A century in its wake, Jones Act faces new era of challenges

One hundred years after being enacted, the Jones Act is still mired in controversy. Proponents say it protects the U.S. maritime industry from low-priced foreign competition, preserving the merchant marine and domestic shipbuilding for national defense. Detractors say it does neither, and that it leads to higher consumer costs.

Officially Section 27 of the Merchant Marine Act of 1920, the Jones Act was named for Sen. Wesley Jones from Washington state. It deals with cabotage, or coastwise trade, requiring that goods transported by water between U.S. ports be carried on vessels that are U.S.-flagged, U.S.-built, and crewed by U.S. citizens or permanent residents. It applies to shipping between ports in the contiguous 48 states and Alaska, Hawaii, Guam and Puerto Rico. Other island territories, such as the U.S. Virgin Islands and American Samoa, are exempt.

The Jones Act grew out of the U.S. experience in World War I. Vessels flagged to foreign nations were pulled out of service, leaving America without enough ships to support domestic trade. The country then embarked on a massive shipbuilding program to support the war effort. 

From its inception, the Jones Act was a protectionist measure with the stated goal of providing for national defense and the growth of foreign and domestic commerce to preserve the merchant marine and the nation’s shipbuilding industry. According to Mike Roberts, president of the American Maritime Partnership, national security — not competition — is the main reason the Jones Act is still relevant after a century.

“We need Americans who know how to build and operate ships, and that will never change because it provides a host of benefits to this country,” he said. “The Jones Act basically says that if you want to do business (here), you have to hire American workers and obey American laws. It’s really about sovereignty, and that’s one of the most basic concepts of government.”

Maritime laws around the world are similar to regulations for aviation and other transportation modes. A recent study found that 91 countries have some form of cabotage law restricting foreign maritime activity in their respective coastal trades.

Roberts said about one-third of the merchant mariners needed in a national defense activation would come from the domestic trades, and shipyards could build vessels as part of the industrial base built into Defense Department planning. From a homeland security perspective, the Jones Act’s vessel and crew requirements protect domestic supply chains from foreign vessels and foreign mariners, he said.

There are provisions in the act that allow for waivers during emergencies when enough U.S.-flagged shipping capacity is not available. One example was when Hurricane Katrina struck the Gulf Coast in 2005, damaging fuel pipelines. Foreign-flagged tankers were allowed to carry petroleum between U.S. ports to alleviate potential shortages.

“We’re very vigilant about making sure that there’s a genuine need before a waiver is granted,” Roberts said.

One criticism of the act is that it prevents the shipment of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) from ports in the Gulf to the Northeast for heating use. There are no domestic tankers available now for this service. However, if there was a market-based demand, U.S. shipyards could provide the capacity, Roberts said.

The Cato Institute, a libertarian think tank in Washington, D.C., launched a campaign to challenge the Jones Act in 2018. Colin Grabow, a policy analyst at the institute, said that the act had not kept the number of merchant mariners from declining, and it had not supported shipbuilding capacity for non-government vessels.

“We’ve been doing the same thing for well over 100 years, and I would think at this point that it’s time to consider some kind of change,” he said.

Grabow acknowledged the Jones Act wouldn’t be changing imminently, as congressional support for it remains strong. It has been reported that President Trump is not a fan of the act, but so far the administration has not taken steps toward altering it. 

“I’m not under any illusion that that’s going to happen anytime soon, but I would like to think that there’s room for some common-sense reforms,” Grabow said.

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