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For all the flaws of the Jones Act — the 1920 legislation requiring that all maritime commerce between US ports take place on ships owned, built and crewed by Americans — there’s no faulting its professed goal. The US needs a thriving maritime sector, for both economic and
military reasons.
The best way to achieve this is to lift the Jones Act’s protectionist blanket. Granted, that’s not so simple, because the act is part of a complex regulatory and legal web. But some straightforward steps could bring immediate benefits.
First, grant at least a five-year waiver of the act to Puerto Rico. This would speed the island’s recovery. It would also test how best to regulate foreign-flag carriers, and provide data to show exactly what the act is
costing.
Next, scrap the act’s “build-in-America†provision, as Senator John McCain and others have proposed. The global glut in container ships makes now a good time to replace the aging Jones Act cargo fleet with cheaper, cleaner vessels. Many components in “American-built†ships are already imported; some “American†shipbuilders and shipping lines are foreign subsidiaries. Allow foreign-flag ships sailing from and then onward to foreign ports to deliver cargo to more than one US port on a given coast. This would stimulate coastal commerce overall.
Make US coastal shipping more efficient with new infrastructure and smarter regulation. Use the bulging Harbor Maintenance Trust Fund to defray some of the cost. Update work, safety and crew-size rules to reflect risk-based analysis and international standards. Streamline overlapping federal and state environmental rules. Change tax structures that put US-flag ships and their crews at a disadvantage. Curbing protectionism at home will also make it easier to go after other countries on that score.
What about security? Without resorting to maritime protection, the US has plenty of ways to keep North Korean barges from plying the Mississippi, to cite one fantastical scenario. The US already handles thousands of coastal port calls made each year by foreign-flag vessels, including along inland waterways.
Maintaining the edge and readiness of the US military is crucial — but isn’t best achieved by relying on a shrinking, uncompetitive oceangoing fleet and shipbuilding industry. Instead, put the costs of national security where they belong — in the defense budget.
Rather than trying to build up the Jones Act fleet to ensure crew for strategic sealift contingencies, require the Navy to expand its active and reserve forces. Spend more on the four public shipyards that sorely need attention, and on training shipbuilders. Change procurement to ensure steadier work for military contractors, and hold them strictly accountable for defects.
Undoing the Jones Act will be disruptive. Workers who lose their jobs should be compensated. But US aircraft and automobile manufacturers make better products because of foreign competition, and its railroads and trucking industry have done well since deregulation. The success of US coastal shipping should be measured not by the US vessels and sailors it employs but by its contribution to the overall US economy. On that score, the Jones Act is a failure. It has outlived whatever rationale it once had. Enough is enough.
—Bloomberg