Jones Act shipping restrictions inflate costs
The Merchant Marine Act of 1920 requires all goods shipped between U.S. ports to travel on U.S.-built, U.S.-owned, U.S.-crewed vessels. As an island territory, this forces Puerto Rico to pay shipping costs 15-20% higher than neighboring Caribbean islands.
The Law
Section 27 of the Merchant Marine Act of 1920 requires that all goods shipped between U.S. ports be transported on vessels that are:
- Built in the United States
- Owned by U.S. citizens or companies
- Crewed by U.S. citizens or permanent residents
Impact on Puerto Rico
Because Puerto Rico is a U.S. territory, all shipments from the mainland must comply with the Jones Act. A 2013 GAO report found that "shipping costs between the United States and Puerto Rico were about twice the cost of shipping between the United States and comparable foreign ports."
Who Benefits
The Jones Act protects the U.S. domestic shipping industry — approximately 40,000 jobs on the mainland. Puerto Rico bears the cost of this subsidy through higher prices on virtually everything.
Exemptions
The U.S. Virgin Islands are exempt from the Jones Act. Puerto Rico has never received a permanent waiver.
Sources
- Primary Source Merchant Marine Act of 1920 (Jones Act). 46 U.S.C. §§ 55102-55116.
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Primary Source
GAO-13-260. Puerto Rico: Characteristics of the Island Maritime Trade and Potential Effects of Modifying the Jones Act. March 2013.
https://www.gao.gov/products/gao-13-260