owned or controlled by a United States corporation; and, three, are engaged in the production or processing of goods or services for sale or distribution in the United States or are engaged in transporting cargo between vessels in international waters and a vessel or port in the United States.

On February 26 of this year, the Subcommittee on Labor Standards marked up the bill, deleting liner carriers (container ship operators) from its provisions. On June 10 of this year, the Committee on Education and Labor ordered the bill reported, as amended by the Subcommittee on Labor Standards.

Supporters of this legislation say it is a step in the right direction to end the all-too-frequent occurrences of economic, psychological, and physical abuse of seamen on foreign-flag vessels. Also, they say it helps to level the playing field for the U.S.-flag shipping industry.

Opponents contend that the bill improperly extends U.S. laws to foreign-flag vessels, a violation of traditional international maritime law and practice. They also say that not only will it not help the U.S.-flag merchant marine, but that it will harm American ports where these foreign vessels call.

With these things in mind, we will proceed with the hearing, but first we want to call on our distinguished Ranking Minority Member, my friend, Congressman Norman Lent of New York, for an opening statement.

STATEMENT OF HON. NORMAN F. LENT, A U.S. REPRESENTATIVE FROM NEW YORK, AND RANKING MINORITY MEMBER, SUBCOMMITTEE ON MERCHANT MARINE

Mr. LENT. Thank you, Mr. Chairman. I regret and will apologize in advance that I will only give an opening statement and then have to leave. As I have indicated to the Chairman, there is an important meeting about to begin of the conference committee on the energy strategy legislation, and I have got to get over there, but I am leaving my counsel here, so Kip Robinson will report to me on the testimony of our witnesses this morning on H.R. 1126, which would apply the National Labor Relations Act and the Fair Labor Standards Act to certain foreign-registered vessels engaged in the commerce of the United States.

I am aware that over the years there has been considerable concern voiced about the working conditions aboard a number of foreign-flag vessels that come in and out of our ports. I believe this legislation is an effort to address some of those problems.

I am also aware of some of the concerns which have been raised by the companies currently involved in these trades, as well as from various agencies of the Executive Branch, who have voiced fears that this legislation could create difficulties with some of our international obligations.

Consequently, Mr. Chairman, I think this hearing will be helpful for us in fully understanding the scope of the problem and the impact of this particular proposed solution.

I hope that our witnesses today will be very specific in addressing the way that this legislation would provide a legislative remedy to some of the health and welfare problems which have, admitted

ly, been identified on some of these foreign-flag ships. My concern is to be sure that we are crafting the proper solution to fix these problems.

Thank you, Mr. Chairman. I have no further comment at this time and look forward to a good, productive hearing.

Mr. HUBBARD. Thank you, Congressman Lent, for your opening statement and for your helpfulness.

We have three panels of witnesses today, and we are happy to have our first panel already in position. We will hear from James R. Tarrant, Acting Deputy Assistant Secretary of State for Transportation Affairs for the Department of State here in Washington, D.C. He is accompanied by W. Patrick Morris, Acting Administrator of the Maritime Administration, Department of Transportation in Washington; and Arthur R. Rosenfeld, Special Assistant to the Solicitor, Office of the Solicitor, Department of Labor in Washing

ton.

Mr. Tarrant, we appreciate your being with us, and we await your testimony.

STATEMENT OF JAMES R. TARRANT, ACTING DEPUTY ASSISTANT SECRETARY OF STATE FOR TRANSPORTATION AFFAIRS, OFFICE, ASSISTANT SECRETARY FOR ECONOMIC AND BUSINESS AFFAIRS, DEPARTMENT OF STATE, ACCOMPANIED BY W. PATRICK MORRIS, ACTING ADMINISTRATOR, MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION; AND ARTHUR R. ROSENFELD, SPECIAL ASSISTANT TO THE SOLICITOR, OFFICE OF THE SOLICITOR, DEPARTMENT OF LABOR

Mr. TARRANT. Thank you very much, Mr. Chairman. I would like to thank you and all of the Members of the Committee for the opportunity to present the position of the Administration this morning. With your permission, Mr. Chairman, I would propose to simply cover the highlights of my written testimony and submit the full text to the Committee.

Before giving my formal statement, however, may I offer a tribute to Walter Jones. With his passing, Mr. Chairman, the maritime industry has certainly lost a good friend, a strong advocate. His family has lost a loving husband, a father, and a grandfather, and I would like to extend our condolences to the entire family. While he is not here, I would also like to welcome Representative Studds in his new capacity as Acting Chairman of the full Committee. We certainly, as an administration, wish him our very best hopes for smooth sailing in his new capacity.

H.R. 1126, as we know, would extend both the Fair Labor Standards Act of 1938 and the National Labor Relations Act, as amended, to broad categories of foreign-flag vessels. Extending these statutes to foreign-flag vessels raises several important questions about how we should best promote the welfare of our seafarers and U.S.-flag shipping. Let me first, if I may, turn to the general issue of regulating foreign vessels.

Because of their inherently mobile nature, ships represent a fairly unique situation for us. They spend most of their time on the high seas. Under longstanding and fundamental principles of international law, the nationality of a vessel is determined by its flag,

its registry. The flag state generally exercises exclusive jurisdiction over shipboard matters related to the internal order and economy of its vessels. In order to establish and maintain consistent standards and stable enforcement of these standards, organizations such as the International Maritime Organization (IMO) and the International Labor Organization (ILO) have codified these long-established principles into conventions. These conventions are intended to establish uniform application of internationally accepted standards to all ships around the world.

As this Committee knows, a vast majority of our international trade is now carried on foreign ships. The United States must, therefore, be centrally involved in developing global standards through the IMO and through the ILO. Taking unilateral action carries the very real risk of isolating the United States from the mainstream of international commerce. This in no way means that we condone in any way inadequate conditions on foreign ships or accept in any way unsatisfactory foreign standards. Quite to the contrary, the United States has taken a leading role in strengthening international regulations.

IMO and ILO conventions give us the authority to enforce these global standards on foreign ships while they are in our ports and in our territorial waters.

Let me be very clear, the Administration firmly supports a policy of promoting better conditions for the men and women working aboard merchant vessels. This commitment extends to mariners on foreign ships as well as to U.S. seafarers. For this reason, the United States became a party to ILO Convention 147,* which provides internationally recognized standards for merchant ships. This Treaty is intended to protect the right of seafarers to organize and to bargain collectively with ship owners and to provide safety standards and shipboard conditions of employment and living arrangements. Parties to the Convention may take appropriate action in response to complaints involving working conditions on foreignflag vessels in their waters.

For example, in its inspections of foreign ships, the United States Coast Guard also checks the working conditions of the seafarers who are on board.

Mr. Chairman, H.R. 1126, on the other hand, would, in fact, create serious problems with our major trading partners. It would do this by unilaterally overturning the longstanding practice of states regarding exclusive flag state jurisdiction over the internal affairs of that country's ship. The Supreme Court, in the key 1963 McCulloch decision, recognized the many, many pitfalls that would arise if the National Labor Relations Act were to be extended to foreign-flag vessels.

I will not go into the details of the court's decision, but I would like to underscore three key elements of that decision. First, the court noted that enforcement of National Labor Relations Board orders "would inevitably lead to embarrassment in foreign affairs.' Our closest allies and trading partners have repeatedly,

* ILO Convention 147 was signed in Geneva on October 13, 1976.

* McCulloch v. Sociedad Nacional De Marineros de Honduras, 372 U.S. 10, 83 S.Ct. 671 (1963).

and I underscore repeatedly, expressed strong opposition to this bill.

I believe that Members of Congress have heard directly from some of these governments. They argue that the bill represents an unwarranted assertion of U.S. jurisdiction over matters on which they claim primacy. They do this under international law. Moreover, jurisdiction over foreign vessels in ports is frequently limited by bilateral agreements or bilateral treaties.*

If H.R. 1126 or similar legislation is enacted, the United States would either be forced to violate these agreements or to engage in a series of renegotiations.

Second, the Supreme Court pointed out that extension of the NLRA would, and I quote, "be entirely infeasible in actual practice." Both the NLRA and the Fair Labor Standards Act establish fairly complex mechanisms for finding abuses, correcting them, and sanctioning employers who have violated the legislation.

The proposed legislation does not address how these laws would be applied with respect to ships and personnel which are constantly moving across international borders. The Department of Labor and the National Labor Relations Board fact-finders would be very hard-pressed to carry out any reasonable investigation. Even if a United States Court obtained jurisdiction over a matter when a ship was visiting a United States port, carrying out any judicial orders regarding labor matters would be difficult, at best. Moreover, U.S. legislation would not take away the flag state's jurisdiction over the internal management and affairs of the vessels. Foreign-flag vessels would be subject to dual, sometimes conflicting, laws and regulations.

Owners and crews of foreign-and U.S.-flag ships could find themselves subject to a complicated patchwork of different and almost certainly contradictory labor regulations in every port in which they call. If a labor dispute arose in a foreign port, U.S. mariners might not be able to rely on the very rights that they enjoy under the National Labor Relations Act and the Fair Labor Standards Act.

Third, the Supreme Court stated, and again I quote, that "questions of such international import would remain as to invite retaliatory action from other nations." We believe that enacting H.R. 1126 would indeed prompt retaliatory measures which would fall upon American businesses and American workers. Rather than enhancing the competitiveness of U.S.-flagged ships, enacting H.R. 1126 would encourage other governments to enact and enforce legislation, and legislation not necessarily limited to collective bargaining and wages/overtime labor legislation-against the ships and crews of U.S.-flag vessels.

H.R. 1126 has a five-year limit, and as we know, would set up a Commission on Compliance and Enforcement to study the effects of the legislation. In the Administration's view, the legal and international consequences can be foreseen relatively clearly. Therefore, provisions to limit the bill and/or to establish a study commission do not lessen the Administration's objections to the bill.

For example, the United States has such an agreement with the United Kingdom (the 1952 United States-United Kingdom Convention regarding Consular Officers).

H.R. 1126 has been portrayed as a way to narrow the competitive advantage of foreign-flag ships by raising labor costs. In the Administration's view this is not the best approach to making U.S. shipping more competitive. As part of the President's strategy for promoting domestic growth by eliminating unnecessary government regulation, the Administration recently conducted a thorough review of U.S. maritime policy. The Maritime Reform Act of 1992 reflects that policy review. Its approach would reduce regulatory burdens on U.S.-flag shipping and provide incentives to keep vital sealift capacity under the U.S. flag.

We strongly urge the Committee to support the Administration strategy rather than a bill such as H.R. 1126, which disregards, in our view, these vital considerations.

It is true, of course, that U.S.-flag vessels have higher operating costs than many foreign-flag ships, but this is only part of the picture that we ought to be looking at. U.S.-flag carriers cannot meet the challenge of a rapidly changing market without the ability to build or to buy new, more efficient vessels. In his statement to the Senate Committee on Commerce, Science, and Transportation on June 17,** Secretary Card stressed that the collective bargaining process has a vital role in enhancing the competitiveness of U.S. shipping by reducing labor costs. The Administration encourages maritime labor and management to review work rules in order to bring shipboard productivity in line with technological advances in the fleet. For the time being, the Administration will defer submitting any legislation to increase productivity so that collective bargaining processes can address these issues if at all possible.

Therefore, to conclude, Mr. Chairman, for the reasons I have sought to outline here, the Administration continues to oppose H.R. 1126. In our view, the bill will not make U.S. shipping more competitive or solve the problems facing the U.S.-flag fleet.

As I have highlighted, the U.S. Government, through several international agreements, already has the means to curb abuses by owners and operators of foreign-flag vessels. Mr. Chairman, there is also the very real danger that H.R. 1126 would, in fact, cause our trading partners to retaliate and to seek to apply their labor laws and other regulations to American-flag vessels, thus creating a maze of conflicting legal standards that would be extremely difficult for our industry to cope with.

Thank you very much, Mr. Chairman. We would be pleased to respond to any questions that you or the Committee Members have.

[The prepared statement of Mr. Tarrant can be found at the end of the hearing.]

Mr. HUBBARD. Thank you very much, Mr. Tarrant. We appreciate your testimony. I think our Members and the witnesses and visitors realize that on this September 23 there is very little chance that House bill 1126 will become law during the 102nd Congress. We are scheduled to adjourn October 4th or 5th-which is question

* H.R. 5627.

See House Committee on Merchant Marine and Fisheries Printed Hearings No. 102-102 (July 8, 23, and 24, 1992).