[Extensions of Remarks]
[Pages E2432-E2433]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

THE ALL AMERICAN CRUISE ACT OF 1999

______

HON. DUNCAN HUNTER

of california

in the house of representatives

Tuesday, November 16, 1999

Mr. HUNTER. Mr. Speaker, today I am introducing a bill critical to
the future of our domestic shipbuilding industry. This bill, aptly
named the ``All American Cruise Act of 1999,'' takes steps that are
long overdue to promote the construction of cruise ships by U.S.
shipbuilders. My bill is a prime example of a ``Made in the USA''
initiative.
The United States is the largest cruise ship market in the world. In
1998, 120 foreign-built, foreign-registered cruise ships serviced the
American market, which consists of nearly seven million passengers
annually. Experts anticipate that by 2003 there will be 10 million
passengers and 160 foreign-built and operated ships servicing North
America. American shipbuilding firms have been placed at a decisive
disadvantage in the global shipbuilding market due to U.S. tax laws and
European subsidy policies. European builders of cruise ships receive
numerous tax incentives and other assistance from their governments to
reduce the price of their ships. Foreign cruise companies operating
from U.S. ports pay no U.S. income tax, an immediate price advantage
for the foreign competitor. For example, Carnival Cruise Lines, a
Libyan registered company, is reported to have earned $652 million in
tax-free income during 1998, yet 90 percent of their passengers are
Americans.
The All American Cruise Act is designed to bring this industry back
to our shores through tax parity desperately needed to encourage our
domestic industry. My bill, among other recommended changes, would
implement the following: tax credits to U.S. builders of cruise ships
of 20,000 gross tons and greater; U.S. cruise ship owners will be
exempt from paying U.S. corporate income tax; cruise ship owners will
be able to depreciate their ships over a five-year period rather than
the current 10-year period; the current $2,500 business tax deduction
limit for a convention on a cruise ship would be repealed to give the
same unlimited tax deductions for business conventions held at shore-
side hotels; and a 20 percent tax credit will be granted to U.S.
companies which operate ships using environmentally clean burning
engines manufactured in the United States.
While some of these tax provisions may at first glance seem costly to
the U.S. Treasury, it should be noted that, since cruise chips are not
presently built domestically nor operated as U.S. companies, current
tax revenues will not be impacted. In fact, when this bill is passed,
hundreds of thousands of high technology and high skill manufacturing
jobs will be created. Although my bill has not yet been scored by the
Joint Tax Committee or the Congressional Budget Office, I am confident
that it will actually contribute to the U.S. Treasury as well as to the
U.S. manufacturing base.
In addition, the All American Cruise Act has national security
implications. At this time there are only six private-sector shipyards
in the United States. These shipyards are located in California,
Connecticut and Rhode Island, Louisiana, Maine, Mississippi, and
Virginia. Taking legislative action to ensure a robust domestic ship
building industry will ensure that U.S. taxpayers have access to
competitive prices, technology, and a ready supply of ships and labor
in time of conflict. A recent Congressional Research Service Report (RL
30251) stated, ``. . . competition in defense acquisition can generate
benefits for the government and taxpayers by restraining acquisition
costs, improving product quality, encouraging adherence to scheduled
delivery dates, and promoting innovation.'' Further, ``achieving
effective competition in Navy ship construction has become more
difficult in recent years due to the relatively low rate of Navy ship
procurement . . .'' It is in our best interest as a nation to do all we
can to ensure that there is a viable and productive United States
shipbuilding industry that will meet our national security, cargo and
recreational needs long into the future.
The All American Cruise Act will also stimulate revenue for our
nation's ports. With U.S. built and operated cruise ships in operation,
American cruise lines will be able to dock at more than one U.S. port
per trip. This will ultimately benefit both passengers and local ports.
It is also important to emphasize that ships built in the United
States and operated by Americans adhere to the highest construction,
labor, and environmental standards, unlike ships that are neither built
nor operated to America's high safety standards. Our citizens deserve
better. My bill will give American tourists the safety they deserve
when vacationing at sea.
The All American Cruise Act is supported by both industry and labor.
In fact, I am submitting letters in support of this legislation from
the following organizations: the American Shipbuilding Association, the
International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers, the American Maritime Officers, and
the American Maritime Officers Service.
I urge all of my colleagues to join me in sponsoring this
legislation. Throughout our history, seafaring vessels have played a
critical role in our military, cargo movement and entertainment. The
time has come to bring the cruise industry back to America's shores.
Support the All American Cruise Act of 1999.

American Shipbuilding Association

November 9, 1999.
Hon. Duncan Hunter,
Rayburn House Office Building, Washington, DC.
Dear Congressman Hunter: On behalf of the shipbuilding
industry, the American Shipbuilding Association (ASA) would
like to express to you its strong support of your
legislation, entitled the ``All American Cruise Act of
1999''. This bill will provide American shipbuilders, owners,
and crews with tax parity with foreign builders and owners of
cruise ships that operate almost exclusively from U.S. ports
and derive over 90 percent of their income from U.S.
citizens.
As you have recognized, American shipbuilders, ship owners,
and crews have been placed at a severe competitive
disadvantage in the American cruise ship market because of
the U.S. tax code that rewards companies that build and
register their ships in foreign countries while penalizing
American companies who wish to build and register their ships
in the United States. For example, the 120 cruise ships that
serve the North American market depart U.S. ports with
vacation tours bought by U.S. citizens. These ships, however,
are built in foreign countries where governments provide tax
credits and other assistance that equates to as much as a 50
percent reduction in the price of these ships. The ships in
turn are operated by companies that register them in foreign
countries to avoid U.S. corporate income tax. By building and
operating these ships foreign, these companies avoid
America's high environmental, labor, and safety standards in
the construction and operation of their ships, and jeopardize
the lives of American tourists.
Some in Congress would propose that the United States just
surrender the U.S. cruise ship market to these foreign
entities by repealing the American Passenger Vessel Services
Act, which requires ships carrying passengers between two
U.S. ports to be U.S.-built, owned, and crewed. Our industry
believes there is a better way--your way--which would create
an All American industry built by Americans for Americans.
Your legislation would retain U.S. high safety standards in
the construction and operation of cruise ships, while
providing American builders and owners tax parity with
foreign builders and owners of cruise ships that operate from
U.S. shores.
Your bill would create hundreds of thousands of high
technology, high skilled manufacturing and seagoing jobs for
Americans; strengthen the American defense shipbuilding
industrial base; and ignite a powerful engine that would
propel all segments of the U.S. economy toward strong growth
and prosperity into the 21st Century. Furthermore, American
tourists would be assured

[[Page E2433]]

that they would be vacationing on the safest constructed and
operated ships in the world.
The American Shipbuilding Association commends you for your
legislation and urges your colleagues to support the All
American Cruise Act of 1999.
Sincerely,
Cynthia L. Brown,
President.

American Maritime

Officers Service,

Washington, DC, November 9, 1999.
Hon. Duncan Hunter,
U.S. House of Representatives, Washington, DC.
Dear Congressman Hunter: We understand that you are
considering introducing legislation to address the inequities
facing the creation of a domestic U.S.-flag, U.S.-built
cruise industry. We have reviewed the draft bill and on
behalf of the American Maritime Officers Service, we would
like to express our strong support for your effort.
As you know, the United States is the largest cruise ship
market in the world and represents one of the largest growth
markets. Yet all of the large oceangoing cruise ships serving
the American market are built and operated by foreign
companies to avoid U.S. tax laws. This anomaly has created a
market barrier to U.S. companies are to have an opportunity
to develop an American cruise industry to serve our market.
Your legislation will provide American companies tax parity
with their foreign competitors and create hundreds of
thousands of high technology jobs, highly skilled
manufacturing and seagoing jobs. In addition, your
legislation will increase port revenues in the United States.
Again, we wish to commend you for your efforts and urge you
to introduce the ``All-American Cruise Act of 1999'' at the
earliest possible date. Please do not hesitate to call me if
I can be of any assistance in gaining support for your
efforts.
Sincerely,
Gordon W. Spencer,
Legislative Director.

American Maritime Officers, A National Union Celebrating
50 Years,
Washington, DC, November 9, 1999.
Hon. Duncan Hunter,
U.S. House of Representatives, Washington, DC.
Dear Congressman Hunter: We understand that you are
considering introducing legislation to address the inequities
facing the creation of a domestic U.S. flag, U.S. built
cruise industry. On behalf of the American Maritime Officers,
the largest seagoing officer's union in the United States, we
want to take this opportunity to commend you for your
efforts. This proposed legislation is critical if Americans
are to reenter a market currently being dominated by foreign
built and foreign-crewed ships.
The United States is the largest cruise ship market in the
world and represents one of the largest growth markets. All
of the large oceangoing cruise ships serving the American
market are built and operated by foreign companies to avoid
U.S. tax law. This anomaly has created a market barrier to
U.S. companies which pay U.S. taxes.
Tax parity must be provided if U.S. companies are to have
an opportunity to develop an American cruise industry. Your
legislation will provide tax parity in a number of very
critical ways including tax credits to U.S. builders of
cruise ships over 20,000 tons, accelerated depreciation for
ships build in U.S. shipyards, elimination of the current
$2,500 limit for the cost of conventions on cruise ships, and
exemption from U.S. corporate income tax for U.S. cruise
operators. Changes such as these are critical if Americans
are to enter a market now dominated by foreign companies that
pay no taxes.
Again we wish to commend you for your efforts and urge you
to introduce the ``All-American Cruise Act of 1999'' at the
earliest possible date. Please do not hesitate to call me if
I can be of any assistance in gaining the support for your
effort.

Charles T. Crangle,

Executive Director,
Congressional and Legislative Affairs American Maritime
Officers.

International Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmiths, Forgers & Helpers,
November 8, 1999.
Hon. Duncan Hunter,
U.S. House of Representatives, Washington, DC.
Dear Congressman Hunter: We understand that you are
considering introducing legislation to address the inequities
facing the creation of a domestic U.S. flag, U.S. built
cruise industry. We have reviewed the draft bill and on
behalf of the International Brotherhood of Boilermakers, Iron
Ship Builders, Blacksmiths, Forgers, and Helpers, we would
like to express our strong support for your effort.
As you know the United States is the largest cruise ship
market in the world and represents one of the largest growth
markets. Yet all of the large oceangoing cruise ships serving
the American market are built and operated by foreign
companies to avoid U.S. tax law. This is a huge market--120
foreign-built cruise ships serve the American market today.
The number is expected to grow to 160 by 2003. Unless U.S.
tax laws are amended to allow the entry of American companies
into this market, these ships will continue to be built by
European shipyards and be owned and operated by foreign
companies. Your legislation will provide American companies
the needed tax parity with their foreign competitors and
create hundreds of thousands of highly skilled manufacturing
jobs in the United States. It is a given that European
builders of cruise ships receive numerous tax incentives and
other assistance from their governments to reduce the price
of their cruise ships. It is only fair that our shipyards and
our skilled workers be given the same breaks as those
provided to our competitors.
Again we wish to commend you for your efforts and urge you
to introduce the ``All-American Cruise Act of 1999'' at the
earliest possible date. Please do not hesitate to call me if
I can be of any assistance in gaining the support for your
effort.
Sincerely,
Ande M. Abbott,
Assistant to the International President.