Merchant Marine Act of 1920 (Jones Act) — Section 27: Cabotage Provisions

The Merchant Marine Act of 1920, commonly known as the Jones Act (not to be confused with the Jones-Shafroth Act of 1917), was signed into law on June 5, 1920. Section 27 — the cabotage provision — has had devastating economic consequences for Puerto Rico.

Section 27 Text (paraphrased):
'No merchandise shall be transported by water... between points in the United States... in any vessel other than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States.'

Requirements:
All vessels carrying goods between U.S. ports (including Puerto Rico) must be:
1. Built in a U.S. shipyard
2. Owned by U.S. citizens (75% ownership)
3. Crewed by U.S. citizens or permanent residents (75% of crew)
4. Flagged under the U.S. flag

Economic Impact on Puerto Rico:

The Federal Reserve Bank of New York (2012) studied the Jones Act's impact on Puerto Rico and found:
- Shipping costs from the U.S. East Coast to Puerto Rico are roughly double the cost of shipping to nearby Caribbean islands
- The Jones Act fleet is aging and shrinking; fewer than 100 Jones Act-compliant vessels are in service
- U.S.-built ships cost 4-5 times more than comparable foreign-built vessels
- The cost premium is passed directly to Puerto Rican consumers through higher prices for food, fuel, and all imported goods

Studies and Estimates:
- A University of Puerto Rico-Mayagüez study estimated the annual cost at approximately $1.1 billion
- The GAO has studied the issue multiple times, documenting the cost differential
- Economists estimate the Jones Act adds 15-20% to the cost of goods in Puerto Rico
- Puerto Rico imports approximately 85% of its food — all subject to Jones Act shipping costs

Waiver History:
- After Hurricane María (2017), the Jones Act was waived for only 10 days
- The waiver request was initially denied by DHS before being granted under intense political pressure
- The brief waiver period was insufficient to address the humanitarian crisis
- By contrast, the Jones Act was waived for extended periods after hurricanes hitting Gulf Coast states

Why It Persists:
- The American maritime industry — shipbuilders, ship operators, and maritime unions — lobby aggressively to maintain the law
- The industry's political donations and lobbying expenditures far exceed Puerto Rico's political influence in Congress
- Puerto Rico has no vote in Congress and cannot effectively lobby against the maritime industry

The Jones Act is not merely an outdated shipping regulation — it is a mechanism of colonial extraction that transfers wealth from Puerto Rican consumers to the American maritime industry. No sovereign nation would voluntarily impose such costs on itself.