Flag of convenience 402049 225924138 2008-07-16T01:13:22Z CarsracBot 6929011 robot Modifying: [[nl:Goedkope vlag]] {{POV-check|date=July 2008}} [[Image:Ship transom.JPG|thumb|The [[chemical tanker]] ''Sichem Princess Marie-Chantal'' had [[Panama City]] as its [[port of registry]] when this 2005 picture was taken but [[as of 2007]] it is registered in [[Valetta]] with Maltese flag. It was the property of [[Eitzen Chemical]] (Singapore) and has the [[International Transport Workers' Federation|ITF]] [[ITF Special Agreement|Special Agreement]] on board<ref name="Sichem">[http://www.eitzen-chemical.com/q88.php?vesselname=SICHEM+PRINCESS+MARIE-CHANTAL Eitzen page]</ref>.]] [[Image:Flags of convenience.png|thumb|Countries listed as having a flag of convenience by the ITF]] A flag of convenience (FOC) vessel or ship is one where the nationality of the owner is different from the country of registration. <ref> A comprehensive review of the ITF FOC Campaign, Oslo to Delhi </ref> The term has been used since the 1950s and comes from the flag ships fly to show their country of registration. The country of registration determines the laws under which the ship is required to operate and to be applied in relevant admiralty cases. ==Background== Today, more than half of the world’s merchant ships (measured by tonnage) are registered under the so-called flags of convenience, more commonly referred to as "open registries". Traditional reasons for choosing an open register include protection from burdensome income taxes, wage scales and regulations. A specific example of the type of advantage flying a flag of convenience offers is bypassing the 50% duty the United States government charges on repairs performed on American-flagged ships in foreign ports. Globalism has significantly influenced the mechanics of world trade. Likewise, it has also affected the owning and operating structures of merchant ships. Long gone are the days of the traditional family owned and operated shipping companies. Today’s ships are commonly owned by multinational corporations and operated by multinationals. This fact makes the traditional flag of convenience argument of a national owner seeking an international jurisdiction largely irrelevant as there are few national owners. Opponents argue that flags of convenience "do not enforce safety standards, minimum social standards or trade union rights for seafarers." While this may be true of some open registries, independent data and safety statistics demonstrate that open registries are most often safer and better at enforcing international maritime regulations than the so-called national registries. It is therefore difficult to substantiate generalized arguments against flags of convenience. ==History== The ‘Belen Quezada’ was the first foreign-owned vessel to register with the Panamanian registry in 1919. Several US ships followed suit in 1922. The registry slowly grew over the next 15 years, mostly due to transfers from European flags. In the late 1940s, several factors led American shipowners to become unhappy with the registry, and there became a demand for a new registry that could compete with Panama. The Liberian Registry was formed in 1948 with the help of American businessmen. Stavros Niarchos, a Greek shipowner, registered the first ship (the 'World Peace') with Liberia in 1949. More shipowners followed suit, and the registry slowly grew and provided the competition that shipowners were looking for. Currently the three largest ship registries are open registers, namely Panama, Liberia and the Bahamas. Of these, both Liberian and Bahamian are judged by international safety organizations as “white-listed” flags indicating above average safety performance. ==Opposition== The [[International Transport Workers' Federation]] (ITF) website says that “FOCs provide a means of avoiding labor regulation in the country of ownership, and become a vehicle for paying low wages and forcing long hours of work and unsafe working conditions. Since FOC ships have no real nationality, they are beyond the reach of any single national seafarers' trade union.” They also accuse such ships of having low safety standards and no construction requirements. However, many nations, categorized either as open or national registries, effectively implement and enforce the international treaties of the [[International Maritime Organization]], such as the [[International Convention for the Safety of Life at Sea]] (SOLAS), [[International Convention for the Prevention of Pollution from Ships]] (MARPOL), Standards of Training, Certification and Watchkeeping ([[STCW]]) and the [[International Ship and Port Facility Security Code]] (ISPS), all of which require minimum standards for vessels trading internationally. Further, several open registers including Liberia have ratified the [[International Labour Organization]]’s Consolidated Maritime Convention of 2006, which specifically protects the interest and rights of seafarers. National registries have yet to ratify this ground breaking international treaty. Other arguments against flags of convenience include evasion of taxes and lack of patriotism. ==Support== Supporters of flags of convenience argue that where a vessel is engaged in [[international trade]] it should be free to register in the jurisdiction which best suits its commercial model. Proponents argue that the choice of flags allows companies to take advantage of another country's infrastructure and the efficiencies of effective and non-bureaucratic maritime administrations typically offered by the prominent open registers. An open registry allows a Norwegian owner access to US public finance, Japanese shipbuilding expertise with Scottish and Hong Kong shipmanagers, while employing cost effective, yet well-trained crew from the Philippines, India or China. Before the open registry system, national flags required national ownership, national construction and national crew – with zero possibility to gain from the combination of best practices. Tax-efficient flags of convenience enable both lower costs of registration and the maintenance of proper technical, safety and environmental standards, which are influenced not just by the flag that the vessel flies but also by its classification society, insurers, managers and the port state authorities of the countries where it calls to trade. These efficiencies in turn reduce overall transportation costs and facilitate world trade and consumer savings. See http://www.marisec.org/flag-performance/FlagStatePerformanceTable07.pdf, a table from a brochure published in 2006 by The Round Table of international shipping associations entitled ‘Shipping Industry Guidelines on Flag State Performance’. The entire brochure, which gives a comprehensive guide of qualities to look for in a registry, can be found at http://www.marisec.org/flag-performance/. After viewing the table from the International Shipping Federation it is plain to see that there are some very high quality open registers operating today. ==Summary== Ship registries should be judged on their responsiveness, their proactivity, their quality of service, their treatment of seafarers, their ratification and implementation of modern regulatory conventions and their safety records. Port state control safety and casualty records independently judge the quality of a flag administration. Underperforming registries may be mired in politics and bureaucracy, whether open or not. They can discourage new investment and cultivate a culture of blame. Such registries should be identified by their performance, and not by the politics of their livery. Quality ship registers have effective compliance regimes, and policies that encourage investment. They focus on improvement, rather than on blame. And they work with shipowners to identify root causes of accidents, and to improve performance and prevent casualties. Again, their provenance alone is not determinative or indicative of their quality. ==See also== {{nautical portal}} *[[Flag State]] and [[Port State]] *[[List of merchant marine capacity by country]] *[[United States Merchant Marine]] *[[Canadian Merchant Navy]] ==Notes== {{Reflist|2}} ==References== *{{cite web |url=http://www.marisec.org/flag-performance/flag-performance.pdf |title=Shipping Industry Guidelines on Flag State Performance |accessdate=2008-06-25 |author= |authorlink=International Chamber of Shipping/International Shipping Federation |coauthors=BIMCO, Intercargo, International Chamber of Shipping/International Shipping Federation, Intertanko |date= |year=2006 |month= |format= |work= |publisher=Maritime International Secretariat Services Limited |pages=15 |language=English |archiveurl= |archivedate= |quote= }} *Carlisle, Rodney (1981), Sovereignty for Sale ISBN 0-87021-668-6 *{{cite journal | quotes = | author=The Economist | authorlink = The Economist | coauthors = | date= May 27, 2000 | year = | month = | title = Bolivia Waves the Flag | journal = The Economist | volume = | issue = | pages = | issn = | doi = | id = | url = http://www.globalpolicy.org/nations/flags.htm | language = | format = | accessdate = | laysummary = | laysource = | laydate = | quote = }} *{{cite web |url=http://www.itfglobal.org/flags-convenience/sub-page.cfm |title=What are Flags of Convenience? |accessdate=2007-05-04 |author=International Transport Workers' Federation |authorlink=International Transport Workers' Federation |coauthors= |date= |year= |month= |format= |work= |publisher= |pages= |language= |archiveurl= |archivedate= |quote= }} *{{cite web |url=http://www.itfglobal.org/flags-convenience/flags-convenien-183.cfm |title=FOC Countries |accessdate=2007-05-04 |author=International Transport Workers' Federation |authorlink=International Transport Workers' Federation |coauthors= |date= |year= |month= |format= |work= |publisher= |pages= |language= |archiveurl= |archivedate= |quote= }} *{{cite web |url=http://www.admiraltylawguide.com/conven/registration1986.html |author=United Nations |authorlink=United Nations |title=United Nations Convention on Conditions for Registration of Ships |date=1986-02-07 |accessdate=2007-05-05 |format= |work= }} *{{cite journal | quotes = | last = Toweh | first = Alphonso | authorlink = | coauthors = | date = [[March 3]], [[2008]] | year = 2008 | month = March | title = Shipping’s flag of convenience pays off for Liberia | journal = Business Day | volume = | issue = | pages = | publisher = BDFM Publishers (Pty) Ltd. | location = Rosebank, South Africa | issn = | doi = | bibcode = | oclc = | id = | url = http://www.businessday.co.za/articles/world.aspx?ID=BD4A718723 | language = | format = | accessdate = 2008-03-13 | laysummary = | laysource = | laydate = | quote = }} ==External links== {{commons}} *[http://www.imo.org/ International Maritime Organization website] *[http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---normes/documents/publication/wcms_088042.pdf FAQ regarding the Consolidated Maritime Convention of 2006] *[http://homeport.uscg.mil/cgi-bin/st/portal/uscg_docs/MyCG/Editorial/20070802/annualrpt06.pdf?id=8b77f3c4d1158e55baaed16d12ca742f131b96ed US Coast Guard 2006 Annual Report including flag state statistics] *[http://www.parismou.org/upload/pdf/BGW2006%20and%20RO%20performance%20list%202006.pdf Paris MOU Black-Grey-White list 2006] *[http://www.tokyo-mou.org/ANN07.pdf Tokyo MOU 2007 Annual Report including Black-Grey-White list] *[http://www.liscr.com Liberian Registry website] *[http://www.globalpolicy.org/nations/launder/general/2002/1124house.htm Report on Prestige disaster] *[http://www.greenpeace.org/international/news/prestige-one-year-on Flag of Convenience Cyprus: Prestige Oil Spill] *[http://query.nytimes.com/gst/fullpage.html?res=9F00E5D61739F93AA35752C1A964948260 Honduras Cuts Ship Registry] *[http://www.globalsecurity.org/military/world/liberia/registry.htm History of Liberian Ship Registry] *[http://www.globalpolicy.org/nations/flags/2004/0702landlocked.htm Landlocked Mongolia's Seafaring Tradition] *[http://www.maritimeadvocate.com/i22_neth.php A kind of it’s own] Ship Registration in the Netherlands Antilles *[http://www.panaconsul.com/pages/shipping_advantages.htm Advantages of the Panamanian Registry] *[http://www.imo.org/Safety/mainframe.asp?topic_id=68&doc_id=513 International Maritime Organization's White List] *[http://www.globalpolicy.org/nations/flags/2007/0419dirtyflags.htm Flags That Hide the Dirty Truth] *[http://www.straightdope.com/mailbag/mlawofsea.html Straight Dope on Flag States] [[Category:Offshoring]] [[Category:International taxation]] [[Category:International trade]] [[Category:Offshore finance]] [[Category:Business terms]] [[Category:International economics]] [[Category:Law of the sea]] [[de:Ausflaggung]] [[et:Mugavuslipp]] [[el:Σημαία ευκαιρίας]] [[fr:Pavillon de complaisance]] [[it:Bandiera di comodo]] [[nl:Goedkope vlag]] [[ja:便宜置籍船]] [[no:Bekvemmelighetsflagg]] [[pl:Tania bandera]] [[pt:Bandeiras de conveniência]] [[simple:Flag of convenience]] [[sv:Bekvämlighetsflagg]]