[Congressional Record (Bound Edition), Volume 145 (1999), Part 9]
[Extensions of Remarks]
[Pages 12569-12570]
[From the U.S. Government Publishing Office, www.gpo.gov]



                      INTRODUCTION OF LEGISLATION

                                 ______
                                 

                            HON. JIM McCRERY

                              of louisiana

                    in the house of representatives

                        Thursday, June 10, 1999

  Mr. McCRERY. Mr. Speaker, I rise today to announce the introduction 
of the United States-Flag Merchant Marine Revitalization Act of 1999. 
This bipartisan legislative initiative, which I am introducing along 
with Congressman Herger of California, Congressman Jefferson of 
Louisiana, and Congressman Abercrombie of Hawaii, is critically 
important to the modernization and growth of the United States maritime 
industry, our nation's fourth arm of defense.
  History has repeatedly proven--and Congress has repeatedly affirmed--
that the United States needs a strong, active, competitive and 
militarily-useful United States-flag commercial maritime industry to 
protect and strengthen our nation's economic and military security. In 
times of war or other emergency, as vividly demonstrated during the 
Persian Gulf War, United States-flag commercial vessels and their 
United States citizen crews respond quickly, effectively and 
efficiently to our nation's call, providing the sealift sustainment 
capability necessary to support America's armed forces overseas.
  In 1992, General Colin Powell, then-Chairman of the Joint Chiefs of 
Staff, told the graduating class of the United States Merchant Marine 
Academy at Kings Point that:

       Since I became Chairman of the Joint Chiefs of Staff, I 
     have come to appreciate firsthand why our merchant marine has 
     long been called the nation's fourth arm of defense . . . The 
     war in the Persian Gulf is over but the merchant marine's 
     contribution to our nation continues. In war, merchant seamen 
     have long served with valor and distinction by carrying 
     critical supplies and equipment to our troops in far away 
     lands. In peacetime, the merchant marine has another vital 
     role-contributing to our economic security by linking us to 
     our trading partners around the world and providing the 
     foundation for our ocean commerce.

  I am convinced that the best way to ensure that our nation continues 
to have the militarily-useful commercial vessels and trained and loyal 
United States citizen crews we need to support our interests around the 
world is to enact those programs and policies that will better enable 
our maritime industry to flourish in peacetime. I am equally convinced 
that one important way to do so is to provide a tax environment for our 
maritime industry which more closely reflects the favorable tax 
treatment other maritime nations provide to their own merchant fleets. 
The legislation my colleagues and I are introducing today will in fact 
strengthen the competitiveness of United States-flag vessel operations 
by providing a greater opportunity for American vessel owners to 
accumulate the private capital necessary to build modern, efficient and 
economical commercial vessels in American shipyards.
  This bill amends the existing merchant marine Capital Construction 
Fund (CCF) program contained in section 607 of the Merchant Marine Act, 
1970 and section 7518 of the Internal Revenue Code of 1986. The 
existing program allows an American citizen to deposit the earnings 
from various United States built, United States-flag vessel operations 
into a tax-deferred Capital Construction Fund to be used exclusively in 
conjunction with an approved United States shipbuilding program. The 
deferred tax is recouped by the Treasury through reduced depreciation 
because the tax basis of vessels built with CCF monies is reduced on a 
dollar-for-dollar basis.
  In order to better reflect the significant tax-related disadvantages 
American vessel owners face as compared to their foreign competition, 
and to continue to ensure our nation has the most militarily useful and 
economically viable domestic maritime industry, this legislation would 
amend the existing CCF program to expand the type of earnings eligible 
to be deposited into a CCF and the purposes for which a qualified 
withdrawal can be made. Significantly, these amendments do not in any 
fashion alter or weaken the existing requirement that vessels build 
with CCF monies must be built in the United States and operate under 
the laws of the United States with United States citizens crews.
  Specially, this legislation amends the CCF program to:
  Allow earnings from United States-flag foreign built vessels to be 
deposited into a CCF in order to increase the amount of capital 
available to build vessels in an American shipyard;
  Allow CCF monies to be withdrawn to build, in an American shipyard, a 
vessel for operation under the United States-flag in the oceangoing 
domestic trades in order to further enhance the modernization and 
growth of this important segment of the maritime industry;
  Allow CCF monies to be withdrawn to acquire United States-built 
containers or trailers for use on a United States-flag vessel in order 
to better ensure that cargo moves on American vessels in a safe and 
efficient fashion;
  Allow CCF monies to be withdrawn in conjunction with the lease of a 
United States-built vessel, trailer or container in order to better 
reflect the realities of current ship financing arrangements;

[[Page 12570]]

  Allow a vessel owner to deposit into a CCF the duty arising from 
foreign ship repairs to ensure that the duty is used to the benefit of 
United States shipyards; and
  Remove the CCF as an alternative minimum tax adjustment item so that 
the full intended benefits of the program--the accumulation of private 
capital for the construction of commercial vessels in United States 
shipyards--are realized.
  The United States-Flag Merchant Marine Revitalization Act of 1999 is 
critically important to the modernization and growth of the United 
States-flag merchant marine and should be supported and enacted. It 
will generate significant commercial vessel construction in United 
States shipyards and help American flag vessel operators compete more 
equally with their foreign flag vessel counterparts.

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