Renewed calls from the Centre for Ocean Policy and Economics (COPE) for a US Virgin Islands (USVI) flag, are under consideration by the Trump Administration.
Functioning similarly to the function of the UK’s Gibraltar flag, allowing vessels – most of them yachts – to enjoy some benefits and protections of the Red Ensign without associated tax commitments, the USVI would allow vessels to fly the US flag while forgoing many of its key requirements.
Eric Dawicki, COPE fellow and Northeast Maritime Institute president, said it was easy to understand the appeal.
“Well… it’s time to let the cat out of the bag… America has an opportunity to engage in strategic competition for maritime trade and commerce,” he posted on LinkedIn. “We can regularise trade and truly take advantage of an opportunity that has been ignored for too long.”
The plan takes aim at US businesses’ most hated maritime legislation, the Merchant Marine Act of 1920 (the ‘Jones Act’), which specifies that US-flagged vessels need to be built in the US – and most importantly, crewed by US personnel.
That legislation has been regarded as a critical protection for labour rights in US shipping, ensuring that US shipowners cannot participate in the race-to-the-bottom for crew wages that has gripped other participants in the sector.
Flags of convenience (FOCs), by contrast, such as those of Liberia, Panama and the Marshall Islands, have enthusiastically embraced hiring the lowest-paid seafarers available.
Many of these registries are run from US offices, and serve similar purposes to the proposed USVI; but until now, none has had an inroad into the US market. On the other hand, the USVI would enjoy both the low costs and weak labour protections of the world’s largest registries, and unfettered access to US ports.
This latest campaign by COPE is a reiteration of the previous attempt in 2022, targeting adoption by the Biden administration at a time when shipping faced major cost increases from the Covid crisis. Unsurprisingly, union body the AFL-CIO was unimpressed, calling the move “nothing more than an exercise in labour arbitrage”, and “an affront” to American seafarers.
“Increasing America’s dependence on foreign-owned and foreign-manned vessels will exacerbate the current situation and will not somehow magically enhance America’s maritime posture,” the group added.
And a 2022 COPE document was swinging against AFL-CIO. It read: “Taking such a public and guttural stance, without making an effort to understand the facts or engage in dialogue, is quite frankly appalling given the state of our maritime industry.”
This was not enough to win the interest of the ‘most pro-union president in history’, however. His successor, Donald Trump, seems to like the Jones Act. In 2017, he suspended it for ten days following the impact of Hurricane Irma in Puerto Rico; but had his reservations about doing so, saying: “We have a lot of shippers and … a lot of people who work in the shipping industry that don’t want the Jones Act lifted… and we have a lot of ships out there right now,” he said.
If adopted, the USVI would also provide an easy route through which foreign-built, foreign-owned vessels could re-flag in order to serve the US market, while in practice changing little about how they operate. It remains to be seen whether the administration will take the easy road, or the hard one – rebuilding the US fleet from the keel up, via the SHIPS for America Act.
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