MI/00 1/4 ANALYSIS OF GENERAL MARITIME POLICY

General Remarks

The general maritime policy in this context consists of six issues responded by APEC member economies in Transparency Exercise Questionnaire (TEQ). These issues include the topics on vessels registration, second register, cargo reservation, major maritime policy challenges, international cooperation, and access to and use of ports, related port services and onward transport services respectively. Most APEC member countries indicated their policy directions towards the more liberalized scheme with free and fair market under the competitive environment, while some developing economies still maintained measures to protect their national fleet and other maritime related industries to some extent. However, the trend of liberalization has forced all economies to prepare and improve their regulations accordingly.

In addition, increasing awareness on maritime safety and marine environment protection has been widely observed. However, the need to comply with international standards with a view to achieve the world's uniformity should be emphasized among other things.

Question item 3 : Are there any limitations to registration on the basis of ship type, size, age, ownership, control, place of construction, nationality of crew, certification (i.e. safety certification such as ISM code certificate, certificate of classification authority, etc.) or others ? Please describe the limitations in detail.

This topic aims to investigate the limitations to vessels registration of APEC member countries on the basis of ship type, size, age, ownership, control, place of construction, nationality of crew, certification (i.e. safety certification such as ISM code certificate, certificate of classification authority, etc.) and others.

Findings

Fifteen economies indicated limitations to vessels registration in respect of ownership (11 economies), compliance to international standards and certification (6), size (5), nationality of crew (5), age (2), control (2), place of construction (1), paid-up capital (1) and status of vessels (3).

Remarks

With regard to the above mentioned limitations, some remarks has been made as follows :

1. In most economies, the ship registration law stipulates that a national vessel must be owned by national citizen whether he/she is a natural or juristic person. For the latter, 50% or more of national shareholders is the requisite. This can be viewed either as a measure to promote nationals to engage in the international shipping industry or as a cabotage in domestic shipping.
   
2. The requirement for compliance to international standards such as those incorporated in IMO conventions and recommendations clearly indicates the ever increasing awareness of maritime safety and marine environment among various economies, particularly from those developed countries.
   
3. The limitation on the nationality of crew apparently reveals the efforts of some economies in promoting the work opportunity of national seafarers.
   
4. The limitation on age of vessels may lead to the control of outdated or substandard vessels in maritime trade so as to ensure seaworthiness of registered vessels and maritime safety.
   
5. The registration of vessel status such as type of charter, ship mortgage, etc. may be deemed as a means to collect basic data for shipping policy formulation.

1. Some limitations to vessels registration such as compliance to international standards and certification, and age should be maintained in order to ensure operational safety and to prevent the deployment of substandard vessels. In addition, the registration of vessel status may be useful as it can provide basic data for shipping policy formulation.
   
2. It is anticipated that the ownership by nationals or majority of national shareholders will steadily decrease as most APEC member countries have become members of World Trade Organization (WTO). These countries are obliged to pave their ways to achieve their specific commitments submitted to WTO. More specifically, the progressive liberalization of vessel ownership will comply with the commercial presence mode of supply.
   
3. If the limitation on crew has to be maintained, it should also emphasize well-trained crew who meet the IMO standards, particularly STCW, in addition to the nationality.

Question item 4 : Is there a second register or other incentive system provided to attract foreign vessels or to stem the tide of flagging out, or is the establishment of one being considered by your government ? If so, what are the criteria for registration ?

This topic has the objective to investigate the establishment of a second register or other incentive system to attract foreign vessels or to stem the tide of flagging out and the criteria for registration.

Findings

Out of 15 economies, it was found that eleven economies have neither second register nor even any plan to establish such system while three economies also do not have such system, however, they are considering to establish one. Only one economy has the so-called "International Vessel Register System" with the criteria on vessel size and age.

Remarks

So as to attract foreign vessels and solve the problem of flagging-out, the second register will generally have more relaxed rules and regulations such as no requirements for national ownership, no requirement for national manning of the vessel and no taxation or other dues to be paid to the Government except for a very limited registration fee. As a result, it clearly has two advantages as follows :

1. With more relaxed rules and regulations and lower cost of registration, the second register will attract foreign vessels to register under its system. This can be considered as a source of income for an economy.
   
2. The second register may be considered as an alternative to the existing vessel registration, provided that the latter system is more complicated and costly. As a result, the establishment of the second register will not only prevent flagging-out but also attract flagged-out vessels.

However, some arguments have occurred on the issue of the increasing number of substandard vessels under the second register.

Implications

Criteria on safety standards which are based on IMO conventions and recommendations as well as other generally accepted rules should be adopted under the second register in order to ensure safety of vessels.

Question item 6 : What are the estimated percentage shares of the bulk and general cargo trades that subject to cargo reservation, including government cargo ?

This topic has the objective to investigate the protection and supportive measures such as cargo reservation in member economies.

Findings

Out of 15 responding economies, only 5 implemented cargo reservation measure, while 9 economies responded that they did not have such measure, and one economy indicated the unavailability of data.

Remarks

Although the world has increasingly moved towards the more liberalized scheme with emphasis on free and fair competition, protectionism such as cargo reservation has been maintained in some economies as a means to promote the infant industries including the maritime industry. Cargo reservation will secure and guarantee certain amount of cargo to be carried by the national fleet at the initial stage of its operation. However, as most economies have become members of WTO, they finally have to follow the more liberalized scheme in the long run.

Implications

Due to the increasing role of WTO towards liberalization and fair competition, cargo reservation should be regarded as a temporary measure for the infant maritime industry. While the General Agreement on Trade in Services (GATS), including maritime transport service, under WTO scheme has not been concluded yet, economies implementing cargo reservation can maintain this measure for a while and should take this opportunity to strengthen their maritime industry to be self-sustainable before the GATS is concluded.

Question item 7 : What are the main challenges concerning international maritime transport related matters in your economy recently, as below ? Briefly explain the nature of the challenge ?

The aim of this topic is to investigate major challenges to be encountered by member economies with a view to determine suitable international shipping maritime policy.

Findings

a. Creation of free and fair international shipping market

Nine economies responded no restriction on international shipping market while two

indicated that although they undertook competitive environment on international shipping market, cargo reservation on government and state enterprise imports was still maintained. In addition, one economy reported of reviewing her maritime policy to respond to the globalization of trade and services.

b. Prevention of flagging out

Only 5 economies clearly indicated their concern on flagging-out issue, however, their approach to cope with it is quite varied as follows:

• To assign a working group to consider means by which the national flagged ships may be encouraged to remain registered in that economy;
• To introduce the international ship system with a view to stop the flagging-out;
• To carry out studies to analyze some possible mechanism for at least suppressing the tendency of flagging-out;
• To implement indirect measures such as administrative, fiscal and funding ones to attract operators to fly national flags;
• To reverse the precipitous decrease in the number of ships in national flag fleet.

c. Development and protection of national shipping industry

Most 13 economies reported on developing and promoting their national shipping industry by various approaches such as introducing international vessel registration system, fostering highly-qualified seafarers, implementing promotional measures including cargo reservation, and eliminating or relaxing various restriction to market entry.

d. Review and deregulation of existing regulations in maritime transport related areas.

Two developed economies reported on their current review and revision of shipping and maritime related laws and regulations while one economy informed about her proposed amendment on maritime transportation law. Moreover, two economies also indicated their efforts in deregulating some regulations in maritime transport related areas.

e. Other, please specify.

It is interesting to learn that one economy expressed her intention to promote herself as a free port and an international shipping center by emphasizing how to attract more ships to register in her economy and how to encourage more related shipping business to be established in her economy to support economic activities in her economy. Besides, another economy placed emphasis on security concern.

Remarks

Most member economies have realized the challenge of more liberalization in the field of maritime transport and, therefore, incorporated it as priority in their maritime policy. It can be viewed that all economies are still undertaking to create the suitable mechanism for competitive environment.

However, some developing economies still maintain privileged and protective measures such as cargo reservation as a means to encourage and develop their national fleet during the initial stage of fleet expansion, although knowing that it may contradict to the liberalization policy.

Flagging-out has become a great concern to various economies as it may deteriorate the development and expansion of national fleet. As a result, direct measure such as the introduction of international ship register system and indirect measures to attract operators to fly national flag has been adopted and implemented by some economies.

Another recent development prevailing in several economies is the deregulation of existing maritime related regulations which goes consistently with the liberalization policy and WTO's directions.

Implications

With regard to the liberalization scheme, creating of free and fair market and promoting of deregulation policies are welcome and more desirable while some measures to protect national fleet and prevent flagging-out such as cargo reservation and discriminatory measures should be temporarily employed and then carefully reconsidered after achieving certain developments. In this context, the international ship register system may be regarded as an effective alternative, provided that no discriminatory measures are incorporated while international standards are to be maintained.

Question item 8 : Please describe any multilateral or bilateral arrangements between your economy and other APEC members,

This topic has the aim to investigate the cooperation among APEC economies including multilateral and bilateral agreements as well as the economic and technical cooperation.

Findings

a. in the field of maritime transport policy and related services

Almost all economies have concluded some forms of agreements with others. Under the broader umbrella is the multilateral regional cooperation such as ASEAN, NAFTA and other regional or common interest groupings. More specifically, bilateral agreements on maritime transport facilitation can be found in several economies, mostly on an MFN basis.

b. economic or technical cooperation ( if so please outline the projects, their value and whether your economy is a donor or recipient of cooperation.,)

Most developed economies take the role of donor in offering some forms of assistance to developing economies. Generally, economic and technical cooperation among APEC economies can be found in the form of training program, expert providing, loan support and development feasibility study. The existing technical cooperation mainly focuses on maritime safety and marine environment protection.

Remarks

International cooperation among economies will pave the way to set up learning mechanism for developing economies to upgrade their development level to be close to those of developed economies. This can be done through technical transfer, maritime manpower training and increasing awareness on specific issues.

Implications

In response to WTO’s directions, maritime transport agreements should be concluded in the way that they do not place any party at an unfair competitive advantage/disadvantage in world markets. In respect of technical cooperation, especially when maritime safety and marine environment is concern, international standards should be always taken into consideration and strictly followed in order to achieve international uniformity.

Question item 10 : Do foreign carriers have access to and use of ports, related port services and onward transport services ( i.e., truck and rail ) on a discriminatory basis? If not, is discriminatory treatment the result of government measures or private practices applied to foreign firms ? Please describe current policies/practices with respect to vessel access to port, i.e., advance notice/approval ( specify time period ), and differential treatment for port charges and dues. Are foreign carriers permitted to arrange for their own port services, including vessel agency service ?

The objective of this topic is to investigate the restriction of ports, related port services and onward transport services to serve foreign carriers among APEC economies.

Findings

Most economies reported almost the same practices to be applied to foreign carriers in access to and use of ports, related port services and onward transport services i.e. foreign carriers are treated on the first come first serve and non-discriminatory basis. Advance notice is made 24-48 hours in advance. There is no differential treatment in respect of port charges and dues. Most economies permitted foreign carriers to arrange for their own port services except a few economies which required major percentage of national shareholders, the conformity to domestic shipping laws and the appointment of representative or agent.

One economy applied port access restrictions to vessels from certain countries due to national security consideration.

Remarks

As a result of the liberalization trend, the increasing number of ports have been deregulated with a view to improve efficiency and be self-reliance. So as to relieve financial burden of the government and as an alternative to achieve more efficiency and higher productivity, the participation of private sector is welcome in various forms. Therefore, port has become one of the maritime related industries that can operate under competitive environment.

During the past decade, the proliferation of intermodalism and multimodal transport has put strong requirements on the smooth flow of goods along the entire transport chain, with special attention to be paid to the port interface and other inland transport linkages.

Implications

To guarantee effective port operations, port efficiency and smooth flow of goods along the entire transport chain, particularly at the port intermodal interface, should be enhanced. This can be done through the adoption of new technology, simplified procedures, revised and harmonized regulations, etc. Besides, safety and environment should also be topics of great concern while APEC member economies should be encouraged to pursue international standards.

International Affairs Section
Planning and International Affairs Division
Office of the Maritime Promotion Commission
March 2000

This page was last updated on 18 May 2000