Shipping Industry Sails toward Subsidies While Congress Appears Close to Approving Aid for Hard-Hit Shippers, Some Lawmakers Say Maritime Business Gets Too Much Already

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SINCE the late 1970s, the federal government has released the trucking and airline industries from its grip. But another major transportation industry, shipping, isn't following in their footsteps. Instead, Congress appears to be close to approving new subsidies for maritime business.

Late last year, the House overwhelmingly approved legislation that would offer $1.2 billion over 10 years to operators of large commercial vessels in foreign commerce - less than the $240 million shipowners now get annually, but those New Deal subsidies are due to expire by the end of the decade. The bill also may offer hundreds of millions of dollars for shipyards, which have not received direct subsidies since 1981.

The Senate appears set to approve the legislation as soon as its sponsors, Sen. John Breaux (D) of Louisiana and Rep. Gerry Studds (D) of Massachusetts, reach agreement with the Clinton administration on the funding mechanism for the payments. A plan appears near, sources close to the negotiations say. Gale-force economic winds

Backers of the legislation say it is necessary at a time when the United States maritime industry is being battered by gale-force economic winds.

There are now 377 oceangoing vessels and 77 Great Lakes boats under the US flag - less than half the number just two decades ago. The number of jobs aboard US oceangoing ships has plummeted from more than 50,000 in 1965 to less than 10,000 today - a decline that corresponds with a concomitant fall in related occupations, such as longshoremen and port pilots.

US shipyards have been similarly hard-hit. The number of vessels under construction in the US fell from 97 in 1974 to one in 1992, according to the National Shipbuilding Initiative. If that trend continues, the number of shipyard workers will drop from roughly 100,000 today to 28,000 in 1997, according to the Shipbuilders Council of America.

A large part of the decline is due to dwindling Pentagon spending, shipping executives say. With fewer Navy ships to build and fewer Army divisions to transport, the maritime industry has been forced to look to the private sector. But attracting customers isn't easy, since US-built vessels cost more than those built abroad, and foreign-flagged vessels are typically much cheaper to operate than ships flying the Stars and Stripes.

Maritime-industry executives say they're not responsible for their lack of competitiveness in the world marketplace. Shipbuilders place the blame on foreign subsidies. South Korea, Germany, and Japan - the world's three biggest shipbuilders - each provide roughly $2 billion annually in ship-construction subsidies.

"As long as the foreign practices exist, it's impossible for us to enter the market," says John Stoker, president of the Shipbuilders Council of America.

In 1989, US shipbuilders filed a formal complaint against the foreign handouts, and US officials have been negotiating with the Organization for Economic Cooperation and Development ever since to eliminate the subsidies. To spur along the Paris-based talks, Rep. Sam Gibbons (D) of Florida has introduced legislation that imposes punitive fees at US ports on vessels built with foreign subsidies. …


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