Stranger in Every Port: Fight Brews Over Foreign-Flagged Merchant Marine Vessels Using American Ports

A 106-year-old law enacted to protect the American shipbuilding industry is standing on sea legs as the Trump administration — over the objections of Republican Party loyalists and Democrats alike — seeks to upend it to reduce price spikes caused by Iran war-related shipping disruptions.The White House has credited a six-monthlong waiver — set to expire in August — of the merchant marine law known as the Jones Act with increasing the efficiency of shipping and movement of energy supplies and other goods. Suspending its enforcement, however, has angered American mariners and the shipbuilding industry and even divided electoral Democratic politics in deep blue Hawaii.A suspension is supported by those who say the law disproportionately punishes outlying American states and territories and increases the costs of goods. Proponents of America’s maritime industry, on the other hand, call it a last defense against foreign adversaries and competitors. “A strong maritime industrial base is essential to the nation’s economic and national security, particularly as the United States works to reinforce its global strategic position,” 52 Republicans, led by House Speaker Mike Johnson, wrote in a letter to the president earlier this summer. “Our nation’s strongest shield against foreign exploitation of American waterways is the Jones Act,” the letter reads.The Merchant Marine Act of 1920, as it is formally known, passed in the aftermath of World War I to give American-built ships an edge against foreign shippers. It requires all goods shipped between American ports to be carried on ships that are domestically built, owned, and crewed. A foreign ship can deliver goods to one American port but then has to travel back to a foreign port before carrying goods to another American port. A waiver is permitted if the nation’s secretary of defense finds it necessary “in the interest of national defense to address an immediate adverse effect on military operations.”Several presidents have issued temporary waivers of the law but Mr. Trump’s suspension of it is the longest since at least 1950. With the waiver in place since March, the Maritime Administration has tracked an increase in foreign-flagged fuel shipments traveling between the Gulf Coast and California. Puerto Rico has also seen nearly two dozen shipments of gasoline and jet fuel.Nearly 80 percent of American trade, by weight, moves by sea but opponents of the Jones Act say it has done little to keep the shipbuilding industry viable nor has it helped keep prices under control. American shipyards currently build less than one-tenth of one percent of global commercial capacity, according to a January Vanderbilt University white paper. Meanwhile, foreign shipbuilders produce ships more cheaply than American businesses and foreign-owned companies enjoy lower staffing and operating costs. “Rebuilding shipbuilding means abandoning the half-measures that keep failing and returning to tools that worked in the past when the country actually had to scale: public shipyards, stable financing, and wages that make shipbuilding a durable career,” a Vanderbilt senior fellow, Mary Bridges, said.The Competitive Enterprise Institute says the repeated need to suspend the act highlights its deficiencies and demonstrates how it keeps everyday costs higher than they need to be. That debate over consumer prices has become part of Hawaii’s Democratic primary season. Congressman Ed Case, a seven-term Blue Dog Democrat running for re-election, has sought for years to repeal the act. He says the law has dramatically increased costs across the islands, amounting to a $2,000 tax per family each year because of higher shipping costs. His progressive opponent, state Senator Jarrett Keohokalole, however — whom Mr. Case says is being funded by shippers and maritime unions — defends the act, saying it’s war, not shipping that raise prices. “We can’t have Chinese shipping companies deliver 100 percent of our goods to Hawaii because if they elect to at any point, they can just turn the deliveries off,” Mr. Keohokalole told Hawaii News Now. As Republicans urge Mr. Trump to let the current waiver expire, Congressman Salud Carbajal, a California Democrat and ranking member of the Coast Guard and Maritime Transportation Subcommittee, is demanding to know how foreign-owned vessels may be exploiting the exception. “Even when operating under a Jones Act waiver, every vessel that operates in the domestic trades must comply with all other federal and state statutes,” Mr. Carbajal wrote in a letter to vessel owners and operators. “This waiver has shown that now is the time to engage in rigorous oversight to protect the American maritime industry,” he added. The domestic maritime group, American Maritime Partnership, is organizing a campaign urging the public to voice support for the law with their congressional representatives. Those favoring repeal, however, say the act has outlived its purported economic and security rationale. “When a real crisis hit, allies and neutral registrants, not adversaries, filled the gap,” wrote a vice president at the libertarian think tank Cato Institute, Scott Lincicome in a recent opinion piece. None of the foreign vessels moving fuel and fertilizer between American ports has been owned or operated by China or Russia, undercutting security worries, he added. The American Maritime Partnership disputes that, saying that 18.5 percent of the vessels that obtained waivers in the first 60 days were tied to Hong Kong or China. One Russian-crewed ship also recently made a delivery to Florida.Separately, the Pacific Legal Foundation, which calls the Jones Act “nothing short of a colossal failure,” is supporting legal action to abolish the law.A White House said a decision on a waiver extension has not been made yet and noted that the second extension does not expire until August 16. The official said any further announcements would come directly from the president or the administration.

Stranger in Every Port: Fight Brews Over Foreign-Flagged Merchant Marine Vessels Using American Ports

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