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CONTINENTAL GRAIN CO. WAIVER REQUEST ON USE OF U.S. SHIPS FOR GRAIN SHIPMENTS TO RUSSIA

THURSDAY, FEBRUARY 6, 1964

MARITIME ADMINISTRATION,

Washington, D.C.

The meeting commenced at 11:30 a.m., in room 4519, General Accounting Office, Mr. Robert E. Giles, Acting Administrator, Federal Maritime Administration, presiding.

Mr. GILES. Good morning, gentlemen and lady; as you all know, we announced yesterday that we would have this meeting this morning to consider the waiver application submitted by Continental Grain Co. in connection with shipment of a total of 1 million tons of wheat to the Soviet Union.

Now, this is a formal business session. We are going to be considering business. This is not just an open meeting where people will come to comment on matters generally but this is an open meeting so that all of those who are interested-and there are many who are interested in the subject-will have an opportunity to focus on the specifics that we have got involved in and see and know what we are doing and why. I would like to have a few general comments for the record simply to lay the background on why we are here today.

Last January 7 we published our final notice of waiver procedure which would be followed in the event any exporter was not able or said he was not able to get the full American tonnage in compliance with the 50-percent requirement that you all know about. That was published on January 7 as our final notice of procedure and here is a copy for the record:

NOTICE TO EXPORTERS AND AMERICAN SHIPOWNERS ON SHIPMENT OF WHEAT AND WHEAT FLOUR TO SOVIET BLOC COUNTRIES

Current Export Bulletin No. 883 issued by the Office of Export Control, Department of Commerce, on November 13, 1963, requires that at least 50 percent of the wheat and wheat flour to subgroup A countries will be exported on U.S.-flag carriers and that if such carriers are not available at reasonable rates, the exporters must obtain prior authorization from the Maritime Administration to ship less than 50 percent on U.S.-flag carriers.

Any application by an exporter to the Maritime Administration for waiver of the foregoing requirement must be accompanied by a certification that solicitation of all owners and/or operators in all segments of the American steamship trade for necessary shipping space has been made including posting at the New York Maritime Exchange, 80 Broad Street, New York, N.Y., for the required U.S.-flag shipping. Application may be made at any time subsequent to the date of prompt solicitation after a sales contract has been signed and after allowing 5 days for response thereto. The results of such solicitation must be clearly and fully itemized including the dates of all tenders, shipping dates, rates, terms and conditions, loading and discharge ports, cargo tonnage offered, and full response to such tenders. Exporters are advised that waivers will not be considered unless

U.S.-flag ships have been given a reasonable period to meet the shipping schedules, and in any event the shipping schedules (laydays) for U.S.-flag ships shall extend over the same period applicable for other shipping but should be not less than 30 calendar days after the date of solicitation unless compelling circunstances require a shorter period.

Upon receipt of an application for a waiver of the U.S.-flag shipping requirement, the Maritime Administration will promptly issue a public notice including posting of a notice at the New York Maritime Exchange, 80 Broad Street, New York, N.Y., giving full details of the waiver application, stating that a request for waiver has been received and unless evidence within 5 days from date of such notice is received showing that U.S.-flag shipping is offered, capable of meeting the reasonable shipping schedules of the exporters at applicable guideline rates for wheat in bulk published by the Maritime Administration, Department of Commerce, in the Federal Register issue of November 16, 1963, and any other supplemental guideline rates published for other port areas applicable to ships of 15,600 to 30,000 total deadweight tons will govern. If wheat flour in bags is to be shipped under Current Export Bulletin No. 883, supplemental guideline rates will be published.

As background to that procedure and to this final notice of procedure published January 7, we circulated in December to shipping association representatives, to grain exporters, and to interested citizens a proposed draft of waiver procedure. That was sent out around December 11 and we solicited comments and suggestions at that time. Simply representative of what we received, I would like to make note of these letters and put these letters in the record.

This letter is from Mr. Ralph B. Dewey and is dated December 17, 1963. Mr. Dewey represents the Pacific American Steamship Association. The letter is addressed to me.

First it expresses thanks for sending the draft notice and then it has these two paragraphs and I will put the entire letter in the record. (The letter referred to follows:)

DEAR MR. ADMINISTRATOR: Many thanks for sending me the draft of "Notice to Exporters and American Shipowners on Shipment of Wheat and Wheat Flour to Soviet-bloc Countries" which you plan to publish soon in the Federal Register.

I have not canvassed every member of my organization but, on my own responsibility, will indicate to you that the notification plan therein by which American operators are given 30 days advance notice of bloc country shipments seems quite satisfactory. Your Department's extreme caution in insuring maximum participation by U.S.-flag vessels is greatly appreciated.

This has been a difficult matter for your Department and we commend you and your staff for finding a fair and equitable solution.

We, of course, appreciated those comments from Mr. Dewey. This letter is dated December 19, 1963, and is from Ralph E. Casey, president of American Merchant Marine Institute and reads as follows:

DEAR MR. GILES: Thank you for sending me a copy of your proposed "Notice to Exporters and American Shipowners on Shipment of Wheat and Wheat Flour to Soviet-bloc Countries," which I note has been sent to all American steamship owners or managing agents, the Association of Ship Brokers & Agents, Inc., and is being made available to grain exporters.

The revised procedure for the granting of waivers appears to be generally satisfactory and should assure proper participation by U.S.-flag vessels.

This letter dated December 16, 1963, is from Mr. J. Smith, chairman of the American Tramp Shipowners Association and is addressed to Mr. Martin L. Goodman. The letter reads as follows:

GENTLEMEN: This will acknowledge receipt of your letter of December 11, 1963, enclosing a proposed draft of "Notice to Exporters and American Shipowners on Shipment of Wheat and Wheat Flour to Soviet-bloc Countries."

Our association feels that your suggested handling of waivers is good and wishes me to tell you that they will cooperate with you to the fullest extent and they also are very much pleased and grateful to Mr. Roosevelt, Mr. Giles, and yourselves in connection with the other matters discussed in our recent meeting. The next letter is from Mr. Max Harrison, president of the American Maritime Association and is addressed to Capt. M. I. Goodman and reads as follows:

DEAR MARTY: We were advised at a meeting of AMA member companies today that the owners have received your letter requesting comments on the proposed procedure governing the shipment of wheat and wheat flour to Soviet bloc countries. I have been ask to inform you that in accordance with our comments in Washington on Tuesday, the owners consider 30 days' notice insufficient to meet the shipping schedules and would like 60 days' notice. However, in light of the special circumstances in these deals, they would appreciate 45 days notice, if that is possible.

That was the only comment from AMA. It was not possible or we did not conclude that we could have 45 days' minimum notice in our waiver of procedure, rather it is 30 and on that point I would like to read the precise language in our waiver notice as it finally went out:

Exporters

and I quote

are advised that waivers will not be considered unless U.S.-flag ships have been given a reasonable period to meet the shipping schedule and in any event the shipping schedule for U.S.-flag ships shall extend over the same period applicable for other shipping but should not be less than 30 calendar days after the date of solicitation unless compelling circumstances require a shorter period.

In other words, we did not word this in such a way as to say that 30 days is all it should be but we stated it in such a way that there should be more than 30 days under the circumstances if that was indicated and certainly it should be the same as for foreign shipping and only if compelling circumstances indicated, should there or could there be less than 30 days.

This letter is from the Association of Ship Brokers & Agents, it is addressed to Captain Goodman and is signed by the president of that association, Mr. Glosky. It reads as follows:

GENTLEMEN: We have your letter of December 11 addressed to this association and we submit herewith our suggestions for a modus operandi designed to give American shipowners every reasonable opportunity to employ their own tonnage on any possible offer, if such tonnage is available at reasonable rates.

Over a century of experience has shown that the surest and most expeditious way to bring full cargoes and the ships to carry them together, has been a broker using his own individual efforts and methods, whatever they may be.

There is no daily shipping paper that is published on all our coasts. To attempt to assure the Maritime Administration that American-flag tonnage is not available at reasonable rates by such a method would be cumbersome, expensive, and time consuming.

We suggest the following procedure.

1. All requests for waivers will be filed with Maritime Administration. Such request shall give the following data:

(a) Date of tender.

(b) Shipping dates.

(c) Rates.

(d) Terms and conditions.

(e) Loading and discharge ports.

(f) Cargo tonnage offered.

(g) Full response, if any, to such tenders.

2. All requests for waivers will be immediately forwarded by the MaritimeAdministration to the New York Maritime Exchange, 80 Broad Street, New York 4, N.Y., for posting where they will be immediately available to all shipowners and the wire service. Brokers and principals to be identified whenever associated.

3. If, after 5 days from filing with the Maritime Administration, no suitable offer has been received from any American shipowner, the waiver will be considered granted.

All American shipowners belong to the maritime exchange, insofar as we know. That is the substance of the suggestions from the Association of Ship Brokers and Agents and, if you will note, the essence of his suggestions is that we do not rely on the publishing in newspapers but add in a posting in the exchange. We thought that a good suggestion and it is accepted.

This letter is from Mr. W. P. Rathbone of the Columbia Steamship Co. and reads as follows:

GENTLEMEN: Thank you for your letter of December 11, enclosing a proposed draft of "Notice to Exporters and American Shipowners on Shipment of Wheat and Wheat Flour to Soviet-Bloc Countries" and requesting our comments or suggestions prior to its publication.

Our one suggestion would be to increase the period for U.S.-flag ships to have the opportunity to meet the shipping schedules if possible. From a review of our operations and chartering, it would appear that we would require perhaps 45 to 60 days to position our vessels.

The only suggestion that was made by this particular correspondent was for a period of 45 to 60 days to position their vessels.

This next letter is from Harold A. Thurston from Pocahontas Steamship Co. and is dated December 13, 1963. The letter reads as follows:

GENTLEMEN: We have reviewed the proposed draft of "Notice to Exporters and American Shipowners on Shipment of Wheat and Wheat Flour to Soviet-Bloc Countries."

We are in complete agreement with the procedures outlined and feel certain that you have devoted sufficient thought and effort to this project so that any mechanics you decide on will be acceptable to us.

There are other letters here and I am going to pick the ones that would be primarily interested in this particular business.

This letter is from Mr. Alfred Segal of the American Trading & Production Corp. The letter is dated December 16, 1963, and reads as follows:

GENTLEMEN: We acknowledge with thanks yours of December 11 to which was attached a proposed draft of "Notice to Exporters and American Shipowners on Shipment of Wheat and Wheat Flour to Soviet-Bloc Countries."

Our only comment is that we feel such regulation, in our opinion, covers the situation of waivers quite adequately.

The next letter is from Keystone Shipping Co. and is signed by Mr. Karl R. Kurz in which he made the following suggestion:

As a suggestion, we believe that the exporter, in applying to the Maritime Administration for a waiver of the 50 percent U.S.-flag requirement, should also have a certification by at least one recognized dry-cargo or tanker-chartering broker stating that the entire available American-flag steamship charter market has been canvassed and this statement to be supported by a list of the steamship owners and agents who were actually contacted. This information would serve as a doublecheck for the Maritime Administration to substantiate the nonavailability of American ships and thereby protect the American-flag steamship business.

The next letter is from Mr. A. E. Fridberg of the Matson Navigation Co. and the Oceanic Steamship Co. The letter is addressed to Captain Goodman and reads as follows:

The procedure as outlined in the attachment to your memo would seem to cover, adequately, requirements for any necessary notification/investigation prior to granting of waivers.

The next letter is from the States Steamship Line and is signed by Mr. R. G. Jubitz, vice president. The letter is dated December 16, 1963, and their only suggestion was as follows:

The only suggestion we have is that we feel it would be more equitable if the reasonable period for notice to arrange freight was increased from 30 to 45 days. Next is a letter from Alcoa Steamship Co. signed by W. L. Hamm and he stated as follows:

We do not have any comments, but we do appreciate and thank you for the opportunity to make comments in advance of publication.

The next letter is from the vice president of Moore-McCormack Lines who is Mr. D. B. Geddes. The letter is dated December 16 and is addressed to Captain Goodman. Mr. Geddes said:

We have studied this draft carefully and can advise you that Moore-McCormack Lines, Inc., is in complete accord with the procedures outlined therein. May we thank you for your continued efforts on behalf of the Americanflag shipping industry.

This letter is from Mr. H. B. Luckett, vice president of American President Lines. The letter is dated December 17 and is addressed to Captain Goodman. The letter reads, as follows:

We are in full accord with the wording and intent of this notice. Its implementation and enforcement should assure maximum participation by American carriers in the movement of grains and allied products to Soviet-bloc countries and, at the same time, not prove unduly restrictive to the movement in general. We have no constructive suggestions relative to the procedures outlined. Next we have a telegram from the United States Lines Co. which reads, as follows:

Reference your letter December 11 our opinion your proposed draft of notice to operators and American shipowners on shipment of wheat and wheat flour to Soviet-bloc countries will adequately protect our interests.

There is also a telegram from the American Mail Line Ltd., reading as follows:

Reference your letter December 11, enclosing proposed draft notice to exporters and American shipowners on shipment of wheat and wheat flour to Soviet-bloc countries, we have no comments or suggestions to offer as outlined procedures appear adequate.

The next letter is from the States Marine-Isthmian and is signed by E. A. Terres, vice president. The letter is dated December 17 and is addressed to Captain Goodman. Mr. Terres stated:

The proposed draft seems to contain all the safeguards that would be required to protect U.S.-flag carriers.

The next letter is from the Bloomfield Steamship Co. and is signed by Wiley R. George, president. The letter is dated December 17 and is addressed to Captain Goodman.

Mr. George states:

The proposed notice is clear and understandable and announces a practical procedure to support the Government's policy relative to the participation of U.S.flag ships in these movements, and should be sent to all interested parties.

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