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The Pros and Cons of The Jones Act
 CONTENTS
* "Stop Beating Up on the Jones Act" By Chris Landers, CityLab (September 28, 2017)
* "The Jones Act: The Law Strangling Puerto Rico" By Nelson A. Denis, New York Times (September 25, 2017)
Stop Beating Up on the Jones Act
Yes, it's an obscure maritime law that you might not have heard of before this week. It's also helping to protect the lives of U.S. sailors.
Over the past several days, opponents of President Trump's response to the humanitarian crisis in Puerto Rico zeroed in on his unwillingness to lift the Jones Act, a 1920 maritime law that regulates U.S. shipping. After some hurried Googling of the Wilson Administration, the media joined in this chorus. Called variously "obscure," "anachronistic,"and "archaic," the Jones Act has been blamed for hindering hurricane recovery by preventing foreign vessels from joining in relief efforts, jacking up the cost of desperately needed essentials on the island, and benefiting large American shipping companies at the expense of citizens, an impression Trump did nothing to dispel when he told reporters on Wednesday that there were "a lot of people that work in the shipping industry that don't want the Jones Act lifted."
Bowing to a rising ride of Twitter indignation, this morning the president authorized a temporary waiver.Here's the thing though: The Jones Act does not deserve your outrage.
It's debatable whether more ships would help the situation in Puerto Rico-CNN is reporting that goods are piling up on the dock waiting for trucks-but in any event no one in the shipping industry really objects to lifting these restrictions during an emergency, as Trump did after hurricanes Harvey and Irma. As Brian Schoeneman, legislative director for the Seafarers International Union, recently told Congress, maritime labor has never opposed a temporary Jones Act waiver, but "any long-term waiver of the Jones Act would undermine the entire purpose of the law and could jeopardize the future existence of the Merchant Marine."
The danger of using the Jones Act as a cudgel against an unpopular president is that the overheated rhetoric loses sight of the real reasons for the law.
The Jones Act is, at heart, a labor act. It protects the rights of sailors in the U.S. Merchant Marine from being exploited the way their counterparts abroad often are. And it's been in the sights of Republican Senator John McCain for a long time-he most recently tried to kill it in July.
Under the Jones Act, a maritime employer is responsible for providing a safe environment for its workers, as well as paying for any medical care. It requires U.S. Coast Guard-approved safety equipment and lifeboats, trained and licensed crew, and adherence to EPA regulations. That stuff isn't cheap, but it protects workers in an industry that's legendary for its exploitation of sailors. "In the past 15 years the Jones Act has been sidelined by some federal courts in favor the enforcement of arbitration agreements," KCRW found in its 2016 investigation into the safety of Filipino seafarers. "Some injuries, negligence and wage dispute cases that would have been litigated in a courtroom are now being heard in private arbitration hearings all over the world, where the compensation can be a fraction of what may be granted by a U.S. jury."
From the linked article:
Ben Buenaventura, a career waiter with Norwegian Cruise Line, suffered catastrophic injuries on July 20, 2016 during a safety drill. A lifeboat davit fell on top of him and his co-worker, who died immediately. Buenaventura spent a month in ICU in Miami before dying on Aug. 27, 2016. Under Philippine arbitration system, his widow-also a cruise ship worker-is entitled to roughly $60,000 USD. She cannot sue for negligence or wrongful death against NCL under the terms set forth by the Philippine government.
Vessels operate by the laws of the state whose flag they fly, which is why so-called "flag of convenience" nations like Liberia are so popular among owners, and why they have such a terrible reputation among sailors. Any added expense to shipping under the Jones Act comes for the same reason Chinese manufactured goods are cheaper than American made-we have labor laws.
McCain's objections are free-trade-based-part of the act stipulates that goods can't be shipped between U.S. ports by foreign-flagged vessels. So while foreign companies can and do ship directly to Puerto Rico, any cargo from the U.S. has to come on American ships. It's possible, though unproven, that this raises the costs of goods to the island, and that argument is gaining traction as the Jones Act faces scrutiny from the left as a sign of Trump's inaction.
Limited temporary Jones Act waivers have been issued in the past, including the one from September 8 to 22 for transporting petroleum products in hurricane-hit areas of the Gulf Coast. According to the maritime blog gCaptain, it went unused. A similar waiver was issued in the wake of Superstorm Sandy in 2012. Both went largely unnoticed by the general public.
Chris Landers is a writer and editor based in Baltimore, Maryland. His work has appeared in BoatU.S. Magazine, National Geographic News, and the Christian Science Monitor.
The Jones Act:
The Law Strangling Puerto Rico
By Nelson A. Denis
Hurricane Maria was the most powerful storm to hit Puerto Rico in more than 80 years. It left the entire island without electricity, which may take
six months
to restore. It toppled trees, shattered windows, tore off roofs and turned streets into rivers
throughout the island
.
President Trump declared that "Puerto Rico was absolutely obliterated" and issued a federal disaster declaration. But the United States needs to do more. It needs to suspend the Jones Act in Puerto Rico.
After World War I, America was worried about German U-boats, which had sunk nearly 5,000 ships during the war. Congress enacted the Merchant Marine Act of 1920, a.k.a. the Jones Act, to ensure that the country maintained a shipbuilding industry and seafaring labor force. Section 27 of this law decreed that only American ships could carry goods and passengers from one United States port to another. In addition, every ship must be built, crewed and owned by American citizens.
Almost a century later, there are no U-boats lurking off the coast of Puerto Rico. The Jones Act has outlived its original intent, yet it is strangling the island's economy.
The foreign vessel has one other option: It can reroute to Jacksonville, Fla., where all the goods will be transferred to an American vessel, then shipped to Puerto Rico where - again - all the rerouting costs are passed through to the consumer.
Thanks to the law, the price of goods from the United States mainland is at least double that in neighboring islands, including the United States Virgin Islands, which are not covered by the Jones Act. Moreover, the cost of living in Puerto Rico is 13 percent higher than in 325 urban areas elsewhere in the United States, even though per capita income in Puerto Rico is about $18,000, close to half that of Mississippi, the poorest of all 50 states.
This is a shakedown, a mob protection racket, with Puerto Rico a captive market. The island is the fifth-largest marketin the world for American products, and there are more Walmarts and Walgreens per square mile in Puerto Rico than anywhere else on the planet.
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A 2012 report by two University of Puerto Rico economists found that the Jones Act caused a $17 billion loss to the island's economy from 1990 through 2010. Other studies have estimated the Jones Act's damage to Puerto Rico, Hawaii and Alaska to be $2.8 billion to $9.8 billion per year. According to all these reports, if the Jones Act did not exist, then neither would the public debt of Puerto Rico.
The U-boats are gone and a protectionist law has been exposed. The crony capitalism of the Jones Act does not "protect" anyone and it is choking the economy of Puerto Rico. If the United States has any interest in the hurricane-battered people of Puerto Rico, it needs to take the law off their necks - and now.
Recovering from the disaster will be difficult no matter what, but the Jones Act will make it that much harder.
Food costs twice as much in Puerto Rico as in Florida. Jones Act relief will save many Puerto Ricans - especially children and seniors - from potential starvation. Jones Act relief will also enable islanders to find medicine, especially Canadian pharmaceuticals, at lifesaving rates. And it will give islanders access to international oil markets - crucial for running its electric grid - devoid of a 30 percent Jones Act markup.
And suspending or repealing the law is crucial to the arduous rebuilding process ahead. In one town alone, 70,000 people were evacuated because of a failing dam. Jones Act relief will enable residents to buy materials, rebuild their homes and prevent an explosion of homelessness.
This is not just about recovering from Hurricane Maria. It is also about Puerto Rico's long-term future. If the Jones Act were suspended, consumer prices would drop by 15 percent to 20 percent and energy costs would plummet. A post-Jones Puerto Rico could modernize its infrastructure and develop its own island-based shipping industry. Indeed, the island could become a shipping hub between South America, the Caribbean and the rest of the world. This industry would generate thousands of jobs and opportunities for skilled laborers and small businesses. On an island with official unemployment over 10 percent (but actually closer to 25 percent), this would energize their entire work force.
A humanitarian crisis is about to explode in Puerto Rico. But the consequences of Jones Act relief would be immediate and powerful. This is not the time to price-gouge the entire population. It is time for Congress to act ethically and responsibly and suspend the Jones Act in Puerto Rico.
President Trump on Sept. 28 temporarily waived the Jones Act for Puerto Rico.
Nelson A. Denis, a former New York State assemblyman, is the author of "War Against All Puerto Ricans: Revolution and Terror in America's Colony."
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The NiLP Report on Latino Policy & Politics is an online information service provided by the National Institute for Latino Policy. For further information, visit www.latinopolicy. org. Send comments to [email protected].
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