amicxean. Jirector of Transportation, from the Office of avy lancower. Reserve Affairs, and Logistics.

Cefore answering any questions you may have, I would like to Ich mer in i ew central maritime matters. First, the U.S. dermant carmes the cornerstone of our sealift capability. We Dow ve sea ina ve fully support a viable merchant marine in cout teace and var. Over 35 percent of the Defense Department's moves in privately owned U.S.-flag ships. In peacetime me i ur argos shipped in U.S. berth liner service along the bag and tomestic commerce of the United States. In varme ind inder certain contingency situations, we would be AILS ZITNT ant on civilian shipping assets. Thus, the health Ice IS-dag merchant marine is vital to our national defense

The US perhant marine is, of course, more than operations in ce genera argciner rades. Tankers, bulk carriers, and special curuse saps are also vital to our national security as is the ality of the supyards which construct and repair both naval and merenact resses And, certainly the operation, construction, and repair of the US merchant marine is dependent upon trained productve zvitan manpower, which benefits both the merchant marine and the Navy.

Thus we have viewed with misgiving the stagnant conditions of our merchant deer and the declining shipyard order book. In the wrthiller service, we have seen some improvement. We understand that the US share of our foreign trade now stands at about 30 percent, but the competition from foreign flag is very keen, and our & dag operators are often competitively disadvantaged on

Si rade routes

The dry buik eet is old and very small, and moves but an extremely smail percentage. I think around 2 or 3 percent of our signers Lthough there now appears to be a worldwide surplus af dry bulk tonnage, that condition will not continue forever. In ay vent, Prudence dictates that actions be taken to revitalize Pattern S-flag shipping, as well.

dede al aware of the worldwide surplus of tankers, although Ne curren CS dag tanker fleet continues to be fully employed. Qu own tänder fleet is not, however, expanding, and our ships

At approximately 4 percent of our vital oil imports. This slidvor 1000 s improvement whenever it can be accom

Trevvymize that the primary purpose of your hearing today is to dover Phe fiscal year 1980 appropriations authority for the MariCrne Lammanstration (MA) of the Department of Commerce. ThereA & ag be useful for me to relate some of the interests we Aaaon with MA.

As You Now, the Merchant Ship Sales Act of 1946 established The Name Defense Reserve Fleet (NDRF) now administered by LA Axa cena 1%, many ships built in World War II were placed in ANA6 & 20 de used under specified conditions. You also know The me read upon the NDRF for shipping support in both the Asuka and enam conflicts. The NDRF still contains a number * YAWAY xdow which could not be competitive in the commercial SAN D which can be responsive under contingency conditions.

In addition, there is a segment of the NDRF, called the Ready Reserve Fleet (RRF), which is largely the result of trade-ins to the NDRF of newer and more modern cargo ships. The RRF is a joint Navy-MA program initiated over 2 years ago. The RRF program was undertaken to select and upgrade the best and most useful ships from the NDRF into a 5 to 10 day readiness status for contingency use. This program continues and as newer ships are traded in to the NDRF, the usefulness of this fleet will improve. Therefore, the Navy supports MA in the operation, maintenance, and improvement of the NDRF and there are funds in the Navy's 1980 budget to increase the size of the RRF upwards to 20 ships. In the area of ship construction, you are aware of Navy review and comment on plans for ships built with subsidy funds. As a result of these reviews, the Navy recommends certain national defense features (NDF) which make these ships potentially more useful for defense purposes. We are supporting MARAD concerning broadening the scope of NDF to improve further the utility of the merchant fleet.

We have recently completed a joint study by MA and the Navy Military Sealift Command concerning the civilian seafaring manpower requirements in peace and war in the 1978-84 period. Actions to improve our seafaring manpower posture have been initiated.

Since your time is limited, let me sum up the Navy's general feelings with respect to the U.S. merchant marine and related industry. Given the current situation, we believe that the merchant marine should be provided parity of treatment in competing with foreign-flag shipping, appropriate promotional assistance, and the necessary subsidies to balance costs of operation and construction as required.

That concludes my presentation. However, I think we should note that, while the past few years have been extremely trying ones for the U.S. merchant marine, MA has succeeded in holding things together and, pursuant to the Merchant Marine Act of 1970, has authorized the award of shipbuilding contracts resulting in the largest surge of merchant ship construction since World War II. Mr. Chairman, that concludes my prepared statement. The CHAIRMAN. Thank you, Mr. Secretary.

Mr. Secretary, last year the Congress passed a piece of legislation to require the Secretary of the Navy, and the Secretary of Commerce to meet on a quarterly basis. Of course, the purpose of it was to discuss the needs of the Navy vis-a-vis the American merchant marine President Carter vetoed that legislation.

What was the Navy's recommendation on that occasion?

Mr. WOOLSEY. I believe that Mr. Pyatt for the Navy testified to this committee that we did not feel the legislation was necessary, and felt that the purpose could be accomplished by administrative means to insure that the Secretary of the Navy and the Secretary of Commerce meet on a regular basis and fulfill the purposes of the legislation.

I might add, Mr. Chairman, that that has begun to happen. Secretary Claytor and Secretary Kreps met, I think, about a month ago, and another meeting is planned in a few months, and they

sors in the Maritime Administration, Navy Department slating it hat resting.

HAIRMAN. *sen the Navy came up her last year, Secretary ar vs tere he had with him the important planning people and very clearly emphasized the difficulty in the coding case in America to support a merchant ship construcmama wa Navy ship construction program. We ant to be em of expansion and the cost problems of exand be answers at that time were not very satisfactory. It mcated hat there was little coordination between the Maritime oration in the Department of Navy.

Tomes Ling, when the Congress takes the initia

move the coordination between the two ocean 3. ne sect and one economic, and both interrelated; we decarve reaction to the fact that once a quarter, two mas sacold beet in such a vital security and economic area - Carman, all I can say is that I think we re message, and I do not think the proposed legislavocour feet. I believe that its intended effect is being sex operation between the Navy and the Comment and MA is improving. Secretary Claytor has

VISEL Xerest in that.

eresscussion last month, with Secretary e state of the shipbuilding industry, and Navy-Marinooperation in that area.

u alked about the Ready Reserve Fleet. How reme Ready Reserve Fleet at the present

believe. for fiscal 1978, Mr. Chairman. I toward around 14 in 1979, and up toward The reason I say approximately is that I think erly stated in terms of tonnage rather than cers & t can vary by one or two.

any merchant ships would be necessary to rovement to the Persian Gulf in 30 days? ave to supply it for the record, but considor 20.

sergy more than that.

ave nat submitted by the Navy each year, ve in the Ready Reserve Fleet or the rent support for four division moveasir Juif or the Mediterranean or the Far

at for the record, we have it. my understanding that both Navy

Love stvices. Is there any coordination of es R. & D. activities?

eres Mr. Chairman. We have worked stration, at the working level, on merchant ship naval auxiliary proor example, to make containerships eve we have cooperated with

Mr. KINKBAR M. SamAT at sort of at the wood & Pet and there are sever

da if that ma & Mo recite those I was recT COST W M: Stover on Mr S well's staff Our conversAN AT Lee or four LAN BAKL matters of m

Now, in other are the Nary Sex Sisters Commend words very closely with the sipildy pns on the sue of MA, and I am sure their conversanos av s tepent, or perhaps even more frequent.

The CHAIRMAN What specially here you diatased in regard to nuclear propulsoc

Mr. KINKAD. I have not discussed nuclear propulsion with Mr. Stryker. I goes maybe sometime a couple of years ago I did The CHAIRMAN. Mr. Secretary, what would you recommend as far as the dry bulk segment of the US merchant marine is concerned? It is really not a question of revitalizing it, becNUS ne carry 1 percent of our dry bulk cargoes in American flag ships, so it would be a question of really starting from scratch.

What would you recommend

Mr. WOOLSEY. Well, Mr. Chairman, I think it would be for Maritime Administration and this committee to come up with specific recommendations as to industry's needs for ship types, and so forth, for any kind of application of a subsidy program.

My only expressed interest, the only interest I would want to express from the Navy Department's point of view, is that we import today about 30 percent of our total resource needs. That is double that of 25 or 30 years ago, and it is headed up. And as Admiral Kidd said, when he testified before this committee a few months ago, when you run a fire department you kind of like to own your own engines.

To the extent that this country depends upon the overseas sup pliers for ore, or anything else that would be carried by dry bulk ships, the ore is better carried in U.S. ships in the national inter est. So I do not want to try to rate that priority, compared with other priorities, as they would be assessed by the committee or the Maritime Administration, but I do think that it is certainly worth your consideration.

The CHAIRMAN. On page 4 you mention a recently completed joint study by the Maritime Administration and the Navy's Military Sealift Command, concerning the sealift manpower demands during peace and war in the half decade 1978 to 1984.

Will you generally describe what the study was pointing out? Mr. WOOLSEY. Well, the problem was to ascertain whether there would be sufficient mariners available, particularly in a contingen

46-188 O - 79 - 2

and determined by our capacity to do what must be done. In that respect, it is clear that we must retain and enhance our ability to transit international waters as worldwide traders in first-rate vessels in a competitive posture.

During the last 2 years as the chairman of this committee, I have often stated my goals for the American merchant marine. I can restate them today in one sentence: To see America once again ascend to uncontested maritime preeminence in the world, ready and able to lead the way. To that end, I pledge the best efforts of this committee.

[The bill and departmental report follow:]