The New York Times has agreed that the Jones Act must be removed in Puerto Rico. The Times editorial board stated that:
“Lawmakers should allow non-American ships to carry goods between the island and the mainland, which is prohibited by the Jones Act of 1920 to protect the domestic shipping industry. That will lower shipping costs to Puerto Rico, including those for oil and natural gas, an important consideration for an island economy.”
Even the infamous Krueger Report, a neo-liberal concoction by three IMF economists, concurred that due to the Jones Act:
“All islands, remote from the centers of economic activity, suffer from high transportation costs. But Puerto Rico does so disproportionately, with import costs at least twice as high as in neighboring islands on account of the Jones Act, which forces all shipping to and from US ports to be conducted with US vessels and crews.” (Krueger Report, p. 8)
In other words, the New York Times and the International Monetary Fund (IMF) both agree that the Cabotage Law, aka the Jones Act, is choking the Puerto Rican economy and must be revoked as soon as possible.
JONES ACT #101
A brief study of the Jones Act will show you why it must die. Here is the U.S. Merchant Marine Act of 1920 (also known as the Jones Act):
Under Section 27 of this Act, all goods carried by water between U.S. ports must be carried on U.S. flag ships that are constructed in the U.S., and owned and operated by U.S. citizens.
In other words… every product that enters or leaves the island, must be carried on a U.S. ship to and from U.S. ports.
Every consumer item that passes between U.S. and Puerto Rican ports must be carried on a U.S. ship – this includes cars from Germany, engines from Japan, food from Central America, medicine from Canada – any product from anywhere. In order to comply with the Jones Act, all this merchandise must be off-loaded from the original carrier, reloaded onto a US ship and then delivered to Puerto Rico.
It all makes as much sense, as digging a hole and filling it up again.
Any foreign registry vessel that enters directly into Puerto Rico must pay extreme tariffs, quotas, fees and taxes which, again, are passed onto the Puerto Rican consumer.
This is not a “business.” It is a shakedown, a Mafia protection racket. A 40-year study of this “cabotage cost” to Puerto Rico shows the following figures:
Economic Impact of Jones Act on Puerto Rico’s Economy
From 1970 through 2010, the Jones Act cost Puerto Rico $29 billion. Projected from 1920 through the present (2016), this cost becomes $77 billion.
This $77 billion cost is higher than Puerto Rico’s current public debt. In other words…had the Jones Act never existed, then neither would Puerto Rico’s public debt.
A SORDID HISTORY OF PRICE FIXING
As if this “protection racket” weren’t enough, the shipping industry in Puerto Rico – controlled by U.S. carrier companies – is infected with corruption. Between 2008 and 2013, six shipping executives were sentenced to federal prison for Sherman Antitrust Act violations, conspiring to fix shipping rates, and allocating cargoes amongst the three companies which employed them.
The largest Jones Act companies in Puerto Rico – Sea Star, Crowley, and Horizon Lines – were all indicted as co-conspirators who “conspired to fix, stabilize and maintain rates and surcharges for Puerto Rico freight services, to allocate customers of Puerto Rico freight services between and among the conspirators, and to rig bids submitted to customers of Puerto Rico freight services.”
In addition to these criminal executives, the three carriers – Sea Star, Crowley, and Horizon – all pleaded guilty to violating the Sherman Antitrust Act in other areas during 2011 through 2012, and were collectively fined a total of $46.2 million.
BENEFITS OF JONES ACT REPEAL
Jones Act repeal would increase Puerto Rico’s control over its own coast, maritime activity, trade relations, and would generate an island-based shipping industry: ship building, operation, maintenance, and ownership.
This shipping industry would provide opportunities for many skilled laborers: carpenters, electricians, welders, electrical engineers, seamen. It would also create thousands of small businesses: metal, wood and hardware suppliers; storage facilities; shipyard building and maintenance; even restaurants and food stands to feed these 50,000 new workers.
On an island with 15% “official” unemployment (closer to 25%), this would jump-start the entire economy.
While Jones Act repeal would not solve all of Puerto Rico’s economic problems, it is a viable and achievable first step – a step that does not invite foreign investors, US billionaires, and hedge fund operators to buy up pieces of Puerto Rico. In fact, it does the exact opposite: it helps to build a local, indigenous economic infrastructure, that does not depend on the US or any other foreign power.
THE JONES ACT NEEDS TO END RIGHT NOW
The Jones Act is a corrupt law.
The Jones Act shipping companies are also corrupt.
The New York Times has called for an end to the Cabotage Law. Even the IMF economists who drafted the Krueger Report agreed. It is immoral, illegal, and fatal for Puerto Rico to be denied the right to its own shipping industry.
The Jones Act, aka the law of cabotage, is the new Vieques.
It needs to end RIGHT NOW.
For a history of the War Against All Puerto Ricans, read the book…
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