What is the Jones act
The Jones act is a Federal law that regulates Maritime Commerce in the United States. The Jones act requires goods shipped between U.S. ports be carried on vessels built, owned and operated by U.S. citizens or permanent residents.
It is also known as, the merchant marine act of 1920.
Breaking down the ‘Jones act
The Jones act was passed by the U.S. Congress in order to stimulate the shipbuilding industry after the First World War. Considered protectionist legislation. The law focuses on issues related to Maritime trade, including cabotage, which is the transportation of persons or cargo between ports of one country. It also provides sailors with additional rights, including the possibility of indemnity from the crew, captain or ship owner in case of injury.
Perhaps the most lasting effect of the Jones Act was its requirement that goods shipped between ports of the United States was transported on ships built, owned and operated by U.S. citizens or permanent residents. This requirement won actors Wesley Jones, the U.S. Senator who introduced this law and who represented Washington. Because Washington state has a large shipping industry, the act was intended to give him a monopoly on shipping to Alaska. Although the law took advantage of his constituents, he increased the shipping cost from other States and U.S. territories.
The Jones act increases shipping costs to Hawaii, Alaska, Puerto Rico and other Non continental American lands who depend on imports by limiting the number of vessels is able legally to deliver the goods. Deliveries of American construction, owner and operator of the vessel is relatively small compared to global supply of ships, while the demand for basic goods, as a rule, remain unchanged or grow. This creates a scenario in which a shipping company can charge higher prices because of the lack of competition, increase costs passed on to consumers. This can lead to consumers taking on more debt to Finance purchases that can have a negative impact on public finances.
This law has been criticized for limiting who can conduct trade with Puerto Rico and has been cited as a factor leading to the island’s economic and budgetary problems. A study published by the new York fed in 2012 found that the cost of transportation of container traffic in Puerto Rico from the mainland was two times higher than shipping the same container from a foreign port.
Opponents of the law want to repeal it, in the hope that this will lead to lower shipping costs, lower prices, and less strain on state budgets. Supporters of the law include States with the owners of the shipyard, defense firms and shipbuilding industries, as well as longshoremen and other personnel who work in the ports. Scrapping the law will probably reduce the number of U.S. Maritime jobs, reducing the cost of shipping.
In some cases, the US government has granted temporary waivers to the requirements of the Jones act. This is usually done in natural disasters, such as hurricane, in order to increase the number of ships that can officially deliver the goods in the affected area.