What to know about an obscure law delaying the U.S. territory's recovery from Hurricane Maria

By Sarah Begley
Updated: September 27, 2017 5:13 PM ET

While Puerto Rico begins the long recovery process after Hurricane Maria, experts say that waiving a law known as the Jones Act could help. But the Trump Administration on Tuesday declined to waive the statute, also known as the Merchant Marine Act of 1920. Here’s what to know about the law.

What was the origin of the Jones Act?

The Jones Act was put in place after World War I, when the threat of German U-boats (which sunk almost 5,000 ships during the war) was still fresh. The statute required that any ship carrying goods from one U.S. port to another be made in America, staffed with Americans, and owned by an American. The idea was to support the American shipbuilding and marine shipping industries from competition, so that they would be sufficiently robust should another conflict begin.

What is its legacy?

As many have argued, the Jones Act has long outlived its usefulness. German U-boats no longer pose a threat to the U.S., and the act now mainly serves to bolster the American shipping industry, effectively giving it a monopoly on shipping to ports like those in Puerto Rico. The effect is to increase costs for consumers. If a foreign ship unloads in Puerto Rico, it must pay high tariffs, taxes and fees, costs which get passed along to consumers. If it first unloads in Florida and the products are shipped from there to Puerto Rico, the cost of rerouting will also be passed to the consumer, one Puerto Rico expert recently wrote in the New York Times. The result is that American goods cost twice as much in Puerto Rico as they do in other parts of the region, like the U.S. Virgin Islands, which are not covered by the Jones Act. Critics say it is a protectionist law, and multiple studies say it has cost the Puerto Rican economy billions of dollars.

Why did Trump decline to waive it?

Waiving the Jones Act would theoretically allow cheaper, more readily available vessels to supply Puerto Rico with its needs while it recovers from the hurricane, and the act was recently waived to aid recovery after Hurricanes Harvey and Irma. But the Administration said waiving it for Puerto Rico would not help. Gregory Moore, a spokesman for Customs and Border Protection, told Reuters that there were plenty of American vessels available to ship goods to Puerto Rico, and that because ports had been damaged, “The limitation is going to be port capacity to offload and transit, not vessel availability.”

What happens to the Jones Act and Puerto Rico next?

Some members of Congress have taken issue with the decision, including Arizona Republican Sen. John McCain, who would like to see the act not just waived but repealed. “I am very concerned by the Department’s decision not to waive the Jones Act for current relief efforts in Puerto Rico, which is facing a worsening humanitarian crisis following Hurricane Maria,” he wrote in a letter to the Department of Homeland Security this week. “It is unacceptable to force the people of Puerto Rico to pay at least twice as much for food, clean drinking water, supplies and infrastructure due to Jones Act requirements as they work to recover from this disaster. Now, more than ever, it is time to realize the devastating effect of this policy and implement a full repeal of this archaic and burdensome Act.”

On Wednesday, Puerto Rico Governor Ricardo Rossello said he expected Congress to help. “We expect them to waive it,” he told CNN. “One of the considerations right now is the priority of getting fuel, diesel, gasoline, all across the island. Right now we have enough fuel. We’re limited by the transportation logistics, but at some point of course, getting fuel into the island is going to be critical so that we can have the major functions of telecoms, hospitals, water, to be running appropriately.”

Correction: The original version of this story misstated when the Jones Act was put into place. It was after World War I, not after World War II.

SPONSORED FINANCIAL CONTENT

You May Like

EDIT POST