American barriers mean Europe still waits for its ship to come in

by Alexandra Frean, The Times of London, April 21, 2015 (excerpts)

The 1920 Jones Act requires that all goods transported by water between US ports be carried on US-flagged ships, constructed in the US and owned and crewed by US citizens.

In a bizarre twist, that 95-year-old law has become a key bargaining chip in one of the world’s largest trade accords and it could affect the price you pay for the Florida orange juice on your breakfast table.

The Jones Act has been highly effective in shielding American shipping businesses from foreign competition, which is why it is so popular with shippers and trade unions. The Transportation Institute, a Washington-based maritime lobby group, credits it with supporting 73,787 American jobs, plus another 425,889 from indirect and induced employment.

Yet it has also produced some odd incentives, making it necessary for Florida to import coal from Colombia instead of American mines or for Maryland and Virginia to bring in road salt from Chile rather than Ohio, according to the non-profitable Capital Research Centre. And considering that the world’s top ten shipbuilders are based in Japan, South Korea and China, you have to wonder how well the Jones Act mission of protecting the nation’s shipbuilding industry is working for America.

In addition, the law is unpopular with free trade advocates, who quite rightly complain that it increases the price of goods to American consumers, particularly those living in offshore states and territories such Hawaii, Puerto Rico and Guam.

And it is heartily disliked by John Cridland, director-general of the CBI in Britain. “Why,” he asks, “shouldn’t a British or French-badged ship have the same rights as an American ship?” He has a point. Under the Jones Act, if a British, French or German-flagged ship bringing imports to New York from Europe wants to load up in, say, Boston for the return journey across the Atlantic, it cannot ship anything on the New York-to-Boston leg.

At present, Mr Cridland is busy talking about the Jones Act to any American who will listen. He regards it as central to the potentially world-changing negotiations taking place on the Transatlantic Trade and Investment Partnership, known as TTIP, which aims to open up trade between the European Union and the United States by removing tariffs and reducing regulatory barriers. The governments in both London and Washington are pushing for completion of the TTIP, which will create a single market of 800 million consumers, boosting trade and jobs....

Last week, in an unlikely alliance between the president and free trade Republicans, senators agreed the wording of a Trade Promotion Authority bill that would give politicians the power to “fast track” trade deals by allowing Congress to approve or reject, but not alter, any treaty.

If Congress passes this, America can start to finalise the Trans-Pacific Partnership, an equally ambitious tree trade agreement with 11 other Pacific Rim countries, not including China, that is ahead of the TTIP on President Obama’s to-do list....

All of which brings us back to the Jones Act. The likelihood of America repealing it or watering it down seem, if anything, to be receding....

read ... The Times

GRIH: A Jones Act Ally in Britain