ship is a gambling ship within the definition of 1081. It would make the proof as far as the Federal Government is concerned much more difficult. I might add one thing that bothers us very much in this bill is a lack of forfeiture."

I can understand that. But remember, there are Americans who own these vessels but because the principal source of income is not gambling, they have them under foreign-flag and it is an accounting nightmare where if the restaurant is slow one night, but the casino has a good night, they could technically be breaking the law; whereas if the next night the restaurant did a lot of business and the casino did a little bit of business, they are living within the law.

So we have not stopped Americans from owning vessels that have gambling equipment onboard. What we have done is stopped them from owning American-flag vessels. Again, that American flag is more than a symbolic gesture. It means the vessel was built in one of our shipyards and we are down to where 97 percent of the shipbuilding is for the DOD; it means it is manned by an American

crew.

I don't know of any State that doesn't need to put people to work. It means it is inspected by the Coast Guard and hauled to an American shipyard when it comes time to get fixed.

You have not prohibited Americans from owning gambling ships. You have prohibited them from putting their fellow Americans to work while they own gambling ships, and I use your testimony from 1982 as my source on that.

Mr. KEENEY. As I indicated in response to Mr. Miller, we are looking at situations where Americans do have interests in foreignflag vessels. Where we are able to demonstrate that and that the ship is a gaming ship or gambling ship within the statute, we will consider prosecution.

Mr. TAYLOR. Thank you, Mr. Chairman.

Mr. JONES. Captain MacDonald, couldn't we control foreign gambling cruises to nowhere from our ports by extending coastwise shipping laws to cover them? Then they would have to be United States-flag ships.

Captain MACDONALD. Right now a cruise to nowhere is defined as a cruise that starts at a particular port, goes out to the high seas and then returns to that same place. Right now, under U.S. Customs' Carrier Rulings Branch interpretation, the cruise to nowhere is not considered coastwise trade so foreign-flag vessels can engage in that kind of a cruise.

If you tinker with the offshore boundary, they will have to go out a greater or lesser distance. Right now it is generally 3 miles to the high seas.

The other thing the Committee should be aware of is that even if this law is passed, it won't stop a foreign-flag vessel from continuing to operate if they abide by the 12-mile limit, and they went beyond that and then back to the same port, it would still be a cruise to nowhere and probably would not be determined to be coastwise trade.

Mr. JONES. That concludes our hearing for this panel.

I thank both you gentlemen for your presence here this morning.

At this point I ask unanimous consent that a statement from Maritime Administration be placed in the hearing record.

There being no objection, so ordered.

[The prepared statement of Captain Leback can be found at the end of the hearing.]

Mr. JONES. Our next witness is Mr. Harvey Walpert, Vice President of Trinity Marine Group out of Mississippi.

You are recognized. You may proceed.

STATEMENT OF HARVEY B. WALPERT, VICE PRESIDENT, TRINITY MARINE GROUP, GULFPORT, MISSISSIPPI

Mr. WALPERT. Good morning, sir.

Mr. Chairman, it is certainly a privilege for me to represent the Trinity Marine Group before your Committee today in support of two bills introduced by Congressman Gene Taylor, H.R. 5533 and H.R. 5534.

The Trinity Marine Group operates ten shipyards in the United States. We have five shipyards in Louisiana including one at Lockport, which is in Mr. Tauzin's district, and three in Mississippi, all of which are in Mr. Taylor's district.

In addition, we operate yards in Beaumont, Texas and Brownsville, Pennsylvania.

The Trinity Marine Group is the Nation's largest builder of ships in the 100-600 foot range.

Our yards have built over 14,000 vessels.

We build everything from luxury mega yachts, inland and offshore tugs, barges for both inland waterways and for use offshore, vessels for the offshore oil industry, ferries, tug boats and tow boats, fisheries' vessels, pleasure cruise vessels, paddlewheelers, patrol boats, oceanographic research vessels and landing craft for both the U.S. and friendly nations.

We are survivors in an industry that has seen the number of shipyards shrink over the past ten years to a level of one-third of their former numbers.

We have seen similar decreases in employment levels of people working in the shipyards.

Our employment at this time is approximately 2,500 people. These are experienced, competent, motivated shipbuilders who are the match of any in the world.

We have survived because of the financial strength of our parent, Trinity Industries, a New York Stock Exchange company, and the hard work and knowledge of our skillful craftsmen.

Our sales last year approximated $200 million. Of this, approximately one-half was for military vessels.

The remaining sales were for ferries, repair work on barges, barge new construction, both inland and offshore, dinner cruise vessels and offshore tugs.

With the shrinking of the military budgets and the likelihood that the shipbuilding account will generally be decreased, we have to look to new markets to find employment for these hard-working craftsmen.

Our ten yards are among the most competitive in the United States.

I believe, on a manhours per ton basis, they are as competitive as any in the world that build vessels similar to those we build.

We sell vessels around the world. We sell crewboats to the Middle East.

We sell patrol boats to South America. Yet when we compete for foreign business, we usually don't have a chance because of subsidies, both outright and hidden.

The Governments of Japan, Korea, Norway, Germany and many other shipbuilding nations provide subsidies that we just can't match because our Government does not provide such subsidies to us, nor do we ask for subsidization.

All we ask is to compete on an even basis. We have to turn a profit on the work that we produce.

Their governments treat their labor force as a fixed cost and only calculate the cost of materials when they compete with us.

Their governments provide their yards with facilities; we have to go and buy our facilities, amortize them and still try to make a profit.

I understand that there are ongoing negotiations with our Trade Representative and these nations. They have been slow on making any meaningful concessions to eliminate subsidies to their shipbuilding industries.

Congressman Taylor's bills, if enacted, would provide for additional work for our shipyards.

All of the present "Cruises to Nowhere" are vessels which are not built to the same standards and government inspections that are required of vessels that we build for the commercial trades.

Under Congressman Taylor's bill, these vessels would be built in U.S. yards, sailed in U.S. waters, and manned by U.S. crews.

This is certainly an opportunity for the three competing interests the owners of the vessels, the crews that operate them, and the shipyards that will build them to get together to bring this business back to the United States.

The United States will gain the taxes, obtain the jobs, and enjoy the benefits if Congressman Taylor's bills are enacted.

Thank you very much for this opportunity to address you.

If there are any questions, I will be glad to give them a try.
ME. JONEN. I have no questions.

Mr. Paylor.

Mr. PAYLOR. Mr. Jones.

I want to thank Mr. Walpert for representing his industry. Mr. Walport, 13 years ago, what percentage of your business would have been public sector versus private sector?

ME. WALPACE. It would have been all public business. We didn't set into the Government business until 1985, sir, when commercial Av pbuddig had ad gone away, totally.

MY FAVLON Poday it is what percentage of your business?

ME WALPANr. About 30 percent.

M Exxon Would it be safe to say that if we were able to inrae opportunities for our vessel owners, that that would o more work for our domestic shipyards so that the we think you make tremendous landing craft and other Not deu't you think our economy would be better served

creating something for the private sector on a higher percentage basis than the public sector?

Mr. WALPERT. Yes, sir.

I think if you can find a way that you can make intercoastal trade more attractive, there will be more of it and gambling is certainly one way that attracts people to go from New Orleans to Gulfport or to Tampa.

That is not a trade that is very much used now, but if there are reasons for people to take that, I would expect to see vessels result from it.

Mr. TAYLOR. Didn't your shipyard submit the low bid a few years back on a cruise ship that was to have been built in British Columbia?

Mr. WALPERT. Yes, sir; in fact, last month.

We competed against Japan, Finland, and Canadian interests and we were low bidder after all the tariffs and duties were considered, and even though it was a worldwide competition and we had the best price and the best delivery, because of their own political interests, they still gave it to their own yard.

That was just last month, $200 million worth of business that we would have done in this country.

Mr. TAYLOR. So you are telling us that because of local political pressure, another country gave the contract to their own people while we are prohibiting our people from participating in the same type of business?

Mr. WALPERT. Really, all we are asking for is to compete on an even basis. If we can compete on an even basis, we can compete with anybody.

Mr. HUBBARD. Would the gentleman yield?

I apologize for being late.

I was in a Banking Committee hearing and must go back. We thank Mr. Harvey Walpert for being a witness and I congratulate you upon having such an excellent Congressman here representing the interest of southern Mississippi.

Is my understanding correct that enactment of this legislation would also stimulate the construction in shipyards of smajer vas sels?

Mr. WALPERT. I believe that. We are talking about intercoastal trades and you don't need a thousand-foot vessel to participate in that.

I believe that with the opportunity for vessels to go betwaan ports, not only going nowhere-going nowhere is just a way to get around the law.

People like to travel somewhere.

Mr. HUBBARD. In your testimony, as far as I am concerned you said all the right things and I support your position and that is why some of us don't have any questions.

Thank you for yieiding.

Mr. TAYLOR. Mr. Walpert, thank you once again for appearing before the Committee.

Mr. JONES. Our next set of witnesses is Mr. Rogers, accompanied by Mr. McAlear and Mr. Stocker.

Mr. Rogers, you may proceed.

STATEMENT OF JOHN S. ROGERS, VICE CHAIRMAN/CHIEF EXECUTIVE OFFICER, WORLD CITY CORPORATION, NEW YORK, NY; ACCOMPANIED BY RONALD J. MCALEAR, DIRECTOR OF SHIP MARKETING. SHIPYARD DIVISION, AVONDALE INDUSTRIES, INC.. NEW ORLEANS, LA; AND JOHN J. STOCKER, PRESIDENT, SHIPBUILDERS COUNCIL OF AMERICA, WASHINGTON, D.C.

Mr. ROGERS. Thank you, Mr. Chairman and Members of the Committee.

My name is John Rogers. I am Vice Chairman and Chief Executive Officer of World City Corporation.

vant to thank you for the opportunity to appear here today and express our views in support of H.R. 5534.

We take no position on H.R. 5533, simply because it doesn't impact on the matters which concern us.

Mr. Chairman, we have submitted a written statement plus some expions and I would request that it be made part of the record of is proceeding.

Mr ONES. Without objection, so ordered.

ROGERS. Just to touch on a few points including some that een raised in testimony thus far today if the panel please, Verd City comes here today, in a sense, as a shipowner. :s a company which has committed itself to a project to build de digest passenger cruise vessel ever built and we are committed is we can make this happen to build it here in the United Estes trait 't with U.S. citizens and put an American flag on it. be the largest vessel in the world. It will be the first ercise vessel built in this country in over 30 years. te quere nat this is possible financially, technologically with shippers with whom we are dealing and that this will be a ཝིལ་འ། ། see at the revival of an industry, the cruise industry in het is ready for revival and can compete on an even

a a sense, almost a negotiating session as far as our Sveined here today because we are moving ahead. Oract with Avondale Shipyards in New Orleans. au money to see if we can make this happen.

V million thus far committed to this project and es e vet witch is more, I suspect, than any of the foreigna live capended on development of a ship.

capected to cost on the order of $800 million. It Cegistered tons. It will be a floating city oper

ed here, it will be a taxpayer. It will provide a major shot in the arm for the maritime

savement

Na Mg Cerrupt to apologize, but that is the second ne House Floor. I am sure Mr. Taylor would like