LECTURE 14 TITLE: Basic Categories of Shipping Policy

1.0 INTRODUCTION

1.1

Recapping on what has actually been covered so far, we started with subjects on shipping operation, followed by shipping economic.

1.2

By then we are assumed to have good knowledge on how international shipping operates,

1.3

and the economic reasons of some characteristics in international shipping.

1.4

The final part is of course on some policy matters concerning the running of international shipping.

1.5

Policy issues are important in ensuring smooth and efficient international shipping services.

2.0 TYPES OF/ISSUE ON SHIPPING POLICIES

2.1

The five types of shipping policies are those concerning:.

2.2 2.3

..Freedom of the Seas,. ..Anti-trust Policies,..

2.4 2.5 2.6 2.7

..Protectionist Policies,.. ..Open Registry Policies, and.. ..Safety of the Sea Policies. They are the main categories worthy of mention due to its effect on the economic of international shipping.

3.0 FREEDOM OF THE SEAS.

3.1

Says that international shipping community should adopt a policy that promote free competition,..

3.2

..and the provision of services free of government influence..

3.3 3.4

..especially on matters that have effects on price. This they argue will secure a commercial and efficient framework for the further development of trade and international shipping.

3.5

This they say naturally follows the intention of the socalled international division of labour,..

3.6

..where certain nations only participate/do what is naturally advantages for them to do.

3.7

Some element of Freedom of the Seas is laid down in the Code of Liberalization belonging to the OECD countries that agrees on:,..

3.8

..first no favouratism that finally lead to the selection of national flag vessel,..

3.9

..second must not do business with nation which practice favouratism in that sense,..

3.10 ..third no inducement of regulation that will give advantage to owns vessels,. 3.11 ..fourth no currency exchange rules that will give advantage to owns vessels,. 3.12 ..fifth to follow liberal and competitive commercial shipping practices,.. 3.13 ..sixth only normal commercial consideration should determine vessel selection,.. 3.14 ..seventh rational treatment of foreign vessels,.. 3.15 ..eight no government influence.

4.0 ANTI-TRUST POLICIES.

4.1 It basically says that Freedom of the Seas may have some disadvantages. 4.2 It say that is international shipping is left alone with no control it then will lead to unhealthy situation like monopoly.

4.3

It proposes government intervention to reduce this freedom in order to preserve the benefits which free competition is considered to give to the public in general,..

4.4

i.e from smooth and efficient commercial running of international shipping services.

4.5

On the question of monopolistic competition, it intent to control it rather that break it up,.

4.6

.says by controlling, agrees or disagrees, on some rates of freight.

4.7

On the question of agreement between several carriers, the oligopolistic situation, it intent is to control it rather that declaring it illegal,..

4.8

..says by approving or disapproving the tariff schedules.

4.9

On the question of loyalty agreement, it intent to compromise its effect with the fact that liner operational cost is so high due to large operational organisation such as agents and canvasers.

5.0 THE PROTECTIONIST POLICIES

5.1

This basically gives national fleet some special protection to ensure survival.

5.2

Two main categories are protection in the form of subsidies,..

5.3

..and second protection in the form of preferential treatment.

5.4 5.5

Protection by subsidies can be:.. ..by providing assistance in investment financing, say lower interest rate, interest subsidies, loan guarantess, extended grace period, or lower import duties for shipbuilding materials, etc..

5.6

..by providing tax allowances, says lower tax rate, accelerated depreciation, tax free revenues, tax credit, etc..

5.7

..by providing direct subsidies, says operating subsidies, construction subsidies, investment grants.

5.8

Protection by preferential treatment normally relates to cargo reservation for national fleets:

5.9

..through national legislation,..

5.10 ..through reducing custom duties for cargo imported by national vessel,.. 5.11 ..through lower port duties for national flags,.. 5.12 ..through priority berthing for national flags,.. 5.13 ..through tax incentives for exporters using national flags,.. 5.14 ..through restriction in currency exchange,.. 5.15 ..through conditions for extension of export/import licenses favourable to national flags.

6.0 OPEN REGISTRY POLICIES

6.1

It is basically an option adopted by a country to accept registration of foreign owned vessels under its flag.

6.2 6.3 6.4

The characteristics of open registry are:.. ..no requirement for national ownership,.. ..no requirement for headquarters to be in that country,..

6.5 6.6 6.7

..no requirement for national manning,.. ..no taxation; only registration fees base on tonnage. The advantages to shipowners under Open Registry Policies are:..

6.8

..lower operating cost especially on manning,..

6.9

..freedom of taxation,.. flexibility in operation, says

6.10 ..commercial partnership, etc.

6.11 Criticism on Open Registry are on safety standard, .. 6.12 ..inadequate national maritime legislation, not

making vessels as part of national territory thus legally binding to the country, 6.13 ..loose international legal jurisdiction/responsibility says on pollution claims involving more than one country.

7.0 SAFETY POLICIES

7.1

The world is basically concerns with the ever increasing rate of ship casualty.

7.2

It concern also with impact from ship casualty such as oil tankers of harzadeous cargo carriers.

7.3 7.4 7.5 7.6

Thus the need of government involvement,.. ..and global approach,.. ..in maintaining safe seas. This by observing rules and regulation concerning safety such as,..

7.7 ..SOLAS,..

7.8 ..MARPOL,.. 7.9 ..IMO,..

7.10 ..LOADLINE CONVENTION,.. 7.11 ..CONVENTION ON TANKER SAFETY, etc.

8.0 CLOSING

8.1

It is important to appreciate the many types of policies adopted by governments to safeguard the interest of their shipping fleets.

8.2

It is important to know some of the details of each of the policies.

8.3

It is important to know the linking between policies matters and commercial international shipping

operations.