April 12, 2018 Print

The impact of Hurricane Maria on Puerto Rico and the attempts in the months thereafter to ship aid materials to the island have shown the significant negative economic impact of a nearly 100-year-old law which has hindered the rebuilding of Puerto Rico. This law, known as the Jones Act, is a section of the Merchant Marine Act of 1920. The statute prohibits the use of ships built outside the United States for the purposes of cabotage (shipping within the borders of the United States), under which shipping aid from the continental United States to Puerto Rico falls. The Jones Act prevents all shipments of aid to Puerto Rico from the United States on any ships built, crewed, owned, or flagged outside the U.S. (which comprises the vast majority of the global shipping fleet).

Within the last year, some Members of Congress have proposed the repeal of the Jones Act. Dan Griswold of the Mercatus Center at George Mason University briefed Senator John McCain (R-Arizona) on the economic consequences of the Jones Act on July 25, 2017. In the same month, McCain introduced the Open America’s Water Act (S. 1561) to repeal the Jones Act. Griswold presented the findings of An Economic Analysis of the Jones Act, a paper by Mercatus scholar Thomas Grennes, to McCain during the briefing. While the bill has not yet been debated or voted on, the Republican Study Committee has added the repeal of the Jones Act to its agenda.

Dan Griswold of the Mercatus Center presents the findings of the Center’s study of the Jones Act.

Hurricane Maria’s impact on Puerto Rico and subsequent aid efforts have renewed interest in the repeal of the Jones Act. The Mercatus Center has launched the Jones Act 2020 Project to push for repeal or major overhaul of the law.

Regulations of shipping have expanded massively since the 1970s.

“After a thorough evaluation of the arguments made by supporters of the Jones Act, the conclusion remains the same,” said Grennes. “The Jones Act is harmful to American consumers and businesses as a whole. Americans would gain from a major reform of the act, including a possible repeal.”

The full publication of An Economic Analysis of the Jones Act can be read here.