McCain said “I have long advocated for a full repeal of The Jones Act, an antiquated law that has for too long hindered free trade, made U.S. industry less competitive and raised prices for American consumers. The amendment I am introducing again today would eliminate this unnecessary, protectionist restriction.
"According to the Congressional Research Service, it costs $6 per barrel to move crude from the Gulf Coast to the Northeast United States on a Jones Act tanker," McCain said, "while a foreign-flag tanker can take that same crude to a refinery in Canada for $2 per barrel – taking money directly out of the pockets of American consumers.”
However, it appeared the bill was less sweeping than might be implied by McCain’s press release, aimed primarily at the requirement to build ships in America ships engaged in trade between points in America, not at crewing of vessels.
Jonathan Waldron, an attorney at Blank Rome said that in addition to allowing ships to be built overseas, it would also appear to repeal the requirements that a vessel that is sold foreign or rebuilt foreign (foreign repairs) would lose its coastwise trading privileges. He said it was unclear how the legislation would affect the requirement that Jones Act ships be 75 percent owned by Americans. As U.S. flag ships, Jones Act vessels would still have to be crewed by Americans.
While it is widely expected that the Keystone XL Pipeline bill will be vetoed by President Obama if approved by Congress, supporters of the U.S. shipping and shipbuilding industries wasted no time in issuing statements strongly opposing McCain’s amendment.
They note that the amendment is being proposed when shipyards are building a slew of new vessels, including new containerships for the Hawaii and Puerto Rico trades, and tankers and tank barges to move increased quantities of oil being produced in the U.S. (See “Head of the Line” in the November issue of American Shipper.)
American Maritime Partnership (AMP), a trade association for the domestic maritime industry, said the measure would “eliminate the U.S. shipbuilding industry, which is critical to supporting America’s military power and defense needs, employs hundreds of thousands of Americans, and pumps tens of billions of dollars into the U.S. economy.
“The McCain amendment would gut the nation’s shipbuilding capacity, outsource our U.S. Naval shipbuilding to foreign builders, and cost hundreds of thousands of family-wage jobs across this country," said AMP Chairman Tom Allegretti, who is also president and chief executive officer of the American Waterways Operators, a trade organization for the towing industry.
The Navy League of the United States said the bill “would gut the U.S. shipbuilding industry by striking the U.S. build requirement provisions of the Jones Act.”
The league said the requirement in the Jones Act that vessels in domestic waterborne be owned by U.S. citizens, built in the United States and crewed by U.S. mariners “keep American shipping companies, shipyards, mariners, maritime academies and thousands of people working. It is a critical component to the long-term sustainability of the U.S. fleet and the health of the U.S. shipbuilding industry.
“The Jones Act aids in controlling shipbuilding costs for the Navy, the Marine Corps and the Coast Guard by ensuring the health of the industrial base,” the league added
and predicted a repeal would "result in higher costs for ships used by the Navy, Marine Corps and Coast Guard."
"It is hard to believe that the Congress would endorse a change to the law that would outsource U.S. jobs and reduce national security by effectively creating dependence on foreign countries to build our ships,” said AMP.
The McCain proposal would create difficulties for companies that have built vessels in U.S. shipyards at considerably higher prices than potential competitors using vessels who built ships in shipyards in countries such as China or Korea.
The amendment “would undermine and devalue tens of billions of dollars of investments in existing U.S. constructed vessels throughout the American domestic maritime industry,” said AMP.
AMP said “The American domestic maritime industry is investing record amounts in new ship construction in virtually every trade. American shipyards are building record numbers of modern, state-of-the-art vessels in all sectors with more on order. The amendment is particularly troubling because shipyards are among the largest employers in many states, providing stable manufacturing jobs that pay far above the national average.”
The Maritime Trades Department of the AFL-CIO urged its affiliates and port councils to oppose the amendment being offered to the proposed Keystone XL Pipeline legislation that would repeal a portion of the Jones Act. The overall legislation is being debated on the floor of the U.S. Senate at this time.
“This amendment has no place in the Keystone bill or in Congress,” said Michael Sacco, president of the MTD and Seafarers International Union. “It is just another attack from those seeking to cripple the U.S.-flag maritime industry. We need all hands on deck to defeat this amendment.”
On the other hand, McCain’s proposal won plaudits from Marietje Schaake a member of the European Parliament from the Netherlands.
“It is good news that there is now a proposal to repeal this outdated and protectionist measure. Under the pretense of national security, the Jones Act makes it almost impossible for European companies to operate in the US. The Jones act does not only affect the transport of goods but also other maritime services, such as towing, dredging and port services," she said. "Whether McCain’s amendment will make it is still uncertain, the American shipping lobby is traditionally very strong.”
Schaake noted that within the negotiations between the U.S. and European Union over the Transatlantic Trade and Investment Partnership “the EU has already stated that the Jones Act is a problematic law.
“Since the start of negotiations, I have consistently told the European negotiators that repealing this law should be a European priority. European policy makers and the affected sectors should now investigate how they can contribute to this process. More broadly, it is crucial that the European priorities for an agreement with the Americans are clear, so that the negotiators can realize them. That will require a broad debate and I hope that more companies, organizations and citizens will contribute to that.”