CARGO PREFERENCE GIVEAWAY

THE U.S. GOVERNMENT concluded a treaty with Iceland that allocates the

carriage of military cargo to and from U.S. bases in Iceland to both U.S.-flag carriers and Icelandic compa nies (65 percent to the lowest bidder; 35 percent to the next lowest bidder of the other nation).

This treaty flouts the rules of the U.S. Cargo Preference Act of 1904, which reserves the transportation of U.S. military cargo for U.S.-flag vessels. It is a serious breach of the law and a dangerous precedent that will certainly have repercussions. It also virtually assures that 65 percent of that cargo will not be carried by U.S.-flag vessels, which will usually be more expensive than competing foreign-flag vessels.Technically, our government is within the law. Our Constitution permits an international treaty, if ratified by the Senate, to supersede a domestic statute. Morally, however, it is highly questionable. The government, in effect, is making an exception to existing law because it suits a political purpose.

Indeed, this treaty is political. It is an attempt to shore up support for the current Icelandic government, which faces an election campaign against a strong and vociferous Socialist opposition. Included in the Socialists' platform is the pledge to scrap the highly strategic U.S. military bases located in Iceland. A Socialist victory would not be to the advantage of the United States, but it's debatable whether this cargo-sharing treaty will make much difference. One would think that it would be of little interest to the Icelandic people. Iceland does not have a merchant marine, and Icelandic companies charter ships of other nations to carry the cargo.

Edward J. Derwinski, counselor of the State Department and chief negotiator of the treaty, has been quick to give assurances that the treaty sets "no precedent" that should worry U.S.-flag carriers. We beg to differ. The Federal Republic of Germany, for one, is following this development with the greatest interest, and we can soon expect some kind of action from Bonn as it is coming under increasing pressure by German-flag carriers to negotiate a similar deal.

The Germans are the recipients of the lion's share of U.S. military cargo in Europe. It would be logical if Hapag-Lloyd were to push for a share of this cargo, along the same 65:35 cargo sharing formula of the U.S.-Iceland treaty. It seems obvious the United States could not deny to its German allies what it has granted to its friends in Iceland.

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