HTML _ 98-864 - The Maritime Security Program (MSP) in an International Commercial Context: A Discussion
28-Oct-1998; Stephen Thompson; 9 p.

Abstract: The Maritime Security Program (MSP) is a national defense sealift program that provides commercial assistance to ocean ship operators, primarily containership operators. The MSP makes ships and ship crews, and the intermodal transportation and communication network of the ship operator, available for sealift to the Department of Defense upon request. These ship services, if required, would be compensated at commercial rates. A substantial portion of ship crews for reserve ships for military sealift are drawn from the trained and experienced ship crews associated with U.S.-flag ships, many of which are in the MSP. The MSP is funded from the civilian side of the federal budget, rather than from the military side. The MSP is administered by the Maritime Administration (MARAD) in the U.S. Department of Transportation, in consultation with the U.S. Department of Defense (DoD). The MSP program was established in 1996 to replace the Operating Differential Subsidy (ODS) program that was established in 1936. The MSP provides $2.1 million per ship per year through FY2005. The MSP is authorized at $100 million each year through FY2005, enough to fund 47 ships per year through the life of the program. The program is subject to annual appropriations. The Clinton Administration requested $97.650 million for the MSP for FY1999, and Congress enacted that amount of funding. Forty-seven ships are in the MSP; 39 of them are containerships. There are 57 privately owned, U.S.-flag containerships in U.S. foreign trade, none in foreign-to-foreign trade, and 23 in domestic trade. All 47 ships qualified on the basis of military usefulness. Ten companies have ships in the MSP. U.S.-flag containerships transport 8.6% of U.S. ocean-borne commercial foreign trade, measured in tons, and 9.9% measured by value. The U.S.-operated containership fleet is significantly larger when foreign-flag ships controlled by U.S. citizens are included. Since 1970, many nations have been increasing the size of their merchant marine as a means of projecting visibility and earning hard currency. One key rationale for the commercial assistance funding in the MSP is to assure a continuing presence of U.S.-flag ships in international trade. The key rationale for the MSP is to assure, in the event of a national defense need, the availability of an adequate number of ships, and trained and experienced ship personnel who are U.S. citizens to operate these and other ships. Some suggest that alternative approaches to these goals would be preferable. This report discusses the MSP in an international commercial context. Maritime policies of other nations that may adversely affect the U.S.-flag containership industry could be addressed in international negotiations. In such negotiations, the MSP may be an issue. A U.S. response to such objections in the past has been that: (1) the MSP is a small program having a largely military objective; (2) the United States already has some of the most market-based national maritime policies among maritime countries; and (3) the United States is ready to negotiate more market-based maritime policies as soon as ¨a critical mass of countries¨ is willing to do the same. The Maritime Security Program (MSP) is a national defense sealift program that provides commercial assistance to ocean ship operators, primarily containership operators.(1) A rationale for the commercial assistance is to assure a continuing presence of U.S.-flag ships in international trade. Another rationale is to assure, in the event of a national defense need, the availability of an adequate number of trained and experienced ship personnel who are U.S. citizens to operate these and other ships. This report discusses the MSP in an international commercial context. Maritime policies of other nations may adversely affect the U.S.-flag containership industry. These policies could be addressed in international negotiations. [read report]

Topics: Marine, International, Economics & Trade

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