Posted on 08/10/2017 11:42:34 AM PDT by Oatka
Another effort is under way in the Senate to repeal the Jones Act sponsored by Senator John McCain of Arizona. The law, originally enacted 97 years ago by Senator Wesley L. Jones of Washington State under section 27 of the Merchant Marine Act of 1920, focused on:
Increased growth of American marine commerce Improving remedies to American mariners if injured on the job Providing for national security interests
Today the Jones Act refers to federal statute 46 USC section 883 which controls coastwise trade within the United States. Essentially the Act prohibits foreign flagged vessels from engaging in coastwise trade within the United States. In the context of the modern Jones Act, industry and government stress the following three components:
Should the Jones Act be repealed? Much has been written pro and con on the subject. Senator McCain’s position is that it costs American tax payers millions each year, and that it is an antiquated and protectionist Act. It’s presented as undermining the American ideal of a free market and unfairly impacting American ship owners by forcing them to build American and hire American. From the American tax payers point of view it does cost millions per year. From the American ship owners point of view millions could be saved by building ships in China and hiring all Chinese crews to operate those ships. Critics also claim the Jones Act encourages the extension of a vessel’s life due to the high cost of domestic shipbuilding and repair. It may well be true in the container business and if so needs to be rectified. The U.S. flag tanker fleet, however, has some of the most modern ships in the world. The issue at hand remains, so let’s take a look.
Economic Security
As to free market ideals, Adam Smith, Scottish Author of Wealth of Nations, founder and great defender of the ‘free market’ economic principle contrarily believed in the concept of protecting a nation’s maritime interests. This goes against mistaken assumptions that he was a pure free market advocate.
In Wealth of Nations Smith states the following, ’There seem to be two cases, in which it will generally be advantageous to lay some burden upon foreign, for the encouragement of domestic industry…’ and ‘The act of navigation, therefore, very properly endeavors to give the sailors and shipping of Great Britain the monopoly of the trade of their own country, in some cases by absolute prohibitions, and in others, by heavy burdens upon the shipping of foreign countries.’
According to a recent Price Waterhouse study:
The American Maritime industry sustains nearly 500,000 U.S. jobs The U.S. flag brown and blue water commercial fleet comprises 40,000+ vessels of all types Hundreds of billions in annual economic output is produced by the U.S. domestic maritime industry For every direct maritime job, 4-5 indirect jobs are created elsewhere More than 100 million passengers are transported annually on U.S. flag ferries 29 billion in annual wages is spent by maritime employees throughout the U.S.
National and Homeland Security
The National and Homeland security component is critical. The U.S. Coast Guard and Department of Homeland Security rely heavily on mariners to be the eyes and ears on our waterways. The possibility of maritime terrorism is real. Keeping American mariners manning U.S. flag ships, tugs/barges, supply, anchor handling vessels and American pilots on arriving and departing ships in our ports should not be discounted. Just one example, American pilots work closely with regional U.S. Coast Guard units around the country regarding safety and compliance of all foreign vessels calling in U.S. waters.
’The Jones Act fleet is subject to owners and operators adhering to U.S. Laws, including tax, immigration and labor laws. The Jones Act fleet contributes militarily useful ships and experienced crews to national defense sealift needs. U.S. merchant mariners are available to crew vessels that move goods for the military, supplying US military forces around the world with the goods and munitions needed to sustain their missions. This has been demonstrated in recent memory during Operations Enduring Freedom and Iraqi Freedom when US Flag commercial vessels transported 63% of all military cargoes.’ The Jones Act helps to sustain national defense through the domestic oceangoing shipbuilding industry. Domestic shipyards build and repair commercial and naval vessels capable of meeting United States Navy needs.’ *American Maritime Partnerships
A 2013 MARAD study backs up the above statements from American Maritime Partnerships
Even with the Jones Act intact, there is serious debate among experts that the United States merchant marine and shipbuilding complex would struggle in the event of a serious international conflict. Eliminating it would leave this country completely at the mercy of other nations stepping up to fill in the shipping gap.
International Cabotage law
New Zealand, the United Kingdom (U.K.), Argentina and Australia have or are embarking on the removal of ‘Jones Act’ type laws. Australia has recently repealed its laws and is now committed to a future without them. The result? In just a few years this Island nation totally dependent on maritime trade has only 15 nationally flagged vessels left in the entirety of its blue water commercial maritime fleet. It doesn’t end there, however, the Australian ship building and repair industry will be crippled in just a few short years. Where will future Harbor Masters, ship’s agents, tug captains, etc. come from? The Australian legislature and government have embarked on a path of no return as it will be nigh or impossible to come back from the place they have chosen to go. Would any nation like to think they are entirely dependent of the good will of other nations to secure and ensure homeland security?
The U.K., historically one of the world’s great maritime nations, repealed maritime cabotage laws. One consequence has been the introduction of foreign deckhands by some of the major U.K. ferry companies. Those deckhands make less than British national minimum hourly wage on ‘ships of shame’, harking back to the days when mariners were little more than indentured servants.
New Zealand long ago chose a complete free market maritime model, the results? Maritime Union of New Zealand’s General Secretary, Joe Fleetwood, stated in 2012 ’The approach for the last generation has been for Government to abdicate its responsibility to ensure standards in the maritime industry.’ There is general agreement that deregulation and ‘Flag of Convenience (FOC)’ shipping (removing cabotage laws) has put New Zealand’s environment at greater risk, there has been a rush to the bottom. In an increasingly fierce competitive shipping market, each new FOC is forced to promote itself by lowering standards on the ships under control of the FOC. This puts the environment at much greater risk of a shipping disaster.
Taking Action
In conclusion, it would seem a strong Jones Act is still an essential cornerstone of our nation’s economic, national and homeland security. The question to be answered by the United States Congress is straightforward. Is repealing the Jones Act good legislation? If repealed, real pressure as well as long term negative consequences would likely be placed on national security, the domestic economy and the environment, rippling back to the doors of Congress.
We would like to thank Capt. Michael Kelly (Marine Pilot at Port Authority of New South Wales) and Caitlin Sause (V.P. of Governmental Affairs at Sause Brothers Ocean Towing, Inc) for invaluable input to this article.
Id say yes sucks to go to ensenada we dont even get of the ship
If McKeating is for it, it must be anti-American.
I deal with this sort of thing periodically in my line of work. I’ve long advocated a revision of the Jones Act that leaves most of its provisions intact but removes the prohibition against foreign-flagged vessels for domestic shipping routes to Hawaii and Alaska.
Agree.
If McPain is for it, I’m against it.
It’s a shame McKeating will assume room temperature soon.
That’s about it. As far as security and domestic benefit, most of the act is fine.
Then why leave the rest?
You should. They have some good fish tacos.
EVERY industry will claim that if they face free and open competition - national security will be harmed, enemies will be strengthened, the environment will be damaged, jobs will be lost, children will die.
We heard it back in the Carter days about airline deregulation. We were told the same when Obama bailed out General Motors. The Left screamed the same for years about health insurance, and then simply combined the power of government together with bought-and-paid-for cronies in the insurance industry and gave us Obamacare to rape the American middle class.
These numbers might be a few years old, but they tell the story nonetheless ... It costs about $800 to ship a 40-foot container from Los Angeles to Shanghai, and about $8,000 to ship the same container from LA to Honolulu. The ship carrying the container to Shanghai sails past Hawaii. This seems ludicrous on its face.
The primary focus of the Jones Act should be on truly domestic shipping -- and by that I mean shipping between U.S. ports on U.S. waterways (barge shipping up on the Mississsipi River system and within U.S. harbors, for example). This type of shipping would be most applicable in terms of U.S. security interests and the protection of our domestic shipping industry.
You're actually making the case in favor of the Jones Act and the protection of the U.S. shipping industry.
Foreign airlines are permitted to operate international routes to and from the U.S., but they are NOT permitted to operate between domestic U.S. destinations. This is exactly how the shipping industry operates under the Jones Act, and as far as I know it's the same for Federal trucking industry regulations.
Astonishingly one of the relatively few things the federal government does that is lawful ... so of course they want to ditch it.
Correct. Here in Hawaii the Jones Act functions as an outdated engine of our high cost of living, needlessly so.
Been there done that the fish tacos aint that good
I used to deal with that sort of thing everyday in my line of work because that was my line of work.
One of the down falls of Great Britain was started by them giving up most of their merchant marine to foreigners.
This is analogous of sending all our manufacturing to China.
How did that turn out.
Getting rid of the Jones Act or even part of it is a globalist view.
Getting rid of the Jones Act or even part of it is a globalist view.
No, it's not. In fact, as far as Hawaii and Alaska are concerned the Jones Act probably makes them more reliant on foreign-sourced materials and products -- simply because the cost of domestic shipping is prohibitively high. See the example I gave earlier in this thread.
What domestic shipping industry? Allow foreign lines to move cargo between the continental U.S. and Alaska, Hawaii, Puerto Rico, Guam, and you remove the need for a domestic shipping industry. And since foreign lines can move between U.S. ports on the coast then why not up and down rivers and lakes? If cost is your only consideration?
And why we're at it, why not allow foreign airlines to fly passengers between U.S. cities? Let Air France do the New York to Dulles run, Japan Air fly LA to Honolulu, Aer Lingus fly Boston to Chicago, Aeromexico fly Dallas to Miami, and so forth. Imagine the savings that could result from that kind of competition?
Of course the outcome of all that is you would lose just about your entire U.S. merchant marine, your domestic ship building industry, and probably a couple of airlines but hey, you're saving money.
The purpose is to give the US maritime labor unions, (and the Mafia, and the Democrat Party,) a stranglehold over trade and shipping.
Oh, I don't know ... maybe the one that operates on some of the busiest shipping lanes on the planet?
In a typical year, the volume of freight traffic on the U.S. domestic waterway system is something like two and a half times the volume of cargo that moves through the Panama Canal.
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