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Senate Committee Urged To Reconsider Total Repeal Of Jones Act

Puerto Rico Exemption Encouraged As A Potentially Sellable Alternative


July 19, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

The Senate Foreign & Federal Affairs Committee was urged to desist from asking the U.S. Congress for a total repeal of the Jone’s Act’s applicability to Puerto Rico and ask instead for limited, tailor-made exemptions to benefit the island.

The Jones Act requires that all water commerce between U.S. ports , including ports in U.S. territories or possessions, be carried on U.S.-built vessels owned, operated, and manned by U.S. citizens, and registered in the U.S.

"We all recognize how difficult it will be for the U.S. Congress to totally eliminate the Jones Act after so many years in effect," said Bob Leith, president of Puerto Rico Line, Inc., during his presentation to the senate committee.

"Therefore, I would like to recommend that we abstain from promoting and using the word "repeal" when you refer to the Jones Act. Experience tells us that the strategy to follow is to start requesting exemptions from these laws, not damaging U.S. interests, and that on the contrary, they benefit in the same proportion that Puerto Rico may benefit," said Leith.

Leith’s suggestion was to initially request exemptions from the Jones Act for the future Port of the Americas to be built in the southern part of Puerto Rico. The U.S. would benefit from an increase of foreign ships that after transshipping, or dropping off cargo, in Puerto Rico would sail and dock at U.S. ports, generating additional cargo movements.

"The first exemption should be directed towards all the shipping activities to take place at the Port of the Americas, so the industry can benefit from the same customs exemptions that U.S. ports such as St. Thomas and St. Croix have. This would allow transshipment activities at the port to be competitive with other Caribbean countries such as the Dominican Republic, Jamaica, and Panama, our competitors in this industry," said Leith.

Leith, who is part of a workgroup organized by Gov. Sila Calderon to prepare data for international investors interested in the Ports of the Americas, predicts that the U.S. Congress will eliminate the Jones Act in the future.

"The Jones Act will be eliminated, but it won’t be now. The success of its repeal will depend on the united efforts of prestigious associations in Puerto Rico such as the Chamber of Commerce and the Manufacturers Association, among others. In conjunction with their U.S. counterparts, these organizations will lobby U.S. congressmen that have the necessary influence to bring about this necessary change," said Leith.

On the other hand, Puerto Rico Maritime Alliance President Jaime Santiago, also general manager for Sea Star Line, restated the group’s support of the Jones Act as a matter of principle and economics.

"The Jones Act guarantees that uniform rules and regulations for workers and companies involved in Puerto Rico’s shipping industry will be applied," said Santiago.

"Because of the Jones Act, industry workers working in Puerto Rico and the U.S. are covered by minimum wage laws, pension laws and other regulations designed to protect their basic rights as American workers. Revoking the Jones Act would force U.S. companies to look for workers from third world countries that are not covered by these laws in order to compete with foreign companies."

The Alliance’s data indicates that economically, the repeal of Jones Act would cause shipping rates to rise, after decreasing at least 50% in the last 15 years.

"Northbound ocean cargo rates from Puerto Rico to the U.S. are extraordinarily low; lower than in any other part of Latin America. If the Jones Act were revoked, this would result in a rate increase northbound. It would also cause international companies to create conferences, where the different ocean carriers would legally unite and agree on which market rates to set," said Santiago.

Santiago emphasized that the cost of transportation as a percentage of a product’s retail cost is less than 10%, contrary to popular belief. At the same time, Puerto Rico carriers have invested millions of dollars in the most sophisticated and varied shipping equipment available worldwide, to compete in an excess vessel capacity market.

This Caribbean Business article appears courtesy of Casiano Communications.
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