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Open Vs Closed Registry
The market has always been the determining factor with
respect to which flag a ship fly. All decisions are taken in order to achieve
the common goal of minimising costs and maximising revenue. Therefore, it is not
possible for a shipowner to choose a flag without considering the fiscal
advantages. It is believed that taking part in competition in the market has
great importance for a shipowner when considering open registry or “Flag of
Convenience” (FOC).
The
following 27 countries have been declared FOCs by the ITF's Fair Practices
Committee (a joint committee of ITF seafarers' and dockers' unions) which runs
the ITF campaign against FOCs: Antigua and Barbuda, Aruba (Netherlands),
Bahamas, Barbados, Belize, Bermuda (UK), Burma, Cambodia, Canary Islands
(Spain), Cayman Islands (UK), Cook Islands (New Zealand), Cyprus, German
International Ship Register (GIS), Gibraltar (UK), Honduras, Lebanon, Liberia,
Luxembourg, Malta, Marshall Islands (USA), Mauritius, Netherlands Antilles,
Panama, St. Vincent, Sri Lanka, Tuvalu, Vanuatu.
The history of flags of convenience dates back to the
Roman Empire, but it was not until after World War II that the desire and the
need to be competitive in the world shipping markets gave rise to the
spectacular growth in the use of such flags.
The growth in open registry almost doubled over the past
years and today accounts for more than 54% of world shipping. This growth has
been to the dislike of countries with "closed registry" who have been unwilling
to change.
After the transfer of American ships to the Panamanian and
Honduras flags organised labour opposition to flags of convenience began in the
1930s. In 1957 it also became clear to the business leaders of the advanced
maritime states that if no steps were taken to control the situation, the flags
of convenience institution would cause serious problems. In 1948 the ITF adopted
a resolution in which it threatened to boycott ships transferred to the
Panamanian flag. In 1958 the ITF Congress decided to start a worldwide boycott
of open registry ships. The aim of the campaign was to drive the ships back to
their national flags. Shipowners who operate their vessels under the flags of
convenience are supposed to employ their crews under the ITF Collective
Agreement.
More than 50 years the ITF has co-ordinated an
international campaign. It, has forced some owners to sign collective agreements
but has not managed to drive the ships back to their national flags. Ships still
have multinational crew, owned by a multinational company, registered in one
country, mortgaged in another and managed from a third country. So it is
possible to say that we have a globalised shipping sector.
On the basis of the history of flags of convenience and
present practice, everybody involved in shipping practice knows that the flags
of convenience system will continue to exist. It is time for the opponents of
this system to find a different solution rather than trying to get rid of the
system. Today some of these nations with closed registries find that change is essential or else they will have only coastal ships to regulate their registries. You do not have to pay high fee to some
lawyer or notary public to compose you a valid and
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