Panel Discusses Value, Benefits Of The Jones Act

Panelists at a keynote breakfast at the International WorkBoat Show discussed “The State of the Jones Act in 2024: Threats, Opportunities and the Way Forward.”

The session, held November 13, was moderated by U.S. Coast Guard Rear Adm. (Ret.) Richard Timme, who now serves as president of VX Marine. Panelists were Matthew Paxton, president of the Shipbuilders Council of America; Aaron Smith, president and CEO of the Offshore Marine Service Association; and Michael Roberts of the Hudson Institute and a Navy League Center for Maritime Strategy senior fellow.

The panelists generally agreed that opposition to the Jones Act has primarily come from arguments some businesses have about the cost of shipping goods on U.S. owned and operated vessels crewed by American mariners, as required by the act. However, panelists stressed that the Jones Act remains important.

“To say, well, we need to repeal the Jones act and become more competitive is nonsense,” Roberts said. “We are very competitive when we’re talking about a level playing field. I’m sure every business in this room understands this.”

The problem, he said, is that foreign-flag vessels have an unfair advantage as they are based in countries that pay lower wages and have lower regulatory standards.

Just as other countries have protected their own workforces, the United States must continue to do so, and that means continuing to support the Jones Act, Roberts said. He added that in a time when more people are concerned about border security, failure to enforce the Jones Act would send the wrong message.

Smith mentioned what he sees as a major enforcement problem with the Jones Act for the offshore energy industry. He offered the offshore wind industry as an example.

“What we’re finding is, since 2016, there have been 84 foreign-flag vessels participating in the U.S. offshore wind industry,” he said. “Fifty-one of those vessels are directly competing with existing American industry. That’s a problem. That’s not the way the Jones Act was designed to work.”

Smith estimated that those vessels and their foreign crews took 4,750 jobs away from U.S. mariners.

Additionally, he said it makes no sense to allow these vessels only 12 miles off American shores as it creates a national security risk.

Allowing foreign-flag vessels to participate in building projects just off American coastlines essentially allows U.S. tax laws, U.S. wage laws and U.S. environmental and regulatory inspection laws to be waived, Paxton said. He added, “All of those vessels that come in are playing on a very different playing field from all of our U.S. companies.”

The Jones Act also supports American shipyards, Paxton said. He gave an example where American policy at first was going to require Jones Act-compliant specialized vessels for installing the foundations for projects built on pristine seabed. Instead, he said, U.S. Customs and Border Protection reversed that ruling. That meant instead of building five vessels in American shipyards, only one is being built, he said.

Ensuring continued Jones Act protections does not mean that some changes to existing laws might not be beneficial to the industry, panelists said. They brought up the “Ships For America” Act proposed by U.S. Sen. Mark Kelly (D-Arizona) and U.S. Rep. Mike Waltz (R-Florida) as an example.

“We can’t become competitive with China just by fixing the Jones Act,” Roberts said.

Smith brought up the idea of depositing money from Jones Act violations into the Ships Act Trust Fund. He said that would allow the money to be used for the betterment of the industry.

Paxton said it is important to take advantage of any opportunity for government to support the American commercial shipbuilding sector, which in turn already supports U.S. Navy and Coast Guard fleets. He added that shipyard workers have been aging out in greater numbers since the beginning of the COVID-19 pandemic, and a large portion of those remaining have only five or six years left to work until they retire.

“We need to grow the next generation of workers in our shipyards,” Paxton said. “That only happens if we have work.”

Panelists concluded by noting that too many Americans erroneously believe the cost of their everyday products is high because of the Jones Act. That’s because it is what they hear from some shippers, panelists said. They suggested that, instead, Jones Act supporters need to get to work telling the story of how a robust U.S. maritime industry, made possible by the existence of the Jones Act, strengthens the American workforce and economy, supports the U.S. military, preserves national security, enforces existing border laws and drives business to American shipyards.