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The
fact that such a law exists in a nation
that boasts the world's largest economy,
particularly a nation that advocates an
open and free market economy as one of its
national policies, is rather surprising,
one might say.
The
report cites studies conducted by the US
International Trade Commission that says
the Jones Act increases significant costs
to both domestic and foreign shippers and
their customers.
The
high costs are not only caused by the absence
of competition, but also due to the remarkably
high construction cost. According to Alphaliner,
the cost of building ships in the US is
up to five times the cost of building them
in Asia.
However,
the cruel fact is that the US Congress is
not keen to revise it due to huge political
pressure from the US "shipyards and
associated industries, maritime labour unions
and congressional delegations from the non-contiguous
states of Hawaii and Alaska".
For
China, the report says if Asia's largest
economy could abolish cabotage restrictions
and enable international relay, about 10
million TEU that are currently relayed at
international ports (including Hong Kong)
would thus be transshipped via Chinese ports.
That
volume could generate a potential income
of CNY2 billion ($321 million) for local
ports, resulting in savings of $500 to $700
million per year from lower port charges,
optimised shipping networks, lower inventory
costs and shorter transportation time by
five to 10 days.
Further,
the WEF says many emerging countries, such
as Brazil, Indonesia and India, are considering
easing international relay regulations.
However,
it is easier said than done. Although liberalisation
of cabotage regulations all over the world
can boost global trade by reducing costs,
the progress should be slow and gradual,
because it takes time to eliminate "the
legitimate national security concerns that
surround domestic transport".
Therefore,
the WEF argues that efforts should be focused
on relaxing protectionist international
relay restrictions, because the subsequent
economic and environmental benefits are
so obvious that they overshadow security
concerns.
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