Repealing the Jones Act

CHOICE 2: The Jones Act

530 TRANSPORTATION

The Jones Act also known as the Merchant Marine Act of 1920 is a United States federal statute introduced by Wesley Jones in 1920. Initially, it was designed to strengthen national security and commerce by providing the development and maintenance of the American merchant marine fleet. Moreover, the Jones Act obliged all vessels transporting goods between American ports to be American owned, registered and crewed.

The Merchant Marine Acts original purpose was to protect the American maritime commerce,

sustain its growth and to ensure homeland security. However, this act engendered several

negative effects and many voices are underlining that the Jones Act is not tailored for

today’s global trade. Senator John McCain attempted to scuttle the Jones Act in several

times in order to eliminate certain domestic build requirements. The amendment suggested

to exempt petroleum tankers from the Jones Act cabotage requirement.

The Jones Act’s defenders argue that it provided plenty of benefits to the United States.

First, people against repealing argue that the Jones Act lead to plenty of economic activity in variety sectors of the economy. Jones Act operations require plenty of processes done in the US such as loading and unloading cargo at ports, warehousing products and building boats. Most of shipbuilders purchase components such as steel from domestic companies to build ships; wages paid to the workers are also generating economic impacts. Moreover, it assures the availability of skilled professionals and facilities in order to construct and repair ships. These advantages could also be needed in time of war or emergency.

What’s more, the Jones Act has ensured the economic and national security of the United States since it began. The defenders of the Merchant Marine Act are highlighting that this act is vital to America’s future. Thanks to the Jones Act, thousands of American are employed across the nation. Moreover, the Jones Act guarantees high quality of services from coast to coast with the American professionalism. However, one of the main argument of the Jones Act supporters is that it is vital to America’s ability to supply the military forces by providing all types of goods needed. Furthermore, the Jones Act provides extra capacity and manpower to the military in case of emergency deployment.

Partisans of the Jones Act also argue that this is also part of the American tradition worthiness of protection. Cabotage laws have enabled America to become the strongest economy of the world thanks to securing the safety of their trade waterways. Moreover, the United States cannot afford to lose the total control of the movement of oil tankers in the major rivers and water ways (such as Alaska to California, Midwest to the Gulf Coast, goods from the continent to insular states).

Furthermore, many Jones Act’s supporters emphasize that the Jones Act is critical to the American citizens’ safety and to waterways’ protection. Employing American crews, we ensure that American waterways are navigated by people willing to work hard and people

who know and will obey the law. Thereby, by having US operators and US mariners responding to national transportation needs, the American waterways remain safer.

Nevertheless, this archaic regulation laws are limiting the number of vessels available in the United States for shipping, and lead to the increase of marine transportation costs.

One of the direct consequence of maintaining the Jones act is the strong increase of the American maritime freight. The regulation engendered the increase of the average operating costs of American vessels which are three time more than their foreign flagged competitors.

In addition, the average cost of the American maritime freight is about three times higher than the worldwide prices for the same type of Vessel. Therefore, it is impossible for the American maritime carrier to meet demand because of this lack of competitiveness.

For instance, according to the Federal Reserve Bank of New York, shipping commercial goods from New York to Puerto Rico costs twice as much as shipping the same goods to Dominican Republic. Jones Act’s detractors pointed out the absurdity of such a cost difference. The charts in Figure 3 shows the gap between the average daily operation costs for US-flag vessels and for foreign-flag vessels.

Moreover, the Jones Act also engendered the strong increase of the energy costs in some Areas within the United States. According to the EIA (Energy Information Administration).

For instance, the northeast region relies on the Sunoco Philadelphia refinery to provide energy. The limited supply of vessels to transport oil to the northeast is not enough to sustain demand. As a consequence, this region has the highest cost of electricity in all of the United States. It shows how the Jones Act can also affect the American households. For example, moving crude oil from the Gulf Coast to the American northeast area costs three to four times more than transporting the same quantity of oil to eastern Canada. The initial purpose of the law was to protect domestic commerce, conversely it has resulted in augmenting the American reliance on foreign oil.

There is not the slightest doubt that the American islands have been the most negatively affected by the Jones Act. Given that the islands such as Hawaii and Puerto Rico are very distant from the contiguous states, they rely on marine transportation. Nonetheless, with the constant increase of waterways transportation costs, all the insular populations were affected. For instance, the price of electricity is almost three times higher in Puerto Rico than in the contiguous states. As a consequence, PREPA’s (Puerto Rico Electric Power Authority) debt reached $9 billion last year. Generally, all the American households are concerned: according to the Heritage Foundation, the increase of transportation costs caused by the Jones Act increased the cost of Gasoline by 15 cents per Gallon

Furthermore, the Government Accountability Office pointed out that deregulating the US domestic shipping can lead to increasing the gross domestic product by $3 to $10 billion annually.

One of the initial purposes of the Merchant Marine Act was to increase commerce. Nonetheless it has disrupted foreign and domestic trade by limiting supply and increasing costs. Opponents urged that the most affected by this law were finally the American consumers. Despite that