Monday, January 22, 2018

Row Over Jones Act Cargo Vessels Rages as Ever Despite the Tragedy of Puerto Rico

Parole Period Over the Island Reverts to Caribbean Second Class Citizen
Shipping News Feature
US – PUERTO RICO – As with other contentious issues such as gun control and abortion, the 1920 Merchant Marine Act aka the Jones Act, as ever has bitter rivals amongst its supporters and detractors. Last week saw the home team batting as the House Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation discussed the 'State of the US Flag Maritime Industry' during which congressional and maritime leaders stressed what they consider the essential application of regulations that ensure domestic transport by water is only carried on American built freight vessels, crewed by US citizens.

Whilst opponents maintain the Act stifles competition, grossly increases costs and strangles freedom of trade, the politicians were out in force to commend the restrictions of the Act, whilst some insisted that employment and commerce were not the primary reason for maintaining the status quo, emphasising the view that the rules were at the very heart of national security.

As members from both sides of the US political debate spoke in support the American Maritime Partnership (AMP), an undeniably vested interest group, claimed the debate was ‘bipartisan’, choosing to ignore any contrary arguments in favour of scrapping the century old policy which was introduced after World War I in an effort to eliminate any future threat to the nation from U boats and the like.

Last September, as with his predecessors Bush and Obama in previous storms, President Trump suspended the Act for cargoes bound for Puerto Rico for 10 days with an option to extend the waiver (which was soon cancelled), following in the wake of Hurricane Maria, considered by many historians as the worst storm ever in the region, and one which devastated the island. The move, and perhaps the reality of logistics in a crisis situation, was lost on Republican Congressman Garret Graves however who commented:

”When I went down to Puerto Rico with Chairman Schuster, Ranking Member DeFazio and others, it was clear to me after seeing it myself and talking to folks that the real challenge was the internal infrastructure, perhaps the distribution system, within Puerto Rico that was significantly damaged rather than actually getting the cargo there. In fact, the ports were clogged with cargo.”

As things return to normal in Puerto Rico so once again cargo island bound will continue to cost more simply by dint of the fact it either has to tranship in a US port to a Jones Act ship, or face crippling duties, not the situation in neighbouring communities with no US ties. Enforcement of the Act simply means Puerto Rican citizens, with no Congressional representation, must pay higher rates of import duty than their Caribbean neighbours.

This 2012 report found that the Jones Act had cost Puerto Rico circa $17 billion in the two decades from 1990 – 2010 and this in a region which income per capita is substantially lower than the mainland US and causing the cost of goods to average 13% above the national rate.

None of this however deters the supporters of the Act, with Homeland Security continually cited as the reason for maintaining it. Republican Congressman Duncan Hunter, Chairman of the Subcommittee on Coast Guard and Marine Transportation, commented:

“In order for us to maintain the way of life as we know it as a nation that is secure and is able to project power, be it Navy power or commercial power, the Jones Act is intrinsic to that. It is the cornerstone of all of them, the absurdity to have Korean or Chinese or, name your country, made ships take away the entire American workforce of making ships and driving them and getting something from point A to point B in America, it’s absurd and I hope that we keep educating, so that people understand how [the Jones Act] is one of the cornerstones of our entire country’s national security apparatus.”

Whilst its detractors cry protectionism and its supporters continually feel the need to justify its continuation, it would seem, as with gun control, there is little likelihood of seeing the century old Act swept from the statute book, particularly under the current administration.

Photo: The US Navy undertook many operations in Puerto Rico following Hurricane Maria