fact that it has destroyed the U.S. maritime industry, we are going to allow this to continue because that is the way it is. If that attitude had been taken, the United States would not have had a Revolution 200 years ago, and we would not have done many other things, where we have taken the lead in the world in promoting the rights and responsibilities of modern democracies. From that perspective, I appreciate the arguments of the status quo and the history, but when you look at what is going on in the industries, if you look at the exploitation that is taking place and the advantage that is being taken from the American economy, I think you have a fairly compelling argument for making changes. Thank you very much. [The prepared statements of Louis Parise and Thomas J. Schneider follow:] LOUIS PARISE Mr. Chairman, we very much appreciate your decision to again hold hearings on this important legislation. We also appreciate the efforts of Congressman William (Bill) Clay, and yourself on behalf of merchant seamen. We represent America's oldest and largest maritime union consisting of licensed and unlicensed merchant mariners onboard U.S.-flag ships in the domestic and international trades. The AFL-CIO Maritime Committee was established in 1938 to give American seamen a voice in our Nation's Capitol. We strongly support H.R. 1517. This bill would extend the coverage of the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to the following types of nonliner vessels regularly engaged in the U.S. foreign trade that are not at least 50 percent owned, manned and registered in the same country: Vessels regularly engaged in transporting Cruise ships. Vessels engaged in carrying cargo from large "Factory" or production ships that manufacture in the U.S. market while operating primarily out of U.S. ports. For many of these vessels, the United States is their exclusive - 2 place of business. leave U.S. docks. Indeed, some of these vessels never even These ships carry in excess of 90 percent of the U.S. passenger trade and in excess of 50 percent of the nonliner waterborne foreign cargo trade. (In the tanker trade, U.S.-flag tankers carried less than 3 percent, and in the nonliner dry bulk trade, U.S.-flag ships carried less than 2 percent of the trade.) Not only do the companies owning these vessels pay little or no U.S. corporate taxes, they also evade U.S. labor and other laws to which American companies are subject. This has put American workers and companies at an unfair competitive disadvantage. There are several We think it is time to start closing these loopholes and establish a minimum level of fair treatment and improve safety conditions on the 100-plus passenger bring our labor laws into conformity with those of enhance port state control; and, extend similar-type workers' rights that are in 3 It is hard to really comprehend what is actually taking place behind the scenes, so to speak, with our U.S.-flag merchant marine and why it has all but disappeared. We all know that U.S.-flag ships carry approximately 3 percent of our trade while "runaway-flag" operators--those who have registered their ships in open registry countries such as Panama and Liberia--carry 50 percent or more. Since these "runaway" operators are allowed to set up shop here and circumvent all U.S. labor laws, the American-flag maritime industry and labor have been forced into fighting a competitive battle they cannot win. Today, 80 percent of all unlicensed seamen on merchant ships of the world are from Asia, primarily Southeast Asia. This is not because they are the best seamen, but because they are more susceptible to abuse without recourse, as you will hear from other witnesses. In general, the only major cost of running a ship that is not fixed is the labor cost. American seamen's wages represent approximately 12-15 percent of total operating costs of an American-flag ship. This is down from approximately 30 percent some 30 years ago. And I want to emphasize that this cost represents the smallest labor cost per total operating costs for any mode of transportation in the U.S. Foreign seamen can always undercut us, just as they would take over American airlines and railroads if our government's 4 policies permitted them to do so. Their labor costs represent 3-4 percent of total operating costs on "runaway-flag" ships, and there currently is an effort to lower these costs even further. The ILO minimum wage for an able-bodied seaman, a skilled unlicensed rating, is now $356 per month--no overtime, fringe benefits or hourly limitations of work. And worse yet, half of the ships of the world do not even comply with the ILO minimum wage provisions. In comparison, the U.S. minimum wage of $4.25 per hour translates to slightly over $1,000 per month for a 56-hour workweek. The decline of the U.S.-flag merchant marine began with the decision of the Supreme Court in 1957 which stated that U.S. labor laws, as written, did not apply to American-owned "runaway-flag" ships. The practical effect of this ruling was to allow foreign-flag ships to set up shop in the States and do business with American customers without having to comply with our country's laws. As a This Court decision did say, however, that Congress had the authority to extend the labor laws to these ships. matter of fact, there were several laws in existence at the time that extended U.S. laws to foreign seamen when they were in American ports. We do not believe that this is a partisan political issue. I say this because both Democrats and Republicans have |