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Monday, May 15, 2017
Jones Act: An out of date anchor on the American Economy
By Michael Hansen @ 12:01 AM :: 978 Views :: Jones Act

The Jones Act is an anchor on the U.S. economy

by Michael Hansen, Hawaii Shippers Council, May 12, 2017

The Washington Examiner published on May 12, 2017, an opinion-editorial, “The Jones Act: An out of date anchor on the American economy,” describing the adverse effects of Jones Act cabotage on the national economy and its especially pernicious effects on the noncontiguous jurisdictions of Alaska, Hawaii and Puerto Rico.

The author is Martin Rodriguez a policy analyst with the Americans for Prosperity, a conservative political advocacy group based in Arlington, Virginia.

Key excerpts:

At the time of its passage, proponents argued it was in our national interest to foster a strong domestic maritime industry, which if necessary, could be mobilized in time of war or national emergency. But in recent years, this antiquated law has done little more than stifle competition and raise prices.

As a result, rather than contributing to America's national security, the Jones Act has become a textbook example of a "concentrated benefits and diffuse cost" policy – lining the pockets of a handful of large shipping companies at the expense of American consumers.

While the act harms all Americans, some consumers are more acutely affected — such as non-contiguous states like Alaska and Hawaii and American territories like Puerto Rico.

As for Puerto Rico, the act is a one-two punch, putting the island at a competitive disadvantage with respect to producers from Mexico and other Caribbean islands, while curtailing its geographical competitive advantage as a would-be hub for transshipment operations. Additionally, the law significantly raises the cost of living for the island's beleaguered residents, still reeling from the financial crisis.

A report from the Federal Reserve Bank of New York estimated that the cost of shipping a 20-foot container from the East Coast of the U.S. to Puerto Rico was $3,063, whereas the same shipment cost just $1,504 to nearby Santo Domingo (Dominican Republic) and $1,687 to Kingston (Jamaica). That just doesn't make sense.

With each passing day that Congress refuses to repeal or modernize the Jones Act, American consumers will continue subsidizing a handful of uncompetitive maritime unions and U.S. shipping magnates in a high-seas example of cronyism.

If they truly want to help Puerto Rico, politicians in Washington can take an immediate and easy step that would help right the economic ship in Puerto Rico — sinking this outdated law.

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