Jones Act industry attacks Mercatus paper

by Michael Hansen, Hawaii Shippers Council, September 5, 2017

The American Maritime Partnership (AMP) posted to their website on June 20, 2017, a position paper, “Thomas Grennes’ Jones Act paper is a one-sided advocacy document, not a real study,” attacking a paper written by Professor Thomas Grennes and published by the Mercatus Center at George Mason University on May 2, 2017.

Grennes, Professor of Economics, Emeritus, Poole College of Management, North Carolina State University, wrote the paper, “An Economic Analysis of the Jones Act,” for presentation at the Mercatus Center’s “Policy research seminar on researchers’ and stakeholders’ view on the Jones Act,” held at the Sheraton Maui Resort on Friday, April 13, 2017.

The AMP was originally formed in 1995 as the Maritime Cabotage Task Force (MCTF) to defend Jones Act cabotage in response to the Jones Act Reform Coalition (JARC)’s efforts to reform the nation’s coastwise laws. The MCTF changed its name to AMP in February 2011 to adopt a name that would be more comprehensible by the general public. Today, AMP is the leading domestic maritime industry trade association as an IRS 501(c) 6 business league organization lobbying for support of and opposed to any reform of the coastwise laws and regulations. The membership of the AMP is made up of domestic shipowners, U.S. shipbuilders, and the maritime shipboard and shipyard unions.

Prof Grennes’ finds Jones Act cabotage has not fulfilled the legislative goals stated in the preamble of the Merchant Marine Act of 1920, especially in respect of national security and supporting a strong merchant fleet, while its protectionist features have restricted economic development and harmed consumers over time. As a result, Prof Grennes recommends that Jones Act cabotage be reformed especially in terms of the most adversely affected U.S. noncontiguous jurisdictions of Alaska, Guam, Hawaii and Puerto Rico.

Any mention of Jones Act reform is anathema to the domestic maritime industry and the AMP in their position paper accordingly attacks Prof Grennes’ paper stating, “. . . . . it is a one-sided, unbalanced advocacy document that only highlights facts that support Grennes’ own perspective and ignores those that don’t, presenting only one side of the story that is riddled with omissions and outright factual errors. As a result, it should not be viewed as serious scholarship and read with skepticism.”

Of course the AMP and the domestic maritime industry generally will not stand for any analysis of Jones Act cabotage that doesn’t agree with their protectionist views, as they wish to ensure their privileged position in the market place is preserved. This industry intransigence leads any debate over domestic maritime policy to become a polemical exchange.

Interestingly, the AMP position paper criticizes Prof Grennes’ overreliance on a few of sources, which they characterize as particularly biased against the Jones Act.

In this regards, the AMP states, “More than 50 of the author’s footnotes (approximately one-third of the entire document) come from three specific individuals who are known, avowed opponents of the Jones Act, while most pro-Jones Act commentators are ignored.” The identity of these three sources are named in foot note 10, “The three anti-Jones Act advocates are Brian Slattery of the Heritage Foundation, John Frittelli of the Congressional Research Service, and Michael Hansen of the Hawaii Shippers Council.”

None of the three sources have called for full repeal of Jones Act cabotage, have variously pointed out the problems with the current domestic maritime regulatory regime and recommended moderate reforms to improve the industry’s primary role of providing domestic waterborne transportation to the nation.

However, rather than addressing the issues, the AMP finds the rhetorical need to characterize critics of their industry’s legal protections as “known, avowed opponents of the Jones Act,” recalling the language of the House Un-American Activities Committee (HUAC) hearings of the late 1940’s investigating communists in the federal government.

There are several shortcomings to Prof Grennes paper which the AMP accurately and appropriately points out in their position paper, which hopefully Prof Grennes will respond to in due course.