The Trump administration refused to waive the Jones Act for Puerto Rico:
The Trump administration on Tuesday denied a request to waive shipping restrictions to help get fuel and supplies to storm-ravaged Puerto Rico, saying it would do nothing to address the island’s main impediment to shipping, damaged ports.
The Jones Act limits shipping between coasts to U.S. flagged vessels. However, in the wake of brutal storms, the government has occasionally issued temporary waivers to allow the use of cheaper, tax free, or more readily available foreign flagged ships.
The Department of Homeland Security, which waived the act after hurricanes Harvey and Irma, did not agree an exemption would help this time.
Waiving the act may not do anything to repair the island’s ports, but that misses the point as badly as one can. The problem with the act is that it imposes significant economic costs on Puerto Rico, and especially in the wake of a storm as devastating as this one it is unreasonable and cruel to deny a waiver that would reduce those costs. Waiving the Jones Act isn’t just a question of delivering aid in the near term. It is a matter of helping a ruined Puerto Rican economy recover more quickly than it otherwise could. The administration doesn’t seem to understand this, and officials at Homeland Security reportedly aren’t taking that into consideration when they made their decision (via Drezner):
Asked for comment on Puerto Rico having to pay twice as much for supplies at a time when it is economically and geographically devastated, [DHS spokesman David] Lapan said the department has not analyzed the potential cost savings of waiving the Jones Act “since that is not material to our decision-making.”
Nelson Denis spells out the effects that the law has on the island:
Under the law, any foreign registry vessel that enters Puerto Rico must pay punitive tariffs, fees and taxes, which are passed on to the Puerto Rican consumer.
The foreign vessel has one other option: It can reroute to Jacksonville, Fla., where all the goods will be transferred to an American vessel, then shipped to Puerto Rico where — again — all the rerouting costs are passed through to the consumer.
Thanks to the law, the price of goods from the United States mainland is at least double that in neighboring islands [bold mine-DL], including the United States Virgin Islands, which are not covered by the Jones Act. Moreover, the cost of living in Puerto Rico is 13 percent higher than in 325 urban areas elsewhere in the United States, even though per capita income in Puerto Rico is about $18,000, close to half that of Mississippi, the poorest of all 50 states.
This is a shakedown, a mob protection racket, with Puerto Rico a captive market.
This would be an unfair policy at the best of times, and under the circumstances refusing to waive the Jones Act will do real harm to Puerto Rico’s recovery from the worst natural disaster in its modern history. Waiving the Jones Act in this case isn’t a panacea and it won’t address many of the real logistical problems of getting aid to the people that need it across Puerto Rico, but it will help to lower the cost of goods and make it a little easier for Puerto Ricans to start rebuilding. Denis continues:
This is not just about recovering from Hurricane Maria. It is also about Puerto Rico’s long-term future. If the Jones Act were suspended, consumer prices would drop by 15 percent to 20 percent and energy costs would plummet.
Ideally, the law should be repealed or significantly altered so that this unfair arrangement is no longer a burden on the island’s economy. In the meantime, Puerto Rico should be freed from its constraints while it recovers from total devastation.