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Splitting the Jones Act Baby

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January 21, 2015

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Splitting the Jones Act Baby

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The maritime industry spent the past week marshaling its forces to oppose Senator McCain’s Jones Act amendment. The Senator calls the law antiquated and one that impedes free trade. In contrast, shipbuilders, US vessel owners, and labor unions argue that it is vital for national security. Both are correct.

The Jones Act of 1920 and the Merchant Marine Act of 1936 helped America become a maritime superpower. These laws mandated the building of 500 merchant ships. They also created a new federal agency, the US Maritime Commission, that was responsible for maintaining a strong merchant marine fleet that could support US defense needs and requirements. By 1955, US merchant mariners were sailing the high seas on 1,072 US ships and you couldn’t enter a foreign port without seeing a US flag.

Sadly, the number of US vessels in international trade has shrunk dramatically – less than 90 remain. The majority of US imports and exports are being transported on foreign flag vessels with foreign crews. The domestic fleet has not suffered this dramatic decline but overall, the US flag fleet is much smaller than its heyday in the 1950s.

Senator McCain’s proposal amends current law and allows foreign built vessels to be used to transport goods from one US port to another. Alaska, Hawaii, and Puerto Rico will support this change as the prices for food and everyday items will drop. Louisiana, Mississippi, and Florida shipbuilders will lose their jobs. Deciding whose interests are more important would stump even King Solomon.

The one constant is this debate is the need for US built warships and merchant vessels to support them. The US government isn’t going to outsource building its carriers to China. These vessels contain classified equipment which can’t be compromised during the construction phase. Similarly, the US isn’t going to risk using foreign built commercial vessels to transport sensitive defense items.

The question then is how many vessels, civilian and military, does the Defense Department need to fight US wars. DOD is responsible for providing military stats. The Maritime Administration is responsible for the merchant marine information and Representatives Hunter and Garamendi tasked the agency with determining this information last year.

Unfortunately, MARAD can’t provide the data. The White House won’t allow it. They’ll allow it to hold symposiums to “develop” a national maritime strategy on the assumption that it will placate maritime stakeholders who have long complained of shabby treatment. They won’t, however, let the agency provide solid numbers or finalize the strategy because to do so would support cargo preference, a program that White House has tried its darnedest to kill.

So what’s the solution? The first step is to best manage what remains of the US blue water fleet. Congress should combine the existing duplicative maritime agencies including the Coast Guard, the Maritime Administration, the Saint Lawrence Seaway Development Corporation, and the Federal Maritime Commission to minimize burdensome regulations on industry. Under the current scheme, the only ones benefiting are federal employees. They keep their jobs while subjecting the maritime industry to mind-numbing paperwork drills that force businesses to spend excessive amount of money complying with outdated policies.

Best management also includes finalizing the much-delayed national maritime strategy. From personal experience, I know that the Departments of State, Energy, and Agriculture, in addition to the White House, will oppose this idea but it must happen if we are to get a better understanding of how many US merchant marine vessels are needed to support war efforts. The current strategy is antiquated and will continue be so as long as officials drag their collective feet.

Lastly, the final strategy must address the high costs of goods in the non-contiguous states and territories while at the same preserving the US shipbuilding base. These interests should be weighted equally. Continuing to allow one to take priority over the other is unconscionable. A Mississippi ship builder shouldn’t lose her job so that a Hawaiian shopper pays less at the grocery store and vice versa.

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