Three fleets of ships are vital to America’s national and economic security.
The first fleet is the U.S. Navy, the mightiest ever assembled. It would be unthinkable to build these ships anywhere but in our own shipyards, dotted around our coasts from Groton to Newport News, to Pascagoula, San Diego, and others.
The second fleet is the ocean-going vessels that carry 90% of the world’s trade aboard container ships, tankers, grain carriers and more. However, these 41,000 ships are rarely built, owned, or crewed by Americans. Instead, China and other Asian nations use government resources and subsidies to dominate this fleet.
The third fleet seems almost invisible, but is the 40,000 vessels engaged in domestic trade within America’s borders that sail between our ports. Ore carriers on the Great Lakes, giant barges plying the Mississippi and other rivers, goods moving along inland waterways, and powerful tugboats within our harbors are examples. Like our Navy, these are American-built, owned and crewed.
This third fleet is challenged because some interests want to turn it over to foreign control, claiming we would save money if we let other nations dominate it like they do the ocean-going maritime fleet. Those countries are using subsidies by their governments to expand their power. In the case of China, it’s part of a multi-year global plan to enlarge economic and military power across the oceans of the world.
Standing in their way is an American law that turns 100 years old in 2020. This is the Jones Act, which essentially says that commercial vessels traveling routes from one U.S. port to another must be American built, owned and crewed. It reflects a policy promoted by that father of capitalism, Adam Smith, who wrote in The Wealth of Nations that America should protect its maritime trade from foreign competition. Smith saw economic power as a servant of national interest.
The principle extends beyond ships. Foreign air carriers can fly between U.S. airports and those in other countries but cannot fly purely domestic routes. Foreign trucks face restrictions on operating within our borders. The World Trade Organization has sanctioned Europe (and approved retaliatory tariffs by the U.S.) for improper subsidies of Airbus, which interferes with competition by American aircraft manufacturers.
The same thing is happening in shipbuilding. China dominates thanks to subsidies and use of state-run enterprises, part of their plan to dominate the strategic area of ocean trade. Their success is reflected in the fact that in 2019 China passed Japan to become the world’s #2 economic power, second only to the USA.
They don’t succeed by allowing free enterprise. At the heart of foreign shipbuilding and operations are massive subsidies. Years ago, China announced its Belt and Road Initiative (also known as the New Silk Road), spending billions each year not only to subsidize building of cargo ships but also to control port facilities all over the globe. That takeover already includes ports on both ends of the Panama Canal, in the Mediterranean near the Suez Canal, elsewhere in Europe, in South America, in Africa, the Middle East, the Indian Ocean and of course the South China Sea—covering the major global shipping lanes.
In 2006 China designated shipbuilding a “strategic industry” and since then, “Chinese subsidies dramatically altered the geography of production and countries’ market shares,” as reported in a Harvard study. The success of their shipbuilding subsides is shown by the fact that of the 2,995 new ocean-going now under construction (as tracked by the shipbrokers BRS Group), China is building 1,291 of them, Japan 697 and South Korea 475. The United States? Only 8.
Of the current international fleet, our Bureau of Transportation Statistics reports that a mere 182 of over 41,000 ocean-going cargo ships are American (0.4%). The vast majority are from China or other highly-subsidized shipyards in South Korea or Japan.
Imagine if America’s domestic fleet were reduced to similar ratios of foreign control. Yet some American interests are blatantly calling to end the Jones Act and open our waters to foreign powers. These promoters claim that we will save money but they ignore the larger implications of American security and jobs. During the Trump years America has realized the benefits of promoting our self-interest, as reflected in our booming economy. Repeal or gutting of the Jones Act would be a step backwards.
Repealing the Jones Act would be surrendering to nations that want to monopolize control of global trade. Those interests already dominate one of the three fleets that are vital to America. We should not let them make it two out of three.
Former Congressman Istook held key positions in Congress over trade and transportation. He now practices law, teaches political science, and is a Distinguished Fellow with Frontiers of Freedom.
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