Dialog; The Jones Act: A Federal Maritime Law

You Dialogue is brought to you by Hawaiian Electric Company, people with a powerful commitment. Section 27 of the Merchant Marine Act of 1920, the Jones Act,

requires that cargo and passengers transported between ports within the United States must be carried on U .S. flag vessels. Those ships must also be owned by U .S. citizens. Members of the crews must be U .S. citizens as well. Critics argue that the Jones Act constitutes a subsidy which protects an inefficient domestic industry. It is protectionism in an age of free market prosperity and deregulation. And the ultimate result of the Jones Act? Critics say higher prices for American consumers. If the critics are correct, residents of Hawaii pay disproportionately for it is the only island state so dependent on maritime shipping. Good evening and welcome to Dialogue. My name is Dan Boylan. With me tonight are two men with an abiding interest in the Jones Act. Neil Abercrombie has wrestled with federal maritime policy for most of this decade in the halls of the United States Congress. Representative Abercrombie won Hawaii's first district seat in 1990. Prior to his congressional service, Mr. Abercrombie served a dozen years in the state legislature,

part of the term on the Honolulu City Council, and a stint in the State Department of Education. There's a job open there now, Neil. He is a Democrat. State Representative Jean Ward wants to wrestle with federal maritime policy in the halls of the United States Congress. He is announced candidate for the Republican nomination for the first district congressional seat, Mr. Abercrombie holds. Representative Ward has served most of this decade in the State House, representing an East Honolulu District. Until recently, he served as the House Majority Leader. Both Representative Ward and Congressman Abercrombie hold doctorates proudly from the University of Hawaii, Manoa. Dialogue, as you know, runs on high -octane questions and comments from its viewers. Without them, the program will sputter and stall, even with such high -octane guests as Congressman Abercrombie and Representative Ward. So please punch 973 -1000 on your telephone,

and our phone answers, who are wonderful students at Marino High School, will take your question. Again, 973 -1000 is the number. Neighbor -I of the residents may call us collect. Our sign language interpreter this evening is the high -octane Loretta McDonald. Congressman Abercrombie, we've deregulated railroads. We've deregulated airlines. Isn't the Jones Act an anachronism? Why don't we deregulate the maritime shipping? Because we'd have the same kind of situation that prevails and shipping in the rest of the world. Which is to say there are no environmental standards, there's no labor standards, there's no health standards. There would be no way for anyone to be accountable. When you have something as important as ocean shipping, this goes back over 200 years in the history of the United States. To see to it that we're unable to have on -time shipping where we are able to be sure our goods are going to be shipped. And that we have them American -owned, American flag, that is to say the flag on the ship is

American. We have American crews. The alternative, of course, would be to turn over all transportation, including the very rails and airlines that you're talking about, to the kind of people that are now involved in their economies crashing and burning all over the world. Particularly in Asia. No, no, I don't explain that a little bit. I don't quite understand what you mean by that. Well, if you have foreign flag vessels that are foreign -owned, let's take for example the sea Empress. This ship, when grounded itself off the coast of Wales within the last couple of years, it was owned by a company in Connecticut. They are the ones who have provided for it to have its flag in one country, its ownership in another country, its crew from a third country. There's no way to have any accountability or liability. When this ship grounded, it released twice as much oil as came from the

Exxon Valdez. The Exxon Valdez was an American ship and thousands and thousands and thousands of trips have been made under American ships, where you have the Coast Guard inspection, where you have the environmental standards, the health standards, the labor standards, with virtually no accidents. That's an aberration. Whereas with these other ships, these foreign ships, you can't tell what's going to happen and when it does happen, there's no accountability. Representative Ward, why shouldn't we protect American jobs? I mean, you don't want to protect American jobs? Dan, I think the representative is off course already. He's tried to divert the issue away from really what is central in reforming the Jones Act. Well, you're going away from my question, too, but go ahead. Let's get to the core of what this is all about. That's my point. This is about lowering the cost of living for people in Hawaii. That's what the issue is about. These are the ten general issues I will deal with in a very specific way, but right now we're going to talk about lowering the cost of living. As we sit here, the governor's economic revitalization task force is going on.

I would submit, Neil, tonight, what we are talking about is as vital, if not more vital to send this signal out there, that we want to save money for the people of Hawaii, and we are, in effect, a user -friendly, not as we are now, the highest cost of living in the United States, and with the highest shipping costs. The highest shipping cost. What does that mean? What does that mean to the people of Hawaii? For example, what have we got here? A local piece of bread, right? Bread. Wrong. Because of the Jones Act, we have to bring in Canadian wheat to feed the people of Hawaii because the cost of taking American wheat and shipping it to Hawaii is so expensive, we've got to go to the Canada, get wheat that otherwise comes on a Canadian ship to us. That's because the Jones Act puts the price of things so highly. Let me go to another one. Wait, wait, let's take, you've got your, you made your own bread. Let's talk about, let's test. Here's another part. You already made your start, Gene. You'll get to the, I'm looking, where's the beef in this argument? Did I interrupt

the congressman? The question was raised. The question was raised. What the representative ward proposes to do is take the bread out of the mouths of the people who are working here in Hawaii. How do you propose to have a cost savings if you are losing jobs in Hawaii? What about the hundreds of seafarers that have their jobs right in the seafarers hall right now who support the Jones Act because they're working paying taxes? Canada is not going to pay any taxes to Hawaii or to the United States. They don't have to obey any of our rules, any of those other countries need not do it as well. When you bring up this bread, you're taking bread off the table of the people of Hawaii. Mr. Congressman, you're running these metaphors. He's running off course again. Let me finish the explanation of why this is an issue about the cost of living for the people of Hawaii. I have here Mr. Congressman and Dan, this is a pound of beef. Because of the cost of bringing grain to Hawaii, we cannot

raise our beef in eat it here. We have to raise our beef and send it to the mainland. But how do we send our beef to the mainland? We fly half of our cows on 747s. My daughter is fond of reading the little book about the cow jumps over the moon. Literally 6 ,000 cattle every year are loaded into 747s. And we send it off to the mainland. You tell me there's not a problem with shipping? Of course there is, because we're sending our beef through the mainland. Now, one more point here. Where is the beef? Where is the beef? Of course. Because of the Jones Act, we don't have cattle carrying ships if we didn't have that. No, why don't we have cattle? It's too expensive. The Jones Act has such restrictions that we haven't had cattle carries in which there's 64 of them floating around the world. We cannot have them come to Hawaii, the big island in particular, and send it off to the mainland. Because none of them are American flagships. Exactly. Which is in

keeping with what you just said. Now lastly, remember to... Here's the bottom line. This is okay. I'm just finishing. You can have all meat in the milk next. You can have all of it. You can have all of it. You can take the whole thing. Together, this food chain together represents what otherwise for the high cost of living in Hawaii. If we could just get one third of our shipping cost saved, we could have $500 to $1 ,000 off of every Hawaii family budget. What's right now? The point is, this is what when we go shopping, we end up having one extra bag of groceries, which we give to Matsyn and Sealand, rather than to the people of Hawaii. What I'm saying is, if we could get the Jones Act reformed, we could put an extra bag of groceries in every family for a whole year. Right now, we give it to Matsyn and Sealand. And let me put it this way. Matsyn and Sealand, unfortunately, are forced by the Jones Act to buy these very expensive ships that are built by defense contractors. They pay two to three times then, what the otherwise would pay in Northern Europe or in East Asia. Two to three times means that these are the defense contractors who have a $1 ,000 toilet seats and $500 hammers.

That's very unfortunate because we are paying those prices when we go to the store and pay extra food. The other difficulty is, as I spoke about, the green that has to come from Canada is that there are so many ships going to the U .S. West Coast, which when they come back by Hawaii, by the hundreds, half empty, if they could only stop off in Hawaii, we could save Hawaii consumers $500 to $1 ,000 per year. And that's simply all it is. Let's get competition back into it. Let's save people some money. Well, obviously, everything that's been said right now has no basis, in fact. What you have is cliches being quoted. You have figures being pulled out of reports that are obviously rigged to come up with the figures that they want. The fact of the matter is that there is a competition. He mentioned Sealand and Matsyn, for example. Sealand has approximately 29 % of the capacity, 28 % of the capacity. They have 29 % of the shipping. Matsyn has about two thirds of the capacity. They have about

two thirds of the shipping. So there have been other competition, U .S. lines, the serious lines, acrylic lines that have been here. They haven't been able to compete precisely because the competition was too tough for them, service. What Mr. Ward's talking about has to do with spot versus regular charter service. Yes, somebody could come in, I suppose, and ship cattle occasionally if they wanted to. What if they didn't show up? They're under no obligation to do this. Because you don't get shipping so that you can take this beef that will be in your Safeway Market, your Foodland Market, and all of the other goods that are there by having people who will show up when they please, and if they get a better offer somewhere else, go there. How are you going to do anything about it if their offices in Singapore, if their ownership is in Liberia, if the owners have a holding company and they're down in Panama? You have no accountability for any of this. So not only will you lose

jobs, not only will you see to it that we don't have an opportunity to have our goods come in that we can count on it, but you'd be turning over the transportation system, the United States, to people who don't have to follow any labor laws, no environmental laws, no health standards, all the rest of it. Congressman, what do you do with Representative Ward's figure? You're five hundred to a thousand dollars a year saved by an average family. That's a lot of money that a lot of a wife and family would like to have. But of course it's not true. If you take the cost of a can of beans, for example, and you put in what the cost of the shipping is, ocean shipping is among the cheapest kind of transportation shipping that you can possibly have. You aid perhaps forty to one hundreds of a cent to the cost, yet it's much higher here than it is on the mainland. Why? Because you have lease costs, you have all kinds of costs that are built into the Hawaii system that ocean transportation has nothing to do with. Do your figures take that into consideration? Well, because the Good Congressman doesn't believe

Representative Ward, I wonder if he would believe the consumer advocate of Hawaii. The people who have a consumer advocate has said the following. There is no real competition in the Hawaii trade. Hawaii's businesses and consumers do not benefit from price competition. In the current context, the carriers now have the best of both worlds. Protection against competition and deregulated rates. What the consumer protector is saying, Mr. Advocromby, is either let's get the Jones Act out of here or get competition in here or go back to the old days of regulation. This is the consumer advocate. This is not Representative Ward talking. This is the one who is saying that we have not really any competition whatsoever. And let me continue to quote furthermore, we emphasize that consumers and businesses of Hawaii are unfairly burdened by one of the crucial provisions of the Jones Act, which restricts vessels in the domestic offshore trade to be owned by US citizens, built in US shipyards, and manned by US citizens.

The Jones Act enables the United States government to use those vessels to support the nation's emergency military needs. Thus, the Jones Act benefits the entire nation, but imposes a disproportionate premium on transportation costs paid by the Hawaii consumers. Congress, are you saying that the Jones Act is good for the nation but bad for Hawaii? Because people in the mainland have 15 % of their good ship by the Jones Act. 97 % of everything that comes in Hawaii comes on ships. And the majority of those are Jones Act ships, which we pay sometimes 30 to 40, 50 to 60 to 70%. Could I get back to the $500 to $1 ,000, which I find interesting, because it's a lot of money. It's a very low estimate. And who's offered that up? That has come from the International Trade Commission, which was actually $3 ,000 per family. I even went back to Mr. Smizer at $1 ,000 per family for a year. And I've been willing to go down to $500 per year. But he's a cheap columnist. I wouldn't believe. All right. No, let's go to the premise. No, I believe, and we have students here tonight, and I believe

in teaching. I come from a teaching background. You and I both do, Dan, as you know. So let's go to the premises that Mr. Ward has. He's basing all of this commentary on something called the International Trade Commission Report. Isn't that right? No, not all this commentary. Well, now don't start back in a way for what you said. Commentary. Didn't you tell Mr. Boylan that your figure of the $500 ,000 might even be as high as $3 ,000, came from what you extrapolated from the International Trade Commission? This whole discussion began in deregulation of in the Congress. You did say the ITC in regard to the $500 ,000. That's only one of the beginning sources. Well, let him respond to that. Yeah, but can we establish that's what you said? That is not the total source of my figures. No. Well, it's one source. Go ahead. Okay. We're all ready. Well, he wants to discredit it because, well, you brought it up. Well, you brought it up. He's got a chance to respond. And you would agree that the Jones Act regulates

services, right? Are you talking to me or him? No, I'm not talking to him. The Jones Act regulates shipping cabitons between the various points. But you know, of course, that they were comparing apples to oranges. Because with the International Trade Commission report, treats shipping, surface transportation on the waters if it was a good. And therefore, doesn't have to take into account the fact that foreign shipping lines don't have to pay taxes, don't have to obey U .S. rules, don't have to obey any environmental standards, and therefore their costs are bound to be lower. So the figure that he brought up, the $500 ,000 to $1 ,000, when you don't take into account that you have slave labor on these ships, that the savings that he says are going to accrue come at the expense of other people's jobs, and that no revenue comes either to the state or to the nation as a result of taxes paid by corporations and individuals who are earning their living under the Jones Act. Now, that International Trade Commission report, as Mr. Ward

very well knows, does not take into account the loss of revenue, nor does it take into account the fact that the foreign flag vessels with the foreign crews do not have to meet any of the standards that the Americans do, so it's easy to come up with a figure like that. I'm ashamed of Eugene trying to pull a fast one like that. I've read the report. What I think the Congressman fails to understand is that if Hawaii was given an exemption, like the Congressional delegation gave the Hawaii American cruises, the exemption to have a cruise ship out in Hawaii waters, 50 years without having a Jones Act hull built, if we can just allow Sea Land in Matson to buy those ships made either in Northern Europe or in Japan, we will save a lot of money. Now, you're talking about all these worldly kinds of things of crews and what all we're saying is, all you've got to do is give us an exemption. Well, you just meant to allow these things to live. Okay. But Sea Land in Matson. Why the less expensive ships?

Sea Land in Matson are not asking for that exemption. They want to build ships in America. Matson Corporation just spent hundreds of millions of dollars and so has Sea Land seeing to it that they can support American jobs. Now, I don't quite understand why you're so much against America. I don't understand why you're against American workers. I don't even understand why you're against American business. The main fact is that the Matson company, the RJ Fifer, for example, is able to deliver goods now in that ship that are 20 times, 21 times more than some of the old ships that were there and they built the ship in America. The reason you have less ships is that your capacity has been raised in. You now have crews that are infinitely more efficient as a result of the technological innovations that have been made in the United States. And so we have less ships shipping more goods with fewer crews, higher productivity, so the

Jones Act has resulted in an American shipping industry that is actually expanding. It is more than double since 1965. When you take all the transportation into account under Jones Act ship on the mainland and here, you have an expanding fleet, you have a loyal and dedicated series of crew members and you have American shipping companies that all of whom support the Jones Act. Mr. Everton, probably that is very incorrect. That is very misleading. You know, the Jones Act is very esoteric, but you've just really said some very, very inaccurate things. We, in fact, have a shrinking merchant marine. We've got almost a third -world capacity now from compared to what we used to have. We've had eight ships built in the last 15 years. We basically have a shrinking merchant marine. In fact, 97 % of everything that arrives in America to the mainland comes on a foreign ship. If we were the controller of the seas, what you've just said, we would not have all of those foreign ships. But why is that? But, Gene, doesn't that speak to this question? During World War I and World War II, math and sent ships to war.

Did they lose any ships? Did Sea Land lose any ships during Desert Storm? During emergency, can we call on foreign ships for help? Isn't part of the... I mean, I think this goes back to actually the 18th century an attempt to maintain a merchant marine in order in part service and times of war. Isn't that part of what the Jones Act is all about? Exactly. But you had to remember two things. Number one, I'm only asking for an exemption of these two monopolists of which the consumer advocate is called, Sea Land and Matson, a duopoly. I'm simply saying we can get some competition there. That's the one point. The other point is we have 500 ships in the United States. There's only about 124 of those which are Jones certified ships, which means most of American entrepreneurs have decided to buy ships made overseas and put them outside of the Jones Act trade, which means when in an act of war we've got those 300 ships, which are not made in America as if they were American ships, because they are

owned by Americans. So these two exemptions is nominal, it's insignificant. Well, I'm glad that the Congressman is wrapping himself in the flag because if in a few days that we go to war in the Middle East or in Iraq and as he was the last time in line not to vote for our troops to go into Iraq, I hope that because you are wrapping yourself in the flag on this, rather than in the lowering of cost of living that when President Clinton, if he does decide, you will equally wrap yourself in the flag this time because you didn't do it the last time. Well, Gene, I will tell you, it takes a pretty low road to attack somebody's patriotism. I wouldn't do it to you. Well, you were just telling me about my American jobs and all these other things that I was going against. A person wants to know, I'm for the industry and Abercrombie, but where are you going to get your sailors from, your semen from? A person is a member of the maritime industry.

That's a very good question. As a matter of fact, if you go out to Piney Point, Maryland right now, to the Seafarer School, you will find a good number of young men and women from Hawaii there, Dan. They are training right now for all aspects of taking jobs in the American merchant marine. Every one of them is being placed. What Mr. Ward is talking about, and I will re -emphasize, it has nothing to do with patriotism, it has to do with good judgment. And the good judgment here is every one of those young people from Hawaii is getting a job. Many of them want to work out of Hawaii. What you are advocating is substituting in my judgment, substituting low paid foreign labor, unregulated foreign ships to come in and do trade in this country. I will grant you, and I will draw the parallel to the sugar industry. I will

grant you, if you use slave labor, if you take advantage of oligarchies in other countries, sometimes dictator ships, authoritarian regimes, being able to take over their shipping lines and force their people to work for slave wages. Yes, Mr. Ward, you probably can get something a little bit cheaper, but the way I grew up and the lessons I learned in this country was, we are about giving opportunity to people. We are about raising standards, not lowering them. The argument is about saving the people of Hawaii money, about lowering the cost of living, and you are talking about the international standards of the seafarers. I am saying, let's get an exemption for those people who are shipping to Hawaii. Let's get it so we can get American bread. Let's get it so our cattlemen can ship and make money. Let's so our people don't have to go to the mainland to get a job, but they can stay here and get a job. Mr. Abraham, we have exactly 50 ,000 jobs and 20 ,000 people. Dean, someone calls him, wants to know, what is your plan for replacing the thousands of local jobs currently involved in the maritime industry? That will be lost if foreign ship operators are allowed to take over our maritime industry. Good question.

Number one, there are 320 seafarers on mats and ships. Most of those live in California, most of them pay California taxes. They don't live here in order to pay taxes. So a matter of the jobs compared to the thousands of people who are being exported from Hawaii is insignificant. We want to get the money back into Hawaii. We want to get some competition. So in effect, there will be more jobs created. In fact, when New Zealand brought their Jones Act down, 8 % of the economy, 8 % in the shipping industry, increased. Studies have indicated that when you do have competition in shipping, as you do in the airlines, as you do in trucking, as we know that this delegation is so anti -free competition, this delegation has made this the only state in the union where you cannot have freedom of the market in trucking. We are the only, I would just say, unfree to place in the United States. There is no response to that, sure. Of course I will. He's referring to regimes now that we're having to bail out.

His great unfettered market, his free market, has just crashed and burned all over Asia. And when he talks about more jobs for Hawaii, by eliminating mats and sea land, and the jobs that we have right now in shipping, do you think that Hawaii people are going to get these jobs with crews coming out of Sri Lanka, with crews coming out of South Asia right now in the midst of the worst economic chaos since World War II, and those companies with Liberian flags, Panamanian owned, unable to trace who their ownership is, are going to hire people from Hawaii at wages that are worthy of America? No one can make that happen. I'm getting a little offended by this. Being that I've been in the merchant marine, I know the condition of some of these ships. In fact, I think some of the Japanese seafarers who may be listening are going to be offended by this rust bucket image that he's giving. The American ship age is averaging

29 years old. The average of the international ships is 18. We have the oldest ships in the world. We have not upgraded because, again, we pay two to three times because the defense contractors who have these thousand -dollar hammers, they've got these $500 chopsticks that they give to us. That's why we're having this industry die off. If you want to defend the Japanese shipbuilding industry, that's your business. I happen to be a member of the United States Congress and represent the first district of Hawaii, Honolulu, and I'm not so concerned about the Japanese shipbuilding industry. I'm saying you're not too understanding with the international shipping companies. Neil, someone's questioning your motives here. Do you receive funding from shipping lobbyists, political action committees, or the shipping industry? I'm very happy to say that I have the support of the maritime officers from the seafarers, from shipping interests, and some shipbuilders around the country were trying to expand that, the cruise line people that I helped bring into who I am happy to say when I was in the way to meet the committee.

Because the question was asked to me, I would also like the opportunity to finish occasionally. The question was raised by Mr. White. Why don't you give them an exemption? He means the cruise ship industry. The cruise ship industry, every one of them, is owned, foreign flagged, foreign crude. They're taking American money out of America. One of the cruise lines is owned by somebody who gave up his citizenship in order not to pay taxes in the United States. These are the kinds of people that Mr. Ward wants to give exemptions to. Our program is half over, so we must take a short break. Doesn't seem like it just began. We'll be back in 60 seconds with more dialogue on the Jones Act with Congressman Neil Abercrombie and State Representative Jane Ward. He was called the Great Communicator. All you wanted to do was fix

the camera on his head and let him talk. Mr. Gorbachev teared down this wall, but his actions were what changed the world. That was the message he wanted to convey to the Soviets, namely that we would be willing to spend them into oblivion. Ronald Reagan had a few very simple precepts. The government was too big, taxed too much, and the Soviet Union was getting away with murder. You guys worked out the details. We'll hear from his friends and foes. I thought he could possibly press the button. And for the first time since leaving office, his family... You're not going to figure him out. That's the first thing you need to know. The most popular president of our time was a man that nobody knew. Reagan, on the American Experience, another reason history's best on PBS. Monday at 9 p .m. Welcome back to our dialogue on the Jones Act. My name is Dan Boyland and our phone

answer is this evening our students from Marinole High School. We greatly appreciate their help and want to thank them for volunteering their time tonight. They are useless to us, however, if you don't call with your questions or comments for our guests. Congressman Neil Abercrombie and Representative Jean Ward. The number to call is 973 -1000. Neighbor Island residents may call us a collect. 973 -1000. When they send me a pink card, that means a lot of people are asking this question. How does the Jones Act affect gas prices? The same way it affects bread prices and beef prices and milk prices. It adds cost to shipping. That's what we're trying to say. Let's get an exemption. Let's get competition, as the consumer advocate said. Let's allow others to make us a bit more efficient. While he was talking about the death of the cruise industry and why we had to give an exemption to the Jones Act is because the Jones Act has the same application to the cruise industry. If it's not made, flagged, owned, and crewed by Americans, it

can't be put in American waters. In effect, what happened to the American cruise industry? It all died off. We only have one ship left. That's the one out here in the harbor. USS Independence, the Constitution sunk. And Mr. Abercrombie, we're going to sink our merchant marine unless we get exemptions. And that's what I'm saying. We're not asking you to change this. Neil, you want to respond to the gas question? I will respond to the gas question. As a matter of fact, it has to do with profiteering. As Mr. Wardwell knows, the cost of shipping oil, particularly with oil prices coming down, has to do with the barrel of oil. And the cost has nothing to do with the shipping, nothing whatsoever. The cost is the same regardless of whatever the cost of the barrel was when it was produced and when it was sold. So prices were oil or concern, or gasoline that is refined from it, is entirely a question having to do with the refiners and the consumers here in Hawaii. And nothing to do with shipping. Hold on a second. If that's the case, why does it cost twice as much to ship the Hawaii versus say American, some more, or go on? Why is that? That's what the

shipping prices are right now. The shipping prices, as you well know, you have international trade shipping and you have domestic trade shipping and you have differences in whether it's a spot market, whether it's treated as a good or whether it's treated as a service. All of these things come into play and to mix them up, it's just simple. Mr. Robert, this is orange. A sea land of yesterday, where if I sent something to Hawaii, it cost me $800 versus if I sent it all the way to Singapore and the same sea land ship. Now, his colleague, Hold on a second. His colleague, sorry, but he's getting undue advantage by making it like shipping costs, don't mean anything. His colleague, Representative Mink, has agreed with those in Guam and those in other parts of the Alaskan, otherwise, Port Rico, who are most subject to this, that there are certain costs which are three to four times in shipping, which we shouldn't be punished because we are offshore of the mainland United States. Does anybody understand what

just got said? I'm saying that your colleague, Representative Mink, does not agree with what you just said about shipping costs, never make a difference in gas. Well, Representative Mink can speak for herself, I'm sure. Dr. Ward, President Ronald Reagan and Tobil Clinton in their respective secretaries of defense, have repeatedly stated that the Jones Act is crucial to national security. I agree. Why are they so wrong? No, I agree. Look, we're asking for an exemption for Hawaii. We want to have some competition with sea land in Madsen. So those? Who's we? The people who pay an extra five hundred to $1 ,000. What? Shippers. Don't confuse the issue. No, we're talking about shipping. No. Who goes to the mainland? Who is we? The consumers of Hawaii. No. Who is going to compete? Who is going to compete for the shipping? It's going to be foreign ships. These rust buckets with slave crews on them, the kinds of people who are left right off of a Wahoo right out at Barber's Point within the last couple of years, unable to find

their owners, unable to get any pay for these people. This is what he's talking about in terms of competition. Did you understand? Someone's calls in. I think they ask a legitimate question. You keep referring to these shippers that are in rust buckets and using slave labor. Name a few that you would consider. What are some companies or some lines that operate this way? Virtually. Most of the ships coming from China. Most of the ships who are Panamanium flagged or Liberian flagged that have crews from Indonesia, from Sri Lanka, and no ownership that can be traced. Virtually every line in that regard. Mr. Boyle, the congressman is rather ill and informed in this regard. 90s, as I said earlier, Neil get this. 97 % of everything that arrives between a foreign and American port comes in an American ship. I mean, on a foreign ship. 97 % of everything that arrives are these rust buckets, which means all

of the mainland goods that is received on the mainland are in these rust buckets. If that's the case, how can we in effect have survived? Excuse me, Neil. It's not true. It's just untrue. Well, it's not untrue. Of course, they come on foreign ships. But if you talk about that. You know, Dan, I submit to you. It's virtually impossible to have a dialogue if it becomes one way operation. Go ahead, I'm sorry. The fact of the matter is that these goods are coming on foreign ships because they do not have to meet American standards of labor, American standards of the environment, American standards with respect to health and safety, and most certainly don't have to pay taxes in the United States or meet rules and regulations of the Coast Guard. Under those circumstances, you have to go back to the bottom line point that not only will jobs be lost here in Hawaii, jobs will be lost all over the country to these foreign interests that do not have to meet those

standards. There's no way around that. When Mr. Ward says we, and when he talks about competition, what he's talking about is lowering the standards of living for Americans, lowering the standards with respect to labor and all the rest of it. There's no other way around it. If you were asked, Congressman Abraham, how does, if you're opposed to an exemption on the Jones Act, how do you suggest easing the cost of financial burdens for the people of the state? Well, if you want to go past shipping, there's a lot of things that can be done there. I think, well, I'll be very happy to do that. What you have to do is have the projects that our congressional delegation is supported, which I have supported, to see to it that we bring every dollar that we can into Hawaii in order to strengthen our economy. We've brought in construction jobs. We've brought in, right now, we're trying to save social security. We're having targeted tax cuts to improve education. The superintendent, Mr. Izawa, has just

indicated that because of cuts in the state budget that will have to increase class size, we're going to bring in, when our budget passes, more teachers, construction money for classrooms, we're going to lower class size. And with those kinds of efforts being made, including reviving transportation, mass transit, I believe that our congressional delegation will be able to significantly improve the economy in Hawaii. I am a maritime merchant under the Jones Act. We don't have any overtime. The reform of the 1927 of the Jones Act is outdated. I think that it needs a major remap. No one understands what the Jones Act is. How do you respond to that? That's a long one. That's a seat. I'm forgiven him over time. I can guarantee him this. If the Jones Act goes, he won't have a job, and he won't have to worry about overtime. He won't have any time at all. The caller

is correct. In fact, you know, those seafarers don't even have workers' compensation. They have to take their employers' fees. No, they have to take their employees' fees. They have a tort system, Mr. Abokrombi. They don't have a no -fault system the way we have. They have to take their employer literally to court to get compensation when they're injured on the job. It's rather archaic. It was what we were before we were a no -fault state. Do you think you're becoming a Democrat? I used to be a no -fault state. Because workers' compensation, as you well know, is something that was brought to the American people into Hawaii by the Democratic Party. And now that you want to be on board with us, I'm real happy. Abe Lincoln was the first one who thought about other people's rights before his own. Representative Ward, are you aware of a study done by, I think, his professor William Boyd at the University of Hawaii regarding the figures that you're talking about, and I believe. And he says that the cost under the Jones Act, there is no. He says, in effect, it's the opposite. If we got rid of the Jones

Act, we would be paying $5 ,000 or $6 ,000 per year. I would think that if we want to release some credibility, we would probably go beyond a union organizer at the University of Hawaii. Mr. Boyd is very good at doing that. He, in fact, I remember last year testified before the Finance Committee in that we are paying two of our taxes. We should be going more in debt as the state of Hawaii. Dan, you suppose we could leave the person in tax? What I'm suggesting is the objectivity of his study, Mr. Boyd. I think it's highly in question. I think he's part of the Center for Labor Research. It's called Clear Center Labor Education Research. It's the University. Yeah. But they're business school economists, too. You know, these things work up. But the objectivity that, and he's a bit of a lone wolf, and he's the only one who's ever said that as an economist. Well, if a foreign man can award be said for Mr. Boyd without him being vilified, he's your hero.

Come on. Come on, Jane. Kind of cheap. Go ahead. Mr. Boyd was asked to make this study just as other economists have been asked to make studies. My point is, I'm sure that Mr. Boyd made his best effort and put forward his views with this as much professionalism and dedication as he could, as does other economists. That's the point, Danny. You can't run a relatively speculative amount. That's what I'm driving at. That's what I'm driving at. You can throw these figures around any way you want to throw them around. It comes back to not whether your economist is better than my economist. It comes back to, do you want to defend American jobs and American interests, or do you want to throw people to the wolves of unfettered competition, which will allow those who exploit people to be able to, in turn, exploit the American economy? Jane. If a foreign ship owner was running against Matson and Celan, and over time through

competition, Matson and Celan moved away, what is to prevent the foreign shipers from then raising ship rates higher than they are today? We have from the rotary speeches of Mr. Mahaland. Mr. Mahaland is the president of Celan, a commitment that if the Jones Act did disappear or if it got reformed that they would match dollar for dollar. Remember that Celan is the biggest shipping company in America right now. It has 25 ships. They are all over the world. I think that's hypothetically rather not a reality or not a possibility. Again, we're only asking for an exemption for the Hawaii, not for the United States of America. Just to do to Hawaii what the senior senator and this gentleman did for the tourist industry. I say let's give the people of Hawaii a break by giving us an exemption. Not just the tourist industry and the passenger ships. Let's do it for our Matson and our Celan people so they can buy foreign ships that are going to lower the cost by 60 percent or let those empty ships that are coming back from the West Coast which are in the hundreds off a diamond head. Every day we got empty ships coming back or

at least half empty from the mainland because it's such a big importer. All of those ships that bring as I said earlier, 97 percent of everything that America takes in is on these foreign ships. Deandrez buckets. Deandrez buckets. Deandrez could you ask the question again and I'll try and answer it in as much as Gene Wolff. Well I can't remember what it was. Well I think the question, I think the question was before we got a long speech trying to run away from it was what would prevent these foreign carriers from coming in and undercutting Celan and Red Matt from driving him out of business, losing the jobs and then raising their prices and doing as they please. And the answer is nothing. And by the way, when you're going to quote Mr. Mahalind I think it would be good in terms of credibility to say who he is. He's the president of Matson, not Celan. Well if the Jones Act is so great. Do you know why Mr. Abel -Kromy knows that? What's that? Do you know why Mr. Abel -Kromy knows that? Do you know why he knows Mr. Mahalind? I don't want to get caught here because I pay attention. No, because I pay attention. Because there is a convict of interest to the extent that he has $100 ,000 of shipping

interest which I fortunately had a chance to look on his FEC report which is in effect. Want to give it to me? Well I think you know that Mr. Mahalind is in here and all of the Matson packs. Do you deny that there's $100 ,000 or there's 40 % of your pack money comes from people who do not want to reform the Jones Act? This is like talking to a tobacco executive with Joe Campbell. Okay. Do you understand that? The objectivity would be questioned if there's $100 ,000 that he got paid for by setting in. Are you pledging not to accept pack money? If I'm elected, I will not accept money from anti -Jones Act people. If I'm elected, then I'll ask the next question. If elected, will you not accept pack money? I mean there's motherhood in Apple Pie in the environmental group or pack money. That's a fully statement. That's a fully questioned. I'm saying this gentleman has those who are out to put aside everybody who wants to reform the Jones Act. He has $100 ,000 in his pocket so far in his campaign from just anti -Jones Act people.

That's a lot of money. That's $100 ,000. That's a lot of money. Well you asked a simple question to Mr. Ward and he wouldn't give you an answer. That probably tells you where he's at on that. I of course said at the beginning, I'm proud to have the support. Financial and voting support of hard working American men and women who make their living in this country and don't turn tail and run to foreign countries to try and see to it whether they can undercut their own working people right here in this nation in this state. You remember your own people. There are the ones that have the worst economy. They're paying the highest prices. So you are again. You're shipping costs in the world. Remember your people in Hawaii, the ones who elected. If Nike Shoes are made for pennies and foreign countries and the price of U .S. Shoes are sold for are the same cost. Why would shipping be lower if we went with foreign shipping? What's the first part of the question? If Nike Shoes are made for pennies and foreign countries by foreign workers and the price of the shoes as they're sold in the U .S. are the same cost. Why should shipping be lower if we went with foreign shipping? It's

not just one particular product. It's the whole cost from gasoline to food, which is part of what I've got on the table here. It's the grain that I pointed out. We've got to eat Canadian grain because we can't. Couldn't the foreign shipper raise its rates up and run them at exactly what Manson was doing or whatever. But international competition, we are in a global economy to say that when Manson gets put out of business, the rates are automatically going to go up. I mean, there are 25 ,000 ships in the world right now. To say that that is a scenario by which, as I said, Mr. Mahalin has already pledged that he will not go out if there is any reform of the Jones Act, which has had a simple answer. It's so hard for you to give just a straightforward answer. Will people, given the opportunity to raise prices, do it? We have to lower the cost of living in Hawaii as our priority, Mr. Congressman. And I don't see you doing that. This is a proposal. We've got to get away from old thinking. We've got to look at new innovative ideas. The congressional trend now is towards deregulation. We did it with airlines. We did it with trucking. We did it

with trains and buses. Why are we having the sacred cow? Why this corporate welfare? If you ask me a question, let me answer. I haven't finished my statement yet. Why corporate welfare? For those who are in this dinosaur. Mr. Howard, we want to get corporate welfare. Mr. Howard, that's apparent to anyone who has tried to listen to this tonight. In as much as you don't want, any kind of regulation at all and this so -called unfettered free economy, would you require these people to ship to the neighbor islands? Exemption is all I've asked for, Mr. Revocromy. Would you require goods to be shipped to the neighbor islands, try for once tonight to give a similar straight forward answer? Why not? Not why not? Would you require it? Should I trust him to lead me into a question of work? Well, I think there's been leading on everybody's part here a little bit tonight. But Dan, you understand. Goes to your question, Dan. It goes to your question of what happens if Matson and Sealand go out of business? He dismisses this, is irrelevant. Matson right now, Sealand right now, they are under regulations in America to see to it that we serve

all of these areas, whether it's over on the big island, whether it's on Maui, whether it's on Molokai, they have to do the shipping. They have to make sure that those people are serviced. But if you throw this over for ships to do the same thing. Then why can't we require them to meet American labor standards? Why can't we require them to meet environmental and health and safety standards? What Mr. Ward has done all night long in his quest, supposedly to lower costs, ignores the facts that no taxes will be paid, that no one will have to meet any American standards. Therefore, they can charge a lower price. He assumes then, once they drive the Americans out of business, that these individuals, or these companies, will then not raise their prices. Show me someone who has the opportunity with no restraints, with no restrictions, with no regulations, who won't raise prices, who won't raise prices and gouges here and over. Ten years ago, American President Lines tried to get in as the third shipping agent. They were barred because of the Jones Act from

coming in, giving competition, and lowering our rates. So when you say that, well, competition is going to be bad and is going to destroy us. Did they meet American standards? That is so fallacious. That is a scare tactic. Did they meet? As I said, we got thousands of ships going to America every day, the mainland America. Their passing is off diamond and every day. Those are the ones that will make a very inexpensive to come back half empty, at least to give competition. But here's a pertinent question, Jean, to what you just said. Manson and C. Land have six arrivals from the West Coast. I guess that mean daily or weekly? 23 ships, probably weekly. Well, the very frequent. If foreign ships came in, will we have the same frequency? In fact, we would have so much frequency we wouldn't know what to do. That's the whole point of it. But if we had that much frequency, would there be enough? Costs would make a business, in fact, one study said that the economy picks up by eight percentage points when you free up shipping, when you free up trucking, the economy expands

in the trucking industry. Right now, Mr. Abracrumbing, when you go to Washington, you are paying rates at about the 1985 level because we deregulated the airline industry. What excess capacity is it? You have a round trip ticket, about six or seven hundred dollars. What excess? Unless you go first class. Do you go first class? What excess capacity? What excess class? Of course I do. Every chance I get to invite me to open the pilot seat through it. Your twelve hundred dollar ticket is the same rate it was when the ten years ago because of competition. I know. Go ahead, man. I regret. I really regret. I came here in good faith tonight. And I really regret that this, and I have been on dialogue many, many times before. I regret that this is degenerating the way it is. I would like to respond. When you make accusations against companies or individuals like C. Land or Mats and indicating that somehow American President Line was unfairly kept from coming into competition. I asked you a simple question. Was American President Line willing to meet the same standards as the other two competitors? I didn't answer the question

because I was speaking while you interrupted me. They were asked to do exactly the same thing and compete on an even playing field. But because of the Jones Act, they were not allowed to come in. That's a not true. Anyone who meets the standards is allowed to compete. C. Land came in. They were not allowed to compete. They were not allowed to compete. They were not allowed to compete. If you are against foreign shipping and say it's bad, why did Clinton allow Chinese to buy a huge port in San Diego? And the second question I find interesting one. If you are against foreign money and jobs, how does Hawaii survive? We're very dependent on foreign money and jobs. If they're going to invest in Hawaii and they're going to pay taxes in Hawaii, if they're going to create jobs in Hawaii, that's a different situation. Then you have an investor in Hawaii. We're talking about sending money out of the United States, sending it out of Hawaii to foreign -owned ships, foreign flagships, and taking away jobs from people in Hawaii and people in America. As

for the port in California, I opposed that. I publicly opposed it. I opposed it in committee. I have both signed letters of inquiry and made statements in opposition to it. I do not think it's a good idea. I think it's a perfect example, as a matter of fact, of what Mr. Ward is talking about, this free and open competition. We're now letting the people's liberation army, which is the group that's behind the shipping company that's being referred to, now own a port in the facilities in the United States of America. I am opposed to that. I think it's against the national interests of this nation. A better way of posing the question, should the money go to Madison or should it go to the people of Hawaii? That's really what the question is. That's what this dialogue is all about. The cruise ship Constitution, the Constitution, I can't say, and independence, or independence, was purchased by a Chinese man, but he ran it like a slave ship. Do you know anything about that? I believe the Constitution was being,

what do they call it, a toad to scrap, and it sunk somewhere in the northern Pacific? No, no, no. The independence is now still operating in Hawaiian waters after being refurbished. What the question refers to is that an American company bought the independence and the Constitution. An American company then had the independence refurbished in an American shipyard with American shipbuilding workers, and has it crude with American labor. It is competing and will compete with these other cruise ships when we have the opportunity to build up the American cruise lines, which is what I intend to do. I have spent a major portion of my time on the merchant marine panel and in the Congress itself supporting American shipping. And I'm happy to do that because it is a perfect example. That ship was owned by somebody who didn't care anything about Hawaii, who didn't care about the cruise, whose loyalty was elsewhere, and when an American company came in and took it over, that's when we made

the comeback. Well, Congressman, you're losing a supporter. This person says, I'm a long time supporter of Abercrombie. A die -ired liberal, I'd have to say, I disagree with him. Doesn't he know that many of the laws that supposedly help protect you were put in by Republicans and helped cause the depression? Does protectionism lead to a depression? Well, we've got one, don't we? With this conversation? How can I don't understand what the word protectionism means if you're talking about setting standards? If it is equivalent to the word of Mr. Ward used before, restrictions. Is it a restriction to prevent child labor? Is it a restriction to be against prison labor? Is it a restriction to say that women should be paid the same as men? Of course, we have standards in the United States. That's what made this country great. People came here from all around the world because they wanted to be more than what they were. They did not want to be exploited by capital. They did not want to be exploited by oligarchies. They did not want to be exploited by dictatorial governments. That's what would open up if we lose American

standards. Would you advocate replacing workers in other industries in a way with foreigners to help jumpstart the economy? Isn't that what you said? No, no, I'm asking for an exemption for just some workers. No, I don't know. Just some workers. No, no, no. That's a misunderstanding of what I'm talking about. I'm simply saying of which Mr. Abukurambi is the great advocate for the passenger industry. Interestingly, to jumpstart and kickstart that passenger industry, he is asked for a Jones Act exemption. That's all I'm saying for the sake of lowering the cost of living in Hawaii. Let's get a Jones Act exemption the way that Obama has asked for it. The way that Puerto Rico has asked for it. The way Alaskan has asked for it. All of us offshore pay more. Remember your constituents, Mr. Abukurambi. This is a 77 -year -old man who needs to be reformed. The Jones Act is 77 years old. He's 77 years old and we're an hour long and I'm afraid we're out of time. Our sincere thanks to Congressman Neil Abukurambi and Representative Jean Ward for joining us this evening. And thanks as well to our volunteer phone answers for Mary Noel High School. And also

a little reminder, if you would like to send in your questions or comments for dialogue, our email address is dialogue at kht .pbs .org. Next week we will devote yet another dialogue to the state's precarious economic condition. We've invited state representatives Bob Herkies and Galen Fox and business people Stephanie Sofos, Tim Moore, and Barry Tonoguchi to talk about it. So please join me for an hour of dialogue, a new year, same old, tired economy. Until then, for all of us at a wide public television, thank you for watching Dialogue, Aloha. .

Dialogue is brought to you by Hawaiian Electric Company. People with a powerful commitment. The Merchant Marine Act of 1920 requires that cargo transported between U .S. ports be carried on U .S. flag vessels, vessels that are owned by U .S. citizens, and crewed by Americans as well. The Jones Act, as it

is more commonly known, has come under increasing attack as a subsidy for an inefficient domestic industry. And the cost of it to Hawaiian consumers, critics argue, is particularly high. We'll discuss the pros and cons of the Jones Act with Congressman Neil Abercombe and state representative Gene Ward, Friday at 8 on dialogue. Thank you very much. The Merchant Marine Act of 1920

requires that cargo transported between U .S. ports be carried on U .S. flag vessels, vessels that are owned by U .S. citizens, and crewed by Americans as well. The Jones Act, as it is more commonly known, has come under increasing attack as a subsidy for an inefficient domestic industry, and the cost of it to Hawaiian consumers, critics argue, is particularly high. We'll discuss the pros and cons of the Jones Act with Congressman Neil Abercombe and state representative Gene Ward, tonight at 8 on dialogue.