, September 23, 2000
I would like to defend my article concerning the political economy of Flag of Covenience ships (FOCs) against recent criticism from R. J. F. Hudson (NW, August 26).
The fact that many shipping companies using FOC run vessels at “world’s best practice” (if there is such a standard) does not mean that problems within the industry should be ignored. Data concerning the adverse impact of FOCs upon national economies and seafarer working conditions is in the possession of the International Transport Workers Federation (London) MUA, NUMAST, RMIT, the Sea and Land Based Workers Alliance (Philippines) the All Japan’s Seaman’s Union, ILWU, ILO, UNCTAD, Christian Missions to Seafarers, the European Commission and UK Department of Transport among many others. Mr Hudson might like to know that some horrendous cases of exploitation occur aboard many well-built and salubrious passenger liners.
The concerns of the FOC system were also expressed to me by British, French and Norwegian seafarers during my sea-time. Perhaps Mr Hudson might explain the actions of a large number of people I know personally who went ashore in order to pursue other careers.
I suggest Mr Hudson also explain the initial reasons for the creation of the International Commission on Shipping (ICONS) if problems caused by FOCs and substandard shipping is not an issue. Mr Hudson may also explain why the Canadian Merchant Service Guild, Vancouver Port Authority, Alaska Department of Environment Conservation NTSB (US), Governor Engler — State of Michigan, Port Authority of NY and new Jersey, Chamber of Shipping of America, the OECD, IACS, the European Commission, NUMAST, MUA, ITF, Captain A. Roach BIMCO, Maritime Unions of Singapore, Association of Australian Ports and Marine Authorities, Australian Shipowners Association, Mission Seafarers, Singapore Strandard Seafarers’ Fund, SLBWA (Philippines), Maritime and Port Authority Singapore, among others, saw it necessary to write submissions to ICONS globally orientated investigation into merchant shipping.
The notion that there is nothing wrong with tax havens appeared to represent another aspect of political economy of which Mr Hudson displayed superficial knowledge. The universality of individual and commercial taxation payments is a necessary fact of life if we are going to continue to live in a society — not an economy. Rousseau’s 18th Century text, The Social Contract, highlights this arguments clearly. Over 60 per cent of global wealth is now held or moved through offshore facilities. The proliferation of tax haven use contributed to the Latin American debt crisis during 1982 and also to the increase in socio-economic polarity in OECD states since the first oil crisis in the 1970s.
Some companies not only minimise tax — they pay no tax under the FOC system. Companies also enjoy confidentiality agreements meaning that ownership of a vessel can be almost impossible to trace — which may be all very well until tankers like the Sea Empress and the Erika run aground. The collective, long-term use of FOCs is problematic as relative, competitive advantages gained by companies have diminished as more and more companies used this offshore network. Reports concerning vessels detention statistics under the Paris Memorandum of Port State Control and the Australian Port State Control system indicate a significant problem — to state otherwise would be to ignore yet another issue.
Obviously owners of rust buckets should shoulder blame. Classification societies, ship brokers, cargo owners and charters all play a part in the equation of applying ad hoc maritime legislation. However, which institution allows substandard ships to be enlisted on their registers? Flag States.
As for defence, some crews that had served aboard merchant ships during the Falklands War were replaced after the conflict when owners re-registered offshore. What thanks is that?
Russell D. Brennan,