HEARING ON H.R. 1517, FOREIGN FLAG SHIPS THURSDAY, MAY 13, 1993 HOUSE OF REPRESENTATIVES, 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, Faleomavaega, Fawell, and Ballenger. Staff present: Jim Riley, chief counsel and staff director; Adrienne Fields, deputy staff director, Education and Labor; Ted Martin, professional staff; Vicki Nimmo, clerk; Molly Salmi, minority professional staff; Gary Visscher, minority professional staff; and Tim Butler, minority staff assistant. 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 hopeful 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 foreign shipping companies are earned at the expense of shipboard employees. Foreign maritime workers do not enjoy the same statutory 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 operators? Will H.R. 1517 improve America's competitive edge and the lot of the seaman?" This legislation, we believe, will help legions of people from less fortunate nations working on the sea by stopping, if they exist, exploitative 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 staff has traveled to listen to firsthand reports of those who labor on foreign ships. Their stories are chilling and sad. The experiences of some onboard shipworkers remind me of the terrible and frightening stories of sailors from centuries long past. I was astounded to learn of the many abuses that routinely take place onboard some foreign flag ships. 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 of dollars in profit. But, simple business acumen does not fully account for all their success. It is fair to say that much of the profits enjoyed by foreign shipping companies are earned at the expense of shipboard employees. Foreign maritime workers do not enjoy the same statutory protections and benefits 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 exploitation 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 of the late twentieth century. Unfortunately, this enlightened work has ended at the shoreline, because the law of the 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 of American commerce without having to obey any American worker protection statutes. These shipping lines find themselves in the enviable position of having their cake and eating it too. This situation creates an unfair double standard, and leaves American shipping at a decided disadvantage. 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 itself a 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 of convenience registry that supports such willful and careless disregard for the lives of people. This legislation will help legions of people 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 of convenience." I look forward to prompt action on this legislation. Chairman MURPHY. Mr. Fawell, do you have an opening statement? 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 National 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 maritime 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 foreign flag ships presents another interesting issue. We are, today, in a global economy, with people and goods flowing at an increasing rate from country to country. Actions such as these will only lead to friction where comity should exist. International conventions codifying long established principles have been created to develop and secure uniform standards for vessels operating internationally. Organizations such as the International Maritime Organization and the International Labor Organization have dealt with issues governing jurisdiction over the employment relationships 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 working 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 frustrated 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 operate under the flag of another country. We need, therefore, to simplify and to reduce the taxes and subsidies 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 shipping. I have two statements, Mr. Chairman-from the Council of European and Japanese National Shipowners' Association and the Federation 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 of the 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 & THE HOUSE EDUCATION AND LABOR 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 20 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 a party and which now protect merchant seamen, including: The International Labor Organization Convention 147 The 1958 Convention on the High Seas. Existing Treaties of Friendship Commerce and Navigation. •• Vienna Convention on Consular Relationship and Optional Protocol on Disputes of 1963. The Bill would intrude on the sovereignty of foreign nations, invite other countries to react in the same manner against United States flag vessels and adversely affect international trade. I. THE BILL WOULD CONFLICT WITH INTERNATIONAL LAW AND UNITED STATES SUPREME COURT PRECEDENT The present bill seeks to impose United States laws of collective bargaining, union elections and representation, United States unfair labor practices and wage control over foreign vessels calling at United States ports. It would do so by making foreign vessels subject to the full reach of the National Labor Relations Act, the NLRB and the Fair Labor Standards Act of 1938. It would bring the United States in conflict with the laws of the countries of registry of foreign vessels, would violate longstanding rules of comity and international law and practice, would intrude into the labor relations of foreign vessels, |