U.S. Senator John McCain took to the Senate floor on Thursday to defend his amendment to repeal the Merchant Marine Act of 1920, also known as the Jones Act.
The proposed amendment has been faced with fierce opposition from various interested parties including the American Maritime Partnership (AMP) and more recently a group of Congressmen.
Fears have been raised that the repeal would harm the domestic shipbuilding and repair industry which is sustaining more than 400,000 jobs in all 50 states.
While speaking before the Senate, McCain said that the Jones Act hinders free trade, stifles the economy and hurts consumers, largely for the benefit of labor unions.
This, on the other hand, invites other countries to put up or retain their own barriers and, at the end of the day, the U.S. consumer and the economy at-large pay the price, he explained.
According to McCain, the law serves only to raise shipping costs, making U.S. farmers and businesses less competitive in the global marketplace and increasing costs for American consumers. “Specifically, my amendment would effectively repeal a law that prevents U.S. shippers from purchasing, or otherwise affordably procuring the services of, vessels built outside the United States for use in American waters,” he said.
Referring to the findings of a 2002 U.S. International Trade Commission economic study, McCain went on to say that repealing the Jones Act would lower shipping costs by about 22 percent.
In addition, according to the U.S. Maritime Administration (MARAD), the cost to operate U.S. flag vessels – at USD 22,000 per day – is about 2.7 times higher than foreign-flag vessels – USD 6,000 per day.
McCain estimates that the impact that Jones Act repeal would have today could reach up to USD 1 billion, instead of USD 656 million predicted by the Trade Commission a decade ago.
“ In the energy sector, for example, the price for moving crude oil from the Gulf Coast to the Northeastern United States on Jones Act tankers is USD 5 to 6 dollars per barrel, while moving it to eastern Canada on foreign-flag tankers is USD 2. That can mean an additional USD 1 million per tanker in shipping costs for oil producers. This increased cost is why, according the Congressional Research Service, more than twice as much Gulf Coast crude oil was shipped by water to Canada as was shipped to Northeastern U.S. refineries over the last year – all in an effort to avoid paying Jones Act vessels shipping rates,“McCain pointed out.
“Mr. President, the domestic shipbuilding requirement of the Jones Act is outdated and must be abolished,” he concluded.
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