Academic journal article Centro Journal

Cabotage as an External Non-Tariff Measure on the Competitiveness on SIDS's Agribusinesses: The Case of Puerto Rico

Academic journal article Centro Journal

Cabotage as an External Non-Tariff Measure on the Competitiveness on SIDS's Agribusinesses: The Case of Puerto Rico

Article excerpt

1.Introduction

Puerto Rico has many strengths that include its political stability, literacy rates, dol- larized economy, access to US markets, and absence of direct U.S. taxes (Collins et al. 2006). Ironically, Puerto Rico's particular political relationship with the U.S. is questioned due to its highly unequal society (IEPR 2018), higher than average price of goods (Marazzi-Santiago 2018), and an economic recession and staggering debt (Caraballo-Cueto and Lara 2018). To exacerbate the situation, recently, two consec- utive hurricanes broke down Puerto Rico's national supply chain (Holpuch 2017).1 These disasters helped reveal how some of the US Federal Government regulations could be affecting Puerto Rico's agrifood production and sustainable development.

It is not possible to understand the humanitarian crisis that ensued on Septem- ber 2017 without considering the long-standing political and economic phenomena that preceded it. An exploration of Puerto Rico's Maritime Merchant Law, and its agricultural sector before Hurricane Maria are needed to situate multidimensional findings of this research. The findings could be meaningful to policymakers, other SIDS, and U.S. off-shore jurisdictions.

This paper does not assume a stance against the relationship between Puerto Rico and the US. This research approaches the phenomenon of the US Cabotage Act as a commercial relationship using an operational perspective focused on sustainable development and food insecurity.

1.1.The Jones Act 1920 as a non-tariff measure (NTM)

Since 1917, the relationship between Puerto Rico and the US has been linked with a "Jones Act" (Venator-Santiago 2017). Between 1917 and the mid-1930s the name "Jones Act" was popularly applied to various2 US federal laws. Although different in intent (e.g., citizenship, cabotage), the term causes some confusion to this day (Rivera 2007; Dietz 1989). This paper is focused on the operational effects of the Wesley "Jones Act" or the Merchant Maritime Act. The Act was strategically designed as a reformulation3 of the US maritime trade policies but legislated in 1920 as a framework for the US Cabotage structure between the US and its territories. With World War I as a context, the initia- tive was also supported by the US security/military apparatus to re-ordain and register all the US flagged carriers (Pantojas-García 1990). These trade restrictions, based on the Dutch and British imperial rules, have been building up through decades of administra- tive structures to benefit the US maritime industry (Santos 1997), whilst diluting its cost in terms of the total welfare among its mammoth economy and its more than 300 mil- lion consumers (USITC 1991). US cabotage policies are a complex combination of regu- lations to protect trade among its coasts, which in the long run has shrunk its national registered fleet (USGAO 1998). Currently in Puerto Rico, unlike other non-incorporated US territories,4 this Act limits trades only to ships constructed and repaired in the US, operated by US citizens, and registered under the US flag (Torruellas 2017).

In some cases, policies designed for developed markets are not necessarily suit- able for the less developed ones and/or small economy realities (Stiglitz 2010). That is the case because some policy instruments (such as NTM) could affect competitiveness creating hidden costs to trade and/or business behaviors, that by their particularity, may imply indirect effects on the agents (participants) (May 2015; Beghin 2013). Literature on this subject is scarce and limited when it comes to proposing methods to analyze multidimensional effects of a NTM on SIDS.

The US maritime cabotage could fit the above description. Unfortunately, the regulation has primarily been studied based on its welfare cost5 (AMP 2018; Alameda and Valentín 2014; Cruz et al. 2014; Martínez 2014; Estudios Técnicos 2013; Lewis 2013; USGAO 2013). Another area which has received some attention is the marketpolitical relations (Clar 2013; Collazo 2012; Frankel 2002; Santos 1997). …

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