McCain seeks to make Puerto Rico Jones Act waiver permanent

Long time Jones Act opponent Senator John McCain Long time Jones Act opponent Senator John McCain

SEPTEMBER 29, 2017 — U.S. Senators John McCain (R-AZ) and Mike Lee (R-UT) yesterday introduced legislation that would permanently exempt Puerto Rico from the Merchant Marine Act of 1920, or the Jones Act, "to aid recovery efforts in the wake of Hurricane Maria and encourage long-term economic growth."

"While I welcome the Trump administration's Jones Act waiver for Puerto Rico, this short-term, 10-day exemption is insufficient to help the people of Puerto Rico recover and rebuild from Hurricane Maria," said Senator McCain. "Our legislation would permanently exempt Puerto Rico from the Jones Act, an antiquated, protectionist law that has driven up costs and crippled Puerto Rico's economy. For years, I have fought to fully repeal the Jones Act, which has long outlived its purpose to the benefit of special interests. It's time for Congress to take action, end this injustice, and help our fellow citizens in this time of need."

"The Jones Act is just another example of a federal regulation that harms American consumers, gives foreign corporations an edge over American businesses, and makes disaster response harder," said Senator Lee. "It is far past time to repeal it."

You can download the legislation HERE

FACT CHECK

Meantime, the American Maritime Partnership has issued this fact check on false claims about the Jones Act that have appeared in the media:

Claim: The Jones Act prevents cargo from foreign vessels to reach Puerto Rico.

False. Any foreign vessel can call on Puerto Rico. The Government Accountability Office (GAO) noted in a 2011 report that two-thirds of the ships serving Puerto Rico were foreign ships. 55 different foreign carriers provided imported cargo to Puerto Rico in a single month, as cited as an example by GAO. Foreign shipping companies compete directly with the American shipping companies in an intensely competitive transportation market.

Claim: Import costs are at least twice as high in Puerto Rico as in neighboring islands on account of the Jones Act.

There is no study that supports this statement in any way. In fact, anecdotal evidence about rates indicates that the opposite is true. For example, one analysis shows it is 40% more expensive to ship goods from the U.S. mainland on foreign vessels to the U.S. Virgin Islands (not subject to the Jones Act) than on Jones Act vessels to Puerto Rico.

Claim: Jones Act vessels lack sufficient capacity to reach communities impacted by Hurricane Maria.

In the immediate aftermath of the hurricane, one hundred percent of the island was without power, and roads were blocked by downed trees and debris. Goods are arriving to the island on vessels but bottlenecks on the roads are limiting arrival to the communities. The largest bottleneck is not getting goods to the island, but delivering goods once they arrive.

Domestic maritime companies have the equipment at their terminals to handle the throughput at the terminals without overwhelming the shoreside and inland

Domestic maritime roll-on/roll-off barges can immediately discharge cargoes while work is performed to restore power for cranes and other equipment at the

Domestic maritime containerships can deliver cargoes from the S. mainland to Puerto Rico in three days.

Claim: A Jones Act waiver would add efficiency to the delivery of essential cargoes to impacted communities.

Because of infrastructure challenges, a Jones Act waiver could hinder, not help, relief efforts. A Jones Act waiver could overwhelm the system, creating unnecessary backlogs and causing confusion on the distribution of critical supplies throughout the island. Already there are logistical bottlenecks for Jones Act cargoes as a result of the inability to distribute goods within Puerto Rico due to road blockages, communications disruptions, and concerns about equipment shortages, including trucks, chassis, and containers.

Claim: The Jones Act adds significantly to the cost of goods in Puerto Rico.

Over the last decade, a parade of politicians and "experts" have attempted to estimate the so- called "cost" of the Jones Act in Puerto Rico. Because the estimates have been wildly contradictory, in 2012, Puerto Rico Delegate Pierluisi asked the GAO to determine the true "cost." The GAO studied the issue for more than a year and debunked the previous estimates. First, the GAO said there are far too many factors that impact the price of a consumer good to determine the supposed cost related to shipping, much less the Jones Act. Second, the GAO said, one could not truly estimate the cost unless one knew which American laws would be applied to foreign ships if they were allowed to enter the domestic trades, which would certainly increase the cost of foreign shipping.

Claim: Changing the Jones Act in Puerto Rico will help the island, especially considering its current economic crisis.

A GAO study on Puerto Rico listed a number of potential harms to the territory itself if the Jones Act were changed, including the possible loss of the stable service the island currently enjoys under the Jones Act and the loss of jobs on the island. Moreover, American domestic carriers are making some of the largest private sector investments currently underway in Puerto Rico by investing nearly $1 billion in new vessels, equipment, and infrastructure. They employ hundreds of Puerto Rican American citizens on the island and on vessels serving the market, providing highly reliable, low-cost maritime and logistics services. These private sector jobs and reliable services are important to the long-term recovery of the Puerto Rican economy and would be jeopardized by changes to the Jones Act.

You can read the GAO study cited by the American Maritime Partnership HERE

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