U.S. Shipping Industry Slams Amendment Seeking to Exempt Puerto Rico from the Jones Act

A Crowley barge loaded with goods from the U.S. mainland arrives in Puerto Rico. File photo: Crowley
A Crowley barge loaded with goods from the U.S. mainland arrives in Puerto Rico. File photo: Crowley

U.S. shipbuilders and the greater maritime industry are fighting back against an amendment offered to a draft Puerto Rico debt relief bill currently advancing in the House seeking to exempt the Commonwealth from the Jones Act.

The amendment was offered by Alabama Congressman Gary Palmer (R-AL) to the proposed H.R. 5278, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which seeks to create a legal framework for the federal government to oversee the fiscal and budgetary affairs of certain U.S. territories, and Puerto Rico in particular.

In a press release, Congressman Palmer argues that exempting U.S. territories from the Jones Act has proven to be a stable and successful way of improving a territory’s economic environment, providing the baseless example that the costs of shipping goods to U.S. Virgin Islands, which is exempt from the Jones Act, from the U.S. mainland are now nearly half that of shipping to Puerto Rico.

“Relief from the Jones Act would allow the cost of living in Puerto Rico to decline, allowing residents to stretch their wages further than before,” said Congressman Palmer Palmer. “If Congress wants to help Puerto Rico we must provide them with opportunities to better their economy and lower their cost of living, not bail them out without any forward thinking solutions.”

Sponsorship of the amendment by Rep. Palmer is surprising given that Jones Act shipping and shipbuilding is a major industry in Alabama.

Fighting back against Palmer’s claims, Matthew Paxton, President of the Shipbuilders Council of America (SCA), released a statement slamming the political nature of the amendment to spite U.S. jobs.

“Given that the Jones Act and U.S. shipyard industry support more than 12,800 jobs and contributes over $953 million in GDP to the U.S. economy from Alabama alone, we are disappointed that Rep. Palmer seems to be more focused on political maneuvering than on protecting our nation’s domestic and economic security. Exempting Puerto Rico from the Jones Act would do nothing to address island’s debt crisis and would actually jeopardize the more than $1 billion the U.S. maritime industry has invested in the Puerto Rican shipping trade, as well as the thousands of good-paying jobs on the island,” Paxton said.

For months, shipping industry stakeholders have been keeping a close watch on Jones Act opponents who have been actively working to tie the debt crisis in Puerto Rico to the maritime industry, but supporters of the Jones Act see things differently.

Speaking at the annual Tradewinds Jones Act Shipping Forum last September, Tom Allegretti, Chairman of the American Maritime Partnership (AMP), explained:

“Some in Puerto Rico have suggested that a Jones Act exemption be included in the legislative package under the erroneous theory that the Jones Act is bad for Puerto Rico. But here’s the kicker: If Congress did that – include an anti-Jones Act amendment in the package – the chances of the overall package getting enacted into law would diminish. That’s because the presence of an anti-Jones Act amendment would reduce or subtract the number of Members of Congress who would vote for the overall bill. So Puerto Ricans would be undermining – and maybe even sabotaging – their own assistance package by including an anti-Jones Act amendment in it.”

Speaking to Palmer’s amendment to H.R. 5278, Allegretti stressed that the Jones Act is not the cause for the island’s financial woes, and that any vote against the Jones Act is a vote to outsource American jobs, undermine national security, and degrade homeland security.

“Weakening the Jones Act would harm, not help, the Puerto Rican people and the Commonwealth’s economy. In fact, a vote against the Jones Act is a vote to outsource American jobs, undermine national security, and degrade homeland security,” Allegretti said in the statement.

Echoing these sentiments, Edward Wytkind, president of the Transportation Trades Department, AFL-CIO (TTD), released his own statement:

“The Jones Act has served as an indispensable role in promoting American economic and national security since 1920. Exempting Puerto Rico from the Jones Act not only threatens our military sealift capabilities and thousands of domestic seafaring and shipbuilding jobs, but potentially further damages Puerto Rico’s already fragile economy. This amendment could increase shipping rates for Puerto Rico, erode an important, dedicated Northbound route for exports and undermine ‘just in time’ delivery methods for goods traveling in both directions.”

Rep. Duncan Hunter, Chairman of the House Coast Guard and Maritime Transportation Subcommittee, also recently stressed the importance of the Jones Act in the Washington Times, saying:

“It’s imperative not to conflate the unrelated issues of Puerto Rico’s debt and the Jones Act, and to fully grasp the importance of ensuring the safe transport of goods between American ports. There must also be acknowledgment of the dire consequences of exposing ports and waterways to foreign seafarers.”

H.R. 5278 is likely to be debated by the U.S. House of Representatives beginning Thursday. Meanwhile the House Rules Committee is expected to decide on Wednesday which amendments, if any, would be attached and up for debate by the full house.