PVA Opposes Bill Allowing Foreign-Flagged Ships to Compete with U.S. Passenger Vessels

The Board of Directors of the Passenger Vessel Association (PVA) unanimously voted to oppose enactment of a bill in the U.S. House of Representatives that would allow foreign-flagged passenger vessels to directly compete with their American-flagged counterparts.   The PVA Board action reaffirmed support of the Passenger Vessel Services Act (PVSA) which reserves the commercial carriage of passengers between U.S. ports for vessels that are U.S.-flagged, U.S.-owned, U.S.-built, and U.S.-crewed.  The legislation (H.R. 2460) was introduced by Congressman Blake Farenthold of Texas on July 7, 2011. 

The proposed Farenthold exception to the PVSA would apply if the duration of the foreign vessel’s voyage is more than 24 hours and if some part of the voyage occurs on the high seas.  The foreign vessel could not operate as a ferry.  However, the bill would enable a foreign cruise ship crewed by foreign nationals to compete directly on the same routes served by small and large U.S.-flagged overnight cruise vessels operated by companies that are fully subject to U.S. labor, environmental, social, and tax laws and that hire American citizens as crew members.  

Crews on foreign-flagged passenger vessels are made up almost exclusively of foreign nationals.  Many domestic U.S. laws (such as the statute setting minimum wage and overtime requirements) don’t cover crew members of foreign passenger vessels, even when they sail into U.S. ports.  Also, most revenues of foreign-flagged passenger vessels are not subject to federal income taxes. 

Under the bill, the foreign vessel would not have to be owned by a corporation controlled by U.S. citizens, as are U.S. passenger vessels.  The foreign vessel would not have to be built in an American shipyard by American shipyard workers (as a qualified U.S. passenger vessel must be).  Nor would the foreign vessel be mandated to have any repairs or maintenance performed in U.S. shipyards, as U.S. passenger vessels must do.

PVA’s vessel-operating members, its associate members who design or build U.S. passenger vessels, and the U.S. citizen employees of these companies would be economically harmed by the enactment of H.R. 2460.

The full text of the resolution approved by the PVA Board of Directors follows:
        
“The Passenger Vessel Association (PVA) supports the preservation, without amendment, of the Passenger Vessel Services Act.  This “cabotage” law reserves the commercial carriage of passengers between U.S. ports for vessels that are U.S.-flagged, U.S.-owned, U.S.-built, and U.S.-crewed. It prevents unfair competition by foreign-flagged passenger vessels that do not have to comply with U.S. laws, including tax laws.  Therefore, PVA opposes enactment of H.R. 2460, sponsored by Congressman Farenthold.”