Jones Act getting questioned

[Rob Tucker]

I really wasn't expecting the Gulf Oil Mess to bear directly on Hawaii and I want to keep Punaweb on Hawaiian and Puna issues....

Dating from 1920, the Jones Act restricts intrastate shipping to American Flag vessels. There has long been a complaint in Hawaii that the Jones Act restricts competition in our island supply chain and increases our costs of living.

I have had experience with this getting shipments by container for my business. Shipments from Mexico or Canada typically cost me $1,500 less each than shipments from California.

So we may be witness to a serious challenge to the Jones Act at this time which could benefit us greatly.

Apparently the response to the Gulf Oil Mess is restricted from using international maritime resources in oil spill clean up. The Jones Act requires that all vessels serving coastal and interstate needs must be American flag ships. There is talk about calling for repeal of the Jones Act.

Pay attention and be prepared to send testimony to Congress on the topic as it evolves.

Feel free to discuss this in terms of Hawaii. It certainly relates and may soon offer some real changes in our supply situation.




Assume the best and ask questions.

Punaweb moderator

[David M]

Jones Act was suspended for awhile in aftermath of Katrina, but I don't know if the suspension applied to Hawaii. Wonder how it might go this time?

David

Ninole Resident

[Bullwinkle]

The Jones act main purpose was to ensure a supply of American flagged vessels for transport in case of war

The act makes a vessel "person" in the eyes of the law. Boats can be "arrested" if they do not pay their bills before leaving port - one minor provision and protection for suppliers.

Also requires all flag vessels to be built in the us eliminating foreighn competition and ownership

Seaman employment and injury rights as another minor provision

Maritime shipping is just one facet. Most pacific islands sharing a hardship exemption by the way ...

There is a whole industry that has been created to interpret the act. The US maritime industry shaped by it. Repealing the act would be the end of the industry as foreign vessels without these requirement$ would dominate the US market.

The reason shipping companies like it - it allows them to escape work comp in a hazardous industry for starters, guarantees and vessel working in the us is built in the us .... keeping the yards solvent and ready to build in case of war.

be careful not to throw out the baby with the bath water - US boat yards are still paying good union wages... Building boats for US flag operators - do we want to send those jobs to the chinese also?

[Rob Tucker]

Foreign ships can and do land in Hawaii. The problem for Hawaii is that it is such a small population that most all foreign manufactures and products ship to the west coast for distribution back to Hawaii.

Many of the foreign products are made for American companies that exported the jobs to other countries. Hawaii simply is not a big enough market for a company like Nike to ship full containers of shoes here as an example. So Hawaii ends up getting double freight costs with the last leg, west coast to Honolulu, being the most expensive.


Meanwhile many of the foreign flag freighters pass by Hawaii empty on their way back to Asia. The U.S. used to be a great producer but has transformed into a great consumer.

[Bullwinkle]

Maritime shipping is just one facet. Most pacific islands sharing a hardship exemption by the way ...

read the act, and you will come to this solution imho

[Bob Orts]

There are many items in the Jones Act, but most people only know the three hot buttons. But when you strip them apart, the majority of people would end up supporting the Act.

1. The smallest of the three that raises issues is related to seamen’s rights. Basically it's similar to OSHA and state employment laws we all enjoy and seamen needed equal coverage. If a person is against this provision, they should equally be against any other law that protects the safety of workers in the US.

2. The second is the most controversial. That's the requirement that only US built ships be used for US commerce within the US.

Opponents say that there is no other transportation industry that forces companies to use only US built equipment. Airlines, bus, trucks, taxis, etc are all allowed to use equipment that meets mechanical and safety needs but not where it was built.

Supporters claim that it's vital to the security of the US. Just like there would be an uproar and calls for embargos if Ford and GM closed all their US factories and shipped it overseas. There is a good basis for keeping shipbuilding within our borders, but without the nationalism aspect, most arguments for this provision don’t apply to any other area of US commerce.

3. Cartage between and within the US is the one area that is a no brainier but often is opposed. No other industry is allowed to operate within the US unless it adheres to US laws and regulations. A foreign company that intends to operate within the US for US business must follow US laws and regulations, this is fact. A foreign company can't come into the US, set up shop and compete with US businesses but following the laws of their country and not ours. A foreign flagged ship is operating under the laws of their country, not ours.

An example of what is allowed would be a representative of a foreign company visiting the US to make a presentation or review their US operations. An employee engaged in transportation can also come in under the rules of their country so long as they are not conducting commerce within the US, just transient commerce. What is not allowed is if they engaged in direct US to US commerce while operating under their country's laws.

If that was allowed, every company can hire in a foreign country, bring those workers here and pay them based on their country wages and work rules, not ours. So US businesses would have to compete against foreign companies paying their people as little as they can and located within the US. A US company has to pay at least minimum wage and on HI provide medical insurance to full timers, while the foreign company could pay $5 a day and not have to provide anything they don't provide back home.

Think about your own job and ask what would that same person be paid and what benefits would they get in their own country? Could you or your employer compete against $1 an hour workers right here within the borders of the US?

[Rob Tucker]

Just for discussion sake can it not be said that Walmart, BP and others take full advantage of foreign flag vessels in bringing goods to an American market?

In the Gulf Oil Mess the drilling platform was itself a foreign flag vessel operating in our waters to deliver goods to our refineries.

All kinds of logic comes into play and the corporations take full advantage of avoiding U.S. costs of operation. Hawaii suffers from this.

[Bob Orts]

I guess that would apply to every shipment from foreign countries into the US. But as you already mentioned, the foreign shippers can unload in Hawaii if they want, but I think it’s just not cost effective to stop a whole ship to unload just a few things. Many also forget the Jones Act only applies to US port to US port, not US port to foreign port or foreign port to US ports. Also often ignored is just about every worker in the US has the exact same protection from foreign business as the Jones Act provides to sea shipments. If that wasn't the case, a company can claim they are based in Sri Lanka and bring over any employee they want at whatever wage they accept and have no requirement to obey American labor laws or provide benefits that US businesses must provide. I challenge anyone to show me a business that isn't protected by similar Jones Act type protections.

As for the US built requirement, I think if they are applying it to sea vessels, it needs to be applied to all transportation. Few industries have such protections and it needs to either be eliminated or applied to all.

You make a good pint about the Deepwater Horizon. It's not a US built platform and is flagged in the Marshall Islands. It appears the foreign flagged nature caused a lower safety standard than if it was flagged in the US, but that's another argument.

Back when Congress and the President were all gung-ho to drill every inch of everything for oil, exemptions to the Jones Act for oil exploration was issued at the drop of the hat. Exemptions are allowed and Hawaii actually gets exemptions. So there are foreign flagged ships that do operate within the US and Hawaii under exemptions.

I bet even if the Jones Act exempted Hawaii Commerce, those ships still wouldn't come because it's just out of the way.

[Kapohocat]

Merchant Marine Act of 1920 This link is full text. Section 27 is the discussed section.

Wikipedia version of Jones Act"]link text[/url]