iginez gerams and the tendency. I any, of this malpractice for coe **ed wetve mere crer another.

Third, the Leare a entry macerned about any effort that wald restrict or eliminate price and service competitions in the US. Liver trades. This mecanice is beard rerrocamentations that wild limit carrier entry into the US. Lzer trades, expand revesse and cargo pocis, inesse bünteral trade agreementa andor erabilst closed confereres. The Learne fois verè fanis. nema. Vary chacze unacceptatie. In the face of serious worldwide encage titen for foreiz markets, it is critically important that we maintain a maritime poing which will provide the range of services and rate levels required to be entpetitive in foreign markets.

Fourth, this subeommittee has been repeatedly advised that rebating is caused by vertonnazing, which is caused by the U.S. liter trades being then. The wointions all propose drastic reduction in competition, particularly that of the wwconierede carrier, without evidence that overtonnaging is caused by excesane bob-conference entry into the open U.S. trades. We believe this subject requires complete study of each trade route to avertain where overtonnaging exists and the causes for such overtonnaging, before entertaining any major change in maritime policy.

In summary, the League reconfirms its support of HR. 9518 and asks that Its sperite views be seriously considered. This legislation will better enable the Federal Maritime Commission to discharge its responsibilities and to provide the Congress within 18 months with the disclosures made, together with Its recommendations for corrective action. The League believes this is the most effective way to progress to a resolution of rebating. However, the League does not believe sufficient data is in hand to alter the current maritime laws. When *uch data is available, the League intends to participate in the proceedings to assist in identifying the commercial impact of any proposed changes in United States maritime policy.

Thank you, Mr. Chairman, and members of the Subcommittee on Merchant Marine for allowing The National Industrial Traffic League to present its thoughts on H.R. 518. My colleagues and I will now be pleased to answer any questions which the subcommittee may have.

Mr. AVERY. And then we can enter into a question-and-answer session.

First, the league's primary concern is to provide for the Nation and all of its shippers a sound, efficient, well-managed transportation system, privately owned and managed.

It is the policy of the National Industrial Traffic League that an absolute minimum of regulation in connection with ocean transportation and foreign commerce is desirable, because the complexity of international trade does not permit any one nation properly to exercise jurisdiction. Reliable, frequent, common carrier service, providing adequate space for shippers and consignees at fair and reasonable stable rates is essential. To achieve this, the league recognizes the need to support the principle of the ocean freight conference but not to the extent of the elimination from world trade of reliable nonconference carriers who also provide a valuable service to shippers.

Second, the league has no knowledge of the evidence secured in the Federal Maritime Commission's rebate investigations. However, the League recommends that the Commission's experience in these investigations be carefully evaluated to ascertain the extent of the problem, the effectiveness of the current conference selfpolicing programs, and the tendency, if any, of this malpractice for one type of conference structure over another.

Third, the league is strongly concerned about any effort that would restrict or eliminate price and service competitions in the U.S. liner trades. This subcommittee has heard recommendations that would

limit carrier entry into the U.S. liner trades, expand revenue and cargo pools, increase bilateral trade agreements, and/or establish closed conferences. The league finds such fundamental policy changes unacceptable. In the face of serious worldwide competition for foreign markets, it is critically important that we maintain a maritime policy which will provide the range of services and rate levels required to be competitive in foreign markets.

And, fourth, this subcommittee has been repeatedly advised that rebating is caused by overtonnaging, which is caused by the U.S. liner trades being open. The solutions all propose drastic reduction in competition, particularly that of the nonconference carrier, without evidence that overtonnaging is caused by excessive nonconference entry into the open U.S. trades. We believe that this subject requires complete study of each trade route to ascertain where overtonnaging exists and the causes for such overtonnaging, before entertaining any major change in maritime policy.

Thank you, Mr. Chairman. My colleagues and I will now be pleased to answer any questions the subcommittee may have.

The CHAIRMAN. Thank you, Mr. Avery. Referring back to your last statement, you feel that this legislation is a major change in maritime policy?

Mr. AVERY. No; we do not.

The CHAIRMAN. This committee has been attempting for a long time to enact a cargo policy that protects the American-flag merchant marine, and we feel that would probably enter into areas of major maritime policy changes. But, as far as this particular legislation is concerned, I tend to agree that it may not be a major maritime policy change.

Mr. AVERY. Yes, and the league strongly supports the objectives of this legislation.

The CHAIRMAN. Mr. Kyros.

Mr. KYROS. Thank you, Mr. Chairman. Mr. Avery, you have been a shipper for a long time, haven't you? I notice throughout hearings before the Merchant Marine Committee your name and that of Mr. Merritt, who appears here with you, prominently displayed, is that right?

Mr. AVERY. That is correct.

Mr. KYROS. And you have considerable experience in shippers' problems?

Mr. AVERY. That is correct, sir.

Mr. KYROS. Now, in the last decade, you have heard all the rumors, and I am sure you have been privy to information, general information, that rebates have occurred in the foreign trade of the United States, as everyone else has.

Would you say at this time that there seems to be less rebating going on? Could you make any value judgment? Some people have said that the investigations that have been commenced by the FMC, the hearings commenced just by this very committee, have prodded people to be a good deal more discreet in such malpractices as rebating.

Would you say that that is the case? Is there any way of knowing? Mr. AVERY. We have no judgment on which to base a responsible

response.

Mr. KYROS. You know, we talked earlier today of probably 600 carriers involved in the foreign commerce of the United States, roughly 20 American and the other foreign, and thousands of shippers, large and small. You are also familiar that about 215 consignors and consignees have been alleged to have rebated.

Do you think it is much more widespread than that as far as the shipper involvement is concerned?

Mr. AVERY. I have no knowledge of it, which is one of the principal reasons we support the legislation.

Mr. MERRITT. Mr. Kyros, I thought, too, that there were 215 shippers and consignees who were involved. There is previous testimony, the Chairman of the Federal Maritime Commission would indicate. However, in the testimony this morning, Chairman Daschbach seemed to refer to 215 cases rather than shippers and consignees.

We in the league have no direct knowledge of any of our members who have been a participant in a rebating procedure. As a matter of fact, to my knowledge, most of the corporate members of the league have policies directly opposed to any rebating procedures. We can't overlook the possibility that individuals may be involved in such a practice, but as far as the league is concerned we just don't know of any.

Mr. KYROS. Generally speaking, a large corporation which has a substantial commerce in shipping, foreign commerce, puts out a policy specifically telling its shipping department and shipping agents not to engage in any kind of rebating? Is that a general provision they put out as a policy?

Mr. AVERY. I don't know of any such broad statement. I only can tell you of the significant administrative effort to comply with the law.

Mr. KYROS. The bill provides, among other things, the possible use of a sort of immunity, that is, to get people, to induce them to come forward and sign up. And in your statement, the National Industrial Traffic League did not take a position on that limited use of immunity-and no reason why it should.

But do you have any comments on whether, in your judgment, that would be helpful in getting people to come in, sign up with the FMC, and put these matters behind them?

Mr. AVERY. We do not have a statement for you. We believe that is a matter wholly in the adjudicatory area-the Federal Maritime Commission, the Department of Justice, and the Congress.

Mr. KYROS. All right. It has been suggested, Mr. Avery, that all the liner companies execute a general certification and state that they will not rebate, they will cooperate with the Federal Maritime Commission in the event any allegation or any investigation of rebating

occurs.

Then someone has gone further and suggested, well, why not have every single shipper sign such a statement. And then, the next statement was, of course, well, how would they do that, how would every shipper, small and large, be signing statements about rebating? Someone said, well, why not put it on the bill of lading?

What kind of response would that incur from you, if someone ever suggested that? That is, a statement on the bill of lading that the

shipper says I am receiving these goods, but I have not rebated and do not intend to rebate?

Mr. AVERY. Do you have a comment on that?

Mr. MERRITT. Well, I am going to refer that question to counsel, if I may, Mr. Kyros.

Mr. DONELAN. Mr. Kyros, the league, as you know, is a national organization. It has been in continuous existence for about 70 years. In the course of that time it has enunciated certain policies and I might just quote one sentence. We feel "that an absolute minimum of regulation in connection with ocean transportation in foreign commerce is desirable, because the complexity of international trade does not permit any one nation properly to exercise jurisdiction."

Now, this particular matter, which you very properly have raised a question about, has never been before the league. Intuitively, it would be my view that the league as a body would not view that favorably.

Mr. KYROS. Now, have there been cases that you have from your own experience noticed that the rebating, kickbacks, refunds, absorptions of any kind, have caused discrimination as to shippers, that is, a certain carrier preferred a certain shipper in certain ways? Have you ever seen anything like that happen?

Mr. AVERY. No.

Mr. KYROS. Never in any of your experience?

Mr. AVERY. That's correct.

Mr. KYROS. Well, of course, rebates, however, would cause that, actual rebates would cause discrimination.

Mr. AVERY. By definition, yes, sir.

Mr. KYROS. And for that reason they should be strongly outlawed and prohibited, is that right?

Mr. AVERY. That is correct.

Mr. KYROS. Do I take it from you gentlemen that you had no inkling at all, then, that there was this rebating going on at any length on the part of U.S. and foreign flags?

Mr. AVERY. We do not know the extent of the problem, and we believe that this legislation is particularly well drawn to provide the Commission with the authority to present to the Congress within 18 months, based on a broader knowledge of the facts, the full facts in the issue.

Mr. KYROS. You generally touched on a subject here on page 3 of your testimony in which you say that you are aware there has been considerable testimony before this committee concerning recommendations to essentially control entry into the U.S. foreign trade in order to give some measure of control on overtonnaging. You say that the varoius methods proposed are not the kind of methods that you would find acceptable to your fundamental policy.

Mr. AVERY. Not without significant study of each trade route. Mr. KYROS. Suppose there is a problem, for example, we hear that Hapag-Lloyd is going to add container ships out in the Pacific-we have had testimony before this committee that the Soviets are able to add liner vessels into our trade-suppose there are problems of overcapacity that exist, do you have any recommendations generally about which way the committee should go in attempting to legislate in order to control that?

Mr. MERRITT. Mr. Kyros, I believe in the economic viewpoint, in my experience and I have had about 35 years' experience in ocean shipping practices-where there have been too many ships in the trade; some of those ships have pulled away and the owners have put them into other trades. That's an economic fact of life.

Mr. KYROS. Well, would the conference system as it exists today in our trades, a conference system that is essentially open to all comers to put their ships into the U.S. trade-and it is a lucrative trade, there has been testimony here to that effect-the problem of overtonnaging does exist, and they say these malpractices frequently follow overtonnaging.

And the problem is that shippers get discriminated against because rebates, as has been indicated by these hearings, have been paid. So it does affect you, Mr. Merritt.

What I am saying is, what action should the Commission take, if any? You can't talk about a free market force out there, because it just isn't a free market.

Mr. MERRITT. I think that the problem still requires, as the bill suggests, a study period. I am not prepared today to tell this subcommittee my views on what the national maritime policy should be. I don't have that answer for you, Mr. Kyros.

Mr. KYROS. Thank you very much. Thank you, Mr. Chairman. The CHAIRMAN. Mr. McCloskey.

Mr. MCCLOSKEY. I take it from your testimony there is no need for legislation to provide amnesty for shippers in the United States who may or may not have accepted rebates. Is that your testimony? Mr. AVERY. No; it is not.

Mr. MCCLOSKEY. Well, do you feel that shippers in the United States need amnesty?

Mr. AVERY. Again, we believe that is a subject for the adjudicatory bodies to determine

Mr. MCCLOSKEY. You can't have it both ways. You testified in favor of this legislation. Yet you say there is no need for the legislation as far as shippers are concerned because you are aware of no instances where shippers have received rebates.

What do you mean? Why is there need for the legislation, then, for shippers, if you have no knowledge of any rebates being paid to shippers?

Mr. AVERY. To put some clarity on the true issues that are at issue in this trade.

Mr. MCCLOSKEY. Now, wait just a minute. Let's get right down to this. You have no evidence that any shipper in the United States has ever gotten a rebate, and yet you are proposing legislation that would grant amnesty for any violation by any shipper who had.

What in the devil is the need for such legislation if there is no evidence that any shipper has ever violated the law? I would like you to answer that question. Why do you support this legislation if you have no evidence at all that any shipper has ever violated the law?

Mr. AVERY. There are two basic reasons that we believe it is necessary to support this legislation. One is to get an evenhanded treatment of all carriers that participate in this trade