EU Seeks Jones Act Exemptions Through TTIP

The legal online publication Law360 reported on October 30, 2015, that an European maritime industry trade association wrote an open letter to the European Commission (EC)’s top international trade official, European Trade Commissioner Cecilia Malmstrom advocating that the European Union (EU) should seek exemptions from the U.S. cabotage laws and asking for a meeting with the Commissioner.

The industry trade association is SEA Europe, whose membership is comprised of shipbuilders, ship repairers and marine equipment manufacturer in the 28 countries  of the EU.

The exemptions from U.S. cabotage are being sought in the context of the Transatlantic Trade and Investment Partnership (EU), a bilateral free trade agreement currently being negotiated between the United State and the EU.

SEA Europe is seeking specific exemptions from the U.S. build requirement of U.S. cabotage laws to allow their members to sell new ships built in the EU for employment under U.S. the U.S. flag in domestic cabotage trades.  They are also seeking exemptions for their members EU shipbuilding and repair yards from what is known as the Second Proviso of the Jones Act which severely limits the extent of rebuilding of a coastwise eligible vessel in a foreign place, the customs 50% ad valorem duty on repairs to U.S. flag ships effected in foreign places.

The SEA Europe letter follows from the International Transportation Workers’ Federation (ITF) and the Seafarers International Union (SIU) announcing that they held the inaugural meeting in Washington, D.C,, October 27 – 28, 2015, of the ITF Cabotage Task Force to oppose the liberalization of cabotage laws through international trade agreements including the TTIP.

Key excerpts from Law360 include:

A European maritime shipping advocacy group asked the European Commission’s top international trade official on Thursday to ensure that negotiations for the Transatlantic Trade and Investment Partnership are aimed at rolling back an embattled 95-year-old U.S. shipping law, which it says restricts free trade of maritime transport.

The Merchant Marine Act of 1920 — more commonly known as the Jones Act — requires that vessels operating between American ports are built, owned and staffed by U.S. workers, and stipulates that U.S. ship owners can only repair their vessels outside the U.S. by complying with a set of severe restrictions and paying a 50 percent import duty, according to a Thursday letter sent by SEA Europe to European Trade Commissioner Cecilia Malmstrom.

The group told the commissioner that the protectionist policy is contrary to the overall liberal trade intentions of the European Union and the U.S. But that can be changed through negotiations for the TTIP, which it said can bring “real opportunities” to both E.U. and U.S. maritime technology industries if adjustments to the Jones Act are made.

Specifically, the group is asking for an exemption from the requirement that vessels covered under the Jones Act be built in the U.S., and to remove trade barriers for ships repaired by European shipyards.

In the letter on Thursday, SEA Europe told Commissioner Malmstrom that rolling back the Jones Act would allow U.S. ship owners and operators to benefit from lower costs and better energy efficiency as a result of competition, and would free up the amount of materials available during times of emergency.

SEA Europe told the commissioner that it’s waiting for the “appropriate moment” to approach U.S. regulators with its proposal.

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