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News release: Grassroot Institute supports Alaska bid seeking exemption from cruising ban

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The following is a news release issued by the Grassroot Institute of Hawaii on March 6, 2021, regarding testimony it submitted to the Alaska Senate Labor and Commerce Committee about Senate Joint Resolution 9.
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Alaska’s tourism industry is in deep trouble because foreign cruise ships may not carry passengers between U.S. ports without a foreign stop

 

HONOLULU, March 6, 2021 >> The Grassroot Institute of Hawaii and the Alaska Policy Forum testified jointly yesterday before the Alaska Senate Labor and Commerce Committee in support of a resolution urging Congress to exempt Alaska from the U.S. Passenger Vessel Services Act due to its adverse impact on the state’s tourism industry.

According to the resolution, Alaska hosted more than 2.26 million visitors in 2019, of which more than half arrived by cruise ship, accounting for 90% of the visitors to Southeast Alaska. The Resource Development Council for Alaska estimates that before the COVID-19 crisis, one in 10 Alaska residents worked in tourism, with visitor spending totaling more than $2.2 billion a year.

But now almost all of that has disappeared. The COVID-19 lockdowns that started in March 2020 forced the suspension of virtually all cruising worldwide, crushing tourism economies around the globe.

A year later, things are starting to open up. The U.S. Centers for Disease Control and Prevention eased its ban on cruising in October 2020, but Canada is following its own path. Due to COVID-19 concerns, Canada has not been allowing cruise ships [that carry more than 100 passengers] to stop at its ports since March 2020, and just last month extended its ban through February 2022.

This is a problem for Alaska because the Passenger Vessel Services Act requires any vessels carrying passengers between U.S. ports to be U.S.-flagged and built. But all of the large cruise vessels in the Alaska trade are foreign-flagged and built, and the PVSA requires that they stop at a foreign port as well, which in this case means Canada.

The result is that tourism arrivals to Alaska have slowed to a trickle, causing significant economic misery throughout the state. Unless Canada budges, the only workaround — short of reform or repeal of the PVSA — is for Alaska is to obtain a PVSA exemption.

Understandably, the Alaska State Legislature’s proposed Senate Joint Resolution 9 has bipartisan support and appears likely to be approved. At the federal level, Alaska’s congressional delegation has introduced legislation to effect an exemption.

As reported yesterday by USA Today, U.S. Sens. Lisa Murkowski and Dan Sullivan have introduced the “Alaska Tourism Recovery Act,” in the Senate, which they hope will “temporarily relieve restrictions in place as a result of the Passenger Vessel Services Act.” And U.S. Rep. Don Young has introduced companion legislation in the House.

In October 2020, the Grassroot Institute issued a policy report regarding the PVSA: “Cruising in Hawaii: How the federal government’s 1886 Passenger Vessel Services Act has limited the Aloha State’s tourism potential.” It detailed how the law has restricted tourism in Hawaii, and urged that the law be reformed or repealed.

As noted by the institute and the Alaska Policy Forum, the PVSA was enacted in 1886, long before either Alaska or Hawaii joined the United States. Its purpose was to protect U.S. maritime jobs, but it has failed in that mission. The last large ocean cruise liner built in a U.S. shipyard was in 1958, and the only large PVSA-qualified ship remaining — the 2,500-passenger, mostly foreign-built MS Pride of America — operates under an exemption and is restricted to Hawaii.

There are smaller PVSA-qualified ships that serve the Alaska market, but collectively they bring in only a fraction of the visitors that the larger foreign-flagged and built ships do.

Considering the ineffectual nature of the PVSA, there seems to be little or no reason to continue it, especially when the costs so clearly outweigh the benefits. With Alaska so drastically feeling the brunt of the PVSA, it is clear that this 135-year-old protectionist maritime law needs attention.

Said the Grassroot Institute and APF in conclusion:

“Hawaii and Alaska have a history of working together to push for less costly federal shipping regulations. Back in the 1960s and 1970s, bipartisan lawmakers from both states tried to reform the protectionist Jones Act, but to no avail. Today, we want to rekindle this spirit of cooperation and support Alaska’s plea that Congress grant it relief from an archaic and expensive law.

“As University of Hawaii professor emeritus of economics James Mak concluded about the PVSA more than 10 years ago, “The current, and antiquated law imposes costs on a lot of people but confers few, if any, national benefits.’

“Mak went on to recommend that the PVSA be repealed. It is also possible it could be meaningfully reformed. At the very least, however, a waiver should be granted to help Alaska’s tourism industry recover after the nonexistent cruise season of 2020 — and the Alaska Policy Forum and the Grassroot Institute of Hawaii support Senate Joint Resolution 9 as a step toward that goal.”

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