Reader Response - Jones Act: Fact vs. Fiction

Scott Bergeron, Chief Executive Officer at the Liberian Registry, was interested to read MarEx's report of a statement issued by the American Marine Partnership (AMP) in response to a recent Reuters article on the Jones Act. The following is his response: 

As the US-headquartered manager of the world’s second-largest ship registry, Liberia, I am delighted to hear AMP’s assertion that the US maritime industry is “flourishing and stronger than ever.” A strong US merchant marine is essential for a wide array of reasons, not the least of which is its positive impact on the maritime policy of the world’s largest trading country. Other obvious areas to benefit include the US economy, international shipping policy, security, safety, environmental protection and national defense. The Liberian Administration considers strong national flags essential to the shipping industry and routinely demonstrates its support to the national flags of major shipping countries. 

To this end, the Jones Act is undeniably an important piece of US domestic legislation. However, The Jones Act needs active support by the government in order to be effective and successful. For far too long, the US Government has sat idle, while the various components of the US shipping industry, including labor, shipbuilding and shipowning struggle and at times fight each other. Meanwhile, the US flag fleet itself suffers and contracts in size. 

In order for the US to protect its interests and the US shipping industry, the Jones Act must be sustained through active and financial support. It is an economic reality, not a political statement that cabotage and other protective measures hinder the competitiveness of the industry that they seek to protect. Simply put, global economic forces render protected industries largely uncompetitive in the global market. As such, protective measures must be complemented by robust government support including appropriate subsidy. 

In keeping with the AMP’s Fact Check statement, we wish to correct their presentation as follows: 

FICTION: The expression Flag of Convenience correctly identifies all open flag registries as substandard and lax. 

FACT CHECK (1): The AMP’s reported assertion that “foreign-flag ships operating in international trades are subject to the lax laws of flag of convenience countries like Liberia and Panama” is unfounded and unfair. 

To refer to the “lax laws of flag of convenience countries like Liberia and Panama” – and, by implication, other open registries - is an apples-to-oranges comparison. 

There are quality and substandard open registries, just as there are quality and substandard national registries. The Liberian Registry’s international reputation, confirmed consistently over many years by totally independent arbiters of quality and safety, places it at the very top of the industry. Specifically, Liberia is the largest white-listed flag in all Port State Control regimes, has achieve Qualship Status with the US Coast Guard, has a young average fleet age and outperforms most flags in terms of safety and casualties. Moreover, quality open flags like Liberia do not compete with national flags. Indeed, global ownership structures in today’s shipping industry prohibit the use of closed national flags. 

FACT CHECK (2): The Liberian Corporate Registry has earned international recognition from business investment professionals, financial institutions and corporate firms for its historical commitment to legal stability, significant investments in advanced information technology, and commitment to providing first-class corporate services to clients worldwide. 

Liberian corporations are at the core of well-established private and public investments in all major financial sectors, resulting in a significant percentage of global business activity being conducted through Liberian corporate entities. Despite the rapidly changing regulatory environment of the offshore corporate sector, Liberia is committed to providing flexibility, confidentiality and security. 

FACT CHECK (3): For more than 65 years, the Liberian Registry has been part of the fabric of the larger US maritime industry. It was established by former US Secretary of State, Edward Stettinius in partnership with the US’s daughter nation, the Republic of Liberia. The Liberian Registry has been operated from the US since 1948 as required by Liberian law. In fact, the Liberian Registry is run by US Citizen maritime professionals that are former members of the US Coast Guard and also graduates of US maritime academies. Liberia’s successful registry is in a unique way the US maritime industry’s success. 

There is room in today’s industry for a healthy US merchant marine and a flourishing Liberian registry. One need not fear the other. Rather, the opposite. 

We encourage the American Maritime Partnership to work with all responsible and effective elements of the maritime industry, including the Liberian Registry to strengthen the US maritime industry.

If you have thoughts on either the AMP or Liberian Registry perspectives, please feel free to comment below or e-mail us a response for possible publication.