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Thursday, July 09, 2015
Europe, Manhattan, Puerto Rico all Demand Jones Act Reform
By Michael Hansen @ 11:33 PM :: 3064 Views :: Jones Act

European Parliament Demands Jones Act Reform

by Michael Hansen, Hawaii Shippers Council, July 9, 2015 

Member of the European Parliament (MEP) Marietje Schaake from the Netherlands posted to her official website the full text of the “Resolution on the negotiations for the Transatlantic Trade and Investment Partnership (TTIP).” The Resolution was passed on July 8th by the European Parliament with 436 yes votes to 241 no votes and provides nonbinding “sense of the Parliament” guidance to the European Commission and its Commissioner for Trade Cecilia Malmstrom in their negotiations with the United States Trade Representative (USTR) Michael Froman.

The Resolution addresses European access to U.S. maritime cabotage markets in Section 2 Recommendations (b) market access (vi) maritime and air transport stating in part “the negotiations should meaningfully address and remove the current US restrictions on maritime and air transport services owned by European businesses as a result of US legislation such as the Jones Act, Foreign Dredging Act.”

Passage of the Resolution with the cabotage paragraph should now set the stage for meaningful negotiations between the EU and the US regarding the restrictions on European access to the US maritime cabotage markets.

MEP Schaake is a member of the Dutch Political Party Democrats 66 (Politieke Partij Democraten 66) which is a center-left party formed in 1966. In the European Parliament MEP Schaake is a member of the pro-European Union transnational political alliance known as Alliance of Liberals and Democrats for Europe (ADLE). The ADLE leader in the European Parliament is Guy Verhofstadt a former Dutch Prime Minister. In the current 8th European Parliament ADLE has 4th largest group of MEPs with 70 out of a total of 751 seats.

Key excerpt quote:

(vi) the negotiations should meaningfully address and remove the current US restrictions on maritime and air transport services owned by European businesses as a result of US legislation such as the Jones Act, Foreign Dredging Act, the Federal Aviation Act and the US Air Cabotage law and in relation to capital restrictions on foreign ownership of airlines, which seriously hinders market access for EU companies as well as innovation in the US itself....

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Puerto Rico Needs Jones Act Reform, not a Bailout

by Michael Hansen, Hawaii Shippers Council, July 9, 2015 

Vicente Feliciano, an economist and president of Advantage Business Consulting in San Juan, Puerto Rico, wrote an op-ed published on July 9th in The Hill stating the need for Jones Act relief for Puerto Rico to reverse the Commonwealth’s downward economic spiral .

The Hill is a top non-partisan American political website published in Washington, D.C. since 1994 focusing on the intersection of politics, policy, business and international relations. According to its publishers, The Hill is read by the White House and more lawmakers than any other site.

Puerto Rico is not requesting, and should not get, a bailout. What Puerto Rico needs is fair treatment from the federal government as one component of a recovery package. On the island, fiscal adjustments are leading to economic contraction, emigration, reduction in tax revenues and the need for further fiscal adjustments. The federal government is contributing to this downward spiral because of discriminatory policies in several areas such as the bankruptcy law, the Jones Act and Medicare regulations.

The federal government can meaningfully support a Puerto Rico turnaround by changing discriminatory public policies that hamper economic growth. Three examples are the bankruptcy law, Medicare rules and the Jones Act.

The Jones Act, from 1920, forces maritime commerce between U.S. ports to be with U.S. crew and U.S.-built ships. This shamelessly protectionist law increases the cost of bringing production inputs and consumer goods to Puerto Rico while acting as a tax on exports. The law has little impact on a state such as Tennessee, while the territory of the U.S. Virgin Islands is excluded from the law. It is a burden on producing and living in Puerto Rico.

Bloomberg: How Puerto Rico's Debt Levels Compare with US States

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Manhattan Institute Calls for Jones Act Reform

by Michael Hansen, Hawaii Shippers Council, July 9, 2015 

Senior Fellow Oren Cass of the conservative Manhattan Institute for Policy Research authored a paper (Issue Brief No. 35) entitled “Step on the gas: How to extend America’s energy advantage” which was published for July 2015. The paper endorses the dramatically increased production of oil and gas in the U.S. and advocates to extend and amplify the current phenomena through 11 reforms including repeal of the Jones Act, which the author states hampers domestic transportation especially of crude oil and petroleum products.

Key quote:

U.S. energy policy, still based on an assumption of resource scarcity, is ill equipped to manage the new abundance. Indeed, America’s private sector has driven an oil and gas revolution in the face of, at best, ambivalent federal policy. This paper suggests 11 reforms to help craft a smarter U.S. energy policy, one that will amplify the current boom and extend it far into the future:

1. Amplify the Boom (Reforms 1–5). Enact regulatory reforms to increase the efficiency and effectiveness of U.S. energy markets.

2. Extend the Boom (Reforms 6–11). Open federal land and waters to energy development to replicate the extraordinary growth of tight oil.

The Jones Act, which requires products shipped between U.S. ports to travel on American-built and -crewed vessels, represents another major hurdle.

This nakedly protectionist law triples shipping costs—one can more cheaply send oil from the Gulf Coast to the East Coast, via Nigeria (<$2/bbl to Nigeria + <$2/bbl back across the Atlantic) than directly ($5–$6/bbl).46 Supporters argue that the Jones Act is necessary to preserve a U.S. merchant marine in the event of war. Yet with little demand for shipment at such uncompetitive prices, the result has been an 80 percent decline in the number of U.S. tankers during the past 30 years.47 Little would be lost and much gained by allowing international vessels to efficiently move U.S. fuels.

Reform 2. Repeal the Jones Act entirely—or, at a minimum, as it pertains to the transport of energy products.

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