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STATEMENT BY ANTHONY SCOTTO, VICE PRESIDENT AND LEGISLATIVE DIRECTOR, INTERNATIONAL LongshoremEN'S ASSOCIATION, AFL-CIO

The International Longshoremen's Association, AFL-CIO, (ILA), files this statement before the Subcommittee on Merchant Marine of the House Committee on Merchant Marine and Fisheries to comment on H.R. 2462, a bill to authorize appropriations for the fiscal year 1980 for certain maritime programs of the Department of Commerce.

The ILA represents approximately 100,000 longshoremen and other waterfront craft workers from Maine to Texas, and in the Great Lakes. It also represents longshore workers in Canada, in Puerto Rico, and other ports in the Caribbean. These workers are employed in the day-to-day loading and discharging of vital ocean cargoes and handling of ocean-going vessels that are integral to the foreign and domestic seaborne trades of the U.S.

The ILA supports H.R. 2462 and concurs totally with testimony and statements made by other U.S. maritime unions, including the International Organization of Masters, Mates and Pilots, and affiliate of the ILA; the Seafarers' International Union; the National Maritime Union; and the Marine Engineers' Beneficial Association.

We, too, urge that the Maritime Appropriation Authorization Act for Fiscal Year 1980 be approved by the Congress, notwithstanding the fact that the fiscal year 1980 maritime program falls short of last year's authorization by $23 million. Moreover, the ILA respectfully offers the following general comments relative to our overall U.S. maritime policy.

A few months before the signing of the Merchant Marine Act of 1970, the privately-owned U.S.-flag fleet numbered 852 vessels, with an aggregate of 15 million deadweight tons. The signing of that Act was hailed as the key to the rebirth of America's merchant marine. It was intended to give the U.S. the shipping capability and capacity to provide service to all routes essential for maintaining the flow of our commerce at all times. The Act extended, for the first time in our history, the operating (ODS) and construction (CDS) differential subsidy programs to all types of merchant vessels. Its goal, of course, was the construction of 30 American ships per year for the next ten years.

It is now 81⁄2 years later and, as we all know, the United States has not achieved the 300 ship goal, In fact, the privately-owned active fleet currently numbers 543, although the aggregate deadweight tonnage has increased to 19 million deadweight tons. Some progress has been made, but it is important to note that most of the tonnage built under the 1970 Act was tankers and liquified natural gas (LNG) vessels. Our dry-bulk fleet and, to some extent, our container fleet, I regret to say, have not been built up in the same degree as liquid bulk carriers.

Nor have we achieved the cargo carrying goals contained in the Act. Ten years ago, the privately-owned U.S.-flag fleet carried less than 5 per cent of our waterborne export-import trade. At that time, Congress expressed its concern about the low participation of American vessels in America's foreign trade.

"The story of the United States merchant marine since the end of the (second world) war has been largely one of decline and disregard. Although the importance of sealift capacity was emphasized in Korea and . . . in Vietnam where 98 per cent of all supplies have been carried by ships, the U.S. merchant fleet has deteriorated to the position of fifth in the world and is now capable of carrying only about 5 per cent of this nation's waterborne foreign commerce.'

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To change this situation, Congress in 1970 reaffirmed the longstanding policy of the United States that this nation should have a merchant fleet "sufficient to carry a substantial portion of the waterborne export and foreign commerce of the United States."

Today there are 543 American-flag vessels in service and we are still only carrying less than 5 per cent of U.S. foreign commerce. In 1946, U.S. ships carried 62 per cent of U.S. foreign waterborne commerce. Yet, in the last 30 years, the U.S. waterborne export and import tonnage has increased nearly six-fold. In contrast, the number of U.S.-flag ships has decreased by 75 percent. As a result, the country's merchant marine has fallen from number one in the world to number ten. This has had great adverse effect on thousands of American workers in both shoreside and seagoing employment and in the many related industries that provide marine equipment, supplies and ship repairs.

If American ships were carrying just 50 per cent of the nation's foreign trade today, there would be some 4,000 ships operating under the U.S. flag. This would be a substantial benefit to the U.S. economy and result in tens of thousands of jobs for American workers.

We are the world's greatest trading nation, yet we have not made any significant progress to prevent our economy and security from becoming totally dependent upon foreign vessels operated by foreign governments. More importantly, the ILA believes our maritime status will be no different tomorrow than it is today unless we bring this message loud and clear to the Administration. The United States must develop a new maritime policy which accurately reflects the new rules and conditions which dominate international shipping.

When the Merchant Marine Act of 1970 was enacted, we could not foresee the economic and political forces that dominate our lives today.

Certainly, no one envisioned, for example, the rise of the Soviet merchant fleet and the extent to which it would penetrate into our trades. Nor could anyone conceive then that Panama Canal tolls could possibly increase by 75 percent in less than a decade, causing U.S. ports to lose some of their competitive edge to alternate modes of transport, such as the Soviet Trans-Siberian Railroad, or the minibridge system; or that oil and bunker fuel charges would surge at such extraordinary levels. Moreover, no one could envisage that executive levels of our government would design to battle each other in defense of causes contrary to our national interests, such as in the case of the Baltic Steamship case now pending in the courts.

And yet, the American merchant marine is expected to compete in 1979 as if the rules had not changed since 1970. We are supposed to operate as if state-owned fleets did not exist, and as if international cargo preference laws and predatory rate practices were non-existent. In short, we are acting as if traditional principles of free trade still dominated world shipping business.

If we do not dramatically change American maritime policy, the future of America's maritime industry will be more bleak than ever. Further, we believe that our nation should seize each and every opportunity to foster the growth of our maritime industry. This nation must use our vessels to the fullest possible extent in all maritime policy programs. And, we must rededicate our efforts to regain America's position as a leading maritime nation.

To encourage U.S.-flag participation in foreign trades, the ILA respectfully recommends the following points to be considered relative to our national maritime policy.

National cargo policy

Above all else, the U.S. must develop a national cargo policy which assures our merchant marine a fair share of all types of cargo.

Federal Government commitment to use American vessels

All federal agencies should be directed to use U.S.-flag vessels to the fullest extent possible.

Bulk shipping capability

Another essential component of any national cargo policy must be the development of a U.S.-flag bulk shipping capability. The U.S.-flag bulk fleet now consists of 13 vessels which carry less than 2 per cent of our dry bulk trade.

The ILA believes that the full implementation of such a maritime policy will help bolster the economy, promote national security, and provide additional jobs in shipping and allied industries.

Thank you for giving the ILA this opportunity to express our views on U.S. maritime programs.

[Whereupon, at 3:30 p.m., the subcommittee adjourned.]

MARITIME AUTHORIZATION AND OVERSIGHT 1980

THURSDAY, MARCH 15, 1979

HOUSE OF REPRESENTATIVES,

COMMITTEE ON MERCHANT MARINE AND FISHERIES,

SUBCOMMITTEE ON MERCHANT MARINE,

Washington, D.C. The subcommittee met, pursuant to notice, at 10:08 a.m., in room 1334 Longworth House Office Building, Hon. John M. Murphy, chairman, presiding.

Present: Representatives Murphy, Anderson, Donnelly, Snyder, Trible, and Davis.

Staff present: Carl L. Perian, chief of staff; Ernest J. Corrado, chief counsel; Lawrence J. O'Brien, Jr., deputy chief counsel; Len Sutter, counsel; Peter N. Kyros, counsel; Jack E. Sands, chief minority counsel; Ronald K. Losch, minority counsel; and Elizabeth Coker, subcommittee clerk.

The CHAIRMAN. The subcommittee will come to order.

Today is the third and final day of hearings on the fiscal year 1980 maritime authorization. We are privileged to have on today's agenda a distinguished array of some of the foremost authorities in the maritime transportation industry. Whereas previous sessions have focused on representatives of the executive branch and spokesmen for the maritime labor community, today's proceedings will, in part, be concerned with representatives of the subsidized operators as well as some half-dozen industry trade associations and promotional groups.

Prior to calling upon representatives of the private sector, however, we are privileged to have with us the Honorable Brock Adams, the Secretary of Transportation. Secretary Adams is no stranger to this subcommittee nor to the Congress, and many here recall fondly his many years of distinguished service in the House of Representatives. As a member of the Interstate and Foreign Commerce Committee and chairman of the House Budget Committee, his expertise in transportation matters assisted that committee in dealing with the very trying and difficult financial problems of reorganizing the Nation's railroads, as well as many other related problems.

Secretary Adams has taken the bold and innovative step of creating an Assistant Secretaryship of Transportation for Marine Transportation, and this subcommittee is anxious to learn his plans and goals for this new post.

Secretary Adams, welcome to the Subcommittee on Merchant Marine, of the Merchant Marine and Fisheries Committee.

STATEMENT OF HON. BROCK ADAMS, SECRETARY, DEPARTMENT OF TRANSPORTATION, ACCOMPANIED BY REAR ADM. R. H. WOOD, MARITIME POLICY ADVISER TO THE SECRETARY OF TRANSPORTATION; AND RICHARD F. WALSH, DIRECTOR FOR TRANSPORTATION ECONOMIC ANALYSIS, OFFICE OF THE SECRETARY, DEPARTMENT OF TRANSPORTATION

Secretary ADAMS. Thank you very much, Mr. Chairman. I am most pleased to come before the committee and testify about the new office of the Assistant Secretary for Marine Transportation, and our plans regarding the functions and responsibilities of this new office.

At the outset, I ought to indicate that the entire staff structure of the Department of Transportation-and by staff, I mean the staff that reports to the Secretary, as opposed to the line administration, such as the Federal Aviation Administration, the Federal Highway Administration, and so on-has been restructured because of changes that occurred in the law during the period of time just prior to my taking office as Secretary of Transportation.

For example, we revised the positions of all the Assistant Secretaries. We had to create an Assistant Secretary for Budget and Program Review, because the Budget Act had come into existence, and we were required also to establish a Program Review Unit. The Assistant Secretary for Administration, a position which is established by statute, was given new responsibilities and is gathering more responsibilities in a new audit area. We retained the policy and congressional liaison Assistant Secretaries while combining some previously separate functions under these offices. We streamlined the Office of the Secretary, placed in operational offices people that conduct operations, and reduced the total number of people reporting to the Secretary. Since the DOT Act authorizes the Department to have a total of five Assistant Secretaries, this restructuring left vacant one Assistant Secretary position.

Early on in my tenure as Secretary of Transportation, as I traveled, both locally and abroad, not on maritime matters, but on other matters which the Department of Transportation is involved in, such as aviation and highway systems, I found that we were constantly being asked about the Nation's maritime policy.

For example, at that time we were trying to develop an aviation policy group, which now we have done, consisting of State, Transportation, Justice, representatives of the CAB, and other interested agencies, to enable us to negotiate bilateral aviation treaties effectively. We had to do that, because when we first came in I was very concerned in that the organization of the American Government with respect to aviation negotiations was badly divided, and we were trying to move in a new direction. As I discussed this new initiative with ministers of foreign governments, they often inquired peripherally what we were doing in the maritime area, and (explained to them that the U.S. Government had a divided group of responsibilities in that field.

I am well aware of the fact that when DOT was established our basic mission, which we are still trying to accomplish, was to get a Cast, safe, and efficient national transportation system, based on national policies and programs. This means trying to combine, not

by Government fiat but both by promotion and otherwise, the rail, highway, aviation, and marine modes. The marine modes have an enormous impact, particularly the inland waterways, on our national transportation system. The inland waterway is really the area in which we are most involved with the new office I have established.

Let me outline for you now how we have combined resources within our organization, to provide sort of a window to the world for the groups that want to talk to us about marine transportation problems. This particularly involves, as I say, the inland waterways, as you will see as I describe the sections of the new office. We do not propose to bring on any new people to staff this new office. We are using the existing positions.

This office does not change our relationship with the Coast Guard. But early on, as this committee knows, we had to create a position of Maritime Policy Adviser, responding directly to the Secretary, because we were involved all over the world in the IMCO negotiations, tanker safety, crew standards, all of the port operations that the Coast Guard is required to interface with, et cetera. And you will remember that the President sent a set of initiatives to the IMCO countries, which the Congress adopted. For the first time the whole world community moved a quantum step forward in the IMCO negotiations. Much of this progress was due to the people in the Coast Guard, and the other divisions that I will mention in a moment, that went throughout the world and convinced the world community that we had to deal with the oil pollution problem, and with tanker standards, and so on.

I want the committee to be very much aware that I, as a member of Congress, was here when the Department of Transportation was created, I am very well aware of the section 7(a) provisions of the DOT Act. But the interface between the marine, surface, and air modes has become increasingly apparent.

What we want to do is simply create, as a staff function to me, a focal point within the Department for maritime affairs so that I have people in one area, talking to one another, providing me with staff advice. Previously, they were scattered through four areas. This office will act as a catalyst, to provide for comprehensive analysis, and to provide a voice particularly for the domestic marine industries we try to work out what to do with the railroads and the highways, and particularly with the bulk shipments out of the middle part of the United States.

We basically represent consumers of transportation services, people who have to move large quantities of coal, grain, gravel, and other items. They make choices in the free market as to which mode they are going to use. The Department of Transportation wants to be sure that the systems are available, that shippers know what they are and which ones they can use. And to the greatest degree possible we want to be sure that the various modes interface effectively because we are trying to use the most efficient system in each case.

We are in a rather unique position in that our constituencies cover a whole gamut of different interests in the total transportation system, and we are interested in trying to work with the maritime area with a completely unbiased view. We have no posi

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