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tion. And we believe that the Maritime Security Program should be amended to reflect the current ownership of U.S. flag vessels consistent with, to the fullest extent practical, the existing priority system for awarding operating agreements and the overalì interests of the Department of Defense.

We want to emphasize, Mr. Chairman, that under the proposed changes in citizenship ownership rules that we suggest, the MSP fleet will continue to be comprised entirely of American-flag ships with American crews, operated by companies controlled by Americans and contractually bound to provide national defense sealift shipping for the U.S. military worldwide.

These proposed changes would strengthen the Maritime Security Program and help ensure it is long-term viability. We note that representatives of the Department of Defense have repeatedly indicated their support for such changes.

In fact, they, too, have indicated that not only are they necessary to the future program, but that these arrangements have been, and are, used by the military to provide the operation of vessels performing a wide range of defense missions.

The unions sitting at this table, look forward to working with you to develop an expanded and updated maritime program which will create a more competitive and cost-effective U.S. flag commercial fleet.

Thank you, Mr. Chairman. And we will answer any questions that you may have. And I think Ron

[The prepared statement of Mr. Sacco, Mr. Davis, Mr. Rodriguez, and Mr. McKay can be found in the Appendix on page 91.)

Mr. HUNTER. Thank you very much, Mr. Saaco, for a very fine statement.

Mr. Davis.

Mr. DAVIS. Thank you, Mr. Chairman, and members of this panel.

Thank you for holding this hearing. I welcome the opportunity to appear before you today on behalf of the men and the women of the Marine Engineers Beneficial Association.

Our members serve aboard 40 of the 47 MSP vessels supplying international waters today and are an integral part of our armed forces national defense sealift capability.

The authorization of extended MSP, increase in size to 60 ships, is of vital interest to my unit and to our nation's economic and military security.

In addition to the points raised in the joint statement for this hearing, I want to emphasize at the outset in my remarks an important principal in any such program must be that U.S. mariner jobs, and more specifically, licensed officers' jobs, can not be disenfranchised.

By this, I mean the relationship between unions and the ratio of vessels must be preserved so that no future program jeopardizes already proven, highly trained and ready personnel available to our nation.

As the president of the nation's oldest maritime unit, founded in 1875, I am deeply troubled that, since January of this year, I have seen 12 vessels leave the American flag either to be re-flagged foreign or scrapped.

The Marine Engineer's Beneficial Association (MEBA) officers served aboard all 12 of these vessels. No doubt my fellow brothers on this panel have also witnessed the continuing loss of ships to foreign flags or to the scrap yard.

Such a loss of maritime capability is unacceptable for a nation faced with global challenges and responsibilities. Even more so in light of September 11 and the ongoing war on terrorism.

Importantly, three of these 12 vessels that once flew the American flag participated in the MSP program. We are confident that, with an extended and expanded program to MSP, replacement tonnage for these vessels will be brought on line soon, together with jobs for sailing members.

The other nine vessels no longer sailing under the U.S. flag represent a deplorable loss that will, most likely, not be met with replacement ships, unless a new, expanded program is authorized. In addition to losing an essential asset in time of national emergency, ships lost to our flag also represent lost jobs.

The nation's dwindling pool of highly-trained professional mariners represents not only a threat to the well being of my union and the U.S. maritime industry, but the lack of U.S. maritime manpower is a direct threat to our national security. These loyal, readyto-serve merchant mariners provide reliable crews for our MSP ships and other merchant marine vessels in a time of feral coalitions and global uncertainty. Moreover, the same crew base is expected to fully man the Defense Department's reserve sealift fleet.

The panel is familiar, I am sure, of the role played by the merchant marines serving this nation throughout its history. We have seen heroic efforts ranging from the Murmansk Run in World War II to Korea and Vietnam and to recent emergencies in the Persian Gulf, the Balkans and at home at the shore side evacuation of lower Manhattan on September 11.

The Staten Island ferries and New York City fireboats rescuing victims of that tragedy were crewed by MEBA members, eager to lend a hand at a moment's notice.

Just as the merchant marine is the cornerstone of the U.S. military's ability to project power globally, MSP is the cornerstone of our nation's maritime policy. Together with the Jones Act and cargo preference laws, MSP makes up the absolutely essential triad of maritime policies and programs supporting the U.S. merchant marine.

Without action to create an expanded program to MSP, MEBA risks losing 40 contracted vessels participating in MSP. Without action, these vessels will leave the U.S. flag. Without action, the maritime loses more mariners. Without action, America will lose a key element of military and economic power at a time when there is no substitute for American leadership. Without action, the day may come when U.S. troops engaged in combat halfway around the world are left vulnerable due to lack of ammunition and supplies because there are not enough U.S. ships to service them.

Thank you.
Mr. HUNTER. Okay. Thank you, Mr. Davis, appreciate it.
Captain Rodriguez.

Mr. RODRIGUEZ. Thank you, Mr. Chairman, members of the panel.

I am Captain Mike Rodriguez, executive assistant to Captain Tim Brown, president of the International Organization of Masters, Mates & Pilots.

Were it not for the fact that our union is presently holding its 79th convention, Captain Brown would be here, personally, to express our union's support for the Maritime Security Program and for the changes we believe are necessary to make it work even better for the United States.

On behalf of Captain Brown and the membership of the MMP, I am grateful that this hearing is being held—we are grateful that this hearing is being held so that Congress can gather the information it needs to properly consider Maritime Security Program reauthorization legislation.

At the outset, I want to emphasize that the reauthorization of the Maritime Security Program is extremely important for the masters and licensed deck officers represented by the MMP. We represent licensed officers working aboard 37 of the 47 United States flag vessels enrolled in the program. As such, the Maritime Security Program represents the most significant component of our U.S. flag foreign trades commercial fleet.

Let me state that the Masters, Mates, & Pilots strongly endorses the statement submitted to this panel by the four seagoing organizations represented here, today. Rather than simply repeat what my colleagues have already said, I would like to make and emphasize two points.

First, we believe that if we have learned anything from the attacks on our nation of September 11, it is that we must be even more vigilant about the threats we face through the carriers of cargo from overseas locations. To us, the only real security is the security that comes with the operation of United States flag vessels, crewed by United States citizens, as guaranteed by the Maritime Security Program.

The best way to ensure that our country has the information it needs regarding the ownership, operation, and crews of commercial vessels is if they are American flagged. We believe that a larger, more realistic Maritime Security Program, resulting in more vessels operating under the U.S. flag, with American crews, further enhances America's security by giving our country a greater measure of control over the loading and transportation of cargo destined for the United States ports, as more of America's foreign trade is carried on vessels owned and operated by American companies flying the American flag and crewed by our mariners.

Second, if Congress considers the issues relating to the U.S. citizenship ownership of vessels operating in the Maritime Security Program, it is important to understand exactly what we are suggesting and how maritime labor's proposal fits under current law.

Neither the Masters, Mates & Pilots union nor the other seafaring unions are asking Congress to abandon the United States citizen ownership requirements that apply to United States flagged foreign-trade vessels, in general, or to vessels in the Maritime Security Program. In fact, today, there are a significant number of United States flagged vessels that carry commercial and military cargoes that are operated by documentation citizens, as allowed by the existing law.

In addition, Congress, in 1996, when it enacted the Maritime Security Program, specifically allowed documentation U.S. citizens to participate directly in the Maritime Security Program. In other words, a maritime labors proposal is needed and an unprecedented attempt to allow documentation United States citizens to operate U.S. flagged vessels commercially or for the military or an unprecedented attempt to open the Maritime Security Program to documentation United States citizens.

As I said, Congress has already enacted laws that authorize those operations.

On the other hand, maritime labors proposal is an attempt to reflect the current ownership structure of the American maritime industry and to incorporate these changes into the law, as already enacted by the Congress. We suggest that for only existing Maritime Security Program vessels the distinction between certain documentation United States citizens companies and Section 2 United States citizen companies be eliminated. In all other circumstances under the Maritime Security Act, our proposal would retain the system as enacted by Congress in 1996.

I appreciate the opportunity to appear before this panel on behalf of the Masters, Mates, & Pilots, and I will try to answer whatever questions you may have for us.

Mr. HUNTER. Thank you.
Mr. RODRIGUEZ. Thank you, sir.
Mr. HUNTER. Captain Rodriguez.
Mr. McKay.

Mr. McKay. I do not have a prepared statement. I agree with everything this panel has just said. We do believe

Mr. ĦUNTER. You know, that is some of the finest testimony I have ever heard. [Laughter.]

Mr. McKay. You like that, huh?
Mr. HUNTER. Yes. Was that Gordon Spencer's idea? [Laughter.)
Mr. McKay. No. (Laughter.]

Mr. McKay. Though I will give him credit for it, no. I think it is a long overdue need for this new maritime program. Like anything, it can always be improved. And I think this is a step in the right direction. Mr. HUNTER. Okay.

Well, let me kind of summarize what I have heard. Gentlemen, it is this, that you see the American crewing and the American flagging as the paramount goal here. And that if we had some type of a-as long as we had an American directorship, from your perspective, an American directorship of these companies, the need to have the class 2 citizen, the so-called middleman that we have, is in the present structure, would not be necessary.

You could live with the proposal that has been endorsed, I believe, by Maersk and the other owners that would have an American directorship in the companies, but not necessarily an American ownership.

Is that right?

You could live with it? Let me ask you one other question. The one difference there, though, major difference-we have talked about maintaining the American interest and control-is that ultimately the stockholders, as I pointed out to one of the gentlemen

who was here in front of us, ultimately the stockholders could make a decision.

And if you do not own the stock in the company that maintains control, you do not really have control. But it is true the directors can, they can go against the stockholders until the next meeting is held. And that is about as long as they can do it. And at that point, the stockholders control the company.

So you would still have a company which would be controlled by the stockholders. And, therefore, perhaps, not meeting all of the goals in terms of having an American interest being served, maybe, in time of conflict.

The one thing that was just going through my mind as the testimony was going on, and I was thinking about the situation in Taiwan with China, with the other shipping companies, all the global shipping companies having major stakes and major interests, because of the massive China trade and shipbuilding and other economic interests.

And if it came time for them to choose up between Taiwan and China, well that is almost a choice that we cannot make, as an American government. And if you watch us tap dance on these issues, now, that becomes very apparent.

So it would be, maybe, a bridge too far for a global shipping company to make that choice in terms of going with the United States interests over those of China and seeing a wealth of investments in China and strategic and economic relationships evaporate.

So this is, I mean, this is a difficult choice that this panel is going to have to make if we, in fact, change this. And I would hope you can appreciate that. And I just wondered if you had any comments on that.

Yes, sir?

Mr. DAVIS. Mr. Chairman, it was not that long ago when the United States had American merchant mariner companies, liner companies, that had around-the-world services. Back in the 1980s, I worked for U.S. Lines. U.S. Lines went around the world. We had infrastructure around the world.

Recently, there was APL, a wholly-owned American company, and Sealand, a wholly-owned American company. But it is gone; those are gone.

What we also realize is that in the interest of national defense and what we are hearing from the other government agencies is that it is very important to have infrastructure.

Mr. HUNTER. You know, that is true. And, incidentally, Mr. Taylor and I and Mr. Saxton have been worried about China Ocean Shipping Corporation, COSCO, having infrastructure around the world and not only trying to get the Navy base at Long Beach, which we were successful at stopping, but now having terminals on both ends of the Panama Canal.

And, in light of the testimony that has gone before, there is a great deal of wisdom in their strategy, because it has now been pointed out very clearly that simply having controls of the ships is not even half the ballgame. You have got to have control of the infrastructure and the intermodal capability to move cargo once it gets to the shore.

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