Response to critique: repealing the Jones Act on Puerto Rico

Last week the editors of Liberation received a critique from a maritime worker activist with a history of supporting the International Longshore Workers Union in California. He responded to a recent PSL statement on Puerto Rico, which called, among other demands, for the repeal of the Jones Act on the island. The Jones Act requires that all trade between U.S. ports take place with U.S.-flagged ships, built in the United States, and using U.S. shipping crews, meeting U.S. labor standards; and these requirements extend to Puerto Rico. His claim is that this repeal would undercut the hard-fought gains of the U.S. working class, and that we are unintentionally supporting the argument of U.S. corporate lobbies that intend to super-exploit workers worldwide in the name of “free trade.”

Because the letter raises important questions for the working class in the United States and Puerto Rico, and for all socialists, it requires further clarification and elaboration.

He writes:

“I expect this was written by someone who meant well, but PSL really put its foot in its mouth on the subject of the Jones Act in this. … A foreign carrier can bring in foreign cargo to Puerto Rico any time without any restriction. Nothing has to be unloaded in Jacksonville or anything remotely similar. This is just a complete fabrication. … This has nothing to do with U.S. colonialism. If Puerto Rico were independent its cargo from countries other than the U.S. would be carried mostly on foreign flag ships, just like it is today. No nation allows domestic trade to be carried by foreign carriers. None of the countries whose flags might want to carry U.S. domestic trade would allow U.S. carriers to do the same in their country.”

First, the PSL calls for the repeal of the Jones Act vis-a-vis Puerto Rico, alongside other colonially imposed laws. We do not call for the elimination of cabotage laws within the 50 states, given that such laws currently serve as the foundation of labor standards for longshore and other workers in the shipping industry. We oppose Sen. John McCain’s manipulation of the Puerto Rico crisis to try and eliminate labor protections in the shipping industry within U.S. states. We recognize that such cabotage laws like this exist in practically every country as a means to regulate their own merchant marine.

The PSL has not erred with the demand for repeal with respect to Puerto Rico, however. To the contrary, this demand has long existed among the broad Puerto Rican socialist and pro-independence forces. All class-conscious and internationalist longshore workers in the United States should understand why, and support this demand from the people of Puerto Rico and its left-wing forces who fight for the interests of the working class.

The statement that the Jones Act’s functioning in Puerto Rico “has nothing to do with colonialism” is an astounding negation of the island’s history, economy and present condition. Colonialism is not just about the subordination of all Puerto Rican political institutions to U.S. directives. Colonialism is based on the domination of markets.

All the laws that control Puerto Rico’s economic development and relations with the world — its commercial rules, maritime laws, postal service, transportation, banking, currency, defense, etc. — are controlled by Washington. Puerto Ricans have never voted on these laws. They did not and could not vote for the legislators or presidents that passed them, and they are powerless to change them under the current system.

The 1920 Jones Act is just one part of this but it is an important part. Jones Act restrictions are not the main impediment to the necessary relief getting to Puerto Ricans at the moment, but they do speak directly to the island’s colonial status. It is one of many laws that has distorted and underdeveloped Puerto Rico’s economy.

It is wrong to assert that that an independent Puerto Rico would pursue identical trade arrangements and that “a foreign carrier can bring in foreign cargo to Puerto Rico any time without any restriction. Nothing has to be unloaded in Jacksonville or anything remotely similar.”

While our previous statement’s formulation was imprecise that foreign carrier “must” pay steep tariffs if they go directly to Puerto Rico, and so go to Jacksonville instead, it is true that the Jones Act creates considerable additional hurdles to Puerto Rico’s foreign trade. A ship from elsewhere in Latin America or Africa, for instance, could stop in the Dominican Republic, Jamaica, or any of Puerto Rico’s Caribbean neighbors, to offload products and pick up locally manufactured goods, before proceeding to the United States. But no such ship that stops to do so in Puerto Rico can proceed to U.S. ports without heavy fees because this would then constitute trade between “U.S.” ports. To avoid fines, a foreign-flagged ship that goes directly to Puerto Rico would have to either 1) not load Puerto Rican products before going to the United States or 2) not proceed to the United States whatsoever.

Puerto Rico is an island nation of 3.4 million people only a few hundred miles from the United States. As such, international manufacturers and shippers opt instead to go directly to the U.S. mainland, to break their bulk, and ship back to Puerto Rico on U.S.-flagged ships. Nor can an international ship that stops first in a U.S. mainland port then proceed with U.S. products to Puerto Rico, as it would to any other country in Latin America and the Caribbean. All this amounts to an artificial colonial surcharge that adds considerably to the final price of goods in Puerto Rico.

Likewise, shipments from the U.S. east coast to Puerto Rico are nearly double the cost of shipments to the Dominican Republic or Jamaica because of the Jones Act requirements. A recent study found that supermarket items cost 21% higher in Puerto Rico than the U.S. average.

The critique of the PSL’s statement continues:

 “If anyone thinks the savings in shipping costs from foreign flag shipping would trickle down to Puerto Ricans, they are applying the same logic as union busters anywhere. The savings from gutting workers’ rights are taken by predatory employers, not passed on to the poor.”

In general we would agree that the bosses’ advocacy for “free markets,” promising to lower costs for consumers, is a deception. They always find a way to keep the additional profits from lower labor costs and regulations, rather than passing this along to workers as consumers. Rather than accepting the bosses’ propaganda about lowering consumer costs, the left fights to raise all workers’ wages and benefits — the workers’ share of the surplus value.

But this general orientation will not suffice when we are dealing with two separate national economies and labor markets — one constructed on the basis of an imperialist and hegemonic place in the world economy exploiting another constructed on the basis of colonialism.

It is one thing to have U.S. importers and even consumers — who have actual political rights, higher average wages and far more economic opportunity — pay a fractionally higher cost for goods so as to help safeguard the job standards for workers in the U.S.-based shipping industry.

But Puerto Rico’s wages are far below U.S. wages. It is facing extreme austerity. The poverty rate is triple that of the United States. Unemployment is enormous, and college graduates have been leaving in waves to find employment off the island. Eighty percent of Puerto Rico’s private-sector workers are employed by small businesses, unlike the United States where half of private-sector employees work for large corporations which can easily absorb higher shipping costs.

Around 30 percent of workers in Puerto Rico are also in the informal economy (compared to 9 percent in the United States). This highly precarious sector is deeply impacted by the price of basic foodstuffs.

It is unconscionable to tell Puerto Rican workers to just fight to raise their wages but in the meantime pay more to U.S. shipping companies than all their Latin American and Caribbean counterparts.

Some might say that Puerto Rico should grow its own food and develop its own industries to lessen the impact of shipping costs. But the truth is that this reliance on food imports too is a product of its colonial constructed markets.

The extension of U.S. mercantile laws to Puerto Rico in the early 20th century meant that its exports were not subject to any tariff when imported to the United States. U.S. finance and industrial capital thus rushed in to buy up Puerto Rican land for the production of cash crops (sugar, tobacco and coffee), and construct new manufacturing plants based on super-exploitation of its workers. Cheaply produced goods were sent back to the United States, and the capitalists made out like bandits. Puerto Rico’s domestic food production, however, collapsed, and the island was forced to import its food.

As part of Puerto Rico’s forced integration into the U.S. national market, profits made in Puerto Rico could be exported back to the United States free of federal taxation. Meanwhile tax laws in Puerto Rico, designed and approved in Washington, also allowed foreign-owned entities to deduct from corporate income all the dividends it sent back to its parent companies. In short, U.S. capital extracted billions from Puerto Rico, but the island had little to show for it.

Although Puerto Rico is heavily industrialized, for decades it was primarily engaged in the preliminary phases of assembly and manufacturing, not the finishing of products. Puerto Rican manufacturing products thus were sent to the United States for final assembly and then shipped back to Puerto Rico where it had started. This is a common feature of manufacturing in the so-called “Third World,” but Puerto Rico has been taxed by additional shipping costs compared to its independent counterparts.

When U.S. capital would desert Puerto Rico, moving as it always does in the hunt for higher profits, this left the fields fallow and the factories abandoned. Puerto Rico was left with nothing, and millions have migrated in successive waves as a result.

One cannot treat Puerto Rico’s economic history and present-day reality as if it were just another part of the United States. It is “apples and oranges.” The overall shape of the class struggle there is deeply impacted by colonial development. The capital and surplus value generated in Puerto Rico always went back to the United States. The Puerto Rican capitalists developed as an intermediary comprador class — not a true national bourgeoisie. Puerto Rico has no predominant position in the world economy, which might allow the working class there to compensate for any higher costs of imports through other measures.

Many capitalist countries in Latin America and the Caribbean utilized import-substitution policies to protect their own domestic industries from the predations and dislocation of Western capital. Others have pursued multinational South-South and regional trade agreements. Of course, there has also been tremendous regression with the adoption of U.S.-imposed neoliberal free-trade agreements such as NAFTA and CAFTA-DR. The Puerto Rican people never had a moment to even consider such policies, even on a bourgeois basis, because of their colonial status. Puerto Rican exports were geared overwhelmingly to the U.S. market, and the intra-regional trade agreements that it signed onto were designed in Washington.

The Jones Act is not the singular cause of all this distorted development. There are a host of colonial laws that have subordinated Puerto Rico’s economic development to the U.S. national market and U.S. capital. But the imposition of the Jones Act on Puerto Rico is part of that, and it, along with all the other colonially imposed laws, must go.

How, after all the above information, can one suggest that Puerto Rican people should be forced to continuously subsidize the U.S. shipping industry? Even if a section of Puerto Rican workers in the shipping industry receive better-than-average wages and conditions on account of Jones Act provisions, this is a secondary to the fact that it forms an integral part of the colonial construction of the Puerto Rican economy.

The U.S. Virgin Islands are exempt from the Jones Act and U.S.-made goods there are about half as expensive. If one were to advocate for the unilateral extension of the Jones Act to the Virgin Islands, which currently has a 30% poverty rate, in the interest of expanding “good jobs” this would rightly be seen as a nakedly colonial position. To stand against the left-wing and working-class forces of the Puerto Rican working class, who are demanding the annulment of the Jones Act on their island, is equally colonial.

Update (Oct. 26)

The AFL-CIO leadership has recently issued a letter to the U.S. Senate against the repeal of the Jones Act. The letter makes several valuable points about how the ruling-class politicians are using the Puerto Rico crisis to launch a general attack on the Jones Act in order to strip away labor standards and drive down wages in the United States. But their point that the law’s application to Puerto Rico has “in no way” impeded the recovery — that aid arrived speedily but the only problem has been with internal infrastructure — is far weaker. In any case, this assessment of the relief effort is not the pivotal question. What is pivotal is that the Puerto Rican people are now, more loudly than ever, demanding that they be exempted from these trade restrictions imposed on them from U.S. Congress.

By lumping together the Puerto Rican people’s demand with the efforts of the U.S. capitalists and banks, the federation is promoting the colonial status quo and betraying working-class internationalism. A far more balanced defense of the Jones Act and its application in the United States can be found in “Puerto Rico and the Jones Act conundrum,” by retired longshore worker leader Jack Heyman.

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