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According to Investopedia it defines the Jones Act as a legislation that regulates maritime commerce between U.S. cities. The Jones Act is found in Section 27 of the Merchant Marine Act of 1920. The act required that goods and passengers transported by water between U.S. ports be done in U.S.-made ships, owned by U.S. citizens and crewed by U.S. citizens. The Jones Act also provided sailors with additional rights, including the ability to seek damages from the crew, captain or ship owner in the case of injury.
“Some provisions of the Jones Act are considered to be protectionist in nature as it requires ships to be U.S.-flagged, crewed and owned. This may price ship builders and operating companies out of the international market because the added expense and higher labor costs make companies less competitive. Today, at least 75% of a ship’s crew must be comprised of U.S. citizens.”
I am totally against the Jones Act because it limits many job opportunities and not allowed legal immigrants with maritime experiences to do business domestically. There are several legal immigrants that are highly skilled and know how to navigate the open seas. Therefore, the Jones Act would be more diversify and beneficial if allowed legal immigrants to bring their ideas to the table. For me I think if you are qualified and your ship passed a safety inspection whether it was U.S. made ship or not it should be able to navigate between ports. The more diversify a business is the better it will grow due to the fact that everybody brings different ideas to the table. In my opinion I think they should get rid of the Jones Act and I think the Jones Act is obsolete.
Jones Act is a maritime law that was enacted in the 1920s to address Seamen’s industrial injury dispute with vessel owners with a no fault determination before service and a minimum of 31 months wait period for benefit. It also addressed the issue of ship flagging and domestic commerce with the United States territorial waters. The Jones act defines a seaman as an employee of a sea vessel that spends a minimum of seventy (70%) of their time working on a vessel at sea keeping the MTS (maritime transportation system) functioning smoothly in the support of commerce, developing security capabilities, shipment loading/unloading to provide efficiency benefits (TRANSPORTATION RESEARCH BOARD, 2004). The Act as a general maritime law provided seamen a no-fault short-term benefits that was less extensive than those provided by industrial insurance for disabled employees. The Jones Act and general maritime law gave seamen the right to sue for damages – a right that is not extended to employees under industrial insurance or workers compensation insurance. The Jones Act does not cover Long-term disability, pensions, vocational training, and survivor benefits for the seamen. It is interesting to know that there is no payroll deduction under the Jones Act. Presumably, the seamen’s right under Jones Act/General Maritime Law to sue the employers for industrial disability compensation has a major drawback, even though they can get a larger – total payout amount, but ironically, these employees have to wait an average of 31 months between the incidence occurrence, and the receipt of their settlement which usually impose undue hardship on the employees (Final Jones Act Report).
The new policy options proposed after the repeal of Jones Act proposed that we enact regulations to substantially reduce freight rates aimed at enhancing the previous legislation using statutes to address other maritime concerns. Vessel operators had a choice to choose an alternative among various suppliers when procuring goods and services they need for their vessel operations thus giving themselves comparative cost advantage for the individual destinations. Majority of the larger ports, for instance, have cheap fueling services at their ports even if these services are not provided, the ships can choose to use bunkering services at alternative destinations. If one country alone is able to offer that level of service to other nations, they would have the competitive advantages from that country but unfortunately they cannot because it will violate the maritime law. Jones Act also is a broad-based federal legislation and regulations that protects air and water quality, ecosystem functions, wildlife and their habitats. The Marine Transportation System and the Federal Role under the Jones Act have since evolved prompting several changes in marine transportation demand, operations, and infrastructure. The jones Act had also promoted a number of statutory and regulatory requirements focused on marine transportation, and the federal requirements for the safe disposal of dredged materials from water ways, highlight regulations on air, emissions from ship engines, and the treatment of ballast water to prevent the spread of harmful, and invasive species (TRANSPORTATION RESEARCH BOARD, 2004). A country hosting competitive insurance service providers does not reduce maritime transport costs on vessel services within the shipping network rather other factors effect ship operating costs and freight rates like
1). Developing coastal Shipping-Countries can operate as an open market with very little regulation other than relevant international rules on carrier liability, security and safety. The exception to this rule is that they still have to obtain these services through the design of ship registration infrastructural investments such as the development of a feeder port network. (In a market where cabotage is restricted to domestic carriers only, ship operators have no choice but to comply with the country’s regulatory set up) which would directly impact operating costs. The is not future potential that the United States Department of Transportation will open up Cabotage to international shipping lines even with a prospect of creating diversity and fostering further reduction in freight rates for shippers. However, most countries often give cabotage rights exclusively to their domestic carriers with the aim of protecting and promoting their national shipping industry.
2). Another way of supporting cabotage is to expand the country’s feeder port networks to facilitate the access of traders to coastal shipping, and prod them to shift their logistical operations from land to maritime transports. The fact is that the increased volumes would lead to higher utilization rates and lower freight rates thus developing port competitiveness.
The Jones Act, enacted in 1920, brought about critical legislation that required ships transiting materials and passengers between two U.S. ports to be under the primary operational control of U.S. citizens. This act was implemented to ensure the integrity of the U.S. economy and the protection of U.S. water ports. Some of the issues addressed by the Jones Act include the taxation of domestic carriers and shipyards which contribute to the U.S. economy, enforcement of environmental standards set by U.S. regulations and quality of vessel staff, which are trained and monitored per U.S. policy (Transportation Institute, n.d.).
While some of the intentions of the Jones Act listed above are undoubtedly beneficial to the U.S., there is a question as to the current relevance and positive impact in our country’s economy as it stands today. The Jones Act requires that at least 75 percent of the crew on board a vessel transiting between two U.S. ports be made up of U.S. citizens, in addition to 75 percent ownership of the vessel being U.S. controlled itself. While this requirement is beneficial for ensuring that U.S. jobs are going to U.S. citizens, the effects of this policy can have a negative impact on the labor pool and operating costs as well. The emphasis on providing U.S. jobs to U.S. citizens is important and the ability to ensure that manufacturing capabilities for U.S. made machinery can benefit the U.S. economy are both qualifiers that should be taken into consideration in the nation’s best interest. However, modifying the Jones Act to be less restrictive in some areas should still make it possible for the United States to remain successful in the areas of trade and employment, while incorporating the capabilities of manufacturing and job opportunities from the rest of the world’s global trade infrastructure.
My question to the class is this… Do you think that the Jones Act helps or hinders the cost of trade and logistics for U.S. consumers?
There are many critics of the Jones Act —the law requiring all maritime commerce between U.S. ports to be carried on ships built, crewed and owned by Americans—who believe the law has outlived its purpose because it costs millions to maintain the status quo which is to sustain maritime industry which needs to be available during national emergencies or wartime.
However, the fleet of vessels originally assigned to provide the support during wartime and national emergency are either gone by almost half or in real bad shape. A good example of the state of deterioration of these vessels is the 40 year-old El Faro, a cargo ship servicing Puerto Rico sank and the whole crew perished. The Coast Guard called this incident one of worst maritime disasters in U.S. history.
There are two reasons why the U.S. shipbuilding industry has fallen behind the rest of the world and the big shipbuilding powerhouses like China, South Korea, and Japan to name a few. The price to build a container ship in the United States is double what it will cost in other parts of the world. Secondly, to crew a vessel with U.S. mariners (American crew) is also more expensive than a foreign crew.
The national security argument for the Jones Act fleet has also come under attack because the United States used foreign flag vessels during the first Gulf War and many of the sanctioned vessels under the Jones Act were not fully utilized to the extent called for under the law.
With said, I think the U.S. needs to revise the Jones Act and update some of its mandates to better accommodate the changes that have occurred over the past 100 years and allow for more openness to all. I do not think there is enough will in Congress to abolish it completely.