Cargo Preference Requirements: Objectives Not Met When Applied to Food
Aid Programs (Testimony, 09/29/94, GAO/T-GGD-94-212).

"Cargo preference" is the reservation of government-financed or
-sponsored oceangoing cargos specifically for U.S.-flag ships. Due to
cargo preference requirements, the government has spent an additional
$600 million during the past three years to transport food aid on
U.S.-flag ships rather than on lower-cost foreign flag ships. The
objective of the cargo preference is to help maintain a U.S. merchant
marine (1) to serve as a naval and military auxiliary in times of war or
national emergency and (2) to carry a substantial portion of U.S.
domestic and foreign waterborne commerce. However, the U.S.-flag ships
carrying the majority of the food aid tonnage are not viewed as
militarily useful by the Defense Department. In addition, all domestic
waterborne commerce, i.e., cargos shipped between U.S. ports, are
required to be carried by U.S.-flag ships. As for foreign commerce,
U.S.-flag ships now carry only about four percent of all cargo shipped
into and out of the United States, and food aid cargos account for less
than one-fourth of that four percent. GAO also found that cargo
preference requirements harm the operations of the food aid programs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-94-212
     TITLE:  Cargo Preference Requirements: Objectives Not Met When 
             Applied to Food Aid Programs
      DATE:  09/29/94
   SUBJECT:  Federal aid to foreign countries
             Food relief programs
             Shipping industry
             Marine transportation operations
             Freight transportation operations
             Cost effectiveness analysis
             Armed forces reserves
             Defense contingency planning
             Transportation costs
             Cargo preference laws
IDENTIFIER:  Ready Reserve Fleet
             Ready Reserve Force
             National Defense Reserve Fleet
             Sri Lanka
             Tunisia
             USDA Food for Progress Program
             
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