Maritime Constraints and International Trade: Case Study of the Impact of Cargo Preference on U.S. Wheat Trade

The trade significance of the impact of proposed cargo preference maritime legislation can perhaps be placed in better perspective by comparing the above results to the projected effect of inland waterway user fees in a companion study on the costs of shipping wheat to Columbia river ports on the Columbia Snake navigation system. Depending on whether a uniform fuel tax or ton mile river segment user fee is used, it is estimated that 100 percent cost recovery of navigation maintenance, operation and construction costs on the Columbia river system would add six to ten cents to the rate for shipping wheat. The Boggs proposal, assuming a Portland base price of $4.00 per bushel, would affect export prices by eight to sixteen cents per bushel. Regional politicians and industry lobbyists have been much more vocal about waterway user fee proposals than about proposed cargo preference legislation. These results, along with economic efficiency arguments which support user fee proposals and weaken the case for cargo preference schemes, suggest that a more desirable allocation of the region’s efforts to oppose current proposals before congress should be against cargo reservations.