Robert C. O’Brien Supports the Jones Act. But Does he Understand it?
Former National Security Advisor Robert C. O’Brien recently waded into the Jones Act debate by penning an op‐ed in support of the law. But anyone expecting a rich vein of evidence for the Jones Act’s necessity is likely to be disappointed. Indeed, the piece raises the question of whether O’Brien fully understands the law, with misleading and inaccurate information in abundance. This blog post will sort through the various claims made and provide a more complete picture.
O’Brien:
Before World War I, the United States relied on a combination of U.S.-flagged vessels and foreign vessels to conduct trade across the Atlantic, in U.S. coastal waters, and across our inland waterways. As the Great War approached, allied and enemy countries alike withdrew their vessels from U.S. commerce to aid their own war efforts. Our potential adversaries also wanted to hamstring the U.S. economically by disrupting maritime trade.
To prevent such a crisis from occurring again, following the War, Congress enacted the Merchant Marine Act of 1920, commonly known as The Jones Act. The Act dealt with cabotage, a term defined as “trade or navigation in coastal waters, or the exclusive right of a country to operate the traffic within its territory.”
The Jones Act sought to ensure that only American-flagged and American-operated ships conducted trade within the sovereign coastal and inland waterways of the United States. It was hoped that the act would ensure the security of trade within the United States and create a supply of merchant marine vessels, as well as trained mariners, that could be readily tapped in the event of another conflict.
Fact-check: Readers could be forgiven for believing that prior to World War I foreign ships were allowed to engage in both international and domestic waterborne trade and that the Jones Act halted this in an effort to bolster the U.S. Merchant Marine. But that would be false. While O’Brien refers to a combination of U.S. and foreign ships conducting trade in U.S. coastal waters and inland waterways, only U.S. vessels have been allowed to transport goods within the United States since 1817.
But this raises an obvious question: if restricting the use of foreign ships in domestic trade is a long-standing policy, why was the Jones Act passed?
It first helps to specify what the Jones Act is. The term “Jones Act”—as used by the U.S. Maritime Administration, Congressional Research Service, and even pro-Jones Act lobbying groups—refers not to the Merchant Marine Act of 1920 in its entirety but rather the legislation’s Section 27 addressing cabotage.
The impetus for the Merchant Marine Act of 1920 was the need to dispose of the many merchant ships built by the government during World War I. That cabotage was addressed at all was not due to high-minded concerns about the "security of trade" but rather the desire of carriers based in Seattle—the city Sen. Wesley Jones (for whom the Jones Act is named) called home—to eliminate foreign competition in shipping to Alaska.
At the time, Americans could send goods via rail to Vancouver for eventual shipment to Alaska on less expensive foreign ships. The revised cabotage language in the Jones Act meant this was no longer possible, much to the detriment of Alaska (which as a territory had no vote in Congress) and the benefit of shipping companies in Seattle.
O’Brien:
The Jones Act proved effective. Two decades later, over two hundred thousand Merchant Mariners and hundreds of commercial ships served in World War II. They made a vital contribution to our victory over the Axis powers.
Fact-check: Clearly implied is that the Jones Act’s cabotage restrictions left the United States well prepared to face the demands of the Second World War. In fact, the commercial maritime industry was on shaky ground. Following the glut of merchant ships built for use in World War I, relatively few ships were constructed during the interwar years. As one historian describes matters in the late 1930s:
The shipyard labor force was down to twenty thousand workers. There were no more than ten yards that could build ships longer than four hundred feet, and half of the forty-six slipways were tied up in naval contracts. During the fifteen years from 1922 to 1937, only two dry cargo ships, a few tankers, and twenty-nine subsidized passenger ships were built.
This lack of shipbuilding was reflected in the advanced age of the U.S. merchant fleet. A 1937 U.S. Maritime Commission report referenced the fleet’s “high degree of obsolescence,” noting that 94 percent of the ships in the domestic trade fleet—Jones Act ships—would be 20 years of age within the next five years. A 1946 Maritime Commission report, meanwhile, states that “By 1936, as another World War approached, our Merchant Marine was dying of old age.”
The decayed status of the U.S. commercial fleet led to the passage of the Merchant Marine Act of 1936 which attempted to rectify matters with new subsidy programs to build and operate ships. Even so, merchant shipbuilding still had to be ramped up to a mind-boggling scale once World War II began. Between 1942-45 more than 5,500 oceangoing vessels were built, requiring tens of thousands of additional mariners to crew them.
O’Brien:
Seventy-five years of post–World War II peace between the great maritime powers seems to have obscured for some U.S. political and business leaders—the original reason for the Jones Act. They argue that the Act stifles competition in the shipping sector and, thus, increases costs for American consumers. The Government Accountability Office investigated the effect of the Act on consumers, and it found the impact to be negligible.
Fact-check: The GAO has never said any such thing, which explains the lack of a hyperlink to this alleged finding. The GAO has released two studies of the Jones Act’s economic impact, one focused on Alaska and the other on Puerto Rico. The 1986 Alaska study estimated the cost of the Jones Act’s U.S.-built requirement alone to the state to be $163.2 million per year ($372 million in 2021 dollars). Far from negligible, the report noted that this amount was equal to 2 percent of personal income in Alaska.
The 2013 Puerto Rico report demurred from offering a cost estimate, instead stating that the effects of altering the Jones Act’s application to Puerto Rico would be “highly uncertain” and that “various trade-offs could materialize depending on how the Act is modified.” It did, however, highlight statements from importers on the island that they purchase various goods from foreign sources instead of the U.S. mainland owing to the high cost of Jones Act transportation.
O’Brien:
Unfortunately, the world remains a dangerous place and the original purpose of the Jones Act is still relevant. For example, we saw the impact of a cyber-attack on the Colonial Pipeline last month. Foreign hackers in an adversary nation infiltrated the Pipeline’s system and blocked the major gasoline artery of the entire East Coast. This attack led seventeen governors to declare states of emergency.
Now imagine a future without the Jones Act, where Chinese-flagged vessels all controlled, in whole or in part, by the Chinese Communist Party—were able to freely dock at our domestic ports, cruise our coastlines, and travel up and down our inland waterways. From the St. Lawrence Seaway in the Great Lakes right through our heartland on the Mississippi River, the Chinese Communist Party would have virtually unrestricted access to essential American economic arteries. That access would position our adversaries to do far greater damage to American infrastructure than the pipeline hackers ever imagined.
Fact-check: O’Brien’s imagined future where vessels flying the flag of China—or any other foreign country—are permitted to dock at U.S. ports, cruise U.S. coastlines, or sail on U.S. inland waterways is actually our present. The Jones Act does not prevent this. At any given moment a dizzying array of foreign ships can be found in U.S. ports, coastal waters, and even rivers such as the Mississippi (as far north as Baton Rouge, Louisiana), Columbia (as far east as Vancouver, Washington), and Delaware (as far inland as Fairless Hills, Pennsylvania).
As a 2011 Congressional Research Service report points out:
If not for the Jones Act, domestic containers could be shipped between U.S. coastal ports on existing services provided by international carriers. Foreign containerships carrying U.S. imports and exports already sail frequently between U.S. ports, providing an almost continuous conveyor belt of vessel space along each coast.
The Jones Act does not keep foreign vessels out of U.S. waters. What it does is prevent Americans from using them. Granting Americans the ability to use such vessels in domestic trade, meanwhile, would actually mitigate the impact of supply disruptions such as the Colonial Pipeline shutdown by expanding transportation alternatives. Indeed, during the shutdown the Biden administration issued two waivers of the Jones Act in order to speed fuel transport.
O’Brien:
Moreover, the American merchant marine and civilian shipping industry would be virtually eliminated by state-subsidized Chinese vessels, just like our manufacturing and industrial base were severely damaged by predatory Chinese practices over the past two decades. And critically, the reserve of merchant mariners and civilian cargo ships we require in the event of conflict would be significantly eroded.
During my tenure as U.S. National Security Advisor, I saw numerous indications that the frightening picture described above could become a reality without sound public policies. In addition to maintaining our military advantage in the emerging great-power competitions of the twenty-first century, America must nurture a robust and resilient industrial base connected by our critical maritime arteries. The Jones Act is a critical tool in that effort and must be preserved and strengthened for the decades ahead.
Fact-check: Virtual elimination at the hands of China is a speculative claim, but what’s indisputable is the massive erosion of the U.S. domestic fleet under the Jones Act. While the number of Jones Act ships stood at 257 in 1980, that number has more than halved to just 96 today. Fewer ships mean fewer mariners, and in 2017 a government report calculated that the country was 1,800 mariners short of those needed for a sustained sealift operation. On the shipbuilding front, U.S. shipyards collectively produce a mere 2-3 commercial ships per year.
And the country's industrial base is most certainly not served by a law that raises transportation costs and, in doing so, discourages domestic supply chains.
The Jones Act is not working. The law, by almost any metric, is an embarrassing failure that has contributed to the downfall of both domestic shipping and shipbuilding. The Jones Act should be repealed and more efficient and effective measures devised to meet U.S. economic and national security needs. The last thing the country can afford to do is maintain this ruinous status quo.