Panel: Jones Act a dire economic ‘burden’ for Hawaii

Hawaii and other American territories renewed their call for changes to the Jones Act which they said impose an unfair economic burden outside the continental United States.

The act requires U.S.-built and -crewed ships to move cargo between domestic destinations, including Hawaii, Alaska, Puerto Rico and Guam, outside the contiguous 48 states.

The comments came during a recent panel discussion hosted by the Cato Institute, a longtime critic of the Jones Act.

“These restrictions inflict significant harms,” said panel moderator Colin Grabow, associate director at Cato’s Herbert A. Stiefel Center for Trade Policy Studies, emphasizing the acute impact on regions that rely heavily on shipping for essential goods. He cited Sen. Hiram Fong of Hawaii who in the 1960s highlighted the exorbitant costs of shipping to non-contiguous states — an issue compounded by outdated legislation that continues to inflate shipping expenses.

Rep. Ed Case of Hawaii, a panelist, articulated this perspective vividly, illustrating the disproportionate burden the Jones Act imposes on Hawaii. Describing the state as a small island reliant on outside resources, Case pointed out, “The effect of the Jones Act is far more severe on those parts of our country…that’s the classic definition of a monopoly.”

Case advocated for reform, suggesting that equitable economic treatment could alleviate these financial strains. “Let our non-contiguous parts of our country go because that’s where the impact is the most severe.”

Echoing these sentiments, panelist Rep. James Moylan of Guam drew parallels to his territory’s struggles, stressing the geographical and economic disadvantages worsened by the Jones Act. “We’re supposed to be the gateway to Asia…but we’re not because of the Jones Act,” Moylan said.

Both representatives shared their legislative endeavors aimed at addressing these issues. They have introduced several bills, including the Non Contiguous Shipping Relief Act and the Non Contiguous Energy Relief and Access Act. These legislative proposals aim to either exempt non-contiguous areas from the Jones Act or create competitive freight rate structures to ensure economic sustainability.

National implications and defense concerns

Besides economic ramifications, the discussion turned to national defense implications. Moylan emphasized the strategic importance of Guam, amid rising tensions in the Indo-Pacific region. “We’re in a bad position right now with the amount of ships that we have…the cost of living and shipping restrictions only exacerbate that.”

The panel’s calls for a loosening of the rules come as the Trump administration looks to boost American shipping and shipbuilding.

The panelists also analyzed the paradox of allowing foreign repairs and parts for Jones Act ships while the U.S. military increasingly relies on foreign allies for ship repairs — a reality that illustrates the law’s inconsistencies. Case noted, “[U.S.-flag carrier] Matson (NYSE: MATX) repairs its ships in the People’s Republic of China…if the whole idea of the Jones Act is to maintain American shipbuilding, ship repair capacity, then why are we…doing it in an adversary?”

As the discussion opened to audience questions, one inquiry focused on the potential for legal challenges to the Jones Act. Case welcomed this avenue as a supplementary approach despite his inclination towards legislative solutions. Moreover, the discourse highlighted the broader impacts on the continental U.S., with Case asserting that reform could lower costs nationwide by fostering competitive shipping alternatives.

Find more articles by Stuart Chirls here.

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