Rep. Palmer Introduces Jones Act Exemption for Puerto Rico Despite Uncertainty over Need for Change

On October 5, 2017, Rep. Gary Palmer (R-AL) introduced legislation to exempt Puerto Rico from the Jones Act for five years (H.R. 3966).

The bill has three bipartisan cosponsors: Rep. Nydia Velazquez (D-NY), Rep. Andy Biggs (R-AZ), and Rep. Dave Brat (R-VA).

In addition to creating an exemption to the Jones Act, the bill also proposes for the Comptroller General of the United States to conduct a study, no later than 4 years after the date of enactment, of the economic impact the exemption would create on the economy of Puerto Rico.

Exempting Puerto Rico from the Jones Act would mean that vessels from other countries would be able to serve Puerto Rico.The Jones Act is a little-known federal shipping law that requires all goods transported by water between U.S. ports be carried by ships built in the United States, owned and registered in the United States, and crewed by U.S. citizens. Also known as the Merchant Marine Act of 1920, the Jones Act was designed at least in part to protect the U.S. shipbuilding industry from foreign competition, on the theory that shipbuilding is an essential part of U.S. security. It was deemed important to the government to have a strong shipping industry and experienced seamen in case future wars needed the capacity to build and staff ships quickly in response to defense needs.

The President initially waived the Jones Act for 10 days, but that waiver has expired. DHS stated that about “14 vessels notified us and three have completed their movements,” regarding to the results of the Jones Act waiver.

The effects that the Jones Act has on Puerto Rico’s economy are not very clear, GAO reports. The Government Accountability Office was referenced in letter by the American Maritime Partnership stating that “there were far too many factors impacting the cost of transportation in Puerto Rico to identify a specific cost attributable to the Jones Act, if any.” The letter also quoted the GAO report stating that “it is even more complicated —’difficult, if not impossible’ — to quantify any purported cost of the Jones Act on the price of consumer goods on the island.” A more detailed look of the effects that the Jones Act has on Puerto Rico can be viewed here.

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