A Jones Act Ally in Britain

We can now number an unexpected ally among those who recognize the economic problems caused by the Jones Act and its barriers to free trade … Great Britain. While we in Hawaii are accustomed to looking at the Act in terms of its barriers to business and how it affects the cost of living, the Act is also one of the areas of debate in negotiation of the Transatlantic Trade and Investment Partnership, which looks to create a better trading relationship between the EU and U.S. As a recent article in the London Times (subscription required) explains:

[T]he law is unpopular with free trade advocates, who quite rightly complain that it increases the price of goods to American consumers, particularly those living in offshore states and territories such Hawaii, Puerto Rico and Guam.

And it is heartily disliked by John Cridland, director-general of the CBI in Britain. “Why,” he asks, “shouldn’t a British or French-badged ship have the same rights as an American ship?” He has a point. Under the Jones Act, if a British, French or German-flagged ship bringing imports to New York from Europe wants to load up in, say, Boston for the return journey across the Atlantic, it cannot ship anything on the New York-to-Boston leg.

At present, Mr Cridland is busy talking about the Jones Act to any American who will listen. He regards it as central to the potentially world-changing negotiations taking place on the Transatlantic Trade and Investment Partnership, known as TTIP, which aims to open up trade between the European Union and the United States by removing tariffs and reducing regulatory barriers. The governments in both London and Washington are pushing for completion of the TTIP, which will create a single market of 800 million consumers, boosting trade and jobs.

From the EU point of view, repealing the Jones Act seems like a no-brainer. So does removing US restrictions on airline ownership (US rules restrict foreign ownership of airlines to 25 per cent, which is why Sir Richard Branson is only a minority owner of Virgin America). Europe has a long list of similar grievances with, in its opinion, simple solutions.

The article goes on to state that the current outlook for Jones Act reform has dimmed somewhat. However, longtime supporters of an updated Jones Act can take heart from the fact that this is yet more evidence that this is a law badly in need of modernization.