NATIONAL SECURITY/ECONOMIC BENEFITS

WEDNESDAY, JULY 23, 1975

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON MERCHANT MARINE OF THE

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

Washington, D.C. The subcommittee met, pursuant to call, at 11:57 a.m., in room 1334, Longworth Office Building, the Honorable Thomas N. Downing (chairman of the subcommittee) presiding.

Mr. DOWNING. The committee will now resume its oversight hearings with respect to the economic benefits associated with the U.S. merchant marine.

At this point, we look forward to receiving views of the Maritime Committee and Common Cause.

Thank you gentlemen for being with us this morning and I am real sorry about the delay in starting these hearings.

Our first witness is Mr. Shannon Wall, president of the National Maritime Union, who will testify on behalf of the Labor-Management Martime Committee.

Mr. Wall, we welcome you to the subcommittee. If you will come forward, you may proceed.

STATEMENT OF SHANNON J. WALL, COCHAIRMAN, LABOR-MANAGEMENT MARITIME COMMITTEE; ALSO PRESIDENT, NATIONAL MARITIME UNION; ACCOMPANIED BY EARL W. CLARK, CODIRECTOR, LABOR-MANAGEMENT MARITIME COMMITTEE; TALMAGE SIMPKINS, EXECUTIVE DIRECTOR, AFL-CIO MARITIME COMMITTEE; AND EUGENE P. SPECTOR, RESEARCH DIRECTOR, NATIONAL MARITIME UNION

Mr. WALL. Mr. Chairman and members of the committee, my name is Shannon J. Wall, cochairman of the Labor-Management Maritime. Committee. I am president of the National Maritime Union of America, AFL-CIO, and am also representing the AFL-CIO MaritimeCommittee.

I have with me this morning Mr. Talmage Simpkins of the AFLCIO Maritime Committee, Mr. Eugene Spector, research director, National Maritime Union, and Earl Clark, representing the LaborManagement Maritime Committee.

The Labor-Management Maritime Committee is composed of major steamship lines and maritime unions. For that committee and the AFL-CIO Maritime Committee, let me say that we appreciate this (285)

opportunity to present our views on the national security and economic benefit aspects of our American merchant marine.

We would like to say at the outset that it is becoming increasingly difficult to separate these aspects as they become more intrinsically interlocked with each new international development. For example, foreign oil and many strategic materials are essential to our economy and to our defense posture. We must import 85 percent of our tantalum; 95 percent of our cobalt; 95 percent of our asbestos, 100 percent of our tin, 93 percent of our nickel, 99 percent of our chromite, 100 percent of our rubber, 99 percent of our buxite, and 85 percent of our antimony, to mention only a few of the essential raw materials required in both peace and war.

These commodities are supplied through ocean shipping and thus ships become of more crucial economic and military importance with each passing year.

Any examination of the adequacy of our maritime programs to meet national needs must face, first and foremost, the fact that American flagships are carrying just over 6 percent of the Nation's waterborne. foreign commerce. The U.S. share of U.S. cargoes has been at that level or below consistently since 1966 and has been under 10 percent since 1960.

A merchant marine that is geared to carry only 10 percent and less of the Nation's seaborne imports and exports cannot be expected to rise to the challenges it will have to face in any emergency, even a limited one.

The U.S. Merchant Marine has risen to great heights in the past but at enormous cost in lives and human suffering as well as money. Much of that terrible cost might have been saved had we maintained our merchant shipping capacity at reasonable levels before the

emergency.

Therefore, in our opinion, the most important requirement to make our maritime programs effective in terms of national interest is action. to expand the share of U.S. cargoes carried by U.S. ships.

It was gratifying to hear the Defense Department spokesman testify at those hearings that the Department recognizes it can no longer rely on the so-called "effective control" principle. The order which the Liberian Government issued in 1973 to all ships flying its flag restricting their operations in the Middle East trouble area coming simultaneously with Liberia's declaration in favor of one side in the conflict there, could leave no doubt about the fallacy of "effective control" of American-owned foreign-flag ships for defense purposes.

The fact is, evidence that effective control won't work has been available for a long time for anybody who wanted to recognize it. We have been through many emergencies since the policy was enunciated, but no "effective control" of American-owned foreign-flag ships has been demonstrated. On the contrary, there have been numerous occasions when cargo loaded on foreign-flag ships destined for Vietnam had to be taken off because the crews of those ships refused to assist the US. cause.

As far as we have been able to determine, no "effective control" ships participated in the Vietnam sealift. Yet we were desperate for shipping in that limited emergency. U.S. commercial ships had to

leave their regular routes to supplement the rust-eaten World War II ships that were brought out of the reserve fleets and patched together to fill our needs. We submit that the failure to use the so-called "effective control" ships in that emergency stemmed from the fact that those in charge of the operation simply did not trust them.

There is no question that this country could by force take over many of the "effective control" ships in an emergency, should the country of registry try to assert its national sovereignty. But whatever crisis we were facing would be multiplied many times over by such action. For example, just imagine the position we would have been in going after the Mayaguez if she were under Liberian or Panamanian flag with a foreign crew.

There is also an extremely serious threat closer to home. When Congress was acting recently to close tax loopholes enjoyed by oil companies and other international operators, one of the threats the companies posed was that such action on taxes might force them to transfer their foreign-flag ships from Liberian and Panamanian "convenience" registry to other "legitimate" foreign registries where the ships would no longer be under "effective control."

Apparently the companies assumed, with their "effective control" fleet now totaling more than 16 million tons greater capacity than we have under U.S. flag-and with a defense policy in which that fleet is a key ingredient, that they could use it to threaten Congress on this tax legislation.

We hope the statement of the Defense spokesmen before this committee, to the effect that they no longer could rely on those vessels will bring effective action to free the Nation from the threat the former policy posed. The "effective control" concept should be eliminated not only by formal policy declaration but by statute.

There should be a full reevaluation of our current maritime capacity and our shipping needs to make up for that 16-million-ton fallacy. That will require considerable vision, probably going beyond the scope of these hearings, but if we are to establish a realistic maritime policy, it has to be done.

Our tax laws should be revised to assure that no more advantages are enjoyed by the corporate owners of runaway ships over those shipping companies flying the U.S. flag. The AFL-CIO Maritime Committee strongly urges that war risk insurance privileges for foreign flagships also be eliminated.

Another area of reliance in the past for vessel capacity in emergency situations has been the so-called reserve fleet. The quality of the reserve fleet has steadily deteriorated to a point where it would have little value in an emergency situation. The Victory ships broken out of the reserve fleet for the Vietnam sealift were costly, required extended time periods to be made operational and were grossly inefficient. They were kept going only by the skill and dedication of their crews.

More than ships, we must have competent people to man our shipsmen and women who have the knowledge, experience and ability, plus the courage and loyalty to keep our ships sailing in the kind of emergencies we must be prepared to face. A couple of things are sure--you can't put seamen in mothballs and you can't buy loyalty.

There are shortages of certain licensed and unlicensed ratings even

now. This is in part due to the economic uncertainties of the industry. Many seamen prefer steady shoreside employment rather than struggle through the uncertainties of the maritime industry. New seamen face an even tougher situation and there are not many who will stick out long years of sporadic employment until they have accumulated sufficient skills and seniority to give them a reasonable hope of steady employment. The merchant marine needs a steady influx of dedicated young people. And those young people deserve a solid industry on which to build their careers.

When the 1970 Merchant Marine Act was passed, it was hailed by all as a revival of hope. It has enabled us to make some progress but it has not solved all our major problems. At midpoint of the 10-year program, an assessment is timely.

In some important aspects, the situation today is worse than it was in 1970. Our ships have made great gains in efficiency but competition is increasing and the scramble of freight grows more furious. Seamen's jobs continue to decline.

As cochairman of the Labor-Management Maritime Committee and as representing the AFL-CIO Maritime Committee, may I say that our interest is in achieving an efficient and economically healthy U.S. merchant fleet able to provide secure employment with fair pay and decent conditions for seamen. The National Maritime Union is in the forefront in support of this purpose.

The U.S. merchant marine has gone through a period of enormous technological development in the past several years.

Maritime labor did not stand in the way of this development. We recognized that unless U.S.-flag ships can hold their own against the ships of other nations we can look forward to nothing but continued decay and decline as a result of which all seamen will suffer.

With this technological advance, we looked for a regeneration of national purpose concerning the U.S. merchant marine. This was what the 1970 act was supposed to be about. It was the premise on which we could look forward to greater prosperity for the maritime industry and better and more secure jobs for American seamen. Up to now, however, we have paid a heavy price, with seagoing jobs plummeting from about 66,000 in 1966 to 37,600 in 1970, to about 27.000 today.

This is due mainly to the increased efficiency of U.S. ships, with no comparable increase in their share of U.S. foreign commerce. However, we should also point out that a part of the job loss in that period stems from the deliberate destruction of a prestigious and strategically valuable passenger ship fleet. We still believe it would be in the national interest to restore the SS United States to service, even if only as a goodwill ambassador. She is still the greatest ship in the world. She would be a tremendous psychological and political asset. Instead, wasting away in layup, she is a source of national shame and humiliation.

Further, the industry has an obligation to those many thousands of seamen who manned a once-proud U.S.-flag passenger fleet to assure continued employment, as well as to safeguard the pension of those who were able to retire from the industry.

The total active fleet has shrunk from 933 vessels as of January 1, 1970, to 531 as of June 1, 1975. Conversely, American waterborne