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COVID-19 Fuels Debate Over Waiver of Jones Act’s Coastwise Trade Restrictions

COVID-19 Fuels Debate Over Waiver of Jones Act’s Coastwise Trade Restrictions

Trevor M. Cutaiar

Trevor M. Cutaiar

October 12, 2020 12:31 PM

The COVID-19 virus has significantly impacted the United States economy. The maritime industry, as part of the global supply chain, is certainly no exception. Opponents of the Jones Act’s prohibitions on coastwise trade see COVID-19 as an impetus for the permanent waiver or repeal of such restrictions.

JONES ACT BACKGROUND

The Jones Act, which may be better known to some for its extension of the Federal Employer’s Liability Act to injured seaman, was passed into law as the Merchant Marine Act of 1920. Some of the Jones Act’s provisions function as a cabotage law designed to protect the domestic shipping industry from competition with foreign-flagged vessels. The Jones Act still currently requires that the transportation of merchandise between coastwise points must be by vessels that are owned, operated, and controlled by U.S. citizens.

THE IMPACT OF COVID-19 ON THE JONES ACT

With the recent pandemic, there has been discussion in Washington about a waiver of the Jones Act as pertains to shipments of oil. Attempts to repeal the Jones Act are not new but opponents of the coastwise trade restrictions suggest that, in light of the economic downturn caused by COVID-19 and the desire for a swift recovery, the waiver should apply to all cargo and should be made permanent.

Others see the continued survival of the Jones Act as vital to American maritime industries. Supporters of the Jones Act fear that a waiver of its restrictions on coastwise trade, even temporarily, will allow foreign powers, such as China, to have undue influence over the movement of goods between U.S. ports and along inland waterways and would result in large-scale loss of domestic jobs in the maritime industry.

EXISTING LEGISLATION SEEKS REPEAL OR MODIFICATION OF CABOTAGE PROVISIONS OF JONES ACT

Efforts to undermine the Jones Act have existed long before the pandemic. In March 2019, Senator Mike Lee of Utah introduced Senate Bill 694, Open America’s Waters Act of 2019, which is still in the Committee on Commerce, Science and Transportation. As recently as December 2019, Congressman Ed Case of Hawaii introduced three different bills in the House dealing with the Jones Act. These bills seeking repeal or modification of the cabotage provisions of the Jones Act are existing vehicles in Congress should the movement gain enough support. Congressional delegations from states supported by the maritime industry will continue to push back against these efforts. COVID-19 and the resultant economic downturn will certainly play into the ongoing debate and could ultimately have a significant impact on the American maritime industry.

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