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In fact, some of our successes have been with countries with whom we do not have these treaties.

We have had success, and significant success, to which the lines and the other agencies can attest, with Italy, Turkey, Chile, Brazil, Argentina-to mention just a few. I am saying that some of them have treaties and some do not and these cases are within the last year and a half.

Mr. McCLOSKEY. Now, refresh my memory.

How many people are in your offce dealing with maritime matters and how many people in the aviation office ?

What are the numerical strengths?

Mr. Bank. I have 4 officers working for me, and I believe there are about 20 in the office of aviation.

Mr. McCLOSKEY. What is your opinion of Mr. Blackwell's statement that there must be some means of controlling entry into the U.S. trade routes if we are to have stability and a prosperous U.S. merchant marine ?

Mr. Bank. I believe there are a number of areas that can be investigated.

Mr. McCLOSKEY. We are talking about entry.
Mr. BANK. I understand.

Regarding the question of closed conferences in cooperation with shippers' councils and consumer input-I think this should be looked into.

Mr. McCLOSKEY. Should there be consideration of a statutory change with respect to the control of entry into the U.S. shipping conferences ?

Mr. BANK. I think there can be an investigation of that.

Mr. McCLOSKEY. If that is so, who in the administration should control entry into U.S. shipping conferences?

In the airline situation, it is the State Department, essentially, that does it; is that not right?

Mr. Bank. The State Department in collaboration with the Civil Aeronautics Board negotiates bilateral aviation agreements. I think it is a just responsibility.

Mr. McCLOSKEY. What would you see as a problem if we statutorily created an obligation on the part of the State Department in cooperation with the Federal Maritime Commission to control entry into the U.S.-foreign trades?

Mr. Bank. From the broad view, I don't see a problem, but it would have to be worked on legislatively in the same way that our entire shipping legislation has to be changed.

Mr. MCCLOSKEY. Can you tell me from your observations and experience, what would be the problems if we treated shipping in our foreign trade routes precisely as we presently treat airline competition?

Mr. Bank. I think that is a very good question. I do not think it is one on which I could touch all the points. It is one that a lot of people should consider. This question goes to the history of the two industries.

Mr. McCLOSKEY. That is my point.
Other than history—and I appreciate the history-

Mr. Bank. History is an important point.

Mr. McCLOSKEY. In what respects does the history change our considerations today as to why we should not treat our shipping lines precisely as we treat our airlines ?

Mr. BANK. It goes to the nature and type of cargo carried by the two different modes. That is an important aspect.

Mr. McCLOSKEY. In what way?

Mr. BANK. Even with the growth of aircargo, I have read figures such that over 95 percent or 99 percent of cargo tonnage and value still travels by ships as opposed to aviation.

Shipping and the relatively free movement of goods promote trade and create business.

Restrictions or inordinate restrictions on international shipping can very well have a significant impact, in fact, a negative impact, on world trade and the well being of all of us in the United States and the world.

Taking this as a basis and combining it with a history of the industry, which was initially laissez-faire in the older days in a pure free trade situation, it contrasts with the aviation industry which began in its more important stages after the war as a government-togovernment situation.

Mr. McCLOSKEY. Might you say we are out of date in shipping and not in airline regulation?

Mr. Bank. No; because they are two different industries in which two different goals and two different ends are involved.

Mr. McCLOSKEY. But the goal of the State Department in both cases is that American companies can compete and can carry a fair share of passengers or cargo; is that not correct?

Mr. Bank. That is correct.

Mr. McCLOSKEY. If the goals are the same and the problem is one of entry, what are we groping for? Which agency should control that entry? Is State a better agency or is the Federal Maritime Commission ?

Mr. Bank. It would depend upon what form the legislation is going to take.

Let me make this point: What I distinguish between shipping and aviation, I am not indicating that there is no correlation, nor has our view of the shipping industry remained unchanged over the last

from the view 50 years ago. Government participation, both in this country and abroad, is growing in the shipping industry, either through the desires of the operators or through the fact that we have had more governmentcontrolled operators worldwide. There may very well be a need for the government to have a stronger hand in creating the relationships bet ween the operators of two trading partners and, in fact, some limitation of access by cross traders.

However, I think this must be examined in the light of the shipping industry and the role which the shipping industry plays and that there are significant differences between the shipping industry and the aviation industry.

Mr. McCLOSKEY. Of course it must be examined, but we are almost in a crisis situation. If 5 or 6 of our 10 subsidized companies can

few years

not compete and are in danger of going out of business; if we have 9 out of 13 that have pled guilty or are being under investigation for illegal practices under the law; clearly the time for examination is long past, would you not agree?

Mr. BÁNK. Clearly the time for investigation is now. I agree.

Mr. McCLOSKEY. You indicated you sent a note to all of our Atlantic trading partners who have laws against disclosing facts to our Maritime Commission. Is there a provision where the Federal Maritime Commission could deny entry into the ports of the United States for foreign-flag ships that did not cooperate with our law?

Mr. BANK. No.

I think Mr. Blackwell made some reference to that. It was probably in another context, concerning section 19.

Mr. McCLOSKEY. Let me get a yes or no answer.

In your opinion, does the Federal Maritime Commission have the authority today to deny entry to U.S. ports to the ships of a foreign nation who failed to comply with Federal Maritime Commission regulations or trade routes

Mr. Bank. Probably not.
Mr. McCloskey. Do they have the right to deny entry to
The CHAIRMAN. Would the gentleman yield!
Mr. McCLOSKEY. Surely.
The CHAIRMAN. Don't give us a "probably not."

Communicate with us at a later date whether they do or whether they do not. I think the question refers specifically to the Federal Maritime Commission. We can broaden it.

Does any government law have the right to deny entry under
Mr. BANK [continuing). Violation of law or regulation?
The CHAIRMAN. Yes.
Mr. BANK. We will respond to that later, Mr. Chairman.

The CHAIRMAN. That communication will be placed in the record at this point. [The following was received for the record :)

DEPARTMENT OF STATE,

Washington, D.C., December 16, 1977. Hon. JOHN M. MURPHY, Chairman. Committee on Merchant Marine and Fisheries, House of Representatives

DEAR MR. CHAIRMAN: When the Director of the Department of State's Office of Maritime Affairs, Richard K. Bank, testified before the Merchant Marine Subcommittee on October 20, 1977, you requested that the Department provide you with a written reply to a question posed by Representative McCloskey and yourself. The question was: Does the Federal Maritime Commission have the right today to deny entry into United States ports to the ships of a foreign nation which fail to comply with Federal Maritime Commission rules or regulations?

In general, Commission enforcement remedies are injunctive relief and civil penalties of up to $1,000 a day. Sections 29 and 32(c) of the Shipping Act, 1916, as amended (46 U.S.C. 88 828, 831(c)). However, denial of entry is required as a remedy for violation of section 14a of the Shipping Act, 1916, as amended (46 U.S.C. $ 813). In addition, it may be ordered by the Commission where necessary and appropriate in the public interest to adjust or meet conditions unfavorable to shipping, as prescribed by section 19 of the Merchant Marine Act of 1920, as amended (46 U.S.C. $ 876).

Section 14a of the Shipping Act, 1916, provides that the Commissioner of Customs shall refuse a person the right of entry when the Commission finds

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(and certifies to the Commissioner of Customs) that such person is party to an agreement, in respect to transportation between foreign ports, which excludes a U.S. carrier and involves deferred rebates' or any other unfair practice designated by section 14, as amended (46 U.S.C. $ 812). The unfair practices designated by section 14 do not include rebates other than deferred rebates. To the best of our knowledge, the Commission has never found a section 14a violation, nor has entry to a U.S. port been denied to a foreign vessel pursuant to that section.

Section 19 of the Merchant Marine Act of 1920 authorizes the Commission to make rules and regulations in order to adjust or meet general or special conditions unfavorable to shipping in the foreign trade of the United States, which arise out of or result from foreign laws, rules or regulations, or from competitive methods or practices employed by owners, operators, agents, or masters of vessels of a foreign country. Regulations established by the Commission under this section must “not [be] in conflict with law." 2

The Department of State and the Federal Maritime Commission agree that the Commission is authorized under section 19 to deny port entry to foreign vessels where such action is “necessary and appropriate in the public interest." : Such a rule under section 19 could, however, be enforced only through a court order and with the cooperation of the Customs Service and the Coast Guard. To the best of our knowledge, this remedy has never been imposed. However, we note that the Commission on December 8, 1977 served regulations concerning particular section 19 sanctions, which were published on December 14, 1977, in the Federal Register (pp. 62914–62918). Denial of port entry is specified therein as a possible remedy in the event that these regulations are not complied with. Sincerely,

DOUGLAS J. BENNET, Jr.,

Assistant Secretary for

Congressional Relations. Enclosures.

Mr. McCloskey. Can you give me an opinion on how many people your office would have to have in order to take over all of the problems of control of entry into the U.S. shipping trades?

Mr. BANK. I would say

Mr. McCLOSKEY. Assuming we gave you a statute and that you have the same kind of Federal Maritime Commission-State Department cooperation that you presently have with the Civil Aeronautics Board and airlines; how many people would be necessary to handle it?

Mr. BANK. It would have to be larger than the size of the aviation office-40 or 50.

Mr. McCLOSKEY. About twice as large.

What would be the nature of the problems which would require twice as many?

Why?

Mr. BANK. They would include the volume of trade and the number of countries whose vessels would be calling on the United States, unless we limited it to bilateral trades, and access of vessels to the U.S. ports.

Mr. McCLOSKEY. So the sheer volume of the number of countries that have vessels as compared with those that have airlines?

1A rebate is "deferred” when it is paid after completion of the service and only if the shipper has complied with the terms of the rebate arrangement during both the period for which computed and the period of deferment. See section 14 (46 U.S.C. $ 812). The deferred rebate is much more difficult to prove than other type rebates (giving or obtaining transportation at less than the tariffe rates under sections 16 and 18(b) (3)), which are not punishable by refusal of entry under Section 11a.

• The ('ommission's regulations are set forth at 46 C.F.R. $ 506. 3 46 C.F.R. $ 506.9(d).

Mr. BANK. And the type of negotiations that would have to evolve to allow the different freedoms, using the aviation term, that would be required. It is speculation.

Mr. MOCLOSKEY. I understand. But I have seen a memorandum in relation to cargo preference. One of the reasons that the Secretary of Transportation opposed cargo preference was that he felt it might lead to ultimate nationalization of U.S. shipping companies.

Do you have an opinion?
Mr. Bank. No; I haven't seen the memo.

Mr. McCLOSKEY. You are not prepared to advocate nationalization of U.S. shipping ?

Mr. BANK. No.

Mr. McCLOSKEY. What have been your efforts thus far to obtain the cooperation of NATO allies or trading partners for cooperation with the Federal Maritime Commission?

Mr. BANK. As I pointed out before, and as Mr. Blackwell indicated, from discussions following a set of diplomatic notes and the response notes delivered to the governments involved, we feel confident that we will be able to take the first step necessary to get the cooperation of these governments.

Mr. McCLOSKEY. In view of the fact that the Administration has not yet undertaken this overall review of policy and in view of Mr. Blackwell's pessimism about an administration decision about how the laws should be changed, in your judgment, would it be appropriate to convene a conference here of all the nations with whom we have trading agreements or trading relationships and perhaps with Members of the House and Senate in attendance?

Those countries have not hesitated to make their views known with respect to cargo preference.

To unlock this, we could invite all the industrial nations with whom we trade, if our own administration does not wish to address it, to come up with a solution.

Mr. BANK. It is a possibility. A lot of work would have to be done beforehand.

Mr. McCLOSKEY. How much work and how long would it take?
Mr. BANK. I would say months.
Mr. McCLOSKEY. Two months ?

Mr. Banks. I think it depends again on the number of countries that are going to be invited. The number of months and the number of man-months is very difficult to say based upon allocation of resources.

Mr. McCLOSKEY. Say in the next week, would you be able to consult with the other agencies and the other people in the State Department and give us a precise timetable of the steps, the number of nations involved, and a recommendation as to the convening of such a conference this winter or spring?

Mr. BANK. If you would like, we could work on that and get back to the committee. Mr. McCLOSKEY. You have said you were going to do this anyway. Mr. Bank. In regard to the problem of rebating.

Yes; we are speaking to foreign governments. We have initiated steps. To make it broader, in regard to the number of nations and the

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