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Greater Houston Port Bureau
 
The following is the June, 1999 edition of "The Bulletin". Any questions or comments regarding content should be addressed to Alistair Macnab at 713-678-4300.
 
 The Editorial
 
We're beginning to think a lot about education and professional advancement in the maritime and logistics management industries that are so important for the future prosperity of our city and region where international commerce is one of the principal engines of progress.
 
Its time, it seems to me, for us to be looking to the future and encouraging the next generation of leaders to acquire a world-class education in subjects that will ready them for world-class positions as the Port of Houston increasingly takes its place in the topmost ranks of seaports. Instead of recruiting the best and brightest from other places, Houston should be in a position to send out highly skilled and knowledgeable professionals to demonstrate to the world that the Houston way of doing business is the best way to go.
 
But we're not there yet. Its true we have the makings of a local maritime commerce education program in place but it is somewhat fragmented and so much is learned "on the job" that there is as yet, no comprehensive professional structure for young people to follow that will lead them towards an internationally-recognized qualification that reflects the stature of Houston as a center for excellence in all things maritime.
 
We need to be preparing the way for the next generation of marine arbitrators; traffic and logistics management professionals; charter brokers; port administrators; educators in international commerce - professional people who will provide support services for the port's and the world's maritime commerce in the 21st. Century.
 
If we fail to grow our own future leaders then we will be condemned to follower status by our own lack of initiative. That doesn't look to me as the Texas, or indeed, the Houston way of taking care and control of the future.
 
Alistair Macnab
 
 U.S. Army Corps: Waterborne Commerce Statistics Center
 
We often talk about the Port of Houston being Number One in the U.S.A. when measured in tons involved with international trade but it comes as a pleasant reminder of our port's increasing stature when the Army Corps of Engineers issued its 1997 statistics in May of this year which showed the Port of Houston as the Number One port in the nation with respect to the dollar value of exports.
 
Houston ranked Number Four overall by total value, trailing Long Beach, Los Angeles, and New York/New Jersey. But on export value, Houston was the leader with $20,815,018,158 although only ranked Number Five with respect to import value.
 
The Army Corps of Engineers tracks statistics from 180 ports and Houston's exports by value added up to no less than 9.4% of the entire nation's waterborne export commerce. At a time when our country's overall trade balance with the rest of the world is in deficit, Houston's positive contribution is yet something else to be proud of.
 
 What others are saying about Texas
 
We always knew it but its nice to see an article in the Wall Street Journal (May 5th.,1999) which names Texas as the state with the best business climate, based on a new survey of U.S. and European high-level executives.
 
Senior officers and CEOs were asked to identify the state that had "the most favorable business climate" and Texas was awarded the top honors by 25% of those surveyed. California came in second with 23%, followed by North Carolina with 18%.
 
The survey was conducted by Development Counsellors International whose senior vice president, Rob DeRocker, speculated that Texas was favored because of the absence of a state income tax, a varied work force, and a positive image projected by Austin. In 1996, Texas had been in second place to North Carolina so this new ranking is clearly a result of recent gains in Texas' overall image and reputation.
 
 The Port of Houston and Y2K
 
Symposium and Workshop sponsored by The U.S. Coast Guard and The Houston Maritime Industry.
 
Is Y2K a storm in a teacup or something that will change our lives forever?
 
Delegates drawn from Houston's diverse maritime community were present on Wednesday, May 26th.,1999 to participate in an all-day session to examine the Y2K phenomenon and its possible impact on the Port of Houston. Starting from the premise that it was desirable for the Port of Houston to conduct "business as usual" during critical Y2K dates, it quickly became obvious that much preparatory work still needed to be done and contingency plans made, if this goal were to be achieved.
 
Chaired by Captain Alistair M. Macnab, Executive Vice President of the Greater Houston Port Bureau, Inc., the symposium moved off to a brisk start with introductory remarks from guest speakers, Carlos Litke of Stolt Nielsen/Intertanko, John Hannon of the U.S. Coast Guard in Washington DC, and Tom Kornegay of the Port of Houston Authority. Following this, three panels were convened to respectively examine Y2K and its likely effects on Terminals (Roger Guenther/PHA), Ships (Robert Conn/Equiva Trading) and Support Services (Jim Black/Moran-Gulf Agencies).
 
The keynote speaker over lunch was James McIsaac/Market Partners Inc., Boston, who reminded the more than 130 attendees that they ignored Y2K at their peril. Perpetual crisis management was going to become more of a way of doing business in the future than perhaps many of us realized. In addition to technical preparedness, there was fear of the unknown to contend with and that could best be handled by taking in emergency supplies of food, fuel, and funds.
 
Y2K is only the tip of the iceberg, stated Mr. McIsaac, and there will be many perils to face in the future as individuals and organizations seek to take advantage of any ensuing chaos.
 
The afternoon session opened with a report from the panel on Infrastructure and Public Safety (Tim Leitzell/Hogansac) and an address by the Captain of the Port, Captain Wayne Gusman USCG., who described a safety-based traffic management regime that would be in place to help keep the Port working normally at critical times. Drawing on the IMO Code of Good Practice and working from a vessel/barge risk assessment matrix, the Coast Guard would be partnering with industry to ensure that the Coast Guard's national policy was successfully translated through the office of the Captain of the Port into a contingency plan which captured and prioritized risks and articulated local port posture and preparedness.
 
A lively discussion period followed with an open microphone from the floor from which questions were raised and answers received from both civilian and Coast Guard personnel. Final Coast Guard Y2K rules will be published in the Federal Register in June 1999 and are expected to articulate what actions arriving vessels will need to undertake in order to be considered for port entry during critical dates. The Port of Houston has approximately 120 ship agencies doing business in the port and it will be necessary for them to ensure timely notice to Owners and Charterers just what precautions and actions will have to be taken if a vessel is to receive entry into the Port of Houston.
 
Critical dates have been expanded and now include: August 22nd.,1999; September 9th; December 31st.,1999; January 1st.,2000; February 28th. and 29th; February 30th (!); October 10th.,2000, as well as February 29th. 2001, 2002, 2003 and 2004.
 
The Port Bureau would like to thank Captain Gusman, the U.S. Coast Guard, and the many speakers and panelists who contributed their time and experience to ensuring the success of the symposium. While many participants felt that they would be ready for Y2K, they were not too sure that other parties would be similarly committed. The symposium did much to highlight the overall level of preparedness that exists in the Port of Houston and to open channels of communication between and among those who desire "business as usual" on the critical dates.
 
In his summing up, Captain Macnab suggested that the whole Y2K matter would cause inconvenience rather than disaster if we were all well prepared in good time with our contingency and low-technology plans to combat any loss of computer power. While a Y2K apocalypse is a myth and civilization will not be coming to an end, we should recognize that civilization as we once knew it has ended already. Citing Danny Hillis, a Disney Fellow at Walt Disney Co., Macnab suggested that we are no longer in complete command of our creation, the computer chip, and that a sort-of perpetual crisis management regime will become the norm and our way of life in the 21st. Century with Y2K just the precursor of things to come. This need not be an unhappy thought, continued Macnab, as working smarter with an expanded awareness of an increasingly interconnected world is where we all need to be as successful business people. The Port of Houston would become even-more of a world-class port and we would need to be ready for the challenges that this would bring.
 
 Call to Action on Senate Steel Quota Bill
 
There is growing concern in the steel consuming industries that the well organized and well funded clamor raised by steel workers against imported steel is beginning to have its effect in Washington. While passage of any steel quota bill or other anti-free trade measure would seriously hurt the nation's economy, here in Texas, the adverse effect of any such protectionist measures would be infinitely greater than in many other states.
 
It is calculated that in order to protect the 7,500 jobs in blast furnaces and basic steel production, no fewer than 459,300 other jobs in the steel consuming sectors would be placed in serious jeopardy. This number is broken down as follows:
 
Texas:
 
  • Heavy Construction - 19,000 jobs
  • Fabricated Metal Products - 04,300 jobs
  • Machinery - 151,800 jobs
  • Transportation Equipment - 84,200 jobs
 
There are many other reasons for opposing any steel quota bill. These include the fact any trade restriction action of this sort by the USA would certainly be in violation of the WTO; that steel exports would be hurt by retaliation from our trading partners; that the 25% of existing steel imports are for USA steel producers themselves in any case as they seek to satisfy the growing domestic demand; and that 11 of the top 13 U.S. steel companies were actually profitable in 1998 which hardly suggests that legislative protection is warranted.
 
More importantly, with over $220 billion in exports of steel containing products in 1998, ample supplies of steel at competitive prices from both domestic and overseas producers are absolutely vital to our trading balances as well as to the jobs that such economic activity supports. Overall in the USA, there are 40 jobs in the steel consuming areas for every one job in steel production. For over thirty years the domestic steel industry has a history of going to Washington for protectionist help. This time, the unions are playing their jobs card, but the numbers are not in their favor. "Saving" one job while putting a further 40 at risk makes no sense.
 
The American Institute for International Steel (AIIS) will welcome support from interested parties as it seeks to persuade Senators to oppose the steel quota bill now under consideration. For more information, you can call David Phelps at AIIS on 202-628-3878.
 
 Strategic Freight Corridors Study: Area Council Seeks Input from Road Users
 
The Houston-Galveston Area Council (H-GAC), the regional association of local governments, is conducting a Strategic Freight Corridors and Needs Assessment Study. The study includes an initial phase designed to identify the major intermodal freight facilities in the region as well as congestion problems associated with these facilities. The information gathered during this initial phase will be used to develop and prioritize roadway projects for funding.
 
In addition to gathering data related to the types and volumes of freight handled by each intermodal facility, a profile of freight movement by mode is also being requested. Facilities from which data are being sought include ports and marine terminals; railroad yards; airports; pipeline terminals; ferry terminals; and facilities for the handling of intercity passengers.
 
Responders will be asked to identify access and congestion problems, whether these are daily, ongoing or seasonal, and to suggest possible solutions. If you feel you have a situation to report, you are invited to contact Susan Alleman, TEI Study Manager on 713-270-8145 or Jorge Castillo, LKC Data Collection on 713-522-2554. The H-GAC can be contacted on 713-993-4597 (Jim Dickinson) or more information may be obtained from the Port Bureau on 713-678-4300 (Alistair Macnab).
 
A Strategic Freight Corridor Workshop will be conducted on Friday, July 16th.,1999 from 0830 to 1230 Hours at the 2nd. Floor Meeting Rooms of the Houston-Galveston Area Council at 3555 Timmons (near the Summit). The workshop will provide an opportunity for a discussion of congestion problems and possible solutions to be considered as the study develops. Seating will be limited so be sure to RSVP to Jorge Castillo (see above) as soon as possible. This workshop and the available light lunch are free of charge.
 
 CargoTrax: Internet Based Information for the Transportation Industry
 
Be sure to look up CargoTrax for a look at the latest Port Bureau Newsletter. Mark and Matthew Moore are the proprietors of this innovative web site which is specifically designed with the Houston maritime community in mind.
 
But it's not just a source of information. It can also be a notice board for advertising your company and its services with prime, select, and stamp banner formats to suit your requirements. CargoTrax is located in Humble, Texas and you can call Mark on 281-852-3988. Better still, connect with him on the web at mark@cargotrax.com
 
 U.S./EU Close to Agreement of Textile Labeling
 
The United States and the European Union are reportedly close to an agreement which would end a dispute over a U.S. rule which currently prohibits some European clothing makers from labeling their goods as being made in various European countries when the fabric for the garments came from outside Europe.
 
This dispute arose out of a change in 1996 of U.S. Rule of Origin on textiles, which left many European exporters of designer clothing and things like silk and other fine scarves from applying a label such as "made in Italy", etc. to their products.
 
Recently, the U.S. Trade Representative's Office sent the European Union a proposal, which is hoped, will settle the dispute. The proposal would allow the European manufacturers to apply a label to the products stating they were produced in Europe even though the fabric came from a country outside the European Union.
 
If the proposal is accepted, U.S. importers of fine clothing and products such as high-end European sheets, scarves and tablecloths would not have to worry about Customs detaining their shipments due to improper labeling.
 
 House Panel Hears Testimony on New Port Fee Proposal
 
The House Transportation Water Resources Subcommittee has heard testimony from a large number of shipping companies, led by the largest U.S. flag carrier Sea-Land Service, as well as the National Industrial Transportation League and the American Association of Port Authorities, opposing a proposal set forth by President Clinton which would establish a new set of service fees at U.S. ports which would replace the old Harbor Maintenance Tax ruled unconstitutional by the U.S. Supreme Court in 1998.
 
Sea-Land and the other companies claim the new fees are similar to the HMT and would impose unnecessary costs on oil tankers, cruise ships and other types of commercial ships. Sea-Land claims the new tax is nothing more than a user fee.
 
The Clinton Administration wants to use moneys from the fees collected to not only pay for maintenance dredging at U.S. ports but for navigational aids and other navigational uses in U.S. seaports and harbors.
 
Private sector groups besides the steamship industry opposing the new port fees, such as the American Association of Port Authorities, claim it would generate more than twice as money as the amount spent annually on channel maintenance dredging.
 
Other groups are also fearful of the new fees such as the agricultural and mining industries who are afraid the new tax could price U.S. farm products and coal completely out of some foreign markets. The transportation cost is a very large part of the export price of both types of products and even a few cents extra cost could result in lost sales to foreign suppliers.
 
The Agricultural group claims the administration's own figures dispute information distributed back in April which shows that the new tax would result in lower shipping charges than the previous Harbor Maintenance Tax.
 
The AAPA claims harbor maintenance and dredging should be paid out of the general revenue fund and that there is no big hurry for any sort of replacement fee, as the Administration itself estimates that there is currently a $1.8 billion surplus in the harbor maintenance trust fund at the end of the current fiscal year.
 
The new fee is virtually unchanged from one put forth by the Clinton Administration late last year, and has yet to find any member of Congress willing to sponsor the proposed legislation.
 
  Clinton Proposal to Charge Importers for New Ace System Criticized
 
A plan by the Clinton Administration to charge U.S. importers a new user fee to pay for half of the cost of replacing the U.S. Custom's computer system has come under extreme criticism. The criticism has come not only from U.S. traders and others who would be assessed the new fee, but also from the Canadian government, which claims such a fee would actually be a trade barrier and in violation of the North American Free Trade Agreement.
 
The proposal which is contained within the Clinton Administration's 2000 fiscal year budget request, would force the private trade sector to pay for half of the more than $1billion cost of developing Custom's new computer system.
 
The new user fees would cost importers nearly $163 million over at least four or five years and would pay for both the new system, called the Automated Commercial Environment, and a related system, the International Trade Data System, costing about one quarter as much.
 
The administration and the private sector agree that a new computer system and program to replace the current Automated Export System is badly needed, as it has nearly reached capacity and is in danger of a crash which could result in a temporary freeze on trade and a long slowdown in processing due to an increase in manual processing of trade data.
 
However, the private sector believes that the Congress should pay for the cost of any new system out of the general revenue funds since all the costs related to the new systems are the government's responsibility.
 
Canada's Ambassador to the U.S., Mr. Robert Chretien, recently sent a letter to U.S. Rep. Philip Crane, R., IL, Chairman of the Trade Subcommittee of the House Ways and Means Committee and has complained to the Secretary of the Treasury and other Cabinet officials about the proposed user fees on importers. The ambassador stated in his opinion it would be a new tax imposing increased costs on Canadian business communities and increase the costs of cross-border trade and lessen economic benefits enjoyed by the U.S. and Canada in recent years.
 
Mr. Chretien's letter stated the new fee would be a violation of Article 310 of the North American Free Trade Agreement in that it would be a customs user fee prohibited by that article. The Ambassador stated the 1993 free trade pact exempts Canadian products from a current charge called a merchandise processing fee, and any similar fees. The Ambassador argued in his letters that the proposed new user fee is similar to fees prohibited in Article 310.
 
The U.S. government is taking the opposite stance, claiming the two fees are different in that the merchandise processing fee covers the governments costs of processing import documentation while the new user fee would pay for a new system to cover the cost of building a new system to handle that documentation.
 
  CIT Designates Test Cases on Import Challenge to HMT
 
The Court of International Trade (CIT) has designated two test cases : Thompson Consumer Electronics v. United States and Amoco Oil Co. v. United States as lead cases in which to hallenge the legality of the Harbor Maintenance Tax (HMT) assessed on imports.
 
The Court is basing its challenge on a "non-severabilty" argument. This argument states that: (1) the HMT has been found by the Supreme Court to be unconstitutional with respect to its assessment on exports; and (2) the provisions applying the HMT to exports and imports cannot be severed from one another and, as such, the HMT law is invalid with respect to imports. The theory behind this argument is that applying the tax to imports but not exports is a violation of U.S. international treaty obligations.
 
In addition, the import challenge also brings up the argument that assessment of the HMT on imports violates the Uniformity Clause and the Port Preference Clause of the U.S. Constitution. This clause states that "all Duties, Imports and Excises shall be uniform throughout the United States" and the Port Preference Clause provides that "No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another." The import case claims that the application of the HMT at certain ports in certain states, but not others is a violation of the Uniformity Clause and the Port Preference Clause.
 
  Russia Rejects U.S. Steel Import Plan
 
American officials have received little support from Russian trade officials on proposals to deal with proposed new penalties on imports of Russian steel. The U.S. Department of Commerce is scheduled to issue penalty decisions on imported Russian hot-rolled steel, which is the target of dumping complaints since last September, this month and the International Trade Commission must then determine if the imports damaged the U.S. steel industry before the penalties become permanent.
 
Although not all details are available, it is believed that the U.S. is placing the Russian steelmakers into two categories: one includes the big three producers, Severstal, Magnitogorsk and Novolipetsk. If the U.S. does assess penalties, these three firms would reportedly be assessed penalty duties of 73%, 150% and 218% respectively.
 
The other category would cover the rest of the Russian steel exporters and reportedly be assessed a 150% penalty duty by the U.S. Commerce department.
 
It is understood that U.S. officials have told the Russians that if they are to escape any major sanctions on hot-rolled coils, all producers must accept a volume and price limitation agreement on other steel products.
 
  Port Bureau Publishes Terminal Tariffs on Internet
 
The Greater Houston Port Bureau has under terms of the Ocean Shipping Reform Bill acted as the tariff publisher for eighteen marine terminal operators throughout the United States.
 
The Bureau had previously been acting as tariff publisher for these operators when the Federal Maritime Commission required filing of these tariffs under the FMC's Automated Tariff Filing System. As of May 1, 1999 the FMC no longer requires that marine terminal operators file their tariffs with the FMC but may publish a copy on the Internet. For legal purposes, the terminal operators opted to have the Bureau continue to file their tariffs and post them on the Bureau's web site hosted by CargoTrax.
 
The marine terminal operators represented by the Bureau range from private terminals operating inside the Port of Houston to Ports such as the Port of Bethel, Alaska. For a complete listing of the tariffs provided by the Bureau, please contact us at (713) 678-4300.
 
 
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