Ban on domestic shipping by foreign vessels needs critical scrutiny

THE ISSUE Senator Akaka and his challenger, Rep. Ed Case, disagree about whether Hawaii should be exempt from a ban on foreign ships transporting cargo between U.S. ports.

A RECENT STUDY named Hawaii the fastest-growing cruise destination market in the United States, due largely to an exemption obtained by Senator Inouye from an antiquated federal ban on foreign-built ships operating between U.S. ports. The protectionist law remains intact against cargo shipments, and further exemption may be needed to control prices of goods in Hawaii.

Rep. Ed Case is the only member of Hawaii's congressional delegation to call for further exemption from a section of the 1920 Merchant Marine Act known as the Jones Act after its sponsor. Without legislation, he says, Matson Navigation Co. and Horizon Lines (Sea-Land) will continue their "stranglehold" on the state's economy. Senator Akaka, whose Senate seat is sought by Case, defends the Jones Act.

The Jones Act limits shipping between U.S. ports to ships that are built, owned and registered in the United States, and with American crews. At Inouye's urging, Congress created an exemption in 2003 allowing Norwegian Cruise Line to operate three foreign-built ships under the U.S. flag between Hawaii ports.

Case introduced legislation two years ago to exempt Hawaii from the barriers to let in more competition, requiring only that shippers comply with U.S. law, including labor and environmental requirements. "We have laws in this country against the creation of monopolies," he said during last week's televised debate with Akaka. "We believe monopolies are bad, yet, in this case, a federal law creates a monopoly."

Akaka responded that the Jones Act "is a critical component to protecting local jobs and national security." He has been well-rewarded for his support of the restrictions. His two largest contributors since he first began running for the Senate are Matson's parent, Alexander & Baldwin, and the International Longshoremen's Association, each giving more than $52,000 since 1989.

The question is whether Matson and the longshoremen have benefited at the expense of Hawaii residents. Case maintains that residents are "paying for it in spades" through high freight rates, with no alternative such as rail, buses, trucks or, realistically, air transport.

Rob Quartel, a former federal maritime commissioner and now head of the Jones Act Reform Coalition, has maintained that Hawaii families' budgets are 40 percent higher -- $3,000 a year -- than those of mainland families because of those costs.

The late Robert J. Pfeiffer, former chairman of Alexander & Baldwin, insisted several years ago that virtually every other significant power has a similar policy. Case says "most of the world's shipping is by way of an international merchant marine functioning in an open, competitive market."

An independent study is needed to determine if Hawaii residents are paying exorbitant prices for goods because of a federally sanctioned monopoly.