MTD Alerts Congress to Fallacies in Puerto Rican Anti-Jones Act Report

Screen Shot 2015-09-15 at 3.39.22 PMThe MTD has called upon members of Congress to not be taken in by a newly released study purporting to blame some of Puerto Rico’s economic crisis on the Jones Act.

In letters sent to the chair and ranking member of the Senate Commerce, Science and Transportation Committee and its Surface Transportation and Merchant Marine Subcommittee as well as to the House Transportation Committee, its Coast Guard and Maritime Transportation Subcommittee, and the House Armed Services Committee and its Seapower and Projection Forces Subcommittee, MTD President Michael Sacco reiterated the department’s longstanding promotion of the Jones Act, the nation’s freight cabotage law.

“Let me go straight to the point: the Maritime Trades Department, AFL-CIO has been, is and will be a resolute supporter of the Jones Act,” stated Sacco in his letters of September 2. “For nearly 100 years, the Jones Act has served America’s economic and defense interests. It provides decent family-supporting jobs all across the United States and its territories, including Puerto Rico.”

Sacco noted the study (known as the Krueger Report) commissioned by the government of Puerto Rico “did not rely on the critical ingredient that was used heavily in a 2013 independent review of the Jones Act in Puerto Rico by the Government Accountability Office – facts.”

The Krueger Report tried to make a case that exempting the commonwealth from the Jones Act would alleviate some of the financial indebtedness faced by Puerto Rico. However, it ignored many of the points made in the GAO study – including one that there are too many factors involved in the cost of transportation as it relates to cost of consumer goods to identify any specific cost related directly to the Jones Act. In addition, the Krueger Report failed to provide an accounting of the thousands of jobs held by Puerto Ricans thanks to the Jones Act trade.

Several news stories released after the Krueger Report came out have tried to claim all goods and services going into or out of Puerto Rico have to be carried aboard U.S.-flag vessels. This ignored the fact that two-thirds of the island’s services come from foreign-flag bottoms.

Sacco also pointed out that the Krueger Report chose to leave out the importance of the Jones Act to national security. He quoted the vice chairman of the Joint Chiefs of Staff, General Paul Selva, who addressed the MTD Executive Board meeting in February when he was commander of the U.S. Transportation Command: “’Without the contribution that the Jones Act brings to support of our industry, there is a direct threat to national defense.’”

In his conclusion, Sacco stated, “While we are greatly concerned about the economic distress being faced by Puerto Rico and are willing to be part of the effort to help alleviate the crisis, we firmly believe any attempt to exempt the commonwealth from the jurisdiction of the Jones Act will only exacerbate the situation, leading to additional job losses for the citizens of the island as well as to workers on the mainland.”

In addition to the MTD, the American Maritime Partnership (AMP) – an alliance of U.S.-flag industry and labor – sent letters in late August calling attention to fallacies in the Krueger Report.

“One important fact is that changing the Jones Act for Puerto Rico is not in the best interests of the United States or Puerto Rico,” declared AMP Chairman Thomas Allegretti.

AMP consists of more than 450 members including shipowners and operators, shoreside and seaside workers, shipbuilders and repair yards, manufacturers, vendors, contractors and national security organizations all working together to promote the U.S.-flag maritime industry.