Jones Act Law: What You Need to Know (Overview)

Jones Act Law – The Jones Act law is a federal law that regulates maritime commerce in the United States. It requires that goods shipped between U.S. ports be transported on ships that are built, owned, and operated by U.S. citizens or permanent residents. The Jones Act law is also known as Section 27 of the Merchant Marine Act of 1920, which was enacted to support the U.S. shipping industry after World War I.

In this article, we will explain what the law is, why it was passed, what it means for consumers and businesses, and what are the pros and cons of this law.

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What Is the Jones Act Law?

The Jones Act law is a protectionist law that restricts foreign involvement in domestic waterborne trade. It applies to any cargo that travels by sea between two U.S. ports, such as from New York to Los Angeles, or from Houston to Puerto Rico.

According to the law, the ships that carry such cargo must meet four criteria:

  • They must be built in the U.S., using mostly U.S.-made materials and components
  • They must be owned by U.S.-based companies, with at least 75% of the ownership stake held by U.S. citizens
  • They must be operated by U.S.-based companies, with at least 75% of the crew members being U.S. citizens or permanent residents
  • They must be registered in the U.S., flying the U.S. flag, and comply with U.S. laws and regulations

If a ship does not meet these criteria, it cannot transport goods between two U.S. ports, even if it is cheaper or faster than a U.S.-compliant ship. Instead, it can only transport goods from a foreign port to a U.S. port, or vice versa.

Why Was the Jones Act Law Passed?

The Jones Act law was passed in 1920 as part of the Merchant Marine Act, which aimed to revitalize the U.S. shipping industry after World War I. The U.S. shipping industry had suffered from a lack of ships, infrastructure, and personnel during the war, and faced competition from foreign shippers after the war.

  • Stimulate the domestic shipbuilding industry by creating a guaranteed market for U.S.-built ships
  • Support the domestic shipping industry by creating a monopoly for U.S.-owned and operated ships
  • Generate jobs and revenue for U.S. shipbuilders, shippers, and workers
  • Enhance national security by ensuring a reliable supply of ships and sailors for military and emergency purposes

What Does the Jones Act Law Mean for Consumers and Businesses?

The Jones Act law has significant implications for consumers and businesses that rely on domestic waterborne trade. Depending on your perspective, the Jones Act law can be seen as either beneficial or detrimental.

Some of the benefits of the Jones Act law are:

  • It protects and promotes the U.S. shipping industry, which supports about 650,000 jobs and generates about $150 billion in economic activity annually
  • It ensures a high standard of safety and quality for U.S.-built and operated ships, which reduces the risk of accidents, pollution, and security breaches
  • It contributes to national defense and homeland security by providing a ready fleet of ships and sailors for military and emergency use

Some of the drawbacks of the law are:

  • It increases the cost of shipping goods between two U.S. ports, which raises the prices of imported goods for consumers and reduces the profits of exporters
  • It limits the availability and variety of ships for domestic trade, which reduces competition, efficiency, and innovation in the shipping industry
  • It harms some states and territories that depend on imports more than others, such as Hawaii, Alaska, Puerto Rico, and Guam

What Are the Pros and Cons of Repealing or Reforming the Jones Act Law?

The Jones Act law has been controversial since its inception and has faced many challenges and criticisms over the years. Some people argue that the Jones Act law is outdated, unnecessary, and harmful to the economy and consumers, and should be repealed or reformed. Others argue that the Jones Act law is vital, beneficial, and patriotic, and should be maintained or strengthened.

Some of the arguments for repealing or reforming the Jones Act law are:

  • It would lower the cost of shipping goods between two U.S. ports, which would lower the prices of imported goods for consumers and increase the profits of exporters
  • It would increase the availability and variety of ships for domestic trade, which would increase competition, efficiency, and innovation in the shipping industry
  • It would help some states and territories that suffer from high shipping costs and limited choices, such as Hawaii, Alaska, Puerto Rico, and Guam

Some of the arguments for maintaining or strengthening the Jones Act law are:

  • It would protect and promote the U.S. shipping industry, which supports hundreds of thousands of jobs and billions of dollars in economic activity annually
  • It would ensure a high standard of safety and quality for U.S.-built and operated ships, which reduces the risk of accidents, pollution, and security breaches
  • It would contribute to national defense and homeland security by providing a ready fleet of ships and sailors for military and emergency use

In conclusion, The Jones Act law is a federal law that regulates maritime commerce in the United States. It requires that goods shipped between U.S. ports be transported on ships that are built, owned, and operated by U.S. citizens or permanent residents. The law was passed in 1920 to support the U.S. shipping industry after World War I.

The law has both advantages and disadvantages for consumers and businesses that rely on domestic waterborne trade. Depending on your perspective, the law can be seen as either beneficial or detrimental.

The law has been controversial since its inception and has faced many challenges and criticisms over the years. Some people argue that the law should be repealed or reformed, while others argue that it should be maintained or strengthened.

Frequently Asked Questions (F&Qs)

What are the exceptions to the Jones Act?

Some exceptions to the Jones Act are:

  • Waivers for national defense: The Jones Act can be waived for national defense purposes. This has been done in the past to allow foreign-flagged vessels to carry goods to areas that have been affected by natural disasters.
  • Waivers for small vessels: The Jones Act does not apply to vessels that are less than 100 gross tons. This means that small pleasure boats and fishing vessels are not subject to the Jones Act.
  • Waivers for certain types of cargo: The Jones Act does not apply to certain types of cargo, such as mail, fish, and petroleum products. This is because these types of cargo are considered to be essential to the U.S. economy and national security.
  • Waivers for territories: The Jones Act does not apply to U.S. territories, such as Puerto Rico and Guam. This is because these territories are not considered to be part of the United States for the purposes of the Jones Act.

What is Section 27 of the Merchant Marine Act?

Section 27 of the Merchant Marine Act of 1920, also known as the Jones Act, is a United States federal statute that requires all goods transported by water between U.S. ports to be carried on U.S.-flagged vessels, built in the United States, and crewed by U.S. citizens or permanent residents.

How did the Jones Act affect Alaska?

The Jones Act has had a significant impact on Alaska. The state is heavily dependent on waterborne transportation, and the Jones Act has made it more expensive to transport goods to and from Alaska.

Who wrote the Jones Act?

The Jones Act was written by Senator Wesley L. Jones, a Republican from Washington State. He introduced the bill in Congress in 1919, and it was signed into law by President Woodrow Wilson on June 5, 1920.

What was the impact of the Jones Act on Hawaii?

The Jones Act has also made it more difficult for Hawaii to attract foreign investment in its shipping industry. Foreign companies are less likely to invest in the Hawaii shipping industry because they are not allowed to use their own vessels or crews.

The Jones Act has been estimated to increase the cost of shipping goods to Hawaii by 20-30%. This has had a number of negative consequences for the state, including:

  • Higher prices for consumers:┬áThe higher cost of shipping goods to Hawaii has led to higher prices for consumers. This is especially true for goods that are not produced in Hawaii, such as food and fuel.
  • Reduced competition:┬áThe Jones Act has reduced competition in the Hawaii shipping market. This has made it more difficult for businesses in Hawaii to get the best prices for their goods.
  • Fewer jobs: The Jones Act has led to fewer jobs in the Hawaii shipping industry. This is because foreign companies are less likely to invest in the Hawaii shipping industry and because U.S.-flagged vessels are often more expensive to operate.