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McCain proposes abolishing U.S. shipping restriction

Post by John Gillie / The News Tribune on June 28, 2010 at 1:51 pm |
June 28, 2010 1:51 pm

In a proposal that could have a major effect on waterborne trade between Tacoma and Alaska, Arizona Republican Sen. John McCain has introduced legislation that would allow foreign vessels manned by foreign crews to carry goods between U.S. ports.

McCain’s legislation would repeal the Jones Act, which requires that goods moved between U.S. ports such as Tacoma and Anchorage be moved in ships built in the U.S. owned by Americans and manned by American crews.

By repealing the law, the costs of transporting goods to such isolated American states such as Alaska and Hawaii and the commonwealth of Puerto Rico, an American possession, would drop, McCain contends.

Two major American steamship companies, Horizon Lines and Totem Ocean Trailer Express (TOTE), transport containers and truck trailers weekly between Tacoma and Alaska. The two lines handle about 75 percent of the waterborne traffic to Alaska.

The two lines use vessels built in the U.S. and manned by Americans.

Part of McCain’s motivation is to allow foreign oil skimmers to join the cleanup in the Gulf of Mexico. But the senator argued that the entire 90-year-old law should be permanently removed from the books.

In a statement, Senator McCain said: “I am pleased to introduce legislation that would fully repeal the Jones Act, a 1920s law that hinders free trade and favors labor unions over consumers. Specifically, the Jones Act requires that all goods shipped between waterborne ports of the United States be carried by vessels built in the United States and owned and operated by Americans. This restriction only serves to raise shipping costs, thereby making U.S. farmers less competitive and increasing costs for American consumers.

“This was highlighted by a 1999 U.S. International Trade Commission economic study, which suggested that a repeal of the Jones Act would lower shipping costs by approximately 22 percent. Also, a 2002 economic study from the same Commission found that repealing the Jones Act would have an annual positive welfare effect of $656 million on the overall U.S. economy. Since these studies are the most recent statistics available, imagine the impact a repeal of the Jones Act would have today: far more than a USD656 million annual positive welfare impact – maybe closer to USD1 billion. These statistics demonstrate that a repeal of the Jones Act could prove to be a true stimulus to our economy in the midst of such difficult economic times,” McCain said.

The act’s repeal would open up trade to Alaska to foreign companies with lower cost vessels and crews and potentially leave the Americans who man those vessels jobless.

TOTE is headquartered in Federal Way. It is part of SaltChuk Resources which also has a Jones Act shipping line serving Puerto Rico.

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