 Aloha everyone and welcome to Hawaii Together on Think Tech Hawaii. I'm Kaley Ikeena your host and president of the Grassroot Institute of Hawaii and we've got a delightful program today. I'll be interviewing a young man from Montana who has researched a topic that very few people in Montana or even in our country know much about. You've heard the word supply chain. Not very many people paid attention to that phrase until the past couple of years. Bottle necks at U.S. ports were common in 2020 and 2021 and that caused many people in the media and Congress to ask why those log jams happened in the first place. The log jams also caused many Americans to ask why there wasn't enough toilet paper to go around or at least that's iconic for those of us here in Hawaii. Upgrading U.S. ports to avoid such bottlenecks in the future is going to take a lot of work from a great number of government agencies and private companies but there's one law that needs more scrutiny and that law is the topic of today's show. Can you guess what law it is? Well not quite the Jones Act although it's very much related to it and very much similar to it. I'm talking about the law called the Foreign Dredge Act of 1906 the Foreign Dredge Act of 1906 and it is very similar to the Jones Act which we have discussed quite a bit on this program. Joining me today to talk about this law indeed an expert already in it is Brad Tomasovic. Brad's a national high school champion debater and that's one of the areas one of the ways he got involved in studying this topic. He spent a good part of last year researching this law and explaining why it needs to be updated for the 21st century. So please join me in welcoming to the program Mr. Brad Tomasovic. Brad so glad you're joining us. Welcome to Hawaii together on Think Tech Hawaii. Aloha. Yeah well thank you for having me. Well I'm glad you're here. Now it's not usual that we interview someone so young as you. You have certainly distinguished yourself by winning the national high school debate championship but you've also studied a topic that in many ways is near and dear to us in Hawaii. But before we dive into it let me ask you this question. Tell us a bit about you. Who is Brad Tomasovic? In addition to having completed high school and now going off to college with hopes of completing law school who is Brad? Well thanks for the introduction. Right now I live in Great Falls Montana and I really enjoy policy and especially team policy debate. So. Well Brad how did you get involved in maritime policy? That's a very specific kind of public policy and I don't know what the connection would be in Montana but why don't you tell us your story. What drew you into this topic? So every year the debate resolution would come out and we would have to study that resolution and so the resolution that I was studying this year was about European policy or Americans policy towards one or more countries in Europe and I quickly discovered this area of law and of policy which was maritime policy and I was looking into a bunch of different facets of that and that's how I discovered the foreign dredge act 1906. Well when we talk about the foreign dredge act of 1906 we're going back over a hundred years and we're talking about dredging. Would you explain to our viewers what exactly dredging is? Yeah so dredging is when we remove soil or any type of biomass at the bottom of a port or a channel. So over time a bunch of soil and debris piles up inside of our ports and inside of our rivers and we need to remove that in order to have ships or boats come into our ports. Well what are some commonly known ports or rivers where dredging needs to take place on a regular basis? So a lot of the big ones would be the Mississippi River, LA and Long Beach in California and there's even a harbor in Honolulu that needs to be dredged. That's right and we have a very famous canal in Waikiki called the Alawai Canal that was just dredged and from time to time has to be dredged so our viewers understand a bit about that. Now when it comes to paying for the costs of dredging who usually foots the bill for these projects? Is it the state government or the port users or the federal government? Yes so the primary organizer of all of this dredging is the U.S. Army Corps of Engineers and they provide most of the funding but then the port authorities themselves will fund these projects as well. Well as with all things there are a number of laws that dredging companies have to deal with in order to comply with dredging law in United States sports and one of those laws you've mentioned already is the Foreign Dredge Act of 1906. In very simple terms and you're an excellent communicator could you please let our viewers know what the Foreign Dredge Act is all about? So the Foreign Dredge Act of 1906 was essentially one of the main precursors to the Jones Act in that it stops any company from building ships outside of America and dredging from outside America so every single dredger inside of this country has to be American-owned operated and built. Well that's very similar to the Jones Act which is known as or was first known as the Merchant Marine Act of the 1920s in that it has four components to it and you've mentioned them all already in order to transport cargo from one port to another port in the United States ships have to meet this criteria first they've got to be built in the United States they've got to be crewed by a United States crew for the most part they've got to be flagged a United States ship and they have to be owned by a United States entity. Now let's let's just review once again you said the Foreign Dredge Act of 1906 came before this once again what are the basic elements of the Foreign Dredge Act which is talking about dredging in the United States? Yeah so it's basically those four elements if you are in a dredging ship in the United States it has to be built using American labor using American materials then it has to be operated by an American company with 75% of the crew being American. Okay now we're going to come back and see what the impact has been of that law but first let's talk a little bit about the dredging industry today um has it flourished in the absence of foreign competition uh what about well I'll ask you about Hawaii in a moment but let's just talk in general what has happened since these regulations have been imposed upon dredging? Yeah so America as a whole doesn't have a good dredging industry and what we can see is that there's a lot of regional monopolies which is essentially one company will control one area of the United States you look at all the contracts that the U.S. Army Corps of Engineers is putting out and usually there's only one or two bidders on these contracts so we don't have enough companies or enough ships for the amount of dredging we need to get done and in fact just a couple years ago the average build of these dredging ships was 1980s so we have a very old and outdated fleet and not enough companies to fulfill the demand well with the lack of enough ships and enough companies to be able to carry out the work it sounds like a few companies will be making a lot of money and that the cost should be fairly high is that the case? Yes a great example of that is in Savannah Georgia we wanted to deepen the port and what happened was is because we didn't have any other companies we spent 200 million more dollars on that project than we had the budget for because these companies didn't have to compete they were basically the sole contractor. So one of the things that has happened since the passing of this foreign dredge law is the creation of monopolies or virtual monopolies so that there's very little competition fewer companies can enter the market and so what does that mean in terms of the consumer in terms of the quality of the product and the cost of the product and availability? Well it harms us in two main ways the first way is that our taxes are going to these projects we fund the US Army Corps of Engineers and so if they're spending way too much money than needed on these projects we're wasting our money but I think the most important way is that if we do not dredge maintain or expand our ports then the consumer loses money and a great example of this is what's called light load. Now the reason why we need to dredge our ports is because over time sediment will build up inside of that channel and what that means is that we have to have smaller ships come into these channels so more ships instead of just one big ship and we have to put less goods on those ships so what that means is that it's more expensive for companies to ship goods to the United States because it requires more boats it requires more trips more fuel and when companies have to pay more money to make a product that means that the price of their product goes up so every time a company has to spend more money because we aren't dredging our ports that is reflected on almost every product that gets imported into the United States. Well how does the US industry the US dredging industry compare on the international playing field especially to countries that don't have a comparable law are there other countries that have significant dredging fleets? Yes so I would split up the dredging market into three main areas the first main area would be the American market and the American market is completely locked off from any foreign competition the exact same thing is true with the Chinese market they don't allow any dredgers into their waters but now the rest of the market is a free market they don't have restrictions on who can't and can dredge in their ports and what we can see is that the Europeans four main companies specifically actually do 80 percent of the world's free market dredging and their ships are about four to seven times less costly to build their job or to do the job is about three times cheaper than the Americans and one Dutch company Van Ord actually has three times the capacity of the entire American market so what we can see is that when the market is free and people are allowed to compete we have a lot of very effective and profitable companies well how does all of this affect American consumers and in fact it would probably affect a lot more consumers than at first glance one might realize because good ship to our country but by ships affect the actual commerce inland as well that aren't on the coastline products ultimately have to get to them through rail or through truck and so forth so everybody in some sense is affected by what goes on in our shipping industry but how is the consumer affected by our lack of free market in the dredging industry well they're ultimately harmed because the less dredging we have the more expensive it is to ship goods into the united states a good example of this is that in the mississippi river last november there were 2000 barges stopped because of the lack of dredging and because those barges were stopped the us army corps of engineers reports that there is a 24 increase in the price of soybeans and that's just one example of all of the products that come into the united states so the businesses trying to sell goods are affected which means that the people who work at those businesses can't earn as much money it means that when businesses aren't making enough money they have to raise the price of their goods which basically affects every single america now brad let's talk a little bit about hawaii we at the grassroot institute study the impact of the jones act across the nation and in particular on hawaii and puerto rico and alaska which happened to be other non contiguous regions with the continental us we've seen a significant impact of the jones act how about the foreign dredge act of 1906 what's its impact on hawaii from what you've seen yeah its impact on hawaii is actually really unique compared to the rest of the country because the problem is that the foreign dredge act restricts building dredging ships it's more expensive to build dredging ships in america than it is in europe for example where it's four to seven times cheaper than building those ships in america and because of that we don't have that many what's called mobilization ships which allow these companies to move all of their dredging equipment across the seas so a lot of these mainland companies aren't able to dredge in hawaii because it's just too expensive to ship all their equipment here so hawaii is actually completely reliant on the hawaiian dredging companies and there aren't that many of them and they don't do a lot of dredging well that kind of leaves us in a stark position now let's go to the other side which is something that you have studied because you're a debater and naturally that means you get trained to debate both sides of an issue who supports this this law today who benefits from it and and why is that the case i think the main supporters of this law are essentially the jones act support because the foreign dredge act is a mini version of the jones act so you see a lot of unions and a lot of obviously american dredging companies will support this act because they want to isolate the market which is called protectionism now what are the major arguments that they put forward to defend the foreign dredge act of 1906 i think the major argument is that if we allow foreign companies to come into the united states then they're going to just completely take over our market they're going to use cheaper labor so the americans can't compete and then we would be reliant on the foreign companies to do all of our dredging so if they for some reason decide they want they don't want to dredge here anymore then now we're completely out of dredgers now how would you respond to that argument i think there's a couple responses i think the first response is that there can be a gray area you don't have to isolate your entire market from everybody else in the world and then if you lift up on those regulations then they're going to completely take over our market there's there's a big spectrum of how we can allow foreign companies into the united states you can limit how many bids they have you can make it cheaper for the americans by allowing them to buy foreign equipment like the europeans which would make it a lot cheaper for them to operate you could require us labor could phase this in but i think the best argument is that when people are forced to compete they become better that's the whole point of debate is that we're competing against each other we're debating against each other so that the best debater will win so if you have more companies not only does that lower the price for the us army corps engineers for these contracts but it also forces all of these companies you have a better service to buy better equipment and to do it at a lower price when people are forced to compete everybody gets better do some people argue that we need the reliability of american companies companies that are located here in our country in order to be assured that our waterways will be functioning up to par the problem with that argument is that they aren't reliable right now like i said earlier we had 2000 barges stopped at the mississippi river in november this is a very recent issue we're losing millions of dollars we're increasing the prices of our of our goods so it would be nice to have a reliable american market but until the americans have to compete against other companies they won't be reliable so what that means is that we are relying on an unreliable and a poor industry what do you say to those who argue that we need to protect american jobs that if we gave our dredging industry a way to foreign sources americans would lose jobs well i think it's very likely that these companies would actually hire american jobs a good example of this is a lot of these dredging companies in europe are starting to build offshore wind farms and they're using unionized american labor to do so because they don't want to make enemies with the unions the unions are very powerful and they're actually cooperating with american unions to do their offshore wind farm jobs so i would imagine that they would do the exact same thing with their dredging jobs as well you know that international tensions are at an all-time high now in in the 21st century we've got the conflicts taking place between china and the united states becoming manifest in economic battles as well what do you say to those who argue that we need the foreign dredge act in order to protect our country from foreign influences we need it for the purpose of national defense and that's a very significant argument for the jones act as well what are you what is your response well that was the original purpose of the foreign dredge act because our dredging equipment was not that sophisticated in 1906 and we wanted to have as many american-made ships as possible just in case we had to utilize them in war the thing is is that in 2023 these dredging ships are just for dredging that is the only purpose they serve they they serve no purpose for national security unless you are dredging a military base or naval base so other than just a few small examples i would say that this is a commercial issue not necessarily a national security issue brad do you think that the united states will seriously consider getting rid of the foreign dredge act is that a politically feasible approach for anyone to take in congress i think it's politically feasible i think it is a winnable argument now senator mike lee has proposed about four bills talking about the foreign dredge act and i think that as long as these lobbyists hold a lot of their influence monetary and political influence over these politicians and the american people don't know about the jones act or they don't know about the foreign dredge act then it's never going to be addressed the first thing when you're trying to solve any political issue is to actually let the public know about it because if the public cares about this issue which they should because it's increasing the cost of almost every good in their home then we can actually lead to real change well as with the jones act real change may be desirable but in the real world it may not be quite so achievable or certainly not quickly have you considered modification of the law in some way as a first step forward in trying to appeal to congress i see by shaking your head you are and i look at our clock and realize our time is running out so let me ask you to do something quickly i started to surprise you like this give me an elevator speech if you would you're in an elevator with a member of congress you've got 30 seconds to a minute in which to get to your destination you've got the attention of this powerful member of congress sell him or her on bringing about change to the foreign dredge act of 1906 because of the foreign dredge act we're losing billions of dollars and it's affecting every america the purpose of the foreign dredge act is to protect national security so what we can do as a compromise is waiver the foreign dredge act and allow european or nato allies to dredge in united states commercial ports we can still keep our military ports safe we can still protect national security but we can save billions of dollars and employ more americans by allowing more competition in the market america is built off of the free market and if we allow the free market to thrive it can solve our issues well done brad thank you for informing me and our audience today about the foreign dredge act of 1906 but more than that inspiring us you've accomplished a lot already in your high school career congratulations on your national debate championship and i want to wish you well as you launch your college career and head off perhaps to law school or whichever direction you plan to go good job thanks for being with us today all right thank you i appreciate it well that was brad tomasovic from montana we're going to keep our eye on him as he moves forward in his career it's very encouraging to see young people like that well informed about issues that affect our nation and i want to thank you for supporting that and your viewership of the program today hawaii together on think tech hawaii i'm kelly akina president of the grassroot institute and i wish you well until next time aloha thank you so much for watching think tech hawaii if you like what we do please click the like and subscribe button on youtube you can also follow us on facebook instagram and linkedin check out our website think tech hawaii.com mahalo