Cato Institute’s Jones Act Conference

by Michael Hansen, Hawaii Shippers Council, December 16, 2018

The Cato institute hosted a successful one-day public conference at their offices in Washington, D.C., entitled, “The Jones Act: Charting a new course after a century of failure,” on December 6, 2018. The conference featured fourteen presenters in four panel sessions and a debate in the final fifth session. The presenters came from all over the country, brought a wealth of expertise and represented different perspectives. There was a good turnout for the event, which was held on a cold Washington Thursday, and the crowd asked many interesting questions of the panelists.

This event built on the Mercatus Center’s “Researchers’ and Stakeholders’ Views on the Jones Act” held last year at the Sheraton Maui Kaanapali on April 13, 2017, and continued the process of laying the factual foundation for an effective narrative and a rational basis to support Jones Act reform.

Various issues relative to the Jones Act’s economic impact and reform options were discussed at the conference. The most widely addressed issue was the U.S. domestic ship build requirement, which was seen as the most important single cost driver in the U.S. cabotage system. The focus was generally on reform options as opposed to wholesale repeal.

Two presenters from Hawaii participated in the fourth session, “Options for Jones Act Reform;” Keli’i Akina, President of the Grassroot Institute of Hawaii (GRIH), and Michael Hansen, President of the Hawaii Shippers Council (HSC)

Akina presented a paper and reiterated on the panel the GRIH’s position that the build requirement should be addressed and invoked the cave analogy from Plato’s Republic (total repeal of the Jones Act is akin to the reflection on the cave wall but not achievable in the real world) and suggested the use of political jujitsu to advance the reform effort (focus on the build requirement and deflect supporters the domestic flag, crewing and ownership requirements). The GRIH was founded in 2001.

Hansen submitted a paper describing the series of reports issued by the U.S. International Trade Commission (USITC) known as The Economic Effects of Significant U.S. Trade Import Restraints, which included several estimates of the Jones Act’s impact on the national economy and led to the reform effort of the 1990’s. Although the early estimates of the impact were substantial and material, the estimates declined over time and reform effort fizzled-out. The paper outlined the series of USITC reports, described the declining estimates, related the history of the time and noted that a new reform effort would have to address the USITC process.

During the panel discussion, Hansen described the HSC Jones Act reform proposal that would exempt the noncontiguous trades (Alaska, Guam, Hawaii and Puerto Rico) from the domestic build requirement for self-propelled seagoing ships of 1,000 gross tons and over. He explained it’s a narrow exemption first put forward in detail in 2010 to avoid as much opposition possible while still addressing the main issue. He also stated the HSC’s support for the late U.S. Senator John S. McCain III’s “Open America’s Waters Act,” first introduced in 2010 and lastly in 2017, and proposed complete elimination of the domestic build requirement across all domestic coastwise trades and types of vessels in domestic service. The HSC was incorporated in 1998 to support the efforts of the national Jones Act Reform Coalition (JARC), which was active from 1994 thought 2000.

Cato’s Daniel J. Ikenson, Director, Trade Policy Studies and moderator of the second panel, announced that they are working on an estimate of the impact of the Jones Act on the national economy, which should be released during the first half of 2019.

Cato will publish an e-book containing the participant’s essays later in first quarter of 2019.

In the meantime, Cato has posted the videos of the full five sections of the conference on their website, which can be viewed in their entirety.

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Related: Nation’s Capital hears our message on Jones Act