Caribbean Business
By : CARLOS ROMERO BARCELÓ
When we talk about the Jones Act, we should explain which Jones Act we are talking about.
There are two very well-known Jones acts related to Puerto Rico. One is the Jones Act of 1917, which is a federal law passed by Congress that defined our constitutional, legal, political and economic relations to the states of the union and the federal government, and prescribed the organization of our territorial government as a republican form of government.
The other Jones Act, which very often is publicly discussed in Puerto Rico, is the federal law officially known as the U.S. Coastwise Shipping Act, which requires all passengers and merchandise using seagoing vessels for transportation from one U.S. port to another U.S. port be transported via a U.S.-flag vessel whose crews must consist of U.S. citizens.
Of the two, the one we are going to discuss in this column is the Jones Act that controls our ocean transportation between Puerto Rico and the states of the union. As indicated above, the Jones Act requires all passengers and cargo transported by ocean carriers from Puerto Rico to the states of the union and vice versa must be on U.S. vessels.
There is, however, one exception regarding people traveling by ocean vessel between Puerto Rico and the mainland U.S. The exception is an amendment that allows passengers to travel from Puerto Rico to the mainland and vice versa on foreign-flag vessels with foreign crews as long as there are no passenger U.S.-flag vessels available to transport them between other U.S. ports and Puerto Rico.
That amendment was the product of a bill I asked former Resident Commissioner Baltasar Corrada del Río to introduce when I was governor of Puerto Rico. We even managed to get the House committee to hold hearings in Puerto Rico, where the amendment was strongly supported.
To get Sen. Daniel K. Inouye’s (D-Hawaii) support, I had to meet with the presidents of the maritime unions in Washington, including the Seafarers’ International Union, as representatives of the stevedores (dockworkers). After I obtained their commitment to support my proposed amendment, Inouye brought the House bill to the Senate floor and it eventually was enacted.
In the process of obtaining support from the labor leaders and other senators and members of Congress, I learned how important ocean vessels are to a nation’s commerce, safety, influence and power. The majority of great trading and commercial nations as well as the powerful commercial and military empires have had large and powerful navies. To mention a few: the Carthaginian, Spanish and Portuguese empires, Dutch East India Co., the British Empire and, last but not least, the U.S.A.
All the ocean-cargo traffic between Puerto Rico and the mainland is done on U.S.-flag vessels and a substantial number of the crew is from Puerto Rico. According to a report made by the U.S. Maritime Administration in 2006, Puerto Rico and the mainland’s ocean-liner trade, in terms of 40-foot containers, was the largest domestic offshore liner trade. All U.S.-flag vessels are subject to the Coastwise Shipping Act and all cabotage laws. They are also subject to the supervision of the U.S. Maritime Administration and the congressional committees, which help ensure Puerto Rico, as well as other offshore U.S. ports, receive reliable ocean-transportation services at competitive rates.
In terms of rates for northbound traffic—transportation from Puerto Rico to U.S. mainland ports—the rates are not only competitive but also lower than what any foreign shipping company would charge. Why? Because we now have as much cargo capacity northbound as we have southbound. However, all southbound vessels are usually loaded to capacity, but northbound vessels are usually half-empty. Obviously, northbound rates are much lower but with the same consistent and reliable service.
We hear continuous claims that if we are exempted from the Jones Act we would economize on the cost of all goods and merchandise brought from the mainland. Therefore, we should demand we be excluded from the Jones Act and allowed to use foreign-flag vessels to transport goods from the mainland to Puerto Rico. However, once we are excluded from the protection of the U.S. Maritime Administration and the Jones Act, we would be left at the mercy of the commercial and business interests of the foreign carriers, who don’t and wouldn’t give a damn about Puerto Rico’s interests. However, as long as we are protected by U.S. laws and the Maritime Administration, the U.S. carriers can’t enter into commercial agreements or cartels that control rates, prices and availability of service.
Not only would northbound vessel availability be reduced and rates increased, but since foreign carriers would be exempt from U.S. cabotage laws, controls and the U.S. Maritime Administration’s supervision, they also most probably would enter into agreements in restraint of trade (monopolistic practices) and increase rates after the competition is eliminated. Puerto Rico would then be at the mercy of foreign carriers which, as I have said, don’t give a damn about our welfare or interests vis-à-vis their own economic interests.
Studies made by the maritime industry reveal that once foreign carriers eliminate the competition by offering lower rates, they will begin increasing their rates to maximize their profits. When that happens, if we are excluded from the U.S. cabotage laws, we would have no protection.
At present, we are being served by several U.S. carriers that share an extremely important and large offshore trade, which also gives us a substantial market power and influence. To foreign carriers, our share of their total market would be much less, thereby diminishing our market power.
For the past 25 years or more, a highly competitive shipping market has existed in Puerto Rico. This highly competitive market has worked to provide the island with a variety of services tailored to the needs of different shippers.
Finally, an unfortunate attitude has been fast developing since the turn of the century in Puerto Rico. More than ever, we keep demanding more and more privileges, benefits and money as U.S. citizens while refusing to contribute and participate in the duties and responsibilities of U.S. citizens.
All crew members of U.S.-flag vessels are U.S. citizens, many of them Puerto Ricans who, to become U.S. seafarers, had to go through criminal and Homeland Security screenings to obtain a Transportation Worker Identification Credential, which provides us with much greater security in our ports.
Last but not least, in times of conflict overseas and particularly in time of war, the nation needs the cargo and transportation vessels with American crews to assist the military abroad. If we demand parity in Medicaid and other federal programs, shouldn’t we also be proud to contribute to our nation’s safety and needs in times of conflict?
Carlos Romero Barceló is a two-term former governor of Puerto Rico (1977-’84), a two-term former resident commissioner (1993-’00) and a two-term former mayor of San Juan (1969-’78). He was president of the New Progressive Party for 11 years.
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