THE ECONOMIC AND POLITICAL IMPLICATIONS OF DEEP DRAFT USER FEES

Major policy debates in the early 1980s focused on U.S. ports and their adequacy to meet the nation's present and future needs. After five years of debate Congress passed the Waterway Resources Act of 1986, which established a .04 percent ad valorem tax on all cargo passing through the port system. This policy change to user fees to help share the costs for the operation and maintenance of U.S. harbors and navigable channels is a highly debated and controversial issue. The authors contend that the port user fee scheme enacted by Congress is a compromise that results neither in complete cost recovery nor economic efficiency. Issues such as port location, capacity and the timing of deeper draft ports are too important to be left completely to market forces. A national policy on port development is still required.