A small National Defense Authorization Act rule change will have big consequences

The House has been asked to consider including a seemingly innocuous but potentially damaging rule change by airdropping new language into a Coast Guard Reauthorization Act and putting it all into an amendment to Coast Guard Reauthorization provisions within the 2021 National Defense Authorization Act. This provision, found in Section 4104 of the Coast Guard package, serves private US maritime interests but is completely unrelated to any Coast Guard function. The change would give the US Maritime Administration (MARAD) the authority to enforce compliance by the United States Agency for International Development (USAID) and the Department of Agriculture (USDA) with cargo preference mandates to transport of at least 50 percent of all international food aid shipments on US flagged vessels. Furthermore, the rule change would require USAID and USDA to comply with cargo preference requirements at every moment during any given fiscal year, while currently compliance is only required for the fiscal year as a whole. The proposed rule change would also give MARAD, an agency chartered to advocate for the US maritime industry, the authority to determine whether or not a foreign ship can be used.

The clear intent of the proposed rule change is to alter the way in which the mandates are implemented so as to increase the profits of private sector shipping companies such as Liberty, Sealift, and a US subsidiary of Maersk, a Danish international shipping conglomerate that already carries over 30 percent of all cargo preference shipments of packaged food. These gains would come at the expense of the nation’s emergency food aid efforts abroad just as the COVID pandemic drives an extra 130 million more people into acute hunger. Emergency food aid is critically important both from a humanitarian perspective and as a source of soft power for the US military and national security. 

Via Twenty20

These changes are unnecessary because the current approach clearly meets the original intent of Congress and gives agencies the flexibility to manage food aid shipments prudently over the entire year.  This flexibility is especially important because US carriers are often unavailable to serve a specific route or will only do so at truly exorbitant rates and with substantial delays when aid is urgently needed by the families and children facing food emergencies.  

On the surface, these rule changes may seem minor, but the consequences for US humanitarian aid efforts and taxpayers are likely to be substantial. Careful studies have consistently shown that emergency food aid shipped on US flagged vessels, many of which are effectively owned by foreign conglomerates, increase shipping by costs by upwards of 60 percent. Even modest increases in the share of aid shipped on US vessels would prove costly. The added layer of bureaucratic approvals would also inevitably further delay deliveries of emergency food to hundreds of thousands of families around the world, at great cost to their nutrition and US national interests, purely to enhance a few corporations’ profits. 

There is no sound evidence that food aid cargo preference benefits the US national security in any substantive way by usefully increasing military sealift capacity, even though historically this has been the primary justification for cargo preference’s existence. Nor is there any evidence that the US shipbuilding industry benefits from the program. Between 2012 and 2018, of the 59 US flagged vessels carrying cargo preference food aid shipments, far more were built in South Korea (31) and in China (five) than in the United States (four). 

Nevertheless, whether or not US emergency food aid programs comply with the cargo preference mandate attracts the attention of congressional committees empowered with oversight authority over the programs. So the question is whether or not the agencies comply. Over the past decade, only at the end of one fiscal year (2013) was USAID not in compliance in one segment of the program, and then only by a modest amount and only because of a sudden surge at the end of the fiscal year in emergency food aid funding from Congress to meet unexpected needs — a surge that US flagged vessels were unable to accommodate. 

Fundamentally, the compliance system works. An additional
layer of wasteful government bureaucracy would only serve to line the pockets
of largely-foreign-owned corporate interests and take food from the mouths of
hungry people in the midst of a global pandemic. 

Christopher B. Barrett is a professor of applied economics and management at Cornell University.

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