INDUSTRY WARNS CUSTOMS TO REVERSE VESSEL REPAIR RULE
A coalition of U.S.-flag shipping lines, labor unions and supporting industries has warned that a new rule imposed by the U.S. Customs Service will threaten the competitive position of the U.S. merchant marine, the jobs of U.S. seafarers, the businesses of domestic marine suppliers and the nation’s security.
The rule makes a sharp break from previous policy by subjecting supplies and parts used in routine repairs of vessels while sailing on the high seas to a-50 percent ad valorem duty. For some 65 years, the duty was applied only to shore-side repairs performed in non-U.S. shipyards.
The rule would affect some 147 deep-sea foreign trade vessels, and is projected to cost the industry a minimum of $33.8 million per year, according Gloria Cataneo Tosi, president of the American Maritime Congress.
On a per-vessel basis, the minimum cost would be a little more than $230,000 per deep-sea operating vessel, Tosi said. If implemented, the rule could force 30 percent of the remaining U.S. fleet to abandon the U.S. flag, she said.
Without immediate and decisive action to reverse this rule, its provisions would … decimate a significant portion of our nation’s U.S.-flag fleet and jeopardize not only our seafarers’ trade skills and jobs, but also directly discourage the utilization of domestic suppliers,” Tosi said in a letter sent to Charles W. Winwood, acting Customs commissioner.
The rule directly threatens the U.S. national security because of its adverse effects on vessels participating in the Maritime Security Program and the Voluntary Intermodal Sealift Agreement program, Tosi said.
“If the U.S. government, through agencies like the U.S. Customs Service, continues to impose severe economic burdens on U.S.-flag operators, then, in short order, there will no longer be a U.S.-flag fleet to penalize, injure or maltreat,” Tosi warned.
Noting that 97 percent of the U.S. exports and imports are transported on foreign-registered vessels, Tosi said the rule “serves to drive the last nail in the coffin for the U.S.-flag fleet.”