Page 23: of Maritime Reporter Magazine (April 1994)

Details Of U.S. Maritime

Subsidy Program Revealed

New Tonnage Fees On Foreign Ships To Pay For Program

The Clinton Administration re- vealed a 10-year, $1 billion pro- gram for subsidizing the U.S. mari- time industry, to be financed by increasing tonnage fees on foreign vessels entering U.S. ports. The plan, which would cost approxi- mately $100 million per year, was incorporated into legislation re- cently submitted to Congress called the Maritime Security and Trade

Act of 1994, and constitutes a de- parture from previous proposals in that it contains a plan for paying subsidy costs.

Transportation Secretary

Federico Pena reportedly esti- mated that 52 ships would qualify for the program. However, only 32 would be allowed to enter the pro- gram in the first year.

Backing the plan, Gerry E.

Studds, chairman of the House

Merchant Marine & Fisheries Com- mittee, said "The fight for maritime reform, the fight to ensure that this nation has a strong and competi- tive U.S.-flag fleet, and the fight to see that it happens in our lifetime, have stretched out far too long.

Secretary Pena's announcement today reinforced the commitment

President Clinton made to Sena- tor Breaux and me last year to help us win this fight, and I believe we will win."

Formally debuted on March 10, the Merchant Marine and Fisher- ies Committee convened a hearing on the plan on March 17.

The program provides subsidies at the rate of $2.5 million per U.S.- flagged ship until 1997. The subsi- dies would decrease to $2 million per vessel from 1998 until 2004 when the program expires. In or- der to qualify for the program, own- ers would have to make their ves- sels available to the military in the event of a national emergency.

Vessels would have to be U.S. flagged, have U.S. crews, and be less than 15 years old. Foreign- built vessels in the program can be no older than five years old.

Transportation Department

Maritime Administrator Albert

Herberger reportedly said in- creased tonnage fees to support the program would amount to roughly $1.50 per teu per year. Put in other terms, it amounts to less than 15 cents per ton of bulk cargo, a penny per barrel of fuel and 38 cents added to the price of each cruise ticket.

AdministratorHerberger referred to the program as deregulatory, noting that program participants would be free of U.S. limits on which routes they may serve, which cargo they may carry, and other restric- tions of the current operating dif- ferential subsidy (ODS) program.

Owners of vessels in the current program may keep the vessels in that program or apply for ODS or other vessels to enter the new pro- gram, but may not apply to the new program pending termination of ex- isting ODS agreements. The Mari- time Administration will not con- sider applications that extend the subsidizable lives of ODS ships.

Transportation Department offi- cials reportedly warned that with- out the new program, the U.S. faced the possibility of losing all vessels under its flag. Among companies affected by the new legislation would be Lykes Brothers, reportedly the largest recipient of U.S. subsidiza- tion funds.

Maritime officials reportedly con- vinced the President that allowing

U.S.-flagged vessels to re-flag would constitute disaster. U.S.-flag ves- sels provide sealift services to the

U.S. military during military ac- tions and wartime. Larger crews and stricter rules aboard U.S.-flag vessels make U.S.-flagging vessels as much as $1 million per vessel per year. CSX Corp.'s Sea-Land Service

Inc. subsidiary reportedly said in (Continued on page 26)

THE DOUBLE EAGLE 333 HAS LANDED.

Introducing the first product tanker from America in almost a decade.

For information, call (804)380-2800. Or fax (804)688-4222.

Newport News Shipbuilding

A Tenneco Company

Newport News, Virginia 23607

Circle 342 on Reader Service Card

April, 1994 25