President Trump is making a post-election push of his MAGA agenda.
An executive order of Nov. 12 cuts off American investments in Chinese “military-controlled” companies, banning them from American stock and investment markets, and from being held in pension fund portfolios, effective in January.
Americans have subsequently been told to divest themselves within a year of their holdings in those stocks and securities as well.
In the wake of this executive order and to little surprise, prices quickly plunged in China and Hong Kong’s stock market.
The ban is a follow-up to this summer’s Pentagon report that listed 31 major Chinese companies doing business in the United States while assisting the Chinese military — which controls those corporations. Congress ordered the list — which is heavy with companies involved in electronics, space and aviation, communications, construction and shipbuilding — to be compiled.
The Defense Department additionally determined that each company “supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities.”
Trump’s executive order is a blow to two major initiatives of China’s Communist Party:
1. Its “Made in China 2025” strategic plan to expand the manufacturing sector of the PRC (People’s Republic of China), and
2. Its Belt and Road Initiative (BRI) plan to control global trade and transportation infrastructure
The Belt and Road Initiative, with a presence in over 100 countries, involves $1.3-trillion dollars spent by China to build or buy control of the transportation and logistics facilities that are critical to global trade.
That dollar figure comes from Australian conglomerate BHP, which says the BRI is seven times larger than the Marshall Plan funded by America to rebuild Europe after World War 2.
As Forbes puts it, China has been on a “seaport shopping spree” buying control of major port facilities worldwide. Furthermore, another Department of Defense report says the BRI is “leveraging civilian construction for military purposes; and . . . logistics . . . for military purposes.”
A new assessment by the Center for Strategic and International Studies notes that China’s state funding is building over a third of the world’s ocean-going merchant ships, producing 96 percent of the world’s shipping containers, and controlling the largest port and logistics company in the world, all to serve as “the maritime supply arm of the People’s Liberation Army.”
The result is that China builds about 1,200 merchant ships a year, while the United States only builds eight.
With regards to combat ships, an October report from the Congressional Research Service warns Congress that China’s fast-growing navy is now “a major challenge to the U.S. Navy . . . in the Western Pacific — the first such challenge the U.S. Navy has faced since the end of the Cold War.”
Since 90% of global trade travels by ship, China is developing a chokehold that it could apply to threaten the economies of every nation, including the United States, in order to enforce its Communist will.
Sadly, there are some who want to invite China to expand its grip on America by repealing the Jones Act a, law prevents any vessel from conducting internal trade within American waters unless it’s American-built, American-owned and American-crewed.
This applies to cargoes carried on our waterways, along the intercoastal canals, and between American ports.
It would require a major U.S. commitment to reverse the trend of Chinese dominance of global trade. But keeping the Jones Act prevents China from accelerating the trend by taking control over our internal waters. Homeland security would be at risk if any foreign power infiltrated into the American economy in that way.
Keeping the Jones Act by itself will not remedy the problem of China’s militant expansionism. Cutting off U.S. funds from China’s commercial/military complex may help.
However, to develop real solutions, a first step is that the American people must be better-informed about what China is doing.
Pre-coronavirus, America’s economy was booming. Now we have an economic pandemic but some proposed cures could be worse than the disease.
The economic stoppage has been as drastic as chemotherapy which harms healthy tissue in order to reach and attack cancer cells. We don’t need further dangerous treatments.
A key to terrific growth was how the Trump Administration freed commerce from stifling regulations. Continuing to cut red tape will once more be vital to recover from the COVID-19 shutdown
But some are misusing the term deregulation so they can slip in agendas that are not actually about economic recovery. Infamously, House Speaker Nancy Pelosi wanted to tack pet causes and wish lists onto recovery legislation. Others are now trying something similar.
One idea floated and wrongfully labeled deregulation is to end the Jones Act. But that item belongs on China’s wish list, not America’s.
The Jones Act essentially requires domestic maritime shipping to use vessels that are American-owned, American-built and American-crewed. Undoing this 100-year-old standard would not create American jobs but instead would create jobs for the foreign interests that would rush in to take over.
The Jones Act is not about economic regulations; it’s about national security and homeland security. Even the father of capitalism, Adam Smith, promoted that we should not let foreign interests control our shipping and means of trade.
This is not about international trade—ships carrying goods between a U.S. port and a foreign port are not covered by the Jones Act. The issue purely involves domestic trade, traveling between U.S. ports, such as along our intra-coastal waterways, on the Great Lakes, and barge traffic on the Mississippi and other rivers.
Ending the Jones Act would not benefit free enterprise or free markets. As the world’s largest shipbuilder, thanks to its subsidized and state-run enterprises, cheap and even slave labor, China has the most to gain if our Jones Act were ended. Then they could expand to operate on America’s 25,000 miles of inland waterways.
That would be the feather in the cap for their Belt and Road Initiative which aims to control seaways and shipping all over the world. China already has spent a fortune to take over strategic ports and waterways on every continent except Antarctica, as well as the ships themselves. The global trade fleet is about 41,000 ships, and China builds almost 1,300 of them a year; the United States only builds 8.
Jones Act opponents argue that the issue is money. They argue that shipping will be cheaper if we let non-Americans also build and operate the non-ocean-going ships that handle our purely-domestic freight. This internal fleet involves 40,000 vessels (including barges). Allowing them to be built overseas, operated by foreign interests and crewed by non-Americans might indeed be cheaper, but it would reduce American security and American jobs.
We should not sell our security in the name of saving a few bucks.
Inviting a foreign takeover will worsen our struggling economy, not help it. Ending the Jones Act makes as little sense as claiming we could boost our recovery by inviting British Airways, Lufthansa, Aeroflot, Air China, Emirates, Qatar Airways, Scandinavian Airlines, Turkish Airlines and other airlines owned by foreign governments to fly routes between U.S. cities, which U.S. laws currently prohibit.
Ending the Jones Act makes as little sense as arguing that our recovery requires expanding our reliance on China for medical supplies, personal protective equipment, pharmaceutical ingredients, consumer goods, electronics and a host of other items.
Their philosophy would also repeal the Buy American provisions currently incorporated into our military purchasing statutes, homeland security laws and other acts of Congress. Can you imagine the U.S. Navy pursuing make-believe benefits by building its warships overseas?
This is not about money. The Jones Act is not an economic regulation; it is a national security standard.
By all means, let’s cut red tape to boost our rebound from the COVID-19 economic pandemic. But that’s no excuse for undoing laws that protect our national and homeland security.
The Jones Act Webinar is part of WJLA-TV’s Government Matters series on “Sea-Air-Space 2020 Virtual Edition.” It will include Frontiers of Freedom Senior Fellow, the Honorable Ernest Istook, who served in the U.S. House of Representatives from 1993 to 2007 and is currently teaching at Brigham Young University.
The Host will be Francis Rose. Topics will include: What is the Jones Act? Why is it both a commercial and national security issue? What are common misconceptions about the Jones Act? How does it work? How does China and its “One Belt, One Road” plan play into this issue?
If you are in the Washington DC metro area, you can watch the program on WJLA 24/7 News (formerly NewsChannel 8). If you are anywhere else you can watch it at FedInsider.com.
It will be broadcast on Tuesday, April 7, 2020 from 1 p.m. to 2 p.m. Eastern Time.
It is typical for pundits to criticize the Jones Act claiming that it harms American consumers or benefits others — some even outlandishly claim it benefits Russian President Vladimir Putin. These hypercritical pundits all seem to either overlook or completely ignore a number of critically important facts. In a fact free world, one can come to any conclusion — even silly ones. But when facts and sound reasoning matter, the conclusions must stand up to scrutiny.
The Merchant Marine Act of 1920 (also known as the Jones Act) was passed in the aftermath of World War I to ensure that America had a viable merchant marine that could provide support to our navy and military in times of war or national emergency. It was also intended to ensure that we had a viable ship-building and ship repairing capability — again to support our military. In a world where many foreign nations heavily subsidize their shipping industries as well as their ship building and repairing industries, we must not allow ourselves to become dependent upon other nations to maintain our naval strength.
Contrary to the view that the Jones Act is favored by despots like Vladimir Putin, the act has significant national security benefits for the U.S. Consider the Vice Chairman of the Joint Chiefs of Staff Gen. Paul Selva, who said, “I am an ardent Supporter of the Jones Act. It supports a viable ship building industry, cuts costs and produces 2,500 qualified mariners. Why would I tamper with that?” Likewise, Former Coast Guard Commandant Adm. Paul Zunkunft has said, “You take the Jones Act away, the first thing to go is these shipyards and then the mariners… If we don’t have a U.S. fleet or U.S. shipyard to constitute that fleet how do we prevail?” The military understands that the Jones Act is critically important to our national security.
History teaches an important lesson. In 1812, Napoleon left France with an army of about 700,000 soldiers. Napoleon’s army easily pushed through western Russia and made it all the way to Moscow. But as Napoleon’s supply lines became attenuated, his army lacked the ability to feed and supply itself. Napoleon, despite having the world’s greatest army, was defeated because he couldn’t supply his troops. When he returned to France six months later, his army had only 27,000 soldiers who could defend France and the balance of power in Europe was radically altered for a century.
The lesson we must learn from this is obvious — we may have the best technology and the best trained military on the planet, but if we cannot properly supply them, we too could meet with disaster. The Jones Act is an important part of our military’s ability to supply itself.
In a world in which China and Russia are expanding their naval capabilities, the need for the Jones Act is all the greater. Putin would like a weaker America, not a strong America – with a functioning domestic shipping industry to support our nation’s military strength.
The Jones Act also has a significant impact on homeland security. It limits foreign flagged ships and foreign crewed ships from sailing around America’s inland waterways. Dr. Joan Mileski, head of the Maritime Administration Department at Texas A&M, said, “If we totally lifted the Jones Act, any foreign-flagged ship — with an entirely unknown crew — could go anywhere on our waterways, including up the Mississippi River.” Obviously, this would make our defenses very porous.
Since 9/11/2001, our homeland security approach has been to place most of our security resources and assets at our coasts and at the ports that have the most traffic. But few assets and resources are used along the more than 25,000 miles of navigable inland waterways in the United States. There we rely upon the Jones Act to provide security. American flagged and American crewed ships are trained and keep a watchful eye for signs of terrorism and are thus an important part of our nation’s homeland security layered defense.
Our southern border is 1,989 miles long. The U.S. has more than 25,000 miles of navigable waters. Without the Jones Act, we’ve just made both sides of every river a possible entry point. Michael Herbert, Chief of the Customs & Border Protection’s Jones Act Division of Enforcement has said: “We use the Jones Act as a virtual wall. Without the Jones Act in place, our inland waterways would be inundated with foreign flagged vessels.”
The truth is the Jones Act is more important today than even when it was first passed. Today, it not only provides America with trained and skilled mariners and a viable ship building and ship repairing capability to support our military and Navy, but it also protects us from terrorists and other nefarious international bad actors.
Imagine if Chinese government owned ships could operate freely up and down the Mississippi River and remain there throughout the year. They would use that access to spy and intercept even civilian communications.
Adam Smith, the father of free market economics, in his seminal work — The Wealth of Nations — strongly supported and defended the British Navigation Act, which was a cabotage law much like America’s Merchant Marine Act. His rationale included, “The defense of Great Britain, for example, depends very much on the number of its sailors and shipping.”
The Jones Act protects America. This is a verifiable fact. Any alleged costs are amorphous and difficult to verify or prove. But what is not difficult to prove is that America’s security is benefited and protected by the Jones Act. The world is a dangerous place, filled with adversaries that will be all too happy if the Jones Act is weakened. It is time tested and proven.
Crowley Maritime Corp. on Saturday christened its Commitment Class combination container and roll-on/roll-off ship El Coquí, which is among the first of its kind to be powered by liquefied natural gas.
Crowley said the ship is a key component in its supply chain transformation in the U.S. mainland-Puerto Rico trade.
A crowd of more than 350 people, including White House officials, U.S. congressional members, local dignitaries, representatives from shipbuilder VT Halter Marine and Eagle LNG joined Crowley employees, vessel crew members and other industry and union representatives to celebrate christening. Continue reading
By The Hill•
Virtually every argument against the Jones Act is falsely premised on the notion that it increases consumer prices and that it impeded emergency supplies from getting to Puerto Rico after last year’s hurricanes. Some have even argued that Puerto Rico’s decade long recession is the fault of the Jones Act — despite the fact that it was enacted almost 100 years ago. Simply stated, there is no factual evidence to support these claims.
The Jones Act, or more precisely, the “Merchant Marine Act of 1920,” simply requires goods shipped between two or more U.S. ports to be shipped on vessels that are American built, owned and crewed. But it does not prohibit foreign vessels from bringing goods to a U.S. port.
Because of the Jones Act, foreign flagged ships with unknown and unvetted foreign crews cannot deliver goods to New Orleans and then sail up the Mississippi River deep into the American heartland. Continue reading
by Gabriella Hoffman • Maven
Here’s more from my reporting trip to Puerto Rico.
I recently joined a group of center-right bloggers and journalists on a reporting trip to Puerto Rico examine the status of the Jones Act and how the law is aiding relief efforts there following the aftermath of Hurricane Maria.
President Trump was reluctant to waive the Jones Act following Hurricane Maria, but later did for ten days. Outlets like Reason Magazine said the waiver didn’t go far enough. The topic has been in the news, so I wanted the opportunity to see it for myself despite media reports projecting doom and gloom.
During the course of the reporting trip, we heard from a series of speakers from the shipping industry to get their take on the law and the status of their industry. Continue reading
While Puerto Rico is still recovering from last year’s severe hurricane damage, the all too predictable push to blame the tragedy on the Jones Act appears to have passed — for now. But almost like clockwork, this false blame game will be replayed whenever opponents of the Jones Act think they can spread falsehood during times of tragedy to gain a political advantage. When that next moment comes, the tired, oft-repeated, and baseless arguments will be trotted out once again.
The Jones Act, or more precisely, the “Merchant Marine Act of 1920,” simply requires goods shipped between U.S. ports to be shipped on American vessels crewed by Americans. It does not limit foreign vessels from bringing goods to US ports. It only prevents foreign ships from carrying cargo between two or more US ports. This has a number of homeland security benefits as well as ensuring that our military has a robust merchant marine sea lift capability and ship repair industry.
Some may assume that Americans are burned out on debating the Jones Act’s merits every time there’s a hurricane or some other event that supplies the pretext to blame the nearly 100 year old law. But when I recently spoke at a public policy conference, I saw Continue reading
Frontiers of Freedom will be at the 2017 Conservative Leadership Conference in Las Vegas on Saturday, September 16th.
At the Conservative Leadership Conference, we will be presenting a panel discussion on emerging issues with:
We will be discussing at least three important, emerging issues:
Freedom through Commerce
EPA & Superfund Reform
High Speed Rail Boondoggles
Hope you will join us in at the Conservative Leadership Conference. Click HERE for more details.
To project power and protect America the U.S. military requires a robust American sealift capability. Transporting materials and weaponry over across the high seas is a key component of America’s ability to protect its interests around the globe yet it is often overlooked, misunderstood and underappreciated.
History teaches this lesson unmistakably. In 1812, when the greatest army the world had seen up to that time launched an invasion of Russian. Napoleon had an army of almost 700,000 men. At first his troops routed the opposition wherever they engaged but, as he led his forces deeper and deeper into Russia, supplies ran short and his men began to starve.
As winter came, his men began to freeze, not from fear but from hypothermia. Napoleon was forced to beat a hasty retreat back to France, leaving 380,000 dead, 100,000 captured, and many so sick that they could no longer fight. His once great army had only 27,000 soldiers capable of fighting. Continue reading