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Wednesday, May 25, 2011

Pierluisi Reiterates Need for Comprehensive Study on Jones Act in Puerto Rico

Local report cited by Ferrer also confirms need for such a study

WASHINGTON, DC- The Resident Commissioner, Pedro Pierluisi, today reiterated the need for an “objective and comprehensive” study to be conducted that examines the impact of the Jones Act’s application to Puerto Rico, in terms of its effect on both the Puerto Rico economy and the broader U.S. economy. Pierluisi noted that numerous economists and stakeholders quoted in a 2002 locally-commissioned report cited by Puerto Rico Representative Héctor Ferrer also emphasized the need for such a study.

Pierluisi was responding to a letter sent to him yesterday by Representative Ferrer, in which Ferrer argued that the 2002 study—commissioned by a committee of the Puerto Rico House of Representatives under Ferrer’s leadership—rendered the study that the Resident Commissioner recently requested from the U.S. Government Accountability Office (GAO) unnecessary. The 2002 report had concluded that exemption of Puerto Rico from the Jones Act would dramatically improve the Island’s economy.

“While I have no reason to doubt the validity of this conclusion, it should be obvious to any serious observer that this report has done nothing to date—and can be expected to do little going forward—to convince the United States Congress and the President of the United States to modify the Jones Act as it relates to Puerto Rico. In terms of its potential power to persuade federal policymakers, the 2002 report—whatever its merits—cannot compare to the study I have requested from the GAO, which is a highly-respected, non-partisan investigative arm of Congress,” wrote Pierluisi in his response letter to Ferrer.

The 2002 report cited by Ferrer is not in fact a study at all; it contains no new or independent analysis of the Jones Act’s impact on Puerto Rico’s economy. Instead, the report simply quotes third parties who, in turn, quote prior studies—like those conducted by the International Trade Commission in the early 1990s—that concluded that the Jones Act has increased the cost of domestic maritime shipping nationally. Not one of the studies cited in the 2002 report appears to have specifically addressed the issue of the Jones Act in Puerto Rico. Nor does the 2002 report contain any analysis of the impact that application of the Jones Act in Puerto Rico has had on the broader U.S. economy.

“As somebody who is familiar with how Washington works, you presumably share my view that the odds of getting a majority of Members of Congress to agree to any change to the Jones Act as it applies to Puerto Rico would be much improved if there were analysis indicating that such application has adversely affected the nation’s—as well as Puerto Rico’s—economic welfare,” the Resident Commissioner said to Ferrer in his letter.

Moreover, while the 2002 report was cited by Ferrer to support his claim that no new study is needed, the report itself explicitly contradicts that argument in multiple places. On page 7 and 11 of the report, for example, Héctor Jiménez Juarbe, General Manager of the Port of the Americas, is quotes as saying that “there are no sufficiently-detailed studies that have evaluated the true impact of this law [the Jones Act] on the economy of Puerto Rico. Accordingly, a detailed analysis should be undertaken that examines the cost of maritime shipping in Puerto Rico—broken down by product and by volume—and compares it to the cost within trade routes not governed by the Jones Act.”

In addition, page 17 of the 2002 report notes that Ramón Cantero Frau, the then-Secretary of Economic Development and Commerce, “mentioned that, at this time, he is not aware of a trustworthy study that analyzes in detailed fashion the cost of maritime shipping in Puerto Rico, by product and by volume, and compares it to the cost along non-Jones Act routes.”

Similarly, on page 33 of the report, Dr. José I. Alameda Lozada, a professor in the Economics Department at the University of Puerto Rico, Mayagüez stated that “there does not appear to exist any consensus in the existing studies regarding the economic costs of the law and, worse, certain of the studies have questioned whether such costs exist.”

In addition, Jaime García, Executive Director of the Puerto Rico Association of Mayors is quoted on pages 44 and 45 of the report cited by Ferrer as being “hopeful that this issue will be studied with the rigor it requires and that a sufficient record will be developed to serve as the basis for an argument to be made before Congress and the White House.”

Moreover, on page 53 of the 2002 report, Jorge Berlingeri Burgos, vice-president of the Puerto Rico Manufacturing Association, is quoted as saying that “he understands that an exhaustive study of the additional costs incurred as a result of the Jones Act is the best tool to argue in favor of its elimination.”

And, in the “Findings and Recommendations” section of the report that Ferrer cites, it is recommended that “The Department of Economic Development of Puerto Rico should conduct an economic study that includes an analysis of the impact of this law on the economy of Puerto Rico. The study should contain a detailed analysis examining the cost of maritime shipping in Puerto Rico, by product and by volume, and comparing it to the cost within trade routes not governed by the Jones Act.”

Pierluisi also responded to Ferrer’s argument that a GAO study will take too much time. “The implication of this statement is that you believe I should simply have introduced legislation in the U.S. Congress to exempt Puerto Rico from the Jones Act. This is a strange argument indeed. Members of your political party served as Resident Commissioner from 2001 to 2005, 1985 to 1993, and 1973 to 1977—to name just the most recent examples. Not one of them introduced a bill to exempt Puerto Rico from the Jones Act,” said Pierluisi, who wrote that he hoped to count on Ferrer’s support as they sought to promote the welfare of the people of Puerto Rico.