In an open letter to President Obama, dated August 28, 2012, to coincide with the opening of the Republican National Convention, World City President, Stephanie Gallagher, challenged Obama to explain the Administration’s position that effectively excludes American shipowners from competing in a huge industry that is almost entirely supported by US passengers and US dollar revenues.
“The whole purpose of Title XI is to make it possible for American shipowners to obtain long-term financing on terms and conditions and at interest rates comparable to those available to large corporations,” Gallagher stated in her letter, citing 60 Fed. Reg. 20592. “And the whole purpose of that, of course, is to support job creation, not only in shipbuilding and supply, but in operating ships under the American Flag.”
“The only sector of the international shipping industry that is doing well and has consistently done well year after year after year, Mr. President, is the cruise sector,” Gallagher wrote. “Why would you want to exclude Americans from that activity?”
“Except for small coastwise vessels and riverboats,” World City’s letter continued, “none of the 200+ ocean-going cruise ships operating in the North American cruise market were built here, none hire American officers or crew, and none pay US income tax on their multi-billion dollar annual profits – unlike every other US hospitality organization.”
World City also forwarded a copy of Devils on the Deep Blue Sea by Kristoffer A. Garin, referring specifically to Chapter Eight, “Hiding in Plain Sight.” Garin’s book points out that “this profoundly American industry” is in fact not American at all; it also is not transportation,” according to Gallagher. In fact, she wrote, according to Garin, “the story of the modern cruise industry has as much as anything been that of its steady and prosperous retreat from the transportation industry.” It competes directly with US hotels and resorts which are required to hire Americans and pay income taxes on their US operations.
She wrote: “World City doesn’t blame the Obama Administration for this predicament. For decades, both sides of the aisle have been major recipients of the foreign-flag lobby largesse and, for the most part, have closed their eyes to this unfair situation.”
“But we do blame the Obama Administration for throwing down the gauntlet…for precluding America’s long-delayed entry into this booming US-driven market; for shutting the door on what we have proven is possible and viable if the government applied the Title XI regulations as intended – not as a subsidy for special interests, but as a job-creating, economy-boosting and tax revenue-generating program and policy.”
“Why, Mr. Obama, would you choose this, of all times, to lock out American shipbuilders, hotel construction companies, hundreds of US suppliers in all fifty states, and thousands of long-term self-sustaining new jobs for our dwindling Merchant Marine and US hospitality workers?”
“Why,” the letter continued, “when there are twenty-three million Americans out of work, would you decide to announce a policy that America and Americans can’t participate in this booming US-driven market that has grown steadily at 7% or more every year, recession or no recession, for decades?”
“I’ll tell you why,” World City asserted. “Politics and special interests. The rich non-taxpaying foreign-flag cruise industry does not want an American entrant into this market because it will focus the spotlight on the reality that these hospitality companies are operating unfairly in competition with American hotels, resorts and entertainment facilities. Period. And they especially don’t want the American Flagship Project to happen because it promises to build the largest, safest and greenest passenger ship in the world; to fly the Stars & Stripes, to hire Americans and to pay taxes, like every other US hospitality organization. That’s why.”
World City’s Open Letter to President Obama ended with a request that the Administration “not only reverse this shocking anti-American policy, but instruct MARAD/DOT to reinstate World City’s fully-reviewed, economically sound Title XI application that was terminated without cause, and theoretically “without prejudice”, after the disgraceful American Classic Voyages Title XI fiasco – that was MARAD’s own doing – and which cost the American taxpayers over $500 million.”
“The current Administration,” World City asserts, “apparently wants to throw the baby out with the bathwater and would prefer to use limited Title XI resources to enable large corporations to refinance ships that are already built and which will not create any new jobs, either in shipbuilding or on their ships. This approach defies the statutorily mandated purpose of Title XI and would be a double whammy for entrepreneurial start-ups like World City America Inc.”
What is the World City America project today, was originally launched in the mid 1980s with plans to build in Germany and later Japan, before opening an office in New York and pursuing a US shipbuilding project.