The Jones Act is a ban on transport between two U.S. ports,
unless it's on a U.S.-built, U.S.-manned, U.S.-flagged, U.S.-owned vessel.
The Merchant Marine Act of 1920, or the Jones Act, was designed to
make sure that America had a viable merchant marine
and that it had the ability to repair and build ships, and that that was important for our navy.
The nation's always had some laws that have to do with what kind of ships can travel in U.S. waters,
but the Jones Act that we're using now is mostly because of a 1920 law.
We look at the Jones Act and realize that it adds to our ability to defend ourselves
and to project American power throughout the world.
I don't think it is a major contributor to national security in any way anymore.
Obviously, we allow foreign ships all the time to come to U.S. ports and they are allowed to under the Jones Act.
The Jones Act just requires they come make their delivery, say at New Orleans or Tampa,
but then they leave and they go somewhere else and
if they come back to a U.S. port, it's only after having visited a foreign port.
Historically, one reason that it was adopted was because
railroads didn't want any competition from shipping.
And, so, if you look at the United States compared to other places, like for instance in Europe,
a lot of transport between places in Europe happens through coastwise trade,
from vessels going from port to port.
Here in the United States, that traffic basically has to go by railroad or by truck.
After World War I, we learned some important lessons.
We realized that we were not very well prepared for that conflict
even though it been going on for years before we even got involved.
And, so, there were some attempts to get us more prepared.
Since that time, the main justification that people have used for the Jones Act has moved to
trying to make sure that we still manufacture vessels in the United States because they say,
"Well, if we ban all vessels that aren't U.S.-made from traveling between U.S. ports,
that's an incentive for the domestic shipbuilding industry to build ships to service that trade."
Unfortunately, that hasn't been very successful.
What we've seen is instead of growing, the domestic shipbuilding industry has been shrinking over time.
If someone says it's unsuccessful because we don't have the largest shipbuilding industry in the world,
I would say that's not the standard by which it should be judged and
I don't even necessarily want the government trying to make sure
we have the biggest shipbuilding industry in the world.
I think the Jones Act is interesting to people now at least because it's been in the news a couple of times.
The critics of it, they make a couple different critiques, but the first one they usually lead with is
that it increases the cost of shipping with the United States.
They compare what it would cost to ship something at an equal distance.
The result of the Jones Act is that it's much more expensive to transport between two U.S. ports
than it is to ship goods from the United States to Europe and vice versa.
What that means is that if you have U.S. energy products like oil and gas,
which we are producing more and more of in the United States these days,
if you want to ship it to consumers who need those, you're better off
shipping it to Africa, Europe, Latin America.
It's much more expensive if you want to ship it to U.S. consumers.
Having rum in Hawaii cost a little bit more is probably not a bad price for protecting America's military.
I don't mean to be insensitive, but I just think I'm not willing to make America more at risk.
I'm not willing to open up 200,000 miles of coastline in the United States,
not on its border but inside, to the rest of the world.
We should stop playing this game about,
"Oh, these are all national security waivers," and,
instead, the president should have the ability to waive the Jones Act when it is clearly economically punitive
without providing any benefit to the U.S. shipbuilding industry.
All it was designed to do is make sure the military had a viable shipbuilding industry
and a viable ship repair industry and trained mariners.
So, we have this merchant marine idea and then the sealift capability.
That's what it existed for and that's what it does,
and I would argue that's what makes it successful.
The Jones Act forbids any shipment between U.S. ports of liquefied natural gas because
there are no liquefied natural gas vessels that are made in the United States that comply with the Jones Act.
This isn't benefiting the U.S. shipping industry because nobody's
building liquefied natural gas vessels here anyway, and all it is doing is
harming U.S. producers who can't ship their natural gas to U.S. markets when that's the most valuable one,
and U.S. consumers who can't take liquefied natural gas from the United States
and instead have to import it from unfriendly countries like Russia.
The Chinese would be very, very happy to pay us for the privilege of making that run in perpetuity.
A lot of our interior riverways are pretty shallow, right?
So, basically there's ocean-going vessels and then there's interior waterway vessels.
No one expects ships to start going all the way from China up to Saint Paul, Minnesota.
That's not what's going to happen, right?
So, I don't think anybody's suggesting that we remove some of these limits
for some of these interior waterways.
The reason why the Jones Act is important to us is really pretty basic.
It comes down to the simple idea of peace through strength.
We look at the Jones Act and realize that it adds to our ability to defend ourselves
and to project American power throughout the world.
The idea is that, well, we have a U.S. merchant fleet and,
so, as a result, it could be re-purposed during wartime.
Nowadays, the U.S. Navy relies on very specialized ships that they can't just
take your local vessels and turn them into naval vessels at the drop of a hat.
So, that's just not how the modern military works.
America has over 100,000 miles of inland waterways
and if you look at both sides of every river then that means 200,000 miles of points of possible entry.
It's a lot to defend.
The president can only waive the Jones Act if it threatens national security.
So, that means that in the aftermath of a hurricane,
when we desperately need new vessels to come in here and transport oil and gas and other commodities
between a place that's been affected by the hurricane,
the president will give a waiver, at some times for a period of time.
But when he does that he has to say that it's necessary for national security.
The problem with that is that there are lots of consumers on the U.S. East Coast
as well as in Puerto Rico and Hawaii and other places that really need oil and gas,
and we're producing a lot of that oil and gas here in Texas and elsewhere in the United States,
but our U.S. consumers can't receive it because
the Jones Act forbids people from shipping it to those U.S. consumers.
Sometimes this is just a creation of the media and I don't exactly know why they would do that
but the reality is this is a very funny anecdote of how it's portrayed
so that average Americans are sitting there thinking,
"These people in Puerto Rico are suffering and it's because of the Jones Act,"
and it's just: no, it's because of two hurricanes.
And the Jones Act, because of the relationship that the shippers have with the government,
they knew this was coming and they were, actually before the hurricane ever hit,
were getting together water and tents and other emergency supplies.
Our ocean ports already have foreign vessels all the time.
So, the Jones Act is not preventing foreign vessels from entering these ports.
There are regularly exceptions and as the situation in Puerto Rico illustrated it wasn't needed.
Their problem was a different problem. They could not get the goods from the port to the rest of the island.
And, that doesn't get fixed by changing the Jones Act.
If you can only be reached by seagoing vessel, you are disproportionately harmed by the Jones Act.
There are lots of regulations that have both big costs and big benefits.
You can think about those air pollution regulations,
where it costs a lot of money to clean up our power plants or refineries, etc.,
but it also has big benefits for consumers.
So, one of the goals of my research is to find areas where there are regulations
that cost consumers a lot of money but don't have any kind of benefit,
and the Jones Act is one of these.
So, for taxpayers, it's a great deal.
So, it allows Homeland Security to focus on our international ports and
they can put most of their law enforcement and preventive resources and their scanning resources
in the places that international ships come in to to load and unload.
Now, there are some shipbuilding companies and some American sailors
that benefit from portions of the Jones Act.
It's an advantage if you are insulated from foreign competition.
I think the priority for reform should be those parts of the Jones Act that currently benefit no one,
that simply impose costs on producers of oil and gas
and consumers of oil and gas without benefiting any American.