Update to Merchant Marine Act of 1920 (Jones Act)

Economy
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Updated Jones Act Recommendations

1. Introduction of Tonnage-Based Fees for Subsidized Foreign-Built Ships

  • New Regulation: A flat fee based on tonnage will be imposed on all ships built by countries that provide significant subsidies to their shipbuilding industry. This fee will apply to any foreign-built vessel imported into the U.S.
  • Fee Structure: The fee will be calculated as a clear, flat rate per gross ton, with rates adjusted according to the level of subsidies in the country of origin. Higher levels of subsidies will result in higher fees.
  • Revenue Allocation: Funds collected from these fees will be used to modernize U.S. shipbuilding facilities, support workforce training programs, and invest in R&D for advanced shipbuilding technologies.

2. Allowance of Certified Foreign-Built Ships with 100% U.S. Crews

  • Conditional Allowance: Permit the use of certified foreign-built ships on specific routes, provided they are crewed entirely by U.S. citizens or permanent residents.
  • Annual Certification: These foreign-built ships must undergo annual certification by U.S. authorities to ensure they meet safety, operational, and regulatory standards.
  • Route and Cargo Restrictions: Limit the operation of these certified foreign-built ships to non-strategic or commercial routes, such as those serving non-contiguous U.S. territories like Hawaii and Puerto Rico.

3. Encouragement of Modernization in U.S. Shipbuilding

  • Updated Regulations: Relax certain construction mandates to reduce costs while maintaining compliance with U.S. labor and safety standards. This includes allowing more foreign-sourced materials and adopting international design standards where feasible.
  • Joint Ventures: Facilitate partnerships between U.S. shipbuilders and foreign companies to leverage technology and production methods that can lower construction costs while preserving U.S. labor participation.

4. Enhanced Monitoring and Compliance

  • Subsidy List: Develop and maintain a comprehensive list of countries with significant government subsidies for shipbuilding. This list will be reviewed and updated regularly.
  • Documentation Requirements: All imported ships must provide documentation proving compliance with the tonnage-based fee, including information on subsidies received by the building shipyard.
  • Penalties for Non-Compliance: Establish strict penalties for misreporting or circumventing the fee to ensure adherence to the policy.

5. Periodic Reviews and Adjustments

  • Review Process: Conduct regular assessments to evaluate the economic and competitive impacts of these changes on the U.S. shipbuilding industry and non-contiguous U.S. territories.
  • Stakeholder Input: Gather feedback from industry stakeholders, including shipbuilders and shipping companies, to refine the policy and address any challenges that arise.
  • WTO Compliance: Ensure that all changes align with World Trade Organization rules to avoid potential disputes and maintain fair trade practices.

Expected Benefits

  • Enhanced U.S. Competitiveness: The tonnage-based fees will help level the playing field for U.S. shipbuilders, reducing the unfair advantage of heavily subsidized foreign competitors.
  • Lower Shipping Costs: Allowing certified foreign-built ships with U.S. crews will introduce more competition and help lower shipping costs for regions like Hawaii and Puerto Rico.
  • Increased Job Protection: Maintaining the 100% U.S. workforce requirement for crewed ships ensures continued job support for American maritime workers.
  • Modernized Infrastructure: Revenue from the fees will fund improvements in U.S. shipyard infrastructure, contributing to long-term competitiveness and sustainability.

Conclusion

These updates to the Jones Act represent a balanced approach to support U.S. shipbuilding while addressing economic challenges in non-contiguous U.S. territories. By implementing tonnage-based fees, allowing certified foreign-built ships with U.S. crews, and encouraging modernization, the policy aims to enhance the U.S. maritime industry’s global standing and reduce costs for consumers without compromising national security or job protection.