Merchant Marine Act of 1920 - Cabotage

Cabotage

The cabotage provisions restrict the carriage of goods or passengers between United States ports to U.S. built and flagged vessels. Whilst the Panama Canal Zone was US sovereign territory, this resulted in any inter-oceanic trade going through the Panama Canal be on US-flagged vessels. Multinational Corporations were therefore decisive in lobbying the Carter Administration and the United States Congress in surrendering the US territory to Panama. The importance of the Canal in keeping the US Merchant Navy strong was made clear when with the surrender hundreds of US Merchant vessels were sold as scrap or put under a Flag of convenience and their crews unemployed. However, the main provision of the Jones Act remained thereby allowing for a legacy fleet of the US Merchant Navy to remain.

Since 2006 increased lobbying has been undertaken to scrap the Jones Act. It has been codified as portions of 46 U.S.C. ch.551 (Coastwise Trade). Nonetheless, the provisions requiring at least three-fourths of the crewmembers must be U.S. citizens. Moreover, the steel of foreign repair work on the hull and superstructure of a U.S.-flagged vessel is limited to ten percent by weight. This restriction largely prevents American shipowners from refurbishing their ships at overseas shipyards thereby circumventing trade measures to the detriment of National Security and the US Industrial economy. The passenger provision is also why most cruise lines always include at least one non-U.S. port in every cruise.