Trump Waives Jones Act for Puerto Rico for 10 Days. That's Good, but It's Not Enough.

Congress needs to vote to stop protecting shipping cartel from market competition.


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The White House this morning announced it is waiving part of the Merchant Marine Act of 1920 (commonly referred to as the Jones Act) to make it easier and cheaper for Puerto Rico to import goods to recover from Hurricane Maria. From CNN:

Acting Department of Homeland Security Secretary Elaine Duke said the waiver will be in effect for 10 days and will cover all products being shipped to Puerto Rico, according to a release from the department.

The waiver will guarantee the needed equipment to repair infrastructure damaged by the storm and restore emergency services, Duke said in a news release.

Puerto Rico Gov. Ricardo Rosello said he had formally asked for a waiver, but yesterday President Donald Trump was unwilling to do so, he said, because people in the shipping industry didn't want him to.

That's because the Jones Act shields them from competition from foreign shippers so they can make more money. It therefore drives up the cost of shipping goods to isolated and faraway places like Puerto Rico and Hawaii.

The Jones Act requires any ship traveling from port to port in the United States and its territories be built, owned, and crewed by Americans. Foreign ships can dock once in a U.S. port and cannot bounce from port to port delivering (or picking up) goods.

Studies show that the Jones Act is partly to blame for the significant increases in costs to ship goods to Puerto Rico and Hawaii, doubling them in some cases.

Waiving the Jones Act will for the next 10 days allow Puerto Rico to more readily accept assistance or goods delivered on foreign-owned ships. While the waiver is wonderful, that's just the tip of a logistical iceberg and may be of limited assistance so early in the crisis response. The extensive damage to Puerto Rico's infrastructure has made it difficult to distribute the cargo they've been receiving in their ports to react to the crisis.

The financial impacts of the Jones Act will be much more painful moving forward, when distribution gets figured out. It's going to take much, much longer than 10 days for the island to import everything it needs to restore itself from the damage caused by Hurricane Maria. After those 10 days, the Jones Act will kick back in and the island will again have to be paying much more for imports of goods than it should.

But the Trump Administration's ability to waive the Jones Act is limited to times of crisis. It cannot simply wave its hands and decide the law does not apply for as long as the administration chooses. So it's up to Congress to act and remove the part of the law that cartelizes the American shipping industry and shields it from market pressures that lower prices.

Read more about the awfulness of the law here. Or watch this ReasonTV video about its impacts on Hawaii: