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Jones Act (Merchant Marine Act)

Jones Act (Merchant Marine Act)

The Jones Act (officially named the Merchant Marine Act of 1920) and related statutes require that vessels used to transport passengers and cargo between U.S. ports be owned by U.S. citizens, built in U.S. shipyards, and manned by crews of U.S. citizens. According to the wording of the act, its purpose “is to maintain reliable domestic shipping services and to ensure the existence of a domestic maritime industry available and subject to national control in time of need.” The Jones Act is also known as the “cabotage” law. Cabotage, from the old French word for “cape,” means navigation along a coastline and now refers to all navigation within a country’s waters. Most major maritime countries have cabotage laws similar to the Jones Act. Enacted after World War I, the Jones Act, like other industry-protection laws, reduces market competition in the name of national security. When World War II began, the existing shipping industry and ship-building INFRASTRUCTURE became the basis for naval military resources. More recently, during the 1990 Gulf War, the U.S. military chartered domestic cargo ships and tankers from the “Jones Act fleet” and used American merchant seaman to supply U.S. forces in the Middle East. One question associated with the Jones Act is: What is a vessel? According to the Louisiana Workers’ Compensation corporation Jones Act case history defines a vessel as “a structure designed for and being used for the transportation of passengers, cargo, or equipment across navigable waters.” Determining what constitutes a Jones Act vessel has significant implications. The act’s critics contend the United States’ fleet of vessels is miniscule, and it is unrealistic to think the Jones Act is helping to protect national security in an emergency. The Jones Act Reform Coalition claims, “. . . the United States today has no more than 128 privately owned vessels over 1,000 tons in domestic service . . . all but 33 of these vessels are tankers or tub-barge combinations carrying liquid bulk cargoes.” The act’s supporters contend the United States has “more than 44,000 vessels in the U.S. Jones Act fleet.” Both sides agree that foreign-flagged vessels transport 97 percent of all cargoes moving into and out of American ports. Critics argue the act has not worked and has increased the cost of goods to consumers. They use examples like the reduction in U.S.-flagged tankers bringing oil from the Caribbean as a major factor in raising the cost of transportation of fuel oil to the Northeast. Other critics point out the act does not allow foreign-flagged shippers to stop in Hawaii on their way to the West Coast, forcing goods to go to the West Coast and then back to Hawaii. One University of Hawaii economist estimated abolishing the Jones Act shipping rules would save $500 to $600 per Hawaiian household. The act also prevents foreign-flagged cruise ships from operating in the Hawaiian Islands unless they add one foreign stop to the cruise itinerary—a difficult requirement, given how far Hawaii is from any other foreign port of call. Yet cruise companies are adding foreign destinations because it is cheaper than complying with U.S. merchant laws that would force them to hire U.S. crews and conform to U.S. environmental and labor laws. Supporters of the Jones Act, such as Representative Neil Abercrombie, contend that “the dependability of Hawaii’s maritime links to the mainland would vanish . . . Our nowdependable shipping would be under the control of whatever foreign government was most willing to subsidize its shipping. We could find Hawaii-mainland shipping routes under the control of a hostile nation.” As Representative Abercrombie suggests, many foreign governments are actively involved in subsidizing shipbuilding and shipping. Shipping is part of international trade infrastructure and almost always the cheapest form of bulk transportation. Countries that have access to international shipping have a COMPARATIVE ADVANTAGE over those that do no shipping. Shipbuilding is labor-intensive, creating thousands of jobs, and many countries subsidize shipbuilding as a means to ECONOMIC DEVELOPMENT. In the United States, one controversial “boondoggle,” according to Arizona senator John McCain, was the proposal supported by Mississippi senator Trent Lott for the U.S. Navy to take over the CONTRACT for cruise ships being built in Mississippi boatyards.

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