After Irma, America should scrap the Jones Act: Editorial

By The Bloomberg Editors
September 13, 2017, 11:44 AM CDT

(Bloomberg View) — Another big hurricane, another temporary waiver of the Jones Act — the 1920 law mandating that goods and passengers shipped between U.S. ports be carried in U.S.-flagged ships, constructed primarily in the U.S., owned by U.S. citizens, and crewed by them or by U.S. legal permanent residents.Circumstances did indeed demand a new stay on this dumb law — but it would be better to get rid of it altogether, as Senator John McCain and others have argued.

The Jones Act was meant to ensure that the U.S. has a reliable merchant marine during times of national emergency. It has devolved into a classic protectionist racket that benefits a handful of shipbuilders and a dwindling number of U.S. mariners. It causes higher shipping costs that percolate throughout the economy, especially penalizing the people of Alaska, Guam, Hawaii and Puerto Rico.

Despite the law, the U.S. merchant fleet has continued to shrink. Today there are only about 100 large ships that meet its requirements — and many of them are past their best. In part because of the high cost of using Jones Act vessels, coastal shipping has steadily declined, even though it would otherwise be more efficient in many cases than trucks and railroads. The act distorts trade flows, giving imports carried by foreign ships an edge over goods shipped from within the U.S. Proposed extensions of the law could threaten the development of offshore energy resources as well as exports of U.S. oil and natural gas.

Defenders of the law say its effects are uncertain because there’s too little data. The Federal Reserve Bank of New York suggests a way to put that right: Give a five-year Jones Act waiver to Puerto Rico. That would provide data for a more rigorous analysis while giving the island’s battered economy a lift. Short of outright repeal, Congress could also revisit the law’s ancient, burdensome rules on crew sizes and much else. If the law remains, its focus should be on restoring the vibrancy of coastal maritime commerce, not on counting ships and sailors.

Economics aside, one might ask, isn’t the Jones Act vital for national security? Hardly. Much of the U.S. Ready Reserve Fleet is foreign-built. Very few Jones Act ships are the roll-on, roll-off kind that the military wants. To be sure, the U.S. has sound strategic reasons for maintaining some shipbuilding capability — but smarter support narrowly directed to that purpose would be cheaper and fairer than a trade law that does so much pointless collateral harm.

The latest waiver is slated to expire this week. Modernizing the law would be a step forward. But the best thing to do with the Jones Act is scrap it.

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    Saw this this morning. At least editorial opinion (even one I disagree with) is labeled is such, and not as news- unlike some mainstream media outlets…but I digress.

    I support the Jones Act. As the Jones Act vessels got out of position from Hurricane Harvey, the international market brought refined product cargo from Europe on TC2. And when the ships got further out of position re Hurricane Irma- the waivers (one week plus another week) were granted. This was a correct decision to waive Jones Act for a short timeframe. But when ships get back to normal trading patterns, then the Jones Act will work just fine. Imagine if there was a storm in Europe and trades of all the MR tankers got out of whack….our domestic coastal needs would not be met.

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    Captain Paul Figuenick on

    Scrap the Jones Act? I say not, we need this act to stay intact. I work in the smaller cruise ship industry, us/solas class. We operate in international and US waters, if we scrap the jones act this would put our small cruise ship industry out of business in the states. All those foreign flagged small cruise lines would start operating over here putting hundreds of mariners out of work, Also the Jones act is the only thing keeping our large vessel merchant fleet together, keeping thousands of seafarers working. Not to mention shipyards and other supporting vendors. Let this Jones Act Exemption expire. Keep the Jones Act in place

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    What country or company is lining your pockets? You people have given all of America away and now you want to get rid of the only laws that protect American jobs. Our industry is struggling now and you gave the audacity to want to scrap it. You people are slaves to your own stupidity.

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    I think that this Bloomberg editor should be replaced by an editor in a foreign country who is paid a more efficient wage. That way Bloomberg could put out more editorials for their money.

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      Not a Corporate Shill like the Editorial Staff on

      Precisely. Their argument is akin to saying we can’t depend on domestic media to meet our news needs.

      Scrapping the Jones Act now would devastate us in a time where we are rapidly becoming beholden to foreign trade interests. Why on earth would we voluntarily hand over our maritime industry to China and others who don’t have our national interests in mind?
      The ripple effect would be catastrophic for our mariners, shipping companies, shipyards, steel manufacturers, marine technicians, and we’d lose so much expertise in the process it would be extremely difficult to ever rebuild the industry.

      Obviously both sides of the argument have their biases, but the Jones Act opponents clearly have less interest in the common good.

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    No it shows that the US merchant marine needs the support of all in this country instead of using flags of convenience how many American or American based multi national companies use a US hull and a US crew?

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    The end of the Jones Act would be the end of most US shipbuilding. The act covers more than large merchant ships. Commercial fishing boats, tugs, ferries, and river traffic all come under the act. Without the act, who mans those ships and boats. What are the standards the vessels are built to meet? Who licenses the cut rate mariners? Are we going to have many more New Clarissa clean up that the government ends up finishing? Once the shipyards and skilled people are gone, the capital is gone, the skills are gone and not easily learned quickly. Who builds the ships in the next war? Do we have them built in China? I don’t know who’s buying John McCain, but when the act is gone it will hurt Americans, not help them. As a former naval officer, McCain should know better.

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    BLOOMBERG – Just another DEMOCRAT RAG that wants to see America overrun by foreign garbage.
    I have a better idea – SCRAP BLOOMBERG!!

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    Capt. Randal Yeager on

    “…Congress could also revisit the law’s ancient, burdensome rules on crew sizes and much else.” This one statement demonstrates the position of ignorance from which the Bloomberg editors write.
    As the El Faro incident rulings come to light we find repeated examples of crew shortages and unmet training requirements that cause loss of life and damage to the environment…but, of course, these conditions cost money to rectify. Scrapping the Jones Act would expose our waterways and infrastructure to the same training and materiel standards that cater to the lowest common denominator – a position that flag of convenience vessels enjoy as they starve their crews and pollute waterways worldwide with substandard vessels that are well beyond their useful age.
    Kudos Bloomberg, you have shown the uselessness of your position.

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    Sound like idiot John McCain. Please stop saying “its ok to hire cheap foreign labor”. It makes you look stupid. We should replace the writer of this article with some guy from India because its ‘cheaper and better’.

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    I have watched politicians and foreign interests pick the Jones Act apart,piece by piece for 40 years.Now they want to do away with it completely.No!I have been a Merchant Seaman a,and Licensed(dual dept.)Capt.and CH.Engr.When not at sea I worked in several strategic shipyards,supporting Naval and U.S.commercial interests as a machinist or project Engr.Leave the Jones Act in place and increase its scope when it becomes feasible again!

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    As usual it just shows how out of touch the average person is with our industry. I am sure this author must think it’s okay to let illegals do jobs in this country. Perhaps we’ll get rid of all our truck drivers as well and let the illegals drive them with no DOT oversight. This author needs to go on one of these FOC ships and see the delorable conditions of those vessels and the slaves they call crew.

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    Good thing foreign governments are organized with equivalent labor laws that American companies have to comply with here in the U.S. If not it would give them an unfair advantage, for instance if there was no minimum wage or environmental compliance issues.

    We can all look to China as the standard bearer for producing quality products while spurring economic opportunity for its citizens.

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