There’s an old saying that the road to you-know-where is paved with good intentions.
Remember Hillary Care, the Clinton Administration’s attempt at national health care? And more recently, in its rush toward biofuels, Congress ignored warnings that diverting corn crops to biofuel production would cause global corn shortages and increase food prices. Now, food costs have skyrocketed, and some African children are eating pancakes made of mud.
Well, the law of unintended consequences is about to raise its ugly head again.
This time, it involves an effort by federal regulators to “level the playing field” on behalf of domestic cruise ship companies. But, if they succeed, they will only make matters worse, particularly for the Port of Seattle and Washington state.
This mess dates back to 1886 and 1922 when Congress passed laws to protect the American maritime transportation industry from foreign competition. The laws require foreign-flagged passenger ships calling on two or more U.S. ports to dock in at least one foreign port during their trip. But the law did not stipulate the length of the port call.
It didn’t take long for foreign cruise lines to find a way around the law. Foreign-flagged ships cruising along the West Coast simply dock briefly in Canada or Mexico, often at night when the passengers are asleep. Industry insiders call such stops a “touch and go.”
Now, federal regulators, responding to complaints from U.S. cruise ship companies, want to amend the rule to require foreign-flagged ships to stop at least 48 hours in a foreign port. In addition, the stop must be more than half the time they spend in U.S. ports, and passengers must be allowed to go ashore.
While grounded in good intentions, the rule change could devastate the cruise business in Seattle. Seattle is not a cruise destination; rather the city is the place passengers board cruise ships headed to Alaska. Foreign-flagged vessels could easily circumvent the 48-hour rule by leaving from Vancouver, B.C. or Victoria, B.C., cutting Seattle out of the picture entirely.
Why does that matter?
According to the latest figures from the Cruise Lines International Association, Seattle is the 9th busiest cruise port in the nation, with 373,000 passengers annually. Cruise lines and their passengers account for more than $631 million a year in direct spending throughout Washington state, and the industry supports 16,300 jobs in our state totaling $722 million a year in wages. Keenly aware of the industry’s economic impact, the Port of Seattle has spent more than $35 million on cruise ship terminal improvements in recent years.
The new rule could jeopardize all of that — unnecessarily, as it turns out.
The controversy that led to the proposed 48-hour rule stems from complaints about Hawaii-bound ships based in L.A. and San Diego. American cruise lines charged that the faster foreign-flagged vessels had an unfair advantage because they simply did a “touch and go” in Ensenada, Mexico to comply with the foreign port requirement and outpaced the American ships to Hawaii.
But instead of applying a blanket 48-hour rule across the board, regulators should focus their solution on the problem — the Hawaii route — and leave other routes alone. That way, they could avoid the damage of unintended consequences to ports such as Seattle.
This all begs the question of why foreign-flagged vessels have such a big advantage to begin with. It comes down to operating costs. Virtually all large passenger vessels sailing to U.S. ports fly foreign flags of countries such as Bermuda and Panama to escape America’s high taxes and regulatory burdens.
The U.S. could boost America’s domestic cruise industry — and eliminate the need for companies to base their ships in foreign countries — if we reduced the tax and regulatory costs imposed on cruise lines. In the meantime, federal regulators should reconsider their blanket 48-hour rule before it sinks Seattle’s cruise line business.
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