Resonse to HR Bill 5629 -All US Flag Vessel in Gulf

[/B][LEFT]These comments are made on behalf of the International Chamber of Shipping
(ICS), which is the principal international trade association for shipowners and
operators comprising national shipowners’ associations from 34 nations,
representing about 75% of world shipping tonnage.
We wish to comment in response to issues being considered in Congress in the
aftermath of the [I]Deepwater Horizon [/I]oil spill. We appreciate the far reaching
impacts of this environmental disaster, including the truly appalling loss of life,
and the need for a determined political response. However, as representatives
of international ship operators, we are very concerned by proposals in Section 11
of Bill HR 5629, that have emerged from the House Transportation and
Infrastructure Committee, which relate to the ‘Americanization of Offshore
Shipping Operations in the Exclusive Economic Zone’.
Section 11 of the bill would require all vessels engaged in support of oil drilling
activities in, on, above, or below the Exclusive Economic Zone (EEZ), to the
extent that the regulation of such activities is not prohibited under customary
international law, to be US flag vessels and owned by US citizens.
This proposal appears to be an attempt to remove exemptions to the Jones Act
as they pertain to cabotage restrictions that have applied to certain offshore
shipping activities involving foreign flag vessels for several decades. We believe
Section 11 concerns free trade principles and issues of market access.
We note that the proposals in Section 11 are similar in their effect to those made
by U.S. Customs and Border Protection last year (see Customs Bulletin and
Decisions, Volume 43, No 28, July 17 2009), but which were subsequently
withdrawn following concerns raised by the international community about free
trade principles as well as, [I]inter alia, [/I]about the short notice period for comment.
Based on comments made by the U.S. Customs and Border Protection in the
Federal Register, they are expected to reissue proposals governing offshore
shipping operations in the near future. We believe this process would provide a
better mechanism to address these complicated matters, rather than
amalgamating them with legislation which primarily concerns issues in which
questions of free trade and market access are not at stake.
We are especially concerned about the very negative signal which this proposal
in HR 5629 conveys with regard to the approach taken by the United States
towards the maintenance of free trade principles in shipping and good relations
with its trading partners. It must be appreciated that these proposals will have
very serious commercial implications for many international offshore operators
that are members of the national shipowners’ associations which we represent.
Some of these foreign operators have invested many millions of dollars in
specialist ships and equipment in order to provide services to the US offshore
drilling industry, which will have to be curtailed if the proposal in Section 11, or a
similar one, is carried. Such a dramatic change goes beyond the normal
expectations of arrangements between the United States and its trading partners.
This is particularly unfortunate in the context of the current global economic
downturn, and sets a negative example which could be emulated by other
nations around the world. Indeed, if such protectionist policies were copied by
other nations, this could impact on those important U.S. shipping companies that
operate significant numbers of offshore support vessels in overseas markets,
such as West Africa, South East Asia, and South America. Moreover, U.S. oil
producers operating in such markets could be compelled to use local shipping
companies that might not meet accepted international standards.
We acknowledge (although we do not support) the US rationale underlying the
Jones Act, and the desire from some U.S. constituents to further extend
coverage to the U.S. offshore support vessel sector. However, it is emphasised
that foreign flag operators providing services to the U.S. offshore industry must
comply with international standards regarding safety, environmental protection,
seafarer training and security, to which the U.S. is a Party through Conventions
adopted by the International Maritime Organization (IMO). These requirements
are substantiated by very thorough U.S. Coast Guard inspections.
We believe that all ship operators serving the offshore industry in the Gulf of
Mexico, U.S. flag and others, are providing a safe and environmentally
responsible service to that industry. We believe that concerns about safety are
not a valid pretext for what will be perceived outside the U.S. as protectionism
that goes against the spirit of the free trade principles to which the U.S. is
committed as a member of the World Trade Organization and the OECD.
We stress that ships servicing the offshore oil production sector are part of an
entirely separate industry to the oil drilling industry itself. We do not believe there
is justification for the legislation being developed in response to the [I][FONT=Times New Roman]Deepwater
Horizon [/I][/FONT]spill to be used to address unrelated market access issues involving
international ship operators.
When the Senate considers legislation to address this truly terrible incident, we
respectfully ask that the nationality of offshore support vessels is not
inappropriately included. We request this noting that U.S. Customs and Border
Protection is expected to reissue proposals, in the context of the Jones Act,
which will address these same matters in the near future.
Yours sincerely
Peter Hinchliffe
Secretary General[/LEFT]
International Chamber of Shipping