Repealing the Jones Act

...

the homeland security is strengthened by this law, detractors of this law highlighted that the advanced technologies and means of the US Navy which is the most

reliable in the world are sufficient to protect the American waterways. Other opponents cast doubt on how waterways security is improved by having only vessels owned by Americans.

Moreover, air and ground transportation which are vital to US defense are not subject of a Jones Act equivalent. So why the waterways transportation should not have the same restrictions?

Eventually, some Jones Act’s detractors urged that by repealing it, there will be more competition which lead to more opportunities and a potential expansion and revitalization of important sector of our economy such as energy and commerce. According to the World Economic Forum, the ban of foreign ships trans-ship cargo between American ports costs around $200 millions per year to the US economy. Another aspect that Jones Act detractors are underlining is its consequences in case of extreme emergency. For instance, when the hurricanes Sandy and Katrina reached American coasts, it was almost impossible to ensure the total needs of fuel in the region affected. As a consequence, the federal government waived the Jones Act to expedite the delivery of fuel.

However, repealing the Jones might lead to several cost consequences to the American economy. The Jones Act’s defenders argue that repealing this law would have a harmful effect on the US economy. Some industry groups claimed that revoking this act will ruin the American shipbuilding industry whose operations and results rely on this law. Moreover, they emphasized that the suppliers’ network would be significantly disturbed.

The Jones Act’s supporters’ argument is that several medium-sized American companies rely on this law to pursue their business. According to the Congressional District, jobs related to the Jones Act industries are ranked 12th out of 435 districts. These companies have good financials thanks to these protectionist measures and rescinding it would threaten thousands of jobs.

Moreover, the Jones Act is a major source of Employment for the country. About 80,000 jobs are directly linked to the Jones Act including maintenance, building, repair, management and support of trade. In addition, more than 400,000 indirect jobs are provided by this act. No one can deny the positive impact of the Jones Act on the American economy because it had provided almost half a millions jobs in the United States, more than $45 billions were generated in value added and about $10 billions were paid in taxes to state, local and federal government. The two tables in figure 1 and 2 gives more information concerning the impact of the Jones Act on the US economy.

Furthermore, a Government Accountability Office report pointed out that if the foreign ships were authorized to do business in the United States, their costs would not be as low as they think in so far as they will have to pay additional costs due to other regulations. Matt Paxton, president of the Shipbuilders Council of America urged that "If we were to repeal the Jones Act, we would repeal the U.S. build requirement, but these foreign vessels who would have better price bargains would still have to meet environmental regulations; they would have to meet tax regulations; they would have to meet workforce regulation; they would have to pay better wages.". According to this theory, even without the Jones Act, the maritime transportation cost will remain high compared to other countries. Conversely, US shippers and companies will just suffer from additional competition which could lead to decreasing US shippers and builders’

market shares in the domestic market. Therefore, repealing this law will just barely affect US costs and give more difficulties to American companies.

In addition, the Jones Act obliges US Merchant marine to meet the stringent requirement that protect American waterways. Among these requirements, there are strict oversight inspections done by American agencies with the highest standards and liability for performance through insurance premiums and using only trained and experienced mariners. There are also plenty of environmental requirements. Nonetheless, several foreign-flag ship operators do not guarantee maintained vessels, superior safety, American requirements. Moreover, foreign crews are extremely under-paid and work with inhuman schedules without professional training in comparison to the US merchant marine. As a consequence, if the Jones Act is repealed, American waterways will be full of vessels and crews that do not respect American requirements and standards and are not willing to do so. Given that many foreign-flag vessels are carrying strange cargos without control, the US environment would be even more vulnerable.

Furthermore, another dramatic consequence of repealing the Jones Act will be the suppression of thousands of jobs in the United States. Let’s take the example of Hawaii. The state of Hawaii is 85% depend on shipping to provide all the food and goods needed by the population, and the Jones Act is the only law which ensure the reliability needed. According to Democratic member of the Senate Armed Services Committee Horino, shipbuilder and unions are very concerned about the potential repealing of the Jones Act because more than 23,000 jobs are threatened in the islands. Nationally, around 400,000 jobs are dependent on the Jones Act. Other supporters of the Jones Act pointed out that there is not any credible analysis of how the law impacts consumers in term of increased pricing of goods.

In my opinion, American politics must focus first on the global extremely bad situation of the shipping industry. The Jones Act is an impediment of growing the freight capacity, nonetheless, politics should find a solution to make investment easier and to provide sufficient funds to sustain the waterways and shipping industry.

Given that the Jones Act ensures almost half a million direct and indirect jobs, it will be very complicated to repeal it totally, even more after all the effort made by Obama’s administration to reduce the unemployment rate. As a consequence, I believe that we should focus on improving the waterways and the shipping industry rather than threatening thousands of jobs.

In addition, all American will benefit from the increase of shale gas industry. The biggest part of domestic oil is transported by pipeline so the Jones Act has not an important impact on this.

Nevertheless, I think that politics should give a special statue to Alaska and insular states such as Hawaii and Puerto Rico. We saw that these states’ populations were suffering from the Jones Act mainly because of the high price of energy such as electricity (three time more expensive