Waive Jones Act for Puerto Rico

Hurricane Maria devastated the island of Puerto Rico with winds up to 155 MPH, heavy rainfall, and storm surges between six and nine feet. Given Puerto Rico’s fragile economic recovery prior to the storm, there has never been a better time to waive the Jones Act for Puerto Rico. The Merchant Marine Act of 1920, known as the Jones Act, is the foundation for protectionist cabotage laws that govern shipping in the United States. The Jones Act requires that all goods shipped or passengers conveyed by water between US ports (including Puerto Rico) be carried in a ship, that must be built, crewed and owned by American citizens.

Jones Act, puts Puerto Rico at a heavy competitive disadvantage, hampering both its imports and exports. Every product sold in Puerto Rico, from food to building materials, has a higher price because shipping costs to the territory are so great. Foreign ships can’t stop in Puerto Rico to offload goods. Instead, goods are dropped off on the US mainland and brought to the island on US flagships. A report by the University of Puerto Rico found that the Jones Act caused a $17 billion loss to the island’s economy from 1990 through 2010.

According to the report by the Federal Reserve Bank of New York, the Jones Act does have a negative effect on the Puerto Rican economy, the high cost of shipping is a substantial burden on the Puerto Rico’s productivity.

It costs an estimated $3,063 to ship a twenty-foot container of household and commercial goods from the East Coast of the United States to Puerto Rico; the same shipment costs $1,504 to nearby Santo Domingo (Dominican Republic) and $1,687 to Kingston (Jamaica)—destinations that are not subject to Jones Act restrictions.

Hurricane Maria was the most powerful storm to hit Puerto Rico in more than 80 years. It left the entire island without electricity, 3.5 million people will face a catastrophic humanitarian crisis. It may take months, before electricity and services are restored. Due to the severe disruptions of the oil supply system resulting from Hurricanes Harvey and Irma, Department of Homeland Securityy extended the limited Jones Act Waiver on September 8 at the recommendation of the Departments of Defense and Energy. The waiver was originally set to expire in one week, but it was extended once to September 22, 2017.