American Maritime Partnership chairman Tom Allegretti says there is strong support for Jones Act in Congress and attempts to exempt Puerto Rico could jeopardize Congressional support for aid.
The chairman of a coalition of U.S. ship and barge operators, shipyards, and maritime unions argued yesterday that attempts to exempt Puerto Rico from the Jones Act could jeopardize Congressional support for aid to Puerto Rico.
Tom Allegretti, who is chairman of the national Jones Act coalition American Maritime Partnership as well as president and chief executive of the American Waterways Operators, a group that represents the tug and barge industry, made his remarks in New York at a conference sponsored by TradeWinds on the Jones Act. The Jones Act requires ships bringing goods between ports and terminals in the U.S. be built in U.S. shipyards, be registered in the U.S. and employ U.S. seafarers.
“Puerto Rico is experiencing a severe debt crisis and Congress may be considering a legislative assistance package to help Puerto Rico. Some in Puerto Rico have suggested that a Jones Act exemption be included in the legislative package under the erroneous theory that the Jones Act is bad for Puerto Rico,” said Allegretti.
“But here’s the kicker: If Congress did that — included an anti-Jones Act amendment in the package — the chances of the overall package getting enacted into law would diminish. That’s because the presence of an anti-Jones Act amendment would reduce or subtract the number of members of Congress who would vote for the overall bill. So Puerto Ricans would be undermining, and maybe even sabotaging, their own assistance package by including an anti-Jones Act amendment in it.”
“We’ve seen this same scenario — the Jones Act as a vote subtractor — in analogous recent cases related to the Keystone pipeline and crude oil exports,” he noted. “Adding an anti-Jones Act provision to legislation is essentially a poison pill, or, to use a maritime analogy, a huge heavy anchor that puts a real drag on legislative progress.”
Earlier this year, the Senate passed a bill for the construction of the Keystone XL oil pipeline, without a an amendment filed by Sen. John McCain, R-Ariz., that would have repealed the build in America requirement in the Jones Act.
Exemption from the Jones Act for Puerto Rico was recommended last week by the Group for the Fiscal and Economic Recovery of Puerto Rico established by the commonwealth’s Governor Alejandro García Padilla.
It cited the so-called “Kreuger Report,” entitled Puerto Rico: A way forward, whose lead author is Anne O. Krueger, former chief economist for the World Bank. That report said Puerto Rico’s import costs are “at least twice as high as in neighboring islands on account of the Jones Act…Even those that consider the negative effects of the Jones Act to be exaggerated — e.g., outbound cargo rates are lower than inbound ones, as ships would rather not return empty — concede it is a clear net negative.”
The report also noted Puerto Rico also has local laws that add to transportation costs, specifically, prices and licensing requirements set by the Public Service Commission for ground transportation.
In remarks prepared for the TradeWinds conference, Maritime Administrator Paul “Chip” Jaenichen said the Jones Act “is not responsible for the cost of gasoline; the price of groceries in Hawaii; the debt crisis in Puerto Rico; or New Jersey’s snowy roads. These are all tall tales, embellishments, and outright falsehoods or misrepresentations.
“Every time the Jones Act is smeared — every time the Jones Act is demonized — every time the Jones Act becomes a scapegoat for another problem it threatens our national defense, it threatens our economy, it threatens our way of life,” added Jaenichen.
The price of products such as milk and gasoline are the result of the state’s geographic isolation, he argued, noting that the price of milk there is about the same as it is in Greenland, where there is no Jones Act requirement.
“With or without the Jones Act, geographical isolation always has and always will carry high costs,” he said.
“The reality of the situation is that under the Jones Act, foreign shipping companies can supply Hawaii directly from Asian ports. But none choose to regularly do so,” he said. Jaenichen noted that the state is a small market with only 1.42 million people, has limited warehousing capacity, requires consistent high frequency service, and is “nearly a thousand miles away from all major transpacific shipping routes like Hong Kong to Los Angeles/Long Beach.”
“It isn’t that foreign carriers cannot compete against the Jones Act when it comes to Hawaii…It’s that they largely choose not to compete — because plain and simple — it isn’t profitable or time-efficient.”
He noted that Matson and Pasha, which acquired Horizon Lines’ service to Hawaii earlier this year, provide reliable service to Hawaii five times a week that “keeps local retailers consistently and fully stocked with goods” in what he said is a “ship-to-shelf” market because of the limited warehousing.
Jaenichen claimed “there is no credible analysis of what the Jones Act costs Hawaii in terms of increased pricing on goods.”
In Puerto Rico, Jaenichen said that while 85 percent of everything consumed in Puerto Rico is imported by water, only 25 percent is carried on Jones Act ships. “So pinning the blame on the Jones Act simply doesn’t work.”
He called the Kreuger Report “a long string of absolute falsehoods and inaccuracies.”
The claim that import costs are at least twice as high in Puerto Rico as they are on neighboring islands was “100 percent untrue,” said Jaenichen. “The truth of the matter is that for decades, the Jones Act has provided persistent capacity and frequency of service to Puerto Rico — even as cargo shipping volumes have fluctuated with economic events.”
Attempt to repeal Jones Act could be ‘poison pill’ for Puerto Rico
