Congressional Subcommittee Expresses Strong Support for Jones Act During Committee Hearing

July 2011

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Members of the House Subcommittee on Coast Guard and Maritime Transportation recently described the Jones Act – one of America’s most important maritime laws – as critical to the national, economic and homeland security needs of the United States.

SIU Executive Vice President Augie Tellez testified at the subcommittee’s June 14 hearing, most of which focused on America’s maritime transportation system (MTS) and its capacity to create jobs, facilitate commerce and help the U.S. maintain and increase its exports. In addition to the MTS, panelists and members of the subcommittee discussed other issues that directly involve the maritime industry, including several programs that have come under attack in recent months.

Chairman Frank LoBiondo (R-N.J., pictured at left), after pointing out that the Jones Act requires that cargo moving between domestic ports be carried aboard ships that are crewed, flagged, owned and built American, stated the law is “something I strongly support. I hear rumors from time to time about ideas or suggestions that can be advanced, either legislatively or otherwise, that would dramatically change or weaken the Jones Act. I can assure you that as chair of this committee, I’ll do everything in my power not to allow that to happen.

“As we focus our efforts on ways to maximize the (maritime transportation) system’s potential, it is imperative that the policies we develop promote the transportation of goods on American ships, built in American shipyards, and operated by American mariners,” LoBiondo continued.

In addition to the effects that the Jones Act and other pro-maritime legislation have on the national economy, certain state-level economies would be in dire straits without the protections afford

ed to American workers and companies.

“I just want to note, for the record, that in Hawaii, Jones Act activities provide 23,000 jobs, just in Hawaii, and approximately $1.1 billion in wages and benefits to Hawaii’s economy,” said U.S. Rep. Mazie Hirono (D-Hawaii), a member of the subcommittee. “I’m a strong supporter of that act.”

U.S. Rep. Chip Cravaack (R-Minn.) said that as a retired Navy captain, “I understand the importance of a maritime industry and how important it is to have a U.S.-flag, U.S.-crewed vessel ensuring that when we do have to go over the horizon we have the proper assets to do it; with the proper people that have been trained in a way that we need to make sure they’ll be able to carry the flag when rubber starts hitting the road. So I highly support U.S.-flag vessels and U.S. Jones Act, as well.”

Panelist Mike Roberts, who is a senior vice president of SIU-contracted Crowley, thanked the committee for its support of the Jones Act and mentioned its paramount importance to his company.

“This fundamental maritime law provides important national security, homeland security and economic security benefits to our nation,” Roberts stated. “This subcommittee’s support for the Jones Act is greatly appreciated.”

In addition to Tellez and Roberts, others testifying before the subcommittee were Maritime Administrator David Matsuda, Chamber of Shipping of America President and CEO Joseph Cox, and John Mohr, executive director of the Port of Everett, Wash. Each of the men on the panel gave brief summaries of their submitted remarks and answered questions by members of Congress on the maritime industry and the important role it plays in our economic and national security.

The MTS is made up of 25,000 miles of channels, the Great Lakes, and over 3,700 terminals around the country. In addition, the MTS includes nearly 175,000 miles of railways, more than 45,000 miles of interstate highways, and over 1,400 intermodal connections. Due to its reach, the MTS is a key aspect of the nation’s economy.

“The commerce which moves on the MTS fuels the economy,” said Rep. LoBiondo. “Approximately 99 percent of the volume of overseas trade enters or leaves the country by water. The movement of cargo and associated activities add more than $649 billion annually to U.S. gross domestic product, sustains more than 13 million jobs and contributes over $212 billion in annual federal state local taxes. Domestic shipping alone is responsible for 500,000 American jobs and $100 billion in annual economic output.”

U.S. Rep. Rick Larsen (D-Wash.), ranking member of the subcommittee, looked to the future to provide solid justification for fully funding the MTS today. Larsen’s district, which encompasses some of the most important ports on theWest Coast, has an understandable interest in ensuring that the MTS and other programs are fully funded and defended by lawmakers.

“The overarching reality is that our economic future and the MTS are closely intertwined,” said Larsen. “To think that our economy can fully recover and grow if we fail to invest in this critical infrastructure is both unrealistic and shortsighted. We must summon the will to invest in the system or we risk choking off the very conduit that makes our economy hum, that drives job creation, and that ensures the U.S. market remains preeminent in global trade.”

Matsuda emphasized the economic importance of the MTS and touted its proven job-producing capabilities.

“The MTS accommodates 78 percent of U.S. exports and imports by weight and 48 percent by value,” Matsuda told the subcommittee. “In addition to supporting the needs of U.S. exporters and industry, it is an important source of employment in its own right. The MTS supports millions of American jobs, facilitates trade, and moves people and goods in a safe, cost-effective, and energy-efficient manner.”

While there have been calls both within and outside of the industry for more laws that will enable the U.S. Merchant Marine to continue to thrive, there are several long-standing laws that need sustained implementation.

Tellez (pictured testifying before the subcommittee at left) encouraged the committee members to continue enforcing laws that are already on the books, including the Jones Act, cargo preference laws and the U.S. Maritime Security Program (MSP). Enforcing existing enacted laws would strengthen the industry and would subsequently strengthen the economy as a whole.

“We must ensure that our U.S.- flag merchant fleet remains strong and viable in the international and domestic trades,” said Tellez. “It is only by defending our existing programs, reducing the regulatory burden on our operators, ensuring the tax system is fair and competitive internationally, seeking opportunities to expand the industry both internationally and domestically and maintaining the key government programs that keep the fleet afloat that we will be able to create jobs and increase U.S. exports.”

Tellez pointed out that it would stimulate the national economy if more U.S.-produced cargo were shipped on American-flagged, American-crewed vessels.

“The U.S. Merchant Marine is effective in that our reliability and performance are second-to-none, particularly when it comes to productivity and safety,” Tellez said. “For too long, we have allowed foreign competitors to undercut the American-flag fleet and our ship operators. This foreign competition is often supported by generous tax regimes, little or no-cost health care, and tax exempt wages for foreign seafarers by a number of foreign governments that make the international playing field far from even.”

Another issue that was raised was cargo preference and food aid, both of which are of great importance to maritime industry workers. With budget cuts involving food aid and other cargo financed through the Export-Import Bank, Tellez made it clear to members of the committee that cutting funds for those programs would have disastrous effects on U.S. Merchant Mariners.

“When it’s all said and done, the various maritime industry programs are fine, but we must not overlook one other imperative point,” said Tellez. “Namely, our industry’s lifeblood is cargo. Cargo cures practically every ill. That’s what keeps us afloat.”

While the present laws have beneficial effects on the U.S. economy and its worker pool, Tellez and others believe that the future is dependent on a stronger American-flag fleet.

“Maritime labor believes that we as a nation have to think and plan long-term, and such planning absolutely must include maintaining a strong American-flag fleet and a reliable pool of U.S. shipboard manpower,” said Tellez. “Ideally, we’ll reach a point where shippers look first for ways to use the U.S. vessels, rather than having to be convinced.”

 

Tellez concluded, “I respectfully urge continued support of the Maritime Security Program, the Jones Act and cargo preference laws, and I further ask that any and all reasonable steps be taken in order to further encourage the maintenance and growth of the American-flag fleet and the U.S. Merchant Marine.”

 

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