Matters Related to the World Trade Organization (WTO)
SECTION III. SHIPPING RELATIONS AMONG OECD COUNTRIES
The Maritime Transport Committee (MTC) serves as a unique forum for the discussion of a broad range of economic and political maritime issues. Prime objectives to be pursued by the MTC are: to improve the convergence of shipping policies among Member and non-member countries, to foster further liberalisation, to strengthen the competitiveness of Member country fleets, and to provide political support for the promotion of maritime safety and the protection of the marine environment.
All 29 Members of the OECD are also members of the Maritime Transport Committee, and most participate regularly in its activities.
In 1999 Mr. Ryoichi Sonoda (Japan) continued as Chairman of the MTC. The Chairman, together with three Vice-Chairmen (France, Korea and Norway) constitute the Bureau of the Committee. This Bureau is supported by members of the extended Bureau, which comprises Australia, Germany, Greece, Japan, the United Kingdom and the United States, with the rotating seat currently being occupied by Denmark.
The Russian Federation participated in the work of the Maritime Transport Committee in its capacity as observer.
The Committee's principal activities in 1999 were:
Finalisation of three additional MTC Common Shipping Principles.
Adoption of an Understanding with DNMEs on International Maritime Transport Policies.
Draft report on, and proposals for, regulatory reform in the maritime sector.
Implementation of the Action Plan to Combat Substandard Shipping.
Technical work in preparation for the resumption of the WTO negotiations.
Strengthening its relationship with China.
Approval of a project proposal on cargo liability regimes.
Readers should note that, due to the varying availability of data, the Statistical Annex is published separately, and will be available towards the middle of 2000 at the following URL: " Statistics ".
The MTC has taken measures to update its 1998 annual report that govern the way in which the maritime industry operates. The Committee has agreed that three additional principles be added to the existing text. They concern: i) non-discriminatory treatment of access to and use of maritime auxiliary services; ii) non-discriminatory treatment of access to, use and provision of, multimodal transport services; and iii) measures related to safety, the environment and substandard shipping. These Principles will be transmitted to the OECD Council with a recommendation that they be formally adopted.
In the context of the Organisation's Review of Regulatory Reform , the MTC is examining the maritime sector, and has produced a discussion paper which will be finalised in 2000.
The report recognises that, despite a multitude of regulations and practices, the liner and bulk shipping sector appears to be less regulated than many other service sectors, in particular other transport sectors. However, it points out that there is still scope for improvements in the regulatory framework and potential reform areas are addressed. In particular, the discussion paper identifies some aspects of competition policy, as it affects maritime transport, that could be considered for potential reform.
The Committee will hold a joint Workshop with the OECD Committee for Law and Policy on 26 May 2000, with participation from industry, to discuss the findings of the report prior to its finalisation.
The MTC will start work on cargo liability regimes in 2000. The need for work on these regimes stems from an increasingly complex international scenario involving a variety of agreements. Concern has been expressed in respect of the proliferation of "home-grown" regimes to address specific problems with the existing regimes, including recently enacted legislation in Australia and the likelihood of the early introduction of legislation in the United States.
The objective of the Committee is to identify those elements of existing cargo liability regimes for which there is no general agreement, and to attempt to find workable formulations that will allow them to be broadly acceptable to all parties. Contact will be made with relevant industry parties, and due attention will be given to avoid duplication of work with other international organisations.
The Committee has in recent years placed particular emphasis on safety and the environment. In 1999 work was undertaken, in close consultation with relevant industry groups as well as Member governments, to implement an Action Plan which has the strong support of the International Maritime Organization . The Action Plan aims to reduce the incidence of substandard shipping by addressing action that could be undertaken by parties, apart from shipowners, within the shipping industry.
As part of this Plan and efforts to promote transparency of information, the Committee also established an interim homepage on substandard shipping . This site includes links to bodies (such as the International Association of Classification Societies and port state control authorities) that provide relevant, publicly available information related to substandard shipping.
Since 1991, the MTC has accorded high priority to enhancing its relationship with non-OECD members. The Committee believes it is important to share ideas on important maritime and trade issues, to encourage liberalisation of the maritime sector worldwide, and to keep abreast of current developments. In this context, with the assistance of the Japanese government, the Committee held two separate Workshops in 1999 with the DNMEs and China. These are described below.
At the end of the Kobe Workshop, particular importance was given to continuing the fruitful dialogue and to keeping each other up to date with shipping-related developments. In particular, participants identified the preparatory work for the possible resumption of negotiations at the WTO covering maritime transport services as an issue that would benefit greatly from an ongoing dialogue. An Electronic Discussion Group has been set up to facilitate the exchange of information. Other issues which were also on the agenda were:
The impact of the financial crisis on world trade and the demand for, and organisation of, shipping services.
WTO resumption of negotiations on maritime transport services.
Safety and environmental protection.
Supply, demand and training of seafarers.
China is universally recognised as having a growing importance in the maritime sector. The MTC's initial contact with China took place at a Workshop in November 1997 [see 1997 Annual Report ]. The second occasion to exchange views on important selected issues was at a Workshop on "Opportunities to Increase the Efficiency of Maritime Transport" that took place in Kobe on 28/29 October 1999. This Workshop brought together about 100 participants, including representation from BIAC and TUAC. Discussions were frank and lively and touched upon the following:
The role and future potential of maritime transport for economic development and expansion of international trade.
Shipper and shipowner perspectives regarding future developments in maritime transport.
Safety and protection of the environment.
Improving the efficiency of maritime transport.
The role of ports in improving maritime operations.
Participants felt that a great deal of benefit was to be gained through forums of this nature and that contact should be maintained to ensure a regular exchange of information.
The MTC is carrying out certain technical work in preparation for the possible resumption of negotiations on maritime transport services at the World Trade Organization (WTO) this year. In 1999, the Committee considered possible ways of including elements of multimodal transport into the Schedules for Maritime Transport Services and initiated contacts with industry to obtain their views on a range of matters related to the negotiations. The MTC will continue with its preparatory work in 2000, and will:
Elaborate a list of restrictive practices and evaluate, to the extent possible, their broad economic importance.
Assess the importance of multimodal transport in order to establish a case (for the benefit of trade negotiators) for why this should be considered an integral part of the negotiations on maritime transport services.
Enhance transparency by introducing a standing item on the MTC Agenda whereby each member advises other members, in general terms, of its activities in relation to the WTO negotiations.
Prepare a country-by-country profile of shipping policies, a list of restrictive practices and a list of items that might form part of offers and requests.
Note: This section reflects developments in the maritime sector as reported to the Committee by members of the MTC, and does not purport to be a comprehensive record of all the developments that took place in the maritime sector during 1999.
Trade Practices Act 1974: On 23 December 1999, the Australian Federal Government announced its decision to retain the arrangements for regulating shipping conferences through Part X of the Trade Practices Act 1974. The government has also decided to implement a number of amendments to Part X to improve the application of competition policy to international liner shipping and to further protect the interests of Australian shippers. Media Release
Shipping Reform: The Shipping Reform Group (SRG) (commissioned by the government in 1996) reported in 1997, recommending that a package of interrelated measures be introduced. While there was no formal government response to the report, a number of its recommendations relating to the introduction of labour reforms and the winding back of cabotage were implemented.
The administrative arrangements relating to the operation of the system of licences and permits governing access to Australia's coastal trade were streamlined considerably in the period since December 1997, culminating in the issuing of new guidelines in June 1998. The new arrangements allow shippers greater flexibility in transporting cargo than was previously the case and provide the opportunity for them to obtain significant savings in freight costs. The proportion of coastal cargo carried by foreign vessels increased from 2% in 1992-93 to about 10% in 1998-99.
The Minister for Transport and Regional Services subsequently established the Shipping Reform Working Group to examine a number of issues arising from the SRG report. Dr. Greg Feeney (First Assistant Secretary, Department of Transport and Regional Services) chaired the Working Group. The Working Group provided its report to the Minister with advice that it had been prepared as confidential advice to the government.
The government has had some initial consideration of the recommendations made by the Shipping Reform Working Group and will be considering further shipping reform issues.
Review of the Navigation Act: The second stage of the review commenced in 1999 and is expected to be completed by mid-2000. This stage of the review is to:
identify the objectives of the Act and any issues the Act seeks to address.
analyse the effects of regulation on the competitiveness of shipping.
Waterfront Issues: A major reform package for the Australian waterfront commenced in April 1998. The package incorporated seven benchmarks set by government for improved performance within the industry. Access to financial assistance was conditional on commitment to the benchmarks, which include:
An end to over-manning and restrictive work practices.
Higher productivity (25 lifts per hour as a national five-port average).
Better reliability from reduced industrial action and less-restrictive work practices.
Achieving injury and fatality levels comparable with other industry sectors.
Lower costs throughout the logistics chain of the waterfront gateway.
More effective use of technology to increase productivity.
The impact of the government's waterfront reform programme was reflected in the June 1999 quarter average crane rate which reached a record high of 20.3 containers per hour.
The Australian Competition and Consumer Commission (ACCC) released a report in October 1999 indicating that the stevedores have absorbed the levy of AUD 12 per container and AUD 6 per motor vehicle loaded and unloaded in Australia in accordance with their commitment to the Government. The report also noted that there has been no significant reduction in stevedoring charges since the reform program commenced, although the downward trend of recent years continued.
The Maritime Industry Finance Company (MIFCo), established by the government, has taken a direct role in assisting restructuring by facilitating stevedores' access to funding for redundancy-related payments, initially capped at AUD 250 million in April 1998. The redundancy related payments have now been concluded with MIFCo providing approximately AUD 176 million to 16 companies to fund approximately 1 400 redundancies. Both Patrick and P&O Ports (which handle 95% of container trade) have negotiated redundancies and achieved considerable improvements in labour productivity and efficiency through addressing over-manning and reforming work practices. It is anticipated that further benefits from these reforms will emerge in coming months.
Ministerial Review of Outstanding Pilotage Issues: Recent changes to the Pilotage Act stipulate that the Minister of Transport must review certain aspects of Canada's pilotage system. The impetus for this review stems from the 1995 National Marine Policy which recognised a need for further analysis of some of the more contentious issues within the current pilotage regime. Four distinct subject areas were covered in the review: the pilot certification process for masters and officers; training and licensing requirements for pilots; compulsory pilotage area designations; and measures taken in respect of financial self-sufficiency and cost reduction.
The Minister is currently reviewing the recommendations and preparing a response to the review report undertaken by the Canadian Transportation Agency. The Minister was to table a report on the results of the review in Parliament in mid-November 1999.
Reform of the Canada Shipping Act: Details of the reform were given in the 1998 annual report . A second and final Bill to replace the existing CASE was to be introduced before Parliament during the fall of 1999.
Marine Liability Act: Canadian legislation relating to the marine mode includes several regimes which govern the liability and, in some cases, insurance of domestic and foreign shipowners and shippers, and their responsibility for loss or damage to property, the environment, or loss of life or injury to others during maritime activity. These regimes are usually based on international conventions which aim to harmonise international law and practice in this field and, over the years, Canada has adopted the provisions of these conventions in several different statutes. The government is planning to consolidate these statutes into a single piece of legislation - the proposed Marine Liability Act - and implement, at the same time, the provisions of the 1974 Athens Convention on the Carriage of Passengers and their Luggage by Sea, including its 1990 Protocol, and a new regime on apportionment of liability. It was expected that the new Act would be introduced in the fall of 1999.
Shipping Conferences Exemption Act, 1987: Transport Canada began a review of its Shipping Conferences Exemption Act (SCEA) in January 1999 to determine if it might require any amendments. The SCEA exempts liner shipping conference agreements from certain provisions of Canada's Competition Act. The first part of the review involved collecting the views of the public and private sectors. Following on from the initial consultation, in July 1999, the Department of Transport issued a Consultation Paper containing policy options for stakeholders to comment on. Analysis of the two consultation exercises and proposed options is now being undertaken. Should the Government agree, a Bill containing pro-competitive amendments to the Act will be introduced before Parliament during the first half of 2000.
The Canadian Carriage of Goods by Water Act (COGWA), 1993: This Act was based on the 1924 Hague Rules that governed the liability of shipowners for cargo damage until 1993, when this Act was amended and implemented the 1968 Hague-Visby Rules. In addition, the 1993 COGWA adopted the more recent Hamburg Rules, which were agreed internationally in 1978 in the hope that they would replace both the Hague and the Hague-Visby Rules.
The COGWA applies to the international carriage of goods between Canada and other countries which adhere to the Hague-Visby Rules. It also applies with some flexibility to the domestic carriage of goods by water. Specific provisions have been incorporated which allow carriers and shippers to operate outside of the Act by mutual agreement to negotiate separate contracts for the domestic carriage of goods by water.
As part of a review process prescribed by the Act in 1993, Transport Canada recommended in a Consultation Paper distributed to the industry in September 1999, that Canada retain the Hague-Visby Rules in the current COGWA until the next review period, ending by January 1, 2005. It also recommended that Canada continue to make efforts, in consultation and in cooperation with like-minded countries, towards the development of practical options for a new international regime of liability for the carriage of goods by sea that would provide a viable alternative to the Hague-Visby Rules. Report submitted to Parliament in December 1999.
Presidency of the EU: Finland held the Presidency in the European Union during the second half of 1999. During this time, priority was given to the promotion of the efficient integration of various modes of transport. The aim was to make better use of the transport systems, to encourage environmentally friendly modes of transport, to achieve regional quality and to apply new technology in Community transport policy. In this connection work started on the opening up of rail transport and the Directives enabling the deregulation of railway policy were to be discussed at the end of last year.
Safety and Environmental Protection: On 6 October 1999, Transport Ministers approved a strategy for reducing environmental damage from transport, including the reduction of carbon dioxide emissions, and the reduction of noise. The draft report was to be submitted to the European Council in Helsinki in December 1999.
Short Sea Shipping: The Council Resolution on Short Sea Shipping was adopted in 1996. According to the second progress report issued in the summer, short sea shipping increased by 23% from 1990 through 1997. However, at the same time, road transport increased even more (by 26%). Thought is being given to improving the image of short sea shipping and seeking ways to provide fast, reliable and flexible services. In this respect the development of port facilities is also vital. On the basis of the report, a new Communication [COM(1999)317 Final] was adopted in June 1999.
Proposed Amendment of the Marine Transportation Law: The Japanese Government decided in March 1998 to review the current exemption system for international shipping agreements from the Anti-Monopoly Law and to propose the amendment of the Marine Transportation Law.
Maritime Transport Act: Reforms in Korea's shipping industry were completed in 1999 with the revision of the Maritime Transport Act and the elimination of the Shipping Industry Promotion Act. Through these measures, Korea has achieved almost complete liberalisation and deregulation in international shipping. Revision of the Maritime Transport Act and elimination of the Shipping Industry Promotion Act has resulted in the following changes:
Elimination of the Designated Cargo System: This system, which mandates national carriers to transport certain bulk cargo, has been de facto eliminated as of 31 December 1998. When the revised Maritime Transport Act came into effect on 16 July 1999, the system was also eliminated legally, in line with the commitment made by Korea at the time of becoming a Member of the OECD.
Liberalisation of the Oceangoing Shipping Business: As of 1 January 1999, limitations on foreign investment in Korea's oceangoing shipping business have been completely eliminated, enabling foreigners to invest freely in the business. In the past, foreign carriers establishing branch offices in Korea had to acquire permission from the competent shipping authority. However, from 16 July 1999, branch offices can be established through a simple filing procedure.
Revision of the Ship's Act: With the revision of the Ship's Act which came into effect on 15 April 1999, foreigners can register their vessels in Korea. Thus, a company established in Korea by a foreigner can register its vessel in the Korean registry, regardless of the nationality of the company representative or executives.
Deregulation of the Shipping Industry: From 16 July 1999, government regulation in the shipping industry has been greatly relaxed. Accordingly, various measures to promote the commercial autonomy of shipping companies have been put in place, including elimination of registration restrictions concerning oceangoing shipping business and vessel ownership ceilings, and elimination of the prohibition of industrial carriers (participation of large shippers in cargo transport business).
Elimination of the Tariff Filing System and Introduction of the Tariff Publication System: With the objective of reducing the administrative work load of the oceangoing liner carriers, and establishing a fair order in the tariff system, the Tariff Filing System was abolished and replaced by the Tariff Publication System. According to the Tariff Publication System, the oceangoing liner carrier publishes its tariff concerning a specified cargo item on a specified route on the designated Internet homepage. Shippers and other interested parties can freely access this information. The Tariff Publication System is expected to contribute greatly to establishing a fair order in the tariff system by preventing acts of dumping and enabling shippers better access to tariff information.
However, considering that carriers might be adversely affected if all their sales information is exposed, the government has minimised the scope of the publication. This means that carriers will not publish tariffs for all items on all service routes but only for the major items that represent specified routes. Also, carriers need not change their publication information when the tariff drops by less than 20%. Therefore, strictly speaking, the Tariff Publication System in Korea does not publish the tariff itself, but rather the trend or changes therein.
Accepting the recommendation made by Lord Alexander of Weedon, the UK Government intends to introduce a tonnage tax in 2000. A condition of entry will be that the company undertakes seafarer training. These measures will be introduced as part of the UK Government's policy to increase seafarer training and to provide an appropriate fiscal environment in which to increase the United Kingdom's attractiveness to shipping enterprises. Lord Alexander's report and other papers that address the future of the UK shipping industry .
The United Kingdom continues to play an active role in furthering the objectives of the international quality shipping campaign. At IMO, the United Kingdom has been active in the Flag State Implementation Sub-Committee, which is working to develop objective criteria against which the performance of flag states can be measured. It was one of the first administrations to complete and publish its Self-Assessment Form.
The United Kingdom is also taking part in Dutch-led discussions aimed at developing a "network of quality registers" committed to transparency about performance, sharing best practices, and peer review.
FMC Investigation: On 29 December 1999, the Federal Maritime Commission closed its fact-finding investigation and proceeding against ANERA for pricing and contracting practices, including the "opt out" provision in its service contracts. Full FMC orders .
Safety and Environmental Protection, OPA 90: The Coast Guard has decided that adding double sides or a double bottom to an existing single-hull tank vessel after 18 August 1990 will not extend the tank vessel's originally scheduled phase-out date as required by OPA 90.
Ballast Water Management: To comply with the National Invasive Species Act of 1996, the Coast Guard issued a rule on 17 May 1999 amending existing regulations for the Great Lakes; establishing voluntary ballast water management guidelines for all other waters of the United States; and establishing mandatory reporting for nearly all vessels entering waters of the United States. The Coast Guard is currently reviewing comments from interested parties. Further information about this docket. 1
Rodent Inspection Fee: As of 6 June 1999, the Centers for Disease Control and Prevention will assess fees for conducting rodent infestation inspections of ships and issuing Deratting and Deratting Exemption Certificates. The United States does not require these certificates for ships to enter its ports but conducts these inspections and issues the certificates in accordance with International Health Regulations. The cost will be USD 150 for each inspection conducted for the first full year.
Bilateral Consultations with Brazil: In February 1999, US and Brazilian officials discussed the discriminatory tax and duty preferences for ships in the REB register and the treatment of US vessels under the terms of a 1996 bilateral agreement which Brazil signed but did not ratify. Following the meeting, the Brazilian Government put an end to the preferences associated with the REB. In turn, the United States reapplied the exemption previously granted to Brazilian vessels from the payment of special tonnage taxes and light monies. On 20 October 1999, US Secretary of Transportation Rodney Slater and Brazilian Minister of Transports Eliseu Padilha signed a new maritime agreement. The three-year agreement grants equal access for the carriers of each country to the government cargoes of the other country, and provides for non-discriminatory treatment of each country's carriers with respect to maritime services and other matters such as shipping taxes.
Ban on Yugoslavian Shipping: As of 16 September 1999, ships registered in the Federal Republic of Yugoslavia (FRY) or owned or operated by the FRY Government or by commercial entities operating within the FRY may not call on US ports. These restrictions do not apply to vessels flying other flags and owned and operated by commercial entities within the borders of Montenegro. Earlier restrictions against other vessels with a Yugoslavian master, first mate or first engineer are no longer in effect.
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