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26/09/2016

TTIP: MEP hails proposal to repeal US Jones Act

Trade & Society

TTIP: MEP hails proposal to repeal US Jones Act

British container ship. Oakland, 2006.

[Jim Bahn/Flickr]

Liberal MEP Marietje Schaake flagged on Wednesday (14 January) a proposal by US Senator John McCain to repeal the ‘Jones Act’.

McCain proposed an amendment for the full repeal of the Jones Act, which he considers “an antiquated law that has for too long hindered free trade, made US industry less competitive, and raised prices for American consumers.”

The 1920 federal law requires every ship transporting goods or person between US ports to be made in the US, and sail under a US flag, to be US-owned and crewed at least 75% by US citizens.

“It is good news that there is now a proposal to repeal this outdated and protectionist measure. Under the pretense of national security, the Jones Act makes it almost impossible for European companies to operate in the US,” Schaake said.

The Jones Act also affects other maritime services, such as towing, dredging and port services.

The repeal of the Jones Act has been on the negotiating table of the Transatlantic Trade and Investment Agreement since the beginning.

The EU has repeatedly stated that the Jones Act is a problematic law. But US Trade Representative Michael B. Froman has made it clear in the past that he will preserve the Jones Act.

>> Read: EU, US gear up for ‘real’ negotiation round on trade deal

“Since the start of negotiations, I have consistently told the European negotiators that repealing this law should be a European priority,” Schaake said, adding that EU policymakers and all sectors concerned should now investigate how they can contribute to this process.

The discussion in Congress was brought forward after some US refiners suggested a temporary waiver to the Jones Act would be needed for them to support a change in US oil export policy.

According to shippers quoted in a July Congressional Research Service report, the price for moving crude oil from the Gulf Coast to the northeastern US on Jones Act tankers is $5-6/barrel, while moving it to eastern Canada on foreign-flagged tankers is $2/b.

However, US maritime industry sources are quoted as saying that the appetite among lawmakers for a Jones Act change has not grown. “Such a change simply would not happen,” one source said.

Even though it is uncertain whether McCain’s amendment will make it is still, considering the powerful American shipping lobby, Schaake is aware that there is a political momentum to seize.

“It is crucial that the European priorities for an agreement with the Americans are clear, so that the negotiators can realise them. That will require a broad debate and I hope that more companies, organisations and citizens will contribute to that,” she said.

Background

Negotiations between the US and the EU on the Transatlantic Trade and Investment Partnership (TTIP) began in July 2013.

If the treaty is signed, it will affect almost 40% of world GDP. The transatlantic market is already the most important in the world.

This agreement could save businesses millions of Euro and create hundreds of thousands of jobs. It is estimated that TTIP could save the average European household €545 each year, and could cause the European Union's GDP to grow by 0.5%.

Timeline

  • 2-5 February: New round of negotiation on TTIP

Further Reading