COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/21/EC on compliance with flag State requirements
Date: 2023-06-01
Institutions: Directorate-General for Mobility and Transport, European Commission
Subjects: International Maritime Organisation, environmental protection, international convention, international standard, law of the sea, maritime safety, maritime shipping, pollution from ships, prevention of pollution, ship's flag

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   EUROPEAN COMMISSION  Brussels, 1.6.2023  SWD(2023) 166 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a Directive of the European Parliament and of the Council   amending Directive 2009/21/EC on compliance with flag State requirements {COM(2023) 272 final} - {SEC(2023) 210 final} - {SWD(2023) 165 final}  
 
 
A. Need for action 

What is the problem and why is it a problem at EU level?  
EU  action  in  the  field  of  maritime  safety  both  complements  and  implements  the  international 
framework as defined by the International Maritime Organization (IMO). The responsibility for maritime 
safety at state level involves three overlapping lines of action. 

The  first  line  of  defence  is  provided  by  Directive  2009/21/EC  on  compliance  with  flag  State 
requirements  (FSD).  The  aim  is  to  ensure  that  EU  Member  States  as  flag  States  discharge  their 
international law obligations as regards ships flying their flags, that they enhance safety and prevent 
pollution  from  those  ships.  Since  this  Directive  was  adopted,  the  UN  specialised  agency  -  the 
International  Maritime Organization - has made the Instruments Implementation  Code (III-Code) and 
IMO audit mandatory as of 2016 for all flag States in the world, including EU Member States as flag 
States. However, the IMO lacks enforcement powers. 

The  Directive  incorporates  parts  of  the  III-Code  into  EU  legislation,  but  it  does  so  in  a  fragmented 
manner.  The  Directive  was  the  subject  of  an  ex-post  evaluation  and  a  maritime  fitness  check  that 
identified  several  problematic  issues.  These  include  (1)  legal  uncertainty  in  implementing  new 
international  rules  at  EU  level  and,  (2)  the  lack  of  a  harmonised  approach  to  inspections,  control, 
monitoring and information sharing of flagged fleet. It is also essential for national authorities to have 
the resources needed as a flag State to carry out their international obligations. 

Absent EU action, EU flag administrations will work in an uncoordinated and non-harmonised way. 

What should be achieved?  
This initiative seeks to ensure and improve on the high level of maritime safety and pollution protection 
across the EU.  

What is the value added of action at EU level (subsidiarity)?  
Shipping  as  an  international  business  operates  in  different  EU  and  international  waters  and  is 
regulated  at  the  global  as  well  as  regional  and  national  instances,  it  has  by  nature  a  strong  cross-
border  dimension.  Harmonising  flag  State  inspections  and  control  over  flagged  fleet  at  EU  level  is 
essential to this end.  

B. Solutions 

What are the options to achieve the objectives? Is there a preferred option? If not, why?  
Four  policy  options  addressing  the  problems  have  been  developed.  All  policy  options  provide  for 
incorporating the now mandatory flag-State parts of the III-Code and maintaining the mandatory IMO 
audit.  

The preferred option is policy option 2. It aims to retain a core capacity of technical staff in flag State 
administrations  for  upholding  international  obligations  and  to  ensure  effective  control  of  flagged  fleet 
and  purposeful  monitoring  of  recognised  organisations.  In  essence,  this  option  incorporates  the 
remaining  key  parts  of  the  mandatory  III-Code  relevant  to  flag  States  and  provides  a  joint  solution 
using digitalisation to achieve consistent compliance of flag State requirements across the EU.  

What are different stakeholders' views? Who supports which option?  
All flag State administrations and industry stakeholders are in favour of a clear, coherent and aligned 
legal framework that incorporates the international rules: the III-Code and the IMO audit. The preferred 
policy option is supported as it ensures a high degree of internal and external coherence. This option 
is  considered  measured  and  proportional  given  the  great  range  in  the  size  and  type  of  fleet  in  EU 
Member States. The flag State administrations and industry stakeholders fully support digitalisation.  

C. Impacts of the preferred option 

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What are the benefits of the preferred option?                                       
The societal impacts are mainly assessed in terms of the impacts of the policy options on maritime 
safety  (lives  saved),  and  on  environmental  protection. With  digitalisation,  the  preferred  policy  option 
also  ensures  more  effective,  efficient  and  transparent  ship  inspections  and  monitoring  and  oversight 
by the EU recognised organisations.  

The preferred option is projected to result in 69 lives saved and 810 injuries avoided during 2025-2050 
relative  to  the  baseline  figure.  These  benefits  are  expected  to  reduce  external  costs  related  to 
accidents by an estimated EUR 2.3973 billion relative to the baseline costs over 2025-2050 (in 2021 
prices). Preventing accidents from occurring in the future1 is projected to avoid the loss at sea of 1 418 
tonnes  of  bunker  fuel  relative  to  the  baseline  over  2025-2050.  This  is  expected  to  have  an  indirect 
positive impact on the quality of marine water and biodiversity.  

For  flag  State  authorities,  the  preferred  policy  option  is  expected  to  generate  enforcement  cost 
savings of EUR 48.8-52.9 million relative to the baseline (in current prices over 2025-2050). For ship 
operators, the adjustment cost savings were estimated at EUR 0.6-1.2 million relative to the baseline 
(current prices over 2025-2050). They are principally the result of implementing technical solutions for 
electronic flag State inspection reports. 

What are the costs of the preferred option (if any, otherwise of main ones)?  
Additional costs will fall mainly on flag State authorities as option 2 increase the control of flagged fleet 
via  flag  State  inspections  and  oversight  of  recognised  organisations.  The  total  costs  for  flag  State 
authorities are estimated at EUR 49.1- 49.2 million.  

For EMSA, the policy measures related to developing or improving a flag State reporting module and 
to  develop  enhanced  training  tools  for  inspectors  are  expected  to  give  rise  to  adjustment  costs 
estimated at EUR 6.4-7 million. 

For  ship  operators,  the  limited  increase  in  the  number  of  inspections  is  expected  to  result  in 
adjustment costs estimated at EUR 3.2 million.   

What are the impacts on SMEs and competitiveness?  
The proposed amendments to the Directive will not have an impact on SMEs since the vessels under 
the scope of the Directive  tend  to  be  international merchant  vessels. The fleet of small ships  (below 
300 gross tonnes) fall outside the scope of the Directive.  

Will there be significant impacts on national budgets and administrations?  
The proposal is expected to give rise to costs for  national administrations as flag States estimated at 
EUR 49.1-49.2 million. However, these costs will be largely offset by savings in enforcement costs due 
to digitalisation and use and sharing of e-reports and e-certificates, at EUR 48.8-52.9 million. 

Will there be other significant impacts?  
The proposal will have a positive impact on the internal market, since it will ensure the same high level 
of safety across the EU. 

Proportionality 
The  preferred  policy  option  does  not  go  beyond  what  is  necessary  to  reach  the  overall  policy 
objectives.  In  essence,  the  preferred  policy  option  incorporates  the  remaining  key  parts  of  the 
mandatory III-Code relevant to flag States and provides a joint solution using digitalisation to achieve 
consistent compliance of flag State requirements across the EU. 

D. Follow up 

When will the policy be reviewed?  
The  policy  will  be  reviewed  using  the  flag  State  performance  measurement  scheme.  The 
Commission/EMSA  will  participate  as  observers  to  the  IMO  audits.  The  EMSA  will  continue  to  carry 
out  visits  to  Member  States  to  verify  flag  State  operations  on  the  ground,  leading  to  horizontal 
analyses to continuously improve maritime safety.  

1 It should be noted, however, that these estimates are subject to a high degree of uncertainty since the impacts of the Directive 
on safety are indirect (being the result of inspections and follow-up).   

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