Why Make it Harder for Puerto Rico to Rebuild?

COMMENTARY International Economies

Why Make it Harder for Puerto Rico to Rebuild?

Oct 12th, 2017 2 min read
COMMENTARY BY
Edwin J. Feulner, Ph.D.

President

Edwin J. Feulner is the founder and president of The Heritage Foundation.
Damage left by a flooded river is seen from the air during recovery efforts following Hurricane Maria near Utuado, Puerto Rico October 10, 2017. LUCAS JACKSON/REUTERS/Newscom

Key Takeaways

A week after Hurricane Maria, 44 percent of the population still lacked access to drinking water.

Instead of innovating, the U.S. shipbuilding industry hid behind the Jones Act and gave up the global ocean-going trade to Japan, Korea and China.

Puerto Rico's road to economic renaissance will be long. Without policy reforms, that road will never be cleared.

To say that our fellow citizens in Puerto Rico and the Virgin Islands are suffering is a vast understatement. Hurricanes Irma and Maria have devastated the island territories.

Nearly the entire electrical grid was wiped out. In Puerto Rico, over 80 percent of crops were destroyed. A week after Hurricane Maria, 44 percent of the population still lacked access to drinking water.

First responders wearing U.S. uniforms — mostly military — have been working with local emergency personnel to clear roads, restore power to hospitals and deliver clean water.

As we support the relief effort and pray for those living day to day, policymakers in Washington should begin to look forward to the islands' rebuilding and renewal.

With encouragement from Heritage Foundation experts and a bipartisan coalition, President Trump directed the Department of Homeland Security to issue a 10-day waiver of the commerce-killing Jones Act. But this is only a start.

The Jones Act, a 1920 measure that mandates all shipping between U.S. ports be done by American-made and manned vessels, was intended to vitalize the U.S. maritime industry. Yet it's had the opposite effect.

Instead of innovating, the U.S. shipbuilding industry hid behind the Jones Act and gave up the global ocean-going trade to Japan, Korea and China.

The result is that U.S. coastal trade is served by an aging, slow fleet of barges and tugboats. No place is hurt so badly as Puerto Rico, which faces shipping costs twice as high as nearby foreign islands not covered by the Jones Act.

After Hurricane Maria, the Jones Act created an extra burden, preventing mainland suppliers of rebuilding materials from participating in the rebuilding effort.

The aid chokepoint for the first weeks after the storm was on land; not enough trucks were available to move goods inland. But once roads are cleared and fuel is restored, the cost of shipping will again be a major barrier to Puerto Rico's commerce with the mainland U.S.

Trump would be wise to suspend the Jones Act for a longer period.

As Puerto Rico begins to rebuild its shattered infrastructure, demand for materials and machinery will soar. As long as the Jones Act is in place, though, Puerto Rico's access to American suppliers will be limited, meaning less income for stateside workers and businesses and higher costs for Puerto Ricans.

Trump should waive the Jones Act for as long as Puerto Rico is receiving post-hurricane aid. An artificial barrier should not prevent this money from being spent on American goods.

In our system of government, however, the buck stops with Congress. A few in the Senate recognize that is unreasonable to expect Puerto Rico's economy to thrive while it faces a serious trade barrier with the U.S. mainland.

Sens. John McCain and Mike Lee introduced legislation that would permanently exempt Puerto Rico from the Jones Act, like the U.S. Virgin Islands. Puerto Rico would then be able to rebuild its power plants to burn natural gas from Texas and Pennsylvania, rather than buying oil from Venezuela.

Puerto Rico's road to economic renaissance will be long. Without policy reforms, that road will never be cleared. Trump and Congress can take the first steps by waiving and then repealing the Jones Act for Puerto Rico.

This piece originally appeared in Pittsburgh Tribune-Review