The Jones Act: Understanding Its Impact and Significance
The Jones Act is a federal law that regulates maritime commerce in the United States. This legislation mandates that goods shipped between U.S. ports must be transported on ships that are built, owned, and operated by United States citizens or permanent residents.
The Jones Act, formally known as Section 27 of the Merchant Marine Act of 1920, was introduced to support the American merchant marine industry and shore up national security in the wake of World War I.
Key Takeaways
- The Merchant Marine Act of 1920, commonly referred to as the Jones Act, is a key piece of protectionist legislation regulating maritime shipping in the U.S.
- The Act mandates that cargo traveling by sea between U.S. ports must be carried on American-owned, American-built, and American-crewed ships.
- Enacted post-World War I, the Jones Act was designed to boost the U.S. shipping industry.
- Critics argue that the Jones Act inflates the cost of shipping, especially to U.S. territories like Hawaii and Puerto Rico.
The Genesis and Goals of the Jones Act
The Jones Act was crafted by Wesley Jones, a Senator from Washington, to secure his state a strategic advantage in shipping to Alaska. It was put into effect by Congress to rejuvenate the U.S. shipping industry crippled by World War I.
As a protectionist measure, the Jones Act covers issues relevant to maritime commerce, including cabotage, which governs the transport of goods or passengers between domestic ports.
The Act’s primary directives stipulate that goods moving between U.S. ports must be shipped on vessels built, owned, and predominantly operated by Americans. While this stimulates domestic shipbuilding and crew hiring, it consequently raises shipping costs, especially to distant U.S. territories.
Inspirational Goals of the Jones Act
- Reinvigorate the Maritime Industry: Address the industry’s post-World War I weakening by endorsing U.S.-built and operated ships.
- Economic and Job Support: Provide a substantial economic boost, creating approximately 650,000 American jobs and generating $150 billion annually.
Core Requirements of the Jones Act
- Ownership: Vessels transporting cargo between U.S. ports must belong to companies based in the U.S., with at least 75% ownership by U.S. citizens.
- Crew: The majority of the ship’s crew must be U.S. citizens.
- Construction: Ships must be constructed and registered in the U.S.
Jones Act Waivers: Flexibility for Extraordinary Circumstances
- Natural Disasters: Waivers can be issued post-natural disasters, such as hurricanes, to allow more ships to transport aid and supplies.
- National Defense: The Secretary of Defense can request waivers in the interest of national defense, with final waiver authorization lying with the Secretary of Homeland Security.
Critical Evaluation: Pros & Cons
- Supporters argue state’s having naval, defense contractors, shipping industries, and port personnel experience economic gains.
- Macroeconomic Strain for Territories: States and territories, especially peninsula and island populations like Puerto Rico and Hawaii faced inflated shipping costs significantly impacting local economies.
The Jones Act’s Impact on Puerto Rico
Puerto Rico faces higher costs for development due to the Jones Act’s requirement for U.S. naval shipping for cargo between its ports and the U.S. mainland. This translates to significant financial burdens on the island’s economy. For example, a study revealed that Puerto Rican trade costs are substantially higher compared to non-U.S. flagged carriers, with economic strains exceeding $1.2 billion annually.
Impact on Cruise Ships
While not affecting passenger vessels directly, a related law—the Passenger Vessel Services Act of 1886—embodies similar principles. It prohibits foreign ships from transporting passengers directly between U.S. ports, necessitating stops at foreign ports. This often results in logistical confusion and sometimes fines for passengers.
The Longevity of Jones Act Waivers
As of 2020, the legislative authority to grant long-term waivers is limited without direct adverse effects on military operations. Benefit waivers must now undergo stringent, particularized reviews.
Final Thoughts: Navigating Maritime Commerce
Originally formulated to bolster national security and economic interests, the Jones Act continues to stir controversy as a symbol of maritime protectionism. While it undeniably supports the U.S. shipping industry and associated jobs, it also incurs significant costs, particularly for island economies reliant on maritime trade.
Related Terms: Maritime Law, U.S. Ports, Protectionism, Cabotage, Merchant Marine Act, Maritime Commerce.
References
- U.S. Congress. “H. Rept. 111-521 - Securing Protections For The Injured From Limitations On Liability Act”.
- U.S. Department of Transportation. “Domestic Shipping”.
- Congressional Research Service. “Shipping Under the Jones Act: Legislative and Regulatory Background”, Pages 1-30.
- Defense News. “Why the Jones Act Is Still Needed 100 Years Later”.
- Maritime Administration. “Domestic Shipping”.
- John Dunham and Associates. “The Jones Act: The Legacy of Economic Ruin For Puerto Rico”, Pages 27-28.
- U.S. Department of Homeland Security. “Statement By Secretary Mayorkas on the Approval of a Jones Act Waiver For Puerto Rico”.
- CBS News. “Biden bans Russian oil and gas imports to U.S., targeting main artery of Russia’s economy”.
- Wall Street Journal. “Jonesing to Give Up Russian Oil”.
- The Points Guy. “What Is the Jones Act for Cruise Ships?”
- Legal Information Institute. “Jones Act”.
