The Real Takeaway from the Jones Act Waivers for Puerto Rico | Puerto Rico 51st

The Jones Act has been in the headlines again, since the federal government granted a couple of waivers for ships carrying fuel and various members of Congress weighed in either for or against the waivers. Here’s a review of the law and its effects on Puerto Rico.

What is the Jones Act?

The Jones Act, also known as the Merchant Marine Act of 1920, is a federal law that prohibits foreign-flagged ships from transporting goods between U.S. ports.

The Jones Act

This is a cabotage law. It applies to ships carrying cargo from any U.S. port to any other U.S. port. If a ship takes goods from California to Hawaii, from Puerto Rico to Florida, or from Connecticut to Massachusetts, the ship used for the journey must be an American ship.

It must be built in the U.S., owned by American companies with 75% of the owners being citizens, crewed by American workers with no more than 25% foreign nationals, and flying under a U.S. flag.

There is nothing in the Jones Act preventing foreign ships from docking in Puerto Rico, requiring higher prices for goods, or adding extra fees for the Island. The Jones Act applies to all U.S. ports, just as much in Texas as in Puerto Rico. It is not specific to Puerto Rico or to the territories.

What is the point of the Jones Act?

The Jones Act was enacted in 1920. At the time, there was a fear that the U.S. shipbuilding industry was on the decline, that there was a shortage of trained seamen, and that the United States might be unprepared to defend itself in sea battles if another war came along.

Supporting the Merchant Marine was intended to make sure that the United States would have the skills and facilities needed to mount ocean-going defense when needed.

This is not what most news reports about the Jones Act say. For example, Vox said this: “But getting goods from the US mainland to Puerto Rico is much more expensive than sending them to Texas or even to other Caribbean islands as a result of a century-old man-made disaster that’s been crippling the island’s economy for a long time.”

We have a lot of respect for Vox, but they’re wrong in their understanding of the Jones Act.

The waivers

The Jones Act has been waived for Puerto Rico several times in the past, most recently in the aftermath of Hurricane Fiona.

There was a waiver in September for a ship that was already en route. The ship, traveling from Texas with a cargo of diesel fuel, was flying under the flag of the Marshall Islands, so the Jones Act would not normally allow it to carry goods to any other U.S. port.

It stopped off alongside the Island until it got a waiver from the Department of Homeland Security and was allowed to offload the fuel. The shipping company already had another shipment on the way to Puerto Rico on a U.S.-flagged ship, and the Department of Transportation had already determined that Puerto Rico was not facing a fuel shortage and had not supported a waiver. However, there was an outcry from news media, Congress, and the public, and the president encouraged the waiver.

There was another waiver in October for a ship carrying natural gas. Homeland Security Secretary Alejandro Mayorkas announced that this waiver was granted to make sure that there would be no shortage of fuel in Puerto Rico. According to a law passed in 2020, waivers of the Jones Act must be requested by shipping companies and decided on a case-by-case basis.

Congressional reps on committees relevant to the Jones Act waivers, including Transportation,  Coast Guard and Maritime Transportation,  and Energy, expressed concern about the waivers and asked for an explanation of the decisions made by Homeland Security.

The real takeaway from this episode

Some argue that the Jones Act hamstrings Puerto Rico’s economy and prevents it from recovering from natural disasters. Others argue that the Jones Act is essential for national security and should not be waived.

The real message, though, is that the federal government will listen to a public outcry. Eight members of Congress asked for a full year waiver of the Jones Act for Puerto Rico. The Governor of Puerto Rico echoed this request. Other leaders asked for ten year waivers. Many news outlets and social media platforms published outraged opinion pieces about the Jones Act and its ills.

We think they’re wrong. The facts are pretty clear. Experts from the Government Accountability Office to the Walmart Corporate Office have said that the Jones Act does not have major negative effects on Puerto Rico’s economy. In fact, the rule allows exporters in Puerto Rico to take advantage of deep discounts on backhaul shipping which would not be possible without the law, and ensures frequent and regular shipping from the states, the primary source of food for the Island. Nonetheless, the public uproar over the Jones Act led to waivers.

Once the American public recognizes that Puerto Rico faces inequality and inequity because of the territorial status and that statehood will bring equal rights and justice to the Island, a public outcry against territory status could get the attention of Congress.

Congress makes the decision whether or not to provide Puerto Rico with a permanent, non-colonial political status. A public uproar may be what’s needed to get to the level of awareness required. Won’t you reach out to your congressional reps? Puerto Rico has no senators and no voting members of the House. We need your voice to help influence Congress.

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