WORLD TRADE
ORGANIZATIONWT/GC/W/523
23 December 2003
(03-6750)
Original:  English
REVIEW OF THE EXEMPTION PROVIDED
UNDER PARAGRAPH 3 OF THE GATT 1994
Response by the United States to Questions Posed Concerning Jones Act
The following communication, dated 12 December 2003, is being circulated at the request of
the Delegation of the United States.
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The United States submits the following responses to the questions from the delegation of the
European Communities, contained in document WT/GC/W/521.
Questions from the European Community
Q: In order to assess the impact of the Jones Ac t legislation on the shipbuilding market the
EU would like the US to provide precise figure regarding:
(i) the number and types of vessels/ships pr oduced in the last five years in the
framework of the "Jones Act";
(ii) the sale price for these vessels/ships and the name of the company (name of the
ship owners);
(iii) the total amount of the aid awarded in relation to the sale price.
A: (i) Data on the number and types of vessels/ships produced in the last five years is
provided by the United States to the WTO Secretariat annually.  For yourconvenience, we have reproduced this information in the table in Annex I.
(ii) U.S. Law does not require that this information be notified to the U.S. government.
We do not believe that there is complete information on sale value available from
commercial sources.
(iii) Because we do not maintain sales price information, we are unable to respond fully to
this question.  In Annex II, however, we have provided a table containing the data
from the Maritime Administration's financial guarantee program.  For a full display of
the publicly available data relevant to your request, please visit the Maritime
Administration’s website, http://www.marad.dot.gov/TitleXI/approved.html, whichWT/GC/W/523
Page 2
provides information on vessels receiving financial guarantees from the Federal
government.
Q: Furthermore the EU would appreciate information on the legal grounds for using
foreign-built or foreign-reconstructed vess els for commercial application with the US
waters (e.g. as of the appropriations bill for 2003 allowing a foreign owned shipping
company to operate foreign build vessels between the islands of Hawaii).  Does the
United States intend to grant this possibility in the future to all WTO Members?
A: The EC is correct that 2003 appropriations legislation (Pub. L. 108-7) provides the legal
grounds for up to three cruise ships constructed to completion in a shipyard located outside of
the United States to receive a coastwise endorsement to operate in regular service transportingpassengers between or among the islands of Hawaii.  The thrust of the last part of the EC’s
question is not entirely clear, given that the legislation does not specify that such a shipyard
be located in a particular country (WTO Member or otherwise).   We are not aware of any
similar legislation currently pending before the U.S. Congress .
In relation to maritime transport services:
Q: While we note that the provision of mariti me transport services is not covered by the
exemption provided for by paragraph 3 (a-e) of GATT 1994, the EU would like the US
to clarify the conditions for granting exemption to the general restriction on provision oftransport between ports in the US?  In a rec ent case (the appropriations bill for 2003) a
foreign owned shipping company was allowed to operate between the islands of Hawaii.
Should this case be understood as a permanent derogation, or is it rather a partial step
towards opening up some of the restrictions covering cabotage on a case by case basis?
A: The conditions for granting a waiver are governed by federal regulation, in particular 46
C.F.R. 388.4 and 46 C.F.R. 251.31, copies of which are attached.  For detailed information
regarding the conditions for eligibility and the criteria for governing the Maritime
Administrator’s actions in granting a waiver, please refer in particular to 46 C.F.R. 388.4 and
46 C.F.R. 251.31, copies of which are attached as Annex III, and which can also be found at
the following websites:
http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/o
ctqtr/pdf/46cfr388.4.pdf
and
http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/o
ctqtr/pdf/46cfr251.31.pdf.
The U.S. administration is not aware of any legislation pending in the U.S. Congress that
would suggest that the legislation to which the EC is referring is a first step towards openingup the restrictions referred to.WT/GC/W/523
Page 3ANNEX I
U.S. SHIPYARD DELIVERI ES - FIVE-YEAR PERIODS
Time Period Fishing Vessels  Non-Fishing Vessels Total
No. of
VesselsTotal Gross
TonnageAverage
Gross Tonnage No. of Vessels Total Gross
TonnageAverage Gross
TonnageNo. of Vessels Total Gross
TonnageAverage Gross
Tonnage
1994         330        50,628         153           150       283,156          1,888            480       333,784         695
1998
1995         352        50,908         145           174       747,093          4,294            526       798,001       1,517
1999
1996         365        53,964         148           208       971,098          4,669            573    1,025,062       1,789
2000
1997         360        55,895         155           226    1,328,856          5,880            586    1,384,751       2,363
2001
1998         395        64,103         162           252    1,505,829          5,976            647    1,569,932       2,426
2002
5 yr.
Avg.(mv)        360        55,100         153           202       967,206          4,541            562    1,022,306       1,818
U.S. SHIPYARD ORDERBOOK (Expected Deliveries) - FIVE-YEAR PERIODS
Time Period Fishing Vessels  Non-Fishing Vessels Total
No. of
VesselsTotal Gross
TonnageAverage
Gross TonnageNo. of Vessels Total Gross
TonnageAverage Gross
TonnageNo. of Vessels Total Gross
TonnageAverage Gross
Tonnage
1994  N/A N/A  N/A           149    1,438,568          9,655            149    1,438,568       9,655
1998
1995  N/A N/A  N/A           169    1,702,848        10,076            169    1,702,848     10,076
1999
1996  N/A N/A  N/A           152    1,752,156        11,527            152    1,752,156     11,527
2000
1997  N/A N/A  N/A           139    1,566,127        11,267            139    1,566,127     11,267
2001
1998  N/A N/A  N/A           178    1,811,785        10,179            178    1,811,785     10,179
2002
5 yr.
Avg.(mv) N/A N/A  N/A           157    1,654,297        10,541            157    1,654,297     10,541
NOTE: Gross Tons 100 and above.
Source:   Lloyd's Register-FairPlay / Coast Guard (Fishing Vessels).WT/GC/W/523
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ANNEX II
PUBLIC DISTRIBUTION
MARITIME ADMINISTRATION Title XI Ship Financing Guarantees
Pending Applications
No. of Types of
Owner Ships Vessels/Projects
Fast Ship Atlantic, Inc. 2 High-Speed Container VesselsPasha Hawaii Transport Lines LLC 1 Pure Car/Truck Carrier
Vessel Management Services, Inc. 2 155,000 Barrel-Capacity ATB's
Speede Shipyard, LLC & Metro Machine Co N/A Shipyard ModernizationAHL Shipping Company 2 Double-hull Product Tankers
K Ship 1-4, LLC. 4 Double-hulled, 45,000 DWT, Crude Oil and
Product Carriers
Harbor Fuel Service, Inc. 1 3,000 HP Harbor Tug
1 Double-hull Tank Barge
Cashman Equipment Corporation 29 Steel Deck Barges
Rowan Companies, Inc. 2 Self-Elevating Mobile Offshore Jack-up RigsAlter Barge Line, Inc. 45 Covered Hopper Barges
New York Trans Harbor, LLC 6 Low-Wake Motorized Catamaran Ferries
Sterling Equipment, Inc. 4 Deck Barges
2 Dump Scow
Port Imperial Ferry Corp. 5 Passenger Catamarans
Kvaerner Philadelphia Shipyard, Inc. N/A Shipyard ModernizationSanta Maria Shipping, LLC 1 Container Vessel
Perforadora Central, S.A. de C.V. 2 Supply Vessels
Vane Line Bunkering, Inc. 2 Double-Hull Heavy Oil Tank Barges
TOTAL 111
*ExportWT/GC/W/523
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As of 6 November 2003
Shipyard Actual Cost Orig. Amount Terms of Arrival
to Owner of Loan Guarantee Date
National Steel & Shipbuilding Co. – $857,500,000.00 $750,500,000.00 Const. Period 09/22/99
San Francisco, CA + 25 yrs
Halter Marine Inc. - Gulfport, MS $79,317,000.00 $69,403,000.00 Const. Period 12/07/00
+ 25 yrs
Bay Shipbuilding - Sturgeon, WS $71,000,000.00 $61,400,000.00 25 yrs 03/07/01
$39,691,419.00 $34,700,000.00 25 yrs 03/23/01
$141,256,120.00 $123,599,105.00 25 yrs 07/12/01
Kvaerner Philadelphia Shipyard $68,000,000.00 $59,500,000.00 25 yrs 07/16/01
 - Phila., PA
Orange $6,617,250.00 $5,790,094.00 25 yrs 03/20/02
Jeffboat LLC - Jeffersonville, IN
HBC Barge LLC - Brownsville, PA $14,076,923.00 $12,561,000.00 25 yrs 08/19/02
Cove Fleeting - Morgan City, LA
LeTourneau, Inc. - Vicksburg, MS $200,909,000.00 $175,795,000.00 15 yrs 08/29/02
Trinity Marine Products, Inc. $11,740,000.00 $8,805,000.00 25 yrs 09/03/02
Robert E. Derecktor, Inc. $4,800,000.00 $3,840,000.00 25 yrs 11/18/02
- Mamaroneck, NY
HBC Barge, LLC - Brownsville, PA $8,487,000.00 $7,426,000.00 20 yrs 11/21/02
Corn Island Shipyard - Lamar, IN
Conrad Industries - Morgan City, LA
AIlenMarine, Inc - Stika, Alaska $12,315,084.00 $10,775,000.00 25 yrs 01/13/03
$34,300,000.00 $30,000,000.00 18 yrs 04/04/03
Santa Maria Steel LLC $18,170,000.00 $15,600,000.00 Const. Period 09/16/03
Bollinger Shipyards Lockport, LLC  $26,133,782.00 $19,600,000.00 15 yrs 10/02/03
- Lockport, LA
Jeffboat, LLC. $13,370,000.00 $11,698,000.00 25 yrs 11/06/03
$1,607,683,578.00 $1,400,992,199.00WT/GC/W/523
Page 6
Annex III
§251.31 Charges for processing applications for authorization to transfer ownership of
ships build with construction-differential subsidy.
(a) Applications for an amendment or addendum to construction-differential subsidy
contracts to provide the sale of a vessel built under Title V, Merchant Marine Act,
1936, as amended, to a buyer who assumes the obligations under said contracts, shall
be filed with the Secretary, Maritime Subsidy Board, Washington, DC 20590.
(b) Fee.  Each such application shall be accompanied by the sum of $200, which sum will
be retained to recover the cost of processing the application.
(Sec. 4; 5 U.S.C. 553)
[G.O. 106, 31 FR 3397, Mar. 4, 1966]
§388.4 Criteria for grant of a waiver.
(a) General criteria .  (1)  We will waive the foreign build and/or foreign rebuild
prohibition in the coastwise trade laws for an  eligible vessel only if we determine that
the employment of the vessel in the coastwise trade will not unduly adversely affect –
(i) United States vessel builders; or
(ii) The coastwise trade business of any person who employs vessels built in the
United States in that business.
(2) We may not limit the determination of "unduly adverse affect" on a
coastwise operator or an U.S. vessel builder to operators or builders of vessels
carrying 12 or fewer passengers.
(3) We will evaluate the expected impact of the proposed waiver on the basis of
all the information received from all sources, including public comment, internal
investigation and analysis, or any other sources or information deemed appropriate.
(b) Impact on U.S. vessel builders .  We may use the following criteria to determine the
effect on U.S. vessel builders:  Whether a potentially impacted U.S. vessel builder has
a history of construction of similar vessels, or can demonstrate the capability and
capacity to build a similar vessel, for use in the same geographic region of the United
States, as the proposed vessel of the applicant.
(c) Impact on coastwise trade operators :  We may use the following criteria to determine
the effect on existing operators of U.S. – built vessels in coastwise trade.
(1) Whether the proposed vessel of the applicant and a vessel of an existing
operator (or the vessel of an operator that can demonstrate it has taken definite stepsto begin operation) would provide similar commercial service and would operate in
the same geographic area.
(2) The number of similar vessels operating or proposed to operate in the same
market with the same or similar itinerary, relative t the size of the market.WT/GC/W/523
Page 7
(d) Advance notice and approval needed for changes .  When we approve a waiver
application, we will notify the applicant that the applicant may not make substantial
changes in the employment of the vessel in the coastwise trade without prior notice to
MARAD.  If the applicant fails to provide advance notice of substantial changes toMARAD, we may immediately revoke the waiver under §388.5.
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