Deep-Six the Jones Act

COMMENTARY Trade

Deep-Six the Jones Act

Oct 13th, 2017 2 min read
COMMENTARY BY
Theodore R. Bromund, Ph.D.

Senior Research Fellow in Anglo-American Relations

Ted Bromund studies Anglo-American relations, U.S. relations with Europe and the EU, and the U.S.’s leadership role in the world.
Protectionism helps a few, but it hurts many, and there is no better illustration of that truth than the Jones Act. DoD/Sipa USA/Newscom

Key Takeaways

The act is a costly failure, and the administration’s short-term waiver was of a piece with its broader protectionism.

Nor does the Jones Act help us win wars. The U.S. military has its own fleet of cargo ships. It relies very little on Jones Act vessels.

Liberal hostility to Trump’s Jones Act policy is hypocritical.

In response to Hurricane Maria, the Trump administration waived the restrictions the Jones Act imposes on shipping to Puerto Rico. The Sept. 28 decision was the right move, though a belated one. The act is a costly failure, and the administration’s short-term waiver was of a piece with its broader protectionism.

A quick review: The Merchant Marine Act of 1920, commonly known as the Jones Act, requires goods shipped between U.S. ports to be carried by vessels built, owned and operated — with a few exceptions — by Americans. Passed after World War I, the act sought to ensure that a viable, U.S.-owned merchant marine would be available to tap in time of war.

I favor a strong American military. I agree with Adam Smith, the Scottish prophet of free trade: Defense comes before opulence. But the Jones Act does nothing for our defenses or our merchant marine, and it imposes costs on all of us — costs that hang particularly heavily on islands like Puerto Rico.

The Jones Act has not saved American-owned shipping. In 2000, according to the Congressional Research Service, only 193 vessels met the qualifications of the Jones Act. By 2016, there were a mere 91. The American share of the market is tiny, and, if anything, it’s shrinking.

And that’s common sense. It’s expensive to employ Americans, so if you run a shipping company, you’ll almost always hire elsewhere. If you’re forced — by the Jones Act — to hire in the United States, you won’t be competitive. Far from saving our merchant marine, the Jones Act helped drive it from the seas.

To the extent there are still U.S.-flagged ships on the ocean, they often transport sugar between U.S. ports. But sugar is yet another thing we subsidize. Expensive shipping plus expensive sugar means jobs for very few Americans — and higher costs and fewer jobs for everyone else.

Nor does the Jones Act help us win wars. The U.S. military has its own fleet of cargo ships. It relies very little on Jones Act vessels. Yes, the United States needs to maintain its logistical edge. The Jones Act had has a hundred years to solve this problem. It hasn’t done so, and there is no reason to believe it will.

In the immediate aftermath of the hurricane, Puerto Rico’s problem wasn’t a shortage of shipping, but the devastated infrastructure of the island as a whole. So at the start of the crisis, it’s true that the Jones Act wasn’t creating bottlenecks.

But in the months to come, Puerto Rico is going to need a lot of supplies to rebuild — and a 10-day waiver for emergency supplies doesn’t allow for that. At a minimum, the Trump administration should support Senate proposals to permanently exempt Puerto Rico from the act.

That really is a minimum, though. It would be better to junk the act completely.

The 10-day waiver for emergency supplies points out the folly of the entire act. Emergency supplies need to get there cheaply and fast. But what do businesses and consumers want when times are better? Delays and higher costs? The arguments that justify a waiver justify getting rid of the act entirely.

In its first eight months in office, the Trump administration has piled up a dismaying record of protectionism, from trashing the Pacific free trade area to attacking the North American Free Trade Agreement and, then, our free trade agreement with South Korea.

Liberals have no right to be snide: President Barack Obama refused to waive the Jones Act in response to the Gulf of Mexico oil spill in 2010, and sought to tighten up the act’s regulations in 2017. Liberal hostility to Trump’s Jones Act policy is hypocritical. But that doesn’t make the policy right. Protectionism helps a few, but it hurts many, and there is no better illustration of that truth than the Jones Act.

In normal times, it’s folly. Right now, it’s cruel.

This piece originally appeared in Newsday