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In a new paper just published by The Mercatus Center (“The Jones Act Revisited“) North Carolina State University economist Thomas Grennes responds to Jones Act supporters at the American Maritime Council and updates his earlier paper “An Economic Analysis of the Jones Act” from May 2017. Here’s the conclusion from Professor Grennes’s new paper (emphasis added):
After a thorough evaluation of the arguments made by supporters of the Jones Act, the conclusion remains the same. The Jones Act is harmful to American consumers and businesses as a whole. Americans would gain from a major reform of the act, including a possible repeal. However, the supporters of the act have effectively protected it from repeal since 1920, and there is little evidence that their political support is diminishing. If repeal is not a reasonable option, reform of the act that would include relaxing the American-built requirement for ships would bring substantial benefits. A specific bill supported by the Hawaii Shippers’ Council would provide an exemption from the American-built requirement, but only for oceangoing ships traveling to or from the noncontiguous parts of the US (primarily Hawaii, Alaska, and Puerto Rico). The remaining features of the Jones Act would remain in place. To make the reform more palatable to shipyard employees, compensation could be paid to certain shipbuilders for a limited number of years. A precedent for such a buyout would be the tobacco buyout of 2004–2014.
MP: As I concluded in an op-ed in the Washington Examiner last summer “Meet the Jones Act: A 97-year-old regulatory law that’s costing you money“:
There’s no longer any economic reason to keep the anti-competitive and outdated Jones Act. Congress should repeal it. Scrapping the century-old legislative relic of the past would generate a broad range of benefits for the U.S. economy and consumers. If foreign vessels were able to ship U.S.-produced oil from Gulf Coast ports to East Coast refineries, it would save U.S. consumers about $1 billion annually.
Repealing the Jones Act would scale back excessive and unnecessary regulation, give Americans access to cheaper foreign-flag tankers, and allow greater energy production – all without any cost to the U.S. Treasury.
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