HEARING ON H.R. 1517, FOREIGN FLAG SHIPS Y 4. ED 8/1:103-9 Hearing on H.R. 1517, Foreign fUj.-- xxii^ARING BEFORE THE SUBCOMMITTEE ON LABOR STANDARDS, OCCUPATIONAL HEALTH AND SAFETY OF THE COMMITTEE ON EDUCATION AND LABOR HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION HEARING HELD IN WASHINGTON, DC, MAY 13, 1993 Serial No. 103-9 Printed for the use of the Committee on Education and Labor SEP 20 m3 ::^ir^.J^U, ''''^>>^. U.S. GOVERNMENT PRINTING OFFICE 69-954rts WASHINGTON : 1993 Tors;ilchyllicU..S.GovemmciilPriiuiiigOl'lico Superintendentot Doeiinients,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-041166-1 HEARING ON H.R. 1517, FOREIGN FUG SHIPS Y 4. ED 8/1:103-9 Hearing on H.R. 1517. Foreign Flag... iii2.ARING BEFORE THE SUBCOMMITTEE ON LABOR STANDARDS, OCCUPATIONAL HEALTH AND SAFETY OF THE COMMITTEE ON EDUCATION AND LABOR HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION HEARING HELD IN WASHINGTON, DC, MAY 13, 1993 Serial No. 103-9 Printed for the use of the Committee on Education and Labor U.S. GOVERNMENT PRINTING OFFICE (•>9-9.',4^ WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffiee SuperintendentofDocuments,CongressionalSalesOffice.Washington.DC 20402 ISBN 0-16-041166-1 COMMITTEE ON EDUCATION AND LABOR WILLIAM D. FORD, Michigan, Chairman WILLIAM (BILL) CLAY, Missouri WILLIAM F. GOODLING, Pennsylvania GEORGE MILLER, California THOMAS E. PETRI, Wisconsin AUSTIN J. MURPHY, Pennsylvania MARGE ROUKEMA, New Jersey DALE E. KILDEE, Michigan STEVE GUNDERSON, Wisconsin PAT WILLIAMS, Montana RICHARD K. ARMEY, Texas MATTHEW G. MARTINEZ, California HARRIS W. FAWELL, Illinois MAJOR R. OWENS, New York PAUL B. HENRY, Michigan THOMAS C. SAWYER, Ohio CASS BALLENGER, North Carolina DONALD M. PAYNE, New Jersey SUSAN MOLINARI, New York JOLENE UNSOELD, Washington BILL BARRETT, Nebraska PATSY T. MINK, Hawaii JOHN A. BOEHNER, Ohio ROBERT E. ANDREWS, New Jersey RANDY "DUKE" CUNNINGHAM, California JACK REED, Rhode Island PETER HOEKSTRA, Michigan TIM ROEMER, Indiana HOWARD "BUCK" McKEON, California ELIOT L. ENGEL, New York DAN MILLER, Florida XAVIER BECERRA, California ROBERT C. SCOTT, Virginia GENE GREEN, Texas LYNN C. WOOLSEY, California CARLOS A. ROMERO-BARCELO, Puerto Rico RON KLINK, Pennsylvania KARAN ENGLISH, Arizona TED STRICKLAND, Ohio RON DE LUGO, Virgin Islands ENI F. H. FALEOMAVAEGA, American Samoa SCOTTY BAESLER, Kentucky ROBERT A. UNDERWOOD, Guam Patricia F. Rissler, StaffDirector Jay Eagen, Minority StaffDirector Subcommittee on Labor Standards, Occupational Health and Safety AUSTIN J MURPHY, Pennsylvania, Chairman WILLIAM (BILL) CLAY, Missouri HARRIS W. FAWELL, Illinois ROBERT E. ANDREWS, New Jersey CASS BALLENGER, North Carolina GEORGE MILLER, California PETER HOEKSTRA, Michigan TED STRICKLAND, Ohio ENI F. H. FALEOMAVAEGA, American Samoa (II) CONTENTS Page Hearing held in Washington, DC, May 13, 1993 1 Statement of: Balderas, Deacon Robert M., National Director, Apostleship of the Sea; Terry Turner, National Governmental Relations Director, Seafarers International Union of North America; John A. Sansone, Jr., U.S. Inspectorate FOC Coordinator, International Transport Workers Feder- ation, International Longshoremen's Association; and Thomas J. Schneider, Esq., O'Connor & Hannan, Washington, DC, Counsel to the AFL-CIO Maritime Committee 18 Estes, John T., President, International Council ofCruise Lines, accompa- nied by Duncan Hoopes, Price Waterhouse, Washington, DC; and Jean C. Godwin, Vice President, Government Relations, American Associa- tion ofPort Authorities 64 Prepared statements, letters, supplemental materials, et cetera: American Petroleum Institute, prepared statement of 109 Clay, Hon. William L., a Representative in Congress from the State of Missouri, prepared statement of 108 Council of European & Japanese National Shipowners' Associations, London, England, prepared statement of 4 Department ofState, letter to, from 14 foreign governments 14 Estes, John T., President, International Council ofCruise Lines, prepared statement of 69 Godwin, Jean C, Vice President, Government Relations, American Asso- ciation ofPort Authorities, prepared statement of 91 Loree, Philip J., Chairman, Federation ofAmerican Controlled Shipping, prepared statement of 110 Murphy, Hon. Austin J., a Representative in Congress from the State of Pennsylvania, prepared statement of 2 Letter to Thomas J. Schneider requesting information relevant to H.R.1517 50 Parise, Louis, President, AFL-CIO Maritime Committee, prepared state- ment of 33 Schneider, Thomas J., Esq., O'Connor & Hannan, Washington, DC, Coun- sel to the AFL-CIO Maritime Committee, prepared statement of 42 Reply to Hon. Austin J. Murphy's letter 51 Turner, Terry, National Governmental Relations Director, Seafarers International Union ofNorth America, prepared statement of 22 (III) HEARING ON H.R. 1517, FOREIGN FLAG SHIPS THURSDAY, MAY 13, 1993 House of Representatives, Subcommittee on Labor Standards, Occupational Health and Safety, Committee on Education and Labor, Washington, DC. The committee met, pursuant to notice, at 10:30 a.m., Room 2261, Rayburn House Office Building, Hon. Austin J. Murphy, Chairman, presiding. Members present: Representatives Murphy, Andrews, Faleoma- vaega, Fawell, and Ballenger. Staff present: Jim Riley, chief counsel and staff director; Adri- enne Fields, deputy staff director. Education and Labor; Ted Martin, professional staff; Vicki Nimmo, clerk; Molly Salmi, minor- ity professional staff; Gary Visscher, minority professional staff; and Tim Butler, minority staffassistant. Chairman Murphy. Good morning. We are here this morning to discuss the ramifications of H.R. 1517. The subcommittee has been working with this legislation for a number of years, and I am hope- ful that our new President will be interested and supportive of our efforts, which I believe that he will. The success of foreign ship lines cannot be disputed. For years now, they have been freely operating in American ports, being the beneficiaries of our free market economy, and have earned millions of dollars in profits. But we wonder whether simple business acumen is fully accountable for this success. It is fair to say that much in the way of profits enjoyed by for- eign shipping companies are earned at the expense of shipboard employees. Foreign maritime workers do not enjoy the same statu- tory protections and benefits as American seamen. What we are here for this morning is to answer the question, "Is there an unfair advantage that foreign operators have over American ship opera- tors? Will H.R. 1517 improve America's competitive edge and the lot ofthe seaman?" This legislation, we believe, will help legions of people from less fortunate nations working on the sea by stopping, if they exist, ex- ploitative labor practices in American territorial waters. The bill also may help more American workers find gainful employment. [The prepared statement of Hon. Austin J. Murphy follows:] (1) Statement of Hon. Austin J. Murphy, a Representative in Congress from the State of Pennsylvania Good morning. I am pleased to be here this morning to discuss H.R. 1517. I have been working unsuccessfully with this legislation for a number of years, and I am hopeful that our new President will be more interested and cooperative than the last. At previous hearings I have listened to many people speak about the need for this legislation. My staffhas traveled to listen to firsthand reports ofthose who labor on foreign ships. Their stories are chilling and sad. The experiences of some onboard shipworkers remind me ofthe terrible and frightening stories ofsailors from centur- ies long past. I was astounded to learn ofthe many abuses that routinely take place onboard some foreign flagships. The success of foreign ship lines cannot be disputed. For years now they have freely operated in American ports, been generous benificiaries of our free market economy and earned millions ofdollars in profit. But, simple business acumen does not fully account for all their success. It is fair to say that much of the profits en- joyed by foreign shipping companies are earned at the expense ofshipboard employ- ees. Foreign maritime workers do not enjoy the same statutory protections and ben- efits as Americans. Because of this lack of protection their employers are able to reap huge profits. This situation is clearly disgraceful. Profits gained at the expense of exploited workers represent a scandal of enormous proportions. The stories of abuse and ex- ploitation onboard foreign flag ships are too numerous, and the continued existence of such activities is shocking. Many people have worked long and hard to develop our national labor code to provide a reasonable minimum standard for the modern world ofthe late twentieth century. Unfortunately, this enlightened work has ended at the shoreline, because the law ofthe sea seems mired in the middle ages. This legislation though, is not strictly aimed at correcting numerous labor abuses. Foreign ship operators gain all the benefits ofAmerican commerce without having to obey any American worker protection statutes. These shipping lines find them- selves in the enviable position ofhaving their cake and eating it too. This situation creates an unfair double standard, and leaves American shipping at a decided disad- vantage. In this time of great world turmoil, America needs to regain its stature as the world's foremost economic power. H.R. 1517 puts the American shipping lines and the foreign shipping lines on a level playing field. The unfair advantage that foreign lines have over American lines is wiped away when this legislation is enacted. H.R. 1517 sharpens America's competitive edge. America has made itselfa great Nation through hard work and sacrifice. But we have always tried to balance our striving for economic success with a compassionate outlook towards workers. We have attempted to create laws that humanely and fairly protect the lives of workers. Unfortunately, we are one among few nations that follow this course. No responsible maritime nation would choose to maintain a flag ofconvenience registry that supports such willful and careless disregard for the lives ofpeople. This legislation will help legions ofpeople from less fortunate nations working on the sea by stopping exploitive labor practices that occur in our territorial waters. H.R. 1517 may also help more American workers to find gainful employment in a revived U.S. maritime trade, so much of which is conducted under runaway "flags ofconvenience." I look forward to prompt action on this legislation. Chairman Murphy. Mr. Fawell, do you have an opening state- ment? Mr. Fawell. Yes, I do, Mr. Chairman. I am looking forward to hearing the testimony today from our witnesses on this legislation which extends the Fair Labor Standards Act as well as the Nation- al Labor Relations Act to foreign flag ships. I remain concerned that this bill, however well-intended, would have a number of harmful effects. My first concern is that H.R. 1517 would conflict with well-established international and mari- time laws. It is the established rule of international law that the internal affairs of a ship are ordinarily governed by the law of the flag state. How we would impose and enforce U.S. labor law on for- eign flag ships presents another interesting issue. We are, today, in a global economy, with people and goods flow- ing at an increasing rate from country to country. Actions such as these will only lead to friction where comity should exist. Interna- tional conventions codifying long established principles have been created to develop and secure uniform standards for vessels operat- ing internationally. Organizations such as the International Mari- time Organization and the International Labor Organization have dealt with issues governing jurisdiction over the employment rela- tionships aboard these vessels. The U.S. is already a party, in fact, to International Convention 147, which establishes minimum standards in merchant ships and provides for protection against poor working conditions on vessels. The treaty allows port states to exercise appropriate authority in response to complaints of foreign seamen about working conditions on foreign flag ships. In previous years, I have asked for a study of how ILO 147, which is the international law to which I make reference, is work- ing and whether or not it is effective. If changes are needed and the enforcement mechanisms under ILO 147 are not effective, then we obviously should work with international labor organizations to address those issues. Finally, I believe that many who support this legislation are frus- trated with the amount of business that is leaving the U.S. and moving into foreign countries. I share those concerns. Testimony heard by the labor-management subcommittee in 1989, as well as by this subcommittee 2 years ago, convinced me that our laws and government policies actually force many U.S. shipowners to oper- ate under the flag ofanother country. We need, therefore, to simplify and to reduce the taxes and sub- sidies we employ in regulating the shipbuilding industry. Only in this way will the U.S., I believe, acquire a competitive maritime force. I do not believe that we are competitive at this particular time, except with the cabotage laws that may apply or in other areas where subsidies are granted to shi—pping. I have two statements, Mr. Chairman from the Council of Euro- pean and Japanese National Shipowners'—Association and the Fed- eration of American Controlled Shipping as well as a letter to the State Department from the governments of 14 other countries. I would ask at this point unanimous consent that they be included as a part ofthe record. Chairman Murphy. Without objection, we will certainly admit the letters as requested. Mr. Fawell. Thank you, Mr. Chairman. [The material referred to follows:] STATEMENT OF THE COUNCIL OF EUROPEAN & JAPANESE NATIONAL SHIPOWNERS' ASSOCIATIONS (CENSA) BEFORE THE SUBCOMMITTEE ON LABOR STANDARDS, OCCUPATIONAL HEATH AND SAFETY OF THE HOUSE EDUCATION AND LABOR COMMITTEE ON H.R. 1517 MAY 13, 1993 The Council of European & Japanese National Shipowners' Associations, known as CENSA, is pleased to present this statement for the Committee's consideration. CENSA is comprised of the National Shipowners' Associations of Belgium, Denmark, Finland, France, Germany, Greece, Italy, Japan, the Netherlands, Norway, Sweden and the United Kingdom. The International Shipping Federation joins in these comments. The International Shipping Federation is the international employers' organization for shipowners and is concerned with labour affairs and manning and training issues at international level. Membership comprises national shipowners' operations of over 2 countries including all the members of CENSA, and together represents more than half of the world's merchant tonnage. The American Institute of Merchant Shipping is a member of ISF. CENSA opposes enactment of H.R. 1517 for the following reasons: • The Bill would place the United States in conflict with international law which has recognized that laws of the flag state should govern vessels and the Bill would reverse Supreme Court precedent and practice. • The Bill would violate and undermine existing International Agreements to which the United States is