The Jones Act (Merchant Marine Act of 1920)

Section 27: The Cabotage Provision That Costs Puerto Rico Billions

The Law

Section 27 of the Merchant Marine Act of 1920 (commonly called the Jones Act, though not to be confused with the Jones-Shafroth Act of 1917) requires that all goods shipped between U.S. ports be transported on ships that are:
1. Built in the United States
2. Owned by U.S. citizens or permanent residents
3. Flagged under the U.S. flag
4. Crewed by U.S. citizens or permanent residents

Application to Puerto Rico

Because Puerto Rico is a U.S. territory, all goods shipped between the mainland and the island must comply with these requirements. This effectively means:
- Puerto Rico cannot use cheaper foreign-flagged vessels for trade with the mainland
- The cost of shipping to Puerto Rico is estimated to be 2-3 times higher than to comparable Caribbean destinations
- These costs are passed directly to consumers in the form of higher prices for food, fuel, building materials, medicine, and consumer goods

The Cost

Multiple studies have estimated the Jones Act's cost to Puerto Rico:
- Federal Reserve Bank of New York (2012): Identified the Jones Act as a significant factor in Puerto Rico's high cost of living
- GAO (2013): Found that shipping costs to Puerto Rico were higher than to nearby Caribbean islands not subject to the Jones Act
- Various estimates: The annual cost to Puerto Rico ranges from $1.5 billion to $4.6 billion (depending on methodology and what costs are included)

What It Means in Practice

• A container shipped from the East Coast to San Juan costs roughly twice as much as shipping the same container to a foreign Caribbean port like Jamaica or the Dominican Republic
• Food: 85% of Puerto Rico's food is imported — all of it at Jones Act premiums
• Fuel: Gasoline and diesel cost more because of shipping costs
• Building materials: Reconstruction after hurricanes is more expensive
• Medicine: Pharmaceutical products shipped from the mainland cost more to transport
• Solar panels: Renewable energy equipment is more expensive to import
• Consumer goods: Everything from clothing to electronics costs more

Why It Persists

The Jones Act persists because of the political power of the U.S. maritime industry:
- The American shipbuilding industry and maritime unions lobby heavily to maintain the law
- Jones Act supporters argue it is necessary for national security (maintaining a domestic merchant fleet)
- Hawaii, Alaska, and Guam are also affected — but Puerto Rico bears the greatest burden due to its distance from mainland ports and near-total import dependency
- Puerto Rico has no voting members of Congress to advocate for repeal or reform
- Temporary waivers have been granted during emergencies (e.g., after Hurricane María) but permanent reform has never passed

The Colonial Function

The Jones Act is a colonial tax disguised as a shipping regulation:
1. It forces a captive colonial market to use overpriced American shipping
2. It enriches mainland shipping companies at the expense of island consumers
3. It makes Puerto Rico less competitive economically
4. It increases the cost of hurricane recovery
5. It cannot be changed by Puerto Rico — only Congress can modify federal law
6. Puerto Rico has no voting representation in the Congress that imposes this cost

The Jones Act is perhaps the clearest example of how colonial law operates: an economic regulation that appears neutral but structurally disadvantages the colony for the benefit of the metropole.