The Jones Act (Merchant Marine Act of 1920): Cabotage Provisions

The Merchant Marine Act of 1920 (commonly called the Jones Act, after Senator Wesley Jones of Washington) established the cabotage law that continues to impose billions of dollars in excess shipping costs on Puerto Rico — the most economically damaging colonial law in active effect.

Key Provision — Section 27

'No merchandise shall be transported by water, or by land and water, on penalty of forfeiture thereof, between points in the United States, including Districts, Territories, and possessions thereof embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any other vessel 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.'

What This Means for Puerto Rico

Since Puerto Rico is a U.S. territory 'embraced within the coastwise laws,' all goods shipped between the mainland and Puerto Rico must travel on:
- Ships built in U.S. shipyards (which cost 3-5x more than foreign-built ships)
- Ships owned by U.S. citizens
- Ships crewed by U.S. citizens or permanent residents
- Ships registered under the U.S. flag

Why It Matters

• American-built ships cost approximately $200 million vs. $30-50 million for comparable foreign-built vessels
• American crews earn higher wages (required by U.S. labor law)
• The combination makes shipping to Puerto Rico significantly more expensive than to competing Caribbean destinations
• Puerto Rico has no alternative: it cannot use cheaper foreign shipping for trade with the mainland
• Three companies (Crowley, TOTE Maritime, and Trailer Bridge) dominate the Puerto Rico shipping route — a functional oligopoly

Reform Attempts

• Multiple bills have been introduced in Congress to exempt Puerto Rico — none have passed
• The maritime industry spends approximately $3-5 million annually lobbying against any change
• National security arguments (maintaining a merchant fleet for wartime mobilization) are used to defend the law
• After Hurricane María, a temporary 10-day waiver was granted — proving exemption is possible
• GAO, Federal Reserve Bank of New York, and other agencies have recommended reform
• Puerto Rico's lack of voting representation in Congress makes legislative change extremely difficult

The Jones Act's application to Puerto Rico is a textbook example of colonial economic extraction through regulation — a law that enriches mainland industries at the expense of territorial consumers, maintained by a legislative process from which the affected territory is excluded.