Politics

The Nitty Gritty of the Jones Act

When the United States Constitution was created, congress immediately began hindering the use of foreign-flag vessels for domestic commerce. By 1817, it had turned it into a categorical ban. The legislation sought to shield the interests of American shippers from foreign competition. The Jones Act, enacted in 1917, regulates maritime transport between the United States and Puerto Rico. Essentially, any cargo that is transported between Puerto Rico and any ports in the United States must be shipped on vessels built and registered in the U.S. The Federal Cabotage Law, as it is also known, applies to Puerto Rico as if it were any other port in the continental United States. Therefore, it applies to possessions, territories, and states of the U.S.

Interestingly enough, not all possessions and territories are created equal, as there are exceptions to this law. The Jones Act does not apply to the following U.S. possessions: the U.S. Virgin Islands have been exempt, as part of the agreement entered into when they were purchased from the government of Denmark; American Samoa is exempt as a result of the Tripartite Convention of 1899 between the United States, Germany, and England; the commonwealth of Northern Mariana Islands was exempt from federal cabotage laws in the Covenant to establish a Commonwealth in political union with the United States; and Guam is exempt from the requirement to use U.S.-built vessels when shipping goods from the United States. Puerto Rico is the only possession where the restrictions imposed by cabotage laws, regarding the shipping of goods, are fully implemented.

The Jones Act has been detrimental to the economy of Puerto Rico. Automobiles, strawberries, oil, etc., can cost up to 40 percent more. It impairs the economic development of Puerto Rico by not being able to fully participate in the global market. Moreover, it has a domino effect on Puerto Rican goods since the Puerto Rican market is not open to free competition. The purpose of eliminating protectionist regulations like the Jones Act is to promote competitiveness and economic development of a country, that will ultimately enable consumers to benefit from a wider variety of goods at fair prices.

Currently, there are four shipping companies that benefit from this monopoly created by the Jones Act. It has allowed them full control of the ocean freight market between Puerto Rico and the United States. The limited number of vessels to transport certain goods, such as gasoline or natural gas, limits Puerto Rico’s options to purchase fuel at better prices.

Senator John McCain has been trying for years, unsuccessfully, to have the Jones Act eliminated permanently from Puerto Rico. He understands the impediment to progress by this archaic law, which extends beyond reasonably-priced goods, where various food products are in limited supply in grocery chains across Puerto Rico. Furthermore, many of the fruit and meat arriving on U.S. vessels, are not fresh by the time they arrive in Puerto Rico. The image below is from a watermelon I bought during my recent trip over Thanksgiving. It’s not the first time I have bought fruit that was noticeably rotten, once cut open. Many folks in Puerto Rico stay away from certain fruits and meats that come in from the U.S. for two reasons: 1) they have arrived past the human safety-consumption date (it’s quite obvious to notice it when the meat is brown) or 2) the item is too expensive, as is the case with strawberries, which then go bad because people can’t afford to purchase them.

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Here’s a snippet of how the current system works under the Jones Act. A product being shipped from China to Puerto Rico would have to travel to Los Angeles first, then to Jacksonville, and finally to Puerto Rico. That’s a 47-day trip, which covers 11,000 nautical miles, not including ground transportation in China and Puerto Rico. It’s not hard to see how this would affect product freshness. Eliminate the Jones Act, and that same product would take 29 days to Puerto Rico, directly from Shanghai.

We must look no further for the definition of a human rights violation than this Jones Act, where stifling an economy and price-gouging towards a struggling population is seen as justifiable to the folks in control of a country. While I agree that shipping companies need business, why must four companies have ALL the business? Where is our sense of competition that the U.S. so righteously touts? Since when does the number “4”  (shipping companies) hold more weight than the number “3.5 million” (residents in Puerto Rico)? Sadly, when the small number equals big business.

It’s been 100 years since the Jones Act was implemented. It doesn’t take guts to eliminate it. It takes common sense, empathy, and less greed. I guess the “free-market cry” only applies when it’s convenient.

 

 

 

 

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