Hawaii, Guam lawmakers seek to plug loopholes in Jones Act that pose risks to national security

By Pacific Island Times News Staff

U.S. Rep. Ed Case and Guam Del. James Moylan have introduced a measure in the U.S. House of Representatives aimed at fixing loopholes in a 

1920 law that incentivize U.S. domestic trade ships to be built and repaired in China.

The Jones Act is widely recognized as creating domestic shipping monopolies that artificially inflate the cost of critical imported goods to Hawaii, Guam

 and other non-contiguous parts of the United States.

“Under long-standing loopholes in maritime law, Jones Act shippers can and do outsource major vessel parts fabrications and modifications to foreign shipyards, primarily those in China,” said Case.

The Democratic congressman from Hawaii noted that the modifications are not minor, and often include full engine replacements, liquefied natural gas conversions and other critical overhauls. 

"Through further loopholes, these modifications largely avoid the 50 percent import duty imposed on foreign ship repair," he added.

Case said the Jones Act is usually defended on domestic industrial base and national security grounds. 

However, the congressman noted that the federal law has led to an accelerating decline in domestic shipping, with less than 100 Jones Act vessels now in service, many of them committed to specialized uses.”

While creating "extreme monopolistic conditions and exorbitant shipping prices," the Jones Act poses a significant and immediate national security concern.

“This bipartisan bill is about modernizing outdated maritime laws that have unfairly burdened Americans in places like Guam and Hawai‘i for decades,” said Moylan.

“By closing loopholes that benefit China and instead partnering with trusted allies like Japan and South Korea, we can grow our shipbuilding capacity, support good-paying jobs, and deliver real relief for families and businesses."

The proposed Merchant Marine Allies Partnership Act seeks to:

• Exempt U.S. companies from the 50 percent tax on major vessel modifications if the work is performed in shipyards located in allied nations, such as Japan and South Korea, rather than adversarial nations like the PRC.

  
  

• Allow ships purchased from allied countries to qualify for the coastal trade by granting them a Jones Act exemption, ensuring more flexible access to quality vessels without incentivizing China shipyards.

  
  

• Provide a path for companies from allied nations to operate foreign-built, foreign-crewed vessels in coastwise trade, under appropriate regulatory conditions, in recognition of the global nature of modern shipping.

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