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Maritime Policy (1)
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Maritime Policy (1)
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Records of the Office of the Chief of Staff (Reagan Administration)
James Cicconi's Subject Files
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THE WHITE HOUSE
WASHINGTON
November 10, 1983
MEMORANDUM FOR JIM CICCONI
FROM:
Douglas A. Riggs
AK
SUBJECT: Action the Administration could undertake to
foster support in the maritime industry
The attached memorandum was prepared by Robert
Blackwell. Mr. Blackwell was the Assistant Secretary
of Commerce for Maritime Affairs from 1972 to 1979
(Nixon and Ford Administrations.) He is presently the
partner-in-charge of the Washington D.C. office of
Bogle and Gates, a Seattle law firm with approximately
140 lawyers. His practice includes representation of
steamship operators, maritime unions and possibly some
shipyards.
I was a partner of Bogle and Gates until my resignation
to join the White House staff. (In fact, I opened the
Anchorage office for Bogle and Gates in 1980 and served
as partner-in-charge.) I did not directly represent
maritime interests, and frankly had and continue to
have limited knowledge of the identity of Mr.
Blackwell's clients other than I know he has a maritime
practice.
I asked Mr. Blackwell to prepare this memorandum. I
believe him to be very knowledgeable of the issues and
players, and very politically savy. He is also very
discreet. He does not want any publicity.
The shipyards, steamship operators and most seagoing
unions perceive the President as having reneged on his campaign
promises to support the American Merchant Marine.
The following suggestions are offered to change those
perceptions. They would have a nominal line item effect on the
budget and their adoption would bring the maritime industry
much closer to the President. Their adoption would not
guarantee, but would facilitate support from the shipyards and
certain maritime unions in the 1984 election.
1.
Authorize Title XI of The Merchant Marine Act,
1936 (the Act) To Be Used To Finance Foreign Construction Of
U.S.-Flag Ocean Going Vessels Provided That The Applicant Incurs
Similar Dollar Commitments To Build Non-Subsidized Ocean Going
Vessels In The United States.
Legislation not required; could be accomplished by
Maritime Administration rule. No line item budget impact, but
would increase U.S. guaranteed obligations. Substantial
increase in U.S.-fleet and seagoing jobs. Modest increase in
U.S. shipyard order book and shipbuilding jobs. The mix of
vessels produced would be capital cost competitive as higher
U.S. construction costs are offset by more favorable financing
of foreign built vessels under Title XI.
U.S. shipbuilding prices are three times those of
shipyards in the Far East. Thus, three ships would be built
abroad for one in the U.S. The U.S. shipyards probably will
propose a 1-1 ratio and it might be possible to negotiate and
obtain their support for two foreign building for one in the
U.S.
2. Increase U.S.-Flag Share Of Government Preference
Cargo From Fifty To Seventy-Five Percent.
Section 901 (b) of the Act requires that at least fifty
percent of government generated civilian cargo move on U.S.
vessels. The government agencies that ship under these programs
have read the words "at least" out of the Act and concluded that
fifty percent U.S. carriage is a ceiling. Raising the
requirement to seventy-five percent, which can be accomplished
by rule, will create several million additional tons of much
needed cargo for U.S. dry bulk vessels, tankers and liners.
With the U.S.-fleet shrinking rapidly and with over 60
vessels laid up for lack of employment this program would
provide an immediate increase in U.S. shipping activity and
jobs. Such action would demonstrate that the President
recognizes the problems of the maritime industry and the need
to support it.
In most instances it will cost more to ship these
incremental tonnages on U.S. rather than foreign ships. The
annual increased cost is approximately $78 million. The
Department of Agriculture, a major shipper, will probably
contend that the resulting increased shipping costs will
diminish farm exports and injure farmers. For that reason the
additional costs associated with this program should be
appropriated and authorized as "shipping costs" and so
budgeted, thus insuring that such additional costs will not
reduce the amount of commodities exported.
- 2 -
3. Promptly Terminate The DOT Rulemaking Which Would
Allow Tankers Built With Subsidy To Repay That Subsidy And
Enter The Domestic Trade.
The merits of this proposal are still being debated.
What is clear however is that DOT has significantly
over-estimated the benefits of subsidy payback to the
government; that if enacted the rule will force 35 to 50
additional vessels from employment with the resulting loss of
2,500 seagoing jobs; that the shipyards will be deprived of
building replacement tanker vessels for the domestic trade for
at least 10 years and that every U.S. shipyard, every seagoing
union, save one; and every affected operator, save two,
vehemently opposes the rule.
It would be extremely difficult for the President to
re-establish his former rapport with the maritime industry and
implement a credible series of maritime initiatives if the
subsidy repayment rule is adopted.
4. Withdraw the Administration's Legislative
Proposal To Eliminate The Fifty Percent Ad Valorem Tax On
Foreign Repairs.
The Administration proposed the above elimination of
the tax on foreign repairs of U.S.-flag vessels to enhance the
competitiveness of our merchant marine. However, the proposal
has been effectively stymied by the combined efforts of the
shipyards and certain maritime unions. It is unrealistic to
believe this legislation can pass. I suggest it be immediately
- 3 -
withdrawn with an appropriate announcement that on further study
it appears that eliminating the tax will further impair our
shipyard mobilization base and lose jobs for American shipyard
workers.
5. Signal A Change Of Policy On Bilateral Shipping
Arrangements.
This and previous administrations have refused to adopt
the UNCTAD Liner Code and have indicated bilateral shipping
agreements with other nations will only be considered as
measures of last resort.
Many U.S. operators are concerned that ratification of
the UNCTAD Liner Code will preclude them from participation in
the trades between other states or that such participation will
be severely restricted. Yet, the trades of the U.S. are open
to all fleets on an unrestrictive basis. Given the cost and
regulatory disabilities that American owners operate under,
considering that tonnage squeezed from other trades might be
dumped into the American trades and recognizing that American
operators cannot effectively combat the pernicious competitive
practices of some of their foreign-flag competition because the
FMC, the regulatory agency responsible for regulating our liner
trades has such limited power and authority, operators and
seagoing unions are concerned about the viability of American
shipping services in our own trades.
- 4 -
These concerns are real and deserve examination on the
highest government levels. It would encourage the maritime
industry if an appropriate official of the Administration stated
an intention to re-examine this entire problem with a view
toward better protecting U.S. maritime interests. The
Administration might also desire to open discreet discussions
with the Republic of Korea and the Government of the Philippines
who have both expressed a desire to enter bi-lateral shipping
arrangements with the United States.
6. At Least Ten Auxillary Vessels Currently Operated
By The U.S. Navy Should Be Immediately Made Available For
Civilian Union Manning.
U.S. seagoing jobs have been declining for at least a
decade and will continue to do so at an accelerated rate unless
new job opportunities are quickly created. The jobs on the
above Navy vessels are desperately needed by all maritime
labor, and should be equitably divided among the unions.
Although such action must be approved pursuant to
certain procurement regulations, it is generally recognized
that, in the past, those conducting the reviews proceeded under
economic assumptions that were unrealistic and unfair and made
union manning of Navy vessels virtually impossible. If doubt
exists regarding the efficacy of union manning, the ten vessels
could be used as a test bed over a reasonably fixed period to
determine conclusively the economic value of union manning.
- 5 -
Acceptance and implementation of this proposal would be
obviously met with considerable favor by seagoing labor and
their union leadership.
7. The Capital Construction Fund (CCF) Should Be
Available For Foreign Construction.
The Maritime Administration administers the CCF in
which approximately $700 million has been deposited for new
vessel construction in the U.S. With construction subsidy no
longer available these funds cannot be used for U.S.
construction of foreign trade vessels and remain unproductive.
It has been advocated that such funds be used for the
construction of foreign built vessels to be operated under
U.S.-flag. The shipyards and some unions have successfully
opposed such legislation. However, if the instant proposal is
coupled with Proposal 1 above, operators with CCF funds are
likely to use such funds for building abroad as well as in the
U.S. under whatever foreign/U.S. building formula is agreed
upon; thus giving U.S. shipyards some of the benefits of CCF
from which they are now totally deprived and an economic
incentive to support both proposals.
- 6 -
THE WHITE HOUSE
WASHINGTON
October 14, 1983
MEMORANDUM FOR FAITH WHITTLESEY
THROUGH: JACK COURTEMANCHE
FROM:
Douglas A. Riggs
AL
10:Jim Jim CICCONI
SUBJECT: Maritime Policy
I propose you forward the attached memorandum to
Jack Svahn and Jim Baker as a means of pushing for a
resolution on what this Administration is prepared to
do for the maritime industry.
7.
"Revitalize our domestic water transportation
system. "
8.
"Reduce the severe regulatory environment that
inhibits American competitiveness.' "
According to the maritime trade unions and the
shipbuilding industry, the Administration has:
1. offered no support for cargoe promotion programs;
2.
has begun to phase out of operating subsidies;
3. has cut and eliminated all shipbuilding subsidies
without presenting a viable replacement program;
and
4. placed an unnecessary cap on Title IV loan
guarantees.
Moreover, according to the maritime trade unions and
the maritime industry there are 531 U.S. Merchant Ships
in the active fleet as of January 1981 in contrast to
459 as of June 1983. In January 1981 there were 16
U.S. commercial shipyards in contrast to 11 in June
1983. The number of ship-board jobs in June 1983 had
decreased to 15,506 from 22,620 in January 1981.
Further, the number of commercial vessels on order or
under construction in U.S. yards in January 1981 was 46
in contrast to 13 as of June 1983.
The proposed maritime policy, as envisioned by the
maritime industry and the maritime trade unions, is set
forth in attachments A and B, respectively, to this
memorandum.
At the conclusion of the meeting, it was agreed that
the maritime unions have been friends to the
Administration and other important maritime unions
would like to be our friends. However, the
continuation of a relationship requires this
Administration to carefully review the 1980 promises
and act where we can. Time is of the essence in terms
of articulating a policy that will be helpful in 1984.
I suggest we reconvene in four weeks for the purpose of
reviewing the Administration's posture on this matter.
ATTACHMENT A
A specific
naval-maritime
program must be
developed that will:
1. Provide a unified direction for
United States. We have tradition-
all government programs affecting
ally believed in free trade and free-
maritime interests of the United
dom of the seas. Today, however,
States. We must insure that there
we are faced with a network of
is active cooperation between the
foreign governmental preferences
Navy and the Merchant Marine
and priorities designed to advance
and the governmental departments
the interests of foreign shipping at
responsible for each. We must see
the expense of our own. It is much
that long-range building programs
the same as a country which sub-
for naval and merchant ships are
sidizes its steel industry to enable
established and carried out.
it to dump steel in the U.S. market
2. Insure that our vital shipbuild-
at prices below actual production
ing mobilization base is preserved.
costs. That's not free trade. Thus,
It is issential that sufficient naval
countries will have to be told they
and commercial shipbuilding be
can't have it both ways-protec-
mudertaken to maintain the irre-
tion for their ships and competition
placeable shipbuilding mobiliza-
for everybody else. As President, I
tion base. Without this mucleus of
intend to make that fact very clear
trained workers and established
to a number of people who appar-
production facilities, we can never
ently have not heard much from
hope to meet any future challenge
the current administration on this
to our security.
point.
3. Improve utilization of our mili-
In addition, we must encourage
tary resources by increasing com-
and support our maritime industry
mercial participation in limited
by negotiating bilateral agree-
functions. The Navy today is fac-
ments with some countries now -
ing a critical shortage of trained
such as Brazil and Argentina. A
personnel. With the commercial
major goal of my administration
industry assuming increased res-
will be to assure that American
ponsibility for many auxiliary
functions, substantial cost saving
can be achieved and a large re-
serve of manpower can be released
to provide crews for a growing
naval fleet.
4. Recognize the challenges cre-
ated by cargo policies of other na-
tions. The cargo policies of other
nations hold a challenge to the
"A"
flag ships carry an equitable por-
tion. Again we are paying a high
tion of our trade consistent with
price for the absence of any CO-
the legitimate aspirations and po!-
herent national policy.
icies of our trading partners.
7. Preservation of coastal trade.
5. Restore the cost competitive-
The principle that a nation's own
ness of U.S.-flag operators in the
ships should carry its coastal trade,
international marketplace. It has
presently embodied in the Jones
been American policy since 1936
Act, has been part of this country's
for the additional costs of building
maritime policies since the early
and operating U.S.-flag ships to be
days of the Nation. I can assure
borne by a system of subsidies to
you that a Reagan Administration
help insure the competitive
of
will not support legislation that
American importers and ex:
would jeopardize this long-stand-
But our parity system faile
ing policy or the jobs dependent
mid-1970's because most
upon it.
governments moved to
8. Reduce the severe regulatory
their own vital maritime
environment that inhibits Ameri-
after the shipping collapse
can competitiveness. As foreign
mid-1970's. We must now
competition on the maritime scene
rective action to make ce
has increased, so have the opera-
merchant fleet and our s!
tional and regulatory restrictions
ing industry survive and
on U.S. shipping and shipbuilding.
6. Revitalize our domes
Many of these restrictions increase
transportation system. T¹
d
costs and, in some cases, simply
water transportation SVS
prevent our ships from competing
vides an economic and (
with foreign ships. There is rarely,
ficient method of me
if ever, any commensurate be nefit
goods and commodities
from these restrictions. According-
tion between all parts of
ly, we will carefully and rapidly
try. It also provides a vi-
in
review the effect of these restric-
our international trading
by
tions and sponsor appropriate ac-
tying the ports of all four
tions.
which includes our Great
to
In carrying out these expansive
the producing heartland
Na-
programs, a coordinated effort will
be undertaken to create new jobs
for American scamen, shipyard
workers, and the thousands of
workers in related industries.
These maritime industries which
are vital to our national well being,
in the past have had an outstand-
ing record of providing not only
employment but the training to
enable minorities and the disad-
vantaged to obtain continued ad-
vancement.
ATTACHMENT B
MARITIME POLICY
The United States is a leading world power and the major force behind
the promotion of democracy throughout the world. This country is also
the world's largest trading nation. Bordered on the east by the Atlantic
Ocean and on the west by the Pacific Ocean, shipping traffic to and from
the United States has flourished to accommodate growing trade with
Europe and the Far East. As a consequence of America's economic and
political stature in the world, as well as her geographical location, it has
long been recognized that a strong and viable merchant fleet is fundamental
to this nation's security and econoimic well-being.
Unfortunately. at the moment, the existence of a strong and well-
balanced merchant fleet befitting of America's world position is far from
reality. In fact, over the past decade our merchant fleet has greatly
deteriorated.
When this body last met for the biennial convention, we had great
hope that the even-then declining position of the U.S.-flag fiee: ould
be reversed by the newly elected President's pledge to revitalize America's
maritime and shipbuilding industries.
Instead we have seen an increasingly incoherent and piecemeal ap-
proach to maritime policy due in part to the movement of the Maritime
Administration from the Department of Commerce to the Department of
Transportation. This transfer of functions to the Transportation Depart-
ment has precipitated a dramatic change in attitude by the Maritime
Administration, which was once the prime protector and outspoken
advocate of the maritime industry. As part of the Transporta De-
partment, the Maritime Administration no longer plays the mie it once
did since maritime concerns are increasingly eclipsed by of transpor-
tation issues.
Never before has America's merchant fleet been so important. Yet
while our fleet is shrinking, and our shipyards close for lack
the
fleets and shipbuilding industries of the nondemocratic
are
ex-
panding at an alarming pace. The Soviet Union. for exam:- = ==
made
remarkable advances into international shipping. Its fleet
-creased
more than five fold since the early 1960's, placing it we! ---- of the
United States.
This set of circumstances creates an urgent need for a --- compre-
hen. ive and positive U.S. maritime policy, shaped to the --d. of this
country's economic and political position in the world.
What then, should a comprehensive maritime policy come of?
A maritime program which will ensure: a) the ma mance and
retention of an adequate. efficient and modern flee: === to the
country's national security needs; b) a pool of well-tre men and
women that can be called upon to man commercial or assist
1
the armed services in time of war or national emergency: and c) a
viable commercial shipbuilding industry.
Recognition that this nation cannot maintain a fleet without a
minimum of subsidy in a world where many nations heavily subsidize
their merchant-fleet operations and shipbuilding industries. Although
we recognize that current subsidy programs may not be the final
answer to the preservation of a U.S. fleet. until new mechanisms
are put in place current support programs should not be eliminated.
The truth of the matter is that nearly 50 percent of the U.S. fleet
constructed in this country since 1957 was done with subsidy. The
premature liquidation of subsidies since 1981 has meant that not one
commercial order has been placed in U.S. shipyards this year,
threatening the continued existence of several U.S. shipyards. the
loss of U.S. shipyard jobs and the continued health of many allied
industries.
Recognition by the Administration that the Jones Act is a funda-
mental defense statute which has served as the backbone for the
U.S. domestic fleet. The Administration must not only recognize the
importance of the Jones Act. but must also bear in mind the millions
of dollars that have been invested by domestic operators in reliance
on its original principles and future existence. A maritime policy
should also undertake to close existing loopholes in the Jones Act
and expand its jurisdictional limits to reflect changing international
attitudes.
A well-balanced cargo policy. No merchant fleet can exist without
assured cargoes to carry, thus the centerpiece of a truly effective
maritime program must reserve a portion of U.S. bulk cargoes to
U.S.-flag vessels. A comprehensive cargo policy must ensure that
the Administration continues to monitor and enforce Federal agency
compliance with existing cargo preference laws.
Cargo preference laws should also be expanded in all areas. This
would include entering into bilateral shipping agreements with Amer-
ica's trading partners so that the U.S. fleet can obtain an equitable
share of cargo and ratification of the United Nations Conference on
Trade and Development Code of Conduct for Liner Conferences
(UNCTAD) since failure to ratify will reduce U.S.-flag access to
many trade routes.
Undertaking a program to strengthen U.S.-flag shipping on the
Great Lakes and other inland waterways. America's ports and
navigable waterways play a crucial role in the economic well-being
of the country but a comprehensive approach to their operation and
maintenance has yet to be formulated. Federal policies now in
existence continue to disadvantage the private dredge fleet. There-
fore. specific policies must be set forth to take the dredge and tugboat
fleets out of the Federal realm and place them in the hands of the
private sector.
2
Renewed efforts to encourage the expansion and growth of the
U.S. fishing and canning industries. Despite enactment of legislation
extending the U.S. fishing zone and prof. ting foreign fishing fleets
from operating in U.S. waters, the U.S still imports nearly 69 percent
of all fish consumed in this country.
De elopment of a viable oceans policy. Legislation has been
enacted requiring the use of U.S.-flag, U.S.-built and U.S.-crewed
vessels in new ocean ventures such 25 ocean mining and ocean
thermal energy conversion. These ventures. operating at full capacity,
will provide thousands of new job opportunities in maritime and
related industries. The United States must continue to support
programs that guarantee full particip by American industry and
labor in the development of new marine technology.
We are adamant about the critical imp nance of our merchant fleet.
As the "fourth arm of defense," the US merchant marine plays a key
role in assisting the U.S. military in ti== i war or national emergency
and U.S. shipbuilding capability is a le national defense asset. Fur-
thermore, the maritime and shipbul industries constitute major
industrial sectors of the U.S. economy. -tich generate billions of dollars
in the Gross National Product a year 202 employ thousands of workers
throughout the United States. Therefore R. it
RESOLVED: That the 1983 Biennial Convention of the Maritime Trades
Department. AFL-CIO, affirms its comment to a strong. effective and
efficient U.S.-built, operated and crewed merchant fleet: and be it further
RESOLVED: That the Maritime Trades Department, AFL-CIO, will
continue to oppose any governmental amons which in any way dilute or
eliminate currently established maritime programs: and be it further
RESOLVED: That the Maritime Trades Department shall work to
ensure the immediate development and adeption of a comprehensive,
long-range maritime program designe- to promote and encourage all
segments of the maritime and shipbuding industries; and be it further
RESOLVED: That upon adoption of this resolution, it be submitted to
the 15th Constitutional Convention of the AFL-CIO for support and
action.
Resolution #2
KOREAN AIRLINE TRAGEDY
The recent tragic loss of life resulting 50m the unprovoked, brutal
Soviet response to an accidental violation of airpace, vividly illustrates
the frailty of the international found_tons of civilized behavior upon
which world peace and security rest. THE enton use of destructive force
3
THE WHITE HOUSE
WASHINGTON
October 14, 1983
MEMORANDUM FOR FAITH WHITTLESEY
THROUGH: JACK COURTEMANCHE
To:Jim C.CONi
FROM:
Douglas A. Riggs DAL
SUBJECT: Proposed letter from President Reagan to
Howard Baker, Majority Leader of the Senate
concerning the President's views on
legislation to amend the Hobbs Act.
Dear Senator Baker:
As means of resolving any ambiguity that may exist as
to my position concerning any proposed legislation to
amend the Hobbs Act in such a way as to classify picket
line violence as extortion and a federal crime, I would
like to reaffirm my position that I do not favor such
legislation. I believe that picket line violence can
be adequately prosecuted within the context of the
criminal statutes of municipal and state governments.
Sincerely,
THE WHITE HOUSE
WASHINGTON
October 14, 1933
MEMORNADUM FOR FAITH WHITTLESEY
TRHOUGH: JACK COURTEMANCHE
TO Jim CIOCON,
FROM:
Douglas A. Riggs
DAL-
SUBJECT: Status of the ICC Appointments
1. The ICC has seven (7) members. At the present time,
four members are confirmed, to wit: Chairman Taylor,
Messrs. Sterrett and Andre and Ms. Gradison. Their
terms expire December 1983, December 1987, December 1987
and December 1988, respectively.
2. The White House has forwarded to the Senate, for
confirmation, the names of Paul Lamboli and Jane Holt.
Lamboli's name was submitted in December 1982 for 3 position
which term expires in December 1985. Ms. Holt's name
was submitted in April 1983 for a position which term
expires in December 1985. The Senate has not scheduled
hearings on these nominations. (It appears that Maboli,
a lawyer from Nevada, has the support of Senator Laxalt
and the Teamsters. Holt, a consultant and who had prior
experience in the Department of Transportation and the
trucking trade association, appears to have yalvanizei
some resistance from the Teamsters.)
3. There has been substantial effort to identify a candidate
for the remaining vacancy. This vacancy is for a position
which term expires in December 1985. At the present time,
there are no candidates who either have the support of
the White House or who are prepared to accept the position.
(A candidate who is under consideration has informed the
White House personnel office that he cannot accept the
position. However, he may reconsider.)
4. Lamboli and Holt's nominations are apparently not being
considered by the Senate because interested parties,
including the Teamsters, have asked that the confirmation
process not proceed until the nominee for the third
vacancy is identified.
5. Chairman Taylor was sponsored by Senator Laxalt. As
indicated, his term expires in December 1983.
THE WHITE HOUSE
WASHINGTON
October 17, 1983
MEMORANDUM FOR FAITH WHITTLESEY
THROUGH: JACK COURTEMANCHE
TO Jim COCCON.
FROM:
Douglas A. Riggs DAK
SUBJECT: Status of NLRB Vacancy
There is presently a vacancy on the NLRB occassioned
by the expiration of Mr. Jenkins' term. White House
Presidential Personnel is presently canvasing for a
candidate. All interested parties, including the
Teamsters, are being consulted in the identification
and selection of a candidate.
THE WHITE HOUSE
WASHINGTON
January 5, 1984
To: Jim Cicconi
From: Elaine Chao
Re: Maritime policy
For your meeting with Jack
Svahn tomorrow.
THE WHITE HOUSE
WASHINGTON
January 5, 1984
MEMORANDUM FOR JOHN A. SVAHN
FROM:
ELAINE L. CHAO
RE:
Maritime policy
Since late November, we have met with a number of
representatives from the U.S. shipping industry and listened to
their concerns. What emerges clearly from these meetings is the
sad state of our merchant fleet and the inevitable demise that
will result if no major action occurs.
This suggests several possibilities for policy development.
First, the administration can continue the status quo, making
changes on the margin. This will allow small comparative
advantages and the "market" to encourage some profit and
discourage some loss. Given today's and tomorrow's likely
pressures, this course will probably not be sufficient to
rejuvenate both the merchant marine and the shipbuilding
industry.
Second, the administration could mount a major effort to
support all sectors of the shipping industry through further
government subsidies and advantages. This can be extremely costy
and will not alter the structural realities which have put the
maritime industry in its current position.
Third, the industries can be encouraged to take a hard,
critical self-examination of their strengths and weakness, the
challenges as well as opportunities. Given the large and diverse
number of people directly involved in this industry, this may not
be very easy. However, a possibility could be the establishment
of an industry/government maritime commission.
In the final analysis, any policy decision must consider the
goals of the American merchant fleet, and the balance between the
interests of national security versus economic efficiency. A
determination must also be made defining national security
requirements and whether these requirements can be met by other
ways such as through utilization of the U.S. beneficially
controlled fleet. Past maritime policy have assumed that
different sectors of the industry could be helped by the same
medicine. Future policies should consider which sectors will be
the potential beneficiaries. Finally, all these policies must be
evaluated with their accompanying costs. In light of the
numerous interest groups within and without government, greater
participation by these different groups would insure greater
success in developing and implementing any policy decisions.
attachments: 1980 Campaign Promises on U.S. Maritime Policy
Administration Announcements on Maritime Policy
1980 Campaign Promises on U.S. Maritime policy*
1. Provide a unified direction for all government programs
affecting maritime interests of the United States.
Status:
MARAD was moved from DOC to DOT, however, interagency
coordination is deemed by the industry to be worse than ever:
State, DOD, Agriculture, Justice and others are perceived to
be frustrating efforts to strengthen U.S. fleet (ie. civilian
manning, Alaskan oil exports.)
2. Insure that our vital shipbuilding mobilization base is
preserved.
Status:
Attainment of an active balanced U.S. Navy fleet of 600 ships
by 1989 is a central objective of this administration.
Contracts for 30 Navy ships were placed with U.S.
shipbuilders during 1982, and at year-end, a total of 105
vessels were under construction at 12 of the 27 private yards
in the shipbuilding mobilization base. These Navy contracts
constitute more than 75% percent of the total U.S. orderbook.
However, due to depressed world shipping conditions and
uncertain domestic policies such as no new CDS payments and
ceiling limiting Title XI guarantees, only 3 new commercial
orders were placed. Of these, two were offshore drilling
rigs. U.S. shipyards are barely surviving.
3. Improve utilization of our militiary resources by increasing
commercial participation in limited functions.
Status:
This issue is currently under controversy. Some union
leaders and companies have charged publicly that the Navy has
obstructed the policy and used questionable bidding practices
in awarding contracts. Navy officials claim that unions are
unhappy because rival unions is consistently winning work by
offering the Navy significant concessions that cut some
categories of labor costs in half. Further, the Navy
asserts, since 1981, more than 20 privately operated vessels
have joined the support fleet as the Navy added new cargo
ships in the Reagan defense buildup.
*
(Based on statements made by Candidate Ronald Reagan in
Washington, D.C. on September 15, 1980 and in St. Louis, Mo
,
on October 9, 1980, outlining his program for the development
of an effective maritime strategy.)
4.
Recognize the challenges created by cargo policies of other
nations. A major goal of the United States must be to insure
that American flag ships carry an equitable portion of our
trade consistent with the legitimate aspirations and policies
of our trading partners.
Status:
The Aministration opposes the concept of cargo sharing, and
the UNCTAD liner Code. The Administration considers selected
cargo sharing in defense of bilateral threats to U.S.-flag
trade.
5. Restore the cost competitiveness of U.S. -flag operators in
the international marketplace. We must take corrective
action to make certain our merchant fleet and shipbuilding
industry survive and grow.
Status:
Since May 1982, the Administration has not accepted any new
ODS contracts, cut off CDS funding, allowed the payback of
CDS, limited the increase in ceiling on Title XI guarantees.
The Administration has allowed one U.S. company to terminate
operating subsidies which give the company an enormous
infusion of cash but does not guarantee that this cash will
be used to support U.S. flag fleet. Yet, no authority has
granted for shipowners build and acquire abroad to increase
fleet size.
6. Revitalize our domestic water transportation system.
Status:
No mention in Drew Lewis' program and no Administration
action.
7. Reduce the severe regulatory environment that inhibits
American competitiveness.
Status:
Vice President's Regulatory Relief task group examined the
1) Coast Guard proposal requiring double hulls on new
tankers, 2) new ship electrical engineering standards, and 3)
retrofit requirements for small tankers under the Port and
Tanker Safety Act. The review was concluded after 1) the
Coast Guard withdrew the double hull proposal, 2) revised
electrical engineering regulations, and 3) DOT decided to
issue the PTSA retrofit rule.
Also established the Maritime Advisory Committee which has
been since been perceived as being inactive.
8. Preservation of (U.S. Jones Act) coastal trade.
Status:
President Reagan was quoted in Business Week (2/14/83) in
response to whether he would seriously consider legislation
to change the prohibition on Alaskan oil exports as saying
that "Yes, I would. It makes a lot of sense."
Administration is perceived as having leaned toward lifting
export restrictions.
The Administration has not made a stand on the "Cunard bill"
on the Hill which would permit two foreign built cruise ships
into the domestic cruise trade, an abrogation of the Jones
Act.
The Administration also supports H.R. 89, a bill to allow
foreign-flag ships to serve between U.S. ports and Puerto
Rico. This is a loophole in the Jones Act.
Administration Announcements on Maritime Policy, 1982-1983
The Reagan administration early in its term indicated that a
strong merchant marine was one of its goals. This rejuvenation
was to be stimulated by a reduction of Government regulations
that hinder the ability of the U.S. fleet to be competitive. The
administration sought to make the U.S. flag fleet more efficient
and independent.
Shortly after the administration took office, an interagency
task force was set up to examine current maritime policies and to
make specific recommendations for changes.
On May 20, 1982, Secretary Lewis announced the initial
elements of a new maritime program:
1. to honor existing operating differential subsidy
contracts (CDS) and to retain the the Jones Act and
existing cargo preference laws covering
government-impelled cargoes;
2. to support regulatory reform legislation (the Shipping
Act of 1983) which provided an expanded antitrust
immunity and permitted U.S. flag liner operators similar
flexibility as its international competitors.
3. support to an extension of temporary authority for
subsidized U.S.-flag operators to construct or acquire
vessels built abroad without construction differential
subsidy (CDS) but still quality for ODS under U.S.-flag
operations;
4. to encourage foreign investment in U.S.-flag shipping and
permit the current 49 percent foreign ownership in U.S.
flag ships to be increased to 75%;
5. to relieve all U.S. flag ships of the current 50 percent
ad valorem duty on repairs performed abroad;
6. to reduce unnecessary regulation of the shipbuilding and
ship operating industries and estalish a top level
government-industry group to further that effort;
7. to support elimination of FMC regulation governing liner
operators in domestic trades.
On August 5, 1982, the Secretary announced a second set of
policy initiatives:
1. the Administration would authorize an increase in the
fiscal year 1983 ceiling on ship financing guarantees
(Title XI) from $600 million to $900 million. (The
Administration sought a 1-year limit of $950 million on
Title XI guarantees and annual limits in the future.)
2. to allow U.S. flag operators to use existing and newly
deposited tax-deferred moneys in capital construction
funds (CCF) and construct or acquire foreign vessels;
3. DOD would continue its efforts to expand use of civilian
nongovernment seafarers to crew Government ships.
4. the U.S. Navy would provide significant work for U.S.
yards, not only in combatant ships, but the U.S. Navy
T-ship programs that are essentially
construction/converstion of merchant ships for Navy use.
Most of the initiative listed above require legislative
authority. The promotional maritime policy elements which do not
require legislation announced by the administration to date are:
1. operating subsidy contracts will continue but no new
contracts will be signed;
2. construction subsidies no longer will be funded;
3. Title XI guarantee and CCF program will continue.
On April 8, 1983, the Secretary of Transportation transmitted
draft legislation to implement five promotional elements of the
previously announced maritime policy package:
1. permission to build foreign;
2. Immediate cargo preference eligibility for reflagged
vessels;
3. Allow greater percentage of foreign investment in
U.S.-flag shipping;
4. Allow Capital Construction Fund to be used for building
or acquiring foreign vessels.
5. Eliminate the 50% Ad Valorem tariff on foreign repairs.
When Congress recessed in 1983, the maritime shipping
deregulation bills have passed both the House and Senate and are
in Conference. Hearing have been held in the Senate and House on
the maritime promotional reform bills.
Possible policy initiatives
I. reaffirm the Jones Act of 1920 as amended, to reserve
domestic trade, for U.S. flag fleet ships in the 200 nautical
mile economic exclusion zone (EEZ) around the U.S.
pros: 1. increases trade for U.S. ships
2. reinforces the U.S. position about exploiting the
EEZ in the Law of the Sea.
cons: 1. likelihood of retaliation by other nations,
2. uncertain amount of trade that may be generated
for U.S. flag ships,
3. improbable passage through Congress.
II. increase the allowable percentage of foreign ownership of
U.S. flag fleet ships from 49% to 75%.
pros: 1. increase and stimulates foreign investments
2. decreases costs of U.S. owners
3. reduces trade deficit by capital inflow.
cons: 1. in times of crisis, cannot be assured foreign
owners will permit ships to be used.
2. can decrease U.S. control unless strict guidelines
are drawn to control.
3. strong capital inflow when balance of trade is in
surplus may overstrengthen dollars.
III. authorize temporary construction and purchase of ships
abroad while permitting ODS for U.S. flag fleet ships.
pros: 1. decreases costs of U.S. owners,
2. permits revitalization of merchant marine numbers
including expanded sealift capacity in a crisis,
3. increase U.S. control of own fleet
cons: 1. reduces work for U.S. shipyards
2. increases dependence on foreign shipyards
3. contributes to negative balance of payments
IV: Remove 50% duty on repairs done in foreign shipyards.
Pros: 1. decreases costs of U.S. ship operators
Cons: 1. reduces work for U.S. shipyards
2. decreases U.S. revenues
3. increases dependence on foreign shipyards
Additional issues:
V. Create a maritime redevelopment bank to rejuvenate shipping
industry.
VI. Whether to allow CDS paybacks.
VII. Whether to allow ODS buyouts.
VIII. Expand Capital Construction Fund and Title XI loan
guarantees.
IX. Allow higher investment tax credit for construction of new
ships in U.S. yards.
No
from
1-006010C342 12/08/83
ICS IPMWGWF WSH
00611 12-08 1020A EST
83DEC 8 A10: 48
PMS WHITE HOUSE DC 20500
1-0026611342003 12/08/83
TWX COVESHIP NYK
03 NEW YORK, NY DEC. 8 83
PMS MR. JAMES CICCONI
SPECIAL ASSISTANT TO THE PRESIDENT
OFFICE OF THE CHIEF OF STAFF
THE WHITE HOUSE
WASHINGTON, D.C. 20500
RE: CDS PAYBACK
1
DESPITE OVERWHELMING MARITIME INDUSTRY AND UNION OPPOSITION,
WE UNDERSTAND THAT DOT WILL ISSUE THE CONSTRUCTION DIFFERENTIAL
SUBSIDY PAYBACK RULING WITHIN THE NEXT WEEK.
PLEASE CALL SECRETARY ELIZABETH DOLE AND TRY TO CONVINCE HER
THAT THIS RULEMAKING IS NOT IN THE BEST INTERESTS OF OUR NATIONAL
ECONOMY AND NATIONAL DEFENSE.
WE COUNT ON YOUR CONTINUED SUPPORT AND LOOK FORWARD TO HEARING
FROM YOU.
COVE SHIPPING INC.
WALL STREET PLAZA
NEW YORK, NY 10005
TELEPHONE: 212-422-3355 EXT. 215
TELEX: 177362 CSI UT
TWX: 710 581 2467 COVESHIPS NYK
1013 EST
1025 EST
THE REAGAN ADMINISTRATION AND THE MERCHANT MARINE: PROMISES VERSUS PERFORMANCE
A Comparison of Reagan Campaign Promises, MEBA Recommendations, and Administration Record
MARITIME POLICY -- GENERAL
CAMPAIGN OF CANDIDATE RONALD REAGAN
MARINE ENGINEERS' BENEFICIAL ASSOCIATION
ADMINISTRATION OF PRESIDENT RONALD REAGAN
RESULTS AND REMARKS
"THIS NATION BADLY NEEDS REVITALIZED
Recommended a clear, coherent policy of
Two phases announced; a third, "on the
NO UNIFIED PACKAGE BY ADMINISTRATION;
MARITIME POLICY. That policy must
interrelated efforts introduced and
way" since summer of 1982, has yet to be
little follow-up action; EXISTING
reverse the drift and decline of the
unified as a package in a Presidential
seen
PROGRAM OF PROMOTIONAL MEASURES BEING
Carter Administration." (10/9/80)
Declaration
DISMANTLED WITH NO SUBSTITUTE TO
REPLACE IT; SIZE OF FLEET HAS DECLINED
"We must. reestablish the US-flag fleet
FROM 576 to 561 SHIPS; JOBS FOR
as AN EFFECTIVE ECONOMIC INSTRUMENT CAPABLE
AMERICAN SEAMEN HAVE DECLINED FROM
OF SUPPORTING US INTERESTS ABROAD." (8/19/80)
MORE THAN 22,000 to LESS THAN 20,000.
"Let's begin today...TO PUT AMERICA BACK IN
THE CAPTAIN's CHAIR OF WORLD MARITIME POWERS."
(8/19/80)
"We must, first of all, PROVIDE UNIFIED
Recommended firm Presidential leader-
MarAd moved to DOT; DOT Secretaries
Maritime Administration under DOT UNIFIED
DIRECTION FOR ALL GOVERNMENT PROGRAMS
ship and a unified program without
Drew Lewis and Elizabeth Dole designated
IN NAME ONLY; interagency coordination
AFFECTING THE MARITIME INTERESTS OF THE
circumvention of its policies by other
Administration maritime spokespersons
is worse than ever; State, DOD, Agri-
UNITED STATES." (10/8/80)
government departments
culture, Justice, and others still
frustrate programs and damage proposals
"We must see that long-range building
to strengthen US fleet (i.e., CIVMAN,
programs for Naval and merchant ships
cargo measures, Alaskan oil exports).
are established and carried out WITHOUT
FALLING VICTIM TO PETTY BUREAUCRATIC
JEALOUSY. THIS IS THE ROLE OF THE
PRESIDENT AND I SHALL SEE THAT OUR
MARITIME POLICY IS COORDINATED TO
INSURE THAT rr ACHIEVES THE OBJECTIVES
WE SET FOR IT." (9/22/80)
* Emphasis is ours throughout.
2
MARITIME POLICY -- SPECIFICS
MEBA RECOMMENDATIONS
ADMINISTRATION MARITIME POLICIES
CAMPAIGN PROMISES AND STATEMENTS
(Primarily set forth in Paper
(Phase I: May 20, 1982;
of
presented to DOT Secretary
Phase II: August 5, 1982;
RESULTS AND REMARKS
CANDIDATE RONALD REAGAN
Phase III: Not Yet Announced)
(as of December 5, 1983)
Drew Lewis in January 1982)
Cargo Policies
"The principle that a nation's own ships
Supports strict adherence to Jones Act
(I) Affirms sanctity of Jones Act
When asked whether he would seriously
should carry its coastal trade, presently
of 1920, permanent ban on Alaskan oil
(II) Reaffirms Administration support
consider legislation to change the
embodied in the Jones Act, has been part
exports
for Jones Act
prohibition on Alaskan oil exports,
of this country's maritime policy since
PRESIDENT REAGAN SAID: "YES, I WOULD.
the early days of the nation. I CAN ASSURE
IT MAKES A LOT OF SENSE." (Business Week,
YOU THAT A REAGAN ADMINISTRATION WILL NOT
2/14/83), ADMINISTRATION HAS LEANED TOWARD
SUPPORT LEGISLATION THAT WOULD JEOPARDIZE
LIFTING EXPORT RESTRICTIONS, an action that
THIS LONG STANDING POLICY OR THE JOBS
could lay up 50-80 Jones Act tankers of
DEPENDENT UPON ΓΓ." (10/9/80)
1.8-4.9 million dwt (1/3 of US tanker
fleet). However, the Administration has
been restrained by the clear and over-
whelming support in the Congress for con-
tinuing the restrictions. In addition, one
of the most blatant examples of Jones Act
erosion has been debated in both the House
and the Senate, a measure commonly
referred to as the "CUNARD BILL", yet the
Administration has improvidently deter-
mined to take no stance. The Administration
also supports H.R. 89, a bill to allow
foreign-flag ships to serve between U.S.
ports and Puerto Rico, with no reservations.
In sum, the Administration claims to
supports strict adherence to Jones Act, but
in reality does not fight for this time-
honored law needed for our shipbuilding
base.
"Further, my comprehensive National
Supports strict adherence to existing
(I) Affirms sanctity of cargo
White House directive ordered one-time
Maritime Policy will be targeted toward 4
cargo preference Laws covering US-flag
prefernece Laws
cargo preference for Egyptian wheat-flour
GREATER MARKET SHARE OF EXPORTS AND
carriage of government-impelled cargoes
(II) Reaffirms Administration support
(3/83); but NO DECISIVE STANCE on other
IMPORTS FOR US-FLAG SHIPPING."
for cargo preference
interagency abuse of cargo preference
(8/19/30)
laws - e.g., for "political" reasons, not
legal reasons, Administration announced
that farm exports financed under Agri-
culture's blended credit program do not
have to meet any government cargo pre-
ference requirements. In other words,
DOT/MARAD, our industry's only agency
"ally", threw in the towel. Another set-
back came when DOT accepted Justice Depart-
ment decision that Jones Act shipments of
Alaskan oil for SPR may be counted toward
the 50 percent US-flag cargo preference
required by existing law. In short, STILL
NO CLEAR NATIONAL POLICY GOVERNING CARGO
PREFERENCE AND ANY RHETORIC ADDRESSES ONLY
EXISTING LAWS - NO THOUGHT OF EXPANSION.
3
MEBA RECOMMENDATIONS
ADMINISTRATION MARITIME POLICIES
CAMPAIGN PROMISES AND STATEMENTS
(Primarily set forth in Paper
(Phase I: May 20, 1982;
of
presented to DOT Secretary
Phase II: August 5, 1982;
RESULTS AND REMARKS
CANDIDATE RONALD REAGAN
Drew Lewis in January 1982)
Phase III: Not Yet Announced)
(as of December 5, 1983)
"Those countries will have to be told
Supports widespread pursuit of bilateral
(I) No mention
In a "Note" responding to an OECD Aide
they can't have it both ways - protection
agreements
(II) No mention
Memoire (11/82), DOT said that the U.S.
for their ships, and competition for every-
would consider selective cargo sharing
body else. As President, I intend to make
in defense of bilateral threats to US-flag
that fact very clear to a number of people
trade; however, ADMINISTRATION REFUSES
who have apparently not heard much from
TO PURSUE CONSTRUCTIVE CARGO POLICY.
the Administration of Mr. Carter on this
Although bilaterals have been proposed in
point. In addition, WE MIST ENCOURAGE
several areas, e.g., the Philippines, they
AND SUPPORT OUR MARITIME INDUSTRY BY
appear to be defensive and reactive rather
NEGOTIATING BILATERAL AGREEMENTS TO
than what MarAd terms "deliberate
ASSURE EQUAL ACCESS TO CARGOES."
bilateralism.
(10/9/83)
"A major goal of my Administration will be
Supports ratification of UNCTAD Liner
(I) No mention
Administration officially "shuns" the
to assure that American flag ships carry an
Code; as well as bilaterals
(II) No mention
UNCTAD Liner Code, and OPPOSES EVEN THE
equitable portion of our trade, consistent
CONCEPT OF CARGO SHARING: 4sst. DOT
with the legitimate aspirations and policies
Secretary Judith Connor said in early
of our trading partners." (10/9/80) "We
1983: "THERE IS JUST NO WAY THE REAGAN
must be prepared to RESPOND CONSTRUCTIVELY FOR
ADMINISTRATION WILL GO FOR DIVIDING
OUR OWN INTERESTS TO THE RESTRICTIVE SHIPPING
CARGOES"; meanwhile, the UNCTAD Code has
POLICIES OF OTHER NATIONS." (9/22/80)
entered into force -- with it would come
a flood of foreign ships into the US trades
because UNCTAD Code will reduce opportu-
nities in other trades. U.S. government
did not accept the UNCTAD Code for over 100
maritime nations, which went into effect
October 6, 1983, and it has not formulated
an alternative mechanism to protect US
liner shipping. In addition, no aggressive
bilateral shipping agreements have been
pursued with our trading partners.
Supports cargo preference for imports
(I) No mention
NO such interagency group has been
and legislation to phase in bulk cargo
(II) Promises to establish "inter-
established; Administration has CON-
preference, such as one linked to series
agency international shipping
SISTENTLY OPPOSED ALL CARGO REQUIREMENTS
production of efficient class of coal-
policy group to evaluate the
OF ANY KIND TO STIMULATE DEVELOPMENT OF
powered colliers
options available to the US
MODERN, EFFICIENT BULK FLEET, nor has it
government."
proposed a concrete alternative.
"We are heavily dependent upon ships to
Supports requirements for US-flag
(I) No mention
No Administration action.
bring in foreign goods as well as petro-
carriage of 40 percent of strategic
(II) No mention
leum and the new materials for our
minerals cargoes
industries (9/22/80)
WE CANNOT EXPECT OTHERS - EITHER
Supports requirements for US-flag
(I) No mention
No Administration action.
ALLIES OR ADVERSARIES - TO RESPECT OUR
carriage of a percentage of foreign-
(II) No mention
INTERESTS IF WE SHOW NO RESPECT OR CON-
manufactured automobiles to encourage
CERN FOR THEM OURSELVES. (9/22/80)
construction of militarily-useful
RO/RO vessels
4
MEBA RECOMMENDATIONS
ADMINISTRATION MARITIME POLICIES
CAMPAIGN PROMISES AND STATEMENTS
(Primarily set forth in Paper
(Phase I: May 20, 1982;
of
presented to DOT Secretary
Phase II: August 5, 1982;
RESULTS AND REMARKS
CANDIDATE RONALD REAGAN
Drew Lewis in January 1982)
Phase III: Not Yet Announced)
(as of December 5, 1983)
Re-flagging (see also Investment)
"Reduce the severe regulatory environ-
Proposes that Coast Guard should tem-
(I) No mention
No Administration action; USCG refuses to
ment that inhibits American competitive-
pomrily grant exceptions from certain
(II) No mention
888 any problem with its requirements; no
ness. Accordingly, WE WILL CAREFULLY
vessel standards that would hinder re-
studies undertaken or planned: however.
AND RAPIDLY REVIEW THE EFFECT OF THESE
flagging; documentation should be tied
COSTS OF COAST GUARD AND MARAD REGULATIONS
RESTRICTIONS AND SPONSOR APPROPRIATE
to meeting standards of ship classifi-
HAVE ADDED 9 TO 14 PERCENT TO THE COST OF
ACTIONS." (9/22/80)
cation societies
A VESSEL.
"Ninety-five percent of US trade is
Supports immediate eligibility for re-
(I) Proposes immediate eligibility
Administration gave vigorous vocal support
carried in foreign bottoms. IN TIME OF
flagged vessels to carry preference
for re-flagged vessels to carry
and included immediate eligibility pro-
CRISIS, WILL THESE SHIPS BE AVAILABLE?
cargoes without three-year delay as
government-impelled cargoes
vision in FY '83 MarAd authorization bill;
WE SIMPLY DON'T KNOW. WHEN WE FIND OUT,
currently required under Section 901 (b)
measure passed Senate, but when trouble
IT MAY BE TOO LATE." (10/9/80)
of the Merchant Marine Act
(II) Reaffirms support
was encountered in House, ADMINISTRATION
SUPPORT FALTERED, MEASURE FAILED; intro-
duced again as part of the Administration's
Five Point Maritime Promotional Package -
no action taken.
Investment..
(see quotation in SUBSIDIES section)
Supports construction or purchase
(I) Considers extension of temporary
of vessels abroad by ODS operators
Administration support continues, but
authority for subsidized US
Concurrent Resolution at close of 97th
for unlimited period of time
operators to build abroad
Congress failed to extend build abroad
rights; yet CDS funds remain at zero;
(II) Reaffirms support for legislation
SHIPS CANNOT BE BUILT WITHOUT FOREIGN
to continue temporary build abroad
BUILDING EXTENSION OR ANY ALTERNATIVE;
authority
new build abroad legislation introduced
in Spring 1982 containing five principle
elements, yet support for these concepts
by Administration was 80 shallow that
scheduled mark-up had to be scuttled.
Supports elimination of current 50
percent duty on US-flag repairs per-
(I) Supports elimination of current
Introduced as part of the Administration's
formed abroad
50 percent duty on US-flag repairs
Five Point Maritime Promotional Package:
performed abroad
no action taken.
(II) Reaffirms support
MERA RECOMMENDATIONS
ADMINISTRATION MARITIME POLICIES
CAMPAIGN PROMISES AND STATEMENTS
(Primarily set forth in Paper
(Phase I: May 20, 1982;
5
of
presented to DOT Secretary
Phase II: August 5, 1982;
RESULTS AND REMARKS
CANDIDATE RONALD REAGAN
Drew Lewis in January 1982)
Phase III: Not Yet Announced)
(as of December 5, 1983)
Soviet "maritine activities are care-
Favors removal of arbitramy ceiling
(I) No mention
For FY '84, Administation proposed
fully orchestmted; their maritime
for Title XI Ship Loan Guarantees;
(II) Authorizes $600 million for
$900 million for Title XI loan guarantses,
recources supplement and reinforce
program should be used as aggressive
Title XI in FY '83 and augments
of which $300 million must be saved for
one another. THE TIME HAS COME FOR THE
tool to attract capital
it with $300 million additional
militarily-ussful ships; ADMINISTRATION
UNITED STATES TO UNDERTAKE A SIMILAR
reserve fund
MISUNDERSTANDS UNIQUE, COST-EFFECTIVE
COMMITMENT.' (9/22/80)
TITLE XI PROGRAM; Congressmen fear that
Administration may circumvent MM&F Cmte
by placing cap on Title XI through Appro-
priations Cmte.
Supports repeal of Subpart F exclusion
(I) No mention
No Administration action.
of the Internal Revenue Code (which
(II) No mention
permits US corporations to escape taxes
on earnings from foreign-flag shipping
if the profits are reinvested in ship-
ping operations abroad)
...and subsequent permission for
(I) No mention
Introduced as part of the Administration's
US-controlled foreign corporations
(II) Approves CCF for foreign con-
Five Point Maritime Promotional Package;
to deposit income from foreign
struction and acquisition
no action taken.
shipping operations into a fund for
foreign building of US-flag shipe
Calls for increased foreign owner-
(I) Encourages foreign investment
Introduced as part of the Administration's
ship, with foreigners allowed direct
in US-flag shipping and proposes
Five Point Maritime Promotional Package;
managerial control in the foreign
increase in percentage of foreign
no action taken.
trades; MarAd, not Coast Guard,
ownership from 49 to 75 percent
should determine whether a vessel's
ownership is in compliance with
(II) Reaffirms support
US statutes
Tax Policy
"A specific nuval-maritime program
Supports incentives through tax
(I) No mention
No Administration action.
must be developed that will. RECOGNIZE
system for U.S. shippers who ship
(II) No mention
THE CHALLENGES CREATED BY CARGO POLICIES
on US-flag vessels
OF OTHER NATIONS. (9/22/80)
...and "RESTORE THE COST COMPETITIVENESS
Proposes income tax reductions and
(I) No mention
No action, although Administration debated
OF US-FLAG OPERATORS IN THE INTERNATIONAL
pension assistance for merchant sea-
(II) No mention
income tax reductions for merchant seamen
MARKETPLACE." (9/22/80)
men sailing on oceangoing ships,
during internal Phase I and Phase III
possibly linked to participation in
discussions.
US Navy Reserve
6
MERA RECOMMENDATIONS
ADMINISTRATION MARITIME POLICIES
CAMPAIGN PROMISES AND STATEMENTS
(Primarily set forth in Paper
(Phase I: May 20, 1982;
of
presented to DOT Secretary
Phase II: August 5, 1982;
RESULTS AND REMARKS
CANDIDATE RONALD REAGAN
Drew Lewis in January 1982)
Phase III: Not Yet Announced)
(as of December 5, 1983)
Regulatory Reform...
"REDUCE THE REGULATORY ENVIRONMENT that
Supports maritime regulatory reform
(I) Supports maritime regulatory
Gorton Shipping Act of 1983, S. 47, passed
inhibits American competitivensss. 4a
ambodied in Shipping Act (S. 47,
reform
Senate 64-33 (3/1/83); Biaggi Shipping Act,
foreign competition on maritime scene
Corton; H.R. 1878, Biaggi)
H.R. 1878, passed House of Representatives
has increased, 80 have the operational
(II) Reaffirms support
by voice vote (10/17/83); INTERDEPARTMENT-
and regulatory restrictions on US
AL BICKERING (I.E., DOT V. STATE AND
shipping and shipbuilding." (9/22/80)
JUSTICE) WEAKENED ADMINISTRATION STANCE:
e.g., tariff filing was first opposed,.
then supported, then opposed by White
House. Today, industry still without
shipping act reform -- almost three years
since Administration first embruced the
concept aving to this equivocal stance on
this most important provision in shipping
reform.
"Eight, I WILL DIRECT A REVIEW OF
Supports reduction of unnecessary
(I) Favors reduction of unnecessary
President's Task Force on Regulatory
REGULATORY REQUIREMENTS IMPOSED IN US
regulation of shipbuilding and ship
regulations
Reform undertook general nationwide "study,"
SHIPBUILDING (as well as other
operating industries
but took no action and Task Force has
industries) (8/19/80) "MANY OF
(II) Reaffirms support
since been dismantled; yet 20 PERCENT OF
THESE RESTRICTIONS increase costs and,
ALREADY HIGH US SHIPBUILDING COSTS CAN BE
in some cases, SIMPLY PREVENT OUR SHIPS
ATTRIBUTED TO UNNECESSARY FEDERAL GOVERN-
FROM COMPETING WITH FOREIGN SHIPS."
MENT REGULATIONS.
(9/22/80)
"Since there are many who must be
Supports full and active advisory
(I) Establishes top level government/
ADMINISTRATION HAS NOT FOLLOWED BY-LAWS
involved in developing a coordinated
role of industry representatives as
industry committee to advise the
OF COMMITTEE BY FAILING TO CONSULT MEMBERS
maritime policy, CONSTANT COMMUNICATION
established in the by-laws of the
Administration on all major
ON KEY MARITIME ISSUES; Congressmen
AND A FEELING OF MUTUAL TRUST MUST BE
"Maritime Advisory Committee, of
maritime affairs
extramely critical of Maritime Advisory
DEVELOPED BY A PRESIDENT AND HIS TOP
which Mr. Calhoon is a member
Committee's inaction (3/93); Administra-
EXECUTIVES AND THE MANY UNIONS, SHIPPING
(II) Applauds committee formation
tion has failed to support as well proposed
FIRMS AND OTHERS WITHIN THE PRIVATE
Presidential Commission on defense-
SECTOR." (10/11/80)
related aspects of maritime industry.
Subsidies
"But our parity system failed in the
Supports traditional ODS programs
(I) Promises to honor existing ODS
WITH ADMINISTRATION STRESSING ITS SUPPORT
mid-1970's because most foreign
until workable set of alternatives
contracts
OF ONLY EXISTING ODS CONTRACTS, YET
governments moved to protect their own
can be found and out in place
OFFERING NO NEW ALTERNATIVES, FLEET
vital maritime intereste after the
(II) Promises to honor existing ODS
GROWTH WILL NEVER BE STIMULATED.
shipping collapse of the mid-70's.
contracts, but no new contracts
WE MUST NOW TAKE CORRECTIVE ACTION
will be signed
TO MAKE CERTAIN OUR MERCHANT FLEET
AND OUR SHIPBUILDING INDUSTRY SURVIVE
AND GROW." (9/22/80)
MEBA RECOMMENDATIONS
ADMINISTRATION MARITIME POLICIES
CAMPAIGN PROMISES AND STATEMENTS
(Primarily set forth in Paper
(Phase I: May 20, 1982;
7
of
presented to DOT Secretary
Phase II: August 5, 1982;
RESULTS AND REMARKS
CANDIDATE RONALD REAGAN
Drew Lewis in January 1982)
Phase III: Not Yet Announced)
(as of December 5, 1983)
Supports buyouts of outstanding
(I) No mention
TO terminate subsidies ahead of their
ODS contracts only if MarAd
(II) No mention
planned expiration dates, Administration
examines on a case-by-case basis,
has begun to buy out existing subsidies
with approval contingent upon
(i.e., Crowley/Delta), which gives the
fleet expansion opportunities
recipient company an enormous infusion of
cash but does not guarantee that this cash
will be used to support the US fleet or to
keep US-flag ships sailing (the intent of
the subsidy program in the first place);
THE RESULT WILL BE A NET LOSS OF US-FLAG
SHIPS. Without industry consulation, the
Administration published proposed rule-
making for early ODS buy-outs; no
protection whatsoever included in rule for
merchant seamen - the very segment of the
industry that operating subsidies were
designed to protect according to the
purpose and principles of the Merchant
Marine Act of 1936.
Supports continuation of CDS subsidies
(I) No mention
Today! NO CDS IN ADMINISTRATION BUDGET.
until a workable set of alternatives
(II) Makes permanent the moratorium
YET NO PERMISSION TO BUILD AND ACQUIRE
can be found and put in place
on signing new CDS agreements
ABROAD (see INVESTMENT); THUS, NO US-FLAG
SHIPBUILDING.
Supports paybacks by tanker operators
(I) No mention
of outstanding CDS contracts, in cash
(II) No mention
Administration favors CDS paybacks.
Proposed Rulemaking in the works now for
with amortized interest, in return for
more than a year; Congressional efforts to
entry into hitherto restricted Jones
Act trade
prohibit rulemaking from being implemented
thwarted every step of the way - not
forcefully fought-off by Administration,
but rather by the only maritime labor
union backing the proposal.
Civilian/Military Cooperation
"AT A TIME WHEN THE NAVY'S SUPPORT
Supports civilian contract manning
(I) No mention
So far, THERE IS NO CIVMAN PROGRAM to
CAPABILITY IS OPEN TO SERIOUS
of Navy fleet support vessels
convert Navy fleet support and MSC nucleus
QUESTION, WE SHOULD BE INCREASING
(II) "The Department of Defense will
fleet ships -- only an effort to claim
THE MERCHANT MARINER'S ROLE -- AND
continue its efforts to expand
CIVMAN credit for some programs such 13
WE ARE NOT. WE KNOW THAT INTEGRATED
appropriate use of civilian
TAKX and TAKRX that ALWAYS have been planned
COMMERCIAL SUPPORT OF THE NAVY IS
non-goverment seafarers to
(even by the previous Administration) to be
POSSIBLE.
I KNOW, AND YOU KNOW,
crew government ships"
contract manned; even retreated from Carter
THAT THE MARITIME INDUSTRY CAN
Administration program to turn over 21 MSC
ASSUME ANY NAVY SUPPORT FUNCTIONS.
scientific support ships to civilian
IT WILL SAVE THE NAVY MONEY, AND IT
contract manning; while Navy continues to
WILL RELEASE TRAIVED SAILORS TO MAN
delay and delay, NO SUSTAINED WHITE HOUSE
THE NEW SHIPS MY ADMINISTRATION WILL
PRESSURE FOR ACTION.
BUILD FOR THE FLEET. THIS KIND OF
INTEGRATION AND COOPERATION WILL
STRENGTHEN OUR DEFENSE, STRENGTHEN
OUR MARITIME INDUSTRY, AND PROVIDE
THE AMERICAN TAXPAYER WITH THE MOST
FOR HIS MONEY." (10/11/80)
(Similar promises announced, 9/22/80.)
8
MERA RECOMMENDATIONS
ADMINISTRATION MARITIME POLICIES
CAMPAIGN PROMISES AND STATEMENTS
(Primarily set forth in Paper
(Phase I: May 20, 1982;
of
presented to not Secretary
Phase II: August 5, 1982;
RESULTS AND REMARKS
CANDIDATE HONALD REAGAN
Drew Lewis in January 1982)
Phase III: Not Yet Announced)
(as of December 5, 1983)
Favors creation of a series of tax-
(I) No mention
TREASURY APPEARS TO BF UNALTERABLY OPPOSED
exempt shipping bonds, guaranteed by
(II) No mention
AND UNWILLING TO CONSIDER VEERING FROM
the government, targeted on a special
COURSE OF PREVIOUS ADMINISTRATIONS.
class of national defense merchant
vessels constructed with military
features and applicability in mind,
to be operated by private shipping
companies in peacetime
"OUR MERCHANT MARINE IS A VITAL
Supports extensive use of merchant
(I) No mention
Because CDS has been eliminated, there ia
ANCILLARY 10 THE NAVY." (10/11/80)
ship enhancement features to enable
(II) No mention
no money in the MarAd budget for national
merchant ships to be able to take up
defense features for merchant ships; this
quickly defense roles in wartime
program is virtually moribund except for a
few features installed by the buyers them-
selves on US-flag ships temporarily
constructed abroad.
Improved Efficiency.
Pledges to improve operating
(I) No mention
MEBA has worked steadily to improve
efficiency of US-flag fleet from
(II) No mention
operating efficiency on many fronts;
within; recognizes that fleet
signed contracts for SIGNIFICANTLY LOWER
revitalization cannot be accomplished
MANNING LEVELS on modern, efficient vessels
by government alone; industry, labor,
soon to be built; DEMONSTRATED COOPERATION
and management must work together for
WITH ADMINISTRATION BY AGREEING TO 7.5
good of merchant marine, national
PERCENT WAGE ROLLBACK rr REQUESTED (7/82);
and economic security
testified on unnecessary and duplicative
duties of USOG Commercial Vessel Safety
Branch; submitted to the President's
Task Force on Regulatory Reform a number
of proposals, three of which were selected
for special examination (8/81); (no
subsequent Administration action).
MARITIME BUDGET: A COMPARISON
FY '81 - FY '83
(Thousands of Dollars)
Carter
Reagan
Estimate
Total Estimated
Current Monies Needed
Estimate
Estimate
Total FY '81 Actual
Reagan FY '82
to carry out Carter
and Carter Estimated
and PY '83
programs using CNP
Adjusted Savings
WIDGET YEAR:
FY '81 Actual
FY '82
FY '82
ry' 83
FY '82 Budget
Budgets
Savings Difference
deflator changes.
Difference
MARITIME ADMINISTRATION
CONSTRUCTION DIFFERENTIAL SUBSIDY
Brigat Authority
135,000
107,000
242,000
-242,000
275,638
-275,638
Outlays
208,113
206,000
208,200
54,300
414,113
262,300
-151,813
471,657
-209,357
OPERATING DIFFERENTIAL SUBSIDY
Butjet Authority
353,103
414,899
414,899
406,821
768,002
821,720
+53,718
874,754
+53,034
Outlays
334,854
417,148
417,148
454,010
752,002
671,158
+119,156
856,528
+14,630
RESEARCH AND DEVELOPMENT
Budget Authority
13,800
17,210
8,491
16,800
31,010
25,291
-5,719
35,309
-10,018
Outleys
17,362
17,210
14,184
5,393
34,572
29,577
-4,995
39,378
-9,801
OPERATIONS AND TRAINING
Budget Authority
66,016
77,063
75,007
71,013
143,079
146,020
+2,941
162,967
-16,947
Outlays
66,438
77,172
74,886
73,004
143,610
147,890
+4,280
163,572
-15,682
FEDERAL SHIP FINANCING FUND
The Commitments
1,047,000
1,305,000
675,000
600,000
2,352,000
1,275,000
-1,077,000
2,678,928
-1,403,928
EXPORT-IMPORT BANK DIRECT LOAN OBLIGATIONS
5,430,780
5,000,000
4,400,000
3,830,000
10,430,780
8,230,000
-2,200,780
11,880,638
-3,650,658(a)
PUBLIC LAW 480 COMMODITY LOANS
1,221,930
1,263,100
1,000,000
1,028,000
2,492,030
2,028,000
-464,030
2,838,422
-810,422(b)
FEDERAL MARITIME COMMISSION
Budget Authority
12,100
12,525
11,225
10,428
24,625
21,653
-2,972
20,048
-6,395
Outlays
11,738
12,424
11,067
10,324
24,162
21,391
-2,771
27,521
-6,130
PUBLIC HEALTH SERVICE HOSPITALS AND CLINICS
130,232
172,140
148,335
302,372
148,335
-154,037
344,402
-196,067
NOTES:
Figures derived by using GNP deflator changes of 13.9 percent
SAVINGS TOTALS:
Initial
Adjusted (Inflation)
from 1981 - 1983 (forecast).
-$4,126,022
-$6,543,379
(a)
Under Public Resolution 17, subject to 100 percent U,S,-flag
Though the total represents, in many instances, both budget authority
carriage unless a waiver is granted by MarAd,
and outlays, it nevertheless reflects the additional savings in the
FY '82 and FY '83 budgets when compared to money that would have to
(b)
Under Public Law 480, subject to 50 percent U.S.-flag carriage,
be currently spent to carry out President Carter's programs,
if ships are available.