The editors of Bloomberg recently published multiple opinions criticizing the Jones Act and calling for its repeal. Here is where those opinion pieces went wrong:
Claiming “The Jones Act Serves No Purpose” ignores the views of U.S. military and other leaders who say America is more secure because of the law.
These articles assert the unprecedented position that the Jones Act serves “no purpose.” Claiming the law provides absolutely no benefits to the nation completely ignores statements from senior military leaders who are among the most vocal supporters of the Jones Act. Senior officials at the U.S. Department of Defense (DOD), U.S. Navy, and U.S. Coast Guard support the law because they clearly believe the Jones Act serves an important purpose: helping to secure our nation. In the last several years, the Commandant of the Coast Guard, the Commander of the DOD’s U.S. Transportation Command (USTRANSCOM), the Secretary of the Navy, the current Vice Chairman of the Joint Chiefs of Staff, and the Maritime Administrator (a former Commander of Military Sealift Command) have all cited the importance of the Jones Act to America’s national and homeland security. This year, for example, USTRANSCOM’s Commander stated that the Jones Act “is part of the overall readiness of our maritime industry and our ability to go to war,” and a U.S. Customs and Border Protection official said, “There is no way we could enforce our national security laws without the Jones Act.”
In addition to national and homeland security, the Jones Act provides economic security in the form of nearly 500,000 American jobs and about $100 billion in annual economic impact, according to PricewaterhouseCoopers. To say the law serves no purpose, discounts the obvious economic benefits of these American companies and workers. For example, in Puerto Rico, the U.S. General Accountability Office (GAO) found that the Jones Act “has helped to ensure reliable, regular service between the United States and Puerto Rico—service that is important to the Puerto Rico economy.” These benefits to American economic, national, and homeland security are the reason the Jones Act enjoys such broad, bipartisan support among the military, Congress, and modern administrations.
The national security benefits of the law are well documented.
The assertion that the national security argument in support of the Jones Act “rings increasingly hollow” fails to acknowledge that military experts in the DOD and in Congress consistently state the Jones Act is essential to American security. They say the Jones Act contributes vessels, seafarers and shoreside workers, shipbuilding capacity, logistics support, and a national maritime infrastructure that is essential to our national security.
In fact, the U.S. Congress, acting through the House Armed Services Committee and the National Defense Authorization Act (NDAA) recently called the national security benefits of the domestic maritime industry “unquestioned.” The NDAA further stated that DOD “benefits from a robust commercial shipyard and ship repair industry” and that the “domestic fleet is essential to national security and was a primary source of mariners needed to crew” for reserve defense sealift vessels activated during Operations Enduring Freedom and Iraqi Freedom in the period 2002 through 2010. In specifically studying Puerto Rico, GAO said a change in the Jones Act there could undermine national security because “the military strategy of the United States relies on the use of commercial U.S.-flag ships and crews and the availability of a shipyard industrial base to support national defense needs.”
The four-star general in charge of military sealift also recently called the Jones Act the “anchor” of American policy in that regard, and the current Vice Chairman of the Joint Chief of Staffs described proposed elimination of the Jones Act as “a direct threat to national defense.” These military leaders, and others like them, are intimately involved in military sealift planning and execution, and there would be no reason for them to overstate the importance of the Jones Act to national security.
Arguments against the Jones Act “cost” are unsupported.
The pieces argue that the Jones Act adds costs for American consumers but fail to support their theses. Twice it cites to the U.S. International Trade Commission (ITC) research in this area but never mentions that the ITC’s findings about Jones Act cost were called “unclear,” “uncertain,” “unverifiable,” “undeterminable,” “incomplete,” and “unpredictable” by the non-partisan GAO. The editors argue that the Jones Act adds to consumer prices in Puerto Rico, ignoring data showing the opposite.
The editors fail to account for the benefits that Puerto Rico receives from the Jones Act. The island receives faster and less expensive service from the U.S. mainland than other nearby Caribbean islands that are not subject to the Jones Act. They also fail to recognize well-documented evidence of regular service and extremely low shipping rates in the crucial Puerto Rican northbound trades. The opinions cite to GAO for the proposition that the Jones Act adds to costs in Puerto Rico when GAO said that a number of factors impact transportation costs that are not affected by the Jones Act and emphasized that the Jones Act provides unique benefits to Puerto Rico. The editors also blame the cost of the Jones Act for the lack of liquefied natural gas (LNG) in Puerto Rico but ignore the fact that the island has little natural gas infrastructure to receive or use LNG for generating electricity (and gas from mainland U.S. export facilities is already subscribed for export overseas). The articles argue that the Jones Act adds costs throughout the United States but offers nothing to support that contention. They ignore the fact that ocean shipping is a small and often insignificant part of the cost of consumer goods and that GAO has debunked studies that purported to quantify the cost of the Jones Act.
The opinions appear to be suggesting that costs could be reduced by allowing foreign shipping companies to carry cargo between two points in the United States outside of U.S. laws. There is no precedent for any company in any American industry to operate entirely exempt from U.S. laws in exclusively domestic commerce, but that is exactly what Bloomberg is suggesting in Puerto Rico and beyond. This is precisely the point that the non-partisan GAO has made in two major studies: Foreign companies play by different rules and generally have lower operating costs that could increase once U.S. laws are applied.
The editorials overstate the case against the Jones Act.
The Bloomberg opinions overstate the case against the Jones Act, beginning with their argument that the Jones Act serves “no purpose,” and ignore facts that are inconsistent with their premise. For example, the editors write that “Congress is thinking about giving Puerto Rico a new five-year exemption from the law” when, in fact, there is no serious consideration being given to enacting any legislation to change the law. They argue that the Jones Act “obstructs and delays the [Puerto Rico] recovery,” when Jones Act vessels by every account have played a leading role in promptly getting critical supplies to those who need them most. In fact, the federal government has described Jones Act shipping service to Puerto Rico as “the largest sea-bridge operation of federal disaster aid in FEMA history.” The opinions also blame the Jones Act for reductions in the size of the U.S.-flag international fleet even though the Jones Act does not govern international vessels. (The Jones Act fleet totals more than 40,000 vessels and is one of largest domestic fleets in the world.) Ultimately, the articles dismiss the hundreds of thousands of American jobs and nearly $100 billion in annual economic impact related to the Jones Act as unimportant, not to mention ignoring the ardent support of military and homeland security leaders who have noted the law’s contributions.