European shipbuilding industry trade association blames Jones Act for lower environmental standards and higher costs in US

by Michael Hansen, Hawaii Shippers Council, May 10, 2016

The London-based Fairplay Magazine published on May 10, 2016, a news article, “SEA Europe says US is being held back by Jones Act.” It reported SEA Europe, an European Union shipbuilding and marine equipment industry trade association, recited in an open letter dated May 9th several ways in which the Jones Act negatively impacts the U.S. domestic economy and environment.

The open letter was addressed to Greenpeace Netherlands which is highly critical of the bilateral foreign trade agreement (FTA) currently being negotiated between the European Union (EU) and the United States (US) known as the Transatlantic Trade and Investment Partnership (abbreviated TTIP, and pronounced “Tea-Tip”).

SEA Europe is seeking through the TTIP negotiations a treaty exemption in U.S. Jones Act cabotage laws (formally known in U.S. jurisprudence as the “coastwise laws of the U.S.”) that would allow vessels constructed in the European Union (i.e., EU-built) to be imported and employed under the U.S. flag (with U.S. crew) in the domestic trade of the U.S.

SEA Europe responded to Greenpeace stating that the environment would benefit from advanced EU shipbuilding and marine equipment technology if through the TTIP process EU-built vessels were permitted to be imported and operate under the U.S. flag in the domestic Jones Act trades.

In addition, SEA Europe extolled the economic advantages that would benefit the U.S. from allowing EU-built vessels operating U.S, flag into the Jones Act trades.

Key excerpts:

Brussels-based European shipbuilding and marine equipment body SEA Europe claimed today that the development of maritime safety and environmental standards in the United States was being held back by US insistence on maintaining Jones Act-style restrictions on its trade with the European Union.

The normally discreet SEA Europe urged US and EU negotiators not to shy away from tackling Jones Act-style restrictions on trade in the current negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the two power blocs.

Responding to recent leaks on the talks published by Greenpeace Netherlands, it warned the environmental body against treating the TTIP simply as a potential threat. It should be regarded rather as a “unique opportunity to improve standards, reduce emissions and harvest existing potential for a substantially better industrial performance related to environment protection”, it said.

In an open letter to Greenpeace Netherlands, new SEA Europe secretary general Christophe Tytgat argued that Jones Act restrictions on the use of non-US owned and built vessels in US domestic trades were having a negative effect on the US maritime sector, particularly from a safety and environmental standpoint.

They had resulted in the virtual disappearance of US commercial shipbuilding and heavy reliance on road transport to move domestic freight, he said.

They had also led to US shipowners continuing to use older, less energy-efficient vessels instead of replacing them with “newer, safer and more environmentally friendly ships”.

They had pushed up domestic shipping costs, causing many US businesses to import goods rather than use domestic supplies.

He also blamed the Jones Act for the lack of development of offshore wind energy in the United States, which he said was the result of a lack of suitable US-built wind farm support vessels, and claimed

that the Deepwater Horizon oil spill in 2010 had been worsened because specialised European clean-up vessels had not been allowed to enter US waters to respond.

Tytgat acknowledged that Jones Act defenders had so far managed to “ring-fence” the act by “myths and false reasoning” but argued that advanced European technology and ships could improve safety and environmental standards in the United States.

SEA Europe is the European Association for Ships and Maritime Equipment and is the voice of the European maritime technology industry in the European Union. The industry trade association represents close to 100% of the European shipbuilding industry in the 28 nations of the European Union, an industry which generates more than €91 billion (US $ 104 billon) turnover annually and offers direct employment in high profile jobs for more than 500,000 Europeans.

Fairplay: SEA Europe says US is being held back by Jones Act

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SEA Europe posts open letter to Greenpeace defending liberalization of Jones Act Cabotage

by Michael Hansen, Hawaii Shippers Council, May 10, 2016

The European shipbuilding and marine equipment industry trade association, SEA Europe, posted to their website an open letter dated May 9, 2016, addressed to Greenpeace Netherlands responding to their criticism of the bilateral free trade agreement (FTZ) between the European Union (EU) and the United States (US) currently being negotiated and known as the Transatlantic Trade and Investment Partnership (abbreviated TTIP, and pronounced “Tea-Tip”).

SEA Europe is seeking through the TTIP process a treaty exemption to the U.S. Jones Act cabotage laws to allow the employment of vessels built in the European Union (i.e., EU-built) operating U.S. flag (with U.S. crew) in the domestic trades of the U.S.

A copy of the SEA Europe letter to Greenpeace is attached.

Key excerpts:

SEA Europe has been actively following the TTIP process. In this regard, the challenge that our sector is facing are those restrictive US legislations which practically prevent European built vessels and many major European built marine equipment and systems from accessing the US domestic market.

A well-known example of such a trade barrier is the US Jones Act. Under this Act, which dates from the 1920s, all commercial vessels transporting cargo between ports and points located in the United States and on the outer continental shelf need to fly a US flag, be owned and manned by US citizens and to be built in US shipyards.

Due to such restrictions in particular the US built requirement, today, US commercial shipbuilding has almost disappeared as a direct result of lack of competition. Domestic cargo transport is mainly done over land, primarily by trucks, which results in highly congested US roads with an adverse effect for the environment.

In addition, due to high building costs and lack of commercial newbuilding capacity and skills in the US, US ship operators have an economic incentive to continue operating old vessels instead of replacing them with newer, safer and more environmentally friendly ships. The average age of a US container ship is 31 years, compared to an average age of 10.8 years at the world level. Moreover, containerships operating in the world market are typically taken out-of-service and scrapped at the age of 22 to 25 years. It goes without saying that older ships are less efficient, produce more emissions, and do not have the same safety levels as younger vessels.

Furthermore, due to the high domestic shipping costs that are caused by the Jones Act, many businesses in the US have to import goods from foreign countries whereas there are abundant local supplies of the same goods. For example, the price for moving crude oil from the US Gulf Coast to the US Northeast on Jones Act tankers is $5 to $6 per barrel, while moving it to eastern Canada on foreign tankers is only $2 per barrel. This has caused unnecessary longer shipment and transportation (thus higher energy consumption and emission) which consequently also have a negative impact on environment.

LINK: SEA Europe Open Letter to Greenpeace