Clinton urged to fund maritime reform 2 major lines want to reflag ships

August 06, 1993|By Suzanne Wooton | Suzanne Wooton,Staff Writer

WASHINGTON -- With the nation's two largest shipping companies poised to register a sizable portion of their fleet under foreign flags, several Congressional leaders and others urged President Clinton yesterday to overcome squabbling in his administration and find the money for maritime reform.

"Today, our American maritime marine industry is dialing 911 to the president of the United States, and we want him to pick up that call," Sen. Barbara A. Mikulski, D-Md., told a Senate subcommittee at a hearing regarding applications by Sea-Land Service Inc. and American President Cos. to reflag 20 of their ships by 1995.

If approved by the U.S. Department of Transportation, the reflagging would reduce the nation's merchant marine fleet and potentially threaten its ability to respond to conflicts abroad, said Ms. Mikulski and others. Commercial ships are used to carry supplies during wartime.

The reflagging also would mean the loss of 900 American jobs because the two companies plan to hire foreign crews, who are paid substantially less after the reflagging.

"The American workers are the real losers in this," Ms. Mikulski told the Merchant Marine Subcommittee of the Senate Committee on Commerce, Science and Transportation.

The Clinton administration, like others before it, has promised to deliver a plan to Congress to bolster the U.S.-flag merchant fleet and the country's shipbuilding industry.

So far, however, it has not come up with the money.

While the Department of Transportation is financially committed, maritime reform has been stalled by the Pentagon's refusal to share enough of the cost of subsidizing the merchant marine industry. The industry estimated it needs about $5 billion in subsidies and tax breaks over the next 15 years.

"The Department of Defense is saying that not having a captive U.S. fleet is a risk we're prepared to live with," said John W. Snow, chairman and chief executive of the Richmond-based CSX Corp., which operates Sea-Land. "If there is an important national interest, then the cost should be borne by taxpayers and the Department of Defense."

While CSX and American President Cos., which operates American President Lines (APL), are lobbying for tax breaks and looser regulations, their primary concern appears to be increased subsidies to offset the wage differential between U.S. and foreign crews. That difference amounts to $3.4 million per ship a year, according to Mr. Snow.

Representatives of four maritime labor unions opposed the reflagging yesterday, saying they have made major financial concessions to Sea-Land and APL.

"The first incentive for reflagging is immediately replacing American-citizen crews with cheap wage labor from third-world countries," said Michael Sacco, president of the Seafarers International Union of North America, AFL-CIO.

By law, ships registered in the United States must operate U.S.-built ships with American crews, a condition that has prompted all but a handful of major shipping companies to reflag. Since 1970, the number of U.S.-flagged vessels has plummeted to 350, from 840, and the number of jobs for seamen has dropped to 9,165, from more than 40,000.

Sea-Land is applying to reflag 13 of its 41 U.S. flag vessels, while APL wants to reflag 7 of its Pacific fleet vessels and register six new vessels in foreign countries as well.

The House of Representatives passed legislation that would prohibit the two companies from reflagging for two years. But Sen. John Breaux, D-La., chairman of the Senate merchant marine subcommittee, said yesterday that his panel was not likely to consider the measure.

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