There are moves afoot in the United States to repeal the Jones Act. The Merchant Marine Act of 1920, better known as the Jones Act, is a federal statute that provides for the promotion and maintenance of the American merchant marine. Among other purposes, the law regulates maritime commerce in U.S. waters and between U.S. ports. Section 27 of the Jones Act requires that all goods transported by water between U.S. ports be carried on U.S. flagged ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. The Act was introduced by Senator Wesley Jones.
In the December 2013 edition I put forward reasons to keep the act, but there is now a strong argument to repeal it that is difficult to disagree with.
Senator John McCain said a 95 year old law that requires ships servicing coastal businesses to be built and mostly staffed by U.S. crews will be repealed sooner or later if lawmakers keep fighting the trade restriction.
Oil refiners, and many manufacturers and state governments oppose the Jones Act, saying the requirement increases costs by blocking shipping by cheaper foreign built and foreign-flagged vessels.
Much of the added cost stems from the higher expense of purchasing and operating U.S. ships relative to foreign vessels.
For instance, the U.S. container line Matson recently purchased two vessels for a domestic shipping route for $209 million each, as required by the Jones Act, even though foreign ships of the same size would cost closer to $40 million each.
According to the U.S. Department of Homeland Security, “The coastwise laws are highly protectionist provisions that are intended to create a ‘coastwise monopoly’ in order to protect and develop the American merchant marine, shipbuilding, etc.”
U.S. commercial shipbuilding accounts for just 21.7 percent of total shipbuilding. Most of the industry produces vessels for the military and will continue to do so with or without the Jones Act. The notion that U.S. defense needs require a ban on the use of foreign-built ships for commercial purposes seems bizarre.
Americans in most states would benefit from the freedom to ship goods on the best built, most affordable vessels, wherever they are made.
The Jones Act drives up the price of gas, hinders U.S. infrastructure improvements, inflicts high costs on people in Hawaii and Puerto Rico, and makes it difficult to transship goods between U.S. ports. Senator McCain’s Jones Act amendment would promote competition, strengthen the economy, and benefit American consumers.
It is time that this outdated act is repealed and the U.S. ethic of free trade is allowed to flourish.