Federal involvement in the shipping industry dates back to 1789. Since then, governmental efforts to promote the American merchant marine have taken a variety of forms, including the prohibition of foreign shipping from the coastwise trade. To this end, laws have been enacted which deal with specific activities considered to be coastwise trade in nature and which ban the use of foreign-flag and, in some cases, foreign-built ships from those activities. However, the laws are narrowly worded and archaic, and have been unable to adequately address modern trends in coastal commerce. Maritime service industries have emerged in recent years which are associated with such coastal activities as passenger cruises and oil and gas exploration. Because federal law has not dealt with these specific coastal service activities, the coastwise trade laws have not been applied to them, and they may be undertaken by ships of any flag. Without a modern legal framework to govern cabotage activities, much of the recent coastwise trade policy of the United States has been formulated by federal courts and agencies. At present, the U.S. coastwise trade laws are applied to the navigable waters of the United States and, with certain exceptions, its districts, territories and possessions. In addition, the cabotage principle extends to artificial islands on the outer continental shelf which are in place for the purpose of oil and gas exploitation. Moreover, the requirements for participation in this trade stipulate that the vessel be domestically constructed, owned, and documented. Unfortunately, such ships are usually more expensive to operate than foreign ships, and consequently there is an inherent conflict between the users of coastal marine services, who seek them at the lowest possible cost, and the traditional public policy of the United States, which has been to encourage the growth of its own fleet. It is proposed that two changes to the existing policy regarding the coastwise trade be pursued. The first is to include all coastal maritime commercial services within the purview of the U.S. coastwise trade. The second is to remove the U.S. construction requirement from some or all of the ships participating in that trade
