This is an application for funding under the [   ] Operational Account
                                                                     [   ] TILF Special Account

A. PROJECT DESIGN

PROJECT

01. Name of project: Safer Shipping in the Asia Pacific Region

02. Transportation Working Group is taking responsibility for the project and the dissemination of its results

OBJECTIVES

03. The objectives/justification of the project.

Objectives

To remove the unfair competitive advantage obtained by those who use substandard shipping and contribute to longer-term efficiency of trade in maritime services, by

• identifying the legislative, economic, or commercial mechanisms that can be used in APEC economies to encourage all players in the international maritime industry to support a safety culture;

and in Phase II

• facilitate the implementation of the identified mechanisms in APEC economies in a coordinated effort to further progress safer shipping;

Justification

Unsafe and substandard shipping can potentially have deleterious effects on almost every aspect of maritime transport. The use of such shipping risks the integrity of the marine environment, the welfare of seafarers, the reliability of services and cargo carried.

It is well recognised that safer shipping results from the effective involvement of all parties, with the primary focus on flag State responsibilities. However, effective flag State administrations and port State control programs are reliant upon two major elements:

1. the existence of domestic and international rules which cover all aspects of safe shipping; and
2. the effective implementation of those rules by trained personnel, supported by a sound infrastructure and comprehensive safety policy.

International efforts, particularly by the International Maritime Organization (IMO), to promote safe shipping are well known and have been successful in many cases. This project attempts to determine whether additional commercial or legal mechanisms can be employed to augment such efforts. It complements work being undertaken in the OECD Maritime Transport Committee.

04. How, briefly, this project responds to the priorities set by APEC Leaders and Ministers, as evidenced by parts of the APEC Action Agenda including Action Program, work plan, vision statement, and policy statement that relate to this project. (*)

APEC Leaders

This project is responsive to the sustainable development and economic and technical cooperation priorities set by APEC Leaders which were reaffirmed at their meeting in Canada in November 1997. The project is consistent with the APEC Framework for Strengthening Economic Cooperation and Development which is intended to reduce economic disparity among APEC economies, to improve the economic and social well being of people and to achieve sustainable growth. In November 1997 APEC Ministers reviewed progress achieved within the Framework and recognised that "an efficient, safe and integrated regional transportation system is critical to support growth."

The project is also consistent with the APEC Leaders summit held in November 1996 which resulted in a direction to Ministers to develop specific initiatives to implement a work program for sustainable development in APEC, including sustainability of the marine environment.

APEC Transportation Ministers

At their meeting in June 1997 in Victoria, Canada, APEC Transportation Ministers affirmed "that transportation safety and security in the region must remain one of the highest priorities of the Transportation Working Group" and also recognised "the importance of environmentally sustainable transportation to improving the quality of life for APEC citizens".

APEC Transportation Working Group

Transportation Ministers directed the TPT-WG to "establish an Experts Group on Maritime Safety to address maritime safety concerns in the Region" and urged "economies to work closely with international organisations having competence in the field, such as the IMO, to develop programs and mechanisms to promote the implementation of, and compliance with, existing international rules and standards adopted by these organisations."

APEC Transportation Working Group - Experts Group on Maritime Safety

The Experts Group on Maritime Safety has a role in facilitating a cooperative approach to institutional and commercial practices which ensure the effectiveness of maritime safety policies within APEC. This project proposal is an appropriate practical program of work for the Experts Group focused on commercial and economic constraints on maritime safety, which could include work relating to classification societies. It will build on the findings of a survey by Canada on regional maritime safety concerns.

A significant reduction in substandard shipping in the APEC region will reduce the threat to the marine environment of shipping related accidents. In this respect, safer shipping practices contribute to initiatives to promote sustainability of the marine environment.

Osaka Action Agenda

Consistent with the Osaka Action Agenda objectives of liberalisation and facilitation, the TPT-WG's Transportation Action Programme states that APEC economies will promote the implementation of IMO standards, regulations and safety measures. Safety of shipping is considered a priority issue for the IMO.

The use of substandard shipping creates an unfair competitive advantage for those willing, or able, to circumvent international safety standards.

A reduction in the use of such ships will promote free and fair competition in shipping and contribute to the longer-term efficiency and reliability of maritime services. In this respect this project supports the APEC objective of liberalisation and facilitation in international trade.

05. For applications under the TILF Special Account: How briefly this project contributes to APEC Trade and Investment Liberalisation and Facilitation (eg. relevance to specific parts of the Osaka Action Agenda).

Not Applicable

LINKAGES

06. The kinds of institutions in member economies intended to benefit from the results of the project. Highlight the direct benefits to the institutions, the types of businesses in member economies which will benefit from the results of the project and what the direct benefits are.

A significant reduction in or removal of substandard ships from the region will enhance safer shipping and may provide benefits to:

• Maritime safety agencies: As maritime safety improves in the region, the cost of administration should decline allowing the reallocation of resources to more critical areas;
• Shipowners: As substandard tonnage is forced out of the market, shipowners and operators could expect greater demand for quality tonnage resulting in fairer competition in freight charges;
• Seafarers: As the incidence of unsafe vessels declines, the welfare and safety of seafarers will improve.
• Insurance companies: As other industry players accept a greater share of liability for risks and as vessel casualties decline, insurers may have fewer claims;
• Importers and exporters: The benefits for importers and exporters will be accrued through greater reliability of shipping services; and
• Consumers and the Community: The benefits from long-term competitive shipping for consumers will be similar to those for importers and exporters with respect to greater reliability of shipping services. In addition, the impact of sub-standard shipping on the marine environment should diminish affording considerable intrinsic benefit to the community as a whole.

07. How the participation of the business/private sector and non- governmental institutions has been sought or will be sought. Illustrate how the business/private sector are involved in the planning and delivery of the project and whether any other APEC fora have been consulted. (*)

The participation of the business/private sector and non-governmental institutions in most aspects of this project will be essential to identify (and possibly develop) practical mechanisms to counter substandard shipping. This project will involve a wide range of businesses associated with the shipping industry as information will be sought from ship owners, shippers, classification societies, marine insurers and other financial institutions that influence decisions taken affecting safety outcomes in the industry. Industry input was sought during the project proposal's development.

08. How this project will add "APEC value" (as to the potential benefits of implementing projects) in the context of other work that might have been done elsewhere in the same field.

Through promoting safe shipping practices and improving the availability of safe shipping, this project will:

• implement APEC Transportation Policy objectives;
• promote the implementation of and compliance with IMO standards as agreed in the Osaka Action Agenda;
• contribute to the efficiency and safety of maritime transport;
• contribute to increased protection of the marine environment and the safety of seafarers; and
• assist sustainable growth and development of the Asia-Pacific region for the common good of its people and their equitable participation in the international shipping industry.

09. An indication of how the project might contribute to related projects or activities in APEC or elsewhere.

This project complements:

• OECD Maritime Transport Committee research on the unfair competitive advantage obtained by operators of substandard ships. It complements and builds on an OECD project to address substandard shipping;
• IMO efforts to improve safety of shipping operations including the International Management Code for Safe Operation of Ships and Pollution Prevention (ISM Code) implementation and moves to strengthen flag State compliance;
• APEC TPT-WG project proposals relating to the transparency of shipping policy and practices, and vessel classification capabilities in APEC; and
• Objectives of the 1996 Strategy to Address Sustainability of the Marine Environment and the 1997 APEC Action Plan for Sustainability of the Marine Environment developed by the APEC Marine Resource Conservation Working Group which respond to the regional need for sustainable management of marine resources and the reduction and control of marine pollution.

10. Describe the deliverables of the project and demonstrate how it will meet the needs of the targeted beneficiaries.

The deliverables of Phase I of this project include identification of those mechanisms which are most effective in achieving shipping safety. It is proposed that this will be achieved through the design and distribution of a questionnaire seeking information on existing and alternative mechanisms for achieving ship safety. The identification of the most effective mechanisms for achieving ship safety will allow each of the beneficiaries (described in paragraph 6) to determine how their resources can be effectively allocated to improve ship safety. In the long term, mechanisms or measures developed during this project could encourage all industry players to adopt, and adhere to, commercial practices which promote the employment of safe ships.

METHODOLOGY

11. A concise description of the project's methodology.

PHASE I: Identification of safe shipping practices

Data collection to reveal the state of the industry, particularly the actions, obligations and liabilities of each of the players in relation to ship safety. This may include:

• analysis of complementary work undertaken by other international bodies, particularly the OECD, IMO and the Tokyo Memorandum of Understanding on Port State Control Secretariat
• a scoping or feasibility analysis to identify relevant parties in the industry, and their roles
• a description and statistics of the incidence and effect of substandard shipping in the region
• design a questionnaire, based on this analysis, to identify existing mechanisms or procedures used by APEC governments and maritime industries to improve the safety of shipping in the region
• preparation of a questionnaire to APEC economies seeking details of
  • existing mechanisms (legislative and/or economic) used by governments and industry to promote safe shipping (incentives)
  • existing mechanisms (legislative and/or economic) used by governments and industry to identify and deter substandard shippers (disincentives)
  • the method by which the mechanisms are funded ie. tax or cost recovery
  • the effectiveness of these mechanisms
  • the respondents' policy on ship safety
  • whether the respondent differentiates between safe shipping and sub-standard shipping
  • the type of ship safety information used by the respondent in the course of their operations
  • the importance of knowledge on the state of vessels in the respondents' operations
  • the importance of risk assessment to the respondents' operations risk assessment procedures.

• Distribution of the questionnaire to all member economies for their completion and relevant intergovernmental institutions, such as the IMO and the OECD Maritime Transport Committee, for their completion
• Another method of obtaining information would be a review mechanism carried out by 'peer' economies, industry participants and/or independent assessors which would assess the degree to which stated policies are implemented in practice
• Collation and analysis of information received
• Distribution of the findings to all member economies, the IMO and the OECD Maritime Transport Committee
• Identification of mechanisms which are most (and least) effective in achieving ship safety
• If feasible undertake further work to identify the reasons why those mechanisms have (or have not) been effective
• Report back to TPT-WG on outcomes with views to moving to Phase II of the project

12. A concise description of the project by component, with its associated outputs clearly specified.

13. A timetable for the accomplishment of each component in (12)

PROPOSED TIMETABLE

14. The number of APEC member economies that will participate in this project. Please indicate the names of member economies participating in each component of the project as set out in (12).

Australia would oversee the project with assistance provided by the Republic of Korea, Chinese Taipei and Canada as cosponsors. A Steering Committee, in conjunction with the APEC Secretariat, would prepare an RFP and select a consultant.

China and New Zealand have indicated their interest in this project. Considering the importance of shipping to regional trade, Australia anticipates that a wide range of economies will participate.

BUDGET

15. An itemized budget is at Enclosure 1.

No budget estimate has been made for Phase II of the project which will involve analysis of the report provided in Phase I to identify mechanisms most effective in improving safety and preparation of a best practices document. A separate funding proposal will be lodged for Phase II. Detailed consideration and consultation of how these mechanisms could be implemented in APEC would follow, including consultation with shippers, shipowners, classification societies and other commercial interests as well as relevant port State control authorities and international regulatory organisations. A final report would be presented to TPT-WG 19.

16. A timetable for the drawdown of APEC funding requested for the project, including details of any advance payment or instalment payment requested and justifications for such requests.

17. Details of any request for waiver or exception from the normal APEC financial rules with justifications.

Not applicable

DISSEMINATION OF PROJECT OUTPUT

18. A plan for the publication and dissemination of the results of the project:

Interim and final results of all phases will be discussed by Australia and the cosponsoring economies, Canada, Republic of Korea and Chinese Taipei. The results will then be circulated to economies in draft form for comment and the final report to the Transportation Working Group meeting for consideration. The results of the Project will also be distributed to the IMO and the OECD Maritime Transport Committee. Economies will be encouraged to distribute copies of final reports to participating industry organisations. Copies of final documents will be available in both hard copy and electronic format for ease of distribution. One copy of the final documents will be available to each APEC member economy with additional copies able to be taken from the electronic version as required for circulation.

Assessability of results for the targeted audience

The targeted audience are members of the shipping industry of each APEC member economy. Results of the study will be measured in terms of the extent the target audience adopts any recommendations arising out of the study and the effectiveness of such recommendations in reducing the level of substandard shipping.

Publicity plan

Member economies to determine the publicity given to recommendations within their economies. One hard copy of the recommendations will be sent to each Member economy.

Budget for publication and dissemination

The estimated cost for one hard copy of the recommendations sent to relevant international organisations and each Member economy is US$2,000.

ASSESSMENT OF PROJECT

19. How the project proponent will assess whether he has met the criteria for APEC projects and how he will measure the impact of the project on expected beneficiaries.

The outcomes of the project will be assessed in terms of improved maritime safety within APEC economies, the reduction of maritime incidents, a fall in the number of unsafe vessels detained by port State control inspections, and legislation or compliance mechanisms undertaken or adopted by Member economies in relation to the way business is conducted by the target audience.

B. UNDERTAKING BY THE WORKING GROUP/COMMITTEE

The APEC Transportation Working Group undertakes that, working closely with the APEC Secretariat, due care has been taken that:

1. The line items for the APEC-funded parts of the budget for this project are within SOM-approved guidelines.

2. The costs for line items for APEC-funded parts of the budget of this project are justifiable.

and, with regard to the dissemination of results from the project, due care will be taken that:

1. Comprehensive quality control and professional editing, including factual precision and thoroughness, to ensure that the publication or other dissemination media will be understood by and useful/beneficial to the target audience, will be undertaken before submission of the publication to the printer or the APEC Secretariat.

2. Any output will be consistent with APEC's publication policy.

The project has been reviewed, approved and prioritized by my Working Group before it is submitted to the BAC for review.

SIGNATURE ______________________________________

NAME OF LEAD SHEPHERD
(Please print) ______________________________________

DATE AND PLACE ______________________________________

Enclosure 1

APEC OPERATIONAL ACCOUNT

ITEMIZED BUDGET FOR FISCAL YEAR 1999

This page was last updated on 1 Feb, 2007