ISRAELI GOVERNMENT REQUESTS WAIVER TO U.S. CARGO PREFERENCE RULES

ISRAELI GOVERNMENT REQUESTS WAIVER TO U.S. CARGO PREFERENCE RULES The Israeli Defense Ministry has asked for a waiver to the U.S. cargo preference rules for jet fuel that it has bought from the U.S. Defense Security Cooperative Agency under the Foreign Military Sales Program.
   The 1954 Cargo Preference Act requires that at least 50 percent of non-agricultural government-sponsored cargoes to be transported on U.S.-flag vessels. Foreign-flag capacity may be obtained under a waiver from the U.S. Maritime Administration if U.S.-flag vessels are not available at a “fair and reasonable rate.”
   However, the cargo preference rules exclude from eligibility foreign-built ships previously registered under foreign flags that were re-registered under the U.S.-flag until after three years. The Defense Security Cooperative Agency’s rules are even more explicit in that they require 100-percent U.S.-flag carrier transport of goods.
   The Israeli Defense Ministry has expressed concern that qualified U.S.-flag tonnage may not be available in 2004 because of many tankers retiring under the 1990 Oil Pollution Act. “Their efforts to conclude a multiyear contract with a U.S.-flag carrier were frustrated for this very reason earlier this year,” MarAd said.
   The Israeli Defense Ministry has proposed that when qualified U.S.-flag vessels aren’t available that instead of granting a waiver for a foreign-flag ship to carry the cargo that MarAd grant a waiver so that non-qualified U.S.-flag vessels can carry the cargo.
   “From the national policy perspective of fostering a sufficient U.S. merchant marine employing U.S. citizen crew members, it would be preferable for U.S. sponsored cargoes to be carried by a non-qualified U.S.-flag vessel rather than a foreign-flag vessel,” MarAd said.
   MarAd is accepting comments from the industry regarding the Israeli Defense Ministry’s proposal through Sept. 12.