Page 18: of Marine News Magazine (May 2016)

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COLUMN FINANCE

When Foreign Doesn’t Mean Foreign

The Jones Act Lease Financing Exception

By James A. Kearns

Much attention has recently been fo- rity than a conventional attack by a foreign power (“Vener- cused on the requirements of the Jones able Jones Act Provides an Important Barrier to Terrorist In? l-

Act for vessels engaged in the U.S. tration of the Homeland” at http://lexingtoninstitute.org).

coastwise trade, which includes the U.S. Our border with Mexico of less than 2,000 miles pales rivers and other inland waterways. It has in comparison with the more than 95,000 miles of our been debated, for example, whether the nation’s shoreline or the 25,000 miles of our navigable wa- additional cost of building coastwise- terways, including the Intracoastal Waterway. Those who eligible vessels in the United States and work at our country’s seaports and on our inland water- having them manned with U.S. citizen ways are at the front lines of protecting our nation’s bor-

Kearns crews increases the cost of living for the ders and security over these many miles.

residents of Hawaii and Puerto Rico, since many products Foreign built, owned, and operated ships routinely enter and commodities are available to them, as a practical matter, U.S. seaports. Measures are in place, and are being steadily only if transported by ship from the U.S. mainland, which increased, to ensure that these vessels, their cargoes, and constitutes coastwise trade under the Jones Act. There has their crews, do not threaten our nation’s security. Consid- also been a controversy over whether the Jones Act played er, however, the greater effort and resources that would be a role in the tragic loss of the El Faro last October, with required if U.S. coastwise trade, especially on the inland some arguing that requiring coastwise vessels to be built in waterways, were to be opened to vessels with non-citizen the United States has resulted in a ? eet that is considerably crews and built by hands of unknown allegiance. The older than it would be if less expensive, foreign-built vessels citizenship requirements of the Jones Act help to protect were allowed to engage in U.S. coastwise trade. our national security against these modern day risks just as they have served to protect our national security in the

N S ways that were envisioned in earlier times.

ATIONAL ECURITY

The national security argument in support of the Jones

Act’s requirements has traditionally been that it is vital to L F I J A TEVERAGING OREIGN NVOLVEMENT FOR ONES CT RAFFIC maintain an adequate domestic shipbuilding capacity and a There is, however, one way in which the Jones Act in its ? eet of U.S.-? ag merchant vessels crewed by a ready contin- current form not only allows, but actually takes advantage gent of well-trained, U.S. citizen mariners in case of war or of, foreign involvement in the U.S. coastwise trade. As a some other national emergency. However, a recent posting result of revisions to the Jones Act over the past 20 years, by the Lexington Institute points out that we live in an era the law now provides opportunities to tap into foreign when the in? ltration of our borders by terrorists and other sources of capital to ? nance the construction in the United malefactors is a more immediate threat to our national secu- States of new vessels to the Jones Act ? eet.

Credit: Thomas Rollins

May 2016

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