Welcome to the September issue of the Jones Act Gazette. This month's edition includes features about the Jones Act lobby's backlash against the Cato Institute, the relaunch of Cato's 2018 policy analysis about the Jones Act, U.K. Prime Minister Boris Johnson's desire for cabotage privileges as part of a prospective bilateral free trade agreement, and Maritime Administrator Mark Buzby's recent comments about a shortage of U.S. ships and mariners. In addition, you will find links to op-eds and blog posts written by Cato staff as well as the usual collection of Jones Act news and opinion from the previous month.
Cato Jones Act Criticism Prompts Industry Backlash
For over a year the Cato Institute has been highlighting the costly failure that is the Jones Act—and backers of the law have taken notice. In late July, John McCown, the former CEO and chairman of Jones Act carrier Trailer Bridge Inc., penned a column in maritime industry publication American Shipper accusing Cato of “analytical gobbledygook." Rife with half-truths and outright falsehoods, the piece largely centered around the alleged flaws of a report regarding the Jones Act's impact on Puerto Rico that was neither written nor published by Cato. For a debunking of McCown's error-ridden column, please see Cato's rebuttal published by American Shipperhere.
Cato staff were not the only ones to notice the flaws in McCown's column. Michael Hansen, a maritime expert who serves as president of the Hawaii Shippers Council, published his own critiques which can be found here and here (piece appears about halfway down the page). The actual author of the report McCown used as the basis for his Cato criticism, meanwhile, also took to American Shipper to raise his own objections.
This episode was not the only evidence of the Cato Institute getting under the Jones Act lobby's skin. Evidently smarting over Cato's billboard campaign that encouraged motorists to visit BlameJonesAct.com, the American Maritime Partnership—a pro-Jones Act advocacy group—registered BlameJonesAct.org which directs visitors to its own website.
The Jones Act lobby is concerned that evidence of the law's failure is attracting increased attention. We will continue to press the case for reform.
Jones Act Policy Analysis Relaunched
Last year the Cato Institute kicked off it's Project on Jones Act reform with the release of the policy analysis #845: The Jones Act: A Burden America Can No Longer Bear. That policy analysis has now been launched with a cleaner look and new features such as embedded tweets and videos. Be sure to give it a read, and be on the lookout for new Jones Act-related policy analyses this fall!
UK Prime Minister Signals Cabotage Desire for US-UK FTA
On the sidelines of last month's G7 summit, UK Prime Minister Boris Johnson expressed to President Trump his wish that U.S. cabotage restrictions be on the table during prospective free trade agreement negotiations. "Donald, what we want is for our ships to be able to take freight, say, from New York to Boston, which at the moment they can’t do," said Johnson. "So, we want cabotage."
Getting in the way of UK ships engaging in cabotage, of course, is the Jones Act. As Colin Grabow wrote in a recent blog post, Johnson's comments present an opportunity for Trump to both play a leading role on Jones Act reform and, in so doing, expand U.S. exporters' access to the $2.8 trillion U.K. economy.
Buzby Highlights Shortage of U.S.-Flag Ships, Mariners
Speaking at a recent Navy League-sponsored breakfast, Maritime Administrator Mark Buzby highlighted the shortage of civilian mariners to crew the government-owned sealift fleet. To remedy this Buzby said that increased employment opportunities were needed, with the U.S.-flag fleet about 45 ships shy of what was required to ensure an adequate pool of U.S. mariners. To achieve this goal Colin Grabow argues that Buzby should end his wholesale support of the Jones Act and push for Congress to scrap the law's U.S.-build requirement. Allowing Americans to use far cheaper foreign-built ships for domestic transport, Grabow points out, would raise the demand for U.S.-flag vessels and the mariners that crew them.
Quick Notes
Grammy-winning artist Draco Rosa called for the Jones Act's repeal in a recent interview with Puerto Rican newspaper El Nuevo Dia (Spanish).
An August 11 Bloomberg editorial regarding Puerto Rico's travails described a Jones Act waiver for the commonwealth as a "no brainer."
New infographics about the Jones Act released by American Shipper magazine note that "tensions are growing" over the law's role in the U.S. economy. The publication also cites the Cato Institute as a source for the information provided.
Commentary
Writings from Cato Scholars on the Jones Act
For More U.S.-Flag Ships, Lift the Domestic-Build Requirement
Allowing Americans to use cheap foreign-built ships for domestic transport will mean more vessels and more mariners.
Jones Act advocates claim the law's protectionism serves to boost U.S. commercial shipbuilding, which the evidence very much contrasts. Surveying U.S. commercial shipbuilding in his congressional testimony earlier this year Maritime Administrator Mark Buzby said the following:
U.S. commercial shipbuilding of large merchant-type ships has been locked into a downward spiral of decreasing demand and an increased divergence between domestic and foreign shipbuilding productivity and pricing.
In the case of large self-propelled oceangoing vessels, U.S. shipyards still lack the scale, technology, and the large volume “series building” order books needed to compete effectively with shipyards in other countries. The five largest U.S. commercial shipyards construct limited numbers of large cargo vessels for domestic use, averaging five such vessels per year over the last five years, with a peak of ten such vessels in 2016. This production is small, however, relative to the worldwide production of 1,408 such ships in 2016.
A May 2019 Congressional Research Service report, meanwhile, said that U.S. shipyards "typically build only two or three oceangoing ships per year."
