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Vol.1974/0181

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UOMMISSION OFTHE EU2.0.FSAN COMMXJM3ISS
COM (74)1112 final .
Brussels ,15July 1974
Proposai fer a
Decision ofthe Council
concerning common action "bytheMember States
inrespect oftheUnited Fations Conventions
onaCode ofConduct for Liner Conferences .
V.submitted totheCouncil bytheCommission )
COM (74)1112 final .

-1-
Proposai for aDécision ofthe Council
concerning common action "bytheMember
States inrespect oftheUnited Nations Conventions
onaCode ofConduct for Liner Conferences
MPLMATORY m.ïOR /JTO TJM
BACKGROUND :
For some time aconsensus ofopinion has "been growing mfavour of
general rules forcertain aspects ofliner conferences .This consensus of
opinion received apowerful stimulus from UNCTAD 1swork inthefield of
seatransport and itdeveloped infavour ofmandatory rules aimed at
institutionalizing cargo reservation infavour oftheexporting andimporting
countries served byaliner conference .
UNCTAD 'swork ,theaimofwhich wastheestablishment ofa"code of
conduct "forliner conferences ,resulted intheconvening ofaconference
ofplenipotentiaries whometinGeneva from 12November to15December 1973
andfrom 11March to7April 1974 *On7April 1974 this Conference adopted
itsPinal Act towhich a"Convention onaCode ofConduct for Liner
Conferences "and two resolutions were annexed .
When thefinal vote wastaken ,theopinions oftheMember States
differed (infavour oftheCode :Germany ,Belgium France ;abstentions :Italy ,
Netherlands ;against :Denmark ,United Kingdom ;absent from theConference :
Ireland ,Luxembourg ).Allthedeveloping countries andthesocialist
countries were infavour oftheCode ,aswere anumber ofmarket economy
countries (Australia ,Japan ,Spain ,Turkey ).Other industrialized countries
(Canada ,NewZealand ,Greece )abstained andsome voted against theCode
(United States ,Norway ,Sweden ,Finland ,Switzerland ).
TheConvention will remain open forsignature asfrom 1July 1974

until anaincluding 30June 1975s an(ishall thereafter remain open for
accession ."States maybecome contracting parties by:
«• signature subject toratification ,acceptance orapproval ;
– signature without reservation astoratification ,acceptance or
approval ,or
– accession .
Theentry into force ofthis Convention shall remain subject tothe
accession ofatleast 2dcountries having atleast 25%oftheworld 's
general cargo tonnage .
SUMMARY OPTHE PRINCIPAL PROVISIONS OFTHE CODE OFCONDUCT FOR LINER CONFERTWCES
TheCode contains seven chapters andanAnnex jtworesolutions arealso
annexed toit.Theseven chapters deal with thefollowing topics :definitions ,
relations among member lines ,relations with shippers ,freight rates ,"other
matters ",provisions andmachinery forsettlement ofdisputes ,final clauses .
TheAnnex contains model rules £>rinternational mandatory conciliation .The
two resolutions annexed tothe Code concern non-conference lines and the
question oflocal conciliation .
Generally speaking ,theCode ofConduct canbeconsidered asrepresenting
asignificant departure from theformer situation ,particularly a3regards
theprovisions forcargo sharing which provide that thegroup ofnational
shipping lines ofeach oftwocountries ,atoneendortheother ofits
traffic which iscarried bytheconference ,shall have equal rights to
participate inthefreight andvolume oftraffic generated bytheir mutual
foreign trade andcarried bytheconference ,andthat third country shipping
lines shall have theright toacquire asignificant part ,such as20$ ,inthe
freight andvolume oftraffic generated bythat trade .Such provisions
institutionalize thedistribution ofshares oftrade inthefollowing
proportions :40$fortheshipping lines oftheexporting country ,A-Ofo -or
those oftheimporting country and20foforthose ofthird countries .Other
provisions concern theconditions formembership ofaconference andlay
down fairly strict rules asregards theaccession ofthird-country shipping

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lines# Itmust beadded that thevarious provisions referred toabove
leave noopening foranyinterpretation whereby theCommunity could he
considered asingle entity andnotasnine independent markets andnational
merchant navios #
The Code ofConduct also contains large sections onrelations between
shipping lines within aconference and ,more generally ,between shipowners
and shippers#
Asfarasfreight rates areconcerned ,the Code stipulates that 150
days 'notice must begiven before anygeneral increase naybenade •
The Code also contains quite complex rules aimed atintroducing a
system ofinternational mandatory conciliation# More detailed comments on
thevarious chapters ,especially ontheprovisions which are ofparticular
interest totheCommon Market ,areannexed tothis draft Decision#
PARTICULAR INTEREST TOTHE CdaMCM "MARKET
This Convention concerns various matters relating tomaritime transport
policy# Inaddition ,itsconclusions cangive rise toproblems concerning
compatibility with obligations arising from theTreaty ,particularly as
regards theprohibition ofdiscrimination ,competition rules andcommercial
policy# .
Itwould therefore beinadvisable for the Member States toconclude
this Convention before theproblems ofcompatibility aswell asthereper­
cussion ofthis Convention onpossible Community action inthis field
have been cleared up#TheCommission therefore reserves theright totake
anyaction inthis connection which itconsiders necessary inorder tosee
that theTreaty arerespected .
However ,regardless ofthese problems ofincompatibility ,itshould be
emphasised that thearea governed bytheConvention onaCode ofConduct
forLiner Conferences isofprime importance tothe Common Market :
-most ofitsexperts andasubstantial part ofitsimports are
transported byliners belonging toliner conferences ;

– approximately one-quarter ofthetrade within theCommunity is .carried
out "bysea ,andpart ofthis isgoverned byagreements such asthose
concluded within theframework ofconferences ; ■
– theshipping lines oftheMember States have approximately one-quarter
oftheworld general cargo tonnage and .make asubstantial contribution
totheemployment andbalance ofpayments situations within the
Community .
Onaccount oftheprovisions which itcontains ,theConvention ona
Code ofConduct for Liner Conferences isliable : '
– toinfluence thecost andquality ofliner services between the
Community andtheother parts oftheworld ;
– tointerfere with thedevelopment oftrade within theCommunity .
TheCommission draws particular attention tothefact that itconsiders
that thepresent provisions oftheCode ofConduct donotpayequal ragard
totheinterests ofshipowners andofshippers andarelikely todamage
certain fundamental interests oftheCommunity .
Finally ,theCommission isaware oftheserious risks connected with
thedifferences ofopinion ofthevarious Member States which were observed
ttfhen avote wastaken onthedraft Convention andwhich could jeopardize
thegeneral organization ofseatraffic onboth aworldwide scale anda
Community scale .
COMMON ACTION .
Forthereasons andwith thereservations given above ,itisimperative
that theMember States should adopt acommon position onthequestion ofthe
possible conclusion oftheConvention onaCode ofConduct forLiner
Conferences ,andthat ,while awaiting theimplementation ofsuch common
action ,they should abstain from signing ,ratifying orthepossibility of
acceding tothat Convention .

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Proposal foraDecision ofthe Council concerning connon action "bythe
Member States inrespect oftheUnited ITati or.s Convention on v.
Conduct for Liner Conferences
THIS COULTCIL OPTHE EUR0FEA1T CQMULTITIES
Having regard totheTreaty establishing theEuropean Economic Community ,
andinparticular Article 116thereof ,
Having regard totheproposal from theCommission ,
Whereas thequestion oftheoperation ofliner conferences hasbeen treated
"byIMCIAjD ,and -whereas U1ICTAD' swork hasresulted inthedrawing-up ofa
Convention onaCode ofConduct forLiner Conferences ;
Whereas that Convention isaimed inparticular atlaying dawn certain
internationally-applicable rules relating tocargo sharing ,th§accession
ofshipping lines toconferences and therelations between transporters
andshippers j
Whereas theapplication ofsuch internationally-applicable rules affects the
terms onwhich transport iseffected ,both within theCommunity andwith
non-member countries ,,andwhereas such rules would affect theinterests of
theshipping lines andshippers oftheMember States :
Whereas ,regardless ofthepossible incompatibility ofcertain provisions
ofthis Convention with theobligations arising from theTreaty and the
repercussions that theConvention canhave inthefield ofmaritime transport ,
itsentry into force isofparticular interest totheCommon Market ,and
whereas common action onthepart oftheMember States isrequired inthis
connection ;
Whereas thedefinition ofthepositions which theMember States will adopt
aspart oftheir common action requires careful examination ,andwhereas in
themeantime they must abstain from anyaction which could prejudice or
affect theinpleEjontation oftheir subsequent common action j

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HAS ADOPTED THIS DECISIOÎT î ■
Article 1
X,Without prejudice toallother possible Community actions ,theCouncil
shall define "before 30June 1975 »an&onaproposal from theCommission ,
ontheform ofthecommon action toheimplemented asregards thepossible
conclusion bytheMember States oftheConvention onaCode ofConduct for
Liner Conferences .
2.While awaiting thedecision referred toinparagraphaph 1,theMember
States shall abstein from signing ,ratifying oracceding totheabove -
mentioned Convention .
i
Article 2
This Decision isaddressed tothe Member States -
Done at For the Council

COMMENTS PITTHE VARIOUS CHATTERS OFTHE CODE OFCOKDUCT FOR LIJER
CONTEREMCES frJITH PARTICULAR REFERENCE TOTHOSE PROVISIONS WHICH ARE OF
PARTICULAR INTEREST TOTHE COMMON MARKET ORWHICH RELATE TOANAREA
GOVERNED BYTHE GENERAL RULES CONTAINED INTHE TREATY
CHAPTER I:Définitions
There arenoparticular comments tobemade onthis chapter ,except
tosaythat thedefinition oftheexpression "national shipping line "is
restrictive .Inorder to "beregarded asa"national shipping line ",a
shipping line must have itshead office ofmanagement and itseffective
control inthat country .
CHAPTER II :Relations among member lines
Article 1:lîerabcrship
This Article provides that anynational shipping line (see
definition inChapter I)shall have theright tobeamember ofaconference ,
provided that certain criteria aremet ,inparticular asregards itsability
tooperate aregular ,adequate andefficient service asdefined inthe
agreement concluded between themembers oftheConference .Furthermore ,
itmust beable toprove that itwill beable tofulfil itsobligations
within theframework oftheagreement andshall deposit afinancial guarantee
tocover anyoutstanding financial obligation intheevent ofsubsequent
withdrawal ,suspension orexpulsion from membership oftheConference .
Anyshipping line notregarded aca"national shipping line "("cross
trader ")must meet thesame requirements andanumber ofadditional :
requirements (especially asregards theexisting volume oftrade onthe
route orroutes served bytheconference andprospects foritsgrowth ;the
adequacy ofshipping spa.ee fortheexisting andprospective volume oftrade
ontheroute orroutes served bytheConference ;theprobable effect of
admission oftheshipping line totheconference ontheefficiency and
quality oftheconference service ;thecurrent participation ofthe

shipping line on -thesane route orroutes within theframework ofanother
conference ).Furthermore ,theadmission ofsuch ashipping line shall also
besubject totheapplication ofthecargo sharing provisions (seebelow ).
ilrticle 2:Participation inthetrade -
Forthepurpose ofdetermining theshare oftrade which member lines
shall have theright toacquire ,thenational shipping lines ofeach country ,
irrespective ofthenumber oflines ,shall beregarded ,asasingle group of
shipping lines forthat country .
Shares oftrade within apool shall bedetermined asfollows ,unless
otherwise mutually agreed :
– thegroup ofnational shipping lines ofeach oftwocountries ,the
foreign trade ofwhich iscarried byaconference ,shall have equal
rights toparticipate inthefreight andvolume oftraffic generated
bytheir mutual foreign trade andcarried bytheconference ;
-■ third –country shipping lines ,ifany ,shall have theright to
acquire asignificant part ,such as20Jbinthefreight andvolume
oftraffic generated bythat trade .
These provisions therefore institutionalise thedistribution of
freight inthefollowing proportions :40-40–20 .
Other provisions relate tothedistribution ofshares oftrade in
cases where thenational shipping lines ofonecountry decide nottocarry ,
orcannot carry ,their full share of .trade .Insuch cases ,that portion
oftheir share oftrade which those shipping lines donotcarry shall be
distributed among theindividual member lines participating inthetrade
inproportion totheir respective shares (inexceptional cases where no
national shipping line ofonecountry will participate intrade ,the
national shipping lines attheother endoftheroute ,andthird-country
shipping lines will distribute thetrade asfollows :

66^/^forthenational shipping linesand33forthird country shipping
lines .
Another provision provides that national shipping lines ofaregion ,
members ofaconference ,atoneendofthetrade covered "bytheconference ,
mayredistribute among themselves "bymutual agreement theshares intrade
allocr.t3d tothen .
Article 2also maices provision forcases where aconference hasnot
yetdistributed thetrade "between themember lines .Insuch cases the
national shipping lines have theright torequire theestablishment ofa
eyctom ofpooling whereby they would receive theshare oftrade defined
abo /c.
Ixaconference makes provision forsuch acase inapooling agreement ,
anyvessel shall beallowed tolift cargo ,even inexcess ofthepool share
oftheline ,ifotherwise thecargo would beshut outanddelayed beyond a
period setbytheconference .
Article 4sSanctions and Article 5iSelf-policing
These articles relate tosanctions against shipping lines which fail
toabide bytheterms andconditions ofaconference agreement ,-with
particular reference tofinancial sanctions andthesuspension orexpulsion
ofashipping lino .
Article 6:Conférence arrsements
This article lays down certain rules concerning thefact that all
documents relating totheagreement shall bemade available tothe
appropriate authorities ofthecountries whose trade isserved bythe
conference .

CHAPTER III •Relations with shippers
This Chapter stipulates inparticular that themembers ofconference
areentitled toinstitute andmaintain loyalty arrangements with shippers .
Whatever loyalty arrangements aremade ,thefreight rate applicable to
loyal shippers shall bedetermined within afixed range ofpercentages
ofthefreight rate applicable toother shippers .Article 31ofthis
chapter relates tothemachinery forconsultations between conferences and
shippers 'organizations .
OH'PTER IV :•Frci.-rht rates
This chapter requires that anumber ofcriteria betaken into account
when determining freight rates (butdoes notprovide foranymachinery fcr
satisfying these criteria ).Themember lines ofaconference crust cdLsr ")
strictly tofreight rates ,rules andterms laid down bytheconference .
Atleast I50days *notice must begiven before ageneral increase infreight
rates can taZce place .Surcharges maybeimposed temporarily inorder to
cover sudden orextraordinary increases incosts crlosses ofrevenue .
CHAPTER V:Other matters
Members ofaconference shall notusefighting ships toprevent
competition from ashipping line which isnotamember oftheconference .
General provisions require that shipping lines ensure regular services .
CHAPTER VI :Provisions andmachinery for settlement ofdisputes
This chapter gives amore detailed account oftheprocedure for
applying quite acomplex system ofconciliation orofinternational
mandatory conciliation forthepurposes ofapplying thevarious provisions
ofthe Code .
CHAPTER VII :Final clauses
This chapter contains ,inparticular ,provisions relating tothe

signature andratification oftheConvention anditsentry into force .
Another important provision provides that areview conference shall be
convened five years from thedate onwhich theConvention enters into
force .
Resolution intheAnnex concerning non-conference lines
This Resolution provides inparticular that non-conference lines
should adhere totheprinciple offair competition onacommercial basis .
Aslong asthey doso,such companies should notbeprevented from operating
onanygiven route .