US House members: Do not extend Jones Act waiver

US House members: Do not extend Jones Act waiver

Republicans and Democrats on a US House subcommittee said President Donald Trump erred in temporarily allowing foreign-flag ships to sail from the US mainland to hurricane-ravaged Puerto Rico, and that Congress should leave the Jones Act alone.

The bipartisan blasts at Tuesday’s Transportation and Infrastructure subcommittee hearing indicated that the Puerto Rico crisis is unlikely to lead to repeal of the Jones Act, which restricts domestic waterborne shipments to US-flag vessels built, owned, and crewed by American citizens.

After criticism about delays in providing hurricane relief to Puerto Rico, Trump last week issued a 10-day waiver of the law for shipments between US ports and Puerto Rico. The Jones Act does not restrict shipments by foreign-flag ships from other countries to the island.

Rep. Duncan Hunter Jr., R-Calif., the subcommittee chairman, said he hopes Trump will decline to extend the waiver, which Hunter said appeared to have been granted as a result of a “purely political” misunderstanding.

“Trump went very anti-Trump by waiving the Jones Act. He went anti-American worker, anti-American-made, and basically sold out to Wall Street and big interests that don’t want American-made,” Hunter said.

“If the president stands for the American worker and the president stands for American jobs and national security, which he said over and over that he does, then what he did was a mistake and he won’t do it again, and instead of lambasting the Jones Act and waiving it, he’ll be standing up for it in his next speech,” Hunter said.

In the days after Hurricane Maria ravaged Puerto Rico, the Jones Act was criticized as an impediment to relief and recovery efforts. Sen. John McCain, R-Ariz., and Sen. Mike Lee, R-Utah, introduced bills to provide a one-year Jones Act waiver for Puerto Rico.

McCain has introduced several bills during the last decade to repeal of the act, which he and other opponents have denounced as a protectionist law that raises consumer costs of goods shipped to Puerto Rico, Alaska, Hawaii, and Guam.

Rep. Don Young, R-Alaska, said the 10-day waiver should not be extended. He agreed with Hunter, and other subcommittee members that Jones Act critics are using the Puerto Rico crisis as an opportunity to undermine the act.

“I’m a little concerned about that nose under the tent, because it’s not the first time they’ve tried to do it,” Young said. “They’re trying to do it in Hawaii, and they’re trying to do it in Puerto Rico, and down the line. ... This is not the first time this has occurred.”

Rep. John Garamendi, D-Calif., said Jones Act carriers have done a “superb” job delivering supplies to Puerto Rico, but “it would be very hard to tell that from the narrative spun by the media and by the critics of the Jones Act.”

He said delivery backlogs are due to disruption to trucking services and inland infrastructure, not availability of US-flag vessel capacity. “More vessels delivering more supplies without any improvement of the island’s surface infrastructure will do little to improve the recovery effort on the island. In fact, it may create even greater congestion and confusion,” Garamendi said.

Officials of Crowley Maritime and TOTE, the two largest Jones Act carriers operating between the US mainland and Puerto Rico, told subcommittee members that containers have been piling up at their San Juan terminals, and that any foreign-flag vessels calling at San Juan’s international terminals would have the same problems.

Anthony Chiarello, CEO at TOTE, said his company has more than 2,000 containers sitting at its San Juan terminal “and more keep coming each time a ship unloads.” He said the flow is improving, but that only 1,274 containers had left the terminal since the hurricane, compared with a normal 600 per day.

Michael Roberts, senior vice president at Crowley, said his company’s San Juan terminal normally has about 900 containers awaiting dispatch, but now has four times that number and that gate moves are about half their normal rate of 400 to 500 a day.

Chiarello said that because Puerto Rico is a small market, any international carriers serving the island probably would transship via other ports, resulting in transit times of 10 to 15 days, compared with TOTE’s two and a half days on its back-and-forth route between Jacksonville, Florida, and San Juan.

He also said Jones Act carriers’ northbound backhaul rates from Puerto on the heavily imbalanced trade with the US mainland are probably much lower than an international carrier would provide as part of a broader service.

All of the witnesses at the subcommittee hearing, and all subcommittee members who spoke at the hearing, were Jones Act supporters. Hunter said the hearing aimed to counter misinformation that has been circulated on media outlets ranging “from MSNBC to Fox News.”

Brian Schoeneman, legislative director of the Seafarers International Union, said the current crisis in Puerto Rico has produced “knee-jerk” claims of protectionism and false claims about Jones Act’s impact. He said misinformation about the act “has spread like a disease through the mainstream media and through social media.”

Schoeneman, Roberts, Chiarello, and John Graykowski, of Philly Shipyards, cited pro-Jones Act arguments include carriers’ investment in Jones Act ships and infrastructure, the act’s importance for US shipbuilders and national defense readiness, the impact of US jobs, and what they said were false claims that eliminating the act would reduce shipping costs.

Hunter said cabotage laws were defended by the famed economist Adam Smith and exist in many countries, and that tinkering with the Jones Act would threaten US jobs, open the way for non-US vessels and crews to eventually operate on US inland waterways, and undermine military readiness.

Contact Joseph Bonney at joseph.bonney@ihsmarkit.com and follow him on Twitter: @JosephBonney.