[Congressional Record (Bound Edition), Volume 149 (2003), Part 14]
[Extensions of Remarks]
[Pages 19837-19838]
[From the U.S. Government Publishing Office, www.gpo.gov]




INTRODUCTION OF H.R._ (UNITED STATES NONCONTIGUOUS SHIPPING OPEN MARKET 
  ACT OF 2003), H.R._ (HAWAII SHIPPING OPEN MARKET ACT OF 2003), AND 
 H.R._ (HAWAII AGRICULTURE/LIVESTOCK SHIPPING OPEN MARKET ACT OF 2003)

                                 ______
                                 

                              HON. ED CASE

                               of hawaii

                    in the house of representatives

                        Thursday, July 24, 2003

  Mr. CASE. Mr. Speaker, today, I introduce three bills to end a 
century of closed market cargo shipping to, from and within my isolated 
home state of Hawaii, as well as the other noncontiguous locations of 
our country. In doing so, we will break the stranglehold on the 
economics and peoples of these exposed communities which results from 
just a few shipping companies controlling the lifeline of commerce upon 
which our communities absolutely depend.
  These bills all amend the Merchant Marine Act of 1920, also known as 
the Jones Act. That federal law mandates that all cargo shipping 
between U.S. ports occur exclusively on U.S., not foreign, flagged 
vessels. (A similar federal law of the same vintage, the Passenger 
Vessels Services Act, provides the same mandate for cruise line and 
other passenger transit; the same arguments as drive these three bills 
apply there, but that is another effort, already commenced through 
limited Federal exemptions.)
  The Jones Act was enacted in a protectionist era under the guise of 
preserving a strong national merchant marine. But today it is just an 
anachronism: most of the world's shipping is by way of an international 
merchant marine functioning in an open, competitive market. And those 
few U.S. flag cargo lines that remain have maneuvered the Jones Act to 
develop virtual monopolies over domestic cargo shipping to, from and 
within our most isolated and exposed locales: our island and offshore 
states, territories and possessions.
  My Hawaii is a classic example. Located almost 2,500 miles off the 
West Coast, we import well over 90 percent of our life necessities by 
ocean cargo. There are no doubt plenty of international cargo lines who 
could and would compete for a share of that market. Yet only two U.S. 
flag domestic cargo lines--Matson Navigation and CSX Lines (fka Sea-
Land)--operate a virtual duopoly over our lifeline.
  While they are nominally subject to Federal regulation, the fact of 
the matter is that cargo prices have gone in only one direction--up, 
and fast--and it is indisputable that there is no downward market 
pressure which would otherwise result from meaningful competition. 
These accelerating cargo prices are not absorbed by the shipping lines, 
but passed through all the way down the chain, to the transporters, 
wholesalers, retailers, small businesses, mom-n-pops, and ultimately 
consumers, of all of the elementals of life, from food, to medical 
supplies, clothes, housing and virtually all other goods. The result is 
a crippling drag on an already-challenged economy and the very quality 
of life in Hawaii.

[[Page 19838]]

  The broadest, deepest effects of the Jones Act on Hawaii result from 
its impact on westbound imports. But Hawaii is an export location as 
well, in key products such as agriculture and livestock. Here the Jones 
Act also effectively stifles meaningful competition in getting those 
products to their primary markets on the U.S. Mainland. Because the 
producers of these products and all that rely for their own livelihood 
on their successful export have to eat inflated shipping costs, these 
export industries, which any economist knows are the ultimate key to 
any economy's prosperity, are also crippled.
  Let's take a concrete example: Hawaii's once-prosperous ranching/
cattle industry, which is so key to the economic health and the very 
lifestyle of so much of the rural Second District which I proudly 
represent. That industry depends on getting its product, young cattle, 
to West Coast pens and transportation hubs in a cost-efficient manner.
  There are foreign cargo carriers that specialize, through custom 
cattle ships and overall sensitivity and adjustment to rancher 
timetables and needs, in such transport, but the Jones Act outright 
excludes them from the Hawaii-Mainland market. As a result, Hawaii's 
ranchers are reduced to two crippling, cost magnifying options.
  The first is to ship their cargo by foreign carriers to Canada, where 
they have to go through a myriad of bureaucratic, cost-magnifying 
gyrations to get their product eventually to their U.S. markets. The 
second is to beg for the goodwill of the domestic carriers, to whom 
this is simply a hindrance rather than a major commitment, to ship 
directly to the West Coast.
  And it shows: most of the cattle are first shipped from Hawaii's 
Neighbor Islands, where the bulk of the cattle industry is located, to 
Oahu, in small ``cow-tainers'', where they sit for days in Honolulu 
Harbor awaiting the return to the Mainland of one of the massive cargo 
ships designed and utilized for quite another purpose. The result 
(besides associated higher costs): in-harbor cattle waste disposal 
challenges; higher in-transit cattle mortality; lower-weight cattle 
delivery to market. That's what happens when you try to squeeze a 
square peg into a round hole.
  These three bills say: enough is enough. The first, H.R. --, the 
United States Noncontiguous Shipping Open Market Act of 2003, exempts 
all noncontiguous U.S. locations, including Hawaii, from the Jones Act. 
(Frankly I question whether we shouldn't outright repeal the Jones Act, 
but I leave it to my colleagues from the contiguous U.S. to evaluate 
that option; the consequences are especially acute in the noncontiguous 
U.S. and that is my focus.) The second, H.R. --, the Hawaii Shipping 
Open Market Act of 2003, exempts Hawaii. And the third, H.R. --, the 
Hawaii Agriculture/Livestock Shipping Open Market Act of 2003, exempts 
Hawaii agriculture and livestock. Essentially, the bills are intended 
to lay out the options from broad to narrow; we can get into the issue 
at any level and work our way up or down.
  Let me address directly some arguments sometimes offered up by the 
domestic shippers in defense of the Jones Act: that it contains 
important labor and environmental protections that would be lost upon 
repeal. Of course, the exact terms of repeal are up to this Congress 
and administration, and all three of these bills propose to retain 
these important protections. Specifically, these bills provide that all 
foreign shippers operating under Jones Act exemptions must comply with 
the same labor, environmental, tax, documentation, U.S. locus and other 
laws as are applicable to non-U.S. flag ships and shippers transiting 
U.S. waters today.
  Mr. Speaker, these long-overdue bills are of the utmost importance to 
the localities which have long borne the brunt of the Jones Act. 
Sometimes it is difficult to pierce the veil of longstanding custom and 
understanding to see what should instead be, but clearly the time for 
these measures is overdue. I urge their passage.

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