Never Underestimate the Power of Protectionist Laws

by lgadmin


With much of the island still without electricity as a result of Hurricane Fiona pummeling Puerto Rico on Sunday, one might think that the Biden administration would be leading an effort to repeal a 1920 federal law that continues to cost the island’s inhabitants dearly for every gallon of petroleum imported into the island, which in turn pushes the cost of most consumer goods far beyond those on the U.S. mainland.

The administration, along with a majority of the Congress, however, stubbornly refuses to seriously consider weakening, much less repealing, the Jones Act (also known as the Merchant Marine Act of 1920) as a way to help the island’s 3.2 million inhabitants cope with inflation, high unemployment, and lack of basic necessities..

The Jones Act is best described as the poster child for overtly protectionist legislation that long ago outlived any usefulness it might have provided when signed into law. It was designed to protect the domestic maritime industry against competition from other countries; a goal it has accomplished for more than a century. The law does this by mandating that shipment by water of any goods or cargo between any two U.S. ports must be conducted only by vessels built in the United States and that are at least 75 percent U.S.-owned and crewed.

The Jones Act was passed in the aftermath of the First World War, during which America’s maritime fleet had been severely impacted by German submarine attacks, and when our nation’s shipbuilding and cargo carrying capacity was insufficient to meet the needs of the war effort. While national security might at the time have constituted a legitimate basis on which to enact corrective legislation, such is no longer the case and has not been for decades.

Still, like the famous case of Jarndyce v. Jarndyce described by Charles Dickens in his well-known novel, “Bleak House,” the Jones Act lives on and on and on.

Exceptions to the law’s rigorous and costly mandates can be invoked for emergency needs, as President Trump did in 2017 following the devastation suffered by Puerto Ricans as a result of Hurricane Maria. The Act also allows for national security exceptions, as was considered earlier this year in the context of cuts targeting Russia’s petroleum exports. Over the decades, however, such moves are rare, insofar as they may incur the wrath of union leaders and members of Congress from districts having significant shipbuilding industry.

The cost of this law for a small nation like Puerto Rico (an “unincorporated territory of the United States”) that is highly dependent on importing virtually all petroleum and most other consumer goods, is massive; estimated to be in excess of $1.2 billion per year.

Still, whatever compassion resides in the White House or on Capitol Hill for the misery periodically inflicted on citizens of Puerto Rico by disruptive and deadly hurricanes, remains insufficient to move Washington away from its steadfast support for the protectionist law and the many shipbuilding union voters who demand allegiance to it.

In fact, rather than our government moving to relax some of the strict mandates the Jones Act requires which make it significantly costlier and less efficient to move goods and services from one U.S. port to another, recent initiatives have been in the opposite direction. In December 2020, for example, legislation was passed requiring that the law’s mandates apply to all aspects of the “offshore wind industry.”

The survivability of the Jones Act proves yet again that the most powerful force in Washington, if not in the entire universe, is the force of the status quo.

Bob Barr represented Georgia’s Seventh District in the U.S. House of Representatives from 1995 to 2003. He served as the United States Attorney in Atlanta from 1986 to 1990 and was an official with the CIA in the 1970s. He now practices law in Atlanta, Georgia and serves as head of Liberty Guard.

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