Jones Act apologists build straw man around China threat

By Keli'i Akina, Ph.D., Grassroot Institute, September 27, 2021

Apologists for the Jones Act would like you to believe that the protectionist federal maritime law is the only thing stopping China from taking over American shipping.

The truth is that China loves the Jones Act.

In fact, the Jones Act — which requires goods carried between U.S. ports to be on ships that are U.S. flagged and built and mostly owned and crewed by American — is one of the things that has helped China in its efforts to dominate international trade.

That was a point I made during a debate at this year’s FreedomFest, the annual conference that explores ideas and issues in the context of liberty.

Along with Grassroot Scholar Ken Schoolland, an associate professor of economics at Hawaii Pacific University, I debunked some of the myths that have propped up the law for the last hundred years, and argued it was time to update the law for the 21st century.

Our debate opponents were George Landrith, president of the group Frontiers of Freedom, and former Republican Congressman Ernest Istook of Oklahoma, who writes frequently about the Jones Act.

For both Landrith and Istook, China was the sinister star of their Jones Act defense. Istook dwelt on the nation’s “One Belt One Road” initiative, and discussed how China has “weaponized the global supply chain.” Landrith suggested that the Jones Act is all that prevents Chinese spies from sailing the Mississippi. The clear implication was that the Jones Act is a national security measure needed to defend America from Chinese expansionism.

Except that it isn’t.

As I explained in my rebuttal speech, the Jones Act has been a boon for China, partly because, for a century, it has been an anchor around the neck of the U.S. economy.

Under the Jones Act, America’s shipyards have dwindled, the number of ships has decreased and the number of mariners has fallen far below what is required to supply our needs in an emergency. Simply put, the Jones Act has made America less competitive.

As I said at FreedomFest, “The Jones Act has spawned a whole industry of politicians and political operatives to run around the country, telling you, ‘Keep the Jones Act because it protects us from China.’ China loves to hear that, because it just doesn’t protect us from China.”

Seriously, how does it protect us to make U.S. shipping companies buy U.S.-built ships that cost four to five times more than vessels on the world market? How are we fending off Chinese domination by ensuring there are insufficient Jones Act ships or mariners to cope with national emergencies, and in some categories, such as tankers to carry liquid natural gas, no Jones Act-compliant ships at all?

As for the notion that the Jones Act prevents Chinese operatives from sailing our inland waterways or entering our ports, that distorts what the Jones Act really does.

Recall that the Jones Act applies to only the transport of goods between U.S. ports. It does not prevent foreign ships or sailors from entering our ports; that happens every day. Nor does it apply to foreign vessels and their crews sailing our rivers and lakes; that also happens every day. These may prompt national security questions, but they aren’t addressed by the Jones Act. They’re rightfully the concern of the U.S. Coast Guard, Customs and Border Protection and other federal agencies.

I’m not suggesting that China does not pose a threat to America’s national security or economic interests. I’m saying only that the Jones Act works more to China’s benefit than to ours.

More proof for that proposition is that U.S. carriers typically have their vessels maintained and repaired in Chinese shipyards, because U.S. shipyards are too expensive — even after paying a 50% federal tariff intended to discourage such transactions.

We talk about the Jones Act as “protectionist” legislation, but really it doesn’t do much protecting. In the bigger picture, it’s not protecting our shipyards, it’s not protecting maritime jobs, it’s not protecting consumers from higher prices, and it’s not protecting our country’s military readiness.

In the smaller picture, the main beneficiaries of the act are the few companies that are “protected” from competition. But even that “protection” is debatable: A 2019 OECD study indicated that American shipbuilding could rebound and increase its output in the long term by 71%, up to $1.47 billion a year, if the Jones Act were reformed.

If we really want to protect the U.S. against Chinese expansionism, we should be looking at ways to make American shipping and shipbuilding strong again.

As I said during the FreedomFest debate, “If we modified the Jones Act simply to allow our shippers to buy our ships from our allies, we could build a powerful force that could counter China, absolutely. Because the power to counter China would be to bring together the economic force of the world.”

Creating the counter to China requires new thinking about how the Jones Act has hurt American interests. By updating the Jones Act for the times we live in, we can remove this burden to our economy and help strengthen American shipping.