Congressional, Maritime Leaders Emphasize Backing of Jones Act, MSP, Cargo Preference

 

February 2018

 

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Hearing Examines State of American Maritime Industry

 

Strong bipartisan support for the U.S. Merchant Marine was readily apparent during a recent hearing in the U.S. House of Representatives.

 

Conducted Jan. 17 by the Subcommittee on Coast Guard and Maritime Transportation (part of the Transportation and Infrastructure Committee), the hearing’s broad purpose was to examine the state of the U.S.-flag maritime industry. U.S. Rep. Duncan Hunter (R-California) chairs the subcommittee, while U.S. Rep. John Garamendi (D-California) is its ranking member.

 

Subcommittee members heard from two panels. The first consisted of U.S. Maritime Administrator Mark Buzby and U.S. Coast Guard Rear Adm. John Nadeau, the agency’s assistant commandant for prevention policy. The second comprised Matt Woodruff, newly elected chair of the American Maritime Partnership (AMP); Eric Ebeling, president and CEO of American Roll-On/Roll-Off Carrier Group (testifying on behalf of USA Maritime); Aaron Smith, president and CEO of the Offshore Marine Service Association; Matthew Paxton, president of the Shipbuilders Council of America; and Bill Van Loo, secretary-treasurer of the Marine Engineers’ Beneficial Association (testifying on behalf of his union along with the SIU, AMO and MM&P).

 

Throughout the two-hour hearing, legislators from both sides of the aisle along with panelists spelled out why U.S. national, economic and homeland security rely on a strong American maritime industry. The industry in turn depends on laws and programs prominently including the Jones Act, the Maritime Security Program (MSP), and cargo preference. The return of a fully functioning U.S. Export- Import (Ex-Im) Bank also would provide a much-needed boost to American-flag shipping, several speakers noted.

 

Hunter voiced concern about the shrinking pool of U.S. mariners, and commended the industry’s efforts to mitigate the problem in part through the Military to Maritime program, which assists veterans in transitioning to careers in the U.S.-flag industry. (The SIU is a partner organization.)

 

Hunter also expressed incredulity at recent opposition to the Jones Act, which he described as “the absurdity of trying to take away America’s cabotage law. In order to maintain life as we know it, the Jones Act is intrinsic to that. It is the cornerstone…. I hope that we keep educating, because that’s what it’s going to take. The Jones Act is one of the cornerstones of our entire security apparatus.”

 

Garamendi also cited Jones Act support as a top maritime priority.

 

He said, “First and foremost, we cannot become complacent in our defense of the Jones Act, and our efforts along with other organizations to raise public awareness of the need for, and the many benefits that flow from this longstanding maritime policy.”

 

He added, “We need to … find new cargoes for U.S.-flag vessels in the international and coastwise trades. More cargo means more ships, and more ships mean more good-paying maritime jobs…. The export of oil and natural gas give us such an opportunity. We need better enforcement of existing cargo preference requirements, especially for the Food Aid shipments…. We also need to look creatively at how best to recapitalize our nation’s Ready Reserve Force, Military Sealift Command (MSC), and Maritime Security Program fleets.”

 

Buzby, formerly the commanding officer of MSC, reviewed the statutory mission of the Maritime Administration (MARAD), which is part of the Transportation Department. That mandate “is to foster, promote, and develop the maritime industry of the United States to meet the nation’s economic and security needs,” he said. “Congress long ago recognized that it is necessary for national defense, and development of domestic and foreign commerce, that we have a U.S. Merchant Marine capable of serving in times of war or national emergency, and composed of the best-equipped, safest, and most suitable types of vessels, constructed in the U.S., and crewed by trained and efficient citizen mariners.”

 

He continued, “Unfortunately, over the last few decades, the U.S. maritime industry has suffered losses as companies, ships, and jobs moved overseas. MARAD will continue to leverage, as appropriate, the current mainstays of the merchant marine: the Jones Act, the Maritime Security Program, and cargo preference…. The U.S. military, the most powerful military in the world, relies on U.S.-flag vessels crewed by U.S. civilian mariners, operating from strategic ports, and using intermodal systems to ensure delivery of vital supplies and equipment to service members and their families stationed overseas. This transportation partnership between the U.S. military and the U.S.-flag Merchant Marine has been proven as reliable, enabling, and cost-effective to meeting sealift requirements.”

 

Turning to cabotage, Buzby stated, “Coastwise trade laws promote a strong and vibrant U.S. domestic maritime industry, which helps the United States maintain its expertise in shipbuilding and maritime transportation. The Jones Act also ensures that vessels navigating on a daily basis among and between U.S. coastal ports and vulnerable inland waterways are operating with U.S. documentation and crew rather than under a foreign flag with foreign crew.”

 

Nadeau said, “A healthy maritime industry is vital to the nation’s economic prosperity and national security. It is also dynamic and continually evolving to meet stakeholder demand.”

 

AMP Chairman Woodruff praised U.S. mariners for their effective responses to last year’s hurricanes that struck the mainland, Puerto Rico and the U.S. Virgin Islands.

 

“In many cases, the men and women of our industry put aside the need to address damage to their own homes in order to help their fellow Americans because they knew the cargo they carried represented a lifeline to impacted areas,” Woodruff said.

 

Specifically addressing the Puerto Rico relief effort, he added, “As you all know, the original narrative was that the Jones Act was impairing the recovery effort, a narrative that was proven to be patently false. Thanks to your hearing last October, public statements, and other factors, the story quickly changed and the truth came out. In reality, the Jones Act fleet was steadily delivering containers to the island, which, unfortunately, were stacking up on the terminals due to road closures and other inland infrastructure issues that resulted from the hurricane. Today, we can say without equivocation that the Jones Act fleet was and continues to be a major part of the recovery effort.”

 

Woodruff concluded his prepared statement by citing the numerous security benefits directly stemming from the Jones Act: “If your concern is national security, the Jones Act contributes to it, whether by helping maintain the shipyard industrial base that is vital to national security, providing a pool of mariners who have demonstrated through the ages that they will go into harm’s way to support America’s interests and defense, or through using commercial vessels for military cargoes. If you worry about homeland security, you can sleep better knowing that the vessels plying our inland waters, often carrying dangerous cargoes, are manned by security-screened Americans, who care about keeping your home safe and secure, because they are your neighbors. If you care about economic security, you are glad to know that the vessels that keep vital goods moving between American cities and energy flowing will not disappear overnight because of a decision by a foreign power. You know the industry provides well-paying, family wage jobs that allow Americans to climb the ladder of economic security. You know that we cannot have energy independence or dominance if we have to depend on foreign interests to get our domestic energy out of the ground and to its markets in America.”

 

Ebeling said the U.S.-flag fleet “has been at a crossroads in recent years.” He reiterated the industry’s confidence in Transportation Secretary Elaine Chao, Transportation Command Commanding Officer Gen. Darren McDew, and Maritime Administrator Buzby. He then detailed the effectiveness and importance of the MSP, cargo preference laws and a fully functioning Ex-Im Bank.

 

“Smart and effective management by the U.S. Maritime Administration, and full cooperation of the shipper agencies such as the Department of Defense, Export-Import Bank, USAID, and other government shipping agencies is critically important to the U.S. international fleet, and to the survival of the U.S. Merchant Marine, which provides the loyal, competent, well-trained mariners for our vessels,” Ebeling said. “It is a rather simple equation. Without cargo, carriers will not invest in ships, and without ships, there will not be jobs for merchant mariners. Without those merchant mariners, the government-owned reserve fleet cannot be crewed.”

 

Smith of OMSA said his organization “is a strong supporter of the Jones Act. This act has proven time and again to promote U.S. national, homeland, and economic security.”

 

Paxton, head of the shipbuilder coalition, said of the Jones Act, “This policy, which is provided at no cost to the U.S. government, helps to maintain a merchant marine that is sufficient to carry our domestic waterborne commerce and also ensures that there is sufficient U.S. capacity to serve as a naval and military auxiliary in time of war or national emergency.”

 

He offered several illustrations of how some foreign countries subsidize their shipyards – a fact that shouldn’t be overlooked when calculating the costs of American-built vessels.

 

“U.S. shipyards do not compete on a level playing field in the worldwide market,” he observed. “For example, last year South Korea’s government injected $2.6 billion into one of their most prominent shipyards in order to keep the yard from going bankrupt. China’s government subsidies are extremely difficult to detect and measure, partly because international trade agreements prohibit direct and indirect subsidies. However, we know that there is a certain extent of market manipulation based on international news reports and recent studies.

 

“On top of [a] scrapping incentive, the Chinese government offers more overt support for its shipyard industry through cash infusions,” he added. “One such shipyard, Rongsheng, received state subsidies of up to $202 million per year from 2010 to 2012.”

 

Van Loo pointed to the U.S. Merchant Marine’s centuries-long history of supporting the nation in peace and war. Like other panelists, he also said America has reached a dangerous point for its U.S.-flag fleet and the men and women who crew the vessels.

 

“We continue the patriotic tradition of American mariners serving since the founding of our nation – we remain willing to sail into harm’s way in order to support and supply our military overseas,” Van Loo said. “A strong U.S.-flag fleet and the corresponding base of American merchant mariners is imperative to securing America’s economic and national security. Unfortunately, the pool of licensed and unlicensed mariners has shrunk to a critical level. Without governmental action, the military will no longer be able to rely on the all-volunteer U.S. Merchant Marine as our nation’s fourth arm of defense…. The commercial sealift capacity and its pool of highly trained and experienced mariners is reaching a diminished point of no return.”

 

He then spelled out numerous steps that can be taken to rectify the problems, and pledged the ongoing cooperation of maritime labor.

 

During question-and-answer periods, other subcommittee members expressed strong support for the Jones Act and the industry as a whole including Reps. Garret Graves (R-Louisiana), Randy Weber (R-Texas), Rick Larsen (D-Washington) and Alan Lowenthal (D-California).

 

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