COMMUNICATION FROM THE COMMISSION - EXTERNAL RELATIONS IN THE FIELD OF MARITIME TRANSPORT
Date: 1997-03-14
Institutions: European Commission
Subjects: EU relations, maritime transport, third country, transport policy

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  14.03.1997 
COM(96) 707  final 

97/ 0012 (SYN) 

Proposal  for a 

COUNCIL  DECISION 

a  consultation  procedure  on relations  between  Member  States  and third  countries  in  shipping 
matters  and on action  relating  to such  matters  in international  organizations 
and  an authorization  procedure  for agreements  concerning  maritime  transport 

setting  up 

(presented  by the  Commission) 

EXPLANATORY  MEMORANDUM 

A.  Foreword 

As the Community  has been developing  its external  action  in the field  of maritime  transport,  the  need 
has  been  increasingly  felt,  i.a.  in  response  to  the  request  of  the  Member  States,  to  establish  agreed 
objectives and rules for  such action. 

B.  Objectives  of the  Communication 

The  present  communication,  with  the  proposal  annexed  to  it,  responds  to  the  need  to  provide  a 
coherent  concept  for  the  external  action  of  the Community  in  the  field  of  shipping,  a  comprehensive 
framework  within  which  such  action can  be  undertaken,  and  rules  necessary  to  complement  existing 
related  legislation. 

C.  Content of the Communication and proposals 

The main points and conclusions of this Communication are presented  in the Executive  Summary. 

Chapter  II  indicates  the  background  and  basic  considerations  for  the  development  of  EC  action:  the 
importance  of  shipping  to  the  EC,  its  basic  interest  in  the  functioning  of  the  international  shipping 
market,  recent  developments  in  the  world  shipping  market  and  the  EC  position,  difficulties 
encountered  in  external  maritime  trade  and  recent  shipping  policy  developments  at  national  and 
international  level. 

Chapter III  sets out the objectives  pursued  by the Community  in its external  relations  in shipping,  and 
considers  the  various  means  that  may  be  used,  and  Community  action  that  may  be  undertaken,  in 
pursuance  of  such  objectives.  An  overview  of  EC  action  to  date  relating  to  external  aspects  of 
maritime  transport  is  provided  in  Chapter IV.  It  covers  relevant  legislation  adopted  by  the  EC,  the 
application  of  EC  instruments  and  policy  so  far,  the  developments  and  action  in  international 
organizations and within the framework  multilateral  agreements. 

Chapter  V first reviews  the present  international  context  in which  external  shipping  relations  develop, 
before  proceeding  to  consider  further  the  various  components  of  Community  action  and  criteria  for 
identification  of  priorities,  in  respect  of  certain  types  of  Community  action.  These  concern  relations 
with  third  countries  or  groups  of  countries,  action  aiming  at  the  integration  of  the  transport  services 
and  systems  in  Europe,  and  international  organizations  and  multilateral  Conventions,  including 
particularly  the question  of  participation  and  representation  in  international  organizations  dealing  with 
economic and commercial  aspects of maritime  transport. 

Chapter  VI concerns  arrangements  in  respect  of  action  by  the  Community  and  the  Member  States  in 
their bilateral  relations  with third countries. 

A proposal  for  the  legal  instruments  needed  to set  out  the  procedures  to be  followed  in  respect  of  the 
last two points is presented  in Annex  II. 

The proposed  Council  Decision  would  replace Council  Decision  77/587/EEC  setting  up a  consultation 
procedure  on  relations  between  Member  States  and  third  countries  in  shipping  matters  and  on  action 
relating to such matters  in international  organisations. 

It  would  also  provide  for  a  consultation  and  authorization  procedure  for  agreements  concerning 
commercial  maritime transport  relations between  Member  States and third countries. 

EXTERNAL RELATIONS IN THE  FIELD OF  MARITIME  TRANSPORT 

EXECUTIVE  SUMMARY 

I. 

INTRODUCTION 

Contents 

II. 

EC  SHIPPING  AND  THE  IMPORTANCE OF  EXTERNAL  RELATIONS 

A. 

Importance  of  shipping to the  EC 

B. 

The  basic  EC  interest  concerning  the  functioning  of  the  international 
shipping  market 

par 

1 - 6 

par 

7-10 

paF 

11-15 

C.  Recent  developments  in the world  shipping  market  and  EC position 

par 

16-28 

D.  Difficulties  encountered  in external  maritime  trade 

E.  Recent  shipping  policy  developments 

III. 

EC  OBJECTIVES  AND  MEANS  OF  ACTION  IN  THE  EXTERNAL  FIELD 

A.  The  need  for,  and  the  objectives  of  EC action 

B.  Means of  Community  action 

par 

29-40 

par 

41-44 

par 

45-51 

par 

52-56 

par 

53 

1. 

2. 

Preemptive:  seeking agreement  with third  countries  on 
policy  principles  and a common approach  to specific  issues  arising 

Addressing  problems  arising from restrictive measures  of  third 
countries 

par 

54 

3. 

Seeking  to secure fair  competitive  conditions 

4. 

Cooperative  activities 

par 

par 

55 

56 

IV. 

ACTION  TO  DATE  RELATING  TO  EXTERNAL  ASPECTS  OF  MARITIME 

EC 
TRANSPORT 

A. 

Existing  legislation,  its application  and  initiatives  to  resolve  specific 
problems 

par 

57-64 

B.  Development  of  EC  relations  with  third  countries  to-date 

par 

65-86 

/. 

Agreements  with third countries 

2. 

3. 

Consultations  with third countries 

Cooperation  and  technical assistance 

par 

66-68 

par 

69-70 

par 

71-75 

C.  Action  in  international  organizations  &  multilateral  agreements 

par 

76-86 

IL 

FURTHER  DEVELOPMENT  OF* THE  EC  EXTERNAL  RELATIONS  IN  THE  FIELD  OF 
MARITIME  TRANSPORT 

A.  The  present  context  in which  external  shipping relations  develop 

par  87-107 

1. 

International political,  economic and  commercial  developments 

par 

87-93 

2. 

Evolution  of the role of the EC and  its powers  in the external field 

par  94-107 

a 

b 

Evolution  of  EC powers and  scope of  action  in the 
of  external  shipping  relations 

field 

par 

94-99 

Issues relating  to the exercise  of  EC powers 
b.l  Bilateral  relations  of  MS with  third  countries 
b.2  Representation  in  international  organizations 

par  100-101 

B.  Components  and  priorities  for  Community  action 

par 108-157 

1. 

Relations  with third countries or groups  of countries 

par 111-143 

a 

b 

c 

Seek  agreement  with  third  countries  on  policy  principles 
and  common  approach  to shipping  policy  issues 
a. 1  Agreements  with  third  countries  on  shipping  policy 

par 112-126 

principles 

a.2  Consultations  with  third  countries 
a.3  Policy  workshops 

Address  problems  arising  from  measures of  third  countries 
b.l  Elimination  of  restrictive  or  discriminatory  measures 
b.2  Review  and  possible adaptation  of  existing  EC  legis 

lation:  Council  Regulation  No.  4058/86 

par  127-132 

Action  to  secure  fair  competition  on  a commercial  basis 
c. 1  Countering  unfair  pricing  practices:  review  and  possible 

par 133-141 

adaptation  of  Council  Regulation  No.  4057/86 

c.2  Adoption,  compliance  and  enforcement  of  international 
safety  rules  and  standards,  i.a.  through  stricter  PSC  and 
possibly action  vàv  flag  states 

d 

Cooperative  actions and  technical  assistance  to  third  countries  par 142-143 

2. 

Action  aiming at the integration of the transport services and systems 
in  Europe 

par  144-150 

3. 

International  Organizations & Multilateral  Conventions 

par 151-157 

a 

b 

Adaptation  of consultation  procedure 

Tasks  ahead  for  the  short-  and  medium-term 

par  151-153 

par  154-157 

C-

VI.  ARRANGEMENTS  FOR  PROGRESSIVE  TRANSFORMATION  OF  BILATERAL  REGIMES 

A 

The  main  principles 

par  158-161 

B.  Agreements  between  the Community  and  third  countries 

par 

162 

C.  Bilateral  agreements  between  Member  States and  third  countries 

par  163-175 

1. 

Types of provisions  in bilateral agreements between Member States  par  166-167 
and  third  countries 

2. 

Agreements  regarding the provision  of maritime transport services 

par  168-172 

3. 

Agreements  with other provisions  only 

par  173-175 

ANNEXES: 

I. 

II. 

Table:  Scope  of  external  action  and  specific  actions and  proposals  foreseen 

Proposal  for  a Council  Decision setting up a consultation procedure on relations between  Member 
States  and  third  countries  in  shipping  matters  and  on  action  relating  to  such  matters  in 
international  organisations  and  an  authorization  procedure  for  agreements  concerning  maritime 
transport. 

III. 

Existing Community  legislation  and  policy  initiatives on  external  aspects of  maritime  policy  and 
their  application. 

IV.  Development  of  relations  between  the  EC and  third  countries  to date. 

I +. 

EXTERNAL  RELATIONS  IN THE  FIELD  OF  MARITIME  TRANSPORT 

EXECUTIVE  SUMMARY 

In view of the  international  shipping and  trade  interests of the  EC, the external  dimension  of  its 

1. 
shipping  policy  is of  vital  importance. 

The  central  aim  of  EC  external  action  in  the  field  of  shipping  is  to  serve  effectively  its  shipping 
industry  and trade  interests by securing free  access and  fair  competitive  conditions  in the world  market. 

2. 
Taking  into  account  its  policy  interests,  the  existing  conditions  of  the  international  shipping 
market  and  the  present  international  context,  the EC should, therefore,  in the  view  of the  Commission, 
and  in accordance  with  its new  Market  Access Strategy,  pursue a  policy  destined  to  improve the access 
of  European  shipping  industry  to third  country  markets  and  to  create  new  business opportunities.  This 
can  be  summarised  by the  following  general  objectives: 

seek  to  consolidate,  bilaterally  as  well  as  multilaterally  in  international  organisations, 
through  consultations  and  negotiations, developments  towards  liberalisation,  as well  as 
obtain  further  roll-back  of  existing  restrictions; 

address  specific  problems that  arise with  non-member  countries,  in particular  in  respect 
of  market  access; 

in particular,  address the problem  of unfair  competition  and the related  problem  of sub 
standard  shipping arising particularly,  although  by no means solely,  from  open  registry 
shipping; 

and  should,  in  parallel, 

work towards the development  of an  integrated  and efficient  European  transport  system, 
including  assistance  for  the  transition  of  CEEC  to  the  market  economy  and  alignment 
of  their  policies  in the  perspective  of  accession. 

Consideration  of the specific  problems  faced  by the shipping  industry  leads to the  formulation  of  more 
specific  or particular  objectives as regards  market access and related  questions; operating conditions; and 
cooperative  action. 

To pursue  its objectives  in  the external  field,  the  EC has the  following  range of  possible  means 

3. 
of  action: 

I. 

Preemptive initiatives to secure agreement on policy principles  and a common  approach 
to specific  issues 

Agreements  with  third  countries 
Multilateral  consultations  and  agreements 
Consultations  with  individual  countries 

This Communication  does not address relations with the IMO, concerning safety  and technical aspects of 
shipping;  for such  relations  reference 
is made'to the Communication  on "A Common  Policy on  Safe 
Seas"  (COM  (93) 66 of 24.02.1993) 

2. 

Addressing problems  arising from restrictive measures of third  countries 

Démarches 
Consultations to address  restrictive  measures or other specific  problems 
Measures to counter  restrictions 

3. 

Seeking  to secure fair  competitive  conditions 

Action  to counter advantages to foreign  shipowners from  Government  measures 
or  support 
Action  to ensure compliance with  internationally  applicable  rules and  standards 

4. 

Cooperative  activities 

Provide  assistance  to  third  countries  to  develop  their  shipping  sector  in  a 
competitive  environment. 

The  Commission  considers  that,  in  pursuing  its efforts  to  achieve  its key  market  access objectives,  the 
main  instrument  should  be the multilateral  negotiations  in the context of the World  Trade  Organisation 
(WTO).  However,  since  they  are  due  to  resume  in  the  year  2000,  the  Commission  will  use  in  the 
meantime all the  instruments, negotiations and opportunities available to achieve these objectives,  in the 
expectation  that they  could  ultimately  become a spring board  for  a multilateral  agreement  in the WTO. 
The  present  communication  therefore  stresses  the  different 
instruments  and  negotiations  that  the 
Community  could  use  to  achieve  its  key  external  objectives  pending  an  agreement  on  a  multilateral 
solution. 

The Commission invites the shipping industry to inform  the Commission of the problems they encounter 
in  third  countries,  so that  it can  examine  the  best  way  to deal  with  them. 

4. 
The role and powers of the EC have considerably  increased since  1986, when the package of  four 
Regulations forming  the basis of Community  maritime transport  policy  was adopted. A review of  action 
undertaken  to  date  indicates  the  potential  for  further  effective  development  of  EC  action  in  this  field. 
Intervening developments and the present international context provide a favourable environment for such 
development. 

5. 
The  EC has always  privileged  a consensual  and  cooperative  approach  and  considered  the  resort 
to defensive  measures only as a last option  if effective  solutions through consultation  and negotiation  are 
not  achieved.  Action  to  date  has  placed  particular  emphasis  on  this  type  of  approach  and  the  present 
international  conjuncture  in  which  external  shipping  relations  develop  appears  generally  favourable  to 
the  further  development  of  external  relations  in  this  direction. 

Taking  into  account  the  EC objectives  and  means of  action  in the  external  field  with  regard  to 

6. 
maritime  transport,  the  main  components  of  Community  external  action  should  be: 

the further  development  of  relations  with,  and  related  action  vis-à-vis third  countries,  by  means 
of 
* 

Community  agreements with  third  countries and consultation  procedures  leading to the 
progressive  transformation  of  existing  bilateral  regimes,  as  well  as  forms  of  dialogue 
with  third  countries  to  promote  a common  approach  to  shipping  policy  issues; 
action  to  address  problems  arising  from  restrictive  or  discriminatory  measures  of  third 
countries; 
action  to  secure  fair  competition  on  a commercial  basis; 
cooperative  actions  and  technical  assistance to third  countries; 

* 

* 
* 

the  development  of  cooperative  action  in  the  field  of  shipping  as  a  component  of  a  global 
approach  to the transport  services and systems of Europe, including those of Central and  Eastern 
Europe,  so  that  they  can  develop  in  as  integrated  a way  as  possible; and 

the  reinforcement  of  the  role  of  the  Community  within  relevant  international  organizations  to 

reflect  the  full  development  of  the  Community  shipping  policy;  and  the  negotiation  by  the 
Community  within  such organisations,  in accordance  with  Community procedures,  with  a view 
in  particular  to consolidating  positive developments  in respect of  shipping  policy and  obtaining 
further  roll-back  of  existing  restrictions. 

7. 
Within the framework  provided, the scope of appropriate external action under these components 
as  well  as related priorities  are considered.  A wide range of  such action  is envisaged  to  be  undertaken, 
adopting  the  appropriate  means to  suit the  particular  situations  and  issues, as  indicated  in  the  Table  in 
Annex I. Within this framework  particular emphasis is placed on the use of consultation, agreement and 
cooperative  action  to the extent  possible, whilst  being  prepared  to address problems  through  defensive 
measures  if this becomes  necessary. 

8. 
The  appropriate  and  effective  response  to  problems  faced  in  the  world  shipping  market  may 
require  the  adaptation  of  existing  EC  legal  instruments  to  present  circumstances,  in "the  light  of 
experience  to date. To  this end  the  Commission 

will  undertake  a review  of  Council  Regulations Nos. 4057/86  and  4058/86; and 

proposes the replacement  of the consultation  procedure  set up by Council  Decision  77/587/EEC 
by  a  new  procedure  (Annex  II),  with  a  view  to  (i)  ensuring  coherence  of  action  of  the 
Community  and  of the Member  States  in their  relations  with  third  countries  and  improving  the 
efficiency  of such action; and (ii) ensuring the pursuance of Community objectives  in discussions 
or  negotiations  in  international  organizations. 

9. 
The  competence  acquired  by  the  EC  and  its  increasing  involvement  in  relations  with  third 
countries  in  the  field  of  maritime  transport  should  lead  to  a  progressive  transformation  of  existing 
bilateral  régimes.  This  process  can  only  be  gradual,  as  the  EC  proceeds  to  develop  various  forms  of 
relations  with  individual  countries. 

In order for the EC to develop a comprehensive external  maritime transport  policy, it is necessary 
10. 
to  establish  rules  concerning  the  extension  of  existing  maritime  transport  agreements  and  the 
authorization  for  Member States to conduct  bilateral  negotiations. To this end, the Commission  proposes 
the adoption of a consultation and authorization  procedure  for  agreements concerning maritime  transport 
relations between  Member States and third countries, which  is included  in the proposed Council  Decision 
presented  in Annex  II. 

11. 

The  Council  is  invited  to: 

endorse  the  concept  of  external  policy  action  suggested  in  this  Communication, 
encompassing 

-  aims and  objectives; 
-  means; 
-  components; and 
-  priorities 

and 

adopt  the  proposed  instrument,  presented  in  Annex  II. 

I. 

INTRODUCTION 

1. 
It is now  a decade  since the adoption,  by the  Council, of  the  1986  package  of  four  Regulations 
which constituted the basis for a coherent Community policy  in international  maritime transport.2  In view 
of the largely worldwide  involvement of Community shipping, this policy addressed  predominantly  issues 
and problems arising  in  the external field. 

In  reporting  previously  on  the  application  of  the  package3,  the  Commission  has  particularly  also 
emphasized  wider  action  involving  or  affecting  relations  with  non-member  countries.  Such  action  has 
continued  to  be  pursued  and  further  developed. 

2. 
There  have  been  particularly  significant  political,  economic  and  commercial  developments 
worldwide  during  the  intervening  period,  which  have  profoundly  affected  world  shipping.  In  parallel, 
developments  in  the  EC,  including  the  completion  of  the  internal  market,  have  had  implications  for 
Community competence; and, in combination with the developments worldwide, have increased the weight 
of  the  Union  on  the  international  scene. 

3. 
The Commission  undertook  in  1995 a review  of the Community  maritime  transport  policy.  In so 
doing,  it has been assisted by a Core Group of  12 individuals  with wide-ranging  experience  of the  world 
shipping,  which  submitted  a  Report  in  September  1995. The  Commission  presented  the  result  of  its re 
assessment in a Communication  "Towards a New Maritime Strategy"4  in March  1996. The Communication 
considered  external  action  in  the  field  of  maritime  transport,  together  with  action  to 
improve 
competitiveness  and  action  relating  to maritime  safety  as one  of  the  three  pillars  of  maritime  transport 
policy,  and  announced  a  further  Communication  to  consider  more  specifically  external  relations  in  this 
field. 

The Commission  considers,  indeed,  also  in  response to  requests  by the  Member  States, that  it  is 

4. 
appropriate  at this  stage to: 

take  stock  of  results  of  actions  in  the external  field  in  shipping  undertaken  so  far; 
formulate  explicitly  a  coherent  set  of  objectives  to  be  pursued  and  to  guide  the  coherent 
development  of  the  external  action; 
consider  the  available  means and  modalities  of  such  action; 
consider  and,  as  relevant,  set priorities; 
determine procedures and practical  working arrangements that may be required  and,  in particular: 

arrangements  for  action  by  the  Member  States; 
arrangements  for  exchange of  information  concerning developments  in external  relations 
of the  Community  and  Member  States  with  non-Member  countries; 
arrangements  for  the  participation  and  representation  of  the  Community  in  certain 
international  organizations. 

5. 
The competence of the Community  in this field arises from  existing legislation,  in particular  from 
the  package  of  four  maritime  Regulations  adopted  in  1986.  This  Communication  is  concerned  with 
implementing  action  based  on  this  competence. 

6. 
The  above  mentioned  subjects  are  considered  in  this  Communication,  which  builds  upon 
discussions on the subject  in the Council,  notably  the  Edinburgh  High  Level  meeting  in November  1992, 
and  with  High  Officials  in  March  1993 and  January  1994. 

See Section  IV.A. 

Report  from  the  Commission  to  the  Council:  "Implementation  of  the  four  Regulations  in  the  field  of 
maritime transport adopted by the Council on 22 December  1986" ( SEC(90)  1594 final  - 1  August 1990). 

COM (96) 81 final,  13.03.96 

II. 

EC SHIPPING  AND THE IMPORTANCE  OF  EXTERNAL  RELATIONS 

A. 

Importance  of shipping  to  the  EC 

Reliable and efficient  maritime transport services are of great  importance  for Community trade. 
7. 
The Community  is  the origin  or destination  of  almost  25  % of  the  total  world  trade  and  90  % of  this 
external  Community  trade  is  carried  by  sea.  A  significant  part  of  this  trade  is  carried  by  Community 
shipowners.  Estimates  for  1992  indicate  that  around  42%  was  carried  on  vessels  registered  in  the 
Community or beneficially  owned  by Community shipowners. 

8. 
The  importance  of  the Community  shipping  industry as an economic  activity  goes  well  beyond 
EC external  trade. Seaborne trade  between  the then  twelve Member  States amounted  to a significant  217 
mt in  1994. A further amount of around 224 mt (in  1993) was domestic seaborne trade within the Member 
States, the  largest  part  of  which  is carried  by Community-registered  ships. 

9. 
Beyond  this  activity,  the  Community  shipping  industry  is  active  in  cross-trading  between  third 
countries. The magnitude of this activity has been particularly  difficult  to estimate for  the  EC as a whole, 
since no figures are available  for several  Member States; and  those available are  not on  a uniform  basis. 
Somewhat old estimates  indicated  that  roughly  one third  of all  income of the  EC shipping  industry  came 
from  such  cross-trading  activity. 

10. 
In  addition,  the  industry  generates  significant  employment  on  ships and  on-shore  as well  as  for 
ancillary  or other  related  or dependent  services and  industries, while the  EC shipping  industry  is the main 
client  of  the  EC shipbuilding  industry. 

Considerably  reduced  during  recent years,  from  around  230.000  in  1985 to  140.000  in  1994, the  number 
of  seafarers  remains  significant,  although  in  respect  of  some  Member  States  the  concern  arises  as  to  the 
future  of the profession,  particularly  the more  highly trained  who are also the natural  source of  expertise 
needed  for  some on-shore,  ancillary  and  related  services. 

B. 

The  basic EC interest  concerning  the  functioning  of  the  international  shipping  market 

From  the foregoing  the Community  interest  in world  seaborne trade  is obvious. Both  for  the sake 
the  Community  has  an  overriding 

11. 
of  its  exports  and  imports  as  well  as  for  its  own  shipping  industry 
interest  in  a worldwide  shipping  market  free  of  restrictions. 

12. 
Another  consideration  is that,  over  a  period  of  several  years,  the  Community  shipping  industry 
has faced  a depressed  world  market  in which,  in trying  to  secure cargoes,  an  increasing  number  of  third 
countries  have been  resorting  to  protectionist  measures  in order  to develop  their  fleets.  It  has also  had  to 
face low price competition  from  lines which, benefitting  from  non-commercial  advantages granted  by their 
governments,  do  not  have  to  meet  the  test of  the  market  the  way  Community  shipowners  in  general  do. 

13. 
In  addition,  Community  shipowners  have  had  to contend  with  the  fact  that  the  Community  is a 
relatively  high cost environment  for  their business and their competitive position  has become  increasingly 
vulnerable.  This has  led  to a substantial  decline of  the merchant  fleet  registered  in the Community,  from 
about  one  third  of  the  world  tonnage  at  the  beginning  of  the  80's  down  to  around  13% -  including  the 
fleets  of  the  new  Member  States  - on  1.01.96,  and  this  appears  still  not  to  be  the  bottom  line. 

14. 
It  is in response to these  facts  and  circumstances  that  the  EC has defined  its shipping  policy.  For 
the  benefit  both  of  its  foreign  trading  to  and  from  all  continents  and  the  deployment  of  its  fleet  on  all 
seas, the Community strives to achieve the application  of commercial  principles and  freedoms  on an open 
world  shipping  market,  free  from  distortions  of  competition. 

15. 
At  the  same  time  the  Community  has  to  see  to  it  that  the  operating  conditions  for  the  European 
shipping  industry  are  such  that  the  competitiveness  of  ships  registered  in  the  EC  and  manned  as  far  as 
possible  with  seafarers  from  the  Member  States  is  safeguarded.  The  significance  of  this  issue  is  evident 
in  view  of  the  heavy  decline  of  the  merchant  fleet  of  the  Community. 

Furthermore,  working  conditions  for  seafarers  should  be  optimal,  and  shipping  services  should  be 
undertaken  at  a  minimum 
level  of  risk  for  all  directly  or  indirectly  concerned  and  for  the  marine 
environment. 

C. 

Recent  developments  in  the  world  shipping  market  and  EC  position 

The  development  of  international  seaborne  trade 

For  well  over  a  decade  now,  the  world  shipping  industry  has  faced  a  depressed  world  market. 
16. 
In  the  late  1970's  the  steady  and  considerable  growth  of  the  world  shipping  industry  that  was  witnessed 
from  1945  onwards,  came  to  an  end. 
In  the  years  that  followed,  the  industry  plunged  into  crisis;  the 
demand  for  shipping  services  fell  considerably,  whilst  considerable  new  tonnage  was  coming  into  the 
market  or  was on  order,  causing prolonged  overcapacity  world-wide.  As a result,  freight  rates came  under 
severe  pressure  and  this  remained  the  case  for  a  very  long  time.  The  economic  recovery  at  the  end  of 
the  1980's  did  not  prove  to  be  a  lasting  one  and  1992  and  1993  have  been  particularly  bad  years  for  the 
world  economy  and  as  a  result  the  shipping  industry  was  badly  hit  as  well.  Only  in  1994  have  appeared 
the  first  signs  of  a  halt  in  the  adverse  trend  and  the  expectation  of  an  upturn. 

17. 
The  continuous  growth  of  the  world  merchant  fleet  stopped  in  1983  and  turned  into  a  yearly 
shrinkage  until  1988.  Only  in  1991  did  the  total  gross  registered  tonnage  (grt/gt)  of  the  world  fleet  reach 
the  level  of  1982  again  and  it  has  since  1991  shown  a  modest  growth  of  1,9%. 

18. 
As  for  the  world  shipping  market,  it  is expected  that  the  volumes  of  seaborne  cargoes  will  conti 
nue  to  be  influenced  by  the  slower  growth  in  demand  for  primary  commodities  which  have  had  to  make 
way  for  the  increased  economic  importance  of  the  service  sector.  Apart  from  this,  the  composition  of 
cargoes,  as  well  as  the  growth  rates  in  the  international  seatrade  markets,  will  continue  to  be  affected  by 
other  factors  such  as  the  further  globalisation  of  manufacturing  processes,  changes  in  production  tech 
niques and  organisation,  relocation  of  industries and  the development  and  integration  of  regional  markets. 

Development  of  EC  shipping 

During  the  long  period  of  recession  of  the  world  shipping  market  the  European  Community  has 
19. 
been  relatively  more  affected  by  the  general  decline  in  shipping  activities  than  other  major  regions  in  the 
world. 

The  erosion  of  the  comparative  advantages  of  Community  shipping,  unfair  competition  and  the 
20. 
increasingly  protectionist  practices  adopted  by  third  countries  during  the  ^Os  and  '80s,  as well  as  low  cost 
operations  by  third  country  shipowners  have  been  the  major  causes  of  the  substantial  decline  of  the 
Community  flagged  fleet  relative  to  world  tonnage  (see  para.  13).  The  consequences  are  measured  in 
terms  of  increased  dependence  on  the  services  of  third  countries'  operators,  lost  foreign  exchange 
earnings,  lost  employment,  lost  influence  in  international  trade  and  shipping  negotiations  and  lost  orders 
for  Community  shipyards. 

The  decline  of  the  fleet  was  partly  the  result  of 

the  growing  attraction  of  alternative  non-EC 
21. 
registries  to  Community  shipowners  and  consequently  of  the  outflagging  of  EC-vessels.  At  the  moment, 
around  55%  of  the  fleet  owned  by  EC  nationals  is  under  flags  other  than  those  of  the  Member  States. 
This  figure  compares  with  the  49,7%  of  the  fleet  of  the  top  35  maritime  countries  under  a  flag  other  than 
that  of  the  country  of  domicile  of  the  owner. 

22. 
From  a  macro-economic  point  of  view,  the  situation  has  been  equally  bleak.  Since  1981, 
maritime  freight  has  shown  a permanent  deficit  on  the balance of  payments of  the twelve  Member  States 
combined.  Between  1978  and  1990,  in  the  EC more  than  200.000 jobs  for  Member  States'  nationals  as 
crew  members  on  vessels  registered  in the  EC were  lost out  of  a total  of  around  335.000  in  1978,  down 
to  around  120.000  in  1990-92. 

Organisational  and  technological  developments 

23. 
The  container  revolution  has  radically  transformed  the  organization  of  world  liner  shipping. 
Practically  every  liner  trade  is  now  intermodal  to  some  extent,  at  least  at  one  end  of  the  trade.  Many 
shipping  lines  now  offer  a  multimodal  transport  service  to  shippers. 

24. 
The  organisational  and  technological  changes  resulting  from  this  development  have  been 
considerable,  as  the  shipping  lines  need  to  control  the  logistics  of  the  system  and  maximise  and  control 
the  use  of  the  container.  The  need  for  intermodal  infrastructure  has  also  stimulated  demand  for  port 
terminals;  port  handling;  inland  haulage  hardware;  inland  distribution  centers  and  tracking  systems; and 
is  pushing  the  use  of  electronic  data  processing  (EDP)  and  EDI  systems. 

In parallel  to, and as part of this evolution  which  requires considerable  investment,  there has been 
25. 
a  trend  towards  merger  and  acquisition,  which  is  expected  to  continue  in  the  coming  years.  These 
developments,  occurring  in  a  market  subject  to  frequent  excess  capacity,  have  been  also  inciting  the 
shipping  lines  to  enter  into  new  forms  of  cooperative  agreements. 

Expansion  and  proliferation  of  open registers 

26. 
The  flagging  out  from  traditional,  "genuine"  registers  has  been  a  worldwide  phenomenon.  Since 
the  late  '80s  there  has  been  an  unprecedented  proliferation  of  open  registers  and  the  trend  to  register 
vessels  under  such  flags  has  steadily  increased. 

Total  tonnage  registered  in  "open  registry"  countries  increased  by  107  million  dwt  between  mid-
27. 
1985  and  end-1994,  an  overall  growth  of  51,8%,  as  compared  to  a  7,3%  increase  in  the  world  total  dwt 
tonnage.  By  31  December  1994,  the top  ten  open  registry  countries5  accounted  for  44.6%  of  world  total 
dwt  of  cargo  carrying  ships  of  100  gt  and  over  (with  314,1  mill,  out  of  704,0  mill,  total  dwt),  as 
compared  to  30.7%  in  mid-1985.  This  flagging  out  to  open  registers  would  have  been  even  more 
pronounced  but  for  the  fact  that  a  number  of  maritime  countries  established  international/second  registers 
during  this  period,  leading  to  a  slowdown  or  even,  in  some  cases,  a  reversal  of  the  flagging  out  trend. 

In  view  of  these  developments,  it  has  become  increasingly  important  to  consider  how 

the  open 
28. 
registry  phenomenon  could  be  controlled  and  contained, 
so  that  risks  for  safety  and  the  marine 
environment  can  be  minimised,  and  a level-playing  field  in terms of operating  conditions  attained,  in  view 
of  the  unfair  competitive  advantages  gained  by  shipowners  from  not  observing  international  rules  and 
standards.  Indeed,  there  is often  an  almost  complete  absence  of  effective  control  and  regulatory  oversight 
programs  to  ensure  that  consistent  and  competent  maritime  safety  actions  are  taken.  A  shipowner  who, 
due  to  inadequate  regulatory  oversight,  can  avoid  compliance  with  the  internationally  agreed  set  of 
standards  and  regulations  as  regards  safety  and  the  pollution  of  the  marine  environment  has  a  cost 
advantage  -  which  can  be  very  significant  -  over  his  competitor  who  fully  respects  all  applicable 
international  rules  and  standards. 

D. 

Difficulties  encountered  in  external  maritime  trade 

29. 

In  addition  to  the  problems  relating  to  trade  and  market  developments,  the  Community  shipping 

Liberia,  Panama,  Bahamas,  Cyprus,  Malta,  St. Vincent,  Bermuda,  Marshall  Isl.,  Vanuatu  and  Antigua & 
Barbuda. 

7 

industry  has been  facing  problems  arising from  policies and  measures adopted  by the governments  of  third 
countries  which  affect  international  shipping  relations. 

Whilst  the  traditional  maritime  nations  as a  whole  -  albeit  with  certain  notable  exceptions  -  have  pursued 
a  policy  of  maintaining  an  open  trading,  free-enterprise  environment,  a  large  number  of  Governments 
sought  and  adopted,  over  the  previous  two  decades,  measures  to  protect  and  develop  their  own  national 
merchant  fleet. 

30. 
Such  measures  have often  taken  the  form  of  restrictions  on  market  access  by  foreign  shipowners; 
in  other  cases, or  in  combination  with  such  restrictions,  governments  have  affected  operating  conditions 
to  favour  their  national  fleets,  for  example,  through  subsidies or  fiscal  advantages.  Neglect  or  inadequacy 
of  enforcement  of  internationally  applicable  rules  and  standards  has  greatly  contributed  to  the  problems 
of  the  industry;  and  all  these  adverse  effects  on  free  and  fair  competition  have  made  it  possible  for 
shipowners  benefiting  from  such  advantages  to  offer  their  services  under  conditions  which  shipowners 
relying  on  their  own  commercial  means  and  complying  duly  with  applicable  rules  cannot  meet. 

Restrictions  on  market  access 

Protectionist  measures  used  by governments  restricting  market  access for  foreign  shipowners  take 
31. 
various  forms;  they  may  be categorised  as: national,  unilateral  regulations  or  requirements;  bilateral  or, 
sometimes,  regional  arrangements;  and  international  agreements/conventions. 

/. 

National  regulations  or  requirements 

32. 
Through  national  regulations  governments  have  unilaterally  imposed  restrictions  on  access  to  the 
shipping  market;  restrictions  on  related  doing  business  activities;  discriminatory  treatment  of  foreign 
vessels  in  ports;  and  restrictions  on  auxiliary  services. 

(i)  Restrictions  on  access  to  the  shipping  market 

The  most  overt  unilateral  restrictions  take  the  form  of  national  legislation  which  reserves  part  of 

33. 
national  cargoes  to  national  flag  ships. 

Restrictions  in  several  countries  have  taken  the 
form  of  discrimination  in  favour  of  the 
national  flag  based  on  legislation  and/or  using  various  forms  of  allocating  cargoes  on  a 
preferential  basis;  or  through  the  inclusion  of  clauses  in  import  licenses,  or  letters  of  credit, 
which  give  preference  to  the  national  carrier. 

Nomination  of  the  national  flag  carrier  by a  requirement  that  all  or  certain  categories  of  goods 
exported  are  sold  on  cif  terms;  and  that  goods  imported  are  purchased  on  fob  terms;  this  is 
often  the  case  in  practice  through  the  imposition  of  terms  in  contracts  with  shippers,  without 
necessarily  the  government  being  openly  involved. 

Other  administrative  provisions  can  have  the  effect  of  preventing  or  limiting  the  participation 
of  non-national  lines  in  the  trade. 

(ii)  Restrictions  on  "doing  business"  activities 

Access  to  the-trade  has  arso  been  restricted  by  thwarting  activities  generally  regarded  as  a 

34. 
perfectly  normal  part  of  day  to  day  business.  Examples  of  such  restrictions  are: 

impediments  to  door-to-door  operations; 
difficulties,  or  prohibitions,  on  non-nationals  establishing  branch  offices  or  agencies; 
impediments  in  obtaining  necessary  licences,  work  permits  or  visas  for  non-nationals; 
restrictions  on  inward  investment  or  on  the  repatriation  of  profits; 
requirements  that  national  agents,  firms  or  organisations  be  used  in  preference  to  non-national 

interests; 
raising  taxes  or  duties  on these  activities, which  discriminate  as compared  to  those  imposed 
on  a  State's  own  nationals. 

(Hi)  Discriminatory  treatment of  vessels in ports 

35. 

Discriminatory  treatment  of  vessels  in  ports  may  regard: 

the  use of  infrastructure  and  auxiliary  maritime  services, such  as 

assignment  of  berths  or  facilities  for  loading  and  unloading, 
cargo  handling, 
storage  and  warehousing, 
customs clearance  services, 
container  station  services, 
maritime  agency  services; 

fees  and  charges,  depending  on  the flag of the ship or  the  nationality  of  the  operator. 

2.  Bilateral  arrangements 

Particularly  damaging  to  free  market  access has been  the tendency  to  bilateralise  trades  through 
36. 
cargo-sharing  agreements  (mainly,  though  not  exclusively,  in  liner  trades),  squeezing  out  of  the  market 
cross-traders or severely limiting their possibilities to participate in the trade. The intra-OECD trades have 
been  free  from  such arrangements.  But several  developed  countries,  including  Member  States, have been 
involved  in  such  agreements,  either  with  developing  countries  or  with  State-trading  countries;  often,  in 
the  latter  case,  in  order  to  be  in  a  position  to  participate  in the trade  at  all. 

3.  International  agreements/conventions 

37. 
Persistent efforts  have  been  made by developing countries,  in particular  in  UNCTAD, to  regulate 
commercial  aspects  of  shipping  with  a  view  to  promoting  and  developing  their  fleets  by  preferential 
treatment  rather  than  on  the  basis of commercial  criteria. 

38. 
Many  of  these  efforts  have  been  unsuccessful;  but  at  least  in  the  case  of  the  UN  Convention, 
adopted  in  1974,  on  a  Code  of  Conduct  for  Liner  Conferences,  they  have  significantly  affected  liner 
shipping  between  European  and  developing  countries,  in  particular  due  to  the  way  certain  developing 
countries  have  used  it to  "legitimize"  national  restrictive  measures. 

Operating  conditions 

39. 
National  rules  and  regulations,  either  specific  to  shipping  or  of  a  general  application,  affect  the 
operating conditions of the shipping firms  of the country concerned  and of its merchant  fleet.  These range 
from  manning rules and crew nationality and related conditions to subsidies and  fiscal  advantages, but also 
regulations on  safety  of  ships and  crew  and  the  protection  of  the marine environment.  The  latter  aspects 
may be particularly  affected  by  inadequate enforcement  of  internationally  applicable  rules and standards. 
As a result,  operating  conditions  vary  considerably  among countries  and  shipping  registers  to the extent 
that  competition  can  be  seriously  distorted. 

Unfair  competition 

Operators  can  take  advantage  of  such  conditions  as  referred  to  above,  offered  or  allowed  by 

40. 
governments,  to  a degree  that  such  competition  is  unfair. 

A  guaranteed  cargo  base,  subsidisation,  low  cost  operation  by  neglect  of  safety  and  social  rules,  are  all 
factors  permitting  the  undercutting  of  rates  to  an  extent  that  shipowners  having  to  meet  the  test  of  the 
market  while complying  with  their  obligations  and  not enjoying  any  such  advantages  cannot  compete. 

E. 

Recent  shipping  policy  developments 

EC  external  action  in  the  field  of  shipping  needs  to  take  into  account  conflicting  economic, 

41. 
competitive  and  political  forces  influencing  the  international  shipping  environment. 

42. 
The dramatic  political  and  economic  events of the  late  '80s  and  early  90's  have  left  their  mark 
on  shipping  policy  developments  worldwide.  The rhythm  of  political, economic  and  social  change  over 
the last two decades has increased  since  1989. Rapidly changing world  events including new political  and 
economic  realities 
in  both  developed  and  developing  countries,  increased  awareness  of  social, 
environmental  and  economic  disparities  and  the perceived  failure  of  previous  policy  approaches  meant 
to  increase  the  competitiveness  of  developing  countries'  fleets  have  significantly  affected  the  approach 
of  numerous  countries  to  international  shipping. 

43. 
As  a  consequence,  significant  shipping  policy  developments  have  taken  place "in  numerous 
developing  countries,  resulting  in  fragmentation  of  previously  common  shipping  policy  approaches. 
Liberalisation  in  the  field  of  shipping  has  gained  ground  in  Latin  America  and  certain  parts  of  Asia, 
although  not  yet  in  Africa. 

The  decisions  made  in  UNCTAD  VIII  in  Cartagena  at  the  beginning  of  1992,  which  radically 
44. 
changed  the policy orientations  of  UNCTAD, signalled  a significant  reorientation  of shipping  policies in 
the developing world  towards  progressive  liberalization.  This was already  noticeable  in mid-1991  during 
the  Review Conference  on  the  Liner Code, when  a number  of  significant  changes  became apparent  with 
respect  to  the  approach  exhibited  by developing  countries.  It  has  also been  apparent  during  discussions 
on  maritime  services  within  the context  of the  negotiations of the GATS, although  it has not  so far  been 
possible to  reach  a  satisfactory  worldwide  agreement. 

in 

i n. 

EC OBJECTIVES AND MEANS  OF  ACTION  IN THE  EXTERNAL  FIELD 

A. 

The  need  for,  and  the objectives  of  EC action 

45. 
In view  of  the  worldwide  involvement  of  Community  shipping,  EC shipping  policy  was  bound 
to  give, and  indeed  has given  from  the outset,  a predominant  place to  issues concerning  seaborne trades 
with or between non-EC countries.  Inevitably also, internal  EC shipping policies have had to take account 
of  the  international  context. 

46. 
The basic policy orientation  in favour  of free  and fair  competition  in world  shipping has been the 
traditional one generally followed  by the Member States, which as members of the OECD have subscribed 
to  the  Code  of  Liberalisation  of  Invisible  Operations  and  have  formulated  common  shipping  policy 
principles.  It  has  been  pursued  by  the  Community  and  the  Member  States  in  UNCTAD  and,  more 
recently,  in the  GATS  negotiations. 

47. 
An active policy to combat the problems arising from  the protectionist  policies of third  countries 
was difficult  to conduct individually or even as a group outside the Community framework.  Developments 
in the '70s, and  increasingly  in the '80s, made the need  for Community action  imperative.  Following  the 
adoption  in  1977 of a Council Decision "setting up a consultation procedure on relations between  Member 
States and  third  countries  and  on  action  relating  to  such  matters  in  international  organizations"6 and  of 
Regulation  No.  954/797  in  1979, the  decisive  step  for  a common  policy  was  the  adoption  of  the  1986 
package, based on the proposals submitted  by the Commission with  the Communication  of  March  19858. 

In the Communication  the Commission  formulated  a set of  basic principles  to guide  Community 

48. 
action  in  shipping: 

considering  that  the  predominant  issues affecting  shipping  are  those concerning  trade  with  third 
counties, actions on matters  internal to the Community have to take fully  into account their  effect 
on  the  international  competitive  position  of Community  shipping; 
the  Community  should  seek,  where  regulatory  action  is  necessary,  and  in  particular  where  the 
.  '  competitive position of Community shipping is affected,  wide international  agreement  rather than 

take  unilateral  Community  action; 
the Community  should  ensure equality  of  treatment  of  Community  shipowners; 
the Community  should  pursue a non-protectionist  shipping  policy,  based  on  the principle  of  free 
and  fair  competition  in world  shipping,  in the  interests  of  Community,shipowners and  the  users 
of  shipping  services,  taking  into  account  the  interests  of  the  Community's  trading  partners, 
including the  developing  countries; 
the  Community  should  support  international  efforts  to  maintain  and  improve  the  standards  of 
maritime  safety; 
the Community should  seek to improve the commercial  competitiveness of Community  shipping. 

49. 
The  1986 package  was designed  to defend  and  promote  EC commercial  interests  in  international 
shipping,  while  at  the  same  time  applying  basic  provisions  of  the  Treaty  concerning  the  freedom  to 
provide  services  and  the  competition  rules. Thus the Council  decided  that  this task  would  be  henceforth 
the  responsibility  of  the  Community,  since  shipping  policy  objectives  can  be  more  effectively  pursued 
through  action  at  Community  level. 

Council  Decision  77/587, O.J.  L 239,  17.9.1977 

O.J.  L  121, 17.5.1979 

"Progress  towards  a common  transport  policy  * Maritime  Transport",  COM  (85) 90  final  of  19 March 
1985.  Also see section  IV.A. 

11 

50. 
The  central  aim  of  EC  external  action  in the  field  of  shipping  is to  serve  effectively  the  shipping 
industry  and  trade  interests  of the  EC by  securing  free  access and  fair  competitive  conditions  in  the  world 
market,  where  EC  shipowners  compete  and  offer  their  services.  The  guiding  principles  set  out  already  in 
1985  retain  generally  their  validity  under  current  conditions  of  the  international  shipping  market  and  the 
present  context  in  which  the  Community's  external  shipping  relations  develop,  which  are  reviewed, in 
Chapters  II  and  V.A.  Taking  into  account  its policy  interests,  the  existing  conditions  of  the  international 
shipping  market  and  the  present  international  context,  the  EC  should,  therefore,  in  the  view  of  the 
Commission,  pursue  the  following  general  objectives: 

seek  to  consolidate,  bilaterally  as  well  as  multilaterally  in  international  organisations, 
through  consultations  and  negotiations,  developments  towards  liberalisation,  as  well  as 
obtain  further  roll-back  of  existing  restrictions; 

address  problems  that arise  with  non-member  countries,  in  particular  in  respect  of  market 
access; 

address  the  problem  of  unfair  competition  and  the  related  problem  of  sub-standard 
shipping  arising  particularly,  although  by  no  means  solely,  from  open  registry  shipping; 

and  should,  in  parallel, 

work  towards  the  development  of  an  integrated  and  efficient  European  transport  system, 
including  assistance  for  the  transition  of  central  and  eastern  European  countries  (CEEC) 
to  the  market  economy  and  alignment  of  their  policies  m  the  perspective  of  accession. 

51. 
Considering  the  specific  problems  faced  by  the  shipping  industry,  which  are  indicated  in  Section 
II.D,  Community  action  in  this  field  should  aim  at  achieving  a  number  of  more  specific  or  particular 
objectives: 

As  regards  market  access  and  related  questions: 

(i) 

(ii) 

the  consolidation  of  developments 
years  in  respect  of  shipping  policy 

towards  liberalisation 

that  have  taken  place  in  recent 

internationally; 

in  providing  services  in  the  trades  with  and 
increased  opportunities  for  EC  shipowners 
between  third  countries,  including  the provision  of multimodal  transport  services 
involving 
a sea  leg,  in particular  by  eliminating  or countering  restrictions  on  access  to  the  shipping 
market  and  on  connected 

land-side  operations; 

(Hi) 

removing  other  unilateral  measures  of  third  countries  adversely  affecting 
taxation  or  treatment  of  ships  in  ports; 
activity,  for  example,  discriminatory 

shipping 

(iv) 

(v) 

ensuring  equal 
without  discrimination  vis  à  vis  their  competitors; 

treatment,  on  the  part  of  third  countries,  of  Community 

shipowners 

promoting  a  market  orientated, 
regard  to  the  competition  rules,  in particular,  Regulations  no.  4056/86  and  870/95. 

international  shipping  policy  environment,  also  with  due 

is  a  need  to  get  rid  of  regulations  that  either  distort  competition  or  place 
There 
unnecessary  and  unjustified  burdens  on  commercial  operators;  this  includes  Government 
interventions  in  favour  of  shipping  lines  having  agreements  that  restrict  competition. 

12 

As  regards  operating  conditions 

In  its  relations  with  third countries  the Community  should: 

(vi) 

(vii) 

promote  the adoption,  observance and  enforcement of appropriate  international 
standards  relating  to  the  safety  of  ships  and  crew  and  the  protection  of  the 
marine environment; 

achieve fair  competitive conditions  in the world shipping market, i.a. through the 
adoption, observance and enforcement of internationally applicable standards as 
above; 

Third  country  shipowners  can  derive  advantages  from  Government  measures  or 
support  taking  various  forms  (such  as  cargo  preference,  subsidies,  non-
enforcement  of  rules  &  standards),  which  distort  competitive  conditions. 

(viii) 

seek  solutions  to  the  economic  and  safety  problems  associated  with  the 

proliferation  and  expansion  of open  registers. 

As  regards cooperative  action 

The Community  should  also,  in  pursuing  the  above  objectives,  give  particular  attention  to 

(ix) 

promotion  of co-operation with third countries, in particular developing countries 
and  CEEC. 
In  its relations in this field  with developing countries, the Community should take 
account  of the objectives  referredMo  in  Article  130u  of  the  Treaty  on  European 
Union. 

Cooperative  actions  and  technical  assistance  can  serve  mutual  interests  by 
resolving  problems  and  promoting  convergent  policy  approaches. 

More  particularly, 
in  Central  and  Eastern  Europe,  they  can  significantly 
contribute  towards  the  development  of  an  integrated  and  efficient  European 
transport  system  and  the  preparation  of  the  candidate  European  countries  for 
eventual  accession. 

B. 

Means  of  Community  action 

In  pursuance  of  its  objectives  in  external  relations  in  shipping,  the  Community  may,  as 
52. 
appropriate,  have  recourse  to a range  of  measures, whether  unilateral  (based  on  the  Regulations  adopted 
by the Council  in December  1986) or on the basis of agreements (bilateral  or multilateral) and  cooperative 
action.  The  various  means  of  Community  action  may  be classified  into the  following  types: 

Preemptive  action,  seeking agreement  on  policy  principles  and  a common  approach  to  specific 
issues,  may  be  taken  to  achieve  a  situation  where  policies  pursued  by  third  countries  are  close 
or  compatible  enough  in  respect  of  the  provision  of  international  shipping  services, as  to  allow 
the  free  exercise  of  shipping  activity  and  to avoid  as  far  as possible the  occurrence  of  problems 
between  the  Community  and  those  countries  in  the  sector. 

In  cases  where  third  countries'  policies  impose  restrictions,  the  Community  has  to  be  prepared 
to  address  such  specific  problems  in  appropriate  ways,  through  consultation  or,  if  this  fails, 

13 

through  other  measures. 

Problems  also  arise  from  unfair  competition  based  on  non-commercial  advantages  provided  by 
governments  or  on  their  failure  to  ensure  compliance  of  their  ships  and/or  operators  with 
internationally  applicable  rules  and  standards;  in  such  cases  the  Community  should  consider 
possible  means  of  securing  fair  competitive  conditions. 

Furthermore 
activities  with  third  countries  in the shipping  sector. 

the  Community  should  use  its  possibilities  to  develop  further  its  cooperative 

1.  Preemptive  action:  seeking  agreement  on  policy  principles  and  a  common  approach  to 

specific  issues arising 

53. 
Seeking  agreement  on  policy  principles  and  a common  approach  to  specific  issues arising  may 
take the  form  of  consultation  with third  countries,  negotiation  of  agreements  with  them,  or  multilateral 
consultations  and  agreements: 

agreements  with  third  countries,  including  agreements  on  principles  of  shipping  policy, 
negotiated  by the Commission on  the  basis of a Council  authorisation  and  concluded  by  the 
Council. The need  for such agreements arises  in the absence of a multilateral  agreement  that 
would  meet  the  Community  objectives.  Such  agreements  may  be  sectoral  or  part  of  more 
general  agreements. The use of a sectoral  agreement  may be preferable  in certain  cases. The 
choice  between  a  sectoral  agreement  or  provisions  on  shipping  as  part  of  a  more  general 
agreement  cannot  be answered  on  the basis of a general  rule, but  should  be decided  in each 
case  where  the timing  of  negotiations  on  a  general  agreement  raises  such  a  possibility  (see 
also  in  this  connection  paras.  114-116  below); 

multilateral  consultations  and  agreements  (such  as  in  UNCTAD  and  the  World  Trade 
Organization). 

A  satisfactory  multilateral  agreement  on  maritime  transport  in  the  WTO,  for  which 
negotiations  are  to  resume  in the  year  2000,  would  be the  most  effective  means  to  achieve 
the  widest  possible  liberalisation  of  the  sector. 
Multilateral  consultations  and  agreements  are  considered  under  the  section  concerning 
participation  and representation  in international organizations dealing with maritime transport. 

consultations  with  third  countries,  whether  or  not  within  the  framework  of  an  existing 
agreement,  to evaluate  policy  options  better,  influence  policies  of  third  countries,  and  reach 
understanding  on  a  basic  policy  approach. 

2.  Addressing  problems  arising from restrictive measures of third  countries 

54. 

Addressing  problems  arising  from  measures  taken  by  third  countries  may  involve: 

demarches  to  third  countries,  which  may  need  to  be  followed  by  consultations; 

consultations  with  third  countries,  whether  or  not  within  the  framework  of  an  existing 
agreement,  to address restrictive  measures taken or other specific  problems that  have already 
been  identified  with  such  countries;  the  outcome  of  such  consultations  may  be  reflected  in 
appropriate  documents,  including agreed  minutes, depending  on  the  nature  of  the  issues, the 
nature  of  the  commitments  made  and  the  procedure  under  which  the  consultations  are 
conducted  (consultation  procedure  or a Council  Decision  based  on  Regulation  no. 4058/86); 
where legally binding commitments are envisaged, negotiations conducted  by the Commission 
would  be  based  on  an  authorisation  from  the Council  (procedurally  as  for  agreements  with 

14 

third  countries  under  the previous  paragraph,  but  normally  of  a  more  limited  scope); 

measures  to counter  restrictions  by third  countries  on  market  access,  if consultations do  not 
succeed  (ref.  Regulation  no. 4058/86). 

3.  Seeking  to secure  fair competitive  conditions 

55. 

Seeking  to  secure  fair  competitive  conditions  may  involve: 

action  to counter  advantages  to  foreign  shipowners  from  Government  measures or  support: 

The elimination of cargo preference  measures would remove an advantage which 
shipowners  benefiting  from  such  preference  enjoy  and  which  places  them  in  a 
better  position  when  seeking to obtain  cargoes  open  to  competition. 

In  cases  of  unfair  pricing  practices  in  international  liner  shipping,  Regulation 
No.  4057/86 can  be used to address the problem  and  avoid  further  injury  to  the 
Community  shipping  industry. 

In  addition,  a  review  of  the  Regulation  will  be  undertaken,  to  evaluate  the 
possibilities  for  more  effective  responses  to  problems  arising  from  unfair 
practices  of  third-country  shipowners. 

Subsidies and fiscal  advantages are difficult  to handle through  bilateral  relations. 
A multilateral  régime  would  also appear  difficult  to obtain,  but a subsidy  code 
is envisaged  in  the GATS. 

The adoption, observance and enforcement  of appropriate  international  standards 
relating  to  the  safety  of  ships  and  crew  and  the  protection  of  the  marine 
environment,  would  help  to  achieve  a  more  level-playing  field.  Besides 
promoting  such  action,  the  Community  could  seek  to  exercise  its  influence 
directly  by addressing  specific  countries,  for  example,  by offering  its assistance 
in  enforcing  Port  State  Control  (PSC)  and  Flag  state  responsibilities. 

Action  to  ensure  compliance  with  internationally  applicable  rules  and  standards  concerning 
the  safety  of  vessels and  crew  and  the  protection  of  the  marine  environment: 

This  will  involve: 

vigorous  enforcement  of  port  state  control  in  the  EC  and  the  area 
covered  by  the  Paris  MOU; 
promotion  of PSC in other regions  by cooperating  with  interested  third 
countries  and  groups  of  countries,  as well  as  with  IMO; 
promotion  of the adoption  and enforcement  of appropriate  international 
standards  through  consultation  and  assistance to  third  countries. 

Such  action  relates  to  the  Communication  of  the  Commission  on  "A  Common 
Policy  on  Safe  Seas"9  and  points  to  the  possibility  of  taking  action  in  the 
external  field  in  support  of  the  objectives  relating  to  safety  and  environmental 
protection,  thereby  also seeking to achieve a level-playing  field  by removing  an 
unfair  advantage  of  shipowners  who  use substandard  vessels. 

COM(93) 66 of 24.02.1993 

15 

4.  Cooperative  activities: 

The Community  should continue to  use its means to promote cooperation  with  third  countries  so 

56. 
as to  serve  mutual  interest,  by 

providing  assistance  to  third  countries  (developing  countries  and  CEEC),  to  orient  their 
shipping  sector and/or  enable their  shipping companies to  provide  competitive  services  in a 
free shipping market environment and to promote institutional reform,  improve administrative 
and  management  infrastructure,  and  training  for  application  of  international  Conventions. 

This  can  take  the  form  of  seminars  or  workshops,  to  identify  in  common 
appropriate  action  programs,  and  technical  assistance  for  carrying  out  agreed 
actions.  Assistance  actions  generally  come  under  existing  programmes  or  are 
otherwise agreed  with  requesting  countries, and the Commission  is attentive  that 
the objectives  be served  as far  as possible. 

16 

IV. 

EC  ACTION  TO  DATE  RELATING  TO  EXTERNAL  ASPECTS  OF  MARITIME 
TRANSPORT 

A. 

Existing  legislation,  its  application  and  initiatives  to  resolve specific  problems 

The main  legal  instruments on shipping adopted  by the EC to date relate  to  important  aspects of 

57. 
its external  relations  in this field. 

Council Decision  77/587 ,0 set up a consultation procedure on relations  between  Member States and third 
countries  in  shipping  matters  and  on  action  relating  to  such  matters  in  international  organisations. 

Council  Regulation  No  954/79  "  concerns  the  conditions  of  ratification  by  Member  States  of  the  UN 
Convention  on a Code of Conduct  for  Liner  Conferences,  so as to preserve  conditions of competition  as 
regards  liner  conference  shipping,  while at the same time offering  national  shipping  lines of  developing 
countries  particular  opportunities  to participate  in  liner conferences  and  the  trade  carried  by  them. 

The four  Regulations  adopted  by the Council  in December  1986  ll  concern: 

the  application  of  the  principle  of  freedom  to  provide  services  to  maritime  transport  between 
Member  States and  between  Member  States and  third  countries; 
the application  of  Articles  85 and  86 of the Treaty  to  maritime  transport; 
unfair  pricing  practices  in  maritime  transport;  and 
coordinated  action  to  safeguard  free  access to cargoes  in ocean  trades. 

They constitute a coherent  package of Community  instruments in pursuance of a non-protectionist  policy, 
while  applying  basic  provisions  of the  Treaty. 

In  respect  of  restrictive  measures  by  third  countries  or  unfair  practices  by  foreign  shipowners,  the 
Regulations serve to  discourage such  measures or practices or,  when these do occur, to achieve  effective 
solutions through  negotiation.  In cases where  this  is not achieved  the  Regulations  provide  the  basis  for 
defensive  action  to counter  such  measures  and  practices. 

58. 
In  addition  to  phasing  out  unilateral  restrictions  by  Member  States, the  Regulation  applying  the 
principle of freedom  to provide services to maritime transport has put an effective  brake on new initiatives 
for  cargo-sharing  arrangements  between  Member  States and  third  countries. 

59. 
Numerous  cases have  been  raised  under  Regulation  No.  4056/86  and  related  decisions  made  by 
the Commission. The  Regulation  has proved  an effective  means of ensuring compliance  with  Articles  85 
and  86  in  shipping  and  to  ensure  the  effective  competition  in  the  liner  shipping  trades  serving  the 
European  Union  and  the  provision  of  high  quality,  low-cost  services  to  shippers,  i.e.  the  exporters  and 
the  importers  of  the  Union. 

60. 
The  Regulation  addressing  unfair  pricing  practices  in  maritime  transport  has been  used  to  good 
effect  and  there  are,  furthermore,  strong  indications  that  it  has  influenced  the  behaviour  of  certain 
third-country  lines,  in  particular  concerning  their  rate  setting  policies. 

Apart  from 

61. 
effective 
solution  through  negotiations  is  not  achieved,  the  Regulation  providing  for  coordinated  action  to 
safeguard  free  access to cargoes  constitutes a valuable deterrent.  In  the  case of  restrictions  imposed  by 

the  actual  implementation  of  defensive  measures  in  cases  where  an 

10  O.J.  L 239,  17.9.1977 
11  O.J.  L  121,  17.5.1979 
12  Council -Regulations Nos. 4055/86, 4056/86, 4057/86, 4058/86; O.J. L 378. 31.12.1986 

17 

the West and  Central  African  states, where the use of the  Regulation  has been  requested,  the Community 
has continued to try to achieve a mutually  acceptable solution  through consultations. More generally,  the 
possibility  provided  by  the  Regulation  to  take  counter-measures,  has  been  of  particular  value  for  the 
Commission in its discussions with a number of countries when seeking to secure market access and  non 
discriminatory  treatment  for  Community  shipowners. 

62. 
Member  States  and  Community  shipowners  have  regularly  raised  with  the  Commission  issues 
regarding  specific  problems  arising  in  particular  shipping  trades.  In  its  report  to  the  Council  on  the 
implementation of the shipping Regulations'3 the Commission reported,  i.a., on action  undertaken  by that 
time  to address  such  problems  as  arose  with  Algeria;  Kenya;  Korea;  Taiwan;  Indonesia;  Japan;  and  on 
consultations  with  third  countries,  such  as  Brazil,  Sri  Lanka  and  the  USSR.  The  Commission  has 
the  Member  States.  It  has,  in  particular, 
continued  to  pursue  such  action,  in  close  consultation  with 
raised  specific  issues  regarding  maritime  transport  in  discussions  with  a  number  of 
third  countries, 
namely  Taiwan;  Korea;  China;  Ukraine;  Japan.  Such  discussions  have  resulted  in  several  concessions 
obtained  from  the  competent  authorities  of  the countries  concerned. 

63. 
The  results  obtained  clearly  show  that  the  Community  can  efficiently  secure  the  interest  of  the 
Member States collectively.  It is obvious that the leverage of the Community vis-à-vis third countries can 
be  used  to  obtain  concessions that  individual  Member  States  would  not  be  able  to  realise.  Apart  from 
its  significant  tactical  advantage,  a  Community  approach  is  distinctly  preferable  to  that  of 
individual 
Member  States  since  they  are  not  normally  in  a  position  to  take  account  of 
the  interests  of  the 
Community  as  a  whole.  In  this  respect,  the  need  to  establish  a  coherent  and  comprehensive  maritime 
Community  policy  on  the  basis  of  well  defined  policy  objectives  can  be  considered  essential  for  the 
further  development  of  the  EC merchant  fleet  and  to  prevent  any  internal  distortions  of  competition. 

64. 

Further  information  on  matters  referred  to  in  this  section  can  be  found  in  Annex  III. 

B. 

Development  of  EC  relations  with  third  countries  to^date 

In the  intervening  years after  1986 an  increasing  number  of third  countries  have developed  their 
65. 
relations  with  the  Community  in  shipping.  The  Commission  lias  used,  and  intends  to  continue  to  use, 
its  possibilities  to  work  towards  the  objective  of  free  and  fair  competition  in  the  world  market. 
It 
considers  this  effort  as an  essential  component  of  implementing  the established  Community  policy. 

EC relations  with  third  countries  have developed  to-date  by  means  of  (i)  agreements,  (ii)  consultations, 
as well  as  (iii)  various  forms  of  cooperation,  including  technical  assistance. 

(I)  Agreements  with  third  countries 

66. 
Although  the  Community  has  not,  so  far,  concluded  any  sectoral  maritime  transport  agreement 
with  a  third  country,  a  number  of  general  agreements  between  the  EC  and  third  countries  (or  groups 
of  third  countries)  contain substantive provisions  which relate to shipping.  Other 
agreements,  whilst 
not  containing  specific  substantive  provisions  on  shipping,  provide  for  cooperation/technical  assistance 
as  well  as  for  consultations,  as  necessary. 

In  the  first  category  belong:  the  Lomé Convention,  the  Europe  Agreements,  the  Partnership  and 

67. 
Cooperation  Agreements  with  countries  of  the  former  USSR,  and  the  EEA  Agreement14. 

13 

SEC(90)  1594  final,  1.08.1990 

14  For  more  detail  as regards,  i.a.,  the content  of the agreements  concerning  maritime  transport  see Annex  V. 

18 

Association  agreements  have  also  been  or  are  being  negotiated  with  most  third  countries  of  the 
Mediterranean.  They  provide  for  early  negotiations  leading  to  liberalization  of  maritime  transport  along 
similar  lines to  those  recent  agreements  with  Central  and  Eastern  European  countries. 

68. 
Over the years, the Community  has concluded  trade and economic  cooperation agreements  with 
numerous  third  countries;  transport  is generally  included  among  the  sectors  for  economic  cooperation, 
and  this has been  the  basis for  consultations  and cooperative  action  with  a number  of  such  countries. In 
several  such  agreements,  maritime  transport  has been  the  subject  of  an  exchange  of  letters  annexed  to 
the  agreement,  whereby  the  Parties undertake  to address any  issue relating  to  the operation  of  shipping 
with  a  view  to  finding  solutions  to  problems  that  may  arise.  In  several  instances  discussions  in  the 
framework  of  the Joint  Committees have taken  place with  satisfactory  results. 

In  more  recent  negotiations  for  such agreements,  engaged  with  Korea  and  South  Africa  (as  well  as  for 
a  new  partnership  agreement  with  Mexico),  the  Community  has  proposed  the  inclusion  of  substantive 
provisions on shipping. The negotiations with  Korea have been  concluded  and the agreement  was signed 
recently. 

(2)  Consultations  with  third  countries 

The  Commission  has,  for  some  time,  engaged  in  discussions and  consultations  with  important 
69. 
partners  in  maritime  transport,  which  have been  intensified  with  the development  of  EC shipping  policy 
and  activity  relating  to  international  shipping:  several  EFTA  countries  -  Finland15,  Norway,  Sweden15 
and  Switzerland;  the  USA,  within  the  framework  of  the Consultative  Shipping  Group; the  Republic  of 
Korea;  Japan;  and,  until  1991,  the  USSR.  Such  consultations  serve  the  purpose  of  exchange  of 
information  and  views  on  developments  and  policy  issues of  mutual  interest,  as  well  as  the  pursuance 
of  solutions to  problems  that  arise16. 

70. 
Consultations with  other countries have so far  been  held  on an ad hoc basis, where required.  Use 
is made  of  opportunities  offered  in the  framework  of existing  agreements  or  of  less formal  events,  incl. 
workshops  organised  with  representatives  of  third  countries  or  groups  of  countries. 

. (3)  Cooperation  and  Technical  assistance 

71. 
The  Commission  has  organised  several  seminars  and  conferences  or  workshops  with  third 
countries  or  groups  of  countries  on  shipping  issues.  These  have  provided  the  possibility  to  discuss 
constructively  with  high-level  officials  as  well  as  with  commercial  interests  existing  problems  and  to 
consider needs for  technical  assistance in the efforts  to  liberalise the sector,  facilitate  transport  operations 
and  promote  compliance  with  internationally  applicable  rules  and  standards.  A  number  of  these 
conferences  and  workshops  have  resulted  in joint  action  programs  that  are  been  followed-up  and/or 
specific  technical  assistance  projects'7. 

72. 
Technical  assistance  provides  an  important  means  to  improve  the  functioning  of  the  trade  and 
help  liberalisation  of  such  trades  by  providing  better  conditions  of  operation  for  the  lines.  This  serves 
the dual  objective  of  development  policy  and  shipping policy.  Actions  in respect of,  i.a.,  India,  countries 
of  the  Maghreb  and  of  West  and  Central  Africa,  as  well  as  for  the  ASEAN  countries  have  been 
undertaken,  in  addition  to  numerous  projects  under  the  PHARE  and  TACIS  programs. 

Prior to their accession  to the EC. 

As far as the developed countries are concerned, the Maritime Transport Committee of the OECD has also 
traditionally  served  as  the  forum  for  multilateral  contact  among  them  as  regards  shipping  matters;  the 
Commission  regularly  participates at  its meetings (see para. 83). 

See also Section  V.B.2 

The  Commission  has  also  established  cooperative  relations  with  a  number  of  international 

73. 
organisations  and  institutions:  UNCTAD, the  World  Bank; and  with  the World  Maritime  University 
and  the  International  Maritime  Law  Institute  concerning  study  programs  and  fellowships  for  shipping 
officials  of  developing  countries. 

74. 
Experience  with  actions  of  cooperation  and  provision  of  technical  assistance,  as  above,  can  be 
considered  generally  positive and  promising in terms of serving the objectives of such actions as regards 
the third countries  involved  as well  as the Community.  The Commission  intends to  further  pursue  such 
activity  as an  integral  part of  its external  relations  in the field of  maritime transport. 

75. 

A more detailed  review  of  developments  covered  in  this section  is provided  in Annex  IV. 

C. 

Action  in  international  organizations  &  multilateral  agreements 

76. 
The Commission participates systematically in the work of international  oganizations dealing with 
maritime transport and  in the  negotiation  of  international  conventions concerning  international  shipping. 
These have  included,  in  particular: 

the  Uruguay  Round  negotiation  for  a  GATS  and  the  continuation  of  these  negotiations  on 
maritime  transport  in  the  Negotiating  Group  on  Maritime  Transport  Services  (NGMTS)  in  the 
World  Trade  Organization; 
UNCTAD,  as  well  as  UN  conferences  and  negotiations  organized  under  the  auspices  of 
UNCTAD; 
the  Maritime  Transport  Committee  (MTC) of  the OECD; 
the Consultative  Shipping  Group  (CSG); 
IMO and  ILO. 

- 

The  Uruguay  Round  negotiations  have  been  conducted  by  the  Commission  under  specific 
77. 
arrangements  agreed  by  the  Council  so as  to ensure the  unified  representation  of  the  EC. The  currently 
continuing  negotiations  on  certain  services  are  conducted  by  the  Commission  in  conformity  with  the 
"Code  of  Conduct  agreed  between  the  Council,  the  Member  States  and  the  Commission  on  the  post-
in  May  1994,  as  were  the 
Uruguay  Round  Negotiations  on  Services"  approved  by  the  Council 
negotiations  on  maritime  services. 

78. 
Since its adoption  in  1977, the consultation  procedure set up in Council  Decision  77/587 has been 
used  as  a  basis  to  harmonize  the  position  taken  in  other  international  organizations  and  international 
conferences.  In  certain  cases  of  important  negotiations  common  objectives  have  been  adopted  by  the 
Council  or  directives  have  been  given  to the Commission  for  participation  and  representation  of  the  EC. 
based  on  the  recommendations  submitted  by the Commission  (see  para.  82  below). 

79. 
In  UNCTAD  the  EC  has  been  represented,  notably,  at  sessions of  the Conference  as well  as the 
sessions  of  the  Committee  on  Shipping,  until  the  latter's  demise  in  1992;  and  of  the  subsequently 
established  Standing  Committee  on  Services:  Shipping,  since  1992. 

80. 
The Commission  has coordinated  positions, as necessary, on  subjects discussed  at these  meetings 
and  on  Resolutions  adopted  therein.  Until  1992  this  was  regularly  done  within  the  coordination 
framework  of  Group  B. It  has, also, represented  the Community  on  matters  of  specific  relevance  for  the 
EC and  on  which  Group  B as  a whole  did  not  have a position  or  interest.  The  representation  of  the EC 
at  these  meetings  and  participation  in  their  work  has  been  facing  considerable  difficulties,  not  only 
because of  the Community's  status as an observer  rather  than  as a full  participant,  but  primarily  because 
of  the  reluctance  of  the  Member  States  to  accept  the  implications  of  such  role  as  regards  their  own 
independent  voice. 

81. 
Following  UNCTAD  VIII  (Cartagena,  1992)  and  the  abandonment  of  the  tradition  of  a 
coordinated  position  of  the  OECD  countries,  the  Community  has  been  speaking  at  the  sessions  of  the 

oob 

Standing Committee with one voice, represented jointly by the Presidency  and  the Commission. This has 
represented  a significant  shift  in  practice,  which  has been  increasingly  confirmed  at the  successive three 
sessions  of  the  Standing  Committee  held  since  November  1992,  as  Member  States  have  come  to 
recognize  the  necessity  of  common  action  and  representation  and  the  significant  risks  involved  if  each 
of  them  were  to  express  individually  its  views.  At  the  same  time  this  represents  a  fragile  practical 
arrangement:  it  leaves open  the question of an agreed  and binding  discipline which  is needed  in the  light 
of  the  Court's  requirement  for  unity of  representation. 

In  the  UN framework, 

82. 
in  addition  to  participation  in  the  work  of  UNCTAD  as  above,  the 
Commission  has  also  participated  during  recent  years  in  negotiations  organized  under  the  auspices  of 
UNCTAD, relating  to  international  Conventions, and  more  specifically: 

Convention  on  conditions  for  registration  of  ships (from  1983 to  1986): 

besides coordination  of  positions, as required,  within  Group  B, the  EC  had to  negotiate 
specific  EC  clauses  necessary  to  ensure  compatibility  of  the  Convention  with  relevant 
Treaty  provisions;18 

First  Review Conference  of the  Liner  Code (October/November  1989 and  June  1991): 

negotiation  on  behalf  of  the  EC on  the  basis of  directives  adopted  by  the Council.19 

In  the  OECD  the  Commission  participates  regularly  in  the  discussions  of  the  MTC  and  its 
83. 
subsidiary  bodies.  It  seeks  to  ensure  that  views  expressed  by  Member  States  on  issues  relating  to  the 
common  policy  are  in  line with  it.  It  presents the  EC position  where  relevant;  it also  presents the  views 
of  the Commission  on  matters  within  its own  competence  as  well  as on  those  on  which  it  is  exercising 
its  initiative  to  formulate  recommendations  or  make  legislative  proposals. 

84. 
The  nature  of  the  discussions  usually  taking  place  in  the  MTC  does  not,  as  a  rule,  require  a 
coordination  of positions of the  Member  States; whenever  such a need  has arisen, coordination  has taken 
place  either  in  the  Council  Transport  Working  Group  or  on  the  spot.  An  unsatisfactory  aspect  of  the 
OECD framework  relates to the  implications of the status of the Commission  in meetings with  groups  of 
non-OECD  countries. 

85. 
The  informal  framework  of  the  Consultative  Shipping  Group  has traditionally  been  one  which 
has  not  raised  problems  for  the  Commission  to  play  its role  in  the  dialogue  of  the  CSG  with  the  USA. 

Coordination  of  positions  in  IMO  and  ILO  is  of  increasing  importance  in  view  of  the 
86. 
development  of  EC  policy  on  matters  within  the  area of  work  of  these organizations.  The  modalities  of 
such coordination  have been  the subject  of discussions within  the Council  Transport  Working  Group;  for 
practical  reasons  they  will  not  be  elaborated  in  this  Communication  which  does  not  cover  the  fields  of 
activity  of  these  organizations. 

COM(85)  388 final,  5.07.85 

Communication  from  the  Commission  on  a  recommendation  and  proposal  for  a  Council  Decision 
authorising  the Commission  to participate  on behalf  of the Community  in the Review Conference  on the 
United  Nations Convention  on a Code of Conduct  for  Liner Conferences  and  in its preparatory  work and 
on common  action  in this regard,  SEC(87)  2063 final,  17.12.87; 

Council.Decision  of 7.12.88,  doc.  6529/88  - MAR  17,  6.06.88 

a, 

V. 

FURTHER  DEVELOPMENT OF THE  EC  EXTERNAL RELATIONS IN THE  FIELD 

OF  MARITIME TRANSPORT 

A. 

The  present  context  in which  external  shipping  relations  develop 

International  political,  economic  and  commercial  developments 
The  present  context  in which  EC action  is situated  is  in  several  respects  considerably  different 

/. 
87. 
from that prevailing  only a few  years ago. 

There  has  been  in  recent years  a marked  reorientation  towards  liberalisation  worldwide,  which 
could  not  fail  to  affect  shipping  policies  as  well.  Thus  significant  improvement  in  lifting 
restrictions on access to the shipping market has been made in several  Latin American  and Asian 
countries.  At  the  same  time 
a  similar  reorientation  has  taken  place  in  "international 
organisations:  this  is  to  be  seen  in  the  reorientation  of  UNCTAD  towards  progressive 
liberalization,  signalled  by  UNCTAD  VIII  at  the  beginning  of  1992.  The  conclusion,  more 
recently,  of  the  Uruguay  Round  and  the  GATS  confirrn  this  trend  although,  regrettably,  the 
negotiations  on  maritime  transport  could  not  be successfully  concluded. 
This reorientation  has been  resisted by formerly  protected  industries in various countries; and this 
has  made  it  difficult  to  achieve  legally  binding  commitments  that  would  make  the  changes 
irreversible. 

At  the  same  time,  we  are  witnessing  tendencies  towards  unilateralism  at  the  expense  of  the 
multilateral  approach  to seeking solutions to international  problems. This tendency  is particularly 
pronounced  in  the  USA  as  manifested,  for  example,  by  the  attitude  of  the  USA  with  regard  to 
the  negotiations  on  maritime  transport  in  the  WTO  as well  as the  recent  reservation  of  Alaskan 
oil  exports  for  US  flag  ships, and  is a source of  increasing  concern. 

There  have  been  considerable  shifts  in  the  relative  importance  of  various  trades,  the  most 
noteworthy  in  terms  of  its  global  significance  being  the  growth  of  Asian  trades,  including  the 
expansion  of  intra-Asian  trades. 

Commercial  developments  involving  global  carriers  and  changes  in  patterns  of  cooperation 
accompanying  the extension  of  multimodal  transport  and  the evolution  of  logistic  requirements. 

There  has  been  further  internationalisation  of  shipping  activity  with  increasing  separation  of 
management  from  ownership,  chartering  of  vessels of  different  nationality,  recourse  to  foreign 
crew,  and  slot  chartering  arrangements. 

88. 
Closer to the  EC, there  is a totally  new situation  as the disappearance  of the State-trading  system 
has  radically  altered  the  political  and  economic  environment;  from  confrontation  we  have  turned  to 
cooperation  and assistance programs, association or partnership  agreements, and the prospect  of  accession 
of a number of CEEC  in the not distant  future.  Thus the old  preoccupation  with  the perceived  threat  from 
State-trading  countries'  shipping  has disappeared  as  far  as the  CEEC  and  former  USSR  are  concerned. 

89. 
On  the  EC  side,  there  has  been  à  marked  increase  in  the  weight  and  role  of  the  EC  in 
international  economic  relations  with  the  completion  of  the  single  market,  the  Maastricht  Treaty,  the 
enlargement  of  the Community  and  the development  of closer and  deeper  ties  with  numerous  countries 
and  in  particular  CEEC, CIS  and  Mediterranean  countries. 

90. 
Effective  external  action  in  the  field  of  maritime  transport  in  pursuance  of  the  Community's 
objectives (ref.  Chapter  III) should  now be further  developed  so as to take advantage of the  Community's 
changed  position.  In effect,  the competitive  position  of Community  shipping would  be enhanced  if,  with 
regard  to  third  countries  and  in  international  organisations,  the  EC  were  to  take  full  advantage  of  its 

changed  position  and speak  with one voice. 

91. 
Apart from the legal considerations (see next Section 2.a), the commercial  advantages which can 
be  derived  from  a  common  external  policy  in  the  maritime  transport  sector  are  considerable.  The 
negotiating  power of  the Community representing  the  fifteen  Member States  is  far greater than  that  of 
the  individual  Member  States.  The results obtained  by  the  Commission  so  far,  during  discussions  on 
maritime  transport  with  the  authorities  of  a  number  of  countries,  have  proved  that  the  Community, 
speaking  with  one  voice  on  behalf  of  the  Member  States,  can  achieve  more  than  individual  Member 
States. 

92. 
Given the competence of the Community, confirmed  in the recent Opinion No.  1/94  of the ECJ, 
to conclude  agreements  on  maritime transport  with  third countries,  the Community  has a responsibility 
to  formulate  external  maritime  transport  policy.  All  actions  vis  à  vis  third  countries  in  the  field  of 
commercial  maritime  transport  matters should  therefore  be subject  to Community  oversight  in order  to 
safeguard  consistency  and  clarity  in  its  external  relations.  In  summary,  it  is  in  the  first  place  the 
responsibility  of  the Community  to assume the task of  negotiations  with  third  countries. 

93. 
This  does  not,  however,  mean  that  the  Commission  must  immediately  take  up  all  the 
responsibilities that come with the Community's competence to conclude shipping agreements  with third 
countries.  The Commission  intends at the present  stage rather  to concentrate  on  priority  cases  identified 
on  the  basis of  the criteria  considered  in  Section  V.B.I.a. 

2. 

a. 

Evolution  of  the  role  of  the EC and  its powers in the  external field 

Evolution  of  Community  powers  and  scope  of  action  in  the  field  of  external  shipping 
relations 

94. 
The  evolution  of  Community  competence  in  the  external  field  was  set  out  by  the  Commission 
in the White Paper on  "The development of the Common Transport  Policy" presented  in December  1992. 

Since then,  the Court  of Justice, in  its Opinion  Number  1/94,  has pronounced  itself on  the  long-
95. 
running  dispute  regarding  external  competence  for  trade  in  services  and,  in  this  context,  for  transport. 
As  far  as  maritime  transport  is  concerned,  the  principal  conclusion  was  that,  in  areas  of  exclusive 
Community  competence,  the  legal  basis  for  any  such  action  was Article  84.2  of  the  Treaty.  It  also  set 
out  a certain  number  of considerations  regarding  the delineation  of the areas  which  fell  under  exclusive 
competence. 

Already,  the  Community  had  begun  to  exercise  external  competence  in  the  shipping  area  based 
96. 
on  Article  84.2  of  the Treaty.  The  European  Court of  Justice held  in Case 22/70  that  as the  Community 
develops common  internal  rules  it also acquires  authority  over external  negotiations  which  might  affect 
these  common  rules  (ERTA  doctrine20).  Later,  Case  1/76  of  the  Court  of  Justice  constituted  an 
important  step  in  the  definition  of  the  external  powers  of  the  Community,  declaring  that  if  the 
Community  has  an  internal  competence  to  achieve  a  specific  objective,  it  implicitly  disposes  of  the 
exclusive external  competence  on  that  subject  as  far  as such  an external  exercise  is necessary  to  achieve 
that  objective21.  The  Court's  Opinion  (1/94)  did  not  in  any  way  detract  from  the  rationale  of  these  two 
judgements.  Accordingly,  the  legislation  adopted  by  the  Council  gives  the  Community  exclusive 
competence,  in accordance  with  the  ERTA doctrine,  in particular  for  agreements  relating to the  provision 
of  maritime  transport  services  on  the  basis of  Regulation  4055/86. 

20  Commission  v.  Council,  Case  22/70  [1971]  ECR 263 
21  Case  1/76  (on the  Agreement  establishing  a European  laying-up  fund  for  inland  waterway  vessels) 

[1976] „ 

o23 

97. 
However,  not all  issues addressed  in agreements  with  a third  country  in the field  of shipping can 
je  considered  as necessarily  falling  within the area referred  to in the previous paragraph.  Agreements on 
such  issues may  therefore  still  be concluded  by  individual  Member States.  Furthermore,  even  where  the 
Community  has  an  exclusive  power,  Member  States can,  in certain  circumstances,  be authorised  by  the 
Council to negotiate bilaterally.  The Court of Justice in a number of judgements has set out the principles 
for  such  a  procedure22. 

Given  the  arguments  set  out  in  Section  V.A.I  above,  allied  to  the  fact  that  a  number  of 
98. 
significant  issues  fall  under  the  area  of  exclusive  competence,  there  is  however  a  strong  case  for  the 
pursuit,  at  Community  level,  of  agreements  covering  the  entirety  of  international  maritime  relations,  if 
necessary  on  the  basis  of  shared  competence  between  the  Community  and  Member  States.  • Such  an 
approach  allows the demonstrably  greater  negotiating  leverage of the Community to be used, while at the 
same time avoiding  lengthy, and  ultimately unproductive debate within Community  institutions regarding 
the  exact  delineation  of  the  Community's  and  Member  States'  respective  competencies.  * 

99. 
In  view  of  the  evolution  of  the  Community's  powers  in  the  external  field  and  its wider  role  in 
international  economic  relations,  there  is  clearly  a  need  for  an  increased  scope  of  action  by  the 
Community and  its Member States, acting as one,  in the field  of external  shipping relations.  The  Court's 
that,  where  areas  of  shared  competence  are  being  addressed  in  international 
Opinion  confirmed 
negotiations,  there  is  an  obligation  on  Member  States  to  ensure  close  cooperation  in  the  definition  of 
positions. 

b. 

Issues  relating  to  the  exercise of  EC  powers 

1. 

Bilateral  relations  of  Member  States  with  third  countries 

The  Member  States  have  over  a  long  period  developed  a  system  of  bilateral  agreements  with 
100. 
third countries regulating  maritime transport relations. These agreements deal with a wide range of issues, 
including  market  access. 

Moreover,  a number of the existing bilateral  agreements concluded  by Member States include  provisions 
based on nationality which  imply a different  treatment of the nationals of the Member State involved  than 
lhat  accorded  to  nationals  of  other  Member  States.  Such  clauses,  in  particular  clauses  in  the  form  of 
cargo-sharing  arrangements,  violate  the  principle  of  the  freedom  to  provide  services,  as  applied  by 
Council  Regulation  No.  4055/86  in  maritime  transport  between  Member  States  and  between  Member 
States  and  third  countries.  All  such  provisions  ought  to  have  been  appropriately  adjusted  or  terminated 
in accordance  with  the Regulation, at the  latest by the end  of  1992. Nevertheless, there  are still  numerous 
agreements  with  such  provisions  in  force,  whose adjustment  has not yet  been  achieved.  The  Commission 
has,  as  a  result,  opened  procedures  on  the  basis  of  Article, 169 of  the  Treaty,  seeking  to  terminate  the 
infringements  to  the  Regulation." 

The  conclusion  of  agreements  between  Member  States  and  third  countries  negatively  affecting 
101. 
the  freedom  to  provide  maritime  transport  services  in  the  terms  of  Council  Regulation  No.  4055/86  is 
no  longer  allowed.  Only  in  specified  exceptional  circumstances  in  liner  trades  may  cargo  sharing 
arrangements  be  permitted  in  accordance  with  a  specified  Community  procedure. 

More  generally,  in  accordance  with  the  ERTA  doctrine  (see  para.  96  above),  the  Member  States  no 
longer  have  the  competence  to  conclude  agreements  relating  to  the  provision  o(  maritime  transport 
services. 

22  Citations  of  Donderwolke,  Tezi,  Bulk Oil 
23  Commission  Report  on  the  implementation  of Council  Regulation  No. 4055/86,  SEC(94)  1570  final 

5.10.1994., 

c 2^ 

102.  Bilateral  agreements  between  Member  States  and  third  countries  containing  other  provisions24 
falling  within  Community  competence are a different  subject.  In addition  to the question of competence, 
covered  in the preceding section, there  is the important  question  how best to attain the desired  objectives. 
In comparison  with  each  Member State the Community,  acting as one, will  be  in a  much  better  position 
to  negotiate  with  trading  partners  than  individual  Member  States.  Not  only  because the Community  as 
a whole is one of the most important trading blocs in the world  but also because a consistent coordination 
of  all  interests  involved  will  lead  to a more  coherent  approach  to third  countries. 

103. 
In  view  of the  large-number  of cases  in which  a  bilateral  agreement  is considered  necessary  by 
either  a  Member  State  or  a third  country,  a  Community  approach  is  needed  whereby  cases  should  be 
identified  which  should  be  handled  by  the  Community  and  others  which  could,  for  the  time  being,  be 
left  to the  individual  Member  States, acting  within  a Community  procedure. 

The  questions  relating  to  Community  agreements  with  third  countries  and  possible  transitional 
arrangements  for  bilateral  agreements  of  the  Member  States  are  of  particular  importance  for  the 
development  of  the  EC external  relations  in the  field  of  maritime  transport;  they  are dealt  with  in detail 
in  Section  B.l.a.l  and  Chapter  VI  below. 

2. 

Representation  in international  organisations dealing with economic and  commercial 
aspects  of  shipping  2S 

104. 
EC  action  to  date  in  international  organizations,  as  well  as difficulties  arising  in  respect  of  EC 
participation  and  representation,  have  been  the  subject  of  Section  IV.C  above.  Consideration  of  the 
question  of  participation  and  representation  of  the  Community  and  the  Member  States  in  international 
organizations  dealing  with  economic  and  commercial  aspects  of  shipping  has  acquired  considerable 
importance,  in  particular,  because  of  the  relatively  recent  developments  in  UNCTAD  (UNCTAD  VIII 
and  the  Cartagena  Commitment,  January  1992,  and  onwards).  As  far  as  representation  in  the  WTO  is 
concerned,  there  have  so  far  been  few  practical  implications  resulting  from  the  need  to  develop  a code 
of  conduct  for  defending  Community  interests,  and  maritime  issues  have  been  handled  relatively 
satisfactorily.  The  difficulties  that  have  arisen  in  discussions  on  shipping  in  the  OECD  relate  more  to 
formal  aspects  concerning  the  general  status  of  the  EC  in  the  organization  rather  than  with  issues  of 
substance  in  respect  of  shipping; these difficulties,  as a result,  are not addressed  in  this  Communication. 

105. 
The  new  orientation  and  organisation  of  work  of  UNCTAD  require  new  working  arrangements 
on  the  part  of  the  Community.  Work  on  shipping  is  now  within  the  scope  of  wider  work  on  services 
instead  of  being  dealt  in  a specific  Committee  on  Shipping,  as had  been  the  case  previously. 

In addition,  there  is no  longer  a spokesman  for  the OECD countries  as a group  nor  is there  coordination 
of  positions  of  these  countries. 

106. 
In  accordance  with  the provisions of  the Treaty,  the Community  has to  speak  with  one voice  in 
all  cases  in  which  Community  competence  or  common  interest  is  involved.26  The  Group  system  that 
existed  until  recently  in  UNCTAD, whereby  each  Group's  position  was  presented  by  its spokesman,  led 
to  the  full  implications  of  the  Treaty  provisions  being  avoided.  The  new  circumstances  impose  new 
arrangements,  in  line  with  the  requirements  of  the  Treaty. 

On types of provisions contained  in bilateral  agreements see Section  Vl.C.l. 

As already  indicated (see Executive Summary,  footnote  1), this Communication  does not address relations 
with the  IMO, concerning  safety  and technical  aspects of shipping.  More particularly,  representation  in 
the  IMO has been  the subject  of a specific  arrangement. 

See also  European  Court  Opinion 2/91 given on  19.03.1993. confirmed  by Opinion  1/94. 

In the past, the  common  position  of  the OECD countries  was presented  by the Group  B spokesman; as 
a  result,  the  question  of  representation  of  the  EC  outside  Group  B  did  not  arise  except  on  those 
infrequent  occasions  where  the  EC had  a  particular  concern,  not generally  shared  by  the  other  OECD 
countries. 

This  is no  longer the case.  In the circumstances  it is all  the more  important  that the Community  speaks 
with  one  voice  instead of  Member States trying to present their views  individually. 

107. 
In  case  of  negotiation  on  subjects  of  importance  leading  to  a  legally  binding  document,  the 
Commission  acts  on  the  basis of  a Council  Decision  including  directives  for  the  negotiation;  such  has 
been  the  case,  for  example,  at the  Liner  Code  Review  Conference.  In other  cases  the  course  of  action 
may  be  agreed  at  the  level  of  the  Council  Working  Group  or  in  Coreper  and,  as  appropriate,  at 
coordination  meetings  on  the  spot,  and  be  presented  by  the  Commission  or,  for  matters  within  the 
competence  of  the  Member  States,  by  the  Presidency.  In  such  cases,  individual  Member  States' 
delegations  may  also  intervene  to provide  additional  information  or support  the common  position  with 
additional  arguments,  however,  always within  the commonly  agreed  line. 

B. 

Components  and  priorities  for  Community  action 

108.  The  completion  of  the  single  market  and  the  establishment of  the  EEA,  the  recent  changes  in 
Central  and  Eastern  Europe  and  the  new  association  or  partnership  with  the  countries  of  the  region, 
continuing  growth  in the  international  mobility of goods and people, and the  increasing  interdependence 
in world  trade  and services,  call  for  the  further  development  of the  external  action  of  the  Community 
in the  field  of  shipping. 

109.  Taking  into  account  the  EC objectives  and  means of  action  in the external  field  with  regard  to 
maritime transport,  considered  in Chapter  III,  the main  components  of  Community  action  in respect  of 
the  further  development  of  its external  action  in this field  should be: 

the  further  development  of  relations  with,  and  related  action  vis-à-vis third  countries,  by  means 
of 
* 

Community  agreements  with  third  countries  and  procedures 
leading  to the  progressive 
transformation  of  existing  bilateral  regimes,  as  well  as  forms  of  dialogue  with  third 
countries  to  promote  a common  approach  to shipping  policy  issues; 
action  to  address  problems  arising  from  restrictive  or  discriminatory  measures  of  third 
countries; 
action  to  secure  fair  competition  on  a commercial  basis; 
cooperative  actions  and  technical  assistance to  third  countries; 

* 

* 
* 

the  development  of  cooperative  action  in  the  field  of  shipping  as  a  component  of  a  global 
approach  to the transport  services and systems of  Europe,  including those of Central  and  Eastern 
Europe,  so that  they  can  develop  in  as  integrated  a way  as  possible; and 

the  reinforcement  of  the  role  of  the  Community  within  relevant  international  organizations  to 
reflect  the  full  development  of  the  Community  shipping  policy;  and  the  negotiation  by  the 
Community  within  such  organisations,  in  accordance  with  Community  procedures,  with  a  view 
in  particular  to  consolidating  positive  developments  in  respect  of  shipping  policy  and  obtaining 
further  roll-back  of  existing  restrictions. 

110. 
These components of Community  action  are the subject  of  Sections V.B.I  to 3 below. The scope 
of  action  required  for  the  full  implementation  of a comprehensive  policy  on  relations  with  non-member 
countries  makes  it  necessary  also  to  consider  the  relative  priorities  of  particular  actions  to  be  pursued. 
This  raises  the  need  for  appropriate  arrangements  in  respect  of  existing  bilateral  agreements  of  Member 

9^ 

States with  third countries. 

/. 

Relations  with third  countries or groups  of  countries 

111.  The components of Community external  action as regards relations with non-member  countries, 
referred  to  in para.  109, are considered  below. 

The  development  of  these  relations  would  greatly  benefit  from  efficient  exchange  of  information  and 
timely  consultation  with  the  Member  States  concerning  their  relations  with  third  countries  and  related 
problems.  The  existing  consultation  procedure  set  up  by  Council  Decision  77/587/EEC  does  not  well 
fulfil  present needs. New,  practical  and effective  rules and  procedures are therefore  required  in order to 
ensure  adequate,  regular  and  timely  exchange  of  information  and  views  on  issues  relating  to  third 
countries. 

The proposed  Council  Decision,  presented  in Annex  II, aims  at adapting  to  this effect  the  consultation 
procedure  as regards developments concerning  shipping  relations  with  third countries. 

a. 

Seek agreement  with  third  countries on  policy  principles and common  approach to 
shipping  policy  issues 

112.  The  Community  has  an  interest  in  other  countries  following  similar  policy  principles  so  that 
problems  of  the  kinds  described  in  Section  II.D  do  not  arise  and,  if  they  do  arise,  to  address  them 
through  consultation  rather  than  by  recourse  to  defensive  measures.  It  should  therefore,  as a  matter  of 
priority,  seek  agreement  with  third  countries  on  policy  principles  and  a  common  approach  to  shipping 
policy  issues. 

This  can  take the  form  of  (i)  agreements  with  third  countries  on  policy  principles  and  cooperation,  as 
appropriate,  (ii)  consultations  and  (iii)  informal  discussions  in,  for  example,  policy  workshops  that  can 
promote  a common  understanding  concerning  shipping  policy  principles. 

1. 

Agreements  with  third  countries  on  shipping  policy  principles 

113.  With regard  to agreements with non-member  countries, and taking  into account the considerations 
in Section  A of  this  Chapter,  it  is necessary  also  to consider  the  question  of  the  bilateral  agreements  of 
the  Member  States.  This  question  is  dealt  with  in  Chapter  VI,  whereas  this  section  considers  only  EC 
agreements  with  non-member  countries. 

Provisions  on shipping  in horizontal agreements between  the EC  and  third  countries 

114. 
In the  framework  of  agreements  between  the  EC and  third  countries,  the  Commission  considers 
it  important  to insert appropriate  provisions when  new or renewed  agreements  are negotiated.  The timing 
of  such  negotiations  is  determined  by  considerations  beyond  transport.  Thus  the  question  of  setting 
priorities  as  among  third  countries  does  not  arise  as  a  sectoral  question;  however,  the  nature  and 
specificity  of  appropriate  provisions  needs  to  be  considered  in  each  case,  taking  into  account  that 
Community  agreements  with  third  countries  are  of  various  types,  ranging  from  traditional  co-operation 
agreements  to  agreements  of  economic  integration. 

115. 
In  the  first  place,  appropriate  provisions  concerning  in  particular  the  cross-border  provision  of 
services  and  establishment,  similar  to  those  negotiated  so  far  with  CEEC  or  CIS  countries,  should  be 
included  in  Association  or  Partnership  agreements  with  other  CEEC, CIS  and  Mediterranean  countries. 
Negotiations  with  several  Mediterranean  countries  already  have  been  or  are  to  be  engaged  in  the  near 
future: 

implementation  of  agreements  with  Egypt,  Israel,  Jordan,  Morocco  and  Tunisia; 

«23-

* 

forthcoming  negotiations,  as soon as the situation  allows, with  Algeria; 
in accordance with  the concept  of  the  recent  Communication  on  Mediterranean 
policy,  agreements  should  be  foreseen  to  gradually  cover  all-non-member 
countries  of  the area. 

In  the cases  of  negotiation  of  new  Trade  and  Cooperation  agreements  the  Community  should 

116. 
systematically  take advantage of  the opportunity  to  insert  provisions  relating  to  shipping. 

A  cooperation  provision,  as  in several  agreements  concluded  so  far,  allows  the  development  of  certain 
activities that assist the third  country  concerned  and  which  may  improve  the conditions  of  operation  of 
the  shipping  activity  to  the  benefit  of  all  involved.  They  may  also  allow,  indirectly,  improved  market 
access through  the promotion  of  market  orientated  policies. 

Whenever  possible,  it  is  desirable  to  go  beyond  a  simple  cooperation  clause  and  include  provisions 
reflecting  agreement  on  key,  substantive  issues of  shipping  policy. 

Sectoral  agreements and understandings between the EC and third countries on maritime transport 

117.  As  far  as  sectoral  agreements  between  the  EC  and  third  countries  on  maritime  transport  are 
concerned,  which  would  cover  shipping  generally  (rather  than  addressing  specific  problems  covered  in 
para.  128  below),  the  need  for  such  agreements  would  generally  depend  on  problems  that may  exist  or 
arise and that may  be  brought  to the attention  of  the  Commission  by  Member  States or  otherwise.  This 
would  be the  case,  for  instance,  if  similar  provisions  were  of  interest  to  several  Member  States  or  if  a 
Community  agreement  were  necessary  to  ensure  free  access  and/or  equal  treatment  of  Community 
shipowners  by  the  third  country  concerned. 

118.  The Commission considers at this stage that  shipping agreements  with  certain  maritime  countries 
should  be  envisaged  in  order  to  consolidate  positive  policy  developments  in  such  countries  or  improve 
the  conditions  of  market  access  of  Community  shipowners.  Among  countries  other  than  those  which 
would  be adequately  covered  through  the  Association  or  Partnership  and  Cooperation  Agreements,  such 
as CEEC  and  CIS,  the  EC  should  seek  agreements  with  significant  maritime  countries  such  as  Brazil, 
among  the  Latin  American  countries,  and  China,  Taiwan,  India,  and  a  number  of  ASEAN  countries, 
among  the  maritime  countries  of  Asia. 

As  a  first  step  and  based  on  contacts  held  so  far,  the  Commission  has  very  recently  submitted 
recommendations  to the Council  to authorize  it to negotiate agreements  on  maritime  transport  with  India 
and  China. 

119.  There  may  be  instances where a formal  agreement  with  a particular  country  appears,  for  the time 
being,  not  feasible;  a  less  formal,  and  not  legally  binding,  understanding  may  in  such  instances  be 
feasible  and  appropriate.  This  will  depend  on  particular  circumstances,  to  be  considered  by  the 
Commission  in  making  appropriate  proposals. 

120.  The  case  of  ad  hoc  issues  that  may  need  to  be  addressed,  and  which  may  result  in  agreements 
or  less  formal  understandings  on  specific  issues,  is covered  in  Section  B.l.b.l  below. 

Implementation  of  agreements and  development of  relations 

121. 
Finally,  the  relations  with  the countries  with  which  the  Community  has concluded  an  agreement 
containing provisions on  maritime transport,  will need to be developed. The implementation  of concluded 
agreements will require attention,  in particular as regards agreements with substantive maritime provisions 
or foreseeing  relatively  extensive cooperative  programs  in specific  fields,  including transport,  such as the 
Europe  and  the  Partnership  and  Cooperation  agreements.  Among  the  tasks  foreseen,  the  harmonisation 
of  legislation  of  CEEC  to  that  of  the Community  should  also  be  noted  (see  para.  150  below). 

2. 

Consultations  with  third  countries 

122. 
In  several  instances,  cooperation  agreements  with  third  countries  offer  the  possibility  to  consult, 
as  appropriate  or  necessary.  The  need  to  establish  regular  consultations  on  shipping  would  therefore  not 
appear  to  be  the  rule. 

As  far  as  regular  consultations  on  shipping  are  concerned,  as  distinct  from  consultations  in 
123. 
particular  cases  on  specific  issues  that  may  arise,  the  Commission  intends,  therefore,  to  continue  to  be 
selective,  devoting  its  attention  to  countries  with  which  it  has  significant  maritime  trade  relations  and 
whose  maritime  transport  policies  directly  affect  the  Community's  interests. 

124. 
The Commission  intends therefore  in the first  place to continue the regular consultations  engaged 
so  far (see  Section  IV.B.2  above); and considers  it desirable to also engage or  intensify  such  consultations 
with  countries  such  as  the  USA  and  Russia. 

3. 

Policy  workshops 

125. 
The  experience  with  the  limited  number of  shipping policy  workshops  organised  so  far  leads  the 
Commission  to  consider  that  such  events  can  positively  contribute  to  promote  the  objectives  of 
Community  shipping  policy.  However,  these  events  require  allocation  of  considerable  human  and 
budgetary  resources;  consequently,  they  can  be  organised  only  very  selectively  in  cases  of  considerable 
mutual  interest  where  they  can  make  an  impact. 

126. 
The  case  of  neighbouring  countries  -  CEEC, CIS,  Mediterranean  -  will  need  particular  attention, 
within  the framework  of  established  EU  policies and relevant  agreements.  This  includes the  continuation 
of  action  launched  at  the  Constanza  workshop  relating  to  the  Black  Sea  (September  1994);  and  similar 
action  in  respect  of  the  Baltic  Sea  region  and  the  Mediterranean. 

b. 

Address  problems  arising  from  measures  of  third  countries 

1. 

Elimination  of  restrictive  or  discriminatory  measures 

The  Community  needs  in  several  instances  to address  either  existing  restrictive  or  discriminatory 

127. 
measures,  or  new  measures  introduced  by  one  or  another  country: 

Existing  measures 

In  addition  to  cases  that  have  already  been  identified  and  have  to  be  further  pursued  (such  as 
West  and  Central  Africa,  Kenya,  South  Korea,  China),  other  cases  may  be  taken  up  as they  come 
to  the  attention  of  the  Commission,  by  being  raised  through  specific  requests  by  Member  States 
or  Community  shipowners  or  shippers  or  otherwise. 

The  approach  to  be  followed  would  be  problem-oriented  so  as  to  focus  on  measures  of  third 
countries  of  significance  for  the  Community  shipping  industry. 

New  measures 

In addition  to  existing  restrictive  or  discriminatory  measures,  new  ones  are  announced  from  time 
to  time  by  one  or  another  third  country.  The  Commission  will  be  attentive  to  any  cases  that  will 
be  brought  to  its  notice  by  Member  States  or  by  the  industry  or  that  the  Commission  itself  may 
identify. 

It is important  as a  matter  of  priority  to avoid,  as far  as possible, the  introduction  and  enforcement 
of  such  measures  instead  of  trying  to  reverse  them  once  enforced. 

=29 

128.  Démarches,  followed  as appropriate  by consultations,  have  been  the course  of  action  regularly, 
and  often  successfully,  pursued  in  such cases.  In that respect,  actions  of  all  kind  should:to  the  extent 
possible be co-ordinated  within  the Transport  Working  Group of the Council. 

Following  exploratory  discussions  with  the  country  concerned,  and  if  negotiations  for 

129. 
agreement  appeared  necessary,  the Commission would  request a Council  mandate to that end. 

an 

130. 
In  situations  described  above  relating  either  to  existing  or  to  new  measures,  action  based  on 
Regulation  no.  4058/86,  as  it  may  be modified  (see  para.  132  below),  could  become  a  priority  to  be 
identified,  subject  to  international  obligations  that  may  be  subscribed  by  the  Community  under  the 
GATS. 

2. 

Review  and  possible adaptation  of  existing  EC legislation:  Council  Regulation  No. 
4058/86 

131.  Coordinated  action  using  the  procedures  of  Council  Regulation  No.  4058/86  has  so  far  been 
undertaken and pursued only in the case of restrictive measures imposed by the West and Central  African 
countries.  As the  Commission  stated  in  its  Report  on  the  implementation  of  the  maritime  Regulations 
adopted in  1986, which  it submitted  on  1.08.1990,  it has been  pursuing its action  in that case on the basis 
of  the relevant  Council  Regulations, namely  Nos. 4058/86,  4055/86  and  4056/8627. 

The  Regulation  has  also  served  as  a  deterrent  against  restrictive  measures  by  third  countries; 
132. 
however,  the  question  has  been  raised  as  to  the  possibility  of  its  effective  use  in  a  number  of 
circumstances.  A  review  is therefore  being  made  of  the  Regulation  with  a  view  possibly  to  adapting  it 
to  ensure  a  more  efficient  response  to  problems  arising  from  restrictions  by  third  countries,  or  their 
agents,  on  market  access.  Consideration  may  be  given  to  widening  of  the  scope  of  the  third  country 
measures covered  and the eventual  measures that  may be adopted  by the Community.  Account  has to  be 
taken  in this respect of the  implications of developments  in the negotiations on  maritime  transport  in the 
framework  of the  World  Trade  Organisation. 

c.  Action  to secure  fair  competition  on  a commercial  basis 

133.  As  mentioned  in  para.  39  above,  operating  conditions  vary  considerably  among  countries  and 
shipping  registers  to the extent  that  competition  can  be seriously  distorted  by  advantages  deriving  from 
Government  measures  or  support.  In  addressing  this  problem  in  its  Communication  entitled  "Progress 
towards  a common  transport  policy  -  Maritime transport"28  the Commission  identified  a number  of  such 
measures  or  factors: 

State  ownership  or  control:  this  results  in  several  instances  in  significant  subsidisation  of 
operations; 
preferential  access to  an  international  market  to  which  other  shipowners  do  not  have  access; 
operation  under  a  flag  of  a  country  which  has  not  ratified  or  does  not  correctly  implement  the 
main  IMO  and  ILO  conventions. 

134.  Community  action  to  address  restrictions  on  market  access  and  recourse,  in  spécifie  cases,  to 
Council  Regulation No. 4057/86 to counter  unfair  pricing  practices by foreign  shipowners, are means that 
may  be used to secure  conditions  of  fair  competition  on  a commercial  basis. The  Commission  considers 
unfair  competition  should  also  be  addressed  by  ensuring,  insofar  as  it  is  within  the  Community 

27  SEC(90)  1594  final,  para.  90 

28  COM(85)90 final  of  19 March  1985. 

3o 

jurisdiction,  and  by  otherwise  promoting  the  adoption,  observance  and  enforcement  of  appropriate 
international  standards  relating  to  the'safety  of  ships  and  crew  and  the  protection  of  the  marine 
environment. 

1. 

Countering  unfair  pricing  practices:  review  and  possible  adaptation  of  Council 
Regulation  No.  4057/86 

135.  The  Regulation  has  proved  a  valuable  instrument  for  adopting  a  specific,  targeted  ad  hoc 
measure; the  mere  possibility  of  its  use has allowed  both  the  Commission  to  use  its  contacts  so  as  to 
preempt the need to  have  recourse to  it and the  industry to secure healthier competitive  conditions  in at 
least a number of  instances known  to the Commission. 

136.  However,  the  Regulation  has not been  designed  to address the more  general  problem  of  unfair 
competition.  A  review  of  the  question  is  underway  to  consider  the  adaptation  of  the  Regulation  as a 
means for addressing the problem. 

2. 

Adoption,  compliance and  enforcement  of  international  safety  rules and  standards 
through  stricter  PSC and  possibly action  vis  à vis flag states 

137.  Neglect  by  Governments  of  enforcement,  and  by  shipowners  of  observance,  of  internationally 
applicable rules and standards can provide a significant  competitive edge to shipowners using vessels not 
complying  with them. 

Thus,  besides the  paramount  importance  of  observing  such  rules  and  standards  for  reasons  of  safety  of 
ships and crew and  for  environmental  protection,  this is also of particular  importance  for  the  elimination 
of  unfair competition  from  ships  not  observing  such  standards. 

138.  Measures  in  this  regard  comprise  stricter  Port  State  Control  and  possibly  action  vis-à-vis  flag 
States  not  adequately  enforcing  internationally  applicable  rules  and  standards  concerning  the  safety  of 
vessels and  crew  and  the  protection  of the  marine  environment. 

139. 
This  issue relates  to  the Communication  of the Commission  of  1993 on  "A  Common  Policy  for 
Safe  Seas"29 and points to the possibility of taking action  in the external  field  in support  of the  objectives 
relating  to  safety  and  environmental  protection.  The  Commission  already  submitted  in  March  1994  a 
proposal  for  a Council  Directive  "concerning  the enforcement,  in  respect  of  shipping  using  Community 
ports and sailing  in the waters  under  the jurisdiction  of the  Member  States, of  international  standards  for 
ship  safety,  pollution  prevention  and  shipboard  living  and  working  conditions"'0;  the  Directive  was 
adopted  by the Council  on  19.06.199531  and  implemented  as  from  1.07.1996. 

This question  is closely  linked  with  the conditions of  registration  in open  registers  as well  as the 

140. 
failure  of  the  flag  states  concerned  to adopt  and  enforce  the  relevant  rules  and  standards. 

Flagging  out  from  national  ("genuine")  registers  has  assumed  unprecedented  proportions  during  recent 
years,  so that  by  now  close  to  half  the  world  tonnage  is under  open  registers. 

There  is increasing  concern  about  this trend,  and  various responses  by  individual  countries,  with  varying 
degree of success. The  Commission  considers that the Community  has a major  stake  in  this  issue and an 
appropriate  response to the  challenge  has to be considered.  It would  appear  that,  to the  extent  there  were 

29  COM(93)  66  of  24.02.1993 

30  COM(94)  73  final,  16.03.1994 

31  Council-Directive  95/21/EC  of  19.06.1995,  OJ  L  157 of  7.07.95 

31 

a will to face  the  problem,  this would  necessitate a concerted  approach  by the major  maritime  countries, 
as  well  as  appropriate  intervention  in  the  relevant  international  fora  and  selected  major  open  registry 
countries. 

--=-• — 

The Commission  considers  the  political  stance  adopted  recently  by  the  developed  countries  as  a  whole 
within  the  Maritime  Transport  Committee  of  the OECD32  as a step  in  the  right  direction. 

141. 

In  its  relations  with  third  countries  the Community  should  also exercise  its  influence  to  : 

promote  Port  State  Control  in  other  regions  through  cooperation  with  interested  third 
countries  and  groups  of  countries,  as  well  as  with  IMO,  as  well  as  technical  assistance 
where  appropriate; 

promote  the  adoption  of  appropriate  international  standards  through  consultation  and 
assistance to  third  countries. 

d.  Cooperative  actions  and  technical  assistance to  third  countries 

142. 
The  Commission  considers  as  a  potentially  effective  means  of  pursuing  the  Community's 
maritime transport  interests assistance to third countries which  may be receptive to a reorientation  of their 
maritime  policies  in  the  direction  of  the  shipping  policies  advocated  by  the  Community.  This  can  also 
be effective  to  remedy  problems  of  common  concern  or  interest  and  as an  important  means to  improve 
the functioning  of the trade and  help liberalisation  by providing  better conditions of operation  for  the EC 
lines.  Simplification  of  customs  and  other  procedures  and  documentation,  improvement  of  port  and 
hinterland  infrastructure  are significant  examples in this respect. Technical assistance, training of  officials 
concerned  with  shipping  policy  issues,  expert  or  financial  support  of  activities  promoting  efficient 
commercial  operations,  including the use of new technologies, may also prove  fruitful  with  respect  to the 
attitude taken  with  regard  to market  orientated  maritime transport  and related  activities. The exchange of 
information  through  seminars,  workshops  or  courses  or  in  specific  instances,  the  exchange  of  senior 
officials  are  appropriate  means  to  raise  awareness,  discuss  issues,  and  develop  appropriate  action 
programs. 

143. 
Such cooperative  action  serves the dual  objective  of development  policy and  shipping  policy,  by 
helping  to  achieve  free  access  to  the  trade.  Therefore  the  Commission  intends  to  pursue  such  activities 
within  the  framework  of  existing  programs,  within  the provisions of agreements  with  third  countries,  as 
well as within  the possibilities of available  resources,  in particular  resources available  in connection  with 
agreements  with  the  countries  concerned,  taking  into  account  the  importance  of  issues  and  interest  of 
partners. 

2. 

Action  aiming  at  the  integration  of  the  transport services and  systems  in  Europe 

144.  As  a  follow-up  to  the  first  Pan-European  Transport  Conference  in  Prague  of  1991  and  in 
preparation  for  the  second  such  conference  held  in Crete  in  March  1994, a Regional  Conference  for  the 
Black  Sea  was  held  at  ministerial 
level  late  in  1993.  Conferences  for  the  Baltic  Sea  and  the 
Mediterranean  area  were  also  held  following  the  Crete  Conference.  These  regional  conferences  aimed 
at  establishing  the  basis  for  a coherent  transport  network  and  transport  system  for  the  whole  of  Europe 
and  they  provided  opportunities  for  exchanges  of  views and  coordination. 

The  Black  Sea  Conference  (Ministerial  Conference  on  transport  challenges  in  South-Eastern 
145. 
Europe)  which  was  held  in  Constanza,  Romania,  in  October  1993  decided  to  create  a  Working  Group 

"Statement  by OECD  Member Countries on  Enforcement  of  International  Rules and Standards' 
SG/PRESS(94)34  of 24.05.94 

3a. 

for  Waterborne  Transport  in  order  to  discuss  pragmatic  solutions  for  problems  in  that  sector.  That 
Working  Group  started  its  work  with  a  meeting  in  Constanza  in  September  1994,  following  a  first 
preparatory  workshop organized  in April  1994 for  high-level  decisicn-makers from the Black Sea region, 
where  the  European  Community  policy  and  the  functioning  of  port  and  maritime  industries  in  a  free 
market  environment  were  presented. 

The Commission also intends to launch a comprehensive study on port development in the  Black 
146. 
Sea area  including the assessment on the shipping and  port policies of the countries concerned. The study 
would  be  carried  out  with  financial  support  from  the  Community's  technical  assistance  programs.  A 
second  Black  Sea  transport  conference  at ministerial  level  is envisaged  for  mid-1997. 

147. 
Similar  initiatives  have  been  launched  for  the  Mediterranean  and  Baltic  Sea  areas.  The  first 
Regional  Conference  for  the  Development  of  Maritime  Transport  in  the  Mediterranean  was  held  in 
Barcelona  on  27-28  April  1995.  A  Working  Conference  on  Maritime  Transport  in  the  Baltic  Sea  was 
held  on  22-23  May  1995  in  Copenhagen  upon  invitation  from  the  Government  of  Denmark  and  the 
European  Commission  and  under the auspices of the  Council  of the  Baltic Sea  States.  Each  Conference 
agreed  to create a Waterborne  Transport  Working Group to prepare and, if possible, adopt a  multi-annual 
work  program  for  the  respective  region.  The  Mediterranean  Waterborne  Transport  Group  met  in 
September  1995  and  agreed  on  such  a  program;  final  agreement  on  a  program  for  the  Baltic Group  is 
pending. 

148.  Within  the  framework  of the  Pan-European  Transport  Conference  and  the  regional  conferences 
as  above,  the  Commission  considers  it  appropriate  to  pursue  cooperative  action  programs,  focusing  in 
particular  on  actions  relating  to: 

short-sea  shipping; 
inclusion  of  the  ports  in  the  Trans-European  Networks; and 
maritime  safety,  including  Port  State  Control. 

149. 
In  parallel,  and  in  accordance  with  the  provisions  on  co-operation  of  the  agreements  concluded 
(or  to  be  concluded)  with  the  CEEC,  CIS  and  Mediterranean  countries,  the  Commission  intends  to 
privilege  actions  and  projects  aiming  at: 

the  restructuring  and  modernisation  of  transport; 
the  improvement  of  the  movement  of  passengers  and  goods  and  the  access  to  the  transport 
market  by  removing  administrative,  technical  and  other  obstacles; 
the  facilitation  and  development  of  multimodal  transport. 

150. 
It is further  noted that the Europe Agreements provide  for  progressive harmonisation  of transport 
legislation  of  the  CEEC  concerned  in  the  perspective  of  these  countries  to  accede.  The  Community  is 
according  particular  attention  to  this  process.  The  strategy  for  preparing  the  associated  CEEC  for 
accession  to the  European  Union,  decided  by  the  European  Council  in  Essen  in  December  1994,  views 
the  alignment  of  these  countries'  legislation  as  necessary  for  them  to  be  ready  to  participate  in  the 
Internal  Market  on  accession;  the  White  Paper  on  the  Internal  Market33  acquis  was  the  first  step  in 
implementing  the  Strategy  in  this  area. 

3. 

International  Organizations  & Multilateral  Conventions 

a.  Adaptation  of  consultation  procedure 

The considerations  in  Section  V.A.2.b.2  (paras.  104-107)  underline  the  need  to  adopt  practical 
151. 
and  effective  rules  to  ensure  the  pursuance  of  Community  objectives  in  discussions  or  negotiations  in 
international  organizations. 

COM(95)  163  final 

33 

152.  The consultation  procedure adopted  in  1977 J4 does not fulfil  present needs. The aim,  in its Art. 
2,  "to consider jointly  whether  Member  States'  action  within  the  international  organizations  concerned 
should be coordinated" has for some time been overtaken  by events; and particularly, in view of the new 
situation  in UNCTAD, as well  as the Court's  recent Opinion, this old concept  is now obsolete. 

153.  A  new  procedure  is  therefore  now  needed,  which  would  provide  for  the  establishment  of  a 
common  position  at appropriate  level, depending on the subject,  its importance  and circumstances, and 
for the presentation  of  such position. 

The proposed Council Decision presented in Annex II aims, i.a., at the adoption of an adequate procedure 
as regards action  relating  to shipping matters  in international  organisations. 

b.  Tasks ahead  for  the  short-  and  medium-term 

154. 
The  outcome  of  important  negotiations, at  present  ongoing  or  forthcoming,  in  multilateral  fora 
could have a significant  effect  on  world  shipping; the  EC has a particular  stake in  this  and  must act  so 
as to  safeguard  and  further  its  interests. 

155. 
The  negotiation  in the  field  of  shipping  in  the  WTO,  which  is to  be  resumed  in  the year  2000, 
is the  most significant  in terms of its potential  impact on world  shipping. In  line with  its shipping policy, 
the Community  has been  actively  seeking commitments  from  the widest  number  of countries,  including 
all  countries  with  significant  shipping  activity,  for  effective  standstill  on  restrictions  in the  provision  of 
shipping  services  and  elimination  of  existing  restrictions  within  a  fixed  time  scale.  The  satisfactory 
conclusion  of  such  a multilateral  agreement  remains  a fundamental  objective  for  the  Community. 

The  second  Review  Conference  on  the  UN  Convention  on  a  Code  of  Conduct  for  Liner 
156. 
Conferences,  which  was  to  be  convened  in  1997,  has  been  postponed.  The  relevance  of  key  provisions 
of the Code seems to be  increasingly  open  to question  in view,  in particular,  of the declining  importance 
of  conferences  and  the  reorientation  of  shipping  policies  in  quite  a  number  of  countries;  and  the 
Convention  may be significantly  affected  by the outcome of the NGMTS negotiations when they resume. 
Thus  a  Review  Conference  could  pose  important  policy  questions. 

When  the  Conference  is  convened,  the  Commission  will  propose  to  the  Council  the  appropriate 
Community  position  and  the  participation  of  the Community  at  the Conference,  and  will  seek  directives 
for  the  participation  and  negotiation  on  behalf  of  the  Community. 

In addition  to the  above  negotiations, attention  has also to be given  to the ongoing  consultations 
157. 
within  the  MTC  of  the  OECD  as  well  as  to  the  joint  consultations  on  shipping  between  the  OECD 
countries  and  other  regional  groups,  which  aim  at  promoting  a  market  orientated  shipping  policy  and 
have  become  a regular  and  increasing  activity  of  the  MTC over  the  last  few  years. 

34  Council  Decision  77/587/EEC,  OJ  L 239,  17.9.1977 

2& 

VI. 

ARRANGEMENTS  FOR  PROGRESSIVE  TRANSFORMATION  OF  BILATERAL 
REGIMES 

A. 

The  main  principles 

158.  Among  the  components  of Community  action  should  be, as  stated  in  Section  V.B (para.  109), 
the  progressive  transformation  of  existing  bilateral  regimes  by  means  of  a  framework  of  Community 
agreements  and  procedures. 

There  are  cases  where  one  or  another  Member  State  may  consider  necessary  to  conclude  a 
159. 
bilateral  agreement  with  a  third  country,  which  would  be  in  conformity  with  EC  law  and  in  particular 
Council  Regulation  No.  4055/86.  Given  the  exclusive  competence  of  the  Community  to  conclude 
agreements  with  third  countries  relating  to  the  provision  of  maritime  transport  services,  it  is clear  that 
it has a responsibility  for  the formulation  of the external  maritime  transport  policy.  Thus action  vis à vis 
third  countries  in  the  field  of  commercial  maritime  transport  matters  should  be  under  Community 
oversight  in order  to safeguard  consistency and  clarity in the external relations  of  the  Community. 

160.  On the other  hand  the Commission  does not consider  it at present  either  necessary or  feasible  to 
take  up  immediately  all  the  responsibilities  that  come  with  the  Community's  competence  to  conclude 
agreements  with  third  countries 
in all  such  cases.  The Commission  intends at  the present  stage  rather 
to  concentrate  on priority  cases  identified on  the basis of the criteria considered  in Chapter V. 

161.  An  appropriate  approach  would  therefore  be: 

(i)  Member  States should  inform  the Commission adequately  of the extension  of agreements  in 
force  and  of  their  intention  to  negotiate  new  agreements  or  modifications  to  existing  ones.  Such 
information  is the essential prerequisite for effective  machinery  beginning with consultations between the 
Commission  and  the  Member  States,  to  ensure  that  Community  competence  is  respected  and  the  most 
appropriate  solutions  found  for  the  different  types  of  problem  that  will  arise.  Existing  instruments,  in 
particular  Council  Decision  77/587  are  not  adequate  in  this  regard.  It  is accordingly  important  that  a 
specific  procedure  be  adopted  and  this  is  the  objective  of  the  provisions  in  this  regard  included  in  the 
proposal  presented  in  Annex  II. 

(ii)  In those cases in which the Community should negotiate an agreement,  the close  involvement 

of  the  Member  States  in  the  process  should  be ensured  (see  para.  162 below). 

(iii)  As regards  matters  falling  within the powers of the Community, a Member  State would need 
to be authorized,  according to a Community procedure, to negotiate a bilateral  agreement.  A coordination 
procedure  will  be essential  and  conditions  might  also need  to be placed  on  the scope of  the negotiations. 
These  might  relate  for  example  to  the  content  of  the  agreement  to  be  negotiated,  in  particular  to  take 
account  of  the  interests  of  other  Member  States  and  to  avoid  any  incompatibility  with  Community  law. 

B. 

Agreements  between  the  Community  and  third  countries 

162.  Agreements  between  the Community  and  third  countries  would  be concluded  on  the basis of the 
normal  Community  procedures: 

recommendation  for  an  authorization  to  negotiate  an  agreement; 
decision  by the-Council  authorising  the Commission  to  negotiate; 
negotiations  by  the  Commission,  in  accordance  with  normal  procedures; 
conclusion  of  the  agreement  by  the  Council. 

3^ 

An  Advisory  Committee  of  Member  States'  representatives  would  be  established  to  advise  the 
Commission  throughout  the  whole process of  the  negotiations. 

C. 

Bilateral  agreements  between  Member  States  and  third  countries 

163.  Given  the  Commission's  intention  to  focus  for  the  time  being  on  priority  relationships,  it  is 
necessary  for  the  time  being  that  the  Member  States,  so  as  not  to  hinder  the  normal  progress  and 
development  of  their  external  commercial  relations, be allowed  to continue  negotiating  and  concluding 
bilateral  agreements  with  third  countries  provided  that  in  every  case  the  common  policy  in  maritime 
transport  is respected  and  that  proper  consultation  takes place at Community  level. 

164.  Council  Decision  69/494/EEC35  on  the  progressive  standardisation  of  agreements  concerning 
commercial  relations  between  Member  States and  third  countries  and  on  the  negotiation  of  Community 
agreements, has established  a notification  and consultation  procedure  at Community  level. The  Decision 
also established  a procedure  for  the negotiation  of  agreements  with  third  countries  by the  Community. 

Title  II  of  this  Decision  provides  the  procedure  to  be  followed 
in  case  a  Member  State  or  the 
Commission considers that  a bilateral  treaty, agreement  or arrangement  concerning  commercial  relations 
should  be  negotiated  by  the  Commission  on  behalf  of  the  Community.  Title  I  and  III  deal  with  the 
extension of existing agreements and they provide transitional  provisions according  to which the Council 
may  authorise  bilateral  negotiations between  Member  States and  certain  third  countries,  respectively. 

165. 
In  order  for  the  Community  to  develop  a comprehensive  external  maritime  transport  policy,  it 
is necessary to establish  similar  rules concerning the extension  of existing maritime  transport  agreements 
and  the  authorisation  for  Member  States  to  conduct  bilateral  negotiations.  These  rules  should  be  in 
accordance  with  the  Treaty  and  should,  more  specifically,  take  into  account  Community  legislation  in 
the  field  of  maritime  transport.  To  this  end,  the  Commission  proposes  the  adoption  of  a  Council 
Decision which  would  include, i.a., a consultation and authorization  procedure  for  agreements  concerning 
maritime  transport  relations  between  Member  States and  third  countries  (Annex  II). 

/. 

Types of  provisions  in  bilateral agreements  between Member  States  and  third  countries 

166. 
The  various  provisions  appearing  in existing  bilateral  agreements  relate  to  the  matters  indicated 
below,  this  list  neither  being  exhaustive  nor  implying  that  all  agreements  contain  provisions  relating  to 
all  such  matters: 

principles  concerning  access to  the shipping  market; 
reference  to  the  application  of  the  Liner  Code; 
multimodal  transport  operations; 
landside  operations; 
establishment  of  commercial  presence; 
auxiliary  services; 
treatment  of  vessels  in  ports; 
freight  earnings  remittances; 
definition  of  beneficiaries  (companies;  flag  of  vessels); 
recognition  of  seafarers'  documents  and  treatment; 
assistance  in  case of  accident; 
management  of  the  agreement  (e.g.  Joint  Committee,  frequency  of  meetings,  etc.) 

167. 

Such  provisions  may,  for  practical  purposes,  be  usefully  distinguished,  as  far  as  their  subjects 

35  OJ  L 326  of  29.12.69 

3^ 

are  concerned,  into  those  relating  to  commercial  aspects  of  transport  and  those  dealing  only  with  what 
the 
may  be  called  technical  matters;  and  those  in  the  first  category  either  concern  directly  or  affect 
provision  of  shipping  services: 

(i)  provisions  relating  to commercial  aspects of  transport  are  those concerning:  access  to  the  market; 
multimodal  transport;  landside  operations; 
establishment  of  commercial  presence;  auxiliary 
services;  treatment  of  vessels  in  ports;  and  transactions  and  payments  related  to  the  provision 
of  the  shipping  services; 

(ii) 

provisions  relating  what  may  be  called  technical  matters  concern:  the  mutual  recognition  of 
vessel  documents;  identity  documents  for  crew; 
entry  or  leave  of  crew  members  from  the 
country  concerned;  permission  for  delivery  of  crew  members  to  hospital;  national  jurisdiction 
in  matters  occurring  on  board;  necessary  assistance  in  case  of  emergency  of  vessel. 

2.  Agreements  relating 

to  the  provision  of  maritime  transport 

services 

168. 
In  conformity  with  Regulation  no.  4055/86,  no  new  agreements  by  Member  States  affecting  the 
freedom  to  provide  services  are allowed.  For specified  exceptional  circumstances,  the  Regulation  foresees 
a  special  procedure. 

169. 
Council  Regulation  (EEC)  No.  4055/86  applying  the  principle  of  freedom  to  provide  services  to 
maritime  transport  between  Member  States  and  between  Member  States  and  third  countries,  and  in 
particular  Article  3  of  the  Regulation,  requires  that  Member  States  phase  out  or  adjust  cargo-sharing 
arrangements  which  are  contained  in  existing  bilateral  agreements  with  third  countries.  Obviously,  this 
obligation  demands  action  from  the  Member  States  which  had  cargo-sharing  arrangements  with  third 
countries,  concluded  before  1  January  1987,  the  date  on  which  Regulation  No.  4055/86  entered  into 
force.  For  such  agreements,  the  provisions  of  Articles  4  of  the  Regulation  can  be  understood  to  include 
an  authorization  for  Member  States  to  conduct  the  negotiations  necessary  to  adjust  the  cargo-sharing 
arrangements. 

170.  Where  agreements  which  were  only  ratified  on  or  after  1 January  1987,  or  signed  or  negotiated 
after  this  date,  fall  under  the  competence  of  the  Community,  Member  States  may  continue  to  deal  with 
these  agreements,  on  the  condition  that  the  Member  States'  actions  take  place  in  consultation  with  the 
Commission. 

171. 
There  could  be  cases  where  Member  States  may  desire  to  include  in  an  agreement  to  be 
negotiated  with  a  third  country  provisions  relating  to  the  provision  of  maritime  transport  services  and 
which  would  not  raise  questions  of  conformity  with  Community  law,  and  in  particular  with  Regulation 
No.  4055/86. 

It  would  be  acceptable  that,  for  the  time  being,  the  Member  State  concerned  negotiate  an  agreement 
containing  such  provisions,  if  it  is not  considered  preferable,  in  view  of  the  Community  interest,  to  have 
a  Community  agreement  with  the third  country  concerned  (see  para.  103  above).  The  maritime  provisions 
included  in the  Europe  and  Partnership  and  Cooperation  agreements  with  third  countries  negotiated  so  far 
may  serve  at  this  stage  as  a  standard,  as  to  appropriate  and  acceptable  provisions  on  the  subjects  they 
cover, 

in  comparable  circumstances. 

172. 
A  negotiation  by  a  Member  State  with  a  third  country  would,  however,  be  subject  to  a  procedure 
established  in  a  Council  Decision.  The  envisaged  arrangements  for  bilateral  agreements,  including  such 
a  procedure,  are  set  out  in  the  proposal  for  a  Council  Decision  in  Annex  III.  Its  main  features  are  the 
following: 

it  authorizes  the  Member  States  to  extend  the  validity  of  existing  bilateral  agreements  insofar  as 
they  are  in  conformity  with  Community  law  and  in  particular  Regulation  No.  4055/86; 

39-

it provides  for  the possibility  that a  Member  State  may  be authorized  to  conclude  an  agreement 
with  a third  country  regarding  the provision  of  maritime  services, without  prejudice  to  Council 
Regulation  No. 4055/86: 

such authorization could be granted  following notification  by a Member State of its desire 
to conclude such an agreement,  setting out the need  for  the agreement,  its objectives  and 
a  draft  of  the agreement  proposed; 
the Member State concerned  would be authorized  to start negotiations  if no question  was 
raised  by  the  Commission  or  by  any  other  Member  State  within  a  specified  period 
following  receipt  of  the  request; 
otherwise,  authorization  could  be given  by  the Commission,  following  consultations,  if 
appropriate; 

it  provides,  if  considered  appropriate  by the  Commission,  for  conditions  for  the  negotiation  of 
such  an  agreement  by  the  Member  State; 
it  provides  for  information  to  be  submitted  to  the  Commission  at  the  end  of  the  negotiation 
process  and  for  consultation  with  the Commission  before  signing the agreement;  and 
it  provides  for  the  possibility  that  the  Council  decides  that  a  Community  agreement  is  more 
appropriate  and  authorises  the  Commission to this  effect. 
it  provides  for  review  of  the  procedure,  on  the basis of  a  report  by  the  Commission,  before  31 
December  2000. 

*5. 

Agreements 
time  transport  services 

containing  only  provisions  which  do  not 

relate 

to the  provision  of  mari 

173.  Member  States have the  possibility, as long as Community legislation  has  not  been proposed  or 
adopted  on such  matters,  to  negotiate  agreements  containing  only  provisions  which  do  not  relate  to  the 
provision  of  maritime  transport  services, of  which  the Commission  should  be adequately  informed. 

174. 
Therefore,  agreements  which  do  not  contain  clauses  relating  to  the  provision  of  maritime 
transport  services, are subject  to the  general  rules  which  apply to the external  policy  of the  Community. 
According  to  Community  law  Member  States  may  negotiate  and  conclude  such  agreements  as  long  as 
Community  legislation  has  not  been proposed  or adopted. 

175.  However,  in  order  to  permit  the  Community  to  have  the  overall  picture  of  the  agreements 
concluded,  it  is necessary  that  the  Member  States  inform  the Commission  on  any  such  agreements  they 
intend  to  negotiate. 

3? 

TABLE: 

Scope  of  external  action  and  specific  actions  and  proposals  foreseen 

ANNEX  I 

Component 

Scope  of  action 

Specific  actions/proposals  foreseen 

1.1  General  agreements 

Association  or  Partnership  agreements: 

1.2  Sectoral  agreements  and  under- 
standings  on maritime  transport 

Negotiation  of  provisions  concerning  in  particular  the  cross- 
border  provision  of  shipping  services  and  establishment 
(commercial  presence) 

Trade  and  Cooperation  agreements: 

Negotiation  of  provisions  concerning  shipping,  as 
appropriate  in  each  case 

Seek  agreements  with  significant  maritime  countries  such  as 
Brazil,  among  the  Latin  American  countries,  and  China, 
Taiwan,  India,  and  a number  of  ASEAN  countries,  among  the 
maritime  countries  of  Asia. 

In  some  instances  a  less  formal  understanding  may  be 
appropriate. 

Negotiations  engaged  or  foreseen: 
- 

conclusion  of  current  negotiations  with  Egypt,  Jordan  and 
Lebanon. 

-  negotiations  foreseen  with  Algeria; 
- 

negotiations  with  Mediterranean  countries  on  shipping  as 
foreseen  in  the  present  agreements 

Recommendations  to  Council  for  negotiation  of  agreements 
with  India  and  China 

1.3 

Implementation  of  agreements 
and  development  of  relations 

Implementation  of  concluded  agreements  with  substantive 
maritime  provisions  or  foreseeing  cooperative  programs  in 
maritime  transport 

Regular  activity 

Harmonisation  of  legislation  of  CEEC  to  that  of  the 
Community 

Follow  up  to  White  Paper 

1.4  Consultations  with  third 

countries 

Regular  consultations  with  certain  countries  with  which  EC 
has  significant  maritime  trade  relations  and  whose  maritime 
transport  policies  directly  affect  EC  interests. 

- 

- 

continue  the  regular  consultations  engaged  so  far  (Japan, 
Korea,  Norway,  Switzerland,  CSG); 
engage  or  intensify  consultations  with  countries  such  as the 
USA,  Russia,  China  and  India. 

Consultations  as  necessary  with  other  countries  in  the 
framework  of  cooperation  agreements. 

1.5 

Policy  workshops 

To  be  organised  in  cases  of  considerable  mutual  interest  where 
they  can  make  an  impact. 

Follow  up of  action  launched  at  the  Workshops  relating  to: 
the  Black  Sea,  the  Baltic  Sea,  and  the  Mediterranean 
- 
the  ASEAN  countries 
- 

39 

I 

1.6 Address  problems  arising  from 
existing  or  new  measures  of 
third  countries 

Démarches,  followed  as  appropriate  by  consultations 

-  Cases  that  have  already  been  identified  and  have  to  be 

I 

further  pursued  (such  as  West  and  Central  Africa,  Kenya, 
South  Korea,  China) 
other  cases  raised  by  Member  States  or  Community 
shipowners  or  shippers.* 

- 

'Recourse,  in  specific  cases,  to  Regulation  no.  4058/86 

Review  of  Regulation  No.  4058/86 

Eventually  proposal  to  adapt  Regulation  No.  4058/86 

1.7 Action  to  secure  fair  competition 

Recourse,  in  specific  cases,  to  Regulation  No.  4057/86 

on  a commercial  basis 

Review  of  Regulation  No.  4057/86 

Eventually  proposal  to  adapt  Regulation  No.  4057/86 

Adoption,  compliance  and  enforcement  of  international  safety 
rules  and  standards 

Stricter  Port  State  Control;  action  vis-à-vis  flag  States  not 
adequately  enforcing  internationally  applicable  rules  and 
standards 

' 

0 

Supportive  action  in  the  external  field  : 

promote  Port  State  Control  in  other  regions  through 
cooperation  with  interested  third  countries  and  groups  of 
countries,  as  well  as  with  IMO,  as  well  as  technical 
assistance  where  appropriate; 
promote  the  adoption  of  appropriate  international  standards 

through  consultation  and  assistance  to  third  countries. 

Eventually  concerted  approach  by  the  major  maritime 
countries,  as  well  as  appropriate  intervention  v.àv.  the  relevant 
international  fora  and  selected  major  open  registry  countries. 

1.8  Cooperative  actions  and  technical 

assistance  to  third  countries 

Technical  assistance,  training  of  officials  concerned  with 
shipping  policy  issues,  expert  or  financial  support  of  activities 
promoting  efficient  commercial  operations,  incl.  the  use  of  new 
technologies. 

Pursue  such  activities  within  the  framework  of  existing 
programs,  within  the  provisions  of  agreements  with-third 
countries,'as  well  as  within  the  possibilities  of  available 
resources 

Exchange  of  information  through  seminars,  workshops  or 
courses  or  exchange  of  senior  officials. 

^o 

II.  Action  aiming  at  the  integration 
of  the  transport  services  and 
systems  in  Europe 

Follow-up  to  the  Pan-European  Transport  Conferences  and  the 
regional  Ministerial  Conferences  for  the  Black  Sea,  Baltic  Sea 
and  the  Mediterranean  area 

Regional  Waterborne  Transport  Working  Groups  set  up  to 
prepare  and  adopt  a multi-annual  work  program  for  the 
respective  region. 

Progressive  harmonisation  of,  i.a.,  transport  legislation  of  the 
CEEC,  in  the  perspective  of  these  countries  to  accede. 

Pursue  cooperative  action  programs,  focusing  in  particular  on 
actions  relating  to: 
- 
- 
-  maritime  safety,  including  Port  State  Control. 

short-sea  shipping; 
inclusion  of  the  ports  in  the  Trans-European  Networks; 

- 

In  parallel,  privilege  actions  and  projects  aiming,  i.a.,  at: 
the  restructuring  and  modernisation  of  transport; 
the  improvement  of  the  movement  of  passengers  and  goods 
and  the  access  to  the  transport  market  by  removing 
administrative,  technical  and  other  obstacles; 
the  facilitation  and  development  of  multimodal  transport. 

- 

III.  International  Organizations  & 
Multilateral  Conventions 

Adoption  of  practical  and  effective  EC  rules  to  ensure  the 
pursuance  of  Community  objectives  in  discussions  or 
negotiations  in  international  organizations. 

-^ 

Tasks  for  the  short-  and  medium-term 
-  second  Review  Conference  on  the  UN  Convention  on  a 
Code  of  Conduct  for  Liner  Conferences; 
-  consultations  within  the  MTC  of  the  OECD  as  well  as  the 
joint  consultations  on  shipping  between  the  OECD 
countries  and  other  regional  groups 

Adoption  of  new  consultation  procedure  (replacing  the prôce-
dure  of  Council  Decision  77/587)  to  provide  for  the  establish-
ment  and  presentation  of  a  common  position  (proposal  in 
Annex  II) 

Recommendation  to  the  Council  on  the  Community  position 
and  the  participation  of  the  Community  at  the  Conference 

IV.  Internal  rules  for  relations  with 

third  countries 

Ensure  coherence  of  action  of  the  Community  and  of  the 
Member  States  in  their  relations  with  third  countries  and 
improved  efficiency  of  such  action 

Adoption  of  new  consultation  procedure  (replacing  the proce-
dure  of  Council  Decision  77/587)  -  proposal  in  Annex  II 

Establish  rules  concerning  the  extension  of  existing  maritime 
transport  agreements  and  the  authorization  for  Member  States 
to  conduct  bilateral  negotiations 

Proposal  for  a Council  Decision  -  Annex  II 

9-i 

9^/c»/JL  OVAJ) 

ANNEX  II 

Proposal  for a Council  Decision setting  up 
a  consultation  procedure  on relations between Member  States  and third countries  in  shipping 
matters  and on action  relating to such matters  in international  organizations 
and an authorization  procedure for  agreements  concerning  maritime  transport 

THE COUNCIL OF THE EUROPEAN  UNION, 

Having  regard  to the Treaty  establishing  the  European  Community,  and  in particular  Article  84  (2) 
thereof, 

Having  regard  to the proposal  from  the Commission, 

Acting  in accordance with the procedure referred  to in Article  189c of the Treaty  in cooperation  with 
dip. European  Parliament, 

Having  regard  to the opinion  of  the  Economic  and  Social  Committee, 

Whereas  the  development  of  external  relations  of  the  Community  in the  field  of  maritime  transport 
requires  adequate  and efficient  exchange  of  information  and timely  consultation  between the 
Commission  and  the  Member  States; 

Whereas Council Decision 77/587/EEC  set up a consultation procedure on relations between Member 
States  and  third  countries  in shipping  matters  and on  action  relating  to  such  matters  in  international 
organizations; 

Whereas  consultations  should  also cover,  in addition to developments  that have taken place,  ongoing 
developments  in  relations  with  third  countries; 

Whereas  any problems  arising  in the  field  of shipping  in the trades  with  and between  third  countries 
and  appropriate  means  to  address  these  problems  should  be  considered; 

Whereas  therefore  provision  should  be made  for  consultations  to be  held  at  regular  intervals; 

Whereas  appropriate  action  to address  problems  arising  in international  organizations  should be 
considered;  whereas a procedure should be introduced  for  the establishment  of the po  ition to be taken 
by  the Community  and  the Member  States  on questions  of common  interest  discussed  within 
international  organizations;  whereas  such  position,  on  matters  within  the competence  of  the 
Community  or of  the  Member  States,  should  be presented  by  the Commission  or  the  Member  State 
exercising  the presidency  of  the  Council,  respectively. 

Whereas  maritime  transport  relations  between  Member  States  and  third  countries  are  regulated  by 
bilateral'agreements  as well  as by other  bilateral  and  multilateral  arrangements  containing  provisions 
on,  or applicable  to,  matters  relating  to the  provision  of shipping  services  such  as access  to  the 
shipping  market,  incl. multimodal  transport  operations, connected  landside operations,  establishment 
of  commercial  presence,  access  to ports,  utilisation  of  port  and  related  services  and  facilities, 
transactions  and  payments  related  to  the  provision  of  shipping  services,  and  related  provisions; 

OJ  L239,  17.09.1977. 

42-

Whereas  a  regulatory  framework  for  negotiations  by  Member  States  with  third  countries  should  be 
provided  for;  whereas  the  Commission  should  have  the  possibility  to  authorize  Member  States  to 
negotiate,  conclude or  renew  agreements  with third  countries; whereas  in  appropriatejcircumstances 
such  authorization  could  be  tacitly  granted; 

Whereas  an effective  procedure  to secure the examination  of bilateral  maritime  transport  agreements 
and other bilateral  arrangements  which Member  States propose to conclude with third countries  must 
be  established; 

Whereas  the purpose of this examination  must be to determine whether the proposed  agreements  are 
compatible with Community  law and the common maritime transport policy and would not  constitute 
an obstacle  to  this  policy  or  its  implementation; 

Whereas  in  certain  cases  it  may  be  appropriate  that  the  Council  or,  as  the  case  may  be,  the 
attaches 
Commission; 
conditions  thereto; 

in  authorising  a  Member  State  to  negotiate  or  conclude  an  agreement 

Whereas  a committee  should  be set  up for  the  implementation  of  this  Decision; 

Whereas  the  procedures  for  negotiations  by  the  Commission  of  agreements  with  third  countries  or 
within  an  international  organization  are not covered  by  this  Decision; 

Whereas  in view  of  the  amendments  of the procedure  established  by  Council  Decision  77/587/EEC 
and the introduction of significant  new procedures such Decision should be replaced by a separate act; 

HAS ADOPTED THIS DECISION: 

Article  1 

The  Member  States  and  the  Commission  shall  consult  each  other,  in  accordance  with  the 

1. 
procedures  laid  down  in this  Decision: 

(a) 

(b) 

on questions concerning shipping matters and dealt with in international organizations, 
and 

on  relations  with  third  countries  in  shipping  matters,  and  on  the  negotiation, 
conclusion  and  functioning  of  bilateral  or  multilateral  agreements  in this  sphere. 

2. 

The  consultations  shall  be  held 

at  regular  intervals,  and  at  least  once  every  two  months,  and 

at  any  other  time  upon  the  request  of  a Member  State or  of  the  Commission,  within 
two  weeks  of  the  request  or  at  the earliest  opportunity  in  urgent  cases. 

Article  2 

1. 

The  main  aims  of  the consultations  provided  for  in  Article  1 under  para.  1(a) shall  be: 

(a) 

to  consider  any  questions  that  may  raise  problems  of  common  interest; 

U o 

(b) 

depending  upon  the nature of such  problems: 

to  consider  whether  Member  States'  action  within 
organizations  concerned  should  be  coordinated; 

the-international 

to  consider  any other  approach  which  might  be  appropriate. 

The  Member  States  and the Commission  shall as soon as possible exchange  any  information 
of  relevance  to the  aims  described  in paragraph  1. 

1. 

The  main  aims  of  the consultations  provided  for  in Article  1 under para.  1(b)  shall  be: 

Article 3 

(a) 

(b) 

(c) 

to  review  developments  in shipping  relations  with  third  countries; 

to  consider  the  negotiation,  conclusion  and  functioning  of  bilateral  or  multilateral 
maritime transport agreements or any other arrangements  concerning matters  relating 
to  the provision  of  shipping  services; 

to  consider  problems  arising  in the  field  of  shipping  in the trades  with  and  between 
third  countries,  i.a., 

restrictions  on  access  to  the  shipping  market  and  on  connected  land-side 
operations 
any  other  unilateral  measures  of  third  countries  affecting  shipping  activity, 
such  as discriminatory  taxation  or  treatment  of  ships  in ports; 

(d) 

to  consider  any  ether  questions  that  may  raise  problems  of  common  interest; 

(e) 

depending  upon  the  nature  of  such  problems  as  may  arise,  to  consider  appropriate 
action  to  address  these problems. 

For  the purposes  of the consultations  referred  to  in Article  1  under  para.  1(b), each  Member 
2. 
State  shall  inform  the  other  Member  States  and  the Commission  of  the  various  developments  in  its 
relations  with  third  countries  in  shipping  matters,  and  of  the  functioning  of  bilateral  or  multilateral 
agreements  concluded  in this  field. 

3. 
A  Member  State  wishing  to  conduct  negotiations  with  a  third  country  or  to  proceed  to  the 
conclusion  of  an  agreement  which  it  has  negotiated  and  initialled  or  signed  but  has  not,  at  the  date 
of  this  Decision,  completed  the  procedures  for  its  entry  into  force,  shall  submit 1i  request  to  the 
Commission  and  inform  the other  Member  States.  In the  request,  the Member  State shall  set out  the 
justification  for  the envisaged  agreement,  its  objectives  and  a draft  text  of  the  proposed  agreement. 

A  Member  State  wishing  to  proceed  to  the  extension,  whether  express  or  tacit,  of  an  agreement  in 
force  at  the  date  of  this  Decision  shall  submit  a  request  to  the  Commission  and  inform  the  other 
Member  States  at  least 4  months  prior  to the date of express  extension  or of the expiry  of  the period 
during  which  notice  of  termination  of  the  agreement  may  be  given.  It  shall  supply  a  copy  of  the 
agreement. 

Without  prejudice  to Article 5 of Council  Regulation  No. 4055/86,  if neither the Commission 
1. 
nor  any  Member  State has  requested  consultations  within  two months  from  receipt  of a request  from 

Article  4 

a  Member  State  under  Article  3,  para.  3,  and  the  Commission  has  not  submitted  to  that  Member 
State, within three months from such receipt, any observations to the contrary, that Member State will 
be  considered  to  be  tacitly  authorized  to  conduct  the  bilateral  negotiations  in  accordance  with  its 
request  or  to  complete  the  procedures  for  the  entry  into  force  of  the  agreement  or  to  extend  the 
agreement,  as  the case  may be. 

If  the  Commission  determines,  after  consultations  where  these  have  taken  place,  that  the 
2. 
provisions of the envisaged agreement are not contrary to the common maritime transport policy and 
its objectives  and would  not constitute an obstacle  to this policy  or its implementation,  the Member 
State  concerned  may  be  authorized  by  the  Commission,  if  appropriate  subject  to  conditions,  to 
conduct  the bilateral  negotiations  with the third country concerned. 

3. 
If  the  Commission  determines,  after  consultations  where  these  have  taken  place,  that  any 
provision of an envisaged  agreement  is not in line with the common maritime transport policy  or its 
objectives,  or could constitute an obstacle to this policy  or its  implementation,  it  shall  so notify  the 
Member State concerned and inform the other Member States. The Commission may accompany such 
notification  with conditions  subject to which the agreement  could be authorized. 

Article 5 

1. 
At the end of the negotiation process  the Member  State concerned  shall communicate  to the 
Commission  the  final  result  of  the negotiations.  If the  Commission  does  not  raise  objections  within 
three  months  from  receipt  of  the  negotiation  results,  the  Member  State  concerned  may  sign  the 
agreement  in  question. 

If  the  Commission  raises  any  objections,  the  Member  State  concerned  shall  re-negotiate 

2. 
accordingly  on  the  basis  of  the  conditions,  which  the Commission  has  imposed. 

Article  6 

The consultations  provided  for  in this  Decision shall  take place within  the committee  created 

1. 
in Article  7,  paragraph  1. 

2. 
With  respect  to  Article  2,  para.  1(b),  the  positions  to  take  on  economic  and  commercial 
aspects of maritime  transport  in international  organizations by the Community  and  its Member  States 
are  adopted  in  accordance  with  the procedure  set  out  in  Article  7,  paragraph  2. 

Where  the  position  corresponds  to  a  matter  of  Community  competence,  it  is  presented  by  the 
Commission;  if the  matter  is within  the competence  of  the Member  States,  the  position  is  presented 
by  the  Member  State  exercising  the presidency  of  the  Council.  However,  if the  Commission  or  the 
Member  State exercising the presidency does not have a status permitting  it to expess  itself  within the 
international  organization  in question, appropriate modalities shall be defined  in the decision  adopting 
the  position. 

Article  7 

The  Commission  shall  be  assisted  by  a  committee  composed  of  the  representatives  of  the 

1. 
Member  States  and  chaired  by  the  representative  of  the  Commission. 

The  representative  of the Commission  shall  submit  to the committee  a draft  of  any  measures 
2. 
to  be  taken.  The  committee  shall  deliver  its  opinion  on  the  draft  within  a  time  limit  which  the 

chairman  may  lay  down  according  to  the urgency  of  the  matter.  The opinion  shall  be delivered  by 
the majority  laid down  in  Article  148 (2)  of  the Treaty  in the case of  decisions  which  the Council 
is  required  to  adopt  on  a  proposal  from  the  Commission.  The  votes  of  the  representatives  of  the 
Member  States  within  the  committee  shall  be  weighted  in  the  manner  set  out  in  that  Article.  The 
Chairman  shall  not vote. 

The Commission  shall adopt the measures envisaged  if they are in accordance with the opinion of the 
committee. 

If the measures  envisaged  are not  in accordance with the opinion of the committee,  or if no opinion 
is delivered,  the  Commission  shall,  without  delay,  submit  to the Council  a proposal  relating  to the 
measures  to be taken.  The Council  shall  act by a qualified  majority. 

If,  on the expiry of  a period  of  two months  from the date of  referral  to the Council  the Council  has 
not acted,  the proposed  measures  shall  be adopted  by the Commission. 

Article 8 

The  procedures  set  out  in  this  Decision  are  without  prejudice  to  procedures  relating  to  a 
recommendation  by  the  Commission  to  negotiate  an  agreement  with  a  third  country  or  group  of 
countries  or within an international  organization  or relating  to the conclusion  of  such an agreement 

Council  Decision  77/587/EEC  is  hereby repealed. 

Article  9 

Before 31  December 2000 the Council shall consider a report to be submitted  by the Commission  on 
the  working  of  the  procedures  set  up  in  this  Decision  and  shall  take  action  on  any  proposals  for 
amending  or supplementing  it which  experience  shows  to be  appropriate. 

This  Decision  is  addressed  to the  Member  States. 

Article  10 

he 

ANNEX  III 

EXISTING  COMMUNITY  LEGISLATION  AND  POLICY  INITIATIVES  ON  EXTERNAL 
ASPECTS  OF  MARITIME POLICY AND THEIR  APPLICATION 

A. 

Legislation  adopted  by the  Community 

Among the legal instruments concerning maritime transport adopted so far by the Council, those 

\. 
forming  the  basis of  shipping policy concern  directly the external  relations  in the  field  of shipping. 

2. 
Council  Decision  77/587  '  was  the  first  piece  of  legislation  concerning  maritime  transport, 
adopted under Article 84(2) of the EEC Treaty in June 1977 in an effort  to seize the opportunities which 
a  common  approach  by  the  Member  States  on  shipping  matters  would  bring.  It  set  up a consultation 
procedure  on  relations  between  Member  States and  third  countries  on  shipping  matters and  on action 
relating  to  such  matters  in  international  organisations.  ITtat  was  the  first  step  towards  shaping  the 
Community's  external  relations  in  matters  concerning  shipping.  The  procedure  is  used  regularly  to 
consult  in  the  Transport  Working  Group  of  the  Council  on  developments  and  problems  arising  in  the 
relations  with  individual  non-Member  countries  and to  coordinate  the  position  to  be taken  at  meetings 
of  international  organisations. 

Council  Regulation  No 954/79  2,  widely  referred  to as the  " Brussels package", concerns  the 
3. 
ratification  by  Member  States  of,  or  their  accession  to,  the  UN  Convention  on  a  Code of  Conduct 
for  Liner  Conferences.  This  ratification  or accession  is possible provided  that the  Member States make 
a number  of  reservations.  The most important  is that the  Member States confirm  that the provisions of 
the  Code  do  not  apply  in  conference  trades  between  the  Member  States  and,  on  a  reciprocal  basis, 
between  Member  States and the other OECD countries which are party  to the Code.  The regulation  also 
preserves competitive access within conferences  to that part of cargo  liner shipping which  is not covered 
by commitments  to national  shipping lines of third  countries  under the Code,  when  ratified  by Member 
States. 

In adopting  this  Regulation,  the Community  recognized  the  specific  situation  of developing  countries, 
in  particular  in  liner  shipping, as the Liner Code offers  national  shipping  lines of developing  countries 
particular  opportunities  to  participate  in  liner  conferences  and  the  trade  carried  by  them. 

In  December  1986  the  Community  adopted  four  important  Regulations  3  the  first  of  which 

4. 
entered  into  force  on  1 January  1987, the  other  three  on  July  1 of  the  same  year: 

Council  Regulation  (EEC)  No.  4055/86  applying  the  principle  of  freedom  to  provide 
services to maritime transport  between  Member States and between  Member States and third 
countries; 
Council  Regulation  (EEC)  No. 4056/86  laying  down  detailed  rules  for  the application  of 
Articles  85  and  86 of  the  Treaty  to  maritime  transport; 
Council  Regulation  (EEC)  No. 4057/86 on  unfair  pricing  practices  in mari-time  transport; 
Council  Regulation  (EEC)  No.  4058/86  concerning  coordinated  action  to  safeguard  free 
access  to  cargoes  in  ocean  trades. 

O.J.  L239,  17.9.1977 

O.J.  L  121,  17.5.1979 

O.J.  L378,  31.12.1986 

2 

3 

44-

5. 
These  four  Regulations  were  adopted  against  the  background  of  an  alarming  decline  of  the 
Community  fleet,  out  of  proportion  to the  impact of  the world  economic  crisis on  all  fleets,  due  to 
a  loss  of  comparative  advantage  and  the  growth  of  protectionist  policies  and  practices  of  other 
countries.  It  is,, in  particular,  the  threat of  these policies  and  practices  which  could  be  countered  by 
Community  action. 

The  four  Regulations  make  up  a  coherent  package  of  Community  legislative  instruments  in 
6. 
pursuance  of  a  non-protectionist  policy,  aiming  at  safeguarding  to  the  maximum  extent  possible  the 
continuing application  of commercial  principles  in world  shipping, while  applying  basic provisions of 
the Treaty  of  Rome relating  to the  freedom  to provide  services and  the competition  rules. 

7. 
As  a whole,  the  package  of  Regulations adopted  in  1986 embodied  the  determination  of  the 
Community to ensure free and  non-discriminatory access to cargoes  for  Community  shipowners and to 
secure  fair  competition  on  a commercial  basis  in the trades to, from and  within  the Community,  with 
due respect  for  the  interests of shippers and ports. In  respect of restrictive  measures  by third  countries 
or  unfair  practices  by  foreign  shipowners,  the  Regulations  serve  to  discourage  such  measures  or 
practices or, when these do occur, to achieve effective  solutions through  negotiation. In cases where  this 
is not  achieved,  the  Regulations  provide  the  basis for  defensive  action  to counter  such  measures  and 
practices. 

8. 
The  possibility  of  achieving  a  further  liberalization  in  the  shipping  sector  was  also  taken  up 
by the Community  in the  context of negotiations on an  Agreement  in Trade in Services  in the  Uruguay 
Round  in  mid-December  1993.  Regrettably,  no  satisfactory  result  could  be obtained  at  the  end  of  the 
Round.  As  a result  the  Community  withdrew  the  commitments  it  had  been  prepared  to  undertake  and 
obtained  a  Ministerial  Decision  setting  up  a  Negotiation  Group  on  Maritime  Transport  Services 
(NGMTS)  to  pursue  the  negotiations  with  the  objective  of  reaching  agreement  on  the  elimination  of 
restrictions  within  a  fixed  time-scale. 

B. 

Application  of  EC  instruments  and  policy 

9. 
The  adoption  in  1986  of  the  four  Regulations  in  the  field  of  maritime  transport  has,  together 
with  the  "Brussels  Package"  on  the  UN  Liner  Code, established  a Community  policy  of  free  and  fair 
competition  on  a commercial  basis  in  international  shipping.  Adopted  at  practically  the same time  as 
the  Single  Act,  it  both  embodied  concretely  in  the  field  of  shipping  the  movement  to  complete  the 
common  market  and  stood  to  benefit  from  the  strengthening  of  the Community  generally. 

In the  intervening  years  an  increasing  number of  third  countries  have developed  their  relations 
its 

10. 
with  the  Community 
possibilities  to  work  towards  the  objective  of  free  and  fair  competition  in  the  world  market. 

in  shipping.  The  Commission  has  used,  and  intends  to  continue  to  use, 

11. 
Whilst  restrictions  on  access  to  cargo  are  to  various  degrees  widespread  among  non-OECD 
countries,  nevertheless  there  has been  in recent  years a  noticeable  move towards  relaxation  or  lifting 
of  restrictions  in  international  shipping  in a number  of  countries  worldwide,  belonging  to all  regions 
with,  as  yet,  the  exception  of  the  African 
region.  The  Commission  has  consistently  exercised  its 
influence  to  encourage  such  moves. It considers this effort  as an essential  component  of  implementing 
the  policy  embodied 

in  the  1986  package. 

12. 
The application  of the freedom  to provide services appears to have  made an  impression  on third 
countries  as well  as to  have aroused  concern  in some countries  wishing  to ensure that  their own  access 
to  the  Community  market  is  unrestricted.  Regulation  No.  4055/86  has  put  an  effective  brake  on  new 
initiatives,  whether  from  within  or  from  outside  the  Community,  for  cargo-sharing 
arrangements 
between  Member  States  and  third  countries.  The Commission  considers  that  it  is not  only  a  matter  of 
implementing  legal obligations under  Regulation No.  4055/86 but also a point of credibility and  success 
of the EEC  maritime transport  policy towards third countries that the Member States with  cargo-sharing 

4? 

agreements  pursue  more  actively  the  adjustment  of  these  agreements.  As  regards  the  non-respect  of 
legal  obligations  by  Member  States, the Commission  has  recently  opened  proceedings  on  the  basis  of 
Article  169 of  the  Treaty,  to  bring the  infringements  to  an  end. 

13. 
Numerous cases have been raised under  Regulation No. 4056/86 and  related  decisions made  by 
the Commission.  The  Regulation  has,  in the  view  of  the  Commission,  proved  an  effective  means  of 
ensuring  compliance  with  Articles  85  and  86  in  shipping  and  to  ensure  the  existence  of  effective 
competition  in the  liner  shipping trades  serving  the European  Union and  the provision  of  high-quality, 
low-cost  services to  shippers,  i.e.  the exporters  and  the  importers  of the  Union. 

Regulation  No.  4057/86  has  been  used  to  good  effect  and  there  is,  furthermore,  a  strong 
14. 
indication that it has influenced  the behavior of certain third-country  lines, in particular concerning  their 
rate  setting  policies. 

Apart  from  the  actual  implementation  of  defensive  measures  in  cases  where  an 

effective 
15. 
the  effect  of  Regulation  No.  4058/86  should  also  be 
solution  through  negotiations  is  not  achieved, 
judged  for  its  value  as  a  basis  for  consultation  as  well  as  a  deterrent. 
In  the  case  of  restrictions 
imposed  by  the  West  and  Central  African  states, where  the  use  of  the  Regulation  has  been  requested, 
the  Community  has  continued  to  try  to  achieve  a  mutually  acceptable  solution  through  consultations. 
More  generally,  the  possibility  provided  by  the  Regulation  to  take  counter-measures,  has  been  of 
particular value for  the Commission in its discussions with  a number of countries when seeking to secure 
market  access and  non-discriminatory  treatment  for  Community  shipowners. 

Specific  problems  in  relations  with  certain  third  countries 

Member  States and  Community  shipowners  have  regularly  raised  with  the Commission  issues 

16. 
regarding  specific  problems  arising  in  particular  shipping  trades. 

In its report to the Council on the implementation  of the shipping Regulations4 the Commission  reported 
on action  undertaken  by that  time to address  such  problems  as arose with  Algeria;  Kenya;  the  Republic 
of Korea; Taiwan;  Indonesia; Japan; and on consultations with third countries, such as Brazil, Sri  Lanka 
and the  USSR. 

The  Commission  has continued  to pursue  such  action,  in close consultation  with  the  Member 
17. 
States.  It  has,  in  particular,  raised  specific  issues  regarding  maritime  transport  in  discussions  with  a 
number  of  third  countries.  Such  discussions  have  resulted  in  several  concessions  obtained  from  the 
competent  authorities  of  the  countries  concerned. 

18.  With  Taiwan  a  Protocol  on  income  tax  exemption  for  shipping  companies  was  concluded  in 
August  1990  and  on  1  October  1993  an  Addendum  was  signed. 
It  was  agreed  that  the  financial 
authorities of Taiwan  and the EC Member States would  not impose income tax on the operation  of  ships 
in  international  traffic  by  their  respective  shipping enterprises,  including  the customary  surcharges  and 
additional,  will  be  tax  exempted  on  a  reciprocal  basis. 

From  1989  onwards,  bilateral  consultations  have  been  regularly  held  to  bring  about  further 
19. 
liberalisation  of the traditionally  restrictive  Korean  shipping policies.  As a result, concessions from  the 
Korean  Authorities  have  been  obtained  concerning  access  for  EC carriers  to  "inter-port"  5 services  and 
to  landside  activities  in  Korea,  as  well  as  the  possibility  to  invest  in  freight  forwarding.  Lastly,  in 
November  1993  the  Korean  authorities  agreed  that  as  from  the  same month,  inter-port  services  would 

4 

5 

SEC(90)  1594  final,  1.08.1990 

Term  indicating  the  intra-Asian  services  from/to  Korea 

6Q 

be completely  liberalised  for  EC carriers  with  the exception  for  services to and  from  Japan.  The  same 
applies for  feeder  services and  any  other  part  of  normal  deep sea maritime  transport  services  from  EC 
carriers.  As  from  I  July  1994,  shipping  services  from  Korea to Japan  and  vice  versa have  also  been 
liberalized. 

As 

20. 
for  the  People's  Republic  of  China,  in  August  1992  it  was  agreed  by  the  Chinese 
authorities that EC carriers shall have the right to establish entities in China as joint or sole ventures able 
to conduct  business activities  on  the  basis of  equal  treatment.  EC carriers  are also  allowed  to  operate 
feeder  services to  and  from  Chinese ports open  for  international  trade  with  no  limitations as to  which 
hub  port  should  be  used.  However  the  effective  application  of  this  undertaking  continues  to  meet 
considerable  difficulties. 

21. 
Consultations  with  Ukraine,  starting  in  early  1994,  resulted  in  a  satisfactory  outcome  on  the 
question  of  establishment  of  shipping agencies  under  non-discriminatory  conditions  in that  country,  in 
the  form  of  a governmental  Resolution  of  15 May  1995. 

22. 
In  consultations  with  Japan  the  Commission  has  repeatedly  raised  its  concern  in  respect  of 
requirements  of  the Japan  Harbour  Transportation  Association resulting  in  inefficient  port  services and 
unduly  expensive  port  charges,  having  the  effect  of  substantially  increasing  the  cost  of  shipments  and 
therefore  restricting  trade.  In  the  absence  of  indications  of  improvement,  the  Community  made  a 
démarche to Japan  on this  issue in  fall  1995. The US  Federal  Maritime Commission  has also started  an 
inquiry  and  indications  are  that  there  are  concerns  voiced  in Japan  itself.  It  is hoped  that  the  Japanese 
Government  will  act  to  resolve  the  situation  rather  than  having  it raised  by  the  EC  in  the  WTO. 

23. 
The  foregoing  shows that  the Community  in a number  of cases  has proved  its effectiveness  in 
securing  the maritime  interest  of  the  Community  and  the  Member  States collectively.  The  leverage  of 
the Community as a whole vis-à-vis  third  countries can  be, and  has been, used to obtain  advantages that 
individual  Member  States would  not  be able to realise. The Community  is  able to  benefit  substantially 
from  its  unique  negotiating  position  as  it  speaks  with  one  voice  on  behalf  of  all  the  Member  States. 
Apart  from  this significant  tactical  advantage,  a Community  approach  is distinctly  preferable  to  that  of 
individual  Member  States  since they  are not  normally  in a position to take account  of  the  interests of 
the Community as a whole.  In this respect, the need to establish a coherent  and comprehensive  maritime 
Community  policy  on  the  basis  of  well  defined  policy  objectives  can  be  considered  essential  for  the 
further  development  of  the  EC  merchant  fleet. 

&  Ci 

DEVELOPMENT OF RELATIONS BETWEEN THE EC AND THIRD COUNTRIES TO  DATE 

ANNEX  IV 

1. 
With  reference  to  Section  IV.B,  this  annex  provides  further  details  on  the  development  of 
relations  between  the  EC and  third  countries  to-date  by  means of (i)  agreements, (ii)  consultations, as 
well  as (iii)  various  forms  of  cooperation,  including  technical  assistance. 

I  Agreements  with third  countries 

Agreements  containing  substantive provisions  on  shipping 

2. 
The  Community  has not, so far,  concluded  any  sectoral  maritime  transport  agreement  with  a 
third  country.  However,  a  number  of  general  agreements  between  the  EC  and  third  countries  (or 
groups  of  third  countries)  contain  substantive  provisions  which  relate to  shipping.  Other  agreements, 
whilst  not  containing  specific  substantive provisions  on  shipping, provide  for  cooperation  or  technical 
assistance as well  as for  consultations, as necessary,  in the  maritime  sector. 

3. 
In the first  category  belong: the Lomé Convention,  the Europe Agreements, the Partnership  and 
Cooperation  Agreements  and  the  EEA  Agreement.  AH these agreements  have  in  common  that,  on  the 
EC side,  both  the  EC  and  the  Member  States  are  Parties;  this  is due  to  the  very  wide  scope  of  fields 
included  in  the agreements  and, on  the other  hand,  has permitted  the avoidance  of questions  regarding 
legal  basis for  external  competence. 

4. 
Firstly,  there are  the successive Lomé  Conventions  the third  of which, concluded  in  1984,  for 
the  first  time  contained  a chapter  dedicated  to  transport  in  general  and  several  articles  on  shipping  in 
particular,  which  were maintained  in the fourth  Lomé Convention,  signed  in  1989 and  revised  in  1995. 

5. 
These  articles  establish  the principles  of  unrestricted  access to the trade  on a commercial  basis 
and  the  implementation  of  the  Liner  Code  Convention  for  conferences  serving  the  trades  between  the 
Community and  its ACP partners. Cooperation  also  is foreseen  to improve the ACP countries'  shipping 
industries,  safety  of  ships and  crews.  Furthermore,  several  areas  for  financial  and  technical  assistance 
are  identified. 

6. 
Secondly, there are the so-called  "Europe agreements"  concluded with the countries of Central 
and  Eastern  Europe,  namely,  Bulgaria,  the  Czech  Republic,  Hungary,  Poland,  Romania  and  Slovakia. 
Similar  agreements  have  also  recently  been  signed  with  Estonia,  Latvia,  Lithuania  and  Slovenia. 

7. 
These  agreements  establish a close association  with  the respective third  countries  and  contain 
specific  provisions on  maritime  transport.  The  latter  cover  the reciprocal  right of  establishment  and  the 
principle  of  unrestricted  access to  the  market  and  traffic  on  a commercial  basis.  It  is  further  provided 
that  non-conference  lines  shall  be free  to operate  in competition  with  a conference  as  long they  adhere 
to  the  principle  of  fair  competition  on  a  commercial  basis.  Dry  and  liquid  bulk  trade  is  to  be  freely 
competitive.  Cargo  sharing  arrangements  in  future  bilateral  agreements  between  the  parties  and  third 
countries will  be avoided. Any existing unilateral  restrictions or measures that may have a discriminatory 
effect  as  regards  the  provision  of  maritime  transport  services  are  also  abolished. 

8. 
In addition,  it was agreed  that cooperation  should  be developed  and strengthened  to enable CEE 
countries to restructure  and  modernize transport  and achieve operating  standards comparable  to those in 
the Community.  Such  cooperation  includes the modernization,  on major  routes of common  interest,  of 
port infrastructure  and the upgrading of technical equipment for containerization  and transhipment as part 
of  specified  priority  areas. 

<T/ 

9. 
An "Agreement on trade and commercial and economic cooperation" has been concluded with 
Albania; it does not contain specific provisions relating to shipping but includes transport and ports as 
areas of mutual interest  for economic cooperation. 

10. 
Thirdly,  with  Belarus,  Moldova,  Russia  and  Ukraine,  "Partnership  and  Cooperation 
Agreements"  have been signed. These agreements  include a number of specific  clauses on maritime 
transport such as the guarantee of tree access to the international shipping market on a commercial basis, 
national treatment for vessels in ports and the opening of inland waterways for international  sea-river 
services. This last issue has not been resolved with Russia and it has been agreed to negotiate on it not 
later than 31.12.1996. National treatment for establishment to under-take shipping agency activities has 
also  been agreed, hi addition to providing that no cargo-sharing agreements will be concluded with third 
countries, they disapply any such provisions that exist between any Member State and the other party. 

As is the case with the Europe agreements, extensive economic cooperation in a large number of sectors, 
including transport, is also envisaged in these Partnership and Cooperation Agreements. 

Similar  agreements  -  mutatis mutandis  -  have  been  subsequently  signed  with  Kazakhstan  and 
Klrgizstan, and  very recently with Armenia, Azerbaijan,  Georgia and Uzbekistan. 

11. 
Fourthly, the EEA agreement  entered into force  on  1  January  1994.  As a result, the acquis 
communautaire  also with  regard to maritime  transport  now applies  in  the relationship  between the 
Community and the EFTA countries involved. 

However,  the  measures 
referring  to  the  external  relations  of  the  Community,  such  as  Council 
Regulations 4057/86 and 4058/86, do not apply. Instead, the Community and the EFTA countries agreed 
to coordinate their actions and measures towards third countries and third country companies in the area 
of maritime transport. 

12. 
The recently concluded customs union agreement with Turkey maintains the objective of dealing 
with the transport sector.  New association agreements have been negotiated  with  Israel, Morocco and 
Tunisia and negotiations are nearing conclusion with Egypt, Jordan and Lebanon and foreseen with 
Algeria. These agreements provide for early negotiations leading to liberalization of maritime transport 
along similar lines to those recent agreements with Central and Eastern European countries. 

13. 
The  Barcelona  Euro-Mediterranean  Conference  in  November  1995  adopted  a  Ministerial 
Declaration whereby participants (EU and 12 Mediterranean countries) undertook to respect the principles 
of the freedom to provide services and free access to international cargoes. 

Trade  and economic  cooperation  agreements 

14. 
Over the years, the Community has concluded trade and economic cooperation agreements with 
numerous third countries; transport is generally includud among the sectors for economic cooperation, 
and this has been the basis for consultations and cooperative action with a number of such countries. 

15. 
In several such agreements, which do not contain substantive provisions on services, maritime 
transport has been the subject  of an exchange of letters annexed to the agreement,  hi these letters, the 
Community  and  the  third  country  concerned  have  undertaken  to  address  any  issue  relating  to  the 
operation of shipping with a view to finding solutions to problems that may  arise.  This can be done 
within the Joint Committee established under the auspices of the cooperation agreement. The wording 
of such letters varies; they generally make reference to free and fair competition as a guiding principle, 
hi  several  instances  discussions  in  the framework of  the  Joint  Committees  have  taken  place  with 
satisfactory  results. 

5~2 

Letters  such  as  mentioned  above  have  been  exchanged  with  countries  like  Argentina;  Brazil; 
16. 
Chile;  in Central  America,  Costa Rica, El  Salvador,  Guatemala,  Honduras, Nicaragua  and  Panama;  the 
Andean  Pact  and  its  member  countries,  Bolivia,  Colombia,  Ecuador,  Peru  and  Venezuela;  Mexico; 
Paraguay;  and  Uruguay. 

17. 
In  more  recent  negotiations  for  such agreements, with  Korea  and  South  Africa  as well  as for  a 
new  partnership  agreement  with  Mexico,  the  Community  has  proposed  the  inclusion  of  substantive 
provisions  on  shipping.  The  negotiations  with  Korea  were  concluded  recently. 

2  Consultations  with  third  countries 

18. 
The  Commission  has,  for  some time, engaged  in  discussions and  consultations  with  important 
partners  in maritime  transport.  Such consultations, which  serve the purpose  of exchange of  information 
and  views  on  developments  and  policy  issues of  interest  to  the  two  sides, as  well  as the  pursuance  of 
solutions to problems  that arise, have been  intensified  with  the development  of  EC shipping policy  and 
activity  relating  to  international  shipping. 

19. 
As  far  as  the  developed  countries  are  concerned,  the  Maritime  Transport  Committee  of  the 
OECD  has  traditionally  served  as  the  forum  for  multilateral  contact  among  them  as  regards  shipping 
matters; the  Commission  regularly  participates  at  its meetings. 

20. 
In  parallel,  the  Commission  has  held  since  as  early  as the  late  '70s  regular  consultations  on 
shipping  with  several  EFTA  countries:  Finland1,  Norway,  Sweden1  and  Switzerland.  It  has  actively 
participated  in the Consultative Shipping Group  and the dialogue of the Group  with the USA, and  it has 
established  regular  contacts  and,  more  recently,  annual  high-level  consultations,  with  Japan. 

21. 
Following  the adoption  of the Regulation  imposing countervailing  duties on Hyundai  Merchant 
Marine2,  regular  meetings  have  been  held  between  the  Commission  and  the  Korean  authorities  since 
1989.  These  meetings  have  proved  valuable  in  respect  of  improving  maritime  relations  with  Korea, 
solving  a number  of  problems  of  concern  to Community  shipowners  and  seeking  a reorientation  of  the 
shipping  policy  of  the  country.3 

22. 
Consultations with other countries (apart from  the USSR, with which regular consultations were 
held  until  1991) have  so far  been  held  on an ad hoc basis, where  required.  Use is made of  opportunities 
offered  in the  framework  of existing agreements or of less formal  events, including workshops organised 
with  representatives  of  third  countries  or  groups  of  countries  (see  para.  24  below),  for  example,  with 
Brazil  and  India. 

3  Cooperation  and  Technical  assistance 

23. 
Cooperation  with  third  countries  has taken the  form  of seminars and  conferences  or  workshops 
organised  by the Commission and technical  assistance to individual  countries or groups. In addition,  the 
Commission  is cooperating  with  international  organisations  and  institutions. 

Seminars  and  Conferences  or  Workshops 

24. 

The Commission  has so far  organised  several  seminars and conferences  or workshops with  third 

Prior to their  accession  to the EC. 

Council  Regulation No.  15/89, O.J.  L 4, 6.01.1989 

3 

See para.76  above  and  SEC(90)  1594  final. 

^"3 

countries  or  groups  of  countries  on  shipping  issues.4  These  events  have  provided  the  possibility  to 
discuss  freely  with  high-level  officials  as  well  as  with  commercial  interests  current  problems  and  to 
consider needs for technical assistance in the efforts to liberalise the sector, facilitate transport operations 
and promote  compliance  with  internationally  applicable  rules and standards. 

A  number  of  these  conferences  and  workshops  have  resulted  in joint  action  programs  that  are  been 
followed-up  and/or  specific  technical  assistance projects.5 

Technical assistance to  individual countries or groups 

25. 
Technical  assistance provides  an  important means to improve  the  functioning  of  the trade and 
help  liberalisation of  such trades by providing  better conditions of  operation  for  the lines.  This serves 
the dual  objective of  development  policy  and shipping policy. 

26. 
Actions  in respect  of  India,  countries  of the Maghreb and of West and Central  Africa,  as well 
as for the ASEAN  countries have been  undertaken,  in addition to numerous projects under the PHARE 
and TACIS programs. 

Cooperation  with international institutions 

27. 
The  Commission  has  also  established  cooperative  relations  with  a  number  of  international 
organisations  and  institutions:  UNCTAD,  the  IMO,  the  World  Bank;  and  with  the  World  Maritime 
University and the International  Maritime Law Institute concerning study programs and fellowships  for 
shipping officials  of  developing countries. 

28. 
Experience  with  actions of  cooperation  and provision of  technical  assistance, as above,  can be 
considered generally positive and promising in terms of serving the objectives of such actions as regards 
the third  countries  involved as well as the Community. The Commission intends to further  pursue such 
activity  as an integral  part of  its external  relations  in the field of  maritime transport. 

-  Central  America  (Costa  Rica,  1991); 
-  Andean  Pact  (Venezuela,  1992); 
-  Brazil  (1993); 
-  India  (January  1994 and  December  1995); 
-  Black  Sea (September  1994); 
-  SADC  (December  1994); 
-  Baltic  States  (January  1995); 
-  Mediterranean  Conference  (April  1995); 
-  Baltic  Sea  Conference  (May  1995); 
-  Mediterranean  (September  1995); 
-  ASEAN  countries  (October  1995). 

See  also  Section  V.B.2 

S4 

ISSN  0254-1475 

COM(96) 707 final 

DOCUMENTS 

EN 

07  11 

Catalogue  number  :  CB-CQ-96-717-EN-C 

ISBN  92-78-13892-4 

Office  for  Official  Publications of the European Communities 

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