GAO to Pierluisi: Jones Act impact study underway

Written by  //  April 17, 2012  //  Government  //  No comments

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Resident Commissioner Pedro Pierluisi

The U.S. Government Accountability Office is “actively working” on Resident Commissioner Pedro Pierluisi’s request to determine the economic impact that the cabotage laws have on Puerto Rico, his office said Monday.

In a letter, Lorelei St. James, director of the GAO’s Physical Infrastructure Team, explained the progress the agency is making in examining the impact of the Jones Act’s application to Puerto Rico, in terms of its effect on both the island’s economy and the broader U.S. economy.

The goal of the analysis is to provide policymakers with a comprehensive, descriptive summary of information on the Puerto Rican and Caribbean Basin trade markets, and how the Jones Act potentially affects these markets, the GAO said.

“This study should put an end to all of the speculation that surrounds this subject and, if the study concludes that the Jones Act is having a negative impact on our economy, could provide the basis for potential legislative action in Congress,” said Pierluisi, noting the GAO could release its findings sometime between Dec. 1, 2012, and Feb. 28, 2013.

Pierluisi said Monday the best way to seek a change in the Jones Act is to demonstrate through evidence that the law has an adverse impact on Puerto Rico’s economy, and that an impartial and credible report by the GAO is necessary to support any Congressional action on this subject.

“Now is the proper time for this study to be conducted.  This study will be ready by the start of the next congressional session,” he said. “I have pledged that that I will introduce and promote any legislation that is supported by the conclusions in the study, and I expect to have broad support in Puerto Rico for any bill I file on this subject.”

According to GAO’s letter to the Resident Commissioner, the agency will attempt to answer three fundamental questions:

  • What is the nature of the oceangoing trade markets in Puerto Rico and the Caribbean Basin and what are stakeholder views on how the Jones Act affects these markets?
  • How do operating costs compare between Jones Act carriers in the Puerto Rican trade and foreign carriers in the Caribbean Basin, and what are stakeholder views on which U.S. laws might impact costs to foreign carriers in the U.S.-Puerto Rican trade market if the Jones Act did not apply to such trade? and,
  • What is known about the costs and benefits associated with the U.S.-built requirement of the Jones Act as it pertains to the Puerto Rican trade fleet?

To answer each of these questions, the GAO will review relevant background literature and interview relevant stakeholders in both the U.S. and Puerto Rico, including carriers and shippers, industry trade groups, government officials, and others to describe the range of views regarding how the Jones Act affects Puerto Rico, the shipping market, and the broader economy.

GAO representatives will be on the island next week to conduct interviews with stakeholders, he said.

“I urge all individuals and groups that are interested in this subject to cooperate with the GAO to provide the agency with all relevant information it seeks,” Pierluisi said. “With this GAO report, we will have a real opportunity to seek our exclusion from components of the Jones Act. It is important that we provide GAO with any and all information that demonstrates how this law affects us. We have spent decades talking about this issue. Now is the time to act.”

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