Cargo Preference Programs for Government-Financed Ocean Shipments Could Be Improved

CED-78-116: Published: Jun 8, 1978. Publicly Released: Jun 8, 1978.

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Cargo preference laws seek to promote the development and maintenance of an adequate, well-balanced U.S. merchant marine, to promote U.S. commerce, and to aid in the national defense. The laws require use of U.S. flag vessels for 50 percent to 100 percent of federal government-generated ocean shipments. The Secretary of Commerce is responsible for issuing cargo preference regulations, reviewing the administration of agency cargo preference programs, and reporting on them annually to Congress.

The three major civilian government agencies reporting to the Maritime Administration have generally met the U.S. flag shipping requirements. The Administration had some success in expanding the number of programs with cargo preference requirements but has been hampered by nonspecific legislation and lack of clear-cut authority to determine the applicability of cargo preference legislation to programs. Because of uncertainty about applicability of the legislation to transportation of imports under federal grant programs, some shipments may have been made on foreign-flag vessels which could have been made on U.S. flag vessels. Reports to the Congress on cargo preference shipments have been incomplete, and some agencies have not fully complied with the Administration's reporting regulations. Although the Administration has tried to resolve these problems, improvements are still needed. It is developing a computerized system to improve its cargo preference monitoring and reporting capabilities.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should clarify section 901(b) of the Merchant Marine Act of 1936 concerning the types of programs to be covered under cargo preference legislation and the extent of the Administration's authority to determine the applicability of the legislation to specific programs. The Secretary of Commerce should direct the Assistant Secretary for Maritime Affairs to: (1) include in the annual cargo preference report those agencies not complying with the Administration's determinations under section 901(b) and the reasons why not; and (2) amend the Administration's cargo preference regulations to require submission of summary shipment or other data as well as bills of lading for all federal agency cargo preference shipments, and establish a timetable for identifying all of the Department of Defense's (DOD) programs that have cargo preference applicability and for developing DOD reporting requirements.


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