MARAD OFFICIAL BLASTS REPORT POINTING TO BENEFITS OF FOREIGN SHIP OPERATORS

MARAD OFFICIAL BLASTS REPORT POINTING TO BENEFITS OF FOREIGN SHIP OPERATORS

Warren Leback, U.S. maritime administrator, slammed a recent International Trade Commission report that says American consumers and the economy would benefit if U.S. coastal maritime trades were opened to foreign ship operators.

Mr. Leback attacked sharply in a speech late last week in Key Largo, Fla., and in a letter to Anne E. Brunsdale, acting chairman of the trade commission."We found (the commission's study) to be flawed by major errors, faulty analytic assumptions and invalid conclusions," he said.

Mr. Leback heads the Department of Transportation's Maritime Administration, the agency responsible for promoting the health of the U.S.-flag merchant fleet.

The trade commission report, released last year, was the third of a series by the agency on "significant U.S. import restraints." It concludes that if the 1920 Jones Act, which reserves coastal commerce to U.S.-built and -manned vessels, is eliminated, consumers will gain $4.2 billion to $10.4 billion annually through lower shipping costs.

The report also said maritime operators would lose about $630 million in profits generated by Jones Act restrictions.

In the letter to Ms. Brunsdale, Mr. Leback said the commission report ''presents grossly exaggerated costs to the U.S. economy without reference to the value of maintaining a viable U.S.-flag maritime industry."

He called it absurd for the trade commission to assume that if tanker rates were halved, Alaskan oil production would double to over 4 billion barrels a day.

"There are not enough reserves to double production," he asserted, noting that production is declining and the Trans-Alaska Pipeline has a maximum throughput of 2 million barrels a day.

"Yet the ITC uses these faulty assumptions to calculate the cost of the Jones Act," Mr. Leback said.

The agency report has fueled a growing debate, both domestically and internationally, about the continued need for the Jones Act. Mr. Leback said about 50 other maritime nations have cabotage laws similar to the Jones Act.

Separately, a qualified endorsement of the law came from Philip Loree, chairman of the Federation of American Controlled shipping, a group that represents U.S. companies that own ships operated under foreign registries.

"Cabotage is cabotage; we don't oppose the Jones Act," he said, speaking Friday at the Transportation Table, a forum sponsored by The Journal of Commerce and Traffic World magazine.

But he added the law's domestic building requirement should be removed,

because "not many countries tie building to cabotage."

According to Marad, only five nations other than the United States include a domestic building requirement in their cabotage laws.

Some maritime sources think it is a matter of time before the Jones Act is modified or eliminated. They think the trade commission report could signal the beginning of the end of the Bush administration's support for the U.S.-flag protection law, and that 1993 could see the end of that support.

But Mr. Leback firmly reiterated last week that "it is the policy of this administration to support the Jones Act."