Canadian Manufacturing

U.S. Senator McCain sets sights on maritime deregulation

The chairman of the Senate Armed Services Committee says old regulations from the 1920 Jones Act drive up the cost of food, gasoline and steel



WASHINGTON _ Sen. John McCain is taking on America’s maritime industry and the longstanding law barring foreign-built ships from transporting goods within the United States.

McCain’s opposition to the 1920 Jones Act isn’t new, and he’s made clear in recent weeks that one of his priorities is to strip away the maritime industry’s protections, which he says stifle competition and drive up the cost of food, gasoline and steel.

“As has been my habit over the years, I will not quit on this issue,” McCain said during a recent speech on the Senate floor.

Federal law requires that ships transporting cargo between two U.S. ports be built in the United States, manned by U.S. citizens and primarily owned by U.S. citizens.

For now, McCain is focused on rolling back the American-made requirement in the law. Ships moving goods between two U.S. ports would still require an American crew.

Congress barred foreign-made ships and crews from domestic routes to help ensure the U.S. has the vessels, shipyards and crews necessary to sustain a healthy defence and economy. Many countries have similar protections in place for their shipbuilders and workers.

California Reps. Duncan Hunter, a Republican, and John Garamendi, a Democrat, are among the lawmakers who have signed letters encouraging Senate leaders to maintain the protections. They said weakening the Jones Act would harm an industry that supports more than 400,000 domestic jobs. Virginia, California, Louisiana, Texas and Mississippi have the highest employment associated with the industry.

Hunter said his opposition to McCain’s efforts is based primarily on national security. Great nations, he said, rule the ocean.

“What happens an entire generation from now when something really bad happens and the people who had been selling ships to us no longer want to do it or are unable to? What do you do then?” asked Hunter, chairman of the House subcommittee with oversight over maritime transportation issues.

Garamendi predicted that a multitude of jobs would disappear if other nations were allowed to build the cargo ships that travel from Houston to New York, for example, or the barges and tug boats that travel from Memphis to New Orleans. “Tens of thousands of jobs would wind up in Singapore, in Korea, in Japan. Now, Mr. McCain, you tell me why that would be good for America,” said Garamendi, the ranking Democrat on the House subcommittee.

McCain acknowledges there would be losers under his proposal, but he maintains that the average American would gain because the change would lead to lower prices for an array of products.

The Congressional Research Service, relying on federal studies, has told lawmakers that U.S.-made tankers cost about four times more to build than foreign ones. A U.S.-flagged ship also costs about three times more to operate, largely because their crews receive greater pay and benefits than the foreign-flagged crews, which typically come from poor countries.

Companies and unions focused on sea transportation spend millions of dollars in campaign contributions and lobbying expenses each year. Hunter ranked fifth among federal lawmakers, with his campaign receiving $111,600 from the industry during the latest election cycle, according to the Center for Responsive Politics. Garamendi ranked 12th, with his campaign netting $66,100. Garamendi’s campaign also received $99,250 from transportation unions.

Supporters of the shipbuilder protections question the savings for businesses and consumers, especially since McCain’s amendment would still require the ships to be manned by American workers. They also note that the cost of building a ship is paid off over a lengthy period, typically 40 years, which limits the cost impact of an individual voyage.

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