U.S. denies request for Puerto Rico shipping waiver

Reuters reports: The Trump administration on Tuesday denied a request to waive shipping restrictions to help get fuel and supplies to storm-ravaged Puerto Rico, saying it would do nothing to address the island’s main impediment to shipping, damaged ports.

The Jones Act limits shipping between coasts to U.S. flagged vessels. However, in the wake of brutal storms, the government has occasionally issued temporary waivers to allow the use of cheaper, tax free, or more readily available foreign flagged ships.

The Department of Homeland Security, which waived the act after hurricanes Harvey and Irma, did not agree an exemption would help this time.

On Monday, U.S. Representative Nydia Velázquez and seven other representatives asked Elaine Duke, acting head of Homeland Security, to waive the nearly 100-year-old shipping law for a year to help Puerto Rico recover from Hurricane Maria.Gregory Moore, a spokesman for Customs and Border Protection, an office of Homeland Security, said in a statement that an assessment by the agency showed there was “sufficient capacity” of U.S.-flagged vessels to move commodities to Puerto Rico.

“The limitation is going to be port capacity to offload and transit, not vessel availability,” Moore said.

The government’s rationale for a waiver after the storms hit Texas, Louisiana and Florida was to ease movement of fuel to places along the U.S. East Coast and make up for temporary outages of high capacity pipelines.

“The situation in Puerto Rico is much different,” Moore said in the statement, adding that most of the humanitarian effort would be carried out with barges, which make up a large portion of the U.S. flagged cargo fleet.

Puerto Rico has long railed against the Jones Act, saying it makes the cost of imported basic commodities, such as food, clothing and fuel, more expensive.

“Our dependence on fossil fuel imports by sea is hampering the restoration of services,” said Juan Declet-Barreto, an energy expert at the nonprofit group the Union of Concerned Scientists. The refusal to allow the waiver “is raising fears on the island that they are going to be left behind in this disaster.” [Continue reading…]

Nelson A. Denis writes: After World War I, America was worried about German U-boats, which had sunk nearly 5,000 ships during the war. Congress enacted the Merchant Marine Act of 1920, a.k.a. the Jones Act, to ensure that the country maintained a shipbuilding industry and seafaring labor force. Section 27 of this law decreed that only American ships could carry goods and passengers from one United States port to another. In addition, every ship must be built, crewed and owned by American citizens.

Almost a century later, there are no U-boats lurking off the coast of Puerto Rico. The Jones Act has outlived its original intent, yet it is strangling the island’s economy.

Under the law, any foreign registry vessel that enters Puerto Rico must pay punitive tariffs, fees and taxes, which are passed on to the Puerto Rican consumer.

The foreign vessel has one other option: It can reroute to Jacksonville, Fla., where all the goods will be transferred to an American vessel, then shipped to Puerto Rico where — again — all the rerouting costs are passed through to the consumer.

Thanks to the law, the price of goods from the United States mainland is at least double that in neighboring islands, including the United States Virgin Islands, which are not covered by the Jones Act. Moreover, the cost of living in Puerto Rico is 13 percent higher than in 325 urban areas elsewhere in the United States, even though per capita income in Puerto Rico is about $18,000, close to half that of Mississippi, the poorest of all 50 states.

This is a shakedown, a mob protection racket, with Puerto Rico a captive market. The island is the fifth-largest market in the world for American products, and there are more Walmarts and Walgreens per square mile in Puerto Rico than anywhere else on the planet. [Continue reading…]

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