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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Leí ese libro, es algo prejuiciado, pero dice algunas verdades dolorosas. Los EEUU han sido mezquinos en cierta forma, al tratar a PR como una “Tala” una pequeña finca donde solo es sacarle provecho. Puerto Rico necesita su soberania para que puedan forjar su propio destino.
Mr. Julio Caseres seems to have ALL of the information. I would like to know from him. How isThe Jones Act advantageous to PR? I realize that most of the major companies such as Walmart, Sears, etc. sell their products in PR and appear to do quite well. Major companies have resources that are used to benefit them. The average business person in PR does not. It is not enough to know about rules and regulations but how do you help our merchants benefit all of the advantages you appear to claim.
There is enough blame for everyone. Yet, the unethical and possibly criminal pattern seen by the Crowley’s, etc. in PR give this a much more serious meaning. I am sure the penalties they paid, are far less than the income they have made.
We can legalize and analyze The Jones Act all you want. The end result is still the same-it does not help PR.
That is a really, really stupid idea. In case you people are not aware, ending the Jones Act also means ending the automatic US citizenship of anyone born in Puerto Rico. How many of you have actually read the Act before calling for its outright repeal???
You are slightly confused but that is okay. . . a number of people confuse the JONES-SHAFROTH ACT (1917) which conferred US citizenship, with the JONES ACT (1920) which is Section 27 of the Merchant Marine Act of 1920, and the subject which we are currently discussing.
I agree with you. . . people should read the Act before publishing opinions about it. Did you read it?
If the Jones Act is as Destructive and Corrupt to Puerto Rico’s Well Being, I am fore Eliminating the Law! We the Puerto Rican people must Unite and Fight for our Country! Enough with the Abuse and lack of information witheld, its time to Cleanup House and investigate those who have been tampering with the Democracy and Fraudulent Occurrences that the Hard Working People of Puerto Rico have had to Deal with these CORRUPTED Criminal Executives, should be Investigated, Fined and Arrested!
The products exported from the Island
Are subjected to same shipping rules.
I agree Puerto Rico should be its own nation
Once again Nelson,you are on target
How many agree Puerto Rico should be its own nation? http://www.emcii.net
I just want to point out that the Jones Act had very little to do with the public debt. Unless the extra money put back into the economy was taxed at 100% and the politicians didn’t spend it, unlikely, it would have had little effect on the debt. Saying that it would makes the quality of the rest of the analysis suspect.
Leí este libro tan pronto salió y plantea y revela muchas verdades ocultas. Recomiendo su lectura!
It is always someone else’s fault when it comes to discussing what has happened to the Puertorrican economy… none in there takes accountability…….
Yes. Thank you.
I left this for you on messages:
I enjoyed attending the meeting of Rotary East with my wife Linda and my son Carl and receiving your club flag. I presented your flag to the Rotary Club of Geneva, Illinois last Tuesday. They asked me to exchange our flag with your club. Please tell me to what address to mail our flag . Loy Williams,
This is not fair for us Puertoricans we are citizen off US, when this going to end.
This is not fair for us Puertoricans we are citizen off US, when this going to end.
Good luck on repeal under a Republican Congress.
Why not abolish the Jones act and while were at it, either let Puerto Rico become a state or a sovereign nation. The time has come.
AS I EXPLAINED BEFORE… NO ONE (Merchants) in Puerto Rico is forced to purchase or transport goods exclusively from USA mainland to Puerto Rico… NO ONE!!!! Puerto Rico merchants can purchase good from international origins and transport it on INTERNATIONAL FLAGGED VESSELS directly to the Port of San Juan.. Puerto Rico’s merchant are only affected by the Merchant Marine Act of 1920 ONLY, JUST ONLY if they purchase goods to a USA Mainland supplier…PERIOD!!, if a Puerto Rico’s Merchant purchase raw material from China, Hong Kong, Malaysia, South Korea, Australia. New Zealand, Philippine, Indonesia, Singapore, etc etc etc (meaning from international markets) can ship the products on international vessels (e.g. Maersk, CMA-CGM, Evergreen, DOLE, Mediterranean Shipping, Mitsui, Hapag Lloyd, APL…etc) directly to Puerto Rico via an international transship port (e.g. Panama Canal, Caucedo, Kingston Jamaica, Algeciras, etc)… all of this protected and ALLOWED by “CODE OF FEDERAL REGULATIONS TITLE 19” (19 CFR)… Puerto Rico, unlike the other U.S. Possessions, is the only one that is part of the “U.S. CUSTOMS TERRITORY” therefore allowed to transport and enter directly from international port into the port of San Juan: Here are the fact (regulations) on the matter:
– 19 CFR §101.1 Customs territory of the United States. “Customs territory of the United States” includes only the States, the District of Columbia, and Puerto Rico….
– Harmonized Tariff Of the United States – General Notes: Customs Territory of the United States. The term “customs territory of the United States”, as used in the tariff schedule, includes only the States, the District of Columbia and Puerto Rico….
– 19 CFR §7.2 Insular possessions of the United States other than Puerto Rico. (a) Insular possessions of the United States other than Puerto Rico are also American territory but, because those insular possessions are outside the customs territory of the United States, goods imported therefrom are subject to the rates of duty set forth in column 1 of the Harmonized Tariff Schedule of the United States (HTSUS) except as otherwise provided in §7.3 or in part 148 of this chapter. The principal such insular possessions are the U.S. Virgin Islands, Guam, American Samoa, Wake Island, Midway Islands, and Johnston Atoll. Pursuant to section 603(c) of the Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union With the United States of America, Public Law 94-241, 90 Stat. 263, 270, goods imported from the Commonwealth of the Northern Mariana Islands are entitled to the same tariff treatment as imports from Guam and thus are also subject to the provisions of §7.3 and of part 148 of this chapter.
(b) Importations into Guam, American Samoa, Wake Island, Midway Islands, Johnston Atoll, and the Commonwealth of the Northern Mariana Islands are not governed by the Tariff Act of 1930, as amended, or the regulations contained in this chapter. The customs administration of Guam is under the Government of Guam. The customs administration of American Samoa is under the Government of American Samoa. The customs administration of Wake Island is under the jurisdiction of the Department of the Air Force (General Counsel). The customs administration of Midway Islands is under the jurisdiction of the Department of the Navy. There is no customs authority on Johnston Atoll, which is under the operational control of the Defense Nuclear Agency. The customs administration of the Commonwealth of the Northern Mariana Islands is under the Government of the Commonwealth.
(c) The Secretary of the Treasury administers the customs laws of the U.S. Virgin Islands through the U.S. Customs and Border Protection. The importation of goods into the U.S. Virgin Islands is governed by Virgin Islands law; however, in situations where there is no applicable Virgin Islands law or no U.S. law specifically made applicable to the Virgin Islands, U.S. laws and regulations shall be used as a guide and be complied with as nearly as possible. Tariff classification of, and rates of duty applicable to, goods imported into the U.S. Virgin Islands are established by the Virgin Islands legislature. Jay Fonseca Alexandra Lúgaro Jay y sus Rayos X Monica Cabrera Juan C Lourido Oscar Reyes Alfredo Figueroa Daphne Guzman… lets stop giving the wrong information to the public, specially those in distress (like the people of Puerto Rico) and lets get all the right facts from experts in U.S. Customs and Trade Laws…. Puerto Rico’s large companies (e.g. Goya, Holsum, Pan American Grain, Pan Pepin, etc) buy their raw material and finished products from international origin/markets because they understand what supply chain management is and understand U.S. Customs laws… small companies or enterpreneurs unfortunately don’t know supply chain management and Customs laws, hence purchase their goods to a USA Mainland supplier that purchase the same damn good from and international supplier and has done the U.S. Customs process so none of his clients has to do it.. therefore has room to sell the product with high prices!!!
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The Jones Act and it’s advantageous practices must cease immediately in order to give economic parity to Puerto Rico. However, they cannot permit the “same Gringo roosters and their Puerto Rican cohorts” to continue to oversee the chicken coop. Failure to do so will only breed more of the same old practices.
The Jones Act is squeezing the life out of Puerto Rico. Someone has to get that racketeering law to vanish.
Reblogged this on It Is What It Is and commented:
The Jones Act, in place since 1920 …. “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.”
See? the current debt was created by “American laws” …. tell me how if you broke it, own it, how can you NOT fix it???