Why has America not yet scrapped the Jones Act? We explain
. Less attention has been paid to tackling protectionist regulation, notably a 102-year-old law known as the Jones Act. What is it, and why has America not scrapped it?
Section 27 of the Merchant Marine Act of 1920, to give the Jones Act its proper name, requires American waterborne domestic trade to be carried by vessels built, owned, operated and flagged in America. This in effect prohibits foreign involvement in transport between any two American ports. The law’s origin, as with many protectionist measures, lies in concerns over national defence.
In fact, the country’s shipping industry became uncompetitive, and has in recent decades declined. Because of the Jones Act, America’s fleet of domestic cargo ships has fallen in number from 434 in 1950 to just 99 in 2018. American cargo ships can be four times more expensive to build and twice as expensive to operate as European or Asian ones, owing to higher labour, material and maintenance costs.
This means American companies instead opt for pricier ground and air transport, or simply import products from overseas. The volume of American cargo shipped along the Pacific coast, the Atlantic coast and the Great Lakes has fallen by about half since 1960. Over the same period shipping by rail and road has risen by 50% and more than 200%, respectively. The Jones Act is most punishing for states and territories cut off from the mainland.
Efforts to repeal the act have failed, thanks to the vigorous efforts of lawmakers from both parties who represent states with shipbuilding industries. The economic damage of the Jones Act is diffuse, which dulls political opposition. It is only in moments of crisis that the law’s pernicious effects become clear. To ease the flow of aid, the president regularly waives the Jones Act when hurricanes strike—ironically, on national-security grounds .
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