"Port and Cargo Security and the American Flag Merchant Marine."

In an special release through the Maritime Executive Newsletter, Maritime TV released a white paper entitled "Port and Cargo Security and the American Flag Merchant Marine."

Maritime TV has been instrumental in highlighting video content that has attracted national attention about maritime security issues in the past, including the 2004 report that cited the homeland security threat from the lack of U.S. flag shipping and crew presence in U.S. ports.

Sources at Maritime TV confirmed at press time that the Internet TV channel was preparing to produce a nation-wide video webcast forum featuring industry experts on the issue, to be announced shortly. For more information go to http://www.MaritimeTV.com .

"Port and Cargo Security and the American Flag Merchant Marine"

The recent debate on the merits of whether or not a foreign-controlled entity should be allowed to operate terminals in United States ports has illustrated the great concern the government and all citizens have about port security. The underlying issue, however, is in reality cargo security for which numerous layers of inspection and screening are being implemented by the U. S. Coast Guard, the Bureau of Immigration and Customs Enforcement and local and state governmental agencies. The security of cargo is necessary in the maintenance of world trade. It is essential in the current environment.

Ports are creatures of cargo. Without cargo, indeed, there would be no need for ports. This paper discusses the use of an existing system which will greatly improve cargo security which has been proven in times of crisis since at least 1936. The system in place in its critical component, is cost-effective and will, if expanded and integrated with other security measures greatly improve cargo security and therefore national security.

The Merchant Marine Act of 1936 had as an aspiration the training and manning of United States flag ships with United States citizens as officers and mariners. It also tied together American shipyards and American-flag ships in an economic triangle of citizen manning, United States built ships and protected trade routes. The system has been modified over the years but has a salient characteristic which still exists. The core cadre of officers on United States flag ships hold licenses issued by the U. S. Coast Guard which require substantial personal background checks. Many of these license holders are Naval Reserve officers having security clearances. All are trained in the operations of modern ships and in handling the cargoes these ships carry. They are indeed a first line of defense in cargo security at sea.

It is no great revelation that the United States flag fleet has fallen on hard times. Most ships calling in the United States have foreign officers, foreign crews and fly foreign flags. They are ? as the Department of Homeland Security has rightly observed ? a potential threat along with their cargoes. A principal reason the United States flag has declined is because of taxation policies which in effect penalize the United States ship owner in the world markets. Further, the inflexible binding of United States flag ships to American shipyards has historically created difficulties to vessel owners and operators under the United States flag. A change in policy in shipping is needed which will allow the use of cost-effective shipping assets to manage cargoes and ships which call in United States ports to protect the national security in the current emergency and in the future.

Ship owning and cargo carriage are a function of capital formation. Capital formation for shipping and ship owning currently is easier outside the United States than in the United States. Several things can be done easily and readily to make American flag shipping attractive to investors and owners:

1. Taxation and policy can be changed which will permit all American-flag owners to compete on the world shipping market with other owners. The cost to the government would be small and the effects would very large. The current taxation system for ship owners is onerous and does not recognize the realities of the business.

2. Flag policy can be changed to a two-tier flag system such that an American Offshore Registry can be established which would permit the flying of the United States flag but which would allow owners to buy and own ships outside the country. This can be coordinated with a change in taxation policy. The American Offshore Registry would require the ships in it to have a full complement of American officers and United States citizen crews. The current training facilities in the United States can readily supply sufficient officers and mariners for an expanding registry. The Norwegian two-tier system can be used as a model for the American Offshore Registry.

3. Cargo policy can be changed. Currently there is cargo preference for bulk cargo under P. L. 480 for American flag ships if available. Some Department of Defense cargoes must also be carried under American flag ships. It is a fairly easy matter for the Bureau of Immigration and Customs Enforcement to identify in the harmonized tariff system those cargoes which are "sensitive cargoes" which require carriage on American flag ships. Those cargoes could be carried either on ships of the current registry or on the American Offshore registry. With American officers and mariners, additional inspections can be performed at sea and the cargo can be fully controlled from place of departure to arrival. American Offshore Registry with officers and crews of all American ships carrying sensitive cargoes would be allowed preferential clearance and entry. Department of Defense cargoes could also be carried on American Offshore Registry ships preferentially.

4. Ship policy can be changed. The American Offshore Registry would allow the use of foreign-built tonnage with, among other things no duty, for a reasonable, say five year, period. During that period additional policies can be developed which will encourage United States shipyards and American Offshore Registry owners to use the services of United States shipyards for newbuildings as well as repairs. Such a policy should recognize the necessary interests of shipyards as a vital component of cargo and vessel security both in the current emergency and in the future. For example, all repairs of American Offshore Registry ships would perhaps be required in United States shipyards for the initial five year period while the shipyard newbuilding policy is being developed. The current subsidy system and loan guarantee system can be reordered to encourage newbuildings in American yards. The cost to the government is small. The effects on the national security are enormous.

5. The United States Merchant Marine Academy and the various state maritime colleges and union training schools can be used to supply officers and mariners for the American Offshore Registry. These citizens can be trained from the beginning in proper cargo security procedures and methods and be refreshed regularly as a part of the current licensing and credentialing scheme. The advantage of the American Offshore registry to the government is very simple. On each vessel of the registry all personnel are cleared, secure members of the anti-terrorism team who are on the front line of detecting and stopping cargoes dangerous to the national security from entering the country. The trained officers and unlicensed personnel of the ships as directed by owners who are United States citizens can add an integrated layer of protection to the nation not now present.

The United States is a trading nation, yet very little cargo is carried on United States flag ships. A policy in place which would target a 2.5% cargo carriage growth rate per year in growth using the American Offshore Registry by both competitive means and by designating sensitive cargoes would in a decade provide a critical mass of cargo security for the nation. The objective would be that one half of all cargoes bound for the country should be carried on American ships manned with trained and secure American citizens. Such a policy change would provide thousands of new jobs for American officers and mariners and shpiyards. It would cost the government little and would substantially increase the nation's cargo security and national security. It would violate no international shipping policies and would be good for the nation and for the world.

As an industrial nation, the vital shipyard workforce necessary to its trade survival and its military projection of force is also threatened. The American Offshore Registry, if carefully and appropriately established would forge a new alliance of American owners with American yards and the United States Navy and United States Coast Guard for the protection of the national industrial base and the trade upon which the country is dependent.