Protectionist Jones Act Harms Puerto Ricans

Bryan Riley / February 20, 2013

Photo credit: Chad Ehlers Stock Connection Worldwide/Newscom

An obsolete U.S. law known as the Jones Act makes people in Puerto Rico poorer, according to a new report from the Federal Reserve Bank of New York.

The Jones Act, also known as the Merchant Marine Act of 1920, requires people transporting goods by ship between two points in the United States to use U.S.-owned, U.S.-built, and U.S.-operated vessels, even if more affordable options are available.

According to the New York Fed, the Jones Act is especially harmful to Puerto Rico:

It costs an estimated $3,063 to ship a twenty-foot container of household and commercial goods from the East Coast of the United States to Puerto Rico; the same shipment costs $1,504 to nearby Santo Domingo (Dominican Republic) and $1,687 to Kingston (Jamaica)—destinations that are not subject to Jones Act restrictions….

Shipping goods to and from Puerto Rico costs considerably more than shipping to and from the Island’s regional peers, imposing an important cost on Puerto Rican businesses and dampening the economy’s competitiveness. Much of this relatively high cost of shipping is widely attributed to the Jones Act.

There have been several recommendations to fix this damage. The Federal Reserve report suggested giving Puerto Rico a five-year exemption from the Jones Act. Then after a review, the exemption could either be rescinded or made permanent.

Another option, floated by the Hawaii Shippers Council, is the Noncontiguous Trades Jones Act Reform (NTJAR). This would exempt Hawaii, Guam, Puerto Rico, and Alaska from the requirement that large, self-propelled oceangoing ships used to transport cargo be built in the United States.

Here’s an even better idea: The Jones Act could be repealed entirely for all Americans.

Any of these choices would bring people in Puerto Rico some much-needed relief from the costs imposed on them by this antiquated law.