The Senate vote to limit the level of cargo preference rates was a mistake, said Adm. Albert Herberger, President Clinton's nominee to head the Maritime Administration.
At a confirmation hearing Wednesday before the Senate Commerce, Science and Transportation Committee, Adm. Herberger said he would be a strong advocate for the U.S. merchant marine industry and that cargo preference requirements were an important part of the nation's maritime policy.The Senate told President Clinton that federal agencies should not ship aid to Russia on U.S.-flag vessels if they cost more than double the world rate.
The 51-47 vote on the issue came Tuesday on a non-binding sense of the Senate resolution that does not have the force of law to limit cargo preference requirements, but sends a signal that Congress is beginning to look more critically at the cargo set-aside provision.
The Clinton administration could use the resolution as a guideline for determining what constitutes "a fair and reasonable rate" that U.S. vessel owners can charge the government for guaranteed cargo, which could put a cap on rates.
The Agriculture Department said earlier this year some bids from U.S.-flag vessels for shipments of food aid to Russia were three to four times the amount sought by foreign-flag vessels. U.S. vessel owners disputed that, saying port congestion and delays, not price gouging, raised the rates.
On Wednesday, a maritime labor leader denounced the Senate resolution but called it a "serious wake-up call" for the maritime industry.
The Senate vote "will only serve to feed the near-fanatical mentality of those who are determined to get rid of the United States merchant marine," said Gordon M. Ward, president of District 1/Marine Engineers Beneficial Association. At the same time, it "sends a very clear message that our industry is in serious trouble and needs to double and triple its effort to defeat similar measures in the future," Mr. Ward said.
The arguments made during the Senate debate were nothing new: Farm state legislators said cargo preference is a subsidy of the maritime industry too costly to continue if not reined in, and maritime industry supporters said agricultural subsidies are much larger.
However, farm-state legislators picked up some new support, including that of Sen. Alphonse D'Amato, R-N.Y., who voted for the amendment introduced by Sen. Hank Brown, R-Colo.
Sen. Brown said that because 75 percent of all agricultural aid shipped must go on U.S.-flag vessels, owners were free to charge whatever rate they wanted without worrying about competition.
Democratic Sens. John Breaux of Louisiana and Paul Sarbanes of Maryland said the farm support programs they vote to fund are far more costly. He said taxpayers foot a $7.6 billion annual bill for export promotional programs. Sen. Sarbanes said Russia was required to buy U.S. wheat even though Argentine wheat is less costly.
Sen. Charles Grassley, R-Iowa, said the vote was more of a moral victory than anything else and the growing support could lead to more extensive limits later.