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Friday, September 30, 2011

GAO Accepts Pierluisi’s Request to Study Economic Impact of the Jones Act in Puerto Rico

San Juan, Puerto Rico- The Government Accountability Office (GAO) today accepted the request of Resident Commissioner Pedro Pierluisi to conduct a detailed study on the Jones Act in Puerto Rico, specifically its impact on both the Puerto Rico economy and the broader U.S. economy.

The Resident Commissioner sought the study from the GAO, the investigative arm of the U.S. Congress, based on the belief that the best way to obtain any modification to federal law is to demonstrate the effect that the law has on the Puerto Rico economy, including the future development of the Port of the Americas.

“The study is another initiative that has broad-based public support in Puerto Rico. The purpose of the study is to determine, once and for all, the impact that the Jones Act has on our economy. The GAO has the credibility and expertise to analyze this issue, and to present its conclusions to members of Congress who, in the final analysis, are the only ones who can make a change to the underlying law,” said Pierluisi.

“Now it is important for the business sector, labor unions, shipping companies and local government officials, among other stakeholders, to make themselves available so that the GAO can hear their different perspectives,” he added.

In the acceptance letter sent by GAO to the Resident Commissioner, the GAO indicates that it will begin work on the study this year. In preparing the study, the GAO will meet with stakeholders in Puerto Rico to obtain the information required to analyze how current policy is affecting the Island’s economy.

Pierluisi’s initiative has been endorsed by, among others, the representative from the Commonwealth of the Northern Mariana Islands, Gregorio “Kilili” Sablan, the senior Democrat on the House Committee on Natural Resources’ Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs, by various Puerto Rico economists, and by the Private Sector Coalition, which includes over twenty organizations on the Island.

Section 27 of the Merchant Marine Act of 1920, commonly known as the Jones Act, generally requires that all maritime transport of cargo 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. Puerto Rico’s neighboring territory, the U.S. Virgin Islands, is exempt from the Jones Act, as are the U.S. territories of American Samoa and the Commonwealth of the Northern Mariana Islands.

A broad array of economists in Puerto Rico have expressed concern that the Jones Act hinders the Island’s economic growth, since a 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, about 70 percent of what Puerto Rico produces for sale outside the Island—generally manufactured goods—is destined for the U.S. market, and most of those goods are moved by ship.

The GAO study on the Jones Act is one of numerous economic initiatives that the Resident Commissioner has been pursuing. Currently, Pierluisi is advocating for the passage of his legislation, H.R. 3020, the Puerto Rico Investment Promotion Act, which is designed to generate job-creating investment on the Island.

In addition, Pierluisi is urging the passage of the American Jobs Act, which President Obama recently transmitted to Congress. As a result of the Resident Commissioner’s efforts, Puerto Rico is fully included in every major component of the proposed legislation, which would temporarily eliminate or reduce social security payroll taxes paid by employers and employees, provide tax credits to employers who hire certain workers, provide assistance to unemployed individuals, and make critical infrastructure investments.

“I will continue to promote measures that will create jobs and increase economic activity on the Island,” said Pierluisi.