US Does Support

Its Merchant FleetRep. Walter B. Jones' article, "Support the U.S. Merchant Fleet" (JofC, Feb. 24) points out that the United States "imports" 95 percent of its ocean transportation. In explaining this poor showing by U.S.-flag vessels, the chairman of the House Merchant Marine and Fisheries Committee recognizes that foreign-flag vessels are less costly to operate, but then argues that there are two other forces at work: (1) foreign nations are "more willing" to support their fleets, and (2) many reserve "huge chunks" of their commercial shipments for their own carriers.

While the chairman deserves to be applauded for his tireless efforts to win additional support for the merchant marine, his analysis is, in part,

misdirected. For instance, his 95 percent figure is an amalgam of both liner and bulk commercial (but not government impelled and U.S. military) shipments weighted by tonnage rather than freight revenues. In this mix, bulk shipments make up at least 80 percent of the equation.

The picture is distorted when the liner and bulk trades are grouped together in such fashion. For example, the commercial bulk trades are, with minor exceptions, free and open ship ping markets where price competition is intense, much to the benefit of U.S. importers and exporters. U.S.-flag participation in those trades has traditionally been minimal, not because of cargo allocation schemes but because of much higher U.S. flag costs that would require charter rates three to five times those of foreign vessels.

It is true, as the chairman contends, that some foreign nations assist their merchant fleets with direct and indirect supports, but it should be stressed that this practice is far more prevalent in the liner trades. In contrast, the overwhelming majority of the competitive vessels in the bulk trades receives no such supports.

In fairness, it should also be recognized that the value of governmental supports in any of the other nations in the free world does not even come near the aggregate costs of such supports in this country. U.S. taxpayers pay for operating subsidies, the additional freight charges for government impelled preference cargoes and military cargoes, not to mention the indirect costs of cabotage.

We must recognize that in the eyes of our maritime friends abroad we are looked upon as the quintessential example of a nation that directly and indirectly supports its merchant fleet. Complaining about the practices of other countries is, at the very best, a case of the pot calling the kettle black.

The chairman's claim of pervasive cargo reservation practices abroad also needs to be qualified. Roughly 95 percent of the commercial cargoes in the

bulk trades are shipped free of any such artificial restraints. The picture is more muddied in the liner trades where cargo preference practices by some developing countries, encouraged by the misguided UNCTAD Liner Code, are a constant concern.

To the extent that cargo preference practices in the Third World are a problem, they should be, and increasingly have been, resisted. In this regard, the administration has been actively involved in working to eliminate barriers to shipping services, multilaterally with the Consultative Shipping Group and within the GATT framework, and bilaterally in negotiations with Brazil and other trading partners.

To the extent that in terrorem legal machinery is needed to capture the attention of wrong-doers, the administration can simply cite the harsh retaliatory measures available to the Federal Maritime Commission.

In sharp contrast, the chairman's legislative proposals are geared to emulation rather than resistance. Even in this context his solution of mandating U.S.-flag participation in the Japanese and Korean car carrier trades misses the mark, considering the fact that those governments have not mandated cargo allocations governing those trades.

The other proposal discussed in his article is to compel U.S.-flag participation in trades where the practices of trading partners are deemed to be "unfair." Pending the introduction of this bill and the specific definition of "unfair" trading practices, the best that can be said at this writing is that emulating the regressive and objectionable practices of "some Third World nations is not the course that the world's most powerful trading nation should seek to follow.

Philip J. Loree, Chairman Federation of American Controlled Shipping New York

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