U.S. Senator Introduces Bill To Repeal Jones Act

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McCain effort could end monopoly of shipping service to Guam

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Jan. 22, 2015) – Sen. John McCain has reintroduced legislation that proposes to repeal the nearly century-old Jones Act, which restricts shipping between U.S. ports to ships built and owned by Americans and manned by mostly U.S. workers.

Guam officials for decades also have pursued a repeal of the Jones Act, citing the monopoly it creates for shippers that serve the island.

McCain and others who support allowing foreign ships to compete in the U.S. domestic shipping market stated that competition would lower the cost of shipping, and ultimately the price tag of consumer goods, including on Guam.

"The bottom line is: How do we lower the cost of transshipment for our consumers here on island?" said David Leddy, president of the Guam Chamber of Commerce.

"Free, fair and open markets generally achieve lower rates through competition," Leddy said.

The Chamber's board is expected to issue a position on the issue.

In an interview last month, Jeff Jones, chairman of the Guam Chamber board, said there are arguments on both sides of the issue: whether prices of consumer goods will go down; and whether there's enough business activity on Guam to support even two ocean carriers.

"We had two ocean carriers and one didn't last, ... but it would be good for the market to determine whether there will be one ocean carrier or more, and not the federal government making the decision," Jones has stated.

Previous Guam governors have attempted to seek exemptions for the island from the Jones Act. It's been an issue of public debate off and on for about 40 years, Pacific Daily News files show.

McCain introduced the same proposal in 2010. This time, his proposal piggybacks on a bill related to the controversial Keystone XL oil pipeline.

Congress is poised to pass a bill that could force President Obama to authorize construction on the U.S. side of the 1,179-mile pipeline, which is designed to send as much as 830,000 barrels a day, mostly from the western Canadian oil sands, to refineries in Texas, McClatchy's Washington Bureau reported yesterday.

McCain stated in a Jan. 13 press release the "antiquated law has for too long hindered free trade, made U.S. industry less competitive and raised prices for American consumers."

"The amendment I am introducing again, ... would eliminate this unnecessary, protectionist restriction," McCain stated.

The Congressional Research Service has reported it costs $6 per barrel to move crude from the Gulf Coast to the Northeast United States on a U.S. oil tanker, while a foreign tanker can take that same crude to a refinery in Canada for $2 per barrel, McCain stated.

The U.S. shipping industry opposes allowing foreign ships into the U.S. domestic shipping market, in a bid to protect the jobs of American workers and America's shipbuilders.

Jobs, national security

Jones Act carriers, such as Matson, provide job opportunities to more than 300,000 American citizens as seafarers and in the maritime industry, Matson stated in 2009.

Matson is the only ocean carrier that transports containerized consumer goods from the U.S. mainland to Guam. A few years ago, competitor Horizon Lines pulled out of Guam because of financial challenges.

Some of Guam's government and business officials have called for the repeal of the Jones Act, which is being blamed as a factor in the high cost of shipping goods to Guam from the U.S. mainland.

The idea of allowing foreign ships to serve routes between U.S. ports also has raised concerns about national security.

"We have a Jones Act because we need an American maritime industry for reasons of national security," stated Michael Roberts, with the law firm Venable, in a previous congressional hearing on the issue.

"Could we have cheaper ships and cheaper transportation if we left it up to the Chinese to take care of that? Of course," according to Roberts' testimony. "But Congress has said very clearly that you can't do that in American domestic markets, and to a large extent that is a reason that is how we maintain an American maritime industry."

Roberts spoke on behalf of a Florida-based shipping company.

The Heritage Foundation, a conservative research think tank based in Washington D.C., calls the Jones Act a "legislative gift" to the U.S. shipping industry, but it carries a stiff price.

"The Jones Act harms the U.S. economy by driving up shipping costs," a group of Heritage Foundation scholars wrote. "It increases energy costs, stifles competition, and hampers innovation that is essential to the long-term competitiveness of the U.S. shipping industry, and the national security argument for the Jones Act is weak at best," according to the think tank.

Matson has argued further that U.S.-flag vessels "are held to higher U.S. Coast Guard environmental and safety standards than foreign carriers and are more accountable to the public they serve."

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