A bipartisan group of 32 U.S. House members are pushing back against a recently filed amendment to repeal requirements that domestic waterborne cargo be shipped in U.S.-flag ships owned, built and operated by Americans.
The representatives argue that repealing the Jones Act would hurt the U.S. economy and national security. The group urged Senate leadership to reject the amendment, which Sen. John McCain, R-Ariz., has proposed as an amendment to the Keystone XL pipeline authorization bill.
Whether McCain’s amendment will become law is questionable. President Obama has vowed to veto the Keystone bill if it’s passed by Congress. But the current fight over the Jones Act shows how sharply divided the bill’s supporters and opponents are.
Opponents have long criticized the Jones Act for raising the cost of shipping between the continental U.S. and Hawaii, Alaska, Puerto Rico and Guam. High costs of U.S. shipbuilding create barriers of entry, limiting the number of competitors to the protected U.S. domestic market.
Ironically, the renewed debate over the law comes as U.S.-flag domestic carriers are investing in new ships after years of few orders. Shipbuilders are enjoying demand for vessels to transport domestic energy products, and liner operators Matson, TOTE and Crowley have ordered container ships that will be fueled by clean-burning liquefied natural gas.
The Jones Act supporters in the House said the law helps the military by supporting a maritime industrial base.
“America’s sea services are the most powerful in the world and play a critical role providing a stabilizing presence to keep the seas free and open, which in turn allows commerce to provide,” the group wrote in a Jan. 20 letter to Senate Majority Leader Mitch McConnell, R-Ky., and Senate Minority Leader Harry Reid, D-Nev. “One of the reasons our Navy is strong is because of the U.S. industrial base.”
The group, which includes Rep. Duncan Hunter, R-Calif, the chair of the Coast Guard and Maritime Transportation committee, pointed to a Maritime Administration study that concluded U.S. shipbuilding supports more than 40,000 jobs and injects nearly $60 billion into the economy annually.
McCain, a longtime Jones Act critic, argues that the Jones Act hinders free trade and makes U.S. industry less competitive because they have to pay higher shipping rates to move waterborne cargo within the U.S. He has cited a Congress Research Service report that found foreign-flag tankers could move crude oil from the Gulf Coast to the Northeast for a third the price of U.S.-flag carriage.