McCain Wants To End Protectionism For Shipping Industry

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Peter Fricke Contributor
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Republican Sen. John McCain is mounting a campaign to repeal a protectionist law that artificially raises the cost of shipping goods between U.S. ports.

In a press release issued on Tuesday, McCain announced that he had filed legislation to repeal the Merchant Marine Act of 1920, also known as the Jones Act, which “requires that all goods shipped between waterborne ports of the United States be carried by vessels built in the United States and owned and operated by Americans.”

McCain claimed he has long advocated repealing the Jones Act, which he called “an antiquated law that has for too long hindered free trade, made U.S. industry less competitive, and raised prices for American consumers.” (RELATED: How to End the Jones Act’s Protectionism)

The Congressional Research Service, he noted, has determined that “it costs $6 per barrel to move crude from the Gulf Coast to the Northeast United States on a Jones Act tanker, while a foreign-flag tanker can take that same crude to a refinery in Canada for $2 per barrel.”

According to an editorial in the Washington Post, “the Jones Act is a vestige of the post-World War I years,” designed to maintain a dependable merchant fleet that could face up to threats such as German U-boats.

Although the law’s original justification has lost relevance in the intervening years, previous efforts to repeal it have met with failure, largely because “shipping businesses and labor unions love the way it shields them from foreign competition.” (RELATED: The Freer the Trade, the Better Things Get)

Indeed, the day after McCain announced his repeal measure, the American Maritime Partnership, an industry trade association, responded with a press release claiming it would “gut the nation’s shipbuilding capacity, outsource our U.S. Naval shipbuilding to foreign builders, and cost hundreds of thousands of family-wage jobs across this country.”

According to AMP Chairman Tom Allegretti, “the shipbuilding requirement … is in place to ensure that the United States maintains the industrial capacity to build its own ships, so as to protect and defend the American homeland.”

Beyond considerations of national security, moreover, the press release claims U.S. shipbuilding is vital to the nation’s economy, “because shipyards are among the largest employers in many states, providing stable manufacturing jobs that pay far above the national average.”

A recent study by the U.S. Maritime Administration found that the shipbuilding and repair industry provides more than 400,000 full-time jobs and adds roughly $36 billion to GDP. (RELATED: Protectionism is the Solution to America’s Job Shortage)

Given the industry’s importance to both national security and the economy, Allegretti said, “It is hard to believe that the Congress would endorse a change to the law that would outsource U.S. jobs and reduce national security by effectively creating dependence on foreign countries to build our ships.”

The Post editorial, however, counters that the industry’s economic value is only part of the story, because, “like other protectionist laws, [the Jones Act] increases the price of goods and services to American consumers.”

“If FedEx can move cargo across the country in European-made Airbuses,” they ask, “why can’t a boat built in, say, Canada, ship wheat from Los Angeles to Honolulu?”

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