James Oberstar

Mr. OBERSTAR

Mr. OBERSTAR. Mr. Speaker, I yield such time as he may consume to the gentleman from Ohio [Mr. Traficant].

Mr. OBERSTAR. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, House Concurrent Resolution 150, as amended, would authorize the use of the Capitol Grounds for a display of specialty vehicles, including racing cars and antique cars. Mr. Speaker, as I understand this event, like other events on the Capitol Grounds, it will be open to the public and will be free of charge. The amended resolution before us includes some substantial improvements over the introduced resolution. In my opinion, the concurrent resolution as introduced did not contain sufficient safeguards to ensure that the authorized event would be consistent with our longstanding and bipartisan policy, and one enforced by the previous Architect of the Capitol, that the Capitol Grounds should not be used for commercial purposes. I frankly find it offensive that anybody would want to do such a thing. Mr. Speaker, I had two major concerns in that regard about the introduced resolution, First, it did not prohibit the cars on display from being covered with decals advertising automotive and other products. Second, there did not appear to be adequate protections to assure that photographs of cars on the Capitol Grounds would not be used in commercial advertising; the selling of the Capitol, it seemed to me. We discussed this a great deal with our good friend, the gentleman from Maryland [Mr. Gilchrest], the very thoughtful and concerned Member of Congress, for whom I have great respect and appreciation. The amended resolution now deals with these issues. It did not totally prohibit the decals. We were advised in the course of these discussions that the event would not be able to go forward with a total ban on decals, since owners would not be willing to display their cars with the decals covered up with masking tape, which I frankly suggested. However, the bill limits the decals to those that are already on the car, so they cannot put new ones on. I do not know how we are going to monitor that, test it, or check it, but we will take them at their word. With respect to photographs, the amended resolution includes a provision prohibiting the sponsor of the event, the person displaying the vehicles, and the manufacturers of the vehicles, from using photographs of the event for commercial purposes. I hope, I just strongly, hope, that these prohibitions, which carry financial penalties, will control the potential for commercialization of the U.S. Capitol. I know the gentleman from Maryland shares that concern. He has endeavored vigorously to achieve the same objective. I believe with his vigilance and with the attention that has been drawn to this subject that the commercialization, the use of the U.S. Capitol for commercial purposes, will not go forward. Mr. Speaker, I think these protections are as good as we can get, short of not allowing the event. Congress has an obligation, Mr. Speaker, I feel very strong about this, to ensure that the Capitol Grounds are used in a fitting and in a proper manner. Use of grounds for a commercial purpose detracts from the integrity of this national treasure and this landmark that belongs to all of us, to all Americans. It offends me, frankly, that groups that criticize Washington and criticize government then want to turn around and use Washington and its most important symbol, the U.S. Capitol, to further their own commercial purposes. I find that inconsistent, I find that offensive. Use of the grounds of the U.S. Capitol should be reserved for events that have public significance, that have national significance, that have broad national interest, such as the Special Olympics torch relay run, the memorial ceremony honoring law enforcement officers killed in the line of duty. Even in those, as in this particular event with racing cars, we ought to be sensitive to safeguarding the integrity of this very treasured national symbol of freedom. It is, after all, a symbol of freedom. It is not a symbol of commerce. I think the amendment before us achieves those objectives, responds to my concerns, and I appreciate the cooperation I have had from the gentleman from Maryland and the sensitivity and concern and cooperation we have had from the chairman of the full committee.

Mr. OBERSTAR. Mr. Speaker, I yield 3\1/2\ minutes to the gentlewoman from Colorado [Mrs. Schroeder].

Mr. OBERSTAR. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, following up the discussion with the ranking member of the subcommittee, the gentleman from Ohio [Mr. Traficant], discussing the matter of foreign cars, which we have been assured there are not going to be foreign automobiles, the provision of the resolution deals with this issue, section 6, do I understand the chairman's response to mean that in entering into an agreement authorizing the event, that the Architect will include provisions to assure that no foreign manufactured cars will be included in the display?

Mr. OBERSTAR. Mr. Speaker, reclaiming my time, I would say that the assurances given by the scholarly gentleman from Maryland [Mr. Gilchrest] are satisfactory to our side and to those who have raised concerns in the course of the debate this afternoon, and I would most certainly hope that we will not have a request for a recorded vote. I think this should pass on voice vote.

Mr. OBERSTAR. I yield to the gentlewoman from Colorado.

Mr. OBERSTAR. I yield to the gentleman from North Carolina.

Mr. OBERSTAR

Mr. OBERSTAR. Mr. Chairman, we are not opposed to the amendment. Therefore, we claim no time.

Mr. OBERSTAR. Mr. Chairman, I offer an amendment.

Mr. OBERSTAR. Mr. Chairman, I ask unanimous consent to be able to proceed for an additional 5 minutes.

Mr. OBERSTAR. Mr. Chairman, this amendment requires that the essential terms of ocean transportation contracts be disclosed to the public. The amendment transfers, in addition, the remaining functions of the Federal Maritime Commission to the Surface Transportation Board within the Department of Transportation rather than to the secretary to ensure that investigations and decisions about ocean shipping are done in an unbiased and nonpolitical manner. Those are the only changes my amendment makes to the bill. In evaluating the request of secret contracts, we have to remember that international shipping operates in a very different environment than any other mode in our domestic transportation industry. Over 85 percent of the containerized shipments in and out of our ports go on foreign-flagged ships. Most of this cargo is transported on ships operated under a conference or a cartel agreement. Many foreign carriers have many agendas. Some are controlled by their governments, some are vertically integrated with manufacturing companies, some are motivated by their brand of nationalism, some will do whatever necessary to drive their competitors out of the marketplace. Into such a complex system will this bill allow secret contracts. I do not think it is in the interest of our ports, our manufacturers, U.S. consumers, or the Nation to allow secret contracts negotiated behind closed doors to determine the fate of our international trade. There have been no hearings on this legislation in our committee. No testimony was received on the impact of that provision of the bill. Potential opponents were not given an opportunity to voice their concerns about it in open hearings. However, the Senate's hearing on an identical bill raised a number of problems about this particular issue of secret contracts. Mr. Chairman, the basis of this bill is to promote competition, but it will result in less competition. With secret contracts, rates likely will fall below levels that provide an adequate return on assets or investments. I quoted earlier Mr. Clancy, President and CEO of Sealand Services, one of the world's largest ocean carriers and a major supporter of this bill. He sees the result of this bill: that in a few years, a few giant super shipping consortia with global reach will control 85 to 90 percent of the world's container ships. There will be one cartel in the Atlantic, one in the Pacific, and one in the Asia-Europe trade. He believes it will be the demise of the niche carrier, of the feeder line, of the North-South shipping lines between North and South America. The types of carriers he believes will disappear are carriers such as Crowley Maritime and Tropical Shipping. Secret agreements will be the major weapon megacarriers are going to use to achieve their goals of consolidating power in the shipping industry. This provision will allow large companies to offer lower rates to larger shippers, and if smaller shippers and carriers are unaware of the deals, they are going to find it difficult to compete. The end result will be exactly what Mr. Clancy predicts: the demise of niche carriers, feeder lines, and North-South lines. Let us look at the impact on small- and medium-sized shippers and on manufacturers and retailers. With secret contracts it will be virtually impossible to enforce any of the prohibitions in the bill. For example, under the act, a carrier or a group of carriers may not retaliate against any shipper who has patronized another carrier or filed a complaint. How will anyone be able to tell if there has been retaliation or discrimination if all contracts are going to be kept confidential? With the secret contracts, small- and medium-sized shippers will likely pay more, not less, in the short run and the rates they pay will increase even more in the long run. Everyone acknowledges that confidential contracts will lower the rates paid by the large shippers, of course. But 70 percent of the carriers' costs are fixed. Who is going to make up the difference when the large shippers get the rate breaks? Obviously, the ones who are going to make up the differences are going to be the small- and medium- sized shippers. If Mr. Clancy's plans succeed and the cartels controlled 85 to 90 percent of the world's shipping, then we are going to see increased use of secret contracts from large shippers and higher rates for these small- and medium-sized carriers, and they will be driven right out of the marketplace. What about our ports and our infrastructure? Ports in their communities have invested billions of dollars in developing their port facilities through local taxes and bond issues. But when these consortia enter into secret deals under the protection of antitrust immunity, they are going to drive the small carrier out of business, the very tenants in those ports that pay the rent to pay off the bonds. When U.S. Lines, for example, went bankrupt, it left the port of New York with a vacant terminal. That terminal has been vacant for 15 years. Who paid for the construction? The port of New York-New Jersey. Who paid for the financing of an empty terminal? The port of New York- New Jersey. Do we want to see that repeated all over the country? With the demise of small carriers in a regime of secret agreements, surviving large carriers will consolidate their operations at the larger ports. Carriers will stop calling at many of the smaller ports. Jobs, public investment, will be lost. One of the fundamental purposes of the 1984 act was to reach a balance by legalizing international cartels with antitrust immunity, but requiring public disclosure of the agreements between the carriers in the cartel and the essential terms of the contract between carriers and shippers, so everyone would know that ports, manufacturers, retailers, consumers in the United States are not being discriminated against. The contracts in this bill will promote survival of cartels and survival of large carriers. There may be a short-term decrease in rates as they use market power to drive small and independent carriers out of business. But when, as the chairman of Sea Land predicts, there are only three cartels left controlling 85 to 90 percent of the world trade, rates are going to go up. They are going to put U.S. exporters out of business or at a disadvantage in the international market. We should not launch that process here with this legislation. The overriding purpose of shipping laws should be to ensure that the small as well as the large shipper is able to have their goods shipped anywhere in the world at a competitive price. My other concern is that the bill transfers the remaining functions of the FMC to the Secretary of Transportation instead of an independent regulatory panel. The former FMC responsibilities would not appropriately be exercised by an independent panel. So my amendment would do that. My amendment will do that. The Republic of China, for example, has restricted the ability of U.S. carriers to operate terminals and freight forwarding operations in China, even though we allow Chinese carriers to conduct these same operations in the United States. The Japanese Government imposes a harbor tax that does not benefit navigation, but only increases the price of United States exports to Japan. I believe we ought to have an independent body, insulated from pressures by the State Department, to pursue elimination of trade barriers. That is why I propose that we transfer this function to the Surface Transportation Board. My amendment leaves in place elimination of the Federal Maritime Commission; elimination of tariff filing and regulation by the Government; restrictions on the contents of contracts between shippers and carriers are eliminated; laws related to unfair trade practices of foreign carriers and foreign governments will be strengthened; conferences will not be able to prevent their members from making individual, lower cost ocean transportation contracts with shippers. We deal with two shortcomings of the legislation. Airlines do not have antitrust immunity for anything domestically. Shipping conferences have antitrust immunity for point-to-point rates. No other mode of transportation has antitrust immunity for point-to-point rates. We should not allow secret deals to be made under such protection. My amendment will make this bill acceptable in the other body, acceptable to the administration. It will make it possible for us to enact good deregulation. I urge support for the amendment I have set forth.

Mr. OBERSTAR. Mr. Chairman, will the gentleman yield?

Mr. OBERSTAR. Mr. Chairman, I thank the gentleman for his courtesies. I am sorry that the gentleman from Arizona exhibited such discourtesy in displaying a quote up there which is incomplete, takes out of context or at least leaves out conveniently something I did say. I am glad he thought it was important to quote what I said. I have quoted myself, and I do not need to be quoted in a poster by the gentleman from Arizona and then have part of it left out. I supported the legislation as it was pending in committee. I said it accomplishes preservation of the conference carrier system, which is important to carriers, and injects a healthy and significant dose of flexibility. Put the whole thing in context. Do not just quote part of what I said. I thank the gentleman for yielding.

Mr. OBERSTAR. Mr. Chairman, will the gentleman yield?

Mr. OBERSTAR. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, in the course of this debate, much has been made of who said what and when. At the very outset of this whole process, I made it very clear to my good friend, the chairman of our committee, that as we moved the bill through subcommittee and full committee, I supported the bill. I felt, however, there should have been hearings on the introduced bill before we went to markup, but there was a willingness to work together to try to work out differences to come to an agreement. When we came to markup, I said very clearly, ``I support the legislation being considered, as do my fellow Democrats on the committee.'' I thought that we had gone through a process whereby all considerations had been given an opportunity to be brought to bear on the legislation. The bill that the committee was about to consider was very similar, I said, to legislation I introduced earlier in the year, but that bill that I introduced following the concept hearings the committee held never allowed for secret contracts. That was not something, it was not a provision, that I supported. We had come to an agreement, however, that I thought was about as far as we could go at that point. Mr. Chairman, time passed 8 months went on, and agreements should never stand in the way of good public policy. If people have objection to legislation, people feel their interests are being hurt, if ports feel that they are going to be disadvantaged, if labor feels it is going to be disadvantaged, we have a right to hear their concerns, and we have a responsibility to react to those concerns. That is what I am doing in proposing my amendment. This is not some act of disloyalty, as it seems to be portrayed in the course of this general debate. This is, however, a high act of public responsibility and public policy. Openly discussed, I did not conceal from my friends on the Republican side that there were concerns raised by valid interests that need to be heard. I was very open about it, told my colleagues directly what needed to be done and gave them an opportunity to look at this legislation, at this amendment, rise objections if they have them. We understood that they could not probably come to an agreement on it and that this is the place to take that language to the floor and have a vote on it, and we will have a vote. Mr. Chairman, but it is done in the full spirit of openness and of respecting interests that people have and concerns in this open public policy process. There is no hidden agenda on my part or on the part of any of us on this side. We have differences; let us have them out. But let us not make them personal. I never have and I do not like that way of proceeding. We have differences on public policy issues; let us debate them out on their merits, and that is what we are going to do in a few minutes. With that, Mr. Chairman, I yield back the balance of our time.

Mr. OBERSTAR. Mr. Chairman, that is what I attempted to do with the quote of the gentleman from Arizona, or that he attempted to represent as attributed to me. But the point is, what I said there does not bear on the subject of our debate this afternoon.

Mr. OBERSTAR. Mr. Speaker, on that I demand the yeas and nays.

Mr. OBERSTAR. Mr. Chairman, will the gentleman yield?

Mr. OBERSTAR. Mr. Chairman, I voted for airline deregulation, and trucking and bus deregulation, and rail deregulation. But I wanted to say, since my former colleague is no longer here to explain himself, that quote was taken at a time when we had a concept of a bill and not the specific language of a bill. It is not relevant to the present debate.

Mr. OBERSTAR. Mr. Chairman, will the gentlewoman yield?

Mr. OBERSTAR. Mr. Chairman, I thank the gentlewoman for yielding. I just wanted to say that repeatedly my chairman has said that seagoing maritime labor supports this legislation, and I have called to find out just what is their position on this matter, and both the American maritime officers and the seafarers are not in support of the legislation unless it is amended as we have proposed. I just wanted to get the record straight.

Mr. OBERSTAR. Mr. Chairman, I demand a recorded vote.

Mr. OBERSTAR. Mr. Chairman, I yield 5 minutes to the gentleman from Oregon [Mr. DeFazio].

Mr. OBERSTAR. Mr. Chairman, I yield 5\1/2\ minutes to the gentleman from New Jersey [Mr. Menendez]. (Mr. MENENDEZ asked and was given permission to revise and extend his remarks.)

Mr. OBERSTAR. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, many writers and historians have described the United States as an ``Island Nation''. The oceans that have protected us from foreign invasion are also the highways over which most of this country's imports and exports must travel to market. While most people recognize that the coastal cities in our country grew up around ports, today, every congressional district in the United States is touched by this linkage to the world market--whether it be iron ranges in my district, or wheat fields in Kansas. That's why we must all be concerned about how international shipping is regulated. The bill now before us would take major steps in shifting the regulation of international shipping from the Government to the marketplace. In general, I support this approach. The market can do a much better job than the Government in promoting efficiencies and low prices for consumers. That was proved with the successful deregulation of the domestic airlines, trucking, bus, and railroad industries. I also support most of the provisions of H.R. 2149, including the provisions which eliminate the Federal Maritime Commission; prohibit ocean carrier conferences from restricting the rights of individual carriers to make contracts with shippers; and eliminate the requirement that tariffs must be filed with a governmental agency. However, I believe that the bill goes too far in one important respect. By combining continued antitrust immunity for conferences of carriers with a right of these carriers to make secret agreements with individual shippers, the bill is likely to lead to less competition and higher rates. Later, I plan to offer an amendment to prevent these unfortunate consequences by banning secret agreements. In evaluating the problems with secret agreements, we must be aware of some basic economic facts about ocean shipping today. At the end of World War II, the United States had the greatest commercial fleet in the world to carry this commerce. Today, less than 4 percent of our commerce is transported on U.S.-flag vessels. More than ever before, we are dependent on foreign vessels owned by foreign citizens to transport the lifeblood of our Nation. Foreign carriers do not necessarily have the best interest of United States' citizens at heart. Foreign carriers can be motivated by their own nationalism, their business interests, or the interests of their government. Foreign carriers can operate as an instrument of their country's corporate or governmental policy. To further these policies, foreign carriers can set rates which increase the costs of our exporters and lower the shipping costs of their country's corporations which export to the United States. Thereby, foreign carriers can place U.S. manufacturers, even those only serving domestic markets, at a disadvantage in competing against foreign manufactured goods. The ability of foreign carriers to create unfair advantages for their country's exporters will be greatly enhanced if the foreign carriers are allowed to enter secret agreements with these exporters, with discriminatory terms. Our shippers will be unaware of these agreements and have less leverage to obtain comparable agreements. Secret agreements will also accelerate current trends toward industry concentration. In this regard, I would like to take a moment to read to you the views of one of the biggest supporters of H.R. 2140, John Clancy, the president and CEO of Sea-Land Services, Inc. According to an interview he granted with World Wide Shipping in September, Mr. Clancy believe that: A few giant shipping consortia with global reach and the freedom to function like contract carriers will dominate the world's sealanes before the end of the century. He painted a picture of a maritime environment where a few super-consortia will control 85-90% of the world's containerships. The byproduct, he says, is the demise of the niche carrier, the feeder line and the north-south lines with no other links in the shipping chain. The controlling factor in this, according to Mr. Clancy, is the pending legislation to deregulate the U.S. shipping industry. I thought the purpose of deregulation legislation was to increase competition, not to eliminate it. That's the fundamental flaw in H.R. 2149. It lacks balance. Everyone is looking at the quick, short-term impact--everyone; that is, except Mr. Clancy. He has his eye on the ball--a short-term cut in rates resulting from secret contracts under deregulation will drive his competitors into bankruptcy and he and the other super consortia members will have the market to themselves, with unlimited ability to control the price of international shipping--whether it be household goods, food and grain, raw materials, automobile parts, or clothing. Secret agreements will be a major weapon enabling Mr. Clancy to achieve his goals. It will permit large companies to offer lower rates to larger shippers. If smaller shippers and carriers are unaware of these deals they will find it difficult to compete. The end result is likely to be exactly what Mr. Clancy predicts. The demise of the niche carrier, the feeder line and the north-south lines. I served on the House Committee on Merchant Marine and Fisheries when the Shipping Act of 1984 was written. One of the fundamental purposes of the 1984 act was to counterbalance the legalization of international cartels that have anti-trust immunity by requiring public disclosure of the agreements between the carriers in the cartel, and the essential terms of the contracts between the carriers and the shippers. This way the Government and public will know that ports and manufacturers in the United States are not being discriminated against. By allowing secret contracts, this bill eliminates this balance and undermines the concept of common carriage. I reiterate that there are good provisions in the Ocean Shipping Reform Act. There should be less governmental interference in the marketplace. The Federal Maritime Commission should be eliminated. The marketplace is a better regulator than the Government. But for the market to work, there must be daylight in the market. Carriers, conferences, consortia, and shippers shouldn't be allowed to enter into secret deals that can harm our ports, manufacturers, and consumers. It's one thing to allow for confidential contracting in our domestic commerce where the Department of Justice or the investigating agency can easily obtain evidence by subpoena. But this isn't the domestic commerce. These contracts are being made and executed in cities around the globe--Hong Kong, Singapore, Tokyo, London, Rio de Janiero, and Rotterdam. Many foreign governments have blocking statutes to prevent discovery of evidence by U.S. investigators. It will be virtually impossible to obtain information about the content of these secret deals before the harm is done to U.S. ports, manufacturers, and consumers. Was it good for the U.S. consumer and manufacturers when OPEC got together to control the world price of oil? At the appropriate time I will offer an amendment to require that essential terms of these confidential contracts be made publicly available and to transfer the residual functions of the FMC to the Surface Transportation Board that currently regulates ocean shipping between the continental United States and Hawaii, Puerto Rico, Alaska, and Guam. I believe that my amendment will not gut or kill this bill but will restore the proper balance to this legislation and allow market forces to regulate this industry instead of the Federal Government. Now you have already heard from the other side that this amendment will gut the bill. There's nothing further from the truth. The fact is my amendment would still allow for private contracts between shippers and carriers. My amendment would not disturb the important provision in the bill that conferences may not prevent individual carriers from making separate contracts. All my amendment would do is require that certain essential terms of these contracts be made public so that there would be an equal playing field in terms of competition. In addition, my amendment would also allow for the transfer of FMC's remaining functions to the Secretary of Transportation with the minor modification that the Secretary then delegate those responsibilities to the Surface Transportation Board. Hardly ``killer'' changes, I submit. Lastly, you have also heard that this bill received bipartisan support in the committee and that even though no hearings were held on it there was opportunity for comment and reaction. That's true. But unfortunately as is often the case, when a bill lays around for 8 months after markup as this bill did, new issues and new interested parties emerge. While some may charge that particular groups came late in the game, the real issue is not ``when'' but ``what.'' In this case, the issues that have been raised are legitimate public policy issues which must be addressed. My amendment addresses these issues, while at the same time preserving the basic structure of deregulation established by the bill. If my amendment is adopted, I will support final passage of the bill. Without the amendment, I believe that the bill is highly anticompetitive and I will urge a ``no'' vote on final passage. Mr. Chairman, I reserve the balance of my time.