Heritage Action Supports Jones Act Repeal Efforts
In the wake of Hurricane Maria’s damage to Puerto Rico, the Trump administration waived the restrictions the Merchant Marine Act of 1920, commonly known as the Jones Act, imposes on shipping to the island. The Jones Act is an outdated WWI protectionist law that regulates domestic U.S. shipping practices by mandating any good shipped by water between two points in the U.S. must be transported on a U.S. built, U.S.-flagged, and at least 75 percent U.S.-crewed vessel.
In effect, the Jones Act drives up shipping costs for American consumers by creating a government monopoly for U.S. only shipping commerce. According to a Heritage Foundation report, Sink the Jones Act: Restoring America’s Competitive Advantage in Maritime-Related Industries:
“Foreign companies carry more than 80 percent of traffic in American international liner commerce. The Jones Act keeps otherwise uncompetitive elements of the American shipping industry afloat, but this legislative gift to the shipping industry carries a stiff price. The Jones Act harms the U.S. economy by driving up shipping costs. It increases energy costs, stifles competition, and hampers innovation that is essential to the long-term competitiveness of the U.S. shipping industry, and the national security argument for the Jones Act is weak at best.”
For the island of Puerto Rico, the Jones Act has a significantly worse effect given its dependence on the shipping industry to transport goods and services. According to the Federal Reserve Bank of New York, the Jones Act is especially harmful to Puerto Rico:
“It costs an estimated $3,063 to ship a twenty-foot container of household and commercial goods from the East Coast of the United States to Puerto Rico; the same shipment costs $1,504 to nearby Santo Domingo (Dominican Republic) and $1,687 to Kingston (Jamaica)—destinations that are not subject to Jones Act restrictions…Shipping goods to and from Puerto Rico costs considerably more than shipping to and from the Island’s regional peers, imposing an important cost on Puerto Rican businesses and dampening the economy’s competitiveness. Much of this relatively high cost of shipping is widely attributed to the Jones Act.”
Thankfully, legislative efforts to repeal the Jones Act for the island of Puerto Rico have gained momentum. Sen. John McCain introduced a bill to exempt Puerto Rico from the coastwise laws of the United States (commonly known as the “Jones Act”) (S. 1894) that would repeal the Jones Act for the island of Puerto Rico. In the House, Rep. Gary Palmer introduced the Puerto Rico Humanitarian Relief Act (H.R. 3966) that would exempt Puerto Rico from the Jones Act for five years.
There are three American territories currently exempt from the Jones Act, including the U.S. Virgin Islands, which was exempted in 1992. Ideally, Congress should pass legislation permanently repealing the Jones Act for the entire country, but the legislative efforts by Sen. McCain and Rep. Palmer represent a good first step toward ending this damaging and outdated law. At a minimum, Congress should include a provision to repeal the Jones Act on upcoming disaster relief legislation.
Heritage Action supports Jones Act repeal legislation, encourages Representatives and Senators to support it, and reserves the right to key vote in the future.