Nonpartisan effort needed to change harmful Jones Act
POSTED: 01:30 a.m. HST, Aug 21, 2013
With the growing awareness of the Jones Act and its impact on the cost of almost everything in Hawaii, calls for action are mounting.
In a recent Honolulu Star-Advertiser informal poll, for instance, 82 percent of online respondents to “The Big Q” said they favor either a Hawaii exemption from, or an outright repeal of, the nearly century-old federal statute.
The most economically debilitating plank of the Jones Act requires that ships carrying cargo between U.S. ports be built in the United States. This has created an artificial scarcity of ships largely due to the inefficiency and extraordinary cost of U.S. ship construction, driving up freight and charter rates and thus limiting domestic commerce.
As a consequence, U.S. shipbuilding yards today construct fewer than 1 percent of the world’s deep draft tonnage, and the ships produced for the commercial market come at a hefty price. For example, Matson Inc., which has a 70 percent market share of the domestic container shipping in the Hawaii trade and 100 percent of the Guam trade, announced earlier this year that it plans to build two new containerships in a U.S. yard at an estimated cost of $200 million each. That is four to five times the cost of constructing comparable ships at state-of-the art shipbuilding yards in the U.S.-allied nations of Japan and South Korea.
While the Jones Act’s full economic impact upon Hawaii remains the subject of further research, Bloom-berg’s online journal on Jan. 1, 2013, cited estimates that the law “makes goods in Hawaii a third more expensive than they otherwise should be.”
Here are four steps which could bring about a shifting tide for the Jones Act:
- First, generate public awareness globally and locally. The international community looks at the act as an antiquated form of economic protectionism. One Singapore shipping industry CEO quipped to me that the Jones Act is the “granddaddy” of all protectionist shipping laws worldwide. A movement synergizing global admonition with local outrage could influence the political climate which protects the act.
- Second, unite proponents for change around a single message: What the Jones Act is and how it hurts us. The bottom line is that most citizens and many politicians know nothing to little about the statute and its consequences. Before change can occur, widespread education and awareness are needed.
- Third, mount an all-fronts campaign. The Jones Act is more than a single law. It has spawned a political culture with tentacles reaching into all levels of government and financial forces pervading virtually every state and territory of the union. We need to harness international interest, national concern and multiple avenues for change, whether they be political, legislative, legal or industry-driven.
- Fourth, make Jones Act change a non-partisan issue. In the wake of U.S. Sen. Daniel Inouye’s passing, three Democrats and two Republicans in our state House co-sponsored a resolution calling on Congress to exempt the domestic Hawaii, Alaska, Guam and Puerto Rico trades from the act’s U.S.-build requirement. Also this year, similar resolutions were passed by the Senate of Puerto Rico and introduced in the Guam legislature.
In a state in which labor union and political leaders have long opposed any attempt to liberalize the Jones Act for fear that it would reduce maritime union jobs, a bipartisan group of legislators is now arguing that removing the U.S. build requirement could substantially result in increased shipping industry jobs, more economic opportunity, and better prices for everyone. Not a bad thing to be non-partisan about.