The Trump administration dealt a grave blow to U.S. Maritime industry workers by withdrawing a proposed Jones Act review announced by President Obama. The Trump administration is the first to choose not to support the Act in its ninety-seven-year history. The consequences could be catastrophic.
The proposal would have put an end to decades of exemptions by U.S. Customs and Border Protection. The U.S. maritime industry recently spent $2 billion retrofitting ships to prepare for the increased work allotment. Instead, the Trump administration heeded warnings from the offshore oil and gas industry that lifting the exemptions would force many of those companies to move out of the Gulf in favor of offshore fields overseas.
U.S. Customs announced the decision to withdraw the proposal in April. Aaron Smith, president of the maritime association, immediately demanded action from Trump to correct the decision.
The many benefits of the Jones Act
The Jones Act protects workers by keeping U.S. ships and mariners working in U.S. waters. The Act requires that American ships, built by U.S. shipbuilders, transport goods between U.S. ports. The whole purpose of the Jones Act is to support the U.S. maritime industry. For 97 years, it has accomplished this goal.
The wisdom of the Jones Act ensured a strong U.S. maritime industry for almost a century. The Jones Act is the foundation of a strong base of seafarers, vessels, and shipyards. It ensures the continuation of domestic waterborne trade and serves as a naval and military auxiliary in times of war.
The administration’s recent decision sharply conflicts with the fact that every job created in an American shipyard supports four jobs in other areas of the economy. According to a PricewaterhouseCoopers (PwC) study, the Jones Act fleet generates 500,000 jobs annually, contributes $100 billion in total economic output, and provides $29 billion in wages, to the U.S. economy.
Critics who claim that the Jones Act hinders competition are incorrect. U.S. carriers compete among themselves and with other modes of transportation, keeping rates highly competitive.
Weighing the costs of repeal
A president can suspend the Jones Act during emergencies. George W. Bush did this after Hurricane Katrina in order to admit foreign vessels. Obama chose not to suspend the Act after the Deepwater Horizon oil spill in 2010. Instead, he equipped American ships with skimming technology airlifted from the Netherlands.
Still, critics claim high union labor costs make the Jones Act too expensive. They would like to see it dismantled and replaced with cheaper foreign labor.
Now, they may have a chance to prove their point. Most perplexing are how Trump reconciles the decision to accommodate the oil and gas industry against his firm campaign promises to put American workers first.
The decision marks a startling break in Washington’s heretofore unwavering support of the Jones Act. Every administration since 1920 has supported the Act. The U.S. Navy even says the Act provides significant economic and national security benefits.
You don’t need any expertise in the maritime industry to understand that repeal of the Jones Act will leave the U.S. quite vulnerable.
View the original Jones Act here: Act for the Relief of Sick & Disabled Seamen, July 1798
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