- - Wednesday, October 4, 2017

ANALYSIS/OPINION:

When natural disasters hit, the last thing anyone wants is to make relief and rebuilding efforts harder and more expensive. Yet there is a century-old law on the books that does precisely that — one that is frequently waived, but still hasn’t been repealed. It would be better for all Americans if it were.

In the wake of the havoc wrought by Hurricanes Harvey, Irma and Maria, attention has been focused on the obscure shipping law known as the Jones Act.

A protectionist relic signed into law at the close of World War I, it restricts competition in the shipping industry by mandating that commercial shipments between U.S. ports be carried only by American-made and largely American-staffed vessels.

Born in the geopolitical realities of a postwar era, the act is rarely noticed until natural disaster strikes. But its mandates create captive markets, raise transport costs, and result in higher prices for consumers — and that’s on a good day.

On bad days, like those many Americans are suffering through thanks to the recent spate of hurricanes, the rigid command-and-control restrictions of the Jones Act interfere with the effort to quickly and cost-effectively deliver resources to the places they are needed most. A report from the Federal Reserve Bank of New York estimated that the cost of shipping a 20-foot container from the East Coast of the U.S. to Puerto Rico was $3,063. The same shipment cost just $1,504 to the nearby Dominican Republic and $1,687 to Jamaica.

In the case of Puerto Rico, the immediate message from the Department of Homeland Security was that “vessel availability” was not expected to be a problem — so the Jones Act was not quickly waived. After days of protest from lawmakers and the island’s governor, the administration reversed course and waived the restrictions.

Repeal wouldn’t solve all of the transport challenges faced by Puerto Rico. But why impose arbitrary limits at all?

In the aftermath of Hurricanes Katrina and Rita in 2005, the Bush administration swiftly moved to approve Jones Act waivers for oil and petroleum products to add shipping capacity, speed and flexibility to a market constrained by disruptions of all kinds.

In the week following Harvey and Irma, 18 states saw average gasoline prices jump more than 30 cents per gallon. Millions of American families dealing with the aftermath of a natural disaster should not be subjected to government-imposed limits that will make recovery harder and more expensive.

In the best of times, Puerto Rico is one of the Jones Act’s hardest-hit victims, along with other noncontiguous U.S states and territories that rely heavily on shipping. A 2012 study by University of Puerto Rico economists said the Jones Act cost the island $537 million in 2010 alone. In total, the study estimated that the Jones Act cost Puerto Ricans about $29 billion from 1970 to 2010.

With Hurricane Maria lashing Puerto Rico after Irma delivered a glancing blow, things are already getting worse. The island’s population faces months without power. A short-term waiver of the Jones Act will serve only to prolong recovery for the more than 3 million U.S. citizens who live there.

While hurricane season invariably brings cloudy skies, it unfortunately also paints a clear picture of the anticompetitive nature of the Jones Act, its harmful, market-distorting effects, and the burden it places on the everyday lives of millions of families while benefiting a handful of maritime unions and U.S. shipping magnates.

The immediate repeal of the Jones Act and the return of a free market in the maritime industry is the best policy for those now suffering, and for consumers in the long-term.

Policymakers seem to understand this, as evidenced by their willingness to waive the law’s restrictions to speed up shipping during emergencies. Having regularly conceded that the law is harmful, they should have no problem getting rid of it to help improve peoples’ lives both in good times and bad.

• Martin Rodriguez is a policy analyst for the LIBRE Initiative.

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