The Jones Act And Other Cabotage Laws
The Jones Act (Section 27 of the Merchant Marine Act of 1920) holds all domestic waterborne cargoes for merchant vessels owned, built, flagged and manned in the United States.
The Jones Act -- and comparable cabotage laws applicable to passenger, towing and salvage and service vessels -- helps sustain a strong U.S. merchant fleet and the skilled and dependable maritime manpower the U.S. needs to man government-owned and chartered sealift ships in defense emergencies. Several ocean-going Jones Act ships have in recent years provided sealift service to Persian Gulf points.
The Jones Act also helps to preserve the U.S. shipbuilding industries and scores of supply and service industries that U.S. shipyards depend upon. It accounts for hundreds of thousands of jobs at sea and ashore.
On the Great Lakes and inland waterways, the Jones Act ensures reliable, competitive and efficient transportation of vital industrial raw materials -- including iron ore and other products necessary for defense manufacturing, as well as the agricultural products that factor significantly in the U.S. economy.
The principles expressed in the Jones Act have governed domestic maritime commerce since the early days of the Republic -- the first law enacted by the first Congress in 1789 was intended to promote a U.S. merchant fleet for domestic service.
For additional information about the Jones Act, please visit the Web site at American Maritime Partnership.
The Maritime Security Program (MSP) and Voluntary Intermodal Sealift Agreement (VISA)
The Maritime Security Program provides limited operating assistance to 60 U.S.-flagged merchant ships operating in international commercial trade. In exchange for the operating aid these ships, their U.S. citizen crews, and all intermodal assets and logistical support systems owned or leased by the participating companies are available immediately to the Department of Defense (DOD) for strategic sealift services during national security emergencies. Vessels participating in the MSP have delivered more than 80 percent of the unit equipment, rolling stock and other supplies to U.S. military personnel in the Middle East and Afghanistan since 2001.
The total cost of the Maritime Security Program in fiscal 2010 was a modest $174 million. By DOD's own account, the department would have to spend an estimated $13 billion to build or buy the defense cargo capacity and intermodal capabilities the MSP represents (the estimated cost to DOD does not include ship operation or maintenance).
The Maritime Security Program -- a highly successful example of productive partnership between the private sector and the federal government -- was authorized initially for 10 years in the Maritime Security Act of 1996 in response to U.S. sealift deficiencies identified during Operations Desert Shield and Desert Storm in the Persian Gulf in 1990 and 1991. The MSP was reauthorized for a second 10-year term in the Duncan Hunter Defense Authorization Act of 2003. The MSP is scheduled to expire in fiscal 2015.
Voluntary Intermodal Service Agreement, or VISA, complements the Maritime Security Program. Under VISA, U.S.-flagged merchant vessel operators agree to make cargo space available to the Department of Defense as needed. The 60 ships enrolled in the Maritime Security Program and more than 100 other U.S.-flagged vessels participate in VISA.
U.S.-Flag Cargo Preference Laws
Under a 1904 law, 100 percent of U.S. defense cargoes moving by sea are held for U.S.-flagged merchant ships, provided these vessels are available at reasonable rates. A comparable law in 1954 reserved 50 percent of non-defense government-financed imports and exports for U.S.-flagged merchant ships (including cargoes financed by the Export-Import Bank).
A 1985 amendment to the 1954 law raised the statutory U.S.-flagged share of the U.S. Department of Agriculture's donated food aid exports from 50 percent to at least 75 percent. In exchange for the increased allotment, U.S.-flagged merchant vessel operators relinquished all claim to other USDA exports.
These U.S.-flag cargo preference laws help make certain that U.S. merchant ships manned by civilian American merchant mariners are available for military support services, and they account for significant economic activity nationwide.