PRESS BRIEF

MARITIME TRANSPORT

    On 28 June 1996, WTO member governments agreed to suspend market access negotiations for maritime transport services. The negotiations will resume in 2000 when a new comprehensive round covering all services is due to begin. At the time of the suspension, 42 governments (counting the European CommunitiesSee footnote 1 as one) were participating. Conditional offers for market access commitments had been submitted by 24 of these.

    Following the suspension, participants allowed themselves a month to modify or withdraw commitments they had made previously. Austria (by then an EC member) and the Dominican Republic withdrew their commitments. Despite the suspension, two countries turned their best offers into formal commitments _ Iceland and Norway.

    The decision to suspend the talks actually contains four parts: First, the suspension. Second, for the time being, the non-discrimination provision (known as most favoured nation treatment) of the General Agreement on Trade in Services (GATS) will not apply to maritime transport.See footnote 2 Third, when negotiations resume in 2000, they will continue where they left off instead of starting from scratch, so that the starting point will be the existing offers. Fourth, while the talks remain suspended, participants will not raise barriers or apply measures in the sector in order to improve their bargaining power (for example, withdrawing some forms of market access in order to put pressure on other participants) except in response to measures applied by other countries. Naturally, no one would object if countries voluntarily liberalised further during the suspension.

    Calculations of the value of maritime transportation are difficult to make because of statistical difficulties. But the UN Conference on Trade and Development (UNCTAD) estimates that freight accounts for more than 5% of the total value of imports around the world. The tonnage of world seaborne freight has been growing steadily over the past 10 years. In 1995, it grew by 3.7% to a new record volume of 4.65 billion tons, with about 4.8 billion tons expected in 1996, adding another 3%-3.5%.

History

    Maritime transport, financial services and basic telecommunications were the three services sectors whose market-opening negotiations continued after the Uruguay Round. Although 32 countries had made commitments on maritime transport in the round, members agreed that negotiations should continue because some major participants had made no or very limited commitments, among them the United States. The renewed maritime negotiations began immediately after the round concluded in April 1994. They were suspended two years later because the US said the 24 offers on the table were too few and the extent of market access proposed in those offers was insufficient to justify making a new offer of its own. Many other countries disagreed.

What is maritime transport?

    Maritime transport is difficult to negotiate for two reasons. It involves several different kinds of services, from shipping to port facilities. And each of these services is organised in complex ways. Some (including bulk shipping) are relatively competitive, others (such as much of liner shipping) are dominated by rate-setting conferences, bilateral arrangements or monopolies. Some are operated by state enterprises. Some are highly protected with strong domestic political lobbies and long-established labour union practices. Finding appropriate formulas for negotiated liberalisation in these circumstances is not easy.

    The negotiations have dealt with the so-called three pillars of the maritime transport sector:

    *    International shipping: transporting passengers or freight between ports in different countries.

    *    Auxiliary services such as cargo-handling, storage and warehousing, stevedoring, freight forwarding, customs clearance services, container-station and depot services. Negotiations deal also with foreign operators' rights to establish their own facilities and supply these services.

    *    Access to and use of port facilities, such as pilotage, towing and tug assistance, provisioning, garbage collection, port captain's services, and anchorage. Negotiations deal with rights of foreign ships to gain access to these services without discrimination.

    A fourth pillar, "multimodal transport" emerged later in the negotiations with a US proposal. Essentially a door-to-door service, this involves the use of one or more "modes" (ie: road, rail, air, or inland water transport) in addition to shipping by sea.

    The negotiations have not dealt with domestic coastal shipping known as cabotage (i.e. shipping between ports in the same country), a highly protected sector. Most countries reserve this kind of transportation for national-flag ships. Economists argue that the costs of cabotage protection are extremely high.

    Broadly speaking, there are two kinds of shipping: bulk (complete shiploads of commodities and more recently steel, paper and even cars, for example) and liner services (crates, containers, etc of freight, and passengers). Bulk shipping is considered to be more competitive. Liner shipping is traditionally dominated by rate-setting bodies known as conferences. Many countries exempt these conferences from anti-monopoly laws but how this is done varies from country to country.

    Seaborne shipping and its international liberalisation is further complicated by the use of flags of convenience such as those of Panama and Liberia. Flag of convenience laws mean ships can be owned by nationals of one country and be registered in another. Most ships in the major ship-owning nations sail under flags of convenience (71% of US ships, 56% of Greek ships, 69% of Japanese ships, 81% of Hong Kong ships, 73% of UK ships and 61% of German ships, according to UNCTAD figures for 1994.) Under GATS, it is the nationality of the owner that counts.

    An important additional factor is shipping technology. This is changing so rapidly that in some areas experts say negotiating liberalisation ought to be easier than during the Uruguay Round, even only two years after the round ended. One example of rapid change is in port handling of containerised cargoes. This has allowed movement away from public sector structures towards market-oriented approaches including deregulation, decentralisation, anti-monopoly laws, and privatisation.

Selected Glossary

Some of the terms that frequently appear in documents on maritime transport:

binding Commitment under GATT or GATS to keep market open, specifying maximum level of trade barriers (and for GATS, the extent of national treatment). Requires negotiation and possibly compensation if a trade barrier is to be raised beyond the bound ceiling.

cabotage Sea shipping between ports of the same country, usually along coasts.

conferences Cartels regulating international shipping.

GATS General Agreement on Trade in Services

MFN Most Favoured Nation: basic non-discrimination between trading partners.

modes of delivery In GATS, how international trade in services is supplied and consumed. Mode 1: Cross border supply. Mode 2: Consumption abroad. Mode 3: Foreign commercial presence. Mode 4: Movement of natural persons.

mode (transport) Method of transportation (e.g. road, rail, air, sea).

multi-modal Transportation using more than one mode. In the negotiations, essentially door-to-door services that include international shipping.

national treatment Non-discrimination between one's own nationals and foreigners.

NGMTS Negotiating Group on Maritime Transport Services.

pillars The three pillars of the negotiations are: international shipping, auxiliary services, and port facilities. A fourth pillar introduced later is multi-modal service.

offer A country's proposal for binding its market opening levels.

schedule Table of a country's market access (and for GATS national treatment) bindings.


Footnote: 1    The European Union is called the European Communities in WTO affairs.
Footnote: 2    Normally, countries have to declare publicly which sectors or sections of service trade they are exempting from non-discrimination (most-favoured nation treatment). The June 28 decision means that for maritime transport, no public announcements have to be made. Countries are assumed to be discriminating until the negotiations are completed.
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