Jones Act supporters still justify the law under the guise that it is vital to U.S. national security. To the contrary, however, the law has led to a maritime sector that is uncompetitive, diminished in size, and increasingly unprepared to play a helpful role in times of war or national emergency. Since the 2003 Iraq War, the Jones Act fleet has declined from 151 ships to 99, and a senior Pentagon official was forced to admit this year that the United States may “need to rethink policies of the past in order to face an increasingly competitive future.” Moreover, in recent natural disasters, such as Hurricane Maria, rather than serving as an asset, the Jones Act functioned as an impediment by disqualifying ships for providing relief.
High economic costs resulting from Jones Act restrictions are robust, and trickle down through numerous industries. While the law’s most direct consequence is to raise transportation costs, which are ultimately reflected in higher retail prices, it also generates enormous collateral damage through excessive wear on the country’s infrastructure, time wasted in traffic congestion, and the accumulated health and environmental toll caused by unnecessary carbon emissions and hazardous material spills from trucks and trains.
Despite these considerable costs, repealing the Jones Act will not be easy. After nearly 100 years, incumbent interests, regulators, and politicians have become used to the privileges of a system that benefits a concentrated few. If Congress is unable to fully repeal the law, the authors offer three important reforms that would help lift the burden of the Jones Act on the U.S. economy. First, the federal government should grant limited cabotage rights to non-Jones Act compliant vessels. Second, permanent exemptions should be granted for Alaska, Hawaii, Puerto Rico, and Guam, which are located many miles from the U.S. mainland. And lastly, Congress should eliminate the burdensome U.S. build requirement.
If anyone wants more evidence of how protectionism hurts the poor and most vulnerable among us, Puerto Rico now offers a prime example.
The island was devastated by Hurricane Maria. Tens of thousands have been left homeless. Basic goods and services, such as food, water, and fuel, are in short supply. Electricity is out for virtually the entire island, and may not be restored in some places for months. Nearly 85 percent of the island has no cell-phone coverage. Much of the country’s already-shaky economic base, including tourism and agriculture, has been all but wiped out.
Yet despite the unfolding humanitarian crisis, the Trump administration has so far refused to waive the law’s restrictions.
Yet vital aid to the island is being slowed by the Jones Act, a 100-year-old example of protectionism and corporate welfare. The Jones Act requires that all cargo shipped to Puerto Rico is carried on ships built entirely in the United States, owned by a U.S. citizen, flying a U.S. flag, and staffed by a majority-American crew. Relatively few ships meet those requirements. And at a time when even a brief delay in getting assistance to suffering islanders could cost lives, the Jones Act is an unneeded impediment to that aid.
Liberty, of course! As you enjoy delicious chocolate products in honor of National Chocolate Day, think about that special ingredient that makes your candy bar just so sweet—sugar!
For decades, political support for the U.S. sugar program has been underpinned by the general sense that the costs of producing sugar in this country are quite high relative to prices prevailing in world markets. Thus, the elimination of government support would lead to the certain death of the U.S. sugar industry. However, recent analysis indicates that this view simply is not correct. Rather, the U.S. industry would continue to produce sugar economically in the absence of government support.
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