Senator McCain Introduces Bill to Repeal Jones Act

Friday, June 25, 2010

On June 25, Senator John McCain announced that he introduced the “Open America’s Water Act,” to repeal the Jones Act. In a release on his website, Senator McCain said:

“Today I am pleased to introduce legislation that would fully repeal the Jones Act, a 1920s law that hinders free trade and favors labor unions over consumers.  Specifically, the Jones Act 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.  This restriction only serves to raise shipping costs, thereby making U.S. farmers less competitive and increasing costs for American consumers. 

“This was highlighted by a 1999 U.S. International Trade Commission economic study, which suggested that a repeal of the Jones Act would lower shipping costs by approximately 22 percent.  Also, a 2002 economic study from the same Commission found that repealing the Jones Act would have an annual positive welfare effect of $656 million on the overall U.S. economy.  Since these studies are the most recent statistics available, imagine the impact a repeal of the Jones Act would have today: far more than a $656 million annual positive welfare impact – maybe closer to $1 billion.  These statistics demonstrate that a repeal of the Jones Act could prove to be a true stimulus to our economy in the midst of such difficult economic times.

“The Jones Act also adds a real, direct cost to consumers – particularly consumers in Hawaii and Alaska.  A 1988 GAO report found that the Jones Act was costing Alaskan families between $1,921 and $4,821 annually for increased prices paid on goods shipped from the mainland.  In 1997, a Hawaii government official asserted that ‘Hawaii residents pay an additional $1 billion per year in higher prices because of the Jones Act.  This amounts to approximately $3,000 for every household in Hawaii.’


“This antiquated and protectionist law has been predominantly featured in the news as of late due to the Gulf Coast oil spill.  Within a week of the explosion, 13 countries, including several European nations, offered assistance from vessels and crews with experience in removing oil spill debris, and as of June 21st, the State Department has acknowledged that overall ‘it has had 21 aid offers from 17 countries.’  However, due to the Jones Act, these vessels are not permitted in U.S. waters. 


“The Administration has the ability to grant a waiver of the Jones Act to any vessel – just as the previous Administration did during Hurricane Katrina – to allow the international community to assist in recovery efforts.  Unfortunately, this Administration has not done so. 

“Therefore, some Senators have put forward legislation to waive the Jones Act during emergency situations, and I am proud to co-sponsor this legislation.  However, the best course of action is to permanently repeal the Jones Act in order to boost the economy, saving consumers hundreds of millions of dollars.  I hope my colleagues will join me in this effort to repeal this unnecessary, antiquated legislation in order to spur job creation and promote free trade.”


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