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On Global Trade & Investment

 

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No. 64 of 2015

FRIDAY, SEPTEMBER 18, 2015

Filed from Portland, Oregon

Click here for yesterday's Cuba quote from David Salmonsen.
THE JONES ACT AND AMERICAN HISTORY

"Pilgrims did not land at Plymouth Rock.  Betsy Ross did not sew or design the United States flag.  And the Jones Act is not responsible for the cost of gasoline, the cost of groceries in Hawaii, the debt in Puerto Rico, or snowy roads in New Jersey.

"They are all tall tales.  They are embellishments.  They are outright falsehoods."

Paul "Chip" Jaenichen
September 16, 2015
CONTEXT
Paul Jaenichen, a former Naval officer and submarine commander, is today the Administrator of the Maritime Administration.  Last Wednesday he gave a speech in New York to The TradeWinds Jones Act Shipping Forum.  We haven't been able to locate copy of the speech.  It doesn't seem to be on the website of the Maritime Administration.  Still from the accounts we have read, it was a strong defense of the Merchant Marine Act of 1920, aka, the Jones Act.  
 
The act gets its name from former Senator Wesley Jones (R-IL) and is perhaps best known for its provisions on cabotage, summed up in this passage from the Wikipedia entry on the Jones Act:

"Section 27 of the Jones Act, deals with cabotage (i.e., coastal shipping) and requires that all goods transported by water between U.S. ports be carried on U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents."

As for the reason it is still needed after 95 years, Mr. Jaenichen reportedly focused on security.  According to the maritime newsletter gCaptain, the source for today's quote, "Jaenichen was very clear that the Jones Act is not about protecting domestic trade, rather the reason the Jones Act exists today, above all else, is to support national defense."

COMMENT
The law may be as settled and permanent as any law can be.  As an issue, however, it is not settled.  Rather it is destined to spark more debate, a lot more, with each new issue adding grist to the mill.  For starters, consider these four:

Oil Exports.  Yesterday, the House Energy and Commerce Committee approved legislation to allow crude oil to be exported from the United States.  If we are reading the press reports on that correctly, there may be an effort to apply Jones Act like restrictions to those exports, which would be an expansion of the Act.

Puerto Rico, which is in the middle of a debt crisis, is trying to cut costs wherever it can and is seeking a five year waiver from the cabotage requirements of the Jones Act.

Icebreakers.  America needs them and Finland can build them at a 10th of the cost of an American icebreaker.  Whether the Finns can win the legal argument - namely, that the Arctic isn't U.S. waters and so not covered by the Jones Act - is quite another matter.

Dredging.  The Dutch and the Belgians are awfully good at it, and the U.S. needs to do more of it.  As Dan Ikenson of Cato pointed out in a recent Wall Street Journal article, "Many American ports desperately need to be modernized if the U.S. is to compete successfully in the global economy.  But arcane laws protecting domestic dredgers from competition - [the Jones Act] - are holding the country back."

Presumably, the issue will get raised in negotiations on the Transatlantic Trade and Investment agreement.  But maybe not seriously.  Negotiators are not fools - not the EU negotiators and not the American - and they won't spend a lot of effort on a truly hopeless cause.   Put differently, the fate of the Jones Act will depend more on how Americans talk about it over the next couple of years than on the formalities of a negotiating round.

***
Now as to Plymouth Rock and Betsy Ross, they are certainly myths.  But are they falsehoods?  The rock in Plymouth is there.  We have seen it.  No, we cannot prove that William Bradford and the other Pilgrims stepped on it.  Can anyone prove they didn't?

And Betsy Ross, her grandson tells a plausible tale.  George Ross, her husband's uncle, was a General in the Continental Army as well as a signer of the Declaration of Independence.  She is credited not with the whole design of the original American flag but with the thought that a five pointed star would look better than a six pointed one.  And, as her grandson told the tale, she made a flag with five-pointed stars. 

Your editor's very conservative 1940 edition of the Encyclopedia Britannica concludes the entry on Betsy Ross this way:

"All that has been verified is that there was a Mrs. Ross living in Philadelphia at the time of the flag's adoption, and that she was an upholsterer and flagmaker by trade."

That's hardly proof she didn't do it.  We're sticking with the family lore.  You, of course, are free to choose what you believe in this matter. Whatever you decide: put out the flag and

Enjoy the Weekend!
SOURCES & LINKS
Betsy Ross and the Jones Act takes you to the September 17 gCaptain story by Mike Schuler that was the source for today's quote.

The Merchant Marine Act of 1920 is a link to the Wikipedia entry on the Jones Act.

31-19 is a BloombergBusiness report on this week's vote in the House Energy and Commerce Committee to allow crude oil exports from the United States.

Finland Wants In is an Arctic Newswire story on Finland's interest in selling icebreakers and/or icebreaker expertise to the United States. 

Barnacles Ports Policy is the Dan Ikenson op-ed from The Wall Street Journal referenced in the Comment Section above.

 

 

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