Back off rule change resulting in cruise line monopoly

THE ISSUE Gov. Linda Lingle is at loggerheads with Hawaii's congressional delegation on a proposed federal rule change for cruise ships.

A federal proposal to hamper foreign-flagged cruise ships from operating from the mainland to Hawaii has drawn a tidal wave of opposition from business and labor from Maine and Florida to California and Alaska. The ill-conceived barrier should be abandoned in favor of a more reasonable approach to satisfy wage and environmental concerns.

Under current law, a foreign-flagged ship must stop at a foreign port between U.S. ports. The proposal would require that such a foreign stop last for at least 48 hours and that more than half the total time of a cruise be spent at that foreign port. These changes are impractical enough to sink the foreign-flagged cruises.

The rule proposed by the Department of Homeland Security's Bureau of Customs and Border Protection is aimed at protecting NCL America's three U.S.-flagged cruise liners, which sail in Hawaiian waters, from competition with foreign-flagged ships that sail to and from San Diego and Hawaii, with brief stops at Ensenada, Mexico.

Rex D. Johnson, head of the Hawaii Tourism Authority, commented to the bureau that its adoption "could mean the withdrawal of all international cruise business in Hawaii and result in significant economic losses for our entire state." Gov. Linda Lingle, also opposing the rule change, estimates those yearly losses at $155 million in sales, $44 million in labor income and 1,447 jobs.

"We can expect to see fares increase, service decrease and record profit declarations, all for the benefit of the monopoly and at the expense of the consumer," commented Neil M. Takekawa, president of Roberts Hawaii Tours.

Supporters of the proposal, including the state's congressional delegation, say foreign ships should not benefit from paying low wages and being immune from U.S. laws. "I've got no sympathy for somebody that's trying to pull a fast one by avoiding taxes, health laws and environmental laws," said Rep. Neil Abercrombie.

The second-largest contributor to Abercrombie's current re-election campaign is Star Cruises, NCL's parent company. The company gave him $11,000, behind only defense contractor BAE Systems, according to Opensecrets.org. A contribution of $10,000 came from International Longshore and Warehouse Union, which opposes the rule change because "it will cause an unacceptable loss of jobs in our port communities."

In a statement this week, Kurt Nagle, president of the American Association of Port Authorities, said the "unintended consequences would be to threaten thousands of American jobs elsewhere in the country, from longshore, hotel, restaurant and retail store workers to taxi, bus and tour operators, travel agents and insurance, banking and manufacturing employees."

"Customs is overreacting," Nagle said, "like using a sledgehammer to swat a fly."