Hurricanes

Federal Relief to Puerto Rico Won't Include Waiving Law That Drives up Import Costs

Administration says it will not reduce effects of the anti-free-trade Jones Act.

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Puerto Rico
Carl Juste/TNS/Newscom

President Donald Trump will be visiting Puerto Rico next week to take in the massive damage from Hurricane Maria. But if the island is looking for some regulatory relief, it may be out of luck.

The administration announced some bad news for Puerto Rico: It will not be waiving the Jones Act, which significantly restricts the ability of foreign or foreign-owned ships from bringing goods to Puerto Rico.

The law requires ships traveling from port to port in America and its territories be made, owned, and crewed by Americans. Foreign ships are permitted to dock in one port and that's it. They cannot visit several different ports sequentially within our borders. The result is higher shipping costs to islands like Puerto Rico and Hawaii because the law shields U.S.-based companies from a lot of foreign competition.

The act is a bane to Puerto Rico. As I noted yesterday, studies show it can double to cost of shipping goods to ports there compared to nearby island countries that aren't American territories (and therefore aren't affected by the law). The Department of Homeland Security can waive this part of the Jones Act in crisis situations and had done so specifically for fuel shipping to Puerto Rico. But the administration has announced it will not be expanding or extending any relief for Puerto Ricans as it imports what it needs to recover. From the Associated Press:

A spokesman for the Department of Homeland Security says officials believe there is sufficient capacity of U.S.-flagged vessels to move goods to Puerto Rico. Spokesman David Lapan said most of the humanitarian shipments to Puerto Rico will be through barges, which make up a significant portion of the U.S.-flagged cargo fleet.

This is flat-out centralized government planning for the benefit of a small group of powerful U.S. shipping interests. It's no different than a city government deciding how many taxi cabs or liquor stories its community "needs" and using medallions and licensing to keep out competition. Entrenched interests cash in while worrying about competitors entering the marketplace offering lower prices or better services.

The defense of the Jones Act, like most trade restrictions, revolves around "protecting U.S. jobs," about 1,400 in this case, according to a Government Accountability Office report. Puerto Rico has a population of 3.4 million.

Puerto Rico is swamped in debt as well as water, and terrible fiscal management of government and its failure to plan for its expenses definitely plays a role in how difficult it will be for the island to recover.

That makes it all the more important to dump the Jones Act, because guess who is going to be asked to chip in for Puerto Rico's recovery? It will be all of us, of course. And with the Jones Act in place our tax dollars (and our voluntary donations) will not go as far as they should in helping Puerto Rico.

Below, here's ReasonTV blasting the Jones Act back in 2013:

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  1. The jones act is here to stay. Just like the Ex-Im bank and all of these other massive job supporting protectionist rackets. No one seems to care anymore. In fact, mariners of all stripes have been totally brainwashed that it is patriotic and thus is irrelevant for criticism.

    Very few have any idea how much financial damage this festering turd has done to US commerce over the last century.

    1. My guess is that shipping is a barely considered part of the economy for almost everyone. It seems less definite than actual production of goods. The shipping industry seems particularly unionized, though correct me if I’m full of shit there, and so there is likely a stronger type of cronyism there as well.

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  2. *sigh*

    I guess I have to keep repeating myself: the law is the law, and therefore it should be applied to equally to all. If you don’t like the law, elect congressman who will change it.

    1. Or elect a president who’s not afraid of his pen and his phone.

  3. The rule of law is incompatible with protectionism.

    The law of economics teaches us the Jones Act has harmed commerce.

    The law of reality teaches us that the law of economics is superior to the laws of protectionism and socialism.

    Hence, the law is that the Jones Act violates the rule of law.

  4. cut Puerto Rico loose then. we don’t have to bail out their debt, they don’t have to live by the Jones Act.

    win-win.

    1. Throw the baby out, but keep the bathwater!

  5. RE: Federal Relief to Puerto Rico Won’t Include Waiving Law That Drives up Import Costs
    Administration says it will not reduce effects of the anti-free-trade Jones Act.

    “The administration announced some bad news for Puerto Rico: It will not be waiving the Jones Act, which significantly restricts the ability of foreign or foreign-owned ships from bringing goods to Puerto Rico.”

    That’s good.
    I’m sure the people of PR don’t want any aid from those most foul and most foreign enemy of America, the French.

    1. France has been a US ally in every major war in US history, unlike those Capitol-burning British. Watch out for those blokes.

  6. I thought they lifted the Jones act for Hurricane harvey making it still in effect an not needed to re state such? Maybe someone can clarify

  7. Protection racket gotta protect.

  8. Of course not. Remember, governance is a balancing act – you need to let up at just the right moments and as little as possible lest the governed start to wonder what use that heavy hand is to them.

    Government is the science of oppression.

  9. No one is arguing a lack of capacity. What a disingenuous statement.

  10. What can you expect? A legislature is always going to prefer a short-term cash bailout to either a temporary or permanent waiver of anti-competitive edicts. The reasons are manifold:

    (1) Cash can be steered. It can be used to either (a) pay off those w the votes and/or kickbacks to deliver, or (b) be showy payments to an obviously needy small minority. Regulatory relief practicallyt never does either of those things.

    (2) A permanent elimination or reduction in regulation simply isn’t justified in voters’ opinions. The emergency is short term, so why fuck with an arrangement that the experts have put in for long term stability?

    (3) A temporary waiver of a regulation would advertise the badness of the regul’n?a form of propaganda by deed. Those with an interest to protect would sacrifice much to keep that from happening.

  11. I guess I have to keep repeating myself: the law is the law, and therefore it should be applied to equally to all. If you don’t like the law, elect congressman who will change it.

    1. Puerto Rico CAN’T elect congressmen nor vote for president. They have one non voting representative in congress.

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  13. No one is arguing a lack of capacity. What a disingenuous statement.Result 2018

  14. I thought they lifted the Jones act for Hurricane harvey making it still in effect an not needed to re state such? Maybe someone can clarify Result 2018

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