated ships in the world.
       The American Shipbuilding Association commends you for your 
     legislation and urges your colleagues to support the All 
     American Cruise Act of 1999.
           Sincerely,
                                                 Cynthia L. Brown,
                                                        President.


                                                 American Maritime


                                             Officers Service,

                                 Washington, DC, November 9, 1999.
     Hon. Duncan Hunter,
     U.S. House of Representatives, Washington, DC.
       Dear Congressman Hunter: We understand that you are 
     considering introducing legislation to address the inequities 
     facing the creation of a domestic U.S.-flag, U.S.-built 
     cruise industry. We have reviewed the draft bill and on 
     behalf of the American Maritime Officers Service, we would 
     like to express our strong support for your effort.
       As you know, the United States is the largest cruise ship 
     market in the world and represents one of the largest growth 
     markets. Yet all of the large oceangoing cruise ships serving 
     the American market are built and operated by foreign 
     companies to avoid U.S. tax laws. This anomaly has created a 
     market barrier to U.S. companies are to have an opportunity 
     to develop an American cruise industry to serve our market. 
     Your legislation will provide American companies tax parity 
     with their foreign competitors and create hundreds of 
     thousands of high technology jobs, highly skilled 
     manufacturing and seagoing jobs. In addition, your 
     legislation will increase port revenues in the United States.
       Again, we wish to commend you for your efforts and urge you 
     to introduce the ``All-American Cruise Act of 1999'' at the 
     earliest possible date. Please do not hesitate to call me if 
     I can be of any assistance in gaining support for your 
     efforts.
           Sincerely,
                                                Gordon W. Spencer,
                                             Legislative Director.


         American Maritime Officers, A National Union Celebrating 
           50 Years,
                                 Washington, DC, November 9, 1999.
     Hon. Duncan Hunter,
     U.S. House of Representatives, Washington, DC.
       Dear Congressman Hunter: We understand that you are 
     considering introducing legislation to address the inequities 
     facing the creation of a domestic U.S. flag, U.S. built 
     cruise industry. On behalf of the American Maritime Officers, 
     the largest seagoing officer's union in the United States, we 
     want to take this opportunity to commend you for your 
     efforts. This proposed legislation is critical if Americans 
     are to reenter a market currently being dominated by foreign 
     built and foreign-crewed ships.
       The United States is the largest cruise ship market in the 
     world and represents one of the largest growth markets. All 
     of the large oceangoing cruise ships serving the American 
     market are built and operated by foreign companies to avoid 
     U.S. tax law. This anomaly has created a market barrier to 
     U.S. companies which pay U.S. taxes.
       Tax parity must be provided if U.S. companies are to have 
     an opportunity to develop an American cruise industry. Your 
     legislation will provide tax parity in a number of very 
     critical ways including tax credits to U.S. builders of 
     cruise ships over 20,000 tons, accelerated depreciation for 
     ships build in U.S. shipyards, elimination of the current 
     $2,500 limit for the cost of conventions on cruise ships, and 
     exemption from U.S. corporate income tax for U.S. cruise 
     operators. Changes such as these are critical if Americans 
     are to enter a market now dominated by foreign companies that 
     pay no taxes.
       Again we wish to commend you for your efforts and urge you 
     to introduce the ``All-American Cruise Act of 1999'' at the 
     earliest possible date. Please do not hesitate to call me if 
     I can be of any assistance in gaining the support for your 
     effort.

                                           Charles T. Crangle,

                                               Executive Director,
          Congressional and Legislative Affairs American Maritime 
                                                         Officers.


         International Brotherhood of Boilermakers, Iron Ship 
           Builders, Blacksmiths, Forgers & Helpers,
                                                 November 8, 1999.
     Hon. Duncan Hunter,
     U.S. House of Representatives, Washington, DC.
       Dear Congressman Hunter: We understand that you are 
     considering introducing legislation to address the inequities 
     facing the creation of a domestic U.S. flag, U.S. built 
     cruise industry. We have reviewed the draft bill and on 
     behalf of the International Brotherhood of Boilermakers, Iron 
     Ship Builders, Blacksmiths, Forgers, and Helpers, we would 
     like to express our strong support for your effort.
       As you know the United States is the largest cruise ship 
     market in the world and represents one of the largest growth 
     markets. Yet all of the large oceangoing cruise ships serving 
     the American market are built and operated by foreign 
     companies to avoid U.S. tax law. This is a huge market--120 
     foreign-built cruise ships serve the American market today. 
     The number is expected to grow to 160 by 2003. Unless U.S. 
     tax laws are amended to allow the entry of American companies 
     into this market, these ships will continue to be built by 
     European shipyards and be owned and operated by foreign 
     companies. Your legislation will provide American companies 
     the needed tax parity with their foreign competitors and 
     create hundreds of thousands of highly skilled manufacturing 
     jobs in the United States. It is a given that European 
     builders of cruise ships receive numerous tax incentives and 
     other assistance from their governments to reduce the price 
     of their cruise ships. It is only fair that our shipyards and 
     our skilled workers be given the same breaks as those 
     provided to our competitors.
       Again we wish to commend you for your efforts and urge you 
     to introduce the ``All-American Cruise Act of 1999'' at the 
     earliest possible date. Please do not hesitate to call me if 
     I can be of any assistance in gaining the support for your 
     effort.
           Sincerely,
                                                   Ande M. Abbott,
                         Assistant to the International President.