Effects of Cargo Preference Requirement for Dry Bulk Exports and Imports

GAO was asked to comment on the effects of requiring that at least 40 percent of the Nation's dry bulk imports and exports be carried in U.S. flag, U.S.-built vessels, particularly with respect to coal. The specific questions addressed were whether such a cargo preference would: (1) inhibit U.S. dry bulk export trade; (2) burden U.S. consumers with increased import costs; (3) increase the costs of U.S. coal and other dry bulk exports so that they would not be competitive on the world market; (4) stimulate investment in domestic maritime trades and shipbuilding; (5) erode the concept of free trade among nations by artificially distorting market prices and by dictating source of transportation; and (6) be practical from a regulatory aspect.