Jones Act and the Pacific: Lessons from the wave

Pacific Reflections By Gabriel McCoard

I’m not going to tiptoe around semantics. America is at war. When missiles fly and civilians die, it’s a war. 

And Iran has leveraged the sole weapon in its arsenal: shutting down shipping through the Strait of Hormuz, the 34-mile-wide gate in and out of the world’s oil basket known as the Persian Gulf, in a move designed to cripple the global economy. The threat to shipping is too great, so oil tankers, or more accurately, their insurers, are not risking the passage.

I won’t try to predict what might happen, but 136 years ago Alfred Thayer Mahan, a strategist at the U.S. Naval War College, put it plainly: “Whoever rules the waves rules the world.” 

Not only military power floats on the waves; global commerce does, too.

And just like that, ocean shipping, the largest industry you’ve never heard of, is relevant again. The ripples from Hormuz are washing through every maritime chokepoint from Malacca to the Taiwan Strait.

I don’t have a maritime background, but my greatest disappointment in law school was discovering the field of Admiralty Law halfway through the only semester the course was offered. Despite that, I’ve probably used it in practice more than my would-have-been classmates. Living on islands will do that.

After stumbling through complex issues, such as extended continental shelf claims, flags of convenience registries, even odd legal hypotheticals like whether you can marry a pirate’s ghost by proxy on the high seas, it was the sight of empty store shelves—as a Marshallese-flagged Kyowa Line freighter vanished over the horizon—that brought a true sense of desolation. With it came a sudden realization that the law of the sea—not to be confused with the United Nations Convention on the Law of the Seas—was important. 

Following the U.S. Supreme Court's recent decision striking down the latest round of President Trump’s tariffs, I told a friend that if I were Iran, I’d be nervous. The wounded tiger would strike when backed into a corner.

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As we all know by now, it’s not just oil for fuel that moves by ship through the Gulf, but chemical feedstocks for pharmaceuticals, fertilizers, plastics and just about everything else.

Petroleum is too valuable to burn. It’s the lifeblood of modern industry, climate threats notwithstanding, and every corner of the globe has felt Iran’s sucker punch to the global economy. 

NATO members and other nations have told Trump to deal with what he started and have not sent warships into the fray. That could change if energy gets too expensive; nations may have to protect shipping out of sheer economic necessity

A 60-day suspension of the Jones Act was among the measures generated by Trump’s screw-you-I-don’t-care policy machine.

The Jones Act of 1920 was designed to support American shipbuilding and maritime labor by requiring that goods moving between domestic ports be carried on ships built, registered in the U.S. and crewed by Americans.

The idea was to have ships ready to support domestic industry and available in times of war or national crisis, while pumping more life into the shipbuilding industry.

Supporters say the Jones Act protects a vital trade, while critics argue that it limits competition, raises costs and slows down service. They also note that the U.S. has a limited shipbuilding and domestic seagoing industry. As a result, there are few tankers, bulk carriers or container ships built or registered in the U.S. In that sense, the Jones Act has fallen short of its original goals.

Suspending the Jones Act allows foreign vessels to move between U.S. ports without leaving U.S. waters or stopping at a foreign port. In theory, revamping the Jones Act could enable Guam, Hawaii and other U.S. territories to take better advantage of international trade routes that pass through their backyards by lowering costs and increasing sailings.

Without the Jones Act, foreign vessels could sail directly from Guam to Honolulu without stopping at an intermediary foreign port, such as the Marshall Islands. U.S. territories may not be fully American for Social Security, but they are treated as domestic under maritime law.

Consider a vessel like L’Aranui, a hybrid cargo ship and cruise vessel that plies the waters of French Polynesia, carrying both passengers and freight. Alas, L’Aranui V was built in China and sails under the French flag, meaning it would have to stop at a foreign port to serve Guam.

I often disagree with myself about whether the Pacific pivot is happening. On the one hand, there is appalling ignorance in the halls of American policy about the region, aside from the China question. At the same time, it has gotten more attention and funding than ever before.

Just as a crisis highlights the importance of ocean shipping, the fluid Indo-Pacific order has ordained wayward Pacific islands not just relevant, but possibly important. 

And for that reason,  I’ll be watching what happens in the Taiwan Strait. Trade wars can quickly escalate into real wars.

Gabriel McCoard is an attorney who previously worked in Palau and Chuuk State. Send feedback to gabrieljmccoard@hotmail.com.

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