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Mr. KYROS. On the other hand, it would seem that instead of striking for some department of oceans there might be discussions of a Presidential coordinator on maritime policy.

How about a more modest approach, a task force, perhaps, just for the single issue of overtonnage of the trade, not to study any law, because there has ben more than enough study; but instead to come out with specific recommendations that could be considered by the Congress or the executive departments concerned ?

Mr. BRAND. Well, I think a task force could be important. However, I think that would tend to ignore the fundamental or basic problem and, until we can address ourselves to the problem of whether or not we should or are going to have a merchant marine, until we develop a policy which indicates that that is part of our national program, then it seems to me that a taks force could only further debilitate the merchant marine.

Unless we get some positive expression for programs or legislation that indicates a desire on the part of this nation to have a merchant marine, I don't se what we are going to cut up.

Why do we ned a taks force to decide what some of the problems are with respect to a merchant marine that is on the verge of extinction? We are talking about a merchant marine that very soon is going to carry 2 percent of our oil imports and we can't get going to resolve that problem and I think that to do anything else, to do the things that you are talking about, which are under normal circumstances most desirable, would be to walk around a central problem or ignore it.

Mr. Kyros. Well, I had no idea that section 101 had been repealed by anybody, but even by recent actions by this very Congress, I believe in 101 and I think it is something we should go further into.

Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Corrado?
Mr. CORRADO. No questions.

The CHAIRMAN. Thank you, Mr. Brand. We certainly appreciate your testimony. We also appreciate your indulgence of these hearings.

We are going to continue these hearings through the rest of this year before we get into some hard writing on this proposed legislation and, if it is possible, we hope that we will have the cooperation of all members of this committee in trying to meet what is a demonstrated need for the American merchant marine because we know the critical stage we are in.

I, frankly, think we are past the point of no return.
Mr. BRAND. Absolutely.

The CHAIRMAN. But hopefully somehow we might be able to bring it back.

Mr. BRAND. I hope so.
The CHAIRMAN. Thank you very much.
Mr. BRAND. Thank you.
The CHAIRMAN. The committee will stand adjourned.

[Whereupon, at 5:40 p.m., the Committe on Merchant Marine and Fisheries, Subcommittee on Merchant Marine, adjourned.]

REBATING PRACTICES

WEDNESDAY, NOVEMBER 30, 1977,

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON MERCIIANT MARINE OF THE
COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C. The subcommittee met, pursuant to notice, at 9:42 a.m., in Room 1134 Longworth House Office Building, Hon. John M. Murphy, Chairman, presiding.

The CHAIRMAN. The Committee will come to order.

The subcommittee on the Panama Canal is meeting in an adjacent hearing room, and necessarily some members are present at that hearing, and will not be at this hearing. But we are going to continue hearings on H.R. 9518, a bill to amend the Shipping Act of 1916, to provide for a 3-year period to reach a permanent solution of the rebating practices in the U. S. foreign trade.

The subcommittee has already held hearings on October 14, 20, and November 1, 1977. At these hearings, wide ranging testimony on rebating and a national maritime policy was adduced from all the Government agencies involved, available carriers and trade associations. Further testimony from shippers and other interested groups and persons will be scheduled for January 1978.

The testimony to date has revealed that overcapacity in our liner trade is the immediate cause of the rebating problem. There appears to be uniform opinion that the root cause is that the existing law, that is, the Shipping Act, 1916, as amended, is inadequate to regulate effectively both the foreign-flag, and U.S.-flag and U.S.-flag carriers that transport the vast majority of the export-import commerce in the U.S. liner trades.

The hearings have disclosed that the various Government agencies -FMC, Maritime Administration, Department of State, Department of Justice, Securities and Exchange Commission, Department of Transportation, Department of Treasury-differ sharply among themselves in regard to basic maritime policy decisions required to achieve control of overcapacity. Similarly, U.S.-flag carriers and trade associations have contributed differing judgments on H.R. 9518 and methods of control rebating.

Various diverse and often conflicting judgments have been proposed by the witnesses thus are. I think that is understandable.

These include strengthening the dual rate contract system; providing for the operation of closed conference system; granting each conference member the right of independent action on pricing; the formation of shippers' councils; the control of entry into the U.S. liner trade: consideration of the UNCTAD 40-40-20 Code of Liner Conduct; the promotion of pooling and cargo sharing; bilateral trade agreements; the loosening of antitrust laws; the establishing by foreign-flag carriers of a resident agent in this country; enactment of controlled-carrier legislation to block predatory pricing; intergovernmental consultation with our trading partners to secure cooperation from foreign governments; more severe penalties for rebating; and numerous other recommendations.

25-684-78-30

In regard to the provision for amnesty there was considerable opposition primarily on the grounds that it was broader than necessary to accomplish its objective of encouraging disclosure of rebating and aiding the FMC in resolving its outstanding caseload.

Consequently, the testimony at the hearings narrowed to possible provision for limited use immunity which would limit amnesty for rebating under section 16, paragraph 2, and 18(b) (3) of the Shipping Act, 1916 to such penalties for rebating and immunity from prosecution under section 371 of title 18, for any conspiracy related solely to that rebating. This matter will be developed further during the hearings.

The hearings have revealed that there is a distinct lack of coordination among the Government agencies responsible so that we have no coherent national maritime policy. Indeed, the agencies and departments are often in conflict, with the result that it is difficult if not impossible to achieve the objectives of the Shipping Act, 1916. This problem becomes particularly acute when it is realized that we have no control over or access to the records of foreign-flag carriers. As a result of certain "blocking statutes" enacted by our foreign trading partners it then becomes impossible to enforce our shipping laws uniformly.

The testimony at the hearings thus far makes readily apparent the complexities of our international liner trades and the challenging task the committee faces in fashioning appropriate legislation.

And this task is made even more difficult because of the fact that various witnesses, who could provide valuable testimony to this subcommittee, including carriers, shippers and maritime lawyers, are reluctant and have refused to testify because of their concern about the criminal grand jury investigations of shipping conferences in the North Atlantic.

I have been advised by subcommittee counsel that despite repeated requests and assurances several possible witnesses whose testimony is needed by the subcommittee have stated that due to the pending grand jury proceedings their employers have asked them not to testify. This is a most regrettable circumstance and is certainly depriving the Congress of the best possible judgments on rebating and a national maritime policy.

Further, I note with regret that a major trade association, representing shippers, the National Industrial Traffic League, was not able to testify today, although they had been scheduled to do so.

I would at this time, however, welcome to our subcommittee the Council of European and Japanese National Shipowners's Associa

tion, who I am certain will furnish a unique foreign perspective to our shipping laws and the issue of rebating.

Mr. Russell is the immediate past chairman of CENSA, and we welcome you to the subcommittee.

And if you would please identify for the record those gentlemen who are appearing with you.

STATEMENT OF W. R. RUSSELL, PREVIOUSLY CHAIRMAN OF SHAW

SAVILL, AND A DIRECTOR OF FURNESS WITHY, IMMEDIATE PAST CHAIRMAN OF THE COUNCIL OF EUROPEAN AND JAPANESE NATIONAL SHIPOWNERS' ASSOCIATIONS, PAST CHAIRMAN OF THE AUSTRALIA/BRITISH TRADE ASSOCIATIONS, AND CURRENTLY CHAIRMAN OF AN INDEPENDENT COMMITTEE INVOLVED IN THE SELF-POLICING ARRANGEMENTS OF THE EUROPEAN/FAR EAST/ EUROPEAN FREIGHT CONFERENCE; ACCOMPANIED BY IAN ROSSBELL, SECRETARY-GENERAL, CENSA; AND RONALD CAPONE, PARTNER, LAW FIRM OF KIRLIN, CAMPBELL & KEATING, WASHINGTON, D.C.

Mr. Russell. Thank you, Mr. Chairman. May I introduce Mr. Ian Ross-Bell, who is the Secretary-General of CENSA, and Mr. Ronald Capone

The CHAIRMAN. Would you reepat those names?
Mr. RUSSELL. Mr. Ian Ross-Bell, and Mr. Ronald Capone.
The CHAIRMAN. And pull that microphone down a little bit.

Mr. RUSSELL. Mr. Chairman, members of the subcommittee, as the immediate past chairman of CENSA, I am grateful for the opportunity to appear before you today, and to elaborate on the written testimony submitted by CĚNSA, on the 26th of October.

I should like, first and foremost, to reiterate CENSA's opposition to malpractices of whatever kind.

As ČENSA's previous testimony stated, H.R. 9518 fails to address itself to the causes of malpractices. Therefore, if enacted, this bill will not only fail to deal with the issues, but will create new and additional problems.

For example, as the Treasury spokesman, Mr. Hufbauer, said in his testimony to you last month about the proposal to close your ports to specific vessels of the free enterprise partners of the United States, whose owners either refuse or are unable to cooperate with FMC investigations and here I quote:

From a policy point of view, however, we are concerned about the possible repercussions of such Draconian actions on our international trade. Summarily closing our ports to foreign liners could result in retaliation against U.S.-flag liners. We do not believe such actions would further the interests of the United States or its trading partners.

That assessment is largely confirmed by the reaction of 10 of the major trading partners of the United States in a note to the State Department on September 27 commenting on the parallel bill, S. 2008, in the Senate. It is also confirmed by the President of a lead

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