Yesterday, Senators John McCain (R-AZ) and Mike Lee (R-UT) introduced Senate Bill S.1894, permanently exempting Puerto Rico from trade restrictions under the Merchant Marine Act of 1920, commonly known as the Jones Act.
Their action comes in response to the massive devastation from Hurricane Maria that made landfall on the island earlier on September 20th; some estimates show damages upwards of $95 billion. In his relief efforts, President Trump granted a 10-day waiver of the Jones Act for Puerto Rico to allow much needed supplies and resources to flow into the ailing territory. This is a good step, but it only hints at the obvious damage done by a harmful protectionist measure.
Under the law, only U.S. flagged ships are allowed to deliver goods between U.S. ports. The archaic law is rooted in faulty protectionism that does more harm than good for America’s economic interests. With that, research has shown that consumers foot the bill for the higher cost of shipping caused by the law. Further, the U.S. International Trade Commission has estimated that its repeal could save the United States $15 billion annually.
In a statement, Sen. Lee said: “The Jones Act is just another example of a federal regulation that harms American consumers, gives foreign corporations an edge over American businesses, and makes disaster response harder. It is far past time to repeal it.”
Beyond pressures from Senators McCain and Lee, this week, members of the House wrote to acting Department of Homeland Security Secretary Elaine Duke, requesting a one-year exemption on the ban to further relief efforts, expressing their discontent with the law and its devastating effects.
While the exemption undoubtedly helps, it is simply insufficient, and a permanent exemption is the only solution to get Puerto Rico the help it so desperately needs. That being said, the McCain-Lee legislation would be a positive first step in ending the mercantilist law that keeps us locked in a 20th century import barrier economy, that never worked in the first place, and facilitate a trade environment that will allow us to compete competitively in a modern global economy that requires free and open commerce.