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Hawaii Cruises


Rule Would Target Foreign Cruise Ships

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Jan 06, 2008

Rule Would Target Foreign Cruise Ships
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HONOLULU — Foreign cruise ships sailing from California to Hawaii would have to spend at least two days in Mexico under a proposed federal rule meant to help U.S.-flagged ships better compete with them.

Cruises departing from Los Angeles and San Diego typically include a short, token stop in Ensenada, Mexico, to meet federal laws that require ships flying under foreign flags to dock in another country before going to other U.S. ports.

The rule change proposed by U.S. Customs and Border Protection would force those ships to stay in a foreign port for at least 48 hours and allow passengers to go ashore.

Supporters say the change would make Hawaii cruises more costly for foreign-based cruise lines, bolstering U.S.-flagged ships' presence in the island tourism market.

"It would allow fair competition," said Alan Yamamoto, vice president of Hawaii operations for NCL America, which hosts cruises among the Hawaiian Islands on the Pride of Hawaii, Pride of Aloha and Pride of America. "This issue is a matter of trying to create a level playing field for everyone."

U.S.-flagged ships are at a competitive disadvantage because they have higher labor costs than foreign-flagged ones, must comply with environmental laws and are required to pay federal taxes, Yamamoto said.

But critics say the rule would stop cruises from departing from California, delivering a blow to its economy.

"San Diego's cruise industry generates over $300 million a year in economic impact for our city. This proposed rule could change that and could drastically impact our city's tourism and economy," U.S. Rep. Bob Filner, D-Calif., said in a statement.

If the rule takes effect, "the vast majority of U.S.-based cruises will have to be shut down or, alternatively, will have to move their base of operation to a foreign port," Bradley Stein, vice president and general counsel for Royal Caribbean Cruises, wrote in a letter opposing the change.

Miami-based NCL's three Hawaii ships are the only oceangoing U.S.-flagged cruise ships in the country, providing more than 4,000 seagoing jobs, Yamamoto said.

But the company has lost more than $250 million since 2004, and foreign competition contributed to the 2,500-passenger Pride of Hawaii's relocation to Europe, where it will be reflagged into the Bahamas registry and renamed Norwegian Jade, he said.

U.S. Rep. Neil Abercrombie, D-Hawaii, said the rule is not meant to harm California-based cruises but to ensure that foreign ships don't benefit from paying low wages and dodging U.S. laws.

U.S. Customs and Border Protection accepted comments on the proposal in November and December, and it will consider them before making a final recommendation for the rule change, said Glen Vereb of the agency's Border Security Regulations Branch. A decision is expected in less than a year.

Royal Caribbean Cruises Ltd. deferred comment to the Cruise Line International Association, which didn't immediately return calls seeking comment Friday. Holland America Line and Princess Cruises, which are run by Carnival Corp., also didn't return phone calls.

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