Press Releases

(Washington, DC) – U.S. Congressman Ed Case (D-HI-01) and U.S. Congressman James Moylan (R-Guam) today announced they have introduced a measure in the U.S. House of Representatives to address loopholes in a 1920 law that incentivize U.S. domestic trade ships to be built and repaired in the People’s Republic of China (PRC).

That law, the Jones Act, is widely recognized as creating domestic shipping monopolies that artificially inflate the cost of critical imported goods to Hawai‘i, Guam and other non-contiguous parts of the United States.

“Under long-standing loopholes in maritime law, Jones Act shippers can and do outsource major vessel parts fabrications and modifications to foreign shipyards, primarily those in the PRC,” said Case. 

“These modifications are not minor, and often include full engine replacements, liquefied natural gas conversions and other critical overhauls. Through further loopholes, these modifications largely avoid the 50% import duty imposed on foreign ship repair.”

Case said the Jones Act is usually defended on domestic industrial base and national security grounds. “However, under long-standing loopholes in maritime law, the Act has led to an accelerating decline in domestic shipping, with less than 100 Jones Act vessels now in service, many of them committed to specialized uses,” said Case. “The results have included extreme monopolistic conditions and exorbitant shipping prices, especially for those parts of our country with no real transportation alternatives.”

“But equally so, this poses a significant and immediate national security concern, especially if this same work, which cannot be done economically or practically under any circumstances in the U.S., at least without cripplingly higher shipping costs hitting the whole country and not just our non-Continent locations, can be done in shipyards located in allied or partner countries, such as Japan and South Korea – nations with world-class maritime industries and deep national security alignment with the United States.”

“This bipartisan bill is about modernizing outdated maritime laws that have unfairly burdened Americans in places like Guam and Hawai‘i for decades,” said Moylan. “By closing loopholes that benefit the People’s Republic of China and instead partnering with trusted allies like Japan and South Korea, we can grow our shipbuilding capacity, support good-paying jobs, and deliver real relief for families and businesses. I’m proud to join Congressman Case in advancing a smarter, stronger maritime strategy that puts all Americans—and our national security—first.”

Case and Moylan say their proposed Merchant Marine Allies Partnership Act would address four concerns:

·        the domestic build and repair requirement is largely honored in the breach by Jones Act shippers who profess agreement with the Jones Act, take its monopolistic benefits, but outsource the build and repair wherever possible for profit motive;

·        the United States clearly should not be reliant on adversaries such as the PRC to build and repair our coastal trade vessels;

·        even if the law is revised to eliminate all such loopholes, the domestic industrial base could not sustain domestic shipping needs, and;

·        the United States and its territories have strong partners and allies in countries such as Japan and Korea with world-class shipping capabilities who can assist them with their needs at more affordable shipping prices and markedly reduced national security concerns.

Case and Moylan say their proposed legislation seeks to realign Jones Act requirements and incentives in a way that serves all of national security, coastal trade capacity and lower shipping (and thus consumer) prices. It does so by:

·        Exempting U.S. companies from the 50% tax on major vessel modifications if the work is performed in shipyards located in allied nations, such as Japan and South Korea, rather than adversarial nations like the PRC.

·        Allowing ships purchased from allied countries to qualify for the coastal trade by granting them a Jones Act exemption, ensuring more flexible access to quality vessels without incentivizing PRC shipyards.

·        Providing a path for companies from allied nations to operate foreign-built, foreign-crewed vessels in coastwise trade, under appropriate regulatory conditions, in recognition of the global nature of modern shipping.

Their Merchant Marine Allies Partnership Act comes on the heels of three other measures they introduced earlier this year that proposed amendments to the Jones Act:

• the Noncontiguous Shipping Relief Act, which exempts all noncontiguous U.S. locations, including Hawai‘i and Guam, from the Jones Act (text of the measure is here);
• the Noncontiguous Shipping Reasonable Rate Act, which benchmarks the definition of a “reasonable rate” which domestic shippers can charge as no more than ten percent above international shipping rates for comparable routes (text of the measure is here; and
• the Noncontiguous Shipping Competition Act (text of measure is  here), which rescinds the Jones Act wherever monopolies or duopolies in noncontiguous Jones Act shipping develop.

Text of the Merchant Marine Allies Partnership Act is here

Text of Case’s Congressional Record remarks on introduction is here

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