Reform Jones Act and PVSA for Hawaii

Hawaii Together with Keli’i Akina, June 7, 2021

President Joe Biden recently issued two Jones Act waivers to help facilitate fuel transport from Texas to the East Coast after the Colonial Pipeline shutdown. He also waived the Passenger Vessel Services Act to help Alaska's cruise ship industry. With those incidents in mind, "Hawaii Together" host Keli'i Akina will talk with Grassroot Scholar and Cato Institute policy analyst Colin Grabow Grassroot Institute research associate Jonathan Helton about whether waivers or other sorts of relief from these two federal maritime laws could also help Hawaii.

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Do it for Hawaii: Reform the Jones Act and PVSA

The 1920 Jones Act and the 1886 Passenger Vessel Services Act have been in the national news recently, so Keli’i Akina, president of the Grassroot Institute of Hawaii devoted his latest “Hawaii Together” program on ThinkTech Hawaii to the topic of why both of these destructive, protectionist federal maritime laws need to be reformed.

His guests on Monday, June 7, 2021, were Colin Grabow, a Grassroot Scholar, policy analyst for the Cato Institute and one of the nation’s leading Jones Act and PVSA experts; and Jonathan Helton, a Grassroot Institute research associate who also specializes in the Jones Act and the PVSA.

Grabow explained that by requiring all ships that transport goods between U.S. ports to be U.S. flagged and built, and mostly owned and crewed by Americans, “the Jones Act serves to increase the cost of transportation, which of course, that impacts all aspects of our economy. … Why does it drive up the cost? Two factors I’d point out: [First], the ships have to be U.S.-registered. There’s something like 50,000 ships in the world, [and] out of those, only 180 are U.S.-flagged. Then out of those 180, only 96 are U.S.-built.

“[Second], a ship built in the United States is usually anywhere from four to five times more expensive than one built in another country. [So] we have … ships that are expensive to build, expensive to operate, … and there are very few to choose from. It doesn’t take an advanced degree in economics to understand that when you have restricted supply, very costly inputs, the result is very expensive shipping.”

Helton said the PVSA is “essentially everything that Colin said about the Jones Act.… but it applies to the transportation of passengers instead of the transportation of goods.” However, “instead of there being 96 Jones Act-compliant ships, as Colin mentioned, there’s actually only one PVSA- compliant ship. … That ship operates exclusively in Hawaii. It’s the Pride of America. So because of that, Americans have much more limited options for choosing a ship to cruise on than they would otherwise, if we were to have some looser restrictions on what ships can move passengers between U.S. points.”

To learn more about how both laws are destructive to America’s economy and national security, while benefiting a lucky, rent-seeking few, watch the full half-hour interview. 

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The 1920 Jones Act and its “cousin,” the 1886 Passenger Vessel Services Act, were the topics of Keli’i Akina’s latest conversation with radio host Johnny Miro, broadcast this past Sunday, June 6, 2021, by the H. Hawaii Media family of radio stations on Oahu at 101.1 FM, 107.5 FM, 101.5 FM, 96.7 FM, 97.1 FM, 103.9 FM, and online at hawaiistream.fm.

Akina explained during the 20-minute interview why both of these protectionist federal maritime laws need to be updated for the 21st century.

Noting that the Jones Act applies to merchandise and the PVSA to passengers, Akina said both interfere with market efficiency, raise prices for consumers, have limited Hawaii’s economic potential, and have failed in their missions to protect the U.S. shipbuilding industry and national security.

They discussed President Joe Biden’s recent waivers of the Jones Act, intended to compensate for the brief shutdown of the important Colonial fuel pipeline, and his approval of a congressional bill  to temporarily waive the PVSA, intended to help Alaska’s suffering tourism industry, which relies heavily on cruise ship commerce.

Asked what Hawaii can learn from the PVSA exemption for Alaska, Akina responded:

“Well, the biggest lesson is the importance of demonstrating the harm caused by these protectionist laws and assembling a broad coalition that supports reform. Having a strong statement from the Alaska Legislature and governor also helped push the bill forward in Congress. This is the kind of cooperation and action we need to achieve in order to see updating of the Jones Act for Hawaii.”