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Tuesday, July 14, 2020
The scuttling of Trump’s modest Jones Act reform
By Michael Hansen @ 2:54 AM :: 698 Views :: Jones Act

The scuttling of Trump’s modest Jones Act reform

by Michael Hansen, Hawaii Shippers Council, July 13, 2020

The Washington Examiner published a news article on July 12, 2020, “Trump backed off shipping reform under political pressure, former advisers claim,” which describes how President Trump’s modest Jones Act reform proposal circa mid-2019 was scuttled by opposition from the domestic maritime industry.

The article is based upon an upcoming book by Casey Mulligan, a University of Chicago professor, who was the chief economist for the White House Council of Economic Advisers from September 6, 2018 to August 2019, when the events reportedly occurred.

Key excerpts from the Washington Examiner:

Even as he moved to deregulate other industries, Trump backed off from overhauling the Jones Act. Officials who were on the losing side of the fight argue that Trump gave in to pressure from congressional Republicans aligned with industry, who they say deployed arguments about national security that the president's national security advisers rejected.

Mulligan and other senior administration officials say the president initially endorsed reforms of the Jones Act in internal deliberations.

In a forthcoming memoir of his time in the White House, “You’re Hired!: Untold Successes and Failures of a Populist President,” Mulligan writes that Trump "hates" the Jones Act, describing it as the "type of harmful regulation that he has succeeded in ending in health insurance, telecommunications, farming, and many other industries." Mulligan also claims Trump dislikes the law on grounds of national interest as well as on free market principles. He says the president is dismayed that the American shipping industry lags far behind that of China and other countries and is irked that the U.S. doesn't have ships to transport liquefied natural gas.

In a spring 2019 Oval Office meeting that included senior officials, trade adviser Peter Navarro, Transportation Secretary Elaine Chao, economic adviser Larry Kudlow, and senior members of his National Security Council, Trump endorsed the idea of easing Jones Act requirements, Mulligan's book claims.

Trump favored granting a narrow waiver for shipments of liquefied natural gas to Massachusetts and Puerto Rico, where energy costs are high and rely on foreign shippers, such as Russian companies, instead of U.S. ones because of the high costs imposed by the Jones Act.

A week later in May, however, Trump turned against granting a waiver. Mulligan and other free-marketers blame the shipping industry's influence for ending administration efforts to lessen the regulatory burden.

"They convinced him that they would make [his] life so uncomfortable if he even did a waiver for the Jones Act, let alone repealed it,” Mulligan told the Washington Examiner.

Others who are no longer in the administration say, however, that the National Security Council had no major concerns about granting a waiver.

Trump’s former senior director for strategy at the National Security Council, Robert Spalding, told the Washington Examiner that the Jones Act has contributed to the demise of the U.S. shipping industry and the U.S. naval presence by driving up costs and restricting the supply of ships. He noted that America's biggest competitor, China, has more than 10,000 commercial ships, while the U.S. has only 98 that meet Jones Act criteria.

“There is a consensus at the NSC that the Jones Act has not enabled the success of the U.S. maritime industry in a manner that is promoting U.S. national interests,” said Spalding, who served in the NSC in 2018.

A senior official who was with the NSC at the time told the Washington Examiner, “There are no red flags national-security-wise that I’m aware of.” Trump wanted only a narrow waiver for natural gas shipments, not a full repeal. If Trump's National Economic Council was convinced of the economic benefits of removing the law, the NSC would not stand in its way, the official added.

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