HOUSE COMMITTEE BACKS ELIMINATING U.S.-FLAG VESSEL REPAIR DUTY

HOUSE COMMITTEE BACKS ELIMINATING U.S.-FLAG VESSEL REPAIR DUTY    The House Ways and Means Committee has approved a provision to eliminate a Customs duty on U.S.-flag vessel repairs in its proposed miscellaneous trade bill.
   The 50-percent ad valorem duty, which covers nearly all parts, supplies and equipment used in routine repairs performed by crewmembers, has added thousands of dollars to the operations costs of U.S.-flag vessels.
   The initial purpose of the duty was to encourage U.S.-flag vessel operators to make repairs in U.S. shipyards. On April 25, 2001, Customs extended its interpretation of the duty to include vessel repairs and maintenance by American seafarers on the high seas.
   'This impractical regulation forces the crew on U.S.-flag ships to report the use of every single item on board a vessel, literally down to the last nut, bolt, fastener and pint of grease,' said Gloria Cataneo Tosi, president of the American Maritime Congress, in a recent letter to the House Ways and Means Committee calling for the end of the duty. 'Further still, miring the crew in such unnecessary and burdensome paperwork compromises their focus on vessel safety, environmental protection and cargo delivery.'
   She added 'this unfair rule places the already beleaguered U.S.-flag fleet at a further competitive disadvantage since foreign-flag ships are not subject to this rule.'
   For more than a year, the Washington-based group has worked on behalf of a coalition of U.S.-flag vessel operators, maritime unions and trade associations to eliminate the ship repair duty.
   The American Maritime Congress first attempted to eliminate the ship repair duty by attaching a provision to the proposed 2002 Maritime Transportation Anti-Terrorism Act (S. 1214), but the bill has stalled. The group next pushed for a provision in the 2002 Miscellaneous Trade and Technical Corrections Act (H.R. 5385).
   The provision to eliminate the ship repair duty was sponsored by Reps. Jim McCrery, R-La., and Phil Crane, R-Ill. House Ways and Means Committee Chairman Bill Thomas, R-Calif., made the termination date for the ship repair duty retroactive to April 25, 2001, 'because the regulation was wrong from the beginning.'
   H.R. 5385 is expected to head for a full vote soon, and could pass before Congress adjourns at the end of September.