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Friday, June 3, 2011

Pierluisi Requests Support for Study on Jones Act in Puerto Rico

Resident Commissioner pledges to seek an exemption if study demonstrates the need

FAJARDO, PUERTO RICO-Resident Commissioner Pedro Pierluisi, in a speech delivered today before the Puerto Rico Manufacturing Association, sought the support of industry for his effort to secure a serious and objective study of the Jones Act and its impact on the economy of both Puerto Rico and the broader United States. Pierluisi asked for industry’s cooperation to provide all necessary information so that any analysis performed by the U.S. Government Accountability Office (GAO) would be comprehensive.

“For this effort to yield the results we want, it is imperative that we create a common front with the aim that this study contain all information necessary to achieve our goals. Each of you should contribute by providing data specifically reflecting effects—whether negative or positive—of the law on the sector in which you participate. The numbers, quantities of cargo, frequency of imports and exports, difficulties faced by the industry or trade, as well as all elements relevant to the topic should be made available to the GAO so that it can produce the most complete and accurate report possible,” said the Resident Commissioner to participants at the Convention of the Association of Industries of Puerto Rico.
 
In requesting a comprehensive study by GAO, Pierluisi asked that they consult with interested parties in Puerto Rico, including representatives from the manufacturing, agriculture and trade sectors. In addition, he urged GAO to meet with representatives of the Port of the Americas in Ponce, who are highly interested in this matter, and with individuals and organizations that both support and oppose repeal or relaxation of the Jones Act in Puerto Rico. According to Pierluisi, the best way to demand a change in the cabotage law is to demonstrate the impact that it has on the Island’s economy and the future development of the Port of the Americas.
 
The Resident Commissioner asked that the issue not be viewed through the prism of partisan politics.

“There has been much discussion of the Jones Act, especially every time we approach an election. Many promises have been made, but no results have been delivered. In over thirty years, no Resident Commissioner has introduced a bill in Congress to exempt Puerto Rico from the application of this law,” he explained.

“Most of you know me and are therefore aware that I have not spent a lifetime in politics. I am doing this with the best intentions and I have not promised—nor will I promise—anything I do not believe I can deliver. But today I promise you something. If you join me, and this study confirms that this law serves to harm Puerto Rico, I will fight tirelessly to seek an exemption for the Island,” said Pierluisi.


The Jones Act, enacted in 1920, generally requires that all maritime transport of cargo and passengers between ports in the United States be carried by vessels built in the United States, owned by U.S. citizens, and operated by U.S. citizen crews. The U.S. Virgin Islands, American Samoa and the Commonwealth of the Northern Mariana Islands are all exempt from the Jones Act. In 1984, at the request of then-Resident Commissioner Baltasar Corrada del Río, federal law was amended to authorize the transportation of passengers between Puerto Rico and other U.S. ports on foreign-flag vessels when Jones Act-qualified service is not available.

The majority of Puerto Rico’s imports come from the U.S. mainland, and most of those imported products are transported by ship. Likewise, on the export side, the products that Puerto Rico generates for sale outside the Island—generally manufactured goods—are primarily destined for the U.S. market, and most of those goods are moved by ship.

“If the Jones Act does lead to higher shipping costs, the law might have a disproportionate adverse impact on Puerto Rico. However, the existing studies do not establish, through empirical data, the law’s true effect on the Island,” said Pierluisi.

In 1979, a federal interagency task force chaired by the U.S. Secretary of Commerce prepared a multi-volume “Economic Study of Puerto Rico” for the U.S. President, which contained a detailed analysis of the Jones Act. The task force found that “exemption from the cabotage laws—sometimes pointed to as an answer to the problem—would not provide a lasting remedy” in the form of lower freight rates.

During his speech before the Puerto Rico Manufacturing Association, the Resident Commissioner highlighted Puerto Rico’s suitability as a destination for biotechnology, pharmaceuticals, information technology, engineering, manufacturing, biosciences, renewable energy, high-technology and other professional services.

“We must recognize that the current economic situation, in Puerto Rico and throughout the world, has had serious implications for the industrial sector. But the fact remains that here we have the human, technical, creative and innovative ability and incentives to maximize the Island’s opportunities for economic development in the evolving global market,” he said.