It is commonly believed that the Jones Act (Section 27 of the Merchant Marine Act of 1920) is necessary to promote the development of an adequate U.S. merchant fleet to supply our armed forces during war, but that is not the case.

Our merchant fleet today is too small and comprised mostly of the wrong types of vessels to meet the needs of the military. The Federal Maritime Administration currently lists only 154 privately-owned Jones Act vessels over 1,000 tons that are not tugs and barges. This figure includes container ships, tankers, freighters and bulk carriers and roll-on/roll-off (ro/ro) vessels of all types.

To meet the needs of the U.S. armed forces, the Military Sealift Command maintains the Naval Fleet Auxiliary Force, which provides fuel, food, ammunition, spare parts and other supplies through a fleet of specialized ships. During emergencies, when additional vessels may be needed, the Navy hires private U.S.-flag vessels, usually ro/ro ships. If there are not enough ships of the right type, foreign-flag cargo vessels, and even foreign oil tankers, may be chartered.

During the Gulf War the Jones Act was suspended because there were not enough U.S. cargo vessels to supply our troops in the Middle East. Some 500 supply vessels were used: 44 percent flew foreign flags, 41 percent were U.S. government-owned ships and 15 percent were privately owned, U.S.-flag merchant ships. In all, 176 foreign ships were chartered by the Military Sealift Command and another seven were donated by foreign governments.

The Jones Act requires that cargo being transported entirely or partly between U.S. ports must be carried on vessels built and documented (flagged) in the U.S., manned with American crews and owned and operated by American citizens. The Jones Act does not cover cruise ships, which are regulated by the 1886 Passenger Vessel Services Act, which imposes similar requirements. The Jones Act also requires that domestic vessels be repaired in U.S. shipyards. In contrast, the U.S. Navy operates ship repair yards abroad as well as domestically.

It is also believed that the Jones Act is needed to ensure cleaner seas and safer ships. The International Maritime Organization regulates crew readiness, ship safety and environmental standards for the global shipping industry through a number of international treaties, most of which have been signed by the U.S. These standards are increasingly enforced by port authorities, not the open registry flag states. The minimum wage for able seamen onboard open registry ships, which is set by the International Transport Worker's Federation Fair Practices Committee, rose to $1,550 per month in 2006.

Jones Act requirements, in combination with other related maritime labor law provisions that are imposed on shipping by water, but not by rail or trucks, make U.S.-flag vessels uncompetitive in the global shipping industry. New vessels built in American shipyards can cost three times that of vessels built in Korean and Japanese shipyards, where high volume and efficient production processes keep costs down despite the $57-plus hourly wages earned by shipyard laborers in Japan.

To remain competitive, U.S. liners flag out ships used in international trade and to save shipping costs U.S. merchants ship their goods in foreign-flag vessels, which are usually built in foreign shipyards. When shipping between U.S. ports, merchants pass the higher costs of shipping on Jones Act vessels to consumers. It is cheaper to haul cargo from Brazil to Maine than from San Diego to Seattle.

It has long been recognized that the Jones Act has failed its original purpose of providing adequate cargo capacity for our military during times of crisis. Over 97 percent of all cargo to and from U.S. ports and foreign ports is carried on some 8,500 foreign-flag vessels each year. The Merchant Marine Acts of 1936 and 1970 attempted to fix the problem with little success.

In recent years numerous exceptions have been carved out to meet particular needs. In 1996, the Maritime Security Act established a nine-year operating assistance program to encourage the establishment of a domestic fleet of active, militarily useful, privately owned vessels to meet national security requirements. U.S.-flag operators of ro/ro and LASH vessels operating in foreign commerce were eligible to receive an annual payment of $2.1 million per vessel for enrolling in the program as long as they did not operate between U.S. ports (except for Guam, American Samoa, Wake, Midway and Kingman Reef). Foreign flag vessels could reflag and qualify if less than 10 years old. All vessels would have to meet U.S.-flag documentation requirements.

In 2003, U.S. Sen. Daniel Inouye engineered the passage of an exemption to the U.S.-built requirement in the Passenger Vessel Services Act to allow Norwegian Cruise Line, a Malaysian-owned company, to sail its foreign-built, foreign-flagged cruise vessels between Hawai'i ports. That exemption, which also required that the crew be mostly American, is believed to have created many more jobs both in onboard and related shore-side employment than it cost U.S. shipyard workers. More recently three bills introduced in the U.S. House by Rep. Ed Case would have allowed foreign-built vessels to ship to noncontiguous U.S. ports such as Alaska and Hawai'i, and/or to ship livestock and agricultural products, but would still have required compliance with U.S. labor and environmental laws.

A comprehensive overhaul of the Jones Act is clearly needed if the U.S. is to have sufficient domestic cargo capacity to draw on during a national emergency. Construction and operating subsidies, loan guarantees, cargo preference and cargo reservation laws have all been tried and have failed, and the various tax schemes needed to finance them would make U.S. shipping industries and ports even less competitive than they already are. The Navy needs special ships and sufficient funds should be allocated directly for their development and construction.

As for the additional capacity needed during times of crisis, our merchant fleet can only supply that capacity if it is not hampered by restrictive rules that prevent it from competing globally. We cannot continue to rely on foreign-flag charters to supply our military during times of conflict. Cheap foreign charters tend to get a lot more expensive when it is perceived that we are desperate and foreign cargo ships are not always available or willing to go into troubled waters. Removing certain Jones Act restraints will allow the U.S.-flag merchant fleet to grow and supply our security needs.

L.M.B. Paul is director of the Ocean Law & Policy Institute at Pacific
Forum Center for Strategic and International Studies. She wrote this commentary for The Advertiser.