Once again, Puerto Ricans are paying the price for an antiquated shipping law that makes food and other goods more expensive on the island. The law is inexcusable in ordinary times — and downright scandalous now, when the island is reeling from yet another natural disaster.
Hurricane Fiona devastated the island this week, killing at least eight and knocking out power and water for thousands. Because Puerto Rico is an island, getting emergency supplies of fuel and food to the island almost always means sending them by ship from the mainland.
But not just any ship. Under a 100-year-old law known as the Jones Act, vessels transporting products between domestic ports — which includes Puerto Rico — must be built, owned, and crewed by Americans. As a result of operating in such a protected market, ship builders and shipping companies are able to inflate prices and make outsized profits. US-built ships are two to five times more expensive than foreign-built ships, according to a 2019 estimate.
The law rarely has a discernible impact on most Americans, but it’s a permanent economic burden on our fellow citizens in places like Hawaii, Alaska, Puerto Rico, and Guam. People there can either pay to import foreign cargoes or pay the premium for American-flagged shipping of domestic goods. Either way, the result is higher prices. In Hawaii, the law adds an estimated $248 to annual food costs for its residents. Cars cost about 40 percent more in Puerto Rico than on the mainland. Debate emerges around the value of the law, or lack thereof, every few years when natural disasters strike or conflicts like the war in Ukraine arise. (Hawaii imports a large chunk of crude oil from Russia because the Jones Act makes buying US oil too expensive and had to suspend those imports after the Ukraine invasion.)
Abolishing the law — or, at the very least, permanently exempting island territories and Alaska — is overdue.
The Jones Act has been temporarily suspended in times of natural disasters, most recently in the wake of Hurricane Maria, which battered Puerto Rico in 2017, but also after Hurricanes Harvey and Irma that same year, Sandy in 2012, and Katrina and Rita in 2005. The rationale is self-evident: to expedite the transportation of emergency supplies and oil from other parts of the country to the affected areas.
In recent days, US Representative Nydia Velazquez of New York sent a letter, co-signed by seven members of Congress, to the Biden administration requesting a one-year waiver of the Jones Act. “A significant number of Puerto Ricans have not only lost electricity but have been displaced and are currently experiencing food and water insecurity,” they wrote. A waiver “will allow Puerto Rico to have more access to the oil needed for its power plants, food, medicines, clothing, and building supplies.”
The exemption is certainly warranted. But Puerto Rico will continue to need all those goods long after the current crisis has eased, and there is no reason residents of the island should have to go back to paying inflated prices.
The ostensible purpose of the Jones Act is to protect the American shipbuilding industry. But to the extent that remains a goal of Congress, there has to be a better way.
Indeed, according to Joseph Stiglitz, who chaired the Council of Economic Advisers in the Clinton administration, the law is an extremely inefficient way to support shipbuilding. Stiglitz told NPR’s Planet Money that the Jones Act “does save some jobs in the shipping industry,” which is a small industry to begin with. “[B]ut it also makes all kinds of other things cost way more than they should.” Each job saved, Stiglitz said, cost “something like a quarter-million dollars.”
There may be legitimate economic and national security reasons to support US shipbuilding. But if it’s a national priority, the burden should be shared equally, instead of foisted on the tiny number of Americans who live on islands or in Alaska. Rather than kicking the can down the road and seeking waivers after every hurricane, Congress should just repeal the law.
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