How Jones Act reform can work for everyone: Oahu presentation

A "very interesting coalition" of diverse political interests has been forming recently to update the 1920 maritime law for the 21st century

from Grassroot Institute of Hawaii, December 8, 2022

The Grassroot Institute of Hawaii hosted the nation’s leading critic of the Jones Act in Honolulu and Kahului this week, with the point being to explore “How Jones Act reform can work for everyone.”

The events originally were intended to feature representatives of both sides of the Jones Act debate, who together would explore where common ground might be found. But in the end, it was just Colin Grabow, a trade policy analyst at the Cato Institute in Washington, D.C., a Grassroot Scholar and co-editor of the book “The Case Against the Jones Act,” on hand to discuss the issue.

Asked at the Oahu event by moderator Keli’i Akina to give Jones Act supporters the benefit of the doubt and explain what their best case for the law might be, Grabow said, “I’ll just first say that … this is a recurring theme of not finding Jones Act supporters willing to engage in this kind of back and forth. [But] to try to give a fair shake to the other side, … what I imagine they would tell you is they’d say the Jones Act is for national security. That’s the primary benefit.” 

Specifically, he said, “The U.S.-built requirement [of the Jones Act] means that we have shipyards that can build and repair ships for our military in a time of war. The U.S.-flag requirement means that we have American ships that can transport equipment and supplies for our military, provide sealift in times of war or national emergency. The U.S.-crew requirement means that we have American mariners that we can rely on to crew these ships and operate them in times of war. These are all laudable goals.”

However, he added, “My response to that, taking the side of the opponent, is that none of this works.”

Continuing in a Q&A format with Akina and then later the audience, Grabow highlighted the many costs and harmful effects of the law, while also making it clear that Jones Act reform doesn’t have to be a “binary” proposition.

“There’s a whole spectrum of possibilities between repeal and the status quo,” he said. One would be to, “Get rid of the U.S.-built requirement. Let Americans buy foreign-built vessels. Some of the biggest shipbuilders in the world are Japan and South Korea. These are our allies. These are our friends. Why can we not buy our ships from them?”

Another reform that would harm almost nobody would be to let U.S. carriers buy foreign-built ships that U.S. shipyards don’t currently produce, such as livestock, liquid natural gas and propane carriers.

Another would be to grant complete exemptions for noncontiguous states and territories, such as Hawaii and Puerto Rico, that are almost wholly dependent on waterborne imports and bear a greater proportion of the higher costs imposed by the Jones Act, which limits shipping competition between U.S. ports.

As for the political possibilities, Grabow said, “There’s cause for optimism here. There are a lot of people, more than you might suspect, that recognize the shortcomings [of the Jones Act].”

He listed Democrats and Republicans who have stepped forward in recent months to advocate Jones Act reform, including U.S. Rep. Alexandria Ocasio-Cortez — “obviously well to the left than probably everyone in this room” — and U.S. Sen. Ted Cruz, and many others. 

“There’s a very interesting coalition to be built here, that you could imagine we could have Ted Cruz and AOC on the same team. That would be amazing, wouldn’t it? It [the Jones Act] would be the one thing that could bring everybody together.”

Akina added: “Well, thank you for expressing that, Colin. That’s a commercial for what we call at Grassroot, ‘E hana kākou.’ Let’s work together to find solutions.”

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In related news …

The Wall Street Journal published an attractive "slide show"-style article about the Jones Act on Tuesday in which a 2020 report by the Grassroot Institute of Hawaii was cited.

The WSJ article was titled "How the Century-Old Jones Act Affects Today's Home-Heating Prices" and referenced the Institute's study "Quantifying the cost of the Jones Act to Hawaii."

The WSJ article also discussed the impact of the protectionist 1920 maritime law on Puerto Rico and New England, both of which, like Hawaii, have sought Jones Act waivers to import fuel.

Sadly, the article uncritically repeated a couple of very dubious Jones Act lobby talking points, namely that the law "supports 650,000 jobs and contributes $150 billion to the economy." But it's still worth a look.