Memorandum by the Chamber of Shipping
(EU 20)
EUROPEAN UNION COMPETENCE AND TRANSPORT
BACKGROUND
Shipping is both by its nature and development
a truly global industry. Maritime trade accounts for the vast
majority of all transport movements, with over 90% of all trade
travelling by sea at some stage. It is the key driver in the engine
of world trade, providing the means to deliver goods at low cost
throughout a rapidly changing and expanding global market place.
International shipping is versatile, efficient and largely free
from barriers to trade and the maritime sector in the UK, in particular,
is completely liberalised.
There is an unique and historic concentration
of shipping and associated business activity in the UK. This activity
has grown in recent years, following a decline in the previous
three decades, with the introduction in 2000 of the UK Tonnage
Tax. This, combined with other elements, has led to a more than
100% increase in the fleet owned and operated by companies established
in the UK and a 250% increase in the UK-registered fleet.
It is important to note also the importance
of the UK as a base for shipping activity. The earnings of British
shipping also include a substantial international contribution
which comes from carryings by UK-based companies engaged in maritime
cross trading—ie tonnage employed overseas, trading between
countries outside the UK and EU.
The UK's approach on shipping has therefore
long been based on an open-trading philosophy. While it shares
this with many other European countries (particularly in Northern
Europe), it is quite different in character from the approach
of some of its other EU partners. Not surprisingly, the EU institutions
have had to try to reconcile the two. While they have taken account
of the economic contribution of international shipping and the
importance of EU-based shipping companies being able to operated
on a level playing field with their competitors, there has been
a tendency for them also to politicise the issue by focussing
instead on interventionist activity which is of questionable value
or practicality.
The global shipping industry has an established
legal regime. The international community—through the United
Nations—empowered the International Maritime Organisation
as summarised by Article1(a) of the IMO Convention (1958) "to
provide machinery for the cooperation among Governments in the
field of governmental regulation and practices relating to technical
matters of all kinds affecting shipping engaged in international
trade; to encourage and facilitate the general adoption of the
highest practicable standards in matters concerning maritime safety,
efficiency of navigation and prevention and control of marine
pollution". The supremacy of the IMO in regulating shipping
is clear and is unquestioned by its 163 contracting governments.
Shipping is also subject to international regulation
by other similar bodies within or related to the United Nations
family. The most evident of these is the International Labour
Organisation, which has adopted over 60 specifically maritime
instruments dealing with labour matters.
EUROPEAN MARITIME
POLICY
Maritime regulation has therefore long been
essentially international in character but the more recent difficulty
in the European context has been to find a proper and appropriate
function for advancing the maritime elements of the Common Transport
Policy of the European Union. The EU has implemented this policy
and sought to promote the regional maritime interests of the community
in a wide range of important areas affecting shipping, including
trade harmonisation, competition policy, state aids, maritime
safety, environmental protection, port and maritime infrastructure,
and the promotion of short sea and inland waterway transport modes.
Most recently, this policy evolved from the
1993 communication "A Common Policy on Safe Seas" which
outlined a framework based on four pillars:
— securing the convergent implementation
of international safety standards in European waters;
— strengthening the role of port states
in inspecting ships of all flags;
— fostering an adequate and technologically
advanced maritime safety structure; and
— supporting international organisations
in their primary role in international standard-setting.
This was in turn endorsed and built on in the
so-called Kinnock strategy paper entitled "Towards a maritime
strategy", adopted in 1996, and resulted in a programme of
10 different proposals of which the main directives aimed to ensure
the implementation of international safety rules, social conditions
for crews and better protection of the European coast. In reality
much of the legal output of the EU has been implementing legislation
for IMO requirements.
The Chamber supported the general approach of
the European Commission at that time. However, while we continue
to do so, we have seen over recent years a greater tendency to
shift and reinforce the EU's role to one of increasingly seeking
to be "the driving force for global international rule-making".
It is in the detail of many directives that the Commission seeks
to advance this. A careful study of successive directives shows
a trend not only to reflect IMO rules but also to add rules that
are tighter or more advanced than those set internationally.
The Commission also outlined and developed a
bolder policy approach in its White Paper in 2001 stating "plans
to reinforce the position of the community in international organisations,
in particular the International Maritime Organisation". In
a moment of self analysis the report acknowledged: "it is
paradoxical that the EU which is the world's leading commercial
power carries so little weight in the adoption of the international
rules which govern much of transport . . . This situation needs
to be remedied without delay by having the Community accede to
the intergovernmental organisations."
Arguably, it is largely the ambition of the
Commission to influence the supra-national bodies and go further
and quicker that lies behind recent difficulties.
This aspiration has led to a proposal, currently
before the Council of Ministers, that the EU as a body should
formally become a member of IMO. But this in turn raises several
serious questions which straddle the line between increasing the
EU's influence and weakening it. There is the obvious question
as to whether individual member states will be willing to give
up their competence in IMO and to rely on the Commission or Council
representatives as their sole interlocutors. But beyond that lie
questions of the weight carried by one large institution (even
if representing 25 countries) compared with that of 25 governments
speaking in concert. This is an issue that could run and run,
but it is with us now. There are precedents, particularly for
example in trade policy generally and in the WTO, but are they
desirable here? And will the growing role of the European Maritime
Safety Agency have an impact on this debate as it develops?
EU MEASURES EXCEEDING
INTERNATIONAL REQUIREMENTS
The IMO conventions (on Load Lines, Marine Pollution,
Safety of Life at Sea (including the International Ship Management
Code), and Standards of Training, Certification and Watchkeeping)
lay down a complete framework of rules which competent authorities
such as the Department for Transport and the Maritime & Coastguard
Agency can implement into UK law. It is widely known that some
countries do not apply IMO rules as consistently as the UK and
other quality administrations. This does not mean that there is
a need for more regulation globally or regionally. Instead it
illustrates the need for better enforcement of existing regulations.
The Chamber strongly supports the use of existing institutions
and devices such as port state control inspections, and where
appropriate help to flag states, as the appropriate instruments
to ensure that errant ship operators and poorer quality flag states
raise their standards. In addition there are other international
conventions and standards organisations in other fields, all of
which—taken together—provide a practical framework
to underpin the carriage of international trade.
While the Chamber accepts that specific regional
action may be required in a limited number of defined cases, in
general, unilateral action outside IMO—whether at regional
or national level—can only encourage dual standards, cause
confusion, and hinder trade. Regrettably, there has to date been
a trend for the EU not only to copy IMO rules into directives
and regulations but also to set rules which are tighter or more
extensive than those set internationally.
In the Chamber's view, the accumulation over
time of unnecessary gold-plating of international requirements
can only be counterproductive to the objectives of liberalising
world trade, raising standards world-wide, and enhancing European
competitiveness.
A number of practical examples are set out in
the Annex.
MEASURES GOING
BEYOND EU COMPETENCE
Even more damaging to international law-making
and good order in the global trading environment are attempts
by the Commission to extend EU law into new areas beyond accepted
boundaries of EU competence. The Select Committee has specifically
identified the draft directive and draft framework decision on
the enforcement of the law against ship source pollution as a
subject for inquiry.
The directive was proposed by the Commission
in March 2003. The principles contained in it were the result
of high-level political reaction in the aftermath of the Prestige
incident in November 2002. The purpose of the directive is
to incorporate applicable international rules on ship-source pollution
into Community law and to provide detailed enforcement provisions.
There is no dispute about punishing illegal
discharges. However, the international nature of shipping demands
internationally agreed provisions.
The mechanism already exists through the IMO,
which has well-developed pollution prevention provisions. The
International Convention for the Prevention of Pollution from
Ships 1973 and its Protocol of 1978 (MARPOL 73/78) is the primary
instrument for prevention of pollution of the marine environment
by ships. It has been accepted by some 127 states representing
97% of world tonnage. It has been ratified by all EU member and
accession states and is incorporated into UK domestic law through
the Merchant Shipping Acts.
MARPOL sets out provisions for strictly controlled
operational discharges and the situation in the event of accidental
discharges. Violations of MARPOL may be an offence. Accidental
discharges do not normally give rise to the commission of an offence.
Where an offence has been committed, Article 230 of the United
Nations Convention on the Law of the Sea (UNCLOS) provides that
monetary penalties are the appropriate sanction for foreign vessels
other than in the case of a "wilful and serious act of pollution
in the territorial sea".
The Commission's proposals would duplicate the
principles of MARPOL but are less than a mirror image. For example,
they broaden the definition of "illegal discharges"
to include accidental spills of oil and other noxious liquid substances
and although this has been rejected by the European Parliament,
however they did add "confiscation of the ship" as a
sanction. There are also difficulties with terminology, such as
a "gross negligence" test which is inconsistent with
the common law approach.
The Commission does not have competence in relation
to criminal matters so a directive cannot specify detailed "sanctions".
For this reason, an accompanying Council framework decision is
being developed, which will set out detailed rules and criminal
provisions for implementation by individual member states to apply
in response to illegal discharges, as laid down in the Directive.
However, and contrary to the principles in UNCLOS,
the proposed penalties in the framework decision include imprisonment
where "death or serious injury" is caused (although
it is questionable whether, in such circumstances, states' domestic
health and safety legislation would be a more appropriate means
of action), or where the offence results in "substantial
damage" to water quality. Other penalties, to be set on a
monetary basis, would relate fines to a percentage of turnover
and it remains to be seen whether confiscation will be added.
In any event such sanctions represent a disproportionate response.
Implementation of the directive and framework
decision will create uncertainty as between MARPOL/UNCLOS and
EU provisions and lead to potential conflicts in states' treaty
law obligations. At the same time, unilateral action by the EU
is likely to encourage similar action by individual states (as
with recent legislation in France) or regional groupings in other
parts of the world which can only erode the uniformity created
by agreement at IMO. The value of the internationally agreed provisions
will thus be undermined.
Adequate provisions already exist under MARPOL
for regulating and punishing illegal discharges. New regulations
are therefore unnecessary and, as demonstrated, are inappropriate
and potentially divisive.
CONCLUSION
Generally, the Chamber of Shipping has a concern
that the Commission has a policy approach which has tended recently
to be driven by political opportunism, to be sometimes interventionist
in style, and often to add to the burdens on shipping business,
which is already heavily regulated.
The EU appears to be seeking a role which actively
drives or contributes to the continuing improvement of international
standards. While this is an admirable and potentially valuable
objective, the EU must strike a balance which does not undermine
the well-established and respected legislative machinery which
has evolved for the development and enforcement of standards on
a world-wide basis. There can only be one principal international
regulator setting standards for shipping, namely the UN through
its agency the IMO, supported by other similar organisations in
specific legal and operational areas (eg the ILO in social policy).
The main role of the EU should focus on ensuring full adherence
by member states to generally accepted international requirements
and framing the regional implementing legislation for them, where
that is required.
It is important that the EU should join with
the wider international effort to establish and enforce a range
of effective minimum international standards in shipping—through
strong flag and port state commitment. To the extent that it is
seen by others as promoting the use of regional or unilateral
solutions, in conflict with or going beyond what is agreed internationally,
that runs the risk of damaging—rather than helping achieve—the
common objective.
May 2004
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