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JULY 16, 2002

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Your performance in transporting equipment and sustainment cargo to our forces around the world has enabled them to maintain their readiness and accomplish their mission. As expected, APL has been a true partner in providing service to Afghanistan and its surrounding area. Your recent handling of the Force Provider modules was simply superb. The success of our operations in the Afghanistan area would not be possible without the level of performance you showed in moving this shipment and others into the theater of operations.

APL should be proud of the service it has provided and the role it has played in the war against terrorism. Your staff of Mr. David DeBoer, Mr. Ron Seignious, and Mr. Lars Magnusson has performed exceptionally. As Operation Enduring Freedom and other missions around the world continue, I ask for your continued support and diligence in providing world class transportation service to the Department of Defense.

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On Tuesday, July 16, the Merchant Marine Panel will hear testimony to amend U.S. maritime law to allow foreign companies with a Special Security Agreement (SSA) with the Department of Defense to be added as an eligible operator of ships to receive subsidies under the Mantime Security Program. On behalf of the shipbuilding industry, the American Shipbuilding Association (ASA) urges you to oppose this proposal. A foreign company with a SSA, which is designed to protect classified technology, is no substitute for an independent U.S. citizen company. If this amendment is adopted, there will be no U.S. citizen company operating ships in the MSP fleet.

The United States is a maritime nation, yet it is growing increasingly reliant on foreign companies and foreign governments for the construction, ownership and operation of merchant ships to meet US military sealift requirements in times of war and national emergency. In the absence of a renewed commitment to foster a U.S. Merchant Marine -- a fleet of ships built by Americans, owned/operated by Americans, and crewed by Americans -- there will be no independent American commercial fleet to serve as a defense auxiliary fleet. The demise of the U.S. Merchant Marine is a direct result of a Nation that has not made in recent decades a small investment, in comparison with many other national investments, to maintain this critical national security capability.

When Congress enacted the Maritime Security Act of 1996, it tried to maintain a U.S. Merchant Marine by applying a band-aid instead of a tourniquet. At that time, Congress arnended U.S. maritime law to allow foreign-owned and foreign-built ships to be eligible for operating subsidies under the Maritime Security Program provided that the ships were operated by Section 2 U.S. citizen companies and crewed by U.S. citizens. The U.S. citizen operating requirement was retained to ensure that DOD had access to a ship in an emergency, regardless of the political position of a foreign government where the ship owner may reside.

As a result of the 1996 Act, 87 percent of the ships operating in the MSP are foreignowned, and 99 percent are foreign-built. Now, these foreign owners propose that Congress essentially repeal the U.S. citizen operating law. They maintain that they can reduce their operating costs if they no longer have to place the control and management of their ships with an independent U.S. citizen company. Whatever the cost of U.S. citizenship control, it is a small price to pay to ensure that these ships are available if and when DOD needs them. Furthermore, is Congress prepared to list the foreign governments whose companies may be eligible under this revised program? Can Congress list with certainty the 100 percent reliability of any foreign

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